SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
FORM N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 / /
Pre-Effective Amendment No. / /
Post-Effective Amendment No. 9 /X/
and/or
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT / /
OF 1940
Amendment No. 11 /X/
(Check appropriate box or boxes.)
The Unified Funds - File Nos. 33-89078 and 811-8968
- ---------------------------------------------------
(Exact Name of Registrant as Specified in Charter
431 North Pennsylvania Street, Indianapolis, Indiana 46204
- ------------------------------------------------------------------
(Address of Principal Executive Offices) (Zip Code)
Registrant's Telephone Number, including Area Code: (800) 862-7283
--------------
Timothy L. Ashburn, Unified Investment Advisers, Inc., 431 North
Pennsylvania Street, Indianapolis, Indiana 46204
- --------------------------------------------------
(Name and Address of Agent for Service)
With copy to:
Donald S. Mendelsohn, Brown, Cummins & Brown Co., L.P.A.
3500 Carew Tower, Cincinnati, Ohio 45202
Release Date: February 2, 1998
It is proposed that this filing will become effective:
/X/ immediately upon filing pursuant to paragraph (b) / / on
______________pursuant to paragraph (b) / / 60 days after filing pursuant to
paragraph (a)(1) / / on (date) pursuant to paragraph (a)(1) / / 75 days after
filing pursuant to paragraph (a)(2) / / on (date) pursuant to paragraph (a)(2)
of Rule 485.
If appropriate, check the following box:
/ / this post-effective amendment designates a new effective date for a
previously filed post-effective amendment.
Title of Securities Being Registered__________________
Omit from the facing sheet reference to the other Act if the Registration
Statement or amendment is filed under only one of the Acts. Include the
"Approximate Date of Proposed Public Offering" and "Title of Securities Being
Registered" only where securities are being registered under the Securities Act
of 1933.
<PAGE>
CROSS-REFERENCE SHEET
Explanatory Note: The Registrant is a "series" company. This Registration
Statement relates to all four series of the Registrant's shares: Starwood
Strategic Fund, Laidlaw Fund (formerly Fiduciary Value Fund), First Lexington
Balanced Fund (formerly Municipal Fixed Income Fund), and Taxable Money Market
Fund. All of the Funds' shares are offered pursuant to a combined Prospectus
(the "Combined Prospectus") and a combined Statement of Additional Information.
In addition, the shares of The Taxable Money Market Fund are offered pursuant to
a separate Prospectus for that Fund only (the "Money Market Fund Prospectus").
Both the Combined Prospectus and the Money Market Fund Prospectus are included
in Part A of this Post-Effective Amendment. The Prospectus headings below refer
to the headings in the Combined Prospectus; the Prospectus headings in the Money
Market Fund Prospectus are substantially identical.
PART A. INFORMATION REQUIRED IN THE PROSPECTUS.
Item in Form N-1A Prospectus Heading
Item 1. Cover Page . . . . . . . . . . . . . Cover Page
Item 2. Synopsis . . . . . . . . .. . . . . Summary of Fund Expenses;
Highlights
Item 3. Condensed Financial Information . . Financial Highlights;
Performance Information
Item 4. General Description of Registrant . Highlights; Investment
Objectives and Policies;
Investment Policies and
Techniques and Risk Factors;
General Information
Item 5. Management of the Fund . . . . . . . The Trust and Its
Management
Item 5A. Management's Discussion of Fund . . .Not Applicable
Performance
Item 6. Capital Stock and Other Securities . General Information;
Dividends and Distributions;
Taxes
Item 7. Purchase of Securities Being. . . . How to Buy Shares;
Offered Shareholder Services; Net
Asset Value; The Trust and
its Management
Item 8. Redemption or Repurchase . . . . . . How to Redeem Shares;
Exchange Privilege
Item 9. Pending Legal Proceedings . . . . . .Not Applicable
Item 13. Investment Objectives and Policies. .Investment Objectives and
Policies; Investment Policies
and Techniques and Risk
Factors
Item 16. Investment Advisory and Other
Services. . . . . . . . . . . . . .The Trust and Its Management
PART B. INFORMATION REQUIRED IN THE STATEMENT OF ADDITIONAL INFORMATION.
Item in Form N-1A Statement Heading
Item 10. Cover Page . . . . . . . . . . . . . . . . Cover Page
Item 11. Table of Contents . . . . . . . . . . . . . .Table of Contents
Item 12. General Information and History . . . . . . .None
Item 13. Investment Objectives and Policies . . . . . Types of Investments
and Investment
Techniques;
Investment Limitations
Item 14. Management of the Fund . . . . . . . . . . . Management of the Trust
Item 15. Control Persons and Principal Holders
of Securities . . . . . . . . .. . . . . . . . . . . Management of the Trust
Item 16. Investment Advisory and Other Services . . . Investment Advisory
Arrangements;
Distribution
Arrangements;
Administrative
Services Arrangements;
Custodian, Transfer
Agent, Fund Accounting
Agent, and
Independent Accountants
Item 17. Brokerage Allocation and Other Practices . . Brokerage
Transactions
Item 18. Capital Stock and Other Securities . . . . . Information About the
Trust
Item 19. Purchase, Redemption and Pricing of
Securities Being Offered . . . . . . . . . . .Purchase and
Redemption;
Determination of Net
Asset Value
Item 20. Tax Status . . . . . . . . . . . . . . . . . Tax Status
Item 21. Underwriters . . . . . . . . . . . . . . . Not Applicable
Item 22. Calculation of Performance Data . . . . . . .Performance
Information
Item 23. Financial Statements . . . . . . . . . . . Financial Statements
PART C. OTHER INFORMATION
Information required to be included in Part C is set forth under the
appropriate Item, so numbered, in Part C of this Registration Statement.
<PAGE>
THE UNIFIED FUNDS
Prospectus dated February 1, 1998
The Unified Funds is a family of mutual funds with four separate
portfolios:
The Starwood Strategic Fund seeks growth of capital. The Fund pursues
this objective by investing principally in a diversified portfolio of equity
securities of seasoned, financially strong growth companies.
The Laidlaw Fund seeks growth of capital, current income and growth of
income. The Fund pursues this objective by investing principally in a
diversified portfolio of common stocks, preferred stocks and securities
convertible into common stock of socially conscious companies that offer the
prospect for growth of earnings while paying current dividends.
The First Lexington Balanced Fund seeks long term growth of capital and
current income. The Fund pursues this objective by investing principally in a
diversified portfolio of other no-load mutual funds selected from six major
financial asset classes.
The Taxable Money Market Fund seeks a high level of current income
consistent with the preservation of capital and maintenance of liquidity. The
Fund pursues this objective by investing principally in a diversified portfolio
of short-term money market instruments.
The shares offered hereby are not deposits or obligations of any
financial institution and are not insured by the Federal Deposit Insurance
Corporation, the Federal Reserve Board or any other government agency.
Investment in the shares involves investment risks including the possible loss
of principal. There can be no assurance that the Taxable Money Market Fund will
be able to maintain a stable net asset value of $1.00 per share.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
This Prospectus contains information that you should know before
investing in any of the Funds and it should be retained for future reference. A
Statement of Additional Information, dated February 1, 1998 has been filed with
the Securities and Exchange Commission (the "SEC") and is incorporated herein by
reference. The Statement of Additional Information is available upon request and
without charge by calling 1-800-408-4682. The SEC maintains a Web Site
(http://www.sec.gov) that contains the Statement of Additional Information,
material incorporated by reference, and other information regarding registrants
that file electronically with the SEC.
<PAGE>
TABLE OF CONTENTS
SUMMARY OF FUND EXPENSES.........................
FINANCIAL HIGHLIGHTS
HIGHLIGHTS.......................................
INVESTMENT OBJECTIVES AND POLICIES...............
The Starwood Strategic Fund.................
The Laidlaw Fund............................
The First Lexington Balanced Fund...........
The Taxable Money Market Fund...............
INVESTMENT POLICIES AND TECHNIQUES
AND RISK FACTORS.............................
NET ASSET VALUE
HOW TO BUY SHARES................................
Minimum Investment..........................
Opening an Account..........................
By Mail................................
By Wire................................
Subsequent Investments......................
By Automated Clearing House (ACH)......
By Telephone Order ...................
DIVIDENDS AND DISTRIBUTIONS......................
Timing of Certain Money Market Fund Transactions
EXCHANGE PRIVILEGE
By Telephone................................
By Mail or Telecopy.........................
HOW TO REDEEM SHARES.............................
By Mail.....................................
Signatures.............................
By Telephone................................
Receiving Payment...........................
Check Writing (Money Market Fund Only)......
Minimum Account Balance.....................
SHAREHOLDER SERVICES
THE TRUST AND ITS MANAGEMENT.....................
Investment Advisory Arrangements............
Investment Adviser.....................
Sub-Adviser............................
Portfolio Managers' Backgrounds.............
Advisory Fees...............................
Distribution Services.......................
Distributor............................
Distribution Plan......................
Administration of the Trust.................
Administrator..........................
Shareholder Services Plan..............
Other Arrangements.....................
Transfer Agent, Fund Accounting Agent
and Custodian
Portfolio Transactions......................
THE "V.O.I.C.E.SM" PROGRAM.......................
TAXES............................................
Backup Withholding..........................
PERFORMANCE INFORMATION..........................
GENERAL INFORMATION..............................
No person has been authorized to give any information or to make any
representations other than those contained in this Prospectus and in the Fund's
official sales literature in connection with the offer of the Fund's shares,
and, if given or made, such other information or representation must not be
relied upon as having been authorized by the Fund. This Prospectus does not
constitute an offer in any State in which, or to any person to whom, such
offering may not lawfully be made.
<PAGE>
SUMMARY OF FUND EXPENSES
Shareholders should be aware that the Funds are no-load funds and,
accordingly, a shareholder does not pay any sales charge or commission upon
purchase or redemption of shares of the Funds. Unlike most other mutual funds,
the Funds do not pay directly for transfer agency, pricing, custodial, auditing
or legal services, nor do the Funds pay directly any general administrative or
other significant operating expenses (except for 12b-1 and shareholder servicing
fees). The Adviser pays all of the operating expenses of the Fund except 12b-1
and shareholder servicing fees, brokerage, taxes, interest and extraordinary
expenses.
Shareholder Transaction Expenses
Maximum Sales Load Imposed on Purchases
(as a percentage of offering price)..............................None
Maximum Sales Load Imposed on Reinvested Dividends
(as a percentage of offering price)..............................None
Deferred Sales Load (as a percentage of original
purchase price or redemption proceeds, as applicable) ...........None
Redemption Fee (as a percentage of amount redeemed if applicable)..........None
Exchange Fee...............................................................None
Annual Fund Operating Expenses
(As a percentage of average net assets)
<TABLE>
<S> <C> <C> <C> <C> <C>
Management 12b-1 Servicing Other Total
Fund Name Fees Fees Fees Expenses Expenses
Starwood Strategic 1.25% 0.10% 0.15% None 1.50%
Laidlaw 1.25% 0.10% 0.15% None 1.50%
First Lexington Balanced 0.75% 0.10% 0.15% None 1.00%
Taxable Money Market 0.90% 0.10% 0.15% None 1.15%
</TABLE>
Initial investments of less than the required minimum by persons exempt from
the minimum investment requirement are subject to a one-time $4.50
administrative charge. See "How to Buy Shares." Wire-transferred redemptions are
subject to a $15.00 charge and certain checking transactions may be subject to
additional charges. See "How to Redeem Shares."
The purpose of this table is to assist the investor in understanding the
various costs and expenses that a shareholder of a Fund will bear, either
directly or indirectly. The expense information has been restated to reflect
current fees. Long-term shareholders may pay more than the economic equivalent
of the maximum front-end sales charge permitted under the rules of the National
Association of Securities Dealers, Inc. For a further description of the various
costs and expenses incurred by the Funds, see "The Trust and its Management."
Example:
An investor would pay the following expenses on a $1,000 investment,
assuming (1) 5% annual return and (2) redemption at the end of each time period:
Fund Name 1 Year 3 Years 5 Years 10 Years
- --------- ------ ------- ------- --------
Starwood Strategic Fund $15 $47 $82 $179
Laidlaw Fund 15 47 82 179
First Lexington Balanced Fund 10 32 55 122
Taxable Money Market Fund 12 37 64 140
The amounts listed in the example should not be considered as representative
of future expenses and actual expenses may be greater or less than those
indicated. Moreover, while the example assumes a 5% annual return, a Fund's
performance will vary and may result in an actual return greater or less than
5%.
The First Lexington Balanced Fund intends to invest principally in other
mutual funds. The other Funds may invest incidentally in other mutual funds. To
the extent that a Fund invests in other mutual funds, the Fund will indirectly
bear its proportionate share of any fees and expenses paid by such other funds,
in addition to the fees and expenses payable directly by the Fund. Therefore, to
the extent that the Fund invests in other mutual funds, the Fund will incur
higher expenses, many of which may be duplicative. These expenses will be borne
by the Fund, and are not included in the expenses reflected in the table or
example above. See "Investment Objectives and Policies -- Investments in Other
Mutual Funds."
FINANCIAL HIGHLIGHTS
The financial highlights of the Funds' operations for the periods presented
are derived from the audited financial statements of The Unified Funds (formerly
The Vintage Funds) and have been audited by McCurdy and Associates CPA's, Inc.,
independent public accountants. The financial highlights of the Laidlaw Fund
include the financial highlights of the Laidlaw Covenant Fund for periods prior
to December 20, 1996, when it was acquired by the Laidlaw Fund. This information
should be read in conjunction with the financial statements and notes thereto
included in the Annual Report to Shareholders. The Annual Report is available
without charge by calling the Funds at 1-800-408-4682.
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>
<S> <C> <C> <C> <C> <C> <C>
First Municipal Municipal
Starwood Starwood Starwood Lexington Fixed Fixed
Strategic Strategic Strategic Balanced Income Income
Fund Fund Fund Fund Fund Fund
---- ---- ---- ---- ---- ----
1997(a) 1996(b) 1995(c) 1997(a)(i) 1996(b) 1995(c)
PER SHARE OPERATING
PERFORMANCE:
Net asset value, beginning .... $ 7.69 $10.00 $10.00 $ 22.60(j) $200.00(j) $200.00(j)
Income from investment
Operations:
Net investment income .... (0.26) (3.23) 0.00 (12.54) (177.40) 0.00
Net realized and unrealized
gain (loss) on investments 2.00 0.92 0.00 0.99 0.00 0.00
---- ---- ---- ---- ---- ----
Total from investment income 1.74 (2.31) 0.00 11.05 (177.40) 0.00
Less distributions:
Dividends from realized gains (0.13) 0.00 0.00 (0.01) 0.00 0.00
Dividends from net
investment income ........ 0.00 0.00 0.00 (0.03) 0.00 0.00
---- ---- ---- ---- ---- ----
Total from distributions ...... (0.13) 0.00 0.00 (0.04) 0.00 0.00
---- ---- ---- ---- ---- ----
Net asset value at end of period $ 9.30 $ 7.69 $10.00 $11.01 $22.60 $200.00
==== ==== ===== ===== ===== ======
TOTAL ANNUALIZED
RETURN (%) (f)............ 20.94 (3.97)(e) (d) 18.54(g) (d) (d)
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period 1,136,986 483,458 2,705 3,064,511 8,988 100
Ratio of expenses to
average net assets .. 4.26% 15.99% 0.00% 3.06% 181.72% 0.00%
Ratio of expenses (after
reimbursement) to
average net assets .. 2.54% 15.25% 0.00% 2.35% 181.01% 0.00%
Ratio of net investment
Income to average net assets(2.97)% (14.42)% 0.00% 0.30% (181.58)% 0.00%
Ratio of net investment
income (after reimbursement)
to average net assets (1.25)% (13.68)% 0.00% 1.01% (180.86)% 0.00%
Portfolio turnover 76.09% 169.83% 0.00% 6.60% 0.00% 0.00%
Average commission rate paid $ 0.0600 $ 0.0600 $ 0.0000 $ 0.0000 $ 0.0000 $ ---
<FN>
(a) For the Year-Ended September 30, 1997.
(b) For the Year-Ended September 30,1996.
(c) For the Period June 2, 1995 (commencement of operations) to September 30, 1995.
(d) Investment in accordance with objective had not commenced at this time.
(e) For the period April 4,1996 (commencement of investment in accordance with objective) to September 30, 1996.
(f) Total return would have been lower had certain expenses not been reduced during the periods shown (see Note 3).
(g) For the period March 13, 1997 (commencement of investment in accordance with objective) to September 30, 1997.
(h) For the period February 1, 1997 to September 30, 1997; expense ratio was 1.00%.
(i) The name of the fund was changed during the period (see Note 1).
(j) Beginning balance adjusted for reverse stock split (see Note 1)
</FN>
</TABLE>
<PAGE>
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>
<S> <C> <C> <C> <C> <C> <C>
Laidlaw Laidlaw Laidlaw Laidlaw Laidlaw
Laidlaw Covenant Covenant Covenant Covenant Covenant
Fund Fund Fund Fund Fund Fund
---- ---- ---- ---- ---- ----
1997(a)(b) 1996(c)(g) 1995(d)(g) 1994(d)(g) 1993(d)(g) 1992(e)(g)
PER SHARE OPERATING............
PERFORMANCE:
Net asset value, beginning .... $ 1.77 $1.78 $1.54 $1.54 $1.49 $1.42
Income from investment
Operations:
Net investment income .... 0.00 0.00 0.00 0.00 0.00 0.01
Net realized and unrealized
gain (loss) on investments 0.68 0.08 0.45 0.04 0.06 0.12
----- ----- ----- ---- ---- ----
Total from investment income . 0.68 0.08 0.45 0.04 0.06 0.13
Less distributions:
Dividends from net
investment income ... 0.00 0.00 0.00 0.00 0.00 (0.01)
Net realized gains........ (0.49) (0.09) (0.21) (0.04) (0.01) (0.05)
----- ------ ----- ------ ------ ------
Total from distributions ...... (0.49) (0.09) (0.21) (0.04) (0.01) (0.06)
------- ------- ------- ------ ------ ------
Net asset value at end of period $ 1.96 $ 1.77 $1.78 $1.54 $1.54 $1.49
===== ===== ==== ===== ===== =====
TOTAL ANNUALIZED
RETURN (%) (f)............ 40.40 6.19 29.59 2.86 4.06 11.20
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period 2,920,342 3,313,000 4,497,000 4,381,000 4,996,000 4,284,000
Ratio of expenses to
average net assets .. 3.25% 4.81% 4.57% 5.20% 5.80% 7.09%
Ratio of expenses (after
reimbursement) to
average net assets .. 1.89% 2.44% 2.50% 2.50% 2.50% 2.50%
Ratio of net investment
Income to average net assets(1.35)% (2.09)% (2.10)% (2.57)% (3.16)% (3.90)%
Ratio of net investment
income (after reimbursement)
to average net assets 0.01% (0.28)% 0.02% 0.11% 0.16% 0.69%
Portfolio turnover ....... 58.44% 5.92% 61.00% 73.00% 107.00% 128.00%
Average commission rate paid $ 0.0618 $ 0.0100 $ --- $ --- $ --- $ ---
<FN>
(a) For the Year-Ended September 30, 1997.
(b) The name of the fund was changed during the period (see Note 1).
(c) For the Nine Months Ended September 30, 1996.
(d) For the Year-Ended.
(e) For the Period March 3, 1992 (commencement of operations) to December 31, 1992.
(f) Total return would have been lower had certain expenses not been reduced during the periods shown (see Note 3).
(g) Per share data adjusted for share conversion 8.41 to 1.
</FN>
</TABLE>
<PAGE>
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>
<S> <C> <C> <C>
Taxable Taxable Taxable
Money Money Money
Market Market Market
Fund Fund Fund
---- ---- ----
1997(a) 1996(b) 1995(c)
PER SHARE OPERATING
PERFORMANCE:
Net asset value, beginning .... $ 1.00 $ 1.00 $ 1.00
Income from investment
Operations:
Net investment income .... 0.03 0.04 0.002
Net realized and unrealized
gain (loss) on investments 0.00 0.00 0.000
----- ----- ------
Total from investment income . 0.03 0.04 0.002
Less Distribution :
Dividends from net
investment income ... (0.03) (0.04) (0.002)
------- ------ -------
Total from distributions ...... (0.03) (0.04) (0.002)
------- ------ -------
Net asset value at end of period $ 1.00 $ 1.00 $ 1.00
===== ===== =====
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period 50,619,710 50,544,511 1,230,385
Ratio of expenses to
average net assets .. 1.44% 1.25% 12.82%
Ratio of expenses (after
reimbursement) to
average net assets .. 1.12% 1.16% 0.47%
Ratio of net investment
Income to average net assets 3.86% 4.12% (11.94%)
Ratio of net investment
income (after reimbursement)
to average net assets 4.19% 4.21% 0.65%
Portfolio turnover ....... 0.00% 0.00% 0.00%
Average commission rate paid $ ---- $ ---- $ ----
<FN>
(a) For the Year-Ended September 30, 1997.
(b) For the Year-Ended September 30,1996.
(c) For the Period June 2, 1995 (commencement of operations) to September 30, 1995.
</FN>
</TABLE>
<PAGE>
HIGHLIGHTS
Investment Objectives and Investment Risks
The Unified Funds (the "Trust") is a family of mutual funds with four
separate portfolios (the "Funds"), each having its own investment objective and
policies. An investment in the Funds involves investment risks including the
possible loss of principal. See "Investment Objectives and Policies" and
"Investment Policies and Techniques and Risk Factors."
Liquidity
Each Fund continuously offers and redeems its shares at the Fund's
prevailing net asset value per share. See "How to Buy Shares," "How to Redeem
Shares" and "Net Asset Value." The Taxable Money Market Fund intends to maintain
a constant net asset value of $1.00 per share, although there is no assurance
that it will be able to do so.
No Sales or Redemption Charges
There are no commissions, fees or charges by the Trust for the purchase or
redemption of shares. Initial investments below the stated minimum,
wire-transferred redemptions and certain checking transactions may be subject to
additional charges. See "Summary of Fund Expenses," "How to Buy Shares" and "How
to Redeem Shares."
Minimum Investment
A minimum investment of $1,000 is required to open an account, except an IRA
account for which the minimum is $500. Former shareholders of the Unified family
of funds, or the Quest funds which acquired the Unified family of funds, may
open an account with less than the required minimum. The minimum investment may
also be waived for certain other types of retirement accounts and direct deposit
accounts. Subsequent investments must be at least $100, or $50 for an IRA. See
"How to Buy Shares."
Investment Adviser
Unified Investment Advisers, Inc. is the Funds' investment adviser (the
"Adviser"). The Adviser has engaged Health Financial, Inc. to serve as
sub-adviser to the First Lexington Balanced Fund (the "Sub-Adviser"). Health
Financial, Inc. manages the investment portfolio of the Fund, subject to the
Adviser's overall management. The Adviser directly manages the investment
portfolios of the other Funds. See "The Trust and its Management."
Retirement Plans and Other Shareholder Services
The Trust offers retirement plans including a prototype Profit Sharing
Plan, Money Purchase Pension Plan, Salary Savings Plan - 401(k) and IRA
accounts, as well as a number of special shareholder services. For information
regarding these plans or services, call the Transfer Agent at 1-800-408-4682.
See "Shareholder Services."
V.O.I.C.E.sm (Vision for Ongoing Investment in Charity and Education)sm
The Adviser administers The Unified Funds University and Philanthropic
Program pursuant to which the Adviser will make contributions to the general
scholarship funds or endowments of certain accredited colleges and universities
designated by qualified shareholders of any of the Funds. For information
regarding this Program, call the Adviser at 1-800-408-4682. See "The
V.O.I.C.E.SM Program" below.
INVESTMENT OBJECTIVES AND POLICIES
The Trust offers four separate Funds, each with its own investment objective
and policies. The Funds' investment objectives cannot be changed without
shareholder approval. While there is no assurance that any Fund will achieve its
investment objective, it endeavors to do so by following the investment policies
described in this Prospectus. Unless otherwise indicated, the Funds' investment
policies may be changed by the Trust's Board of Trustees without shareholder
approval. Shareholders will be notified before any material change in investment
policies becomes effective.
The following sections are concise descriptions of the Funds and their
investment objectives and policies. More information about certain types of
investments, investment techniques and risk factors is provided below under
"Investment Policies and Techniques and Risk Factors" and in the Statement of
Additional Information.
The Starwood Strategic Fund
The Starwood Strategic Fund seeks growth of capital. The Fund pursues this
objective by investing principally in a diversified portfolio of equity
securities of seasoned, financially strong growth companies. Although current
income is an incidental consideration, many of the Fund's investments should
provide regular dividends which may grow over time.
Under normal circumstances, the Fund's assets will consist primarily of
common stocks, preferred stocks, and preferred stocks or corporate debt
securities convertible into common stocks, that are issued by companies which,
in the opinion of the Adviser, have the following characteristics:
Above-average growth rates over an extended period with prospects for
maintaining greater than average rates of growth in earnings, cash flow or
assets in the future;
A strong financial position with high credit standings and profitability;
Important business franchises, leading products or dominant marketing and
distribution systems;
At least five years' operating history, annual revenues of at least $200
million and market capitalization of at least $300 million; and
Attractive share prices relative to potential growth in earnings, cash flow
or assets.
The Fund's investments are selected by the Adviser, which uses a combination
of research techniques to identify companies having these characteristics.
Fundamental research is used to evaluate various aspects of corporate
performance, with a particular emphasis on consistency of results, long-term
growth prospects and financial strength. Quantitative valuation methods are used
to determine which growth companies offer superior values at a given point in
time. When assessing growth rates, the Adviser generally considers a company to
be "above average" if its growth in earnings, cash flow or assets exceed the
average growth rates of companies included in the S&P 500 index, as published by
Standard & Poor's Corporation ("S&P"). When assessing financial quality, the
Adviser evaluates five criteria: the strength of the company's balance sheet;
the volatility of the company's earnings over time; the company's accounting
practices; ranking (if any, at the time of purchase) given the company's common
stock by the S&P; and the vulnerability of earnings to changes in external
factors, such as the general economy, the competitive environment, governmental
action and technological change.
The Fund may also invest to a lesser extent in equity securities that do not
meet the criteria listed above, as well as in investment grade corporate debt
obligations. The types of equity securities in which the Fund may invest are
described below under "Investment Policies and Techniques and Risk Factors --
Corporate Equity Securities." The corporate debt obligations in which the Fund
may invest are described below under "Investment Policies and Techniques and
Risk Factors -- Corporate Debt Securities." Also, the Fund may invest
temporarily in money market instruments of the types described below under "The
Taxable Money Market Fund." It is expected that the Fund will invest principally
in securities of U.S. companies. However, the Fund's investment policies permit
the Fund to invest in foreign securities under normal circumstances.
The Fund allocates its investments among different industries and companies,
and changes its portfolio securities based on long-term investment
considerations as opposed to short-term trading. However, the Fund may take
advantage of opportunities for short-term profits as they arise.
The Laidlaw Fund
The Laidlaw Fund seeks growth of capital, current income and growth of
income. The Fund pursues this objective by investing principally in a
diversified portfolio of common stocks, preferred stocks and preferred stocks or
corporate debt securities convertible into common stocks of companies which
offer the prospect of growth of earnings while paying current dividends. The
Fund may also purchase securities that do not pay current dividends but which
offer prospects for growth of capital and future income. Over time, the Adviser
believes continued growth of earnings will to lead to higher dividends and
enhancement of capital value.
In evaluating investments for the Fund, the Adviser seeks to identify
companies that have demonstrated their ability to grow and whose markets, profit
margins and rates of return on investments indicate the likelihood of future
growth, in addition to a likelihood for future dividend growth. It is the
Adviser's intention to follow a socially responsible investment policy. For this
purpose, the Adviser will retain, at no expense to the Fund, Laidlaw Holdings
Asset Management, Inc. to maintain a list of approximately 200 preferred
companies selected from the 1,000 largest corporations based on corporate
behavior related to customer, community, employee, competitor, supplier and
shareholder relations, environmental and social issues. While the Adviser
intends to select securities for the Fund from the list, it is not obligated to
do so, and will only do so to the extent the Adviser believes such selection is
consistent with the Fund's investment strategy described above. The Fund
allocates its investments among different industries and companies, and changes
its portfolio securities based on long-term investment considerations and not
for short-term trading purposes. However, the Fund may take advantage of
opportunities for short-term profits as they arise.
Under normal circumstances, of the Fund's assets will consist primarily of
equity securities of the types described below under "Investment Policies and
Techniques and Risk Factors -- Corporate Equity Securities." However, the Fund
also may invest to a lesser extent in investment grade corporate debt
obligations of the types described below under "Investment Policies and
Techniques and Risk Factors -- Corporate Equity Securities." Also, the Fund may
invest temporarily in money market instruments of the types described below
under "The Taxable Money Market Fund."
The First Lexington Balanced Fund
The First Lexington Balanced Fund seeks long term growth of capital and
current income. The Fund pursues this objective by investing primarily in a
diversified portfolio of other no-load mutual funds that invest in one of the
following six financial asset classes: (1) S&P 500 common stocks, (2) smaller
capitalized stocks as represented by the Wilshire 4500 Index, (3) international
stocks as represented by the Morgan Stanley EAFE Index, (4) real estate
investment trusts as represented by the Morgan Stanley REIT Index, (5) cash
equivalents, and (6) long-term investment rated corporate and government bonds
as represented by the Sheerson-Lehman Government/Corporate Bond Index. A mutual
fund in which the Fund invests will not necessarily own all of the securities
comprising the relevant index, although it is expected that it will own a
sufficient number of the securities to be representative of the index.
The Fund's sub-adviser, Health Financial, Inc. (the "Sub-Adviser") utilizes
an "active asset allocation" strategy based on the modern portfolio theory that
93% of investment return is attributable to the "asset class" of an investment,
not the individual security. In other words, if a stock performed well, it is
probably because the asset class of the stock performed well, not because the
investor was successful at choosing a particular stock. The Fund's Sub-Adviser
allocates the Fund's portfolio among the asset classes and actively monitors and
adjusts the allocation. The sub-adviser seeks to enhance return by increasing
the Fund's participation in asset classes that are, in the Sub-Adviser's
opinion, undervalued. The Sub-Adviser believes that diversification across these
asset classes should reduce risk because, in most years, at least one or more
asset classes have a positive return.
Under normal circumstances, the Fund's assets will consist primarily of
other no load mutual funds, and at least 25% of the Fund's assets will consist
of fixed income securities, including repurchase agreements and mutual funds
that invest in fixed income securities. For a description of other factors
related to the Fund's investment in other mutual funds, see "Investment in Other
Mutual Funds" below.
The Taxable Money Market Fund
The Taxable Money Market Fund seeks a high level of current income
consistent with the preservation of capital and maintenance of liquidity. The
Fund pursues this objective by investing principally in a diversified portfolio
of high quality, short-term money market instruments. The Fund intends to
maintain a constant net asset value of $1.00 per share, although there is no
assurance that it will be able to do so.
The Fund's investments principally include:
direct obligations of the U.S. Treasury, such as U.S. Treasury bills, notes
and bonds; notes, bonds, and discount notes of U.S. government agencies or
instrumentalities;
short-term corporate debt instruments (including commercial paper and
variable rate demand notes) which mature in 270 days or less;
domestic and foreign issues of corporate debt obligations having floating
or fixed rates of interest and having remaining maturities of less than 13
months;
bank instruments described below under "Bank Instruments";
other short-term investments of a type which the Adviser determines
presents minimal credit risks and which are of "high quality" as determined
by a nationally recognized statistical rating organization, or, in the case
of an instrument that is not rated, of comparable quality in the judgment
of the Adviser; and
repurchase agreements collateralized by eligible investments.
The Fund may invest only in securities that, at the time of purchase, have a
remaining maturity of less than 13 months and that are "eligible securities" as
defined by regulations of the Securities and Exchange Commission. "Eligible
securities" generally include securities rated in one of the two highest
categories by at least two nationally recognized statistical rating
organizations (or by one such rating agency if only one has issued a rating) or,
if unrated, are determined to be of comparable quality by the Adviser pursuant
to policies approved by the Board of Trustees. If the Fund purchases an eligible
security and its rating is subsequently downgraded so that the security is no
longer of high quality, the Fund will consider and take appropriate action,
which may include divesting the security. The Fund will maintain a
dollar-weighted average portfolio maturity of 90 days or less.
INVESTMENT POLICIES AND TECHNIQUES AND RISK FACTORS
This section describes certain types of investments, investment techniques
and investment policies and limitations of the Funds. This section also includes
information about the risk factors associated with the investments and
investment techniques. The risks of each Fund depend upon many factors. For the
Funds that invest principally in equity securities, these factors include, among
others, the Fund's investment objective, the types of equity securities held and
the financial position of the issuers of these securities. For the Funds that
invest principally in debt securities, these factors include, among others, the
Fund's investment objective, the average duration of the Fund's portfolio,
credit quality of the securities held and interest rate movements. For further
information, see the Statement of Additional Information.
Corporate Equity Securities
The Starwood Strategic Fund, the Laidlaw Fund, and the First Lexington
Balanced Fund may invest in equity securities, including common stocks,
preferred stocks, convertible securities, warrants and rights issued by
corporations in any industry (industrial, financial or utility) which may be
denominated in U.S. dollars or in foreign currencies. Equity securities
fluctuate in value, often based on factors unrelated to the performance of the
issuer of the securities and fluctuations can be pronounced. Small
capitalization issues and emerging growth company securities, in particular, may
be subject to wider price fluctuations than the stock market as measured by
popular indices.
Preferred Stocks. Preferred stock, unlike common stock, offers a stated
dividend rate payable from the issuer's earnings. Preferred stock dividends may
be cumulative or non-cumulative, participating, or auction rate. If interest
rates rise, the fixed dividend on preferred stocks may be less attractive,
causing the price of preferred stocks to decline. Preferred stock may have
mandatory sinking fund provisions, as well as call/redemption provisions prior
to maturity, a negative feature when interest rates decline.
Convertible Securities. A convertible security is a bond, debenture, note,
preferred stock or other security that may be converted into or exchanged for a
prescribed amount of common stock of the same or a different issuer within a
particular period of time at a specified price or formula. A convertible
security entitles the holder to receive interest generally paid or accrued on
debt or the dividend paid on preferred stock until the convertible security
matures or is redeemed, converted or exchanged. Convertible securities have
several unique investment characteristics, such as (a) higher yields than common
stocks, but lower yields than comparable nonconvertible securities, (b) a lesser
degree of fluctuation in value than the underlying stock since they have fixed
income characteristics, and (c) the potential for capital appreciation if the
market price of the underlying common stock increases. A convertible security
might be subject to redemption at the option of the issuer at a price
established in the convertible security's governing instrument. If a convertible
security held by the Fund is called for redemption, the Fund may be required to
permit the issuer to redeem the security, convert it into the underlying common
stock or sell it to a third party.
Warrants and Rights. Each Fund named above may invest up to 5% of its total
assets in warrants and rights, including but not limited to warrants or rights
(i) acquired as part of a unit or attached to other securities purchased by the
Fund, or (ii) acquired as part of a distribution from the issuer.
Fixed Rate Corporate Debt Obligations
All of the Funds may invest to varying extents in fixed rate corporate debt
obligations. Also, all of the Funds may invest in short-term fixed rate
corporate debt obligations that qualify as money market instruments. Fixed rate
securities tend to exhibit more price volatility during times of rising or
falling interest rates than securities with floating rates of interest. This is
because floating rate securities, as described below, behave like short-term
instruments in that the rate of interest they pay is subject to periodic
adjustments based on a designated interest rate index. Fixed rate securities pay
a fixed rate of interest and are more sensitive to fluctuating interest rates.
In periods of rising interest rates the value of a fixed rate security is likely
to fall. Fixed rate securities with short-term characteristics are not subject
to the same price volatility as fixed rate securities without such
characteristics. Therefore, they behave more like floating rate securities with
respect to price volatility.
Many corporate debt obligations permit the issuers to call the security and
thereby redeem their obligations earlier than the stated maturity dates. Issuers
are more likely to call bonds during periods of declining interest rates. In
these cases, if a Fund owns a bond which is called, the Fund will receive its
return of principal earlier than expected and would likely be required to
reinvest the proceeds at lower interest rates, thus reducing income to the Fund.
Other Corporate Debt Obligations
The Funds may also invest to varying extents in other corporate debt
obligations, including those described below. Also, all of the Funds may invest
in short-term corporate debt obligations that qualify as money market
instruments.
Floating Rate Obligations. Floating rate securities are generally offered at
an initial interest rate which is at or above prevailing market rates. The
interest rate paid on these securities is then reset periodically (commonly
every 90 days) to an increment over some predetermined interest rate index.
Commonly utilized indices include the three-month Treasury bill rate, the
180-day Treasury bill rate, the one-month or three-month London Interbank
Offered Rate (LIBOR), the prime rate of a bank, the commercial paper rates, or
the longer-term rates on U.S. Treasury securities.
Variable Rate Demand Notes. Variable rate demand notes are long-term
corporate debt instruments that have variable or floating interest rates and
provide the Fund with the right to tender the security for repurchase at its
stated principal amount plus accrued interest. Such securities typically bear
interest at a rate that is intended to cause the securities to trade at par. The
interest rate may float or be adjusted at regular intervals (ranging from daily
to annually), and is normally based on an interest index or a stated percentage
of a prime rate or another published rate. Many variable rate demand notes allow
the Fund to demand the repurchase of the security on not more than seven days
prior notice. Other notes only permit the Fund to tender the security at the
time of each interest rate adjustment or at other fixed intervals.
Investments in Other Mutual Funds
All of the Funds may invest to some extent in the securities of other
open-end registered investment companies ("mutual funds"). The First Lexington
Balanced Fund intends to invest principally in other mutual funds, and may
invest up to 25% of its assets in any one mutual fund, and up to 100% of its
assets in other mutual funds in general. Each of the other Funds intends to
invest incidentally in other mutual funds and may not invest more than 5% of its
total assets in any one mutual fund, or more than 10% of its total assets in
mutual funds in general. The Funds, considered together, may not invest in more
than 3% of the total outstanding voting securities of any one mutual fund. The
foregoing limitations are not applicable to investment company securities
acquired as part of a merger, consolidation, reorganization or other
acquisition.
The Trust believes that investing in other mutual funds will provide the
Funds with opportunities to achieve greater diversification of portfolio
securities and investment techniques than the Funds could achieve by investing
in individual securities. The Funds will invest only in other mutual funds that
do not impose up-front sales loads or deferred sales loads or redemption fees.
However, the Fund may invest in Funds that have 12b-1 plans or shareholder
services plans which permit the funds to pay certain distribution and other
expenses from fund assets. To the extent that a Fund invests in other mutual
funds, the Fund will indirectly bear its proportionate share of any fees and
expenses paid by such funds in addition to the fees and expenses payable
directly by the Fund. Therefore, to the extent that a Fund invests in other
mutual funds, the Fund will incur higher expenses, many of which may be
duplicative. (For example, the First Lexington Balanced Fund pays the Adviser a
fee of 0.50% of its average net assets to manage its investment portfolio of
other mutual funds, each of which pays its own investment adviser a fee to
manage its own portfolio securities.) In addition, to the extent that a Fund
invests in other mutual funds, the Fund's shareholders may receive capital gains
distributions to a greater extent that if the shareholder owned the underlying
mutual funds directly.
Each Fund will invest only in other mutual funds that have an investment
objective similar to the Fund's, or that otherwise is a permitted investment
under the Fund's investment policies described herein. Nevertheless, the mutual
funds purchased by the Funds likely will have certain investment policies, and
use certain investment practices that are different from those of the Funds and
not described herein. These other policies and practices may subject the other
funds' assets to varying or greater degrees of risk. The Funds are independent
from any of the other mutual funds in which they invest and have little voice in
or control over the investment practices, policies or decisions of those funds.
If a Fund disagrees with those practices, policies or decisions, it may have no
choice other than to liquidate its investment in that fund, which can entail
further losses. However, a mutual fund is not required to redeem any of its
shares owned by another mutual fund in an amount exceeding 1% of the underlying
fund's shares during any period of less than 30 days. As a result, to the extent
that a Fund owns more than 1% of another mutual fund's shares, the Fund may not
be able to liquidate those shares in the event of adverse market conditions or
other considerations.
Also, the investment advisers of the mutual funds in which a Fund invests
may simultaneously pursue inconsistent or contradictory courses of action. For
example, one fund may be purchasing securities of the same issuer whose
securities are being sold by another fund, with the result that the Fund would
incur an indirect expense without any corresponding investment or economic
benefit.
Asset-Backed Securities
The Taxable Money Market Fund may invest in mortgage-related asset-backed
securities that are considered U.S. government securities. The other Funds may
invest in these and, to varying extents, in other asset-backed securities.
Asset-backed securities are created by the grouping of certain governmental,
government related and private loans, receivables and other lender assets into
pools. Interests in these pools are sold as individual securities. Payments from
the asset pools may be divided into several different tranches of debt
securities, with some tranches entitled to receive regular installments of
principal and interest, other tranches entitled to receive regular installments
of interest, with principal payable at maturity or upon specified call dates,
and other tranches only entitled to receive payments of principal and accrued
interest at maturity or upon specified call dates. Different tranches of
securities will bear different interest rates, which may be fixed or floating.
Because the loans held in the asset pool often may be prepaid without
penalty or premium, asset-backed securities can be subject to higher prepayment
risks than most other types of debt instruments. Prepayments may result in a
capital loss to the Fund to the extent that the prepaid mortgage securities were
purchased at a market premium over their stated amount. Conversely, the
prepayment of mortgage securities purchased at a market discount from their
stated principal amount will accelerate the recognition of interest income by
the Fund, which would be taxed as ordinary income when distributed to the
shareholders.
The credit characteristics of asset-backed securities also differ in a
number of respects from those of traditional debt securities. The credit quality
of most asset-backed securities depends primarily upon the credit quality of the
assets underlying such securities, how well the entity issuing the securities is
insulated from the credit risk of the originator or any other affiliated
entities, and the amount and quality of any credit enhancement to such
securities.
Foreign Securities
Each Fund may invest in foreign securities, including foreign securities not
publicly traded in the United States. The Taxable Money Market Fund may only
invest in foreign securities that are denominated in U.S. dollars. The
percentage of a Fund's assets that will be allocated to foreign securities will
vary depending on the relative yields of foreign and U.S. securities, the
economies of foreign countries, the condition of such countries' financial
markets, the interest rate climate of such countries and the relationship of
such countries' currency to the U.S. dollar. These factors are judged on the
basis of fundamental economic criteria (e.g., relative inflation levels and
trends, growth rate forecasts, balance of payments status, and economic
policies) as well as technical and political data.
Investments in foreign securities involve special risks that differ from
those associated with investments in domestic securities. The risks associated
with investments in foreign securities apply to securities issued by foreign
corporations and sovereign governments. These risks relate to political and
economic developments abroad, as well as those that result from the differences
between the regulation of domestic securities and issuers and foreign securities
and issuers. These risks may include, but are not limited to, expropriation and
nationalization, confiscatory taxation, reduced levels of government regulation
of securities markets, currency fluctuations and restrictions on, and costs
associated with, the exchange of currencies, withholding taxes on interest,
limitations on the use or transfer of assets, political or social instability
and adverse diplomatic developments. It may also be more difficult to enforce
contractual obligations or obtain court judgments abroad than would be the case
in the United States because of differences in the legal systems. If the issuer
of the debt or the governmental authorities that control the repayment of the
debt may be unable or unwilling to repay principal or interest when due in
accordance with the terms of such debt, the Fund may have limited legal recourse
in the event of a default. Moreover, individual foreign economies may differ
favorably or unfavorably from the domestic economy in such respects as growth of
gross national product, the rate of inflation, capital reinvestment, resource
self-sufficiency and balance of payments position.
Additional differences exist between investing in foreign and domestic
securities. Examples of such differences include: less publicly available
information about foreign issuers; credit risks associated with certain foreign
governments; the lack of uniform financial accounting standards applicable to
foreign issuers; less readily available market quotations on foreign issues; the
likelihood that securities of foreign issuers may be less liquid or more
volatile; generally higher foreign brokerage commissions; and unreliable mail
service between countries.
To the extent that debt securities purchased by a Fund are denominated in
currencies other than the U.S. dollar, changes in foreign currency exchange
rates will affect the Fund's net asset value; the value of interest earned;
gains and losses realized on the sale of securities; and net investment income
and capital gain, if any, to be distributed to shareholders by the Fund. If the
value of a foreign currency rises against the U.S. dollar, the value of the
Fund's assets denominated in that currency will increase; correspondingly, if
the value of a foreign currency declines against the U.S. dollar, the value of
the Fund's assets denominated in the currency will decrease.
Foreign Currency Transactions. The Funds (except the Taxable Money Market
Fund) may enter into foreign currency transactions to obtain the necessary
currencies to settle securities transactions. Currency transactions may be
conducted either on a spot or cash basis at prevailing rates or through forward
foreign currency exchange contracts.
The Funds may also enter into foreign currency transactions to protect Fund
assets against adverse changes in foreign currency exchange rates or exchange
control regulations. Such changes could unfavorably affect the value of Fund
assets which are denominated in foreign currencies, such as foreign securities
or funds deposited in foreign banks, as measured in U.S. dollars. Although
foreign currency transactions may be used by the Fund to protect against a
decline in the value of one or more currencies, such efforts may also limit any
potential gain that might result from a relative increase in the value of such
currencies and might, in certain cases, result in losses to the Fund.
U.S. Government Securities
All of the Funds may invest in U.S. government securities. These securities
are either issued or guaranteed by the U.S. government, its agencies or
instrumentalities. The government securities in which the Fund may invest are
backed in a variety of ways by the U.S. government or its agencies or
instrumentalities. Some of these securities, such as Government National
Mortgage Association ("GNMA") mortgage-backed securities, are backed by the full
faith and credit of the U.S. government. Other securities, such as obligations
of the Federal National Mortgage Association ("FNMA") or Federal Home Loan
Mortgage Corporation ("FHLMC"), are backed by the credit of the agency or
instrumentality issuing the obligations but not the full faith and credit of the
U.S. government. No assurances can be given that the U.S. government will
provide financial support to these other agencies or instrumentalities, because
it is not obligated to do so.
Bank Instruments
All of the Funds may invest in time deposits (including savings deposits and
certificates of deposit), deposit notes and bankers acceptances in commercial
banks or savings associations whose accounts are insured by the Federal Deposit
Insurance Corporation ("FDIC"), including certificates of deposit issued by and
other time deposits in foreign branches of FDIC insured financial institutions
or who have at least $100 million in capital. These instruments may also include
Eurodollar Certificates of Deposit ("ECDs"), Yankee Certificates of Deposit
("Yankee Cds") and Eurodollar Time Deposits ("ETDs"). The banks issuing these
instruments are not necessarily subject to the same regulatory requirements that
apply to domestic banks, such as reserve requirements, loan requirements, loan
limitations, examinations, accounting, auditing, and record keeping and the
public availability of information.
Repurchase Agreements
All of the Funds may invest in repurchase agreements related to eligible
securities. Repurchase agreements are arrangements in which banks,
broker/dealers, and other recognized financial institutions sell U.S. government
securities or other securities to the Fund and agree at the time of sale to
repurchase them at a mutually agreed upon time and price. Under the Investment
Company Act of 1940, a repurchase agreement is deemed to be a loan
collateralized by the underlying securities. To the extent that the original
seller does not repurchase the securities from the Fund, the Fund could receive
less than the repurchase price on any sale of such securities.
Selling Securities Short
The Starwood Strategic Fund may sell securities short. The Fund will effect
short sales when it is believed that the price of a particular security will
decline. A short sale involves the sale of a security which the Fund does not
own in the hope of purchasing the same security at a later date at a lower
price. To make delivery to the buyer, the Fund must borrow the security, and the
Fund is obligated to return the security to the lender, which is accomplished by
a later purchase of the security by the Fund.
When the Fund makes a short sale, it must deposit with the lender or
maintain in a segregated account cash or government securities to collateralize
its obligation to replace the borrowed securities which have been sold. The Fund
may sell securities short only to the extent that would cause the amounts on
deposit or segregated to equal 25% of the value of its total assets.
The Fund will incur a loss as a result of a short sale if the price of the
security increases between the date of the short sale and the date on which the
Fund purchases the security to replace the borrowed security. The Fund will
realize a gain if the security declines in price between those dates. The amount
of any gain will be decreased and the amount of any loss increased by any
premium or interest the Fund may be required to pay in connection with a short
sale.
When-Issued and Delayed Delivery Transactions
The Funds may purchase securities on a when-issued or delayed delivery
basis. These transactions are arrangements in which a Fund purchases securities
with payment and delivery scheduled for a future time. Prior to such delivery,
no income on the securities accrues to the Fund. In when-issued and delayed
delivery transactions, the Fund relies on the seller to complete the
transaction. The seller's failure to complete the transaction may cause the Fund
to miss a price or yield considered to be advantageous.
Demand Features
The Funds that invest in debt securities may acquire securities that are
subject to puts and standby commitments ("demand features") to purchase the
securities at their principal amount (usually with accrued interest) within a
fixed period following a demand by the Fund. The demand feature may be issued by
the issuer of the underlying securities, a dealer in the securities or by
another third party, and may not be transferred separately from the underlying
security. The Fund uses these arrangements to provide the Fund with liquidity
and not to protect against changes in the market value of the underlying
securities. The bankruptcy, receivership or default by the issuer of the demand
feature, or a default on the underlying security or other event that terminates
the demand feature before its exercise, will adversely affect the liquidity of
the underlying security. Demand features that are exercisable even after a
payment default on the underlying security are treated as a form of credit
enhancement.
Options Transactions
Each of the Funds (except the Taxable Money Market Fund) may attempt to
hedge all or a portion of its portfolio by buying put options on portfolio
securities. These Funds also may also write covered call options on portfolio
securities to attempt to increase current income. Each Fund may write covered
call options and secured put options on up to 25% of its net assets and may
purchase put and call options provided that no more than 5% of the fair market
value of its net assets may be invested in premiums on such options.
A call option gives the purchaser the right to buy, and the writer the
obligation to sell, the underlying currency, security or other asset at the
exercise price during the option period. A put option gives the purchaser the
right to sell, and the writer the obligation to buy, the underlying currency,
security or other asset at the exercise price during the option period. The
writer of a covered call owns assets that are acceptable for escrow and the
writer of a secured put invests an amount not less than the exercise price in
eligible assets to the extent that it is obligated as a writer. If a call
written by a Fund is exercised, the Fund forgoes any possible profit from an
increase in the market price of the underlying asset over the exercise price
plus the premium received. In writing puts, there is a risk that the Fund may be
required to take delivery of the underlying asset at a disadvantageous price.
Over-the-counter options ("OTC options") differ from exchange traded options
in several respects. They are transacted directly with dealers and not with a
clearing corporation, and there is a risk of nonperformance by the dealer as a
result of the insolvency of such dealer or otherwise, in which event the fund
may experience material losses. However, in writing options the premium is paid
in advance by the dealer, OTC options, which may not be continuously liquid, are
available for a greater variety of assets, and a wider range of expiration dates
and exercise prices, than are exchange traded options. The Fund intends to treat
OTC options as illiquid securities.
Temporary Investments
All of the Funds may invest temporarily in cash or short-term money market
instruments during times of unusual market conditions for defensive purposes,
without limitation. These temporary investments may include the instruments
described above under "The Taxable Money Market Fund". The Funds may also invest
in these instruments temporarily to maintain liquidity in anticipation of
favorable investment opportunities.
Borrowing
The Starwood Strategic Fund is permitted to borrow money up to one-third of
the value of total assets (including the amount borrowed), and pledge up to 15%
of the value of those assets to secure such borrowings, for the purpose of
investment. The other Funds may borrow to that extent for temporary or emergency
purposes. Borrowing for the purpose of investment is a speculative technique
that increases both investment opportunity and Starwood's ability to achieve
greater diversification of the Fund's portfolio. However, it also increases
investment risk. Because the Fund's investments will fluctuate in value, whereas
the interest obligations on borrowed funds may be fixed, during times of
borrowing, the Fund's net asset value may tend to increase more when its
investments increase in value, and decrease more when its investments decrease
in value. In addition, interest costs on borrowings may fluctuate with changing
market interest rates and may partially offset or exceed the return earned on
the borrowed funds. Also, during times of borrowing under adverse market
conditions, the Fund might have to sell portfolio securities to meet interest or
principal payments at a time when fundamental investment considerations would
not favor such sales.
General
In order to generate additional income, each Fund may lend portfolio
securities on a short-term or a long-term basis up to 5% of the value of its
total assets to broker/dealers, banks, or other institutional borrowers of
securities. Each Fund may invest up to 5% of its assets in reverse repurchase
agreements, restricted securities and demand notes and credit facilities.
Portfolio Turnover
Each Fund may trade or dispose of portfolio securities as considered
necessary to meet its investment objective. Each of the Funds intends to make
investments based on long-term investment considerations as opposed to
short-term trading. However, each Fund may take advantage of opportunities for
short-term profits as they arise. Higher portfolio turnover results in increased
Fund expenses, including brokerage commissions, dealer mark-ups and other
transaction costs on the sale of securities and on the reinvestment in other
securities, and results in the acceleration of realization of capital gains or
losses for tax purposes. The Funds cannot accurately predict their portfolio
turnover rates, but it is anticipated that each Fund's annual turnover rate
generally will not exceed 100% (excluding the money market Fund, which must
invest in short-term instruments). Each Fund intends to comply with the
short-term trading restrictions of Subchapter M of the Internal Revenue Code of
1986, as amended, which could inhibit a rapid change in a Fund's investments.
NET ASSET VALUE
Net asset value per share (the price at which shares are purchased and
redeemed) is determined as of the close of regular trading on the New York Stock
Exchange (currently 4:00 p.m., Eastern time), on each business day the Exchange
is open for business. Net asset value per share of the Taxable Money Market Fund
is also determined as of 12:00 noon (Eastern time) on such days. Each Fund's net
asset value per share is determined by dividing the sum of the market value of
all securities and all other assets of the applicable Fund, less liabilities of
the Fund, by the number of the Fund's shares outstanding.
The net asset value per share will fluctuate for each Fund other than the
Taxable Money Market Fund. The portfolio securities of the Taxable Money Market
Fund are valued utilizing the amortized cost method of valuation, which normally
approximates market value, and which is intended to result in a constant net
asset value of $1.00 per share. Although every effort is made to maintain the
net asset value of the Taxable Money Market Fund at $1.00 per share, there can
be no assurance that this constant net asset value will be maintained at all
times. For example, in the event of rapid and sharp increases in current
interest rates, a national credit crisis, or a default by one or more of the
issuers of the Fund's portfolio securities, then it is possible that the Fund's
net asset value could decline below $1.00 per share.
HOW TO BUY SHARES
Shares of the Funds are sold each day the New York Stock Exchange is open at
the applicable Fund's net asset value per share next calculated after receipt of
the purchase order in proper form. The Trust reserves the right to reject any
purchase request. Investors may be charged a fee if they effect transactions
through a broker or agent.
Minimum Investment
The minimum initial investment in each Fund is $l,000, except an IRA for
which the minimum initial investment is $500. Former shareholders of the Unified
family of funds, or the Quest funds which acquired the Unified family of funds,
may open an account with less than the required minimum. However, they are
subject to a one-time $4.50 administrative charge to establish the account. The
minimum investment may also be waived for certain other types of retirement
accounts and direct deposit accounts. Subsequent investments may be made in
amounts of at least $100, except for an IRA, which must be in amounts of at
least $50. Minimum investments for certain other types of retirement accounts
and direct deposit accounts may be different. See "Shareholder Services."
Opening An Account
An account may be opened by mail or bank wire, as follows:
By Mail. To open a new account by mail:
Complete and sign the account application. (Be sure to specify the name of
the Fund(s) in which an investment is made.)
Enclose a check payable to each Fund specified in the application.
Mail the application and the check to the Fund's Transfer Agent, Unified
Fund Services, Inc. (the "Transfer Agent") at the following address: The
Unified Funds, c/o Unified Fund Services, Inc., P.O. Box 6110,
Indianapolis, Indiana 46206-6110.
