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DEAN INVESTMENT ASSOCIATES
Large Cap Value Fund
Small Cap Value Fund
Balanced Fund
International Value Fund
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Annual Report
March 31, 1999
<PAGE>
CHAIRMAN AND PRESIDENT'S LETTER
================================================================================
TO INVESTORS IN THE DEAN FAMILY OF MUTUAL FUNDS:
You will find a consistent theme within the reports of each of our four Funds --
that despite the performance of the Dow Jones Industrial Average and the S&P 500
Index, the 12 months ended March 31, 1999 was not a good year for most stocks.
For a narrow segment of the market -- a relatively few stocks with huge market
capitalization (the mega-caps)-- it was a spectacular year. Their prices climbed
and climbed, regardless of earnings, book value or other proven yardsticks,
rocketing the Dow and the S&P 500 Stock Index past record after record. Yet,
most stocks declined.
During calendar year 1998, companies whose share prices declined outnumbered
gainers by 38% among all the companies on the New York Stock Exchange. Just how
narrow a market it was is demonstrated by the fact that while the S&P 500 Index
return was 28.6% in 1998, just 10 stocks accounted for 44.5% of the return of
the 500 companies in the Index. The price-to-earnings ratios of those 10 stocks
ranged from the mid-30s to well over 100!
Clearly, it was not a good year for value stocks. The results are evident in the
reports which follow. Only in the arena of international stocks were we able to
elude the effects of the U.S. market in which traditional measures of value were
so ignored.
Quite logically, investors will ask whether holding to the value approach to
stock selection makes sense in a market such as this. Our answer is emphatic:
stay the course. Over the long term, the value approach has rewarded investors
handsomely and with less risk than other styles. There have been other periods
when investor sentiment has swung away from prudent assessment of investment
value and risk. Over the long term, however, the market behaves rationally.
Most of the companies in which we have invested are operating quite well. Their
operating performance has confirmed the conclusions of our research, and there
have been relatively few disappointments.
Sooner, rather than later, we believe the market will step back from its
enchantment with mega-cap stocks with soaring prices. Recent developments
suggest this very change may now be underway. As that happens, our more
conservative approach, emphasizing companies which produce consistent earnings
growth, should reward investors in the Dean Family of Funds.
Sincerely,
/s/ Chauncey H. Dean /s/ Robert D. Dean
Chauncey H. Dean Robert D. Dean
Chairman of the Board and President and Chief Investment Officer
Chief Executive Officer C.H. Dean & Associates, Inc.
C.H. Dean & Associates, Inc.
1
<PAGE>
LARGE CAP VALUE FUND
================================================================================
FISCAL 1999: A YEAR WHEN "LARGE" WAS STILL TOO SMALL
Our fiscal year ended March 31, 1999 will be remembered as the year when
investors flocked to the few, the mighty, the very largest of mega-cap stocks.
Their rush not only exaggerating the performance of the Dow Jones and the S&P
500 indices, it left the shares of thousands of other companies languishing and
ignored. While large cap stocks did better than small caps, this was small
consolation.
IMPROVEMENT IN THE SECOND HALF
At least there was improvement in the second half. The Dean Large Cap Value Fund
gained 8.38% during the six months ended March 31, 1999. For the full year,
however, the Fund had a negative 11.48% return. The Fund's benchmark, the
Russell 1000 Index, was up 16.66% for the fiscal year. The Russell 1000 Value
Index, highly correlated with our value investment philosophy, was up 18.28% in
the final six months of the fiscal year and up 5.04% for the full year.
EXCELLENT VALUES WENT UNAPPRECIATED
Cyclical issues were a disappointment. We purchased strong companies, many of
them at bargain prices. The story was much the same in oil service industry
stocks. It was clear that declining oil industry prices and profits would
threaten the companies, which provide oil rigs, drilling supplies and a variety
of services. So it did; their share prices fell, often to below book value, even
though many remained profitable.
As value investors, the price you pay relative to earnings and book value
matters a great deal. As suggested, however, in fiscal 1999 the market was not
focused on value. Oddly, it was stocks with the highest valuations which brought
the greatest returns in the stock market.
Among large cap stocks (stocks with a market value of $3 billion or more), those
with a price-to-book value ratio above the median (3.6X) produced a median
return of 22.3%. Those with a price-to-book ratio below 3.6 had a median loss of
12.4%.
A similar pattern existed last year with regard to price-to-earnings ratios
(P/E). Among large cap stocks, the upper half in terms of P/E produced a median
return of 21.6%. The low P/E group produced a negative median return of 14.0%.
CONTINUING WITH A DISCIPLINED VALUE APPROACH
We do not believe a year like 1998 negates the merits of a disciplined approach
to value investing. The history of the stock market contains many incidents of
investor fads which are irrational in their disregard for fundamental principles
of investing.
The chase after mega-cap stocks with P/Es of 50, 70, even 100 or more is an
example of such a fad. We are confident the market will soon force investors to
return to sensible ways of evaluating risk and the fundamental elements required
to create value -- financial strength, market position, the ability to grow
earnings consistently and a realistic assessment of value.
- --------------------------------------------------------------------------------
Comparison of the Change in Value of a $10,000 Investment
in the Dean Large Cap Value Fund - Class A*, the Russell 1000 Index
and the Russell 1000 Value Index
3/31/99
-------
Dean Large Cap Value Fund $10,410
Russell 1000 Index $15,435
Russell 1000 Value Index $14,144
- --------------------------------------------------------------------------------
---------------------------------------
Average Annual Returns
1 Year Since Inception*
Class A (16.13)% 2.20%
Class C (12.12)% 0.46%
---------------------------------------
Past performance is not predictive of future performance.
*The chart above represents performace of Class A shares only, which will vary
from the performance of Class C shares based on the difference in loads and fees
paid by shareholders in the different classes. The initial public offering of
Class A shares commenced on May 28, 1997, and the initial public offering of
Class C shares commenced on August 19, 1997.
2
<PAGE>
SMALL CAP VALUE FUND
================================================================================
A BAFFLING AND DIFFICULT YEAR
The extent to which the past year's stock market has ignored time-proven rules
of value and risk has baffled most investment professionals. And, in the case of
the Dean Small Cap Value Fund, it led to discouraging results during the 12
months ended March 31, 1999. The Fund declined 23.39% during that period.
A comparison of the Fund's performance to comparable indices highlights the very
difficult environment faced by investors in smaller-capitalization,
value-oriented stocks. The Russell 2000 Index of small cap companies declined
16.26% during the fiscal year. The Russell 2000 Value Index, highly correlated
with our value investment philosophy, fell 22.03% for our fiscal year. Although
the decline in small cap value stocks moderated significantly during the second
half of the year, results were negative. The Fund had a decline of 4.12% and the
Russell 2000 Value Index declined 1.50%.
BIGGEST WAS BEST
Not only did the prices of the vast majority of small cap value stocks decline
significantly, they did so while a narrow band of mega-cap stocks have romped on
to a series of new highs.
Over the long term, small cap stocks have done very well. The rewards for being
small and low-priced have often enabled the small caps to outperform their
larger, costlier counterparts. However, the past year has been an aberration.
The smaller and cheaper a stock was, the worse it did. Conversely, the larger
and more expensive a stock was, the better it did.
No one expects perfect timing on every stock purchase, of course. Still, it is
disconcerting to wait as an interesting stock declines, for example, from $30 a
share to $10, where it becomes a compelling value, only to see it decline still
further. The bargain at $10 has slipped to $7, even though its real value is
closer to $20.
SOLID FUNDAMENTALS IGNORED IN MOST STOCKS
One of the classic measures of a stock's worth is the ratio between market price
and book value. Book value is the per share value of a company's assets (based
on historical cost) minus its liabilities. Historically, buying at low multiples
of book value has been a successful way to invest. Also, over the long term,
small companies have tended to outperform large companies.
Not so this year. If you look at all the companies which currently have market
capitalization of more than $10 billion and which are currently trading for more
than 30X book value, their median return is 116%. In a headlong rush toward
big-name, big companies, investors have ignored old ideas of price and value.
Meanwhile, small cap value stocks-- those with market capitalization of between
$30 million and $750 million and which currently have price-to-book ratios of
under 1.5X-- have been ignored. The median return for that universe of stocks
was -42.85% during the 12 months of this report.
Just when small cap value stocks will begin once again to get the attention and
command the prices they deserve is unclear. We are confident they will return to
favor. We intend to manage on that assumption, so that the Dean Small Cap Value
Fund will be in a position to participate fully, as considerations of value
resume their rightful place in the minds of investors.
- --------------------------------------------------------------------------------
Comparison of the Change in Value of a $10,000 Investment
in the Dean Small Cap Value Fund - Class A*, the Russell 2000 Index
and the Russell 2000 Value Index
3/31/99
-------
Dean Small Cap Value Fund $ 9,717
Russell 2000 Index $10,790
Russell 2000 Value Index $10,293
- --------------------------------------------------------------------------------
---------------------------------------
Average Annual Returns
1 Year Since Inception*
Class A (27.41)% (1.55)%
Class C (24.00)% (4.61)%
---------------------------------------
Past performance is not predictive of future performance.
*The chart above represents performace of Class A shares only, which will vary
from the performance of Class C shares based on the difference in loads and fees
paid by shareholders in the different classes. The initial public offering of
Class A shares commenced on May 28, 1997, and the initial public offering of
Class C shares commenced on August 1, 1997.
3
<PAGE>
BALANCED FUND
================================================================================
A DIFFICULT YEAR FOR THOSE WHO BELIEVE IN VALUE
The Fund's performance improved during the six months ended March 31, 1999,
returning 4.58%. For the full fiscal year, the Fund declined 3.22%. These
returns did not match the 16.18% and 12.62% respective returns of our Fund's
target index, a 60/40 mixture of appropriate stock and bond benchmark indices.
We use the Russell 1000 Index for the equity portion and the Lehman Brothers
Intermediate Government/Corporate Bond Index for fixed-income. A 60/40 blend of
the Russell 1000 Value Index, highly correlated with our value investment
philosophy, and the Lehman Index gained 11.01% in the final six months of the
fiscal year and 5.65% for the full year.
The performance of the portfolio was affected by weak performance in our
holdings in the oil service and REIT groups in particular. The companies we hold
in these sectors have turned in solid operating performance and maintained
strong balance sheets. They are true value stocks. Yet, value stocks have been
ignored during the past year, as investors have pursued a small number of
mega-cap stocks, apparently without regard for long-established measures of
value or risk.
POSSIBLE SIGNS OF CHANGE
While there are some indications that this situation may be changing, it is too
early to predict with certainty. Regardless of when market psychology takes a
more rational turn, we are confident that a disciplined and consistent
application of our investment philosophy will reward long-term investors.
On a positive note, the Fund's portfolio benefited from its position in the
telecommunications, financial and consumer groups. And, fixed-income holdings
made a solid contribution.
During the stock market decline last summer, we increased the Fund's stock
position toward 60% as the market created an attractive opportunity for
selective buying. In the ensuing rally toward 10,000 on the Dow Jones, our
forecasting models turned more cautious, and we have adjusted the stock position
toward the 50% level. The Fund's fixed-income portfolio remains in high-quality,
intermediate-term holdings.
OUTLOOK
Market volatility in both stocks and bonds was relatively high by historic
standards during the past year, and this appears likely to continue in the
months ahead. Corporate earnings growth has slowed to a very modest single-digit
level. Interest rates, which declined significantly in the latter half of 1998,
rose sharply in early 1999.
