SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
FORM N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 / /
Pre-Effective Amendment No. / /
Post-Effective Amendment No. 5 /X/
and/or
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT / /
OF 1940
Amendment No. 7 /X/
(Check appropriate box or boxes.)
The Vintage Funds - File Nos. 33-89078 and 811-8968
429 North Pennsylvania Street, Indianapolis, Indiana 46204
(Address of Principal Executive Offices) Zip Code
Registrant's Telephone Number, including Area Code: (800) 862-7283
Timothy L. Ashburn, Vintage Advisers, Inc., 429 North Pennsylvania Street,
Indianapolis, Indiana 46204
(Name and Address of Agent for Service)
With copy to:
Donald S. Mendelsohn, Brown, Cummins & Brown Co., L.P.A.
3500 Carew Tower, Cincinnati, Ohio 45202
Approximate Date of Proposed Public Offering:
It is proposed that this filing will become effective:
/ / immediately upon filing pursuant to paragraph (b)
/ / on (date) pursuant to paragraph (b)
/X/ 60 days after filing pursuant to paragraph (a)(1)
/ / on (date) pursuant to paragraph (a)(1)
/ / 75 days after filing pursuant to paragraph (a)(2)
/ / on (date) pursuant to paragraph (a)(2) of Rule 485.
If appropriate, check the following box:
/ / this post-effective amendment designates a new effective date for a
previously filed post-effective amendment.
Registrant continues its election made by the filing of its Registration
Statement, effective June 2, 1995, to register an indefinite number and
amount of its securities under Rule 24f-2 of the Investment Company Act.
Registrant filed, pursuant to paragraph b(1) of Rule 24f-2, a Form 24F-2 for
the fiscal year ended September 30, 1996 on November 29, 1996.
<PAGE>
CROSS-REFERENCE SHEET
Explanatory Note: The Registrant is a "series" company. This Registration
Statement relates to all eight series of the Registrant's shares: Starwood
Strategic Fund, Aggressive Growth Fund, Laidlaw Fund (formerly Fiduciary
Value Fund), Asset Allocation Fund, Taxable Fixed Income Fund, Municipal
Fixed Income Fund, Taxable Money Market Fund and Tax-Free Money Market Fund.
All of the Funds' shares are offered pursuant to a combined Prospectus (the
"Combined Prospectus") and a combined Statement of Additional Information.
PART A. INFORMATION REQUIRED IN THE PROSPECTUS.
Item in Form N-1A Prospectus
Heading
Item 1. Cover Page . . . . . . . . . . . . . Cover Page
Item 2. Synopsis . . . . . . . . .. . . . . Summary of Fund Expenses;
Highlights
Item 3. Condensed Financial Information . . Financial Highlights;
Performance Information;
Supplement to Prospectus
Item 4. General Description of Registrant . Highlights; Investment
Objectives and Policies;
Certain Investments and
Investment Techniques;
General Information;
Supplement to Prospectus
Item 5. Management of the Fund . . . . . . . The Trust and Its
Management
Item 5A. Management's Discussion of Fund . . .Not Applicable
Performance
Item 6. Capital Stock and Other Securities . General Information;
Dividends and Distributions;
Taxes
Item 7. Purchase of Securities Being. . . . How to Buy Shares;
Offered Shareholder Services; Net
Asset Value; The Trust and
its Management
Item 8. Redemption or Repurchase . . . . . . How to Redeem Shares;
Exchange Privilege
Item 9. Pending Legal Proceedings . . . . . .Not Applicable
Item 13. Investment Objectives and Policies. .Investment Objectives and
Policies; Types of Investments
and Investment Techniques;
Supplement to Prospectus
Item 16. Investment Advisory and Other
Services. . . . . . . . . . . . . .The Trust and Its Management;
Supplement to Prospectus
PART B. INFORMATION REQUIRED IN THE STATEMENT OF ADDITIONAL
INFORMATION.
Item in Form N-1A Statement
Heading
Item 10. Cover Page . . . . . . . . . . . . . . . . Cover Page
Item 11. Table of Contents . . . . . . . . . . . . . .Table of Contents
Item 12. General Information and History . . . . . . .None
Item 13. Investment Objectives and Policies . . . . . Types of Investments
and Investment
Techniques; Investment
Limitations
Item 14. Management of the Fund . . . . . . . . . . . Management of the Trust
Item 15. Control Persons and Principal Holders
of Securities . . . . . . . . .. . . . . . . . . . . Management of the Trust
Item 16. Investment Advisory and Other Services . . . Investment Advisory
Arrangements;
Distribution
Arrangements;
Administrative
Services Arrangements;
Custodian, Transfer
Agent, Fund Accounting
Agent, and Independent
Accountants
Item 17. Brokerage Allocation and Other Practices . . Brokerage
Transactions
Item 18. Capital Stock and Other Securities . . . . . Information About the
Trust
Item 19. Purchase, Redemption and Pricing of
Securities Being Offered . . . . . . . . . . .Purchase and
Redemption;
Determination of Net
Asset Value
Item 20. Tax Status . . . . . . . . . . . . . . . . . Tax Status
Item 21. Underwriters . . . . . . . . . . . . . . . Not Applicable
Item 22. Calculation of Performance Data . . . . . . .Performance
Information
Item 23. Financial Statements . . . . . . . . . . . Financial Statements
PART C. OTHER INFORMATION
Information required to be included in Part C is set forth
under the appropriate Item, so numbered, in Part C of this Registration
Statement.
<PAGE>
December 20, 1996
THE VINTAGE FUNDS
SUPPLEMENT TO PROSPECTUS
DATED JANUARY 29, 1996
On December 20, 1996, a reorganization involving The Laidlaw Covenant
Fund and The Fiduciary Value Fund, a series of The Vintage Funds, was
completed and accounted for as a pooling without restatement. As a result
of the reorganization, the name of The Fiduciary Value Fund has been changed
to "The Laidlaw Fund."
The table below represents the financial highlights of The Laidlaw
Fund. For the period ended September 30, 1996, the information is unaudited
and should be read in conjunction with the unaudited pooled financial
statements and notes thereto of The Laidlaw Fund, which are included in The
Vintage Funds' Statement of Additional Information dated December 20, 1996.
For the year ended December 31, 1995, the information has been audited by
Coopers and Lybrand L.L.P., independent accountants, whose report thereon is
included in The Laidlaw Covenant Fund's 1995 Annual Report to Shareholders.
The information presented for the period ended December 31, 1992 was audited
by other independent accountants. The audited information should be read
in conjunction with the other financial statements and notes thereto included
in The Laidlaw Covenant Fund's 1995 Annual Report.
<TABLE>
THE LAIDLAW FUND
Selected Per Share Data and Ratios
Financial Highlights
for a share outstanding for the nine months ended September 30, 1996 (Unaudited)
and the years ended December 31, 1995, 1994 and 1993
and for the period from March 3, 1992 through December 31, 1992
<CAPTION>
For the nine
months ended Year Ended Year Ended Year Ended March 3, 1992
September 30, 1996 December 31,1995 December 31, 1994 December 31, 1993 December 31, 1992(a)
<S> <C> <C> <C> <C> <C>
Selected Per Share Data
Net Asset Value
Beginning of Period..... $14.96 $12.91 $12.92 $12.56 $11.94
Investment Activities
Net investment income (loss) 0.03 0.00 0.01 0.02 0.08
Net realized and unrealized
gains (losses) on
investments.... 0.66 3.82 0.35 0.49 1.03
Total from Investment Activities 0.69 3.82 0.36 0.51 1.11
Distributions
Net investment income... 0.00 0.00 (0.01) (0.02) (0.08)
Net realized gains...... (0.70) (1.77) (0.36) (0.13) (0.41)
Total Distributions (0.70) (1.77) (0.37) (0.15) (0.49)
Net Asset Value, End of Period.... $14.95 $14.96 $12.91 $12.92 $12.56
Total Return (excluding sales
charges 5.95% 29.59% 2.86% 4.06% 11.20%(b)
Ratios/Supplementary Data
Net Assets at end of period(000) 3,469 4,497 4,381 4,996 4,284
Ratio of expenses to average
net assets 2.50% 2.50% 2.50% 2.50% 2.50%
Ratio of net investment income
(loss) to average net assets 0.28% 0.02% 0.11% 0.16% 0.69%
Ratio of expenses to average
net assets* 4.86% 4.57% 5.20% 5.80% 7.09%
Ratio of net investment income
(loss) to average net assets* (2.11%) (2.10%) (2.57%) (3.16%) (3.90%)
Portfolio turnover................ 0% 61% 73% 107% 128%
<FN>
* During the period the investment advisory and administration fees were waived and reimbursed.
If such voluntary fee reductions had not occured, the ratios would have been as indicated.
(a) Period from commencement of operations.
(b) Restated to correct previous inaccurate calculations.
</FN>
</TABLE>
In addition to the name change, The Vintage Funds' Prospectus is revised
as described below.
The following information supplements the information provided under
the section titled "Investment Objectives and Policies - The Fiduciary Value
Fund" on page 11 of the Prospectus:
It is the sub-adviser's intention to invest in socially conscious
companies. For this purpose the sub-adviser will maintain a list of
approximately 200 preferred companies selected from the 1,000 largest
corporations based on corporate behavior related to customer,
community, employee, competitor, supplier and shareholder relations,
environmental and social issues.
The following information supplements the information provided under the
section titled "The Trust and Its Management - sub-advisers" on page 37 of the
Prospectus:
To assist Fiduciary Counsel, Inc. in the selection of socially conscious
companies in which The Laidlaw Fund might invest, Fiduciary Counsel,
Inc. has entered into a consulting agreement with Laidlaw Holdings Asset
Management, Inc. ("Laidlaw"). Laidlaw's duties include the preparation
of a recommended list of socially conscious companies, investment in
which would be consistent with the socially responsible investment
policy of The Laidlaw Fund. Laidlaw does not provide investment
advisory services to the Fund. The consulting fee is paid directly by
the sub-adviser from its own resources and is not an expense of the Fund.
The table below represents the financial highlights of The Vintage Funds
for the periods presented. The financial highlights for all periods presented
have been audited by McCurdy & Associates CPA's, Inc., independent public
accountants, whose report is included in the The Vintage Funds' 1996
Annual Report to Shareholders. This information should be read in conjunction
with the financial statements and notes thereto included in The Vintage Funds'
1996 Annual Report.
<TABLE>
FINANCIAL HIGHLIGHTS
The following table includes selected data for a share outstanding throughout
each fiscal year or period and other performance information derived from the
financial statements.
<CAPTION>
Starwood Starwood Aggressive Aggressive Asset Asset
Strategic Strategic Growth Growth Allocation Allocation
Fund Fund Fund Fund Fund Fund
1996(a) 1995(b) 1996(a) 1995(b) 1996(a) 1995(b)
<S> <C> <C> <C> <C> <C> <C>
PER SHARE OPERATING
PERFORMANCE:
Net asset value, beginning $10.00 $10.00 $10.00 $10.00 $10.00 $10.00
Income from investment
Operations:
Net investment income (3.23) 0.00 (0.24) 0.00 (0.93) 0.00
Net realized and unrealized
gain (loss) on investments 0.92 0.00 0.04 0.00 0.20 0.00
Total from investment income (2.31) 0.00 (0.20) 0.00 (0.73) 0.00
Less distributions:
Dividends from net
investment income 0.00 0.00 0.00 0.00 0.00 0.00
Total from distributions 0.00 0.00 0.00 0.00 0.00 0.00
Net asset value at end of period $ 7.69 $10.00 $9.80 $10.00 $9.27 $10.00
TOTAL ANNUALIZED
RETURN (%)(e) (3.97)(f) (c) (2.72)(d) (c) (1.16)(d) (c)
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period 483,458 2,705 573,522 340 567,519 100
Ratio of expenses to
average net assets 15.99% 0.00% 9.74% 0.00% 9.61% 0.00%
Ratio of expenses (after
reimbursement) to
average net assets 15.25% 0.00% 9.01% 0.00% 8.87% 0.00%
Ratio of net investment
Income to average net assets (14.42%) 0.00% (8.07%) 0.00% (8.36%) 0.00%
Ratio of net investment
income (after reimbursement)
to average net assets (13.68%) 0.00% (7.33%) 0.00% (7.61%) 0.00%
Portfolio turnover 169.83% 0.00% 51.44% 0.00% 123.14% 0.00%
Average commission rate paid $ 0.06 $ --- $0.00 $ ---- $0.00 $ ---
<FN>
(a) For the Year-Ended September 30, 1996.
(b) For the Period June 2, 1995 (commencement of operations) to September 30,
1995.
(c) Investment in accordance with objective had not commenced at this time.
(d) For the period March 13, 1996 (commencement of investment in accordance
with objective) to September 30, 1996.
(e) Total return would have been lower had certain expenses not been reduced
during the periods shown (see Note 3).
(f) For the period April 4, 1996 (commencement of investment in accordance
with objective) to September 30, 1996.
</FN>
</TABLE>
<TABLE>
FINANCIAL HIGHLIGHTS
The following table includes selected data for a share outstanding throughout
each fiscal year or period and other performance information derived from the
financial statements.
<CAPTION>
Taxable Taxable Tax-Free Tax-Free
Money Money Money Money
Market Market Market Market
Fund Fund Fund Fund
1996(a) 1995(b) 1996(a) 1995(b)
<S> <C> <C> <C> <C>
PER SHARE OPERATING
PERFORMANCE:
Net asset value, beginning $ 1.00 $1.00 $ 1.00 $ 1.00
Income from investment
Operations:
Net investment income 0.04 0.002 0.02 0.00
Net realized and unrealized
gain (loss) on investments 0.00 0.000 0.00 0.00
Total from investment income 0.04 0.002 0.02 0.00
Less distributions:
Dividends from net investment income (0.04) (0.002) (0.02) 0.00
Total from distributions (0.04) (0.002) (0.02) 0.00
Net asset value at end of period $ 1.00 $1.00 $ 1.00 $ 1.00
TOTAL ANNUALIZED RETURN (%)(e) 4.13 0.20 1.96 (c)
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period 50,544,511 1,230,385 7,334,110 100
Ratio of expenses to average net
assets 1.25% 12.82% 1.82% 0.00%
Ratio of expenses (after
reimbursement) to average net assets 1.16% 0.47% 1.62% 0.00%
Ratio of net investment
income to average net assets 4.12% (11.94%) 2.09% 0.00%
Ratio of net investment
income (after reimbursement)
to average net assets 4.21% 0.65% 2.29% 0.00%
Portfolio turnover 0.00% 0.00% 0.00% 0.00%
Average commission rate paid $ 0.00 $--- $0.00 $ ---
<FN>
(a) For the Year-Ended September 30, 1996.
(b) For the Period June 2, 1995 (commencement of operations) to September 30,
1995.
(c) Investment in accordance with objective had not commenced at this time.
(d) For the Period March 13, 1996 (commencement of investment in accordance
with objective) to September 30, 1996.
(e) Total return would have been lower had certain expenses not been reduced
during the periods shown (see Note 3).
</FN>
</TABLE>
Financial highlights for The Municipal Fixed Income Fund and The
Taxable Fixed Income Fund are not included because those funds had not
commenced investment in accordance with their respective investment
objectives prior to September 30, 1996.
This supplement, and the Prospectus dated January 29, 1996, contain
information that you should know before investing in The Vintage Funds and
should be retained for future reference. Additional information is included
in the The Vintage Funds' Statement of Additional Information dated December
20, 1996, which has been filed with the Securities and Exchange Commission and
is incorporated herein by reference. The Statement of Additional Information
and the respective Annual Reports of The Vintage Funds and The Laidlaw Funds
are available upon request and without charge by calling (800) 408-4682
(1-800-40-VINTAGE).
<PAGE>
THE VINTAGE FUNDS
PROSPECTUS Prospectus dated January 29, 1996
The Vintage Funds (the "Trust") is an open-end,
management investment company (a mutual fund) having eight separate portfolios
(the "Funds"), each of which has its own separate investment objective and
policies.
The Starwood Strategic Fund seeks growth of capital by investing
principally in a diversified portfolio of equity securities of seasoned,
financially strong growth companies.
The Aggressive Growth Fund seeks growth of capital by investing primarily
in a diversified portfolio of other no-load mutual funds that invest
principally in large capitalization stocks, and secondarily in other no-load
mutual funds that invest principally in small capitalization and emerging
growth company securities.
The Fiduciary Value Fund seeks growth of capital, current income and growth
of income by investing principally in a diversified portfolio of common stocks,
preferred stocks and securities convertible into common stock of companies that
offer the prospect for growth of earnings while paying current dividends.
The Asset Allocation Fund seeks preservation of capital, capital
appreciation and income through a flexible policy of investing principally in
a diversified portfolio of other no-load index mutual funds, including
domestic and international stock and bond index funds, as well as money
market funds.
The Taxable Fixed Income Fund seeks a high level current income
consistent with the preservation of capital by investing principally in
a diversified portfolio of U.S. government securities and investment
grade corporate debt obligations and asset-backed securities.
The Municipal Fixed Income Fund seeks a high level of current income that
is exempt from federal regular income tax consistent with the preservation
of capital by investing principally in a diversified portfolio of investment
grade municipal securities.
The Taxable Money Market Fund seeks a high level of current income
consistent with the preservation of capital and maintenance of liquidity by
investing principally in a diversified portfolio of short-term money market
instruments. The Fund intends to maintain a constant net asset value of
$1.00 per share, although there is no assurance that it will be able to do so.
The Tax-Free Money Market Fund seeks a high level of current income that is
exempt from federal income tax consistent with the preservation of capital and
maintenance of liquidity by investing principally in a diversified portfolio
of high quality, short-term municipal securities. The Fund intends to
maintain a constant net asset value of $1.00 per share, although there is no
assurance that it will be able to do so.
The shares offered hereby are not deposits or obligations of any
financial institution and are not insured by the Federal Deposit
Insurance Corporation, the Federal Reserve Board or any other government
agency. Investment in the shares involves investment risks including the
possible loss of principal. There can be no assurance that the money market
Funds will be able to maintain a stable net asset value of $1.00 per share.
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.
This Prospectus contains information that you should know before investing
in any of the Funds and it should be retained for future reference. A
Statement of Additional Information, dated January 29, 1996 has been filed
with the Securities and Exchange Commission and is incorporated herein by
reference. The Statement of Additional Information is available upon request
and without charge by calling 1-800-408-4682 (1-800-40-VINTAGE).
[END OF COVER PAGE]
<PAGE>
TABLE OF CONTENTS
SUMMARY OF FUND EXPENSES
FINANCIAL HIGHLIGHTS
HIGHLIGHTS
CERTAIN RISK FACTORS
INVESTMENT OBJECTIVES AND POLICIES
The Starwood Strategic Fund
The Aggressive Growth Fund
The Fiduciary Value Fund
The Asset Allocation Fund
The Taxable Fixed Income Fund
The Municipal Fixed Income Fund
The Taxable Money Market Fund
The Tax-Free Money Market Fund
Temporary Investments
Investments in Other Mutual Funds
Fundamental Investment Limitations
CERTAIN INVESTMENTS AND
INVESTMENT TECHNIQUES
NET ASSET VALUE
HOW TO BUY SHARES
Minimum Investment
Opening an Account
By Mail
By Wire
Subsequent Investments
By Automated Clearing House (ACH)
By Telephone Order
DIVIDENDS AND DISTRIBUTIONS
Timing of Certain Money Market Fund Transactions
EXCHANGE PRIVILEGE
By Telephone
By Mail or Telecopy
HOW TO REDEEM SHARES
By Mail
Signatures
By Telephone
Receiving Payment
Check Writing (Money Market Funds Only)
Minimum Account Balance
SHAREHOLDER SERVICES
THE TRUST AND ITS MANAGEMENT
Investment Advisory Arrangements
Investment Adviser
Sub-Advisers
Portfolio Managers' Backgrounds
Advisory Fees
Distribution Services
Distributor
Distribution Plan
Administration of the Trust
Administrator
Shareholder Services Plan
Other Arrangements
Transfer Agent, Fund Accounting Agent
and Custodian
Portfolio Transactions
Expenses
THE "VOICE" PROGRAM
TAXES
The Municipal and Tax-Free Funds
Backup Withholding
PERFORMANCE INFORMATION
GENERAL INFORMATION
No person has been authorized to give any information or to make
any representations other than those contained in this Prospectus and in the
Fund's official sales literature in connection with the offer of the Fund's
shares, and, if given or made, such other information or representation must
not be relied upon as having been authorized by the Fund. This Prospectus
does not constitute an offer in any State in which, or to any person to
whom, such offering may not lawfully be made.
SUMMARY OF FUND EXPENSES
Shareholder Transaction Expenses
Maximum Sales Load Imposed on Purchases
(as a percentage of offering price). . . . . . . . . . . . . . . . . . . None
Maximum Sales Load Imposed on Reinvested Dividends
(as a percentage of offering price) . . . . . . . . . . . . . . . . . . None
Deferred Sales Load (as a percentage of original
purchase price or redemption proceeds, as applicable) . . . . . . . . . None
Redemption Fee (as a percentage of amount redeemed, if applicable) . . . None
Exchange Fee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . None
Annual Fund Operating Expenses *
(As a percentage of projected average net assets)
Management 12b-1 Servicing Other(1) Total (2)
Fund Name Fees Fees Fees Expenses Expenses
Starwood Strategic 0.75% 0.10% 0.15% 0.50% 1.50%
Fiduciary Value 0.75% 0.10% 0.15% 0.50% 1.50%
Asset Allocation 0.75% 0.10% 0.15% 0.50% 1.50%
Aggressive Growth 0.75% 0.10% 0.15% 0.50% 1.50%
Taxable Fixed 0.50% 0.10% 0.15% 0.50% 1.25%
Income
Municipal Fixed 0.50% 0.10% 0.15% 0.50% 1.25%
Income
Taxable Money 0.50% 0.10% 0.15% 0.25% 1.00%
Market
Tax-Free Money 0.50% 0.10% 0.15% 0.25% 1.00%
Market
(1) The Adviser has voluntarily agreed to waive its management fees to
the extent necessary to cause the Other Expenses of each Fund to be as
indicated. Although the Adviser has no current intention to abandon this
voluntary arrangement, the Adviser may terminate the arrangement at any time
at its sole discretion. Absent the voluntary fee waiver arrangement, Other
Expenses are not expected to exceed 0.75% for the non-money market Funds and
0.50% for the money market Funds.
(2) Absent the voluntary fee waiver arrangement, Total Expenses are
not expected to exceed 1.75% for the non-money market Funds and 1.25% for the
money market Funds.
* The Funds commenced operations on June 2, 1995 and only the Taxable
Money Market Fund had investment operations during the period ended
September 30, 1995. Thus, the expenses in the table are estimated based
on average expenses expected to be incurred during the year ending September
30, 1996. During the course of this period, expenses may be more or less
than the average amounts shown.
Initial investments of less than the required minimum by persons exempt
from the minimum investment requirement are subject to a one-time $4.50
administrative charge. See "How to Buy Shares." Wire-transferred
redemptions are subject to a $15.00 charge and certain checking transactions
may be subject to additional charges. See "How to Redeem Shares."
The purpose of this table is to assist the investor in understanding
the various costs and expenses that a shareholder of a Fund will bear,
either directly or indirectly. Long-term shareholders may pay more than the
economic equivalent of the maximum front-end sales charge permitted under the
rules of the National Association of Securities Dealers, Inc. For a further
description of the various costs and expenses incurred by the Funds, see "The
Trust and its Management."
Example:
An investor would pay the following expenses on a $1,000 investment,
assuming (1) 5% annual return and (2) redemption at the end of each time
period:
Fund Name 1 Year 3 Years
Starwood Strategic Fund $15.00 $46.56
Aggressive Growth Fund 15.00 46.56
Fiduciary Value Fund 15.00 46.56
Asset Allocation Fund 15.00 46.56
Taxable Fixed Income Fund 12.50 38.91
Municipal Fixed Income Fund 12.50 38.91
Taxable Money Market Fund 10.00 31.19
Tax-Free Money Market Fund 10.00 31.19
The amounts listed in the example should not be considered as
representative of future expenses and actual expenses may be greater or less
than those indicated. Moreover, while the example assumes a 5% annual return,
a Fund's performance will vary and may result in an actual return greater or
less than 5%.
The Aggressive Growth Fund and the Asset Allocation Fund intend to
invest principally in other mutual funds, and the other Funds may
invest incidentally in other mutual funds. To the extent that a Fund invests
in other mutual funds, the Fund will indirectly bear its proportionate share
of any fees and expenses paid by such other funds, in addition to the fees
and expenses payable directly by the Fund. Therefore, to the extent that
the Fund invests in other mutual funds, the Fund will incur higher expenses,
many of which may be duplicative. These expenses will be borne by the Fund,
and are not included in the expenses reflected in the table or example above.
See "Investment Objectives and Policies -- Investments in Other Mutual Funds."
HIGHLIGHTS
Investment Objectives and Investment Risks
The Vintage Funds (the "Trust") is a family of mutual funds with
eight separate portfolios (the "Funds"), each having its own
investment objective and policies. An investment in the Funds involves
investment risks including the possible loss of principal. See "Certain Risk
Factors," "Investment Objectives and Policies" and "Certain Investments and
Investment Techniques."
Liquidity
Each Fund continuously offers and redeems its shares at the Fund's
prevailing net asset value per share. See "How to Buy Shares," "How to Redeem
Shares" and "Net Asset Value." The Taxable Money Market Fund and the Tax-Free
Money Market Fund each intends to maintain a constant net asset value of $1.00
per share, although there is no assurance that it will be able to do so.
No Sales or Redemption Charges
There are no commissions, fees or charges by the Trust for the purchase or
redemption of shares. Inital investments below the stated minimum,
wire-transferred redemptions and certain checking transactions may be subject
to additional charges. See "Summary of Fund
Expenses," "How to Buy Shares" and "How to Redeem Shares."
Minimum Investment
A minimum investment of $1,000 is required to open an account, except an
IRA account for which the minimum is $500. Former shareholders of the Unified
family of funds, or the Quest funds which acquired the Unified family of
funds, may open an account with less than the required minimum. However,
they are subject to a one-time $4.50 administrative charge to establish the
account. Subsequent investments must be at least $100, or $50 for an IRA.
See "How to Buy Shares."
Investment Advisers
Vintage Advisers, Inc. is the Funds' investment adviser (the "Adviser").
The Adviser has engaged Starwood Corporation to serve as sub-adviser to
the Starwood Strategic Fund, and Fiduciary Counsel, Inc. to serve as sub-
adviser to the Fiduciary Value Fund, the Taxable Fixed Income Fund, the
Municipal Fixed Income Fund, the Taxable Money Market Fund and the Tax-Free
Money Market Fund. The sub-advisers manage the investment portfolios of the
applicable Funds, subject to the Adviser's overall management. The Adviser
itself manages the investment portfolios of the Asset Allocation Fund and the
Aggressive Growth Fund. See "The Trust and its Management."
Retirement Plans and Other Shareholder Services
The Trust offers retirement plans including a prototype Profit Sharing
Plan, Money Purchase Pension Plan, Salary Savings Plan - 401(k) and IRA
accounts, as well as a number of special shareholder services. For
information regarding these plans or services, call the Transfer Agent at
1-800-408-4682. See "Shareholder Services."
V.O.I.C.E. (Vision for Ongoing Investment in Charity and Education)
The Adviser administers The Vintage Funds University
and Philanthropic Program pursuant to which the Adviser will make contributions
to the general scholarship funds or endowments of certain accredited
colleges and universities designated by qualified shareholders of any of
the Funds. For information regarding this Program, call the Adviser
at 1-800-408-4682. Also see "The V.O.IC.E. Program" below.
CERTAIN RISK FACTORS
An investment in the Funds involves investment risks including the possible
loss of principal. Certain of these risks are described below, and others are
described under "Investment Objectives and Policies" and "Certain Investments
and Investment Techniques" and in the Statement of Additional Information.
General
The risks of each Fund depend upon many factors. For the Funds that invest
principally in equity securities, these factors include, among others, the
Fund's investment objective, the types of equity securities held and the
financial position of the issuers of these securities. For the Funds that
invest principally in debt securities, these factors include, among others,
the Fund's investment objective, the average duration of the Fund's
portfolio, credit quality of the securities held and interest rate movements.
There is no assurance that any Fund will achieve its investment objective,
and there is no assurance that the money market Funds will be able to
maintain a stable net asset value of $1.00 per share.
Borrowing and Short Selling
All of the Funds may borrow money up to one-third of the value of
total assets (including the amount borrowed) for temporary or
emergency purposes, and the Starwood Strategic Fund may borrow money to that
extent for the purpose of investment. The Starwood Strategic Fund also may
sell securities short to the extent of 25% of the value of its total assets.
Borrowing money for investment purposes is a speculative technique and
borrowing and short selling may increase investment risk. See "Investment
Objectives and Policies -- The Starwood Strategic Fund" and "Certain
Investments and Investment Techniques -- Selling Securities Short."
Foreign Securities
Each of the Funds may invest up to 25% of its total assets
in foreign securities (35% in the case of the Starwood Strategic Fund).
Investments in foreign securities involve special risks that differ from
those associated with investments in domestic securities. See
"Certain Investments and Investment Techniques -- Foreign Securities."
Investments in Other Mutual Funds
Each of the Aggressive Growth Fund and the Asset Allocation Fund intends to
invest principally in other mutual funds. Each Fund will invest only in other
mutual funds that have an investment objective similar to the Fund's, or that
otherwise is a permitted investment under the Fund's investment policies
described herein. In addition, each Fund will invest only in other funds that
have fundamental investment restrictions that are substantially no less
restrictive than its own. Nevertheless, the other funds purchased by the
Funds likely will have certain investment policies, and use certain investment
practices that are different from those of the Funds and not described herein.
These other policies and practices may subject the other funds' assets to
varying or greater degrees of risk. See "Investment Objectives and
Policies -- Investments in Other Mutual Funds."
Derivative Securities
Although there is no uniform definition of "derivative securities,"
certain instruments in which the Funds may invest may be considered
derivative because the value of the instrument fluctuates depending on the
value of another security, index, reference interest rate or currency. These
instruments may principally include options, futures, forward foreign
currency exchange contracts and mortgage-backed securities. These
instruments and related risks are described below under "Certain Investments
and Investment Techniques" and in the Statement of Additional Information.
Short Operating History
The Adviser was organized in December 1994 and the Funds commenced
operations in June 1995. The Adviser has no prior operating history and does
not act as the investment adviser to any other investment companies. See "The
Trust and its Management -- Investment Advisory Arrangements."
INVESTMENT OBJECTIVES AND POLICIES
The Trust offers eight separate Funds, each with its own investment
objective and policies. The Funds' investment objectives cannot be changed
without shareholder approval. While there is no assurance that any Fund
will achieve its investment objective, it endeavors to do so by following the
investment policies described in this Prospectus. Unless otherwise indicated,
the Funds' investment policies may be changed by the Trust's Board of Trustees
without shareholder approval. Shareholders will be notified before any
material change in investment policies becomes effective.
The following sections are concise descriptions of the Funds and
their investment objectives and policies. More information about certain types
of investments and investment techniques is provided below
under "Certain Investments and Investment Techniques" and in the Statement
of Additional Information.
The Starwood Strategic Fund
The Starwood Strategic Fund seeks growth of capital. The Fund pursues this
objective by investing principally in a diversified portfolio of
equity securities of seasoned, financially strong growth companies. Although
current income is an incidental consideration, many of the Fund's investments
should provide regular dividends which may grow over time.
Under normal circumstances, at least 65% of the Fund's assets will consist
of common stocks, preferred stocks, and preferred stocks or corporate debt
securities convertible into common stocks, that are issued by companies which,
in the opinion of the Fund's sub-adviser, have the following characteristics:
Above-average growth rates over an extended period with prospects for
maintaining greater than average rates of growth in earnings, cash
flow or assets in the future;
A strong financial position with high credit standings and
profitability;
Important business franchises, leading products or dominant marketing
and distribution systems;
At least five years' operating history, annual revenues of at least
$200 million and market capitalization of at least $300 million; and
Attractive share prices relative to potential growth in earnings,
cash flow or assets.
The Fund's investments are selected by its
sub-adviser, Starwood Corporation, which uses a combination of research
techniques to identify companies having these characteristics. Fundamental
research is used to evaluate various aspects of corporate performance, with
a particular emphasis on consistency of results, long-term growth prospects
and financial strength. Quantitative valuation methods are used to
determine which growth companies offer superior values at a given point in
time. When assessing growth rates, Starwood generally considers a company to
be "above average" if its growth in earnings, cash flow or assets exceed the
average growth rates of companies included in the S&P 500 index, as published
by Standard & Poor's Corporation ("Standard & Poor's"). When assessing
financial quality, Starwood evaluates five criteria: the strength of the
company's balance sheet; the volatility of the company's earnings over time;
the company's accounting practices; ranking (if any, at the time of
purchase) given the company's common stock by Standard & Poor's; and
the vulnerability of earnings to changes in external factors, such as the
general economy, the competitive environment, governmental action and
technological change.
The Fund may also invest to a lesser extent in equity securities that do
not meet the criteria listed above, as well as in investment grade corporate
debt obligations. The types of equity securities in which the Fund may
invest are described below under "Certain Investments and Investment
Techniques -- Corporate Equity Securities." The corporate debt obligations
in which the Fund may invest are described below under "The Taxable Fixed
Income Fund" and "Certain Investments and Investment Techniques -- Corporate
Debt Securities." Also, the Fund may invest temporarily in money market
instruments of the types described below under "The Taxable Money Market
Fund." It is expected that the Fund will invest principally in securities of
U.S. companies. However, the Fund's investment policies permit the Fund to
invest up to 35% of its net assets in foreign securities under normal
circumstances.
The Fund allocates its investments among different industries and
companies, and changes its portfolio securities based on long-term
investment considerations as opposed to short-term trading. However, the Fund
may take advantage of opportunities for short-term profits as they arise.
The Fund is permitted to borrow money up to one-third of the value of
total assets (including the amount borrowed), and pledge up to 15% of the
value of those assets to secure such borrowings, for the purpose of
investment. Borrowing for the purpose of investment is a speculative
technique that increases both investment opportunity and Starwood's ability
to achieve greater diversification of the Fund's portfolio. However, it also
increases investment risk. Because the Fund's investments will fluctuate in
value, whereas the interest obligations on borrowed funds may be fixed,
during times of borrowing, the Fund's net asset value may tend to increase
more when its investments increase in value, and decrease more when its
investments decrease in value. In addition, interest costs on borrowings may
fluctuate with changing market interest rates and may partially offset or
exceed the return earned on the borrowed funds. Also, during times of
borrowing under adverse market conditions, the Fund might have to sell
portfolio securities to meet interest or principal payments at a time when
fundamental investment considerations would not favor such sales.
The Aggressive Growth Fund
The Aggressive Growth Fund seeks growth of capital. The Fund pursues this
objective by investing primarily in a diversified portfolio of other no-load
mutual funds that invest principally in large capitalization stocks, and
secondarily in other no-load mutual funds that invest principally in
small capitalization and emerging growth company equity securities.
