SCHEDULE 14A
(RULE 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE
SECURITIES EXCHANGE ACT OF 1934
Filed by the registrant [X]
Filed by a party other than the registrant [_]
Check the appropriate box:
[_] Preliminary proxy statement [_] Confidential, for Use of the
Commission Only
[X] Definitive proxy statement (as permitted by Rule 14a-6(e)(2))
[_] Definitive additional materials
[_] Soliciting material pursuant to Rule 14a-11(c) or Rule 14a-12
TRANS ADVISER FUNDS, INC.
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(Name of Registrant as Specified in Its Charter)
Joanne Doldo
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(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of filing fee (Check the appropriate box):
[X] No fee required.
[_] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and
0-11.
(1) Title of each class of securities to which transaction applies:
(2) Aggregate number of securities to which transaction applies:
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11:
(4) Proposed maximum aggregate value of transaction:
(5) Total fee paid:
[_] Fee paid previously with preliminary materials.
[_] Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the
offsetting fee was paid previously. Identify the previous filing
by registration statement number, or the form or schedule and the
date of its filing.
(1) Amount previously paid:
(2) Form, schedule or registration statement no.:
(3) Filing party:
(4) Date filed:
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TRANS ADVISER FUNDS, INC.
TWO PORTLAND SQUARE
PORTLAND, MAINE 04101
July 11, 1997
Dear Shareholder:
You are invited to attend a Special Meeting of Shareholders of Trans Adviser
Funds, Inc. ("Trans Adviser Funds") to be held at the offices of Trans
Financial, Inc., 814 Church Street, Nashville, Tennessee 37203, at [2
p.m.](Central time) on August 14, 1997.
At this meeting, you are being asked to consider and approve an Agreement and
Plan of Reorganization (the "Plan") providing for the transfer of the assets of
your fund and the four other portfolios of Trans Adviser Funds (each, a "Fund,"
collectively, the "Funds") to corresponding series of the Countrywide Group of
Mutual Funds (each, a "Countrywide Fund").
Prior to taking this action, the Board has been advised by your Fund's primary
sponsor, Trans Financial Bank, N.A. ("Trans Financial Bank"), that its parent
company, Trans Financial, Inc. had concluded that its revised business plan was
no longer consistent with its role as adviser to the Funds. However, Trans
Financial Bank has clearly expressed its strong desire that continuity of
management and investment style, potential to build the asset base, and
consistency of service to all shareholders be maintained.
In seeking alternative arrangements for the advisory role, Trans Financial Bank
recommends the Countrywide Group of Mutual Funds (the "Countrywide Group") for
its endorsement. If the reorganization is approved by shareholders of the Funds,
Countrywide Investments, Inc. ("Countrywide") will manage the portfolios of the
Intermediate Bond, Kentucky Tax-Free and Money Market Funds, as well as oversee
the investment role of Mastrapasqua & Associates, Inc. ("Mastrapasgrea &
Associates") who will remain as the sub-adviser managing the Growth/Value and
Aggressive Growth Funds.
The possibility of a transaction to reorganize your Fund into a Countrywide Fund
was first presented to the Trans Adviser Funds' Board of Directors on April 10,
1997. After reviewing alternative courses of action, the Directors recommended
that your Fund's assets be exchanged into a corresponding Countrywide Fund and
once there continue to be managed with the same investment style. The
Growth/Value and Aggressive, Growth Funds will continue to be managed by
Mastrapasqua & Associates.
The Countrywide Group, headquartered in Cincinnati, presently has a fixed
income-oriented family of funds with assets in excess of $1 billion.
Countrywide's parent company is headquartered in Pasadena, California and is a
nationally prominent originator and servicer of residential mortgages, as well
as a provider of various other financial products and services. Mastrapasqua &
Associates will continue to be headquartered in Nashville, and Trans Financial,
through its Trust Department, will continue to actively support Countrywide's
sponsorship and advisory role.
Because this transaction affects each Fund and because much of the information
required to be included in the proxy materials for each Fund is substantially
identical, we believe it is more efficient and cost-effective to prepare a
single, "combined" Proxy Statement for use by shareholders of all of the Funds.
As part of the transaction, each shareholder of your Fund will receive new
shares of the corresponding Countrywide Fund which have the same aggregate value
as the shares you own in your Fund immediately prior to the reorganization.
Details of the proposed reorganization, which is intended to be tax-free, are
described in the Proxy Statement. Please give this your prompt attention.
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Trans Adviser Funds' Board of Directors approved the Plan on May 31, 1997 and
recommend that shareholders of your Fund approve the transfer to the
corresponding Countrywide Fund. If, for any reason, the proposed reorganization
is not consummated, the Board of Directors of Trans Adviser Funds, Inc. will
have to consider other alternatives to meet the challenge of the withdrawal of
Trans Financial Bank's role as adviser. In the event the Reorganization is not
approved by shareholders of a Fund, the Board of Directors of Trans Advisor
Funds will consider what other course of action, if any, should be taken with
respect to such Fund, which could include the adoption of a plan to liquidate
such Fund. No assurances can be given as to what other alternatives may be
available other than the fact that no alternative course of action is now known
that could be more favorable to the shareholders than the Plan.
WE ASK YOU TO TAKE THE TIME TO CONSIDER THIS IMPORTANT MATTER
AND VOTE NOW. IN ORDER TO MAKE SURE THAT YOUR VOTE IS
REPRESENTED, PLEASE INDICATE YOUR VOTE ON THE ENCLOSED
CARD AND DATE, SIGN AND RETURN IT IN THE ENCLOSED ENVELOPE.
Your prompt response will ensure that your shares are counted at the meeting.
Every vote counts! If you later find that you are able to attend the meeting in
person, you may revoke your proxy at the meeting and vote in person.
We all appreciate your past support of the Trans Adviser Funds. The Board, Trans
Financial Bank and Mastrapasqua & Associates all believe that this transaction
serves your interests well and will maintain the same investment strategies, has
greater potential to build the asset base, and will deliver the same, and in
some cases, more convenient administrative services in the future. We look
forward to the next exciting chapter in the development of the Trans Adviser
Funds.
Sincerely,
Thomas A. Trantum
President
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TRANS ADVISER FUNDS, INC.
TWO PORTLAND SQUARE
PORTLAND, MAINE 04101
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD AUGUST 14, 1997
A special meeting of the shareholders of the Growth/Value Fund, the Aggressive
Growth Fund, the Intermediate Bond Fund, the Kentucky Tax-Free Fund and the
Money Market Fund (each, a "Fund" and, collectively, the "Funds"), series of
Trans Adviser Funds, Inc. ("Trans Adviser Funds") will be held at 2 p.m.
(Central time) at the offices of Trans Financial, Inc., 814 Church Street,
Nashville, Tennessee 37203 on August 14, 1997, for the purpose indicated below:
1. To approve or disapprove an Agreement and Plan of Reorganization
(the "Plan") to reorganize each Fund into a separate
newly-created series of an investment company in the Countrywide
Group of Mutual Funds (the "New Series"). A vote for approval of
this proposal will authorize your Fund, as the sole shareholder
of the corresponding New Series prior to the reorganization to
approve (a) the proposed Investment Advisory Agreement for the
New Series, (b) the proposed Distribution Plan for the shares of
the New Series and (c) with respect to the Growth/Value and
Aggressive Growth Funds, the proposed Sub-Advisory Agreement for
the New Series.
In addition, to transact such other business as may properly come
before the meeting or any adjournment thereof.
Shareholders of record as of the close of business on July 3,
1997 are entitled to receive notice of, and to vote at, the meeting and any and
all adjournments thereof. Your attention is called to the accompanying Proxy
Statement.
BY ORDER OF THE BOARD OF DIRECTORS
MAX BERUEFFY
SECRETARY
July 11, 1997
YOU CAN HELP AVOID THE NECESSITY AND EXPENSE OF SENDING FOLLOW-UP LETTERS TO
ENSURE A QUORUM BY PROMPTLY RETURNING THE ENCLOSED PROXY. IF YOU ARE UNABLE TO
ATTEND THE MEETING, PLEASE MARK, SIGN, DATE AND RETURN THE ENCLOSED PROXY SO
THAT THE NECESSARY QUORUM MAY BE REPRESENTED AT THE MEETING. THE ENCLOSED
ENVELOPE REQUIRES NO POSTAGE IF MAILED IN THE UNITED STATES.
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TRANS ADVISER FUNDS, INC.
TWO PORTLAND SQUARE
PORTLAND, MAINE 04101
PROXY STATEMENT
The enclosed proxy is solicited by the Board of Directors of TRANS ADVISER
FUNDS, INC. ( "Trans Adviser Funds") on behalf of the Growth/Value Fund, the
Aggressive Growth Fund, the Intermediate Bond Fund, the Kentucky Tax-Free Fund
and the Money Market Fund (each, a "Fund" and, collectively, the "Funds"). Trans
Adviser Funds is a registered open-end investment company having its executive
offices at Two Portland Square, Portland, Maine 04101. The proxy is revocable at
any time before it is voted by sending written notice of the revocation to Trans
Adviser Funds or by appearing personally at the August 14, 1997 special meeting
of shareholders (the "Meeting").
A copy of each Fund's Annual Report (which contains information
pertaining to the Fund) may be obtained, without charge, by calling the Fund's
Transfer Agent, Forum Financial Corp., Two Portland Square, Portland, Maine
04112, at (207) 879-0001.
This combined Proxy Statement and notice of meeting and proxy card are
first being mailed to shareholders on or about July 11, 1997.
INTRODUCTION
The Meeting is being called to approve or disapprove the reorganization
of each Fund into a corresponding new series (each, a "New Series") of an
investment company in the Countrywide Group of Mutual Funds (the "Proposal") and
to transact such other business as may properly come before the Meeting or any
adjournment thereof.
DESCRIPTION OF VOTING
Approval of the Proposal requires the vote of a majority of the
outstanding shares of common stock of a Fund.
Shareholders of record at the close of business on July 3, 1997 (the
"Record Date"), will be entitled to notice of and to vote at the Meeting,
including any adjournment thereof. As of the Record Date, the Funds had the
number of shares of common stock ("Shares") outstanding set forth below, each
Share being entitled to one vote:
Total Shares
Fund Outstanding
---- -----------
Growth/Value Fund 1,653,077.565
Aggressive Growth Fund 844,849.016
Intermediate Bond Fund 1,614,300.039
Kentucky Tax-Free Fund 914,068.380
Money Market Fund 107,857,769.640
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Each shareholder will be entitled to one vote for each Share and a
fractional vote for each fractional Share held. Shareholders holding one-third
of the outstanding Shares of a Fund at the close of business on the Record Date
present in person or by proxy will constitute a quorum for the transaction of
business with respect to the Fund at the Meeting.
For purposes of determining the presence of a quorum and counting votes
on the matters presented, Shares represented by abstentions and "broker
non-votes" will be counted as present, but not as votes cast, at the Meeting.
Under the Investment Company Act of 1940 (the " 1940 Act"), the affirmative vote
necessary to approve a matter under consideration may be determined with
reference to a percentage of votes present at the Meeting. For this reason,
abstentions and non-votes have the effect of votes against the proposal.
Any proxy which is properly executed and returned in time to be voted
at the Meeting will be counted in determining whether a quorum is present with
respect to a Fund and will be voted as marked. In the absence of any
instructions, such proxy will be voted to approve the Proposal. If a quorum is
not present at the Meeting with respect to a Fund, or if a quorum is present but
sufficient votes to approve the Proposal are not received, the persons named as
proxies may propose one or more adjournments of the Meeting to permit further
solicitation of proxies. In determining whether to adjourn the Meeting, the
following factors may be considered: the nature of the Proposal that is the
subject of the Meeting, the percentage of votes actually cast, the percentage of
negative votes actually cast, the nature of any further solicitation and the
information to be provided to shareholders with respect to the reasons for the
solicitation. Any adjournment will require the affirmative vote of a majority of
those Shares of a Fund represented at the Meeting in person or by proxy. A
shareholder vote may be taken for the Proposal in this proxy statement prior to
any adjournment if sufficient votes have been received for approval. If a
shareholder abstains from voting as to any matter, then the Shares held by such
shareholder shall be deemed present at the Meeting for purposes of determining a
quorum and for purposes of calculating the vote with respect to such matter, but
shall not be deemed to have been voted in favor of such matter. A shareholder
may revoke his or her proxy at any time prior to its exercise by delivering
written notice of revocation or by executing and delivering a later dated proxy
to the address set forth on the cover page of this Proxy Statement, or by
attending and voting at the Meeting.
The cost of preparing and mailing proxy materials will be borne by
Countrywide Investments, Inc. ("Countrywide Investments"). Proxy solicitations
will be made primarily by mail, but may also be made by telephone, facsimile or
personal interview conducted by certain officers or employees of Trans Adviser
Funds, Countrywide Investments or the Funds' investment adviser.
If the Proposal is approved, it is anticipated that it will become
effective as soon as practical thereafter, and in any event by August 28, 1997.