With modest earnings growth, poor technical conditions and high valuations, the
stock market is vulnerable to negative news, such as disappointing earnings by
industry leaders. It is our view that U.S. financial markets will experience
wild price swings. In such an environment, the benefits of the Fund's
disciplined tactical asset allocation strategy will be especially important.
- --------------------------------------------------------------------------------
Comparison of the Change in Value of a $10,000 Investment in the Dean Balanced
Fund - Class A*, the Russell 1000 Index, Russell 1000 Value Index and the Lehman
Brothers Intermediate Government/Corporate Bond Index
3/31/99
-------
Dean Balanced Fund $10,827
Russell 1000 Index $15,435
Russell 1000 Value Index $14,144
Lehman Brothers Intermediate
Government/Corporate Bond Index $11,508
- --------------------------------------------------------------------------------
---------------------------------------
Average Annual Returns
1 Year Since Inception*
Class A (8.30)% 4.40%
Class C (3.81)% 3.18%
---------------------------------------
Past performance is not predictive of future performance.
*The chart above represents performace of Class A shares only, which will vary
from the performance of Class C shares based on the difference in loads and fees
paid by shareholders in the different classes. The initial public offering of
Class A shares commenced on May 28, 1997, and the initial public offering of
Class C shares commenced on August 1, 1997.
4
<PAGE>
INTERNATIONAL VALUE FUND
================================================================================
INTERNATIONAL STOCKS REBOUNDED
The Dean International Value Fund returned 19.89% during the six months ended
March 31, 1999, reflecting a sharp improvement in the market for international
stocks. That strong comeback from the negative returns in the previous six
months brought the return for the year ended March 31, 1999 to 5.82%. For the
final six months and the full year, the Fund's benchmark, the Morgan Stanley
EAFE Index, was up 22.34% and 6.04%, respectively.
Since its inception on October 13, 1997 through to March 31, 1999, the Fund has
returned 16.09% on an annualized basis.
The Fund entered fiscal 1999 having moved largely to European and Canadian
stocks and away from Asian stocks which had fallen sharply in the wake of the
Asian financial crisis. In mid-1998, the troubled Asian and Latin American
economies began to show signs of recovery.
THE RETURN TO ASIAN MARKETS
Given their improving economies, the stocks of Asian and Latin American
companies began again to be attractive. While solid value opportunities were
emerging in those markets, they were drying up in Continental Europe, where the
market had risen sharply. Consequently, the Fund shifted its investments toward
Asia in mid-year.
An improving outlook for the United Kingdom and Japanese economies has prompted
an increase in the Fund's weightings in those markets for 1999. As the outlook
for the global economy has improved, the Fund's weightings in cyclical sectors
have risen.
A DISCIPLINED APPROACH TO DEFINING VALUE
The Fund aims to buy the best-placed companies within favored sectors. Strong
management and focused strategy are key requirements for the Fund's investments,
and strict valuation criteria are applied when carrying out global sector
comparisons. Particular emphasis is given to valuation measures such as
price/cash flow, price/book, price/sales and the price/earnings multiples in
relation to the stock's expected rate of growth in earnings. A disciplined,
"bottom-up," value approach is used to manage the Fund.
- --------------------------------------------------------------------------------
Comparison of the Change in Value of a $10,000 Investment in the Dean
International Value Fund - Class A* and the Morgan Stanley EAFE Index
3/31/99
-------
Dean International Value Fund $11,791
Morgan Stanley EAFE Index $11,263
- --------------------------------------------------------------------------------
---------------------------------------
Average Annual Returns
1 Year Since Inception*
Class A (0.27)% 11.90%
Class C (5.07)% 16.95%
---------------------------------------
Past performance is not predictive of future performance.
*The chart above represents performace of Class A shares only, which will vary
from the performance of Class C shares based on the difference in loads and fees
paid by shareholders in the different classes. The initial public offering of
Class A shares commenced on October 13, 1997, and the initial public offering of
Class C shares commenced on November 6, 1997.
5
<PAGE>
FUND FACTS
================================================================================
LARGE CAP VALUE FUND
- --------------------------------------------------------------------------------
TOP HOLDINGS
Diamond Offshore Drilling, Inc. Vulcan Materials Co.
AT&T Corp. Berkshire Hathaway, Inc. -- Class B
Philip Morris Cos., Inc. Conseco, Inc.
Alltel Corp. News Corp. Ltd. (The) (ADR)
Tidewater, Inc. Ambac Financial Group, Inc.
NUMBER OF POSITIONS ............................................ 50
MEDIAN PRICE/EARNINGS RATIO .................................... 15.0
PORTFOLIO TURNOVER (4/1/98 - 3/31/99) .......................... 55%
SMALL CAP VALUE FUND
- --------------------------------------------------------------------------------
TOP HOLDINGS
American Residential Services, Inc. M/I Schottenstein Homes, Inc.
Kentek Information Systems, Inc. Offshore Logistics, Inc.
Pool Energy Services Co. Veritas DGC, Inc.
America West Holdings Corp. -- Class B Winston Hotels, Inc.
Friedman's, Inc. -- Class A RFS Hotel Investors, Inc.
NUMBER OF POSITIONS ............................................ 134
MEDIAN PRICE/EARNINGS RATIO .................................... 8.7
PORTFOLIO TURNOVER (4/1/98 - 3/31/99) .......................... 79%
6
<PAGE>
FUND FACTS
================================================================================
BALANCED FUND
- --------------------------------------------------------------------------------
TOP EQUITY HOLDINGS
Philip Morris Cos., Inc. Diamond Offshore Drilling, Inc.
News Corp. Ltd. (The)(ADR) NCR Corp.
AT&T Corp. AFLAC, Inc.
Tricon Global Restaurants, Inc. Conseco, Inc.
Allstate Corp. (The) Tidewater, Inc.
NUMBER OF POSITIONS ............................................ 34
MEDIAN PRICE/EARNINGS RATIO .................................... 15.4
PORTFOLIO TURNOVER (4/1/98 - 3/31/99) .......................... 60%
INTERNATIONAL VALUE FUND
- --------------------------------------------------------------------------------
TOP HOLDINGS
Novartis Shell Transport & Trading Co.
Ing Groep NV Hoechst AG
Telecom Italia SPA UBS AG
Telefonica de Espana Transiciel SA
BCE, Inc. National Grid Group Plc
NUMBER OF POSITIONS ............................................ 96
MEDIAN PRICE/EARNINGS RATIO .................................... 26.2
PORTFOLIO TURNOVER (4/1/98 - 3/31/99) .......................... 100%
7
<PAGE>
LARGE CAP VALUE FUND
PORTFOLIO OF INVESTMENTS
MARCH 31,1999
================================================================================
SHARES COMMON STOCKS -- 96.8% VALUE
- --------------------------------------------------------------------------------
AEROSPACE -- 1.7%
2,000 AlliedSignal Inc. ........................... $ 98,375
1,000 General Dynamics Corp. ...................... 64,250
------------
162,625
------------
AUTOMOTIVE -- 7.3%
2,805 DaimlerChrysler Ag (ADR) .................... 240,704
4,000 Ford Motor Co. .............................. 227,000
1,000 General Motors Corp. ........................ 86,875
4,000 PACCAR Inc. ................................. 164,750
------------
719,329
------------
BANKING -- 2.2%
4,000 Bank One Corp. .............................. 220,250
------------
BUILDING PRODUCTS -- 3.1%
7,500 Vulcan Materials Co. ........................ 309,843
------------
CAPITAL GOODS -- 4.7%
5,000 Caterpillar Inc. ............................ 229,687
6,000 Deere & Co. ................................. 231,750
------------
461,437
------------
CHEMICALS -- 2.2%
4,000 Potash Corp. of Saskatchewan Inc. (ADR) ..... 214,000
------------
ELECTRONICS -- 1.8%
63 Raytheon Co. - Class A ...................... 3,638
3,000 Raytheon Co. - Class B ...................... 175,875
------------
179,513
------------
ENERGY -- 9.3%
12,000 Diamond Offshore Drilling, Inc. ............. 379,500
4,000 Texaco Inc. ................................. 227,000
12,000 Tidewater, Inc. ............................. 310,500
------------
917,000
------------
FINANCIAL SERVICES -- 6.6%
5,000 Ambac Financial Group, Inc. ................. 270,000
2,000 Associates First Capital Corp. - Class A .... 90,000
3,000 Chase Manhattan Corp. ....................... 243,938
1,500 Edwards (A.G.), Inc. ........................ 49,031
------------
652,969
------------
HEALTH CARE -- 1.5%
8,000 Columbia/HCA Healthcare Corp. ............... 151,500
------------
HOUSING -- 1.9%
17,000 Clayton Homes, Inc. ......................... 188,062
------------
8
<PAGE>
LARGE CAP VALUE FUND (CONTINUED)
================================================================================
SHARES COMMON STOCKS -- 96.8% (CONTINUED) VALUE
- --------------------------------------------------------------------------------
INSURANCE -- 14.9%
4,000 AFLAC, Inc. ................................. $ 217,750
7,000 Allstate Corp. (The) ........................ 259,438
2,000 American National Insurance Co. ............. 133,750
126 Berkshire Hathaway, Inc. - Class B .......... 296,226
9,415 Conseco, Inc. ............................... 290,688
3,600 Transamerica Corp. .......................... 255,600
------------
1,453,452
------------
MEDIA -- 2.8%
10,000 News Corp. Ltd. (The) (ADR) ................. 275,000
------------
MISCELLANEOUS -- 3.1%
7,500 Convergys Corp. ............................. 128,437
2,500 Minnesota Mining and Manufacturing Co. ...... 176,875
------------
305,312
------------
MORTGAGE SERVICES -- 6.3%
2,500 Countrywide Credit Industries, Inc. ......... 93,750
2,400 MBIA, Inc. .................................. 139,200
7,000 MGIC Investment Corp. ....................... 245,438
3,000 PMI Group, Inc. (The) ....................... 139,125
------------
617,513
------------
REAL ESTATE -- 1.7%
6,000 Simon Property Group, Inc. .................. 164,625
------------
RESTAURANTS -- 1.4%
2,000 Tricon Global Restaurants, Inc. ............. 140,500
------------
RETAIL -- 0.6%
2,500 Dillard's, Inc. ............................. 63,437
------------
SEMI-CONDUCTORS -- 1.2%
1,000 Intel Corp. ................................. 119,125
------------
TECHNOLOGY -- 2.5%
7,000 Computer Associates International, Inc. ..... 248,938
------------
TELECOMMUNICATIONS-- 11.1%
5,000 Alltel Corp. ................................ 311,875
4,000 AT&T Corp. .................................. 319,250
6,000 ECI Telecom Ltd. (ADR) ...................... 210,000
3,000 NCR Corp. ................................... 150,000
1,000 Sprint Corp. ................................ 98,125
------------
1,089,250
------------
9
<PAGE>
LARGE CAP VALUE FUND (CONTINUED)
================================================================================
SHARES COMMON STOCKS -- 96.8% (CONTINUED) VALUE
- --------------------------------------------------------------------------------
TOBACCO -- 4.9%
1,500 Loews Corp. ................................. $ 111,938
9,000 Philip Morris Cos., Inc. .................... 316,687
2,000 UST, Inc. ................................... 52,250
------------
480,875
------------
UTILITIES -- 4.0%
9,000 Reliant Energy, Inc. ........................ 234,563
7,000 Southern Co. ................................ 163,188
------------
397,751
------------
TOTAL COMMON STOCKS (COST $9,418,432) $ 9,532,306
------------
================================================================================
FACE AMOUNT MONEY MARKET AND EQUIVALENTS -- 4.0% VALUE
- --------------------------------------------------------------------------------
$ 300,000 Countrywide Home Loans CP, 04/01/99 ......... $ 299,876
97,055 Firstar Treasury Fund ....................... 97,055
------------
TOTAL MONEY MARKET AND EQUIVALENTS
(COST $396,931) ............................. $ 396,931
------------
TOTAL INVESTMENTS AT VALUE -- 100.8%
(COST $9,815,363) ........................... $ 9,929,237
LIABILITIES IN EXCESS OF OTHER ASSETS -- (0.8)% (82,254)
------------
NET ASSETS -- 100.0% ........................ $ 9,846,983
============
ADR - American Depository Receipt
CP - Commercial Paper
See accompanying notes to financial statements.
