UC Investment Fund
[LOGO]
PROSPECTUS
June 16, 1998
<PAGE>
PROSPECTUS
June 16, 1998
UC INVESTMENT TRUST
P.O. Box 1280
1005 Glenway Avenue
Bristol, Virginia 24203-1280
(877) UC FUNDS
(1-877-823-8637)
UC INVESTMENT FUND
- --------------------------------------------------------------------------------
The UC Investment Fund (the "Fund"), a separate series of the UC Investment
Trust, seeks long-term total return, from a combination of capital growth and
growth of income, by investing primarily in common stocks.
United Investment Corporation (the "Adviser"), P.O. Box 1280, 1005 Glenway
Avenue, Bristol, Virginia 24203-1280, manages the Fund's investments.
SHARES OF THE FUND ARE NOT DEPOSITS OR OBLIGATIONS OF, OR GUARANTEED OR ENDORSED
BY, ANY FINANCIAL INSTITUTION, AND ARE NOT FEDERALLY INSURED BY THE FEDERAL
DEPOSIT INSURANCE CORPORATION, THE FEDERAL RESERVE BOARD OR ANY OTHER AGENCY.
This Prospectus sets forth concisely the information about the Fund that you
should know before investing. Please retain this Prospectus for future
reference. A Statement of Additional Information dated June 16, 1998 has been
filed with the Securities and Exchange Commission and is hereby incorporated by
reference in its entirety. The Fund's address is P.O. Box 1280, 1005 Glenway
Avenue, Bristol, Virginia 24203-1280, and its telephone number is toll-free:
1-877-UC FUNDS (1-877-823-8637). A copy of the Statement of Additional
Information can be obtained at no charge by calling or writing the Fund.
TABLE OF CONTENTS
- --------------------------------------------------------------------------------
Expense Information ...................................................... 2
Investment Objective, Investment Policies and Risk Considerations ........ 3
How to Purchase Shares ................................................... 7
Shareholder Services ..................................................... 8
How to Redeem Shares ..................................................... 9
Dividends and Distributions .............................................. 9
Taxes .................................................................... 10
Operation of the Fund .................................................... 11
Distribution Plan ........................................................ 12
Calculation of Share Price ............................................... 13
Performance Information .................................................. 14
- --------------------------------------------------------------------------------
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.
- --------------------------------------------------------------------------------
1
<PAGE>
EXPENSE INFORMATION
- --------------------------------------------------------------------------------
SHAREHOLDER TRANSACTION EXPENSES
Sales Load Imposed on Purchases .............................. None
Sales Load Imposed on Reinvested Dividends ................... None
Redemption Fees .............................................. None*
* A wire transfer fee is charged by the Fund's custodian in the case of
redemptions made by wire. Such fee is subject to change and is currently $8.
See "How to Redeem Shares."
ANNUAL FUND OPERATING EXPENSES (AS A PERCENTAGE OF AVERAGE NET ASSETS)
Management Fees ........................... 1.00%
12b-1 Fees ................................ .25%(1)
Other Expenses ............................ .75%
-----
Total Fund Operating Expenses ............. 2.00%
=====
(1) Long-term shareholders may pay more than the economic equivalent of the
maximum front-end sales load permitted by the National Association of
Securities Dealers.
The purpose of this table is to assist you in understanding the various costs
and expenses that an investor in the Fund will bear directly or indirectly. The
percentages expressing "Other Expenses" are based on estimated amounts for the
current fiscal year. Other expenses include transfer agent fees, custodian fees
and accounting and printing expenses. THE EXAMPLE BELOW SHOULD NOT BE CONSIDERED
A REPRESENTATION OF PAST OR FUTURE EXPENSES AND ACTUAL EXPENSES MAY BE GREATER
OR LESS THAN THOSE SHOWN.
EXAMPLE
You would pay the following expenses on a $1,000 investment, assuming (1) 5%
annual return and (2) redemption at the end of each time period:
1 Year.............. $20
3 Years............. 63
2
<PAGE>
INVESTMENT OBJECTIVE, INVESTMENT POLICIES AND RISK CONSIDERATIONS
- --------------------------------------------------------------------------------
The Fund is a series of UC Investment Trust (the "Trust"), a no-load, open-end
diversified management company created pursuant to an Agreement and Declaration
of Trust on February 27, 1998. The investment objective of the Fund is to seek
long-term total return, from a combination of capital growth and growth of
income, by investing primarily in common stocks. The Fund is not intended to be
a complete investment program, and there is no assurance that its investment
objective can be achieved. The Fund's investment objective may be changed by the
Board of Trustees without shareholder approval, but only after notification has
been given to shareholders and after this Prospectus has been revised
accordingly. If there is a change in the Fund's investment objective,
shareholders should consider whether the Fund remains an appropriate investment
in light of their then current financial position and needs. Unless otherwise
indicated, all investment practices, strategies and limitations of the Fund are
nonfundamental policies which may be changed by the Board of Trustees without
shareholder approval.
The Fund pursues its investment objective by following long-term investment
policies emphasizing growth opportunities in industry groups and specific
stocks. Once an attractive company or industry group has been identified, the
Adviser combines traditional analysis with a quantitative approach where a
multi-factor rating system of fundamental criteria is evaluated. That same
approach is used for weighting industry groups within broad sectors of the
economy. Stocks will be purchased for the Fund's portfolio if, in the Adviser's
opinion, their prices are undervalued or attractively valued.
Under normal circumstances, at least 65% of the Fund's total assets will be
invested in common stocks. However, the Fund, in seeking to achieve its
investment objective, may also invest in securities convertible into common
stocks (such as convertible bonds, convertible preferred stocks and warrants)
which are rated at the time of purchase in the four highest grades assigned by
Moody's Investors Service, Inc. (Aaa, Aa, A or Baa) or Standard & Poor's Ratings
Group (AAA, AA, A or BBB) or unrated securities determined by the Adviser to be
of comparable quality. Preferred stocks and bonds rated Baa or BBB have
speculative characteristics and changes in economic conditions or other
circumstances are more likely to lead to a weakened capacity to pay principal
and interest or to pay the preferred stock obligations than is the case with
higher grade securities. Subsequent to its purchase by the Fund, a security may
cease to be rated or its rating may be reduced, and the Adviser will consider
such an event to be relevant in its determination of whether the Fund should
continue to hold such security.
The Fund will invest primarily in United States companies, although it may
invest in foreign companies through the purchase of American Depository Receipts
(certificates of ownership issued by a United States bank or trust company as a
convenience to investors in lieu of the underlying shares which such bank or
trust company holds in custody) or other securities of foreign issuers that are
publicly traded in the United States. To the extent that the Fund invests in
such securities, such investments may be subject to special risks, including
future political and economic developments and the possibility of seizure or
nationalization of companies, imposition of withholding taxes on income,
establishment of exchange controls or adoption of other restrictions that might
affect an investment adversely.
3
<PAGE>
The Fund may from time to time invest a portion of its assets in small,
unseasoned companies. While smaller companies generally have potential for rapid
growth, they often involve higher risks because they lack the management
experience, financial resources, product diversification and competitive
strengths of larger corporations. In addition, in many instances, the securities
of smaller companies are traded only over-the-counter on a regional exchange,
and the frequency and volume of their trading is substantially less than is
typical of larger companies. Therefore, the securities of smaller companies may
be subject to wider price fluctuations. When making large sales, the Fund may
have to sell portfolio holdings at discounts from quoted prices or may have to
make a series of small sales over an extended period of time.
Investments in common stocks are subject to inherent market risks and
fluctuations in value due to earnings, economic and political conditions and
other factors beyond the control of the Adviser. As a result, the return and net
asset value of the Fund will fluctuate.
When the Adviser believes substantial price risks exist for common stocks and
securities convertible into common stocks because of uncertainties in the
investment outlook or when in the judgment of the Adviser it is otherwise
warranted in selling to manage the Fund's portfolio, the Fund may temporarily
hold for defensive purposes all or a portion of its assets in short-term
obligations such as bank debt instruments (certificates of deposit, bankers'
acceptances and time deposits), commercial paper, shares of money market
investment companies, U.S. Government or agency obligations having a maturity of
less than one year or repurchase agreements.
If, in addition to believing that substantial price risks exist for common
stocks and securities convertible into common stocks, the Adviser believes that
market indicators point to lower interest rates, the Fund may, in seeking to
achieve its investment objective, invest up to 35% of its total assets in U.S.
Government obligations or other fixed income securities of any maturity for
temporary defensive purposes. "U.S. Government obligations" include securities
which are issued or guaranteed by the United States Treasury, by various
agencies of the United States Government, and by various instrumentalities which
have been established or sponsored by the United States Government. U.S.
Treasury obligations are backed by the "full faith and credit" of the United
States Government. Other U.S. Government obligations may or may not be backed by
the full faith and credit of the United States. In the case of securities not
backed by the full faith and security of the United States, the investor must
look principally to the agency issuing or guaranteeing the obligation for
ultimate repayment, and may not be able to assert a claim against the United
States in the event the agency or instrumentality does not meet its commitments.
Shares of the Fund are not guaranteed or backed by the Unites States Government.
Fixed income securities will consist primarily of "investment grade" securities
rated at least Baa by Moody's Investors Service, Inc. ("Moody's") or BBB by
Standard & Poor's Ratings Group ("S&P") or, if not rated, of equivalent quality
in the Adviser's opinion. Fixed income securities are acquired primarily for
their income return and secondarily for capital appreciation. Companies and/or
industries at the low point of their business cycle often experience a
downgrading of their quality ratings by Moody's, S&P or other rating services,
generally resulting in reduced prices for their fixed-income securities. The
Adviser believes such downgraded debt obligations often represent opportunities
for capital appreciation as well as current income and will acquire such
securities after a downgrading where it believes that the company's financial
condition (and therefore its quality ratings) will be improving. Such downgraded
securities will usually be rated less than A by Moody's and S&P. The Fund does
not intend to hold more than 5% of its net assets in fixed income
4
<PAGE>
securities rated less than Baa by Moody's or BBB by S&P and will not invest in
fixed income securities rated lower than B (or the equivalent, in the Adviser's
opinion, if not rated). Lower rated issues (those rated lower than A) are
considered speculative in certain respects.
The Fund may also engage in the following investment techniques, each of which
may involve certain risks:
OPTIONS. When the Adviser believes that individual portfolio securities within
the Fund are approaching the top of the Adviser's growth and price expectations,
covered call options ("calls") may be written (sold) against such securities in
a disciplined approach to selling portfolio securities.
When the Fund writes a call, it receives a premium and agrees to sell the
underlying security to a purchaser of a corresponding call at a specified price
("strike price") by a future date ("exercise date"). To terminate its obligation
on a call the Fund has written, it may purchase a corresponding call in a
"closing purchase transaction". A profit or loss will be realized, depending
upon whether the price of the closing purchase transaction is more or less than
the premium (net of transaction costs) previously received on the call written.
The Fund may also realize a profit if the call it has written lapses
unexercised, in which case the Fund keeps the premium and retains the underlying
security as well. If a call written by the Fund is exercised, the Fund forgoes
any possible profit from an increase in the market price of the underlying
security over the exercise price plus the premium received. The Fund writes
options only for hedging purposes and not for speculation where the aggregate
value of the underlying obligations will not exceed 25% of the Fund's net
assets. If the Adviser is incorrect in its expectations and the market price of
a stock subject to a call option rises above the exercise price of the option,
the Fund will lose the opportunity for further appreciation of that security.
Profits on closing purchase transactions and premiums on lapsed calls written
are considered capital gains for financial reporting purposes and are short term
gains for federal income tax purposes. When short term gains are distributed to
shareholders, they are taxed as ordinary income. If the Fund desires to enter
into a closing purchase transaction, but there is no market when it desires to
do so, it would have to hold the securities underlying the call until the call
lapses or until the call is exercised.
The Fund will only write options which are issued by the Options Clearing
Corporation and listed on a national securities exchange. Call writing affects
the Fund's portfolio turnover rate and the brokerage commissions paid.
Commissions for options, which are normally higher than for general securities
transactions, are payable when writing calls and when purchasing closing
purchase transactions.
REPURCHASE AGREEMENTS. Repurchase agreements are transactions by which the Fund
purchases a security and simultaneously commits to resell that security to the
seller at an agreed upon time and price, thereby determining the yield during
the term of the agreement. In the event of a bankruptcy or other default of the
seller of a repurchase agreement, the Fund could experience both delays in
liquidating the underlying security and losses. To minimize these possibilities,
the Fund intends to enter into repurchase agreements only with its Custodian,
banks having assets in excess of $10 billion and the largest and, in the
Adviser's judgment, most creditworthy primary U.S. Government securities
dealers. The Fund will only enter into repurchase agreements which are
collateralized by U.S. Government obligations. The Fund will not enter into a
repurchase agreement not terminable within seven days if, as a result thereof,
more than 15% of the value of the net assets of the Fund would be invested in
such securities and other illiquid securities.
