SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934 (Amendment No. )
Filed by the Registrant /X/
Filed by a party other than the Registrant / /
Check the appropriate box:
/ / Preliminary Proxy Statement
/ / Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
/X/ Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to 240.14a-11(c) or 240.14a-12
THE VINTAGE FUNDS
- - -----------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- - -----------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
/X/ No fee required.
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(1)
and 0-11
(1) Title of each class of securities to which transaction applies:
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(2) Aggregate number of securities to which transaction applies:
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(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):
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(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
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/ / Fee paid previously with preliminary materials.
/ / Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
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(2) Form, Schedule or Registration Statement No.:
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(3) Filing Party:
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(4) Date Filed:
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<PAGE>
THE VINTAGE FUNDS
429 NORTH PENNSYLVANIA STREET
INDIANAPOLIS, INDIANA 46204
Dear Shareholder:
Enclosed is a proxy statement for a special meeting of shareholders of the First
Lexington Balanced Fund (the "Fund"), a portfolio of The Vintage Funds the
("Trust") to be held at 10:00 a.m. local time on May 29, 1997.
This special meeting has been called to seek shareholder approval for a new
sub-advisory agreement between Vintage Advisers, Inc., investment adviser to the
Trust, (the "Adviser"), and Health Financial, Inc., sub-adviser to The First
Lexington Balanced Fund (the "Sub-Adviser"). The Board of Trustees of the Trust
has unanimously approved the proposed agreement because it believes it is in
shareholders' best interests and in the best interests of the Trust. As such,
the Board of Trustees recommends that you vote in favor of the proposal as
described in the proxy statement. Please be assured that approval by you will
not increase any of the fees that you pay.
The enclosed Question and Answer Summary is intended to provide shareholders
with an overview of this proxy process. Please read it and the other enclosed
documents carefully. It is important that we receive your vote as soon as
possible. Simply return the proxy card in the enclosed postage-paid envelope.
If you have further questions about your proxy, please contact Shareholder
Services at (800) 408-4682. Thank you.
Sincerely,
/s/ Timothy L. Ashburn
Timothy L. Ashburn
President
<PAGE>
QUESTION AND ANSWER SUMMARY
A SUMMARY OF THE TRANSACTION
Health Financial, Inc., the Sub-Adviser to The First Lexington Balanced
Fund, is a Kentucky corporation owned by its sole shareholder, Dr. Gregory W.
Kasten. Unified Holdings, Inc. ("Unified") is a Delaware corporation. Pursuant
to an executed merger agreement, Health Financial will become a wholly owned
subsidiary of Unified. Consummation of the merger transaction is subject to
approval by the shareholders of The First Lexington Balanced Fund of a new
sub-advisory agreement between Vintage Advisers, Inc. and Health Financial, Inc.
WHAT SHAREHOLDERS ARE BEING ASKED TO DO
Upon the consummation of the merger transaction described above, the present
sub-advisory agreement with Health Financial will terminate automatically as a
matter of law. SHAREHOLDERS ARE BEING ASKED TO APPROVE THE FOLLOWING:
A new sub-advisory agreement between the Adviser and Health
Financial, Inc., sub-adviser to The First Lexington Balanced Fund. THE
NEW AGREEMENT WOULD BE IDENTICAL TO THE AGREEMENT CURRENTLY IN PLACE.
WILL THIS CHANGE INCREASE ANY OF THE FEES THAT I PAY?
No. Fees will not change.
WHO PAYS FOR THE EXPENSE OF THIS PROXY PROCESS?
There is no charge to shareholders. Vintage Advisers, Inc. will pay for all
expenses associated with the proxy voting process.
IF SHAREHOLDERS APPROVE THESE PROPOSALS, WHEN WILL THEY BECOME EFFECTIVE?
The new agreement will become effective the day following shareholder approval
of the new agreement.
HOW DO I VOTE MY PROXY?
It is important that we receive your vote as soon as possible. Simply return the
proxy card in the enclosed postage-paid envelope.
WHEN AND WHERE WILL THE SPECIAL SHAREHOLDER MEETING TAKE PLACE?
The shareholder meeting will take place at 10:00 a.m. local time on May 29, 1997
at 429 North Pennsylvania Street, Indianapolis, Indiana 46204. Please return
your completed proxy card by mail as soon as possible, regardless of whether you
plan to attend the meeting.
<PAGE>
THE VINTAGE FUNDS
429 NORTH PENNSYLVANIA STREET
INDIANAPOLIS, INDIANA 46204
------------------------
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD MAY 29, 1997
---------------------
TO THE SHAREHOLDERS OF THE FIRST LEXINGTON BALANCED FUND:
A special meeting (the "Meeting") of shareholders of The First Lexington
Balanced Fund (the "Fund"), a portfolio of The Vintage Funds (the "Trust") will
be held at 429 North Pennsylvania Street, Indianapolis, Indiana 46204, on May
29, 1997 at 10:00 a.m. local time. The purpose of the Meeting is to consider the
following proposals:
I. To approve a new sub-advisory agreement between Vintage Advisers,
Inc., investment adviser to the Trust (the "Adviser") and Health
Financial, Inc., sub-adviser to the Fund (the "Sub-Adviser").
II. To consider and act upon such other matters as may properly come
before the Meeting or any adjournment thereof.
The attached Proxy Statement describes the above proposals in detail and is
being sent to shareholders of record of the Fund as of the close of business on
May 9, 1997, who are the shareholders entitled to notice of and to vote at the
Meeting.
IMPORTANT
YOUR BOARD OF TRUSTEES UNANIMOUSLY URGES YOU TO VOTE IN FAVOR OF THE PROPOSAL BY
MARKING, SIGNING AND RETURNING THE ENCLOSED PROXY CARD AS SOON AS POSSIBLE. THE
ENCLOSED ADDRESSED ENVELOPE REQUIRES NO POSTAGE AND IS PROVIDED FOR YOUR
CONVENIENCE.