10
<PAGE>
SMALL CAP VALUE FUND
PORTFOLIO OF INVESTMENTS
MARCH 31,1999
================================================================================
SHARES COMMON STOCKS -- 96.8% VALUE
- --------------------------------------------------------------------------------
AIRLINES -- 1.6%
15,000 American West Holdings Corp. - Class B(a) ... $ 285,937
------------
AUTOMOTIVE -- 0.7%
20,000 TBC Corp.(a) ................................ 121,250
------------
AUTOMOTIVE PARTS -- 0.2%
5,000 R & B, Inc.(a) .............................. 40,000
------------
BUILDING PRODUCTS -- 5.3%
6,000 Ameron International Corp. .................. 213,000
60,000 American Residential Services, Inc.(a) ...... 326,250
5,000 Building Materials Holding Corp.(a) ......... 50,625
20,000 Cameron Ashley Building Products(a) ......... 182,500
14,000 Patrick Industries, Inc. .................... 189,000
------------
961,375
------------
BUILDING SUPPLIES -- 1.1%
15,000 Wolohan Lumber Co. .......................... 191,250
------------
CAPITAL GOODS -- 7.9%
10,000 AGCO Corp. .................................. 65,625
6,000 Amcast Industrial Corp. ..................... 96,750
10,000 Baldwin Technology Co., Inc. - Class A(a) ... 32,500
20,000 Bridgeport Machines, Inc.(a) ................ 123,750
6,000 Central Sprinkler Corp.(a) .................. 85,500
10,000 Exponent, Inc. .............................. 56,250
10,000 Foster Wheeler Corp. ........................ 121,250
13,000 Gehl Co.(a) ................................. 191,750
20,000 Global Industrial Technologies, Inc.(a) ..... 210,000
10,000 Hardinge, Inc. .............................. 141,250
10,000 Kennametal, Inc. ............................ 175,000
30,000 Perini Corp.(a) ............................. 131,250
------------
1,430,875
------------
CHEMICALS -- 0.9%
20,000 Wellman, Inc. ............................... 177,500
------------
ELECTRONICS -- 3.5%
16,760 Bell Industries, Inc.(a) .................... 173,885
10,000 CHS Electronics, Inc.(a) .................... 31,875
8,000 Cherry Corp. - Class A(a) ................... 108,000
6,000 Cherry Corp. - Class B(a) ................... 74,250
12,000 ESCO Electronics Corp.(a) ................... 108,000
20,000 Pioneer-Standard Electronics, Inc. .......... 131,250
------------
627,260
------------
11
<PAGE>
SMALL CAP VALUE FUND (CONTINUED)
================================================================================
SHARES COMMON STOCKS -- 96.8% (CONTINUED) VALUE
- --------------------------------------------------------------------------------
ENERGY -- 3.3%
14,000 Castle Energy Corp.(a) ...................... $ 224,000
20,000 Trico Marine Services, Inc.(a) .............. 113,750
18,000 Veritas DGC, Inc.(a) ........................ 255,375
------------
593,125
------------
FINANCIAL SERVICES -- 0.8%
20,000 EZCORP, Inc. - Class A(a) ................... 137,500
------------
FOOD -- 1.9%
12,000 Fleming Cos., Inc. .......................... 102,750
20,000 M&F Worldwide Corp.(a) ...................... 140,000
12,000 Nash-Finch Co. .............................. 100,500
------------
343,250
------------
FURNITURE -- 0.9%
12,000 Flexsteel Industries, Inc. .................. 157,500
------------
HEALTH CARE -- 2.2%
23,000 Beverley Enterprises, Inc.(a) ............... 117,875
5,000 Integrated Health Services, Inc. ............ 27,500
50,000 NovaCare, Inc.(a) ........................... 87,500
33,000 PhyCor, Inc.(a) ............................. 156,750
------------
389,625
------------
HOUSING -- 6.5%
11,000 Beazer Homes USA, Inc.(a) ................... 231,000
18,000 Engle Homes, Inc. ........................... 189,000
30,000 Hovnanian Enterprises Inc. - Class A(a) ..... 225,000
15,000 M/I Schottenstein Homes, Inc.(a) ............ 266,250
6,000 Ryland Group, Inc. (The) .................... 151,875
20,000 Southern Energy Homes, Inc.(a) .............. 107,500
------------
1,170,625
------------
INSURANCE -- 1.8%
5,000 Chartwell Re Corp. .......................... 86,250
2,000 LandAmerica Financial Group, Inc. ........... 58,000
3,000 Stewart Information Services Corp. .......... 100,688
3,000 Trenwick Group, Inc. ........................ 84,375
------------
329,313
------------
METALS -- 5.5%
20,000 Ampco-Pittsburgh Corp. ...................... 197,500
15,000 Atchison Casting Corp.(a) ................... 120,937
30,000 Bayou Steel Corp.(a) ........................ 93,750
3,500 Cleveland-Cliffs, Inc. ...................... 119,219
4,000 Commercial Metals Co. ....................... 80,000
8,000 National Steel Corp. - Class B(a) ........... 66,000
7,000 Quanex Corp. ................................ 108,500
8,000 Texas Industries, Inc. ...................... 198,500
------------
984,406
------------
12
<PAGE>
SMALL CAP VALUE FUND (CONTINUED)
================================================================================
SHARES COMMON STOCKS -- 96.8% (CONTINUED) VALUE
- --------------------------------------------------------------------------------
MISCELLANEOUS -- 12.0%
14,000 Boykin Lodging Co. .......................... $ 168,000
30,000 CNS, Inc.(a) ................................ 97,500
25,000 Eagle Geophysical, Inc.(a) .................. 95,312
12,000 Gibson Greetings, Inc.(a) ................... 87,750
30,000 Heilig - Meyers Co. ......................... 155,625
15,000 Hvide Marine, Inc.(a) ....................... 64,688
12,000 Industrial Distribution Group, Inc.(a) ...... 63,000
17,000 K2, Inc. .................................... 133,875
2,250 Lakes Gaming, Inc.(a) ....................... 18,422
60,000 Loewen Group, Inc. (The) .................... 108,750
9,000 Park Place Entertainment Corp.(a) ........... 68,062
20,000 Pool Energy Services Co.(a) ................. 306,250
20,000 Pride International, Inc.(a) ................ 165,000
25,000 Stolt Comex Seaway, SA(a) (ADR) ............. 209,375
20,000 Stolt-Nielsen SA ............................ 216,250
10,000 Titanium Metals Corp. ....................... 57,500
20,000 York Group, Inc. (The) ...................... 147,500
------------
2,162,859
------------
OFFICE SUPPLIES-- 0.2%
5,000 Olsten Corp. ................................ 30,937
------------
POLLUTION -- 0.6%
25,000 Kaneb Services, Inc.(a) ..................... 101,562
------------
PUBLISHING -- 0.4%
12,000 PrimeSource Corp. ........................... 67,500
------------
REAL ESTATE -- 16.2%
12,000 Berkshire Realty Company, Inc. .............. 134,250
11,000 Brandywine Realty Trust ..................... 178,750
5,000 Commercial Net Lease Realty ................. 55,938
8,000 Crown American Realty Trust ................. 52,000
7,000 EastGroup Properties, Inc. .................. 112,875
20,000 Equity Inns, Inc. ........................... 170,000
2,000 First Washington Realty Trust, Inc. ......... 42,875
5,000 Health Care REIT, Inc. ...................... 107,500
3,407 Healthcare Realty Trust, Inc. ............... 64,733
22,000 Jameson Inns, Inc. .......................... 199,375
3,000 Kranzco Realty Trust ........................ 35,437
5,000 Mid-America Apartment Communities, Inc. ..... 106,875
2,400 New Plan Excel Realty Trust ................. 46,050
7,000 Pacific Gulf Properties, Inc. ............... 126,000
3,970 Prime Retail, Inc. .......................... 34,738
10,000 Prison Realty Corp. ......................... 174,375
20,000 RFS Hotel Investors, Inc. ................... 231,250
12,000 Ramco-Gershenson Properties Trust ........... 191,250
3,000 Sovran Self Storage, Inc. ................... 69,938
30,000 Sunstone Hotel Investors, Inc. .............. 215,625
13
<PAGE>
SMALL CAP VALUE FUND (CONTINUED)
================================================================================
SHARES COMMON STOCKS -- 96.8% (CONTINUED) VALUE
- --------------------------------------------------------------------------------
21,000 Thornburg Mortgage Asset Corp. .............. $ 181,125
5,000 TriNet Corporate Realty Trust, Inc. ......... 126,875
35,000 Winston Hotels, Inc. ........................ 282,187
------------
2,940,021
------------
RESTAURANTS -- 1.9%
31,000 Cooker Restaurant Corp. ..................... 160,813
28,000 Landry's Seafood Restaurants, Inc.(a) ....... 179,375
------------
340,188
------------
RETAIL -- 11.1%
10,000 Blair Corp. ................................. 157,500
28,000 Bon-Ton Stores, Inc. (The)(a) ............... 206,500
14,000 Burlington Industries, Inc.(a) .............. 92,750
20,000 CompuCom Systems, Inc.(a) ................... 58,750
18,000 Duckwall-ALCO Stores, Inc.(a) ............... 175,500
30,000 Friedman's, Inc. - Class A(a) ............... 270,000
15,000 HomeBase, Inc.(a) ........................... 66,563
17,900 Jan Bell Marketing, Inc.(a) ................. 76,075
6,000 Marsh Supermarkets, Inc. - Class B .......... 71,250
15,000 Movie Gallery, Inc.(a) ...................... 79,687
40,000 PharMerica, Inc.(a) ......................... 200,000
14,000 REX Stores Corp.(a) ......................... 161,875
7,000 Sportman's Guide, Inc. (The)(a) ............. 48,125
3,000 Supreme International Corp.(a) .............. 29,250
25,000 Syms Corp.(a) ............................... 185,937
18,000 Windmere-Durable Holdings, Inc. ............. 126,000
------------
2,005,762
------------
TECHNOLOGY -- 3.4%
47,000 Kentek Information Systems, Inc. ............ 317,250
7,000 Miami Computer Supply Corp.(a) .............. 139,563
15,000 Nam Tai Electronics, Inc. (ADR) ............. 150,000
------------
606,813
------------
TOBACCO -- 0.4%
17,000 Standard Commercial Corp. ................... 80,750
------------
TRANSPORTATION -- 3.8%
15,000 Halter Marine Group, Inc.(a) ................ 87,188
23,000 Offshore Logistics, Inc.(a) ................. 267,375
11,000 Pittston BAX Group .......................... 76,312
10,000 RailTex, Inc.(a) ............................ 113,750
18,000 Rural/Metro Corp.(a) ........................ 142,875
------------
687,500
------------
TRUCKING -- 2.4%
30,000 Arkansas Best Corp.(a) ...................... 204,375
10,000 Old Dominion Freight Line, Inc.(a) .......... 113,750
7,000 Roadway Express, Inc. ....................... 119,438
------------
437,563
------------
14
<PAGE>
SMALL CAP VALUE FUND (CONTINUED)
================================================================================
SHARES COMMON STOCKS -- 96.8% (CONTINUED) VALUE
- --------------------------------------------------------------------------------
UTILITY -- 0.3%
12,500 York Research Corp.(a) ...................... $ 61,719
------------
TOTAL COMMON STOCKS (COST $20,325,434) ...... $ 17,463,965
------------
================================================================================
SHARES PREFERRED STOCK -- 0.7% VALUE
- --------------------------------------------------------------------------------
4,200 Bradley Real Estate, Inc., 8.400% ........... $ 94,500
2,000 Prime Retail, Inc., 8.500% .................. 32,000
------------
TOTAL PREFERRED STOCKS (COST $147,512) ...... $ 126,500
------------
TOTAL INVESTMENTS AT VALUE -- 97.5%
(COST $20,472,946) ........................ $ 17,590,465
OTHER ASSETS IN EXCESS OF LIABILITIES -- 2.5% 449,208
------------
NET ASSETS -- 100.0% ........................ $ 18,039,673
============
(a) Non-income producing security.
