envestpre14a.htm
SCHEDULE
14A INFORMATION
PROXY
STATEMENT PURSUANT TO SECTION 14(a)
OF THE
SECURITIES EXCHANGE ACT OF 1934
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by the Registrant
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Preliminary Proxy Statement
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Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
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Definitive Proxy Statement
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Definitive Additional Materials
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Soliciting Material under Rule 14a-12
UNIFIED SERIES
TRUST
(Name of
Registrant as Specified In Its Charter)
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Proxy
Materials
PLEASE
CAST YOUR VOTE NOW!
3
TO 1 DIVERSIFIED EQUITY FUND
3
TO 1 STRATEGIC INCOME FUND
Each
a series of Unified Series Trust
c/o
Unified Fund Services, Inc.
2960
N. Meridian Street, Suite 300
Indianapolis,
Indiana 46208
(866)
616-4848
Envestnet
Asset Management, Inc. (“Envestnet”) has served as investment adviser to the 3
to 1 Strategic Income Fund and the 3 to 1 Diversified Equity Fund (each, a
“Fund,” and collectively, the “Funds”), each a series of Unified Series Trust
(the “Trust”), since their inception. On March 25, 2010, Envestnet’s
parent company, Envestnet, Inc., filed a registration statement pursuant to the
Securities Act of 1933, as amended, with respect to an initial public offering
of its shares. In connection with the initial public offering,
Envestnet, Inc. will undergo a capital restructuring. As a result, certain large
shareholders of Envestnet, Inc., each presumptively a “control person” of
Envestnet, Inc. currently by virtue of the fact that it owns more than 25% of
the outstanding shares of Envestnet, Inc., will own less than 25% of the
firm. As a result, a “change in control” of Envestnet, Inc. will
occur. However, there will be no change to the management and key
personnel of either Envestnet or Envestnet, Inc. as a result of the initial
public offering or capital restructuring.
The
change in control of Envestnet, Inc. also constitutes a change in control of
Envestnet, which will trigger an automatic termination of the investment
advisory agreements between Envestnet and the Trust with respect to the
Funds.
I am
writing to ask for your prompt vote for the approval of a new investment
advisory agreement between the Trust, on behalf on each Fund, and
Envestnet. The new investment advisory agreement will not result in
any changes to the Funds’ investment strategies. This package
contains information about the proposal to approve the new investment advisory
agreements.
The
proposal has been carefully reviewed by the Board of Trustees of the
Trust. The Board of
Trustees unanimously recommends that you vote FOR the proposal.
It
is very important that we receive your vote before June 25,
2010. Voting is quick and easy. Everything you need is
enclosed. To cast your vote:
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PHONE:
Call the toll-free number on your proxy card. Enter the control
number on your proxy card and follow the
instructions.
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INTERNET:
Visit the website indicated on your proxy card. Enter the
control number on your proxy card and follow the
instructions.
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MAIL:
Complete the proxy card(s) enclosed in this package. BE SURE TO
SIGN EACH CARD before mailing it in the postage-paid
envelope.
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I
appreciate your participation and prompt response in this matter.
Sincerely,
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/s/
John C. Swhear
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John
C. Swhear
Senior
Vice President
Unified
Series Trust
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Important
information to help you understand and vote on the proposal:
Please
read the full text of the proxy statement. Below is a brief overview
of the proposal to be voted upon. Your vote is
important.
What is this document and why did you
send it to me?
We are
sending this document to you for your use in deciding whether to approve a new
investment advisory agreement with Envestnet Asset Management, Inc.
(“Envestnet”) to enable Envestnet to continue as the investment adviser for the
3 to 1 Strategic Income Fund and the 3 to 1 Diversified Equity Fund (each, a
“Fund” and collectively, the “Funds”), each a series of Unified Series Trust
(the “Trust”). This document includes a Notice of Special Meeting of
Shareholders, a Proxy Statement, and a Proxy Card.
At a
meeting of the Trust’s Board of Trustees (the “Board of Trustees”) held on May
___, 2010, the Board of Trustees approved, subject to shareholder approval,
Envestnet as the investment adviser to the Funds and the new investment advisory
agreements.
What
am I being asked to vote on?
You are
being asked to vote to approve a new investment advisory agreement between
Envestnet and the Trust on behalf of each Fund.
Envestnet
has served as the investment adviser to the Funds since their
inception. On March 25, 2010, Envestnet’s parent company, Envestnet,
Inc., filed a registration statement pursuant to the Securities Act of 1933, as
amended (the “Securities Act”), with respect to an initial public offering of
its shares. In preparation for the initial public offering,
Envestnet, Inc. will undergo a capital restructuring. Through this
restructuring a large shareholder of Envestnet, Inc., EnvestNet Group, Inc.,
will merge with Envestnet, Inc. and will distribute the voting securities in
Envestnet, Inc. that it owns to EnvestNet Group, Inc.’s
shareholders. No former individual shareholder of EnvestNet Group,
Inc. will own 25% or more of the outstanding voting securities of Envestnet,
Inc. Also, another existing holder of more than 25% of Envestnet,
Inc.’s voting securities, GRP II L.P. (“GRP”), likely will experience a dilution
of its total ownership of Envestnet, Inc. to less than 25% of Envestnet, Inc.’s
voting securities following the capital restructuring and the public
offering. Thus, GRP will no longer hold a presumptive controlling
interest in Envestnet, Inc. Finally, EnvestNet Group, Inc. and
GRP, among others, are parties to a shareholders agreement that will
automatically terminate as a result of the foregoing
transactions. Since that agreement currently aggregates the voting
power of EnvestNet Group, Inc. and GRP together, its termination could also be
viewed to reduce or remove another “controlling block” of Envestnet, Inc.’s
outstanding voting securities. However, there
will be no change to the management and key personnel of either Envestnet or
Envestnet, Inc. as a result of the initial public offering or capital
restructuring.
The
change in control of Envestnet, Inc. constitutes a change in control of
Envestnet, which will trigger an automatic termination of the existing
investment advisory agreements between Envestnet and the Trust on behalf of the
Funds. Accordingly, each Fund needs shareholder approval to approve a
new investment advisory agreement in order to continue its engagement of
Envestnet as the Fund’s investment adviser on a permanent
basis. There are no material
differences between the present investment advisory agreement and the proposed
new investment advisory agreement, other than their effective
dates.
On May
____, 2010, the Board approved an interim advisory agreement between the Trust
and Envestnet on behalf of each Fund which, as permitted by Rule 15a-4 of the
Investment Company Act of 1940 (the “1940 Act”), allows Envestnet to continue
providing advisory services to the Funds while the Funds seek shareholder
approval of a permanent agreement.
How
will my approval of this proposal affect the management and operation of the
Funds?
The
Funds’ investment strategies will not change as a result of the new investment
advisory agreement with Envestnet. The same sub-advisers and
management teams will continue to manage the Funds’ portfolios.
How
will my approval of this proposal affect the expenses of the Funds?
The
proposed approval of the new investment advisory agreement with Envestnet will
not result in an increase of the investment advisory fees paid by the Funds to
Envestnet or in the Funds’ total expenses.
What
are the primary reasons for the selection of Envestnet as the investment adviser
of the Funds?
The Board of Trustees weighed a number of factors in
reaching its decision to approve Envestnet as the investment adviser for the
Funds, including the history, reputation, qualifications and resources of
Envestnet and the current sub-advisers and portfolio management teams selected
by Envestnet, who will continue to provide the day-to-day management of the
Funds. The Board of Trustees also considered that, as a result
of the proposal, the Funds’ advisory fees would not increase. In
addition, Envestnet has contractually
agreed to waive its advisory fee and reimburse expenses of the Funds to the
extent necessary to ensure that each Fund’s total annual operating expenses do
not exceed the Funds’ current expense limitations. The agreement by Envestnet to waive
advisory fees and/or reimburse expenses of the Funds will continue for the term
of the new investment advisory agreement.
Are
there any material differences between the present investment advisory agreement
and the proposed new investment advisory agreement?
No. There
are no material differences between the present investment advisory agreement
and the proposed new investment advisory agreement, other than their effective
dates.
Has the Board of Trustees approved
the proposal?
Yes. The
Board of Trustees has unanimously approved the proposal set forth herein, and
recommends that shareholders also vote to approve the proposal.
Who is Altman
Group?
Altman
Group is a third party proxy vendor that the Funds have engaged to contact
shareholders and record proxy votes. In order to hold a shareholder
meeting, a quorum must be reached for each Fund. If a quorum is not
attained for a Fund, the meeting must adjourn to a future date with respect to
such Fund. Voting your shares immediately will help minimize
additional solicitation expenses and prevent the need to call you to solicit
your vote.
Who is paying for this proxy mailing
and for the other expenses and solicitation costs associated with this
shareholder meeting?
