DANIEL KALLUS, CFA, CIC. Mr. Kallus is the lead portfolio manager of the Fund. He is a 20-year veteran of the industry having worked at DHJA for 12 years and previously at Shell Pension Trust, American Capital Management and Research, and Smith Barney’s Managed Money Division in Houston. Mr. Kallus was made a Partner of the Firm in 2004 and was named Director of Equity Investments in September 2008. His prior position was Equity Portfolio Manager. He has been a critical component of the equity process since he joined the Firm and was the architect of equity process enhancements implemented in early 2007. He oversees the DHJA Equity Investment Team of two portfolio managers and a support staff that includes three equity analysts, one quantitative strategist and one trader. Mr. Kallus is a Chartered Financial Analyst and a Chartered Investment Counselor. He received a B.B.A. Summa Cum Laude in Finance from the University of Houston in 1993 and an M.B.A. from the University of Houston in 1997.
CURT ROHRMAN, CFA. Mr. Rohrman, a Partner and Portfolio Manager who has been with DHJA since 2006 as an Equity Portfolio Manager, serves as the backup to Mr. Kallus and performs equity research for the Fund. Prior to joining DHJA, from 2002-2005, Mr. Rohrman served as Senior Portfolio Manager responsible for growth and core equity strategies at Vaughan Nelson Investment Management. Mr. Rohrman is a Chartered Financial Analyst. He received a B.B.A. Summa Cum Laude in Finance and Marketing from Texas Christian University in 1984 and an M.B.A. from the University of Texas at Austin in 1988.
The Statement of Additional Information for the Monteagle Large Cap Growth Fund and Monteagle Quality Growth Funds provide additional information about each Fund's portfolio managers, their compensation structure, a description of other accounts managed by each portfolio manager, and each portfolio manager’s ownership of shares of the Fund.
The August 31, 2009 Annual Report and February 28, 2009 Semi-Annual Report for the Monteagle Funds contain information about the factors that the Board of Trustees of the Trust considered in approving the management and sub-advisory agreements.
Investment Management Fees. The following tables compare management fees paid to Nashville Capital Corporation for the Current Growth Fund and New Growth Fund. The management fees are identical and not changing during this reorganization. The Sub-Advisor fee paid to the Sub-advisor of the Quality Growth Fund is not expected to change during this reorganization.
Monteagle Funds. Under its Investment Management Agreement with the Trust, Nashville Capital Corporation pays all of the operating expenses of the Fund except costs of membership in trade associations, SEC registration fees and related expenses, brokerage fees and commissions, taxes, borrowing costs (such as (a) interest and (b) dividend expense on securities sold short), litigation expenses, fees and expenses of non-interested Trustees, 50% of the compensation of the Trust’s Chief Compliance Officer (the “CCO”) attributable to the Fund, and extraordinary expenses. In this regard, it should be noted that most investment companies pay their own operating expenses directly, while the expenses of the Monteagle Funds, except those specified herein, are paid by the investment manager. As compensation for its investment management services and agreement to pay such Fund's expenses (with certain exceptions), each Monteagle Fund is obligated to pay the investment manager a fee at the following annual rates:
| Fund Assets | Current Growth Fund Contractual Fees | New Growth Fund Contractual Fees |
| On assets from $1 - $25 million | 1.20% | 1.20% |
| On assets from $25,000,001 to $50 million | 1.115% | 1.115% |
| On assts from $50,000,001 to $100 million | 0.975% | 0.975% |
| On assets over $100 million | 0.875% | 0.875% |
The Fund’s expenses are comprised of expenses attributable to the Fund as well as expenses that are allocated among all series of the Trust. In addition to all of the operating expenses of the Fund, the Adviser is responsible for distribution expenses – including, among other things, it pays the expense of printing and mailing prospectuses and sales materials used for promotional purposes. The Adviser or the Sub-adviser (not the Fund) may, from its management fee, pay certain financial institutions (which may include banks, brokers, securities dealers and other industry professionals) a fee for providing distribution related services and/or performing certain administrative servicing functions for Fund shareholders to the extent these institutions are allowed to do so by applicable statute or regulation.
The Sub-Advisor
The following table shows the rate of compensation payable by Nashville Capital Corporation (not the Monteagle Funds) to the respective sub-advisor of each of the Monteagle Funds:
Fund Assets | Current Growth Fund | New Growth Fund |
| On assets up to and including $25 million | 0.50% | 0.30% |
| On assets from $25 million to up to and including $50 million | 0.50% | 0.30% |
| On assets from $50 million up to and including $100 million | 0.50% | 0.30% |
| On all assets over $100 million | 0.50% | 0.30% |
Investment Performance and Financial Highlights. A bar chart showing each Fund’s annual total returns for each of the last 10 calendar years (or the life of the Fund if less than 10 years) and a table showing each Fund’s average annual total return before and after taxes, are incorporated by reference to the prospectuses for the Monteagle Funds. The performance and financial highlights of the New Growth Fund will become the performance history for the Current Growth Fund (see New Growth Fund prospectus for details). The prospectuses for the Monteagle Funds are available upon request.
Investment Objectives
This section will help you compare the investment objectives and principal investment strategies of both Monteagle Large Cap Growth Fund ("Current Growth Fund") and Monteagle Quality Growth Fund ("New Growth Fund" -- collectively referred to as the "Monteagle Funds"). This section also describes the key differences, if any, between the Funds. Please be aware that this is only a brief discussion. More complete information may be found in the Monteagle Large Cap Growth Fund and Monteagle Quality Growth Fund prospectuses.
Monteagle Large Cap Growth Fund “Current Growth Fund”
and
Monteagle Quality Growth Fund “New Growth Fund”
Comparison: The Current Growth Fund and the New Growth Fund have similar investment objectives and principal investment strategies. Both of the Monteagle Funds seek long term growth of capital. Both of the Funds will, under normal circumstances, invest at least 80% of its assets in common stocks of U.S. companies that the Funds believes exhibit a history of increasing earnings. The difference between the Funds is that the Current Growth Fund invests at least 80% of its assets in domestic common stocks of large capitalization companies above $5 billion while the New Growth Fund is permitted to invest in companies that have a minimum market capitalization companies of $250 million (but seeks to maintain a minimum average weighted market capitalization of at least $5 billion). Other investment aspects of the Monteagle Funds include:
The Current Growth Fund: First analyzes various industrial sectors to select the industry groups in which the respective Fund will focus its investments. Then the Current Growth Fund manager considers such factors as economic trends and earnings growth prospects when selecting the industries in which the portfolio will focus. Then the manager ranks individual stocks in each industrial group based on certain factors, such as:
| · | Expected earnings growth; |
| · | Analysts’ earnings estimates for the next fiscal year; |
| · | Stability of earnings growth in the past five years; and |
| · | Relative price-to-earnings multiple. |
The Current Growth Fund may sell a stock if:
| · | Stock appreciation has caused the stock to become too large a position in the portfolio; |
| · | The fundamental price objective has been achieved; |
| · | The company has experienced a negative change in fundamentals (such as its earnings growth rate or competitive position in its industry group); or |
| · | Some or all of the factors used to rank the company have declined, combined with relative underperformance of the stock compared to the S&P 500 Stock Index or the company’s industry group. |
The New Growth Fund: Invests in the securities of issuers that its manager believes have superior growth potential and fundamental characteristics that are significantly better than the market average and support internal earnings growth capability. The New Growth Fund may invest in the securities of companies whose growth potential is, in the managers opinion, generally unrecognized or misperceived by the market. The manager may also look to changes in a company that involve a sharp increase in earnings, the hiring of new management or measures taken to close the gap between the company’s share price and takeover/asset value.
Both Monteagle Funds may from time to time take temporary defensive positions that are inconsistent with their principal investment strategies in attempting to respond to adverse market, economic, political or other conditions. For example, both Monteagle Funds may hold all or a portion of its assets in money market instruments or securities of no-load mutual funds. If either Monteagle Fund invests in shares of another mutual fund, the shareholders of the Fund generally will be subject to duplicative management fees. As a result of engaging in these temporary measures, the respective Fund may not achieve its investment objectives. The investment objective and strategies of both Funds may be changed without shareholder approval. Both of the Funds’ policies to invest at least 80% of its assets in common stocks of large capitalization companies will not be changed without 60 days notice to shareholders.
Investment Limitations
This section will discuss the fundamental and non-fundamental investment policies and restrictions of the Monteagle Funds (Large Cap Growth and Quality Growth).
Fundamental Policies
Listed below are the investment limitations adopted by both Monteagle Funds (the "Funds"). The investment limitations are identical. The investment limitations listed in this section are fundamental policies of the Funds. Fundamental policies of a Fund cannot be changed without the consent of the holders of a majority of each Fund’s outstanding shares. The term “majority of the outstanding shares” means the vote of (i) 67% or more of the Fund’s shares present at a meeting, if more than 50% of the outstanding shares of the Fund are present or represented by proxy, or (ii) more than 50% of the Fund’s outstanding shares, whichever is less. An affirmative vote on Proposal 1 for any Monteagle Fund will not only constitute approval of the Reorganization of the Current Growth Fund, but also will have the effect of adopting the same fundamental policies of the New Growth Fund once the Reorganization occurs.
Issuance of Senior Securities
No Fund may issue senior securities except as: i) permitted by the 1940 Act, the rules and regulations promulgated thereunder or interpretations of the SEC or its staff; and ii) to the extent a Fund may borrow money subject to its investment limitation on borrowing.
Underwriting Activities
No Fund may act as an underwriter of securities of other issuers, except to the extent that, in connection with the disposition of portfolio securities, a Fund may be deemed to be an underwriter for purpose of the 1933 Act.
Concentration
No Fund may purchase the securities of issuers (other than U.S. Government Securities) conducting their business activity in the same industry if, immediately after such purchase, the value of a Fund's investments in such industry would comprise 25% or more of the value of its total assets.
Purchases and Sales of Real Estate
No Fund may purchase or sell real estate or any interest therein, except that a Fund may invest in securities issued or guaranteed by corporate or governmental entities secured by real estate or interests therein, such as mortgage pass-throughs and collateralized mortgage obligations, or issued bycompanies that invest in real estate or interests therein.
Purchases and Sales of Commodities
No Fund may purchase or sell physical commodities or contracts, options or options on contracts to purchase or sell physical commodities; provided that currency and currency-related contracts and contracts on indices will not be deemed to be physical commodities.
Making Loans
No Fund may make loans to other persons except for the purchase of debt securities that are otherwise permitted investments or loans of portfolio securities through the use of repurchase agreements, or securities lending programs and agreements. A Fund may pay fees to arrange securities loans and each Fund will, as a fundamental policy, limit securities lending to not more than 33-1/3% of the value of its total assets.
Diversification
Each Fund is "diversified" as that term is defined in the 1940 Act. Accordingly, no Fund may purchase a security if, as a result; (1) more than 5% of a Fund's total assets would be invested in the securities of a single issuer; or (2) a Fund would own more than 10% of the outstanding voting securities of a single issuer. This limitation applies only to 75% of a Fund's total assets and does not apply to U.S. Government Securities.
Non-Fundamental Policies
The following investment policies are non-fundamental policies of both Monteagle Funds. Non-fundamental policies may be changed at any time by the Fund’s Board of Trustees. Shareholders are notified before any material change in these limitations becomes effective. Both Monteagle Funds have adopted the following investment limitations, which are not fundamental policies of the Fund.
Borrowing
No Fund may purchase portfolio securities if its outstanding borrowings exceed 5% of its total assets or borrow for purposes other than meeting redemptions in an amount exceeding 5% of the value of its total assets at the time the borrowing is made.
Illiquid Securities
No Fund may acquire securities or invest in repurchase agreements with respect to any securities if, as a result, more than 15% of the Fund's net assets (taken
at current value) would be invested in illiquid securities.
Short Sales
No Fund may make short sales of securities (except short sales against the box).
Sector Concentration
The Fund is not intended to be a "Sector Fund" (a fund concentrating its investments in one industry or related group of industries). To address this risk, the Fund's policy is: (1) limit its investments in any industry or group of related industries to twenty-five percent (25%) of fund assets; and (2) if the 25% threshold is exceeded due to market appreciation, the portfolio manager shall commence an orderly reduction in holdings to bring the aggregate investment in any industry or group of related industries to below 25%. The Fund will provide Shareholders with at least sixty (60) days notice of any change to this limitation.
Purchases on Margin
No Fund may purchase securities on margin except for the use of short-term credit necessary for the clearance of purchases and sales of portfolio securities but a Fund may make margin deposits in connection with permitted transactions in options, futures contracts and options on futures contracts.
Unseasoned Issuers
No Fund may invest more than 5% of the value of the Fund's total assets in securities (other than fully collateralized debt obligations) issued by companies that have conducted continuous operations for less than three years.
Pledging
No Fund may pledge, mortgage, hypothecate or encumber any of its assets except to secure permitted borrowings or to secure other permitted transactions. The deposit in escrow of securities in connection with the writing of put and call options, collateralized loans of securities and collateral arrangements with respect to margin for futures contracts are not deemed to be pledges or hypothecations for this purpose.
Oil, Gas or Mineral
No Fund may invest in interests in oil or gas or interests in other mineral exploration or development programs.
Purchase, Redemption and Exchange Procedures
This section will discuss the purchase, redemption and exchange procedures of the Monteagle Funds (Large Cap Growth and Quality Growth). These procedures are identical for both Monteagle Funds.
General Information
Shareholders may effect purchases or redemptions or request any shareholder privilege in person at the Transfer Agent's offices located at 630 Fitzwatertown Road Building A, Second Floor, Willow Grove, Pennsylvania 19090. The Funds accept orders for the purchase or redemption of shares on any weekday except days when the New York Stock Exchange is closed.
Purchase and Redemption of Shares
The Monteagle Quality Growth Fund offers three classes of shares: Class A, Class C and Class I. The Monteagle Large Cap Growth Fund only offers Class I shares. This reorganization proposes to merge both Funds Class I shares only. There is no sales charge on the purchase of Class I shares. Shares may be purchased by contacting the Transfer Agent at 1-888-263-5593 and by completing the application. Shares of either Fund may be purchased at the net asset value per share next determined after receipt and acceptance of the purchase order. Investors may invest any amount as often as they wish subject to the minimum investment and eligibility requirements and subject to the restrictions on excessive trading discussed below. The minimum investment in both Funds is $100,000 for Class I shares; unless you invest using an Automatic Investment Plan. See the prospectuses for more information. Shares of both Funds may be purchased by clients of certain financial institutions (which may include banks), securities dealers and other industry professionals (collectively, “Agents”). The Distributor may, from time to time, enter into agreements with one or more brokers or other intermediaries to accept purchase and redemption orders for Fund shares until the close of regular trading on the Exchange (normally, 4:00 p.m. Eastern time on each day that the Exchange is open for trading); such purchase and redemption orders will be deemed to have been received by both Funds when the authorized broker or intermediary accepts such orders; and such orders will be priced using that Fund's net asset value next computed after the orders are placed with and accepted by such brokers or intermediaries. Any purchase and redemption orders received by a broker or intermediary under these agreements will be transmitted daily to the Fund.