By Order of the Board of Trustees,
/s/ Carol J. Highsmith
Carol J. Highsmith
Secretary
Indianapolis, Indiana
Dated: May 14, 1997
<PAGE>
THE VINTAGE FUNDS
SPECIAL MEETING OF SHAREHOLDERS OF
THE FIRST LEXINGTON BALANCED FUND
TO BE HELD MAY 29, 1997
PROXY STATEMENT
This proxy statement is furnished in connection with the solicitation of proxies
by the board of trustees (the "Board" or the "Trustees") of The Vintage Funds
(the "Trust"), an Indiana business trust, from holders (the "Shareholders") of
shares of beneficial interest of The First Lexington Balanced Fund (the "Fund"),
a portfolio of the Trust, no par value (the "Shares") to be voted at a special
meeting of Shareholders (the "Meeting") to be held at 429 North Pennsylvania
Street, Indianapolis, Indiana 46204, on May 29, 1997 at 10:00 a.m. local time,
and at any adjournments thereof, for the purposes set forth in the accompanying
Notice of Special Meeting of Shareholders. The Trust has outstanding one class
of Shares that is currently issued in the following separate series: Starwood
Strategic Fund, Aggressive Growth Fund, Laidlaw Fund, Asset Allocation Fund,
Taxable Fixed Income Fund, First Lexington Balanced Fund, Taxable Money Market
Fund, and Tax-Free Money Market Fund (each, a "Portfolio" and collectively, the
"Portfolios"). This proxy statement and the accompanying form of proxy will
first be sent to Shareholders on or about May 15, 1997. THE TRUST'S ANNUAL
REPORT, INCLUDING FINANCIAL STATEMENTS OF THE TRUST FOR THE FISCAL YEAR ENDED
SEPTEMBER 30, 1996, IS AVAILABLE WITHOUT CHARGE UPON REQUEST FROM SHAREHOLDER
SERVICES, AT 429 NORTH PENNSYLVANIA STREET, INDIANAPOLIS, INDIANA
46204(TELEPHONE NUMBER (800) 408-4682).
The primary purpose of the Meeting is to allow Shareholders to consider a new
sub-advisory agreement for the Fund. As explained in more detail below, the
existing sub-advisory agreement for the Fund will terminate automatically by
operation of law, upon the consummation of the proposed merger (the
"Transaction") of Health Financial, Inc. and Unified Holdings, Inc., whereby
Health Financial will become a wholly owned subsidiary of Unified. Shareholders
are not being asked to approve the Transaction; rather, they are being asked to
continue the existing investment sub-advisory relationship for the Fund under a
new contract which would take effect at the time of the consummation of the
Transaction. Consummation of the Transaction is conditioned upon, among other
things, Shareholder approval of the new sub-advisory contract. The Transaction
and the terms of the new sub-advisory agreement are discussed below.
THE PROPOSED SUB-ADVISORY AGREEMENT IS IDENTICAL IN FORM AND TERMS TO THE
PRESENT AGREEMENT OTHER THAN ITS COMMENCEMENT AND EXPIRATION DATES.
Therefore:
Shareholders of the Fund are being asked to approve a new sub-advisory agreement
between the Adviser and the existing sub-adviser to the Fund to replace the
existing agreement between the Adviser and the Sub-Adviser.
VOTING INFORMATION
The Board has fixed the close of business on May 9, 1997, as the record date
(the "Record Date") for the determination of Shareholders entitled to notice of
and to vote at the Meeting and any adjournment(s) thereof. Shareholders on that
date will be entitled to one vote for each Share held and a fractional vote with
respect to fractional Shares on each matter as to which such Shares are entitled
to vote.
As provided under the 1940 Act, approval of the proposed agreement will require
the affirmative vote of a majority of the outstanding shares of the Fund. Such a
majority is defined in the 1940 Act as the lesser of: (a) 67% or more of the
shares present at such meeting, if the holders of more than 50% of the
outstanding shares of the Fund are present or represented by proxy, or (b) more
than 50% of the total outstanding shares of the Fund.
A majority of shares of the Fund outstanding on May 9, 1997, 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 proposal 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 indicated
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 for the proposal) 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
proposal.
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 the
Secretary of the Trust 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.
As of the close of business on the Record Date, the Fund had 79,898.745 Shares
outstanding. As of the Record Date, the following Shareholders held, as
beneficial owners, 5% or more of the Fund's outstanding shares.
<TABLE>
<CAPTION>
NAME AND ADDRESS AMOUNT OF PERCENTAGE
OF SHAREHOLDER BENEFICIAL OWNERSHIP OF FUND
<S> <C> <C>
Unified Management Corporation(1) 24,009.796 30.1
429 N. Pennsylvania St.
Indianapolis, IN 46204
Jan W. Kasten(2) 8,479.934 10.6
924 Montavesta Cir
Lexington, KY 40502
Dr. Gregory W. Kasten(2) 8,233.973 10.3
924 Montavesta Cir
Lexington, Ky 40502
John P. Gillespie 7,484.688 9.4
789 Eastern Byp
Richmond, KY 40475
Unified Holdings, Inc.(1) 5,641.287 7.0
429 N. Pennsylvania St.
Indianapolis, IN 46204
Richard J. Bischoff 4,330.541 5.4
14611 Woodsteam Pl
Louisville, KY 40245
<FN>
(1) These shares may be deemed to be beneficially owned by Timothy L. Ashburn,
Lynn E. Wood, and Thomas G. Napurano.
(2) Dr. Gregory W. Kasten and Jan W. Kasten are husband and wife and may be
deemed to have beneficial ownership in each other's shares.
</FN>
</TABLE>
To the knowledge of the Board, no other person owned beneficially on the Record
Date as much as 5% of the outstanding shares of the Fund.
As of the Record Date, the following Trustees and Officers held, as beneficial
owners, shares of the Fund as follows:
<TABLE>
<CAPTION>
NAME AND ADDRESS AMOUNT OF PERCENTAGE
OF SHAREHOLDER BENEFICIAL OWNERSHIP OF FUND
<S> <C> <C>
Thomas G. Napurano 31,376.850(1) 39.3
429 N. Pennsylvania St.
Indianapolis, IN 46204
Timothy L. Ashburn 30,670.316(1) 38.4
429 N. Pennsylvania St.
Indianapolis, IN 46204
Lynn E. Wood 30,599.857(1) 38.3
429 N. Pennsylvania St.
Indianapolis, IN 46204
Carol J. Highsmith 704.573 *
429 N. Pennsylvania St.
Indianapolis, IN 46204
* Beneficial ownership is less than 1% of the Fund.
