Registration Nos. 811-7987
333-18653
U.S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 /x/
Pre-Effective Amendment No.
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Post-Effective Amendment No. 7
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and/or
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 /x/
Amendment No. 10
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(Check appropriate box or boxes)
DEAN FAMILY OF FUNDS
(Exact Name of Registrant as Specified in Charter)
2480 Kettering Tower, Dayton, Ohio 45423
(Address of Principal Executive Offices)
Registrant's Telephone Number, including Area Code: (937) 222-9531
Stephen M. Miller
C.H. Dean & Associates, Inc.
2480 Kettering Tower
Dayton, Ohio 45423
(Name and Address of Agent for Service)
Copies to:
Carol J. Highsmith
Unified Fund Services, Inc.
431 N. Pennsylvania Street
Indianapolis, Indiana 46204
It is proposed that this filing will become effective:
/X/ immediately upon filing pursuant to Rule 485(b)
/ / on (date) pursuant to Rule 485(b)
/ / 75 days after filing pursuant to Rule 485(a)
/ / on ____________ pursuant to Rule 485(a)
The Registrant has registered an indefinite number of shares under the
Securities Act of 1933, as amended, pursuant to Rule 24f-2 under the Investment
Company Act of 1940, as amended.
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[Logo]
DEANINVESTMENTASSOCIATES
DEAN FAMILY OF FUNDS
Prospectus
August 1, 2000
These securities have not been approved or disapproved by the Securities and
Exchange Commission nor has the Commission passed upon the accuracy or adequacy
of this Prospectus. Any representation to the contrary is a criminal offense.
<PAGE>
PROSPECTUS
August 1, 2000
DEAN FAMILY OF FUNDS
2480 Kettering Tower
Dayton, Ohio 45423
The Dean Family of Funds currently offers four separate series of shares to
investors: the Large Cap Value Fund, the Small Cap Value Fund, the Balanced Fund
and the International Value Fund (individually a "Fund" and collectively the
"Funds").
The Large Cap Value Fund seeks to provide 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.
TABLE OF CONTENTS
PAGE
Risk/Return Summary............................................................3
Expense Information ..........................................................8
Investment Objectives, Principal Investment Strategies
and Risk Considerations ....................................................10
Buying Fund Shares ..........................................................17
Distribution Plans............................................................24
Redeeming Your Shares ........................................................25
Exchange Privilege ..........................................................27
Dividends and Distributions ..................................................28
Taxes .......................................................................29
Operation of the Funds .......................................................30
Calculation of Share Price and Public Offering Price..........................32
Financial Highlights..........................................................34
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<PAGE>
RISK/RETURN SUMMARY
What are the Funds' investment objectives?
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.
What are the Funds' principal investment strategies?
Dean Investment Associates uses a disciplined, prudent "value" approach to
equity management that attempts to provide superior capital appreciation on a
risk-adjusted basis by investing in equities which are out-of-favor, neglected
or misunderstood. The goal is to choose those equities that appear to have the
greatest margin of safety. Great emphasis is placed on purchasing stocks that
have lower than market multiples of price to earnings, book value, cash flow and
revenues and/or high dividend yield.
Large Cap Value Fund
The Large Cap Value Fund invests primarily in the common stocks of large
companies, specifically companies which have a market capitalization of greater
than $1 billion at the time of investment.
Normally, the Fund will invest at least 65% of its total assets in common stocks
or securities convertible into common stocks of large companies.
Small Cap Value Fund
The Small Cap Value Fund invests primarily in the common stocks of small
companies, those companies with a market capitalization of $1 billion or less at
the time of investment.
Normally, the Fund will invest at least 65% of its total assets in common stocks
or securities convertible into common stocks of small companies. However, the
Fund may invest a portion of its assets in common stocks of larger companies.
<PAGE>
The Balanced Fund
The Balanced Fund attempts to achieve growth of capital through its investments
in equity securities. The Fund attempts to earn current income and at the same
time achieve moderate growth of capital and/or reduce fluctuation in the net
asset value of its shares by investing a portion of its assets in fixed-income
securities. The Fund also attempts to earn current income and reduce fluctuation
in the net asset value of its shares by investing a portion of its assets in
money market instruments.
The asset mix of the Fund will normally range between 40-75% in common stocks
and securities convertible into common stocks, 25-60% in preferred stocks and
bonds, and 0-25% in money market instruments.
International Value Fund
The International Value Fund invests primarily in the common stocks of foreign
companies. Generally, the stocks purchased by the Fund are issued by companies
located in the United Kingdom, Continental Europe and the Pacific Basin,
including Japan, Singapore, Malaysia, Hong Kong and Australia.
Normally, the Fund will invest at least 65% of its total assets in the common
stocks of foreign companies and securities convertible into the common stocks of
foreign companies.
What are the principal risks of investing in the Funds?
Equity and fixed-income securities are subject to inherent market risks and
fluctuations in value due to changes in earnings, economic conditions, quality
ratings and other factors beyond the control of Dean Investment Associates and
Newton Capital. Fixed-income securities are also subject to price fluctuations
based upon changes in the level of interest rates, which will generally result
in all those securities changing in price in the same way, i.e., all those
securities experiencing appreciation when interest rates decline and
depreciation when interest rates rise. As a result, there is a risk that you may
lose money by investing in the Funds.
Preferred stocks, bonds and fixed-income securities rated Baa or BBB have
speculative characteristics and changes in economic conditions or other
circumstances are more likely to lead to a weakened capacity to pay principal
and interest or to pay the preferred stock obligations than is the case with
higher grade securities.
Investment in securities of foreign issuers involves somewhat different
investment risks from those affecting securities of domestic issuers. In
addition to credit and market risk, investments in foreign securities involve
sovereign risk, which includes local political and economic developments,
potential nationalization, withholding taxes on dividend or interest payments
and currency blockage. Foreign companies may have less public or less reliable
information available about them and may be subject to less governmental
regulation than U.S. companies. Securities of foreign companies may be less
liquid or more volatile than securities of U.S. companies.
The Small Cap Value Fund will typically invest a substantial portion of its
assets in small and medium-sized companies, which may be less liquid and more
volatile than investments in larger companies
Because the Balanced Fund intends to allocate its assets among equity
securities, fixed-income securities and money market instruments, it may not be
able to achieve, at times, a total return as high as that of a portfolio with
complete freedom to invest its assets entirely in any one type of security.
The degree of risks of investing in the Balanced Fund depend upon the ability of
Dean Investment Associates to correctly anticipate the relative performance and
risk of equity securities, fixed-income securities and money market instruments.
Historical evidence indicates that correctly timing portfolio allocations among
these asset classes has been an extremely difficult investment strategy to
implement successfully.
An investment in the Funds is not a deposit of a bank and is not insured or
guaranteed by the Federal Deposit Insurance Corporation or any other
governmental agency.
Performance Summary
The bar charts and performance tables shown below provide an indication of the
risks of investing in the Funds. The bar charts show each Fund's annual total
returns for each full calendar year since inception. Sales loads are not
reflected in the bar chart. If they were, returns would be less than those
shown. The accompanying tables show each Fund's average annual total return for
1999 and since its inception and compares those returns with the performance of
a broad-based securities market index. How the Funds have performed in the past
is not necessarily an indication of how the Funds will perform in the future.
Large Cap Value Fund - Class A Shares
1.40% -2.43%
[bar chart]
1998 1999
During the period shown in the bar chart, the highest return for a quarter was
11.60% during the quarter ended December 31, 1998 and the lowest return for a
quarter was -15.90% during the quarter ended September 30, 1998.
The year-to-date return for the Fund's Class A shares through June 30, 2000 is
-.51%.
Small Cap Value Fund - Class A Shares
-5.02% -12.39
[bar chart]
1998 1999
During the period shown in the bar chart, the highest return for a quarter was
18.47% during the quarter ended June 30, 1999 and the lowest return for a
quarter was -17.72% during the quarter ended September 30, 1998.
The year-to-date return for the Fund's Class A shares through June 30, 2000 is
4.18%.
Balanced Fund - Class A Shares
6.19% -5.70%
[bar chart]
1998 1999
During the period shown in the bar chart, the highest return for a quarter was
7.69% during the quarter ended March 31, 1998 and the lowest return for a
quarter was -8.15% during the quarter ended September 30, 1999.
The year-to-date return for the Fund's Class A shares through June 30, 2000 is
-.69%.
International Value Fund - Class A Shares
20.28% 59.78%
[bar chart]
1998 1999
During the period shown in the bar chart, the highest return for a quarter was
43.27% during the quarter ended December 31, 1999 and the lowest return for a
quarter was -16.16% during the quarter ended September 30, 1998.
The year-to-date return for the Fund's Class A shares through June 30, 2000 is
.52%.
Average Annual Total Returns for
Periods Ended December 31, 1999
Since
One Year Inception Inception Date
-------- --------- --------------
Large Cap Value Fund - Class A -7.55% 1.75% May 28, 1997
Russell 1000 Index(1) 20.91% 25.30%
Russell 1000 Value Index(1) 7.35% 16.86%
Large Cap Value Fund - Class C -3.21% 0.23% August 19, 1997
Russell 1000 Index(1) 20.91% 22.97%
Russell 1000 Value Index(1) 7.35% 13.60%
Small Cap Value Fund - Class A -16.99% -2.15% May 28, 1997
Russell 2000 Index(2) 21.26% 13.19%
Russell 2000 Value Index(2) -1.49% 4.48%
Small Cap Value Fund - Class C -13.31% -4.64% August 1, 1997
Russell 2000 Index(2) 21.26% 9.84%
Russell 2000 Value Index(2) -1.49% 0.67%
Balanced Fund - Class A -10.65% 1.53% May 28, 1997
Russell 1000 Index(1) 20.91% 25.30%
Lehman Brothers Intermediate
Government/Corporate Bond Index(3) 0.39% 5.64%
Balanced Fund - Class C -6.38% 0.18% August 1, 1997
Russell 1000 Index(1) 20.91% 21.48%
Lehman Brothers Intermediate
Government/Corporate Bond Index(3) 0.39% 4.77%
International Value Fund - Class A 51.39% 31.81% October 13, 1997
Europe, Australia and Far East Index(4) 25.77% 15.29%
International Value Fund - Class C 59.11% 36.22% November 6, 1997
Europe, Australia and Far East Index(4) 25.77% 19.20%
(1) The Russell 1000 Index is an unmanaged index comprised of the 1,000 largest
U.S. domiciled publicly-traded common stocks in the Russell 3000 Index (an
unmanaged index of the 3,000 largest U.S. domiciled publicly-traded common
stocks by total market capitalization representing approximately 98% of the U.S.
publicly-traded equity market). The Russell 1000 Value Index measures the
performance of those Russell 1000 companies with lower price-to-book ratios and
lower forecasted growth values. (2) The Russell 2000 Index is an unmanaged index
comprised of the 2,000 smallest U.S. domiciled publicly-traded common stocks in
the Russell 3000 Index. The Russell 2000 Value Index is measures the performance
of those Russell 2000 companies with lower price-to-book ratios and lower
forecasted growth values.
(3) The Lehman Brothers Intermediate Government/Corporate Bond Index is an
unmanaged index generally representative of intermediate term bonds. (4) The
Europe, Australia and Far East Index is an unmanaged index which tracks the
market performance of small, medium and large capitalization companies in
Europe, Australia and the Far East.
EXPENSE INFORMATION
This table describes the fees and expenses that you would pay if you buy and
hold shares of the Funds.
Shareholder Fees (fees paid directly from your investment)
Class A Class C
Shares Shares
------ ------
Maximum Sales Charge (Load) Imposed on Purchases
(as a percentage of offering price) 5.25% None
Maximum Deferred Sales Charge (Load)
(as a percentage of original purchase price) None* 1.00%
Maximum Sales Charge (Load) Imposed on
Reinvested Dividends None None
Exchange Fee None None
Redemption Fee None** None**
* Purchases at net asset value of amounts totaling $500,000 or more and
purchases by qualified retirement plans with greater than 100 participants may
be subject to a contingent deferred sales load of up to 1.00% if a redemption
occurred within 12 months of purchase and a commission was paid by the
Underwriter to a participating unaffiliated dealer.
** A wire transfer fee is charged in the case of redemptions made by wire.
Annual Fund Operating Expenses (expenses that are deducted from fund assets)
LARGE CAP SMALL CAP
VALUE FUND VALUE FUND
---------- ----------
Class A Class C Class A Class C
Shares Shares Shares Shares
------ ------ ------ ------
Management Fees 1.00% 1.00% 1.00% 1.00%
Distribution(12b-1) Fees(A) .02% .16% .00% .00%
Other Expenses 1.09% 2.88% .92% 1.32%
---- ---- ---- ----
Total Annual Fund 2.11% 4.04% 1.92% 2.32%
Operating Expenses ==== ==== ==== ====
Fee Waiver and Expense .26% 1.44% .07% .01%
Reimbursement(B) ---- ---- --- ----
Net Expenses(B) 1.85% 2.60% 1.85% 2.31%
==== ==== ==== ====
INTERNATIONAL
BALANCED FUND VALUE FUND
------------- ----------
Class A Class C Class A Class C
Shares Shares Shares Shares
------ ------ ------ ------
Management Fees 1.00% 1.00% 1.25% 1.25%
Distribution(12b-1) Fees (A) .01% .07% .00% .00%
Other Expenses 1.12% 1.67% 1.64% 2.28%
---- ---- ---- ----
Total Annual Fund 2.13% 2.74% 2.89% 3.53%
Operating Expenses ==== ==== ==== ====
Fee Waiver and Expense .28% .14% .80% .69%
---- ---- ---- ----
Reimbursement(B)
Net Expenses(B) 1.85% 2.60% 2.09% 2.84%
==== ==== ==== ====
(A) Each Fund may incur distribution (12b-1) fees of up to .25% per annum of its
average daily net assets allocable to Class A shares and up to 1.00% per annum
of its average daily net assets allocable to Class C shares.
(B) Pursuant to a written contract between Dean Investment Associates and the
Trust, Dean Investment Associates has agreed to waive a portion of its advisory
fee and/or reimburse certain expenses of each Fund in order to limit "Total
Annual Fund Operating Expenses" to 1.85% for Class A shares and 2.60% for Class
C shares of the Large Cap Value Fund, the Small Cap Value Fund and the Balanced
Fund and 2.10% for Class A shares and 2.84% for Class C shares of the
International Value Fund. Dean Investment Associates has agreed to maintain
these expense limitations with regard to each class of each Fund through March
31, 2001.
Example
This Example is intended to help you compare the cost of investing in the Fund
with the cost of investing in other mutual funds. The cost for 1 year is based
on the "Net Expenses" described in the table, which reflect fee waivers for the
Funds during the fiscal year ended March 31, 2000. The cost for 3, 5 and 10
years is based on the Total Annual Fund Operating Expenses, as described in the
table, which do not reflect any fee waivers. The example assumes that you invest
$10,000 in the Fund for the time periods indicated, reinvest all dividends and
distributions, and then redeem all of your shares at the end of those periods.
The Example also assumes that your investment has a 5% return each year and that
the Fund's operating expenses remain the same. Although your costs may be higher
or lower, based on these assumptions your costs would be:
Large Cap Small Cap Balanced International
Value Fund Value Fund Fund Value Fund
Class A Class C Class A Class C Class A Class C Class A Class C
Shares Shares Shares Shares Shares Shares Shares Shares
1 Year $ 703 $ 263 $ 703 $ 234 $ 703 $ 263 $ 726 $ 287
3 Years 1,127 1,098 1,090 723 1,131 837 1,301 1,019
5 Years 1,577 1,950 1,501 1,239 1,585 1,437 1,902 1,773
10 Years 2,819 3,342 2,645 2,465 2,837 2,780 3,516 3,483
<PAGE>
INVESTMENT OBJECTIVES, PRINCIPAL INVESTMENT STRATEGIES AND RISK CONSIDERATIONS
Large Cap Value Fund and Small Cap Value Fund
Investment Objectives
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.
Principal Investment Techniques and Strategies
Known primarily for its balanced approach to managing money, Dean Investment
Associates strives to generate superior risk-adjusted returns over full market
cycles. Dean Investment Associates also has over 25 years experience in managing
equities via the "value" approach. The "value" approach is a disciplined,
prudent approach to equity management that attempts to provide superior capital
appreciation on a risk-adjusted basis by investing in equities which are
out-of-favor, neglected or misunderstood. The goal is to choose those equities
that appear to have the greatest margin of safety. Great emphasis is placed on
purchasing stocks that have lower than market multiples of price to earnings,
book value, cash flow and revenues and/or high dividend yield.
Normally, at least 65% of the Large Cap Value Fund's total assets will be
invested in common stocks or securities convertible into common stocks of large
companies (such as convertible bonds, convertible preferred stocks and
warrants). A "large company" is one which has a market capitalization of greater
than $1 billion at the time of investment.
Normally, the Small Cap Value Fund will invest at least 65% of its total assets
in common stocks or securities convertible into common stocks of small companies
(such as convertible bonds, convertible preferred stocks and warrants). A "small
company" is one which has a market capitalization of $1 billion or less at the
time of investment. However, the Fund may invest a portion of its assets in
common stocks of larger companies.
Balanced Fund
Investment Objective
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.
Principal Investment Techniques and Strategies
Normally, the asset mix of the Fund will range between 40-75% in common stocks
and securities convertible into common stocks, 25-60% in preferred stocks and
bonds, and 0-25% in money market instruments. Moderate shifts between asset
classes are made in an attempt to maximize returns or reduce risk.
The Fund attempts to achieve growth of capital through its investments in equity
securities. The equity securities that the Fund may purchase consist of common
stocks or securities having characteristics of common stocks (such as
convertible preferred stocks, convertible debt securities or warrants) of
domestic issuers. The equity selection approach of the Fund can best be
described in the vernacular of the investment business as a "value" orientation.
That is, great emphasis is placed on purchasing stocks that have lower than
market multiples of price to earnings, book value, cash flow and revenues and/or
high dividend yield.
The Fund attempts to earn current income and at the same time achieve moderate
growth of capital and/or reduce fluctuation in the net asset value of its shares
by investing a portion of its assets in fixed-income securities. The
fixed-income securities that the Fund may purchase include U.S. Government
obligations and corporate debt securities (such as bonds and debentures)
maturing in more than one year from the date of purchase and preferred stocks of
domestic issuers rated at the time of purchase in the four highest grades
assigned by Moody's Investors Service, Inc. (Aaa, Aa, A or Baa) or Standard &
Poor's Ratings Group (AAA, AA, A or BBB) or, if unrated, which are determined by
Dean Investment Associates to be of comparable quality.
The Fund also attempts to earn current income and reduce fluctuation in the net
asset value of its shares by investing a portion of its assets in money market
instruments. The money market instruments that the Fund may purchase consist of
short-term (i.e., maturing in one year or less from the date of purchase)
dollar-denominated debt obligations which (1) are U.S. Government obligations,
(2) are issued by domestic banks, or (3) are issued by domestic corporations, if
such corporate debt obligations have been rated at least Prime-2 by Moody's
Investors Service, Inc. ("Moody's") or A-2 by Standard & Poor's Ratings Group
("S&P"), or have an outstanding issue of debt securities rated at least A by
Moody's or S&P, or are of comparable quality in the opinion of Dean Investment
Associates. Money market instruments also include repurchase agreements
collateralized by U.S. Government obligations and shares of money market
investment companies.
<PAGE>
International Value Fund
Investment Objective
The International Value Fund seeks to provide long-term capital growth by
investing primarily in the common stocks of foreign companies. Generally, the
stocks purchased by the Fund are issued by companies located in the United
Kingdom, Continental Europe and the Pacific Basin, including Japan, Singapore,
Malaysia, Hong Kong and Australia. Under normal market conditions, investments
will be made in a minimum of three countries other than the United States.
Principal Investment Techniques and Strategies
Normally, at least 65% of the Fund's total assets will be invested in the common
stocks of foreign companies and securities convertible into the common stocks of
foreign companies (such as convertible bonds, convertible preferred stocks and
warrants).
Dean Investment Associates has retained Newton Capital Management Ltd. ("Newton
Capital") to manage the investments of the International Value Fund. Individual
stock selection decisions are based upon Newton Capital's assessment of value
based on fundamental research. Fundamental research includes a review of
capitalization and valuation measures. Stocks are chosen that Newton Capital
believes sell at a discount to the company's true economic value. The stock
selection process includes a review of enterprise value to sales, price/earnings
relative to the local market, dividend coverage, dividend yield relative to the
local market, and price to free cash flow. Preference is given to companies with
strong balance sheets and histories of consistent profitability. This strategic
framework guides the managers towards the sectors and company characteristics
that they believe will lead to future out-performance of the Europe, Australia
and Far East Index compiled by Morgan Stanley Capital International.
Over the longer term, stocks are selected which Newton Capital expects to
deliver superior earnings and dividend growth. This will often reflect the
company's market position and pricing power. Newton Capital looks for either a
dominant position in a competitive market or a well protected niche. The goal is
to be able to invest in these companies at valuation levels which do not reflect
their future prospects so a wider view is used when analyzing a company's
potential. Response to different phases of the market and economic cycle may be
made, for instance, through varying the Fund's exposure to more cyclical
companies ahead of an expected economic recovery. Other, more specific criteria
may also generate some stock selection decisions.
When Newton Capital believes that the currency of a particular foreign country
may suffer a substantial decline against the U.S. dollar, it may attempt to
hedge some portion or all of this anticipated risk by entering into a forward
currency exchange contract to sell an amount of foreign currency approximating
the value of some or all of the Fund's portfolio obligations denominated in such
foreign currency. It may also enter into such contracts to protect against loss
between trade and settlement dates resulting from changes in foreign currency
exchange rates. Such contracts will also have the effect of limiting any gains
to the Fund between trade and settlement dates resulting from changes in such
rates.
<PAGE>
Investment Techniques and Strategies Applicable to All Funds
Preferred Stocks and Bonds. Each Fund may invest in preferred stocks and bonds
provided they are rated at the time of purchase in the four highest grades
assigned by Moody's Investors Service, Inc. (Aaa, Aa, A or Baa) or Standard &
Poor's Ratings Group (AAA, AA, A or BBB) or, if unrated, are determined by Dean
Investment Associates to be of comparable quality. Subsequent to its purchase by
the Fund, a security may cease to be rated or its rating may be reduced below
Baa or BBB. Dean Investment Associates or Newton Capital Management will
consider such an event to be relevant in its determination of whether the Fund
should continue to hold such security.
Foreign Securities. Each Fund may invest in foreign companies through the
purchase of sponsored American Depository Receipts (certificates of ownership
issued by an American bank or trust company as a convenience to investors in
lieu of the underlying shares which it holds in custody) or other securities of
foreign issuers that are publicly traded in the United States. When selecting
foreign investments for the Large Cap Value Fund, the Small Cap Value Fund, or
the Balanced Fund, Dean Investment Associates will seek to invest in securities
that have investment characteristics and qualities comparable to the kinds of
domestic securities in which the Fund invests.