Institutional Class of Shares
Class I shares of the Funds are offered to institutional investors and may be purchased by:
• A bank, trust company or other type of depository institutions;
• An insurance company, investment company, endowment or foundation purchasing shares for its own account;
• A 401(k), 403(b) or 457(b) plan or the custodian for such a plan; and
• Other qualified or non-qualified employee benefit plans, including pension, profitsharing, health and welfare, or other employee benefit plans that meet the following definition of an “Eligible Benefit Plan”: “Eligible Benefit Plans” are qualified or non-qualified employee benefit plans or other programs
where (i) the employers or affiliated employers maintaining such plans or programs have a minimum of 250 employees eligible for participation in such plans or programs or (ii) such plan’s or program’s aggregate investment in the Monteagle Family of Funds exceeds $1,000,000.
• Monteagle Trustees and their immediate family members, Fund Counsel and Monteagle officers, employees and their immediate family members, including parents, and siblings may also purchase Class I shares.
• Any person that meets the $100,000 minimum. The Funds reserve the right to change the criteria for investors eligible for Class I shares.
The Trust reserves the right to reimburse certain expenses of Class I shareholders who have a significant investment, at its discretion. The reimbursement will not be paid by the Fund in any way.
Redemptions in Cash
It is possible that, in the future, conditions may exist which would, in the opinion of the Funds' Adviser, make it undesirable for the Funds to pay for redeemed shares in cash. In such cases, the Adviser may authorize payment to be made in portfolio securities or other property of the Funds. However, the Company is obligated under the 1940 Act to redeem for cash all shares of the Funds presented for redemption by any one shareholder having a value up to $250,000 (or 1% of a Fund's net assets if that is less) in any 90-day period. Securities delivered in payment of redemptions are selected entirely by the Adviser based on what is in the best interests of the Funds and its shareholders, and are valued at the value assigned to them in computing the respective Fund's net asset value per share. Shareholders receiving such securities are likely to incur brokerage costs on their subsequent sales of the securities. Other procedures for purchasing, selling (redeeming) and exchanging shares of the Funds are described in the prospectuses.
Additional Purchase Information
Requests to purchase shares are processed at the net asset value (the "NAV") next calculated after the Fund receives an order in proper form. The NAV is calculated at the close of trading (normally 4:00 p.m. ET) on each day the New York Stock Exchange ("NYSE") is open for business (the Stock Exchange is closed on weekends, most Federal holidays and Good Friday). If the NYSE closes early – such as on days in advance of certain generally observed holidays – the Funds will calculate NAV as of the earlier closing time. The NAV is calculated by dividing the value of the Fund’s total assets (including interest and dividends accrued but not yet received) minus liabilities (including accrued expenses) by the total number of shares outstanding. The Fund values securities for which market quotations are readily available at current market value. Securities for which market quotations are readily available are valued using the official closing price. If market quotations are not readily available, the Fund values securities at fair value, as determined by the Board (e.g., if the exchange on which a portfolio security is principally traded closes early or if trading in a particular portfolio security was halted during the day and did not resume prior to the Fund's NAV calculation). Shares of each Fund are sold on a continuous basis by the Distributor at NAV per share without any sales charge. Accordingly, the offering price per share is the same as the NAV per share.
Fund shares are normally issued for cash only. In the Adviser or Subadviser's discretion, however, a Fund may accept portfolio securities that meet the investment objective and policies of a Fund as payment for Fund shares. A Fund will only accept securities that: (1) are not restricted as to transfer by law and are not illiquid; and (2) have a value that is readily ascertainable (and not established by fair valuation procedures). All contributions into an IRA through the automatic investment plan are treated as IRA contributions made during the year the investment is received. UGMAS/UTMAS If the trustee's name is not in the account registration of a gift or transfer to minor ("UGMA/UTMA") account, the investor must provide a copy of the trust document.
Purchases Through Financial Institutions
You may purchase and redeem shares through certain broker-dealers, banks and other financial institutions. Financial institutions may charge their customers a fee for their services and are responsible for promptly transmitting purchase, redemption and other requests to the Funds. If you purchase shares through a financial institution, you will be subject to the institution's procedures, which may include charges, limitations, investment minimums, cutoff times and restrictions in addition to, or different from, those applicable when you invest in a Fund directly. When you purchase a Fund's shares through a financial institution, you may or may not be the shareholder of record and, subject to your institution's procedures, you may have Fund shares transferred into your name. There is typically a three-day settlement period for purchases and redemptions through broker-dealers. Certain financial institutions may also enter purchase orders with payment to follow. You may not be eligible for certain shareholder services when you purchase shares through a financial institution. Contact your institution for further information. If you hold shares through a financial institution, the Funds may confirm purchases and redemptions to the financial institution, which will provide you with confirmations and periodic statements. The Funds are not responsible for the failure of any financial institution to carry out its obligations. The Funds may authorize one or more brokers to receive on its behalf purchase and redemption orders. Such brokers, including Charles Schwab & Co., Inc., are authorized to designate other intermediaries to receive purchase and redemption orders on the Funds' behalf. The Funds will be deemed to have received a purchase or redemption order when an authorized broker or, if applicable, a broker's authorized designee, receives the order. Customer orders will be priced at a Fund's NAV next computed after they are received by an authorized broker or the broker's authorized designee and accepted by the Funds. Investors purchasing shares of the Funds through a financial institution should read any materials and information provided by the financial institution to acquaint themselves with its procedures and any fees that the institution may charge.
Additional Redemption Information
A Fund may redeem shares involuntarily to reimburse the Fund for any loss sustained by reason of the failure of a shareholder to make full payment for shares purchased by the shareholder or to collect any charge relating to transactions effected for the benefit of a shareholder which is applicable to the Fund's shares, as provided in the Prospectus.
Suspension of Right of Redemption
The right of redemption may not be suspended, except for any period during which: (1) the New York Stock Exchange, Inc. is closed (other than customary weekend and holiday closings) or during which the SEC determines that trading thereon is restricted; (2) an emergency (as determined by the SEC) exists as a result of which disposal by a Fund of its securities is not reasonably practicable or as a result of which it is not reasonably practicable for a Fund fairly to determine the value of its net assets; or (3) the SEC may by order permit for the protection of the shareholders of a Fund.
Redemption-In-Kind
Redemption proceeds normally are paid in cash. Payments may be made wholly or partly in portfolio securities, however, if the Trust determines conditions exist which would make payment in cash detrimental to the best interests of a Fund. If redemption proceeds are paid wholly or partly in portfolio securities, brokerage costs may be incurred by the shareholder in converting the securities to cash. The Trust has filed an election with the SEC pursuant to which a Fund may only effect a redemption in portfolio securities if the particular shareholder is redeeming more than $250,000 or 1% of the Fund's total net assets, whichever is less, during any 90-day period.
Exchanges
By making an exchange by telephone, you authorize the Transfer Agent to act on telephonic instructions believed by the Transfer Agent to be genuine instructions from any person representing himself or herself to be you. The records of the Transfer Agent of such instructions are binding. The exchange procedures may be modified or terminated at any time upon appropriate notice to shareholders. For Federal income tax purposes, exchanges are treated as sales on which a purchaser will realize a capital gain or loss depending on whether the value of the shares redeemed is more or less than the shareholder's basis in such shares at the time of such transaction.
Market Timing Policy (Both funds have same policy)
It is the Trust's policy to strongly discourage abusive short-term trading or market timing in the Trust's funds. This policy and related procedures are designed to reduce, to the extent possible, investors from using the Funds for abusive short-term trading or market timing. To minimize harm to the Fund and its shareholders, the Trust reserves the right to reject any purchase order, including exchange purchases, for any reason without prior notice, particularly orders that the Trust believes are made on behalf of persons engaging in excessive short-term trading. Service providers to the Trust (primarily the Investment Manager and the Transfer Agent) are subject to this policy and will assist the Trust in undertaking steps necessary to implement this policy and related procedures. Trust service providers will assist the Trust in monitoring selected trades based on a shareholder's trading activity and history in an effort to detect short-term trading activities. If as a result of this monitoring the service providers believe a shareholder has engaged in abusive trading practices, they will inform the Trust's Chief Compliance Officer and may, after consultation with or at the discretion of the Trust's Chief Compliance Officer, ask the shareholder to stop such activities or refuse to process purchases or exchanges in the shareholder's account.
Dividend Policy (Both funds have same policy)
The Current Growth Fund and the New Growth Fund declare and pay distributions from net investment income quarterly. Any net capital gain realized by the Funds will be distributed at least annually. All distributions are reinvested in additional shares, unless the shareholder elects to receive distributions in cash. Shares become entitled to receive distributions on the day after the shares are issued.
PRINCIPAL RISKS
Monteagle Large Cap Growth Fund “Current Growth Fund”
and
Monteagle Quality Growth Fund “New Growth Fund”
Comparison: The Current Growth Fund and the New Growth Fund and have substantially similar investment objectives and principal investment strategies. Therefore, investing in the New Growth Fund has the same or similar principal risks as investing in the Current Growth Fund except for the additional risk of small and mid capitalization as outlined below:
Current Growth Fund and New Growth Fund principal risks of investing include:
Management Risk. The strategy used by the Fund may fail to produce the intended results.
Company Risk. The Fund might decrease in value in response to the activities and financial prospects of an individual company in the Fund’s portfolio. The value of an individual company can be more volatile than the market as a whole.
Market Risk. The Fund might decrease in value in response to general market and economic conditions. Factors such as domestic economic growth and market conditions, interest rate levels and political events affect the securities markets.
Volatility Risk. Common stocks tend to be more volatile than other investment choices. With only 25-35 stocks in the Fund’s portfolio, the Fund may be more volatile than a more diversified fund.
Sector Risk. If the Fund’s portfolio is overweighted in a certain sector, any negative development affecting that sector will have a greater impact on the Fund than a fund that is not overweighted in that sector.
As with any mutual fund investment, the Fund’s returns will vary and you could lose money. An investment in the Fund is not a deposit of any bank and is not insured or guaranteed by the Federal Deposit Insurance Corporation or any other government agency. The Fund is not a complete investment program.
Additionally, New Growth Fund principal risks of investing include:
The Fund may invest in small and medium capitalization companies which involve greater risks than those associated with larger, more established companies. Smaller companies may be subject to more abrupt or erratic price movements, for reasons including that the stocks are generally traded in lower volume and that the issuers are more sensitive to changing conditions and have less certain growth prospects.
INFORMATION RELATING TO THE REORGANIZATION
Description of the Reorganization. The following summary is qualified in its entirety by reference to the Plan of Reorganization found in Exhibit A.
The Plan of Reorganization provides that all of the assets and liabilities of the Monteagle Large Cap Growth Fund (“Current Growth Fund”) will be transferred to the Monteagle Quality Growth Fund (“New Growth Fund”) at the Effective Time of the Reorganization (i.e., 9:00 a.m. ET on or about December 30, 2009). In exchange for these transfers of these assets and liabilities, the New Growth Fund will simultaneously issue shares to the Current Growth Fund, in an amount equal in value to the net asset value of the Current Growth Fund's shares.
Following the transfer of assets and liabilities in exchange for New Growth Fund shares, the Current Growth Fund will distribute, in complete liquidation pro rata to its shareholders of record, all the shares of the corresponding New Growth Fund so received. Shareholders of the Current Growth Fund owning shares at the Effective Time of the Reorganization will receive a number of shares of the New Growth Fund with the same aggregate value as the shareholder had in the Current Growth Fund immediately before the Reorganization. Such distribution will be accomplished by the establishment of accounts in the names of the shareholders of the Current Growth Fund’s shareholders on the share records of the New Growth Fund’s transfer agent. Each account will represent the respective pro rata number of full and fractional shares of the New Growth Fund due to the shareholders of the Current Growth Fund. The New Growth Fund does not issue share certificates to shareholders. Shares of the New Growth Fund to be issued will have no preemptive or conversion rights. No front-end sales loads or contingent deferred sales charges will be imposed in connection with the receipt of such shares by the Current Growth Fund’s shareholders. The Current Growth Fund then will be terminated under state law.
The Plan of Reorganization provides that the consummation of the Reorganization is contingent upon, among other things: (i) approval of the Plan of Reorganization by the Current Growth Fund shareholders; (ii) approval of Davis Hamilton Jackson & Assoc. as Subadviser; and (iii) the receipt of a tax opinion to the effect that the Reorganization will be tax-free to the Current Growth Fund and the New Growth Fund and their shareholders. The Plan of Reorganization may be terminated if, on the Closing Date, any of the required conditions have not been met, if at any time prior to the Effective Time of the Reorganization, the Board of Trustees determines that the consummation of the transactions contemplated by the Plan of Reorganization is not in the best interest of its shareholders.
In addition, even if the Reorganization is approved by a majority of the outstanding shares of the Current Growth Fund, the Reorganization will not be completed unless the Current Growth Fund shareholders approve all related Proposals.
Costs of Reorganization. Reorganization expenses include, without limitation: (a) expenses associated with the preparation and filing of this Prospectus/Proxy Statement; (b) postage; (c) printing; (d) accounting fees; (e) legal and audit fees; (f) solicitation costs of the transaction, (g) accounting fees, and (h) the cost of winding up and liquidating the business and affairs of the Current Growth Fund. Nashville Capital Corporation will be responsible to pay all expenses of the Reorganization.