<FN>
(1) These amounts include amounts disclosed above for Unified Management and
Unified Holdings and also shares held by Vintage Advisers, Inc., as to
which Mr. Napurano, Mr. Ashburn, and Mr. Wood may be deemed to have
beneficial ownership.
</FN>
</TABLE>
To the knowledge of the Board, no other Officer or Trustee owned beneficially on
the Record Date 1% or more of the Shares of the Fund. The Officers and Trustees
as a group owned 40.2% of the Fund on the Record Date.
Prior to February 1, 1997, the Fund was known as The Municipal Fixed Income
Fund, and was not open to the public. Investment was limited to Unified and its
subsidiaries and affiliates. Therefore, on February 1, 1997, and until outside
shareholders began investing, Unified may be deemed to have controlled the Fund.
In March 1997, outside shareholders began investing, and no single shareholder
controlled the Fund. As of the Record Date Unified and its subsidiaries,
affiliates, and employees owned more than 50% of the outstanding shares of the
Fund. Therefore, Unified may be deemed to control the Fund, and to control the
vote at the Meeting.
PROPOSAL
APPROVAL OF A NEW SUB-ADVISORY AGREEMENT BETWEEN VINTAGE ADVISERS, INC.,
INVESTMENT ADVISER TO THE TRUST (THE "ADVISER") AND HEALTH FINANCIAL, INC.,
SUB-ADVISER TO THE FIRST LEXINGTON BALANCED FUND (THE "SUB-ADVISER")
BACKGROUND
The Adviser serves as investment adviser to the Trust pursuant to an existing
Advisory Agreement. The Adviser, in turn, has entered into an existing
Sub-Advisory Agreement with the Sub-Adviser. Pursuant to the Advisory Agreement,
the Adviser, subject to the general supervision of the Trust's Board of
Trustees, manages the investment operations of each Portfolio of the Trust. In
doing so, the Adviser must act in conformity with the Trust's Declaration of
Trust, By-Laws, Prospectus, and Statement of Additional Information, and also
with the Investment Company Act of 1940.
Pursuant to the existing Sub-Advisory Agreement, the Sub-Adviser, subject to the
general supervision of the Trust's Board of Trustees and the Adviser, manages
the investment operations of the Fund and the composition of the portfolio of
securities and investments belonging to the Fund. In doing so, the Sub-Adviser
must act in conformity with the Trust's Declaration of Trust, By-Laws,
Prospectus, and Statement of Additional Information, and also with the
Investment Company Act of 1940.
The Sub-Adviser is a Kentucky corporation. It was founded in 1984 by its sole
shareholder, Dr. Gregory W. Kasten, who is also its sole Director and Officer.
Dr. Kasten acts as portfolio manager for the Fund. As a registered investment
adviser, the Sub-Adviser, in addition to providing services to the Trust,
provides private, individualized portfolio management for individuals and
institutions, primarily physicians and private pension plans, and also serves as
investment adviser to the First Lexington Trust Company. The Sub-Adviser
presently provides investment counsel for approximately $300,000,000 of assets
under its management. Its principal executive offices are located at 3320 Tates
Creek Road, Lexington, Kentucky, 40502, and its telephone number is (606)
266-5211.
Unified Holdings, Inc., ("Unified") a Delaware corporation, was organized in
1989. Unified indirectly owns all of the capital stock of its subsidiaries -
Unified Management Corporation, a licensed NASD broker-dealer and Unified
Advisers, Inc., a registered investment adviser and transfer agent. Unified
Management Corporation acts as Distributor for the Trust, and Unified Advisers
acts as Fund Accounting Agent, Transfer Agent, Shareholder Servicing Agent, and
Administrator for the Trust. The principal executive offices of Unified and its
subsidiaries are located at 429 North Pennsylvania Street, Indianapolis,
Indiana, 46204, and its telephone number is (317) 634-3300.
Unified's services concentrate in four major lines of business in the financial
services industry - mutual fund services and distribution; brokerage services;
investment advisory services; and systems development for financial services
products. Unified's subsidiaries provide related financial services, including
investment management, brokerage services, mutual fund services and
distribution, and certain types of non-bank custodial services.
In order to enhance Unified's service capabilities, revenue, capital, assets
under management, and expertise of personnel, discussions were initiated with
Dr. Kasten concerning a transaction whereby Health Financial would become a
wholly owned subsidiary of Unified (the "Transaction"). Following extensive
discussion and negotiation, an Agreement and Plan of Merger was signed by the
parties on April 25, 1997. Consummation of the Transaction is conditioned, among
other things, on Shareholder approval of a new Sub-Advisory Agreement between
the Adviser and the Sub-Adviser.
The following individuals, holding positions with the Trust as indicated, are
employees of Unified or one of its subsidiaries. As employees, they have
received options and common shares of Unified through certain employee benefit
plans, which directly or indirectly give them beneficial ownership in Unified.
Therefore, they may be deemed to have an interest in the Transaction.
Timothy L. Ashburn Chairman of the Board of Trustees,
President of the Trust
Thomas G. Napurano Treasurer of the Trust
Carol J. Highsmith Secretary of the Trust
Lynn E. Wood Assistant Secretary of the Trust
Timothy L. Ashburn and Jack R. Orben, who is a Trustee of the Trust, also may be
deemed to have an interest in the Transaction because they are preferred
stockholders of Unified.
If the Transaction is consummated, the Sub-Adviser will become a wholly owned
subsidiary of Unified. The above-mentioned officers and Trustees of the Trust
may then be deemed to have beneficial ownership in the Sub-Adviser. Mr. Ashburn
will become a Director of the Sub-Adviser, and Dr. Kasten will become a Director
of Unified. Dr. Kasten will also acquire a 34.8% ownership interest in Unified.
