SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
FORM N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 / /
Pre-Effective Amendment No. / /
Post-Effective Amendment No. 3 / X /
and/or
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT / /
OF 1940
Amendment No. 4 / X /
(Check appropriate box or boxes.)
Star Select Funds - File Nos.333-23987 and 811-8155
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(Exact Name of Registrant as Specified in Charter)
431 North Pennsylvania Street, Indianapolis, Indiana 46204
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(Address of Principal Executive Offices) (Zip Code)
Registrant's Telephone Number, including Area Code: 317-634-3300
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Jennie Carlson, c/o Star Bank, N.A., 425 Walnut Street, Cincinnati, Ohio 45202
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(Name and Address of Agent for Service)
With copy to:
Donald S. Mendelsohn, Brown, Cummins & Brown Co., L.P.A.
3500 Carew Tower, Cincinnati, Ohio 45202
Approximate Date of Proposed Public Offering:
It is proposed that this filing will become effective:
/X/ immediately upon filing pursuant to paragraph (b)
/ / on pursuant to paragraph (b)
/ / 60 days after filing pursuant to paragraph (a)(1)
/ / on (date) pursuant to paragraph (a)(1)
/ / 75 days after filing pursuant to paragraph (a)(2)
/ / on (date) pursuant to paragraph (a)(2) of Rule 485.
If appropriate, check the following box:
/ / this post-effective amendment designates a new effective date for a
previously filed post-effective amendment.
Title of Securities Being Registered
Omit from the facing sheet reference to the other Act if the
Registration Statement or amendment is filed under only one of the Acts. Include
the "Approximate Date of Proposed Public Offering" and "Title of Securities
Being Registered" only where securities are being registered under the
Securities Act of 1933.
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Star Select Funds
CROSS REFERENCE SHEET
FORM N-1A
FOR STAR SELECT REIT-PLUS FUND
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ITEM SECTION IN PROSPECTUS
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1........................Cover Page
2........................Summary of Fund Expenses
3........................Financial Highlights, Performance Information
4........................The Fund, Investment Objective and Strategies and Risk
Considerations, Investment Policies and Techniques, Operation of the
Fund, General Information
5........................Operation of the Fund
5A.......................None
6........................Cover Page, Summary of Fund Expenses, Dividends and Distributions,
Taxes, General Information, Redeeming Shares
7........................Cover Page, How to Invest in the Fund, Share Price Calculation,
Operation of the Fund, Redeeming Shares
8........................Redeeming Shares
9........................None..
13........................General Information
15........................General Information
SECTION IN STATEMENT OF
ITEM ADDITIONAL INFORMATION
10........................Cover Page
11........................Table of Contents
12........................None
13........................Additional Information About Fund Investments and Risk
Considerations, Investment Limitations
14........................Trustees and Officers
15........................Description of the Trust
16........................The Investment Adviser, Custodian, Transfer Agent, Accountants,
Trustees and Officers
17........................Portfolio Transactions and Brokerage
18........................Description of the Trust
19........................Determination of Share Price
20........................None..
21........................Distributor
22........................Investment Performance
23........................Financial Statements
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STAR SELECT REIT-PLUS FUND
PROSPECTUS August 1, 1998
431 North Pennsylvania Street
Indianapolis, Indiana 46204
For Information, Client Services and Requests:
(800) 677-FUND
Star Select REIT-Plus Fund (the "Fund") is a diversified, open-end
mutual fund whose investment objective is to provide above average income and
long-term growth of capital. The Fund seeks to achieve its objective by
investing primarily in REITs (real estate investment trusts) plus other real
estate related equity securities.
This Prospectus provides the information a prospective investor ought
to know before investing and should be retained for future reference. A
Statement of Additional Information, dated August 1, 1998, ("SAI") has been
filed with the Securities and Exchange Commission (the "SEC"), is incorporated
herein by reference, and can be obtained without charge by calling the Fund at
the phone number listed above. The SEC maintains a Web Site (http://www.sec.gov)
that contains the SAI, material incorporated by reference, and other information
regarding registrants that file electronically with the SEC.
Shares of the Fund are not deposits or obligations of Star Bank, N.A.
or its affiliates, are not endorsed or guaranteed by Star Bank, N.A. or its
affiliates, and are not insured by the Federal Deposit Insurance Corporation
(FDIC), the Federal Reserve Board or any other government agency, entity, or
person. The purchase of fund shares involves investment risks, including the
possible loss of principal.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
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SUMMARY OF FUND EXPENSES
The tables below are provided to assist an investor in understanding
the direct and indirect expenses that an investor in the Fund may incur as a
shareholder. The expense information for Class B shares is based on estimated
amounts for the current fiscal year. The expense information for Class C shares
is based on operating expenses incurred during the most recent fiscal year. The
expenses are expressed as a percentage of average net assets. The Example should
not be considered a representation of future Fund performance or expenses, both
of which may vary.
Shareholder Transaction Expenses CLASS B CLASS C
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Maximum Sales Load on Purchases .................NONE NONE
Sales Load Imposed on Reinvested Dividends....................NONE NONE
Maximum Contingent Deferred Sales Charge......................5.00%(1) NONE
Redemption Fee................................................NONE NONE
Exchange Fees.................................................NONE NONE
Annual Fund Operating Expenses (as a percentage of average net assets)
Management Fees.....................................0.75% 0.75%
12b-1 Fees(2).......................................0.00% 0.00%
Other Expenses (after reimbursement)................0.77%(3) 0.77%
Total Fund Operating Expenses (after reimbursement)...........1.52% 1.52%
1 The contingent deferred sales charge for Class B shares is 5.0% in the
first year, declining to 1.0% in the fifth year, and 0.0% thereafter.
(see "Redeeming Shares-Contingent Deferred Sales Charge.")
2 The Trust has adopted a 12b-1 Plan which permits the Fund to pay up to 0.25%
of average net assets as a 12b-1 fee to the Fund's distributor. The Fund's
expenses will not be affected by the 12b-1 Plan because the Adviser does not
intend to activate the Plan through July 31, 1999.
3 The Adviser has committed to reimburse other expenses of Class B shares
through July 31, 1999 to the extent necessary to maintain total operating
expenses as indicated. Absent reimbursement, it is estimated that other expenses
and total expenses would be 1.46% and 2.21%, respectively.
Example
You would pay the following expenses on a $1,000 investment, assuming (1) 5%
annual return and (2) redemption at the end of each time period:
1 Year 3 Years 5 Years 10 Years
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Class B $65 $78 $93 $181
Class C $15 $48 $83 $181
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THE FUND
Star Select REIT-Plus Fund (the "Fund") was organized as a series of
Star Select Funds, an Ohio business trust (the "Trust") on February 28, 1997.
This prospectus offers two classes of shares of the Fund: C Shares - a no-load
class of shares where there are no sales charges or commissions; and B Shares -
a class of shares where all purchases are made at the net asset value but
redemptions may be assessed a sales charge (see "Contingent Deferred Sales
Charge" on page 5). Each share represents an undivided, proportionate interest
in the respective class. The investment adviser to the Fund is Star Bank, N.A.
(the "Adviser" or "Star Bank").
FINANCIAL HIGHLIGHTS
The following condensed supplementary financial information for the
Class C shares for the period June 24, 1997 (commencement of operations) to
March 31, 1998 is derived from the audited financial statements of the Fund. The
financial statements of the Fund have been audited by McCurdy & Associates
CPA's, Inc., independent public accountants, and are included in the Fund's
Annual Report. The Annual Report contains additional performance information and
is available upon request and without charge.
1998(a)
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PER SHARE OPERATING
PERFORMANCE:
Net asset value, beginning ................................... $ 10.00
Income from investment
Operations:
Net investment income ................................... 0.35
Net realized and unrealized
gain (loss) on investments.......................... 0.86
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Total from investment income ................................. 1.21
Less distributions:
Dividends from net
investment income .................................. (0.35)
Distributions from net realized
Gains on investments ........................... (0.27)
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Total from distributions ..................................... (0.62)
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Net asset value at end of period ............................. $ 10.59
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TOTAL RETURN (b).............................................. 14.96%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (millions)..................... 43.9
Ratio of total expenses to
average net assets (b).............................. 1.52%
Ratio of net investment
income to average net assets (b).................... 4.29%
Portfolio turnover ...................................... 29.50%
Average commission rate paid ............................ $ 0.0764
(a) For the period June 24, 1997 (commencement of operations) to
March 31,1998.
(b) Annualized.
INVESTMENT OBJECTIVE, STRATEGIES AND RISK CONSIDERATIONS
The investment objective of the Star Select REIT-Plus Fund is to
provide shareholders with above average income and long-term growth of capital.
The Fund seeks to achieve its objective by investing primarily in real estate
investment trusts ("REITs") plus other real estate related equity securities
(including common stock, preferred stock and securities convertible into common
stock). Under normal circumstances, the Fund will invest at least 65% of its
total assets in real estate related equity securities, including at least 50% of
its total assets in REITs.
A REIT is a corporation or business trust that invests substantially
all of its assets in interests in real estate. Equity REITs are those which
purchase or lease land and buildings and generate income primarily from rental
income. Equity REITs may also realize capital gains (or losses) when selling
property that has appreciated (or depreciated) in value. Mortgage REITs are
those which invest in real estate mortgages and generate income primarily from
interest payments on mortgage loans. Hybrid REITs generally invest in both real
property and mortgages. It is anticipated that the Fund's investments in REITs
will be primarily those characterized as equity REITs. Real estate related
equity securities also include those issued by real estate developers, companies
with substantial real estate holdings (for investment or as part of their
operations), as well as companies whose products and services are directly
related to the real estate industry, such as building supply manufacturers,
mortgage lenders or mortgage servicing companies.
The Fund is not intended to be a complete investment program. The
concentration of the Fund's investments in the real estate industry will subject
the Fund to risks in addition to those that apply to the general equity market.
Economic, legislative or regulatory developments may occur which significantly
affect the entire real estate industry and thus may subject the Fund to greater
market fluctuations than a fund that does not concentrate in a particular
industry. In addition, the Fund will generally be subject to risks associated
with direct ownership of real estate, such as
<PAGE>
decreases in real estate values or fluctuations in rental income caused by a
variety of factors, including increases in interest rates, increases in property
taxes and other operating costs, casualty or condemnation losses, possible
environmental liabilities and changes in supply and demand for properties.
Risks associated with REIT investments include the fact that equity
and mortgage REITs are dependent upon specialized management skills and are not
fully diversified. These characteristics subject REITs to the risks associated
with financing a limited number of projects. They are also subject to heavy cash
flow dependency, defaults by borrowers, and self-liquidation. Additionally,
equity REITs may be affected by any changes in the value of the underlying
property owned by the trusts, and mortgage REITs may be affected by the quality
of any credit extended. The Adviser seeks to mitigate these risks by selecting
REITs diversified by sector (shopping malls, apartment building complexes and
health care facilities) and geographic location.