Federal Income Taxes. The combination of the Current Growth Fund into the New Growth Fund in the Reorganization is intended to qualify for federal income tax purposes as a separate tax-free reorganization under Section 368(a) of the Internal Revenue Code of 1986, as amended. If so, neither the Current Growth Fund nor their shareholders will recognize gain or loss as a result of the Reorganization. The tax basis of the New Growth Fund shares received will be the same as the basis of the Current Growth Fund shares exchanged and the holding period of the New Growth Fund shares received will include the holding period of the Current Growth Fund shares exchanged, provided that the shares exchanged were held as capital assets at the time of the Reorganization. As a condition to the closing of the Reorganization, the Trust will receive an opinion from counsel to that effect. No tax ruling from the Internal Revenue Service regarding the Reorganization has been requested. The opinion of counsel is not binding on the Internal Revenue Service and does not preclude the Internal Revenue Service from adopting a contrary position. Nevertheless, the sale of securities by the Current Growth Fund prior to the Reorganization, whether in the ordinary course of business or in anticipation of the Reorganization, could result in a taxable capital gains distribution prior to the Reorganization. Shareholders should consult their own tax advisors concerning the potential tax consequences of the Reorganization to them, including foreign, state and local tax consequences.
As of August 31, 2009, the Monteagle Large Cap Growth Fund and Monteagle Quality Growth Fund had unutilized federal tax capital loss carryforwards, which will expire in the following years:
| | | 2010 | | | 2011 | | | 2012 | | | 2013 | | | 2014 | | | 2015 | | | 2016 | | | 2017 | | | Total | |
| Fund | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Large Cap Growth Fund | | | - | | | | 2,182,811 | | | | 2,165,647 | | | | 309,209 | | | | 155,209 | | | | - | | | | - | | | | 1,623,590 | | | | 6,436,466 | |
| Quality Growth Fund | | | 1,658,403 | | | | 471,453 | | | | 296,216 | | | | - | | | | | | | | - | | | | 63,079 | | | | 458,231 | | | | 2,947,382 | |
The final amount of unutilized capital loss carryover for the Funds is subject to change and will not be determined until the time of the Reorganization. After and as a result of the Reorganization, these capital loss carryforwards and the utilization of certain unrealized capital losses may, in part, be subject to limitations under applicable tax laws on the rate at which they may be used in the future to offset capital gains of the Monteagle Quality Growth Fund. As a result, some or all of the capital loss carryforwards may expire unutilized. The Trustees took this factor into account in concluding that the proposed Reorganization would be in the best interests of the Monteagle Large Cap Growth Fund and its shareholders.
Capitalization. The following table sets forth as of August 31, 2009: (i) the unaudited capitalization of each of the Monteagle Funds; and (ii) the unaudited pro forma combined capitalization of the Funds assuming the Reorganization has been approved. If the Reorganization is consummated, the capitalizations are likely to be different on the Effective Time as a result of daily share purchase and redemption activity in the Funds and changes in NAV.
| Merger of Monteagle Quality Growth Fund and Monteagle Large Cap Growth Fund | | | | | | | |
| | | | | | | | | | |
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| | | Monteagle Large Cap Growth Fund | | Monteagle Quality Growth Fund | | Surviving Fund Pro Forma - Monteagle Quality Growth Fund after Reorganization (estimated) (unaudited) |
| Net Assets (millions) | | | 15.59 | | | | 11.19 | | | | 26.78 | |
| Total shares outstanding | | | 3,441,517 | | | | 1,634,974 | | | | 3,910,316 | (a) |
| Net asset value per share | | | 4.53 | | | | 6.85 | | | | 6.85 | |
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| * As of August 31, 2009 | | | | | | | | | | | | |
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| (a) Reflects share totals, net of retired shares of Monteagle Large Cap Growth Fund. The Net Asset Value of the Monteagle Quality Growth Fund is higher than the Net Asset Value of the Monteagle Large Cap Growth Fund. This results in a lower number of shares outstanding after the Reorganization. |
REASONS FOR THE REORGANIZATION
At the meetings held on October 27-28, 2009, the Board of Trustees of the Trust unanimously voted that the proposed Reorganization would be in the best interests of both Monteagle Funds and its shareholders and that the interests of the shareholders would not be diluted. At these meetings, representatives of Nashville Capital Corporation provided, and the Trust Board reviewed, detailed information about the proposed Reorganization. The representatives discussed with the Board of Trustees the anticipated effects of the Reorganization on the advisory and related relationships of the Monteagle Funds. The representatives provided information to the Trust Board concerning: (a) the specific terms of the Reorganization, including information regarding comparative expense ratios; (b) the proposed plans for ongoing management, distribution and operation of the Monteagle Funds; (c) the management and business of Nashville Capital Corporation; and (d) the impact of the Reorganization on the Monteagle Funds and their shareholders.
Before approving the Reorganization, the Board examined all factors that it considered relevant, including information regarding comparative expense ratios. In connection with its deliberations, the Trust Board, with the advice and assistance of legal counsel, inquired into a number of matters and evaluated the above-referenced information and considered, among other things, the following in support of the proposals:
| · | The fact that the investment objectives of the Large Cap Growth Fund and the Monteagle Quality Growth Fund are substantially similar; |
| · | The fact that the Reorganization would result in reduced expense ratio and the creation of a more cost effective structure due to attaining breakpoint levels; |
| · | The fact that the Reorganization would give shareholders of the Current Growth Fund a more diversified investment portfolio; |
| · | The fact that Reorganization would allow access to a more streamlined distribution channel, which could result in the growth of assets and lower expenses as a result of economies of scale; |
| · | The fact that the Reorganization is expected to be tax free to shareholders of the Monteagle Funds; and |
| · | The fact that the Monteagle Funds will not bear the costs of the Reorganization. |
The Board of Trustees also reviewed the potential benefits of the Reorganization to other persons, including Nashville Capital Corporation and their affiliates, and the benefits to the New Growth Fund shareholders. Representatives of Nashville Capital Corporation noted its belief that the Reorganization would result in a larger asset base, economies of scale, and a more diversified shareholder base.
The Board determined the Reorganization is in the best interests of both Monteagle Funds’ shareholders. On the basis of the information provided to the Trust Board and its evaluation of that information, the Board recommends that the shareholders of the Large Cap Growth Fund approve the Reorganization.
SHAREHOLDER RIGHTS
Large Cap Growth Fund Shareholders
General. The Monteagle Trust was established as a business trust under Delaware law by a Trust Instrument dated November 26, 1997. Monteagle Trust also is governed by applicable Delaware law.
Shares. The Monteagle Trust is authorized to issue an unlimited number of shares of beneficial interest, without par value, from an unlimited number of series of shares. Currently, the Monteagle Trust consists of six separate investment series. The shares of each Monteagle Fund have no preference as to conversion and have no preemptive rights.
Voting Requirements. Holders of shares of the Monteagle Funds are entitled to one vote for each full share held and fractional votes for fractional shares. On any matter submitted to a vote of shareholders, all shares of the Monteagle Trust entitled to vote shall be voted separately by individual series, except: (i) when so required by applicable law, shares shall be voted in the aggregate and not by individual series; and (ii) when the Trustees of the Monteagle Trust (the "Trustees") have determined that the matter affects the interest of more than series, then the shareholders of all such series shall be entitled to vote.
Shareholder Meetings. Annual meetings of shareholders will not be held, but special meetings of shareholders may be held when specifically required by federal or state law. A meeting of shareholders shall be called by the Secretary whenever (i) ordered by the Trustees or (ii) requested in writing by the holder or holders of at least one-third of the outstanding shares entitled to vote. If the Secretary refuses or neglects for more than 30 days to call such special meeting, the Trustees or the shareholders may, in the name of the Secretary, call the meeting by giving notice thereof in the manner required when notice is given by the Secretary. If the meeting is a meeting of the shareholders of one or more series or classes, but not a meeting of all shareholders of the Monteagle Trust, then only special meetings of the shareholders of such one or more series or classes shall be called, and only the shareholders of such one or more series or classes shall be entitled to notice of and to vote at such meeting.
Election and Term of Trustees. The affairs of the Monteagle Trust are supervised by the Trustees under the laws governing business trusts in the State of Delaware. Trustees of the Monteagle Trust are elected by shareholders holding a majority of shares entitled to vote. Trustees hold office until their successors are duly elected and qualified or until their death, removal or resignation. Shareholders may remove a Trustee by vote of a two-thirds of the outstanding shares, with or without cause. The maximum number of Trustees is 15 and is currently at four.
Shareholder Liability. Pursuant to the Instrument of the Trust, shareholders of the Monteagle Trust generally are not personally liable for the debts, liabilities, obligation and expenses incurred by, contracted for, or otherwise existing with respect to, the Trust or by or on behalf of any Series.
Liability of Trustees. A Trustee, when acting in such capacity, is not personally liable to any person other than the Trust or a beneficial owner for any act, omission or obligation of the Trust or any Trustee. A Trustee is not liable for any act or omission or any conduct whatsoever in his capacity as Trustee, provided that nothing contained in the Instrument of the Trust or in the Delaware Act protects any Trustee against any liability to the Monteagle Trust or to shareholders to which he would otherwise be subject by reason of willful misfeasance, bad faith, gross negligence or reckless disregard of his duties. The Monteagle Trust will indemnify its Trustees and officers against all liabilities and expenses except for liabilities arising from such person's willful misfeasance, bad faith, gross negligence or reckless disregard of that person's duties involved in the conduct of his or her office.
Taxes.
Please consult your tax advisor regarding your specific questions about federal, state and local income taxes. Below is a summary of some important tax issues that affect the Monteagle Funds and their shareholders. This summary is based on current tax laws, which may change. This summary is not applicable to the tax consequences of the Reorganization. The tax-free nature of the Reorganization is discussed above under INFORMATION RELATING TO THE REORGANIZATION – Federal Income Taxes.
Each Fund will distribute substantially all of its net investment income and its net realized capital gains, if any, at least annually. The dividends and distributions that shareholders receive may be subject to federal, state and local taxation, depending upon your tax situation. Distributions received from a Fund may be taxable whether or not shareholders reinvest them. Income distributions are generally taxable as ordinary income. Long-term capital gains are currently taxed at a maximum rate of 15%. Absent further legislation, the maximum 15% tax rate on long-term capital gains and on qualified individual income will cease to apply to taxable years beginning after December 31, 2009. Each sale or exchange of Fund shares may be a taxable event. For tax purposes, an exchange of shares of one Fund for shares of another Fund is treated the same as a sale. The Funds inform shareholders of the amount of ordinary income dividends and capital gain distributions received by the shareholder shortly after the close of each calendar year.
It is anticipated that the Current Growth Fund’s securities holdings will be sold prior to or immediately following the Reorganization. To the extent that the Current Growth Fund’s securities holdings are sold prior to the Reorganization, the proceeds of such sales will be held in temporary investments or reinvested in assets that the New Growth Fund (Surviving Fund) may hold. The possible need for the Current Growth Fund to dispose of certain portfolio investments prior to the Reorganization could result in selling such investments at a disadvantageous time. The sale of securities either prior to the Reorganization or shortly thereafter could result in the Current Growth Fund or the New Growth Fund (Surviving Fund) realizing gains (which may be taxable) or losses that would not otherwise have been realized but for the Reorganization. Such a sale of assets and the reinvestment of the proceeds would involve brokerage and other transactional costs.
Shareholders with tax-advantaged or other retirement accounts generally will not be subject to federal taxation on income and capital gain distributions until distributions from the retirement account are received. Shareholders should consult their tax advisor regarding the rules governing their own retirement plan.
More information is in the Statement of Additional Information for each Fund.
The Monteagle Funds Trust is subject to the information requirements of the Securities Exchange Act of 1934 and the 1940 Act and in accordance therewith, files reports and other information with the SEC. Reports, proxy statements, registration statements and other information filed by the Trust may be inspected without charge and copied at the public reference facilities maintained by the SEC at 100 F Street, N.E., Washington, DC 20549, and at the following regional offices of the SEC: Northeast Regional Office, 3 World Financial Center, Room 4-300, New York, New York 10281; Southeast Regional Office, 801 Brickell Avenue, Suite 1800, Miami, Florida 33131; Midwest Regional Office, 175 West Jackson Boulevard, Suite 900, Chicago, Illinois 60604; Central Regional Office, 1801 California Street, Suite 1500, Denver, Colorado 80202; and Pacific Regional Office, 5670 Wilshire Boulevard, Suite 1100, Los Angeles, California 90036. Copies of such materials may also be obtained from the Public Reference Branch, Office of Consumer Affairs and Information Services, Securities and Exchange Commission, Washington, DC 20549 at prescribed rates. Information included in the Proxy/Prospectus concerning the Monteagle Funds was provided by Nashville Capital Corporation and Matrix Capital Group.
INFORMATION ABOUT THE MONTEAGLE FUNDS
Information concerning the operation and management of the Monteagle Funds is incorporated herein by reference from the Monteagle Funds' prospectuses, a copy of the Monteagle Quality Growth Fund's prospectus is being provided with this Proxy Statement/Prospectus. Additional information about the Monteagle Funds is included in the Statement of Additional Information for the Current Growth and New Growth Fund dated November 9, 2009, respectively, which are available upon request and without charge by calling 1-888-263-5593. The current prospectus and Statements of Additional Information have been filed with the SEC.
The Monteagle Funds are subject to the informational requirements of the Securities Exchange Act of 1934 and the 1940 Act and, in accordance therewith, file reports and other information, including proxy material and charter documents, with the SEC. These items may be inspected and copied at the public reference facilities maintained by the SEC at 100 F Street, NW, Washington, D.C. 20549, and copies of such materials can be obtained at prescribed rates from the Public Reference Branch, Office of Consumer Affairs and Information Services, SEC, Washington, DC 20549.
Interest of Certain Persons in the Transactions. The following person may be deemed to have an interest in the Reorganization because he controls Nashville Capital Corporation. Nashville Capital Corporation provides investment management services to Monteagle Funds. Future growth of the Monteagle Funds can be expected to increase the total amount of fees payable to Nashville Capital Corporation.
| Name | Relationship to Nashville Capital Corporation |
| Larry Curtis Catlett | President, Chief Compliance Officer, Managing Director and Shareholder |
Financial Statements. The financial statements of the Monteagle Funds contained in the Annual Report to shareholders for the fiscal year ended August 31, 2009 have been audited by Cohen Fund Audit Services Ltd., their independent registered public accounting firm. The Monteagle Funds will furnish, without charge, a copy of its most recent Semi-Annual Report succeeding such Annual Report, if any, on request. Requests should be directed to Monteagle Funds by calling toll-free 1-888-263-5593.
THE BOARD OF TRUSTEES OF THE MONTEAGLE FUNDS TRUST RECOMMENDS THAT YOU VOTE FOR APPROVAL OF THE PLAN OF REORGANIZATION.