5
<PAGE>
LENDING PORTFOLIO SECURITIES. The Fund may, from time to time, lend securities
on a short-term basis (i.e., for up to seven days) to banks, brokers and dealers
and receive as collateral cash, U.S. Government obligations or irrevocable bank
letters of credit (or any combination thereof), which collateral will be
required to be maintained at all times in an amount equal to at least 100% of
the current value of the loaned securities plus accrued interest. It is the
present intention of the Fund, which may be changed without shareholder
approval, that loans of portfolio securities will not be made if as a result the
aggregate of all outstanding loans exceeds one-third of the value of the Fund's
total assets. Securities lending will afford the Fund the opportunity to earn
additional income because the Fund will continue to be entitled to the interest
payable on the loaned securities and also will either receive as income all or a
portion of the interest on the investment of any cash loan collateral or, in the
case of collateral other than cash, a fee negotiated with the borrower. Such
loans will be terminable at any time. Loans of securities involve risks of delay
in receiving additional collateral or in recovering the securities lent or even
loss of rights in the collateral in the event of the insolvency of the borrower
of the securities. The Fund will have the right to regain record ownership of
loaned securities in order to exercise beneficial rights. The Fund may pay
reasonable fees in connection with arranging such loans.
BORROWING AND PLEDGING. The Fund may borrow money from banks provided that,
immediately after any such borrowing, there is asset coverage of 300% for all
borrowings of the Fund. The Fund will not make any borrowing which would cause
its outstanding borrowings to exceed one-third of its total assets. The Fund may
pledge assets in connection with borrowings but will not pledge more than
one-third of its total assets. Borrowing magnifies the potential for gain or
loss on the portfolio securities of the Fund and, therefore, if employed,
increases the possibility of fluctuation in the Fund's net asset value. This is
the speculative factor known as leverage. The Fund's policies on borrowing and
pledging are fundamental policies which may not be changed without the
affirmative vote of a majority of its outstanding shares. It is the Fund's
present intention, which may be changed by the Board of Trustees without
shareholder approval, to limit its borrowings during the coming year to 5% of
its total assets and to borrow only for emergency or extraordinary purposes and
not for leverage.
PORTFOLIO TURNOVER. The Fund does not intend to use short-term trading as a
primary means of achieving its investment objective. However, the Fund's rate of
portfolio turnover will depend upon market and other conditions, and it will not
be a limiting factor when portfolio changes are deemed necessary or appropriate
by the Adviser. Although the annual portfolio turnover rate of the Fund cannot
be accurately predicted, it is not expected to exceed 200%, but may be either
higher or lower. A 100% turnover rate would occur, for example, if all the
securities of the Fund were replaced once in a one-year period. High turnover
(100% or more) involves correspondingly greater commission expenses and
transaction costs. High turnover may result in the Fund recognizing greater
amounts of taxable income and capital gains, which would increase the amount of
income and capital gains which the Fund must distribute to shareholders in order
to maintain its status as a regulated investment company and to avoid the
imposition of federal income or excise taxes (see "Taxes").
6
<PAGE>
HOW TO PURCHASE SHARES
- --------------------------------------------------------------------------------
Your initial investment in the Fund ordinarily must be at least $2,500 ($1,000
for tax-deferred retirement plans). The Fund will accept accounts with less than
the stated minimum from employees of The United Company and its affiliates and
may accept certain other accounts with less than the stated minimum initial
investment in the Adviser's sole discretion.
Shares of the Fund are sold on a continuous basis at the net asset value next
determined after receipt of a purchase order by the Trust. Purchase orders
received by dealers prior to 4:00 p.m., Eastern time, on any business day and
transmitted to CW Fund Distributors, Inc. (the "Distributor"), 312 Walnut
Street, 21st Floor, Cincinnati, Ohio 45202 by 5:00 p.m., Eastern time, that day
are confirmed at the net asset value determined as of the close of the regular
session of trading on the New York Stock Exchange on that day. It is the
responsibility of dealers to transmit properly completed orders so that they
will be received by the Distributor by 5:00 p.m., Eastern time. Dealers may
charge a fee for effecting purchase orders. Direct purchase orders received by
the Transfer Agent by 4:00 p.m., Eastern time, are confirmed at that day's net
asset value. Direct investments received by the Transfer Agent after 4:00 p.m.,
Eastern time, and orders received from dealers after 5:00 p.m., Eastern time,
are confirmed at the net asset value next determined on the following business
day.
You may open an account and make an initial investment in the Fund by sending a
check and a completed account application form to Countrywide Fund Services,
Inc. (the "Transfer Agent"), P.O. Box 5354, Cincinnati, Ohio 45201-5354. Checks
should be made payable to the "UC Investment Fund". An account application is
included in this Prospectus.
The Trust mails you confirmations of all purchases or redemptions of Fund
shares. Certificates representing shares are not issued. The Trust and the
Distributor reserve the rights to limit the amount of investments and to refuse
to sell to any person.
Investors should be aware that the Fund's account application contains
provisions in favor of the Trust, the Transfer Agent, the Distributor and
certain of their affiliates, excluding such entities from certain liabilities
(including, among others, losses resulting from unauthorized shareholder
transactions) relating to the various services made available to investors.
Should an order to purchase shares be canceled because your check does not
clear, you will be responsible for any resulting losses or fees incurred by the
Trust or the Transfer Agent in the transaction.
You may also purchase shares of the Fund by wire. Please telephone the Transfer
Agent (Nationwide call toll-free 1-877-UC FUNDS (1-877-823-8637)) for
instructions. You should be prepared to give the name in which the account is to
be established, the address, telephone number and taxpayer identification number
for the account, and the name of the bank which will wire the money.
Your investment will be made at the net asset value next determined after your
wire is received together with the account information indicated above. If the
Trust does not receive timely and complete account information, there may be a
delay in the investment of your money and any accrual of dividends. To make your
initial wire purchase, you are required to mail a completed account application
to the Transfer Agent. Your bank may
7
<PAGE>
impose a charge for sending your wire. There is presently no fee for receipt of
wired funds, but the Transfer Agent reserves the right to charge shareholders
for this service upon thirty days' prior notice to shareholders.
You may purchase and add shares to your account by mail or by bank wire. Checks
should be sent to Countrywide Fund Services, Inc., P.O. Box 5354, Cincinnati,
Ohio 45201-5354. Checks should be made payable to the "UC Investment Fund". Bank
wires should be sent as outlined above. You may also make additional investments
at the Trust's offices at 312 Walnut Street, 21st Floor, Cincinnati, Ohio 45202.
Each additional purchase request must contain the name of your account and your
account number to permit proper crediting to your account. While there is no
minimum amount required for subsequent investments, the Trust reserves the right
to impose such requirement.
SHAREHOLDER SERVICES
- --------------------------------------------------------------------------------
Contact the Transfer Agent (Nationwide call toll-free 1-877-UC FUNDS
(1-877-823-8637)) for additional information about the shareholder services
described below.
AUTOMATIC WITHDRAWAL PLAN
If the shares in your account have a value of at least $5,000, you may elect to
receive, or may designate another person to receive, monthly or quarterly
payments in a specified amount of not less than $100 each. There is no charge
for this service.
TAX-DEFERRED RETIREMENT PLANS
Shares of the Fund are available for purchase in connection with the following
tax-deferred retirement plans:
- -- Keogh Plans for self-employed individuals
- -- Individual retirement account (IRA) plans for individuals and their
non-employed spouses, including Roth IRAs and Education IRAs
- -- Qualified pension and profit-sharing plans for employees, including those
profit-sharing plans with a 401(k) provision
- -- 403(b)(7) custodial accounts for employees of public school systems,
hospitals, colleges and other non-profit organizations meeting certain
requirements of the Internal Revenue Code
DIRECT DEPOSIT PLANS
Shares of the Fund may be purchased through direct deposit plans offered by
certain employers and government agencies. These plans enable a shareholder to
have all or a portion of his or her payroll or social security checks
transferred automatically to purchase shares of the Fund.
AUTOMATIC INVESTMENT PLAN
You may make automatic monthly investments in the Fund from your bank, savings
and loan or other depository institution account on either the 15th or the last
business day of the month. The minimum initial and subsequent investments must
be $100 under the plan. The Transfer Agent pays the costs associated with these
transfers, but reserves the right, upon thirty days' written notice, to make
reasonable charges for this service. Your depository institution may impose its
own charge for debiting your account which would reduce your return from an
investment in the Fund.
8
<PAGE>
HOW TO REDEEM SHARES
- --------------------------------------------------------------------------------
You may redeem shares of the Fund on each day that the Trust is open for
business by sending a written request to the Transfer Agent. The request must
state the number of shares or the dollar amount to be redeemed and your account
number. The request must be signed exactly as your name appears on the Trust's
account records. If the shares to be redeemed have a value of $25,000 or more,
your signature must be guaranteed by any eligible guarantor institution,
including banks, brokers and dealers, municipal securities brokers and dealers,
government securities brokers and dealers, credit unions, national securities
exchanges, registered securities associations, clearing agencies and savings
associations.
Redemption requests may direct that the proceeds be wired directly to your
existing account in any commercial bank or brokerage firm in the United States.
If your instructions request a redemption by wire, you will be charged an $8
processing fee by the Fund's Custodian. The Trust reserves the right, upon
thirty days' written notice, to change the processing fee. All charges will be
deducted from your account by redemption of shares in your account. Your bank or
brokerage firm may also impose a charge for processing the wire. In the event
that wire transfer of funds is impossible or impractical, the redemption
proceeds will be sent by mail to the designated account.
You may also redeem shares by placing a wire redemption request through a
securities broker or dealer. Unaffiliated broker-dealers may impose a fee on the
shareholder for this service. You will receive the net asset value per share
next determined after receipt by the Trust or its agent of your wire redemption
request. It is the responsibility of broker-dealers to properly transmit wire
redemption orders.
You will receive the net asset value per share next determined after receipt by
the Transfer Agent of your redemption request in the form described above.
Payment is made within three business days after tender in such form, provided
that payment in redemption of shares purchased by check will be effected only
after the check has been collected, which may take up to fifteen days from the
purchase date. To eliminate this delay, you may purchase shares of the Fund by
certified check or wire. At the discretion of the Trust or the Transfer Agent,
corporate investors and other associations may be required to furnish an
appropriate certification authorizing redemptions to ensure proper
authorization.
The Trust reserves the right to suspend the right of redemption or to postpone
the date of payment for more than three business days under unusual
circumstances as determined by the Securities and Exchange Commission.
DIVIDENDS AND DISTRIBUTIONS
- --------------------------------------------------------------------------------
The Fund expects to distribute substantially all of its net investment income,
if any, on an annual basis. The Fund expects to distribute any net realized
long-term capital gains at least once each year. Management will determine the
timing and frequency of the distributions of any net realized short-term capital
gains.
9
<PAGE>
Distributions are paid according to one of the following options:
Share Option - income distributions and both long-term and short-term
capital gains distributions reinvested in additional shares.
Income Option - income distributions and short-term capital gains
distributions paid in cash; long-term capital gains
distributions reinvested in additional shares.
Cash Option - income distributions and capital gains distributions paid in
cash.
You should indicate your choice of option on your application. If no option is
specified on your application, distributions will automatically be reinvested in
additional shares. All distributions will be based on the net asset value in
effect on the payable date.
If you select the Income Option or the Cash Option and the U.S. Postal Service
cannot deliver your checks or if your checks remain uncashed for six months,
your dividends may be reinvested in your account at the then current net asset
value and your account will be converted to the Share Option. No interest will
accrue on amounts represented by uncashed distribution checks.
TAXES
- --------------------------------------------------------------------------------
The Fund intends to qualify for and elect (each on a continuous basis) the
special tax treatment afforded a "regulated investment company" under Subchapter
M of the Internal Revenue Code so that it does not pay federal taxes on income
and capital gains distributed to shareholders. The Fund intends to distribute
substantially all of its net investment income and any realized capital gains
for each year of its operation to its shareholders. Distributions of net
investment income and net realized short-term capital gains, if any, are taxable
to investors as ordinary income. Dividends distributed by the Fund from net
investment income may be eligible, in whole or in part, for the dividends
received deduction available to corporations.
Distributions of net capital gains (i.e., the excess of net long-term capital
gains over net short-term capital losses) by the Fund to its shareholders are
taxable to the recipient shareholders as capital gains, without regard to the
length of time a shareholder has held Fund shares. The maximum capital gains
rate for individuals is 28% with respect to assets held for more than 12 months,
but not more than 18 months, and 20% with respect to assets held more than 18
months. The maximum capital gains rate for corporate shareholders is the same as
the maximum tax rate for ordinary income derived by such shareholders.
Redemptions of shares of the Fund are taxable events on which a shareholder may
realize a gain or loss.