By Wire. To open a new account (or to open an additional account in a
different Fund) by wire, call the Transfer Agent at 1-800-408-4682. A
representative will assist you to obtain an account application by telecopy (or
mail), which must be completed, signed and telecopied (or mailed) to the
Transfer Agent before payment by wire may be made. Then, request your financial
institution to wire immediately available funds to:
Star Bank, N.A.
ABA # 04-20000-13
Attention: Name of Fund (see below)
Number of Fund (see below)
Credit Account # ________ (see below)
The applicable Fund and account numbers are as follows:
Fund Name Fund Number Account Number
Starwood Strategic Fund 20 483616744
Laidlaw Fund 23 483616769
First Lexington Balanced Fund 26 483616793
Taxable Money Market Fund 30 483616819
The order is considered received when Star Bank, N.A., the Trust's custodian
(the "Custodian"), receives payment by wire. However, the completed account
application must be mailed to the Transfer Agent on the same day the wire
payment is made. See "Opening an Account -- By Mail" above. The Trust will not
permit redemptions until the Transfer Agent receives the application in proper
form. Financial institutions may charge a fee for wire transfers.
Subsequent Investments
Once an account is open, additional purchases of Fund shares may be made at
any time in minimum amounts of $100, except for an IRA, which must be in amounts
of at least $50. Additional purchases may be made:
By sending a check, made payable to the applicable Fund, to The Unified
Funds, [Name of Fund], P.O. Box 640689, Cincinnati, Ohio 45264-0689. The
Trust will charge a $15 fee against a shareholder's account for any check
returned for insufficient funds. The shareholder also will be responsible
for any losses suffered by the Trust as a result.
By wire to the applicable Fund account as described above under "Opening an
Account -- By Wire". Shareholders should call the Transfer Agent at
1-800-408-4682 before wiring funds.
By electronic funds transfer from a financial institution through the
Automated Clearing House ("ACH"), as described below.
By telephone order, as described below.
By Automated Clearing House (ACH). Once an account is open, shares may be
purchased or redeemed through ACH in minimum amounts of $100. ACH is the
electronic transfer of funds directly between an account with a financial
institution and the applicable Fund. In order to use the ACH service, the ACH
Authorization section of the account application must be completed. For existing
accounts, an ACH Authorization Form may be obtained by calling the Transfer
Agent at 1-800-408-4682. Allow at least two weeks for preparation before using
ACH. To order a purchase or redemption by ACH, call the Transfer Agent at
1-800-408-4682. There are no charges for ACH transactions imposed by the Fund or
the Transfer Agent. ACH transactions are completed approximately two business
days following the placement of the transfer order.
ACH may be used to make direct deposits into a Fund account of part or all
of recurring payments made to a shareholder by his or her employer (corporate,
federal, military, or other) or by the Social Security Administration.
By Telephone Order. Once an account is open, shares may be purchased at a
certain day's price by calling the Transfer Agent at 1-800-408-4682, before the
close of regular trading on the New York Stock Exchange (currently 4:00 p.m.,
Eastern time) on that day. Orders must be for $1,000 or more and may not be for
an amount greater than twice the value of the existing account at the time the
order is placed. Payment by check or wire must be received within three business
days after the order is placed, or the order will be cancelled and the
shareholder will be responsible for any resulting loss to the Fund. Payment of
telephone orders by check may not be mailed to the Transfer Agent's P.O. Box
address herein, but must be mailed to the Transfer Agent at Unified Fund
Services, Inc., 431 North Pennsylvania Street, Indianapolis, Indiana 46204.
Payment must be accompanied by the order number given at the time the order is
placed. A written confirmation with complete purchase information will be sent
to the shareholder of record shortly after payment is received.
DIVIDENDS AND DISTRIBUTIONS
The Starwood Strategic Fund, the Laidlaw Fund and the First Lexington
Balanced Fund declare and pay dividends on a quarterly basis. The Taxable Money
Market Fund declares and pays dividends on a daily basis.
The Funds make distributions of any net realized long-term capital gains at
least once every twelve months. Dividends and distributions are automatically
reinvested in additional shares on payment dates at the ex-dividend net asset
value, unless cash payments are requested on the account application or in
writing to the Transfer Agent. If cash payments are requested with respect to
the Taxable Money Market Fund, daily dividends will accumulate and be paid at
the end of each month, as requested in writing. All shareholders on the record
date are entitled to the dividend.
If an order for shares is received on a business day prior to receipt of
wire payment, shares purchased by wire begin earning dividends on the business
day wire payment is received by the Transfer Agent. If the order for shares and
payment by wire are received on the same day, shares begin earning dividends on
the next business day. Shares purchased by check begin earning dividends on the
business day after the check is converted into federal funds. Shares earn
dividends through the business day that proper written redemption instructions
are received by the Transfer Agent. Certain transactions in the Taxable Money
Market Fund are treated differently, as described below.
Timing of Certain Money Market Fund Transactions
The Taxable Money Market Fund has two transaction times each day, at 12:00
noon (Eastern time) and the close of regular trading on the New York Stock
Exchange (currently 4:00 p.m., Eastern time). New investments represented by
federal funds or bank wires received by the Custodian prior to 12:00 noon are
paid the full dividend for that day; such investments received after 12:00 noon
do not begin to receive daily dividends until the next day. Redemption orders
received prior to 12:00 noon are effected at 12:00 noon, and the redemption
proceeds are normally available that day. Redemption orders received after 12:00
noon are effected at the close of regular trading on the New York Stock
Exchange, and the redemption proceeds are normally remitted the next business
day. Redemption orders received at any time during a day do not earn that day's
dividend.
EXCHANGE PRIVILEGE
Shares of any Fund may be exchanged for shares of any other Fund at net
asset value, without any additional charges. The shares exchanges must have been
registered in the shareholder's name for at least five days prior to the
exchange request, and must have a net asset value which at least meets the
minimum investment required for the Fund into which the exchange is being made.
Exchange requests may be made by telephone or in writing. Exchanges will be
effected at the respective net asset values per share of the Funds involved,
next determined after the exchange request is received in proper form. If an
exchange request is received by the Transfer Agent in proper form on a Trust
business day before the close of regular trading on the New York Stock Exchange
(currently 4:00 p.m., Eastern time), the exchange will be effected that day. An
exchange of shares purchased by check will be delayed until the check has been
converted into federal funds and redemption proceeds are available for purchase
of the newly acquired shares, which could take up to 15 days.
By Telephone. Exchange requests may be made by telephone by calling the
Transfer Agent at 1-800-408-4682. Exchange requests made by telephone will be
effected only if (1) the shareholder's existing account has authorized telephone
redemption privileges (see "How to Redeem Shares -- By Telephone" below) and (2)
no account information will change as a result of the exchange. The Transfer
Agent requires personal identification before accepting any exchange request by
telephone, and telephone exchange requests may be recorded.
By Mail or Telecopy. Exchange requests made in writing should be sent to The
Unified Funds c/o Unified Fund Services, Inc., P.O. Box 6110, Indianapolis,
Indiana 46206-6110. A written request to exchange shares having a net asset
value of less than $5,000 may be sent by telecopy, by first calling the Transfer
Agent at 1-800-408-4682. Regardless of whether the request is sent by mail or by
telecopy, the request must be signed exactly as the shareholder's name appears
on the Trust's account records. If the shares to be exchanged have a net asset
value of $5,000 or more, the request must be mailed, and all signatures must be
properly guaranteed as described below under "How to Redeem Shares --
Signatures." If shares are to be exchanged into a new account registered in a
different name, or if any account information will change as a result of the
exchange, a separate account application must be received by the Transfer Agent
by mail before the exchange may be effected.
The exchange privilege is designed to accommodate changes in shareholder
investment objectives. It is not designed for frequent trading in response to
short-term market fluctuations. Accordingly, the Trust reserves the right to
limit a shareholder's use of the exchange privilege. The exchange privilege may
be modified or terminated at any time.
Any exchange involves a redemption of shares of one Fund and an investment of
the redemption proceeds in shares of another Fund. Before requesting an
exchange, a shareholder should read carefully the parts of this Prospectus
describing the Fund into which the exchange will be made. Also, an exchange is
treated for federal income tax purposes as a sale of the shares given in
exchange, and the shareholder may realize a taxable gain or loss on the
exchange.
HOW TO REDEEM SHARES
Shares of each Fund may be redeemed on any day on which the Fund computes it
net asset value. Shares are redeemed at their net asset value next determined
after the Transfer Agent receives the redemption request in proper form.
Redemption requests may be may by mail or by telephone.
By Mail. A shareholder may redeem shares by mailing a written request to
The Unified Funds, c/o Unified Fund Services, Inc., P.O. Box 6110, Indianapolis,
Indiana 46206-6110. Written requests must state the shareholder's name, the name
of the Fund, the account number and the shares or dollar amount to be redeemed
and be signed exactly as the shares are registered.
Signatures. Shareholders requesting a redemption of $5,000 or more, or
a redemption of any amount payable to a person other than the shareholder of
record or to be sent to an address other than that on record with the Trust,
must have all signatures on written redemption requests guaranteed. The
Transfer Agent will accept signatures guaranteed by a financial institution
whose deposits are insured by the FDIC; a member of the New York, American,
Boston, Midwest, or Pacific Stock Exchange; or any other "eligible guarantor
institution," as defined in the Securities Exchange Act of 1934. The
Transfer Agent will not accept signatures guaranteed by a notary public. The
Transfer Agent has adopted standards for accepting signature guarantees from
the above institutions. The Trust may elect in the future to limit eligible
signature guarantors to institutions that are members of a signature
guarantee program. The Trust and its Transfer Agent reserve the right to
amend these standards at any time without notice.
Redemption requests by corporate and fiduciary shareholders must be
accompanied by appropriate documentation establishing the authority of the
person seeking to act on behalf of the account. Forms of resolutions and
other documentation to assist in compliance with the Transfer Agent's
procedures may be obtained by calling the Transfer Agent.
By Telephone. You may also redeem shares by telephone by calling the
Transfer Agent at 1-800-408-4682. In order to make redemption requests by
telephone, the Telephone Privileges section of the account application must be
completed. For existing accounts, a Telephone Privileges form may be obtained by
calling the Transfer Agent at 1-800-408-4682.
Telephone redemptions may be requested only if the proceeds are to be issued
to the shareholder of record and mailed to the address on record with the Fund.
Upon request, proceeds of $100 or more may be transferred by ACH, and proceeds
of $1,000 or more may be transferred by wire, in either case to the account
stated on the account application. Shareholders will be charged for outgoing
wires.
Telephone privileges and account designations may be changed by sending the
Transfer Agent a written request with all signatures guaranteed as described
above.
The Transfer Agent requires personal identification before accepting any
redemption request by telephone, and telephone redemption instructions may be
recorded. If reasonable procedures are not followed by the Trust, it may be
liable for losses due to unauthorized or fraudulent telephone instructions. In
the event of drastic economic or market changes, a shareholder may experience
difficulty in redeeming by telephone. If such a case should occur, redemption by
mail should be considered.
Receiving Payment
The Trust normally will make payment for all shares redeemed within three
business days after receipt by the Transfer Agent of a redemption request in
proper form, except as provided by the rules of the Securities and Exchange
Commission. A requested wire of redemption proceeds normally will be effected
the following business day, but in no event more than three business days, after
receipt of the redemption request in proper form. However, when shares are
purchased by check or through ACH, the proceeds from the redemption of those
shares are not available, and the shares may not be exchanged, until the
purchase check or ACH transfer has been converted to federal funds, which could
take up to 15 days.
Check Writing (Taxable Money Market Fund Only)
Under the Funds' check writing service, shareholders of the Taxable Money
Market Fund may write checks payable to any payee in any amount of $250 or more.
There is no check writing privilege for the non-money market Funds. A
shareholder with check writing privileges may present for payment three checks
per month free of charge; additional checks will result in a charge of $0.30 per
check. Daily dividends will continue to accrue on the shares redeemed by check
until the day the check is presented for payment.
The Check Writing Privileges section of the account application must be
completed in order to initiate check writing privileges. For existing accounts,
check writing privileges may be initiated by sending a written request to the
Transfer Agent with all signatures guaranteed. A book of checks will be sent to
the shareholder of record upon the Transfer Agent's receipt of the request.
A check should not be used to close out an account with the Fund because the
balance of the account will continue to increase by the amount of daily
dividends until the check is presented for payment. The Transfer Agent may
impose a charge for checks returned unpaid for insufficient funds or for
effecting stop-payment instructions.
Minimum Account Balance
Due to the high cost of maintaining accounts with low balances, the Trust
may involuntarily redeem Shares in any account, and pay the proceeds to the
shareholder, if the account balance falls below a required minimum value of
$1,000 ($500 for an IRA) due to shareholder redemptions. This requirement does
not apply, however, if the balance falls below the minimum because of changes in
a Fund's net asset value. Before shares are redeemed to close an account, the
shareholder is notified in writing and allowed 30 days to purchase additional
Shares to meet the minimum requirement. The Transfer Agent reserves the right
and may charge shareholders an administrative fee to cover the cost of
maintaining and properly servicing lost accounts and accounts with balances
below the required minimums.
SHAREHOLDER SERVICES
Each time shares are purchased or redeemed, a statement will be mailed
showing the details of the transaction and the number and value of shares owned
after the transaction. Transactions made in brokerage sweep accounts will be
detailed on a monthly brokerage statement. Share certificates are not issued.
Financial reports showing investments, income and expenses of the Funds are
mailed to shareholders semi-annually. After the end of each year, shareholders
receive a statement of all their transactions for the year.
The Trust provides a number of plans and services to meet the special needs
of certain investors, including (1) an automatic investment plan, (2) a payroll
deduction plan, (3) a systematic withdrawal plan to provide monthly payments,
(4) retirement plans such as IRA and 403(b), and (5) corporate pension and
profit sharing plans, including a 401(k) plan. Brochures describing these plans
and related charges and account applications are available from the Transfer
Agent by calling 1-800-408-4682.
THE TRUST AND ITS MANAGEMENT
The Trust is an Ohio business trust authorized to offer separate series and
classes of shares of beneficial interest. The Trust, which was organized on
November 20, 1997, is the successor to the operations of The Vintage Funds. At
the date of this Prospectus, the Trust has established each of the four Funds
described herein as a separate series of its shares. The Trust's offices are at
431 North Pennsylvania Street, Indianapolis, Indiana 46204. The business affairs
of the Trust are under the direction of its Board of Trustees.
Investment Advisory Arrangements
Investment Adviser. Unified Investment Advisers, Inc., 431 North
Pennsylvania Street, Indianapolis, Indiana 46204, serves as the Trust's
investment adviser (the "Adviser"). The Adviser supervises and assists in the
management of the Funds under an Investment Advisory Agreement between the
Adviser and the Trust, subject to the overall authority of the Board of
Trustees. The Adviser also is responsible for monitoring and evaluating the
performance of the Sub-Adviser, as described below.
The Adviser was organized in December 1994 and is a registered investment
adviser. The Adviser is a wholly owned subsidiary of Unified Financial Services,
Inc. Unified Financial Services is also the parent of Unified Management
Corporation (the Funds' Distributor) and Health Financial, Inc. (the Sub-Adviser
of the First Lexington Balanced Fund).
To assist the Adviser in the selection of socially conscious companies in
which the Laidlaw Fund might invest, the Adviser has entered into a consulting
agreement with Laidlaw Holdings Asset Management, Inc. ("Laidlaw"). Laidlaw's
duties include the preparation of a recommended list of socially conscious
companies, investment in which would be consistent with the socially responsible
investment policy of the Laidlaw Fund. Laidlaw does not provide investment
advisory services to the Fund. The consulting fee is paid directly by the
Adviser from its own assets and is not an expense of the Fund.
Sub-Adviser. The Adviser has entered into a Sub-Advisory Agreement with
Health Financial, Inc., 2353 Alexandria Dr., Lexington, KY 40504 to serve as the
sub-adviser of the First Lexington Balanced Fund. Health Financial, Inc.,
founded by Dr. Gregory W. Kasten in 1984, is a registered investment adviser
that primarily serves physicians and private pension plans. of This sub-adviser
currently manages approximately [$255] million in assets, including the assets
held by First Lexington Trust Company, a regulated trust company that provides
pension trust and charitable gift investment management.
Portfolio Managers' Backgrounds
Starwood Strategic Fund. Andrew E. Beer has been the Fund's portfolio
manager since its inception. Mr. Beer has been the President and Director of
Starwood Corporation, a registered investment adviser that manages approximately
$30 million in assets, since 1984.
Laidlaw Fund and Taxable Money Market Fund. Jack R. Orben is the Funds'
portfolio manager. Mr. Orben has been the Chairman of Fiduciary Counsel, a
registered investment adviser that manages approximately $450 million in assets,
since 1979. Prior to that time, he was President of Orben & Associates, Inc., an
investment consultant to bank trust departments. Since 1979, Mr. Orben has been
a member of Fiduciary Counsel's Investment Policy Committee and Chairman of its
Executive Committee. Mr. Orben graduated from Tufts University in 1960, and has
nearly 25 years of investment experience.
First Lexington Balanced Fund. Dr. Gregory W. Kasten began managing the
Fund's portfolio in January 1997. Dr. Kasten has served as president of Health
Financial, Inc., the Fund's Sub-Adviser, since 1986. Prior to 1994, Dr. Kasten
practiced medicine with Anesthesia Associates, PSC, Lexington, Kentucky. Dr.
Kasten has completed the two year program from the Denver College of Financial
Planning and is a Certified Financial Planner. Dr. Kasten has also completed the
two year program from the American Society of Pension Actuaries, and he received
from that program the Certificate of Pension Consultant designation. In 1990, he
received his M.B.A. in Finance from the University of Kentucky.
Advisory Fees
Each Fund pays the Adviser an annual advisory fee, payable monthly, based on
its average daily net assets. The fee is equal to 1.25% of the Fund's average
daily net assets for the Starwood Strategic Fund and the Laidlaw Fund. The fee
is equal to 0.75% of the Fund's average daily net assets for the First Lexington
Balanced Fund. The fee is equal to 0.90% of the Fund's average daily net assets
for the Taxable Money Market Fund. The Adviser pays all of the operating
expenses of the Funds except 12b-1 and shareholder servicing fees, brokerage,
taxes, interest and extraordinary expenses.
The Adviser pays Health Financial, Inc. an annual fee for its services in
managing the First Lexington Balanced Fund. These fees are paid directly by the
Adviser from its own assets and are not an expense of the Funds. The Funds
themselves pay no fees to the Sub-Adviser. The annual sub-advisory fee, payable
monthly, is equal to 0.40% of the Fund's net assets up to $250 million; 0.35% of
the next $250 million of net assets; and 0.30% of net assets in excess of $500
million.
Distribution Services
Distributor. Unified Management Corporation (the "Distributor"), 431 North
Pennsylvania Street, Indianapolis, Indiana 46024, acts as each Fund's
distributor pursuant to a Distribution Agreement with the Trust. The distributor
is a subsidiary of Unified Financial Services, Inc.
Distribution Plan. Under a Distribution Plan adopted with respect to each
Fund pursuant to Rule 12b-1 under the Investment Company Act of 1940, the Trust
pays the Distributor an annual fee, payable monthly, of up to 0.10% of each
Fund's average daily net assets. The Distributor is entitled to retain all of
this distribution fee to reimburse the Distributor for payments made or expenses
incurred for distribution of Fund shares, including those incurred in connection
with preparing and distributing sales literature and advertising, preparing,
printing and distributing prospectuses and statements of additional information
used for other than regulatory purposes or distribution to existing
shareholders, implementing and operating the Distribution Plan, and compensating
third parties for their distribution services. The Distributor may select
financial institutions such as banks, custodians, investment advisers and
broker/dealers to provide sales support services as agents for their clients or
customers.
The Distribution Plan is a compensation-type plan. Therefore, the amounts
payable to the Distributor during any year may be more or less than actual
expenses incurred by the Distributor during such year. No amount payable or
credit due pursuant to the Distribution Plan for any fiscal year may be carried
over for payment or utilized as a credit, as the case may be, beyond the end of
the year, unless authorized by the Trust's Board of Trustees. However, the
Distributor may be able to recover such amounts or may earn a profit from future
payments made by the Trust under the Distribution Plan.
Administration of the Trust
Administrator. Unified Fund Services, Inc., 431 North Pennsylvania St.,
Indianapolis, Indiana 46204, serves as the Trust's administrator (the
"Administrator"). Pursuant to a Mutual Fund Services Agreement with the Trust,
the Administrator provides certain administrative personnel and services
(including administration, transfer agency and fund accounting services)
necessary to operate the Funds. For its services, the Administrator receives
from the Adviser an annual fee, payable monthly, based on each Fund's average
daily net assets. The fee is equal to 0.435% of the average daily net assets for
the Starwood Strategic Fund and the Laidlaw Fund, and 0.185% of the average
daily net assets of the First Lexington Balanced Fund and the Taxable Money
Market Fund.
Shareholder Services Plan. The Trust has adopted a Shareholder Services
Plan (the "Service Plan") with respect to each Fund, which is administered by
the Administrator. Under the Service Plan, financial institutions, including
brokers, may enter into shareholder service agreements with the Trust to provide
administrative support services to their clients or customers who from time to
time may be owners of record or beneficial owners of the shares of one or more
of the Funds. In return for providing these support services, a financial
institution may receive payments from the Fund at a rate not exceeding 0.15% of
the average daily net assets of the shares beneficially owned by the financial
institution's clients or customers for whom it is holder of record or with whom
it has a servicing relationship. These administrative services may include, but
are not limited to, the provision of personal services and maintenance of
shareholder accounts.
The Glass-Steagall Act limits the ability of a depository institution (such
as a commercial bank or a savings and loan association) to become an underwriter
or distributor of securities. In the event the Glass-Steagall Act is deemed to
prohibit depository institutions from acting in the capacities described above
or should Congress relax current restrictions on depository institutions, the
Board of Trustees will consider appropriate changes in the services. State
securities laws governing the ability of depository institutions to act as
underwriters or distributors of securities may differ from interpretations given
to the Glass-Steagall Act and, therefore, banks and financial institutions may
be required to register as dealers pursuant to state law.
Other Arrangements. The Adviser, the Distributor or the Administrator may,
from their respective fees, also pay brokers or financial institutions a fee
based upon the net asset value of the Fund shares beneficially owned by the
broker's or financial institution's clients or customers. This fee is in
addition to amounts paid under the Distribution Plan or the Services Plan. These
payments will be made directly by the Adviser, the Distributor or the
Administrator from their own assets, will not be made from the assets of the
Funds and are not an additional expense of the Funds.
From time to time the Distributor will purchase Fund shares on behalf of its
clients and will be entitled to receive 12b-1 fees, shareholder servicing fees
and other administrative fees described herein to the same extent as any other
broker or financial institution.
Transfer Agent, Fund Accounting Agent and Custodian
Unified Fund Services, Inc., P.O. Box 6110, Indianapolis, Indiana
46206-6110, acts as the Trust's transfer agent and fund accounting agent.
Star Bank, N.A., 425 Walnut Street, Cincinnati, Ohio 45201, acts as the
Trust's custodian. General correspondence to the Custodian should be addressed
to Star Bank, N.A., P.O. Box 1038, Location 6118, Cincinnati, Ohio 45201. Share
purchase orders mailed directly to the custodian (See "How to Buy Shares --
Subsequent Investments") should be addressed to The Unified Funds, [Name of
Applicable Fund], P.O. Box 640689, Cincinnati, Ohio 45264-0689.
Portfolio Transactions
The Adviser and Sub-Adviser select the firms that effect brokerage
transactions for their respective Funds, subject to the overall direction and
review of Adviser and the Board of Trustees. The initial criterion that must be
met by the Adviser and Sub-Adviser in selecting brokers and dealers is whether
the firm can obtain the most favorable combination of price and execution for
the transaction. This does not mean that the execution decision must be based
solely on whether the lowest possible commission costs may be obtained. In
seeking the best combination of price and execution, the Adviser and Sub-Adviser
evaluate the execution capability of the firms and the services they provide,
including their general execution capability, reliability and integrity,
willingness to take positions in securities, and general operational and
financial condition.
Subject to this primary objective, the Adviser and Sub-Adviser may select
for brokerage transactions those firms which furnish brokerage and research
services to the Funds, the Adviser or the Sub-Adviser. The Adviser and the
Sub-Adviser may also give consideration to firms that have sold Fund shares. The
Board of Trustees has authorized the Funds to pay brokerage commissions to firms
that are affiliated with the Adviser or the Sub-Adviser, subject to the
foregoing criteria.
"V.O.I.C.E.SM"
(VISION FOR ON-GOING INVESTMENTS IN CHARITY AND EDUCATIONSM)
The Adviser has established The Unified Funds University and Philanthropic
Program (the "Program"), entitled "V.O.I.C.E.SM" (Vision for On-going
Investments in Charity and EducationSM) pursuant to which the Adviser will make
donations from its own income to certain accredited college or university
endowments or general scholarship funds ("Eligible Institutions") designated by
qualified shareholders. Philanthropic institutions outside of the area of
education may be proposed by qualifying shareholders and may, at the sole
discretion of the Adviser, be accepted for inclusion as an Eligible Institution.
All Unified Funds shareholders maintaining an average annualized aggregate
net asset value of $25,000 or more over the period of an entire calendar quarter
("Qualified Shareholders") will be qualified to designate one or more Eligible
Institutions to receive a donation under the Program with respect to that
period. A shareholder making an initial investment of $25,000 or more in Fund
shares may designate one Eligible Institution on the V.O.I.C.E.SM Program
Application. A shareholder making an initial investment of $1,000,000 or more
(or maintaining that amount for an entire quarterly period) may designate one
additional Eligible Institution for each $l,000,000 invested (or maintained for
such period).
The Adviser will donate annually from its own income an amount equal to
0.25% of the average daily aggregate net asset value of the shares owned by the
Qualified Shareholder. This donation will be made on a quarterly basis for so
long as the average daily aggregate net asset value of the shares owned by the
Qualified Shareholder remains above $25,000 for the applicable quarterly period.
Donations will be made by the Adviser in the name of the Qualified Shareholder
to the Eligible Institution(s) designated by the Qualified Shareholder. However,
while the donation will be made in the Qualified Shareholder's name, the
Qualified Shareholder will not be entitled to any tax deductions for such
donation.
All Qualified Shareholders desiring to change their designated Eligible
Institution(s) may do so twice a year, in January and July. If a Qualified
Shareholder was entitled to designate, and did designate, more than one Eligible
Institution, the amount donated will be allocated according to the percentages
designated on the V.O.I.C.E.SM Program Application.
Donations will be made by the Adviser from its own income and, therefore,
will have no impact on the expenses or yield of the Funds. There can be no
assurances that the Adviser will have income from which to make donations.
The preceding information is only a summary of the V.O.I.C.E.SM Program and
is qualified in its entirety by the more complete information available from the
Adviser.
Information about the V.O.I.C.E.SM Program, including applications to
participate in the Program, may be obtained from the Adviser by calling
1-800-408-4682.
TAXES
It is intended that each Fund will qualify as a "regulated investment
company" under the Internal Revenue Code of 1986, as amended (the "Code"), as
long as such qualification is in the best interest of the Fund's shareholders.
Such qualification relieves each Fund of liability for federal income tax to the
extent its earnings are distributed in accordance with the Code.
A shareholder receiving a distribution of ordinary income and/or an excess
of net short-term capital gain over net long-term capital loss ordinarily would
treat it as a receipt of ordinary income in the computation of the shareholder's
gross income, whether such distribution is received in cash or reinvested in
additional shares. Any distribution of the excess of net long-term capital gain
over net short-term capital loss ordinarily is taxable to shareholders as
long-term capital gain regardless of how long the shareholder has held shares.
Dividends and distributions also may be subject to state and local taxes.
Shareholders will receive statements as to the tax status of dividends and
distributions annually, as well as periodic account summaries that will include
information as to any dividends and distributions from securities gains paid
during the year. Shareholders should consult their own tax advisers with
questions regarding federal, state or local taxes.
Backup Withholding
The Trust may be required to withhold federal income tax at a rate of 31%
from dividends and redemption proceeds paid to non-corporate shareholders. This
tax may be withheld from dividends if a shareholder fails to furnish the Trust
with the shareholder's correct taxpayer identification number, the Internal
Revenue Service (the "IRS") notifies the Trust that the shareholder has failed
to report certain income to the IRS, or the shareholder fails to certify that he
or she is not subject to backup withholding when required to do so. Backup
withholding is not an additional tax and the shareholder may credit any amounts
withheld against the shareholder's federal income tax liability.
PERFORMANCE INFORMATION
From time to time the Trust may publish performance information relative to
the Funds, and may include such information in advertisements, sales literature
or shareholder reports. Each Fund may periodically advertise "average annual
total return." The "average annual total return" of a Fund refers to the average
annual compounded rate of return over the stated period that would equate an
initial amount invested at the beginning of a stated period to the ending
redeemable value of the investment. The calculation of "average annual total
return" assumes the reinvestment of all dividends and distributions.
Each Fund may also periodically advertise its total return over various
periods in addition to the value of a $10,000 investment (made on the date of
the initial public offering of the Fund's shares) as of the end of a specified
period. The "total return" for a Fund refers to the percentage change in the
value of an account between the beginning and end of the stated period, assuming
no activity in the account other than reinvestment of dividends and capital
gains distributions.
The Taxable Money Market Fund may quote its current yield and effective
yield. The "yield" of the Fund refers to the income generated by an investment
in the Fund over a seven-day period (which period will be stated in the
advertisement). This income is then annualized. That is, the amount of income
generated by investments during the week is assumed to be generated each week
over a 52-week period and is shown as a percentage of the investment. The
"effective yield" is calculated similarly but, when annualized, the income
earned by an investment in the Fund is assumed to be reinvested. The effective
yield will be slightly higher than the yield because of the compounding effect
of this assumed reinvestment.
The Funds may also include in advertisements data comparing performance with
other mutual funds as reported in non-related investment media, published
editorial comments and performance rankings compiled by independent
organizations and publications that monitor the performance of mutual funds
(such as Lipper Analytical Services, Inc., Morningstar, Inc., Fortune or
Barron's). Performance information may be quoted numerically or may be presented
in a table, graph or other illustration. In addition, Fund performance may be
compared to well-known indices of market performance including the Standard &
Poor's (S&P) 500 Index or the Dow Jones Industrial Average.
The advertised performance data of each Fund is based on historical
performance and is not intended to indicate future performance. Rates of total
return quoted by a Fund may be higher or lower than past quotations, and there
can be no assurance that any rate of total return will be maintained. The
principal value of an investment in a non-money market Fund will fluctuate so
that a shareholder's shares, when redeemed, may be worth more or less than the
shareholder's original investment.
GENERAL INFORMATION
Any Trustee of the Trust may be removed by vote of the shareholders holding
not less than two-thirds of the outstanding shares of the Trust. The Trust does
not hold an annual meeting of shareholders. When matters are submitted to
shareholders for a vote, each shareholder is entitled to one vote for each whole
share he owns and fractional votes for fractional shares he owns. All shares of
the Fund have equal voting rights and liquidation rights. The Declaration of
Trust can be amended by the Trustees, except that any amendment that adversely
affects the rights of shareholders must be approved by the shareholders
affected.
Each Fund acknowledges that it is solely responsible for the information or
any lack of information about it in this joint Prospectus and in the joint
Statement of Additional Information, and no other Fund is responsible therefor.
There is a possibility that one Fund might be deemed liable for misstatements or
omissions regarding another Fund in this Prospectus or in the joint Statement of
Additional Information; however, the Funds deem this possibility slight.
Shareholder inquiries may be made by writing to The Unified Funds, c/o
Unified Fund Services, Inc., P.O. Box 6110, Indianapolis, Indiana 46206-6110, or
by calling 1-800-408-4682.
THE UNIFIED FUNDS
The Starwood Strategic Fund
The Laidlaw Fund
The First Lexington Balanced Fund
The Taxable Money Market Fund
PROSPECTUS
February 1, 1998
TRANSFER AGENT
Unified Fund Services, Inc.
431 N. Pennsylvania Street
Indianapolis, Indiana 46204
CUSTODIAN
Star Bank, N.A.
425 Walnut Street
Cincinnati, Ohio 45201
INVESTMENT ADVISER
Unified Investment Advisers, Inc.
431 N. Pennsylvania Street
Indianapolis, Indiana 46204
AUDITORS
McCurdy & Associates CPA's, Inc.
27955 Clemens Road
Westlake, Ohio 44145
THE UNIFIED FUNDS
P.O. Box 6110
Indianapolis, Indiana 46206-6110
1-800-408-4682
<PAGE>
THE UNIFIED FUNDS
Prospectus dated February 1, 1998
The Unified Funds (the "Trust") is an open-end, management investment
company (a mutual fund) having four separate portfolios, each of which has its
own separate investment objective and policies. One of the portfolios offered by
the Trust, the Taxable Money Market Fund (the "Fund"), is a money market fund.
The Taxable Money Market Fund seeks a high level of current income
consistent with the preservation of capital and maintenance of liquidity. The
Fund pursues this objective by investing principally in a diversified portfolio
of short-term money market instruments. The Fund intends to maintain a constant
net asset value of $1.00 per share, although there is no assurance that it will
be able to do so.
The shares offered hereby are not deposits or obligations of any
financial institution and are not insured by the Federal Deposit Insurance
Corporation, the Federal Reserve Board or any other government agency.
Investment in the shares involves investment risks including the possible loss
of principal. There can be no assurance that the Fund will be able to maintain a
stable net asset value of $1.00 per share.
This Prospectus contains information that you should know before
investing in the Fund and it should be retained for future reference. A
Statement of Additional Information, dated February 1, 1998 has been filed with
the Securities and Exchange Commission (the "SEC") and is incorporated herein by
reference. The Statement of Additional Information is available upon request and
without charge by calling 1-800-408-4682. The SEC maintains a Web Site
(http://www.sec.gov) that contains the Statement of Additional Information,
material incorporated by reference, and other information regarding registrants
that file electronically with the SEC.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
TABLE OF CONTENTS
SUMMARY OF FUND EXPENSES
FINANCIAL HIGHLIGHTS
HIGHLIGHTS
INVESTMENT OBJECTIVES AND POLICIES
INVESTMENT POLICIES AND TECHNIQUES AND RISK FACTORS
NET ASSET VALUE
HOW TO BUY SHARES
Minimum Investment
Opening an Account
By Mail
By Wire
Subsequent Investments
By Automated Clearing House (ACH)
DIVIDENDS AND DISTRIBUTIONS
EXCHANGE PRIVILEGE
By Telephone
By Mail or Telecopy
HOW TO REDEEM SHARES
By Mail
Signatures
By Telephone
Receiving Payment
Check Writing
Minimum Account Balance
SHAREHOLDER SERVICES
THE TRUST AND ITS MANAGEMENT
Investment Advisory Arrangements
Investment Adviser
Portfolio Manager's Background
Advisory Fees
Distribution Services
Distributor
Distribution Plan
Administration of the Trust
Administrator
Shareholder Services Plan
Other Arrangements
Transfer Agent, Fund Account Agent
and Custodian
Portfolio Transactions
THE "V.O.I.C.E."SM PROGRAM
TAXES
Backup Withholding
PERFORMANCE INFORMATION
GENERAL INFORMATION
No person has been authorized to give any information or to make any
representations other than those contained in this Prospectus and in the Fund's
official sales literature in connection with the offer of the Fund's shares,
and, if given or made, such other information or representation must not be
relied upon as having been authorized by the Fund. This Prospectus does not
constitute an offer in any State in which, or to any person to whom, such
offering may not lawfully be made.
<PAGE>
SUMMARY OF FUND EXPENSES
Shareholders should be aware that the Fund is a no-load fund and,
accordingly, a shareholder does not pay any sales charge or commission upon
purchase or redemption of shares of the Fund. Unlike most other mutual funds,
the Fund does not pay directly for transfer agency, pricing, custodial,
auditing, or legal services, nor does the Fund pay directly any general
administrative or other significant operating expenses (except for 12b-1 and
shareholder servicing fees). The Adviser pays all of the operating expenses of
the Fund except 12b-1 and shareholder servicing fees, brokerage, taxes,
interest, and extraordinary expenses.
Shareholder Transaction Expenses
Maximum Sales Load Imposed on Purchases
(as a percentage of offering price)...................................None
Maximum Sales Load Imposed on Reinvested Dividends
(as a percentage of offering price) ..................................None
Deferred Sales Load
(as a percentage of original purchase price or redemption proceeds,
as applicable).......................................................None
Redemption Fee
(as a percentage of amount redeemed, if applicable)...................None
Exchange Fee...............................................................None
Annual Fund Operating Expenses
(As a percentage of average net assets)
Management 12b-1 Servicing Other Total
Fees Fees Fees Expenses Expenses
---- ---- ---- -------- --------
0.90% 0.10% 0.15% None 1.15%
Initial investments of less than the required minimum by persons exempt
from the minimum investment requirement are subject to a one-time $4.50
administrative charge. See "How to Buy Shares." Wire-transferred redemptions are
subject to a $15.00 charge and certain checking transactions may be subject to
additional charges. See "How to Redeem Shares".
The purpose of this table is to assist the investor in understanding
the various costs and expenses that a shareholder of the Fund will bear, either
directly or indirectly. The expense information has been restated to reflect
current fees. Long-term shareholders may pay more than the economic equivalent
of the maximum front-end sales charge permitted under the rules of the National
Association of Securities Dealers, Inc. For a further description of the various
costs and expenses incurred by the Fund, see "The Trust and its Management.
Example:
An investor would pay the following expenses on a $1,000 investment,
assuming (1) 5% annual return and (2) redemption at the end of each time period:
1 Year 3 Years 5 Years 10 Years
------ ------- ------- --------
$12 $37 $64 $140
The amounts listed in the example should not be considered as
representative of future expenses and actual expenses may be greater or less
than those indicated. Moreover, while the example assumes a 5% annual return,
the Fund's performance will vary and may result in an actual return greater or
less than 5%.
The Fund may invest incidentally in other mutual funds. 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 other funds, in
addition to the fees and expenses payable directly by the Fund. Therefore, to
the extent that the Fund invests in other mutual funds, the Fund will incur
higher expenses, many of which may be duplicative. These expenses will be borne
by the Fund, and are not included in the expenses reflected in the table or
example above. See "Investment Policies and Techniques and Risk Factors."
FINANCIAL HIGHLIGHTS
The financial highlights of the Fund's operations for the periods
presented are derived from the audited financial statements of The Unified Funds
(formerly The Vintage Funds) and have been audited by McCurdy and Associates
CPA's, Inc., independent public accountants. This information should be read in
conjunction with the financial statements and notes thereto included in the
Annual Report to Shareholders. The Annual Report also contains additional
performance information and is available without charge by calling the Funds at
1-800-408-4682.
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>
<S> <C> <C> <C>
Taxable Taxable Taxable
Money Money Money
Market Market Market
Fund Fund Fund
1997(a) 1996(b) 1995(c)
PER SHARE OPERATING
PERFORMANCE:
Net asset value, beginning .... $ 1.00 $ 1.00 $ 1.00
Income from investment
Operations:
Net investment income .... 0.03 0.04 0.002
Net realized and unrealized
gain (loss) on investments 0.00 0.00 0.000
----- ----- ------
Total from investment income . 0.03 0.04 0.002
Less Distribution :
Dividends from net
investment income ... (0.03) (0.04) (0.002)
------- ------ -------
Total from distributions ...... (0.03) (0.04) (0.002)
------- ------ -------
Net asset value at end of period $ 1.00 $ 1.00 $ 1.00
===== ===== =====
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period 50,619,710 50,544,511 1,230,385
Ratio of expenses to
average net assets .. 1.44% 1.25% 12.82%
Ratio of expenses (after
reimbursement) to
average net assets .. 1.12% 1.16% 0.47%
Ratio of net investment
Income to average net assets 3.86% 4.12% (11.94%)
Ratio of net investment
income (after reimbursement)
to average net assets 4.19% 4.21% 0.65%
Portfolio turnover ....... 0.00% 0.00% 0.00%
Average commission rate paid $ ---- $ ---- $ ----
<FN>
(a) For the Year-Ended September 30, 1997.
(b) For the Year-Ended September 30,1996.
(c) For the Period June 2, 1995 (commencement of operations) to September 30, 1995
</FN>
</TABLE>
<PAGE>
HIGHLIGHTS
Investment Objectives and Investment Risks
An investment in the Fund involves investment risks including the
possible loss of principal. These risks depend upon many factors including,
among others, the Fund's investment objective, the credit quality of the
securities held and interest rate movements. There is no assurance that the Fund
will be able to maintain a stable net asset value of $1.00 per share. See
"Investment Objectives and Policies" and "Investment Policies and Techniques and
Risk Factors."
Liquidity
The Fund continuously offers and redeems its shares at a constant net asset
value of $1.00 per share. See "How to Buy Shares," "How to Redeem Shares" and
"Net Asset Value."
No Sales or Redemption Charges
There are no commissions, fees or charges by the Trust for the purchase or
redemption of shares. Initial investments below the stated minimum,
wire-transferred redemptions and certain checking transactions may be subject to
additional charges. See "Summary of Fund Expenses," "How to Buy Shares" and "How
to Redeem Shares."
Minimum Investment
A minimum investment of $1,000 is required to open an account, except
an IRA account for which the minimum is $500. Former shareholders of the Unified
family of funds, or the Quest funds which acquired the Unified family of funds,
may open an account with less than the required minimum. The minimum investment
may also be waived for certain other types of retirement accounts and direct
deposit accounts. Subsequent investments must be at least $100, or $50 for an
IRA. See "How to Buy Shares."
Investment Adviser
Unified Investment Advisers, Inc. is the Fund's investment adviser (the
"Adviser"). The Adviser was organized in December 1994 and the Fund commenced
operations on June 2, 1995.
Retirement Plans and Other Shareholder Services
The Trust offers retirement plans including a prototype Profit Sharing
Plan, Money Purchase Pension Plan, Salary Savings Plan - 401(k) and IRA
accounts, as well as a number of special shareholder services. For information
regarding these plans or services, call the Transfer Agent at 1-800-408-4682.
See "Shareholder Services."
The "V.O.I.C.E.SM" Program
(Vision For On-Going Investments In Charity and EducationSM)
The Adviser administers The Unified Funds University and Philanthropic
Program pursuant to which the Adviser will make contributions to the general
scholarship funds or endowments of certain accredited colleges and universities
designated by qualified shareholders of the Fund. For information regarding this
Program, call the Adviser at 1-800-408-4682. Also see "The V.O.I.C.E.SM Program"
below.
INVESTMENT OBJECTIVES AND POLICIES
The Fund's investment objectives cannot be changed without shareholder
approval. While there is no assurance that the Fund will achieve its investment
objective, it endeavors to do so by following the investment policies described
in this Prospectus. Unless otherwise indicated, the Fund's investment policies
may be changed by the Trust's Board of Trustees without shareholder approval.
Shareholders will be notified before any material change in investment policies
becomes effective.
The following sections are concise descriptions of the Fund and its
investment objectives and policies. More information about certain types of
investments, investment techniques and risk factors is provided below under "
Investment Policies and Techniques and Risk Factors" and in the Statement of
Additional Information.
The Taxable Money Market Fund seeks a high level of current income
consistent with the preservation of capital and maintenance of liquidity. The
Fund pursues this objective by investing principally in a diversified portfolio
of high quality, short-term money market instruments.
The Fund's investments principally include:
direct obligations of the U.S. Treasury, such as U.S. Treasury
bills, notes and bonds;
notes, bonds, and discount notes of U.S. government agencies or
instrumentalities;
short-term corporate debt instruments (including commercial paper
and variable rate demand notes) which mature in 270 days or less;
domestic and foreign issues of corporate debt obligations having
floating or fixed rates of interest and having remaining
maturities of less than 13 months;
bank instruments described below under "Bank Instruments";
other short-term investments of a type which the adviser
determines presents minimal credit risks and which are of "high
quality" as determined by a nationally recognized statistical
rating organization, or, in the case of an instrument that is not
rated, of comparable quality in the judgment of the adviser; and
repurchase agreements collateralized by eligible investments.
The Fund may invest only in securities that, at the time of purchase,
have a remaining maturity of less than 13 months and that are "eligible
securities" as defined by regulations of the Securities and Exchange Commission.
"Eligible securities" generally include securities rated in one of the two
highest categories by at least two nationally recognized statistical rating
organizations (or by one such rating agency if only one has issued a rating) or,
if unrated, are determined to be of comparable quality by Fiduciary Counsel
pursuant to policies approved by the Board of Trustees. If the Fund purchases an
eligible security and its rating is subsequently downgraded so that the security
is no longer of high quality, the Fund will consider and take appropriate
action, which may include divesting the security. The Fund will maintain a
dollar-weighted average portfolio maturity of 90 days or less.
INVESTMENT POLICIES AND TECHNIQUES AND RISK FACTORS
This section describes certain types of investments, investment
techniques and investment policies and limitations of the Fund. This section
also includes information about the risk factors associated with the investments
and investment techniques. The risks of the Fund depend upon many factors
including, among other things, the Fund's investment objective, the average
duration of the Fund's portfolio, credit quality of the securities held and
interest rate movements. For further information, see the Statement of
Additional Information.
Fixed Rate Corporate Debt Obligations
The Fund may invest in fixed rate corporate debt obligations. Fixed
rate securities tend to exhibit more price volatility during times of rising or
falling interest rates than securities with floating rates of interest. This is
because floating rate securities, as described below, behave like short-term
instruments in that the rate of interest they pay is subject to periodic
adjustments based on a designated interest rate index. Fixed rate securities pay
a fixed rate of interest and are more sensitive to fluctuating interest rates.
In periods of rising interest rates the value of a fixed rate security is likely
to fall. Fixed rate securities with short-term characteristics are not subject
to the same price volatility as fixed rate securities without such
characteristics. Therefore, they behave more like floating rate securities with
respect to price volatility.
Many corporate debt obligations permit the issuers to call the security
and thereby redeem their obligations earlier than the stated maturity dates.
Issuers are more likely to call bonds during periods of declining interest
rates. In these cases, if a Fund owns a bond which is called, the Fund will
receive its return of principal earlier than expected and would likely be
required to reinvest the proceeds at lower interest rates, thus reducing income
to the Fund.
Other Corporate Debt Obligations
The Fund may also invest in other corporate debt obligations, including
those described below.
Floating Rate Obligations. Floating rate securities are generally
offered at an initial interest rate which is at or above prevailing market
rates. The interest rate paid on these securities is then reset periodically
(commonly every 90 days) to an increment over some predetermined interest rate
index. Commonly utilized indices include the three-month Treasury bill rate, the
180-day Treasury bill rate, the one-month or three-month London Interbank
Offered Rate (LIBOR), the prime rate of a bank, the commercial paper rates, or
the longer-term rates on U.S. Treasury securities.
Variable Rate Demand Notes. Variable rate demand notes are long-term
corporate debt instruments that have variable or floating interest rates and
provide the Fund with the right to tender the security for repurchase at its
stated principal amount plus accrued interest. Such securities typically bear
interest at a rate that is intended to cause the securities to trade at par. The
interest rate may float or be adjusted at regular intervals (ranging from daily
to annually), and is normally based on an interest index or a stated percentage
of a prime rate or another published rate. Many variable rate demand notes allow
the Fund to demand the repurchase of the security on not more than seven days
prior notice. Other notes only permit the Fund to tender the security at the
time of each interest rate adjustment or at other fixed intervals.
Asset-Backed Securities
The Fund may invest in mortgage-related asset-backed securities that
are considered U.S. government securities. Asset-backed securities are created
by the grouping of certain governmental, government related and private loans,
receivables and other lender assets into pools. Interests in these pools are
sold as individual securities. Payments from the asset pools may be divided into
several different tranches of debt securities, with some tranches entitled to
receive regular installments of principal and interest, other tranches entitled
to receive regular installments of interest, with principal payable at maturity
or upon specified call dates, and other tranches only entitled to receive
payments of principal and accrued interest at maturity or upon specified call
dates. Different tranches of securities will bear different interest rates,
which may be fixed or floating.
Because the loans held in the asset pool often may be prepaid without
penalty or premium, asset-backed securities can be subject to higher prepayment
risks than most other types of debt instruments. Prepayments may result in a
capital loss to the Fund to the extent that the prepaid mortgage securities were
purchased at a market premium over their stated amount. Conversely, the
prepayment of mortgage securities purchased at a market discount from their
stated principal amount will accelerate the recognition of interest income by
the Fund, which would be taxed as ordinary income when distributed to the
shareholders.
The credit characteristics of asset-backed securities also differ in a
number of respects from those of traditional debt securities. The credit quality
of most asset-backed securities depends primarily upon the credit quality of the
assets underlying such securities, how well the entity issuing the securities is
insulated from the credit risk of the originator or any other affiliated
entities, and the amount and quality of any credit enhancement to such
securities.
Foreign Securities
The Fund may invest in U.S. dollar denominated foreign securities,
including foreign securities not publicly traded in the United States. The
percentage of the Fund's assets that will be allocated to foreign securities
will vary depending on the relative yields of foreign and U.S. securities, the
economies of foreign countries, the condition of such countries' financial
markets, the interest rate climate of such countries and the relationship of
such countries' currency to the U.S. dollar. These factors are judged on the
basis of fundamental economic criteria (e.g., relative inflation levels and
trends, growth rate forecasts, balance of payments status, and economic
policies) as well as technical and political data.
Investments in foreign securities involve special risks that differ
from those associated with investments in domestic securities. The risks
associated with investments in foreign securities apply to securities issued by
foreign corporations and sovereign governments. These risks relate to political
and economic developments abroad, as well as those that result from the
differences between the regulation of domestic securities and issuers and
foreign securities and issuers. These risks may include, but are not limited to,
expropriation and nationalization, confiscatory taxation, reduced levels of
government regulation of securities markets, currency fluctuations and
restrictions on, and costs associated with, the exchange of currencies,
withholding taxes on interest, limitations on the use or transfer of assets,
political or social instability and adverse diplomatic developments. It may also
be more difficult to enforce contractual obligations or obtain court judgments
abroad than would be the case in the United States because of differences in the
legal systems. If the issuer of the debt or the governmental authorities that
control the repayment of the debt may be unable or unwilling to repay principal
or interest when due in accordance with the terms of such debt, the Fund may
have limited legal recourse in the event of a default. Moreover, individual
foreign economies may differ favorably or unfavorably from the domestic economy
in such respects as growth of gross national product, the rate of inflation,
capital reinvestment, resource self-sufficiency and balance of payments
position.
Additional differences exist between investing in foreign and domestic
securities. Examples of such differences include: less publicly available
information about foreign issuers; credit risks associated with certain foreign
governments; the lack of uniform financial accounting standards applicable to
foreign issuers; less readily available market quotations on foreign issues; the
likelihood that securities of foreign issuers may be less liquid or more
volatile; generally higher foreign brokerage commissions; and unreliable mail
service between countries.
U.S. Government Securities
The Fund may invest in U.S. government securities. These securities are
either issued or guaranteed by the U.S. government, its agencies or
instrumentalities. The government securities in which the Fund may invest are
backed in a variety of ways by the U.S. government or its agencies or
instrumentalities. Some of these securities, such as Government National
Mortgage Association ("GNMA") mortgage-backed securities, are backed by the full
faith and credit of the U.S. government. Other securities, such as obligations
of the Federal National Mortgage Association ("FNMA") or Federal Home Loan
Mortgage Corporation ("FHLMC"), are backed by the credit of the agency or
instrumentality issuing the obligations but not the full faith and credit of the
U.S. government. No assurances can be given that the U.S. government will
provide financial support to these other agencies or instrumentalities, because
it is not obligated to do so.
Bank Instruments
The Fund may invest in time deposits (including savings deposits and
certificates of deposit) and bankers acceptances in commercial banks or savings
associations whose accounts are insured by the Federal Deposit Insurance
Corporation (the "FDIC"), including certificates of deposit issued by and other
time deposits in foreign branches of FDIC insured financial institutions or who
have at least $100 million in capital. These instruments may also include
Eurodollar Certificates of Deposit ("ECDs"), Yankee Certificates of Deposit
("Yankee CDS") and Eurodollar Time Deposits ("ETDs"). The banks issuing these
instruments are not necessarily subject to the same regulatory requirements that
apply to domestic banks, such as reserve requirements, loan requirements, loan
limitations, examinations, accounting, auditing, and record keeping and the
public availability of information.
Investments in Other Mutual Funds
The Fund may invest to some extent in the securities of other open-end
registered investment companies ("mutual funds"). The Fund intends to invest
incidentally in other mutual funds and may not invest more than 5% of its total
assets in any one mutual fund, or more than 10% of its total assets in mutual
funds in general. The Fund, considered together with the other funds of the
trust, may not invest in more than 3% of the total outstanding voting securities
of any one mutual fund. The foregoing limitations are not applicable to
investment company securities acquired as part of a merger, consolidation,
reorganization or other acquisition.
The Fund will invest only in other mutual funds that do not impose
up-front sales loads or deferred sales loads or redemption fees. However, the
Fund may invest in funds that have 12b-1 plans or shareholder services plans
which permit the funds to pay certain distribution and other expenses from fund
assets. To the extent that a Fund invests in other mutual funds, the Fund will
indirectly bear its proportionate share of any fees and expenses paid by such
funds in addition to the fees and expenses payable directly by the Fund.
Therefore, to the extent that a Fund invests in other mutual funds, the Fund
will incur higher expenses, many of which may be duplicative. In addition, to
the extent that a Fund invests in other mutual funds, the Fund's shareholders
may receive capital gains distributions to a greater extent that if the
shareholder owned the underlying mutual funds directly.
Furthermore, although the Fund will invest only in other mutual funds
that have an investment objective similar to the Fund's, or that otherwise is a
permitted investment under the Fund's investment policies described herein, the
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
and not described herein. These other policies and practices may subject the
other funds' 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 a Fund disagrees with those practices, policies or decisions,
it may have no choice other than to liquidate its investment in that fund, which
can entail further losses. However, a mutual fund is not required to redeem any
of its shares owned by another mutual fund in an amount exceeding 1% of the
underlying fund's shares during any period of less than 30 days. As a result, to
the extent that a Fund owns more than 1% of another mutual fund's shares, the
Fund may not be able to liquidate those shares in the event of adverse market
conditions or other considerations.
Also, the investment advisers of the mutual funds in which the Fund
invests may simultaneously pursue inconsistent or contradictory courses of
action. For example, one fund may be purchasing securities of the same issuer
whose securities are being sold by another fund, with the result that the Fund
would incur an indirect expense without any corresponding investment or economic
benefit.
Repurchase Agreements
The Fund may invest in repurchase agreements related to eligible
securities. Repurchase agreements are arrangements in which banks,
broker/dealers, and other recognized financial institutions sell U.S. government
securities or other securities to the Fund and agree at the time of sale to
repurchase them at a mutually agreed upon time and price. Under the Investment
Company Act of 1940, a repurchase agreement is deemed to be a loan
collateralized by the underlying securities. To the extent that the original
seller does not repurchase the securities from the Fund, the Fund could receive
less than the repurchase price on any sale of such securities.
When-Issued and Delayed Delivery Transactions
The Fund may purchase securities on a when-issued or delayed delivery
basis. These transactions are arrangements in which the Fund purchases
securities with payment and delivery scheduled for a future time. Prior to such
delivery, no income on the securities accrues to the Fund. In when-issued and
delayed delivery transactions, the Fund relies on the seller to complete the
transaction. The seller's failure to complete the transaction may cause the Fund
to miss a price or yield considered to be advantageous.
Demand Features
The Fund may acquire securities that are subject to puts and standby
commitments ("demand features") to purchase the securities at their principal
amount (usually with accrued interest) within a fixed period following a demand
by the Fund. The demand feature may be issued by the issuer of the underlying
securities, a dealer in the securities or by another third party, and may not be
transferred separately from the underlying security. The Fund uses these
arrangements to provide the Fund with liquidity and not to protect against
changes in the market value of the underlying securities. The bankruptcy,
receivership or default by the issuer of the demand feature, or a default on the
underlying security or other event that terminates the demand feature before its
exercise, will adversely affect the liquidity of the underlying security. Demand
features that are exercisable even after a payment default on the underlying
security are treated as a form of credit enhancement.
