As filed with the Securities and Exchange Commission
on November 8, 1996
Registration No. 333-13375
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-14
Registration Statement Under The Securities Act of 1933
/X/ Pre-Effective Amendment No. _1_ / / Post-Effective Amendment No. ___
THE VINTAGE FUNDS
(Exact Name of Registrant as Specified in Charter)
429 North Pennsylvania Street
Indianapolis, Indiana 46204
(Address of Principal Executive Offices)
1-800-862-7283
(Telephone Number)
TIMOTHY L. ASHBURN
Vintage Advisers, Inc.
429 North Pennsylvania Street
Indianapolis, Indiana 46204
(Name and Address of Agent for Service)
Copies to:
Donald S. Mendelsohn
Brown, Cummins & Brown Co., L.P.A.
3500 Carew Tower, 441 Vine Street
Cincinnati, Ohio 45202
Approximate date of proposed public offering: As soon as practicable after
this Registration Statement becomes effective.
Rule 24f-2(a)(1) Declaration:
The shares of the beneficial interest of the Registrant that are the subject
of this filing on Form N-14 were previously registered under the Securities
Act of 1933 pursuant to Rule 24f-2 of the Investment Company Act of 1940 as
an indefinite number of shares of beneficial interest; accordingly, no filing
fee is due.
Registrant filed a Form 24F-2 on November 29, 1995 for the fiscal year
ended September 30, 1995. It is anticipated that a Form 24F-2 will be filed
on or before November 29, 1996 for its most recent fiscal year ended September
30, 1996.
<PAGE>
Delaying Amendment Declaration:
Registrant hereby amends this Registration Statement on such date or dates as
may be necessary to delay its effective date until Registrant shall file a
further amendment which specifically states that this Registration Statement
shall thereafter become effective in accordance with Section 8(a) of the
Securities Act of 1933, as amended, or until this Registration Statement
shall become effective on such date as the Commission, acting pursuing to
Section 8(a), may determine.
<PAGE>
Cross Reference Sheet
Pursuant to Rule 481(a) under the Securities Act of 1933
Proxy
Statement/
Part A Form N-14 Item No. Prospectus Caption
Item 1. Beginning of Registration Cover Page
Statement and Outside Front
Cover Page of Prospectus
Item 2. Beginning and Outside Back Table of Contents
Cover Page of Prospectus
Item 3. Fee Table, Synopsis Information Synopsis; Comparison of
and Risk Factors Principal Risk Factors
Item 4. Information About The Transaction Synopsis; The Proposed
Transaction; General
Information
Item 5. Information About The Additional Information
Registrant* about The Vintage Funds
Fiduciary Value Fund;
Miscellaneous
Item 6. Information About the Company Miscellaneous
Being Acquired
Item 7. Voting Information Voting Information; The
Proposed Transaction
Item 8. Interest of Certain Persons Not Applicable
and Experts
Item 9. Additional Information Not Applicable
Required for Reoffering by
Persons Deemed to be Underwriters
* The Registrant has not commenced operations and, therefore, the information
required by Item 5A of Form N1-A is not applicable.
Statement of Additional
Part B Form N-14 Item No. Information Caption
Item 10. Cover Page Cover Page
Item 11. Table of Contents Table of Contents
Item 12. Additional Information Introduction; Additional
About the Registrant Information about
Fiduciary Value Fund
Item 13. Additional Information About Not Applicable
the Company Being Acquired
Item 14. Financial Statements Financial Statements
Part C
Information required to be included in Part C is set forth under the
appropriate item in Part C of this Registration Statement.
<PAGE>
November ___, 1996
Dear Shareholder:
Enclosed is a Prospectus/Proxy Statement asking you to vote in favor of a
reorganization of The Laidlaw Covenant Fund.
In ____________, 1996, Laidlaw Holdings Asset Management, Inc., the
investment adviser of The Laidlaw Covenant Fund, informed the Board of
Trustees of the Fund that it no longer wished to manage the Fund. The
Trustees considered the options available to the Laidlaw Covenant Fund and
determined the reorganization of the Fund into Fiduciary Value Fund to be in
your best interest as shareholder.
Fiduciary Value Fund, a series of The Vintage Funds, has an investment
objective substantially similar to The Laidlaw Covenant Fund. We encourage
you to read the Prospectus/Proxy Statement which provides additional details
about Fiduciary Value Fund and the reasons for the reorganization. After
reviewing the information carefully, the Board of Trustees of The Laidlaw
Covenant Fund unanimously recommends that you vote FOR the proposed
reorganization.
YOUR VOTE IS IMPORTANT, REGARDLESS OF THE NUMBER OF SHARES YOU OWN.
PLEASE TAKE A FEW MINUTES TO REVIEW THIS MATERIAL, CAST YOUR VOTE ON THE
ENCLOSED PROXY CARD AND RETURN THE PROXY CARD IN THE ENCLOSED POSTAGE-PAID
ENVELOPE. YOUR PROMPT RESPONSE IS NEEDED TO AVOID COSTLY FOLLOW-UP MAILINGS.
Thank you very much for your assistance.
Sincerely,
____________________________
Chairman
The Laidlaw Covenant Fund
<PAGE>
THE LAIDLAW COVENANT FUND
100 Park Avenue
New York, NY 10017
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD ON _____________, 1996
To the shareholders of The Laidlaw Covenant Fund:
A special meeting of shareholders of The Laidlaw Covenant Fund will be
held at ________________________________, on December ____, 1996 at _______
a.m., to consider and vote on the following matters, all as described in the
accompanying Prospectus/Proxy Statement:
1. Approval or disapproval of an Agreement and Plan of Reorganization,
included as Exhibit A to the attached Proxy Statement, under which Fiduciary
Value Fund, a series of The Vintage Funds, would acquire the assets of The
Laidlaw Covenant Fund in exchange solely for shares of beneficial interest in
Fiduciary Value Fund and the assumption by Fiduciary Value Fund of The
Laidlaw Covenant Fund's liabilities, followed by the distribution of those
shares to the shareholders of The Laidlaw Covenant Fund and the termination of
that Fund.
2. To transact such other business as may properly come before the
meeting or any adjournment thereof.
The Board of Trustees unanimously recommends that the shareholders
approve the proposed Reorganization.
Shareholders of record of The Laidlaw Covenant Fund as of ______________
1996, are entitled to notice of and to vote at the meeting or any adjournment
thereof.
If you do not expect to attend the meeting in person, please complete,
date, sign and mail the enclosed Proxy in the enclosed, postage paid envelope
provided for that purpose.
By Order of the Board of Trustees
_____________________________________
Joseph V. Del Raso, Secretary
New York, New York
_____________________, 1996
YOUR VOTE IS IMPORTANT
TO ENSURE A QUORUM, PLEASE COMPLETE AND RETURN THE PROXY IN THE
ENCLOSED ENVELOPE WHICH REQUIRES NO POSTAGE IF
MAILED IN THE UNITED STATES. IF YOU ATTEND THE
MEETING, YOUR PROXY WILL BE RETURNED TO YOU
UPON REQUEST TO THE SECRETARY OF THE MEETING.
<PAGE>
PROSPECTUS/PROXY STATEMENT
DECEMBER ___, 1996
FIDUCIARY VALUE FUND THE LAIDLAW COVENANT FUND
(A Series of The Vintage Funds) 100 Park Avenue
P.O. Box 6110 New York, NY 10017
Indianapolis, IN 46206-6110 1-800-275-2683
This Prospectus/Proxy Statement ("Proxy Statement") is being furnished to
shareholders of The Laidlaw Covenant Fund ("Covenant Fund") in connection
with the solicitation of proxies by Covenant Fund's Board of Trustees for use
at a Special Meeting of Shareholders of Covenant Fund to be held
on December _________, 1996, at ________a.m., and at any adjournment thereof
("Meeting").
As more fully described in this Proxy Statement, the purpose of the
Meeting is to ask shareholders to consider and approve a proposed
reorganization (the "Reorganization"). Under the Reorganization, Fiduciary
Value Fund ("Value Fund"), a series of The Vintage Funds ("Vintage Funds")
would acquire all of the assets and liabilities of Covenant Fund in exchange
solely for shares of Value Fund. Those Value Fund shares then would be
distributed to the shareholders of Covenant Fund, so that each shareholder of
Covenant Fund would receive a number of full and fractional shares of Value
Fund having an aggregate net asset value that, on the effective date of the
Reorganization, is equal to the aggregate net asset value of the
shareholder's shares in Covenant Fund. Following the distribution, Covenant
Fund will be terminated.
This Proxy Statement also serves as a Prospectus of Vintage Funds under
the Securities Act of 1933, as amended, for the issuance of shares of Value
Fund to the current Covenant Fund shareholders upon completion of the
Reorganization. Value Fund is a diversified, open-end management investment
company with an investment objective that is substantially similar to that of
Covenant Fund. The investment objective of Value Fund is growth of capital,
current income and growth of income. There can be no assurance that Value
Fund will achieve its investment objective. This Proxy Statement, which
should be retained for future reference, sets forth concisely the information
about the Reorganization and Value Fund that a shareholder should know before
voting or investing in the Value Fund and should be retained for future
reference.
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/PROXY STATEMENT. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
This Proxy Statement is accompanied by the Prospectus of Value Fund,
dated January 29, 1996, which is incorporated (excluding the Financial
Highlights section) by this reference into this Proxy Statement. A Statement
of Additional Information dated ________________, 1996 relating to the
Reorganization, and including historical financial statements, has been filed
with the Securities and Exchange Commission ("SEC"), and is incorporated
herein by this reference. The Prospectus and Statement of Additional
Information for Covenant Fund, dated April 29, 1996, have been filed with the
SEC and also are incorporated herein by this reference. Copies of these
documents, as well as Covenant Fund's Annual Report to Shareholders for the
fiscal year ended December 31, 1995, may be obtained without charge, and
further inquiries may be made, by writing Unified Adviser's Inc., transfer
agent, at its principal executive offices or by calling Linda Lawson at
1-800-862-7283, extension 8525.
<PAGE>
TABLE OF CONTENTS
VOTING INFORMATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
SYNOPSIS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
The Proposed Reorganization. . . . . . . . . . . . . . . . . . . 2
Comparative Fee Table . . . . . . . . . . . . . . . . . . . . . 3
Shareholder Transaction Expenses . . . . . . . . . . . . . . . . 5
Annual Fund Operating Expenses . . . . . . . . . . . . . . . . . 5
Example of Effect on Fund Expenses . . . . . . . . . . . . . . . 6
Forms of Organization . . . . . . . . . . . . . . . . . . . . . 7
Investment Objectives and Policies . . . . . . . . . . . . . . . 7
Operations of Value Fund Following the Reorganization . . . . . 8
Purchases, Exchanges and Redemptions . . . . . . . . . . . . . . 9
Dividends . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Federal Income Tax Consequences of the Reorganization . . . . . 10
COMPARISON OF PRINCIPAL RISK FACTORS . . . . . . . . . . . . . . . . . . . 10
Fixed Income . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Foreign Securities . . . . . . . . . . . . . . . . . . . . . . . 11
Hedging Strategies . . . . . . . . . . . . . . . . . . . . . . . 11
Mutual Funds . . . . . . . . . . . . . . . . . . . . . . . . . . 12
THE PROPOSED TRANSACTION . . . . . . . . . . . . . . . . . . . . . . . . . 13
Reorganization Plan. . . . . . . . . . . . . . . . . . . . . . . 13
Reasons for Reorganization . . . . . . . . . . . . . . . . . . . 15
Description of Securities to be Issued . . . . . . . . . . . . . 16
Federal Income Tax Considerations Applicable to Each Transaction 16
Capitalization . . . . . . . . . . . . . . . . . . . . . . . . . 18
ADDITIONAL INFORMATION ABOUT
THE VINTAGE FUNDS FIDUCIARY VALUE FUND . . . . . . . . . . . . . . . . . . 19
MISCELLANEOUS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
Available Information. . . . . . . . . . . . . . . . . . . . . . 20
Experts. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
<PAGE>
VOTING INFORMATION
This Prospectus/Proxy Statement ("Proxy Statement") is being furnished to
shareholders of The Laidlaw Covenant Fund ("Covenant Fund") in connection
with the solicitation of proxies by Covenant Fund's Board of Trustees for use
at a Special Meeting of Shareholders to be held on December ___, 1996, and at
any adjournment thereof ("Meeting"). This Proxy Statement will first be
mailed to shareholders on or about ______________________, 1996.
A majority of shares of Covenant Fund outstanding on ________________,
1996, represented in person or by proxy, must be present for the transaction
of business at the Meeting. If a quorum is not present at the Meeting or a
quorum is present but sufficient votes to approve the proposal are not
received, the persons named as proxies may propose one or more adjournments
of the Meeting to permit further solicitation of proxies. Any such
adjournment will require the affirmative vote of a majority of those shares
voted at the Meeting in person or by proxy. The persons named as proxies will
vote those proxies that they are entitled to vote FOR the proposal in favor
of such an adjournment and will vote those proxies required to be voted
AGAINST the proposal against such adjournment. A shareholder vote may be
taken on the proposals in this Proxy Statement prior to any such adjournment
if sufficient votes have been received and it is otherwise appropriate.
Broker non-votes are shares held in street name for which the broker
indicates that instructions have not been received from the beneficial owners
or other persons entitled to vote and for which the broker does not have
discretionary voting authority. Abstentions and broker non-votes will be
counted as shares present for purposes of determining whether a quorum is
present but will not be voted for or against the adjournment or the proposal.