Although the Fund will invest primarily in real estate related equity
securities (including REITs), the Fund may invest outside the real estate
industry. For temporary defensive purposes under abnormal market conditions (as
determined by the Adviser), the Fund may hold all or a portion of its assets in
money market instruments (high quality income securities with maturities of less
than one year), securities of money market funds or U.S. government repurchase
agreements. The Fund may also invest in such instruments at any time to maintain
liquidity or pending selection of investments in accordance with its policies.
To the extent the Fund invests in money market funds, shareholders of the Fund
will be subject to duplicative management fees.
As all investment securities are subject to inherent market risks and
fluctuations in value due to earnings, economic and political conditions and
other factors, the Fund cannot give any assurance that its investment objective
will be achieved. Rates of total return quoted by the Fund may be higher or
lower than past quotations, and there can be no assurance that any rate of total
return will be maintained. See "Investment Policies and Techniques" for a more
detailed discussion of the Fund's investment practices.
HOW TO INVEST IN THE FUND
Minimum Investment Required
The minimum initial investment in the Fund by an investor is $1,000
($25 for Star Bank Connections Group banking customers, Star Bank employees and
members of their immediate family, participants in Star Bank's Student Banking
101 Program, and $500 for an Education IRA). The minimum subsequent investment
is $25. For customers of Star Bank, an institutional investor's minimum
investment will be calculated by combining all Fund accounts it maintains with
Star Bank and invests with the Fund.
Systematic Investment Plan
Once a Fund account has been opened, shareholders may add to their
investment on a regular basis in a minimum amount of $25. Under this plan, funds
may be withdrawn periodically from the shareholder's checking account and
invested in shares of the Fund at the net asset value next determined after an
order is received by Star Bank. A shareholder may apply for participation in
this plan through Star Bank.
<PAGE>
Share Purchases
All shares are purchased through Unified Management Corporation, the
Fund's distributor (the "Distributor"). All purchases should be sent as
indicated under "Purchasing By Mail," except Texas residents must send purchase
documents to Unified Fund Services, Inc., the Fund's transfer agent (the
"Transfer Agent") and agent for the Distributor, at 431 N. Pennsylvania Street,
Indianapolis, Indiana 46204.
Purchasing By Mail
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New Account Additional Investments
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Complete and sign the enclosed New Account Additional investments should include
Form. Please include the amount of your your account number and the name of
initial investment on the New Account Form, the Fund. Make the check payable to
specify which class of shares you wish The Star Select Funds and mail to:
to purchase, make your check payable to
The Star Select Funds and mail to:
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Star Select Funds
Client Services
Star Bank, N.A.
425 Walnut Street, ML 7135
Cincinnati, OH 45202
Purchasing By Wire
You may also purchase shares of the Fund by wiring Federal Funds from
your bank, which may charge you a fee for doing so. The funds should be wired
to:
Star Bank, N.A.
ABA: 042000013
Account: 486464944
Credit to Unified Management Corporation Star Select REIT-Plus Fund
(designate Class B or Class C)
Account Number (your account number)
Account Registration
To assure the proper receipt, please be sure your bank includes the Fund's name
and your mutual fund account number. Wire purchases will be accepted only when
the Fund and Custodian Bank are open for business. Funds must be received at the
Federal Reserve Bank by 3:30 p.m. (Eastern time) in order to receive that day's
trade date.
Other Purchase Information
Shares of the Fund also may be purchased through broker-dealers. Your
broker-dealer must notify Star Bank of your purchase by 3:30 p.m. (Eastern
time), and payment is normally required within three business days. The
Distributor will pay dealers an amount equal to 3.2% of the net asset
<PAGE>
value of the B shares of the Trust purchased by their clients or customers.
These payments will be made directly by the Distributor from its assets and will
not be made from the assets of the Fund.
The Fund does not issue share certificates. All shares are held in
non-certificate form registered on the books of the Fund and the Transfer Agent
for the account of the shareholder. The rights to limit the amount of purchases
and to refuse to sell to any person are reserved by the Fund. If your check or
wire does not clear, you will be responsible for any loss incurred by the Fund.
If you are already a shareholder, the Fund can redeem shares from any
identically registered account in the Fund as reimbursement for any loss
incurred. You may be prohibited or restricted from making future purchases in
the Fund.
REDEEMING SHARES
The Fund redeems shares at its net asset value, less any applicable
contingent deferred sales charge, next determined after Star Bank receives the
redemption request. (See "Contingent Deferred Sales Charge.") Redemptions will
be made on days on which the Fund computes its net asset value. Redemption
requests cannot be executed on days on which the New York Stock Exchange is
closed or on federal holidays restricting wire transfers. Requests for
redemption for the Fund can be made in person, by telephone or by mail.
By Telephone. Shareholders may redeem shares of the Fund by telephoning Star
Bank at 1-800-677- FUND. Redemption requests given by telephone may be
electronically recorded. For calls received by Star Bank before 3:30 p.m.
(Eastern time), proceeds will normally be wired the following day to the
shareholder's account at Star Bank or a check will be sent to the address of
record. In no event will proceeds be wired or a check mailed more than five
business days after a proper request for redemption has been received. If, at
any time, the Fund shall determine it necessary to terminate or modify this
method of redemption, shareholders will be promptly notified.
In the event of drastic economic or market changes, a shareholder may
experience difficulty in redeeming by telephone, although neither the Fund nor
the transfer agent has ever experienced difficulties in receiving and in a
timely fashion responding to telephone requests for redemptions. If such a case
should occur, another method of redemption should be considered.
If reasonable procedures are not followed by the Fund, it may be
liable for losses, due to unauthorized or fraudulent telephone instructions.
By Mail. Shareholders may also redeem shares by sending a written request to
Star Select Funds Client Services, Star Bank, N.A., 425 Walnut Street, ML 7135,
Cincinnati, Ohio 45202. The written request must include the shareholder's name,
the Fund name, the account number, and the share or dollar amount requested.
Shareholders may call the Fund for assistance in redeeming by mail.
Signatures. Shareholders requesting a redemption of any amount to be sent to an
address other than that on record with the Fund or a redemption payable other
than to the shareholder of record must have signatures on written redemption
requests guaranteed by:
o a trust company or commercial bank whose deposits are insured
by the BIF, which is administered by the FDIC;
<PAGE>
o a member of the New York, American, Boston, Chicago, or
Pacific Stock Exchange;
o a savings bank or savings and loan association whose deposits
are insured by the SAIF, which is administered by the FDIC;
or
o any other "eligible guarantor institution" as defined in the
Securities Exchange Act of 1934.
The Fund does not accept signatures guaranteed by a notary public.
The Trust and its Transfer Agent have adopted standards for accepting
signature guarantees from the above institutions. The Trust may elect in the
future to limit eligible signature guarantors to institutions that are members
of a signature guarantee program. The Trust and its Transfer Agent reserve the
right to amend these standards at any time without notice.
Normally, a check for the proceeds is mailed within one business day,
but in no event more than five business days, after receipt of a proper written
redemption request.
Contingent Deferred Sales Charge
Shareholders redeeming Class B shares within five full years of the
purchase date will be charged a contingent deferred sales charge ("CDSC") by the
Distributor. Any applicable CDSC will be imposed on the lesser of the net asset
value of the redeemed shares at the time of purchase or the net asset value of
the redeemed shares at the time of redemption in accordance with the following
schedule:
Years of Redemption Contingent Deferred
After Purchase Sales Charge
-------------------- -------------------
Year 1 5.00%
Year 2 4.00%
Year 3 3.00%
Year 4 2.00%
Year 5 1.00%
Year 6 0.00%
The CDSC will not be charged for redemptions in connection with the
Fund's Systematic Withdrawal Plan which are 10% or less of the initial balance
of the account, calculated annually. The CDSC will not be charged with respect
to: 1) shares acquired through the reinvestment of dividends or distributions of
short-term or long-term capital gains and 2) shares held for more than five full
years from the date of purchase. Redemptions will be processed in a manner
intended to maximize the amount of redemption which will not be subject to a
CDSC. In computing the amount of CDSC, redemptions are deemed to have occurred
in the following order: 1) shares of the Fund acquired through the reinvestment
of dividends and long-term capital gains; 2) shares of the Fund held for more
than five full years from the date of purchase; and 3) shares of the Fund held
for fewer than five full years on a first-in, first-out basis. The CDSC will be
eliminated with respect to certain redemptions. (See "Elimination of CDSC.")
<PAGE>
Elimination of Contingent Deferred Sales Charge
The CDSC will be eliminated with respect to the following redemptions:
1) redemptions following the death or disability, as defined in Section 72(m)(7)
of the Internal Revenue Code of 1986, as amended, of a shareholder; 2)
redemptions representing minimum required distributions from an Individual
Retirement Account or other retirement plan to a shareholder who has attained
the age of 70 1/2; and 3) involuntary redemptions of shares of the Fund in
shareholder accounts that do not comply with the minimum balance requirements.
The exemption from the CDSC for Individual Retirement Accounts or other
retirement plans does not extend to account transfers, rollovers, and other
redemptions made for purposes of reinvestment. To receive the CDSC exemption
with respect to death or disability, Star Bank or the Distributor must be
notified in writing at the time of the redemption that the shareholder, or the
shareholder's executor/executrix, requests the exemption.
Shares of the Fund purchased by the following entities are not subject
to the CDSC to the extent that no payment was advanced for purchases made by
such entities: a) employees and retired employees of Star Bank, Unified
Management Corporation, or their affiliates, or of any bank or investment dealer
who has a sales agreement with Unified Management Corporation with regard to the
Fund, and members of their families (including parents, grandparents, siblings,
spouses, children, and in-laws) of such employees or retired employees; b) trust
customers of StarBanc Corporation and its subsidiaries; and c) non-trust
customers of financial advisers.
The Fund reserves the right to terminate the elimination of the CDSC.
Shareholders will be notified of such termination. Any shares of the Fund
purchased prior to the termination of such waiver would have the CDSC eliminated
as provided in the Fund's prospectus at the time of purchase of Fund shares. If
a shareholder making a redemption qualified for an elimination of the CDSC, the
shareholder must notify the Distributor or Transfer Agent in writing that the
shareholder is entitled to such elimination.
Systematic Withdrawal Plan
Shareholders of the Fund may engage in a Systematic Withdrawal Plan.