Real Estate Securities. The Funds may not invest in real estate (including
limited partnership interests), but may invest in readily marketable securities
secured by real estate or interests therein or issued by companies that invest
in real estate or interests therein. The Funds may also invest in readily
marketable interests in real estate investment trusts ("REITs"). REITs are
generally publicly traded on the national stock exchanges and in the
over-the-counter market and have varying degrees of liquidity.
Commercial Paper. Commercial paper consists of short-term (usually from one to
two hundred seventy days) unsecured promissory notes issued by corporations in
order to finance their current operations. The Funds will only invest in
commercial paper within the 2 top ratings of either Moody's (Prime-1 or Prime-2)
or S&P (A-1 or A-2), or which, in the opinion of the investment adviser is of
equivalent investment quality. Certain notes may have floating or variable
rates. Variable and floating rate notes with a demand notice period exceeding 7
days will be subject to each Fund's restriction on illiquid investments unless,
in the judgment of the investment adviser, such note is liquid.
Temporary Defensive Position. When Dean Investment Associates, or with respect
to the International Value Fund, Newton Capital, believes substantial price
risks exist for common stocks and securities convertible into common stocks
because of uncertainties in the investment outlook or when in the judgment of
Dean Investment Associates it is otherwise warranted in selling to manage a
Fund's portfolio, each Fund may temporarily hold for defensive purposes all or a
portion of its assets in short-term obligations such as bank debt instruments
(certificates of deposit, bankers' acceptances and time deposits), commercial
paper, U.S. Government obligations having a maturity of less than one year,
shares of money market investment companies or repurchase agreements
collateralized by U.S. Government obligations. When and to the extent a Fund
assumes such a temporary defensive position, it may not pursue or achieve its
investment objective.
Principal Investment Risks Applicable to All Funds
General Market Risk. Investments in fixed-income and equity securities are
subject to inherent market risks and fluctuations in value due to changes in
earnings, economic conditions, quality ratings and other factors beyond the
control of Dean Investment Associates and Newton Capital. Fixed-income
securities are also subject to price fluctuations based upon changes in the
level of interest rates, which will generally result in all those securities
changing in price in the same way, i.e., all those securities experiencing
appreciation when interest rates decline and depreciation when interest rates
rise. As a result, the return and net asset value of the Fund will fluctuate.
Preferred Stocks and Bonds. Preferred stocks and bonds rated Baa or BBB have
speculative characteristics and changes in economic conditions or other
circumstances are more likely to lead to a weakened capacity to pay principal
and interest or to pay the preferred stock obligations than is the case with
higher grade securities.
Foreign Securities. Investment in securities of foreign issuers involves
somewhat different investment risks from those affecting securities of domestic
issuers. In addition to credit and market risk, investments in foreign
securities involve sovereign risk, which includes fluctuations in foreign
exchange rates, future political and economic developments, and the possible
imposition of exchange controls or other foreign governmental laws or
restrictions. In addition, with respect to certain countries, there is the
possibility of expropriation of assets, confiscatory taxation, political or
social instability or diplomatic developments which could adversely affect
investments in those countries.
<PAGE>
There may be less publicly available information about a foreign company than
about a U.S. company, and accounting, auditing and financial reporting standards
and requirements may not be comparable. Securities of many foreign companies are
less liquid and their prices more volatile than securities of comparable U.S.
companies. Transaction costs of investing in foreign securities markets are
generally higher than in the U.S. and there is generally less governmental
supervision and regulation of exchanges, brokers and issuers than there is in
the U.S. The Funds might have greater difficulty taking appropriate legal action
in foreign courts. Depository receipts that are not sponsored by the issuer may
be less liquid. Dividend and interest income from foreign securities will
generally be subject to withholding taxes by the country in which the issuer is
located and may not be recoverable by the Fund or the investor.
Small Companies. The Small Cap Value Fund may invest a significant portion of
its assets in small, unseasoned companies. While smaller companies generally
have potential for rapid growth, they often involve higher risks because they
lack the management experience, financial resources, product diversification and
competitive strengths of larger corporations. In addition, in many instances,
the securities of smaller companies are traded only over-the-counter or on a
regional securities exchange and the frequency and volume of their trading is
substantially less than is typical of larger companies. Therefore, the
securities of smaller companies may be subject to wider price fluctuations. When
making large sales, the Fund may have to sell portfolio holdings at discounts
from quoted prices or may have to make a series of small sales over an extended
period of time.
Balanced Investment Strategy. Because the Balanced Fund intends to allocate its
assets among equity securities, fixed-income securities and money market
instruments, it may not be able to achieve, at times, a total return as high as
that of a portfolio with complete freedom to invest its assets entirely in any
one type of security. Likewise, since a portion of the Fund's portfolio will
normally consist of fixed-income securities and/or money market instruments, the
Fund may not achieve the degree of capital appreciation that a portfolio
investing solely in equity securities might achieve. It should be noted that,
although the Fund intends to invest in fixed-income securities to reduce the
price volatility of the Fund's shares, intermediate and long-term fixed-income
securities do fluctuate in value more than money market instruments.
Investors should be aware that the investment results of the Balanced Fund
depend upon the ability of Dean Investment Associates to correctly anticipate
the relative performance and risk of equity securities, fixed-income securities
and money market instruments. Historical evidence indicates that correctly
timing portfolio allocations among these asset classes has been an extremely
difficult investment strategy to implement successfully. There can be no
assurance that Dean Investment Associates will correctly anticipate relative
asset class performance in the future on a consistent basis. Investment results
would suffer, for example, if only a small portion of the Fund's assets were
invested in stocks during a significant stock market advance or if a major
portion were invested in stocks during a major decline.
Foreign Currencies. The International Value Fund may have investments that are
denominated in a currency other than the U.S. dollar. These investments are
subject to the risk that the value of a particular currency will change in
relation to one or more other currencies including the U.S. dollar. Among the
factors that may affect currency values are trade balances, the level of
short-term interest rates, differences in relative values of similar assets in
different currencies, long-term opportunities for investment and capital
appreciation and political developments. The International Fund may try to hedge
these risks by investing in foreign currencies, currency futures contracts and
options thereon, forward currency exchange contracts, or any combination
thereof, but there can be no assurance that such strategies will be effective.
Emerging Markets. The risks of foreign investing are of greater concern in the
case of investments in emerging markets, which may exhibit greater price
volatility and have less liquidity. Furthermore, the economies of emerging
market countries generally are heavily dependent upon international trade and,
accordingly, have been and may continue to be adversely affected by trade
barriers, managed adjustments in relative currency values, and other
protectionist measures applied internally or imposed by the countries with which
they trade. These emerging market economies also have been and may continue to
be adversely affected by economic conditions in the countries with which they
trade. The International Value Fund presently intends to limit its investments
in emerging market countries to no more than 10% of its net assets. The Large
Cap Value Fund, the Small Cap Value Fund and the Balanced Fund will not invest
in emerging market countries.
BUYING FUND SHARES
You may open an account with the Funds by investing the minimum amount required
for the type of account you open. You may invest additional amounts in an
existing account at any time. Several different account options and minimum
investment amounts options are detailed below.
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Account Options Minimum Investment
Requirements
Regular Accounts
Tax-Deferred Retirement Plans Initial Additional
------- ----------
Traditional IRA Regular Accounts $1,000 None
Assets grow tax-deferred and contributions may be deductible.
Withdrawals and distributions are taxable in the year made.
Tax-Deferred
Roth IRA Retirement Plans $250 None
An IRA with tax free growth of assets and distributions, if
certain conditions are met. Contributions are not deductible.
Automatic Investment
Education IRA Plans:
An IRA with tax free growth of assets and tax free withdrawals for
qualified higher education expenses. Contributions are not Regular Accounts $50 $50
deductible.
IRA stands for "Individual Retirement Account." IRAs are special Tax-Deferred
types of accounts that offer different tax advantages. You should Retirement Plans $50 $50
consult your tax professional to help decide which is right for
you.
You may also open accounts for:
- Keogh Plans for self-employed individuals
- Qualified pension and profit-sharing plans for employees,
including those profit-sharing plans with a 401(k) provision
- 403(b)(7) custodial accounts for employees of public school systems,
hospitals, colleges and other non-profit organizations meeting certain
requirements of the Internal Revenue Code
Automatic Investment Plan
You may make automatic monthly investments in the Funds from your bank, savings
and loan or other depository institution account on either the 15th or the last
business day of the month or both. The Funds pay the costs associated with these
transfers, but reserve the right, upon 30 days' written notice, to make
reasonable charges for this service.
----------------------------------------------------------------------- ---------------------------------------------------
Direct Deposit Plans
You may purchase shares of the Funds through direct deposit plans offered by
certain employers and government agencies. These plans enable you to have all
or a portion of your payroll or social security checks transferred automatically
to purchase shares of the Funds.
----------------------------------------------------------------------- ---------------------------------------------------
</TABLE>
Opening a New Account. To open an account with us, please follow the steps
outlined below.
1. Complete the enclosed Account Application. Be sure to indicate the
Fund(s) and type of account(s) you wish to open, the amount of money
you wish to invest, and which class of shares you wish to purchase. If
you do not indicate which class you wish to purchase, we will invest
your purchase in Class A shares.
2. Write a check for your initial investment to "Dean Family of Funds."
Mail your completed Account Application and your check to the following
address:
Dean Family of Funds
c/o Unified Fund Services, Inc.
P.O. Box 6110
Indianapolis, Indiana 46206-6110
You may also establish an account through a broker-dealer that has a sales
agreement with the Trust's principal underwriter, 2480 Securities LLC (the
"Underwriter"). Since your broker-dealer may charge you fees for his or her
services other than those described in this Prospectus, you should ask your
broker-dealer about fees before investing.
Adding to Your Account. You may make additional purchases for your account at
any time. These purchases may be made by mail, wire transfer or by contacting
your broker-dealer (ask your broker-dealer about any fees for his or her
services). Use the address above for additional purchases by mail, and call us
c/o our transfer agent, Unified Fund Services, Inc. (the "Transfer Agent"), at
888-899-8343 for wiring instructions. Your additional purchase requests must
contain your name and account number to permit proper crediting.
Miscellaneous. In connection with all purchases of Fund shares, we observe the
following policies and procedures:
o We price direct purchases based on the next public offering price (net
asset value plus any applicable sales load) or net asset value ("NAV")
calculated after your order is received. Direct purchase orders received by
the Transfer Agent by the close of the regular session of trading on the
New York Stock Exchange on any business day, generally 4:00 p.m., Eastern
time, are confirmed at that day's public offering price or NAV. Purchases
orders received by dealers prior to the close of trading of the regular
session on the New York Stock Exchange on any business day and transmitted
to the Transfer Agent by 5:00 p.m., Eastern time, that day are confirmed at
that day's public offering price or NAV. We do not accept third party
checks for any investments.
o We may open accounts for less than the minimum investment or change minimum
investment requirements at any time.
o We may refuse to accept any purchase request for any reason or no reason.
o We mail you confirmations of all your purchases or redemptions of Fund
shares.
o Certificates representing shares are not issued.
o If your order to purchase shares is canceled because your check does not
clear, you will be responsible for any resulting losses or fees incurred by
the Funds or the Transfer Agent incur in the transaction.
o There is no fee for purchases made by wire, but we may charge you for this
service upon 30 days' prior notice.
Choosing a Share Class
The Funds offers two classes of shares: Class A shares and Class C shares. These
Classes, which represent interests in the same portfolio of investments and have
the same rights, differ primarily in sales loads and expenses to which they are
subject. Before choosing a Class, you should consider the following factors, as
well as any other relevant facts and circumstances:
The decision as to which Class of shares is more beneficial to you depends on
the amount and intended length of your investment. You should consider Class A
shares if you prefer to pay an initial sales load. If you qualify for reduced
sales loads or, in the case of purchases of $500,000 or more, no initial sales
load, you may find Class A shares attractive because similar sales load
reductions are not available with respect to Class C shares. Moreover, Class A
shares are subject to lower ongoing expenses than are Class C shares over the
term of the investment. As an alternative, Class C shares are sold without any
initial sales load so the entire purchase price is immediately invested in the
Fund. Any investment return on these investments may partially or wholly offset
the higher annual expenses; however, because a Fund's future return cannot be
predicted, there can be no assurance that this would be the case.
You should also consider the effect of the contingent deferred sales load in the
context of your investment timeline. Class C shares are subject to a 1.00%
contingent deferred sales load if redeemed within one year of purchase. Class C
shares are also subject to a 1.00% annual 12b-1 fee, while Class A shares are
subject to only a .25% annual 12b-1 fee. Please note that Class C shares will
automatically convert to Class A shares after approximately 6 years.
<PAGE>
Set forth below is a chart comparing the sales loads and 12b-1 fees applicable
to each Class of shares:
CLASS SALES LOAD 12B-1 FEE
----------------------------------------------------------------
A Maximum 5.25% initial 0.25%
sales load reduced for
purchases of $25,000 and
over; shares sold without
an initial sales load are
generally subject to a
1.00% contingent deferred
sales load during first year
----------------------------------------------------------------
C 1.00% contingent deferred 1.00%
sales load during first year
----------------------------------------------------------------
If you are investing $500,000 or more, it is generally more beneficial for you
to buy Class A Shares because there is no front-end sales load and the annual
expenses are lower. Therefore, any purchase of $500,000 or more is automatically
invested in Class A Shares.
Class A Shares
Class A shares are sold at NAV plus an initial sales load. In some cases,
reduced initial sales loads for the purchase of Class A shares may be available,
as described below. Class A shares are also subject to an annual 12b-1 fee of up
to .25% of the Fund's average daily assets allocable to Class A shares. For
purchases of Class A shares of the Funds by qualified retirement plans with
greater than 100 participants, the Underwriter may pay a dealer's commission of
1.00% of such to participating unaffiliated dealers through whom such purchases
are effected. For initial purchases of Class A shares of the Funds of $500,000
or more and subsequent purchases further increasing the size of the account, the
Underwriter may pay a dealer's commission of 1.00% of such purchases from
$500,000 to $3 million, .75% of such purchases from $3 million to $5 million and
.50% of such purchases in excess of $5 million of the purchase amount to
participating unaffiliated dealers through whom such purchases are effected.
Purchases of Class A shares of the Funds and shares of any other fund which has
made appropriate arrangements with the Underwriter may be aggregated to
determine a dealer's eligibility for the commission. Dealers should contact the
Underwriter concerning the applicability and calculation of the dealer's
commission in the case of combined purchases. An exchange from other funds will
not qualify for payment of the dealer's commission, unless such exchange is from
a fund with assets as to which a dealer's commission or similar payment has not
been previously paid.
The following table illustrates the initial sales load breakpoints for the
purchase of Class A shares:
Sales Load as % of:
------------------ Dealer
Public Net Reallowance
Offering Amount as % of Public
Amount of Investment Price Invested Offering Price
-------------------- -------- -------- --------------
Less than $25,000 5.25% 5.54% 4.75%
$25,000 but less than $50,000 4.50 4.71 4.00
$50,000 but less than $100,000 3.75 3.90 3.25
$100,000 but less than $250,000 3.00 3.09 2.50
$250,000 but less than $500,000 2.25 2.30 2.00
$500,000 or more* None None None
o There is no front-end sales load on purchases of $500,000 or more but a
contingent deferred sales load of up to 1.00% may apply with respect to
Class A shares if a commission was paid by the Underwriter to a
participating unaffiliated dealer and the shares are redeemed within
twelve months from the date of purchase.
Under certain circumstances, the Underwriter may increase or decrease the
reallowance to dealers. The Underwriter receives that portion of the initial
sales load which is not reallowed to the dealers who sell shares of the Fund.
The Underwriter retains the entire sales load on all direct initial investments
in the Fund and on all investments in accounts with no designated dealer of
record.
In addition to the compensation otherwise paid to dealers, the Underwriter may
from time to time pay from its own resources additional cash bonuses or other
incentives to selected dealers in connection with the sale of shares of the
Funds. On some occasions, such bonuses or incentives may be conditioned upon the
sale of a specified minimum dollar amount of the shares of the Funds during a
specific period of time. Such bonuses or incentives may include financial
assistance to dealers in connection with conferences, sales or training programs
for their employees, seminars for the public, advertising, sales campaigns and
other dealer-sponsored programs or events.
Contingent Deferred Sales Load for Certain Purchases of Class A Shares. A
contingent deferred sales load is imposed upon certain redemptions of Class A
shares (or shares into which such Class A shares were exchanged) purchased at
NAV in amounts totaling $500,000 or more or by qualified retirement plans with
greater than 100 participants, if the dealer's commission described above was
paid by the Underwriter and the shares are redeemed within one year from the
date of purchase. The contingent deferred sales load will be paid to the
Underwriter and will be equal to the commission percentage paid at the time of
purchase (either 1.00%, .75% or .50% depending on the amount of purchase) as
applied to the lesser of (1) the net asset value at the time of purchase of the
Class A shares being redeemed or (2) the net asset value of such Class A shares
at the time of redemption. If a purchase of Class A shares is subject to the
contingent deferred sales load, you will be so notified on the confirmation you
receive for such purchase.
Redemptions of such Class A shares of the Fund held for at least one year will
not be subject to the contingent deferred sales load and an exchange of such
Class A shares into another fund will not trigger the imposition of the
contingent deferred sales load at the time of such exchange. A Fund will "tack"
the period for which such Class A shares being exchanged were held onto the
holding period of the acquired shares for purposes of determining if a
contingent deferred sales load is applicable in the event that the acquired
shares are redeemed following the exchange; however, the period of time that the
redemption proceeds of such Class A shares are held in a money market fund will
not count toward the holding period for determining whether a contingent
deferred sales load is applicable. See "Exchange Privilege".
Reduced Sales Load. You may use the Right of Accumulation to combine the cost or
current NAV (whichever is higher) of your existing Class A shares of a Fund with
the amount of any current purchases in order to take advantage of the reduced
sales loads set forth in the table above. Purchases made pursuant to a Letter of
Intent may also be eligible for the reduced sales loads. The minimum initial
investment under a Letter of Intent is $10,000. You should contact the Transfer
Agent for information about the Right of Accumulation and Letter of Intent.
Purchases at Net Asset Value. Banks, bank trust departments and savings and loan
associations, in their fiduciary capacity or for their own accounts, may
purchase Class A shares of a Fund at NAV. To the extent permitted by regulatory
authorities, a bank trust department may charge fees to clients for whose
account it purchases shares at NAV. Federal and state credit unions may also
purchase Class A shares at NAV.
In addition, Class A shares of a Fund may be purchased at NAV by broker-dealers
who have a sales agreement with the Underwriter and their registered personnel
and employees, including members of the immediate families of such registered
personnel and employees.
Clients of investment advisers and financial planners may also purchase Class A
shares at NAV if their investment adviser or financial planner has made
appropriate arrangements with the Trust and the Underwriter. The investment
adviser or financial planner must notify the Fund that an investment qualifies
as a purchase at NAV.
Class A shares may also be purchased at NAV by organizations which qualify under
section 501(c)(3) of the Internal Revenue Code as exempt from Federal income
taxes, their employees, alumni and benefactors, and family members of such
individuals, and by qualified retirement plans with greater than 100
participants whose broker of record is not affiliated with the Adviser or the
Underwriter and has made appropriate arrangements with the Funds.
Trustees, directors, officers and employees of the Trust, Dean Investment
Associates, the Underwriter or the Transfer Agent, including members of the
immediate families of such individuals and employee benefit plans established by
such entities, may also purchase Class A shares of the Fund at NAV.
Class C Shares
Class C shares are sold at NAV without an initial sales load so that the full
amount of your purchase payment may be immediately invested in a Fund. A
contingent deferred sales load of 1.00% will be imposed on redemptions of Class
C shares made within one year of their purchase. A contingent deferred sales
load will not be imposed upon redemptions of Class C shares held for at least
one year. Class C shares are subject to an annual 12b-1 fee of up to 1.00% of
the Fund's average daily net assets allocable to Class C shares. The Underwriter
intends to pay a commission of 1.00% of the purchase amount to your broker at
the time you purchase Class C shares.
Conversion to Class A Shares. Class C shares will convert automatically to Class
A shares, based on the relative NAVs of the shares of the two Classes on the
conversion date, approximately 6 years after the date of your original purchase
of those shares. Class C shares you have acquired through automatic reinvestment
of dividends and distributions will be converted in proportion to the total
number of Class C shares you have purchased and own.
Additional Information on the Contingent Deferred Sales Load
The contingent deferred sales load is waived for any partial or complete
redemption following death or disability (as defined in the Internal Revenue
Code) of a shareholder (including one who owns the shares with his or her spouse
as a joint tenant with rights of survivorship) from an account in which the
deceased or disabled is named. The Underwriter may require documentation prior
to waiver of the load, including death certificates, physicians' certificates,
etc. The contingent deferred sales load is also waived for any partial or
complete redemption of shares purchases by qualified retirement plans where the
broker of record and the Underwriter have agreed to such waiver.
All sales loads imposed on redemptions are paid to the Underwriter. In
determining whether the contingent deferred sales load is payable under each
Class of shares, it is assumed that shares not subject to the contingent
deferred sales load are the first redeemed followed by other shares held for the
longest period of time. The contingent deferred sales load will not be imposed
upon shares representing reinvested dividends or capital gains distributions, or
upon amounts representing share appreciation.
The following example will illustrate the operation of the contingent deferred
sales load. Assume that you open an account and purchase 1,000 shares at $10 per
share and that six months later the NAV per share is $12 and, during such time,
you have acquired 50 additional shares through reinvestment of distributions. If
at such time you should redeem 450 shares (proceeds of $5,400), 50 shares will
not be subject to the load because of dividend reinvestment. With respect to the
remaining 400 shares, the load is applied only to the original cost of $10 per
share and not to the increase in NAV of $2 per share. Therefore, $4,000 of the
$5,400 redemption proceeds will be charged the load. At the rate of 5.00%, the
contingent deferred sales load would be $200. At the rate of 1.00%, the
contingent deferred sales load would be $40. In determining whether an amount is
available for redemption without incurring a deferred sales load, the purchase
payments made for all Class C shares in your account are aggregated.
DISTRIBUTION PLANS
Pursuant to Rule 12b-1 under the 1940 Act, the Funds have adopted two separate
plans of distribution under which each of each Fund's two Classes of shares may
directly incur or reimburse the Underwriter for certain expenses related to the
distribution of its shares, including:
o payments to securities dealers and other persons, including the Underwriter
and its affiliates, who are engaged in the sale of shares of the Fund and
who may be advising investors regarding the purchase, sale or retention of
Fund shares;
o expenses of maintaining personnel who engage in or support distribution of
shares or who render shareholder support
o services not otherwise provided by the Transfer Agent or the Trust;
o expenses of formulating and implementing marketing and promotional
activities, including direct mail promotions and mass media advertising;
o expenses of preparing, printing and distributing sales literature and
prospectuses and statements of additional information and reports for
recipients other than existing shareholders of the Fund;
o expenses of obtaining such information, analyses and reports with respect
to marketing and promotional activities as the Trust may, from time to
time, deem advisable; and
o any other expenses related to the distribution of each of the respective
Classes.