Accordingly, abstentions and broker non-votes effectively will be a vote
against adjournment or against the proposal because the required vote is a
percentage of the shares present (for adjournment) or outstanding (for the
proposal).
The individuals named as proxies on the enclosed proxy card will vote in
accordance with your direction as indicated thereon if your proxy card is
received properly executed by you or by your duly appointed agent or
attorney-in-fact. If you sign, date and return the proxy card, but give no
voting instructions, your shares will be voted in favor of approval of the
Agreement and Plan of Reorganization, dated as of August 21, 1996 (the
"Reorganization Plan"). A form of the Reorganization Plan is attached to this
Proxy Statement as Appendix A. Under the Reorganization Plan, Fiduciary Value
Fund ("Value Fund"), a series of The Vintage Funds ("Vintage Funds") would
acquire the assets of Covenant Fund in exchange soley for shares of beneficial
interest in Value Fund and the assumption by Value Fund of Covenant Fund's
liabilities; those Value Fund shares then would be distributed to Covenant
Fund's shareholders. After completion of the Reorganization, Covenant Fund
will be terminated.
In addition, if you sign, date and return the proxy card, but give no
voting instructions, the duly appointed proxies may vote your shares, in their
discretion, upon such other matters as may come before the Meeting. The proxy
card may be revoked by giving another proxy or by letter or telegram revoking
the initial proxy. To be effective, such revocation must be received by
Covenant Fund prior to the Meeting and must indicate your name and account
number. In addition, if you attend the Meeting in person, you may, if you
wish, vote by ballot at the Meeting, thereby canceling any proxy previously
given.
Approval of the Reorganization Plan requires the affirmative vote of a
majority of the outstanding shares of Covenant Fund. Each outstanding full
share of Covenant Fund is entitled to one vote, and each outstanding
fractional share thereof is entitled to a proportionate fractional share of
one vote. As of [ ], 1996 "(Record Date"), Covenant Fund had
[ ] shares of beneficial interest outstanding. The solicitation of
proxies, the cost of which will be borne by Laidlaw Holdings Asset Management,
Inc. ("Laidlaw"), Covenant Fund's adviser, will be made primarily by mail but
also may include telephone or oral communications by representatives of
Unified Adviser's, Inc., Value Fund and Covenant Fund's transfer agent, and an
affiliate of the Adviser. The transfer agent will not be compensated for the
solicitation activities. Management does not know of any single shareholder
or "group" (as that term is used in Section 13(d) of the Securities Exchange
Act of 1934) who owned beneficially 5% or more of the shares of Covenant Fund
as of the Record Date. Trustees and officers of Covenant Fund own in the
aggregate less than 1% of the shares of their respective funds.
As of the Record Date, Value Fund had ______ shares of beneficial
interest outstanding. As of the Record Date, the following persons owned
beneficially 5% or more of the shares of Value Fund: _______________________.
Trustees and officers of Value Fund own in the aggregate _______% of the
shares of Value Fund.
SYNOPSIS
The following is a summary of certain information contained elsewhere in
this Proxy Statement, the Prospectus of Covenant Fund and Value Fund, which
are incorporated herein by reference, and the Reorganization Plan and is
qualified by reference to the more complete information contained in the
Proxy Statement and Prospectus and Reorganization Plan. Shareholders should
read this Proxy Statement and the Prospectus of Value Fund carefully. As
discussed more fully below, Covenant Fund's Board of Trustees believes that
the Reorganization will benefit Covenant Fund's shareholders. Covenant Fund
and Value Fund have substantially similar investment objectives, although
their investment policies differ in some respects.
The Proposed Reorganization
The Board of Trustees of Covenant Fund considered and gave preliminary
approval of, the Reorganization Plan at a meeting held on August 19, 1996.
The Reorganization Plan was given final approval by the Board of Trustees of
Covenant Fund at a meeting held on September 3, 1996. For the reasons set
forth below under "The Proposed Transaction -- Reasons for the
Reorganization," the Board of Trustees of Covenant Fund, including its
trustees who are not "interested persons," as that term is defined in the
Investment Company Act of 1940 ("1940 Act") ("Independent Trustees"), has
determined that the Reorganization is in the best interests of Covenant Fund,
that the terms of the Reorganization are fair and reasonable and that the
interests of Covenant Fund's shareholders will not be diluted as a result of
the Reorganization. Accordingly, the Board of Trustees of Covenant Fund
approved the Reorganization Plan and recommends approval of the transaction
to the shareholders.
The Reorganization Plan provides for the acquisition of the assets of
Covenant Fund by Value Fund, in exchange solely for shares of beneficial
interest of Value Fund and the assumption by Value Fund of the liabilities of
Covenant Fund. Covenant Fund will then distribute those shares to its
shareholders, so that each Covenant Fund shareholder will receive the number
of full and fractional shares that equals in value such shareholder's
holdings in Covenant Fund as of the Closing Date (defined below). Covenant
Fund then will be terminated as soon as practicable thereafter.
Following the Reorganization, the investment policies of the Value
Fund will be modified to include the socially responsible investment policy
currently followed by Covenant Fund, and Fiduciary Counsel, Value Fund's sub-
adviser, will retain Laidlaw as a consultant. The consulting fee will be
paid directly by the sub-adviser from its own assets and will not be an
expense of the Fund. Laidlaw's duties will include the preparation of a
recommended list of socially conscious companies, investment in which would
be consistent with the socially responsible investment policy adopted by the
Value Fund. Laidlaw will not provide investment advisory services to the
Value Fund.
The exchange of Covenant Fund's assets for Value Fund shares and
Covenant Fund's assumption of its liabilities will occur as of [12:00 noon],
on December ____, 1996 or such later date as the conditions to the closing are
satisfied ("Closing Date"). The Plan provides that either Value Fund or
Covenant Fund may terminate the Plan if the closing has not occurred on or
before December 31, 1996. If circumstances cause the closing to be delayed
beyond December 31, 1996, it is anticipated that neither Value Fund nor
Covenant Fund will terminate the Plan.
Comparative Fee Table
Certain fees and expenses that Covenant Fund shareholders pay, directly
or indirectly, are different from those incurred by Value Fund shareholders.
It is anticipated that, following the Reorganization, the former shareholders
of Covenant Fund will, as shareholders of Value Fund, be subject to lower
expenses as a percentage of net assets than those experienced by Covenant
Fund.
Vintage Advisers, Inc. (the "Adviser"), the investment adviser of Value
Fund, is entitled to receive a management fee from Value Fund at an annual
rate of 0.75% of Value Fund's average daily net assets. The Adviser has
entered into a sub-advisory agreement with Fiduciary Counsel, Inc. ("Sub-
Adviser") to manage the investment portfolio of Value Fund. The Adviser pays
the Sub-Adviser an annual fee for its services. This fee is paid directly by
the Adviser from its own assets and is not an expense of Value Fund. The sub-
advisory fee is equal to 0.35% of Value Fund 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.
Value Fund is authorized to pay a 12b-1 fee to its distributor at an
annual rate of 0.10% of its average daily net assets. Unified Management
Corporation, an affiliate of the Adviser, is Value Fund's distributor. The
amounts payable to the distributor during any year may be more or less than
actual expenses incurred by the distributor during such year because the
12b-1 fee is a compensation type plan, not based on actual expenses.
Other expenses of the Value Fund include fees incurred under an
administration agreement and shareholder services plan. Unified Advisers,
Inc., Vintage Fund's administrator, provides certain administrative personnel
and services (including administration, transfer agency and fund accounting
services) necessary to operate Value Fund. For its services, the
administrator receives an annual fee equal to 0.435% of the Fund's average
daily net assets, payable monthly, from Value Fund. Under the shareholder
services plan, financial institutions, including brokers, may enter into
shareholder service agreements with Vintage Funds 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 Value Fund. 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.
The Adviser has voluntarily agreed to waive its management fee to the
extent necessary to cause Vintage Fund's other expenses (not including the
12b-1 fee and the shareholder service fees) to be 0.50% of its average daily
net assets, resulting in total expenses of 1.50% of its daily net assets.
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.
Laidlaw, the investment adviser of Covenant Fund, is entitled to receive
a management fee from Covenant Fund at an annual rate of 1.00% of Covenant
Fund's average daily net assets. Covenant Fund has no sub-adviser.
Covenant Fund is authorized to pay a 12b-1 fee at the annual rate of up
to 0.35% of Covenant Fund's average daily net assets. Of this, 0.10% is
retained by Laidlaw Equities, Inc., Covenant Fund's distributor, and the
remainder may be used to reimburse the distributor for expenses incurred
pursuant to the 12b-1 plan. Laidlaw has undertaken to reimburse Covenant
Fund for other expenses and waive its management fee to the extent necessary
to cause Covenant Fund's total expenses not to exceed 2.50% of its daily net
assets.
The Value Fund charges no front end or deferred sales charge. Covenant
Fund charges a front end sales load of up to 4.5% of the offering price per
share.
Following the Reorganization, the management fee for the combined fund is
expected to be 0.75% of the average daily net assets, and the total operating
expenses of the combined fund, including the 12b-1 fee and the shareholder
service fees, is expected to be 1.50%. There is no assurance that the
Adviser will continue to waive its management fee to the extent necessary to
cause Value Fund's other expenses to remain at 0.50% of its daily net assets,
however, it is expected that the combined fund will be of such a size that
efficiencies realized through economies of scale will substantially offset any
increase in total operating expenses attributable to the termination of the
voluntary fee waiver.
The following tables show (1) transaction expenses currently incurred by
shareholders of each Fund and transaction expenses that each shareholder will
incur after giving effect to the Reorganization, and (2) the current fees and
expenses incurred for the fiscal year ended December 31, 1995 by Covenant
Fund and for the fiscal year ended September 30, 1996 by Value Fund, and
pro forma fees for Value Fund after giving effect to the Reorganization.
<TABLE>
Shareholder Transaction Expenses
<CAPTION>
Covenant Value Combined
Fund Fund Fund
<S> <C> <C> <C>
Sales charge on purchases 4.50% None None
of shares
Sales charge on reinvested None None None
dividends
Redemption fee or deferred None None None
sales charge
Annual Fund Operating Expenses
(as a percentage of average net assets)
<CAPTION>
Covenant Value Combined
Fund Fund Fund
<S> <C> <C> <C>
Management Fees 0.00%* 0.75%** 0.75%
12b-1 Fees 0.35% 0.10% 0.10%
Shareholder Service Fee 0.00% 0.15% 0.15%
Other Expenses 2.15%* 0.50%** 0.50%
Total Fund Operating 2.50%* 1.50%** 1.50%
Expenses
<FN>
* Annual Fund Operating Expenses are based on Covenant Fund's actual
expense incurred during the fiscal year ended December 31, 1995.
Laidlaw has undertaken to reimburse Other Expenses and to waive its
management fee to the extent necessary to ensure that Total Fund
Operating Expenses do not exceed 2.50% of Covenant Fund's average
daily net assets. Absent this reimbursement and fee waiver
arrangement, the Management Fee would have been 1.00%, Other
Expenses would have been 3.22%, and Total Fund Operating
Expenses would have been 4.57% of the Fund's average daily net
assets.
** Annual Fund Operating Expenses are based on Value Fund's actual
expenses incurred during the fiscal year ended September 30, 1996.
The Adviser reimbursed expenses and waived its management fee to
the extent necessary to cause the Management Fees and other
Expenses of Value Fund to be as indicated. Absent this voluntary
reimbursement and fee waiver arrangement, the Management Fees would
have been 0.75%, other expenses would have been 107.32%
and Total Fund Operating Expenses would have been 108.32% of the
Fund's average daily net assets. In this regard, shareholders
should understand that the investors in Value Fund consist
exclusively of affiliated persons of the Fund and that shares have
not been sold generally to the public. The Fund was maintained by
Vintage Funds only for future business opportunities, and total net
assets never exceeded $ 200,000. Therefore, while actual expenses
of the Fund were less than $ 31,000, this represented a significant
percentage of Value Fund's net assets.
[/FN]
Example of Effect on Fund Expenses
The following illustrates the expenses on a $1,000 investment under the
fees and the expenses stated above.
<CAPTION>
ONE YEAR THREE YEARS FIVE YEARS TEN YEARS
<S> <C> <C> <C> <C>
Covenant Fund . . . . $69 $119 $172 $316
Value Fund . . . . . $15 $ 47 $ 82 $179
Combined Fund . . . . $15 $ 47 $ 82 $179
</TABLE>
This Example assumes that all dividends are reinvested and that the
percentage amounts listed under Annual Fund Operating Expenses remain the
same in the years shown and that the shares are redeemed at the end of each
time period shown. The above tables and the assumption in this Example of a
5% annual return are required by regulations of the Securities and Exchange
Commission ("SEC") applicable to all mutual funds; the assumed 5% annual
return is not a prediction of, and does not represent, either Fund's projected
or actual performance.
THIS EXAMPLE SHOULD NOT BE CONSIDERED A REPRESENTATION OF PAST OR
FUTURE EXPENSES, AND EACH FUND'S ACTUAL EXPENSES MAY BE MORE OR LESS THAN
THOSE SHOWN. The actual expenses of each Fund will depend upon, among other
things, the level of its average net assets and the extent to which it incurs
variable expenses, such as transfer agency costs.