The Fund's investment policies define "large capitalization" stocks
as equity securities of companies that rank in the top one-third of the
equity securities listed on the New York Stock Exchange ("NYSE"), based upon
their equity capitalization. "Small capitalization" stocks are the equity
securities of companies that rank in the middle one-third of the equity
securities listed on the NYSE, based upon their equity capitalization. Small
capitalization stocks typically would rank near or slightly below the average
capitalization of all equity securities listed on the NYSE. "Emerging growth
company securities" are defined as the equity securities of little-known
companies. These equity securities may consist of securities of the types
described below under "Certain Investments and Investment Techniques --
Corporate Equity Securities."
Under normal circumstances, the Fund invests at least 65% of its assets in
no-load mutual funds that invest principally in large capitalization stocks.
However, depending on market circumstances, at times, the Fund may invest more
heavily in no-load mutual funds emphasizing small capitalization stocks and
emerging growth company securities. Additionally, at times, the Fund may
invest in sector funds (which concentrate their investments in a particular
industry) or international funds. However, at no time will the Fund invest
more than 25% of its assets in any mutual fund concentrated in any one
industry, or more than 25% of its assets in international funds. In addition,
from time to time the Fund may invest in individual equity securities of the
types described below under "Certain Investments and Investment Techniques --
Corporate Equity Securities."
Small capitalization stocks and emerging growth company securities involve
a higher degree of risk because most are not as broadly traded as
large capitalization stocks and their prices may fluctuate more widely and
abruptly. These securities are also less researched and often overlooked in
the market, and may have less market liquidity than large capitalization
stocks.
To the extent that the Fund invests in other mutual funds, the Fund
will indirectly bear its proportionate share of any fees and expenses paid by
such funds in addition to the fees and expenses payable directly by the Fund.
Therefore, to the extent that the Fund invests in other mutual funds, the
Fund will incur higher expenses, many of which may be duplicative. For a
description of these and other factors related to the Fund's investment in
other mutual funds, see "Investments in Other Mutual Funds" below.
The Fiduciary Value Fund
The Fiduciary Value Fund seeks growth of capital, current income and growth
of income. The Fund pursues this objective by investing principally in a
diversified portfolio of common stocks, preferred stocks and preferred stocks
or corporate debt securities convertible into common stocks of companies which
offer the prospect of growth of earnings while paying current dividends. The
Fund may also purchase securities that do not pay current dividends but which
offer prospects for growth of capital and future income. Over time, continued
growth of earnings should tend to lead to higher dividends and enhancement of
capital value.
The Fund's portfolio is managed by its sub-adviser, Fiduciary Counsel,Inc.
In evaluating investments for the Fund, Fiduciary Counsel seeks to identify
companies that have demonstrated their ability to grow and whose markets,
profit margins and rates of return on investments indicate the likelihood of
future growth, in addition to a likelihood for future dividend growth. The
Fund allocates its investments among different industries and companies, and
changes its portfolio securities based on long-term investment considerations
and not for short-term trading purposes. However, the Fund may take advantage
of opportunities for short-term profits as they arise.
Under normal circumstances, at least 65% of the Fund's assets will consist
of equity securities of the types described below under "Certain Investments
and Investment Techniques -- Corporate Equity Securities." However, the Fund
also may invest to a lesser extent in investment grade corporate debt
obligations of the types described below under "The Taxable Fixed Income
Fund." Also, the Fund may invest temporarily in money market instruments of
the types described below under "The Taxable Money Market Fund."
The Asset Allocation Fund
The Asset Allocation Fund seeks preservation of
capital, capital appreciation and current income. There is no priority
among these objectives. Rather, the Fund pursues its objectives through a
flexible policy of investing principally in a diversified portfolio of other
no-load index mutual funds, including domestic and international stock and
investment grade bond index funds, as well as money market funds. The Fund may
invest directly in equity securities (of the types described below under
"Certain Investments and Investment Techniques -- Corporate Equity
Securities"), investment grade corporate and municipal debt obligations, U.S.
government securities and money market instruments, but under normal
circumstances at least 65% of its assets will be invested in other no-load
index funds.
The types of stock index funds in which the Fund invests
may include domestic and international stock index funds, large cap, small cap
and mid cap stock index funds, and certain sector stock index funds. Bond
index funds may include domestic and international corporate bond index
funds, and municipal and U.S. government bond index funds. The Fund also may
invest in no-load money market funds. However, at no time will the Fund
invest more than 25% of its assets in index funds concentrated in any one
industry, or more than 25% of its assets in foreign securities index funds.
Under normal circumstances, the Fund's assets will be invested in both
stock and bond index funds. The Adviser will purchase stock index funds
which, in its opinion, have the greatest potential for capital appreciation.
However, the Fund may not invest more than 75% of its assets in common stock
index funds (or individual equity securities). The Fund may from time to time
invest up to 100% of its assets in bond index funds or money market funds if,
in the judgment of the Adviser, the Fund has the opportunity of seeking a high
level of capital appreciation or current income without undue risk to
principal. The Adviser will monitor and adjust its weighing of investments to
adapt to changing market and economic conditions. Distributable income will
fluctuate as the Fund shifts assets among various types of investments.
To the extent that the Fund invests in other mutual funds, the Fund
will indirectly bear its proportionate share of any fees and expenses paid by
such funds in addition to the fees and expenses payable directly by the Fund.
Therefore, to the extent that the Fund invests in other mutual funds, the
Fund will incur higher expenses, many of which may be duplicative. For a
description of these and other factors related to the Fund's investment in
other mutual funds, see "Investments in Other Mutual Funds" below.
The Taxable Fixed Income Fund
The Taxable Fixed Income Fund seeks a high level current income
consistent with the preservation of capital. The Fund pursues this objective by
investing principally in a diversified portfolio of U.S. government securities
and investment grade corporate debt obligations.
The Fund's investments are selected by its sub-adviser, Fiduciary
Counsel, Inc. Under normal circumstances, at least 65% of the Fund's assets
will be invested in one or more of the following types of investments:
domestic and foreign issues of corporate debt obligations having fixed
rates of interest and rated in one of the three highest categories
by a nationally recognized statistical rating organization (e.g.,
rated Aaa, Aa or A by Moody's Investors Service, Inc. ("Moody's") or
AAA, AA or A by Standard & Poor's, Fitch Investors Service, Inc.
("Fitch"), Duff & Phelps, Inc. ("Duff") or Thompson BankWatch
("BankWatch")), or which are of comparable quality in the
judgment of Fiduciary Counsel;
rated commercial paper which matures in 270 days or less
so long as at least two ratings are high quality ratings by nationally
recognized statistical rating organizations (e.g., rated Prime-1 or
Prime-2 by Moody's, A-1 or A-2 by Standard & Poor's, or F-1 or F-2
by Fitch), or which are of comparable quality in the judgment of
Fiduciary Counsel;
time deposits (including savings deposits and
certificates of deposit), deposit notes and bankers acceptances in
commercial banks or savings associations whose accounts are insured
by the Federal Deposit Insurance Corporation ("FDIC"), including
certificates of deposit issued by and other time deposits in foreign
branches of FDIC insured financial institutions or who have at least
$100 million in capital;
direct obligations of the U.S. Treasury, such as U.S.
Treasury bills, notes and bonds;
notes, bonds, and discount notes of U.S. government agencies or
instrumentalities, such as Federal Home Loan Banks, Federal National
Mortgage Association, Government National Mortgage Association,
Federal Farm Credit Banks, Tennessee Valley Authority, Export-Import
Bank of the United States, Commodity Credit Corporation, Federal
Financing Bank, Student Loan Marketing Association, Federal Home Loan
Mortgage Corporation, or National Credit Union Administration;
asset-backed securities rated in one of the three highest categories
by a nationally recognized statistical rating organization, or which
are of comparable quality in the judgment of the adviser; and
repurchase agreements collateralized by eligible
investments.
The Fund may also invest to a lesser extent in corporate
debt obligations that are lower rated, but nevertheless investment grade.
The Fund will not invest in corporate debt obligations having a rating of less
than Baa by Moody's or BBB or better by Standard & Poor's, Fitch, Duff
or Bankwatch. Fiduciary Counsel also may choose bonds that are unrated if
it determines that such bonds are of comparable quality or have
similar characteristics to investment grade bonds. Bonds rated Baa or BBB may
have speculative characteristics. Changes in economic conditions or
other circumstances are more likely to lead to weakened capacity to make
principal and interest payments than higher rated bonds. If the Fund purchases
a rated security and the rating is subsequently downgraded, Fiduciary Counsel
will determine whether or not the security continues to be an acceptable
investment. If not, the security will be sold. A description of the
rating categories is contained in the Appendix to the Statement of
Additional Information.
Also, from time to time during periods of other than normal market
conditions, the Fund may invest in short-term temporary investments of the
types described below under "The Taxable Money Market Fund."
The net asset value of the Fund is expected to fluctuate with changes
in interest rates and bond market conditions. Fiduciary Counsel will attempt
to minimize principal fluctuation through, among other
things, diversification, credit analysis and security selection, and
adjustments of the duration of the dollar-weighted average maturity of the
Fund's portfolio. Under normal circumstances, the Fund will limit the
duration of the dollar-weighted average maturity of its portfolio to not less
than three years or more than ten years. In periods of rising interest rates
and falling bond prices, Fiduciary Counsel may shorten the Fund's average
duration to minimize the effect of declining bond values on the Fund's net
asset value. Conversely, during times of falling interest rates and rising
prices a longer average duration of up to ten years may be sought. The Fund
may hold individual securities of any maturity.
The Municipal Fixed Income Fund
The Municipal Fixed Income Fund seeks a high level of current income that
is exempt from federal regular income tax consistent with the preservation
of capital. The Fund pursues this objective by investing principally in a
diversified portfolio of investment grade municipal securities.
Municipal securities are debt obligations issued by or on behalf of
states, territories and possessions of the United States, including the
District of Columbia, and their political subdivisions, agencies and
instrumentalities, the interest from which is exempt from federal regular
income tax. They are described in more detail below under "Certain
Investments and Investment Techniques -- Municipal Securities" and in the
Statement of Additional Information. The Fund may invest up to 25% of its
assets in securities of issuers located in the same state.
As a matter of investment policy, which may not be changed without
shareholder approval, under normal circumstances, the Fund will be invested
so that at least 80% of the income from investments will be exempt from
federal regular income tax or that at least 80% of its net assets are
invested in obligations, the interest from which is exempt from federal
regular income tax. Interest income that is exempt from federal regular
income tax retains its federal tax-free status when distributed to the
Fund's shareholders. As described below under "Taxes," income from certain
types of municipal securities may be subject to the federal alternative
minimum tax. To the extent that the Fund invests in these securities, a
shareholder, depending on the shareholder's own tax status, may be subject to
alternative minimum tax on that part of the Fund's distributions derived from
these securities.
The municipal securities in which the Fund invests are rated, at the time
of purchase, Baa or better by Moody's or BBB or better by S&P, Fitch, Duff
or Bankwatch. In certain cases the Fund's sub-adviser, Fiduciary Counsel,
Inc., may choose securities that are unrated if it determines that they are
of comparable quality. If the Fund purchases a rated security and the rating
is subsequently downgraded, the Fund is not required to drop the security
from the portfolio, but will consider whether such action is appropriate.
The municipal securities in which the Fund invests may carry fixed or
floating rates of interest. While fixed-rate securities bear interest at the
same rate from issuance until maturity, the interest rate on floating rate
securities is subject to adjustment based upon changes in market interest
rates or indices, such as a bank's prime rate or a published market index.
The interest rate for most floating rate securities varies directly with
changes in the index rate, so that the market value of the security will
approximate its stated value at the time of each adjustment.
The net asset value of the Fund is expected to fluctuate with changes
in interest rates and bond market conditions. Under normal circumstances,
the Fund will seek to limit the duration of the dollar-weighted average
maturity of its portfolio to not less than three years or more than 15 years.
The Fund may hold individual securities of any maturity.
From time to time, during periods of other than normal
market conditions, the Fund may invest in short-term temporary investments
which may or may not be exempt from federal income tax. Although the Fund
is permitted to make taxable, temporary investments, there is no current
intention of generating income subject to federal regular income tax.
The Taxable Money Market Fund
The Taxable Money Market Fund seeks a high level of
current income consistent with the preservation of capital and maintenance
of liquidity. The Fund pursues this objective by investing principally in
a diversified portfolio of high quality, short-term money market instruments.
The Fund intends to maintain a constant net asset value of $1.00 per share,
although there is no assurance that it will be able to do so.
The Fund's investments are selected by its sub-adviser, Fiduciary
Counsel, Inc. These investments principally include:
direct obligations of the U.S. Treasury, such as U.S.
Treasury bills, notes and bonds;
notes, bonds, and discount notes of U.S. government agencies or
instrumentalities;
short-term corporate debt instruments (including commercial paper and
variable rate demand notes) which mature in 270 days or less;
domestic and foreign issues of corporate debt obligations having
floating or fixed rates of interest and having remaining maturities
of less than 13 months;
time deposits (including savings deposits and certificates of
deposit) and bankers acceptances in commercial banks or savings
associations whose accounts are insured by the FDIC, including
certificates of deposit issued by and other time deposits
in foreign branches of FDIC insured financial institutions or who
have at least $100 million in capital (collectively, "domestic bank
instruments");
other short-term investments of a type which the adviser determines
presents minimal credit risks and which are of "high quality" as
determined by a nationally recognized statistical rating
organization, or, in the case of an instrument that is not rated, of
comparable quality in the judgment of the adviser; and
repurchase agreements collateralized by eligible investments.
The Fund may invest only in securities that, at the time of purchase, have
a remaining maturity of less than 13 months and that are "eligible
securities" as defined by regulations of the Securities and Exchange
Commission. "Eligible securities" generally include securities rated in one
of the two highest categories by at least two nationally recognized
statistical rating organizations (or by one such rating agency if only one
has issued a rating) or, if unrated, are determined to be of comparable
quality by Fiduciary Counsel pursuant to policies approved by the Board of
Trustees. If the Fund purchases an eligible security and its rating is
subsequently downgraded so that the security is no longer of high quality,
the Fund will consider and take appropriate action, which may include
divesting the security. The Fund will maintain a dollar-weighted average
portfolio maturity of 90 days or less.
The Tax-Free Money Market Fund
The Tax-Free Money Market Fund seeks a high level of current income that is
exempt from federal income tax consistent with the preservation of capital and
maintenance of liquidity. The Fund pursues this objective by investing
principally in a diversified portfolio of high quality, short-term municipal
securities. The Fund intends to maintain a constant net asset value of $1.00
per share, although there is no assurance that it will be able to do so.
The Fund invests principally in high quality, short-term municipal
securities, the interest from which is exempt from federal income tax.
Municipal securities are described generally under "The Municipal Fixed
Income Fund" above, and are described in more detail below under "Certain
Investments and Investment Techniques -- Municipal Securities" and in the
Statement of Additional Information. The Fund may invest up to 25% of its
assets in securities of issuers located in the same state.
As a matter of investment policy, which may not be changed without
shareholder approval, under normal circumstances, the Fund will be invested
so that at least 80% of the income from investments will be exempt from
federal income tax or that at least 80% of its net assets are invested in
obligations, the interest from which is exempt from federal income tax.
Interest income that is exempt from federal income tax retains its federal
tax-free status when distributed to the Fund's shareholders. As described
below under "Taxes," income from certain types of municipal securities may be
subject to the federal alternative minimum tax. To the extent that the Fund
invests in these securities, a shareholder, depending on the shareholder's
own tax status, may be subject to alternative minimum tax on that part of the
Fund's distributions derived from these securities. However, the Fund will
limit its investments in these securities so that no more than 20% of its
income will be subject to the alternative minimum tax.
From time to time, during periods of other than normal market conditions,
the Fund may invest in instruments that may or may not be exempt from federal
income tax. Although the Fund is permitted to make taxable, temporary
investments, there is no current intention of generating income subject to
federal regular income tax.
The Fund may invest only in securities that, at the time of purchase, have
a remaining maturity of less than 13 months and that are "eligible
securities" as defined by regulations of the Securities and Exchange
Commission. "Eligible securities" generally include securities rated in one
of the two highest rating categories by at least two nationally recognized
statistical rating organizations (or by one such rating agency if only one
has issued a rating) or, if unrated, determined to be of comparable quality
by the Fund's sub-adviser, Fiduciary Counsel, Inc., pursuant to policies
approved by the Board of Trustees. If the Fund purchases an eligible
security and its rating is subsequently downgraded so that the security is no
longer of high quality, the Fund will consider and take appropriate action,
which may include divesting the security. The Fund will maintain a dollar-
weighted average portfolio maturity of 90 days or less.
Temporary Investments
All of the Funds may invest temporarily in cash or short-term money
market instruments during times of unusual market conditions for defensive
purposes, without limitation. These temporary investments may include
the instruments described above under "The Taxable Money Market Fund". The
Funds may also invest in these instruments temporarily to maintain liquidity in
anticipation of favorable investment opportunities. Under normal market
conditions, the Funds (other than the money market Funds) will limit their
temporary investments for liquidity purposes to no more than 20% of the value
of their total assets.
Investments in Other Mutual Funds
All of the Funds may invest to some extent in the securities of
other open-end registered investment companies ("mutual funds"). Each of
the Aggressive Growth Fund and the Asset Allocation Fund intends
to invest principally in other mutual funds, and may invest up to 25% of its
assets in any one mutual fund, and up to 100% of its assets in other
mutual funds in general. Each of the other Funds intends to invest
incidentally in other mutual funds and may not invest more than 5% of its
total assets in any one mutual fund, or more than 10% of its total assets in
mutual funds in general. The Funds, considered together, may not invest in
more than 3% of the total outstanding voting securities of any one mutual
fund. The foregoing limitations are not applicable to investment company
securities acquired as part of a merger, consolidation, reorganization or
other acquisition.
The Trust believes that investing in other mutual funds will provide
the Funds with opportunities to achieve greater diversification
of portfolio securities and investment techniques than the Funds could
achieve by investing in individual securities. The Funds will invest only in
other mutual funds that do not impose up-front sales loads or deferred sales
loads or redemption fees. However, the Fund may invest in Funds that have
12b-1 plans or shareholder services plans which permit the funds to pay
certain distribution and other expenses from fund assets. To the extent that
a Fund invests in other mutual funds, the Fund will indirectly bear its
proportionate share of any fees and expenses paid by such funds in addition
to the fees and expenses payable directly by the Fund. Therefore, to the
extent that a Fund invests in other mutual funds, the Fund will incur higher
expenses, many of which may be duplicative. (For example, each of the
Aggressive Growth Fund and the Asset Allocation Fund pays the Adviser a fee
of 0.75% of its average net assets to manage its investment portfolio of
other mutual funds, each of which pays its own investment adviser a similar
fee to manage its own portfolio securities.) In addition, to the extent
that a Fund invests in other mutual funds, the Fund's shareholders may
receive capital gains distributions to a greater extent that if the
shareholder owned the underlying mutual funds directly.
Each Fund will invest only in other mutual funds that have
an investment objective similar to the Fund's, or that otherwise is a
permitted investment under the Fund's investment policies described herein.
In addition, each of the Aggressive Growth Fund and the Asset Allocation Fund
will invest only in other funds that have fundamental investment restrictions
that are substantially no less restrictive than its own. Nevertheless, the
mutual funds purchased by the Funds likely will have certain
investment policies, and use certain investment practices that are different
from those of the Funds and not described herein. These other policies and
practices may subject the other funds' assets to varying or greater degrees of
risk. The Funds are independent from any of the other mutual funds in which
they invest and have little voice in or control over the investment
practices, policies or decisions of those funds. If a Fund disagrees with
those practices, policies or decisions, it may have no choice other than to
liquidate its investment in that fund, which can entail further losses.
However, a mutual fund is not required to redeem any of its shares owned by
another mutual fund in an amount exceeding 1% of the underlying fund's shares
during any period of less than 30 days. As a result, to the extent that a
Fund owns more than 1% of another mutual fund's shares, the Fund may not be
able to liquidate those shares in the event of adverse market conditions or
other considerations.
Also, the investment advisers of the mutual funds in which a Fund
invests may simultaneously pursue inconsistent or contradictory courses of
action. For example, one fund may be purchasing securities of the same
issuer whose securities are being sold by another fund, with the result that
the Fund would incur an indirect expense without any corresponding investment
or economic benefit.
When a Fund invests in another mutual fund, the Fund will have the right
to vote on matters submitted to a vote of the other fund's shareholders.
As required by the Investment Company Act of 1940, on all matters submitted to
a vote of the other fund's shareholders, the Fund will vote all of its shares
in that fund in the same proportion as the vote of all other shareholders of
that fund.
Fundamental Investment Limitations
The following investment limitations cannot be changed without
shareholder approval. These limitations are considered at the time of
purchase; a sale of securities is not required in the event of a subsequent
change in circumstances.
None of the Funds will:
borrow money or pledge securities except that, for temporary or emergency
purposes, each Fund may borrow up to one-third of the value of total assets
(including the amount borrowed) and pledge up to 15% of the value of those
assets to secure such borrowings, and except that the Starwood Strategic
Fund may borrow money and pledge securities for the purpose of investment
subject to the foregoing asset value limitations;
lend any of its assets, except portfolio securities up to one-third of the
value of its total assets. This shall not prevent a Fund from purchasing
or holding U.S. government obligations, money market instruments, variable
rate demand notes, bonds, debentures, notes, certificates of indebtedness,
or other debt securities, entering into repurchase agreements, or
engaging in other transactions where permitted by the Fund's investment
objective, policies and limitations.
with respect 75% of the value of its total assets (100% in the case of the
Taxable Money Market Fund), invest more than 5% of the value of its total
assets in the securities (other than securities issued or guaranteed by the
government of the United States or its agencies or instrumentalities,
repurchase agreements collateralized by U.S. government securities and
securities of other investment companies) of any one issuer or acquire
more than 10% of the outstanding voting securities of any one issuer;
invest 25% or more of the value of its total assets in any one industry or
in government securities of any one foreign country, except that (i) each
Fund may invest without limitation in securities issued or guaranteed by
the U.S. government, its agencies or instrumentalities, (ii) each of the
Aggressive Growth Fund and the Asset Allocation Fund may invest without
limitation in other investment companies and (iii) each of the Taxable
Money Market Fund and the Tax-Free Money Market Fund may invest without
limitation in domestic bank instruments.
write or purchase options, except that each Fund (other the Taxable Money
Market Fund and the Tax-Free Money Market Fund) may write covered call
options and secured put options on up to 25% of its net assets and may
purchase put and call options, provided that no more than 5% of the fair
market value of its net assets may be invested in premiums on such options;
invest in more than 3% of the total outstanding voting securities of any one
investment company or invest more than 5% of its total assets in any one
investment company, or invest more than 10% of its total assets in
investment companies in general, except that each of the Aggressive Growth
Fund and the Asset Allocation Fund may invest of up to 25% of its total
assets in any one investment company and up to 100% of their total assets
in investment companies in general, subject to the other limitations
described herein. The foregoing limitations are not applicable to
investment company securities acquired as part of a merger, consolidation,
reorganization or other acquisition.
CERTAIN INVESTMENTS AND INVESTMENT TECHNIQUES
This section describes certain types of investments, investment
techniques and investment policies and limitations of the Funds. For further
information, see the Statement of Additional Information.
Corporate Equity Securities
The Starwood Strategic Fund, the Aggressive Growth Fund, the Fiduciary
Value Fund and the Asset Allocation Fund may invest in equity securities,
including common stocks, preferred stocks, convertible securities, warrants
and rights issued by corporations in any industry (industrial, financial or
utility) which may be denominated in U.S. dollars or in foreign currencies.
Equity securities fluctuate in value, often based on factors unrelated to the
performance of the issuer of the securities and fluctuations can be
pronounced. Small capitalization issues and emerging growth company
securities, in particular, may be subject to wider price fluctuations than
the stock market as measured by popular indices.
Preferred Stocks. Preferred stock, unlike common stock, offers a
stated dividend rate payable from the issuer's earnings. Preferred stock
dividends may be cumulative or non-cumulative, participating, or auction
rate. If interest rates rise, the fixed dividend on preferred stocks may be
less attractive, causing the price of preferred stocks to decline. Preferred
stock may have mandatory sinking fund provisions, as well as call/redemption
provisions prior to maturity, a negative feature when interest rates decline.
Convertible Securities. A convertible security is a bond, debenture,
note, preferred stock or other security that may be converted into or exchanged
for a prescribed amount of common stock of the same or a different issuer
within a particular period of time at a specified price or formula. A
convertible security entitles the holder to receive interest generally paid
or accrued on debt or the dividend paid on preferred stock until the
convertible security matures or is redeemed, converted or exchanged.
Convertible securities have several unique investment characteristics, such
as (a) higher yields than common stocks, but lower yields than comparable
nonconvertible securities, (b) a lesser degree of fluctuation in value than
the underlying stock since they have fixed income characteristics, and (c)
the potential for capital appreciation if the market price of the underlying
common stock increases. A convertible security might be subject to
redemption at the option of the issuer at a price established in the
convertible security's governing instrument. If a convertible security held
by the Fund is called for redemption, the Fund may be required to permit the
issuer to redeem the security, convert it into the underlying common stock or
sell it to a third party.
Warrants and Rights. Each Fund named above may invest up to 5% of its
total assets in warrants and rights, including but not limited to warrants or
rights (i) acquired as part of a unit or attached to other securities
purchased by the Fund, or (ii) acquired as part of a distribution from the
issuer.
Fixed Rate Corporate Debt Obligations
All of the Funds may invest to varying extents in fixed rate corporate
debt obligations. Also, all of the Funds may invest in short-term fixed rate
corporate debt obligations that qualify as money market instruments. Fixed
rate securities tend to exhibit more price volatility during times of rising
or falling interest rates than securities with floating rates of interest.
This is because floating rate securities, as described below, behave like
short-term instruments in that the rate of interest they pay is subject to
periodic adjustments based on a designated interest rate index. Fixed rate
securities pay a fixed rate of interest and are more sensitive to fluctuating
interest rates. In periods of rising interest rates the value of a fixed rate
security is likely to fall. Fixed rate securities with short-term
characteristics are not subject to the same price volatility as fixed rate
securities without such characteristics. Therefore, they behave more like
floating rate securities with respect to price volatility.
Many corporate debt obligations permit the issuers to call the security
and thereby redeem their obligations earlier than the stated maturity dates.
Issuers are more likely to call bonds during periods of declining interest
rates. In these cases, if a Fund owns a bond which is called, the Fund will
receive its return of principal earlier than expected and would likely be
required to reinvest the proceeds at lower interest rates, thus reducing
income to the Fund.
Certain fixed-income obligations may involve equity characteristics.
The Asset Allocation Fund and the Taxable Fixed Income Fund may,
for example, invest in unit offerings that combine fixed-income securities
and common stock equivalents such as warrants, rights and options. It
is anticipated that the majority of the value attributable to the unit will
relate to its fixed-income component. These Funds have no current intention
of converting any convertible securities it may own into equity securities
or holding them as an equity investment upon conversion.
Other Corporate Debt Obligations
The Funds may also invest to varying extents in other corporate
debt obligations, including those described below. Also, all of the Funds may
invest in short-term corporate debt obligations that qualify as money
market instruments.
Floating Rate Obligations. Floating rate securities are generally offered
at an initial interest rate which is at or above prevailing market rates. The
interest rate paid on these securities is then reset periodically (commonly
every 90 days) to an increment over some predetermined interest rate index.
Commonly utilized indices include the three-month Treasury bill rate, the
180-day Treasury bill rate, the one-month or three-month London Interbank
Offered Rate (LIBOR), the prime rate of a bank, the commercial paper rates, or
the longer-term rates on U.S. Treasury securities.
Variable Rate Demand Notes. Variable rate demand notes are long-term
corporate debt instruments that have variable or floating interest rates and
provide the Fund with the right to tender the security for repurchase at its
stated principal amount plus accrued interest. Such securities typically
bear interest at a rate that is intended to cause the securities to trade at
par. The interest rate may float or be adjusted at regular intervals
(ranging from daily to annually), and is normally based on an interest index
or a stated percentage of a prime rate or another published rate. Many
variable rate demand notes allow the Fund to demand the repurchase of the
security on not more than seven days prior notice. Other notes only permit
the Fund to tender the security at the time of each interest rate adjustment
or at other fixed intervals.
Zero Coupon Securities. Corporate zero coupon securities are: (i) notes
or debentures which do not pay current interest and are issued at substantial
discounts from par value, or (ii) notes or debentures that pay no current
interest until a stated date one or more years into the future, after which
the issuer is obligated to pay interest until maturity, usually at a higher
rate than if interest were payable from the date of issuance.
Corporate Debt Ratings
The Funds will not invest in corporate debt obligations having a rating of
less than Baa by Moody's or BBB or better by Standard & Poor's, Fitch, Duff or
Bankwatch. (The money market Funds have higher rating requirements,
as described above.) In certain cases a Fund's investment adviser may
choose bonds which are unrated if it determines that such bonds are
of comparable quality or have similar characteristics to investment grade bonds.
Bonds rated Baa or BBB may have speculative characteristics. Changes
in economic conditions or other circumstances are more likely to lead
to weakened capacity to make principal and interest payments than higher
rated bonds. Downgraded securities will be evaluated on a case-by-case basis
by the Fund's sub-adviser. The sub-adviser will determine whether or not the
security continues to be an acceptable investment. If not, the security will
be sold. A description of the rating categories is contained in the Appendix
to the Statement of Additional Information.
Asset-Backed Securities
The money market Funds may invest in mortgage-related asset-backed
securities that are considered U.S. government securities. The other Funds
may invest in these and, to varying extents, in other asset-backed
securities. Asset-backed securities are created by the grouping of certain
governmental, government related and private loans, receivables and other
lender assets into pools. Interests in these pools are sold as individual
securities. Payments from the asset pools may be divided into several
different tranches of debt securities, with some tranches entitled to receive
regular installments of principal and interest, other tranches entitled to
receive regular installments of interest, with principal payable at maturity
or upon specified call dates, and other tranches only entitled to receive
payments of principal and accrued interest at maturity or upon specified call
dates. Different tranches of securities will bear different interest rates,
which may be fixed or floating.
Because the loans held in the asset pool often may be prepaid without
penalty or premium, asset-backed securities can be subject to higher
prepayment risks than most other types of debt instruments. Prepayments may
result in a capital loss to the Fund to the extent that the prepaid mortgage
securities were purchased at a market premium over their stated amount.
Conversely, the prepayment of mortgage securities purchased at a market
discount from their stated principal amount will accelerate the recognition of
interest income by the Fund, which would be taxed as ordinary income when
distributed to the shareholders.
The credit characteristics of asset-backed securities also differ in a
number of respects from those of traditional debt securities. The credit
quality of most asset-backed securities depends primarily upon the credit
quality of the assets underlying such securities, how well the entity issuing
the securities is insulated from the credit risk of the originator or any
other affiliated entities, and the amount and quality of any credit
enhancement to such securities.
Foreign Securities
Each Fund may invest in foreign securities, including foreign securities
not publicly traded in the United States. The Starwood Strategic Fund may
invest up to 35% of its total assets in foreign securities. Each of the
other Funds may invest up to 25% of its total assets in foreign securities.
The percentage of a Fund's assets that will be allocated to foreign
securities will vary depending on the relative yields of foreign and U.S.
securities, the economies of foreign countries, the condition of such
countries' financial markets, the interest rate climate of such countries and
the relationship of such countries' currency to the U.S. dollar. These
factors are judged on the basis of fundamental economic criteria (e.g.,
relative inflation levels and trends, growth rate forecasts, balance of
payments status, and economic policies) as well as technical and political
data.
Investments in foreign securities involve special risks that differ from
those associated with investments in domestic securities. The risks
associated with investments in foreign securities apply to securities issued
by foreign corporations and sovereign governments. These risks relate to
political and economic developments abroad, as well as those that result from
the differences between the regulation of domestic securities and issuers
and foreign securities and issuers. These risks may include, but are not
limited to, expropriation and nationalization, confiscatory taxation, reduced
levels of government regulation of securities markets, currency fluctuations
and restrictions on, and costs associated with, the exchange of currencies,
withholding taxes on interest, limitations on the use or transfer of assets,
political or social instability and adverse diplomatic developments. It may
also be more difficult to enforce contractual obligations or obtain court
judgments abroad than would be the case in the United States because of
differences in the legal systems. If the issuer of the debt or the
governmental authorities that control the repayment of the debt may be unable
or unwilling to repay principal or interest when due in accordance with the
terms of such debt, the Fund may have limited legal recourse in the event of
a default. Moreover, individual foreign economies may differ favorably or
unfavorably from the domestic economy in such respects as growth of gross
national product, the rate of inflation, capital reinvestment, resource self-
sufficiency and balance of payments position.
Additional differences exist between investing in foreign
and domestic securities. Examples of such differences include: less
publicly available information about foreign issuers; credit risks associated
with certain foreign governments; the lack of uniform financial accounting
standards applicable to foreign issuers; less readily available market
quotations on foreign issues; the likelihood that securities of foreign
issuers may be less liquid or more volatile; generally higher foreign
brokerage commissions; and unreliable mail service between countries.
To the extent that debt securities purchased by a Fund are denominated
in currencies other than the U.S. dollar, changes in foreign currency
exchange rates will affect the Fund's net asset value; the value of interest
earned; gains and losses realized on the sale of securities; and net
investment income and capital gain, if any, to be distributed to shareholders
by the Fund. If the value of a foreign currency rises against the U.S.
dollar, the value of the Fund's assets denominated in that currency will
increase; correspondingly, if the value of a foreign currency declines
against the U.S. dollar, the value of the Fund's assets denominated in the
currency will decrease.
Foreign Currency Transactions. The Funds may enter into foreign
currency transactions to obtain the necessary currencies to settle securities
transactions. Currency transactions may be conducted either on a spot or cash
basis at prevailing rates or through forward foreign currency exchange
contracts.
The Funds may also enter into foreign currency transactions to protect
Fund assets against adverse changes in foreign currency exchange rates or
exchange control regulations. Such changes could unfavorably affect the value
of Fund assets which are denominated in foreign currencies, such as foreign
securities or funds deposited in foreign banks, as measured in U.S. dollars.
Although foreign currency transactions may be used by the Fund to protect
against a decline in the value of one or more currencies, such efforts may
also limit any potential gain that might result from a relative increase in
the value of such currencies and might, in certain cases, result in losses to
the Fund.
Municipal Securities
The Municipal Fixed Income Fund may invest in municipal securities.
The Tax-Free Money Market Fund may invest in short-term
municipal securities that qualify as money market instruments.
Municipal securities are generally issued to finance public works, such
as airports, bridges, highways, housing, hospitals, mass transportation
projects, schools, streets, and water and sewer works. They are also issued to
repay outstanding obligations, to raise funds for general operating expenses,
and to make loans to other public institutions and facilities.