Envestnet
(not the Funds’ shareholders) will pay the expenses incurred in connection with
preparing the proxy statement and its enclosures and all related legal and
solicitations expenses.
Who is eligible to
vote?
Shareholders
of record of each Fund as of the close of business on May 28, 2010 (the “Record
Date”) are entitled to be present and to vote at the special meeting of
shareholders (the “Special Meeting”) or any adjournment
thereof. Shareholders of record of each Fund at the close of business
on the Record Date will be entitled to cast one vote for each full share and a
fractional vote for each fractional share they hold on each proposal presented
at the Special Meeting.
What
vote is required?
Approval
of the new investment advisory agreement with Envestnet requires the vote of the
“majority of the outstanding voting securities” of each Fund. Under
the 1940 Act, a “majority of the outstanding voting securities” is defined as
the lesser of: (1) 67% or more of the voting securities of the
Fund entitled to vote present in person or by proxy at the Special Meeting, if
the holders of more than 50% of the outstanding voting securities entitled to
vote thereon are present in person or represented by proxy; or (2) more
than 50% of the outstanding voting securities of the Fund entitled to vote
thereon.
How do I vote my
shares?
Although
you may attend the Special Meeting and vote in person, you do not have
to. You can vote your shares by completing and signing the enclosed
proxy card and mailing it in the enclosed postage-paid envelope. You
may also vote by touch-tone telephone by calling the toll-free number printed on
your proxy card and following the recorded instructions.
In
addition, you may vote through the Internet by visiting www.proxyvote.com and
following the on-line instructions. If you need any assistance, or
have any questions regarding the proposal or how to vote your shares, please
call 1-800-___-______.
If you
simply sign and date the proxy card but do not indicate a specific vote, your
shares will be voted FOR the proposal and to grant discretionary authority to
the persons named in the card as to any other matters that properly come before
the Special Meeting. Abstentions will be treated as votes AGAINST the
proposal.
Shareholders
who execute proxies may revoke them at any time before they are voted by
(1) filing with the Funds a written notice of revocation, (2) timely
voting a proxy bearing a later date or (3) by attending the Special Meeting
and voting in person.
How
can a quorum be established?
A
majority of a Fund’s outstanding shares, present in person or represented by
proxy, constitute a quorum at the Special Meeting for a Fund. Proxies
returned for shares that represent broker non-votes, and shares whose proxies
reflect an abstention on any item, are all counted as shares present and
entitled to vote for purposes of determining whether the required quorum of
shares exists. However, since such shares are not voted in favor of
the proposal, they have the effect of counting as a vote AGAINST the
proposal. If a quorum is not present for a Fund at the Special
Meeting, or if a quorum is present at the Special Meeting but sufficient votes
to approve a proposal are not received on behalf of a Fund, or if other matters
arise requiring shareholder attention, persons named as proxy agents may propose
one or more adjournments of the Special Meeting to permit further solicitation
of proxies with respect to such Fund.
Please
complete, sign and return the enclosed proxy card in the enclosed
envelope. You may vote your proxy by Internet or telephone in
accordance with the instructions set forth on the enclosed proxy
card. No postage is required if mailed in the United
States.
3
TO 1 STRATEGIC INCOME FUND
3
TO 1 DIVERSIFIED EQUITY FUND
Each
a series of Unified Series Trust
c/o
Unified Fund Services, Inc.
2960
N. Meridian Street, Suite 300
Indianapolis,
IN 46208
(866)
616-4848
NOTICE OF SPECIAL MEETING OF
SHAREHOLDERS
A special
meeting of shareholders (the “Special Meeting”) of the 3 to 1 Strategic Income
Fund and the 3 to 1 Diversified Equity Fund (each, a “Fund” and collectively,
the “Funds”), each a series of the Unified Series Trust (the “Trust”), will be
held at the offices of the Funds’ administrator, Unified Fund Services, Inc.,
2960 N. Meridian Street, Suite 300, Indianapolis, Indiana, 46208, on Friday,
June 25, 2010, at 9:00 a.m., Eastern time.
The
purpose of the Special Meeting is to consider and act upon the following
proposal and to transact such other business as may properly come before the
Special Meeting or any adjournments thereof:
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1.
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to
approve an Investment Advisory Agreement between Envestnet Asset
Management, Inc. and the Trust on behalf of each Fund;
and
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2.
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to
transact such other business as may properly come before the Special
Meeting or any adjournments
thereof.
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The
Trust’s Board of Trustees has fixed the close of business on May 28, 2010 as the
record date for the determination of the shareholders entitled to notice of, and
to vote at, the Special Meeting and any adjournments thereof.
By order
of the Board of Trustees of the Trust,
John C.
Swhear, Senior Vice President
May ___ ,
2010
Your vote is important – please vote
your shares promptly.
Shareholders are invited to attend
the Special Meeting in person. Any shareholder who does not expect to
attend the Special Meeting is urged to vote using the touch-tone telephone or
Internet voting instructions found on the enclosed proxy card or indicate voting
instructions on the enclosed proxy card, date and sign it, and return it in the
envelope provided, which needs no postage if mailed in the United
States. In order to avoid unnecessary expense, we ask your
cooperation in responding promptly, no matter how large or small your holdings
may be.
SPECIAL
MEETING OF SHAREHOLDERS OF
3
TO 1 STRATEGIC INCOME FUND
3
TO 1 DIVERSIFIED EQUITY FUND
Each
a series of Unified Series Trust
c/o
Unified Fund Services, Inc.
2960
N. Meridian Street, Suite 300
Indianapolis,
IN 46208
(866)
616-4848
TO
BE HELD ON JUNE 25, 2010
This Proxy Statement is furnished in connection with a
solicitation of proxies made by, and on behalf of, the Board of Trustees (the
“Board of Trustees”) of Unified Series Trust (the “Trust) and its series, the 3
to 1 Strategic Income Fund and the 3 to 1 Diversified Equity Fund (each, a
“Fund” and collectively, the “Funds”), and at any adjournments thereof (the
“Special Meeting”), to be held on Friday, June 25, 2010 at 9:00 a.m., Central
time, at the offices of the Funds’ administrator, Unified Fund Services, Inc.,
2960 N. Meridian Street, Suite 300, Indianapolis, Indiana 46208.
Shareholders
of record of each Fund at the close of business on the record date, established
as May 28, 2010 (the “Record Date”), are entitled to notice of, and to vote
at, the Special Meeting. This proxy statement is expected to be
mailed to shareholders on or about May ___, 2010. The Special Meeting
is being held to vote on the following proposal and to transact such other
business as may properly come before the Special Meeting or any adjournments
thereof:
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To
Approve an Investment Advisory Agreement Between Envestnet Asset
Management, Inc. and the Trust on behalf of each
Fund
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Shareholders
of the Funds are being asked to approve a new investment advisory agreement
between Envestnet Asset Management, Inc. (“Envestnet” or the “Adviser”) and the
Trust on behalf of each Fund.
Important
Notice Regarding the Availability of Proxy Materials for the
Shareholder
Meeting to be Held on June 11, 2010:
The
Notice of Special Meeting, Proxy Statement and Proxy Card are available at www.proxyvote.com. Enter
the control number provided on your Proxy Card and follow the
instructions. To obtain directions to attend the Special Meeting,
please call (866) 616-4848. For a free copy of the Funds’ latest
annual and/or semi-annual reports, call (866) 616-4848, visit the Funds’ website at
www._______.com or write to the Funds, c/o Unified Fund Services, Inc., 2960 N.
Meridian Street, Suite 300, Indianapolis, Indiana, 46208.
Background
Envestnet
has served as the investment adviser to the Funds since their
inception. On March 25, 2010, Envestnet’s parent company, Envestnet,
Inc., filed a registration statement pursuant to the Securities Act of 1933, as
amended (the “Securities Act”), with respect to an initial public offering of
its shares. In preparation for the initial public offering,
Envestnet, Inc. will undergo a capital restructuring. Through this
restructuring a large shareholder of Envestnet, Inc., EnvestNet Group, Inc.,
will merge with Envestnet, Inc. and will distribute the voting securities in
Envestnet, Inc. that it owns to EnvestNet Group, Inc.’s
shareholders. No former individual shareholder of EnvestNet Group,
Inc. will own 25% or more of the outstanding voting securities of Envestnet,
Inc. Also, another existing holder of more than 25% of Envestnet,
Inc.’s voting securities, GRP II L.P. (“GRP”), will likely experience a dilution
of its total ownership of Envestnet, Inc. to less than 25% of Envestnet, Inc.’s
voting securities following the capital restructuring and the public
offering. Thus, GRP will no longer hold a presumptive controlling
interest in Envestnet, Inc. Finally, EnvestNet Group, Inc. and
GRP, among others, are parties to a shareholders agreement that will
automatically terminate as a result of the foregoing
transactions. Since that agreement currently aggregates the voting
power of EnvestNet Group, Inc. and GRP together, its termination could also be
viewed to reduce or remove another “controlling block” of Envestnet, Inc.’s
outstanding voting securities. However, there will be no change to
the management and key personnel of either Envestnet or Envestnet, Inc. as a
result of the initial public offering or capital restructuring.