MATTERS TO BE ACTED ON
PROPOSAL 1
APPROVAL OR DISAPPROVAL OF THE REORGANIZATION
The Board of Directors of Trans Adviser Funds has approved an Agreement
and Plan of Reorganization (the "Plan") which provides for the reorganization
(the "Reorganization") of the Growth/Value Fund into the Growth/Value Fund
Series (the "Growth/Value Series") of Countrywide Strategic Trust, the
Aggressive Growth Fund into the Aggressive Growth Fund Series (the "Aggressive
Growth Series") of Countrywide Strategic Trust, the Intermediate Bond Fund into
the Intermediate Bond Fund Series (the "Intermediate Bond Series") of
Countrywide Investment Trust, the Kentucky Tax-Free Fund into the Kentucky
Tax-Free Fund Series (the "Kentucky Tax-Free Series") of Countrywide Tax-Free
Trust and the Money Market Fund into the Money Market Fund Series (the "Money
Market Series") of Countrywide Investment Trust (the "New Series"). Countrywide
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Strategic Trust, Countrywide Tax-Free Trust and Countrywide Investment Trust are
referred to individually in this proxy statement as a "Countrywide Fund" and
collectively as the "Countrywide Funds." The New Series do not currently have
any assets; they are shell funds which are being registered as series of the
respective Countrywide Fund for the sole purpose of receiving the assets of the
corresponding Funds. Each New Series has the same investment objectives,
policies and restrictions as its corresponding Fund. However, each New Series
will have a different investment adviser, distributor and transfer agent from
its corresponding Fund. Each New Series also differs from its corresponding Fund
in that each New Series is a series of a Countrywide Fund, each of which is a
Massachusetts business trust, whereas Trans Adviser Funds is a Maryland
Corporation. In addition, the Countrywide Funds each have a Board of Trustees
which is different from the Board of Directors of Trans Adviser Funds.
Each New Series has been organized and registered for the purpose of
continuing the investment operations of its corresponding Fund. Because of the
continuation of investment operations, and to avoid the need to call another
shareholders' meeting after a Reorganization, shareholders of each Fund are also
being asked to authorize the Fund, as the sole shareholder of the New Series
prior to the Reorganization, to approve the proposed Investment Advisory
Agreement for the New Series, the proposed Distribution Plan for the New Series
and, with respect to the Growth/Value and Aggressive Growth Funds, the proposed
Sub-Advisory Agreement for the New Series. A vote in favor of the Reorganization
is also a vote to authorize the relevant Fund to take such actions. In the event
the Reorganization is not approved by shareholders of a Fund, the Board of
Directors of Trans Advisor Funds will consider what other course of action, if
any, should be taken with respect to such Fund, which could include the adoption
of a plan to liquidate such Fund.
NO COMMISSIONS, SALES LOADS OR OTHER SIMILAR CHARGES WILL BE INCURRED
BY SHAREHOLDERS OF A FUND IN CONNECTION WITH THE REORGANIZATION.
BACKGROUND
Trans Financial, Inc., the parent of Trans Financial Bank, N.A. ("Trans
Financial"), adviser to the Funds, in the course of a review of its business,
concluded that the Funds' asset growth has been more modest than initially
envisioned and that the anticipated prospects for its future growth are limited
should Trans Financial continue to manage the assets of the Funds. Moreover,
Trans Financial, Inc. has made a decision to invest its capital resources in its
core bank-related business rather than investing in the expansion of mutual fund
assets managed by Trans Financial. Therefore, Trans Financial, Inc. sought
alternative arrangements for the management of its mutual funds. Because
managing a mutual fund's investment portfolio in an efficient and cost effective
manner can be better achieved by managing assets significantly in excess of the
amount of assets currently in each Fund's investment portfolio, Trans Financial
is proposing that each Fund be merged into a corresponding New Series of a
Countrywide Fund, which may become economically more viable because of a greater
asset potential. The Reorganization would result in Countrywide Investments
assuming management of the assets of the Funds. In addition, following the
Reorganization, Trans Financial or its affiliates have agreed to provide certain
services to shareholders of the New Series for which Trans Financial or its
affiliates will receive fees paid by Countrywide Investments. Countrywide
Investments may seek reimbursement of such amounts from the applicable New
Series pursuant to its plan of distribution under Rule 12b-1. See
"Distribution."
CONSIDERATIONS OF THE BOARD OF DIRECTORS
At the regular quarterly meeting of the Board of Directors of Trans
Adviser Funds held on April 10, 1997, Trans Financial apprised the Directors of
Trans Financial, Inc.'s plan to seek alternative arrangements for the management
of the Funds. Trans Financial informed the Directors that it had solicited
various proposals with respect to management of the Funds and recommended that
the Directors approve, and recommend to the Funds' shareholders that they
approve, the Reorganization in accordance with the terms of the Plan. The Board
of Directors held a special meeting on May 21, 1997 at which it considered, but
took no action with respect to, the Reorganization and the Plan. At another
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special meeting of the Board of Directors held on May 31, 1997, the Directors
determined that the Reorganization would not result in dilution of the interests
of, and would be in the best interest of, the shareholders of each Fund.
Accordingly, the Directors unanimously approved, and resolved to recommend to
the shareholders of the Funds that they approve, the Reorganization and the
Plan. The Directors present at the May 31, 1997 special meeting constituted a
majority of all of the Directors and a majority of those Directors who are not
"interested persons" of Trans Financial or the Funds, within the meaning of the
1940 Act (the "Independent Directors").
The Independent Directors retained special counsel, who did not
represent Trans Financial or Countrywide Financial Services, Inc. ("Countrywide
Financial") and/or its subsidiaries, to advise them with respect to their
responsibilities under state and federal law and to assist them in evaluating
the Reorganization and the Plan. In addition to their attendance at the Board of
Directors' meetings held on April 10, May 21 and May 31, the Independent
Directors met separately with their counsel on April 30, May 14, May 19, and May
29, 1997 to consider the Reorganization. In conducting their evaluation, the
Independent Directors reviewed and discussed various materials provided by Trans
Financial and Countrywide Financial at the request of the Independent Directors.
Included among these materials were: (i) data concerning historical
performance of the existing series of the Countrywide Funds; (ii) comparative
information with respect to expenses of the New Series, presented on a pro forma
basis, and other mutual funds with similar investment objectives to those of the
Funds; (iii) competitive proposals obtained by Trans Financial with respect to
management of the Funds and an analysis of the factors considered by Trans
Financial in reaching its decision to recommend the Reorganization to the Board
of Directors; (iv) biographical information concerning directors and officers of
Countrywide Financial and Countrywide Investments, the Trustees of the
Countrywide Funds, and the portfolio managers for the New Series; (v) forms of
proposed investment advisory agreements, distribution plans, and related
agreements to be adopted by the New Series and a comparison of such agreements
and plans with those currently in effect for the Funds; (vi) information
concerning marketing capabilities of Countrywide Financial; (vii) a description
of the compliance and supervisory procedures used by Countrywide Investments;
(viii) the Code of Ethics adopted by the Countrywide Funds; (ix) a description
of Countrywide Financial's brokerage allocation and soft dollar practices; (x)
financial statements of Countrywide Investments; and (xi) information concerning
the personnel and operations of Countrywide Financial and its subsidiaries.
The Directors considered various factors in reaching their decision to
approve, and to recommend to the shareholders of the Funds that they approve,
the Reorganization and the Plan. Countrywide Financial's ability to promote the
New Series to a large marketing base, particularly through the mortgage lending
operations of its parent, Countrywide Credit Industries, Inc., is expected to
enhance the asset growth potential of the Funds. The Directors anticipate that
such growth will result in economies of scale that will benefit the shareholders
in the form of lower expense ratios.
The Directors also considered that the Reorganization will be
accomplished by transferring the assets of each Fund to a corresponding New
Series having the same investment policies and objectives as those of such Fund.
The Directors further considered that Countrywide Investments will retain
Mastrapasqua & Associates, Inc. to provide sub-advisory services to the
Growth/Value and Aggressive Growth Series, thereby affording shareholders
continuity of management with respect to such portfolios.
The Directors considered that there will be no sales charge imposed in
effecting the Reorganization. In addition, by keeping the Funds together within
the same family of funds, shareholders will benefit from the ability to make
exchanges among the Funds without incurring sales charges. Also considered was
the fact that the Reorganization is intended to qualify as a tax-free exchange.
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The Directors compared the actual expense structures of the Funds for
the most recent fiscal year to pro forma expense structures, calculated as if
agreements pursuant to the Reorganization had been in effect for the same
period. Actual total expense ratios were 1.95% for each of the Growth/Value and
Aggressive Growth Funds, .68% for the Intermediate Bond Fund, .82% for the
Kentucky Tax-Free Fund, and .65% for the Money Market Fund. Had agreements
pursuant to the Reorganization been in effect, total expense ratios would have
been 1.66% for the Growth/Value fund, 1.95% for the Aggressive Growth Fund, .95%
for the Intermediate Bond Fund, .82% for the Kentucky Tax-Free Fund, and .80%
for the Money Market Fund. The Directors noted that actual expense ratios were
equal to pro forma expense ratios for the Aggressive Growth and Kentucky
Tax-Free Funds, actual expense ratios were greater than pro forma expense ratios
for the Growth/Value Fund, and actual expense ratios were lower than pro forma
expense ratios for the Intermediate Bond and Money Market Funds.
The Directors further considered the effect on the expense structures
of voluntary fee waivers. Absent Trans Financial's voluntary waiver of certain
fees and expenses and reimbursement of certain expenses, total expense ratios
for the most recent fiscal year would have been 2.83% for the Growth/Value Fund,
5.05% for the Aggressive Growth Fund, 2.04% for the Intermediate Bond Fund,
1.65% for the Kentucky Tax-Free Fund, and .99% for the Money Market Fund.
Assuming that (i) agreements pursuant to the Reorganization had been in effect
for the most recent fiscal year, (ii) there had been no waiver of fees and
expenses, and (iii) the maximum amount of 12b-1 fees had been paid by the Funds
pursuant to a distribution plan (i.e., .35% of average net assets with respect
to the Intermediate Bond and Money Market Funds and .25% with respect to each
other Fund), expense ratios calculated on a pro forma basis would have been
1.66% for the Growth/Value Fund, 2.11% for the Aggressive Growth Fund, 1.55% for
the Intermediate Bond Fund, 1.52% for the Kentucky Tax-Free Fund, and .98% for
the Money Market Fund. The Directors noted that, when fee waivers are
eliminated, each Fund's pro forma expense ratio is lower under the
Reorganization than under the current structure.
The Directors reviewed the investment advisory fees currently charged
by Trans Financial and the fees that Countrywide Investments will charge
following the Reorganization. The Directors considered that Countrywide
Investments' fees are structured on a tiered basis, i.e., that as a New Series'
asset size increases, the percentage of assets paid as advisory fees will
decrease at specified breakpoints. The Directors noted that the highest
percentage fee in Countrywide Investments' tiered structure is greater than the
flat percentage rate fee charged by Trans Financial with respect to the Money
Market, the Intermediate Bond, and the Kentucky Tax-Free Funds. However, the
Directors considered that as a Fund's asset size increases, except for the Money
Market Fund, each Fund potentially will pay lower investment advisory fees under
Countrywide Investments' fee structure than under Trans Financial's fee
arrangement. The Directors also considered that certain shareholder servicing
fees that are currently paid directly by the Funds will be paid by Countrywide
Investments from its advisory fees.
Another factor considered by the Directors was Countrywide Investments'
undertaking to waive fees and/or reimburse expenses so that the New Series'
annual expense ratios for a period of two years following the Reorganization
will not exceed 1.95% for the Growth/Value and Aggressive Growth Series, .95%
for the Intermediate Bond Series, .82% for the Kentucky Tax-Free Series, and
.80% for the Money Market Series. Trans Financial has not been contractually
obligated to waive fees or reimburse expenses and if it chose not to do so, the
impact on expense ratios would adversely affect the shareholders.
Among the other factors considered by the Directors were that: (i)
Countrywide Investments agreed to pay expenses associated with the
Reorganization; and (ii) Trans Financial will continue to provide certain
services to shareholders following completion of the Reorganization, thus
assuring continuity for the shareholders in their dealings with the Funds.
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DESCRIPTION OF THE NEW SERIES
The New Series are series of the Countrywide Funds, investment
companies that are managed and distributed by Countrywide Investments. Each of
the Countrywide Funds is a Massachusetts business trust. Countrywide Strategic
Trust was organized on November 18, 1982 and currently offers four series of
shares. Countrywide Investment Trust was organized on December 7, 1980 and
currently offers five series of shares. Countrywide Tax-Free Trust was organized
on April 13, 1981 and currently offers six series of shares.
Each share of a series of a Countrywide Fund 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 the income belonging to the series as are declared by the
Board of Trustees (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 the 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 a Countrywide Fund 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.
Generally, the Trustees allocate such expenses on the basis of relative net
assets or number of shareholders. No shareholder is liable to further calls or
to assessment by a Countrywide Fund without his express consent. The Trustees
may classify and reclassify the shares of a series into additional classes of
shares at a future date.