<PAGE>
Forms of Organization
Vintage Funds and Covenant Fund are both open-end management
investment companies organized as business trusts under the laws of the State
of Indiana. The Declaration of Trust of both trusts authorizes the issuance
of an unlimited number of shares of beneficial interest, no par value per
share. On September 30, 1996, Value Fund had net assets of $156,618.00, but
technically it has not commenced operations because it has not begun
investing in accordance with its investment objective. Covenant Fund
commenced operations on March 3, 1992, and, as of September 30, 1996, had net
assets of $3,312,739.00 (unaudited). Neither trust is required to (and
neither does) hold annual shareholder meetings.
Investment Objectives and Policies
The investment objective and policies of each Fund are set forth below.
There can be no assurance that either Fund will achieve its investment
objective, and each Fund's net asset value fluctuates based upon changes in
the value of its portfolio securities.
Value Fund. The investment objective of the Value Fund is growth of
capital, current income and growth of income. Under normal circumstances, at
least 65% of the Fund's assets will consist of equity securities, including
common stocks, preferred stocks, convertible securities, warrants and rights
issued by corporations in any industry which may be denominated in U.S.
dollars or in foreign currencies. Value Fund may also invest to a lesser
extent in investment grade fixed income obligations, including unrated
securities judged by the Adviser to be of comparable quality. The Fund may
invest temporarily in money market instruments, including U.S. government
obligations, repurchase agreements and other short-term investments.
Following the Reorganization, Value Fund will implement a socially
responsible investment policy, similar to that described below under
"Covenant Fund." The Value Fund's planned implementation of a socially
responsible investment policy is described below under "Operations of Value
Fund Following the Reorganization."
The Fund may invest up to 25% of its total assets in foreign securities,
and the Fund may enter into foreign currency transactions to obtain the
necessary currencies to settle securities transactions as well as to protect
the Fund assets against adverse changes in foreign currency exchange rates or
exchange control regulations.
The Fund may invest up to 10% of its total assets in other mutual funds,
and may invest up to 5% of its total assets in any one mutual fund. The Fund
will invest only in other mutual funds that have an investment objective
similar to the Fund, or that otherwise are permitted investments under the
Fund's investment policies described in its Prospectus.
Covenant Fund. The investment objective of Covenant Fund is to provide
investors with long-term capital growth and dividend or interest income.
Laidlaw, as the Fund's adviser, selects stocks from a universe of 200
securities chosen from the 1,000 largest U.S. corporations as to their
socially responsible behavior. This list of 200 securities is referred to as
the "Covenant 200." Responsibility encompasses such issues as customer,
community, employee, competitor, supplier and shareholder relations,
environmental and social issues. Once a corporation has been selected for
inclusion in the Covenant 200, purshases and sales by Covenant Fund are made
on the basis of traditional investment considerations by its adviser.
Under normal circumstances, at least 65% of the Fund's assets will
consist of common stocks, or securities convertible into or exchangeable for
common stocks, of issuers that meet Fund's investment criteria described
above. The Fund may invest in investment grade fixed income securities,
including unrated securities judged by Laidlaw to be of comparable quality.
If the Covenant 200 is expanded to include foreign issuers for temporary
defensive purposes, up to 25% of the value of the Fund's assets may be
invested in the securities of foreign issuers. If the Fund purchases
securities denominated in foreign currencies, the Fund may purchase and sell
currency futures contracts, and may engage in currency exchange transactions.
In periods of market weakness as determined by Laidlaw, for temporary
defensive purposes or in anticipation of otherwise investing cash positions,
Covenant Fund may invest its assets in money market instruments, such as U.S.
Government securities and other short-term-debt instruments, or short-term
investment grade corporate bonds, or by entering into repurchase agreements
with respect to such securities.
Other Policies of The Funds. Both Funds may purchase and write call and
put options on portfolio securities. Covenant Fund may also purchase and
write put and call options on stock indexes, engage in futures and options on
futures transactions, and may purchase and sell stock index futures contracts
and options on stock index futures contracts, and may purchase and sell call
and put options on foreign currency. Each Fund may lend securities from its
investment portfolio, provided such loans do not exceed one-third of the value
of the Fund's respective total assets. Both of the Funds may purchase
securities on a forward commitment basis.
Operations of Value Fund Following the Reorganization
Following the Reorganization, the name of the Value Fund will be
changed to Laidlaw Social Fund. It is not expected that Value Fund will
revise its investment policies following the Reorganization to reflect those
of Covenant Fund. However, Value Fund will implement a socially responsible
investment policy. Laidlaw will be retained to provide Value Fund's sub-
adviser with a list of 200 socially conscious companies (the "List") for
purposes of possible investment on behalf of Value Fund. Laidlaw will update
the list at least quarterly to eliminate companies that no longer qualify as
socially conscious. For this purpose, socially conscious companies will be
chosen by Laidlaw from the 1,000 largest corporations on the basis of their
responsible behavior, after consideration of such issues as customer,
community, employee, competitor, supplier and shareholder relations,
environmental and social issues. While it is the sub-adviser's intention to
select securities for Value Fund from the List, it is not obligated to do so.
Subject to the supervision of the Adviser, the sub-adviser will provide all
investment advisory services to Value Fund. Laidlaw will not provide
investment advisory services to Value Fund.
Based on its review of the investment portfolios of each Fund, the
Adviser believes that all of the assets held by Covenant Fund will be
consistent with the investment policies of Value Fund and thus can be
transferred to and held by Value Fund if the Reorganization is approved.
With respect to portfolio securities acquired by the Value Fund prior to
the Reorganization, it is not anticipated that Value Fund will hold any
securities that are incompatible with the socially responsible investment
policy.
After the Reorganization, the trustees and officers of Value Fund and its
investment adviser, sub-adviser, distributor and other outside agents will
continue to serve Value Fund in their current capacities. As described above,
Value Fund's sub-adviser will retain Laidlaw as a consultant to recommend a
list of socially conscious companies. For its consulting services, Laidlaw
will be paid a fee equal to an annual rate of 0.18% of the average daily net
assets of Value Fund. In addition, Laidlaw and/or its affiliates may receive
payments under Value Fund's 12-b1 Plan and/or Shareholder Services Plan to the
extent that Laidlaw or one of its affiliates serves as broker, or provides
support services to shareholders, respectively.
Purchases, Exchanges and Redemptions
The minimum initial investment in Value Fund is $1,000, generally, and
subsequent minimum investments are $100, generally. The minimum initial
investment in Covenant Fund is $500, generally, and subsequent minimum
investments are $100, generally. Shares of Value Fund are exchangeable for
shares of any other Vintage Funds mutual fund, without any additional charge.
Since Covenant Fund is the only series of the trust currently offered, shares
of Covenant Fund cannot be exchanged for shares of any other fund. The
redemption procedures for Covenant Fund and Value Fund are substantially
similar. It is not expected that Value Fund will revise its policy with
respect to purchases, exchanges and redemptions following the Reorganization.
If the Reorganization is approved, implementation of the Plan of
Reorganization will not interrupt or otherwise affect the sale of Covenant
Fund shares because, with the exception of shares purchased with reinvested
dividends, Covenant Fund stopped selling shares on May 10, 1996. Redemptions
of Covenant Fund's shares may be effected through the Closing Date.
Dividends
Value Fund and Covenant Fund each declare dividends out of its investment
company taxable income, which consists of net investment income and net short-
term capital gains. Value Fund declares and pays dividends on a quarterly
basis, and distributes any net realized long-term gains at least every twelve
months. Covenant Fund declares and pays dividends annually, and
distributes any net capital gains at least annually.
On or before the Closing Date, Covenant Fund will declare as a dividend
all of its taxable net investment income and net capital gain, if any, and
distribute that amount in order to continue to maintain its tax status as a
regulated investment company. Covenant Fund will pay these distributions in
shares or cash, as provided in its current registration statement.
Although the Value Fund did not qualify for tax purposes as a
regulated investment company for the fiscal year ended September 30, 1996
because of its small size and limited operations, there were no tax
consequences and the Fund was not required to pay any tax. The Fund intends
to (and anticipates that it will) maintain its tax status as a regulated
investment company for the fiscal year ending September 30, 1997.
Federal Income Tax Consequences of the Reorganization
Value Fund and Covenant Fund have received an opinion of Brown, Cummins &
Brown Co., L.P.A., Vintage Fund's counsel, to the effect that the
Reorganization will constitute a tax-free reorganization within the meaning
of section 368(a)(1) of the Internal Revenue Code of 1986, as amended
("Code"). Accordingly, no gain or loss will be recognized to either Fund or
its shareholders as a result of the Reorganization. See "The Proposed
Transaction -- Federal Income Tax Considerations," page ___.
COMPARISON OF PRINCIPAL RISK FACTORS
Because Value Fund's investment objective and policies are similar to
those of Covenant Fund, the investment risks of the Funds are similar.
These risks are those typically associated with investing in equity
securities: market risk and financial risk. Market risk is the risk
associated with the movement of the stock market in general. Financial risk
is associated with the financial conditions and profitability of the
underlying company. Other risks, and certain differences between the Funds,
are identified below. See the Prospectus of Value Fund, which accompanies
this Proxy Statement, for a more detailed discussion of the investment risks
of that Fund. There can be no assurance that the Funds will achieve their
investment objectives.
Fixed Income. In periods of declining interest rates, the market value
of fixed income securities will rise, and in periods of rising interest rates
the opposite will be true. Also, when interest rates are falling, net cash
inflows from the continuous sale of a Fund's shares are likely to be invested
in portfolio instruments producing lower yields than the balance of that
Fund's portfolio, thereby reducing its yield. In periods of rising interest
rates, the opposite can be true. Each Fund may invest in obligations issued
or guaranteed by the U.S. Government, its agencies or instrumentalities. In
the case of obligations not backed by the full faith and credit of the United
States, a Fund must look principally to the agency or instrumentality issuing
or guaranteeing the obligation for ultimate repayment and may not be able to
assert a claim against the United States itself in the event the agency or
instrumentality does not meet its commitment.
Each Fund is also permitted to invest in debt securities that are rated
investment grade (BBB or better by S&P or Baa or better by Moody's). Moody's
considers securities rated Baa to have speculative characteristics. Changes
in economic conditions or other circumstances are more likely to lead to a
weakened capacity for such securities to make principal and interest payments
than is the case for higher-rated securities.
Foreign Securities. Both Funds may invest in foreign securities.
Investing in foreign securities involves special risks, which include
possible adverse political and economic developments abroad, differing
regulatory systems and differing characteristics of foreign economies and
markets, as well as the fact that there is often less information publicly
available about foreign issuers.
Both Covenant Fund and Value Fund may invest in foreign securities
denominated in currencies other than the U.S. dollar. Changes in foreign
currency exchange rates thus may affect net asset values, the value of
dividends and interest earned, gains and losses realized on the sale of
securities and net investment income and capital gains, if any, to be
distributed to shareholders by these Funds. If the value of a foreign
currency rises against the U.S. dollar, the value of Fund assets denominated
in that currency will increase; correspondingly, if the value of a foreign
currency declines against the U.S. dollar, the value of Fund assets
denominated in that currency will decrease. The exchange rates between the
U.S. dollar and other currencies are determined by supply and demand in the
currency exchange markets, international balances of payments, speculation
and other economic and political conditions. In addition, some foreign
currency values may be volatile and there is the possibility of governmental
controls on currency exchange or governmental intervention in currency
markets.
Unlike Value Fund, which may at any time invest up to 25% of its net
assets in foreign issuers, Covenant Fund may invest up to 25% of its assets in
foreign issuers, but only if foreign issuers have been added to the Covenant
200 for defensive purposes. Because Covenant Fund's investment in foreign
issuers may be more limited, the risk associated with foreign securities may
be more significant for Value Fund.
Hedging Strategies. Both Funds may purchase and write options on
portfolio securities. There can be no assurance, however, that any strategy
utilizing these instruments will succeed. If Laidlaw or the Adviser
incorrectly forecasts interest rates, market values or other economic factors
utilizing a strategy for a Fund, the Fund might have been in a better
position had the Fund not hedged at all. The use of these instruments
involve certain special risks, including (1) the fact that skills needed to
use hedging instruments are different from those needed to select the Funds'
securities, (2) possible imperfect correlation, or even no correlation,
between price movements of hedging instruments and price movements of the
investments being hedged, (3) the fact that, while hedging strategies can
reduce the risk of loss, they can also reduce the opportunity for gain, or
even result in losses, by offsetting favorable price movements in hedged
investments, and (4) the possible inability of a Fund to purchase or sell a
portfolio security at a time that otherwise would be favorable for it to do
so, or a possible need for a Fund to sell a portfolio security at a
disadvantageous time, due to the need for the Fund to maintain "cover" or to
segregate securities in connection with hedging transactions and the possible
inability of a Fund to close out or to liquidate its hedged position.
In addition to the options on portfolio securities, Covenant Fund may
utilize other strategies that subject Covenant Fund to the above-described
risks, and additional risks associated with these other strategies. Covenant
Fund may purchase and write options on stock indexes. Because the value of
an index option depends upon movement in the level of the index, rather than
the price of a particular stock, whether the Fund will realize a gain or loss
from the purchase or writing of options on an index depends upon movements in
the level of stock prices in the stock market generally or, in the case of
certain indexes, in an industry or market segment, rather than movements in
the price of a particular stock. Predicting corectly movements in the
direction of the stock market generally or of a particular industry requires
different skills and techniques than predicting changes in the price of
individual stocks.