The
change in control of Envestnet, Inc. constitutes a change in control of
Envestnet. Under the Investment Company Act of 1940, as amended (the
“1940 Act”), an investment advisory agreement automatically terminates when
an investment adviser undergoes a change in control.
With the change in control of Envestnet and the
resulting termination of Envestnet’s investment advisory agreements with the
Trust on behalf of the Funds, the Board of Trustees was required to take action
to approve the necessary arrangements for the continued management of the Funds
by the same investment adviser. At a meeting of the Board of Trustees
held on May ____, 2010, the Board of Trustees, including a majority of Trustees
who are not “interested persons,” as that term is defined under the 1940 Act
(the “Independent Trustees”), voted unanimously to authorize the Trust to
enter into interim advisory agreement with Envestnet on behalf of the Funds as
permitted by Rule 15a-4 under the 1940 Act, pursuant to which Envestnet would
continue providing advisory services while each Fund would have 150 days to
obtain shareholder approval of a permanent agreement.
At their
May meeting, the Board of Trustees also approved the proposed new investment
advisory agreement (the “New Investment Advisory Agreement”) between Envestnet
and the Trust on behalf of each Fund, retaining Envestnet as investment adviser
for the Funds. The Board voted unanimously to recommend that each
Fund’s shareholders approve the New Investment Advisory Agreement. Accordingly,
each Fund needs shareholder approval to re-engage Envestnet as its investment
adviser on a permanent basis.
To
achieve the investment objectives of the 3 to 1 Strategic Income Fund and the 3
to 1 Diversified Equity Fund, Envestnet utilizes sub-advisers with expertise in
various types of investment strategies using a “manager of managers”
approach. Envestnet selects the sub-advisers for the Funds, subject
to approval by the Board of Trustees, and allocates the assets of each Fund
among its respective sub-advisers. The Trust and Envestnet have
applied for, and the SEC has granted, an exemptive order with respect to the
Funds that permits Envestnet, subject to certain conditions, to terminate
existing sub-advisers or hire new sub-advisers for the Funds, to materially
amend the terms of particular agreements with sub-advisers or to continue the
employment of existing sub-advisers after events that would otherwise cause an
automatic termination of a sub-advisory agreement. This arrangement
has been approved by the Board of Trustees and each Fund’s initial
shareholder. The manager of managers structure enables the Funds to
operate with greater efficiency and without incurring the expense and delays
associated with obtaining shareholder approval of sub-advisory
agreements. SMH Capital Advisors, Inc. and Loomis, Sayles &
Company, LP currently serve as the sub-advisers to the 3 to 1 Strategic Income
Fund; and Aletheia Research Management, Inc., London Company of Virginia, and
Pictet Asset Management Ltd. (collectively, the
“Sub-Advisers”) currently serve as the sub-advisers to the 3 to 1
Diversified Equity Fund. There will be no change to the Sub-Advisers
as a result of the New Investment Advisory Agreement, or to the sub-advisory
agreements between Envestnet and the Sub-Advisers (the “Sub-Advisory
Agreements”). However, under the terms of the Sub-Advisory
Agreements, the termination of Envestnet’s investment advisory agreement will
cause the termination of, the Sub-Advisory Agreements. The Board of
Trustees has approved new Sub-Advisory Agreements, as permitted under the
exemptive order, subject to the approval of each New Investment Advisory
Agreement at the Special Meeting.
Legal
Requirements in Approving the New Investment Advisory Agreements
To avoid
disruption of the Funds’ investment management and after considering the
potential benefits to shareholders of continuing to engage Envestnet as the
Funds’ investment adviser, as discussed more fully below, the Board of Trustees
voted unanimously to approve each New Investment Advisory
Agreement.
The form
of the New Investment Advisory Agreement is attached hereto as Exhibit A. The
terms of each New Investment Advisory Agreement are substantially similar to the
terms of the prior investment advisory agreement (the “Prior Investment Advisory
Agreement”) with respect to services to be provided by Envestnet compared to
those it previously provided. The Prior Investment Advisory Agreement
for each Fund was approved by the Fund’s initial shareholder and became
effective on December 10, 2007. The Board of Trustees approved the
renewal of each Prior Investment Advisory Agreement with respect to the Funds
for an additional one-year term ending December 10, 2010 at a meeting of the
Board of Trustees on November 9, 2009.
The New
Investment Advisory Agreements and the Prior Investment Advisory Agreements have
identical fee structures for each Fund. There are no material
differences between the two agreements, other than their effective
dates. The material terms of the New Investment Advisory Agreement
and the Prior Investment Advisory Agreement are compared below in the “Summary
of the New Investment Advisory Agreement and Prior Investment Advisory
Agreement” section.
The
Board of Trustees has authorized the Funds to continue engaging
Envestnet pursuant to an interim advisory agreement under Rule 15a-4
until a permanent agreement is approved by the shareholders of the affected
Fund. During
the term of the interim agreement, the advisory fees earned by Envestnet will be
held in an interest-bearing escrow account with the Fund’s custodian, Huntington
National Bank, and shall be paid out to Envestnet as follows:
(a) if
a majority of a Fund’s outstanding voting securities (as defined by the 1940
Act) approve a new investment advisory agreement with Envestnet on or before the
date that the interim agreement is terminated, the amount in the escrow account
(including interest earned) shall be paid to Envestnet; or
(b) if
a majority of a Fund’s outstanding voting securities (as defined by the 1940
Act) do not approve a new investment advisory agreement with Envestnet,
Envestnet shall be paid, out of the escrow account, the lesser of:
i. any
costs incurred by Envestnet in performing the interim agreement (including any
interest earned on that amount while in escrow); or
ii. the
total amount in the escrow account (including interest earned).
Compensation
Paid to Envestnet
The table
below illustrates the base advisory fees paid to Envestnet under each Prior
Investment Advisory Agreement:
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Advisory
Fee (as a percentage of average daily net assets)
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3
to 1 Strategic Income Fund
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1.00%
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|
|
|
|
|
|
|
|
|
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3
to 1 Diversified Equity Fund
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1.00%
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Subject
to the general supervision of the Board of Trustees, Envestnet is responsible
for managing the Funds in accordance with their investment objectives and
policies using a “manager of managers” approach, and making recommendations with
respect to the hiring, termination or replacement of
sub-advisers. The fee structure under each New Investment Advisory
Agreement with Envestnet will be identical to the fee structure under the Prior
Investment Advisory Agreement as set forth above. For the fiscal year
ended December 31, 2009, the Funds paid Envestnet investment advisory fees in
the amounts shown below.
Management
Fees Paid to Envestnet for Fiscal Year Ended December 31, 2009
Strategic
Income Fund
|
Advisory
Fee
|
|
|
Fee
Waivers/Expense Reimbursements
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|
|
Advisory
Fee After Waiver/Reimbursement
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|
| $ |
250,672 |
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|
$ |
259,607 |
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|
$ |
0 |
|
Diversified
Equity Fund
|
Advisory
Fee
|
|
|
Fee
Waivers/Expense Reimbursements
|
|
|
Advisory
Fee after Waiver/Reimbursement
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|
| $ |
390,895 |
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|
$ |
387,212 |
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$ |
3,683 |
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In
connection with the Prior Investment Advisory Agreements, Envestnet
contractually agreed to an operating expense limitation that limited the total
annual operating expenses (with certain exceptions) of each Fund to 1.15% of a
Fund’s respective average annual net assets. The expense limitation
agreed to by Envestnet in connection with the New Investment Advisory Agreement
will be identical to the expense limitation agreed to by Envestnet in connection
with the Prior Investment Advisory Agreement.
Information
about Envestnet
Envestnet
is registered with the Securities and Exchange Commission (“SEC”) as an
investment adviser under the Investment Advisers Act of 1940, as
amended. Envestnet’s principal office is located at 35 East Wacker
Drive, Suite 2400, Chicago, Illinois 60601. As of March 31, 2010,
Envestnet and its affiliates managed approximately $10.9 billion of investment
assets.
The
following table sets forth the name, position and principal occupation of each
current director and principal officer of Envestnet. Each
individual’s address is 35 East Wacker Drive, Suite 2400, Chicago, Illinois
60601.