General
In order to generate additional income, the Fund may lend portfolio
securities on a short-term or a long-term basis up to 5% of the value of its
total assets to broker/dealers, banks, or other institutional borrowers of
securities. The Fund may invest up to 5% of its assets in reverse repurchase
agreements, restricted securities and demand notes and credit facilities.
NET ASSET VALUE
Net asset value per share (the price at which shares are purchased and
redeemed) is determined as of 12:00 noon (Eastern time) and as of the close of
regular trading on the New York Stock Exchange (currently 4:00 p.m., Eastern
time), on each business day the Exchange is open for business. The Fund's
portfolio securities are valued utilizing the amortized cost method of
valuation, which normally approximates market value, and which is intended to
result in a constant net asset value of $1.00 per share. Although every effort
is made to maintain the net asset value of the Fund at $1.00 per share, there
can be no assurance that this constant net asset value will be maintained at all
times. For example, in the event of rapid and sharp increases in current
interest rates, a national credit crisis, or a default by one or more of the
issuers of the Fund's portfolio securities, then it is possible that the Fund's
net asset value could decline below $1.00 per share.
HOW TO BUY SHARES
Shares of the Fund are sold each day the New York Stock Exchange is
open at the Fund's net asset value per share next calculated after receipt of
the purchase order in proper form. The Trust reserves the right to reject any
purchase request.
Minimum Investment
The minimum initial investment in the Fund is $l,000, except an IRA for
which the minimum initial investment is $500. Former shareholders of the Unified
family of funds, or the Quest funds which acquired the Unified family of funds,
may open an account with less than the required minimum. However, they are
subject to a one-time $4.50 administrative charge to establish the account. The
minimum investment may also be waived for certain other types of retirement
accounts and direct deposit accounts. Subsequent investments may be made in
amounts of at least $100, except for an IRA, which must be in amounts of at
least $50. Minimum investments for certain other types of retirement accounts
and direct deposit accounts may be different. See "Shareholder Services."
Opening An Account
An account may be opened by mail or bank wire, as follows:
By Mail. To open a new account by mail:
Complete and sign the account application.
Enclose a check payable to the Fund
Mail the application and the check to the Transfer Agent at the
following address: The Unified Funds, c/o Unified Fund Services,
Inc., P.O. Box 6110, Indianapolis, Indiana 46206-6110.
By Wire. To open a new account by wire, call the Transfer Agent at
1-800-408-4682. A representative will assist you to obtain an account
application by telecopy (or mail), which must be completed, signed and
telecopied (or mailed) to the Transfer Agent before payment by wire may be made.
Then, request your financial institution to wire immediately available funds to:
Star Bank, N.A.
ABA # 04-20000-13
Attention: Taxable Money Market Fund
Fund Number 30
Credit Account # 483616819
The order is considered received when Star Bank, N.A., the Trust's
custodian, receives payment by wire. However, the completed account application
must be mailed to the Transfer Agent on the same day the wire payment is made.
See "Opening an Account -- By Mail" above. The Trust will not permit redemptions
until the Transfer Agent receives the application in proper form. Financial
institutions may charge a fee for wire transfers.
Subsequent Investments
Once an account is open, additional purchases of Fund shares may be
made at any time in minimum amounts of $100, except for an IRA, which must be in
amounts of at least $50. Additional purchases may be made:
By sending a check, made payable to the Fund, to The Unified Funds,
Taxable Money Market Fund, P.O. Box 640689, Cincinnati, Ohio
45264-0689. The Trust will charge a $15 fee against a shareholder's
account for any check returned for insufficient funds. The shareholder
also will be responsible for any losses suffered by the Trust as a
result.
By wire to the Fund account as described above under "Opening an
Account -- By Wire". Shareholders should call the Transfer Agent at
1-800-408-4682 before wiring funds.
By electronic funds transfer from a financial institution through the
Automated Clearing House ("ACH"), as described below.
By Automated Clearing House (ACH). Once an account is open, shares may
be purchased or redeemed through ACH in minimum amounts of $100. ACH is the
electronic transfer of funds directly between an account with a financial
institution and the applicable Fund. In order to use the ACH service, the ACH
Authorization section of the account application must be completed. For existing
accounts, an ACH Authorization Form may be obtained by calling the Transfer
Agent at 1-800-408-4682. Allow at least two weeks for preparation before using
ACH. To order a purchase or redemption by ACH, call the Transfer Agent at
1-800-408-4682. There are no charges for ACH transactions imposed by the Fund or
the Transfer Agent. ACH transactions are completed approximately two business
days following the placement of the transfer order.
ACH may be used to make direct deposits into a Fund account of part or
all of recurring payments made to a shareholder by his or her employer
(corporate, federal, military, or other) or by the Social Security
Administration.
DIVIDENDS AND DISTRIBUTIONS
The Fund declares and pays dividends on a daily basis. If cash payments
are requested, daily dividends will accumulate and be paid at the end of each
month, as requested in writing.
The Fund has two transaction times each day, at 12:00 noon (Eastern
time) and the close of regular trading on the New York Stock Exchange (currently
4:00 p.m., Eastern time). New investments represented by federal funds or bank
wires received by the Custodian prior to 12:00 noon are paid the full dividend
for that day; such investments received after 12:00 noon do not begin to receive
daily dividends until the next day. Shares purchased by check begin earning
dividends on the business day after the check is converted into federal funds.
Redemption orders received prior to 12:00 noon are effected at 12:00 noon, and
the redemption proceeds are normally available for wire transfer that day.
Redemption orders received after 12:00 noon are effected at the close of regular
trading on the New York Stock Exchange, and the redemption proceeds are normally
remitted the next business day. Redemption orders received at any time during a
day do not earn that day's dividend.
EXCHANGE PRIVILEGE
Shares of the Fund may be exchanged for shares of any other fund of the
Trust at net asset value, without any additional charges. The shares exchanges
must have been registered in the shareholder's name for at least five days prior
to the exchange request, and must have a net asset value which at least meets
the minimum investment required for the fund into which the exchange is being
made.
Exchange requests may be made by telephone or in writing. Exchanges
will be effected at the respective net asset values per share of the Funds
involved, next determined after the exchange request is received in proper form.
If an exchange request is received by the Transfer Agent in proper form on a
Trust business day before the close of regular trading on the New York Stock
Exchange (currently 4:00 p.m., Eastern time), the exchange will be effected that
day. An exchange of shares purchased by check will be delayed until the check
has been converted into federal funds and redemption proceeds are available for
purchase of the newly acquired shares, which could take up to 15 days.
By Telephone. Exchange requests may be made by telephone by calling the
Transfer Agent at 1-800-408-4682. Exchange requests made by telephone will be
effected only if (1) the shareholder's existing account has authorized telephone
redemption privileges (see "How to Redeem Shares -- By Telephone" below) and (2)
no account information will change as a result of the exchange. The Transfer
Agent requires personal identification before accepting any exchange request by
telephone, and telephone exchange requests may be recorded.
By Mail or Telecopy. Exchange requests made in writing should be sent
to The Unified Funds c/o Unified Fund Services, Inc., P.O. Box 6110,
Indianapolis, Indiana 46206-6110. A written request to exchange shares having a
net asset value of less than $5,000 may be sent by telecopy, by first calling
the Transfer Agent at 1-800-408-4682. Regardless of whether the request is sent
by mail or by telecopy, the request must be signed exactly as the shareholder's
name appears on the Trust's account records. If the shares to be exchanged have
a net asset value of $5,000 or more, the request must be mailed, and all
signatures must be properly guaranteed as described below under "How to Redeem
Shares -- Signatures." If shares are to be exchanged into a new account
registered in a different name, or if any account information will change as a
result of the exchange, a separate account application must be received by the
Transfer Agent by mail before the exchange may be effected.
The exchange privilege is designed to accommodate changes in
shareholder investment objectives. It is not designed for frequent trading in
response to short-term market fluctuations. Accordingly, the Trust reserves the
right to limit a shareholder's use of the exchange privilege. The exchange
privilege may be modified or terminated at any time.
Any exchange involves a redemption of shares of one fund and an
investment of the redemption proceeds in shares of another. Before requesting an
exchange, a shareholder must request and should read carefully the Prospectus
describing the fund into which the exchange will be made. Also, an exchange is
treated for federal income tax purposes as a sale of the shares given in
exchange, and the shareholder may realize a taxable gain or loss on the
exchange.
HOW TO REDEEM SHARES
Shares of the Fund may be redeemed on any day on which the Fund
computes it net asset value. Shares are redeemed at their net asset value next
determined after the Transfer Agent receives the redemption request in proper
form. Redemption requests may be may by mail or by telephone.
By Mail. A shareholder may redeem shares by mailing a written request
to The Unified Funds, c/o Unified Fund Services, Inc., P.O. Box 6110,
Indianapolis, Indiana 46206-6110. Written requests must state the shareholder's
name, the name of the Fund, the account number and the shares or dollar amount
to be redeemed and be signed exactly as the shares are registered.
Signatures. Shareholders requesting a redemption of $5,000 or
more, or a redemption of any amount payable to a person other than the
shareholder of record or to be sent to an address other than that on
record with the Trust, must have all signatures on written redemption
requests guaranteed. The Transfer Agent will accept signatures
guaranteed by a financial institution whose deposits are insured by the
FDIC; a member of the New York, American, Boston, Midwest, or Pacific
Stock Exchange; or any other "eligible guarantor institution," as
defined in the Securities Exchange Act of 1934. The Transfer Agent will
not accept signatures guaranteed by a notary public. The Transfer Agent
has adopted standards for accepting signature guarantees from the above
institutions. The Trust may elect in the future to limit eligible
signature guarantors to institutions that are members of a signature
guarantee program. The Trust and its Transfer Agent reserve the right
to amend these standards at any time without notice.
Redemption requests by corporate and fiduciary shareholders
must be accompanied by appropriate documentation establishing the
authority of the person seeking to act on behalf of the account. Forms
of resolutions and other documentation to assist in compliance with the
Transfer Agent's procedures may be obtained by calling the Transfer
Agent.
. You may also redeem shares by telephone by calling the Transfer Agent
at 1-800-408-4682. In order to make redemption requests by telephone, the
Telephone Privileges section of the account application must be completed. For
existing accounts, a Telephone Privileges form may be obtained by calling the
Transfer Agent at 1-800-408-4682.
Telephone redemptions may be requested only if the proceeds are to be
issued to the shareholder of record and mailed to the address on record with the
Fund. Upon request, proceeds of $100 or more may be transferred by ACH, and
proceeds of $1,000 or more may be transferred by wire, in either case to the
account stated on the account application. Shareholders will be charged for
outgoing wires.
Telephone privileges and account designations may be changed by sending
the Transfer Agent a written request with all signatures guaranteed as described
above.
The Transfer Agent requires personal identification before accepting
any redemption request by telephone, and telephone redemption instructions may
be recorded. If reasonable procedures are not followed by the Trust, it may be
liable for losses due to unauthorized or fraudulent telephone instructions. In
the event of drastic economic or market changes, a shareholder may experience
difficulty in redeeming by telephone. If such a case should occur, redemption by
mail should be considered.
Receiving Payment
The Trust normally will make payment for all shares redeemed within
three business days after receipt by the Transfer Agent of a redemption request
in proper form, except as provided by the rules of the Securities and Exchange
Commission. A requested wire of redemption proceeds normally will be effected
the following business day, but in no event more than three business days, after
receipt of the redemption request in proper form. However, when shares are
purchased by check or through ACH, the proceeds from the redemption of those
shares are not available, and the shares may not be exchanged, until the
purchase check or ACH transfer has been converted to federal funds, which could
take up to 15 days.
Check Writing
Under the Fund's check writing service, shareholders may write checks
payable to any payee in any amount of $250 or more. A shareholder with check
writing privileges may present for payment three checks per month free of
charge; additional checks will result in a charge of $0.30 per check. Daily
dividends will continue to accrue on the shares redeemed by check until the day
the check is presented for payment.
The Check Writing Privileges section of the account application must be
completed in order to initiate check writing privileges. For existing accounts,
check writing privileges may be initiated by sending a written request to the
Transfer Agent with all signatures guaranteed. A book of checks will be sent to
the shareholder of record upon the Transfer Agent's receipt of the request.
A check should not be used to close out an account with the Fund
because the balance of the account will continue to increase by the amount of
daily dividends until the check is presented for payment. The Transfer Agent may
impose a charge for checks returned unpaid for insufficient funds or for
effecting stop-payment instructions.
Minimum Account Balance
Due to the high cost of maintaining accounts with low balances, the
Trust may involuntarily redeem shares in any account, and pay the proceeds to
the shareholder, if the account balance falls below a required minimum value of
$1,000 ($500 for an IRA) due to shareholder redemptions. This requirement does
not apply, however, if the balance falls below the minimum because of changes in
the Fund's net asset value. Before shares are redeemed to close an account, the
shareholder is notified in writing and allowed 30 days to purchase additional
shares to meet the minimum requirement. The Transfer Agent reserves the right
and may charge shareholders an administrative fee to cover the cost of
maintaining and properly servicing lost accounts with balances below the
required minimums.
SHAREHOLDER SERVICES
Each time shares are purchased or redeemed, a statement will be mailed
showing the details of the transaction and the number and value of shares owned
after the transaction. Transactions made in brokerage sweep accounts will be
detailed on a monthly brokerage statement. Share certificates are not issued.
Financial reports showing investments, income and expenses of the Funds are
mailed to shareholders semi-annually. After the end of each year, shareholders
receive a statement of all their transactions for the year.
The Trust provides a number of plans and services to meet the special
needs of certain investors, including (1) an automatic investment plan, (2) a
payroll deduction plan, (3) a systematic withdrawal plan to provide monthly
payments, (4) retirement plans such as IRA and 403(b), and (5) corporate pension
and profit sharing plans, including a 401(k) plan. Brochures describing these
plans and related charges and account applications are available from the
Transfer Agent by calling 1-800-408-4682.
THE TRUST AND ITS MANAGEMENT
The Trust is an Ohio business trust authorized to offer separate
classes and sub-classes of shares of beneficial interest. The Trust, which was
organized on November 20, 1997, is the successor to the operations of The
Vintage Funds. At the date of this Prospectus, the Trust has established four
funds, including the Fund described herein, each as a separate class of its
shares. The Trust's offices are at 431 North Pennsylvania Street, Indianapolis,
Indiana 46204. The business affairs of the Trust are under the direction of its
Board of Trustees.
Investment Advisory Arrangements
Investment Adviser. Unified Investment Advisers, Inc., 431 North
Pennsylvania Street, Indianapolis, Indiana 46204, serves as the Trust's
investment adviser (the "Adviser"). The Adviser supervises and assists in the
management of the Fund under an Investment Advisory Agreement between the
Adviser and the Trust, subject to the overall authority of the Board of
Trustees.
The Adviser was organized in December 1994 and is a registered
investment adviser. The Adviser is a wholly owned subsidiary of Unified
Financial Services, Inc. Unified Financial Services is also the parent of
Unified Management Corporation (the Fund's Distributor).
Portfolio Manager's Background
Jack R. Orben is the Fund's portfolio manager. Mr. Orben has been the
Chairman of Fiduciary Counsel, a registered investment adviser that manages
approximately $450 milliion in assets, since 1979. Prior to that time, he was
President of Orben & Associates, Inc., an investment consultant to bank trust
departments. Since 1979, Mr. Orben has been a member of Fiduciary Counsel's
Investment Policy Committee and Chairman of its Executive Committee. Mr. Orben
graduated from Tufts University in 1960, and has nearly 25 years of investment
experience.
Advisory Fees
The Fund pays the Adviser an annual advisory fee, payable monthly,
equal to 0.90% of the Fund's average daily net assets. The Adviser pays all of
the operating expenses of the Funds except 12b-1 and shareholder servicing fees,
brokerage, taxes, interest and extraordinary expenses.
Distribution Services
Distributor. Unified Management Corporation (the "Distributor"), 431 North
Pennsylvania Street, Indianapolis, Indiana 46204, acts as the Fund's distributor
pursuant to a Distribution Agreement with the Trust. The distributor is a
subsidiary of Unified Financial Services, Inc.
Distribution Plan. Under a Distribution Plan adopted with respect to
the Fund pursuant to Rule 12b-1 under the Investment Company Act of 1940, the
Trust pays the Distributor an annual fee, payable monthly, of up to 0.10% of
the Fund's average daily net assets. The Distributor is entitled to retain all
of this distribution fee to reimburse the Distributor for payments made or
expenses incurred for distribution of Fund shares, including those incurred in
connection with preparing and distributing sales literature and advertising,
preparing, printing and distributing prospectuses and statements of additional
information used for other than regulatory purposes or distribution to existing
shareholders, implementing and operating the Distribution Plan, and compensating
third parties for their distribution services. The Distributor may select
financial institutions such as banks, custodians, investment advisers and
broker/dealers to provide sales support services as agents for their clients or
customers.
The Distribution Plan is a compensation-type plan. Therefore, the
amounts payable to the Distributor during any year may be more or less than
actual expenses incurred by the Distributor during such year. No amount payable
or credit due pursuant to the Distribution Plan for any fiscal year may be
carried over for payment or utilized as a credit, as the case may be, beyond the
end of the year, unless authorized by the Trust's Board of Trustees. However,
the Distributor may be able to recover such amounts or may earn a profit from
future payments made by the Trust under the Distribution Plan.
Administration of the Trust
Administrator. Unified Fund Services, Inc., 431 North Pennsylvania St.,
Indianapolis, Indiana 46204, serves as the Trust's administrator (the
"Administrator"). Pursuant to a Mutual Fund Service Agreement with the Trust,
the Administrator provides certain administrative personnel and services
(including administration, transfer agency and fund accounting services)
necessary to operate the Fund. For its services, the Administrator receives from
the Adviser an annual fee, payable monthly, equal to 0.185% of the Fund's
average daily net assets.
Shareholder Services Plan. The Trust has adopted a Shareholder Services
Plan (the "Service Plan") with respect to the Fund, which is administered by the
Administrator. Under the Service Plan, financial institutions, including
brokers, may enter into shareholder service agreements with the Trust to provide
administrative support services to their clients or customers who from time to
time may be owners of record or beneficial owners of the shares of the 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. These administrative services may include, but are not limited to,
the provision of personal services and maintenance of shareholder accounts.
The Glass-Steagall Act limits the ability of a depository institution
(such as a commercial bank or a savings and loan association) to become an
underwriter or distributor of securities. In the event the Glass-Steagall Act is
deemed to prohibit depository institutions from acting in the capacities
described above or should Congress relax current restrictions on depository
institutions, the Board of Trustees will consider appropriate changes in the
services. State securities laws governing the ability of depository institutions
to act as underwriters or distributors of securities may differ from
interpretations given to the Glass-Steagall Act and, therefore, banks and
financial institutions may be required to register as dealers pursuant to state
law.
Other Arrangements. The Adviser, the Distributor or the Administrator
may, from their respective fees, also pay brokers or financial institutions a
fee based upon the net asset value of the Fund shares beneficially owned by the
broker's or financial institution's clients or customers. This fee is in
addition to amounts paid under the Distribution Plan or the Services Plan. These
payments will be made directly by the Adviser, the Distributor or the
Administrator from their own assets, will not be made from the assets of the
Fund and are not an additional expense of the Fund.
From time to time the Distributor will purchase Fund shares on behalf
of its clients and will be entitled to receive 12b-1 fees, shareholder servicing
fees and other administrative fees described herein to the same extent as any
other broker or financial institution.
Transfer Agent, Fund Accounting Agent and Custodian
Unified Fund Services, Inc., P.O. Box 6110, Indianapolis, Indiana
46206-6110, acts as the Trust's transfer agent (the "Transfer Agent") and fund
accounting agent.
Star Bank, N.A., 425 Walnut Street, Cincinnati, Ohio 45201, acts as the
Trust's custodian. General correspondence to the custodian should be addressed
to Star Bank, N.A., P.O. Box 1038, Location 6118, Cincinnati, Ohio 45201. Share
purchase orders mailed directly to the custodian (See "How to Buy Shares --
Subsequent Investments") should be addressed to The Unified Funds, Taxable Money
Market Fund, P.O. Box 640689, Cincinnati, Ohio 45264-0689.
Portfolio Transactions
The Adviser selects the firms that effect brokerage transactions for
the Fund, subject to the overall direction and review of the Board of Trustees.
The initial criterion that must be met by the Adviser in selecting brokers and
dealers is whether the firm can obtain the most favorable combination of price
and execution for the transaction. This does not mean that the execution
decision must be based solely on whether the lowest possible commission costs
may be obtained. In seeking the best combination of price and execution, the
Adviser evaluates the execution capability of the firms and the services they
provide, including their general execution capability, reliability and
integrity, willingness to take positions in securities, and general operational
and financial condition.
Subject to this primary objective, the Adviser select for brokerage
transactions those firms which furnish brokerage and research services to the
Fund or the Adviser. The Adviser may also give consideration to firms that have
sold Fund shares. The Board of Trustees has authorized the Fund to pay brokerage
commissions to firms that are affiliated with the Adviser, subject to the
foregoing criteria.
THE "V.O.I.C.E.SM" PROGRAM
(Vision For On-Going Investments In Charity and EducationSM)
The Adviser has established The Unified Funds University and
Philanthropic Program (the "Program"), entitled "V.O.I.C.E.SM" (Vision for
On-going Investments in Charity and EducationSM) pursuant to which the Adviser
will make donations from its own revenue to certain accredited college or
university endowments or general scholarship funds ("Eligible Institutions")
designated by qualified shareholders. Philanthropic institutions outside of the
area of education may be proposed by qualifying shareholders and may, at the
sole discretion of the Adviser, be accepted for inclusion as an Eligible
Institution.
All Unified Funds shareholders maintaining an average annualized
aggregate net asset value of $25,000 or more over the period of an entire
calendar quarter ("Qualified Shareholders") will be qualified to designate one
or more Eligible Institutions to receive a donation under the Program with
respect to that period. A shareholder making an initial investment of $25,000 or
more in Fund shares may designate one Eligible Institution on the V.O.I.C.E.SM
Program Application. A shareholder making an initial investment of $1,000,000 or
more (or maintaining that amount for an entire quarterly period) may designate
one additional Eligible Institution for each $l,000,000 invested (or maintained
for such period).
The Adviser will donate, on a quarterly basis, from its own revenue an
amount equal to 0.25% of the average daily aggregate net asset value of the
shares owned by the Qualified Shareholder for the preceding quarterly period,
for so long as the average daily aggregate net asset value of the shares owned
by the Qualified Shareholder remains above $25,000 for such period. Donations
will be made by the Adviser in the name of the Qualified Shareholder to the
Eligible Institution(s) designated by the Qualified Shareholder. However, while
the donation will be made in the Qualified Shareholder's name, the Qualified
Shareholder will not be entitled to any tax deductions for such donation.
All Qualified Shareholders desiring to change their designated Eligible
Institution(s) may do so twice a year, in January and July. If a Qualified
Shareholder was entitled to designate, and did designate, more than one Eligible
Institution, the amount donated will be allocated according to the percentages
designated on the V.O.I.C.E.SM Program Application.
Donations will be made by the Adviser from its own revenue and,
therefore, will have no impact on the expenses or yield of the Fund. There can
be no assurance that the Adviser will have revenue from which to make donations.
The preceding information is only a summary of the V.O.I.C.E.SM Program
and is qualified in its entirety by the more complete information available from
the Adviser.
Information about the V.O.I.C.E.SM Program, including applications to
participate in the Program, may be obtained from the Adviser by calling
1-800-408-4682.
TAXES
It is intended that the Fund will qualify as a "regulated investment
company" under the Internal Revenue Code of 1986, as amended (the "Code"), as
long as such qualification is in the best interest of the Fund's shareholders.
Such qualification relieves the Fund of liability for federal income tax to the
extent its earnings are distributed in accordance with the Code.
A shareholder receiving a distribution of ordinary income and/or an
excess of net short-term capital gain over net long-term capital loss ordinarily
would treat it as a receipt of ordinary income in the computation of the
shareholder's gross income, whether such distribution is received in cash or
reinvested in additional shares. Any distribution of the excess of net long-term
capital gain over net short-term capital loss ordinarily is taxable to
shareholders as long-term capital gain regardless of how long the shareholder
has held shares.
Dividends and distributions also may be subject to state and local taxes.
Shareholders will receive statements as to the tax status of dividends
and distributions annually, as well as periodic account summaries that will
include information as to any dividends and distributions from securities gains
paid during the year. Shareholders should consult their own tax advisers with
questions regarding federal, state or local taxes.
Backup Withholding
The Trust may be required to withhold federal income tax at a rate of
31% from dividends and redemption proceeds paid to non-corporate shareholders.
This tax may be withheld from dividends if a shareholder fails to furnish the
Trust with the shareholder's correct taxpayer identification number, the
Internal Revenue Service (the "IRS") notifies the Trust that the shareholder has
failed to report certain income to the IRS, or the shareholder fails to certify
that he or she is not subject to backup withholding when required to do so.
Backup withholding is not an additional tax and the shareholder may credit any
amounts withheld against the shareholder's federal income tax liability.
PERFORMANCE INFORMATION
From time to time the Trust may publish performance information
relative to the Fund, and include such information in advertisements, sales
literature or shareholder reports. The Fund may quote its current yield and
effective yield. The "yield" of the Fund refers to the income
generated by an investment in the Fund over a seven-day period (which will be
stated in the advertisement). This income is then annualized. That is, the
amount of income generated by investments during the week is assumed to be
generated each week over a 52-week period and is shown as a percentage of the
investment. The "effective yield" is calculated similarly but, when annualized,
the income earned by an investment in the Fund is assumed to be reinvested. The
effective yield will be slightly higher than the yield because of the
compounding effect of this assumed reinvestment.
The Fund may also include in advertisements data comparing performance
with other mutual funds as reported in non-related investment media, published
editorial comments and performance rankings compiled by independent
organizations and publications that monitor the performance of mutual funds
(such as Lipper Analytical Services, Inc., Morningstar, Inc., Fortune or
Barron's). Performance information may be quoted numerically or may be presented
in a table, graph or other illustration.
The advertised performance data of the Fund is based on historical
performance and is not intended to indicate future performance. Rates of total
return quoted by the Fund may be higher or lower than past quotations, and there
can be no assurance that any rate of total return will be maintained.
GENERAL INFORMATION
Any Trustee of the Trust may be removed by vote of the shareholders
holding not less than two-thirds of the outstanding shares of the Trust. The
Trust does not hold an annual meeting of shareholders. When matters are
submitted to shareholders for a vote, each shareholder is entitled to one vote
for each whole share he owns and fractional votes for fractional shares he owns.
All shares of the Fund have equal voting rights and liquidation rights. The
Declaration of Trust can be amended by the Trustees, except that any amendment
that adversely affects the rights of shareholders must be approved by the
shareholders affected.
Shareholder inquiries may be made by writing to The Unified Funds, c/o
Unified Fund Services, Inc., P.O. Box 6110, Indianapolis, Indiana 46206-6110, or
by calling 1-800-408-4682.
TRANSFER AGENT
Unified Fund Services, Inc.
431 North Pennsylvania Street
Indianapolis, Indiana 46204
CUSTODIAN
Star Bank, N.A.
425 Walnut Street
Cincinnati, Ohio 45201
INVESTMENT ADVISER
Unified Investment Advisers, Inc.
431 North Pennsylvania Street
Indianapolis, Indiana 46204
AUDITORS
McCurdy & Associates CPA's, Inc.
27955 Clemens Road
Westlake, Ohio 44145
THE UNIFIED FUNDS
P.O. Box 6110
Indianapolis, Indiana 46206-6110
1-800-408-4682
<PAGE>
THE UNIFIED FUNDS
STATEMENT OF ADDITIONAL INFORMATION
February 1, 1998
This Statement of Additional Information, which is not a prospectus,
supplements and should be read in conjunction with the current Prospectus of The
Unified Funds (the "Trust"), dated February 1, 1998, as may be revised from time
to time. To obtain a copy of the Trust's Prospectus, please write to The Unified
Funds at P.O. Box 6110, Indianapolis, Indiana 46206-6110, or call
1-800-408-4682.
TABLE OF CONTENTS
Page
Description of the Trust
Types of Investments and Investment Techniques . . . . . . . . . . . . . . .
Investment Limitations . . . . . . . . . . . . . . . . . . . . . . . . . .
Management of the Trust. . . . . . . . . . . . . . . . . . . . . . . . . .
Investment Advisory Arrangements . . . . . . . . . . . . . . . . . . . . . .
Distribution Arrangements . . . . . . . . . . . . . . . . . . . . . . . . .
Administrative Services Arrangements . . . . . . . . . . . . . . . . . . . .
Brokerage Transactions . . . . . . . . . . . . . . . . . . . . . . . . . .
Purchase and Redemption . . . . . . . . . . . . . . . . . . . . . . . . .
Determination of Net Asset Value . . . . . . . . . . . . . . . . . . . . . .
Tax Status . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Performance Information . . . . . . . . . . . . . . . . . . . . . . . . .
Custodian, Transfer Agent, Fund Accounting Agent,
and Independent Accountants . . . . . . . . . . . . . . . . . . . . . . .
Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . .
<PAGE>
DESCRIPTION OF THE TRUST
The Unified Funds (the "Trust") is an open-end investment company
established under the laws of Ohio by an Agreement and Declaration of Trust
dated November 19, 1997 (the "Trust Agreement"). The Trust is the successor
entity to The Vintage Funds. The Trust Agreement permits the Trustees to issue
an unlimited number of shares of beneficial interest of separate series without
par value. There are four series currently authorized by the Trustees (the
"Funds").
Each share of a series represents an equal proportionate interest in
the assets and liabilities belonging to that series with each other share of
that series and is entitled to such dividends and distributions out of income
belonging to the series as are declared by the Trustees. The Shares do not have
cumulative voting rights or any preemptive or conversion rights, and the
Trustees have the authority from time to time to divide or combine the shares of
any series into a greater or lesser number of shares of that series so long as
the proportionate beneficial interest in the assets belonging to that series and
rights of shares of any other series are in no way affected. In case of any
liquidation of a series, the holders of shares of the series being liquidated
will be entitled to receive as a class a distribution out of the assets, net of
the liabilities, belonging to that series. Expenses attributable to any series
are borne by that series. Any general expenses of the Trust not readily
identifiable as belonging to a particular series are allocated by or under the
direction of the Trustees in such manner as the Trustees determine to be fair
and equitable. No shareholder is liable to further calls or to assessment by the
Trust without his or her express consent.
For other information concerning the purchase and redemption of shares
of the Funds, see "How to Buy Shares" and "How to Redeem Shares" in the Funds'
Prospectus. For a description of the methods used to determine the share price
and value of each Fund's assets, see "Net Asset Value" in the Funds' Prospectus.
TYPES OF INVESTMENTS AND INVESTMENT TECHNIQUES
Convertible Securities
The Funds may invest in convertible securities. Convertible securities
are fixed income securities that may be exchanged or converted into a
predetermined number of shares of the issuer's underlying common stock at the
option of the holder during a specified period. Convertible securities may take
the form of convertible preferred stock, convertible bonds or debentures, units
consisting of "usable" bonds and warrants or a combination of the features of
several of these securities. The investment characteristics of each convertible
security vary widely, which allows convertible securities to be employed for a
variety of investment strategies.
The Funds will exchange or convert convertible securities into shares
of underlying common stock when, in the opinion of the investment adviser, the
investment characteristics of the underlying common shares will assist the Fund
in achieving its investment objective. The Funds may also elect to hold or trade
convertible shares. In selecting convertible securities, a Fund's investment
adviser evaluates the investment characteristics of the convertible security as
a fixed income instrument, and the investment potential of the underlying equity
security for capital appreciation. In evaluating these matters with respect to a
particular convertible security, the investment adviser considers numerous
factors, including the economic and political outlook, the value of the security
relative to other investment alternatives, trends in the determinants of the
issuer's profits, and the issuer's management capability and practices.
Warrants
The Funds (other than the Taxable Money Market Fund) may invest in
warrants. Warrants are basically options to purchase common stock at a specific
price (usually at a premium above the market value of the optioned common stock
at issuance) valid for a specific period of time. Warrants may have a life
ranging from less than one year to twenty years, or they may be perpetual.
However, most warrants have expiration dates after which they are worthless. In
addition, a warrant is worthless if the market price of the common stock does
not exceed the warrant's exercise price during the life of the warrant. Warrants
have no voting rights, pay no dividends, and have no rights with respect to the
assets of the corporation issuing them. The percentage increase or decrease in
the market price of the warrant may tend to be greater than the percentage
increase or decrease in the market price of the optioned common stock. No Fund
will invest more than 5% of the value of its total assets in warrants. Warrants
acquired in units or attached to securities may be deemed to be without value
for purposes of this policy.
Corporate Debt Obligations
The Funds may invest in corporate debt obligations, including corporate
bonds, notes, medium term notes, and debentures, which may have floating or
fixed rates of interest.
Ratings. The Funds will not invest in corporate debt obligations having
a rating of less than A by Moody's Investors Service, Inc. ("Moody's"), Standard
& Poor's Corporation ("S&P"), Fitch Investors Service ("Fitch"), Duff & Phelps,
Inc. ("Duff") or Thompson Bankwatch ("Bankwatch"). (The Taxable Money Market
Fund has higher rating requirements, as described in the Prospectus.) In certain
cases a Fund's investment adviser may choose bonds which are unrated if it
determines that such bonds are of comparable quality or have similar
characteristics to investment grade bonds. Downgraded securities will be
evaluated on a case-by-case basis by the Fund's investment adviser. The adviser
will determine whether or not the security continues to be an acceptable
investment. If not, the security will be sold.
Medium Term Notes and Deposit Notes. Medium term notes ("MTNs") and
Deposit Notes are similar to Variable Rate Demand Notes as described in the
Prospectus. MTNs and Deposit Notes trade like commercial paper, but may have
maturities from 9 months to ten years.
Section 4(2) Commercial Paper. Section 4(2) commercial paper is
commercial paper issued in reliance on the exemption from registration afforded
by Section 4(2) of the Securities Act of 1933. Section 4(2) commercial paper is
restricted as to disposition under federal securities law and is generally sold
to institutional investors, such as the Funds, who agree that they are
purchasing the paper for investment purposes and not with a view to public
distribution. Any resale by the purchaser must be in an exempt transaction.
Section 4(2) commercial paper is normally resold to other institutional
investors like the Funds through or with the assistance of the issuer or
investment dealers who make a market in Section 4(2) commercial paper, this
providing liquidity. The Trust believes that the criteria for liquidity
established by the Board of Trustees are quite liquid. The Funds intend,
therefore, to treat the restricted securities which meet the criteria for
liquidity established by the Trustees, including Section 4(2) commercial paper,
as determined by the Funds' investment advisers, as liquid and not subject to
the investment limitation applicable to illiquid securities. In addition,
because Section 4(2) commercial paper is liquid, the Trust intends to not
subject such paper to the limitation applicable to restricted securities.
Variable and Floating Rate Securities.
The interest rates payable on certain securities in which the Funds may
invest are not fixed and may fluctuate based upon changes in market rates. A
variable rate obligation has an interest rate which is adjusted at predesignated
periods. Interest on a floating rate obligation is adjusted whenever there is a
change in the market rate of interest on which the interest rate payable is
based. Variable or floating rate obligations generally permit the holders of
such obligations to demand payment of principal from the issuer or a third party
at any time or at stated intervals. Variable and floating rate obligations are
less effective than fixed rate instruments at locking in a particular yield.
Nevertheless, such obligations may fluctuate in value in response to interest
rate changes if there is a delay between changes in market interest rates and
the interest reset date for an obligation. The Funds will take demand features
into consideration in determining the average portfolio duration of the Fund and
the effective maturity of individual municipal securities. In addition, the
absence of an unconditional demand feature exercisable within seven days will,
and the failure of the issuer or a third party to honor its obligations under a
demand feature might, require a variable or floating rate obligation to be
treated as illiquid for purposes of a Funds 15% limitation on illiquid
investments.
The Funds may invest in floating rate corporate debt obligations,
including increasing rate securities. Floating rate securities are generally
offered at an initial interest rate which is at or above prevailing market
rates. The interest rate paid on these securities is then reset periodically
(commonly every 90 days) to an increment over some predetermined interest rate
index. Commonly utilized indices include the three-month Treasury bill rate, the
six-month Treasury bill rate, the one-month or three-month London Interbank
Offered Rate (LIBOR), the prime rate of a bank, the commercial paper rates, or
the longer-term rates on U.S. Treasury securities.
Some of these floating rate corporate debt obligations include floating
rate corporate debt securities issued by savings and loans and collateralized by
adjustable rate mortgage loans, also known as collateralized thrift notes. Many
of these collateralized thrift notes have received AAA ratings from nationally
recognized statistical rating organizations. Collateralized thrift notes differ
from traditional "pass through" certificates in which payments made are linked
to monthly payments made by individual borrowers net of any fees paid to the
issuer or guarantor of such securities. Collateralized thrift notes pay a
floating interest rate which is tied to a pre-determined index, such as the
six-month Treasury bill rate. Floating rate corporate debt obligations also
include securities issued to fund commercial real estate construction.
Increasing rate securities, which currently do not make up a
significant share of the market in corporate debt securities, are generally
offered at an initial interest rate which is at or above prevailing market
rates. Interest rates are reset periodically (most commonly every 90 days) at
different levels on a predetermined scale. These levels of interest are
ordinarily set at progressively higher increments over time. Some increasing
rate securities may, by agreement, revert to a fixed rate status. These
securities may also contain features which allow the issuer the option to
convert the increasing rate of interest to a fixed rate under such terms,
conditions, and limitations as are described in each issue's prospectus.
Asset-Backed Securities
The Taxable Money Market Fund may invest in mortgage-related
asset-backed securities that are considered U.S. government securities. The
other Funds may invest in these and, to varying extents as described in the
Prospectus, in other asset-backed securities.
Asset-backed securities are created by the grouping of certain
governmental, government related and private loans, receivables and other lender
assets into pools. Interests in these pools are sold as individual securities.
Payments from the asset pools may be divided into several different tranches of
debt securities, with some tranches entitled to receive regular installments of
principal and interest, other tranches entitled to receive regular installments
of interest, with principal payable at maturity or upon specified call dates,
and other tranches only entitled to receive payments of principal and accrued
interest at maturity or upon specified call dates. Different tranches of
securities will bear different interest rates, which may be fixed or floating.
Because the loans held in the asset pool often may be prepaid without
penalty or premium, asset backed securities are generally subject to higher
prepayment risks than most other types of debt instruments. Prepayment risks on
mortgage securities tend to increase during periods of declining mortgage
interest rates, because many borrowers refinance their mortgages to take
advantage of the more favorable rates. Depending upon market conditions, the
yield that a Fund receives from the reinvestment of such prepayments, or any
scheduled principal payments, may be lower than the yield on the original
mortgage security. As a consequence, mortgage securities may be a less effective
means of "locking in" interest rates than other types of debt securities having
the same stated maturity and may also have less potential for capital
appreciation. For certain types of asset pools, such as collateralized mortgage
obligations, prepayments may be allocated to one tranche of securities ahead of
other tranches, in order to reduce the risk of prepayment for the other
tranches.
Prepayments may result in a capital loss to the Fund to the extent that
the prepaid mortgage securities were purchased at a market premium over their
stated amount. Conversely, the prepayment of mortgage securities purchased at a
market discount from their stated principal amount will accelerate the
recognition of interest income by the Fund, which would be taxed as ordinary
income when distributed to the shareholders.
The credit characteristics of asset-backed securities also differ in a
number of respects from those of traditional debt securities. The credit quality
of most asset-backed securities depends primarily upon the credit quality of the
assets underlying such securities, how well the entity issuing the securities is
insulated from the credit risk of the originator or any other affiliated
entities, and the amount and quality of any credit enhancement to such
securities.
Non-Mortgage Related Asset-Backed Securities. The Funds may invest in
non-mortgage related asset backed securities including, but not limited to,
interests in pools of receivables, such as credit card and accounts receivable
and motor vehicle and other installment purchase obligations and leases. These
securities may be in the form of pass-through instruments or asset-backed
obligations. The securities, all of which are issued by non-governmental
entities and carry no direct or indirect government guarantee, are structurally
similar to collateralized mortgage obligations and mortgage pass-through
securities, which are described below.
Non-mortgage related asset-backed securities present certain risks that
are not presented by mortgage backed securities. Primarily, these securities do
not have the benefit of the same security interest in the related collateral.
Credit card receivables are generally unsecured and the debtors are entitled to
the protection of a number of state and federal consumer credit laws, many of
which give such debtors the right to set off certain amounts owed on the credit
cards, thereby reducing the balance due. Most issuers of asset-backed securities
backed by motor vehicle installment purchase obligations permit the servicer of
such receivables to retain possession of the underlying obligations. If the
servicer sells these obligations to another party, there is a risk that the
purchaser would acquire an interest superior to that of the holders of the
related asset-backed securities. Further, if a vehicle is registered in one
state and is then registered because the owner and the obligor move to another
state, such re-registration could defeat the original security interest in the
vehicle in certain cases. In addition, because of the large number of vehicles
involved in a typical issuance and technical requirements under state laws, the
trustee with the holders of asset-backed securities backed by automobile
receivables may not have a proper security interest in all of the obligations
backing such receivables. Therefore, there is a possibility that recoveries on
repossessed collateral may not, in some cases, be available to support payments
on these securities.
Mortgage-Related Asset-Backed Securities. The Funds may also invest in
various mortgage-related asset-backed securities. These types of investments may
include adjustable rate mortgage securities, collateralized mortgage
obligations, real estate mortgage investment conduits, or other securities
collateralized by or representing an interest in real estate mortgages
(collectively, "mortgage securities"). Many mortgage securities are issued or
guaranteed by government agencies.
Adjustable Rate Mortgage Securities ("ARMS"). ARMS are
pass-through mortgage securities representing interests in adjustable
rather than fixed interest rate mortgages. The ARMS in which the Funds
invest are issued by the Government National Mortgage Association
("GNMA"), the Federal National Mortgage Association ("FNMA"), and the
Federal Home Loan Mortgage Corporation ("FHLMC") and are actively
traded. The underlying mortgages which collateralize ARMS issued by
GNMA are fully guaranteed by the Federal Housing Administration ("FHA")
or Veterans Administration ("VA"), while those collateralizing ARMS
issued by FHLMC or FNMA are typically conventional residential
mortgages conforming to strict underwriting size and maturity
constraints.
Collateralized Mortgage Obligations ("CMOS"). CMOs are bonds
issued by single-purpose, stand alone finance subsidiaries or trusts of
financial institutions, government agencies, investment bankers, or
companies related to the construction industry. CMOs purchased by the
Funds may be:
collateralized by pools of mortgages in which each mortgage
is guaranteed as to payment of principal and interest by an
agency or instrumentality of the U.S. government;
collateralized by pools of mortgages in which payment of
principal and interest is guaranteed by the issuer and such
guarantee is collateralized by U.S. government securities;
or
securities in which the proceeds of the issuance are
invested in mortgage securities and payment of the principal
and interest is supported by the credit of an agency or
instrumentality of the U.S. government.
All CMOs purchased by the Funds are investment grade, as rated
by a nationally recognized statistical rating organization.
Real Estate Mortgage Investment Conduits ("REMICS"). REMICs
are offerings of multiple class real estate mortgage-backed securities
which qualify and elect treatment as such under provisions of the
Internal Revenue Code. Issuers of REMICs may take several forms, such
as trusts, partnerships, corporations, associations, or segregated
pools of mortgages. Once REMIC status is elected and obtained, the
entity is not subject to federal income taxation. Instead, income is
passed through the entity and is taxed to the person or persons who
hold interests in the REMIC. A REMIC interest must consist of one or
more classes of "regular interests," some of which may offer adjustable
rates of interest, and a single class of "residual interests." To
qualify as a REMIC, substantially all the assets of the entity must be
in assets directly or indirectly secured principally by real property.
Resets of Interest. The interest rates paid on the ARMS, CMOs, and
REMICs in which the Funds invest generally are readjusted at intervals of one
year or less to an increment over some predetermined interest rate index. There
are two main categories of indices: those based on U.S. Treasury securities and
those derived from a calculated measure, such as a cost of funds index or a
moving average of mortgage rates. Commonly utilized indices include the one-year
and five-year constant maturity Treasury Note rates, the three-month Treasury
Bill rate, the 180-day Treasury Bill rate, rates on longer term Treasury
securities, the National Median Cost of Funds, the one-month or three-month
London Interbank Offered Rate (LIBOR), the prime rate of a specific bank, or
commercial paper rates. Some indices, such as the one-year constant maturity
Treasury Note rate, closely mirror changes in market interest rate levels.
To the extent that the adjusted interest rate on the mortgage security
reflects current market rates, the market value of an adjustable rate mortgage
security will tend to be less sensitive to interest rate changes than a fixed
rate debt security of the same stated maturity. Hence, ARMs which use indices
that lag changes in market rates should experience greater price volatility than
adjustable rate mortgage securities that closely mirror the market.
Caps and Floors. The underlying mortgages which collateralize the ARMS,
CMOs, and REMICs in which the Funds invest will frequently have caps and floors
which limit the maximum amount by which the loan rate to the residential
borrower may change up or down: (1) per reset or adjustment interval, and (2)
over the life of the loan. Some residential mortgage loans restrict periodic
adjustments by limiting changes in the borrower's monthly principal and interest
payments rather than limiting interest rate changes. These payment caps may
result in negative amortization.
The value of mortgage securities in which the Funds invest may be
affected if market interest rates rise or fall faster and farther than the
allowable caps or floors on the underlying residential mortgage loans.
Additionally, even though the interest rates on the underlying residential
mortgages are adjustable, amortization and prepayments may occur, thereby
causing the effective maturities of the mortgage securities in which the Funds
invest to be shorter than the maturities stated in the underlying mortgages.
Foreign Securities
Each Fund may invest in foreign securities, including foreign
securities not publicly traded in the United States. As described in the
Prospectus, investments in foreign securities involve special risks that differ
from those associated with investments in domestic securities.
Emerging and Developing Countries. The risks described in the
Prospectus often are heightened for investments in emerging or developing
countries. Compared to the United States and other developed countries, emerging
or developing countries may have relatively unstable governments, economies
based on only a few industries, and securities markets that trade a small number
of securities. Prices on these exchanges tend to be volatile and, in the past,
securities in these countries have offered a greater potential for gain (as well
as loss) than securities of companies located in developed countries. Further,
investment by foreign investors are subject to a variety of restrictions in many
emerging or developing countries. These restrictions may take the form of prior
governmental approval, limits on the amount or type of securities held by
foreigners, and limits on the type of companies in which foreigners may invest.
Additional restrictions may be imposed at any time by these and other countries
in which a Fund invests. In addition, the repatriation of both investment income
and capital from several foreign countries is restricted and controlled under
certain regulations, including in some cases the need for certain government
consents.
Currency Risks. Foreign securities are denominated in foreign currencies.
Therefore, the value in U.S. dollars of a Fund's assets and income may be
affected by changes in exchange rates and regulations. Although each Fund values
its assets daily in U.S. dollars, it will not convert its holdings of foreign
currencies to U.S. dollars daily. When a Fund converts its holdings to another
currency, it may incur conversion costs. Foreign exchange dealers realize a
profit on the difference between the prices at which they buy and sell
currencies.
A Fund may engage in foreign currency exchange transactions in
connection with its investments in foreign securities. The Fund will conduct its
foreign currency exchange transactions either on a spot (i.e., cash) basis at
the spot rate prevailing in the foreign currency exchange market or through
forward contracts to purchase or sell foreign currencies.
Forward Foreign Currency Exchange Contracts. A forward foreign currency
exchange contract involves an obligation to purchase or sell a specific currency
at a future date, which may be any fixed number of days from the date of the
contract agreed upon by the parties, at a price set at the time of the contract.
These contracts are traded directly between currency traders usually large
commercial banks) and their customers. When a Fund enters into a contract for
the purchase or sale of a security denominated in a foreign currency, it may
want to establish the U.S. dollar cost or proceeds, as the case may be. By
entering into a forward contract in U.S. dollars for the purchase or sale of the
amount of foreign currency involved in an underlying security transaction, the
Fund is able to protect itself against a possible loss between trade and
settlement dates resulting from an adverse change in the relationship between
the U.S. dollar and such foreign currency. However, this tends to limit
potential gains which might result from a positive change in such currency
relationships.
A Fund will not enter into forward foreign currency exchange contracts
or maintain a net exposure in such contracts where the Fund would be obligated
to deliver an amount of foreign currency in excess of the value of the Fund's
securities or other assets denominated in that currency or denominated in a
currency or currencies that the adviser believes will reflect a high degree of
correlation with the currency with regard to price movements. The Fund generally
will not enter into forward foreign currency exchange contracts with a term
longer than one year.
Foreign Currency Options. A foreign currency option provides the option
buyer with the right to buy or sell a stated amount of foreign currency at the
exercise price on a specified date or during the option period. The owner of a
call option has the right, but not the obligation, to buy the currency.
Conversely, the owner of a put option has the right, but not the obligation, to
sell the currency. When the option is exercised, the seller (i.e., writer) of
the option is obligated to fulfill the terms of the sold option. However, either
the seller or the buyer may, in the secondary market, close its position during
the option period at any time prior to expiration.
A call option on foreign currency generally rises in value if the
underlying currency appreciates in value, and a put option on foreign currency
generally falls in value if the underlying currency depreciates in value.
Although purchasing a foreign currency option can protect a Fund against an
adverse movement in the value of a foreign currency, the option will not limit
the movement in the value of such currency. For example, if the Fund was holding
securities denominated in a foreign currency that was appreciating and had
purchased a foreign currency put to hedge against a decline in the value of the
currency, the Fund would not have to exercise their put option. Likewise, if the
Fund were to enter into a contract to purchase a security denominated in foreign
currency and, in conjunction with that purchase, were to purchase a foreign
currency call option to hedge against a rise in value of the currency, and if
the value of the currency instead depreciated between the date of purchase and
the settlement date, the Fund would not have to exercise its call. Instead, the
Fund could acquire in the spot market the amount of foreign currency needed for
settlement.
Buyers and sellers of foreign currency options are subject to the same
risks that apply to options generally. In addition, there are certain additional
risks associated with foreign currency options. The markets in foreign currency
options are relatively new, and a Fund's ability to establish and close out
positions on such options is subject to the maintenance of a liquid secondary
market. Although a Fund will not purchase or write such options unless and
until, in the opinion of the Fund's investment adviser, the market for them has
developed sufficiently to ensure that the risks in connection with such options
are not greater than the risks in connection with the underlying currency, there
can be no assurance that a liquid secondary market will exist for a particular
option at any specific time. In addition, options on foreign currencies are
affected by all of those factors that influence foreign exchange rates and
investments generally. Foreign currency options that are considered to be
illiquid are subject to each Fund's 15% limitation on illiquid securities.
The value of a foreign currency option depends upon the value of the
underlying currency relative to the U.S. dollar. As a result, the price of the
option position may vary with changes in the value of either or both currencies
and may have no relationship to the investment merits of a foreign security.
Because foreign currency transactions occurring in the interbank market involve
substantially larger amounts than those that may be involved in the use of
foreign currency options, investors may be disadvantaged by having to deal in an
odd lot market (generally consisting of transactions of less than $1 million)
for the underlying foreign currencies at prices that are less favorable than for
round lots.
There is no systematic reporting of last sale information for foreign
currencies or any regulatory requirement that quotations available through
dealers or other market sources be firm or revised on a timely basis. Available
quotation information is generally representative of very large transactions in
the interbank market and thus may not reflect relatively smaller transactions
(i.e., less than $1 million) where rates may be less favorable. The interbank
market in foreign currencies is a global, around the-clock market. To the extent
that the U.S. option markets are closed while the markets for the underlying
currencies remain open, significant price and rate movements may take place in
the underlying markets that cannot be reflected in the options markets until
they reopen.
Foreign Bank Instruments
Each Fund may invest in foreign bank instruments, including Eurodollar
Certificates of Deposit ("ECDs"), Eurodollar Time Deposits ("ETDs"),Yankee
Certificates of Deposit ("Yankee Cds"), and Europaper. These instruments are
subject to somewhat different risks than domestic obligations of domestic
issuers. Examples of these risks include international, economic and political
developments, foreign governmental restrictions that may adversely affect the
payment of principal or interest, foreign withholdings or other taxes on
interest income, difficulties in obtaining or enforcing a judgment against the
issuing bank, and the possible impact of interruptions of the flow of
international currency transactions. Different risks may also exist for ECDs,
ETDs, and Yankee Cds because the banks issuing these instruments, or their
domestic or foreign branches, are not necessarily subject to the same regulatory
requirements that apply to domestic banks, such as reserve requirements, loan
requirements, loan limitations, examinations, accounting, auditing, and
recording keeping and the public availability of information. These factors will
be carefully considered by a Fund's adviser in selecting investments for the
Fund.
U.S. Government Securities
Each Fund may invest in obligations issued or guaranteed by the U.S.
government and its agencies, authorities or instrumentalities. Some U.S.
government securities, such as Treasury bills, notes and bonds, which differ
only in their interest rates, maturities and times of issuance, are supported by
the full faith and credit of the United States of America. Others, such as
obligations issued or guaranteed by U.S. government agencies, authorities or
instrumentalities, are supported either by (a) the full faith and credit of the
U.S. government (such as securities of the Small Business Administration), (b)
the right of the issuer to borrow from the Treasury (such as securities of
Federal Home Loan Banks), (c) the discretionary authority of the U.S. government
to purchase the agency's obligations (such as securities of the Federal National
Mortgage Association), or (d) only the credit of the issuer (such as securities
of the Financing Corporation). The U.S. government is under no legal obligation
to purchase the obligations of its agencies, authorities and instrumentalities.
Securities guaranteed as to principal and interest by the U.S. government and
its agencies, authorities or instrumentalities are deemed to include (i)
securities for which the payment of principal and interest is based by a
guaranty of the U.S. government or its agencies, authorities or
instrumentalities, and (ii) participations in loans made to foreign governments
or their agencies that are so guaranteed. The secondary market for certain of
these participations is limited. Such participations may therefore be regarded
as illiquid.
Options
Each Fund (other than the Taxable Money Market Fund) may attempt to
hedge all or a portion of its portfolio by buying put options on portfolio
securities. These Funds may also write covered call options on portfolio
securities to attempt to increase their current income. Each Fund currently does
not intend to invest more than 5% of its net assets in premiums on options
transactions.
Purchasing Put Options on Portfolio Securities. A Fund may purchase put
options on portfolio securities to protect against price movements in particular
securities in its portfolio. A put option gives the Fund, in return for a
premium, the right to sell the underlying security to the writer (seller) at a
specified price during the term of the option.
Writing Covered Call Options on Portfolio Securities. A Fund may also
write covered call options to generate income. As writer of a call option, the
Fund has the obligation upon exercise of the option during the option period to
deliver the underlying security upon payment of the exercise price. The Fund may
only sell call options either on securities held in its portfolio or on
securities which it has the right to obtain without payment of further
consideration (or has segregated cash in the amount of any additional
consideration).
Purchasing and Writing Over-The-Counter Options. A Fund may purchase
and write over-the-counter options on portfolio securities in negotiated
transactions with the buyers or writers of the options for those options on
portfolio securities held by the Fund and not traded on an exchange.
Over-the-counter options are two party contracts with price and terms negotiated
between buyer and seller. In contrast, exchange traded options are third party
contracts with standardized strike prices and expiration dates and are purchased
from a clearing corporation. Exchange-traded options have a continuous liquid
market while over-the-counter options may not.
Financial Futures and Options on Financial Futures
Each Fund (other than the Taxable Money Market Fund) may purchase and
sell financial futures contracts to hedge all or a portion of its portfolio
against changes in interest rates. However, none of the Funds intends to do so
during the current fiscal year. Financial futures contracts call for the
delivery of particular debt instruments at a certain time in the future. The
seller of the contract agrees to make delivery of the type of instrument called
for in the contract and the buyer agrees to take delivery of the instrument at
the specified future time.