The annual limitation for payment of expenses pursuant to the Class A Plan is
.25% of each Fund's average daily net assets allocable to Class A shares. The
annual limitation for payment of expenses pursuant to the Class C Plan is 1.00%
of each Fund's average daily net assets allocable to Class C shares.
The payments permitted by the Class C Plan fall into two categories. First, the
Class C shares may directly incur or reimburse the Underwriter in an amount not
to exceed .75% per year of each Fund's average daily net assets allocable to
Class C shares for certain distribution-related expenses as described above. The
Class C Plan also provides for the payment of an account maintenance fee of up
to .25% per year of each Fund's average daily net assets allocable to Class C
shares, which may be paid to dealers based on the average value of Fund shares
owned by clients of such dealers.
Because these fees are paid out of the Funds' assets on an on-going basis, over
time these fees will increase the cost of your investment and may cost you more
than paying other types of sales loads.
In the event a Plan is terminated by the Trust in accordance with its terms, a
Fund will not be required to make any payments for expenses incurred after the
date the Plan terminates. The Underwriter may make payments to dealers and other
persons in an amount up to .75% per annum of the average value of Class C shares
owned by their clients, in addition to the .25% account maintenance fee
described above.
REDEEMING YOUR SHARES
To redeem your shares, send a written request to our Transfer Agent, Unified
Fund Services, with your name, account number and the amount you wish to redeem.
You must sign your request exactly as your name appears on the Fund's account
records. Mail your written redemption request to:
Dean Family of Funds
c/o Unified Fund Services, Inc.
P.O. Box 6110
Indianapolis, Indiana 46206-6110
If you would like your redemption proceeds deposited free of charge directly
into your account with a commercial bank or other depository institution via an
Automated Clearing House (ACH) transaction, contact the Transfer Agent for more
information.
We redeem shares based on the next NAV calculated after we receive a valid
request for redemption, less any contingent deferred sales load due on the
redeemed shares. Be sure to review "Buying Fund Shares" above to determine
whether your redemption is subject to a contingent deferred sales load.
You may also place a wire redemption request through your broker-dealer to
redeem your shares. The broker-dealer is responsible for ensuring that
redemption requests are transmitted to us in proper form in a timely manner. The
broker-dealer may charge you additional or different fees for redeeming shares
than those described in this Prospectus. If you request a redemption by wire,
you will be charged a processing fee. We reserve the right to change the
processing fee upon thirty days' notice. All charges will be deducted from your
account by redemption of shares in your account. Your bank or brokerage firm may
also impose a charge for processing the wire. In the event that wire transfer of
funds is impossible or impractical, the redemption proceeds will be sent by mail
to your designated account.
<TABLE>
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A signature guarantee helps protect against A signature guarantee is required
fraud. You can obtain one from most banks or for any redemption which is
securities dealers, but not from a notary $25,000 or more, which is mailed to
public. For joint accounts, each signature an address other than your address of
must be guaranteed. Please call us to ensure record or if your name(s) or address on
that your signature guarantee will be processed your account has been changed within
correctly. thirty days.
-----------------------------------------------
</TABLE>
Additional Information About Accounts and Redemptions
Small Accounts. Due to the high costs of maintaining small accounts, we may ask
that you increase your account balance if your account falls below $1,000 (or
$250 for a retirement account). If the account remains under $1,000 (or $250 for
a retirement account) 30 days after we notify you, we may close your account and
send you the proceeds, less any applicable sales load.
Automatic Withdrawal Plan. If your account's value is at least $5,000, you may
be eligible for our automatic withdrawal program that allows you to withdraw a
fixed amount from your account each month, calendar quarter or year. Under the
program, we send withdrawals to you or to another person you designate. Each
withdrawal must be $50 or more, and you should note that a withdrawal involves a
redemption of shares that may result in a gain or loss for federal income tax
purposes. Please contact us for more information about the automatic withdrawal
program.
Reinvestment Privilege. If you have redeemed shares of a Fund, you may reinvest
all or part of the proceeds without any additional sales load. This reinvestment
must occur within 90 days of the redemption and the privilege may only be
exercised once per year.
Miscellaneous. In connection with all redemptions of Fund
shares, we observe the following policies and procedures:
o We may refuse any redemption request involving recently purchased shares
until your check for the recently purchased shares has cleared. To
eliminate this delay, you may purchase shares of the Fund by certified
check or wire.
o We may delay mailing redemption proceeds for up to 7 days (most redemption
proceeds are mailed within 3 days after receipt of a request),
o We may process any redemption request that exceeds $250,000 or 1% of the
Fund's assets (whichever is less) by paying the redemption proceeds in
portfolio securities rather than cash (typically referred to as "redemption
in kind", see the Statement of Additional Information for further
discussion).
EXCHANGE PRIVILEGE
You may exchange shares of the Funds for each other or for shares of other funds
which have made appropriate arrangements with the Underwriter.
You may exchange Class A shares of a Fund which are not subject to a contingent
deferred sales load for Class A shares of any other Fund or for shares of a
money market fund which has made the appropriate arrangements with the
Underwriter. Class A shares of a Fund which are not subject to a contingent
deferred sales load may also be exchanged for Class A shares of any other fund
which has made the appropriate arrangements with the Underwriter (provided such
shares are not subject to a contingent deferred sales load).
Class C shares of a Fund, as well as Class A shares of a Fund subject to a
contingent deferred sales load, may be exchanged, on the basis of relative net
asset value per share, for shares of any other Fund subject to a contingent
deferred sales load. Class C shares of a Fund, as well as Class A shares of a
Fund subject to a contingent deferred sales load, may also be exchanged, on the
basis of relative net asset value per share, for shares subject to a contingent
deferred sales load of any other fund which has made appropriate arrangements
with the Underwriter.
A fund will "tack" the period for which the shares being exchanged were held
onto the holding period of the acquired shares for purposes of determining if a
contingent deferred sales load is applicable in the event that the acquired
shares are redeemed following the exchange. The period of time that shares are
held in a money market fund will not count toward the holding period for
determining whether a contingent deferred sales load is applicable.
Class C shares of a Fund, purchased by a qualified retirement plan whose broker
of record is not affiliated with the Adviser or the Underwriter and which has
made appropriate arrangements with the Fund, may be exchanged for Class A shares
of a Fund on the earlier of the date that the value of such plan's assets first
equals or exceeds $5 million or that is ten years after the date of the initial
purchase of the shares to be exchanged.
You may request an exchange by sending a written request to the Transfer Agent.
The request must be signed exactly as your name appears on the Trust's account
records. Exchanges may also be requested by telephone. If you are unable to
execute a transaction by telephone (for example during times of unusual market
activity), you should consider requesting the exchange by mail or by visiting
the Trust's offices at 2480 Kettering Tower, Dayton, Ohio 45423. An exchange
will be effected at the next determined net asset value after receipt of your
request by the Transfer Agent.
Exchanges may only be made for shares of funds then offered for sale in the your
state of residence and are subject to the applicable minimum initial investment
requirements. The exchange privilege may be modified or terminated by the Board
of Trustees upon 60 days' prior notice to shareholders. Before making an
exchange, contact the Transfer Agent to obtain more information about exchanges.
DIVIDENDS AND DISTRIBUTIONS
The Large Cap Value Fund, the Balanced Fund and the International Value Fund
each expects to distribute substantially all of its net investment income, if
any, on a quarterly basis. The Small Cap Value Fund expects to distribute
substantially all of its net investment income, if any, on an annual basis. Each
Fund expects to distribute any net realized long-term capital gains at least
once each year. Management will determine the timing and frequency of the
distributions of any net realized short-term capital gains.
Distributions are paid according to one of the following options:
Share Option - income distributions and capital
gains distributions reinvested in
additional shares.
Income Option - income distributions and
short-term capital gains distributions
paid in cash; long-term capital gains
distributions reinvested in additional
shares.
Cash Option - income distributions and capital gains distributions
paid in cash.
You should indicate your choice of option on your application. If no option is
specified, distributions will automatically be reinvested in additional shares.
All distributions will be based on the net asset value in effect on the payable
date.
<PAGE>
If you select the Income Option or the Cash Option and the U.S. Postal Service
cannot deliver your checks or if your checks remain uncashed for six months,
your dividends may be reinvested in the account at the then-current net asset
value and the account will be converted to the Share Option. No interest will
accrue on amounts represented by uncashed distribution checks.
Any dividend or capital gains distribution you receive in cash from any Fund may
be returned within 30 days of the distribution date to the Transfer Agent for
reinvestment at the net asset value next determined after its return. You or
your dealer must notify the Transfer Agent that a distribution is being
reinvested pursuant to this provision.
TAXES
Each Fund has qualified and intends to continue to qualify for the special tax
treatment afforded a "regulated investment company" under Subchapter M of the
Internal Revenue Code so that it does not pay federal taxes on income and
capital gains distributed to shareholders. Each Fund intends to distribute
substantially all of its net investment income and any net realized capital
gains to its shareholders. Distributions of net investment income and from net
realized short-term capital gains, if any, are taxable as ordinary income.
Dividends distributed by the Funds from net investment income may be eligible
for the dividends received deduction available to corporations. Distributions
resulting from the sale of foreign currencies and foreign obligations are
generally taxed as ordinary income or loss.
Distributions of net capital gains (i.e., the excess of net long-term capital
gains over net short-term capital losses) by a Fund to its shareholders are
taxable to the recipient shareholders as capital gains, without regard to the
length of time a shareholder has held Fund shares. Capital gains distributions
may be taxable at different rates depending on the length of time a Fund holds
its assets.
Redemptions of shares of the Funds are taxable events on which you may realize a
gain or loss. An exchange of a Fund's shares for shares of another Fund will be
treated as a sale of such shares and any gain on the transaction may be subject
to federal income tax.
The Funds' use of hedging techniques involves greater risk of unfavorable tax
consequences than funds not engaging in such techniques and may also result in
the application of the mark-to-market and straddle provisions of the Code. These
provisions could result in an increase (or decrease) in the amount of taxable
dividends paid by the Funds as well as affect whether dividends paid by the
Funds are classified as capital gains or ordinary income.
The Funds will mail to each of their shareholders a statement indicating the
amount and federal income tax status of all distributions made during the year.
In addition to federal taxes, shareholders of the Funds may be subject to state
and local taxes on distributions. Shareholders should consult their tax advisors
about the tax effect of distributions and withdrawals from the Funds and the use
of the Automatic Withdrawal Plan and the Exchange Privilege. The tax
consequences described in this section apply whether distributions are taken in
cash or reinvested in additional shares.
OPERATION OF THE FUNDS
The Funds are diversified series of the Dean Family of Funds, an open-end
management investment company organized as an Ohio business trust on December
18, 1996. The Board of Trustees supervises the business activities of the Trust.
Like other mutual funds, the Trust retains various organizations to perform
specialized services for the Funds.
The Trust retains Dean Investment Associates, 2480 Kettering Tower, Dayton, Ohio
45423 to manage the Funds' investments. Dean Investment Associates is an
independent investment counsel firm which has been advising individual,
institutional and corporate clients since 1972. Dean Investment Associates
currently provides investment advisory services to three registered investment
companies which serve as underlying vehicles for variable annuity insurance
products. The firm manages approximately $4 billion for clients worldwide.
Currently, Dean Investment Associates has 110 employees which include 8
Chartered Financial Analysts (CFA), 7 Certified Public Accountants (CPA), 3
Certified Financial Planners (CFP) and 3 PhDs. Dean Investment Associates is
Dayton, Ohio's largest independent investment manager.
The Large Cap Value Fund, the Small Cap Value Fund and the Balanced Fund each
pays Dean Investment Associates a fee for its services equal to the annual rate
of 1.00% of the average value of its daily net assets. The International Value
Fund pays Dean Investment Associates a fee for its services equal to the annual
rate of 1.25% of the average value of its daily net assets.
Dirk H. Van Dijk and Arvind K. Sachdeva are primarily responsible for managing
the portfolio of the Large Cap Value Fund. Mr. Van Dijk is currently Senior
Equity Analyst and has been employed by Dean Investment Associates since 1994.
He previously was an Equity Analyst with Bartlett & Co., an investment adviser.
Mr. Sachdeva is currently Director of Research and has been employed by Dean
Investment Associates in various capacities since 1993. He previously was a
portfolio manager for Carillon Advisers, an investment management firm.
Mr. Van Dijk is primarily responsible for managing the portfolio of the Small
Cap Value Fund and Mr. Sachdeva is primarily responsible for managing the
portfolio of the Balanced Fund.
Newton Capital Management Ltd., 71 Queen Victoria Street, London, England EC4V
4DR ("Newton Capital"), has been retained by Dean Investment Associates to
manage the investments of the International Value Fund. Newton Capital is a
United Kingdom investment advisory firm registered with the Securities and
Exchange Commission. Newton Capital is affiliated with Newton Investment
Management Ltd., an English investment advisory firm which has been managing
assets for institutional investors, mutual funds and individuals since 1977.
Dean Investment Associates (not the Fund) pays Newton Capital a fee for its
services equal to the rate of .50% of the average value of the International
Value Fund's daily net assets.
Paul Butler is International Equities Director for Newton Capital Management and
is primarily responsible for managing the portfolio of the International Value
Fund. Mr. Butler graduated from Cambridge University in 1986 with a degree in
Natural Sciences and joined Newton Capital in 1987. Mr. Butler worked as an
International Equities analyst for five years before becoming a Portfolio
Manager in 1992. In 1993, Mr. Butler was appointed as a director of Newton
Capital and promoted to his current position as Director of International
Equities.
2480 Securities LLC, 2480 Kettering Tower, Dayton, Ohio 45423 (the
"Underwriter"), an affiliate of Dean Investment Associates, serves as principal
underwriter for the Funds and is the exclusive agent for the distribution of
shares of the Funds.
CALCULATION OF SHARE PRICE AND PUBLIC OFFERING PRICE
On each day that the Trust is open for business, the share price (net asset
value) of Class C shares and the public offering price (net asset value plus
applicable sales load) of Class A shares is determined as of the close of the
regular session of trading on the New York Stock Exchange, generally 4:00 p.m.,
Eastern time. The Trust is open for business on each day the New York Stock
Exchange is open for business and on any other day when there is sufficient
trading in a Fund's investments that its net asset value might be materially
affected.
Securities held by a Fund may be primarily listed on foreign exchanges or traded
in foreign markets which are open on days (such as Saturdays and U.S. holidays)
when the New York Stock Exchange is not open for business. As a result, the net
asset value per share of such Fund may be significantly affected by trading on
days when the Trust is not open for business. Securities mainly traded on a
non-U.S. exchange are generally valued according to the preceding closing values
on that exchange. However, if an event that may change the value of a security
held in a Fund's portfolio occurs after the time when the closing value on the
non-U.S. exchange was determined, the Board of Trustees might decide to value
the security based on fair value. This may cause the value of the security on
the books of the Fund to be significantly different from the closing value on
the non-U.S. exchange and may affect the calculation of the Fund's net asset
value.
The net asset value per share of each Fund is calculated by dividing the sum of
the value of the securities held by the Fund plus cash or other assets minus all
liabilities (including estimated accrued expenses) by the total number of shares
outstanding of the Fund, rounded to the nearest cent. The net asset value per
share of each Fund will fluctuate with the value of the securities it holds.
U.S. Government obligations are valued at their most recent bid prices as
obtained from one or more of the major market makers for such securities. Other
portfolio securities are valued as follows:
(1) securities which are traded on stock exchanges or are quoted
by NASDAQ are valued at the last reported sale price as of the
close of the regular session of trading on the New York Stock
Exchange on the day the securities are being valued, or, if
not traded on a particular day, at the closing bid price;
(2) securities traded in the over-the-counter market, and which
are not quoted by NASDAQ, are valued at the last sale price
(or, if the last sale price is not readily available, at the
last bid price as quoted by brokers that make markets in the
securities) as of the close of the regular session of trading
on the New York Stock Exchange on the day the securities are
being valued;
(3) securities which are traded both in the over-the-counter
market and on a stock exchange are valued according to the
broadest and most representative market; and
(4) securities (and other assets) for which market quotations are
not readily available are valued at their fair value as
determined in good faith in accordance with consistently
applied procedures established by and under the general
supervision of the Board of Trustees.
<PAGE>
FINANCIAL HIGHLIGHTS
The financial highlights tables are intended to help you understand the
Funds' financial performance. Certain information reflects financial results for
a single Fund share. The total returns in the tables represent the rate that an
investor would have earned or lost on an investment in the Funds (assuming
reinvestment of all dividends and distributions). This information has been
audited by Ernst & Young LLP, whose report, along with the Funds' financial
statements, are included in the Statement of Additional Information, which is
available upon request.
DEAN FAMILY OF FUNDS
LARGE CAP VALUE FUND
FINANCIAL HIGHLIGHTS
Per Share Data for a Share Outstanding Throughout Each Period
<TABLE>
<S> <C> <C> <C>
Class A
Year Year From (c)
Ended Ended Inception
March 31, March 31, Through
2000 1999 March 31, 1998
Net asset value at beginning of period............ $ 10.65 $ 12.21 $ 10.00
-------------- -------------- --------------
Income (loss) from investment operations:
Net investment income (loss)................... 0.01 0.05 0.03
Net realized and unrealized gains (losses)
on investments............................... 0.46 (1.44) 2.36
--------------- ------------- ---------------
Total from investment operations.................. 0.47 (1.39) 2.39
--------------- ------------- ---------------
Less distributions:
From net investment income..................... (0.01) (0.05) (0.03)
From net realized gains........................ ------ (0.12) (0.15)
---------------- -------------- ---------------
Total distributions............................... (0.01) (0.17) (0.18)
---------------- -------------- ----------------
Net asset value at end of period.................. $ 11.11 $ 10.65 $ 12.21
================ ================ ================
Total return (b).................................. 4.38% (11.48)% 24.11%
=============== ================ ===============
Net assets at end of period....................... $ 10,134,912 $ 9,315,112 $ 7,669,807
============== =============== ==============
Ratio of expenses to average net assets:
Before fee waivers and/or expense reimbursements
by Adviser................................... 2.11% 2.29% 2.72% (a)
After fee waivers and/or expense reimbursements
by Adviser................................... 1.85% 1.85% 1.84% (a)
Ratio of net investment income
to average net assets.......................... .02% 0.46% 0.30% (a)
Portfolio turnover rate........................... 71% 55% 54% (a)
</TABLE>
See accompanying notes to financial statements.
(a) Annualized
(b) Total returns shown exclude the effect of applicable sales loads and are not
annualized. (c) Represents the period from the initial Public Offering of Shares
(May 28, 1997) through March 31, 1998.
<PAGE>
DEAN FAMILY OF FUNDS
LARGE CAP VALUE FUND
FINANCIAL HIGHLIGHTS
Per Share Data for a Share Outstanding Throughout Each Period
<TABLE>
<S> <C> <C> <C>
Class C
Year Year From (c)
Ended Ended Inception
March 31, March 31, Through
2000 1999 March 31, 1998
Net asset value at beginning of period............ $ 10.57 $ 12.16 $ 10.76
------------- ------------- -------------
Income (loss) from investment operations:
Net investment income (loss)................... (0.03) (0.02) (0.01)
Net realized and unrealized gains (losses)
on investments............................... 0.18 (1.45) 1.56
--------------- ------------- ------------
Total from investment operations.................. 0.15 (1.47) 1.55
---------------- ------------- ------------
Less distributions:
From net investment income..................... (0.01) ------ ------
From net realized gains........................ ------- (0.12) (0.15)
---------------- ------------ ------------
Total distributions............................... (0.01) (0.12) (0.15)
---------------- ------------- ------------
Net asset value at end of period.................. $ 10.71 $ 10.57 $ 12.16
================ ============= =============
Total return (b).................................. 1.38% (12.12)% 14.63%
================ ============= ============
Net assets at end of period....................... $ 511,730 $ 531,871 $ 136,237
================ ============== ============
Ratio of expenses to average net assets:
Before fee waivers and/or expense reimbursements
by Adviser................................... 4.04% 8.53% 52.73% (a)
After fee waivers and/or expense reimbursements
by Adviser................................... 2.60% 2.60% 2.59% (a)
Ratio of net investment (loss)
to average net assets.......................... (.22)% (0.31)% (0.55)% (a)
Portfolio turnover rate .......................... 71% 55% 54% (a)
</TABLE>
See accompanying notes to financial statements.
(a) Annualized
(b) Total returns shown exclude the effect of applicable sales loads and are not
annualized. (c) Represents the period from the initial Public Offering of Shares
(August 19, 1997) through March 31, 1998.
<PAGE>
DEAN FAMILY OF FUNDS
SMALL CAP VALUE FUND
FINANCIAL HIGHLIGHTS
Per Share Data for a Share Outstanding Throughout Each Period
<TABLE>
<S> <C> <C> <C>
Class A
Year Year From
Ended Ended Inception
March 31, March 31, Through
2000 1999 March 31, 1998 (c)
Net asset value at beginning of period............ $ 9.15 $ 12.84 $ 10.00
------------ ------------- --------------
Income (loss) from investment operations:
Net investment income (loss)................... 0.14 0.08 0.03
Net realized and unrealized gains (losses)
on investments............................... (0.19) (3.03) 3.30
----------------- ------------- -------------
Total from investment operations.................. (0.05) (2.95) 3.33
----------------- ------------- -------------
Less distributions:
From net investment income..................... (0.15) (0.06) (0.02)
From net realized gains........................ ----- (0.68) (0.47)
------------------ ----------- ------------
Total distributions............................... (0.15) (0.74) (0.49)
------------------ -----------
Net asset value at end of period.................. $ 8.95 $ 9.15 $ 12.84
================= =========== ==============
Total return (b).................................. (0.53)% (23.39)% 33.86%
================== ============ ==============
Net assets at end of period....................... $ 13,333,607 $ 15,479,055 $ 19,437,554
================= =========== ============
Ratio of expenses to average net assets:
Before fee waivers and/or expense reimbursements
by Adviser................................... 1.92% 1.89% 1.98% (a)
After fee waivers and/or expense reimbursements
by Adviser................................... 1.85% 1.85% 1.84% (a)
Ratio of net investment income (loss)
to average net assets.......................... 1.49% 0.83% 0.35% (a)
Portfolio turnover rate .......................... 90% 79% 62% (a)
</TABLE>
See accompanying notes to financial statements.
(a) Annualized
(b) Total returns shown exclude the effect of applicable sales loads and are not
annualized. (c) Represents the period from the initial Public Offering of Shares
(May 28, 1997) through March 31, 1998.