Under Massachusetts law, under certain circumstances, shareholders of a
Massachusetts business trust could be deemed to have the same type of personal
liability for the obligations of a Countrywide Fund as does a partner of a
partnership. However, numerous investment companies registered under the 1940
Act have been formed as Massachusetts business trusts and the Countrywide Funds
are not aware of an instance where such result has occurred. In addition, the
Trust Agreement of each Countrywide Fund disclaims shareholder liability for
acts or obligations of the Countrywide Fund and requires that notice of such
disclaimer be given in each agreement, obligation or instrument entered into or
executed by the Countrywide Fund or the Trustees. Each Trust Agreement also
provides for the indemnification out of the Countrywide Fund property for all
losses and expenses of any shareholder held personally liable for the
obligations of the Countrywide Fund. Moreover, it provides that the Countrywide
Fund will, upon request, assume the defense of any claim made against any
shareholder for any act or obligation of the Countrywide Fund and satisfy any
judgment thereon. As a result, and particularly because the Countrywide Fund
assets are readily marketable and ordinarily substantially exceed liabilities,
management of the Countrywide Funds believes that the risk of shareholder
liability is slight and limited to circumstances in which the Countrywide Fund
itself would be unable to meet its obligations. Management of the Countrywide
Funds believes that, in view of the above, the risk of personal liability is
remote.
SHAREHOLDERS' RIGHTS
The operations of the Funds are governed by Trans Adviser Funds'
Articles of Amendment and Restatement ("Articles"), By-Laws and applicable
Maryland law. The operations of each Countrywide Fund are governed by its
respective Declaration of Trust, By-laws and applicable Massachusetts law.
Trans Adviser Funds' Articles provide for the issuance of two billion
shares of common stock, $.001 par value. In comparison, each Countrywide Fund's
Declaration of Trust provides for the issuance of an unlimited number of shares
of beneficial interest, no par value. The Articles and the Declaration of Trust
each provide for the creation of additional series and classes.
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Shares of the Funds have no subscription, preemptive, conversion or
exchange rights. Shares of the Countrywide Funds have no preemptive or
conversion rights. With respect to all shares, voting rights are not cumulative.
Neither the Funds nor the Countrywide Funds intend to hold annual
meetings of shareholders. Such meetings may be called, however, at the
discretion of their respective boards, and if requested to do so by the holders
of at least 10% of the outstanding shares of a fund, a special meeting of
shareholders will be called for the purpose of voting upon the removal of a
director or trustee.
INVESTMENT ADVISERS
Currently, Trans Financial provides the overall management necessary
for the Funds' operations and oversees the investment of their assets pursuant
to an Advisory Agreement. Trans Financial is a subsidiary of Trans Financial,
Inc. which is a full service financial services provider with approximately $625
million in assets under management as of July 7, 1997.
In managing the Funds and overseeing the investment of their assets,
Trans Financial is subject at all times to the supervision of Trans Adviser
Funds' Board of Directors. Trans Financial also furnishes or procures on behalf
of each Fund all services necessary for the proper conduct of the Fund's
business and administration. In addition to the foregoing, Trans Financial
selects, monitors and evaluates each Fund's sub-adviser. Trans Financial,
through its Fixed-Income Investment Management Group, has primary responsibility
for managing the Intermediate Bond Fund, the Kentucky Tax-Free Fund and the
Money Market Fund.
Under the terms of the Advisory Agreement, each Fund pays all of its
expenses, including, but not limited to, the costs incurred in connection with
the registration and maintenance of registration of the Fund and its shares with
the Securities and Exchange Commission and various states and other
jurisdictions, printing and mailing prospectuses and statements of additional
information to shareholders, transfer taxes on the sales of portfolio
securities, brokerage commissions, custodial and transfer charges, legal and
auditing expenses, certain insurance premiums, out of pocket expenses of the
custodian, transfer agent and fund accountants, preparation of shareholder
reports, directors' fees and expenses of director and shareholder meetings.
For the services it provides under the terms of the Advisory Agreement,
Trans Financial receives a monthly fee of .20% per annum of the Money Market
Fund's average daily net assets, 1.00% per annum of each of the Growth/Value and
Aggressive Growth Funds' average daily net assets and .40% per annum of each of
the Intermediate Bond and Kentucky Tax-Free Funds' average daily net assets.
Trans Financial may, from time to time, voluntarily agree to defer or waive fees
or absorb some or all of the expenses of a Fund.
Trans Financial has retained Mastrapasqua & Associates, Inc., 814
Church Street, Nashville, Tennessee 37203 ("M&A") to provide sub-advisory
services pursuant to a Sub-Advisory Agreement. M&A is a registered investment
adviser formed in March 1993. Its core business is portfolio management for
institutions, individuals and business owners, including Trans Financial. M&A
currently manages over $400 million in assets. M&A shares primary responsibility
for managing the Growth/Value and the Aggressive Growth Funds with Trans
Financial and provides Trans Financial with economic forecasts and strategic
analysis for the Intermediate Bond, the Kentucky Tax-Free and the Money Market
Funds. For its services, M&A is paid fees by Trans Financial, calculated daily
and paid monthly, at an annual rate of .50% on the first $100 million of the
Growth/Value and Aggressive Growth Funds' combined average daily net assets plus
.25% of such Funds' combined average daily net assets in excess of $100 million
and .03% of the Kentucky Tax-Free, the Intermediate Bond and the Money Market
Funds' average daily net assets. For the fiscal year ended August 31, 1996,
Trans Financial paid M&A sub-advisory fees of $40,980, $15,589, $2,886, $4,729
and $14,957, respectively, for the Growth/Value Fund, the Aggressive Growth
Fund, the Intermediate Bond Fund, the Kentucky Tax-Free Fund and the Money
Market Fund, respectively.
-7-
<PAGE>
If the Reorganization is approved, Countrywide Investments, 312 Walnut
Street, Cincinnati, Ohio 45202 will manage the investments and business affairs
of each New Series. Countrywide Investments, which was organized in 1974, is an
indirect wholly-owned subsidiary of Countrywide Credit Industries, Inc., a New
York Stock Exchange listed company principally engaged in the business of
residential mortgage lending and mortgage servicing. Under new investment
advisory agreements, the Growth/Value and the Aggressive Growth Series will each
pay Countrywide Investments a fee, computed and accrued daily and paid monthly,
of 1.00% of each series' average daily net assets up to $50 million, .90% of
such assets from $50 million to $100 million, .80% of such assets from $100
million to $200 million and .75% of such assets in excess of $200 million. With
respect to the currently existing series of Countrywide Strategic Trust,
Countrywide Investments is paid a fee of .75% of each series' average daily net
assets up to $200 million, .70% of such assets from $200 million to $500 million
and .50% of such assets in excess of $500 million. The Kentucky Tax-Free Series
will pay Countrywide Investments a fee of .50% of its average daily net assets
up to $100 million, .45% of such assets from $200 million to $300 million and
.375% of such assets in excess of $300 million. The Intermediate Bond and Money
Market Series will each pay Countrywide Investments a fee of .50% of its average
daily net assets up to $50 million, .45% of such assets from $100 million to
$200 million, .40% of such assets from $50 million to $150 million, .40% of such
assets from $150 million to $250 million and .375% of such assets in excess of
$250 million. The total fees paid by a series during the first and second halves
of each fiscal year of a Countrywide Fund may not exceed the semiannual total of
the daily fee accruals requested by Countrywide Investments during the
applicable six month period. Other series of Countrywide Tax-Free Trust and
Countrywide Investment Trust currently pay fees identical to those set forth
with respect to the New Series. If the Reorganization is approved, M&A will
enter into sub-advisory agreements with Countrywide Investments on behalf of the
Growth/Value and the Aggressive Growth Series. Under each sub-advisory
agreement, M&A will earn a fee equal to the annual rate of .60% of the average
value of the daily net assets of the New Series up to and including $50 million,
.50% of the next $50 million of such assets, .40% of the next $100 million of
such assets, and .35% of such assets in excess of $200 million.
The table below sets forth the advisory fees earned by Trans Financial
and the amount of fees voluntarily waived during the fiscal year ended August
31, 1996, and the fees that would have been earned had the proposed new advisory
agreement been in place ("pro forma fees"):
<TABLE>
<CAPTION>
Actual Fees
Fund Fees Earned Amount Waived Pro Forma Fees % Change
<S> <C> <C> <C> <C>
Aggressive Growth Fund $31,177 $31,177 $31,177 0
Growth/Value Fund 81,961 34,323 81,961 0
Intermediate Bond Fund 38,478 38,478 43,288 25
Kentucky Tax-Free Growth Fund 63,051 63,051 78,814 25
Money Market Fund 99,711 93,026 249,277 250
</TABLE>
*Pro Forma Fees do not reflect waivers. See "Comparison of Fees & Expenses"
below, for a discussion of waivers.
Each New Series is responsible for the payment of all operating
expenses, including fees and expenses in connection with membership in
investment company organizations, brokerage fees and commissions, legal,
auditing and accounting expenses, expenses of registering shares under federal
and state securities laws, expenses related to the distribution of its shares
(see "Distribution"), insurance expenses, taxes or governmental fees, fees and
expenses of the custodian, transfer agent and accounting and pricing agent of
the New Series, fees and expenses of members of the Board of Trustees who are
not interested persons of the respective Countrywide Fund, the cost of preparing
and distributing prospectuses, statements, reports and other documents to
shareholders, expenses of shareholders' meetings and proxy solicitations, and
such extraordinary or non-recurring expenses as may arise, including litigation
to which the New Series may be a party and indemnification of the respective
-8-
<PAGE>
Countrywide Fund's officers and Trustees with respect thereto. In addition,
under the Plan, each Countrywide Fund has agreed to, under certain conditions
described in the Plan, indemnify and advance expenses to each person who at the
time of execution of the Plan serves as a Director, advisory Director or officer
of Trans Adviser Funds.
Each new investment advisory agreement will remain in effect until
February 28, 1999 and will continue in effect thereafter only if its continuance
is specifically approved at least annually by the Trustees of the applicable
Countrywide Fund or by the shareholders, and in either case by a majority of the
Trustees of the applicable Countrywide Fund who are not parties to an agreement
or interested persons of any such party, at a meeting called for the purpose of
voting on an agreement.
Countrywide Investments is a wholly-owned subsidiary of Countrywide
Financial, which is a wholly-owned subsidiary of Countrywide Credit Industries,
Inc. The directors of Countrywide Investments and Countrywide Financial are:
Angelo R. Mozilo, Andrew S. Bielanski, Thomas H. Boone, Marshall M. Gates,
Robert H. Leshner and David Sambol. The address of each director, except for
Robert H. Leshner, is 4500 Park Granada, Calabasas, California 91302. The
executive officers of Countrywide Financial are: Angelo R. Mozilo, Chairman,
Robert H. Leshner, President and Chief Executive Officer, Robert G. Dorsey, Vice
President - Finance and Treasurer, Maryellen Peretzky, Vice
President-Administration, Human Resources and Operations and John F. Splain,
Secretary and General Counsel. The executive officers of Countrywide Investments
are: Angelo R. Mozilo, Chairman, Robert H. Leshner, President and Chief
Executive Officer, John J. Goetz, Vice President and Chief Investment Officer,
Maryellen Peretzky, Vice President-Administration, Human Resources and
Operations, Robert G. Dorsey, Treasurer, John F. Splain, Secretary and General
Counsel, Susan Flischel, Vice President-Investments, and Sharon Karp, Vice
President-Marketing. The address of Countrywide Investments and of each
principal executive officer, except for Angelo R. Mozilo, is 312 Walnut Street,
Cincinnati, Ohio 45202.
SHAREHOLDER SERVICING PLAN. Currently, Forum Financial Services, Inc.
("Forum") acts as distributor of each Fund's shares. Each Fund has adopted a
shareholder servicing plan under which shareholder services are provided to it
pursuant to agreements between Forum and various shareholder servicing agents.
The annual limitation for payments under the plan is .25% of a Fund's average
daily net assets.
DISTRIBUTION. If the Reorganization is approved by shareholders,
Countrywide Investments will be principal underwriter of each New Series' shares
and, as such, will be the exclusive agent for distribution of each New Series'
shares. Pursuant to Rule 12b-1 under the 1940 Act, each New Series will adopt a
plan of distribution under which the New Series may directly incur or reimburse
Countrywide Investments for certain distribution related expenses, including,
but not limited to, payments to securities dealers and others who are engaged in
the sale of the New Series' shares and who may be advising investors regarding
the purchase, sale or retention of New Series shares. The annual limitation for
payment of expenses is .25% (.35% with respect to the Money Market Series and
the Intermediate Bond Series) of the New Series' average daily net assets. Each
plan of distribution permits the New Series to reimburse Countrywide Investments
for payments made to Trans Financial for support services to its clients who may
from time to time beneficially own shares of a New Series.
Trans Financial has agreed to provide support services to each New
Series and its shareholders, which services may include, without limitation:
answering customer inquiries regarding account status and history, the manner in
which purchases and redemptions of shares of a New Series may be effected and
certain other matters pertaining to the New Series; (ii) assisting shareholders
in designating and changing dividend options, account designations and
addresses; (iii) providing necessary personnel and facilities to establish and
maintain shareholder accounts and records; (iv) assisting in processing purchase
and redemption transactions; (v) arranging for the wiring of monies; (vi)
transmitting and receiving monies in connection with customer orders to purchase
or redeem shares; (vii) verifying and guaranteeing shareholder signatures in
connection with redemption orders and transfers and changes in
shareholder-designated accounts; (viii) furnishing (either separately or on an
integrated basis with other reports sent to a shareholder servicing agent)
monthly and year-end statements and confirmations from the New Series to its
shareholders; (ix) transmitting, on behalf of the New Series, proxy statements,
annual reports, updating prospectuses and other communications from the New
Series to its shareholders; and (x) providing such other related services as the
New Series or a shareholder may request.