Each Fund (other than the Taxable Money Market Fund) may also write
call options and purchase put options on financial futures contracts as a hedge
to attempt to protect securities in its portfolio against decreases in value.
However, none of the Funds intends to do so during the current fiscal year. When
a Fund writes a call option on a futures contract, it is undertaking the
obligation of selling a futures contract at a fixed price at any time during a
specified period if the option is exercised. Conversely, as purchaser of a put
option on a futures contract, the Fund is entitled (but not obligated) to sell a
futures contract at the fixed price during the life of the option.
No Fund may purchase or sell futures contracts or related options if
immediately thereafter the sum of the amount of margin deposits on the Fund's
existing futures positions and premiums paid for related options would exceed 5%
of the market value of the Fund's total assets. When a Fund purchases a futures
contract, an amount of cash and cash equivalents, equal to the underlying
commodity value of the futures contract (less any related margin deposits), will
be deposited in a segregated account with the Fund's custodian (or the broker,
if legally permitted) to collateralize the position and thereby insure that the
use of such futures contract is unleveraged.
Risks. When a Fund uses financial futures and options on financial
futures as hedging devices, there is a risk that the prices of the securities
subject to the futures contracts may not correlate perfectly with the prices of
the securities in the Fund's portfolio. This may cause the futures contracts and
any related options to react differently than the portfolio securities to market
changes. In addition, the Fund's investment adviser could be incorrect in its
expectations about the direction or extent of market factors such as interest
rate movements. In these events, the Fund may lose money on the futures
contracts or options. It is not certain that a secondary market for positions in
futures contracts or for options will exist at all times. Although the
investment adviser will consider liquidity before entering into options
transactions, there is no assurance that a liquid secondary market on an
exchange or otherwise will exist for any particular futures contract or option
at any particular time. The Fund's ability to establish and close out futures
and options positions depends on this secondary market.
Credit Enhancement
Certain of the Funds' investments may have been credit enhanced by a
guaranty, letter of credit or insurance. The Funds typically evaluate the credit
quality and ratings of credit enhanced securities based upon the financial
condition and ratings of the party providing the credit enhancement (the "credit
enhancer"), rather than the issuer. Generally, a Fund will not treat credit
enhanced securities as having been issued by the credit enhancer for
diversification purposes. However, under certain circumstances applicable
regulations may require the Fund to treat the securities as having been issued
by both the issuer and the credit enhancer. The bankruptcy, receivership or
default of the credit enhancer will adversely affect the quality and
marketability of the underlying security.
Demand Notes
All of the Funds may invest in demand notes. These are borrowing
arrangements between a corporation and an institutional lender (such as the
Fund) payable upon demand by either party. The notice period for demand
typically ranges from one to seven days, and the party may demand full or
partial payment. Demand notes usually provide for floating or variable rates of
interest, and are subject to the considerations described above with regard to
foreign securities.
Demand Features
The Funds may acquire securities that are subject to puts and standby
commitments ("demand features") to purchase the securities at their principal
amount (usually with accrued interest) within a fixed period following a demand
by the Fund. The demand feature may be issued by the issuer of the underlying
securities, a dealer in the securities or by another third party, and may not be
transferred separately from the underlying security. A Fund uses these
arrangements to provide the Fund with liquidity and not to protect against
changes in the market value of the underlying securities. The bankruptcy,
receivership or default by the issuer of the demand feature, or a default on the
underlying security or other event that terminates the demand feature before its
exercise, will adversely affect the liquidity of the underlying security. Demand
features that are exercisable even after a payment default on the underlying
security are treated as a form of credit enhancement.
When-Issued and Delayed Delivery Transactions
These transactions are arrangements in which a Fund purchases
securities with payment and delivery scheduled for a future time. The Fund
engages in when-issued and delayed delivery transactions only for the purpose of
acquiring portfolio securities consistent with the Fund's investment objective
and policies, and not for investment leverage.
These transactions are made to secure what is considered to be an
advantageous price and yield for the Fund. Settlement dates may be a month or
more after entering into these transactions, and the market values of the
securities purchased may vary from the purchase prices.
No fees or other expenses, other than normal transaction costs, are
incurred. However, liquid assets of the Fund sufficient to make payment for the
securities to be purchased are segregated at the trade date. These securities
are marked to market daily and are maintained until the transaction is settled.
Each Fund may engage in these transactions to an extent that would cause the
segregation of an amount up to 25% of the value of its net assets.
Lending of Portfolio Securities
A Fund will only enter into loan arrangements with broker/dealers,
banks, or other institutions which its investment adviser has determined are
creditworthy under guidelines established by the Board of Trustees. In these
loan arrangements, the Fund will receive collateral in the form of cash or U.S.
government securities equal to at least 100% of the value of the securities
loaned. The Fund continues to be entitled to payments in amounts equal to the
interest, dividends and other distributions on the loaned security and receives
interest on the amount of the loan. The collateral received when a Fund lends
portfolio securities must be valued daily and, should the market value of the
loaned securities increase, the borrower must furnish additional collateral to
the Fund. During the time portfolio securities are on loan, the borrower pays
the Fund any dividends or interest paid on such securities. Loans are subject to
termination at the option of the Fund or the borrower. The Fund may pay
reasonable administrative and custodial fees in connection with a loan and may
pay a negotiated portion of the interest earned on the cash or equivalent
collateral to the borrower or placing broker.
Selling Securities Short
The Starwood Strategic Fund may sell securities short. When the Fund
makes a short sale, it must leave the proceeds from the short sale with the
broker and it must also deposit with the broker a certain amount of cash or
government securities to collateralize its obligation to replace the borrowed
securities which have been sold. In addition, the Fund must put in a segregated
account (not with the broker) an amount of cash or U.S. government securities
equal to the difference between the market value of the securities sold short at
the time they were sold short and any cash or government securities deposited as
collateral with the broker in connection with the short sale (not including the
proceeds from the short sale). In addition, until the Fund replaces the borrowed
security, it will daily maintain the segregated account at a level so that the
amount deposited in the account plus the amount deposited with the broker (not
including the proceeds from the short sale) will equal the greater of (a) the
current market value of the securities sold short and (b) the market value of
the securities at the time they were sold short. As a result of these
requirements, the Fund will not gain any leverage merely by selling short,
except to the extent that it earns interest on the immobilized cash or
government securities while also being subject to the possibility of gain or
loss from the securities sold short. The Fund may sell securities short to the
extent that would cause the amounts on deposits or segregated to equal 25% of
the value of its net assets.
Restricted and Illiquid Securities
Restricted securities are any securities in which a Fund may otherwise
invest pursuant to its investment objective and policies, but which are subject
to restriction on resale under federal securities law. Each Fund will limit
investments in illiquid securities, including certain restricted securities not
determined by the Board of Trustees to be liquid, non-negotiable time deposits,
and repurchase agreements providing for settlement in more than seven days after
notice, to 15% of the value of its net assets (10% in the case of the Taxable
Money Market Fund). The ability of the Trustees to determine the liquidity of
certain restricted securities is permitted under the Securities and Exchange
Commission ("SEC") Staff position set forth in the adopting release for Rule
144A under the Securities Act of 1933 (the "Rule"). The Rule is a non exclusive
safe harbor for certain secondary market transactions involving securities
subject to restrictions on resale under federal securities laws. The Rule
provides an exemption from registration for resales of otherwise restricted
securities to qualified institutional buyers. The Rule was expected to further
enhance the liquidity of the secondary market for securities eligible for resale
under Rule 144A. The Trust believes that the Staff of the SEC has left the
question of determining the liquidity of all restricted securities eligible for
resale under Rule 144A to the Trustees. The Trustees consider the following
criteria in determining the liquidity of certain restricted securities:
the frequency of trades and quotes for the security;
the number of dealers willing to purchase or sell the security and the
number of other potential buyers;
dealer undertakings to make a market in the security; and
the nature of the security and the nature of the marketplace trades.
Repurchase Agreements
The Funds require the Custodian to take possession of the securities
subject to repurchase agreements, and these securities are marked to market
daily. To the extent that the original seller does not repurchase the securities
from a Fund, the Fund could receive less than the repurchase price on any sale
of such securities. In the event that a defaulting seller files for bankruptcy
or becomes insolvent, disposition of securities by the Fund might be delayed
pending court action. The Funds believe that under the regular procedures
normally in effect for custody of the Funds' portfolio securities subject to
repurchase agreements, a court of competent jurisdiction would rule in favor of
the Fund and allow retention or disposition of such securities. A Fund will only
enter into repurchase agreements with banks and other recognized financial
institutions such as broker/dealers which are deemed by the Fund's adviser to be
creditworthy pursuant to guidelines established by the Directors.
Reverse Repurchase Agreements
A reverse repurchase transaction is similar to borrowing cash. In a
reverse repurchase agreement a Fund transfers possession of a portfolio
instrument to another person, such as a financial institution, broker, or
dealer, in return for a percentage of the instrument's market value in cash, and
agrees that on a stipulated date in the future, the Fund will repurchase the
portfolio instrument by remitting the original consideration plus interest at an
agreed upon rate. The use of reverse repurchase agreements may enable the Fund
to avoid selling portfolio instruments at a time when a sale may be deemed to be
disadvantageous, but the ability to enter into reverse repurchase agreements
does not ensure that the Fund will be able to avoid selling portfolio
instruments at a disadvantageous time. When effecting reverse repurchase
agreements, liquid assets of the Fund, in a dollar amount sufficient to make
payment for the obligations to be purchased, are segregated at the trade date.
These securities are marked to market daily and are maintained until the
transaction is settled.
Portfolio Turnover
The Funds will not attempt to set or meet a portfolio turnover rate
since any turnover would be incidental to transactions undertaken in an attempt
to achieve a Fund's investment objective, without regard to the length of time a
particular security may have been held. The Adviser does not anticipate that
portfolio turnover will result in adverse tax consequences.
INVESTMENT LIMITATIONS
Fundamental Investment Limitations
The following investment limitations cannot be changed without shareholder
approval. These limitations are considered at the time of purchase; a sale of
securities is not required in the event of a subsequent change in circumstances.
Selling Short and Buying on Margin
The Funds will not sell securities short or purchase securities on margin,
except that (a) the Starwood Strategic Fund may sell securities short to the
extent that would cause amounts on deposits or segregated as a result thereof to
equal 25% of the value of its net assets, (b) the Funds (other than the Taxable
Money Market Fund) may purchase securities on margin in connection with the
purchase and sale of options, financial futures and options on financial
futures, and (c) all Funds may obtain such short-term credits as are necessary
for clearance of transactions.
Issuing Senior Securities and Borrowing Money
The Funds will not issue senior securities except as required by
forward commitments to purchase securities or currencies and except that each
Fund may borrow money and engage in reverse repurchase agreements in amounts up
to one-third of the value of its total assets, including the amounts borrowed.
The Funds (other than the Starwood Strategic Fund) will not borrow money or
engage in reverse repurchase agreements for investment leverage, but rather as a
temporary, extraordinary, or emergency measure or to facilitate management of
the portfolio by enabling the Fund to meet redemption requests when the
liquidation of portfolio securities is deemed to be inconvenient or
disadvantageous. Each Fund (other than the Starwood Strategic Fund) will not
purchase any securities while borrowings in excess of 5% of its total assets are
outstanding. During the period any reverse repurchase agreements are
outstanding, but only to the extent necessary to assure completion of the
reverse repurchase agreements, the Funds will restrict the purchase of portfolio
instruments to money market instruments maturing on or before the expiration
date of the reverse repurchase agreements.
Pledging Assets
The Funds will not mortgage, pledge, or hypothecate any assets except
to secure permitted borrowings. In those cases, a Fund may pledge assets having
a market value not exceeding the lesser of the dollar amounts borrowed or 15% of
the value of total assets at the time of the borrowing. Margin deposits for the
purchase and sale of options, financial futures contracts and related options
are not deemed to be a pledge.
Diversification of Investments
With respect to securities comprising 75% of the value of its total
assets (100% in the case of the Taxable Money Market Fund), each Fund will not
purchase securities of any one issuer (other than cash, cash items, securities
issued or guaranteed by the government of the United States or its agencies or
instrumentalities and repurchase agreements collateralized by U.S. government
securities, and securities of other investment companies) if as a result more
than 5% of the value of its total assets would be invested in the securities of
that issuer or the Fund would own more than 10% of the outstanding voting
securities of that issuer.
Investing in Real Estate
The Funds will not buy or sell real estate, including limited
partnership interests in real estate, although it may invest in securities of
companies whose business involves the purchase or sale of real estate or in
securities which are secured by real estate or interests in real estate.
Investing in Commodities
The Funds will not purchase or sell commodities, except that the Funds
(other than the Taxable Money Market Fund) may purchase and sell financial
futures contracts and related options. Further, the Funds may engage in
transactions in foreign currencies and may purchase and sell options on foreign
currencies and indices for hedging purposes.
Underwriting
The Funds will not underwrite any issue of securities, except as it may
be deemed to be an underwriter under the Securities Act of 1933 in connection
with the sale of restricted securities which a Fund may purchase pursuant to its
investment objective, policies, and limitations.
Lending Cash or Securities
Each Fund will not lend any of its assets, except portfolio securities
up to one-third of the value of its total assets. This shall not prevent a Fund
from purchasing or holding U.S. government obligations, money market
instruments, variable rate demand notes, bonds, debentures, notes, certificates
of indebtedness, or other debt securities, entering into repurchase agreements,
or engaging in other transactions where permitted by the Fund's investment
objective, policies and limitations.
Concentration of Investments
Each Fund will not invest 25% or more of the value of its total assets
in any one industry or in government securities of any one foreign country,
except that (i) each Fund may invest without limitation in securities issued or
guaranteed by the U.S. government, its agencies or instrumentalities, (ii) the
First Lexington Balanced Fund may invest without limitation in other investment
companies, and (iii) the Taxable Money Market Fund may invest without limitation
in domestic bank instruments.
Investing in Securities of Other Investment Companies
Each Fund will limit its investments in other investment companies to
no more than 3% of the total outstanding voting securities of any one investment
company, will invest no more than 5% of its total assets in any one investment
company, and will invest no more than 10% of its total assets in investment
companies in general, except that the First Lexington Balanced Fund may invest
of up to 25% of its total assets in any one investment company and up to 100% of
its total assets in investment companies in general, subject to the other
limitations described herein. The foregoing limitations are not applicable to
investment company securities acquired as part of a merger, consolidation,
reorganization or other acquisition.
Dealing in Puts and Calls
The Funds will not deal in puts and calls, except that each Fund (other
than the Taxable Money Market Fund) may write covered call options and secured
put options on up to 25% of its net assets and may purchase put and call
options, provided that no more than 5% of the fair market value of its net
assets may be invested in premiums on such options.
Non-Fundamental Investment Limitations
The following limitations may be changed by the Board of Trustees
without shareholder approval. Shareholders will be notified before any material
change in these limitations becomes effective.
Investing in Restricted Securities
Each Fund will not invest more than 10% of the value of its total
assets in securities subject to restrictions on resale under the Securities Act
of 1933, except for commercial paper issued under Section 4(2) of the Securities
Act of 1933 and certain other restricted securities which meet the criteria for
liquidity as established by the Trustees.
Investing in Illiquid Securities
Each Fund will not invest more than 15% of the value of its net assets
(10% in the case of the Taxable Money Market Funds) in illiquid securities,
including repurchase agreements providing for settlement in more than seven days
after notice, over-the-counter options, certain foreign currency options, and
certain securities not determined by the Trustees to be liquid.
Investing in New Issuers
Each Fund will not invest more than 5% of the value of its total assets
in securities of companies, including their predecessors, that have been in
operation for less than three years. With respect to asset backed securities,
the Funds will treat the originator of the asset pool as the company issuing the
security for purposes of determining compliance with this limitation.
Investing in Issuers whose Securities are Owned by Officers and Trustees
Each Fund will not purchase or retain the securities of any issuer if
the officers and Trustees of the Trust or its investment adviser owning
individually more than 1/2 of 1% of the issuer's securities together own more
than 5% of the issuer's securities.
Investing in Minerals
The Funds will not purchase or sell oil, gas, or other mineral
exploration or development programs or leases, although they may purchase the
securities of issuers which invest in or sponsor such programs.
Investing in Warrants
Each Fund (other than the Taxable Money Market Fund) may invest up to
5% of its total assets in warrants, including those acquired in units or
attached to other securities. For purposes of this investment restriction,
warrants will be valued at the lower of cost or market, except that warrants
acquired by a Fund in units with or attached to securities may be deemed to be
without value.
MANAGEMENT OF THE TRUST
Trustees and Officers of the Trust
Trustees and officers of the Trust, together with information as to
their principal business occupations during at least the last five years, are
shown below. Each Trustee who is an "interested person" of the Trust, as defined
in the Investment Company Act of 1940, is indicated by an asterisk. The officers
of the Trust listed below are affiliated persons of the Trust and the Adviser.
<TABLE>
<S> <C>
Name, Address and Age Positions with the Trust and Principal Occupation
--------------------- -------------------------------------------------
* Timothy L. Ashburn (47) Trustee (Chairman of the Board) and President of the Trust and of the Star Select
431 N Pennsylvania St. Funds; Chairman of the Board and President, Unified Investment Advisers, Inc.
Indianapolis, IN 46204 (December 1994 to present); Chairman of the Board, Unified Corporation, Unified
Management Corporation and Unified Fund Services, Inc. (December 1989 to present);
Trust Division Manager and Senior Trust Officer, Vine Street Trust Company (July 1991
to April 1994).
David Bottoms Trustee of the Trust;
30 Wall Street
New York, NY 10005
Daniel J. Condon (47) Trustee of the Trust and of the Star Select Funds; Vice President and Officer,
101 Carley Court International Crankshaft, Inc. (1990 to present); General Manager,
Georgetown, KY 40324 Van Leer Containers, Inc. (1988 to 1990).
Philip L. Conover (51) Trustee of the Trust and of the Star Select Funds; Adjunct Professor of Finance,
8218 Cypress Hollow Drive University of South Florida (August 1994 to present); Managing Director and Chief
Sarasota, FL 34238 Operating Officer, Federal Housing Finance Board (November 1990 to
April 1994); President and CEO, Trustcorp Bank (February 1989 to November 1990).
John Hinkel (43) Trustee of the Trust; Partner, Fowler Measle & Bell (1986 to present).
300 W. Vine St.
Lexington, KY 40507
David E. LaBelle (48) Trustee of the Trust and of the Star Select Funds; Vice President of Compensation
5005 LBJ Freeway Benefits, Occidental Petroleum Corporation (May 1993 to present); Vice President of
Dallas, TX 76092 Human Resources, Island Creek Coal Company (A subsidiary of Occidental Petroleum)
June 1990 to April 1993); Director of Human Resources, Occidental Chemical
Corporation (March 1989 to May 1990).
Thomas G. Napurano (56) Treasurer of the Trust and of the Star Select Funds; Chief Financial Officer, Unified
431 N. Pennsylvania St. Investment Advisers, Inc. (January 1995 to Present); Senior Vice President and Chief
Indianapolis, IN 46204 Financial Officer of Unified Financial Services, Unified Management Corporation and
Unified Fund Services, Inc.
Carol J. Highsmith (33) Secretary of the Trust and of the Star Select Funds; Secretary of Unified Financial
431 N. Pennsylvania St. Services, Inc. and Unified Investment Advisers, Inc. (October 1996 to present);
Indianapolis, IN 46204 employed by Unified Fund Services, Inc. (November 1994 to present).
</TABLE>
No executive officer of the Trust receives annual aggregate
compensation from the Trust in excess of $60,000, and no Trustee or executive
officer of the Trust receives any pension or retirement benefits from the Trust.
The table sets forth the compensation paid by The Vintage Funds (the predecessor
entity to the Trust) during the fiscal year ended September 30, 1997, to its
Trustees who are Trustees of the Trust, all of which consists of meeting fees.
In addition to The Vintage Funds' trustees listed below, John Hinkel and David
Bottoms are Trustees of the Trust. It is anticipated that fees paid by the Trust
during the fiscal year ending September 30, 1998 will be comparable.
Compensation Table
Name of Trustee Total Compensation
- --------------- ------------------
Timothy L. Ashburn $0
Daniel J. Condon $9600
Philip L. Conover $7200
David E. LaBelle $9600
Fund Ownership
As of January 2, 1998, the following persons may be deemed to
beneficially own five percent (5%) or more of the Starwood Strategic Fund:
Robert A. Orben, 1080 Pintail Ct., Columbus, IN - 21.03%; Josephine B. Smith,
1346 Barrowdale Rd., Rydal, PA - 13.08%; John V. Rowan, Jr., 14 Sutton Pl. S.,
New York, NY - 10.41%; Rosa C. Raveneau, 2 Tudor City Pl., Apt 1CN, New York, NY
- - 8.68%; Dr. Richard Stevenson, Jr., 51 Mohegan Rd., Larchmont, NY - 5.25%.
As of January 2, 1998, the following persons may be deemed to
beneficially own five percent (5%) or more of the First Lexington Balanced Fund:
Osco Employees Retirement Trust, 7180 N. Center St., Mentor, OH - 8.99%; Lake
County Nursery, Inc., 401(k) Retirement Plan, 2353 Alexandria Dr., Suite 100,
Lexington, KY - 5.72%.
In addition to the beneficial ownership described above, the officers
and Trustees as a group beneficially owned as of January 2, 1998, 1.54% of the
First Lexington Balanced Fund, and less than 1% of the other Funds.
INVESTMENT ADVISORY ARRANGEMENTS
Investment Adviser
The Trust's investment adviser is Unified Investment Advisers, Inc. (the
"Adviser"). Timothy L. Ashburn, Chairman of the Board and President of the
Trust, is the Chairman of the Board and Chief Executive Officer of the Adviser.
Mr. Ashburn, Jack R. Orben, and Dr. Gregory W. Kasten each may be deemed to
control the Adviser, because of their ownship interest in the Adviser and/or
Unified Financial Services, Inc. Thomas G. Napurano, Treasurer of the Trust, is
the Executive Vice President and Chief Financial Officer of the Adviser. Carol
J. Highsmith, Secretary of the Trust, is Secretary of the Adviser.
Under the terms of the advisory agreement (the "Agreement"), the
Adviser retains the right to use the names "Unified" and "Starwood" in
connection with another investment company or business enterprise with which the
Adviser is or may become associated. The Trust's right to use the name "Unified"
automatically ceases ninety days after termination of the Agreement and may be
withdrawn by the Adviser on ninety days written notice.
The Adviser may make payments to banks or other financial institutions
that provide shareholder services and administer shareholder accounts. The
Glass-Steagall Act prohibits banks from engaging in the business of
underwriting, selling or distributing securities. Although the scope of this
prohibition under the Glass-Steagall Act has not been clearly defined by the
courts or appropriate regulatory agencies, management of the Funds believes that
the Glass-Steagall Act should not preclude a bank from providing such services.
However, state securities laws on this issue may differ from the interpretations
of federal law expressed herein and banks and financial institutions may be
required to register a dealers pursuant to state law. If a bank were prohibited
from continuing to perform all or a part of such services, management of the
Funds believes that there would be no material impact on the Funds or its
shareholders. Banks may charge their customers fees for offering these services
to the extent permitted by applicable regulatory authorities, and the overall
return to those shareholders availing themselves of the bank services will be
lower than to those shareholders who do not. The Funds may from time to time
purchase securities issued by banks which provide such services; however, in
selecting investments for the Funds, no preference will be shown for such
securities.
Sub-Adviser
Health Financial, Inc. ("HFI") is the sub-adviser to the First
Lexington Balanced Fund. HFI is a wholly owned subsidiary of Unified Financial
Services, Inc., and may be deemed to be controlled by Gregory W. Kasten and
Timothy L. Ashburn, due to their ownship interest in Unified Financial Services,
Inc. Under the terms of the sub-advisory agreement, the sub-adviser retains the
right to use the name "First Lexington" in connection with another investment
company or business enterprise with which the sub-adviser is or may become
associated. The Trust's right to use the name "First Lexington" automatically
ceases ninety days after termination of the Agreement and may be withdrawn by
the sub-adviser on ninety days written notice.
Advisory Fees
For their advisory services, the Adviser and Sub-Adviser receive an
annual investment advisory fee as described in the Prospectus. Prior to February
1, 1997, the Adviser and Sub-Advisers were compensated under different
arrangements. For the fiscal year ended September 30, 1997, the Starwood
Strategic Fund, the Laidlaw Fund, the First Lexington Balanced Fund, and the
Taxable Money Market Fund paid advisory fees of $5,778, $18,634, $4,426, and
$245,999 respectively. For the fiscal year ended September 30, 1996, the Taxable
Money Market Fund paid advisory fees of $194,953, and the Adviser waived its
entire advisory fee with respect to the other Funds. Fiduciary Counsel, Inc.,
which acted as Sub-Adviser to the Taxable Money Market Fund, received $24,166
from the Adviser for advisory services provided to the Fund. During the period
from June 2, 1995 (commencement of operations) through September 30, 1995, the
Adviser waived its entire advisory fee with respect to each Fund. The
Sub-Advisers were not paid any sub-advisory fees during that period.
DISTRIBUTION ARRANGEMENTS
Rule 12b-1 under the Investment Company Act of 1940 describes the
circumstances under which an investment company such as the Trust may, directly
or indirectly, bear the expenses of distributing its shares. The Rule defines
such distribution expenses to include the cost of any activity which is
primarily intended to result in the sale of Trust shares.
The Trust has adopted a Distribution Plan with respect to each of the
Funds. Pursuant to this Plan, the Funds are authorized to incur distribution
expenses including those incurred in connection with preparing and distributing
sales literature and advertising, preparing, printing and distributing
prospectuses and statements of additional information used for other than
regulatory purposes or distribution to existing shareholders, implementing and
operating the Plan, and compensating third parties for their distribution
services. Distribution expenses attributable to a particular Fund are borne by
that Fund. Distribution expenses which are not readily identifiable as
attributable to a particular Fund are allocated among the Funds based on the
relative size of their average net assets.
Each Fund may expend annually up to 0.10% of the Fund's average daily
net assets pursuant to the Plan. A report of the amounts so expended by each
Fund and the purpose of the expenditures must be made to and reviewed by the
Board of Trustees at least quarterly. In addition, the Plan may not be amended
to increase materially the costs which any Fund may bear for distribution
pursuant to the Plan without approval of the amendment by the shareholders of
the affected Fund.
The Board of Trustees expects that the adoption of the Plan will result
in the sale of a sufficient number of shares so as to allow the Funds to achieve
economic viability. It is also anticipated that an increase in the size of each
Fund will facilitate more efficient portfolio management and assist the Fund in
seeking to achieve its investment objective.
During the fiscal year ended September 30, 1997, Unified Management
Corporation, the Trust's distributor, spent $64,235 under the Distribution Plan.
Of this amount, approximately $2875 was spent on printing and mailing marketing
materials; $28,129 was spent on sales and marketing payroll; $213 was spent on
advertising and $1647 was spent on sales related travel and entertainment
expenses. The Trust's total reimbursement of the distributor was .10% of each
Fund's average daily net assets, or $60,307.
ADMINISTRATIVE SERVICES ARRANGEMENTS
The Trust has adopted a Shareholders Services Plan (the "Services
Plan") with respect to each Fund. Pursuant to the Services Plan, the Funds are
authorized to incur annual expenses of up to 0.15% of their average daily net
assets for administrative support services provided their shareholders. Such
expenses may include costs and expense incurred by third parties for
administrative services to the Funds' shareholders, including answering
shareholder inquiries, maintenance of shareholder accounts, performing sub
accounting, obtaining taxpayer identification number certificates from
shareholders, personnel whose time is attributable to servicing the shareholders
of the Funds, and the provision of personal services to shareholders. For the
fiscal year ended September 30, 1997, the Trust's Administrator, Unified Fund
Services, Inc., received the following payments pursuant to the Services Plan:
Starwood Strategic Fund, $1,158; Aggressive Growth Fund, $550; Laidlaw Fund,
$3,716; Asset Allocation Fund, $622; First Lexington Balanced Fund, $2,337;
Taxable Money Market Fund, $74,009, and Tax-Free Money Market Fund, $10,916. For
the fiscal year ended September 30, 1996, the Administrator received the
following payments: Starwood Strategic Fund, $598; Aggressive Growth Fund, $972;
Fiduciary Value Fund (now the Laidlaw Fund), $56; Asset Allocation Fund, $994;
Taxable Fixed Income Fund, $41; Municipal Fixed Income Fund (now the First
Lexington Balanced Fund), $45; Taxable Money Market Fund, $52,637; Tax-Free
Money Market Fund, $7,686. During the period from June 2, 1995 to September 30,
1995, no amounts were expended under the Services Plan by any Fund.
BROKERAGE TRANSACTIONS
When selecting brokers and dealers to handle the purchase and sale of
portfolio instruments, a Fund's investment adviser looks for prompt execution of
the order at a favorable price. In working with dealers, the adviser will
generally use those who are recognized dealers in specific portfolio
instruments, except when a better price and execution of the order can be
obtained elsewhere. The Adviser and the Sub-Adviser make decisions on portfolio
transactions and select brokers and dealers subject to review by the Board of
Trustees.
The Adviser and Sub-Adviser may select brokers and dealers who offer
brokerage and research services. These services may be furnished directly to the
Fund or to the Adviser and Sub-Adviser and may include advice as to the
advisability of investing in securities, security analysis and reports, economic
studies, industry studies, receipt of quotations for portfolio evaluations and
similar services.
Research services provided by brokers may be used by the Adviser and
Sub-Adviser in advising the Fund's and other clients. To the extent that receipt
of these services may supplant services for which the Adviser or the Sub-Adviser
might otherwise have paid, it would tend to reduce their expenses. During the
fiscal year ended September 30, 1997, the Adviser did not direct any brokerage
transactions to brokers because of research services provided.
For the fiscal year ended September 30, 1997, the Starwood Strategic
Fund and the Laidlaw Fund paid $1825 and $2,300, respectively, to Unified
Management Corporation, the Trust's Distributor, for effecting 100% of each
Fund's commission transactions. For the fiscal year ended September 30, 1996,
the Starwood Strategic Fund paid brokerage commissions of $2,317 to the Trust's
Distributor for effecting 100% of that Fund's commission transactions. During
the period from June 2, 1995 to September 30, 1995, no Fund paid any brokerage
commissions to the Distributor.
PURCHASE AND REDEMPTION
Terms of Purchase
The Trust reserves the right to reject any purchase order and to change
the amount of the minimum initial and subsequent investments in the Funds upon
notice.
Reopening an Account
A shareholder may reopen a closed account with a minimum investment of
$1,000 without filing a new account application, during the calendar year the
account is closed or during the following calendar year, provided that the
information on the existing account application remains correct.
Brokers
The Trust has authorized one or more brokers to accept purchase and
redemption orders on behalf of the Funds. Authorized brokers are permitted to
designate other intermediaries to accept purchase and redemption orders on the
Funds' behalf. A Fund will be deemed to have received a purchase or redemption
order when an authorized broker or, if applicable, an authorized broker's
designee, accepts the order. Orders will be priced at the Fund's net asset value
next computed after the order is accepted by an authorized broker of the
authorized broker's designee.
Redemption in Kind
The Trust has committed to pay in cash all redemption requests by a
shareholder of record, limited in amount during any 90-day period up to the
lesser of $250,000 or 1% of the value of the particular Fund's net assets at the
beginning of such period. Such commitment is irrevocable without the prior
approval of the Securities and Exchange Commission. In the case of requests for
redemption in excess of such amount, the Board of Trustees reserves the right to
make payments in whole or in part in securities or other assets of the
particular Fund. In this event, the securities would be valued in the same
manner as the particular Fund's net asset value is determined. If the recipient
sold such securities, brokerage charges would be incurred.
Suspension of Redemptions
The right of redemption may be suspended or the date of payment
postponed (a) during any period when the New York Stock Exchange is closed, (b)
when trading in the markets the particular Fund normally uses is restricted, or
when an emergency exists as determined by the Securities and Exchange Commission
so that disposal of the particular Fund's investments or determination of its
net asset value is not reasonably practicable, or (c) for such other periods as
the Securities and Exchange Commission by order may permit to protect the
particular Fund's shareholders.
DETERMINATION OF NET ASSET VALUE
The methods and days on which net asset value is calculated by each
Fund are described in the Prospectus.
Valuation of Portfolio Securities
Portfolio securities owned by a Fund and listed or traded on any
national securities exchange are valued on the basis of the last sale on such
exchange each day the exchange is open for business. Securities not listed on an
exchange or national securities market, or securities in which there were no
transactions, are valued at the average of the most recently reported bid and
asked prices. Bid price is used when no asked price is available. Options are
valued at the last sales price on an exchange. Options for which there were no
transactions are valued at the average of the most recently reported bid and
asked prices. Money market instruments (certificates of deposit, commercial
paper, etc.) are valued at amortized cost if not materially different from
market value. Portfolio securities for which market quotations are not readily
available are to be valued in good faith as determined by the Board of Trustees.
Other assets, which include cash, prepaid and accrued items and amounts
receivable as income on investment and from the sale of portfolio securities,
are carried at book value, as are all liabilities.
TAX STATUS
Status of the Funds
The Funds intend to pay no federal income tax because they expect to
meet the requirements of Subchapter M of the Internal Revenue Code applicable to
regulated investment companies and to receive the special tax treatment afforded
to such companies. To qualify for this treatment, a Fund must, among other
requirements:
derive at least 90% of its gross income from dividends, interest, and
gains from the sale of securities;
invest in securities within certain statutory limits; and
distribute to its shareholders at least 90% of its net income earned
during the year.
Shareholders' Tax Status
Shareholders are subject to federal income tax on dividends and capital
gains received as cash or additional shares. Depending on the composition of a
Fund's income, a portion of the dividends from net investment income may qualify
for the dividends received deduction allowable to certain U.S. corporations. In
general, dividend income of a Fund distributed to certain U.S. corporate
shareholders will be eligible for the corporate dividends received deduction
only to the extent that (i) the Fund's income consists of dividends paid by
certain U.S. corporations and (ii) the Fund would have been entitled to the
dividends received deduction with respect to such dividend income if the Fund
were not a regulated investment company.
The foregoing tax consequences apply whether dividends are received in
cash or as additional shares. No portion of any income dividend paid by any Fund
is eligible for the dividends received deduction available to corporations.
Capital Gains
Shareholders will pay federal tax at capital gains rates on long-term
capital gains distributed to them regardless of how long they have held the Fund
shares.
Foreign Taxes
Dividend and interest income received by a Fund from sources outside
the U.S. may be subject to withholding and other taxes imposed by such foreign
jurisdictions. Tax conventions between certain countries and the U.S. may reduce
or eliminate these foreign taxes, however, and foreign countries generally do
not impose taxes on capital gains respecting investments by foreign investors.
PERFORMANCE INFORMATION
Quotations of a Fund's performance are based on historical earnings,
show the performance of a hypothetical investment, and are not intended to
indicate future performance of a Fund. An investor's shares when redeemed may be
worth more or less than their original cost. Performance of a Fund will vary
based on changes in market conditions and the level of the Fund's expenses.
Total Return
"Average annual total return," as defined by the Securities and
Exchange Commission, is computed by finding the average annual compounded rates
of return (over the one and five year periods and the period from initial public
offering through the end of a Fund's most recent fiscal year) that would equate
the initial amount invested to the ending redeemable value, according to the
following formula:
P(1+T)n = ERV
Where: P = a hypothetical $1,000 initial investment
T = average annual total return
n = number of years
ERV = ending redeemable value at the end of the
applicable period of the hypothetical $1,000
investment made at the beginning
of the applicable period.
The computation assumes that all dividends and distributions are reinvested at
the net asset value on the reinvestment dates and that a complete redemption
occurs at the end of the applicable period.
The average annual total return of the Funds for the one year period
ended September 30, 1997 was as follows: Starwood Strategic, 20.94%; Laidlaw,
40.40%; First Lexington Balanced, 18.54%; Taxable Money Market, 4.38%.
Yield
The yield of a Fund's shares (other than the Taxable Money Market Fund)
is determined each day by dividing the net investment income per share (as
defined by the Securities and Exchange Commission) earned by the Fund over a
thirty-day period by the net asset value per share of the Fund on the last day
of the period. This value is annualized using semi-annual compounding. This
means that the amount of income generated during the thirty-day period is
assumed to be generated each month over a 12-month period and is reinvested
every six months.
The "yield" of a money market Fund refers to the income generated by an
investment in the Fund over a seven-day period. This income is then annualized.
The amount of income generated by investments during the week is assumed to be
generated each week over a 52-week period and is shown as a percentage of the
investment. The "effective yield" is calculated similarly but, when annualized,
the income earned by an investment in the Fund is assumed to be reinvested. The
effective yield will be slightly higher than the yield because of the
compounding effect of this assumed reinvestment.
The yield of does not necessarily reflect income actually earned by the
applicable shares because of certain adjustments required by the Securities and
Exchange Commission and, therefore, may not correlate to the dividends or other
distributions paid to shareholders. To the extent that financial institutions
and broker/dealers charge fees in connection with services provided in
conjunction with an investment in the Fund, performance will be reduced for
those shareholders paying those fees.
The annualized yield of the Taxable Money Market Fund for the seven-day
period ended September 30, 1997 was 4.38%. The effective yield of the Taxable
Money Market Fund for that seven-day period was 4.47%.
Performance Comparisons
A comparison of the quoted non-standard performance of various
investments is valid only if performance is calculated in the same manner.
Because there are different methods of calculating performance, investors should
consider the effect of the methods used to calculate performance when comparing
performance of a particular Fund with the performance quoted with respect to
other investment companies or types of investments.
From time to time, in advertising and marketing literature, a Fund's
performance may be compared to the performance of broad groups of mutual funds
with similar investment goals, as tracked by independent organizations such as
Investment Company Data, Inc. ("ICD"), Lipper Analytical Services, Inc.
("Lipper"), CDA Investment Technologies, Inc. ("CDA"), Morningstar, Inc. And
other independent organizations. When these organizations' tracking results are
used, a Fund will be compared to the appropriate fund category, that is, by fund
objective and portfolio holdings or the appropriate volatility grouping, where
volatility is a measure of a fund's risk. Rankings may be listed among one or
more of the asset-size classes as determined by the independent ranking
organization. Footnotes in advertisements and other marketing literature will
include the organization issuing the ranking, time period, and asset size class,
as applicable, for the ranking in question.
In addition, a particular Fund's performance may be compared to
unmanaged indices of securities that are comparable in their terms and intent to
those in which the Fund invests such as the Dow Jones Industrial Average
("DJIA"), Standard & Poor's 500 Stock Index ("S&P 500"), the Lehman Brothers
Government/Corporate Bond Index and the Consumer Price Index ("CPI"). The DJIA
and S&P 500 are unmanaged indices widely regarded as representative of the
equity market in general. The CPI is a commonly used measured of inflation.
Marketing and other literature for the Funds may include a description
of the potential risks and rewards associated with an investment in a particular
Fund. The description may include a comparison of a particular Fund to broad
categories of comparable funds in terms of potential risks and returns. The
description may also compare a particular Fund to bank products, such as
certificates of deposit. Unlike mutual funds, certificates of deposit are
insured up to $100,000 by the U.S. government and offer a fixed rate of return.
Because bank products guarantee the principal value of an investment and money
market funds seek stability of principal, these investments are considered to be
less risky than investments in either bond or equity funds, which may involve
loss of principal.
The risks and rewards associated with an investment in bond or equity
funds depend upon many factors. For fixed income funds these factors include,
but are not limited to a fund's overall investment objective, the average
portfolio maturity, credit quality of the securities held, and interest rate
movements. For equity funds, factors include a fund's overall investment
objective, the types of equity securities held and the financial position of the
issuers of the securities. The risks and rewards associated with an investment
in international bond or equity funds will also depend upon currency exchange
rate fluctuation. Shorter-term bond funds generally are considered less risky
and offer the potential for less return than longer-term fixed income funds. The
same is true of domestic bond funds relative to international fixed income
funds, and fixed income funds that purchase higher quality securities relative
to bond funds that purchase lower quality securities. Growth and income equity
funds are generally considered to be less risky and offer the potential for less
return than growth funds. In addition, international equity funds usually are
considered more risky than domestic equity fund but generally offer the
potential for greater return.
CUSTODIAN, TRANSFER AGENT, FUND ACCOUNTING AGENT,
AND INDEPENDENT ACCOUNTANTS
Star Bank, N.A., 425 Walnut Street, Cincinnati, Ohio 45201
("Custodian") serves as the custodian for each of the Funds. General
correspondence to the Custodian, such as for IRA information, etc., should be
addressed to: Star Bank, P.O. Box 1038 Location 6118, Cincinnati, Ohio 45201.
When Fund purchases or deposits require delivery directly to the Custodian,
those correspondences should be addressed to: The Unified Funds, [name of
specific Fund in which you are purchasing shares], P.O. Box 640689, Cincinnati,
Ohio, 45264-0689.
Unified Fund Services, Inc., P.O. Box 6110, Indianapolis, Indiana
46206-6110, acts as the transfer agent, fund accounting agent and administrator
for the Trust (the "Transfer Agent"). The Transfer Agent maintains the records
of each shareholder's account, answers shareholders' inquiries concerning their
accounts, processes purchases and redemptions of shares, acts as dividend and
distribution disbursing agent and performs other accounting and shareholder
service functions. The Transfer Agent provides the Trust with certain monthly
reports, record-keeping and other management-related services. For its services
the Transfer Agent receives a monthly fee at an annual rate of .025% and .0675%
of the net assets of the money market fund and the non-money market funds,
respectively. The Transfer Agent and Unified Management Corporation are both
wholly owned subsidiaries of Unified Financial Services, Inc.
Neither the Custodian nor Unified Fund Services, Inc., has any part in
determining the investment policies of the Trust or any of the Funds or which
securities are to be purchased or sold by the Funds, and neither can provide
protection to shareholders against possible depreciation of assets.
McCurdy & Associates CPA's Inc., 27955 Clemens Road, Westlake, OH
44145, independent accountants, have been selected as the Trust's auditors.
FINANCIAL STATEMENTS
The financial statements and independent auditor's report required to
be included in this Statement of Additional Information are incorporated herein
by reference to the Trust's Annual Report to Shareholders for the year ended
September 30, 1997. The Trust will provide the Annual Report without charge upon
request by calling the Trust at 1-800-408-4682.
<PAGE>
PART C. OTHER INFORMATION
Item 24. Financial Statements and Exhibits.
(a) Financial Statements:
Included in Part A:
Financial Highlights for the Starwood Strategic Fund, Laidlaw Fund,
First Lexington Balanced Fund, and Taxable Money Market Fund.
Included in part B:
All financial statements and independent auditors' report for The
Vintage Funds required to be included in Part B are incorporated
therein by reference to the Registrant's Annual Report to Shareholders
for the year ended September 30, 1997.
(b) Exhibits:
Description
* 1.(a) Declaration of Trust.
* 2.(a) By-Laws.
3. Not applicable.
4. Not applicable.
* 5.(a) Management Agreement between the Registrant and Unified
Investment Advisers, Inc.
* (b) Investment Sub-Advisory Agreement between Unified Investment
Advisers, Inc. and Health Financial, Inc.
* 6. Distribution Agreement between the Registrant and Unified
Management Corporation.
7. Not applicable.
* 8. Custody Agreement between the Registrant and Star Bank, N.A.
* 9.(a) Mutual Fund Services Agreement (Fund Administration Services,
Fund Accounting Services, Transfer Agency Services) between the
Registrant and Unified Fund Services, Inc.
* (b) Shareholder Services Plan.
* (c) Form of Shareholder Services Agreement pursuant to Shareholder
Services Plan.
* (d) Letter Agreement between the Registrant and Unified Investment
Advisers, Inc. with respect to The Unified Funds University and
Philanthropic Program.
* 10.(a) Opinion and Consent of Counsel.
* 11. Consent of McCurdy & Associates.
12. Not applicable.
* 13. Subscription Agreement between the Registrant and Unified
Investment Advisers, Inc.
14.(a) Model Plan used in Establishment of any Retirement Plan - None.
* 15.(a) Distribution Plan.
* (b) Form of Distribution Agreement pursuant to Distribution Plan.
** 16. Schedule for computation of performance data.
17. Financial Data Schedules - None.
18. Not Applicable.
* 19. Powers of Attorney.
-------------------------
* Filed herewith.
** Filed with Post-Effective Amendment No. 8 to the Registration
Statement and hereby incorporated by reference.
Item 25. Persons Controlled by or Under Common Control with Registrant.
As of January 2, 1998, no person owns beneficially, either directly or
through one or more controlled companies, more than 25% of the outstanding
shares of any Fund.
Item 26. Number of Holders of Securities.
Number of Record Holders
Title of Class at January 2, 1998
Shares of beneficial interest, without par value of the:
Starwood Strategic Fund 84
Laidlaw Fund 140
First Lexington Balanced Fund 139
Taxable Money Market Fund 5397
Item 27. Indemnification.
Reference is hereby made to Section 6 of the Registrant's Declaration of
Trust (filed as Exhibit 1 to this Registration Statement), which contains
provisions regarding the indemnification by the Registrant of its Trustees,
officers, employees and agents under certain circumstances.
The Distribution Agreement (Exhibit 6) provides for indemnification of
Unified Management Corporation by the Registrant for certain civil liabilities,
including certain liabilities under the Securities Act of 1933. In addition, the
Mutual Fund Services Agreement (Exhibit 9(a)) provides for the indemnification
of Unified Fund Services, Inc. by the Registrant under certain circumstances.
The foregoing indemnification arrangements are subject to the provisions of
Sections 17(h) and (i) of the Investment Company Act of 1940.
Insofar as indemnification by the Registrant for liabilities arising under
the Securities Act of 1933 may be permitted to Trustees, officers and
controlling persons of the Registrant pursuant to the foregoing provisions, or
otherwise, the Registrant has been advised that in the opinion of the Securities
and Exchange Commission such indemnification is against public policy as
expressed in the Act and is, therefore, unenforceable. In the event that a claim
for indemnification against such liabilities (other than the payment by the
Registrant of expenses incurred or paid by a Trustee, officer or controlling
person of the Registrant in the successful defense of any action, suit or
proceeding) is asserted against the Registrant by such Trustee, officer or
controlling person in connection with the securities being registered, the
Registrant will, unless in the opinion of counsel the matter has been settled by
controlling precedent, submit to a court of appropriate jurisdiction the
question whether such indemnification by it is against public policy as
expressed in the Act and will be governed by the final adjudication of such
issue.
The Registrant maintains an insurance policy which insures its Trustees and
officers against certain civil liabilities.
Item 28. Business and Other Connections of Investment Adviser.
Incorporated herein by reference is the information under the captions "The
Trust and its Management -- Investment Advisory Arrangements" and "-- Portfolio
Managers' Backgrounds" in the Combined Prospectus, and under the captions
"Management of the Trust" and "Investment Advisory Arrangements" in the
Statement of Additional Information, incorporated by reference into Parts A and
B, respectively, of this Registration Statement.
Incorporated herein by reference are (a) the descriptions of the businesses
of Unified Fund Services, Inc. and Health Financial, Inc. under the caption "The
Trust and its Management" in the Combined Prospectus incorporated by reference
into Part A of this Registration Statement and (b) the biographical information
pertaining to Timothy L. Ashburn, Thomas G. Napurano, Andrew E. Beer, Jack R.
Orben and Gregory W. Kasten under the captions "Management of the Trust --
Portfolio Managers' Backgrounds" in the Combined Prospectus, and under the
captions "Management of the Trust" and "Investment Advisory Arrangements" in the
Statement of Additional Information, incorporated by reference into Parts A and
B, respectively, of this Registration Statement.
For information concerning the business, vocation or employment of a
substantial nature of the directors and officers of Unified Investment Advisers,
Inc., reference is hereby made to the Form ADV filed by it under the Investment
Advisers Act of 1940 (file no. 801-48493).
For information concerning the business, vocation or employment of a
substantial nature of the directors and officers of Health Financial, Inc.,
reference is hereby made to the Form ADV filed by it under the Investment
Advisers Act of 1940 (file no. 801-29028).
Item 29. Principal Underwriters.
(a) Unified Management Corporation, the Registrant's distributor, also acts
as distributor for the Star Select Funds and the Saratoga Advantage
Trust.
(b) Information with respect to each director and officer of Unified
Management Corporation is incorporated by reference to Schedule A of
Form BD filed by it under the Securities Exchange Act of 1934 (File No.
8-23508).
(c) Not applicable.
Item 30. Location of Accounts and Records.
The Registrant's custodian, Star Bank, N.A., 425 Walnut Street, Cincinnati,
Ohio 45201, has possession of and maintains the accounts, books and other
documents relating to its function as custodian. All other accounts, books and
other documents of the Registrant required to be maintained by Section 31(a) of
the Investment company Act of 1940 and Rules 31a-1 to 31a-3 thereunder are in
the possession of Unified Investment Advisers, Inc. or Unified Fund Services,
Inc., each of which is located at 431 North Pennsylvania Street, Indianapolis,
Indiana 46204.
Item 3l. Management Services.
Not Applicable.
Item 32. Undertakings.
(a) Registrant hereby undertakes to comply with the provisions of
Section 16(c) of the 1940 Act with respect to the removal of
Trustees and the calling of special shareholder meetings by
shareholders.
(b) Registrant hereby undertakes to furnish each person to whom a
prospectus is delivered with a copy of the Registrant's latest
annual report to shareholders, upon request and without charge.
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, the Registrant certifies that it meets all the
requirements for effectiveness of this Post-Effective Amendment to its
Registration Statement pursuant to Rule 485(b) under the Securities Act of 1933
and has duly caused this amendment to the Registration Statement to be signed on
its behalf by the undersigned, thereunto duly authorized, in the City of
Indianapolis, and State of Indiana, on the 30th day of January, 1998.
THE UNIFIED FUNDS
By /s/ Carol J. Highsmith
Carol J. Highsmith
Secretary
Pursuant to the requirements of the Securities Act of 1933, this amendment
to the Registration Statement has been signed below by the following persons in
the capacities indicated on January 30, 1998.
Signature Title
* Trustee, Chairman of the Board
Timothy L. Ashburn and President
(principal executive officer)
/s/Thomas G. Napurano Treasurer
Thomas G. Napurano (principal financial officer
and principal accounting officer)
* Trustee
Daniel J. Condon
* Trustee
David E. LaBelle
* Trustee
Philip L. Conover
* Trustee
David Bottoms
* Trustee
John Hinkel
* By /s/ Carol J. Highsmith
Carol J. Highsmith
Attorney-in-Fact
<PAGE>
EXHIBIT INDEX
Exhibit Description
- ------- -----------
1. Declaration of Trust.............................. Ex-99.B1
2. By-Laws........................................... Ex-99.B2
3. Management Agreement.............................. Ex-99.B5.1
4. Investment Sub-Advisory Agreement................. Ex-99.B5.2
5. Distribution Agreement............................ Ex-99.B6
6. Custody Agreement................................. Ex-99.B8
7. Mutual Fund Services Agreement.................... Ex-99.B9.1
8. Shareholder Services Plan......................... Ex-99.B9.2
9. Form of Shareholder Services Agreement............ Ex-99.B9.3
10. Letter Agreement between the Registrant and
Unified Investment Advisers, Inc.................. Ex-99.B9.4
11. Opinion and Consent of Counsel.................... Ex-99.B10
12. Consent of Accountants............................ Ex-99.B11
13. Subscription Agreement............................ Ex-99.B13
14. Distribution Plan................................. Ex-99.B15.1
15. Form of Distribution Agreement.................... Ex-99.B15.2
16. Powers of Attorney................................ Ex-99.POA
THE UNIFIED FUNDS
AGREEMENT AND DECLARATION OF TRUST
November 19, 1997
<PAGE>
THE UNIFIED FUNDS
AGREEMENT AND DECLARATION OF TRUST
TABLE OF CONTENTS
<TABLE>
<S> <C>
ARTICLE I - NAME AND DEFINITIONS............................................................................... 1
Section 1.1 Name and Principal Office................................................... 1
Section 1.2 Definitions................................................................. 1
(a) The "Trust"......................................................................... 1
(b) "Trustees".......................................................................... 1
(c) "Shares"............................................................................ 1
(d) "Series"............................................................................ 1
(e) "Class"............................................................................. 2
(f) "Shareholder"....................................................................... 2
(g) The "1940 Act"...................................................................... 2
(h) "Commission"........................................................................ 2
(i) "Declaration of Trust".............................................................. 2
(j) "By-Laws"........................................................................... 2
ARTICLE II - PURPOSE OF TRUST.................................................................................. 2
ARTICLE III - THE TRUSTEES..................................................................................... 2
Section 3.1 Number, Designation, Election, Term, etc.................................... 2
(a) Initial Trustees.................................................................... 2
(b) Number.............................................................................. 2
(c) Term................................................................................ 2
(d) Resignation and Retirement.......................................................... 3
(e) Removal............................................................................. 3
(f) Vacancies........................................................................... 3
(g) Effect of Death, Resignation, etc................................................... 3
(h) No Accounting....................................................................... 3
Section 3.2 Powers of Trustees.......................................................... 4
(a) Investments......................................................................... 4
(b) Disposition of Assets............................................................... 4
(c) Ownership Powers.................................................................... 4
(d) Subscription........................................................................ 5
(e) Form of Holding..................................................................... 5
(f) Reorganization, etc................................................................. 5
(g) Voting Trusts, etc.................................................................. 5
(h) Compromise.......................................................................... 5
<PAGE>
(i) Partnerships, etc................................................................... 5
(j) Borrowing and Security.............................................................. 5
(k) Guarantees, etc..................................................................... 5
(l) Insurance........................................................................... 5
(m) Pensions, etc....................................................................... 6
Section 3.3 Certain Contracts........................................................... 6
(a) Advisory............................................................................ 6
(b) Administration...................................................................... 7
(c) Distribution........................................................................ 7
(d) Custodian and Depository............................................................ 7
(e) Transfer and Dividend Disbursing Agency............................................. 7
(f) Shareholder Servicing............................................................... 7
(g) Accounting.......................................................................... 7
Section 3.4 Payment of Trust Expenses and Compensation of Trustees...................... 8
Section 3.5 Ownership of Assets of the Trust............................................ 8
ARTICLE IV - SHARES............................................................................................ 8
Section 4.1 Description of Shares....................................................... 8
Section 4.2 Establishment and Designation of Series..................................... 10
(a) Assets Belonging to Series.......................................................... 10
(b) Liabilities Belonging to Series..................................................... 10
(c) Dividends........................................................................... 11
(d) Liquidation......................................................................... 12
(e) Voting.............................................................................. 12
(f) Redemption by Shareholder........................................................... 12
(g) Redemption by Trust................................................................. 12
(h) Net Asset Value..................................................................... 13
(i) Transfer............................................................................ 13
(j) Equality............................................................................ 13
(k) Fractions........................................................................... 14
(l) Conversion Rights................................................................... 14
Section 4.3 Ownership of Shares......................................................... 14
Section 4.4 Investments in the Trust.................................................... 14
Section 4.5 No Preemptive Rights........................................................ 14
Section 4.6 Status of Shares and Limitation of Personal Liability....................... 14
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<PAGE>
ARTICLE V - SHAREHOLDERS' VOTING POWERS AND MEETINGS........................................................... 15
Section 5.1 Voting Powers............................................................... 15
Section 5.2 Meetings.................................................................... 15
Section 5.3 Record Dates................................................................ 15
Section 5.4 Quorum and Required Vote.................................................... 16
Section 5.5 Action by Written Consent................................................... 16
Section 5.6 Inspection of Records....................................................... 16
Section 5.7 Additional Provisions....................................................... 16
ARTICLE VI - LIMITATION OF LIABILITY; INDEMNIFICATION.......................................................... 16
Section 6.1 Trustees, Shareholders, etc. Not Personally Liable; Notice.................. 16
Section 6.2 Trustee's Good Faith Action; Expert Advice; No Bond or Surety............... 17
Section 6.3 Indemnification of Shareholders............................................. 17
Section 6.4 Indemnification of Trustees, Officers, etc.................................. 18
Section 6.5 Advances of Expenses........................................................ 18
Section 6.6 Indemnification Not Exclusive, etc.......................................... 18
Section 6.7 Liability of Third Persons Dealing with Trustees............................ 18
ARTICLE VII - MISCELLANEOUS.................................................................................... 18
Section 7.1 Duration and Termination of Trust........................................... 18
Section 7.2 Reorganization.............................................................. 19
Section 7.3 Amendments.................................................................. 19
Section 7.4 Filing of Copies; References; Headings...................................... 20
Section 7.5 Applicable Law.............................................................. 20
</TABLE>
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<PAGE>
THE UNIFIED FUNDS
AGREEMENT AND DECLARATION OF TRUST
AGREEMENT AND DECLARATION OF TRUST made this 19th day of November,
1997, by the Trustees hereunder, and by the holders of Shares of beneficial
interest to be issued hereunder as hereinafter provided.