Under this plan, shareholders may arrange for regular monthly or quarterly fixed
withdrawal payments. Each payment must be at least $25. Depending upon the
amount of the withdrawal payments and the amount of dividends paid with respect
to shares of the Fund, redemptions may reduce, and eventually deplete, the
shareholder's investment in the Fund. For this reason, payments under this plan
should not be considered as yield or income on the shareholder's investment in
the Fund. The Systematic Withdrawal Plan may not be advisable for Class B shares
to the extent the investment is subject to a CDSC and the withdrawal amounts
would constitute more than 10% of the initial balance of the account, calculated
annually.
Additional Information
If you are not certain of the requirements for a redemption please
call Star Bank at 800- 677- FUND. Redemptions specifying a certain date or share
price cannot be accepted and will be returned. You will be mailed the proceeds
on or before the fifth business day following the redemption. However, payment
for redemption made against shares purchased by check will be made only after
the check has been cleared, which normally may take up to fifteen calendar days.
<PAGE>
Because the Fund incurs certain fixed costs in maintaining shareholder
accounts, the Fund reserves the right to require any shareholder to redeem all
of his or her shares in the Fund on 30 days' written notice if the value of his
or her shares in the Fund is less than $1,000 due to redemption, or such other
minimum amount as the Fund may determine from time to time. An involuntary
redemption constitutes a sale. You should consult your tax adviser concerning
the tax consequences of involuntary redemptions. A shareholder may increase the
value of his or her shares in the Fund to the minimum amount within the 30 day
period. Each share of the Fund is subject to redemption at any time if the Board
of Trustees determines in its sole discretion that failure to so redeem may have
materially adverse consequences to all or any of the shareholders of the Fund.
SHARE PRICE CALCULATION
The value of an individual share in the Fund (the net asset value) is
calculated by dividing the total value of the Fund's investments and other
assets (including accrued income), less any liabilities (including estimated
accrued expenses), by the number of shares outstanding, rounded to the nearest
cent. Net asset value per share is determined as of the close of the New York
Stock Exchange (4:00 p.m., Eastern time) on each day that the exchange is open
for business, and on any other day on which there is sufficient trading in the
Fund's securities to materially affect the net asset value. The net asset value
per share of the Fund will fluctuate.
Securities which are traded on any exchange or on the NASDAQ
over-the-counter market are valued at the last quoted sale price. Lacking a last
sale price, a security is valued at its last bid price except when, in the
Adviser's opinion, the last bid price does not accurately reflect the current
value of the security. All other securities for which over-the-counter market
quotations are readily available are valued at their last bid price. When market
quotations are not readily available, when the Adviser determines the last bid
price does not accurately reflect the current value or when restricted
securities are being valued, such securities are valued as determined in good
faith by the Adviser, subject to review by the Board of Trustees of the Trust.
Fixed income securities generally are valued by using market
quotations, but may be valued on the basis of prices furnished by a pricing
service when the Adviser believes such prices accurately reflect the fair market
value of such securities. A pricing service utilizes electronic data processing
techniques based on yield spreads relating to securities with similar
characteristics to determine prices for normal institutional-size trading units
of debt securities without regard to sale or bid prices. When prices are not
readily available from a pricing service, or when restricted or illiquid
securities are being valued, securities are valued at fair value as determined
in good faith by the Adviser, subject to review by the Board of Trustees. Short
term investments in fixed income securities with maturities of less than 60 days
when acquired, or which subsequently are within 60 days of maturity, are valued
by using the amortized cost method of valuation, which the Board has determined
will represent fair value.
DIVIDENDS AND DISTRIBUTIONS
The Fund intends to distribute substantially all of its net investment
income as dividends to its shareholders on a quarterly basis, and intends to
distribute its net long-term capital gains and its net short-term capital gains
at least once a year.
<PAGE>
Income dividends and capital gain distributions are paid in cash. An
election to have dividends and/or capital gain distributions automatically
reinvested in additional shares at the net asset value per share on the
distribution date may be made in the application to purchase shares or by
separate written notice to Star Bank. Shareholders will receive a quarterly
statement reflecting the payment and reinvestment of dividends and summarizing
all other transactions. Checks for cash payments normally will be mailed within
five business days after the payable date. Distributions on shares held in IRAs
and 403(b) plans may be paid in cash only if you are 59 1/2 years old or
permanently and totally disabled or if you otherwise qualify under the
applicable plan.
TAXES
The Fund intends to qualify each year as a "regulated investment
company" under the Internal Revenue Code of 1986, as amended. By so qualifying,
the Fund will not be subject to federal income taxes to the extent that it
distributes substantially all of its net investment income and any realized
capital gains.
For federal income tax purposes, dividends paid by the Fund from
ordinary income are taxable to shareholders as ordinary income, but may be
eligible in part for the dividends received deduction for corporations. Pursuant
to the Tax Reform Act of 1986 (the "Tax Reform Act"), all distributions of net
capital gains to individuals are taxed at the same rate as ordinary income. All
distributions of net capital gains to corporations are taxed at regular
corporate rates. Any distributions designated as being made from net realized
long-term capital gains are taxable to shareholders as long-term capital gains
regardless of the holding period of the shareholder.
The Fund will mail to each shareholder after the close of the calendar
year a statement setting forth the federal income tax status of distributions
made during the year. Dividends and capital gains distributions may also be
subject to state and local taxes. Shareholders are urged to consult their own
tax advisers regarding specific questions as to federal, state or local taxes
and the tax effect of distributions and withdrawals from the Fund.
On the application or other appropriate form, the Fund will request
the shareholder's certified taxpayer identification number (social security
number for individuals) and a certification that the shareholder is not subject
to backup withholding. Unless the shareholder provides this information, the
Fund will be required to withhold and remit to the U.S. Treasury 31% of the
dividends, distributions and redemption proceeds payable to the shareholder.
Shareholders should be aware that, under regulations promulgated by the Internal
Revenue Service, the Fund may be fined $50 annually for each account for which a
certified taxpayer identification number is not provided. In the event that such
a fine is imposed with respect to a specific account in any year, the Fund may
make a corresponding charge against the account.
OPERATION OF THE FUND
The Fund is a diversified series of Star Select Funds, an open-end
management investment company organized as an Ohio business trust on February
28, 1997. The Board of Trustees supervises the business activities of the Fund.
Like other mutual funds, the Fund retains various organizations to perform
specialized services.
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The Fund retains Star Bank, N.A., 425 Walnut Street, Cincinnati, Ohio
45201 (the "Adviser" or "Star Bank") to manage the Fund's investments. The
Adviser continually conducts investment research and supervision for the Fund
and is responsible for the purchase or sale of portfolio instruments, for which
it receives an annual fee from the Fund. The Fund is authorized to pay the
Adviser a monthly fee equal to an annual average rate of 0.75% of its average
daily net assets.
Star Bank, a national bank, was founded in 1863 and is the largest
bank and trust organization of Star Banc Corporation. As of June 30, 1998, Star
Bank had an asset base of $14.9 billion. Star Bank's expertise in trust
administration, investments, and estate planning ranks it among the most
predominant trust institutions in Ohio, with assets of $54.5 billion as of June
30, 1998.
Star Bank has managed pooled funds since 1957. As of June 30, 1998, it
managed two collective investment funds having a market value in excess of $59.6
million. Additionally, Star Bank has managed the portfolios of the Star Funds,
another registered investment company, since 1989. As of June 30, 1998, the
combined assets of the Star Funds and the pooled funds managed by the Adviser
exceeded $3 billion.
As part of its regular banking operations, Star Bank may make loans to
public companies. Thus, it may be possible, from time to time, for the Fund to
hold or acquire the securities of issuers which are also lending clients of Star
Bank. The lending relationship will not be a factor in the selection of
securities.
B. Randolph Bateman has been primarily responsible for the day-to-day
management of the Fund's portfolio since July 1, 1998. Mr. Bateman is a Senior
Vice President and Chief Investment Officer of the StarTrust Division of Star
Bank. His responsibilities include overseeing the investment policy and research
process of $10 billion in assets managed by the Capital Management Department
within the StarTrust Division. These assets include the 13 Star Bank mutual
funds. In addition to these responsibilities, Mr. Bateman is the portfolio
manager of the REIT portfolios in the Star Funds and the Star International
Equity fund.
Mr. Bateman joined Star Bank in 1988. He has over twenty-five years of
investment experience, including serving as President of MPACT Securities, the
investment research and advisory arm of MCORP in Dallas. He earned a Bachelor of
Arts degree in Economics from North Carolina State University and holds the
Chartered Financial Analyst designation.
The Fund also retains Star Bank to act as shareholder servicing agent
on its behalf. The Fund is authorized to pay Star Bank up to 0.25% of its
average daily net assets to provide shareholder support services and to maintain
shareholder accounts. Star Bank currently receives 0.05% of the Fund's average
daily net assets for shareholder services and it is anticipated that the fee
will remain at 0.05% for the foreseeable future. Star Bank also acts as the
Fund's custodian, for which it receives a monthly fee equal to an annual average
rate of 0.025% of its average daily net assets.
The Fund retains Unified Fund Services, Inc. ("Unified"), 431 N.
Pennsylvania Street, Indianapolis, Indiana 46204, to act as the Fund's
administrator and transfer agent. As administrator, Unified manages the Fund's
business affairs and provides the Fund with administrative services, including
compliance and accounting services and all regulatory reporting, and necessary
office equipment, personnel and facilities to operate the Fund. For these
administrative and transfer agency services, it receives a monthly fee from the
Fund equal to an annual average rate of 0.25% of the
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Fund's average daily net assets. The Fund retains Unified Management
Corporation, 431 N. Pennsylvania Street, Indianapolis, Indiana 46204 (the
"Distributor") to act as the principal distributor of the Fund's shares.
Consistent with the Rules of Fair Practice of the National Association
of Securities Dealers, Inc., and subject to its obligation of seeking best
qualitative execution, the Adviser may give consideration to sales of shares of
the Fund as a factor in the selection of brokers and dealers to execute
portfolio transactions. The Adviser (not the Fund) may pay certain financial
institutions (which may include banks, securities dealers and other industry
professionals) a "servicing fee" for performing certain administrative functions
for Fund shareholders to the extent those institutions are allowed to do so by
applicable statute, rule or regulation. The servicing fee may amount to 0.25% of
the average daily net assets serviced by the institution for each calendar
quarter, although it is anticipated that no fee will be paid with respect to
assets invested for more than one year.
INVESTMENT POLICIES AND TECHNIQUES
This section contains general information about various types of
securities and investment techniques that the Fund may purchase or employ.
Equity Securities
The Fund may invest in common stock, preferred stock and common stock
equivalents (such as convertible preferred stock and convertible debentures) of
real estate related companies (including REITs) and other companies. Convertible
preferred stock is preferred stock that can be converted into common stock
pursuant to its terms. Convertible debentures are debt instruments that can be
converted into common stock pursuant to their terms. The Adviser intends to
invest only in convertible debentures rated A or higher by Standard & Poor's
Corporation ("S&P") or by Moody's Investors Services, Inc. ("Moody's") or, if
unrated, are deemed to be of comparable quality by the Adviser. The Fund may
hold warrants and rights issued in conjunction with common stock, but in general
will sell any such warrants or rights as soon as practicable after they are
received. Warrants are options to purchase equity securities at a specified
price 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.