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Name
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Position/Principal
Occupation
|
|
Judson
T. Bergman
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Chairman,
Chief Executive Officer and Director
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Brandon
R. Thomas
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Vice
President, Chief Investment Officer and Managing
Director
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|
James
W. Lumberg
|
Executive
Vice President and Managing Director
|
|
William
C. Crager
|
Executive
Vice President and Managing Director
|
|
Shelly
S. O’Brien
|
Executive
Vice President, General Counsel and Secretary
|
|
Dale
J. Seier
|
Controller
|
|
William
V. Rubino, Jr.
|
Chief
Administrative Officer
|
|
Eric
B. Fowler
|
Senior
Vice President
|
|
Charles
F. Tennant
|
Chief
Operating Officer
|
|
Peter
H. Darrigo
|
Chief
Financial Officer
|
|
Timothy
S. Sterns
|
Chief
Compliance Officer
|
The
following table sets forth the name of each parent company of Envestnet, and the
basis of each parent company’s control of Envestnet and its parent
companies. Each company’s address is 35 East Wacker Drive, Suite
2400, Chicago, Illinois 60601.
|
Name
|
Basis
of Control
|
|
Envestnet,
Inc.
|
Sole
Parent Company of Envestnet, owning 100% of its outstanding
shares
|
|
GRP
II, L.P.
|
Shareholder
of Envestnet, Inc., owning more than 25% of its outstanding
shares
|
|
EnvestNet
Group, Inc.
|
Shareholder
of Envestnet, Inc., owning more than 25% of its outstanding
shares
|
Summary
of the New Investment Advisory Agreement and the Prior Investment Advisory
Agreement
A copy of
the proposed New Investment Advisory Agreement is attached hereto as Exhibit A. The
following description is only a summary. However, all material terms
of the New Investment Advisory Agreement have been included in this
summary. You should refer to Exhibit A for the New
Investment Advisory Agreement, and the description set forth in this Proxy
Statement of the New Investment Advisory Agreement is qualified in its entirety
by reference to Exhibit A. The
investment advisory services to be provided by Envestnet under the New
Investment Advisory Agreement and the fee structure are identical
to the services currently provided by Envestnet and the fee structure under the
Prior Investment Advisory Agreement.
Advisory Services. Both the New Investment
Advisory Agreement and the Prior Investment Advisory Agreement state that,
subject to the supervision and direction of the Board of Trustees, Envestnet
will provide for the overall management of the Funds including: (i) furnish
the Funds with advice and recommendations with respect to the investment of the
Funds’ assets and the purchase and sale of portfolio securities for the Funds,
including the taking of such steps as may be necessary to implement such advice
and recommendations (i.e., placing the orders);
(ii) manage and oversee the investments of the Funds, subject to the
ultimate supervision and direction of the Board of Trustees;
(iii) vote proxies for the Funds, and take other actions on behalf of the
Funds; Both the Prior Investment Advisory Agreement and New Investment Advisory
Agreement provide that Envestnet is authorized to delegate its duties under the
agreement to one or more sub-advisers pursuant to a written agreement under
which such sub-advisers shall furnish the services specified in the agreement to
Envestnet or the Funds. Each agreement provides that Envestnet will
continue to have responsibility for all investment advisory services furnished
pursuant to any agreement with a sub-adviser.
Other Investment Companies Advised
by Envestnet. Envestnet currently acts as adviser to the
following registered investment companies having similar investment objectives
and policies to those of the Funds. The table below also states the
approximate size of the funds as of December 31, 2009, and the current advisory
fee rate for the funds as a percentage of average daily net
assets. Envestnet has agreed to waive its management fee and/or to
reimburse certain operating expenses of these funds, but only to the extent
necessary so that each fund’s total annual operating expenses, do not exceed
1.00% of the average daily net assets of the Core Fixed Income, and 1.40% of the
average daily net assets of the Diversified Equity Fund .
|
Fund
|
|
Net
Assets as of 12/31/2009
|
|
|
Advisory
Fee Rate
|
|
|
Diversified
Equity Fund
|
|
$ |
48,772,494.54 |
|
|
|
0.80 |
% |
|
Core
Fixed Income Fund
|
|
$ |
30,333,427.34 |
|
|
|
0.95 |
% |
Brokerage. Both
the New Investment Advisory Agreement and the Prior Investment Advisory
Agreement provide that Envestnet shall be responsible for decisions to buy and
sell securities for the Funds, for broker-dealer selection and for negotiation
of brokerage commission rates. The Adviser’s primary consideration in
effecting a securities transaction will be execution at the most favorable
price. In selecting a broker-dealer to execute each particular
transaction, the Adviser may take the following into consideration: the best net
price available; the reliability, integrity and financial condition of the
broker-dealer; the size of and difficulty in executing the order; and the value
of the expected contribution of the broker-dealer to the investment performance
of a Fund on a continuing basis. The price to a Fund in any
transaction may be less favorable than that available from another broker-dealer
if the difference is reasonably justified by other aspects of the portfolio
execution services offered.
Payment of
Expenses. Both the New Investment Advisory Agreement and the
Prior Investment Advisory Agreement provide that Envestnet is responsible for
providing the personnel, office space and equipment reasonably necessary for the
operation of the Funds, the expenses of printing and distributing copies of the
Funds’ prospectus, SAI, and sales and advertising materials to prospective
investors, the costs of any special Board of Trustees meetings or shareholder
meetings convened for the primary benefit of the Adviser, and any costs of
liquidating or reorganizing a Fund.
Both the
New Investment Advisory Agreement and the Prior Investment Advisory Agreement
provide that the Funds are responsible for all of their own expenses, except for
those specifically assigned to the Adviser under the advisory agreement,
including but not limited to: fees and expenses incurred in connection with the
issuance, registration and transfer of its shares; brokerage and commission
expenses; all fees and expenses related to Fund custody, shareholder services
and Fund accounting; interest charges on any borrowings; costs and expenses of
pricing and calculating its daily net asset value and of maintaining its books;
insurance premiums on property or personnel of the Funds which inure to its
benefit; the cost of preparing and printing regulatory documents and other
communications for distribution to existing shareholders; legal, auditing and
accounting fees; fees and expenses (including legal fees) of registering and
maintaining registration of its shares for sale; all expenses of maintaining and
servicing shareholder accounts, and all other charges and costs of its operation
plus any extraordinary and non-recurring expenses.
Management
Fees. Both the New Investment Advisory Agreement and Prior
Investment Advisory Agreement contain an identical fee structure based on the
Funds’ average daily net assets.
Duration and
Termination. The Prior Investment Advisory Agreement provided
that the agreement would become effective at the time each Fund commenced
operations. The New Investment Advisory Agreement provides that the agreement
will become effective at the time a Fund receives an affirmative vote of a
majority of the outstanding voting securities of the Fund. Both the
Prior Investment Advisory Agreement and the New Investment Advisory Agreement
provide that the agreements will continue in effect for a period of two years,
unless sooner terminated, and that they shall continue in effect for successive
annual periods, with such continuation to be approved at least annually by the
Board of Trustees or by the vote of a majority of the Funds’ outstanding
securities. Both the Prior Investment Advisory Agreement and the New
Investment Advisory Agreement may be terminated at any time, on 60 days’
prior written notice, by a Fund (by vote of the Board of Trustees or by vote of
a majority of the outstanding voting securities of such Fund) without the
payment of a penalty, or by the Adviser at any time, without the payment of a
penalty, upon 60 days’ prior written notice.
Limitation of Liability to Trust
Property. Both the New Investment Advisory Agreement and the
Prior Investment Advisory Agreement provide that, in absence of willful
misfeasance, bad faith, negligence, or reckless disregard of the duties imposed
on the Adviser by the agreements, the Adviser will not be subject to liability
to the Trust or the Funds for any act or omission in the course of, or connected
with, rendering services under the agreement or any losses sustained in the
purchase, holding, or sale of any security of a Fund. Obligations of the Trust
shall not be binding upon any of the trustees, shareholders, nominees, officers,
agents or employees of the Trust personally, but bind only the trust
property.
Board
of Trustees Recommendation of Approval
In
reaching its decision to recommend the approval of the New Investment Advisory
Agreement on behalf of each Fund, the Board of Trustees, including each of the
Independent Trustees, met in person at a meeting held on May ___, 2010, during
which the Board reviewed materials related to Envestnet. In the
course of their review, the Trustees considered their fiduciary responsibilities
with regard to all factors deemed to be relevant to the Fund. The
Board Trustees also considered other matters, including, but not limited to the
following: (1) the quality of services provided to the Funds in the past by
Envestnet and the Sub-Advisers since the Funds’ inception compared to the
quality of services expected to be provided to the Funds with Envestnet as a
manager of managers going forward; (2) the performance of the Funds while
managed by Envestnet; (3) the fact that there are no material differences
between the terms of the New Investment Advisory Agreement and terms of the
Prior Investment Advisory Agreement; (4) the fact that Envestnet is
retaining the Funds’ current Sub-Advisers and portfolio managers to continue
managing the Funds, as well as the fact that the Funds will benefit from the
depth of investment talent and resources of Envestnet and each of the
Sub-Advisers; (5) the fact that the fee structure under the New Investment
Advisory Agreement will be identical to the fee structure under the Prior
Investment Advisory Agreement and that Envestnet has agreed to maintain the
Funds’ current expense limitation agreements; and (6) other factors deemed
relevant.