The Fund will mail to each of its shareholders a statement indicating the amount
and federal income tax status of all distributions made during the year. In
addition to federal taxes, shareholders of the Fund may be subject to state and
local taxes on distributions. Shareholders should consult their tax advisors
about the tax effect of distributions and withdrawals from the Fund and the use
of the Automatic Withdrawal Plan. The tax consequences described in this section
apply whether distributions are taken in cash or reinvested in additional
shares. See "Taxes" in the Statement of Additional Information for further
information.
10
<PAGE>
OPERATION OF THE FUND
- --------------------------------------------------------------------------------
The Fund is a diversified series of UC Investment Trust (the "Trust"), an
open-end management investment company organized as an Ohio business trust on
February 27, 1998. The Board of Trustees supervises the business activities of
the Trust. Like other mutual funds, the Trust retains various organizations to
perform specialized services for the Fund.
The Trust retains United Investment Corporation, P.O. Box 1280, 1005 Glenway
Avenue, Bristol, Virginia 24203-1280 (the "Adviser"), to manage the Fund's
investments. The Adviser is a registered investment adviser organized in
Virginia and is a wholly-owned subsidiary of The United Company, a
Virginia-based conglomerate active in the oil and gas, real estate, financial
services, golf and mining supply industries, among others. The Adviser has not
previously provided advisory services to an investment company. United
Investment Corporation has managed both discretionary accounts on behalf of
individual clients as well as the financial assets of The United Company since
1986. In addition, the Adviser has also managed private limited partnerships,
including the United Utility Funds. The Fund pays the Adviser a fee for its
services at an annual rate of 1.00% of the average value of its daily net
assets.
As of the date of this Prospectus, the Adviser owns all of the outstanding
shares of the Fund. The controlling shareholders of The United Company are James
W. McGlothlin, Woodrow W. McGlothlin and Nicholas Doyle Street.
Lois A. Clarke and Ronald E. Oliver are primarily responsible for managing the
Fund's portfolio. Ms. Clarke has served as President and a Director of the
Adviser since 1986. She also serves as Assistant Treasurer, Executive Vice
President and Chief Financial Officer of The United Company. She is also
Director, Chairman, President, Chief Executive Officer and Treasurer of the
following subsidiaries of The United Company: Star Coal Company, Inc., United
Affiliates Corporation and UCC Stadium Box Corporation. Ms. Clarke serves as
Treasurer of several other wholly-owned subsidiaries of The United Company and
she was a Director and Treasurer of United Coal Company until The United Company
sold this subsidiary in August, 1997. Mr. Oliver, Vice President and a Director
of the Adviser, has also been employed by the Adviser in this capacity since
1986. In addition, he is the Vice President of Investments of The United
Company. Mr. Oliver was the Manager of Corporate Investments for United Coal
Company from 1980 through 1995.
In addition to the advisory fee, the Fund is responsible for the payment of all
operating expenses, including fees and expenses in connection with membership in
investment company organizations, brokerage fees and commissions, legal,
auditing and accounting expenses, expenses of registering shares under federal
and state securities laws, expenses related to the distribution of the Fund's
shares (see "Distribution Plan"), insurance expenses, taxes or governmental
fees, fees and expenses of the custodian, transfer agent, administrator, and
accounting and pricing agent of the Fund, fees and expenses of members of the
Board of Trustees who are not interested persons of the Trust, the cost of
preparing and distributing prospectuses, statements, reports and other documents
to shareholders, expenses of shareholders' meetings and proxy solicitations, and
such extraordinary or non-recurring expenses as may arise, including litigation
to which the Fund may be a party and indemnification of the Trust's officers and
Trustees with respect thereto.
CW Fund Distributors, Inc. (the "Distributor"), 312 Walnut Street, Cincinnati,
Ohio serves as principal underwriter for the Trust and, as such, is the
exclusive agent for the distribution of shares of the Fund. The
11
<PAGE>
Distributor is an indirect wholly-owned subsidiary of Countrywide Credit
Industries, Inc., a New York Stock Exchange listed company principally engaged
in the business of residential mortgage lending. Robert G. Dorsey, John F.
Splain and Tina D. Hosking are officers of both the Distributor and the Trust.
The Trust has retained Countrywide Fund Services, Inc. (the "Transfer Agent"),
P.O. Box 5354, Cincinnati, Ohio, to serve as the Fund's transfer agent, dividend
paying agent and shareholder service agent. The Transfer Agent is a wholly-owned
indirect subsidiary of Countrywide Credit Industries, Inc. The Transfer Agent
also provides accounting and pricing services to the Fund. The Transfer Agent
receives a monthly fee from the Fund for calculating daily net asset value per
share and maintaining such books and records as are necessary to enable it to
perform its duties.
In addition, the Transfer Agent has been retained to provide administrative
services to the Fund. In this capacity, the Transfer Agent supplies executive,
administrative and regulatory services, supervises the preparation of tax
returns, and coordinates the preparation of reports to shareholders and reports
to and filings with the Securities and Exchange Commission and state securities
authorities. The Fund pays the Transfer Agent a fee, payable monthly, for these
administrative services at the annual rate of .15% of the average value of its
daily net assets up to $25,000,000, .125% of such assets from $25,000,000 to
$50,000,000 and .10% of such assets in excess of $50,000,000; provided, however,
that the minimum fee is $1,000 per month.
Consistent with the Conduct Rules of the National Association of Securities
Dealers, Inc., and subject to its objective of seeking best execution of
portfolio transactions, the Adviser may consider sales of shares of the Fund as
a factor in the selection of brokers and dealers to execute portfolio
transactions of the Fund.
Shares of the Fund have equal voting rights and liquidation rights. When matters
are submitted to shareholders for a vote, each shareholder is entitled to one
vote for each full share owned and fractional votes for fractional shares owned.
The Trust does not normally hold annual meetings of shareholders. The Trustees
shall promptly call and give notice of a meeting of shareholders for the purpose
of voting upon removal of any Trustee when requested to do so in writing by
shareholders holding not less than 10% of the Trust's outstanding shares. The
Trust will comply with the provisions of Section 16(c) of the Investment Company
Act of 1940 in order to facilitate communications among shareholders.
DISTRIBUTION PLAN
- --------------------------------------------------------------------------------
Pursuant to Rule 12b-1 under the Investment Company Act of 1940, the Fund has
adopted a plan of distribution (the "Plan"), under which the Fund may directly
incur or reimburse the Adviser or the Distributor for certain
distribution-related expenses, including payments to securities dealers and
others who are engaged in the sale of shares of the Fund and who may be advising
investors regarding the purchase, sale or retention of such shares; expenses of
maintaining personnel who engage in or support distribution of shares or who
render shareholder support services not otherwise provided by the Transfer
Agent; expenses of formulating and implementing marketing and promotional
activities, including direct mail promotions and mass media advertising;
expenses of preparing, printing and distributing sales literature and
prospectuses and statements of additional information and reports for recipients
other than existing shareholders of the Fund; expenses of obtaining such
information, analyses and reports with respect to marketing and promotional
activities as the Trust may, from time to time, deem advisable; and any other
expenses related to the distribution of the Fund's shares.
12
<PAGE>
The annual limitation for payment of expenses pursuant to the Plan is .25% of
the Fund's average daily net assets. Unreimbursed expenditures will not be
carried over from year to year. In the event the Plan is terminated by the Fund
in accordance with its terms, the Fund will not be required to make any payments
for expenses incurred after the date the Plan terminates.
Pursuant to the Plan, the Fund may also make payments to banks or other
financial institutions that provide shareholder services and administer
shareholder accounts. The Glass-Steagall Act generally prohibits banks from
engaging in the business of underwriting, selling or distributing securities.
Although the scope of this prohibition under the Glass-Steagall Act has not been
clearly defined by the courts or appropriate regulatory agencies, management of
the Trust believes that the Glass-Steagall Act should not preclude a bank from
providing such services. However, state securities laws on this issue may differ
from the interpretations of federal law expressed herein and banks and financial
institutions may be required to register as dealers pursuant to state law. If a
bank were prohibited from continuing to perform all or a part of such services,
management of the Trust believes that there would be no material impact on the
Fund or its shareholders. Banks may charge their customers fees for offering
these services to the extent permitted by 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.
CALCULATION OF SHARE PRICE
- --------------------------------------------------------------------------------
On each day that the Trust is open for business, the share price (net asset
value) of the shares of the Fund is determined as of the close of the regular
session of trading on the New York Stock Exchange, currently 4:00 p.m., Eastern
time. The Trust is open for business on each day the New York Stock Exchange is
open for business and on any other day when there is sufficient trading in the
Fund's investments that its net asset value might be materially affected. The
net asset value per share of the Fund is calculated by dividing the sum of the
value of the securities held by the Fund plus cash or other assets minus all
liabilities (including estimated accrued expenses) by the total number of shares
outstanding of the Fund, rounded to the nearest cent.
U.S. Government obligations are valued at their most recent bid prices as
obtained from one or more of the major market makers for such securities. Other
portfolio securities are valued as follows: (1) securities which are traded on
stock exchanges or are quoted by NASDAQ are valued at the last reported sale
price as of the close of the regular session of trading on the New York Stock
Exchange on the day the securities are being valued, or, if not traded on a
particular day, at the closing bid price, (2) securities traded in the
over-the-counter market, and which are not quoted by NASDAQ, are valued at the
last sale price (or, if the last sale price is not readily available, at the
last bid price as quoted by brokers that make markets in the securities) as of
the close of the regular session of trading on the New York Stock Exchange on
the day the securities are being valued, (3) securities which are traded both in
the over-the-counter market and on a stock exchange are valued according to the
broadest and most representative market, and (4) securities (and other assets)
for which market quotations are not readily available are valued at their fair
value as determined in good faith in accordance with consistently applied
procedures established by and under the general supervision of the Board of
Trustees. The net asset value per share of the Fund will fluctuate with the
value of the securities it holds.
13
<PAGE>
PERFORMANCE INFORMATION
- --------------------------------------------------------------------------------
From time to time, the Fund may advertise its "average annual total return."
Average annual total return figures are based on historical earnings and are not
intended to indicate future performance.
The "average annual total return" of the Fund refers to the average annual
compounded rates of return over the most recent 1, 5 and 10 year periods or,
where the Fund has not been in operation for such period, over the life of the
Fund (which periods will be stated in an advertisement) that would equate an
initial amount invested at the beginning of a stated period to the ending
redeemable value of the investment. The calculation of "average annual total
return" assumes the reinvestment of all dividends and distributions. The Fund
may also advertise total return (a "nonstandardized quotation") which is
calculated differently from "average annual total return." A nonstandardized
quotation of total return may be a cumulative return which measures the
percentage change in the value of an account between the beginning and end of a
period, assuming no activity in the account other than reinvestment of dividends
and capital gains distributions. A nonstandardized quotation of total return may
also indicate average annual compounded rates of return over periods other than
those specified for "average annual total return." A nonstandardized quotation
of total return will always be accompanied by the Fund's "average annual total
return" as described above.
From time to time the Fund may advertise its performance rankings as published
by recognized independent mutual fund statistical services such as Lipper
Analytical Services, Inc. ("Lipper"), or by publications of general interest
such as Forbes, Money, The Wall Street Journal, Business Week, Barron's Fortune
or Morningstar Mutual Fund Values. The Fund may also compare its performance to
that of other selected mutual funds, average of the other mutual funds within
its category as determined by Lipper, or recognized indicators such as the Dow
Jones Industrial Average, the Standard & Poor's 500 Stock Index, the Value Line
Composite Index, the NASDAQ Composite Index and the Russell 2000 Index. In
connection with a ranking, the Fund may provide additional information, such as
the particular category of funds to which the ranking relates, the number of
funds in the category, the criteria upon which the ranking is based, and the
effect of fee waivers and/or expense reimbursements, if any. The Fund may also
present its performance and other investment characteristics, such as volatility
or a temporary defensive posture, in light of the Adviser's view of current or
past market conditions or historical trends.
<PAGE>
THIS PAGE INTENTIONALLY LEFT BLANK
15
<PAGE>
UC INVESTMENT TRUST
P.O. Box 1280
1005 Glenway Avenue
Bristol, Virginia 24203-1280
BOARD OF TRUSTEES
Robert J. Bartel
Lois A. Clarke
James W. McGlothlin
A. A. Modena
Robert H. Spilman
Timothy J. Sullivan
Charles W. Sydnor, Jr., Ph.D.
INVESTMENT ADVISER
United Investment Corporation
P.O. Box 1280
1005 Glenway Avenue
Bristol, Virginia 24203-1280
INDEPENDENT AUDITOR
Price Waterhouse LLP
2200 Chemed Center
255 East Fifth Street
Cincinnati, Ohio 45202-4798
LEGAL COUNSEL
Jones, Day, Reavis & Pogue
599 Lexington Avenue
New York, New York 10022
DISTRIBUTOR
CW Fund Distributors, Inc.
