SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
FORM N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 / /
Pre-Effective Amendment No. / /
Post-Effective Amendment No. 11 /X/
and/or
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT / /
OF 1940
Amendment No. 13 /X/
(Check appropriate box or boxes.)
The Unified Funds - File Nos. 33-89078 and 811-8968
- ---------------------------------------------------
(Exact Name of Registrant as Specified in Charter
431 North Pennsylvania Street, Indianapolis, Indiana 46204
- ------------------------------------------------------------------
(Address of Principal Executive Offices) (Zip Code)
Registrant's Telephone Number, including Area Code: (800) 862-7283
--------------
Timothy L. Ashburn, Unified Investment Advisers, Inc., 431 North
Pennsylvania Street, Indianapolis, Indiana 46204
- --------------------------------------------------
(Name and Address of Agent for Service)
With copy to:
Donald S. Mendelsohn, Brown, Cummins & Brown Co., L.P.A.
3500 Carew Tower, Cincinnati, Ohio 45202
Approximate date of proposed public offering: February 13, 1999
It is proposed that this filing will become effective:
/ / immediately upon filing pursuant to paragraph (b) / / on
______________pursuant to paragraph (b) / / 60 days after filing pursuant to
paragraph (a)(1) / / on (date) pursuant to paragraph (a)(1) /x/ 75 days after
filing pursuant to paragraph (a)(2) / / on (date) pursuant to paragraph (a)(2)
of Rule 485.
If appropriate, check the following box:
/ / this post-effective amendment designates a new effective date for a
previously filed post-effective amendment.
<PAGE>
CROSS-REFERENCE SHEET
Explanatory Note: The Registrant is a "series" company. This Registration
Statement relates to all four series of the Registrant's shares: Starwood
Strategic Fund, Laidlaw Fund (formerly Fiduciary Value Fund), First Lexington
Balanced Fund (formerly Municipal Fixed Income Fund), and Taxable Money Market
Fund. All of the Funds' shares are offered pursuant to a combined Prospectus
(the "Combined Prospectus") and a combined Statement of Additional Information.
In addition, the shares of The Taxable Money Market Fund are offered pursuant to
a separate Prospectus for that Fund only (the "Money Market Fund Prospectus").
Both the Combined Prospectus and the Money Market Fund Prospectus are included
in Part A of this Post-Effective Amendment. The Prospectus headings below refer
to the headings in the Combined Prospectus; the Prospectus headings in the Money
Market Fund Prospectus are substantially identical.
PART A. INFORMATION REQUIRED IN THE PROSPECTUS.
Item in Form N-1A Prospectus Heading
Item 1. Cover Page . . . . . . . . . . . . . Cover Page
Item 2. Synopsis . . . . . . . . .. . . . . Summary of Fund Expenses;
Highlights
Item 3. Condensed Financial Information . . Performance Information
Item 4. General Description of Registrant . Highlights; Investment
Objectives and Policies;
Investment Policies and
Techniques and Risk Factors;
General Information
Item 5. Management of the Fund . . . . . . . The Trust and Its
Management
Item 5A. Management's Discussion of Fund . . .Not Applicable
Performance
Item 6. Capital Stock and Other Securities . General Information;
Dividends and Distributions;
Taxes
Item 7. Purchase of Securities Being. . . . How to Buy Shares;
Offered Shareholder Services; Net
Asset Value; The Trust and
its Management
Item 8. Redemption or Repurchase . . . . . . How to Redeem Shares;
Exchange Privilege
Item 9. Pending Legal Proceedings . . . . . .Not Applicable
Item 13. Investment Objectives and Policies. .Investment Objectives and
Policies; Investment Policies
and Techniques and Risk
Factors
Item 16. Investment Advisory and Other
Services. . . . . . . . . . . . . .The Trust and Its Management
PART B. INFORMATION REQUIRED IN THE STATEMENT OF ADDITIONAL INFORMATION.