-9-
<PAGE>
Countrywide Investments will compensate Trans Financial with a
quarterly fee based upon the average daily value of the shareholder accounts for
which Trans Financial provides the foregoing services. With respect to each New
Series, the fee is calculated at the annual rate of .30% of the first $100
million of the value of such accounts, .35% of the next $100 million, and .40%
of the value of such accounts in excess of $200 million. The servicing fee will
be paid indefinitely, i.e., for as long as the accounts for which Trans
Financial provides services are maintained. Although Countrywide Investments
will make these payments to Trans Financial, it may seek reimbursement of such
amounts from the applicable New Series pursuant to its plan of distribution
under Rule 12b- 1, subject to regular review and approval by the Trustees of the
applicable Countrywide Fund, and provided further that (i) such reimbursements,
and all other payments under a New Series' plan of distribution during any
fiscal year do not exceed the maximum allowable expenditures under the plan, and
(ii) that total operating expenses of the New Series do not exceed the expense
ratio guaranteed by Countrywide Investments. See "Comparison of Fees and
Expenses."
Each new distribution plan provides that it will remain in effect for
one year from the date of its adoption and thereafter may continue in effect for
successive annual periods provided it is approved by the shareholders or by the
relevant Trustees, including a majority of Trustees who are not interested
persons of the Countrywide Fund and who have no direct or indirect interest in
the operation of the new distribution plan or in any agreement related to the
new distribution plan. Each new distribution plan further provides that it may
not be amended to increase materially the costs which may be borne by the New
Series for distribution pursuant to the plan without shareholder approval and
that other material amendments of the new distribution plan must be approved by
the Trustees in the manner described above. Each new distribution plan may be
terminated at any time by a vote of the relevant Trustees or, with respect to
the New Series, by the New Series' shareholders.
ADMINISTRATION
Currently, Forum supervises the administration of all aspects of each
Fund's operations. Forum receives a fee from each Fund computed daily and paid
monthly at an annual rate of .15% of the average daily net assets of the Fund,
subject to an annual minimum fee of $25,000.
If the Reorganization is approved by shareholders, Countrywide Fund
Services, Inc., an indirect wholly-owned subsidiary of Countrywide Credit
Industries, Inc., will provide administrative services to the New Series.
Countrywide Investments (not the New Series) will pay Countrywide Fund Services,
Inc. a fee equal to the annual rate of .10% of the average value of each New
Series' daily net assets.
TRANSFER AGENT AND ACCOUNTING SERVICES AGENT
Currently, Forum Financial Corp. ("FFC") acts as transfer agent and
dividend disbursing agent of the Funds pursuant to a transfer agency agreement.
For these services, FFC receives with respect to each Fund an annual fee of
$12,000 plus fees of $25 per account. FFC is reimbursed for its out-of-pocket
expenses incurred in providing transfer agency services. FFC also performs
portfolio accounting services for each Fund pursuant to a Fund Accounting
Agreement with Trans Adviser Funds. Under its Agreement, FFC prepares and
maintains books and records of each Fund on behalf of Trans Adviser Funds as
required under the 1940 Act, calculates the net asset value per share of each
Fund and dividends and capital gain distributions and prepares periodic reports
to shareholders and the Securities and Exchange Commission. For these services,
FFC receives from Trans Adviser Funds with respect to each Fund a fee of $36,000
per year plus surcharges of $6,000 to $24,000 for specified asset levels. FFC is
paid additional surcharges of $12,000 per year for tax-free money market funds
and for each of the following: a portfolio with more than a specified number of
securities positions and/or international positions; investments in derivative
instruments; percentages of assets invested in asset backed securities; and a
monthly portfolio turnover rate of 10% or greater.
If the Reorganization is approved by shareholders, Countrywide Fund
Services, Inc. will serve as transfer agent, dividend paying agent and
shareholder service agent to each New Series under agreements which will remain
in effect until February 28, 1999 and will continue in effect thereafter only if
their continuance is specifically approved at least annually by the respective
Trustees. For these services, Countrywide Fund Services, Inc. will receive a
monthly fee at the annual rate of $17 per account from each of the Growth/Value
Series and the Aggressive Growth Series, $21 per account from the Intermediate
Bond Series and the Kentucky Tax-Free Series and $25 per account from the Money
-10-
<PAGE>
Market Series (subject to a minimum monthly fee of $1,000 with respect to each
New Series). Countrywide Fund Services, Inc. is reimbursed for its out-of-pocket
expenses incurred in providing transfer agency services. Countrywide Fund
Services, Inc. will also provide accounting and pricing services to the New
Series, for which it will receive a monthly fee from each New Series for
calculating daily net asset value per share and maintaining such books and
records as are necessary to enable it to perform its duties.
COMPARISON OF FEES AND EXPENSES
If the Reorganization is approved by shareholders, Countrywide
Investments has voluntarily undertaken to waive fees and/or reimburse expenses
so that the New Series' expense ratios will not exceed 1.95% for each of the
Growth/Value and Aggressive Growth Series; .95% for the Intermediate Bond
Series; .82% for the Kentucky Tax- Free Series; and .80% for the Money Market
Series for a period of two years following the Reorganization.
The following tables summarize and compare the fees and expenses of the
Funds and the New Series. These tables are intended to assist shareholders in
comparing the various costs and expenses that shareholders indirectly bear with
respect to an investment in a Fund and those that they can expect to bear
indirectly as shareholders of the corresponding New Series. Fees and expenses
are reflected as of each Fund's most current fiscal year end. Actual expenses
may be more or less than those set forth below. In addition, the "Example" set
forth below should not be considered a representation of future expenses, which
will vary depending upon actual investment returns and expenses.
<TABLE>
<CAPTION>
Growth/ Growth/ Aggressive Aggressive Intermediate Intermediate
Value Value Growth Growth Bond Bond
Fund Series Fund Series Fund Series
---- ------ ---- ------ ---- ------
SHAREHOLDER TRANSACTION EXPENSES
<S> <C> <C> <C> <C> <C> <C>
Maximum Sales Commission Imposed
on Purchases (as a percentage of
offering price) 4.50% 4.00% 4.50% 4.00% 4.50% 2.00%
Maximum Sales Commission Imposed on
Reinvested Dividends (as a
percentage of offering price) NONE NONE NONE NONE NONE NONE
Maximum Contingent Deferred Sales
Commission (as a percentage of
original purchase price or
redemption proceeds, as
applicable) NONE NONE(1) NONE NONE(1) NONE NONE(1)
Redemption Fees (as a percentage of
amount redeemed, if applicable) NONE NONE(2) NONE NONE(2) NONE NONE(2)
Exchange Fee NONE NONE NONE NONE NONE NONE
ANNUAL FUND OPERATING EXPENSES
(AS A PERCENTAGE OF NET ASSETS)
Advisory Fees .58%(5) 1.00% .00%(5) 1.00% .00%(5) .25%(3)
12b-1 Fees NONE .25%(4) NONE .09%(4) NONE .00%(4)
Shareholder Servicing Fees .24%(5) NONE .24%(5) NONE .25% NONE
Other Expenses 1.13%(5) .41% 1.71%(5) .86% .43%(5) .70%
---- ---- ---- ---- ---- ----
Total Fund Operating Expenses (after fee
waiver and/or reimbursement) 1.95%(5) 1.66% 1.95%(5) 1.95% .68%(5) .95%(6)
</TABLE>
-11-
<PAGE>
<TABLE>
<CAPTION>
Kentucky Kentucky Money Money
Tax-Free Tax-Free Market Market
Fund Series Fund Series
---- ------ ---- ------
SHAREHOLDER TRANSACTION EXPENSES
<S> <C> <C> <C> <C>
Maximum Sales Commission Imposed
on Purchases (as a percentage of
offering price) 4.50% 4.00% NONE NONE
Maximum Sales Commission Imposed
on Reinvested Dividends (as a
percentage of offering price) NONE NONE NONE NONE
Maximum Contingent Deferred Sales
Commission (as a percentage of
original purchase price or
redemption proceeds, as applicable) NONE NONE(1) NONE NONE
Redemption Fees (as a percentage of
amount redeemed, if applicable) NONE NONE(2) NONE NONE(2)
Exchange Fee NONE NONE NONE NONE
ANNUAL FUND OPERATING EXPENSES
(AS A PERCENTAGE OF NET ASSETS)
Advisory Fees .00%(5) .05%(3) .01%(5) .48%
12b-1 Fees NONE .00%(4) NONE .17%(4)
Shareholder Servicing Fees .18%(5) NONE .25% NONE
Other Expenses .64%(5) .77% .39%(5) .15%
---- ---- ---- ----
Total Fund Operating Expenses (after fee
waiver and/or reimbursement) .82%(4) .82%(6) .65%(5) .80%
</TABLE>
(1) Purchase at net asset value of amounts totaling $1 million or more may be
subject to a contingent deferred sales load of .75% if a redemption
occurred within 12 months of purchase and a commission was paid by
Countrywide Investments to a participating unaffiliated dealer.
(2) A wire transfer fee is charged by the New Series' custodian in the case of
redemptions made by wire. Such fee is subject to change and is currently
$8.
(3) Absent waivers, management fees would be .50% for the Intermediate Bond and
Kentucky Tax-Free Series.
(4) Shares of the New Series may incur 12b-1 fees in an amount up to .25% (.35%
with respect to the Money Market Series and the Intermediate Bond Series)
of average net assets. Long-term shareholders may pay more than the
economic equivalent of the maximum front-end sales loads permitted by the
National Association of Securities Dealers.
(5) Total Fund Operating Expenses reflect the voluntary waiver of Advisory
Fees, Shareholder Servicing Fees and certain other expenses and the
reimbursement of certain expenses. Absent such voluntary waiver and expense
reimbursement, Advisory Fees, Shareholder Servicing Fees, Other Expenses
and Total Fund Operating Expenses, for each fund would be: Growth/Value
Fund: 1.00%, .25%, 1.58% and 2.83%, respectively; Aggressive Growth Fund:
1.00%, .25%, 3.80% and 5.05%, respectively; Intermediate Bond Fund: .40%,
.25%, 1.39% and 2.04%, respectively; Kentucky Tax-Free Fund: .40%, .25%,
1.00% and 1.65%, respectively; and Money Market Fund: .20%, .25%, .54% and
.99%, respectively.
(6) Absent waivers of management fees total operating expenses would be 1.20%
for the Intermediate Bond Series and 1.27% for the Kentucky Tax-Free
Series. Countrywide will, until at least August 31, 1999, waive fees and
reimburse expenses to the extent necessary to limit total operating
expenses to .95% for the Intermediate Bond Series and .82% for the Kentucky
Tax-Free Series.
-12-
<PAGE>
EXAMPLE:
You would pay the following expenses on a $1,000 investment, assuming (1) 5%
annual return, (2) reinvestment of all dividends and distributions and (3)
redemption at the end of each time period:
<TABLE>
<CAPTION>
1 Year 3 Years 5 Years 10 Years
------ ------- ------- --------
<S> <C> <C> <C> <C>
Growth/Value Fund $64 $103 $145 $262
Growth/Value Series 56 90 127 229
Aggressive Growth Fund 64 103 145 262
Aggressive Growth Series 59 99 141 258
Intermediate Bond Fund 52 66 81 126
Intermediate Bond Series 20 40 62 125
Kentucky Tax-Free Fund 53 70 88 142
Kentucky Tax-Free Series 48 65 84 137
Money Market Fund 7 21 36 81
Money Market Series 8 26 44 99
</TABLE>
The purpose of the table above is to assist you in understanding the
various costs and expenses a shareholder of a Fund will bear directly or
indirectly. The foregoing example should not be considered a representation of
past or future expenses. Actual expenses may be greater or less than those
shown.
SECURITIES TRANSACTIONS
Decisions to buy and sell securities for the Countrywide Funds and the
placing of the Countrywide Funds' securities transactions and negotiation of
commission rates where applicable are made by Countrywide Investments and are
subject to review by the Trustees. In the purchase and sale of portfolio
securities, Countrywide Investments seeks best execution for the Countrywide
Funds, 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. Countrywide Investments
generally seeks favorable prices and commission rates that are reasonable in
relation to the benefits received.
Countrywide Investments is specifically authorized to select brokers
who also provide brokerage and research services to the Countrywide Funds and/or
other accounts over which Countrywide Investments exercises investment
discretion and to pay such brokers a commission in excess of the commission
another broker would charge if it is determined in good faith that the
commission is reasonable in relation to the value of the brokerage and research
services provided. The determination may be viewed in terms of a particular
transaction or Countrywide
Investments' overall responsibilities with respect to the Countrywide Funds and
to accounts over which it exercises investment discretion.
Research services include securities and economic analyses, reports on
issuers' financial conditions and future business prospects, newsletters and
opinions relating to interest trends, general advice on the relative merits of
possible investment securities for the Countrywide Funds and statistical
services and information with respect to the availability of securities or
purchasers or sellers of securities. Although this information is useful to the
Countrywide Funds and Countrywide Investments, it is not possible to place a
dollar value on it. Research services furnished by brokers through whom the
Countrywide Funds effect securities transactions may be used by Countrywide
Investments in servicing all of its accounts and not all such services may be
used in connection with the Countrywide Funds.
