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 14, 1996
Dear Shareholder:
Enclosed is a Prospectus/Proxy Statement asking you to vote in favor of a
reorganization of The Laidlaw Covenant Fund.
On April 17, 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,
/S/ John M. Downey
____________________________
John M. Downey
Portfolio Manager
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 DECEMBER 18, 1996
To the shareholders of The Laidlaw Covenant Fund:
A special meeting of shareholders of The Laidlaw Covenant Fund will be
held at 100 Park Avenue, New York, NY 10017 on December 18, 1996 at 4:00
p.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 November 14,
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
/S/ Joseph V. Del Raso
_____________________________________
Joseph V. Del Raso, Secretary
New York, New York
November 18, 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
NOVEMBER 18, 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 18, 1996, at 4:00 p.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 November 18, 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, and a supplement to that
prospectus dated November 14, 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 . . . . . . . . . . . . . . . . 4
Annual Fund Operating Expenses . . . . . . . . . . . . . . . . . 5
Example of Effect on Fund Expenses . . . . . . . . . . . . . . . 5
Forms of Organization . . . . . . . . . . . . . . . . . . . . . 5
Investment Objectives and Policies . . . . . . . . . . . . . . . 6
Operations of Value Fund Following the Reorganization . . . . . 7
Purchases, Exchanges and Redemptions . . . . . . . . . . . . . . 7
Dividends . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Federal Income Tax Consequences of the Reorganization . . . . . 8
COMPARISON OF PRINCIPAL RISK FACTORS . . . . . . . . . . . . . . . . . . . 8
Fixed Income . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Foreign Securities . . . . . . . . . . . . . . . . . . . . . . . 9
Hedging Strategies . . . . . . . . . . . . . . . . . . . . . . . 9
Mutual Funds . . . . . . . . . . . . . . . . . . . . . . . . . . 10
THE PROPOSED TRANSACTION . . . . . . . . . . . . . . . . . . . . . . . . . 11
Reorganization Plan. . . . . . . . . . . . . . . . . . . . . . . 11
Reasons for Reorganization . . . . . . . . . . . . . . . . . . . 12
Description of Securities to be Issued . . . . . . . . . . . . . 13
Federal Income Tax Considerations Applicable to Each Transaction 13
Capitalization . . . . . . . . . . . . . . . . . . . . . . . . . 14
ADDITIONAL INFORMATION ABOUT
THE VINTAGE FUNDS FIDUCIARY VALUE FUND . . . . . . . . . . . . . . . . . . 15
MISCELLANEOUS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
Available Information. . . . . . . . . . . . . . . . . . . . . . 16
Experts. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
<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 18, 1996, and at
any adjournment thereof ("Meeting"). This Proxy Statement will first be
mailed to shareholders on or about November 22, 1996.
A majority of shares of Covenant Fund outstanding on November 14,
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 November 14, 1996 "(Record Date"), Covenant Fund had
219,139.189 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 28,669.817 shares of beneficial
interest outstanding. As of the Record Date, the following persons owned
beneficially 5% or more of the shares of Value Fund: Unified Advisers, Inc.,
429 N Pennsylvania Street, Indianapolis, IN 46204 - 91.25% and Vintage
Advisers, Inc., 429 N Pennsylvania Street, Indianapolis, IN 46204 - 8.25%.
Trustees and officers of Value Fund own in the aggregate 0% 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 4:00 p.m.
on December 20, 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 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 13.
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 previously 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 transactions. 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 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
preparating 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
interest 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 that 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 Chairity 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 organizaed 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 share 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 distributiions and assets as every other
share ofr 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 November 18, 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 November 18,
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 November 18, 1996.
Table of Contents
Page
Introduction . . . . . . . . . . . . . . . . . . . . . . . . . 2
Additional Information About Fiduciary Value Fund. . . . . . . 2
Financial Statements . . . . . . . . . . . . . . . . . . . . . 3-17
<PAGE>
Introduction
This Statement of Additional Information is intended to supplement the
information provided in the Prospectus/Proxy Statement dated November 18,
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
(UNAUDITED)
<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 receivable 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
prepaid exp.
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
offering price
Maximum Offering Price $ 15.65 $ 1.96 $ 0.00 $ 1.96
COMPOSITION OF NET ASSETS:
Shares of beneficial interest $ 209 $ 0 $ 0 $ 209
at par
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
<FN>
*These adjustments reflect organization costs and other prepaid expenses that
were eliminated due to combining The Laidlaw Covenant Fund and The Fiduciary
Value Fund. These costs and expenses were treated as paid by the adviser
(Laidlaw Holdings Asset Management, Inc.).
</FN>
</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 18,556 712* 25,576
Audit fees 14,410 2,611 0 17,021
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
<FN>
*These adjustments reflect organization costs and other prepaid expenses that
were eliminated due to combining The Laidlaw Covenant Fund and The Fiduciary
Value Fund. These costs and expenses were treated as paid by the adviser
(Laidlaw Holdings Asset Management, Inc.).
</FN>
</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
THIS AGREEMENT AND PLAN (the "Agreement") is made as of
September 3, 1996, by and between: The Laidlaw Covenant Fund
(hereinafter referred to as "LCF"), an Indiana Business Trust;
Laidlaw Holdings Asset Management, Inc. (hereinafter referred to
as "Laidlaw"), a New York corporation; The Vintage Funds
(hereinafter referred to as "Vintage"), an Indiana Business Trust
on behalf of the Fiduciary Value Fund (hereinafter referred to as
"Portfolio"), a series and sub-trust of Vintage; and Vintage
Advisers, Inc. (hereinafter referred to as "Advisers"), an
Indiana corporation which serves as the investment adviser to the
Portfolio.
WITNESSETH:
WHEREAS, this Agreement is intended to be and is adopted as
a "plan of reorganization", within the meaning of Treasury Reg.
Sec. 1.368-2 (g), for a reorganization under Section 368 (a) (1)
of the Internal Revenue Code of 1986, as amended (the "Code");
and
WHEREAS, the reorganization (the "Reorganization") will
consist of the transfer to the Portfolio of all of the assets of
LCF in exchange for the assumption by Portfolio of all the stated
liabilities of LCF and the issuance by Portfolio of shares of
beneficial interest, without par value, (the "Portfolio Shares"),
to be distributed pro rata, after the Closing Date hereinafter
defined, to the shareholders of LCF in complete liquidation and
dissolution of LCF as provided for herein, all upon the terms and
conditions hereinafter set forth in this Agreement; and
WHEREAS, it is intended that the transactions contemplated
herein shall qualify as a tax-free reorganization under Section
368(a) (1) (D) of the Code; and
WHEREAS, the Board of Trustees of Vintage, on behalf of the
Portfolio, and the Board of Trustees of LCF, each a registered
open-end management investment company, deem it advisable that
the parties enter into this Agreement, and that this Agreement
and the transactions contemplated herein are in the best
interests of the LCF and the Portfolio shareholders; and
NOW, THEREFORE, in consideration of the mutual promises,
covenants and agreements hereinafter set forth and herein
contained, the parties hereto covenant and agree as follows:
1.0 The Reorganization and Liquidation of LCF.
On the Closing Date (as hereinafter defined), Portfolio will
issue to LCF the number of Portfolio Shares, taken at their then
net asset value, having an aggregate net asset value equal to the
aggregate value of the net assets of LCF, and shall provide
evidence satisfactory to LCF that Portfolio has credited such
Portfolio Shares on the books of Portfolio to the account of LCF.
The aggregate value of the net assets of LCF and Portfolio shall
be determined in accordance with their then currently effective
registration statements as of the close of the New York Stock
Exchange on the Valuation Date, using consistently applied
accounting principles, as approved and agreed to by officers of
LCF and Portfolio.
1.1 Subject to the terms and conditions herein set forth
and on the basis of the representations and warranties contained
herein, on the Closing Date (as hereinafter defined), LCF will
assign, deliver and otherwise transfer its assets as set forth in
paragraph 1.2 (the "LCF Assets") to Portfolio, and Portfolio
will in exchange therefore, assume all the stated LCF liabilities
determined as set forth in paragraph 1.3 and deliver to LCF the
number of Portfolio Shares, including fractional Portfolio
Shares, determined by dividing the value of the LCF Assets, net
of such stated liabilities, computed in the manner and as of the
time and date set forth in paragraph 2.1, by the net asset value
of one full Portfolio Share, computed in the manner and as of the
time and date set forth in paragraph 2.2 herein. Such
transactions shall take place at the closing provided for in
paragraph 3.1 (the "Closing").