Option Transactions
The Fund may engage in option transactions involving individual
securities and stock indexes. An option involves either (a) the right or the
obligation to buy or sell a specific instrument at a specific price until the
expiration date of the option, or (b) the right to receive payments or the
obligation to make payments representing the difference between the closing
price of a stock index and the exercise price of the option expressed in dollars
times a specified multiple until the expiration date of the option. Options are
sold (written) on securities and stock indexes. The purchaser of an option on a
security pays the seller (the writer) a premium for the right granted but is not
obligated to buy or sell the underlying security. The purchaser of an option on
a stock index pays the seller a premium for the right granted, and in return the
seller of such an option is obligated to make the payment. A writer of an option
may terminate the obligation prior to expiration of the option by making an
offsetting purchase of an identical option. Options are traded on organized
exchanges and in the over-the-counter market. To cover the potential obligations
involved in writing options, the
<PAGE>
Fund will either (a) own the underlying security, or in the case of an option on
a market index, will hold a portfolio of stocks substantially replicating the
movement of the index, or (b) the Fund will segregate with the Custodian high
grade liquid debt obligations sufficient to purchase the underlying security or
equal to the market value of the stock index option, marked to market daily.
The purchase and writing of options requires additional skills and
techniques beyond normal portfolio management, and involves certain risks. The
purchase of options limits the Fund's potential loss to the amount of the
premium paid and can afford the Fund the opportunity to profit from favorable
movements in the price of an underlying security to a greater extent than if
transactions were effected in the security directly. However, the purchase of an
option could result in the Fund losing a greater percentage of its investment
than if the transaction were effected directly. When the Fund writes a call
option, it will receive a premium, but it will give up the opportunity to profit
from a price increase in the underlying security above the exercise price as
long as its obligation as a writer continues, and it will retain the risk of
loss should the price of the security decline. When the Fund writes a put
option, it will assume the risk that the price of the underlying security or
instrument will fall below the exercise price, in which case the Fund may be
required to purchase the security or instrument at a higher price than the
market price of the security or instrument. In addition, there can be no
assurance that the Fund can effect a closing transaction on a particular option
it has written. Further, the total premium paid for any option may be lost if
the Fund does not exercise the option or, in the case of over-the-counter
options, the writer does not perform its obligations.
Loans of Portfolio Securities
The Fund may make long- and short-term loans of its portfolio
securities. Under the lending policy authorized by the Board of Trustees and
implemented by the Adviser in response to requests of broker-dealers or
institutional investors which the Adviser deems qualified, the borrower must
agree to maintain collateral, in the form of cash or U.S. government
obligations, with the Fund on a daily mark-to-market basis in an amount at least
equal to 100% of the value of the loaned securities. The Fund will continue to
receive dividends or interest on the loaned securities and may terminate such
loans at any time or require such securities in time to vote on any matter which
the Adviser determines to be important. With respect to loans of securities,
there is the risk that the borrower may fail to return the loaned securities or
that the borrower may not be able to provide additional collateral.
General
Under normal circumstances, the Fund may invest up to 5% of its net
assets in U.S. government obligations, and up to 5% of its net assets in
corporate bonds and notes. The Fund intends to invest only in fixed income
securities rated A or higher by Moody's Investors Services, Inc. or by Standard
and Poor's Corporation or, if unrated, are deemed to be of comparable quality by
the Adviser. See "Additional Information About Fund Investments and Risk
Considerations" in the Statement of Additional Information.
GENERAL INFORMATION
Fundamental Policies. The investment limitations set forth in the
Statement of Additional Information as fundamental policies may not be changed
without the affirmative vote of the majority of the outstanding shares of the
Fund. The investment objective of the Fund may be changed without the
affirmative vote of a majority of the outstanding shares of the Fund. Any such
change may result
<PAGE>
in the Fund having an investment objective different from the objective which
the shareholders considered appropriate at the time of investment in the Fund.
Portfolio Turnover. The Fund does not intend to purchase or sell
securities for short term trading purposes. The Fund will, however, sell any
portfolio security (without regard to the length of time it has been held) when
the Adviser believes that market conditions, creditworthiness factors or general
economic conditions warrant such action.
Shareholder Rights. The shares of the Fund are divided into two
classes, designated Class B and Class C shares. The differing sales charges and
other expenses applicable to the different classes of the Fund's shares may
affect the performance of those classes. Broker/dealers and others entitled to
receive compensation for selling or servicing Fund shares may receive more with
respect to one class than another. The Board of Trustees of the Trust does not
anticipate that there will be any conflicts among the interests of the holders
of the different classes of Fund shares. On an ongoing basis, the Board will
consider whether any such conflict exists and, if so, take appropriate action.
More information concerning the classes of shares of the Fund may be obtained by
calling Star Bank at 800-677-FUND.
Any Trustee of the Trust may be removed by vote of the shareholders
holding not less than two-thirds of the outstanding shares of the Trust. The
Trust does not hold an annual meeting of shareholders. The Trust will, if
requested to do so by the holders of at least 10% of the Trust's outstanding
shares, call a meeting of shareholders for the purpose of voting upon the
question of removal of a trustee or trustees and will assist in communications
with other shareholders. When matters are submitted to shareholders for a vote,
each shareholder is entitled to one vote for each whole share he owns and
fractional votes for fractional shares he owns. All shares of the Fund have
equal voting rights and liquidation rights. A separate vote is taken by a class
of shares of the Fund if a matter affects just that class of shares. The
Declaration of Trust can be amended by the Trustees, except that any amendment
that adversely effects the rights of shareholders must be approved by the
shareholders affected. As of July 9, 1998, Star Bank, N.A., trustee of the First
Cinco omnibus accounts, was the record owner of a majority of the outstanding
shares of the Fund. As a result, Star Bank, N.A. may be deemed to control the
Fund.
Effect of Banking Laws. The Glass-Steagall Act and other banking laws
and regulations presently prohibit a bank holding company registered under the
Bank Holding Company Act of 1956 or any affiliate thereof from sponsoring,
organizing, or controlling a registered, open-end management investment company
continuously engaged in the issuance of its shares, and from issuing,
underwriting, selling, or distributing securities in general. Such laws and
regulations do not prohibit such a holding company or affiliate from acting as
investment adviser, transfer agent, or custodian to such an investment company
or from purchasing shares of such a company as agent for and upon the order of
their customers. The Fund's investment adviser, Star Bank, is subject to such
banking laws and regulations.
Star Bank believes that it may perform the investment advisory
services for the Fund contemplated by its advisory agreement with the Trust
without violating the Glass-Steagall Act or other applicable banking laws or
regulations. Changes in either federal or state statutes and regulations
relating to the permissible activities of banks and their subsidiaries or
affiliates, as well as further judicial or administrative decisions or
interpretations of present or future statutes and
<PAGE>
regulations, could prevent Star Bank from continuing to perform all or a part of
the above services for its customers and/or the Fund.
In such event, changes in the operation of the Fund may occur,
including the possible alteration or termination of any automatic or other Fund
share investment and redemption services then being provided by Star Bank, and
the Trustees would consider alternative investment advisers and other means of
continuing available investment services. It is not expected that shareholders
would suffer any adverse financial consequences (if another adviser with
equivalent abilities to Star Bank is found) as a result of any of these
occurrences.
PERFORMANCE INFORMATION
The Fund may periodically advertise "average annual total return" for
its shares. The "average annual total return" of the Fund refers to the average
annual compounded rate of return over the stated period that would equate an
initial amount invested at the beginning of a stated period to the ending
redeemable value of the investment. The calculation of "average annual total
return" assumes the reinvestment of all dividends and distributions.
The Fund may also periodically advertise the total return for its
shares over various periods in addition to the value of a $10,000 investment
(made on the date of the initial public offering of its shares) as of the end of
a specified period. The "total return" for its shares refers to the percentage
change in the value of an account between the beginning and end of the stated
period, assuming no activity in the account other than reinvestment of dividends
and capital gains distributions.
The Fund may also include in advertisements data comparing its share
performance with other mutual funds as reported in non-related investment media,
published editorial comments and performance rankings compiled by independent
organizations and publications that monitor the performance of mutual funds
(such as Lipper Analytical Services, Inc., Morningstar, Inc., Fortune or
Barron's). Performance information may be quoted numerically or may be presented
in a table, graph or other illustration. In addition, Fund performance may be
compared to well-known indices of market performance including the NAREIT
(National Association of Real Estate Investment Trusts) Index, the Standard &
Poor's (S&P) 500 Index or the Dow Jones Industrial Average.
The Fund is the successor to the portfolio of a common trust fund
managed by the Adviser for over ten years. At the Fund's commencement of
operations, the assets from the common trust fund were transferred to the Fund
in exchange for Class C shares. The Adviser has represented that the Fund's
investment objective, policies and limitations are in all material respects
identical to those of the common trust fund.
Any quoted performance data may include the performance of the common
trust fund for periods before the Fund's registration statement became
effective, as adjusted to reflect expenses of 1.34% of average daily net assets,
the percentage of expenses estimated for the Fund in its original prospectus.
The common trust fund was not registered under the Investment Company Act of
1940 ("1940 Act") and therefore was not subject to certain investment
restrictions that are imposed by the 1940 Act. If the common trust fund had been
registered under the 1940 Act, the performance may have been adversely affected.
<PAGE>
The advertised performance data of the Fund is based on historical
performance and is not intended to indicate future performance. Rates of total
return quoted by the Fund may be higher or lower than past quotations, and there
can be no assurance that any rate of total return will be maintained. The
principal value of an investment in the Fund will fluctuate so that a
shareholder's shares, when redeemed, may be worth more or less than the
shareholder's original investment.
Investment Adviser Transfer Agent and Administrator
Star Bank, N.A. Unified Fund Services, Inc.
425 Walnut Street 431 N. Pennsylvania Street
Cincinnati, Ohio 45201 Indianapolis, Indiana 46204
Custodian and Shareholder Servicing Agent Auditors
Star Bank, N.A. McCurdy & Associates CPA's, Inc.
P.O. Box 641083 27955 Clemens Road
Cincinnati, Ohio 45264 Westlake, Ohio 44145
Legal Counsel Distributor
Brown, Cummins & Brown Co., L.P.A. Unified Management Corporation
3500 Carew Tower, 441 Vine Street 431 N. Pennsylvania Street
Cincinnati, Ohio 45202 Indianapolis, Indiana 46204
No person has been authorized to give any information or to make any
representations, other than those contained in this Prospectus, in connection
with the offering contained in this Prospectus, and if given or made, such
information or representations must not be relied upon as being authorized by
the Fund. This Prospectus does not constitute an offer by the Fund to sell its
shares in any state to any person to whom it is unlawful to make such offer in
such state.