The Countrywide Funds have no obligation to deal with any broker or
dealer in the execution of securities transactions. However, Countrywide
Investments and other affiliates of the Countrywide Funds or Countrywide
Investments may effect securities transactions which are executed on a national
securities exchange or effect transactions in the over-the-counter market
conducted on an agency basis. No New Series will effect any brokerage
transactions in its portfolio securities with Countrywide Investments if such
transactions would be unfair or unreasonable to its shareholders.
Over-the-counter transactions will be placed either directly with principal
-13-
<PAGE>
market makers or with broker-dealers. Although the Countrywide Funds do not
anticipate any ongoing arrangements with other brokerage firms, brokerage
business may be transacted from time to time with other firms. Neither
Countrywide Investments nor affiliates of the Countrywide Funds or Countrywide
Investments will receive reciprocal brokerage business as a result of the
brokerage business transacted by the Countrywide Funds with other brokers.
DESCRIPTION OF TRUSTEES OF THE COUNTRYWIDE FUNDS
Each Countrywide Fund has a common Board of Trustees comprised of the
individuals listed below. These individuals are different from the current
Directors of Trans Adviser Funds. The operations of each New Series will
continue to be subject to the same investment objectives, restrictions and
policies of its corresponding Fund and the New Series will continue to be
managed in conformity with such investment objectives, restrictions and policies
by the new investment adviser (current sub-advisor with respect to the
Growth/Value and Aggressive Growth Funds), subject to the general oversight of
the Countrywide Funds, Boards of Trustees.
Principal Occupation During
Name Age the Past Five Years
---- --- -------------------
Donald L. Bogdon, M.D. 66 Physician with Hematology Oncology
Consultants and director of Verdugo VNA
(a hospice facility). He was formerly
President of Western
Hematology/Oncology (1971-1996) and
Chairman of the Board of Glendale
Memorial Hospital (1991-1993).
John R. Delfino 63 President of Concorde Capital Corporation
(an investment firm). He was formerly a
director of Cypress Financial (1984-1993)
and Chairman of Rancho Santa Margarita
(1989-1993), mortgage banking firms.
H. Jerome Lerner 58 Principal of HJL Enterprises and
Chairman of Crane Electronics, Inc. (a
manufacturer of electronic connectors).
Principal Occupation During
Name Age the Past Five Years
---- --- -------------------
Robert H. Leshner* 57 President of Countrywide Investments, Inc.
(the investment adviser and principal
underwriter of the Countrywide Funds), Vice
Chairman of Countrywide Fund Services, Inc.
(a registered transfer agent) and President
of Countrywide Financial Services, Inc. (a
financial services company and parent of
Countrywide Investments, Inc. and
Countrywide Fund Services, Inc.)
Angelo R. Mozilo* 58 Vice Chairman of the Board and Executive
Vice President of Countrywide Credit
Industries, Inc. ("CCI") and Chairman of the
Board of Countrywide Investments, Inc.,
Countrywide Fund Services, Inc. and
Countrywide Financial Services, Inc. He is
also President and a director of CWM
Mortgage Holdings, Inc. (a publicly-held
real estate investment trust managed by
CCI).
-14-
<PAGE>
Oscar P. Robertson 57 President of Orchem Corp. (a chemical
specialties distributor) and Orpack Stone
Corporation (a corrugated box
manufacturer).
John F. Seymour, Jr. 59 Chief Executive Officer of the Southern
California Housing Development Agency
and a consultant for Orange Coast Title
Co. (a title insurance company). He is
also a director of Irvine Apartment
Communities (a real estate investment
trust) and Inco Homes (a home builder).
He was formerly a Senator in the United
States Congress (1991-2) and a director of
the California Housing Finance Agency
(1993-4).
Sebastiano Sterpa 67
Chairman of Sterpa Realty, Inc. and
Chairman and a director of the
California Housing Finance Agency. He is
also a director of Real Estate Business
Services and a director of the
SunAmerica Mutual Funds.
* "Interested person" of the Countrywide Funds, as defined by the 1940 Act.
THE AGREEMENT AND PLAN OF REORGANIZATION
The Plan provides that all of the assets of a Fund will be transferred
to its corresponding New Series in exchange for shares of the New Series and the
assumption by the New Series of all of the liabilities of the corresponding
Fund. No sales charges will be charged to effect such exchange of shares. A copy
of the Plan is included as Exhibit A to this Proxy Statement.
As a result of each Reorganization, an account will be established for
each shareholder in the relevant New Series, which will be credited with full
and fractional shares of the New Series equal in value to the value of the
shares of the Fund held by the shareholder immediately prior to the
Reorganization.
On the effective date of the Reorganization (the "Closing Date") each
of the Funds will transfer all of its assets to the corresponding New Series in
exchange for the assumption by the New Series of all of the liabilities of the
current Fund and the issuance of shares of beneficial interest of that New
Series ("New Series Shares") to the current Fund. The New Series Shares issued
with respect to a current Fund will have an aggregate net asset value equal to
the aggregate net asset value of the current Fund's common stock (as determined
by using the procedures set forth in the current Prospectus) on the Closing
Date. Following distribution of the New Series Shares to each of the current
Funds, and as soon as practicable thereafter, Trans Adviser Funds and each Fund
will be liquidated and terminated. Upon completion of the Reorganization, each
shareholder will be the owner of full and fractional New Series Shares equal in
number, denomination and aggregate net asset value to the shareholder's current
Fund Shares. New Series Shares will be represented by book entries and no share
certificates will be issued.
The Reorganization is subject to the satisfaction of a number of
conditions set forth in the Plan, including approval of the Plan and the
transactions contemplated by the Plan by shareholders of the Funds. The Plan may
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be terminated and the Reorganization abandoned at any time, before or after
approval by shareholders, by the mutual written consent of the Fund and the New
Series, or by either of them without liability to the other (unless the
terminating party is in default or in breach of the Plan) if certain conditions
exist.
Shareholders in the Funds have no dissenters' rights or appraisal
rights. All shareholders have the right at any time up to the business day
preceding the Closing Date to redeem their Fund Shares at their then current net
asset value.
FEDERAL INCOME TAX CONSEQUENCES
Consummation of the Reorganization is subject to the condition that the
Funds receive an opinion from Kramer, Levin, Naftalis & Frankel, counsel to the
Funds, stating that for federal income tax purposes: (i) the transfer of all of
the assets of a Fund to its New Series in exchange for the assumption of all the
liabilities of such Fund by such New Series, the delivery to such Fund of New
Series Shares, the distribution by such Fund pro rata to its shareholders of
such New Series Shares and the termination of such Fund, pursuant to the
Reorganization Plan, will constitute a reorganization within the meaning of
Section 368(a)(1) of the Internal Revenue Code of 1986, as amended; (ii) a Fund
will not recognize any gain or loss as a result of the Reorganization; (iii) a
New Series will not recognize any gain or loss on the receipt of the assets of a
Fund in exchange for New Series Shares; (iv) the shareholders of a Fund will not
recognize any gain or loss on the exchange of their shares of a Fund for New
Series Shares; (v) the aggregate tax basis of the New Series Shares received by
each shareholder of a Fund in the Reorganization will be the same as the
aggregate tax basis of the shares of the Fund exchanged therefor; (vi) a New
Series' adjusted tax bases in the assets received from a Fund in the
Reorganization will be the same as the adjusted tax bases of such assets in the
hands of a Fund immediately prior to the Reorganization; (vii) the holding
period of each former shareholder of a Fund in the New Series Shares received in
the Reorganization will include the period for which such shareholder held his
shares of the Fund as a capital asset; and (viii) the New Series' holding
periods in the assets received from a Fund in the Reorganization will include
the holding periods of such assets in the hands of the corresponding Fund
immediately prior to the Reorganization.
The Funds and the New Series have not sought a tax ruling from the
Internal Revenue Service (the "IRS") with respect to the tax aspects of the
Reorganization, but will act in reliance upon the opinion of counsel discussed
in the previous paragraph. Such opinion is not binding on the IRS and does not
preclude the IRS from adopting a contrary position. If for any reason the
Reorganization did not qualify as a tax-free Reorganization for federal income
tax purposes, then the Reorganization would be treated as a taxable asset sale
and purchase. In such event, a Fund would recognize gain or loss on the
transaction measured by the difference between the consideration received by a
Fund and the tax basis of Fund assets; the tax basis of the assets acquired by
the New Series would equal the purchase price plus the amount of any liabilities
transferred to the New Series; and upon distribution of the New Series Shares in
dissolution of the Fund, the shareholders of the Fund would recognize gain or
loss on the disposition of their Fund shares measured by the difference between
the fair market value of the New Series Shares received by them and the basis of
Fund shares held by them. Shareholders should consult their own advisers
concerning the potential tax consequences of the Reorganization to them,
including state and local income tax consequences.
REQUIRED VOTE AND BOARD OF DIRECTORS' RECOMMENDATION
Approval of the Reorganization with respect to a Fund requires the
affirmative vote of a majority of the outstanding shares of common stock of that
Fund. Approval of the Reorganization by shareholders will constitute approval of
the amendment of any investment restrictions of the Funds which might be deemed
to prohibit the transactions contemplated by the Reorganization. After carefully
considering all the issues involved, the Board of Directors has unanimously
concluded that the proposal is in the best interests of the Funds and their
shareholders and that the interest of existing shareholders in the Funds will
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not be diluted as a result of the Reorganization. If the Reorganization is
approved at the Meeting, the Closing Date is expected to be on or about August
15, 1997.
VOTING INFORMATION AND DISCRETION
OF ATTORNEYS NAMED IN THE PROXY
While the Meeting is called to act upon any other business that may
properly come before it, at the date of this Proxy Statement the only business
which the management intends to present or knows that others will present is the
business mentioned in the Notice of Meeting. If any other matters lawfully come
before the Meeting, and in all procedural matters at the Meeting, it is the
intention that the enclosed proxy shall be voted in accordance with the best
judgment of the attorneys named therein, or their substitutes, present and
acting at the Meeting.
As of July 7, 1997, Trans Financial, Inc. was believed to possess
voting power with respect to the following outstanding Shares: 1,170,960 (71%)
of the Growth/Value Fund, 620,508 (73%) of the Aggressive Growth Fund, 1,566,263
(97%) of the Intermediate Bond Fund, 105,043 (11%) of the Kentucky Tax-Free
Fund, and 36,012,668 (34%) of the Money Market Fund, in view of which such
Shares could be deemed to be beneficially owned by Trans Financial, Inc. as of
such date. However, Trans Financial, Inc. and its affiliates have advised Trans
Adviser Funds that they intend to vote any Shares over which they have voting
power at the Meeting (i) in the manner instructed by the customers for which
such shares are held, or (ii) in the event that such instructions are not
received, in the same proportion as the votes cast by other shareholders
(including advisory customers who furnish voting instructions).
As of the Record Date, to the best of the knowledge of Trans Adviser
Funds, no person beneficially owned more than 5% of Shares of the Funds.
SUBMISSION OF PROPOSALS FOR THE
NEXT MEETING OF SHAREHOLDERS
Under Trans Adviser Funds' Articles (defined above under "Shareholders
Rights") and By-Laws, annual meetings of shareholders are not required to be
held unless necessary under the 1940 Act (for example, when fewer than a
majority of the Directors have been elected by shareholders). Therefore, Trans
Adviser Funds does not hold shareholder meetings on an annual basis. A
shareholder proposal intended to be presented at any meeting hereafter called
should be sent to Trans Adviser Funds at Two Portland Square, Portland, Maine
04101, and must be received by Trans Adviser Funds within a reasonable time
before the solicitation relating thereto is made in order to be included in the
notice or proxy statement related to such meeting. The submission by a
shareholder of a proposal for inclusion in a proxy statement does not guarantee
that it will be included. Shareholder proposals are subject to certain
regulations under federal securities law.
IT IS IMPORTANT THAT PROXIES BE RETURNED PROMPTLY. IF YOU DO NOT EXPECT TO
ATTEND THE MEETING, PLEASE SIGN YOUR PROXY CARD PROMPTLY AND RETURN IT IN THE
ENCLOSED ENVELOPE TO AVOID UNNECESSARY EXPENSE AND DELAY. NO POSTAGE IS
NECESSARY.
July 11, 1997
BY ORDER OF THE BOARD OF DIRECTORS OF
TRANS ADVISER FUNDS, INC.
Max Berueffy, Secretary
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EXHIBIT A
FORM OF AGREEMENT AND PLAN OF REORGANIZATION
THIS AGREEMENT AND PLAN OF REORGANIZATION (this "Agreement") is made as
of the 31st day of May, 1997, by and among Trans Adviser Funds, Inc., a Maryland
corporation ("Trans Adviser"), for itself and on behalf of each of its
investment portfolios set forth on Schedule A hereto (each, a "Fund"),
Countrywide Investment Trust, a Massachusetts business trust, for itself and on
behalf of its Intermediate Bond Fund and Money Market Fund series, Countrywide
Strategic Trust, a Massachusetts business trust, for itself and on behalf of its
Growth/Value Fund and Aggressive Growth Fund series, and Countrywide Tax-Free
Trust, for itself and on behalf of its Kentucky Tax-Free Fund series (each, a
"Successor Series") and Countrywide Fund Services, Inc. Countrywide Investment
Trust, Countrywide Strategic Trust and Countrywide Tax-Free Trust are each
referred to herein, as a "Countrywide Trust".