<PAGE>
DEAN FAMILY OF FUNDS
SMALL CAP VALUE FUND
FINANCIAL HIGHLIGHTS
Per Share Data for a Share Outstanding Throughout Each Period
<TABLE>
<S> <C> <C> <C>
Class C
Year Year From
Ended Ended Inception
March 31, March 31, Through
2000 1999 March 31, 1998 (c)
Net asset value at beginning of period............ $ 9.05 $ 12.79 $ 10.95
------------- ------------- ------------
Income (loss) from investment operations:
Net investment income (loss)................... (0.01) 0.01 (0.02)
Net realized and unrealized gains (losses)
on investments............................... (0.09) (3.03) 2.33
-------------- ----------- -------------
Total from investment operations.................. (0.10) (3.02) 2.31
-------------- ----------- -------------
Less distributions:
From net investment income..................... (0.15) (0.04) ------
From net realized gains........................ ----- (0.68) (0.47)
--------------- ----------- -------------
Total distributions............................... (0.15) (0.72) (0.47)
--------------- ----------- -------------
Net asset value at end of period.................. $ 8.80 $ 9.05 $ 12.79
=============== =========== =============
Total return (b).................................. (1.11)% (24.00)% 21.63%
=============== =========== =============
Net assets at end of period....................... $ 2,344,244 $ 2,560,618 $ 1,392,036
============== =========== ============
Ratio of expenses to average net assets:
Before fee waivers and/or expense reimbursements
by Adviser................................... 2.32% 2.70% 6.41% (a)
After fee waivers and/or expense reimbursements
by Adviser................................... 2.31% 2.60% 2.59% (a)
Ratio of net investment income (loss)
to average net assets.......................... (0.31)% 0.17% (0.42)% (a)
Portfolio turnover rate .......................... 90% 79% 62% (a)
</TABLE>
See accompanying notes to financial statements.
(a) Annualized
(b) Total returns shown exclude the effect of applicable sales loads and are not
annualized. (c) Represents the period from the initial Public Offering of Shares
(August 1, 1997) through March 31, 1998.
<PAGE>
DEAN FAMILY OF FUNDS
BALANCED FUND
FINANCIAL HIGHLIGHTS
Per Share Data for a Share Outstanding Throughout Each Period
<TABLE>
<S> <C> <C> <C>
Class A
Year Year From (c)
Ended Ended Inception
March 31, March 31, Through
2000 1999 March 31, 1998
Net asset value at beginning of period............ $ 10.75 $ 11.55 $ 10.00
-------------- -------------- --------------
Income (loss) from investment operations:
Net investment income (loss)................... 0.28 0.19 0.17
Net realized and unrealized gains (losses)
on investments............................... (0.66) (0.56) 1.62
--------------- -------------- --------------
Total from investment operations.................. (0.38) (0.37) 1.79
--------------- --------------- --------------
Less distributions:
From net investment income..................... (0.21) (0.19) (0.16)
From net realized gains........................ ----- (0.24) (0.08)
---------------- --------------- --------------
Total distributions............................... (0.21) (0.43) (0.24)
---------------- --------------- --------------
Net asset value at end of period.................. $ 10.16 $ 10.75 $ 11.55
================ ============== ==============
Total return (b).................................. (3.52)% (3.22)% 18.07%
================ ============== ==============
Net assets at end of period....................... $ 8,606,480 $ 10,391,582 $ 7,262,670
================ ============== ===============
Ratio of expenses to average net assets:
Before fee waivers and/or expense reimbursements
by Adviser................................... 2.13% 2.09% 2.60% (a)
After fee waivers and/or expense reimbursements
by Adviser................................... 1.85% 1.85% 1.84% (a)
Ratio of net investment income (loss)
to average net assets.......................... 2.63% 1.79% 1.85% (a)
Portfolio turnover rate .......................... 196% 60% 64% (a)
</TABLE>
See accompanying notes to financial statements.
(a) Annualized
(b) Total returns shown exclude the effect of applicable sales loads and are not
annualized. (c) Represents the period from the initial Public Offering of Shares
(May 28, 1997) through March 31, 1998.
<PAGE>
DEAN FAMILY OF FUNDS
BALANCED FUND
FINANCIAL HIGHLIGHTS
Per Share Data for a Share Outstanding Throughout Each Period
<TABLE>
<S> <C> <C> <C>
Class C
Year Year From (c)
Ended Ended Inception
March 31, March 31, Through
2000 1999 March 31, 1998
Net asset value at beginning of period............ $ 10.73 $ 11.52 $ 10.71
------------- -------------- --------------
Income (loss) from investment operations:
Net investment income (loss)................... (0.22) 0.11 0.07
Net realized and unrealized gains (losses)
on investments............................... (0.34) (0.55) 0.92
------------- -------------- -------------
Total from investment operations.................. (0.56) (0.44) 0.99
------------- -------------- -------------
Less distributions:
From net investment income..................... (0.17) (0.11) (0.10)
From net realized gains........................ ----- (0.24) (0.08)
-------------- ------------- --------------
Total distributions............................... (0.17) (0.35) (0.18)
-------------- ------------- --------------
Net asset value at end of period.................. $ 10.00 $ 10.73 $ 11.52
============== ============= ===============
Total return (b).................................. (5.24)% (3.81)% 9.37%
============== ============= ===============
Net assets at end of period....................... $ 1,291,000 $ 1,885,376 $ 1,083,890
============== ============= ==============
Ratio of expenses to average net assets:
Before fee waivers and/or expense reimbursements
by Adviser................................... 2.74% 3.14% 7.39% (a)
After fee waivers and/or expense reimbursements
by Adviser................................... 2.60% 2.60% 2.59% (a)
Ratio of net investment income (loss)
to average net assets.......................... (2.13)% 1.04% 0.99% (a)
Portfolio turnover rate .......................... 196% 60% 64% (a)
</TABLE>
See accompanying notes to financial statements.
(a) Annualized
(b) Total returns shown exclude the effect of applicable sales loads and are not
annualized. (c) Represents the period from the initial Public Offering of Shares
(August 1, 1997) through March 31, 1998.
<PAGE>
DEAN FAMILY OF FUNDS
INTERNATIONAL VALUE FUND
FINANCIAL HIGHLIGHTS
Per Share Data for a Share Outstanding Throughout Each Period
<TABLE>
<S> <C> <C> <C>
Class A
Year Year From (c)
Ended Ended Inception
March 31, March 31, Through
2000 1999 March 31, 1998
Net asset value at beginning of period............ $ 12.41 $ 11.76 $ 10.00
------------- ----------- ------------
Income (loss) from investment operations:
Net investment income (loss)................... (0.13) (0.01) (0.05)
Net realized and unrealized gains (losses)
on investments............................... 8.50 0.69 1.81
-------------- ------------ -------------
Total from investment operations.................. 8.37 0.68 1.76
--------------- ------------ -------------
Less distributions:
From net investment income..................... ----- ----- -----
From net realized gains........................ (0.67) (0.03) -----
--------------- ------------- -------------
Total distributions............................... (0.67) (0.03) -----
--------------- ------------- -------------
Net asset value at end of period.................. $ 20.11 $ 12.41 $ 11.76
=============== ============= =============
Total return (b).................................. 69.26% 5.82% 17.60%
=============== ============= =============
Net assets at end of period....................... $ 19,605,996 $ 5,981,899 $ 1,295,896
=============== ============= =============
Ratio of expenses to average net assets:
Before fee waivers and/or expense reimbursements
by Adviser................................... 2.89% 4.25% 16.66% (a)
After fee waivers and/or expense reimbursements
by Adviser................................... 2.09% 2.09% 2.04% (a)
Ratio of net investment (loss)
to average net assets.......................... (0.82)% (0.70)% (1.30)% (a)
Portfolio turnover rate .......................... 157% 100% 109% (a)
</TABLE>
See accompanying notes to financial statements.
(a) Annualized
(b) Total returns shown exclude the effect of applicable sales loads and are not
annualized. (c) Represents the period from the initial Public Offering of Shares
(October 13, 1997) through March 31, 1998.
<PAGE>
DEAN FAMILY OF FUNDS
INTERNATIONAL VALUE FUND
FINANCIAL HIGHLIGHTS
Per Share Data for a Share Outstanding Throughout Each Period
<TABLE>
<S> <C> <C> <C>
Class C
Year Year From (c)
Ended Ended Inception
March 31, March 31, Through
2000 1999 March 31, 1998
Net asset value at beginning of period............ $ 12.28 $ 11.72 $ 9.89
------------- ------------- -------------
Income (loss) from investment operations:
Net investment income (loss)................... (0.24) (0.10) (0.04)
Net realized and unrealized gains (losses)
on investments............................... 8.43 0.69 1.87
-------------- ------------- --------------
Total from investment operations.................. 8.19 0.59 1.83
--------------- -------------- --------------
Less distributions:
From net investment income..................... ----- ----- -----
From net realized gains........................ (0.71) (0.03) -----
--------------- -------------- ---------------
Total distributions............................... (0.71) (0.03) -----
--------------- --------------- ---------------
Net asset value at end of period.................. $ 19.76 $ 12.28 $ 11.72
=============== ============== ================
Total return (b).................................. 68.54% 5.07% 18.50%
=============== ============= ================
Net assets at end of period....................... $ 1,902,892 $ 1,453,569 $ 87,249
=============== ============== ================
Ratio of expenses to average net assets:
Before fee waivers and/or expense reimbursements
by Adviser................................... 3.53% 5.91% 58.89% (a)
After fee waivers and/or expense reimbursements
by Adviser................................... 2.71% 2.84% 2.82% (a)
Ratio of net investment (loss)
to average net assets.......................... (1.61)% (1.23)% (1.94)% (a)
Portfolio turnover rate .......................... 157% 100% 109% (a)
</TABLE>
See accompanying notes to financial statements.
(a) Annualized
(b) Total returns shown exclude the effect of applicable sales loads and are not
annualized. (c) Represents the period from the initial Public Offering of Shares
(November 6, 1997) through March 31, 1998.
<PAGE>
DEAN Family Of Funds
2480 Kettering Tower
Dayton, Ohio 45423
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
UNIFIED FUND SERVICES, INC.
P.O. Box 6110
Indianapolis, Indiana 46206-6110
Shareholder Service
Nationwide: (Toll-Free) 888-899-8343
<PAGE>
Additional information about the Funds is included in the Statement of
Additional Information ("SAI"), which is incorporated by reference in its
entirety. Additional information about the Funds' investments is available in
the Funds' annual and semiannual reports to shareholders. In the Funds' annual
report, you will find a discussion of the market conditions and strategies that
significantly affected the Funds' performance during their last fiscal year.
To obtain a free copy of the SAI, the annual and semiannual reports or other
information about the Funds, or to make shareholder inquiries about the Funds,
please call 1-888-899-8343.
Information about the Funds (including the SAI) can be reviewed and copied at
the Securities and Exchange Commission's public reference room in Washington,
D.C. Information about the operation of the public reference room can be
obtained by calling the Commission at 1-800-SEC-0330. Reports and other
information about the Funds are available on the Commission's Internet site at
http://www.sec.gov. Copies of information on the Commission's Internet site may
be obtained, upon payment of a duplicating fee, by writing to: Securities and
Exchange Commission, Public Reference Section, Washington, D.C. 20549-6009 or by
electronic request at [email protected].
File No. 811-7987
<PAGE>
DEAN FAMILY OF FUNDS
--------------------
STATEMENT OF ADDITIONAL INFORMATION
-----------------------------------
August 1, 2000
Large Cap Value Fund
Small Cap Value Fund
Balanced Fund
International Value Fund
This Statement of Additional Information is not a prospectus. It should
be read in conjunction with the Prospectus of the Dean Family of Funds dated
August 1, 2000. A copy of the Funds' Prospectus can be obtained by writing the
Trust at 2480 Kettering Tower, Dayton, Ohio 45423, or by calling the Trust
nationwide toll-free 888-899-8343.
<PAGE>
STATEMENT OF ADDITIONAL INFORMATION
-----------------------------------
Dean Family of Funds
2480 Kettering Tower
Dayton, Ohio 45423
TABLE OF CONTENTS
-----------------
THE TRUST.................................................................... 3
DEFINITIONS, POLICIES AND RISK CONSIDERATIONS................................ 4
QUALITY RATINGS OF CORPORATE BONDS AND PREFERRED STOCKS...................... 18
INVESTMENT LIMITATIONS....................................................... 20
TRUSTEES AND OFFICERS........................................................ 22
THE INVESTMENT ADVISER....................................................... 24
THE SUB-ADVISER.............................................................. 26
THE UNDERWRITER.............................................................. 27
DISTRIBUTION PLANS........................................................... 27
SECURITIES TRANSACTIONS...................................................... 29
PORTFOLIO TURNOVER........................................................... 31
CALCULATION OF SHARE PRICE AND PUBLIC OFFERING PRICE......................... 32
OTHER PURCHASE INFORMATION................................................... 33
TAXES........................................................................ 34
REDEMPTION IN KIND........................................................... 37
HISTORICAL PERFORMANCE INFORMATION........................................... 37
CUSTODIAN.................................................................... 40
AUDITORS..................................................................... 40
PRINCIPAL SECURITY HOLDERS................................................... 41
TRANSFER AGENT, FUND ACCOUNTING AGENT, AND ADMINISTRATOR..................... 42
ANNUAL REPORT................................................................ 43
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THE TRUST
The Dean Family of Funds (the "Trust") was organized as an Ohio
business trust on December 18, 1996. The Trust is an open-end, diversified,
management investment company that currently offers four series of shares to
investors: the Large Cap Value Fund, the Small Cap Value Fund, the Balanced Fund
and the International Value Fund (referred to individually as a "Fund" and
collectively as the "Funds").
Each Fund has its own investment objective(s) and policies. None of the
Funds is intended to be a complete investment program, and there is no assurance
that the investment objective of any Fund can be achieved. Each Fund's
investment objective may be changed by the Board of Trustees without shareholder
approval, but only after notification has been given to shareholders and after
this Prospectus has been revised accordingly. If there is a change in a Fund's
investment objective, shareholders should consider whether such Fund remains an
appropriate investment in light of their then current financial position and
needs. Unless otherwise indicated, all investment practices and limitations of
the Funds are nonfundamental policies which may be changed by the Board of
Trustees without shareholder approval.
Shares of each Fund have equal voting rights and liquidation rights,
and are voted in the aggregate and not by Fund except in matters where a
separate vote is required by the 1940 Act or when the matter affects only the
interests of a particular Fund. Each class of shares of a Fund shall vote
separately on matters relating to its plan of distribution pursuant to Rule
12b-1 (see "Distribution Plans"). When matters are submitted to shareholders for
a vote, each shareholder is entitled to one vote for each full share owned and
fractional votes for fractional shares owned. The Trust does not normally hold
annual meetings of shareholders. The Trustees shall promptly call and give
notice of a meeting of shareholders for the purpose of voting upon the removal
of any Trustee when requested to do so in writing by shareholders holding 10% or
more of the Trust's outstanding shares. The Trust will comply with the
provisions of Section 16(c) of the 1940 Act in order to facilitate
communications among shareholders.
Each share of a Fund represents an equal proportionate interest in the
assets and liabilities belonging to that Fund with each other share of that Fund
and is entitled to such dividends and distributions out of the income belonging
to the Fund as are declared by the Trustees. The shares do not have cumulative
voting rights or any preemptive or conversion rights, and the Trustees have the
authority from time to time to divide or combine the shares of any Fund into a
greater or lesser number of shares of that Fund so long as the proportionate
beneficial interest in the assets belonging to that Fund and the rights of
shares of any other Fund are in no way affected. In case of any liquidation of a
Fund, the holders of shares of the Fund being liquidated will be entitled to
receive as a class a distribution out of the assets, net of the liabilities,
belonging to that Fund. Expenses attributable to any Fund are borne by that
Fund. Any general expenses of the Trust not readily identifiable as belonging to
a particular Fund are allocated by or under the direction of the Trustees in
such manner as the Trustees determine to be fair and equitable. Generally, the
Trustees allocate such expenses on the basis of relative net assets or number of
shareholders. No shareholder is liable to further calls or to assessment by the
Trust without his express consent.
Both Class A shares and Class C shares of a Fund represent an interest
in the same assets of such Fund, have the same rights and are identical in all
material respects except that (i) Class C shares bear the expenses of higher
distribution fees; (ii) certain other class specific expenses will be borne
solely by the class to which such expenses are attributable, including transfer
agent fees attributable to a specific class of shares, printing and postage
expenses related to preparing and distributing materials to current shareholders
of a specific class, registration fees incurred by a specific class of shares,
the expenses of administrative personnel and services required to support the
shareholders of a specific class, litigation or other legal expenses relating to
a class of shares, Trustees' fees or expenses incurred as a result of issues
relating to a specific class of shares and accounting fees and expenses relating
to a specific class of shares; and (iii) each class has exclusive voting rights
with respect to matters relating to its own distribution arrangements. The Board
of Trustees may classify and reclassify the shares of a Fund into additional
classes of shares at a future date.
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DEFINITIONS, POLICIES AND RISK CONSIDERATIONS
A more detailed discussion of some of the terms used and investment
policies described in the Prospectus (see "Investment Objectives and Policies")
appears below:
Majority. As used in the Prospectus and this Statement of Additional
Information, the term "majority" of the outstanding shares of the Trust (or of
any Fund) means the lesser of (1) 67% or more of the outstanding shares of the
Trust (or the applicable Fund) present at a meeting, if the holders of more than
50% of the outstanding shares of the Trust (or the applicable Fund) are present
or represented at such meeting or (2) more than 50% of the outstanding shares of
the Trust (or the applicable Fund).
U.S. Government Obligations. "U.S. Government obligations" include
securities which are issued or guaranteed by the United States Treasury, by
various agencies of the United States Government, and by various
instrumentalities which have been established or sponsored by the United States
Government. U.S. Treasury obligations are backed by the "full faith and credit"
of the United States Government. U.S. Treasury obligations include Treasury
bills, Treasury notes, and Treasury bonds. U.S. Treasury obligations also
include the separate principal and interest components of U.S. Treasury
obligations which are traded under the Separate Trading of Registered Interest
and Principal of Securities ("STRIPS") program. Agencies or instrumentalities
established by the United States Government include the Federal Home Loan Banks,
the Federal Land Bank, the Government National Mortgage Association, the Federal
National Mortgage Association, the Federal Home Loan Mortgage Corporation, the
Student Loan Marketing Association, the Small Business Administration, the Bank
for Cooperatives, the Federal Intermediate Credit Bank, the Federal Financing
Bank, the Federal Farm Credit Banks, the Federal Agricultural Mortgage
Corporation, the Resolution Funding Corporation, the Financing Corporation of
America and the Tennessee Valley Authority. Some of these securities are
supported by the full faith and credit of the United States Government while
others are supported only by the credit of the agency or instrumentality, which
may include the right of the issuer to borrow from the United States Treasury.
In the case of securities not backed by the full faith and credit of the United
States, the investor must look principally to the agency issuing or guaranteeing
the obligation for ultimate repayment, and may not be able to assert a claim
against the United States in the
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event the agency or instrumentality does not meet its commitments. Shares of the
Funds are not guaranteed or backed by the United States Government.
Commercial Paper. Commercial paper consists of short-term (usually from
one to two hundred seventy days) unsecured promissory notes issued by
corporations in order to finance their current operations. The Funds will only
invest in commercial paper rated A-1 or A-2 by Standard & Poor's Ratings Group
("S&P") or Prime-1 or Prime-2 by Moody's Investors Service, Inc. ("Moody's") or
which, in the opinion of the investment adviser, is of equivalent investment
quality. Certain notes may have floating or variable rates. Variable and
floating rate notes with a demand notice period exceeding seven days will be
subject to each Fund's restrictions on illiquid investments (see "Investment
Limitations") unless, in the judgment of the investment adviser, subject to the
direction of the Board of Trustees, such note is liquid.
The rating of Prime-1 is the highest commercial paper rating assigned
by Moody's. Among the factors considered by Moody's in assigning ratings are the
following: evaluation of the management of the issuer; economic evaluation of
the issuer's industry or industries and an appraisal of speculative-type risks
which may be inherent in certain areas; evaluation of the issuer's products in
relation to competition and customer acceptance; liquidity; amount and quality
of long-term debt; trend of earnings over a period of 10 years; financial
strength of the parent company and the relationships which exist with the
issuer; and recognition by the management of obligations which may be present or
may arise as a result of public interest questions and preparations to meet such
obligations. These factors are all considered in determining whether the
commercial paper is rated Prime-1 or Prime-2. Commercial paper rated A-1
(highest quality) by S&P has the following characteristics: liquidity ratios are
adequate to meet cash requirements; long-term senior debt is rated "A" or
better, although in some cases "BBB" credits may be allowed; the issuer has
access to at least two additional channels of borrowing; basic earnings and cash
flow have an upward trend with allowance made for unusual circumstances;
typically, the issuer's industry is well established and the issuer has a strong
position within the industry; and the reliability and quality of management are
unquestioned. The relative strength or weakness of the above factors determines
whether the issuer's commercial paper is rated A-1 or A-2.
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Bank Debt Instruments. Bank debt instruments in which the Funds may
invest consist of certificates of deposit, bankers' acceptances and time
deposits issued by national banks and state banks, trust companies and mutual
savings banks, or banks or institutions the accounts of which are insured by the
Federal Deposit Insurance Corporation or the Federal Savings and Loan Insurance
Corporation. Certificates of deposit are negotiable certificates evidencing the
indebtedness of a commercial bank to repay funds deposited with it for a
definite period of time (usually from fourteen days to one year) at a stated or
variable interest rate. Bankers' acceptances are credit instruments evidencing
the obligation of a bank to pay a draft which has been drawn on it by a
customer, which instruments reflect the obligation both of the bank and of the
drawer to pay the face amount of the instrument upon maturity. Time deposits are
non-negotiable deposits maintained in a banking institution for a specified
period of time at a stated interest rate. Investments in time deposits maturing
in more than seven days will be subject to each Fund's restrictions on illiquid
investments (see "Investment Limitations").
Shares of Other Investment Companies. Each Fund will not invest more
than 10% of its total assets in shares of other investment companies. To the
extent the Funds invest in securities of other investment companies, Fund
shareholders would indirectly pay a portion of the operating costs of such
companies. These costs include management, brokerage, shareholder servicing and
other operational expenses. Indirectly, then, shareholders may pay higher
operational costs than if they owned the underlying investment companies
directly.
Repurchase Agreements. Repurchase agreements are transactions by which
a Fund purchases a security and simultaneously commits to resell that security
to the seller at an agreed upon time and price, thereby determining the yield
during the term of the agreement. In the event of a bankruptcy or other default
of the seller of a repurchase agreement, a Fund could experience both delays in
liquidating the underlying security and losses. To minimize these possibilities,
each Fund intends to enter into repurchase agreements only with its Custodian,
with banks having assets in excess of $10 billion and with broker-dealers who
are recognized as primary dealers in U.S. Government obligations by the Federal
Reserve Bank of New York. Each Fund will only enter into repurchase agreements
which are collateralized by U.S. Government obligations. Collateral for
repurchase agreements is held in safekeeping in the customer-only account of the
Funds' Custodian at the Federal Reserve Bank. A Fund will not enter into a
repurchase agreement not terminable within seven days if, as a result thereof,
more than 15% of the value of its net assets would be invested in such
securities and other illiquid securities.