Based on the respective representations, warranties, and
agreements, and subject to the terms and conditions contained
herein, LCF agrees to transfer to Portfolio and Portfolio agrees
to accept from LCF, all of the assets of LCF on the Closing Date
in exchange for the assumption by Portfolio of all of the stated
liabilities of LCF shown on the list to be delivered to Portfolio
pursuant to paragraph 1.3 and the issuance of the number of
Portfolio Shares provided in Section 2. Portfolio will assume
only those liabilities shown on such financial statements and
shall not assume any others, whether absolute or contingent,
known or unknown, accrued or unaccrued. Such Portfolio Shares
subsequently shall be distributed pro rata to the shareholders of
LCF in complete liquidation and dissolution of LCF and in
exchange for all of the outstanding shares of beneficial
interest, without par value, of LCF (the "LCF Shares"). LCF
shall not issue, sell or transfer any LCF Shares after the
Closing Date, and only redemption requests received by LCF in
proper form no later than seven days before the Closing Date
shall be fulfilled by LCF. Redemption requests received by LCF
thereafter shall be treated as requests for redemption of those
Portfolio Shares allocable to the shareholder in question as
provided in Section 1.5 of this Agreement.
1.2 (a) The LCF Assets shall include all property,
including without limitation, all cash, cash equivalents,
securities and dividends and interest receivable owned by LCF,
and any deferred or prepaid expenses shown as an asset on LCF's
books on the Closing Date;
(b) Subsequent to the execution of this Agreement and
prior to the Closing Date, LCF shall deliver to Portfolio a list
setting forth the assets to be assigned, delivered and
transferred to Portfolio, including the securities then owned by
LCF and the respective Federal income tax bases (on an identified
cost basis)<PAGE>
thereof, and the liabilities to be assumed by Portfolio pursuant
to this Agreement;
1.3 (a) LCF will endeavor to discharge all of it
liabilities and obligations when and as due prior to the Closing
Date;
(b) On the Closing Date, Portfolio will assume all
stated liabilities, expenses, costs, charges and reserves
reflected on an unaudited Statement of Assets and Liabilities
(the "Statement of Assets and Liabilities") of LCF, prepared by
the Treasurer of LCF, and agreed to by the parties as of the
Valuation Date, and prepared in conformity with generally
accepted accounting principles and consistently applied from the
prior audited period. Said Statement of Assets and Liabilities
shall be attached hereto as Schedule 1.3(b);
(c) Portfolio shall only assume the liabilities that
are listed and included as part of the LCF Statement of Assets
and Liabilities. Portfolio shall not be responsible for nor
shall it assume any liabilities which are not included on the
aforementioned LCF Statement of Assets and Liabilities.
(d) After the Closing Date, any refunds relating to
expenditures paid by LCF or Laidlaw shall inure to the benefit of
Portfolio, except for those otherwise agreed between the parties
and attached hereto as Schedule 1.3 (d);
(e) Any deferred organizational costs and/or any
prepaid filing and registration fees of LCF and/or Laidlaw shall
be 100% expensed at or prior to the Closing Date along with any
known additional fees and/or expenses due and payable for the
unwinding of LCF's activities in the states in which LCF was
registered; and
(f) All receivables due LCF from Laidlaw shall be paid
in full prior to Closing.
1.4 In order for LCF to comply with Section 852 (a) (1) of
the Code and to avoid having any investment company taxable
income or net capital gain (as defined in Sections 852 (b) (2)
and 1222 (11) of the Code, respectively) in the short taxable
year ending with its liquidation, LCF will, on or before the
Closing Date, (a) declare a dividend in an amount large enough so
that it will have declared dividends of all of its investment
company taxable income and net capital gain, if any, for such
taxable year (determined without regard to any deduction for
dividends paid) and (b) distribute such dividend in shares or
cash, as applicable and provided for in LCF's currently effective
registration statement.
1.5 As soon as practicable after the Closing Date, (a)
LCF shall distribute on a pro rata basis to the shareholders of
record of LCF at the close of business on the Valuation Date in
exchange for all of the outstanding LCF Shares, (each shareholder
of LCF being entitled to receive that proportion of the Portfolio
Shares to be received by LCF that the number of LCF Shares owned
by each such shareholder bears to the number of outstanding LCF
Shares) and (b) LCF shall be liquidated and dissolved in
accordance with applicable law and its Declaration of Trust.
Upon liquidation, all issued and outstanding LCF Shares will be
canceled on LCF's books and LCF shareholders will have no further
rights as such shareholders. Portfolio will not issue
certificates representing Portfolio Shares in connection with
such exchange.
For purpose of distribution of the Portfolio Shares to
shareholders of LCF, Portfolio shall credit on the books of
Portfolio an appropriate number of Portfolio Shares to the
account of each shareholder of LCF, and shall provide evidence
satisfactory to LCF that such Portfolio Shares have been so
credited. After the Closing Date, each outstanding certificate
which, prior to the Closing Date, represented LCF Shares, shall
be deemed void. Portfolio will pay the registration or
qualification fees as are necessary under applicable securities
laws to qualify the Portfolio Shares to be issued inconnection
with this Agreement.
1.6 After the Closing, LCF shall not conduct any business
except in connection with the winding up of its affairs and shall
file at no expense to Portfolio or Advisers, or make provision
for the filing of, all reports it is required by law to file.
Laidlaw and LCF shall prepare and cause to be filed, at no
expense to Portfolio or Advisers, the final 1120 RIC for LCF,
which form shall make the proper election of tax-free
reorganization as approved by and coordinated with Portfolio and
Vintage.
1.7 Copies of all books and records maintained on behalf of
LCF in connection with its obligations under the Investment
Company Act of 1940, as amended, (the "1940 Act"), the Code,
state blue sky laws or otherwise in connection with this
Agreement will promptly after the Closing be delivered to
officers of Portfolio or their designee and Portfolio or its
designee shall comply with applicable record retention
requirements to which LCF is subject under the 1940 Act.
1.8 Any effective insurance policies for LCF, and any other
LCF insurance policies required under the law to effect the
transactions contemplated herein, shall be maintained or acquired
and shall be in full force and effect as of the Closing Date.
1.9 At Closing, or as soon as practicable thereafter under
the law, Portfolio shall change its name from the Fiduciary Value
Fund to the Laidlaw Fund, or such other name as may be mutually
agreed upon between the parties. Portfolio and Vintage agree to
take all requisite actions necessary to effect such name change,
including but not limited to the amendment of its Declaration of
Trust.
2.0 The Calculation of Net Asset Value.
2.1 The value of the LCF Assets shall be the value of such
assets computed as of 4:00 p.m. on the Friday immediately
following the satisfaction of the condition set forth in
paragraph 8.1, or as otherwise mutually agreed upon in writing by
the parties (such time and date being hereinafter called the
"Valuation Date"), using the valuation procedures set forth in
paragraph 1.0.
2.2 The net asset value of a Portfolio Share shall be the
net asset value per share computed on the Valuation Date, using
the valuation procedures set forth in Paragraph 1.0.
2.3 The number of Portfolio Shares (including fraction
thereof, if any) to be issued hereunder shall be determined by
dividing the value of the LCF Assets, net of the liabilities
assumed by Portfolio pursuant to paragraph 1.1, determined in
accordance with paragraph 2.1, by the net asset value of a
Portfolio Share determined in accordance with paragraph 2.2.
2.4 All computations of value shall be made by Unified
Advisers, Inc. Portfolio shall cause Unified Advisers, Inc. to
deliver a copy of its valuation report at Closing.
3.0 Closing and Closing Date.
3.1 The closing date (the "Closing Date") shall be the next
business day following the Valuation Date. All acts taking place
at the Closing shall be deemed to take place simultaneously as of
9:00 a.m. Eastern time on the Closing Date unless otherwise
agreed by the parties. The Closing shall be held at the offices
of the transfer agent, Unified Advisers, Inc., 429 North
Pennsylvania Street, Indianapolis, Indiana.