Item in Form N-1A Statement Heading
Item 10. Cover Page . . . . . . . . . . . . . . . . Cover Page
Item 11. Table of Contents . . . . . . . . . . . . . .Table of Contents
<PAGE>
Item 12. General Information and History . . . . . . .None
Item 13. Investment Objectives and Policies . . . . . Types of Investments
and Investment
Techniques;
Investment Limitations
Item 14. Management of the Fund . . . . . . . . . . . Management of the Trust
Item 15. Control Persons and Principal Holders
of Securities . . . . . . . . .. . . . . . . . . . . Management of the Trust
Item 16. Investment Advisory and Other Services . . . Investment Advisory
Arrangements;
Distribution
Arrangements;
Administrative
Services Arrangements;
Custodian, Transfer
Agent, Fund Accounting
Agent, and
Independent Accountants
Item 17. Brokerage Allocation and Other Practices . . Brokerage
Transactions
Item 18. Capital Stock and Other Securities . . . . . Information About the
Trust
Item 19. Purchase, Redemption and Pricing of
Securities Being Offered . . . . . . . . . . .Purchase and
Redemption;
Determination of Net
Asset Value
Item 20. Tax Status . . . . . . . . . . . . . . . . . Tax Status
Item 21. Underwriters . . . . . . . . . . . . . . . Not Applicable
Item 22. Calculation of Performance Data . . . . . . .Performance
Information
Item 23. Financial Statements . . . . . . . . . . . None
PART C. OTHER INFORMATION
Information required to be included in Part C is set forth under the
appropriate Item, so numbered, in Part C of this Registration Statement.
<PAGE>
THE UNIFIED FUNDS
Prospectus dated ________, 1999
The Unified Select Series
The Unified Select 30 Index Fund seeks to track the performance of Dow
Jones Industrial Average, which is made up of the stocks of 30 companies.
The Unified Select 500 Index Fund seeks to track the performance of the
Standard & Poor's 500 Composite Stock Price Index, which emphasizes stocks of
large U.S. companies.
The Unified Select 2000 Index Fund seeks to track the performance of
the Russell 2000 Index, which is made up of stocks of small, generally
unseasoned U.S. companies.
The Unified Select International Equity Index Fund seeks to track the
performance of the securities in the Morgan Stanley Capital International
Europe, Australia and Far East Index.
The Unified Select REIT Index Fund seeks to track the performance of
the Morgan Stanley REIT Index, which is made up of stocks issued by
real estate investment trusts (known as REITs).
The Unified Select NanoCap(TM) Index Fund seeks to track the
performance of the NanoCap(TM) stock index, a composite stock price index which
emphasizes the stocks of NanoCap(TM) companies. NanoCap(TM) securities are
securities issued by extremely small, publicly reporting companies, which are
listed on the recently established NanoCap(TM) Exchange.
The Unified Select Bond Index Fund seeks to track the investment
performance of the Lehman Brothers Aggregate Bond Index, a broad market-weighted
index which encompasses U.S. Treasury and agency securities, investment grade
corporate bonds, international (dollar-denominated) investment grade bonds, and
mortgage-backed securities.
The Unified Select Money Market Fund seeks a high level of current
income consistent with the preservation of capital and maintenance of liquidity.
The Fund pursues this objective by investing principally in a diversified
portfolio of money market mutual funds that meet three basic criteria: expense
ratios less than 0.50%, upper quartile yield and high investment safety
standards.
The shares offered hereby are not deposits or obligations of any
financial institution and are not insured by the Federal Deposit Insurance
Corporation, the Federal Reserve Board or any other government agency.
Investment in the shares involves investment risks including the possible loss
of principal. There can be no assurance that the Unified Select Money Market
Fund will be able to maintain a stable net asset value of $1.00 per share.
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.
This Prospectus contains information that you should know before
investing in any of the Funds and it should be retained for future reference. A
Statement of Additional Information, dated __________, 1999 has been filed with
the Securities and Exchange Commission (the "SEC") and is incorporated herein by
reference. The Statement of Additional Information is available upon request and
without charge by calling 1-800-408-4682. The SEC maintains a Web Site
(http://www.sec.gov) that contains the Statement of Additional Information,
material incorporated by reference, and other information regarding registrants
that file electronically with the SEC.