WITNESSETH:
WHEREAS, this Trust is being formed to carry on the business of an
investment company; and
WHEREAS, the Trustees have agreed to manage all property coming into
their hands as trustees of an Ohio business trust in accordance with the
provisions hereinafter set forth.
NOW, THEREFORE, the Trustees hereby declare that they will hold all
cash, securities and other assets which they may from time to time acquire in
any manner as Trustees hereunder IN TRUST to manage and dispose of the same upon
the following terms and conditions for the benefit of the holders from time to
time of shares of beneficial interest in this Trust as hereinafter set forth.
ARTICLE I
NAME AND DEFINITIONS
Section 1.1 Name and Principal Office. This Trust shall be known as
"The Unified Funds" and the Trustees shall conduct the business of the Trust
under that name or any other name as they may from time to time determine. The
principal office of the Trust shall be located at Indianapolis, Indiana or such
other place as determined from time to time by the Trustees and as reported to
the Secretary of the State of Ohio.
Section 1.2 Definitions. Whenever used herein, unless otherwise
required by the context or specifically provided:
(a) The "Trust" refers to the Ohio business trust established by
this Agreement and Declaration of Trust, as amended from time
to time;
(b) "Trustees" refers to the Trustees of the Trust named herein or
elected in accordance with Article III;
(c) "Shares" refers to the transferable units of interest into
which the beneficial interest in the Trust, shall be divided
from time to time, including the shares of any and all Series
or Classes which may be established by the Trustees, and
includes fractions of Shares as well as whole Shares;
(d) "Series" refers to Series of Shares established and designated
under or in accordance with the provisions of Article IV;
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<PAGE>
(e) "Class" refers to a class or sub-series of any Series of
Shares established and designated under and in accordance with
the provisions of Article IV;
(f) "Shareholder" means a record owner of Shares;
(g) The "1940 Act" refers to the Investment Company Act of 1940
and the Rules and Regulations thereunder, all as amended from
time to time;
(h) "Commission" shall have the meaning given it in the 1940 Act;
(i) "Declaration of Trust" shall mean this Agreement and
Declaration of Trust as amended or restated from time to time;
and
(j) "By-Laws" shall mean the By-Laws of the Trust as amended from time
to time.
ARTICLE II
PURPOSE OF TRUST
The purpose of the Trust is to operate as an investment company, to
offer Shareholders one or more investment programs primarily in securities and
debt instruments and to engage in any and all lawful acts or activities for
which business trusts may be formed under Chapter 1746 of the Ohio Revised Code.
ARTICLE III
THE TRUSTEES
Section 3.1 Number, Designation, Election, Term, etc.
----------- -----------------------------------------
(a) Initial Trustees. Upon their execution of this Declaration of
Trust or a counterpart hereof or some other writing in which
they accept such Trusteeship and agree to the provisions
hereof, the following shall become Trustees hereof: Timothy L.
Ashburn, Philip L. Conover, David E. LaBelle, Daniel J.
Condon, John Hinkel and David Bottoms.
(b) Number. The Trustees serving as such, whether named above or
hereafter becoming a Trustee, may increase or decrease the
number of Trustees to a number other than the number
theretofore determined. No decrease in the number of Trustees
shall have the effect of removing any Trustee from office
prior to the expiration of his term, but the number of
Trustees may be decreased in conjunction with the removal of a
Trustee pursuant to subsection (e) of this Section 3.1.
(c) Term. Each Trustee shall serve as a Trustee during the
lifetime of the Trust and until its termination as hereinafter
provided or until such Trustee sooner dies, resigns, retires
or is removed. The Trustees may elect their own successors and
may, pursuant to Section 3.1(f) hereof, appoint Trustees to
fill vacancies; provided that, immediately after filling a
vacancy, at least two-thirds of the Trustees then holding
office shall have been elected to such office by the
Shareholders at an
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annual or special meeting. If at any time less than a majority
of the Trustees then holding office were so elected, the
Trustees shall forthwith cause to be held as promptly as
possible, and in any event within 60 days, a meeting of
Shareholders for the purpose of electing Trustees to fill any
existing vacancies.
(d) Resignation and Retirement. Any Trustee may resign his trust
or retire as a Trustee, by written instrument signed by him
and delivered to the other Trustees or to any officer of the
Trust, and such resignation or retirement shall take effect
upon such delivery or upon such later date as is specified in
such instrument.
(e) Removal. Any Trustee may be removed with or without cause at
any time: (i) by written instrument, signed by at least
two-thirds of the number of Trustees prior to such removal,
specifying the date upon which such removal shall become
effective, (ii) by vote of the Shareholders holding not less
than two-thirds of the Shares then outstanding, cast in person
or by proxy at any meeting called for the purpose, or (iii) by
a declaration in writing signed by Shareholders holding not
less than two-thirds of the Shares then outstanding and filed
with the Trust's Custodian.
(f) Vacancies. Any vacancy or anticipated vacancy resulting from
any reason, including without limitation the death,
resignation, retirement, removal or incapacity of any of the
Trustees, or resulting from an increase in the number of
Trustees by the Trustees may (but so long as there are at
least three remaining Trustees, need not unless required by
the 1940 Act) be filled either by a majority of the remaining
Trustees through the appointment in writing of such other
person as such remaining Trustees in their discretion shall
determine (unless a shareholder election is required by the
1940 Act) or by the election by the Shareholders, at a meeting
called for the purpose, of a person to fill such vacancy, and
such appointment or election shall be effective upon the
written acceptance of the person named therein to serve as a
Trustee and agreement by such person to be bound by the
provisions of this Declaration of Trust, except that any such
appointment or election in anticipation of a vacancy to occur
by reason of retirement, resignation, or increase in number of
Trustees to be effective at a later date shall become
effective only at or after the effective date of said
retirement, resignation, or increase in number of Trustees. As
soon as any Trustee so appointed or elected shall have
accepted such appointment or election and shall have agreed in
writing to be bound by this Declaration of Trust and the
appointment or election is effective, the Trust estate shall
vest in the new Trustee, together with the continuing
Trustees, without any further act or conveyance.
(g) Effect of Death, Resignation, etc. The death, resignation,
retirement, removal, or incapacity of the Trustees, or any one
of them, shall not operate to annul or terminate the Trust or
to revoke or terminate any existing agency or contract created
or entered into pursuant to the terms of this Declaration of
Trust.
(h) No Accounting. Except to the extent required by the 1940 Act
or under circumstances which would justify his removal for
cause, no person ceasing to be a Trustee as a result of his
death, resignation, retirement, removal or incapacity (nor
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<PAGE>
the estate of any such person) shall be required to make an
accounting to the Shareholders or remaining Trustees upon such
cessation.
Section 3.2 Powers of Trustees. Subject to the provisions of this
Declaration of Trust, the business of the Trust shall be managed by the
Trustees, and they shall have all powers necessary or convenient to carry out
that responsibility and the purpose of the Trust. Without limiting the
foregoing, the Trustees may adopt By-Laws not inconsistent with this Declaration
of Trust providing for the conduct of the business and affairs of the Trust and
may amend and repeal them to the extent that such By-Laws do not reserve that
right to the Shareholders; they may as they consider appropriate elect and
remove officers and appoint and terminate agents and consultants and hire and
terminate employees, any one or more of the foregoing of whom may be a Trustee,
and may provide for the compensation of all of the foregoing; they may appoint
from their own number, and terminate, any one or more committees consisting of
two or more Trustees, including without implied limitation an executive
committee, which may, when the Trustees are not in session and subject to the
1940 Act, exercise some or all of the power and authority of the Trustees as the
Trustees may determine; in accordance with Section 3.3 they may employ one or
more Advisers, Administrators, Depositories and Custodians and may authorize any
Depository or Custodian to employ subcustodians or agents and to deposit all or
any part of such assets in a system or systems for the central handling of
securities and debt instruments, retain transfer, dividend, accounting or
Shareholder servicing agents or any of the foregoing, provide for the
distribution of Shares by the Trust through one or more distributors, principal
underwriters or otherwise, set record dates or times for the determination of
Shareholders or certain of them with respect to various matters; they may
compensate or provide for the compensation of the Trustees, officers, advisers,
administrators, custodians, other agents, consultants and employees of the Trust
or the Trustees on such terms as they deem appropriate; and in general they may
delegate to any officer of the Trust, to any committee of the Trustees and to
any employee, adviser, administrator, distributor, principal underwriter,
depository, custodian, transfer and dividend disbursing agent, or any other
agent or consultant of the Trust such authority, powers, functions and duties as
they consider desirable or appropriate for the conduct of the business and
affairs of the Trust, including without implied limitation the power and
authority to act in the name of the Trust and of the Trustees, to sign documents
and to act as attorney-in-fact for the Trustees.
Without limiting the foregoing and to the extent not inconsistent with
the 1940 Act or other applicable law, the Trustees shall have power and
authority:
(a) Investments. To invest and reinvest cash and other property,
and to hold cash or other property uninvested without in any
event being bound or limited by any present or future law or
custom in regard to investments by trustees;
(b) Disposition of Assets. To sell, exchange, lend, pledge,
mortgage, hypothecate, write options on and lease any or all
of the assets of the Trust;
(c) Ownership Powers. To vote or give assent, or exercise any
rights of ownership, with respect to stock or other
securities, debt instruments or property; and to execute and
deliver proxies or powers of attorney to such person or
persons as the Trustees shall deem proper, granting to such
person or persons such power and discretion
- 4 -
<PAGE>
with relation to securities, debt instruments or property as
the Trustees shall deem proper;
(d) Subscription. To exercise powers and rights of subscription or
otherwise which in any manner arise out of ownership of
securities or debt instruments;
(e) Form of Holding. To hold any security, debt instrument or
property in a form not indicating any trust, whether in
bearer, unregistered or other negotiable form, or in the name
of the Trustees or of the Trust or in the name of a custodian,
subcustodian or other depository or a nominee or nominees or
otherwise;
(f) Reorganization, etc. To consent to or participate in any plan
for the reorganization, consolidation or merger of any
corporation or issuer, any security or debt instrument of
which is or was held in the Trust; to consent to any contract,
lease, mortgage, purchase or sale of property by such
corporation or issuer, and to pay calls or subscriptions with
respect to any security or debt instrument held in the Trust;
(g) Voting Trusts, etc. To join with other holders of any
securities or debt instruments in acting through a committee,
depository, voting trustee or otherwise, and in that
connection to deposit any security or debt instrument with, or
transfer any security or debt instrument to, any such
committee, depository or trustee, and to delegate to them such
power and authority with relation to any security or debt
instrument (whether or not so deposited or transferred) as the
Trustees shall deem proper, and to agree to pay, and to pay,
such portion of the expenses and compensation of such
committee, depository or trustee as the Trustees shall deem
proper;
(h) Compromise. To compromise, arbitrate or otherwise adjust
claims in favor of or against the Trust or any matter in
controversy, including but not limited to claims for taxes;
(i) Partnerships, etc. To enter into joint ventures, general or
limited partnerships and any other combinations or
associations;
(j) Borrowing and Security. To borrow funds and to mortgage and
pledge the assets of the Trust or any part thereof to secure
obligations arising in connection with such borrowing;
(k) Guarantees, etc. To endorse or guarantee the payment of any
notes or other obligations of any person; to make contracts of
guaranty or suretyship, or otherwise assume liability for
payment thereof; and to mortgage and pledge the Trust property
or any part thereof to secure any of or all such obligations;
(l) Insurance. To purchase and pay for entirely out of Trust
property such insurance as they may deem necessary or
appropriate for the conduct of the business, including,
without limitation, insurance policies insuring the assets of
the Trust and payment of distributions and principal on its
portfolio investments, and insurance policies insuring the
Shareholders, Trustees, officers, employees, agents,
consultants,
- 5 -
<PAGE>
investment advisers, managers, administrators, distributors,
principal underwriters, or independent contractors, or any
thereof (or any person connected therewith), of the Trust
individually against all claims and liabilities of every
nature arising by reason of holding, being or having held any
such office or position, or by reason of any action alleged to
have been taken or omitted by any such person in any such
capacity, including any action taken or omitted that may be
determined to constitute negligence; provided, however, that
insurance which protects the Trustees and officers against
liabilities rising from action involving willful misfeasance,
bad faith, gross negligence or reckless disregard of the
duties involved in the conduct of their offices may not be
purchased; and
(m) Pensions, etc. To pay pensions for faithful service, as deemed
appropriate by the Trustees, and to adopt, establish and carry
out pension, profit-sharing, share bonus, share purchase,
savings, thrift and other retirement, incentive and benefit
plans, trusts and provisions, including the purchasing of life
insurance and annuity contracts as a means of providing such
retirement and other benefits, for any or all of the Trustees,
officers, employees and agents of the Trust.
Except as otherwise provided by the 1940 Act or other applicable law,
this Declaration of Trust or the By-Laws, any action to be taken by the Trustees
may be taken by a majority of the Trustees present at a meeting of Trustees (a
quorum, consisting of at least a majority of the Trustees then in office, being
present), within or without Ohio, including any meeting held by means of a
conference telephone or other communications equipment by means of which all
persons participating in the meeting can hear each other at the same time and
participation by such means shall constitute presence in person at a meeting, or
by written consents of a majority of the Trustees then in office (or such larger
or different number as may be required by the 1940 Act or other applicable law).
Section 3.3 Certain Contracts. Subject to compliance with the
provisions of the 1940 Act, but notwithstanding any limitations of present and
future law or custom in regard to delegation of powers by trustees generally,
the Trustees may, at any time and from time to time and without limiting the
generality of their powers and authority otherwise set forth herein, enter into
one or more contracts with any one or more corporations, trusts, associations,
partnerships, limited partnerships, other type of organizations, or individuals
("Contracting Party") to provide for the performance and assumption of some or
all of the following services, duties and responsibilities to, for or of the
Trust and/or the Trustees, and to provide for the performance and assumption of
such other services, duties and responsibilities in addition to those set forth
below as the Trustees may determine appropriate:
(a) Advisory. Subject to the general supervision of the Trustees
and in conformity with the stated policy of the Trustees with
respect to the investments of the Trust or of the assets
belonging to any Series of Shares of the Trust (as that phrase
is defined in subsection (a) of Section 4.2), to manage such
investments and assets, make investment decisions with respect
thereto, and to place purchase and sale orders for portfolio
transactions relating to such investments and assets;
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<PAGE>
(b) Administration. Subject to the general supervision of the
Trustees and in conformity with any policies of the Trustees
with respect to the operations of the Trust, to supervise all
or any part of the operations of the Trust, and to provide all
or any part of the administrative and clerical personnel,
office space and office equipment and services appropriate for
the efficient administration and operations of the Trust;
(c) Distribution. To distribute the Shares of the Trust, to be
principal underwriter of such Shares, and/or to act as agent
of the Trust in the sale of Shares and the acceptance or
rejection of orders for the purchase of Shares;
(d) Custodian and Depository. To act as depository for and to
maintain custody of the property of the Trust and accounting
records in connection therewith;
(e) Transfer and Dividend Disbursing Agency. To maintain records
of the ownership of outstanding Shares, the issuance and
redemption and the transfer thereof, and to disburse any
dividends declared by the Trustees and in accordance with the
policies of the Trustees and/or the instructions of any
particular Shareholder to reinvest any such dividends;
(f) Shareholder Servicing. To provide service with respect to the
relationship of the Trust and its Shareholders, records with
respect to Shareholders and their Shares, and similar matters;
and
(g) Accounting. To handle all or any part of the accounting
responsibilities, whether with respect to the Trust's
properties, Shareholders or otherwise.
The same person may be the Contracting Party for some or all of the services,
duties and responsibilities to, for and of the Trust and/or the Trustees, and
the contracts with respect thereto may contain such terms interpretive of or in
addition to the delineation of the services, duties and responsibilities
provided for, including provisions that are not inconsistent with the 1940 Act
relating to the standard of duty of and the rights to indemnification of the
Contracting Party and others, as the Trustees may determine. Nothing herein
shall preclude, prevent or limit the Trust or a Contracting Party from entering
into subcontractual arrangements relative to any of the matters referred to in
Sections 3.3(a) through (g) hereof.
Subject to the provisions of the 1940 Act, the fact that:
(i) any of the Shareholders, Trustees or officers of the Trust
is a shareholder, director, officer, partner, trustee, employee,
manager, adviser, principal underwriter or distributor or agent of or
for any Contracting Party, or of or for any parent or affiliate of any
Contracting Party or that the Contracting Party or any parent or
affiliate thereof is a Shareholder or has an interest in the Trust, or
that
(ii) any Contracting Party may have a contract providing for
the rendering of any similar services to one or more other
corporations, trusts, associations, partnerships, limited partnerships
or other organizations, or has other business or interests,
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<PAGE>
shall not affect the validity of any contract for the performance and assumption
of services, duties and responsibilities to, for or of the Trust and/or the
Trustees or disqualify any Shareholder, Trustee or officer of the Trust from
voting upon or executing the same or create any liability or accountability to
the Trust or its Shareholders, provided that in the case of any relationship or
interest referred to in the preceding clause (i) on the part of any Trustee or
officer of the Trust either (l) the material facts as to such relationship or
interest have been disclosed to or are known by the Trustees not having any such
relationship or interest and the contract involved is approved in good faith
reasonably justified by such facts by a majority of such Trustees not having any
such relationship or interest (even though such unrelated or disinterested
Trustees are less than a quorum of all of the Trustees), (2) the material facts
as to such relationship or interest and as to the contract have been disclosed
to or are known by the Shareholders not having such relationship or interest and
who are entitled to vote thereon and the contract involved is specifically
approved in good faith by majority vote of such Shareholders, or (3) the
specific contract involved is fair to the Trust as of the time it is authorized,
approved or ratified by the Trustees or by such Shareholders.
Section 3.4 Payment of Trust Expenses and Compensation of Trustees. The
Trustees are authorized to pay or to cause to be paid out of the principal or
income of the Trust, or partly out of principal and partly out of income, and to
charge or allocate the same to, between or among such one or more of the Series
and Classes that may be established and designated pursuant to Article IV, as
the Trustees deem fair, all expenses, fees, charges, taxes and liabilities
incurred or arising in connection with the Trust, or in connection with the
management thereof, including, but not limited to, the Trustees' compensation
and such expenses and charges for the services of the Trust's officers,
employees, investment adviser, administrator, distributor, principal
underwriter, auditor, counsel, depository, custodian, transfer agent, dividend
disbursing agent, accounting agent, Shareholder servicing agent, and such other
agents, consultants, and independent contractors and such other expenses and
charges as the Trustees may deem necessary or proper to incur. Without limiting
the generality of any other provision hereof, the Trustees shall be entitled to
reasonable compensation from the Trust for their services as Trustees and may
fix the amount of such compensation.
Section 3.5 Ownership of Assets of the Trust. Title to all of the
assets of the Trust shall at all times be considered as vested in the Trustees.
ARTICLE IV
SHARES
Section 4.1 Description of Shares. The beneficial interest in the Trust
shall be divided into Shares, all without par value. The Trustees shall have the
authority from time to time to issue or reissue Shares in one or more Series of
Shares (including without limitation the Series specifically established and
designated in Section 4.2), as they deem necessary or desirable, to establish
and designate such Series, and to fix and determine the relative rights and
preferences as between the different Series of Shares as to right of redemption
and the price, terms and manner of redemption, special and relative rights as to
dividends and other distributions and on liquidation, sinking or purchase fund
provisions, conversion rights, and conditions under which the several Series
shall have separate voting rights or no voting rights.
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<PAGE>
The Shares of each Series may be issued or reissued from time to time
in one or more Classes, as determined by the Board of Trustees pursuant to
resolution. Each Class shall be appropriately designated, prior to the issuance
of any shares thereof, by some distinguishing letter, number or title. All
Shares within a Class shall be alike in every particular. All Shares of each
Series shall be of equal rank and have the same powers, preferences and rights,
and shall be subject to the same qualifications, limitations and restrictions
without distinction between the shares of different Classes thereof, except with
respect to such differences among such Classes, as the Board of Trustees shall
from time to time determine to be necessary or desirable, including without
limitation differences in expenses, in voting rights and in the rate or rates of
dividends or distributions. The Board of Trustees may from time to time increase
the number of Shares allocated to any Class already created by providing that
any unissued Shares of the applicable Series shall constitute part of such
Class, or may decrease the number of Shares allocated to any Class already
created by providing that any unissued Shares previously assigned to such Class
shall no longer constitute part thereof. The Board of Trustees is hereby
empowered to classify or reclassify from time to time any unissued Shares of
each Series by fixing or altering the terms thereof and by assigning such
unissued shares to an existing or newly created Class. Notwithstanding anything
to the contrary in this paragraph the Board of Trustees is hereby empowered (i)
to redesignate any issued Shares of any Series by assigning a distinguishing
letter, number or title to such shares and (ii) to reclassify all or any part of
the issued Shares of any Series to make them part of an existing or newly
created Class.
The number of authorized Shares and the number of Shares of each Series
and Class that may be issued is unlimited, and the Trustees may issue Shares of
any Series or Class for such consideration and on such terms as they may
determine (or for no consideration if pursuant to a Share dividend or split-up),
all without action or approval of the Shareholders. All Shares when so issued on
the terms determined by the Trustees shall be fully paid and non-assessable (but
may be subject to mandatory contribution back to the Trust as provided in
subsection (h) of Section 4.2). The Trustees may classify or reclassify any
unissued Shares or any Shares previously issued and reacquired of any Series or
Class into one or more Series or Classes that may be established and designated
from time to time. The Trustees may hold as treasury Shares (of the same or some
other Series), reissue for such consideration and on such terms as they may
determine, or cancel, at their discretion from time to time, any Shares of any
Series or Class reacquired by the Trust.
The Trustees may from time to time close the transfer books or
establish record dates and times for the purposes of determining the holders of
Shares entitled to be treated as such, to the extent provided or referred to in
Section 5.3.
The establishment and designation of any Series or Class of Shares in
addition to those established and designated in Section 4.2 shall be effective
upon the execution by a majority of the then Trustees of an instrument setting
forth such establishment and designation and the relative rights and preferences
of such Series or Class, or as otherwise provided in such instrument. At any
time that there are no Shares outstanding of any particular Series or Class
previously established and designated the Trustees may by an instrument executed
by a majority of their number abolish that Series or Class and the establishment
and designation thereof. Each instrument referred to in this paragraph shall
have the status of an amendment to this Declaration of Trust.
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Any Trustee, officer or other agent of the Trust, and any organization
in which any such person is interested may acquire, own, hold and dispose of
Shares to the same extent as if such person were not a Trustee, officer or other
agent of the Trust; and the Trust may issue and sell or cause to be issued and
sold and may purchase Shares from any such person or any such organization
subject only to the general limitations, restrictions or other provisions
applicable to the sale or purchase of Shares generally.
Section 4.2 Establishment and Designation of Series or Classes. Without
limiting the authority of the Trustees set forth in Section 4.1 to establish and
designate any further Series, the Trustees hereby establish and designate four
Series of Shares: the "Starwood Strategic Fund", the "Laidlaw Fund," the "First
Lexington Balanced Fund" and the "Taxable Money Market Fund." The Shares of
these Series and any Shares of any further Series or Class that may from time to
time be established and designated by the Trustees shall (unless the Trustees
otherwise determine with respect to some further Series or Class at the time of
establishing and designating the same) have the following relative rights and
preferences:
(a) Assets Belonging to Series. All consideration received by the
Trust for the issuance or sale of Shares of a particular
Series or Class, together with all assets in which such
consideration is invested or reinvested, all income, earnings,
profits, and proceeds thereof, including any proceeds derived
from the sale, exchange or liquidation of such assets, and any
funds or payments derived from any reinvestment of such
proceeds in whatever form the same may be, shall irrevocably
belong to that Series or Class for all purposes, subject only
to the rights of creditors, and shall be so recorded upon the
books of account of the Trust. Such consideration, assets,
income, earnings, profits and proceeds thereof, including any
proceeds derived from the sale, exchange or liquidation of
such assets, and any funds or payments derived from any
reinvestment of such proceeds, in whatever form the same may
be, together with any General Items allocated to that Series
or Class as provided in the following sentence, are herein
referred to as "assets belonging to" that Series or Class. In
the event that there are any assets, income, earnings,
profits, and proceeds thereof, funds, or payments which are
not readily identifiable as belonging to any particular Series
or Class (collectively "General Items"), the Trustees shall
allocate such General Items to and among any one or more of
the Series or Classes established and designated from time to
time in such manner and on such basis as they, in their sole
discretion, deem fair and equitable; and any General Items so
allocated to a particular Series or Class shall belong to that
Series or Class. Each such allocation by the Trustees shall be
conclusive and binding upon the Shareholders of all Series and
Classes for all purposes.
The Trustees shall have full discretion, to the extent not
inconsistent with the 1940 Act, to determine which items shall
be treated as income and which items as capital; and each such
determination and allocation shall be conclusive and binding
upon the Shareholders.
(b) Liabilities Belonging to Series. The assets belonging to each
particular Series and Class thereof shall be charged with the
liabilities of the Trust in respect of that Series or Class
and all expenses, costs, charges and reserves attributable to
that
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Series or Class, and any general liabilities, expenses, costs,
charges or reserves of the Trust which are not readily
identifiable as belonging to any particular Series or Class
shall be allocated and charged by the Trustees to and among
any one or more of the Series and Classes established and
designated from time to time in such manner and on such basis
as the Trustees in their sole discretion deem fair and
equitable. The liabilities, expenses, costs, charges and
reserves allocated and so charged to a Series or Class are
herein referred to as "liabilities belonging to" that Series
or Class. Each allocation of liabilities, expenses, costs,
charges and reserves by the Trustees shall be conclusive and
binding upon the Shareholders of all Series for all purposes.
(c) Dividends. Dividends and distributions on Shares of a
particular Series may be paid with such frequency as the
Trustees may determine, which may be daily or otherwise
pursuant to a standing resolution or resolutions adopted only
once or with such frequency as the Trustees may determine, to
the holders of Shares of that Series, from such of the
estimated income and capital gains, accrued or realized, from
the assets belonging to that Series, as the Trustees may
determine, after providing for actual and accrued liabilities
belonging to that Series. All dividends and distributions on
Shares of a particular Series shall be distributed pro rata to
the holders of that Series in proportion to the number of
Shares of that Series held by such holders at the date and
time of record established for the payment of such dividends
or distributions, except that in connection with any dividend
or distribution program or procedure the Trustees may
determine that no dividend or distribution shall be payable on
Shares as to which the Shareholder's purchase order and/or
payment have not been received by the time or times
established by the Trustees under such program or procedure,
and except that if Classes have been established for any
Series, the rate of dividends or distributions may vary among
such Class pursuant to resolution, which may be a standing
resolution, of the Board of Trustees. Such dividends and
distributions may be made in cash or Shares or a combination
thereof as determined by the Trustees or pursuant to any
program that the Trustees may have in effect at the time for
the election by each Shareholder of the mode of the making of
such dividend or distribution to that Shareholder. Any such
dividend or distribution paid in Shares will be paid at the
net asset value thereof as determined in accordance with
subsection (h) of Section 4.2.
The Trust intends to qualify each Series as a "regulated
investment company" under the Internal Revenue Code of 1954,
as amended, or any successor or comparable statute thereto,
and regulations promulgated thereunder. Inasmuch as the
computation of net income and gains for federal income tax
purposes may vary from the computation thereof on the books of
the Trust, the Board of Trustees shall have the power, in its
sole discretion, to distribute in any fiscal year as
dividends, including dividends designated in whole or in part
as capital gains distributions, amounts sufficient, in the
opinion of the Board of Trustees, to enable each Series to
qualify as a regulated investment company and to avoid
liability of the Series for federal income tax in respect of
that year. However, nothing in the foregoing shall limit the
authority of the Board of Trustees to make distributions
greater than or less
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than the amount necessary to qualify as a regulated investment
company and to avoid liability of each Series for such tax.
(d) Liquidation. In event of the liquidation or dissolution of the
Trust, the Shareholders of each Series or Class that has been
established and designated shall be entitled to receive, as a
Series or Class, when and as declared by the Trustees, the
excess of the assets belonging to that Series or Class over
the liabilities belonging to that Series or Class. The assets
so distributable to the Shareholders of any particular Series
or Class shall be distributed among such Shareholders in
proportion to the number of Shares of that Series or Class
held by them and recorded on the books of the Trust. The
liquidation of any particular Series or Class may be
authorized by vote of a majority of the Trustees then in
office subject to the approval of a majority of the
outstanding voting Shares of that Series or Class, as defined
in the 1940 Act.
(e) Voting. All Shares shall have "equal voting rights" as such
term is defined in the Investment Company Act of 1940 and
except as otherwise provided by that Act or rules, regulations
or orders promulgated thereunder. On each matter submitted to
a vote of the Shareholders, each Series shall vote as a
separate series except (i) as to any matter with respect to
which a vote of all Series voting as a single series is
required by the 1940 Act or rules and regulations promulgated
thereunder, or would be required under the Ohio General
Corporation Law if the Trust were an Ohio corporation; and
(ii) as to any matter which the Trustees have determined
affects only the interests of one or more Series or Classes,
only the holders of Shares of the one or more affected Series
or Classes shall be entitled to vote thereon.
(f) Redemption by Shareholder. Each holder of Shares of a
particular Series or Class shall have the right at such times
as may be permitted by the Trust, but no less frequently than
once each week, to require the Trust to redeem all or any part
of his Shares of that Series or Class at a redemption price
equal to the net asset value per Share of that Series or Class
next determined in accordance with subsection (h) of this
Section 4.2 after the Shares are properly tendered for
redemption. Payment of the redemption price shall be in cash;
provided, however, that if the Trustees determine, which
determination shall be conclusive, that conditions exist which
make payment wholly in cash unwise or undesirable, the Trust
may make payment wholly or partly in securities or other
assets belonging to the Series or Class of which the Shares
being redeemed are part at the value of such securities or
assets used in such determination of net asset value.
Notwithstanding the foregoing, the Trust may postpone payment
of the redemption price and may suspend the right of the
holders of Shares of any Series to require the Trust to redeem
Shares of that Series during any period or at any time when
and to the extent permissible under the 1940 Act, and such
redemption is conditioned upon the Trust having funds or
property legally available therefor.
(g) Redemption by Trust. Each Share of each Series or Class that
has been established and designated is subject to redemption
by the Trust at the redemption price which would be applicable
if such Share was then being redeemed by the Shareholder
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pursuant to subsection (f) of this Section 4.2:(a) at any
time, if the Trustees determine in their sole discretion that
failure to so redeem may have materially adverse consequences
to all or any of the holders of the Shares, or any Series or
Class thereof, of the Trust, or (b) upon such other conditions
as may from time to time be determined by the Trustees and set
forth in the then current Prospectus of the Trust with respect
to maintenance of Shareholder accounts of a minimum amount.
Upon such redemption the holders of the Shares so redeemed
shall have no further right with respect thereto other than to
receive payment of such redemption price.
(h) Net Asset Value. The net asset value per Share of any Series
or Class shall be the quotient obtained by dividing the value
of the net assets of that Series or Class (being the value of
the assets belonging to that Series or Class less the
liabilities belonging to that Series or Class) by the total
number of Shares of that Series or Class outstanding, all
determined in accordance with the methods and procedures,
including without limitation those with respect to rounding,
established by the Trustees from time to time. Net asset value
shall be determined separately for each Class of a Series.
The Trustees may determine to maintain the net asset value per
Share of any Series or Class at a designated constant dollar
amount and in connection therewith may adopt procedures not
inconsistent with the 1940 Act for the continuing declarations
of income attributable to that Series or Class as dividends
payable in additional Shares of that Series or Class at the
designated constant dollar amount and for the handling of any
losses attributable to that Series or Class . Such procedures
may provide that in the event of any loss each Shareholder
shall be deemed to have contributed to the capital of the
Trust attributable to that Series or Class his pro rata
portion of the total number of Shares required to be canceled
in order to permit the net asset value per Share of that
Series or Class to be maintained, after reflecting such loss,
at the designated constant dollar amount. Each Shareholder of
the Trust shall be deemed to have agreed, by his investment in
any Series with respect to which the Trustees shall have
adopted any such procedure, to make the contribution referred
to in the preceding sentence in the event of any such loss.
(i) Transfer. All Shares of each particular Series or Class shall
be transferable, but transfers of Shares of a particular
Series or Class will be recorded on the Share transfer records
of the Trust applicable to that Series or Class only at such
times as Shareholders shall have the right to require the
Trust to redeem Shares of that Series or Class and at such
other times as may be permitted by the Trustees.
(j) Equality. All Shares of each particular Series shall represent
an equal proportionate interest in the assets belonging to
that Series (subject to the liabilities belonging to that
Series), and each Share of any particular Series shall be
equal to each other Share of that Series; but the provisions
of this sentence shall not restrict any distinctions
permissible under this Section 4.2 that may exist with respect
to a Class of the same Series. The Trustees may from time to
time divide or combine the Shares of any particular Series or
Class into a greater or lesser number of Shares of
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that Series or Class without thereby changing the
proportionate beneficial interest in the assets belonging to
that Series or Class or in any way affecting the rights of
Shares of any other Series or Class.
(k) Fractions. Any fractional Share of any Series or Class, if any
such fractional Share is outstanding, shall carry
proportionately all the rights and obligations of a whole
Share of that Series or Class, including with respect to
voting, receipt of dividends and distributions, redemption of
Shares, and liquidation of the Trust.
(l) Conversion Rights. Subject to compliance with the requirements
of the 1940 Act, the Trustees shall have the authority to
provide that holders of Shares of any Series or Class shall
have the right to convert said Shares into Shares of one or
more other Series or Classes in accordance with such
requirements and procedures as may be established by the
Trustees.
Section 4.3 Ownership of Shares. The ownership of Shares shall be
recorded on the books of the Trust or of a transfer or similar agent for the
Trust, which books shall be maintained separately for the Shares of each Series
and Class that has been established and designated. No certificates certifying
the ownership of Shares need be issued except as the Trustees may otherwise
determine from time to time. The Trustees may make such rules as they consider
appropriate for the issuance of Share certificates, the use of facsimile
signatures, the transfer of Shares and similar matters. The record books of the
Trust as kept by the Trust or any transfer or similar agent, as the case may be,
shall be conclusive as to who are the Shareholders and as to the number of
Shares of each Series and Class held from time to time by each such Shareholder.
Section 4.4 Investments in the Trust. The Trustees may accept
investments in the Trust from such persons and on such terms and for such
consideration, not inconsistent with the provisions of the 1940 Act, as they
from time to time authorize. The Trustees may authorize any distributor,
principal underwriter, custodian, transfer agent or other person to accept
orders for the purchase of Shares that conform to such authorized terms and to
reject any purchase orders for Shares whether or not conforming to such
authorized terms.
Section 4.5 No Preemptive Rights. Shareholders shall have no preemptive
or other right to subscribe to any additional Shares or other securities issued
by the Trust.
Section 4.6 Status of Shares and Limitation of Personal Liability.
Shares shall be deemed to be personal property giving only the rights provided
in this instrument. Every Shareholder by virtue of having become a Shareholder
shall be held to have expressly assented and agreed to the terms hereof and to
have become a party hereto. The death of a Shareholder during the continuance of
the Trust shall not operate to terminate the Trust nor entitle the
representative of any deceased Shareholder to an accounting or to take any
action in court or elsewhere against the Trust or the Trustees, but only to the
rights of said decedent under this Trust. Ownership of Shares shall not entitle
the Shareholder to any title in or to the whole or any part of the Trust
property or right to call for a partition or division of the same or for an
accounting, nor shall the ownership of Shares constitute the Shareholders
partners. Neither the Trust nor the Trustees, nor any officer, employee or agent
of the Trust shall have any power to bind personally any Shareholder, nor except
as specifically provided herein to call upon any Shareholder for the
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payment of any sum of money or assessment whatsoever other than such as the
Shareholder may at any time personally agree to pay.
ARTICLE V
SHAREHOLDERS' VOTING POWERS AND MEETINGS
Section 5.1 Voting Powers. The Shareholders shall have power to vote
only (i) for the election or removal of Trustees as provided in Section 3.1,
(ii) with respect to any contract with a Contracting Party as provided in
Section 3.3 as to which Shareholder approval is required by the 1940 Act, (iii)
with respect to any termination or reorganization of the Trust or any Series to
the extent and as provided in Sections 7.1 and 7.2, (iv) with respect to any
amendment of this Declaration of Trust to the extent and as provided in Section
7.3, (v) to the same extent as the stockholders of an Ohio business corporation
as to whether or not a court action, proceeding or claim should or should not be
brought or maintained derivatively or as a class action on behalf of the Trust
or the Shareholders, and (vi) with respect to such additional matters relating
to the Trust as may be required by the 1940 Act, this Declaration of Trust, the
By-Laws or any registration of the Trust with the Commission (or any successor
agency) or any state, or as the Trustees may consider necessary or desirable.
There shall be no cumulative voting in the election of any Trustee or Trustees.
Shares may be voted in person or by proxy. A proxy with respect to Shares held
in the name of two or more persons shall be valid if executed by any one of them
unless at or prior to exercise of the proxy the Trust receives a specific
written notice to the contrary from any one of them. A proxy purporting to be
executed by or on behalf of a Shareholder shall be deemed valid unless
challenged at or prior to its exercise and the burden of proving invalidity
shall rest on the challenger. Until Shares are then issued and outstanding, the
Trustees may exercise all rights of Shareholders and may take any action
required by law, this Declaration of Trust or the By-Laws to be taken by
Shareholders.
Section 5.2 Meetings. Meetings (including meetings involving only the
holders of Shares of one or more but less than all Series or Classes) of
Shareholders may be called by the Trustees from time to time for the purpose of
taking action upon any matter requiring the vote or authority of the
Shareholders as herein provided or upon any other matter deemed by the Trustees
to be necessary or desirable. Written notice of any meeting of Shareholders
shall be given or caused to be given by the Trustees by mailing such notice at
least seven days before such meeting, postage prepaid, stating the time, place
and purpose of the meeting, to each Shareholder at the Shareholder's address as
it appears on the records of the Trust. If the Trustees shall fail to call or
give notice of any meeting of Shareholders (including a meeting involving only
the holders of Shares of one or more but less than all Series or Classes) for a
period of 30 days after written application by Shareholders holding at least 25%
of the Shares then outstanding requesting a meeting be called for any other
purpose requiring action by the Shareholders as provided herein or in the
By-Laws, then Shareholders holding at least 25% of the Shares then outstanding
may call and give notice of such meeting, and thereupon the meeting shall be
held in the manner provided for herein in case of call thereof by the Trustees.
Section 5.3 Record Dates. For the purpose of determining the
Shareholders who are entitled to vote or act at any meeting or any adjournment
thereof, or who are entitled to participate in any dividend or distribution, or
for the purpose of any other action, the Trustees may from time to time close
the transfer books for such period, not exceeding 30 days (except at or in
connection
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with the termination of the Trust), as the Trustees may determine; or without
closing the transfer books the Trustees may fix a date and time not more than 60
days prior to the date of any meeting of Shareholders or other action as the
date and time of record for the determination of Shareholders entitled to vote
at such meeting or any adjournment thereof or to be treated as Shareholders of
record for purposes of such other action, and any Shareholder who was a
Shareholder at the date and time so fixed shall be entitled to vote at such
meeting or any adjournment thereof or (subject to any provisions permissible
under subsection (c) of Section 4.2 with respect to dividends or distributions
on Shares that have not been ordered and/or paid for by the time or times
established by the Trustees under the applicable dividend or distribution
program or procedure then in effect) to be treated as a Shareholder of record
for purposes of such other action, even though he has since that date and time
disposed of his Shares, and no Shareholder becoming such after that date and
time shall be so entitled to vote at such meeting or any adjournment thereof or
to be treated as a Shareholder of record for purposes of such other action.
Section 5.4 Quorum and Required Vote. A majority of Shares entitled to
vote shall be a quorum for the transaction of business at a Shareholders'
meeting, except that where any provision of law or of this Declaration of Trust
permits or requires that holders of any Series or Class thereof shall vote as a
Series or Class, then a majority of the aggregate number of Shares of that
Series or Class thereof entitled to vote shall be necessary to constitute a
quorum for the transaction of business by that Series or Class. Any lesser
number shall be sufficient for adjournments. Any adjourned session or sessions
may be held, within a reasonable time after the date set for the original
meeting, without the necessity of further notice. Except when a larger vote is
required by any provision of this Declaration of Trust or the By-Laws, a
majority of the Shares voted, at a meeting at which a quorum is present, shall
decide any questions and a plurality shall elect a Trustee, provided that where
any provision of law or of this Declaration of Trust permits or requires that
the holders of any Series or Class shall vote as a Series or Class, then a
majority of the Shares of that Series or Class voted on the matter shall decide
that matter insofar as that Series or Class is concerned.
Section 5.5 Action by Written Consent. Subject to the provisions of the
1940 Act and other applicable law, any action taken by Shareholders may be taken
without a meeting if a majority of Shareholders entitled to vote on the matter
(or such other proportion thereof as shall be required by the 1940 Act or by any
express provision of this Declaration of Trust or the By-Laws)
consent to the action in writing and such written consents are filed with the
records of the meetings of Shareholders. Such consent shall be treated for all
purposes as a vote taken at a meeting of Shareholders.
Section 5.6 Inspection of Records. The records of the Trust shall be
open to inspection by Shareholders to the same extent as is permitted
stockholders of an Ohio corporation under the Ohio General Corporation Law.
Section 5.7 Additional Provisions. The By-Laws may include further
provisions for Shareholders' votes and meetings and related matters not
inconsistent with the provisions hereof.
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ARTICLE VI
LIMITATION OF LIABILITY; INDEMNIFICATION
Section 6.1 Trustees, Shareholders, etc. Not Personally Liable; Notice.
All persons extending credit to, contracting with or having any claim against
any Series of the Trust (or the Trust on behalf of any Series) shall look only
to the assets of that Series for payment under such credit, contract or claim;
and neither the Shareholders nor the Trustees, nor any of the Trust's officers,
employees or agents, whether past, present or future, shall be personally liable
therefor. Every note, bond, contract, instrument, certificate or undertaking and
every other act or thing whatsoever executed or done by or on behalf of the
Trust or the Trustees or any of them in connection with the Trust shall be
conclusively deemed to have been executed or done only by or for the Trust or
the Trustees and not personally. Nothing in this Declaration of Trust shall
protect any Trustee or officer against any liability to the Trust or the
Shareholders to which such Trustee or officer would otherwise be subject by
reason of willful misfeasance, bad faith, gross negligence or reckless disregard
of the duties involved in the conduct of the office of Trustee or of such
officer.
Every note, bond, contract, instrument, certificate or undertaking made
or issued by the Trustees or by any officers or officer shall give notice that
this Declaration of Trust is on file with the Secretary of the State of Ohio and
shall recite to the effect that the same was executed or made by or on behalf of
the Trust or by them as Trustees or Trustee or as officers or officer and not
individually and that the obligations of such instrument are not binding upon
any of them or the Shareholders individually but are binding only upon the
assets and property of the Trust, but the omission thereof shall not operate to
bind any Trustees or Trustee or officers or officer or Shareholders or
Shareholder individually.
Section 6.2 Trustee's Good Faith Action; Expert Advice; No Bond or
Surety. The exercise by the Trustees of their powers and discretions hereunder
shall be binding upon everyone interested. A Trustee shall be liable for his own
willful misfeasance, bad faith, gross negligence or reckless disregard of the
duties involved in the conduct of the office of Trustee, and for nothing else,
and shall not be liable for errors of judgment or mistakes of fact or law.
Subject to the foregoing, (a) the Trustees shall not be responsible or liable in
any event for any neglect or wrongdoing of any officer, agent, employee,
consultant, adviser, administrator, distributor or principal underwriter,
custodian or transfer, dividend disbursing, Shareholder servicing or accounting
agent of the Trust, nor shall any Trustee be responsible for the act or omission
of any other Trustee; (b) the Trustees may take advice of counsel or other
experts with respect to the meaning and operation of this Declaration of Trust
and their duties as Trustees, and shall be under no liability for any act or
omission in accordance with such advice or for failing to follow such advice;
and (c) in discharging their duties, the Trustees, when acting in good faith,
shall be entitled to rely upon the books of account of the Trust and upon
written reports made to the Trustees by any officer appointed by them, any
independent public accountant, and (with respect to the subject matter of the
contract involved) any officer, partner or responsible employee of a Contracting
Party appointed by the Trustees pursuant to Section 3.3. The Trustees as such
shall not be required to give any bond or surety or any other security for the
performance of their duties. Nothing stated herein is intended to detract from
the protection accorded to Trustees by Ohio Revised Code Sections 1746.08 and
1701.59, as amended from time to time.
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Section 6.3 Indemnification of Shareholders. In case any Shareholder or
former Shareholder shall be charged or held to be personally liable for any
obligation or liability of the Trust solely by reason of being or having been a
Shareholder and not because of such Shareholder's acts or omissions or for some
other reason, the Trust (upon proper and timely request by the Shareholder)
shall assume the defense against such charge and satisfy any judgment thereon,
and the Shareholder or former Shareholder (or his heirs, executors,
administrators or other legal representatives or in the case of a corporation or
other entity, its corporate or other general successor) shall be entitled out of
the assets of the Trust estate to be held harmless from and indemnified against
all loss and expense arising from such liability; provided that, in the event
the Trust shall consist of more than one Series, Shareholders of a particular
Series who are faced with claims or liabilities solely by reason of their status
as Shareholders of that Series shall be limited to the assets of that Series for
recovery of such loss and related expenses. The rights accruing to a Shareholder
under this Section 6.3 shall not exclude any other right to which such
Shareholder may be lawfully entitled, nor shall anything herein contained
restrict the right of the Trust to indemnify or reimburse a Shareholder in any
appropriate situation even though not specifically provided herein.
Section 6.4 Indemnification of Trustees, Officers, etc. Subject to and
except as otherwise provided in the Securities Act of 1933, as amended, and the
1940 Act, the Trust shall indemnify each of its Trustees and officers (including
persons who serve at the Trust's request as directors, officers or trustees of
another organization in which the Trust has any interest as a shareholder,
creditor or otherwise (hereinafter referred to as a "Covered Person") against
all liabilities, including but not limited to amounts paid in satisfaction of
judgments, in compromise or as fines and penalties, and expenses, including
reasonable accountants' and counsel fees, incurred by any Covered Person in
connection with the defense or disposition of any action, suit or other
proceeding, whether civil or criminal, before any court or administrative or
legislative body, in which such Covered Person may be or may have been involved
as a party or otherwise or with which such person may be or may have been
threatened, while in office or thereafter, by reason of being or having been
such a Trustee or officer, director or trustee, and except that no Covered
Person shall be indemnified against any liability to the Trust or its
Shareholders to which such Covered Person would otherwise be subject by reason
of willful misfeasance, bad faith, gross negligence or reckless disregard of the
duties involved in the conduct of such Covered Person's office.
Section 6.5 Advances of Expenses. The Trust shall advance attorneys'
fees or other expenses incurred by a Covered Person in defending a proceeding to
the full extent permitted by the Securities Act of 1933, as amended, the 1940
Act, and Ohio Revised Code Chapter 1707, as amended. In the event any of these
laws conflict with Ohio Revised Code Section 1701.13(E), as amended, these laws,
and not Ohio Revised Code Section 1701.13(E), shall govern.
Section 6.6 Indemnification Not Exclusive, etc. The right of
indemnification provided by this Article VI shall not be exclusive of or affect
any other rights to which any such Covered Person may be entitled. As used in
this Article VI, "Covered Person" shall include such person's heirs, executors
and administrators. Nothing contained in this article shall affect any rights to
indemnification to which personnel of the Trust, other than Trustees and
officers, and other persons may be entitled by contract or otherwise under law,
nor the power of the Trust to purchase and maintain liability insurance on
behalf of any such person.
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Section 6.7 Liability of Third Persons Dealing with Trustees. No person
dealing with the Trustees shall be bound to make any inquiry concerning the
validity of any transaction made or to be made by the Trustees or to see to the
application of any payments made or property transferred to the Trust or upon
its order.
ARTICLE VII
MISCELLANEOUS
Section 7.1 Duration and Termination of Trust. Unless terminated as
provided herein, the Trust shall continue without limitation of time. The Trust
may be terminated at any time by a majority of the Trustees then in office
subject to a favorable vote of a majority of the outstanding voting Shares, as
defined in the 1940 Act, of each Series voting separately by Series.
Upon termination, after paying or otherwise providing for all charges,
taxes, expenses and liabilities, whether due or accrued or anticipated as may be
determined by the Trustees, the Trust shall in accordance with such procedures
as the Trustees consider appropriate reduce the remaining assets to
distributable form in cash, securities or other property, or any combination
thereof, and distribute the proceeds to the Shareholders, in conformity with the
provisions of subsection (d) of Section 4.2.
Section 7.2 Reorganization. The Trustees may sell, convey and transfer
the assets of the Trust, or the assets belonging to any one or more Series, to
another trust, partnership, association or corporation organized under the laws
of any state of the United States, or to the Trust to be held as assets
belonging to another Series of the Trust, in exchange for cash, shares or other
securities (including, in the case of a transfer to another Series of the Trust,
Shares of such other Series) with such transfer being made subject to, or with
the assumption by the transferee of, the liabilities belonging to each Series
the assets of which are so transferred; provided, however, that if shareholder
approval is required by the 1940 Act, no assets belonging to any particular
Series shall be so transferred unless the terms of such transfer shall have
first been approved at a meeting called for the purpose by the affirmative vote
of the holders of a majority of the outstanding voting Shares, as defined in the
1940 Act, of that Series. Following such transfer, the Trustees shall distribute
such cash, shares or other securities (giving due effect to the assets and
liabilities belonging to and any other differences among the various Series the
assets belonging to which have so been transferred) among the Shareholders of
the Series the assets belonging to which have been so transferred; and if all of
the assets of the Trust have been so transferred, the Trust shall be terminated.
Section 7.3 Amendments. All rights granted to the Shareholders under
this Declaration of Trust are granted subject to the reservation of the right to
amend this Declaration of Trust as herein provided, except that no amendment
shall repeal the limitations on personal liability of any Shareholder or Trustee
or repeal the prohibition of assessment upon the Shareholders without the
express consent of each Shareholder or Trustee involved. Subject to the
foregoing, the provisions of this Declaration of Trust (whether or not related
to the rights of Shareholders) may be amended at any time so long as such
amendment does not adversely affect the rights of any Shareholder with respect
to which such amendment is or purports to be applicable and so long as such
amendment is not in contravention of applicable law, including the 1940 Act, by
an instrument in writing signed by a majority of the then Trustees (or by an
officer of the Trust pursuant to the vote
- 19 -
<PAGE>
of a majority of such Trustees). Except as provided in the first sentence of
this Section 7, any amendment to this Declaration of Trust that adversely
affects the rights of Shareholders may be adopted at any time by an instrument
signed in writing by a majority of the then Trustees (or by an officer of the
Trust pursuant to the vote of a majority of such Trustees) when authorized to do
so by the vote in accordance with subsection (e) of Section 4.2 of Shareholders
holding a majority of the Shares entitled to vote; (a "Majority Shareholder
Vote"); provided, however, than an amendment that shall affect the Shareholders
of one or more Series (or of one or more Classes), but not the Shareholders of
all outstanding Series (or Classes), shall be authorized by a Majority
Shareholder Vote of each Series (or Class, as the case may be) affected, and no
vote of a Series (or Class) not affected shall be required. Subject to the
foregoing, any such amendment shall be effective as provided in the instrument
containing the terms of such amendment or, if there is no provision therein with
respect to effectiveness, upon the execution of such instrument and of a
certificate (which may be a part of such instrument) executed by a Trustee or
officer to the effect that such amendment has been duly adopted. Copies of the
amendment to this Declaration of Trust shall be filed as specified in Section
7.4. A restated Declaration of Trust, integrating into a single instrument all
of the provisions of the Declaration of Trust which are then in effect and
operative, may be executed from time to time by a majority of the then Trustees
(or by an officer of the Trust pursuant to the vote of a majority of such
Trustees) and shall be effective upon filing as specified in Section 7.4.
Section 7.4 Filing of Copies; References; Headings. The original or a
copy of this instrument and of each amendment hereto shall be kept at the office
of the Trust where it may be inspected by any Shareholder. A copy of this
instrument and of each amendment hereto shall be filed by the Trust with the
Secretary of the State of Ohio, as well as any other governmental office where
such filing may from time to time be required, but the failure to make any such
filing shall not impair the effectiveness of this instrument or any such
amendment. Anyone dealing with the Trust may rely on a certificate by an officer
of the Trust as to whether or not any such amendments have been made, as to the
identities of the Trustees and officers, and as to any matters in connection
with the Trust hereunder; and, with the same effect as if it were the original,
may rely on a copy certified by an officer of the Trust to be a copy of this
instrument or of any such amendments. In this instrument and in any such
amendment, references to this instrument, and all expressions like "herein",
"hereof" and "hereunder" shall be deemed to refer to this instrument as a whole
as the same may be amended or affected by any such amendments. The masculine
gender shall include the feminine and neuter genders. Headings are placed herein
for convenience of reference only and shall not be taken as a part hereof or
control or affect the meaning, construction or effect of this instrument. This
instrument may be executed in any number of counterparts each of which shall be
deemed an original.
Section 7.5 Applicable Law. This Trust is an Ohio business trust, and
it is created under and is to be governed by and construed and administered
according to the laws of said State, including the Ohio General Corporation Law
as the same may be amended from time to time, but the reference to said
Corporation Law is not intended to give the Trust, the Trustees, the
Shareholders or any other person any right, power, authority or responsibility
available only to or in connection with an entity organized in corporate form.
The Trust shall be of the type referred to in Section 1746.01 of the Ohio
Revised Code, and without limiting the provisions hereof, the Trust may exercise
all powers which are ordinarily exercised by such a trust.
- 20 -
<PAGE>
IN WITNESS WHEREOF, the undersigned has hereunto set his hand for
himself and his assigns, as of the day and year first above written.
/s/ Timothy L. Ashburn
TIMOTHY L. ASHBURN
STATE OF KENTUCKY )
) ss:
COUNTY OF Fayette )
Before me, a Notary Public in and for said county and state, personally
appeared the above named Timothy L. Ashburn, who acknowledged that he did sign
the foregoing instrument and that the same is his free act and deed.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my official
seal on this 19th day of November, 1997.
/s/ Michelle Hardesty
Notary Public
My Commission Expires: 3/19/01
- 21 -
<PAGE>
IN WITNESS WHEREOF, the undersigned has hereunto set his hand for
himself and his assigns, as of the day and year first above written.
/s/ Philip L. Conover
PHILIP L. CONOVER
STATE OF FLORIDA )
) ss:
COUNTY OF Sarasota )
Before me, a Notary Public in and for said county and state, personally
appeared the above named Philip L. Conover, who acknowledged that he did sign
the foregoing instrument and that the same is his free act and deed.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my official
seal on this 17th day of November, 1997.
/s/ Kristen Rhyne
Notary Public
My Commission Expires: 2/16/01
- 22 -
<PAGE>
IN WITNESS WHEREOF, the undersigned has hereunto set his hand for
himself and his assigns, as of the day and year first above written.