3.2 LCF securities held by LCF and represented by a
certificate or written instrument shall be made available by it
or on its behalf to Star Bank, N.A., the custodian bank for
Portfolio (the "Portfolio Custodian") for examination no later
than five business days preceding the Valuation Date. Such LCF
securities (together with any cash or other assets) shall be
delivered by LCF to the Portfolio Custodian for the account of
Portfolio on or before the Closing Date in conformity with
applicable custody provisions under the 1940 Act and duly
endorsed in proper form for transfer in such condition as to
constitute good delivery thereof in accordance with the custom of
brokers. LCF securities and instruments deposited with a
securities depository, as defined in Rule 17f-4 under the 1940
Act, shall be delivered on or before the Closing Date by book
entry in accordance with customary practices of such depositories
and the Portfolio Custodian. The cash delivered shall be in the
form of a Federal Funds wire payable to the order of "Star Bank,
NA, Custodian for the Fiduciary Value Fund".
If on the Closing Date LCF is unable to make good delivery
pursuant to this Section to the Portfolio Custodian of any of
LCF's portfolio securities because such securities have not yet
been delivered to LCF's custodian by its brokers or by the
transfer agent for such securities, then the delivery requirement
of this Section with respect to such securities shall be waived,
and LCF shall deliver to the Portfolio Custodian on or by said
Closing Date with respect to said undelivered securities executed
copies of an agreement or assignment in a form satisfactory to
the Portfolio Custodian, together with such other documents
including brokers' confirmations, as may be reasonably requested
by Portfolio.
3.3 In the event that on the Valuation Date (a) the New
York Stock Exchange shall be closed to trading or trading thereon
shall be restricted or (b) trading or the reporting of trading on
such Exchange or elsewhere shall be disrupted so that, in the
judgment of both Portfolio and LCF, accurate appraisal of the
value of the net assets of Portfolio or LCF is impracticable,
the Valuation Date shall be postponed until the first business
day after the day when trading shall have been fully resumed
without restriction or disruption and reporting shall have been
restored.
3.4 LCF shall deliver to Portfolio or its designee (a) at
the Closing, a list, certified by LCF's Secretary, of the names,
addresses and taxpayer identification numbers of LCF's
shareholders and the number of outstanding LCF Shares owned by
each such shareholder, all as of the Valuation Date, and (b) as
soon as practicable after the Closing, all original documentation
(including Internal Revenue Service forms, certificates,
certifications and correspondence) relating to the LCF
shareholders' taxpayer identification numbers and their liability
for or exemption from back-up withholding. Portfolio shall issue
and deliver to LCF a confirmation evidencing delivery of the
Portfolio Shares to be credited on the Closing Date to the LCF
shareholders. At the Closing, each party shall deliver to the
other such bills of sale, assignments, assumption agreements,
receipts or other documentation as such other party or its
counsel may reasonably request to effect the consummation of the
transactions contemplated by this Agreement.
4.0 Covenants of Portfolio, Laidlaw and LCF.
4.1 Portfolio and LCF each will operate its business in the
ordinary course between the date hereof and the Closing Date, it
being understood that such ordinary course of business will
include customary dividends and other distributions.
4.2 LCF, or Laidlaw on behalf of LCF, at no expense to
Portfolio or Advisers, will assist Portfolio in the preparation
of the registration statement on Form N-14 under the Securities
Act of 1933, as amended (the "1933 Act") relating to the
Portfolio Shares to be exchanged pursuant to paragraph 1.0 and
including the Proxy Materials described in paragraph 4.3 below
(the "Registration Statement"), and Portfolio shall then file the
Registration Statement with the Securities and Exchange
Commission (the "Commission") pursuant to filing requirements and
deadlines. Both LCF and Portfolio agree to provide the other
with such other information and documentation as are reasonably
necessary for the preparation of the Registration Statement. The
legal fees and expenses of Brown, Cummins & Brown, Co., L.P.A. in
preparing the Registration Statement shall be borne by Laidlaw up
to $25,000.<PAGE>
4.3 LCF will call a meeting of its shareholders to consider
and act upon this Agreement and to take all other actions
necessary to obtain approval of the transactions contemplated
herein. LCF will assist Portfolio in the preparation of the
notice of the meeting, form of proxy and proxy statement
(collectively "Proxy Materials") to be used in connection with
such meeting) it being understood that Portfolio will furnish a
currently effective prospectus relating to the Portfolio for
inclusion in the Proxy Materials and with such other information
relating to Portfolio as is reasonably necessary for the
preparation of the Proxy Materials, including the currently
effective registration statement of the Portfolio.
4.4 Prior to the Closing Date, LCF will assist Portfolio in
obtaining such information as Portfolio reasonably requests
concerning the beneficial ownership of the LCF Shares.
4.5 Subject to the provisions in this Agreement, Portfolio
and LCF will each take, or cause to be taken, all actions, and do
or cause to be done, all things reasonably necessary, proper or
advisable to consummate and make effective the transactions
contemplated by this Agreement.
4.6 As promptly as practicable, but in any case within
sixty (60) calendar days after the Closing Date, LCF shall
furnish, or cause to be furnished, to Portfolio such information
as Portfolio reasonably requests to enable Portfolio to determine
LCF's earnings and profits for Federal income tax purposes that
will be carried over to Portfolio pursuant to Section 381 of the
Code.
4.7 As soon after the Closing Date as is reasonably
practicable, LCF (a) shall prepare and file all Federal and other
tax returns and reports of LCF required by law to be filed with
respect to all periods ending on or before the Closing Date but
not theretofore filed and (b) shall submit to Portfolio for
payment all Federal and other taxes shown as due thereon which
were not required to be paid on or before the Closing Date,
provision for the payment of which was made as of the Closing
Date on the unaudited LCF Statement of Assets and Liabilities
referred to in paragraph 1.2.
4.8 Portfolio agrees to use all reasonable efforts to
obtain the approvals and authorizations required by the 1933 Act,
the 1940 Act and such of the state securities laws as it may deem
appropriate in order to continue its operations after the Closing
Date.
4.9 The parties agree that Laidlaw shall be retained to
provide certain consulting services to Portfolio's sub-adviser,
Fiduciary Counsel (the "Sub-Adviser") pursuant to and more fully
described in a consulting agreement, (the"Consulting Agreement"),
the material terms of which are described in Schedule 4.9
attached hereto. The Consulting Agreement will define the
specific nature of the services and duties to be provided by
Laidlaw, which include, among others, Laidlaw's consulting
arrangement with the Sub-Adviser and the preparation and delivery
by Laidlaw to Sub-Adviser of Laidlaw'srecommended list of
socially conscious companies, investment in which would be
consistent with the Portfolio prospectus and statement of
additional information. The parties agree that Portfolio's
registration statement will be modified to reflect that Portfolio
will be a "socially conscious" fund.
5.0 Representations and Warranties of Portfolio, LCF and
Laidlaw.
5.1 Portfolio represents and warrants to LCF as follows:
(a) Portfolio is a series and sub-trust of a business
trust validly existing and in good standing under the laws of the
State of Indiana and has the power and authority to own its
properties and to carry on its business as it is now conducted.
The beneficial interest in Portfolio is divided into an unlimited
number of transferable shares, without par value.