It is also anticipated that Jack R. Orben and Charles H. Binger, Trustees of the
Trust, will resign from the Board effective upon consummation of the
Transaction.
The Transaction will be consummated only if the Shareholders of the Fund approve
the new sub-advisory agreement between the Adviser and the Sub-Adviser. If the
Transaction is not consummated, the existing agreement will remain in effect,
and the Board of Trustees of the Trust will consider what, if any, alternative
actions are appropriate. If the proposed agreement is approved and the
Transaction is thereafter consummated, the proposed sub-advisory agreement will
be executed and become effective on the day after such approval.
The Transaction does not contemplate any changes in the individuals principally
responsible for overseeing the investment operations of the Fund, and will not
result in any increase in expenses of the Trust.
The existing sub-advisory agreement, as required by Section 15 of the Investment
Company Act of 1940, automatically terminates in the event of its assignment.
Any change of control of the Sub-Adviser is deemed to be an assignment. The
Transaction, if consummated, will result in a change of control of the
Sub-Adviser, and the resulting termination of the existing sub-advisory
agreement necessitates affirmative action by Shareholders of the Fund.
During its regular quarterly meeting on November 18, 1996, the Board approved
the existing sub-advisory agreement, concluding that the agreement would be in
the best interests of the Trust, the Fund, and its Shareholders. During the
regular meeting of the Board on February 24, 1997, all Advisory and Sub-Advisory
agreements of the Trust were reviewed. The Board unanimously voted to continue
the existing agreement, concluding that it was in the best interest of the
Trust, the Fund, and the Shareholders. At that meeting, the Board was advised of
the contemplated Transaction and its effect on the Sub-Adviser and the Trust.
For the reasons discussed below (see "The Board's Consideration"), the Board
unanimously approved the proposed agreement, and recommended that it be approved
by Shareholders of the Fund.
THE BOARD'S CONSIDERATION
On February 24, 1997, during its regular quarterly meeting, the Board of
Trustees considered the Transaction and its effect on the Trust. The Board also
evaluated the proposed sub-advisory agreement, which is identical to the
existing sub-advisory agreement. Timothy Ashburn, President of the Trust,
Chairman of the Board of Trustees, and Chief Executive Officer of Unified, was
present at the meeting to provide information regarding the Transaction and to
respond to questions. Legal counsel to the Trust was also present to advise the
Board.
In considering the initial selection of Health Financial as Sub-Adviser to the
Fund, and Dr. Kasten as portfolio manager, the Board invited Dr. Kasten to give
a presentation regarding his investment strategy and philosophy. Dr. Kasten
presented to a majority of the Board on August 21, 1996, and responded to
extensive questions by the Board. Based on information provided by Dr. Kasten,
and information provided to the Board concerning his portfolio management
experience, investment style and investment performance, the Board concluded
during its regular meeting on November 21, 1996, that the existing sub-advisory
agreement would be in the best interest of the Trust, the Fund, and the
Shareholders.
During its regular meeting on February 24, 1997, the Board reviewed all Advisory
and Sub-Advisory agreements of the Trust to determine whether each agreement
should be renewed for another year. In considering whether the existing
agreement between the Adviser and Health Financial should be continued, the
Board considered the nature, quality and extent of services which would be
provided by the Sub-Adviser to the Fund, as well as the benefits derived by the
Trust. In addition, the Board discussed and reviewed the terms and provisions of
the agreement. The Board unanimously concluded that continuation of the
agreement would be in the best interest of the Trust, the Fund, and the
Shareholders.
In considering whether to recommend approval of the proposed sub-advisory
agreement, the Board considered the terms of the Transaction, and its effect on
the Sub-Adviser, the Trust, and the Fund. The Board specifically noted the
Sub-Adviser's stated commitment, and Dr. Kasten's personal commitment, to
provide the Fund with the same nature, quality and extent of services currently
provided. The Board also considered the anticipated benefits of the Transaction
to Unified and its subsidiaries, which provide distribution, fund accounting,
shareholder servicing, and administrative services to the Trust and the Fund. In
evaluating the terms of the proposed agreement, the Trustees noted that, other
than the dates of execution, effectiveness and termination, the terms of the
proposed agreement are identical to the terms of the existing agreement.
Based upon the Trustees' review and the evaluation of the information presented
to them, and in consideration of all factors deemed relevant to them, the
Trustees unanimously determined that the proposed agreement is fair, reasonable
and in the best interests of the Trust, the Fund, and its Shareholders.
ACCORDINGLY THE BOARD UNANIMOUSLY APPROVED THE PROPOSED SUB-ADVISORY AGREEMENT
AND VOTED TO RECOMMEND THAT ALL OF THE FUND SHAREHOLDERS VOTE TO APPROVE THE
PROPOSED SUB-ADVISORY AGREEMENT.
THE PROPOSED SUB-ADVISORY AGREEMENT
If shareholders of the Fund approve the proposed sub-advisory agreement, the
proposed agreement will become effective immediately after approval. The
proposed agreement will remain in effect, unless earlier terminated, for an
initial term expiring two years from the date of its execution. It will then
continue in effect from year to year thereafter, if such continuance is approved
at least annually by (a) a majority of the outstanding voting securities of the
Fund or by vote of the Trust's Board of Trustees, cast in person at a meeting
called for the purpose of voting on such approval, and (b) by vote of a majority
of the Trustees who are not parties to the agreement or "interested persons" (as
defined in the 1940 Act) of any party to the agreement, cast in person at a
meeting called for the purpose of voting on such approval. The purpose of
entering into the proposed agreement is to enable the current Sub-Adviser to the
Fund to continue to serve in that capacity after the termination of the existing
agreement by virtue of the assignment of the existing agreement that would
result from the consummation of the Transaction. OTHER THAN ITS EFFECTIVE AND
TERMINATION DATES, THE TERMS AND PROVISIONS OF THE PROPOSED AGREEMENT ARE THE
SAME AS THOSE OF THE EXISTING AGREEMENT, WHICH ARE SUMMARIZED BELOW. THE FORM OF
THE PROPOSED AGREEMENT IS ATTACHED AS AN EXHIBIT TO THIS PROXY STATEMENT.