312 Walnut Street, 21st Floor
Cincinnati, Ohio 45202
TRANSFER AGENT
Countrywide Fund Services, Inc.
P.O. Box 5354
Cincinnati, Ohio 45201-5354
SHAREHOLDER SERVICES
Nationwide: (Toll-Free) 1-877-UC FUNDS
(1-877-823-8637)
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
shares in any State to any person to whom it is unlawful for the Fund to make
such offer in such State.
<PAGE>
UC INVESTMENT FUND ACCOUNT NO. P7 - ___________________
ACCOUNT APPLICATION (For Fund Use Only)
------------------------------------
Please mail account application to: FOR BROKER/DEALER USE ONLY
UC Investment Fund Firm Name:__________________________
c/o Countrywide Fund Services, Inc. Home Office Address:________________
P.O. Box 5354 Branch Address:_____________________
Cincinnati, Ohio 45201-5354 Rep Name & No.:_____________________
Rep Signature:______________________
------------------------------------
================================================================================
o Check or draft enclosed payable to the UC Investment Fund. Initial Investment
of $____________ ($2,500 minimum)
o Bank Wire From:______________________________________________________________
ACCOUNT NAME S.S. #/TAX I.D.#
________________________________________________________ ______________________
Name of Individual, Corporation, (In case of custodial
Organization, or Minor, etc. account please list
minor's S.S.#)
________________________________________________________ Citizenship: o U.S.
Name of Joint Tenant, Partner, Custodian o Other
_________
ADDRESS PHONE
________________________________________________________ ( )_________________
Street or P.O. Box Business Phone
________________________________________________________ ( )_________________
City State Zip Home Phone
Check Appropriate Box: o Individual o Corporation
o Joint Tenant o Trust
(Right of survivorship o Custodial
presumed) o Non-Profit
o Partnership o Other
Occupation and Employer Name/Address____________________________________________
Are you an associated person of an NASD member? o Yes o No
================================================================================
TAXPAYER IDENTIFICATION NUMBER-- Under penalties of perjury I certify that the
Taxpayer Identification Number listed above is my correct number. The Internal
Revenue Service does not require my consent to any provision of this document
other than the certifications required to avoid backup withholding. Check box if
appropriate:
o I am exempt from backup withholding under the provisions of section
3406(a)(1)(c) of the Internal Revenue Code; or I am not subject to backup
withholding because I have not been notified that I am subject to backup
withholding as a result of a failure to report all interest or dividends; or
the Internal Revenue Service has notified me that I am no longer subject to
backup withholding.
o I certify under penalties of perjury that a Taxpayer Identification Number
has not been issued to me and I have mailed or delivered an application to
receive a Taxpayer Identification Number to the Internal Revenue Service
Center or Social Security Administration Office. I understand that if I do
not provide a Taxpayer Identification Number within 60 days that 31% of all
reportable payments will be withheld until I provide a number.
================================================================================
DISTRIBUTIONS (If no election is checked the SHARE OPTION will be assigned.)
o Share Option -- Income distributions and both long-term and short-term
capital gains distributions automatically reinvested in
additional shares.
o Income Option -- Income distributions and short-term capital gains
distributions paid in cash, long-term capital gains
distributions reinvested in additional shares.
o Cash Option -- Income distributions and capital gains distributions paid in
cash.
o By Check o By ACH to my bank checking or savings account.
PLEASE ATTACH A VOIDED CHECK.
================================================================================
SIGNATURES
By signature below each investor certifies that he/she has received a copy of
the Fund's current Prospectus, that he/she is of legal age, and that he/she has
full authority and legal capacity for himself/herself or the organization named
below, to make this investment and to use the options selected above. The
investor appoints Countrywide Fund Services, Inc. as his/her agent to enter
orders for shares whether by direct purchase or exchange, to receive dividends
and distributions for automatic reinvestment in additional shares of the Fund
for credit to the investor's account and to surrender for redemption shares held
in the investor's account in accordance with any of the procedures elected above
or for payment of service charges incurred by the investor. The investor further
agrees that Countrywide Fund Services, Inc. can cease to act as such agent upon
ten days' notice in writing to the investor at the address contained in this
Application. The investor hereby ratifies any instructions given pursuant to
this Application and for himself/herself and his/her successors and assigns does
hereby release the UC Investment Trust, United Investment Corporation,
Countrywide Fund Services,Inc., CW Fund Distributors, Inc. and their respective
officers, employees, agents and affiliates from any and all liability in the
performance of the acts instructed herein.
____________________________________ ______________________________________
Signature of Individual Owner, Signature of Joint Owner, if Any
Corporate Officer, Trustee, etc.
____________________________________ ______________________________________
Title of Corporate Officer, Date
Trustee, etc.
NOTE: CORPORATIONS, TRUSTS AND OTHER ORGANIZATIONS MUST COMPLETE THE
RESOLUTION FORM ON THE REVERSE SIDE. UNLESS OTHERWISE SPECIFIED, EACH
JOINT OWNER SHALL HAVE FULL AUTHORITY TO ACT ON BEHALF OF THE ACCOUNT.
<PAGE>
AUTOMATIC INVESTMENT PLAN (Complete for Investments into the Fund)
The Automatic Investment Plan is available for the UC Investment Fund. There is
no charge for this service, and it offers the convenience of automatic investing
on a regular basis. The minimum investment is $100.00 per month. For an account
that is opened by using this Plan, the minimum initial and subsequent
investments must be $100.00. Though a continuous program of 12 monthly
investments is recommended, the Plan may be discontinued by the shareholder at
any time.
Please invest $_____________ per month ABA Routing Number ____________________
FI Account Number _____________________
o Checking Account o Savings Account
______________________________________
Name of Financial Institution (FI) Please make my automatic investment on:
o the last business day of each month
______________________________________ o the 15th day of each month
City State o both the 15th and last business day
X_____________________________________ X______________________________________
(Signature of Depositor EXACTLY as it (Signature of Joint Tenant - if any)
appears on FI Records)
(Joint Signatures are required when bank account is in joint names. Please sign
exactly as signature appears on your FI's records.)
PLEASE ATTACH A VOIDED CHECK FOR THE AUTOMATIC INVESTMENT PLAN.
INDEMNIFICATION TO DEPOSITOR'S BANK
In consideration of your participation in a plan which Countrywide Fund
Services, Inc. ("CFS") has put into effect, by which amounts, determined by your
depositor, payable to the UC Investment Fund designated above, for purchase of
shares of said Fund, are collected by CFS, CFS hereby agrees:
CFS will indemnify and hold you harmless from any liability to any person or
persons whatsoever arising out of the payment by you of any amount drawn by the
Fund to its own order on the account of your depositor or from any liability to
any person whatsoever arising out of the dishonor by you whether with or without
cause or intentionally or inadvertently, of any such amount. CFS will defend, at
its own cost and expense, any action which might be brought against you by any
person or persons whatsoever because of your actions taken pursuant to the
foregoing request or in any manner arising by reason of your participation in
this arrangement. CFS will refund to you any amount erroneously paid by you to
the Fund if the claim for the amount of such erroneous payment is made by you
within six (6) months from the date of such erroneous payment; your
participation in this arrangement and that of the Fund may be terminated by
thirty (30) days written notice from either party to the other.
================================================================================
AUTOMATIC WITHDRAWAL PLAN (Complete for Withdrawals from the UC Investment Fund
if your account has a value of at least $5,000)
This is an authorization for you to withdraw $_____________ ($100 minimum) from
my mutual fund account beginning the last business day of the month of
__________.
Please Indicate Withdrawal Schedule (Check One):
o MONTHLY -- Withdrawals will be made on the last business day of each month.
o QUARTERLY -- Withdrawals will be made on or about 3/31, 6/30, 9/30 and 12/31.
o ANNUALLY -- Please make withdrawals on the last business day of the month of:
__________.
Please Select Payment Method (Check One):
o Check: Please mail a check for my withdrawal proceeds to the mailing address
on this account.
o ACH Transfer: Please send my withdrawal proceeds via ACH transfer to my bank
checking or savings account as indicated below. I understand that the
transfer will be completed in two to three business days and that there is no
charge.
o Bank Wire: Please send my withdrawal proceeds via bank wire, to the account
indicated below. I understand that the wire will be completed in one business
day and that there is an $8.00 fee.
Please attach a voided _____________________________________________________
check for ACH or bank wire Bank Name Bank Address
_____________________________________________________
Bank ABA# Account # Account Name
o Send to special payee (other than applicant): Please mail a check for my
withdrawal proceeds to the mailing address below:
Name of payee___________________________________________________________________
Please send to:_________________________________________________________________
Street address City State Zip
RESOLUTIONS
(This Section to be completed by Corporations, Trusts, and Other Organizations)
RESOLVED: That this corporation or organization become a shareholder of UC
Investment Fund (the Fund) and that
____________________________________________________________________________
is (are) hereby authorized to complete and execute the Application on behalf of
the corporation or organization and to take any action for it as may be
necessary or appropriate with respect to its shareholder account with the Fund,
and it is
FURTHER RESOLVED: That any one of the above noted officers is authorized to sign
any documents necessary or appropriate to appoint Countrywide Fund Services,
Inc. as redemption agent of the corporation or organization for shares of the UC
Investment Fund, to establish or acknowledge terms and conditions governing the
redemption of said shares and to otherwise implement the privileges elected on
the Application, and it is
Certificate
I hereby certify that the foregoing resolutions are in conformity with the
Charter and By-Laws or other empowering documents of the
________________________________________________________________________________
(Name of Organization)
incorporated or formed under the laws of________________________________________
(State)
and were adopted at a meeting of the Board of Directors or Trustees of the
organization or corporation duly called and held on _____________________ at
which a quorum was present and acting throughout, and that the same are now in
full force and effect.
I further certify that the following is (are) duly elected officer(s) of the
corporation or organization, authorized to act in accordance with the foregoing
resolutions.
Name Title
____________________________________ ______________________________________
____________________________________ ______________________________________
____________________________________ ______________________________________
Witness my hand and seal of the corporation or organization this _______________
day of ___________, 19___
____________________________________ ______________________________________
*Secretary-Clerk Other Authorized Officer (if required)
*If the Secretary or other recording officer is authorized to act by the above
resolutions, this certificate must also be signed by another officer.
<PAGE>
UC INVESTMENT TRUST
-------------------
STATEMENT OF ADDITIONAL INFORMATION
-----------------------------------
June 16, 1998
This Statement of Additional Information is not a prospectus. It should be read
in conjunction with the Prospectus of the UC Investment Trust (the "Trust")
dated June 16, 1998. A copy of the Trust's Prospectus can be obtained by writing
the Trust at 312 Walnut Street, 21st floor, Cincinnati, Ohio 45202 or by calling
the Trust nationwide toll-free 1-877-UC FUNDS (1-877-823-8637).
<PAGE>
STATEMENT OF ADDITIONAL INFORMATION
-----------------------------------
UC Investment Trust
P.O. Box 1280
1005 Glenway Avenue
Bristol, Virginia 24203-1280
THE TRUST ................................................................ 3
DEFINITIONS, POLICIES AND RISK CONSIDERATIONS ............................ 3
QUALITY RATINGS OF CORPORATE BONDS AND PREFERRED STOCKS .................. 8
INVESTMENT LIMITATIONS ................................................... 11
TRUSTEES AND OFFICER ..................................................... 13
THE INVESTMENT ADVISER ................................................... 16
THE DISTRIBUTOR .......................................................... 17
DISTRIBUTION PLAN ........................................................ 17
SECURITIES TRANSACTIONS .................................................. 18
PORTFOLIO TURNOVER ....................................................... 20
CALCULATION OF SHARE PRICE ............................................... 20
TAXES .................................................................... 21
REDEMPTION IN KIND ....................................................... 22
HISTORICAL PERFORMANCE INFORMATION ....................................... 22
CUSTODIAN ................................................................ 24
AUDITORS ................................................................. 24
COUNTRYWIDE FUND SERVICES, INC ........................................... 24
STATEMENT OF ASSETS AND LIABILITIES ...................................... 25
ADDITIONAL INFORMATION ................................................... 25
- 2 -
<PAGE>
THE TRUST
- ---------
The UC Investment Trust was organized as an Ohio business trust on February
27, 1998. The Trust currently offers one series of shares to investors: the UC
Investment Fund (the "Fund").
Each share of the Fund represents an equal proportionate interest in the
assets and liabilities belonging to the Fund with each other share of the Fund
and is entitled to such dividends and distributions out of the income belonging
to the Fund as are declared by the Trustees. The shares do not have cumulative
voting rights or any preemptive or conversion rights, and the Trustees have the
authority from time to time to divide or combine the shares of the Fund into a
greater or lesser number of shares so long as the proportionate beneficial
interest in the assets belonging to the Fund are in no way affected. In case of
any liquidation of the Fund, the holders of shares of the Fund being liquidated
will be entitled to receive as a class a distribution out of the assets, net of
the liabilities, belonging to the Fund. No shareholder is liable to further
calls or to assessment by the Fund without his or her express consent.