This Agreement shall constitute a separate Agreement and Plan of
Reorganization for each Fund and its corresponding Successor Series. It is
expressly agreed that the respective rights and obligations of each Fund and its
corresponding Successor Series, as provided for hereunder, are separate from the
rights and obligations of each of the other Funds of Trans Adviser and each of
the other Successor Series and any other series of a Countrywide Trust, and that
neither the rights and obligations of any Fund nor of any Successor Series shall
be construed to be joint rights or obligations of the other Funds of Trans
Adviser or their corresponding Successor Series, respectively, notwithstanding
the fact that such other Funds and Successor Series may be (i) included in
Schedule A to this Agreement (and thereby subject to the terms of this form of
the Agreement) or (ii) subject to another agreement and plan of reorganization
containing terms and conditions which are substantially the same as the terms
and conditions set forth herein.
In consideration of the mutual promises herein contained, Trans
Adviser, for itself and on behalf of each Fund, and each Countrywide Trust, for
itself and on behalf of its Successor Series, hereby agree as follows:
1. APPROVAL BY SHAREHOLDERS.
A special meeting of the shareholders of the Fund (the "Meeting") will
be called for the purpose of considering adoption of this Agreement and
considering such other business as may properly come before the Meeting. The
agenda for such Meeting may include such other proposals as the Board of
Directors of Trans Adviser may deem appropriate.
2. PLAN OF REORGANIZATION.
(i) Subject to the terms and conditions set forth in this
Agreement, the Fund will convey, transfer and deliver to the Successor Series
(as shown on Schedule A) at the closing provided for in Section 3 (hereinafter
called the "Closing") all of the then-existing assets of the Fund. In
consideration thereof, and subject to the terms and conditions set forth in this
Agreement, at the Closing the Successor Series will (a) assume all of the
obligations and liabilities attributable to the Fund, of whatever kind or
nature, whether absolute, accrued, contingent or otherwise, and whether or not
determinable as of the Closing, and (b) deliver to the Fund a number of full and
fractional shares of beneficial interest of the Successor Series, no par value
(the "Shares"), having an aggregate net asset value ("NAV") equal to the
aggregate net asset value of the current Fund's common stock (as determined in
accordance with the Investment Company Act of 1940, as amended (the "1940 Act")
and the Fund's current Prospectus) on the Closing Date (as defined in Section
3).
(ii) Upon consummation of the transactions described in
Section 2(i) hereof, the Fund will distribute to persons who are shareholders of
record of the Fund at the Closing the Shares received by the Fund pursuant to
Section 2(i), such distribution to be made pro rata to the shareholders based
upon the ratio that the percentage of the outstanding shares of the Fund owned
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by each such shareholder at the Closing bears to the total number of Shares
received by the Fund from the Successor Series. Such distribution will be
accomplished by the establishment of an open account on the stock records of the
Successor Series in the name of each such shareholder of the Fund and setting
forth the number of Shares due such shareholder in accordance with the
foregoing. Fractional Shares will be carried to the third decimal place.
Certificates representing Shares will not be issued.
(iii) As soon as is reasonably practicable after the Closing,
Trans Adviser will take all necessary steps under its Articles of Incorporation
and Maryland law to effect a complete liquidation and dissolution of the Fund
and of Trans Adviser.
(iv) The transactions contemplated in this Section 2 are
referred to as the "Reorganization."
3. CLOSING.
The Closing will occur prior to the commencement of business on August
18, 1997 or such other time and date as may be mutually agreed upon by the
parties (the "Closing Date"). In the event that the NAV calculations of the Fund
or the Successor Series are not readily determinable for purposes of the
Reorganization due to market disruption, the Closing shall occur on the next
successive business day.
4. CONDITIONS TO OBLIGATIONS OF TRANS ADVISER AND THE FUND.
The obligations of Trans Adviser and the Fund in connection with the
consummation of the Reorganization shall be subject to the satisfaction of each
of the following conditions:
(i) Trans Adviser shall have received the opinion of legal
counsel for Countrywide Trust, dated as of the date of the Closing and addressed
to Trans Adviser, to the effect that: (a) Countrywide Trust is established as a
Massachusetts business trust and is validly existing under the laws of The
Commonwealth of Massachusetts, (b) Countrywide Trust is an open-end investment
company of the management type registered under the 1940 Act, and the Successor
Series is a duly established series of Countrywide Trust, (c) this Agreement and
the Reorganization provided for herein and the execution and delivery of this
Agreement has been duly authorized and approved by all requisite action of the
Board of Trustees of Countrywide Trust and this Agreement has been duly executed
and delivered by Countrywide Trust and is a valid and binding obligation of
Countrywide Trust and the Successor Series, and (d) the Shares to be issued in
the Reorganization will be duly authorized and upon issuance thereof in
accordance with this Agreement will be validly issued, fully paid and
non-assessable Shares of the Successor Series. In rendering such opinion, such
legal counsel may rely on an opinion of Massachusetts counsel reasonably
acceptable to Trans Adviser with respect to matters of Massachusetts law, and on
certificates of officers or trustees of Countrywide Trust, in each case
reasonably acceptable to Trans Adviser.
(ii) Countrywide Trust and the Successor Series shall have
complied with each of their covenants contained herein and each of the
representations and warranties of Countrywide Trust and the Successor Series
contained herein shall be true in all material respects as of the Closing, and
Countrywide Trust shall have delivered to Trans Adviser a certificate from
appropriate officers of Countrywide Trust reasonably acceptable to the Fund to
such effect.
5. CONDITIONS TO OBLIGATIONS OF COUNTRYWIDE TRUST AND THE SUCCESSOR
SERIES.
The obligations of Countrywide Trust and the Successor Series in
connection with the consummation of the Reorganization shall be subject to the
satisfaction of each of the following conditions:
(i) Countrywide Trust shall have received the opinion of legal
counsel for Trans Adviser, dated as of the Closing Date and addressed to
Countrywide Trust, to the effect that: (a) Trans Adviser is established as a
Maryland corporation and is validly existing under the laws of the State of
Maryland, (b) Trans Adviser is an open-end investment company of the management
type registered under the 1940 Act, (c) this Agreement and the Reorganization
provided for herein and the execution and delivery of this Agreement have been
duly authorized and approved by all requisite action of the Board of Directors
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of Trans Adviser and this Agreement has been duly executed and delivered by
Trans Adviser and is a valid and binding obligation of Trans Adviser and the
Fund, and (d) the outstanding shares of the Fund have been duly authorized. In
rendering such opinion, such legal counsel may rely on an opinion of Maryland
counsel reasonably acceptable to Countrywide Trust with respect to matters of
Maryland law, and on certificates of officers or directors of Trans Adviser, in
each case reasonably acceptable to Countrywide Trust.
(ii) Trans Adviser and the Fund shall have complied with each
of its covenants contained herein and each of the representations and warranties
of Trans Adviser shall be true in all material respects as of the Closing, and
Trans Adviser shall have delivered to Countrywide Trust a certificate from
appropriate officers of Trans Adviser reasonably acceptable to Countrywide Trust
to such effect.
6. CONDITIONS TO OBLIGATIONS OF TRANS ADVISER AND COUNTRYWIDE
TRUST.
The obligations of Trans Adviser and Countrywide Trust in connection
with the consummation of the Reorganization shall be subject to the satisfaction
of each of the following conditions:
(i) Countrywide Trust and Trans Adviser shall have received an
opinion of legal counsel to Trans Adviser, dated as of the date of the Closing,
addressed to and in form and substance satisfactory to Countrywide Trust and
Trans Adviser to the effect that: (a) the transfer of all of the assets of the
Fund to the Successor Series in exchange for the assumption of all the
liabilities of the Fund by the Successor Series, the delivery to the Fund of
shares of the Successor Series, the distribution by the Fund pro rata to its
shareholders of such shares of the Successor Series, and the termination of such
Fund, pursuant to the Plan, will constitute a reorganization within the meaning
of Section 368(a)(1) of the Internal Revenue Code of 1986, as amended; (b) the
Fund will not recognize any gain or loss as a result of the Reorganization; (c)
the Successor Series will not recognize any gain or loss on the receipt of the
assets of the Fund in exchange for shares of the Successor Series; (d) the
shareholders of the Fund will not recognize any gain or loss on the exchange of
their shares of the Fund for shares of the Successor Series; (e) the aggregate
tax basis of the Successor Series received by each shareholder of the Fund in
the Reorganization will be the same as the aggregate tax basis of the shares of
the Fund exchanged therefor; (f) the Successor Series' adjusted tax bases in the
assets received from the Fund in the Reorganization will be the same as the
adjusted tax bases of such assets in the hands of the Fund immediately prior to
the Reorganization; (g) the holding period of each former shareholder of the
Fund in the shares of the Successor Series received in the Reorganization will
include the period for which such shareholder held his shares of the Fund as a
capital asset; and (h) the Successor Series' holding periods in the assets
received from the Fund in the Reorganization will include the holding periods of
such assets in the hands of the Fund immediately prior to the Reorganization.
(ii) Such authority, including "no-action" letters and orders
from the Securities and Exchange Commission (the "Commission") and state
securities commissions, as may be necessary to permit the parties to carry out
the transactions contemplated by this Agreement shall have been received.
(iii) The Shares shall have been duly qualified for offering
to the public in such jurisdictions (except where such qualifications are not
required) so as to permit the transfers contemplated by this Agreement to be
consummated.
(iv) This Agreement and the Reorganization and, if necessary,
a temporary amendment of the investment restrictions that might otherwise
preclude the consummation of the Reorganization, shall have been approved by the
holders of the requisite number of shares of common stock of the Fund entitled
to vote on the matter under Trans Adviser's Articles of Amendment and
Restatement.
(v) As of the time of the Closing, (a) the Commission shall
not have issued an unfavorable advisory report under Section 25(b) of the 1940
Act nor instituted nor threatened to institute any proceeding seeking to enjoin
consummation of the Reorganization contemplated hereby under Section 25(c) of
the 1940 Act and (b) no other action, suit or other proceeding shall be
threatened or pending before any court or governmental agency which seeks to
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restrain or prohibit, or obtain damages or other relief in connection with, this
Agreement or the transactions contemplated herein.
At any time prior to the Closing, any of the foregoing conditions in
Section 4, 5 or 6 may be waived by the Fund or the Successor Series, as the case
may be, if, in the judgment of such party, such waiver will not have a material
adverse effect on the benefits intended under this Agreement to the shareholders
of the Fund or the Successor Series, as the case may be.
7. REPRESENTATIONS AND WARRANTIES.
a. TRANS ADVISER. Trans Adviser, with respect to itself and the Fund,
represents and warrants to Countrywide Trust as follows:
(i) Trans Adviser is a corporation duly organized, validly
existing and in good standing under the laws of the State of Maryland;
(ii) Trans Adviser is a registered investment company,
classified as a management company of the open-end type, and its registration
with the Commission as an investment company under the 1940 Act is in full force
and effect;
(iii) The Fund is a duly established series of Trans Adviser;
(iv) The Board of Directors of Trans Adviser, including a
majority of the directors who are not "interested persons" of Trans Adviser (as
defined by the 1940 Act) have determined that this Agreement and the
transactions contemplated hereby are in the best interests of the Fund and that
the interests of the shareholders in the Fund will not be diluted as a result of
such transactions.