THE EXISTING SUB-ADVISORY AGREEMENT
The existing sub-advisory agreement between Vintage Advisers, Inc. and Health
Financial, Inc. was approved on November 21, 1996 by the Trustees, including a
majority of the Independent Trustees. On January 15, 1997, the shareholders off
the Fund unanimously approved the existing agreement. The continuation of the
existing agreement until February 24, 1998 was unanimously approved by the
Trustees at a meeting of the Trustees held on February 24, 1997, called for the
purpose of approving the existing Advisory and Sub-Advisory agreements.
The existing agreement may be terminated by the Adviser or the Trust at any
time, without the payment of any penalty, by the Adviser with the consent of the
Trust's Board of Trustees, by the Trust's Board of Trustees, or by vote of a
majority of the outstanding voting securities (as defined in the 1940 Act) of
the Fund, in any such case on 30 days' written notice to the Sub-Adviser, or by
the Sub-Adviser at any time, without the payment of any penalty, on 90 days'
written notice to the Adviser.
The agreement provides that the Sub-Adviser is obligated to manage the
investment operations of the Fund and the composition of the portfolio of
securities and investments belonging to the Fund, including the purchase,
retention and disposition of securities, in accordance with the Fund's
investment objective, policies and restrictions as stated in the Trust's current
Prospectus and Statement of Additional Information. The Sub-Adviser is obligated
to determine the securities to be purchased or sold by the Fund and as agent for
the Trust effects portfolio transactions. The Sub-Adviser must, in the
performance of its duties and obligations under the agreement, act in conformity
with the Trust's Declaration of Trust, its By-Laws and its Prospectus and with
the instructions and directions of the Trust's Board of Trustees and the Adviser
and will conform to and comply with the requirements of the 1940 Act and all
other applicable federal and state laws and regulations.
In placing orders with broker and/or dealers, the Sub-Adviser is directed at all
times to seek best price and execution for purchases and sales on behalf of the
Fund, taking into account such factors as price (including the applicable
brokerage commission or dealer spread), the execution capability, financial
responsibility and responsiveness of the broker or dealer and the brokerage and
research services provided by the broker or dealer. Subject to such conditions
as may be imposed by the Trust's Board of Trustees, the Sub-Adviser may pay
commissions to brokers and/or dealers that are higher than might be charged by
another qualified broker to obtain brokerage and/or research services considered
by the Sub-Adviser to be useful or desirable in the performance of the
Sub-Adviser's duties under the agreement. The Sub-Adviser may do so if it
determines in good faith that the amount of the commission is reasonable in
relation to the value of the brokerage and research services provided by the
executing broker or dealer. The Board periodically reviews any commissions paid
by the Fund to determine if the commissions paid over representative periods of
time were reasonable in relation to the benefits to the Fund. Subject to such
conditions as may be imposed by the Adviser or the Board of Trustees and the
provisions of the 1940 Act and other applicable law, nothing in the agreement
prohibits the Sub-Adviser from selecting brokers and/or dealers who are
"affiliated persons" of the Sub-Adviser, the Adviser, or the Trust.
Under the agreement, the Trust, the Adviser, and the Sub-Adviser acknowledge
that all rights to the name "First Lexington" belong to the Sub-Adviser, and
that the Trust is being granted a limited license to use such words in its Fund
name or in any class name. In the event the Sub-Adviser ceases to be the
Sub-Adviser to the Fund, the Trust's right to the use of the name "First
Lexington" will automatically cease on the ninetieth day following the
termination of the agreement. The right to the name may also be withdrawn by the
Sub-Adviser during the term of the agreement upon ninety days' written notice by
the Sub-Adviser to the Trust. Nothing contained in the agreement impairs or
diminishes in any respect Sub-Adviser's right to use the name "First Lexington"
in the name of, or in connection with, any other business enterprises with which
Sub-Adviser is or may become associated. There is no charge to the Trust for the
right to use the name.
The agreement states that the Sub-Adviser shall not be liable for any error of
judgment or mistake of law or for any loss suffered by the Fund in connection
with the matters to which the agreement relates except a loss resulting from a
breach of fiduciary duty with respect to the receipt of compensation for
services or a loss resulting from willful misfeasance, bad faith or gross
negligence on its part in the performance of its duties or from reckless
disregard by it of its obligations and duties under the agreement.
As compensation for its services, the Sub-Adviser, pursuant to the existing
agreement, receives a fee from the Adviser (not the Fund) as set forth below
based on the average net assets of the Fund:
0.40% of net assets up to $250 million;
0.35% of the next $250 million of net assets;
0.30% of net assets in excess of $500 million
The above fees are computed daily and paid monthly. From inception of the Fund
(March 13, 1997) to April 30, 1997, the Sub-Adviser earned $137 in sub-advisory
fees under the agreement. In no case are fees under the agreement paid by the
Fund or its shareholders.
During the fiscal year ended September 30, 1996, the Adviser earned $105 in
advisory fees under the Advisory agreement. The Advisor waived this fee in its
entirety. During the period from October 1, 1996 to April 30, 1997, the Fund
paid the Adviser $228 in advisory fees.
There have been no brokerage commissions paid by the Fund to affiliated brokers.
OTHER INFORMATION
HEALTH FINANCIAL, INC. The Sub-Adviser, a registered investment adviser, is a
Kentucky corporation with its offices at 3320 Tates Creek Road, Lexington,
Kentucky, 40502. Dr. Gregory W. Kasten is its shole shareholder, Director, and
Officer. The company provides private, individualized portfolio management for
individuals and institutions, primarily physicians and private pension plans,
and also serves as investment adviser to the First Lexington Trust Company. The
Sub-Adviser presently provides investment counsel for approximately $300,000,000
of assets under management.
OTHER BUSINESS
The management of the Trust has no business to bring before the Meeting other
than the matters described above. Should any other business be presented at the
Meeting, it is the intention of the persons named in the accompanying proxy to
vote on such matters in accordance with their best judgment.