Although the securities subject to a repurchase agreement might bear
maturities exceeding one year, settlement for the repurchase would never be more
than one year after a Fund's acquisition of the securities and normally would be
within a shorter period of time. The resale price will be in excess of the
purchase price, reflecting an agreed upon market rate effective for the period
of time the Fund's money will be invested in the securities, and will not be
related to the coupon rate of the purchased security. At the time a Fund enters
into a repurchase agreement, the value of the underlying security, including
accrued interest, will equal or exceed the value of the repurchase agreement,
and in the case of a repurchase agreement exceeding one day, the seller will
agree that the value of the underlying security, including accrued interest,
will at all times equal or exceed the value of the repurchase agreement. The
collateral securing the seller's obligation must be of a credit quality at least
equal to the Fund's investment criteria for portfolio securities and will be
held by the Custodian or in the Federal Reserve Book Entry System.
For purposes of the Investment Company Act of 1940, a repurchase
agreement is deemed to be a loan from a Fund to the seller subject to the
repurchase agreement and is therefore subject to that Fund's investment
restriction applicable to loans. It is not clear whether a court would consider
the securities purchased by a Fund subject to a repurchase agreement as being
owned by that Fund or as being collateral for a loan by the Fund to the seller.
In the event of the commencement of bankruptcy or insolvency proceedings with
respect to the seller of the securities before repurchase of the security under
a repurchase agreement, a Fund may encounter delay and incur costs before being
able to sell the security. Delays may involve loss of interest or decline in
price of the security. If a court characterized the transaction as a loan and a
Fund has not perfected a security interest in the security, that Fund may be
required to return the security to the seller's estate and be treated as an
unsecured creditor of the seller. As an unsecured creditor, a Fund would be at
the risk of losing some or all of the principal and income involved in the
transaction. As with any unsecured debt obligation purchased for a Fund, the
investment adviser seeks to minimize the risk of loss through repurchase
agreements by analyzing the creditworthiness of the obligor, in this case, the
seller. Apart from the risk of bankruptcy or insolvency proceedings, there is
also the risk that the seller may fail to repurchase the security, in which case
a Fund may incur a loss if the proceeds to that Fund of the sale of the security
to a third party are less than the repurchase price. However, if the market
value of the securities subject to the repurchase agreement becomes less than
the repurchase price (including interest), the Fund involved will direct the
seller of the security to deliver additional securities so that the market value
of all securities subject to the repurchase agreement will equal or exceed the
repurchase price. It is possible that a Fund will be unsuccessful in seeking to
enforce the seller's contractual obligation to deliver additional securities.
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Borrowing and Pledging. Each Fund may borrow money from banks, provided
that, immediately after any such borrowings, there is asset coverage of 300% for
all borrowings of the Fund. A Fund will not make any borrowing which would cause
its outstanding borrowings to exceed one-third of the value of its total assets.
Each Fund may pledge assets in connection with borrowings but will not pledge
more than one-third of its total assets. Borrowing magnifies the potential for
gain or loss on the portfolio securities of the Funds and, therefore, if
employed, increases the possibility of fluctuation in a Fund's net asset value.
This is the speculative factor known as leverage. Each Fund's policies on
borrowing and pledging are fundamental policies which may not be changed without
the affirmative vote of a majority of its outstanding shares. It is the Funds'
present intention, which may be changed by the Board of Trustees without
shareholder approval, to borrow only for emergency or extraordinary purposes and
not for leverage.
Loans of Portfolio Securities. Each Fund may, from time to time, lend
securities on a short-term basis (i.e., for up to seven days) to banks, brokers
and dealers and receive as collateral cash, U.S. Government obligations or
irrevocable bank letters of credit (or any combination thereof), which
collateral will be required to be maintained at all times in an amount equal to
at least 100% of the current value of the loaned securities plus accrued
interest. It is the present intention of the Trust, which may be changed without
shareholder approval, that loans of portfolio securities will not be made with
respect to a Fund if as a result the aggregate of all outstanding loans exceeds
one-third of the value of the Fund's total assets.
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To be acceptable as collateral, letters of credit must obligate a bank
to pay amounts demanded by a Fund if the demand meets the terms of the letter.
Such terms and the issuing bank must be satisfactory to the Fund. The Funds
receive amounts equal to the dividends or interest on loaned securities and also
receive one or more of (a) negotiated loan fees, (b) interest on securities used
as collateral, or (c) interest on short-term debt securities purchased with such
collateral; either type of interest may be shared with the borrower. The Funds
may also pay fees to placing brokers as well as custodian and administrative
fees in connection with loans. Fees may only be paid to a placing broker
provided that the Trustees determine that the fee paid to the placing broker is
reasonable and based solely upon services rendered, that the Trustees separately
consider the propriety of any fee shared by the placing broker with the
borrower, and that the fees are not used to compensate the investment adviser or
any affiliated person of the Trust or an affiliated person of the investment
adviser or other affiliated person.
Loans of securities involve risks of delay in receiving additional
collateral or in recovering the securities lent or even loss of rights in the
collateral in the event of the insolvency of the borrower of the securities. The
terms of the Funds' loans must meet applicable tests under the Internal Revenue
Code and permit the Funds to reacquire loaned securities on five days' notice or
in time to vote on any important matter. A Fund will have the right to regain
record ownership of loaned securities in order to exercise beneficial rights.
When-Issued Securities and Securities Purchased On a To-Be-Announced
Basis. Obligations issued on a when-issued or to-be-announced basis are settled
by delivery and payment after the date of the transaction, usually within 15 to
45 days. In a to-be-announced transaction, a Fund has committed to purchasing or
selling securities for which all specific information is not yet known at the
time of the trade, particularly the face amount in transactions involving
mortgage-related securities. The Funds will only make commitments to purchase
obligations on a when-issued or to-be-announced basis with the intention of
actually acquiring the obligations, but a Fund may sell these securities before
the settlement date if it is deemed advisable as a matter of investment strategy
or in order to meet its obligations, although it would not normally expect to do
so. The Funds will purchase securities on a when-issued basis or to-be-announced
basis only if delivery and payment for the securities takes place within 120
days after the date of the transaction.
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Purchases of securities on a when-issued or to-be-announced basis are
subject to market fluctuations and their current value is determined in the same
manner as other portfolio securities. When effecting such purchases for a Fund,
a segregated account of cash or liquid securities of the Fund in an amount
sufficient to make payment for the portfolio securities to be purchased will be
maintained with the Fund's Custodian at the trade date and valued daily at
market for the purpose of determining the adequacy of the securities in the
account. When a segregated account is maintained because a Fund purchases
securities on a when-issued or TBA basis, the assets deposited in the segregated
account will be valued daily at market for the purpose of determining the
adequacy of the securities in the account. If the market value of such
securities declines, additional cash or securities will be placed in the account
on a daily basis so that the market value of the account will equal the amount
of a Fund's commitments to purchase securities on a when-issued or TBA basis. To
the extent funds are in a segregated account, they will not be available for new
investment or to meet redemptions.
Securities purchased on a when-issued or TBA basis and the securities
held in a Fund's portfolio are subject to changes in market value based upon
changes in the level of interest rates (which will generally result in all of
those securities changing in value in the same way, i.e., all those securities
experiencing appreciation when interest rates decline and depreciation when
interest rates rise). Therefore, if in order to achieve higher returns, a Fund
remains substantially fully invested at the same time that it has purchased
securities on a when-issued or TBA basis, there will be a possibility that the
market value of the Fund's assets will have greater fluctuation. A Fund's
purchase of securities on a when-issued or to-be-announced basis may increase
its overall investment exposure and involves a risk of loss if the value of the
securities declines prior to the settlement date or if the broker-dealer selling
the securities fails to deliver after the value of the securities has risen.
When the time comes for a Fund to make payment for securities purchased
on a when-issued or TBA basis, the Fund will do so by using then available cash
flow, by sale of the securities held in the segregated account, by sale of other
securities or, although it would not normally expect to do so, by directing the
sale of the securities purchased on a when-issued or TBA basis themselves (which
may have a market value greater or less than the Fund's payment obligation).
Warrants and Rights. Warrants are options to purchase equity securities
at a specified price and are valid for a specific time period. Rights are
similar to warrants, but normally have a short duration and are distributed by
the issuer to its shareholders. Each Fund may purchase warrants and rights,
provided that the Fund does not invest more than 5% of its net assets at the
time of purchase in warrants and rights other than those that have been acquired
in units or attached to other securities. Of such 5%, no more than 2% of a
Fund's assets at the time of purchase may be invested in warrants which are not
listed on either the New York Stock Exchange or the American Stock Exchange.
STRIPS. STRIPS are U.S. Treasury bills, notes and bonds that have been
issued without interest coupons or stripped of their unmatured interest coupons,
interest coupons that have been stripped from such U.S. Treasury securities, and
receipts or certificates representing interests in such stripped U.S. Treasury
securities and coupons. A STRIPS security pays no interest in cash to its holder
during its life although interest is accrued for federal income tax purposes.
Its value to an investor consists of the difference between its face value at
the time of maturity and the price for which it was acquired, which is generally
an amount significantly less than its face value. Investing in STRIPS may help
to preserve capital during periods of declining interest rates.
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STRIPS do not entitle the holder to any periodic payments of interest
prior to maturity. Accordingly, such securities usually trade at a deep discount
from their face or par value and will be subject to greater fluctuations of
market value in response to changing interest rates than debt obligations of
comparable maturities which make periodic distributions of interest. On the
other hand, because there are no periodic interest payments to be reinvested
prior to maturity, STRIPS eliminate the reinvestment risk and lock in a rate of
return to maturity. Current federal tax law requires that a holder of a STRIPS
security accrue a portion of the discount at which the security was purchased as
income each year even though the Fund received no interest payment in cash on
the security during the year.
Foreign Securities. Subject to the Fund's investment policies and
quality and maturity standards, a Fund may invest in the securities (payable in
U.S. dollars) of foreign issuers. Because the Funds may invest in foreign
securities, an investment in the Funds involves risks that are different in some
respects from an investment in a fund which invests only in securities of U.S.
domestic issuers. Foreign investments may be affected favorably or unfavorably
by changes in currency rates and exchange control regulations. There may be less
publicly available information about a foreign company than about a U.S.
company, and foreign companies may not be subject to accounting, auditing and
financial reporting standards and requirements comparable to those applicable to
U.S. companies. There may be less governmental supervision of securities
markets, brokers and issuers of securities. Securities of some foreign companies
are less liquid or more volatile than securities of U.S. companies, and foreign
brokerage commissions and custodian fees are generally higher than in the United
States. Settlement practices may include delays and may differ from those
customary in United States markets. Investments in foreign securities may also
be subject to other risks different from those affecting U.S. investments,
including local political or economic developments, expropriation or
nationalization of assets, restrictions on foreign investment and repatriation
of capital, imposition of withholding taxes on dividend or interest payments,
currency blockage (which would prevent cash from being brought back to the
United States), and difficulty in enforcing legal rights outside the United
States.
Forward Foreign Currency Exchange Contracts. The value of the
International Value Fund's portfolio securities which are invested in non-U.S.
dollar denominated instruments as measured in U.S. dollars may be affected
favorably or unfavorably by changes in foreign currency exchange rates and
exchange control regulations, and the Fund may incur costs in connection with
conversions between various currencies. The Fund will conduct its foreign
currency exchange transactions either on a spot (i.e., cash) basis at the spot
rate prevailing in the foreign currency exchange market, or through forward
contracts to purchase or sell foreign currencies. A forward foreign currency
exchange contract involves an obligation to purchase or sell a specific currency
at a future date, which may be any fixed number of days from the date of the
contract agreed upon by the parties, at a price set at the time of the contract.
These contracts are traded directly between currency traders (usually large
commercial banks) and their customers. The Fund will not, however, hold foreign
currency except in connection with purchase and sale of foreign portfolio
securities.
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The International Value Fund will enter into forward foreign currency
exchange contracts as described hereafter. When the Fund enters into a contract
for the purchase or sale of a security denominated in a foreign currency, it may
desire to establish the cost or proceeds relative to another currency. The
forward contract may be denominated in U.S. dollars or may be a "cross-currency"
contract where the forward contract is denominated in a currency other than U.S.
dollars. However, this tends to limit potential gains which might result from a
positive change in such currency relationships.
The forecasting of a short-term currency market movement is extremely
difficult and the successful execution of a short-term hedging strategy is
highly uncertain. The International Value Fund may enter into such forward
contracts if, as a result, not more than 50% of the value of its total assets
would be committed to such contracts. Under normal circumstances, consideration
of the prospect for currency parities will be incorporated into the longer term
investment decisions made with regard to overall diversification strategies.
However, the Trustees believe that it is important to have the flexibility to
enter into forward contracts when the Sub-Adviser determines it to be in the
best interests of the Fund. The Custodian will segregate cash or liquid
portfolio securities in an amount not less than the value of the Fund's total
assets committed to foreign currency exchange contracts entered into under this
type of transaction. If the value of the segregated securities declines,
additional cash or securities will be added on a daily basis, i.e., "marked to
market," so that the segregated amount will not be less than the amount of the
Fund's commitments with respect to such contracts.
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Generally, the International Value Fund will not enter into a forward
foreign currency exchange contract with a term of greater than 90 days. At the
maturity of the contract, the Fund may either sell the portfolio security and
make delivery of the foreign currency, or may retain the security and terminate
the obligation to deliver the foreign currency by purchasing an "offsetting"
forward contract with the same currency trader
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obligating the Fund to purchase, on the same maturity date, the same amount of
the foreign currency.
It is impossible to forecast with absolute precision the market value
of portfolio securities at the expiration of the contract. Accordingly, it may
be necessary for the Fund to purchase additional foreign currency on the spot
market (and bear the expense of such purchase) if the market value of the
security is less than the amount of foreign currency the Fund is obligated to
deliver and if a decision is made to sell the security and make delivery of the
foreign currency. Conversely, it may be necessary to sell on the spot market
some of the foreign currency received upon the sale of the portfolio security if
its market value exceeds the amount of foreign currency the Fund is obligated to
deliver.
If the International Value Fund retains the portfolio security and
engages in an offsetting transaction, the Fund will incur a gain or a loss (as
described below) to the extent that there has been movement in forward contract
prices. If the Fund engages in an offsetting transaction, it may subsequently
enter into a new forward contract to sell the foreign currency. Should forward
prices decline during the period between entering into a forward contract for
the sale of a foreign currency and the date the Fund enters into an offsetting
contract for the purchase of the foreign currency, the Fund will realize a gain
to the extent the price of the currency the Fund has agreed to sell exceeds the
price of the currency it has agreed to purchase. Should forward prices increase,
the Fund will suffer a loss to the extent the price of the currency the Fund has
agreed to purchase exceeds the price of the currency the Fund has agreed to
sell.
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The International Value Fund's dealings in forward foreign currency
exchange contracts will be limited to the transactions described above. The Fund
is not required to enter into such transactions with regard to its foreign
currency-denominated securities and will not do so unless deemed appropriate by
the Sub-Adviser. It should also be realized that this method of protecting the
value of the Fund's portfolio securities against a decline in the value of a
currency does not eliminate fluctuations in the underlying prices of the
securities held by the Fund. It simply establishes a rate of exchange which one
can achieve at some future point in time. Additionally, although such contracts
tend to minimize the risk of loss due to a decline in the value of the hedged
currency, at the same time, they tend to limit any potential gain which might
result should the value of such currency increase.
Writing Covered Call Options. Each Fund may write covered call options
on equity securities or futures contracts that the Fund is eligible to purchase
to earn premium income, to assure a definite price for a security it has
considered selling, or to close out options previously purchased. A call option
gives the holder (buyer) the right to purchase a security or futures contract at
a specified price (the exercise price) at any time until a certain date (the
expiration date). A call option is "covered" if a Fund owns the underlying
security subject to the call option at all times during the option period. A
covered call writer is required to deposit in escrow the underlying security in
accordance with the rules of the exchanges on which the option is traded and the
appropriate clearing agency.
The writing of covered call options is a conservative investment
technique which the investment adviser believes involves relatively little risk.
A Fund will receive a premium from writing a call option, which increases the
Fund's return in the event the option expires unexercised or is closed out at a
profit. The amount of the premium will reflect, among other things, the
relationship of the market price of the underlying security to the exercise
price of the option and the remaining term of the option. However, there is no
assurance that a closing transaction can be effected at a favorable price.
During the option period, the covered call writer has, in return for the premium
received, given up the opportunity for capital appreciation above the exercise
price should the market price of the underlying security increase, but has
retained the risk of loss should the price of the underlying security decline.
A Fund may write covered call options if, immediately thereafter, not
more than 30% of its net assets would be committed to such transactions. As long
as the Securities and Exchange Commission continues to take the position that
unlisted options are illiquid securities, a Fund will not commit more than 15%
of its net assets to unlisted covered call transactions and other illiquid
securities.
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Writing Covered Put Options. Each Fund may write covered put options on
equity securities and futures contracts that the Fund is eligible to purchase to
earn premium income or to assure a definite price for a security if it is
considering acquiring the security at a lower price than the current market
price or to close out options previously purchased. A put option gives the
holder of the option the right to sell, and the writer has the obligation to
buy, the underlying security at the exercise price at any time during the option
period. The operation of put options in other respects is substantially
identical to that of call options. When a Fund writes a covered put option, it
maintains in a segregated account with its Custodian cash or liquid portfolio
securities in an amount not less than the exercise price at all times while the
put option is outstanding.
A Fund will receive a premium from writing a put option, which
increases the Fund's return in the event the option expires unexercised or is
closed out at a profit. The amount of the premium will reflect, among other
things, the relationship of the market price of the underlying security to the
exercise price of the option and the remaining term of the option. The risks
involved in writing put options include the risk that a closing transaction
cannot be effected at a favorable price and the possibility that the price of
the underlying security may fall below the exercise price, in which case a Fund
may be required to purchase the underlying security at a higher price than the
market price of the security at the time the option is exercised, resulting in a
potential capital loss unless the security subsequently appreciates in value. A
Fund may not write a put option if, immediately thereafter, more than 25% of its
net assets would be committed to such transactions.
The Funds may also write straddles (combinations of puts and calls on
the same underlying security.)
Purchasing Put Options. Each Fund may purchase put options. As the
holder of a put option, a Fund has the right to sell the underlying security at
the exercise price at any time during the option period. Each Fund may enter
into closing sale transactions with respect to such options, exercise them or
permit them to expire. Each Fund may purchase put options for defensive purposes
in order to protect against an anticipated decline in the value of its
securities. An example of such use of put options is provided below.
Each Fund may purchase a put option on an underlying security (a
"protective put") owned as a defensive technique in order to protect against an
anticipated decline in the value of the security. Such hedge protection is
provided only during the life of the put option when the Fund, as the holder of
the put option, is able to sell the underlying security at the put exercise
price regardless of any decline in the underlying security's market price. For
example, a put option may be purchased in order to protect unrealized
appreciation of a security where the Adviser deems it desirable to continue to
hold the security because of tax considerations. The premium paid for the put
option and any transaction costs would reduce any capital gain otherwise
available for distribution when the security is eventually sold.
Each Fund may also purchase put options at a time when it does not own
the underlying security. Each Fund may also purchase call options on relevant
stock indices. By purchasing put options on a security it does not own, a Fund
seeks to benefit from a decline in the market price of the underlying security.
If the put option is not sold when it has remaining value, and if the market
price of the underlying security remains equal to or greater than the exercise
price during the life of the put option, a Fund will lose its entire investment
in the put option. In order for the purchase of a put option to be profitable,
the market price of the underlying security must decline sufficiently below the
exercise price to cover the premium and transaction costs, unless the put option
is sold in a closing sale transaction.
Each Fund will commit no more than 5% of its assets to premiums when
purchasing put options. The premium paid by a Fund when purchasing a put option
will be recorded as an asset in the Fund's statement of assets and liabilities.
This asset will be adjusted daily to the option's current market value, which
will be the latest sale price at the time at which the Fund's net asset value
per share is computed (close of trading on the New York Stock Exchange), or, in
the absence of such sale, the latest bid price. The asset will be extinguished
upon expiration of the option, the selling (writing) of an identical option in a
closing transaction, or the delivery of the underlying security upon the
exercise of the option. The purchaser of a put option risks a total loss of the
premium paid for the option if the price of the underlying security does not
increase or decrease sufficiently to justify exercise.
Purchasing Call Options. Each Fund may purchase call options. As the
holder of a call option, a Fund has the right to purchase the underlying
security at the exercise price at any time during the option period. Each Fund
may enter into closing sale transactions with respect to such options, exercise
them or permit them to expire. Each Fund may purchase call options for the
purpose of increasing its current return or avoiding tax consequences which
could reduce its current return. Each Fund may also purchase call options in
order to acquire the underlying securities. Examples of such uses of call
options are provided below.
Call options may be purchased by a Fund for the purpose of acquiring
the underlying securities for its portfolio. Utilized in this fashion, the
purchase of call options enables a Fund to acquire the securities at the
exercise price of the call option plus the premium paid. At times the net cost
of acquiring securities in this manner may be less than the cost of acquiring
the securities directly. This technique may also be useful to a Fund in
purchasing a large block of securities that would be more difficult to acquire
by direct market purchases. So long as it holds such a call option rather than
the underlying security itself, a Fund is partially protected from any
unexpected decline in the market price of the underlying security and in such
event could allow the call option to expire, incurring a loss only to the extent
of the premium paid for the option.
Each Fund will commit no more than 5% of its assets to premiums when
purchasing call options. Each Fund may also purchase call options on underlying
securities it owns in order to protect unrealized gains on call options
previously written by it. A call option would be purchased for this purpose
where tax considerations make it inadvisable to realize such gains through a
closing purchase transaction. Call options may also be purchased at times to
avoid realizing losses that would result in a reduction of a Fund's current
return. For example, where a Fund has written a call option on an underlying
security having a current market value below the price at which such security
was purchased by the Fund, an increase in the market price could result in the
exercise of the call option written by the Fund and the realization of a loss on
the underlying security with the same exercise price and expiration date as the
option previously written.
Futures Contracts. Each Fund may purchase and sell futures contracts to
hedge against changes in prices. A Fund will not engage in futures transactions
for speculative purposes. A Fund may also write call options and purchase put
options on futures contracts as a hedge to attempt to protect securities in its
portfolio against decreases in value. When a Fund writes a call option on a
futures contract, it is undertaking the obligation of selling a futures contract
at a fixed price at any time during a specified period if the option is
exercised. Conversely, as purchaser of a put option on a futures contract, a
Fund is entitled (but not obligated) to sell a futures contract at the fixed
price during the life of the option.