The Board
of Trustees also evaluated the New Investment Advisory Agreements in light of
information they had requested and received from Envestnet prior to the May ___,
2010 meeting. Below is a summary of the material factors considered
by the Board of Trustees in its deliberations as to whether to approve the New
Investment Advisory Agreement, and the Board’s conclusions. In their
deliberations, the Trustees did not rank the importance of any particular piece
of information or factor considered, but considered these matters in their
totality.
Nature, Extent and Quality of
Services Provided to the Funds. The Trustees considered the nature,
extent and quality of services provided by Envestnet to the Funds and the amount
of time devoted to the Funds’ affairs by Envestnet’s staff. The
Trustees considered Envestnet’s specific responsibilities in all aspects of
day-to-day management of the Funds, including the supervision of investment
strategies implemented by each of the Funds’ Sub-Advisers, as well as the
qualifications of key personnel at Envestnet involved in the day-to-day
activities of the Funds. The Trustees considered that Envestnet provides the
services of two portfolio managers and three compliance personnel to assist in
the management of the Funds. The Trustees reviewed information
provided by Envestnet in a due diligence summary, including the structure of
Envestnet’s compliance program, and a summary detailing the key features of the
compliance policies and procedures, and Envestnet’s marketing activity and goals
and its continuing commitment to the growth of the Funds’ assets. The
Trustees noted that during the course of the prior year they had met with
representatives of Envestnet via teleconference to discuss the Funds’
performance and outlook, along with the marketing and compliance efforts made by
Envestnet. The Trustees also considered Envestnet’s selection and oversight of
the Funds’ Sub-Advisers. The Trustees discussed in detail Envestnet’s
handling of compliance matters including the reports of the Trust’s chief
compliance officer to the Board of Trustees on the effectiveness of Envestnet’s
compliance program and oversight of the compliance programs of the Sub-Advisers.
The Trustees found that Envestnet and each Sub-Adviser had adopted a compliance
program reasonably designed to prevent a violation of federal securities laws by
the Funds. The Trustees concluded that Envestnet had sufficient quality and
depth of personnel, resources, investment methods and compliance policies and
procedures essential to performing its duties under the New Investment Advisory
Agreement and managing the Funds under the “manager of managers” structure and
that the nature, overall quality and extent of the management services provided
to the Funds, as well as Envestnet’s compliance policies and procedures, were
satisfactory and reliable.
Investment Performance of Envestnet
and the Funds. The Trustees discussed the Funds’ recent
performance and the overall performance by Envestnet since the inception of each
Fund. In assessing the quality of the portfolio management services
delivered by Envestnet under the “manager of managers” structure, the Trustees
also compared the short-term and long-term performance of the Funds on both an
absolute basis and in comparison to the Funds’ benchmark indexes. The
Trustees noted that each Fund’s performance was generally in line with its
benchmark index, Barclay’s Capital Aggregate Bond Index for the 3 to 1 Strategic
Income Fund, and the MSCI World Index for the 3 to 1 Diversified Equity
Fund. After considering all of the information, the Trustees
concluded that the performance obtained by Envestnet for the Funds was
satisfactory under current market conditions and that Envestnet has developed
the necessary expertise and resources in selecting and managing the Sub-Advisers
to the Funds to provide investment advisory services in accordance with each
Fund’s investment objective and strategy. Although past performance
is not a guarantee or indication of future results, the Trustees determined that
the Funds and their shareholders were likely to benefit from Envestnet’s
continued management.
Costs of Service and Profits
Realized by Envestnet. The Trustees considered the cost of
services and the structure of Envestnet’s fees, including a review of the
expense analyses and other pertinent material with respect to the
Funds. The Trustees reviewed the related statistical information and
other materials provided, including the comparative expenses, expense components
and peer group selections. The Trustees considered data relating to
the cost structure of the Funds relative to their peer groups, as compiled by
Lipper, Inc., as well as the fee waivers and expense reimbursements by
Envestnet. In reviewing the Funds’ fees and total expense structure,
the Trustees took into account the Funds’ “manager of managers” structure,
noting that Envestnet pays each of the Funds’ sub-advisory fees out of its own
advisory fees, and that the Funds were not directly responsible for payment of
any sub-advisory fees.
The
Trustees also considered the overall profitability of Envestnet, reviewing
Envestnet’s financial information and noting that Envestnet had subsidized the
Funds’ operations since their inception and had not yet recouped those
subsidies. The Trustees also examined the level of profits that could
be expected to accrue to Envestnet from the fees payable under the New
Investment Advisory Agreement and the expense subsidization undertaken by
Envestnet. These considerations were based on materials requested at
the time of renewal of the investment advisory agreement by the Trustees and the
Funds’ administrator specifically for the November 2009 quarterly
Board meeting at which the Investment Advisory Agreement was formally
renewed.
The
Trustees concluded that the Funds’ expenses and the advisory fees payable to
Envestnet were fair and reasonable in light of the comparative expense
information and considering the Funds’ “manager of managers”
structure. The Trustees further concluded that Envestnet’s profit
from sponsoring the Funds had not been, and currently was not, excessive and
that Envestnet had maintained adequate profit levels to support the services to
the Funds.
Extent of Economies of Scale as the
Funds Grow. The Trustees compared the Funds’ expenses relative
to their peer groups and discussed realized and potential economies of
scale. The Trustees also reviewed the structures of each Fund’s
advisory fee and whether each Fund was large enough to generate economies of
scale for shareholders or whether economies of scale would be expected to be
realized as the Funds’ assets grow (and if so, how whose economies of scale were
being or would be shared with shareholders). The Trustees reviewed
all fee waivers and expense reimbursements by Envestnet with respect to the
Funds. The Trustees concluded that Envestnet’s advisory fee structure
and fee waivers/expense reimbursements were reasonable and reflect a sharing of
economies of scale between Envestnet and the Funds at the Funds’ current asset
levels.
Benefits Derived from the
Relationship with the Funds. The Trustees considered the
direct and indirect benefits that could be realized by Envestnet from its
association with the Funds, including Envestnet’s summary of “fall-out”
benefits. The Trustees also noted that Envestnet receives no soft
dollar benefits with respect to its management of the Funds. The
Trustees concluded that any benefits Envestnet received from its management of
the Funds, including increased name recognition or greater exposure to press
coverage, appear to be reasonable, and in many cases may benefit the
Fund.
No single
factor was determinative in the Board of Trustees decision to approve the New
Investment Advisory Agreement for each Fund, but rather the Board of Trustees
based its determination on the total mix of information available to the
Trustees. Based on a consideration of all the factors in their
totality, the Board of Trustees determined that each New Investment Advisory
Agreement, including the advisory fees, was fair and reasonable. The
Board of Trustees therefore determined that the approval of the New Advisory
Agreement for each Fund would be in the best interest of the Fund and its
shareholders.
Vote Required
Approval of the proposal to approve the
New Investment Advisory Agreement in order to re-engage Envestnet as the
investment adviser for the Funds requires the vote of the “majority of the
outstanding voting securities” of each Fund. Under the 1940 Act, a
“majority of the outstanding voting securities” is defined as the lesser of:
(1) 67% or more of the voting securities of a Fund entitled to vote present
in person or by proxy at the Special Meeting, if the holders of more than 50% of
the outstanding voting securities entitled to vote thereon are present in person
or represented by proxy; or (2) more than 50% of the outstanding voting
securities of the Fund entitled to vote thereon.
Based
on all of the foregoing, the Trustees recommend that shareholders of each Fund
vote FOR the approval of the New Investment Advisory Agreement.
The Board
of Trustees knows of no other business to be brought before the Special
Meeting. However, if any other matters properly come before the
Special Meeting, proxies that do not contain specific instructions to the
contrary will be voted on such matters in accordance with the judgment of the
persons designated therein.
SUBMISSION
OF SHAREHOLDER PROPOSALS
The Funds
do not hold annual shareholder meetings. Shareholders wishing to
submit proposals for inclusion in a proxy statement for a shareholder meeting
should send their written proposals to the Secretary of the Trust, c/o Unified
Funds Services, Inc., 2960 N. Meridian Street, Suite 300, Indianapolis, Indiana
46208. Proposals must be received a reasonable time prior to the date
of a meeting of shareholders to be considered for inclusion in the proxy
materials for the meeting. Timely submission of a proposal does not,
however, necessarily mean the proposal will be included.