DEFINITIONS, POLICIES AND RISK CONSIDERATIONS
- ---------------------------------------------
A more detailed discussion of some of the terms used and investment
policies described in the Prospectus (see "Investment Objective, Investment
Policies and Risk Considerations") appears below:
MAJORITY. As used in the Prospectus and this Statement of Additional
Information, and as provided under the Investment Company Act of 1940, the term
"majority" of the outstanding shares of the Fund means the lesser of (1) 67% or
more of the Fund's outstanding shares 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.
REPURCHASE AGREEMENTS. Repurchase agreements are transactions by which the
Fund purchases a security and simultaneously commits to resell that security to
the seller at an agreed upon time and price, thereby determining the yield
during the term of the agreement. In the event of a bankruptcy or other default
of the seller of a repurchase agreement, the Fund could experience both delays
in liquidating the underlying security and losses. To minimize these
possibilities, the Fund intends to enter into repurchase agreements only with
its Custodian, with banks having assets in excess of $10 billion and with
broker-dealers who are recognized as primary dealers in U.S. Government
obligations by the Federal Reserve Bank of New York. Collateral for repurchase
agreements is held in safekeeping in
- 3 -
<PAGE>
the customer-only account of the Fund's Custodian at the Federal Reserve Bank.
The Fund will not enter into a repurchase agreement not terminable within seven
days if, as a result thereof, more than 15% of the value of its net assets would
be invested in such securities and other illiquid securities.
Although the securities subject to a repurchase agreement might bear
maturities exceeding one year, settlement for the repurchase would never be more
than one year after the Fund's acquisition of the securities and normally would
be within a shorter period of time. The resale price will be in excess of the
purchase price, reflecting an agreed upon market rate effective for the period
of time the Fund's money will be invested in the securities, and will not be
related to the coupon rate of the purchased security. At the time the Fund
enters into a repurchase agreement, the value of the underlying security,
including accrued interest, will equal or exceed the value of the repurchase
agreement, and in the case of a repurchase agreement exceeding one day, the
seller will agree that the value of the underlying security, including accrued
interest, will at all times equal or exceed the value of the repurchase
agreement.
For purposes of the Investment Company Act of 1940, a repurchase agreement
is deemed to be a loan from the Fund to the seller subject to the repurchase
agreement and is therefore subject to the Fund's investment restriction
applicable to loans. It is not clear whether a court would consider the
securities purchased by the Fund subject to a repurchase agreement as being
owned by the Fund or as being collateral for a loan by the Fund to the seller.
In the event of the commencement of bankruptcy or insolvency proceedings with
respect to the seller of the securities before repurchase of the security under
a repurchase agreement, the Fund may encounter delay and incur costs before
being able to sell the security. Delays may involve loss of interest or decline
in price of the security. If a court characterized the transaction as a loan and
the Fund has not perfected a security interest in the security, the Fund may be
required to return the security to the seller's estate and be treated as an
unsecured creditor of the seller. As an unsecured creditor, the Fund would be at
the risk of losing some or all of the principal and income involved in the
transaction. As with any unsecured debt obligation purchased for the Fund, the
Adviser seeks to minimize the risk of loss through repurchase agreements by
analyzing the creditworthiness of the obligor, in this case, the seller. Apart
from the risk of bankruptcy or insolvency proceedings, there is also the risk
that the seller may fail to repurchase the security, in which case the Fund may
incur a loss if the proceeds to the Fund of the sale of the security to a third
party are less than the repurchase price. However, if the market value of the
securities subject to the repurchase agreement becomes less than the repurchase
price (including interest), the Fund will direct the seller of the security to
- 4 -
<PAGE>
deliver additional securities so that the market value of all securities subject
to the repurchase agreement will equal or exceed the repurchase price. It is
possible that the Fund will be unsuccessful in seeking to enforce the seller's
contractual obligation to deliver additional securities.
LOANS OF PORTFOLIO SECURITIES. The Fund may lend its portfolio securities
subject to the restrictions stated in its Prospectus. Under applicable
regulatory requirements (which are subject to change), the loan collateral must,
on each business day, at least equal the value of the loaned securities. To be
acceptable as collateral, letters of credit must obligate a bank to pay amounts
demanded by the Fund if the demand meets the terms of the letter. Such terms and
the issuing bank must be satisfactory to the Fund. The Fund receives amounts
equal to the dividends or interest on loaned securities and also receives one or
more of (a) negotiated loan fees, (b) interest on securities used as collateral,
or (c) interest on short-term debt securities purchased with such collateral;
either type of interest may be shared with the borrower. The Fund may also pay
fees to placing brokers as well as custodian and administrative fees in
connection with loans. Fees may only be paid to a placing broker provided that
the Trustees determine that the fee paid to the placing broker is reasonable and
based solely upon services rendered, that the Trustees separately consider the
propriety of any fee shared by the placing broker with the borrower, and that
the fees are not used to compensate the Adviser or any affiliated person of the
Trust or an affiliated person of the Adviser or other affiliated person. The
terms of the Fund's loans must meet applicable tests under the Internal Revenue
Code and permit the Fund to reacquire loaned securities on five days' notice or
in time to vote on any important matter.
BANK DEBT INSTRUMENTS. Bank debt instruments in which the Fund may invest
consist of certificates of deposit, bankers' acceptances and time deposits
issued by national banks and state banks, trust companies and mutual savings
banks, or of banks or institutions the accounts of which are insured by the
Federal Deposit Insurance Corporation or the Federal Savings and Loan Insurance
Corporation. Certificates of deposit are negotiable certificates evidencing the
indebtedness of a commercial bank to repay funds deposited with it for a
definite period of time (usually from fourteen days to one year) at a stated or
variable interest rate. Bankers' acceptances are credit instruments evidencing
the obligation of a bank to pay a draft which has been drawn on it by a
customer, which instruments reflect the obligation both of the bank and of the
drawer to pay the face amount of the instrument upon maturity. Time deposits are
non-negotiable deposits maintained in a banking institution for a specified
period of time at a stated interest rate. The Fund will not invest in time
deposits maturing in more than seven days if, as a result thereof, more than 15%
of the value of its net
- 5 -
<PAGE>
assets would be invested in such securities and other illiquid securities.
COMMERCIAL PAPER. Commercial paper consists of short-term (usually from one
to two hundred seventy days) unsecured promissory notes issued by corporations
in order to finance their current operations. The Fund will only invest in
commercial paper rated A-1 by Standard & Poor's Ratings Group ("S&P") or Prime-1
by Moody's Investors Service, Inc. ("Moody's") or unrated paper of issuers who
have outstanding unsecured debt rated AA or better by S&P or Aa or better by
Moody's. Certain notes may have floating or variable rates. The Fund will not
invest in variable and floating rate notes with a demand notice period exceeding
seven days if, as a result thereof, more than 15% of the value of its net assets
would be invested in such securities and other illiquid securities, unless, in
the judgment of the Adviser, subject to the direction of the Board of Trustees,
such note is liquid.
The rating of Prime-1 is the highest commercial paper rating assigned by
Moody's. Among the factors considered by Moody's in assigning ratings are the
following: valuation of the management of the issuer; economic evaluation of the
issuer's industry or industries and an appraisal of speculative-type risks which
may be inherent in certain areas; evaluation of the issuer's products in
relation to competition and customer acceptance; liquidity; amount and quality
of long-term debt; trend of earnings over a period of 10 years; financial
strength of the parent company and the relationships which exist with the
issuer; and recognition by the management of obligations which may be present or
may arise as a result of public interest questions and preparations to meet such
obligations. These factors are all considered in determining whether the
commercial paper is rated Prime-1. Commercial paper rated A-1 (highest quality)
by S&P has the following characteristics: liquidity ratios are adequate to meet
cash requirements; long-term senior debt is rated "A" or better, although in
some cases "BBB" credits may be allowed; the issuer has access to at least two
additional channels of borrowing; basic earnings and cash flow have an upward
trend with allowance made for unusual circumstances; typically, the issuer's
industry is well established and the issuer has a strong position within the
industry; and the reliability and quality of management are unquestioned. The
relative strength or weakness of the above factors determines whether the
issuer's commercial paper is rated A-1.
FOREIGN SECURITIES. Subject to the Fund's investment policies and quality
and maturity standards, the Fund may invest up to 10% of its net assets in the
securities (payable in U.S. dollars) of foreign issuers through the purchase of
American Depository Receipts (certificates of ownership issued by a United
- 6 -
<PAGE>
States bank or trust company as a convenience to investors in lieu of the
underlying shares which such bank or trust company holds in custody) or other
securities of foreign issuers that are publicly traded in the United States.
Because the Fund may invest in foreign securities, an investment in the Fund
involves risks that are different in some respects from an investment in a fund
which invests only in securities of U.S. domestic issuers.
Foreign investments may be affected favorably or unfavorably by changes in
currency rates and exchange control regulations. There may be less publicly
available information about a foreign company than about a U.S. company, and
foreign companies may not be subject to accounting, auditing and financial
reporting standards and requirements comparable to those applicable to U.S.
companies. There may be less governmental supervision of securities markets,
brokers and issuers of securities. Securities of some foreign companies are less
liquid or more volatile than securities of U.S. companies, and foreign brokerage
commissions and custodian fees are generally higher than in the United States.
Settlement practices may include delays and may differ from those customary in
United States markets. Investments in foreign securities may also be subject to
other risks different from those affecting U.S. investments, including local
political or economic developments, expropriation or nationalization of assets,
restrictions on foreign investment and repatriation of capital, imposition of
withholding taxes on dividend or interest payments, currency blockage (which
would prevent cash from being brought back to the United States), and difficulty
in enforcing legal rights outside the United States.
WRITING COVERED CALL OPTIONS. The writing of call options by the Fund is
subject to limitations established by each of the exchanges governing the
maximum number of options which may be written or held by a single investor or
group of investors acting in concert, regardless of whether the options were
written or purchased on the same or different exchanges or are held in one or
more accounts or through one or more different exchanges or through one or more
brokers. Therefore the number of calls the Fund may write (or purchase in
closing transactions) may be affected by options written or held by other
entities, including other clients of the Adviser. An exchange may order the
liquidation of positions found to be in violation of these limits and may impose
certain other sanctions.
WARRANTS AND RIGHTS. Warrants are options to purchase equity securities at
a specified price and are valid for a specific time period. Rights are similar
to warrants, but normally have a short duration and are distributed by the
issuer to its shareholders. The Fund does not presently intend to invest more
than 5% of its net assets at the time of purchase in warrants and rights other
than those that have been acquired in units or attached to other securities.
- 7 -
<PAGE>
QUALITY RATINGS OF CORPORATE BONDS AND PREFERRED STOCKS
- -------------------------------------------------------
The ratings of Moody's Investors Service, Inc. and Standard & Poor's
Ratings Group for corporate bonds and convertible debt in which the Fund may
invest are as follows:
Moody's Investors Service, Inc.
-------------------------------
Aaa - Bonds which are rated Aaa are judged to be of the best quality. They
carry the smallest degree of investment risk and are generally referred to as
"gilt edge." Interest payments are protected by a large or by an exceptionally
stable margin and principal is secure. While the various protective elements are
likely to change, such changes as can be visualized are most unlikely to impair
the fundamentally strong position of such issues.
Aa - Bonds which are rated Aa are judged to be of high quality by all
standards. Together with the Aaa group they comprise what are generally known as
high grade bonds. They are rated lower than the best bonds because margins of
protection may not be as large as in Aaa securities or fluctuation of protective
elements may be of greater amplitude or there may be other elements present
which make the long-term risks appear somewhat larger than in Aaa securities.
A - Bonds which are rated A possess many favorable investment attributes
and are to be considered as upper medium grade obligations. Factors giving
security to principal and interest are considered adequate but elements may be
present which suggest a susceptibility to impairment sometime in the future.
Baa - Bonds which are rated Baa are considered as medium grade obligations,
i.e., they are neither highly protected nor poorly secured. Interest payments
and principal security appear adequate for the present but certain protective
elements may be lacking or may be characteristically unreliable over any great
length of time. Such bonds lack outstanding investment characteristics and in
fact have speculative characteristics as well.
Ba - Bonds which are rated Ba are judged to have speculative elements;
their future cannot be considered as well assured. Often the protection of
interest and principal payments may be very moderate and thereby not well
safeguarded during both good and bad times over the future. Uncertainty of
position characterizes bonds in this class.
B - Bonds which are rated B generally lack characteristics of the desirable
investment. Assurance of interest and principal
- 8 -
<PAGE>
payments or of maintenance of other terms of the contract over any long period
of time may be small.
Standard & Poor's Ratings Group
-------------------------------
AAA - Bonds rated AAA have the highest rating assigned by Standard & Poor's
to a debt obligation. Capacity to pay interest and repay principal is extremely
strong.