/s/ David E. LaBelle
DAVID E. LaBELLE
STATE OF TEXAS )
) ss:
COUNTY OF Dallas )
Before me, a Notary Public in and for said county and state, personally
appeared the above named David E. LaBelle, who acknowledged that he did sign the
foregoing instrument and that the same is his free act and deed.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my official
seal on this 18th day of November, 1997.
Notary Public
My Commission Expires: 10/29/98
- 23 -
<PAGE>
IN WITNESS WHEREOF, the undersigned has hereunto set his hand for
himself and his assigns, as of the day and year first above written.
/s/ Daniel J. Condon
DANIEL J. CONDON
STATE OF KENTUCKY )
) ss:
COUNTY OF Harrison )
Before me, a Notary Public in and for said county and state, personally
appeared the above named Daniel J. Condon, who acknowledged that he did sign the
foregoing instrument and that the same is his free act and deed.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my official
seal on this 17th day of November, 1997.
/s/ Layne V. McIlvain
Notary Public
My Commission Expires: 8/15/01
- 24 -
<PAGE>
IN WITNESS WHEREOF, the undersigned has hereunto set his hand for
himself and his assigns, as of the day and year first above written.
/s/ John Hinkel
JOHN HINKEL
STATE OF KENTUCKY )
) ss:
COUNTY OF Fayette )
Before me, a Notary Public in and for said county and state, personally
appeared the above named John Hinkel, who acknowledged that he did sign the
foregoing instrument and that the same is his free act and deed.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my official
seal on this 18th day of November, 1997.
/s/ Alohama J. Goff
Notary Public
My Commission Expires: 9/29/01
- 25 -
<PAGE>
IN WITNESS WHEREOF, the undersigned has hereunto set his hand for
himself and his assigns, as of the day and year first above written.
/s/ David Bottoms
DAVID BOTTOMS
STATE OF NEW YORK )
) ss:
COUNTY OF New York )
Before me, a Notary Public in and for said county and state, personally
appeared the above named David Bottoms, who acknowledged that he did sign the
foregoing instrument and that the same is his free act and deed.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my official
seal on this 18th day of November, 1997.
/s/ Keidre M. Keag
Notary Public
My Commission Expires: 2/26/98
- 26 -
<PAGE>
ACCEPTANCE OF TRUST
As contemplated in Section 3.1 of the Agreement and Declaration of
Trust of The Unified Funds, the undersigned accepts his designation as a Trustee
of said Trust and agrees to the provisions of said Agreement and Declaration of
Trust.
IN WITNESS WHEREOF, the undersigned has set his hand on the date set
opposite his signature.
Date: 11/19/97 /s/ Timothy L. Ashburn
TIMOTHY L. ASHBURN
STATE OF KENTUCKY )
) ss:
COUNTY OF Fayette )
Before me, a Notary Public in and for said county and state, personally
appeared the above named TIMOTHY L. ASHBURN, who acknowledged that he did sign
the foregoing instrument and that the same is his free act and deed.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my official
seal on this 19th day of November, 1997.
/s/ Michele Hardesty
Notary Public
My Commission Expires: 3/19/01
<PAGE>
ACCEPTANCE OF TRUST
As contemplated in Section 3.1 of the Agreement and Declaration of
Trust of The Unified Funds, the undersigned accepts his designation as a Trustee
of said Trust and agrees to the provisions of said Agreement and Declaration of
Trust.
IN WITNESS WHEREOF, the undersigned has set his hand on the date set
opposite his signature.
Date: 11/17/97 /s/ Philip L. Conover
PHILIP L. CONOVER
STATE OF FLORIDA )
) ss:
COUNTY OF Sarasota )
Before me, a Notary Public in and for said county and state, personally
appeared the above named PHILIP L. CONOVER, who acknowledged that he did sign
the foregoing instrument and that the same is his free act and deed.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my official
seal on this 17th day of November, 1997.
/s/ Kristen Rhyne
Notary Public
My Commission Expires: 2/16/01
<PAGE>
ACCEPTANCE OF TRUST
As contemplated in Section 3.1 of the Agreement and Declaration of
Trust of The Unified Funds, the undersigned accepts his designation as a Trustee
of said Trust and agrees to the provisions of said Agreement and Declaration of
Trust.
IN WITNESS WHEREOF, the undersigned has set his hand on the date set
opposite his signature.
Date: 11/18/97 /s/ David E. LaBelle
DAVID E. LaBELLE
STATE OF TEXAS )
) ss:
COUNTY OF Dallas )
Before me, a Notary Public in and for said county and state, personally
appeared the above named DAVID E. LaBELLE, who acknowledged that he did sign the
foregoing instrument and that the same is his free act and deed.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my official
seal on this 18th day of November, 1997.
/s/ Jacqueline B. Wood
Notary Public
My Commission Expires: 10/29/98
<PAGE>
ACCEPTANCE OF TRUST
As contemplated in Section 3.1 of the Agreement and Declaration of
Trust of The Unified Funds, the undersigned accepts his designation as a Trustee
of said Trust and agrees to the provisions of said Agreement and Declaration of
Trust.
IN WITNESS WHEREOF, the undersigned has set his hand on the date set
opposite his signature.
Date: Nov. 17, 1997 /s/ Daniel J. Condon
DANIEL J. CONDON
STATE OF KENTUCKY )
) ss:
COUNTY OF Harrison )
Before me, a Notary Public in and for said county and state, personally
appeared the above named DANIEL J. CONDON, who acknowledged that he did sign the
foregoing instrument and that the same is his free act and deed.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my official
seal on this 17th day of November, 1997.
/s/ Layne V. McIlvain
Notary Public
My Commission Expires: 8/15/01
<PAGE>
ACCEPTANCE OF TRUST
As contemplated in Section 3.1 of the Agreement and Declaration of
Trust of The Unified Funds, the undersigned accepts his designation as a Trustee
of said Trust and agrees to the provisions of said Agreement and Declaration of
Trust.
IN WITNESS WHEREOF, the undersigned has set his hand on the date set
opposite his signature.
Date: November 16, 1997 /s/ David Bottoms
DAVID BOTTOMS
STATE OF NEW YORK )
) ss:
COUNTY OF New York )
Before me, a Notary Public in and for said county and state, personally
appeared the above named DAVID BOTTOMS, who acknowledged that he did sign the
foregoing instrument and that the same is his free act and deed.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my official
seal on this 18th day of November, 1997.
/s/ Deirdre M. Keag
Notary Public
My Commission Expires: 2/26/98
<PAGE>
ACCEPTANCE OF TRUST
As contemplated in Section 3.1 of the Agreement and Declaration of
Trust of The Unified Funds, the undersigned accepts his designation as a Trustee
of said Trust and agrees to the provisions of said Agreement and Declaration of
Trust.
IN WITNESS WHEREOF, the undersigned has set his hand on the date set
opposite his signature.
Date: Nov. 18, 1997 /s/ John Hinkel
JOHN HINKEL
STATE OF KENTUCKY )
) ss:
COUNTY OF Fayette )
Before me, a Notary Public in and for said county and state, personally
appeared the above named JOHN HINKEL, who acknowledged that he did sign the
foregoing instrument and that the same is his free act and deed.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my official
seal on this 18th day of November, 1997.
/s/ Alohama J. Goff
Notary Public
My Commission Expires: 9/29/01
By-Laws
of
The Unified Funds
ARTICLE 1
Agreement and Declaration of Trust and Offices
1.1 Agreement and Declaration of Trust. These By-Laws shall be subject
to the Agreement and Declaration of Trust, as from time to time in effect (the
"Declaration of Trust"), of The Unified Funds, the Ohio business trust
established by the Declaration of Trust (the "Trust").
1.2 Offices. The Trust may maintain one or more other offices,
including its principal office, in or outside of Ohio, in such cities as the
Trustees may determine from time to time. Unless the Trustees otherwise
determine, the principal office of the Trust shall be located in Beavercreek,
Ohio.
ARTICLE 2
Meetings of Trustees
2.1 Regular Meetings. Regular meetings of the Trustees may be held
without call or notice at such places and at such times as the Trustees may from
time to time determine, provided that notice of the first regular meeting
following any such determination shall be given to absent Trustees. A regular
meeting of the Trustees may be held without call or notice immediately after and
at the same place as any meeting of the shareholders.
2.2 Special Meetings. Special meetings of the Trustees may be held at
any time and at any place designated in the call of the meeting when called by
the President or the Treasurer or by two or more Trustees, sufficient notice
thereof being given to each Trustee by the Secretary or an Assistant Secretary
or by the officer or the Trustees calling the meeting.
2.3 Notice. It shall be sufficient notice to a Trustee of a special
meeting to send notice by mail at least forty-eight hours or by telegram at
least twenty-four hours before the meeting addressed to the Trustee at his or
her usual or last known business or residence address or to give notice to him
or her in person or by telephone at least twenty-four hours before the meeting.
Notice of a meeting need not be given to any Trustee if a written waiver of
notice, executed by him or her before or after the meeting, is filed with the
records of the meeting, or to any Trustee who attends the meeting without
protesting prior thereto or at its commencement the lack of notice to him or
her. Neither notice of a meeting nor a waiver of a notice need specify the
purposes of the meeting.
<PAGE>
2.4 Quorum. At any meeting of the Trustees a majority of the Trustees
then in office shall constitute a quorum. Any meeting may be adjourned from time
to time by a majority of the votes cast upon the question, whether or not a
quorum is present, and the meeting may be held as adjourned without further
notice.
2.5 Participation by Telephone. One or more of the Trustees or of any
committee of the Trustees may participate in a meeting thereof by means of a
conference telephone or similar communications equipment allowing all persons
participating in the meeting to hear each other at the same time. Participation
by such means shall constitute presence in person at a meeting except as
otherwise provided by the Investment Company Act of 1940.
2.6 Action by Consent. Any action required or permitted to be taken at
any meeting of the Trustees or any committee thereof may be taken without a
meeting, if a written consent of such action is signed by a majority of the
Trustees then in office or a majority of the members of such committee, as the
case may be, and such written consent is filed with the minutes of the
proceedings of the Trustees or such committee.
ARTICLE 3
Officers
3.1 Enumeration and Qualification. The officers of the Trust shall be a
President, a Treasurer, a Secretary and such other officers, including Vice
Presidents, if any, as the Trustees from time to time may in their discretion
elect. The Trust may also have such agents as the Trustees from time to time may
in their discretion appoint. Any officer may be but none need be a Trustee or
shareholder. Any two or more offices may be held by the same person.
3.2 Election. The President, the Treasurer and the Secretary shall be
elected annually by the Trustees. Other officers, if any, may be elected or
appointed by the Trustees at any time. Vacancies in any office may be filled at
any time.
3.3 Tenure. The President, the Treasurer and the Secretary shall hold
office for one year and until their respective successors are chosen and
qualified, or in each case until he or she sooner dies, resigns, is removed or
becomes disqualified. Each other officer shall hold office and each agent shall
retain authority at the pleasure of the Trustees.
3.4 Powers. Subject to the other provisions of these By-Laws, each
officer shall have, in addition to the duties and powers herein and in the
Declaration of Trust set forth, such duties and powers as are commonly incident
to the office occupied by him or her as if the Trust were organized as an Ohio
business corporation and such other duties and powers as the Trustees may from
time to time designate.
3.5 President. Unless the Trustees otherwise provide, the President, or
in the absence of the President, any Trustee chosen by the Trustees, shall
preside at all meetings of the shareholders and of the Trustees. The President
shall be the chief executive officer.
<PAGE>
3.6 Treasurer. The Treasurer shall be the chief financial and
accounting officer of the Trust, and shall, subject to the provisions of the
Declaration of Trust and to any arrangement made by the Trustees with a
custodian, investment adviser or manager, or transfer, shareholder servicing or
similar agent, be in charge of the valuable papers, books of account and
accounting records of the Trust, and shall have such other duties and powers as
may be designated from time to time by the Trustees or by the President.
3.7 Secretary. The Secretary shall record all proceedings of the
shareholders and the Trustees in books to be kept therefor, which books or a
copy thereof shall be kept at the principal office of the Trust. In the absence
of the Secretary from any meeting of the shareholders or Trustees, an assistant
secretary, or if there be none or if he or she is absent, a temporary secretary
chosen at such meeting shall record the proceedings thereof in the aforesaid
books.
3.8 Resignations and Removals. Any Trustee or officer may resign at any
time by written instrument signed by him or her and delivered to the President
or the Secretary or to a meeting of the Trustees. Such resignation shall be
effective upon receipt unless specified to be effective at some other time. The
Trustees may remove any officer elected by them with or without cause. Except to
the extent expressly provided in a written agreement with the Trust, no Trustee
or officer resigning and no officer removed shall have any right to any
compensation for any period following his or her resignation or removal, or any
right to damages on account of such removal.
ARTICLE 4
Committees
4.1 General. The Trustees, by vote of a majority of the Trustees then
in office, may elect from their number an Executive Committee or other
committees and may delegate thereto some or all of their powers except those
which by law, by the Declaration of Trust, or by these By-Laws may not be
delegated. Except as the Trustees may otherwise determine, any such committee
may make rules for the conduct of its business, but unless otherwise provided by
the Trustees or in such rules, its business shall be conducted so far as
possible in the same manner as is provided by these By-Laws for the Trustees
themselves. All members of such committees shall hold such offices at the
pleasure of the Trustees. The Trustees may abolish any such committee at any
time. Any committee to which the Trustees delegate any of their powers or duties
shall keep records of its meetings and shall report its action to the Trustees.
The Trustees shall have power to rescind any action of any committee, but no
such rescission shall have retroactive effect.
ARTICLE 5
Reports
5.1 General. The Trustees and officers shall render reports at the time
and in the manner required by the Declaration of Trust or any applicable law.
Officers and Committees shall render such additional reports as they may deem
desirable or as may from time to time be required by the Trustees.
<PAGE>
ARTICLE 6
Fiscal Year
6.1 General. The fiscal year of the Trust shall be fixed by, and shall
be subject to change by, the Trustees.
ARTICLE 7
Seal
7.1 General. If required by applicable law, the seal of the Trust shall
consist of a flat-faced die with the word "Ohio", together with the name of the
Trust and the year of its organization cut or engraved thereon, but, unless
otherwise required by the Trustees, the seal shall not be necessary to be placed
on, and its absence shall not impair the validity of, any document, instrument
or other paper executed and delivered by or on behalf of the Trust.
ARTICLE 8
Execution of Papers
8.1 General. Except as the Trustees may generally or in particular
cases authorize the execution thereof in some other manner, all deeds, leases,
contracts, notes and other obligations made by the Trustees shall be signed by
the President, any Vice President, or by the Treasurer and need not bear the
seal of the Trust, but shall state the substance of or make reference to the
provisions of Section 7.1 of the Declaration of Trust.
ARTICLE 9
Issuance of Share Certificates
9.1 Share Certificates. In lieu of issuing certificates for shares, the
Trustees or the transfer agent may either issue receipts therefor or may keep
accounts upon the books of the Trust for the record holders of such shares, who
shall in either case be deemed, for all purposes hereunder, to be the holders of
certificates for such shares as if they had accepted such certificates and shall
be held to have expressly assented and agreed to the terms hereof.
The Trustees may at any time authorize the issuance of share
certificates. In that event, each shareholder shall be entitled to a certificate
stating the number of shares owned by him, in such form as shall be prescribed
from time to time by the Trustees. Such certificate shall be signed by the
President or a Vice-President and by the Treasurer or Assistant Treasurer. Such
signatures may be facsimiles if the certificate is signed by a transfer agent,
or by a registrar, other than a Trustee, officer or employee of the Trust. In
case any officer who has signed or whose facsimile signature has been placed on
such certificate shall cease to be such officer before such certificate is
issued, it may be issued by the Trust with the same effect as if he were such
officer at the time of its issue.
9.2 Loss of Certificates. In case of the alleged loss or destruction or
the mutilation of a share certificate, a duplicate certificate may be issued in
place thereof, upon such terms as the Trustees shall prescribe.
<PAGE>
9.3 Issuance of New Certificate to Pledgee. In the event certificates
have been issued, a pledgee of shares transferred as collateral security shall
be entitled to a new certificate if the instrument of transfer substantially
describes the debt or duty that is intended to be secured thereby. Such new
certificate shall express on its face that it is held as collateral security,
and the name of the pledgor shall be stated thereon, who alone shall be liable
as a shareholder, and entitled to vote thereon.
9.4 Discontinuance of Issuance of Certificates. The Trustees may at any
time discontinue the issuance of share certificates and may, by written notice
to each shareholder, require the surrender of share certificates to the Trust
for cancellation. Such surrender and cancellation shall not affect the ownership
of shares in the Trust.
ARTICLE 10
Custodian
10.1 General. The Trust shall at all times employ a bank or trust
company having a capital, surplus and undivided profits of at least Five Hundred
Thousand ($500,000) Dollars as Custodian of the capital assets of the Trust. The
Custodian shall be compensated for its services by the Trust and upon such basis
as shall be agreed upon from time to time between the Trust and the Custodian.
ARTICLE 11
Dealings with Trustees and Officers
11.1 General. Any Trustee, officer or other agent of the Trust may
acquire, own and dispose of shares of the Trust to the same extent as if he were
not a Trustee, officer or agent; and the Trustees may accept subscriptions to
shares or repurchase shares from any firm or company in which he is interested.
ARTICLE 12
Shareholders
12.1 Meetings. A meeting of the shareholders of the Trust shall be held
whenever called by the Trustees, whenever election of a Trustee or Trustees by
shareholders is required by the provisions of Section 16(a) of the Investment
Company Act of 1940 for that purpose or whenever otherwise required pursuant to
the Declaration of Trust. Any meeting shall be held on such day and at such time
as the President or the Trustees may fix in the notice of the meeting.
12.2 Record Dates. For the purpose of determining the shareholders who
are entitled to vote or act at any meeting or any adjournment thereof, or who
are entitled to receive payment of any dividend or of any other distribution,
the Trustees may from time to time fix a time, which shall be not more than 60
days before the date of any meeting of shareholders or the date for the payment
of any dividend or of any other distribution, as the record date for determining
the shareholders having the right to notice of and to vote at such meeting and
any adjournment thereof or the right to receive such dividend or distribution,
and in such case only shareholders
<PAGE>
of record on such record date shall have such right, notwithstanding any
transfer of shares on the books of the Trust after the record date; or without
fixing such record date the Trustees may for any such purposes close the
register or transfer books for all or any part of such period.
ARTICLE 13
Amendments to the By-Laws
13.1 General. These By-Laws may be amended or repealed, in whole or in
part, by a majority of the Trustees then in office at any meeting of the
Trustees, or by one or more writings signed by such a majority.
MANAGEMENT AGREEMENT
TO: Unified Investment Advisers, Inc.
431 N. Pennsylvania Street
Indianapolis, Indiana 46204
Dear Sirs:
The Unified Funds (the "Trust") herewith confirms our agreement with
you.
The Trust has been organized to engage in the business of an investment
company. The Trust currently offers the following four series of shares to
investors: Starwood Strategic Fund, Laidlaw Fund, First Lexington Balanced Fund,
Taxable Money Market Fund.
You have been selected to act as the sole investment adviser of each
series of the Trust, now or hereafter established (the Funds"), and to provide
certain other services, as more fully set forth below, and you are willing to
act as such investment adviser and to perform such services under the terms and
conditions hereinafter set forth. Accordingly, the Trust agrees with you as
follows upon the date of the execution of this Agreement.
1. ADVISORY SERVICES
You will regularly provide the Funds with such investment
advice as you in your discretion deem advisable and will furnish a continuous
investment program for the Funds consistent with the respective Funds'
investment objectives and policies. You will determine the securities to be
purchased for each Fund, the portfolio securities to be held or sold by each
Fund and the portion of each Fund's assets to be held uninvested, subject always
to the Fund's investment objectives, policies and restrictions, as each of the
same shall be from time to time in effect, and subject further to such policies
and instructions as the Board may from time to time establish. You will advise
and assist the officers of the Trust in taking such steps as are necessary or
appropriate to carry out the decisions of the Board and the appropriate
committees of the Board regarding the conduct of the business of the Funds.
2. ALLOCATION OF CHARGES AND EXPENSES
You will pay all operating expenses (other than expenses which
may be deemed to be related to the distribution of the Fund's shares under the
Distribution Plan or expenses incurred under the Shareholder Services Plan) of
the Funds, including the compensation and expenses of any employees of the Funds
and of any other persons rendering any services to the Funds; clerical and
shareholder service staff salaries; office space and other office expenses; fees
and expenses incurred by the Funds in connection with membership in investment
company organizations; legal, auditing and accounting expenses;
non-organizational expenses of registering shares under federal and state
securities laws; insurance expenses; fees and expenses of the custodian,
transfer agent, dividend disbursing agent, administrator, accounting and pricing
services agent of the Funds; expenses, including clerical expenses, of issue,
sale, redemption or repurchase of shares of the Funds; the cost of preparing and
distributing reports and notices to shareholders, the cost of printing or
preparing prospectuses and statements of additional information for delivery to
the Funds' current shareholders; the cost of printing or preparing stock
certificates or any other documents, statements or reports to shareholders;
expenses of shareholders' meetings and proxy solicitations; and all other
operating expenses not specifically assumed by the Funds.
<PAGE>
Each Fund will pay all brokerage fees and commissions, taxes,
interest, expenses incurred by the Funds in connection with the organization and
initial registration of shares of the Funds, expenses incurred under the
Distribution Plan, expenses incurred under the Shareholder Services Plan and
such extraordinary or non-recurring expenses as may arise, including litigation
to which the Fund may be a party and indemnification of the Trust's trustees and
officers with respect thereto. You may obtain reimbursement from a Fund, at such
time or times as you may determine in your sole discretion, for any of the
expenses advanced by you, which the Fund is obligated to pay, and such
reimbursement shall not be considered to be part of your compensation pursuant
to this Agreement.
3. COMPENSATION OF THE ADVISER
For all of the services to be rendered and payments to be made
as provided in this Agreement, as of the last business day of each month, each
Fund will pay you a fee based on the average value of its daily net assets at
the annual rate listed on Exhibit A attached hereto.
The average value of the daily net assets of the Fund shall be
determined pursuant to the applicable provisions of the Declaration of Trust of
the Trust or a resolution of the Board, if required. If, pursuant to such
provisions, the determination of net asset value of a Fund is suspended for any
particular business day, then for the purposes of this paragraph, the value of
the net assets of the Fund as last determined shall be deemed to be the value of
the net assets as of the close of the business day, or as of such other time as
the value of the Fund's net assets may lawfully be determined, on that day. If
the determination of the net asset value of a Fund has been suspended for a
period including such month, your compensation payable at the end of such month
shall be computed on the basis of the value of the net assets of the Fund as
last determined (whether during or prior to such month).
4. EXECUTION OF PURCHASE AND SALE ORDERS
In connection with purchases or sales of portfolio securities
for the account of each Fund, it is understood that you will arrange for the
placing of all orders for the purchase and sale of portfolio securities for the
account with brokers or dealers selected by you, subject to review of this
selection by the Board from time to time. You will be responsible for the
negotiation and the allocation of principal business and portfolio brokerage. In
the selection of such brokers or dealers and the placing of such orders, you are
directed at all times to seek for the Funds the best qualitative execution,
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.
You should generally seek favorable prices and commission
rates that are reasonable in relation to the benefits received. In seeking best
qualitative execution, you are authorized to select brokers or dealers who also
provide brokerage and research services (as those terms are defined in Section
28(e) of the Securities Exchange Act of 1934) to the Funds and/or the other
accounts over which you exercise investment discretion. You are authorized to
pay a broker or dealer who provides such brokerage and research services a
commission for executing a Fund portfolio transaction which is in excess of the
amount of commission another broker or dealer would have charged for effecting
that transaction if you determine in good faith that the amount of the
- 2 -
<PAGE>
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 your overall
responsibilities with respect to the Funds and to accounts over which you
exercise investment discretion. The Funds and you understand and acknowledge
that, although the information may be useful to the Funds and you, it is not
possible to place a dollar value on such information. The Board shall
periodically review the commissions paid by each Fund to determine if the
commissions paid over representative periods of time were reasonable in relation
to the benefits to the Fund.
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, you 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 provisions of the Investment Company Act of
1940, as amended, and other applicable law, you, any of your affiliates or any
affiliates of your affiliates may retain compensation in connection with
effecting the Funds' portfolio transactions, including transactions effected
through others. If any occasion should arise in which you give any advice to
clients of yours concerning the shares of a Fund, you will act solely as
investment counsel for such client and not in any way on behalf of the Fund.
Your services to the Funds pursuant to this Agreement are not to be deemed to be
exclusive and it is understood that you may render investment advice, management
and other services to others, including other registered investment companies.
5. LIMITATION OF LIABILITY OF ADVISER
You may rely on information reasonably believed by you to be
accurate and reliable. Except as may otherwise be required by the Investment
Company Act of 1940 or the rules thereunder, neither you nor your officers,
directors, employees, agents, control persons or affiliates of any thereof shall
be subject to any liability for, or any damages, expenses or losses incurred by
the Trust in connection with, any error of judgment, mistake of law, any act or
omission connected with or arising out of any services rendered under, or
payments made pursuant to, this Agreement or any other matter to which this
Agreement relates, except by reason of willful misfeasance, bad faith or gross
negligence on the part of any such persons in the performance of your duties
under this Agreement, or by reason of reckless disregard by any of such persons
of your obligations and duties under this Agreement.
Any person, even though also a director, officer, employee or
agent of you, 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 your duties hereunder), to be rendering such services to or
acting solely for the Trust and not as a director, officer, employee or agent of
you, or one under your control or direction, even though paid by you.
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<PAGE>
6. DURATION AND TERMINATION OF THIS AGREEMENT
This Agreement shall take effect on the date of its execution,
and shall remain in force for a period of two (2) years from the date of its
execution with respect to each Fund, and from year to year thereafter, subject
to annual approval by (i) the Board or (ii) a vote of a majority (as defined in
the Investment Company Act of 1940) of the outstanding voting securities of such
Fund, provided that in either event continuance is also approved by a majority
of the trustees who are not "interested persons," as defined in the Investment
Company Act of 1940, of you or the Trust, by a vote cast in person at a meeting
called for the purpose of voting such approval.
If the shareholders of a Fund fail to approve the Agreement in
the manner set forth above, upon request of the Board, you will continue to
serve or act in such capacity for the Fund for the period of time pending
required approval of the Agreement, of a new agreement with you or a different
adviser or other definitive action; provided that the compensation to be paid by
the Fund to you for your services to and payments on behalf of the Fund will be
equal to the lesser of your actual costs incurred in furnishing such services
and payments or the amount you would have received under this Agreement for
furnishing such services and payments.
This Agreement may, on sixty days written notice, be
terminated with respect to a Fund, at any time without the payment of any
penalty, by the Board, by a vote of a majority of the outstanding voting
securities of the Fund, or by you. This Agreement shall automatically terminate
in the event of its assignment.
7. USE OF NAME
The Trust and you acknowledge that all rights to the names
"Unified" and "Starwood" belong to you, and that the Trust is being granted a
limited license to use such names in the Funds' names or in any name of any
class of a Fund. In the event you cease to be the adviser to a Fund, the Trust's
right to the use of the name "Unified," and in the case of the Starwood
Strategic Fund, the use of the name "Starwood," shall automatically cease on the
ninetieth day following the termination of this Agreement. The right to the
names may also be withdrawn by you during the term of this Agreement upon ninety
(90) days' written notice by you to the Trust. Nothing contained herein shall
impair or diminish in any respect, your right to use the names "Unified" and
"Starwood" in the name of, or in connection with, any other business enterprises
with which you are or may become associated. There is no charge to the Trust for
the right to use the names "Unified" and "Starwood."
8. AMENDMENT OF THIS AGREEMENT
No provision of this Agreement may be changed, waived,
discharged or terminated orally, and no amendment of this Agreement shall be
effective until approved by the Board, including a majority of the trustees who
are not interested persons of you or of the Trust, cast in person at a meeting
called for the purpose of voting on such approval, and (if required under
current interpretations of the Act by the Securities and Exchange Commission) by
vote of the holders of a majority of the outstanding voting securities of the
series to which the amendment relates.
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<PAGE>
9. LIMITATION OF LIABILITY TO TRUST PROPERTY
The term "The Unified Funds" means and refers to the Trustees
from time to time serving under the Trust's Declaration of Trust as the same may
subsequently thereto have been, or subsequently hereto be, amended. It is
expressly agreed that the obligations of the Trust hereunder shall not be
binding upon any of the trustees, shareholders, nominees, officers, agents or
employees of the Trust personally, but bind only the trust property of the
Trust, as provided in the Declaration of Trust of the Trust. The execution and
delivery of this Agreement have been authorized by the trustees and shareholders
of the Trust and signed by officers of the Trust, acting as such, and neither
such authorization by such trustees and shareholders nor such execution and
delivery by such officers shall be deemed to have been made by any of them
individually or to impose any liability on any of them personally, but shall
bind only the trust property of the Trust as provided in its Declaration of
Trust. A copy of the Agreement and Declaration of Trust of the Trust is on file
with the Secretary of the State of Ohio.
10. 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.
11. QUESTIONS OF INTERPRETATION
(a) This Agreement shall be governed by the laws of the State
of Ohio.
(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 Investment Company Act of 1940, as amended (the "Act") shall be
resolved by reference to such term or provision of the 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 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.
12. NOTICES
Any notices under this Agreement shall be in writing,
addressed and delivered or mailed postage paid to the other party at such
address as such other party may designate for the receipt of such notice. Until
further notice to the other party, it is agreed that the address of the Trust is
431 North Pennsylvania Street, Indianapolis, IN 46204, and your address for this
purpose shall be 431 North Pennsylvania Street, Indianapolis, IN 46204.
13. 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.
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<PAGE>
14. 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.
15. CAPTIONS
The captions in this Agreement are included for convenience of
reference only and in no way define or delimit any of the provisions hereof or
otherwise affect their construction or effect.
If you are in agreement with the foregoing, please sign the
form of acceptance on the accompanying counterpart of this letter and return
such counterpart to the Trust, whereupon this letter shall become a binding
contract upon the date thereof.
Yours very truly,
The Unified Funds
By /s/ Timothy L. Ashburn
Timothy Ashburn, President
Dated: January 30, 1998
ACCEPTANCE
The foregoing Agreement is hereby accepted.
Unified Investment Advisers, Inc.
By /s/ Timothy L. Ashburn
Name/Title Timothy L. Ashburn
President
Dated: January 30, 1998
- 6 -
<PAGE>
EXHIBIT A
TO
MANAGEMENT AGREEMENT
THE UNIFIED FUNDS
The following table sets forth the annual fee for each Fund, based on
the average value of its daily net assets.
Name of Fund Fee
Starwood Strategic Fund 1.25%
Laidlaw Fund 1.25%
First Lexington Balanced Fund 0.75%
Taxable Money Market Fund 0.90%
THE UNIFIED FUNDS
INVESTMENT SUB-ADVISORY AGREEMENT
INVESTMENT SUB-ADVISORY AGREEMENT, dated as of January 30, 1998,
between Unified Investment 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 Unified
Funds, an Ohio business trust (the "Trust"), pursuant to an Investment Advisory
Agreement, dated as of January 30, 1998 (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;
<PAGE>
(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 acknowledges 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.
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<PAGE>
Subject to the foregoing and to such conditions as may be imposed by
the Adviser or the Trust's Board of Trustees and the provisions of the 1940 Act,
Exchange Act, and other applicable law, nothing herein shall prohibit the
Sub-Adviser from selecting brokers and/or dealers who are "affiliated persons"
of the Sub-Adviser, the Adviser or the Trust. On occasions when the Sub-Adviser
deems the purchase or sale of a security to be in the best interest of the Trust
as well as other customers, the Sub-Adviser may, to the extent permitted by
applicable laws and regulations, but shall not be obligated to, aggregate the
securities to be so sold or purchased in order to obtain the best execution and
lower brokerage commissions, if any. In such event, allocation of the securities
so purchased or sold, as well as the expenses incurred in the transaction, will
be made by the Sub-Adviser in the manner it considers to be the most equitable
and consistent with its fiduciary obligations to the Trust and, if applicable,
to such other customers.
If any occasion should arise in which the Sub-Adviser gives any advice
to clients of Sub-Adviser concerning the shares of any Fund, Sub-Adviser will
act solely as investment counsel for such client and not in any way on behalf of
the Fund. Sub-Adviser's services to the Funds pursuant to this Agreement are not
to be deemed to be exclusive and it is understood that Sub-Adviser may render
investment advice, management and other services to others, including other
registered investment companies.
Section 4. Books and Records. The Sub-Adviser shall keep the Trust's
books and records required to be maintained by it pursuant to Section 2(e) of
this Agreement. The Sub-Adviser agrees that all records which it maintains for
the Trust are the property of the Trust and it will promptly surrender any of
such records to the Trust upon the Trust's request. The Sub-Adviser further
agrees to preserve for the periods prescribed by Rule 31a-2 under the 1940 Act
any such records as are required to be maintained by the Sub-Adviser with
respect to the Trust by Rule 31a-1 under the 1940 Act.
Section 5. Expenses of the Sub-Adviser. During the term of this
Agreement, the Sub-Adviser will pay all expenses (including without limitation
the compensation of all trustees or officers of the Trust who are "interested
persons" of the Sub-Adviser, as defined in the 1940 Act) incurred by it in
connection with its activities under this Agreement other than the cost of
securities and investments purchased for each Fund (including taxes and
brokerage commissions, if any).
Section 6. Compensation of the Sub-Adviser. For the services provided
and the expenses borne pursuant to this Agreement, the Adviser will pay to the
Sub-Adviser as full compensation therefor a fee with respect to each Fund at an
annual rate as set forth on the Exhibit executed with respect to such Fund and
attached hereto. This fee for each month will be paid to the Sub-Adviser during
the succeeding month. For purposes of determining the fee payable hereunder, the
net asset value of each Fund shall be calculated in the manner specified in the
Trust's Prospectus.
Section 7. Use of Name. The Trust, Adviser and Sub-Adviser acknowledge
that all rights to the name "First Lexington" belong to Sub-Adviser, and that
the Trust is being granted a limited license to use such words in its Fund name
or in any class name. In the event Sub-Adviser ceases to be a Sub-Adviser, the
Trust's right to the use of the name "First Lexington" shall automatically cease
on the ninetieth day following the termination of this Agreement. The right to
the name may also be withdrawn by Sub-Adviser during the term of this Agreement
upon ninety (90) days' written notice by Sub-Adviser to the Trust. Nothing
contained herein shall impair or diminish in any respect, Sub-Adviser's right to
use the name "First Lexington" in the name of, or in connection
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<PAGE>
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.
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<PAGE>
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 Unified Advisers, Inc., 431 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 Ohio, 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.
UNIFIED INVESTMENT ADVISERS, INC. HEALTH FINANCIAL, INC.
By /s/ Timothy L. Ashburn By /s/ Gregory W. Kasten
Name: Timothy L. Ashburn Name: Gregory W. Kasten
Title: President Title: President
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<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:
<TABLE>
<S> <C>
Name of Fund Fee Percentage
The First Lexington Balanced 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
</TABLE>
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.
UNIFIED INVESTMENT ADVISERS, INC. HEALTH FINANCIAL, INC.
By /S/ Timothy L. Ashburn By /s/ Gregory W. Kasten
Name: Timothy L. Ashburn Name: Gregory W. Kasten
Title: President Title: President
-6-
THE UNIFIED FUNDS
DISTRIBUTION AGREEMENT
DISTRIBUTION AGREEMENT, dated as of January 30, 1998 between The
Unified Funds an Indiana business trust (the "Trust"), and Unified Management
Corporation, an Indiana corporation (the "Distributor").
WITNESSETH:
WHEREAS, the Trust is an open-end management investment company registered
under the Investment Company Act of 1940, as amended (the " 1940 Act");
WHEREAS, the Trust desires to retain the Distributor as the principal
underwriter of the Trust's shares of beneficial interest (the "Shares"); and
WHEREAS, the Distributor is willing to render such services.
NOW, THEREFORE, in consideration of the premises and mutual covenants set
forth herein, t parties hereto agree as follows:
Section 1. Delivery of Documents. The Trust has delivered to the
Distributor copies of the following documents and will deliver to the
Distributor all future amendments and supplements thereto, if any:
(a) The Trust's Declaration of Trust and all amendments thereto (as
currently in effect and as from time to time amended, hereinafter referred to as
the "Declaration");
(b) The Trust's By-Laws (as currently in effect and as from time to time
amended, hereinafter referred to as the "By-Laws");
(c) Resolutions of the Board of Trustees authorizing the execution and
delivery of this Agreement;
(d) The Trust's Registration Statement under the Securities Act of 193 3,
as amended (the " 193 3 Act"), and the 1940 Act on Form N-IA most recently filed
with the Securities and Exchange Commission (the "Commission") and all
subsequent amendments or supplements thereto (the "Registration Statement");
(e) The Trust's Notification of Registration under the 1940 Act on Form
N-8A as filed Commission; and
(f) The Trust's current Prospectus and Statement of Additional Information
(as currently in effect and as from time to time amended and supplemented,
hereinafter collectively referred to as the "Prospectus").
Section 2. Distribution.
2.1 Appointment of Distributor. The Trust hereby appoints the Distributor
as principal underwriter of the Shares of each class of the Trust that is set
forth on an executed exhibit to this Agreement (each a "Fund") and the
Distributor hereby accepts such appointment and agrees to render the services
and duties set forth in this Agreement.
2.2 Services and Duties.
(a) The Trust agrees to sell through the Distributor, as agent, from time
to time during the term of this Agreement, Shares of each Fund upon the terms
and at the current offering prices as described in the Prospectus. The
Distributor will act only in its own behalf as principal in making agreements
with selected dealers or others for the sale and redemption of Shares, and shall
sell Shares only at the offering prices as set forth in the Prospectus. The
Distributor shall devote its best efforts to effect the sale of shares, but
shall not be obligated to sell any certain number of Shares.
(b) In all matters relating to the sale and redemption of Shares, the
Distributor will act in conformity with the Trust's Declaration, By-laws and
Prospectus and with the instructions and directions of the Board of Trustees and
will conform and comply with the requirements of the Securities Exchange Act of
1934, as amended, the 1933 Act, the 1940 Act, the regulations of the National
Association of Securities Dealers, Inc. and all other applicable federal or
state laws or regulations. In connection with the sale of Shares, the
Distributor acknowledges and agrees that it is not authorized to provide any
information or make any representation other than as contained in the Trust's
Registration Statement or Prospectus and any sales literature approved by the
Trust.
(c) The Trust will bear the costs and expenses incurred for (i) printing
and mailing to prospective investors copies of the Prospectus (including
supplements thereto) and annual and interim reports of the Trust which are used
in connection with the offering of Trust's Shares; and (ii) preparing, printing
and mailing any other literature used by the Distributor in connection with the
sale of the Shares.
(d) All Trust Shares offered for sale by the Distributor shall be offered
for sale to the public at a price per Share (the "offering price") equal to
their net asset value (determined in the manner set forth in the Trust's
then-current Prospectus).
2.3 Sales and Redemptions.
(a) The Trust shall pay all costs and expenses in connection with the
registration of the Shares under the 1933 Act, and all expenses in connection
with maintaining facilities for the issue and transfer of the Shares and for
supplying information, prices and other data to be furnished by the Trust
hereunder, and all expenses in connection with preparing, printing and
distributing any Prospectus, except as set forth in Section 2.2(c) hereof.
(b) The Trust shall execute all documents, furnish all information and
otherwise take all actions which may be reasonably necessary in the discretion
of the Trust's officers in connection with the qualification of the Shares for
sale in such states as the Distributor may designate to the Trust and the Trust
may approve, and the Trust shall pay all fees which may be incurred in
connection with such qualification. The Distributor shall pay all expenses
connected with its qualification as a dealer under state or federal laws and,
except as otherwise specifically provided in this Agreement, all other expenses
incurred by the Distributor in connection with the sale of the Shares as
contemplated in this Agreement. It is understood that certain advertising,
marketing, shareholder servicing, administration and/or distribution expenses to
be incurred in connection with the Shares may be paid as provided in any plan
which may be adopted by the Trust in accordance with Rule 12b- I under the 1940
Act.
(c) The Trust shall have the right to suspend the sale of Shares at any
time in response to conditions in the securities markets or otherwise, and to
suspend the redemption of Shares at any time permitted by the 1940 Act or the
rules of the Commission
(d) The Trust reserves the right to reject any order for Shares.
(e) No Shares shall be offered by either the Trust or the Distributor under
any provisions of this Agreement and no orders for the purchase or sale of
Shares hereunder shall be accepted by the Trust if and so long as the
effectiveness of the Registration Statement shall be suspended under any of the
provisions of the 1933 Act, or if and so long as a Prospectus as required by
Section 10 of the 1933 Act is not on file with the Commission; provided,
however, that nothing contained in this subsection shall in any way restrict or
have any application to or bearing upon the Trust's obligation to repurchase any
Shares from any shareholder in accordance with the provisions of the Prospectus.
Section 3. Limitation of liability. The Distributor shall not be liable for
any error of judgment or mistake of law or for any loss suffered by the Trust in
connection with the matters to which this Agreement relates, except a loss
resulting from willful misfeasance, bad faith or gross negligence on the
Distributor's 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 an officer, director, partner, employee or agent of the Distributor,
who may be or become an officer, trustee, employee or agent of the Trust, shall
be deemed, when rendering services to the Trust, or acting on any business of
the Trust (other than services or business in connection with the Distributors
duties as distributor hereunder), to be rendering such services to or acting
solely for the Trust and not as an officer, director, partner, employee or agent
of, or one under the control or direction of, the Distributor even though paid
by the Distributor.
Section 4. Indemnification.
4.1. Trust Representations. The Trust represents and warrants to the
Distributor that at all times the Registration Statement and Prospectus will in
all material respects conform to the applicable requirements of the 1933 Act and
the rules and regulations thereunder and will 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, except that no
representation or warranty is made herein with respect to any statements in the
Registration Statement or Prospectus made in reliance upon and in conformity
with written information furnished to the Trust by, or on behalf of and with
respect to, the Distributor specifically for use in the Registration Statement
or Prospectus.
4.2. Distributor's Representations. The Distributor represents and warrants
to the Trust that it is duly organized and validly existing as an Indiana
corporation and is and at all times will remain duly authorized and licensed to
carry out its services as contemplated herein.
4.3. Trust Indemnification. The Trust will indemnify, defend and hold
harmless the Distributor, its several officers and directors, and any person who
controls the Distributor within the meaning of Section 15 of the 1933 Act, from
and against any losses, claims, damages or liabilities, joint or several, to
which any of them may become subject under the 1933 Act or otherwise, insofar as
such losses, claims, damages or liabilities (or actions or proceedings in
respect thereof) arise out of, or are based upon, any untrue statement or
alleged untrue statement of a material fact contained in the Registration
Statement, the Prospectus or in any application or other document executed by or
on behalf of the Trust, or arise out of, or are based upon, information
furnished by or on behalf of the Trust filed in any state in order to qualify
the Shares under the securities or blue sky laws thereof ("Blue Sky
Application"), or arise out of, or are based upon, the omission or alleged
omission to state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading, and will reimburse the
Distributor, its several officers and directors, and any person who controls the
Distributor within the meaning of Section 15 of the 1933 Act, for any legal or
other expenses reasonably incurred by any of them in investigating, defending or
preparing to defend any such action, proceeding or claim; provided, however ,
that the Trust shall not be liable in any case to the extent that such loss,
claim, damage or liability arises out of, or is based upon, any untrue
statement, alleged untrue statement, or omission or alleged omission made in the
Registration Statement, the Prospectus, any Blue Sky Application or any
application or other document executed by or on behalf of the Trust in reliance
upon and in conformity with written information furnished to the Trust by, or on
behalf of, and with respect to, the Distributor specifically for inclusion
therein.
The Trust shall not indemnify any person pursuant to this Section 4.3
unless the court or other body before which the proceeding was brought has
rendered a final decision on the merits that such person was not liable by
reason of his willful misfeasance, bad faith or gross negligence in the
performance of his duties, or his reckless disregard of obligations and duties,
under this Agreement ("disabling conduct") or, in the absence of such a
decision, a reasonable determination (based upon a review of the facts) that
such person was not liable by reason of disabling conduct has been made by the
vote of a majority of Trustees who are neither "interested persons" of the Trust
(as defined in the 1940 Act) nor parties to the proceeding, or by an independent
legal counsel in a written opinion.
The Trust shall advance attorneys' fees and other expenses incurred by any
person in defending any claim, demand, action or suit which is the subject of a
claim for indemnification pursuant to this Section 4.3, so long as such person
shall: (I) undertake to repay all such advances unless it is ultimately
determined that he is entitled to indemnification hereunder; and (ii) provide
security for such undertaking, or the Trust shall be insured against losses
arising by reason of any lawful advances, or a majority of a quorum of
disinterested non-party Trustees of the Trust (or an independent legal counsel
in a written opinion) shall determine based on a review of readily available
facts (as opposed to a full trial-type inquiry) that there is reason to believe
that such person ultimately will be found entitled to indemnification hereunder.
4.4. Distributor's Indemnification. The Distributor will indemnify, defend
and hold harmless the Trust, the Trust's several officers and Trustees and any
person who controls the Trust within the meaning or Section 15 of the 1933 Act,
from and against any losses, claims, damages or liabilities, joint or several,
to which any of them may become subject under the 1933 Act or otherwise, insofar
as such losses, claims, damages, liabilities (or actions or proceedings in
respect hereof) arise out of, or are based upon, any breach of its
representations and warranties in Section 4.2 hereof, or which arise out of, or
are based upon, any true statement or alleged untrue statement of a material
fact contained in the Registration Statement, the Prospectus, any Blue Sky
Application or any application or other document executed by or on behalf of the
Trust, or the omission or alleged omission to state therein a material fact
required to be stated therein or necessary to make the statements therein not
misleading, which statement or omission was made in reliance upon and in
conformity with written information furnished to the Trust or any of its several
officers and Trustees by, or on behalf of, and with respect to, the Distributor
specifically for inclusion therein, and will reimburse the Trust, the Trust's
several officers and Trustees, and any person who controls the Trust within the
meaning of Section 15 of the 1933 Act, for any legal or other expenses
reasonably incurred by any of them in investigating, defending or preparing to
defend any such action, proceeding or claim.
4.5. General Indemnity Provisions. No indemnifying party shall be liable
under its indemnity agreement contained in Section 4.3 or 4.4 hereof with
respect to any claim made against such indemnifying party unless the indemnified
party shall have notified the indemnifying party in writing within a reasonable
time after the summons or other first legal process giving information of the
nature of the claim shall have been served upon the indemnified party (or after
the indemnified party shall have received notice of such service on any
designated agent), but failure to notify the indemnifying party of any such
claim shall not relieve it from any liability which it may otherwise have to the
indemnified party. The indemnifying party will be entitled to participate at its
own expense in the defense or, if it so elects, to assume the defense of any
suit brought to enforce any such liability, and if the indemnifying party elects
to assume the defense, such defense shall be conducted by counsel chosen by it
and reasonably satisfactory to the indemnified party. In the event the
indemnifying party elects to assume the defense of any such suit and retain such
counsel, the indemnified party shall bear the fees and expenses of any
additional counsel retained by the indemnified party.
Section 5. 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 term of this Agreement) for two years thereafter, and 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
Trust with respect to any Fund at any time, without the payment of any penalty,
by the Board of Trustees or by vote of a majority of the outstanding voting
securities (as defined in the 1940 Act) of such Fund, on 60 days' written notice
to the Adviser, or by the Adviser at any time, without the payment of any
penalty, on 90 days' written notice to the Trust. This Agreement will
automatically and immediately terminate in the event of its assignment (as
defined in the 1940 Act).
Section 6. Miscellaneous.
6.1. Amendments. No provision of this Agreement may be changed, waived,
discharged or terminated except by an instrument in writing signed by the party
against which an enforcement of the change, waiver, discharge or termination is
sought.
6.2. Construction. The captions in this Agreement are included for
convenience of reference only and in no way define or delimit any of the
provisions hereof or otherwise affect their construction or effect. If any
provision of this Agreement shall be held or made invalid by a court decision,
statute, rule or otherwise, the remainder of this Agreement shall not be
affected thereby. Subject to the provisions of Section 5 hereof, this Agreement
shall be binding upon and shall inure to the benefit of the parties hereto and
their respective successors.
6.3. Notices. Any notice or other instrument in writing, authorized or
required by this Agreement to be given to the Trust shall be sufficiently given
if addressed to the Trust and mailed or delivered to it at its principal office
set forth in the Registration Statement, or at such other place as the Trust may
from time to time designate in writing. Any notice or other instrument in
writing, authorized or required by this Agreement to be given to the Distributor
shall be sufficiently given if addressed to the Distributor and mailed or
delivered to it at 431 North Pennsylvania Street, Indianapolis, Indiana 46204,
Attention: President, or at such other place as the Distributor may from time to
time designate in writing.
6.4. Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of Indiana.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their officers designated below as of the date and year first
above written.
THE UNIFIED FUNDS
By/s/ Timothy L. Ashburn
Timothy L. Ashburn
President
UNIFIED MANAGEMENT CORPORATION
By /s/ Lynn E. Wood
Lynn E. Wood
President
EXHIBIT A
to
Distribution Agreement
List of Portfolios
The Starwood Strategic Fund
The Laidlaw Fund
The First Lexington Balanced Fund
The Taxable Money Market Fund
IN WITNESS WHEREOF, the parties hereto have caused this Exhibit to be
executed by their officers designated below as of the date and year first above
written.
THE UNIFIED FUNDS
By /s/ Timothy L. Ashburn
Timothy L. Ashburn
President
UNIFIED MANAGEMENT CORPORATION
By /s/ Lynn E. Wood
President
CUSTODY AGREEMENT
BETWEEN
STAR BANK, N.A.
AND
The Unified Funds
<PAGE>
<TABLE>
<S> <C>
TABLE OF CONTENTS
Definitions 1
ARTICLE II - Appointment; Acceptence; and Furnishing of Documents
II. A. Appointment of Custodian. 5
II. B. Acceptance of Custodian. 5
II. C. Documents to be Furnished. 5
II. D. Notice of Appointment of Dividend and Transfer Agent. 5
ARTICLE III - Receipt of Trust Assets
III. A. Delivery of Moneys. 6
III. B. Delivery of Securities. 6
III. C. Payments for Shares. 6
III. D. Duties Upon Receipt. 6
ARTICLE IV - Disbursement of Trust Assets
IV. A. Declaration of Dividends by Trust. 7
IV. B. Segregation of Redemption Proceeds. 7
IV. C. Disbursements of Custodian. 8
IV. D. Payment of Custodian Fees. 8
ARTICLE V - Custody of Trust Assets
V. A. Separate Accounts for Each Fund. 8
V. B. Segregation of Non-Cash Assets. 9
V. C. Securities in Bearer and Registered Form. 9
V. D. Duties of Custodian as to Securities. 9
V. E. Certain Actions Upon Written Instructions. 10
V. F. Custodian to Deliver Proxy Materials. 11
V. G. Custodian to Deliver Tender Offer Information. 11
V. H. Custodian to Deliver Security and Transaction Information. 11
ARTICLE VI - Purchase and Sale of Securities
VI. A. Purchase of Securities. 12
VI. B. Sale of Securities. 13
VI. C. Delivery Versus Payment for Purchases and Sales. 14
VI. D. Payment on Settlement Date. 14
VI. E. Segregated Accounts. 15
VI. F. Advances for Settlement. 16
ARTICLE VII - Trust Indebtedness
VII. A. Borrowings. 17
VII. B. Advances. 18
ARTICLE VIII - Concerning the Custodian
VIII. A. Limitations on Liability of Custodian. 18
VIII. B. Actions not Required by Custodian. 20
VIII. C. No Duty to Collect Amounts Due From Dividend and Transfer Agent. 21
VIII. D. No Enforcement Actions. 21
VIII. E. Authority to Use Agents and Sub-Custodians. 21
VIII. F. No Duty to Supervise Investments. 22
VIII. G. All Records Confidential. 22
VIII. H. Compensation of Custodian. 22
VIII. I. Reliance Upon Instructions. 23
VIII. J. Books and Records. 23
VIII. K. Internal Accounting Control Systems. 24
VIII. L. No Management of Assets by Custodian. 24
VIII. M. Assistance to Trust. 24
ARTICLE IX - Termination
IX. A. Termination. 26
IX. B. Failure to Designate Successor Trustee. 27
ARTICLE X - Force Majeure
ARTICLE XI - Miscellaneous
XI. A. Designation of Authorized Persons. 28
XI. B. Limitation of Personal Liability. 28
XI. C. Authorization By Board. 28
XI. D. Custodian's Consent to Use of Its Name. 29
XI. E. Notices to Custodian. 29
XI. F. Notices to Trust. 29
XI. G. Amendments In Writing. 29
XI. H. Successors and Assigns. 30
XI. I. Governing Law. 30
XI. J. Jurisdiction. 30
XI. K. Counterparts. 30
XI. L. Headings. 30
APPENDIX A
APPENDIX B
APPENDIX C
APPENDIX D
APPENDIX E
</TABLE>
CUSTODY AGREEMENT
This agreement (the "Agreement") is entered into as of the 30th day of
January, 1998, by and between the Unified Funds, an Ohio business trust (the
"Trust") and Star Bank, National Association, (the "Custodian"), a national
banking association having its principal office at 425 Walnut Street,
Cincinnati, Ohio, 45202.
WHEREAS, the Trust and the Custodian desire to enter into this
Agreement to provide for the custody and safekeeping of the assets of the Trust
as required by the Act (as hereafter defined).
THEREFORE, in consideration of the mutual promises hereinafter set
forth, the Trust and the Custodian agree as follows:
Definitions
The following words and phrases, when used in this Agreement, unless
the context otherwise requires, shall have the following meanings:
Act - the Investment Company Act of 1940, as amended. 1934 Act - the
Securities and Exchange Act of 1934, as amended.
Authorized Person - any person, whether or not any such person is an
officer or employee of the Trust, who is duly authorized by the Board of
Trustees of the Trust to give Oral Instructions and Written Instructions on
behalf of the Trust or any Fund, and named in Appendix A attached hereto and as
amended from time to time by resolution of the Board of Trustees, certified by
an Officer, and received by the Custodian.
Board of Trustees - the Trustees from time to time serving under the
Trust's Agreement and Declaration of Trust, as from time to time amended.
Book-Entry System - a federal book-entry system as provided in Subpart
O of Treasury Circular No. 300, 31 CFR 306, in Subpart B of 31 CFT Part 350, or
in such book-entry regulations of federal agencies as are substantially in the
form of Subpart O.
Business Day - any day recognized as a settlement day by The New York
Stock Exchange, Inc. and any other day for which the Trust computes the net
asset value of Shares of any fund.
Depository - The Depository Trust Company ("DTC"), a limited purpose
trust company, its successor(s) and its nominee(s). Depository shall include any
other clearing agency registered with the SEC under Section 17A of the 1934 Act
which acts as a system for the central handling of Securities where all
Securities of any particular class or series of an issuer deposited within the
system are treated as fungible and may be transferred or pledged by bookkeeping
entry without physical delivery of the Securities provided that the Custodian
shall have received a copy of a resolution of the Board of Trustees, certified
by an Officer, specifically approving the use of such clearing agency as a
depository for the Funds.
Dividend and Transfer Agent - the dividend and transfer agent
appointed, from time to time, pursuant to a written agreement between the
dividend and transfer agent and the Trust.
Foreign Securities - a) securities issued and sold primarily outside of
the United States by a foreign government, a national of any foreign country, or
a trust or other organization incorporated or organized under the laws of any
foreign country or; b) securities issued or guaranteed by the government of the
United States, by any state, by any political subdivision or agency thereof, or
by any entity organized under the laws of the United States or of any state
thereof, which have been issued and sold primarily outside of the United States.
Fund - each series of the Trust listed in Appendix B and any additional
series added pursuant to Proper Instructions. A series is individually referred
to as a "Fund" and collectively referred to as the "Funds."