The two principal classifications of municipal securities are "general
obligation" and "revenue" bonds. General obligation bonds are secured by the
issuer's pledge of its full faith and credit and taxing power for the payment
of principal and interest. Interest on and principal of revenue bonds,
however, are payable only from the revenue generated by the facility financed
by the bond or other specified sources of revenue. Revenue bonds do not
represent a pledge of credit or create any debt of or charge against the
general revenues of a municipality or public authority.
Municipal securities may carry fixed or floating rates of interest.
Most municipal securities pay interest in arrears on a semiannual or more
frequent basis. However, certain securities, typically known as
capital appreciation bonds or zero coupon bonds, do not provide for any
interest payments prior to maturity. Such securities are normally sold at a
discount from their stated value, or provide for periodic increases in their
stated value to reflect a compounded interest rate. The market value of these
securities is also more sensitive to changes in market interest rates than
securities that provide for current interest payments.
Participation Interests. The Funds may purchase participation interests
from financial institutions such as commercial banks, savings and loan
associations and insurance companies. These participation interests give the
Fund an undivided interest in one or more underlying municipal securities.
The financial institutions from which the Fund purchases participation
interests frequently provide or obtain irrevocable letters of credit or
guarantees to attempt to assure that the participation interests are of high
quality. These typically give the Fund the right to demand payment of the
principal amounts of the participation interests plus accrued interest on
short notice (usually within seven days).
Municipal Leases. Municipal leases are obligations issued by state and
local governments or authorities to finance the acquisition of equipment and
facilities. They may take the form of a lease, an installment purchase
contract, a conditional sales contract or a participation certificate of any
of the above.
Industrial Development Bonds. Industrial development bonds are issued by
or on behalf of public authorities to provide financing aid to acquire sites
or construct and equip facilities for privately or publicly owned
corporations. The availability of this financing encourages these
corporations to locate within the sponsoring communities and thereby
increases local employment. Industrial development bonds do not represent a
pledge of credit or create any debt of municipality or a public authority,
and no taxes may be levied for payment of principal or interest on these
bonds. The principal and interest is payable solely out of monies generated
by the entities using or purchasing the sites or facilities. These bonds
will be considered municipal securities if the interest paid on them, in the
opinion of bond counsel, is exempt from federal regular income tax.
Municipal Notes. Municipal securities in the form of notes generally are
used to provide for short-term capital needs, in anticipation of an issuer's
receipt of other revenues or financing, and typically have maturities of up
to three years. Such instruments may include Tax Anticipation Notes, Revenue
Anticipation Notes, Bond Anticipation Notes, Tax and Revenue Anticipation
Notes and Construction Loan Notes. The obligations of an issuer of municipal
notes are generally secured by the anticipated revenues from taxes, grants or
bond financing. An investment in such instruments, however, presents a risk
that the anticipated revenues will not be received or that such revenues will
be insufficient to satisfy the issuer's payment obligations under the notes
or that refinancing will be otherwise unavailable.
Tax-Exempt Commercial Paper. Issues of commercial paper typically
represent short-term, unsecured, negotiable promissory notes. These
obligations are issued by state and local governments and their agencies to
finance working capital needs of municipalities or to provide interim
construction financing and are paid from general revenues of municipalities
or are refinanced with long-term debt. In most cases, tax-exempt commercial
paper is backed by letters of credit, lending agreements, note repurchase
agreements or other credit facility agreements offered by banks or other
institutions.
Zero Coupon and Capital Appreciation Bonds. Zero coupon
and capital appreciation bonds are debt securities issued or sold at a discount
from their face value and which do not entitle the holder to any
periodic payment of interest prior to maturity or a specified redemption date
(or cash payment date). The amount of the discount varies depending on the
time remaining until maturity or cash payment date, prevailing interest rates,
the liquidity of the security and the perceived credit quality of the issuer.
These securities also may take the form of debt securities that have been
stripped of their unmatured interest coupons, the coupons themselves or
receipts or certificates representing interest in such stripped
debt obligations or coupons. Discount with respect to stripped tax-exempt
securities or their coupons may be taxable. The market prices of
capital appreciation bonds generally are more volatile than the market prices
of interest bearing securities and are likely to respond to a greater degree
to changes in interest rates than interest bearing securities having
similar maturities and credit quality.
U.S. Government Securities
All of the Funds may invest in U.S. government securities. These
securities are either issued or guaranteed by the U.S. government, its
agencies or instrumentalities. The government securities in which the Fund
may invest are backed in a variety of ways by the U.S. government or its
agencies or instrumentalities. Some of these securities, such
as Government National Mortgage Association ("GNMA") mortgage-backed
securities, are backed by the full faith and credit of the U.S. government.
Other securities, such as obligations of the Federal National Mortgage
Association ("FNMA") or Federal Home Loan Mortgage Corporation ("FHLMC"), are
backed by the credit of the agency or instrumentality issuing the obligations
but not the full faith and credit of the U.S. government. No assurances can be
given that the U.S. government will provide financial support to these other
agencies or instrumentalities, because it is not obligated to do so.
Bank Instruments
All of the Funds may invest in bank instruments of the types described
under "The Taxable Money Market Fund". These instruments may include
Eurodollar Certificates of Deposit ("ECDs"), Yankee Certificates of Deposit
("Yankee CDs") and Eurodollar Time Deposits ("ETDs"). The banks issuing these
instruments are not necessarily subject to the same regulatory requirements
that apply to domestic banks, such as reserve requirements, loan requirements,
loan limitations, examinations, accounting, auditing, and record keeping and
the public availability of information.
Credit Facilities
All of the Funds may invest in demand notes and revolving credit
facilities that qualify as money market instruments. Demand notes
are borrowing arrangements between a corporation and an institutional
lender (such as the Fund) payable upon demand by either party. The notice
period for demand typically ranges from one to seven days, and the party may
demand full or partial payment. Revolving credit facilities are
borrowing arrangements in which the lender agrees to make loans up to a maximum
amount upon demand by the borrower during a specified term. As the borrower
repays the loan, an amount equal to the repayment may be borrowed again during
the term of the facility. The Fund generally acquires a participation
interest in a revolving credit facility from a bank or other financial
institution. The terms of the participation require the Fund to make
a pro rata share of all loans extended to the borrower and entitles the Fund to
a pro rata share of all payments made by the borrower. Demand notes and
revolving facilities usually provide for floating or variable rates of
interest. These instruments are subject to the considerations described
above with regard to foreign securities.
Repurchase Agreements
All of the Funds may invest in repurchase agreements related to
eligible securities. Repurchase agreements are arrangements in
which banks, broker/dealers, and other recognized financial institutions
sell U.S. government securities or other securities to the Fund and agree at
the time of sale to repurchase them at a mutually agreed upon time and price.
Under the Investment Company Act of 1940, a repurchase agreement is deemed to
be a loan collateralized by the underlying securities. To the extent that the
original seller does not repurchase the securities from the Fund, the Fund
could receive less than the repurchase price on any sale of such securities.
Reverse Repurchase Agreements
The Funds may also enter into reverse repurchase agreements. A
reverse repurchase transaction is similar to borrowing cash. In a reverse
repurchase agreement a Fund transfers possession of a portfolio instrument to
another person, such as a financial institution, broker, or dealer, in return
for a percentage of the instrument's market value in cash, and agrees that on a
stipulated date in the future, the Fund will repurchase the portfolio
instrument by remitting the original consideration plus interest at an agreed
upon rate. The use of reverse repurchase agreements may enable the Fund to
avoid selling portfolio instruments at a time when a sale may be deemed to
be disadvantageous, but the ability to enter into reverse
repurchase agreements does not ensure that the Fund will be able to avoid
selling portfolio instruments at a disadvantageous time.
Lending of Portfolio Securities
In order to generate additional income, each Fund may
lend portfolio securities on a short-term or a long-term basis up to
one-third of the value of its total assets to broker/dealers, banks, or
other institutional borrowers of securities. A Fund will only enter into
loan arrangements with broker/dealers, banks, or other institutions which its
investment adviser has determined are creditworthy under guidelines
established by the Board of Trustees. In these loan arrangements, the Fund
will receive collateral in the form of cash or U.S. government securities
equal to at least 100% of the value of the securities loaned. The Fund
continues to be entitled to payments in amounts equal to the interest,
dividends and other distributions on the loaned security and receives
interest on the amount of the loan.
Selling Securities Short
The Starwood Strategic Fund may sell securities short. The Fund will
effect short sales when it is believed that the price of a particular security
will decline. A short sale involves the sale of a security which the Fund
does not own in the hope of purchasing the same security at a later date at a
lower price. To make delivery to the buyer, the Fund must borrow the
security, and the Fund is obligated to return the security to the lender,
which is accomplished by a later purchase of the security by the Fund.
When the Fund makes a short sale, it must deposit with the lender
or maintain in a segregated account cash or government securities
to collateralize its obligation to replace the borrowed securities which have
been sold. The Fund may sell securities short only to the extent that
would cause the amounts on deposit or segregated to equal 25% of the value of
its total assets.
The Fund will incur a loss as a result of a short sale if the price of
the security increases between the date of the short sale and the date on which
the Fund purchases the security to replace the borrowed security. The Fund
will realize a gain if the security declines in price between those dates. The
amount of any gain will be decreased and the amount of any loss increased by
any premium or interest the Fund may be required to pay in connection with
a short sale.
When-Issued and Delayed Delivery Transactions
The Funds may purchase securities on a when-issued or
delayed delivery basis. These transactions are arrangements in which a
Fund purchases securities with payment and delivery scheduled for a future
time. Prior to such delivery, no income on the securities accrues to the
Fund. In when-issued and delayed delivery transactions, the Fund relies on
the seller to complete the transaction. The seller's failure to complete the
transaction may cause the Fund to miss a price or yield considered to be
advantageous.
Demand Features
The Funds that invest in debt securities may acquire securities that
are subject to puts and standby commitments ("demand features") to purchase
the securities at their principal amount (usually with accrued interest) within
a fixed period following a demand by the Fund. The demand feature may be
issued by the issuer of the underlying securities, a dealer in the securities
or by another third party, and may not be transferred separately from the
underlying security. The Fund uses these arrangements to provide the Fund
with liquidity and not to protect against changes in the market value of the
underlying securities. The bankruptcy, receivership or default by the issuer
of the demand feature, or a default on the underlying security or other event
that terminates the demand feature before its exercise, will adversely affect
the liquidity of the underlying security. Demand features that are
exercisable even after a payment default on the underlying security are
treated as a form of credit enhancement.
Options Transactions
Each of the Funds (except the Taxable Money Market Fund and the Tax-Free
Money Market Fund) may attempt to hedge all or a portion of its portfolio by
buying put options on portfolio securities. These Funds also may also write
covered call options on portfolio securities to attempt to increase current
income. Each Fund may write covered call options and secured put options on up
to 25% of its net assets and may purchase put and call options provided that no
more than 5% of the fair market value of its net assets may be invested in
premiums on such options.
A call option gives the purchaser the right to buy, and the writer
the obligation to sell, the underlying currency, security or other asset at the
exercise price during the option period. A put option gives the purchaser the
right to sell, and the writer the obligation to buy, the underlying currency,
security or other asset at the exercise price during the option period. The
writer of a covered call owns assets that are acceptable for escrow and the
writer of a secured put invests an amount not less than the exercise price in
eligible assets to the extent that it is obligated as a writer. If a call
written by a Fund is exercised, the Fund forgoes any possible profit from an
increase in the market price of the underlying asset over the exercise price
plus the premium received. In writing puts, there is a risk that the Fund may
be required to take delivery of the underlying asset at a disadvantageous
price.
Over-the-counter options ("OTC options") differ from exchange traded options
in several respects. They are transacted directly with dealers and not with a
clearing corporation, and there is a risk of nonperformance by the dealer as a
result of the insolvency of such dealer or otherwise, in which event the fund
may experience material losses. However, in writing options the premium is
paid in advance by the dealer, OTC options, which may not be continuously
liquid, are available for a greater variety of assets, and a wider range of
expiration dates and exercise prices, than are exchange traded options. The
Fund intends to treat OTC options as illiquid securities.
Restricted and Illiquid Securities
The Funds may invest in restricted securities. Restricted securities are
any securities in which a Fund may otherwise invest pursuant to its
investment objective and policies, but which are subject to restriction
on resale under federal securities law. Each Fund will limit investments
in illiquid securities, including certain restricted securities not determined
by the Board of Trustees to be liquid, non-negotiable time deposits,
and repurchase agreements providing for settlement in more than seven days
after notice, to 15% of the value of its net assets (10% in the case of the
money market Funds).
Portfolio Turnover
Each Fund may trade or dispose of portfolio securities
as considered necessary to meet its investment objective. Each of the
Funds intends to make investments based on long-term investment considerations
as opposed to short-term trading. However, each Fund may take advantage
of opportunities for short-term profits as they arise. Higher portfolio
turnover results in increased Fund expenses, including brokerage commissions,
dealer mark-ups and other transaction costs on the sale of securities and on
the reinvestment in other securities, and results in the acceleration
of realization of capital gains or losses for tax purposes. The Funds cannot
accurately predict their portfolio turnover rates, but it is anticipated that
each Fund's annual turnover rate generally will not exceed 100% (excluding the
money market Funds, which must invest in short-term instruments). Each
Fund intends to comply with the short-term trading restrictions of Subchapter
M of the Internal Revenue Code of 1986, as amended, which could inhibit a
rapid change in a Fund's investments.
NET ASSET VALUE
Net asset value per share (the price at which shares are purchased
and redeemed) is determined as of the close of regular trading on the New
York Stock Exchange (currently 4:00 p.m., Eastern time), on each business day
the Exchange is open for business. Each Fund's net asset value per share
is determined by dividing the sum of the market value of all securities and all
other assets of the applicable Fund, less liabilities of the Fund, by the
number of the Fund's shares outstanding.
The net asset value per share will fluctuate for each Fund other than
the Taxable Money Market Fund and the Tax-Free Money Market Fund. The
portfolio securities of the two money market Funds are valued utilizing the
amortized cost method of valuation, which normally approximates market value,
and which is intended to result in a constant net asset value of $1.00 per
share. Although every effort is made to maintain the net asset value of the
money market Funds at $1.00 per share, there can be no assurance that this
constant net asset value will be maintained at all times. For example, in
the event of rapid and sharp increases in current interest rates, a national
credit crisis, or a default by one or more of the issuers of a money market
Fund's portfolio securities, then it is possible that a money market Fund's
net asset value could decline below $1.00 per share.
HOW TO BUY SHARES
Shares of the Funds are sold each day the New York Stock Exchange is open
at the applicable Fund's net asset value per share next calculated after
receipt of the purchase order in proper form. The Trust reserves the right
to reject any purchase request.
Minimum Investment
The minimum initial investment in each Fund is $l,000, except an IRA for
which the minimum initial investment is $500. Former shareholders of
the Unified family of funds, or the Quest funds which acquired the Unified
family of funds, may open an account with less than the required minimum.
However, they are subject to a one-time $4.50 administrative charge to
establish the account. Subsequent investments may be made in amounts of at
least $100, except for an IRA, which must be in amounts of at least $50.
Minimum investments for certain other types of retirement accounts may
be different. See "Shareholder Services."
Opening An Account
An account may be opened by mail or bank wire, as follows:
By Mail. To open a new account by mail:
Complete and sign the account application. (Be sure to specify the
name of the Fund(s) in which an investment is made.)
Enclose a check payable to each Fund specified in the application.
Mail the application and the check to the Transfer Agent at the
following address: The Vintage Funds, c/o Unified Advisers, Inc.,
P.O. Box 6110, Indianapolis, Indiana 46206-6110.
By Wire. To open a new account (or to open an additional account in
a different Fund) by wire, call the Transfer Agent at 1-800-408-4682.
A representative will assist you to obtain an account application by telecopy
(or mail), which must be completed, signed and telecopied (or mailed) to
the Transfer Agent before payment by wire may be made. Then,
request your financial institution to wire immediately available funds to:
Star Bank, N.A.
ABA # 04-20000-13
Attention: Name of Fund (see below)
Number of Fund (see below)
Credit Account # ________ (see below)
The applicable Fund and account numbers are as follows:
Fund Name Fund Number Account Number
Starwood Strategic Fund 20 483616744
Aggressive Growth Fund 21 483616751
Fiduciary Value Fund 23 483616769
Asset Allocation Fund 24 483616777
Taxable Fixed Income Fund 25 483616785
Municipal Fixed Income Fund 26 483616793
Taxable Money Market Fund 30 483616819
Tax-Free Money Market Fund 31 483616827
The order is considered received when Star Bank, N.A., the Trust's
custodian, receives payment by wire. However, the completed account
application must be mailed to the Transfer Agent on the same day the wire
payment is made. See "Opening an Account -- By Mail" above. The Trust will
not permit redemptions until the Transfer Agent receives the application in
proper form. Financial institutions may charge a fee for wire transfers.
Subsequent Investments
Once an account is open, additional purchases of Fund shares may be made at
any time in minimum amounts of $100, except for an IRA, which must be in
amounts of at least $50. Additional purchases may be made:
By sending a check, made payable to the applicable Fund, to The
Vintage Funds, [Name of Fund], P.O. Box 640689, Cincinnati, Ohio
45264-0689. The Trust will charge a $15 fee against a shareholder's
account for any check returned for insufficient funds. The
shareholder also will be responsible for any losses suffered by the
Trust as a result.
By wire to the applicable Fund account as described above under
"Opening an Account -- By Wire". Shareholders should call the
Transfer Agent at 1-800-408-4682 before wiring funds.
By electronic funds transfer from a financial institution through the
Automated Clearing House ("ACH"), as described below.
By telephone order, as described below.
By Automated Clearing House (ACH). Once an account is open, shares may be
purchased or redeemed through ACH in minimum amounts of $100. ACH is the
electronic transfer of funds directly between an account with a financial
institution and the applicable Fund. In order to use the ACH service, the ACH
Authorization section of the account application must be completed. For
existing accounts, an ACH Authorization Form may be obtained by calling the
Transfer Agent at 1-800-408-4682. Allow at least two weeks for preparation
before using ACH. To order a purchase or redemption by ACH, call the Transfer
Agent at 1-800-408-4682. There are no charges for ACH transactions imposed by
the Fund or the Transfer Agent. ACH transactions are completed approximately
two business days following the placement of the transfer order.
ACH may be used to make direct deposits into a Fund account of part or
all of recurring payments made to a shareholder by his or her employer
(corporate, federal, military, or other) or by the Social
Security Administration.
By Telephone Order. Once an account is open, shares may be purchased at
a certain day's price by calling the Transfer Agent at 1-800-408-4682, before
the close of regular trading on the New York Stock Exchange (currently 4:00
p.m., Eastern time) on that day. Orders must be for $1,000 or more and may not
be for an amount greater that twice the value of the existing account at the
time the order is placed. Payment by check or wire must be
received within three business days after the order is placed, or the order
will be cancelled and the shareholder will be responsible for any resulting
loss to the Fund. Payment of telephone orders by check may not be mailed to
the Transfer Agent's P.O. Box address herein, but must be mailed to
the Transfer Agent at Unified Advisers, Inc., 429 North Pennsylvania
Street, Indianapolis, Indiana 46204. Payment must be accompanied by the order
number given at the time the order is placed. A written confirmation with
complete purchase information will be sent to the shareholder of record shortly
after payment is received.
DIVIDENDS AND DISTRIBUTIONS
The Starwood Strategic Fund, the Aggressive Growth Fund,
the Asset Allocation Fund and the Fiduciary Value Fund declare and pay
dividends on a quarterly basis.
The Taxable Fixed Income Fund and the Municipal Fixed Income Fund declare
and pay dividends on a monthly basis.
The Taxable Money Market Fund and The Tax-Free Money Market Fund declare
and pay dividends on a daily basis.
The Funds make distributions of any net realized long-term capital gains
at least once every twelve months. Dividends and distributions
are automatically reinvested in additional shares on payment dates at
the ex-dividend net asset value, unless cash payments are requested on the
account application or in writing to the Transfer Agent. If cash payments are
requested with respect to either of the money market Funds, daily dividends will
accumulate and be paid at the end of each month, as requested in writing.
All shareholders on the record date are entitled to the dividend.
If an order for shares is received on a business day prior to receipt of
wire payment, shares purchased by wire begin earning dividends on the
business day wire payment is received by the Transfer Agent. If the order
for shares and payment by wire are received on the same day, shares begin
earning dividends on the next business day. Shares purchased by check begin
earning dividends on the business day after the check is converted into
federal funds. Shares earn dividends through the business day that proper
written redemption instructions are received by the Transfer Agent. Certain
transactions in the money market Funds are treated differently, as described
below.
Timing of Certain Money Market Fund Transactions
The money market Funds have two transaction times each day, at 12:00 noon
(Eastern time) and the close of regular trading on the New York Stock Exchange
(currently 4:00 p.m., Eastern time). New investments represented by federal
funds or bank wires received by the Custodian prior to 12:00 noon are paid the
full dividend for that day; such investments received after 12:00 noon do not
begin to receive daily dividends until the next day. Redemption orders
received prior to 12:00 noon are effected at 12:00 noon, and the redemption
proceeds are normally available that day. Redemption orders received after
12:00 noon are effected at the close of regular trading on the New York Stock
Exchange, and the redemption proceeds are normally remitted the next business
day. Redemption orders received at any time during a day do not earn that
day's dividend.
EXCHANGE PRIVILEGE
Shares of any Fund may be exchanged for shares of any other Fund at
net asset value, without any additional charges. The shares exchanges must
have been registered in the shareholder's name for at least five days prior to
the exchange request, and must have a net asset value which at least meets
the minimum investment required for the Fund into which the exchange is
being made.
Exchange requests may be made by telephone or in writing. Exchanges will
be effected at the respective net asset values per share of the Funds
involved, next determined after the exchange request is received in proper
form. If an exchange request is received by the Transfer Agent in proper
form on a Trust business day before the close of regular trading on the New
York Stock Exchange (currently 4:00 p.m., Eastern time), the exchange will be
effected that day. An exchange of shares purchased by check will be delayed
until the check has been converted into federal funds and redemption proceeds
are available for purchase of the newly acquired shares, which could take up
to 15 days.
By Telephone. Exchange requests may be made by telephone by calling
the Transfer Agent at 1-800-408-4682. Exchange requests made by telephone
will be effected only if (1) the shareholder's existing account
has authorized telephone redemption privileges (see "How to Redeem Shares --
By Telephone" below) and (2) no account information will change as a result
of the exchange. The Transfer Agent requires personal identification
before accepting any exchange request by telephone, and telephone
exchange requests may be recorded.
By Mail or Telecopy. Exchange requests made in writing should be sent to
The Vintage Funds c/o Unified Advisers, Inc., P.O. Box
6110, Indianapolis, Indiana 46206-6110. A written request to exchange shares
having a net asset value of less than $5,000 may be sent by telecopy, by
first calling the Transfer Agent at 1-800-408-4682. Regardless of whether
the request is sent by mail or by telecopy, the request must be signed exactly
as the shareholder's name appears on the Trust's account records. If the
shares to be exchanged have a net asset value of $5,000 or more, the request
must be mailed, and all signatures must be properly guaranteed as described
below under "How to Redeem Shares -- Signatures." If shares are to
be exchanged into a new account registered in a different name, or if
any account information will change as a result of the exchange, a
separate account application must be received by the Transfer Agent by mail
before the exchange may be effected.
The exchange privilege is designed to accommodate changes
in shareholder investment objectives. It is not designed for frequent
trading in response to short-term market fluctuations. Accordingly, the Trust
reserves the right to limit a shareholder's use of the exchange privilege.
The exchange privilege may be modified or terminated at any time.
Any exchange involves a redemption of shares of one Fund and an investment
of the redemption proceeds in shares of another Fund. Before requesting an
exchange, a shareholder should read carefully the parts of this Prospectus
describing the Fund into which the exchange will be made. Also, an exchange is
treated for federal income tax purposes as a sale of the shares given in
exchange, and the shareholder may realize a taxable gain or loss on the
exchange.
HOW TO REDEEM SHARES
Shares of each Fund may be redeemed on any day on which the
Fund computes it net asset value. Shares are redeemed at their net asset value
next determined after the Transfer Agent receives the redemption request in
proper form. Redemption requests may be may by mail or by telephone.
By Mail. A shareholder may redeem shares by mailing a written request
to The Vintage Funds, c/o Unified Advisers, Inc., P.O. Box
6110, Indianapolis, Indiana 46206-6110. Written requests must state
the shareholder's name, the name of the Fund, the account number and the shares
or dollar amount to be redeemed and be signed exactly as the shares are
registered.
Signatures. Shareholders requesting a redemption of $5,000 or more,
or a redemption of any amount payable to a person other than the shareholder
of record or to be sent to an address other than that on record with the
Trust, must have all signatures on written redemption requests guaranteed.
The Transfer Agent will accept signatures guaranteed by a financial
institution whose deposits are insured by the FDIC; a member of the New
York, American, Boston, Midwest, or Pacific Stock Exchange; or any other
"eligible guarantor institution," as defined in the Securities Exchange Act
of 1934. The Transfer Agent will not accept signatures guaranteed by a
notary public. The Transfer Agent has adopted standards for
accepting signature guarantees from the above institutions. The Trust may elect
in the future to limit eligible signature guarantors to institutions that
are members of a signature guarantee program. The Trust and its Transfer
Agent reserve the right to amend these standards at any time without notice.
Redemption requests by corporate and fiduciary shareholders must
be accompanied by appropriate documentation establishing the authority of
the person seeking to act on behalf of the account. Forms of resolutions and
other documentation to assist in compliance with the Transfer
Agent's procedures may be obtained by calling the Transfer Agent.
By Telephone. You may also redeem shares by telephone by calling
the Transfer Agent at 1-800-408-4682. In order to make redemption requests
by telephone, the Telephone Privileges section of the account application must
be completed. For existing accounts, a Telephone Privileges form may be
obtained by calling the Transfer Agent at 1-800-408-4682.
Telephone redemptions may be requested only if the proceeds are to be
issued to the shareholder of record and mailed to the address on record with
the Fund. Upon request, proceeds of $100 or more may be transferred by ACH,
and proceeds of $1,000 or more may be transferred by wire, in either case to
the account stated on the account application. Shareholders will be charged
for outgoing wires.
Telephone privileges and account designations may be changed by sending the
Transfer Agent a written request with all signatures guaranteed as described
above.
The Transfer Agent requires personal identification before accepting
any redemption request by telephone, and telephone redemption instructions may
be recorded. If reasonable procedures are not followed by the Trust, it may
be liable for losses due to unauthorized or fraudulent telephone instructions.
In the event of drastic economic or market changes, a shareholder may
experience difficulty in redeeming by telephone. If such a case should occur,
redemption by mail should be considered.
Receiving Payment
The Trust normally will make payment for all shares redeemed within three
business days after receipt by the Transfer Agent of a redemption request in
proper form, except as provided by the rules of the Securities and
Exchange Commission. A requested wire of redemption proceeds normally will
be effected the following business day, but in no event more than three
business days, after receipt of the redemption request in proper form.
However, when shares are purchased by check or through ACH, the proceeds
from the redemption of those shares are not available, and the shares may not
be exchanged, until the purchase check or ACH transfer has been converted
to federal funds, which could take up to 15 days.
Check Writing (Money Market Funds Only)
Under the Funds' check writing service, shareholders of the Taxable
Money Market Fund or the Tax-Free Money Market Fund may write checks payable
to any payee in any amount of $250 or more. There is no check writing
privilege for the non-money market Funds. A shareholder with check
writing privileges may present for payment three checks per month free of
charge; additional checks will result in a charge of $0.30 per check.
Daily dividends will continue to accrue on the shares redeemed by check until
the day the check is presented for payment.
The Check Writing Privileges section of the account application must
be completed in order to initiate check writing privileges. For existing
accounts, check writing privileges may be initiated by sending a written
request to the Transfer Agent with all signatures guaranteed. A book of
checks will be sent to the shareholder of record upon the Transfer Agent's
receipt of the request.
A check should not be used to close out an account with the Fund because
the balance of the account will continue to increase by the amount of
daily dividends until the check is presented for payment. The Transfer Agent
may impose a charge for checks returned unpaid for insufficient funds or
for effecting stop-payment instructions.
Minimum Account Balance
Due to the high cost of maintaining accounts with low balances, the
Trust may involuntarily redeem Shares in any account, and pay the proceeds to
the shareholder, if the account balance falls below a required minimum value
of $1,000 ($500 for an IRA) due to shareholder redemptions.
This requirement does not apply, however, if the balance falls below the
minimum because of changes in a Fund's net asset value. Before shares are
redeemed to close an account, the shareholder is notified in writing and
allowed 30 days to purchase additional Shares to meet the minimum requirement.
SHAREHOLDER SERVICES
Each time shares are purchased or redeemed, a statement will be
mailed showing the details of the transaction and the number and value of
shares owned after the transaction. Share certificates are not issued.
Financial reports showing investments, income and expenses of the Funds
are mailed to shareholders semi-annually. After the end of each
year, shareholders receive a statement of all their transactions for the year.
The Trust provides a number of plans and services to meet the special
needs of certain investors, including (1) an automatic investment plan, (2) a
payroll deduction plan, (3) a systematic withdrawal plan to provide monthly
payments, (4) retirement plans such as IRA and 403(b), and (5) corporate
pension and profit sharing plans, including a 401(k) plan. Brochures
describing these plans and related charges and account applications are
available from the Transfer Agent by calling 1-800-408-4682.
THE TRUST AND ITS MANAGEMENT
The Trust is an Indiana business trust authorized to offer separate classes
and sub-classes of shares of beneficial interest. At the date of this
Prospectus, the Trust has established each of the eight Funds described herein
as a separate class of its shares. The Trust's offices are at 429 North
Pennsylvania Street, Indianapolis, Indiana 46204. The business affairs of the
Trust are under the direction of its Board of Trustees.
Investment Advisory Arrangements
Investment Adviser. Vintage Advisers, Inc., 429 North Pennsylvania Street,
Indianapolis, Indiana 46204, serves as the Trust's investment adviser (the
"Adviser"). The Adviser supervises and assists in the management of the Funds
under an Investment Advisory Agreement between the Adviser and the Trust,
subject to the overall authority of the Board of Trustees. The Adviser also is
responsible for monitoring and evaluating the performance of each Sub-Adviser,
as described below.
The Adviser was organized in December 1994 and is a registered
investment adviser. It has no prior operating history and does not act as the
investment adviser to any other investment companies. The Adviser is
controlled by Timothy L. Ashburn and Jack R. Orben, each of whom owns of
record 25% of its voting securities. The remainder of the Adviser's voting
securities are owned of record by a management retention plan for the benefit
of Messrs. Ashburn and Orben and certain other individuals. Messrs. Ashburn
and Orben control the voting of the shares owned by that plan. They,
together with the other directors and officers of the Adviser, have
substantial experience in the investment counsel and mutual fund industries.
Each of the portfolio managers named below under "Portfolio Managers'
Backgrounds" is a director or officer of the Adviser. Messrs. Ashburn and
Orben are members of the Trust's Board of Trustees.
The Adviser has notified the Trust that, in the event of an initial
public offering of the Adviser's voting securities, the Adviser may offer the
first opportunity to purchase such securities to persons who are
then shareholders of the Funds. The Adviser has also notified the Trust,
however, that it has no current intention of offering its voting securities to
the public in the foreseeable future, and that there can be no assurance that
the Adviser will ever offer its voting securities to the public.
Sub-Advisers. The Adviser has entered into Sub-Advisory Agreements
with Starwood Corporation and Fiduciary Counsel, Inc. (the "Sub-Advisers")
to manage the investment portfolios of certain of the Funds.
The Sub-Advisers are located at 40 Wall Street, New York, New York. They
are wholly owned subsidiaries of Associated Family Services, Inc. ("AFS").
Jack R. Orben owns 33% of the outstanding voting securities of AFS.
Starwood Corporation is the sub-adviser of the Starwood Strategic Fund.
Originated in 1932, Starwood Corporation is a registered investment
adviser that manages approximately $30 million in assets. It does not act as
the investment adviser to any other investment companies.
Fiduciary Counsel, Inc. is the sub-adviser to each of the Fiduciary
Value Fund, the Taxable Fixed Income Fund, the Municipal Fixed Income Fund,
the Taxable Money Market Fund and the Tax-Free Money Market Fund. Formed in
1931, Fiduciary Counsel is a registered investment adviser that manages
approximately $350 million in assets. It does not act as the investment
adviser to any other investment companies.
Portfolio Managers' Backgrounds
Starwood Strategic Fund. Andrew E. Beer is the Fund's portfolio manager.
Mr. Beer has been the President and Director of Starwood Corporation
since 1984.
Aggressive Growth Fund and The Asset Allocation Fund. Timothy L. Ashburn
and Lynn E. Wood are the Funds' portfolio managers. Mr. Ashburn is the Chairman
of the Board and President of the Adviser. Also, since December 1989, he has
been the Chairman of the Board of the Distributor and the Transfer Agent. From
July 1991 to April 1994, he also was the Trust Division Manager and Senior
Trust Officer of Vine Street Trust Company, Lexington, Kentucky. Mr. Wood is
the Executive Vice President and Chief Operating Officer and a Director of the
Adviser. Since July 1993, he has been the President and Chief Operating
Officer of the Distributor and the Transfer Agent. Prior to then, he was
Vice President and Managing Director of the Distributor.
Fiduciary Value Fund, Taxable Fixed Income Fund, Municipal Fixed
Income Fund, Taxable Money Market Fund and Tax-Free Money Market Fund. Ralph
E. Rosamilia is the Funds' portfolio manager. Mr. Rosamilia has been the
President and Chief Executive Officer of Fiduciary Counsel since January
1995. Prior to then, he was a Managing Director of Fiduciary Counsel since
1986. Since 1986, Mr. Rosamilia has been Chairman of Fiduciary Counsel's
Investment Policy Committee and a member of its Executive Committee. Mr.
Rosamilia graduated from the University of Pennsylvania's Wharton School of
Business in 1966, and has nearly 30 years of investment experience.
Advisory Fees
Each Fund pays the Adviser an annual advisory fee, payable monthly, based
on its average daily net assets. The fee is equal to 0.75% of the Fund's
average daily net assets for all of the Funds that may invest principally in
equity securities (i.e., the Starwood Strategic Fund, the Aggressive Growth
Fund, the Fiduciary Value Fund and the Asset Allocation Fund). The fee is
equal to 0.50% of the Fund's average daily net assets for all of the Funds
that may invest principally in debt securities (i.e., the Taxable Fixed
Income Fund, the Municipal Fixed Income Fund, the Taxable Money Market Fund
and the Tax-Free Money Market Fund). These fees are similar to those for
other mutual funds with similar investment objectives, but may be higher than
fees paid by other mutual funds with different investment objectives. The
Adviser has agreed to voluntarily waive some or all of its fees, but may
terminate this voluntary waiver with respect to any Fund at any time at its
sole discretion. The Adviser has also undertaken to reimburse each Fund for
operating expenses in excess of limitations established by certain states.
During the period June 2, 1995 (commencement of operations) to September 30,
1995, only the Taxable Money Market Fund had investment operations. During
that period, the Adviser waived its entire advisory fee.