See accompanying notes to financial statements.
15
<PAGE>
BALANCED FUND
PORTFOLIO OF INVESTMENTS
MARCH 31,1999
================================================================================
SHARES COMMON STOCKS -- 51.6% VALUE
- --------------------------------------------------------------------------------
AIRLINES -- 1.0%
5,250 Comair Holdings, Inc. ....................... $ 124,031
------------
AUTOMOTIVE -- 2.6%
3,000 Ford Motor Co. .............................. 170,250
3,500 PACCAR Inc. ................................. 144,156
------------
314,406
------------
BUILDING MATERIALS -- 0.9%
2,000 Martin Marietta Materials, Inc. ............. 114,125
------------
CAPITAL GOODS -- 1.1%
7,500 AGCO Corp. .................................. 49,218
2,000 Caterpillar, Inc. ........................... 91,875
------------
141,093
------------
CHEMICALS -- 0.9%
2,000 Potash Corp. of Saskatchewan Inc. (ADR) ..... 107,000
------------
ELECTRONICS -- 1.5%
3,050 Raytheon Co. - Class B ...................... 178,806
------------
ENERGY -- 4.0%
8,000 Diamond Offshore Drilling, Inc. ............. 253,000
8,500 Tidewater, Inc. ............................. 219,937
------------
472,937
------------
FINANCIAL SERVICES -- 2.6%
3,000 Ambac Financial Group, Inc. ................. 162,000
2,000 Chase Manhattan Corp. (The) ................. 162,625
------------
324,625
------------
GOVERNMENT SPONSORED ENTERPRISES -- 1.1%
2,000 Federal National Mortgage Association ....... 138,500
------------
HEALTH CARE -- 1.1%
7,000 Columbia/HCA Healthcare Corp. ............... 132,563
------------
HOUSING -- 1.4%
15,625 Clayton Homes, Inc. ......................... 172,851
------------
INSURANCE -- 6.6%
4,000 AFLAC, Inc. ................................. 217,750
8,000 Allstate Corp. (The) ........................ 296,500
6,382 Conseco, Inc. ............................... 197,044
8,800 Frontier Insurance Group, Inc. .............. 104,500
------------
815,794
------------
16
<PAGE>
BALANCED FUND (CONTINUED)
================================================================================
SHARES COMMON STOCKS -- 51.6% (CONTINUED) VALUE
- --------------------------------------------------------------------------------
MEDIA -- 3.9%
17,500 News Corp. Ltd. (The) (ADR) ................. $ 481,250
------------
MISCELLANEOUS -- 1.3%
9,500 Convergys Corp. ............................. 162,687
------------
MORTGAGE SERVICES -- 2.3%
3,000 Countrywide Credit Industries, Inc. ......... 112,500
5,000 MGIC Investment Corp. ....................... 175,313
------------
287,813
------------
RESTAURANTS -- 4.0%
7,000 Tricon Global Restaurants, Inc.(a) .......... 491,750
------------
REAL ESTATE -- 3.9%
8,000 Duke Realty Investments, Inc. ............... 172,000
6,000 Simon Property Group, Inc. .................. 164,625
5,000 Storage USA, Inc. ........................... 141,875
------------
478,500
------------
TECHNOLOGY -- 3.2%
4,000 ECI Telecommunications Ltd. (ADR) ........... 140,000
5,000 NCR Corp.(a) ................................ 250,000
------------
390,000
------------
TELECOMMUNICATIONS -- 3.4%
5,000 AT&T Corp. .................................. 399,063
450 Sprint Corp. (PCS Group) .................... 19,941
------------
419,004
------------
TOBACCO -- 2.6%
9,000 Philip Morris Cos., Inc. .................... 316,688
------------
UTILITIES -- 2.2%
9,000 DPL Inc. .................................... 148,500
5,000 Southern Co. ................................ 116,563
------------
265,063
------------
TOTAL COMMON STOCKS (COST $6,018,451) ....... $ 6,329,486
------------
17
<PAGE>
BALANCED FUND (CONTINUED)
================================================================================
PAR VALUE FIXED INCOME OBLIGATIONS -- 34.0% VALUE
- --------------------------------------------------------------------------------
$ 300,000 U.S. Treasury Note, 5.875%, 11/15/99 ........ $ 301,875
300,000 Federal Home Loan Bank, 5.500%, 7/14/00 ..... 300,869
250,000 Federal National Mortgage Association,
5.620%, 3/15/01 ........................... 251,856
250,000 Merrill Lynch & Co., 6.050%, 5/11/01 ........ 251,813
300,000 PHH Corp., 7.020%, 11/9/01 .................. 307,272
300,000 EI Dupont De Nemours, 6.500%, 9/01/02 ....... 308,564
300,000 Federal National Mortgage Association,
5.250%, 1/15/03 ........................... 297,678
300,000 Federal Home Loan Bank, 5.620%, 2/25/04 ..... 296,250
300,000 Federal Home Loan Bank, 6.100%, 4/29/04 ..... 298,794
300,000 Commercial Credit Co., 6.500%, 8/01/04 ...... 305,280
300,000 U.S. Treasury Note, 7.250%, 8/15/04 ......... 327,469
300,000 U.S. Treasury Note, 6.500%, 8/15/05 ......... 318,469
300,000 U.S. Treasury Note, 6.500%, 10/15/06 ........ 319,688
300,000 Washington Water Power, 5.990%, 12/10/07 .... 291,360
------------
TOTAL FIXED INCOME OBLIGATIONS (COST $4,153,786) $ 4,177,237
------------
================================================================================
FACE AMOUNT MONEY MARKET AND EQUIVALENTS -- 12.3% VALUE
- --------------------------------------------------------------------------------
$ 600,000 Armstrong Funding CP, 4/1/99 ................ $ 600,000
300,000 Vulcan Materials CP, 4/14/99 ................ 299,464
296,000 Progress Funding CP, 4/19/99 ................ 295,201
309,725 Firstar Treasury Fund ....................... 309,725
------------
TOTAL MONEY MARKET AND EQUIVALENTS
(COST $1,502,637) ........................... $ 1,504,390
------------
TOTAL INVESTMENTS AT VALUE -- 97.9%
(COST $11,674,874) .......................... $ 12,011,113
OTHER ASSETS IN EXCESS OF LIABILITIES -- 2.1% 265,845
------------
NET ASSETS -- 100.0% ........................ $ 12,276,958
============
(a) Non-income producing security.
ADR - American Depository Receipt
CP - Commercial Paper
See accompanying notes to financial statements.