A Fund may not purchase or sell futures contracts or related options if
immediately thereafter the sum of the amount of margin deposits on a Fund's
existing futures positions and premiums paid for related options would exceed 5%
of the market value of a Fund's total assets. When a Fund purchases futures
contracts, an amount of cash and cash equivalents equal to the underlying
commodity value of the futures contracts (less any related margin deposits) will
be deposited in a segregated account with the Fund's custodian (or the broker,
if legally permitted) to collateralize the position and thereby insure that the
use of such futures contract is unleveraged. When a Fund sells futures
contracts, it will either own or have the right to receive the underlying future
or security, or will make deposits to collateralize the position as discussed
above. When a Fund uses futures and options on futures as hedging devices, there
is a risk that the prices of the securities subject to the futures contracts may
not correlate perfectly with the prices of the securities in a Fund's portfolio.
This may cause the futures contract and any related options to react differently
than the portfolio securities to market changes. In addition, the investment
adviser could be incorrect in its expectations about the direction or extent of
market factors such as stock price movements. In these events, the Fund may lose
money on the futures contract or option. It is not certain that a secondary
market for positions in futures contracts or for options will exist at all
times. Although the investment adviser will consider liquidity before entering
into these transactions, there is no assurance that a liquid secondary market on
an exchange or otherwise will exist for any particular futures contract or
option at any particular time. A Fund's ability to establish and close out
futures and options positions depends on this secondary market.
<PAGE>
Options Transactions Generally. Option transactions in which the Funds
may engage involve the specific risks described above as well as the following
risks: the writer of an option may be assigned an exercise at any time during
the option period; disruptions in the markets for underlying instruments could
result in losses for options investors; imperfect or no correlation between the
option and the securities being hedged; the insolvency of a broker could present
risks for the broker's customers; and market imposed restrictions may prohibit
the exercise of certain options. In addition, the option activities of a Fund
may affect its portfolio turnover rate and the amount of brokerage commissions
paid by a Fund. The success of a Fund in using the option strategies described
above depends, among other things, on the investment adviser's ability to
predict the direction and volatility of price movements in the options, futures
contracts and securities markets and the investment adviser's ability to select
the proper time, type and duration of the options.
Each Fund may purchase either exchange-traded or over-the-counter
options on securities. A Fund's ability to terminate options positions
established in the over-the-counter market may be more limited than in the case
of exchange-traded options and may also involve the risk that securities dealers
participating in such transactions would fail to meet their obligations to the
Fund.
<PAGE>
QUALITY RATINGS OF CORPORATE BONDS AND PREFERRED STOCKS
The ratings of Moody's Investors Service, Inc. and Standard & Poor's
Ratings Group for corporate bonds in which the Funds may invest are as follows:
Moody's Investors Service, Inc.
Aaa - Bonds which are rated Aaa are judged to be of the best quality.
They carry the smallest degree of investment risk and are generally referred to
as "gilt edge." Interest payments are protected by a large or by an
exceptionally stable margin and principal is secure. While the various
protective elements are likely to change, such changes as can be visualized are
most unlikely to impair the fundamentally strong position of such issues.
Aa - Bonds which are rated Aa are judged to be of high quality by all
standards. Together with the Aaa group they comprise what are generally known as
high grade bonds. They are rated lower than the best bonds because margins of
protection may not be as large as in Aaa securities or fluctuation of protective
elements may be of greater amplitude or there may be other elements present
which make the long-term risks appear somewhat larger than in Aaa securities.
A - Bonds which are rated A possess many favorable investment
attributes and are to be considered as upper medium grade obligations. Factors
giving security to principal and interest are considered adequate but elements
may be present which suggest a susceptibility to impairment sometime in the
future.
Baa - Bonds which are rated Baa are considered as medium grade
obligations, i.e., they are neither highly protected nor poorly secured.
Interest payments and principal security appear adequate for the present but
certain protective elements may be lacking or may be characteristically
unreliable over any great length of time. Such bonds lack outstanding investment
characteristics and in fact have speculative characteristics as well.
Standard & Poor's Ratings Group
AAA - Bonds rated AAA have the highest rating assigned by Standard &
Poor's to a debt obligation. Capacity to pay interest and repay principal is
extremely strong.
AA - Bonds rated AA have a very strong capacity to pay interest and
repay principal and differ from the highest rated issues only in small degree.
<PAGE>
A - Bonds rated A have a strong capacity to pay interest and repay
principal although they are somewhat more susceptible to the adverse effects of
changes in circumstances and economic conditions than bonds in higher rated
categories.
BBB - Bonds rated BBB are regarded as having an adequate capacity to
pay interest and repay principal. Whereas they normally exhibit adequate
protection parameters, adverse economic conditions or changing circumstances are
more likely to lead to a weakened capacity to pay interest and repay principal
for bonds in this category than for bonds in higher rated categories.
The ratings of Moody's Investors Service, Inc. and Standard & Poor's
Ratings Group for preferred stocks in which the Funds may invest are as follows:
Moody's Investors Service, Inc.
aaa - An issue which is rated aaa is considered to be a top-quality
preferred stock. This rating indicates good asset protection and the least risk
of dividend impairment within the universe of preferred stocks.
aa - An issue which is rated aa is considered a high-grade preferred
stock. This rating indicates that there is reasonable assurance that earnings
and asset protection will remain relatively well maintained in the foreseeable
future.
a - An issue which is rated a is considered to be an upper-medium grade
preferred stock. While risks are judged to be somewhat greater than in the "aaa"
and "aa" classifications, earnings and asset protection are, nevertheless,
expected to be maintained at adequate levels.
<PAGE>
baa - An issue which is rated baa is considered to be medium grade,
neither highly protected nor poorly secured. Earnings and asset protection
appear adequate at present but may be questionable over any great length of
time.
Standard & Poor's Ratings Group
AAA - This is the highest rating that may be assigned by Standard &
Poor's to a preferred stock issue and indicates an extremely strong capacity to
pay the preferred stock obligations.
AA - A preferred stock issue rated AA also qualifies as a high-quality
fixed income security. The capacity to pay preferred stock obligations is very
strong, although not as overwhelming as for issues rated AAA.
<PAGE>
A - An issue rated A is backed by a sound capacity to pay the preferred
stock obligations, although it is somewhat more susceptible to the diverse
effects of changes in circumstances and economic conditions.
BBB - An issue rated BBB is regarded as backed by an adequate capacity
to pay the preferred stock obligations. Whereas it normally exhibits adequate
protection parameters, adverse economic conditions or changing circumstances are
more likely to lead to a weakened capacity to make payments for a preferred
stock in this category than for issues in the A category.
INVESTMENT LIMITATIONS
The Trust has adopted certain fundamental investment limitations
designed to reduce the risk of an investment in each Fund. These limitations may
not be changed with respect to any Fund without the affirmative vote of a
majority of the outstanding shares of that Fund.
1. Borrowing Money. The Fund will not borrow money, except from a bank,
provided that immediately after such borrowing there is asset coverage of 300%
for all borrowings of the Fund. The Fund will not make any borrowing which would
cause its outstanding borrowings to exceed one-third of the value of its total
assets. This limitation is not applicable to when-issued purchases.
2. Pledging. The Fund will not mortgage, pledge, hypothecate or in any
manner transfer, as security for indebtedness, any security owned or held by the
Fund except as may be necessary in connection with borrowings described in
limitation (1) above. The Fund will not mortgage, pledge or hypothecate more
than one-third of its assets in connection with borrowings.
3. Margin Purchases. The Fund will not purchase any securities or
evidences of interest thereon on "margin" (except such short-term credits as are
necessary for the clearance of transactions or to the extent necessary to engage
in transactions described in the Prospectus and Statement of Additional
Information which involve margin purchases).
4. Options. The Fund will not purchase or sell puts, calls, options,
futures, straddles, commodities or commodities futures contracts except as
described in the Prospectus and Statement of Additional Information.
<PAGE>
5. Real Estate. The Fund will not purchase, hold or deal in real estate
or real estate mortgage loans, except that the Fund may purchase (a) securities
of companies (other than limited partnerships) which deal in real estate or (b)
securities which are secured by interests in real estate.
6. Amount Invested in One Issuer. The Fund will not invest more than 5%
of its total assets in the securities of any issuer; provided, however, that
there is no limitation with respect to investments and obligations issued or
guaranteed by the United States Government or its agencies or instrumentalities
or repurchase agreements with respect thereto.
7. Short Sales. The Fund will not make short sales of securities, or
maintain a short position, other than short sales "against the box."
8. Mineral Leases. The Fund will not purchase oil, gas or other mineral
leases or exploration or development programs.
9. Underwriting. The Fund will not act as underwriter of securities
issued by other persons, either directly or through a majority owned subsidiary.
This limitation is not applicable to the extent that, in connection with the
disposition of its portfolio securities (including restricted securities), the
Fund may be deemed an underwriter under certain federal securities laws.
10. Illiquid Investments. The Fund will not purchase securities which
cannot be readily resold to the public because of legal or contractual
restrictions on resale or for which no readily available market exists or engage
in a repurchase agreement maturing in more than seven days if, as a result
thereof, more than 15% of the value of the Fund's net assets would be invested
in such securities.
11. Concentration. The Fund will not invest 25% or more of its total
assets in the securities of issuers in any particular industry; provided,
however, that there is no limitation with respect to investments in obligations
issued or guaranteed by the
<PAGE>
United States Government or its agencies or instrumentalities or repurchase
agreements with respect thereto.
12. Investing for Control. The Fund will not invest in companies for
the purpose of exercising control.
13. Other Investment Companies. The Fund will not invest more than 10%
of its total assets in securities of other investment companies. The Fund will
not invest more than 5% of its total assets in the securities of any single
investment company.
<PAGE>
14. Senior Securities. The Fund will not issue or sell any senior
security. This limitation is not applicable to short-term credit obtained by the
Fund for the clearance of purchases and sales or redemptions of securities, or
to arrangements with respect to transactions involving options, futures
contracts, short sales and other similar permitted investments and techniques.
15. Loans. The Fund will not make loans to other persons, except (a) by
loaning portfolio securities, or (b) by engaging in repurchase agreements. For
purposes of this limitation, the term "loans" shall not include the purchase of
bonds, debentures, commercial paper or corporate notes, and similar marketable
evidences of indebtedness.
With respect to the percentages adopted by the Trust as maximum
limitations on each Fund's investment policies and restrictions, an excess above
the fixed percentage (except for the percentage limitations relative to the
borrowing of money and the holding of illiquid securities) will not be a
violation of the policy or restriction unless the excess results immediately and
directly from the acquisition of any security or the action taken.
TRUSTEES AND OFFICERS
The Board of Trustees supervises the business activities of the Funds.
Like other mutual funds, various organizations are retained to perform
specialized services for the Funds.
The following is a list of the Trustees and executive officers of the
Trust and their compensation from the Trust for the fiscal year ended March 31,
2000. Each Trustee who is an "interested person" of the Trust, as defined by the
Investment Company Act of 1940, is indicated by an asterisk.
<PAGE>
Compensation
Name Age Position Held from the Trust
---- --- ------------- --------------
*Chauncey H. Dean 76 Trustee 0
*Robert D. Dean 66 Trustee 0
Sam B. Gould 57 Trustee 4000(1)
+Frank J. Perez 55 Trustee 3000(1)
+David H. Ponitz 69 Trustee 4000(1)
+Gilbert P. Williamson 63 Trustee 4000(1)
Stephen M. Miller 45 President 0
Carol J. Highsmith 35 Secretary 0
* Mr. Chauncey Dean and Mr. Robert Dean are brothers. As affiliated
persons of C.H. Dean & Associates, Inc., the Trust's investment
adviser, and 2480 Securities LLC, the Trust's principal underwriter,
they are "interested persons" of the Trust within the meaning of
Section 2(a)(19) of the Investment Company Act of 1940.
+ Member of Audit Committee.
<PAGE>
(1) Messrs. Gould, Perez, Ponitz and Williamson have elected to defer their
compensation by participating in the Dean Family of Funds Directors
Deferred Compensation Plan (the "Plan"). The Plan is a non-qualified
deferred compensation plan in which the Trustees will accrue their
benefits on a tax-free basis until such time as they begin receiving
distributions. The tax obligations of the Plan will be paid by C.H.
Dean & Associates, Inc. Messrs. Gould, Perez, Ponitz and Williamson
will not be entitled to receive a distribution from the Plan until they
have attained the age of 72.
The principal occupations of the Trustees and executive officers of the
Trust during the past five years are set forth below:
CHAUNCEY H. DEAN, 2480 Kettering Tower, Dayton, Ohio 45423, is Chairman
& Chief Executive Officer and the controlling shareholder of C.H. Dean &
Associates, Inc.
ROBERT D. DEAN, 2480 Kettering Tower, Dayton, Ohio 45423, is President
and Chief Investment Officer of C.H. Dean & Associates, Inc.
SAM B. GOULD, University of Dayton, School of Business Administration,
Dayton, Ohio 45469, is Dean of the University of Dayton School of Business
Administration.
FRANK J. PEREZ, 3535 Southern Blvd., Kettering, Ohio 45429 is President
and Chief Executive Officer of Kettering Medical Center.
DAVID H. PONITZ, 444 W. Third Street, Dayton, Ohio 45402, is President
of Sinclair Community College.
GILBERT P. WILLIAMSON, 2320 Kettering Tower, Dayton, Ohio 45423, is a
Director of S.C.O., Inc. (a software company), Retix, Inc. (a communications
company), Roberds, Inc. (a retail company) and Citizens Federal Bank.
STEPHEN M. MILLER, 2480 Kettering Tower, Dayton, Ohio 45423, is Chief
Financial Officer and Chief Operating Officer of C.H. Dean & Associates, Inc.,
and Treasurer of 2480 Securities LLC.
CAROL J. HIGHSMITH, 431 N. Pennsylvania St., Indianapolis, Indiana
46204, is an Assistant Vice President of Unified Fund Services, Inc. She is also
Vice President of Lindbergh Funds, and Secretary of The Unified Funds and
Firstar Select Funds (all of which are registered investment companies).
Each non-interested Trustee will receive an annual retainer of $2,000
and a $1,000 fee for each Board meeting attended and will be reimbursed for
travel and other expenses incurred in the performance of their duties.
<PAGE>
THE INVESTMENT ADVISER
C.H. Dean & Associates, Inc. ("Dean Investment Associates") is the
Funds' investment manager. Chauncey H. Dean is the controlling shareholder of
Dean Investment Associates. Mr. Dean, by reason of such affiliation, may
directly or indirectly receive benefits from the advisory fees paid to Dean
Investment Associates.
Under the terms of the advisory agreements between the Trust and Dean
Investment Associates, Dean Investment Associates manages the Funds'
investments. The Large Cap Value Fund, the Small Cap Value Fund and the Balanced
Fund each pay Dean Investment Associates a fee computed and accrued daily and
paid monthly at an annual rate of 1.00% of its average daily net assets. The
International Value Fund pays Dean Investment Associates a fee computed and
accrued daily and paid monthly at an annual rate of 1.25% of its average daily
net assets.
For the fiscal periods ended March 31, 1998, 1999, and 2000, the Large
Cap Value Fund accrued advisory fees of $52,709, $93,051 and $106,970, the Small
Cap Value Fund accrued advisory fees of $127,902, $201,945 and $191,195, the
Balanced Fund accrued advisory fees of $57,457, $115,850 and $116,876, and the
International Value Fund accrued advisory fees of $4,452, $68,092 and $162,144.
In order to reduce the operating expenses of the Funds during the year ended
March 31, 1998, the Adviser voluntarily waived $46,607 of its fees and
reimbursed $20,468 of Class C expenses with respect to the Large Cap Value Fund,
voluntarily waived $17,445 of its fees and reimbursed $16,684 of Class C
expenses with respect to the Small Cap Value Fund, voluntarily waived $44,231 of
its fees and reimbursed $16,291 of Class C expenses with respect to the Balanced
Fund, and voluntarily waived its entire advisory fee and reimbursed $49,049 of
common expenses and $5,663 of Class C expenses with respect to the International
Value Fund. During the year ended March 31, 1999, the Adviser voluntarily waived
$40,548 of its fees and reimbursed $17,974 of Class C expenses with respect to
the Large Cap Value Fund, voluntarily waived $8,323 of its fees and reimbursed
$1,297 of Class C expenses with respect to the Small Cap Value Fund, voluntarily
waived $27,553 of its fees and reimbursed $5,073 of Class C expenses with
respect to the Balanced Fund, and voluntarily waived its entire advisory fee and
reimbursed $49,746 of common expenses and $8,363 of Class C expenses with
respect to the International Value Fund. During the year ended March 31, 2000,
the Adviser voluntarily waived $27,290 of its fees and reimbursed $8,842 of
Class C expenses with respect to the Large Cap Value Fund, voluntarily waived
$1,056 of its fees and reimbursed $9,076 of Class A expenses with respect to the
Small Cap Value Fund, voluntarily waived $16,223 of its fees and reimbursed
$13,449 of Class A expenses with respect to the Balanced Fund, and voluntarily
waived $103,091 of its fees and reimbursed $300 of Class C expenses with respect
to the International Value Fund. Pursuant to a written contract between Dean
Investment Associates and the Trust, Dean Investment Associates has agreed to
waive a portion of its advisory fee and/or reimburse certain Fund expenses,
other than brokerage commissions, extraordinary items, interest and taxes, in
order limit total annual Fund operating expenses to 1.85% of the average daily
net assets allocable to Class A shares and 2.60% of the average daily net assets
allocable to Class C shares of the Large Cap Value Fund, Small Cap Value Fund
and Balanced Fund and 2.10% of the average daily net assets allocable to Class A
shares and 2.85% of the average daily net assets allocable to Class C shares of
the International Value Fund.
The Funds are responsible for the payment of all expenses incurred in
connection with the organization, registration of shares and operations of the
Funds, including fees and expenses in connection with membership in investment
company organizations, brokerage fees and commissions, legal, auditing and
accounting expenses, expenses of registering shares under federal and state
securities laws, expenses related to the distribution of the Funds' shares (see
"Distribution Plans"), insurance expenses, taxes or governmental fees, fees and
expenses of the custodian, transfer agent and accounting and pricing agent of
the Funds, fees and expenses of members of the Board of Trustees who are not
interested persons of the Trust, the cost of preparing and distributing
prospectuses, statements, reports and other documents to shareholders, expenses
of shareholders' meetings and proxy solicitations, and such extraordinary or
non-recurring expenses as may arise, including litigation to which the Funds may
be a party and indemnification of the Trust's officers and Trustees with respect
thereto. The Funds may have an obligation to indemnify the Trust's officers and
Trustees with respect to such litigation, except in instances of willful
misfeasance, bad faith, gross negligence or reckless disregard by such officers
and Trustees in the performance of their duties. The compensation and expenses
of any officer, Trustee or employee of the Trust who is an officer, director,
employee or stockholder of Dean Investment Associates are paid by Dean
Investment Associates.
By its terms, the advisory agreement on behalf of each Fund will remain
in force until April 1, 2001 and from year to year thereafter, subject to annual
approval by (a) the Board of Trustees or (b) a vote of the majority of the
Fund's outstanding voting securities; provided that in either event continuance
is also approved by a majority of the Trustees who are not interested persons of
the Trust, by a vote cast in person at a meeting called for the purpose of
voting such approval. Each Fund's advisory agreement may be terminated at any
time, on sixty days' written notice, without the payment of any penalty, by the
Board of Trustees, by a vote of the majority of the Fund's outstanding voting
securities, or by Dean Investment Associates. Each of the advisory agreements
automatically terminates in the event of its assignment, as defined by the
Investment Company Act of 1940 and the rules thereunder.
<PAGE>
Dean Investment Associates may use the name "Dean" or any derivation
thereof in connection with any registered investment company or other business
enterprise with which it is or may become associated.
THE SUB-ADVISER
Newton Capital Management Ltd. (the "Sub-Adviser") has been retained by
Dean Investment Associates to manage the investments of the International Value
Fund. The Sub-Adviser is a United Kingdom investment advisory firm registered
with the Securities and Exchange Commission. The Sub-Adviser is affiliated with
Newton Investment Management Ltd., an English investment advisory firm and
subsidiary of Mellon Bank, which has been managing assets for institutional
investors, mutual funds and individuals since 1977. Dean Investment Associates
(not the Fund) pays the Sub-Adviser a fee computed and accrued daily and paid
monthly at an annual rate of .50% of the average value of the International
Value Fund's daily net assets. For the fiscal periods ended March 31, 1998, 1999
and 2000, Dean Investment Associates paid the Sub-Adviser fees of $1,780,
$27,236 and $65,127.
By its terms, the Sub-Advisory Agreement will remain in force until
April 1, 2001 and from year to year thereafter, subject to annual approval by
(a) the Board of Trustees or (b) a vote of the majority of the International
Value Fund's outstanding voting securities; provided that in either event
continuance is also approved by a majority of the Trustees who are not
interested persons of the Trust, by a vote cast in person at a meeting called
for the purpose of voting on such approval. The Sub-Advisory Agreement may be
terminated at any time, on sixty days' written notice, without the payment of
any penalty, by the Board of Trustees, by a vote of the majority of the
International Value Fund's outstanding voting securities, or by Dean Investment
Associates or Sub-Adviser. The Sub-Advisory Agreement automatically terminates
in the event of its assignment, as defined by the Investment Company Act of 1940
and the rules thereunder.
THE UNDERWRITER
2480 Securities LLC (the "Underwriter"), 2480 Kettering Tower, Dayton,
Ohio 45423, is the principal underwriter of the Funds and, as such, is the
exclusive agent for distribution of shares of the Funds. The Underwriter is
obligated to sell the shares on a best efforts basis only against purchase
orders for the shares. Shares of each Fund are offered to the public on a
continuous basis. The Underwriter is a subsidiary of Dean Investment Associates.
Mr. Miller is an officer of both the Trust and the Distributor.
<PAGE>
The Underwriter currently allows concessions to dealers who sell shares
of the Funds. The Underwriter receives that portion of the sales load which is
not reallowed to the dealers who sell shares of the Funds. The Underwriter
retains the entire sales load on all direct initial investments in the Funds and
on all investments in accounts with no designated dealer of record. The
Underwriter bears promotional expenses in connection with the distribution of
the Funds' shares to the extent that such expenses are not assumed by the Funds
under their plans of distribution.
For the fiscal periods ended March 31, 1998, 1999 and 2000, the
aggregate commissions collected on sales of Class A shares of the Trust were
$326,654, $100,095 and $42,779 of which the Underwriter paid $311,410, $86,538
and $37,331 to unaffiliated broker-dealers in the selling network and earned
$15,244, $13,557 and $5,448 from underwriting and broker commissions.
The Funds may compensate dealers, including the Underwriter and its
affiliates, based on the average balance of all accounts in the Funds for which
the dealer is designated as the party responsible for the account. See
"Distribution Plans" below.