The Adviser pays each Sub-Adviser an annual fee for its services in
managing the portfolios of certain of the Funds. These fees are paid directly
by the Adviser from its own assets and are not an expense of the Funds. The
Funds themselves pay no fees to the Sub-Advisers. The sub-advisory fees are
payable monthly, with respect to the applicable Fund's average daily net
assets. For the Starwood Strategic Fund and the Fiduciary Value Fund, the
sub-advisory fee is equal to 0.35% of the Fund's net assets up to $250 million;
0.30% of the next $250 million of net assets; and 0.25% of net assets in
excess of $500 million. For the Taxable Fixed Income Fund and the Municipal
Fixed Income Fund, the sub-advisory fee is equal to 0.30% of the Fund's net
assets up to $500 million; and 0.25% of net assets in excess of $500 million.
For the Taxable Money Market Fund and the Tax-Free Money Market Fund, the
sub-advisory fee is equal to 0.07% of the Fund's net assets up to $1 billion;
and 0.05% of net assets in excess of $1 billion.
Distribution Services
Distributor. Unified Management Corporation (the "Distributor"), 429 North
Pennsylvania Street, Indianapolis, Indiana 46024, acts as each
Fund's distributor pursuant to a Distribution Agreement with the Trust.
The distributor is a subsidiary of Unified Holdings, Inc.
Distribution Plan. Under a Distribution Plan adopted with respect to
each Fund pursuant to Rule 12b-1 under the Investment Company Act of 1940,
the Trust pays the Distributor an annual fee, payable monthly, of up to 0.10%
of each Fund's average daily net assets. The Distributor is entitled to retain
all of this distribution fee to reimburse the Distributor for payments made or
expenses incurred for distribution of Fund shares, including those incurred in
connection with preparing and distributing sales literature and advertising,
preparing, printing and distributing prospectuses and statements of additional
information used for other than regulatory purposes or distribution to
existing shareholders, implementing and operating the Distribution Plan, and
compensating third parties for their distribution services. The Distributor
may select financial institutions such as banks, custodians, investment
advisers and broker/dealers to provide sales support services as agents for
their clients or customers.
The Distribution Plan is a compensation-type plan. Therefore, the
amounts payable to the Distributor during any year may be more or less than
actual expenses incurred by the Distributor during such year. No amount
payable or credit due pursuant to the Distribution Plan for any fiscal year
may be carried over for payment or utilized as a credit, as the case may be,
beyond the end of the year, unless authorized by the Trust's Board of
Trustees. However, the Distributor may be able to recover such amounts or
may earn a profit from future payments made by the Trust under the
Distribution Plan.
Administration of the Trust
Administrator. Unified Advisers, Inc., 429 North Pennsylvania St.,
Indianapolis, Indiana 46204, serves as the Trust's administrator (the
"Administrator"). Pursuant to a Mutual Fund Services Agreement with the
Trust, the Administrator provides certain administrative personnel and
services (including administration, transfer agency and fund accounting
services) necessary to operate the Funds. For its services, the
Administrator receives an annual fee, payable monthly, from each Fund based
on its average daily net assets. The fee is equal to 0.435% of the Fund's
average daily net assets for all of the Funds, other than the Taxable Money
Market Fund and the Tax-Free Money Market Fund for which the fee is equal to
0.185% of the Fund's average daily net assets.
Shareholder Services Plan. The Trust has adopted a Shareholder
Services Plan (the "Service Plan") with respect to each Fund, which
is administered by the Administrator. Under the Service Plan,
financial institutions, including brokers, may enter into shareholder service
agreements with the Trust to provide administrative support services to their
clients or customers who from time to time may be owners of record or
beneficial owners of the shares of one or more of the Funds. In return for
providing these support services, a financial institution may receive
payments from the Fund at a rate not exceeding 0.15% of the average daily net
assets of the shares beneficially owned by the financial institution's
clients or customers for whom it is holder of record or with whom it has a
servicing relationship. These administrative services may include, but are
not limited to, the provision of personal services and maintenance of
shareholder accounts.
The Glass-Steagall Act limits the ability of a depository institution
(such as a commercial bank or a savings and loan association) to become an
underwriter or distributor of securities. In the event the Glass-Steagall Act
is deemed to prohibit depository institutions from acting in the capacities
described above or should Congress relax current restrictions on depository
institutions, the Board of Trustees will consider appropriate changes in the
services. State securities laws governing the ability of depository
institutions to act as underwriters or distributors of securities may differ
from interpretations given to the Glass-Steagall Act and, therefore, banks and
financial institutions may be required to register as dealers pursuant to
state law.
Other Arrangements. The Adviser, the Distributor or the Administrator
may, from their respective fees, also pay brokers or financial institutions a
fee based upon the net asset value of the Fund shares beneficially owned by
the broker's or financial institution's clients or customers. This fee is in
addition to amounts paid under the Distribution Plan or the Services Plan.
These payments will be made directly by the Adviser, the Distributor or the
Administrator from their own assets, will not be made from the assets of the
Funds and are not an additional expense of the Funds.
From time to time the Distributor will purchase Fund shares on behalf of
its clients and will be entitled to receive 12b-1 fees, shareholder servicing
fees and other administrative fees described herein to the same extent as any
other broker or financial institution.
Transfer Agent, Fund Accounting Agent and Custodian
Unified Advisers, Inc., P.O. Box 6110, Indianapolis,
Indiana 46206-6110, acts as the Trust's transfer agent (the "Transfer Agent")
and fund accounting agent.
Star Bank, N.A., 425 Walnut Street, Cincinnati, Ohio 45201, acts as
the Trust's custodian. General correspondence to the custodian should
be addressed to Star Bank, N.A., P.O. Box 1038, Location 6118, Cincinnati,
Ohio 45201. Share purchase orders mailed directly to the custodian (See "How
to Buy Shares -- Subsequent Investments") should be addressed to
The Vintage Funds, [Name of Applicable Fund], P.O. Box 640689, Cincinnati, Ohio
45264-0689.
Portfolio Transactions
The Adviser and Sub-Advisers select the firms that
effect brokerage transactions for their respective Funds, subject to the
overall direction and review of Adviser and the Board of Trustees. The
initial criterion that must be met by the Adviser and Sub-Advisers in
selecting brokers and dealers is whether the firm can obtain the most
favorable combination of price and execution for the transaction. This does
not mean that the execution decision must be based solely on whether the
lowest possible commission costs may be obtained. In seeking the best
combination of price and execution, the Adviser and Sub-Advisers evaluate the
execution capability of the firms and the services they provide, including
their general execution capability, reliability and integrity, willingness to
take positions in securities, and general operational and financial condition.
Subject to this primary objective, the Advisers and Sub-Advisers may
select for brokerage transactions those firms which furnish brokerage and
research services to the Funds, the Adviser or the Sub-Advisers. The Adviser
and Sub-Advisers may also give consideration to firms that have sold Fund
shares. The Board of Trustees has authorized the Funds to pay
brokerage commissions to firms that are affiliated with the Adviser or
the Sub-Advisers, subject to the foregoing criteria.
Expenses
Each Fund pays, except to the extent specifically assumed by others,
all expenses incurred in its operations, and a portion of the
Trust's general administrative expenses are allocated to the Funds either on
the basis of their relative net assets, on the basis of special needs of any
Fund, or equally as is deemed appropriate. The expenses borne by a Fund
include: organizational costs, taxes, interest, brokerage fees and commissions,
fees of Trustees, Securities and Exchange Commission fees, state Blue
Sky qualification fees, advisory and administrative fees, distribution and
shareholder servicing fees, charges of custodians, transfer and dividend
disbursing agent's fees, certain insurance premiums, industry association fees,
auditing and legal expenses, costs attributable to investor services
(including, without limitation, telephone and personnel expenses), costs of
calculating the net asset value of the Fund's shares, costs of shareholders'
reports and meetings, costs of preparing and printing prospectuses and
statements of additional information for regulatory purposes and for
distribution to existing shareholders, and any extraordinary expenses.
"VOICE"
(VISION FOR ON-GOING INVESTMENTS IN CHARITY AND
EDUCATION)
The Adviser has established The Vintage Funds University
and Philanthropic Program (the "Program"), entitled "VOICE" (Vision for
On-going Investments in Charity and Education) pursuant to which the Adviser
will make donations from its own income to certain accredited college or
university endowments or general scholarship funds ("Eligible Institutions")
designated by qualified shareholders. Philanthropic institutions outside of the
area of education may be proposed by qualifying shareholders and may, at the
sole discretion of the Adviser, be accepted for inclusion as an Eligible
Institution.
All Vintage Funds shareholders maintaining an average annualized
aggregate net asset value of $25,000 or more over the period of an
entire calendar quarter ("Qualified Shareholders") will be qualified to
designate one or more Eligible Institutions to receive a donation under the
Program with respect to that period. A shareholder making an initial
investment of $25,000 or more in Fund shares may designate one Eligible
Institution on the VOICE Program Application. A shareholder making an initial
investment of $1,000,000 or more (or maintaining that amount for an entire
quarterly period) may designate one additional Eligible Institution for each
$l,000,000 invested (or maintained for such period).
The Adviser will donate, on a quarterly basis, from its own income an
amount equal to 0.25% of the average annualized aggregate net asset value of
the shares owned by the Qualified Shareholder for the preceding quarterly
period, for so long as the average annualized aggregate net asset value of
the shares owned by the Qualified Shareholder remain above $25,000 for such
period. Donations will be made by the Adviser in the name of the Qualified
Shareholder to the Eligible Institution(s) designated by the Qualified
Shareholder. However, while the donation will be made in the Qualified
Shareholder's name, the Qualified Shareholder will not be entitled to any tax
deductions for such donation.
All Qualified Shareholders desiring to change their designated
Eligible Institution(s) may do so twice a year, in January and July. If
a Qualified Shareholder was entitled to designate, and did designate, more than
one Eligible Institution, the amount donated will be allocated according to
the percentages designated on the VOICE Program Application.
Donations will be made by the Adviser from its own income and,
therefore, will have no impact on the expenses or yield of the Funds. There
can be no assurances that the Adviser will have income from which to make
donations.
The preceding information is only a summary of the VOICE Program and
is qualified in its entirety by the more complete information available from
the Adviser.
Information about the VOICE Program, including applications to
participate in the Program, may be obtained from the Adviser by
calling 1-800-408-4682 (1-800-40-VINTAGE).
TAXES
It is intended that each Fund will qualify as a "regulated investment
company" under the Internal Revenue Code of 1986, as amended (the "Code"), as
long as such qualification is in the best interest of the Fund's
shareholders. Such qualification relieves each Fund of liability for federal
income tax to the extent its earnings are distributed in accordance with the
Code.
A shareholder receiving a distribution of ordinary income and/or an excess
of net short-term capital gain over net long-term capital loss ordinarily
would treat it as a receipt of ordinary income in the computation of the
shareholder's gross income, whether such distribution is received in cash or
reinvested in additional shares. Any distribution of the excess of net
long-term capital gain over net short-term capital loss ordinarily is taxable
to shareholders as long-term capital gain regardless of how long the
shareholder has held shares. Dividends and distributions also may be subject
to state and local taxes.
Shareholders will receive statements as to the tax status of dividends
and distributions annually, as well as periodic account summaries that will
include information as to any dividends and distributions from securities gains
paid during the year. Shareholders should consult their own tax advisers
with questions regarding federal, state or local taxes.
The Municipal and Tax-Free Funds
Shareholders of the Municipal Fixed Income Fund or the Tax-Free Money
Market Fund are not required to pay federal regular income tax on any dividends
received from the Fund that represent net interest on tax-exempt municipal
bonds. However, under the Tax Reform Act of 1986, dividends representing net
interest earned on some municipal bonds may be included in calculating the
federal individual alternative minimum tax or the federal alternative minimum
tax for corporations. The alternative minimum tax, imposed at a maximum rate
of 28% of alternative minimum taxable income for individuals and other
non-corporate taxpayers, and 20% for corporations, applies when it exceeds the
regular tax for the taxable year. Alternative minimum taxable income is equal
to the regular taxable income of the taxpayer increased by certain "tax
preference" items not included in regular taxable income and reduced by only a
portion of the deductions allowed in the calculation of the regular tax.
The Tax Reform Act of 1986 treats interest on certain "private
activity" bonds issued after August 7, 1986, as a tax preference item for both
individuals and corporations. Unlike traditional governmental purpose
municipal bonds, which finance roads, schools, libraries, prisons and other
public facilities, private activity bonds provide benefits to private
parties. The Municipal Fixed Income Fund and the Tax-Free Money Market Fund
may purchase all types of municipal bonds, including private activity bonds.
Thus, should a Fund purchase any such bonds, a portion of the Fund's dividends
may be treated as a tax preference item.
In addition, in the case of a corporate shareholder, dividends of these
Funds which represent interest on municipal bonds may be subject to the
20% corporate alternative minimum tax because the dividends are included in
a corporation's "adjusted current earnings." The corporate alternate minimum
tax treats 75% of the excess of a taxpayer's pre-tax "adjusted current
earnings" over the taxpayer's alternative minimum taxable income as a
tax preference item. "Adjusted current earnings" is based upon the concept of
a corporation's "earnings and profits." Since "earnings and profits"
generally includes the full amount of any Fund dividend, and alternative
minimum taxable income does not include the portion of the Fund's dividend
attributable to municipal bonds which are not private activity bonds, the
difference will be included in the calculations of the corporation's
alternative minimum tax.
Dividends of the Municipal Fixed Income Fund and the Tax-Free Money Market
Fund representing net interest income earned on some temporary investments and
any realized net short-term gains are taxed as ordinary income.
Backup Withholding
The Trust may be required to withhold federal income tax at a rate of
31% from dividends and redemption proceeds paid to non-corporate shareholders.
This tax may be withheld from dividends if a shareholder fails to furnish
the Trust with the shareholder's correct taxpayer identification number, the
Internal Revenue Service (the "IRS") notifies the Trust that the shareholder
has failed to report certain income to the IRS, or the shareholder fails to
certify that he or she is not subject to backup withholding when required to
do so. Backup withholding is not an additional tax and the shareholder may
credit any amounts withheld against the shareholder's federal income tax
liability.
PERFORMANCE INFORMATION
From time to time the Trust may publish performance information relative
to the Funds, and may include such information in advertisements, sales
literature or shareholder reports. This information will be based
on historical performance and is not intended to indicate future performance.
Additional information about the performance of the Funds will be contained in
the Trust's annual reports to shareholders which may be obtained without charge
by calling the Trust.
Total return quotations for the Funds (other than the money market
Funds) are expressed in terms of average annual compounded rates of return for
the periods quoted, and will assume that all dividends and distributions
were reinvested in additional shares.
Yield quotations for the Funds (other than the money market Funds) are
based upon a 30-day period ended on a specific date, computed by dividing the
Fund's net investment income per share earned during the period by the Fund's
price per share on the last day of the period. This number is then
annualized using semi-annual compounding.
The Taxable Money Market Fund and the Tax-Free Money Market Fund may quote
their current yields and effective yields. The "yield" of a money market Fund
refers to the income generated by an investment in the Fund over a seven-day
period. This income is then annualized. The amount of income generated by
investments during the week is assumed to be generated each week over a 52-week
period and is shown as a percentage of the investment. The "effective yield"
is calculated similarly but, when annualized, the income earned by an
investment in the Fund is assumed to be reinvested. The effective yield will
be slightly higher than the yield because of the compounding effect of this
assumed reinvestment.
The Municipal Fixed Income Fund and the Tax-Free Money Market Fund may also
quote their "tax-equivalent yield", which is calculated similarly to the yield,
but is adjusted to reflect the taxable yield that the Fund's shares would have
had to earn to equal the actual yield, assuming a specific tax rate. A Fund's
tax-equivalent yield will always be higher than its taxable yield.
Comparative performance information may be used from time to time
in advertising or marketing information relative to the Funds, including
certain indices or data from Lipper Analytical Services, Inc., Morningstar
Mutual Fund Report and other publications.
GENERAL INFORMATION
The Trust was organized on February 1, 1995 as an Indiana business trust.
The Trust's Declaration of Trust permits the Trust to offer and sell an
unlimited number of full and fractional shares of beneficial interest in each
of the Funds and to create additional Funds. Each Fund of the Trust issues
its own class of shares of beneficial interest. The shares of each Fund
represent an interest only in that Fund's assets (and income) and in the event
of liquidation, each share of a particular Fund would have the same rights to
distributions and assets as every other share of that Fund. Shares have no
preemptive or conversion rights, nor do they have cumulative voting rights.
Each full or fractional share of each Fund has a proportionate vote on each
matter submitted to shareholders of that Fund. All shares of each Fund have
equal voting rights except that in matters affecting only a particular Fund,
only shares of that Fund are entitled to vote.
Under Indiana law, the Trust is not required to hold annual meetings
of shareholders. The Trust will not hold annual meetings except
for extraordinary items requiring shareholder approval under the Investment
Company Act of 1940.
Trustees may be removed by the Board of Trustees or by the shareholders at
a special meeting. A special meeting of shareholders shall be called by the
Board of Trustees upon the request of shareholders owning at least 10% of
the outstanding shares of all Funds entitled to vote.
Shareholder inquiries may be made by writing to The Vintage Funds,
c/o Unified Advisers, Inc., P.O. Box 6110, Indianapolis, Indiana 46206-6110, or
by calling 1-800-408-4682 (1-800-40-VINTAGE).
[Begin Back Cover Page]
THE VINTAGE FUNDS
The Starwood Strategic Fund
The Agressive Growth Fund
The Fiduciary Value Fund
The Asset Allocation Fund
The Taxable Fixed Income Fund
The Municipal Fixed Income Fund
The Taxable Money Market Fund
The Tax-Free Money Market Fund
PROSPECTUS
January 29, 1996
TRANSFER AGENT
Unified Advisers, Inc.
429 N. Pennsylvania Street
Indianapolis, Indiana 46204
CUSTODIAN
Star Bank, N.A.
425 Walnut Street
Cincinnati, Ohio 45201
INVESTMENT ADVISER
Vintage Advisers, Inc.
429 N. Pennsylvania Street
Indianapolis, Indiana 46204
THE VINTAGE FUNDS
P.O. Box 6110
Indianapolis, Indiana 46206-6110
1-800-40-VINTAGE (1-800-408-4682
<PAGE>
THE VINTAGE FUNDS
STATEMENT OF ADDITIONAL INFORMATION
December 20, 1996
This Statement of Additional Information, which is not a prospectus,
supplements and should be read in conjunction with the current Prospectus of
The Vintage Funds (the "Trust"), dated January 29, 1996, and the Supplement to
the Prospectus dated December 20, 1996. To obtain a copy of the Trust's
Prospectus and Supplement, please write to The Vintage Funds at P.O. Box 6110,
Indianapolis, Indiana 46206-6110, or call 1-800-408-4682
(1-800-40-VINTAGE).
TABLE OF CONTENTS
Types of Investments and Investment Techniques. . . . . . . . . . . . . . 3
Investment Limitations . . . . . . . . . . . . . . . . . . . . .. .. . . 20
Management of the Trust. . . . . . . . . . . . . . . . . . . . .. . . .. 24
Investment Advisory Arrangements . . . . . . . . . . . . . . . ... . . . 27
Distribution Arrangements. . . . . . . . . . . . . . . . . . . .. . . . 28
Administrative Services Arrangements . . . . . . . .. . . . . . .. . . . 29
Brokerage Transactions . . . . . . . . . . . . . . . . . . . . .. . . . 29
Purchase and Redemption. . . . . . . .. . . . . . . . . . . . . .. . . . 30
Determination of Net Asset Value . . . . . . . . . . . . . . . .. . . . 31
Tax Status . . . . . . . . . . . . . . . . . . . . . . . . . . .. . . . 31
Performance Information. . . . . . . . . . . . . . . . . . .. . .. . . . 33
Information About the Trust. . . . . . . . . . . . . . . . . . .. . . . 35
Custodian, Transfer Agent, Fund Accounting Agent
and Independent Accountants. . . . . . . . . . . . .. . . . . . .. . . . 35
Financial Statements . . . . . . . . . . . . . . . . . . . . . .. . . . 36
Appendix . . . . . . . . . . . . . . .. . . . . . . . . . . . . .. . . . 36
<PAGE>
TYPES OF INVESTMENTS AND INVESTMENT TECHNIQUES
In the case of the Taxable Fixed Income Fund and the Municipal Fixed Income
Fund, all references to various types of securities are deemed to include mutual
funds that invest in such securities.
Convertible Securities
The Funds may invest in convertible securities. Convertible securities
are fixed income securities that may be exchanged or converted into a
predetermined number of shares of the issuer's underlying common stock at the
option of the holder during a specified period. Convertible securities may take
the form of convertible preferred stock, convertible bonds or debentures, units
consisting of "usable" bonds and warrants or a combination of the features of
several of these securities. The investment characteristics of each convertible
security vary widely, which allows convertible securities to be employed for a
variety of investment strategies.
The Funds will exchange or convert convertible securities into shares
of underlying common stock when, in the opinion of the investment adviser,
the investment characteristics of the underlying common shares will assist the
Fund in achieving its investment objective. The Funds may also elect to hold
or trade convertible shares. In selecting convertible securities, a
Fund's investment adviser evaluates the investment characteristics of the
convertible security as a fixed income instrument, and the investment potential
of the underlying equity security for capital appreciation. In evaluating
these matters with respect to a particular convertible security, the
investment adviser considers numerous factors, including the economic and
political outlook, the value of the security relative to other investment
alternatives, trends in the determinants of the issuer's profits, and the
issuer's management capability and practices.
Warrants
The Funds (other than the money market Funds) may invest in warrants.
Warrants are basically options to purchase common stock at a specific
price (usually at a premium above the market value of the optioned common stock
at issuance) valid for a specific period of time. Warrants may have a
life ranging from less than one year to twenty years, or they may be perpetual.
However, most warrants have expiration dates after which they are worthless.
In addition, a warrant is worthless if the market price of the common stock
does not exceed the warrant's exercise price during the life of the warrant.
Warrants have no voting rights, pay no dividends, and have no rights
with respect to the assets of the corporation issuing them. The percentage
increase or decrease in the market price of the warrant may tend to be greater
than the percentage increase or decrease in the market price of the optioned
common stock. No Fund will invest more than 5% of the value of its total assets
in warrants. Warrants acquired in units or attached to securities may be deemed
to be without value for purposes of this policy.
<PAGE>
Corporate Debt Obligations
The Funds may invest in corporate debt obligations, including
corporate bonds, notes, medium term notes, and debentures, which may have
floating or fixed rates of interest.
Ratings. The Funds will not invest in corporate debt obligations having
a rating of less than Baa by Moody's Investors Service, Inc. ("Moody's") or BBB
or better by Standard & Poor's Corporation ("S&P"), Fitch Investors
Service ("Fitch"), Duff & Phelps, Inc. ("Duff") or Thompson Bankwatch
("Bankwatch"). (The money market Funds have higher rating requirements, as
described in the Prospectus.) In certain cases a Fund's investment adviser may
choose bonds which are unrated if it determines that such bonds are of
comparable quality or have similar characteristics to investment grade bonds.
Bonds rated Baa or BBB may have speculative characteristics. Changes in
economic conditions or other circumstances are more likely to lead to weakened
capacity to make principal and interest payments than higher rated bonds.
Downgraded securities will be evaluated on a case-by-case basis by the Fund's
investment adviser. The adviser will determine whether or not the security
continues to be an acceptable investment. If not, the security will be sold. A
description of the rating categories is contained in the Appendix to this
Statement of Additional Information.
Floating Rate Corporate Debt Obligations. The Funds expect to invest
in floating rate corporate debt obligations, including increasing rate
securities. Floating rate securities are generally offered at an initial
interest rate which is at or above prevailing market rates. The interest rate
paid on these securities is then reset periodically (commonly every 90 days) to
an increment over some predetermined interest rate index. Commonly utilized
indices include the three-month Treasury bill rate, the six-month Treasury bill
rate, the one-month or three-month London Interbank Offered Rate (LIBOR), the
prime rate of a bank, the commercial paper rates, or the longer-term rates on
U.S. Treasury securities.
Some of these floating rate corporate debt obligations include
floating rate corporate debt securities issued by savings and loans and
collateralized by adjustable rate mortgage loans, also known as collateralized
thrift notes. Many of these collateralized thrift notes have received AAA
ratings from nationally recognized statistical rating organizations.
Collateralized thrift notes differ from traditional "pass through" certificates
in which payments made are linked to monthly payments made by individual
borrowers net of any fees paid to the issuer or guarantor of such securities.
Collateralized thrift notes pay a floating interest rate which is tied to a
pre-determined index, such as the six-month Treasury bill rate. Floating rate
corporate debt obligations also include securities issued to fund commercial
real estate construction.
Increasing rate securities, which currently do not make up a
significant share of the market in corporate debt securities, are generally
offered at an initial interest rate which is at or above prevailing market
rates. Interest rates are reset periodically (most commonly every 90 days) at
different levels on a predetermined scale. These levels of interest are
ordinarily set at progressively higher increments over time. Some increasing
rate securities may, by agreement, revert to a fixed rate status. These
securities may also contain features which allow the issuer the option to
convert the increasing rate of interest to a fixed rate under such terms,
conditions, and limitations as are described in each issue's prospectus.
Medium Term Notes and Deposit Notes. Medium term notes ("MTNs")
and Deposit Notes are similar to Variable Rate Demand Notes as described in
the Prospectus. MTNs and Deposit Notes trade like commercial paper, but
may have maturities from 9 months to ten years.
Section 4(2) Commercial Paper. Section 4(2) commercial paper is commercial
paper issued in reliance on the exemption from registration afforded by Section
4(2) of the Securities Act of 1933. Section 4(2) commercial paper is restricted
as to disposition under federal securities law and is generally sold to
institutional investors, such as the Funds, who agree that they are purchasing
the paper for investment purposes and not with a view to public distribution.
Any resale by the purchaser must be in an exempt transaction. Section 4(2)
commercial paper is normally resold to other institutional investors like the
Funds through or with the assistance of the issuer or investment dealers who
make a market in Section 4(2) commercial paper, thus providing liquidity. The
Trust believes that Section 4(2) commercial paper and possibly certain other
restricted securities which meet the criteria for liquidity established by the
Board of Trustees are quite liquid. The Funds intend, therefore, to treat the
restricted securities which meet the criteria for liquidity established by the
Trustees, including Section 4(2) commercial paper, as determined by the Funds'
investment advisers, as liquid and not subject to the investment limitation
applicable to illiquid securities. In addition, because Section 4(2) commercial
paper is liquid, the Trust intends to not subject such paper to the limitation
applicable to restricted securities.
Asset-Backed Securities
The money market Funds may invest in mortgage-related
asset-backed securities that are considered U.S. government securities. The
other Funds may invest in these and, to varying extents as described in the
Prospectus, in other asset-backed securities.
Asset-backed securities are created by the grouping of
certain governmental, government related and private loans, receivables and
other lender assets into pools. Interests in these pools are sold as individual
securities. Payments from the asset pools may be divided into several different
tranches of debt securities, with some tranches entitled to receive regular
installments of principal and interest, other tranches entitled to receive
regular installments of interest, with principal payable at maturity or upon
specified call dates, and other tranches only entitled to receive payments of
principal and accrued interest at maturity or upon specified call dates.
Different tranches of securities will bear different interest rates, which may
be fixed or floating.
Because the loans held in the asset pool often may be prepaid
without penalty or premium, asset- backed securities are generally subject to
higher prepayment risks than most other types of debt instruments. Prepayment
risks on mortgage securities tend to increase during periods of declining
mortgage interest rates, because many borrowers refinance their mortgages to
take advantage of the more favorable rates. Depending upon market conditions,
the yield that a Fund receives from the reinvestment of such prepayments, or
any scheduled principal payments, may be lower than the yield on the
original mortgage security. As a consequence, mortgage securities may be a
less effective means of "locking in" interest rates than other types of
debt securities having the same stated maturity and may also have less potential
for capital appreciation. For certain types of asset pools, such as
collateralized mortgage obligations, prepayments may be allocated to one tranche
of securities ahead of other tranches, in order to reduce the risk of prepayment
for the other tranches.
Prepayments may result in a capital loss to the Fund to the extent that
the prepaid mortgagesecurities were purchased at a market premium over
their stated amount. Conversely, the prepayment of mortgage securities
purchased at a market discount from their stated principal amount will
accelerate the recognition of interest income by the Fund, which would be taxed
as ordinary income when distributed to the shareholders.
The credit characteristics of asset-backed securities also differ in
a number of respects from those of traditional debt securities. The
credit quality of most asset-backed securities depends primarily upon the
credit quality of the assets underlying such securities, how well the entity
issuing the securities is insulated from the credit risk of the originator or
any other affiliated entities, and the amount and quality of any credit
enhancement to such securities.
Non-Mortgage Related Asset-Backed Securities. The Funds may invest
in non-mortgage related asset-backed securities including, but not limited
to, interests in pools of receivables, such as credit card and accounts
receivable and motor vehicle and other installment purchase obligations and
leases. These securities may be in the form of pass-through instruments or
asset-backed obligations. The securities, all of which are issued by
non-governmental entities and carry no direct or indirect government guarantee,
are structurally similar to collateralized mortgage obligations and mortgage
pass- through securities, which are described below.
Non-mortgage related asset-backed securities present certain risks that
are not presented by mortgage-backed securities. Primarily, these securities do
not have the benefit of the same security interest in the related collateral.
Credit card receivables are generally unsecured and the debtors are entitled
to the protection of a number of state and federal consumer credit laws, many
of which give such debtors the right to set off certain amounts owed on the
credit cards, thereby reducing the balance due. Most issuers of
asset-backed securities backed by motor vehicle installment purchase obligations
permit the servicer of such receivables to retain possession of the underlying
obligations. If the servicer sells these obligations to another party, there is
a risk that the purchaser would acquire an interest superior to that of the
holders of the related asset-backed securities. Further, if a vehicle is
registered in one state and is then registered because the owner and the obligor
move to another state, such re-registration could defeat the original security
interest in the vehicle in certain cases. In addition, because of the large
number of vehicles involved in a typical issuance and technical requirements
under state laws, the trustee with the holders of asset-backed securities backed
by automobile receivables may not have a proper security interest in all of the
obligations backing such receivables. Therefore, there is a possibility that
recoveries on repossessed collateral may not, in some cases, be available to
support payments on these securities.
Mortgage-Related Asset-Backed Securities. The Funds may also invest
in various mortgage-related asset-backed securities. These types of
investments may include adjustable rate mortgage securities, collateralized
mortgage obligations, real estate mortgage investment conduits, or other
securities collateralized by or representing an interest in real estate
mortgages (collectively, "mortgage securities"). Many mortgage securities are
issued or guaranteed by government agencies.
Adjustable Rate Mortgage Securities ("ARMS"). ARMS are pass-
through mortgage securities representing interests in adjustable rather
than fixed interest rate mortgages. The ARMS in which the Funds invest are
issued by the Government National Mortgage Association ("GNMA"), the
Federal National Mortgage Association ("FNMA"), and the Federal Home Loan
Mortgage Corporation ("FHLMC") and are actively traded. The underlying
mortgages which collateralize ARMS issued by GNMA are fully guaranteed by
the Federal Housing Administration ("FHA") or Veterans Administration
("VA"), while those collateralizing ARMS issued by FHLMC or FNMA are
typically conventional residential mortgages conforming to strict
underwriting size and maturity constraints.
Collateralized Mortgage Obligations ("CMOS"). CMOs are bonds
issued by single-purpose, stand-alone finance subsidiaries or trusts of
financial institutions, government agencies, investment bankers, or
companies related to the construction industry. CMOs purchased by the
Funds may be:
collateralized by pools of mortgages in which each mortgage is
guaranteed as to payment of principal and interest by an agency or
instrumentality of the U.S. government;
collateralized by pools of mortgages in which payment of principal and
interest is guaranteed by the issuer and such guarantee is
collateralized by U.S. government securities; or
securities in which the proceeds of the issuance are invested in
mortgage securities and payment of the principal and interest is
supported by the credit of an agency or instrumentality of the U.S.
government.
All CMOs purchased by the Funds are investment grade, as rated by a
nationally recognized statistical rating organization.
Real Estate Mortgage Investment Conduits ("REMICS"). REMICs are
offerings of multiple class real estate mortgage-backed securities which
qualify and elect treatment as such under provisions of the Internal
Revenue Code. Issuers of REMICs may take several forms, such
as trusts, partnerships, corporations, associations, or segregated pools of
mortgages. Once REMIC status is elected and obtained, the entity is not
subject to federal income taxation. Instead, income is passed through the
entity and is taxed to the person or persons who hold interests in the
REMIC. A REMIC interest must consist of one or more classes of "regular
interests," some of which may offer adjustable rates of interest, and a
single class of "residual interests." To qualify as a REMIC,
substantially all the assets of the entity must be in assets directly or
indirectly secured principally by real property.
Resets of Interest. The interest rates paid on the ARMS, CMOs, and REMICs
in which the Funds invest generally are readjusted at intervals of one year or
less to an increment over some predetermined interest rate index. There are two
main categories of indices: those based on U.S. Treasury securities and those
derived from a calculated measure, such as a cost of funds index or a moving
average of mortgage rates. Commonly utilized indices include the one-year and
five-year constant maturity Treasury Note rates, the three-month Treasury Bill
rate, the 180-day Treasury Bill rate, rates on longer-term Treasury securities,
the National Median Cost of Funds, the one-month or three-month London Interbank
Offered Rate (LIBOR), the prime rate of a specific bank, or commercial paper
rates. Some indices, such as the one-year constant maturity Treasury Note rate,
closely mirror changes in market interest rate levels.
To the extent that the adjusted interest rate on the mortgage
security reflects current market rates, the market value of an adjustable rate
mortgage security will tend to be less sensitive to interest rate changes than a
fixed rate debt security of the same stated maturity. Hence, ARMs which use
indices that lag changes in market rates should experience greater price
volatility than adjustable rate mortgage securities that closely mirror the
market.
Caps and Floors. The underlying mortgages which collateralize the
ARMS, CMOs, and REMICs in which the Funds invest will frequently have caps and
floors which limit the maximum amount by which the loan rate to the
residential borrower may change up or down: (1) per reset or adjustment
interval, and (2) over the life of the loan. Some residential mortgage loans
restrict periodic adjustments by limiting changes in the borrower's monthly
principal and interest payments rather than limiting interest rate changes.
These payment caps may result in negative amortization.
The value of mortgage securities in which the Funds invest may be
affected if market interest rates rise or fall faster and farther than the
allowable caps or floors on the underlying residential mortgage loans.
Additionally, even though the interest rates on the underlying residential
mortgages areadjustable, amortization and prepayments may occur, thereby causing
the effective maturities of the mortgage securities in which the Funds invest to
be shorter than the maturities stated in the underlying mortgages.
Municipal Securities
The Municipal Fixed Income Fund and the Tax-Free Money Market Fund will
invest in municipal securities.