18
<PAGE>
INTERNATIONAL VALUE FUND
PORTFOLIO OF INVESTMENTS
MARCH 31,1999
================================================================================
SHARES COMMON STOCKS -- 98.6% VALUE
- --------------------------------------------------------------------------------
AUSTRALIA -- 1.5%
2,900 Brambles Industries Limited ................. $ 73,410
15,000 Cable & Wireless Optus Limited(a) ........... 34,764
------------
108,174
------------
BRAZIL -- 5.3%
43,105,000 Tele Celular Sul Participacoes SA--Pfd ...... 83,194
1,500,000 Tele Centro Sul Participacoes SA(a) ......... 7,085
1,105,000 Tele Centro Sul Participacoes SA--Pfd ....... 10,309
84,105,000 Tele Nordeste Celular Participacoes SA--Pfd . 90,726
1,500,000 Tele Norte Leste Participacoes SA ........... 12,393
1,105,000 Tele Norte Leste Participacoes SA--Pfd ...... 16,881
2,150,000 Telerj Celular SA ........................... 36,105
1,500,000 Telesp Celular Participacoes SA ............. 8,475
1,105,000 Telesp Celular Participacoes SA--Pfd ........ 9,214
2,790,200 Telesp Celular SA ........................... 66,704
1,500,000 Telesp Celular Participacoes SA ............. 19,679
1,105,000 Telesp Participacoes SA--Pfd ................ 23,202
1,500,000 Tele Sudeste Celular Participacoes SA ....... 5,335
1,105,000 Tele Sudeste Celular Participacoes SA--Pfd .. 4,633
------------
393,935
------------
CANADA -- 6.5%
7,800 Abitibi Consolidated Inc. ................... 69,606
4,690 BCE, Inc. ................................... 206,939
3,740 BCE Mobile Communications Inc.(a) ........... 99,878
1,740 Northern Telecom Limited .................... 108,117
------------
484,540
------------
DENMARK -- 0.6%
380 Columbus IT Partner A/S(a) .................. 44,047
------------
EUROPEAN COMMUNITY -- 5.2%
2,560 Banco Santander SA .......................... 52,512
260 Castorama Dubois ............................ 54,455
1,400 Fortis (NL) NV .............................. 53,732
5,400 Lusomundo-SGPS SA ........................... 58,298
600 Societe Generale ............................ 115,301
180 SAP AG ...................................... 57,424
------------
391,722
------------
FINLAND -- 0.6%
910 Pohjola Insurance Group ..................... 48,139
------------
19
<PAGE>
INTERNATIONAL VALUE FUND (CONTINUED)
================================================================================
SHARES COMMON STOCKS -- 98.6% (CONTINUED) VALUE
- --------------------------------------------------------------------------------
FRANCE -- 8.2%
500 Axa ......................................... $ 66,287
330 Bouygues SA ................................. 91,561
92 Carrefour SA ................................ 70,917
1,100 Equant(a) ................................... 57,896
870 France Telecom SA ........................... 70,350
470 Total SA - Class B .......................... 168,223
1,400 Transiciel SA(a) ............................ 83,604
------------
608,838
------------
GERMANY -- 5.0%
380 Fresenius AG ................................ 75,075
4,100 Hoechst AG .................................. 177,718
940 Mannesmann AG ............................... 120,054
------------
372,847
------------
GREECE -- 0.3%
900 Panafon Hellenic Telecom SA(a) .............. 23,357
------------
HONG KONG -- 2.3%
26,000 China Telecom (HK) Ltd.(a) .................. 43,280
8,000 Hutchison Whampoa Ltd. ...................... 62,971
5,000 Johnson Electric Holdings Limited ........... 14,098
18,000 SmarTone Telecommunications Holdings Limited 52,145
------------
172,494
------------
ITALY -- 5.5%
26,000 Banca Nazionale del Lavoro(a) ............... 90,946
6,430 Istituto Bancario San Paolo di Torino ....... 104,475
20,100 Telecom Italia SPA .......................... 213,528
------------
408,949
------------
JAPAN -- 11.1%
20 DDI Corp. ................................... 94,571
8,000 Fujitsu Limited ............................. 128,481
38,000 Kawasaki Steel Corp. ........................ 64,173
11,000 Komatsu Limited ............................. 56,565
6 Nippon Telegraph & Telephone Corp. .......... 58,769
14,000 Nissan Motor Co., Limited(a) ................ 54,378
3,000 Pioneer Electronic Corp. .................... 55,729
900 Softbank Corp. .............................. 100,920
700 Sony Corporation ............................ 64,722
1,000 Tokyo Electron Limited ...................... 51,761
3,000 Yamanouchi Pharmaceutical Co., Limited ...... 94,993
------------
825,062
------------
MEXICO --1.1%
24,600 Telefonos De Mexico SA ...................... 81,088
------------
20
<PAGE>
INTERNATIONAL VALUE FUND (CONTINUED)
================================================================================
SHARES COMMON STOCKS -- 98.6% (CONTINUED) VALUE
- --------------------------------------------------------------------------------
NETHERLANDS -- 3.6%
3,300 ING Groep NV ................................ $ 181,875
400 TNT Post Group NV ........................... 12,048
1,800 VNU NV ...................................... 70,152
------------
264,075
------------
NEW ZEALAND -- 1.6%
34,000 Auckland International Airport Ltd. ......... 49,682
14,000 Telecom Corporation of New Zealand Ltd. ..... 68,092
------------
117,774
------------
PORTUGAL -- 0.6%
300 Telecel-Communicacaoes Pessoais SA .......... 47,772
------------
SINGAPORE -- 1.4%
6,000 Oversea-Chinese Banking Corporation Ltd. .... 40,613
9,000 Singapore Airlines Ltd. ..................... 65,085
------------
105,698
------------
SOUTH KOREA -- 1.5%
103 SK Telecom Co. Limited ...................... 68,331
1,800 Korea Electric Power Corporation ............ 43,423
------------
111,754
------------
SPAIN -- 3.4%
1,338 Acciona SA .................................. 68,600
4,391 Telefonica de Espana ........................ 186,238
------------
254,838
------------
SWEDEN -- 4.1%
8,530 Investment AB Bure .......................... 105,808
5,300 Skandia Forsakrings AB ...................... 98,614
4,000 Telefonaktiebolaget LM Ericsson ............. 97,288
------------
301,710
------------
SWITZERLAND -- 4.4%
116 Novartis .................................... 188,174
440 UBS AG ...................................... 138,234
------------
326,408
------------
21
<PAGE>
INTERNATIONAL VALUE FUND (CONTINUED)
================================================================================
SHARES COMMON STOCKS -- 98.6% (CONTINUED) VALUE
- --------------------------------------------------------------------------------
UNITED KINGDOM -- 23.8%
1,800 Astrazeneca Group Plc ....................... $ 85,022
2,200 Barclays Plc ................................ 63,962
10,180 British Aerospace Plc ....................... 67,994
8,000 British Airways Plc ......................... 55,758
6,000 British Telecommunications Plc .............. 98,601
2,100 EMAP Plc .................................... 41,257
3,900 Energis Plc ................................. 105,706
4,000 GKN Plc ..................................... 60,988
2,900 Glaxo Wellcome Plc .......................... 97,047
20,400 National Grid Group Plc ..................... 148,687
4,000 National Westminster Bank Plc ............... 92,984
14,900 Rentokil Initial Plc ........................ 92,304
4,000 Reuters Group Plc ........................... 58,535
4,390 Royal Bank of Scotland Group Plc ............ 95,742
26,600 Shell Transport & Trading Co. ............... 179,812
4,160 SmithKline Beecham Plc ...................... 60,876
13,800 Stagecoach Holding Plc ...................... 49,846
28,000 Taylor Nelson Sofres Plc .................... 62,490
8,500 Unilever Plc ................................ 79,379
5,000 Vodafone Group Plc(a) ....................... 93,387
6,500 W.H. Smith Group Plc ........................ 69,723
------------
1,760,100
------------
CLOSED-END FOREIGN FUNDS -- 1.0%
890 Societe Generale Baltic Republics Fund(a) ... 75,650
------------
TOTAL INVESTMENTS AT VALUE -- 98.6%
(COST $6,620,209) ......................... $ 7,328,971
OTHER ASSETS IN EXCESS OF LIABILITIES -- 1.4% 106,497
------------
NET ASSETS -- 100% .......................... $ 7,435,468
============
(a) Non-income producing security.
Pfd - Preferred
See accompanying notes to financial statements.
22
<PAGE>
<TABLE>
<CAPTION>
DEAN FAMILY OF FUNDS
STATEMENTS OF ASSETS AND LIABILITIES
MARCH 31,1999
===========================================================================================================================
LARGE CAP SMALL CAP BALANCED INTERNATIONAL
VALUE FUND VALUE FUND FUND VALUE FUND
- ---------------------------------------------------------------------------------------------------------------------------
ASSETS
Investments in securities:
<S> <C> <C> <C> <C>
At amortized cost ................................... $ 9,815,363 $ 20,472,946 $ 11,674,874 $ 6,620,209
============ ============ ============ ============
At value (Note 2) ................................... $ 9,929,237 $ 17,590,465 $ 12,011,113 $ 7,328,971
Cash ................................................... -- -- -- 18,873
Net unrealized appreciation on forward
foreign currency exchange contracts (Note 6) ........ -- -- -- 7,238
Dividends and interest receivable ...................... 15,688 49,378 75,311 29,293
Receivable for securities sold ......................... 54,878 428,898 224,367 183,899
Receivable for capital shares sold ..................... 948 6,883 19,669 6,580
Receivable from Adviser (Note 4) ....................... -- -- -- 11,240
Organization expenses, net (Note 2) .................... 9,726 9,726 9,726 --
Other assets ........................................... 17,043 27,557 16,498 10,408
------------ ------------ ------------ ------------
TOTAL ASSETS ........................................ 10,027,520 18,112,907 12,356,684 7,596,502
------------ ------------ ------------ ------------
LIABILITIES
Bank overdraft denominated in foreign currencies
(at cost $92,523) ................................... -- -- -- 92,586
Dividends payable ...................................... 237 -- 3,605 --
Payable for securities purchased ....................... 153,425 -- 35,370 35,564
Payable for capital shares redeemed .................... -- 29,469 3,327 --
Payable to affiliates (Note 4) ......................... 8,013 18,777 12,916 8,150
Other liabilities ...................................... 18,862 24,988 24,508 24,734
------------ ------------ ------------ ------------
TOTAL LIABILITIES ................................... 180,537 73,234 79,726 161,034
------------ ------------ ------------ ------------
NET ASSETS ............................................. $ 9,846,983 $ 18,039,673 $ 12,276,958 $ 7,435,468
============ ============ ============ ============
Net assets consist of:
Paid-in capital ........................................ $ 9,903,628 $ 21,390,769 $ 12,148,183 $ 6,841,967
Undistributed net investment income .................... -- 50,200 -- --
Accumulated net realized losses from security
transactions ........................................ (170,519) (518,815) (207,464) (118,634)
Net unrealized appreciation (depreciation)
on investments ...................................... 113,874 (2,882,481) 336,239 708,762
Net unrealized appreciation on translation of assets and
liabilities in foreign currencies ................... -- -- -- 3,373
------------ ------------ ------------ ------------
Net assets ............................................. $ 9,846,983 $ 18,039,673 $ 12,276,958 $ 7,435,468
============ ============ ============ ============
</TABLE>
23
<PAGE>
<TABLE>
<CAPTION>
DEAN FAMILY OF FUNDS
STATEMENTS OF ASSETS AND LIABILITIES (CONTINUED)
MARCH 31,1999
===========================================================================================================================
LARGE CAP SMALL CAP BALANCED INTERNATIONAL
VALUE FUND VALUE FUND FUND VALUE FUND
- ---------------------------------------------------------------------------------------------------------------------------
PRICING OF CLASS A SHARES
<S> <C> <C> <C> <C>
Net assets applicable to Class A shares ................ $ 9,315,112 $ 15,479,055 $ 10,391,582 $ 5,981,899
============ ============ ============ ============
Shares of beneficial interest outstanding (unlimited
number of shares authorized, no par value) .......... 874,485 1,692,130 966,243 482,029
============ ============ ============ ============
Net asset value and redemption price per share (Note 2). $ 10.65 $ 9.15 $ 10.75 $ 12.41
============ ============ ============ ============
Maximum offering price per share (Note 2) .............. $ 11.24 $ 9.66 $ 11.35 $ 13.10
============ ============ ============ ============
PRICING OF CLASS C SHARES
Net assets applicable to Class C shares ................ $ 531,871 $ 2,560,618 $ 1,885,376 $ 1,453,569
============ ============ ============ ============
Shares of beneficial interest outstanding (unlimited
number of shares authorized, no par value) .......... 50,312 282,856 175,776 118,347
============ ============ ============ ============
Net asset value, offering price and redemption price
per share (Note 2) .................................. $ 10.57 $ 9.05 $ 10.73 $ 12.28
============ ============ ============ ============
</TABLE>
See accompanying notes to financial statements.