DISTRIBUTION PLANS
Class A Shares -- As stated in the Prospectus, the Funds have adopted a
plan of distribution with respect to the Class A shares of the Funds (the "Class
A Plan") pursuant to Rule 12b-1 under the Investment Company Act of 1940 which
permits each Fund to pay for expenses incurred in the distribution and promotion
of that Fund's Class A shares, including but not limited to, the printing of
prospectuses, statements of additional information and reports used for sales
purposes, advertisements, expenses of preparation and printing of sales
literature, promotion, marketing and sales expenses, and other
distribution-related expenses, including any distribution fees paid to
securities dealers or other firms who have executed a distribution or service
agreement with the Underwriter. The Class A Plan expressly limits payment of the
distribution expenses listed above in any fiscal year to a maximum of .25% of
the average daily net assets of a Fund allocable to its Class A shares.
Unreimbursed expenses will not be carried over from year to year. For the fiscal
periods ended March 31, 1998, 1999 and 2000, the Class A shares of the Small Cap
Value Fund incurred $5,533, 8,759 and $454 in distribution expenses for payments
to broker-dealers and others for the sale or retention of Fund shares. During
the fiscal period ended March 31, 2000, the Class A shares of the Large Cap
Value Fund incurred expenses of $1,508, and the Class A shares of the Balanced
Fund incurred expenses of $1,378.
<PAGE>
Class C Shares -- The Funds have also adopted a plan of distribution
(the "Class C Plan") with respect to the Class C shares of the Funds. The Class
C Plan provides for two categories of payments. First, the Class C Plan provides
for the payment to the Underwriter of an account maintenance fee, in an amount
equal to an annual rate of .25% of the average daily net assets of a Fund
allocable to its Class C shares, which may be paid to other dealers based on the
average value of the Fund's Class C shares owned by clients of such dealers. In
addition, a Fund may pay up to an additional .75% per annum of that Fund's daily
net assets allocable to its Class C shares for expenses incurred in the
distribution and promotion of the shares, including but not limited to,
prospectus costs for prospective shareholders, costs of responding to
prospective shareholder inquiries, payments to brokers and dealers for selling
and assisting in the distribution of Class C shares, costs of advertising and
promotion and any other expenses related to the distribution of the Class C
shares. Unreimbursed expenditures will not be carried over from year to year.
The Funds may make payments to dealers and other persons in an amount up to .75%
per annum of the average value of Class C shares owned by their clients, in
addition to the .25% account maintenance fee described above. For the fiscal
period ended March 31, 2000, the Class C shares of the Large Cap Value Fund and
the Balanced Fund each incurred $1,200 in distribution expenses for payments to
broker-dealers and others for the sale or retention of Fund shares.
General Information - - Agreements implementing the Plans (the
"Implementation Agreements"), including agreements with dealers wherein such
dealers agree for a fee to act as agents for the sale of the Funds' shares, are
in writing and have been approved by the Board of Trustees. All payments made
pursuant to the Plans are made in accordance with written agreements.
The continuance of the Plans must be specifically approved at least
annually by a vote of the Trust's Board of Trustees and by a vote of the
Trustees who are not interested persons of the Trust and have no direct or
indirect financial interest in the Plans (the "Independent Trustees") at a
meeting called for the purpose of voting on such continuance. A Plan may be
terminated at any time by a vote of a majority of the Independent Trustees or by
a vote of the holders of a majority of the outstanding shares of the applicable
class of a Fund. In the event a Plan is terminated in accordance with its terms,
the affected Fund (or class) will not be required to make any payments for
expenses incurred after the termination date. The Plans may not be amended to
increase materially the amount to be spent for distribution without shareholder
approval. All material amendments to the Plans must be approved by a vote of the
Trust's Board of Trustees and by a vote of the Independent Trustees.
In approving the Plans, the Trustees determined, in the exercise of
their business judgment and in light of their fiduciary duties as Trustees, that
there is a reasonable likelihood that the Plans will benefit the Funds and their
shareholders. The Board of Trustees believes that expenditure of the Funds'
assets for distribution expenses under the Plans should assist in the growth of
the Funds which will benefit the Funds and their shareholders through increased
economies of scale, greater investment flexibility, greater portfolio
diversification and less chance of disruption of planned investment strategies.
The Plans will be renewed only if the Trustees make a similar determination for
each subsequent year of the Plans. There can be no assurance that the benefits
anticipated from the expenditure of the Funds' assets for distribution will be
realized. While the Plans are in effect, all amounts spent by the Funds pursuant
to the Plans and the purposes for which such expenditures were made must be
reported quarterly to the Board of Trustees for its review. Distribution
expenses attributable to the sale of more than one class of shares of a Fund
will be allocated at least annually to each class of shares based upon the ratio
in which the sales of each class of shares bears to the sales of all the shares
of such Fund. In addition, the selection and nomination of those Trustees who
are not interested persons of the Trust are committed to the discretion of the
Independent Trustees during such period.
<PAGE>
By reason of his controlling interest in Dean Investment Associates,
Chauncey H. Dean may be deemed to have a financial interest in the operation of
the Plans.
SECURITIES TRANSACTIONS
Decisions to buy and sell securities for the Funds and the placing of
the Funds' securities transactions and negotiation of commission rates where
applicable are made by Dean Investment Associates and are subject to review by
the Board of Trustees of the Trust. In the purchase and sale of portfolio
securities, Dean Investment Associates seeks best execution for the Funds,
taking into account such factors as price (including the applicable brokerage
commission or dealer spread), the execution capability, financial responsibility
and responsiveness of the broker or dealer and the brokerage and research
services provided by the broker or dealer. Dean Investment Associates generally
seeks favorable prices and commission rates that are reasonable in relation to
the benefits received. For the fiscal periods ended March 31, 1998, 1999 and
2000, the Large Cap Value Fund paid brokerage commissions of $16,707, $18,939
and $19,898, the Small Cap Value Fund paid brokerage commissions of $92,954,
$146,317 and $98,009, the Balanced Fund paid brokerage commissions of $12,687,
$16,195 and $20,866, and the International Value Fund paid brokerage commissions
of $3,616, $26,946 and $85,765.
<PAGE>
The Funds may attempt to deal directly with the dealers who make a
market in the securities involved unless better prices and execution are
available elsewhere. Such dealers usually act as principals for their own
account. On occasion, portfolio securities for the Funds may be purchased
directly from the issuer.
Consistent with the Rules of Fair Practice of the National Association
of Securities Dealers, Inc., and subject to its objective of seeking best
execution of portfolio transactions, Dean Investment Associates, and with
respect to the International Value Fund, Newton Capital, may give consideration
to sales of shares of the Funds as a factor in the selection of brokers and
dealers to execute portfolio transactions of the Funds. Subject to the
requirements of the Investment Company Act of 1940 (the "1940 Act") and
procedures adopted by the Board of Trustees, the Funds may execute portfolio
transactions through any broker or dealer and pay brokerage commissions to a
broker (i) which is an affiliated person of the Trust, or (ii) which is an
affiliated person of such person, or (iii) an affiliated person of which is an
affiliated person of the Trust, Dean Investment Associates, Newton Capital or
the Underwriter.
Dean Investment Associates is specifically authorized to select brokers
who also provide brokerage and research services to the Funds and/or other
accounts over which Dean Investment Associates exercises investment discretion
and to pay such brokers a commission in excess of the commission another broker
would charge if Dean Investment Associates determines in good faith that the
commission is reasonable in relation to the value of the brokerage and research
services provided. The determination may be viewed in terms of a particular
transaction or Dean Investment Associates' overall responsibilities with respect
to the Funds and to accounts over which it exercises investment discretion.
Research services include securities and economic analyses, reports on
issuers' financial conditions and future business prospects, newsletters and
opinions relating to interest trends, general advice on the relative merits of
possible investment securities for the Funds and statistical services and
information with respect to the availability of securities or purchasers or
sellers of securities. Although this information is useful to the Funds and Dean
Investment Associates, it is not possible to place a dollar value on it.
Research services furnished by brokers through whom the Funds effect securities
transactions may be used by Dean Investment Associates in servicing all of its
accounts and not all such services may be used by Dean Investment Associates in
connection with the Funds.
<PAGE>
The Funds have no obligation to deal with any broker or dealer in the
execution of securities transactions. However, the Underwriter and other
affiliates of the Trust or Dean Investment Associates may effect securities
transactions which are executed on a national securities exchange or
transactions in the over-the-counter market conducted on an agency basis. No
Fund will effect any brokerage transactions in its portfolio securities with
Dean Investment Associates if such transactions would be unfair or unreasonable
to its shareholders. Over-the-counter transactions will be placed either
directly with principal market makers or with broker-dealers. Although the Funds
do not anticipate any ongoing arrangements with other brokerage firms, brokerage
business may be transacted from time to time with other firms. Neither the
Underwriter nor other affiliates of the Trust or Dean Investment Associates will
receive reciprocal brokerage business as a result of the brokerage business
transacted by the Funds with other brokers.
Code of Ethics. The Trust, Dean Investment Associates and the
Underwriter have each adopted a Code of Ethics under Rule 17j-1 of the
Investment Company Act of 1940. This Code permits personnel subject to the Code
to invest in securities, including securities that may be purchased or held by
the Funds.
Newton Capital Management has also adopted a Code of Ethics under Rule
17j-1. Newton's Code also permits personnel subject to the Code to invest in
securities, including securities that may be purchased or held by the
International Value Fund.
PORTFOLIO TURNOVER
A Fund's portfolio turnover rate is calculated by dividing the lesser
of purchases or sales of portfolio securities for the fiscal year by the monthly
average of the value of the portfolio securities owned by the Fund during the
fiscal year. High portfolio turnover involves correspondingly greater brokerage
commissions and other transaction costs, which will be borne directly by the
Funds. Although a Fund's annual portfolio turnover rate cannot be accurately
predicted, Dean Investment Associates anticipates that each Fund's portfolio
turnover rate normally will not exceed 100%, although it may be higher or lower.
A 100% turnover rate would occur if all of a Fund's portfolio securities were
replaced once within a one year period. High turnover involves correspondingly
greater commission expenses and transaction costs and may result in a Fund
recognizing greater amounts of income and capital gains, which would increase
the amount of income and capital gains which the Fund must distribute to
shareholders in order to maintain its status as a regulated investment company
and to avoid the imposition of federal income or excise taxes (see "Taxes").
The Funds do not intend to use short-term trading as a primary means of
achieving their investment objectives. Generally, each Fund intends to invest
for long-term purposes. However, the rate of portfolio turnover will depend upon
market and other conditions, and it will not be a limiting factor when the
investment adviser believes that portfolio changes are appropriate. For the
fiscal periods ended March 31, 1998, 1999 and 2000, the annualized portfolio
turnover rate was 54%, 55% and 71% for the Large Cap Value Fund, 62%, 79% and
90% for the Small Cap Value Fund, 64%, 60% and 196% for the Balanced Fund, and
109%, 100% and 157% for the International Value Fund, respectively.
<PAGE>
CALCULATION OF SHARE PRICE AND PUBLIC OFFERING PRICE
The share price (net asset value) and the public offering price (net
asset value plus applicable sales load) of the shares of each Fund are
determined as of the close of the regular session of trading on the New York
Stock Exchange (currently 4:00 p.m., Eastern time), on each day the Trust is
open for business. The Trust is open for business on every day except Saturdays,
Sundays and the following holidays: New Year's Day, Martin Luther King, Jr. Day,
President's Day, Good Friday, Memorial Day, Independence Day, Labor Day,
Thanksgiving Day and Christmas Day. The Trust may also be open for business on
other days in which there is sufficient trading in a Fund's portfolio securities
that its net asset value might be materially affected. For a description of the
methods used to determine the share price and the public offering price, see
"Calculation of Share Price and Public Offering Price" in the Prospectus.
The value of non-dollar denominated portfolio instruments held by the
International Value Fund will be determined by converting all assets and
liabilities initially expressed in foreign currency values into U.S. dollar
values at the mean between the bid and offered quotations of such currencies
against U.S. dollars as last quoted by any recognized dealer. If such quotations
are not available, the rate of exchange will be determined in accordance with
policies established in good faith by the Board of Trustees. Gains or losses
between trade and settlement dates resulting from changes in exchange rates
between the U.S. dollar and a foreign currency are borne by the International
Value Fund. To protect against such losses, the Fund may enter into forward
foreign currency exchange contracts, which will also have the effect of limiting
any such gains.
OTHER PURCHASE INFORMATION
The Prospectus describes generally how to purchase shares of the Funds.
Additional information with respect to certain types of purchases of shares of
the Class A shares of the Funds is set forth below.
<PAGE>
Right of Accumulation. A "purchaser" of shares of a Fund has the right
to combine the cost or current net asset value (whichever is higher) of his
existing Class A shares of any Fund in the Dean Family of Funds with the amount
of his current purchases in order to take advantage of the reduced sales loads
set forth in the tables in the Prospectus. The purchaser or his dealer must
notify Countrywide Fund Services, Inc. ("Countrywide") that an investment
qualifies for a reduced sales load. The reduced load will be granted upon
confirmation of the purchaser's holdings by Countrywide.
A "purchaser" includes an individual, his or her spouse and their
children under the age of 21 purchasing shares for his, her or their own
account; or a trustee or other fiduciary purchasing shares for a single
fiduciary account although more than one beneficiary is involved; or employees
of a common employer, provided that economies of scale are realized through
remittances from a single source and quarterly confirmation of such purchases;
or an organized group, provided that the purchases are made through a central
administration or a single dealer, or by other means which result in economy of
sales effort or expense. Contact the Transfer Agent for additional information
concerning purchases at net asset value or at reduced sales loads.
Letter of Intent. The reduced sales loads set forth in the tables in
the Prospectus may also be available to any "purchaser" (as defined above) of
shares of a Fund who submits a Letter of Intent to Countrywide. The Letter must
state an intention to invest within a thirteen month period in any Fund in the
Dean Family of Funds a specified amount which, if made at one time, would
qualify for a reduced sales load. A Letter of Intent may be submitted with a
purchase at the beginning of the thirteen month period or within ninety days of
the first purchase under the Letter of Intent. Upon acceptance of this Letter,
the purchaser becomes eligible for the reduced sales load applicable to the
level of investment covered by such Letter of Intent as if the entire amount
were invested in a single transaction.
The Letter of Intent is not a binding obligation on the purchaser to
purchase, or the Trust to sell, the full amount indicated. During the term of a
Letter of Intent, shares representing 5% of the intended purchase will be held
in escrow. These shares will be released upon the completion of the intended
investment. If the Letter of Intent is not completed during the thirteen month
period, the applicable sales load will be adjusted by the redemption of
sufficient shares held in escrow, depending upon the amount actually purchased
during the period. The minimum initial investment under a Letter of Intent is
$10,000.
A ninety-day backdating period can be used to include earlier purchases
at the purchaser's cost (without a retroactive downward adjustment of the sales
charge). The thirteen month period would then begin on the date of the first
purchase during the ninety-day period. No retroactive adjustment will be made if
purchases exceed the amount indicated in the Letter of Intent. The purchaser or
his dealer must notify Countrywide that an investment is being made pursuant to
an executed Letter of Intent.
<PAGE>
Other Information. The Trust either does not impose a front-end sales
load or imposes a reduced sales load in connection with purchases of shares of a
Fund made under the reinvestment privilege or the purchases described in the
"Reduced Sales Load," "Purchases at Net Asset Value" or "Exchange Privilege"
sections in the Prospectus because such purchases require minimal sales effort
by Dean Investment Associates. Purchases described in the "Purchases at Net
Asset Value" section may be made for investment only, and the shares may not be
resold except through redemption by or on behalf of the Trust.
The Trust's Account Application contains provisions in favor of the
Trust, the Transfer Agent and certain of their affiliates, excluding such
entities from certain liabilities (including, among others, losses resulting
from unauthorized shareholder transactions) relating to the various services
made available to investors.
TAXES
The Prospectus describes generally the tax treatment of distributions
by the Funds. This section of the Statement of Additional Information includes
additional information concerning federal taxes.
Each Fund has qualified and intends to continue to qualify for the
special tax treatment afforded a "regulated investment company" under Subchapter
M of the Internal Revenue Code so that it does not pay federal taxes on income
and capital gains distributed to shareholders. To so qualify a Fund must, among
other things, (i) derive at least 90% of its gross income in each taxable year
from dividends, interest, payments with respect to securities loans, gains from
the sale or other disposition of stock, securities or foreign currency, or
certain other income (including but not limited to gains from options, futures
and forward contracts) derived with respect to its business of investing in
stock, securities or currencies and (ii) diversify its holdings so that at the
end of each quarter of its taxable year the following two conditions are met:
(a) at least 50% of the value of the Fund's total assets is represented by cash,
U.S. Government securities, securities of other regulated investment companies
and other securities (for this purpose such other securities will qualify only
if the Fund's investment is limited in respect to any issuer to an amount not
greater than 5% of the Fund's assets and 10% of the outstanding voting
securities of such issuer) and (b) not more than 25% of the value of the Fund's
assets is invested in securities of any one issuer (other than U.S. Government
securities or securities of other regulated investment companies).
<PAGE>
A Fund's net realized capital gains from securities transactions will
be distributed only after reducing such gains by the amount of any available
capital loss carryforwards. Capital losses may be carried forward to offset any
capital gains for eight years, after which any undeducted capital loss remaining
is lost as a deduction.
As of March 31, 2000, the Large Cap Value Fund had capital loss
carryforwards for federal income tax purposes of $39,825, which expires through
the year 2007. The Large Cap Value Fund, Small Cap Value Fund and Balanced Fund
had capital loss carryforwards of $276,731, $622,259 and $489,511, respectively,
which expire through the year 2008. In addition, the Large Cap Value Fund, Small
Cap Value Fund and Balanced Fund had net realized capital losses of $256,798,
$1,033,224 and $136,089, respectively, during the period from November 1, 1999
through March 31, 2000, which are treated for federal income tax purposes as
arising during the Fund's tax year ending March 31, 2001. 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.
Dividends distributed by the Funds from net investment income may be
eligible, in whole or in part, for the dividends received deduction available to
corporations. Distributions resulting from the sale of foreign currencies and
foreign obligations, to the extent of foreign exchange gains, are taxed as
ordinary income or loss. If these transactions result in reducing a Fund's net
income, a portion of the income may be classified as a return of capital (which
will lower a shareholder's tax basis). If a Fund pays nonrefundable taxes to
foreign governments during the year, the taxes will reduce the Fund's net
investment income but still may be included in a shareholder's taxable income.
However, a shareholder may be able to claim an offsetting tax credit or itemized
deduction on his return for his portion of foreign taxes paid by the Fund.
A federal excise tax at the rate of 4% will be imposed on the excess,
if any, of a Fund's "required distribution" over actual distributions in any
calendar year. Generally, the "required distribution" is 98% of a Fund's
ordinary income for the calendar year plus 98% of its net capital gains
recognized during the one year period ending on October 31 of the calendar year
plus undistributed amounts from prior years. The Funds intend to make
distributions sufficient to avoid imposition of the excise tax.
The Trust is required to withhold and remit to the U.S. Treasury a
portion (31%) of dividend income on any account unless the shareholder provides
a taxpayer identification number and certifies that such number is correct and
that the shareholder is not subject to backup withholding.
Investments by the Funds in certain options, futures contracts and
options on futures contracts are "section 1256 contracts." Any gains or losses
on section 1256 contracts are generally considered 60% long-term and 40%
short-term capital gains or losses ("60/40"). Section 1256 contracts held by the
Funds at the end of each taxable year are treated for federal income tax
purposes as being sold on such date for their fair market value. The resultant
paper gains or losses are also treated as 60/40 gains or losses. When the
section 1256 contract is subsequently disposed of, the actual gain or loss will
be adjusted by the amount of any preceding year-end gain or loss. The use of
section 1256 contracts may force the Funds to distribute to shareholders paper
gains that have not yet been realized in order to avoid federal income tax
liability.
Foreign currency gains or losses on non-U.S. dollar denominated bonds
and other similar debt instruments and on any non-U.S. dollar denominated
futures contracts, options and forward contracts that are not section 1256
contracts generally will be treated as ordinary income or loss.
The Funds' use of hedging techniques, such as foreign currency
forwards, involves greater risk of unfavorable tax consequences than funds not
engaging in such techniques. Hedging may also result in the application of the
mark-to-market and straddle provisions of the Internal Revenue Code. These
provisions could result in an increase (or decrease) in the amount of taxable
dividends paid by the Funds as well as affect whether dividends paid by the
Funds are classified as capital gains or ordinary income.
Certain hedging transactions undertaken by the Funds may result in
"straddles" for federal income tax purposes. The straddle rules may affect the
character of gains (or losses) realized by the Funds. In addition, losses
realized by the Funds on positions that are part of a straddle may be deferred,
rather than being taken into account in calculating taxable income for the
taxable year in which such losses are realized. Because only a few regulations
implementing the straddle rules have been promulgated, the tax consequences of
hedging transactions to the Funds are not entirely clear. The hedging
transactions may increase the amount of short-term capital gain realized by the
Funds which is taxed as ordinary income when distributed to shareholders. The
Funds may make one or more of the elections available under the Internal Revenue
Code of 1986, as amended, which are applicable to straddles. If the Funds make
any of the elections, the amount, character and timing of the recognition of
gains or losses from the affected straddle positions will be determined under
rules that vary according to the elections made. The rules applicable under
certain of the elections operate to accelerate the recognition of gains or
losses from the affected straddle positions. Because application of the straddle
rules may affect the character of gains or losses, defer losses and/or
accelerate the recognition of gains or losses from the affected straddle
positions, the amount which must be distributed to shareholders, and which will
be taxed to shareholders as ordinary income or long-term capital gain in any
year, may be increased or decreased substantially as compared to a fund that did
not engage in such hedging transactions.
<PAGE>
The diversification requirements applicable to the Funds may limit the
extent to which the Funds will be able to engage in transactions in options,
futures contracts or options on futures contracts.
REDEMPTION IN KIND
Under unusual circumstances, when the Board of Trustees deems it in the
best interests of a Fund's shareholders, the Fund may make payment for shares
repurchased or redeemed in whole or in part in securities of the Fund taken at
current value. If any such redemption in kind is to be made, each Fund intends
to make an election pursuant to Rule 18f-1 under the Investment Company Act of
1940. This election will require the Funds to redeem shares solely in cash up to
the lesser of $250,000 or 1% of the net asset value of each Fund during any 90
day period for any one shareholder. Should payment be made in securities, the
redeeming shareholder will generally incur brokerage costs in converting such
securities to cash. Portfolio securities which are issued in an in-kind
redemption will be readily marketable.
HISTORICAL PERFORMANCE INFORMATION
From time to time, each Fund may advertise average annual total return.
Average annual total return quotations will be computed by finding the average
annual compounded rates of return over 1, 5 and 10 year periods that would
equate the initial amount invested to the ending redeemable value, according to
the following formula:
P (1 + T)n = ERV
Where:
P = a hypothetical initial payment of $1,000
T = average annual total return
n = number of years
ERV = ending redeemable value of a hypothetical $1,000 payment made at the
beginning of the 1, 5 and 10 year periods at the end of the 1, 5 or 10
year periods (or fractional portion thereof)
The calculation of average annual total return assumes the reinvestment
of all dividends and distributions and the deduction of the current maximum
sales load from the initial $1,000 payment. If a Fund has been in existence less
than one, five or ten years, the time period since the date of the initial
public offering of shares will be substituted for the periods stated.