Ratings. The municipal securities in which the Municipal Fixed Income
Fund invests are rated, at the time of purchase, Baa or better by Moody's or BBB
or better by S&P, Fitch, Duff or Bankwatch. (The Tax-Free Money Market Fund
has higher rating requirements, as described in the Prospectus.) In certain
cases the Fund's investment adviser may choose bonds which are unrated if
it determines that such bonds are of comparable quality or have
similar characteristics to investment grade bonds. Bonds rated Baa or BBB
have speculative characteristics. Changes in economic conditions or
other circumstances are more likely to lead to weakened capacity to make
principal and interest payments than higher rated bonds. If the Fund purchases
an investment grade bond, and the rating of such bond is subsequently downgraded
so that the bond is no longer classified as investment grade, the Fund is not
required to drop the bond from the portfolio, but will consider whether such
action is appropriate. A description of the rating categories is contained in
the Appendix to this Statement of Additional Information.
Investment Risks. Yields on municipal securities depend on a variety
of factors, including: the general conditions of the municipal note market and
of the municipal bond market; the size of the particular offering; the maturity
of the obligations; and the rating of the issue. The ability of a Fund to
achieve its investment objective also depends on the continuing ability of the
issuers of municipal securities and participation interests, or the guarantors
of either, to meet their obligations for the payment of interest and principal
when due. Since the Municipal Fixed Income Fund will invest primarily in
municipal securities bearing fixed rates of interest, the net asset value of its
shares will generally vary inversely with changes in prevailing interest rates.
Concentration. The Municipal Fixed Income Fund will not invest more than
25% of its total assets in any one industry (except that it may invest without
limitation in other investment companies). Governmental issuers of municipal
securities are not considered part of any "industry." However, municipal
securities backed only by the assets and revenues of nongovernmental users may,
for this purpose, be deemed to be related to the industry in which such
nongovernmental users engage, and the 25% limitation would apply to such
obligations. It is nonetheless possible that the Fund may invest more than 25%
of its assets in a broader segment of the municipal securities market, such as
industrial development bonds and revenue obligations of hospitals and other
health care facilities, housing agency revenue obligations, or airport revenue
obligations. This would be the case only if the Fund determines that the yields
available from obligations in a particular segment of the market justified the
additional risks associated with a large investment in such segment. Although
such obligations could be supported by the credit of governmental users or by
the credit of nongovernmental users engaged in a number of industries, economic,
business, political and other developments generally affecting the revenues of
such users (for example, proposed legislation or pending court decisions
affecting the financing of such projects and market factors affecting the demand
for their services or products) may have a general adverse effect on all
municipal securities in such a market segment.
Participation Interests. The Funds may purchase participation
interests from financial institutions such as commercial banks, savings and
loan associations and insurance companies. These participation interests give
the Fund an undivided interest in one or more underlying municipal securities.
The financial institutions from which the Fund purchases participation interests
frequently provide or obtain irrevocable letters of credit or guarantees to
attempt to assure that the participation interests are of high quality. These
typically give the Fund the right to demand payment of the principal amounts of
the participation interests plus accrued interest on short notice (usually
within seven days).
Municipal Leases. Municipal leases are obligations issued by state
and local governments or authorities to finance the acquisition of equipment
and facilities. They may take the form of a lease, an installment
purchase contract, a conditional sales contract or a participation certificate
of any of the above.
Also included within the general category of municipal securities
are certain lease obligations or installment purchase contract obligations
and participations therein (hereinafter collectively called "lease obligations")
of municipal authorities or entities. Although lease obligations do not
constitute general obligations of the municipality for which the municipality's
taxing power is pledged, a lease obligation is ordinarily backed by the
municipality's covenant to budget for, appropriate and make the payments due
under the lease obligation. Interest on lease obligations is tax-exempt to the
same extent as if the municipality had issued debt obligations to finance the
underlying project or purchase. However, certain lease obligations
contain "non-appropriation" clauses which provide that the municipality has no
obligation to make lease or installment purchase payments in future years unless
money is appropriated for such purpose on a yearly basis. If the entity does
not appropriate funds for the future lease payments, the entity cannot
be compelled to make such payments. Furthermore, a lease may provide that
the certificate trustee cannot accelerate lease obligations upon default. The
trustee would only be able to enforce lease payments as they became due. In the
event of a default or failure of appropriation, it is unlikely that the trustee
would be able to obtain an acceptable substitute source of payment. The Fund
does not intend to invest more than 10% of its total assets in non-puttable
lease obligations that contain "non-appropriation" clauses.
In addition to the "non-appropriation" risk, these securities represent a
relatively new type of financing that has not yet developed the depth
of marketability associated with more conventional bonds and some lease
obligations may be illiquid. Although "non-appropriation" lease obligations
are generally secured by the leased property, disposition of the property in
the event of foreclosure might prove difficult. In addition, the tax treatment
of such obligations in the event of non-appropriation is unclear.
Some municipal leases may be considered to be illiquid. However, some
municipal leases may contain put provisions which grant the Fund the right to
sell the securities to the issuer at a predetermined price and date.
Such provisions improve the marketability and enhance the liquidity of the
security. In determining the liquidity of municipal lease securities,
the Fund's investment adviser will base its determination on the following
factors:
whether the lease can be terminated by the lessee;
the potential recovery, if any, from a sale of the leased property
upon termination of the lease;
the lessee's general credit strength (e.g., its debt, administrative,
economic and financial characteristics and prospects);
the likelihood that the lessee will discontinue appropriating funding
for the leased property because the property is no longer deemed
essential to its operations (e.g., the potential for
an "event of non-appropriation," which the Fund's investment adviser
will continually monitor); and
any credit enhancement or legal recourse provided upon an event of
non-appropriation or other termination of the lease.
Industrial Development Bonds. Industrial development bonds are generally
issued to provide financing aid to acquire sites or construct and equip
facilities for use by privately or publicly owned corporations. Most state and
local governments have the power to permit the issuance of industrial
development bonds to provide financing for such corporations in order to
encourage the corporations to locate within their communities.
Industrial development bonds do not represent a pledge of credit or create any
debt of municipality or a public authority, and no taxes may be levied for
payment of principal or interest on these bonds. The principal and interest is
payable solely out of monies generated by the entities using or purchasing the
sites or facilities. These bonds will be considered municipal securities if the
interest paid on them, in the opinion of bond counsel, is exempt from
federal regular income tax.
Municipal Notes. Municipal securities in the form of notes generally are
used to provide for short-term capital needs, in anticipation of an
issuer's receipt of other revenues or financing, and typically have maturities
of up to three years. Such instruments may include Tax Anticipation Notes,
Revenue Anticipation Notes, Bond Anticipation Notes, Tax and Revenue
Anticipation Notes and Construction Loan Notes. Tax Anticipation Notes are
issued to finance the working capital needs of governments. Generally, they are
issued in anticipation of various tax revenues, such as income, sales, property,
use and business taxes, and are payable from these specific future taxes.
Revenue Anticipation Notes are issued in expectation of receipt of other kinds
of revenue, such as federal revenues available under Federal Revenue
Sharing programs. Bond Anticipation Notes are issued to provide interim
financing until long-term bond financing can be arranged. In most cases, the
long-term bonds then provide the funds needed for repayment of the notes. Tax
and Revenue Anticipation Notes combine the funding sources of both Tax
Anticipation Notes and Revenue Anticipation Notes. Construction Loan Notes are
sold to provide construction financing. These notes are secured by mortgage
notes insured by the Federal Housing Authority; however, the proceeds from
the issuance may be less than the economic equivalent of the payment of
principal and interest on the mortgage note if there has been a default. The
obligations of an issuer of municipal notes are generally secured by the
anticipated revenues from taxes, grants or bond financing. An investment in
such instruments, however, presents a risk that the anticipated revenues will
not be received or that such revenues will be insufficient to satisfy
the issuer's payment obligations under the notes or that refinancing will
be otherwise unavailable.
Pre-Refunded Municipal Securities. The Fund may invest in pre-refunded
municipal securities. The principal of and interest on pre-refunded municipal
securities are no longer paid from the original revenue source for the municipal
securities. Instead, the source of such payments is typically an escrow fund
consisting of obligations issued or guaranteed by the U.S. Government. The
assets in the escrow fund are derived from the proceeds of refunding bonds
issued by the same issuer as the pre-refunded municipal securities, but usually
on more favorable terms. Issuers of municipal securities use this advance
refunding technique to obtain more favorable terms with respect to municipal
securities that are not yet subject to call or redemption by the issuer. For
example, advance refunding enables an issuer to refinance debt at lower market
interest rates, restructure debt to improve cash flow or eliminate restrictive
covenants in the indenture or other governing instrument for the pre-refunded
municipal securities. However, except for a change in the revenue source from
which principal and interest payments are made, the pre-refunded municipal
securities remain outstanding on their original terms until they mature or are
redeemed by the issuer. The effective maturity of pre-refunded municipal
securities will be the redemption date if the issuer has assumed an obligation
or indicated its intention to redeem such securities on the redemption date.
Pre-refunded municipal securities are usually purchased at a price which
represents a premium over their face value.
Variable and Floating Rate Securities. The interest rates payable
on certain securities in which the Funds may invest are not fixed and may
fluctuate based upon changes in market rates. A variable rate obligation has an
interest rate which is adjusted at predesignated periods. Interest on a
floating rate obligation is adjusted whenever there is a change in the market
rate of interest on which the interest rate payable is based. Variable or
floating rate obligations generally permit the holders of such obligations to
demand payment of principal from the issuer or a third party at any time or at
stated intervals. Variable and floating rate obligations are less effective
than fixed rate instruments at locking in a particular yield. Nevertheless,
such obligations may fluctuate in value in response to interest rate changes if
there is a delay between changes in market interest rates and the interest reset
date for an obligation. The Funds will take demand features into consideration
in determining the average portfolio duration of the Fund and the
effective maturity of individual municipal securities. In addition, the absence
of an unconditional demand feature exercisable within seven days will, and
the failure of the issuer or a third party to honor its obligations under a
demand feature might, require a variable or floating rate obligation to be
treated as illiquid for purposes of a Fund's 15% limitation on illiquid
investments.
Zero Coupon and Capital Appreciation Bonds. Zero coupon and capital
appreciation securities carry the risk that, unlike securities that periodically
pay interest to maturity, the Fund will realize no cash until a specified future
payment date unless a portion of such securities is sold and, if the issuer of
such securities defaults, the Fund may obtain no return at all on its
investment. In addition, even though such securities do not pay
current interest in cash, the Fund is nonetheless required to accrue income on
such investments and may be required to distribute such amounts at least
annually. Because no cash is received at the time of the accrual, the Fund may
be required to liquidate other portfolio securities to satisfy the Fund's
distribution obligations.
Insurance. The Funds may invest in "insured" municipal securities.
Insured municipal securities are those for which scheduled payments of
interest and principal are guaranteed by a private (nongovernmental) insurance
company. The insurance only entitles the Fund to receive the face or par value
of the securities held by the Fund. The insurance does not guarantee the market
value of the municipal securities or the value of the shares of the Fund.
The Funds may utilize new issue or secondary market insurance. A new issue
insurance policy is purchased by a bond issuer who wishes to increase the credit
rating of a security. By paying a premium and meeting the
insurer's underwriting standards, the bond issuer is able to obtain a high
credit rating (usually, Aaa from Moody's or AAA from Standard & Poor's) for
the issued security. Such insurance is likely to increase the purchase price
and resale value of the security. New issue insurance policies are
non-cancellable and continue in force as long as the bonds are outstanding. A
secondary market insurance policy is purchased by an investor (such as the
Fund) subsequent to a bond's original issuance and generally insures a
particular bond for the remainder of its term. The Funds may purchase bonds
which have already been insured under a secondary market insurance policy by a
prior investor, or the Fund may itself purchase such a policy from insurers for
bonds which are currently uninsured.
An insured municipal security acquired by a Fund will typically be
covered by only one of the above types of policies. All of the insurance
policies used by the Funds will be obtained only from insurance companies rated,
at the time of purchase, Aaa by Moody's or AAA by Standard & Poor's.
Foreign Securities
Each Fund may invest in foreign securities, including foreign
securities not publicly traded in the United States. The Starwood Strategic
Fund may invest without limitation in foreign securities. Each of the other
Funds may invest up to 25% of its total assets in foreign securities. As
described in the Prospectus, investments in foreign securities involve special
risks that differ from those associated with investments in domestic securities.
Emerging and Developing Countries. The risks described in the Prospectus
often are heightened for investments in emerging or developing countries.
Compared to the United States and other developed countries, emerging or
developing countries may have relatively unstable governments, economies based
on only a few industries, and securities markets that trade a small number of
securities. Prices on these exchanges tend to be volatile and, in the past,
securities in these countries have offered a greater potential for gain (as well
as loss) than securities of companies located in developed countries. Further,
investment by foreign investors are subject to a variety of restrictions in many
emerging or developing countries. These restrictions may take the form of prior
governmental approval, limits on the amount or type of securities held by
foreigners, and limits on the type of companies in which foreigners may invest.
Additional restrictions may be imposed at any time by these and other countries
in which a Fund invests. In addition, the repatriation of both investment
income and capital from several foreign countries is restricted and controlled
under certain regulations, including in some cases the need for certain
government consents.
Currency Risks. Foreign securities are denominated in foreign currencies.
Therefore, the value in U.S. dollars of a Fund's assets and income may
be affected by changes in exchange rates and regulations. Although each
Fund values its assets daily in U.S. dollars, it will not convert its
holdings of foreign currencies to U.S. dollars daily. When a Fund converts its
holdings to another currency, it may incur conversion costs. Foreign exchange
dealers realize a profit on the difference between the prices at which they buy
and sell currencies.
A Fund may engage in foreign currency exchange transactions in connection
with its investments in foreign securities. The Fund will conduct its foreign
currency exchange transactions either on a spot (i.e., cash) basis at the spot
rate prevailing in the foreign currency exchange market or through forward
contracts to purchase or sell foreign currencies.
Forward Foreign Currency Exchange Contracts. A forward foreign currency
exchange contract involves an obligation to purchase or sell a specific currency
at a future date, which may be any fixed number of days from the date of the
contract agreed upon by the parties, at a price set at the time of the
contract. These contracts are traded directly between currency traders
(usually large commercial banks) and their customers. When a Fund enters
into a contract for the purchase or sale of a security denominated in a
foreign currency, it may want to establish the U.S. dollar cost or proceeds,
as the case may be. By entering into a forward contract in U.S. dollars for
the purchase or sale of the amount of foreign currency involved in an
underlying security transaction, the Fund is able to protect itself against a
possible loss between trade and settlement dates resulting from an adverse
change in the relationship between the U.S. dollar and such foreign currency.
However, this tends to limit potential gains which might result from a
positive change in such currency relationships.
A Fund will not enter into forward foreign currency exchange contracts or
maintain a net exposure in such contracts where the Fund would be obligated to
deliver an amount of foreign currency in excess of the value of the
Fund's securities or other assets denominated in that currency or denominated in
a currency or currencies that the adviser believes will reflect a high degree
of correlation with the currency with regard to price movements. The
Fund generally will not enter into forward foreign currency exchange contracts
with a term longer than one year.
Foreign Currency Options. A foreign currency option provides the option
buyer with the right to buy or sell a stated amount of foreign currency at the
exercise price on a specified date or during the option period. The owner of a
call option has the right, but not the obligation, to buy the currency.
Conversely, the owner of a put option has the right, but not the obligation, to
sell the currency. When the option is exercised, the seller (i.e., writer) of
the option is obligated to fulfill the terms of the sold option. However,
either the seller or the buyer may, in the secondary market, close its position
during the option period at any time prior to expiration.
A call option on foreign currency generally rises in value if
the underlying currency appreciates in value, and a put option on foreign
currency generally falls in value if the underlying currency depreciates in
value. Although purchasing a foreign currency option can protect a Fund
against an adverse movement in the value of a foreign currency, the option will
not limit the movement in the value of such currency. For example, if the Fund
was holding securities denominated in a foreign currency that was appreciating
and had purchased a foreign currency put to hedge against a decline in the value
of the currency, the Fund would not have to exercise their put option.
Likewise, if the Fund were to enter into a contract to purchase a security
denominated in foreign currency and, in conjunction with that purchase, were to
purchase a foreign currency call option to hedge against a rise in value of the
currency, and if the value of the currency instead depreciated between the
date of purchase and the settlement date, the Fund would not have to exercise
its call. Instead, the Fund could acquire in the spot market the amount of
foreign currency needed for settlement.
Buyers and sellers of foreign currency options are subject to the
same risks that apply to options generally. In addition, there are
certain additional risks associated with foreign currency options. The markets
in foreign currency options are relatively new, and a Fund's ability to
establish and close out positions on such options is subject to the maintenance
of a liquid secondary market. Although a Fund will not purchase or write
such options unless and until, in the opinion of the Fund's investment adviser,
the market for them has developed sufficiently to ensure that the risks in
connection with such options are not greater than the risks in connection with
the underlying currency, there can be no assurance that a liquid
secondary market will exist for a particular option at any specific time. In
addition, options on foreign currencies are affected by all of those factors
that influence foreign exchange rates and investments generally. Foreign
currency options that are considered to be illiquid are subject to each Fund's
15% limitation on illiquid securities.
The value of a foreign currency option depends upon the value of the
underlying currency relative to the U.S. dollar. As a result, the price of the
option position may vary with changes in the value of either or both currencies
and may have no relationship to the investment merits of a foreign security.
Because foreign currency transactions occurring in the interbank market involve
substantially larger amounts than those that may be involved in the use of
foreign currency options, investors may be disadvantaged by having to deal in an
odd lot market (generally consisting of transactions of less than $1 million)
for the underlying foreign currencies at prices that are less favorable than for
round lots.
There is no systematic reporting of last sale information for
foreign currencies or any regulatory requirement that quotations available
through dealers or other market sources be firm or revised on a timely basis.
Available quotation information is generally representative of very large
transactions in the interbank market and thus may not reflect relatively smaller
transactions (i.e., less than $1 million) where rates may be less favorable.
The interbank market in foreign currencies is a global, around-the-clock
market. To the extent that the U.S. option markets are closed while the
markets for the underlying currencies remain open, significant price and rate
movements may take place in the underlying markets that cannot be reflected
in the options markets until they reopen.
Foreign Bank Instruments
Each Fund may invest in foreign bank instruments, including Eurodollar
Certificates of Deposit ("ECDs"), Eurodollar Time Deposits ("ETDs"), Yankee
Certificates of Deposit ("Yankee CDs"), and Europaper. These instruments are
subject to somewhat different risks than domestic obligations of
domestic issuers. Examples of these risks include international, economic and
political developments, foreign governmental restrictions that may adversely
affect the payment of principal or interest, foreign withholdings or other taxes
on interest income, difficulties in obtaining or enforcing a judgment against
the issuing bank, and the possible impact of interruptions of the flow of
international currency transactions. Different risks may also exist for ECDs,
ETDs, and Yankee CDs because the banks issuing these instruments, or
their domestic or foreign branches, are not necessarily subject to the same
regulatory requirements that apply to domestic banks, such as reserve
requirements, loan requirements, loan limitations, examinations, accounting,
auditing, and recording keeping and the public availability of information.
These factors will be carefully considered by a Fund's adviser in selecting
investments for the Fund.
U.S. Government Securities
Each Fund may invest in obligations issued or guaranteed by the U.S.
government and its agencies, authorities or instrumentalities. Some
U.S. government securities, such as Treasury bills, notes and bonds, which
differ only in their interest rates, maturities and times of issuance, are
supported by the full faith and credit of the United States of America. Others,
such as obligations issued or guaranteed by U.S. government agencies,
authorities or instrumentalities, are supported either by (a) the full faith and
credit of the U.S. government (such as securities of the Small Business
Administration), (b) the right of the issuer to borrow from the Treasury (such
as securities of Federal Home Loan Banks), (c) the discretionary authority of
the U.S. government to purchase the agency's obligations (such as securities of
the Federal National Mortgage Association), or (d) only the credit of the issuer
(such as securities of the Financing Corporation). The U.S. government is under
no legal obligation to purchase the obligations of its agencies, authorities and
instrumentalities. Securities guaranteed as to principal and interest by the
U.S. government and its agencies, authorities or instrumentalities are deemed to
include (i) securities for which the payment of principal and interest is based
by a guaranty of the U.S. government or its agencies, authorities
or instrumentalities, and (ii) participations in loans made to foreign
governments or their agencies that are so guaranteed. The secondary market for
certain of these participations is limited. Such participations may therefore
be regarded as illiquid.
Options
Each Fund (other than the money market Funds) may attempt to hedge all or
a portion of its portfolio by buying put options on portfolio securities.
These Funds may also write covered call options on portfolio securities to
attempt to increase their current income. Each Fund currently does not intend
to invest more than 5% of its net assets in premiums on options transactions.
Purchasing Put Options on Portfolio Securities. A Fund may purchase put
options on portfolio securities to protect against price movements in particular
securities in its portfolio. A put option gives the Fund, in return for a
premium, the right to sell the underlying security to the writer (seller) at a
specified price during the term of the option.
Writing Covered Call Options on Portfolio Securities. A Fund may
also write covered call options to generate income. As writer of a call option,
the Fund has the obligation upon exercise of the option during the option period
to deliver the underlying security upon payment of the exercise price. The
Fund may only sell call options either on securities held in its portfolio or on
securities which it has the right to obtain without payment of
further consideration (or has segregated cash in the amount of any
additional consideration).
Purchasing and Writing Over-The-Counter Options. A Fund may purchase
and write over-the-counter options on portfolio securities in
negotiated transactions with the buyers or writers of the options for those
options on portfolio securities held by the Fund and not traded on an exchange.
Over-the-counter options are two party contracts with price and terms negotiated
between buyer and seller. In contrast, exchange-traded options are third party
contracts with standardized strike prices and expiration dates and are purchased
from a clearing corporation. Exchange-traded options have a continuous liquid
market while over-the-counter options may not.
Financial Futures and Options on Financial Futures
Each Fund (other than the money market Funds) may purchase and sell
financial futures contracts to hedge all or a portion of its portfolio against
changes in interest rates. However, none of the Funds intends to do so during
the current fiscal year. Financial futures contracts call for the delivery of
particular debt instruments at a certain time in the future. The seller of the
contract agrees to make delivery of the type of instrument called for in the
contract and the buyer agrees to take delivery of the instrument at the
specified future time.
Each Fund (other than the money market Funds) may also write call options
and purchase put options on financial futures contracts as a hedge to attempt to
protect securities in its portfolio against decreases in value. However, none
of the Funds intends to do so during the current fiscal year. When a Fund
writes a call option on a futures contract, it is undertaking the obligation of
selling a futures contract at a fixed price at any time during a specified
period if the option is exercised. Conversely, as purchaser of a put option on
a futures contract, the Fund is entitled (but not obligated) to sell a futures
contract at the fixed price during the life of the option.
No Fund may purchase or sell futures contracts or related options if
immediately thereafter the sum of the amount of margin deposits on the
Fund's existing futures positions and premiums paid for related options would
exceed 5% of the market value of the Fund's total assets. When a Fund purchases
a futures contract, an amount of cash and cash equivalents, equal to the
underlying commodity value of the futures contract (less any related margin
deposits), will be deposited in a segregated account with the Fund's custodian
(or the broker, if legally permitted) to collateralize the position and thereby
insure that the use of such futures contract is unleveraged.
Risks. When a Fund uses financial futures and options on financial
futures as hedging devices, there is a risk that the prices of the securities
subject to the futures contracts may not correlate perfectly with the prices of
the securities in the Fund's portfolio. This may cause the futures contracts
and any related options to react differently than the portfolio securities
to market changes. In addition, the Fund's investment adviser could be
incorrect in its expectations about the direction or extent of market factors
such as interest rate movements. In these events, the Fund may lose money on
the futures contracts or options. It is not certain that a secondary market
for positions in futures contracts or for options will exist at all times.
Although the investment adviser will consider liquidity before entering
into options transactions, there is no assurance that a liquid secondary market
on an exchange or otherwise will exist for any particular futures contract or
option at any particular time. The Fund's ability to establish and close out
futures and options positions depends on this secondary market.
Weighted Average Portfolio Duration
The Taxable Fixed Income Fund and the Municipal Fixed Income Fund will
seek to limit, to the extent consistent with the Fund's investment objective
of current income, the magnitude of fluctuations in the Fund's net asset value
by limiting the dollar-weighted average duration of the Fund's portfolio as set
forth in the Prospectus. Duration is a commonly used measure of the potential
volatility of the price of a debt security, or the aggregate market value of a
portfolio of debt securities, prior to maturity. Securities with shorter
durations generally have less volatile prices than securities of comparable
quality with longer durations. A Fund should be expected to maintain a higher
average duration during periods of lower expected market volatility, and a lower
average duration during periods of higher expected market volatility.
Duration measures the magnitude of the change in the price of a
debt security relative to a given change in the market rate of interest.
The duration of a debt security depends upon three primary variables:
the security's coupon rate, maturity date and the level of market interest rates
for similar debt securities. Generally, debt securities with lower coupons
or longer maturities will have a longer duration than securities with
higher coupons or shorter maturities.
Duration is calculated by dividing the sum of the time-weighted values of
cash flows of a security or portfolio of securities, including principal
and interest payments, by the sum of the present values of the cash flows.
Certain debt securities, such as asset-backed securities, may be subject to
prepayment at irregular intervals. The duration of these instruments will be
calculated based upon assumptions established by the investment adviser as to
the probable amount and sequence of principal prepayments.
Credit Enhancement
Certain of the Funds' investments may have been credit enhanced by a
guaranty, letter of credit or insurance. The Funds typically evaluate
the credit quality and ratings of credit enhanced securities based upon
the financial condition and ratings of the party providing the credit
enhancement (the "credit enhancer"), rather than the issuer. Generally, a Fund
will not treat credit enhanced securities as having been issued by the credit
enhancer for diversification purposes. However, under certain circumstances
applicable regulations may require the Fund to treat the securities as having
been issued by both the issuer and the credit enhancer. The bankruptcy,
receivership or default of the credit enhancer will adversely affect the quality
and marketability of the underlying security.
Demand Features
The Funds may acquire securities that are subject to puts and standby
commitments ("demand features") to purchase the securities at their principal
amount (usually with accrued interest) within a fixed period following a demand
by the Fund. The demand feature may be issued by the issuer of the underlying
securities, a dealer in the securities or by another third party, and may not be
transferred separately from the underlying security. A Fund uses these
arrangements to provide the Fund with liquidity and not to protect
against changes in the market value of the underlying securities. The
bankruptcy, receivership or default by the issuer of the demand feature, or a
default on the underlying security or other event that terminates the demand
feature before its exercise, will adversely affect the liquidity of the
underlying security. Demand features that are exercisable even after a payment
default on the underlying security are treated as a form of credit enhancement.
When-Issued and Delayed Delivery Transactions
These transactions are arrangements in which a Fund purchases securities
with payment and delivery scheduled for a future time. The Fund engages in
when-issued and delayed delivery transactions only for the purpose of acquiring
portfolio securities consistent with the Fund's investment objective and
policies, and not for investment leverage.
These transactions are made to secure what is considered to be an
advantageous price and yield for the Fund. Settlement dates may be a month or
more after entering into these transactions, and the market values of
the securities purchased may vary from the purchase prices.
No fees or other expenses, other than normal transaction costs,
are incurred. However, liquid assets of the Fund sufficient to make payment for
the securities to be purchased are segregated at the trade date. These
securities are marked to market daily and are maintained until the transaction
is settled. Each Fund may engage in these transactions to an extent that would
cause the segregation of an amount up to 25% of the value of its net assets.
Lending of Portfolio Securities
The collateral received when a Fund lends portfolio securities must
be valued daily and, should the market value of the loaned securities increase,
the borrower must furnish additional collateral to the Fund. During the
time portfolio securities are on loan, the borrower pays the Fund any
dividends or interest paid on such securities. Loans are subject to termination
at the option of the Fund or the borrower. The Fund may pay reasonable
administrative and custodial fees in connection with a loan and may pay a
negotiated portion of the interest earned on the cash or equivalent collateral
to the borrower or placing broker.
Selling Securities Short
The Starwood Strategic Fund may sell securities short. When the Fund
makes a short sale, it must leave the proceeds from the short sale with the
broker and it must also deposit with the broker a certain amount of cash or
government securities to collateralize its obligation to replace the borrowed
securities which have been sold. In addition, the Fund must put in a segregated
account (not with the broker) an amount of cash or U.S. government securities
equal to the difference between the market value of the securities sold short at
the time they were sold short and any cash or government securities deposited
as collateral with the broker in connection with the short sale (not including
the proceeds from the short sale). In addition, until the Fund replaces
the borrowed security, it will daily maintain the segregated account at a level
so that the amount deposited in the account plus the amount deposited with
the broker (not including the proceeds from the short sale) will equal
the greater of (a) the current market value of the securities sold short and (b)
the market value of the securities at the time they were sold short. As a
result of these requirements, the Fund will not gain any leverage merely by
selling short, except to the extent that it earns interest on the immobilized
cash or government securities while also being subject to the possibility of
gain or loss from the securities sold short. The Fund may sell securities short
to the extent that would cause the amounts on deposits or segregated to equal
25% of the value of its net assets.
Restricted and Illiquid Securities
The ability of the Trustees to determine the liquidity of
certain restricted securities is permitted under the Securities and Exchange
Commission ("SEC") Staff position set forth in the adopting release for Rule
144A under the Securities Act of 1933 (the "Rule"). The Rule is a non-exclusive
safe harbor for certain secondary market transactions involving securities
subject to restrictions on resale under federal securities laws. The Rule
provides an exemption from registration for resales of otherwise restricted
securities to qualified institutional buyers. The Rule was expected to further
enhance the liquidity of the secondary market for securities eligible for resale
under Rule 144A. The Trust believes that the Staff of the SEC has left the
question of determining the liquidity of all restricted securities eligible for
resale under Rule 144A to the Trustees. The Trustees consider the following
criteria in determining the liquidity of certain restricted securities:
the frequency of trades and quotes for the security;
the number of dealers willing to purchase or sell the security and
the number of other potential buyers;
dealer undertakings to make a market in the security; and
the nature of the security and the nature of the marketplace trades.
Repurchase Agreements
The Funds require the Custodian to take possession of the
securities subject to repurchase agreements, and these securities are marked to
market daily. To the extent that the original seller does not repurchase
the securities from a Fund, the Fund could receive less than the repurchase
price on any sale of such securities. In the event that a defaulting seller
files for bankruptcy or becomes insolvent, disposition of securities by the Fund
might be delayed pending court action. The Funds believe that under the
regular procedures normally in effect for custody of the Funds' portfolio
securities subject to repurchase agreements, a court of competent jurisdiction
would rule in favor of the Fund and allow retention or disposition of such
securities. A Fund will only enter into repurchase agreements with banks and
other recognized financial institutions such as broker/dealers which are deemed
by the Fund's adviser to be creditworthy pursuant to guidelines established by
the Directors.
Reverse Repurchase Agreements
When effecting reverse repurchase agreements, liquid assets of the Fund,
in a dollar amount sufficient to make payment for the obligations to be
purchased, are segregated at the trade date. These securities are marked to
market daily and are maintained until the transaction is settled.
Portfolio Turnover
The Funds will not attempt to set or meet a portfolio turnover rate
since any turnover would be incidental to transactions undertaken in an attempt
to achieve a Fund's investment objective, without regard to the length of time
a particular security may have been held. The Adviser does not anticipate
that portfolio turnover will result in adverse tax consequences.
INVESTMENT LIMITATIONS
Except with respect to borrowing money, if a percentage limitation
set forth in the following investment limitations is adhered to at the time of
the investment, a later increase or decrease in percentage resulting from any
change in value or net assets will not result in a violation of such limitation.
Selling Short and Buying on Margin
The Funds will not sell securities short or purchase securities on margin,
except that (a) the Starwood Strategic Fund may sell securities short to the
extent that would cause amounts on deposits or segregated as a result thereof to
equal 25% of the value of its net assets, (b) the Funds (other than the Taxable
Money Market Fund and the Tax-Free Money Market Fund may purchase securities on
margin in connection with the purchase and sale of options, financial futures
and options on financial futures, and all Funds may obtain such short-term
credits as are necessary for clearance of transactions.
Issuing Senior Securities and Borrowing Money
The Funds will not issue senior securities except as required by forward
commitments to purchase securities or currencies and except that each Fund may
borrow money and engage in reverse repurchase agreements in amounts up to
one-third of the value of its total assets, including the amounts borrowed. The
Funds (other than the Starwood Strategic Fund) will not borrow money or engage
in reverse repurchase agreements for investment leverage, but rather as a
temporary, extraordinary, or emergency measure or to facilitate management of
the portfolio by enabling the Fund to meet redemption requests when
the liquidation of portfolio securities is deemed to be inconvenient or
disadvantageous. Each Fund (other than the Starwood Strategic Fund) will
not purchase any securities while borrowings in excess of 5% of its total assets
are outstanding. During the period any reverse repurchase agreements are
outstanding, but only to the extent necessary to assure completion of
the reverse repurchase agreements, the Funds will restrict the purchase of
portfolio instruments to money market instruments maturing on or before the
expiration date of the reverse repurchase agreements.
Pledging Assets
The Funds will not mortgage, pledge, or hypothecate any assets except to
secure permitted borrowings. In those cases, a Fund may pledge assets having a
market value not exceeding the lesser of the dollar amounts borrowed or 15%
of the value of total assets at the time of the borrowing. Margin deposits for
the purchase and sale of options, financial futures contracts and related
options are not deemed to be a pledge.
Diversification of Investments
With respect to securities comprising 75% of the value of its total assets
(100% in the case of the Taxable Money Market Fund), each Fund will not purchase
securities of any one issuer (other than cash, cash items, securities issued or
guaranteed by the government of the United States or its agencies or
instrumentalities and repurchase agreements collateralized by U.S. government
securities, and securities of other investment companies) if as a result more
than 5% of the value of its total assets would be invested in the securities of
that issuer or the Fund would own more than 10% of the outstanding voting
securities of that issuer.
<PAGE>
Investing in Real Estate
The Funds will not buy or sell real estate, including limited
partnership interests in real estate, although it may invest in securities of
companies whose business involves the purchase or sale of real estate or in
securities which are secured by real estate or interests in real estate.
Investing in Commodities
The Funds will not purchase or sell commodities, except that the Funds
(other than the Taxable Money Market Fund and the Tax-Free Money Market Fund)
may purchase and sell financial futures contracts and related options. Further,
the Funds may engage in transactions in foreign currencies and may purchase and
sell options on foreign currencies and indices for hedging purposes.
Underwriting
The Funds will not underwrite any issue of securities, except as it may be
deemed to be an underwriter under the Securities Act of 1933 in connection with
the sale of restricted securities which a Fund may purchase pursuant to
its investment objective, policies, and limitations.
Lending Cash or Securities
Each Fund will not lend any of its assets, except portfolio securities
up to one-third of the value of its total assets. This shall not prevent a
Fund from purchasing or holding U.S. government obligations, money
market instruments, variable rate demand notes, bonds, debentures,
notes, certificates of indebtedness, or other debt securities, entering into
repurchase agreements, or engaging in other transactions where permitted by the
Fund's investment objective, policies and limitations.