SHAREHOLDER PROPOSALS
The Trust does not hold annual meetings of Shareholders. Shareholders wishing to
submit proposals for inclusion in a proxy statement and form of proxy for a
subsequent Shareholders' meeting should send their written proposals to the
Secretary of the Trust, 429 North Pennsylvania Street, Indianapolis, Indiana,
46204. The Trust has not received any Shareholder proposals to be presented at
this Meeting.
By Order of the Board of Trustees,
/s/ Carol J. Highsmith
Carol J. Highsmith
Secretary
Indianapolis, Indiana
May 14, 1997
<PAGE>
THE VINTAGE FUNDS
PROXY FOR SPECIAL MEETING OF SHAREHOLDERS
OF THE FIRST LEXINGTON BALANCED FUND
TO BE HELD MAY 29, 1997
The undersigned shareholder of the First Lexington Balanced Fund (the "Fund"), a
portfolio of The Vintage Funds (the "Trust"), does hereby appoint Carol J.
Highsmith and Linda A. Lawson, and each of them, as attorneys-in-fact and
proxies of the undersigned, each with the full power of substitution, to attend
the Special Meeting of Shareholders of the Fund to be held on May 29, 1997, at
429 North Pennsylvania Street, Indianapolis, Indiana 46204 at 10:00 a.m., and at
all adjournments thereof, and to vote the shares held in the name of the
undersigned on the record date for said meeting, for the Proposal specified
below. Said attorneys-in-fact shall vote in accordance with their best judgment
as to any other matter.
THIS PROXY IS SOLICITED BY THE BOARD OF TRUSTEES OF THE TRUST. THE BOARD OF
TRUSTEES UNANIMOUSLY RECOMMENDS A VOTE "FOR" THE PROPOSAL LISTED BELOW. THE
SHARES REPRESENTED HEREBY WILL BE VOTED AS INDICATED BELOW, OR FOR IF NO CHOICE
IS INDICATED.
TO VOTE, PLEASE DATE AND SIGN BELOW AND RETURN PROMPTLY IN THE ENCLOSED
ENVELOPE.
Note: Please sign exactly as your name(s) appear(s) hereon. Joint owners should
each sign personally. When signing as custodian, attorney, executor,
administrator, trustee, etc., please give your full title as such. If the
account is registered in the name of a corporation, partnership or other entity,
a duly authorized individual must sign on its behalf and give his or her title.
|X| PLEASE MARK VOTES AS IN THIS EXAMPLE
The Proposal:
I. To approve a new sub-advisory agreement FOR AGAINST ABSTAIN
between Vintage Advisers, Inc. (the "Adviser") | | | | | |
and Health Financial, Inc. (the "Sub-Adviser")
II. To consider and act upon such other matters as may properly come before
the Meeting or any adjournment thereof.
Please be sure to sign and date this Proxy.
____Shareholder sign here___________________________ Date ___________________
______Co-owner sign here __________________________
THE VINTAGE FUNDS
INVESTMENT SUB-ADVISORY AGREEMENT
INVESTMENT SUB-ADVISORY AGREEMENT, dated as of _______________,
1997, between Vintage Advisers, Inc., a Delaware corporation (the "Adviser"),
and Health Financial, Inc., a Kentucky corporation (the "Sub-Adviser").
W I T N E S E T H:
WHEREAS, the Adviser acts as the investment adviser to The Vintage Funds, an
Indiana business trust (the "Trust"), pursuant to an Investment Advisory
Agreement, dated as of June 2, 1995 as amended through the date hereof (the
"Advisory Agreement");
WHEREAS, the Trust is an open-end management investment company registered
under the Investment Company Act of 1940, as amended (the "1940 Act"); and
WHEREAS, the Adviser desires to retain the Sub-Adviser to render investment
sub-advisory services to the funds of the Trust set forth on the Exhibits to
this Agreement (the "Funds"), and the Sub-Adviser is willing to render such
services.
NOW, THEREFORE, in consideration of the premises and mutual agreements
hereinafter set forth, the parties hereto agree as follows:
Section 1. Appointment and Status of Sub-Adviser. The Adviser hereby
appoints the Sub-Adviser to act as its agent to provide investment advisory
service to each class of shares of beneficial interest of the Trust set forth on
an executed Exhibit to this Agreement (each a "Fund"), for the period and on the
terms set forth in this Agreement. The Sub-Adviser accepts such appointment and
agrees to render the services herein set forth, for the compensation herein
provided. Although the Sub-Adviser shall be an agent of the Adviser, the
Sub-Adviser shall for all purposes herein be deemed to be an independent
contractor of the Adviser and the Trust and shall, unless otherwise expressly
provided herein or authorized by the Adviser or the Board of Trustees of the
Trust from time to time, have no authority to act for or represent the Adviser
or the Trust in any way or otherwise be deemed an agent of the Trust.
Section 2. Sub-Adviser's Duties. Subject to the general supervision of
the Trust's Board of Trustees (the "Board") and the Adviser, the Sub-Adviser
shall, employing its discretion, manage the investment operations of each Fund
and the composition of the portfolio of securities and investments (including
cash) belonging to each Fund, including the purchase, retention and disposition
thereof and the execution of agreements relating thereto, in accordance with the
Fund's investment objective, policies and restrictions as stated in the
Trust's then-current Prospectus and Statement of Additional Information
(together, the "Prospectus") and subject to the following understandings:
(a) The Sub-Adviser shall furnish a continuous investment program for each
Fund and determine from time to time what investments or securities will be
purchased, retained or sold by each Fund and what portion of the assets
belonging to each Fund will be invested or held uninvested as cash;
(b) The Sub-Adviser shall use its best judgment in the performance of its
duties under this Agreement;
(c) The Sub-Adviser, in the performance of its duties and obligations under
this Agreement, shall act in conformity with the Trust's Declaration of Trust,
its By-Laws and its Prospectus and with the instructions and directions of the
Trust's Board of Trustees and the Adviser and will conform to and comply with
the requirements of the 1940 Act and all other applicable federal and state laws
and regulations;
(d) The Sub-Adviser shall determine the securities to be purchased or sold
by each Fund and as agent for the Trust will effect portfolio transactions
pursuant to its determinations either directly with the issuer or with any
broker and/or dealer in such securities, subject to Section 3 below;
(e) The Sub-Adviser shall maintain books and records with respect to the
securities transactions of each Fund and shall render to the Adviser and the
Trust's Board of Trustees such periodic and special reports as the Adviser or
the Board may request; and
(f) The Sub-Adviser shall provide the Trust's custodian with such
information relating to the Trust as may be required under the terms of the
then-current custody agreement between the Trust and the custodian.