Each Fund may also advertise total return (a "non-standardized
quotation") which is calculated differently from average annual total return. A
nonstandardized quotation of total return may be a cumulative return which
measures the percentage change in the value of an account between the beginning
and end of a period, assuming no activity in the account other than reinvestment
of dividends and capital gains distributions. This computation does not include
the effect of the applicable sales load which, if included, would reduce total
return. A nonstandardized quotation may also indicate average annual compounded
rates of return without including the effect of the applicable sales load or
over periods other than those specified for average annual total return. A
nonstandardized quotation of total return will always be accompanied by the
Fund's average annual total return as described above. The total return
(excluding the effect of applicable sales loads) as of March 31, 2000 of each of
the Funds for the previous one-year period and since inception is as follows:
One Year Since Inception*
-------- ---------------
Large Cap Value Fund-Class A 4.38% 4.94%
Large Cap Value Fund-Class C 1.38% 0.81%
Small Cap Value Fund-Class A -0.53% 0.67%
Small Cap Value Fund-Class C -1.11% -3.47%
Balanced Fund-Class A -3.52% 3.49%
Balanced Fund-Class C -5.24% -0.12%
International Value Fund-Class A 69.26% 35.27%
International Value Fund-Class C 68.54% 36.18%
* The initial public offering of the Class A shares of the Large Cap Value Fund,
the Small Cap Value Fund and the Balanced Fund was May 28, 1997. The initial
public offering of the Class A shares of the International Value Fund was
October 13, 1997. The initial public offering of the Class C shares was August
19, 1997 for the Large Cap Value Fund, August 1, 1997 for the Small Cap Value
Fund and the Balanced Fund and November 6, 1997 for the International Value
Fund.
<PAGE>
From time to time, each of the Funds may advertise its yield. A yield
quotation is based on a 30-day (or one month) period and is computed by dividing
the net investment income per share earned during the period by the maximum
offering price per share on the last day of the period, according to the
following formula:
Yield = 2[(a-b/cd +1)6 -1]
Where:
a = dividends and interest earned during the period
b = expenses accrued for the period (net of reimbursements)
c = the average daily number of shares outstanding during the
period that were entitled to receive dividends
d = the maximum offering price per share on the last day of the period
Solely for the purpose of computing yield, dividend income is
recognized by accruing 1/360 of the stated dividend rate of the security each
day that a Fund owns the security. Generally, interest earned (for the purpose
of "a" above) on debt obligations is computed by reference to the yield to
maturity of each obligation held based on the market value of the obligation
(including actual accrued interest) at the close of business on the last
business day prior to the start of the 30-day (or one month) period for which
yield is being calculated, or, with respect to obligations purchased during the
month, the purchase price (plus actual accrued interest). With respect to the
treatment of discount and premium on mortgage or other receivables-backed
obligations which are expected to be subject to monthly paydowns of principal
and interest, gain or loss attributable to actual monthly paydowns is accounted
for as an increase or decrease to interest income during the period and discount
or premium on the remaining security is not amortized.
Both yield and average annual total return figures are based on
historical earnings and are not intended to indicate future performance. From
time to time, the Funds may advertise their performance rankings as published by
recognized independent mutual fund statistical services such as Lipper
Analytical Services, Inc. ("Lipper"), or by publications of general interest
such as Forbes, Money, The Wall Street Journal, Business Week, Barron's, Fortune
or Morningstar Mutual Fund Values. The Funds may also compare their performance
to that of other selected mutual funds, averages of the other mutual funds
within their categories as determined by Lipper, or recognized indicators such
as the Dow Jones Industrial Average and the Standard & Poor's 500 Stock Index,
the Russell 1000 Index, the Russell 2000 Index, the Lehman Brothers
Government/Corporate Bond Index and the Europe, Australia and Far East Index
compiled by Morgan Stanley.
<PAGE>
To help investors better evaluate how an investment in a Fund might
satisfy their investment objective, advertisements regarding each Fund may
discuss various measures of Fund performance, including current performance
ratings and/or rankings appearing in financial magazines, newspapers and
publications which track mutual fund performance. Advertisements may also
compare performance (using the calculation methods set forth in the Prospectus)
to performance as reported by other investments, indices and averages. In
connection with a ranking, the Funds may provide additional information, such as
the particular category of funds to which the ranking relates, the number of
funds in the category, the criteria upon which the ranking is based, and the
effect of fee waivers and/or expense reimbursements, if any. The Funds may also
present their performance and other investment characteristics, such as
volatility or a temporary defensive posture, in light of the investment
adviser's view of current or past market conditions or historical trends.
In assessing such comparisons of performance an investor should keep in
mind that the composition of the investments in the reported indices and
averages is not identical to the Funds' portfolios, that the averages are
generally unmanaged and that the items included in the calculations of such
averages may not be identical to the formula used by the Funds to calculate
their performance. In addition, there can be no assurance that the Funds will
continue this performance as compared to such other averages.
CUSTODIAN
Firstar Bank, N.A., 425 Walnut Street, Cincinnati, Ohio, has been
retained to act as Custodian for the investments of the Large Cap Value Fund,
the Small Cap Value Fund and the Balanced Fund. Firstar Bank, N.A. acts as each
Fund's depository, safekeeps its portfolio securities, collects all income and
other payments with respect thereto, disburses funds as instructed and maintains
records in connection with its duties.
Boston Safe Deposit and Trust Company ("Boston Safe"), One Boston
Place, Boston, Massachusetts, has been retained to act as Custodian for the
investments of the International Value Fund. Boston Safe acts as the Fund's
depository, safekeeps its portfolio securities, collects all income and other
payments with respect thereto, disburses funds as instructed and maintains
records in connection with its duties. Boston Safe and Newton Capital are both
subsidiaries of Mellon Bank.
AUDITORS
The firm of Ernst & Young LLP has been selected as independent auditors
for the Trust for the current fiscal year. Ernst & Young LLP, 1300 Chiquita
Center, Cincinnati, Ohio, performs an annual audit of the Trust's financial
statements and advises the Trust as to certain accounting matters.
PRINCIPAL SECURITY HOLDERS
As of June 30, 2000, Chauncey H. Dean and Zada G. Dean, 7777
Taylorsville Road, Huber Heights, Ohio, owned of record 34.20% of the
outstanding Class A shares of the Large Cap Value Fund, 49.98% of the
outstanding Class A shares of the Small Cap Value Fund, 39.05% of the
outstanding Class A shares of the Balanced Fund and 25.01% of the outstanding
Class A shares of the International Value Fund. As of June 30, 2000, Zada G.
Dean, 7777 Taylorsville Road, Huber Heights, Ohio, owned of record 11.58% of the
outstanding Class A shares of the Large Cap Value Fund, 8.60% of the outstanding
Class A shares of the Small Cap Value Fund, 13.15% of the outstanding shares of
the Balanced Fund and 8.84% of the outstanding Class A shares of the
International Value Fund. Chauncey H. Dean and Zada G. Dean may be deemed to
control each Fund by virtue of the fact that they own of record more than 25% of
each Fund's shares.
<PAGE>
As of June 30, 2000, Merrill Lynch, Pierce, Fenner & Smith - For the
Sole Benefit of its Customers, Attn: Mutual Fund Administration, 4800 Deer Lake
Drive East, 3rd Floor, Jacksonville, Florida, owned of record 11.57% of the
outstanding Class A shares and 98.33% of the outstanding Class C shares of the
Large Cap Value Fund, 11.93% of the outstanding Class A shares and 40.75% of the
outstanding Class C shares of the Small Cap Value Fund, 11.17% of the
outstanding Class A shares and 89.02% of the outstanding Class C shares of the
Balanced Fund, and 8.39% of the outstanding Class A shares and 38.38% of the
outstanding Class C shares of the International Value Fund. As of June 30, 2000,
DRPS, Inc., 401(k) Account, 2480 Kettering Tower, Dayton, Ohio, owned of record
13.92% of the outstanding Class A shares of the Large Cap Value Fund, 11.51% of
the outstanding Class A shares of the Small Cap Value Fund, 5.41% of the
outstanding Class A shares of the Balanced Fund and 8.31% of the outstanding
Class A shares of the International Value Fund. As of June 30, 2000, C.H. Dean &
Associates, Inc., 2480 Kettering Tower, Dayton, Ohio, owned of record 24.42% of
the outstanding Class A shares of the Large Cap Value Fund, 19.05% of the
outstanding Class A shares of the Balanced Fund and 20.76% of the outstanding
Class A shares of the International Value Fund. As of June 30, 2000, J.C.
Bradford & Co., For the Sole Benefit of its Customers, 330 Commerce St.,
Nashville, Tennessee, owned of record 52.26% of the outstanding Class C shares
of the Small Cap Value Fund and 6.52% of the outstanding Class C shares of the
Balanced Fund. As of June 30, 2000, University of Dayton, 300 College Park,
Dayton, Ohio owned of record 15.61% of the outstanding Class A shares of the
International Value Fund. As of June 30, 2000, DB Alex Brown LLC, For the Sole
Benefit of its Customers, P.O. Box 1346, Baltimore, Maryland, owned of record
44.59% of the outstanding Class C shares of the International Value Fund. As of
June 30, 2000, Children's Emergency Services, Inc., Retirement Trust, FBO Dr.
William M. Marte, 3001 Rising Spring Court, Bellbrook, Ohio, owned of record
9.00% of the outstanding Class C shares of the International Value Fund.
<PAGE>
As of June 30, 2000, the Trustees and officers of the Trust as a group
owned of record and beneficially 34.21% of the outstanding Class A shares of the
Large Cap Value Fund, 50.28% of the outstanding Class A shares of the Small Cap
Value Fund, 39.05% of the outstanding Class A shares of the Balanced Fund,
25.02% of the outstanding Class A shares of the International Value Fund and
less than 1% of the outstanding Class C shares of each of the Funds.
TRANSFER AGENT, FUND ACCOUNTING AGENT, AND ADMINISTRATOR
Under the terms of a Mutual Fund Services Agreement, Unified Fund
Services, Inc., P.O. Box 6110, Indianapolis, Indiana, 46206-6110, serves as
transfer agent and shareholder services agent, fund accounting agent, and
administrator for the Trust. Unified is a wholly owned subsidiary of Unified
Financial Services, Inc.
As transfer agent and shareholder services agent, Unified maintains the
records of each shareholder's account, answers shareholder's 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, Unified receives a monthly
fee based on the number of shareholder accounts in each class of each Fund,
subject to a $1,000 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.
Prior to November 15, 1999, Countrywide Fund Services provided the
above services to the Trust. For these services, Countrywide received 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 paid out-of-pocket expenses including, but not limited to,
postage and supplies.
As fund accounting agent, Unified calculates the daily net asset value
per share and maintains the financial books and records of the Funds. For these
services, Unified receives a monthly fee from each Fund at a rate of 0.05% of
its average daily net assets up to $100 million, 0.04% of the next $150 million
of such net assets, and 0.03% of such net assets in excess of $250 million,
subject to a $26,000 minimum annual fee for each Fund. In addition, each Fund
pays certain out-of-pocket expenses incurred by Unified in obtaining valuations
of such Fund's portfolio securities.
Prior to November 15, 1999, Countrywide provided the above accounting
services to the Trust. For these services, Countrywide received a monthly fee of
$3,000 from each Fund, as well as out-of-pocket expenses.
As administrative services agent for the Trust, Unified supplies
non-investment related administrative and compliance services for the Funds.
Unified prepares 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, Unified
receives a monthly fee from each Fund at an annual rate of 0.09% of its average
daily net assets up to $100 million, 0.06% of the next $150 million of such net
assets, and 0.05% of such net assets in excess of $250 million, subject to a
$1,250 minimum monthly fee.
Prior to November 15, 1999, Countrywide provided the above
administrative services to the Trust. For these services, Countrywide received a
monthly fee from each Fund at an annual rate of 0.10% of its average daily net
assets up to $100 million, 0.075% of the next $100 million of such net assets,
and 0.05% of such net assets in excess of $200 million, subject to a $1,000
minimum monthly fee.
<PAGE>
DRPS, Inc., an affiliate of Dean Investment Associates and the
Underwriter, provides certain sub-accounting and recordkeeping services to the
Funds. In return for these services, DRPS, Inc. receives a fee at the annual
rate of .10% of the average balance of accounts in each Fund for which DRPS,
Inc. provides these services.
ANNUAL REPORT
The Funds' financial statements as of March 31, 2000, which have been
audited by Ernst & Young LLP, are incorporated into this Statement of Additional
Information by reference to the Funds' Annual Report to Shareholders. The Trust
will provide the Annual Report without charge at written or telephone request.
DEAN FAMILY OF FUNDS
--------------------
PART C. OTHER INFORMATION
- ------- -----------------
Item 23.
- --------
(a) Agreement and Declaration of Trust*
(b) Bylaws*
(c) Incorporated by reference to the Agreement and Declaration
of Trust and Bylaws
(d)(i) Advisory Agreement with C.H. Dean & Associates, Inc. for the
Large Cap Fund, the Small Cap Fund and the Balanced Fund*
(ii) Advisory Agreement with C.H. Dean & Associates, Inc. for the
International Value Fund*
(iii) Sub-Advisory Agreement with Newton Capital Management Ltd.*
(e) Underwriting Agreement with 2480 Securities LLC*
(f) Directors Deferred Compensation Plan*
(g)(i) Custody Agreement with Firstar Bank, N.A.*
(ii) Custody Agreement with Boston Safe Deposit and Trust
Company
(h) Mutual Fund Services Agreement with Unified Fund Services,
Inc.
(i) Opinion and Consent of Counsel*
(j) Consent of Independent Auditors
(k) Inapplicable
(l) Agreement Relating to Initial Capital*
(m)(i) Plan of Distribution Pursuant to Rule 12b-1 for Class A
Shares*
(ii) Plan of Distribution Pursuant to Rule 12b-1 for Class C
Shares*
<PAGE>
(n) Inapplicable
(o) Rule 18f-3 Multi-Class Plan*
(p)(i) Code of Ethics of C.H. Dean & Associates, In., 2480
Securities LLC, and Dean Family of Funds
(ii) Code of Ethics of Newton Capital Management Ltd.
- --------------------------------------
* Incorporated by reference to the Trust's Registration Statement on Form
N-1A.
** To be filed by amendment.
Item 24. Persons Controlled by or Under Common Control with Registrant.
- -------- --------------------------------------------------------------
None.
Item 25. Indemnification
- -------- ---------------
Article VI of the Registrant's Agreement and Declaration of Trust
provides for indemnification of officers and Trustees as follows:
"Section 6.4 INDEMNIFICATION OF TRUSTEES, OFFICERS, ETC. Subject
to and except as otherwise provided in the Securities Act of
1933, as amended, and the 1940 Act, the Trust shall indemnify
each of its Trustees and officers, including persons who serve at
the Trust's request as directors, officers or trustees of another
organization in which the Trust has any interest as a
shareholder, creditor or otherwise (hereinafter referred to as a
"Covered Person") against all liabilities, including but not
limited to amounts paid in satisfaction of judgments, in
compromise or as fines and penalties, and expenses, including
reasonable accountants' and counsel fees, incurred by any Covered
Person in connection with the defense or disposition of any
<PAGE>
action, suit or other proceeding, whether civil or criminal,
before any court or administrative or legislative body, in which
such Covered Person may be or may have been involved as a party
or otherwise or with which such person may be or may have been
threatened, while in office or thereafter, by reason of being or
having been such a Trustee or officer, director or trustee, and
except that no Covered Person shall be indemnified against any
liability to the Trust or its Shareholders to which such Covered
Person would otherwise be subject by reason of willful
misfeasance, bad faith, gross negligence or reckless disregard of
the duties involved in the conduct of such Covered Person's
office.
Section 6.5 ADVANCES OF EXPENSES. The Trust shall advance
attorneys' fees or other expenses incurred by a Covered Person in
defending a proceeding to the full extent permitted by the
Securities Act of 1933, as amended, the 1940 Act, and Ohio
Revised Code Chapter 1707, as amended. In the event any of these
laws conflict with Ohio Revised Code Section 1701.13(E), as
amended, these laws, and not Ohio Revised Code Section
1701.13(E), shall govern.
Section 6.6 INDEMNIFICATION NOT EXCLUSIVE, ETC. The right of
indemnification provided by this Article VI shall not be
exclusive of or affect any other rights to which any such Covered
Person may be entitled. As used in this Article VI, "Covered
Person" shall include such person's heirs, executors and
administrators. Nothing contained in this article shall affect
any rights to indemnification to which personnel of the Trust,
other than Trustees and officers, and other persons may be
entitled by contract or otherwise under law, nor the power of the
Trust to purchase and maintain liability insurance on behalf of
any such person.
Insofar as indemnification for liability arising under the
Securities Act of 1933 may be permitted to Trustees, officers and
controlling persons of the Registrant pursuant to the foregoing
provisions, or otherwise, the Registrant has been advised that in
the opinion of the Securities and Exchange Commission such
indemnification is against public policy as expressed in the Act
and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment
by the Registrant of expenses incurred or paid by a Trustee,
officer or controlling person of the Registrant in the successful
defense of any action, suit or proceeding) is asserted by such
Trustee, officer or controlling person in connection with the
securities being registered, the Registrant will, unless in the
opinion of its counsel
<PAGE>
the matter has been settled by controlling precedent, submit to a
court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in
the Act and will be governed by the final adjudication of such
issue.
The Registrant maintains a standard mutual fund and investment
advisory professional and directors and officers liability
policy. The policy provides coverage to the Registrant, its
Trustees and officers, C.H. Dean & Associates, Inc. ("Dean
Investment Associates") and 2480 Securities LLC. Coverage under
the policy will include losses by reason of any act, error,
omission, misstatement, misleading statement, neglect or breach
of duty.
The Advisory Agreements with Dean Investment Associates each
provide that Dean Investment Associates shall not be liable for
any action taken, omitted or suffered to be taken by it in its
reasonable judgment, in good faith and believed by it to be
authorized or within the discretion or rights or powers conferred
upon it by the applicable Advisory Agreement, or in accordance
with (or in the absence of) specific directions or instructions
from the Trust; provided, however, that such acts or omissions
shall not have resulted from Dean Investment Associates' willful
misfeasance, bad faith or gross negligence, a violation of the
standard of care established by and applicable to Dean Investment
Associates in its actions under the appropriate Advisory
Agreement or breach of its duty or of its obligations under the
appropriate Advisory Agreement.
The Sub-Advisory Agreement with the Sub-Adviser provides that the
Sub-Adviser shall give the International Value Fund the benefit
of its best judgment and effort in rendering services under the
Sub-Advisory Agreement, but that neither the Sub-Adviser nor any
of its officers, directors, employees, agents or controlling
persons shall be liable for any act or omission or for any loss
sustained by the International Value Fund in connection with the
matters to which the Sub-Advisory Agreement relates, except a
loss resulting from the Sub-Adviser's willful misfeasance, bad
faith or gross negligence in the performance of its duties, or by
reason of its reckless disregard of its obligations and duties
under the Sub-Advisory Agreement; provided, however, that the
foregoing shall not constitute a waiver of any rights which the
Trust may have which may not be waived under applicable law.
<PAGE>
Item 26. Business and Other Connections of the Investment Adviser
- -------- --------------------------------------------------------
(a) Dean Investment Associates is a registered investment adviser,
providing investment advisory services to the Registrant. Dean
Investment Associates has been engaged since 1973 in the business
of providing investment advisory services to individual,
institutional and corporate clients.
The Sub-Adviser is a United Kingdom investment advisory firm
registered with the Securities and Exchange Commission. The
Sub-Adviser is affiliated with Newton Investment Management Ltd.,
an English investment advisory firm which has been managing
assets for institutional investors, mutual funds and individuals
since 1977.
(b) For information concerning the business, vocation or employment
of a substantial nature of the directors and officers of
Dean Investment Associates, reference is hereby made to the
Form ADV filed by it under the Investment Advisers Act of 1940
(file no. 801-9895).
For information concerning the business, vocation or employment
of a substantial nature of the directors and officers of
Newton Capital Management Ltd., reference is hereby made to
the Form ADV filed by it under the Investment Advisers Act of
1940 (file no. 801-42114).
Item 27. Principal Underwriters
- -------- ----------------------
(a) Inapplicable
(b) Information with respect to each director and officer of 2480
Securities LLCis incorporated by reference to Schedule A of Form
BD filed by it under the Securities Exchange Act of 1934 (File
No. 8-49648).
(c) Inapplicable
Item 28. Location of Accounts and Records
- -------- --------------------------------
Accounts, books and other documents required to be maintained by
Section 31(a) of the Investment Company Act of 1940 and the Rules
promulgated thereunder will be maintained by the Registrant at its
offices located at 2480 Kettering Tower, Dayton, Ohio 45423 as well as
at the offices of the Registrant's transfer agent located at 431
N. Pennsylvania St., Indianapolis, IN 46204.
Item 29. Management Services Not Discussed in Parts A or B
- -------- -------------------------------------------------
Inapplicable
Item 30. Undertakings
- -------- ------------
Inapplicable
<PAGE>
Pursuant to the requirements of the Securities Act of 1933 and the Investment
Company Act of 1940, the Registrant certifies that it meets all of the
requirements for effectiveness of this registration statement under rule 485 (b)
under the Securities Act and has duly caused this amendment to the Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Indianapolis, and State of Indiana, on the 28th day
of July, 2000.
DEAN FAMILY OF FUNDS
By /s/ Carol J. Highsmith
Carol J. Highsmith
Secretary
Pursuant to the requirements of the Securities Act of 1933, this Registration
Statement has been signed below by the following persons in the capacities and
on the dates indicated.
Signature Title Date
--------- ----- ----
/s/ Stephen M. Miller President July 31, 2000
- -----------------------------
Stephen M. Miller
/s/ Michael E. Durham Asst. Treasurer July 28, 2000
- -----------------------------
Michael E. Durham
Trustee July 31, 2000
- -----------------------------
Chauncey H. Dean*
Trustee July 31, 2000
- -----------------------------
Robert D. Dean*
- ----------------------------- Trustee
Sam B. Gould*
- ----------------------------- Trustee
Frank J. Perez
- ----------------------------- Trustee
David H. Ponitz*
- ----------------------------- Trustee
Gilbert P. Williamson*
* By /s/ Carol J. Highsmith
Carol J. Highsmith
Attorney-in-Fact
July 28, 2000
<PAGE>
EXHIBIT INDEX
1. Mutual Fund Services Agreement with Unified Fund Services, Inc....EX-99.23.h
2. Consent of Ernst & Young..........................................EX-99.23.j
3. Code of Ethics of C.H. Dean & Associates, Inc., 2480 Securities
LLC, and Dean Family of Funds.................................EX-99.23.p.i
4. Code of Ethics of Newton Capital Management Ltd................EX-99.23.p.ii