Money Market Security - debt obligations issued or guaranteed as to
principal and/or interest by the government of the United States or agencies or
instrumentalities thereof, commercial paper, obligations (including certificates
of deposit, bankers' acceptances, repurchase agreements and reverse repurchase
agreements with respect to the same), and time deposits of domestic banks and
thrift institutions whose deposits are insured by the Federal Deposit Insurance
Corporation, and short-term corporate obligations where the purchase and sale of
such securities normally require settlement in federal funds or their equivalent
on the same day as such purchase and sale, all of which mature in not more than
thirteen (13) months.
NASD - the National Association of Securities Dealers, Inc.
Officer - the Chairman, President, Secretary, Treasurer, any Vice
President, Assistant Secretary or Assistant Treasurer of the Trust.
Oral Instructions - instructions orally transmitted to and received by
the Custodian from an Authorized Person (or from a person that the Custodian
reasonably believes in good faith to be an Authorized Person) and confirmed by
Written Instructions in such a manner that such Written Instructions are
received by the Custodian on the Business Day immediately following receipt of
such Oral Instructions.
Proper Instructions - Oral Instructions or Written Instructions. Proper
Instructions may be continuing Written Instructions when deemed appropriate by
both parties.
Prospectus - the Trust's then currently effective prospectus and
Statement of Additional Information, as filed with and declared effective from
time to time by the Securities and Exchange Commission.
Security or Securities - Money Market Securities, common stock,
preferred stock, options, financial futures, bonds, notes, debentures, corporate
debt securities, mortgages, bank certificates of deposit, bankers' acceptances,
mortgage-backed securities or other obligations and any certificates, receipts,
warrants, or other instruments or documents representing rights to receive,
purchase, or subscribe for the same or evidencing or representing any other
rights or interest therein, or any similar property or assets, including
securities of any registered investment company, that the Custodian has the
facilities to clear and to service.
SEC - the Securities and Exchange Commission of the United States of
America.
Shares - with respect to a Fund, the units of beneficial interest
issued by the Trust on account of such Fund.
Trust - the business trust organized under the laws of Ohio which is an
open-end diversified management investment company registered under the Act.
Written Instructions - communications in writing actually received by
the Custodian from an Authorized Person. A communication in writing includes a
communication by facsimile, telex or between electro-mechanical or electronic
devices (where the use of such devices have been approved by resolution of the
Board of Trustees and the resolution is certified by an Officer and delivered to
the Custodian). All written communications shall be directed to the Custodian,
attention: Mutual Fund Custody Department.
ARTICLE II
Appointment; Acceptance; and Furnishing of Documents
II. A. Appointment of Custodian. The Trust hereby constitutes and
appoints the Custodian as custodian of all Securities and cash owned by the
Trust at any time during the term of this Agreement.
II. B. Acceptance of Custodian. The Custodian hereby accepts
appointment as such custodian and agrees to perform the duties thereof as
hereinafter set forth.
II. C. Documents to be Furnished. The following documents, including
any amendments thereto, will be provided contemporaneously with the execution of
the Agreement, to the Custodian by the Trust:
1. A copy of the Declaration of Trust of the Trust certified
by the Secretary.
2. A copy of the By-Laws of the Trust certified by the
Secretary.
3. A copy of the resolution of the Board of Trustees of the
Trust appointing the Custodian, certified by the Secretary.
4. A copy of the then current Prospectus.
5. A Certificate of the President and Secretary of the Trust
setting forth the names and signatures of all Authorized Persons.
II. D. Notice of Appointment of Dividend and Transfer Agent. The Trust
agrees to notify the Custodian in writing of the appointment, termination or
change in appointment of any Dividend and Transfer Agent.
ARTICLE III
Receipt of Trust Assets
III. A. Delivery of Moneys. During the term of this Agreement, the
Trust will deliver or cause to be delivered to the Custodian all moneys to be
held by the Custodian for the account of any Fund. The Custodian shall be
entitled to reverse any deposits made on any Fund's behalf where such deposits
have been entered and moneys are not finally collected within 30 days of the
making of such entry.
III. B. Delivery of Securities. During the term of this Agreement, the
Trust will deliver or cause to be delivered to the Custodian all Securities to
be held by the Custodian for the account of any Fund. The Custodian will not
have any duties or responsibilities with respect to such Securities until
actually received by the Custodian. The Custodian is hereby authorized by the
Trust, acting on behalf of the Fund, to actually deposit any assets of the Fund
in the Book-Entry System or in a Depository, provided, however, that the
Custodian shall always be accountable to the Trust for the assets of the Fund so
deposited. Assets deposited in the Book-Entry System or the Depository will be
represented in accounts which include only assets held by the Custodian for
customers, including but not limited to accounts in which the Custodian acts in
a fiduciary or representative capacity.
III. C. Payments for Shares. As and when received, the Custodian shall
deposit to the account(s) of a Fund any and all payments for Shares of that Fund
issued or sold from time to time as they are received from the Trust's
distributor or Dividend and Transfer Agent or from the Trust itself.
III. D. Duties Upon Receipt. The Custodian shall not be responsible for
any Securities, moneys or other assets of any Fund until actually received.
ARTICLE IV
Disbursement of Trust Assets
IV. A. Declaration of Dividends by Trust. The Trust shall furnish to
the Custodian a copy of the resolution of the Board of Trustees of the Trust,
certified by the Trust's Secretary, either (i) setting forth the date of the
declaration of any dividend or distribution in respect of Shares of any Fund of
the Trust, the date of payment thereof, the record date as of which the Fund
shareholders entitled to payment shall be determined, the amount payable per
share to Fund shareholders of record as of that date, and the total amount to be
paid by the Dividend and Transfer Agent on the payment date, or (ii) authorizing
the declaration of dividends and distributions in respect of Shares of a Fund on
a daily basis and authorizing the Custodian to rely on Written Instructions
setting forth the date of the declaration of any such dividend or distribution,
the date of payment thereof, the record date as of which the Fund shareholders
entitled to payment shall be determined, the amount payable per share to Fund
shareholders of record as of that date, and the total amount to be paid by the
Dividend and Transfer Agent on the payment date.
On the payment date specified in the resolution or Written Instructions
described above, the Custodian shall segregate such amounts from moneys held for
the account of the Fund so that they are available for such payment.
IV. B. Segregation of Redemption Proceeds. Upon receipt of Proper
Instructions so directing it, the Custodian shall segregate amounts necessary
for the payment of redemption proceeds to be made by the Dividend and Transfer
Agent from moneys held for the account of the Fund so that they are available
for such payment.
IV. C. Disbursements of Custodian. Upon receipt of a Certificate
directing payment and setting forth the name and address of the person to whom
such payment is to be made, the amount of such payment, the name of the Fund
from which payment is to be made, and the purpose for which payment is to be
made, the Custodian shall disburse amounts as and when directed from the assets
of that Fund. The Custodian is authorized to rely on such directions and shall
be under no obligation to inquire as to the propriety of such directions.
IV. D. Payment of Custodian Fees. Upon receipt of Written Instructions
directing payment, the Custodian shall disburse moneys from the assets of the
Trust in payment of the Custodian's fees and expenses as provided in Article
VIII hereof.
ARTICLE V
Custody of Trust Assets
V. A. Separate Accounts for Each Fund. As to each Fund, the Custodian
shall open and maintain a separate bank account or accounts in the United States
in the name of the Trust coupled with the name of such Fund, subject only to
draft or order by the Custodian acting pursuant to the terms of this Agreement,
and shall hold all cash received by it from or for the account of the Fund,
other than cash maintained by the Fund in a bank account established and used by
the Fund in accordance with Rule 17f-3 under the Act. Moneys held by the
Custodian on behalf of a Fund may be deposited by the Custodian to its credit as
Custodian in the banking department of the Custodian. Such moneys shall be
deposited by the Custodian in its capacity as such, and shall be withdrawable by
the Custodian only in such capacity.
V. B. Segregation of Non-Cash Assets. All Securities and non-cash
property held by the Custodian for the account of a Fund (other than Securities
maintained in a Depository or Book-entry System) shall be physically segregated
from other Securities and non-cash property in the possession of the Custodian
(including the Securities and non-cash property of the other Funds) and shall be
identified as subject to this Agreement.
V. C. Securities in Bearer and Registered Form. All Securities held
which are issued or issuable only in bearer form, shall be held by the Custodian
in that form; all other Securities held for the Fund may be registered in the
name of the Custodian, any sub-custodian appointed in accordance with this
Agreement, or the nominee of any of them. The Trust agrees to furnish to the
Custodian appropriate instruments to enable the Custodian to hold, or deliver in
proper form for transfer, any Securities that it may hold for the account of any
Fund and which may, from time to time, be registered in the name of a Fund.
V. D. Duties of Custodian as to Securities. Unless otherwise instructed
by the Trust, with respect to all Securities held for the Trust, the Custodian
shall on a timely basis (concerning items 1 and 2 below, as defined in the
Custodian's Standards of Service Guide, as amended from time to time, annexed
hereto as Appendix D):
1.) Collect all income due and payable with respect to such
Securities;
2.) Present for payment and collect amounts payable upon all
Securities which may mature or be called, redeemed, or retired, or
otherwise become payable;
3.) Surrender interim receipts or Securities in temporary form
for Securities in definitive form; and
4.) Execute, as Custodian, any necessary declarations or
certificates of ownership under the Federal income tax laws or the laws
or regulations of any other taxing authority, including any foreign
taxing authority, now or hereafter in effect.
V. E. Certain Actions Upon Written Instructions. Upon receipt of a
Written Instructions and not otherwise, the Custodian shall:
1.) Execute and deliver to such persons as may be designated
in such Written Instructions proxies, consents, authorizations, and any
other instruments whereby the authority of the Trust as beneficial
owner of any Securities may be exercised;
2.) Deliver any Securities in exchange for other Securities or
cash issued or paid in connection with the liquidation, reorganization,
refinancing, merger, consolidation, or recapitalization of any
corporation, or the exercise of any conversion privilege;
3.) Deliver any Securities to any protective committee,
reorganization committee, or other person in connection with the
reorganization, refinancing, merger, consolidation, recapitalization,
or sale of assets of any corporation, and receive and hold under the
terms of this Agreement such certificates of deposit, interim receipts
or other instruments or documents as may be issued to it to evidence
such delivery;
4.) Make such transfers or exchanges of the assets of any Fund
and take such other steps as shall be stated in the Written
Instructions to be for the purpose of effectuating any duly authorized
plan of liquidation, reorganization, merger, consolidation or
recapitalization of the Trust; and
5.) Deliver any Securities held for any Fund to the depository
agent for tender or other similar offers.
V. F. Custodian to Deliver Proxy Materials. The Custodian shall
promptly deliver to the Trust all notices, proxy material and executed but
unvoted proxies pertaining to shareholder meetings of Securities held by any
Fund. The Custodian shall not vote or authorize the voting of any Securities or
give any consent, waiver or approval with respect thereto unless so directed by
Written Instructions.
V. G. Custodian to Deliver Tender Offer Information. The Custodian
shall promptly deliver to the Trust all information received by the Custodian
and pertaining to Securities held by any Fund with respect to tender or exchange
offers, calls for redemption or purchase, or expiration of rights as described
in the Standards of Service Guide attached as Appendix D. If the Trust desires
to take action with respect to any tender offer, exchange offer or other similar
transaction, the Trust shall notify the Custodian at least five Business Days
prior to the date on which the Custodian is to take such action. The Trust will
provide or cause to be provided to the Custodian all relevant information for
any Security which has unique put/option provisions at least five Business Days
prior to the beginning date of the tender period.
V. H. Custodian to Deliver Security and Transaction Information. On
each Business Day that the Federal Reserve Bank is open, the Custodian shall
furnish the Trust with a detailed statement of monies held for the Fund under
this Agreement and with confirmations and a summary of all transfers to or from
the account of the Fund. At least monthly and from time to time, the Custodian
shall furnish the Trust with a detailed statement of the Securities held for the
Fund under this Agreement. Where Securities are transferred to the account of
the Fund without physical delivery, the Custodian shall also identify as
belonging to the Fund a quantity of Securities in a fungible bulk of Securities
registered in the name of the Custodian (or its nominee) or shown on the
Custodian's account on the books of the Book-Entry System or the Depository.
With respect to information provided by this section, it shall not be necessary
for the Custodian to provide notice as described by Article XI Section F.
Notices to Trust; it shall be sufficient to communicate by such means as shall
be mutually agreeable to the Trust and the Custodian.
ARTICLE VI
Purchase and Sale of Securities
VI. A. Purchase of Securities. Promptly after each purchase of
Securities by the Trust, the Trust shall deliver to the Custodian (i)
with respect to each purchase of Securities which are not Money Market
Securities, Written Instructions, and (ii) with respect to each
purchase of Money Market Securities, Proper Instructions, specifying
with respect to each such purchase the;
1.) name of the issuer and the title of the Securities,
2.) the number of shares, principal amount purchased (and
accrued interest, if any) or other units purchased,
3.) date of purchase and settlement,
4.) purchase price per unit,
5.) total amount payable,
6.) name of the person from whom, or the broker through which,
the purchase was made,
7.) the name of the person to whom such amount is payable, and
8.) the Fund for which the purchase was made.
The Custodian shall, against receipt of Securities purchased by or for the
Trust, pay out of the moneys held for the account of such Fund the total amount
specified in the Written Instructions, or Oral Instructions, if applicable, to
the person named therein. The Custodian shall not be under any obligation to pay
out moneys to cover the cost of a purchase of Securities for a Fund, if in the
relevant Fund custody account there is insufficient cash available to the Fund
for which such purchase was made. With respect to any repurchase agreement
transaction for the Funds, the Custodian shall assure that the collateral
reflected on the transaction advice is received by the Custodian.
VI. B. Sale of Securities. Promptly after each sale of Securities by a
Fund, the Trust shall deliver to the Custodian (i) with respect to each sale of
Securities which are not Money Market Securities, Written Instructions, and (ii)
with respect to each sale of Money Market Securities, Proper Instructions,
specifying with respect to each such sale the:
1.) name of the issuer and the title of the Securities,
2.) number of shares, principal amount sold (and accrued
interest, if any) or other units sold,
3.) date of sale and settlement,
4.) sale price per unit,
5.) total amount receivable,
6.) name of the person to whom, or the broker through which,
the sale was made,
7.) name of the person to whom such Securities are to be
delivered, and
8.) Fund for which the sale was made.
The Custodian shall deliver the Securities against receipt of the total amount
specified in the Written Instructions, or Oral Instructions, if applicable.
VI. C. Delivery Versus Payment for Purchases and Sales. Purchases and
sales of Securities effected by the Custodian will be made on a delivery versus
payment basis. The Custodian may, in its sole discretion, upon receipt of
Written Instructions, elect to settle a purchase or sale transaction in some
other manner, but only upon receipt of acceptable indemnification from the Fund.
VI. D. Payment on Settlement Date. On contractual settlement date, the
account of the Fund will be charged for all purchased Securities settling on
that day, regardless of whether or not delivery is made. Likewise, on
contractual settlement date, proceeds from the sale of Securities settling that
day will be credited to the account of the Fund, irrespective of delivery.
VI. E. Segregated Accounts. The Custodian shall, upon receipt of Proper
Instructions so directing it, establish and maintain a segregated account or
accounts for and on behalf of a Fund. Cash and/or Securities may be transferred
into such account or accounts for specific purposes, to-wit:
1.) in accordance with the provision of any agreement among
the Trust, the Custodian, and a broker-dealer registered under the 1934
Act, and also a member of the NASD (or any futures commission merchant
registered under the Commodity Exchange Act), relating to compliance
with the rules of the Options Clearing Corporation and of any
registered national securities exchange, the Commodity Futures Trading
Commission, any registered contract market, or any similar organization
or organizations requiring escrow or other similar arrangements in
connection with transactions by the Fund;
2.) for purposes of segregating cash or Securities in
connection with options purchased, sold, or written by the Fund or
commodity futures contracts or options thereon purchased or sold by the
Fund;
3.) for the purpose of compliance by the Fund with the
procedures required for reverse repurchase agreements, firm commitment
agreements, standby commitment agreements, short sales, or any other
securities by Act Release No. 10666, or any subsequent release or
releases or rule of the SEC relating to the maintenance of segregated
accounts by registered investment companies;
4.) for the purpose of segregating collateral for loans of
Securities made by the Fund; and 5.) for other proper corporate
purposes, but only upon receipt of, in addition to Proper Instructions,
a copy of a resolution of the Board of Trustees, certified by an
Officer, setting forth the purposes of such segregated account. Each
segregated account established hereunder shall be established and
maintained for a single Fund only. All Proper Instructions relating to
a segregated account shall specify the Fund involved.
VI. F. Advances for Settlement. Except as otherwise may be agreed upon
by the parties hereto, the Custodian shall not be required to comply with any
Written Instructions to settle the purchase of any Securities on behalf of a
Fund unless there is sufficient cash in the account(s) pertaining to such Fund
at the time or to settle the sale of any Securities from such an account(s)
unless such Securities are in deliverable form. Notwithstanding the foregoing,
if the purchase price of such Securities exceeds the amount of cash in the
account(s) at the time of such purchase, the Custodian may, in its sole
discretion, advance the amount of the difference in order to settle the purchase
of such Securities. The amount of any such advance shall be deemed a loan from
the Custodian to the Trust payable on demand and bearing interest accruing from
the date such loan is made up to but not including the date such loan is repaid
at the rate per annum customarily charged by the Custodian on similar loans.
<PAGE>
ARTICLE VII
Trust Indebtedness
VII. A. Borrowings. In connection with any borrowings by the Trust, the
Trust will cause to be delivered to the Custodian by a bank or broker requiring
Securities as collateral for such borrowings (including the Custodian if the
borrowing is from the Custodian), a notice or undertaking in the form currently
employed by such bank or broker setting forth the amount of collateral. The
Trust shall promptly deliver to the Custodian Written Instructions specifying
with respect to each such borrowing: (a) the name of the bank or broker, (b) the
amount and terms of the borrowing, which may be set forth by incorporating by
reference an attached promissory note duly endorsed by the Trust, or a loan
agreement, (c) the date, and time if known, on which the loan is to be entered
into, (d) the date on which the loan becomes due and payable, (e) the total
amount payable to the Trust on the borrowing date, and (f) the description of
the Securities securing the loan, including the name of the issuer, the title
and the number of shares or other units or the principal amount. The Custodian
shall deliver on the borrowing date specified in the Written Instructions the
required collateral against the lender's delivery of the total loan amount then
payable, provided that the same conforms to that which is described in the
Written Instructions. The Custodian shall deliver, in the manner directed by the
Trust, such Securities as additional collateral, as may be specified in Written
Instructions, to secure further any transaction described in this Article VII.
The Trust shall cause all Securities released from collateral status to be
returned directly to the Custodian and the Custodian shall receive from time to
time such return of collateral as may be tendered to it.
The Custodian may, at the option of the lender, keep such collateral in
its possession, subject to all rights therein given to the lender because of the
loan. The Custodian may require such reasonable conditions regarding such
collateral and its dealings with third-party lenders as it may deem appropriate.
VII. B. Advances. With respect to any advances of cash made by the
Custodian to or for the benefit of a Fund for any purpose which results in the
Fund incurring an overdraft at the end of any Business Day, such advance shall
be repayable immediately upon demand made by the Custodian at any time.
ARTICLE VIII
Concerning the Custodian
VIII. A. Limitations on Liability of Custodian. Except as otherwise
provided herein, the Custodian shall not be liable for any loss or damage,
including counsel fees, resulting from its action or omission to act or
otherwise, except for any such loss or damage arising out of its negligence or
willful misconduct. The Trust, on behalf of the Fund and only from assets of the
Fund (or insurance purchased by the Trust with respect to its liabilities on
behalf of the Fund hereunder), shall defend, indemnify and hold harmless the
Custodian and its directors, officers, employees and agents with respect to any
loss, claim, liability or cost (including reasonable attorneys' fees) arising or
alleged to arise from or relating to the Trust's duties hereunder or any other
action or inaction of the Trust or its Trustees, officers, employees or agents,
except such as may arise from the negligent action, omission, willful misconduct
or breach of this Agreement by the Custodian, its directors, officers, employees
or agents.. The Custodian shall defend, indemnify and hold harmless the Trust
and its trustees, officers, employees or agents with respect to any loss, claim,
liability or cost (including reasonable attorneys' fees) arising or alleged to
arise from or relating to the Custodian's duties as specifically set forth in
this agreement with respect to the Fund hereunder or any other action or
inaction of the Custodian or its directors, officers, employees, agents,
nominees, or Sub-Custodians as to the Fund, except such as may arise from the
negligent action, omission or willful misconduct of the Trust, its trustees,
officers, employees, or agents. The Custodian may, with respect to questions of
law apply for and obtain the advice and opinion of counsel to the Trust at the
expense of the Fund, or of its own counsel at its own expense, and shall be
fully protected with respect to anything done or omitted by it in good faith in
conformity with the advice or opinion of counsel to the Trust, and shall be
similarly protected with respect to anything done or omitted by it in good faith
in conformity with advice or opinion of its counsel, unless counsel to the Fund
shall, within a reasonable time after being notified of legal advice received by
the Custodian, have a differing interpretation of such question of law. The
Custodian shall be liable to the Trust for any proximate loss or damage
resulting from the use of the Book-Entry System or any Depository arising by
reason of any negligence, misfeasance or misconduct on the part of the Custodian
or any of its employees, agents, nominees or Sub-Custodians, but not for any
special, incidental, consequential, or punitive damages; provided, however, that
nothing contained herein shall preclude recovery by the Trust, on behalf of the
Fund, of principal and of interest to the date of recovery on Securities
incorrectly omitted from the Fund's account or penalties imposed on the Trust,
in connection with the Fund, for any failures to deliver Securities.
In any case in which one party hereto may be asked to indemnify the other or
hold the other harmless, the party from whom indemnification is sought (the
"Indemnifying Party") shall be advised of all pertinent facts concerning the
situation in question, and the party claiming a right to indemnification (the
"Indemnified Party") will use reasonable care to identify and notify the
Indemnifying Party promptly concerning any situation which presents or appears
to present a claim for indemnification against the Indemnifying Party. The
Indemnifying Party shall have the option to defend the Indemnified Party against
any claim which may be the subject of the indemnification, and in the event the
Indemnifying Party so elects, such defense shall be conducted by counsel chosen
by the Indemnifying Party and satisfactory to the Indemnified Party and the
Indemnifying Party will so notify the Indemnified Party and thereupon such
Indemnifying Party shall take over the complete defense of the claim and the
Indemnifying Party shall sustain no further legal or other expenses in such
situation for which indemnification has been sought under this paragraph, except
the expenses of any additional counsel retained by the Indemnified Party. In no
case shall any party claiming the right to indemnification confess any claim or
make any compromise in any case in which the other party has been asked to
indemnify such party (unless such confession or compromise is made with such
other party's prior written consent. The provisions of this section VIII. A.
shall survive the termination of this Agreement.
VIII. B. Actions not Required by Custodian. Without limiting the
generality of the foregoing, the Custodian, acting in the capacity of Custodian
hereunder, shall be under no obligation to inquire into, and shall not be liable
for:
1.) The validity of the issue of any Securities purchased by
or for the account of any Fund, the legality of the purchase thereof,
or the propriety of the amount paid therefor;
2.) The legality of the sale of any Securities by or for the
account of any Fund, or the propriety of the amount for which the same
are sold;
3.) The legality of the issue or sale of any Shares of any
Fund, or the sufficiency of the amount to be received therefor;
4.) The legality of the redemption of any Shares of any Fund,
or the propriety of the amount to be paid therefor;
5.) The legality of the declaration or payment of any dividend
by the Trust in respect of Shares of any Fund;
6.) The legality of any borrowing by the Trust on behalf of
the Trust or any Fund, using Securities as collateral; 6.) Whether the
Trust or a Fund is in compliance with the 1940 Act, the regulations
thereunder, the provisions of the Trust's charter documents or by-laws,
or its investment objectives and policies as then in effect.
VIII. C. No Duty to Collect Amounts Due From Dividend and Transfer
Agent. The Custodian shall not be under any duty or obligation to take action to
effect collection of any amount due to the Trust from any Dividend and Transfer
Agent of the Trust nor to take any action to effect payment or distribution by
any Dividend and Transfer Agent of the Trust of any amount paid by the Custodian
to any Dividend and Transfer Agent of the Trust in accordance with this
Agreement.
VIII. D. No Enforcement Actions. Notwithstanding Section D of Article
V, the Custodian shall not be under any duty or obligation to take action, by
legal means or otherwise, to effect collection of any amount, if the Securities
upon which such amount is payable are in default, or if payment is refused after
due demand or presentation, unless and until (i) it shall be directed to take
such action by Written Instructions and (ii) it shall be assured to its
satisfaction (including prepayment thereof) of reimbursement of its costs and
expenses in connection with any such action.
VIII. E. Authority to Use Agents and Sub-Custodians. The Trust
acknowledges and hereby authorizes the Custodian to hold Securities through its
various agents described in Appendix C annexed hereto. In addition, the Trust
acknowledges that the Custodian may appoint one or more financial institutions,
as agent or agents or as sub-custodian or sub-custodians, including, but not
limited to, banking institutions located in foreign countries, for the purpose
of holding Securities and moneys at any time owned by the Fund. The Custodian
shall not be relieved of any obligation or liability under this Agreement in
connection with the appointment or activities of such agents or sub-custodians.
Any such agent or sub-custodian shall be qualified to serve as such for assets
of investment companies registered under the Act. The Funds shall reimburse the
Custodian for all costs incurred by the Custodian in connection with opening
accounts with any such agents or sub-custodians. Upon request, the Custodian
shall promptly forward to the Trust any documents it receives from any agent or
sub-custodian appointed hereunder which may assist trustees of registered
investment companies to fulfill their responsibilities under Rule 17f-5 of the
Act.
VIII. F. No Duty to Supervise Investments. The Custodian shall not be
under any duty or obligation to ascertain whether any Securities at any time
delivered to or held by it for the account of the Trust are such as properly may
be held by the Trust under the provisions of the Declaration of Trust and the
Trust's By-Laws.
VIII. G. All Records Confidential. The Custodian shall treat all
records and other information relating to the Trust and the assets of all Funds
as confidential and shall not disclose any such records or information to any
other person unless (i) the Trust shall have consented thereto in writing or
(ii) such disclosure is compelled by law.
VIII. H. Compensation of Custodian. The Custodian shall be entitled to
receive and the Trust agrees to pay to the Custodian, for the Fund's account
from the Fund's assets only, such compensation as shall be determined pursuant
to Appendix E attached hereto, or as shall be determined pursuant to amendments
to Appendix E as approved by the Custodian and the Trust. The Custodian shall be
entitled to charge against any money held by it for the accounts of the Fund the
amount of any loss, damage, liability or expense, including counsel fees, for
which it shall be entitled to reimbursement under the provisions of this
Agreement as determined by agreement of the Custodian and the Trust or by the
final order of any court or arbitrator having jurisdiction and as to which all
rights of appeal shall have expired. The expenses which the Custodian may charge
against the account of a Fund include, but are not limited to, the expenses of
agents or Sub-Custodians incurred in settling transactions involving the
purchase and sale of Securities of the Fund.
VIII. I. Reliance Upon Instructions. The Custodian shall be entitled to
rely upon any Proper Instructions if such reliance is made in good faith. The
Trust agrees to forward to the Custodian Written Instructions confirming Oral
Instructions in such a manner so that such Written Instructions are received by
the Custodian, whether by hand delivery, telex, facsimile or otherwise, on the
same Business Day on which such Oral Instructions were given. The Trust agrees
that the failure of the Custodian to receive such confirming instructions shall
in no way affect the validity of the transactions or enforceability of the
transactions hereby authorized by the Trust. The Trust agrees that the Custodian
shall incur no liability to the Trust for acting upon Oral Instructions given to
the Custodian hereunder concerning such transactions.
VIII. J. Books and Records. The Custodian will (i) set up and maintain
proper books of account and complete records of all transactions in the accounts
maintained by the Custodian hereunder in such manner as will meet the
obligations of the Fund under the Act, with particular attention to Section 31
thereof and Rules 3la-1 and 3la-2 thereunder and those records are the property
of the Trust, and (ii) preserve for the periods prescribed by applicable Federal
statute or regulation all records required to be so preserved. All such books
and records shall be the property of the Trust, and shall be available, upon
request, for inspection by duly authorized officers, employees or agents of the
Trust and employees of the SEC.
VIII. K. Internal Accounting Control Systems. The Custodian shall send
to the Trust any report received on the systems of internal accounting control
of the Custodian, or its agents or sub-custodians, as the Trust may reasonably
request from time to time.
VIII. L. No Management of Assets by Custodian. The Custodian performs
only the services of a custodian and shall have no responsibility for the
management, investment or reinvestment of the Securities or other assets from
time to time owned by any Fund. The Custodian is not a selling agent for Shares
of any Fund and performance of its duties as custodian shall not be deemed to be
a recommendation to any Fund's depositors or others of Shares of the Fund as an
investment. The Custodian shall have no duties or obligations whatsoever except
such duties and obligations as are specifically set forth in this Agreement, and
no covenant or obligation shall be implied in this Agreement against the
Custodian.
VIII. M. Assistance to Trust. The Custodian shall take all reasonable
action, that the Trust may from time to time request, to assist the Trust in
obtaining favorable opinions from the Trust's independent accountants, with
respect to the Custodian's activities hereunder, in connection with the
preparation of the Fund's Form N- IA, Form N-SAR, or other annual reports to the
SEC.
VIII. N. Grant of Security Interest. The Trust hereby pledges to and
grants the Custodian a security interest in the assets of any Fund to secure the
payment of any liabilities of the Fund to the Custodian for money borrowed from
the Custodian. This pledge is in addition to any other pledge of collateral by
the Trust to the Custodian.
ARTICLE IX
Termination
IX. A. Termination. Either party hereto may terminate this
Agreement for any reason by giving to the other party a notice in writing
specifying the date of such termination, which shall be not less than ninety
(90) days after the date of giving of such notice. If such notice is given by
the Trust, it shall be accompanied by a copy of a resolution of the Board of
Trustees of the Trust, certified by the Secretary of the Trust, electing to
terminate this Agreement and designating a successor custodian or custodians
each of which shall be a bank or trust company having not less than $100,000,000
aggregate capital, surplus, and undivided profits. In the event such notice is
given by the Custodian, the Trust shall, on or before the termination date,
deliver to the Custodian a copy of a resolution of the Board of Trustees of the
Trust, certified by the Secretary, designating a successor custodian or
custodians to act on behalf of the Trust. In the absence of such designation by
the Trust, the Custodian may designate a successor custodian which shall be a
bank or trust company having not less than $100,000,000 aggregate capital,
surplus, and undivided profits. Upon the date set forth in such notice this
Agreement shall terminate, and the Custodian, provided that it has received a
notice of acceptance by the successor custodian, shall deliver, on that date,
directly to the successor custodian all Securities and monies then owned by the
Fund and held by it as Custodian. Upon termination of this Agreement, the Trust
shall pay to the Custodian on behalf of the Trust such compensation as may be
due as of the date of such termination. The Trust agrees on behalf of the Trust
that the Custodian shall be reimbursed for its reasonable costs in connection
with the termination of this Agreement.
IX. B. Failure to Designate Successor Trustee. If a successor custodian
is not designated by the Trust, or by the Custodian in accordance with the
preceding paragraph, or the designated successor cannot or will not serve, the
Trust shall, upon the delivery by the Custodian to the Trust of all Securities
(other than Securities held in the Book-Entry System which cannot be delivered
to the Trust) and moneys then owned by the Trust, be deemed to be the custodian
for the Trust, and the Custodian shall thereby be relieved of all duties and
responsibilities pursuant to this Agreement, other than the duty with respect to
Securities held in the Book-Entry System, which cannot be delivered to the
Trust, which shall be held by the Custodian in accordance with this Agreement.
ARTICLE X
Force Majeure
Neither the Custodian nor the Trust shall be liable for any failure or
delay in performance of its obligations under this Agreement arising out of or
caused, directly or indirectly, by circumstances beyond its reasonable control,
including, without limitation, acts of God; earthquakes; fires; floods; wars;
civil or military disturbances; sabotage; strikes; epidemics; riots; labor
disputes; acts of civil or military authority; governmental actions; or
inability to obtain labor, material, equipment or transportation; provided,
however, that the Custodian, in the event of a failure or delay, shall use its
best efforts to ameliorate the effects of any such failure or delay.
ARTICLE XI
Miscellaneous
XI. A. Designation of Authorized Persons. Appendix A sets forth the
names and the signatures of all Authorized Persons as of this date, as certified
by the Secretary of the Trust. The Trust agrees to furnish to the Custodian a
new Appendix A in form similar to the attached Appendix A, if any present
Authorized Person ceases to be an Authorized Person or if any other or
additional Authorized Persons are elected or appointed. Until such new Appendix
A shall be received, the Custodian shall be fully protected in acting under the
provisions of this Agreement upon Oral Instructions or signatures of the then
current Authorized Persons as set forth in the last delivered Appendix A.
XI. B. Limitation of Personal Liability. No recourse under any
obligation of this Agreement or for any claim based thereon shall be had against
any organizer, shareholder, officer, trustee, past, present or future as such,
of the Trust or of any predecessor or successor, either directly or through the
Trust or any such predecessor or successor, whether by virtue of any
constitution, statute or rule of law or equity, or by the enforcement of any
assessment or penalty or otherwise; it being expressly agreed and understood
that this Agreement and the obligations thereunder are enforceable solely
against the assets of the Trust, and that no such personal liability whatever
shall attach to, or is or shall be incurred by, the organizers, shareholders,
officers, or trustees of the Trust or of any predecessor or successor, or any of
them as such, because of the obligations contained in this Agreement or implied
therefrom and that any and all such liability is hereby expressly waived and
released by the Custodian as a condition of, and as a consideration for, the
execution of this Agreement.
XI. C. Authorization By Board. The obligations set forth in this
Agreement as having been made by the Trust have been made by the Board of
Trustees, acting as such Trustees for and on behalf of the Trust, pursuant to
the authority vested in them under the laws of the State of Ohio, the
Declaration of Trust and the By-Laws of the Trust. This Agreement has been
executed by Officers of the Trust as officers, and not individually, and the
obligations contained herein are not binding upon any of the Trustees, Officers,
agents or holders of shares, personally, but bind only the Trust and then only
to the extent of the assets of the Trust.
XI. D. Custodian's Consent to Use of Its Name. The Trust shall obtain
the Custodian's consent prior to the publication and/or dissemination or
distribution, of the Prospectus and any other documents (including advertising
material) specifically mentioning the Custodian (other than merely by name and
address).
XI. E. Notices to Custodian. Any notice or other instrument in writing,
authorized or required by this Agreement to be given to the Custodian, shall be
sufficiently given if addressed to the Custodian and mailed or delivered to it
at its offices at Star Bank Center, 425 Walnut .Street, M. L. 6118, Cincinnati,
Ohio 45202, attention Mutual Fund Custody Department, or at such other place as
the Custodian may from time to time designate in writing.
XI. F. Notices to Trust. Any notice or other instrument in writing,
authorized or required by this Agreement to be given to the Trust shall be
sufficiently given when delivered to the Trust or on the second Business Day
following the time such notice is deposited in the U.S. mail postage prepaid and
addressed to the Trust at its office at 431 N. Pennsylvania, Indiana 46204 or at
such other place as the Trust may from time to time designate in writing.
XI. G. Amendments In Writing. This Agreement, with the exception of the
Appendices, may not be amended or modified in any manner except by a written
agreement executed by both parties with the same formality as this Agreement,
and authorized and approved by a resolution of the Board of Trustees of the
Trust.
XI. H. Successors and Assigns. This Agreement shall extend to and shall
be binding upon the parties hereto, and their respective successors and assigns;
provided, however, that this Agreement shall not be assignable by the Trust or
by the Custodian, and no attempted assignment by the Trust or the Custodian
shall be effective without the written consent of the other party hereto.
XI. I. Governing Law. This Agreement shall be construed in accordance
with the laws of the State of Ohio.
XI. J. Jurisdiction. Any legal action, suit or proceeding to be
instituted by either party with respect to this Agreement shall be brought by
such party exclusively in the courts of the State of Ohio or in the courts of
the United States for the Southern District of Ohio, and each party, by its
execution of this Agreement, irrevocably (i) submits to such jurisdiction and
(ii) consents to the service of any process or pleadings by first class U.S.
mail, postage prepaid and return receipt requested, or by any other means from
time to time authorized by the laws of such jurisdiction.
XI. K. Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be deemed to be an original, but such
counterparts shall, together, constitute only one instrument.
XI. L. Headings. The headings of paragraphs in this Agreement are for
convenience of reference only and shall not affect the meaning or construction
of any provision of this Agreement.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their respective Officers, thereunto duly authorized as of the day
and year first above written.
ATTEST: TRUST:
The Unified Funds
By: /s/ Timothy L. Ashburn
Title:President
ATTEST: CUSTODIAN:
Star Bank, N.A.
By:/s/ Marsha A. Croxton
Title: Sr. Vice President
MUTUAL FUND SERVICES AGREEMENT
Fund Administration Services
Fund Accounting Services
Transfer Agency Services
between
THE UNIFIED FUNDS
and
UNIFIED FUND SERVICES, INC.
January 30, 1998
Exhibit A - List of Portfolios
Exhibit B - Fund Administration Services Description
Exhibit C - Fund Accounting Services Description
Exhibit D - Transfer Agency Services Description
Exhibit E - Fees and Expenses
<PAGE>
MUTUAL FUND SERVICES AGREEMENT
AGREEMENT (this "Agreement"), dated as of January 30, 1998, between The
Unified Funds, an Ohio business trust (the "Fund"), and Unified Fund Services
Inc., an Indiana corporation ("Unified").
WITNESSTH:
WHEREAS, the Fund is registered as an open-end, management investment
company under the Investment Company Act of 1940, as amended (the "1940 Act");
and
WHEREAS, the Fund wishes to retain Unified to provide certain transfer
agent, fund accounting and administration services with respect to the Fund, and
Unified is willing to furnish such services;
NOW, THEREFORE, in consideration of the premises and mutual covenants
contained herein, the parties hereto hereby agree as follows:
Section 1. Appointment. The Fund hereby appoints Unified to provide
transfer agent, fund accounting and fund administration services for the Fund,
subject to the supervision of the Board of Trustees of the Fund (the "Board"),
for the period and on the terms set forth in this Agreement. Unified accepts
such appointment and agrees to furnish the services herein set forth in return
for the compensation as provided in Section 6 and Exhibit A to this Agreement.
The Fund will initially consist of the portfolios, funds and/or classes of
shares (each an "Portfolio"; collectively the "Portfolios") listed on Exhibit A,
attached hereto. The Fund shall notify Unified in writing of each additional
Portfolio established by the Fund. Each new Portfolio shall be subject to the
provisions of this Agreement, except to the extent that the provisions
(including those relating to the compensation and expenses payable by the Fund
and its Portfolios) may be modified with respect to each new Portfolio in
writing by the Fund and Unified at the time of the addition of the new
Portfolio.
Section 2. Representations and Warranties of Unified. Unified
represents and warrants to the Fund that:
(a) Unified is a corporation duly organized and existing under the laws
of the State of Indiana;
(b) Unified is empowered under applicable laws and by its Articles of
Incorporation and By-Laws to enter into and perform this Agreement, and all
requisite corporate proceedings have been taken by Unified to authorize Unified
to enter into and perform this Agreement;
(c) Unified has, and will continue to have, access to the facilities,
personnel and equipment required to fully perform its duties and obligations
hereunder;
(d) no legal or administrative proceedings have been instituted or
threatened against Unified that would impair its ability to perform its duties
and obligations under this Agreement; and
(e) Unified's entrance into this Agreement will not cause a material
breach or be in material conflict with any other agreement or obligation of
Unified or any law or regulation applicable to Unified.
Section 3. Representations and Warranties of the Fund. The Fund
represents and warrants to Unified that:
(a) the Fund is a business trust duly organized and existing under the
laws of the State of Indiana;
(b) the Fund is empowered under applicable laws and by its Declaration
of Trust and By-Laws to enter into and perform this Agreement, and the Fund has
taken all requisite proceedings to authorize the Fund to enter into and perform
this Agreement;
(c) the Fund is an investment company properly registered under the
1940 Act; a registration statement under the Securities Act of 1933, as amended
("1933 Act") and the 1940 Act on Form N-lA has been filed and will be effective
and will remain effective during the term of this Agreement, and all necessary
filings under the laws of the states will have been made and will be current
during the term of this Agreement;
(d) no legal or administrative proceedings have been instituted or
threatened against the Fund that would impair its ability to perform its duties
and obligations under this Agreement; and
(e) the Fund's entrance into this Agreement will not cause a material
breach or be in material conflict with any other agreement or obligation of the
Fund or any law or regulation applicable to it.
Section 4. Delivery of Documents. The Fund will promptly furnish to
Unified such copies, properly certified or authenticated, of contracts,
documents and other related information that Unified may request or requires to
properly discharge its duties. Such documents may include but are not limited to
the following:
(a) Resolutions of the Board authorizing the appointment of Unified to
provide certain transfer agency, fund accounting and administration services to
the Fund and approving this Agreement;
(b) The Fund's Declaration of Trust;
(c) The Fund's By-Laws;
(d) The Fund's Notification of Registration on Form N-8A under the 1940
Act as filed with the Securities and Exchange Commission ("SEC");
(e) The Fund's registration statement including exhibits, as amended,
on Form N-1A (the "Registration Statement") under the 1933 Act and the 1940 Act,
as filed with the SEC;
(f) Copies of the Investment Advisory Agreement between the Fund and
its investment adviser (the "Advisory Agreement");
(g) Opinions of counsel and auditors reports;
(h) The Fund's Prospectus and Statement of Additional Information
relating to all Portfolios and all amendments and supplements thereto (such
Prospectus and Statement of Additional Information and supplements thereto, as
presently in effect and as from time to time hereafter amended and supplemented,
herein called the "Prospectuses"); and
(i) Such other agreements as the Fund may enter into from time to time
including securities lending agreements, futures and commodities account
agreements, brokerage agreements, and options agreements.
Section 5. Services Provided by Unified. (a) Unified will provide the
following services subject to the control, direction and supervision of the
Board and in compliance with the objectives, policies and limitations set forth
in the Fund's Registration Statement, Declaration of Trust and By-Laws;
applicable laws and regulations; and all resolutions and policies implemented by
the Board:
(i) Fund Administration, as described on Exhibit B to this Agreement.
(ii) Fund Accounting, as described on Exhibit C to this Agreement.
(iii) Transfer Agency, as described on Exhibit D to this Agreement.
(iv) Dividend Disbursing. Unified will serve as the Fund's dividend
disbursing agent. Unified will prepare and mail checks, place wire transfers of
credit income and capital gain payments to shareholders. The Fund will advise
Unified in advance of the declaration of any dividend or distribution and the
record and payable date thereof. Unified will, on or before the payment date of
any such dividend or distribution, notify the Fund's Custodian of the estimated
amount required to pay any portion of such dividend or distribution payable in
cash, and on or before the payment date of such distribution, the Fund will
instruct its Custodian to make available to Unified sufficient funds for the
cash amount to be paid out. If a shareholder is entitled to receive additional
shares by virtue of any such distribution or dividend, appropriate credits will
be made to each shareholder's account and/or certificates delivered where
requested. A shareholder not electing issuance of certificates will receive a
confirmation from Unified indicating the number of shares credited to his/her
account.
(b) Unified will also:
(i) provide office facilities with respect to the provision of the
services contemplated herein (which may be in the offices of Unified or a
corporate affiliate of Unified);
(ii) provide or otherwise obtain personnel sufficient, in Unified's
sole discretion, for provision of the services contemplated herein;
(iii) furnish equipment and other materials, which Unified, in its sole
discretion, believes are necessary or desirable for provision of the services
contemplated herein; and
(iv) keep records relating to the services provided hereunder in such
form and manner as set forth on Exhibits B, C and D and as Unified may otherwise
deem appropriate or advisable, all in accordance with the 1940 Act. To the
extent required by Section 31 of the 1940 Act and the rules thereunder, Unified
agrees that all such records prepared or maintained by Unified relating to the
services provided hereunder are the property of the Fund and will be preserved
for the periods prescribed under Rule 31a-2 under the 1940 Act, maintained at
the Fund's expense, and made available in accordance with such Section and
rules. Unified further agrees to surrender promptly to the Fund upon its request
and cease to retain in its records and files those records and documents created
and maintained by Unified pursuant to this Agreement.
Section 6. Fees: Expenses: Expense Reimbursement. (a) As compensation
for the services rendered to the Fund pursuant to this Agreement the Fund shall
pay Unified monthly fees determined as set forth on Exhibit E to this Agreement.
Such fees are to be billed monthly and shall be due and payable upon receipt of
the invoice. Upon any termination of this Agreement and before the end of any
month, the fee for the part of the month before such termination shall be
prorated according to the proportion which such part bears to the full monthly
period and shall be payable upon the date of termination of this Agreement.
(b) For the purpose of determining fees calculated as a function of a
Portfolio's net assets, the value of the Portfolio's net assets shall be
computed as required by the Prospectus, generally accepted accounting
principles, and resolutions of the Board.
(c) Unified will from time to time employ or associate with such person
or persons as may be appropriate to assist Unified in the performance of this
Agreement. Such person or persons may be officers and employees who are employed
or designated as officers by both Unified and the Fund. The compensation of such
person or persons for such employment shall be paid by Unified and no obligation
will be incurred by or on behalf of the Fund in such respect.
(d) Unified will bear all of its own expenses in connection with the
performance of the services under this Agreement except as otherwise expressly
provided herein. The Fund agrees to promptly reimburse Unified for any equipment
and supplies specially ordered by or for the Fund through Unified and for any
other expenses not contemplated by this Agreement that Unified may incur on the
Fund's behalf at the Fund's request or as consented to by the Fund. Such other
expenses to be incurred in the operation of the Fund and to be borne by the
Fund, include, but are not limited to: taxes; interest; brokerage fees and
commissions; salaries and fees of officers and directors who are not officers,
directors, shareholders or employees of Unified, or the Fund's investment
adviser or distributor; SEC and state Blue Sky registration and qualification
fees, levies, fines and other charges; advisory and administration fees; charges
and expenses of custodians; insurance premiums including fidelity bond premiums;
auditing and legal expenses; costs of maintenance of corporate existence;
expenses of typesetting and printing of prospectuses for regulatory purposes and
for distribution to current shareholders of the Fund (the Fund's distributor to
bear the expense of all other printing, production, and distribution of
prospectuses, statements of additional information, and marketing materials);
expenses of printing and production cost of shareholders' reports and proxy
statements and materials; costs and expense of Fund stationery and forms; costs
and expenses of special telephone and data lines and devices; costs associated
with corporate, shareholder, and Board meetings; and any extraordinary expenses
and other customary Fund expenses. In addition, Unified may utilize one or more
independent pricing services, approved from time to time by the Board, to obtain
securities prices and to act as backup to the primary pricing services, in
connection with determining the net asset values of the Fund, and the Fund will
reimburse Unified for the Fund's share of the cost of such services based upon
the actual usage, or a pro-rata estimate of the use, of the services for the
benefit of the Fund.
(e) The Fund may request additional services, additional processing, or
special reports. Such requests may be provided by Unified at additional charges.
In this event, the Fund shall submit such requests in writing together with such
specifications as may be reasonably required by Unified, and Unified shall
respond to such requests in the form of a price quotation. The Fund's written
acceptance of the quotation must be received prior to implementation of such
request.
Additional services will be charged at Unified's standard rates.
(f) All fees, out-of-pocket expenses, or additional charges of Unified
shall be billed on a monthly basis and shall be due and payable upon receipt of
the invoice.
Unified will render, after the close of each month in which services
have been furnished, a statement reflecting all of the charges for such month.
Charges remaining unpaid after thirty (30) days shall bear interest in finance
charges equivalent to, in the aggregate, the Prime Rate (as publicly announced
by Star Bank, N.A., from time to time) plus 2.00% per year and all costs and
expenses of effecting collection of any such sums, including reasonable
attorney's fees, shall be paid by the Fund to Unified.
In the event that the Fund is more than sixty (60) days delinquent in
its payments of monthly billings in connection with this Agreement (with the
exception of specific amounts which may be contested in good faith by the Fund),
this Agreement may be terminated upon thirty (30) days' written notice to the
Fund by Unified. The Fund must notify Unified in writing of any contested
amounts within thirty (30) days of receipt of a billing for such amounts.
Disputed amounts are not due and payable while they are being investigated.
Section 7. Proprietary and Confidential Information. Unified agrees on
behalf of itself and its employees to treat confidentially and as proprietary
information of the Fund, all records and other information relative to the
Fund's prior, present or potential shareholders, and to not use such records and
information for any purpose other than performance of Unified's responsibilities
and duties hereunder. Unified may seek a waiver of such confidentiality
provisions by furnishing reasonable prior notice to the Fund and obtaining
approval in writing from the Fund, which approval shall not be unreasonably
withheld and may not be withheld where the Service agent may be exposed to civil
or criminal contempt proceedings for failure to comply, when requested to
divulge such information by duly constituted authorities. Waivers of
confidentiality are automatically effective without further action by Unified
with respect to Internal Revenue Service levies, subpoenas and similar actions,
or with respect to any request by the Fund.
Section 8. Duties. responsibilities and Limitations of Liability.
(a) In the performance of its duties hereunder, Unified shall be
obligated to exercise due care and diligence, and to act in good faith in
performing the services provided for under this Agreement. In performing its
services hereunder, Unified shall be entitled to rely on any oral or written
instructions, notices or other communications from the Fund and its Custodian,
officers and Trustees, investors, agents and other service providers which
Unified reasonably believes to be genuine, valid and authorized. Unified shall
also be entitled to consult with and rely on the advice and opinions of outside
legal counsel retained by the Fund, as necessary or appropriate.
(b) Unified shall not be liable for any error of judgment or mistake of
law or for any loss or expense suffered by the Fund, in connection with the
matters to which this Agreement relates, except for a loss or expense solely
caused by or resulting from willful misfeasance, bad faith or gross negligence
on Unified's part in the performance of its duties or from reckless disregard by
Unified of its obligations and duties under this Agreement. Unified's liability
under this Agreement for any cause whatsoever shall be limited to the total
amount of fees paid to Unified under this Agreement for the prior year. Any
person, even though also an officer, director, partner, employee or agent of
Unified, who may be or become an officer, director, partner, employee or agent
of the Fund, shall be deemed when rendering services to the Fund or acting on
any business of the Fund (other than services or business in connection with
Unified's duties hereunder) to be rendering such services to or acting solely
for the Fund and not as an officer, director, partner, employee or agent or
person under the control or direction of Unified even though paid by Unified.
(c) Subject to Section 8(b) above, Unified shall not be responsible
for, and the Fund shall indemnify and hold Unified harmless from and against,
any and all losses, damages, costs, reasonable attorneys' fees and expenses,
payments, expenses and liabilities arising out of or attributable to:
(i) all actions of Unified or its officers or agents required to be
taken pursuant to this Agreement;
(ii) the reliance on or use by Unified or its officers or agents of
information, records, or documents which are received by Unified or its officers
or agents and furnished to it or them by or on behalf of the Fund, and which
have been prepared or maintained by the Fund or any third party on behalf of the
Fund;
(iii) the Fund's refusal or failure to comply with the terms of this
Agreement or the Fund's lack of good faith, or its actions, or lack thereof
involving negligence or willful misfeasance;
(iv) the breach of any representation or warranty of the Fund
hereunder;
(v) the taping or other form of recording of telephone conversations or
other forms of electronic communications with investors and shareholders, or
reliance by Unified on telephone or other electronic instructions of any person
acting on behalf of a shareholder or shareholder account for which telephone or
other electronic services have been authorized;
(vi) the reliance on or the carrying out by Unified or its officers or
agents of any proper instructions reasonably believed to be duly authorized, or
requests of the Fund or recognition by Unified of any share certificates which
are reasonably believed to bear the proper signatures of the officers of the
Fund and the proper countersignature of any transfer agent or registrar of the
Fund;
(vii) any delays, inaccuracies, errors in or omissions from data
provided to Unified by data and pricing services;
(viii) the offer or sale of shares by the Fund in violation of any
requirement under the federal securities laws or regulations or the securities
laws or regulations of any state, or in violation of any stop order or other
determination or ruling by any federal agency or any state agency with respect
to the offer or sale of such shares in such state (1) resulting from activities,
actions, or omissions by the Fund or its other service providers and agents, or
(2) existing or arising out of activities, actions or omissions by or on behalf
of the Fund prior to the effective date of this Agreement; and
(ix) the compliance by the Fund, its investment adviser, and its
distributor with applicable securities, tax, commodities and other laws, rules
and regulations.
Section 9. Terms. This Agreement shall become effective on the date
first hereinabove written. This Agreement may be modified or amended from time
to time by mutual agreement between the parties hereto. This Agreement shall
continue in effect unless terminated by either party on at least ninety (90)
days' prior written notice. Upon termination of this Agreement, the Fund shall
pay to Unified such compensation and any reimbursable expenses as may be due
under the terms hereof as of the date of termination or the date that the
provision of services ceases, whichever is later.
Section 10. Notices. Any notice required or permitted hereunder shall
be in writing and shall be deemed to have been given when delivered in person or
by certified mail, return receipt requested, to the parties at the following
address (or such other address as a party may specify by notice to the other):
(a) If to the Fund, to:
The Unified Funds
431 N. Pennsylvania St.
Indianapolis, IN 46204
(b) If to Unified, to:
Unified Fund Services, Inc.
431 North Pennsylvania Street
Indianapolis, Indiana 46204
Attn: Linda Lawson
Notice shall be effective upon receipt if by mail, on the date of
personal delivery (by private messenger, courier service or otherwise) or upon
confirmed receipt of telex or facsimilie, whichever occurs first.
Section 11. Assignability. This Agreement shall not be assigned by
either party hereto without the prior written consent of the other party.
Section 12. Waiver. The failure of a party to insist upon strict
adherence to any term of this Agreement on any occasion shall not be considered
a waiver nor shall it deprive such party of the right thereafter to insist upon
strict adherence to that term or any term of this Agreement. Any waiver must be
in writing signed by the waiving party.
Section 13. Force Majeur. Unified shall not be responsible or liable
for any failure or delay in performance of its obligations under this Agreement
arising out of or caused, directly or indirectly, by circumstances beyond its
control, including without limitations, acts of God, earthquake, fires, floods,
wars, acts of civil or military authorities, or governmental actions, nor shall
any such failure or delay give the Fund the right to terminate this Agreement.
Section 14. Use or Name. The Fund and Unified agree not to use the
other's name nor the names of such other's affiliates, designees, or assignees
in any prospectus, sales literature, or other printed material written in a
manner not previously, expressly approved in writing by the other or such
other's affiliates, designees, or assignees except where required by the SEC or
any state agency responsible for securities regulation.
Section 15. Amendments. This Agreement may be modified or amended from
time to time by mutual written agreement between the parties. No provision of
this Agreement may be chanted, discharged, or terminated orally, but only by an
instrument in writing signed by the party against which enforcement of the
change, discharge or termination is sought
Section 16. Severability. If any provision of this Agreement is invalid
or unenforceable, the balance of the Agreement shall remain in effect, and if
any provision is inapplicable to any person or circumstance it shall
nevertheless remain applicable to all other persons and circumstances.
Section 17. Governing Law. This Agreement shall be governed by the laws
of the State of Indiana
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their officers designated below as of the date first written above.
<PAGE>
EXHIBIT A
to
Mutual Fund Services Agreement
List of Portfolios
Starwood Strategic Fund
Laidlaw Fund
First Lexington Balanced Fund
Taxable Money Market Fund
<PAGE>
EXHIBIT B
to
Mutual Fund Services Agreement
General description of Fund Administration Services
A. Financial and Tax Reporting
Prepare agreed upon management reports and Board of Trustees materials
such as unaudited financial statements, distribution summaries, and
deviations of mark-to-market valuation and the amortized cost for
money market funds.
B. Report Fund performance to outside services as directed by Fund
management.