(v) Trans Adviser is not, and the execution, delivery and
performance of this Agreement will not result, in material violation of Trans
Adviser's Articles of Amendment and Restatement or By-laws or of any agreement,
indenture, instrument, contract, lease or other undertaking to which Trans
Adviser is a party or is bound;
(vi) Trans Adviser has no material contracts or other
commitments (other than this Agreement) which will be terminated with liability
to the Fund prior to the Closing, except contracts entered into in the ordinary
course of its business and this Agreement;
(vii) There is no litigation or administrative proceeding or
investigation of or before any court or governmental body pending or to Trans
Adviser's knowledge threatened against Trans Adviser with respect to the Fund or
its properties or assets, and Trans Adviser knows of no fact which might form
the basis for the institution of such proceedings, and neither Trans Adviser nor
the Fund is a party to or subject to the provisions of any order, decree or
judgment of any court or governmental body which materially and adversely
affects their respective businesses or their ability to consummate the
transactions contemplated herein;
(viii) The Statement of Assets and Liabilities of the Fund at
the last day of its most recently completed fiscal year, certified by KPMG Peat
Marwick LLP as independent accountants (as supplemented by any unaudited
semi-annual report as of the last day of its most recently completed semi-annual
fiscal period, if available) has been prepared in accordance with generally
accepted accounting principles consistently applied, fairly reflects the
financial condition of the Fund as of such date, and there are no known
contingent liabilities of the Fund as of such date which are required to be and
are not disclosed therein;
(ix) From the date of the most recent report referred to in
paragraph (viii) above, there has not been any material adverse change in the
Fund's financial condition, assets, liabilities or business other than changes
occurring in the ordinary course of business or as a result of this transaction
(for the purposes of this paragraph (ix), a decline in net assets of the Fund
shall not constitute a material adverse change);
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(x) All shares of common stock, $.001 par value, of the Fund
are, and at the Closing will be, duly authorized, legally issued, fully paid and
non-assessable, and the Fund does not have outstanding any options, warrants or
other rights to subscribe for or purchase any shares of the Fund (other than
dividend reinvestment plans of the Fund or as set forth in this Agreement) nor
are there outstanding any securities convertible into any shares of the Fund
(except pursuant to any exchange privileges described in the current Prospectus
or Registration Statement of the Fund under the Securities Act of 1933, as
amended (the "1933 Act"));
(xi) At the Closing, the Fund will have good and marketable
title to the Fund's assets to be transferred to the Successor Series and full
right, power and authority to assign, transfer and deliver such assets
hereunder, and, upon delivery and payment for such assets, the Successor Series
will acquire good and marketable title thereto, subject to no restrictions on
the full transfer thereof, including such restrictions as might arise under the
1933 Act except as disclosed on the date hereof;
(xii) Trans Adviser has full power and authority to enter into
and perform its obligations under this Agreement; the execution, delivery and
performance of this Agreement have been duly authorized by all necessary action
on the part of the Board of Directors of Trans Adviser; and, subject to the
approval of the shareholders of the Fund, this Agreement constitutes a valid and
binding obligation of Trans Adviser and the Fund, enforceable against Trans
Adviser and the Fund in accordance with its terms, except as enforceability may
be limited by bankruptcy, insolvency, reorganization, moratorium and other laws
relating to or affecting creditors' rights and by equitable principles;
(xiii) Trans Adviser has provided Countrywide Trust with the
Fund's most recent Form N-1A Registration Statement under the 1933 Act, which
does not contain any untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary to make the statements
therein, in light of the circumstances under which such statements were made,
not materially misleading;
(xiv) The information furnished by the Fund for use in proxy
materials and other documents in connection with the transactions contemplated
hereby is accurate and complete in all material respects and complies in all
material respects with federal securities and other laws and regulations
thereunder applicable thereto; and
(xv) The Proxy Statement to be used in connection with the
transactions contemplated hereby (only insofar as it relates to Trans Adviser)
on its effective date and at the Closing, will comply in all material respects
with the provisions of the 1933 Act, the Securities Exchange Act of 1934, as
amended (the "1934 Act"), and the 1940 Act and the rules and regulations
thereunder, and will not contain any untrue statement of a material fact or omit
to state a material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances under which such statements
were made, not materially misleading.
b. COUNTRYWIDE TRUST. Countrywide Trust, with respect to itself and the
Successor Series, represents and warrants to Trans Adviser as follows:
(i) Countrywide Trust is a business trust duly organized,
validly existing and in good standing under the laws of The Commonwealth of
Massachusetts;
(ii) Countrywide Trust is a registered investment company
classified as a management company of the open-end type, and its registration
with the Commission as an investment company under the 1940 Act is in full force
and effect;
(iii) The Successor Series is a duly established series of
Countrywide Trust;
(iv) Countrywide Trust is not, and the execution, delivery and
performance of this Agreement will not result, in material violation of
Countrywide Trust's Restated Agreement and Declaration of Trust or Bylaws or of
any agreement, indenture, instrument, contract, lease or other undertaking to
which Countrywide Trust is a party or is bound;
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(v) There is no litigation or administrative proceeding or
investigation of or before any court or governmental body pending or to
Countrywide Trust's knowledge threatened against Countrywide Trust with respect
to the Successor Series or its properties or assets, and Countrywide Trust knows
of no fact which might form the basis for the institution of such proceedings,
and neither Countrywide Trust nor the Successor Series is a party or subject to
the provisions of any order, decree or judgment of any court or governmental
body which materially and adversely affects their respective businesses or their
respective abilities to consummate the transactions contemplated herein;
(vi) At the Closing all shares of beneficial interest in the
Successor Series will be duly authorized, legally issued, fully paid and
non-assessable, and the Successor Series does not have outstanding any options,
warrants or other rights to subscribe for or purchase any shares of the
Successor Series (other than dividend reinvestment plans of the Successor Series
or as set forth in this Agreement), nor are there outstanding any securities
convertible into any shares of the Successor Series (except pursuant to exchange
privileges described in the current Prospectus or Registration Statement of the
Successor Series under the 1933 Act);
(vii) Countrywide Trust has full power and authority to enter
into and perform its obligations under this Agreement; the execution, delivery
and performance of this Agreement have been duly authorized by all necessary
action on the part of the Board of Trustees of Countrywide Trust; and this
Agreement constitutes a valid and binding obligation of Countrywide Trust and
the Successor Series, enforceable against Countrywide Trust and the Successor
Series in accordance with its terms, except as enforceability may be limited by
bankruptcy, insolvency, reorganization, moratorium and other laws relating to or
affecting creditors' rights and by equitable principles;
(viii) Countrywide Trust will provide to the Fund the Form
N-1A Registration Statement under the 1933 Act concerning the Successor Series,
which does not contain any untrue statement of a material fact or omit to state
a material fact required to be stated therein or necessary to make any
statements therein, in light of the circumstances under which such statements
were made, not materially misleading;
(ix) The information to be furnished by Countrywide Trust for
use in Registration Statements, proxy materials and other documents, in
connection with the transactions contemplated hereby, will be accurate and
complete in all material respects and will comply in all material respects with
federal securities laws and other laws and regulations thereunder applicable
thereto; and
(x) The Proxy Statement to be used in connection with the
transactions contemplated hereby (only insofar as it relates to the Successor
Series or Countrywide Trust), on its effective date and at the Closing, will
conform in all material respects with the provisions of the 1933 Act, the 1934
Act and the 1940 Act and the rules and regulations thereunder, and will not
contain any untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements therein, in
light of the circumstances under which such statements were made, not materially
misleading.
8. COVENANTS OF COUNTRYWIDE TRUST.
Countrywide Trust covenants to Trans Adviser and the Fund as follows:
(i) Countrywide Trust will use its best efforts and take all
actions as may be necessary or advisable to effectuate the Reorganization and to
cause to be registered and continue the Successor Series in operation
thereafter, including the obtaining of any regulatory approvals required to be
obtained by it.
(ii) Countrywide Trust agrees, for the period beginning at the
Closing and ending not less than six years thereafter, to indemnify and advance
expenses to each person who at the time of the execution of this Agreement
serves as a director, advisory director or officer ("Indemnified Person") of
Trans Adviser, against all costs and expenses, including attorneys' fees,
judgments, fines and amounts paid in settlement, actually and reasonably
incurred by such Indemnified Person in connection with any claim that is
asserted against such Indemnified Person arising out of such person's service as
a director, advisory director or officer of Trans Adviser, provided that such
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<PAGE>
indemnification and advancement of expenses shall be permitted to the fullest
extent that is available under the Maryland General Corporation law and other
applicable law. This paragraph 8 (ii) shall not protect any such Indemnified
Person against any liability to Trans Adviser, Countrywide Trust or their
shareholders to which he would otherwise be subject by reason of willful
misfeasance, bad faith, gross negligence or from reckless disregard of the
duties involved in the conduct of his office. An Indemnified Person seeking
indemnification shall be entitled to advances from Countrywide Trust for payment
of the reasonable expenses incurred by him in connection with the matter as to
which he is seeking indemnification in the manner and to the fullest extent
permissible under the Maryland General Corporation law and other applicable law.
Such Indemnified Person shall provide to Countrywide Trust a written affirmation
of his good faith belief that the standard of conduct necessary for
indemnification by Countrywide Trust has been met and a written undertaking to
repay any advance if it should ultimately be determined that the standard of
conduct has not been met. In addition, at least one of the following additional
conditions shall be met: (a) the Indemnified Person shall provide security in
form and amount acceptable to Countrywide Trust for its undertaking; (b)
Countrywide Trust is insured against losses arising by reason of the advance; or
(c) either a majority of a quorum of disinterested non-party trustees of
Countrywide Trust (collectively, the "Disinterested Trustees"), or independent
legal counsel experienced in mutual fund matters, selected by the Indemnified
Person, in a written opinion, shall have determined, based on a review of facts
readily available to Countrywide Trust at the time the advance is proposed to be
made, that there is reason to believe that the Indemnified Person will
ultimately be found to be entitled to indemnification.
Countrywide Trust agrees that in the event that it is
subsequently acquired by merger, acquisition or the sale of substantially all of
its assets ("Subsequent Merger"), or it reorganizes or changes its domicile
("Subsequent Redomestication"), it will provide under the terms of such
Subsequent Merger or Subsequent Redomestication that the indemnification
provided for above shall continue in full force and effect. In the event that
Countrywide Trust enters into negotiation for a Subsequent Merger or Subsequent
Redomestication, Countrywide Trust shall promptly notify the Indemnified Person
of such intended Subsequent Merger or Subsequent Redomestication.
(iii) For the period beginning at the Closing and ending not
less than six years thereafter, Countrywide Fund Services, Inc. shall provide
for a liability policy covering the actions of the current directors, advisory
directors and officers of Trans Adviser during the period they served as such by
causing the liability policy carried by Trans Adviser at the Closing to be
continued in full force and effect at the current coverage amount, or by
obtaining a new policy providing comparable coverage.
9. COVENANTS OF TRANS ADVISER.
Trans Adviser covenants to Countrywide Trust and the Successor Series
as follows:
(i) Trans Adviser will use its best efforts and take all
actions as may be necessary or advisable to effectuate the Reorganization,
including the obtaining of any regulatory approvals, as may be required to be
obtained by it.
(ii) Except as otherwise contemplated by this Agreement, Trans
Adviser will use its best efforts to conduct the business of the Fund in the
ordinary course until the consummation of the Reorganization.
(iii) The Fund will duly supplement its Prospectus in the
manner prescribed by Rule 497(e) of the 1933 Act and all other applicable law
and regulations.
10. BROKERAGE FEES AND EXPENSES.
(i) Trans Adviser represents and warrants to Countrywide
Trust, and Countrywide Trust represents and warrants to Trans Adviser, that
there are no brokers or finders entitled to receive any payments in connection
with the transactions provided for herein.
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<PAGE>
(ii) Trans Adviser and Countrywide Trust confirm their
understanding that Countrywide Investments, Inc. will be responsible for all
expenses in connection with the Reorganization.
11. TERMINATION.
The Board of Directors of Trans Adviser may terminate this Agreement
and abandon the Reorganization contemplated hereby at any time prior thereto,
notwithstanding approval thereof by the shareholders of the Fund if, in the
judgment of such Board, proceeding with the Reorganization would be inadvisable
or if any of the conditions set forth in Sections 4 or 6 hereof have not been
satisfied. In any event, the Board of Directors of Trans Adviser may terminate
this Agreement and abandon the Reorganization contemplated hereby at any time
prior thereto, notwithstanding approval thereof by shareholders of one or more
Funds, if shareholders of any of the Funds who are parties to this Agreement do
not approve this Agreement and Plan of Reorganization. The Board of Trustees of
Countrywide Trust may terminate this Agreement and abandon the Reorganization
contemplated hereby if any of the conditions set forth in Sections 5 or 6 hereof
have not been satisfied. In the event of any such termination, there shall be no
liability for damages on the part of either party to the other.
12. ENTIRE AGREEMENT.
This Agreement embodies the entire Agreement between the parties and
there are no agreements, understandings, restrictions or warranties among the
parties other than those set forth herein or herein provided for. This Agreement
may not be amended without the consent in writing of both parties hereto.
Furthermore, after approval of this Agreement by the shareholders of the Fund,
no amendments may be made that materially adversely affect the interests of
shareholders of the Fund unless such amendments are submitted for shareholder
approval.
13. SURVIVAL OF REPRESENTATIONS AND WARRANTIES.
The representations and warranties made in this Agreement shall not
survive the Closing.
14. FURTHER ASSURANCES.
Trans Adviser and Countrywide Trust shall take such further action as
may be reasonably necessary or desirable and proper to consummate the
transactions contemplated hereby.
15. GOVERNING LAW.
This Agreement and the transactions contemplated hereby shall be
governed by and construed and enforced in accordance with the laws of The
Commonwealth of Massachusetts, without regard to principles of conflicts of law.
16. LIMITATION OF LIABILITY OF THE DIRECTORS/TRUSTEES AND
SHAREHOLDERS.
Copies of the Articles of Amendment and Restatement of Trans Adviser
and the Restated Agreement and Declaration of Trust of Countrywide Trust are on
file with the Secretary of State of Maryland and The Commonwealth of
Massachusetts, respectively, and notice is hereby given that each such
instrument is executed on behalf of the directors and trustees of Trans Adviser
and Countrywide Trust, respectively, as directors and trustees, respectively,
and not individually and that the obligations of each of Trans Adviser and
Countrywide Trust pursuant to this Agreement and the other agreements
contemplated hereby are not binding upon any of the directors, trustees or
shareholders individually but binding only upon the assets and property of Trans
Adviser and Countrywide Trust, respectively.
A-8
<PAGE>
17. NOTICES.
All notices, requests, demands and other communications required or
permitted hereunder shall be in writing and deemed properly given if hand
delivered or deposited in the U.S. mail, return receipt requested or certified,
postage prepaid, or with an overnight delivery service, as follows:
a. if to Trans Adviser:
Trans Adviser Funds, Inc.