Concentration of Investments
Each Fund will not invest 25% or more of the value of its total assets
in any one industry or in government securities of any one foreign country,
except that (I) each Fund may invest without limitation in securities issued
or guaranteed by the U.S. government, its agencies or instrumentalities, (ii)
each of the Aggressive Growth Fund, the Asset Allocation Fund, the Taxable
Fixed Income Fund and the Municipal Fixed Income Fund may invest without
limitation in other investment companies and (iii) each of the Taxable Money
Market Fund and the Tax-Free Money Market Fund may invest without limitation in
domestic bank instruments. Governmental issuers of municipal securities are
not considered part of any "industry." Each of the Municipal Fixed Income Fund
and the Tax-Free Money Market Fund may invest more than 25% of the value of
its total assets in a broader segment of the municipal securities market, such
as revenue obligations of hospitals and other health care facilities, housing
agency revenue obligations, or airport revenue obligations.
Investing in Securities of Other Investment Companies
Each Fund will limit its investments in other investment companies to no
more than 3% of the total outstanding voting securities of any one
investment company, will invest no more than 5% of its total assets in any one
investment company, and will invest no more than 10% of its total assets in
investment companies in general, except that each of the Aggressive Growth Fund,
the Asset Allocation Fund, the Taxable Fixed Income Fund and the Municipal Fixed
Income Fund may invest of up to 25% of its total assets in any one investment
company and up to 100% of its total assets in investment companies in general,
subject to the other limitations described herein. The foregoing limitations
are not applicable to investment company securities acquired as part of
a merger, consolidation, reorganization or other acquisition.
The foregoing investment limitations cannot be changed without shareholder
approval. The following limitations, however, may be changed by the Board of
Trustees without shareholder approval. Shareholders will be notified before any
material change in these limitations becomes effective.
Investing in Restricted Securities
Each Fund will not invest more than 10% of the value of its total assets in
securities subject to restrictions on resale under the Securities Act of 1933,
except for commercial paper issued under Section 4(2) of the Securities Act of
1933 and certain other restricted securities which meet the criteria
for liquidity as established by the Trustees.
Investing in Illiquid Securities
Each Fund will not invest more than 15% of the value of its net assets (10%
in the case of the money market Funds) in illiquid securities,
including repurchase agreements providing for settlement in more than seven days
after notice, over-the-counter options, certain foreign currency options,
and certain securities not determined by the Trustees to be liquid.
Investing in New Issuers
Each Fund will not invest more than 5% of the value of its total assets in
securities of companies, including their predecessors, that have been
in operation for less than three years. With respect to asset-backed
securities, the Funds will treat the originator of the asset pool as the company
issuing the security for purposes of determining compliance with this
limitation. Each of the Municipal Fixed Income Fund and the Tax-Free Money
Market Fund will not invest more than 5% of the value of its total assets in
industrial development bonds where the principal and interest are the
responsibility of companies (or guarantors, where applicable) with less than
three years of continuous operations, including the operations of any
predecessor.
Investing in Issuers whose Securities are Owned by Officers and Trustees
Each Fund will not purchase or retain the securities of any issuer if the
officers and Trustees of the Trust or its investment adviser owning individually
more than 1/2 of 1% of the issuer's securities together own more than 5% of the
issuer's securities.
Investing in Minerals
The Funds will not purchase or sell oil, gas, or other mineral
exploration or development programs or leases, although they may purchase the
securities of issuers which invest in or sponsor such programs.
Investing in Warrants
Each Fund (other than the Taxable Money Market Fund and the Tax-Free
Money Fund) may invest up to 5% of its total assets in warrants, including
those acquired in units or attached to other securities. To comply with certain
state restrictions, each Fund will limit its investments in such warrants not
listed on the New York or American Stock Exchanges to 2% of its net assets.
(If state restrictions change, this latter restriction may be revised without
notice to shareholder.) For purposes of this investment restriction, warrants
will be valued at the lower of cost or market, except that warrants acquired by
a Fund in units with or attached to securities may be deemed to be without
value.
Dealing in Puts and Calls
Each Fund (other the Taxable Money Market Fund and the Tax-Free Money
Market Fund) may write covered call options and secured put options on up to 25%
of its net assets and may purchase put and call options, provided that no more
than 5% of the fair market value of its net assets may be invested in premiums
on such options.
MANAGEMENT OF THE TRUST
Trustees and Officers of the Trust
Trustees and officers of the Trust, together with information as to
their principal business occupations during at least the last five years, are
shown below. Each Trustee who is an "interested person" of the Trust, as
defined in the Investment Company Act of 1940, is indicated by an asterisk.
Name, Address and Age Positions with the Trust
and Principal Occupation
* Timothy L. Ashburn (46) Trustee (Chairman of the Board) and President
429 N. Pennsylvania St. of the Trust; Chairman of the Board and
Indianapolis, IN 46204 President, Vintage Advisers, Inc.(December 1994
to present); Chairman of the Board,
Unified Corporation, Unified Management
Corporation and Unified Advisers, Inc.
(December 1989 to present); Trust Division
Manager and Senior Trust Officer, Vine Street
Trust Company (July 1991 to April 1994).
Charles H. Binger (40) Trustee of the Trust; Partner, Thompson
One Merchantile Center Coburn (1987 to present).
Suite 3300
St. Louis, MO 63101
Daniel J. Condon (46) Trustee of the Trust; Vice President and
101 Carley Court Officer, International Crankshaft Inc. (1990 to
Georgetown, KY 40324 present); General Manager, Van Leer Containers,
Inc. (1988 through 1990).
Philip L. Conover (50) Trustee of the Trust; Adjunct Professor of
8218 Cypress Hollow Finance, University of South Florida (August
Sarasota, FL 34238 1994 to present);
Managing Director and Chief Operating Officer,
Federal Housing Finance Board (November 1990
through April 1994);
President and CEO, Trustcorp Bank (February
1989 through November 1990).
David E. LaBelle (47) Trustee of the Trust; Vice President of
200 Bent Creek Ct. Compensation and Benefits, Occidental Petroleum
Southlake, TX 76092 Corporation (May, 1993 to present); Vice
President of Human Resources, Island
Creek Coal Company (A subsidiary of Occidental
Petroleum) (June, 1990 to April, 1993);
Director of Human Resources, Occidental
Chemical Corporation (March, 1989
to May, 1990).
* Jack R. Orben (58) Trustee of the Trust; Chairman and CEO,
40 Wall St. Associated Family Services (January 1980 to
New York, NY 10005 present); Chairman and CEO, Starwood
Corporation (March 1984 to present); Chairman,
Fiduciary Counsel, Inc. (April 1979 to present);
Chairman, Estate Management Company (January
1978 to present).
Thomas G. Napurano (55) Treasurer of the Trust; Chief Financial Officer,
429 N. Pennsylvania St. Vintage Advisers, Inc. (January 1995 to present;
Indianapolis, IN 46204 Senior Vice President and Chief Financial
Officer of Unified Corporation, Unified
Management Corporation and Unified Advisers,
Inc.
Lynn E. Wood (50) Secretary of the Trust; Chief Operating Officer,
429 N. Pennsylvania St. Vintage Advisers, Inc. (January 1995 to present):
Indianapolis, IN 46204 President and Chief Operating Officer, Unified
Corporation, Unified Management Corporation and
Unified Advisers, Inc. (July 1993 to present);
Vice President and Managing Director, Unified
Management Corporation (January 1990 to July
1993).
The Board of Trustees has appointed an Executive Committee composed of
Trustees Ashburn, Conover and Orben. The Executive Committee has all of
the authority of the Board of Trustees except that, without further
authorization by resolution of the Board of Trustees, the Executive Committee
does not have the authority to (I) authorize dividends or other distributions,
(ii) approve or propose to shareholders any action required to be approved by
shareholders under the Trust's Declaration of Trust, By-Laws or applicable law,
(iii) fill vacancies on the Board of Trustees or on any of its committees, (iv)
amend the Trust's Declaration of Trust or By-Laws, (v) approve any plan of
merger involving, or any sale of substantially all the assets of, any fund of
the Trust, whether or not requiring shareholder approval or (vi) authorize
or approve the issuance or sale or a contract for sale of shares of the Trust.
No executive officer of the Trust receives annual aggregate
compensation from the Trust in excess of $60,000, and no Trustee or executive
officer of the Trust receives any pension or retirement benefits from the
Trust. The table sets forth the total compensation paid by the Trust during
the fiscal year ended September 30, 1996, to each of its Trustees, all of
which consists of meeting fees.
Compensation Table
Name of Trustee Total Compensation
Timothy L. Ashburn $ - 0 -
Charles H. Binger $10,000
Daniel J. Condon $10,000
Philip L. Conover $10,000
David E. LaBelle $4,800
Jack R. Orben $ - 0 -
Fund Ownership
As of December 11, 1996, the following persons may be deemed
to beneficially own five percent (5%) or more of the Starwood Strategic Fund:
Robert A. Orben, 1080 Pintail Ct., Columbus, IN -- 32.82%; Christine M. Clemson,
1 Bowdoin St., Shrewsbury, MA --6.95%; Judith C. Ristow, 7206 Whitehall Dr.,
Indianapolis, IN -- 6.24%; David A. Powless, 161 Sagebrush Dr., Corrales, NM --
6.36%; Rosa C. Raveneau, 2 Tudor City Pl., Apt. 1CN, New York, NY --
13.55%.
As of December 11, 1996, the following persons may be deemed to
beneficially own five percent (5%) or more of the Aggressive Growth Fund:
Martin Rhys Farlow, 5049 Potters Pike, Indianapolis, IN -- 6.41%;
Wade Rademacher, 12732 Clay Center Rd., Carmel, IN -- 8.44%; Charles F.
Anastoff, 128 Diplomat Ct., Apt. 8, Beech Grove, IN -- 7.16%; Unified Advisers,
Inc., 429 N. Pennsylvania St., Indianapolis, IN -- 27.00%.
As of December 11, 1996, the following persons may be deemed to
beneficially own five percent (5%) or more of the Fiduciary Value Fund (now the
Laidlaw Fund): Vintage Advisers, Inc., 429 N. Pennsylvania St., Indianapolis,
IN -- 8.75%; Unified Advisers, Inc., 429 N. Pennsylvania St., Indianapolis, IN
- -- 91.25%.
As of December 11, 1996, the following persons may be deemed to
beneficially own five percent (5%) or more of the Asset Allocation Fund:
Vintage Advisers, Inc., -- 5.23%; Unified Advisers, Inc., -- 46.18%;
Unified Holdings, Inc., 429 N. Pennsylvania St., Indianapolis, IN -- 13.59%;
Jon S. Michael Profit Sharing Plan, Jon S. Michael Employer Contribution, 2221
Carberry Dr., West Lafayette, IN -- 9.05%.
As of December 11, 1996, the following persons may be deemed to
beneficially own five percent (5%) or more of the Taxable Fixed Income Fund:
Vintage Advisers, Inc., -- 58.27%; Unified Advisers, Inc., -- 41.73%.
As of December 11, 1996, the following persons may be deemed to
beneficially own five percent (5%) or more of the Municipal Fixed Income Fund:
Vintage Advisers, Inc., -- 43.63%; Unified Advisers, Inc., -- 56.37%.
As of December 11, 1996, the following persons may be deemed to
beneficially own five percent (5%) or more of the Tax-Free Money Market
Fund: Atomic Energy Industrial Labs of SW, Inc., 9261 Kirby Dr., Houston, TX
- -- 8.44%.
As of December 11, 1996, as a result of the above described beneficial
ownership, Robert Orben may be deemed to control the Starwood Strategic Fund;
Unified Advisers, Inc., an Indiana corporation, may be deemed to control the
Aggressive Growth Fund, the Fiduciary Value Fund (now the Laidlaw Fund), the
Asset Allocation Fund, the Taxable Fixed Income Fund and the Municipal Fixed
Income Fund; and Vintage Adviser, Inc., a Delaware corporation, may be deemed to
control the Taxable Fixed Income Fund and the Municipal Fixed Income Fund. Jack
Orben and Timothy Ashburn may be deemed to control Vintage Advisers, Inc. and,
therefore, may be deemed to control the Funds controlled by Vintage Advisers,
Inc. Unified Advisers, Inc. is a wholly owned subsidiary of Unified Holdings,
Inc.
In addition to the beneficial ownership described above, the
officers and Trustees as a group beneficially owned as of December 11, 1996,
1.11% of the Starwood Strategic Fund; 2.36% of the Aggressive Growth Fund; 3.94%
of the Asset Allocation Fund; less than 1% of the Taxable Money Market Fund; and
0% of the other Funds.
INVESTMENT ADVISORY ARRANGEMENTS
Investment Adviser
The Trust's investment adviser is Vintage Advisers, Inc. (the "Adviser").
Timothy L. Ashburn, Chairman of the Board and President of the Trust, is
the Chairman of the Board and President of the Adviser, and owns 25% of
the Adviser's outstanding voting securities. Jack R. Orben, Trustee of the
Trust, is a director and Secretary of the Adviser and owns 25% of the Adviser's
outstanding voting securities. Thomas G. Napurano, Treasurer of the Trust, is
the Executive Vice President and Chief Financial Officer of the Adviser. Lynn
E. Wood, Secretary of the Trust, is a director and Executive Vice President and
Chief Operating Officer of the Adviser.
Sub-Advisers
Fiduciary Counsel, Inc. ("Fiduciary Counsel") is the sub-adviser to each
of the Taxable Fixed Income Fund, the Municipal Fixed Income Fund, the Taxable
Money Market Fund, and the Tax-Free Money Market Fund. Starwood Corporation is
the sub-adviser of the Starwood Strategic Fund. Each of Fiduciary Counsel and
Starwood Corporation is controlled by Associated Family Services, Inc. ("AFS").
Jack R. Orben, Trustee of the Trust, is Chairman and CEO of each of Fiduciary
Counsel, Starwood Corporation and AFS. Mr. Orben owns 33% of the outstanding
voting securities of AFS.
Advisory Fees
For their advisory services, the Adviser and each Sub-Adviser
receives an annual investment advisory fee as described in the Prospectus. For
the fiscal year ended September 30, 1996, the Taxable Money Market Fund and
the Tax-Free Money Market Fund paid advisory fees of $194,953 and $28,468,
respectively, and the Advisor waived its entire advisory fee with respect to the
other Funds. Fiduciary Counsel, Inc., Sub-Adviser to the Money Market Funds,
received $24,166 and $3,525 from the Adviser for advisory services provided to
the Taxable Money Market Fund and the Tax-Free Money Market Fund, respectively.
During the period from June 2, 1995 (commencement of operations) through
September 30, 1995, the Adviser waived its entire advisory fee with respect to
each Fund. The Sub- Advisers were not paid any sub-advisory fees during that
period.
The Adviser has undertaken to comply with the expense
limitation established by certain states for investment companies whose shares
are registered for sale in those states. If a Fund's operating expenses exceed
this expense limitation, the investment advisory fee will be reduced by the
amount of the excess, subject to an annual adjustment. If the expense
limitation is exceeded, the amount to be waived by the Adviser will be limited,
in any single fiscal year, by the amount of the investment advisory fee.
DISTRIBUTION ARRANGEMENTS
Rule 12b-1 under the Investment Company Act of 1940 describes the
circumstances under which an investment company such as the Trust may, directly
or indirectly, bear the expenses of distributing its shares. The Rule defines
such distribution expenses to include the cost of any activity which is
primarily intended to result in the sale of Trust shares.
The Trust has adopted a Distribution Plan with respect to each of the eight
Funds. Pursuant to this Plan, the Funds are authorized to incur distribution
expenses including those incurred in connection with preparing and distributing
sales literature and advertising, preparing, printing and distributing
prospectuses and statements of additional information used for other than
regulatory purposes or distribution to existing shareholders, implementing and
operating the Plan, and compensating third parties for their distribution
services. Distribution expenses attributable to a particular Fund are borne by
that Fund. Distribution expenses which are not readily identifiable as
attributable to a particular Fund are allocated among the Funds based on the
relative size of their average net assets.
Each Fund may expend annually up to 0.10% of the Fund's average daily net
assets pursuant to the Plan. A report of the amounts so expended by each Fund
and the purpose of the expenditures must be made to and reviewed by the Board of
Trustees at least quarterly. In addition, the Plan may not be amended to
increase materially the costs which any Fund may bear for distribution pursuant
to the Plan without approval of the amendment by the shareholders of the
affected Fund.
The Board of Trustees expects that the adoption of the Plan will result
in the sale of a sufficient number of shares so as to allow the Funds to
achieve economic viability. It is also anticipated that an increase in the size
of each Fund will facilitate more efficient portfolio management and assist the
Fund in seeking to achieve its investment objective.
During the period ended September 30, 1996, Unified Management
Corporation, the Trust's distributor, spent $76,800 under the Distribution
Plan. Of this amount, approximately $16,086 was spent on printing and mailing
marketing materials; $47,500 was spent on sales and marketing payroll; $2,283
was spent on advertising and $10,700 was spent on sales related travel and
entertainment expenses. The Trust's total reimbursement of the distributor was
.10% of each Fund's average daily net assets, or $45,588.
ADMINISTRATIVE SERVICES ARRANGEMENTS
The Trust has adopted a Shareholders Services Plan (the "Services Plan")
with respect to each Fund. Pursuant to the Services Plan, the Funds
are authorized to incur annual expenses of up to 0.15% of their average daily
net assets for administrative support services provided their shareholders.
Such expenses may include costs and expense incurred by third parties for
administrative services to the Funds' shareholders, including
answering shareholder inquiries, maintenance of shareholder accounts, performing
sub accounting, obtaining taxpayer identification number certificates
from shareholders, personnel whose time is attributable to servicing the
shareholders of the Funds, and the provision of personal services to
shareholders. For the fiscal year ended September 30, 1996, the Trust's
Administrator, Unified Advisers, Inc., received the following payments pursuant
to the Services Plan: Starwood Strategic Fund, $598; Aggressive Growth Fund,
$972; Fiduciary Value Fund (now the Laidlaw Fund), $56; Asset Allocation Fund,
$994; Taxable Fixed Income Fund, $41; Municipal Fixed Income Fund, $45; Taxable
Money Market Fund, $52,637; Tax-Free Money Market Fund, $7,686. During the
period from June 2, 1995 to September 30, 1995, no amounts were expended under
the Services Plan by any Fund.
BROKERAGE TRANSACTIONS
When selecting brokers and dealers to handle the purchase and sale of
portfolio instruments, a Fund's investment adviser looks for prompt execution of
the order at a favorable price. In working with dealers, the adviser
will generally use those who are recognized dealers in specific
portfolio instruments, except when a better price and execution of the order can
be obtained elsewhere. The Adviser and the respective Sub-Advisers make
decisions on portfolio transactions and selects brokers and dealers subject to
review by the Board of Trustees.
The Adviser and Sub-Advisers may select brokers and dealers who offer
brokerage and research services. These services may be furnished directly to
the Fund or to the Adviser and Sub-Advisers and may include advice as to
the advisability of investing in securities, security analysis and reports,
economic studies, industry studies, receipt of quotations for portfolio
evaluations and similar services.
Research services provided by brokers may be used by the Adviser and
Sub-Advisers in advising the Fund's and other clients. To the extent
that receipt of these services may supplant services for which the Adviser or
the Sub-Advisers might otherwise have paid, it would tend to reduce their
expenses. During the period from June 2, 1995 to September 30, 1995, the
Adviser did not direct any brokerage transactions to brokers because of research
services provided.
For the fiscal year ended September 30, 1996, the Starwood Strategic
Fund paid brokerage commissions of $2,317 to Unified Management Corporation, the
Trust's Distributor, for effecting 100% of that Fund's commission transactions.
During the period from June 2, 1995 to September 30, 1995, no Fund paid any
brokerage commissions to the Distributor.
PURCHASE AND REDEMPTION
Terms of Purchase
The Trust reserves the right to reject any purchase order and to change the
amount of the minimum initial and subsequent investments in the Funds
upon notice.
Reopening an Account
A shareholder may reopen a closed account with a minimum investment of
$1,000 without filing a new account application, during the calendar year
the account is closed or during the following calendar year, provided that
the information on the existing account application remains correct.
Redemption in Kind
The Trust has committed to pay in cash all redemption requests by a
shareholder of record, limited in amount during any 90-day period up to
the lesser of $250,000 or 1% of the value of the particular Fund's net assets at
the beginning of such period. Such commitment is irrevocable without the
prior approval of the Securities and Exchange Commission. In the case of
requests for redemption in excess of such amount, the Board of Trustees reserves
the right to make payments in whole or in part in securities or other assets of
the particular Fund. In this event, the securities would be valued in the same
manner as the particular Fund's net asset value is determined. If the recipient
sold such securities, brokerage charges would be incurred.
Suspension of Redemptions
The right of redemption may be suspended or the date of payment postponed
(a) during any period when the New York Stock Exchange is closed, (b) when
trading in the markets the particular Fund normally uses is restricted, or when
an emergency exists as determined by the Securities and Exchange Commission so
that disposal of the particular Fund's investments or determination of its net
asset value is not reasonably practicable, or (c) for such other periods as the
Securities and Exchange Commission by order may permit to protect the particular
Fund's shareholders.
DETERMINATION OF NET ASSET VALUE
The methods and days on which net asset value is calculated by each
Fund are described in the Prospectus.
Valuation of Portfolio Securities
Portfolio securities owned by a Fund and listed or traded on any national
securities exchange are valued on the basis of the last sale on such exchange
each day the exchange is open for business. Securities not listed on an
exchange or national securities market, or securities in which there were no
transactions, are valued at the average of the most recently reported bid and
asked prices. Bid price is used when no asked price is available. Options are
valued at the last sales price on an exchange. Options for which there were no
transactions are valued at the average of the most recently reported bid
and asked prices. Money market instruments (certificates of deposit, commercial
paper, etc.) are valued at amortized cost if not materially different from
market value. Portfolio securities for which market quotations are not readily
available are to be valued in good faith as determined by the Board of Trustees.
Other assets, which include cash, prepaid and accrued items and amounts
receivable as income on investment and from the sale of portfolio securities,
are carried at book value, as are all liabilities.
TAX STATUS
Status of the Funds
The Funds intend to pay no federal income tax because they expect to meet
the requirements of Subchapter M of the Internal Revenue Code applicable
to regulated investment companies and to receive the special tax treatment
afforded to such companies. To qualify for this treatment, a Fund must, among
other requirements:
derive at least 90% of its gross income from dividends, interest, and
gains from the sale of securities;
derive less than 30% of its gross income from the sale of securities
held less than three months;
invest in securities within certain statutory limits; and
distribute to its shareholders at least 90% of its net income earned
during the year.
Although the Starwood Strategic Fund, Fiduciary Value Fund (now the
Laidlaw Fund), Taxable Fixed Income Fund and Municipal Fixed Income Fund did not
qualify to be taxed as regulated investment companies for the tax year
ended September 30, 1996 because of each Fund's small size and limited
operations, there were no tax consequences and the Funds were not required to
pay any tax. These Funds intend to qualify as regulated investment companies
in subsequent years.
Shareholders' Tax Status
The Taxable Funds. Shareholders are subject to federal income tax on
dividends and capital gains received as cash or additional shares. Depending on
the composition of a Fund's income, a portion of the dividends from
net investment income may qualify for the dividends received deduction allowable
to certain U.S. corporations. In general, dividend income of a Fund distributed
to certain U.S. corporate shareholders will be eligible for the corporate
dividends received deduction only to the extent that (I) the Fund's income
consists of dividends paid by certain U.S. corporations and (ii) the Fund would
have been entitled to the dividends received deduction with respect to
such dividend income if the Fund were not a regulated investment company.
The Tax Free Funds. Shareholders are not required to pay the
federal regular income tax on any dividends received from the Fund that
represent net interest on tax-exempt municipal bonds. However, under the Tax
Reform Act of 1986, dividends representing net interest earned on some municipal
bonds may be included in calculating the federal individual alternative minimum
tax or the federal alternative minimum tax for corporations. In addition, the
Tax Reform Act of 1986 treats interest on certain "private activity" bonds
issued after August 7, 1986, as a tax preference item for both individuals
and corporations. Thus, should the Fund purchase any such bonds, a portion of
the Fund's dividends may be treated as a tax preference item.
Dividends of the Fund representing net interest income earned on some
temporary investments and any realized net short-term gains are taxed
as ordinary income.
All Funds. The foregoing tax consequences apply whether dividends are
received in cash or as additional shares. No portion of any income
dividend paid by any Fund is eligible for the dividends received deduction
available to corporations.
Capital Gains
Shareholders will pay federal tax at capital gains rates on
long-term capital gains distributed to them regardless of how long they have
held the Fund shares.
Foreign Taxes
Dividend and interest income received by a Fund from sources outside the
U.S. may be subject to withholding and other taxes imposed by such
foreign jurisdictions. Tax conventions between certain countries and the U.S.
may reduce or eliminate these foreign taxes, however, and foreign countries
generally do not impose taxes on capital gains respecting investments by foreign
investors.
PERFORMANCE INFORMATION
Quotations of a Fund's performance are based on historical earnings, show
the performance of a hypothetical investment, and are not intended to indicate
future performance of a Fund. An investor's shares when redeemed may be worth
more or less than their original cost. Performance of a Fund will vary based on
changes in market conditions and the level of the Fund's expenses.
Total Return
Cumulative total return of a Fund's shares reflects the applicable
Fund's total performance over a specific period of time. No Fund other than
the Taxable Money Market Fund (which does not advertise its total return)
had investment operations during the period from June 2, 1995 to September 30,
1995
Yield
The yield of a Fund's shares (other than the money market Funds) is
determined each day by dividing the net investment income per share (as defined
by the Securities and Exchange Commission) earned by the Fund over a thirty-day
period by the net asset value per share of the Fund on the last day of the
period. This value is annualized using semi-annual compounding. This means
that the amount of income generated during the thirty-day period is assumed to
be generated each month over a 12-month period and is reinvested every six
months.
The "yield" of a money market Fund refers to the income generated by an
investment in the Fund over a seven-day period. This income is then
annualized. The amount of income generated by investments during the week is
assumed to be generated each week over a 52-week period and is shown as a
percentage of the investment. The "effective yield" is calculated similarly
but, when annualized, the income earned by an investment in the Fund is
assumed to be reinvested. The effective yield will be slightly higher than
the yield because of the compounding effect of this assumed reinvestment.
The yield of does not necessarily reflect income actually earned by the
applicable shares because of certain adjustments required by the Securities and
Exchange Commission and, therefore, may not correlate to the dividends or other
distributions paid to shareholders. To the extent that financial institutions
and broker/dealers charge fees in connection with services provided in
conjunction with an investment in the Fund, performance will be reduced for
those shareholders paying those fees.
The annualized yield of the Taxable Money Market Fund and the
Tax-Free Money Market Fund for the seven-day period ended September 30, 1996
were 4.04% and 1.93%, respectively. The effective yield of the Taxable Money
Market Fund and the Tax-Free Money Market Fund for that seven- day period were
4.13% and 1.96%, respectively.
Tax-Equivalent Yield
The tax-equivalent yield of the Municipal Fixed Income Fund and Tax-Free
Money Market Fund is calculated similarly to the yield, but is adjusted to
reflect the taxable yield that the applicable shares would have to earn to equal
their actual yield, assuming tax rates of 15%, 28%, 31% and 36%, and assuming
that income is 100% tax-exempt.
Performance Comparisons
A comparison of the quoted non-standard performance of various
investments is valid only if performance is calculated in the same manner.
Because there are different methods of calculating performance, investors should
consider the effect of the methods used to calculate performance when comparing
performance of a particular Fund with the performance quoted with respect
to other investment companies or types of investments.
From time to time, in advertising and marketing literature, a Fund's
performance may be compared to the performance of broad groups of mutual funds
with similar investment goals, as tracked by independent organizations such as
Investment Company Data, Inc. ("ICD"), Lipper Analytical Services,
Inc. ("Lipper"), CDA Investment Technologies, Inc. ("CDA"), Morningstar, Inc.
and other independent organizations. When these organizations' tracking results
are used, a Fund will be compared to the appropriate fund category, that is, by
fund objective and portfolio holdings or the appropriate volatility grouping,
where volatility is a measure of a fund's risk. Rankings may be listed among
one or more of the asset-size classes as determined by the independent ranking
organization. Footnotes in advertisements and other marketing literature will
include the organization issuing the ranking, time period, and asset-size class,
as applicable, for the ranking in question.
In addition, a particular Fund's performance may be compared to unmanaged
indices of securities that are comparable in their terms and intent to those in
which the Fund invests such as the Dow Jones Industrial Average ("DJIA"),
Standard & Poor's 500 Stock Index ("S&P 500"), the Lehman Brothers Government/
Corporate Bond Index and the Consumer Price Index ("CPI"). The DJIA and S&P 500
are unmanaged indices widely regarded as representative of the equity market in
general. The CPI is a commonly used measured of inflation.
Marketing and other literature for the Funds may include a description
of the potential risks and rewards associated with an investment in a
particular Fund. The description may include a comparison of a particular Fund
to broad categories of comparable funds in terms of potential risks and returns.
The description may also compare a particular Fund to bank products, such as
certificates of deposit. Unlike mutual funds, certificates of deposit
are insured up to $100,000 by the U.S. government and offer a fixed rate of
return. Because bank products guarantee the principal value of an investment
and money market funds seek stability of principal, these investments are
considered to be less risky than investments in either bond or equity funds,
which may involve loss of principal.
The risks and rewards associated with an investment in bond or equity funds
depend upon many factors. For fixed income funds these factors include, but are
not limited to a fund's overall investment objective, the average portfolio
maturity, credit quality of the securities held, and interest rate movements.
For equity funds, factors include a fund's overall investment objective, the
types of equity securities held and the financial position of the issuers of the
securities. The risks and rewards associated with an investment in
international bond or equity funds will also depend upon currency exchange rate
fluctuation. Shorter-term bond funds generally are considered less risky and
offer the potential for less return than longer-term fixed income funds. The
same is true of domestic bond funds relative to international fixed income
funds, and fixed income funds that purchase higher quality securities relative
to bond funds that purchase lower quality securities. Growth and income equity
funds are generally considered to be less risky and offer the potential for less
return than growth funds. In addition, international equity funds usually are
considered more risky than domestic equity fund but generally offer the
potential for greater return.
INFORMATION ABOUT THE TRUST
The Trust was organized on February 1, 1995 as an Indiana business trust.
The By-Laws of the Trust provide that the Trustees shall promptly call a special
meeting of shareholders for the purpose of voting upon the question of removal
of any Trustee or Trustees upon the written request of shareholders of the Trust
holding at least 10% of all votes entitled to be cast at an election of
Trustees.
CUSTODIAN, TRANSFER AGENT, FUND ACCOUNTING AGENT
AND INDEPENDENT ACCOUNTANTS
Star Bank, N.A., 425 Walnut Street, Cincinnati, Ohio 45201 ("Custodian")
serves as the custodian for each of the Funds. General correspondence to the
Custodian, such as for IRA information, etc., should be addressed to: Star
Bank, P.O. Box 1038 Location 6118, Cincinnati, Ohio 45201. When Fund purchases
or deposits require delivery directly to the Custodian, those correspondences
should be addressed to: The Vintage Funds, [name of specific Fund in which you
are purchasing shares], P.O. Box 640689, Cincinnati, Ohio, 45264-0689.
Unified Advisers, Inc., P.O. Box 6110, Indianapolis, Indiana
46206-6110, acts as the transfer agent, fund accounting agent and administrator
for the Trust (the "Transfer Agent"). The Transfer Agent maintains the records
of each shareholder's account, answers shareholders' inquiries concerning their
accounts, processes purchases and redemptions of shares, acts as dividend and
distribution disbursing agent and performs other accounting and
shareholder service functions. The Transfer Agent provides the Trust with
certain monthly reports, record-keeping and other management-related services.
For its services the Transfer Agent receives a monthly fee at an annual rate of
.025% and .0675% of the net assets of the money market funds and the non-money
market funds, respectively. The Transfer Agent and Unified Management
Corporation are both wholly owned subsidiaries of Unified Holdings, Inc.
Neither the Custodian nor Unified Advisers, Inc., has any part
in determining the investment policies of the Trust or any of the Funds or
which securities are to be purchased or sold by the Funds, and neither can
provide protection to shareholders against possible depreciation of assets.
McCurdy & Associates CPA s, Inc., 27955 Clemens Road, Westlake, OH
44145, independent accountants, have been selected as the Trust s auditors.
FINANCIAL STATEMENTS
The financial statements and independent auditor's report for The
Vintage Funds required to be included in this Statement of Additional
Information are incorporated herein by this reference to the Trust's
Annual Report to Shareholders for the year ended September 30, 1996. The
financial statements and independent auditor's report for The Laidlaw Covenant
Fund, which was acquired by the Laidlaw Fund (formerly the Fiduciary Value
Fund) required to be included in this Statement of Additional Information are
incorporated herein by reference to The Laidlaw Covenant Fund's Annual Report to
Shareholders for the year ended December 31, 1995. The Trust will provide
the Reports without charge upon request by calling the Trust at
1-800-408-4682.
The following unaudited financial statements of the Laidlaw Fund
represent the pooled financial statements of the Fiduciary Value Fund and The
Laidlaw Covenant Fund for the nine-month period ended September 30, 1996.
<TABLE>
THE LAIDLAW FUND
STATEMENT OF NET ASSETS
SEPTEMBER 30,1996 (UNAUDITED)
<CAPTION>
<S> <C>
Value
Description Shares (Note 2)
COMMON STOCKS - 92.1% of total investments
Chemicals - 7.0%
Air Products & Chemicals 2,500 $ 145,625
Vulcan Materials 1,600 96,000
241,625
Consumer Products - 5.8%
Clorox Co. 1,400 134,225
Rubbermaid, Inc. 2,700 66,150
200,375
Drugs and Health Care - 9.5%
Alza, Inc. 3,000 80,625
Bergen Brunswig Corp. "Class A" 2,205 70,009
Merck & Co., Inc. 1,100 77,412
Pharmacia & Upjohn 2,465 101,681
329,727
Equipment and Electronics - 2.5%
Hubbell, Inc. "Class B" 2,310 85,470
85,470
Financial Services - 13.8 %
Allstate Corporation 1,390 68,458
Bank of New York 4,000 117,500
Banc One 2,750 112,750
Cigna Corp. 600 71,925
AG Edwards 2,000 58,250
Transamerica Corp. 700 48,912
477,795
Food and Beverage - 5.9%
CPC International 700 $ 52,413
H.J. Heinz Co. 2,100 70,875
Hershey Foods 1,600 80,400
203,688
Furniture and Home Equipment - 5.4%
Herman Miller 2,500 101,250
Maytag Corp. 4,400 85,800
187,050
Industrial Products and Packaging - 6.0%
Avery Dennison Corp. 1,500 83,250
Bemis Co. "Class A" 2,205 50,813
Cooper Industries, Inc. 1,700 73,525
207,588
Manufacturing - 4.3%
Timken Co. 2,100 82,425
Worthington Industries, Inc. 3,300 66,000
148,425
Office Equipment and Services - 6.6%
Federal Express 1,000 79,250
Kelly Services, Inc. 2,700 76,612
Knight-Ridder 2,000 74,000
229,862
Oil and Gas - 8.6%
Amoco Corp. 2,000 141,000
Apache Corp. 2,300 68,425
Tenneco 1,800 90,225
299,650
Retail - 1.9%
Sears Roebuck & Co. 1,500 $ 67,125
67,125
Transportation - 2.3%
CSX Corp. 1,600 80,800
80,800
Utlilities - 12.5%
American Telephone & Telegraph 1,600 83,600
American Water Works, Inc. 5,200 112,450
Public Service Co. of Colorado 2,500 88,750
SBC Communications, Inc. 1,600 77,000
Southern New England Telecomm Corp. 2,000 73,750
435,550
Money Market- 0.4%
Fountain Square Treasure 14,200
14,200
Total Common Stocks/Money Market
(cost $2,341,614) (a) 3,208,930
Other Assets and Liabilities (Net) - 7.5% 260,427
Net Assets $ 3,469,357
<FN>
(a) Cost also represents cost for federal income tax purposes.