<PAGE>
TABLE OF CONTENTS
PAGE
SUMMARY OF FUND EXPENSES........................................................
THE FUND ......................................................................
FINANCIAL HIGHLIGHTS............................................................
INVESTMENT OBJECTIVE, STRATEGIES AND RISK CONSIDERATIONS........................
HOW TO INVEST IN THE FUND.......................................................
REDEEMING SHARES................................................................
SHARE PRICE CALCULATION.........................................................
DIVIDENDS AND DISTRIBUTIONS.....................................................
TAXES ......................................................................
OPERATION OF THE FUND...........................................................
INVESTMENT POLICIES AND TECHNIQUES .............................................
GENERAL INFORMATION.............................................................
PERFORMANCE INFORMATION.........................................................
<PAGE>
STAR SELECT REIT-PLUS FUND
STATEMENT OF ADDITIONAL INFORMATION
August 1, 1998
This Statement of Additional Information is not a prospectus. It should
be read in conjunction with the Prospectus of Star Select REIT-Plus Fund dated
August 1, 1998. A copy of the Prospectus can be obtained by writing the Transfer
Agent at 431 N. Pennsylvania Street, Indianapolis, Indiana 46204, or by calling
1-800-677-FUND.
<PAGE>
<TABLE>
STATEMENT OF ADDITIONAL INFORMATION
TABLE OF CONTENTS
PAGE
<S> <C> <C>
DESCRIPTION OF THE TRUST....................................................................................... 2
ADDITIONAL INFORMATION ABOUT FUND INVESTMENTS AND RISK
CONSIDERATIONS................................................................................................. 2
INVESTMENT LIMITATIONS......................................................................................... 3
THE INVESTMENT ADVISER......................................................................................... 5
TRUSTEES AND OFFICERS.......................................................................................... 6
PORTFOLIO TRANSACTIONS AND BROKERAGE........................................................................... 8
DISTRIBUTION PLAN.............................................................................................. 9
SHAREHOLDER SERVICES PLAN...................................................................................... 9
CONVERSION TO FEDERAL FUNDS.................................................................................... 9
DETERMINATION OF SHARE PRICE................................................................................... 9
INVESTMENT PERFORMANCE......................................................................................... 10
CUSTODIAN...................................................................................................... 10
TRANSFER AGENT AND ADMINISTRATOR............................................................................... 11
ACCOUNTANTS.................................................................................................... 11
DISTRIBUTOR.................................................................................................... 11
FINANCIAL STATEMENTS........................................................................................... 11
</TABLE>
<PAGE>
DESCRIPTION OF THE TRUST
Star Select REIT-Plus Fund (the "Fund") was organized as a series of
Star Select Funds (the "Trust"). The Trust is an open-end investment company
established under the laws of Ohio by an Agreement and Declaration of Trust
dated February 28, 1997 (the "Trust Agreement"). The Trust Agreement permits the
Trustees to issue an unlimited number of shares of beneficial interest of
separate series without par value. The Fund is the only series currently
authorized by the Trustees. The Fund is divided into two classes, designated
Class B and Class C.
Each share of a series represents an equal proportionate interest in
the assets and liabilities belonging to that series with each other share of
that series and is entitled to such dividends and distributions out of income
belonging to the series 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 series into a greater or lesser number of shares of that series so long as
the proportionate beneficial interest in the assets belonging to that series and
the rights of shares of any other series are in no way affected. In case of any
liquidation of a series, the holders of shares of the series being liquidated
will be entitled to receive as a class a distribution out of the assets, net of
the liabilities, belonging to that series. Expenses attributable to any series
are borne by that series. Any general expenses of the Trust not readily
identifiable as belonging to a particular series are allocated by or under the
direction of the Trustees in such manner as the Trustees determine to be fair
and equitable. No shareholder is liable to further calls or to assessment by the
Trust without his or her express consent.
The Fund may determine to allocate certain of its expenses (in addition
to 12b-1 fees) to the specific class of the Fund's shares to which those
expenses are attributable. For example, a higher transfer agency fee per
shareholder account may be imposed on a class of shares subject to a contingent
deferred sales charge because, upon redemption, the duration of the
shareholder's investment must be determined.
The Fund has filed an election with the Securities and Exchange
Commission which permits the Fund to make redemption payments in whole or in
part in securities or other property if the Trustees determine that existing
conditions make cash payments undesirable. However, the Fund has committed to
pay in cash all redemptions for any shareholder, limited in amount with respect
to each shareholder during any ninety day period to the lesser of (a) $250,000
or (b) one percent of the net asset value of the Fund at the beginning of such
period. For other information concerning the purchase and redemption of shares
of the Fund, see "How to Invest in the Fund" and "Redeeming Shares" in the
Fund's Prospectus. For a description of the methods used to determine the share
price and value of the Fund's assets, see "Share Price Calculation" in the
Fund's Prospectus.
As of July 9, 1998, the following persons may be deemed to beneficially
own five percent (5%) or more of the Class C shares of the Fund: Star Bank,
N.A., trustee of the First Cinco omnibus accounts, PO Box 1118 ML 6120,
Cincinnati, Ohio 45201 -- 84.54%. As of July 9, 1998, the following persons may
be deemed to beneficially own five percent (5%) or more of the Class B shares of
the Fund: Louis S. Ross, IRA, 6221 N. Applecross Rd., Highland Heights, OH 44143
- -- 11.83%; John C. Loebs & Diann E. Loebs, JTWROS, 14680 Winfield Park Dr.,
Novelty, OH 44072 -- 7.48%; Andrew L. Villnave & Renee M. Villnave, JTWROS,
11360 Pelican Cove, Concord, OH 44077 -- 12.51%; Kenneth A. Burke, IRA, 611
Jefferson Dr., Cleveland, OH 44143 -- 64.40%. As of July 9, 1998, Star Bank,
N.A. may be deemed to control the Fund as a result of its beneficial ownership
of the shares of the Fund.
<PAGE>
ADDITIONAL INFORMATION ABOUT FUND INVESTMENTS AND RISK
CONSIDERATIONS
This section contains a more detailed discussion of some of the
investments the Fund may make and some of the techniques it may use, as
described in the Prospectus (see "Investment Objective and Strategies and Risk
Considerations" and "Investment Policies and Techniques").
A. Corporate Debt Securities. Corporate debt securities are bonds or
notes issued by corporations and other business organizations, including
business trusts, in order to finance their credit needs. Corporate debt
securities include commercial paper which 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.
B. U.S. Government Obligations. U.S. government obligations may be
backed by the credit of the government as a whole or only by the issuing agency.
U.S. Treasury bonds, notes, and bills and some agency securities, such as those
issued by the Federal Housing Administration and the Government National
Mortgage Association (GNMA), are backed by the full faith and credit of the U.S.
government as to payment of principal and interest and are the highest quality
government securities. Other securities issued by U.S. government agencies or
instrumentalities, such as securities issued by the Federal Home Loan Banks and
the Federal Home Loan Mortgage Corporation, are supported only by the credit of
the agency that issued them, and not by the U.S. government. Securities issued
by the Federal Farm Credit System, the Federal Land Banks, and the Federal
National Mortgage Association (FNMA) are supported by the agency's right to
borrow money from the U.S. Treasury under certain circumstances, but are not
backed by the full faith and credit of the U.S. government.
C. Repurchase Agreements. The Fund may invest in repurchase agreements
fully collateralized by U.S. Government obligations. A repurchase agreement is a
short-term investment in which the purchaser (i.e., the Fund) acquires ownership
of a U.S. Government obligation (which may be of any maturity) and the seller
agrees to repurchase the obligation at a future time at a set price, thereby
determining the yield during the purchaser's holding period (usually not more
than seven days from the date of purchase). Any repurchase transaction in which
the Fund engages will require full collateralization of the seller's obligation
during the entire term of the repurchase agreement. In the event of a bankruptcy
or other default of the seller, the Fund could experience both delays in
liquidating the underlying security and losses in value. However, the Fund
intends to enter into repurchase agreements only with banks with assets of $1
billion or more and registered securities dealers determined by the Advisor
(subject to review by the Board of Trustees) to be creditworthy. The Advisor
monitors the creditworthiness of the banks and securities dealers with which the
Fund engages in repurchase transactions.
INVESTMENT LIMITATIONS
Fundamental. The investment limitations described below have been
adopted by the Trust with respect to the Fund and are fundamental
("Fundamental"), i.e., they may not be changed without the affirmative vote of a
majority of the outstanding shares of the Fund. As used in the Prospectus and
the Statement of Additional Information, the term "majority" of the outstanding
shares of the Fund means the lesser of (1) 67% or more of the outstanding shares
of the Fund present at a meeting, if the holders of more than 50% of the
outstanding shares of the Fund are present or represented at such meeting; or
(2) more than 50% of the outstanding shares of the Fund. Other investment
practices which may be changed by the Board of Trustees without the approval of
shareholders to the extent
<PAGE>
permitted by applicable law, regulation or regulatory policy are considered
non-fundamental ("Non-Fundamental").
1. Borrowing Money. The Fund will not borrow money, except (a) from a
bank, provided that immediately after such borrowing there is an asset coverage
of 300% for all borrowings of the Fund; or (b) from a bank or other persons for
temporary purposes only, provided that such temporary borrowings are in an
amount not exceeding 5% of the Fund's total assets at the time when the
borrowing is made. This limitation does not preclude the Fund from entering into
reverse repurchase transactions, provided that the Fund has an asset coverage of
300% for all borrowings and repurchase commitments of the Fund pursuant to
reverse repurchase transactions.
2. Senior Securities. The Fund will not issue senior securities. This
limitation is not applicable to activities that may be deemed to involve the
issuance or sale of a senior security by the Fund, provided that the Fund's
engagement in such activities is (a) consistent with or permitted by the
Investment Company Act of 1940, as amended, the rules and regulations
promulgated thereunder or interpretations of the Securities and Exchange
Commission or its staff and (b) as described in the Prospectus and the Statement
of Additional Information.
3. Underwriting. The Fund will not act as underwriter of securities
issued by other persons. This limitation is not applicable to the extent that,
in connection with the disposition of portfolio securities (including restricted
securities), the Fund may be deemed an underwriter under certain federal
securities laws.
4. Real Estate. The Fund will not purchase or sell real estate. This
limitation is not applicable to investments in marketable securities which are
secured by or represent interests in real estate. This limitation does not
preclude the Fund from investing in mortgage-related securities or investing in
companies engaged in the real estate business or that have a significant portion
of their assets in real estate (including real estate investment trusts).