AA - Bonds rated AA have a very strong capacity to pay interest and repay
principal and differ from the highest rated issues only in small degree.
A - Bonds rated A have a strong capacity to pay interest and repay
principal although they are somewhat more susceptible to the adverse effects of
changes in circumstances and economic conditions than bonds in higher rated
categories.
BBB - Bonds rated BBB are regarded as having an adequate capacity to pay
interest and repay principal. Whereas they normally exhibit adequate protection
parameters, adverse economic conditions or changing circumstances are more
likely to lead to a weakened capacity to pay interest and repay principal for
bonds in this category than for bonds in higher rated categories.
BB and B - Bonds rated BB or B are regarded, on balance, as predominantly
speculative with respect to capacity to pay interest and repay principal in
accordance with the terms of the obligation. While such bonds will likely have
some quality and protective characteristics, these are outweighed by large
uncertainties or major risk exposures to adverse conditions.
The ratings of Moody's Investors Service, Inc. and Standard & Poor's
Ratings Group for preferred stocks in which the Fund may invest are as follows:
Moody's Investors Service, Inc.
-------------------------------
aaa - An issue which is rated aaa is considered to be a top-quality
preferred stock. This rating indicates good asset protection and the least risk
of dividend impairment within the universe of preferred stocks.
aa - An issue which is rated aa is considered a high-grade preferred stock.
This rating indicates that there is reasonable assurance that earnings and asset
protection will remain relatively well maintained in the foreseeable future.
a - An issue which is rated a is considered to be an upper-medium grade
preferred stock. While risks are judged to be somewhat greater than in the "aaa"
and "aa" classifications,
- 9 -
<PAGE>
earnings and asset protection are, nevertheless, expected to be maintained at
adequate levels.
baa - An issue which is rated baa is considered to be medium grade, neither
highly protected nor poorly secured. Earnings and asset protection appear
adequate at present but may be questionable over any great length of time.
ba - An issue which is rated ba is considered to have speculative elements
and its future cannot be considered well assured. Earnings and asset protection
may be very moderate and not well safeguarded during adverse periods.
Uncertainty of position characterizes preferred stocks in this class.
b - An issue which is rated b generally lacks the characteristics of a
desirable investment. Assurance of dividend payments and maintenance of other
terms of the issue over any long period of time may be small.
Standard & Poor's Ratings Group
-------------------------------
AAA - This is the highest rating that may be assigned by Standard & Poor's
to a preferred stock issue and indicates an extremely strong capacity to pay the
preferred stock obligations.
AA - A preferred stock issue rated AA also qualifies as a high-quality
fixed income security. The capacity to pay preferred stock obligations is very
strong, although not as overwhelming as for issues rated AAA.
A - An issue rated A is backed by a sound capacity to pay the preferred
stock obligations, although it is somewhat more susceptible to the diverse
effects of changes in circumstances and economic conditions.
BBB - An issue rated BBB is regarded as backed by an adequate capacity to
pay the preferred stock obligations. Whereas it normally exhibits adequate
protection parameters, adverse economic conditions or changing circumstances are
more likely to lead to a weakened capacity to make payments for a preferred
stock in this category than for issues in the A category.
BB and B - Preferred stock rated BB and B are regarded, on balance, as
predominately speculative with respect to the issuer's capacity to pay preferred
stock obligations. While such issues will likely have some quality and
protective characteristics, these are outweighed by large uncertainties or major
risk exposures to adverse conditions.
- 10 -
<PAGE>
INVESTMENT LIMITATIONS
- ----------------------
The Trust has adopted certain fundamental investment limitations designed
to reduce the risk of an investment in the Fund. These limitations may not be
changed without the affirmative vote of a majority of the outstanding shares of
the Fund.
Under these fundamental limitations, the Fund MAY NOT:
(1) Issue senior securities, pledge its assets or borrow money, except that it
may borrow from banks as a temporary measure (a) for extraordinary or
emergency purposes, in amounts not exceeding 5% of the Fund's total assets,
or (b) in order to meet redemption requests that might otherwise require
untimely disposition of portfolio securities if, immediately after such
borrowing, the value of the Fund's assets, including all borrowings then
outstanding, less its liabilities (excluding all borrowings), is equal to
at least 300% of the aggregate amount of borrowings then outstanding, and
may pledge its assets to secure all such borrowings;
(2) Underwrite securities issued by others except to the extent the Fund may be
deemed to be an underwriter under the federal securities laws in connection
with the disposition of portfolio securities;
(3) Purchase securities on margin (but the Fund may obtain such short-term
credits as may be necessary for the clearance of transactions);
(4) Make short sales of securities or maintain a short position, or write,
purchase or sell puts, calls or combinations thereof, except as stated in
the Prospectus and this Statement of Additional Information or except short
sales "against the box";
(5) Make loans of money or securities, except that the Fund may (i) invest in
repurchase agreements and commercial paper; (ii) purchase a portion of an
issue of publicity distributed bonds, debentures or other debt securities;
and (iii) acquire private issues of debt securities subject to the
limitations on investments in illiquid securities;
(6) Write, purchase or sell commodities, commodities contracts, futures
contracts or related options (except that the Fund may write covered call
options as described in the Prospectus and Statement of Additional
Information);
(7) Invest more than 25% of its total assets in the securities of issuers in
any particular industry (other than securities
- 11 -
<PAGE>
of the United States Government, its agencies or instrumentalities);
(8) Invest for the purpose of exercising control or management of another
issuer;
(9) Invest in interests in oil, gas or other mineral exploration or development
programs, except that the Fund may invest in the securities of companies
(other than those which are not readily marketable) which own or deal in
such things;
(10) Purchase or sell interests in real estate or real estate limited
partnerships (although it may invest in real estate investment trusts and
purchase securities secured by real estate or interests therein, or issued
by companies or investment trusts which invest in real estate or interests
therein);
(11) Invest more than 15% of its net assets in illiquid securities;
(12) Purchase the securities of any issuer if such purchase at the time thereof
would cause less than 75% of the value of the total assets of the Fund to
be invested in cash and cash items (including receivables), securities
issued by the U.S. Government, its agencies or instrumentalities,
securities of other investment companies, and other securities for the
purposes of this calculation limited in respect of any one issuer to an
amount not greater in value than 5% of the value of the total assets of the
Fund and to not more than 10% of the outstanding voting securities of such
issuer; or
(13) Invest in securities of other investment companies, other than to the
extent permitted by Section 12(d) of the Investment Company Act of 1940.
With respect to the percentages adopted by the Trust as maximum limitations
on the Fund's investment policies and restrictions, an excess above the fixed
percentage (except for the percentage limitations relative to the borrowing of
money and the holding of illiquid securities) will not be a violation of the
policy or restriction unless the excess results immediately and directly from
the acquisition of any security or the action taken.
The Trust does not intend to pledge, mortgage or hypothecate the assets of
the Fund. The Fund does not intend to make short sales of securities "against
the box" in the coming year as described in investment limitation 4. The
statements of intention in this paragraph reflect nonfundamental policies which
may be changed by the Board of Trustees without shareholder approval.
- 12 -
<PAGE>
TRUSTEES AND OFFICERS
- ---------------------
The following is a list of the Trustees and executive officers of the
Trust. Each Trustee who is an "interested person" of the Trust, as defined by
the 1940 Act, is indicated by an asterisk.
Estimated Annual
Compensation
Name Age Position Held From the Trust
- ---- --- ------------- --------------
*James W. McGlothlin 57 Chairman $ 0
and Trustee
*Lois A. Clarke 53 President 0
and Trustee
*Robert J. Bartel 66 Vice President 0
and Trustee
+A. A. Modena 69 Trustee 5,000
+Robert H. Spilman 70 Trustee 5,000
+Charles W. Sydnor, Jr. 54 Trustee 5,000
+Timothy J. Sullivan 54 Trustee 5,000
Robert G. Dorsey 41 Vice President 0
Mark J. Seger 35 Treasurer 0
Cassandra M. Wambaugh 27 Secretary 0
* Professor Bartel, Ms. Clarke and Mr. McGlothlin are affiliated persons of the
Adviser, and therefore an "interested persons" of the Trust within the
meaning of Section 2(a)(19) of the 1940 Act.
+ Member of Audit Committee.
The principal occupations of the Trustees and executive officers of the
Trust during the past five years are set forth below:
JAMES W. MCGLOTHLIN, P.O. Box 1280, 1005 Glenway Avenue, Bristol, Virginia,
is the Chairman, Chief Executive Officer and a controlling shareholder of The
United Company and its subsidiaries. The United Company is a Virginia-based
conglomerate active in the oil and gas, real estate, financial services, golf
and mining supply industries, and the parent of the Adviser. Mr. McGlothlin
serves as a Director of Basset Furniture Company (whose principal business is
the manufacture and sale of furniture), CSX Corporation (a railroad company) and
Star Oil and Gas Company Ltd. Mr. McGlothlin is also an advisory director for
PGA Tour Golf Properties (which owns and runs golf courses) and a member of the
Virginia Bar Associations.
LOIS A. CLARKE, P.O. Box 1280, 1005 Glenway Avenue, Bristol, Virginia, is
President and a Trustee of the Trust. She is the President and a Director of
United Investment Corporation, the
- 13 -
<PAGE>
investment adviser to the Trust ("the Adviser"). Ms. Clarke serves as Assistant
Treasurer, Executive Vice President and Chief Financial Officer of The United
Company. Ms. Clarke also serves on the Board of Advisors for the First American
Bank and AmeriStar Investments (a division of First American Bank). She is also
on the Board of Directors for King Pharmaceutical, Inc. (a local pharmaceutical
company of which The United Company is a shareholder).
ROBERT J. BARTEL, P.O. Box 1280, 1005 Glenway Avenue, Bristol, Virginia, is
a Director of the Adviser. Professor Bartel is also Senior Financial Advisor to
The United Company and Maclellan Professor of Economics and Business at King
College in Bristol, Tennessee. Professor Bartel is the director of the
International Business Institute (an overseas academic program in global
business and management during the summer semester). He was appointed to the
board of Charter Federal Savings Bank in Bristol, Virginia in 1990 and named
Chairman of that Bank in 1991. He served as Chairman until it merged with First
American Bank. Professor Bartel is now a Director of First American Federal
Savings Bank of Roanoke, Virginia.
A. A. MODENA, 4 Windsor Circle Drive, Bluefield, Virginia, is a Director of
First Community Bancshares, Inc. (a bank holding company), First Community Bank
of Mercer County, Inc. and First Community Bank, Inc. Mr. Modena is a member of
the Virginia State Bar. He previously served as the Executive Vice President of
First Community Bancshares, Inc. and the President and Chief Executive Officer
of The Flat Top National Bank of Bluefield, West Virginia.
ROBERT H. SPILMAN, P.O. Box 880, Bassett, Virginia, is a Director of
Virginia Electric Power Company, Dominion Resources and Dominion Power (all
energy companies). He also serves as Chairman and Director of Jefferson Pilot
Financial (an insurance company) and International Home Furnishing Center
Showroom. He was previously a Director for NationsBank and Aeroquip-Vickers (a
fluid power company).
TIMOTHY J. SULLIVAN, Office of the President, College of William & Mary,
Williamsburg, Virginia is the President of the College of William & Mary. He is
also a member of the Virginia State Bar and the Ohio State Bar and a Fellow of
the Virginia Bar Foundation and the American Bar Foundation.
CHARLES W. SYDNOR, JR., PH.D., 23 Sesame Street, Richmond, Virginia, is
President and Chief Executive Officer of Central Virginia Educational
Telecommunications Corporation (a public broadcast entity comprised of five
public television stations). He is also the Chairman, a Director and member of
the National Board of Advisors of the National Smoker's Alliance (an
organization for lobbying and local advocacy of smoker's rights). Dr. Sydnor is
a former President of Emory and Henry College.
- 14 -
<PAGE>
ROBERT G. DORSEY, 312 Walnut Street, Cincinnati, Ohio, is President and
Treasurer of Countrywide Fund Services, Inc. (a registered transfer agent);
President of CW Fund Distributors, Inc. (a registered broker-dealer and
principal underwriter of the Trust); and Treasurer of Countrywide Investments,
Inc. (a registered broker-dealer and investment adviser) and Countrywide
Financial Services, Inc. (a financial services company and parent of Countrywide
Fund Services, Inc., Countrywide Investments, Inc. and CW Fund Distributors,
Inc. and a wholly-owned subsidiary of Countrywide Credit Industries, Inc.). He
is also Vice President of Atalanta/Sosnoff Investment Trust, Brundage, Story and
Rose Investment Trust, Markman MultiFund Trust, Dean Family of Funds, The New
York State Opportunity Funds, Lake Shore Family of Funds, Maplewood Investment
Trust and Wells Family of Real Estate Funds and Assistant Vice President of
Firsthand Funds, Schwartz Investment Trust, The James Advantage Funds, The
Tuscarora Investment Trust, Williamsburg Investment Trust, The Gannett Welsh &
Kotler Funds and The Westport Funds (all of which are registered investment
companies).