VOTING MATTERS
General Information. This Proxy Statement/Prospectus is being furnished in connection with the solicitation of proxies by the Board of Trustees of the Trust in connection with the Meeting. It is expected that the solicitation of proxies will be primarily by mail. Officers and service contractors of Trust and the Monteagle Trust also may solicit proxies by telephone, facsimile, Internet or in person. The cost of solicitation of the Monteagle Fund shareholders will be borne by Nashville Capital Corporation.
Voting Rights and Required Vote. Shareholders of the Monteagle Funds are entitled to one vote for each full share held and fractional votes for fractional shares. The holders of 50% of the outstanding shares of the Monteagle Funds entitled to vote at the Meeting, present in person or by proxy, constitute a quorum. Approval of the Reorganization with respect to each Monteagle Fund requires the affirmative vote of a majority of the aggregate number of votes entitled to be cast. Any shareholder giving a proxy may revoke it at any time before it is exercised by submitting to Trust a written notice of revocation or a subsequently executed proxy or by attending the Meeting and voting in person. The proposed Reorganization of the Monteagle Funds will be voted upon by the shareholders of the Current Growth Fund. The consummation of the Monteagle Funds Reorganization is conditioned on the approval of the Plan of Reorganization and related proposals. Even if the Shareholders approve Proposal #2 maintaining the Subadviser and Subadivosry Agreement by a majority of the outstanding shares of the Monteagle Large Cap Growth Fund, the reorganization will not be completed unless the Shareholders approve the Plan of Reorganization in Proposal #1.
Shares represented by a properly executed proxy will be voted in accordance with the instructions thereon, or if no specification is made, the shares will be voted "FOR" the approval of the Reorganization and related Proposals. It is not anticipated that any matters other than the approval of the Reorganization and related proposals and approval of the Subadviser and Subadvisory Agreement will be brought before the Meeting. Should other business properly be brought before the Meeting, it is intended that the accompanying proxies will be voted in accordance with the judgment of the persons named as such proxies.
Abstentions and "broker non-votes" (i.e. shares held by brokers or nominees, typically in "street name," as to which (i) instructions have not been received from the beneficial owners or persons entitled to vote and (ii) the broker or nominee does not have discretionary voting power on a particular matter) will be treated as present for purposes of determining a quorum. In addition, under the rules of the New York Stock Exchange, if a broker has not received instructions from beneficial owners or persons entitled to vote and the proposal(s) to be voted upon may "affect substantially" a shareholder's rights or privileges, the broker may not vote the shares as to that proposal(s) even if it has discretionary voting power As a result, these shares also will be treated as broker non-votes for purposes of proposals that may "affect substantially" a shareholder's rights or privileges (but will not be treated as broker non-votes for other proposals, including adjournment of the Meeting).
Abstentions and broker non-votes will be treated as shares voted against a proposal(s). Treating broker non-votes as votes against a proposal(s) can have the effect of causing shareholders who choose not to participate in the proxy vote to prevail over shareholders who cast votes or provide voting instructions to their brokers or nominees. In order to prevent this result, the Trust may request that selected brokers or nominees refrain from returning proxies on behalf of shares for which voting instructions have not been received from beneficial owners or persons entitled to vote. The Trust also may request that selected brokers or nominees return proxies on behalf of shares for which voting instructions have not been received if doing so is necessary to obtain a quorum.
If sufficient votes in favor of the proposals set forth in the Notice of the Meeting are not received by the time scheduled for the Meeting, the holders of a majority of shares present in person or by proxy at the meeting and entitled to vote at the Meeting, whether or not sufficient to constitute a quorum, or any officer present entitled to preside or act as Secretary of such meeting, may adjourn the meeting without determining the date of the new meeting or from time to time without further notice to a date not more than 120 days after the original record date. Any business that might have been transacted at the meeting originally called may be transacted at any such adjourned meeting at which a quorum is present. The costs of any additional solicitation and of any adjourned session will be borne by Nashville Capital Corporation.
Expenses. In order to obtain the necessary quorum at the Meeting, additional solicitations may be made by mail, telephone, telegraph, facsimile or personal interview by representatives of Nashville Capital Corporation. All costs of solicitation (including the printing and mailing of this proxy statement, meeting notice and form of proxy, as well as any necessary supplementary solicitations) will be paid by Nashville Capital Corporation. Persons holding shares as nominees will, upon request, be reimbursed for their reasonable expenses in sending soliciting material to their principals.
Record Date and Outstanding Shares. Only shareholders of record of the Current Growth Fund at the close of business on December 15, 2009 (the "Record Date") are entitled to notice of and to vote at the Meeting and any postponement or adjournment thereof. At the close of business on the Record Date there were outstanding and entitled to vote:
| Monteagle Funds | Shares of Common Stock |
Large Cap Growth Fund (Current Growth Fund) | |
Quality Growth Fund (New Growth Fund) | |
The votes of the shareholders of the New Growth Fund are not being solicited, because their approval or consent is not necessary for the approval of the Plan of Reorganization.
Security Ownership of Certain Beneficial Owners and Management.
Monteagle Large Cap Growth Fund.
As of the Record Date, the officers and Trustees of Trust as a group, beneficially owned less than 1% of the outstanding Shares of the Monteagle Large Cap Growth Fund. As of the Record Date, to the best of the knowledge of Matrix Capital Group, no officers and/or Trustees owned of record 5% or more of the outstanding shares of either the Large Cap Growth Fund or Monteagle Quality Growth Fund.
The following list indicates the ownership by shareholders who, to the best knowledge of Matrix Capital Group, were the owners of more than 25% of the outstanding shares of the Monteagle Large Cap Growth Fund on the Record Date:
Name and Address | Fund | Number of Shares | Percentage Ownership |
FAMCO PO Box 1148 Columbia, TN 38402-1148 | Current Growth Fund | | |
FAMCO may be deemed to be a “controlling person” of the Monteagle Large Cap Growth Fund under the 1940 Act.
OTHER BUSINESS
The Board of Trustees of the Monteagle Funds Trust knows of no other business to be brought before the Meeting. However, if any other matters come before the Meeting, it is the intention that proxies that do not contain specific restrictions to the contrary will be voted on such matters in accordance with the judgment of the persons named in the enclosed form of proxy.
SHAREHOLDER INQUIRIES
Monteagle Funds. Shareholder inquiries may be addressed to Monteagle Funds in writing at the address on the cover page of this Proxy Statement/Prospectus or by calling toll free 1-888-263-5593.
SHAREHOLDERS WHO DO NOT EXPECT TO BE PRESENT AT THE MEETING ARE REQUESTED TO VOTE BY MAIL, PHONE, FAX, OR INTERNET. INFORMATION ON THE VARIOUS MANNERS OF VOTING ARE SET FORTH IN THE ENCLOSED PROXY.
By Order of the Board of Trustees,
Dave Ganley
Secretary
EXHIBIT A
PLAN OF REORGANIZATION
THIS PLAN OF REORGANIZATION (the "Reorganization") is made as of this 29th day of October 2009, by the Board of Trustees of Monteagle Funds (the "Trust"), a Delaware business trust, with its principal place of business at 209 10th Ave. South, Suite 332, Nashville, Tennessee 37203, with respect to the Monteagle Large Cap Growth Fund (the "LCG Fund") and Monteagle Quality Growth Fund (the “QG Fund”), each a separate series of the Trust (each a "Monteagle Fund" and, together, the "Monteagle Funds" or “Funds”).
This Reorganization is intended to be, and is adopted as, a Plan of Reorganization within the meaning of Section 368(a) of the United States Internal Revenue Code of 1986, as amended (the "Code"). The reorganization will consist of: (i) the transfer of all of the assets of the LCG Fund in exchange for shares of beneficial interest, no par value per share, of the QG Fund; (ii) the assumption by the QG Fund of all liabilities of the LCG Fund; and (iii) the distribution, after the Closing Date hereinafter referred to, of the QG Fund Shares to the shareholders of the LCG Fund and the termination of the LCG Fund as provided herein, all upon the terms and conditions set forth in this Reorganization.
WHEREAS, the QG Fund and the LCG Fund are separate series of the Trust which is an open-end, registered management investment company and the LCG Fund owns securities that generally are assets of the character in which the QG Fund is permitted to invest;
WHEREAS, both Funds are authorized to issue shares of beneficial interest;
WHEREAS, the Board of Trustees has determined that the Reorganization, with respect to the LCG Fund, is in the best interests of the LCG Fund shareholders and that the interests of the existing shareholders of the QG Fund will not be diluted as a result of the Reorganization;
NOW, THEREFORE, in consideration of the premises and responsibilities hereinafter set forth, the Board of Trustees hereby approves and adopts the following:
ARTICLE I
TRANSFER OF ASSETS OF THE LCG FUND IN EXCHANGE FOR THE QG FUND SHARES AND THE ASSUMPTION OF THE LCG FUND'S LIABILITIES AND TERMINATION OF THE LCG FUND
1.1 THE EXCHANGE. Subject to the terms and conditions contained herein, the LCG Fund shall transfer all of its assets and liabilities to the QG Fund. In exchange, the QG Fund shall (i) deliver to the LCG Fund the number of full and fractional shares of the QG Fund equal in value to the value of full and fractional shares of the LCG Fund then outstanding and (ii) assume the liabilities of the LCG Fund, as set forth in paragraph 1.3. Such transaction shall take place at the closing date provided for in paragraph 3.1 ("Closing Date").
| Plan of Reorganization | Page 1 of 7 |
1.2 ASSETS TO BE COMBINED. The assets of the LCG Fund to be transferred to the QG Fund shall consist of all property, including, without limitation, all cash, securities, commodities, interests in futures and dividends or interest receivables, owned by the LCG Fund and any deferred or prepaid expenses shown as an asset on the books of the LCG Fund on the Closing Date.
The Trust’s administrator, transfer agent and/or fund accountant will, within a reasonable period of time prior to the Closing Date, furnish a list of the LCG Fund's portfolio securities and other investments. Within a reasonable time prior to the Closing Date, the Trust’s transfer agent and/or fund accountant will furnish a list of the securities and Trust Management shall determine whether any securities do not conform to the QG Fund's investment objectives, policies, and restrictions. As of this date, all of LCG Fund’s securities conform to the QG Fund’s investment objectives, policies and restrictions.
1.3 LIABILITIES TO BE ASSUMED. The LCG Fund will endeavor to discharge all of its known liabilities and obligations to the extent possible prior to the Closing Date. The QG Fund shall assume those liabilities, expenses, costs, charges and reserves reflected on a Statement of Assets and Liabilities of the LCG Fund prepared on behalf of the LCG Fund, as of the Valuation Date (as defined in paragraph 2.1), in accordance with generally accepted accounting principles consistently applied from the prior audited period. The QG Fund shall assume all of the liabilities of the LCG Fund, whether accrued or contingent, known or unknown, existing at the Valuation Date whether or not they are reflected on the Statement of Assets and Liabilities.
1.4 LIQUIDATION AND DISTRIBUTION. On or as soon after the Closing Date as is conveniently practicable (the "Transfer Date"): (a) the LCG Fund will make a liquidating distribution, pro rata to its shareholders of record (the "LCG Fund Shareholders"), determined as of the close of business on the Valuation Date (as defined in paragraph 2.1), of all of the QG Fund Shares received by the LCG Fund pursuant to paragraph 1.1; and (b) the LCG Fund will thereupon proceed to terminate as set forth in paragraph 1.7 below. Such distribution will be accomplished by the transfer of QG Fund Shares credited to the account of the LCG Fund on the books of the QG Fund to open accounts on the share records of the QG Fund in the name of the LCG Fund Shareholders, and representing the respective pro rata number of QG Fund Shares due such shareholders. All issued and outstanding shares of the LCG Fund will simultaneously be canceled on the books of the LCG Fund. The LCG Fund Shareholder shall have the right to receive any unpaid dividends or other distributions that were declared by the LCG Fund before the Effective Time (as defined in paragraph 3.1) with respect to Transferring Fund shares that are held of record by the LCG Fund Shareholder at the Effective Time on the Closing Date.
1.5 OWNERSHIP OF SHARES. Ownership of QG Fund Shares will be shown on the books of the QG Fund's transfer agent. Shares of the QG Fund will be issued simultaneously to the LCG Fund, in an amount equal in value to the NAV of the LCG Fund's shares, to be distributed to shareholders of the LCG Fund.
1.6 REPORTING RESPONSIBILITY. Any reporting responsibility of the LCG Fund is and shall remain the responsibility of the LCG Fund, up to and including the Closing Date, and such later date on which the LCG Fund is terminated.
1.7 TERMINATION. The LCG Fund shall be terminated promptly following the Closing Date and the making of all distributions pursuant to paragraph 1.4.
| Plan of Reorganization | Page 2 of 7 |
VALUATION
2.1 VALUATION OF ASSETS. The value of the LCG Fund’s assets to be transferred to the QG Fund hereunder shall be the value of such assets computed as of the close of regular trading on the New York Stock Exchange ("NYSE") on the business day immediately prior to the Closing Date (such time and date being hereinafter called a "Valuation Date"), using the valuation procedures set forth in the Trust’s Instrument and the LCG Fund's then current prospectus and Statement of Additional Information or such other valuation procedures.
2.2 VALUATION OF SHARES. The net asset value per share of QG Fund Shares shall be the net asset value per share computed as of the close of normal trading on the NYSE on the Valuation Date, using the valuation procedures set forth in Monteagle's Instrument of the Trust and the QG Fund's then current prospectus and Statement of Additional Information.
2.3 SHARES TO BE ISSUED. The number of the QG Fund's shares to be issued (including fractional shares) shall be equal in net asset value to the net asset value of the LCG Fund's shares then outstanding. Upon the LCG Fund's liquidating distribution each holder of shares of the LCG Fund will receive shares of the corresponding the QG Fund equal in net asset value to the net asset value of shares held by such holder immediately prior to such liquidating distribution.
2.4 DETERMINATION OF VALUE. With respect to the LCG Fund’s assets, the Trust’s fund accountant shall compute all values in accordance with its regular practice in pricing the shares and assets of the LCG Fund and QG Fund.
ARTICLE III
CLOSING AND CLOSING DATE
3.1 CLOSING DATE. The closing (the "Closing") will be on or about December 14, 2009 or such other date(s) as the Trustees may specify. All acts taking place at the Closing shall be deemed to take place immediately prior to the Closing Date unless otherwise provided. The Closing shall be held as of 9:00 a.m. Eastern Standard Time (the "Effective Time") at the offices of Matrix Capital Group, 630 Fitzwatertown Rd., Building A, Second Floor, Willow Grove, Pennsylvania 19090, or at such other time and/or place as the parties may agree.