5. Commodities. The Fund will not purchase or sell commodities unless
acquired as a result of ownership of securities or other investments. This
limitation does not preclude the Fund from purchasing or selling options or
futures contracts, from investing in securities or other instruments backed by
commodities or from investing in companies which are engaged in a commodities
business or have a significant portion of their assets in commodities.
6. Loans. The Fund will not make loans to other persons, except (a) by
loaning portfolio securities, (b) by engaging in repurchase agreements, or (c)
by purchasing nonpublicly offered debt securities. For purposes of this
limitation, the term "loans" shall not include the purchase of a portion of an
issue of publicly distributed bonds, debentures or other securities.
7. Concentration. The Fund will not invest 25% or more of its total
assets in any particular industry other than the real estate industry. This
limitation is not applicable to investments in obligations issued or guaranteed
by the U.S. government, its agencies and instrumentalities or repurchase
agreements with respect thereto.
With respect to the percentages adopted by the Trust as maximum
limitations on its investment policies and limitations, an excess above the
fixed percentage will not be a violation of the policy or limitation unless the
excess results immediately and directly from the acquisition of any security or
<PAGE>
the action taken. This paragraph does not apply to the borrowing policy set
forth in paragraph 1 above.
Notwithstanding any of the foregoing limitations, any investment
company, whether organized as a trust, association or corporation, or a personal
holding company, may be merged or consolidated with or acquired by the Trust,
provided that if such merger, consolidation or acquisition results in an
investment in the securities of any issuer prohibited by said paragraphs, the
Trust shall, within ninety days after the consummation of such merger,
consolidation or acquisition, dispose of all of the securities of such issuer so
acquired or such portion thereof as shall bring the total investment therein
within the limitations imposed by said paragraphs above as of the date of
consummation.
Non-Fundamental. The following limitations have been adopted by the
Trust with respect to the Fund and are Non-Fundamental (see "Investment
Limitations" above).
1. Pledging. The Fund will not mortgage, pledge, hypothecate or in any
manner transfer, as security for indebtedness, any assets of the Fund except as
may be necessary in connection with borrowings described in limitation (1)
above. Margin deposits, security interests, liens and collateral arrangements
with respect to transactions involving options, futures contracts, short sales
and other permitted investments and techniques are not deemed to be a mortgage,
pledge or hypothecation of assets for purposes of this limitation.
2. Borrowing. The Fund will not purchase any security while borrowings
(including reverse repurchase agreements) representing more than 5% of its total
assets are outstanding. The Fund will not engage in borrowing or enter into
reverse repurchase agreements.
3. Margin Purchases. The Fund will not purchase securities or evidences
of interest thereon on "margin." This limitation is not applicable to short term
credit obtained by the Fund for the clearance of purchases and sales or
redemption of securities, or to arrangements with respect to transactions
involving options, futures contracts, short sales and other permitted
investments and techniques.
4. Options. The Fund will not purchase or sell puts, calls, options or
straddles, except as described in the Prospectus and the Statement of Additional
Information.
5. Short Sales. The Fund will not effect short sales of securities.
6. Illiquid Securities. The Fund will not purchase securities that are
restricted as to resale or otherwise illiquid. For this purpose, illiquid
securities generally include securities which cannot be disposed of within seven
days in the ordinary course of business without taking a reduced price.
7. Money Market Funds. The Fund will not purchase shares of any money
market fund if immediately after such purchase more than 3 percent of the total
outstanding shares of the money market fund would be owned by the Fund and its
affiliates.
THE INVESTMENT ADVISER
The Fund's investment adviser is Star Bank, N.A., 425 Walnut Street,
Cincinnati, Ohio 45201 ("Star Bank" or the "Adviser"). The Adviser is a wholly
owned subsidiary of StarBanc Corporation. Because of internal controls
maintained by the Adviser to restrict the flow of non-public information,
<PAGE>
Fund investments are typically made without any knowledge of Star Bank's or its
affiliates' lending relationships with an issuer.
Under the terms of the management agreement (the "Agreement"), the
Adviser manages the Fund's investments subject to approval of the Board of
Trustees. As compensation for its management services, the Fund is obligated to
pay the Adviser a fee computed and accrued daily and paid monthly at an annual
rate of 0.75% of the average daily net assets of the Fund. The Adviser may waive
all or part of its fee, at any time, and at its sole discretion, but such action
shall not obligate the Adviser to waive any fees in the future. For the period
from June 24, 1997 (commencement of operations) through March 31, 1998, the Fund
paid fees to the Adviser of $214,090.
The Adviser retains the right to use the names "Star," "Star Select,"
"Star Select REIT-Plus" or any variation thereof in connection with another
investment company or business enterprise with which the Adviser is or may
become associated. The Trust's right to use the names "Star," "Star Select," and
"Star Select REIT-Plus" or any variation thereof automatically ceases ninety
days after termination of the Agreement and may be withdrawn by the Adviser on
ninety days written notice.
The Adviser will, and other banks and financial institutions may,
provide shareholder services and administer shareholder accounts. The
Glass-Steagall Act prohibits banks from engaging in the business of
underwriting, selling or distributing securities. Although the scope of this
prohibition under the Glass-Steagall Act has not been clearly defined by the
courts or appropriate regulatory agencies, management of the Fund believes that
the Glass-Steagall Act should not preclude a bank from providing shareholder and
shareholder account services. However, state securities laws on this issue may
differ from the interpretations of federal law expressed herein and banks and
financial institutions may be required to register as dealers pursuant to state
law. If a bank were prohibited from continuing to perform all or a part of such
services, management of the Fund believes that there would be no material impact
on the Fund or its shareholders. Banks may charge their customers fees for
offering these services to the extent permitted by applicable regulatory
authorities, and the overall return to those shareholders availing themselves of
the bank services will be lower than to those shareholders who do not. The Fund
may from time to time purchase securities issued by banks which provide such
services; however, in selecting investments for the Fund, no preference will be
shown for such securities. The Fund will not purchase securities issued by
StarBanc Corporation, the Adviser, or any of its affiliates.
TRUSTEES AND OFFICERS
The names of the Trustees and executive officers of the Trust are shown
below.
<TABLE>
<CAPTION>
Name, Address and Age Positions with the Trust & Principal Occupations During Past 5 Years
- ------------------------ --------------------------------------------------------------------
<S> <C>
* Timothy L. Ashburn (47) Trustee (Chairman of the Board) and President of the Trust and
431 N. Pennsylvania St. The Unified Funds; Chairman of the Board, Unified Internet
Indianapolis, IN 46204 Services, Inc. (February 1998 to present); Chairman of the Board
and President, Unified Investment Advisers, Inc. (December 1994
to present); Chairman of the Board, Unified Financial Services,
Inc., Unified Management Corporation and Unified Fund
Services, Inc. (December 1989 to present); Director, Health
Financial, Inc. (June 1997 to present); Trust Division Manager
<PAGE>
and Senior Trust Officer, Vine Street Trust Company (July 1991
to April 1994).
Daniel J. Condon (47) Trustee of the Trust and The Unified Funds; Vice President and
101 Carley Court Officer, International Crankshaft Inc. (1990 to present).
Georgetown, KY 40324
Philip L. Conover (52) Trustee of the Trust and The Unified Funds; Private investor
8218 Cypress Hollow and financial consultant (self-employed); part-time Adjunct
Sarasota, FL 34238 Professor of Finance, University of South Florida (August 1994
to present); Managing Director and Chief Operating Officer,
Federal Housing Finance Board (November 1990 through April
1994).
David E. LaBelle (49) Trustee of the Trust and The Unified Funds; Vice President of
5005 LBJ Freeway Compensation and Benefits, Occidental Petroleum Corporation
Dallas, TX 76092 May 1993 to present); Vice President of Human Resources, Island
Creek Coal Company (A subsidiary of
Occidental Petroleum) (June 1990 to
April 1993).
* Jack R. Orben (60) Trustee of the Trust and The Unified Funds; Director, Unified
40 Wall St. Financial Services, Inc.; Chairman and CEO, Associated Family
New York, NY 10005 Services (January 1980 to present); Chairman and CEO, Starwood
Corporation (March 1984 to present); Chairman, Fiduciary Counsel, Inc.
(April 1979 to present); Chairman, Estate Management Company (January
1978 to present).
Thomas G. Napurano (57) Treasurer of the Trust and The Unified Funds; Treasurer and Chief
431 N. Pennsylvania St. Financial Officer, Unified Internet Services, Inc. (February 1998
Indianapolis, IN 46204 present); Chief Financial Officer, Unified Investment Advisers, Inc.
(January 1995 to present); Senior Vice President and Chief Financial
Officer of Unified Financial Services, Inc., Unified Management
Corporation and Unified Fund Services, Inc. (1990 to present).
Carol J. Highsmith (33) Secretary of the Trust and The Unified Funds; Secretary of Unified
431 n. Pennsylvania St. Fund Services, Inc., Unified Management Corporation and Unified
Indianapolis, IN 46204 Internet Services, Inc.; Secretary of Unified Financial Services, Inc.
and Unified Investment Advisers, Inc. (October 1996 to present);
employed by Unified Fund Services, Inc. (November 1994 to
present).
</TABLE>
* Unified Fund Services, Inc. is the Fund's transfer agent and administrator,
and Unified Management Corporation is the Fund's principal underwriter. Unified
Fund Services, Inc. and Unified Management Corporation are subsidiaries of
Unified Financial Services, Inc. Mr. Ashburn and Mr. Orben may each be deemed to
be an "interested person" of the Trust, as defined in the Investment Company Act
of 1940, because of their respective positions with Unified Holdings, Inc. and
its subsidiaries.
<PAGE>
Trustee fees are Trust expenses. The following table sets forth the
Trustees' compensation for the fiscal year ended March 31, 1998.
================================================================================
Total Compensation from Trust
Name (the Trust is not in a Fund Complex)
- --------------------------------------------------------------------------------
Timothy L. Ashburn $0
- --------------------------------------------------------------------------------
Daniel J. Condon $4,000
- --------------------------------------------------------------------------------
Philip L. Conover $3,000
- --------------------------------------------------------------------------------
David E. LaBelle $4,000
- --------------------------------------------------------------------------------
Jack R. Orben $0
================================================================================
PORTFOLIO TRANSACTIONS AND BROKERAGE
Subject to policies established by the Board of Trustees of the Trust,
the Adviser is responsible for the Fund's portfolio decisions and the placing of
the Fund's portfolio transactions. In placing portfolio transactions, the
Adviser seeks the best qualitative execution for the Fund, 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. The Adviser generally seeks favorable prices and commission
rates that are reasonable in relation to the benefits received.