NOTICE
TO BANKS, BROKER-DEALERS AND
VOTING
TRUSTEES AND THEIR NOMINEES
Banks,
broker-dealers, voting trustees and their nominees should advise the Funds, in
care of Unified Funds Services, Inc., 2960 N. Meridian Street, Suite 300,
Indianapolis, Indiana 46208, whether other persons are beneficial owners of
shares held in their names for which proxies are being solicited and, if so, the
number of copies of the Proxy Statement they wish to receive in order to supply
copies to the beneficial owners of the respective shares.
Any
Purchases or Sales of Securities of Envestnet
Since the
beginning of the most recently completed fiscal year, no Trustee has made any
purchases or sales of securities of Envestnet or any of its affiliated
companies.
Voting
Securities, Principal Shareholders and Management Ownership
Shareholders
of the Funds at the close of business on May 28, 2010, will be entitled to be
present and vote at the Special Meeting. As of that date, the Funds
had the following number of shares outstanding:
|
Fund
Shares Outstanding as of May 28, 2010
|
|
3
to 1 Strategic Income Fund:
|
|
3
to 1 Diversified Equity Fund:
|
Management Ownership. As of
December 31, 2009, no officer or trustee of the Trust as a group owned of record
or beneficially any of the Funds’ outstanding shares. Furthermore,
neither the Trustees nor members of their immediate family own securities
beneficially or of record of Envestnet, the Funds’ principal underwriter or any
of their affiliates. Accordingly, neither the Trustees nor members of
their immediate family, have a direct or indirect interest, the value of which
exceeds $120,000, in Envestnet, the Funds’ principal underwriter or any of their
affiliates. In addition, during the most recently completed calendar
year, neither the Trustees nor members of their immediate families have
conducted any transactions (or series of transactions) in which the amount
involved exceeded $120,000 and to which Envestnet, the Funds’ principal
underwriter or any of their affiliates was a party.
Control Persons and Principal
Shareholders. A principal shareholder is any person who owns of record or
beneficially 5% or more of the outstanding shares of a Fund. A
control person is one who owns beneficially or through controlled companies more
than 25% of the voting securities of a Fund or acknowledges the existence of
control. As of May 28, 2010
there were no shareholders considered to be either
a control person or principal shareholder of the Funds.
Portfolio
Transactions
The Funds
do not allocate portfolio brokerage on the basis of the sales of the Funds’
shares. Brokerage firms whose customers purchase shares of the Funds
may participate in brokerage commissions, but only pursuant to the Funds’
“Policy with Respect to Allocation of Brokerage to Compensate for Distribution
of Fund Shares.” The Funds may execute portfolio transactions through
an affiliated broker of Envestnet; provided that any commissions paid to the
affiliated broker are usual and customary.
Solicitation
of Proxies and Voting
The
solicitation is being made primarily by the mailing of this Proxy Statement,
along with a notice of the Special Meeting and proxy card, on or about May ____,
2010. Supplementary solicitations may be made by mail, telephone,
telegraph, facsimile, electronic means or personal interview by representatives
of the Funds. In addition, Altman Group may be paid on a per-call
basis to solicit shareholders by telephone on behalf of the
Funds. The Funds may also arrange to have votes recorded by
telephone.
Voting
instructions may be revoked at any time prior to the final vote at the Special
Meeting by: (1) written instruction addressed to John C. Swhear, Senior
Vice President, Unified Series Trust, c/o Unified Fund Services,
Inc., 2960 N. Meridian Street, Suite 300, Indianapolis, Indiana 46208;
(2) attendance at the Special Meeting and voting in person; or (3) by
proper execution and return of a new proxy card (if received in time to be
voted). Mere attendance at the Special Meeting will not revoke voting
instructions.
If the
Funds receive votes by telephone or through the Internet, they will use
procedures designed to authenticate shareholders’ identities, to allow
shareholders to authorize the voting of their shares in accordance with their
instructions and to confirm that their instructions have been properly
recorded. Proxies voted by telephone or through the Internet may be
revoked at any time before they are voted in the same manner that proxies voted
by mail may be revoked.
The Funds
expect that, before the Special Meeting, broker-dealer firms holding shares of
the Funds in “street name” for their customers will request voting instructions
from their customers and beneficial owners. If these instructions are
not received by the date specified in the broker-dealer firms’ proxy
solicitation materials, these shares will be considered “broker
non-votes.” Broker non-votes will be counted as present for purposes
of determining a quorum, but will not count towards the number of votes in favor
of the approval of the New Investment Advisory Agreement, which means they will
have the effect of a vote against this proposal. With respect to any
other business that may properly come before the Special Meeting, the effect of
broker non-votes will be dependent upon the vote that is required to approve
such proposal.
All
proxies solicited by the Board of Trustees that are properly executed and
received by the Trust’s Senior Vice President prior to the Special Meeting, and
are not revoked, will be voted at the Special Meeting. Shares
represented by such proxies will be voted in accordance with the instructions on
the proxies. If no instruction is made on a properly executed proxy,
it will be voted FOR the proposal. All shares that are voted and all
votes to ABSTAIN will be counted towards establishing a quorum, but abstentions
will not count toward the number of votes in favor of approval of the New
Investment Advisory Agreement, which means they will have the effect of a vote
against the proposal.
With
respect to shares held in individual retirement accounts (including Traditional,
Rollover, SEP, SARSEP, Roth and SIMPLE IRAs), the IRA Custodian will vote those
shares for which it has received instructions from shareholders in accordance
with such instructions. If IRA shareholders do not vote their shares,
the IRA Custodian will vote their shares for them in the same proportion as
other IRA shareholders have voted.
A quorum
is a majority of outstanding shares entitled to vote in person or by proxy at
the Special Meeting. If a quorum is not present for a Fund at the
Special Meeting, or if a quorum is present at the Special Meeting but sufficient
votes to approve a proposal are not received on behalf of a Fund, or if other
matters arise requiring shareholder attention, the persons named as proxy agents
may propose one or more adjournments of the Special Meeting to permit further
solicitation of proxies with respect to such Fund. Any such
adjournment will require the affirmative vote of a majority of those shares
present at the Special Meeting or represented by proxy. When voting
on a proposed adjournment, the persons named as proxy agents will vote FOR the
proposed adjournment all shares that they are entitled to vote with respect to
the proposal, unless directed to vote AGAINST the proposed
adjournment.
Shareholders
of record of the Funds at the close of business on May 28, 2010 will
be entitled to vote at the Special Meeting. Other than any principal
shareholders disclosed above, to the knowledge of the Funds no other shareholder
owned of record or beneficially more than 5% of the outstanding shares of the
Funds on that date. Each whole share you hold as of the close of
business on the Record Date is entitled to one vote, and each fractional share
is entitled to a proportionate fractional vote.
The Funds
expect that the solicitation will be primarily by mail, but also may include
telephone, facsimile or oral solicitations. If the Funds do not
receive your proxy by a certain time, you may receive a telephone call from
Broadridge Financial Solutions, Inc., Trust officers, employees or agents asking
you to vote. The Funds do not reimburse officers of the Trust, or
regular employees and agents involved in the solicitation of
proxies.
The expenses incurred in connection with preparing this
Proxy Statement and its enclosures and all related legal and solicitations expenses will be paid by
Envestnet.
Service
Providers
The
Funds’ investment adviser is Envestnet Asset Management, Inc., located at 35
East Wacker Drive, Suite 2400, Chicago, Illinois 60601. The Fund’s
administrator, fund accountant, and transfer agent is Unified Fund Services,
Inc., 2960 N. Meridian Street, Suite 300, Indianapolis, Indiana 46208.
Huntington Bank, 40 S. High Street, Columbus, Ohio, serves as the Fund’s
Custodian. Unified Financial Securities, Inc., 2960 N. Meridian
Street, Suite 300, Indianapolis, Indiana 46208, serves as the Fund’s principal
underwriter.
Householding
If possible, depending on shareholder registration and
address information, and unless you have otherwise opted out, only one copy of
this Proxy Statement will be sent to shareholders at the same
address. However, each shareholder will receive separate proxy
cards. If you would like to receive a separate copy of the Proxy
Statement, please call (866) 616-4848 or
write to the Funds c/o Unified Fund Services, Inc., 2960 N. Meridian
Street, Suite 300, Indianapolis, Indiana 46208. If you currently
receive multiple copies of Proxy Statements or shareholder reports and would
like to request to receive a single copy of documents in the future, please call
the toll-free number or write to the address above.
Exhibit A
MANAGEMENT
AGREEMENT
|
TO:
|
|
|
|
|
Envestnet
Asset Management, Inc.
|
|
|
35
E. Wacker Drive, Suite 1600
|
|
|
Chicago,
Illinois 60601
|
|
|
|
|
|
Dear
Ladies and Gentlemen:
|
Unified
Series Trust (the “Trust”) herewith confirms our agreement with
you.
|
The Trust
has been organized to engage in the business of a registered open-end investment
company. The Trust currently offers several series of shares to investors, one
of which is the [3 to 1 Diversified Equity Fund / 3 to 1 Strategic Income Fund]
(the “Fund”).