To the extent permitted by applicable regulations, Covenant Fund may
engage in futures and options on futures transactions. Although Covenant Fund
intends to purchase or sell futures contracts only if there is an active
market for such contracts, no assurance can be given that a liquid market will
exist for a particular contract at any particular time. Many futures
exchanges and boards of trade limit the amount of fluctuation permitted in
futures contract prices during a single trading day. If the Fund does not
close its futures positions during periods of adverse price movements, it
will be required to make daily cash payments of variation margin. Successful
use of futures by the Fund also is subject to the adviser's ability to predict
correct movements in the direction of the market or interest rates.
Covenant Fund may also purchase and sell stock index futures contracts
and options on stock index futures. In addition to the possibility that there
may be an imperfect correlation, or no correlation at all, between movements
in the stock index future and the portion of the portfolio being hedged, the
price of stock index futures may not correlate perfectly with the movement in
the stock index because of certain market distortions. First, all
participants in the futures market are subject to margin deposit and
maintenance requirements. Rather than meeting additional margin deposit
requirements, investors may close futures contracts through offsetting
transactions which would distort the normal relationship between index and
futures markets. Secondly, from the point of view of speculators, the
deposit requirements in the futures market are less onerous than margin
requirements in the securities market. Therefore, increased participation by
speculators in the futures market also may cause temporary price distortions.
Because of the possibility of price distortions in the futures market and the
imperfect correlation between movement in the stock index and movement in the
price of stock index futures, a correct forecast of general market trends by
the adviser still may not result in a successful hedging transaction.
Mutual Funds. Value Fund may invest up to 10% of its total assets in
mutual funds. The Adviser believes that investing in other mutual funds
provides the Fund with opportunities to achieve greater diversification of
portfolio securities and investment techniques than the Fund could achieve by
investing in individual securities. Mutual funds purchased by the Fund
likely will have certain investment policies, and use certain investment
practices, that are different from those of the Fund. These other policies
and practices may subject the Fund's assets to varying or greater degrees of
risk. The Fund is independent from any of the other mutual funds in which it
invests and has little voice in or control over the investment practices,
policies or decisions of those funds. If the 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 the
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. 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. The Fund limits its investment in any one mutual fund
to not more than 5% of its total assets.
THE PROPOSED TRANSACTION
Reorganization Plan
Significant provisions of the Reorganization Plan are summarized below;
however, this summary is qualified in its entirety by reference to the
Reorganization Plan, the form of which is attached as Appendix A to this
Proxy Statement.
The Reorganization Plan contemplates (a) the acquisition by Value Fund on
the Closing Date of the assets of Covenant Fund in exchange solely for Value
Fund shares and the assumption by Value Fund of Covenant Fund's liabilities,
and (b) the distribution of such shares to the shareholders of Covenant Fund.
The assets of Covenant Fund to be acquired by Value Fund include all
cash, cash equivalents, securities and dividends and interest, receivable
owned by Covenant Fund, and any deferred or prepaid expenses shown as an
asset on Covenant Fund's books on the Closing Date. Value Fund will assume
from Covenant Fund all stated liabilities, expenses, costs, charges and
reserves reflected on the unaudited Statement of Assets and Liabilities of
Covenant Fund; provided, however, that Covenant Fund will use its best
efforts, to the extent practicable, to discharge all such liabilities, prior
to the Closing Date. Value Fund also will deliver its shares to Covenant
Fund, which then will be distributed to Covenant Fund's shareholders.
The value of Covenant Fund's assets to be acquired, and the amount of
Value Fund and the net asset value of a share of Value Fund, will be
determined as of 4:00 p.m. on the Closing Date. All assets and liabilities
will be valued at fair value as determined in good faith by or under the
direction of each Fund's respective Board of Trustees.
On, or as soon as practicable after, the Closing Date, Covenant Fund will
distribute pro rata to their shareholders of record the shares of Value Fund
they received, so that each shareholder will receive a number of full and
fractional shares of Value Fund equal in value to the shareholder's holdings
in Covenant Fund; Covenant Fund will be terminated as soon as practicable
thereafter. Each such distribution will be accomplished by opening accounts
on the books of Value Fund in the names of Covenant Fund shareholders and by
transferring thereto the shares previouly credited to the account of Covenant
Fund on those books.
Accordingly, immediately after the Reorganization, each former
shareholder of Covenant Fund will own shares of Value Fund that will be equal
in value to that shareholder's shares of Covenant Fund immediately prior to
the Reorganization. Moreover, because shares of Value Fund will be issued at
net asset value in exchange for the net assets of Covenant Fund, the aggregate
net asset value of Value Fund shares so issued will equal to the aggregate
net asset value of Covenant Fund shares. The net asset value per share of
Value Fund will be unchanged by the transaction. Thus, the Reorganization
will not result in a dilution of any shareholder's interest.
As described more fully in the section of this Proxy Statement titled
"Operations of the Fund following the Reorganization", Value Fund will adopt a
socially responsible investment policy, and Value Fund's sub-adviser will
retain Laidlaw as a consultant to provide the sub-adviser with a recommended
list of socially conscious companies. The name of the Value Fund will be
changed to Laidlaw Social Fund.
Any transfer taxes payable upon issuance of shares of Value Fund in a
name other than that of the registered holder of the shares on the books of
Covenant Fund shall be paid by the person to whom such shares are to be
issued as a condition of such transfer. Any reporting responsibility of
Covenant Fund will continue to be its responsibility up to and including the
Closing Date and such later date on which it is terminated.
Adviser will bear all expenses incurred by Value Fund in connection with
the Reorganization, including legal, accounting and federal and state
registration fees and expenses. Laidlaw shall bear all expenses of Covenant
Fund incurred in connection with the Reorganization, including legal and
accounting fees, printing, filing and proxy solicitation expenses and asset
transfer taxes (if any) incurred in connection with the consummation of the
transactions contemplated herein. Notwithstanding the foregoing, any legal
fees and expenses of Brown, Cummins & Brown Co., L.P.A. related to the
preparation and filing of the Registration Statement on Form N-14 shall be
borne by Laidlaw up to an amount of $25,000 and Adviser shall bear any such
fees and expenses that exceed $25,000.
The consummation of the Reorganization is subject to a number of
conditions set forth in the Reorganization Plan, some of which may be waived
by each Fund. In addition, the Reorganization Plan may be amended in any
mutually agreeable manner, except that no amendment may be made subsequent to
the Meeting that has a material adverse effect on the shareholders' interests.
Reasons for Reorganization
The Board of Trustees of Covenant Fund, including a majority of its
Independent Trustees, has determined that the Reorganization is in the best
interests of Covenant Fund and its shareholders, and that the terms of the
Reorganization are fair and reasonable. In considering the Reorganization,
Board of Trustees of the Covenant Fund made an extensive inquiry into a
number of factors, including the following:
(1) the nature and quality of the advisory services to be rendered by
the Adviser and Sub-Adviser;
(2) the experience and qualifications of the personnel providing such
services;
(3) the proposed fee structures, the existence of any fee waivers, and
Value Fund's anticipated expense ratios in relation to those of
Covenant Fund;
(4) the fees charged by the Adviser;
(5) possible economies of scale arising from Value Fund's anticipated
growth;
(6) other possible benefits to the Adviser and its affiliates arising from
its relationships with Value Fund;
(7) possible alternatives to the Reorganization, including continuing to
operate on a stand-alone basis or liquidation.
The Reorganization was recommended by Laidlaw to the Board of Trustees of
Covenant Fund at meetings held on August 19, 1996 and September 3, 1996.
Laidlaw had advised the Board of Trustees of Covenant Fund that Laidlaw no
longer wished to continue financing and managing Covenant Fund. In
recommending the Reorganization, Laidlaw advised the Board of Trustees that
the alternatives were either to liquidate the Covenant Fund (which would
result in taxable gain for most shareholders and would involve legal and
administrative expenses to the Fund) or to seek a reorganization with another
fund (which could be structured as a tax-free transaction). The Board of
Trustees of the Covenant Fund concluded that the Reorganization was in the
best interests of Covenant Fund and its shareholders because (1) the
Reorganization will be tax free to shareholders; (2) the expenses of Value
Fund are less than Covenant Fund's current expenses; (3) while Covenant Fund
currently charges a sales load, Value Fund is a no-load fund; (4) Vintage
Funds offers a money market series into which shareholders could exchange
their shares; and (5) Vintage Funds offers the V.O.I.C.E.sm Program (Vision
for Ongoing Investment in Charity and Education) to investors. (See the
Vintage Fund's Prospectus for a description of the V.O.I.C.E.sm Program.)
THE BOARD OF TRUSTEES RECOMMENDS THAT THE SHAREHOLDERS
OF COVENANT FUND VOTE "FOR" THE REORGANIZATION
Description of Securities to be Issued
Vintage Funds was organized on February 1, 1995 as an Indiana business
trust. Vintage Funds' Declaration of Trust permits the trust to offer and
sell an unlimited number of full and fractional shares of beneficial interest
in each authorized mutual fund. Value Fund is one of eight mutual funds
currently offered by Vintage Funds. Each Vintage Funds mutual fund issues
its own class of shares of beneficial interest. The shares of each Vintage
Funds mutual fund represent an interest only in that fund's assets (and
shares of 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
Vintage Funds mutual fund has a proportionate vote on each matter submitted
to shareholders of that fund. All shares of each Vintage Funds mutual 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, Vintage Funds is not required to hold annual meetings
of shareholders, and 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. Covenant Fund and Vintage
Funds are both Indiana business trusts and, therefore, there are no
significant differences in shareholder rights.
Federal Income Tax Considerations Applicable to Each Transaction
The exchange of Covenant Fund's assets for shares of Value Fund and Value
Fund's assumption of Covenant Fund's liabilities is intended to qualify for
federal income tax purposes as a tax-free reorganization under Section
368(a)(1)(D) of the Code. With respect to the Reorganization, Value Fund and
Covenant Fund have received an opinion of Brown, Cummins & Brown Co., L.P.A.,
counsel to Vintage Funds, substantially to the effect that:
(i) The transfer of all of the assets of Covenant Fund assets in exchange
for the shares of Value Fund and the assumption by Value Fund of
certain identified liabilities of Covenant Fund followed by the
distribution by Covenant Fund of the shares of Value Fund to Covenant
Fund's shareholders in exchange for their Covenant Fund shares will
constitute a "reorganization" within the meaning of Section 368(a)(1)
of the Code, and Covenant Fund and Value Fund will each be a "party
to a reorganization" within the meaning of Section 368(b) of the Code,
and that the transaction qualifies as a tax-free reorganization under
Section 368(a)(1) of the Internal Revenue Code of 1986;
(ii) No gain or loss will be recognized by Covenant Fund or Value Fund on
the transfer of the assets of Covenant Fund to Value Fund solely in
exchange for the shares of Value Fund and the assumption by Value
Fund of the identified liabilities of Covenant Fund;
(iii) No gain or loss will be recognized by Covenant Fund's shareholders
upon the exchange of the shares of Covenant Fund for the shares of
Value Fund and no gain or loss will be recognized by Covenant Fund
on the distribution of the shares of Value Fund to Covenant Fund's
shareholders in exchange for Covenant Fund's shares;
(iv) The aggregate tax basis for the shares of Value Fund received by each
Covenant Fund shareholder pursuant to the reorganization will be the
same as the aggregate tax basis of Covenant Fund shares held by each
such Covenant Fund shareholder immediately prior to the
reorganization;
(v) The holding period of the shares of Value Fund to be received by each
Covenant Fund shareholder will include the period during which
Covenant Fund shares surrendered in exchange therefor were held
(provided such Covenant Fund shares were held as capital assets on
the date of the Reorganization);
(vi) The tax basis of the assets of Covenant Fund attained by Value Fund
will be the same as the tax basis of the assets of Covenant Fund
immediately prior to the Reorganization; and
(vii) The holding period of the assets of Covenant Fund in the hands of
Value Fund will include the period during which those assets were
held by Covenant Fund.
The opinion may state that no opinion is expressed as to the effect of the
Reorganization on the Funds or any shareholder (regarding the recognition of
gain or loss and/or the determination of the basis or holding period) with
respect to any asset (including certain options and futures) as to which any
unrealized gain or loss is required to be recognized for federal income tax
purposes at the end of a taxable year (or on the termination or transfer
thereof) under a mark-to-market system of accounting.
Utilization by Value Fund after the Reorganization of pre-Reorganization
capital losses realized by Covenant Fund could be subject to limitation in
future years under the Code.
Shareholders of Covenant Fund should consult their tax advisers regarding
the effect, if any, of the proposed Reorganization in light of their
individual circumstances. Because the foregoing discussion only relates to
the federal income tax consequences of the Reorganization, those shareholders
also should consult their tax advisers as to state and local tax
consequences, if any, of the Reorganization.
<PAGE>
Capitalization
The following tables show the capitalization of the Funds as of September
30, 1996 (unaudited with respect to Covenant Fund) and on a pro forma
combined basis (unaudited) as of that date giving effect to the
Reorganization.