</FN>
</TABLE>
<TABLE>
THE LAIDLAW FUND
STATEMENT OF ASSETS AND LIABILITIES
SEPTEMBER 30, 1996 (UNAUDITED)
<S> <C>
ASSETS
Investments, at value (cost $2,341,614) $ 3,208,930
Cash 195,198
Receivable from adviser 43,946
Receivable for Fund Shares sold 20
Dividends and interest receivable 8,236
Prepaid expenses 7,178
Deferred organization costs and prepaid expenses 25,950
Total Assets 3,489,458
LIABILITIES
Dividends payable to shareholders 1,131
12b-1 expenses payable 2,693
Accrued expenses 16,277
Total Liabilities 20,101
NET ASSETS $ 3,469,357
Shares outstanding (.001 par value,
unlimited shares authorized) 232,109
CALCULATION OF MAXIMUM OFFERING PRICE:
Net asset value per share $ 14.95
Sales charge - 4.5% of public offering price 0.70
Maximum Offering Price $ 15.65
COMPOSITION OF NET ASSETS:
Shares of beneficial interest, at par $ 209
Additional shares of beneficial interest 2,515,960
Accumulated undistributed net realized gains 85,872
Net unrealized appreciation of investments 867,316
NET ASSETS, SEPTEMBER 30,1996 $ 3,469,357
<FN>
The accompanying notes are an integral part of these financial statements.
</FN>
</TABLE>
<TABLE>
THE LAIDLAW FUND
STATEMENT OF OPERATIONS
SEPTEMBER 30, 1996 (UNAUDITED)
<S> <C>
INVESTMENT INCOME
Dividends $ 70,470
Interest 9,548
Other Income 7
Total Investment Income 80,025
EXPENSES
Advisory fees $ 29,273
Administration fees 2,231
12b-1 expenses 10,179
Custodian fees and expenses 1,884
Fund Accounting fees and expenses 17,315
Transfer Agent fees and expenses 11,245
Legal fees 20,987
Amortization of organization cost 9,486
Printing 5,195
Registration fees 25,576
Audit fees 17,021
Trustee's fees 11,366
Pricing fees 4,493
Insurance expense 2,422
Other expenses 2,680
171,353
Less: Fees waived and expenses to be reimbursed
Adviser and Sub-Adviser (99,465) 71,888
Net Investment Income 8,137
REALIZED AND UNREALIZED GAIN ON INVESTMENTS
Net realized gains on securities transactions 72,801
Net change in unrealized appreciation of investments 117,631
Net Income on Investments 190,432
INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $ 198,569
<FN>
The accompanying notes are an integral part of these financial statements.
</FN>
</TABLE>
<TABLE>
THE LAIDLAW FUND
STATEMENT OF CHANGES IN NET ASSETS
SEPTEMBER 30,1996 (UNAUDITED)
<CAPTION>
Period Ending Year Ended
September 30, 1996 December 31, 1995
<S> <C>
INCREASE (DECREASE) IN NET ASSETS
Operations
Net investment income $8,137 $ $820
Net realized gain on securities transactions 72,801 690,467
Net change in unrealized appreciation of
investments 117,631 511,590
Net increase in net assets resulting
from operations 198,569 1,202,877
Dividends to shareholders from net investment income 0 0
Distributions to shareholders from net realized gain (152,958) (533,277)
Portfolio Share Transactions (Note 5)
Net proceeds from shares subscribed 452,104 815,009
Net asset value of shares issued to shareholders
in reinvestment of dividends and distributions 404,653 0
Cost of shares redeemed (1,930,466) (1,368,124)
Net increase in net assets from capital share
transactions (1,073,709) (553,115)
Total Increase (Decrease) (1,028,098) 116,485
NET ASSETS
Beginning of period 4,497,455 4,380,970
End of period 3,469,357 4,497,455
<FN>
The accompanying notes are an integral part of these financial statements.
</FN>
</TABLE>
THE LAIDLAW FUND
Notes to Financial Statements
Note 1 - General
The Laidlaw Covenant Fund (the
"Fund) was organized as a business trust
under the laws of the State of Indiana on
August 26, 1993, and is registered under
the Investment Company Act of 1940, as
amended (the "Act"), as a diversified,
open-end management investment
company, commonly known as a "mutual
fund".
On December 20, 1996 The Fiduciary
Value Fund, a series of The Vintage
Funds, acquired the assets of The Laidlaw
Covenant Fund. The acquisition consisted
of the transfer of all of the assets and
liabilities of The Laidlaw Covenant Fund
to The Fiduciary Value Fund in exchange
for shares of The Fiduciary Value Fund
and the distribution of such shares to the
shareholders of The Laidlaw Covenant
Fund in liquidation of The Laidlaw
Covenant Fund. The Laidlaw Covenant
Fund is the accounting survivor of the
transaction, and the name of The Fiduciary
Value Fund, the legal survivor of the
transaction, has been changed to "The
Laidlaw Fund." The accounting for the
transaction is on a pooling basis without
restatement, and these financial statements
reflect that accounting principle.
The Fund issues shares of beneficial
interest relating to an investment portfolio
consisting principally of common stocks,
or securities convertible into or
exchangeable for common stocks, of
companies which, in the opinion of the
Fund's investment adviser, meet certain
standards of corporate responsibility and
ethical business behavior, as well as
traditional investment standards.
Laidlaw Holdings Asset Management, Inc.
("Laidlaw") serves as the Fund's
investment adviser. Covenant Investment
Management, Inc. ("Covenant") serves as
the Fund's sub-adviser.
Laidlaw Equities, Inc. ("Distributor")
serves as the distributor of the Fund's
shares. Laidlaw Equities, Inc. also serves
as the Fund's administrator.
Note 2 - Significant Accounting Policies
The following is a summary of
significant accounting policies followed by
the Fund in the preparation of its financial
statements.
A) Security Valuations
Securities are valued at the last sales
price on the securities exchange on which
such securities are primarily traded or at
the last sales price on the NASDAQ
National Market System. Securities not
listed on an exchange or the National
Market System, or securities for which
there were no transactions, are valued at
the average of the most recent bid and
asked prices. Bid price is used when no
asked price is available. Investment in
Money Market Funds are recorded at net
asset value.
B) Securities Transactions and Investment
Income
Securities transactions for these
financial statements are recorded on a trade
date basis. Realized gains and losses from
securities transactions are recorded on the
identified cost basis. Dividend income is
recognized on the ex-dividend date and
interest income on investments is accrued
daily.
C) Dividends and Distributions to
Shareholders
The Fund declares and pays dividends
from net investment income and distributes
net capital gains, if any, at least annually.
However, to the extent that net realized
gains of the Fund can be reduced by any
capital loss carry-overs from the Fund,
such gains will not be distributed.
Dividends and distributions are recorded
on the ex-dividend date.
D) Federal Income Taxes
It is the policy of the Fund to meet the
requirements of the Internal Revenue Code
applicable to regulated investment
companies including the requirement that it
distribute substantially all of its taxable
income to its shareholders. Therefore, no
federal income tax provision is required.
E) Expenses
Organization costs totalling $57,500 have
been deferred and are being amortized by
the Fund on a straight-line basis through
1997.
F) Estimates
Preparation of financial statements in
accordance with generally accepted
accounting principles requires management
to make estimates and assumptions that
affect the reported amounts of assets and
liabilities and the reported amounts of
revenues and expenses during the reporting
period. Actual results could differ from
those estimates.
Note 3 - Agreements and Other
Transactions with Affiliates
The Fund has entered into an Investment
Advisory Agreement with Laidlaw. In
turn, Laidlaw has entered into an
Investment Sub-
Advisory Agreement with Covenant. The
Fund has entered into an Administration
Agreement with Laidlaw Equities Inc. and
a Distribution Agreement with the
Distributor.
As Investment Adviser, Laidlaw
supervises and assists in the management
of the Fund. Pursuant to the terms of the
Investment Advisory Agreement, Laidlaw
is entitled to annual fees, accrued daily and
payable monthly, at the following rates:
Annual Average
Rate Daily Net Assets
1.00% Less than $250 million
.80% $250 to less than $500 million
.70% $500 million and over
For the period ended September 30,
1996, Laidlaw waived its advisory fee.
The amount of this waiver totalled
$29,273.
As Investment Adviser, Laidlaw
provides day to day management of the
Fund's investments. Pursuant to an
agreement with Covenant, Laidlaw has
agreed to pay Covenant 30% of the net
amount of its investment advisory fee paid
by the Fund. Since Laidlaw waived its
entire advisory fee, Covenant was not
entitled to any sub-advisory fee for the
period ended September 30, 1996.
The Fund has agreed to pay Unified
the following for services:
Transfer Agent - Monthly fee equal to
$1.15 per active stockholder account with a
minimum monthly fee of $1,250.
Fund Accounting Agent - Annual fee
equal to .05% of the Fund's average net
assets, subject to a minimum annual fee of
$20,000, plus reimbursement for certain
expenses and optional services.
The agreements further provide that if, in
any fiscal year, the aggregate expenses of
the Fund (generally including fees payable
to Laidlaw and Unified but excluding
interest, taxes, brokerage commissions and
extraordinary expenses ) exceed the most
restrictive expense limitation of any state
having jurisdiction over the Fund, Laidlaw
will reimburse the Fund for any such
expenses. At September 30, 1996, the
most restrictive limitation limits expenses
to 2.5% of the first $30 million of the
Fund's average daily net assets, plus 2.0%
of the next $70 million of such assets plus
1.5% of such assets in excess of $100
million. At September 30, 1996 Laidlaw
owed the Fund $43,946 pursuant to this
limitation, net of advisory and other fees
due to Laidlaw. Laidlaw reimbursed The
Fund in the amount of $50,000 recorded
on June 6, 1996.
For the period ended September 30,
1996, the Distributor advised the Fund that
it retained $11 from commissions earned
on the sales of the Fund's shares. For the
same period various affiliates of Laidlaw
advised the Fund that they retained $4,673
from commissions earned on the sales of
the Fund's shares. In addition, Laidlaw
retained $360 in commissions from the
sales of investment securities to the Fund.
The Fund has adopted a Distribution
Plan (the "Plan") pursuant to Rule 12b-1
under the Act . Pursuant to the Plan, the
Fund is authorized to incur distribution and
shareholder servicing expenses at an
aggregate annual rate of up to .35% of the
Fund's average daily net assets. Pursuant
to the plan, up to .10% of the Fund's
average daily net assets may be retained by
the Distributor and the remainder may be
used to reimburse the Distributor for
payments made for distribution and
servicing provided to Fund shareholders.
For the period ended September 30, 1996,
the Fund incurred expenses of $10,179
pursuant to the Plan. Of that amount,
$8,352 was earned by Laidlaw as
Broker/Dealer/distributor, and non-
affiliated Broker/Dealers earned $1,827.
The Laidlaw Fund offered 100% re-
allowance to all selling agents effective
July 3, 1995.
Certain Trustees and officers of the
Fund are "affiliated persons" (as defined in
the Act) of Laidlaw. Each "non-affiliated"
Trustee is entitled to receive a meeting fee
of $625 per meeting for services relating to
the Fund.
Note 4 - Securities Transactions
For the period ended September 30,
1996, the cost of purchases and the
proceeds from sales of the Fund's
investment securities (excluding short-term
investments) amounted to $0 and
$1,216,869, respectively.
At September 30, 1996, the cost of the
Fund's investment securities for federal
income tax purposes was substantially the
same as for financial reporting purposes.
Accordingly, net unrealized appreciation of
investments amounted to $867,316,
consisting of gross unrealized appreciation
of $857,548 and gross unrealized
depreciation of $9,768.
Note 5 - Capital Share Transactions
Transactions in shares of the Fund are
summarized below (rounded to the nearest
thousand):
Period Ended Year Ended
Sept 30,1996 Dec 31,1995
Shares Sold 30,000 55,000
Shares issued to
shareholders in
reinvestment of
dividends and
distributions 27,000 0
Shares redeemed (126,000) (94,000)
Net Increase
(Decrease) (69,000) (39,000)
Note 6 - Dividend Distribution
For the period November 1,1995 thru
December 31,1996, the Laidlaw Fund had
realized long-term capital gains of $45,801
and short-term capital gains of $107,104.
Dividend distributions in the amount of
$.7029 per share were paid out on
September 23, 1996 to shareholders of
record as of September 16,1996.
<PAGE>
<TABLE>
THE LAIDLAW FUND
Selected Per Share Data and Ratios
Financial Highlights
for a share outstanding for the nine months endeed September 30, 1996 (Unaudited)
and the years ended December 31, 1995, 1994 and 1993
and for the period from March 3, 1992 through December 31, 1992
<CAPTION>
For the nine
months ended Year Ended Year Ended Year Ended March 3, 1992
September 30, 1996 December 31, 1995 December 31, 1994 December 31, 1993 December 31, 1992
(a)
<S> <C>
Selected Per Share Data
Net Asset Value
Beginning of Period $14.96 $12.91 $12.92 $12.56 $11.94
Investment Activities
Net investment income (loss) 0.03 0.00 0.01 0.02 0.08
Net realized and unrealized
gains (losses) on
investments 0.66 3.82 0.35 0.49 1.03
Total from Investment Activities 0.69 3.82 0.36 0.51 1.11
Distributions
Net investment income 0.00 0.00 (0.01) (0.02) (0.08)
Net realized gains (0.70) (1.77) (0.36) (0.13) (0.41)
Total Distributions (0.70) (1.77) (0.37) (0.15) (0.49)
Net Assset Value, End of Period $14.95 $14.96 $12.91 $12.92 $12.56
Total Return (excluding sales
charges) 5.95% 29.59% 2.86% 4.06% 11.20%(b)
Ratios/Supplementary Data
Net Assets at end of period(000) 3,469 4,497 4,381 4,996 4,284
Ratio of expenses to average
net assets 2.50% 2.50% 2.50% 2.50% 2.50%
Ratio of net investment income
(loss) to average net assets 0.28% 0.02% 0.11% 0.16% 0.69%
Ratio of expenses to average
net assets* 4.86% 4.57% 5.20% 5.80% 7.09%
Ratio of net investment income
(loss) to average net assets* (2.11%) (2.10%) (2.57%) (3.16%) (3.90%)
Portfolio turnover 0% 61% 73% 107% 128%
<FN>
* During the period the investment advisory and administration fees were waived and reimbursed.
If such voluntary fee reductions had not occured, the ratios would have been as indicated.
(a) Period from commencement of operations.
(b) Restated to correct previous inaccurate calculations.
</FN>
</TABLE>
APPENDIX
Standard & Poor's Corporation
Earnings and Dividend Rankings for Common Stock
Standard & Poor's Corporation ("Standard & Poor's") believes that earnings
and dividend performance is the end result of an interplay of various factors -
such as product and industry position, corporate resources and financial policy
- - and that, over, the long run, the record of this performance has a
considerable bearing on relative quality. The rankings, however, do not pretend
to reflect all of the factors, tangible or intangible, that bear on stock
quality.
Growth and stability of earnings and dividends are considered key
elements in establishing earnings and dividend rankings for common stocks, which
are designed to capsulize the nature of this record in a single symbol. It
should be noted, however, that the process also takes into consideration
certain adjustments and modifications considered desirable in establishing such
rankings.
The point of departure in arriving at these rankings is a
computerized scoring system based on per-share earnings and dividend records of
the most recent ten years - a period deemed long enough to measure significant
time segments of secular growth, to capture indications of basic change in
trend as they develop, and to encompass the full peak-to-peak range of
the business cycle. Basic scores are computed for earnings and dividends,
then adjusted as indicated by a set of predetermined modifiers for growth,
stability within long-term trend, and cyclicality. Adjusted scores for earnings
and dividends are then combined to yield a final score.
Further, the ranking system makes allowance for the fact that, in general,
corporate size imparts certain recognized advantages from an
investment standpoint. Conversely, minimum size limits (in terms of corporate
sale volume) are set for various rankings, but the system provides for
making exceptions where the score reflects an outstanding earnings-dividend
record.
The final score for each stock is measured against a scoring matrix
determined by analysis of the scores of a large and representative sample of
stocks. The range of scores that may be assigned as follows: A+ (Highest);
A (High); A- (Above Average); B+ (Average); B (Below Average); B- (Lower);
C (Lowest); D (In Reorganization); and NR (No Ranking).
A ranking is not a forecast of future market price performance, but is
basically an appraisal of past performance of earnings and dividends,
and relative current standing. These rankings must not be used as
market recommendations; a high-score stock may at times be so overpriced as to
justify its sale, while a low-score stock may be attractively priced for
purchase. Rankings based upon earnings and dividend records are no substitute
for a complete analysis. They cannot take into account potential effects
of management changes, internal company policies not yet fully reflected in
the earnings and dividend record, public relations standing, recent
competitive shifts, and a host of other factors that may be relevant to
investment status and decision.
Moody's Investors Services, Inc. Corporate Bond Ratings
Bonds which are rated Aaa are judged to be of the best quality. They carry
the smallest degree of investment risk and are generally referred to as "gilt
edge." 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 which 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 which are rated A 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 sometime in the future.
Bonds which are rated Baa 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.
Standard & Poor's Corporation Corporate Bond Ratings
Bonds rated AAA have the highest rating assigned by Standard & Poor's.
Capacity to pay interest and repay principal is extremely strong. Bonds
rated AA have a very strong capacity to pay interest and repay principal and in
a majority of instances differ from AAA issues only in small degree.
Bonds rated A are regarded as upper medium grade. They have a strong
capacity to pay interest and repay principal although they are somewhat more
susceptible to the adverse effects of changes in circumstances and
economic conditions than bonds in higher rated categories. Bonds rated BBB are
regarded as having an adequate capacity to pay interest and repay principal.
Whereas they normally exhibit 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.
Fitch Investor Services, Inc. Long-Term Bond Ratings
The ratings represent Fitch Investor Services, Inc.'s ("Fitch")
assessment of the issuer's ability to meet the obligations of a specific debt
issue or class of debt. The ratings take into consideration special features of
the issuer, the current financial condition and operative performance of the
issuer and of any guarantor, as well as the political and economic environment
that might affect the issuer's future financial strength and credit quality.
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. 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. Plus (+) and minus (-) signs are used with a rating symbol to
indicate the relative position of a credit within the rating category.
Duff & Phelps, Inc. Bond Ratings
Bonds rated AAA by Duff & Phelps, Inc. ("Duff") are considered highest
credit quality. The risk factors are negligible, being only slightly more than
for risk-free U.S. Treasury debt. Bonds rated AA are considered high credit
quality. Protection factors for AA rated bonds are strong and risk is modest,
but may vary slightly from time to time because of economic conditions. Plus
(+) and minus (-) signs are used with a rating symbol (except AAA) to indicate
the relative position of a credit within the category.
Thompson Bankwatch Bond Ratings
Thompson BankWatch's ("BankWatch") highest category is AAA. A rating of
AAA indicates that the ability to repay principal and interest on a timely basis
is very high. The second highest rating category is AA. A rating of AA
indicates a superior ability to repay principal and interest on a timely basis
with limited incremental risk versus issues rated in the highest category.
Ratings may include a plus (+) or minus (-) designation which indicates where
within the respective category the issue is placed.
Standard and Poor's Corporation Municipal Bond Ratings
Debt rated AAA has the highest rating assigned by Standard & Poor's.
Capacity to pay interest and repay principal is extremely strong. Debt rated AA
has a very strong capacity to pay interest and repay principal and differs from
the higher rated issues only in small degree. Debt rated A has a
strong capacity to pay interest and repay principal although it is somewhat more
susceptible to the 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.
Moody's Investors Service, Inc. Municipal Bond Ratings
Bonds which are rated Aaa are judged to be of the best quality. They carry
the smallest degree of investment risk and are generally referred to as "gilt
edge". 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 which 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 which are rated A 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 sometime in the future.
Bonds which are rated Baa 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.<PAGE>
Standard and Poor's Corporation Municipal Note Ratings
SP-1--Very strong or strong capacity to pay principal and interest.
Those issues determined to possess overwhelming safety characteristics will be
given a (+) designation.
SP-2--Satisfactory capacity to pay principal and interest.
Moody's Investors Service, Inc. Short-Term Loan Ratings
MIG1/VMIG1--This designation denotes best quality. There is a
present strong protection by established cash flows, superior liquidity support
or demonstrated broadbased access to the market for refinancing.
MIG2/VMIG2--This designation denotes high quality. Margins of
protection are ample although not so large as in the preceding group.
Commercial Paper Ratings
Commercial paper assigned a rating of A-l by Standard & Poor's 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 with a plus (+) sign designation. A rating of A-2
by Standard & Poor's indicates that the capacity for timely payment on issues is
strong. However, the relative degree of safety is not as high as for issues
designated "A-l".
The rating PRIME-l ("P-l") is the highest commercial paper rating assigned
by Moody's. Issuers rated P-l (for related supporting institutions) have a
superior capacity for repayment of short-term promissory obligations. P-l
repayment capacity will normally be evidenced by the following characteristics:
Conservative capitalization structure with moderate reliance on debt and ample
asset protection; Broad margins in earnings coverage of fixed financial charges
and high internal cash generation; Well established access to a range of
financial markets and assured sources of alternative liquidity. Issuers rated
PRIME-2 ("P-2") (for related supporting institutions have a strong capacity for
repayment of short-term promissory obligations. This will normally be evidenced
by many of the aforementioned characteristics but to a lesser degree. Earnings
trends and coverage ratios, while sound, will be more subject to variation.
Capitalization characteristics, while still appropriate, may be more affected by
external conditions. Ample alternative liquidity is maintained.
Commercial paper assigned a rating of FITCH-l ("F-l") by Fitch is regarded
as having the strongest degree of assurance for timely payment. Commercial
paper assigned a rating of FITCH-2 ("F-2") reflect an assurance of timely
payment only slightly less in degree than the strongest issues.
The rating Duff-l is the highest commercial paper rating assigned by Duff.
Paper rated Duff-l is regarded as having very high certainty of timely
payment with excellent liquidity factors which are supported by ample asset
protection. Risk factors are minor.
The highest rating category for commercial paper given by BankWatch is
TBW-l. This rating indicates a very high degree of likelihood that
principal and interest will be paid on a timely basis.
<PAGE>
PART C. OTHER INFORMATION
Item 24. Financial Statements and Exhibits.
(a) Financial Statements:
Included in Part A:
Financial Highlights for the Starwood Strategic Fund,
Laidlaw Covenant Fund, Aggressive Growth Fund, Asset Allocation
Fund, Taxable Money Market Fund and Tax-Free
Money Market Fund.
Included in part B:
The financial statements and independent auditors' report for
The Vintage Funds required to be included in Part B are
incorporated therein by reference to the Registrant's Annual
Report to Shareholders for the year ended September 30, 1996.
The financial statements and independent auditors' report
for The Laidlaw Covenant Fund, which was acquired by the
Laidlaw Fund (formerly the Fiduciary Value Fund) required to
be included in Part B are incorporated therein by reference
to The Laidlaw Covenant Fund's Annual Report to Shareholders
for the year ended December 31, 1995.
Included in Part B are the unaudited financial statements of
the Laidlaw Fund, which represent the pooled financial
statements of the Fiduciary Value Fund and The Laidlaw
Covenant Fund for the period ended September 30, 1996.
(b) Exhibits:
Description
* 1. Declaration of Trust.
* 2.(a) By-Laws.
**** (b) Amendment No. 1 to By-Laws.
**** (c) Amendment No. 2 to By-Laws.
3. Not applicable.
* 4. Form of certificate for Registrant's shares of beneficial
interest.
* 5.(a) Investment Advisory Agreement between the Registrant and Vintage
Advisers, Inc.
* (b) Investment Sub-Advisory Agreement between Vintage Advisers, Inc.
and Starwood corporation.
* (c) Investment Sub-Advisory Agreement between Vintage Advisers, Inc.
and Fiduciary Counsel, Inc.
****(d) Form of Investment Sub-Advisory Agreement between Vintage
Advisers, Inc. and Health Financial, Inc.
* 6. Distribution Agreement between the Registrant and Unified
Management Corporation.
7. Not applicable.
* 8. Custody Agreement between the Registrant and Star Bank, N.A.
** 9.(a) Mutual Fund Services Agreement (Fund Administration Services,
Fund Accounting Services, Transfer Agency Services) between the
Registrant and Unified Advisers, Inc.
* (b) Shareholder Services Plan.
* (c) Form of Shareholder Services Agreement pursuant to Shareholder
Services Plan.
* (d) Letter Agreement between the Registrant and Vintage Advisers,
Inc. with respect to The Vintage Funds University and
Philanthropic Program.
10. Opinions of Ice Miller Donadio & Ryan, and Brown, Cummins
& Brown Co., L.P.A., which were filed with Registrant's
Form 24F-2 for the fiscal year ended September 30, 1996,
are hereby incorporated by reference.
**** 11.(a) Consent of McCurdy & Associates.
**** (b) Consent of Coopers & Lybrand
12. Not applicable.
** 13. Subscription Agreement between the Registrant and Vintage Advisers,
Inc.
** 14.(a) IRA Questions and Answers and Custodial Agreement.
** (b) Prototype Cash or Deferred Profit-Sharing Plan and Trust/
Custodial Account.
* 15.(a) Distribution Plan.
* (b) Form of Distribution Agreement pursuant to Distribution Plan.
*** 16. Schedule for computation of performance data.
****17. Financial Data Schedule.
18. Not Applicable.
**** 19. Powers of Attorney.
_________________________
* Filed with original Registration Statement, and hereby incorporated by
reference.
** Filed with Pre-Effective Amendment No. 2 to the Registration
Statement, and hereby incorporated by reference.
*** Filed with Pre-Effective Amendment No. 3 to the Registration
Statement, and hereby incorporated by reference.
****Filed herewith.
Item 25. Persons Controlled by or Under Common Control with Registrant.
No person owns beneficially, either directly or through one or
more controlled companies, more than 25% of the outstanding shares of any
Fund, except that Vintage Advisers, Inc., a Delaware corporation and the
investment adviser to the Registrant (the "Adviser"), owns more than 25% of
the outstanding shares of each of the Taxable Fixed Income Fund and the
Municipal Fixed Income Fund; Unified Advisers, Inc., an Indiana corporation and
the administrator to the Registrant owns more than 25% of the outstanding shares
of each of the Municipal Fixed Income fund, Taxable Fixed Income Fund, Asset
Allocation Fund, Fiduciary Value Fund and Aggressive Growth Fund, and Robert A.
Orben owns more than 25% of the outstanding shares of the Starwood Strategic
Fund.
Item 26. Number of Holders of Securities.
Number of Record Holders
Title of Class at December 11, 1996
Shares of beneficial interest,
without par value of the:
Starwood Strategic Fund 49
Aggressive Growth Fund 100
Fiduciary Value Fund 3
Asset Allocation Fund 35
Taxable Fixed Income Fund 3
Municipal Fixed Income Fund 2
Taxable Money Market Fund 5335
Tax-Free Money Market Fund 485
Item 27. Indemnification.
Reference is hereby made to Article X of the Registrant's Declaration
of Trust (filed as Exhibit 1 to this Registration Statement), which contains
provisions regarding the indemnification by the Registrant of its Trustees,
officers, employees and agents under certain circumstances.
The Distribution Agreement (Exhibit 6) provides for indemnification
of Unified Management Corporation by the Registrant for certain civil
liabilities, including certain liabilities under the Securities Act of 1933. In
addition, the Mutual Fund Services Agreement (Exhibit 9(a)) provides for
the indemnification of Unified Advisers, Inc. by the Registrant under certain
circumstances.
The foregoing indemnification arrangements are subject to the provisions
of Sections 17(h) and (i) of the Investment Company Act of 1940.
Insofar as indemnification by the Registrant for liabilities arising under
the Securities Act of 1933 may be permitted to Trustees, officers and
controlling persons of the Registrant pursuant to the foregoing provisions, or
otherwise, the Registrant has been advised that in the opinion of the
Securities and Exchange Commission such indemnification is against public
policy as expressed in the Act and is, therefore, unenforceable. In the event
that a claim for indemnification against such liabilities (other than the
payment by the Registrant of expenses incurred or paid by a Trustee, officer or
controlling person of the Registrant in the successful defense of any action,
suit or proceeding) is asserted against the Registrant by such Trustee, officer
or controlling person in connection with the securities being registered, the
Registrant will, unless in the opinion of counsel the matter has been settled
by controlling precedent, submit to a court of appropriate jurisdiction the
question whether such indemnification by it is against public policy as
expressed in the Act and will be governed by the final adjudication of such
issue.
The Registrant maintains an insurance policy which insures its Trustees and
officers against certain civil liabilities.
Item 28. Business and Other Connections of Investment Adviser.
Incorporated herein by reference is the information under the captions
"The Trust and its Management -- Investment Advisory Arrangements" and
"-- Portfolio Managers' Backgrounds" in the Combined Prospectus, and under
the captions "Management of the Trust" and "Investment Advisory Arrangements" in
the Statement of Additional Information, incorporated by reference into Parts A
and B, respectively, of this Registration Statement.
Incorporated herein by reference are (a) the descriptions of the businesses of
Unified Advisers, Inc., Starwood Corporation, and Fiduciary Counsel, Inc. under
the caption "The Trust and its Management" in the Combined Prospectus
incorporated by reference into Part A of this Registration Statement and (b) the
biographical information pertaining to Timothy L. Ashburn, Thomas G. Napurano,
Lynn E. Wood, Andrew E. Beer, Jack R. Orben, and Ralph E. Rosamilia under the
captions "Management of the Trust -- Portfolio Managers' Backgrounds" in the
Combined Prospectus, and under the captions "Management of the Trust" and
"Investment Advisory Arrangements" in the Statement of Additional Information,
incorporated by reference into Parts A and B, respectively, of this Registration
Statement.
For information concerning the business, vocation or employment of
a substantial nature of the directors and officers of Vintage Advisers,
Inc., reference is hereby made to the Form ADV filed by it under the
Investment Advisers Act of 1940 (file no. 801-48493).
For information concerning the business, vocation or employment of
a substantial nature of the directors and officers of Starwood
Corporation, reference is hereby made to the Form ADV filed by it under the
Investment Advisers Act of 1940 (file no. 801-2277).
For information concerning the business, vocation or employment of
a substantial nature of the directors and officers of Fiduciary Counsel,
Inc., reference is hereby made to the Form ADV filed by it under the
Investment Advisers Act of 1940 (file no. 801-850).
Item 29. Principal Underwriters.
(a) Unified Management Corporation, the Registrant's distributor, does
not act as distributor for any other investment company.
(b) Information with respect to each director and officer of Unified
Management Corporation is incorporated by reference to Schedule A of
Form BD filed by it under the Securities Exchange Act of 1934 (File
No. 8-23508).
(c) Not applicable.
Item 30. Location of Accounts and Records.
The Registrant's custodian, Star Bank, N.A., 425 Walnut Street, Cincinnati,
Ohio 45201, has possession of and maintains the accounts, books and other
documents relating to its function as custodian. All other accounts, books and
other documents of the Registrant required to be maintained by Section 31(a) of
the Investment company Act of 1940 and Rules 31a-1 to 31a-3 thereunder are in
the possession of Vintage Advisers, Inc. or Unified Advisers, Inc., each of
which is located at 429 North Pennsylvania Street, Indianapolis, Indiana
46204.
Item 3l. Management Services.
Not Applicable.
Item 32. Undertakings.
(a) Registrant hereby undertakes to comply with the provisions of
Section 16(c) of the 1940 Act with respect to the removal of
Trustees and the calling of special shareholder meetings by
shareholders.
(b) Registrant hereby undertakes to furnish each person to whom a
prospectus is delivered with a copy of the Registrant's latest
annual report to shareholders, upon request and without charge.
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and
the Investment Company Act of 1940, the Registrant has duly caused
this amendment to the Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of Indianapolis, and State
of Indiana, on the 20th day of December, 1996.
THE VINTAGE FUNDS
By /s/ Lynn E. Wood
Lynn E. Wood
Secretary
Pursuant to the requirements of the Securities Act of 1933,
this amendment to the Registration Statement has been signed below by
the following persons in the capacities indicated on December 20, 1996.
Signature Title
* Trustee, Chairman of the Board
Timothy L. Ashburn and President
(principal executive officer)
* Treasurer
Thomas G. Napurano (principal financial officer
and principal accounting officer)
* Trustee
Charles H. Binger
* Trustee
Daniel J. Condon
* Trustee
David E. LaBelle
* Trustee
Philip L. Conover
* Trustee
Jack R. Orben
* By /s/ Lynn E. Wood
Lynn E. Wood
Attorney-in-Fact
<PAGE>
EXHIBIT INDEX
Exhibit Description
1. Amendment No. 1 to By-Laws. . . ... . .. . .Ex-99.B2.1
2. Amendment No. 2 to By-Laws. . . ... . .. . .Ex-99.B2.2
3. Form of Investment Sub-Advisory Contract. . .Ex-99.B5
4. Consent of McCurdy & Associates. ... . .. . .Ex-99.B11.1
5. Consent of Coopers & Lybrand . . . . . . . . Ex-99.B11.2
6. Financial Data Schedule. . . . ... . .. . .Ex-27
7. Powers of Attorney. . . . . . ... . .. . .Ex-99.POA
THE VINTAGE FUNDS
AMENDMENT NO. 1 TO BYLAWS
Effective December 13, 1995, the first sentence of Section 1.2 of
the Bylaws of The Vintage Funds was amended to read as follows:
"Special meetings of the Shareholders of the Trust may be called at any
time by the Board of Trustees or upon the written request of Shareholders of
the Trust holding at least 10% of all votes entitled to be cast on any issue
proposed to be considered at the proposed special meeting."
/S/ Timothy L. Ashburn
Timothy L. Ashburn, President
ATTEST:
/S/ Lynn E. Wood
Lynn E. Wood, Secretary
THE VINTAGE FUNDS
AMENDMENT NO. 2 TO BYLAWS
Effective April 16, 1996, the first sentence of Section 2.1 of the Bylaws
of The Vintage Funds was amended to read as follows:
"The business and affairs of the Trust shall be managed under the
direction of a Board of Trustees consisting of six (6) Trustees."