The Adviser is specifically authorized to select brokers or dealers who
also provide brokerage and research services to the Fund and/or the other
accounts over which the Adviser exercises investment discretion and to pay such
brokers or dealers a commission in excess of the commission another broker or
dealer would charge if the Adviser 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 the Adviser's overall responsibilities with respect to the Trust and to other
accounts over which it exercises investment discretion.
Research services include supplemental research, securities and
economic analyses, statistical services and information with respect to the
availability of securities or purchasers or sellers of securities and analyses
of reports concerning performance of accounts. The research services and other
information furnished by brokers through whom the Fund effects securities
transactions may also be used by the Adviser in servicing all of its accounts.
Similarly, research and information provided by brokers or dealers serving other
clients may be useful to the Adviser in connection with its services to the
Fund. Although research services and other information are useful to the Fund
and the Adviser, it is not possible to place a dollar value on the research and
other information received. It is the opinion of the Board of Trustees and the
Adviser that the review and study of the research and other information will not
reduce the overall cost to the Adviser of performing its duties to the Fund
under the Agreement.
Over-the-counter transactions will be placed either directly with
principal market makers or with broker-dealers, if the same or a better price,
including commissions and executions, is available. Fixed income securities are
normally purchased directly from the issuer, an underwriter or a market
<PAGE>
maker. Purchases include a concession paid by the issuer to the underwriter and
the purchase price paid to a market maker may include the spread between the bid
and asked prices.
Although investment decisions for the Fund are made independently from
those of the other accounts managed by the Adviser, investments of the type the
Fund may make may also be made by those other accounts. When the Fund and one or
more other accounts managed by the Adviser are prepared to invest in, or desire
to dispose of, the same security, available investments or opportunities for
sales will be allocated in a manner believed by the Adviser to be equitable to
each. In some cases, this procedure may adversely affect the price paid or
received by the Fund or the size of the position obtained or disposed of by the
Fund. In other cases, however, it is believed that coordination and the ability
to participate in volume transactions will be to the benefit of the Fund.
When the Fund and another of the Adviser's clients seek to purchase or
sell the same security at or about the same time, the Adviser may execute the
transaction on a combined ("blocked") basis. Blocked transactions can produce
better execution for the Fund because of the increased volume of the
transaction. If the entire blocked order is not filled, the Fund may not be able
to acquire as large a position in such security as it desires or it may have to
pay a higher price for the security. Similarly, the Fund may not be able to
obtain as large an execution of an order to sell or as high a price for any
particular portfolio security if the other client desires to sell the same
portfolio security at the same time. In the event that the entire blocked order
is not filled, the purchase or sale will normally be allocated on a pro rata
basis. Due to research services provided by brokers, the Fund directed to
brokers $294,748,274 of brokerage transactions (on which commissions were
$87,056.69) during the period from June 24, 1997 (commencement of operations)
through March 31, 1998.
DISTRIBUTION PLAN
With respect to the Fund, the Trust has adopted a Plan pursuant to Rule
12b-1 which was promulgated by the Securities and Exchange Commission pursuant
to the Investment Company Act of 1940 (the "Plan"). The Plan provides for
payment of fees to Unified Management Corporation to finance any activity which
is principally intended to result in the sale of the Fund's shares subject to
the Plan. Such activities may include the advertising and marketing of shares of
the Fund; preparing, printing, and distributing prospectuses and sales
literature to prospective shareholders, brokers, or administrators; and
implementing and operating the Plan. Pursuant to the Plan, Unified Management,
Inc. may pay fees to brokers and others for such services. The Trustees expect
that the adoption of the Plan will result in the sale of a sufficient number of
shares so as to allow the Fund to achieve economic viability. It is also
anticipated that an increase in the size of the Fund will facilitate more
efficient portfolio management and assist the Fund in seeking to achieve its
investment objective.
SHAREHOLDER SERVICES PLAN
This arrangement permits the payment of fees to the Fund and,
indirectly, to financial institutions to cause services to be provided to
shareholders by a representative who has knowledge of the shareholder's
particular circumstances and goals. These activities and services may include,
but are not limited to, providing office space, equipment, telephone facilities,
and various clerical, supervisory, computer, and other personnel as necessary or
beneficial to establish and maintain shareholder accounts and records;
processing purchase and redemption transactions and automatic investments of
client account cash balances; answering routine client inquiries; and assisting
clients in changing divided options, account designations, and addresses.
<PAGE>
CONVERSION TO FEDERAL FUNDS
It is the Fund's policy to be as fully invested as possible so that
maximum interest may be earned. To this end, all payments from shareholders must
be in federal funds or be converted into federal funds. Star Bank acts as the
shareholder's agent in depositing checks and converting them to federal funds.
DETERMINATION OF SHARE PRICE
The price (net asset value) of the shares of the Fund is determined as
of 4:00 p.m., Eastern time on each day the Trust is open for business and on any
other day on which there is sufficient trading in the Fund's securities to
materially affect the net asset value. 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 and Christmas. For a description of the methods
used to determine the net asset value (share price), see "Share Price
Calculation" in the Prospectus.
INVESTMENT PERFORMANCE
"Average annual total return," as defined by the Securities and
Exchange Commission, is computed by finding the average annual compounded rates
of return for the period indicated 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 $1,000 initial investment
T = average annual total return
n = number of years
ERV = ending redeemable value at the end of the
applicable period of the hypothetical $1,000
investment made at the beginning of the
applicable period.
The computation assumes that all dividends and distributions are reinvested at
the net asset value on the reinvestment dates and that a complete redemption
occurs at the end of the applicable period.
The Fund's investment performance will vary depending upon market
conditions, the composition of the Fund's portfolio and operating expenses of
the Fund. These factors and possible differences in the methods and time periods
used in calculating non-standardized investment performance should be considered
when comparing the Fund's performance to those of other investment companies or
investment vehicles. The risks associated with the Fund's investment objective,
policies and techniques should also be considered. At any time in the future,
investment performance may be higher or lower than past performance, and there
can be no assurance that any performance will continue.
From time to time, in advertisements, sales literature and information
furnished to present or to prospective shareholders, the performance of the Fund
may be compared to indices of broad groups of unmanaged securities considered to
be representative of or similar to the portfolio holdings of the Fund or
considered to be representative of the stock market in general. The Fund may use
the
<PAGE>
NAREIT (National Association of Real Estate Investment Trusts) Index, the
Standard & Poor's 500 Stock Index or the Dow Jones Industrial Average.
In addition, the performance of the Fund may be compared to other
groups of mutual funds tracked by any widely used independent research firm
which ranks mutual funds by overall performance, investment objectives and
assets, such as Lipper Analytical Services, Inc. or Morningstar, Inc. The
objectives, policies, limitations and expenses of other mutual funds in a group
may not be the same as those of the Fund. Performance rankings and ratings
reported periodically in national financial publications such as Barron's and
Fortune also may be used. The Fund's average annual total return of Class C
shares of the Fund for the one, five and ten year periods ended March 31, 1998
was 17.22%, 11.14% and 10.60%, respectively.
CUSTODIAN
In addition to acting as the Fund's Adviser, Star Bank, is Custodian of
the Fund's investments. As Custodian, Star Bank acts as the Fund's depository,
safekeeps its portfolio securities, collects all income and other payments with
respect thereto, disburses funds at the Fund's request and maintains records in
connection with its duties. As Custodian, Star Bank receives a monthly fee at
the annual rate of 0.025% of the total assets of the Fund on the last business
day of each month.
TRANSFER AGENT AND ADMINISTRATOR
Unified Fund Services, Inc., 431 N. Pennsylvania, Indianapolis, Indiana
46204, acts as the Fund's transfer agent and, in such capacity, maintains the
records of each shareholder's account, answers shareholders' inquiries
concerning their accounts, processes purchases and redemptions of the Fund's
shares, acts as dividend and distribution disbursing agent and performs other
accounting and shareholder service functions. In addition, Unified Fund
Services, Inc., in its capacity as Fund Administrator, provides the Fund with
certain monthly reports, record-keeping and other management-related services.
For a description of the fees paid by the Adviser on behalf of the Fund for
these administrative services, see "Operation of the Fund" in the Fund's
Prospectus. For the period from June 24, 1997 (commencement of operations)
through March 31, 1998, Unified received $29,253 for its services as
administrator.
ACCOUNTANTS
The firm of McCurdy & Associates, CPA's, 27955 Clemens Road, Westlake,
Ohio 44145, has been selected as independent public accountants for the Trust
for the fiscal year ending March 31, 1999. McCurdy & Associates performs an
annual audit of the Fund's financial statements and provides financial, tax and
accounting consulting services as requested.
DISTRIBUTOR
Unified Management, Inc., 431 N. Pennsylvania, Indianapolis, Indiana
46204, is the exclusive agent for distribution of shares of the Fund. The
Distributor is obligated to sell shares of the Fund on a best efforts basis only
against purchase orders for the shares. Shares of the Fund are offered to the
public on a continuous basis.
<PAGE>
FINANCIAL STATEMENTS
The financial information required to be included in this Statement of
Additional Information is incorporated herein by reference to the Trust's Annual
Report to Shareholders dated March 31, 1998. The Fund will provide the Annual
Report without charge at written or telephone request.
<PAGE>
Star Select Funds
PART C. OTHER INFORMATION
Item 24. Financial Statements and Exhibits
(a) Financial Statements
Included in Part A:
Audited Financial Highlights for the period from June
24, 1997 (Commencement of Operations) through March
31, 1998.
Included in Part B:
The following audited financial statements are hereby
incorporated by reference to the Annual Report to
Shareholders for the period ended March 31, 1998:
(a) Audited Statement of Assets and
Liabilities - March 31, 1998.
(b) Audited Schedule of Investments - March
31, 1998.
(c) Audited Statement of Assets and
Liabilities - March 31, 1998.
(d) Audited Statement of Operations for
the period from June 24, 1997
(Commencement of Operations) through
March 31, 1998.
(e) Audited Statement of Changes in Net
Assets for the period from June 24,
1997 (Commencement of Operations)
through March 31, 1998.
(f) Audited Financial Highlights for the
period from June 24, 1997
(Commencement of Operations) through
March 31, 1998.
(g) Notes to Financial Statements.
(b) Exhibits
(1) (a) Copy of Registrant's Amended and
Restated Declaration of Trust, which
was filed as an Exhibit to Registrant's
Pre-Effective Amendment No. 1, is
hereby incorporated by reference.
(b) Copy of Amendment No. 1 to Registrant's
Amended and Restated Declaration of
Trust is filed herewith.
<PAGE>
(2) Copy of Registrant's By-Laws, which was
filed as an Exhibit to Registrant's
Registration Statement, is hereby
incorporated by reference.
(3) Voting Trust Agreements - None.
(4) Specimen of Share Certificates - None.