<TABLE>
<CAPTION>
Combined Fund
Covenant Fund Value Fund (Pro Forma)
<S> <C> <C> <C>
Net Assets . . . . . .$3,312,739.00 $156,618.00 $3,468,645.00
Net Asset Value
Per Share . . . . . .$14.95 $1.96 $1.96
Shares Outstanding . . 221,633.28 79,824.91 1,769,998.00
</TABLE>
<PAGE>
ADDITIONAL INFORMATION ABOUT THE VINTAGE FUNDS
FIDUCIARY VALUE FUND
FIDUCIARY VALUE FUND 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.
<TABLE>
<CAPTION>
1996(a) 1995(b)
<S> <C> <C>
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning $10.00 $10.00
Income from Investment
Operations:
Net investment income(loss) (8.04) 0.00
Net realized and unrealized
gain(loss)on investments... 0.00 0.00
Total from investment
income..................... (8.04) 0.00
Less Distributions:
Dividends from net
investment income ......... 0.00 0.00
Total from distributions... 0.00 0.00
Net Asset value at
end of period ........... $ 1.96 $10.00
TOTAL ANNUALIZED RETURN(%) (c) (c)
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period 156,618 3,409
Ratio of expenses to
average net assets .... 160.78% 0.00%
Ratio of expenses(after
reimbursement) to
average net assets .... 0.78% 0.00%
Ratio of net investment
income to average net
assets ................. (160.37%) 0.00%
Ratio of net investment
income(after reimbursement)
to average net assets . (0.37%) 0.00%
Portfolio Turnover ...... 0.00% 0.00%
Average Commission Rate Paid ... $ 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.
</FN>
</TABLE>
<PAGE>
MISCELLANEOUS
Available Information
Each Trust (Vintage Funds and Covenant Fund) is subject to the
informational requirements of the Securities Exchange Act of 1934 and the
1940 Act and in accordance therewith files reports, proxy material and other
information with the SEC. Such reports, proxy material and other information
can be inspected and copied at the Public Reference Facilities maintained by
the SEC at 450 Fifth Street, N.W., Washington, D.C., 20549, the Midwest
Regional Office of the SEC, Citicorp Center, 500 West Madison Street, Suite
1400, Chicago, Illinois 60611, and the Northeast Regional Office of the SEC,
Seven World Trade Center, Suite 1300, New York, New York 10048. Copies of
such material can also be obtained from the Public Reference Branch, Office
of Consumer Affairs and Information Services, Securities and Exchange
Commission, Washington, D.C. 20459 at prescribed rates.
Experts
The audited financial statements of Value Fund and Covenant Fund,
incorporated herein by reference and incorporated by reference or included in
their respective Statements of Additional Information, have been audited by
McCurdy & Associates CPA's, Inc. (with respect to Value Fund) and Coopers &
Lybrand L.L.P. (with respect to Covenant Fund), independent auditors, whose
reports thereon are included in Value Fund's Statement of Additional
Information dated _______________, 1996 and Covenant Fund's Annual Report to
Shareholders for the fiscal year ended December 31, 1995. The financial
statements audited by McCurdy & Associates CPA's, Inc. and Coopers & Lybrand
L.L.P. have been incorporated herein by reference in reliance on their
reports given on their authority as experts in auditing and accounting.<PAGE>
<PAGE>
THE VINTAGE FUNDS
STATEMENT OF ADDITIONAL INFORMATION
FIDUCIARY VALUE FUND THE LAIDLAW COVENANT FUND
(A Series of The Vintage Funds) 100 Park Avenue
P.O. Box 6110 New York, NY 10017
Indianapolis, IN 46206-6110 1-800-275-2683
This Statement of Additional Information is not a prospectus and should be
read in conjunction with the Prospectus/Proxy Statement dated ______________,
1996, which may be obtained by writing Unified Advisers, Inc., 429 N.
Pennsylvania Street, Indianapolis, Indiana 46204 or by calling Linda Lawson
at (800) 862-7283, extension 8525.
The date of this Statement of Additional Information is ___________, 1996.
Table of Contents
Page
Introduction . . . . . . . . . . . . . . . . . . . . . . . . . 2
Additional Information About Fiduciary Value Fund. . . . . . . 2
Financial Statements . . . . . . . . . . . . . . . . . . . . . 2
<PAGE>
Introduction
This Statement of Additional Information is intended to supplement the
information provided in the Prospectus/Proxy Statement dated _______________,
1996. The Prospectus/Proxy Statement relates to the proposed acquisition by
Fiduciary Value Fund ("Value Fund"), a series of The Vintage Funds ("Vintage
Funds"), of all of the assets and liabilities of The Laidlaw Covenant Fund
("Covenant Fund") in exchange solely for shares of Value Fund.
Additional Information About Fiduciary Value Fund
Additional information about Fiduciary Value can be found in the
Statement of Additional Information of The Vintage Funds, dated April 17,
1996 ("SAI"). The SAI, excluding the portion of the SAI that incorporates by
reference the September 30, 1995 Annual Report of The Vintage Funds, is hereby
incorporated by reference. The document was previously filed on EDGAR (File
No. 33-89078) on April 17, 1996, pursuant to Rule 497.
Financial Statements - Fiduciary Value Fund
INDEPENDENT AUDITOR'S REPORT
To the Shareholders and
Board of Trustees
The Vintage Funds
We have audited the accompanying statement of assets and liabilities of the
Fiduciary Value Fund (one of the portfolios constituting the Vintage Funds),
as of September 30, 1996, and the related statement of operations for the
year then ended, the statement of changes in net assets, and financial
highlights for the year in the period then ended and for the period from
June 2, 1995 (commencement of operations) to September 30, 1995 in the period
then ended. These financial statements and financial highlights are the
responsibility of the Fund's management. Our responsibility is to express
an opinion on these financial statements and financial highlights based on
our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements and
financial highlights are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures
in the financial statements. Our procedures included confirmation of
investments and cash held by the custodian as of September 30, 1996, by
correspondence with the custodian and brokers. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of
The Fiduciary Value Fund of The Vintage Funds as of September 30, 1996, the
results of its operations for the year then ended, the changes in its net
assets, and the financial highlights for the year in the period then ended
and for the period from June 2, 1995 (commencement of operations) to
September 30, 1995 in the period then ended, in conformity with generally
accepted accounting principles.
/S/ McCurdy & Associates CPA's Inc.
McCurdy & Associates CPA's Inc.
Westlake, Ohio 44145
October 16, 1995
Financial Statement of Fiduciary Value Fund
<TABLE>
FIDUCIARY VALUE FUND
STATEMENT OF ASSETS AND LIABILITIES
September 30,1996
<CAPTION>
<S> <C>
ASSETS
Investments, at value(Note 2) $ 0
Cash .......................... 119,854
Dividend Receivable............ 0
Interest Receivable............ 0
Receivable from adviser(Note 3) 29,765
Receivable for shares sold .... 0
Deferred organization
costs(Note 2) .............. 3,116
Prepaid expenses .............. 6,465
Total assets ............... 159,200
LIABILITIES
Dividends payable ............. 0
Payable for shares redeemed.... 0
Accrued expenses .............. 2,582
Total liabilities .......... 2,582
NET ASSETS ....................... $ 156,618
Net assets consist of:
Paid-in capital ............... 156,687
Undistributed net investment
income ..................... (69)
Net Realized gain(loss) on
investments................. 0
Net unrealized appreciation in
value of investments ....... 0
Net assets ....................... $ 156,618
Shares of capital stock
outstanding (no par value,
unlimited shares authorized)... 79,825
Net Asset Value Per Share,offering
and redemption price........... $ 1.96
<FN>
The accompanying notes are an integral part of these financial statements.
</FN>
</TABLE>
<PAGE>
<TABLE>
FIDUCIARY VALUE FUND
STATEMENT OF OPERATIONS
September 30,1996
<CAPTION>
<S> <C>
INVESTMENT INCOME
Income:
Dividend ..................... $ 0
Interest ..................... 76
76
EXPENSES:
Investment adviser fees(Note 3) 140
Transfer agent fees(Note 3).... 13
Fund Accounting fees .......... 13
Printing ...................... 30
Administrative service fees ... 56
12b-1 fees(Note 3)............. 18
Auditing fees ................. 2,611
Legal fees .................... 1,274
Trustee's fees ................ 3,985
Custodian fees ................ 12
Registration and filing fees .. 18,556
Postage ....................... 43
Servicing fees ................ 28
Amortization of organization
expenses ................... 853
Insurance ..................... 2,395
Other expenses................. 16
Total net expenses ......... 30,043
Less: Expense reimbursement
from adviser(Note 3)........ (29,898)
NET INVESTMENT INCOME(LOSS)....... (69)
REALIZED AND UNREALIZED GAIN(LOSS)
ON INVESTMENTS
Net Realized gain(loss) on
investments ................ 0
Change in net unrealized
appreciation of investments. 0
Net gain(loss) on investments.. 0
INCREASE(DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS ..... $ (69)
<FN>
The accompanying notes are an integral part of these financial statements.
</FN>
</TABLE>
<TABLE>
FIDUCIARY VALUE FUND
STATEMENT OF CHANGES IN NET ASSETS
<CAPTION>
Period
June 2,1995
Year (commencement
Ended of operations)to
Sept 30, Sept 30,
1996 1995
<S> <C> <C>
INCREASE IN NET ASSETS
Operations:
Net investment income(loss) ....................... $ (69) $ 0
Net realized gain/(loss)on investments ............ 0 0
Change in net unrealized appreciation of investments. 0 0
Increase in net assets resulting from operations ..... (69) 0
Dividends and distributions to shareholders from
Net investment income ................................ 0 0
Net realized gain of investments ..................... 0 0
TOTAL INCREASE(DECREASE) ......................... 0 0
Capital Share Transactions:
Proceeds from shares sold ............................157,505 3,409
Value of shares issued to shareholders in reinvestment
of dividends and distributions ....................... 0 0
157,505 3,409
Cost of shares redeemed .............................. (4,227) 0
Net increase in net assets
resulting from capital share transactions ............153,278 3,409
TOTAL INCREASE IN NET ASSETS ......................153,209 3,409
NET ASSETS:
Beginning of period................................... 3,409 0
End of period(including undistributed net investment
income of(69)and 0, respectively) .................$156,618 $ 3,409
Shares of capital stock of the Fund sold and redeemed:
Shares sold ...........................................80,021 341
Shares issued to shareholders in reinvestment
dividends and distributions ........................... 0 0
80,021 341
Shares redeemed ....................................... (537) 0
NET INCREASE IN NUMBER OF
SHARES OUTSTANDING ....................................79,484 341
<FN>
The accompanying notes are an integral part of these financial statements.
</FN>
</TABLE>
NOTES TO FINANCIAL STATEMENTS
September 30,1996
NOTE 1- GENERAL
The Fiduciary Value Fund (the "Fund")was organized as a business trust under
the laws of the State of Indiana on February 1, 1995, and is registered under
the Investment Company Act of 1940, as amended, (the "Act"), as an open-end
management investment company, effective June 2, 1995.
The Fiduciary Value Fund seeks growth of capital, current income and growth
income by investing principally in a diversified portfolio of common stocks,
preferred stocks and 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.
NOTE 2- SIGNIFICANT ACCOUNTING POLICIES
The following is a summary of the significant accounting policies followed by
the Fund in the preparation of the Fund's financial statements.
A) Security Valuations
Portfolio securities are valued using current market valuations: either the
last reported sales price, or in the case of securities for which there is no
reported last sale, the mean of the closing bid and asked prices. Bid price
is used when no asked price is available.
Discounts and premiums on securities purchased are amortized over the life of
the respective securities.
B) Securities Transactions
Securities transactions are recorded on a trade date-plus-one basis. Realized
gains and losses from securities transactions are recorded on the identified
cost basis.
C) Dividends and Distributions to Shareholders
Dividends, if any, from net investment income are declared and paid quarterly.
Net realized long term capital gains, if any, are paid 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. However, for the taxable year ended September 30, 1996, The
Fiduciary Value Fund did not qualify to be taxed as a regulated investment
company for federal income tax purposes. The Fiduciary Value Fund intends to
qualify as a regulated investment company in subsequent years.
E) Organization Costs
Organizational costs and initial registration fees represent costs incurred
in connection with the organization, registration and the initial public
offering of the shares of the Fund. Organizational costs and initial
registration fees are deferred and will be amortized on a straight-line basis
over five years. In the event that the original shareholders (or any
subsequent transferee) redeems any of its original capital (seed capital)
prior to these organizational costs and initial registration fees being fully
amortized, the redemption proceeds will be reduced by a pro-rata portion of
any then unamortized organizational costs and initial registration fees. At
September 30,1996, the unamortized balance of such expenses amounted to
$3,116.
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.
G) Investments
Investment income is recorded on the accrual basis and dividend income is
recorded on the ex-dividend date.
NOTE 3- AGREEMENTS AND OTHER TRANSACTIONS WITH AFFILIATES
The Adviser provides investment advisory services for which the Fund pays an
annual fee of .75% of the average net assets of the fund payable monthly.
The Adviser has engaged Fiduciary Counsel, Inc. to serve as sub-adviser to The
Fiduciary Value Fund. The sub-adviser receives annual investment management
fees, which are not paid directly by the Fund. The Adviser has voluntarily
agreed to waive 100% of its management fees for the twelve months ended
September 30,1996. 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.
Unified Advisers, Inc. as administrator, receives an annual fee, payable
monthly by the Fund. The fee is equal to 0.435% of the Fund's average net
assets.