24
<PAGE>
<TABLE>
<CAPTION>
DEAN FAMILY OF FUNDS
STATEMENTS OF OPERATIONS
FOR THE YEAR ENDED MARCH 31,1999
========================================================================================================================
LARGE CAP SMALL CAP BALANCED INTERNATIONAL
VALUE FUND VALUE FUND FUND VALUE FUND
- ------------------------------------------------------------------------------------------------------------------------
INVESTMENT INCOME
<S> <C> <C> <C> <C>
Dividends (net of foreign withholding taxes of $10,788
for the International Value Fund) ................. $ 212,107 $ 532,481 $ 139,858 $ 78,025
Interest ............................................. 3,042 10,459 282,087 --
----------- ----------- ----------- -----------
TOTAL INVESTMENT INCOME ........................... 215,149 542,940 421,945 78,025
----------- ----------- ----------- -----------
EXPENSES
Investment advisory fees (Note 4) .................... 93,051 201,945 115,850 68,092
Accounting services fees (Note 4) .................... 36,000 36,000 36,000 36,000
Shareholder services and transfer agent fees -
Class A (Note 4) .................................. 14,400 14,400 14,400 14,400
Class C (Note 4) .................................. 14,400 14,400 14,400 14,400
Custodian fees ....................................... 10,563 26,678 11,168 35,706
Registration fees - Common ........................... 4,074 4,724 4,429 17,015
Registration fees - Class A .......................... 6,731 7,315 7,034 4,764
Registration fees - Class C .......................... 6,797 7,064 6,878 4,656
Administration fees (Note 4) ......................... 12,000 20,246 12,403 12,000
Postage and supplies ................................. 7,996 19,032 8,198 5,832
Trustees' fees and expenses .......................... 7,769 7,769 7,769 7,769
Professional fees .................................... 7,500 7,500 7,500 7,500
Reports to shareholders .............................. 5,170 12,157 5,356 5,282
Insurance expense .................................... 1,600 3,445 1,669 548
Amortization of organization expenses (Note 2) ....... 3,154 3,154 3,154 --
Distribution expenses - Class A (Note 4) ............. -- 8,759 -- --
Other expenses ....................................... 1,872 5,058 3,308 13,460
----------- ----------- ----------- -----------
TOTAL EXPENSES .................................... 233,077 399,646 259,516 247,424
Fees waived and/or common expenses
reimbursed by Adviser (Note 4) .................... (40,548) (8,323) (27,553) (117,838)
Class C expenses reimbursed by Adviser (Note 4) ...... (17,974) (1,297) (5,073) (8,363)
----------- ----------- ----------- -----------
NET EXPENSES ...................................... 174,555 390,026 226,890 121,223
----------- ----------- ----------- -----------
NET INVESTMENT INCOME (LOSS) ............................ 40,594 152,914 195,055 (43,198)
----------- ----------- ----------- -----------
REALIZED AND UNREALIZED GAINS (LOSSES)
Net realized losses from:
Security transactions ............................. (170,647) (32,334) (127,866) (115,075)
Foreign currency transactions (Note 5) ............ -- -- -- (124,824)
Net change in unrealized appreciation/depreciation on:
Investments ....................................... (964,977) (5,568,898) (350,073) 562,790
Foreign currency translation (Note 5) ............. -- -- -- (3,203)
----------- ----------- ----------- -----------
NET REALIZED AND UNREALIZED
GAINS (LOSSES) ON INVESTMENTS AND
FOREIGN CURRENCIES ................................... (1,135,624) (5,601,232) (477,939) 319,688
----------- ----------- ----------- -----------
NET INCREASE (DECREASE) IN NET ASSETS
FROM OPERATIONS ...................................... $(1,095,030) $(5,448,318) $ (282,884) $ 276,490
=========== =========== =========== ===========
</TABLE>
See accompanying notes to financial statements.
25
<PAGE>
<TABLE>
<CAPTION>
DEAN FAMILY OF FUNDS
STATEMENTS OF CHANGES IN NET ASSETS
=============================================================================================================================
LARGE CAP VALUE FUND SMALL CAP VALUE FUND
----------------------------- -----------------------------
YEAR YEAR YEAR YEAR
ENDED ENDED ENDED ENDED
MARCH 31, MARCH 31, MARCH 31, MARCH 31,
1999 1998 1999 1998
- -----------------------------------------------------------------------------------------------------------------------------
FROM OPERATIONS:
<S> <C> <C> <C> <C>
Net investment income ................................. $ 40,594 $ 15,666 $ 152,914 $ 42,008
Net realized gains (losses) from security
transactions ....................................... (170,647) 199,457 (32,334) 1,496,720
Net change in unrealized appreciation/depreciation
on investments ..................................... (964,977) 1,078,851 (5,568,898) 2,686,417
------------ ------------ ------------ ------------
Net increase (decrease) in net assets from operations .... (1,095,030) 1,293,974 (5,448,318) 4,225,145
------------ ------------ ------------ ------------
DISTRIBUTIONS TO SHAREHOLDERS:
From net investment income, Class A ................... (40,478) (15,639) (105,005) (27,790)
From net investment income, Class C ................... (116) (27) (11,617) (310)
From net realized gains, Class A ...................... (101,336) (93,134) (1,122,796) (679,224)
From net realized gains, Class C ...................... (4,193) (666) (154,410) (26,771)
------------ ------------ ------------ ------------
Decrease in net assets from distributions
to shareholders ....................................... (146,123) (109,466) (1,393,828) (734,095)
------------ ------------ ------------ ------------
FROM CAPITAL SHARE TRANSACTIONS:
Class A
Proceeds from shares sold ............................. 3,174,933 7,408,080 3,036,967 16,889,610
Net asset value of shares issued in
reinvestment of distributions to shareholders ...... 129,680 100,180 1,100,297 609,751
Payments for shares redeemed .......................... (447,120) (1,043,356) (2,030,441) (1,485,185)
------------ ------------ ------------ ------------
Net increase in net assets from Class A
share transactions .................................... 2,857,493 6,464,904 2,106,823 16,014,176
------------ ------------ ------------ ------------
Class C
Proceeds from shares sold ............................. 422,413 125,961 1,994,365 1,324,235
Net asset value of shares issued in
reinvestment of distributions to shareholders ...... 4,298 690 157,601 26,186
Payments for shares redeemed .......................... (2,112) (4,019) (206,560) (59,057)
------------ ------------ ------------ ------------
Net increase in net assets from Class C
share transactions ................................. 424,599 122,632 1,945,406 1,291,364
------------ ------------ ------------ ------------
Net increase in net assets from capital share transactions 3,282,092 6,587,536 4,052,229 17,305,540
------------ ------------ ------------ ------------
TOTAL INCREASE (DECREASE) IN NET ASSETS .................. 2,040,939 7,772,044 (2,789,917) 20,796,590
NET ASSETS:
Beginning of year ..................................... 7,806,044 34,000 20,829,590 33,000
------------ ------------ ------------ ------------
End of year ........................................... $ 9,846,983 $ 7,806,044 $ 18,039,673 $ 20,829,590
============ ============ ============ ============
UNDISTRIBUTED NET INVESTMENT INCOME ...................... $ -- $ -- $ 50,200 $ 13,908
============ ============ ============ ============
</TABLE>
26
<PAGE>
<TABLE>
<CAPTION>
DEAN FAMILY OF FUNDS
STATEMENTS OF CHANGES IN NET ASSETS (CONTINUED)
=============================================================================================================================
LARGE CAP VALUE FUND SMALL CAP VALUE FUND
----------------------------- -----------------------------
YEAR YEAR YEAR YEAR
ENDED ENDED ENDED ENDED
MARCH 31, MARCH 31, MARCH 31, MARCH 31,
1999 1998 1999 1998
- -----------------------------------------------------------------------------------------------------------------------------
CAPITAL SHARE ACTIVITY:
Class A
<S> <C> <C> <C> <C>
Shares sold ........................................... 276,753 711,149 270,810 1,585,565
Shares issued in reinvestment of distributions
to shareholders .................................... 11,659 9,315 110,385 53,022
Shares redeemed ....................................... (42,215) (95,576) (203,409) (127,543)
------------ ------------ ------------ ------------
Net increase in shares outstanding .................... 246,197 624,888 177,786 1,511,044
Shares outstanding, beginning of year ................. 628,288 3,400 1,514,344 3,300
------------ ------------ ------------ ------------
Shares outstanding, end of year ....................... 874,485 628,288 1,692,130 1,514,344
============ ============ ============ ============
Class C
Shares sold ........................................... 38,912 11,518 178,737 111,598
Shares issued in reinvestment of distributions
to shareholders .................................... 388 64 15,961 2,283
Shares redeemed ....................................... (193) (377) (20,715) (5,008)
------------ ------------ ------------ ------------
Net increase in shares outstanding .................... 39,107 11,205 173,983 108,873
Shares outstanding, beginning of year ................. 11,205 -- 108,873 --
------------ ------------ ------------ ------------
Shares outstanding, end of year ....................... 50,312 11,205 282,856 108,873
============ ============ ============ ============
</TABLE>
See accompanying notes to financial statements.
27
<PAGE>
<TABLE>
<CAPTION>
DEAN FAMILY OF FUNDS
STATEMENTS OF CHANGES IN NET ASSETS
=============================================================================================================================
BALANCED FUND INTERNATIONAL VALUE FUND
----------------------------- -----------------------------
YEAR YEAR YEAR YEAR
ENDED ENDED ENDED ENDED
MARCH 31, MARCH 31, MARCH 31, MARCH 31,
1999 1998 1999 1998(a)
- -----------------------------------------------------------------------------------------------------------------------------
FROM OPERATIONS:
<S> <C> <C> <C> <C>
Net investment income (loss) .......................... $ 195,055 $ 103,458 $ (43,198) $ (4,849)
Net realized gains (losses) from:
Security transactions .............................. (127,866) 263,495 (115,075) 21,655
Foreign currency transactions ...................... -- -- (124,824) (1,319)
Net change in unrealized appreciation/depreciation on:
Investments ........................................ (350,073) 686,312 562,790 145,972
Foreign currency translation ....................... -- -- (3,203) 6,576
------------ ------------ ------------ ------------
Net increase (decrease) in net assets from operations . (282,884) 1,053,265 276,490 168,035
------------ ------------ ------------ ------------
DISTRIBUTIONS TO SHAREHOLDERS:
From net investment income, Class A ................... (176,745) (96,636) -- --
From net investment income, Class C ................... (18,310) (6,822) -- --
From net realized gains, Class A ...................... (243,853) (50,850) (15,554) --
From net realized gains, Class C ...................... (43,568) (4,822) (3,492) --
------------ ------------ ------------ ------------
Decrease in net assets from distributions
to shareholders ....................................... (482,476) (159,130) (19,046) --
------------ ------------ ------------ ------------
FROM CAPITAL SHARE TRANSACTIONS:
Class A
Proceeds from shares sold ............................. 4,763,587 7,467,827 4,672,561 1,135,513
Net asset value of shares issued in
reinvestment of distributions to shareholders ...... 391,315 142,246 14,769 --
Payments for shares redeemed .......................... (1,361,306) (1,219,159) (223,152) (308)
------------ ------------ ------------ ------------
Net increase in net assets from Class A
share transactions .................................... 3,793,596 6,390,914 4,464,178 1,135,205
------------ ------------ ------------ ------------
Class C
Proceeds from shares sold ............................. 1,087,900 1,017,191 1,334,040 79,905
Net asset value of shares issued in
reinvestment of distributions to shareholders ...... 56,830 11,331 3,359 --
Payments for shares redeemed .......................... (242,568) (11) (6,698) --
------------ ------------ ------------ ------------
Net increase in net assets from Class C
share transactions .................................... 902,162 1,028,511 1,330,701 79,905
------------ ------------ ------------ ------------
Net increase in net assets from capital share transactions 4,695,758 7,419,425 5,794,879 1,215,110
------------ ------------ ------------ ------------
TOTAL INCREASE IN NET ASSETS ............................. 3,930,398 8,313,560 6,052,323 1,383,145
NET ASSETS:
Beginning of period ................................... 8,346,560 33,000 1,383,145 --
------------ ------------ ------------ ------------
End of period ......................................... $ 12,276,958 $ 8,346,560 $ 7,435,468 $ 1,383,145
============ ============ ============ ============
</TABLE>
(a) Represents the period from the initial public offering of shares (October
13, 1997) to March 31, 1998.