3.2 CUSTODIAN'S EFFORT. The Trust’s custodian for the LCG Fund shall; a) deliver the LCG Fund's portfolio securities, cash, and any other assets in proper form to the QG Fund on the Closing Date; and b) and transfer all necessary taxes including all applicable federal and state stock transfer stamps, if any, shall have been paid, or provision for payment shall have been made, in conjunction with the delivery of portfolio securities by the LCG Fund.
| Plan of Reorganization | Page 3 of 7 |
3.3 EFFECT OF SUSPENSION IN TRADING. In the event that on the Valuation Date, either: (a) the NYSE or another primary exchange on which the portfolio securities of an the QG Fund or the LCG Fund are purchased or sold, shall be closed to trading or trading on such exchange shall be restricted; or (b) trading or the reporting of trading on the NYSE or elsewhere shall be disrupted so that accurate appraisal of the value of the net assets of the QG Fund or the LCG Fund is impracticable, the Valuation Date shall be postponed until the first business day after the day when trading is fully resumed and reporting is restored.
3.4 TRANSFER AGENT'S EFFORT. The Trust’s transfer agent for the LCG Fund shall prepare the necessary records containing the names and addresses of LCG Fund Shareholders, and the number and percentage ownership of outstanding shares owned by each such shareholder immediately prior to the Closing. The Trust’s administrator and/or fund accountant issue the necessary records evidencing QG Fund Shares to be credited on the Closing Date that have been credited to the LCG Fund's account on the books of the QG Fund.
ARTICLE IV
CONDITIONS / STATUS PRIOR TO TRANFER
4.1 TRUST INFORMATION. The Trust and/or the Funds have the following structure / status:
(a) The Funds are separate series of the Monteagle Funds, a business trust, duly organized, validly existing and in good standing under the laws of the State of Delaware.
(b) The Funds are separate series of a Delaware business trust that is registered as an open-end management investment company, and such Delaware business trust's registration with the U.S. Securities and Exchange Commission (the "Commission") as an investment company under the Investment Company Act of 1940 (the "1940 Act") is in full force and effect.
(c) No litigation, administrative proceeding, or investigation of or before any court or governmental body is presently pending or to its knowledge threatened against the Funds or any of their properties or assets, which, if adversely determined, would materially and adversely affect its financial condition, the conduct of its business, or the ability of the Funds to carry out the transactions contemplated by this Reorganization.
(d) The financial statements of the Funds are in accordance with generally accepted accounting principles, and such statements (copies of which have been furnished to the QG Funds) fairly reflect the financial condition of the Funds as of August 31, 2009 in all material respects as of that date, and there are no known contingent liabilities of the Funds as of that date not disclosed in such statements.
(e) Since August 31, 2009, there have been no material adverse changes in the Funds financial condition, assets, liabilities or business (other than changes occurring in the ordinary course of business), or any incurrence by the Funds of indebtedness maturing more than one year from the date such indebtedness was incurred. For the purposes of this subparagraph (h), a decline in the net asset value of the Funds shall not constitute a material adverse change.
| Plan of Reorganization | Page 4 of 7 |
(f) At the Closing Date, all federal and other tax returns and reports of the Funds required by law to be filed by such date, shall have been filed, and all federal and other taxes shown due on such returns and reports shall have been paid, or provision shall have been made for the payment thereof. To the best of the Trust's knowledge, no such return is currently under audit, and no assessment has been asserted with respect to such returns.
(g) All issued and outstanding shares of the Funds are, and at the Closing Date, will be duly and validly issued and outstanding, fully paid and non-assessable by Funds. All of the issued and outstanding shares of the Funds will, at the time of the Closing Date, be held by the persons and in the amounts set forth in the records of the Funds' transfer agent as provided in paragraph 3.4. The Funds have no outstanding options, warrants, or other rights to subscribe for or purchase any of the Funds' shares, and has no outstanding securities convertible into any of the Funds shares.
(h) At the Closing Date, the LCG Fund will have good and marketable title to the LCG Fund's assets to be transferred to the QG Fund pursuant to paragraph 1.2, and full right, power, and authority to sell, assign, transfer, and deliver such assets hereunder, and, upon delivery and payment for such assets. Upon delivery and payment for such assets, the QG Fund will acquire good and marketable title, subject to no restrictions on the full transfer of such assets, including such restrictions as might arise under the 1933 Act.
(i) The execution, delivery, and performance of this Reorganization have been duly authorized by all necessary action on the part of the Trust. Subject to approval by the LCG Fund Shareholders, this Reorganization constitutes a valid and binding obligation of the LCG Fund, enforceable in accordance with its terms, subject as to enforcement, to bankruptcy, insolvency, reorganization, moratorium, and other laws relating to or affecting creditors' rights and to general equity principles.
(j) The Funds have elected to qualify and has qualified as a "regulated investment company" (a "RIC") under the Code as of and since the first taxable period; has been a RIC under the Code at all times since the end of its first taxable year when they so qualified; and qualifies and shall continue to qualify as a RIC under the Code for its taxable year ending upon its liquidation.
(k) No governmental consents, approvals, authorizations or filings are required under the 1933 Act, the Securities Exchange Act of 1934 (the "1934 Act"), the 1940 Act or Delaware law for the approval of this Reorganization by the Trust, for itself and on behalf of the Funds, except for the effectiveness of the Registration Statement and such other consents, approvals, authorizations and filings that have or will be made or received, and such consents, approvals, authorizations and filings as may be required subsequent to the Closing Date; it being understood, however, that this Reorganization and the transactions contemplated herein must be approved by the shareholders of the LCG Fund as described in paragraph 5.2.
(l) The Trust’s officers and/or administrator, on behalf of the QG Fund, shall obtain the approvals and authorizations required by the 1933 Act, the 1940 Act, and any state blue sky or securities laws as it may deem appropriate in order to continue its operations after the Closing Date.
(m) The Trust shall file the appropriate post-effective amendment and/or other registration statement filings with the Commission to be effective on or before the Closing Date.
| Plan of Reorganization | Page 5 of 7 |
(n) On or before the Closing Date, a special meeting of LCG Fund Shareholders shall be called to consider and act upon this Reorganization and to take all other action necessary to obtain approval of the transactions contemplated herein.
(o) The Funds shall operate business in the ordinary course between the date of this Reorganization and the Closing Date, it being understood that such ordinary course of business will include customary dividends and distributions and shareholder redemptions.
(p) The LCG Fund shall declare and pay a dividend or dividends, which, together with all previous such dividends, shall have the effect of distributing to its shareholders all of the LCG Fund's net investment company taxable income for all taxable periods ending on or prior to the Closing Date (computed without regard to any deduction for dividends paid) and all of its net capital gains realized in all taxable periods ending on or prior to such Closing Date (after reduction for any capital loss carry forward).
ARTICLE V
TAX-FREE TRANSACTION
5.1 The Trust officers or administrative agents shall receive any necessary tax opinion regarding the tax-free status of this Transaction to comply with the following understanding:
(a) No gain or loss will be recognized by the LCG Fund upon the transfer of the LCG Fund's assets to the QG Fund in exchange for QG Fund Shares and the assumption by the QG Fund of the liabilities of the LCG Fund or upon the distribution (whether actual or constructive) of QG Fund Shares to LCG Fund Shareholders in exchange for such shareholders' shares of the LCG Fund.
(b) The aggregate tax basis for QG Fund Shares received by the LCG Fund Shareholder pursuant to the Reorganization will be the same as the aggregate tax basis of the LCG Fund shares exchanged therefor by such shareholder. The holding period of QG Fund Shares to be received by the LCG Fund Shareholder will include the period during which the LCG Fund shares exchanged therefore were held by such shareholder, provided the LCG Fund shares are held as capital assets at the time of the Reorganization.
(c) The tax basis of the LCG Fund's assets acquired by the QG Fund will be the same as the tax basis of such assets to the LCG Fund immediately prior to the Reorganization. The holding period of the assets of the LCG Fund in the hands of the QG Fund will include the period during which those assets were held by the LCG Fund.
| Plan of Reorganization | Page 6 of 7 |
ARTICLE VI
EXPENSES
6.1 Except as otherwise provided for herein, Nashville Capital Corporation, or an affiliate thereof, shall bear all expenses of the transactions contemplated by this Reorganization. Such expenses include, without limitation: (a) expenses associated with the preparation and filing of the Registration Statement/Proxy Statement on Form N-14 under the 1933 Act covering shares to be issued pursuant to the provisions of this Reorganization; (b) postage; (c) printing; (d) accounting fees; (e) legal and audit fees; (f) solicitation costs of the transactions, and (g) the cost of winding up and liquidating the LCG Fund. Nashville Capital Corporation, or an affiliate thereof, shall remain liable for expenses in the event this Reorganization is terminated.
ARTICLE VII
TERMINATION
7.1 This Reorganization may be terminated by the Board of Trustees of the Trust if an any time they deem the consummation of the Reorganization contemplated herein is not in the best interest of the Funds or Trust.
IN WITNESS WHEREOF, all members of the Monteagle Funds Board of Trustees hereby authorize, instruct and direct officers of the Trust to take any and all action necessary to implement this Plan of Reorganization.
MONTEAGLE FUNDS BOARD OF TRUSTEES
| By: | /s/ Larry J. Anderson | |
| Name: | Larry J. Anderson | |
| Title: | Trustee | |
| | | |
| By: | /s/ Charles M. Kinard | |
| Name: | Charles M. (‘Mike”) Kinard | |
| Title: | Trustee | |
| | | |
| By: | /s/ Brian J. Green | |
| Name: | Brian J. Green | |
| Title: | Trustee | |
| | | |
| By: | /s/ Carl C. Peterson | |
| Name: | Carl C. Peterson | |
| Title: | Trustee | |
| Plan of Reorganization | Page 7 of 7 |
STATEMENT OF ADDITIONAL INFORMATION
for the
MONTEAGLE FUNDS
209 10th Ave. South, Suite 332
Nashville, Tennessee 37203
1-888-263-5593
The Statement of Additional Information is not a prospectus but should be read in conjunction with the Prospectuses dated November 9, 2009 for the Special Meeting of Shareholders of Monteagle Funds to be held on Friday December 11, 2009. Copies of the Combined Proxy Statement/Prospectus may be obtained at no charge by calling 1-888-263-5593. Unless otherwise indicated, capitalized terms used herein and not otherwise defined have the same meanings as are given to them in the Combined Proxy Statement/Prospectus.
The audited financial statements and related independent auditor's report for the Monteagle Funds contained in the Annual Report to Shareholders for the fiscal year ended August 31, 2009, are incorporated herein by reference. Additionally, the subsequent Semi-Annual Report is incorporated by reference herein.
Table of Contents
| Financial Statements of the combined Large Cap Growth Fund and the Quality Growth Fund on a pro forma basis for the period ended August 31, 2009 | 1 |
PRO FORMA FINANCIAL STATEMENTS
The proposed Reorganization transaction, if approved by shareholders, will result in: (i) the transfer of all of the assets and liabilities of the Monteagle Large Cap Growth Fund in exchange for shares of the Monteagle Quality Growth Fund, both a series of Monteagle Funds; (ii) the distribution of shares of the Monteagle Quality Growth Fund so received to shareholders of the Monteagle Large Cap Growth Fund; and (iii) the liquidation and termination of the Monteagle Large Cap Growth Fund.
The accompanying unaudited pro forma combined schedule of investments, statement of assets and liabilities and statement of operations are based on the accounts of the Monteagle Large Cap Growth Fund and Monteagle Quality Growth Fund (Surviving Fund) as of August 31, 2009. The pro forma combined statements have been prepared to give effect to the proposed reorganization on the historical operations of the accounting survivor, the combined Surviving Fund, as if the transaction had occurred August 31, 2009.
| MONTEAGLE FUNDS | |
| PRO FORMA SCHEDULE OF INVESTMENTS | | | | | | | | | | | | | | | | | | |
| August 31, 2009 (Unaudited) | | MONTEAGLE QUALITY | | | MONTEAGLE LARGE CAP | | | PRO FORMA | | | SURVIVING FUND | |
| | | GROWTH FUND | | | GROWTH FUND | | | ADJUSTMENTS | | | PROFORMA | |
| | | | | | | | | | | | | | | | | | | | | | | | | |
| | | SHARES | | | VALUE | | | SHARES | | | VALUE | | | SHARES | | | VALUE | | | SHARES | | | VALUE | |
| COMMON STOCKS - 97.58% | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | |
| Aerospace & Defense - 0.40% | | | | | | | | | | | | | | | | | | | | | | |
| United Technologies Corp. | | | 1,815 | | | $ | 107,738 | | | | - | | | $ | - | | | | - | | | $ | - | | | | 1,815 | | | $ | 107,738 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Apparel - 2.20% | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| NIKE, Inc. - Class B | | | 2,225 | | | | 123,243 | | | | 8,400 | | | | 465,276 | | | | - | | | | - | | | | 10,625 | | | | 588,519 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Banks - 5.07% | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Bank of America Corp. | | | 5,910 | | | | 103,957 | | | | - | | | | - | | | | | | | | | | | | 5,910 | | | | 103,957 | |
| Goldman Sachs Group, Inc. | | | - | | | | - | | | | 2,000 | | | | 330,920 | | | | - | | | | - | | | | 2,000 | | | | 330,920 | |
| JPMorgan Chase & Co. | | | 2,235 | | | | 97,133 | | | | 11,400 | | | | 495,444 | | | | - | | | | - | | | | 13,635 | | | | 592,577 | |
| Northern Trust Corp. | | | - | | | | - | | | | 5,650 | | | | 330,299 | | | | - | | | | - | | | | 5,650 | | | | 330,299 | |
| | | | | | | | 201,090 | | | | | | | | 1,156,663 | | | | | | | | - | | | | | | | | 1,357,753 | |
| Beverages - 1.56% | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Coca-Cola Co. | | | 3,995 | | | | 194,836 | | | | - | | | | - | | | | - | | | | - | | | | 3,995 | | | | 194,836 | |
| PepsiCo, Inc. | | | 3,945 | | | | 223,563 | | | | - | | | | - | | | | - | | | | - | | | | 3,945 | | | | 223,563 | |
| | | | | | | | 418,399 | | | | | | | | - | | | | | | | | - | | | | | | | | 418,399 | |
| Biotechnology - 5.49% | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Amgen, Inc. (a) | | | 2,345 | | | | 140,090 | | | | 4,400 | | | | 262,856 | | | | - | | | | - | | | | 6,745 | | | | 402,946 | |
| Celgene Corp. (a) | | | - | | | | - | | | | 5,050 | | | | 263,459 | | | | - | | | | - | | | | 5,050 | | | | 263,459 | |
| Gilead Sciences, Inc. (a) | | | 4,029 | | | | 181,547 | | | | 13,800 | | | | 621,828 | | | | - | | | | - | | | | 17,829 | | | | 803,375 | |
| | | | | | | | 321,637 | | | | | | | | 1,148,143 | | | | | | | | - | | | | | | | | 1,469,780 | |
| Chemicals - 3.85% | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Air Products & Chemicals, Inc. | | | 2,080 | | | | 156,062 | | | | - | | | | - | | | | - | | | | - | | | | 2,080 | | | | 156,062 | |
| Monsanto Co. | | | 2,320 | | | | 194,602 | | | | - | | | | - | | | | - | | | | - | | | | 2,320 | | | | 194,602 | |
| Mosaic Co. | | | - | | | | - | | | | 5,650 | | | | 273,855 | | | | - | | | | - | | | | 5,650 | | | | 273,855 | |
| Sociedad Quimica Y Minera de Chile SA - ADR | | | - | | | | - | | | | 11,700 | | | | 407,511 | | | | - | | | | - | | | | 11,700 | | | | 407,511 | |
| | | | | | | | 350,664 | | | | | | | | 681,366 | | | | | | | | - | | | | | | | | 1,032,030 | |
| Coal - 0.41% | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Peabody Energy Corp. | | | 3,320 | | | | 108,498 | | | | - | | | | - | | | | - | | | | - | | | | 3,320 | | | | 108,498 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Commercial Services - 3.81% | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| H&R Block, Inc. | | | 8,320 | | | | 143,770 | | | | - | | | | - | | | | - | | | | - | | | | 8,320 | | | | 143,770 | |
| Visa, Inc. Class A | | | 1,700 | | | | 120,870 | | | | 9,000 | | | | 639,900 | | | | - | | | | - | | | | 10,700 | | | | 760,770 | |
| Western Union Co. | | | 6,360 | | | | 114,734 | | | | - | | | | - | | | | - | | | | - | | | | 6,360 | | | | 114,734 | |
| | | | | | | | 379,374 | | | | | | | | 639,900 | | | | | | | | - | | | | | | | | 1,019,274 | |
| Computers - 13.91% | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Apple, Inc. (a) | | | 1,800 | | | | 302,778 | | | | 4,900 | | | | 824,229 | | | | - | | | | - | | | | 6,700 | | | | 1,127,007 | |
| Cognizant Technology Solutions Corp. - Class A (a) | | | 3,050 | | | | 106,384 | | | | 19,450 | | | | 678,416 | | | | - | | | | - | | | | 22,500 | | | | 784,800 | |
| Dell, Inc. (a) | | | 4,030 | | | | 63,795 | | | | - | | | | - | | | | - | | | | - | | | | 4,030 | | | | 63,795 | |
| Hewlett-Packard Co. | | | 5,425 | | | | 243,528 | | | | 12,200 | | | | 547,658 | | | | - | | | | - | | | | 17,625 | | | | 791,186 | |
| International Business Machines Corp. | | | 2,915 | | | | 344,116 | | | | 5,200 | | | | 613,860 | | | | - | | | | - | | | | 8,115 | | | | 957,976 | |
| | | | | | | | 1,060,601 | | | | | | | | 2,664,163 | | | | | | | | - | | | | | | | | 3,724,764 | |
| Cosmetics & Personal Care - 1.68% | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Alberto-Culver Co. | | | 4,115 | | | | 108,595 | | | | - | | | | - | | | | - | | | | - | | | | 4,115 | | | | 108,595 | |
| Colgate-Palmolive Co. | | | 1,525 | | | | 110,867 | | | | - | | | | - | | | | - | | | | - | | | | 1,525 | | | | 110,867 | |
| Procter & Gamble Co. | | | 4,265 | | | | 230,779 | | | | - | | | | - | | | | - | | | | - | | | | 4,265 | | | | 230,779 | |
| | | | | | | | 450,241 | | | | | | | | - | | | | | | | | - | | | | | | | | 450,241 | |
| Diversified Financial Services - 2.70% | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Charles Schwab Corp. | | | 6,150 | | | | 111,069 | | | | - | | | | - | | | | - | | | | - | | | | 6,150 | | | | 111,069 | |
| CME Group, Inc. | | | - | | | | - | | | | 1,000 | | | | 291,040 | | | | - | | | | - | | | | 1,000 | | | | 291,040 | |
| Intercontinental Exchange, Inc. (a) | | | 1,730 | | | | 162,274 | | | | - | | | | - | | | | - | | | | - | | | | 1,730 | | | | 162,274 | |
| Janus Capital Group, Inc. | | | 12,425 | | | | 158,046 | | | | - | | | | - | | | | - | | | | - | | | | 12,425 | | | | 158,046 | |
| | | | | | | | 431,389 | | | | | | | | 291,040 | | | | | | | | - | | | | | | | | 722,429 | |
| Electronics - 0.57% | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Amphenol Corp. - Class A | | | 4,335 | | | | 151,552 | | | | - | | | | - | | | | - | | | | - | | | | 4,335 | | | | 151,552 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Energy - Alternative Sources - 0.68% | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| First Solar, Inc. (a) | | | - | | | | - | | | | 1,500 | | | | 182,370 | | | | - | | | | - | | | | 1,500 | | | | 182,370 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Engineering & Construction - 3.66% | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Aecom Technology Corp. (a) | | | 1,810 | | | | 49,612 | | | | - | | | | - | | | | - | | | | - | | | | 1,810 | | | | 49,612 | |
| Fluor Corp. | | | - | | | | - | | | | 12,300 | | | | 650,670 | | | | - | | | | - | | | | 12,300 | | | | 650,670 | |
| Jacobs Engineering Group, Inc. (a) | | | - | | | | - | | | | 6,350 | | | | 279,273 | | | | - | | | | - | | | | 6,350 | | | | 279,273 | |
| | | | | | | | 49,612 | | | | | | | | 929,943 | | | | | | | | - | | | | | | | | 979,555 | |
| Environmental Control - 0.29% | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Stericycle, Inc. (a) | | | 1,550 | | | | 76,756 | | | | - | | | | - | | | | - | | | | - | | | | 1,550 | | | | 76,756 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Food - 0.83% | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| McCormick & Co., Inc. | | | 3,425 | | | | 111,552 | | | | - | | | | - | | | | - | | | | - | | | | 3,425 | | | | 111,552 | |
| Sysco Corp. | | | 4,360 | | | | 111,136 | | | | - | | | | - | | | | - | | | | - | | | | 4,360 | | | | 111,136 | |
| | | | | | | | 222,688 | | | | | | | | - | | | | | | | | - | | | | | | | | 222,688 | |
| COMMON STOCKS - 97.58% (continued) | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Healthcare - Products - 2.95% | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Baxter International, Inc. | | | 1,875 | | | $ | 106,725 | | | | - | | | $ | - | | | | - | | | $ | - | | | | 1,875 | | | $ | 106,725 | |
| CR Bard, Inc. | | | 2,950 | | | | 237,711 | | | | - | | | | - | | | | - | | | | - | | | | 2,950 | | | | 237,711 | |
| Johnson & Johnson | | | 3,200 | | | | 193,408 | | | | - | | | | - | | | | - | | | | - | | | | 3,200 | | | | 193,408 | |
| Medtronic, Inc. | | | 2,600 | | | | 99,580 | | | | - | | | | - | | | | - | | | | - | | | | 2,600 | | | | 99,580 | |
St. Jude Medical, Inc. (a) | | | 1,900 | | | | 73,226 | | | | - | | | | - | | | | - | | | | - | | | | 1,900 | | | | 73,226 | |
| Techne Corp. | | | 1,305 | | | | 80,479 | | | | - | | | | - | | | | - | | | | - | | | | 1,305 | | | | 80,479 | |
| | | | | | | | 791,129 | | | | | | | | - | | | | | | | | - | | | | | | | | 791,129 | |
| Internet - 6.23% | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
eBay, Inc. (a) | | | - | | | | - | | | | 24,400 | | | | 540,216 | | | | - | | | | - | | | | | | | | | |
Google, Inc. - Class A (a) | | | 505 | | | | 233,143 | | | | 1,450 | | | | 669,422 | | | | - | | | | - | | | | 1,955 | | | | 902,565 | |
McAfee, Inc. (a) | | | - | | | | - | | | | 5,700 | | | | 226,746 | | | | - | | | | - | | | | 5,700 | | | | 226,746 | |
| | | | | | | | 233,143 | | | | | | | | 1,436,384 | | | | | | | | - | | | | | | | | 1,669,527 | |
| Machinery - Diversified - 3.05% | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Deere & Co. | | | 2,510 | | | | 109,436 | | | | - | | | | - | | | | - | | | | - | | | | 2,510 | | | | 109,436 | |
| Flowserve Corp. | | | - | | | | - | | | | 6,300 | | | | 543,375 | | | | - | | | | - | | | | 6,300 | | | | 543,375 | |
| Roper Industries, Inc. | | | 3,480 | | | | 164,882 | | | | - | | | | - | | | | - | | | | - | | | | 3,480 | | | | 164,882 | |
| | | | | | | | 274,318 | | | | | | | | 543,375 | | | | | | | | - | | | | | | | | 817,693 | |
| Media - 1.24% | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
DIRECTV Group, Inc. (a) | | | 6,080 | | | | 150,541 | | | | - | | | | - | | | | - | | | | - | | | | 6,080 | | | | 150,541 | |
| Walt Disney Co. | | | 7,020 | | | | 182,801 | | | | - | | | | - | | | | - | | | | - | | | | 7,020 | | | | 182,801 | |
| | | | | | | | 333,342 | | | | | | | | - | | | | | | | | - | | | | | | | | 333,342 | |
| Metal Fabricate & Hardware - 0.66% | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Precision Castparts Corp. | | | 1,925 | | | | 175,714 | | | | - | | | | - | | | | - | | | | - | | | | 1,925 | | | | 175,714 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Mining - 0.26% | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Freeport-McMoRan Copper & Gold, Inc. | | | 1,120 | | | | 70,538 | | | | - | | | | - | | | | - | | | | - | | | | 1,120 | | | | 70,538 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Miscellaneous Manufacturing - 1.67% | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Danaher Corp. | | | 4,660 | | | | 282,909 | | | | - | | | | - | | | | - | | | | - | | | | 4,660 | | | | 282,909 | |
| Harsco Corp. | | | 2,910 | | | | 90,763 | | | | - | | | | - | | | | - | | | | - | | | | 2,910 | | | | 90,763 | |
| Honeywell International, Inc. | | | 2,035 | | | | 74,807 | | | | - | | | | - | | | | - | | | | - | | | | 2,035 | | | | 74,807 | |
| | | | | | | | 448,479 | | | | | | | | - | | | | | | | | - | | | | | | | | 448,479 | |
| Oil & Gas - 5.09% | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Apache Corp. | | | 2,845 | | | | 241,683 | | | | - | | | | - | | | | - | | | | - | | | | 2,845 | | | | 241,683 | |
| Exxon Mobil Corp. | | | 2,785 | | | | 192,583 | | | | - | | | | - | | | | - | | | | - | | | | 2,785 | | | | 192,583 | |
| Petroleo Brasileiro SA - ADR | | | - | | | | - | | | | 11,800 | | | | 467,752 | | | | - | | | | - | | | | 11,800 | | | | 467,752 | |
Southwestern Energy Co. (a) | | | - | | | | - | | | | 12,500 | | | | 460,750 | | | | - | | | | - | | | | 12,500 | | | | 460,750 | |
| | | | | | | | 434,266 | | | | | | | | 928,502 | | | | | | | | - | | | | | | | | 1,362,768 | |
| Oil & Gas Services - 0.53% | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Cameron International Corp. (a) | | | 4,010 | | | | 143,197 | | | | - | | | | - | | | | - | | | | - | | | | 4,010 | | | | 143,197 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Pharmaceuticals - 5.71% | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Abbott Laboratories | | | 4,000 | | | | 180,920 | | | | - | | | | - | | | | - | | | | - | | | | 4,000 | | | | 180,920 | |
| Bristol-Myers Squibb Co. | | | - | | | | - | | | | 11,700 | | | | 258,921 | | | | - | | | | - | | | | 11,700 | | | | 258,921 | |
Express Scripts, Inc. (a) | | | 1,985 | | | | 143,357 | | | | - | | | | - | | | | - | | | | - | | | | 1,985 | | | | 143,357 | |
Medco Health Solutions, Inc. (a) | | | - | | | | - | | | | 6,200 | | | | 342,364 | | | | - | | | | - | | | | 6,200 | | | | 342,364 | |
| Schering-Plough Corp. | | | 4,330 | | | | 122,019 | | | | - | | | | - | | | | - | | | | - | | | | 4,330 | | | | 122,019 | |
| Teva Pharmaceutical Industries Ltd. - ADR | | | - | | | | - | | | | 9,350 | | | | 481,525 | | | | - | | | | - | | | | 9,350 | | | | 481,525 | |
| | | | | | | | 446,296 | | | | | | | | 1,082,810 | | | | | | | | - | | | | | | | | 1,529,106 | |