You have
been selected to act as the investment adviser of the Fund and to provide
certain other services, as more fully set forth below, and you are willing to
act as such investment adviser and to perform such services under the terms and
conditions hereinafter set forth. Accordingly, the Trust agrees with you as set
forth below.
You will
regularly provide the Fund with such investment advice as you in your discretion
deem advisable and will furnish a continuous investment program for the Fund
consistent with the Fund’s investment objectives and policies as set forth in
its then current Prospectus and Statement of Additional Information. You will
determine the securities to be purchased for the Fund, the portfolio securities
to be held or sold by the Fund and the portion of the Fund’s assets to be held
uninvested, subject always to the Fund’s investment objectives, policies and
restrictions, as each of the same shall be from time to time in effect, and
subject further to such policies and instructions as the Board of Trustees for
the Trust (the “Board”) may from time to time establish. You will advise and
assist the officers of the Trust in taking such steps as are necessary or
appropriate to carry out the decisions of the Board and committees of the Board
regarding the conduct of the business of the Fund. You also will be responsible
for voting proxies with respect to securities held by the Fund and reporting the
Fund’s proxy voting record to the Fund’s administrator in the form required by
the Securities and Exchange Commission (“SEC”) or its staff on Form
N-PX.
You may
delegate any or all of the responsibilities, rights or duties described in this
Agreement, with respect to all or a portion of the Fund, to one or more
sub-advisers who shall enter into agreements with you; provided that each
sub-adviser and your agreement with such sub-adviser are approved by the Board
including a majority of the Trustees who are not interested persons of you, the
sub-adviser or of the Trust, cast in person at a meeting called for the purpose
of voting on such approval, and (unless exempted by an applicable order of the
SEC or its staff issued under the Investment Company Act of 1940, as amended
(the “1940 Act”) by a vote of the holders of a majority of the outstanding
voting securities of the Fund. Any such delegation shall not relieve you from
any liability hereunder.
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2.
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ALLOCATION OF CHARGES AND
EXPENSES
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You will
pay the compensation and expenses of any persons rendering any services to the
Fund who are officers, directors, equity owners or employees of your company, as
well as those of any sub-advisers retained pursuant to paragraph 1 above, and
will make available, without expense to the Fund, the services of such of your
employees as may duly be elected officers or trustees of the Trust, subject to
their individual consent to serve and to any limitations imposed by law. The
compensation and expenses of any officers, trustees and employees of the Trust
who are not officers, directors, equity owners or employees of your company will
be paid by the Fund. You will pay all expenses incurred by the Trust in
connection with the organization of the Fund and the costs of obtaining the
initial registration of Fund shares with the SEC pursuant to a post-effective
amendment to the Trust’s registration under the 1940 Act. You also will bear any
expenses incurred in connection with voting proxies with respect to securities
held in the Fund’s portfolio.
The Fund
will be responsible for the payment of all operating expenses of the Fund,
including salary and expenses incurred by the Fund in connection with membership
in investment company organizations; brokerage fees and commissions; fees and
expenses of legal counsel to the Trust and legal counsel to the independent
Trustees, fees and expenses of the Trust’s independent public accountants;
expenses of registering Fund shares under federal and state securities laws;
insurance expenses; taxes or governmental fees; borrowing costs (such as
interest and dividend expenses on securities sold short); fees and expenses of
the custodian, transfer agent, shareholder services agent, dividend disbursing
agent, plan agent, administrator, accounting and pricing services agent and
distributor of the Fund; expenses, including clerical expenses, of issue, sale,
redemption or repurchase of shares of the Fund; the fees and expenses of
officers and trustees of the Trust who are not affiliated with you (including,
but not limited to, fees and expenses of the Chief Compliance Officer of the
Trust); the cost of preparing and distributing reports and notices to
shareholders; the cost of printing or preparing prospectuses and statements of
additional information for delivery to the Fund’s shareholders; the cost of
printing or preparing stock certificates or any other documents, statements or
reports to shareholders; expenses of shareholders’ meetings and proxy
solicitations; such extraordinary or non-recurring expenses as may arise,
including any Legal Action (defined below) to which the Trust may be a party or
to which it may otherwise be subject and indemnification for the Trust’s
officers and Trustees with respect thereto; or any other expense not
specifically described above incurred in the performance of the Fund’s
obligations. All other expenses not assumed by you and incurred by the Fund in
connection with its operations will be borne by the Fund. The Fund will also pay
expenses which it is authorized to pay pursuant to Rule 12b-1 under the 1940
Act.
You may
obtain reimbursement from the Fund, at such time or times as you may determine
in your sole discretion, for any of the expenses advanced by you, which the Fund
is obligated to pay, and such reimbursement shall not be considered to be part
of your compensation pursuant to this Agreement.
In the
event that the Fund is subject to an examination, inquiry or administrative
action by the SEC staff or other federal or state regulator or self-regulatory
organization, or if the Fund becomes the subject of any complaint, lawsuit or
subpoena by any regulator, shareholder of the Fund or other party (collectively,
“Legal Action”), you agree that any expense or cost incurred as a result of the
Legal Action (including settlement costs) and not paid by the Fund as required
above shall be paid directly by you. Expenses may include, but are not limited
to, legal expenses; out-of-pocket expenses and normal hourly fees of the Trust’s
administrator, fund accountant, transfer agent, distributor, or auditor;
standard fees related to meetings of the Board; out-of-pocket expenses and
normal hourly fees of the Trust’s Chief Compliance Officer; and any other
expenses incurred as reasonably necessary, as determined by the Board, in order
to respond to or comply with any Legal Action. If not paid by the Fund as
required above, you agree to pay or reimburse such expenses promptly upon
receipt of an invoice outlining each expense. This provision shall not apply to
the extent that such Legal Action is brought as a result of the negligence,
willful misfeasance or fraud of another service provider to the Fund as
determined by the Board in its reasonable discretion. This provision shall
survive termination of this Agreement.
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3.
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COMPENSATION OF THE
ADVISER
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For all
of the services to be rendered and payments to be made as provided in this
Agreement, as of the last business day of each month, the Fund will pay you a
fee at the annual rate of 1.00% of the average value of its daily net
assets.
The
average value of the daily net assets of the Fund shall be determined pursuant
to the applicable provisions of the Trust’s Declaration of Trust or a resolution
of the Board, if required. If, pursuant to such provisions, the determination of
net asset value of the Fund is suspended for any particular business day, then
for the purposes of this paragraph, the value of the net assets of the Fund as
last determined shall be deemed to be the value of the net assets as of the
close of the business day, or as of such other time as the value of the Fund’s
net assets may lawfully be determined, on that day. If the determination of the
net asset value of the Fund has been suspended for a period including such
month, your compensation payable at the end of such month shall be computed on
the basis of the value of the net assets of the Fund as last determined (whether
during or prior to such month).
You agree
that the Board of Trustees may suspend the payment of the advisory fee set forth
above if you fail to follow directions of the Board as communicated to you in
writing on behalf of the Board by its agents or the Trust’s administrator, and
that such suspension may continue until such time as you reasonably comply with
such directions.
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4.
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EXECUTION OF PURCHASE AND SALE
ORDERS
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In
connection with purchases or sales of portfolio securities for the account of
the Fund, it is understood that you (and/or any sub-advisers retained pursuant
to paragraph 1 above (collectively for this purpose referred to as “you”)) will
arrange for the placing of all orders for the purchase and sale of portfolio
securities for the Fund with brokers or dealers selected by you, subject to
review of this selection by the Board from time to time. You will be responsible
for providing trade tickets on a timely basis to Unified Fund Services, Inc.,
the Trust’s administrator, following the execution of trade orders. You agree to
comply with the Trust’s Valuation Procedures, as adopted by the Board and
amended from time to time, in determining the fair value of securities held in
the Fund’s portfolio as required by the Valuation Procedures from time to
time.
You will
be responsible for the negotiation and the allocation of principal trades and
portfolio brokerage. In the selection of brokers or dealers and placing of
orders, you are directed at all times to seek for the Fund the best qualitative
execution, taking into account such factors as price (including the applicable
brokerage commission or dealer spread), the execution capability, financial
responsibility and responsiveness of the broker or dealer and the brokerage and
research services provided by the broker or dealer.