(b) . . Portfolio is, or at the Closing Date will be,
a duly registered, open-end management investment company, and
its registration with the Commission as an investment company
under the 1940 Act and the registration of its shares under the
1933 Act are, or at the Closing Date will be, in full force and
effect;
(c) . . All of the issued and outstanding Portfolio
Shares have been offered and sold in compliance in all material
respects with applicable registration requirements of the 1933
Act and state securities laws. Portfolio Shares are and will at
the Closing be registered in all jurisdictions in which they are
and will at the Closing be required to be registered under state
securities laws and other laws, and said registrations, including
any periodic reports or supplemental filings, are and will at the
Closing be complete and current, all fees required to be paid
have been and shall be paid, and Portfolio is not and at the
Closing will not be subject to any stop order and is and will be
fully qualified to sell Portfolio Shares in each state in which
its shares have been registered;
(d) .The currently effective prospectus and statement
of additional information of Portfolio conform in all material
respects to the applicable requirements of the 1933 Act and the
1940 Act and the regulations thereunder and do not include any
untrue statement of a material fact or omit to state any material
fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances under which
they were made, not misleading;
(e) At the Closing Date, Portfolio will have title to
its assets, subject to no liens, security interests or other
encumbrances;
(f) No litigation or administrative proceeding or
investigation of or before any court or governmental body is
presently pending or to its knowledge threatened against
Portfolio or any of its properties or assets, except as
previously disclosed in writing to LCF. Portfolio knows of no
facts that might form the basis for the institution of such
proceedings and is not a party to or subject to the provisions of
any order, decree or judgment of any court or governmental body
which materially and adversely affects its business or its
ability to consummate the transactions contemplated herein;
(g) All issued and outstanding Portfolio Shares are,
and at the Closing Date will be, duly and validly issued and
outstanding, fully paid and non-assessable with no personal
liability attaching to ownership thereof; the Portfolio Shares
to be issued and delivered to LCF for the accounts of the LCF
shareholders, pursuant to the terms of this Agreement, will at
the Closing Date have been duly authorized and, when issued and
delivered, will be validly issued Portfolio Shares, and will be
fully paid and non-assessable, and no shareholder of Portfolio
will have any preemptive right or right of subscription or
purchase in respect thereof; Portfolio does not have outstanding
any options, warrants or other rights to subscribe for or
purchase any of its shares, nor is there outstanding any security
convertible into any of its shares;
(h) Portfolio has the power to enter into this
Agreement and carry out its obligations hereunder. The
execution, delivery and performance of this Agreement have been
duly authorized by all necessary actions on the part of Portfolio
under its Declaration of Trust and Code of Regulations, and this
Agreement constitutes a valid and binding obligation of Portfolio
enforceable in accordance with its terms, subject as to
enforcement, to bankruptcy, insolvency, reorganization,
moratorium and other laws relating to or affecting creditors
rights and to general equity principles;
(i) The financial statements of Portfolio as of and
for the fiscal year ended September 30, 1995, examined by Price
Waterhouse, Portfolio's independent accountants, and Semi-Annual
Report of Portfolio as of March 31, 1996 (copies of which have
been or will be furnished to LCF) fairly represent, in all
material respects, Portfolio's financial condition as of their
respective dates indicated, results of operations for such
periods and changes in net assets for such periods in conformity
with generally accepted accounting principles applied on a
consistent basis, and as of such dates there were no known
liabilities of Portfolio (contingent or otherwise) not disclosed
therein that would be required in conformity with generally
accepted accounting principles to be disclosed therein;
(j) Since the date of Portfolio's most recent audited
financial statements, there has not been any material adverse
change in Portfolio's financial condition, assets, liabilities or
business, other than changes occurring in the ordinary course of
business, or any occurrence by Portfolio of indebtedness maturing
more than one year from the date such indebtedness was incurred,
except as otherwise disclosed in writing to LCF prior to the
Closing Date. For the purposes of this subparagraph (j) neither
a decline in Portfolio's net asset value per share nor a decrease
in Portfolio's size due to ordinary redemption activity shall
constitute a material adverse change;<PAGE>
(k) The information furnished or to be furnished by
Portfolio for use in registrations, registration statements,
proxy materials and other documents which may be necessary in
connection with the transactions contemplated hereby shall be
accurate and complete in all material respects and shall comply
in all material respects with Federal securities and other laws
and regulations applicable thereto. Any information furnished by
Portfolio for use in the Registration Statement or in any other
manner that may be necessary in connection with the transactions
contemplated herein shall be accurate and complete and shall
comply in all material respects with applicable Federal
securities and other laws and all regulations thereunder;
(l) The Registration Statement and the proxy materials
(only insofar as they relate to Portfolio, Vintage, Advisers and
any of its affiliates) will, on the effective date of the
Registration Statement, at the time of the meeting of LCF's
shareholders and on the Closing Date, not contain any untrue
statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements
therein, in light of the circumstances under which such
statements were made, not materially misleading;
(m) Portfolio has filed all tax returns required to be
filed and has no liability for any unpaid taxes. Portfolio has
made a proper election to be treated as a regulated investment
company under Subchapter M of the Code and has qualified to be
treated as a regulated investment company during all previous
taxable years;
(n) Portfolio is not in violation of, and the
execution and delivery of this Agreement do not, and the
consummation of the transactions contemplated hereby will not,
violate Portfolio's Declaration of Trust or By-Laws or any
provision of any agreement to which Portfolio is a party or by
which it is bound, or result in the acceleration of any
obligation or the imposition of any penalty under any agreement,
judgment or decree to which Portfolio is a party or by which it
is bound. Portfolio has not material contracts or other
commitments (other than this Agreement) that will be terminated
with liability to it prior to or on the Closing Date;
(o) Portfolio has maintained or has caused to be
maintained on its behalf all books and accounts as required of a
registered investment company in compliance with the requirements
of Section 31 of the 1940 Act and the Rules thereunder. The
books and records of Portfolio made available to LCF and/or its
counsel, accurately summarize the accounting data represented and
contain no material omissions with respect to the business and
operation of Portfolio;
(p) There are no unresolved or outstanding shareholder
claims or inquiries related to Portfolio and there will be no
such claims or inquiries as of the Closing Date other than as
disclosed by Portfolio in writing to LCF prior to the Closing
Date. There are no anticipated, outstanding or unresolved
investigations examinations or inquires relating to Portfolio by
the Commission, or any other governmental authority having
jurisdiction over the business and affairs of Portfolio;
(q) . . No consent, approval authorization or order
of any court or governmental authority of the United States or
any state is required for the consummation by Portfolio of the
transactions contemplated herein; except such as may be required
under the 1933 Act, the Securities Exchange Act of 1934 (the
"1934 Act"), the 1940 Act and state securities laws;
(r) There are and will be no legal or governmental
proceedings or other agreements, only insofar as they relate to
Portfolio, existing on or before the date of mailing of the Proxy
Materials or the Closing Date that will have been required to be
described in the Registration Statement or in any documents that
are required to be filed as exhibits to the Registration
Statement that will not have been described as required;
(s) Except as described in paragraph 4.9, as of the
Closing Date, there shall have been no material change in the
investment objective, policies and restrictions nor any increase
in the investment management fees, fees payable pursuant to
Portfolio's 12b-1 Plan or shareholder services plan from those
described in Portfolio's currently effective prospectus and
statement of additional information; and
(t) To the best knowledge of Portfolio, the operations
of Portfolio (and the operations of Vintage with respect to
Portfolio's operations) as heretofore and as now conducted have
complied and comply in all material respects with all applicable
laws, statutes, legislation, acts, rules and regulations.
5.2 Except as provided in schedule 5.2 attached hereto, LCF
represents and warrants to Portfolio as follows:
(a) LCF is an Indiana business trust validly existing
and in good standing under the laws of the State of Indiana and
has the power and authority to own properties and to carry on
LCF's business as it is now conducted;
(b) LCF is a duly registered, open-end, management
investment company, and its registration with the Commission as
an investment company under the 1940 Act is in full force and
effect and such registration has not been revoked or rescinded.
LCF's current prospectus and statement of additional information
conform in all material respects to the requirements of the 1933
Act and the 1940 Act;
(c) All of the issued and outstanding shares of LCF
have been offered and sold in compliance in all material respects
with applicable registration requirements of the 1933 Act and
state securities laws. Shares of LCF are registered in all
jurisdictions in which they are required to be registered under
state securities laws and other laws.