Two Portland Square
Portland, Maine 04101
Attention: Max Berueffy, Esq.
and required copies to:
Kramer, Levin, Naftalis & Frankel
919 Third Avenue
New York, New York 10022
Attention: Jules Buchwald, Esq.
Ballard Spahr Andrews & Ingersoll
1735 Market Street, 51st Floor
Philadelphia, Pennsylvania 19103-7599
Attention: William H. Rheiner, Esq.
b. if to Countrywide Trust or Countrywide Fund Services, Inc.:
Countrywide Trust/Countrywide Fund Services, Inc.
312 Walnut Street, 21st Floor
Cincinnati, Ohio 45202
Attention: John F. Splain, Esq.
and an additional copy to:
Kramer, Levin, Naftalis & Frankel
919 Third Avenue
New York, New York 10022
Attention: Jules Buchwald, Esq.
or to such additional person or other address as Trans Advisers, Countrywide
Trust or Countrywide Fund Services, Inc., respectively, shall furnish to the
other in writing.
A-9
<PAGE>
IN WITNESS WHEREOF, each of Trans Adviser, Countrywide Trust and
Countrywide Fund Services, Inc. have caused this Agreement and Plan of
Reorganization to be executed on its behalf by its Chairman, President or a Vice
President and attested by its Secretary or Assistant Secretary, all as of the
day and year first above written.
Trans Adviser Funds, Inc., for itself and
on behalf of the Funds
By:
------------------------------------------
Name: Thomas A. Trantum
Title: President
ATTEST:
By:
-------------------
Name: Max Berueffy
Title: Secretary
Countrywide Investment Trust, for itself and
on behalf of the Intermediate Bond Fund and
the Money Market Fund
By:
------------------------------------------
Name:
----------------------------------------
Title:
---------------------------------------
ATTEST:
By:
-------------------
Name: John F. Splain
Title: Secretary
Countrywide Strategic Trust, for itself and
on behalf of the Growth/Value Fund and the
Aggressive Growth Fund
By:
----------------------------------------
Name:
--------------------------------------
Title:
--------------------------------------
ATTEST:
By:
-------------------
Name: John F. Splain
Title: Secretary
A-10
<PAGE>
Countrywide Tax-Free Trust, for itself and
on behalf of the Kentucky Tax-Free Fund
By:
----------------------------------------
Name:
--------------------------------------
Title:
--------------------------------------
ATTEST:
By:
-------------------
Name: John F. Splain
Title: Secretary
Countrywide Fund Services, Inc.
By:
----------------------------
Name:
--------------------------
Title:
-------------------------
ATTEST:
By:
---------------------------
Name:
Title:
A-11
<PAGE>
SCHEDULE A
TRANS ADVISER FUNDS CORRESPONDING SUCCESSOR SERIES OF COUNTRYWIDE TRUSTS
- ------------------- ----------------------------------------------------
Growth/Value Fund Growth/Value Fund
Aggressive Growth Fund Aggressive Growth Fund
Intermediate Bond Fund Intermediate Bond Fund
Kentucky Tax-Free Fund Kentucky Tax-Free Fund
Money Market Fund Money Market Fund
A-12
<PAGE>
TRANS ADVISER FUNDS, INC.
GROWTH/VALUE FUND
SPECIAL MEETING OF SHAREHOLDERS -- August 14, 1997
Please refer to the Proxy Statement for a discussion of these matters. THE
UNDERSIGNED HOLDER(S) OF SHARES OF STOCK OF THE GROWTH/VALUE FUND SERIES OF
TRANS ADVISER FUNDS, INC. HEREBY CONSTITUTES AND APPOINTS THOMAS A. TRANTUM AND
JERRY E. BAKER, OR EITHER OF THEM, THE ATTORNEYS AND PROXIES OF THE UNDERSIGNED,
WITH FULL POWER OF SUBSTITUTION, TO VOTE THE SHARES LISTED BELOW AS DIRECTED,
AND HEREBY REVOKES ANY PRIOR PROXIES. To vote, mark an X in blue or black ink on
the proxy card below. THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF
DIRECTORS OF TRANS ADVISER FUNDS, INC.
- -----Detach card at perforation and mail in postage paid envelope provided------
1. Vote on Proposal to approve an Agreement and Plan of Reorganization with
respect to the Growth/Value Fund.
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
2. In their discretion, the proxies are authorized to vote upon such other
business as may properly come before the meeting.
A-13
<PAGE>
- -----Detach card at perforation and mail in postage paid envelope provided------
TRANS ADVISER FUNDS, INC.
GROWTH/VALUE FUND
PROXY
THIS PROXY, WHEN PROPERLY EXECUTED AND RETURNED, WILL BE VOTED IN THE MANNER
DIRECTED HEREIN BY THE UNDERSIGNED. IF NO DIRECTION IS MADE, THIS PROXY WILL BE
VOTED FOR APPROVAL OF PROPOSAL 1.
Please sign exactly as name appears
on this card. When account is joint
tenants, all should sign. When
signing as administrator, trustee
or guardian, please give title. If
a corporation or partnership, sign
in entity's name and by authorized
person.
x
---------------------------------
x
---------------------------------
Dated: , 1997
-----------------------------
A-14
<PAGE>
TRANS ADVISER FUNDS, INC.
AGGRESSIVE GROWTH FUND
SPECIAL MEETING OF SHAREHOLDERS -- August 14, 1997
Please refer to the Proxy Statement for a discussion of these matters. THE
UNDERSIGNED HOLDER(S) OF SHARES OF STOCK OF THE AGGRESSIVE GROWTH FUND SERIES OF
TRANS ADVISER FUNDS, INC. HEREBY CONSTITUTES AND APPOINTS THOMAS A. TRANTUM AND
JERRY E. BAKER, OR EITHER OF THEM, THE ATTORNEYS AND PROXIES OF THE UNDERSIGNED,
WITH FULL POWER OF SUBSTITUTION, TO VOTE THE SHARES LISTED BELOW AS DIRECTED,
AND HEREBY REVOKES ANY PRIOR PROXIES. To vote, mark an X in blue or black ink on
the proxy card below. THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF
DIRECTORS OF TRANS ADVISER FUNDS, INC.
- -----Detach card at perforation and mail in postage paid envelope provided------
1. Vote on Proposal to approve an Agreement and Plan of Reorganization with
respect to the Aggressive Growth Fund.
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
2. In their discretion, the proxies are authorized to vote upon such other
business as may properly come before the meeting.
<PAGE>
- -----Detach card at perforation and mail in postage paid envelope provided------
TRANS ADVISER FUNDS, INC.
AGGRESSIVE GROWTH FUND
PROXY
THIS PROXY, WHEN PROPERLY EXECUTED AND RETURNED, WILL BE VOTED IN THE MANNER
DIRECTED HEREIN BY THE UNDERSIGNED. IF NO DIRECTION IS MADE, THIS PROXY WILL BE
VOTED FOR APPROVAL OF PROPOSAL 1.
Please sign exactly as name appears
on this card. When account is joint
tenants, all should sign. When
signing as administrator, trustee
or guardian, please give title. If
a corporation or partnership, sign
in entity's name and by authorized
person.
x
---------------------------------
x
---------------------------------
Dated: , 1997
-----------------------------
A-16
<PAGE>
TRANS ADVISER FUNDS, INC.
INTERMEDIATE BOND FUND
SPECIAL MEETING OF SHAREHOLDERS -- August 14, 1997
Please refer to the Proxy Statement for a discussion of these matters. THE
UNDERSIGNED HOLDER(S) OF SHARES OF STOCK OF THE INTERMEDIATE BOND FUND SERIES OF
TRANS ADVISER FUNDS, INC. HEREBY CONSTITUTES AND APPOINTS THOMAS A. TRANTUM AND
JERRY E. BAKER, OR EITHER OF THEM, THE ATTORNEYS AND PROXIES OF THE UNDERSIGNED,
WITH FULL POWER OF SUBSTITUTION, TO VOTE THE SHARES LISTED BELOW AS DIRECTED,
AND HEREBY REVOKES ANY PRIOR PROXIES. To vote, mark an X in blue or black ink on
the proxy card below. THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF
DIRECTORS OF TRANS ADVISER FUNDS, INC.
- -----Detach card at perforation and mail in postage paid envelope provided------
1. Vote on Proposal to approve an Agreement and Plan of Reorganization with
respect to the Intermediate Bond Fund.
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
2. In their discretion, the proxies are authorized to vote upon such other
business as may properly come before the meeting.
<PAGE>
- -----Detach card at perforation and mail in postage paid envelope provided------
TRANS ADVISER FUNDS, INC.
INTERMEDIATE BOND FUND
PROXY
THIS PROXY, WHEN PROPERLY EXECUTED AND RETURNED, WILL BE VOTED IN THE MANNER
DIRECTED HEREIN BY THE UNDERSIGNED. IF NO DIRECTION IS MADE, THIS PROXY WILL BE
VOTED FOR APPROVAL OF PROPOSAL 1.
Please sign exactly as name appears
on this card. When account is joint
tenants, all should sign. When
signing as administrator, trustee
or guardian, please give title. If
a corporation or partnership, sign
in entity's name and by authorized
person.
x
---------------------------------
x
---------------------------------
Dated: , 1997
-----------------------------
A-18
<PAGE>
TRANS ADVISER FUNDS, INC.
KENTUCKY TAX-FREE FUND
SPECIAL MEETING OF SHAREHOLDERS -- August 14, 1997
Please refer to the Proxy Statement for a discussion of these matters. THE
UNDERSIGNED HOLDER(S) OF SHARES OF STOCK OF THE KENTUCKY TAX-FREE FUND SERIES OF
TRANS ADVISER FUNDS, INC. HEREBY CONSTITUTES AND APPOINTS THOMAS A. TRANTUM AND
JERRY E. BAKER, OR EITHER OF THEM, THE ATTORNEYS AND PROXIES OF THE UNDERSIGNED,
WITH FULL POWER OF SUBSTITUTION, TO VOTE THE SHARES LISTED BELOW AS DIRECTED,
AND HEREBY REVOKES ANY PRIOR PROXIES. To vote, mark an X in blue or black ink on
the proxy card below. THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF
DIRECTORS OF TRANS ADVISER FUNDS, INC.
- -----Detach card at perforation and mail in postage paid envelope provided------
1. Vote on Proposal to approve an Agreement and Plan of Reorganization with
respect to the Kentucky Tax-Free Fund.
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
2. In their discretion, the proxies are authorized to vote upon such other
business as may properly come before the meeting.
<PAGE>
- -----Detach card at perforation and mail in postage paid envelope provided------
TRANS ADVISER FUNDS, INC.
KENTUCKY TAX-FREE FUND
PROXY
THIS PROXY, WHEN PROPERLY EXECUTED AND RETURNED, WILL BE VOTED IN THE MANNER
DIRECTED HEREIN BY THE UNDERSIGNED. IF NO DIRECTION IS MADE, THIS PROXY WILL BE
VOTED FOR APPROVAL OF PROPOSAL 1.
Please sign exactly as name appears
on this card. When account is joint
tenants, all should sign. When
signing as administrator, trustee
or guardian, please give title. If
a corporation or partnership, sign
in entity's name and by authorized
person.
x
---------------------------------
x
---------------------------------
Dated: , 1997
-----------------------------
A-20
<PAGE>
TRANS ADVISER FUNDS, INC.
MONEY MARKET FUND
SPECIAL MEETING OF SHAREHOLDERS -- August 14, 1997
Please refer to the Proxy Statement for a discussion of these matters. THE
UNDERSIGNED HOLDER(S) OF SHARES OF STOCK OF THE MONEY MARKET FUND SERIES OF
TRANS ADVISER FUNDS, INC. HEREBY CONSTITUTES AND APPOINTS THOMAS A. TRANTUM AND
JERRY E. BAKER, OR EITHER OF THEM, THE ATTORNEYS AND PROXIES OF THE UNDERSIGNED,
WITH FULL POWER OF SUBSTITUTION, TO VOTE THE SHARES LISTED BELOW AS DIRECTED,
AND HEREBY REVOKES ANY PRIOR PROXIES. To vote, mark an X in blue or black ink on
the proxy card below. THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF
DIRECTORS OF TRANS ADVISER FUNDS, INC.
- -----Detach card at perforation and mail in postage paid envelope provided------
1. Vote on Proposal to approve an Agreement and Plan of Reorganization with
respect to the Money Market Fund.
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
2. In their discretion, the proxies are authorized to vote upon such other
business as may properly come before the meeting.
<PAGE>
- -----Detach card at perforation and mail in postage paid envelope provided------
TRANS ADVISER FUNDS, INC.
MONEY MARKET FUND
PROXY
THIS PROXY, WHEN PROPERLY EXECUTED AND RETURNED, WILL BE VOTED IN THE MANNER
DIRECTED HEREIN BY THE UNDERSIGNED. IF NO DIRECTION IS MADE, THIS PROXY WILL BE
VOTED FOR APPROVAL OF PROPOSAL 1.
Please sign exactly as name appears
on this card. When account is joint
tenants, all should sign. When
signing as administrator, trustee
or guardian, please give title. If
a corporation or partnership, sign
in entity's name and by authorized
person.
x
---------------------------------
x
---------------------------------
Dated: , 1997
-----------------------------
A-22