Under a Distribution Plan adopted pursuant to Rule 12b-1 under the
Investment Company Act of 1940, the Fund pays the Distributor an annual fee,
payable monthly, of up to 0.10% of the Fund's average net assets.
Certain Trustees and officers of the Fund are "affiliated persons" (as
defined in the Act) of Fiduciary. Each "non-affiliated" Trustee is entitled
to receive a meeting fee of $2,400 per meeting plus expenses for services
relating to the Fund.
The Fund has adopted a Shareholder Services Plan in which financial
institutions may enter into shareholder services agreement with the Trust to
provide administrative support services to the Fund. In return for these
services,a financial institution may receive payments at a rate not exceeding
0.15% of the Fund's average net assets owned beneficially by the
institution's clients.
The receivable from the Adviser for the Fiduciary Value Fund is comprised of
$29,765 of expenses that the Adviser reimbursed subsequent to September 30,
1996.
FIDUCIARY VALUE FUND 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.
<TABLE>
<CAPTION>
1996(a) 1995(b)
<S> <C> <C>
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning $10.00 $10.00
Income from Investment
Operations:
Net investment income (loss) (8.04) 0.00
Net realized and unrealized
gain (loss) on invesments... 0.00 0.00
Total from investment
income...................... (8.04) 0.00
Less Distributions:
Dividends from net
investment income........... 0.00 0.00
Total from distributions...... 0.00 0.00
Net Asset value at
end of period............... $ 1.96 $10.00
TOTAL ANNUALIZED RETURN (%) (c) (c)
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period 156,618 3,409
Ratio of expenses to
average net assets........ 160.78% 0.00%
Ratio of expenses (after
reimbursement) to
average net assets........ 0.78% 0.00%
Ratio of net invesment
income to average net
assets.................... (160.37%) 0.00%
Ratio of net investment
income (after reimbursement)
to average net assets..... (0.37%) 0.00%
Portfolio Turnover.......... 0.00% 0.00%
Average Commission Rate Paid $ 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.
</FN>
</TABLE>
Pro Forma Financial Statememt
<TABLE>
PRO FORMA COMBINED
STATEMENT OF ASSETS AND LIABILITIES
SEPTEMBER 30, 1996
<CAPTION>
LAIDLAW FIDUCIARY ADJUSTMENT COMBINED
<S> <C> <C> <C> <C>
ASSETS
Investments, at value (cost $2,341,614) $ 3,208,930 $ 0 $ 0 $ 3,208,930
Cash 75,344 119,854 35,906 231,104
Receivable from Adviser (net) 14,182 29,898 (14,182) 29,898
Receivable for Investments sold 0 0 0 0
Receivable for Fund Shares sold 20 0 (20) 0
Dividends and interest receivab 8,236 0 0 8,236
Receivable from others 0 0 0 0
Deferred organization costs and 23,547 9,580 (23,547) 9,580
Total Assets $ 3,330,259 $ 159,332 $ (1,843) $ 3,487,748
LIABILITIES
Dividends payable to shareholders 1,131 0 (1,131) 0
Administration fee payable 0 8 0 8
12b-1 expenses payable 2,690 4 0 2,694
Payable for investments purchased 0 0 0 0
Payable for capital shares redeemed 0 0 0 0
Accrued expenses 13,699 2,702 0 16,401
Payable to other 0 0 0 0
Accrued registration & filing fees 0 0 0 0
Total Liabilities $ 17,520 $ 2,714 $ (1,131) $ 19,103
NET ASSETS $ 3,312,739 $ 156,618 $ (712) $ 3,468,645
Shares outstanding (without par value, 221,633 79,825 1,468,540 1,769,998
unlimited shares authorized)
CALCULATION OF MAXIMUM OFFERING PRICE:
Net asset value per share $ 14.95 $ 1.96 $ 0.00 $ 1.96
Sales charge - 4.5% of public 0.70 0.00 0.00 0.00
Maximum Offering Price $ 15.65 $ 1.96 $ 0.00 $ 1.96
COMPOSITION OF NET ASSETS:
Shares of beneficial interest $ 209 $ 0 $ 0 $ 209
Additional shares of beneficial
interest 2,359,274 156,687 0 2,515,961
Accumulated undistributed net
realized gains 85,940 (69) (712) 85,159
Net unrealized appreciation of
investments 867,316 0 0 867,316
NET ASSETS, SEPTEMBER 30,1996 $ 3,312,739 $ 156,618 $ (712) $ 3,468,645
</TABLE>
<TABLE>
PRO FORMA COMBINED
STATEMENT OF OPERATIONS
SEPTEMBER 30, 1996
(UNAUDITED)
<CAPTION>
LAIDLAW FIDUCIARY ADJUSTMENTS COMBINED
<S> <C> <C> <C> <C>
INVESTMENT INCOME
Money Market $ 9,472 $ 0 $ 0 $ 9,472
Dividends 70,470 0 0 70,470
Repurch Agreement 0 76 0 76
Other Income 7 0 0 7
Total Investment Income 79,949 76 0 80,025
EXPENSES
Advisory fees $ 29,133 $ 140 $ 0 $ 29,273
Administration fees 2,176 56 0 2,232
12b-1 expenses 10,161 19 0 10,179
Custodian fees and expenses 1,872 12 0 1,884
Transfer Agent fees and expenses 11,233 13 0 11,246
Legal fees 19,713 1,274 0 20,987
Amortization of organization cost 8,634 0 22,834 31,468
Reports to shareholders 0 28 0 28
Registration fees 7,020 18,556 0 25,576
Audit fees 14,410 2,611 712 17,733
Fund Accounting fees 17,302 13 0 17,315
Trustee's fees 7,352 3,985 0 11,337
Other expenses 12,305 3,336 0 15,641
Total Expenses 141,310 30,043 23,546 194,899
Less: Fees waived and expenses to be reimbursed
Adviser and Sub-Adviser (69,567) (29,898) (23,546) (123,011)
Net Investment Income $ 8,206 $ (69) $ 0 $ 8,137
REALIZED AND UNREALIZED GAIN ON INVESTMENTS
Net realized gains on securities
transactions 72,801 0 0 72,801
Net change in unrealized
appreciation of investments 117,631 0 0 117,631
Net Income on Investments $ 190,432 $ 0 $ 0 $ 190,432
INCREASE IN NET ASSETS RESULTING FROM
OPERATIONS INCREASE/(DECREASE) $ 198,638 $ (69) $ 0 $ 198,569
</TABLE>
<TABLE>
LAIDLAW/FIDUCIARY VALUE FUND
PORTFOLIO OF INVESTMENTS
SEPTEMBER 30,1996
<CAPTION>
Value
Description Shares (Note 2)
<S> <C> <C>
COMMON STOCKS - 92.2% 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
AGE Edwards 2000 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 1600 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
67125
Transportation - 2.3%
CSX Corp. 1,600 80,800
80,800
Utlilities - 12.6%
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 14,200.00
14,200.00
Total Common Stocks/Money Market (cost $2,341,614) (a) $3,208,930
Other Assets and Liabilities (Net) - 7.4% 259,715
Net Assets $3,468,645
<FN>
(a) Cost also represents cost for federal income tax purposes.
The accompanying notes are an integral part of these financial statements.
</FN>
</TABLE>
LAIDLAW & FIDUCIARY VALUE FUND
Notes to Pro Forma Financial Statements
Note 1 - General
The Fiduciary Value Fund (The "Fund")
was organized as a business trust under
the laws of the State of Indiana on
February 1, 1995, and is registered under
the Investment Company Act of 1940, as
amended (the "Act"), as an open-end
management investment company,
effective June 2, 1995.
The "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 in the opinion of
the Fund's investment adviser, meet
certain standards of corporate
responsibility and ethical business
behavior, as well as traditional
investments standards. The preferred
stock or corporate debt securities are
convertible into common stock of
companies that offer the prospect for
growth of earnings while paying current
dividends.
As a result of a shareholder's meeting of
The Vintage Funds (Fiduciary Value) on
September 30, 1996, the Fund merged
the assets of The Laidlaw Covenant Fund
with those of Fiduciary Value.
Shares of Fiduciary Value Fund will be
distributed to Laidlaw Covenant Fund
shareholders at the net asset value per
share of Fiduciary Value for the value
acquired and Laidlaw Covenant will be
terminated as soon as practicable
thereafter.
The pro forma combined financial
statements reflect the financial position of
Laidlaw Covenant Fund and Fiduciary
Value at September 30, 1996 and the
combined results of operations of both
Funds for the same period. Certain
expenses have been adjusted to reflect
the expected operations of the combined
entity.
The pro forma combined financial
statements are presented for information
of the reader and may not necessarily be
representative of what the actual
combined financial statements would
have been had the reorganization
occurred at September 30, 1995.
The pro forma combined financial
statements should be read in conjunction
with the historical financial statements of
the constituent Funds incorporated by
reference into the statement of additional
information.
Vintage Adviser, Inc (the "Adviser")
serves as the Fund's investment adviser.
Covenant Investment Management, Inc.
("Covenant") and Fiduciary Counsel, Inc.
serves as the Fund's sub-adviser.
Unified Advisers, Inc. ("Unified") serves
as the Fund's administrator. Unified
Management Corporation (the
"Distributor") serves as the distributor of
the Fund's shares pursuant to a
Distribution Agreement with the Trust.
The distributor is a subsidiary of Unified
Holdings, Inc.
<PAGE>
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 stated at
amortized cost, which approximates
market value.
B) Securities Transactions and
Investment Income
Securities transactions are recorded on a
trade date-plus-one 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 quarterly 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.
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. However, for
the taxable year ended September 30,
1996 The Fiduciary Value Fund did not
qualify to be taxed as a regulated
investment company for federal income
tax purposes. The Fund intends to qualify
as a regulated investment compan in
subsequent years.
E) Expenses
Organization costs are being amortized
by the Fund on a straight-line basis over
five years.
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 Vintage. In
turn, Vintage has entered into an
Investment Sub-Advisory Agreement with
Covenant and Fiduciary Counsel. The
Fund has entered into an Administration
Agreement with Unified and a Distribution
Agreement with the Distributor.
As Investment Adviser, Vintage Adviser
supervises and assists in the
management of the Fund. Pursuant to
the terms of the Investment Advisory
Agreement.
As Sub-Adviser, Fiduciary Counsel is
entitled to an annual fee, paid by the
Adviser, for its services in managing the
portfolio. The fees are payable monthly,
at the following rates:
Annual Average
Rate Daily Net Assets
.035% up to $250 million
.030% over $250 but less than
$500 million
.025% $500 million and over
The Investment Adviser, provides day to
day management of the Fund's
investments. The Fund has agreed to
pay Unified the following for services:
Administrator - Annual fee equal to
.435% of the Fund's average daily net
asset value.
Transfer Agent - Monthly fee equal to
.0065 % of the Funds average net assets.
Fund Accounting Agent - Annual fee
equal to .0065 %of the Funds average
net assets.
The Fund has adopted a Distribution
Plan (the "Plan") pursuant to Rule
12b-1 under the Investment Company
Acts of 1940, the Trust pays the
Distributor an annual fee, payable
monthly, of up to 0.10 % of the Fund's
average daily net assets.
Certain Trustees and officers of the fund
are "affiliated persons" ( as defined in the
Act) of Vintage. Each "non-affiliated"
Trustee is entitled to receive a meeting
fee of $2,400 per meeting plus expenses
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
$0.00 and $1,144,068, respectively.
During this same time period 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 $857,548, consisting of
gross unrealized appreciation of
$867,316 and gross unrealized
depreciation of $9,768.
Note 5 - Capital Share Transactions
Transactions in shares of the Fund for the
period ended September 30, 1996 are
summarized below (rounded to the
nearest thousand):
Shares sold 1, 586,556
Shares issued to
shareholders in
reinvestment of dividends
and distributions 8,746
Shares redeemed (126,286)
Net increase(decrease) 1,469,016
Note 6 - Dividend Distribution
Laidlaw declared a capital gain dividend
on September 16,1996 payable on
September 23, 1996 in the amount of
$152,905. This amount reflects the
distribution balance from November and
December 1995 ( short-term capital gain
of $107,104 and long-term capital gain of
45,801). On September 30, 1996 The
fund declared a capital gain dividend in
the amount of $72,801 and a net
investment income in the amount of
$8,206, to be paid on September 30,
1996 which reflects 1996 earnings.
<PAGE>
APPENDIX A
AGREEMENT & PLAN OF REORGANIZATION
(SEE EXHIBIT 4)
<PAGE> PART C
Other Information
ITEM 15. INDEMNIFICATION
The information required by this item is incorporated by
reference to Item 27 of Part C of Post-Effective Amendment No. 3
to the Registrant's Registration Statement (File No. 33-89078),
filed on EDGAR on January 29, 1996.
ITEM 16. EXHIBITS
Each of the following items, unless otherwise indicated, has
been previously filed as part of the Registrant's Registration
Statement on Form N-1A (File No. 33-89078), filed on February 3,
1995, and are incorporated herein by reference.
1. Declaration of Trust of Registrant.
2. Bylaws of Registrant.
3. Voting trust agreement - none.
4. Agreement and Plan of Reorganization between The
Laidlaw Covenant Fund, Laidlaw Holdings Asset
Management, Inc., Vintage Advisers, Inc. and Registrant
filed as an exhibit to Registration Statement on Form
N-14, filed on EDGAR on October 3, 1996, is incorporated
herein by reference.