(d) LCF has no material contracts or other commitments
(other than this Agreement) that will be terminated with
liability to it prior to or on the Closing Date;
(e) No litigation or administrative proceeding or
investigation of or before any court or governmental body is
presently pending or to its knowledge threatened against LCF,
Laidlaw or any of LCF's properties or assets. LCF knows of no
facts that might form the basis for the institution of such
proceedings and is not a party to or subject to the provisions of
any order, decree or judgment of any court or governmental body
that materially and adversely affect its business or its ability
to consummate the transactions herein contemplated;
(f) The financial statements of LCF as of and for the
fiscal year ended December 31, 1995, examined by Coopers &
Lybrand, LCF's independent accountants, and Semi-Annual Report of
LCF as of June 30, 1996 (copies of which have been or will be
furnished to Portfolio) fairly represent, in all material
respects, LCF's financial condition as of the respective dates
indicated, results of operations for such periods and changes in
net assets for such periods in conformity with generally accepted
accounting principles applied on a consistent basis, and as of
such dates there were no known liabilities of LCF (contingent or
otherwise) not disclosed therein that would be required in
conformity with generally accepted accounting principles to be
disclosed therein. All liabilities (contingent and otherwise) as
of the Closing Date known to LCF will be reflected in conformity
with generally accepted accounting principles on the unaudited
Statement of Assets and Liabilities referred to in paragraph 1.3;
(g) Since the date of LCF's most recent audited
financial statements, there has not been any material adverse
change in LCF's financial condition, assets, liabilities or
business, other than changes occurring in the ordinary course of
business, or any incurrence by LCF of indebtedness maturing more
than one year from the date such indebtedness was incurred,
except as otherwise disclosed in writing to Portfolio prior to
the Closing Date. All liabilities of LCF (contingent or
otherwise) are reflected in the unaudited statement described in
paragraph 1.3 above. For the purposes of this subparagraph (h),
neither a decline in LCF's net asset value per share nor a
decrease in LCF's size due to ordinary redemption activity shall
constitute a material adverse change;
(h) At the Closing Date, all Federal and other tax
returns and reports of LCF required by law to be filed on or
before the Closing Date shall have been filed, and all Federal
and other taxes shall have been paid in full as due, and to the
best of LCF's knowledge no such return is currently under audit
and no assessment has been asserted with respect to any such
return;
<PAGE>
(i) For each taxable year since its inception, LCF has
met all the requirements of Subchapter M of the Code for
qualification and treatment as a "registered investment company"
as defined therein;
(j) All issued and outstanding LCF Shares are, and at
the Closing Date will be, duly and validly issued and
outstanding, fully paid and non-assessable with no personal
liability attaching to the ownership thereof. All such shares
will, at the time of Closing, be held by persons and in the
amounts set forth in the list of shareholders submitted to
Portfolio pursuant to paragraph 3.4. LCF does not have
outstanding any options, warrants or other rights to subscribe
for or purchase any of its shares, nor is there outstanding any
security convertible into any of its shares;
(k) At the Closing Date, LCF will have title to the
LCF Assets, subject to no liens, security interests or other
encumbrances, and full right, power and authority to assign,
deliver and otherwise transfer the LCF Assets hereunder, and upon
delivery of the LCF Assets and exchange of the Portfolio Shares
to LCF's shareholders for the LCF Assets, Portfolio will attain
good title thereto, free and clear of all liens, claims, charges,
options, and encumbrances and subject to no restriction on the
full transfer thereof, including such restrictions as might arise
under the 1933 Act;
(l) Subject to the approval of this Agreement by LCF's
shareholders, the execution, delivery and performance of this
Agreement will have been duly authorized by all necessary action
on the part of LCF and Laidlaw, and this Agreement will
constitute a valid and binding obligation of LCF, enforceable in
accordance with its terms, subject as to enforcement to
bankruptcy, insolvency, reorganization, moratorium and other laws
relating to or affecting creditors rights and to general equity
principles. No other consents, authorizations or approvals are
necessary in connection with the performance of this Agreement,
except such as may be required under the 1933 Act, the 1934 Act,
the 1940 Act and state securities laws;
(m) On the effective date of the Registration
Statement, at the time of the meeting of LCF's shareholders and
on the Closing Date, the Proxy Materials (exclusive of
information relating to Portfolio, Advisers and any of their
affiliates, and the currently effective Prospectus of Portfolio
and the Statement of Additional Information incorporated therein)
will (i) comply in all material respects with the provisions of
the 1933 Act, the 1934 Act and the 1940 Act and the regulations
thereunder and (ii) not contain any untrue statement of a
material fact or omit to state a material fact required to be
stated therein or necessary to make the statements therein, in
light of the circumstances under which such statements were made,
not misleading. Any other information furnished by LCF for use
in the Registration Statement or in any other manner that may be
necessary in connection with the transactions contemplated herein
shall be accurate and complete and shall comply in all material
respects with applicable Federal securities and other laws and
all regulations thereunder;
<PAGE>
(n) LCF will, on or prior to the Closing Date, declare
one or more dividends or other distributions to its shareholders
that, together with all previous dividends and other
distributions to shareholders, shall have the effect of
distributing to the shareholders all of its investment company
taxable income and net realized capital gains, if any, through
the Closing Date (computed without regard to any deduction for
dividends paid);
(o) LCF has maintained or has caused to be maintained
on its behalf all books and accounts as required of a registered
investment company in compliance with the requirements of Section
31 of the 1940 Act and the Rules thereunder. The books and
records of LCF made available to Portfolio and/or its counsel,
accurately summarize the accounting data represented and contain
no material omissions with respect to the business and operation
of LCF;
(p) LCF is not receiving the Portfolio Shares to be
issuedhereunder for the purpose of making any distributions
thereof other than in accordance with this Agreement;
(q) LCF is not in violation of, and the execution and
delivery of this Agreement do not, and the consummation of the
transactions contemplated hereby will not, violate LCF's
Declaration of Trust or Code of Regulations or any provision of
any agreement to which LCF is a party or by which it is bound, or
result in the acceleration of any obligation or the imposition of
any penalty under any agreement, judgment or decree to which LCF
is a party or by which it is bound;
(r) As of the Closing Date, there shall have been no
material change in the investment objective, policies and
restrictions nor any increase in the investment management fees,
fees payable pursuant to LCF's 12b-1 Plan, Distribution Plan or
Shareholder Services Plan, if any, from those described in LCF's
currently effective prospectus and statement of additional
information; and
(s) To the best knowledge of LCF, the operations of
LCF as heretofore and as now conducted have complied and comply
in all material respects with all applicable laws, statutes,
legislation, acts, rules and regulations.
5.3 Laidlaw represents and warrants to Portfolio as
follows:
(a) As of the Closing Date, no violation of applicable
federal, state and local statute, law or regulation exists that
individually, or in the aggregate, would have a material adverse
effect on the business or operations of LCF, except as provided
in Schedule 5.2 attached hereto;
(b) Assuming fulfillment of the conditions precedent
to the consummation of the Reorganization, LCF has the right,
power, legal capacity and authority to enter into the
Reorganization contemplated by this Agreement;
(c) As of the Closing Date the affairs of LCF are in
compliance with the terms of its currently effective registration
statement, and LCF is in compliance with its investment policies
and restrictions as described in such documents;
(d) As of the Closing Date, there are no outstanding
breaches by LCF of any contract to which it is a party, including
but not limited to any contract with a custodian, transfer agent
or pricing agent, and there are no outstanding breaches by LCF of
any plan of distribution it has adopted pursuant to Rule 12b-1
under the 1940 Act;
(e) There are no unresolved or outstanding shareholder
claims or inquiries related to LCF and there will be no such
claims or inquiries as of the Closing Date other than as
disclosed by Laidlaw in writing to Portfolio prior to the Closing
Date;
(f) There are no anticipated, outstanding or
unresolved investigations, examinations or inquiries relating to
LCF by the Commission, or any other governmental authority having
jurisdiction over the business and affairs of LCF;
(g) There are no any outstanding or threatened private
claims or litigation relating to LCF and knows of no facts that
might form the basis for such proceedings;
(h) Except as previously disclosed to Portfolio in
writing and except as will have been fully corrected prior to the
Closing Date, there have been no miscalculations of the net asset
value of LCF during the twelve-month period preceding the Closing
Date and all such calculations have been done in accordance with
the provisions of Rule 2a-4 under the 1940 Act;
(i) The Federal and state income tax returns of LCF
for the fiscal year ended December 31, 1995 properly reflect, in
all material respects, the Federal and state income tax
liabilities of LCF for the periods covered thereby;
(j) There are no claims, levies or liabilities for
corporate, excise, income or other Federal, state or local taxes
outstanding or threatened against LCF, other than those reflected
in its most recent audited and unaudited financial statements.
Laidlaw knows of no facts that might form the basis for such
proceedings; and
(k) There have been no material adverse changes in
LCF's financial condition, assets, liabilities or business, other
than those reflected in its most recent audited and unaudited
financial statements; and all liabilities of LCF (contingent or
otherwise) known to Laidlaw have been reported in writing to and
accepted by Portfolio prior to the Closing Date. A reduction in
net assets due to ordinary shareholder redemption activity will
not be deemed to be a material adverse change.