<PAGE>
TABLE OF CONTENTS
SUMMARY OF FUND EXPENSES......................................................
HIGHLIGHTS....................................................................
INVESTMENT OBJECTIVES AND POLICIES............................................
The Select 30 Index Fund.................................................
The Select 500 Index Fund................................................
The Select 2000 Index Fund...............................................
The Select International Equity Index Fund...............................
The Select REIT Index Fund...............................................
The Select Bond Index Fund...............................................
The Select NanoCap(TM) Index Fund........................................
The Select Money Market Fund.............................................
INVESTMENT POLICIES AND TECHNIQUES
AND RISK FACTORS..........................................................
NET ASSET VALUE...............................................................
HOW TO BUY SHARES.............................................................
Minimum Investment.......................................................
Opening an Account.......................................................
By Mail.............................................................
By Wire.............................................................
Subsequent Investments...................................................
HOW TO BUY SHARES.............................................................
Minimum Investment.......................................................
Opening an Account.......................................................
By Mail.............................................................
By Wire.............................................................
Subsequent Investments...................................................
By Automated Clearing House (ACH)...................................
By Telephone Order..................................................
DIVIDENDS AND DISTRIBUTIONS...................................................
Timing of Certain Money Market Fund......................................
Transactions ..................................
EXCHANGE PRIVILEGE............................................................
By Telephone.............................................................
By Mail or Telecopy......................................................
HOW TO REDEEM SHARES..........................................................
By Mail..................................................................
Signatures..........................................................
By Telephone.............................................................
Receiving Payment........................................................
By Telephone.............................................................
By Mail or Telecopy......................................................
HOW TO REDEEM SHARES..........................................................
<PAGE>
By Mail..................................................................
Signatures
By Telephone.............................................................
Receiving Payment........................................................
Check Writing (Select Money Market Fund Only)............................
Minimum Account Balance..................................................
SHAREHOLDER SERVICES..........................................................
THE TRUST AND ITS MANAGEMENT..................................................
Investment Advisory Arrangements.........................................
Investment Adviser..................................................
Portfolio Managers' Backgrounds..........................................
Advisory Fees............................................................
Distribution Services....................................................
Distributor.........................................................
Administration of the Trust..............................................
Administrator.......................................................
Transfer Agent, Fund Accounting Agent....................................
and Custodian.........................................................
Portfolio Transactions...................................................
Expenses.................................................................
Portfolio Transactions...................................................
THE "V.O.I.C.E."sm PROGRAM....................................................
TAXES.........................................................................
The Tax-Free Fund........................................................
Backup Withholding.......................................................
PERFORMANCE INFORMATION.......................................................
GENERAL INFORMATION...........................................................
No person has been authorized to give any information or to make any
representations other than those contained in this Prospectus and in the Funds'
official sales literature in connection with the offer of the Funds' shares,
and, if given or made, such other information or representation must not be
relied upon as having been authorized by the Funds. This Prospectus does not
constitute an offer in any State in which, or to any person to whom, such
offering may not lawfully be made.
<PAGE>
SUMMARY OF FUND EXPENSES
Shareholders should be aware that the Funds are no-load funds and,
accordingly, a shareholder does not pay any sales charge or commission upon
purchase or redemption of shares of the Funds. Unlike most other mutual funds,
the Funds do not pay directly for transfer agency, pricing, custodial, auditing
or legal services, nor do the Funds pay directly any general administrative or
other significant operating expenses . The Adviser pays all of the operating
expenses of the Fund except brokerage, taxes, interest and extraordinary
expenses.