28
<PAGE>
<TABLE>
<CAPTION>
DEAN FAMILY OF FUNDS
STATEMENTS OF CHANGES IN NET ASSETS (CONTINUED)
=============================================================================================================================
BALANCED FUND INTERNATIONAL VALUE FUND
----------------------------- -----------------------------
YEAR YEAR YEAR YEAR
ENDED ENDED ENDED ENDED
MARCH 31, MARCH 31, MARCH 31, MARCH 31,
1999 1998 1999 1998(a)
- -----------------------------------------------------------------------------------------------------------------------------
CAPITAL SHARE ACTIVITY:
Class A
<S> <C> <C> <C> <C>
Shares sold ........................................... 425,764 725,255 389,709 110,251
Shares issued in reinvestment of distributions
to shareholders .................................... 35,797 13,140 1,216 --
Shares redeemed ....................................... (124,361) (112,652) (19,119) (28)
------------ ------------ ------------ ------------
Net increase in shares outstanding .................... 337,200 625,743 371,806 110,223
Shares outstanding, beginning of period ............... 629,043 3,300 110,223 --
------------ ------------ ------------ ------------
Shares outstanding, end of period ..................... 966,243 629,043 482,029 110,223
============ ============ ============ ============
Class C
Shares sold ........................................... 98,933 93,039 111,186 7,443
Shares issued in reinvestment of distributions
to shareholders .................................... 5,214 1,041 279 --
Shares redeemed ....................................... (22,450) (1) (561) --
------------ ------------ ------------ ------------
Net increase in shares outstanding .................... 81,697 94,079 110,904 7,443
Shares outstanding, beginning of period ............... 94,079 -- 7,443 --
------------ ------------ ------------ ------------
Shares outstanding, end of period ..................... 175,776 94,079 118,347 7,443
============ ============ ============ ============
</TABLE>
(a) Represents the period from intial public offering of shares (October 13,
1997) to March 31, 1998.
See accompanying notes to financial statements.
29
<PAGE>
<TABLE>
<CAPTION>
DEAN FAMILY OF FUNDS
LARGE CAP VALUE FUND
FINANCIAL HIGHLIGHTS
=====================================================================================================================
PER SHARE DATA FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD
- ---------------------------------------------------------------------------------------------------------------------
CLASS A CLASS C
---------------------------- ----------------------------
YEAR FROM YEAR FROM
ENDED INCEPTION(A) ENDED INCEPTION(A)
MARCH 31, THROUGH MARCH 31, THROUGH
1999 MARCH 31, 1998 1999 MARCH 31, 1998
- ---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Net asset value at beginning of period ............ $ 12.21 $ 10.00 $ 12.16 $ 10.76
----------- ----------- ----------- -----------
Income (loss) from investment operations:
Net investment income (loss) ................... 0.05 0.03 (0.02) (0.01)
Net realized and unrealized gains (losses)
on investments .............................. (1.44) 2.36 (1.45) 1.56
----------- ----------- ----------- -----------
Total from investment operations .................. (1.39) 2.39 (1.47) 1.55
----------- ----------- ----------- -----------
Less distributions:
From net investment income ..................... (0.05) (0.03) (0.00) (0.00)
From net realized gains ........................ (0.12) (0.15) (0.12) (0.15)
----------- ----------- ----------- -----------
Total distributions ............................... (0.17) (0.18) (0.12) (0.15)
----------- ----------- ----------- -----------
Net asset value at end of period .................. $ 10.65 $ 12.21 $ 10.57 $ 12.16
=========== =========== =========== ===========
Total return(B) ................................... (11.48)% 24.11% (12.12)% 14.63%
=========== =========== =========== ===========
Net assets at end of period ....................... $ 9,315,112 $ 7,669,807 $ 531,871 $ 136,237
=========== =========== =========== ===========
Ratio of expenses to average net assets:(C)
Before fee waivers and/or expense reimbursements
by Adviser .................................. 2.29% 2.72% 8.53% 52.73%
After fee waivers and/or expense reimbursements
by Adviser .................................. 1.85% 1.84% 2.60% 2.59%
Ratio of net investment income (loss)
to average net assets(C) ....................... 0.46% 0.30% (0.31)% (0.55)%
Portfolio turnover rate(C) ........................ 55% 54% 55% 54%
(A) Initial public offering date 5-28-97 8-19-97
</TABLE>
(B) Total returns shown exclude the effect of applicable sales loads and are
not annualized.
(C) Annualized.
See accompanying notes to financial statements.
30
<PAGE>
<TABLE>
<CAPTION>
DEAN FAMILY OF FUNDS
SMALL CAP VALUE FUND
FINANCIAL HIGHLIGHTS
=====================================================================================================================
PER SHARE DATA FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD
- ---------------------------------------------------------------------------------------------------------------------
CLASS A CLASS C
---------------------------- ----------------------------
YEAR FROM YEAR FROM
ENDED INCEPTION(A) ENDED INCEPTION(A)
MARCH 31, THROUGH MARCH 31, THROUGH
1999 MARCH 31, 1998 1999 MARCH 31, 1998
- ---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Net asset value at beginning of period ............ $ 12.84 $ 10.00 $ 12.79 $ 10.95
----------- ----------- ----------- -----------
Income (loss) from investment operations:
Net investment income (loss) ................... 0.08 0.03 0.01 (0.02)
Net realized and unrealized gains (losses)
on investments .............................. (3.03) 3.30 (3.03) 2.33
----------- ----------- ----------- -----------
Total from investment operations .................. (2.95) 3.33 (3.02) 2.31
----------- ----------- ----------- -----------
Less distributions:
From net investment income ..................... (0.06) (0.02) (0.04) (0.00)
From net realized gains ........................ (0.68) (0.47) (0.68) (0.47)
----------- ----------- ----------- -----------
Total distributions ............................... (0.74) (0.49) (0.72) (0.47)
----------- ----------- ----------- -----------
Net asset value at end of period .................. $ 9.15 $ 12.84 $ 9.05 $ 12.79
=========== =========== =========== ===========
Total return(B) ................................... (23.39)% 33.86% (24.00)% 21.63%
=========== =========== =========== ===========
Net assets at end of period ....................... $15,479,055 $19,437,554 $ 2,560,618 $ 1,392,036
=========== =========== =========== ===========
Ratio of expenses to average net assets:(C)
Before fee waivers and/or expense reimbursements
by Adviser .................................. 1.89% 1.98% 2.70% 6.41%
After fee waivers and/or expense reimbursements
by Adviser .................................. 1.85% 1.84% 2.60% 2.59%
Ratio of net investment income (loss)
to average net assets(C) ....................... 0.83% 0.35% 0.17% (0.42)%
Portfolio turnover rate(C) ........................ 79% 62% 79% 62%
(A) Initial public offering date 5-28-97 8-1-97
</TABLE>
(B) Total returns shown exclude the effect of applicable sales loads and are
not annualized.
(C) Annualized.
See accompanying notes to financial statements.
31
<PAGE>
<TABLE>
<CAPTION>
DEAN FAMILY OF FUNDS
BALANCED FUND
FINANCIAL HIGHLIGHTS
=====================================================================================================================
PER SHARE DATA FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD
- ---------------------------------------------------------------------------------------------------------------------
CLASS A CLASS C
---------------------------- ----------------------------
YEAR FROM YEAR FROM
ENDED INCEPTION(A) ENDED INCEPTION(A)
MARCH 31, THROUGH MARCH 31, THROUGH
1999 MARCH 31, 1998 1999 MARCH 31, 1998
- ---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Net asset value at beginning of period ............ $ 11.55 $ 10.00 $ 11.52 $ 10.71
----------- ----------- ----------- -----------
Income (loss) from investment operations:
Net investment income .......................... 0.19 0.17 0.11 0.07
Net realized and unrealized gains (losses)
on investments .............................. (0.56) 1.62 (0.55) 0.92
----------- ----------- ----------- -----------
Total from investment operations .................. (0.37) 1.79 (0.44) 0.99
----------- ----------- ----------- -----------
Less distributions:
From net investment income ..................... (0.19) (0.16) (0.11) (0.10)
From net realized gains ........................ (0.24) (0.08) (0.24) (0.08)
----------- ----------- ----------- -----------
Total distributions ............................... (0.43) (0.24) (0.35) (0.18)
----------- ----------- ----------- -----------
Net asset value at end of period .................. $ 10.75 $ 11.55 $ 10.73 $ 11.52
=========== =========== =========== ===========
Total return(B) ................................... (3.22)% 18.07% (3.81)% 9.37%
=========== =========== =========== ===========
Net assets at end of period ....................... $10,391,582 $ 7,262,670 $ 1,885,376 $ 1,083,890
=========== =========== =========== ===========
Ratio of expenses to average net assets:(C)
Before fee waivers and/or expense reimbursements
by Adviser .................................. 2.09% 2.60% 3.14% 7.39%
After fee waivers and/or expense reimbursements
by Adviser .................................. 1.85% 1.84% 2.60% 2.59%
Ratio of net investment income
to average net assets(C) ....................... 1.79% 1.85% 1.04% 0.99%
Portfolio turnover rate(C) ........................ 60% 64% 60% 64%
(A) Initial public offering date 5-28-97 8-1-97
</TABLE>
(B) Total returns shown exclude the effect of applicable sales loads and are
not annualized.
(C) Annualized.
See accompanying notes to financial statements.
32
<PAGE>
<TABLE>
<CAPTION>
DEAN FAMILY OF FUNDS
INTERNATIONAL VALUE FUND
FINANCIAL HIGHLIGHTS
=====================================================================================================================
PER SHARE DATA FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD
- ---------------------------------------------------------------------------------------------------------------------
CLASS A CLASS C
---------------------------- ----------------------------
YEAR FROM YEAR FROM
ENDED INCEPTION(A) ENDED INCEPTION(A)
MARCH 31, THROUGH MARCH 31, THROUGH
1999 MARCH 31, 1998 1999 MARCH 31, 1998
- ---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Net asset value at beginning of period ............ $ 11.76 $ 10.00 $ 11.72 $ 9.89
----------- ----------- ----------- -----------
Income (loss) from investment operations:
Net investment loss ............................ (0.01) (0.05) (0.10) (0.04)
Net realized and unrealized gains
on investments and foreign currency ......... 0.69 1.81 0.69 1.87
----------- ----------- ----------- -----------
Total from investment operations .................. 0.68 1.76 0.59 1.83
----------- ----------- ----------- -----------
Less distributions:
From net investment income ..................... -- -- -- --
From net realized gains ........................ (0.03) -- (0.03) --
----------- ----------- ----------- -----------
Total distributions ............................... (0.03) -- (0.03) --
----------- ----------- ----------- -----------
Net asset value at end of period .................. $ 12.41 $ 11.76 $ 12.28 $ 11.72
=========== =========== =========== ===========
Total return(B) ................................... 5.82% 17.60% 5.07% 18.50%
=========== =========== =========== ===========
Net assets at end of period ....................... $ 5,981,899 $ 1,295,896 $ 1,453,569 $ 87,249
=========== =========== =========== ===========
Ratio of expenses to average net assets:(C)
Before fee waivers and/or expense reimbursements
by Adviser .................................. 4.25% 16.66% 5.91% 58.89%
After fee waivers and/or expense reimbursements
by Adviser .................................. 2.09% 2.04% 2.84% 2.82%
Ratio of net investment loss
to average net assets(C) ....................... (0.70)% (1.30)% (1.23)% (1.94)%
Portfolio turnover rate(C) ........................ 100% 109% 100% 109%
(A) Initial public offering date 10-13-97 11-6-97
</TABLE>
(B) Total returns shown exclude the effect of applicable sales loads and are
not annualized.
(C) Annualized.
See accompanying notes to financial statements.
33
<PAGE>
DEAN FAMILY OF FUNDS
NOTES TO FINANCIAL STATEMENTS
MARCH 31,1999
================================================================================
1. ORGANIZATION
The Dean Family of Funds (the Trust) is registered under the Investment Company
Act of 1940, 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 four fund series: the Large Cap Value Fund,
the Small Cap Value Fund, the Balanced Fund, and the International Value Fund
(the Funds). The Trust was capitalized on March 17, 1997, when the initial
shares of each Fund (except for the International Value Fund) were purchased at
$10.00 per share. The initial public offering of shares of the International
Value Fund commenced on October 13, 1997. The Trust had no operations prior to
the public offering of shares except for the initial issuance of shares.