Section 3. Brokerage. In placing orders with brokers and/or dealers,
the Sub- Adviser is directed at all times to seek best price and execution for
purchases and sales on behalf of each Fund, taking into account such factors as
price (including the applicable brokerage commission or dealer spread), the
execution capability, financial responsibility and responsiveness of the broker
or dealer and the brokerage and research services provided by the broker or
dealer. Sub-Adviser should generally seek favorable prices and commission
rates that are reasonable in relation to the benefits received. Subject to such
conditions as may be imposed by the Trust's Board of Trustees, the Sub-Adviser
may pay commissions to brokers and/or dealers that are higher than might be
charged by another qualified broker to obtain brokerage and/or research services
(as those terms are defined in Section 28(e) of the Securities Exchange Act of
1934, as amended (the "Exchange Act")) considered by the Sub- Adviser to be
useful or desirable in the performance of the Sub-Adviser's duties hereunder, if
the Sub-Adviser determines in good faith that the amount of the commission is
reasonable in relation to the value of the brokerage and research services
provided by the executing broker or dealer. The determination may be viewed in
terms of either a particular transaction or Sub-Adviser's overall
responsibilities with respect to the Funds and to accounts over which
Sub-Adviser exercises investment discretion. The Funds and the Sub-Adviser
understands and acknowledge that, although the information may be useful to the
Funds and the Sub-Adviser, it is not possible to place a dollar value on such
information. The Board shall periodically review the commissions paid by the
Funds to determine if the commissions paid over representative periods of time
were reasonable in relation to the benefits to the Funds.
Consistent with the Rules of Fair Practice of the National Association of
Securities Dealers, Inc., and subject to seeking best qualitative execution as
described above, the Sub- Adviser may give consideration to sales of shares of
the Funds as a factor in the selection of brokers and dealers to execute Fund
portfolio transactions.
Subject to the foregoing and to such conditions as may be imposed by the
Adviser or the Trust's Board of Trustees and the provisions of the 1940 Act,
Exchange Act, and other applicable law, nothing herein shall prohibit the
Sub-Adviser from selecting brokers and/or dealers who are "affiliated persons"
of the Sub-Adviser, the Adviser or the Trust. On occasions when the Sub-Adviser
deems the purchase or sale of a security to be in the best interest of the Trust
as well as other customers, the Sub-Adviser may, to the extent permitted by
applicable laws and regulations, but shall not be obligated to, aggregate the
securities to be so sold or purchased in order to obtain the best execution and
lower brokerage commissions, if any. In such event, allocation of the
securities so purchased or sold, as well as the expenses incurred in the
transaction, will be made by the Sub-Adviser in the manner it considers to be
the most equitable and consistent with its fiduciary obligations to the Trust
and, if applicable, to such other customers.
If any occasion should arise in which the Sub-Adviser gives any advice to
clients of Sub-Adviser concerning the shares of any Fund, Sub-Adviser will act
solely as investment counsel for such client and not in any way on behalf of the
Fund. Sub-Adviser's services to the Funds pursuant to this Agreement are not to
be deemed to be exclusive and it is understood that Sub-Adviser may render
investment advice, management and other services to others, including other
registered investment companies.
Section 4. Books and Records. The Sub-Adviser shall keep the Trust's
books and records required to be maintained by it pursuant to Section 2(e) of
this Agreement. The Sub-Adviser agrees that all records which it maintains for
the Trust are the property of the Trust and it will promptly surrender any of
such records to the Trust upon the Trust's request. The Sub-Adviser further
agrees to preserve for the periods prescribed by Rule 31a-2 under the 1940 Act
any such records as are required to be maintained by the Sub-Adviser with
respect to the Trust by Rule 31a-1 under the 1940 Act.
Section 5. Expenses of the Sub-Adviser. During the term of this
Agreement, the Sub-Adviser will pay all expenses (including without limitation
the compensation of all trustees or officers of the Trust who are "interested
persons" of the Sub-Adviser, as defined in the 1940 Act) incurred by it in
connection with its activities under this Agreement other than the cost of
securities and investments purchased for each Fund (including taxes and
brokerage commissions, if any).
Section 6. Compensation of the Sub-Adviser. For the services provided
and the expenses borne pursuant to this Agreement, the Adviser will pay to the
Sub-Adviser as full compensation therefor a fee with respect to each Fund at an
annual rate as set forth on the Exhibit executed with respect to such Fund and
attached hereto. This fee for each month will be paid to the Sub-Adviser during
the succeeding month. For purposes of determining the fee payable hereunder,
the net asset value of each Fund shall be calculated in the manner specified in
the Trust's Prospectus .
Section 7. Use of Name. The Trust, Adviser and Sub-Adviser acknowledge
that all rights to the name "First Lexington" belong to Sub-Adviser, and that
the Trust is being granted a limited license to use such words in its Fund name
or in any class name. Inthe event Sub-Adviser ceases to be a Sub-Adviser, the
Trust's right to the use of the name "First Lexington" shall automatically cease
on the ninetieth day following the termination of this Agreement. The right to
the name may also be withdrawn by Sub-Adviser during the term of this Agreement
upon ninety (90) days' written notice by Sub-Adviser to the Trust. Nothing
contained herein shall impair or diminish in any respect, Sub-Adviser's right to
use the name "First Lexington" in the name of, or in connection with, any other
business enterprises with which Sub-Adviser is or may become associated. There
is no charge to the Trust for the right to use these names.