5. Instruments defining the rights of holders of
Registrant's shares of common stock - none.
6. Management Agreement
(a) Investment Advisory Agreement between Registrant
and Vintage Advisers, Inc.
(b) Investment Sub-Advisory Agreement between Vintage
Advisers, Inc. and Fiduciary Counsel, Inc.
7. Distribution Agreement.
8. Bonus, profit sharing or pension plans - none.
9. Custodian Agreement.
10. 12(b)-1 Plan.
(a) Distribution Plan
<PAGE>
(b) Form of Distribution Agreement pursuant to
Distribution Plan.
11. Opinion and Consent of Ice, Miller, Donadio & Ryan as
to legality of issuance of shares filed herewith.
12. Opinion and Consent of Brown, Cummins & Brown Co.,
L.P.A. as to federal income tax matters filed herewith.
13. Material Contracts
(a) Mutual Fund Services Agreement filed as an exhibit
to Pre-Effective Amendment No. 2 to the
Registration Statement (File No. 33-89078), filed
on May 30, 1995, is incorporated herein by
reference.
(b) Shareholder Services Plan.
(c) Form of Shareholder Services Agreement.
(d) Letter Agreement regarding The Vintage Funds
University and Philanthropic Program.
14. Consents
(a) Consent of McCurdy & Associates CPA's, Inc. filed
herewith.
(b) Consent of Coopers & Lybrand L.L.P. filed
herewith.
15. Financial Statements omitted from Part B - none.
16. (a) Power of Attorney for Registrant and Certificate
filed as an exhibit to Registration Statement on
Form N-14, filed on EDGAR on October 3, 1996, is
incorporated herein by reference.
(b) Powers of Attorney for Trustees and Officers filed
as an exhibit to Registration Statement on Form N-14,
filed on EDGAR on October 3, 1996, is incorporated
herein by reference.
17. Additional Exhibits
(a) Copy of Registrant's Declaration under Rule 24f-2
filed as an exhibit to Registration Statement on Form
N-14, filed on EDGAR on October 1, 1996, is incorporated
herein by reference.
(b) Proxy Card filed as an exhibit to Registration
Statement on Form N-14, filed on EDGAR on October 3, 1996,
is incorporated herein by reference.
<PAGE>
ITEM 17. UNDERTAKINGS
(1) The undersigned Registrant agrees that prior to any
public reoffering of the securities registered through the use of
a prospectus which is a part of this registration statement by
any person or party who is deemed to be an underwriter within the
meaning of Rule 145(c) of the Securities Act of 1933, as amended,
the reoffering prospectus will contain the information called for
by the applicable registration form for reofferings by persons
who may be deemed underwriters, in addition to the information
called for by the other items of the applicable form.
(2) The undersigned Registrant agrees that every prospectus
that is filed under paragraph (1) above will be filed as a part
of an amendment to the registration statement and will not be
used until the amendment is effective, and that, in determining
any liability under the Securities Act of 1933, as amended, each
post-effective amendment shall be deemed to be a new registration
statement for the securities offered therein, and the offering of
the securities at that time shall be deemed to be the initial
bona fide offering of them.
SIGNATURES
As required by the Securities Act of 1933, this amended registration
statement has been signed on behalf of the Registrant, in the City of
Cincinnati and the State of Ohio, on the 8th day of November, 1996.
THE VINTAGE FUNDS
By:/s/Donald S. Mendelsohn
Donald S. Mendelsohn
Attorney in Fact
As required by the Securities Act of 1933, this amended Registration
Statement has been signed below, on November 8, 1996, by the following
persons in the capacities indicated.
Timothy L. Ashburn Chairman of the Board,
President and Trustee
Thomas G. Napurano Treasurer
Charles H. Binger Trustee
Daniel J. Condon Trustee
Philip L. Conover Trustee
David E. LaBelle Trustee
Jack R. Orben Trustee
By:/s/Donald S. Mendelsohn
Donald S. Mendelsohn
Attorney in Fact
<PAGE>
EXHIBIT INDEX
Exhibit Number
1. Opinion and Consent of Ice, Miller,
Donadio & Ryan . . . . . . . . . . . . . . . . . .Ex-99.11
2. Opinion and Consent of Brown, Cummins,
& Brown Co., L.P.A. . . . . . . . . . . . . . . .Ex-99.12
3. Consent of McCurdy & Associates, CPA's, Inc. . . .Ex-99.14.1
4. Consent of Coopers & Lybrand L.L.P. . . . . . . .Ex-99.14.2
November 8, 1996
The Vintage Funds
P.O. Box 6110
Indianapolis, IN 46206-6110
Re: Issuance of Shares of Fiduciary Value Fund
Dear Ladies and Gentlemen:
We have acted as special counsel to The Vintage Funds, an Indiana
business trust "(Vintage"), with respect to the proposed issuance by Vintage
of shares (the "Shares") of the Fiduciary Value Fund (the "Value Fund"), a
series of Vintage, pursuant to an Agreement and Plan of Reorganization (the
"Plan") by and among Vintage, on Behalf of the Value Fund; The Laidlaw
Covenant Fund (the "Covenant Fund"); Laidlaw Holdings Asset Management, Inc.;
and Vintage Advisers, Inc. Pursuant to the Plan, the Value Fund will acquire
all of the assets of the Covenant Fund, in exchange for which the Value Fund
will assume all of the liabilities of the Covenant Fund and will issue shares
in the Value Fund to holders of shares in the Covenant Fund. In connection
with the Plan, Vintage has filed with the Securities and Exchange Commission
a Registration Statement on Form N-14 (the "N-14") for the purpose of
registering under the Securities Act of 1933, as amended (the "1933 Act"), the
Shares to be issued pursuant to the Plan, and is prepared to file a pre-
effective amendment to the N-14.
For purposes of issuing the opinion set forth below, we have examined
the following documents (hereinafter collectively referred to as the
"Documents"):
(1) The form of the Plan attached hereto as Exhibit A;
(2) The Declaration of Trust of Vintage, made as of January 30, 1995
and filed with the Secretary of State of the State of Indiana
(the "Secretary of State") on February 1, 1995 (the "Declaration);
(3) The By-laws of Vintage, as amended by Amendments No. 1 and 2 to
the By-laws (collectively, the "By-laws");
(4) A Certificate of Existence of Vintage issued by the Secretary
of State on October 31, 1996 (the "Certificate of Existence"); and
(5) The resolutions of the Board of Trustees of Vintage attached
hereto as Exhibit B (the "Resolutions").
In rendering the opinion set forth below, we have assumed, without
investigation or verification of any kind:
(a) the genuineness of all signatures, the legal capacity of natural
persons, the authenticity of all documents submitted to us as
originals, the conformity to original documents of all documents
submitted to us as certified or photostatic copies, and the
authenticity of the originals of such copies;
(b) that the parties to the Plan have been duly organized and are
validly existing and in good standing under their respective
jurisdictions of organization; the parties to the Plan (other
than Vintage) have full power and authority to enter into,
execute, deliver, receive and perform their obligations under the
Plan; the entry into, execution, delivery, receipt, and
performance of the Plan has been duly authorized by all requisite
action on the part of the parties to the Plan (other than
Vintage); the Resolutions have been duly approved and adopted by
the Board of Trustees of Vintage; and the Plan will be duly
entered into, executed, received and delivered by each of the
parties thereto;
(c) the execution, delivery and performance of the Plan by the
parties thereto do not and will not contravene, conflict with,
violate or result in the breach of any approvals, consents,
licenses, permits, orders, writs, judgments, injunctions or
decrees of any court, arbitrator, administrative agency or other
governmental authority, or any contract or other agreement to
which any of them is a party; and
(d) that the issuance of the Shares pursuant to the Plan will comply
in all respects with the 1933 Act, the Investment Company Act of
1940, as amended, and applicable securities laws of the State of
Indiana and any other applicable State.
Based solely on our examination of the Documents, and subject to the
assumptions set forth above and the limitations and qualifications set forth
below, we are of the opinion that the Shares registered by the N-14 may be
issued and upon receipt of the consideration therefor called for by the Plan,
will be legally issued, fully paid and non-assessable.
The opinion expressed in this letter speaks as to the documents, facts,
and the law in existence as of the date hereof and at no time subsequent
hereto. We express no opinion as to the effect of prior or subsequent
activities of the parties to the Plan in or with respect to the State of
Indiana, other than those described herein.
The opinions expressed herein are matters of professional judgment and
are not a guarantee of result. We are qualified to practice law only in the
State of Indiana and do not express any opinion concerning any law other than
the laws of the State of Indiana governing business trusts. No expansion of
our opinions may be made by implication or otherwise. We express no opinions
other than as herein expressly set forth. We do not undertake to advise you
of any matter within the scope of this letter that comes to our attention
after the date of this letter and disclaim any responsibility to advise you
of any future changes in law or fact that may affect the opinions set forth
herein.
This letter is rendered to you in connection with the transactions
described above and may not be relied upon you, or any other person, in any
other context or for any other purpose. It may not be quoted in whole or in
part not may copies thereof be furnished or delivered to any person without
the prior written consent of this Firm, except that we hereby consent that
this letter be attached to the pre-effective amendment to the N-14 to be
filed with the Securities and Exchange Commission and any further amendments
thereto.
/S/ Ice Miller Donadio & Ryan
Ice Miller Donadio & Ryan
November ___, 1996
Fiduciary Value Fund
The Vintage Funds
P.O. Box 6110
Indianapolis, Indiana 46206-6110
The Laidlaw Covenant Fund
100 Park Avenue
New York, New York 10017
Ladies and Gentlemen:
Fiduciary Value Fund ("Acquiring Fund"), a series of The Vintage
Funds, an Indiana business trust ("Vintage") and The Laidlaw Covenant
Fund, an Indiana business trust ("Target"), have requested our
opinion as to certain federal income tax consequences of the proposed
acquisition of Target by Acquiring Fund, pursuant to an Agreement and
Plan of Reorganization between them dated as of August 21, 1996
("Plan"), attached as an exhibit to the prospectus/proxy statement
("Proxy") to be furnished in connection with the solicitation of
proxies by Target's Board of Trustees for use at a special meeting of
Target shareholders ("Special Meeting") to be held on or about December
18, 1996, included in the registration statement on Form N-14 that was
filed with the Securities and Exchange Commission ("SEC") on October
3, 1996 ("Registration Statement"). Specifically, Acquiring Fund has
requested our opinion:
(1) that the acquisition by Acquiring Fund of Target's
assets in exchange solely for voting shares of beneficial
interest in Acquiring Fund and the assumption by Acquiring Fund
of Target's liabilities, followed by the distribution of those
shares by Target pro rata to its shareholders of record as of the
Effective Time (defined hereafter) ("Shareholders")
constructively in exchange for their shares of beneficial
interest in Target ("Target shares") (this transaction sometimes
referred to herein as the "Reorganization"), will constitute a
"reorganization" within the meaning of Section 368(a)(1) and
that each Fund will be a "party to a reorganization" within the
meaning of Section 368(b),
(2) that Target, the Shareholders, and Acquiring Fund will
recognize no gain or loss upon the Reorganization, and
(3) regarding the basis and holding period after the
Reorganization of the transferred assets and the shares of
Acquiring Fund issued pursuant thereto.
Before rendering this opinion, we examined:
(1) Target's prospectus and statement of additional
information ("SAI") dated April 29, 1996, the currently
effective prospectus dated January 29, 1996, and the SAI
dated April 17, 1996, of Acquiring Fund; (2) the
Registration Statement, including the proposed Proxy; (3)
the Plan; and (4) other documents as we deemed necessary or
appropriate for the purposes hereof.
In rendering this opinion we assume that documents as yet
unexecuted will, when executed, conform to the proposed forms of such
documents that we have examined. In addition, we assume the
genuineness of all signatures, the capacity of each party executing a
document to so execute such document, the authenticity of all
documents submitted to us as originals and the conformity to original
documents of all documents submitted to us as certified or photostatic
copies. As to various matters of fact material to this opinion, we
have relied, exclusively and without independent verification, on
statements of responsible officers of each Investment Company, the
representations described below and made in the Plan (as contemplated
in paragraph 8.6 thereof) upon certain factual statements relating to
Acquiring Fund and Target set forth in the Proxy and the Registration
Statement and other documents, records and instruments supplied to us
(collectively "Representations"). Although we have no reason to
believe that these Representations are not valid, we have not
attempted to verify independently any of these Representations, and
this opinion is based upon the assumption that each of them is
accurate.
In rendering this opinion we also assume that the Reorganization
will be carried out pursuant to the terms of the Plan, that factual
statements and information contained in the Registration Statement,
the Proxy and other documents, records, and instruments supplied to us
are correct and that there will be no material change with respect to
such facts or information prior to the time of the Reorganization.
The conclusions expressed herein are based upon the Internal Revenue
Code, Treasury Regulations, published rulings and procedures of the
Internal Revenue Service ("Service"), and judicial decisions.
FACTS
Each Investment Company is registered with the SEC as an open-end
management investment company under the Investment Company Act of 1940
("1940 Act"). Acquiring Fund is a "series company" of Vintage within
the meaning of Rule 18f-2 of the 1940 Act. Since its inception Target
has conducted its affairs so as to qualify, and has elected to be
taxed, as a regulated investment company under Section 851 of the
Code.
The Reorganization, together with all related acts necessary to
consummate the same ("Closing"), shall occur as of 4:00 p.m. on
December ____, 1996 (or on any other date or time as the parties may
agree) ("Effective Time"). Before the Effective Time, Target shall
declare and pay to its shareholders a dividend in an amount large
enough so that it will have distributed substantially all (and in any
event not less than 90%) of its investment company taxable income
(computed without regard to any deduction for dividends paid) for the
current taxable year through the Effective Time.
The Funds' investment objectives and investment policies, which
are generally similar, are described in the Proxy and their respective
prospectuses and SAIs. The differences in those policies are
discussed in the Proxy. It is not expected that Acquiring Fund will
revise its investment policies following the Reorganization to reflect
those of Target; however, Acquiring Fund will implement a socially
responsible investment policy similar to that currently followed by
Target. It is anticipated that all of the assets held by Target will
be consistent with the investment policies of Acquiring Fund and thus
can be transferred to and held by Acquiring Fund if the Reorganization
is approved. With respect to the portfolio securities acquired by the
Acquiring Fund prior to the Reorganization, it is not anticipated that
Value Fund will hold securities that are incompatible with the socially
responsible investment policy.
The Reorganization was recommended by Laidlaw Holdings Asset
Management, investment adviser to Target ("Laidlaw"), to Target's
Board of Trustees at meetings thereof held on August 19 and September
3, 1996. In considering the Reorganization, Target's Board of
Trustees made an extensive inquiry into a number of factors (described
in the Proxy) and reviewed Laidlaw's advice and recommendations to
Target's Board of Trustees and the purposes of the Reorganization.
Pursuant thereto, Target's Board of Trustees approved the Plan,
subject to the approval of Target's stockholders. In doing so,
Target's Board of Trustees, including a majority of its members who
are not "interested persons" (as that term is defined in the 1940
Act), determined that the Reorganization is in Target's best
interests, that the terms of the Reorganization are fair and
reasonable, and that shareholders' interests will not be diluted as a
result of the Reorganization. The Board of Trustees of Vintage
approved the Plan at a meeting of the Trustees held on August 21, 1996.
The Plan, which specifies that it is intended to be, and is
adopted as, a plan of a reorganization described in Section 368(a)(1),
provides in relevant part for the following:
(1) The acquisition by Acquiring Fund of all cash, cash
equivalents, securities, dividends and interest receivables, and
any deferred or prepared expenses shown as assets on Target's
books at the Effective Time (collectively "Assets") in exchange
solely for
(a) the number of full and fractional shares of
beneficial interest in Acquiring Fund ("Acquiring Fund
Shares") determined by dividing the net value of Target by
the net asset value ("NAV") of an Acquiring Fund Share, and
(b) Acquiring Fund's assumption of all of Target's
liabilities, expenses, costs, charges and reserves reflected
on an audited Statement of Assets and Liabilities of Target
("Liabilities").
(2) The constructive distribution of such Acquiring Fund
Shares to the Shareholders, and
(3) The subsequent termination of Target.
The distribution described in (2) will be accomplished by
transferring the Acquiring Fund Shares then credited to Target's
account on Acquiring Fund's share transfer records to open accounts on
those records established in the Shareholders' names, with each
Shareholder's account being credited with the respective pro rata
number of full and fractional (rounded to three decimal places)
Acquiring Fund Shares due such Shareholder. All outstanding Target
Shares, including any represented by certificates, simultaneously will
be canceled on Target's share transfer records.
REPRESENTATIONS
The representations enumerated below have been made to us by
appropriate officers of each Investment Company.
Each of Target and Vintage, on behalf of Acquiring Fund, has
represented and warranted to us as follows:
1. The fair market value of the Acquiring Fund Shares,
when received by the Shareholders, will be approximately equal to
the fair market value of their Target Shares constructively
surrendered in exchange therefor;
2. Its management (a) is unaware of any plan or intention
of Shareholders to redeem, exchange or otherwise dispose of any
portion of the Acquiring Fund Shares to be received by them in
the Reorganization and (b) does not anticipate dispositions of
those Acquiring Fund Shares at the time of or soon after the
Reorganization to exceed the usual rate and frequency of
dispositions of shares of Target as an open-end investment
company. Consequently, its management expects that the
percentage of Shareholder interests, if any, that will be
disposed of as a result of or at the time of the Reorganization
will be de minimis. Nor does its management anticipate that
there will be extraordinary redemptions of Acquiring Fund Shares
immediately following the Reorganization;
3. The Shareholders will pay their own expenses, if any,
incurred in connection with the Reorganization;
4. Immediately following consummation of the
Reorganization, Acquiring Fund will hold, in addition to the
assets and liabilities held by Acquiring Fund immediately prior
to consummation of the Reorganization, substantially the same
assets and be subject to substantially the same liabilities that
Target held or was subject to immediately prior thereto;
5. The fair market value on a going concern basis of the
Assets will equal or exceed the Liabilities to be assumed by
Acquiring Fund and those to which the Assets are subject;
6. There is no intercompany indebtedness between the Funds
that was issued or acquired, or will be settled, at a discount;
7. Pursuant to the Reorganization, Target will transfer to
Acquiring Fund, and Acquiring Fund will acquire, at least 90% of
the fair market value of the net assets, and at least 70% of the
fair market value of the gross assets, held by Target immediately
before the Reorganization. For the purposes of this
representation, any amounts used by Target to pay its
Reorganization expenses and redemptions and distributions made by
it immediately before the Reorganization (except for (a)
distributions made to conform to its policy of distributing all
or substantially all of its income and gains to avoid the
obligation to pay federal income tax and/or the excise tax under
Section 4982 and (b) redemptions not made as part of the
Reorganization) will be included as assets thereof held
immediately before the Reorganization;
8. None of the compensation received by any Shareholder
who is an employee of Target will be separate consideration for,
or allocable to, any of the Target Shares held by such
Shareholder-employee; none of the Acquiring Funds Shares received
by any such Shareholder-employee will be separate consideration
for, or allocable to, any employment agreement; and the
consideration paid to any such Shareholder-employee will be for
services actually rendered and will be commensurate with amounts
paid to third parties bargaining at arm's-length for similar
services;
9. Immediately after the Reorganization, the Shareholders
will own shares constituting "control" of Acquiring Fund within
the meaning of Section 304(c); and
10. The Reorganization is being consummated for legitimate
business purposes, and not for any tax avoidance motive.
Target also has represented and warranted to us as follows:
1. The Liabilities were incurred by Target in the ordinary
course of its business and are associated with the Assets;
2. Target is a "fund" as defined in Section 851(h)(2); it
qualified for treatment as a regulated investment company ("RIC")
under Subchapter M of the Code ("Subchapter M") for each past
taxable year since it commenced operations and will continue to
meet all of the requirements for such qualification for its current
taxable year; and it has no earnings and profits accumulated in
any taxable year in which the provisions of Subchapter M did not
apply to it. The Assets shall be invested at all times through
the Effective Time in a manner that ensures compliance with the
foregoing;
3. Target is not under the jurisdiction of a court in a
proceeding under Title 11 of the United States Code or similar
case within the meaning of Section 368(a)(3)(A);
4. Not more than 25% of the value of Target's total assets
(excluding cash, cash items, and U.S. government securities) is
invested in the stock or securities of any one issuer, and not
more than 50% of the value of such assets is invested in the
stock or securities of five or fewer issuers;
5. All of the stock, securities and other properties which
Target receives in exchange for its Assets, as well as any other
properties of Target, will be distributed by Target to
Shareholders in pursuance of the Plan;
6. Immediately before the Reorganization, Target will not
own any asset to which any unrealized gain or loss may be
required to be recognized for federal income tax purposes at the
end of a taxable year (or on the termination or transfer thereof)
under a mark-to-market system of accounting;
7. Prior to the Reorganization, Target will not dispose of
any Assets, except for those dispositions made in the ordinary
course of its business and dispositions necessary to maintain its
status as a RIC; and
8. Target will be terminated as soon as reasonably
practicable after the Reorganization, but in all events within
six months after the Effective Time.
Vintage also has represented and warranted to us on behalf of
Acquiring Fund as follows:
1. Acquiring Fund has no plan or intention to issue
additional Acquiring Fund Shares following the Reorganization
except for shares issued in the ordinary course of its business
as a series of an open-end investment company; nor does Acquiring
Fund have any plan or intention to redeem or otherwise reacquire
any Acquiring Fund Shares issued to the Shareholders pursuant to
the Reorganization, other than through redemptions arising in the
ordinary course of that business;
2. Acquiring Fund (a) will actively continue Target's
business in substantially the same manner that Target conducted
that business immediately before the Reorganization, (b) has no
plan or intention to sell or otherwise dispose of any of the
Assets, except for dispositions made in the ordinary course of
that business and dispositions necessary to maintain its status
as a RIC under Subchapter M, and (c) expects to retain
substantially all the Assets in the same form as it receives them
in the Reorganization, unless and until subsequent investment
circumstances suggest the desirability of change or it becomes
necessary to make dispositions thereof to maintain such status;
3. There is no plan or intention for Acquiring Fund to be
dissolved or merged into another corporation or business trust or
any "fund" thereof (within the meaning of Section 851(h)(2))
following the Reorganization;
4. Immediately prior to and after the Reorganization, (a)
not more than 25% of the value of Acquiring Fund's total assets
(excluding cash, cash items, and U.S. government securities) will
be invested in the stock or securities of any one issuer and (b)
not more than 50% of the value of such assets will be invested in
the stock or securities of five or fewer issuers; and
5. Acquiring Fund does not own, directly or indirectly,
nor at the Effective Time will it own, directly or indirectly,
nor has it owned, directly or indirectly, at any time during the
past five years, any shares of Target.
OPINION
Based solely upon the foregoing, our opinion is as follows:
1. The transfer of all of the Assets in exchange for the
Acquiring Fund Shares and the assumption by Acquiring Fund of the
Liabilities, followed by the distribution of those shares by
Target to the Shareholders in exchange for their Target Shares
will constitute a "reorganization" within the meaning of Section
368(a)(1), and Target and Acquiring Fund will each be a "party to
a reorganization" within the meaning of Section 368(b), and that
the transaction contemplated herein qualifies as a tax-free
reorganization under Section 368(a)(1);
2. No gain or loss will be recognized by Target or Acquiring
Fund on the transfer of the Assets to Acquiring Fund solely in
exchange for the Acquiring Fund Shares and the assumption by
Acquiring Fund of the Liabilities;
3. No gain or loss will be recognized by Target's Shareholders
upon the exchange of the Target Shares for the Acquiring Fund
Shares and no gain or loss will be recognized by Target on the
distribution of the Acquiring Fund Shares to Shareholders in
exchange for their Target Shares;
4. The aggregate tax basis for the Acquiring Fund Shares
received by each Shareholder pursuant to the reorganization will
be the same as the aggregate tax basis of the Target Shares held
by each such Target Shareholder immediately prior to the
reorganization;
5. The holding period of the Acquiring Fund Shares to be
received by each Target Shareholder will include the period
during which the Target Shares surrendered in exchange therefor
were held (provided such Target Shares were held as capital
assets on the date of the Reorganization);
6. The tax basis of the Target Assets attained by Acquiring
Fund will be the same as the tax basis of the Target Assets to
Target immediately prior to the Reorganization; and
7. The holding period of the Target Assets in the hands of
Acquiring Fund will include the period during which those assets
were held by Target.
The foregoing opinion is applicable only to the extent each Fund
is solvent. We express no opinion about the tax treatment of the
transactions described herein if either Fund is insolvent.
As noted above, this opinion is based upon our analysis of the
Code, Regulations, Service rulings and current case law which we deem
relevant as of the date hereof. No assurances can be given that there
will not be a change in the existing law or that the Service will not
alter its present views, either prospectively or retroactively, or
adopt new views with regard to any of the matters upon which we are
rendering this opinion, nor can any assurances be given that the
Service will not audit or question the treatment accorded to the
Reorganization on the federal income tax returns of Acquiring Fund,
Target or the Target Shareholders. This opinion is not binding on
the Service and no ruling of the Service has been requested.
We hereby consent to this opinion accompanying the Registration
Statement and to the reference to our firm under the captions
"Synopsis -- Federal Income Tax Consequences of the Reorganization"
and "The Proposed Transaction -- Reorganization Plan -- Federal Income
Tax Considerations Applicable to Each Transaction" in the Proxy. In
giving such consent, we do not hereby admit that we come within the
category of persons whose consent is required under Section 7 of the
Securities Act of 1933, as amended, or the Rules and Regulations of
the Securities and Exchange Commission promulgated thereunder.
Very truly yours,
BROWN, CUMMINS & BROWN CO., L.P.A.
CONSENT OF INDEPENDENT ACCOUNTANTS
As independent public accountants, we consent to the use in this amended
registration statement on Form N-14 of our report dated October 16, 1996
appearing in the Statement of Additional Information and to all references to
our Firm included in or made a part of this filing.
/S/ McCurdy & Associates CPA's Inc.
McCurdy & Associates CPA's, Inc.
Westlake, OHIO 44145
October 31, 1996
CONSENT OF INDEPENDENT ACCOUNTANTS
______________________________
We consent to the incorporation by reference in the amended registration
statement of The Vintage Funds on Form N-14 (File No. 333-13375) 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 under the caption "Experts".
/s/ Coopers & Lybrand L.L.P.
COOPERS & LYBRAND L.L.P.
Indianapolis, Indiana
November 8, 1996