<PAGE>
6.0 Conditions to Obligations of LCF.
The obligations of LCF to consummate the transactions
provided for herein shall be subject to the performance by
Portfolio of all obligations to be performed by it hereunder on
or before the Closing Date and, in addition thereto, the
following conditions:
6.1 All representations and warranties of Portfolio
contained in this Agreement shall have been true and correct in
all material respects as of the date hereof and except as they
may be affected by the transactions contemplated by this
Agreement, shall be true and correct in all material respects as
of the Closing Date with the same force and effect as if made on
and as of the Closing Date;
6.2 Portfolio shall have delivered to LCF a certificate
executed in Portfolio's name by the President and Treasurer of
Vintage, in a form reasonably satisfactory to LCF and dated as of
the Closing Date, to the effect that the representations and
warranties of Portfolio made in this Agreement are true and
correct at and as of the Closing Date, except as they may be
affected by the transactions contemplated by this Agreement, and
as to such other matters as LCF shall reasonably request;
6.3 Portfolio shall have delivered to LCF copies of the
Declaration of Trust, By-laws and other Trust documents of
Vintage, as currently in effect, together with copies of the
resolutions adopted by the Board of Trustees of Vintage
authorizing the execution of this Agreement and the transactions
contemplated herein, in each case certified by the Secretary or
Assistant Secretary of Vintage;
6.4 Portfolio shall have delivered to LCF a certificate of
the Secretary or Assistant Secretary of Vintage as to the
signatures and incumbency of its officers who executed this
Agreement on behalf of Vintage and Portfolio, and any other
documents delivered in connection with the transactions
contemplated herein on behalf of Portfolio.
6.5 Between the date hereof and the Closing Date, Portfolio
shall have provided LCF and its representatives reasonable access
during regular business hours and upon reasonable notice to the
books and records of Portfolio, as LCF may reasonably request.
All such information obtained by LCF and its representatives
shall be held in confidence and may not be used for any purpose
other than in connection with the transaction contemplated
herein. In the event that the transaction contemplated by this
Agreement is not consummated, LCF and its representatives will
promptly return to Portfolio all documents and copies thereof
with respect to Portfolio obtained during the course of such
investigation;
6.6 Portfolio shall have delivered to Portfolio, pursuant
to paragraph 5.1(i), copies of the most recent financial
statements of Portfolio certified by Price Waterhouse,
Portfolio's accountants;
<PAGE>
6.7 All proceedings taken by Portfolio in connection with
the transactions contemplated by this Agreement and all documents
incidental thereto shall be reasonably satisfactory in form and
substance to LCF.
7.0 Conditions to Obligations of Portfolio.
The obligations of Portfolio to complete the transactions
provided for herein shall be subject to the performance by LCF of
all the obligations to be performed by it hereunder on or before
the Closing Date and, in addition thereto, the following
conditions:
7.1 All representations and warranties of LCF and Laidlaw
contained in this Agreement shall be true and correct in all
material respects as of the date hereof and, except as they may
be affected by the transactions contemplated by this Agreement,
as of the Closing Date with the same force and effect as if made
on and as of the Closing Date;
7.2 LCF shall have delivered to Portfolio a statement of
LCF's assets and its liabilities, together with a list of the
LCF's securities and other assets showing the respective adjusted
bases and holding periods thereof for income tax purposes, as of
the Valuation Date, certified by the Treasurer of LCF;
7.3 LCF shall have delivered to Portfolio at the Closing a
certificate executed in LCF's name by the President and the
Treasurer of LCF, in form and substance satisfactory to
Portfolio and dated as of the Closing Date, to effect that the
representations and warranties of LCF made in this Agreement are
true and correct at and as of the Closing Date, except as they
may be affected by the transactions contemplated by this
Agreement, and as such other matters as Portfolio shall
reasonably request;
7.4 LCF shall have delivered to Portfolio copies of its
Declaration of Trust, Code of Regulations and other Trust
documents, as currently in effect, together with copies of the
resolutions adopted by the Board of Trustees of LCF and by its
shareholders authorizing the execution of this Agreement by LCF
and the transactions contemplated herein, certified in each case
by the Secretary or Assistant Secretary of LCF;
7.5 LCF shall have delivered to Portfolio a certificate of
the Secretary or Assistant Secretary of LCF as to the signatures
and incumbency of it officers who executed this Agreement on
behalf of LCF and any other documents delivered in connection
with the transactions contemplated herein on behalf of LCF;
7.6 Between the date hereof and the Closing Date, LCF shall
have provided Portfolio and its representatives reasonable access
during regular business hours and upon reasonable notice to the
books and records of LCF, as Portfolio may reasonably request.
All such information obtained by Portfolio and its
representatives shall be held in confidence and may not be used
for any purpose other than in connection with the transaction
contemplated herein. In the event that the transaction
contemplated by this Agreement is not consummated, Portfolio and
its representatives will promptly return to LCF all documents and
copies thereof with respect to LCF obtained during the course of
such investigation;
7.7 LCF shall have delivered to Portfolio, pursuant to
paragraph 5.2(g), copies of financial statements of LCF for the
fiscal year ended December 31, 1995, certified by Coopers &
Lybrand, LCF's independent accountants;
7.8 On the Closing Date, LCF Assets shall include no assets
that Portfolio, by reason of charter limitations or otherwise,
may not properly receive; and
7.9 All proceedings taken by LCF in connection with the
transactions contemplated by this Agreement and all documents
incidental thereto shall be reasonably satisfactory in form and
substance to Portfolio.
8.0 Further Conditions Precedent to Obligations of LCF and
Portfolio.
The obligations of LCF and Portfolio are each subject to the
further conditions that on or before the Closing Date:
8.1 This Agreement and the transactions contemplated herein
shall have been approved by the requisite vote of the holders of
the outstanding LCF Shares and certified copies of the
resolutions evidencing such approvals shall have been delivered
to Portfolio;
8.2 On the Closing Date, no action, suit or other
proceeding shall be pending before any court or governmental
agency in which it is sought to restrain or prohibit, or obtain
damages or other relief in connection with this Agreement or the
transactions contemplated herein;
8.3 All consents of other parties and all other consents,
orders and permits of Federal, state and local regulatory
authorities (including those of the Securities and Exchange
Commission and of state securities authorities) deemed necessary
by Portfolio or LCF to permit the consummation, in all material
respects, of the transactions contemplated herein shall have been
obtained, except where failure to obtain any such consent, order
or permit would not involve risk or a material adverse effect on
the assets or properties of Portfolio or LCF;
8.4 The Registration Statement shall have become effective
under the 1933 Act, no stop orders suspending the effectiveness
thereof shall have been issued and, to the best knowledge of the
parties hereto, no investigation or proceeding for that purpose
shall have been instituted or be pending, threatened or
contemplated under the 1933 Act;
<PAGE>
8.5 LCF shall have declared and paid a dividend or
dividends and/or other distributions that, together with all
previous such dividends or distributions, shall have the effect
of distributing to LCF's shareholders all of LCF's investment
company taxable income (computed without regard to any deduction
for dividends paid) and all of it net capital gain (after
reduction for any capital loss carry-forward and computed without
regard to any deduction for dividends paid) for all taxable years
ending or before the Closing Date; and
8.6 The parties shall have received a favorable opinion of
Brown, Cummins & Brown Co., L.P.A. (based upon such
representations as such law firm shall reasonably request),
addressed to Portfolio and LCF, which opinion may be relied upon
by the shareholders of LCF that, for Federal income tax purposes:
(a) The transfer of all of the LCF Assets in exchange
for the Portfolio Shares and the assumption by Portfolio of
certain identified liabilities of LCF followed by the
distribution by LCF of the Portfolio Shares to LCF's shareholders
in exchange for their LCF Shares will constitute a
"reorganization" within the meaning of Section 368 (a) (1) of the
Code, and LCF and Portfolio will each be a "party to a
reorganization" within the meaning of Section 368 (b) of the
Code, and that the transaction contemplated herein qualifies as a
tax-free reorganization under Section 368 (a) (1) of the Internal
Revenue Code of 1986;
(b) No gain or loss will be recognized by LCF or
Portfolio on the transfer of the LCF Assets to Portfolio solely
in exchange for the Portfolio Shares and the assumption by
Portfolio of the identified liabilities of LCF;
(c) No gain or loss will be recognized by LCF's
shareholders upon the exchange of the LCF Shares for the
Portfolio Shares and no gain or loss will be recognized by LCF on
the distribution of the Portfolio Shares to LCF's shareholders in
exchange for their LCF Shares;
(d) The aggregate tax basis for the Portfolio Shares
received by each LCF shareholder pursuant to the reorganization
will be the same as the aggregate tax basis of the LCF Shares
held by each such LCF shareholder immediately prior to the
reorganization;
(e) The holding period of the Portfolio Shares to be
received by each LCF shareholder will include the period during
which the LCF shares surrendered in exchange therefor were held
(provided such LCF Shares were held as capital assets on the date
of the Reorganization);
(f) The tax basis of the LCF Assets attained by
Portfolio will be the same as the tax basis of the LCF Assets to
LCF immediately prior to the Reorganization; and
<PAGE>
(g) The holding period of the LCF Assets in the hands
of Portfolio will include the period during which those assets
were held by LCF.
Notwithstanding anything herein to the contrary, neither
Portfolio nor LCF may waive the conditions set forth in this
paragraph 8.6.
9.0 Brokerage Fees and Expenses.
9.1 Advisers, Portfolio, Laidlaw and LCF each represents
and warrants to the others that there are no brokers or finders
entitled to receive any payments in connection with the
transactions provided for herein.
9.2 (a) Advisers shall bear all Portfolio expenses
incurred in connection with entering into and carrying out the
provisions of this Agreement, including legal, accounting and
federal and state registration fees and expenses. Laidlaw shall
bear all LCF and Laidlaw expenses incurred in connection with
entering into and carrying out the provisions of this Agreement,
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 shall not be borne by LCF, Portfolio or Advisers, except that
Advisers shall bear 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 that exceed the $25,000 limit
borne by Laidlaw.
(b) In the event the transactions contemplated herein
are not consummated by reason of LCF's being either unwilling or
unable to go forward (other than by reason of nonfulfillment or
failure of any condition to LCF's obligations specified in the
Agreement), this Agreement shall terminate and LCF's only
obligation hereunder shall be to reimburse Portfolio for all
reasonable out of pocket fees and expenses incurred by Portfolio
in connection with those transactions, including legal,
accounting and filing fees.
(c) In the event the transactions contemplated herein
are not consummated by reason of Portfolio's being either
unwilling or unable to go forward (other than by reason of the
nonfulfillment or failure of any condition to Portfolio's
obligations specified in the Agreement), this Agreement shall
terminate and Portfolio's only obligation hereunder shall be to
reimburse LCF for all reasonable out-of-pocket fees and expenses
incurred by LCF in connection with those transactions including
legal, accounting and filing fees, and to comply with the
provisions of paragraph 7.6 herein.
<PAGE>
10. Entire Agreement: Survival of Warranties.
10.1 Portfolio, LCF, Laidlaw, Advisers and Vintage agree
that no party has made any representation, warranty or covenant
not set forth herein and that this Agreement constitutes the
entire agreement between the parties.
11. Termination.
11.1 In addition to termination pursuant to paragraph 9.2(b)
or 9.2(c), this Agreement may be terminated and the transactions
contemplated hereby may be abandoned at any time prior to the
Closing, whether before or after action thereon by the
shareholders of LCF and notwithstanding favorable action by such
shareholders:
(a) by the mutual consent of the Board of Trustees of
Vintage and the Board of Trustees of LCF;
(b) by either Portfolio or LCF by notice to the other,
without liability to the terminating party on account of such
termination (providing the terminating party is not otherwise in
default or in breach of this Agreement) if the Closing shall not
have occurred on or before December 31, 1996, or if later, two
business days after the date of any LCF Shareholders meeting
called for the purpose of approving this Agreement which was
convened prior to December 31, 1996 but adjourned to a date
after; or
(c) by either Portfolio or LCF, in writing without
liability to the terminating party on account of such termination
(provided the terminating party is not otherwise in default or
breach of this Agreement), if (i) the other party shall fail to
perform in any material respect its agreements contained herein
required to be performed prior to the Closing Date, (ii) the
other party materially breaches or shall have materially breached
any of its representations, warranties or covenants contained
herein, (iii) LCF shareholders fail to approve this Agreement at
any meeting called for such purpose at which a quorum was present
or (iv) any other condition herein expressed to be precedent to
the obligations of the terminating party has not been met and it
reasonably appears that it will not or cannot be met.
11.2 (a) Termination of this Agreement pursuant to
paragraphs 11.1(a) or (b) shall terminate all obligations of the
parties hereunder (other than Portfolio's obligations under
paragraph 7.6) and there shall be no liability for damages on the
part of Portfolio, LCF, Advisers or Laidlaw or the
directors/trustees or officers of Portfolio, LCF, Laidlaw or
Vintage, or to any other party or its directors/trustees or
officers.
(b) Termination of this Agreement pursuant to
paragraph 11.1(c) shall terminate all obligations of the parties
hereunder (other than Portfolio's obligations under paragraph
7.6) and there shall be no liability for damages on the part of
Portfolio, LCF, Laidlaw, Advisers or Vintage, or
directors/trustees or officers of Portfolio, LCF, Laidlaw,
Advisers or Vintage, to any other party or its directors/trustees
or officers, except that any party in breach of this Agreement
shall, upon demand, reimburse the non-breaching party or parties
for all reasonable out-of-pocket fees and expenses incurred in
connection with the transactions contemplated by this Agreement,
including legal, accounting and filing fees.
(c) Notwithstanding the foregoing, the parties may
extend any dates herein upon the unanimous written consent of all
of the parties hereto.
12. Amendments.
This Agreement may be amended, modified or supplemented in
such a manner as may be mutually agreed upon in writing by the
authorized officers of Portfolio, LCF, Laidlaw and Vintage;
provided, however, that following the meeting of the LCF
shareholders called by LCF pursuant to paragraph 4.3, no such
amendment may have the effect of changing the provisions for
determining the number of the Portfolio Shares to be issued to
the LCF shareholders under this Agreement to the detriment of
such shareholders without their further approval. Furthermore,
after the aforementioned approval by the LCF shareholders, no
amendment may be made with respect to this Agreement which in the
opinion of LCF's Board of Trustees materially adversely affects
the interests of the shareholders of LCF.
At any time either party hereto may, by written instrument
by it (i) waive any inaccuracies in the representations and
warranties made to it contained herein and (ii) waive compliance
with any of the covenants or conditions made for its benefit
contained herein.
13. Indemnification.
13.1 Portfolio will indemnify and hold harmless Laidlaw, its
directors, officers and shareholders against any and all claims
to the extent that such claims are based upon, arise out of or
relate to any untruthful or inaccurate representation made by
Portfolio in this Agreement or any breach by Portfolio of any
warranty or any failure to perform or comply with any of its
obligations, covenants conditions or agreements set forth in this
Agreement.
13.2 Laidlaw will indemnify and hold harmless Portfolio,
Vintage and Advisers, their directors/trustees, officers and
shareholders against any and all claims to the extent that such
claims are based upon, arise out of or relate to any untruthful
or inaccurate representation made by Laidlaw or LCF in this
Agreement or any breach by Laidlaw or LCF of any warranty or any
failure to perform or comply with any of its obligations,
covenants conditions or agreements set forth in this Agreement.
13.3 Advisers will indemnify and hold harmless Laidlaw, its
directors, officers and shareholders against any and all claims
to the extent that such claims are based upon, arise out of or
relate to any untruthful or inaccurate representation made by
Advisers in this Agreement or any breach by Advisers of any
warranty or any failure to perform or comply with any of its
obligations, covenants conditions or agreements set forth in this
Agreement.
13.4 As used in this section 13, the word "claim" shall mean
any and all liabilities, obligations, losses, damages,
deficiencies, demands, claims, penalties, assessments, judgments,
actions, proceedings and suits of whatever kind and nature and
all costs and expenses (including, without limitation, reasonable
attorney's fees and expenses and cost of settlement ).
13.5 Laidlaw will indemnify and hold harmless Portfolio,
Vintage and their respective trustees, officers and shareholders
against any and all claims with respect to any actions,
inactions, activities or any other matters occurring prior to the
Closing which in any way relate to LCF.
13.6 Promptly after receipt by any party (the "Indemnified
Party") of notice of any claim by a third party which may give
rise to indemnification hereunder, the Indemnified Party shall
notify the party against whom a Claim for indemnification may be
made hereunder (the "Indemnifying Party"), in reasonable detail
of the nature and amount of the claim. The Indemnifying Party
shall be entitled to assume, at its sole cost and expense (unless
it is subsequently determined that the Indemnifying Party did not
have the obligation to indemnify the Indemnified party under such
circumstances), in which case the Indemnified party shall bear
all costs and expenses relating to such claim and shall reimburse
the Indemnifying Party for any such costs and expenses, and shall
have sole control of the defense and settlement of such action or
claim; provided, however, that:
. . .(a) the Indemnified Party shall be entitled to
participate in the defense of such claim and, in connection
therewith, to employ counsel at its own expense; and
. . .(b) Without the prior written consent of the
Indemnified Party which shall not be unreasonably withheld, the
Indemnifying Party shall not consent to the entry of any judgment
or enter into any settlement that requires any action other than
the payment of money.
In the event the Indemnifying Party elects to assume control
of the defense of any action in accordance with the foregoing
provisions, (i) the Indemnifying Party shall not be liable to
Indemnified Party for any legal fees, costs and expenses incurred
by the Indemnified Party in connection with the defense thereof
arising after the date the Indemnifying Party elects to assume
control of such defenses and (ii) the Indemnified Party shall
fully cooperate with the Indemnifying Party in such defense. If
the Indemnifying Party does not assume control of the defense of
such claim in accordance with the foregoing provisions (except
when it is subsequently determined that the Indemnifying Party
did not have the obligation to indemnify), the Indemnified Party
shall have the right to defend such claim, in which case the
Indemnifying Party shall pay all reasonable costs and expenses of
such defenses plus interest on the cost of defense from the date
paid at a rate equal to the prime rate of interest as in effect
from time to time at Citibank, N.A.. The Indemnified Party shall
conduct such defense in good faith and shall have the right to
settle the matter with the prior written consent of the
Indemnifying Party which shall not be unreasonably withheld.
14. Notices.
Any notice, report, statement or demand required or
permitted by any provisions of this Agreement shall be in writing
and shall be given by prepaid telegraph, telecopy, certified mail
or overnight express courier addressed to Portfolio and LCF as
follows:
If to Portfolio,
Advisers or Vintage:. . . . . . . .If to LCF or Laidlaw:
Vintage Advisers, Inc.. . . . .Laidlaw Holdings Asset
429 North Pennsylvania Street . . .Management, Inc.
Indianapolis, Indiana 46204 . . . .100 Park Avenue. . .
Attention: Timothy L. Ashburn. . .New York, N.Y. 10017
Attention: Chuck Provini
with a copy to: . . . . . . . . . .with a copy to:
Donald S. Mendelsohn, Esquire . . .Joseph V. DelRaso, Esquire
Brown, Cummins & Brown Co., L.P.A..Stradley, Ronon, Stevens & Young
3500 Carew Tower, 441 Vine Street .2600 One Commerce Square
Cincinnati, Ohio 45202 . . . . . .Philadelphia, Pa. 19103
15. Headings: Counterparts: Governing Law: Assignment,
Limitation of Liability.
15.1 The section and paragraph headings contained in this
Agreement are for reference purposes only and shall not affect in
any way the meaning or interpretation of this Agreement.
15.2 This Agreement may be executed in any number of
counterparts, each of which shall be deemed an original.
15.3 This Agreement shall be governed by and construed in
accordance with the laws of the State of Indiana.
15.4 This Agreement shall bind and inure to the benefit of
the parties hereto and their respective successors and assigns,
but no assignment or transfer hereof or of any rights or
obligations hereunder shall be made by any party without the
written consent of the other parties. Nothing herein expressed
or implied is intended or shall be construed to confer upon or
give any person, entity, firm or corporation, other than the
parties hereto and their respective successors and assigns, any
rights or remedies under or by reason of this Agreement, except
that, the persons designated in paragraphs 13.1, 13.2, 13.3, 13.4
and 13.5 hereof shall be entitled to the benefits and may enforce
the provisions of section 13 hereof.
15.5 The agreements, covenants, representations, warranties,
obligations and liabilities of Portfolio hereunder are solely
those of Portfolio and Vintage, acting on behalf of Portfolio.
None of the shareholders, nominees, officers, trustees, agents or
employees of Portfolio or Vintage shall be personally bound by or
liable under this Agreement nor shall resort be had to their
private property for the satisfaction of any obligation or claim
hereunder. The execution and delivery of this Agreement by
Portfolio and Vintage have been authorized by the trustees of
Vintage under the Declaration of Trust of Vintage and signed by
authorized officers of Vintage acting as such, and neither such
authorization by such trustees nor such execution and delivery by
such officers shall be deemed have been made by them individually
or to impose any liability on any of them personally. Any
obligations or claim relating to the assets of Portfolio shall
not be satisfied by assets of any class of shares of Vintage
other than Portfolio.
15.6 The obligations and liabilities of LCF hereunder are
solely those of LCF. None of the shareholders, nominees,
officers, trustees, agents or employees of LCF shall be
personally bound by or liable under this Agreement nor shall
resort be had to their private property for the satisfaction of
any obligation or claim hereunder. The execution and delivery of
this Agreement have been authorized by the trustees of LCF under
the Declaration of Trust of LCF and signed by authorized officers
of LCF acting as such, and neither such authorization by such
trustees nor such execution and delivery by such officers shall
be deemed have been made by them individually or to impose any
liability on any of them personally. Any obligations or claim
relating to the assets of LCF shall not be satisfied by assets of
any portfolio of LCF other than that of LCF.
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed by its duly authorized officers as of
the date first written above.
. . . . . . . . . . THE VINTAGE FUNDS, acting on behalf of
THE LAIDLAW COVENANT FUND . . . . .FIDUCIARY VALUE FUND
By: /s/ C. R. Provini By: /s/ Timothy L. Ashburn
LAIDLAW HOLDINGS ASSET. . . . . . .VINTAGE ADVISERS,INC.
MANAGEMENT, INC.
By: /s/ C. R. Provini . . . .By: /s/ Timothy L. Ashburn
. . . . . . . . . . . . .UNIFIED ADVISERS, INC. (for
purposes of Schedule 5.2 only)
. . . . . . . . . . . . .By: /s/ Timothy L. Ashburn
<PAGE>
SCHEDULE 1.3 (d)
None
<PAGE>
SCHEDULE 4.9
Advisers, the Sub-Adviser and Laidlaw shall enter into a
consulting agreement, terminable on at least 60 days' prior
written notice by any party, pursuant to which Laidlaw shall
provide the Sub-Adviser with a list of 200 "socially conscious"
companies (the "List") for purposes of possible investment on
behalf of Portfolio. Laidlaw shall update the List at least on a
quarterly basis, and more frequently if necessary to eliminate
companies which no longer qualify as "socially conscious". For
this purpose, "socially conscious" companies shall be chosen by
Laidlaw from the 1,000 largest U.S. 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. The
Sub-Adviser shall not be obligated to select any securities for
Portfolio from the List and, subject to the supervision of
Advisers, shall perform all investment advisory services to
Portfolio. Laidlaw shall not provide investment advisory
services to Portfolio. For its consulting services with respect
to the List, Laidlaw shall be paid by Advisers a fee on a
quarterly basis equal to 18 basis points (.18%) of the average
daily net assets of Portfolio.
<PAGE>
PROXY
THE LAIDLAW COVENANT FUND
Special Meeting of Shareholders - December 18, 1996 at 4:00 p.m.
100 Park Avenue
New York, NY 10017
The undersigned hereby appoints as proxies John M. Downey and Robert J. Ricca
and each of them (with power of substitution) to vote for the undersigned all
shares of beneficial interest in The Laidlaw Covenant Fund owned by the u
ndersigned at the aforesaid meeting and any adjournment thereof with all the
power the undersigned would have if personally present. The shares
represented by this proxy will be voted as instructed. Unless indicated to
the contrary, this proxy shall be deemed to indicate authority to vote "FOR"
all proposals. This proxy is solicited on behalf of the Board of Trustees of
The Laidlaw Covenant Fund.
YOUR VOTE IS IMPORTANT
PLEASE DATE AND SIGN THIS PROXY AND RETURN IT IN THE ENCLOSED ENVELOPE TO
UNIVIED ADVISERS, INC., 429 N. PENNSYLVANIA STREET, INDIANAPOLIS, INDIANA
46204.
This proxy will not be voted unless it is dated and signed exactly as
instructed below.
Please indicate your vote by an "X" in the appropriate box below. The board
of trustees recommends a vote "FOR".
1. Approval of an Agreement and Plan of Reorganization 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.
FOR _______ AGAINST _______ ABSTAIN _______
Sign exactly as name appears hereon.
____________________________________
signature
____________________________________ Date ________________, 1996
signature
If the shares are held jointly, each Shareholder named should sign. If only
one signs, his or her signature will be binding. If the Shareholder is a
corporation, the President or Vice President should sign in his or her own
name, indicating title. If the Shareholder is a partnership, a partner should
sign in his or her own name, indicating that he or she is a "Partner".