Section 8. Liability of the Sub-Adviser. Neither Sub-Adviser nor its
shareholders, officers, directors, employees, agents, control persons or
affiliates of any thereof, shall be liable for any error of judgment or mistake
of law or for any loss suffered by any Fund in connection with the matters to
which this Agreement relates except a loss resulting from a breach of fiduciary
duty with respect to the receipt of compensation for services (in which case any
award of damages shall be limited to the period and the amount set forth in
Section 36(b)(3) of the 1940 Act) or a loss resulting from willful misfeasance,
bad faith or gross negligence on its part in the performance of its duties or
from reckless disregard by it of its obligations and duties under this
Agreement.
Any person, even though also a director, officer, employee, shareholder or
agent of Sub-Adviser, who may be or become an officer, director, trustee,
employee or agent of the Trust, shall be deemed, when rendering services to the
Trust or acting on any business of the Trust (other than services or business in
connection with Sub-Adviser's duties hereunder), to be rendering such services
to or acting solely for the Trust and not as a director, officer, employee,
shareholder or agent of Sub-Adviser, or one under Sub-Adviser's control or
direction, even though paid by Sub-Adviser.
Section 9. Duration and Termination. The term of this Agreement
shall begin on the date of this Agreement for each Fund that has executed an
Exhibit hereto on the date of this Agreement and shall continue in effect with
respect to each such Fund (and any subsequent Funds added pursuant to an Exhibit
executed during the initial two-year term of this Agreement) for a period of two
years from the date of its execution. This Agreement shall continue in effect
from year to year thereafter, subject to termination as hereinafter provided, if
such continuance is approved at least annually by (a) a majority of the
outstanding voting securities (as defined in the 1940 Act) of such Fund or by
vote of the Trust's Board of Trustees, cast in person at a meeting called for
the purpose of voting on such approval, and (b) by vote of a majority of the
Trustees of the Trust who are not parties to this Agreement or "interested
persons" (as defined in the 1940 Act) of any party to this Agreement, cast in
person at a meeting called for the purpose of voting on such approval. If
a Fund is added pursuant to an Exhibit executed after the date of this Agreement
as described above, this Agreement shall become effective with respect to that
Fund upon execution of the applicable Exhibit and shall continue in effect until
the next annual continuance of this Agreement and from year to year thereafter,
subject to approval as described above. This Agreement may be terminated by the
Adviser or the Trust with respect to any Fund at any time, without the payment
of any penalty, by the Adviser with the consent of the Trust's Board of
Trustees, by the Trust's Board of Trustees, or by vote of a majority of the
outstanding voting securities (as defined in the 1940 Act) of such Fund, in any
such case on 30 days' written notice to the Sub-Adviser, or by the Sub-Adviser
at any time, without the payment of any penalty, on 90 days' written notice to
the Adviser. This Agreement will automatically and immediately terminate in the
event of its assignment (as defined in the 1940 Act).
Section 10. Amendment. This Agreement may be amended by mutual
consent of the Adviser, the Sub-Adviser and the Trust, but the consent of the
Trust must be approved (a) by vote of a majority of those Trustees of the
Trustee who are not parties to this Agreement or "interested persons" (as
defined in the 1940 Act) of any such party, cast in person at a meeting called
for the purpose of voting on such amendment, and (b) if required under then
current interpretations of the 1940 Act by the Securities and Exchange
Commission, by vote of a majority of the outstanding voting securities (as
defined in the 1940 Act) of each Fund affected by such amendment.
Section 11. Notices. Notices of any kind to be given in writing and
shall be duly given if mailed or delivered to the Sub-Adviser at Health
Financial, Inc., 3320 Tates Creek Road, Lexington, Kentucky 40502, Attention:
President, and to the Adviser at Vintage Advisers, Inc., 429 N. Pennsylvania
Street, Indianapolis, IN 46204, or at such other address or to such other
individual as shall be specified by the party to be given notice.
Section 12. Governing Law. (a) This Agreement shall be governed by and
construed in accordance with the laws of the State of Indiana, without regard to
the conflicts of laws principles thereof, and (b) any question of interpretation
of any term or provision of this Agreement having a counterpart in or otherwise
derived from a term or provision of the 1940 Act, shall be resolved by reference
to such term or provision of the 1940 Act and to interpretation thereof, if any,
by the United States courts or in the absence of any controlling decision of any
such court, by rules, regulations or orders of the Securities and Exchange
Commission issued pursuant to said 1940 Act. In addition, where the effect of a
requirement of the Act, reflected in any provision of this Agreement is revised
by rule, regulation or order of the Securities and Exchange Commission, such
provision shall be deemed to incorporate the effect of such rule, regulation or
order.
Section 13. Severability. In the event any provision of this Agreement
is determined to be void or unenforceable, such determination shall not affect
the remainder of this Agreement, which shall continue to be in force.
Section 14. Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
Section 15. Binding Effect. Each of the undersigned expressly
warrants and represents that he has the full power and authority to sign this
Agreement on behalf of the party indicated, and that his signature will operate
to bind the party indicated to the foregoing terms.
Section 16. Captions. The captions in this Agreement are included for
convenience of reference only and in no way define or delimit any of the
provisions hereto for otherwise affect their construction or effect.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their officers designated below on the date and year first above
written.
VINTAGE ADVISERS, INC. FIRST LEXINGTON BALANCED FUND, INC.
By __________________ By _________________________
Name: Name:
Title: Title:
<PAGE>
EXHIBIT A
to
Investment Sub-Advisory Agreement
The First Lexington Balanced Fund
For all services rendered by the Sub-Adviser hereunder with respect to the
above- named Funds, the Adviser shall pay to the Sub-Adviser, and the
Sub-Adviser agrees to accept as full compensation for all services rendered
hereunder, an annual fee with respect to each Fund equal to the percentage of
the average daily net assets of the Fund set forth opposite its name below:
Name of Fund Fee Percentage
The First Lexington Balanced 0.40% of net assets up to $250 million;
Fund 0.35% of the next $250 million of net
assets;
0.30% of net assets in excess of $500
million
IN WITNESS WHEREOF, the parties hereto have caused this Exhibit to be
executed by their officers designated below as of the date set forth below.
VINTAGE ADVISERS, INC. FIRST LEXINGTON BALANCED FUND, INC.
By ___________________ By ___________________________
Name: Name:
Title: Title:
