Registration Nos. 811-7987
333-18653
U.S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM N-1A
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REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 /X/
--
Pre-Effective Amendment No.
Post-Effective Amendment No. 3
and/or
--
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 /X/
--
Amendment No. 6
(Check appropriate box or boxes)
DEAN FAMILY OF FUNDS
(Exact Name of Registrant as Specified in Charter)
2480 Kettering Tower
Dayton, Ohio 45423
(Address of Principal Executive Offices)
Registrant's Telephone Number, including Area Code: (937) 222-9531
Frank H. Scott
C.H. Dean & Associates, Inc.
2480 Kettering Tower
Dayton, Ohio 45423
(Name and Address of Agent for Service)
Copies to:
Tina D. Hosking
Countrywide Fund Services, Inc.
312 Walnut Street, 21st Floor
Cincinnati, Ohio 45202
It is proposed that this filing will become effective:
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/X/ immediately upon filing pursuant to Rule 485(b)
/ / on (date) pursuant to Rule 485(b)
/ / 75 days after filing pursuant to Rule 485(a)
/ / on (date) pursuant to Rule 485(a)
The Registrant has registered an indefinite number of shares under the
Securities Act of 1933, as amended, pursuant to Rule 24f-2 under the Investment
Company Act of 1940, as amended.
<PAGE>
DEAN FAMILY OF FUNDS
CROSS REFERENCE SHEET
PURSUANT TO RULE 481(A)
UNDER THE SECURITIES ACT OF 1933
PART A
ITEM NO. REGISTRATION STATEMENT CAPTION CAPTION IN PROSPECTUS
1. Cover Page Cover Page
2. Synopsis Expense Information
3. Condensed Financial Information Performance Information
4. General Description of Registrant Investment Objectives,
Investment Policies and
Risk Considerations;
Operation of the Funds
5. Management of the Fund Operation of the Funds
6. Capital Stock and Other Securities Cover Page; Operation of
the Funds; Dividends and
Distributions; Taxes
7. Purchase of Securities Being Offered How to Purchase Shares;
Shareholder Services;
Exchange Privilege;
Distribution Plans;
Calculation of Share Price
and Public Offering Price;
Application
8. Redemption or Repurchase How to Redeem Shares;
Shareholder Services;
Exchange Privilege
9. Pending Legal Proceedings Inapplicable
PART B
CAPTION IN STATEMENT
OF ADDITIONAL
ITEM NO. REGISTRATION STATEMENT CAPTION INFORMATION
10. Cover Page Cover Page
11. Table of Contents Table of Contents
(i)
<PAGE>
12. General Information and History The Trust
13. Investment Objectives and Policies Definitions, Policies and
Risk Considerations;
Quality Ratings of
Corporate Bonds and
Preferred Stocks;
Investment Limitations;
Securities Transactions;
Portfolio Turnover
14. Management of the Fund Trustees and Officers
15. Control Persons and Principal Holders Principal Security Holders
of Securities
16. Investment Advisory and Other Services The Investment Adviser;
The Sub-Adviser;
Distribution Plans;
Custodian; Auditors;
Countrywide Fund Services,
Inc.
17. Brokerage Allocation and Other Securities Transactions
Practices
18. Capital Stock and Other Securities The Trust
19. Purchase, Redemption and Pricing of Calculation of Share
Securities Being Offered Price and Public Offering
Price; Other Purchase
Information; Redemption in
Kind
20. Tax Status Taxes
21. Underwriters The Underwriter
22. Calculation of Performance Data Historical Performance
Information
23. Financial Statements Statement of Assets and
Liabilities As of March
17, 1997; Financial
Statements As of August
31, 1997
PART C
The information required to be included in Part C is set forth
under the appropriate Item, so numbered, in Part C to this Registration
Statement.
(ii)
<PAGE>
PROSPECTUS
October 1, 1997
DEAN FAMILY OF FUNDS
2480 KETTERING TOWER
DAYTON, OHIO 45423
The Dean Family of Funds currently offers four separate series of shares to
investors: the Large Cap Value Fund, the Small Cap Value Fund, the Balanced Fund
and the International Value Fund (individually a "Fund" and collectively the
"Funds").
The LARGE CAP VALUE FUND seeks to provide growth of capital over the
long-term by investing primarily in the common stocks of large companies.
The SMALL CAP VALUE FUND seeks to provide capital appreciation by investing
primarily in the common stocks of small companies.
The BALANCED FUND seeks to preserve capital while producing a high total
return by allocating its assets among equity securities, fixed-income securities
and money market instruments.
The INTERNATIONAL VALUE FUND seeks to provide long-term capital growth by
investing primarily in the common stocks of foreign companies.
Each Fund offers two classes of shares: Class A shares (sold subject to a
maximum 5.25% front-end sales load and a 12b-1 fee of up to .25% of average
daily net assets) and Class C shares (sold subject to a 1% contingent deferred
sales load for a one-year period and a 12b-1 fee of up to 1% of average daily
net assets).
C.H. Dean & Associates, Inc., dba Dean Investment Associates, 2480 Kettering
Tower, Dayton, Ohio 45423 ("Dean Investment Associates"), serves as investment
adviser to the Funds. Dean Investment Associates is an independent investment
counsel firm which has been advising individual, institutional and corporate
clients since 1973. The firm manages approximately $4.0 billion for clients
worldwide. Currently, Dean Investment Associates has 100 employees which
includes 7 Chartered Financial Analysts (CFA), 10 Certified Public Accounts
(CPA) and 3 PhDs. Dean Investment Associates is Dayton, Ohio's largest
independent investment manager.
This Prospectus sets forth concisely the information about the Funds that
potential investors should know before investing. Please retain this Prospectus
for future reference. A Statement of Additional Information dated October 1,
1997 has been filed with the Securities and Exchange Commission and is hereby
incorporated by reference in its entirety. A copy of the Statement of Additional
Information can be obtained at no charge by calling one of the numbers listed
below.
<PAGE>
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For Information or Assistance in Opening An Account, Please Call:
Nationwide (Toll-Free) . . . . . . . . . . . . . . . 888-899-8343
Cincinnati . . . . . . . . . . . . . . . . . . . . . 513-629-2285
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THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
<PAGE>
FINANCIAL HIGHLIGHTS
The following information, which is unaudited, is an integral part of the Funds'
financial statements and should be read in conjunction with the financial
statements. The financial statements as of August 31, 1997 appear in the
Statement of Additional Information of the Funds, which can be obtained at no
charge by calling Countrywide Fund Services, Inc. (Nationwide call toll-free
888-899-8343) or by writing to the Funds at the address on the front of this
Prospectus.
<PAGE>
<TABLE>
DEAN FAMILY OF FUNDS
FINANCIAL HIGHLIGHTS
Per Share Data for a Share Outstanding Throughout Each period
<CAPTION>
DEAN LARGE CAP VALUE FUND DEAN SMALL CAP VALUE FUND
Class A Class C Class A Class C
Period Period Period Period
Ended Ended Ended Ended
August 31, 1997 (A) August 31, 1997 (A) August 31, 1997 (A) August 31, 1997(A)
(Unaudited) (Unaudited) (Unaudited) (Unaudited)
Net asset value at beginning of period $ 10.00 $ 10.76 $ 10.00 $ 10.95
---------- -------- ------------ -------------
Income from investment operations:
Net investment income 0.02 0.00 0.02 --
Net realized and unrealized gains
(losses) on investments 0.69 (0.07) 1.25 0.31
---------- -------- ------------ -------------
Total from investment operations 0.71 (0.07) 1.27 0.31
---------- -------- ------------ -------------
Less distributions:
Dividends from net investment income (0.01) -- -- --
Distributions from net realized gains -- -- -- --
---------- -------- ------------ -------------
Total distributions (0.01) -- -- --
---------- -------- ------------ -------------
Net asset value at end of period $ 10.70 $ 10.69 $ 11.27 $ 11.26
========== ======== ============ =============
Total return (B) 7.11% (0.65)% 12.70% 2.83%
========== ======== ============ =============
Net assets at end of period $ 6,704,634 $ 5,869 $ 14,800,643 $ 137,339
========== ======== ============ =============
Ratio of expenses to average net assets:
Before waiver of fees by Adviser 2.82% 3.51% 2.12% 2.86%
========== ======== ============ =============
After waiver of fees by Adviser 1.82% 2.51% 1.80% 2.54%
========== ======== ============ =============
Ratio of net investment income (loss) to
average net assets (C) 0.63% (1.47)% 0.83% (0.16)%
Portfolio turnover rate (C) 20% 20% 51% 51%
Average commission rate per share $ 0.0600 $ 0.0600 $ 0.0600 $ 0.0600
<PAGE>
<CAPTION>
DEAN BALANCED FUND
Class A Class C
Period Period
Ended Ended
August 31, 1997 (A) August 31, 1997 (A)
(Unaudited) (Unaudited)
<S> <C> <C>
Net asset value at beginning of period $ 10.00 $ 10.71
---------- --------
Income from investment operations:
Net investment income 0.05 --
Net realized and unrealized gains
(losses) on investments 0.63 (0.06)
---------- --------
Total from investment operations 0.68 (0.06)
---------- --------
Less distributions:
Dividends from net investment income (0.03) --
Distributions from net realized gains -- --
---------- --------
Total distributions (0.03) --
---------- --------
Net asset value at end of period $ 10.65 $ 10.65
========== ========
Total return (B) 6.86% (0.56)%
========== ========
Net assets at end of period $ 6,783,871 $192,093
========== ========
Ratio of expenses to average net assets:
Before waiver of fees by Adviser 2.80% 3.54%
After waiver of fees by Adviser 1.80% 2.54%
Ratio of net investment income (loss) to
average net assets (C) 2.06% 0.68%
Portfolio turnover rate (C) 44% 44%
Average commission rate per share $ 0.0600 $ 0.0600
<FN>
(A) Represents the period from the initial public offering of shares (May 28,
1997 for Class A shares of each Fund) through August 31, 1997.
The initial public purchase of shares was August 1, 1997 for Class C shares
of the Small Cap Value Fund and the Balanced Fund, and August 19, 1997 for
Class C shares of the Large Cap Value Fund.
(B) The total returns shown do not include the effect of applicable
sales loads.
(C) Annualized.
</FN>
See accompanying notes to financial statements.
</TABLE>
<PAGE>
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<PAGE>
<TABLE>
<CAPTION>
EXPENSE INFORMATION
CLASS A CLASS C
SHAREHOLDER TRANSACTION EXPENSES SHARES SHARES
<S> <C> <C>
Maximum Sales Load Imposed on Purchases
(as a percentage of offering price). . . . . . 5.25% None
Maximum Contingent Deferred Sales Load
(as a percentage of original purchase price) . None* 1.00%
Sales Load Imposed on Reinvested Dividends . . None None
Exchange Fee . . . . . . . . . . . . . . . . . None None
Redemption Fee . . . . . . . . . . . . . . . . None** None**
<FN>
* Purchases at net asset value of amounts totaling $1 million or more may
be subject to a contingent deferred sales load of up to 1.00% if a
redemption occurred within 12 months of purchase and a commission was
paid by the Underwriter to a participating unaffiliated dealer. See
"How to Redeem Shares".
** A wire transfer fee is charged in the case of redemptions made by wire.
Such fee is subject to change and is currently $8. See "How to Redeem
Shares".
</FN>
</TABLE>
<TABLE>
<CAPTION>
ANNUAL FUND OPERATING EXPENSES (as a percentage of average net assets)
TOTAL FUND
OPERATING
MANAGEMENT FEES OTHER EXPENSES
(AFTER WAIVERS)(A) 12B-1 FEES(B) EXPENSES (AFTER WAIVERS)(C)
LARGE CAP
VALUE FUND
<S> <C> <C> <C> <C>
Class A Shares .75% .25% .85% 1.85%
Class C Shares .75% 1.00% .85% 2.60%
SMALL CAP
VALUE FUND
Class A Shares .75% .25% .85% 1.85%
Class C Shares .75% 1.00% .85% 2.60%
BALANCED FUND
Class A Shares .75% .25% .85% 1.85%
Class C Shares .75% 1.00% .85% 2.60%
INTERNATIONAL
VALUE FUND
Class A Shares .65% .25% .95% 1.85%
Class C Shares .65% 1.00% .95% 2.60%
(A) Absent waivers, management fees would be 1.00% for the Large Cap Value
Fund, the Small Cap Value Fund and the Balanced Fund and 1.25% for the
International Value Fund.
(B) Long-term shareholders may pay more than the economic equivalent of the
maximum front-end sales charges permitted by the National Association
of Securities Dealers.
(C) Absent waivers of management fees, total Fund operating expenses would
be 2.10% for Class A shares and 2.85% for Class C shares of the Large
Cap Value Fund, the Small Cap Value Fund and the Balanced Fund and
2.45% for Class A shares and 3.20% for Class C shares of the
International Value Fund.
</TABLE>
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<PAGE>
The purpose of these tables is to assist the investor in understanding the
various costs and expenses that an investor in the Funds will bear directly or
indirectly. The percentages expressing "Other Expenses" are based on estimated
amounts for the current fiscal year. THE EXAMPLE BELOW SHOULD NOT BE CONSIDERED
A REPRESENTATION OF PAST OR FUTURE EXPENSES AND ACTUAL EXPENSES MAY BE GREATER
OR LESS THAN THOSE SHOWN.
EXAMPLE
You would pay the following
expenses on a $1,000
investment, assuming (1) CLASS A CLASS C
5% annual return and (2) SHARES SHARES
redemption at the end of ------- ------
each time period: 1 Year $ 70 $26
3 Years 108 81
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<PAGE>
INVESTMENT OBJECTIVES, INVESTMENT POLICIES AND RISK CONSIDERATIONS
The Dean Family of Funds (the "Trust") is comprised of four Funds, each
with its own portfolio and investment objective. None of the Funds is intended
to be a complete investment program, and there is no assurance that the
investment objective of any Fund can be achieved. Each Fund's investment
objective may be changed by the Board of Trustees without shareholder approval,
but only after notification has been given to shareholders and after this
Prospectus has been revised accordingly. If there is a change in a Fund's
investment objective, shareholders should consider whether such Fund remains an
appropriate investment in light of their then current financial position and
needs. Unless otherwise indicated, all investment practices and limitations of
the Funds are nonfundamental policies which may be changed by the Board of
Trustees without shareholder approval.
Known primarily for its balanced approach to managing money, Dean
Investment Associates strives to generate superior risk-adjusted returns over
full market cycles. Dean Investment Associates also has 25 years experience in
managing equities via the "value" approach. The "value" approach is a
disciplined, prudent approach to equity management that attempts to provide
superior capital appreciation on a risk-adjusted basis by investing in equities
which are out-of-favor, neglected or misunderstood. The goal is to choose those
equities that appear to have the greatest margin of safety.
LARGE CAP VALUE FUND
The Large Cap Value Fund seeks to provide growth of capital over the
long-term by investing primarily in the common stocks of large companies. A
"large company" is one which has a market capitalization of greater than $750
million at the time of investment. Under normal circumstances, at least 65% of
the Fund's total assets will be invested in common stocks of large companies or
securities convertible into common stocks of large companies (such as
convertible bonds, convertible preferred stocks and warrants). The Fund may
invest in preferred stocks and bonds provided they are rated at the time of
purchase in the four highest grades assigned by Moody's Investors Service, Inc.
(Aaa, Aa, A or Baa) or Standard & Poor's Ratings Group (AAA, AA, A or BBB) or,
if unrated, are determined by Dean Investment Associates to be of comparable
quality. Preferred stocks and bonds rated Baa or BBB have speculative
characteristics and changes in economic conditions or other circumstances are
more likely to lead to a weakened capacity to pay principal and interest or to
pay the preferred stock obligations than is the
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<PAGE>
case with higher grade securities. Subsequent to its purchase by the Fund, a
security may cease to be rated or its rating may be reduced below Baa or BBB.
Dean Investment Associates will consider such an event to be relevant in its
determination of whether the Fund should continue to hold such security. See the
Statement of Additional Information for a description of ratings.
The stock selection approach of the Fund can best be described in the
vernacular of the investment business as a "value" orientation. That is, great
emphasis is placed on purchasing stocks that have lower than market multiples of
price to earnings, book value, cash flow and revenues and/or high dividend
yield. As indicated above, companies in whose securities the Fund may invest
will predominantly have large capitalizations in terms of total market value.
Usually, but not always, the stocks of such companies are traded on major stock
exchanges. Such stocks are usually very liquid, but there may be periods when a
particular stock or stocks in general become substantially less liquid. Such
periods are usually, but not always, brief and care will be taken by Dean
Investment Associates to minimize the overall liquidity risk of the Fund's
portfolio.
Investments in equity securities are subject to inherent market risks and
fluctuations in value due to earnings, economic conditions, quality ratings and
other factors beyond the control of Dean Investment Associates. As a result, the
return and net asset value of the Fund will fluctuate.
The Fund may invest in foreign companies through the purchase of sponsored
American Depository Receipts (certificates of ownership issued by an American
bank or trust company as a convenience to investors in lieu of the underlying
shares which it holds in custody) or other securities of foreign issuers that
are publicly traded in the United States. When selecting foreign investments,
Dean Investment Associates will seek to invest in securities that have
investment characteristics and qualities comparable to the kinds of domestic
securities in which the Fund invests. Investment in securities of foreign
issuers involves somewhat different investment risks from those affecting
securities of domestic issuers. In addition to credit and market risk,
investments in foreign securities involve sovereign risk, which includes local
political and economic developments, potential nationalization, withholding
taxes on dividend or interest payments and currency blockage. Foreign companies
may have less public or less reliable information available about them and may
be subject to less governmental regulation than U.S. companies. Securities of
foreign companies may be less liquid or more volatile than securities of U.S.
companies.
- 10 -
<PAGE>
The Trust has approved the use of certain options and futures strategies
for the Fund, including the purchase and sale of options on equity securities,
stock indices and futures contracts and the purchase and sale of stock index
futures contracts. For a discussion of these transactions, see "Additional
Investment Information."
When Dean Investment Associates believes substantial price risks exist for
common stocks and securities convertible into common stocks because of
uncertainties in the investment outlook or when in the judgment of Dean
Investment Associates it is otherwise warranted in selling to manage the Fund's
portfolio, the Fund may temporarily hold for defensive purposes all or a portion
of its assets in short-term obligations such as bank debt instruments
(certificates of deposit, bankers' acceptances and time deposits), commercial
paper, U.S. Government obligations having a maturity of less than one year,
shares of money market investment companies or repurchase agreements
collateralized by U.S. Government obligations. The Fund is also permitted to
lend its securities and to borrow money and pledge its assets in connection
therewith. See "Additional Investment Information" for a discussion of these
transactions. The Fund will not invest more than 10% of its total assets in
shares of money market investment companies. Investments by the Fund in shares
of money market investment companies may result in duplication of advisory,
administrative and distribution fees.
SMALL CAP VALUE FUND
The Small Cap Value Fund seeks to provide capital appreciation by investing
primarily in the common stocks of small companies. A "small company" is one
which has a market capitalization of $750 million or less at the time of
investment. Under normal circumstances, the Fund will invest at least 65% of its
total assets in the common stocks of small companies or securities convertible
into common stocks of small companies (such as convertible bonds, convertible
preferred stocks and warrants). However, the Fund may invest a portion of its
assets in common stocks of larger companies. The Fund may invest in preferred
stocks & bonds provided they are rated at the time of purchase in the four
highest grades assigned by Moody's Investors Service, Inc. (Aaa, Aa, A or Baa)
or Standard & Poor's Ratings Group (AAA, AA, A or BBB) or, if unrated, are
determined by Dean Investment Associates to be of comparable quality. Preferred
stocks and bonds rated Baa or BBB have speculative characteristics and changes
in economic conditions or other circumstances are more likely to lead to a
weakened capacity to pay principal and interest or to pay the preferred stock
obligations than is the case with higher grade securities. Subsequent to its
purchase by the Fund, a security may cease to
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<PAGE>
be rated or its rating may be reduced below Baa or BBB. Dean Investment
Associates will consider such an event to be relevant in its determination of
whether the Fund should continue to hold such security. See the Statement of
Additional Information for a description of ratings.
Investments in equity securities are subject to inherent market risks and
fluctuations in value due to earnings, economic conditions and other factors
beyond the control of Dean Investment Associates. As a result, the return and
net asset value of the Fund will fluctuate.
The stock selection approach of the Fund can best be described in the
vernacular of the investment business as a "value" orientation. That is, great
emphasis is placed on purchasing stocks that have lower than market multiples of
price to earnings, book value, cash flow and revenues and/or high dividend
yield. The Fund may invest a significant portion of its assets in small,
unseasoned companies. While smaller companies generally have potential for rapid
growth, they often involve higher risks because they lack the management
experience, financial resources, product diversification and competitive
strengths of larger corporations. In addition, in many instances, the securities
of smaller companies are traded only over-the-counter or on a regional
securities exchange and the frequency and volume of their trading is
substantially less than is typical of larger companies. Therefore, the
securities of smaller companies may be subject to wider price fluctuations. When
making large sales, the Fund may have to sell portfolio holdings at discounts
from quoted prices or may have to make a series of small sales over an extended
period of time.
The Fund may invest in foreign companies through the purchase of sponsored
American Depository Receipts (certificates of ownership issued by an American
bank or trust company as a convenience to investors in lieu of the underlying
shares which it holds in custody) or other securities of foreign issuers that
are publicly traded in the United States. When selecting foreign investments,
Dean Investment Associates will seek to invest in securities that have
investment characteristics and qualities comparable to the kinds of domestic
securities in which the Fund invests. Investment in securities of foreign
issuers involves somewhat different investment risks from those affecting
securities of domestic issuers. In addition to credit and market risk,
investments in foreign securities involve sovereign risk, which includes local
political and economic developments, potential nationalization, withholding
taxes on dividend or interest payments and currency blockage. Foreign companies
may have less public or less reliable information available about them and may
be subject to less governmental regulation than U.S. companies. Securities of
foreign companies may be less liquid or more volatile than securities of U.S.
companies.
- 12 -
<PAGE>
The Trust has approved the use of certain options and futures strategies
for the Fund, including the purchase and sale of options on equity securities,
stock indices and futures contracts and the purchase and sale of stock index
futures contracts. For a discussion of these transactions, see "Additional
Investment Information".
When Dean Investment Associates believes substantial price risks exist for
common stocks and securities convertible into common stocks because of
uncertainties in the investment outlook or when in the judgment of Dean
Investment Associates it is otherwise warranted in selling to manage the Fund's
portfolio, the Fund may temporarily hold for defensive purposes all or a portion
of its assets in short-term obligations such as bank debt instruments
(certificates of deposit, bankers' acceptances and time deposits), commercial
paper, U.S. Government obligations having a maturity of less than one year,
shares of money market investment companies or repurchase agreements
collateralized by U.S. Government obligations. The Fund is also permitted to
lend its securities and to borrow money and pledge its assets in connection
therewith. See "Additional Investment Information" for a discussion of these
transactions. The Fund will not invest more than 10% of its total assets in
shares of money market investment companies. Investments by the Fund in shares
of money market investment companies may result in duplication of advisory,
administrative and distribution fees.
BALANCED FUND
The Balanced Fund seeks to preserve capital while producing a high total
return by allocating its assets among equity securities, fixed-income securities
and money market obligations. Under normal circumstances, the asset mix of the
Fund will normally range between 40-75 percent in common stocks and securities
convertible into common stocks, 25-60 percent in preferred stocks and bonds, and
0-25 percent in money market instruments. Moderate shifts between asset classes
are made in an attempt to maximize returns or reduce risk.
Because the Fund intends to allocate its assets among equity securities,
fixed-income securities and money market instruments, it may not be able to
achieve, at times, a total return as high as that of a portfolio with complete
freedom to invest its assets entirely in any one type of security. Likewise,
since a portion of the Fund's portfolio will normally consist of fixed-income
securities and/or money market instruments, the Fund may not achieve the degree
of capital appreciation that a portfolio investing solely in equity securities
might achieve. It should be noted that, although the Fund intends to invest in
fixed-income securities to reduce the price volatility of the Fund's shares,
intermediate and long-term fixed-income securities do fluctuate in value more
than money market instruments.
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<PAGE>
The Fund attempts to achieve growth of capital through its investments in
equity securities. The equity securities that the Fund may purchase consist of
common stocks or securities having characteristics of common stocks (such as
convertible preferred stocks, convertible debt securities or warrants) of
domestic issuers. The equity selection approach of the Fund can best be
described in the vernacular of the investment business as a "value" orientation.
That is, great emphasis is placed on purchasing stocks that have lower than
market multiples of price to earnings, book value, cash flow and revenues and/or
high dividend yield.
The Fund attempts to earn current income and at the same time achieve
moderate growth of capital and/or reduce fluctuation in the net asset value of
its shares by investing a portion of its assets in fixed-income securities. The
fixed-income securities that the Fund may purchase include U.S. Government
obligations and corporate debt securities (such as bonds and debentures)
maturing in more than one year from the date of purchase and preferred stocks of
domestic issuers rated at the time of purchase in the four highest grades
assigned by Moody's Investors Service, Inc. (Aaa, Aa, A or Baa) or Standard &
Poor's Ratings Group (AAA, AA, A or BBB) or, if unrated, which are determined by
Dean Investment Associates to be of comparable quality. Preferred stocks and
fixed-income securities rated Baa or BBB have speculative characteristics and
changes in economic conditions or other circumstances are more likely to lead to
a weakened capacity to pay principal and interest or to pay the preferred stock
obligations than is the case with higher grade securities. Subsequent to its
purchase by the Fund, a security may cease to be rated or its rating may be
reduced below Baa or BBB. Dean Investment Associates will consider such an event
to be relevant in its determination of whether the Fund should continue to hold
such security. See the Statement of Additional Information for a description of
ratings.
Investments in fixed-income and equity securities are subject to inherent
market risks and fluctuations in value due to changes in earnings, economic
conditions, quality ratings and other factors beyond the control of Dean
Investment Associates. Fixed-income securities are also subject to price
fluctuations based upon changes in the level of interest rates, which will
generally result in all those securities changing in price in the same way,
i.e., all those securities experiencing appreciation when interest rates decline
and depreciation when interest rates rise. As a result, the return and net asset
value of the Fund will fluctuate.
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<PAGE>
The Fund also attempts to earn current income and reduce fluctuation in the
net asset value of its shares by investing a portion of its assets in money
market instruments. The money market instruments that the Fund may purchase
consist of short-term (i.e., maturing in one year or less from the date of
purchase) dollar-denominated debt obligations which (i) are U.S. Government
obligations, (ii) are issued by domestic banks, or (iii) are issued by domestic
corporations, if such corporate debt obligations have been rated at least
Prime-2 by Moody's Investors Service, Inc. ("Moody's") or A-2 by Standard &
Poor's Ratings Group ("S&P"), or have an outstanding issue of debt securities
rated at least A by Moody's or S&P, or are of comparable quality in the opinion
of Dean Investment Associates. Money market instruments also include repurchase
agreements collateralized by U.S. Government obligations and shares of money
market investment companies. The Fund will not invest more than 10% of its total
assets in shares of money market investment companies. Investments by the Fund
in shares of money market investment companies may result in duplication of
advisory, administrative and distribution fees. When Dean Investment Associates
believes substantial price risks exist for equity securities and/or fixed-income
securities because of uncertainties in the investment outlook or when in the
judgment of Dean Investment Associates it is otherwise warranted in selling to
manage the Fund's portfolio, the Fund may temporarily hold greater than 25% of
its assets in money market instruments for defensive purposes.
Investors should be aware that the investment results of the Fund depend
upon the ability of Dean Investment Associates to correctly anticipate the
relative performance and risk of equity securities, fixed-income securities and
money market instruments. Historical evidence indicates that correctly timing
portfolio allocations among these asset classes has been an extremely difficult
investment strategy to implement successfully. There can be no assurance that
Dean Investment Associates will correctly anticipate relative asset class
performance in the future on a consistent basis. Investment results would
suffer, for example, if only a small portion of the Fund's assets were invested
in stocks during a significant stock market advance or if a major portion were
invested in stocks during a major decline.
The Fund may invest in foreign companies through the purchase of sponsored
American Depository Receipts (certificates of ownership issued by an American
bank or trust company as a convenience to investors in lieu of the underlying
shares which it holds in custody) or other securities of foreign issuers that
are publicly traded in the United States. When selecting foreign investments,
Dean Investment Associates will seek to invest in securities that have
investment characteristics and qualities
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comparable to the kinds of domestic securities in which the Fund invests.
Investment in securities of foreign issuers involves somewhat different
investment risks from those affecting securities of domestic issuers. In
addition to credit and market risks, investments in foreign securities involve
sovereign risk, which includes local political and economic developments,
potential nationalization, withholding taxes on dividend or interest payments
and currency blockage. Foreign companies may have less public or less reliable
information available about them and may be subject to less governmental
regulation than U.S. companies. Securities of foreign companies may be less
liquid or more volatile than securities of U.S. companies.
The Trust has approved the use of certain options and futures strategies
for the Fund, including the purchase and sale of options on equity securities,
stock indices and futures contracts and the purchase and sale of stock index
futures contracts. The Fund is also permitted to lend its securities and to
borrow money and pledge its assets in connection therewith. For a discussion of
these transactions, see "Additional Investment Information."
INTERNATIONAL VALUE FUND
The International Value Fund seeks to provide long-term capital growth by
investing primarily in the common stocks of foreign companies. Generally, the
stocks purchased by the Fund are issued by companies located in the United
Kingdom, Continental Europe and the Pacific Basin, including Japan, Singapore,
Malaysia, Hong Kong and Australia. Under normal market conditions, investments
will be made in a minimum of three countries other than the United States.
Dean Investment Associates has retained Newton Capital Management Ltd.
("Newton Capital") to manage the investments of the International Value Fund.
Individual stock selection decisions are based upon Newton's assessment of value
based on fundamental research. Fundamental research includes a review of
capitalization and valuation measures. Stocks are chosen that Newton Capital
believes sell at a discount to the company's true economic value. The stock
selection process includes a review of enterprise value to sales; price/earnings
relative to the local market; dividend coverage; dividend yield relative to the
local market; and price to free cash flow. Preference is given to companies with
strong balance sheets and histories of consistent profitability. This strategic
framework guides the managers towards the sectors and company characteristics
that they believe will lead to future out-performance of the Europe, Australia
and Far East Index compiled by Morgan Stanley Capital International.
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<PAGE>
Over the longer term, stocks are selected which will be able to deliver
superior earnings and dividend growth. This will often reflect the company's
market position and pricing power. Newton Capital looks for either a dominant
position in a competitive market or a well protected niche. The goal is to be
able to invest in these companies at valuation levels which do not reflect their
future prospects so a wider view is used when analyzing a company's potential.
Response to different phases of the market and economic cycle will be made, for
instance, through varying the Fund's exposure to more cyclical companies ahead
of an expected economic recovery. Other, more specific criteria will also
generate some stock selection decisions.
Under normal circumstances, at least 65% of the Fund's total assets will be
invested in the common stocks of foreign companies and securities convertible
into the common stocks of foreign companies (such as convertible bonds,
convertible preferred stocks and warrants). The Fund may invest in preferred
stocks and bonds provided they are rated at the time of purchase in the four
highest grades assigned by Moody's (Aaa, Aa, A or Baa) or S&P (AAA, AA, A or
BBB) or, if unrated, are determined by Dean Investment Associates to be of
comparable quality. Preferred stocks and bonds rated Baa or BBB have speculative
characteristics and changes in economic conditions or other circumstances are
more likely to lead to a weakened capacity to pay principal and interest or to
pay the preferred stock obligations than is the case with higher grade
securities. Subsequent to its purchase by the Fund, a security may cease to be
rated or its rating may be reduced below Baa or BBB. Dean Investment Associates
will consider such an event to be relevant in its determination of whether the
Fund should continue to hold such security. See the Statement of Additional
Information for a description of ratings.
Investments in equity securities are subject to inherent market risks and
fluctuations in value due to earnings, economic conditions, quality ratings and
other factors beyond the control of Newton Capital. As a result, the return and
net asset value of the Fund will fluctuate.
Investment in securities of foreign issuers involves somewhat different
investment risks from those affecting securities of domestic issuers. In
addition to credit and market risk, investments in foreign securities involve
sovereign risk, which includes fluctuations in foreign exchange rates, future
political and economic developments, and the possible imposition of exchange
controls or other foreign governmental laws or restrictions. In addition, with
respect to certain countries, there is the possibility of expropriation of
assets, confiscatory taxation, political or social instability or diplomatic
developments which could adversely affect investments in those countries.
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There may be less publicly available information about a foreign company
than about a U.S. company, and accounting, auditing and financial reporting
standards and requirements may not be comparable. Securities of many foreign
companies are less liquid and their prices more volatile than securities of
comparable U.S. companies. Transaction costs of investing in foreign securities
markets are generally higher than in the U.S. and there is generally less
governmental supervision and regulation of exchanges, brokers and issuers than
there is in the U.S. The Fund might have greater difficulty taking appropriate
legal action in foreign courts. Depository receipts that are not sponsored by
the issuer may be less liquid. Dividend and interest income from foreign
securities will generally be subject to withholding taxes by the country in
which the issuer is located and may not be recoverable by the Fund or the
investor.
The Fund's investments that are denominated in a currency other than the
U.S. dollar are subject to the risk that the value of a particular currency will
change in relation to one or more other currencies including the U.S. dollar.
Among the factors that may affect currency values are trade balances, the level
of short-term interest rates, differences in relative values of similar assets
in different currencies, long-term opportunities for investment and capital
appreciation and political developments. The Fund may try to hedge these risks
by investing in foreign currencies, currency futures contracts and options
thereon, forward currency exchange contracts, or any combination thereof, but
there can be no assurance that such strategies will be effective.
The risks of foreign investing are of greater concern in the case of
investments in emerging markets, which may exhibit greater price volatility and
have less liquidity. Furthermore, the economies of emerging market countries
generally are heavily dependent upon international trade and, accordingly, have
been and may continue to be adversely affected by trade barriers, managed
adjustments in relative currency values, and other protectionist measures
applied internally or imposed by the countries with which they trade. These
emerging market economies also have been and may continue to be adversely
affected by economic conditions in the countries with which they trade. The Fund
presently intends to limit its investments in emerging market countries to no
more than 10% of its net assets.
The Trust has approved the use of certain options and futures strategies
for the Fund, including the purchase and sale of options on equity securities,
stock indices and futures contracts and the purchase and sale of stock index
futures contracts and forward currency exchange contracts. For a discussion of
these transactions, see "Additional Investment Information."
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<PAGE>
When Newton Capital believes substantial price risks exist for common
stocks and securities convertible into common stocks because of uncertainties in
the investment outlook or when in the judgment of Newton Capital it is otherwise
warranted in selling to manage the Fund's portfolio, the Fund may temporarily
hold for defensive purposes all or a portion of its assets in short-term
obligations such as bank debt instruments (certificates of deposit, bankers'
acceptances and time deposits), commercial paper, U.S. Government obligations
having a maturity of less than one year, shares of money market investment
companies or repurchase agreements collateralized by U.S. Government
obligations. The Fund is also permitted to lend its securities and to borrow
money and pledge its assets in connection therewith. See "Additional Investment
Information" for a discussion of these transactions. The Fund will not invest
more than 10% of its total assets in shares of money market investment
companies. Investments by the Fund in shares of money market investment
companies may result in duplication of advisory, administrative and distribution
fees.
ADDITIONAL INVESTMENT INFORMATION
OPTIONS AND FUTURES. Each Fund may write covered call and covered put
options on equity securities that the particular Fund is eligible to purchase.
Call options written by a Fund give the holder the right to buy the underlying
securities from the Fund at a stated exercise price; put options give the holder
the right to sell the underlying security to the Fund. These options are covered
by the Fund because, in the case of call options, it will own the underlying
securities as long as the option is outstanding or because, in the case of put
options, it will maintain a segregated account of cash, U.S. Government
obligations or other high-quality debt securities which can be liquidated
promptly to satisfy any obligation of the Fund to purchase the underlying
securities. The Funds may also write straddles (combinations of puts and calls
on the same underlying security). A Fund will receive a premium from writing a
put or call option, which increases the Fund's return in the event the option
expires unexercised or is closed out at a profit. The amount of the premium will
reflect, among other things, the relationship of the market price of the
underlying security to the exercise price of the option and the remaining term
of the option. By writing a call option, the Fund limits its opportunity to
profit from any increase in the market value of the underlying security above
the exercise price of the option. By writing a put option, the Fund assumes the
risk that it may be required to purchase the underlying security for an exercise
price higher than its then current market value, resulting in a potential
capital loss unless the security subsequently appreciates in value.
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<PAGE>
The purchaser of an option risks a total loss of the premium paid for the
option if the price of the underlying security does not increase or decrease
sufficiently to justify exercise. The seller of an option, on the other hand,
will recognize the premium as income if the option expires unrecognized but
forgoes any capital appreciation in excess of the exercise price in the case of
a call option and may be required to pay a price in excess of current market
value in the case of a put option. Options purchased and sold other than on an
exchange in private transactions also impose on the Funds the credit risk that
the counterparty will fail to honor its obligations. If the price of the
security sold short increases between the time of the short sale and the time a
Fund replaces the borrowed security, the Fund will incur a loss; conversely, if
the price declines, a Fund will realize a capital gain. Although a Fund's gain
is limited to the price at which it sold the security short, its potential loss
is theoretically unlimited.
Each Fund may purchase put options to hedge against a decline in the value
of its portfolio. By using put options in this manner, a Fund will reduce any
profit it might otherwise have realized in the underlying security by the amount
of the premium paid for the put option and by transaction costs. A Fund may
purchase call options on securities or on relevant stock indices to hedge
against an increase in the value of securities that the Fund wants to buy
sometime in the future. The premium paid for the call option and any transaction
costs will increase the cost of securities acquired, upon exercise of the
option, and, unless the price of the underlying security rises sufficiently, the
option may expire worthless.
The Funds may purchase either exchange-traded or over-the-counter options
on securities. A Fund's ability to terminate options positions established in
the over-the-counter market may be more limited than in the case of
exchange-traded options and may also involve the risk that securities dealers
participating in such transactions would fail to meet their obligations to the
Fund.
The Funds may purchase and sell futures contracts to hedge against changes
in prices. The Funds will not engage in futures transactions for speculative
purposes. A Fund may also write call options and purchase put options on futures
contracts as a hedge to attempt to protect securities in its portfolio against
decreases in value. When a Fund writes a call option on a futures contract, it
is undertaking the obligation of selling a futures contract at a fixed price at
any time during a specified period if the option is exercised. Conversely, as
purchaser of a put option on a futures contract, a Fund is entitled (but not
obligated) to sell a futures contract at the fixed price during the life of the
option.
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<PAGE>
A Fund may not purchase or sell futures contracts or related options if
immediately thereafter the sum of the amount of margin deposits on a Fund's
existing futures positions and premiums paid for related options would exceed 5%
of the market value of a Fund's total assets. When a Fund purchases futures
contracts, an amount of cash and cash equivalents, equal to the underlying
commodity value of the futures contracts (less any related margin deposits),
will be deposited in a segregated account with the Fund's custodian (or the
broker, if legally permitted) to collateralize the position and thereby insure
that the use of such futures contract is unleveraged. When a Fund sells futures
contracts, it will either own or have the right to receive the underlying future
or security, or will make deposits to collateralize the position as discussed
above. When a Fund uses futures and options on futures as hedging devices, there
is a risk that the prices of the securities subject to the futures contracts may
not correlate perfectly with the prices of the securities in a Fund's portfolio.
This may cause the futures contract and any related options to react differently
than the portfolio securities to market changes. In addition, the investment
adviser could be incorrect in its expectations about the direction or extent of
market factors such as stock price movements. In these events, the Fund may lose
money on the futures contract or option. It is not certain that a secondary
market for positions in futures contracts or for options will exist at all
times. Although the investment adviser will consider liquidity before entering
into these transactions, there is no assurance that a liquid secondary market on
an exchange or otherwise will exist for any particular futures contract or
option at any particular time. A Fund's ability to establish and close out
futures and options positions depends on this secondary market.
FORWARD CURRENCY EXCHANGE CONTRACTS. The International Value Fund may enter
into forward currency exchange contracts. When Newton Capital believes that the
currency of a particular foreign country may suffer a substantial decline
against the U.S. dollar, it may attempt to hedge some portion or all of this
anticipated risk by entering into a forward contract to sell an amount of
foreign currency approximating the value of some or all of the International
Value Fund's portfolio obligations denominated in such foreign currency. It may
also enter into such contracts to protect against loss between trade and
settlement dates resulting from changes in foreign currency exchange rates. Such
contracts will also have the effect of limiting any gains to the International
Value Fund between trade and settlement dates resulting from changes in such
rates.
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<PAGE>
U.S. GOVERNMENT OBLIGATIONS. "U.S. Government obligations" include
securities which are issued or guaranteed by the United States Treasury, by
various agencies of the United States Government, and by various
instrumentalities which have been established or sponsored by the United States
Government. U.S. Treasury obligations are backed by the "full faith and credit"
of the United States Government. U.S. Treasury obligations include Treasury
bills, Treasury notes, and Treasury bonds. U.S. Treasury obligations also
include the separate principal and interest components of U.S. Treasury
obligations which are traded under the Separate Trading of Registered Interest
and Principal of Securities ("STRIPS") program. Agencies or instrumentalities
established by the United States Government include the Federal Home Loan Banks,
the Federal Land Bank, the Government National Mortgage Association, the Federal
National Mortgage Association, the Federal Home Loan Mortgage Corporation, the
Student Loan Marketing Association, the Small Business Administration, the Bank
for Cooperatives, the Federal Intermediate Credit Bank, the Federal Financing
Bank, the Federal Farm Credit Banks, the Federal Agricultural Mortgage
Corporation, the Resolution Funding Corporation, the Financing Corporation of
America and the Tennessee Valley Authority. Some of these securities are
supported by the full faith and credit of the United States Government while
others are supported only by the credit of the agency or instrumentality, which
may include the right of the issuer to borrow from the United States Treasury.
In the case of securities not backed by the full faith and credit of the United
States, the investor must look principally to the agency issuing or guaranteeing
the obligation for ultimate repayment, and may not be able to assert a claim
against the United States in the event the agency or instrumentality does not
meet its commitments. Shares of the Funds are not guaranteed or backed by the
United States Government.
REPURCHASE AGREEMENTS. Each Fund may enter into repurchase agreements.
Repurchase agreements are transactions by which a Fund purchases a security and
simultaneously commits to resell that security to the seller at an agreed upon
time and price, thereby determining the yield during the term of the agreement.
In the event of a bankruptcy or other default of the seller of a repurchase
agreement, a Fund could experience both delays in liquidating the underlying
security and losses. To minimize these possibilities, each Fund intends to enter
into repurchase agreements only with its Custodian, banks having assets in
excess of $10 billion and the largest and, in the judgment of the investment
adviser, most creditworthy primary U.S. Government securities dealers. Each Fund
will enter into repurchase agreements which are collateralized by U.S.
Government obligations. Collateral for repurchase agreements is held in
safekeeping in the customer-only account of the Funds' Custodian
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<PAGE>
at the Federal Reserve Bank. At the time a Fund enters into a repurchase
agreement, the value of the collateral, including accrued interest, will equal
or exceed the value of the repurchase agreement and, in the case of a repurchase
agreement exceeding one day, the seller agrees to maintain sufficient collateral
so the value of the underlying collateral, including accrued interest, will at
all times equal or exceed the value of the repurchase agreement. A Fund will not
enter into a repurchase agreement not terminable within seven days if, as a
result thereof, more than 15% of the value of the net assets of the Fund would
be invested in such securities and other illiquid securities.
COMMERCIAL PAPER. Commercial paper consists of short-term (usually from one
to two hundred seventy days) unsecured promissory notes issued by corporations
in order to finance their current operations. The Funds will only invest in
commercial paper within the two top ratings of either Moody's (Prime-1 or
Prime-2) or S&P (A-1 or A-2), or which, in the opinion of the investment adviser
is of equivalent investment quality. Certain notes may have floating or variable
rates. Variable and floating rate notes with a demand notice period exceeding
seven days will be subject to each Fund's restriction on illiquid investments
unless, in the judgment of the investment adviser, such note is liquid.
WHEN-ISSUED SECURITIES. Obligations issued on a when-issued or
to-be-announced basis are settled by delivery and payment after the date of the
transaction, usually within 15 to 45 days. In a to-be-announced transaction, a
Fund has committed to purchasing or selling securities for which all specific
information is not yet known at the time of the trade, particularly the face
amount in transactions involving mortgage-related securities. The Funds will
only make commitments to purchase obligations on a when-issued or
to-be-announced basis with the intention of actually acquiring the obligations,
but a Fund may sell these securities before the settlement date if it is deemed
advisable as a matter of investment strategy or in order to meet its
obligations, although it would not normally expect to do so. The Funds will
purchase securities on a when- issued basis or TBA basis only if delivery and
payment for the securities takes place within 120 days after the date of the
transaction.
Purchases of securities on a when-issued or to-be-announced basis are
subject to market fluctuations and their current value is determined in the same
manner as other portfolio securities. When effecting such purchases for a Fund,
a segregated account of cash or liquid securities of the Fund in an amount
sufficient to make payment for the portfolio securities to be purchased will be
maintained with the Fund's Custodian at the trade date and valued daily at
market for the purpose of determining the adequacy of
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the securities in the account. If the market value of segregated securities
declines, additional cash or securities will be segregated on a daily basis so
that the market value of the Fund's segregated assets will equal the amount of
the Fund's commitments to purchase when-issued obligations and securities on a
to-be-announced basis. A Fund's purchase of securities on a when-issued or
to-be-announced basis may increase its overall investment exposure and involves
a risk of loss if the value of the securities declines prior to the settlement
date or if the broker-dealer selling the securities fails to deliver after the
value of the securities has risen.
BORROWING AND PLEDGING. Each Fund may borrow money from banks, provided
that, immediately after any such borrowings, there is asset coverage of 300% for
all borrowings of the Fund. A Fund will not make any borrowing which would cause
its outstanding borrowings to exceed one-third of the value of its total assets.
Each Fund may pledge assets in connection with borrowings but will not pledge
more than one-third of its total assets. Borrowing magnifies the potential for
gain or loss on the portfolio securities of the Funds and, therefore, if
employed, increases the possibility of fluctuation in a Fund's net asset value.
This is the speculative factor known as leverage. Each Fund's policies on
borrowing and pledging are fundamental policies which may not be changed without
the affirmative vote of a majority of its outstanding shares. It is the Funds'
present intention, which may be changed by the Board of Trustees without
shareholder approval, to borrow only for emergency or extraordinary purposes and
not for leverage.
LENDING PORTFOLIO SECURITIES. Each Fund may, from time to time, lend
securities on a short-term basis (i.e., for up to seven days) to banks, brokers
and dealers and receive as collateral cash, U.S. Government obligations or
irrevocable bank letters of credit (or any combination thereof), which
collateral will be required to be maintained at all times in an amount equal to
at least 100% of the current value of the loaned securities plus accrued
interest. Although each of the Funds does have the ability to make loans of all
of its portfolio securities, it is the present intention of the Trust, which may
be changed without shareholder approval, that such loans will not be made with
respect to a Fund if as a result the aggregate of all outstanding loans exceeds
one-third of the value of the Fund's total assets. Securities lending will
afford a Fund the opportunity to earn additional income because the Fund will
continue to be entitled to the interest payable on the loaned securities and
also will either receive as income all or a portion of the interest on the
investment of any cash loan collateral or, in the case of collateral other than
cash, a fee negotiated with the borrower. Such loans will be terminable at any
time. Loans of securities involve risks of delay in receiving additional
collateral or in recovering the securities lent or even loss of rights in the
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collateral in the event of the insolvency of the borrower of the securities. A
Fund will have the right to regain record ownership of loaned securities in
order to exercise beneficial rights. A Fund may pay reasonable fees in
connection with arranging such loans.
PORTFOLIO TURNOVER. The Funds do not intend to use short-term trading as a
primary means of achieving their investment objectives. However, each Fund's
rate of portfolio turnover will depend upon market and other conditions, and it
will not be a limiting factor when portfolio changes are deemed necessary or
appropriate by the investment adviser. Although the annual portfolio turnover
rate of each of the Funds cannot be accurately predicted, it is not expected to
exceed 100% with respect to any of the Funds, but may be either higher or lower.
A 100% turnover rate would occur, for example, if all the securities of a Fund
were replaced once in a one-year period. High turnover involves correspondingly
greater commission expenses and transaction costs and increases the possibility
that a Fund would not qualify as a regulated investment company under Subchapter
M of the Internal Revenue Code. A Fund will not qualify as a regulated
investment company if it derives 30% or more of its gross income from gains
(without offset for losses) from the sale or other disposition of securities
held for less than three months. High turnover may result in a Fund recognizing
greater amounts of income and capital gains, which would increase the amount of
income and capital gains which the Fund must distribute to shareholders in order
to maintain its status as a regulated investment company and to avoid the
imposition of federal income or excise taxes (see "Taxes").
HOW TO PURCHASE SHARES
The initial investment in a Fund ordinarily must be at least $1,000 ($250
for tax-deferred retirement plans). The Funds may, in Dean Investment
Associates' sole discretion, accept certain accounts with less than the stated
minimum initial investment. Investors may open an account and make an initial
investment through securities dealers having a sales agreement with the Trust's
principal underwriter, 2480 Securities LLC (the "Underwriter"). Investors may
also make an initial investment directly by sending a check and a completed
account application to Countrywide Fund Services, Inc. (the "Transfer Agent"),
P.O. Box 5354, Cincinnati, Ohio 45201-5354. Checks should be made payable to the
"Large Cap Value Fund", the "Small Cap Value Fund", the "Balanced Fund" or the
"International Value Fund", whichever is applicable. An account application is
included in this Prospectus. Additional shares may be purchased through the Open
Account Program described below.
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The Trust mails investors a confirmation of all purchases or redemptions of
Fund shares. Certificates representing shares are not issued. The Trust and the
Underwriter reserve the right to limit the amount of investments and to refuse
to sell to any person.
Investors should be aware that the Funds' account application contains
provisions in favor of the Trust, the Underwriter, the Transfer Agent and
certain of their affiliates, excluding such entities from certain liabilities
(including, among others, losses resulting from unauthorized shareholder
transactions) relating to the various services (for example, telephone
exchanges) made available to investors.
Should an order to purchase shares be canceled because the check does not
clear, the investor will be responsible for any resulting losses or fees
incurred by the Trust or the Transfer Agent in the transaction.
OPEN ACCOUNT PROGRAM. Please direct inquiries concerning the services
described in this section to the Transfer Agent at the address or numbers listed
below.
After an initial investment, all investors are considered participants in
the Open Account Program. The Open Account Program helps investors make
purchases of shares of the Funds over a period of years and permits the
automatic reinvestment of dividends and distributions of the Funds in additional
shares without a sales load.
Under the Open Account Program, the investor may purchase and add shares to
his or her account at any time either through a securities dealer or by sending
a check to Countrywide Fund Services, Inc., P.O. Box 5354, Cincinnati, Ohio
45201-5354. The check should be made payable to the applicable Fund.
Under the Open Account Program, investors may also purchase shares of the
Funds by bank wire. Please telephone the Transfer Agent (Nationwide call
toll-free 888-899-8343; in Cincinnati call 629-2285) for instructions. The bank
may impose a charge for sending a wire. There is presently no fee for receipt of
wired funds, but the Transfer Agent reserves the right to charge shareholders
for this service upon thirty days' prior notice to shareholders.
Each additional purchase request must contain the name of the account and
the account number to permit proper crediting to the account. While there is no
minimum amount required for subsequent investments, the Trust reserves the right
to impose such a requirement. All purchases under the Open Account Program
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are made at the public offering price next determined after receipt of a
purchase order by the Trust. If a broker-dealer received concessions for selling
shares of the Funds to a current shareholder, such broker-dealer will receive
the concessions described above with respect to additional investments by the
shareholder.
SALES LOAD ALTERNATIVES
Each Fund offers two classes of shares which may be purchased at the
election of the purchaser. The two classes of shares each represent interests in
the same portfolio of investments of a Fund, have the same rights and are
identical in all material respects except that (i) Class C shares bear the
expenses of higher distribution fees; (ii) certain other class specific expenses
will be borne solely by the class to which such expenses are attributable,
including transfer agent fees attributable to a specific class of shares,
printing and postage expenses related to preparing and distributing materials to
current shareholders of a specific class, registration fees incurred by a
specific class of shares, the expenses of administrative personnel and services
required to support the shareholders of a specific class, litigation or other
legal expenses relating to a specific class of shares, Trustees' fees or
expenses incurred as a result of issues relating to a specific class of shares
and accounting fees and expenses relating to a specific class of shares; and
(iii) each class has exclusive voting rights with respect to matters relating to
its own distribution arrangements. The net income attributable to Class C shares
and the dividends payable on Class C shares will be reduced by the amount of the
incremental expenses associated with the distribution fee (see "Distribution
Plans").
The Funds' alternative sales arrangements permit investors to choose the
method of purchasing shares that is most beneficial given the amount of the
purchase, the length of time the investor expects to hold his or her shares and
other relevant circumstances. Investors should determine whether under their
particular circumstances it is more advantageous to incur a front-end sales load
and be subject to lower ongoing charges, as discussed below, or to have all of
the initial purchase price invested in the Funds with the investment thereafter
being subject to higher ongoing charges. A salesperson or any other person
entitled to receive any portion of a distribution fee may receive different
compensation for selling Class A or Class C shares.
As an illustration, investors who qualify for significantly reduced sales
loads, as described below, might elect the Class A sales load alternative
because similar sales load reductions are not available for purchases under the
Class C sales load
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alternative. Moreover, shares acquired under the Class A sales load alternative
would be subject to lower ongoing distribution fees as described below.
Investors not qualifying for reduced initial sales loads who expect to maintain
their investment for an extended period of time might also elect the Class A
sales load alternative because over time the accumulated continuing distribution
fees on Class C shares may exceed the difference in initial sales loads between
Class A and Class C shares. Again, however, such investors must weigh this
consideration against the fact that less of their funds will be invested
initially under the Class A sales load alternative. Furthermore, the higher
ongoing distribution fees will be offset to the extent any return is realized on
the additional funds initially invested under the Class C sales load
alternative.
Some investors might determine that it would be more advantageous to
utilize the Class C sales load alternative to have more of their funds invested
initially, despite being subject to higher ongoing distribution fees and, for a
one-year period, being subject to a contingent deferred sales load. For example,
based on estimated fees and expenses, an investor subject to the maximum 5.25%
initial sales load on Class A shares who elects to reinvest dividends in
additional shares would have to hold the investment in Class A shares
approximately 6 years before the accumulated ongoing distribution fees on the
alternative Class C shares would exceed the initial sales load plus the
accumulated ongoing distribution fees on Class A shares. In this example and
assuming the investment was maintained for more than 6 years, the investor might
consider purchasing Class A shares. This example does not take into account the
time value of money which reduces the impact of the higher ongoing Class C
distribution fees, fluctuations in net asset value or the effect of different
performance assumptions.
In addition to the compensation otherwise paid to securities dealers, the
Underwriter may from time to time pay from its own resources additional cash
bonuses or other incentives to selected dealers in connection with the sale of
shares of the Funds. On some occasions, such bonuses or incentives may be
conditioned upon the sale of a specified minimum dollar amount of the shares of
the Funds during a specific period of time. Such bonuses or incentives may
include financial assistance to dealers in connection with conferences, sales or
training programs for their employees, seminars for the public, advertising,
sales campaigns and other dealer-sponsored programs or events.
CLASS A SHARES
Class A shares are sold on a continuous basis at the public offering price
next determined after receipt of a purchase order by the Trust. Purchase orders
received by dealers prior to 4:00
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p.m., Eastern time, on any business day and transmitted to the Transfer Agent by
5:00 p.m., Eastern time, that day are confirmed at the public offering price
determined as of the close of the regular session of trading on the New York
Stock Exchange on that day. It is the responsibility of dealers to transmit
properly completed orders so that they will be received by the Transfer Agent by
5:00 p.m., Eastern time. Dealers may charge a fee for effecting purchase orders.
Direct purchase orders received by the Transfer Agent by 4:00 p.m., Eastern
time, are confirmed at that day's public offering price. Direct investments
received by the Transfer Agent after 4:00 p.m., Eastern time, and orders
received from dealers after 5:00 p.m., Eastern time, are confirmed at the public
offering price next determined on the following business day.
The public offering price of Class A shares is the next determined net
asset value per share plus a sales load as shown in the following table.
DEALER
REALLOWANCE
SALES LOAD AS % OF: AS % OF
PUBLIC NET PUBLIC
OFFERING AMOUNT OFFERING
AMOUNT OF INVESTMENT PRICE INVESTED PRICE
- -------------------- -------- -------- ------
Less than $25,000 5.25% 5.54% 4.75%
$25,000 but less than $50,000 4.75 4.99 4.25
$50,000 but less than $100,000 4.00 4.17 3.50
$100,000 but less than $250,000 3.25 3.36 2.75
$250,000 but less than $500,000 2.50 2.56 2.25
$500,000 but less than $1,000,000 2.25 2.30 2.00
$1,000,000 or more None* None* None
* There is no front-end sales load on purchases of $1 million or more but a
contingent deferred sales load of up to 1.00% may apply with respect to
Class A shares if a commission was paid by the Underwriter to a
participating unaffiliated dealer and the shares are redeemed within twelve
months from the date of purchase.
Under certain circumstances, the Underwriter may increase or decrease
the reallowance to dealers. Dealers engaged in the sale of shares of the Funds
may be deemed to be underwriters under the Securities Act of 1933. The
Underwriter retains the entire sales load on all direct initial investments in
the Funds and on all investments in accounts with no designated dealer of
record.
For initial purchases of Class A shares of the Funds of $1,000,000 or
more and subsequent purchases further increasing the size of the account, a
dealer's commission of 1.00% of such purchases from $1 million to $3 million,
.75% of such purchases
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from $3 million to $5 million and .50% of such purchases in excess of $5 million
of the purchase amount may be paid by the Underwriter to participating
unaffiliated dealers through whom such purchases are effected. In determining a
dealer's eligibility for such commission, purchases of Class A shares of the
Funds may be aggregated. Dealers should contact the Underwriter concerning the
applicability and calculation of the dealer's commission in the case of combined
purchases. An exchange from other funds will not qualify for payment of the
dealer's commission, unless such exchange is from a fund with assets as to which
a dealer's commission or similar payment has not been previously paid.
Redemptions of Class A shares may result in the imposition of a contingent
deferred sales load if the dealer's commission described in this paragraph was
paid in connection with the purchase of such shares. See "Contingent Deferred
Sales Load for Certain Purchases of Class A Shares" below.
REDUCED SALES LOAD. A "purchaser" (defined below) may use the Right of
Accumulation to combine the cost or current net asset value (whichever is
higher) of his existing Class A shares of any Fund in the Dean Family of Funds
with the amount of his current purchases in order to take advantage of the
reduced sales loads set forth in the table above. Purchases made of shares of
any Fund in the Dean Family of Funds pursuant to a Letter of Intent may also be
eligible for the reduced sales loads. The minimum initial investment under a
Letter of Intent is $10,000. Shareholders should contact the Transfer Agent for
information about the Right of Accumulation and Letter of Intent.
PURCHASES AT NET ASSET VALUE. Banks, bank trust departments and savings
and loan associations, and employees of such institutions, in their fiduciary
capacity or for their own accounts, may purchase Class A shares of the Funds at
net asset value. To the extent permitted by regulatory authorities, a bank trust
department may charge fees to clients for whose account it purchases shares at
net asset value. Federal and state credit unions may also purchase Class A
shares at net asset value.
In addition, Class A shares of the Funds may be purchased at net asset
value by broker-dealers who have a sales agreement with the Underwriter and
their registered personnel and employees, including members of the immediate
families of such registered personnel and employees. Clients of investment
advisers and financial planners may also purchase Class A shares of the Funds at
net asset value if their investment adviser or financial planner has made
arrangements to permit them to do so with the Trust and the Underwriter. The
investment adviser or financial planner must notify the Transfer Agent that an
investment qualifies as a purchase at net asset value.
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<PAGE>
Class A shares may also be purchased at net asset value by
organizations which qualify under section 501(c)(3) of the Internal Revenue Code
as exempt from Federal income taxes, their employees, alumni and benefactors,
and family members of such individuals.
Trustees, directors, officers and employees of the Trust, Dean
Investment Associates, the Underwriter or the Transfer Agent, including members
of the immediate families of such individuals and employee benefit plans
established by such entities, may also purchase Class A shares of the Funds at
net asset value.
CONTINGENT DEFERRED SALES LOAD FOR CERTAIN PURCHASES OF CLASS A SHARES.
A contingent deferred sales load is imposed upon certain redemptions of Class A
shares (or shares into which such Class A shares were exchanged) purchased at
net asset value in amounts totaling $1 million or more, if the dealer's
commission described above was paid by the Underwriter and the shares are
redeemed within twelve months from the date of purchase. The contingent deferred
sales load will be paid to the Underwriter and will be equal to the commission
percentage paid at the time of purchase (either 1.00%, .75% or .50% depending on
the amount of purchase) as applied to the lesser of (1) the net asset value at
the time of purchase of the Class A shares being redeemed or (2) the net asset
value of such Class A shares at the time of redemption. In determining whether
the contingent deferred sales load is payable, it is assumed that shares not
subject to the contingent deferred sales load are the first redeemed followed by
other shares held for the longest period of time. The contingent deferred sales
load will not be imposed upon shares representing reinvested dividends or
capital gains distributions, or upon amounts representing share appreciation. If
a purchase of Class A shares is subject to the contingent deferred sales load,
the investor will be so notified on the confirmation for such purchase.
Redemptions of such Class A shares of the Funds held for at least 12
months will not be subject to the contingent deferred sales load and an exchange
of such Class A shares into another fund is not treated as a redemption and will
not trigger the imposition of the contingent deferred sales load at the time of
such exchange. A fund will "tack" the period for which such Class A shares being
exchanged were held onto the holding period of the acquired shares for purposes
of determining if a contingent deferred sales load is applicable in the event
that the acquired shares are redeemed following the exchange; however, the
period of time that the redemption proceeds of such Class A shares are held in a
money market fund will not count toward the holding period for determining
whether a contingent deferred sales load is applicable. See "Exchange
Privilege".
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The contingent deferred sales load is currently waived for any partial
or complete redemption following death or disability (as defined in the Internal
Revenue Code) of a shareholder (including one who owns the shares with his or
her spouse as a joint tenant with rights of survivorship) from an account in
which the deceased or disabled is named. The Underwriter may require
documentation prior to waiver of the charge, including death certificates,
physicians' certificates, etc.
ADDITIONAL INFORMATION. For purposes of determining the applicable
sales load and for purposes of the Letter of Intent and Right of Accumulation
privileges, a purchaser includes an individual, his or her spouse and their
children under the age of 21 purchasing shares for his, her or their own
account; or a trustee or other fiduciary purchasing shares for a single
fiduciary account although more than one beneficiary is involved; or employees
of a common employer, provided that economies of scale are realized through
remittances from a single source and quarterly confirmation of such purchases;
or an organized group, provided that the purchases are made through a central
administration or a single dealer, or by other means which result in economy of
sales effort or expense. Contact the Transfer Agent for additional information
concerning purchases at net asset value or at reduced sales loads.
CLASS C SHARES
Class C shares are sold on a continuous basis at the net asset value
next determined after receipt of a purchase order by the Trust. Purchase orders
received by dealers prior to 4:00 p.m., Eastern time, on any business day and
transmitted to the Transfer Agent by 5:00 p.m., Eastern time, that day are
confirmed at the net asset value determined as of the close of the regular
session of trading on the New York Stock Exchange on that day. It is the
responsibility of dealers to transmit properly completed orders so that they
will be received by the Transfer Agent by 5:00 p.m., Eastern time. Dealers may
charge a fee for effecting purchase orders. Direct purchase orders received by
the Transfer Agent by 4:00 p.m., Eastern time, are confirmed at that day's net
asset value. Direct investments received by the Transfer Agent after 4:00 p.m.,
Eastern time, and orders received from dealers after 5:00 p.m., Eastern time,
are confirmed at the net asset value next determined on the following business
day. A contingent deferred sales load is imposed on Class C shares if an
investor redeems an amount which causes the current value of the investor's
account to fall below the total dollar amount of purchase payments subject to
the deferred sales load, except that no such charge is imposed upon shares
representing reinvested dividends or capital gains distributions, or upon
amounts representing share appreciation.
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<PAGE>
Whether a contingent deferred sales load is imposed will depend on the
amount of time since the investor made a purchase payment from which an amount
is being redeemed. Purchases are subject to the contingent deferred sales load
according to the following schedule:
Year Since Purchase Contingent Deferred
Payment Was Made Sales Load
------------------- -------------------
First Year 1%
Thereafter None
In determining whether a contingent deferred sales load is payable, it
is assumed that the purchase payment from which the redemption is made is the
earliest purchase payment (from which a redemption or exchange has not already
been effected). If the earliest purchase from which a redemption has not yet
been effected was made within one year before the redemption, then a deferred
sales load at the rate of 1% will be imposed.
The following example will illustrate the operation of the contingent
deferred sales load. Assume that an individual opens an account and purchases
1,000 shares at $10 per share and that six months later the net asset value per
share is $12 and, during such time, the investor has acquired 50 additional
shares through reinvestment of distributions. If at such time the investor
should redeem 450 shares (proceeds of $5,400), 50 shares will not be subject to
the load because of dividend reinvestment. With respect to the remaining 400
shares, the load is applied only to the original cost of $10 per share and not
to the increase in net asset value of $2 per share. Therefore, $4,000 of the
$5,400 redemption proceeds will be charged the load. At the rate of 1%, the
contingent deferred sales load would be $40. In determining whether an amount is
available for redemption without incurring a deferred sales load, the purchase
payments made for all Class C shares in the shareholder's account are
aggregated, and the current value of all such shares is aggregated.
All sales loads imposed on redemptions are paid to the Underwriter. The
Underwriter intends to pay a commission of 1% of the purchase amount to
participating brokers at the time the investor purchases Class C shares.
The contingent deferred sales load is currently waived for any partial
or complete redemption following death or disability (as defined in the Internal
Revenue Code) of a shareholder (including one who owns the shares with his or
her spouse as a joint tenant with rights of survivorship) from an account in
which the deceased or disabled is named. The Underwriter may require
documentation prior to waiver of the charge, including death certificates,
physicians' certificates, etc.
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<PAGE>
SHAREHOLDER SERVICES
Contact the Transfer Agent (Nationwide call toll-free 888- 899-8343; in
Cincinnati call 629-2285) for additional information about the shareholder
services described below.
AUTOMATIC WITHDRAWAL PLAN
If the shares in an account have a value of at least $5,000, the
shareholder may elect to receive, or may designate another person to receive,
monthly or quarterly payments in a specified amount of not less than $50 each.
There is no charge for this service. Purchases of additional Class A shares
while the plan is in effect are generally undesirable because a sales load is
incurred whenever purchases are made.
TAX-DEFERRED RETIREMENT PLANS
Shares of the Funds are available for purchase in connection with the
following tax-deferred retirement plans:
-- Keogh Plans for self-employed individuals
-- Individual retirement account (IRA) plans for
individuals and their non-employed spouses
-- Qualified pension and profit-sharing plans for
employees, including those profit-sharing plans with a
401(k) provision
-- 403(b)(7) custodial accounts for employees of public school
systems, hospitals, colleges and other non-profit
organizations meeting certain requirements of the Internal
Revenue Code
DIRECT DEPOSIT PLANS
Shares of the Funds may be purchased through direct deposit plans
offered by certain employers and government agencies. These plans enable a
shareholder to have all or a portion of his or her payroll or social security
checks transferred automatically to purchase shares of the Funds.
AUTOMATIC INVESTMENT PLAN
Shareholders may make automatic monthly investments in a Fund from
their bank, savings and loan or other depository institution account. The
minimum initial and subsequent investments must be $50 under the plan. The
Transfer Agent pays the costs associated with these transfers, but reserves the
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right, upon thirty days' written notice, to make reasonable charges for this
service. A shareholder's depository institution may impose its own charge for
debiting an account which would reduce the return from an investment in the
Funds.
REINVESTMENT PRIVILEGE
If a shareholder has redeemed shares of a Fund, he or she may reinvest
all or part of the proceeds without any additional sales load. This reinvestment
must occur within ninety days of the redemption and the privilege may only be
exercised once per year.
HOW TO REDEEM SHARES
Shareholders may redeem shares of a Fund on each day that the Trust is
open for business by sending a written request to the Transfer Agent. The
request must state the number of shares or the dollar amount to be redeemed and
the account number. The request must be signed exactly as the shareholder's name
appears on the Trust's account records. If the shares to be redeemed have a
value of $25,000 or more, the shareholder's signature must be guaranteed by any
eligible guarantor institution, including banks, brokers and dealers, municipal
securities brokers and dealers, government securities brokers and dealers,
credit unions, national securities exchanges, registered securities
associations, clearing agencies and savings associations.
Shareholders may also redeem shares by placing a wire redemption
request through a securities broker or dealer. Unaffiliated broker-dealers may
impose a fee on the shareholder for this service. Shareholders will receive the
net asset value per share next determined after receipt by the Transfer Agent of
the wire redemption request. It is the responsibility of broker-dealers to
properly transmit wire redemption orders.
If the instructions request a redemption by wire, the shareholder will
be charged an $8 processing fee by the Funds' custodian. The Trust reserves the
right, upon thirty days' written notice, to change the processing fee. All
charges will be deducted from the shareholder's account by redemption of shares
in the account. The shareholder's bank or brokerage firm may also impose a
charge for processing the wire. In the event that wire transfer of funds is
impossible or impractical, the redemption proceeds will be sent by mail to the
designated account.
Redemption requests may direct that the proceeds be deposited directly
in the shareholder's account with a commercial bank or other depository
institution via an Automated Clearing House (ACH) transaction. There is
currently no charge for ACH transactions. Contact the Transfer Agent for more
information about ACH transactions.
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<PAGE>
A contingent deferred sales load may apply to a redemption of Class C
shares or to a redemption of certain Class A shares purchased at net asset
value. See "How to Purchase Shares".
Shares are redeemed at their net asset value per share next determined
after receipt by the Transfer Agent of a proper redemption request in the form
described above, less any applicable contingent deferred sales load. Payment is
normally made within three business days after tender in such form, provided
that payment in redemption of shares purchased by check will be effected only
after the check has been collected, which may take up to fifteen days from the
purchase date. To eliminate this delay, shareholders may purchase shares of the
Funds by certified check or wire.
The Trust and the Transfer Agent will consider all written and verbal
instructions as authentic and will not be responsible for the processing of
exchange instructions received by telephone which are reasonably believed to be
genuine or the delivery or transmittal of the redemption proceeds by wire. The
affected shareholders will bear the risk of any such loss. The privilege of
exchanging shares by telephone is automatically available to all shareholders.
The Trust or the Transfer Agent, or both, will employ reasonable procedures to
determine that telephone instructions are genuine. If the Trust and/or the
Transfer Agent do not employ such procedures, they may be liable for losses due
to unauthorized or fraudulent instructions. These procedures may include, among
others, requiring forms of personal identification prior to acting upon
telephone instructions, providing written confirmation of the transactions
and/or tape recording telephone instructions.
At the discretion of the Trust or the Transfer Agent, corporate
investors and other associations may be required to furnish an appropriate
certification authorizing redemptions to ensure proper authorization. The Trust
reserves the right to require shareholders to close an account if at any time
the value of the shares in the account is less than $1,000 (based on actual
amounts invested including any sales load paid, unaffected by market
fluctuations), or $250 in the case of tax-deferred retirement plans, or such
other minimum amount as the Trust may determine from time to time. After
notification of the Trust's intention to close an account, the shareholder will
be given thirty days to increase the value of the account to the minimum amount.
The Trust reserves the right to suspend the right of redemption or to
postpone the date of payment for more than three business days under unusual
circumstances as determined by the Securities and Exchange Commission.
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<PAGE>
EXCHANGE PRIVILEGE
Shares of the Funds may be exchanged for each other or for the
following series of Countrywide Investment Trust:
Short Term Government Income Fund -- a money market fund which invests
in short-term U.S. Government obligations backed by the "full faith and
credit" of the United States and seeks high current income, consistent
with protection of capital.
Intermediate Term Government Income Fund -- invests in intermediate
term U.S. Government obligations and seeks high current income,
consistent with protection of capital. Capital appreciation is a
secondary objective.
Class A shares of a Fund which are not subject to a contingent deferred
sales load may be exchanged for Class A shares of any other Fund, for shares of
the Short Term Government Income Fund and for shares of the Intermediate Term
Government Income Fund (provided such shares are not subject to a contingent
deferred sales load).
Class C shares of a Fund, as well as Class A shares of a Fund subject
to a contingent deferred sales load, may be exchanged, on the basis of relative
net asset value per share, for shares of any other Fund subject to a contingent
deferred sales load, for shares of the Short Term Government Income Fund and for
any shares of the Intermediate Term Government Income Fund subject to a
contingent deferred sales load. A fund will "tack" the period for which the
shares being exchanged were held onto the holding period of the acquired shares
for purposes of determining if a contingent deferred sales load is applicable in
the event that the acquired shares are redeemed following the exchange. The
period of time that shares are held in the Short Term Government Income Fund
will not count toward the holding period for determining whether a contingent
deferred sales load is applicable. Shareholders may request an exchange by
sending a written request to the Transfer Agent. The request must be signed
exactly as your name appears on the Trust's account records. Exchanges may also
be requested by telephone. If you are unable to execute your transaction by
telephone (for example during times of unusual market activity) consider
requesting your exchange by mail or by visiting the Trust's offices at 2480
Kettering Tower, Dayton, Ohio 45423. An exchange will be effected at the next
determined net asset value after receipt of a request by the Transfer Agent.
Exchanges may only be made for shares of funds then offered for sale in
your state of residence and are subject to the applicable minimum initial
investment requirements. The exchange privilege may be modified or terminated by
the Board of Trustees upon 60 days' prior notice to shareholders. An exchange
results
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in a sale of fund shares, which may cause you to recognize a capital gain or
loss. Before making an exchange, contact the Transfer Agent to obtain more
information about exchanges among the Funds.
DIVIDENDS AND DISTRIBUTIONS
The Large Cap Value Fund, the Balanced Fund and the International Value
Fund each expects to distribute substantially all of its net investment income,
if any, on a quarterly basis. The Small Cap Value Fund expects to distribute
substantially all of its net investment income, if any, on an annual basis. Each
Fund expects to distribute any net realized long-term capital gains at least
once each year. Management will determine the timing and frequency of the
distributions of any net realized short-term capital gains.
Distributions are paid according to one of the following options:
Share Option - income distributions and capital gains
distributions reinvested in additional
shares.
Income Option - income distributions and short-term capital
gains distributions paid in cash; long-term
capital gains distributions reinvested in
additional shares.
Cash Option - income distributions and capital
gains distributions paid in cash.
The choice of option should be indicated on the application. If no option is
specified, distributions will automatically be reinvested in additional shares.
All distributions will be based on the net asset value in effect on the payable
date.
If the Income Option or the Cash Option is selected and the U.S. Postal
Service cannot deliver the checks or if the checks remain uncashed for six
months, dividends may be reinvested in the account at the then-current net asset
value and the account will be converted to the Share Option. No interest will
accrue on amounts represented by uncashed distribution checks.
An investor who has received in cash any dividend or capital gains
distribution from any Fund may return the distribution within thirty days of the
distribution date to the Transfer Agent for reinvestment at the net asset value
next determined after its return. The investor or his dealer must notify the
Transfer Agent that a distribution is being reinvested pursuant to this
provision.
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<PAGE>
TAXES
Each Fund intends to qualify for the special tax treatment afforded a
"regulated investment company" under Subchapter M of the Internal Revenue Code
so that it does not pay federal taxes on income and capital gains distributed to
shareholders. Each Fund intends to distribute substantially all of its net
investment income and any net realized capital gains to its shareholders.
Distributions of net investment income and from net realized short-term capital
gains, if any, are taxable as ordinary income. Dividends distributed by the
Funds from net investment income may be eligible, in whole or in part, for the
dividends received deduction available to corporations. Distributions resulting
from the sale of foreign currencies and foreign obligations, to the extent of
foreign exchange gains, are taxed as ordinary income or loss. If these
transactions result in reducing the Fund's net income, a portion of the income
may be classified as a return of capital (which will lower a shareholder's tax
basis). If the Fund pays nonrefundable taxes to foreign governments during the
year, the taxes will reduce the Fund's net investment income but still may be
included in a shareholder's taxable income. However, a shareholder may be able
to claim an offsetting tax credit or itemized deduction on his return for his
portion of foreign taxes paid by the Fund. Distributions of net realized
long-term capital gains are taxable as long-term capital gains regardless of how
long a shareholder has held Fund shares. Redemptions and exchanges of shares of
the Funds are taxable events on which a shareholder may realize a gain or loss.
Under applicable tax law, the Fund may be required to limit its gains
from hedging in foreign currency forwards, futures and options. Although it is
anticipated the Fund will comply with such limits, the Fund's use of these
hedging techniques involves greater risk of unfavorable tax consequences than
funds not engaging in such techniques. Hedging may also result in the
application of the mark-to-market and straddle provisions of the Internal
Revenue Code. These provisions could result in an increase (or decrease) in the
amount of taxable dividends paid by the Fund as well as affect whether dividends
paid by the Fund are classified as capital gains or ordinary income.
The Funds will mail to each of their shareholders a statement
indicating the amount and federal income tax status of all distributions made
during the year. In addition to federal taxes, shareholders of the Funds may be
subject to state and local taxes on distributions. Shareholders should consult
their tax advisors about the tax effect of distributions and withdrawals from
the Funds and the use of the Automatic Withdrawal Plan and the Exchange
Privilege. The tax consequences described in this section apply whether
distributions are taken in cash or reinvested in additional shares.
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<PAGE>
OPERATION OF THE FUNDS
The Funds are diversified series of the Dean Family of Funds, an
open-end management investment company organized as an Ohio business trust on
December 18, 1996. The Board of Trustees supervises the business activities of
the Trust. Like other mutual funds, the Trust retains various organizations to
perform specialized services for the Funds.
The Trust retains Dean Investment Associates, 2480 Kettering Tower,
Dayton, Ohio, to manage the Funds' investments. Dean Investment Associates is an
independent investment counsel firm which has been advising individual,
institutional and corporate clients since 1973. Dean Investment Associates
currently provides investment advisory services to three registered investment
companies which serve as underlying vehicles for variable annuity insurance
products. The firm manages approximately $4.0 billion for clients worldwide.
Currently, Dean Investment Associates has 100 employees which includes 7
Chartered Financial Analysts (CFA), 10 Certified Public Accounts (CPA) and 3
PhDs. Dean Investment Associates is Dayton, Ohio's largest independent
investment manager. The controlling shareholder of Dean Investment Associates is
Chauncey H. Dean.
The Large Cap Value Fund, the Small Cap Value Fund and the Balanced
Fund each pays Dean Investment Associates a fee for its services equal to the
annual rate of 1.00% of the average value of its daily net assets. The
International Value Fund pays Dean Investment Associates a fee for its services
equal to the annual rate of 1.25% of the average value of its daily net assets.
As the owner of greater than 25% of its shares, Chauncey H. Dean may be deemed
to control each of the Funds.
Dirk H. Van Dijk and Arvind K. Sachdeva are primarily responsible for
managing the portfolio of the Large Cap Value Fund. Mr. Van Dijk is currently
Senior Equity Analyst and has been employed by Dean Investment Associates since
1994. He previously was an Equity Analyst with Bartlett & Co., an investment
adviser. Mr. Sachdeva is currently Director of Research and has been employed by
Dean Investment Associates in various capacities since 1993. He previously was a
portfolio manager for Carillon Advisers, an investment management firm.
Dirk H. Van Dijk and Amit Dugar are the persons primarily responsible
for managing the portfolio of the Small Cap Value Fund. Mr. Dugar has been
employed by Dean Investment Associates as an Equity Analyst since 1994. He
formerly was a Quantitative Analyst with Renaissance Investment Management, an
investment adviser.
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<PAGE>
Arvind K. Sachdeva, James C. Hunter, David S. Oda and James G. Tillar
are primarily responsible for managing the portfolio of the Balanced Fund. Mr.
Hunter has been employed as an Equity Analyst by Dean Investment Associates
since 1993. He previously was a Security Analyst for Star Bank, N.A. Mr. Oda,
Senior Fixed Income Analyst, has been employed by Dean Investment Associates
since 1990. Mr. Tillar, Assistant Vice President, has been employed by Dean
Investment Associates since 1987.
Newton Capital Management Ltd., 71 Queen Victoria Street, London,
England EC4V 4DR ("Newton Capital"), has been retained by Dean Investment
Associates to manage the investments of the International Value Fund. Newton
Capital is a United Kingdom investment advisory firm registered with the
Securities and Exchange Commission. Newton Capital is affiliated with Newton
Investment Management Ltd., an English investment advisory firm which has been
managing assets for institutional investors, mutual funds and individuals since
1977. Dean Investment Associates (not the Fund) pays Newton Capital a fee for
its services equal to the rate of .50% of the average value of the Fund's daily
net assets.
Paul Butler is International Equities Director for Newton Capital
Management and is primarily responsible for managing the portfolio of the
International Value Fund. Paul graduated from Cambridge University in 1986 with
a degree in Natural Sciences and joined Newton in 1987. Paul worked as an
International Equities analyst for five years before becoming a Portfolio
Manager in 1992. In 1993, Paul was appointed as a director of Newton and
promoted to his current position as Director of International Equities.
The Funds are responsible for the payment of all operating expenses,
including fees and expenses in connection with membership in investment company
organizations, brokerage fees and commissions, legal, auditing and accounting
expenses, expenses of registering shares under federal and state securities
laws, expenses related to the distribution of the Funds' shares (see
"Distribution Plans"), insurance expenses, taxes or governmental fees, fees and
expenses of the custodian, transfer agent and accounting and pricing agent of
the Funds, fees and expenses of members of the Board of Trustees who are not
interested persons of the Trust, the cost of preparing and distributing
prospectuses, statements, reports and other documents to shareholders, expenses
of shareholders' meetings and proxy solicitations, and such extraordinary or
non-recurring expenses as may arise, including litigation to which the Funds may
be a party and indemnification of the Trust's officers and Trustees with respect
thereto.
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<PAGE>
2480 Securities LLC, 2480 Kettering Tower, Dayton, Ohio (the
"Underwriter"), an affiliate of Dean Investment Associates, serves as principal
underwriter for the Funds and, as such, is the exclusive agent for the
distribution of shares of the Funds.
The Trust retains Countrywide Fund Services, Inc., P.O. Box 5354,
Cincinnati, Ohio 45201-5354 (the "Transfer Agent"), to serve as the Funds'
transfer agent, dividend paying agent and shareholder servicing agent. The
Transfer Agent is a wholly-owned indirect subsidiary of Countrywide Credit
Industries, Inc., a New York Stock Exchange listed company principally engaged
in residential mortgage lending.
The Transfer Agent also provides accounting and pricing services to the
Funds. The Transfer Agent receives a monthly fee from each Fund for calculating
daily net asset value per share and maintaining such books and records as are
necessary to enable it to perform its duties.
In addition, the Transfer Agent has been retained to provide
administrative services to the Funds. In this capacity, the Transfer Agent
supplies executive, administrative and regulatory services, supervises the
preparation of tax returns, and coordinates the preparation of reports to
shareholders and reports to and filings with the Securities and Exchange
Commission and state securities authorities. Each Fund pays the Transfer Agent a
fee for these administrative services at the annual rate of .10% of the average
value of its daily net assets up to $100,000,000, .075% of such assets from
$100,000,000 to $200,000,000 and .05% of such assets in excess of $200,000,000;
provided, however, that the minimum fee is $1,000 per month with respect to each
Fund.
Consistent with the Rules of Fair Practice of the National Association
of Securities Dealers, Inc., and subject to its objective of seeking best
execution of portfolio transactions, Dean Investment Associates, and with
respect to the International Value Fund, Newton Capital, may give consideration
to sales of shares of the Funds as a factor in the selection of brokers and
dealers to execute portfolio transactions of the Funds. Subject to the
requirements of the Investment Company Act of 1940 (the "1940 Act") and
procedures adopted by the Board of Trustees, the Funds may execute portfolio
transactions through any broker or dealer and pay brokerage commissions to a
broker (i) which is an affiliated person of the Trust, or (ii) which is an
affiliated person of such person, or (iii) an affiliated person of which is an
affiliated person of the Trust, Dean Investment Associates, Newton Capital or
the Underwriter.
Shares of each Fund have equal voting rights and liquidation rights,
and are voted in the aggregate and not by Fund except in matters where a
separate vote is required by the 1940 Act or when the matter affects only the
interests of a particular Fund. Each
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class of shares of a Fund shall vote separately on matters relating to its plan
of distribution pursuant to Rule 12b-1 (see "Distribution Plans"). When matters
are submitted to shareholders for a vote, each shareholder is entitled to one
vote for each full share owned and fractional votes for fractional shares owned.
The Trust does not normally hold annual meetings of shareholders. The Trustees
shall promptly call and give notice of a meeting of shareholders for the purpose
of voting upon the removal of any Trustee when requested to do so in writing by
shareholders holding 10% or more of the Trust's outstanding shares. The Trust
will comply with the provisions of Section 16(c) of the 1940 Act in order to
facilitate communications among shareholders.
DISTRIBUTION PLANS
CLASS A SHARES. Pursuant to Rule 12b-1 under the 1940 Act, the Funds
have adopted a plan of distribution (the "Class A Plan") under which the Funds'
Class A shares may directly incur or reimburse the Underwriter for certain
distribution-related expenses, including payments to securities dealers and
others who are engaged in the sale of shares of the Funds and who may be
advising investors regarding the purchase, sale or retention of Fund shares;
expenses of maintaining personnel who engage in or support distribution of
shares or who render shareholder support services not otherwise provided by the
Transfer Agent; expenses of formulating and implementing marketing and
promotional activities, including direct mail promotions and mass media
advertising; expenses of preparing, printing and distributing sales literature
and prospectuses and statements of additional information and reports for
recipients other than existing shareholders of the Funds; expenses of obtaining
such information, analyses and reports with respect to marketing and promotional
activities as the Trust may, from time to time, deem advisable; and any other
expenses related to the distribution of the Funds' Class A shares.
Pursuant to the Class A Plan, the Funds may make payments to dealers
and other persons, including the Underwriter and its affiliates, who may be
advising investors regarding the purchase, sale or retention of Class A shares.
The annual limitation for payment of expenses pursuant to the Class A Plan is
.25% of each Fund's average daily net assets allocable to Class A shares.
Unreimbursed expenditures will not be carried over from year to year. In the
event the Class A Plan is terminated by a Fund in accordance with its terms, the
Fund will not be required to make any payments for expenses incurred by the
Underwriter after the date the Class A Plan terminates.
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<PAGE>
CLASS C SHARES. Pursuant to Rule 12b-1 under the 1940 Act, the Funds
have adopted a plan of distribution (the "Class C Plan") which provides for two
categories of payments. First, the Class C Plan provides for the payment to the
Underwriter of an account maintenance fee, in an amount equal to an annual rate
of .25% of a Fund's average daily net assets allocable to Class C shares, which
may be paid to other dealers based on the average value of Fund shares owned by
clients of such dealers. In addition, the Class C shares may directly incur or
reimburse the Underwriter in an amount not to exceed .75% per annum of a Fund's
average daily net assets allocable to Class C shares for certain
distribution-related expenses incurred in the distribution and promotion of the
Fund's Class C shares, including payments to securities dealers and others who
are engaged in the sale of shares of the Funds and who may be advising investors
regarding the purchase, sale or retention of such shares; expenses of
maintaining personnel who engage in or support distribution of shares or who
render shareholder support services not otherwise provided by the Transfer
Agent; expenses of formulating and implementing marketing and promotional
activities, including direct mail promotions and mass media advertising;
expenses of preparing, printing and distributing sales literature and
prospectuses and statements of additional information and reports for recipients
other than existing shareholders of the Funds; expenses of obtaining such
information, analyses and reports with respect to marketing and promotional
activities as the Trust may, from time to time, deem advisable; and any other
expenses related to the distribution of the Funds' Class C shares.
Pursuant to the Class C Plan, the Funds may make payments to dealers
and other persons, including the Underwriter and its affiliates, who may be
advising investors regarding the purchase, sale or retention of Class C shares.
Unreimbursed expenditures will not be carried over from year to year. In the
event the Class C Plan is terminated by a Fund in accordance with its terms, the
Fund will not be required to make any payments for expenses incurred by the
Underwriter after the date the Class C Plan terminates. The Underwriter may make
payments to dealers and other persons in an amount up to .75% per annum of the
average value of Class C shares owned by their clients, in addition to the .25%
account maintenance fee described above.
GENERAL. Pursuant to the Plans, the Funds may also make payments to
banks or other financial institutions that provide shareholder services and
administer shareholder accounts. The Glass-Steagall Act prohibits banks from
engaging in the business of underwriting, selling or distributing securities.
Although the scope of this prohibition under the Glass-Steagall Act has not been
clearly defined by the courts or appropriate regulatory agencies, management of
the Trust believes that the Glass-
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<PAGE>
Steagall Act should not preclude a bank from providing such services. However,
state securities laws on this issue may differ from the interpretations of
federal law expressed herein and banks and financial institutions may be
required to register as dealers pursuant to state law. If a bank were prohibited
from continuing to perform all or a part of such services, management of the
Trust believes that there would be no material impact on the Funds or their
shareholders. Banks may charge their customers fees for offering these services
to the extent permitted by applicable regulatory authorities, and the overall
return to those shareholders availing themselves of the bank services will be
lower than to those shareholders who do not. The Funds may from time to time
purchase securities issued by banks which provide such services; however, in
selecting investments for the Funds, no preference will be shown for such
securities.
The National Association of Securities Dealers, in its Rules of Fair
Practice, places certain limitations on asset-based sales charges of mutual
funds. These Rules require fund-level accounting in which all sales charges -
front-end load, 12b-1 fees or contingent deferred load - terminate when a
percentage of gross sales is reached.
CALCULATION OF SHARE PRICE AND PUBLIC OFFERING PRICE
On each day that the Trust is open for business, the share price (net
asset value) of Class C shares and the public offering price (net asset value
plus applicable sales load) of Class A shares is determined as of the close of
the regular session of trading on the New York Stock Exchange, currently 4:00
p.m., Eastern time. The Trust is open for business on each day the New York
Stock Exchange is open for business and on any other day when there is
sufficient trading in a Fund's investments that its net asset value might be
materially affected. Securities held by the Fund may be primarily listed on
foreign exchanges or traded in foreign markets which are open on days (such as
Saturdays and U.S. holidays) when the New York Stock Exchange is not open for
business. As a result, the net asset value per share of the Fund may be
significantly affected by trading on days when the Trust is not open for
business. The net asset value per share of each Fund is calculated by dividing
the sum of the value of the securities held by the Fund plus cash or other
assets minus all liabilities (including estimated accrued expenses) by the total
number of shares outstanding of the Fund, rounded to the nearest cent.
U.S. Government obligations are valued at their most recent bid prices
as obtained from one or more of the major market makers for such securities.
Other portfolio securities are valued as follows: (i) securities which are
traded on stock exchanges or are quoted by NASDAQ are valued at the last
reported sale price as of the close of the regular session of trading on
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<PAGE>
the New York Stock Exchange on the day the securities are being valued, or, if
not traded on a particular day, at the closing bid price, (ii) securities traded
in the over-the-counter market, and which are not quoted by NASDAQ, are valued
at the last sale price (or, if the last sale price is not readily available, at
the last bid price as quoted by brokers that make markets in the securities) as
of the close of the regular session of trading on the New York Stock Exchange on
the day the securities are being valued, (iii) securities which are traded both
in the over-the-counter market and on a stock exchange are valued according to
the broadest and most representative market, and (iv) securities (and other
assets) for which market quotations are not readily available are valued at
their fair value as determined in good faith in accordance with consistently
applied procedures established by and under the general supervision of the Board
of Trustees. The net asset value per share of each Fund will fluctuate with the
value of the securities it holds.
PERFORMANCE INFORMATION
From time to time, each Fund may advertise its "average annual total
return." Each Fund may also advertise "yield." Both yield and average annual
total return figures are based on historical earnings and are not intended to
indicate future performance.
The "average annual total return" of a Fund refers to the average
annual compounded rates of return over the most recent 1, 5 and 10 year periods
or, where the Fund has not been in operation for such period, over the life of
the Fund (which periods will be stated in the advertisement) that would equate
an initial amount invested at the beginning of a stated period to the ending
redeemable value of the investment. The calculation of "average annual total
return" assumes the reinvestment of all dividends and distributions and the
deduction of the current maximum sales load from the initial investment. A Fund
may also advertise total return (a "nonstandardized quotation") which is
calculated differently from "average annual total return." A nonstandardized
quotation of total return may be a cumulative return which measures the
percentage change in the value of an account between the beginning and end of a
period, assuming no activity in the account other than reinvestment of dividends
and capital gains distributions. A nonstandardized quotation of total return may
also indicate average annual compounded rates of return over periods other than
those specified for "average annual total return." These nonstandardized returns
do not include the effect of the applicable sales load which, if included, would
reduce total return. A nonstandardized quotation of total return will always be
accompanied by a Fund's "average annual total return" as described above.
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<PAGE>
The "yield" of a Fund is computed by dividing the net investment income
per share earned during a thirty-day (or one month) period stated in the
advertisement by the maximum public offering price per share on the last day of
the period (using the average number of shares entitled to receive dividends).
The yield formula assumes that net investment income is earned and reinvested at
a constant rate and annualized at the end of a six-month period.
From time to time, the Funds may advertise their performance rankings
as published by recognized independent mutual fund statistical services such as
Lipper Analytical Services, Inc. ("Lipper"), or by publications of general
interest such as FORBES, MONEY, THE WALL STREET JOURNAL, BUSINESS WEEK,
BARRON'S, FORTUNE or MORNINGSTAR MUTUAL FUND VALUES. The Funds may also compare
their performance to that of other selected mutual funds, averages of the other
mutual funds within their categories as determined by Lipper, or recognized
indicators such as the Dow Jones Industrial Average and the Standard & Poor's
500 Stock Index. In connection with a ranking, the Funds may provide additional
information, such as the particular category of funds to which the ranking
relates, the number of funds in the category, the criteria upon which the
ranking is based, and the effect of fee waivers and/or expense reimbursements,
if any. The Funds may also present their performance and other investment
characteristics, such as volatility or a temporary defensive posture, in light
of Dean Investment Associates' or Newton Capital's view of current or past
market conditions or historical trends.
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<PAGE>
DEAN FAMILY OF FUNDS
2480 Kettering Tower
Dayton, Ohio 45423
BOARD OF TRUSTEES
Victor S. Curtis
Chauncey H. Dean
Robert D. Dean
Frank J. Perez
Dr. David H. Ponitz
Frank H. Scott
Gilbert P. Williamson
INVESTMENT ADVISER
C.H. DEAN & ASSOCIATES, INC.
2480 Kettering Tower
Dayton, Ohio 45423
UNDERWRITER
2480 SECURITIES LLC
2480 Kettering Tower
Dayton, Ohio 45423
TRANSFER AGENT
COUNTRYWIDE FUND SERVICES, INC.
P.O. Box 5354
Cincinnati, Ohio 45201-5354
SHAREHOLDER SERVICE
Nationwide: (Toll-Free) 888-899-8343
Cincinnati: 513-629-2285
TABLE OF CONTENTS PAGE
Expense Information. . . . . . . . . . . . . . . . . . . . .
Investment Objectives, Investment Policies and Risk
Considerations . . . . . . . . . . . . . . . . . . . . . . .
How To Purchase Shares . . . . . . . . . . . . . . . . . . .
Shareholder Services . . . . . . . . . . . . . . . . . . . .
How To Redeem Shares . . . . . . . . . . . . . . . . . . . .
Exchange Privilege . . . . . . . . . . . . . . . . . . . . .
Dividends and Distributions. . . . . . . . . . . . . . . . .
Taxes. . . . . . . . . . . . . . . . . . . . . . . . . . . .
Operation of the Funds . . . . . . . . . . . . . . . . . . .
Distribution Plans. . . . . . . . . . . . . . . . . . . . .
Calculation of Share Price and Public Offering Price . . . .
Performance Information. . . . . . . . . . . . . . . . . . .
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<PAGE>
No person has been authorized to give any information or to make any
representations, other than those contained in this Prospectus, in connection
with the offering contained in this Prospectus, and if given or made, such
information or representations must not be relied upon as being authorized by
the Trust. This Prospectus does not constitute an offer by the Trust to sell
shares in any State to any person to whom it is unlawful for the Trust to make
such offer in such State.
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<PAGE>
[Logo] DEAN
family of funds_______
[Logo]
Prospectus
October 1, 1997
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<PAGE>
DEAN FAMILY OF FUNDS
STATEMENT OF ADDITIONAL INFORMATION
October 1, 1997
Large Cap Value Fund
Small Cap Value Fund
Balanced Fund
International Value Fund
This Statement of Additional Information is not a prospectus. It should
be read in conjunction with the Prospectus of the Dean Family of Funds dated
October 1, 1997. A copy of the Funds' Prospectus can be obtained by writing the
Trust at 312 Walnut Street, 21st Floor, Cincinnati, Ohio 45202, or by calling
the Trust nationwide toll-free 888-899-8343.
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<PAGE>
STATEMENT OF ADDITIONAL INFORMATION
Dean Family of Funds
2480 Kettering Tower
Dayton, Ohio 45423
TABLE OF CONTENTS
THE TRUST..................................................... 3
DEFINITIONS, POLICIES AND RISK CONSIDERATIONS................. 4
QUALITY RATINGS OF CORPORATE BONDS AND PREFERRED STOCKS....... 13
INVESTMENT LIMITATIONS........................................ 15
TRUSTEES AND OFFICERS......................................... 17
THE INVESTMENT ADVISER........................................ 20
THE SUB-ADVISER............................................... 21
THE UNDERWRITER............................................... 21
DISTRIBUTION PLANS............................................ 22
SECURITIES TRANSACTIONS....................................... 23
PORTFOLIO TURNOVER............................................ 25
CALCULATION OF SHARE PRICE AND PUBLIC OFFERING PRICE.......... 25
OTHER PURCHASE INFORMATION.................................... 26
TAXES ..................................................... 27
REDEMPTION IN KIND............................................ 29
HISTORICAL PERFORMANCE INFORMATION............................ 30
CUSTODIAN..................................................... 32
AUDITORS ..................................................... 32
PRINCIPAL SECURITY HOLDERS.................................... 33
COUNTRYWIDE FUND SERVICES, INC................................ 33
STATEMENT OF ASSETS AND LIABILITIES AS OF MARCH 17, 1997...... 35
UNAUDITED FINANCIAL STATEMENTS AS OF AUGUST 31, 1997.......... 40
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THE TRUST
The Dean Family of Funds (the "Trust") was organized as an Ohio
business trust on December 18, 1996. The Trust currently offers four series of
shares to investors: the Large Cap Value Fund, the Small Cap Value Fund, the
Balanced Fund and the International Value Fund (referred to individually as a
"Fund" and collectively as the "Funds"). Each Fund has its own investment
objective(s) and policies.
Each share of a Fund represents an equal proportionate interest in the
assets and liabilities belonging to that Fund with each other share of that Fund
and is entitled to such dividends and distributions out of the income belonging
to the Fund as are declared by the Trustees. The shares do not have cumulative
voting rights or any preemptive or conversion rights, and the Trustees have the
authority from time to time to divide or combine the shares of any Fund into a
greater or lesser number of shares of that Fund so long as the proportionate
beneficial interest in the assets belonging to that Fund and the rights of
shares of any other Fund are in no way affected. In case of any liquidation of a
Fund, the holders of shares of the Fund being liquidated will be entitled to
receive as a class a distribution out of the assets, net of the liabilities,
belonging to that Fund. Expenses attributable to any Fund are borne by that
Fund. Any general expenses of the Trust not readily identifiable as belonging to
a particular Fund are allocated by or under the direction of the Trustees in
such manner as the Trustees determine to be fair and equitable. Generally, the
Trustees allocate such expenses on the basis of relative net assets or number of
shareholders. No shareholder is liable to further calls or to assessment by the
Trust without his express consent.
Both Class A shares and Class C shares of a Fund represent an interest
in the same assets of such Fund, have the same rights and are identical in all
material respects except that (i) Class C shares bear the expenses of higher
distribution fees; (ii) certain other class specific expenses will be borne
solely by the class to which such expenses are attributable, including transfer
agent fees attributable to a specific class of shares, printing and postage
expenses related to preparing and distributing materials to current shareholders
of a specific class, registration fees incurred by a specific class of shares,
the expenses of administrative personnel and services required to support the
shareholders of a specific class, litigation or other legal expenses relating to
a class of shares, Trustees' fees or expenses incurred as a result of issues
relating to a specific class of shares and accounting fees and expenses relating
to a specific class of shares; and (iii) each class has exclusive voting rights
with respect to matters relating to its own distribution arrangements. The Board
of Trustees may classify and reclassify the shares of a Fund into additional
classes of shares at a future date.
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<PAGE>
DEFINITIONS, POLICIES AND RISK CONSIDERATIONS
A more detailed discussion of some of the terms used and investment
policies described in the Prospectus (see "Investment Objectives and Policies")
appears below:
MAJORITY. As used in the Prospectus and this Statement of Additional
Information, the term "majority" of the outstanding shares of the Trust (or of
any Fund) means the lesser of (1) 67% or more of the outstanding shares of the
Trust (or the applicable Fund) present at a meeting, if the holders of more than
50% of the outstanding shares of the Trust (or the applicable Fund) are present
or represented at such meeting or (2) more than 50% of the outstanding shares of
the Trust (or the applicable Fund).
COMMERCIAL PAPER. Commercial paper consists of short-term (usually from
one to two hundred seventy days) unsecured promissory notes issued by
corporations in order to finance their current operations. The Funds will only
invest in commercial paper rated A-1 or A-2 by Standard & Poor's Ratings Group
("S&P") or Prime-1 or Prime-2 by Moody's Investors Service, Inc. ("Moody's") or
which, in the opinion of the investment Advisor, is of equivalent investment
quality. Certain notes may have floating or variable rates. Variable and
floating rate notes with a demand notice period exceeding seven days will be
subject to each Fund's restrictions on illiquid investments (see "Investment
Limitations") unless, in the judgment of the investment adviser, subject to the
direction of the Board of Trustees, such note is liquid.
The rating of Prime-1 is the highest commercial paper rating assigned
by Moody's. Among the factors considered by Moody's in assigning ratings are the
following: Evaluation of the management of the issuer; economic evaluation of
the issuer's industry or industries and an appraisal of speculative-type risks
which may be inherent in certain areas; evaluation of the issuer's products in
relation to competition and customer acceptance; liquidity; amount and quality
of long-term debt; trend of earnings over a period of 10 years; financial
strength of the parent company and the relationships which exist with the
issuer; and recognition by the management of obligations which may be present or
may arise as a result of public interest questions and preparations to meet such
obligations. These factors are all considered in determining whether the
commercial paper is rated Prime-1 or Prime-2. Commercial paper rated A-1
(highest quality) by S&P has the following characteristics: liquidity ratios are
adequate to meet cash requirements; long-term senior debt is rated "A" or
better, although in some cases "BBB" credits may be allowed; the issuer has
access to at least two additional channels of borrowing; basic earnings and cash
flow have an upward trend with allowance made for unusual
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<PAGE>
circumstances; typically, the issuer's industry is well established and the
issuer has a strong position within the industry; and the reliability and
quality of management are unquestioned. The relative strength or weakness of the
above factors determines whether the issuer's commercial paper is rated A-1 or
A-2.
BANK DEBT INSTRUMENTS. Bank debt instruments in which the Funds may
invest consist of certificates of deposit, bankers' acceptances and time
deposits issued by national banks and state banks, trust companies and mutual
savings banks, or banks or institutions the accounts of which are insured by the
Federal Deposit Insurance Corporation or the Federal Savings and Loan Insurance
Corporation. Certificates of deposit are negotiable certificates evidencing the
indebtedness of a commercial bank to repay funds deposited with it for a
definite period of time (usually from fourteen days to one year) at a stated or
variable interest rate. Bankers' acceptances are credit instruments evidencing
the obligation of a bank to pay a draft which has been drawn on it by a
customer, which instruments reflect the obligation both of the bank and of the
drawer to pay the face amount of the instrument upon maturity. Time deposits are
non-negotiable deposits maintained in a banking institution for a specified
period of time at a stated interest rate. Investments in time deposits maturing
in more than seven days will be subject to each Fund's restrictions on illiquid
investments (see "Investment Limitations").
REPURCHASE AGREEMENTS. Repurchase agreements are transactions by which
a Fund purchases a security and simultaneously commits to resell that security
to the seller at an agreed upon time and price, thereby determining the yield
during the term of the agreement. In the event of a bankruptcy or other default
of the seller of a repurchase agreement, a Fund could experience both delays in
liquidating the underlying security and losses. To minimize these possibilities,
each Fund intends to enter into repurchase agreements only with its Custodian,
with banks having assets in excess of $10 billion and with broker-dealers who
are recognized as primary dealers in U.S. Government obligations by the Federal
Reserve Bank of New York. Collateral for repurchase agreements is held in
safekeeping in the customer-only account of the Funds' Custodian at the Federal
Reserve Bank. A Fund will not enter into a repurchase agreement not terminable
within seven days if, as a result thereof, more than 15% of the value of its net
assets would be invested in such securities and other illiquid securities.
Although the securities subject to a repurchase agreement might bear
maturities exceeding one year, settlement for the repurchase would never be more
than one year after a Fund's acquisition of the securities and normally would be
within a
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<PAGE>
shorter period of time. The resale price will be in excess of the purchase
price, reflecting an agreed upon market rate effective for the period of time
the Fund's money will be invested in the securities, and will not be related to
the coupon rate of the purchased security. At the time a Fund enters into a
repurchase agreement, the value of the underlying security, including accrued
interest, will equal or exceed the value of the repurchase agreement, and in the
case of a repurchase agreement exceeding one day, the seller will agree that the
value of the underlying security, including accrued interest, will at all times
equal or exceed the value of the repurchase agreement. The collateral securing
the seller's obligation must be of a credit quality at least equal to the Fund's
investment criteria for portfolio securities and will be held by the Custodian
or in the Federal Reserve Book Entry System.
For purposes of the Investment Company Act of 1940, a repurchase
agreement is deemed to be a loan from a Fund to the seller subject to the
repurchase agreement and is therefore subject to that Fund's investment
restriction applicable to loans. It is not clear whether a court would consider
the securities purchased by a Fund subject to a repurchase agreement as being
owned by that Fund or as being collateral for a loan by the Fund to the seller.
In the event of the commencement of bankruptcy or insolvency proceedings with
respect to the seller of the securities before repurchase of the security under
a repurchase agreement, a Fund may encounter delay and incur costs before being
able to sell the security. Delays may involve loss of interest or decline in
price of the security. If a court characterized the transaction as a loan and a
Fund has not perfected a security interest in the security, that Fund may be
required to return the security to the seller's estate and be treated as an
unsecured creditor of the seller. As an unsecured creditor, a Fund would be at
the risk of losing some or all of the principal and income involved in the
transaction. As with any unsecured debt obligation purchased for a Fund, the
investment adviser seeks to minimize the risk of loss through repurchase
agreements by analyzing the creditworthiness of the obligor, in this case, the
seller. Apart from the risk of bankruptcy or insolvency proceedings, there is
also the risk that the seller may fail to repurchase the security, in which case
a Fund may incur a loss if the proceeds to that Fund of the sale of the security
to a third party are less than the repurchase price. However, if the market
value of the securities subject to the repurchase agreement becomes less than
the repurchase price (including interest), the Fund involved will direct the
seller of the security to deliver additional securities so that the market value
of all securities subject to the repurchase agreement will equal or exceed the
repurchase price. It is possible that a Fund will be unsuccessful in seeking to
enforce the seller's contractual obligation to deliver additional securities.
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<PAGE>
LOANS OF PORTFOLIO SECURITIES. Each Fund may lend its portfolio
securities subject to the restrictions stated in the Prospectus. Under
applicable regulatory requirements (which are subject to change), the loan
collateral must, on each business day, at least equal the value of the loaned
securities. To be acceptable as collateral, letters of credit must obligate a
bank to pay amounts demanded by a Fund if the demand meets the terms of the
letter. Such terms and the issuing bank must be satisfactory to the Fund. The
Funds receive amounts equal to the dividends or interest on loaned securities
and also receive one or more of (a) negotiated loan fees, (b) interest on
securities used as collateral, or (c) interest on short-term debt securities
purchased with such collateral; either type of interest may be shared with the
borrower. The Funds may also pay fees to placing brokers as well as custodian
and administrative fees in connection with loans. Fees may only be paid to a
placing broker provided that the Trustees determine that the fee paid to the
placing broker is reasonable and based solely upon services rendered, that the
Trustees separately consider the propriety of any fee shared by the placing
broker with the borrower, and that the fees are not used to compensate the
investment adviser or any affiliated person of the Trust or an affiliated person
of the investment adviser or other affiliated person. The terms of the Funds'
loans must meet applicable tests under the Internal Revenue Code and permit the
Funds to reacquire loaned securities on five days' notice or in time to vote on
any important matter.
WHEN-ISSUED SECURITIES AND SECURITIES PURCHASED ON A TO-BE-ANNOUNCED
BASIS. Each Fund will only make commitments to purchase securities on a
when-issued or to-be-announced ("TBA") basis with the intention of actually
acquiring the securities. In addition, each Fund may purchase securities on a
when-issued or TBA basis only if delivery and payment for the securities takes
place within 120 days after the date of the transaction. In connection with
these investments, each Fund will direct the Custodian to place cash or U.S.
Government obligations in a segregated account in an amount sufficient to make
payment for the securities to be purchased. When a segregated account is
maintained because a Fund purchases securities on a when-issued or TBA basis,
the assets deposited in the segregated account will be valued daily at market
for the purpose of determining the adequacy of the securities in the account. If
the market value of such securities declines, additional cash or securities will
be placed in the account on a daily basis so that the market value of the
account will equal the amount of a Fund's commitments to purchase securities on
a when-issued or TBA basis. To the extent funds are in a segregated account,
they will not be available for new investment or to meet redemptions. Securities
purchased on a when-issued or TBA basis and the securities held in a Fund's
portfolio are subject to changes in market value based upon changes in the level
of interest rates (which will
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generally result in all of those securities changing in value in the same way,
i.e., all those securities experiencing appreciation when interest rates decline
and depreciation when interest rates rise). Therefore, if in order to achieve
higher returns, a Fund remains substantially fully invested at the same time
that it has purchased securities on a when-issued or TBA basis, there will be a
possibility that the market value of the Fund's assets will have greater
fluctuation. The purchase of securities on a when-issued or TBA basis may
involve a risk of loss if the broker-dealer selling the securities fails to
deliver after the value of the securities has risen.
When the time comes for a Fund to make payment for securities purchased
on a when-issued or TBA basis, the Fund will do so by using then available cash
flow, by sale of the securities held in the segregated account, by sale of other
securities or, although it would not normally expect to do so, by directing the
sale of the securities purchased on a when-issued or TBA basis themselves (which
may have a market value greater or less than the Fund's payment obligation).
Although a Fund will only make commitments to purchase securities on a
when-issued or TBA basis with the intention of actually acquiring the
securities, the Fund may sell these securities before the settlement date if it
is deemed advisable by the investment adviser as a matter of investment
strategy.
WARRANTS AND RIGHTS. Warrants are options to purchase equity securities
at a specified price and are valid for a specific time period. Rights are
similar to warrants, but normally have a short duration and are distributed by
the issuer to its shareholders. Each Fund may purchase warrants and rights,
provided that the Fund does not invest more than 5% of its net assets at the
time of purchase in warrants and rights other than those that have been acquired
in units or attached to other securities. Of such 5%, no more than 2% of a
Fund's assets at the time of purchase may be invested in warrants which are not
listed on either the New York Stock Exchange or the American Stock Exchange.
STRIPS. STRIPS are U.S. Treasury bills, notes and bonds that have been
issued without interest coupons or stripped of their unmatured interest coupons,
interest coupons that have been stripped from such U.S. Treasury securities, and
receipts or certificates representing interests in such stripped U.S. Treasury
securities and coupons. A STRIPS security pays no interest in cash to its holder
during its life although interest is accrued for federal income tax purposes.
Its value to an investor consists of the difference between its face value at
the time of maturity and the price for which it was acquired, which is generally
an amount significantly less than its face value. Investing in STRIPS may help
to preserve capital during periods of declining interest rates.
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<PAGE>
STRIPS do not entitle the holder to any periodic payments of interest
prior to maturity. Accordingly, such securities usually trade at a deep discount
from their face or par value and will be subject to greater fluctuations of
market value in response to changing interest rates than debt obligations of
comparable maturities which make periodic distributions of interest. On the
other hand, because there are no periodic interest payments to be reinvested
prior to maturity, STRIPS eliminate the reinvestment risk and lock in a rate of
return to maturity. Current federal tax law requires that a holder of a STRIPS
security accrue a portion of the discount at which the security was purchased as
income each year even though the Fund received no interest payment in cash on
the security during the year.
FOREIGN SECURITIES. Subject to the Fund's investment policies and
quality and maturity standards, a Fund may invest in the securities (payable in
U.S. dollars) of foreign issuers. Because the Funds may invest in foreign
securities, an investment in the Funds involves risks that are different in some
respects from an investment in a fund which invests only in securities of U.S.
domestic issuers. Foreign investments may be affected favorably or unfavorably
by changes in currency rates and exchange control regulations. There may be less
publicly available information about a foreign company than about a U.S.
company, and foreign companies may not be subject to accounting, auditing and
financial reporting standards and requirements comparable to those applicable to
U.S. companies. There may be less governmental supervision of securities
markets, brokers and issuers of securities. Securities of some foreign companies
are less liquid or more volatile than securities of U.S. companies, and foreign
brokerage commissions and custodian fees are generally higher than in the United
States. Settlement practices may include delays and may differ from those
customary in United States markets. Investments in foreign securities may also
be subject to other risks different from those affecting U.S. investments,
including local political or economic developments, expropriation or
nationalization of assets, restrictions on foreign investment and repatriation
of capital, imposition of withholding taxes on dividend or interest payments,
currency blockage (which would prevent cash from being brought back to the
United States), and difficulty in enforcing legal rights outside the United
States.
FORWARD FOREIGN CURRENCY EXCHANGE CONTRACTS. The value of the
International Value Fund's portfolio securities which are invested in non-U.S.
dollar denominated instruments as measured in U.S. dollars may be affected
favorably or unfavorably by changes in foreign currency exchange rates and
exchange control regulations, and the Fund may incur costs in connection with
conversions between various currencies. The Fund will conduct its foreign
currency exchange transactions either on a spot (i.e., cash) basis at the spot
rate prevailing in the foreign
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<PAGE>
currency exchange market, or through forward contracts to purchase or sell
foreign currencies. A forward foreign currency exchange contract involves an
obligation to purchase or sell a specific currency at a future date, which may
be any fixed number of days from the date of the contract agreed upon by the
parties, at a price set at the time of the contract. These contracts are traded
directly between currency traders (usually large commercial banks) and their
customers. The Fund will not, however, hold foreign currency except in
connection with purchase and sale of foreign portfolio securities.
The International Value Fund will enter into forward foreign currency
exchange contracts as described hereafter. When the Fund enters into a contract
for the purchase or sale of a security denominated in a foreign currency, it may
desire to establish the cost or proceeds relative to another currency. The
forward contract may be denominated in U.S. dollars or may be a "cross-currency"
contract where the forward contract is denominated in a currency other than U.S.
dollars. However, this tends to limit potential gains which might result from a
positive change in such currency relationships.
The forecasting of a short-term currency market movement is extremely
difficult and the successful execution of a short-term hedging strategy is
highly uncertain. The International Value Fund may enter into such forward
contracts if, as a result, not more than 50% of the value of its total assets
would be committed to such contracts. Under normal circumstances, consideration
of the prospect for currency parities will be incorporated into the longer term
investment decisions made with regard to overall diversification strategies.
However, the Trustees believe that it is important to have the flexibility to
enter into forward contracts when the Sub-Adviser determines it to be in the
best interests of the Fund. The Custodian will segregate cash, U.S. Government
obligations or other liquid high-grade debt obligations in an amount not less
than the value of the Fund's total assets committed to foreign currency exchange
contracts entered into under this type of transaction. If the value of the
segregated securities declines, additional cash or securities will be added on a
daily basis, i.e., "marked to market," so that the segregated amount will not be
less than the amount of the Fund's commitments with respect to such contracts.
Generally, the International Value Fund will not enter into a forward
foreign currency exchange contract with a term of greater than 90 days. At the
maturity of the contract, the Fund may either sell the portfolio security and
make delivery of the foreign currency, or may retain the security and terminate
the obligation to deliver the foreign currency by purchasing an "offsetting"
forward contract with the same currency trader obligating the Fund to purchase,
on the same maturity date, the same amount of the foreign currency.
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<PAGE>
It is impossible to forecast with absolute precision the market value
of portfolio securities at the expiration of the contract. Accordingly, it may
be necessary for the Fund to purchase additional foreign currency on the spot
market (and bear the expense of such purchase) if the market value of the
security is less than the amount of foreign currency the Fund is obligated to
deliver and if a decision is made to sell the security and make delivery of the
foreign currency. Conversely, it may be necessary to sell on the spot market
some of the foreign currency received upon the sale of the portfolio security if
its market value exceeds the amount of foreign currency the Fund is obligated to
deliver.
If the International Value Fund retains the portfolio security and
engages in an offsetting transaction, the Fund will incur a gain or a loss (as
described below) to the extent that there has been movement in forward contract
prices. If the Fund engages in an offsetting transaction, it may subsequently
enter into a new forward contract to sell the foreign currency. Should forward
prices decline during the period between entering into a forward contract for
the sale of a foreign currency and the date the Fund enters into an offsetting
contract for the purchase of the foreign currency, the Fund will realize a gain
to the extent the price of the currency the Fund has agreed to sell exceeds the
price of the currency it has agreed to purchase. Should forward prices increase,
the Fund will suffer a loss to the extent the price of the currency the Fund has
agreed to purchase exceeds the price of the currency the Fund has agreed to
sell.
The International Value Fund's dealings in forward foreign currency
exchange contracts will be limited to the transactions described above. The Fund
is not required to enter into such transactions with regard to its foreign
currency-denominated securities and will not do so unless deemed appropriate by
the Sub-Adviser. It should also be realized that this method of protecting the
value of the Fund's portfolio securities against a decline in the value of a
currency does not eliminate fluctuations in the underlying prices of the
securities held by the Fund. It simply establishes a rate of exchange which one
can achieve at some future point in time. Additionally, although such contracts
tend to minimize the risk of loss due to a decline in the value of the hedged
currency, at the same time, they tend to limit any potential gain which might
result should the value of such currency increase.
WRITING COVERED CALL OPTIONS. Each Fund may write covered call options
on equity securities or futures contracts to earn premium income, to assure a
definite price for a security it has considered selling, or to close out options
previously purchased. A call option gives the holder (buyer) the right to
purchase a security or futures contract at a specified price (the exercise
price) at any time until a certain date (the expiration date). A call option is
"covered" if a Fund owns the underlying security subject to the call option at
all times during the option period.
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<PAGE>
A covered call writer is required to deposit in escrow the underlying security
in accordance with the rules of the exchanges on which the option is traded and
the appropriate clearing agency.
The writing of covered call options is a conservative investment
technique which Dean Investment Associates believes involves relatively little
risk. However, there is no assurance that a closing transaction can be effected
at a favorable price. During the option period, the covered call writer has, in
return for the premium received, given up the opportunity for capital
appreciation above the exercise price should the market price of the underlying
security increase, but has retained the risk of loss should the price of the
underlying security decline.
A Fund may write covered call options if, immediately thereafter, not
more than 30% of its net assets would be committed to such transactions. As long
as the Securities and Exchange Commission continues to take the position that
unlisted options are illiquid securities, a Fund will not commit more than 15%
of its net assets to unlisted covered call transactions and other illiquid
securities.
WRITING COVERED PUT OPTIONS. Each Fund may write covered put options on
equity securities and futures contracts to assure a definite price for a
security if it is considering acquiring the security at a lower price than the
current market price or to close out options previously purchased. A put option
gives the holder of the option the right to sell, and the writer has the
obligation to buy, the underlying security at the exercise price at any time
during the option period. The operation of put options in other respects is
substantially identical to that of call options. When a Fund writes a covered
put option, it maintains in a segregated account with its Custodian cash or
obligations in an amount not less than the exercise price at all times while the
put option is outstanding.
The risks involved in writing put options include the risk that a
closing transaction cannot be effected at a favorable price and the possibility
that the price of the underlying security may fall below the exercise price, in
which case a Fund may be required to purchase the underlying security at a
higher price than the market price of the security at the time the option is
exercised. A Fund may not write a put option if, immediately thereafter, more
than 25% of its net assets would be committed to such transactions.
OPTIONS TRANSACTIONS GENERALLY. Option transactions in which the Funds
may engage involve the specific risks described above as well as the following
risks: the writer of an option may be assigned an exercise at any time during
the option period;
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<PAGE>
disruptions in the markets for underlying instruments could result in losses for
options investors; imperfect or no correlation between the option and the
securities being hedged; the insolvency of a broker could present risks for the
broker's customers; and market imposed restrictions may prohibit the exercise of
certain options. In addition, the option activities of a Fund may affect its
portfolio turnover rate and the amount of brokerage commissions paid by a Fund.
The success of a Fund in using the option strategies described above depends,
among other things, on Dean Investment Associates' or the Sub-Adviser's ability
to predict the direction and volatility of price movements in the options,
futures contracts and securities markets and Dean Investment Associates' or the
Sub-Adviser's ability to select the proper time, type and duration of the
options.
QUALITY RATINGS OF CORPORATE BONDS AND PREFERRED STOCKS
The ratings of Moody's Investors Service, Inc. and Standard & Poor's
Ratings Group for corporate bonds in which the Funds may invest are as follows:
MOODY'S INVESTORS SERVICE, INC.
Aaa - Bonds which are rated Aaa are judged to be of the best quality.
They carry the smallest degree of investment risk and are generally referred to
as "gilt edge." Interest payments are protected by a large or by an
exceptionally stable margin and principal is secure. While the various
protective elements are likely to change, such changes as can be visualized are
most unlikely to impair the fundamentally strong position of such issues.
Aa - Bonds which are rated Aa are judged to be of high quality by all
standards. Together with the Aaa group they comprise what are generally known as
high grade bonds. They are rated lower than the best bonds because margins of
protection may not be as large as in Aaa securities or fluctuation of protective
elements may be of greater amplitude or there may be other elements present
which make the long-term risks appear somewhat larger than in Aaa securities.
A - Bonds which are rated A possess many favorable investment
attributes and are to be considered as upper medium grade obligations. Factors
giving security to principal and interest are considered adequate but elements
may be present which suggest a susceptibility to impairment sometime in the
future.
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<PAGE>
Baa - Bonds which are rated Baa are considered as medium grade
obligations, i.e., they are neither highly protected nor poorly secured.
Interest payments and principal security appear adequate for the present but
certain protective elements may be lacking or may be characteristically
unreliable over any great length of time. Such bonds lack outstanding investment
characteristics and in fact have speculative characteristics as well.
STANDARD & POOR'S RATINGS GROUP
AAA - Bonds rated AAA have the highest rating assigned by Standard &
Poor's to a debt obligation. Capacity to pay interest and repay principal is
extremely strong.
AA - Bonds rated AA have a very strong capacity to pay interest and
repay principal and differ from the highest rated issues only in small degree.
A - Bonds rated A have a strong capacity to pay interest and repay
principal although they are somewhat more susceptible to the adverse effects of
changes in circumstances and economic conditions than bonds in higher rated
categories.
BBB - Bonds rated BBB are regarded as having an adequate capacity to
pay interest and repay principal. Whereas they normally exhibit adequate
protection parameters, adverse economic conditions or changing circumstances are
more likely to lead to a weakened capacity to pay interest and repay principal
for bonds in this category than for bonds in higher rated categories.
The ratings of Moody's Investors Service, Inc. and Standard & Poor's
Ratings Group for preferred stocks in which the Funds may invest are as follows:
MOODY'S INVESTORS SERVICE, INC.
aaa - An issue which is rated aaa is considered to be a top-quality
preferred stock. This rating indicates good asset protection and the least risk
of dividend impairment within the universe of preferred stocks.
aa - An issue which is rated aa is considered a high-grade preferred
stock. This rating indicates that there is reasonable assurance that earnings
and asset protection will remain relatively well maintained in the foreseeable
future.
a - An issue which is rated a is considered to be an upper- medium
grade preferred stock. While risks are judged to be somewhat greater than in the
"aaa" and "aa" classifications, earnings and asset protection are, nevertheless,
expected to be maintained at adequate levels.
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<PAGE>
baa - An issue which is rated baa is considered to be medium grade,
neither highly protected nor poorly secured. Earnings and asset protection
appear adequate at present but may be questionable over any great length of
time.
STANDARD & POOR'S RATINGS GROUP
AAA - This is the highest rating that may be assigned by Standard &
Poor's to a preferred stock issue and indicates an extremely strong capacity to
pay the preferred stock obligations.
AA - A preferred stock issue rated AA also qualifies as a high-quality
fixed income security. The capacity to pay preferred stock obligations is very
strong, although not as overwhelming as for issues rated AAA.
A - An issue rated A is backed by a sound capacity to pay the preferred
stock obligations, although it is somewhat more susceptible to the diverse
effects of changes in circumstances and economic conditions.
BBB - An issue rated BBB is regarded as backed by an adequate capacity
to pay the preferred stock obligations. Whereas it normally exhibits adequate
protection parameters, adverse economic conditions or changing circumstances are
more likely to lead to a weakened capacity to make payments for a preferred
stock in this category than for issues in the A category.
INVESTMENT LIMITATIONS
The Trust has adopted certain fundamental investment limitations
designed to reduce the risk of an investment in each Fund. These limitations may
not be changed with respect to any Fund without the affirmative vote of a
majority of the outstanding shares of that Fund.
1. BORROWING MONEY. The Fund will not borrow money, except from a bank,
provided that immediately after such borrowing there is asset coverage of 300%
for all borrowings of the Fund. The Fund will not make any borrowing which would
cause its outstanding borrowings to exceed one-third of the value of its total
assets. This limitation is not applicable to when- issued purchases.
2. PLEDGING. The Fund will not mortgage, pledge, hypothecate or in any
manner transfer, as security for indebtedness, any security owned or held by the
Fund except as may be necessary in connection with borrowings described in
limitation (1) above. The Fund will not mortgage, pledge or hypothecate more
than one-third of its assets in connection with borrowings.
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<PAGE>
3. MARGIN PURCHASES. The Fund will not purchase any securities or
evidences of interest thereon on "margin" (except such short-term credits as are
necessary for the clearance of transactions or to the extent necessary to engage
in transactions described in the Prospectus and Statement of Additional
Information which involve margin purchases).
4. OPTIONS. The Fund will not purchase or sell puts, calls, options,
futures, straddles, commodities or commodities futures contracts except as
described in the Prospectus and Statement of Additional Information.
5. REAL ESTATE. The Fund will not purchase, hold or deal in real estate
or real estate mortgage loans, except that the Fund may purchase (a) securities
of companies (other than limited partnerships) which deal in real estate or (b)
securities which are secured by interests in real estate.
6. AMOUNT INVESTED IN ONE ISSUER. The Fund will not invest more than 5%
of its total assets in the securities of any issuer; provided, however, that
there is no limitation with respect to investments and obligations issued or
guaranteed by the United States Government or its agencies or instrumentalities
or repurchase agreements with respect thereto.
7. SHORT SALES. The Fund will not make short sales of securities, or
maintain a short position, other than short sales "against the box."
8. MINERAL LEASES. The Fund will not purchase oil, gas or other mineral
leases or exploration or development programs.
9. UNDERWRITING. The Fund will not act as underwriter of securities
issued by other persons, either directly or through a majority owned subsidiary.
This limitation is not applicable to the extent that, in connection with the
disposition of its portfolio securities (including restricted securities), the
Fund may be deemed an underwriter under certain federal securities laws.
10. ILLIQUID INVESTMENTS. The Fund will not purchase securities which
cannot be readily resold to the public because of legal or contractual
restrictions on resale or for which no readily available market exists or engage
in a repurchase agreement maturing in more than seven days if, as a result
thereof, more than 15% of the value of the Fund's net assets would be invested
in such securities.
11. CONCENTRATION. The Fund will not invest 25% or more of its total
assets in the securities of issuers in any particular industry; provided,
however, that there is no limitation with respect to investments in obligations
issued or guaranteed by the United States Government or its agencies or
instrumentalities or repurchase agreements with respect thereto.
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<PAGE>
12. INVESTING FOR CONTROL. The Fund will not invest in companies for
the purpose of exercising control.
13. OTHER INVESTMENT COMPANIES. The Fund will not invest more than 10%
of its total assets in securities of other investment companies. The Fund will
not invest more than 5% of its total assets in the securities of any single
investment company.
14. SENIOR SECURITIES. The Fund will not issue or sell any senior
security. This limitation is not applicable to short-term credit obtained by the
Fund for the clearance of purchases and sales or redemptions of securities, or
to arrangements with respect to transactions involving options, futures
contracts, short sales and other similar permitted investments and techniques.
15. LOANS. The Fund will not make loans to other persons, except (a) by
loaning portfolio securities, or (b) by engaging in repurchase agreements. For
purposes of this limitation, the term "loans" shall not include the purchase of
bonds, debentures, commercial paper or corporate notes, and similar marketable
evidences of indebtedness.
With respect to the percentages adopted by the Trust as maximum
limitations on each Fund's investment policies and restrictions, an excess above
the fixed percentage (except for the percentage limitations relative to the
borrowing of money and the holding of illiquid securities) will not be a
violation of the policy or restriction unless the excess results immediately and
directly from the acquisition of any security or the action taken.
The Trust does not intend to pledge, mortgage or hypothecate the assets
of any Fund. The statements of intention in this paragraph reflect
nonfundamental policies which may be changed by the Board of Trustees without
shareholder approval.
TRUSTEES AND OFFICERS
The following is a list of the Trustees and executive officers of the
Trust. Each Trustee who is an "interested person" of the Trust, as defined by
the Investment Company Act of 1940, is indicated by an asterisk.
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Estimated Annual
Compensation
NAME AGE POSITION HELD FROM THE TRUST
- ---- --- ------------- --------------
*Frank H. Scott 52 President/Trustee $ 0
*Chauncey H. Dean 72 Trustee 0
*Robert D. Dean 63 Trustee 0
*Victor S. Curtis 35 Trustee 0
+Frank J. Perez 53 Trustee 6,000
+David H. Ponitz 66 Trustee 6,000
+Gilbert P. Williamson 59 Trustee 6,000
Robert G. Dorsey 40 Vice President 0
Mark J. Seger 35 Treasurer 0
Tina D. Hosking 29 Secretary 0
John F. Splain 41 Asst. Secretary 0
* Mr. Scott, Mr. Chauncey Dean, Mr. Robert Dean and Mr.
Curtis, as affiliated persons of C.H. Dean & Associates,
Inc., the Trust's investment adviser, and 2480 Securities
LLC, the Trust's principal underwriter, are "interested
persons" of the Trust within the meaning of Section 2(a)(19)
of the Investment Company Act of 1940.
+ Member of Audit Committee.
The principal occupations of the Trustees and executive officers of the
Trust during the past five years are set forth below:
FRANK H. SCOTT, 2480 Kettering Tower, Dayton, Ohio 45423, is Senior
Vice President of C.H. Dean & Associates, Inc. (the investment adviser to the
Trust) and President of 2480 Securities LLC (the Trust's principal underwriter).
CHAUNCEY H. DEAN, 2480 Kettering Tower, Dayton, Ohio 45423, is Chairman
& Chief Executive Officer and the controlling shareholder of C.H. Dean &
Associates. He is also the controlling shareholder of 2480 Securities LLC.
ROBERT D. DEAN, 2480 Kettering Tower, Dayton, Ohio 45423, is President
and Chief Investment Officer of C.H. Dean & Associates. He previously was
Professor of Economics at the University of Memphis.
VICTOR S. CURTIS, 2480 Kettering Tower, Dayton, Ohio 45423, is
Portfolio Manager of C. H. Dean & Associates. He previously was Assistant Vice
President of Corporate Banking for PNC Bank.
FRANK J. PEREZ, 3535 Southern Blvd., Kettering, Ohio 45429 is President
and Chief Executive Officer of Kettering Medical Center.
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<PAGE>
DAVID H. PONITZ, 444 W. Third Street, Dayton, Ohio 45402, is President
of Sinclair Community College.
GILBERT P. WILLIAMSON, 2320 Kettering Tower, Dayton, Ohio 45423, is a
Director of S.C.O., Inc. (a software company), Retix, Inc. (a communications
company), Roberds, Inc. (a retail company) and Citizens Federal Bank. He
formerly was Chairman and Chief Executive Officer of NCR Corp.
ROBERT G. DORSEY, 312 Walnut Street, Cincinnati, Ohio 45202, is
President and Treasurer of Countrywide Fund Services, Inc. (a registered
transfer agent) and Treasurer of Countrywide Investments, Inc. (a registered
broker-dealer and investment adviser) and Countrywide Financial Services, Inc.
(a financial services company and parent of Countrywide Fund Services, Inc. and
Countrywide Investments, Inc.) He is also Vice President of Brundage, Story and
Rose Investment Trust, PRAGMA Investment Trust, Markman MultiFund Trust, The New
York State Opportunity Funds and Maplewood Investment Trust and Assistant Vice
President of Interactive Investments, Schwartz Investment Trust, The Tuscarora
Investment Trust, Williamsburg Investment Trust and The Gannett Welsh & Kotler
Funds (all of which are registered investment companies).
MARK J. SEGER, C.P.A., 312 Walnut Street, Cincinnati, Ohio 45202, is
Vice President of Countrywide Financial Services, Inc. and Vice President and
Chief Operating Officer of Countrywide Fund Services, Inc. He is also Treasurer
of Countrywide Investment Trust, Countrywide Tax-Free Trust, Countrywide
Strategic Trust, Brundage, Story and Rose Investment Trust, Markman MultiFund
Trust, PRAGMA Investment Trust, Williamsburg Investment Trust, The New York
State Opportunity Funds and Maplewood Investment Trust and Assistant Treasurer
of Interactive Investments, Schwartz Investment Trust, The Tuscarora Investment
Trust and The Gannett Welsh & Kotler Funds.
TINA D. HOSKING, 312 Walnut Street, Cincinnati, Ohio 45202, is
Assistant Vice President and Counsel of Countrywide Fund Services, Inc. She is
also Secretary of PRAGMA Investment Trust and The New York State Opportunity
Funds and Assistant Secretary of The Gannett Welsh & Kotler Funds.
JOHN F. SPLAIN, 312 Walnut Street, Cincinnati, Ohio 45202, is Secretary
and General Counsel of Countrywide Fund Services, Inc., Countrywide Investments,
Inc. and Countrywide Financial Services, Inc. He is also Secretary of
Countrywide Investment Trust, Countrywide Tax-Free Trust, Countrywide Strategic
Trust, Brundage, Story and Rose Investment Trust, Markman MultiFund Trust, The
Tuscarora Investment Trust, Williamsburg Investment Trust and Maplewood
Investment Trust and Assistant Secretary of Interactive Investments, Schwartz
Investment Trust, PRAGMA Investment Trust, The New York State Opportunity Funds
and The Gannett Welsh & Kotler Funds.
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Each non-interested Trustee will receive an annual retainer of $2,000
and a $1,000 fee for each Board meeting attended and will be reimbursed for
travel and other expenses incurred in the performance of their duties.
THE INVESTMENT ADVISER
C.H. Dean & Associates, Inc. ("Dean Investment Associates") is the
Funds' investment manager. Chauncey H. Dean is the controlling shareholder of
Dean Investment Associates. Mr. Dean, by reason of such affiliation, may
directly or indirectly receive benefits from the advisory fees paid to Dean
Investment Associates. Mr. Dean is also the controlling shareholder of the
Trust's principal underwriter, 2480 Securities LLC.
Under the terms of the advisory agreements between the Trust and Dean
Investment Associates, Dean Investment Associates manages the Funds'
investments. The Large Cap Value Fund, the Small Cap Value Fund and the Balanced
Fund each pay Dean Investment Associates a fee computed and accrued daily and
paid monthly at an annual rate of 1.00% of its average daily net assets. The
International Value Fund pays Dean Investment Associates a fee computed and
accrued daily and paid monthly at an annual rate of 1.25% of its average daily
net assets.
The Funds are responsible for the payment of all expenses incurred in
connection with the organization, registration of shares and operations of the
Funds, including such extraordinary or non-recurring expenses as may arise, such
as litigation to which the Trust may be a party. The Funds may have an
obligation to indemnify the Trust's officers and Trustees with respect to such
litigation, except in instances of willful misfeasance, bad faith, gross
negligence or reckless disregard by such officers and Trustees in the
performance of their duties. The compensation and expenses of any officer,
Trustee or employee of the Trust who is an officer, director, employee or
stockholder of Dean Investment Associates are paid by Dean Investment
Associates.
By its terms, the advisory agreement on behalf of each Fund will remain
in force until April 1, 1999 and from year to year thereafter, subject to annual
approval by (a) the Board of Trustees or (b) a vote of the majority of a Fund's
outstanding voting securities; provided that in either event continuance is also
approved by a majority of the Trustees who are not interested persons of the
Trust, by a vote cast in person at a meeting called for the purpose of voting
such approval. Each of the Trust's advisory agreements may be terminated at any
time, on sixty days' written notice, without the payment of any penalty, by the
Board of Trustees, by a vote of the majority of a Fund's outstanding voting
securities, or by Dean Investment Associates. Each of the advisory agreements
automatically terminates in the event of its assignment, as defined by the
Investment Company Act of 1940 and the rules thereunder.
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Dean Investment Associates may use the name "Dean" or any derivation
thereof in connection with any registered investment company or other business
enterprise with which it is or may become associated.
THE SUB-ADVISER
Newton Capital Management Ltd. (the "Sub-Adviser") has been retained to
manage the investments of the International Value Fund. The Sub-Adviser is a
United Kingdom investment advisory firm registered with the Securities and
Exchange Commission. Newton is affiliated with Newton Investment Management
Ltd., an English investment advisory firm which has been managing assets for
institutional investors, mutual funds and individuals since 1977. The Adviser
(not the Fund) pays the Sub-Adviser a fee computed and accrued daily and paid
monthly at an annual rate of .50% of the average value of the Fund's daily net
assets.
By its terms, the Trust's Sub-Advisory Agreement will remain in force
until April 1, 1999 and from year to year thereafter, subject to annual approval
by (a) the Board of Trustees or (b) a vote of the majority of the International
Value Fund's outstanding voting securities; provided that in either event
continuance is also approved by a majority of the Trustees who are not
interested persons of the Trust, by a vote cast in person at a meeting called
for the purpose of voting on such approval. The Trust's Sub-Advisory Agreement
may be terminated at any time, on sixty days' written notice, without the
payment of any penalty, by the Board of Trustees, by a vote of the majority of
the International Value Fund's outstanding voting securities, or by the Adviser
or Sub-Adviser. The Sub-Advisory Agreement automatically terminates in the event
of its assignment, as defined by the Investment Company Act of 1940 and the
rules thereunder.
THE UNDERWRITER
2480 Securities LLC (the "Underwriter") is the principal underwriter of
the Funds and, as such, is the exclusive agent for distribution of shares of the
Funds. The Underwriter is obligated to sell the shares on a best efforts basis
only against purchase orders for the shares. Shares of each Fund are offered to
the public on a continuous basis.
The Underwriter currently allows concessions to dealers who sell shares
of the Funds. The Underwriter receives that portion of the sales load which is
not reallowed to the dealers who sell shares of the Funds. The Underwriter
retains the entire sales load on all direct initial investments in the Funds and
on all investments in accounts with no designated dealer of record. The
Underwriter bears promotional expenses in connection with the distribution of
the Funds' shares to the extent that such expenses are not assumed by the Funds
under their plans of distribution.
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The Funds may compensate dealers, including the Underwriter and its
affiliates, based on the average balance of all accounts in the Funds for which
the dealer is designated as the party responsible for the account. See
"Distribution Plans" below.
DISTRIBUTION PLANS
CLASS A SHARES -- As stated in the Prospectus, the Funds have adopted a
plan of distribution with respect to the Class A shares of the Funds (the "Class
A Plan") pursuant to Rule 12b-1 under the Investment Company Act of 1940 which
permits each Fund to pay for expenses incurred in the distribution and promotion
of that Fund's Class A shares, including but not limited to, the printing of
prospectuses, statements of additional information and reports used for sales
purposes, advertisements, expenses of preparation and printing of sales
literature, promotion, marketing and sales expenses, and other
distribution-related expenses, including any distribution fees paid to
securities dealers or other firms who have executed a distribution or service
agreement with the Underwriter. The Class A Plan expressly limits payment of the
distribution expenses listed above in any fiscal year to a maximum of .25% of
the average daily net assets of a Fund allocable to its Class A shares.
Unreimbursed expenses will not be carried over from year to year.
CLASS C SHARES -- The Funds have also adopted a plan of distribution
(the "Class C Plan") with respect to the Class C shares of the Funds. The Class
C Plan provides for two categories of payments. First, the Class C Plan provides
for the payment to the Underwriter of an account maintenance fee, in an amount
equal to an annual rate of .25% of the average daily net assets of a Fund
allocable to its Class C shares, which may be paid to other dealers based on the
average value of the Fund's Class C shares owned by clients of such dealers. In
addition, a Fund may pay up to an additional .75% per annum of that Fund's daily
net assets allocable to its Class C shares for expenses incurred in the
distribution and promotion of the shares, including but not limited to,
prospectus costs for prospective shareholders, costs of responding to
prospective shareholder inquiries, payments to brokers and dealers for selling
and assisting in the distribution of Class C shares, costs of advertising and
promotion and any other expenses related to the distribution of the Class C
shares. Unreimbursed expenditures will not be carried over from year to year.
The Funds may make payments to dealers and other persons in an amount up to .75%
per annum of the average value of Class C shares owned by their clients, in
addition to the .25% account maintenance fee described above.
The continuance of the Plans must be specifically approved at least
annually by a vote of the Trust's Board of Trustees and by a vote of the
Trustees who are not interested persons of the Trust and have no direct or
indirect financial interest in the Plans (the "Independent Trustees") at a
meeting called for the purpose of voting on such continuance. A Plan may be
terminated
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at any time by a vote of a majority of the Independent Trustees or by a vote of
the holders of a majority of the outstanding shares of a Fund or the applicable
class of a Fund. In the event a Plan is terminated in accordance with its terms,
the affected Fund (or class) will not be required to make any payments for
expenses incurred by the Underwriter after the termination date. The Plans may
not be amended to increase materially the amount to be spent for distribution
without shareholder approval. All material amendments to the Plans must be
approved by a vote of the Trust's Board of Trustees and by a vote of the
Independent Trustees.
In approving the Plans, the Trustees determined, in the exercise of
their business judgment and in light of their fiduciary duties as Trustees, that
there is a reasonable likelihood that the Plans will benefit the Funds and their
shareholders. The Board of Trustees believes that expenditure of the Funds'
assets for distribution expenses under the Plans should assist in the growth of
the Funds which will benefit the Funds and their shareholders through increased
economies of scale, greater investment flexibility, greater portfolio
diversification and less chance of disruption of planned investment strategies.
The Plans will be renewed only if the Trustees make a similar determination for
each subsequent year of the Plans. There can be no assurance that the benefits
anticipated from the expenditure of the Funds' assets for distribution will be
realized. While the Plans are in effect, all amounts spent by the Funds pursuant
to the Plans and the purposes for which such expenditures were made must be
reported quarterly to the Board of Trustees for its review. Distribution
expenses attributable to the sale of more than one class of shares of a Fund
will be allocated at least annually to each class of shares based upon the ratio
in which the sales of each class of shares bears to the sales of all the shares
of such Fund. In addition, the selection and nomination of those Trustees who
are not interested persons of the Trust are committed to the discretion of the
Independent Trustees during such period.
By reason of his ownership of shares of Dean Investment Associates,
Chauncey H. Dean may be deemed to have a financial interest in the operation of
the Plans.
SECURITIES TRANSACTIONS
Decisions to buy and sell securities for the Funds and the placing of
the Funds' securities transactions and negotiation of commission rates where
applicable are made by Dean Investment Associates and are subject to review by
the Board of Trustees of the Trust. In the purchase and sale of portfolio
securities, Dean Investment Associates seeks best execution for the Funds,
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taking into account such factors as price (including the applicable brokerage
commission or dealer spread), the execution capability, financial responsibility
and responsiveness of the broker or dealer and the brokerage and research
services provided by the broker or dealer. Dean Investment Associates generally
seeks favorable prices and commission rates that are reasonable in relation to
the benefits received.
The Funds may attempt to deal directly with the dealers who make a
market in the securities involved unless better prices and execution are
available elsewhere. Such dealers usually act as principals for their own
account. On occasion, portfolio securities for the Funds may be purchased
directly from the issuer.
Dean Investment Associates is specifically authorized to select brokers
who also provide brokerage and research services to the Funds and/or other
accounts over which Dean Investment Associates exercises investment discretion
and to pay such brokers a commission in excess of the commission another broker
would charge if Dean Investment Associates determines in good faith that the
commission is reasonable in relation to the value of the brokerage and research
services provided. The determination may be viewed in terms of a particular
transaction or Dean Investment Associates' overall responsibilities with respect
to the Funds and to accounts over which it exercises investment discretion.
Research services include securities and economic analyses, reports on
issuers' financial conditions and future business prospects, newsletters and
opinions relating to interest trends, general advice on the relative merits of
possible investment securities for the Funds and statistical services and
information with respect to the availability of securities or purchasers or
sellers of securities. Although this information is useful to the Funds and Dean
Investment Associates, it is not possible to place a dollar value on it.
Research services furnished by brokers through whom the Funds effect securities
transactions may be used by Dean Investment Associates in servicing all of its
accounts and not all such services may be used by Dean Investment Associates in
connection with the Funds.
The Funds have no obligation to deal with any broker or dealer in the
execution of securities transactions. However, the Underwriter and other
affiliates of the Trust or Dean Investment Associates may effect securities
transactions which are executed on a national securities exchange or
transactions in the over-the-counter market conducted on an agency basis. No
Fund will effect any brokerage transactions in its portfolio securities with
Dean Investment Associates if such transactions would be unfair or unreasonable
to its shareholders. Over-the-counter
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transactions will be placed either directly with principal market makers or with
broker-dealers. Although the Funds do not anticipate any ongoing arrangements
with other brokerage firms, brokerage business may be transacted from time to
time with other firms. Neither Dean Investment Associates nor affiliates of the
Trust or the Underwriter will receive reciprocal brokerage business as a result
of the brokerage business transacted by the Funds with other brokers.
CODE OF ETHICS. The Trust and Dean Investment Associates and the
Sub-Adviser have each adopted a Code of Ethics under Rule 17j-1 of the
Investment Company Act of 1940. The Code significantly restricts the personal
investing activities of all employees of the Trust, Dean Investment Associates
and the Sub- Adviser. No employee may purchase or sell any security which at the
time is being purchased or sold (as the case may be), or to the knowledge of the
employee, is being considered for purchase or sale by any Fund.
PORTFOLIO TURNOVER
A Fund's portfolio turnover rate is calculated by dividing the lesser
of purchases or sales of portfolio securities for the fiscal year by the monthly
average of the value of the portfolio securities owned by the Fund during the
fiscal year. High portfolio turnover involves correspondingly greater brokerage
commissions and other transaction costs, which will be borne directly by the
Funds. Dean Investment Associates anticipates that each Fund's portfolio
turnover rate normally will not exceed 100%. A 100% turnover rate would occur if
all of a Fund's portfolio securities were replaced once within a one year
period.
Generally, each Fund intends to invest for long-term purposes. However,
the rate of portfolio turnover will depend upon market and other conditions, and
it will not be a limiting factor when Dean Investment Associates or, when
appropriate, the Sub-Adviser, believes that portfolio changes are appropriate.
CALCULATION OF SHARE PRICE AND PUBLIC OFFERING PRICE
The share price (net asset value) and the public offering price (net
asset value plus applicable sales load) of the shares of each Fund are
determined as of the close of the regular session of trading on the New York
Stock Exchange (currently 4:00 p.m., Eastern time), on each day the Trust is
open for business. The Trust is open for business on every day except Saturdays,
Sundays and the following holidays: New Year's Day, Martin Luther King, Jr. Day,
President's Day, Good Friday, Memorial Day, Independence Day, Labor Day,
Thanksgiving Day and Christmas Day. The Trust may also be open for business on
other days in which there is sufficient trading in a Fund's portfolio securities
that
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its net asset value might be materially affected. For a description of the
methods used to determine the share price and the public offering price, see
"Calculation of Share Price and Public Offering Price" in the Prospectus.
The value of non-dollar denominated portfolio instruments held by the
International Value Fund will be determined by converting all assets and
liabilities initially expressed in foreign currency values into U.S. dollar
values at the mean between the bid and offered quotations of such currencies
against U.S. dollars as last quoted by any recognized dealer. If such quotations
are not available, the rate of exchange will be determined in accordance with
policies established in good faith by the Board of Trustees. Gains or losses
between trade and settlement dates resulting from changes in exchange rates
between the U.S. dollar and a foreign currency are borne by the International
Value Fund. To protect against such losses, the Fund may enter into forward
foreign currency exchange contracts, which will also have the effect of limiting
any such gains.
OTHER PURCHASE INFORMATION
The Prospectus describes generally how to purchase shares of the Funds.
Additional information with respect to certain types of purchases of shares of
the Class A shares of the Funds is set forth below.
RIGHT OF ACCUMULATION. A "purchaser" (as defined in the Prospectus) of
shares of a Fund has the right to combine the cost or current net asset value
(whichever is higher) of his existing Class A shares of any Fund in the Dean
Family of Funds with the amount of his current purchases in order to take
advantage of the reduced sales loads set forth in the tables in the Prospectus.
The purchaser or his dealer must notify Countrywide Fund Services, Inc.
("Countrywide") that an investment qualifies for a reduced sales load. The
reduced load will be granted upon confirmation of the purchaser's holdings by
Countrywide.
LETTER OF INTENT. The reduced sales loads set forth in the tables in
the Prospectus may also be available to any "purchaser" (as defined in the
Prospectus) of shares of a Fund who submits a Letter of Intent to Countrywide.
The Letter must state an intention to invest within a thirteen month period in
any Fund in the Dean Family of Funds a specified amount which, if made at one
time, would qualify for a reduced sales load. A Letter of Intent may be
submitted with a purchase at the beginning of the thirteen month period or
within ninety days of the first purchase under the Letter of Intent. Upon
acceptance of this Letter, the purchaser becomes eligible for the reduced sales
load applicable to the level of investment covered by such Letter of Intent as
if the entire amount were invested in a single transaction.
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<PAGE>
The Letter of Intent is not a binding obligation on the purchaser to
purchase, or the Trust to sell, the full amount indicated. During the term of a
Letter of Intent, shares representing 5% of the intended purchase will be held
in escrow. These shares will be released upon the completion of the intended
investment. If the Letter of Intent is not completed during the thirteen month
period, the applicable sales load will be adjusted by the redemption of
sufficient shares held in escrow, depending upon the amount actually purchased
during the period. The minimum initial investment under a Letter of Intent is
$10,000.
A ninety-day backdating period can be used to include earlier purchases
at the purchaser's cost (without a retroactive downward adjustment of the sales
charge). The thirteen month period would then begin on the date of the first
purchase during the ninety-day period. No retroactive adjustment will be made if
purchases exceed the amount indicated in the Letter of Intent. The purchaser or
his dealer must notify Countrywide that an investment is being made pursuant to
an executed Letter of Intent.
OTHER INFORMATION. The Trust either does not impose a front-end sales
load or imposes a reduced sales load in connection with purchases of shares of a
Fund made under the reinvestment privilege or the purchases described in the
"Reduced Sales Load," "Purchases at Net Asset Value" or "Exchange Privilege"
sections in the Prospectus because such purchases require minimal sales effort
by Dean Investment Associates. Purchases described in the "Purchases at Net
Asset Value" section may be made for investment only, and the shares may not be
resold except through redemption by or on behalf of the Trust.
TAXES
The Prospectus describes generally the tax treatment of distributions
by the Funds. This section of the Statement of Additional Information includes
additional information concerning federal taxes.
Each Fund intends to qualify for the special tax treatment afforded a
"regulated investment company" under Subchapter M of the Internal Revenue Code
so that it does not pay federal taxes on income and capital gains distributed to
shareholders. To so qualify a Fund must, among other things, (i) derive at least
90% of its gross income in each taxable year from dividends, interest, payments
with respect to securities loans, gains from the sale or other disposition of
stock, securities or foreign currency, or certain other income (including but
not limited to gains from options, futures and forward contracts) derived with
respect to its business of investing in stock, securities or currencies and (ii)
diversify its holdings so that at the end of each quarter of its taxable year
the following two conditions are
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met: (a) at least 50% of the value of the Fund's total assets is represented by
cash, U.S. Government securities, securities of other regulated investment
companies and other securities (for this purpose such other securities will
qualify only if the Fund's investment is limited in respect to any issuer to an
amount not greater than 5% of the Fund's assets and 10% of the outstanding
voting securities of such issuer) and (b) not more than 25% of the value of the
Fund's assets is invested in securities of any one issuer (other than U.S.
Government securities or securities of other regulated investment companies).
A Fund's net realized capital gains from securities transactions will
be distributed only after reducing such gains by the amount of any available
capital loss carryforwards. Capital losses may be carried forward to offset any
capital gains for eight years, after which any undeducted capital loss remaining
is lost as a deduction.
A federal excise tax at the rate of 4% will be imposed on the excess,
if any, of a Fund's "required distribution" over actual distributions in any
calendar year. Generally, the "required distribution" is 98% of a Fund's
ordinary income for the calendar year plus 98% of its net capital gains
recognized during the one year period ending on October 31 of the calendar year
plus undistributed amounts from prior years. The Funds intend to make
distributions sufficient to avoid imposition of the excise tax.
The Trust is required to withhold and remit to the U.S. Treasury a
portion (31%) of dividend income on any account unless the shareholder provides
a taxpayer identification number and certifies that such number is correct and
that the shareholder is not subject to backup withholding.
Investments by the International Value Fund in certain options, futures
contracts and options on futures contracts are "section 1256 contracts." Any
gains or losses on section 1256 contracts are generally considered 60% long-term
and 40% short-term capital gains or losses ("60/40"). Section 1256 contracts
held by the International Value Fund at the end of each taxable year are treated
for federal income tax purposes as being sold on such date for their fair market
value. The resultant paper gains or losses are also treated as 60/40 gains or
losses. When the section 1256 contract is subsequently disposed of, the actual
gain or loss will be adjusted by the amount of any preceding year-end gain or
loss. The use of section 1256 contracts may force the International Value Fund
to distribute to shareholders paper gains that have not yet been realized in
order to avoid federal income tax liability.
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Foreign currency gains or losses on non-U.S. dollar denominated bonds
and other similar debt instruments and on any non-U.S. dollar denominated
futures contracts, options and forward contracts that are not section 1256
contracts generally will be treated as ordinary income or loss.
Certain hedging transactions undertaken by the International Value Fund
may result in "straddles" for federal income tax purposes. The straddle rules
may affect the character of gains (or losses) realized by the International
Value Fund. In addition, losses realized by the International Value Fund on
positions that are part of a straddle may be deferred, rather than being taken
into account in calculating taxable income for the taxable year in which such
losses are realized. Because only a few regulations implementing the straddle
rules have been promulgated, the tax consequences of hedging transactions to the
International Value Fund are not entirely clear. The hedging transactions may
increase the amount of short-term capital gain realized by the International
Value Fund which is taxed as ordinary income when distributed to shareholders.
The International Value Fund may make one or more of the elections available
under the Internal Revenue Code of 1986, as amended, which are applicable to
straddles. If the International Value Fund makes any of the elections, the
amount, character and timing of the recognition of gains or losses from the
affected straddle positions will be determined under rules that vary according
to the elections made. The rules applicable under certain of the elections
operate to accelerate the recognition of gains or losses from the affected
straddle positions. Because application of the straddle rules may affect the
character of gains or losses, defer losses and/or accelerate the recognition of
gains or losses from the affected straddle positions, the amount which must be
distributed to shareholders, and which will be taxed to shareholders as ordinary
income or long-term capital gain in any year, may be increased or decreased
substantially as compared to a fund that did not engage in such hedging
transactions.
The diversification requirements applicable to the International Value
Fund's assets may limit the extent to which the International Value Fund will be
able to engage in transactions in options, futures contracts or options on
futures contracts.
REDEMPTION IN KIND
Under unusual circumstances, when the Board of Trustees deems it in the
best interests of a Fund's shareholders, the Fund may make payment for shares
repurchased or redeemed in whole or in part in securities of the Fund taken at
current value. If any such redemption in kind is to be made, each Fund intends
to make an election pursuant to Rule 18f-1 under the Investment Company
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Act of 1940. This election will require the Funds to redeem shares solely in
cash up to the lesser of $250,000 or 1% of the net asset value of each Fund
during any 90 day period for any one shareholder. Should payment be made in
securities, the redeeming shareholder will generally incur brokerage costs in
converting such securities to cash. Portfolio securities which are issued in an
in-kind redemption will be readily marketable.
HISTORICAL PERFORMANCE INFORMATION
From time to time, each Fund may advertise average annual total return.
Average annual total return quotations will be computed by finding the average
annual compounded rates of return over 1, 5 and 10 year periods that would
equate the initial amount invested to the ending redeemable value, according to
the following formula:
P (1 + T)n = ERV
Where:
P = a hypothetical initial payment of $1,000
T = average annual total return
n = number of years
ERV = ending redeemable value of a hypothetical $1,000
payment made at the beginning of the 1, 5 and 10 year periods
at the end of the 1, 5 or 10 year periods (or fractional
portion thereof)
The calculation of average annual total return assumes the reinvestment
of all dividends and distributions and the deduction of the current maximum
sales load from the initial $1,000 payment. If a Fund has been in existence less
than one, five or ten years, the time period since the date of the initial
public offering of shares will be substituted for the periods stated. Each Fund
may also advertise total return (a "non-standardized quotation") which is
calculated differently from average annual total return. A nonstandardized
quotation of total return may be a cumulative return which measures the
percentage change in the value of an account between the beginning and end of a
period, assuming no activity in the account other than reinvestment of dividends
and capital gains distributions. This computation does not include the effect of
the applicable sales load which, if included, would reduce total return. A
nonstandardized quotation may also indicate average annual compounded rates of
return without including the effect of the applicable sales load or over periods
other than those specified for average annual total return. A nonstandardized
quotation of total return will always be accompanied by the Fund's average
annual total return as described above.
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From time to time, each of the Funds may advertise its yield. A yield
quotation is based on a 30-day (or one month) period and is computed by dividing
the net investment income per share earned during the period by the maximum
offering price per share on the last day of the period, according to the
following formula:
Yield = 2[(a-b/cd +1)6 -1]
Where:
a = dividends and interest earned during the period
b = expenses accrued for the period (net of reimbursements)
c = the average daily number of shares outstanding during
the period that were entitled to receive dividends
d = the maximum offering price per share on the last day of
the period
Solely for the purpose of computing yield, dividend income is
recognized by accruing 1/360 of the stated dividend rate of the security each
day that a Fund owns the security. Generally, interest earned (for the purpose
of "a" above) on debt obligations is computed by reference to the yield to
maturity of each obligation held based on the market value of the obligation
(including actual accrued interest) at the close of business on the last
business day prior to the start of the 30-day (or one month) period for which
yield is being calculated, or, with respect to obligations purchased during the
month, the purchase price (plus actual accrued interest). With respect to the
treatment of discount and premium on mortgage or other receivables-backed
obligations which are expected to be subject to monthly paydowns of principal
and interest, gain or loss attributable to actual monthly paydowns is accounted
for as an increase or decrease to interest income during the period and discount
or premium on the remaining security is not amortized.
To help investors better evaluate how an investment in a Fund might
satisfy their investment objective, advertisements regarding each Fund may
discuss various measures of Fund performance, including current performance
ratings and/or rankings appearing in financial magazines, newspapers and
publications which track mutual fund performance. Advertisements may also
compare performance (using the calculation methods set forth in the Prospectus)
to performance as reported by other investments, indices and averages. When
advertising current ratings or rankings, the Funds may use the following
publications or indices to discuss or compare Fund performance:
Lipper Mutual Fund Performance Analysis measures total return for the
mutual fund industry and ranks individual mutual fund performance over specified
time periods assuming reinvestment of all distributions, exclusive of sales
loads. In
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addition, the Funds may use comparative performance information appearing in
relevant indices, including the S&P 500 Index, the Dow Jones Industrial Average,
and the Russell 2000 Index. The S&P 500 Index is an unmanaged index of 500
stocks, the purpose of which is to portray the pattern of common stock price
movement. The Dow Jones Industrial Average is a measurement of general market
price movement for 30 widely held stocks listed on the New York Stock Exchange.
The Russell 2000 Index is an unmanaged index comprised of the 2,000 smallest
U.S. domiciled publicly-traded common stocks in the Russell 3000 Index (an
unmanaged index of the 3,000 largest U.S. domiciled publicly-traded common
stocks by market capitalization). The International Value Fund may compare its
performance to the Europe, Australia and Far East Index, which is generally
considered to be representative of the performance of unmanaged common stocks
that are publicly traded in the securities markets located outside the United
States.
In assessing such comparisons of performance an investor should keep in
mind that the composition of the investments in the reported indices and
averages is not identical to the Funds' portfolios, that the averages are
generally unmanaged and that the items included in the calculations of such
averages may not be identical to the formula used by the Funds to calculate
their performance. In addition, there can be no assurance that the Funds will
continue this performance as compared to such other averages.
CUSTODIAN
Bank One Trust Company, N.A., 100 East Broad Street, Columbus, Ohio,
has been retained to act as Custodian for the investments of the Large Cap Value
Fund, the Small Cap Value Fund and the Balanced Fund. Bank One acts as each
Fund's depository, safekeeps its portfolio securities, collects all income and
other payments with respect thereto, disburses funds as instructed and maintains
records in connection with its duties.
The Northern Trust Company, 50 South LaSalle Street, Chicago, Illinois,
has been retained to act as Custodian for the investments of the International
Value Fund. Northern Trust acts as the Fund's depository, safekeeps its
portfolio securities, collects all income and other payments with respect
thereto, disburses funds as instructed and maintains records in connection with
its duties.
AUDITORS
The firm of Ernst & Young LLP has been selected as independent auditors
for the Trust for the fiscal year ending March 31, 1998. Ernst & Young LLP, 1300
Chiquita Center, Cincinnati, Ohio, performs an annual audit of the Trust's
financial statements and advises the Trust as to certain accounting matters.
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PRINCIPAL SECURITY HOLDERS
As of September 19, 1997, Merrill Lynch Pierce Fenner & Smith - Mutual
Fund Operations, 4800 Deer Lake Drive East, 3rd Floor, Jacksonville, Florida,
owned of record 31.4% of the outstanding Class A shares of the Large Cap Value
Fund, 89.3% of the outstanding Class C shares of the Large Cap Value Fund, 30.0%
of the outstanding Class A shares of the Small Cap Value Fund, 90.9% of the
outstanding Class C shares of the Small Cap Value Fund, 27.2% of the outstanding
Class A shares of the Balanced Fund and 97.0% of the outstanding Class C shares
of the Balanced Fund. Merrill Lynch Pierce Fenner & Smith - Mutual Fund
Operations may be deemed to control the Class A and Class C shares of the Large
Cap Value Fund, the Small Cap Value Fund and the Balanced Fund by virtue of the
fact that they own of record more than 25% of such shares. As of September 19,
1997, Chauncey H. Dean and Zada G. Dean, 7777 Taylorsville Road, Huber Heights,
Ohio, owned of record 47.0% of the outstanding Class A shares of the Large Cap
Value Fund, 43.2% of the outstanding Class A shares of the Small Cap Value Fund
and 45.0% of the outstanding Class A shares of the Balanced Fund. Chauncey H.
Dean and Zada G. Dean may be deemed to control the Class A shares of the Large
Cap Value Fund, the Small Cap Value Fund and the Balanced Fund by virtue of the
fact that they own of record more than 25% of such shares. As of September 19,
1997, Zada G. Dean, 7777 Taylorsville Road, Huber Heights, Ohio, owned of record
15.9% of the outstanding Class A shares of the Large Cap Value Fund, 7.4% of the
outstanding Class A shares of the Small Cap Value Fund and 15.1% of the
outstanding Class A shares of the Balanced Fund. As of September 19, 1997,
McDonald & Co., C/FBO Ellen Emmel IRA, 2159 Deer Meadow Drive, Cincinnati, Ohio,
owned of record 10.7% of the outstanding Class C shares of the Large Cap Value
Fund. For purposes of voting on matters submitted to shareholders, any person
who owns more than 50% of the outstanding shares of a Fund generally would be
able to cast the deciding vote.
As of September 19, 1997, the Trustees and officers of the Trust as a
group owned of record and beneficially 47.0% of the outstanding Class A shares
of the Large Cap Value Fund, 43.2% of the outstanding Class A shares of the
Small Cap Value Fund and 45.0% of the outstanding Class A shares of the Balanced
Fund and less than 1% of the outstanding shares of each other Fund (or Class
thereof).
COUNTRYWIDE FUND SERVICES, INC.
The Trust's transfer agent, Countrywide Fund Services, Inc.
("Countrywide"), maintains the records of each shareholder's account, answers
shareholders' inquiries concerning their accounts, processes purchases and
redemptions of the Funds' shares, acts as dividend and distribution disbursing
agent and
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<PAGE>
performs other shareholder service functions. Countrywide receives for its
services as transfer agent a fee from the Fund payable monthly at an annual rate
of $20 per account from each of the Funds; provided, however, that the minimum
fee is $1,200 per month for each class of shares of a Fund. In addition, the
Funds pay out-of-pocket expenses, including but not limited to, postage,
envelopes, checks, drafts, forms, reports, record storage and communication
lines.
Countrywide also provides accounting and pricing services to the Funds.
For calculating daily net asset value per share and maintaining such books and
records as are necessary to enable Countrywide to perform its duties, each Fund
will pay Countrywide a fee in accordance with the following schedule:
AVERAGE MONTHLY NET ASSETS MONTHLY FEE
$ 0 - $ 50,000,000 $3,000
50,000,000 - 100,000,000 3,500
100,000,000 - 200,000,000 4,000
200,000,000 - 300,000,000 5,000
Over 300,000,000 6,000 + .001%
of average monthly
net assets.
In addition, each Fund pays all costs of external pricing services.
Countrywide also provides administrative services to the Funds. In this
capacity, Countrywide supplies non-investment related statistical and research
data, internal regulatory compliance services and executive and administrative
services. Countrywide supervises the preparation of tax returns, reports to
shareholders of the Funds, reports to and filings with the Securities and
Exchange Commission and state securities commissions, and materials for meetings
of the Board of Trustees. For the performance of these administrative services,
each Fund pays Countrywide a fee at the annual rate of .10% of the average value
of its daily net assets up to $100,000,000, .075% of such assets from
$100,000,000 to $200,000,000 and .05% of such assets in excess of $200,000,000;
provided, however, that the minimum fee is $1,000 per month for each Fund.
- 34 -
<PAGE>
LARGE CAP VALUE FUND
SMALL CAP VALUE FUND
BALANCED FUND
OF
DEAN FAMILY OF FUNDS
STATEMENT OF ASSETS AND LIABILITIES
AS OF
MARCH 17, 1997
TOGETHER WITH
AUDITORS' REPORT
- 35 -
<PAGE>
REPORT OF INDEPENDENT AUDITORS
To the Board of Trustees and Shareholder
Dean Family of Funds:
We have audited the accompanying statement of assets and liabilities of Dean
Family of Funds (comprised of the Large Cap Value Fund, the Small Cap Value
Fund, and the Balanced Fund)(the Fund) as of March 17, 1997. This statement of
assets and liabilities is the responsibility of the Fund's management. Our
responsibility is to express an opinion on this statement of assets and
liabilities based on our audit.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the statement of assets and liabilities is free of
material misstatements. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the statement of assets and
liabilities. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
statement of assets and liabilities presentation. We believe that our audit
provides a reasonable basis for our opinion.
In our opinion, the statement of assets and liabilities referred to above
presents fairly, in all material respects, the financial position of each of the
portfolios comprising Dean Family of Funds at March 17, 1997, in conformity with
generally accepted accounting principles.
/s/ Ernst & Young, LLP
Ernst & Young, LLP
Cincinnati, Ohio
March 18, 1997
- 36 -
<PAGE>
DEAN FAMILY OF FUNDS
STATEMENT OF ASSETS AND LIABILITIES
AS OF MARCH 17, 1997
<TABLE>
<CAPTION>
LARGE CAP SMALL CAP
VALUE VALUE BALANCED
FUND FUND FUND
ASSETS:
<S> <C> <C> <C>
Cash $34,000 $33,000 $33,000
Organization costs (Note 2) 17,000 17,000 17,000
------- ------- -------
Total assets 51,000 50,000 50,000
------- ------- -------
LIABILITIES:
Accrued expenses (Note 2) 17,000 17,000 17,000
------- ------- -------
Total Liabilities 17,000 17,000 17,000
------- ------- -------
Net assets for shares of
beneficial interest
outstanding (Note 1) $34,000 $33,000 $33,000
======= ======= =======
Shares outstanding (Note 1) 3,400 3,300 3,300
======= ======= =======
Net asset value per share $10.00 $10.00 $10.00
======= ======= =======
</TABLE>
- 37 -
<PAGE>
DEAN FAMILY OF FUNDS
NOTES TO STATEMENT OF ASSETS AND LIABILITIES
AS OF MARCH 17, 1997
(1) The Dean Family of Funds (the Trust) is an open-end management
investment company established as an Ohio business trust under
a Declaration of Trust dated December 18, 1996. The Trust has
established three fund series to date, the Large Cap Value
Fund, the Small Cap Value Fund and the Balanced Fund (the
Funds). The Funds each offer two classes of shares: Class A
shares (sold subject to maximum front-end sales load of 5.25%
and a distribution fee of up to 0.25% of average daily net
assets of each Fund) and Class C shares (sold subject to
maximum contingent deferred sales load of 1% if redeemed
within a one-year period from purchase and a distribution fee
of up to 1% of average daily net assets). Each Class A and
Class C share of the Fund represents identical interests in
the Fund's investment portfolio and has the same rights,
except that (i) Class C shares bear the expenses of higher
distribution fees, which is expected to cause Class C shares
to have a higher expense ratio and to pay lower dividends than
Class A shares; (ii) certain other class specific expenses
will be borne solely by the class to which such expenses are
attributable; and (iii) each class has exclusive voting rights
with respect to matters relating to its own distribution
arrangements.
The Trust has had no operations except for the initial issuance of
Class A shares. On March 17, 1997, 3,400 shares, 3,300 shares and 3,300
shares of each fund, respectively, were issued for cash at $10.00 per
share.
(2) Expenses incurred in connection with the organization of the
Funds and the initial offering of shares are estimated to be
$51,000, which includes $45,000 paid to Countrywide Fund
Services, Inc., the Trust's administrator. These expenses
have been paid by Dean Investment Associates (the Adviser).
Upon commencement of the public offering of shares of the
Funds, the Funds will reimburse the Adviser for such expenses,
with that amount being capitalized and amortized on a
straight-line basis over five years. As of March 17, 1997,
all outstanding shares of the Funds were held by the Adviser,
who purchased these initial shares in order to provide the
Trust with its required capital. In the event the initial
shares of the Funds are redeemed by any holder thereof at any
time prior to the complete amortization of organizational
expenses, the redemption proceeds payable with respect to such
shares will be reduced by the pro rata share (based upon the
- 38 -
<PAGE>
portion of the shares redeemed in relation to the required
capitalization) of the unamortized deferred organizational expenses as
of the date of such redemption.
(3) Reference is made to the Prospectus and this Statement of Additional
Information for a description of the Management Agreement, the
Underwriting Agreement, the Distribution Expense Plan, the
Administration Agreement, tax aspects of the Funds and the calculation
of the net asset value of shares of each Fund.
- 39 -
<PAGE>
DEAN FAMILY OF FUNDS:
LARGE CAP VALUE FUND
SMALL CAP VALUE FUND
BALANCED FUND
INTERIM REPORT
August 31, 1997
(Unaudited)
<PAGE>
<TABLE>
DEAN FAMILY OF FUNDS
STATEMENTS OF CHANGES IN NET ASSETS
For the Five Months Ended August 31, 1997 (Unaudited)
<CAPTION>
DEAN DEAN
LARGE CAP SMALL CAP DEAN
VALUE VALUE BALANCED
FUND FUND FUND
<S> <C> <C> <C>
FROM OPERATIONS:
Net investment income $ 7,693 $ 19,997 $ 26,014
Net realized gains from security transactions 18,360 136,897 50,339
Net change in unrealized appreciation/
depreciation on investments 222,500 1,024,805 215,738
------------- ------------ -----------
Net increase in net assets from operations 248,553 1,181,699 292,091
------------- ------------ -----------
FROM DISTRIBUTIONS TO SHAREHOLDERS:
Dividends from net investment income, Class A (3,594) -- (9,211)
Dividends from net investment income, Class C -- -- --
------------- ------------ -----------
Decrease in net assets from distributions to shareholders (3,594) -- (9,211)
------------- ------------ -----------
FROM CAPITAL SHARE TRANSACTIONS (A):
CLASS A
Proceeds from shares sold 6,424,350 13,609,409 6,512,148
Net asset value of shares issued in
reinvestment of distributions to shareholders 3,308 -- 8,412
Payments for shares redeemed (2,022) (20,673) (52,988)
------------ ----------- -----------
Net increase in net assets from Class A share transactions 6,425,636 13,588,736 6,467,572
------------ ----------- -----------
CLASS C
Proceeds from shares sold 5,908 134,547 192,512
Net asset value of shares issued in
reinvestment of distributions to shareholders -- -- --
Payments for shares redeemed -- -- --
------------ ----------- -----------
Net increase in net assets from Class C share transactions 5,908 134,547 192,512
------------ ----------- -----------
Net increase from capital share transactions 6,431,544 13,723,283 6,660,084
------------ ----------- -----------
TOTAL INCREASE IN NET ASSETS 6,676,503 14,904,982 6,942,964
NET ASSETS:
Beginning of period 34,000 33,000 33,000
------------ ----------- -----------
End of period $ 6,710,503 $14,937,982 $ 6,975,964
============ =========== ===========
UNDISTRIBUTED NET INVESTMENT INCOME $ 4,099 $ 19,997 $ 16,803
============ =========== ===========
(A) Summary of capital share activity:
CLASS A
Shares sold 623,339 1,311,686 637,212
Shares issued in reinvestment of distributions to shareholders 325 -- 835
Shares redeemed (201) (1,813) (4,911)
------------ ----------- -----------
Net increase in shares outstanding 623,463 1,309,873 633,136
Shares outstanding, beginning of period 3,400 3,300 3,300
------------ ----------- -----------
Shares outstanding, end of period 626,863 1,313,173 636,436
============ =========== ===========
CLASS C
Shares sold 549 12,194 18,031
Shares issued in reinvestment of distributions to shareholder -- -- --
Shares redeemed -- -- --
------------ ----------- -----------
Net increase in shares outstanding 549 12,194 18,031
Shares outstanding, beginning of period -- -- --
------------ ----------- -----------
Shares outstanding, end of period 549 12,194 18,031
============ =========== ===========
See accompanying notes to financial statements.
</TABLE>
<PAGE>
<TABLE>
DEAN FAMILY OF FUNDS
FINANCIAL HIGHLIGHTS
Per Share Data for a Share Outstanding Throughout Each period
<CAPTION>
DEAN LARGE CAP VALUE FUND DEAN SMALL CAP VALUE FUND
Class A Class C Class A Class C
Period Period Period Period
Ended Ended Ended Ended
August 31, 1997 (A) August 31, 1997 (A) August 31, 1997 (A) August 31, 1997(A)
(Unaudited) (Unaudited) (Unaudited) (Unaudited)
Net asset value at beginning of period $ 10.00 $ 10.76 $ 10.00 $ 10.95
---------- -------- ------------ -------------
Income from investment operations:
Net investment income 0.02 0.00 0.02 --
Net realized and unrealized gains
(losses) on investments 0.69 (0.07) 1.25 0.31
---------- -------- ------------ -------------
Total from investment operations 0.71 (0.07) 1.27 0.31
---------- -------- ------------ -------------
Less distributions:
Dividends from net investment income (0.01) -- -- --
Distributions from net realized gains -- -- -- --
---------- -------- ------------ -------------
Total distributions (0.01) -- -- --
---------- -------- ------------ -------------
Net asset value at end of period $ 10.70 $ 10.69 $ 11.27 $ 11.26
========== ======== ============ =============
Total return (B) 7.11% (0.65)% 12.70% 2.83%
========== ======== ============ =============
Net assets at end of period $ 6,704,634 $ 5,869 $ 14,800,643 $ 137,339
========== ======== ============ =============
Ratio of expenses to average net assets:
Before waiver of fees by Adviser 2.82% 3.51% 2.12% 2.86%
========== ======== ============ =============
After waiver of fees by Adviser 1.82% 2.51% 1.80% 2.54%
========== ======== ============ =============
Ratio of net investment income (loss) to
average net assets (C) 0.63% (1.47)% 0.83% (0.16)%
Portfolio turnover rate (C) 20% 20% 51% 51%
Average commission rate per share $ 0.0600 $ 0.0600 $ 0.0600 $ 0.0600
<PAGE>
<CAPTION>
DEAN BALANCED FUND
Class A Class C
Period Period
Ended Ended
August 31, 1997 (A) August 31, 1997 (A)
(Unaudited) (Unaudited)
<S> <C> <C>
Net asset value at beginning of period $ 10.00 $ 10.71
---------- --------
Income from investment operations:
Net investment income 0.05 --
Net realized and unrealized gains
(losses) on investments 0.63 (0.06)
---------- --------
Total from investment operations 0.68 (0.06)
---------- --------
Less distributions:
Dividends from net investment income (0.03) --
Distributions from net realized gains -- --
---------- --------
Total distributions (0.03) --
---------- --------
Net asset value at end of period $ 10.65 $ 10.65
========== ========
Total return (B) 6.86% (0.56)%
========== ========
Net assets at end of period $ 6,783,871 $192,093
========== ========
Ratio of expenses to average net assets:
Before waiver of fees by Adviser 2.80% 3.54%
After waiver of fees by Adviser 1.80% 2.54%
Ratio of net investment income (loss) to
average net assets (C) 2.06% 0.68%
Portfolio turnover rate (C) 44% 44%
Average commission rate per share $ 0.0600 $ 0.0600
<FN>
(A) Represents the period from the initial public offering of shares (May 28,
1997 for Class A shares of each Fund) through August 31, 1997.
The initial public purchase of shares was August 1, 1997 for Class C shares
of the Small Cap Value Fund and the Balanced Fund, and August 19, 1997 for
Class C shares of the Large Cap Value Fund.
(B) The total returns shown do not include the effect of applicable
sales loads.
(C) Annualized.
</FN>
See accompanying notes to financial statements.
</TABLE>
<PAGE>
- 40 -
DEAN FAMILY OF FUNDS
NOTES TO FINANCIAL STATEMENTS
August 31, 1997
(Unaudited)
1. ORGANIZATION
The Dean Family of Funds (the Trust) is registered under the Investment Company
Act of 1940, as amended (the 1940 Act), as an open-end management investment
company. The Trust was organized as an Ohio business trust under a Declaration
of Trust dated December 18, 1996. The Trust has established three fund series to
date, the Large Cap Value Fund, the Small Cap Value Fund and the Balanced Fund
(the Funds).
The Large Cap Value Fund seeks to provide growth of capital over the long-term
by investing primarily in the common stocks of large companies.
The Small Cap Value Fund seeks to provide capital appreciation by investing
primarily in the common stocks of small companies.
The Balanced Fund seeks to preserve capital while producing a high total return
by allocating its assets among equity securities, fixed-income securities and
money market instruments.
The Funds each offer two classes of shares: Class A shares (sold subject to a
maximum front-end sales load of 5.25% and a distribution fee of up to 0.25% of
the average daily net assets of each Fund) and Class C shares (sold subject to a
maximum contingent deferred sales load of 1% if redeemed within a one-year
period from purchase and a distribution fee of up to 1% of average daily net
assets). Each Class A and Class C share of a Fund represents identical interests
in the Fund's investment portfolio and has the same rights, except that (i)
Class C shares bear the expenses of higher distribution fees, which is expected
to cause Class C shares to have a higher expense ratio and to pay lower
dividends than Class A shares; (ii) certain other class specific expenses will
be borne solely by the class to which such expense are attributable; and (iii)
each class has exclusive voting rights with respect to matters relating to its
own distribution arrangements.
2. SIGNIFICANT ACCOUNTING POLICIES
The following is a summary of the Trust's significant accounting policies:
Security valuation -- The Funds' portfolio securities are valued as of the close
of business of the regular session of trading on the New York Stock Exchange
(currently 4:00 p.m., Eastern time). Securities traded on a national stock
exchange or quoted by NASDAQ are valued based upon the closing price on the
principal exchange where the security is traded, or, if not traded on a
particular day, at the closing bid price. U.S. Government obligations are valued
at their most recent bid prices as obtained from one or more of the major market
makers for such securities.
Share valuation -- The net asset value per share of each class of shares of each
Fund is calculated daily by dividing the total value of a Fund's assets
attributable to that class, less liabilities attributable to that class, by the
number of shares of that class outstanding. The maximum offering price of Class
A shares of each Fund is equal to the net asset value per share plus a sales
load equal to 5.54% of the net asset value (or 5.25% of the offering price). The
offering price of Class C shares of each Fund is equal to the net asset value
per share.
<PAGE>
DEAN FAMILY OF FUNDS
NOTES TO FINANCIAL STATEMENTS
August 31, 1997
(Unaudited)
The redemption price per share of Class A shares and Class C shares of each Fund
is equal to net asset value per share. However, Class C shares of each Fund are
subject to a contingent deferred sales load of 1% of the original purchase price
if redeemed within a one-year period from the date of purchase.
Investment income -- Dividend income is recorded on the ex-dividend date.
Interest income is accrued as earned. Discounts and premiums on securities
purchased are amortized in accordance with income tax regulations which
approximate generally accepted accounting principles.
Distributions to shareholders -- The Large Cap Value Fund and the Balanced Fund
each expects to distribute substantially all of its net investment income, if
any, on a quarterly basis. The Small Cap Value Fund expects to distribute
substantially all of its net investment income, if any, on an annual basis. Each
Fund expects to distribute any net realized long-term capital gains at least
once each year. Management will determine the timing and frequency of the
distributions of any net realized short-term capital gains.
Organization expenses -- Expenses of organization have been capitalized and are
being amortized on a straight-line basis over five years. In the event any of
the initial shares of the Fund are redeemed during the amortization period, the
redemption proceeds will be reduced by a pro rata portion of any unamortized
organization expenses in the same proportion as the number of initial shares
being redeemed bears to the number of initial shares of the Fund outstanding at
the time of the redemption.
Security transactions -- Security transactions are accounted for on the trade
date. Securities sold are valued on a specific identification basis.
Estimates -- The preparation of financial statements in conformity with
generally accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and liabilities at
the date of the financial statements and the reported amounts of revenues and
expenses during the reporting period. Actual results could differ from those
estimates.
Federal income tax -- It is each Fund's policy to comply with the special
provisions of the Internal Revenue Code available to regulated investment
companies. As provided therein, in any fiscal year in which a Fund so qualifies
and distributes at least 90% of its taxable net income, the Fund (but not the
shareholders) will be relieved of federal income tax on the income distributed.
Accordingly, no provision for income taxes has been made.
In order to avoid imposition of the excise tax applicable to regulated
investment companies, it is also each Fund's intention to declare as dividends
in each calendar year at least 98% of its net investment income (earned during
the calendar year) and 98% of its net realized capital gains (earned during the
twelve months ended October 31) plus undistributed amounts from prior years.
<PAGE>
DEAN FAMILY OF FUNDS
NOTES TO FINANCIAL STATEMENTS
August 31, 1997
(Unaudited)
The following information is based upon the federal income tax cost of portfolio
investments as of August 31, 1997:
<TABLE>
<CAPTION>
LARGE CAP SMALL CAP
VALUE VALUE BALANCED
FUND FUND FUND
<S> <C> <C> <C>
Gross unrealized appreciation $ 336,703 $ 1,301,309 $ 270,948
Gross unrealized depreciation (114,203) (276,504) (55,210)
------------ ----------- -----------
Net unrealized appreciation $ 222,500 $ 1,024,805 $ 215,738
============ =========== ===========
</TABLE>
The Federal income tax cost of portfolio investments is equal to book cost as
shown on the statement of assets and liabilities.
3. INVESTMENT TRANSACTIONS
During the five months ended August 31, 1997, purchases and proceeds from sales
of portfolio securities, other than short-term investments, amounted to
$6,495,388 and $132,582, respectively, for the Large Cap Value Fund, $14,243,720
and $717,641, respectively, for the Small Cap Value Fund, and $6,094,868 and
$276,081, respectively, for the Balanced Fund.
4. TRANSACTIONS WITH AFFILIATES
Certain trustees and officers of the Trust are also officers of C.H. Dean &
Associates, Inc. (the Adviser) or of Countrywide Fund Services, Inc. (CFS), the
administrative services agent, shareholder servicing and transfer agent, and
accounting services agent for the Trust.
INVESTMENT ADVISORY AGREEMENT
The Funds' investments are managed by the Adviser pursuant to the terms of an
Advisory Agreement. Each Fund pays the Adviser an investment management fee,
computed and accrued daily and paid monthly, at an annual rate of 1.00% of
average daily net assets of each Fund.
ADMINISTRATION AGREEMENT
Under the terms of an Administration Agreement, CFS supplies non-investment
related administrative and compliance services for the Funds. CFS supervises the
preparation of tax returns, reports to shareholders, reports to and filings with
the Securities and Exchange Commission and state securities commissions, and
materials for meetings of the Board of Trustees. For these services, CFS
receives a monthly fee from each Fund at an annual rate of 0.10% on its average
daily net assets up to $100 million; 0.075% on the next $100 million of such net
assets and 0.05% on such net assets in excess of $200 million, subject to a
$1,000 minimum monthly fee.
<PAGE>
DEAN FAMILY OF FUNDS
NOTES TO FINANCIAL STATEMENTS
August 31, 1997
(Unaudited)
TRANSFER AGENT AND SHAREHOLDER SERVICING AGREEMENT
Under the terms of a Transfer, Dividend, Shareholder Service and Plan Agency
Agreement, CFS maintains the records of each shareholder's account, answers
shareholders' inquiries concerning their accounts, processes purchases and
redemptions of the Funds shares, acts as dividend and distribution disbursing
agent and performs other shareholder service functions. For these services, CFS
receives a monthly fee based on the number of shareholder accounts in each class
of each Fund, subject to a $1,200 minimum monthly fee for each class of shares
of a Fund. In addition, each Fund pays out-of-pocket expenses, including but not
limited to, postage and supplies.
ACCOUNTING SERVICES AGREEMENT
Under the terms of an Accounting Services Agreement, CFS calculates the daily
net asset value per share and maintains the financial books and records of the
Funds. For these services, CFS receives a monthly fee of $3,000 from each Fund.
<PAGE>
<PAGE>
<TABLE>
LARGE CAP VALUE FUND
PORTFOLIO OF INVESTMENTS
AUGUST 31, 1997
(Unaudited)
<CAPTION>
SHARES VALUE
<S> <C> <C>
COMMON STOCKS-98.4%
AIRLINES-1.0%
2,500 Southwest Airlines Co. $ 70,000
----------------
AUTOMOTIVE-4.0%
4,500 Chrysler Corp. 158,063
2,500 Ford Motor Co. 107,500
----------------
265,563
----------------
CAPITAL GOODS-3.5%
4,500 Agco Corp. 146,250
2,000 Foster Wheeler Corp. 91,375
----------------
237,625
----------------
CHEMICALS-6.2%
1,000 Dow Chemical Co. 88,500
3,000 Great Lakes ChemicalCorp. 139,500
2,500 Potash Corp. Saskatchewan 184,844
----------------
412,844
----------------
DATA STORAGE-1.7%
3,000 Seagate Technology, Inc.(a) 114,562
----------------
ELECTRONICS-3.8%
1,200 Arrow Electronics, Inc.(a) 73,725
1,500 Avnet, Inc. 103,781
1,400 Raytheon Co. 77,000
----------------
254,506
----------------
ENERGY-2.9%
1,000 Atlantic Richfield Co. 75,000
2,500 Phillips Petroleum Co. 118,906
----------------
193,906
----------------
FINANCIAL SERVICES-14.3%
1,700 Ambac, Inc. 137,381
4,000 Bear Stearns Co., Inc. 158,250
1,700 Beneficial Corp. 121,656
1,500 Chase Manhattan Corp. 166,781
3,000 Edwards (A.G.), Inc. 119,250
3,500 Green Tree Financial Corp. 153,781
400 Merrill Lynch & Company, Inc. 24,600
3,000 United Asset Management Corp. 80,438
----------------
962,137
----------------
<PAGE>
<CAPTION>
SHARES VALUE
<S> <C> <C>
Government Sponsored Enterprises-1.6%
2,500 Federal National Mortgage Association $ 110,000
----------------
HOUSING-2.5%
10,000 Clayton Homes, Inc. 168,125
----------------
INSURANCE-9.0%
2,000 Aflac, Inc. 110,125
1,200 American General Corp. 57,825
1,000 American National Insurance Co. 97,000
600 General RE Corp. 116,325
800 TransAmerica Corp. 78,850
2,000 TransAtlantic Holdings, Inc. 141,375
----------------
601,500
----------------
MEDIA-1.4%
6,000 News Corporation LTD.(ADR) 90,750
----------------
Metals-2.0%
1,500 Alumax, Inc. (a) 62,156
900 Aluminum Co. of America 74,025
----------------
136,181
----------------
MISCELLANEOUS-14.3%
1,800 CSX Corp. 102,937
2,500 Columbia/ HCA Healthcare Corp. 78,906
2,500 Hasbro, Inc. 67,188
500 Norfolk Southern Corp. 49,000
1,500 Parker Hannifin Corp. 96,469
2,000 Phelps Dodge Corp. 160,875
1,500 SAFECO, Inc. 73,688
3,500 Union Texas Petroleum Holdings, Inc. 81,594
2,000 Vulcan Materials Co. 175,750
1,700 York International Corp. 76,287
----------------
962,694
----------------
MORTGAGE SERVICES-5.0%
2,500 Countrywide Credit Industries, Inc.. 84,219
1,200 MBIA, Inc. 135,900
2,000 PMI Group, Inc. 115,625
----------------
335,744
----------------
<PAGE>
<CAPTION>
SHARES VALUE
<S> <C> <C>
RETAIL-4.0%
2,500 Dillard's, Inc. $ 100,000
15,000 Food Lion, Inc. 111,094
1,000 J.C. Penney Company, Inc. 60,000
----------------
271,094
----------------
SEMICONDUCTOR-1.1%
800 Intel Corp. 73,700
----------------
TECHNOLOGY-2.3%
5,000 Cabletron Systems, Inc. (a) 151,250
----------------
TELECOMMUNICATIONS-6.2%
7,000 360 Communications Co. (a) 128,625
1,400 AT&T Corp. 54,600
2,000 Century Telephone Enterprises, Inc. 72,625
3,000 Frontier Corp. 66,188
2,000 Sprint Corp. 94,000
----------------
416,038
----------------
TOBACCO-4.2%
1,500 Loews Corp. 152,906
1,600 Phillip Morris Cos., Inc. 69,800
2,000 Ust, Inc. 57,750
----------------
280,456
----------------
UTILITIES-7.4%
2,000 Consolidated Edison Co. of New York 61,250
4,000 DPL, Inc. 94,750
3,000 Houston Industries, Inc. 60,750
4,000 Illinova Corporation 92,000
2,500 Nipsco Industries, Inc. 102,031
4,000 Southern Co. 84,250
----------------
495,031
----------------
TOTAL COMMON STOCKS (COST $6,381,206) $ 6,603,706
----------------
<PAGE>
<CAPTION>
FACE
VALUE VALUE
MONEY MARKET-1.0%
$67,038 One Group Prime Money Market Fund $ 67,038
----------------
TOTAL INVESTMENTS AT VALUE-99.4%
(COST $6,448,244) $ 6,670,744
OTHER ASSETS IN EXCESS OF LIABILITIES - 0.6% 39,759
----------------
NET ASSETS - 100.0% $ 6,710,503
================
<FN>
(a) Non-income producing securities.
</FN>
</TABLE>
<PAGE>
<TABLE>
DEAN SMALL CAP VALUE FUND
PORTFOLIO OF INVESTMENTS
AUGUST 31, 1997
(Unaudited)
<CAPTION>
SHARES VALUE
<S> <C> <C>
COMMON STOCKS-98.3%
AUTOMOTIVE-2.8%
6,000 Excel Industries, Inc. $ 153,000
7,000 Oshkosh Truck Corp. 105,875
7,000 Republic Automotive Parts, Inc. (a) 108,500
7,000 TBC Corp. (a) 57,750
----------------
425,125
----------------
AUTOMOTIVE PARTS-1.1%
12,000 Durakon Industries, Inc. (a) 106,500
9,000 Jason, Inc. (a) 67,500
----------------
174,000
----------------
BUILDING PRODUCTS-4.6%
7,000 BMC West Corp. (a) 91,000
6,000 Dayton Superior Corp. (a) 93,000
1,000 Florida Rock Industries, Inc. 49,375
21,000 Martin Industries, Inc. 123,375
15,000 Morgan Products LTD (a) 122,813
7,000 Patrick Industries, Inc. 104,125
8,000 Shelter Components Corp. 108,000
----------------
691,688
----------------
BUILDING SUPPLIES-0.7%
9,000 Wolohan Lumber Co. 109,125
----------------
CAPITAL GOODS-5.3%
40,000 Baldwin Technology-Class A (a) 207,500
11,000 Bridgeport Machines, Inc. (a) 118,250
4,000 Central Sprinkler Corp. (a) 70,000
6,000 Defiance, Inc. 50,250
3,000 GEHL Co. (a) 67,125
3,000 Hardinge, Inc. 103,125
1,500 Nacco Industries, Inc.-Class A 129,375
7,000 Perini Corp. (a) 49,000
----------------
794,625
----------------
CHEMICALS-0.7%
5,000 Mississippi Chemical Corp. 108,438
<PAGE>
<CAPTION>
SHARES VALUE
<S> <C> <C>
ELECTRONICS-2.8%
9,000 Bel Fuse, Inc. (a) $ 160,875
8,760 Bell Industries, Inc. (a) 154,395
6,500 ESCO Electronics Corp. (a) 107,656
----------------
422,926
----------------
ENERGY-4.9%
8,000 Aquila Gas Pipeline Corp. 83,500
8,000 BP Prudhoe Bay Royalty Trust 139,500
15,000 Burlington Res Coal Seam Gas Royalty Trust 106,875
10,000 Castle Energy Corp. (a) 140,000
4,000 Giant Industries, Inc. 73,750
5,000 NUI Corp. 115,000
8,000 Torch Energy Royalty Trust 79,500
----------------
738,125
----------------
FINANCIAL SERVICES-0.6%
2,700 Arcadia Financial LTD (a) 26,831
1,800 Everen Capital Corp. 59,175
----------------
86,006
----------------
FOOD-2.0%
6,000 Fleming Cos., Inc. 113,250
10,000 Mauna Loa Macadamia Partners LP-Class A 40,625
7,000 Nash-Finch Co. 149,625
----------------
303,500
----------------
FURNITURE-0.9%
8,000 Flexsteel Industries, Inc. 94,000
2,000 Pulaski Furniture Corp. 34,500
----------------
128,500
----------------
GAMING-1.7%
6,000 Grand Casinos, Inc. (a) 92,625
7,000 Harveys Casino Resorts 120,750
6,000 Station Casinos, Inc. (a) 45,375
----------------
258,750
----------------
HEALTH CARE-1.0%
1,000 Mine Safety Appliances Co. (a) 63,000
30,000 Staff Builders, Inc.-Class A (a) 84,375
----------------
147,375
----------------
<PAGE>
<CAPTION>
SHARES VALUE
<S> <C> <C>
HOUSING-7.9%
6,000 Beazer Homes U.S.A., Inc. (a) $ 113,250
10,000 Cavalier Homes, Inc. 102,500
5,000 Continental Homes Holding Corp. 115,000
10,000 Engle Homes, Inc. 140,000
17,000 Hovnanian Enterprises Inc.-Class A (a) 114,750
8,000 MDC Holdings, Inc. 83,000
8,000 M/I Schottenstein Homes (a) 108,000
3,200 NVR, Inc. (a) 68,400
4,000 Pacific Greystone Corp. (a) 69,500
1,100 Pulte Corp. 40,287
8,000 Webb (Del E.) Corp. 140,000
9,000 Zaring National Corp. (a) 87,187
----------------
1,181,874
----------------
INSURANCE-8.7%
2,000 Allied Life Financial Corp. 40,500
2,500 Chartwell RE Corp. 85,625
1,300 Citizens Corp. 36,725
1,733 Donegal Group, Inc. 35,093
8,000 EMC Insurance Group, Inc. 108,000
3,000 FBL Financial Group, Inc.-Class A 96,000
1,300 Farm Family Holdings, Inc. (a) 37,700
3,500 First American Financial Corp. 156,625
1,500 Guaranty National Corp. 42,281
900 Harleysville Group, Inc. 38,138
6,000 Lawyers Title Corp. 167,250
600 Navigators Group, Inc. (a) 11,100
3,300 Omni Insurance Group, Inc. (a) 43,313
3,000 PXRE Corp. 89,625
1,000 Selective Insurance Group, Inc. 49,250
4,900 Sphere Drake Holdings LTD 42,875
6,000 Stewart Information Services Corp. 147,375
3,000 Terra Nova (Bermuda) Holding LTD-Class A 67,875
----------------
1,295,350
----------------
<PAGE>
<CAPTION>
SHARES VALUE
<S> <C> <C>
METALS-6.8%
6,000 Ampco-Pittsburgh Corp. $ 107,250
8,000 A.P. Green Industries, Inc. 82,000
4,000 Chaparral Steel Co. 60,500
3,000 Cleveland-Cliffs, Inc. 125,062
3,000 Commercial Metals Co. 92,250
9,000 National Steel Corp.-Class B (a) 169,313
1,600 Pitt-Des Moines, Inc. 54,800
6,000 Roanoke Electric Steel Co. 130,500
4,000 Rouge Industries, Inc.-Class A 61,500
4,000 Texas Industries, Inc. 133,250
----------------
1,016,425
----------------
MISCELLANEOUS-6.6%
2,000 Arvin Industries, Inc. 69,625
6,000 Atchison Casting Corp. (a) 115,875
5,000 Burlington Industries, Inc. (a) 60,313
8,000 Cameron Ashley Building Products (a) 120,000
7,000 Continental Can, Inc. (a) 138,687
11,000 Designer Holdings LTD. (a) 68,750
5,000 Global Industrial Technologies, Inc. (a) 94,687
3,000 PMC Commerical Trust 57,375
9,000 Primesource Corp. 91,125
8,000 R & B, Inc. (a) 64,000
6,000 Superior Surgical Manufacturing Co. 92,250
----------------
972,687
----------------
MORTGAGE SERVICES-1.1%
2,200 North American Mortgage Co. 56,925
4,000 Scpie Holdings, Inc. 112,000
----------------
168,925
----------------
PAPER AND CONTAINERS-1.3%
10,000 Mercer International, Inc. 103,750
6,000 Paragon Trade Brands, Inc. (a) 95,625
----------------
199,375
----------------
POLLUTION-0.6%
6,000 Graphic Industries, Inc. 96,750
----------------
<PAGE>
<CAPTION>
SHARES VALUE
<S> <C> <C>
RESTAURANTS-2.0%
11,000 Bertuccin's, Inc.(a) $ 66,688
5,000 El Chico Restaurants, Inc. (a) 50,313
10,000 Morrison Restaurants, Inc. 47,500
5,000 Rare Hospitality International, Inc. (a) 62,500
8,000 Ryan's Family Steak Houses, Inc. (a) 74,000
----------------
301,001
----------------
RETAIL-17.5%
13,000 Advanced Marketing Service, Inc. (a) 139,750
9,000 Blair Corp. 141,750
16,000 Bon-Ton Stores, Inc. (a) 153,000
20,000 Books A Million, Inc. (a) 122,500
9,000 Brookstone, Inc. (a) 91,125
6,000 Brown Group, Inc. 100,125
5,000 Burlington Coat Factory Warehouse 115,000
8,000 Dixie Group, Inc. (a) 106,500
10,000 Duckwall-Alco Stores, Inc. (a) 136,250
25,000 Donnkenny, Inc. (a) 92,188
10,000 Dyersburg Corp. 110,000
11,000 GT Bicycles, Inc. (a) 86,625
9,000 Haverty Furniture Co., Inc. 118,125
6,000 Hills Stores Co. (a) 22,500
5,000 Ingles Markets, Inc.-Class A 66,875
40,000 Jan Bell Marketing, Inc. (a) 100,000
10,000 Maris Christina, Inc. (a) 51,250
6,000 Marsh Supermarkets, Inc.-Class B 90,000
11,000 Mikasa, Inc. 130,625
30,000 Movie Gallery, Inc. (a) 127,500
8,000 Rex Stores Corp. (a) 79,000
3,000 The Rival Co. 55,125
30,000 Service Merchandise Co., Inc. (a) 116,250
3,000 Supreme International Corp. (a) 39,000
21,000 Tultex Corp. (a) 120,750
13,000 Worldtex, Inc. (a) 83,687
----------------
2,595,500
----------------
<PAGE>
<CAPTION>
SHARES VALUE
<S> <C> <C>
REAL ESTATE-5.6%
1,000 Capstone Capital Corp $ 23,750
9,000 Commercial Net Lease Realty 141,750
10,000 Dynex Capital, Inc. 141,875
5,000 Health Care REIT, Inc. 130,625
10,000 Horizon Group, Inc. 125,625
7,000 RFS Hotel Investors, Inc. 129,500
6,000 Thornburg Mortgage Asset Corp. 138,750
----------------
831,875
----------------
TECHNOLOGY-2.4%
8,000 Franklin Electronic Publisher, Inc. (a) 98,000
14,000 Microtest, Inc. (a) 69,125
5,600 Software Spectrum, Inc. (a) 84,700
10,000 Spacehab, Inc. (a) 101,250
----------------
353,075
----------------
TELECOMMUNICATIONS-1.2%
8,000 Atlantic Tele-Network, Inc. (a) 104,500
9,000 Audiovox Corp.- Class A (a) 70,313
----------------
174,813
----------------
TRANSPORTATION-1.0%
5,000 InternationalShipholding Corp. 82,187
2,100 Petroleum Helicopters Inc. 29,400
1,500 Sea Containers LTD-Class A 35,625
----------------
147,212
----------------
UTILITY-6.5%
8,000 Bangor Hydro-Electric Co. (a) 43,500
4,000 Central Hudson Gas & Electric 133,500
6,000 Central Maine Power Co. 76,125
9,000 Central Vermont Public Service 108,562
4,000 Commonwealth Energy System 98,500
5,000 Eastern Utilities Association 95,625
2,000 Orange & Rockland Utilities, Inc. 67,875
5,000 Rochester Gas & Electric Corp. 117,812
3,000 Southern California Water Co. 65,625
3,000 TNP Enterprises, Inc. 70,313
2,500 United Illuminating Co. 87,344
----------------
964,781
----------------
TOTAL COMMON STOCKS (COST $13,663,021) $ 14,687,826
----------------
<PAGE>
<CAPTION>
FACE
VALUE VALUE
<S> <C> <C>
MONEY MARKET AND EQUIVALENTS-1.4%
$ 87,736 One Group Prime Money Market Fund $ 87,736
125,000 Merrill Lynch CP 9/3/97 124,883
----------------
TOTAL MONEY MARKET AND EQUIVALENTS
(COST $212,619) $ 212,619
----------------
TOTAL INVESTMENTS AT VALUE-99.7%
(COST $13,875,640) $ 14,900,445
OTHER ASSETS IN EXCESS OF LIABILITIES-0.3% 37,537
----------------
NET ASSETS - 100.0% $ 14,937,982
================
<FN>
(a) Non-income producing securities.
</FN>
</TABLE>
<PAGE>
<TABLE>
DEAN BALANCED FUND
PORTFOLIO OF INVESTMENTS
AUGUST 31, 1997
(Unaudited)
<CAPTION>
SHARES VALUE
<S> <C> <C>
COMMON STOCKS-54.8%
AIRLINES-1.3%
3,500 Comair Holdings, Inc. $ 94,062
----------------
AUTOMOTIVE-2.7%
3,000 Chrysler Corp. 105,375
2,000 Ford Motor Co. 86,000
----------------
191,375
----------------
CAPITAL GOODS-2.6%
4,000 Agco Corp. 130,000
1,100 Briggs & Stratton Corp. 53,144
----------------
183,144
----------------
CHEMICALS-2.5%
700 Dow Chemical Co. 61,950
1,550 Potash Corp. Saskatchewan 114,603
----------------
176,553
----------------
DATA STORAGE-1.7%
3,150 Seagate Technology, Inc.(a) 120,291
----------------
ELECTRONICS-2.5%
1,050 Arrow Electronics, Inc.(a) 64,509
2,050 Raytheon Co. 112,750
----------------
177,259
----------------
FINANCIAL SERVICES-3.1%
1,000 Ambac, Inc. 80,812
3,100 Green Tree Financial Corp. 136,206
----------------
217,018
----------------
GOVERNMENT SPONSORED ENTERPRISES-0.9%
1,500 Federal National Mortgage Association 66,000
----------------
HOUSING-1.5%
6,200 Clayton Homes, Inc. 104,238
----------------
<PAGE>
<CAPTION>
SHARES VALUE
<S> <C> <C>
INSURANCE-0.8%
1,000 Aflac, Inc. $ 55,063
----------------
MEDIA-4.2%
4,000 Comcast Corp. 93,750
4,000 Cox Communications-Class A (a) 108,250
6,000 News Corporation LTD. (ADR) 90,750
----------------
292,750
----------------
METALS-3.0%
2,000 Alumax, Inc. (a) 82,875
1,500 Aluminum Co. of America 123,375
----------------
206,250
----------------
MISCELLANEOUS-1.9%
4,000 CCA Prison Realty Trust (a) 132,500
----------------
MORTGAGE SERVICES-3.6%
3,000 Countrywide Credit Industries, Inc. 101,063
2,600 PMI Group, Inc. 150,313
----------------
251,376
----------------
RETAIL-3.4%
4,200 Fingerhut Companies Inc. 85,050
1,000 Payless Shoesource, Inc. (a) 64,125
2,500 Toys R Us, Inc. (a) 86,406
----------------
235,581
----------------
REAL ESTATE-4.3%
1,500 Health Care Property Investors, Inc. 55,781
2,000 Merry Land & Investment Co., Inc. 43,500
2,000 Simon Debartolo Group, Inc. 63,375
3,000 Trizec Hahn Corp. 67,687
5,000 United Dominion Realty Trust, Inc. 70,625
----------------
300,968
----------------
SEMICONDUCTOR-1.9%
800 Intel Corp. 73,700
2,000 MEMC Electronic Materials, Inc. (a) 58,000
----------------
131,700
----------------
<PAGE>
<CAPTION>
SHARES VALUE
<S> <C> <C>
TECHNOLOGY-3.1%
3,550 Cabletron Systems (a) $ 107,388
3,000 NCR Corp. (a) 106,312
----------------
213,700
----------------
TELECOMMUNICATIONS-3.2%
7,200 360 Communications Co. (a) 132,300
2,000 Sprint Corp. 94,000
----------------
226,300
----------------
TOBACCO-2.0%
3,150 Phillip Morris Cos., Inc. 137,419
----------------
UTILITIES-4.6%
4,000 Houston Industries, Inc. 81,000
4,000 Illinova Corporation 92,000
2,000 Nipsco Industries, Inc. 81,625
3,000 Southern Co. 63,188
----------------
317,813
----------------
TOTAL COMMON STOCKS (COST $3,619,773) $ 3,831,360
----------------
FIXED INCOME-32.3%
300,000 U.S. Treasury Note 6.375% 7/15/99 $ 302,344
200,000 U.S. Treasury Note 6.250% 2/15/03 199,938
200,000 U.S. Treasury Note 6.125% 9/30/00 200,063
300,000 U.S. Treasury Note 6.375% 3/31/01 301,969
250,000 U.S. Treasury Note 6.125% 8/31/98 250,781
300,000 U.S. Treasury Note 5.875% 11/15/99 299,156
250,000 U.S. Treasury Note 6.125% 12/31/01 249,219
200,000 U.S. Treasury Note 6.625% 3/31/02 203,062
250,000 Hilton Hotels 7.000% 7/15/04 246,946
----------------
Total Fixed Income (Cost $2,249,327) $ 2,253,478
----------------
<CAPTION>
VALUE VALUE
<S> <C> <C>
MONEY MARKET AND EQUIVALENTS-12.9%
145,053 One Group Prime Money Market Fund $ 145,053
250,000 4 Winds Commercial Paper 9/3/97 249,922
125,000 Korea Dev Bank Commercial Paper 9/12/97 124,780
100,000 Merrill Lynch Commercial Paper 9/3/97 99,969
----------------
273,000 Sumitomo Bank Cap Commercial Paper 9/9/97 272,661
----------------
TOTAL MONEY MARKET AND EQUIVALENTS
(COST $892,385) $ 892,385
----------------
TOTAL INVESTMENTS AT VALUE-100%
(COST $6,761,485) $ 6,977,223
----------------
LIABILITIES IN EXCESS OF OTHER ASSETS-0.0% (1,259)
----------------
NET ASSETS - 100.0% $ 6,975,964
================
<FN>
(a) Non-income producing securities.
</FN>
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
DEAN FAMILY OF FUNDS
STATEMENTS OF ASSETS AND LIABILITIES
AUGUST 31, 1997 (UNAUDITED)
DEAN DEAN
LARGE CAP SMALL CAP DEAN
VALUE VALUE BALANCED
FUND FUND FUND
ASSETS
Investments in securities:
<S> <C> <C> <C>
At acquisition cost $ 6,448,244 $ 13,875,640 $ 6,761,485
=============== ============== ==============
At value (Note 2) $ 6,670,744 $ 14,900,445 $ 6,977,223
Dividends and interest receivable 12,712 20,034 43,659
Receivable for capital shares sold -- 158,256 16,280
Receivable for securities sold -- 23,188 --
Organization expenses, net (Note 2) 14,720 14,720 14,720
Other assets 20,807 22,564 20,466
--------------- -------------- --------------
TOTAL ASSETS 6,718,983 15,139,207 7,072,348
--------------- -------------- --------------
LIABILITIES
Payable for securities purchased -- 152,578 86,695
Payable to affiliates (Note 4) 6,400 22,590 6,400
Payable for capital shares redeemed -- 20,333 --
Other liabilities 2,080 5,724 3,289
--------------- -------------- --------------
TOTAL LIABILITIES 8,480 201,225 96,384
--------------- -------------- --------------
NET ASSETS $ 6,710,503 $ 14,937,982 $ 6,975,964
=============== ============== ==============
Net assets consist of:
Paid-in capital $ 6,465,544 $ 13,756,283 $ 6,693,084
Undistributed net investment income 4,099 19,997 16,803
Accumulated net realized gains from security transactions 18,360 136,897 50,339
Net unrealized appreciation on investments 222,500 1,024,805 215,738
--------------- -------------- --------------
Net assets $ 6,710,503 $ 14,937,982 $ 6,975,964
=============== ============== ==============
PRICING OF CLASS A SHARES
Net assets applicable to Class A shares $ 6,704,634 $ 14,800,643 $ 6,783,871
=============== ============== ==============
Shares of beneficial interest outstanding (unlimited
number of shares authorized, no par value) 626,863 1,313,173 636,436
=============== ============== ==============
Net asset value and redemption price per share (Note 2) $ 10.70 $ 11.27 $ 10.66
=============== ============== ==============
Maximum offering price per share (Note 2) $ 11.29 $ 11.89 $ 11.25
=============== ============== ==============
PRICING OF CLASS C SHARE
Net assets applicable to Class C shares $ 5,869 $ 137,339 $ 192,093
=============== ============== ==============
Shares of beneficial interest outstanding (unlimited
number of shares authorized, no par value) 549 12,194 18,031
=============== ============== ==============
Net asset value and offering price per share (Note 2) $ 10.69 $ 11.26 $ 10.65
=============== ============== ==============
<FN>
See accompanying notes to financial statements.
</FN>
</TABLE>
<PAGE>
<TABLE>
DEAN FAMILY OF FUNDS
STATEMENTS OF OPERATIONS
For the Five Months Ended August 31, 1997 (Unaudited)
<CAPTION>
DEAN DEAN
LARGE CAP SMALL CAP DEAN
VALUE VALUE BALANCED
FUND FUND FUND
<S> <C> <C> <C>
INVESTMENT INCOME
Dividends $ 23,030 $ 48,956 $ 12,566
Interest 6,953 14,569 36,322
-------- ---------- --------
TOTAL INVESTMENT INCOME 29,983 63,525 48,888
-------- ---------- --------
EXPENSES
Investment advisory fees (Note 4) 12,048 23,500 12,331
Registration fees - Common 965 965 965
Registration fees - Class A 2,444 3,069 2,444
Registration fees - Class C 2,455 2,455 2,455
Accounting services fees (Note 4) 6,000 6,000 6,000
Custodian fees 3,775 5,430 4,359
Shareholder services and transfer
agent fees - Class A (Note 4) 2,400 2,400 2,400
Shareholder services and transfer
agent fees - Class C (Note 4) 1,200 1,200 1,200
Administration fees (Note 4) 2,000 2,190 2,000
Amortization of organization
expenses (Note 2) 1,051 1,051 1,051
Other expenses -- 2,768 --
-------- ---------- --------
TOTAL EXPENSES 34,338 51,028 35,205
Fees waived (12,048) (7,500) (12,331)
-------- ---------- --------
NET EXPENSES 22,290 43,528 22,874
-------- ---------- --------
7,693 19,997 26,014
-------- ---------- --------
NET INVESTMENT INCOME
REALIZED AND UNREALIZED GAINS ON INVESTMENTS
Net realized gains from
security transactions 18,360 136,897 50,339
Net change in unrealized
appreciation/depreciation
on investments 222,500 1,024,805 215,738
-------- ---------- --------
NET REALIZED AND UNREALIZED
GAINS ON INVESTMENTS 240,860 1,161,702 266,077
-------- ---------- --------
NET INCREASE IN NET ASSETS
FROM OPERATIONS $248,553 $1,181,699 $292,091
======== ========== ========
See accompanying notes to financial statements.
</TABLE>
<PAGE>
DEAN FAMILY OF FUNDS
PART C. OTHER INFORMATION
ITEM 24. FINANCIAL STATEMENTS AND EXHIBITS
(a) (i) Financial Statements included in Part A:
Financial Highlights for the Period Ended August
31, 1997
(ii) Financial Statements included in Part B:
Statement of Assets and Liabilities,
March 17, 1997, Notes to Statement of Assets and
Liabilities, Report of Independent Auditors
Statement of Assets & Liabilities, August 31,
1997 (unaudited)
Statement of Operations for the Period Ended
August 31, 1997 (unaudited)
Statement of Changes in Net Assets for the Period
Ended August 31, 1997 (unaudited)
Financial Highlights for the Period Ended August
31, 1997 (unaudited)
Portfolio of Investments, August 31, 1997
(unaudited)
(b) Exhibits
(1) Agreement and Declaration of Trust*
(2) Bylaws*
(3) Inapplicable
(4) Inapplicable
(5)(i) Advisory Agreement with C.H. Dean &
Associates, Inc. for the Large Cap Fund, the
Small Cap Fund and the Balanced Fund
(ii) Form of Advisory Agreement with C.H. Dean &
Associates, Inc. for the International Value
Fund
(iii) Form of Sub-Advisory Agreement with Newton
Capital Management Ltd.
- 41 -
<PAGE>
(6) Underwriting Agreement with 2480 Securities
LLC
(7) Directors Deferred Compensation Plan
(8)(i) Custody Agreement with Bank One Trust
Company
(ii) Form of Custody Agreement with The Northern
Trust Company
(9)(i) Administration Agreement with Countrywide
Fund Services, Inc.
(ii) Accounting Services Agreement with
Countrywide Fund Services, Inc.
(iii) Transfer, Dividend Disbursing, Shareholder
Service and Plan Agency Agreement with
Countrywide Fund Services, Inc.
(10) Opinion and Consent of Counsel*
(11) Consent of Independent Auditors
(12) Inapplicable
(13) Agreement Relating to Initial Capital
(14) Inapplicable
(15)(i) Plan of Distribution Pursuant to Rule 12b-1
for Class A Shares
(ii) Plan of Distribution Pursuant to Rule 12b-1
for Class C Shares
(16) Inapplicable
(17)(i) Financial Data Schedule for Large Cap Value
Fund
(ii) Financial Data Schedule for Small Cap Value
Fund
(iii) Financial Data Schedule for Balanced Fund
(18) Rule 18f-3 Multi-Class Plan*
- --------------------------------------
* Incorporated by reference to the Trust's Registration
Statement on Form N-1A.
- 42 -
<PAGE>
ITEM 25. PERSONS CONTROLLED BY OR UNDER COMMON CONTROL WITH
REGISTRANT.
After commencement of the public offering of the Registrant's
shares, the Registrant expects that no person will be directly
or indirectly controlled by or under common control with the
Registrant.
ITEM 26. NUMBER OF HOLDERS OF SECURITIES.
As of August 31, 1997, there are 335 holders of the shares of
beneficial interest of the Registrant.
ITEM 27. INDEMNIFICATION
Article VI of the Registrant's Agreement and Declaration of
Trust provides for indemnification of officers and Trustees as
follows:
"SECTION 6.4 INDEMNIFICATION OF TRUSTEES, OFFICERS, ETC.
Subject to and except as otherwise provided in the
Securities Act of 1933, as amended, and the 1940 Act,
the Trust shall indemnify each of its Trustees and
officers, including persons who serve at the Trust's
request as directors, officers or trustees of another
organization in which the Trust has any interest as a
shareholder, creditor or otherwise (hereinafter referred
to as a "Covered Person") against all liabilities,
including but not limited to amounts paid in
satisfaction of judgments, in compromise or as fines and
penalties, and expenses, including reasonable
accountants' and counsel fees, incurred by any Covered
Person in connection with the defense or disposition of
any action, suit or other proceeding, whether civil or
criminal, before any court or administrative or
legislative body, in which such Covered Person may be or
may have been involved as a party or otherwise or with
which such person may be or may have been threatened,
while in office or thereafter, by reason of being or
having been such a Trustee or officer, director or
trustee, and except that no Covered Person shall be
indemnified against any liability to the Trust or its
Shareholders to which such Covered Person would
otherwise be subject by reason of willful misfeasance,
bad faith, gross negligence or reckless disregard of the
duties involved in the conduct of such Covered Person's
office.
- 43 -
<PAGE>
SECTION 6.5 ADVANCES OF EXPENSES. The Trust shall
advance attorneys' fees or other expenses incurred by a
Covered Person in defending a proceeding to the full
extent permitted by the Securities Act of 1933, as
amended, the 1940 Act, and Ohio Revised Code Chapter
1707, as amended. In the event any of these laws
conflict with Ohio Revised Code Section 1701.13(E), as
amended, these laws, and not Ohio Revised Code Section
1701.13(E), shall govern.
SECTION 6.6 INDEMNIFICATION NOT EXCLUSIVE, ETC. The
right of indemnification provided by this Article VI
shall not be exclusive of or affect any other rights to
which any such Covered Person may be entitled. As used
in this Article VI, "Covered Person" shall include such
person's heirs, executors and administrators. Nothing
contained in this article shall affect any rights to
indemnification to which personnel of the Trust, other
than Trustees and officers, and other persons may be
entitled by contract or otherwise under law, nor the
power of the Trust to purchase and maintain liability
insurance on behalf of any such person.
Insofar as indemnification for liability arising under the
Securities Act of 1933 may be permitted to Trustees, officers
and controlling persons of the Registrant pursuant to the
foregoing provisions, or otherwise, the Registrant has been
advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as
expressed in the Act and is, therefore, unenforceable. In the
event that a claim for indemnification against such
liabilities (other than the payment by the Registrant of
expenses incurred or paid by a Trustee, officer or controlling
person of the Registrant in the successful defense of any
action, suit or proceeding) is asserted by such Trustee,
officer or controlling person in connection with the
securities 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 issue.
The Registrant maintains a standard mutual fund and investment
advisory professional and directors and officers liability
policy. The policy provides
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<PAGE>
coverage to the Registrant, its Trustees and officers,
C.H. Dean & Associates, Inc. ("Dean Investment
Associates") and 2480 Securities LLC. Coverage under
the policy will include losses by reason of any act,
error, omission, misstatement, misleading statement,
neglect or breach of duty.
The Advisory Agreements with Dean Investment Associates each
provide that Dean Investment Associates shall not be liable
for any action taken, omitted or suffered to be taken by it in
its reasonable judgment, in good faith and believed by it to
be authorized or within the discretion or rights or powers
conferred upon it by the applicable Advisory Agreement, or in
accordance with (or in the absence of) specific directions or
instructions from the Trust; provided, however, that such acts
or omissions shall not have resulted from Dean Investment
Associates' willful misfeasance, bad faith or gross
negligence, a violation of the standard of care established by
and applicable to Dean Investment Associates in its actions
under the appropriate Advisory Agreement or breach of its duty
or of its obligations under the appropriate Advisory
Agreement.
The Sub-Advisory Agreement with the Sub-Adviser provides that
the Sub-Adviser shall give the International Value Fund the
benefit of its best judgment and effort in rendering services
under the Sub-Advisory Agreement, but that neither the
Sub-Adviser nor any of its officers, directors, employees,
agents or controlling persons shall be liable for any act or
omission or for any loss sustained by the International Value
Fund in connection with the matters to which the Sub-Advisory
Agreement relates, except a loss resulting from the
Sub-Adviser's willful misfeasance, bad faith or gross
negligence in the performance of its duties, or by reason of
its reckless disregard of its obligations and duties under the
Sub-Advisory Agreement; provided, however, that the foregoing
shall not constitute a waiver of any rights which the Trust
may have which may not be waived under applicable law.
ITEM 28. BUSINESS AND OTHER CONNECTIONS OF THE INVESTMENT
ADVISER
(a) Dean Investment Associates is a registered
investment adviser, providing investment advisory
services to the Registrant. Dean Investment
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<PAGE>
Associates has been engaged since 1973 in the
business of providing investment advisory services to
individual, institutional and corporate clients.
The Sub-Adviser is a United Kingdom investment
advisory firm registered with the Securities and
Exchange Commission. The Sub-Adviser is affiliated
with Newton Investment Management Ltd., an English
investment advisory firm which has been managing
assets for institutional investors, mutual funds and
individuals since 1977.
(b) The directors and officers of Dean Investment
Associates and any other business, profession,
vocation or employment of a substantial nature
engaged in at any time during the past two years:
(i) Chauncey H. Dean - Chairman of the Board,
Chief Executive Officer and controlling
shareholder of Dean Investment Associates.
A Trustee of the Trust.
(ii) Dennis D. Dean - Treasurer of Dean
Investment Associates. He formerly was
President, Chief Operating Officer and
Secretary of Dean Investment Associates.
(iii) Zada L. Dean - Secretary of Dean
Investment Associates.
(iv) Robert D. Dean - Director of Research of
Dean Investment Associates. He formerly
was Professor of Economics of the
University of Memphis.
A Trustee of the Trust.
(v) Frank H. Scott - Senior Vice President of
Dean Investment Associates.
President and a Trustee of the Trust.
(vi) Richard M. Luthman - Senior Vice President
of Dean Investment Associates.
The directors and officers of Newton Capital
Management Ltd. and any other business,
profession, vocation or employment of a
substantial nature engaged in at any time during
the past two years:
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<PAGE>
(i) Guy Bowles - Chairman of the Sub-Adviser.
(ii) Colin R. Harris - Director and Chief
Operating Officer of the Sub-Adviser.
(iii) Shreekant P. Panday - Director of the
Sub-Adviser.
(iv) Andrew J.W. Powell - Director of the
Sub-Adviser.
ITEM 29. PRINCIPAL UNDERWRITERS
(a) Inapplicable
(b) POSITION WITH POSITION WITH
NAME UNDERWRITER REGISTRANT
Frank H. Scott President President and a
Trustee
Edward J. Blake Vice President None
Stephen M. Miller Treasurer None
The address of the above-named persons is 2480 Kettering Tower, Dayton,
Ohio 45423.
(c) Inapplicable
ITEM 30. LOCATION OF ACCOUNTS AND RECORDS
Accounts, books and other documents required to be maintained
by Section 31(a) of the Investment Company Act of 1940 and the
Rules promulgated thereunder will be maintained by the
Registrant at its offices located at 2480 Kettering Tower,
Dayton, Ohio 45423 as well as at the offices of the
Registrant's transfer agent located at 312 Walnut Street, 21st
Floor, Cincinnati, Ohio 45202.
ITEM 31. MANAGEMENT SERVICES NOT DISCUSSED IN PARTS A OR B
Inapplicable
ITEM 32. UNDERTAKINGS
(a) Inapplicable
<PAGE>
(b) The Registrant undertakes to file a post-effective
amendment, using financial statements of the
International Value Fund which need not be certified,
within four to six months from the effective date
of this Registration Statement.
(c) The Registrant undertakes to furnish each person to
whom a Prospectus is delivered with a copy of the
Registrant's latest annual report to shareholders,
upon request and without charge.
(d) The Registrant undertakes to call a meeting of
shareholders, if requested to do so by holders of
at least 10% of the Fund's outstanding shares, for
the purpose of voting upon the question of removal
of a trustee or trustees and to assist in
communications with other shareholders as required
by Section 16(c) of the Investment Company Act of
1940.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, the Registrant certifies that it meets all of
the requirements for effectiveness of the Registration Statement pursuant to
Rule 485(b) under the Securities Act of 1933 and has duly caused this
Registration Statement to be signed below on its behalf by the undersigned,
thereunto duly authorized, in the City of Dayton and State of Ohio, on the 1st
day of October, 1997.
DEAN FAMILY OF FUNDS
By:/S/ FRANK H. SCOTT
Frank H. Scott
President
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed below by the following persons in the
capacities and on the dates indicated.
SIGNATURE TITLE DATE
/S/ FRANK H. SCOTT President October 1, 1997
Frank H. Scott and Trustee
/S/ MARK J. SEGER Treasurer October 1, 1997
- ----------------------------
Mark J. Seger
/S/ CHAUNCEY H. DEAN Trustee October 1, 1997
- -----------------------------
Chauncey H. Dean
/S/ ROBERT D. DEAN Trustee October 1, 1997
- -----------------------------
Robert D. Dean
/S/ VICTOR S. CURTIS Trustee October 1, 1997
- -----------------------------
Victor S. Curtis
<PAGE>
Trustee
Frank J. Perez* By:/S/TINA D. HOSKING
Tina D. Hosking
Attorney-in-Fact*
October 1, 1997
Trustee
David H. Ponitz*
Trustee
Gilbert P. Williamson*
<PAGE>
INDEX TO EXHIBITS
(1) Agreement and Declaration of Trust*
(2) Bylaws*
(3) Inapplicable
(4) Inapplicable
(5)(i) Advisory Agreement for the Large Cap Value Fund, the
Small Cap Value Fund and the Balanced Fund
(ii) Form of Advisory Agreement for the International Value
Fund
(iii) Form of Sub-Advisory Agreement for the International
Value Fund
(6) Underwriting Agreement
(7) Directors Deferred Compensation Plan
(8)(i) Custody Agreement
(9)(i) Administration Agreement
(ii) Accounting Services Agreement
(iii) Transfer, Dividend Disbursing, Shareholder
Service and Plan Agency Agreement
(10) Opinion and Consent of Counsel*
(11) Consent of Independent Auditors
(12) Inapplicable
(13) Agreement Relating to Initial Capital
(14) Inapplicable
(15)(i) Plan of Distribution Pursuant to Rule 12b-1 for Class A
Shares
(ii) Plan of Distribution Pursuant to Rule 12b-1 for Class C
Shares
(16) Inapplicable
<PAGE>
(17)(i) Financial Data Schedule for Large Cap Value Fund
(ii) Financial Data Schedule for Small Cap Value Fund
(iii) Financial Data Schedule for Balanced Fund
(18) Rule 18f-3 Multi-Class Plan*
- ----------------------------
* Incorporated by reference to the Trust's Registration
Statement on Form N-1A.
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<PAGE>
C.H. Dean & Associates, Inc.
2480 Kettering Tower
Dayton, Ohio 45423
Re: Advisory Agreement
Ladies and Gentlemen:
The Dean Family of Funds (the "Trust") is an open-end management
investment company registered under the Investment Company Act of 1940, as
amended (the "Act"), and subject to the rules and regulations promulgated
thereunder. The Trust's shares of beneficial interest are divided into three
separate series, the Large Cap Value Fund, the Small Cap Value Fund and the
Balanced Fund (the "Funds"). Each share of a Fund represents an undivided
interest in the assets, subject to the liabilities, allocated to that Fund. Each
fund has a separate investment objective and separate investment policies.
1. APPOINTMENT AS ADVISER. The Trust being duly authorized
hereby appoints and employs C.H. Dean & Associates, Inc. (the "Adviser") as
discretionary portfolio manager on the terms and conditions set forth herein
of the Funds.
2. ACCEPTANCE OF APPOINTMENT; STANDARD OF PERFORMANCE.
The Adviser accepts the appointment as discretionary portfolio
manager and agrees to use its best professional judgement to make
timely investment decisions for the Funds in accordance with the
provisions of this Agreement.
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<PAGE>
3. PORTFOLIO MANAGEMENT SERVICES OF THE ADVISER.
The Adviser is hereby employed and authorized to select
portfolio securities for investment by the Trust on behalf of the Funds, to
purchase and sell securities of the Funds, and upon making any purchase or sale
decision, to place orders for the execution of such portfolio transactions in
accordance with paragraphs 5 and 6 hereof. In providing portfolio management
services to the Funds, the Adviser shall be subject to such investment
restrictions as are set forth in the Act and the rules thereunder, the Internal
Revenue Code of 1986, applicable state securities laws, the supervision and
control of the Trustees of the Trust, such specific instructions as the Trustees
may adopt and communicate to the Adviser and the investment objectives, policies
and restrictions of the Trust applicable to the Funds furnished pursuant to
paragraph 4. The Adviser is not authorized by the Trust to take any action,
including the purchase or sale of securities for the Funds, in contravention of
any restriction, limitation, objective, policy or instruction described in the
previous sentence. The Adviser shall maintain on behalf of the Trust the records
listed in Schedule A hereto (as amended from time to time). At the Trust's
reasonable request, the Adviser will consult with the Trust with respect to any
decision made by it with respect to the investments of the Funds.
4. INVESTMENT OBJECTIVES, POLICIES AND RESTRICTIONS. The Trust
will provide the Adviser with the statement of investment objectives, policies
and restrictions applicable to the Funds as contained in the Trust's
registration statement under the Act and the Securities Act of 1933, and any
instructions adopted by the
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<PAGE>
Trustees supplemental thereto. The Trust will provide the Adviser with such
further information concerning the investment objectives, policies and
restrictions applicable thereto as the Adviser may from time to time reasonably
request. The Trust retains the right, on written notice to the Adviser from the
Trust, to modify any such objectives, policies or restrictions in any manner at
any time.
5. TRANSACTION PROCEDURES. All transactions will be consummated
by payment to or delivery by Banc One or any successor custodian (the
"Custodian"), or such depositories or agents as may be designated by the
Custodian in writing, as custodian for the Trust, of all cash and/or securities
due to or from the Funds, and the Adviser shall not have possession or custody
thereof. The Adviser shall advise the Custodian and confirm in writing to the
Trust and to MGF Service Corp., or any other designated agent of the Trust,
all investment orders for the Funds placed by it with brokers and dealers.
The Adviser shall issue to the Custodian such instructions as may be
appropriate in connection with the settlement of any transaction initiated by
the Adviser.
6. ALLOCATION OF BROKERAGE. The Adviser shall have authority and
discretion to select brokers and dealers to execute portfolio transactions
initiated by the Adviser and to select the markets on or in which the
transactions will be executed.
In doing so, the Adviser will give primary consideration to securing
the most favorable price and efficient execution. Consistent with this policy,
the Adviser may consider the financial responsibility, research and investment
information and
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<PAGE>
other services provided by brokers or dealers who may effect or be a party to
any such transaction or other transactions to which other clients of the Adviser
may be a party. It is understood that neither the Trust nor the Adviser has
adopted a formula for allocation of the Funds' investment transaction business.
It is also understood that it is desirable for the Trust that the Adviser have
access to supplemental investment and market research and security and economic
analyses provided by certain brokers who may execute brokerage transactions at a
higher commission to the Funds than may result when allocating brokerage to
other brokers on the basis of seeking the lowest commission. Therefore, the
Adviser is authorized to place orders for the purchase and sale of securities
for the Funds with such certain brokers, subject to review by the Trust's
Trustees from time to time with respect to the extent and continuation of this
practice. It is understood that the services provided by such brokers may be
useful to the Adviser in connection with its services to other clients.
On occasions when the Adviser deems the purchase or sale of a security
to be in the best interest of the Funds as well as other clients, the Adviser,
to the extent permitted by applicable laws and regulations, may, but shall be
under no obligation to, aggregate the securities to be sold or purchased in
order to obtain the most favorable price or lower brokerage commissions and
efficient execution. In such event, allocation of the securities so purchased or
sold, as well as expenses incurred in
- 4 -
<PAGE>
the transaction, will be made by the Adviser in the manner it considers to be
the most equitable and consistent with its fiduciary obligations to the Trust
and to such other clients.
For each fiscal quarter of the Trust, the Adviser shall prepare and
render reports to the Trust's Trustees of the total brokerage business placed
and the manner in which the allocation has been accomplished. Such reports shall
set forth at a minimum the information required to be maintained by Rule
31a-1(b)(9) under the Act.
7. PROXIES. The Trust will vote all proxies solicited by or
with respect to the issuers of securities in which assets of the Funds may be
invested from time to time. At the request of the Trust, the Adviser shall
provide the Trust with its recommendations as to the voting of such proxies.
8. REPORTS TO THE ADVISER. The Trust will provide the Adviser
with such periodic reports concerning the status of the Funds as the Adviser
may reasonably request.
9. FEES FOR SERVICES. For all of the services to be rendered
and payments made as provided in this Agreement, each Fund will pay the Adviser
a fee, computed and accrued daily and paid monthly, at the annual rate of
1.00% of its average daily net assets.
10. ALLOCATION OF CHARGES AND EXPENSES. The Adviser shall employ
or provide and compensate the executive, administrative, secretarial and
clerical personnel necessary to provide the services set forth herein,
and shall bear the expense thereof.
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<PAGE>
The Adviser shall compensate all Trustees, officers and employees of the Trust
who are also employees of the Adviser. The Adviser will pay all expenses
incurred in connection with the sale or distribution of the Funds' shares to the
extent such expenses are not assumed by the Funds under the Trust's Distribution
Expense Plans.
The Funds will be responsible for the payment of all operating expenses
of the Funds, including fees and expenses incurred by the Funds in connection
with membership in investment company organizations, brokerage fees and
commissions, legal, auditing and accounting expenses, expenses of registering
shares under federal and state securities laws, insurance expenses, taxes or
governmental fees, fees and expenses of the custodian, the transfer, shareholder
service and dividend disbursing agent and the accounting and pricing agent of
the Funds, expenses including clerical expenses of the issue, sale, redemption
or repurchase of shares of the Funds, the fees and expenses of Trustees of the
Trust who are not interested persons of the Trust, the cost of preparing,
printing and distributing prospectuses, statements, reports and other documents
to shareholders, expenses of shareholders' meetings and proxy solicitations, and
such extraordinary or non-recurring expenses as may arise, including litigation
to which the Trust may be a party and indemnification of the Trust's officers
and Trustees with respect thereto, or any other expense not specifically
described above incurred in the performance of the Trust's
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<PAGE>
obligations. All other expenses not expressly assumed by the Adviser herein
incurred in connection with the organization, registration of shares and
operations of the Funds will be borne by the Funds.
11. OTHER INVESTMENT ACTIVITIES OF THE ADVISER. The Trust
acknowledges that the Adviser or one or more of its affiliates may have
investment responsibilities or render investment advice to or perform other
investment advisory services for other individuals or entities and that the
Adviser, its affiliates or any of its or their directors, officers, agents or
employees may buy, sell or trade in any securities for its or their respective
accounts ("Affiliated Accounts"). Subject to the provisions of paragraph 2
hereof, the Trust agrees that the Adviser or its affiliates may give advice or
exercise investment responsibility and take such other action with respect to
other Affiliated Accounts which may differ from the advice given or the timing
or nature of action taken with respect to the Funds, provided that the Adviser
acts in good faith, and provided further, that it is the Adviser's policy to
allocate, within its reasonable discretion, investment opportunities to the
Funds over a period of time on a fair and equitable basis relative to the
Affiliated Accounts, taking into account the investment objectives and policies
of the Funds and any specific investment restrictions applicable thereto. The
Trust acknowledges that one or more of the Affiliated Accounts may at any time
hold, acquire, increase, decrease, dispose of or otherwise deal with positions
in
- 7 -
<PAGE>
investments in which the Funds may have an interest from time to time, whether
in transactions which involve the Funds or otherwise. The Adviser shall have no
obligation to acquire for the Funds a position in any investment which any
Affiliated Account may acquire, and the Trust shall have no first refusal,
co-investment or other rights in respect of any such investment, either for the
Funds or otherwise.
12. CERTIFICATE OF AUTHORITY. The Trust and the Adviser shall
furnish to each other from time to time certified copies of the resolutions of
their Trustees or Board of Directors or executive committees, as the case may
be, evidencing the authority of officers and employees who are authorized to
act on behalf of the Trust, the Funds and/or the Adviser.
13. LIMITATION OF LIABILITY. The Adviser shall not be liable for
any action taken, omitted or suffered to be taken by it in its reasonable
judgment, in good faith and believed by it to be authorized or within the
discretion or rights or powers conferred upon it by this Agreement, or in
accordance with (or in the absence of) specific directions or instructions from
the Trust, provided, however, that such acts or omissions shall not have
resulted from the Adviser's willful misfeasance, bad faith or gross negligence,
a violation of the standard of care established by and applicable to the
Adviser in its actions under this Agreement or breach of its duty or of its
obligations hereunder. Nothing in this paragraph 13 shall be construed in a
manner inconsistent with Sections 17(h) and (i) of the Act.
- 8 -
<PAGE>
14. CONFIDENTIALITY. Subject to the duty of the Adviser and the
Trust to comply with applicable law, including any demand of any regulatory or
taxing authority having jurisdiction, the parties hereto shall treat as
confidential all information pertaining to the Funds and the actions of the
Adviser and the Trust in respect thereof.
15. ASSIGNMENT. No assignment of this Agreement shall be made by
the Adviser, and this Agreement shall terminate automatically in the event of
such assignment. The Adviser shall notify the Trust in writing sufficiently in
advance of any proposed change of control, as defined in Section 2(a)(9) of the
Act, as will enable the Trust to consider whether an assignment will occur, and
to take the steps necessary to enter into a new contract with the Adviser.
16. REPRESENTATION, WARRANTIES AND AGREEMENTS OF THE TRUST.
The Trust represents, warrants and agrees that:
A. The Adviser has been duly appointed by the Trustees
of the Trust to provide investment advisory services to the Funds as
contemplated hereby.
B. The Trust will deliver to the Adviser true and complete
copies of its then current prospectuses and statements of additional information
as effective from time to time and such other documents or instruments governing
the investments of the Funds and such other information as is necessary for the
Adviser to carry out its obligations under this Agreement.
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<PAGE>
C. The Trust is currently in compliance and shall at
all times comply with the requirements imposed upon the Trust by
applicable law and regulations.
17. REPRESENTATIONS, WARRANTIES AND AGREEMENTS OF THE
ADVISER. The Adviser represents, warrants and agrees that:
A. The Adviser is registered as an investment adviser
under the Investment Advisers Act of 1940.
B. The Adviser will maintain, keep current and preserve on
behalf of the Trust, in the manner and for the time periods required or
permitted by the Act, the records identified in Schedule A. The Adviser agrees
that such records (unless otherwise indicated on Schedule A) are the property of
the Trust, and will be surrendered to the Trust promptly upon request.
C. The Adviser will complete such reports concerning purchases
or sales of securities on behalf of the Funds as the Trust may from time to time
require to ensure compliance with the Act, the Internal Revenue Code of 1986 and
applicable state securities laws.
D. The Adviser has adopted a written code of ethics complying
with the requirements of Rule 17j-1 under the Act and will provide the Trust
with a copy of the code of ethics and evidence of its adoption. Within
forty-five (45) days of the end of the last calendar quarter of each year while
this Agreement is in effect, an executive officer of the Adviser shall certify
to the Trust that the Adviser has complied with the requirements of Rule 17j-1
during the previous year and that there has been no
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<PAGE>
violation of the Adviser's code of ethics or, if such a violation has occurred,
that appropriate action was taken in response to such violation. Upon the
written request of the Trust, the Adviser shall permit the Trust, its employees
or its agents to examine the reports required to be made to the Adviser by Rule
17j-1(c)(1).
E. The Adviser will, promptly after filing with the
Securities and Exchange Commission an amendment to its Form ADV,
furnish a copy of such amendment to the Trust.
F. Upon request of the Trust, the Adviser will
provide assistance to the Custodian in the collection of income
due or payable to the Funds.
G. The Adviser will immediately notify the Trust of the
occurrence of any event which would disqualify the Adviser from serving as an
investment adviser of an investment company pursuant to Section 9(a) of the Act
or otherwise.
18. AMENDMENT. This Agreement may be amended at any time, but
only by written agreement between the Adviser and the Trust, which amendment,
other than amendments to Schedule A, is subject to the approval of the Trustees
and the shareholders of the Funds in the manner required by the Act and the
rules thereunder, subject to any applicable exemptive order of the Securities
and Exchange Commission modifying the provisions of the Act with respect to
approval of amendments to this Agreement.
19. EFFECTIVE DATE; TERM. This Agreement shall become effective
on the date of its execution and shall remain in force for a period of two
(2) years from such date, and from year to
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<PAGE>
year thereafter but only so long as such continuance is specifically approved at
least annually by the vote of a majority of the Trustees who are not interested
persons of the Trust or the Adviser, cast in person at a meeting called for the
purpose of voting on such approval, and by a vote of the Board of Trustees or of
a majority of the outstanding voting securities of the Funds. The aforesaid
requirement that this Agreement may be continued "annually" shall be construed
in a manner consistent with the Act and the rules and regulations thereunder.
20. TERMINATION. This Agreement may be terminated by either party
hereto, without the payment of any penalty, immediately upon written notice to
the other in the event of a breach of any provision thereof by the party so
notified, or otherwise upon sixty (60) days' written notice to the other, but
any such termination shall not affect the status, obligations or liabilities of
any party hereto to the other.
21. OBLIGATIONS OF THE TRUST. It is expressly agreed that the
obligations of the Trust hereunder shall not be binding upon any of the
trustees, shareholders, nominees, officers, agents or employees of the Trust,
personally, but bind only the trust property of the Trust. The execution and
delivery of this Agreement have been authorized by the trustees of the Trust and
signed by an officer of the Trust, acting as such, and neither such
authorization by such trustees nor such execution and delivery by such officer
shall be deemed to have been made by any of them individually or to impose any
liability on any of them personally, but shall bind only the trust property of
the Trust.
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<PAGE>
22. USE OF NAME. The name "Dean" is a property right of the
Adviser. The Adviser may use the name "Dean" in other connections and for other
purposes, including without limitation in the name of other investment
companies, corporations or businesses that it may manage, advise, sponsor or
own, or in which it may have a financial interest. The Trust will discontinue
any use of the name "Dean" if the Adviser ceases to be employed as the Trust's
portfolio manager.
23. DEFINITIONS. As used in paragraphs 15 and 19 of this
Agreement, the terms "assignment," "interested person" and "vote of a majority
of the outstanding voting securities" shall have the meanings set forth in the
Act and the rules and regulations thereunder.
24. APPLICABLE LAW. To the extent that state law is not
preempted by the provisions of any law of the United States heretofore or
hereafter enacted, as the same may be amended from time to time, this Agreement
shall be administered, construed and enforced according to the laws of the
State of Ohio.
DEAN FAMILY OF FUNDS
By: /S/ FRANK H. SCOTT
Title: PRESIDENT
Date: April 1, 1997
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<PAGE>
ACCEPTANCE
The foregoing Agreement is hereby accepted.
C.H. DEAN & ASSOCIATES, INC.
By: /S/ ROBERT D. DEAN
Title: PRESIDENT
Date: April 1, 1997
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<PAGE>
SCHEDULE A
RECORDS TO BE MAINTAINED BY THE ADVISER
1. (Rule 31a-1(b)(5) and (6)) A record of each brokerage order, and all
other portfolio purchases or sales, given by the Adviser on behalf of
the Funds for, or in connection with, the purchase or sale of
securities, whether executed or unexecuted. Such records shall include:
A. The name of the broker;
B. The terms and conditions of the order and of any
modification or cancellation thereof;
C. The time of entry or cancellation;
D. The price at which executed;
E. The time of receipt of a report of execution; and
F. The name of the person who placed the order on behalf
of the Trust.
2. (Rule 31a-1(b)(9)) A record for each fiscal quarter, completed within
ten (10) days after the end of the quarter, showing specifically the
basis or bases upon which the allocation of orders for the purchase and
sale of portfolio securities to named brokers or dealers was effected,
and the division of brokerage commissions or other compensation on such
purchase and sale orders. Such record:
A. Shall include the consideration given to:
(i) The sale of shares of the Funds by brokers or
dealers.
(ii) The supplying of services or benefits by brokers
or dealers to:
(a) The Trust;
(b) The Adviser; and,
(c) Any person affiliated with the foregoing
persons.
(iii) Any other consideration other than the technical
qualifications of the brokers and dealers as
such.
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<PAGE>
B. Shall show the nature of the services or benefits made
available.
C. Shall describe in detail the application of any general or
specific formula or other determinant used in arriving at such
allocation of purchase and sale orders and such division of
brokerage commissions or other compensation.
D. The name of the person responsible for making the
determination of such allocation and such division of
brokerage commissions or other compensation.
3. (Rule 31a-1(b)(10)) A record in the form of an appropriate
memorandum identifying the person or persons, committees or
groups authorizing the purchase or sale of portfolio
securities. Where an authorization is made by a committee
or group, a record shall be kept of the names of its members
who participate in the authorization. There shall be
retained as part of this record any memorandum,
recommendation or instruction supporting or authorizing the
purchase or sale of portfolio securities and such other
information as is appropriate to support the authorization.*
4. (Rule 31a-1(f)) Such accounts, books and other documents as are
required to be maintained by registered investment advisers by rule
adopted under Section 204 of the Investment Advisers Act of 1940, to
the extent such records are necessary or appropriate to record the
Adviser's transactions with respect to the Funds.
- -----------------------
* Such information might include: the current Form 10-K, annual and
quarterly reports, press releases, reports by analysts and from
brokerage firms (including their recommendation; i.e., buy, sell, hold)
or any internal reports or portfolio adviser reviews.
- 16 -
<PAGE>
C.H. Dean & Associates, Inc.
2480 Kettering Tower
Dayton, Ohio 45423
Re: Advisory Agreement
Ladies and Gentlemen:
The Dean Family of Funds (the "Trust") is an open-end management
investment company registered under the Investment Company Act of 1940, as
amended (the "Act"), and subject to the rules and regulations promulgated
thereunder. The Trust's shares of beneficial interest are divided into separate
series and each such share of a series represents an undivided interest in the
assets, subject to the liabilities, allocated to that series and each series has
separate investment objectives and policies. The International Fund (the
"Fund"), a series of the Trust, has been created for the purpose of investing
and reinvesting its assets in securities pursuant to the investment objectives
and policies as set forth in its registration statement under the Act and the
Securities Act of 1933, as heretofore amended and supplemented.
1. APPOINTMENT AS ADVISER. The Trust being duly authorized hereby
appoints and employs C.H. Dean & Associates, Inc. (the "Adviser") to manage the
investment and reinvestment of the assets of the Fund on the terms and
conditions set forth herein.
2. ACCEPTANCE OF APPOINTMENT; STANDARD OF PERFORMANCE. The Adviser
accepts the appointment and agrees to render the services and assume the
obligations set forth herein.
<PAGE>
3. PORTFOLIO MANAGEMENT SERVICES OF THE ADVISER. The Adviser shall have
overall supervisory responsibility for the general management and investment of
the assets and portfolio securities of the Fund. The Adviser shall provide
overall investment programs and strategies for the Fund, shall revise such
programs as necessary and shall monitor and report periodically to the Board of
Trustees concerning the implementation of the programs.
The Adviser, with the approval of the Board of Trustees of the Trust as
to particular appointments, intends to (i) appoint one or more persons or
companies (the "Sub-Adviser") and, subject to the terms and conditions of this
Agreement, the Sub-Adviser shall have full investment discretion and shall make
all determinations with respect to the investment of the Fund's assets and the
purchase and sale of portfolio securities with those assets, and (ii) take such
steps as may be necessary to implement such appointments. The Adviser shall be
solely responsible for paying the fees and expenses of the Sub-Adviser for its
services to the Fund. The Adviser shall not be responsible or liable for the
investment merits of any decision by the Sub-Adviser to purchase, hold or sell a
portfolio security for the Fund.
The Adviser shall evaluate sub-advisers and shall recommend to the
Board of Trustees the Sub-Adviser which the Adviser believes is best suited to
invest the assets of the Fund; shall monitor and evaluate the investment
performance of the Fund's
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<PAGE>
Sub-Adviser; shall recommend changes in the Sub-Adviser when appropriate; shall
coordinate the investment activities of the Sub-Adviser to ensure compliance
with applicable restrictions and limitations applicable to the Fund; and shall
compensate the Sub- Adviser.
In providing such services to the Fund, the Adviser shall be subject to
such investment restrictions as are set forth in the Act and the rules
thereunder, the Internal Revenue Code of 1986, as amended (the "Code"),
applicable state securities laws, the supervision and control of the Trustees of
the Trust, such specific instructions as the Trustees may adopt and communicate
to the Adviser and the investment objectives, policies and restrictions of the
Fund furnished pursuant to paragraph 4. The Adviser is not authorized by the
Trust to take any action, including the purchase or sale of securities for the
Fund, in contravention of any restriction, limitation, objective, policy or
instruction described in the previous sentence.
4. INVESTMENT OBJECTIVES, POLICIES AND RESTRICTIONS. The Trust will
provide the Adviser with the statement of investment objectives, policies and
restrictions applicable to the Fund as contained in the Trust's registration
statement under the Act and the Securities Act of 1933, and any instructions
adopted by the Trustees supplemental thereto. The Trust will provide the Adviser
with such further information concerning the investment objectives, policies and
restrictions applicable thereto as the Adviser may from time to time reasonably
request. The Trust
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<PAGE>
retains the right, on written notice to the Adviser from the Trust, to modify
any such objectives, policies or restrictions in any manner at any time.
5. TRANSACTION PROCEDURES. All transactions will be consummated by
payment to or delivery by The Northern Trust Company or any successor custodian
(the "Custodian"), or such depositories or agents as may be designated by the
Custodian in writing, as custodian for the Fund, of all cash and/or securities
due to or from the Fund, and the Adviser shall not have possession or custody
thereof. The Adviser shall advise the Custodian and confirm in writing to the
Trust and to Countrywide Fund Services, Inc., or any other designated agent of
the Trust, all investment orders for the Fund placed by it with brokers and
dealers. The Adviser shall issue to the Custodian such instructions as may be
appropriate in connection with the settlement of any transaction initiated by
the Adviser.
6. ALLOCATION OF BROKERAGE. The Sub-Adviser, subject to the limitations
contained in this paragraph 5, shall place, on behalf of the Fund, orders for
the execution of portfolio transactions. The Sub-Adviser is not authorized by
the Trust to take any action, including the purchase or sale of securities for
the Fund's account, (a) in contravention of (i) any investment restrictions set
forth in the Act and the rules thereunder, (ii) specific instructions adopted by
the Board of Trustees and communicated to the Adviser or the Sub-Adviser, (iii)
the investment objectives, policies and restrictions of the Fund as
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<PAGE>
set forth in the Trust's Registration Statement, or (iv) instructions from the
Adviser communicated to the Sub-Adviser, or (b) which would have the effect of
causing the Fund to fail to qualify or to cease to qualify as a regulated
investment company under the Code or any succeeding statute.
Subject to the foregoing, the Sub-Adviser shall have authority and
discretion to select brokers and dealers to execute portfolio transactions
initiated by the Sub-Adviser and to select the markets on or in which the
transactions will be executed. In doing so, the Sub-Adviser will give primary
consideration to securing the most favorable price and efficient execution.
Consistent with the Rules of Fair Practice of the National Association of
Securities Dealers, Inc., and subject to seeking most favorable price and
efficient execution, the Sub-Adviser may (i) pay commissions to brokers or
dealers other than its affiliates which are higher than might be charged by
another qualified broker to obtain brokerage and/or research services considered
by the Sub-Adviser to be useful or desirable in the performance of its duties
hereunder and for the investment management of other advisory accounts over
which it or its affiliates exercise investment discretion and (ii) consider
sales by brokers or dealers (other than its affiliates) of shares of the Fund as
a factor in its selection of brokers and dealers for the Fund's portfolio
transactions. It is understood that neither the Trust, the Adviser nor the
Sub-Adviser has adopted a formula for allocation of the Fund's investment
transaction business. It
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<PAGE>
is also understood that it is desirable for the Fund that the Sub-Adviser have
access to supplemental investment and market research and security and economic
analyses provided by certain brokers who may execute brokerage transactions at a
higher commission to the Fund than may result when allocating brokerage to other
brokers on the basis of seeking the lowest commission. Therefore, the
Sub-Adviser is authorized to place orders for the purchase and sale of
securities for the Fund with such certain brokers, subject to review by the
Trust's Trustees from time to time with respect to the extent and continuation
of this practice, provided that the Sub-Adviser determines in good faith that
the amount of the commission is reasonable in relation to the value of the
brokerage and research services provided by the executing broker or dealer. The
determination may be viewed in terms of either a particular transaction or the
Sub-Adviser's overall responsibilities with respect to the Fund and to other
accounts over which it exercises investment discretion. It is understood that
although the information may be useful to the Trust and the Sub-Adviser, it is
not possible to place a dollar value on such information. It is understood that
the services provided by such brokers may be useful to the Sub-Adviser in
connection with its services to other clients.
On occasions when the Sub-Adviser deems the purchase or sale of a
security to be in the best interest of the Fund as well as other clients, the
Sub-Adviser, to the extent permitted by applicable laws and regulations, may,
but shall be under no obligation to, aggregate the securities to be sold or
purchased in order to obtain the most favorable price or lower brokerage
- 6 -
<PAGE>
commissions and efficient execution. In such event, allocation of the securities
so purchased or sold, as well as expenses incurred in the transaction, will be
made by the Sub-Adviser in the manner it considers to be the most equitable and
consistent with its fiduciary obligations to the Trust and to such other
clients.
The Adviser will not execute any portfolio transactions for the Fund's
account with a broker or dealer which is an "affiliated person" (as defined in
the Act) of the Trust, the Adviser or the Sub-Adviser without the prior written
approval of the Adviser. The Adviser agrees that it will provide the Sub-
Adviser with a list of brokers and dealers which are "affiliated persons" of the
Trust, the Adviser or the Sub-Adviser.
For each fiscal quarter of the Trust, the Sub-Adviser shall prepare and
render reports to the Trust's Trustees of the total brokerage business placed
and the manner in which the allocation has been accomplished. Such reports shall
set forth at a minimum the information required to be maintained by Rule
31a-1(b)(9) under the Act.
7. PROXIES. The Sub-Adviser will vote all proxies solicited by or with
respect to the issuers of securities in which assets of the Fund may be invested
from time to time.
8. REPORTS TO THE ADVISER. The Trust will provide the Adviser with such
periodic reports concerning the status of the Fund as the Adviser may reasonably
request.
- 7 -
<PAGE>
9. FEES FOR SERVICES. For all of the services to be rendered and
payments made as provided in this Agreement, the Fund will pay the Adviser a
fee, computed and accrued daily and paid monthly, at the annual rate of 1.25% of
its average daily net assets.
10. ALLOCATION OF CHARGES AND EXPENSES. The Adviser shall employ or
provide and compensate the executive, administrative, secretarial and clerical
personnel necessary to provide the services set forth herein, and shall bear the
expense thereof. The Adviser shall compensate all Trustees, officers and
employees of the Trust who are also employees of the Adviser. The Adviser will
pay all expenses incurred in connection with the sale or distribution of the
Fund's shares to the extent such expenses are not assumed by the Fund under the
Trust's Distribution Expense Plans.
The Fund will be responsible for the payment of all operating expenses
of the Fund, including fees and expenses incurred by the Fund in connection with
membership in investment company organizations, brokerage fees and commissions,
legal, auditing and accounting expenses, expenses of registering shares under
federal and state securities laws, insurance expenses, taxes or governmental
fees, fees and expenses of the custodian, the transfer, shareholder service and
dividend disbursing agent and the accounting and pricing agent of the Fund,
expenses including clerical expenses of the issue, sale, redemption or
repurchase of shares of the Fund, the fees and expenses of
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<PAGE>
Trustees of the Trust who are not interested persons of the Trust, the cost of
preparing, printing and distributing prospectuses, statements, reports and other
documents to shareholders, expenses of shareholders' meetings and proxy
solicitations, and such extraordinary or non-recurring expenses as may arise,
including litigation to which the Trust may be a party and indemnification of
the Trust's officers and Trustees with respect thereto, or any other expense not
specifically described above incurred in the performance of the Trust's
obligations. All other expenses not expressly assumed by the Adviser herein
incurred in connection with the organization, registration of shares and
operations of the Fund will be borne by the Fund.
11. OTHER INVESTMENT ACTIVITIES OF THE ADVISER. The Trust acknowledges
that the Adviser or one or more of its affiliates may have investment
responsibilities or render investment advice to or perform other investment
advisory services for other individuals or entities and that the Adviser, its
affiliates or any of its or their directors, officers, agents or employees may
buy, sell or trade in any securities for its or their respective accounts
("Affiliated Accounts"). The Trust agrees that the Adviser or its affiliates may
give advice or exercise investment responsibility and take such other action
with respect to other Affiliated Accounts which may differ from the advice given
or the timing or nature of action taken with respect to the Fund, provided that
the Adviser acts in good faith, and provided
- 9 -
<PAGE>
further, that it is the Adviser's policy to allocate, within its reasonable
discretion, investment opportunities to the Fund over a period of time on a fair
and equitable basis relative to the Affiliated Accounts, taking into account the
investment objectives and policies of the Fund and any specific investment
restrictions applicable thereto. The Trust acknowledges that one or more of the
Affiliated Accounts may at any time hold, acquire, increase, decrease, dispose
of or otherwise deal with positions in investments in which the Fund may have an
interest from time to time, whether in transactions which involve the Funds or
otherwise. The Adviser shall have no obligation to acquire for the Fund a
position in any investment which an Affiliated Account may acquire, and the
Trust shall have no first refusal, co- investment or other rights in respect of
any such investment, either for the Fund or otherwise.
12. CERTIFICATE OF AUTHORITY. The Trust and the Adviser shall furnish
to each other from time to time certified copies of the resolutions of their
Trustees or Board of Directors or executive committees, as the case may be,
evidencing the authority of officers and employees who are authorized to act on
behalf of the Trust, the Fund and/or the Adviser.
13. LIMITATION OF LIABILITY. The Adviser shall not be liable for any
action taken, omitted or suffered to be taken by it in its reasonable judgment,
in good faith and believed by it to be authorized or within the discretion or
rights or powers conferred upon it by this Agreement, or in accordance with (or
in
- 10 -
<PAGE>
the absence of) specific directions or instructions from the Trust; provided,
however, that such acts or omissions shall not have resulted from the Adviser's
willful misfeasance, bad faith or gross negligence, a violation of the standard
of care established by and applicable to the Adviser in its actions under this
Agreement or breach of its duty or of its obligations hereunder. Nothing in this
paragraph 13 shall be construed in a manner inconsistent with Sections 17(h) and
(i) of the Act.
14. CONFIDENTIALITY. Subject to the duty of the Adviser and the Trust
to comply with applicable law, including any demand of any regulatory or taxing
authority having jurisdiction, the parties hereto shall treat as confidential
all information pertaining to the Funds and the actions of the Adviser and the
Trust in respect thereof.
15. ASSIGNMENT. No assignment of this Agreement shall be made by the
Adviser, and this Agreement shall terminate automatically in the event of such
assignment. The Adviser shall notify the Trust in writing sufficiently in
advance of any proposed change of control, as defined in Section 2(a)(9) of the
Act, as will enable the Trust to consider whether an assignment will occur, and
to take the steps necessary to enter into a new contract with the Adviser.
16. REPRESENTATION, WARRANTIES AND AGREEMENTS OF THE TRUST. The Trust
represents, warrants and agrees that:
A. The Adviser has been duly appointed by the Trustees of
the Trust to provide investment advisory services to the Fund as contemplated
hereby.
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<PAGE>
B. The Trust will deliver to the Adviser true and complete
copies of its then current prospectuses and statements of additional information
as effective from time to time and such other documents or instruments governing
the investments of the Funds and such other information as is necessary for the
Adviser to carry out its obligations under this Agreement.
C. The Trust is currently in compliance and shall at
all times comply with the requirements imposed upon the Trust by
applicable law and regulations.
17. REPRESENTATIONS, WARRANTIES AND AGREEMENTS OF THE ADVISER. The
Adviser represents, warrants and agrees that:
A. The Adviser is registered as an investment adviser
under the Investment Advisers Act of 1940.
B. The Adviser has adopted a written code of ethics complying
with the requirements of Rule 17j-1 under the Act and will provide the Trust
with a copy of the code of ethics and evidence of its adoption. Within
forty-five (45) days of the end of the last calendar quarter of each year while
this Agreement is in effect, an executive officer of the Adviser shall certify
to the Trust that the Adviser has complied with the requirements of Rule 17j-1
during the previous year and that there has been no violation of the Adviser's
code of ethics or, if such a violation has occurred, that appropriate action was
taken in response to such violation. Upon the written request of the Trust, the
Adviser shall permit the Trust, its employees or its agents to examine the
reports required to be made to the Adviser by Rule 17j-1(c)(1).
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<PAGE>
C. The Adviser will, promptly after filing with the Securities
and Exchange Commission an amendment to its Form ADV, furnish a copy of such
amendment to the Trust.
D. Upon request of the Trust, the Adviser will provide
assistance to the Custodian in the collection of income due or payable to the
Fund.
E. The Adviser will immediately notify the Trust of the
occurrence of any event which would disqualify the Adviser from serving as an
investment adviser of an investment company pursuant to Section 9(a) of the Act
or otherwise.
18. AMENDMENT. This Agreement may be amended at any time, but only by
written agreement between the Adviser and the Trust, which amendment is subject
to the approval of the Trustees and the shareholders of the Fund in the manner
required by the Act and the rules thereunder, subject to any applicable
exemptive order of the Securities and Exchange Commission modifying the
provisions of the Act with respect to approval of amendments to this Agreement.
19. EFFECTIVE DATE; TERM. This Agreement shall become effective on the
date of its execution and shall remain in force for a period of two (2) years
from such date, and from year to year thereafter but only so long as such
continuance is specifically approved at least annually by the vote of a majority
of the Trustees who are not interested persons of the Trust, the Adviser or the
Sub-Adviser, cast in person at a meeting called for the purpose of voting on
such approval, and by a vote of the Board of Trustees or of a majority of the
outstanding voting
- 13 -
<PAGE>
securities of the Fund. The aforesaid requirement that this Agreement may be
continued "annually" shall be construed in a manner consistent with the Act and
the rules and regulations thereunder.
20. TERMINATION. This Agreement may be terminated by either party
hereto, without the payment of any penalty, immediately upon written notice to
the other in the event of a breach of any provision thereof by the party so
notified, or otherwise upon sixty (60) days' written notice to the other, but
any such termination shall not affect the status, obligations or liabilities of
any party hereto to the other.
21. OBLIGATIONS OF THE TRUST. It is expressly agreed that the
obligations of the Trust hereunder shall not be binding upon any of the
trustees, shareholders, nominees, officers, agents or employees of the Trust,
personally, but bind only the trust property of the Trust. The execution and
delivery of this Agreement have been authorized by the trustees of the Trust and
signed by an officer of the Trust, acting as such, and neither such
authorization by such trustees nor such execution and delivery by such officer
shall be deemed to have been made by any of them individually or to impose any
liability on any of them personally, but shall bind only the trust property of
the Trust.
22. USE OF NAME. The name "Dean" is a property right of the Adviser.
The Adviser may use the name "Dean" in other connections and for other purposes,
including without limitation in the name of other investment companies,
corporations or businesses that it may manage, advise, sponsor or own, or in
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<PAGE>
which it may have a financial interest. The Trust will discontinue any use of
the name "Dean" if the Adviser ceases to be employed as the Trust's portfolio
manager.
23. DEFINITIONS. As used in paragraphs 15 and 19 of this Agreement, the
terms "assignment," "interested person" and "vote of a majority of the
outstanding voting securities" shall have the meanings set forth in the Act and
the rules and regulations thereunder.
24. APPLICABLE LAW. To the extent that state law is not preempted by
the provisions of any law of the United States heretofore or hereafter enacted,
as the same may be amended from time to time, this Agreement shall be
administered, construed and enforced according to the laws of the State of Ohio.
DEAN FAMILY OF FUNDS
By: -----------------------
Title:
Date: -----------------, 1997
ACCEPTANCE
The foregoing Agreement is hereby accepted.
C.H. DEAN & ASSOCIATES, INC.
By: ------------------------
Title:
Date: -----------------, 1997
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<PAGE>
SUB-ADVISORY AGREEMENT
Newton Capital Management Limited
71 Queen Victoria Street
London EC4V 4DR
Ladies and Gentlemen:
Dean Family of Funds (the "Trust"), an Ohio business trust, is a
diversified open-end management investment company registered under the
Investment Company Act of 1940, as amended (the "Act"), and is subject to the
rules and regulations promulgated thereunder. The Trust's shares of beneficial
interest are divided into separate series or funds. Each such share of a fund
represents an undivided interest in the assets, subject to the liabilities,
allocated to that fund. Each fund has separate investment objectives and
policies. The International Fund (the "Fund") has been established as a series
of the Trust.
C.H. Dean & Associates, Inc. (the "Adviser") acts as the investment
adviser for the Fund pursuant to the terms of an Advisory Agreement. The Adviser
is responsible for the coordination of investment of the Fund's assets in
portfolio securities. However, specific portfolio purchases and sales for the
investment portfolio of the Fund are to be made by advisory organizations
recommended by the Adviser and approved by the Board of Trustees of the Trust.
<PAGE>
1. APPOINTMENT AS SUB-ADVISER. The Trust being duly authorized hereby
appoints and employs Newton Capital Management Limited (the "Sub-Adviser") as
the discretionary portfolio manager of the Fund, on the terms and conditions set
forth herein.
2. ACCEPTANCE OF APPOINTMENT; STANDARD OF PERFORMANCE. The Sub-Adviser
accepts the appointment as the discretionary portfolio manager and agrees that
in the performance of its duties under this Agreement, it shall at all times use
all reasonable efforts to conform to, and act in accordance with, any
requirements imposed by (i) the provisions of the Act, and of any rules or
regulations in force thereunder; (ii) any other applicable provision of law;
(iii) the provisions of the Declaration of Trust and Bylaws of the Trust, as
such documents are amended from time to time; (iv) the investment objectives,
policies and restrictions applicable to the Fund as set forth in the Trust's
Registration Statement on Form N-1A and (v) any policies and determinations of
the Board of Trustees of the Trust with respect to the Fund.
3. PORTFOLIO MANAGEMENT SERVICES OF SUB-ADVISER. The Sub-Adviser is
hereby employed and authorized to select portfolio securities for investment by
the Fund, to purchase and sell securities of the Fund, and upon making any
purchase or sale decision, to place orders for the execution of such portfolio
transactions in accordance with paragraphs 5 and 6 hereof. In providing
portfolio management services to the Fund, the
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<PAGE>
Sub-Adviser shall be subject to such investment restrictions as are set forth in
the Act and the rules thereunder, the Internal Revenue Code of 1986, applicable
state securities laws, the supervision and control of the Board of Trustees of
the Trust, such specific instructions as the Board of Trustees may adopt and
communicate to the Sub-Adviser, the investment objectives, policies and
restrictions of the Fund furnished pursuant to paragraph 4, the provisions of
Schedule A hereto and general instructions from the Adviser. The Sub-Adviser is
not authorized by the Fund to take any action, including the purchase or sale of
securities for the Fund, in contravention of any restriction, limitation,
objective, policy or instruction described in the previous sentence. The
Sub-Adviser shall maintain on behalf of the Fund the records listed in Schedule
A hereto (as amended from time to time). At the Trust's reasonable request, the
Sub-Adviser will consult with the Adviser with respect to any decision made by
it with respect to the investments of the Fund.
4. INVESTMENT OBJECTIVES, POLICIES AND RESTRICTIONS. The Trust will
provide the Sub-Adviser with the statement of investment objectives, policies
and restrictions applicable to the Fund as contained in the Fund's registration
statements under the Act and the Securities Act of 1933, and any instructions
adopted by the Board of Trustees supplemental thereto. The Trust will provide
the Sub-Adviser with such further information concerning the investment
objectives, policies and restrictions applicable thereto as the Sub-Adviser may
from time to time
- 3 -
<PAGE>
reasonably request. The Trust retains the right, on written notice to the
Sub-Adviser from the Trust or the Adviser, to modify any such objectives,
policies or restrictions in any manner at any time.
5. ALLOCATION OF BROKERAGE. The Sub-Adviser shall have the authority
and discretion to select brokers and dealers to execute portfolio transactions
initiated by the Sub-Adviser, and for the selection of the markets on or in
which the transactions will be executed.
A. In doing so, the Sub-Adviser will give primary
consideration to securing the best execution, taking into account such factors
as price (including the applicable brokerage commission or dealer spread), the
execution capability, financial responsibility and responsiveness of the broker
or dealer and the brokerage and research services provided by the broker or
dealer. Consistent with the Rules of Fair Practice of the National Association
of Securities Dealers, Inc., and subject to seeking most favorable price and
efficient execution, the Sub-Adviser may (i) pay commissions to brokers or
dealers other than its affiliates which are higher than might be charged by
another qualified broker to obtain brokerage and/or research services considered
by the Sub-Adviser to be useful or desirable in the performance of its duties
hereunder and for the investment management of other advisory accounts over
which it or its affiliates exercise investment discretion and (ii) consider
sales by brokers or dealers (other than its affiliates) of shares of
- 4 -
<PAGE>
the Fund as a factor in its selection of brokers and dealers for the Fund's
portfolio transactions. It is understood that neither the Trust, the Adviser nor
the Sub-Adviser have adopted a formula for allocation of the Fund's investment
transaction business. It is also understood that it is desirable for the Fund
that the Sub-Adviser have access to supplemental investment and market research
and security and economic analyses provided by certain brokers who may execute
brokerage transactions at a higher commission to the Fund than may result when
allocating brokerage to other brokers on the basis of seeking the lowest
commission. Therefore, the Sub-Adviser is authorized to place orders for the
purchase and sale of securities for the Fund with such certain brokers, subject
to review by the Trust's Board of Trustees from time to time with respect to the
extent and continuation of this practice, provided that the Sub-Adviser
determines in good faith that the amount of the commission is reasonable in
relation to the value of the brokerage and research services provided by the
executing broker or dealer. The determination may be viewed in terms of either a
particular transaction or the Sub-Adviser's overall responsibilities with
respect to the Fund and to the other accounts over which it exercises investment
discretion. It is understood that although the information may be useful to the
Trust and the Sub-Adviser, it is not possible to place a dollar value on such
information.
On occasions when the Sub-Adviser deems the purchase or sale of a
security to be in the best interest of the Fund as well as other clients, the
Sub-Adviser, to the extent permitted by
- 5 -
<PAGE>
applicable laws and regulations, may, but shall be under no obligation to,
aggregate the securities to be sold or purchased in order to obtain the most
favorable price or lower brokerage commissions and efficient execution. In such
event, allocation of the securities so purchased or sold, as well as expenses
incurred in the transaction, will be made by the Sub-Adviser in the manner it
considers to be the most equitable and consistent with its fiduciary obligations
to the Fund with respect to the Fund and to such other clients.
For each fiscal quarter of the Fund, the Sub-Adviser shall prepare and
render reports to the Adviser and the Trust's Board of Trustees of the total
brokerage business placed and the manner in which the allocation has been
accomplished. Such reports shall set forth at a minimum the information required
to be maintained by Rule 31a-1(b)(9) under the Act.
B. The Sub-Adviser agrees that it will not execute any
portfolio transactions for the Fund's account with a broker or dealer which is
an "affiliated person" (as defined in the Act) of the Trust, the Adviser, the
Sub-Adviser or any portfolio manager of the Trust without the prior written
approval of the Adviser. The Adviser agrees that it will provide the Sub-Adviser
with a list of brokers and dealers which are "affiliated persons" of the Trust,
the Adviser or the Sub-Adviser.
6. TRANSACTION PROCEDURES. All transactions will be consummated by
payment to or delivery by the Fund's custodian (the "Custodian"), or such
depositories or agents as may be designated by the Custodian in writing, as
custodian for the
- 6 -
<PAGE>
Fund, of all cash and/or securities due to or from the Fund, and the Sub-Adviser
shall not have possession or custody thereof. The Sub-Adviser shall advise the
Custodian and confirm in writing to the Trust and to the Adviser all investment
orders for the Fund placed by it with brokers and dealers. The Sub-Adviser shall
issue to the Custodian such instructions as may be appropriate in connection
with the settlement of any transaction initiated by the Sub-Adviser. It shall be
the responsibility of the Sub-Adviser to take appropriate action if the
Custodian fails to confirm in writing proper execution of the instructions.
7. PROXIES. The Sub-Adviser will vote all proxies solicited by or with
respect to the issuers of securities in which assets of the Fund may be invested
from time to time.
8. REPORTS TO THE SUB-ADVISER. The Trust will provide the Sub-Adviser
with such periodic reports concerning the status of the Fund as the Sub-Adviser
may reasonably request.
9. FEES FOR SERVICES. For the services provided to the Fund, the
Adviser shall pay the Sub-Adviser a fee equal to the annual rate of .50% of the
average value of the Fund's daily net assets.
The Sub-Adviser's fees shall be payable quarterly in arrears within
thirty days following the end of each quarter. Pursuant to the provisions of the
Advisory Agreement between the Trust and the Adviser, the Adviser is solely
responsible for the payment of fees to the Sub-Adviser, and the Sub-Adviser
agrees to seek payment of the Sub-Adviser's fees solely from the Adviser. The
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Sub-Adviser agrees to pay the compensation of any persons rendering any services
to the Fund who are officers, directors or employees of the Sub-Adviser.
10. NON-EXCLUSIVE ADVISORY SERVICES. Nothing in this Agreement shall
prevent the Sub-Adviser or any director, officer, employee or other affiliate
thereof from acting as investment adviser for any other person, firm or
corporation, or from engaging in any other lawful activity and shall not in any
way limit or restrict the Sub-Adviser or any of its directors, officers,
employees or agents from buying, selling or trading any securities for its or
their own accounts or for the accounts of others for whom it or they may be
acting, other than to the extent such activity is otherwise limited by the
Trust's Code of Ethics.
11. OTHER INVESTMENT ACTIVITIES OF THE SUB-ADVISER. The Trust
acknowledges that the Sub-Adviser or one or more of its affiliates may have
investment responsibilities or render investment advice to or perform other
investment advisory services for other individuals or entities and that the Sub-
Adviser, its affiliates or any of its or their directors, officers, agents or
employees may buy, sell or trade in any securities for its or their respective
accounts ("Affiliated Accounts"). Subject to the provisions of paragraph 2
hereof, the Trust agrees that the Sub-Adviser or its affiliates may give advice
or exercise investment responsibility and take such other action with respect to
other Affiliated Accounts which may differ
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<PAGE>
from the advice given or the timing or nature of action taken with respect to
the Fund, provided that the Sub-Adviser acts in good faith, and provided
further, that it is the Sub-Adviser's policy to allocate, within its reasonable
discretion, investment opportunities to the Fund over a period of time on a fair
and equitable basis relative to the Affiliated Accounts, taking into account the
investment objectives and policies of the Fund and any specific investment
restrictions applicable thereto. The Trust acknowledges that one or more of the
Affiliated Accounts may at any time hold, acquire, increase, decrease, dispose
of or otherwise deal with positions in investments in which the Fund may have an
interest from time to time, whether in transactions which involve the Fund or
otherwise. The Sub-Adviser shall have no obligation to acquire for the Fund a
position in any investment which any Affiliated Account may acquire, and the
Trust shall have no first refusal, co-investment or other rights in respect of
any such investment, either for the Fund or otherwise.
12. CERTIFICATE OF AUTHORITY. The Trust, the Adviser and the
Sub-Adviser shall furnish to each other from time to time certified copies of
the resolutions of their Board of Trustees or Board of Directors or executive
committees, as the case may be, evidencing the authority of officers and
employees who are authorized to act on behalf of the Trust, the Fund, the
Adviser and/or the Sub-Adviser.
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13. LIMITATION OF LIABILITY. The Sub-Adviser shall give the Fund the
benefit of its best judgment and effort in rendering services hereunder, but
neither the Sub-Adviser nor any of its officers, directors, employees, agents or
controlling persons shall be liable for any act or omission or for any loss
sustained by the Fund in connection with the matters to which this Agreement
relates, except a loss resulting from willful misfeasance, bad faith or gross
negligence in the performance of its duties, or by reason of its reckless
disregard of its obligations and duties under this Agreement; provided, however,
that the foregoing shall not constitute a waiver of any rights which the Trust
may have which may not be waived under applicable law.
In addition, the Sub-Adviser did not prepare and is not responsible for
any part of the Trust's registration statement on Form N-1A or any amendment or
supplement thereto other than the description of the Sub-Adviser provided to the
Trust by the Sub- Adviser.
14. CONFIDENTIALITY. Each of the parties shall maintain in strict
confidentiality any information or documentation it may obtain regarding any of
the other parties to this Agreement, including but not limited to their business
activities or financial condition, with the exception of reports or disclosures
required to be made or other actions required to be taken under applicable laws
and regulations or the order of a regulator or court of competent jurisdiction.
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15. INDEMNITY AND LIABILITY.
A. The Trust and the Adviser (for the purposes of this
subparagraph 15.A., each of the foregoing being an "indemnitor"), severally and
not jointly, will indemnify and hold the Sub-Adviser and its respective
officers, directors, partners, agents, controlling persons and employees (for
the purposes of this subparagraph 15.A., each of the foregoing being an
"indemnitee") harmless from and against all losses, claims, liabilities and
expenses of any kind (including reasonable attorneys' fees and expenses) and
amounts paid in satisfaction of judgments, in compromise or as fines or
penalties resulting from any inaccuracy of any representation made by the
indemnitor herein (including any supplement hereto) or arising out of or with
respect to actions taken by the Sub-Adviser; provided, however, that (1) no
indemnitee shall be indemnified hereunder against any liability to the Trust or
its shareholders or any expense of such indemnitee arising by reason of (i)
willful misfeasance, (ii) bad faith, (iii) gross negligence, (iv) reckless
disregard of the duties involved in the conduct of his position (the conduct
referred to in such clauses (i) through (iv) being sometimes referred to herein
as "disabling conduct"), (2) as to any matter disposed of by settlement or a
compromise payment by such indemnitee, pursuant to a consent decree or
otherwise, no indemnification either for said payment or for any other expenses
shall be provided unless there has been a determination that such settlement or
compromise is in the best
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interests of the Trust and that such indemnitee appears to have acted in good
faith in the reasonable belief that his action was in the best interests of the
Trust and did not involve disabling conduct by such indemnitee and (3) with
respect to any action, suit or other proceeding voluntarily prosecuted by an
indemnitee as plaintiff, indemnification shall be mandatory only if the
prosecution of such action, suit or other proceeding by such indemnitee was
authorized by a majority of the full Board of the Trust.
B. The Sub-Adviser (for purposes of this subparagraph B, the
"indemnitor") will indemnify and hold the Trust and the Adviser and each of
their respective officers, directors, trustees, partners, agents, controlling
persons and employees (for purposes of this subparagraph 15.B., an "indemnitee")
harmless from and against all losses, claims, liabilities and expenses of any
kind (including reasonable attorneys' fees and expenses) and amounts paid in
satisfaction of judgments, in compromise or as fines or penalties resulting from
any inaccuracy of any representation made by the indemnitor herein (including
any supplement hereto) or arising by reason of willful misfeasance, bad faith,
or gross negligence, of the Sub-Adviser or its officers, directors, partners,
agents, controlling persons and employees, or reckless disregard of the duties
of any such person pursuant to this Agreement.
C. The indemnitor shall make advance payments in connection
with the expenses of defending any action with respect to which indemnification
might be sought hereunder if the
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indemnitor receives a written affirmation of the indemnitee's good faith belief
that the standard of conduct necessary for indemnification has been met and a
written undertaking to reimburse the indemnitor unless it is subsequently
determined that he is entitled to such indemnification and if the directors or
trustees, as the case may be, of the indemnitor determine that the facts then
known to them would not preclude indemnification. In addition, at least one of
the following conditions must be met: (A) the indemnitee shall provide a
security for his undertaking; (B) the indemnitor shall be insured against losses
arising by reason of any lawful advances, or (C) a majority of a quorum of
directors or trustees, as the case may be, of the indemnitor who are neither
"interested persons" of the indemnitor (as defined in Section 2(a)(19) of the
Act) nor parties to the proceeding ("Disinterested Non-Party Directors") or an
independent legal counsel in a written opinion, shall determine, based on a
review of readily available facts (as opposed to a full trial-type inquiry),
that there is reason to believe that the indemnitee ultimately will be found
entitled to indemnification.
All determinations with respect to indemnification hereunder shall be
made (1) by a final decision on the merits by a court or other body before whom
the proceeding was brought that such indemnitee is not liable by reason of
disabling conduct, or (2) in the absence of such a decision, by (i) a majority
vote of a quorum of the Disinterested Non-party Directors of the
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indemnitor, or (ii) if such a quorum is not obtainable or even, if obtainable,
if a majority vote of such quorum so directs, independent legal counsel in a
written opinion.
Notwithstanding the foregoing, the indemnitor shall not be obligated to
provide any such indemnification to the extent such provision would waive any
right which the indemnitor cannot lawfully waive. The rights accruing to any
indemnitee under these provisions shall not exclude any other right to which he
may be lawfully entitled.
16. ASSIGNMENT. No assignment of this Agreement shall be made by the
Sub-Adviser, and this Agreement shall terminate automatically in the event of
such assignment. The Sub-Adviser shall notify the Trust in writing sufficiently
in advance of any proposed change of control, as defined in Section 2(a)(9) of
the Act, as will enable the Trust to consider whether an assignment will occur,
and to take the steps necessary to enter into a new contract with the
Sub-Adviser.
17. REPRESENTATIONS, WARRANTIES AND AGREEMENTS OF THE TRUST. The Trust
represents, warrants and agrees that:
A. It is a business trust duly organized and existing in good
standing under the laws of the State of Ohio.
B. It is empowered under applicable laws and by its
Declaration of Trust and Bylaws to enter into and perform this Agreement.
C. All corporate proceedings required by the Declaration of
Trust and Bylaws have been taken to authorize it to enter into and perform
this Agreement.
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<PAGE>
D. It is an open-end, management investment company
registered under the Act.
E. Performance of the Trust's obligations under this
Agreement will not violate any law, regulation, agreement or the Trust's
registration statement, as amended.
F. The Trust will deliver to the Sub-Adviser a true and
complete copy of its then current prospectus and statement of additional
information as effective from time to time and such other documents or
instruments governing the investments of the Fund and such other information as
is necessary for the Sub- Adviser to carry out its obligations under this
Agreement.
G. The Trust is currently in compliance and shall at all
times comply with the requirements imposed upon the Fund by applicable laws
and regulations.
18. REPRESENTATIONS, WARRANTIES AND AGREEMENTS OF THE SUB-ADVISER.
The Sub-Adviser represents, warrants and agrees that:
A. It is a corporation duly organized and existing in good
standing under the laws of the ____________________.
B. It is empowered under applicable laws to enter into and
perform this Agreement.
C. All corporate proceedings have been taken to authorize it
to enter into and perform this Agreement.
D. The Sub-Adviser is registered as an "investment adviser"
under the Investment Advisers Act of 1940.
E. The Sub-Adviser will maintain, keep current and preserve
on behalf of the Fund, in the manner and for the time periods required or
permitted by the Act, the records identified
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in Schedule A. The Sub-Adviser agrees that such records (unless otherwise
indicated on Schedule A) are the property of the Trust, and will be surrendered
to the Trust promptly upon request.
F. The Sub-Adviser will complete such reports concerning
purchases or sales of securities on behalf of the Fund as the Adviser or the
Trust may from time to time require to ensure compliance with the Act, the
Internal Revenue Code of 1986 and applicable state securities laws.
G. The Sub-Adviser will adopt a written code of ethics
complying with the requirements of Rule 17j-1 under the Act and will provide the
Trust with a copy of the code of ethics and evidence of its adoption. Within
forty-five (45) days of the end of the last calendar quarter of each year while
this Agreement is in effect, the President or a Vice President of the
Sub-Adviser shall certify to the Trust that the Sub-Adviser has complied with
the requirements of Rule 17j-1 during the previous year and that there has been
no violation of the Sub-Adviser's code of ethics or, if such a violation has
occurred, that appropriate action was taken in response to such violation. Upon
the written request of the Trust, the Sub-Adviser shall submit to the Trust the
reports required to be made to the Sub-Adviser by Rule 17j-1(c)(1).
H. The Sub-Adviser will promptly after filing with the
Securities and Exchange Commission an amendment to its Form ADV furnish a
copy of such amendment to the Trust and to the Adviser.
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<PAGE>
I. Upon request of the Trust, the Sub-Adviser will provide
assistance to the Custodian in the collection of income due or payable to the
Fund. With respect to income from foreign sources, the Sub-Adviser will
undertake any reasonable procedural steps required to reduce, eliminate or
reclaim non-U.S. withholding taxes under the terms of applicable United States
income tax treaties.
J. The Sub-Adviser will immediately notify the Trust and the
Adviser of the occurrence of any event which would disqualify the Sub-Adviser
from serving as an investment adviser of an investment company pursuant to
Section 9(a) of the Act or otherwise.
K. Performance of the Sub-Adviser's obligations under this
Agreement will not violate any law, regulation, agreement or the Trust's
registration statement, as amended.
19. AMENDMENT. This Agreement may be amended at any time, but only by
written agreement between the Sub-Adviser, the Adviser and the Trust, which
amendment, other than amendments to Schedule A, is subject to the approval of
the Board of Trustees and the shareholders of the Fund in the manner required by
the Act and the rules thereunder, subject to any applicable exemptive order of
the Securities and Exchange Commission modifying the provisions of the Act with
respect to approval of amendments to this Agreement.
20. EFFECTIVE DATE; TERM. This Agreement shall become effective on the
date of its execution and shall remain in full force and effect until April 1,
1999, and from year to year
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thereafter but only so long as such continuance is specifically approved at
least annually by the vote of a majority of the Trustees who are not interested
persons of the Trust, the Adviser or the Sub-Adviser, cast in person at a
meeting called for the purpose of voting on such approval, and by a vote of the
Board of Trustees or of a majority of the outstanding voting securities of the
Fund. The aforesaid requirement that this Agreement may be continued "annually"
shall be construed in a manner consistent with the Act and the rules and
regulations thereunder.
21. TERMINATION. This Agreement may be terminated by either party
hereto, without the payment of any penalty, immediately upon written notice to
the other in the event of a breach of any provision thereof by the party so
notified, or otherwise upon sixty (60) days' written notice to the other.
22. SHAREHOLDER LIABILITY. The Sub-Adviser is hereby expressly put on
notice of the limitation of shareholder liability as set forth in the
Declaration of Trust of the Trust and agrees that obligations assumed by the
Trust pursuant to this Agreement shall be limited in all cases to the Fund and
its assets. The Sub-Adviser agrees that it shall not seek satisfaction of any
such obligations from the shareholders or any individual shareholder of the
Fund, nor from the Trustees or any individual Trustee of the Trust.
23. DEFINITIONS. As used in paragraphs 16 and 20 of this Agreement, the
terms "assignment," interested person" and "vote of a majority of the
outstanding voting securities" shall have the meanings set forth in the Act and
the rules and regulations thereunder.
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<PAGE>
24. APPLICABLE LAW. To the extent that state law is not preempted by
the provisions of any law of the United States heretofore or hereafter enacted,
as the same may be amended from time to time, this Agreement shall be
administered, construed and enforced according to the laws of the State of Ohio.
C.H. DEAN & ASSOCIATES, INC. DEAN FAMILY OF FUNDS
By: By:
Title: PRESIDENT Title: PRESIDENT
Date: __________________, 1997 Date: __________________, 1997
ACCEPTANCE
The foregoing Agreement is hereby accepted.
NEWTON CAPITAL MANAGEMENT
LIMITED
By:
Title:
Date: , 1997
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<PAGE>
SCHEDULE A
RECORDS TO BE MAINTAINED BY THE SUB-ADVISER
1. (Rule 31a-1(b)(5) and (6)) A record of each brokerage order, and all
other portfolio purchases or sales, given by the Sub-Adviser on behalf
of the Fund for, or in connection with, the purchase or sale of
securities, whether executed or unexecuted. Such records shall include:
A. The name of the broker;
B. The terms and conditions of the order and of any
modification or cancellation thereof;
C. The time of entry or cancellation;
D. The price at which executed;
E. The time of receipt of a report of execution; and
F. The name of the person who placed the order on
behalf of the Fund.
2. (Rule 31a-1(b)(9)) A record for each fiscal quarter,
completed within ten (10) days after the end of the
quarter, showing specifically the basis or bases upon
which the allocation of orders for the purchase and
sale of portfolio securities to named brokers or
dealers was effected, and the division of brokerage
commissions or other compensation on such purchase and
sale orders. Such record:
A. Shall include the consideration given to:
(i) The sale of shares of the Fund by brokers
or dealers.
(ii) The supplying of services or benefits by
brokers or dealers to:
(a) The Trust;
(b) the Adviser;
(c) the Sub-Adviser;
(d) any other portfolio adviser of
the Trust; and
(e) any person affiliated with the
foregoing persons.
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(iii) Any other consideration other than the technical
qualifications of the brokers and dealers as
such.
B. Shall show the nature of the services or
benefits made available.
C. Shall describe in detail the application of any general or
specific formula or other determinant used in arriving at such
allocation of purchase and sale orders and such division of
brokerage commissions or other compensation.
D. The name of the person responsible for making the
determination of such allocation and such division of
brokerage commissions or other compensation.
3. (Rule 31a-1(b)(10)) A record in the form of an appropriate
memorandum identifying the person or persons, committees or
groups authorizing the purchase or sale of portfolio
securities. Where an authorization is made by a committee
or group, a record shall be kept of the names of its members
who participate in the authorization. There shall be
retained as part of this record: any memorandum,
recommendation or instruction supporting or authorizing the
purchase or sale of portfolio securities and such other
information as is appropriate to support the authorization.*
4. (Rule 31a-1(f)) Such accounts, books and other documents as are
required to be maintained by registered investment advisers by rules
adopted under Section 204 of the Investment Advisers Act of 1940, to
the extent such records are necessary or appropriate to record the
Sub-Adviser's transactions with respect to the Fund.
- ------------------
*Such information might include: the current Form 10-K, annual and
quarterly reports, press releases, reports by analysts and from brokerage firms
(including their recommendation; i.e., buy, sell, hold) or any internal reports
or portfolio adviser reviews.
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UNDERWRITING AGREEMENT
This Agreement made as of April 1, 1997 by and between the Dean Family
of Funds, an Ohio business trust (the "Trust"), and 2480 Securities LLC, an Ohio
corporation ("Underwriter").
WHEREAS, the Trust is an open-end management investment company
registered under the Investment Company Act of 1940, as amended (the "Act"); and
WHEREAS, Underwriter is a broker-dealer registered with the
Securities and Exchange Commission and a member of the National
Association of Securities Dealers, Inc. (the "NASD"); and
WHEREAS, the Trust and Underwriter are desirous of entering into an
agreement providing for the distribution by Underwriter of shares of beneficial
interest ("Shares") of each series of shares of the Trust (the "Series");
NOW, THEREFORE, in consideration of the promises and agreements of the
parties contained herein, the parties agree as follows:
1. APPOINTMENT.
The Trust hereby appoints Underwriter as its exclusive agent
for the distribution of Shares, and Underwriter hereby accepts such appointment
under the terms of this Agreement. While this Agreement is in force, the Trust
shall not sell any Shares except on the terms set forth in this Agreement.
Notwithstanding any other provision hereof, the Trust may terminate, suspend or
withdraw the offering of Shares whenever, in its sole discretion, it deems such
action to be desirable.
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<PAGE>
2. SALE AND REPURCHASE OF SHARES.
(a) Underwriter will have the right, as agent for the Trust,
to enter into dealer agreements with responsible investment dealers, and to sell
Shares to such investment dealers against orders therefor at the public offering
price (as defined in subparagraph 2(e) hereof) less a discount determined by
Underwriter, which discount shall not exceed the amount of the sales charge
stated in the Trust's effective Registration Statement on Form N-1A under the
Securities Act of 1933, as amended, including the then current prospectus and
statement of additional information (the "Registration Statement"). Upon receipt
of an order to purchase Shares from a dealer with whom Underwriter has a dealer
agreement, Underwriter will promptly cause such order to be filled by the Trust.
(b) Underwriter will also have the right, as agent for the
Trust, to sell such Shares to the public against orders therefor at the public
offering price.
(c) Underwriter will also have the right, as agent for the
Trust, to sell Shares at their net asset value to such persons as may be
approved by the Trustees of the Trust, all such sales to comply with the
provisions of the Act and the rules and regulations of the Securities and
Exchange Commission promulgated thereunder.
(d) Underwriter will also have the right to take, as agent for
the Trust, all actions which, in Underwriter's judgment, are necessary to carry
into effect the distribution of the Shares.
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<PAGE>
(e) The public offering price for Shares of each Series shall
be the respective net asset value of Shares of that Series then in effect, plus
any applicable sales charge determined in the manner set forth in the
Registration Statement or as permitted by the Act and the rules and regulations
of the Securities and Exchange Commission promulgated thereunder. In no event
shall any applicable sales charge exceed the maximum sales charge permitted by
the Rules of Fair Practice of the NASD.
(f) The net asset value of Shares of each Series shall
be determined in the manner provided in the Registration
Statement, and when determined shall be applicable to transactions as provided
for in the Registration Statement. The net asset value of Shares of each Series
shall be calculated by the Trust or by another entity on behalf of the Trust.
Underwriter shall have no duty to inquire into or liability for the accuracy of
the net asset value per Share as calculated.
(g) On every sale, the Trust shall receive the applicable net
asset value of Shares promptly, but in no event later than the third business
day following the date on which Underwriter shall have received an order for the
purchase of Shares. Underwriter shall have the right to retain the sales charge
less any applicable dealer discount.
(h) Upon receipt of purchase instructions, Underwriter will
transmit such instructions to the Trust or its transfer agent for registration
of Shares purchased.
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<PAGE>
(i) Nothing in this Agreement shall prevent Underwriter or any
affiliated person (as defined in the Act) of Underwriter from acting as
underwriter or distributor for any other person, firm or corporation (including
other investment companies) or in any way limit or restrict Underwriter or any
such affiliated person from buying, selling or trading any securities for its or
their own account or for the accounts of others for whom it or they may be
acting; provided, however, that Underwriter expressly represents that it will
undertake no activities which, in its judgment, will adversely affect the
performance of its obligations to the Trust under this Agreement.
(j) Underwriter, as agent of and for the account of the Trust,
may repurchase Shares at such prices and upon such terms and conditions as shall
be specified in the Registration Statement.
3. SALE OF SHARES BY THE TRUST.
The Trust reserves the right to issue any Shares at any time
directly to the holders of Shares ("Shareholders"), to sell Shares to its
Shareholders or to other persons approved by Underwriter at not less than net
asset value and to issue Shares in exchange for substantially all the assets of
any corporation or trust or for the shares of any corporation or trust.
4. BASIS OF SALE OF SHARES.
Underwriter does not agree to sell any specific number of
Shares. Underwriter, as agent for the Trust, undertakes to sell Shares on a best
efforts basis only against orders therefor.
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<PAGE>
5. RULES OF NASD, ETC.
(a) Underwriter will conform to the Rules of Fair Practice of
the NASD and the securities laws of any jurisdiction in which it sells, directly
or indirectly, any Shares.
(b) Underwriter will require each dealer with whom Underwriter
has a dealer agreement to conform to the applicable provisions hereof and the
Registration Statement with respect to the public offering price of Shares, and
neither Underwriter nor any such dealers shall withhold the placing of purchase
orders so as to make a profit thereby.
(c) Underwriter agrees to furnish to the Trust sufficient
copies of any agreements, plans or other materials it intends to use in
connection with any sales of Shares in adequate time for the Trust to file and
clear them with the proper authorities before they are put in use, and not to
use them until so filed and cleared.
(d) Underwriter, at its own expense, will qualify as dealer or
broker, or otherwise, under all applicable state or federal laws required in
order that Shares may be sold in such states as may be mutually agreed upon by
the parties.
(e) Underwriter shall not make, or permit any representative,
broker or dealer to make, in connection with any sale or solicitation of a sale
of Shares, any representations concerning Shares except those contained in the
then current prospectus and statement of additional information covering the
Shares and in printed information approved by the Trust as
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<PAGE>
information supplemental to such prospectus and statement of additional
information. Copies of the then effective prospectus and statement of additional
information and any such printed supplemental information will be supplied by
the Trust to Underwriter in reasonable quantities upon request.
6. RECORDS TO BE SUPPLIED BY TRUST.
The Trust shall furnish to Underwriter copies of all
information, financial statements and other papers which Underwriter may
reasonably request for use in connection with the distribution of the Shares,
and this shall include, but shall not be limited to, one certified copy, upon
request by Underwriter, of all financial statements prepared for the Trust by
independent public accountants.
7. EXPENSES.
In the performance of its obligations under this Agreement,
Underwriter will pay only the costs incurred in qualifying as a broker or dealer
under state and federal laws and in establishing and maintaining its
relationships with the dealers selling Shares. All other costs in connection
with the offering of Shares will be paid by the Trust or the Trust's investment
adviser (the "Adviser") in accordance with agreements between them as permitted
by applicable law, including the Act and rules and regulations promulgated
thereunder.
8. INDEMNIFICATION OF TRUST.
Underwriter, to the extent of the net commission received by
it from the sale of Shares but to no greater amount,
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agrees to indemnify and hold harmless the Trust, the Adviser and each person who
has been, is, or may hereafter be a trustee, director, officer, employee,
partner, shareholder or control person of the Trust or the Adviser, against any
loss, damage or expense (including the reasonable costs of investigation)
reasonably incurred by any of them in connection with any claim or in connection
with any action, suit or proceeding to which any of them may be a party, which
arises out of or is alleged to arise out of or is based upon any untrue
statement or alleged untrue statement of a material fact, or the omission or
alleged omission to state a material fact necessary to make the statements not
misleading, on the part of Underwriter or any agent or employee of Underwriter
or any other person for whose acts Underwriter is responsible, unless such
statement or omission was made in reliance upon written information furnished by
the Trust or the Adviser. Underwriter likewise, to the extent of the net
commission received by it from the sale of Shares but to no greater amount,
agrees to indemnify and hold harmless the Trust, the Adviser and each such
person in connection with any claim or in connection with any action, suit or
proceeding which arises out of or is alleged to arise out of Underwriter's
failure to exercise reasonable care and diligence with respect to its services,
if any, rendered in connection with investment, reinvestment, automatic
withdrawal and other plans for Shares. The term "expenses" for purposes of this
and the next paragraph includes amounts paid in satisfaction of judgments or in
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<PAGE>
settlements which are made with Underwriter's consent. The foregoing rights of
indemnification shall be in addition to any other rights to which the Trust, the
Adviser or each such person may be entitled as a matter of law.
9. INDEMNIFICATION OF UNDERWRITER.
Underwriter, its directors, officers, employees,
shareholders and control persons shall not be liable for any error of judgment
or mistake of law or for any loss suffered by the Trust in connection with the
matters to which this Agreement relates, except a loss resulting from willful
misfeasance, bad faith or gross negligence on the part of any of such persons in
the performance of Underwriter's duties or from the reckless disregard by any of
such persons of Underwriter's obligations and duties under this Agreement. The
Trust will advance attorneys' fees or other expenses incurred by any such person
in defending a proceeding, upon the undertaking by or on behalf of such person
to repay the advance if it is ultimately determined that such person is not
entitled to indemnification. Any person employed by Underwriter who may also be
or become an officer or employee of the Trust shall be deemed, when acting
within the scope of his employment by the Trust, to be acting in such employment
solely for the Trust and not as an employee or agent of Underwriter.
10. TERMINATION AND AMENDMENT OF THIS AGREEMENT.
This Agreement shall automatically terminate, without the payment of
any penalty, in the event of its assignment. This Agreement may be amended
only if such amendment is approved (i)
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<PAGE>
by Underwriter, (ii) either by action of the Board of Trustees of the Trust or
at a meeting of the Shareholders of the Trust by the affirmative vote of a
majority of the outstanding Shares, and (iii) by a majority of the Trustees of
the Trust who are not interested persons of the Trust or of Underwriter by vote
cast in person at a meeting called for the purpose of voting on such approval.
Either the Trust or Underwriter may at any time terminate this
Agreement on sixty (60) days' written notice delivered or mailed by registered
mail, postage prepaid, to the other party.
11. EFFECTIVE PERIOD OF THIS AGREEMENT.
This Agreement shall take effect upon its execution and
shall remain in full force and effect for a period of two (2) years from the
date of its execution (unless terminated automatically as set forth in Section
10), and from year to year thereafter, subject to annual approval (i) by
Underwriter, (ii) by the Board of Trustees of the Trust or a vote of a majority
of the outstanding Shares, and (iii) by a majority of the Trustees of the Trust
who are not interested persons of the Trust or of Underwriter by vote cast in
person at a meeting called for the purpose of voting on such approval.
12. LIMITATION OF LIABILITY.
It is expressly agreed that the obligations of the Trust
hereunder shall not be binding upon any of the Trustees, Shareholders, nominees,
officers, agents or employees of the
- 9 -
<PAGE>
Trust, personally, but bind only the trust property of the Trust, as provided in
the Agreement and Declaration of Trust of the Trust. The execution and delivery
of this Agreement have been authorized by the Trustees and Shareholders of the
Trust and signed by an officer of the Trust, acting as such, and neither such
authorization by such Trustees and Shareholders nor such execution and delivery
by such officer shall be deemed to have been made by any of them individually or
to impose any liability on any of them personally, but shall bind only the trust
property of the Trust as provided in its Agreement and Declaration of Trust.
13. NEW SERIES.
The terms and provisions of this Agreement shall become
automatically applicable to any additional series of the Trust established
during the initial or renewal term of this Agreement.
14. SUCCESSOR INVESTMENT COMPANY.
Unless this Agreement has been terminated in accordance with
Paragraph 10, the terms and provisions of this Agreement shall become
automatically applicable to any investment company which is a successor to the
Trust as a result of reorganization, recapitalization or change of domicile.
15. SEVERABILITY.
In the event any provision of this Agreement is determined to
be void or unenforceable, such determination shall not affect the remainder of
this Agreement, which shall continue to be in force.
- 10 -
<PAGE>
16. QUESTIONS OF INTERPRETATION.
(a) This Agreement shall be governed by the laws of
the State of Ohio.
(b) Any question of interpretation of any term or provision of
this Agreement having a counterpart in or otherwise derived from a term or
provision of the Act shall be resolved by reference to such term or provision of
the Act and to interpretation thereof, if any, by the United States courts or in
the absence of any controlling decision of any such court, by rules, regulations
or orders of the Securities and Exchange Commission issued pursuant to said Act.
In addition, where the effect of a requirement of the Act, reflected in any
provision of this Agreement is revised by rule, regulation or order of the
Securities and Exchange Commission, such provision shall be deemed to
incorporate the effect of such rule, regulation or order.
17. NOTICES.
Any notices under this Agreement shall be in writing,
addressed and delivered or mailed postage paid to the other party at such
address as such other party may designate for the receipt of such notice. Until
further notice to the other party, it is agreed that the address of the Trust
for this purpose shall be 312 Walnut Street, 21st Floor, Cincinnati, Ohio 45202
and that the address of Underwriter for this purpose shall be 2480 Kettering
Tower, Dayton, Ohio 45423.
- 11 -
<PAGE>
IN WITNESS WHEREOF, the Trust and Underwriter have each caused
this Agreement to be signed in duplicate on their behalf, all as of the day and
year first above written.
ATTEST: DEAN FAMILY OF FUNDS
/S/ TINA D. HOSKING By: /S/ FRANK H. SCOTT
Its: President
ATTEST: 2480 SECURITIES LLC
/S/ TINA D. HOSKING By: /S/ FRANK H. SCOTT
Its: President
- 12 -
<PAGE>
THE DEAN FAMILY OF FUNDS
DIRECTORS DEFERRED COMPENSATION PLAN
The Dean Family of Funds hereby establishes as of the Effective Date, The Dean
Family of Funds ("DFF") Directors Deferred Compensation Plan ("Plan") for the
purpose of inducing the service or encouraging the continued service of the
members of its Board of Directors, in order that the interests of DFF may be
advanced. The Plan is intended to constitute a plan maintained for the benefit
of a select group of management or highly compensated employees for the purposes
of Tile I of the Employee Retirement Income Security Act of 1974.
1. DEFINITIONS. Unless otherwise required by the context, for
the purposes of this Plan, the following words and phrases
shall have the meanings indicated.
(a) "Account" shall mean the account maintained for a Participant
under the terms of the Plan, which represents the amount
accrued for the Participant under the Plan.
(b) "DFF" shall mean The Dean Family of Funds or any successor
entity.
(c) "Beneficiary" shall mean the person or entities designated by
the Participant in a Notice to receive any amount payable to
the Participant upon his death.
(d) "Board" shall mean the Board of Directors of DFF.
(e) "Director" shall mean a member of the Board.
(f) "Effective Date" shall mean March 17, 1997.
(g) "Election Date" shall mean, for the first calendar year in
which the Plan is in effect, the Effective Date. For
subsequent calendar years, "Election Date" shall mean January
1.
(h) "Fees" shall include all compensation as fixed and determined
by the Board which is payable to a Director for attendance at
meetings, whether regular or special, of the Board, and any
committees which have been established or in the future may be
established by the Board.
(i) "Notice" shall mean an election to participate in the Plan,
in the form prescribed herein.
(j) "Participant" shall mean a Director who elects to
participate in the Plan by filing a Notice.
<PAGE>
(k) "Plan" shall mean The Dean Family of Funds Deferred
Compensation Plan, as amended from time to time.
(l) "Trust Fund" shall mean the trust fund described in
Section 4.
(m) "Valuation Date" shall mean, for each Participant, the last
day of each calendar year, the last day of the month during
which the Participant separates from service for any reason,
and such other dates designated as Valuation Dates by the
Board.
(n) "Unforeseeable Emergency" shall mean an unanticipated
emergency that is caused by an event beyond the control of the
Participant and that would result in severe financial hardship
to the Participant if early withdrawal were not permitted.
2. PARTICIPATION. Any Director may elect to become a Participant
by filing a Notice with the DFF in the manner described herein.
3. DEFERRED FEES.
(a) By filing a Notice, a Participant may elect to defer
the receipt of the Fees otherwise payable to him by the
DFF in any calendar year.
(b) Any Fees deferred pursuant to this section shall be recorded
by the DFF in an Account maintained in the name of the
Participant. A Participant's Account shall be credited on each
date of payment of Fees, in accordance with the DFF's normal
practices, with a dollar amount equal to the amount of the
payment deferred in accordance with the Participant's Notice.
4. TRUST FUND. The DFF will establish a Trust Fund which will consist
of assets which the DFF may use to offset its liability for payments
due to Participants under the Plan. The Trust Fund shall substantially
comply with the terms of the model trust contained in Internal Revenue
Service Revenue Procedure 92-64, or its successor. The Trust Fund will,
at all times, be subject to the claims of judgment creditors of the DFF
and will otherwise be on such terms and conditions as will prevent
taxation to Participants and Beneficiaries of any amounts held in the
Trust Fund or credited to Participant's Accounts prior to the time
payments are made to them. Participants have the status of general
unsecured creditors of the DFF. Rights to payments to Participants and
their Beneficiaries will be governed by the terms of the Plan and will
not be limited to assets held in the Trust Fund. The Plan constitutes a
mere promise by the DFF to make benefit payments in the future. It is
the intention of the DFF and the Participants that the Plan be
<PAGE>
unfunded for purposes of the Internal Revenue Code of 1986 and Title I
of ERISA. As soon as practicable after the end of each Valuation Date
(or more frequent intervals elected by the Board), the DFF will
contribute to the Trust Fund an amount equal to the total Fees deferred
by Participants since the most recent such contribution.
5. INVESTMENT OF ACCOUNTS.
(a) On each Valuation Date, earnings shall be credited to the
portion of each Account which has not yet been deemed invested
in accordance with Section 5(b) hereof, at the rate from time
to time payable on funds on deposit in such money market or
other cash equivalent account as may be designated from time
to time by the Board.
(b) As of each Valuation Date, the DFF shall furnish each
Participant with a statement of the amount credited to his
Account, including contributions, interest and dividends
credited to the Account, and distributions made from the
Account since the previous Valuation Date.
6. DISTRIBUTION.
(a) Upon the earliest of (i) the termination for any reason
of the services of the Participant as a Director of the DFF
or, (ii) at the discretion of the Board, upon the occurrence
of an Unforeseeable Emergency, the Participant (or, in the
event of the Participant's death, the Participant's
Beneficiary) will be entitled to receive a distribution equal
to the balance allocated to the Participant Account,
determined as of the preceding Valuation Date, but in no event
until such Director or former director has attained age 72.
Such a distribution shall be made in the manner specified in
subsection (b).
(b) The Trustee (or, if so directed by the DFF, the Trust Fund,)
will distribute the amount credited to a Participant's Account
in one of the following forms as elected by the Participant in
the Notice:
(1) in a single lump sum payment allocated to the
Account; or
(2) in quarterly installments payable over a period which
may not exceed the lesser of ten years or the number
of full calendar years during which the Director was
a Participant, provided, however that the minimum
annual installment shall not be less than $1,000.
<PAGE>
If a Participant's Account is distributed in installments, the
installment distributed immediately following each Valuation
Date shall include interest or dividends on the Account
credited as of such Valuation Date.
(c) Distribution of a Participant's Account pursuant to this
section shall be made or shall commence as of the first day of
the month next following the date on which the Participant's
Account becomes payable.
7. TERMS OF NOTICE. A Notice shall be made in writing, signed by the
Participant, and delivered to the DFF prior to the Election Date. Such
Notice (and any subsequent Notice) will continue in effect until
revoked or modified in a subsequent Notice delivered by the Participant
to the DFF. Any such subsequent Notice shall apply only to Fees
otherwise payable to the Participant after the applicable Election
Date. Any Notice made by the Participant shall be irrevocable with
respect to any Fees covered by such Notice, including the Fees payable
in the calendar year in which the Notice is delivered to the Bank.
8. PARTICIPANT'S RIGHTS UNSECURED. The right of the Participant or his
Beneficiary to receive a distribution hereunder shall be an unsecured
claim against the general assets of the DFF, and neither the
Participant nor his Beneficiary shall have any rights in or against the
Trust Fund, any amount credited to his Account or any other specific
assets of the DFF. All amounts credited to an Account shall constitute
general assets of the DFF and may be disposed of by the DFF at such
time and for such purposes as it may deem appropriate.
9. AMENDMENTS TO THE PLAN. The DFF may amend or terminate the Plan at any
time, without the consent of any Participant or Beneficiary. Provided,
however, that no amendment or termination of the Plan shall divest any
Participant or Beneficiary of his contractual right to receive the
amounts credited to his Account as of the date of such amendment or
termination.
10. EXPENSES. Costs of administration of the Plan will be paid by the DFF.
11. NOTICES. Any Notice or other election required or permitted to be given
hereunder shall be in writing and shall be deemed to have been filed
(i) on the date it is personally delivered to Frank H. Scott, the
Administrator of the Plan of the DFF; or (ii) three business days after
it is sent by registered or certified mail, addressed to such
Administrator at 2480 Kettering Tower, Dayton, Ohio 45402.
<PAGE>
12. NO GUARANTEE. No Director shall have any rights whatsoever against
the DFF as a result of this agreement except those expressly granted
hereunder. Nothing herein shall be construed to grant any Participant
the right to remain a Director.
13. GENDER AND NUMBER. Pronouns and other similar words used in the
masculine gender shall be read as the feminine gender where appropriate
and the singular form of words shall be read as the plural where
appropriate.
14. GOVERNING LAW. Except as otherwise required by law, the validity,
construction and administration of this Plan shall be determined under
the laws of the State of Ohio.
15. FUNDS AND INTEREST NONASSIGNABLE. Benefits payable to Plan Participants
and their Beneficiaries under this Plan may not be anticipated,
assigned (either at law or in equity), alienated, pledged, encumbered,
or subjected to attachment, garnishment, levy, execution or other legal
or equitable process.
Executed on behalf of the DFF by its duly authorized officer as of this 15th day
of April, 1997.
THE DEAN FAMILY OF FUNDS
By: /S/ FRANK H. SCOTT
Title: PRESIDENT
<PAGE>
THE DEAN FAMILY OF FUNDS
DIRECTORS DEFERRED COMPENSATION PLAN
NOTICE OF ELECTION OF PARTICIPANT TO DEFER COMPENSATION
FOR A CALENDAR YEAR
Pursuant to the terms of The Dean Family of Funds Directors Deferred
Compensation Plan (the "Plan"), I hereby elect to defer the receipt of 100% of
the compensation earned by me in connection with the performance of my services
as a Director of The Dean Family of Funds for the __________ calendar year and
for each subsequent calendar year until this election is revoked. I hereby
revoke any prior election to make contributions to the Plan.
----------------------------
Participant Name (Print)
----------------------------
Signature
----------------------------
Dated
<PAGE>
THE DEAN FAMILY OF FUNDS
DIRECTORS DEFERRED COMPENSATION PLAN
BENEFICIARY DESIGNATION
Pursuant to the terms of The Dean Family of Funds Directors. Deferred
Compensation Plan (the "Plan"), I hereby designate the persons or entities named
below as Beneficiary of any amounts payable to me under the Plan which have not
been paid to me at the date of my death.
---------------------------------------------------
---------------------------------------------------
I hereby revoke any prior designation of Beneficiary made by me with respect to
the Plan.
--------------------------
Participant Name (Print)
--------------------------
Signature
--------------------------
Dated
<PAGE>
THE DEAN FAMILY OF FUNDS
DIRECTORS DEFERRED COMPENSATION PLAN
ELECTION OF PAYMENT METHOD
Pursuant to the terms of The Dean Family of Funds Directors Deferred
Compensation Plan (the "Plan"), I hereby request that payment of my Account
balance under the terms of the Plan be made in the following form:
_____ 1) a single lump sum payment
_____ 2) in annual installments over a period of ten years
I acknowledge that this election is irrevocable with respect to the amounts
credited to my Account balance for the current calendar year and for each
subsequent calendar year until this election is revoked.
--------------------------
Participant Name (Print)
--------------------------
Signature
--------------------------
Dated
<PAGE>
THE DEAN FAMILY OF FUNDS
DIRECTORS DEFERRED COMPENSATION PLAN TRUST
THIS TRUST INDENTURE, made this 1st day of May, 1997, by and between
The Dean Family of Funds (hereinafter referred to as the "Grantor"), and James
H. Stethem with his office and principal place of business located at 1900
Chemed Center, 255 E. Fifth Street, Cincinnati, Ohio 45202 (hereinafter referred
to as the "Trustee")
WITNESSETH THAT
WHEREAS, Grantor has established an unfunded deferred compensation plan
for its directors entitled "The Dean Family of Funds Directors Deferred
Compensation Plan" (hereinafter "Plan"); and
WHEREAS, Grantor wishes to establish a trust (hereinafter called
"Trust") for such purposes and to contribute to the Trust cash or other property
that shall be held therein and may be used to purchase The Dean Family of Funds
mutual funds (hereinafter "Fund"), subject to the claims of Grantor's creditors
in the event of Grantor's insolvency, as herein defined, until transferred to
Plan participants and their beneficiaries in such manner and at such times as
specified in the Plan; and
WHEREAS, it is the intention of the parties that this Trust shall
constitute an unfunded arrangement and shall not affect the status of the Plan
as an unfunded plan maintained for the purpose of providing deferred
compensation for a select group of management or highly compensated employees
for purposes of Title I of the Employee Retirement Income Security Act of 1974;
and
WHEREAS, it is the intention of Grantor to make contributions to the
Trust to provide itself with a source of funds to assist it in the meeting of
its liabilities under the Plan.
NOW, THEREFORE, the parties do hereby establish the Trust and agree
that the Trust shall be comprised, held and disposed of as follows:
SECTION 1. ESTABLISHMENT OF TRUST
(a) Grantor hereby deposits with Trustee in trust the property
described on attached Exhibit A, which, together with subsequent contributions
thereto, shall become the principal of the trust estate to be held, administered
and disposed of by Trustee as provided in this Trust Agreement.
(b) The Trust shall be irrevocable.
(c) The Trust is intended to be a grantor trust of which
Grantor is the grantor to the extent of the contributions made by
<PAGE>
each such entity, and the stock held for the benefit of Grantor proportionately,
within the meaning of subpart E, part I, subchapter J, chapter 1, subtitle A of
the Internal Revenue Code of 1986, as amended, and shall be construed
accordingly.
(d) The principal of the Trust and any earnings thereon shall be held
separate and apart from other funds of Grantor and shall be used exclusively for
the uses and purposes of Plan participants and general creditors as herein set
forth. Plan participants and their beneficiaries shall have no preferred claim
on, or any beneficial ownership interest in, any assets of the Trust. Any rights
created under the Plan and this Trust shall be mere unsecured contractual rights
of Plan participants and their beneficiaries against Grantor. Any assets held by
the Trust will be subject to the claims of Grantor's general creditors in the
event of Insolvency, as defined in Section 3(a) herein.
(e) Grantor in its sole discretion may at any time, or from time to
time, make additional deposits of cash or other property in trust with Trustee
to augment the principal to be held, administered and disposed of by Trustee as
provided in this Trust Agreement. Neither the Trustee nor any Plan participant
or beneficiary shall have any right to compel such additional deposits.
SECTION 2. PAYMENTS TO PLAN PARTICIPANTS AND THEIR BENEFICIARIES.
(a) Grantor shall deliver to the Trustee a schedule (the "Payment
Schedule") that indicates the amounts payable in respect of each Plan
participant (and his or her beneficiaries), that provides a formula or other
instructions acceptable to Trustee for determining the amounts so payable, the
form in which such amount is to be paid (as provided for or available under the
Plan), and the time of commencement for payment of such amounts. Except as
otherwise provided herein, Trustee shall make payments to the Plan participants
and their beneficiaries in accordance with such Payment Schedule. The Trustee
shall make provision for the reporting and withholding of any federal, state or
local taxes that may be required to be withheld with respect to the payment of
benefits pursuant to the terms of the Plan and shall pay amounts withheld to the
appropriate taxing authorities or determine that such amounts have been
reported, withheld and paid by Grantor.
(b) The entitlement of a Plan participant or his or her beneficiaries
to benefits under the Plan shall be determined by Grantor or such party as it
shall designate under the Plan, and any claim for such benefits shall be
considered and reviewed under the procedures set out in the Plan.
(c) Grantor may make payment of benefits directly to Plan participants
or their beneficiaries as they become due under the terms of the Plan. Grantor
shall notify Trustee of its decision to make payment of benefits directly prior
to the time amounts
<PAGE>
are payable to participants or their beneficiaries. In addition, if the
principal of the Trust and any earnings thereon are not sufficient to make
payments of benefits in accordance with the terms of the Plan, Grantor shall
make the balance of each such payment as it falls due. Trust shall notify
Grantor where principal and earnings are not sufficient.
SECTION 3. TRUSTEE RESPONSIBILITY REGARDING PAYMENTS TO
TRUST BENEFICIARY WHEN GRANTOR IS INSOLVENT.
(a) Trustee shall cease payment of Benefits to Plan participants and
their beneficiaries if Grantor is insolvent. Grantor shall be considered
"insolvent" for purposes of this Trust Agreement if (i) Grantor is unable to pay
its debts as they become due, or (ii) Grantor is subject to a pending proceeding
as a debtor under the United States Bankruptcy Code.
(b) At all times during the continuance of this Trust, as provided in
Section 1(d) hereof, the principal and income of the Trust shall be subject to
claims of general creditors of Grantor.
(1) The Board of Directors and the Chief Executive Officer of
Grantor shall have the duty to inform Trustee in writing of Grantor's
insolvency. If a person claiming to be a creditor of Grantor alleges in
writing to Trustee that Grantor has become insolvent, Trustee shall
determine whether Grantor is insolvent and, pending such determination,
Trustee shall discontinue payment of benefits to Grantor's Plan
participants or their beneficiaries.
(2) Unless Trustee has actual knowledge of Grantor's
insolvency or has received notice from Grantor or a person claiming to
be a creditor alleging that Grantor is insolvent, Trustee shall have no
duty to inquire whether Grantor is insolvent. Trustee may in all events
rely on such evidence concerning Grantor's solvency as may be furnished
to Trustee that provides Trustee with a reasonable basis for making a
determination concerning Grantor's solvency.
(3) If at any time Trustee has determined that Grantor is
insolvent, Trustee shall discontinue payments to Grantor's Plan
participants or their beneficiaries and shall hold the assets of the
account for Grantor in the Trust for the benefit of Grantor's general
creditors. Nothing in this Trust Agreement shall in any way diminish
any rights of Plan participants or their beneficiaries to pursue their
rights as general creditors of Grantor with respect to benefits due
under the Plan or otherwise.
(4) Trustee shall resume the payment of benefits to Plan
participants or their beneficiaries in accordance with Section 2 of
this Trust Agreement only after Trustee has determined that Grantor is
not insolvent (or is no longer insolvent).
<PAGE>
(c) Provided that there are sufficient assets, if Trustee discontinues
the payment of benefits from the Trust pursuant to Section 3(b) hereof and
subsequently resumes such payments, the first payment following such
discontinuance shall include the aggregate amount of all payments due to Plan
participants or their beneficiaries under the terms of the Plan for the period
of such discontinuance, less the aggregate amount of any payments made to Plan
participants or their beneficiaries by Grantor in lieu of the payments provided
for hereunder during any such period of discontinuance.
SECTION 4. PAYMENTS TO GRANTOR. Grantor shall have no right or power
to direct Trustee to return to Grantor or to divert to others any of the Trust
assets before all payment of benefits has been made to Plan participants and
their beneficiaries pursuant to the terms of the Plan.
SECTION 5. INVESTMENT AUTHORITY.
(a) Trustee must invest solely in the family of mutual funds of the
Grantor. In addition, Trustee may temporarily deposit any cash balance held by
it in a depository account of a commercial bank the deposits of which are
insured by the Federal Deposit Insurance Corporation. All rights associated with
assets of the Trust shall be exercised by Trustee or the person designated by
Trustee and shall in no event be exercised by or rest with Plan participants,
except that voting rights with respect to Trust assets will be exercised by
Grantor.
(b) Grantor shall have the right at any time, and from time to time in
its sole discretion, to substitute assets of equal fair market value for any
asset held by the Trust with the family of mutual funds of Grantor. This right
is exercisable by Grantor in a non-fiduciary capacity without the approval or
consent of any person in a fiduciary capacity.
SECTION 6. DISPOSITION OF INCOME During the term of this Trust, all
income received by the Trust, net of expenses and taxes, shall be accumulated
and reinvested.
SECTION 7. ACCOUNTING BY TRUSTEE Trustee shall keep accurate and
detailed reports of all investments, receipts, disbursements, and all other
transactions required to be made, including such specific records as shall be
agreed upon in writing between Grantor and Trustee. Within 60 days following the
close of each calendar year and within 60 days after the removal or resignation
of Trustee, Trustee shall deliver to Grantor a written account if its
administration of the Trust during such year or during the period from the close
of the last preceding year to the date of such removal or resignation setting
forth all investments, receipts, disbursements and other transactions affected
by it, including a description of all securities and investments purchased and
sold with the cost or net proceeds of such purchases or sales (accrued interest
paid or
<PAGE>
receivable being shown separately), and showing all cash, securities and other
property held in the Trust at the end of such year or as of the date of such
removal or resignation, as the case may be. Separate accounts shall be made for
each participating entity and the contributions and investments therefrom shall
not be commingled.
SECTION 8. RESPONSIBILITY OF TRUSTEE.
(a) Trustee shall act with the care, skill, prudence and diligence
under the circumstances then prevailing that a prudent person acting in like
capacity and familiar with such matters would use in the conduct of an
enterprise of a like character and with like aims, provided, however, that
Trustee shall incur no liability to any person for any action taken pursuant to
a direction, request or approval given by Grantor which is contemplated by and
in conformity with the terms of the Plan or this Trust and is given in writing
by Grantor. In the event of a dispute between Grantor and a party, Trustee may
apply to a court of competent jurisdiction to resolve the dispute.
(b) If Trustee undertakes or defends any litigation arising in
connection with this Trust, Grantor agrees to indemnify Trustee against
Trustee's costs, expenses and liabilities (including, without limitation,
attorneys' fees and expenses) relating thereto and to be primarily liable for
such payments. If Grantor does not pay such costs, expenses and liabilities in a
reasonably timely manner, Trustee may obtain payment from the Trust.
(c) Trustee may consult with legal counsel (who may also be counsel for
Grantor generally) with respect to any of its duties or obligations hereunder.
(d) Trustee may hire agents, accountants, actuaries, investment
advisors, financial consultants or other professionals to assist it in
performing any of its duties or obligations hereunder.
(e) Trustee shall have, without exclusion, all powers conferred on
Trustees by applicable law unless expressly provided otherwise herein; provided,
however, that if an insurance policy is held as an asset of the Trust, Trustee
shall have no power to name a beneficiary or the policy other than the Trust, to
assign the policy (as distinct from conversion of the policy to a different
form) other than to a successor Trustee, or to loan to any person the proceeds
of any borrowing against such policy.
(f) Notwithstanding any powers granted to Trustee pursuant to this
Trust Agreement or to applicable law, Trustee shall not have any power that
could give this Trust the objective of carrying on a business and dividing the
gains therefrom within the meaning of Section 301.7701-2 of the Procedure and
Administrative Regulations promulgated pursuant to the Internal Revenue Code.
<PAGE>
SECTION 9. COMPENSATION AND EXPENSES OF TRUSTEES.
Grantor shall pay all administrative and Trustee's fees and
expenses. If not so paid, the fees and expenses shall be paid
from the Trust.
SECTION 10. RESIGNATION AND REMOVAL OF TRUSTEE.
(a) Trustee may resign at any time by written notice to Grantor which
shall be effective 60 days after receipt of such notice unless Grantor and
Trustee agree otherwise.
(b) Trustee may be removed by Grantor on 60 days notice or upon
shorter notice accepted by Trustee.
(c) Upon resignation or removal of Trustee and appointment of a
successor Trustee, all assets shall subsequently be transferred to the successor
Trustee. The transfer shall be completed within 60 days after receipt of notice
of resignation, removal or transfer, unless Grantor extends the time limit.
(d) If Trustee resigns or is removed, a successor shall be appointed,
in accordance with Section 11 hereof, by the effective date of resignation or
removal under paragraph(s) (a) or (b) of this section. If no such appointment
has been made, Trustee may apply to a court of competent jurisdiction for
appointment of a successor or for instruction. All expenses of Trustee in
connection with the proceeding shall be allowable as administrative expenses of
the Trust.
SECTION 11. APPOINTMENT OF SUCCESSOR.
(a) If Trustee resigns or is removed in accordance with Section 10(a)
and (b) hereof, Grantor may appoint any third party, such as a bank trust
department or other party that may be granted corporate trustee powers under
state law as a successor to replace Trustee upon resignation or removal. Any
successor Trustee appointed under this section must be independent or not
affiliated in any manner with Grantor. The appointment shall be effective when
accepted in writing by the new Trustee, who shall have all of the rights and
powers of the former Trustee, including ownership rights in the Trust assets.
The former Trustee shall execute any instrument necessary or reasonably
requested by Grantor or the successor Trustee to evidence the Transfer.
(b) The successor Trustee need not examine the records and acts of any
prior Trustee and may retain or dispose of existing Trust assets, subject to
Sections 7 and 8 hereof. The successor Trustee shall not be responsible for and
Grantor shall indemnify and defend the successor Trustee from any claim or
liability resulting from any action or inaction of any prior Trustee or from any
other past event, or any condition existing at the time it becomes successor
Trustee.
<PAGE>
SECTION 12. AMENDMENT OR TERMINATION.
(a) This Trust Agreement may be amended by a written instrument
executed by Trustee and Grantor. Notwithstanding the foregoing, no such
amendment shall conflict with the terms of the Plan, or shall make the Trust
revocable after it has become irrevocable in accordance with Section 1(b)
hereof.
(b) The Trust shall not terminate until the date on which Plan
participants and their beneficiaries are no longer entitled to benefits pursuant
to the terms of the Plan. Upon termination of the Trust, any assets remaining in
the Trust shall be returned to Grantor as reflected in their separate accounts
in the Trust.
(c) Upon written approval of participants or beneficiaries entitled to
payment of benefits pursuant to the terms of the Plan, Grantor may terminate
this Trust prior to the time all benefit payments under the Plan have been made.
All assets in the Trust at termination shall be returned to Grantor as reflected
in their separate accounts.
SECTION 13. MISCELLANEOUS
(a) Any provision of this Trust Agreement prohibited by law shall be
ineffective to the extent of any such prohibition without invalidating the
remaining provisions hereof.
(b) Benefits payable to Plan participants and their beneficiaries under
this Trust Agreement may not be anticipated, assigned (either at law or in
equity), alienated, pledged, encumbered or subjected to attachment, garnishment,
levy, execution or other legal or equitable process.
(c) This Trust Agreement shall be governed by and construed
in accordance with the laws of Ohio.
SECTION 14. EFFECTIVE DATE. The effective date of this Trust Agreement
shall be the date hereof.
WITNESS the following signatures:
GRANTOR
THE DEAN FAMILY OF FUNDS
By: /S/ FRANK H. SCOTT
Its: PRESIDENT
TRUSTEE
By:_____________________
<PAGE>
EXHIBIT A
TO THE DEAN FAMILY OF FUNDS
DIRECTORS DEFERRED COMPENSATION PLAN TRUST
Property deposited in trust: One Dollar ($1.00) and other good and
valuable consideration.
Received by the undersigned, as Trustee under The Dean Family of Funds
Directors Deferred Compensation Plan Trust, on this _____ day of
______________________, 1997.
TRUSTEE
By:_____________________
<PAGE>
ALTERNATIVE REPORTING AND DISCLOSURE STATEMENT
FOR PENSION PLANS FOR CERTAIN SELECTED EMPLOYEES
To the Secretary of Labor:
In compliance with the requirements of the alternative method of
reporting and disclosure under Part 1 of Title I of the Employees Retirement
Income Security Act of 1974 for unfunded or insured pension plans for a select
group of management or highly compensated employees, specified in Department of
Labor Regulations C.F.R. ss.2520.104-23, the following information is provided
by the undersigned employer.
Name and Address of Employer: THE DEAN FAMILY OF FUNDS
_________________________
_________________________
_________________________
Employer Identification Number: _________________________
The Dean Family of Funds maintains a plan (or plans) primarily for the
purpose of providing deferred compensation for a select group of management or
highly compensated employees.
Number of Plans and
Participants in Each
Plan: __________ Plan covering ____ Employees (or
__________ Plans covering _____ ______and
__________ Employees, respectively)
Dated April 15, 1997.
The Dean Family of Funds
By: /S/ FRANK H. SCOTT
Title: PRESIDENT
This form should be maid to:
Top Hat Plan Exemption
Pension and Welfare Benefits Administration
Room N-5644
U.S. Department of Labor
200 Constitution Avenue, NW
Washington, DC 20210
(Send certified mail to evidence filing requirement
satisfied)
<PAGE>
BANK ONE TRUST COMPANY, N.A.
CUSTODIAN AGREEMENT
FOR
MUTUAL FUNDS
<PAGE>
BANK ONE TRUST COMPANY, N.A.
CUSTODIAN AGREEMENT
FOR
MUTUAL FUNDS
Execution Form
Name of Fund: DEAN FAMILY OF FUNDS, with respect to each portfolio (each a
"Portfolio) listed on Schedule B as it may be amended from time to time.
Address of Fund: c/o Countrywide Fund Services, Inc., 312 Walnut Street, 21st
Floor, Cincinnati, Ohio 45202.
Execution Date: March 17, 1997
Effective Date: March 17, 1997
This Custodian Agreement is entered into on the Execution Date set forth above
effective on the Effective Date set forth above, by and between the above named
Fund ("Fund") and Bank One Trust Company, N.A. ("Custodian"), with its principal
offices located at 100 East Broad Street, Columbus, Ohio 43271. In consideration
of the mutual covenants and conditions of this agreement, the Custodian and Fund
hereby agree to the Provisions of this agreement attached hereto and the
Schedules (if any) of this agreement attached hereto.
IN WITNESS WHEREOF, this agreement is executed by the Custodian and the Fund on
the Execution Date.
CUSTODIAN FUND
BANK ONE TRUST COMPANY, N.A. DEAN FAMILY OF FUNDS
BY:/s/ Deborah A. Harvey BY: /s/ Frank H. Scott
TITLE: AVP TITLE: President
ATTEST: Celia M. Combs ATTEST: N. Kay Gregory
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<PAGE>
BANK ONE TRUST COMPANY, N.A.
CUSTODIAN AGREEMENT
FOR
MUTUAL FUNDS
Table of Contents for Provisions
Section 1 Appointment of Custodian
Section 2 Delivery of Securities, Cash and Other Property
Section 3 Accounts
Section 4 Proper Instructions
Section 5 Payments for Shares
Section 6 Collection of Income and Short Term Investments
Section 7 Payment of Monies
Section 8 Duties of Custodian with Respect to Securities
of the Fund Held by Custodian
Section 9 Registration of Securities
Section 10 Segregated Account
Section 11 Voting and Other Action
Section 12 Transfer Taxes and Other Disbursements
Section 13 Responsibility of Custodian
Section 14 Options
Section 15 Futures Contracts
Section 16 Records and Reports
Section 17 Effective Period, Termination and Interpretive
and Additional Provisions
Section 18 Successor Custodian
Section 19 Compensation of Custodian
Section 20 Notices
Section 21 Overdrafts
Section 22 Governing Law
Section 23 Severability
Section 24 Non-Waiver
Section 25 No Third Party Benefit
Section 26 Captions
Section 27 Governed Accounts
Section 28 Entire Agreement
Section 29 Dispute Resolution
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<PAGE>
BANK ONE TRUST COMPANY, N.A.
CUSTODIAN AGREEMENT
FOR
MUTUAL FUNDS
Provisions
These Provisions are applicable to the Custodian Agreement between the Custodian
and the Fund described in the foregoing Execution Form.
1. APPOINTMENT OF CUSTODIAN Subject to the terms and conditions of
this agreement, the Fund hereby appoints and Custodian hereby accepts such
appointment by the Fund as custodian for certain cash, securities and other
property owned by the Fund.
2. DELIVERY OF SECURITIES, CASH AND OTHER PROPERTY The Fund shall
deliver to Custodian the cash, securities and other property of the Portfolios.
Custodian shall accept for deposit hereunder additional cash, securities and
other property upon receiving written notice from Fund. The Custodian shall only
be responsible for custody hereunder of cash, securities, and other property
delivered to it and then only while they are held in and as a part of the
custodial account. All securities received by Custodian from time to time shall
be hereinafter referred to collectively as the "Securities" and shall be held by
Custodian subject to the terms and conditions of this agreement.
3. ACCOUNTS Custodian shall open and maintain a separate account or
accounts in the name of each Portfolio of the Fund, subject only to draft or
order by Custodian pursuant to the terms of this agreement, and shall maintain
in such account or accounts all cash received by it from or for the account of
the Portfolio, other than cash maintained by the Portfolio pursuant to Rule
17f-3 promulgated under the Investment Company Act of 1940 (the "40 Act").
Custodian may deposit the securities held in the account of a Portfolio:
(a) in the banking department of Custodian;
(b) in such other banks or trust companies, including
affiliates of Custodian, as Custodian may deem appropriate;
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<PAGE>
(c) in its accounts with a clearing agency registered with the
Securities and Exchange Commission (the "Commission") under
Section 17A of the Securities Exchange Act of 1934 (the
"Exchange Act"), which acts as a securities depository (the
"Securities Depository"); or
(d) in a book-entry account which is maintained for the
Custodian by a Federal Reserve bank (the "Book Entry
Account").
So long as Custodian maintains any account pursuant to
subsections (c) and (d) above for a Portfolio, Custodian shall
comply with the requirements of Rule 17f-4, including, but not
limited to:
(i) deposit the Securities in such an account that
includes only assets held for the Portfolio;
(ii) send the Fund confirmation of any transfers to or
from the account maintained for the Portfolio;
(iii) with respect to Securities transferred to the
account of the Portfolio, identify as belonging to
the Portfolio, by book-entry or otherwise, a
quantity of such Securities in the fungible bulk of
Securities (A) registered in the name of Custodian
or its nominee, or (B) shown on Custodian's account
on the books of the Securities Depository, the
Book-Entry Account, or Custodian's agent;
(iv) promptly send to the Fund reports it receives from
the appropriate Federal Reserve Bank of Securities
Depository on its system of internal accounting
control; and
(v) send to the Fund such reports of the systems of
internal accounting control of Custodian and its
agents through which such Securities are deposited
as are available and as the Fund may reasonably
request from time to time.
4. PROPER INSTRUCTIONS For the purpose of this agreement, "proper
instructions" shall mean (a) any oral authorizations, instructions or approvals
of any kind transmitted to Custodian in person or by telephone by a person
believed in good faith by Custodian to be a person authorized by a resolution of
the Board of Trustees of the Fund to give such authorizations, instructions or
approvals on behalf of the Fund; or (b) written authorizations, instructions, or
approvals of any kind transmitted to Custodian by mail, personal delivery,
telecopy, telegram or other written means by at least two (2) persons believed
in good faith by Custodian to be persons authorized by a resolution of the Board
of Trustees of the Fund to give such authorization,
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<PAGE>
instructions or approvals on behalf of the Fund. The Fund shall confirm any
oral authorization, instructions or approval described in (a), above, the same
business day by transmittal to Custodian of a written authorization, instruction
or approval described in (b), above.
5. PAYMENTS FOR SHARES The Fund shall be responsible for allocation of
payment for Shares of a Portfolio, issued from time to time by the Fund. Such
payments will be made instructions or approvals on behalf of the Fund. The Fund
shall confirm any oral authorization, available to the Portfolio in federal
funds as of specified times agreed upon from time to time by the Fund and
Custodian.
6. COLLECTION OF INCOME AND SHORT TERM INVESTMENTS Custodian shall
collect all income and other payments with respect to registered Securities held
hereunder to which each Portfolio shall be entitled by law or pursuant to custom
in the securities business, and shall collect all income and principal and other
payments with respect to bearer Securities if, on the date of payment by the
issuer, such Securities are held by Custodian or agent thereof, and shall
deposit such income and principal, as collected, into such Portfolio's account.
Without limiting the generality of the foregoing, Custodial shall detach and
present for payment all coupons and other income and principal items requiring
presentation as and when they become due, shall collect dividends and interest
when due on Securities held hereunder, and shall endorse and deposit for
collection, in the name of the Portfolio, checks, drafts, and other negotiable
instruments within a reasonable period of time. The Custodian is further
authorized, empowered and directed to invest, said proceeds and any other monies
not directed by the Fund or Fund's agent to be invested in short term interest
bearing or short term discount obligations to the best of Custodian's ability.
It is contemplated that the Fund will, from time to time, provide Custodian with
certain written guidelines setting forth specific short term interest bearing
and short term discount obligations which are acceptable to Fund, and Custodian
agreed to act within said guidelines.
Unless provided otherwise in written instructions from the Fund to the
Custodian, the Custodian is specifically authorized, empowered and directed to
invest any short term monies in securities of The One Group U.S. Treasury
Securities Money Market Fund and The One Group Prime Money Market Fund. The One
Group is an open-end investment company registered under the '40 Act. The fact
that the Custodian, any affiliate of the Custodian, or any affiliate of BANC ONE
CORPORATION is providing services to and receiving remuneration from the
foregoing investment company or investment trust as investment advisor,
custodian, transfer agent, registrar, or otherwise shall not preclude the
Custodian from investing in the securities of such investment company or
investment trust.
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<PAGE>
With respect to Securities of foreign issuers, while Custodian will use its best
efforts to collect any monies which may to its knowledge become collectible
arising from such Securities including dividends, interest and other income and
principal, and to notify the Fund of any call for redemption, offer of exchange,
right of subscription, reorganization or other proceedings affecting such
Securities, it is understood that Custodian shall be under no responsibility for
any failure or delay in effecting such collections or giving such notices.
Custodian shall not be under any obligation or duty to take action to effect
collection of any amount, if the Securities (domestic or foreign) on which such
amount is payable are in default and payment is refused after due demand or
presentation. Custodian will, however, promptly notify the Fund in writing of
such default and refusal to pay.
7. PAYMENT OF MONIES Upon receipt of proper instructions from the Fund
on behalf of the applicable Portfolio, which may be continuing instructions when
Fund and Custodian specifically agree in writing, Custodian shall pay out monies
of a Portfolio from the custodial account in the following cases only:
(a) Upon the purchase of Securities for the account of the Portfolio
by only (i) against the delivery of such Securities to Custodian (or any bank,
banking firm or trust company doing business in the United States or abroad
which is qualified under the '40 Act to act as a custodian and has been
designated by Custodian as its agent for this purpose) registered in the name of
the Portfolio or in the name of a nominee of the Fund or in the name of a
nominee of Custodian referred to in Section 9 below or in proper form for
transfer; (ii) in the case of a purchase effected through a Securities
Depository, in accordance with the conditions set forth in Section 3 above or
(iii) in the case of repurchase agreements entered into between the Fund and
another bank or broker-dealer, against delivery of Securities either in
certificate form or through an entry crediting Custodian's account at the
Federal Reserve Bank with such securities.
(b) In connection with conversion, exchange, surrender, or redemption
of securities owned by the Fund as set forth in Section 8(b) of
this agreement;
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<PAGE>
(c) For the payment of any expense or liability incurred by the
Portfolio, including but not limited to the following payments
for the account of the Portfolio: interest, taxes, management
accounting, transfer agent and legal fees, distribution plan
payments and other operating expenses of the Fund;
(d) For the payment of any dividends or other distributions on
shares of the Portfolio declared pursuant to the governing
documents of the Fund;
(e) In connection with options and futures contracts, as set
forth in sections 14 and 15 of this agreement, respectively; and
(f) For any other purpose of the Fund, but only upon receipt of
proper instructions from the Fund, specifying the amount of such
payment, setting forth the purpose for which such payment is to
be made, declaring such purpose to be a proper purpose, and
naming the person or persons to whom such payment is to be made.
Notwithstanding anything to the contrary, in connection with sales and purchases
of Securities, the Custodian is hereby authorized to debit or credit the
Portfolio's Account on contractual settlement date.
8 DUTIES OF CUSTODIAN WITH RESPECT TO SECURITIES OF THE FUND HELD BY
CUSTODIAN
(a) Holding Securities Custodian shall hold and physically
segregate for the account of each Portfolio all Securities owned
by the Fund other than securities held in a Securities Depository
or Book Entry Account, as provided in Section 3 of this
agreement.
(b) Delivery of Securities Custodian shall release and deliver
Securities owned by a Portfolio held by Custodian or in a
Securities Depository or Book Entry Account for Custodian only
upon receipt of proper instructions from the Fund on behalf of
the applicable Portfolio, which may be continuing instructions
when the Fund and Custodian specifically agree in writing, and
only in the following cases:
(i) Upon the sale of such Securities for the account of the
Portfolio and the receipt of payment therefor;
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<PAGE>
(ii) Upon the receipt of payment in connection with any
repurchase agreement related to such Securities entered
into by the Portfolio;
(iii) In the case of a sale effected through a Securities
Depository or Book Entry Account, in accordance with the
provisions of Section 3 of this agreement;
(iv) In connection with tender or other similar offers for
Securities owned by the Portfolio, provided that, in any
such case, the cash or other consideration is to be
delivered to Custodian;
(v) To the issuer thereof or its agent when such Securities
are called, redeemed, retired, or otherwise become
payable, provided that, in any such case, the cash or
other consideration is to be delivered to Custodian;
(vi) To the issuer thereof, or its agent, for transfer into
the name of the Custodian or into the name of any nominee
or nominees of Custodian, or for exchange for a different
number of bonds, certificates or other evidence
representing the same aggregate face amount or number of
units, or for exchange of interim receipts or temporary
Securities or definitive Securities, provided that, in any
such case, the new Securities are to be delivered to
Custodian;
(vii) To the broker selling the same, against a receipt,
for examination in accordance with "street delivery"
custom provided that Custodian may adopt such procedures
to ensure their prompt return to Custodian by the broker
in the event the broker elects not to accept them;
(viii) For exchange or conversion pursuant to any plan of
merger, consolidation, recapitalization, reorganization,
or readjustment of the Securities of the issuer of such
Securities, or pursuant to provisions for conversion
contained in such Securities provided that, in any such
case, the new Securities and cash, if any, are to be
delivered to Custodian;
(ix) In the case of warrants, rights or similar
Securities, the surrender thereof upon the exercise of
such warrants, rights or similar Securities or the
surrender of interim receipts or temporary Securities for
definitive Securities, provided that, in any such case,
the new Securities and cash, if any, are to be delivered
to Custodian;
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<PAGE>
(x) If the Custodian and the Fund have executed a
Securities Lending Agreement, for delivery in connection
with any loans of securities made by the Portfolio
pursuant to the terms of such Securities Lending
Agreement;
(xi) For delivery as security in connection with any
borrowings by the Fund on behalf of the Portfolio
requiring a pledge of assets by the Fund on behalf of the
Portfolio but only against receipt of amounts borrowed;
(xii) For delivery in accordance with the provisions of
any agreement among the Fund on behalf of the Portfolio,
Custodian and a broker- dealer registered under the
Exchange Act and a member of theNational
(xiii) For delivery in accordance with the provisions of
any agreement among the Fund on behalf of the Portfolio,
Custodian, and a Futures Commission Merchant registered
under the Commodity Exchange Act, relating to the
compliance with the rules of the Commodity Futures Trading
Commission and/or any Contract Market, or any similar
organization or organizations, regarding account deposits
in connection with transactions by the Portfolio;
(xiv) Upon receipt of instructions from the Transfer Agent
for the Fund, for delivery to such Transfer Agent or to
holders of Shares in connection with distributions in
kind, as may be described from time to time in one or more
currently effective prospectuses of the Fund, in
satisfaction of requests by holders of Shares
forrepurchase or redemption; and
(xv) For any other purpose of the Fund, but only upon
receipt of, in addition to proper instructions from the
Fund on behalf of the applicable Portfolio, a certified
resolution of the Board of Trustees of the Fund specifying
the Securities to be delivered, setting forth the purpose
for which such delivery is to be made, declaring such
purpose to be a proper purpose and naming the person or
persons to whom delivery of such Securities shall be made.
Notwithsanding anything to the contrary, in connection with sales and purchases
of Securities, the Custodian is hereby authorized to debit or credit the
Portfolio's Account on contractual settlement date.
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<PAGE>
(c) Security Holdings Disclosure The Custodian is not authorized
and shall not disclose the name, address, or security positions
of the Fund in response to requests concerning shareholder
communications under Section 14 of the Securities Exchange Act of
1934, the rules and regulations thereunder, and any similar
statute, regulation or rule in effect from time to time.
9. REGISTRATION OF SECURITIES Securities held by Custodian (other than
bearer Securities) shall be registered in the name of the Fund or in the name of
any nominee of the Fund or of any nominee of Custodian, unless the Fund has
authorized in writing the appointment of a nominee to be used in common with
other registered investment companies having the same investment adviser as the
Fund. All Securities accepted by Custodian on behalf of the Fund under the terms
of this agreement shall be in "street name" or other good delivery form.
10. SEGREGATED ACCOUNT Custodian shall upon receipt of proper
instructions establish and maintain a segregated account or accounts for and on
behalf of each applicable Portfolio, into which account or accounts may be
transferred cash and/or Securities including Securities maintained in an account
by the Custodian pursuant to Section 3 of this agreement (a) in accordance with
the provisions of any agreement among the Fund on behalf of the Portfolio,
Custodian and a dealer or broker which is registered under the Exchange Act and
is a member in good standing of the NASD relating to compliance with the rules
of the O.C.C. and of any registered national securities exchange, or of any
similar organization or organizations, regarding escrow or other arrangements in
connection with transactions by the Portfolio; (b) for purposes of segregating
cash or government Securities in connection with options purchased or written by
the Fund or commodity futures contracts or options thereon purchase, sold, or
written by the Fund; and (c) for any other purpose, upon receipt of proper
instructions.
11. VOTING AND OTHER ACTION Custodian shall promptly deliver or mail to
the Fund all forms of proxies and all notices of meetings relating to Securities
held for the account of each Portfolio, and, upon receipt of proper
instructions, shall execute and deliver such proxies or other authorizations as
may be required. Neither Custodian nor its nominee shall vote any Securities or
execute any proxy to vote the same or give any consent to take any other action
with respect thereto (except as otherwise herein provided) unless directed to do
so by the Fund on behalf of the Portfolio upon receipt of proper instructions.
12. TRANSFER TAXES AND OTHER DISBURSEMENTS The Fund shall pay or
reimburse Custodian from time to time for any transfer taxes payable upon
transfers of Securities made hereunder, and for all other necessary and proper
disbursements and expenses made or incurred by Custodian in the performance of
its duties and obligations under this agreement. Custodian shall execute and
deliver and shall cause any Securities Depository to execute and deliver such
certificates in connection with Securities delivered to it or by it under this
agreement as may be required under the laws of any jurisdiction to exempt from
taxation any exemptible transfers and/or deliveries of any such Securities.
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<PAGE>
13. RESPONSIBILITY OF CUSTODIAN Custodian shall be held to the exercise
of reasonable care in carrying out its obligations under this Agreement and
shall be without liability to the Fund for any loss, damage, cost, expense
(including attorney's fees and disbursement), liability or claim, unless such
loss, damage, cost, expense, liability or claim arises from negligence, bad
faith or willful misconduct on its part or on the part of any sub-custodian
appointed by Custodian. IN NO EVENT SHALL THE AGENT BE LIABLE FOR ANY SPECIAL,
INDIRECT, INCIDENTAL, PUNITIVE OR CONSEQUENTIAL DAMAGES EVEN IF THE AGENT HAS
BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGES. THIS LIMITATION OF LIABILITY
WILL APPLY REGARDLESS OF THE FORM OF ACTION, INCLUDING WITHOUT LIMITATION,
BREACH OF CONTRACT OF TORT (INCLUDING NEGLIGENCE).
Custodian shall be held harmless in acting upon proper instructions, certified
resolutions of the Board of Trustees of the Fund, or any notice, request,
consent, certificate or other instrument reasonably believed by it to be genuine
and to be signed by the proper party or parties; and shall be entitled to
receive as conclusive proof of any fact or matter required to be ascertained by
it hereunder, a certificate by the President, Treasurer, or Secretary or
Assistant Secretary of the Fund. Custodian may receive and accept a certified
resolution of the Board of Trustees of the Fund as conclusive evidence (a) of
the authority of any person to act in accordance with such resolution or (b) of
any determination or of any action by the Board of Trustees of the Fund pursuant
to the Declaration of Trust or the Code of Regulation or the By-Laws as
described in such resolution, and such vote may be considered as in full force
and effect until receipt by Custodian of written notice from the Secretary or
Assistant Secretary to the contrary. Notwithstanding anything to the contrary,
Custodian shall have no obligation to perform market-to-market services in
connection with securities transactions, including, without limitation, options
and futures.
Custodian shall be entitled to reasonably rely upon and may act upon advice of
counsel (who may or may not be counsel for the Fund) on all matters, and shall
be without liability for any action reasonably taken or omitted pursuant to such
advice.
If the Fund on behalf of a Portfolio requires Custodian to take any action with
respect to Securities, which action involves the payment of monies or which
action may, in the opinion of Custodian, result in Custodian or its nominee
being liable for the payment of money or incurring liability of some other form,
the Fund on behalf of a Portfolio, as a prerequisite to requiring Custodian to
take such action, shall provide indemnity to Custodian in an amount and form
satisfactory to it.
With respect to Securities held by Custodian on behalf of a Portfolio, Custodian
shall collect all income or other payments, release and deliver such Securities,
and take any other action as directed by the Fund with respect to dividends,
splits, distributions, spin-offs, puts, calls,
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<PAGE>
conversions, redemptions, tenders, exchanges, mergers, reorganizations, rights,
warrants or any other similar activity relating to the Securities. The Custodian
shall request direction of Fund upon receipt of actual notice of any such
activity. For purposes of this paragraph, Custodian shall be deemed to have
actual notice if any such activity is published in one or more of the following
publications: J.J. Kenney's Munibase System, Xcitek, Inc., Financial Card
Service, Standard & Poors' Called Bond Listing, Depository Trust Reorganization
Notices, and The Wall Street Journal. If Custodian does not have actual notice
of such activity, any such activity will be handled by Custodian on a "best
efforts" basis.
14. OPTIONS
(a) Purchase of Options by a Portfolio Upon the purchase
by a Portfolio of any Option (as defined below), the Fund
on behalf of the Portfolio shall promptly deliver to the
Custodian a certificate signed by an appropriate officer
of the Fund (a "Certificate") specifying with respect to
each such Option: (i) whether the Option is a put or call
Option; (ii) the name of the issuer of the securities
subject to the Option and the title and number of such
securities; (iii) the expiration date: (iv) the exercise
price; (v) the date of purchase and settlement; (vi) the
premium to be paid by the Portfolio; and (vii) the name of
the registered broker-dealer who is acting as the clearing
agent (the "Clearing Agent"). Upon receipt of a Clearing
Agent's confirmation of the purchase of the Option held by
such Clearing Agent for the account of Custodian as
custodian for the Portfolio, Custodian shall pay the
premium payable to the Clearing Agent through whom the
purchase was made; provided, that such premium conforms to
the total premium payable as set forth in such
Certificate.
(b) Sale of Options by a Portfolio Upon the sale of any
Option purchased by a Portfolio in accordance with
subsection (a) above, the Fund on behalf of the Portfolio
shall promptly deliver to Custodian a Certificate
specifying with respect to such sale: (i) the type of
Option (put or call); (ii) the name of the issuer of the
securities subject to the Option and the title and number
of such securities; (iii) the date of sale; (iv) the sales
price; (v) the date of settlement; (vi) the total amount
payable to the Portfolio upon such sale; and (vii) the
name of the Clearing Agent through whom the sale was made.
Custodian shall consent to the delivery of the Option sold
by the Clearing Agent which previously supplies the
confirmation described in subsection (a) above with
respect to such Option against payment to Custodian of the
total amount payable to the Portfolio; provided that the
same conforms to the total amount payable as set forth in
such Certificate.
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<PAGE>
(c) Upon the exercise by the Portfolio of any Call Option
(as defined below) purchased by the Portfolio pursuant to
subsection (a) above, the Fund on behalf of the Portfolio
shall promptly deliver to Custodian a Certificate
specifying with respect to such Call Option: (i) the name
of the issuer of the securities subject to such Call
Option and the title and number of such securities; (ii)
the expiration date; (iii) the date of exercise and
settlement; (iv) the exercise price per share; (v) the
total amount to be paid by the Portfolio upon such
exercise; and (vi) the name of the Clearing Agent through
whom such Call Option was exercised. Custodian shall, upon
receipt of the securities underlying the Call Option which
was exercised,(A) pay out of the moneys held for the
account of the Portfolio the total amount payable to the
Clearing Agent through whom the Call Option was exercised;
provided that the same conforms to the total amount
payable as set forth in such Certificate, and (B) delete
the exercised Call Option from the statements delivered to
the Fund pursuant to Section 16 of this agreement.
(d) Upon the exercise by a Portfolio of any Put Option (as
defined below) purchased by the Portfolio pursuant to
subsection (a) hereof, the Fund on behalf of the Portfolio
shall deliver to Custodian a Certificate specifying with
respect to such Put Option: (i) the name of the issuer of
the securities subject to such Put Option and the title
and number of such securities; (ii) the expiration date;
(iii) the date of exercise and settlement; (iv) the
exercise price per share; (v) the total amount to be paid
to the Portfolio upon such exercise; and (vi) the name of
the Clearing Agent through whom such Put Option was
exercised. Custodian shall upon receipt of the amount
payable upon the exercise of the Put Option (A) deliver or
cause the Securities Depository or Book Entry Account to
deliver, out of the account of the Portfolio to which such
Put Option was allocated, the securities which were
subject to such Put Option; provided that the same
conforms to the amount payable to the Portfolio as set
forth in such Certificate, and (B) delete the exercised
Put Option from the statements to be delivered to the Fund
pursuant to Section 16 of this agreement.
(e) Whenever a Portfolio writes a Covered Call Option (as
defined below) with respect to securities held by
Custodian hereunder, the Fund on behalf of the Portfolio
shall promptly deliver to Custodian a Certificate
specifying with respect to such Covered Call Option: (i)
the name of the issuer of the securities subject to such
Covered Call Option and the title and number of such
securities; (ii) the expiration date; (iii) the exercise
price; (iv) the premium to be received by the Portfolio;
(v) the date such Covered Call Option was written; and
(vi) the name of the Clearing Agent through whom the
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<PAGE>
premium is to be received. Custodian shall deliver or
cause to be delivered, in exchange for receipt of the
premium specified in the Certificate with respect to such
Covered Call Option, such receipts as are required in
accordance with the customs prevailing among brokers in
Covered Call Options, and shall impose, or direct the
Securities Depository or Book Entry Account to impose,
upon the underlying securities specified in the
Certificate such restrictions as may be required by such
receipts.
(f) Whenever Covered Call Option written by a Portfolio
and described in the preceding subsection (e) is
exercised, the Fund on behalf of the Portfolio shall
promptly deliver to Custodian a Certificate instructing
Custodian to deliver, or to direct the Securities
Depository or Book Entry Account to deliver, the
securities subject to such Covered Call Option and
specifying: (i) the name of the issuer of the securities
subject to such Covered Call Option and the title and
number of such securities; (ii) the Clearing Agent to whom
the underlying securities are to be delivered; and (iii)
the total amount payable to the Portfolio upon such
delivery. Upon the return and/or cancellation of any
receipts delivered pursuant to subsection (e) hereof,
Custodian shall deliver, or cause the Securities
Depository or Book Entry Account to deliver, the
underlying securities as specified in the Certificate for
the amount to be received as set forth in such
Certificate.
(g) Whenever a Portfolio purchases any Option identical to
a previously written Covered Call Option described in
subsection (e) hereof in a transaction expressly
designated as a "Closing Purchase Transaction" in order to
liquidate its position as a writer of an Option, the Fund
on behalf of the Portfolio shall promptly deliver to
Custodian a Certificate specifying with respect to the
Option being purchased: (i) that the transaction is a
Closing Purchase Transaction; (ii) the name of the issuer
of the securities subject to such Option and the title and
number of such securities; (iii) the exercise price; (iv)
the premium to be paid by the Portfolio; (v) the
expiration date; (vi) the date of such purchase; and (vii)
the name of the Clearing Agent to whom the premium is to
be paid. Upon Custodian's payment of the premium and the
return and/or cancellation of any receipt issued pursuant
to subsection (e) of this Section 14 with respect to the
Covered Call option being liquidated through the Closing
Purchase Transaction, Custodian shall (A) remove, or
direct the Securities Depository or Book Entry Account to
remove, the previously imposed restriction on the
securities underlying the Covered Call Option, and (B)
delete such Option from statements delivered to the Fund
by Custodian pursuant to Section 16 of this agreement.
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<PAGE>
(h) Upon the expiration of any Option purchased by a
Portfolio pursuant to subsection (a) of this Section 14 or
any Covered Call Option written by a Portfolio and
described in subsection (e) of this Section 14, Custodian
shall (i) delete such Option from the statements delivered
to the Fund pursuant to Section 16 of this agreement and,
if such expired Option was a Covered Call Option written
by the Portfolio, (ii) free, or instruct the Securities
Depository or Book Entry Account to free, the Securities
underlying such Covered Call Option from the restrictions
imposed by receipts issued in connection therewith.
(i) For purposes of this Section 14, the following terms
shall have the meanings as set forth below:
(i) "Option" shall mean a Call Option, Covered Call
Option and/or Put Option.
(ii) "Call Option" shall mean an option entitling the
holder thereof, upon timely exercise and payment of
the exercise price, as specified therein, to purchase
from the writer of such Call Option the specified
underlying Securities.
(iii) "Covered Call Option" shall mean an option
entitling its holder, upon timely exercise and
payment of the specified exercise price, to purchase
from the writer of such Covered Call Option the
specified underlying Securities which are owned by
such writer and are subject to appropriate
restrictions.
(iv) "Put Option" shall mean an option entitling the
holder thereof, upon timely exercise and tender of
the specified underlying Securities, to sell such
Securities to the writer of such Put Option for the
specified exercise price.
15. FUTURES CONTRACTS
(a) Whenever a Portfolio shall enter into a Futures
Contract (as defined below) to be held by Custodian under
this agreement, the Fund on behalf of the Portfolio shall
deliver to Custodian a Certificate specifying with respect
to such Futures Contract: (i) the category of Futures
Contract (the name of the underlying stock index or
financial instrument); (ii) the number of identical
Futures Contracts entered into; (iii) the delivery of
settlement date of the Futures Contract; (iv) the date the
Futures Contract was entered into; (v) whether the Fund is
buying (going long) or selling (going short) on such
Futures Contract; (vi) the amount of cash and/or the
amount and kind of Securities, if any, to be deposited by
Custodian in a - 16 - margin account with respect to such
Futures Contract and the name in which the margin account
has been, or is to be, established; (vii) the name of the
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<PAGE>
broker, dealer, or futures commission merchant through
whom the Futures Contract was entered into; and (viii) the
amount of fee or commission, if any, to be paid to the
broker, dealer, or futures commission merchant. Custodian
shall upon receipt of such broker's, dealer's, or futures
commission merchant's statement confirming the purchase
(creation of a long position) or sale (creation of a short
position) of a Futures Contract which is held by such
broker, dealer, or futures commission merchant in the name
of Custodian (or of a duly appointed and registered
nominee of Custodian or a designated depository or its
nominee) as custodian for the Portfolio, make payment of
the fee or commission, if any, specified in the
Certificate and deposit in such margin account the amount
of cash and/or the amount and kind of securities specified
in such Certificate.
(b) The Portfolio shall, from time to time, make such
additional deposits to, or withdrawals from, a margin
account as specified in a Certificate received by
Custodian. Such Certificate shall specify the amount of
cash and/or the amount and kind of Securities specifically
to be deposited in, or withdrawn from, a specified margin
account. In the event that the Fund fails to specify in a
Certificate the name of the issuer, the title and the
number of shares or the principal amount of any particular
Securities to be deposited by Custodian in a margin
account, Custodian shall not be under any obligation to
make any such deposit and shall so notify the Fund.
(c) Custodian shall make deliveries or payments from a
margin account to the broker, dealer, or futures
commission merchant in whose name, or for whose benefit,
the account was established only upon the receipt of a
certificate specifying the broker, dealer, or futures
commission merchant to whom such payment or delivery is to
be made, the amount of money and/or the amount and kind of
securities to be paid or delivered, and the date on which
such payment or delivery is to be made. After receipt of
such a Certificate, Custodian shall make the payments
and/or deliveries to the broker, dealer, or futures
commission merchant therein specified.
(d) Whenever a Futures Contract held by Custodian
hereunder is retained by a Portfolio until delivery or
settlement is made on such Futures Contract, the Fund on
behalf of the Portfolio shall deliver to Custodian a
Certificate specifying: (i) the Futures Contract; (ii)
with respect to a Stock Index Futures Contract (as defined
below), the total cash settlement amount to be paid or
received, and with respect to a Financial Futures Contract
(as defined below), the Securities and/or amount of cash
to be delivered or received; (iii) the broker, dealer, or
futures commission merchant to or - 17 - from whom payment
or delivery is to be made or received; and (iv) the amount
of cash and/or Securities to be withdrawn from the related
margin account. Upon the receipt of a broker's, dealer's,
or futures commission merchant's statement or confirmation
reasonably believed by Custodian to be in the form
customarily used by brokers, dealers or futures commission
merchants confirming that the Futures Contract is being
settled and that the Portfolio's position in such Futures
Contract is thereby terminated, Custodian shall make the
payment or delivery specified in the Certificate, and
delete such Futures Contract from the statements delivered
to the Fund pursuant to Section 16 of this agreement.
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<PAGE>
(e) Whenever a Portfolio shall enter into a Futures
Contract to offset a Futures Contract held by Custodian
hereunder, the Fund on behalf of the Portfolio shall
deliver to Custodian a Certificate specifying: (i) the
items of information required in a Certificate described
in subsection (a) above, and (ii) the Futures Contract
being offset. Custodian shall, upon receipt of a broker's,
dealer's. or futures commission merchant's statement or
confirmation reasonably believed by Custodian to be in the
form customarily used by brokers, dealers, or futures
commission merchants confirming the offsetting
transaction, make payment of the fee or commission, if
any, specified in the Certificate and delete the Futures
Contract being offset from the statements delivered to the
Fund pursuant to Section 16 of this agreement.
(f) Custodian shall accept cash and/or Securities tendered
or delivered by a broker, dealer, or futures commission
merchant in connection with any Futures Contract held by
Custodian hereunder when instructed to accept such cash
and/or Securities in a Certificate. Such Certificate shall
instruct Custodian where to deposit such cash and/or
Securities.
(g) For purposes of this Section 15, the following terms
shall have the meanings set forth below:
(i) "Futures Contract" shall mean a Financial Futures
Contract and/or Stock Index Futures Contract.
(ii) "Financial Futures Contract" shall mean the firm
commitment to buy or sell fixed income securities,
including U.S. Treasury Bills, U.S. Treasury Notes,
U.S. Treasury Bonds, Government National Mortgage
Association mortgage-backed securities and commercial
paper, at a specified time at an agreed upon price.
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<PAGE>
(iii) "Stock Index Futures Contract" shall mean a
bilateral agreement pursuant to which the parties
agree to take or make delivery of an amount of cash
equal to a specified dollar amount times the
difference between the value of a particular stock
index at the close of the last business day of the
contract and the price at which the Futures Contract
is originally struck.
16. RECORDS AND REPORTS Fund hereby acknowledges that it may have the
right to receive broker confirmations within the time period prescribed by 12
C.F.R. Section 12.5 at no additional cost. In lieu of receiving such
confirmations within such time period, Custodian and Fund agree to the
alternative procedures set forth below.
Custodian shall create and maintain records relating to its activities and
obligations under this agreement in such manner as will meet the obligations of
the Fund under the '40 Act, with particular attention to Section 31 thereof and
Rules 31a-1 and 31a-2 thereunder, applicable Federal and State tax laws and any
other law or administrative rules or procedures which may be applicable to the
Fund and employees and agents of the Securities and Exchange Commission. All
such records shall remain the property of the Fund, shall be subject to the
provisions of Section 13 of this agreement, and shall be open to the inspection
and audit as reasonable times by duly authorized officers, employees or agents
of the Fund. Custodian shall, at the Fund's request, supply the Fund with a
tabulation of Securities owned by each Portfolio and held by Custodian and shall
supply to the Fund a report from time to time as parties shall agree of all
monies received or paid on behalf of each Portfolio and of the resultant cash
balance, a list of all security transactions that remain unsettled at such time,
and such other reports as the Fund may reasonably request.
17. EFFECTIVE PERIOD, TERMINATION AND INTERPRETIVE AND ADDITIONAL
PROVISIONS This agreement shall become effective as of the date first set forth
in this agreement, and may be terminated by either party by 60 days advance
written notice delivered pursuant to Section 20 of this agreement to the other
party.
Upon termination hereof, the Fund shall pay to Custodian such compensation as
may be due as of the date of such termination, and shall likewise reimburse
Custodian for its costs, expenses and disbursements as of the date of such
termination as contemplated by this agreement.
In connection with the operation of this agreement, Custodian and the Fund may
agree from time to time on such provisions interpretive or in addition to the
provisions of this agreement as may in their joint opinion be consistent with
the general tenor of this agreement. Any such interpretive or additional
provisions shall be signed by both parties and annexed hereto, provided that no
such interpretive or additional provisions shall contravene any applicable
Federal or State regulations, or any provision of the Declaration of Trust and
By-Laws of the Fund as the same may from time to time be amended.
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<PAGE>
18. SUCCESSOR CUSTODIAN If a successor custodian for the Fund, or one
or more of the Portfolios is appointed by the Board of Trustees of the Fund,
Custodian shall, upon termination, deliver to such successor custodian, duly
endorsed and in form for transfer, all Securities of each applicable Portfolio
then held hereunder and all other property of the applicable Portfolio(s)
deposited with or held by it hereunder and Custodian shall be released of all
duties and obligations under this agreement.
If no such successor custodian is appointed and this agreement is terminated
pursuant to Section 17 of this agreement, Custodian shall, in like manner, at
its office, upon receipt of a certified resolution of the Board of Trustees of
the Fund, deliver such property in accordance with such resolution.
In the event that no written order designating a successor custodian or
certified copy of a resolution of the Board of Trustees of the Fund shall have
been delivered to Custodian on or before the date when such termination shall
become effective, then Custodian shall have the right to deliver to a bank or
trust company of its own selection qualified to act as a custodian under the '40
Act, all property of applicable Portfolios held by Custodian, under this
agreement. Thereafter, such bank or trust company shall be the successor of
Custodian under this agreement and Custodian shall be released of all duties and
obligations under this agreement. Alternatively, Custodian shall have the right
to commence as action in the nature of an interpleader, and seek to deposit the
property in a court of competent jurisdiction.
19. COMPENSATION OF CUSTODIAN Custodian shall be entitled to
compensation for its services as set forth in Schedule A attached hereto and
made a part hereof as amended by Custodian from time to time (the "Fee
Schedule") and for reimbursement of its out of pocket expenses.
20. NOTICES Any notices required or desired to be given to any party
hereto shall be in writing, shall be addressed to such other party at that
party's address set forth at the beginning of this agreement and shall be deemed
given when deposited in the United States mail, certified, return receipt
requested, or actually received by the party to whom it was addressed if
delivered by an alternate method. Any party may change the address to which
notices or other communications are to be given by giving the other parties
notice of such change.
21. OVERDRAFTS Any Securities purchased in anticipation of the delivery
of cash on behalf of the Portfolio shall not be credited to the Account of the
Portfolio if such cash is not actually received by the Custodian by the
anticipated delivery date. In such event, Custodian may, in its sole discretion,
advance the necessary funds to complete the transaction and immediately shall
notify the Portfolio of the foregoing. Upon receipt of such notification, the
Portfolio shall wire such funds to the Custodian, in such amount as agreed upon
by the Fund and Custodian to make the Custodian whole in connection with the
shortfall, by 1:00 p.m. eastern standard time on the day the notification is
received or, alternatively, instruct the Custodian to sell Securities in the
Portfolio's account in the amount agreed. Upon Custodian's receipt of the
- 20 -
<PAGE>
funds representing the shortfall, the subject Securities will be credited to the
Portfolio's account. If the Custodian has not received funds in the amount
necessary to cover the shortfall in the Portfolio's account within two days
following notification, Custodian is authorized to sell the subject Securities
and retain that portion of the proceeds necessary to make the Custodian whole,
and shall credit any remaining proceeds to the Account of the Portfolio.
22. GOVERNING LAw This agreement shall be construed and the provisions
thereof interpreted under and in accordance with the laws of Ohio.
23. SEVERABILITY The intention of the parties to this agreement is to
comply fully with all laws, rules, regulations and public policies, and this
agreement shall be construed consistently with all laws, rules, regulations and
public policies to the extent possible. If and to the extent that any court of
competent jurisdiction determines it is impossible to construe any provision of
this agreement consistently with any law, rule, regulation or public policy and
consequently holds that provision to be invalid, such holding shall in no way
affect the validity of the other provisions of this agreement, which shall
remain in full force and effect.
24. NON-WAIVER No failure by any party to insist upon compliance with
any term of this agreement, to exercise any option, enforce any right, or seek
any remedy upon any default of any other party shall affect, or constitute a
waiver of, the first party's right to insist on such strict compliance, exercise
that option, enforce that right, or seek that remedy with respect to that
default or any prior, contemporaneous, or subsequent default. No custom or
practice of the parties at variance with any provision of this agreement shall
affect or constitute a waiver of, any party's right to demand strict compliance
with all provisions of this agreement.
25. NO THIRD PARTY BENEFIT This agreement is intended for the exclusive
benefit of the parties to this agreement and their respective successors and
assigns, and nothing contained in this agreement shall be construed as creating
any rights or benefits in or to any third party.
26. CAPTIONS The captions of the various sections of this agreement are
not part of the context of this agreement, but are only labels to assist in
locating those sections and shall be ignored in construing this agreement.
27. ENTIRE AGREEMENT. This agreement represents the entire agreement
between the parties and may not be modified or amended except by a writing
signed by the party to be charged, except as otherwise provided herein.
28. DISPUTE RESOLUTION AND ARBITRATION. Any controversy or claim
arising out of or relating to this agreement, or the breach of the same, shall
be settled through consultation and negotiation in good faith and a spirit of
mutual cooperation. However, if those attempts fail, the
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<PAGE>
parties agree that any misunderstandings or disputes arising from this agreement
shall be decided by arbitration which shall be conducted, upon request by either
party, before three (3) arbitrators (unless both parties agree on one (1)
arbitrator) designated by the American Arbitration Association (the "AAA"), in
accordance with the terms of the Commercial Arbitration Rules of the AAA, and,
to the maximum extent applicable, the United States Arbitration Act (Title 9 of
the United States Code), or if such Act is not applicable, any substantially
equivalent state law. The parties further agree that the arbitrator(s) will
decide which party must bear the expenses of the arbitration proceedings.
CUSTODIAN FUND
BANK ONE TRUST COMPANY, N.A. DEAN FAMILY OF FUNDS
By: /s/ Deborah A. Harvey By: /s/ Frank H. Scott
Title: AVP Title: President
Attest: Celia M. Combs Attest: N. Kay Gregory
<PAGE>
BANK ONE TRUST COMPANY, N.A.
STANDARD CUSTODY AGREEMENT
SCHEDULE A
FEE SCHEDULE
This Schedule A sets forth the compensation agreed upon by DEAN FAMILY
OF FUNDS to be paid to Bank One Trust Company, N.A. (the "Custodian") pursuant
to the terms and conditions of Section 14 of the Standard Custody Agreement
Effective March 17, 1997 and executed by such parties. Any changes to the
fee schedule shall be by execution of a new Schedule A.
Custody Fees
Base Fee (per portfolio) $400
Transactions (per transaction) $5 DTC/FRB Eligible
$20 DTC/FRB Ineligible
$5 Principal Paydowns
Market Value Fee (annual) .0l% Of Market Value
This fee schedule shall not be amended by Custodian for a period of three years
from the Effective Date hereof.
Effective Date of this Fee Schedule: April 1, 1997
CUSTODIAN PRINCIPAL
Bank One Trust Company, N.A. DEAN FAMILY OF FUNDS
By:/s/ Deborah A. Harvey By: /s/ Frank H. Scott
Printed Name: Deborah A. Harvey Printed Name:Frank H. Scott
Title: AVP Title: President
Dated: March 17, 1997 Dated: March 17, 1997
<PAGE>
SCHEDULE B
LIST OF PORTFOLIOS
LARGE CAP VALUE FUND
SMALL CAP VALUE FUND
BALANCED FUND
ADMINISTRATION AGREEMENT
AGREEMENT dated as of April 1, 1997 between the Dean Family of Funds,
an Ohio business trust (the "Trust"), and Countrywide Fund Services, Inc.
("Countrywide"), an Ohio corporation.
WHEREAS, the Trust is an investment company registered under the
Investment Company Act of 1940, as amended (the "1940 Act"); and
WHEREAS, the Trust wishes to employ the services of Countrywide to
serve as its administrative agent; and
WHEREAS, Countrywide wishes to provide such services under the
conditions set forth below;
NOW, THEREFORE, in consideration of the premises and mutual covenants
contained in this Agreement, the Trust and Countrywide agree as follows:
1. APPOINTMENT.
The Trust hereby appoints and employs Countrywide as agent to
perform those services described in this Agreement for the Trust. Countrywide
shall act under such appointment and perform the obligations thereof upon the
terms and conditions hereinafter set forth.
2. DOCUMENTATION.
The Trust will furnish from time to time the following
documents:
A. Each resolution of the Board of Trustees of the Trust
authorizing the original issue of its shares;
B. Each Registration Statement filed with the Securities
and Exchange Commission (the "SEC") and amendments
thereof;
C. A certified copy of each amendment to the Agreement and
Declaration of Trust and the Bylaws of the Trust;
D. Certified copies of each resolution of the Board of
Trustees authorizing officers to give instructions to
Countrywide;
E. Specimens of all new forms of share certificates
accompanied by Board of Trustees' resolutions approving
such forms;
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<PAGE>
F. Such other certificates, documents or opinions which
Countrywide may, in its discretion, deem necessary or
appropriate in the proper performance of its duties;
G. Copies of all Underwriting and Dealer Agreements in
effect;
H. Copies of all Investment Advisory Agreements in effect;
and
I. Copies of all documents relating to special investment
or withdrawal plans which are offered or may be offered
in the future by the Trust and for which Countrywide is
to act as plan agent.
3. TRUST ADMINISTRATION.
Subject to the direction and control of the Trustees of the
Trust, Countrywide shall supervise the Trust's business affairs not otherwise
supervised by other agents of the Trust. To the extent not otherwise the primary
responsibility of, or provided by, other agents of the Trust, Countrywide shall
supply (i) office facilities, (ii) internal auditing and regulatory services,
and (iii) executive and administrative services. Countrywide shall coordinate
the preparation of (i) tax returns, (ii) reports to shareholders of the Trust,
(iii) reports to and filings with the SEC and state securities authorities
including preliminary and definitive proxy materials, post-effective amendments
to the Trust's registration statement, and the Trust's Form N-SAR, and (iv)
necessary materials for Board of Trustees' meetings unless prepared by other
parties under agreement with the Trust. Countrywide shall provide personnel to
serve as officers of the Trust if so elected by the Board of Trustees; provided,
however, that the Trust shall reimburse Countrywide for the reasonable
out-of-pocket expenses incurred by such personnel in attending Board of
Trustees' meetings and shareholders' meetings of the Trust.
4. RECORDKEEPING AND OTHER INFORMATION.
Countrywide shall create and maintain all records required by
applicable laws, rules and regulations, including but not limited to records
required by Section 31(a) of the 1940 Act and the rules thereunder, as the same
may be amended from time to time, pertaining to the various functions performed
by it and not otherwise created and maintained by another party pursuant to
contract with the Trust. All such records shall be the property of the Trust at
all times and shall be available for inspection and use by the Trust. Where
applicable, such records shall be maintained by Countrywide for the periods and
in the places required by Rule 31a-2 under the 1940 Act. The retention of such
records shall be at the expense of the Trust. Countrywide shall
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<PAGE>
make available during regular business hours all records and other data created
and maintained pursuant to this Agreement for reasonable audit and inspection by
the Trust, any person retained by the Trust, or any regulatory agency having
authority over the Trust.
5. FURTHER ACTIONS.
Each party agrees to perform such further acts and execute
such further documents as are necessary to effectuate the purposes hereof.
6. COMPENSATION.
For the performance of Countrywide's obligations under this
Agreement, each series of the Trust shall pay Countrywide, on the first business
day following the end of each month, a monthly fee at the annual rate of .10% of
such series' average daily net assets up to $100 million; .075% of such assets
from $100 to $200 million; and .05% of such assets in excess of $200 million;
provided, however, that the minimum fee shall be $1,000 per month for each
series.
7. COMPLIANCE WITH GOVERNMENTAL RULES AND REGULATIONS.
The parties hereto acknowledge and agree that nothing
contained herein shall be construed to require Countrywide to perform any
services for the Trust which services could cause Countrywide to be deemed an
"investment adviser" of the Trust within the meaning of Section 2(a)(20) of the
1940 Act or to supersede or contravene the Trust's prospectus or statement of
additional information or any provisions of the 1940 Act and the rules
thereunder. Except as otherwise provided in this Agreement and except for the
accuracy of information furnished to it by Countrywide, the Trust assumes full
responsibility for complying with all applicable requirements of the 1940 Act,
the Securities Act of 1933, as amended, and any other laws, rules and
regulations of governmental authorities having jurisdiction.
8. REFERENCES TO COUNTRYWIDE.
The Trust shall not circulate any printed matter which
contains any reference to Countrywide without the prior written approval of
Countrywide, excepting solely such printed matter as merely identifies
Countrywide as Administrative Services Agent, Transfer, Shareholder Servicing
and Dividend Disbursing Agent and Accounting Services Agent. The Trust will
submit printed matter requiring approval to Countrywide in draft form, allowing
sufficient time for review by Countrywide and its counsel prior to any deadline
for printing.
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<PAGE>
9. INDEMNIFICATION OF COUNTRYWIDE.
A. Countrywide may rely on information reasonably believed by
it to be accurate and reliable. Except as may otherwise be required by the 1940
Act and the rules thereunder, neither Countrywide nor its shareholders,
officers, directors, employees, agents, control persons or affiliates of any
thereof shall be subject to any liability for, or any damages, expenses or
losses incurred by the Trust in connection with, any error of judgment, mistake
of law, any act or omission connected with or arising out of any services
rendered under or payments made pursuant to this Agreement or any other matter
to which this Agreement relates, except by reason of willful misfeasance, bad
faith or gross negligence on the part of any such persons in the performance of
the duties of Countrywide under this Agreement or by reason of reckless
disregard by any of such persons of the obligations and duties of Countrywide
under this Agreement.
B. Any person, even though also a director, officer, employee,
shareholder or agent of Countrywide, or any of its affiliates, who may be or
become an officer, trustee, employee or agent of the Trust, shall be deemed,
when rendering services to the Trust or acting on any business of the Trust, to
be rendering such services to or acting solely as an officer, trustee, employee
or agent of the Trust and not as a director, officer, employee, shareholder or
agent of or one under the control or direction of Countrywide or any of its
affiliates, even though paid by one of these entities.
C. Notwithstanding any other provision of this Agreement, the
Trust shall indemnify and hold harmless Countrywide, its directors, officers,
employees, shareholders, agents, control persons and affiliates from and against
any and all claims, demands, expenses and liabilities (whether with or without
basis in fact or law) of any and every nature which Countrywide may sustain or
incur or which may be asserted against Countrywide by any person by reason of,
or as a result of: (i) any action taken or omitted to be taken by Countrywide in
good faith in reliance upon any certificate, instrument, order or share
certificate reasonably believed by it to be genuine and to be signed,
countersigned or executed by any duly authorized person, upon the oral
instructions or written instructions of an authorized person of the Trust or
upon the opinion of legal counsel for the Trust or its own counsel; or (ii) any
action taken or omitted to be taken by Countrywide in connection with its
appointment in good faith in reliance upon any law, act, regulation or
interpretation of the same even though the same may thereafter have been
altered, changed, amended or repealed. However, indemnification under this
subparagraph shall not apply to actions or omissions of Countrywide or its
directors, officers, employees, shareholders or agents in cases of its or their
own gross negligence, willful misconduct, bad faith, or reckless disregard of
its or their own duties hereunder.
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<PAGE>
10. TERMINATION
A. The provisions of this Agreement shall be effective on the
date first above written, shall continue in effect for two years from that date
and shall continue in force from year to year thereafter, but only so long as
such continuance is approved (1) by Countrywide, (2) by vote, cast in person at
a meeting called for the purpose, of a majority of the Trust's trustees who are
not parties to this Agreement or interested persons (as defined in the 1940 Act)
of any such party, and (3) by vote of a majority of the Trust's Board of
Trustees or a majority of the Trust's outstanding voting securities.
B. Either party may terminate this Agreement on any date by
giving the other party at least sixty (60) days' prior written notice of such
termination specifying the date fixed therefor. Upon termination of this
Agreement, the Trust shall pay to Countrywide such compensation as may be due as
of the date of such termination, and shall likewise reimburse Countrywide for
any out-of-pocket expenses and disbursements reasonably incurred by Countrywide
to such date.
C. In the event that in connection with the termination of
this Agreement a successor to any of Countrywide's duties or responsibilities
under this Agreement is designated by the Trust by written notice to
Countrywide, Countrywide shall, promptly upon such termination and at the
expense of the Trust, transfer all records maintained by Countrywide under this
Agreement and shall cooperate in the transfer of such duties and
responsibilities, including provision for assistance from Countrywide's
cognizant personnel in the establishment of books, records and other data by
such successor.
11. SERVICES FOR OTHERS.
Nothing in this Agreement shall prevent Countrywide or any
affiliated person (as defined in the 1940 Act) of Countrywide from providing
services for any other person, firm or corporation (including other investment
companies); provided, however, that Countrywide expressly represents that it
will undertake no activities which, in its judgment, will adversely affect the
performance of its obligations to the Trust under this Agreement.
12. LIMITATION OF LIABILITY.
It is expressly agreed that the obligations of the Trust
hereunder shall not be binding upon any of the Trustees, shareholders, nominees,
officers, agents or employees of the Trust, personally, but bind only the trust
property of the Trust. The execution and delivery of this Agreement have been
authorized by the Trustees of the Trust and signed by an officer of the
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Trust, acting as such, and neither such authorization by such Trustees nor such
execution and delivery by such officer shall be deemed to have been made by any
of them individually or to impose any liability on any of them personally, but
shall bind only the trust property of the Trust.
13. SEVERABILITY.
In the event any provision of this Agreement is determined to
be void or unenforceable, such determination shall not affect the remainder of
this Agreement, which shall continue to be in force.
14. QUESTIONS OF INTERPRETATION.
This Agreement shall be governed by the laws of the State of
Ohio. Any question of interpretation of any term or provision of this Agreement
having a counterpart in or otherwise derived from a term or provision of the
1940 Act shall be resolved by reference to such term or provision of the 1940
Act and to interpretations thereof, if any, by the United States Courts or in
the absence of any controlling decision of any such court, by rules, regulations
or orders of the SEC issued pursuant to said 1940 Act. In addition, where the
effect of a requirement of the 1940 Act, reflected in any provision of this
Agreement, is revised by rule, regulation or order of the SEC, such provision
shall be deemed to incorporate the effect of such rule, regulation or order.
15. NOTICES.
All notices, requests, consents and other communications
required or permitted under this Agreement shall be in writing (including telex
and telegraphic communication) and shall be (as elected by the person giving
such notice) hand delivered by messenger or courier service, telecommunicated,
or mailed (airmail if international) by registered or certified mail (postage
prepaid), return receipt requested, addressed to:
To the Trust: Dean Family of Funds
2480 Kettering Tower
Dayton, Ohio 45423
Attention: Frank H. Scott
To Countrywide: Countrywide Fund Services, Inc.
312 Walnut Street, 21st Floor
Cincinnati, Ohio 45202
Attention: Robert G. Dorsey
or to such other address as any party may designate by notice complying with the
terms of this Section 15. Each such notice shall be deemed delivered (a) on the
date delivered if by personal delivery; (b) on the date telecommunicated if by
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<PAGE>
telegraph; (c) on the date of transmission with confirmed answer back if by
telex, telefax or other telegraphic method; and (d) on the date upon which the
return receipt is signed or delivery is refused or the notice is designated by
the postal authorities as not deliverable, as the case may be, if mailed.
16. AMENDMENT.
This Agreement may not be amended or modified except by a
written agreement executed by both parties.
17. BINDING EFFECT.
Each of the undersigned expressly warrants and represents that
he has the full power and authority to sign this Agreement on behalf of the
party indicated, and that his signature will operate to bind the party indicated
to the foregoing terms.
18. COUNTERPARTS.
This Agreement may be executed in one or more counterparts,
each of which shall be deemed an original, but all of which together shall
constitute one and the same instrument.
19. FORCE MAJEURE.
If Countrywide shall be delayed in its performance of services
or prevented entirely or in part from performing services due to causes or
events beyond its control, including and without limitation, acts of God,
interruption of power or other utility, transportation or communication
services, acts of civil or military authority, sabotages, national emergencies,
explosion, flood, accident, earthquake or other catastrophe, fire, strike or
other labor problems, legal action, present or future law, governmental order,
rule or regulation, or shortages of suitable parts, materials, labor or
transportation, such delay or non-performance shall be excused and a reasonable
time for performance in connection with this Agreement shall be extended to
include the period of such delay or non-performance.
20. MISCELLANEOUS.
The captions in this Agreement are included for convenience of
reference only and in no way define or limit any of the provisions hereof or
otherwise affect their construction or effect.
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<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed as of the day and year first above written.
DEAN FAMILY OF FUNDS
By: /S/ FRANK H. SCOTT
Its: President
COUNTRYWIDE FUND SERVICES, INC.
By: /S/ ROBERT G. DORSEY
Its: President
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<PAGE>
ACCOUNTING SERVICES AGREEMENT
AGREEMENT dated as of April 1, 1997 between the Dean Family of Funds,
an Ohio business trust (the "Trust"), and Countrywide Fund Services, Inc.
("Countrywide"), an Ohio corporation.
WHEREAS, the Trust is an investment company registered under the
Investment Company Act of 1940, as amended (the "1940 Act"); and
WHEREAS, the Trust wishes to employ the services of Countrywide to
provide the Trust with certain accounting and pricing services; and
WHEREAS, Countrywide wishes to provide such services under
the conditions set forth below;
NOW, THEREFORE, in consideration of the premises and mutual covenants
contained in this Agreement, the Trust and Countrywide agree as follows:
1. APPOINTMENT.
The Trust hereby appoints and employs Countrywide as agent to
perform those services described in this Agreement for the Trust. Countrywide
shall act under such appointment and perform the obligations thereof upon the
terms and conditions hereinafter set forth.
2. CALCULATION OF NET ASSET VALUE.
Countrywide will calculate the net asset value of each series
of the Trust and the per share net asset value of each series of the Trust, in
accordance with the Trust's current prospectus and statement of additional
information, once daily as of the time selected by the Trust's Board of
Trustees. Countrywide will prepare and maintain a daily valuation of all
securities and other assets of the Trust in accordance with instructions from a
designated officer of the Trust or its investment adviser and in the manner set
forth in the Trust's current prospectus and statement of additional information.
In valuing securities of the Trust, Countrywide may contract with, and rely upon
market quotations provided by, outside services.
3. BOOKS AND RECORDS.
Countrywide will maintain and keep current the general ledger
for each series of the Trust, recording all income and expenses, capital share
activity and security transactions of the Trust. Countrywide will maintain such
further books and records
<PAGE>
as are necessary to enable it to perform its duties under this Agreement, and
will periodically provide reports to the Trust and its authorized agents
regarding share purchases and redemptions and trial balances of each series of
the Trust. Countrywide will prepare and maintain complete, accurate and current
all records with respect to the Trust required to be maintained by the Trust
under the Internal Revenue Code of 1986, as amended (the "Code"), and under the
rules and regulations of the 1940 Act, and will preserve said records in the
manner and for the periods prescribed in the Code and the 1940 Act. The
retention of such records shall be at the expense of the Trust.
All of the records prepared and maintained by Countrywide pursuant to
this Section 3 which are required to be maintained by the Trust under the Code
and the 1940 Act will be the property of the Trust. In the event this Agreement
is terminated, all such records shall be delivered to the Trust at the Trust's
expense, and Countrywide shall be relieved of responsibility for the preparation
and maintenance of any such records delivered to the Trust.
4. PAYMENT OF TRUST EXPENSES.
Countrywide shall process each request received from the Trust
or its authorized agents for payment of the Trust's expenses. Upon receipt of
written instructions signed by an officer or other authorized agent of the
Trust, Countrywide shall prepare checks in the appropriate amounts which shall
be signed by an authorized officer of Countrywide and mailed to the appropriate
party.
5. FORM N-SAR.
Countrywide shall maintain such records within its control and
shall be requested by the Trust to assist the Trust in fulfilling the
requirements of Form N-SAR.
6. COOPERATION WITH ACCOUNTANTS.
Countrywide shall cooperate with the Trust's independent
public accountants and shall take all reasonable action in the performance of
its obligations under this Agreement to assure that the necessary information is
made available to such accountants for the expression of their unqualified
opinion where required for any document for the Trust.
7. FURTHER ACTIONS.
Each party agrees to perform such further acts and execute
such further documents as are necessary to effectuate the purposes hereof.
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<PAGE>
8. FEES.
For the performance of the services under this Agreement, each
series of the Trust shall pay Countrywide a monthly fee in accordance with the
schedule attached hereto as Schedule A. The fees with respect to any month shall
be paid to Countrywide on the last business day of such month. The Trust shall
also promptly reimburse Countrywide for the cost of external pricing services
utilized by Countrywide.
9. COMPLIANCE WITH GOVERNMENTAL RULES AND REGULATIONS.
The parties hereto acknowledge and agree that nothing
contained herein shall be construed to require Countrywide to perform any
services for the Trust which services could cause Countrywide to be deemed an
"investment adviser" of the Trust within the meaning of Section 2(a)(20) of the
1940 Act or to supersede or contravene the Trust's prospectus or statement of
additional information or any provisions of the 1940 Act and the rules
thereunder. Except as otherwise provided in this Agreement and except for the
accuracy of information furnished to it by Countrywide, the Trust assumes full
responsibility for complying with all applicable requirements of the 1940 Act,
the Securities Act of 1933, as amended, and any other laws, rules and
regulations of governmental authorities having jurisdiction.
10. REFERENCES TO COUNTRYWIDE.
The Trust shall not circulate any printed matter which
contains any reference to Countrywide without the prior written approval of
Countrywide, excepting solely such printed matter as merely identifies
Countrywide as Administrative Services Agent, Transfer, Shareholder Servicing
and Dividend Disbursing Agent and Accounting Services Agent. The Trust will
submit printed matter requiring approval to Countrywide in draft form, allowing
sufficient time for review by Countrywide and its counsel prior to any deadline
for printing.
11. EQUIPMENT FAILURES.
Countrywide shall take all steps necessary to minimize or
avoid service interruptions, and has entered into one or more agreements making
provision for emergency use of electronic data processing equipment. Countrywide
shall have no liability with respect to equipment failures beyond its control.
12. INDEMNIFICATION OF COUNTRYWIDE.
A. Countrywide may rely on information reasonably believed by
it to be accurate and reliable. Except as may otherwise be required by the
1940 Act and the rules thereunder, neither Countrywide nor its shareholders,
officers, directors, employees, agents, control persons or affiliates of any
thereof
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<PAGE>
shall be subject to any liability for, or any damages, expenses or losses
incurred by the Trust in connection with, any error of judgment, mistake of law,
any act or omission connected with or arising out of any services rendered under
or payments made pursuant to this Agreement or any other matter to which this
Agreement relates, except by reason of willful misfeasance, bad faith or gross
negligence on the part of any such persons in the performance of the duties of
Countrywide under this Agreement or by reason of reckless disregard by any of
such persons of the obligations and duties of Countrywide under this Agreement.
B. Any person, even though also a director, officer, employee,
shareholder, or agent of Countrywide, or any of its affiliates, who may be or
become an officer, trustee, employee or agent of the Trust, shall be deemed,
when rendering services to the Trust or acting on any business of the Trust, to
be rendering such services to or acting solely as an officer, trustee, employee
or agent of the Trust and not as a director, officer, employee, shareholder or
agent of or one under the control or direction of Countrywide or any of its
affiliates, even though paid by one of those entities.
C. Notwithstanding any other provision of this Agreement, the
Trust shall indemnify and hold harmless Countrywide, its directors, officers,
employees, shareholders, agents, control persons and affiliates from and against
any and all claims, demands, expenses and liabilities (whether with or without
basis in fact or law) of any and every nature which Countrywide may sustain or
incur or which may be asserted against Countrywide by any person by reason of,
or as a result of: (i) any action taken or omitted to be taken by Countrywide in
good faith in reliance upon any certificate, instrument, order or share
certificate reasonably believed by it to be genuine and to be signed,
countersigned or executed by any duly authorized person, upon the oral
instructions or written instructions of an authorized person of the Trust or
upon the opinion of legal counsel for the Trust or its own counsel; or (ii) any
action taken or omitted to be taken by Countrywide in connection with its
appointment in good faith in reliance upon any law, act, regulation or
interpretation of the same even though the same may thereafter have been
altered, changed, amended or repealed. However, indemnification under this
subparagraph shall not apply to actions or omissions of Countrywide or its
directors, officers, employees, shareholders or agents in cases of its or their
own gross negligence, willful misconduct, bad faith, or reckless disregard of
its or their own duties hereunder.
13. TERMINATION.
A. The provisions of this Agreement shall be effective on the
date first above written, shall continue in effect for two years from that date
and shall continue in force from year to year thereafter, but only so long as
such continuance is approved (1) by Countrywide, (2) by vote, cast in person at
a meeting called for the purpose, of a majority of the
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<PAGE>
Trust's trustees who are not parties to this Agreement or interested persons (as
defined in the 1940 Act) of any such party, and (3) by vote of a majority of the
Trust's Board of Trustees or a majority of the Trust's outstanding voting
securities.
B. Either party may terminate this Agreement on any date by
giving the other party at least sixty (60) days' prior written notice of such
termination specifying the date fixed therefor. Upon termination of this
Agreement, the Trust shall pay to Countrywide such compensation as may be due as
of the date of such termination, and shall likewise reimburse Countrywide for
any out-of-pocket expenses and disbursements reasonably incurred by Countrywide
to such date.
C. In the event that in connection with the termination of
this Agreement a successor to any of Countrywide's duties or responsibilities
under this Agreement is designated by the Trust by written notice to
Countrywide, Countrywide shall, promptly upon such termination and at the
expense of the Trust, transfer all records maintained by Countrywide under this
Agreement and shall cooperate in the transfer of such duties and
responsibilities, including provision for assistance from Countrywide's
cognizant personnel in the establishment of books, records and other data by
such successor.
14. SERVICES FOR OTHERS.
Nothing in this Agreement shall prevent Countrywide or any
affiliated person (as defined in the 1940 Act) of Countrywide from providing
services for any other person, firm or corporation (including other investment
companies); provided, however, that Countrywide expressly represents that it
will undertake no activities which, in its judgment, will adversely affect the
performance of its obligations to the Trust under this Agreement.
15. LIMITATION OF LIABILITY.
It is expressly agreed that the obligations of the Trust
hereunder shall not be binding upon any of the Trustees, shareholders, nominees,
officers, agents or employees of the Trust, personally, but bind only the trust
property of the Trust. The execution and delivery of this Agreement have been
authorized by the Trustees of the Trust and signed by an officer of the Trust,
acting as such, and neither such authorization by such Trustees nor such
execution and delivery by such officer shall be deemed to have been made by any
of them individually or to impose any liability on any of them personally, but
shall bind only the trust property of the Trust.
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<PAGE>
16. SEVERABILITY.
In the event any provision of this Agreement is determined to
be void or unenforceable, such determination shall not affect the remainder of
this Agreement, which shall continue to be in force.
17. QUESTIONS OF INTERPRETATION.
This Agreement shall be governed by the laws of the State of
Ohio. Any question of interpretation of any term or provision of this Agreement
having a counterpart in or otherwise derived from a term or provision of the
1940 Act shall be resolved by reference to such term or provision of the 1940
Act and to interpretations thereof, if any, by the United States Courts or in
the absence of any controlling decision of any such court, by rules, regulations
or orders of the Securities and Exchange Commission issued pursuant to said 1940
Act. In addition, where the effect of a requirement of the 1940 Act, reflected
in any provision of this Agreement, is revised by rule, regulation or order of
the Securities and Exchange Commission, such provision shall be deemed to
incorporate the effect of such rule, regulation or order.
18. NOTICES.
All notices, requests, consents and other communications
required or permitted under this Agreement shall be in writing (including telex
and telegraphic communication) and shall be (as elected by the person giving
such notice) hand delivered by messenger or courier service, telecommunicated,
or mailed (airmail if international) by registered or certified mail (postage
prepaid), return receipt requested, addressed to:
To the Trust: Dean Family of Funds
2480 Kettering Tower
Dayton, Ohio 45423
Attention: Frank H. Scott
To Countrywide: Countrywide Fund Services, Inc.
312 Walnut Street, 21st Floor
Cincinnati, Ohio 45202
Attention: Robert G. Dorsey
or to such other address as any party may designate by notice complying with the
terms of this Section 18. Each such notice shall be deemed delivered (a) on the
date delivered if by personal delivery; (b) on the date telecommunicated if by
telegraph; (c) on the date of transmission with confirmed answer back if by
telex, telefax or other telegraphic method; and (d) on the date upon which the
return receipt is signed or delivery is refused or the notice is designated by
the postal authorities as not deliverable, as the case may be, if mailed.
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<PAGE>
19. AMENDMENT.
This Agreement may not be amended or modified except by a
written agreement executed by both parties.
20. BINDING EFFECT.
Each of the undersigned expressly warrants and represents that
he has the full power and authority to sign this Agreement on behalf of the
party indicated, and that his signature will operate to bind the party indicated
to the foregoing terms.
21. COUNTERPARTS.
This Agreement may be executed in one or more counterparts,
each of which shall be deemed an original, but all of which together shall
constitute one and the same instrument.
22. FORCE MAJEURE.
If Countrywide shall be delayed in its performance of services
or prevented entirely or in part from performing services due to causes or
events beyond its control, including and without limitation, acts of God,
interruption of power or other utility, transportation or communication
services, acts of civil or military authority, sabotages, national emergencies,
explosion, flood, accident, earthquake or other catastrophe, fire, strike or
other labor problems, legal action, present or future law, governmental order,
rule or regulation, or shortages of suitable parts, materials, labor or
transportation, such delay or non-performance shall be excused and a reasonable
time for performance in connection with this Agreement shall be extended to
include the period of such delay or non-performance.
23. MISCELLANEOUS.
The captions in this Agreement are included for convenience of
reference only and in no way define or limit any of the provisions hereof or
otherwise affect their construction or effect.
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<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed as of the day and year first above written.
DEAN FAMILY OF FUNDS
By: /S/ FRANK H. SCOTT
Its: President
COUNTRYWIDE FUND SERVICES, INC.
By: /S/ ROBERT G. DORSEY
Its: President
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<PAGE>
SCHEDULE A
COMPENSATION
Each series of the Trust will pay Countrywide a monthly fee, according
to the average monthly net assets of such series during such month, as follows:
MONTHLY FEE AVERAGE NET ASSETS DURING MONTH
$3,000 $0 - $ 50,000,000
$3,500 $50,000,000 - $100,000,000
$4,000 $100,000,000 - $200,000,000
$5,000 $200,000,000 - $300,000,000
$6,000 + .001% of
average net assets Over $300,000,000
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<PAGE>
TRANSFER, DIVIDEND DISBURSING, SHAREHOLDER SERVICE
AND PLAN AGENCY AGREEMENT
AGREEMENT dated as of April 1, 1997 between the Dean Family of Funds,
an Ohio business trust (the "Trust"), and Countrywide Fund Services, Inc.
("Countrywide"), an Ohio corporation.
WHEREAS, the Trust is an investment company registered under the
Investment Company Act of 1940, as amended (the "1940 Act"); and
WHEREAS, the Trust wishes to employ the services of Countrywide to
serve as its transfer, dividend disbursing, shareholder service and plan agent;
and
WHEREAS, Countrywide wishes to provide such services under the
conditions set forth below;
NOW, THEREFORE, in consideration of the premises and mutual covenants
contained in this Agreement, the Trust and Countrywide agree as follows:
1. APPOINTMENT.
The Trust hereby appoints and employs Countrywide as agent to
perform those services described in this Agreement for the Trust. Countrywide
shall act under such appointment and perform the obligations thereof upon the
terms and conditions hereinafter set forth.
2. DOCUMENTATION.
The Trust will furnish from time to time the following
documents:
A. Each resolution of the Board of Trustees of the Trust
authorizing the original issue of its shares;
B. Each Registration Statement filed with the Securities
and Exchange Commission (the "SEC") and amendments
thereof;
C. A certified copy of each amendment to the Agreement and
Declaration of Trust and the Bylaws of the Trust;
D. Certified copies of each resolution of the Board of
Trustees authorizing officers to give instructions to
Countrywide;
E. Specimens of all new forms of share certificates
accompanied by Board of Trustees' resolutions approving
such forms;
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<PAGE>
F. Such other certificates, documents or opinions which
Countrywide may, in its discretion, deem necessary or
appropriate in the proper performance of its duties;
G. Copies of all Underwriting and Dealer Agreements in
effect;
H. Copies of all Investment Advisory Agreements in effect;
and
I. Copies of all documents relating to special investment
or withdrawal plans which are offered or may be offered
in the future by the Trust and for which Countrywide is
to act as plan agent.
3. COUNTRYWIDE TO RECORD SHARES.
Countrywide shall record the issuance of shares of the Trust
and maintain pursuant to applicable rules of the SEC a record of the total
number of shares of the Trust which are authorized, issued and outstanding,
based upon data provided to it by the Trust. Countrywide shall also provide the
Trust on a regular basis or upon reasonable request the total number of shares
which are authorized, issued and outstanding, but shall have no obligation when
recording the issuance of the Trust's shares, except as otherwise set forth
herein, to monitor the issuance of such shares or to take cognizance of any laws
relating to the issue or sale of such shares, which functions shall be the sole
responsibility of the Trust.
4. COUNTRYWIDE TO VALIDATE TRANSFERS.
Upon receipt of a proper request for transfer and upon
surrender to Countrywide of certificates, if any, in proper form for transfer,
Countrywide shall approve such transfer and shall take all necessary steps to
effectuate the transfer as indicated in the transfer request. Upon approval of
the transfer, Countrywide shall notify the Trust in writing of each such
transaction and shall make appropriate entries on the shareholder records
maintained by Countrywide.
5. SHARE CERTIFICATES.
If the Trust authorizes the issuance of share certificates and
an investor requests a share certificate, Countrywide will countersign and mail,
by insured first class mail, a share certificate to the investor at his address
as set forth on the transfer books of the Trust, subject to any other
instructions for delivery of certificates representing newly purchased shares
and subject to the limitation that no certificates representing newly purchased
shares shall be mailed to the investor until the cash purchase price of such
shares has
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<PAGE>
been collected and credited to the account of the Trust maintained by the
Custodian. The Trust shall supply Countrywide with a sufficient supply of blank
share certificates and from time to time shall renew such supply upon request of
Countrywide. Such blank share certificates shall be properly signed, manually
or, if authorized by the Trust, by facsimile; and notwithstanding the death,
resignation or removal of any officers of the Trust authorized to sign share
certificates, Countrywide may continue to countersign certificates which bear
the manual or facsimile signature of such officer until otherwise directed by
the Trust. In case of the alleged loss or destruction of any share certificate,
no new certificates shall be issued in lieu thereof, unless there shall first be
furnished an appropriate bond satisfactory to Countrywide and the Trust, and
issued by a surety company satisfactory to Countrywide and the Trust.
6. RECEIPT OF FUNDS.
Upon receipt of any check or other instrument drawn or
endorsed to it as agent for, or identified as being for the account of, the
Trust or 2480 Securities LLC, as underwriter of the Trust (the "Underwriter"),
Countrywide shall stamp the check or instrument with the date of receipt,
determine the amount thereof due the Trust and shall forthwith process the same
for collection. Upon receipt of notification of receipt of funds eligible for
share purchases in accordance with the Trust's then current prospectus and
statement of additional information, Countrywide shall notify the Trust, at the
close of each business day, in writing of the amount of said funds credited to
the Trust and deposited in its account with the Custodian, and shall similarly
notify the Underwriter of the amount of said funds credited to the Underwriter
and deposited in its account with its designated bank.
7. PURCHASE ORDERS.
Upon receipt of an order for the purchase of shares of the
Trust, accompanied by sufficient information to enable Countrywide to establish
a shareholder account, Countrywide shall, as of the next determination of net
asset value after receipt of such order in accordance with the Trust's then
current prospectus and statement of additional information, compute the number
of shares due to the shareholder, credit the share account of the shareholder,
subject to collection of the funds, with the number of shares so purchased,
shall notify the Trust in writing or by computer report at the close of each
business day of such transactions and shall mail to the shareholder and/or
dealer of record a notice of such credit when requested to do so by the Trust.
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<PAGE>
8. RETURNED CHECKS.
In the event that Countrywide is notified by the Trust's
Custodian that any check or other order for the payment of money is returned
unpaid for any reason, Countrywide will:
A. Give prompt notification to the Trust and the
Underwriter of the non-payment of said check;
B. In the absence of other instructions from the Trust or the
Underwriter, take such steps as may be necessary to redeem any shares purchased
on the basis of such returned check and cause the proceeds of such redemption
plus any dividends declared with respect to such shares to be credited to the
account of the Trust and to request the Trust's Custodian to forward such
returned check to the person who originally submitted the check; and
C. Notify the Trust and Underwriter of such actions and
correct the Trust's records maintained by Countrywide pursuant to this
Agreement.
9. SALES CHARGE.
In computing the number of shares to credit to the account of
a shareholder, Countrywide will calculate the total of the applicable sales
charges with respect to each purchase as set forth in the Trust's current
prospectus and statement of additional information and in accordance with any
notification filed with respect to combined and accumulated purchases.
Countrywide will also determine the portion of each sales charge payable by the
Underwriter to the dealer of record participating in the sale in accordance with
such schedules as are from time to time delivered by the Underwriter to
Countrywide; provided, however, that Countrywide shall have no liability
hereunder arising from the incorrect selection by Countrywide of the gross rate
of sales charges except that this exculpation shall not apply in the event the
rate is specified by the Underwriter or the Trust and Countrywide fails to
select the rate specified.
10. DIVIDENDS AND DISTRIBUTIONS.
The Trust shall furnish Countrywide with appropriate evidence
of trustee action authorizing the declaration of dividends and other
distributions. Countrywide shall establish procedures in accordance with the
Trust's then current prospectus and statement of additional information and with
other authorized actions of the Trust's Board of Trustees under which it will
have available from the Custodian or the Trust any required information for each
dividend and other distribution. After deducting any amount required to be
withheld by any applicable laws, Countrywide shall, as agent for each
shareholder who so
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<PAGE>
requests, invest the dividends and other distributions in full and fractional
shares in accordance with the Trust's then current prospectus and statement of
additional information. If a shareholder has elected to receive dividends or
other distributions in cash, then Countrywide shall disburse dividends to
shareholders of record in accordance with the Trust's then current prospectus
and statement of additional information. Countrywide shall, on or before the
mailing date of such checks, notify the Trust and the Custodian of the estimated
amount of cash required to pay such dividend or distribution, and the Trust
shall instruct the Custodian to make available sufficient funds therefor in the
appropriate account of the Trust. Countrywide shall mail to the shareholders
periodic statements, as requested by the Trust, showing the number of full and
fractional shares and the net asset value per share of shares so credited. When
requested by the Trust, Countrywide shall prepare and file with the Internal
Revenue Service, and when required, shall address and mail to shareholders, such
returns and information relating to dividends and distributions paid by the
Trust as are required to be so prepared, filed and mailed by applicable laws,
rules and regulations.
11. UNCLAIMED DIVIDENDS AND UNCLAIMED REDEMPTION PROCEEDS.
Countrywide shall, at least annually, furnish in writing to
the Trust the names and addresses, as shown in the shareholder accounts
maintained by Countrywide, of all shareholders for which there are, as of the
end of the calendar year, dividends, distributions or redemption proceeds for
which checks or share certificates mailed in payment of distributions have been
returned. Countrywide shall use its best efforts to contact the shareholders
affected and to follow any other written instructions received from the Trust
concerning the disposition of any such unclaimed dividends, distributions or
redemption proceeds.
12. REDEMPTIONS AND EXCHANGES.
A. Countrywide shall process, in accordance with the Trust's
then current prospectus and statement of additional information, each order for
the redemption of shares accepted by Countrywide. Upon its approval of such
redemption transactions, Countrywide, if requested by the Trust, shall mail to
the shareholder and/or dealer of record a confirmation showing trade date,
number of full and fractional shares redeemed, the price per share and the total
redemption proceeds. For each such redemption, Countrywide shall either: (a)
prepare checks in the appropriate amounts for approval and verification by the
Trust and signature by an authorized officer of Countrywide and mail the checks
to the appropriate person, or (b) in the event redemption proceeds are to be
wired through the Federal Reserve Wire System or by bank wire, cause such
proceeds to be wired in
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federal funds to the bank account designated by the shareholder, or (c)
effectuate such other redemption procedures which are authorized by the Trust's
Board of Trustees or its then current prospectus and statement of additional
information. The requirements as to instruments of transfer and other
documentation, the applicable redemption price and the time of payment shall be
as provided in the then current prospectus and statement of additional
information, subject to such supplemental instructions as may be furnished by
the Trust and accepted by Countrywide. If Countrywide or the Trust determines
that a request for redemption does not comply with the requirements for
redemptions, Countrywide shall promptly notify the shareholder indicating the
reason therefor.
B. If shares of the Trust are eligible for exchange with
shares of any other investment company, Countrywide, in accordance with the then
current prospectus and statement of additional information and exchange rules of
the Trust and such other investment company, or such other investment company's
transfer agent, shall review and approve all exchange requests and shall, on
behalf of the Trust's shareholders, process such approved exchange requests.
C. Countrywide shall notify the Trust, the Custodian and the
Underwriter on each business day of the amount of cash required to meet payments
made pursuant to the provisions of this Paragraph 12, and, on the basis of such
notice, the Trust shall instruct the Custodian to make available from time to
time sufficient funds therefor in the appropriate account of the Trust.
Procedures for effecting redemption orders accepted from shareholders or dealers
of record by telephone or other methods shall be established by mutual agreement
between Countrywide and the Trust consistent with the Trust's then current
prospectus and statement of additional information.
D. The authority of Countrywide to perform its
responsibilities under Paragraph 7, Paragraph 10, and this Paragraph 12 shall be
suspended with respect to any series of the Trust upon receipt of notification
by it of the suspension of the determination of such series' net asset value.
13. AUTOMATIC WITHDRAWAL PLANS.
Countrywide will process automatic withdrawal orders pursuant
to the provisions of the withdrawal plans duly executed by shareholders and the
current prospectus and statement of additional information of the Trust.
Payments upon such withdrawal order shall be made by Countrywide from the
appropriate account maintained by the Trust with the Custodian on approximately
the last business day of each month in which a payment has been requested, and
Countrywide will withdraw from a shareholder's account and present for
repurchase or redemption as
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many shares as shall be sufficient to make such withdrawal payment pursuant to
the provisions of the shareholder's withdrawal plan and the current prospectus
and statement of additional information of the Trust. From time to time on new
automatic withdrawal plans a check for payment date already past may be issued
upon request by the shareholder.
14. LETTERS OF INTENT.
Countrywide will process such letters of intent for investing
in shares of the Trust as are provided for in the Trust's current prospectus and
statement of additional information. Countrywide will make appropriate deposits
to the account of the Underwriter for the adjustment of sales charges as therein
provided and will currently report the same to the Underwriter.
15. WIRE-ORDER PURCHASES.
Countrywide will send written confirmations to the dealers of
record containing all details of the wire-order purchases placed by each such
dealer by the close of business on the business day following receipt of such
orders by Countrywide or the Underwriter, with copies to the Underwriter. Upon
receipt of any check drawn or endorsed to the Trust (or Countrywide, as agent)
or otherwise identified as being payment of an outstanding wire-order,
Countrywide will stamp said check with the date of its receipt and deposit the
amount represented by such check to Countrywide's deposit accounts maintained
with the Custodian. Countrywide will compute the respective portions of such
deposit which represent the sales charge and the net asset value of the shares
so purchased, will cause the Custodian to transfer federal funds in an amount
equal to the net asset value of the shares so purchased to the Trust's account
with the Custodian, and will notify the Trust and the Underwriter before noon of
each business day of the total amount deposited in the Trust's deposit accounts,
and in the event that payment for a purchase order is not received by
Countrywide or the Custodian on the tenth business day following receipt of the
order, will prepare an NASD "notice of failure of dealer to make payment" and
forward such notification to the Underwriter.
16. OTHER PLANS.
Countrywide will process such accumulation plans, group
programs and other plans or programs for investing in shares of the Trust as are
now provided for in the Trust's current prospectus and statement of additional
information and will act as plan agent for shareholders pursuant to the terms of
such plans and programs duly executed by such shareholders.
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<PAGE>
17. RECORDKEEPING AND OTHER INFORMATION.
Countrywide shall create and maintain all records required by
applicable laws, rules and regulations, including but not limited to records
required by Section 31(a) of the 1940 Act and the rules thereunder, as the same
may be amended from time to time, pertaining to the various functions performed
by it and not otherwise created and maintained by another party pursuant to
contract with the Trust. All such records shall be the property of the Trust at
all times and shall be available for inspection and use by the Trust. Where
applicable, such records shall be maintained by Countrywide for the periods and
in the places required by Rule 31a-2 under the 1940 Act. The retention of such
records shall be at the expense of the Trust. Countrywide shall make available
during regular business hours all records and other data created and maintained
pursuant to this Agreement for reasonable audit and inspection by the Trust, any
person retained by the Trust, or any regulatory agency having authority over the
Trust.
18. SHAREHOLDER RECORDS.
Countrywide shall maintain records for each shareholder
account showing the following:
A. Names, addresses and tax identifying numbers;
B. Name of the dealer of record, if any;
C. Number of shares held of each series;
D. Historical information regarding the account of each
shareholder, including dividends and distributions in
cash or invested in shares;
E. Information with respect to the source of all dividends
and distributions allocated among income, realized
short-term gains and realized long-term gains;
F. Any instructions from a shareholder including all forms
furnished by the Trust and executed by a shareholder
with respect to (i) dividend or distribution elections
and (ii) elections with respect to payment options in
connection with the redemption of shares;
G. Any correspondence relating to the current maintenance
of a shareholder's account;
H. Certificate numbers and denominations for any
shareholder holding certificates;
I. Any stop or restraining order placed against a
shareholder's account;
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<PAGE>
J. Information with respect to withholding in the case of
a foreign account or any other account for which
withholding is required by the Internal Revenue Code of
1986, as amended; and
K. Any information required in order for Countrywide to
perform the calculations contemplated under this
Agreement.
19. TAX RETURNS AND REPORTS.
Countrywide will prepare in the appropriate form, file with
the Internal Revenue Service and appropriate state agencies and, if required,
mail to shareholders of the Trust such returns for reporting dividends and
distributions paid by the Trust as are required to be so prepared, filed and
mailed and shall withhold such sums as are required to be withheld under
applicable federal and state income tax laws, rules and regulations.
20. OTHER INFORMATION TO THE TRUST.
Subject to such instructions, verification and approval of the
Custodian and the Trust as shall be required by any agreement or applicable law,
Countrywide will also maintain such records as shall be necessary to furnish to
the Trust the following: annual shareholder meeting lists, proxy lists and
mailing materials, shareholder reports and confirmations and checks for
disbursing redemption proceeds, dividends and other distributions or expense
disbursements.
21. ACCESS TO SHAREHOLDER INFORMATION.
Upon request, Countrywide shall arrange for the Trust's
investment adviser to have direct access to shareholder information contained in
Countrywide's computer system, including account balances, performance
information and such other information which is available to Countrywide with
respect to shareholder accounts.
22. COOPERATION WITH ACCOUNTANTS.
Countrywide shall cooperate with the Trust's independent
public accountants and shall take all reasonable action in the performance of
its obligations under this Agreement to assure that the necessary information is
made available to such accountants for the expression of their unqualified
opinion where required for any document for the Trust.
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<PAGE>
23. SHAREHOLDER SERVICE AND CORRESPONDENCE.
Countrywide will provide and maintain adequate personnel,
records and equipment to receive and answer all shareholder and dealer inquiries
relating to account status, share purchases, redemptions and exchanges and other
investment plans available to Trust shareholders. Countrywide will answer
written correspondence from shareholders relating to their share accounts and
such other written or oral inquiries as may from time to time be mutually agreed
upon, and Countrywide will notify the Trust of any correspondence or inquiries
which may require an answer from the Trust.
24. PROXIES.
Countrywide shall assist the Trust in the mailing of proxy
cards and other material in connection with shareholder meetings of the Trust,
shall receive, examine and tabulate returned proxies and shall, if requested by
the Trust, provide at least one inspector of election to attend and participate
as required by law in shareholder meetings of the Trust.
25. FURTHER ACTIONS.
Each party agrees to perform such further acts and execute
such further documents as are necessary to effectuate the purposes hereof.
26. COMPENSATION.
For the performance of Countrywide's obligations under this
Agreement, each series of the Trust shall pay Countrywide, on the first business
day following the end of each month, a monthly fee in accordance with the
schedule attached hereto as Schedule A. The Trust shall promptly reimburse
Countrywide for any out-of-pocket expenses and advances which are to be paid by
the Trust in accordance with Paragraph 27.
27. EXPENSES.
Countrywide shall furnish, at its expense and without cost to
the Trust (i) the services of its personnel to the extent that such services are
required to carry out its obligations under this Agreement and (ii) the use of
data processing equipment. All costs and expenses not expressly assumed by
Countrywide under this Paragraph 27 shall be paid by the Trust, including, but
not limited to, costs and expenses of officers and employees of Countrywide in
attending meetings of the Board of Trustees and shareholders of the Trust, as
well as costs and expenses for postage, envelopes, checks, drafts, continuous
forms, reports, communications, statements and other materials, telephone,
telegraph and remote transmission lines, use of
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outside pricing services, use of outside mailing firms, necessary outside record
storage, media for storage of records (e.g., microfilm, microfiche, computer
tapes), printing, confirmations and any other shareholder correspondence and any
and all assessments, taxes or levies assessed on Countrywide for services
provided under this Agreement. Postage for mailings of dividends, proxies,
reports and other mailings to all shareholders shall be advanced to Countrywide
three business days prior to the mailing date of such materials.
28. COMPLIANCE WITH GOVERNMENTAL RULES AND REGULATIONS.
The parties hereto acknowledge and agree that nothing
contained herein shall be construed to require Countrywide to perform any
services for the Trust which services could cause Countrywide to be deemed an
"investment adviser" of the Trust within the meaning of Section 2(a)(20) of the
1940 Act or to supersede or contravene the Trust's prospectus or statement of
additional information or any provisions of the 1940 Act and the rules
thereunder. Except as otherwise provided in this Agreement and except for the
accuracy of information furnished to it by Countrywide, the Trust assumes full
responsibility for complying with all applicable requirements of the 1940 Act,
the Securities Act of 1933, as amended, and any other laws, rules and
regulations of governmental authorities having jurisdiction.
29. REFERENCES TO COUNTRYWIDE.
The Trust shall not circulate any printed matter which
contains any reference to Countrywide without the prior written approval of
Countrywide, excepting solely such printed matter as merely identifies
Countrywide as Administrative Services Agent, Transfer, Shareholder Servicing
and Dividend Disbursing Agent and Accounting Services Agent. The Trust will
submit printed matter requiring approval to Countrywide in draft form, allowing
sufficient time for review by Countrywide and its counsel prior to any deadline
for printing.
30. EQUIPMENT FAILURES.
Countrywide shall take all steps necessary to minimize or
avoid service interruptions, and has entered into one or more agreements making
provision for emergency use of electronic data processing equipment. Countrywide
shall have no liability with respect to equipment failures beyond its control.
31. INDEMNIFICATION OF COUNTRYWIDE.
A. Countrywide may rely on information reasonably believed by
it to be accurate and reliable. Except as may otherwise be required by the 1940
Act and the rules thereunder, neither Countrywide nor its shareholders,
officers, directors, employees, agents, control persons or affiliates of any
thereof shall be subject to any liability for, or any damages, expenses or
losses incurred by the Trust in connection with, any error of
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<PAGE>
judgment, mistake of law, any act or omission connected with or arising out of
any services rendered under or payments made pursuant to this Agreement or any
other matter to which this Agreement relates, except by reason of willful
misfeasance, bad faith or gross negligence on the part of any such persons in
the performance of the duties of Countrywide under this Agreement or by reason
of reckless disregard by any of such persons of the obligations and duties of
Countrywide under this Agreement.
B. Any person, even though also a director, officer, employee,
shareholder or agent of Countrywide, or any of its affiliates, who may be or
become an officer, trustee, employee or agent of the Trust, shall be deemed,
when rendering services to the Trust or acting on any business of the Trust, to
be rendering such services to or acting solely as an officer, trustee, employee
or agent of the Trust and not as a director, officer, employee, shareholder or
agent of or one under the control or direction of Countrywide or any of its
affiliates, even though paid by one of these entities.
C. The Trust shall indemnify and hold harmless Countrywide,
its directors, officers, employees, shareholders, agents, control persons and
affiliates from and against any and all claims, demands, expenses and
liabilities (whether with or without basis in fact or law) of any and every
nature which Countrywide may sustain or incur or which may be asserted against
Countrywide by any person by reason of, or as a result of: (i) any action taken
or omitted to be taken by Countrywide in good faith in reliance upon any
certificate, instrument, order or share certificate reasonably believed by it to
be genuine and to be signed, countersigned or executed by any duly authorized
person, upon the oral instructions or written instructions of an authorized
person of the Trust or upon the opinion of legal counsel for the Trust or its
own counsel; or (ii) any action taken or omitted to be taken by Countrywide in
connection with its appointment in good faith in reliance upon any law, act,
regulation or interpretation of the same even though the same may thereafter
have been altered, changed, amended or repealed. However, indemnification under
this subparagraph shall not apply to actions or omissions of Countrywide or its
directors, officers, employees, shareholders or agents in cases of its or their
own gross negligence, willful misconduct, bad faith, or reckless disregard of
its or their own duties hereunder.
32. TERMINATION
A. The provisions of this Agreement shall be effective on the
date first above written, shall continue in effect for two years from that date
and shall continue in force from year to year thereafter, but only so long as
such continuance is approved (1) by Countrywide, (2) by vote, cast in person at
a meeting called for the purpose, of a majority of the
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<PAGE>
Trust's trustees who are not parties to this Agreement or interested persons (as
defined in the 1940 Act) of any such party, and (3) by vote of a majority of the
Trust's Board of Trustees or a majority of the Trust's outstanding voting
securities.
B. Either party may terminate this Agreement on any date by
giving the other party at least sixty (60) days' prior written notice of such
termination specifying the date fixed therefor. Upon termination of this
Agreement, the Trust shall pay to Countrywide such compensation as may be due as
of the date of such termination, and shall likewise reimburse Countrywide for
any out-of-pocket expenses and disbursements reasonably incurred by Countrywide
to such date.
C. In the event that in connection with the termination of
this Agreement a successor to any of Countrywide's duties or responsibilities
under this Agreement is designated by the Trust by written notice to
Countrywide, Countrywide shall, promptly upon such termination and at the
expense of the Trust, transfer all records maintained by Countrywide under this
Agreement and shall cooperate in the transfer of such duties and
responsibilities, including provision for assistance from Countrywide's
cognizant personnel in the establishment of books, records and other data by
such successor.
33. SERVICES FOR OTHERS.
Nothing in this Agreement shall prevent Countrywide or any
affiliated person (as defined in the 1940 Act) of Countrywide from providing
services for any other person, firm or corporation (including other investment
companies); provided, however, that Countrywide expressly represents that it
will undertake no activities which, in its judgment, will adversely affect the
performance of its obligations to the Trust under this Agreement.
34. LIMITATION OF LIABILITY.
It is expressly agreed that the obligations of the Trust
hereunder shall not be binding upon any of the Trustees, shareholders, nominees,
officers, agents or employees of the Trust, personally, but bind only the trust
property of the Trust. The execution and delivery of this Agreement have been
authorized by the Trustees of the Trust and signed by an officer of the Trust,
acting as such, and neither such authorization by such Trustees nor such
execution and delivery by such officer shall be deemed to have been made by any
of them individually or to impose any liability on any of them personally, but
shall bind only the trust property of the Trust.
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<PAGE>
35. SEVERABILITY.
In the event any provision of this Agreement is determined to
be void or unenforceable, such determination shall not affect the remainder of
this Agreement, which shall continue to be in force.
36. QUESTIONS OF INTERPRETATION.
This Agreement shall be governed by the laws of the State of
Ohio. Any question of interpretation of any term or provision of this Agreement
having a counterpart in or otherwise derived from a term or provision of the
1940 Act shall be resolved by reference to such term or provision of the 1940
Act and to interpretations thereof, if any, by the United States Courts or in
the absence of any controlling decision of any such court, by rules, regulations
or orders of the SEC issued pursuant to said 1940 Act. In addition, where the
effect of a requirement of the 1940 Act, reflected in any provision of this
Agreement, is revised by rule, regulation or order of the SEC, such provision
shall be deemed to incorporate the effect of such rule, regulation or order.
37. NOTICES.
All notices, requests, consents and other communications
required or permitted under this Agreement shall be in writing (including telex
and telegraphic communication) and shall be (as elected by the person giving
such notice) hand delivered by messenger or courier service, telecommunicated,
or mailed (airmail if international) by registered or certified mail (postage
prepaid), return receipt requested, addressed to:
To the Trust: Dean Family of Funds
2480 Kettering Tower
Dayton, Ohio 45423
Attention: Frank H. Scott
To Countrywide: Countrywide Fund Services, Inc.
312 Walnut Street, 21st Floor
Cincinnati, Ohio 45202
Attention: Robert G. Dorsey
or to such other address as any party may designate by notice complying with the
terms of this Section 37. Each such notice shall be deemed delivered (a) on the
date delivered if by personal delivery; (b) on the date telecommunicated if by
telegraph; (c) on the date of transmission with confirmed answer back if by
telex, telefax or other telegraphic method; and (d) on the date upon which the
return receipt is signed or delivery is refused or the notice is designated by
the postal authorities as not deliverable, as the case may be, if mailed.
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<PAGE>
38. AMENDMENT.
This Agreement may not be amended or modified except by a
written agreement executed by both parties.
39. BINDING EFFECT.
Each of the undersigned expressly warrants and represents that
he has the full power and authority to sign this Agreement on behalf of the
party indicated, and that his signature will operate to bind the party indicated
to the foregoing terms.
40. COUNTERPARTS.
This Agreement may be executed in one or more counterparts,
each of which shall be deemed an original, but all of which together shall
constitute one and the same instrument.
41. FORCE MAJEURE.
If Countrywide shall be delayed in its performance of services
or prevented entirely or in part from performing services due to causes or
events beyond its control, including and without limitation, acts of God,
interruption of power or other utility, transportation or communication
services, acts of civil or military authority, sabotages, national emergencies,
explosion, flood, accident, earthquake or other catastrophe, fire, strike or
other labor problems, legal action, present or future law, governmental order,
rule or regulation, or shortages of suitable parts, materials, labor or
transportation, such delay or non-performance shall be excused and a reasonable
time for performance in connection with this Agreement shall be extended to
include the period of such delay or non-performance.
42. MISCELLANEOUS.
The captions in this Agreement are included for convenience of
reference only and in no way define or limit any of the provisions hereof or
otherwise affect their construction or effect.
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<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed as of the day and year first above written.
DEAN FAMILY OF FUNDS
By: /S/ FRANK H. SCOTT
Its: President
COUNTRYWIDE FUND SERVICES, INC.
By: /S/ ROBERT G. DORSEY
Its: President
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<PAGE>
EFFECTIVE OCTOBER 1, 1997 SCHEDULE A
COMPENSATION
SERVICES FEE
As Transfer Agent,
Dividend Disbursing Agent
and Shareholder Servicing Agent: (Per Account)
Large Cap Value Fund Payable monthly at
rate of $20.00/year;
subject to a minimum
of $1,200 per class
per month
Small Cap Value Fund Payable monthly at
rate of $20.00/year;
subject to a minimum
of $1,200 per class
per month
Balanced Fund Payable monthly at
rate of $20.00/year;
subject to a minimum
of $1,200 per class
per month
International Value Fund Payable monthly at
rate of $20.00/year;
subject to a minimum
of $1,200 per class
per month
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<PAGE>
CONSENT OF INDEPENDENT AUDITORS
We consent to the references to our firm under the captions "Auditors"
and "Statement of Assets and Liabilities" in the Statement of Additional
Information and to the incorporation by reference, in Post-Effective Amendment
No. 3 to the Registration Statement (Form N-1A No. 333-18653) and related
Prospectus of Dean Family of Funds, of those references and of our report dated
March 18, 1997 on the Dean Family of Funds (comprising respectively, the Large
Cap Value Fund, Small Cap Value Fund, and Balanced Fund).
/s/Ernst & Young LLP
Ernst & Young, LLP
Cincinnati, Ohio
September 30, 1997
<PAGE>
AGREEMENT RELATING TO INITIAL CAPITAL
March 17, 1997
DEAN FAMILY OF FUNDS
2480 Kettering Tower
Dayton, Ohio 45423
Dear Sir/Madam:
In conjunction with the purchase by C.H. Dean & Associates, Inc., (the
"Purchaser") of 3,400 shares of beneficial interest of the Large Cap Value Fund,
3,300 shares of beneficial interest of the Small Cap Value Fund and 3,300 shares
of beneficial interest of the Balanced Fund of the Dean Family of Funds (the
"Shares"), the Purchaser hereby represents that it is acquiring the Shares for
investment with no intention of reselling or otherwise distributing the Shares.
The Purchaser hereby further agrees that any transfer of any of the Shares or
any interest therein shall be subject to the following conditions:
1. The Purchaser shall furnish you and counsel satisfactory to
you prior to the time of transfer, a written description of
the proposed transfer specifying its nature and consequence
and giving the name of the proposed transferee.
2. You shall have obtained from your counsel a written
opinion stating whether in the opinion of such counsel the
proposed transfer may be effected without registration under
the Securities Act of 1933. If such opinion states that such
transfer may be so effected, the Purchaser shall then be
entitled to transfer the Shares in accordance with the terms
specified in its description of the transaction to you. If
such opinion states that the proposed transfer may not be so
effected, the Purchaser will not be entitled to transfer the
Shares unless the Shares are registered.
<PAGE>
The Purchaser hereby authorizes you to take such action as you shall
reasonably deem appropriate to prevent any violation of the Securities Act of
1933 in connection with the transfer of the Shares, including the imposition of
a requirement that any transferee of the Shares sign a letter agreement similar
to this one. The Purchaser agrees that in the event the Shares are redeemed by
the Purchaser or its successors or any current holder prior to the complete
amortization of organization expenses by the Large Cap Value Fund, the Small Cap
Value Fund or the Balanced Fund, the redemption proceeds payable in respect of
the Shares so redeemed shall be reduced by the pro-rata share (based on the
proportionate share of the Shares redeemed to the total number of the Shares
outstanding at the time of redemption) of the then unamortized deferred
organization expenses as of the date of such redemption.
Very truly yours,
C.H. DEAN & ASSOCIATES
By: /S/ ROBERT D. DEAN
Its:
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<PAGE>
PLAN OF DISTRIBUTION
PURSUANT TO RULE 12B-1 FOR
CLASS A SHARES OF DEAN FAMILY OF FUNDS
WHEREAS, Dean Family of Funds (the "Trust"), an unincorporated business
trust organized under the laws of the State of Ohio, is an open-end management
investment company and is registered as such under the Investment Company Act of
1940, as amended (the "1940 Act"); and
WHEREAS, the Trust is authorized to issue an unlimited number of shares
of beneficial interest without par value (the "Shares"), which are divided into
separate Series of Shares; and
WHEREAS, the Trust issues shares of certain Series in Sub- Series (one
of which may be designated as Class A Shares); and
WHEREAS, the Trustees of the Trust as a whole, and the Trustees who are
not interested persons of the Trust (as defined in the 1940 Act) and who have no
direct or indirect financial interest in the operation of this Plan or in any
agreement relating hereto (the "Rule 12b-1 Trustees"), having determined, in the
exercise of reasonable business judgment and in light of their fiduciary duties
under state law and under Section 36(a) and (b) of the 1940 Act, that there is a
reasonable likelihood that this Plan will benefit each Fund and the holders of
its Class A Shares, have approved this Plan by votes cast in person at a meeting
called for the purpose of voting hereon and on any agreements related hereto;
NOW, THEREFORE, the Trust hereby adopts this Plan in accordance with
Rule 12b-1 under the 1940 Act, on the following terms and conditions:
1. DISTRIBUTION ACTIVITIES. Subject to the supervision of the Trustees
of the Trust, the Trust may, directly or indirectly, engage in any activities
related to the distribution of Class A Shares, which activities may include, but
are not limited to, the following: (a) payments to securities dealers and others
who are engaged in the sale of Class A Shares and who may be advising
shareholders of the Trust regarding the purchase, sale or retention of Class A
Shares; (b) expenses of maintaining personnel (including personnel of
organizations with which the Trust has entered into agreements related to this
Plan) who engage in or support distribution of Class A Shares or who render
shareholder support services not otherwise provided by the Trust's transfer
agent, including, but not limited to, office space and equipment, telephone
facilities and expenses, answering routine inquiries regarding the Trust,
processing shareholder transactions, and providing such other shareholder
services as the Trust may reasonably request; (c) formulating and implementing
of marketing and promotional activities, including, but not limited to, direct
mail promotions and television, radio, newspaper, magazine and other mass media
advertising; (d) preparing, printing and distributing sales literature; (e)
preparing, printing and distributing prospectuses and statements
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<PAGE>
of additional information and reports of the Trust for recipients other than
existing shareholders of the Trust; and (f) obtaining such information, analyses
and reports with respect to marketing and promotional activities as the Trust
may, from time to time, deem advisable. The Trust is authorized to engage in the
activities listed above, and in any other activities related to the distribution
of Class A Shares, either directly or through other persons with which the Trust
has entered into agreements related to this Plan.
2. MAXIMUM EXPENDITURES. The expenditures to be made pursuant to this
Plan and the basis upon which payment of such expenditures will be made shall be
determined by the Trustees of the Trust, but in no event may such expenditures
exceed in any fiscal year an amount calculated at the rate of .25% of the
average daily net asset value of the Class A Shares of any Series of the Trust.
Such payments for distribution activities may be made directly by the Class A
Shares or the Trust's investment adviser or principal underwriter may incur such
expenses and obtain reimbursement from the Class A Shares.
3. TERM AND TERMINATION. This Plan shall become effective on the date
hereof. Unless terminated as herein provided, this Plan shall continue in effect
for one year from the date hereof and shall continue in effect for successive
periods of one year thereafter, but only so long as each such continuance is
specifically approved by votes of a majority of both (i) the Trustees of the
Trust and (ii) the Rule 12b-1 Trustees, cast in person at a meeting called for
the purpose of voting on such approval. This Plan may be terminated with respect
to any Series at any time by vote of a majority of the Rule 12b-1 Trustees or by
vote of a majority (as defined in the 1940 Act) of the outstanding Class A
Shares of such Series of the Trust. In the event this Plan is terminated by any
Series in accordance with its terms, the obligations of the Class A Shares of
such Series to make payments to the Trust's principal underwriter pursuant to
this Plan will cease and such Series will not be required to make any payments
for expenses incurred after the date of termination.
4. AMENDMENTS. This Plan may not be amended with respect to any Series
to increase materially the amount of expenditures provided for in Section 2
hereof unless such amendment is approved by a vote of the majority (as defined
in the 1940 Act) of the outstanding Class A Shares of such series, and no
material amendment to this Plan shall be made unless approved in the manner
provided for annual renewal of this Plan in Section 3 hereof.
5. SELECTION AND NOMINATION OF TRUSTEES. While this Plan is in effect,
the selection and nomination of Trustees who are not interested persons (as
defined in the 1940 Act) of the Trust shall be committed to the discretion of
the Trustees who are not interested persons of the Trust.
- 2 -
<PAGE>
6. QUARTERLY REPORTS. The principal underwriter and the Treasurer of
the Trust shall provide to the Trustees and the Trustees shall review, at least
quarterly, a written report of the amounts expended pursuant to this Plan and
any related agreement, the purposes for which such expenditures were made and
the allocation of such expenditures as provided for in Section 7.
7. ALLOCATING EXPENDITURES BETWEEN CLASSES. Only distribution
expenditures properly attributable to the sale of a particular class of Shares
may be used to support the distribution fee charged to shareholders of such
class of Shares. Distribution expenses attributable to the sale of more than one
class of Shares of a Series will be allocated at least annually to each class of
Shares based upon the ratio in which the sales of each class of Shares bears to
the sales of all Shares of such Series. For this purpose, Shares issued upon
reinvestment of dividends or distributions will not be considered sales.
8. RECORDKEEPING. The Trust shall preserve copies of this Plan and any
related agreement and all reports made pursuant to Section 6 hereof, for a
period of not less than six years from the date of this Plan, the agreements or
such reports, as the case may be, the first two years in an easily accessible
place.
9. LIMITATION OF LIABILITY. A copy of the Agreement and Declaration of
Trust of the Trust is on file with the Secretary of the State of Ohio and notice
is hereby given that this Plan is executed on behalf of the Trustees of the
Trust as trustees and not individually and that the obligations of this
instrument are not binding upon the Trustees or shareholders of the Trust
individually but are binding only upon the assets and property of the Trust.
IN WITNESS WHEREOF, the Trust has caused this Plan to be executed as of
the date set forth below.
Dated: April 1, 1997
Attest:
TINA D. HOSKING By: FRANK H. SCOTT
Secretary President
- 3 -
<PAGE>
PLAN OF DISTRIBUTION
PURSUANT TO RULE 12B-1 FOR
CLASS C SHARES OF DEAN FAMILY OF FUNDS
WHEREAS, Dean Family of Funds (the "Trust"), an unincorporated business
trust organized under the laws of the State of Ohio, is an open-end management
investment company and is registered as such under the Investment Company Act of
1940, as amended (the "1940 Act"); and
WHEREAS, the Trust is authorized to issue an unlimited number of shares
of beneficial interest without par value (the "Shares"), which are divided into
separate Series of Shares; and
WHEREAS, the Trust issues shares of certain Series in Sub- Series (one
of which may be designated as Class C Shares); and
WHEREAS, the Trustees of the Trust as a whole, and the Trustees who are
not interested persons of the Trust (as defined in the 1940 Act) and who have no
direct or indirect financial interest in the operation of this Plan or in any
agreement relating hereto (the "Rule 12b-1 Trustees"), having determined, in the
exercise of reasonable business judgment and in light of their fiduciary duties
under state law and under Section 36(a) and (b) of the 1940 Act, that there is a
reasonable likelihood that this Plan will benefit each Series and the holders of
its Class C Shares, have approved this Plan by votes cast in person at a meeting
called for the purpose of voting hereon and on any agreements related hereto;
NOW, THEREFORE, the Trust hereby adopts this Plan in accordance with
Rule 12b-1 under the 1940 Act, on the following terms and conditions:
1. DISTRIBUTION ACTIVITIES. Subject to the supervision of the Trustees
of the Trust, the Trust may, directly or indirectly, engage in any activities
related to the distribution of Class C Shares, which activities may include, but
are not limited to, the following: (a) maintenance fees or other payments to the
Trust's principal underwriter and to securities dealers and others who are
engaged in the sale of Class C Shares and who may be advising shareholders of
the Trust regarding the purchase, sale or retention of Class C Shares; (b)
expenses of maintaining personnel (including personnel of organizations with
which the Trust has entered into agreements related to this Plan) who engage in
or support distribution of Class C Shares or who render shareholder support
services not otherwise provided by the Trust's transfer agent, including, but
not limited to, office space and equipment, telephone facilities and expenses,
answering routine inquiries regarding the Trust, processing shareholder
transactions, and providing such other shareholder services as the Trust may
reasonably request; (c) formulating and implementing of marketing and
promotional activities, including, but not limited to, direct mail promotions
and television, radio,
- 1 -
<PAGE>
newspaper, magazine and other mass media advertising; (d) preparing, printing
and distributing sales literature; (e) preparing, printing and distributing
prospectuses and statements of additional information and reports of the Trust
for recipients other than existing shareholders of the Trust; and (f) obtaining
such information, analyses and reports with respect to marketing and promotional
activities as the Trust may, from time to time, deem advisable. The Trust is
authorized to engage in the activities listed above, and in any other activities
related to the distribution of Class C Shares, either directly or through other
persons with which the Trust has entered into agreements related to this Plan.
2. MAXIMUM EXPENDITURES. The expenditures to be made pursuant to
Section 1 and the basis upon which payment of such expenditures will be made
shall be determined by the Trustees of the Trust, but in no event may such
expenditures exceed in any fiscal year an amount calculated at the rate of .75%
of the average daily net asset value of the Class C Shares of any Series of the
Trust. Such payments for distribution activities may be made directly by the
Class C Shares or the Trust's investment adviser or principal underwriter may
incur such expenses and obtain reimbursement from the Class C Shares.
3. MAINTENANCE FEE. In addition to the payments of compensation
provided for in Section 2 and in order to further enhance the distribution of
its Class C Shares, the Trust shall pay the principal underwriter a maintenance
fee, accrued daily and paid monthly, in an amount equal to an annual rate of
.25% of the daily net assets of the Class C Shares of the Trust. When requested
by and at the direction of the principal underwriter, the Trust shall pay a
maintenance fee to dealers based on the amount of Class C Shares sold by such
dealers and remaining outstanding for specified periods of time, if any,
determined by the principal underwriter, in amounts up to .25% per annum of the
average daily net assets of the Class C Shares of the Trust. Any maintenance
fees paid to dealers shall reduce the maintenance fees otherwise payable to the
principal underwriter.
4. TERM AND TERMINATION. This Plan shall become effective on the date
hereof. Unless terminated as herein provided, this Plan shall continue in effect
for one year from the date hereof and shall continue in effect for successive
periods of one year thereafter, but only so long as each such continuance is
specifically approved by votes of a majority of both (i) the Trustees of the
Trust and (ii) the Rule 12b-1 Trustees, cast in person at a meeting called for
the purpose of voting on such approval. This Plan may be terminated with respect
to any Series at any time by vote of a majority of the Rule 12b-1 Trustees or by
vote of a majority (as defined in the 1940 Act) of the outstanding Class C
Shares of such Series of the Trust. In the
- 2 -
<PAGE>
event this Plan is terminated by any Series in accordance with its terms, the
obligations of the Class C Shares of such Series to make payments to the Trust's
principal underwriter pursuant to this Plan will cease and such Series will not
be required to make any payments for expenses incurred after the date of
termination.
5. AMENDMENTS. This Plan may not be amended with respect to any Series
to increase materially the amount of expenditures provided for in Sections 2 and
3 hereof unless such amendment is approved by a vote of the majority (as defined
in the 1940 Act) of the outstanding Class C Shares of such Series, and no
material amendment to this Plan shall be made unless approved in the manner
provided for annual renewal of this Plan in Section 4 hereof.
6. SELECTION AND NOMINATION OF TRUSTEES. While this Plan
is in effect, the selection and nomination of Trustees who are
not interested persons (as defined in the 1940 Act) of the Trust
shall be committed to the discretion of the Trustees who are not
interested persons of the Trust.
7. QUARTERLY REPORTS. The principal underwriter and the Treasurer of
the Trust shall provide to the Trustees and the Trustees shall review, at least
quarterly, a written report of the amounts expended pursuant to this Plan and
any related agreement, the purposes for which such expenditures were made and
the allocation of such expenditures as provided for in Section 8.
8. ALLOCATING EXPENDITURES BETWEEN CLASSES. Only distribution
expenditures properly attributable to the sale of a particular class of Shares
may be used to support the distribution fee charged to shareholders of such
class of Shares. Distribution expenses attributable to the sale of more than one
class of Shares of a Series will be allocated at least annually to each class of
Shares based upon the ratio in which the sales of each class of Shares bears to
the sales of all the Shares of such Series. For this purpose, Shares issued upon
reinvestment of dividends or distributions will not be considered sales.
9. RECORDKEEPING. The Trust shall preserve copies of this Plan and any
related agreement and all reports made pursuant to Section 7 hereof, for a
period of not less than six years from the date of this Plan, the agreements or
such reports, as the case may be, the first two years in an easily accessible
place.
10. LIMITATION OF LIABILITY. A copy of the Agreement and Declaration of
Trust of the Trust is on file with the Secretary of the State of Ohio and notice
is hereby given that this Plan is executed on behalf of the Trustees of the
Trust as trustees and not individually and that the obligations of this
instrument are not binding upon the Trustees or shareholders of the Trust
individually but are binding only upon the assets and property of the Trust.
- 3 -
<PAGE>
IN WITNESS WHEREOF, the Trust has caused this Plan to be executed as of
the date set forth below.
Dated: April 1, 1997
Attest:
/S/ TINA D. HOSKING By: /S/ FRANK H. SCOTT
Secretary President
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 6
<CIK> 0001027624
<NAME> DEAN FAMILY OF FUNDS
<SERIES>
<NUMBER> 11
<NAME> LARGE CAP VALUE FUND - CLASS A
<S> <C>
<PERIOD-TYPE> OTHER
<FISCAL-YEAR-END> MAR-31-1997
<PERIOD-END> AUG-31-1997
<INVESTMENTS-AT-COST> 6,448,244
<INVESTMENTS-AT-VALUE> 6,670,744
<RECEIVABLES> 12,712
<ASSETS-OTHER> 35,527
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 6,718,983
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 8,480
<TOTAL-LIABILITIES> 8,480
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 6,465,544
<SHARES-COMMON-STOCK> 626,863
<SHARES-COMMON-PRIOR> 3,400
<ACCUMULATED-NII-CURRENT> 4,099
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 18,360
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 222,500
<NET-ASSETS> 6,704,634
<DIVIDEND-INCOME> 23,030
<INTEREST-INCOME> 6,953
<OTHER-INCOME> 0
<EXPENSES-NET> 22,290
<NET-INVESTMENT-INCOME> 7,693
<REALIZED-GAINS-CURRENT> 18,360
<APPREC-INCREASE-CURRENT> 222,500
<NET-CHANGE-FROM-OPS> 248,553
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 3,594
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 623,339
<NUMBER-OF-SHARES-REDEEMED> 201
<SHARES-REINVESTED> 325
<NET-CHANGE-IN-ASSETS> 6,425,636
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 12,048
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 34,338
<AVERAGE-NET-ASSETS> 4,667,842
<PER-SHARE-NAV-BEGIN> 10.00
<PER-SHARE-NII> .02
<PER-SHARE-GAIN-APPREC> .69
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> (.01)
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 10.70
<EXPENSE-RATIO> 1.82
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<CIK> 0001027624
<NAME> DEAN FAMILY OF FUNDS
<SERIES>
<NUMBER> 13
<NAME> LARGE CAP VALUE FUND - CLASS C
<S> <C>
<PERIOD-TYPE> OTHER
<FISCAL-YEAR-END> MAR-31-1997
<PERIOD-END> AUG-31-1997
<INVESTMENTS-AT-COST> 6,448,244
<INVESTMENTS-AT-VALUE> 6,670,744
<RECEIVABLES> 12,712
<ASSETS-OTHER> 35,527
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 6,718,983
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 8,480
<TOTAL-LIABILITIES> 8,480
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 6,465,544
<SHARES-COMMON-STOCK> 549
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 4,099
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 18,360
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 222,500
<NET-ASSETS> 5,869
<DIVIDEND-INCOME> 23,030
<INTEREST-INCOME> 6,953
<OTHER-INCOME> 0
<EXPENSES-NET> 22,290
<NET-INVESTMENT-INCOME> 7,693
<REALIZED-GAINS-CURRENT> 18,360
<APPREC-INCREASE-CURRENT> 222,500
<NET-CHANGE-FROM-OPS> 248,553
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 549
<NUMBER-OF-SHARES-REDEEMED> 0
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 5,908
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 12,048
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 34,338
<AVERAGE-NET-ASSETS> 5,912
<PER-SHARE-NAV-BEGIN> 10.76
<PER-SHARE-NII> 0
<PER-SHARE-GAIN-APPREC> (.07)
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 10.69
<EXPENSE-RATIO> 2.51
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<CIK> 0001027624
<NAME> DEAN FAMILY OF FUNDS
<SERIES>
<NUMBER> 21
<NAME> SMALL CAP VALUE FUND - CLASS A
<S> <C>
<PERIOD-TYPE> OTHER
<FISCAL-YEAR-END> MAR-31-1997
<PERIOD-END> AUG-31-1997
<INVESTMENTS-AT-COST> 13,875,640
<INVESTMENTS-AT-VALUE> 14,900,445
<RECEIVABLES> 201,478
<ASSETS-OTHER> 37,284
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 15,139,207
<PAYABLE-FOR-SECURITIES> 152,578
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 48,647
<TOTAL-LIABILITIES> 201,225
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 13,756,283
<SHARES-COMMON-STOCK> 1,313,173
<SHARES-COMMON-PRIOR> 3,300
<ACCUMULATED-NII-CURRENT> 19,997
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 136,897
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 1,024,805
<NET-ASSETS> 14,800,643
<DIVIDEND-INCOME> 48,956
<INTEREST-INCOME> 14,569
<OTHER-INCOME> 0
<EXPENSES-NET> 43,528
<NET-INVESTMENT-INCOME> 19,997
<REALIZED-GAINS-CURRENT> 136,897
<APPREC-INCREASE-CURRENT> 1,024,805
<NET-CHANGE-FROM-OPS> 1,181,699
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 1,311,686
<NUMBER-OF-SHARES-REDEEMED> (1,813)
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 13,588,736
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 23,500
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 51,028
<AVERAGE-NET-ASSETS> 9,150,946
<PER-SHARE-NAV-BEGIN> 10.00
<PER-SHARE-NII> .02
<PER-SHARE-GAIN-APPREC> 1.25
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 11.27
<EXPENSE-RATIO> 1.80
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<CIK> 0001027624
<NAME> DEAN FAMILY OF FUNDS
<SERIES>
<NUMBER> 23
<NAME> SMALL CAP VALUE FUND - CLASS C
<S> <C>
<PERIOD-TYPE> OTHER
<FISCAL-YEAR-END> MAR-31-1997
<PERIOD-END> AUG-31-1997
<INVESTMENTS-AT-COST> 13,875,640
<INVESTMENTS-AT-VALUE> 14,900,445
<RECEIVABLES> 201,478
<ASSETS-OTHER> 37,284
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 15,139,207
<PAYABLE-FOR-SECURITIES> 152,578
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 48,647
<TOTAL-LIABILITIES> 201,225
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 13,756,283
<SHARES-COMMON-STOCK> 12,194
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 19,997
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 136,897
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 1,024,805
<NET-ASSETS> 137,339
<DIVIDEND-INCOME> 48,956
<INTEREST-INCOME> 14,569
<OTHER-INCOME> 0
<EXPENSES-NET> 43,528
<NET-INVESTMENT-INCOME> 19,997
<REALIZED-GAINS-CURRENT> 136,897
<APPREC-INCREASE-CURRENT> 1,024,805
<NET-CHANGE-FROM-OPS> 1,181,699
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 12,194
<NUMBER-OF-SHARES-REDEEMED> 0
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 134,547
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 23,500
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 51,028
<AVERAGE-NET-ASSETS> 98,480
<PER-SHARE-NAV-BEGIN> 10.95
<PER-SHARE-NII> 0
<PER-SHARE-GAIN-APPREC> .31
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 11.26
<EXPENSE-RATIO> 2.54
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<CIK> 0001027624
<NAME> DEAN FAMILY OF FUNDS
<SERIES>
<NUMBER> 31
<NAME> BALANCED FUND - CLASS A
<S> <C>
<PERIOD-TYPE> OTHER
<FISCAL-YEAR-END> MAR-31-1997
<PERIOD-END> AUG-31-1997
<INVESTMENTS-AT-COST> 6,761,485
<INVESTMENTS-AT-VALUE> 6,977,223
<RECEIVABLES> 59,939
<ASSETS-OTHER> 35,186
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 7,072,348
<PAYABLE-FOR-SECURITIES> 86,695
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 9,689
<TOTAL-LIABILITIES> 96,384
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 6,693,084
<SHARES-COMMON-STOCK> 636,436
<SHARES-COMMON-PRIOR> 3,300
<ACCUMULATED-NII-CURRENT> 16,803
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 50,339
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 215,738
<NET-ASSETS> 6,783,871
<DIVIDEND-INCOME> 12,566
<INTEREST-INCOME> 36,322
<OTHER-INCOME> 0
<EXPENSES-NET> 22,874
<NET-INVESTMENT-INCOME> 26,014
<REALIZED-GAINS-CURRENT> 50,339
<APPREC-INCREASE-CURRENT> 215,738
<NET-CHANGE-FROM-OPS> 292,091
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 9,211
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 637,212
<NUMBER-OF-SHARES-REDEEMED> 4,911
<SHARES-REINVESTED> 835
<NET-CHANGE-IN-ASSETS> 6,467,572
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 12,331
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 35,205
<AVERAGE-NET-ASSETS> 4,784,290
<PER-SHARE-NAV-BEGIN> 10.00
<PER-SHARE-NII> .05
<PER-SHARE-GAIN-APPREC> .63
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> (.03)
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 10.65
<EXPENSE-RATIO> 1.80
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<CIK> 0001027624
<NAME> DEAN FAMILY OF FUNDS
<SERIES>
<NUMBER> 33
<NAME> BALANCED FUND - CLASS C
<S> <C>
<PERIOD-TYPE> OTHER
<FISCAL-YEAR-END> MAR-31-1997
<PERIOD-END> AUG-31-1997
<INVESTMENTS-AT-COST> 6,761,485
<INVESTMENTS-AT-VALUE> 6,977,223
<RECEIVABLES> 59,939
<ASSETS-OTHER> 35,186
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 7,072,348
<PAYABLE-FOR-SECURITIES> 86,695
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 9,689
<TOTAL-LIABILITIES> 96,384
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 6,693,084
<SHARES-COMMON-STOCK> 18,031
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 16,803
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 50,339
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 215,738
<NET-ASSETS> 192,093
<DIVIDEND-INCOME> 12,566
<INTEREST-INCOME> 36,322
<OTHER-INCOME> 0
<EXPENSES-NET> 22,874
<NET-INVESTMENT-INCOME> 26,014
<REALIZED-GAINS-CURRENT> 50,339
<APPREC-INCREASE-CURRENT> 215,738
<NET-CHANGE-FROM-OPS> 292,091
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 18,031
<NUMBER-OF-SHARES-REDEEMED> 0
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 192,512
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 12,331
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 35,205
<AVERAGE-NET-ASSETS> 114,837
<PER-SHARE-NAV-BEGIN> 10.71
<PER-SHARE-NII> 0
<PER-SHARE-GAIN-APPREC> (.06)
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 10.65
<EXPENSE-RATIO> 2.54
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