The Large Cap Value Fund seeks to provide capital appreciation and dividend
income 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.
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) 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 expenses 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
(normally 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. With respect to the International Value Fund, the
U.S. dollar value of foreign securities and forward foreign currency exchange
contracts is determined using spot and forward currency exchange rates,
respectively, supplied by a quotation service.
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.
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.
34
<PAGE>
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, 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.
Allocations between classes -- Investment income earned, realized capital gains
and losses, and unrealized appreciation and depreciation for the Funds are
allocated daily to each class of shares based upon its proportionate share of
total net assets of the Fund. Class specific expenses are charged directly to
the class incurring the expense. Common expenses which are not attributable to a
specific class are allocated daily to each class of shares based upon its
proportionate share of total net assets of the Fund.
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 a 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 income 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.
The following information is based upon the federal income tax cost of portfolio
investments as of March 31, 1999:
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------
Large Cap Small Cap Balanced International
Value Fund Value Fund Fund Value Fund
- ---------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Gross unrealized appreciation ............... $ 1,023,973 $ 1,102,251 $ 1,139,053 $ 1,005,311
Gross unrealized depreciation ............... (910,099) (3,984,732) (802,814) (298,627)
----------- ----------- ----------- -----------
Net unrealized appreciation (depreciation) .. $ 113,874 $(2,882,481) $ 336,239 $ 706,684
=========== =========== =========== ===========
Federal income tax cost ..................... $ 9,815,363 $20,472,946 $11,674,874 $ 6,622,287
=========== =========== =========== ===========
- ---------------------------------------------------------------------------------------------------------------
</TABLE>
The difference between the federal income tax cost of portfolio investments and
financial statement cost for the International Value Fund is due to certain
timing differences in the recognition of capital losses under income tax
regulations and generally accepted accounting principles.
35
<PAGE>
As of March 31, 1999, the Large Cap Value Fund, Small Cap Value Fund and
International Value Fund had capital loss carryforwards for federal income tax
purposes of $39,697, $1,127 and $31,792, respectively, which expire through the
year 2007. In addition, the Large Cap Value Fund, Small Cap Value Fund, Balanced
Fund and International Value Fund had net realized capital losses of $130,822,
$517,688, $207,464 and $81,205, respectively, during the period from November 1,
1998 through March 31, 1999, which are treated for federal income tax purposes
as arising during the Fund's tax year ending March 31, 2000. These capital loss
carryforwards and "post-October" losses may be utilized in future years to
offset net realized capital gains prior to distributing such gains to
shareholders.
Reclassification of capital accounts -- As of March 31, 1999, the International
Value Fund reclassified $43,198 from accumulated net investment loss and
$124,824 from accumulated net realized losses from foreign currency transactions
to paid-in capital. These reclassifications, which were the result of permanent
differences between financial statement and income tax reporting requirements,
have no effect on the Fund's net assets or net asset value per share.
3. INVESTMENT TRANSACTIONS
Investment transactions, other than short-term investments, were as follows for
the year ended March 31, 1999:
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------
Large Cap Small Cap Balanced International
Value Fund Value Fund Fund Value Fund
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Purchases of portfolio securities ........................ $ 7,798,091 $18,315,717 $ 9,308,341 $10,678,483
=========== =========== =========== ===========
Proceeds from sales and maturities of portfolio securities $ 4,927,827 $15,480,531 $ 6,159,435 $ 5,167,469
=========== =========== =========== ===========
- ----------------------------------------------------------------------------------------------------------------------
</TABLE>
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 AND SUB-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 the
average daily net assets for the Large Cap Value Fund, the Small Cap Value Fund
and the Balanced Fund and 1.25% of the average daily net assets for the
International Value Fund.
Newton Capital Management Ltd. (Newton Capital) has been retained by the Adviser
to manage the investments of the International Value Fund. The Adviser (not the
Fund) pays Newton Capital a fee for its services equal to the rate of 0.50% of
the Fund's average daily net assets.
In order to voluntarily reduce operating expenses during the year ended March
31, 1999, the Adviser waived $40,548 of its advisory fees and reimbursed $17,974
of Class C expenses for the Large Cap Value Fund; waived $8,323 of its advisory
fees and reimbursed $1,297 of Class C expenses for the Small Cap Value Fund;
waived $27,553 of its advisory fees and reimbursed $5,073 of Class C expenses
for the Balanced Fund; and waived its entire advisory fee of $68,092 and
reimbursed $49,746 of common expenses and $8,363 of Class C expenses for the
International Value 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.
36
<PAGE>
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.
In addition, each Fund pays certain out-of-pocket expenses incurred by CFS in
obtaining valuations of such Fund's portfolio securities.
UNDERWRITING AGREEMENT
2480 Securities LLC (the Underwriter), an affiliate of the Adviser, serves as
principal underwriter for the Funds and, as such, is the exclusive agent for the
distribution of shares of the Funds. Under the terms of the Underwriting
Agreement between the Trust and the Underwriter, the Underwriter earned $1,192,
$5,325, $2,893 and $4,147 from underwriting and broker commissions on the sale
of shares of the Large Cap Value Fund, the Small Cap Value Fund, the Balanced
Fund, and the International Value Fund, respectively, during the year ended
March 31, 1999.
PLANS OF DISTRIBUTION
The Trust has a Plan of Distribution (Class A Plan) under which Class A shares
may directly incur or reimburse the Adviser for expenses related to the
distribution and promotion of shares. The annual limitation for payment of such
expenses under the Class A Plan is 0.25% of average daily net assets
attributable to such shares.
The Trust also has a Plan of Distribution (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 0.25% of a Fund's average daily net assets attributable to Class C shares. In
addition, the Class C shares may directly incur or reimburse the Underwriter in
an amount not to exceed 0.75% per annum of a Fund's average daily net assets
attributable to Class C shares for certain distribution-related expenses
incurred in the distribution and promotion of the Fund's Class C shares.
5. FOREIGN CURRENCY TRANSLATION
With respect to the International Value Fund, amounts denominated in or expected
to settle in foreign currencies are translated into U.S. dollars based on
exchange rates on the following basis:
A. The market values of investment securities and other assets and liabilities
are translated at the closing rate of exchange each day.
B. Purchases and sales of investment securities and income and expenses are
translated at the rate of exchange prevailing on the respective dates of
such transactions.
C. The Fund does not isolate that portion of the results of operations
resulting from changes in foreign exchange rates on investments from those
resulting from changes in market prices of securities held. Such
fluctuations are included with the net realized and unrealized gains or
losses from investments. Reported net realized foreign exchange gains or
losses arise from 1) sales of foreign currencies, 2) currency gains or
losses realized between the trade and settlement dates on securities
transactions, and 3) the difference between the amounts of dividends,
interest, and foreign withholding taxes recorded on the Fund's books, and
the U.S. dollar equivalent of the amounts actually received or paid.
Reported net unrealized foreign exchange gains or losses arise from changes
in the value of assets and liabilities, other than investments, resulting
from changes in exchange rates.
37
<PAGE>
6. FORWARD FOREIGN CURRENCY EXCHANGE CONTRACTS
The International Value Fund enters into foreign currency exchange contracts as
a way of managing foreign exchange rate risk. The Fund may enter into these
contracts for the purchase or sale of a specific foreign currency at a fixed
price on a future date as a hedge or cross-hedge against either specific
transactions or portfolio positions. The objective of the Fund's foreign
currency hedging transactions is to reduce the risk that the U.S. dollar value
of the Fund's securities denominated in foreign currency will decline in value
due to changes in foreign currency exchange rates. All foreign currency exchange
contracts are "marked-to-market" daily at the applicable translation rates
resulting in unrealized gains or losses. Realized and unrealized gains or losses
are included in the Fund's Statement of Assets and Liabilities and Statement of
Operations. Risks may arise upon entering into these contracts from the
potential inability of counterparties to meet the terms of their contracts and
from unanticipated movements in the value of a foreign currency relative to the
U.S. dollar.
As of March 31, 1999, the International Value Fund had forward foreign currency
exchange contracts outstanding as follows:
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------
Net Unrealized
Settlement To Receive Initial Market Appreciation
Date (To Deliver) Value Value (Depreciation)
- -------------------------------------------------------------------------------------------
Contracts To Sell
<S> <C> <C> <C> <C>
06/15/99 ........ (52,616,000) JPY $ (455,702) $ (449,005) $ 6,697
08/13/99 ........ (1,579,800) HKD (202,180) (203,084) (904)
08/13/99 ........ (112,835) GBP (183,390) (182,017) 1,373
------------ ------------ ------------
Total sell contracts (841,272) (834,106) 7,166
------------ ------------ ------------
Contracts To Buy
04/01/99 ........ 55,016 HKD 7,103 7,099 (4)
04/07/99 ........ 54,208 HKD 6,995 6,994 (1)
08/13/99 ........ 447,800 HKD 57,488 57,565 77
------------ ------------ ------------
Total buy contracts 71,586 71,658 72
------------ ------------ ------------
Net Contracts ...... $ (769,686) $ (762,448) $ 7,238
============ ============ ============
</TABLE>
GBP - British Pound Sterling
HKD - Hong Kong Dollar
JPY - Japanese Yen
38
<PAGE>
REPORT OF INDEPENDENT AUDITORS
TO THE SHAREHOLDERS AND BOARD OF TRUSTEES OF
DEAN FAMILY OF FUNDS
================================================================================
We have audited the accompanying statements of assets and liabilities, including
the portfolios of investments, of Dean Family of Funds (comprising,
respectively, Large Cap Value Fund, Small Cap Value Fund, Balanced Fund, and
International Value Fund) (the Funds) as of March 31, 1999, the related
statements of operations for the year then ended, and the statements of changes
in net assets and financial highlights for the year ended March 31, 1999 and the
period ended March 31, 1998. These financial statements and financial highlights
are the responsibility of the Funds' management. Our responsibility is to
express an opinion on these financial statements and financial highlights based
on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements and financial highlights. Our procedures included confirmation of
securities owned as of March 31, 1999, by correspondence with the custodian and
others. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of each
of the respective portfolios constituting Dean Family of Funds as of
March 31, 1999, and the results of their operations for the year then ended, and
the changes in their net assets and their financial highlights for the year
ended March 31, 1999 and the period ended March 31, 1998, in conformity with
generally accepted accounting principles.
/s/ Ernst & Young LLP
Cincinnati, Ohio
May 5, 1999
39
<PAGE>
DEAN FAMILY OF FUNDS
2480 Kettering Tower
Dayton, Ohio 45423
BOARD OF TRUSTEES
Victor S. Curtis
Chauncey H. Dean
Dr. Robert D. Dean
Dr. Sam B. Gould
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
- -----------------------------------------
Chairman and President's Letter ... 1
Discussions of Performance:
Large Cap Value Fund ........... 2
Small Cap Value Fund ........... 3
Balanced Fund .................. 4
International Value Fund ....... 5
Fund Facts ........................ 6
Portfolios of Investments:
Large Cap Value Fund ........... 8
Small Cap Value Fund ........... 11
Balanced Fund .................. 16
International Value Fund ....... 19
Financial Statements .............. 23
Notes to Financial Statements ..... 34
Report of Independent Auditors .... 39
- -----------------------------------------