C. Calculate dividend and capital gain distributions in accordance with
distribution policies detailed in the Fund's Prospectus. Assist Fund
management in making final determinations of distribution amounts.
D. Estimate and recommend year-end dividend and capital gain distributions
necessary to establish Fund's status as a regulated investment company
("RIC") under Section 4982 of the Internal Revenue Code of 1986, as
amended (the "Code") regarding minimum distribution requirements.
E. Working with the Fund's public accountants or other professionals,
prepare and file Fund's Federal tax return on Form 1 12()RIC along with
all state and local tax returns where applicable. Prepare and file
Federal Excise Tax Return (Form 8613).
F. Prepare and file Fund's Form N-SAR with the SEC.
G. Prepare and coordinate printing of Fund's Semiannual and Annual
Reports to Shareholders.
H. In conjunction with transfer agent, notify shareholders as to what
portion, if any, of the distributions made by the Fund's during the
prior fiscal year were exempt-interest dividends under Section
852(b)(5)(A) of the Code.
I. Provide Form 1099-MISC to persons other than corporations (i.e.,
Trustees) to whom the Fund paid more than $600 during the year.
J. Prepare and file California State Expense Limitation Report, if
applicable.
K. Provide financial information for Fund proxy statements and
Prospectuses (Expense Table).
II. Portfolio Compliance
A. Assist with monitoring each Portfolio's compliance with investment
restrictions (e.g., issuer or industry diversification, etc.) listed in
the current Prospectus and Statement of Additional Information.
B. Assist with monitoring each Portfolio's compliance with the
requirements of Section 851 of the Code for qualification as a RIC
(i.e., 90% Income, 30% Income-Short Three, Diversification Tests).
C. Assist with monitoring investment manager's compliance with Board
directives such as TMApproved Issuers Listings for Repurchase
Agreements", Rule 17a-7, and Rule 12(1-3 procedures.
D. Administer compliance by the Fund's Trustees, officers and "access
persons" under the terms of the Fund's Code of Ethics and SEC
regulations.
III. Regulatory Affairs and Corporate Governance
A. Assist Fund counsel in the preparation and filing of post-effective
amendments to the Fund's registration statement on Form N-lA and
supplements as needed.
B. Administer shareholder meetings, and assist Fund counsel in the
preparation and filing of proxy materials.
C. Prepare and file Rule 24f-2 Notices and related legal opinions (state
corporate law legal opinion to be furnished by Fund counsel).
D. Prepare and file all state registrations of the Fund's securities
including annual renewals, registering new Portfolios, preparing and
filing sales reports, filing copies of the registration statement and
final prospectus and statement of additional information, and
increasing registered amounts of securities in individual states.
E. Prepare Board materials for all Board meetings.
F. Assist with the review and monitoring of fidelity bond and errors and
omissions insurance coverage and make any related regulatory filings.
G. Prepare and update documents such as charter document, By-Laws,
foreign qualification filings.
H. Assist in identifying and monitoring pertinent regulatory and
legislative developments which may affect the Fund and, in response to
the results of such monitoring, coordinate and provide support to the
Fund and the Fund's investment adviser with respect to those
developments and results, including support with respect to routine
regulatory examinations or investigations of the Fund, and with
respect to such matters, to work on conjunction with outside counsel,
auditors and other professional organizations engaged by the Fund.
I. File copies of financial reports to shareholders with the SEC under
Rule 30b2-1.
VI. General Administration
A Prepare Fund or Portfolio expense projections, establish accruals and
review on a periodic basis, including expenses based on a percentage of
Fund's average daily net assets (advisory and administrative fees) and
expenses based on actual charges annualized and accrued daily (audit
fees, registration fees, directors' fees, etc.).
B. For new Portfolios obtain Employer Identification Number and CUSIP
numbers. Estimate organizational costs and expenses and monitor against
actual disbursements.
C. Coordinate all communications and data collection with regard to any
regulatory examinations and yearly audits by independent accountants.
<PAGE>
Dated: January 30, 1998
EXHIBIT C
to
Mutual Fund Services Agreement
Description of Fund Accounting Services
I. General Description
Unified shall provide the following accounting services to the Fund:
A Maintenance of the books and records and accounting controls for the
Fund's assets, including records of all securities transactions.
B. Calculation of each Portfolio's net asset value in accordance with the
Prospectus and (once the Portfolio meets eligibility requirements)
transmission to NASDAQ and to such other entities as directed by the
Fund.
C. Accounting for dividends and interest received and distributions made
by the Fund.
D. Production of transaction data, financial reports and such other
periodic and special reports as the Board may reasonably request.
E. Liaison with the Fund's independent auditors.
F. Monitoring and administration of arrangements with the Fund's
Custodian and depository banks.
G. A listing of reports that will be available to the Fund is included
below.
II. Daily Reports
A General Ledger Reports
1. Trial Balance Report
2. General Ledger Activity Report
B. Portfolio Reports
1. Portfolio Report
2. Cost Lot Report
3. Purchase Journal
4. Sell/Maturity Journal
5. Amortization/Accretion Report
6. Maturity Projection Report
<PAGE>
C. Pricing Reports
1. Pricing Report
2. Pricing Report by Market Value
3. Pricing Variance by % Change
4. NAV Report
5. NAV Proof Report
6. Money Market Pricing Report
D. Accounts Receivable/Payable Reports
1. Accounts Receivable for Investments Report
2. Accounts Payable for Investments Report
3. Interest Accrual Report
4. Dividend Accrual Report
E. Other Reports
1. Dividend Computation Report
2. Cash Availability Report
3. Settlement Journal
IV. Monthly Reports
Standard Reports
1. Cost Proof Report
2. Transaction History Report
3. Realized Gain/Loss Report
4. Interest Record Report
5. Dividend Record Report
6. Broker Commission Totals
7. Broker Principal Trades
8. Shareholder Activity Report
9. Fund Performance Report
10.SEC Yield Calculation Work Sheet (fixed-income funds only)
<PAGE>
EXHIBIT D
to
Mutual Fund Services Agreement
Description of Transfer Agency Services
The following is a general description of the transfer agency services
Unified shall provide to the Fund.
A. Shareholder Recordkeeping. Maintain records showing for each Fund
shareholder the following: (i) name, address and tax identifying
number; (ii) number of shares of each Portfolio; (iii) historical
information including, but not limited to, dividends paid and date and
price of all transactions including individual purchases and
redemptions; and (iv) any dividend reinvestment order, application,
dividend address and correspondence relating to the current maintenance
of the account.
B. Shareholder Issuance. Record the issuance of shares of each Portfolio.
Except as specifically agreed in writing between Unified and the Fund,
Unified shall have no obligation when countersigning and issuing and/or
crediting shares to take cograaance of any other laws relating to the
issue and sale of such shares except insofar as policies and procedures
of the Stock Transfer Association recognize such laws.
C. Purchase Orders. Process all orders for the purchase of shares of the
Fund in accordance with the Fund's current registration statement. Upon
receipt of any check or other payment for purchase of shares of the
Fund from an investor, Unified will (i) stamp the envelope with the
date of receipt, (ii) forthwith process the same for collection, (iii)
determine the amounts thereof due the Fund, and notify the Fund of such
determination and deposit, such notification to be given on a daily
basis of the total amounts determined and deposited to the Fund's
custodian bank account during such day. Unified shall then credit the
share account of the investor with the number of Portfolio shares to be
purchased made on the date such payment is received by Unified, as set
forth in the Fund's current prospectus and shall promptly mail a
confirmation of said purchase to the investor, all subject to any
instructions which the Fund may give to Unified with respect to the
timing or manner of acceptance of orders for shares relating to
payments so received by it.
D. Redemption Orders. Receive and stamp with the date of receipt all
requests for redemptions or repurchase of shares held in certificate or
non-certificate form, and process redemptions and repurchase requests
as follows: (i) if such certificate or redemption request complies with
the applicable standards approved by the Fund, Unified shall on each
business day notify the Fund of the total number of shares presented
and covered by such requests received by Unified on such day; (ii) on
or prior to the seventh calendar day succeeding any such requests
received by Unified shall notify the Custodian, subject to instructions
from the Fund, to transfer monies to such account as designated by
Unified for such payment to the redeeming shareholder of the applicable
redemption or repurchase price; (iii) if any such certificate or
request for redemption of repurchase does not comply with applicable
standards, Unified shall promptly notify the investor of such fact,
together with the reason therefor, and shall effect such redemption at
the Fund's price next determined after receipt of documents complying
with said standards of, at such other time as the Fund shall so direct.
E. telephone Orders. Process redemptions, exchanges and transfers of Fund
shares upon telephone instructions from qualified shareholders in
accordance with the procedures set forth in the Fund's current
Prospectus. Unified shall be permitted to redeem, exchange and/or
transfer Fund shares from any account for which such services have been
authorized.
F. Transfer of Shares. Upon receipt by Unified of documentation in proper
form to effect a transfer of shares, including in the case of shares
for which certificates have been issued the share certificates in
proper form for transfer, Unified will register such transfer on the
Fund's shareholder records maintained by Unified pursuant to
instructions received from the transferor, cancel the certificates
representing such shares, if any, and if so requested, countersign,
register, issue and mail by first class mall new certificates for the
same or a smaller whole number of shares.
G. Shareholder Communications and Meetings. Address and mail all
communications by the Fund to its shareholders promptly following the
delivery by the Fund of the material to be mailed. Prepare shareholder
lists, mail and certify as to the mailing of proxy materials, receive
the tabulated proxy cards, render periodic reports to the Fund on the
progress of such tabulation, and provide the Fund with inspectors of
election at any meeting of shareholders.
H. Share Certificates. If the Fund issues certificates, and if a
shareholder of the Fund requests a certificate representing his shares,
Unified as Transfer Agent, will countersign and mall by first class
mail with receipt confirmed, a share certificate to the investor at
his/her address as it appears on the Fund's transfer hooks. Unified
shall supply, at the expense of the Fund, a supply of blank share
certificates. The certificates shall be properly signed, manually or be
facsimile, as authorized by the Fund, and shall bear the Fund's seal or
facsimile; and notwithstanding the death, resignation or removal of any
officers of the Fund authorized to sign certificates, Unified may,
until otherwise directed by the Fund, continue to countersign
certificates which bear the manual or facsimile signature of such
officer.
I. Returned checks. In the event that any check or other order for the
payment of money is returned unpaid for any reason, Unified will take
such steps, including redepositing the check for collection or
returning the check to the investor, as Unified may, at its discretion,
deem appropriate and notify the Fund of such action, or as the Fund may
instruct.
J. Shareholder Correspondence. Acknowledge all correspondence from
shareholders relating to their share accounts and undertake such other
shareholder correspondence as may from time to time be mutually agreed
upon.
THE UNIFIED FUNDS
SHAREHOLDER SERVICES PLAN
SHAREHOLDER SERVICES PLAN (this "Plan"), adopted on November 20,1997,
by the Board of Trustees of The Unified Funds, an Ohio business trust (the
'Trust"), with respect to each class of its shares of beneficial interest (the
"Shares") set forth on the exhibits attached hereto (each a "Fund").
Section 1 This Plan is adopted to allow each Fund to make payments as
contemplated herein to obtain certain personal services for shareholders and/or
the maintenance of shareholder accounts ("Services").
Section 2 This Plan is designed to compensate broker/dealers and other
participating financial institutions and other persons ("Providers") for
providing services to each Fund and its shareholders. The Plan will be
administered by Unified Fund Services, Inc., Inc., as administrator of the Funds
("Unified"). In compensation for the services provided pursuant to this Plan,
Providers will be paid a monthly fee computed at the annual rate not to exceed
0.15% of the average aggregate net asset value of the Shares of each Fund held
during the month.
Section 3 Any payments made by a Fund to any Provider pursuant to this Plan
will be made pursuant to a "Shareholder Services Agreement" entered into by
Unified on behalf of the Fund and the Provider.
Section 4 Each Fund has the right (a) to select, in its sole discretion,
the Providers to participate in the Plan and (b) to terminate without cause and
in its sole discretion any Shareholder Services Agreement.
Section 5 Quarterly in each year that this Plan remains in effect, Unified
shall prepare and furnish to the Board of Trustees of the Trust, and the Board
of Trustees shall review, a written report of the amounts expended under this
Plan.
Section 6. This Plan shall become effective with respect to each Fund upon
the latest to occur of the following: (a) approval of this Plan by a majority of
the Trust's Board of Trustees, including a majority of the members of the Board
of Trustees who are not "interested persons" of the Trust and have no direct or
indirect financial interest in the operation of the Plan or in any related
documents to the Plan (the "Qualified Trustees"), cast in person at a meeting
called for the purpose of voting on this Plan; (b) the execution the Fund of an
exhibit hereto adopting this Plan; and (c) the effectiveness of the registration
of the Fund's Shares under the Securities Act of 1933, as amended.
Section 7 This Plan shall remain in effect with respect to each Fund
presently set forth on an exhibit and any subsequent Funds added pursuant to an
exhibit during the initial year of this Plan for the period of one year from the
date set forth above and may be continued thereafter if this Plan is approved
with respect to each Fund at least annually by a majority of the Board of
Trustees, including a majority of the Qualified Trustees, cast in person at a
meeting called for the purpose of voting on this Plan. If this Plan is adopted
with respect to a Fund after the first annual approval by the Trustees as
described above, this Plan will be effective as to that Fund upon execution of
the applicable exhibit pursuant to the provisions of Section 6(b) above and will
continue in effect until the next annual approval of this Plan by the Board of
Trustees and thereafter for successive periods of one year subject to approval
as described above.
Section 8. All material amendments to this Plan must be approved by a vote
of the Board of Trustees, including a majority of the Qualified Trustees, cast
in person at a meeting called for the purpose of voting on such amendment.
Section 9 This Plan may be terminated with respect to any Fund at any time
by: (a) a majority vote of the Qualified Trustees; or (b) a vote of a majority
of the outstanding voting securities of such Fund.
Section 10, While this Plan shall be in effect, the selection and
nomination of Trustees who are not "interested persons" of the Trust will be
committed to the discretion of Trustees who are themselves not interested
persons of the Trust.
Section 11 All agreements with any person relating to the implementation of
this Plan shall be in writing and any agreement related to this Plan shall be
subject to termination, without penalty, pursuant to the provisions of Section 9
above.
Section 12. This Plan shall be construed in accordance with and governed by
the laws of the State of Indiana.
IN WITNESS WHEREOF, this Plan has been executed on behalf of the Board of
Trustees as of the date first hereinabove written.
THE UNIFIED FUNDS
By /s/ Timothy L. Ashburn
Timothy L. Ashburn
Trustee and President
ACCEPTED:
UNIFIED FUND SERVICES, INC.
By /s/ David A. Bogaert
David A. Bogaert
President
-2-
EXHIBIT A
to
Shareholder Services Plan
The Starwood Strategic Fund
The Laidlaw Fund
The First Lexington Balanced Fund
The Taxable Money Market Fund
This Plan is adopted by the Trust with respect to each of the above-named Funds.
As compensation for the services provided pursuant to this Plan, Providers
will be paid a monthly fee computed at the annual rate of 0.15% of the average
aggregate net asset value of the Fund held during the month.
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.
THE UNIFIED FUNDS
By /s/ Timothy L. Ashburn
Timothy L. Ashburn
Trustee and President
UNIFIED FUND SERVICES, INC.
By /s/ David A. Bogaert
David A. Bogaert
President
Dated: January 30, 1998
UNIFIED FUND SERVICES, INC.
431 NORTH PENNSYLVANIA STREET
INDIANAPOLIS, INDIANA 46204
317-634-3300
SHAREHOLDER SERVICES AGREEMENT
This Agreement is made between the broker/dealer or other financial
institution executing this Agreement ("Provider") and Unified Fund Services,
Inc. ("Unified") on behalf of The Unified Funds (the "Funds"), for which Unified
administers a Shareholder Services Plan ("the Plan") and which have approved
this form of Agreement. In consideration of the mutual covenants hereinafter
contained, it is hereby agreed by and between the parties hereto as follows:
Section 1. Unified hereby appoints Provider to render or cause to be
rendered personal services to shareholders of the Funds and/or the maintenance
of accounts of shareholders of the Funds ("Services"). Provider agrees to
provide Services which, in its best judgment, are necessary or desirable for its
customers who are investors in the Funds. Provider further agrees to provide
Unified, upon request, a written description of the Services which Provider is
providing hereunder.
Section 2. During the term of this Agreement, the Funds will pay the
Provider fees as set forth in a written schedule delivered to the Provider
pursuant to this Agreement. The fee schedule for Provider may be changed by
Unified sending a new fee schedule to Provider pursuant to Section 9 of this
Agreement. For the payment period in which this Agreement becomes effective or
terminates, there shall be an appropriate proration of the fee on the basis of
the number of days that this Agreement is in effect during the quarter. Provider
represents that the fees received pursuant to this Agreement will be disclosed
to its customers, will be authorized by its customers, and will not result in an
excessive fee to the Provider. Under no circumstances shall the fees to the
Provider exceed the fees received by Unified from the Funds under the Plan.
Section 3. The Provider understands that the Department of Labor views
ERISA as prohibiting fiduciaries of discretionary ERISA assets from receiving
shareholder service fees or other compensation from funds in which the
fiduciary's discretionary ERISA assets are invested. To date, the Department of
Labor has not issued any exemptive order or advisory opinion that would exempt
fiduciaries from this interpretation. Without specific authorization from the
Department of Labor, fiduciaries should carefully avoid investing discretionary
assets in any fund pursuant to an arrangement where the fiduciary is to be
compensated by the fund for such investment. Receipt of such compensation could
violate ERISA provisions against fiduciary self-dealing and conflict of interest
and could subject the fiduciary to substantial penalties.
Section 4. The Provider agrees not to solicit or cause to be solicited
directly, or indirectly at any time in the future, any proxies from the
shareholders of a Fund in opposition to proxies solicited by management of the
Fund, unless a court of competent jurisdiction shall have determined that the
conduct of a majority of the Board of Trustees of the Trust constitutes willful
misfeasance, bad faith, gross negligence or reckless disregard of their duties.
This Section 4 will survive the term of this Agreement.
Section 5. This Agreement shall continue in effect for one year from
the date of its execution, and thereafter for successive periods of one year if
the form of this Agreement is approved at least annually by the Board of
Trustees of the Trust, including a majority of the members of the Board of
Trustees who are not "interest persons" (as defined in the Investment Company
Act of 1940, as amended (the "1940 Act")) of the Trust and have no direct or
indirect financial interest in the operation of the Plan or in any related
documents to the Plan ("Qualified Trustees"), cast in person at a meeting called
for that purpose.
Section 6. Notwithstanding Section 5 above, this Agreement may be
terminated with respect to any Fund as follows:
(a) at any time, without the payment of any penalty, by the vote of a
majority of the Qualified Trustees or by a vote of a majority of the outstanding
voting securities (as defined in the Investment Company Act of 1940, the "Act")
of such Fund on not more than 60 days' written notice to the parties to this
Agreement; (b) automatically in the event of the Agreement's assignment (as
defined in the Act); or (c) by either party to the Agreement without cause by
giving the other party at least 60 days' written notice of its intention to
terminate.
Section 7. The Provider agrees to obtain any taxpayer identification
number certification from its customers required under Section 3406 of the
Internal Revenue Code of 1986, as amended, and any applicable Treasury
regulations, and to provide the Trust or its designee with timely written notice
of any failure to obtain such taxpayer identification number certification in
order to enable the implementation of any required backup withholding.
Section 8. This Agreement supersedes any prior service agreements
between the parties with respect to the Fund.
Section 9. This Agreement may be amended by Unified from time to time
by the following procedure. Unified will mail a copy of the amendment to the
Provider's address, as shown below. If the Provider does not object to the
amendment within 30 days after its receipt, the amendment will become part of
the Agreement. The Provider's objection must be in writing and be received by
Unified within such 30-day period.
Section 10. The Provider acknowledges and agrees that Unified has
entered into this Agreement solely in the capacity of agent for the Funds and
administrator of the Plan. The Provider agrees not to claim that Unified is
liable for any responsibilities or amounts due by the Funds hereunder.
Section 11. This Agreement shall be construed in accordance with the
laws of the State of Indiana, without regard to the conflicts of laws principles
thereof.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this agreement to be
executed by their duly authorized signatories designated below as of the date
set forth below.
Provider: ______________________________________________
Broker Dealer Tax I.D. #: _________________________________
Address: ______________________________________________
City: _________________________________________________
State: _______________________ Zip Code: _______________
Dated:_______________________
By:
- ---------------------------------------------------
Authorized Signatory
Name: ________________________________________________
Printed
Title: ________________________________________________
UNIFIED FUND SERVICES, INC.
431 North Pennsylvania Street
Indianapolis, Indiana 46204
By: __________________________________________________
Name: ________________________________________________
Title: _________________________________________________
Date:
By: __________________________________________________
Name: ________________________________________________
Title: _________________________________________________
Date:
<PAGE>
EXHIBIT A
to
Shareholder Services Agreement
Funds covered by this Agreement:
The Starwood Strategic Fund
The Laidlaw Fund
The First Lexington Balanced Fund
The Taxable Money Market Fund
Shareholder Service Fees:
1. During the term of this Agreement, the Funds will pay Provider a
monthly fee. This fee will be computed at the annual rate of 0.15% of the
average net asset value of shares of the Funds held during the month in accounts
for which the Provider provides Services under this Agreement, so long as the
average net asset value of shares in the Funds during the month equals or
exceeds such minimum amount as the Funds shall from time to time determine and
communicate in writing to the Provider.
2. For the monthly period in which the Shareholder Services Agreement
becomes effective or terminates, there shall be an appropriate proration of any
fee payable on the basis of the number of days that the Agreement is in effect
during the month.
THE UNIFIED FUNDS
431 North Pennsylvania Street
Indianapolis, Indiana 46204
January 30, 1998
Unified Investment Advisers, Inc.
431 North Pennsylvania Street
Indianapolis, Indiana 46204
Re: Memorandum of Understanding Concerning
Unified Funds V.O.I.C.E. Program
Dear Sirs:
As investment adviser to The Unified Funds (the "Trust"), Unified
Investment Advisers, Inc., Inc. (the "Adviser") has established The Unified
Funds V.O.I.C.E. (Vision for On-Going Investment in Charity and Education)
Program (the "Program"). The Program is described generally in the Trust s
Prospectus (as it may be amended or supplemented from time to time, the
"Prospectus"). Attached hereto is a copy of the Program Application and all
other marketing or promotional materials that may be sent to shareholders of or
potential investors in the Trust in connection with the Program (as they be
amended or supplemented from time to time, and together with the descriptions
the Program in the Prospectus, the "Program Materials").
In connection with the Program, the Adviser and the Trust agree as follows:
1. The Adviser will operate the Program at all times in accordance with
Program Materials and will timely perform all of its obligations to Program
participants (including, without limitation, making. all of the donations
required to be made pursuant to the Program from its own revenue). Failure to do
so will constitute adequate grounds for termination of the Adviser's engagement
as investment adviser to the Trust. In all matters relating to the Program, the
Adviser will act at all times in conformity with all applicable federal or state
laws and regulations.
2. The Program Materials do not and will not contain, and, in connection
with the Program the Adviser, will not otherwise make to shareholders of or
potential investors in the Trust, any untrue statement of a material fact or
omit to state any material fact necessary in order to make the statements
contained in the Program Materials or otherwise made, in the light of the
circumstances under which they were made, not misleading.
3. The Adviser will bear all costs and expenses in connection with all
matters relating to the Program. The Adviser will contribute, on a quarterly
basis, from its own revenues, a amount equal to 0.25% (25) basis point of the
average annualized aggregate net asset value of the shares owned by each
Qualified Shareholder. (as the quoted term is defined in the Program) for the
preceding quarterly period, for so long as the average annualized aggregate net
asset value of the shares owned by the Qualified Shareholder remains above $
25,000 for such period,. Contributions will be made by the Adviser in the name
of the Qualified Shareholder, according to the name specified on the
shareholder's application, to the Eligible Institution(s) designated by the
Qualified Shareholder.
4. The Program will terminate immediately upon any termination of the
Adviser's engagement as investment adviser to the Trust, and may be earlier
terminated by the Trust or the Adviser upon at least 30 days' advance written
notice by the terminating party to the other, but in either case only with the
approval of a majority of the Trustees of the Trust who are not "interested
persons" (as defined in the Investment Company Act of 1940) of any party to this
Agreement. Upon any termination of the Program for any reason whatsoever, the
Adviser will nevertheless make all donations required to be made thereunder with
respect to all periods ending on the calendar quarter-end following such
termination.
5. The Adviser will indemnify, defend and hold harmless the Trust and its
several officers and Trustees from and against any and all losses, claims,
damages or liabilities, joint or several, to which an of them may become
subject, insofar as such losses, claims damages or liabilities (or actions or
proceedings in respect hereof) arise out of, or are based upon, any breach of
this Agreement or otherwise in connection with all matters in relation to the
Program.
6. It is understood by all of the parties that the assets of the Trust, the
portfolios, and/or the shareholders' accounts shall never affected be, reduced,
or increased due to the Program, and that any and all contributions made shall
be made solely by the Adviser from its own revenues and that no such
contributions shall be made by the rust, its portfolios, or the shareholders of
the Trust.
If this letter correctly sets forth our agreement, please sign it in the
space provided below and deliver it to the Adviser at its address appearing on
the first page hereof whereupon this letter will become a legally binding
agreement between us. Thank you.
Very truly yours,
UNIFIED INVESTMENT ADVISERS, INC.
By: /s/ Timothy L. Ashburn
Timothy L Ashburn
Chairman, C.E.O.
By: __________________
Lynn E. Wood
Director
Accepted as of the date first hereinabove written:
UNIFIED FUNDS
By: __________________
Timothy L Ashburn
Chairman and President
BROWN, CUMMINS & BROWN CO., L.P.A.
ATTORNEYS AND COUNSELORS AT LAW
3500 CAREW TOWER
J.W. BROWN (1911-1995) 441 VINE STREET
JAMES R. CUMMINS CINCINNATI, OHIO 45202
ROBERT S BROWN TELEPHONE (513) 381-2121
DONALD S. MENDELSOHN TELECOPIER (513) 381-2125
LYNNE SKILKEN
AMY G. APPLEGATE OF COUNSEL
MELANIE S. CORWIN GILBERT BETTMAN
JOANN M. STRASSER
PAMELA L. KOGUT
January 27, 1998
The Unified Funds
431 North Pennsylvania Street
Indianapolis, IN 46204
Gentlemen:
This letter is in response to your request for our opinion in
connection with the filing of Post- Effective Amendment No. 9 of The Unified
Funds (the "Trust").
We have examined a copy of the Trust's Agreement and Declaration of
Trust, the Trust's ByLaws, the Trust's record of the various actions by the
Trustees thereof, and all such agreements, certificates of public officials,
certificates of officers and representatives of the Trust and others, and such
other documents, papers, statutes and authorities as we deem necessary to form
the basis of the opinion hereinafter expressed. We have assumed the genuineness
of the signatures and the conformity to original documents of the copies of such
documents supplied to us as original or photostat copies.
Based upon the foregoing, we are of the opinion that, after
registration is effective for purposes of federal and applicable state
securities laws, the share of each series of the Trust, if issued in accordance
with the then current Prospectus and Statement of Additional Information of the
Trust, will be legally issued, fully paid and non-assessable.
We herewith give you our permission to file this opinion with the
Securities and Exchange Commission as an exhibit to Post-Effective Amendment No.
9 referred to above.
Very truly yours,
BROWN, CUMMINS & BROWN CO., L.P.A.
BCB:kem
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the use in this
Post-Effective Amendment Number 9 to The Unified Funds' (formerly The Vintage
Funds) Registration Statement of all references to our firm included in or made
a part of this Post-Effective Amendment.
/s/ McCurdy & Associates CPA's, Inc.
McCurdy & Associates CPA's, Inc.
January 28, 1998
January 30, 1998
The Unified Funds
431 North Pennsylvania Street
Indianapolis, IN 46204
Gentlemen:
The undersigned hereby purchases one (1) share of each of the following
Funds: the Starwood Strategic Fund, the Laidlaw Fund, the First Lexington
Balanced Fund and the Taxable Money Market Fund at $1.00 per share, representing
a total investment of $4.00 in the shares of the series of the Unified Funds.
The undersigned hereby represents that (i) such purchase is for investment
purposes, and (ii) the undersigned has no present intention of redeeming or
selling said shares.
Unified Investment Advisers, Inc.
By: /s/ Timothy L. Ashburn
Timothy L. Ashburn, President
THE UNIFIED FUNDS
DISTRIBUTION PLAN
Pursuant to Rule 12b-1
Under the Investment Company Act of 1940
DISTRIBUTION PLAN (this "Plan"), adopted on November 20, 1997, by the
Board of Trustees of The Unified Funds, an Ohio business trust (the 'Trust"),
with respect to each class of its shares of beneficial interest (the "Shares")
set forth on the exhibits attached hereto (each a "Fund").
W I T N E S S E T H:
WHEREAS, the Trust is to be registered as an open-end management investment
company under the Investment Company Act of 1940, as amended (the "Act"); and
WHEREAS, the Trust desires to adopt a plan pursuant to Rule 12b-1 under the
Act with respect to the distribution of the Shares of each Fund, and the Trust's
Board of Trustees has determined that there is a reasonable likelihood that such
a Plan will benefit the Trust and holders of the Shares.
NOW, THEREFORE, the Fund hereby adopts this Plan in accordance with Rule
12b-1 under the Act with respect to each Fund, all on the terms and conditions
hereinafter set forth.
Section 1 This Plan will be administered by Unified Management Corporation,
as distributor of the Funds' Shares, or any successor distributor of the Fund's
Shares (the "Distributor"). In compensation for the services provided pursuant
to this Plan and the Distribution Agreement between the Trust and the
Distributor with respect to the Funds, the Trust shall pay the Distributor a
monthly fee of up to 0.10% of each Fund's average daily net assets. The
Distributor shall retain all of such fee to reimburse the Distributor for
payments made or expenses incurred for distribution of the Shares, including
those incurred in connection with preparing and distributing sales literature
and advertising, preparing, printing and distributing prospectuses and
statements of additional information used for other than regulatory purposes or
distribution to existing shareholders, implementing and operating this Plan, and
compensating third parties ("Providers") for their distribution services.
Section 2 If in any month the Distributor expends or is due more monies
than can be immediately paid under Section 1 hereof, due to the percentage
limitation noted therein, the unpaid amount shall be carried forward from month
to month while this Plan is in effect until such time, if ever, when it can be
paid in accordance with the provisions of Section I hereof. If in any month the
Distributor does not expend the entire amount then available under Section 1
hereof, and assuming that no unpaid amounts have been carried forward and remain
unpaid under Section 1 hereof, then the amount not expended shall be considered
a credit and may be drawn upon from month to month by the Distributor to permit
payment under Section 1 hereof when necessary in the future (i.e., carried
back). Notwithstanding the foregoing, however, no amounts payable or credit due
pursuant to this Plan for any fiscal year may be carried over for payment or
utilized as a credit, as the case may be, beyond the end of such year, unless
the Trust's Board of Trustees approves such action and provided, in any case,
that such action does not contravene any applicable rules or regulations of the
Securities and Exchange Commission.
Section 3 Any payments made by the Distributor to any Provider pursuant to
this Plan will be made pursuant to a "Distribution Agreement" entered into by
the Distributor on behalf of the Fund and the Provider.
Section 4 Each Fund has the right (a) to select, in its sole discretion,
the Providers to participate in the Plan and (b) to terminate without cause and
in its sole discretion any Distribution Agreement.
Section 5 Quarterly in each year that this Plan remains in effect, the
Distributor shall prepare and furnish to the Board of Trustees of the Trust, and
the Board of Trustees shall review, a written report of the amounts expended
under this Plan.
Section 6 This Plan shall become effective with respect to each Fund upon
the latest to occur of the following: (a) approval of this Plan by a majority of
the Trust's Board of Trustees, including a majority of the members of the Board
of Trustees who are not "interested persons" of the Trust and have no direct or
indirect financial interest in the operation of the Plan or in any related
documents to the Plan (the "Qualified Trustees"), cast in person at a meeting
called for the purpose of voting on this Plan; (b) the execution the Fund of an
exhibit hereto adopting this Plan; (c) the effectiveness of the registration of
the Fund's Shares under the Securities Act of 1933, as amended; and (d) the
approval of this Plan by at least a majority of the outstanding voting
securities (as defined in the Act) of the Fund.
Section 7 This Plan shall remain in effect with respect to each Fund
presently set forth on an exhibit and any subsequent Funds added pursuant to an
exhibit during the initial year of this Plan for the period of one year from the
date set forth above and may be continued thereafter if this Plan is approved
with respect to each Fund at least annually by a majority of the Board of
Trustees, including a majority of the Qualified Trustees, cast in person at a
meeting called for the purpose of voting on this Plan. If this Plan is adopted
with respect to a Fund after the first annual approval by the Trustees as
described above, this Plan will be effective as to that Fund upon execution of
the applicable exhibit pursuant to the provisions of Section 6(b) above and will
continue in effect until the next annual approval of this Plan by the Board of
Trustees and thereafter for successive periods of one year subject to approval
as described above.
Section 8. All material amendments to this Plan must be approved by a vote
of the Board of Trustees, including a majority of the Qualified Trustees, cast
in person at a meeting called for the purpose of voting on such amendment. In
addition, this Plan may not be amended to increase materially the amount payable
by any Fund hereunder such amendment is approved by vote of the holders of a
majority (as defined in the 1940 Act) of the outstanding voting securities of
such Fund.
-2-
Section 9. This Plan may be terminated with respect to any Fund at any time
by: (a) a majority vote of the Qualified Trustees; or (b) a vote of a majority
of the outstanding voting securities of such Fund.
Section 10. While this Plan shall be in effect, the selection and
nomination of Trustees who are not "interested persons" of the Trust will be
committed to the discretion of Trustees who are themselves not interested
persons of the Trust.
Section 11. All agreements with any person relating to the implementation
of this Plan shall be in writing and any agreement related to this Plan shall be
subject to termination, without penalty, pursuant to the provisions of Section 9
above.
Section 12. The Trust shall preserve copies of this Plan (including any
amendments thereto) and any related agreements and all reports made pursuant to
Section 5 hereof for a period of not less than six years after the date of this
Plan, the first two years in an easily accessible place.
Section 13. This Plan shall be construed in accordance with and governed by
the laws of the State of Indiana.
IN WITNESS WHEREOF, this Plan has been executed behalf of the Board of
Trustees as of the date first hereinabove written.
THE UNIFIED FUNDS
/s/ Timothy L. Ashburn
Timothy L Ashburn
Trustee and President
ACCEPTED:
UNIFIED MANAGEMENT CORPORATION
By /s/ Lynn E. Wood
Lynn E. Wood
President
-3-
EXHIBIT A
to
Distribution Plan
The Starwood Strategic Fund
The Laidlaw Fund
The First Lexington Balanced Fund
The Taxable Money Market Fund
This Plan is adopted by the Trust with respect to each of the above-named Funds.
In compensation for the services provided pursuant to this Plan and the
Distribution Agreement, the Distributor will be paid a monthly fee computed at
the annual rate of 0.10% of the average daily net assets of each Fund held
during the month.
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.
THE UNIFIED FUNDS
By /s/ Timothy L. Ashburn
Timothy L. Ashburn
Trustee and President
UNIFIED FUND SERVIES, INC.
By /s/ David A. Bogaert
David A. Bogaert
President
Dated: January 30, 1998
UNIFIED MANAGEMENT CORPORATION
429 NORTH PENNSYLVANIA STREET
INDIANAPOLIS, INDIANA 46204
317-634-3300
DISTRIBUTION ASSISTANCE AGREEMENT
This Agreement is made between the broker/dealer or other financial
institution executing this Agreement ("Provider") and Unified Management
Corporation ("Unified") on behalf of the Unified Funds (the "Funds"), for which
Unified administers a Distribution Plan (the "Plan") and which have approved
this form of Agreement.
Provider understands that The Vintage Funds (the "Funds") have adopted a
Distribution Plan (the "Plan") pursuant to Rule 12b-1 under the Investment
Company Act of 1940, as amended (the "Act"), with respect to one or more series
(each, a "Fund") of its shares of beneficial ownership (collectively, "Share")
for making payments to selected brokers for distribution assistance.
Provider further understands that Unified is the principal underwriter as
defined in the Investment Company Act of 1940 and from which Provider has the
right to purchase shares.
In consideration of the mutual covenants hereinafter contained, Provider
desires to enter into an Agreement with Unified for distribution assistance of
the Shares, and it is hereby agreed by and between the parties hereto as
follows:
1. Provider certifies that it is a member in good standing of the National
Association of Securities Dealers, Inc. (the "NASD") and agrees to maintain
membership in the NASD, or, in the alternative, that Provider is a foreign
broker not eligible for membership in the NASD. In either case, Provider agrees
to abide by all of the rules and regulations of the NASD which are binding upon
underwriters and brokers in the distribution of the shares of open-end
investment companies, including without limitation: Section 24 of Article III of
the Rules of Fair Practice; Rule 26 of its Rules of Fair Practice; all of which
are incorporated herein as if set forth in full. Provider further agrees to
comply with all applicable state and federal laws and the rules and regulations
of authorized regulatory agencies. Provider agrees that it will not sell, or
offer for sale, Shares in any state or jurisdiction where they are not exempt
from registration or have not been qualified for sale.
By our acceptance of this Agreement, Provider represent and certifies that
Provider is a broker-dealer registered with the Securities and Exchange
Commission. Provider's acceptance also constitutes a representation that
Provider has been duly authorized by the proper corporate action(s) to enter
into this Agreement and to perform its obligations hereunder.
2. Provider will offer and sell Shares only in accordance with the terms
and conditions of the Trust's then current Prospectus with respect thereto, and
Provider will make no representations not included in said Prospectus or in any
authorized supplemental material supplied by the Trust. Provider will use its
best effores in the development and promotion of sales of the Shares and agrees
to be responsible for the proper instruction and training of all sales personnel
employed by it, in order that the Shares will be offered in accordance with the
terms and conditions of this Agreement and all applicable laws, rules and
regulations. Provider agrees to hold the Trust and Unified harmless and
indemnify the Trust and Unified in the event that Provider, or any of its sales
representatives, should violate any law, rule or regulation, or any provisions
of this Agreement, which may result in liability to the Trust or Unified; and in
the event the Trust or Unified determines to refund any amount paid by any
investor by reason of any such violation on Provider's part, Provider shall
return to the Trust or Unified any distribution assistance payments previously
paid or allowed by the Trust or Unified to Provider with respect to the
transaction for which the refund is made. All expenses which Provider incurs in
connection with its activities under this Agreement shall be borne by the
Provider.
3. For purposes of this Agreement "Qualified Accounts" shall mean: accounts
of customers of Provider who have purchased Shares and who use Provider's
facilities to communicate with the Trust or Unified or to effect redemptions or
additional purchases of Shares and with respect to which Provider provides
shareholder and administration services, which services may include, without
limitation: answering inquiries regarding the Trust; assistance to customers in
changing dividend options, account designations and addresses; establishment and
maintenance of shareholder accounts and records; processing purchase and
redemption transactions; exchanging shares between Funds of the Trust; automatic
investment in Shares of customer account cash balance; providing periodic
statements showing a customer's account balance and the integration of such
statements with those of other transactions and balances in the customer's other
accounts serviced by Provider; arranging for bank wires; and such other
information and services as the Trust or Unified reasonable may request with
respect to the Shares, to the extent Provider is permitted by applicable
statute, rule or regulation.
4. In consideration of the services and facilities described herein,
Provider shall be entitled to receive from Unified fees based on the average
daily net assets of each Fund of the Trust for which a Plan is in effect and
representing Shares for which Provider is the broker of record, as set forth in
the Schedule hereto, provided that such fees shall not exceed those set forth in
such Plan. Provider understands that the payment of such fees has been
authorized pursuant to the related Plan approved by the Board of Trustees and
shareholders of the Trust and shall be paid only so long as the related Plan and
this Agreement are in effect.
5. The frequency of payment, the terms of any right to sell in a territory,
and any other supplemental terms, conditions or qualifications for Provider to
receive such payments are subject to change by the Trust or Unified from time to
time upon written notice. Any orders placed after the effective date of such
change shall be subject to the fee rates in effect at the time of receipt of the
payment by the Trust or Unified.
6. Provider understands and agrees that in performing its services covered by
this Agreement Provider is acting as principal, and the Trust and Unified are in
no way responsible for the manner of Provider's performance or for any of its
acts or omissions in connection therewith. Nothing in this Agreement or in any
Plan shall be construed to constitute Provider or any of its agents, employees
or representatives as the Trust's or Unified's agent, partner or employee.
7. In all sales of shares of the Fund to the public, Provider shall act as
dealer for its own account, and in no transaction shall Provider have authority
to act as agent for the Fund or for Unified Management Corporation.
8. Orders that Unified receives from Provider will be accepted only at the
net asset value applicable to each order. The minimum dollar purchase of shares
of the Fund by any person shall be the applicable minimum amount described in
the current Fund Prospectus, and no order for less than such amount will be
accepted hereunder. The procedures relating to the handling of orders shall be
subject to instructions which Unified shall communicate from time to time to
Provider. All orders are subject to acceptance or rejection by Unified in
Unified's sole discretion.
9. This Agreement shall terminate automatically (i) in the event of its
"assignment" (as defined in Section 2(a)(4) of the Act) or (ii) with respect to
a Plan, in the event such Plan is terminated.
10. This Agreement may be terminated at any time with respect to a Plan
(without payment of any penalty) by a majority of the "Qualified Trustees" (As
defined in such Plan) or by a vote of a majority of the outstanding voting
securities of the related Fund, or by Unified on 60 days' written notice to
Provider at its principal place of business. Provider may terminate this
Agreement on 60 days' written notice addressed to the Trust and Unified at
Unified's principal place of business. Without limiting the generality of the
foregoing, any provision hereof to the contrary notwithstanding, Provider's
expulsion from the NASD will automatically terminate this Agreement without
notice; and Provider's suspension from the NASD, or violation of applicable
state or federal laws or rules and regulations of authorized regulatory
agencies, will terminate this Agreement effective upon the date of mailing
notice to Provider of such termination.
11. Provider agrees to pay for Fund shares by or before the settlement date by
check or Federal wire payable to the order of the Fund, which reserves the right
to delay issuance or transfer of shares until such check has cleared. If such
payment is not received by Unified, Unified reserves the right, without notice,
forthwith either to cancel the sale, or at Unified's option, to sell the shares
ordered back to the Fund, and in either case, Provider shall be responsible for
any loss suffered by the Fund.
12. Provider agrees to purchase shares only from Unified or from Provider's
customers. If Provider purchases shares from Unified, Provider agrees that all
such purchases shall be made only: (a) to cover orders already received by
Provider from its customer, or (b) for Provider's own bona fide investment.
Provider, in turn, agrees that Provider will not purchase any securities from
the Fund except for the purpose of covering purchase orders which Provider has
already received.
13. Provider shall sell shares only: (a) to customers at the applicable net
asset value. In such a sale to Unified, Provider may act either as agent or
principal for its customer. If Provider act as principal for its own account in
purchasing shares for resale to Unified, Provider agrees to pay its customer not
less than the price which Provider receives from Unified. If Provider acts as
agent for its customer in selling shares to Unified, Provider agrees not to
charge its customer more than a fair commission for handling the transaction.
14. Settlement shall be made promptly, but in no case later than three (3)
business days after Unified's acceptance of the order. If payment is not so
received or made, the right is reserved forthwith to cancel the sale or, at
Unified's option, to resell the shares to the respective Fund, at the then
prevailing net asset value in which latter case Provider will agrees to be
responsible for any loss, resulting to such Fund or to Unified from our failure
to make payment as aforesaid.
15. The Fund reserves the right in its discretion and Unified reserves the
right in Unified's discretion, without notice, to suspend sales or withdraw the
offering of shares entirely. Unified reserves the right, without notice, to
amend, modify, or cancel this Agreement. This Agreement may not be assigned by
either party without prior written consent of the other party.
16. Provider will not offer shares of the Fund for sale in any state where they
are not qualified for sale under the Blue Sky Laws and regulations of such state
or where Provider is qualified to act as a dealer, except for states in which
they are exempt from qualification.
17. No person is authorized to make any representations concerning shares of
the Fund except those contained in the then current Fund Prospectus. In
purchasing shares from Unified, Provider shall rely solely on the
representations contained in such Prospectus. Unified will furnish additional
copies of the current Prospectus and sales literature issued by Unified in
reasonable quantities upon request.
18. Neither this Agreement nor the performance of the services hereunder shall
be considered to create a joint venture or partnership between Provider and
Unified.
19. All communications to the Trust or Unified shall be sent to Unified at
Unified's address set forth above. Any notice to Provider shall be duly given if
mailed or telegraphed to Provider at the address set forth below.
20. This Agreement shall become effective on the later of (i) the date the Plan
is adopted and becomes effective, or (ii) the date this Agreement is accepted by
Unified as indicated below. This Agreement and all the rights and obligations of
the parties hereunder shall be governed by and construed under the laws of the
State of Indiana.
IN WITNESS WHEREOF, the parties hereto have caused this agreement to be executed
by their duly authorized signatories designated below as of the date set forth
below.
Provider: ______________________________________________
Broker Dealer Tax I.D. #: ______________________________
Address: ______________________________________________
City: _________________________________________________
State: _______________________ Zip Code: ____________
Dated:_______________________
By:
- ---------------------------------------------------
Authorized Signatory
Name: ________________________________________________
Printed
Title: _____________________________________________
UNIFIED MANAGEMENT CORPORATION
429 North Pennsylvania Street
Indianapolis, Indiana 46204
By: __________________________________________________
Name: ________________________________________________
Title: _________________________________________________
By: __________________________________________________
Name: ________________________________________________
Title: _________________________________________________
<PAGE>
EXHIBIT A
to
Distribution Assistance Agreement
Funds covered by this Agreement:
The Starwood Strategic Fund
The Laidlaw Fund
The First Lexington Balanced Fund
The Taxable Money Market Fund
Distribution Assistance Fees:
1. During the term of this Agreement, the Funds will pay Provider a
monthly fee. This fee will be computed at the annual rate of 0.10% of the
average net asset value of shares of the Funds held during the month in accounts
for which the Provider provides Services under this Agreement, so long as the
average net asset value of shares in the Funds during the month equals or
exceeds such minimum amount as the Funds shall from time to time determine and
communicate in writing to the Provider.
2. For the monthly period in which the Distribution Assistance Agreement
becomes effective or terminates, there shall be an appropriate proration of any
fee payable on the basis of the number of days that the Agreement is in effect
during the month.
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS:
WHEREAS, THE UNIFIED FUNDS, a business trust organized under the laws
of the State of Ohio (hereinafter referred to as the "Trust"), periodically
files amendments to its Registration Statement with the Securities and Exchange
Commission under the provisions of the Securities Act of 1933 and the Investment
Company Act of 1940, as amended; and
WHEREAS, the undersigned is a Trustee and the President of the Trust;
NOW, THEREFORE, the undersigned hereby constitutes and appoints LYNN E.
WOOD and CAROL J. HIGHSMITH, and each of them, his attorneys for him and in his
name, place and stead, and in his office and capacity in the Trust, to execute
and file any Amendment or Amendments to the Trust's Registration Statement,
hereby giving and granting to said attorneys full power and authority to do and
perform all and every act and thing whatsoever requisite and necessary to be
done in and about the premises as fully to all intents and purposes as he might
or could do if personally present at the doing thereof, hereby ratifying and
confirming all that said attorneys may or shall lawfully do or cause to be done
by virtue hereof.
IN WITNESS WHEREOF, the undersigned has hereunto set his hand this
30th day of January, 1998.
/s/ Timothy L. Ashburn
TIMOTHY L. ASHBURN, Trustee and President
STATE OF KENTUCKY )
) ss:
COUNTY OF FAYETTE )
Before me, a Notary Public, in and for said county and state,
personally appeared TIMOTHY L. ASHBURN, known to me to be the person described
in and who executed the foregoing instrument, and who acknowledged to me that he
executed and delivered the same for the purposes therein expressed.
WITNESS my hand and official seal this _____ day of January, 1998.
Notary Public
My commission expires:
<PAGE>
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS:
WHEREAS, THE UNIFIED FUNDS, a business trust organized under the laws
of the State of Ohio (hereinafter referred to as the "Trust"), periodically
files amendments to its Registration Statement with the Securities and Exchange
Commission under the provisions of the Securities Act of 1933 and the Investment
Company Act of 1940, as amended; and
WHEREAS, the undersigned is a Trustee of the Trust;
NOW, THEREFORE, the undersigned hereby constitutes and appoints TIMOTHY
L. ASHBURN, LYNN E. WOOD and CAROL J. HIGHSMITH, and each of them, his attorneys
for him and in his name, place and stead, and in his office and capacity in the
Trust, to execute and file any Amendment or Amendments to the Trust's
Registration Statement, hereby giving and granting to said attorney full power
and authority to do and perform all and every act and thing whatsoever requisite
and necessary to be done in and about the premises as fully to all intents and
purposes as he might or could do if personally present at the doing thereof,
hereby ratifying and confirming all that said attorney may or shall lawfully do
or cause to be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned has hereunto set his hand this
12th day of January, 1998.
/s/ Daniel J. Condon
DANIEL J. CONDON, Trustee
STATE OF KENTUCKY )
) ss:
COUNTY OF Harrison )
Before me, a Notary Public, in and for said county and state,
personally appeared DANIEL J. CONDON, known to me to be the person described in
and who executed the foregoing instrument, and who acknowledged to me that he
executed and delivered the same for the purposes therein expressed.
WITNESS my hand and official seal this 12th day of January, 1998.
/s/ Layne V. McIlvain
Notary Public
My commission expires: 8/13/01
<PAGE>
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS:
WHEREAS, THE UNIFIED FUNDS, a business trust organized under the laws
of the State of Ohio (hereinafter referred to as the "Trust"), periodically
files amendments to its Registration Statement with the Securities and Exchange
Commission under the provisions of the Securities Act of 1933 and the Investment
Company Act of 1940, as amended; and
WHEREAS, the undersigned is a Trustee of the Trust;
NOW, THEREFORE, the undersigned hereby constitutes and appoints TIMOTHY
L. ASHBURN, LYNN E. WOOD and CAROL J. HIGHSMITH, and each of them, his attorney
for him and in his name, place and stead, and in his office and capacity in the
Trust, to execute and file any Amendment or Amendments to the Trust's
Registration Statement, hereby giving and granting to said attorney full power
and authority to do and perform all and every act and thing whatsoever requisite
and necessary to be done in and about the premises as fully to all intents and
purposes as she might or could do if personally present at the doing thereof,
hereby ratifying and confirming all that said attorney may or shall lawfully do
or cause to be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned has hereunto set his hand this
14th day of January, 1998.
/s/ Philip L. Conover
PHILIP L. CONOVER, Trustee
STATE OF FLORIDA )
) ss:
COUNTY OF Sarasota )
Before me, a Notary Public, in and for said county and state,
personally appeared PHILIP L. CONOVER, known to me to be the person described in
and who executed the foregoing instrument, and who acknowledged to me that he
executed and delivered the same for the purposes therein expressed.
WITNESS my hand and official seal this 14th day of January, 1998.
/s/ Kristen Rhyne
Notary Public
My commission expires: 2/16/01
<PAGE>
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS:
WHEREAS, THE UNIFIED FUNDS, a business trust organized under the laws
of the State of Ohio (hereinafter referred to as the "Trust"), periodically
files amendments to its Registration Statement with the Securities and Exchange
Commission under the provisions of the Securities Act of 1933 and the Investment
Company Act of 1940, as amended; and
WHEREAS, the undersigned is a Trustee of the Trust;
NOW, THEREFORE, the undersigned hereby constitutes and appoints TIMOHTY
L. ASHBURN, LYNN E. WOOD and CAROL J. HIGHSMITH, and each of them, his attorneys
for him and in his name, place and stead, and in his office and capacity in the
Trust, to execute and file any Amendment or Amendments to the Trust's
Registration Statement, hereby giving and granting to said attorneys full power
and authority to do and perform all and every act and thing whatsoever requisite
and necessary to be done in and about the premises as fully to all intents and
purposes as he might or could do if personally present at the doing thereof,
hereby ratifying and confirming all that said attorneys may or shall lawfully do
or cause to be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned has hereunto set his hand this
28th day of January, 1998.
/s/ David E. LaBelle
DAVID E. LaBELLE, Trustee
STATE OF TEXAS )
) ss:
COUNTY OF Dallas )
Before me, a Notary Public, in and for said county and state,
personally appeared DAVID E. LaBELLE, known to me to be the person described in
and who executed the foregoing instrument, and who acknowledged to me that he
executed and delivered the same for the purposes therein expressed.
WITNESS my hand and official seal this 28th day of January, 1998.
/s/ Jacqueline B. Wood
Notary Public
My commission expires: 10/29/98
<PAGE>
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS:
WHEREAS, THE UNIFIED FUNDS, a business trust organized under the laws
of the State of Ohio (hereinafter referred to as the "Trust"), periodically
files amendments to its Registration Statement with the Securities and Exchange
Commission under the provisions of the Securities Act of 1933 and the Investment
Company Act of 1940, as amended; and
WHEREAS, the undersigned is a Trustee of the Trust;
NOW, THEREFORE, the undersigned hereby constitutes and appoints TIMOHTY
L. ASHBURN, LYNN E. WOOD and CAROL J. HIGHSMITH, and each of them, his attorneys
for him and in his name, place and stead, and in his office and capacity in the
Trust, to execute and file any Amendment or Amendments to the Trust's
Registration Statement, hereby giving and granting to said attorneys full power
and authority to do and perform all and every act and thing whatsoever requisite
and necessary to be done in and about the premises as fully to all intents and
purposes as he might or could do if personally present at the doing thereof,
hereby ratifying and confirming all that said attorneys may or shall lawfully do
or cause to be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned has hereunto set his hand this
26th day of January, 1998.
/s/ John Hinkel
JOHN HINKEL, Trustee
STATE OF KENTUCKY )
) ss:
COUNTY OF Fayette )
Before me, a Notary Public, in and for said county and state,
personally appeared JOHN HINKEL, known to me to be the person described in and
who executed the foregoing instrument, and who acknowledged to me that he
executed and delivered the same for the purposes therein expressed.
WITNESS my hand and official seal this 26th day of January, 1998.
/s/ Sue Hughes
Notary Public
My commission expires: 3/29/00
<PAGE>
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS:
WHEREAS, THE UNIFIED FUNDS, a business trust organized under the laws
of the State of Ohio (hereinafter referred to as the "Trust"), periodically
files amendments to its Registration Statement with the Securities and Exchange
Commission under the provisions of the Securities Act of 1933 and the Investment
Company Act of 1940, as amended; and
WHEREAS, the undersigned is a Trustee of the Trust;
NOW, THEREFORE, the undersigned hereby constitutes and appoints TIMOHTY
L. ASHBURN, LYNN E. WOOD and CAROL J. HIGHSMITH, and each of them, his attorneys
for him and in his name, place and stead, and in his office and capacity in the
Trust, to execute and file any Amendment or Amendments to the Trust's
Registration Statement, hereby giving and granting to said attorneys full power
and authority to do and perform all and every act and thing whatsoever requisite
and necessary to be done in and about the premises as fully to all intents and
purposes as he might or could do if personally present at the doing thereof,
hereby ratifying and confirming all that said attorneys may or shall lawfully do
or cause to be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned has hereunto set his hand this
27th day of January, 1998.
/s/ David Bottoms
DAVID BOTTOMS, Trustee
STATE OF FLORIDA )
) ss:
COUNTY OF PALM BEACH )
Before me, a Notary Public, in and for said county and state,
personally appeared DAVID BOTTOMS, known to me to be the person described in
and who executed the foregoing instrument, and who acknowledged to me that he
executed and delivered the same for the purposes therein expressed.
WITNESS my hand and official seal this 27th day of January, 1998.
/s/ Rita M. Mahoney
Notary Public
My commission expires: 12/7/98
<PAGE>