Shareholder Transaction Expenses
Maximum Sales Load Imposed on Purchases
(as a percentage of offering price)........................................None
Maximum Sales Load Imposed on Reinvested Dividends
(as a percentage of offering price)........................................None
Deferred Sales Load (as a percentage of original
purchase price or redemption proceeds, as applicable)......................None
Redemption Fee (as a percentage of amount redeemed if applicable)...........None
Exchange Fee................................................................None
<TABLE>
Annual Fund Operating Expenses
(As a percentage of average net assets)
Management 12b-1 Servicing Other Total
Fund Name Fees Fees Fees Expenses Expenses
<S> <C> <C> <C> <C> <C>
Unified Select 30 Index Fund 0.35% 0.00% 0.00% None 0.35%
Unified Select 500 Index Fund 0.35% 0.00% 0.00% None 0.35%
Unified Select 2000 Index Fund 0.35% 0.00% 0.00% None 0.35%
Unified Select Intl. Equity Index Fund 0.35% 0.00% 0.00% None 0.35%
Unified Select REIT Index Fund 0.35% 0.00% 0.00% None 0.35%
Unified Select Bond Index Fund 0.35% 0.00% 0.00% None 0.35%
Unified Select NanoCap(TM)Index Fund 0.35% 0.00% 0.00% None 0.35%
Unified Select Money Market Fund 0.35% 0.00% 0.00% None 0.35%
</TABLE>
Initial investments of less than the required minimum by persons exempt
from the minimum investment requirement are subject to a one-time $4.50
administrative charge. See "How to Buy Shares." Wire-transferred redemptions are
subject to a $15.00 charge and certain checking transactions may be subject to
additional charges. See "How to Redeem Shares."
The purpose of this table is to assist the investor in understanding
the various costs and expenses that a shareholder of a Fund will bear, either
directly or indirectly. The expense information has been restated to reflect
current fees. For a further description of the various costs and expenses
incurred by the Funds, see "The Trust and its Management."
<PAGE>
Example:
An investor 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:
Fund Name 1 Year 3 Years
Unified Select 30 Index Fund
Unified Select 500 Index Fund
Unified Select 2000 Index Fund
Unified Select Intl. Equity Index Fund
Unified Select REIT Index Fund
Unified Select Bond Index Fund
Unified Select NanoCap(TM) Index Fund
Unified Select Money Market Fund
The amounts listed in the example should not be considered as
representative of future expenses and actual expenses may be greater or less
than those indicated. Moreover, while the example assumes a 5% annual return, a
Fund's performance will vary and may result in an actual return greater or less
than 5%.
All of the Funds in the Unified Select Series, from time to time, may
invest in other mutual funds, including index mutual funds. To the extent that a
Fund invests in other mutual funds, the Fund will indirectly bear its
proportionate share of any fees and expenses paid by such other funds, in
addition to the fees and expenses payable directly by the Fund. Therefore, to
the extent that the Fund invests in other mutual funds, the Fund will incur
higher expenses, many of which may be duplicative. These expenses will be borne
by the Fund, and are not included in the expenses reflected in the table or
example above. See "Investment Objectives and Policies -- Investments in Other
Mutual Funds."
Investment Objectives and Investment Risks
The Unified Funds (the "Trust") is a family of mutual funds with twelve
separate portfolios (the "Funds"), each having its own investment objective and
policies. This Prospectus is for the eight separate portfolios (the "Funds) of
the Unified Select Series. An investment in the Funds involves investment risks
including the possible loss of principal. See "Investment Objectives and
Policies" and "Investment Policies and Techniques and Risk Factors."
Liquidity
Each Fund continuously offers and redeems its shares at the Fund's
prevailing net asset value per share. See "How to Buy Shares," "How to Redeem
Shares" and "Net Asset Value." The Unified Select Money Market Fund intends to
maintain a constant net asset value of $1.00 per share, although there is no
assurance that it will be able to do so.
<PAGE>
No Sales or Redemption Charges
There are no commissions, fees or charges by the Trust for the purchase
or redemption of shares. Initial investments below the stated minimum,
wire-transferred redemptions and certain checking transactions may be subject to
additional charges. See "Summary of Fund Expenses," "How to Buy Shares" and "How
to Redeem Shares."
Minimum Investment
A minimum investment of $1,000 is required to open an account, except
an IRA account for which the minimum is $500. [Former shareholders of the
Unified family of funds, or the Quest funds which acquired the Unified family of
funds, may open an account with less than the required minimum.] The minimum
investment may also be waived for certain other types of retirement accounts and
direct deposit accounts. Subsequent investments must be at least $100, or $50
for an IRA. See "How to Buy Shares."