/S/ Timothy L. Ashburn
Timothy L. Ashburn, President
ATTEST:
/S/ Lynn E. Wood
Lynn E. Wood, Secretary
THE VINTAGE FUNDS
INVESTMENT SUB-ADVISORY AGREEMENT
INVESTMENT SUB-ADVISORY AGREEMENT, dated as of _______________,
1996, between Vintage Advisers, Inc., a Delaware corporation (the "Adviser"),
and Health Financial, Inc., a Kentucky corporation (the "Sub-Adviser").
W I T N E S E T H:
WHEREAS, the Adviser acts as the investment adviser to The Vintage Funds,
an Indiana business trust (the "Trust"), pursuant to an Investment Advisory
Agreement, dated as of June 2, 1995 as amended through the date hereof (the
"Advisory Agreement");
WHEREAS, the Trust is an open-end management investment company
registered under the Investment Company Act of 1940, as amended (the "1940
Act"); and
WHEREAS, the Adviser desires to retain the Sub-Adviser to render
investment sub-advisory services to the funds of the Trust set forth on the
Exhibits to this Agreement (the "Funds"), and the Sub-Adviser is willing to
render such services.
NOW, THEREFORE, in consideration of the premises and mutual agreements
hereinafter set forth, the parties hereto agree as follows:
Section 1. Appointment and Status of Sub-Adviser. The Adviser hereby
appoints the Sub-Adviser to act as its agent to provide investment advisory
service to each class of shares of beneficial interest of the Trust set forth on
an executed Exhibit to this Agreement (each a "Fund"), for the period and on
the terms set forth in this Agreement. The Sub-Adviser accepts such
appointment and agrees to render the services herein set forth, for the
compensation herein provided. Although the Sub-Adviser shall be an agent of
the Adviser, the Sub-Adviser shall for all purposes herein be deemed to be an
independent contractor of the Adviser and the Trust and shall, unless
otherwise expressly provided herein or authorized by the Adviser or the Board
of Trustees of the Trust from time to time, have no authority to act for or
represent the Adviser or the Trust in any way or otherwise be deemed an agent
of the Trust.
Section 2. Sub-Adviser's Duties. Subject to the general supervision of
the Trust's Board of Trustees (the "Board") and the Adviser, the Sub-Adviser
shall, employing its discretion, manage the investment operations of each Fund
and the composition of the portfolio of securities and investments (including
cash) belonging to each Fund, including the purchase, retention and disposition
thereof and the execution of agreements relating thereto, in accordance with the
Fund's investment objective, policies and restrictions as stated in the
Trust's then-current Prospectus and Statement of Additional Information
(together, the "Prospectus") and subject to the following understandings:
(a) The Sub-Adviser shall furnish a continuous investment program for each
Fund and determine from time to time what investments or securities will be
purchased, retained or sold by each Fund and what portion of the assets
belonging to each Fund will be invested or held uninvested as cash;
(b) The Sub-Adviser shall use its best judgment in the performance of its
duties under this Agreement;
(c) The Sub-Adviser, in the performance of its duties and obligations under
this Agreement, shall act in conformity with the Trust's Declaration of Trust,
its By-Laws and its Prospectus and with the instructions and directions of the
Trust's Board of Trustees and the Adviser and will conform to and comply with
the requirements of the 1940 Act and all other applicable federal and state laws
and regulations;
(d) The Sub-Adviser shall determine the securities to be purchased or sold
by each Fund and as agent for the Trust will effect portfolio transactions
pursuant to its determinations either directly with the issuer or with any
broker and/or dealer in such securities, subject to Section 3 below;
(e) The Sub-Adviser shall maintain books and records with respect to the
securities transactions of each Fund and shall render to the Adviser and the
Trust's Board of Trustees such periodic and special reports as the Adviser or
the Board may request; and
(f) The Sub-Adviser shall provide the Trust's custodian with such
information relating to the Trust as may be required under the terms of the
then-current custody agreement between the Trust and the custodian.
Section 3. Brokerage. In placing orders with brokers and/or dealers,
the Sub- Adviser is directed at all times to seek best price and execution for
purchases and sales on behalf of each Fund, taking into account such factors as
price (including the applicable brokerage commission or dealer spread), the
execution capability, financial responsibility and responsiveness of the broker
or dealer and the brokerage and research services provided by the broker or
dealer. Sub-Adviser should generally seek favorable prices and commission
rates that are reasonable in relation to the benefits received. Subject to such
conditions as may be imposed by the Trust's Board of Trustees, the Sub-Adviser
may pay commissions to brokers and/or dealers that are higher than might be
charged by another qualified broker to obtain brokerage and/or research services
(as those terms are defined in Section 28(e) of the Securities Exchange Act of
1934, as amended (the "Exchange Act")) considered by the Sub- Adviser to be
useful or desirable in the performance of the Sub-Adviser's duties hereunder, if
the Sub-Adviser determines in good faith that the amount of the commission is
reasonable in relation to the value of the brokerage and research services
provided by the executing broker or dealer. The determination may be viewed in
terms of either a particular transaction or Sub-Adviser's overall
responsibilities with respect to the Funds and to accounts over which
Sub-Adviser exercises investment discretion. The Funds and the Sub-Adviser
understands and acknowledge that, although the information may be useful to
the Funds and the Sub-Adviser, it is not possible to place a dollar value on
such information. The Board shall periodically review the commissions paid
by the Funds to determine if the commissions paid over representative periods
of time were reasonable in relation to the benefits to the Funds.
Consistent with the Rules of Fair Practice of the National Association of
Securities Dealers, Inc., and subject to seeking best qualitative execution as
described above, the Sub- Adviser may give consideration to sales of shares of
the Funds as a factor in the selection of brokers and dealers to execute Fund
portfolio transactions.
Subject to the foregoing and to such conditions as may be imposed by the
Adviser or the Trust's Board of Trustees and the provisions of the 1940 Act,
Exchange Act, and other applicable law, nothing herein shall prohibit the
Sub-Adviser from selecting brokers and/or dealers who are "affiliated persons"
of the Sub-Adviser, the Adviser or the Trust. On occasions when the
Sub-Adviser deems the purchase or sale of a security to be in the best
interest of the Trust as well as other customers, the Sub-Adviser may, to the
extent permitted by applicable laws and regulations, but shall not be
obligated to, aggregate the securities to be so sold or purchased in order to
obtain the best execution and lower brokerage commissions, if any. In such
event, allocation of the securities so purchased or sold, as well as the
expenses incurred in the transaction, will be made by the Sub-Adviser in the
manner it considers to be the most equitable and consistent with its
fiduciary obligations to the Trust and, if applicable, to such other
customers.
If any occasion should arise in which the Sub-Adviser gives any advice to
clients of Sub-Adviser concerning the shares of any Fund, Sub-Adviser will act
solely as investment counsel for such client and not in any way on behalf of the
Fund. Sub-Adviser's services to the Funds pursuant to this Agreement are not to
be deemed to be exclusive and it is understood that Sub-Adviser may render
investment advice, management and other services to others, including other
registered investment companies.
Section 4. Books and Records. The Sub-Adviser shall keep the Trust's
books and records required to be maintained by it pursuant to Section 2(e) of
this Agreement. The Sub-Adviser agrees that all records which it maintains for
the Trust are the property of the Trust and it will promptly surrender any of
such records to the Trust upon the Trust's request. The Sub-Adviser further
agrees to preserve for the periods prescribed by Rule 31a-2 under the 1940 Act
any such records as are required to be maintained by the Sub-Adviser with
respect to the Trust by Rule 31a-1 under the 1940 Act.
Section 5. Expenses of the Sub-Adviser. During the term of this
Agreement, the Sub-Adviser will pay all expenses (including without limitation
the compensation of all trustees or officers of the Trust who are "interested
persons" of the Sub-Adviser, as defined in the 1940 Act) incurred by it in
connection with its activities under this Agreement other than the cost of
securities and investments purchased for each Fund (including taxes and
brokerage commissions, if any).
Section 6. Compensation of the Sub-Adviser. For the services provided
and the expenses borne pursuant to this Agreement, the Adviser will pay to the
Sub-Adviser as full compensation therefor a fee with respect to each Fund at an
annual rate as set forth on the Exhibit executed with respect to such Fund and
attached hereto. This fee for each month will be paid to the Sub-Adviser during
the succeeding month. For purposes of determining the fee payable hereunder,
the net asset value of each Fund shall be calculated in the manner specified in
the Trust's Prospectus .
Section 7. Use of Name. The Trust, Adviser and Sub-Adviser
acknowledge that all rights to the name "First Lexington" belong to
Sub-Adviser, and that the Trust is being granted a limited license to use
such words in its Fund name or in any class name. In the event Sub-Adviser
ceases to be a Sub-Adviser, the Trust's right to the use of the name "First
Lexington" shall automatically cease on the ninetieth day following the
termination of this Agreement. The right to the name may also be withdrawn
by Sub-Adviser during the term of this Agreement upon ninety (90) days'
written notice by Sub-Adviser to the Trust. Nothing contained herein shall
impair or diminish in any respect, Sub-Adviser's right to use the name "First
Lexington" in the name of, or in connection with, any other business
enterprises with which Sub-Adviser is or may become associated. There
is no charge to the Trust for the right to use these names.
Section 8. Liability of the Sub-Adviser. Neither Sub-Adviser nor its
shareholders, officers, directors, employees, agents, control persons or
affiliates of any thereof, shall be liable for any error of judgment or mistake
of law or for any loss suffered by any Fund in connection with the matters to
which this Agreement relates except a loss resulting from a breach of fiduciary
duty with respect to the receipt of compensation for services (in which case any
award of damages shall be limited to the period and the amount set forth in
Section 36(b)(3) of the 1940 Act) or a loss resulting from willful misfeasance,
bad faith or gross negligence on its part in the performance of its duties or
from reckless disregard by it of its obligations and duties under this
Agreement.
Any person, even though also a director, officer, employee, shareholder or
agent of Sub-Adviser, who may be or become an officer, director, trustee,
employee or agent of the Trust, shall be deemed, when rendering services to the
Trust or acting on any business of the Trust (other than services or business in
connection with Sub-Adviser'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 Sub-Adviser, or one under Sub-Adviser's control or
direction, even though paid by Sub-Adviser.
Section 9. Duration and Termination. The term of this Agreement
shall begin on the date of this Agreement for each Fund that has executed an
Exhibit hereto on the date of this Agreement and shall continue in effect with
respect to each such Fund (and any subsequent Funds added pursuant to an
Exhibit executed during the initial two-year term of this Agreement) for a
period of two years from the date of its execution. This Agreement shall
continue in effect from year to year thereafter, subject to termination as
hereinafter provided, if such continuance is approved at least annually by
(a) a majority of the outstanding voting securities (as defined in the 1940
Act) of such Fund or by vote of the Trust's Board of Trustees, cast in person
at a meeting called for the purpose of voting on such approval, and (b) by
vote of a majority of the Trustees of the Trust who are not parties to this
Agreement or "interested persons" (as defined in the 1940 Act) of any party
to this Agreement, cast in person at a meeting called for the purpose of
voting on such approval. If a Fund is added pursuant to an Exhibit executed
after the date of this Agreement as described above, this Agreement shall
become effective with respect to that Fund upon execution of the applicable
Exhibit and shall continue in effect until the next annual continuance of
this Agreement and from year to year thereafter, subject to approval as
described above. This Agreement may be terminated by the Adviser or the
Trust with respect to any Fund at any time, without the payment of any
penalty, by the Adviser with the consent of the Trust's Board of Trustees, by
the Trust's Board of Trustees, or by vote of a majority of the outstanding
voting securities (as defined in the 1940 Act) of such Fund, in any
such case on 30 days' written notice to the Sub-Adviser, or by the Sub-Adviser
at any time, without the payment of any penalty, on 90 days' written notice to
the Adviser. This Agreement will automatically and immediately terminate in the
event of its assignment (as defined in the 1940 Act).
Section 10. Amendment. This Agreement may be amended by mutual
consent of the Adviser, the Sub-Adviser and the Trust, but the consent of the
Trust must be approved (a) by vote of a majority of those Trustees of the
Trustee who are not parties to this Agreement or "interested persons" (as
defined in the 1940 Act) of any such party, cast in person at a meeting called
for the purpose of voting on such amendment, and (b) if required under then
current interpretations of the 1940 Act by the Securities and Exchange
Commission, by vote of a majority of the outstanding voting securities (as
defined in the 1940 Act) of each Fund affected by such amendment.
Section 11. Notices. Notices of any kind to be given in writing and
shall be duly given if mailed or delivered to the Sub-Adviser at Health
Financial, Inc., 3320 Tates Creek Road, Lexington, Kentucky 40502, Attention:
President, and to the Adviser at Vintage Advisers, Inc., 429 N. Pennsylvania
Street, Indianapolis, IN 46204, or at such other address or to such other
individual as shall be specified by the party to be given notice.
Section 12. Governing Law. (a) This Agreement shall be governed by and
construed in accordance with the laws of the State of Indiana, without regard to
the conflicts of laws principles thereof, and (b) any question of interpretation
of any term or provision of this Agreement having a counterpart in or otherwise
derived from a term or provision of the 1940 Act, shall be resolved by reference
to such term or provision of the 1940 Act and to interpretation thereof, if any,
by the United States courts or in the absence of any controlling decision of any
such court, by rules, regulations or orders of the Securities and Exchange
Commission issued pursuant to said 1940 Act. In addition, where the effect of a
requirement of the Act, reflected in any provision of this Agreement is revised
by rule, regulation or order of the Securities and Exchange Commission, such
provision shall be deemed to incorporate the effect of such rule, regulation or
order.
Section 13. Severability. In the event any provision of this Agreement
is determined to be void or unenforceable, such determination shall not affect
the remainder of this Agreement, which shall continue to be in force.
Section 14. Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
Section 15. Binding Effect. Each of the undersigned expressly
warrants and represents that he has the full power and authority to sign this
Agreement on behalf of the party indicated, and that his signature will operate
to bind the party indicated to the foregoing terms.
Section 16. Captions. The captions in this Agreement are included for
convenience of reference only and in no way define or delimit any of the
provisions hereto for otherwise affect their construction or effect.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their officers designated below on the date and year first above
written.
VINTAGE ADVISERS, INC. HEALTH FINANCIAL, INC.
By By
Name: Name:
Title: Title:
<PAGE>
EXHIBIT A
to
Investment Sub-Advisory Agreement
The First Lexington Balanced Fund
For all services rendered by the Sub-Adviser hereunder with respect to the
above- named Funds, the Adviser shall pay to the Sub-Adviser, and the
Sub-Adviser agrees to accept as full compensation for all services rendered
hereunder, an annual fee with respect to each Fund equal to the percentage of
the average daily net assets of the Fund set forth opposite its name below:
Name of Fund Fee Percentage
The First Lexington Balanced 0.40% of net assets up to $250 million;
Fund 0.35% of the next $250 million of net assets;
0.30% of net assets in excess of $500 million
IN WITNESS WHEREOF, the parties hereto have caused this Exhibit to be
executed by their officers designated below as of the date set forth below.
VINTAGE ADVISERS, INC. HEALTH FINANCIAL, INC.
By By
Name: Name:
Title: Title:
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the use in this
Post-Effective Amendment Number 5 to The Vintage Funds' Registration
Statement of all references to our firm included in or made a part of this
Post-Effective Amendment.
/s/
McCurdy & Associates CPA's, Inc.
December 20, 1996
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the incorporation by reference in this post effective
amendment No. 5 to the registration statement of The Vintage Funds on Form
N-1A (File No. 33-89078) of our report dated February 26, 1996, on our audit
of the financial statements of The Laidlaw Covenant Fund as of and for
the year ended December 31, 1995, included in the Annual Report to
Shareholders. We also consent to the reference to our firm in the second
paragraph of the supplement to the prospectus.
COOPERS & LYBRAND L.L.P.
Indianapolis, Indiana
December 20, 1996
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<NAME> STARWOOD STRATEGIC FUND
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<TABLE> <S> <C>
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<NAME> AGGRESSIVE GROWTH FUND
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<TOTAL-ASSETS> 575648
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<OTHER-ITEMS-LIABILITIES> 2126
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<PAID-IN-CAPITAL-COMMON> 593769
<SHARES-COMMON-STOCK> 58493
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<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 2530
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 1140
<NET-ASSETS> 573522
<DIVIDEND-INCOME> 3271
<INTEREST-INCOME> 2190
<OTHER-INCOME> 0
<EXPENSES-NET> 48271
<NET-INVESTMENT-INCOME> (23917)
<REALIZED-GAINS-CURRENT> 3712
<APPREC-INCREASE-CURRENT> 1140
<NET-CHANGE-FROM-OPS> (20247)
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<DISTRIBUTIONS-OF-INCOME> 0
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<NUMBER-OF-SHARES-SOLD> 75414
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<NET-CHANGE-IN-ASSETS> 2705
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<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 2446
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<GROSS-EXPENSE> 31767
<AVERAGE-NET-ASSETS> 326140
<PER-SHARE-NAV-BEGIN> 10.00
<PER-SHARE-NII> (.24)
<PER-SHARE-GAIN-APPREC> .04
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</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
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<NAME> ASSET ALLOCATION FUND
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<NET-INVESTMENT-INCOME> (25231)
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<TABLE> <S> <C>
<ARTICLE> 6
<SERIES>
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<NAME> TAXABLE FIXED INCOME FUND
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</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<SERIES>
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<NAME> MUNICIPAL FIXED INCOME FUND
<S> <C>
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<FISCAL-YEAR-END> SEP-30-1996
<PERIOD-START> OCT-1-1995
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<OTHER-ITEMS-LIABILITIES> 1773
<TOTAL-LIABILITIES> 1773
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<PAID-IN-CAPITAL-COMMON> 35638
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<ACCUMULATED-NII-CURRENT> (26650)
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<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
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<INTEREST-INCOME> 22
<OTHER-INCOME> 0
<EXPENSES-NET> 26882
<NET-INVESTMENT-INCOME> (26650)
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<NET-CHANGE-FROM-OPS> (26650)
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<GROSS-EXPENSE> 26777
<AVERAGE-NET-ASSETS> 14735
<PER-SHARE-NAV-BEGIN> 10.00
<PER-SHARE-NII> (8.87)
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</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<SERIES>
<NUMBER> 7
<NAME> TAXABLE MONEY MARKET FUND
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> SEP-30-1996
<PERIOD-START> OCT-1-1995
<PERIOD-END> SEP-30-1996
<INVESTMENTS-AT-COST> 50701592
<INVESTMENTS-AT-VALUE> 50701892
<RECEIVABLES> 293911
<ASSETS-OTHER> 137871
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 51133674
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<OTHER-ITEMS-LIABILITIES> 589163
<TOTAL-LIABILITIES> 589163
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 50544511
<SHARES-COMMON-STOCK> 50544511
<SHARES-COMMON-PRIOR> 1230385
<ACCUMULATED-NII-CURRENT> 1626449
<OVERDISTRIBUTION-NII> 0
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<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 50544511
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 2072968
<OTHER-INCOME> 369
<EXPENSES-NET> 518220
<NET-INVESTMENT-INCOME> 1626449
<REALIZED-GAINS-CURRENT> 0
<APPREC-INCREASE-CURRENT> 0
<NET-CHANGE-FROM-OPS> 1626449
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 1626449
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 159908254
<NUMBER-OF-SHARES-REDEEMED> 112065721
<SHARES-REINVESTED> 1471593
<NET-CHANGE-IN-ASSETS> 49314126
<ACCUMULATED-NII-PRIOR> 2030
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 194953
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 482554
<AVERAGE-NET-ASSETS> 38612000
<PER-SHARE-NAV-BEGIN> 1.00
<PER-SHARE-NII> .04
<PER-SHARE-GAIN-APPREC> 0
<PER-SHARE-DIVIDEND> .04
<PER-SHARE-DISTRIBUTIONS> .04
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 1.00
<EXPENSE-RATIO> 1.16
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<SERIES>
<NUMBER> 8
<NAME> TAX-FREE MONEY MARKET FUND
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> SEP-30-1996
<PERIOD-START> OCT-1-1995
<PERIOD-END> SEP-30-1996
<INVESTMENTS-AT-COST> 7755239
<INVESTMENTS-AT-VALUE> 7755239
<RECEIVABLES> 193512
<ASSETS-OTHER> 63150
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 8011901
<PAYABLE-FOR-SECURITIES> 440121
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 237670
<TOTAL-LIABILITIES> 677791
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 7334335
<SHARES-COMMON-STOCK> 7334335
<SHARES-COMMON-PRIOR> 100
<ACCUMULATED-NII-CURRENT> 129693
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> (225)
<NET-ASSETS> 7334110
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 221402
<OTHER-INCOME> 0
<EXPENSES-NET> 114479
<NET-INVESTMENT-INCOME> 129693
<REALIZED-GAINS-CURRENT> 0
<APPREC-INCREASE-CURRENT> 0
<NET-CHANGE-FROM-OPS> 129468
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 129693
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 19344229
<NUMBER-OF-SHARES-REDEEMED> 12128168
<SHARES-REINVESTED> 118174
<NET-CHANGE-IN-ASSETS> 7334010
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 29468
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 103094
<AVERAGE-NET-ASSETS> 5660000
<PER-SHARE-NAV-BEGIN> 1.00
<PER-SHARE-NII> .02
<PER-SHARE-GAIN-APPREC> 0
<PER-SHARE-DIVIDEND> .02
<PER-SHARE-DISTRIBUTIONS> .02
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 1.00
<EXPENSE-RATIO> 1.62
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<SERIES>
<NUMBER> 9
<NAME> LAIDLAW COVENANT FUND
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> DEC-31-1995
<INVESTMENTS-AT-COST> 4203282
<INVESTMENTS-AT-VALUE> 4952967
<RECEIVABLES> 82694
<ASSETS-OTHER> 41054
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 5076715
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 579260
<TOTAL-LIABILITIES> 579260
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 3589878
<SHARES-COMMON-STOCK> 300641
<SHARES-COMMON-PRIOR> 339272
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 749685
<NET-ASSETS> 4497455
<DIVIDEND-INCOME> 113271
<INTEREST-INCOME> 2665
<OTHER-INCOME> 0
<EXPENSES-NET> 115117
<NET-INVESTMENT-INCOME> 820
<REALIZED-GAINS-CURRENT> 690467
<APPREC-INCREASE-CURRENT> 511590
<NET-CHANGE-FROM-OPS> 116485
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 533277
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 55000
<NUMBER-OF-SHARES-REDEEMED> 94000
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 116485
<ACCUMULATED-NII-PRIOR> 12033
<ACCUMULATED-GAINS-PRIOR> (12150)
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 46966
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 214566
<AVERAGE-NET-ASSETS> 4695636
<PER-SHARE-NAV-BEGIN> 12.91
<PER-SHARE-NII> 0
<PER-SHARE-GAIN-APPREC> 3.82
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> 1.77
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 14.96
<EXPENSE-RATIO> 2.5
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0.0
<PAGE>
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<SERIES>
<NUMBER> 10
<NAME> POOLED
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> SEP-30-1996
<PERIOD-START> JAN-1-1996
<PERIOD-END> SEP-30-1996
<INVESTMENTS-AT-COST> 2341614
<INVESTMENTS-AT-VALUE> 3208930
<RECEIVABLES> 52202
<ASSETS-OTHER> 228326
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 3489458
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 20101
<TOTAL-LIABILITIES> 20101
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 2516169
<SHARES-COMMON-STOCK> 232109
<SHARES-COMMON-PRIOR> 300641
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 867316
<NET-ASSETS> 3469357
<DIVIDEND-INCOME> 70470
<INTEREST-INCOME> 9548
<OTHER-INCOME> 7
<EXPENSES-NET> 71888
<NET-INVESTMENT-INCOME> 8137
<REALIZED-GAINS-CURRENT> 72801
<APPREC-INCREASE-CURRENT> 117631
<NET-CHANGE-FROM-OPS> 198569
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 152958
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 30000
<NUMBER-OF-SHARES-REDEEMED> 126000
<SHARES-REINVESTED> 27000
<NET-CHANGE-IN-ASSETS> (1028098)
<ACCUMULATED-NII-PRIOR> 12852
<ACCUMULATED-GAINS-PRIOR> 678317
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 29273
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 171353
<AVERAGE-NET-ASSETS> 3879913
<PER-SHARE-NAV-BEGIN> 14.96
<PER-SHARE-NII> .03
<PER-SHARE-GAIN-APPREC> .66
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> .70
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 14.95
<EXPENSE-RATIO> 2.50
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS:
WHEREAS, The Vintage Funds, a business trust organized under the laws of
the State of Indiana (hereinafter referred to as the "Trust"), periodically
files amendments to its Registration Statement with the Securities and
Exchange Commission under the provisions of the Securities Act of 1933 and the
Investment Company Act of 1940, as amended; and
WHEREAS, the undersigned is a Trustee and the President of the Trust;
NOW, THEREFORE, the undersigned hereby constitutes and appoints
LYNN E. WOOD, his attorney for him and in his name, place and stead, and in
his office and capacity in the Trust, to execute and file any Amendment or
Amendments to the Trust's Registration Statement, hereby giving and granting
to said attorney full power and authority to do and perform all and every act
and thing whatsoever requisite and necessary to be done in and about the
premises as fully to all intents and purposes as he might or could do if
personally present at the doing thereof, hereby ratifying and confirming all
that said attorney may or shall lawfully do or cause to be done by virtue
hereof.
IN WITNESS WHEREOF, the undersigned has hereunto set his hand this
18th day of November, 1996.
/S/ Timothy L. Ashburn
TIMOTHY L. ASHBURN, Trustee
and President
STATE OF INDIANA )
) ss:
COUNTY OF MARION )
Before me, a Notary Public, in and for said county and state, personally
appeared TIMOTHY L. ASHBURN, known to me to be the person described in
and who executed the foregoing instrument, and who acknowledged to me that he
executed and delivered the same for the purposes therein expressed.
WITNESS my hand and official seal this 18th day of November, 1996.
/S/Carol J. Highsmith
Carol J. Highsmith
Notary Public
<PAGE>
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS:
WHEREAS, The Vintage Funds, a business trust organized under the laws of
the State of Indiana (hereinafter referred to as the "Trust"), periodically
files amendments to its Registration Statement with the Securities and
Exchange Commission under the provisions of the Securities Act of 1933 and the
Investment Company Act of 1940, as amended; and
WHEREAS, the undersigned is Treasurer of the Trust;
NOW, THEREFORE, the undersigned hereby constitutes and appoints TIMOTHY
L. ASHBURN and LYNN E. WOOD, and each of them, his attorneys for him and
in his name, place and stead, and in his office and capacity in the Trust, to
execute and file any Amendment or Amendments to the Trust's Registration
Statement, hereby giving and granting to said attorneys full power and
authority to do and perform all and every act and thing whatsoever requisite
and necessary to be done in and about the premises as fully to all intents
and purposes as he might or could do if personally present at the doing
thereof, hereby ratifying and confirming all that said attorneys may or shall
lawfully do or cause to be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned has hereunto set his hand this
18th day of November, 1996.
/S/Thomas G. Napurano
THOMAS G. NAPURANO, Treasurer
STATE OF INDIANA )
) ss:
COUNTY OF MARION )
Before me, a Notary Public, in and for said county and state, personally
appeared THOMAS G. NAPURANO, known to me to be the person described in and who
executed the foregoing instrument, and who acknowledged to me that he executed
and delivered the same for the purposes therein expressed.
WITNESS my hand and official seal this 18th day of November, 1996.
/S/Carol J. Highsmith
Carol J. Highsmith
Notary Public
<PAGE>
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS:
WHEREAS, The Vintage Funds, a business trust organized under the laws of
the State of Indiana (hereinafter referred to as the "Trust"), periodically
files amendments to its Registration Statement with the Securities and
Exchange Commission under the provisions of the Securities Act of 1933 and the
Investment Company Act of 1940, as amended; and
WHEREAS, the undersigned is a Trustee of the Trust;
NOW, THEREFORE, the undersigned hereby constitutes and appoints
TIMOTHY L. ASHBURN and LYNN E. WOOD, and each of them, his attorneys for him
and in his name, place and stead, and in his office and capacity in the
Trust, to execute and file any Amendment or Amendments to the Trust's
Registration Statement, hereby giving and granting to said attorneys full
power and authority to do and perform all and every act and thing whatsoever
requisite and necessary to be done in and about the premises as fully to all
intents and purposes as he might or could do if personally present at the
doing thereof, hereby ratifying and confirming all that said attorneys may or
shall lawfully do or cause to be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned has hereunto set his hand this
18th day of November, 1996.
/S/Charles H. Binger
CHARLES H. BINGER, Trustee
STATE OF INDIANA )
) ss:
COUNTY OF MARION )
Before me, a Notary Public, in and for said county and state, personally
appeared CHARLES H. BINGER, known to me to be the person described in and who
executed the foregoing instrument, and who acknowledged to me that he
executed and delivered the same for the purposes therein expressed.
WITNESS my hand and official seal this 18th day of November, 1996.
/S/Carol J. Highsmith
Carol J. Highsmith
Notary Public
<PAGE>
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS:
WHEREAS, The Vintage Funds, a business trust organized under the laws of
the State of Indiana (hereinafter referred to as the "Trust"), periodically
files amendments to its Registration Statement with the Securities and
Exchange Commission under the provisions of the Securities Act of 1933 and the
Investment Company Act of 1940, as amended; and
WHEREAS, the undersigned is a Trustee of the Trust;
NOW, THEREFORE, the undersigned hereby constitutes and appoints
TIMOTHY L. ASHBURN and LYNN E. WOOD, and each of them, his attorneys for him
and in his name, place and stead, and in his office and capacity in the
Trust, to execute and file any Amendment or Amendments to the Trust's
Registration Statement, hereby giving and granting to said attorneys full
power and authority to do and perform all and every act and thing whatsoever
requisite and necessary to be done in and about the premises as fully to all
intents and purposes as he might or could do if personally present at the
doing thereof, hereby ratifying and confirming all that said attorneys may or
shall lawfully do or cause to be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned has hereunto set his hand this
18th day of November, 1996.
/S/Daniel J. Condon
DANIEL J. CONDON, Trustee
STATE OF INDIANA )
) ss:
COUNTY OF MARION )
Before me, a Notary Public, in and for said county and state, personally
appeared DANIEL J. CONDON, known to me to be the person described in and
who executed the foregoing instrument, and who acknowledged to me that he
executed and delivered the same for the purposes therein expressed.
WITNESS my hand and official seal this 18th day of November, 1996.
/S/Carol J. Highsmith
Carol J. Highsmith
Notary Public
<PAGE>
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS:
WHEREAS, The Vintage Funds, a business trust organized under the laws of
the State of Indiana (hereinafter referred to as the "Trust"), periodically
files amendments to its Registration Statement with the Securities and
Exchange Commission under the provisions of the Securities Act of 1933 and the
Investment Company Act of 1940, as amended; and
WHEREAS, the undersigned is a Trustee of the Trust;
NOW, THEREFORE, the undersigned hereby constitutes and appoints TIMOTHY L.
ASHBURN and LYNN E. WOOD, and each of them, his attorneys for him and in his
name, place and stead, and in his office and capacity in the Trust, to
execute and file any Amendment or Amendments to the Trust's Registration
Statement, hereby giving and granting to said attorneys full power and
authority to do and perform all and every act and thing whatsoever requisite
and necessary to be done in and about the premises as fully to all intents
and purposes as he might or could do if personally present at the doing
thereof, hereby ratifying and confirming all that said attorneys may or shall
lawfully do or cause to be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned has hereunto set his hand this
18th day of November, 1996.
/S/Philip L. Conover
PHILIP L. CONOVER, Trustee
STATE OF INDIANA )
) ss:
COUNTY OF MARION )
Before me, a Notary Public, in and for said county and state, personally
appeared PHILIP L. CONOVER, known to me to be the person described in and who
executed the foregoing instrument, and who acknowledged to me that he
executed and delivered the same for the purposes therein expressed.
WITNESS my hand and official seal this 18th day of November, 1996.
/S/Carol J. Highsmith
Carol J. Highsmith
Notary Public
<PAGE>
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS:
WHEREAS, The Vintage Funds, a business trust organized under the laws of
the State of Indiana (hereinafter referred to as the "Trust"), periodically
files amendments to its Registration Statement with the Securities and
Exchange Commission under the provisions of the Securities Act of 1933 and the
Investment Company Act of 1940, as amended; and
WHEREAS, the undersigned is a Trustee of the Trust;
NOW, THEREFORE, the undersigned hereby constitutes and appoints TIMOTHY L.
ASHBURN and LYNN E. WOOD, and each of them, his attorneys for him and in his
name, place and stead, and in his office and capacity in the Trust, to
execute and file any Amendment or Amendments to the Trust's Registration
Statement, hereby giving and granting to said attorneys full power and
authority to do and perform all and every act and thing whatsoever requisite
and necessary to be done in and about the premises as fully to all intents
and purposes as he might or could do if personally present at the doing
thereof, hereby ratifying and confirming all that said attorneys may or shall
lawfully do or cause to be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned has hereunto set his hand this
27th day of November, 1996.
/S/David E. LaBelle
DAVID E. LaBELLE, Trustee
STATE OF TEXAS )
) ss:
COUNTY OF DALLAS )
Before me, a Notary Public, in and for said county and state, personally
appeared DAVID E. LaBELLE, known to me to be the person described in and who
executed the foregoing instrument, and who acknowledged to me that he
executed and delivered the same for the purposes therein expressed.
WITNESS my hand and official seal this 27th day of November, 1996.
/S/Donna Sivley
Donna Sivley
Notary Public
<PAGE>
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS:
WHEREAS, The Vintage Funds, a business trust organized under the laws of
the State of Indiana (hereinafter referred to as the "Trust"), periodically
files amendments to its Registration Statement with the Securities and
Exchange Commission under the provisions of the Securities Act of 1933 and the
Investment Company Act of 1940, as amended; and
WHEREAS, the undersigned is a Trustee of the Trust;
NOW, THEREFORE, the undersigned hereby constitutes and appoints TIMOTHY L.
ASHBURN and LYNN E. WOOD, and each of them, his attorneys for him and in his
name, place and stead, and in his office and capacity in the Trust, to
execute and file any Amendment or Amendments to the Trust's Registration
Statement, hereby giving and granting to said attorneys full power and
authority to do and perform all and every act and thing whatsoever requisite
and necessary to be done in and about the premises as fully to all intents
and purposes as he might or could do if personally present at the doing
thereof, hereby ratifying and confirming all that said attorneys may or shall
lawfully do or cause to be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned has hereunto set his hand this
18th day of November, 1996.
/S/Jack R. Orben
JACK R. ORBEN, Trustee
STATE OF INDIANA )
) ss:
COUNTY OF MARION )
Before me, a Notary Public, in and for said county and state, personally
appeared JACK R. ORBEN, known to me to be the person described in and who
executed the foregoing instrument, and who acknowledged to me that he
executed and delivered the same for the purposes therein expressed.
WITNESS my hand and official seal this 18th day of November, 1996.
/S/Carol J. Highsmith
Carol J. Highsmith
Notary Public