You
should generally seek favorable prices and commission rates that are reasonable
in relation to the benefits received. In seeking best qualitative execution, you
are authorized to select brokers or dealers who also provide brokerage and
research services to the Fund and the other accounts over which you exercise
investment discretion to the extent permitted by Section 28(e) of the Securities
Exchange Act of 1934 and applicable SEC guidance. You are authorized to pay a
broker or dealer who provides such eligible brokerage and research services a
commission for executing a Fund portfolio transaction which is in excess of the
amount of commission another broker or dealer would have charged for effecting
that transaction; provided that you determine that the research or brokerage
service meets the statutory definition, that the eligible product or service
actually provides lawful and appropriate assistance in the performance of your
investment decision-making responsibilities; and that the amount of commissions
paid by the Fund is reasonable in light of the value of products or services
received. The determination may be viewed in terms of either a particular
transaction or your overall responsibilities with respect to the Fund and to
accounts over which you exercise investment discretion. The Board shall
periodically review the commissions paid by the Fund to determine if the
commissions paid over representative periods of time were
reasonable.
You may
place portfolio transactions with brokers or dealers that promote or sell the
Fund’s shares so long as such placements are made pursuant to policies approved
by the Board that are designed to ensure that the selection is based on the
quality of the broker’s execution and not on its sales efforts.
Subject
to the provisions of the 1940 Act, and other applicable law, you, any of your
affiliates or any affiliate of your affiliates may retain compensation in
connection with effecting the Fund’s portfolio transactions, including
transactions effected through others. If any occasion should arise in which you
give any advice to clients of yours concerning shares of the Fund, you will act
solely as investment adviser for such client and not in any way on behalf of the
Fund. Your services to the Fund pursuant to this Agreement are not to be deemed
to be exclusive and it is understood that you may render investment advice,
management and other services to others, including other registered investment
companies.
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5
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LIMITATION OF LIABILITY OF
ADVISER
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You may
rely on information reasonably believed by you to be accurate and reliable.
Except as may otherwise be required by the 1940 Act or the rules thereunder,
neither you nor your shareholders, members, officers, directors, employees,
agents, control persons or affiliates of any thereof shall be subject to any
liability for, or any damages, expenses or losses incurred by the Trust in
connection with, any error of judgment, mistake of law, any act or omission
connected with or arising out of any services rendered under, or payments made
pursuant to, this Agreement or any other matter to which this Agreement relates,
except by reason of willful misfeasance, bad faith or negligence on the part of
any such persons in the performance of your duties under this Agreement, or by
reason of reckless disregard by any of such persons of your obligations and
duties under this Agreement.
Any
person, even though also a director, officer, employee, member, shareholder or
agent of you, who may be or become an officer, director, Trustee, employee or
agent of the Trust, shall be deemed, when rendering services to the Trust or
acting on any business of the Trust (other than services or business in
connection with your duties hereunder), to be rendering such services to or
acting solely for the Trust and not as a director, officer, employee, member,
shareholder or agent of you, or one under your control or direction, even though
paid by you.
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6.
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DURATION AND TERMINATION OF THIS
AGREEMENT
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This
Agreement shall take effect on the date that the Fund receives an affirmative
vote of a majority of outstanding voting securities of the Fund and shall remain
in force for a period of two (2) years from such date, and from year to year
thereafter, subject to annual approval by: (i) the Board; or (ii) a vote of a
“majority of the outstanding voting securities” of the Fund (as defined in the
1940 Act); provided that in either event continuance is also approved by a
majority of the Trustees who are not “interested persons” (as defined in the
1940 Act) of you or the Trust, by a vote cast in person at a meeting called for
the purpose of voting such approval.
If the
shareholders of the Fund fail to approve this Agreement in the manner set forth
above, upon request of the Board, you will continue to serve or act in such
capacity for the Fund for the period of time pending required approval of this
Agreement, of a new agreement with you or a different adviser or other
definitive action; provided that the compensation to be paid by the Fund to you
for your services to and payments on behalf of the Fund will be equal to the
lesser of your actual costs incurred in furnishing such services and payments or
the amount you would have received under this Agreement for furnishing such
services and payments.
This
Agreement may, on 60 days’ written notice, be terminated with respect to the
Fund, at any time without the payment of any penalty, by the Board, by a vote of
a majority of the outstanding voting securities of the Fund, or by you. This
Agreement shall automatically terminate in the event of its “assignment” (as
such term is defined in the 1940 Act).
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The
provisions of Section 2 of this Agreement shall survive its
termination.
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The Trust
and you acknowledge that all rights to the term “3 To 1” belongs to you, and
that the Trust is being granted a limited license to use such term in its Fund
name or in any class name. In the event you cease to be the adviser to the Fund,
the Trust’s right to the use of the name “3 To 1” shall automatically cease on
the 90th day
following the termination of this Agreement. The right to the name may also be
withdrawn by you during the term of this Agreement upon 90 days’ written notice
by you to the Trust. Nothing contained herein shall impair or diminish in any
respect, your right to use the term “3 To 1” belongs in the name of, or in
connection with, any other business enterprises with which you are or may become
associated. There is no charge to the Trust for the right to use this
name.
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8.
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AMENDMENT OF THIS
AGREEMENT
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No
provision of this Agreement may be changed, waived, discharged or terminated
orally, and no amendment of this Agreement shall be effective until approved by
the Board, including a majority of the Trustees who are not interested persons
of you or of the Trust, cast in person at a meeting called for the purpose of
voting on such approval, and (if required under interpretations of the 1940 Act
by the SEC or its staff) by vote of the holders of a majority of the outstanding
voting securities of the series to which the amendment relates.
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9.
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LIMITATION OF LIABILITY TO TRUST
PROPERTY
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The term
“Trustees” means and refers to the Trust’s trustees from time to time serving
under the Trust’s Declaration of Trust as the same may be amended from time to
time. It is expressly agreed that the obligations of the Trust hereunder shall
not be binding upon any of the trustees, shareholders, nominees, officers,
agents or employees of the Trust personally, but bind only the trust property of
the Trust, as provided in the Trust’s Declaration of Trust. The execution and
delivery of this Agreement have been authorized by the Trustees and shareholders
of the Fund and signed by officers of the Trust, acting as such, and neither
such authorization by such Trustees and shareholders nor such execution and
delivery by such officers shall be deemed to have been made by any of them
individually or to impose any liability on any of them personally, but shall
bind only the trust property of the Trust as provided in its Declaration of
Trust. A copy of the Declaration of Trust is on file with the Secretary of the
State of Ohio.
In the
event any provision of this Agreement is determined to be void or unenforceable,
such determination shall not affect the remainder of this Agreement, which shall
continue to be in force.
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11.
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QUESTIONS OF
INTERPRETATION
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(a)
This Agreement shall be governed by the laws of the State of
Ohio.
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(b) For
the purpose of this Agreement, the terms “majority of the outstanding voting
securities,” “control,” “assignment” and “interested person” shall have their
respective meanings as defined in the 1940 Act and rules and regulations
thereunder, subject, however, to such exemptions as may be granted by the SEC
under the 1940 Act.
(c) Any
question of interpretation of any term or provision of this Agreement having a
counterpart in or otherwise derived from a term or provision of the 1940 Act
shall be resolved by reference to such term or provision of the 1940 Act and to
interpretation thereof, if any, by the United States courts or in the absence of
any controlling decision of any such court, by the SEC or its staff. In
addition, where the effect of a requirement of the 1940 Act, reflected in any
provision of this Agreement, is revised by rule, regulation, order or
interpretation of the SEC or its staff, such provision shall be deemed to
incorporate the effect of such rule, regulation, order or
interpretation.
Any
notices under this Agreement shall be in writing, addressed and delivered or
mailed postage paid to the other party at such address as such other party may
designate for the receipt of such notice. Until further notice to the other
party, it is agreed that the address of the Trust is 2960 N. Meridian Street,
Suite 300, Indianapolis, IN 46208, and your address for this purpose shall be 35
E. Wacker Drive, Suite 1600, Chicago, Illinois 60601.
This
Agreement may be executed in one or more counterparts, each of which shall be
deemed an original, but all of which together shall constitute one and the same
instrument.
Each of
the undersigned expressly warrants and represents that he has the full power and
authority to sign this Agreement on behalf of the party indicated, and that his
signature will operate to bind the party indicated to the foregoing
terms.
The
captions in this Agreement are included for convenience of reference only and in
no way define or limit any of the provisions hereof or otherwise affect their
construction or effect.
If you
are in agreement with the foregoing, please sign the form of acceptance below
and return it to the Trust, whereupon this letter shall become a binding
contract effective as of the date the Fund receives an affirmative vote of a
majority of outstanding voting securities of the Fund.
Approved
by the Board of Trustees on May ___, 2010.
Yours
very truly,
UNIFIED
SERIES TRUST
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By:____________________________
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John
Swhear, Senior Vice President
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The
foregoing Agreement is hereby
accepted.
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ENVESTNET
ASSET MANAGEMENT, INC.
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By:_____________________________________
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Name:
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Title:
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