| Real Estate Investment Trust - 0.27% | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| ProLogis | | | 6,525 | | | | 72,558 | | | | - | | | | - | | | | | | | | - | | | | 6,525 | | | | 72,558 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Retail - 9.10% | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| CVS Caremark Corp. | | | 3,500 | | | | 131,320 | | | | - | | | | - | | | | - | | | | - | | | | 3,500 | | | | 131,320 | |
| Family Dollar Stores, Inc. | | | - | | | | - | | | | 7,800 | | | | 236,184 | | | | - | | | | - | | | | 7,800 | | | | 236,184 | |
GameStop Corp. Class A (a) | | | 2,665 | | | | 63,427 | | | | - | | | | - | | | | - | | | | - | | | | 2,665 | | | | 63,427 | |
Kohl's Corp. (a) | | | 1,255 | | | | 64,745 | | | | - | | | | - | | | | - | | | | - | | | | 1,255 | | | | 64,745 | |
| Lowe's Cos., Inc. | | | 3,750 | | | | 80,625 | | | | - | | | | - | | | | - | | | | - | | | | 3,750 | | | | 80,625 | |
| McDonald's Corp. | | | 2,870 | | | | 161,409 | | | | 8,600 | | | | 483,664 | | | | - | | | | - | | | | 11,470 | | | | 645,073 | |
| Target Corp. | | | 2,615 | | | | 122,905 | | | | - | | | | - | | | | - | | | | - | | | | 2,615 | | | | 122,905 | |
| Wal-Mart Stores, Inc. | | | 5,985 | | | | 304,457 | | | | 11,100 | | | | 564,657 | | | | - | | | | - | | | | 17,085 | | | | 869,114 | |
| Yum! Brands, Inc. | | | - | | | | - | | | | 6,500 | | | | 222,625 | | | | - | | | | - | | | | 6,500 | | | | 222,625 | |
| | | | | | | | 928,888 | | | | | | | | 1,507,130 | | | | | | | | - | | | | | | | | 2,436,018 | |
| Savings & Loans - 1.94% | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Hudson City Bancorp, Inc. | | | - | | | | - | | | | 39,700 | | | | 520,864 | | | | - | | | | - | | | | 39,700 | | | | 520,864 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Semiconductors - 1.34% | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Intel Corp. | | | 10,550 | | | | 214,376 | | | | - | | | | - | | | | - | | | | - | | | | 10,550 | | | | 214,376 | |
| Microchip Technology, Inc. | | | 5,400 | | | | 143,370 | | | | - | | | | - | | | | - | | | | - | | | | 5,400 | | | | 143,370 | |
| | | | | | | | 357,746 | | | | | | | | - | | | | | | | | - | | | | | | | | 357,746 | |
| Software - 7.16% | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Activision Blizzard, Inc. (a) | | | 7,675 | | | | 89,107 | | | | - | | | | - | | | | - | | | | - | | | | 7,675 | | | | 89,107 | |
| Adobe Systems, Inc. | | | 1,675 | | | | 52,628 | | | | - | | | | - | | | | - | | | | - | | | | 1,675 | | | | 52,628 | |
BMC Software, Inc. (a) | | | - | | | | - | | | | 12,825 | | | | 457,211 | | | | - | | | | - | | | | 12,825 | | | | 457,211 | |
| Microsoft Corp. | | | 17,300 | | | | 426,445 | | | | - | | | | - | | | | - | | | | - | | | | 17,300 | | | | 426,445 | |
| Oracle Corp. | | | 10,750 | | | | 235,103 | | | | 30,000 | | | | 656,100 | | | | - | | | | - | | | | 40,750 | | | | 891,203 | |
| | | | | | | | 803,283 | | | | | | | | 1,113,311 | | | | | | | | - | | | | | | | | 1,916,594 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| COMMON STOCKS - 97.58% (continued) | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Telecommunications - 2.75% | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
American Tower Corp. (a) | | | 5,745 | | | $ | 181,829 | | | | - | | | $ | - | | | | - | | | $ | - | | | | 5,745 | | | $ | 181,829 | |
Cisco Systems, Inc. (a) | | | 12,880 | | | | 278,208 | | | | - | | | | - | | | | - | | | | - | | | | 12,880 | | | | 278,208 | |
| QUALCOMM, Inc. | | | 5,955 | | | | 276,431 | | | | - | | | | - | | | | - | | | | - | | | | 5,955 | | | | 276,431 | |
| | | | | | | | 736,468 | | | | | | | | - | | | | | | | | - | | | | | | | | 736,468 | |
| Transportation - 0.52% | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Expeditors International of Washington, Inc. | | | 4,300 | | | | 140,438 | | | | - | | | | - | | | | - | | | | - | | | | 4,300 | | | | 140,438 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Total Common Stocks (Cost $23,841,538) | | | | 10,843,285 | | | | | | | | 15,291,240 | | | | | | | | - | | | | | | | | 26,134,525 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| MONEY MARKET FUNDS - 1.08% | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Fidelity Institutional Money Market Fund Class I, 0.51% (b) (Cost $288,423) | | | 292,544 | | | | 292,544 | | | | - | | | | - | | | | (4,121 | ) | | | (4,121 | )(c) | | | 288,423 | | | | 288,423 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Total Investments at Value - 98.66% (Cost $24,129,961) | | | | 11,135,829 | | | | | | | | 15,291,240 | | | | | | | | (4,121 | ) | | | | | | | 26,422,948 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Other Assets in Excess of Liabilities - 1.34% | | | | 60,127 | | | | | | | | 294,856 | | | | | | | | 4,121 | | | | | | | | 359,104 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Net Assets - 100.00% | | | | | | $ | 11,195,956 | | | | | | | $ | 15,586,096 | | | | | | | $ | - | | | | | | | $ | 26,782,052 | |
(a) Non-income producing security.
(b) Rate shown represents the rate at August 31, 2009, is subject to change and resets daily.
(c) The adjustment represents an overdraft balance for the Monteagle Large Cap Growth Fund. This adjustment is to net the overdraft with the sweep balance of the Monteagle Quality Growth Fund in order to eliminate the overdraft once the Funds are combined.
ADR - American Depository Receipt.
| PRO-FORMA STATEMENTS OF ASSETS AND LIABILITIES - August 31, 2009 (Unaudited) | | | | | | | |
| | | | | | | | | | | | | | | | |
| | | A. | | | B. | | | Monteagle Quality Growth Fund (surviving fund) | |
| | | Monteagle | | | Monteagle | | | | | | | | | | |
| | | Quality | | | Large Cap | | | (A) + (B) | | | Pro-Forma | | | Total After | |
| | | Growth Fund | | | Growth Fund | | | Grand Total | | | Adjustments | | | Adjustments | |
| Assets: | | | | | | | | | | | | | | | | | |
| Investments securities | | | | | | | | | | | | | | | | | |
| At cost | | $ | 10,930,863 | | | $ | 13,203,219 | | | $ | 24,134,082 | | | $ | (4,121 | ) | | $ | 24,129,961 | |
| At fair value | | | 11,135,829 | | | | 15,291,240 | | | | 26,427,069 | | | | (4,121 | ) | | | 26,422,948 | |
| Receivables: | | | | | | | | | | | | | | | | | | | | |
| Dividends and interest | | | 16,870 | | | | 14,972 | | | | 31,842 | | | | | | | | 31,842 | |
| Capital shares sold | | | 1,370 | | | | - | | | | 1,370 | | | | | | | | 1,370 | |
| Investment securities sold | | | 53,967 | | | | 301,053 | | | | 355,020 | | | | | | | | 355,020 | |
| Other assets | | | 147 | | | | 262 | | | | 409 | | | | | | | | 409 | |
| Total assets | | | 11,208,183 | | | | 15,607,527 | | | | 26,815,710 | | | | (4,121 | ) | | | 26,811,589 | |
| | | | | | | | | | | | | | | | | | | | | |
| Liabilities: | | | | | | | | | | | | | | | | | | | | |
| Payables: | | | | | | | | | | | | | | | | | | | | |
| Due to custodian | | | - | | | | 4,121 | | | | 4,121 | | | | (4,121 | ) | | | - | |
| Due to Adviser | | | 11,260 | | | | 16,109 | | | | 27,369 | | | | | | | | 27,369 | |
| Accrued compliance fees | | | 817 | | | | 986 | | | | 1,803 | | | | | | | | 1,803 | |
| Accrued Trustee fees | | | 150 | | | | 215 | | | | 365 | | | | | | | | 365 | |
| Total liabilities | | | 12,227 | | | | 21,431 | | | | 33,658 | | | | (4,121 | ) | | | 29,537 | |
| Net Assets | | $ | 11,195,956 | | | $ | 15,586,096 | | | $ | 26,782,052 | | | $ | - | | | $ | 26,782,052 | |
| | | | | | | | | | | | | | | | | | | | | |
| Net Assets consist of: | | | | | | | | | | | | | | | | | | | | |
| Paid-in capital | | $ | 15,573,734 | | | $ | 24,702,895 | | | $ | 40,276,629 | | | | | | | $ | 40,276,629 | |
| Accumulated undistributed net investment income | | | 17,358 | | | | 6,201 | | | | 23,559 | | | | | | | | 23,559 | |
| Accumulated net realized loss on investments | | | (4,600,102 | ) | | | (11,211,021 | ) | | | (15,811,123 | ) | | | | | | | (15,811,123 | ) |
| Net unrealized appreciation on investments | | | 204,966 | | | | 2,088,021 | | | | 2,292,987 | | | | | | | | 2,292,987 | |
| | | | | | | | | | | | | | | | | | | | | |
| Total Net Assets | | $ | 11,195,956 | | | $ | 15,586,096 | | | $ | 26,782,052 | | | $ | - | | | $ | 26,782,052 | |
| | | | | | | | | | | | | | | | | | | | | |
Shares of beneficial interest outstanding (1) | | | 1,634,974 | | | | 3,441,517 | | | | | | | | 2,275,342 | (a) | | | 3,910,316 | |
| Net Asset Value, offering and redemption price per share | | $ | 6.85 | | | $ | 4.53 | | | | | | | | | | | $ | 6.85 | |
(a) Reflects share totals, net of retired shares of the Monteagle Large Cap Growth Fund. The Net Asset Value of the Monteagle Quality Growth Fund is higher than the Net Asset Value of the Monteagle Large Cap Growth Fund. This results in a lower number of shares outstanding after the Reorganization. |
| | |
| (1) | Unlimited number of shares of beneficial interest with no par value, authorized. |
The accompanying notes are an integral part of the financial statements.
| PRO-FORMA STATEMENTS OF OPERATIONS - For the Year Ended August 31, 2009 (Unaudited) | | | | |
| | | | | | | | | | | | | | | | |
| | | A. | | | B. | | | Monteagle Quality Growth Fund (surviving fund) | |
| | | Monteagle | | | Monteagle | | | | | | | | | | |
| | | Quality | | | Large Cap | | | A. + B. | | | Pro-Forma | | | Total after | |
| | | Growth Fund | | | Growth Fund | | | Grand Total | | | Adjustments | | | Adjustments | |
| | | | | | | | | | | | | | | | | | |
| Investment income: | | | | | | | | | | | | | | | | | |
| Dividends | | $ | 164,842 | | | $ | 207,587 | | | $ | 372,429 | | | $ | - | | | $ | 372,429 | |
| | | | | | | | | | | | | | | | | | | | | |
| Total investment income | | | 164,842 | | | | 207,587 | | | | 372,429 | | | | - | | | | 372,429 | |
| | | | | | | | | | | | | | | | | | | | | |
| Expenses: | | | | | | | | | | | | | | | | | | | | |
| Investment advisory fees | | | 121,451 | | | | 185,995 | | | | 307,446 | | | | (527 | )(a) | | | 306,919 | |
| Compliance service fees | | | 6,589 | | | | 7,304 | | | | 13,893 | | | | (5,646 | )(b) | | | 8,247 | |
| Trustees' fees | | | 4,170 | | | | 6,459 | | | | 10,629 | | | | - | | | | 10,629 | |
| ICI membership fees | | | 908 | | | | 1,628 | | | | 2,536 | | | | - | | | | 2,536 | |
| | | | | | | | | | | | | | | | | | | | | |
| Total expenses | | | 133,118 | | | | 201,386 | | | | 334,504 | | | | (6,173 | ) | | | 328,331 | |
| | | | | | | | | | | | | | | | | | | | | |
| Net investment income | | | 31,724 | | | | 6,201 | | | | 37,925 | | | | 6,173 | | | | 44,098 | |
| | | | | | | | | | | | | | | | | | | | | |
| Realized and unrealized loss on investments: | | | | | | | | | | | | | | | | | | | | |
| Net realized loss on investments | | | (1,860,081 | ) | | | (6,136,787 | ) | | | (7,996,868 | ) | | | - | | | | (7,996,868 | ) |
| Net change in unrealized appreciation (depreciation) on investments | | | (935,884 | ) | | | (285,805 | ) | | | (1,221,689 | ) | | | - | | | | (1,221,689 | ) |
| | | | | | | | | | | | | | | | | | | | | |
| Net realized and unrealized loss on investments | | | (2,795,965 | ) | | | (6,422,592 | ) | | | (9,218,557 | ) | | | - | | | | (9,218,557 | ) |
| | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | |
| Net increase (decrease) in net assets resulting from operations | | $ | (2,764,241 | ) | | $ | (6,416,391 | ) | | $ | (9,180,632 | ) | | $ | 6,173 | | | $ | (9,174,459 | ) |
| (a) | Reflects adjustment to investment advisory fee based on combined average net assets of the funds. Investment advisory fee rates are identical for each Fund. |
| (b) | Reflects expected effect of surviving fund operations. Each Fund paid $5,000 per Fund for compliance service fees, plus, during the period from 5/1/09 to 8/31/09 the Trust began paying an additional amount equal to $45,000 per year allocated to the six Funds of the Trust based each Fund's respective average daily net assets. Since there will be one less Fund subsequent to the merger, the rate paid by the Trust will be reduced to $37,500 per year and is reflected in the total. |
Assumptions:
Average Net Assets for the year ended 8/31/09 - Monteagle Quality Growth Fund - $10,120,917.
Average Net Assets for the year ended 8/31/09 - Monteagle Large Cap Growth Fund - $15,499,583.
Average Net Assets for the year ended 8/31/09 - combined Surviving Fund - $25,620,500.
Investment advisory fees assumes rate of 1.20% for the combined Surviving Fund on assets up to $25 million and 1.115% on assets between $25 million and $50 million. Average Net Assets - combined Surviving Fund $25,620,500; $25,000,000 * 1.20% = $300,000 plus $620,500 * 1.115% = $6,919 for a total of $306,919 of investment advisory fees when average net assets are combined.
Average Net Assets for the period from 5/1/09 to 8/31/09 - Monteagle Quality Growth Fund - $10,443,359.
Average Net Assets for the period from 5/1/09 to 8/31/09 - Monteagle Large Cap Growth Fund - $15,107,497.
Average Net Assets for the period from 5/1/09 to 8/31/09 - combined Surviving Fund - $25,550,856.
Average Net Assets for the period from 5/1/09 to 8/31/09 - Trust - $99,446,987.
Compliance service fees assumes rate of $5,000 per Fund per year, plus, for the period from 5/1/09 to 8/31/09, the Trust pays a fee equal to $37,500 per year allocated to each Fund based on their respective average daily net assets. Calculation is as follows: Annual fee $37,500/365 = $102.74 per day accrued = $12,637 accrued during period from May 1, 2009 to August 31, 2009 (123 days). Average net assets of combined Surviving Fund during period from May 1, 2009 to August 31, 2009 25,550,856/average net assets of Trust during period from May 1, 2009 to August 31, 2009 $99,446,987 = 25.6929% * $12,637 = $3,247 + $5,000 per Fund = $8,247 of compliance service fees.