(5) Copy of Registrant's Management Agreement
with its Adviser, Star Bank, N.A., which was
filed as an Exhibit to Registrant's
Pre-Effective Amendment No. 1, is hereby
incorporated by reference.
(6) Copy of Registrant's Distribution Agreement
with Unified Management Corporation, which
was filed as an Exhibit to Registrant's
Pre-Effective Amendment No. 1, is hereby
incorporated by reference.
(7) Bonus, Profit Sharing, Pension or Similar
Contracts for the benefit of Directors or
Officers - None.
(8) Copy of Registrant's Agreement with the
Custodian, Star Bank, N.A., which was filed
as an Exhibit to Registrant's Pre-Effective
Amendment No. 1, is hereby incorporated by
reference.
(9) Other Material Contracts - None.
(10) Opinion and Consent of Brown, Cummins &
Brown Co., L.P.A., which was filed as an
Exhibit to Registrant's Pre-Effective
Amendment No. 1, is hereby incorporated by
reference.
(11) Consent of McCurdy & Associates is filed
herewith.
(12) Financial Statements Omitted from Item 23 -
None.
(13) Copy of Letter of Initial Stockholders,
which was filed as an Exhibit to
Registrant's Pre-Effective Amendment No. 1,
is hereby incorporated by reference.
(14) Model Plan used in Establishment of any
Retirement Plan - None.
(15) (a) Distribution Plan, which was filed
as an Exhibit to Registrant's
Pre-Effective Amendment No. 1, is
hereby incorporated by reference.
(b) Exhibit to Distribution Plan, which
was filed as an Exhibit to
Registrant's Post-Effective
Amendment No. 2, is hereby
incorporated by reference.
<PAGE>
(16) Schedule for Computation of Each Performance
Quotation, which was filed as an Exhibit to
Registrant's Post-Effective Amendment No. 1,
is hereby incorporated by reference.
(17) Financial Data Schedule - None.
(18) Copy of Registrant's Rule 18f-3 Plan, which
was filed as an Exhibit to Registrant's
Post-Effective Amendment No. 2, is hereby
incorporated by reference.
(19) Powers of Attorney for the Trust, the
Trustees and Officers, which were filed as
an Exhibit to Registrant's Pre-Effective
Amendment No. 1, are hereby incorporated by
reference.
Item 25. Persons Controlled by or Under Common Control with the
Registrant
As of July 9, 1998, Star Bank, N.A., trustee of the First
Cinco omnibus accounts, was the record owner of a majority of
the outstanding shares of the Fund. As a result, First Cinco
and the Star Select REIT-Plus Fund may be under the common
control of Star Bank, N.A.
Item 26. Number of Holders of Securities (as of July 9, 1998)
Title of Class Number of Record Holders
-------------- ------------------------
Star Select REIT-Plus Fund
Class B 8
Class C 55
Item 27. Indemnification
(a) Article VI of the Registrant's Declaration of Trust
provides for indemnification of officers and Trustees
as follows:
Section 6.4 Indemnification of
Trustees, Officers, etc. Subject to and
except as otherwise provided in the
Securities Act of 1933, as amended, and the
1940 Act, the Trust shall indemnify each of
its Trustees and officers (including persons
who serve at the Trust's request as
directors, officers or trustees of another
organization in which the Trust has any
interest as a shareholder, creditor or
otherwise (hereinafter referred to as a
"Covered Person") against all liabilities,
including but not limited to amounts paid in
satisfaction of judgments, in compromise or
as fines and penalties, and expenses,
including reasonable accountants' and
counsel fees, incurred by any Covered Person
in connection with the defense or
disposition of any action, suit or other
proceeding, whether civil or criminal,
before any court or administrative or
legislative body, in which such Covered
Person may be or may have been involved as a
party or otherwise or with which
<PAGE>
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.
The Registrant may not pay for insurance which
protects the Trustees and officers against
liabilities rising from action involving willful
misfeasance, bad faith, gross negligence or reckless
disregard of the duties involved in the conduct of
their offices.
(b) The Registrant may maintain a standard mutual fund
and investment advisory professional and directors
and officers liability policy. The policy, if
maintained, would provide coverage to the Registrant,
its Trustees and officers, and could cover its
Advisers, among others. Coverage under the policy
would include losses by reason of any act, error,
omission, misstatement, misleading statement, neglect
or breach of duty.
(c) Insofar as indemnification for liabilities arising
under the Securities Act of 1933 may be permitted to
trustees, officers and controlling persons of the
Registrant pursuant to the provisions of Ohio law and
the Agreement and Declaration of the Registrant or
the By-Laws of the Registrant, 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
<PAGE>
person of the Trust in the successful defense of any
action, suit or proceeding) is asserted by such
trustee, officer or controlling person in connection
with the securities being registered, the Registrant
will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to
a court of appropriate jurisdiction the question
whether such indemnification by it is against public
policy as expressed in the Act and will be governed
by the final adjudication of such issue.
Item 28. Business and Other Connections of Investment Adviser
A. Star Bank, N.A. ("Star Bank"), a national bank, was
founded in 1863 and is the largest bank and trust
organization of StarBanc Corporation. Star Bank had
an asset base of $14.9 billion as of June 30, 1998,
and trust assets of $54.5 billion as of June 30,
1998. Star Bank has managed commingled funds since
1957. It currently manages The Star Funds, one common
trust fund and two collective investment funds having
a market value in excess of $3 billion. With respect
to the officers and directors of the Star Bank, any
other business, profession, vocation, or employment
of a substantial nature in which each such officer
and director is or has been engaged during the past
two years, is set forth below.
B.
<TABLE>
<CAPTION>
Name Position with Other Substantial
- ---- ------------- -----------------
the Advisor Business, Profession
----------- --------------------
Vocation or Employment
----------------------
<S> <C> <C>
Jerry A. Grundhofer Chairman, President & Traditional Interiors
CEO
Stephen E. Smith Executive Vice President S.E. Smith & Co.
S. Kay Geiger Executive Vice President Global Access
Marketing, Inc.
James R. Bridgeland, Jr. Director Taft, Stettinius & Hollister
Victoria B. Buyniski Director United Medical Resources, Inc.
Samuel M. Cassidy Director Cassidy & Cassidy, Ltd. d/b/a
Cave Spring Farm
V. Anderson Coombe Director The William Powell Company
John C. Dannemiller Director Bearings, Inc.
<PAGE>
J.P. Hayden, Jr. Director The Midland Company; American
Family Home Insurance Co.;
American Modern Home
Insurance Co.
Thomas J. Klinedinst, Jr. Director Thomas E. Wood, Inc.; Ohio Cap
Insurance Co., Ltd.; The Tomba
Co., Ltd.
David B. O'Maley Director Ohio National Life Insurance Co.
O'dell M. Owens, M.D., Director O'dell M. Owens, M.D., Inc.;
Moreno M.P.H. Food; MKO
Investment; Seven Hills Lab;
Graphi Action
Thomas E. Petry Director Eagle-Picher Industries, Inc.
William C. Portman Director Portman Equipment Co.
</TABLE>
Item 29. Principal Underwriters
(a) Unified Management Corporation, the Registrant's
distributor, acts as distributor for The Unified
Funds, 431 North Pennsylvania Street, Indianapolis,
Indiana 46204; Saratoga Advantage Trust, 1501
Franklin Avenue, Mineola, NY 11501; Veredus Funds,
6900 Bowling Blvd., Suite 250, Louisville, KY 40207;
and Securities Management & Timing Funds, 620
Woodmere Avenue, Suite B, Traverse City, MI 49686.
(b) Information with respect to each director and officer
of Unified Management Corporation is incorporated by
reference to Schedule A of Form BD filed by it under
the Securities Exchange Act of 1934 (File No.
8-23508).
(c) Not applicable.
Item 30. Location of Accounts and Records
Accounts, books and other documents required to be maintained
by Section 31(a) of the Investment Company Act of 1940 and the
Rules promulgated thereunder will be maintained by the
Registrant at 431 North Pennsylvania Street, Indianapolis,
Indiana 46204 and/or by the Registrant's Custodian, Star Bank,
N.A., 425 Walnut Street, Cincinnati, Ohio 45202, and/or by the
Registrant's Transfer Agent, Unified Fund Services, Inc., 431
North Pennsylvania Street, Indianapolis, Indiana 46204.
Item 31. Management Services Not Discussed in Parts A or B
None.
<PAGE>
Item 32. Undertakings
(a) Not Applicable.
(b) The Registrant hereby undertakes to furnish each
person to whom a prospectus is delivered with a copy
of the Registrant's latest annual report to
shareholders, upon request and without charge.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, the Registrant certifies that it meets all the
requirements for effectiveness of this Post-Effective Amendment to its
Registration Statement pursuant to Rule 485(b) of the Securities Act of 1933 and
has duly caused this Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of Indianapolis, State of
Indiana, on the 3rd day of August, 1998.
Star Select Funds
By:/s/
Carol J. Highsmith,
Attorney-in-Fact
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.
Timothy L. Ashburn,
President and Trustee
Thomas G. Napurano,
Treasurer
Daniel J. Condon, Trustee
Philip L. Conover, Trustee
David E. LaBelle, Trustee
Jack R. Orben, Trustee
By:/s/
Carol J. Highsmith,
Attorney-in-Fact
August 3, 1998
<PAGE>
EXHIBIT INDEX
PAGE
1. Amendment No. 1 to Amended and Restated Declaration of Trust........EX-99.B1
2 Consent of McCurdy & Associates.....................................EX-99.B11
STAR SELECT FUNDS AMENDMENT NO. 1
AMENDED AND RESTATED AGREEMENT AND
DECLARATION OF TRUST
- --------------------------------------------------------------------------------
1. Pursuant to Section 4.1 of the Amended and Restated Agreement
and Declaration of Trust, and effective upon execution of this
document, the undersigned, being a majority of the Trustees of
Star Select Funds (the "Trust"), hereby:
a. establish two new classes of the Star Select
REIT-Plus Fund (the "Fund");
b. designate such classes "Class B" and "Class
C"; and
c. redesignate and reclassify the issued and
outstanding shares of the Fund as Class C
shares.
2. The relative rights and preferences of the Class B and Class C
shares of the Fund shall be those rights and preferences set
forth in Section 4.2 of the Declaration of Trust.
3. This document shall have the status of an Amendment to the
Declaration of Trust.
/s/ /s/
Timothy L. Ashburn Daniel J. Condon
/s/ /s/
Philip L. Conover David E. LaBelle
/s/
Jack R. Orben
Dated: February 25, 1998
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the use in this Post
- -effective Amendment No. 3 to the Registration Statement for Star Select Funds
of all references to our firms included in or made a part of this Amendment.
McCurdy & Associates CPA's, Inc.
July 28, 1998