MARK J. SEGER, C.P.A., 312 Walnut Street, Cincinnati, Ohio, is Vice
President of Countrywide Financial Services, Inc., Countrywide Fund Services,
Inc. and CW Fund Distributors, Inc. He is also Treasurer of Countrywide
Investment Trust, Countrywide Tax-Free Trust, Countrywide Strategic Trust,
Atalanta/Sosnoff Investment Trust, Brundage, Story and Rose Investment Trust,
Markman MultiFund Trust, Williamsburg Investment Trust, Dean Family of Funds,
The New York State Opportunity Funds, Lake Shore Family of Funds, Maplewood
Investment Trust and Wells Family of Real Estate Funds and Assistant Treasurer
of Firsthand Funds, Schwartz Investment Trust, The James Advantage Funds, The
Tuscarora Investment Trust, The Gannett Welsh & Kotler Funds and The Westport
Funds.
CASSANDRA M. WAMBAUGH, 312 Walnut Street, Cincinnati, Ohio, is Counsel of
Countrywide Fund Services, Inc. She is also Assistant Secretary of
Atalanta/Sosnoff Investment Trust, Profit Funds Investment Trust, Lake Shore
Family of Funds and The Westport Funds. Previously, Ms. Wambaugh worked for
Sheakley Uniservice, Inc. (representing employers in workers' compensation
hearings) between February, 1996 and August, 1997 and as an associate at the
general practice law firm of Bartlett & Weigle Co., L.P.A. from May, 1995 to
February, 1996. Prior to May, 1995, Ms. Wambaugh was a full-time student at the
University of Cincinnati College of Law.
Each non-interested Trustee will receive an annual retainer of $1,000 and a
$1,000 fee for each Board meeting attended and will be reimbursed for travel and
other expenses incurred in the performance of their duties.
- 15 -
<PAGE>
THE INVESTMENT ADVISER
- ----------------------
United Investment Corporation (the "Adviser") is the Fund's investment
adviser and a registered investment adviser under the Investment Advisers Act of
1940. The Adviser is a wholly-owned subsidiary of The United Company, a
Virginia-based conglomerate active in the oil and gas, real estate, financial
services, golf and mining supply industries, among others. Professor Bartel, Ms.
Clarke and Mr. McGlothlin are affiliated with the Adviser and by reason of such
affiliation, may directly or indirectly receive benefits from the advisory fees
paid to the Adviser.
Under the terms of the advisory agreement between the Trust and the
Adviser, the Adviser manages the Fund's investments. The Fund pays the Adviser a
fee computed and accrued daily and paid monthly at an annual rate of 1.00% of
its average daily net assets.
The Fund is responsible for the payment of all expenses incurred in
connection with the organization, registration of shares and operations of the
Fund, including such extraordinary or non-recurring expenses as may arise, such
as litigation to which the Fund may be a party. The Fund may have an obligation
to indemnify the Trust's officers and Trustees with respect to such litigation,
except in instances of willful misfeasance, bad faith, gross negligence or
reckless disregard by such officers and Trustees in the performance of their
duties. The Adviser bears promotional expenses in connection with the
distribution of the Fund's shares to the extent that such expenses are not
assumed by the Fund under its plan of distribution (see below). The compensation
and expenses of any officer, Trustee or employee of the Trust who is an officer,
director, employee or stockholder of the Adviser are paid by the Adviser.
By its terms, the Trust's advisory agreement will remain in force until
June 16, 2000 and from year to year thereafter, subject to annual approval by
(a) the Board of Trustees or (b) a vote of the majority of the Fund's
outstanding voting securities; provided that in either event continuance is also
approved by a majority of the Trustees who are not interested persons of the
Trust, by a vote cast in person at a meeting called for the purpose of voting
such approval. The Trust's advisory agreement may be terminated at any time, on
sixty days' written notice, without the payment of any penalty, by the Board of
Trustees, by a vote of the majority of the Fund's outstanding voting securities,
or by the Adviser. The advisory agreement automatically terminates in the event
of its assignment, as defined by the 1940 Act and the rules thereunder.
- 16 -
<PAGE>
THE DISTRIBUTOR
- ---------------
CW Fund Distributors, Inc. (the "Distributor") is the Trust's principal
underwriter and, as such, is the exclusive agent for distribution of Fund's
shares of the Fund. The Distributor is obligated to sell the Fund's shares 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.
The Fund may compensate dealers, including the Distributor and its
affiliates, based on the average balance of all accounts in the Fund for which
the dealer is designated as the party responsible for the account. See
"Distribution Plan" below.
DISTRIBUTION PLAN
- -----------------
The Fund has adopted a plan of distribution pursuant to Rule 12b-1 under
the Investment Company Act of 1940 (the "Plan"), which permits the Fund to pay
for expenses incurred in the distribution and promotion of the Fund's shares
including but not limited to, the printing of prospectuses, statements of
additional information and reports used for sales purposes, advertisements,
expenses of preparation and printing of sales literature, promotion, marketing
and sales expenses and other distribution-related expenses, including any
distribution fees paid to securities dealers or other firms who have executed a
distribution or service agreement ("Implementation Agreement") with the
Distributor. The Plan expressly limits payment of the distribution expenses
listed above in any fiscal year to a maximum of .25% of the Fund's average daily
net assets. Unreimbursed expenses will not be carried over from year to year.
Agreements implementing the Plan (the "Implementation Agreements"),
including agreements with dealers wherein such dealers agree for a fee to act as
agents for the sale of the Fund's shares, are in writing and have been approved
by the Board of Trustees. All payments made pursuant to the Plan are made in
accordance with written agreements.
The continuance of the Plan and Implementation Agreements must be
specifically approved at least annually by a vote of the Trust's Board of
Trustees and by a vote of the Trustees who are not "interested persons" of the
Trust and have no direct or indirect financial interest in the Plan (the
"Independent Trustees") at a meeting called for the purpose of voting on such
continuance. The Plan may be terminated at any time by a vote of a majority of
the Independent Trustees or by a vote of the holders of a majority of the
outstanding shares of the Fund. In the event the Plan is terminated in
accordance with its terms, the Fund will not be required to make any payments
for expenses
- 17 -
<PAGE>
incurred by the Adviser or Distributor after the termination date. The Plan may
not be amended to increase materially the amount to be spent for distribution
without shareholder approval. All material amendments to the Plan must be
approved by a vote of the Trust's Board of Trustees and by a vote of those
Trustees who are not interested persons of the Trust.
In approving the Plan, the Trustees determined, in the exercise of their
business judgment and in light of their fiduciary duties as Trustees, that there
is a reasonable likelihood that the Plan will benefit the Fund and its
shareholders. The Board of Trustees believes that expenditure of the Fund's
assets for distribution expenses under the Plan should assist in the growth of
the Fund, which will benefit the Fund and its shareholders through increased
economies of scale, greater investment flexibility, greater portfolio
diversification and less chance of disruption of planned investment strategies.
The Plan will be renewed only if the Trustees make a similar determination for
each subsequent year of the Plan. There can be no assurance that the benefits
anticipated from the expenditure of the Fund's assets for distribution will be
realized. While the Plan is in effect, all amounts spent by the Fund pursuant to
the Plan and the purposes for which such expenditures were made must be reported
quarterly to the Board of Trustees for its review. In addition, the selection
and nomination of those Trustees who are not "interested persons" of the Trust
are committed to their discretion during such period.
SECURITIES TRANSACTIONS
- -----------------------
Decisions to buy and sell securities for the Fund and the placing of the
Fund's securities transactions and negotiation of commission rates where
applicable are made by the Adviser and are subject to review by the Board of
Trustees of the Trust. In the purchase and sale of portfolio securities, the
Adviser seeks best 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.
Generally, the Fund attempts to deal directly with the dealers who make a
market in the securities involved unless better prices and execution are
available elsewhere. Such dealers usually act as principals for their own
account. On occasion, portfolio securities for the Fund may be purchased
directly from the issuer. Principal securities transactions are generally traded
on a net basis and these transactions do not normally involve brokerage
commissions. When securities are traded on a net basis (without commission)
through broker-dealers and banks acting for their own account, such firms
attempt to profit from buying at the bid price and selling at the higher
- 18 -
<PAGE>
asked price of the market, the difference being referred to as the spread. The
cost of principal transactions by the Fund will include dealer or underwriter
spreads.
The Adviser is specifically authorized to select brokers who also provide
brokerage and research services to the Fund and/or other accounts over which the
Adviser exercises investment discretion and to pay such brokers a commission in
excess of the commission another broker 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 Fund and to accounts over which it exercises investment
discretion.
Research services include securities and economic analyses, reports on
issuers' financial conditions and future business prospects, newsletters and
opinions relating to interest trends, general advice on the relative merits of
possible investment securities for the Fund and statistical services and
information with respect to the availability of securities or purchasers or
sellers of securities. Although this information is useful to the Fund and the
Adviser, it is not possible to place a dollar value on it. Research services
furnished by brokers through whom the Fund effects securities transactions may
be used by the Adviser in servicing all of its accounts and not all such
services may be used by the Adviser in connection with the Fund.
The Fund has no obligation to deal with any broker or dealer in the
execution of securities transactions. However, the Adviser and other affiliates
of the Trust may effect securities transactions which are executed on a national
securities exchange or transactions in the over-the-counter market conducted on
an agency basis. The Fund will not effect any brokerage transactions in its
portfolio securities with the Adviser if such transactions would be unfair or
unreasonable to its shareholders. Over-the-counter transactions will be placed
either directly with principal market makers or with broker-dealers. Although
the Fund does not anticipate any ongoing arrangements with other brokerage
firms, brokerage business may be transacted from time to time with other firms.
Neither the Adviser, nor affiliates of the Trust, the Distributor or the
Adviser, will receive reciprocal brokerage business as a result of the brokerage
business transacted by the Fund with other brokers.
CODE OF ETHICS. The Trust, the Adviser and the Distributor have each
adopted a Code of Ethics under Rule 17j-1 of the Investment Company Act of 1940.
The Code significantly restricts the personal investing activities of all
employees of the Adviser and the Distributor and, as described below, imposes
additional,
- 19 -
<PAGE>
more onerous, restrictions on investment personnel of the Adviser. The Code
requires that all employees of the Adviser and Distributor preclear any personal
securities investment (with limited exceptions, such as U.S. Government
obligations). The preclearance requirement and associated procedures are
designed to identify any substantive prohibition or limitation applicable to the
proposed investment. In addition, no employee may purchase or sell any security
which at the time is being purchased or sold (as the case may be), or to the
knowledge of the employee is being considered for purchase or sale, by the Fund.
The substantive restrictions applicable to investment personnel of the Adviser
include a ban on acquiring any securities in an initial public offering and a
prohibition from profiting on short-term trading in securities. Furthermore, the
Code provides for trading "blackout periods" which prohibit trading by
investment personnel of the Adviser within periods of trading by the Fund in the
same (or equivalent) security.
PORTFOLIO TURNOVER
- ------------------
The Fund's portfolio turnover rate is calculated by dividing the lesser of
purchases or sales of portfolio securities for the fiscal year by the monthly
average of the value of the portfolio securities owned by the Fund during the
fiscal year. High portfolio turnover (100% or more) involves correspondingly
greater brokerage commissions and other transaction costs, which will be borne
directly by the Fund. The Adviser anticipates that the Fund's portfolio turnover
rate normally will not exceed 200%. A 100% turnover rate would occur if all of
the Fund's portfolio securities were replaced once within a one year period.
Generally, the Fund intends to invest for long-term purposes. However, the
rate of portfolio turnover will depend upon market and other conditions, and it
will not be a limiting factor when the Adviser believes that portfolio changes
are appropriate.
CALCULATION OF SHARE PRICE
- --------------------------
The share price (net asset value) of the shares of the Fund is determined
as of the close of the regular session of trading on the New York Stock Exchange
(currently 4:00 p.m., Eastern time), on each day the Trust is open for business.
The Trust is open for business on every day except Saturdays, Sundays and the
following holidays: New Year's Day, Martin Luther King, Jr. Day, President's
Day, Good Friday, Memorial Day, Independence Day, Labor Day, Thanksgiving Day
and Christmas Day. The Trust may also be open for business on other days in
which there is sufficient trading in the Fund's portfolio securities that its
net asset value might be materially affected. For a description of the methods
used to determine the share price, see "Calculation of Share Price" in the
Prospectus.
- 20 -
<PAGE>
TAXES
- -----
The Prospectus describes generally the tax treatment of distributions by
the Fund. This section of the Statement of Additional Information includes
additional information concerning federal taxes.