NOTES
(unaudited)
| 1) | Description of the Fund |
The Monteagle Large Cap Growth Fund, a series of the Monteagle Funds (the “Trust”), is registered under the Investment Company Act of 1940, as amended, as an open-end diversified investment company.
The Trust’s declaration of trust authorizes the Monteagle Large Cap Growth Fund to issue an unlimited number of shares of beneficial interest authorized with no par value.
The accompanying pro forma financial statements are presented to show the effect of the proposed combination of the Monteagle Large Cap Growth Fund with the Monteagle Quality Growth Fund, both a series of the Monteagle Funds (the “Trust”), as if the combination had taken place as of August 31, 2009.
Under the terms of the Plan of Reorganization, the combination of the Large Cap Growth Fund and Quality Growth Fund will be accounted for by the method of accounting for tax-free mergers of investment companies. The acquisition would be accomplished by an acquisition of the net assets of the Large Cap Growth Fund in exchange for shares of the Quality Growth Fund at net asset value. The statement of assets and liabilities and the related statement of operations of the Funds have been combined as of and for the twelve months ended August 31, 2009. Following the combination, the Quality Growth Fund will be the accounting survivor. In accordance with accounting principles generally accepted in the United States of America, the historical cost of investment securities will be carried forward to the surviving fund and the results of operations for pre-combination periods of the surviving fund will not be restated.
The accompanying pro forma financial statements should be read in conjunction with the financial statements of the Large Cap Growth Fund and Quality Growth Fund included in the respective annual report dated August 31, 2009.
The following notes refer to the accompanying pro forma financial statements as if the above-mentioned combination of the Large Cap Growth Fund with the Quality Growth Fund had taken place as of August 31, 2009.
Securities, other than short-term securities, held by the Funds for which market quotations are readily available are valued using the last reported sales price or the official closing price provided by independent pricing services as of the close of trading on the New York Stock Exchange (normally 4:00 p.m. Eastern time) on each Fund’s business day. If no sales are reported, the average of the last bid and ask price is used. If no average price is available, the last bid price is used. In the absence of readily available market quotations, securities are valued at fair value as determined by the Board of Trustees, or its delegate.
The pro forma net asset value per share assumes the issuance of shares of the Quality Growth Fund that would have been issued at August 31, 2009, in connection with the proposed reorganization. The number of shares assumed to be issued is equal to the net asset value per share of the shares of the Large Cap Growth Fund, as of August 31, 2009, divided by the net asset value per share of the shares of the Quality Growth Fund as of August 31, 2009. The pro forma number of shares outstanding for the combined Surviving Fund consists of the following at August 31, 2009:
| Merger of Monteagle Quality Growth Fund and Monteagle Large Cap Growth Fund | | | | | | | |
| | | | | | | | | | |
| | | | | | | | | | |
| | | Monteagle Large Cap Growth Fund | | Monteagle Quality Growth Fund | | Surviving Fund Pro Forma - Monteagle Quality Growth Fund after Reorganization (estimated) (unaudited)* |
| Net Assets (millions) | | | 15.59 | | | | 11.19 | | | | 26.78 | |
| Total shares outstanding | | | 3,441,517 | | | | 1,634,974 | | | | 3,910,316 | |
| Net asset value per share | | | 4.53 | | | | 6.85 | | | | 6.85 | |
| | | | | | | | | | | | | |
| * As of August 31, 2009 | | | | | | | | | | | | |
| | | | | | | | | | | | | |
| (a) Reflects share totals, net of retired shares of Monteagle Large Cap Growth Fund. The Net Asset Value of the Monteagle Quality Growth Fund is higher than the Net Asset Value of the Monteagle Large Cap Growth Fund. This results in a lower number of shares outstanding after the Reorganization. |
Each fund has elected to be taxed as a “regulated investment company” under the Internal Revenue Code. After the combination, the Quality Growth Fund intends to continue to qualify as a regulated investment company, if such qualification is in the best interests of its shareholders, by complying with the provisions available to certain investment companies, as defined in applicable sections of the Internal Revenue Code, and to make distributions of taxable income sufficient to relieve it from all, or substantially all, Federal income taxes.
Securities are not expected to have to be sold to conform the combined portfolios to the Quality Growth Fund’s objectives, policies and/or strategies.
These financial statements are prepared in accordance with accounting principles generally accepted in the United States of America, which require management to make certain estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of increases and decreases in net assets from operations during the reporting period. Actual results could differ from those estimates.
Part C
ITEM 15. INDEMNIFICATION
Section 8 of the Trust Instrument filed as an Exhibit to the Registrant's Registration Statement is incorporated herein by reference. Insofar as indemnification for liabilities arising under the Securities Act of 1933 (the "Act") may be permitted to trustees, directors, officers and controlling persons of the Registrant by the Registrant pursuant to the Trust Instrument or otherwise, the Registrant is aware that in the opinion of the U.S. Securities and Exchange Commission, such indemnification is against public policy as expressed in the Act and, therefore, is unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the Registrant of expenses incurred or paid by trustees, directors, officers or controlling persons of the Registrant in connection with the successful defense of any act, suit or proceeding) is asserted by such trustees, directors, officers or controlling persons in connection with the shares being registered, the Registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Act and will be governed by the final adjudication of such issues.
ITEM 16. EXHIBITS
| (1) | (i) | Trust Instrument of the Registrant dated November 25, 1997 is incorporated by reference to Exhibit (b)(1) to Registrant's Registration Statement filed with the Securities and Exchange Commission on Form N-1A on December 4, 1997 (Accession Number 0001004402-97-000244). |
| | (ii) | Amendment No. 1 to the Trust Instrument of the Registrant dated November 25, 1997 is incorporated by reference to Exhibit 23(b)(2) to Post-Effective Amendment No. 25 to the Registrant's Registration Statement filed with the Securities and Exchange Commission on Form N-1A on April 21, 2006 (Accession Number 0001144204-06-016407). |
| (4) | Form of Plan of Reorganization dated as of October 29, 2009 is filed herein. |
| (5) | Sections 2.02, 2.04 and 2.06 of the Trust Instrument provides as follows: |
| | SECTION 2.02 ISSUANCE OF SHARES. Subject to applicable law, the Trustees in their discretion may, from time to time, without vote of the Shareholders, issue Shares, in addition to the then issued and Outstanding Shares and Shares held in the treasury, to such party or parties and for such amount and type of consideration, including cash or securities, at such time or times and on such terms as the Trustees may deem appropriate, and may in such manner acquire other assets (including the acquisition of assets subject to, and in connection with, the assumption of liabilities) and businesses. In connection with any issuance of Shares, the Trustees may issue fractional Shares and Shares held in the treasury. The Trustees may from time to time divide or combine the Shares into a greater or lesser number without thereby changing the proportionate beneficial interests in the Trust. Contributions to the Trust may be accepted for, and Shares shall be redeemed as, whole Shares and/or 1/1,000th of a Share or integral multiples thereof. |
| | SECTION 2.04 TRANSFER OF SHARES. Except as otherwise provided by the Trustees, Shares shall be transferable on the records of the Trust only by the record holder thereof or by that holder's agent thereunto duly authorized in writing, upon delivery to the Trustees or the Transfer Agent of a duly executed instrument of transfer and such evidence of the genuineness of such execution and authorization and of such other matters as may be required by the Trustees or Transfer Agent. Upon such delivery the transfer shall be recorded on the register of the Trust. Until such record is made, the Shareholder of record shall be deemed to be the holder of such Shares for all purposes hereunder and neither the Trustees nor the Trust, nor any Transfer Agent or registrar nor any officer, employee or agent of the Trust shall be affected by any notice of the proposed transfer. |
| | SECTION 2.06 ESTABLISHMENT OF SERIES OR CLASS. The Trust created hereby shall consist of one or more Series and separate and distinct records shall be maintained by the Trust for each Series and the assets associated with any such Series shall be held and accounted for separately from the assets of the Trust or any other Series. The Trustees may divide the Shares of any Series into Classes. The Trustees shall have full power and authority, in their sole discretion, and without obtaining any prior authorization or vote of the Shareholders of any Series, to establish and designate and to change in any manner any such Series or Class and to fix such preferences, voting powers, rights and privileges of such Series or Classes as the Trustees may from time to time determine, to divide or combine the Shares or any Series or Classes into a greater or lesser number, to classify or reclassify any issued Shares of any Series or Classes into one or more Series or Classes, and to take such other action with respect to the Shares as the Trustees may deem desirable. The establishment and designation of any Series or Class shall be effective when specified in the resolution of Trustees setting forth such establishment and designation and the relative rights and preferences of the Shares of such Series or Class. All references to Shares in this Trust Instrument shall be deemed to be Shares of any or all Series or Classes, as the context may require. All provisions herein relating to the Trust shall apply equally to each Series and each Class, except as the context otherwise requires. Each Share of a Series of the Trust shall represent an equal beneficial interest in the net assets of such Series subject to Section 2.08 and the preferences, rights and privileges of each Class of that Series. Each holder of Shares of a Series or Class thereof shall be entitled to receive the holder's pro rata share of all distributions made with respect to such Series or Class thereof. Upon redemption of Shares, such Shareholder shall be paid solely out of the funds and property of such Series of the Trust. Each Series and Class thereof of the Trust and their attributes will be set forth in Annex A to this Trust Instrument. |
| (6) | (i) | Management Agreement by and among Registrant and Nashville Capital Corporation, effective as of May 1, 2009, regarding the Monteagle Quality Growth and Select Value Funds - (Exhibit incorporated by reference as Exhibit (d)(1) as filed in PEA No. 34 on July 5, 2009, accession number 0001398344-09-000599). |
| | (ii) | Management Agreement by and among Registrant and Nashville Capital Corporation, dated as of July 14, 2006, as amended January 11, 2008 and March 31, 2008, regarding the Monteagle Fixed Income, Large Cap Growth, Value and Informed Investor Growth Funds Exhibit (d)(4) as filed in PEA No. 28 on July 11, 2006, accession number 0001144204-06-028078). |
| | (iv) | Investment Sub-Advisory Agreement by and among Registrant, Nashville Capital Corporation and Davis Hamilton Jackson & Associates, L.P., to be effective May 1, 2009 with respect to the Quality Growth Fund - (Exhibit incorporated by reference as Exhibit (d) (3) as filed in PEA No. 34 on June 5, 2009, accession number 0001398344-09-000599). |
| (7) | Distribution Agreement between Registrant and Matrix Capital Group, Inc., effective May 1, 2009 - (Exhibit incorporated by reference as Exhibit (e)(7) as filed in PEA No. 34 on June 5, 2009, accession number 0001398344-09-000599). |
| (9) | Custodian Agreement between Registrant and Huntington National Bank is incorporated by reference to Exhibit 23(g) to Post-Effective Amendment No. 36 to the Registrant's Registration Statement filed with the Securities and Exchange Commission on Form N-1A on November 9, 2009 (Accession Number 0001398344-09-001041). |
| (10) | Investment Company Services Agreement between Registrant and Matrix Capital Group, Inc. effective May 1, 2009 - (Exhibit incorporated by reference as Exhibit (d)(7) as filed in PEA No. 28 on July 11, 2006, accession number 0001144204-06-028078). |
| (11) | Opinion of Counsel to Registrant is incorporated by reference to Form N-14 filed with the Securities and Exchange Commission on November 13, 2009 (Accession Number 0001398344-09-001086). |
| (12) | Opinion of Rabil, Ropka, Kingett & Stewart, L.L.C. regarding tax matters is incorporated by reference to Form N-14 filed with the Securities and Exchange Commission on November 13, 2009 (Accession Number 0001398344-09-001086). |
| (14) | Consent of Cohen Fund Audit Services, Ltd. is incorporated by reference to Form N-14 filed with the Securities and Exchange Commission on November 13, 2009 (Accession Number 0001398344-09-001086). |
| (16) | Power of Attorney is incorporated by reference to Form N-14 filed with the Securities and Exchange Commission on November 13, 2009 (Accession Number 0001398344-09-001086). |
| (17) | (i) | Prospectuses and Statement of Additional Information for Monteagle Funds dated November 9, 2009 are incorporated by reference to Post-Effective Amendment No. 36 to the Registrant's Registration Statement filed with the Securities and Exchange Commission on Form N-1ANovember 9, 2009 (Accession Number 0001398344-09-001041). |
| | (ii) | Audited Annual Financial Report for Monteagle Funds August 31, 2009 is incorporated herein by reference to Form N-CSR filed with the Securities and Exchange Commission on November 9, 2009 (Accession Number 0001398344-09-001043). |
| | (iii) | Form of Proxy Card is filed herewith. |
Item 17. Undertakings:
(1) The undersigned Registrant agrees that prior to any public reoffering of the securities registered through the use of a prospectus which is a part of this registration statement by any person or party who is deemed to be an underwriter within the meaning of Rule 145(c) of the Securities Act of 1933, as amended, the reoffering prospectus will contain the information called for by the applicable registration form for reofferings by persons who may be deemed underwriters, in addition to the information called for by the other items of the applicable form.
(2) The undersigned Registrant agrees that every prospectus that is filed under paragraph (1) above will be filed as a part of an amendment to the registration statement and will not be used until the amendment is effective, and that, in determining any liability under the Securities Act of 1933, as amended, each post-effective amendment shall be deemed to be a new registration statement for the securities offered therein, and the offering of the securities at that time shall be deemed to be the initial bona fide offering of them.
SIGNATURES
As required by the Securities Act of 1933 this registration statement has been signed on behalf of the Registrant, in the City of Abilene and the State of Texas, on the 15th day of December, 2009.
Monteagle Funds
By: /s/ ��
Paul B. Ordonio, JD, President
As required of the Securities Act of 1933, this registration statement has been signed below by the following persons in the capacity and on the dates indicated.
| /s/ * | | Trustee | December 16, 2009 |
| Carl Clayton Peterson | | | |
| | | | |
| /s/ * | | Trustee | |
| Larry Joe Anderson | | | |
| | | | |
| /s/ * | | Trustee | |
| Brian Joseph Green | | | |
| | | | |
| /s/ * | | Trustee | |
| Charles Michael Kinard | | | |
| | | | |
| /s/ | | Chief Financial Officer | |
| Larry Beaver | | | |
| | | | |
* By /s/ | | | |
Paul B. Ordonio, Attorney in Fact | | | |
Exhibit Index
| (17)(iii) | Form of Proxy Card. |