The Fund intends to qualify for the special tax treatment afforded a
"regulated investment company" under Subchapter M of the Internal Revenue Code
so that it does not pay federal taxes on income and capital gains distributed to
shareholders. To so qualify the Fund must, among other things, (i) derive at
least 90% of its gross income in each taxable year from dividends, interest,
payments with respect to securities loans, gains from the sale or other
disposition of stock, securities or foreign currency, or certain other income
(including but not limited to gains from options, futures and forward contracts)
derived with respect to its business of investing in stock, securities or
currencies; and (ii) diversify its holdings so that at the end of each quarter
of its taxable year the following two conditions are met: (a) at least 50% of
the value of the Fund's total assets is represented by cash, U.S. Government
securities, securities of other regulated investment companies and other
securities (for this purpose such other securities will qualify only if the
Fund's investment is limited in respect to any issuer to an amount not greater
than 5% of the Fund's assets and 10% of the outstanding voting securities of
such issuer) and (b) not more than 25% of the value of the Fund's assets is
invested in securities of any one issuer (other than U.S. Government securities
or securities of other regulated investment companies).
The Fund's net realized capital gains from securities transactions will be
distributed only after reducing such gains by the amount of any available
capital loss carryforwards. Capital losses may be carried forward to offset any
capital gains for eight years, after which any undeducted capital loss remaining
is lost as a deduction.
A federal excise tax at the rate of 4% will be imposed on the excess, if
any, of the Fund's "required distribution" over actual distributions in any
calendar year. Generally, the "required distribution" is 98% of the Fund's
ordinary income for the calendar year plus 98% of its net capital gains
recognized during the one year period ending on October 31 of the calendar year
plus undistributed amounts from prior years. The Fund intends to make
distributions sufficient to avoid imposition of the excise tax.
- 21 -
<PAGE>
The Trust is required to withhold and remit to the U.S. Treasury a portion
(31%) of dividend income on any account unless the shareholder provides a
taxpayer identification number and certifies that such number is correct and
that the shareholder is not subject to backup withholding.
REDEMPTION IN KIND
- ------------------
Under unusual circumstances, when the Board of Trustees deems it in the
best interests of the Fund's shareholders, the Fund may make payment for shares
repurchased or redeemed in whole or in part in securities of the Fund taken at
current value. If any such redemption in kind is to be made, the Fund intends to
make an election pursuant to Rule 18f-1 under the 1940 Act. This election will
require the Fund to redeem shares solely in cash up to the lesser of $250,000 or
1% of the net asset value of the Fund during any ninety day period for any one
shareholder. Should payment be made in securities, the redeeming shareholder
will generally incur brokerage costs in converting such securities to cash.
Portfolio securities which are issued in an in-kind redemption will be readily
marketable.
HISTORICAL PERFORMANCE INFORMATION
- ----------------------------------
From time to time, the Fund may advertise average annual total return.
Average annual total return quotations will be computed by finding the average
annual compounded rates of return over 1, 5 and 10 year periods that would
equate the initial amount invested to the ending redeemable value, according to
the following formula:
n
P (1 + T) = ERV
Where:
P = a hypothetical initial payment of $1,000
T = average annual total return
n = number of years
ERV = ending redeemable value of a hypothetical $1,000 payment made at the
beginning of the 1, 5 and 10 year periods at the end of the 1, 5 or 10
year periods (or fractional portion thereof)
The calculation of average annual total return assumes the reinvestment of
all dividends and distributions. If the Fund has been in existence less than
one, five or ten years, the time period since the date of the initial public
offering of shares will be substituted for the periods stated. The Fund may also
advertise total return (a "nonstandardized quotation") which is calculated
differently from average annual total return. A nonstandardized quotation of
total return may be a cumulative return which measures the percentage change in
the value of an account between the beginning and end of a period, assuming no
- 22 -
<PAGE>
activity in the account other than reinvestment of dividends and capital gains
distributions. A nonstandardized quotation may also indicate average annual
compounded rates of return over periods other than those specified for average
annual total return. A nonstandardized quotation of total return will always be
accompanied by the Fund's average annual total return as described above.
To help investors better evaluate how an investment in the Fund might
satisfy their investment objective, advertisements regarding the Fund may
discuss various measures of Fund performance, including current performance
ratings and/or rankings appearing in financial magazines, newspapers and
publications which track mutual fund performance. Advertisements may also
compare performance (using the calculation methods set forth in the Prospectus)
to performance as reported by other investments, indices and averages. When
advertising current ratings or rankings, the Fund may use the following
publications or indices to discuss or compare Fund performance:
Lipper Mutual Fund Performance Analysis ("Lipper") measures total return
and average current yield for the mutual fund industry and ranks individual
mutual fund performance over specified time periods assuming reinvestment of all
distributions, exclusive of sales loads. Morningstar, Inc. ("Morningstar") is an
independent rating service that publishes bi-weekly Mutual Fund Values. Mutual
Fund Values rates more than 1,000 NASDAQ-listed mutual funds of all types,
according to their risk-adjusted returns. The maximum rating is five stars, and
ratings are effective for two weeks. The Fund may provide comparative
performance information as published in Lipper and Morningstar. In addition, the
Fund may use comparative performance information of relevant indices, including
the S&P 500 Index and the Dow Jones Industrial Average. The S&P 500 Index is an
unmanaged index of 500 stocks, the purpose of which is to portray the pattern of
common stock price movement. The Dow Jones Industrial Average is a measurement
of general market price movement for 30 widely held stocks listed on the New
York Stock Exchange.
In assessing such comparisons of performance an investor should keep in
mind that the composition of the investments in the reported indices and
averages is not identical to the Fund's portfolio, that the averages are
generally unmanaged and that the items included in the calculations of such
averages may not be identical to the formula used by the Fund to calculate its
performance. In addition, there can be no assurance that the Fund will continue
this performance as compared to such other averages.
- 23 -
<PAGE>
CUSTODIAN
- ---------
The Fifth Third Bank, 38 Fountain Square Plaza, Cincinnati, Ohio 45263, has
been retained to act as Custodian for the Fund's investments. Fifth Third Bank
acts as the fund's depository, safekeeps its portfolio securities, collects all
income and other payments with respect thereto, disburses funds as instructed
and maintains records in connection with its duties.
AUDITORS
- --------
The firm of Price Waterhouse LLP has been selected as independent
accountants for the Fund for the fiscal year ending May 31, 1999. Price
Waterhouse LLP, 2200 Chemed Center, 255 East Fifth Street, Cincinnati, Ohio
45202-4798, performs an annual audit of the Trust's financial statements and
advises the Fund as to certain accounting matters.
COUNTRYWIDE FUND SERVICES, INC.
- -------------------------------
The Trust has retained Countrywide Fund Services, Inc. (the "Transfer
Agent") to act as its transfer agent. The Transfer Agent is an indirect
wholly-owned subsidiary of Countrywide Credit Industries, Inc., a New York Stock
Exchange listed company principally engaged in the business of residential
mortgage lending. The Transfer Agent 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 shareholder service functions.
The Transfer Agent receives from the Fund for its services as transfer agent a
fee payable monthly at an annual rate of $20 per account, provided, however,
that the minimum fee is $1,500 per month. In addition, the Fund pays
out-of-pocket expenses, including but not limited to, postage, envelopes,
checks, drafts, forms, reports, record storage and communication lines.
The Transfer Agent also provides accounting and pricing services to the
Fund. For calculating daily net asset value per share and maintaining such books
and records as are necessary to enable the Transfer Agent to perform its duties,
the Fund pays the Transfer Agent a fee in accordance with the following
schedule:
Average Monthly Net Assets Monthly Fee
-------------------------- -----------
$ 0 - $ 50,000,000 $2,000
$ 50,000,000 - 100,000,000 $2,500
$100,000,000 - 200,000,000 $3,000
$200,000,000 - 300,000,000 $4,000
Over - 300,000,000 $5,000 + .001%
of average net assets
over $300,000,000.
- 24 -
<PAGE>
In addition, the Fund pays all costs of external pricing services.
The Transfer Agent also provides administrative services to the Fund. In
this capacity, the Transfer Agent supplies non-investment related statistical
and research data, internal regulatory compliance services and executive and
administrative services. The Transfer Agent supervises the preparation of tax
returns, reports to shareholders of the Fund, reports to and filings with the
Securities and Exchange Commission and state securities commissions, and
materials for meetings of the Board of Trustees. For the performance of these
administrative services, the Fund pays the Transfer Agent a fee at the annual
rate of .15% of the average value of its daily net assets up to $25,000,000,
.125% of such assets from $25,000,000 to $50,000,000 and .10% of such assets in
excess of $50,000,000, provided, however, that the minimum fee is $1,000 per
month.
STATEMENT OF ASSETS AND LIABILITIES
- -----------------------------------
The Fund's Statement of Assets and Liabilities as of May 21, 1998, which
has been audited by Price Waterhouse LLP, is attached to this Statement of
Additional Information.
ADDITIONAL INFORMATION
- ----------------------
The Prospectus and this Statement of Additional Information do not contain
all the information set forth in the Registration Statement and the exhibits
relating thereto, filed with the Securities and Exchange Commission, Washington,
D.C., under the Securities Act of 1933 and the Investment Company Act of 1940,
to which reference is made hereby.
The annual report of the Fund will be available free of charge upon
request.
- 25 -
<PAGE>
UC INVESTMENT TRUST
-------------------
UC INVESTMENT FUND
------------------
STATEMENT OF ASSETS AND LIABILITIES
-----------------------------------
AS OF
-----
MAY 21, 1998
------------
TOGETHER WITH
-------------
AUDITORS' REPORT
----------------
<PAGE>
2200 Chemed Center Telephone 513 621 1900
255 East Fifth Street Facsimile 513 723 4777
Cincinnati, OH 45202-4798
Price Waterhouse
May 21, 1998
REPORT OF INDEPENDENT ACCOUNTANTS
---------------------------------
To the Board of Trustees and Shareholder of the UC Investment Fund of the UC
Investment Trust
In our opinion, the accompanying statement of assets and liabilities presents
fairly, in all material respects, the financial position of the UC Investment
Fund of the UC Investment Trust at May 21, 1998 in conformity with generally
accepted accounting principles. This financial statement is the responsibility
of the Trust's management; our responsibility is to express an opinion on this
financial statement based on our audit. We conducted our audit of this statement
in accordance with generally accepted auditing standards which require that we
plan and perform the audit to obtain reasonable assurance about whether the
financial statement is free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statement, assessing the accounting principles used and
significant estimates made by management, and evaluating the overall financial
statement presentation. We believe that our audit provides a reasonable basis
for the opinion expressed above.
/s/ Price Waterhouse LLP
<PAGE>
UC INVESTMENT TRUST
UC INVESTMENT FUND
Statement of Assets and Liabilities
May 21, 1998
- --------------------------------------------------------------------------------
ASSETS
Cash $ 100,000
Organization costs (Note 2) 73,000
------------
TOTAL ASSETS 173,000
------------
LIABILITIES
Accrued expenses (Note 2) 73,000
------------
TOTAL LIABILITIES 73,000
------------
NET ASSETS FOR SHARES OF BENEFICIAL
INTEREST OUTSTANDING $ 100,000
============
SHARES OUTSTANDING 10,000
============
NET ASSET VALUE, OFFERING PRICE AND REDEMPTION PRICE
PER SHARE $ 10.00
============
The accompanying notes are an integral part of this statement.
<PAGE>
UC INVESTMENT TRUST
-------------------
UC INVESTMENT FUND
------------------
NOTES TO STATEMENT OF ASSETS AND LIABILITIES
--------------------------------------------
AS OF MAY 21, 1998
------------------
(1) The UC INVESTMENT FUND (the Fund) is a diversified series of the UC
INVESTMENT TRUST (the Trust), an open-end management investment company
established as a Ohio business trust under a Declaration of Trust dated
February 27, 1998. On May 21, 1998, 10,000 shares of the Fund were issued
for cash at $10.00 per share. The Fund has had no operations except for the
initial issuance of shares.
(2) Expenses incurred in connection with the organization of the Fund and the
initial offering of shares are estimated to be $73,000. These expenses have
been or will be paid by United Investment Corporation (the Adviser). Upon
commencement of the public offering of shares of the Fund, the Fund will
reimburse the Adviser for such expenses, with that amount being capitalized
and amortized on a straight-line basis over five years. As of May 21, 1998,
all outstanding shares of the Fund were held by the Adviser, who purchased
these initial shares in order to provide the Trust with its required
capital. In the event the initial shares of the Fund are redeemed by any
holder thereof at any time prior to the complete amortization of
organizational expenses, the redemption proceeds payable with respect to
such shares will be reduced by the pro rata share (based upon the portion
of the shares redeemed in relation to the required capitalization) of the
unamortized deferred organizational expenses as of the date of such
redemption.
(3) Reference is made to the Prospectus and the Statement of Additional
Information for a description of the Advisory Agreement, the Underwriting
Agreement, the Administration Agreement, tax aspects of the Funds and the
calculation of the net asset value of shares of the Fund.