Investment Advisers
Unified Investment Advisers, Inc. is the Funds' investment adviser (the
"Adviser"). The Adviser directly manages the investment portfolios of Funds. See
"The Trust and its Management."
Retirement Plans and Other Shareholder Services
The Trust offers retirement plans including a prototype Profit Sharing
Plan, Money Purchase Pension Plan, Salary Savings Plan 401(k) and IRA accounts,
as well as a number of special shareholder services. For information regarding
these plans or services, call the Transfer Agent at 1800-408-4682. See
"Shareholder Services."
[V.O.I.C.E. Logo]
The Adviser administers The Unified Funds University and Philanthropic
Program pursuant to which the Adviser will make contributions to the general
scholarship funds or endowments of certain accredited colleges and universities
designated by qualified shareholders of any of the Funds. For information
regarding this Program, call the Adviser at 1-800-408-4682. See "The
V.O.I.C.E.sm Program" below.
HIGHLIGHTS
INVESTMENT OBJECTIVES AND POLICIES
The Trust offers twelve separate Funds, including the eight Funds in
the Unified Select Series, each with its own investment objective and policies.
While there is no assurance that any Fund will achieve its investment objective,
each Fund endeavors to do so by following the investment policies described in
this Prospectus. Unless otherwise indicated, the Funds' investment objectives
and policies may be changed by the Trust's Board of Trustees without shareholder
approval. Shareholders will be notified before any material change in investment
objectives or policies becomes effective.
<PAGE>
The following sections are concise descriptions of the Funds and their
investment objectives and policies. More information about certain types of
investments, investment techniques and risk factors is provided below under
"Investment Policies and Techniques and Risk Factors" and in the Statement of
Additional Information.
THE UNIFIED SELECT SERIES
All of the Funds, except the Select Money Market Fund, are index funds.
An index is a group of securities whose overall performance is used as a
standard to measure investment performance. Unlike an index, an index fund has
operating expenses. Therefore, an index fund--while expected to track its target
index as closely as possible--will not be able to match the performance of the
index exactly.
Index portfolios are not actively managed by investment advisors who
buy and sell securities based on research and analysis. Instead, a "passively
managed" portfolio tries to match, as closely as possible, the performance of a
target index by holding either all--or a representative sample--of the
securities in the index. Indexing appeals to many investors because of its
simplicity (indexing is a straight forward market-matching strategy);
diversification (indexes generally cover a wide variety of companies and
industries); relative performance predictability (an index portfolio is expected
to move in the same direction--up or down--as its target index); low cost (index
funds do not have many of the expenses of an actively managed fund--such as
research--and keep trading activity--and, thus, brokerage commissions--to a
minimum); and low realization of capital gains.
As an alternative to holding all of the securities in the relevant
index, each Fund (except the[Select 30 Index Fund and] the Select Money Market
Fund) may select stocks through a "sampling" technique in which the Fund selects
a sampling of stocks that will recreate the index in terms of industry, size,
and other characteristics (such as projected earnings, financial strength and
debt). For example, if 10% of the index were made up of utility stocks, the Fund
would invest 10% of its assets in utility stocks of the index with similar
characteristics.
In addition, each Fund may invest in other types of securities that the
Adviser believes will assist the Fund in tracking all or part of the relevant
index. These securities may be other mutual funds, including mutual funds that
invest primarily in the securities that comprise the relevant index. A mutual
fund in which a Fund invests will not necessarily own all of the securities of
the relevant index, although it is expected that it will own a sufficient number
to be representative. See "Investment in Other Mutual Funds" below. These
securities may also include unit investment trusts (such as S&P Depository
Receipts ("SPDRs"), [DIAMONDS] and similar instruments on other indices) and
various option transactions. See"Investment Policies and Techniques and Risk
Factors." It is anticipated that each Fund will invest primarily inthe other
types of secuities described above until the Fund reaches sufficient size and it
becomes practical to invest directly in the common stocks comprising the
relevant index.
For temporary defensive purposes, each Fund may also invest in money
market instruments of the types described below under " The Unified Select Money
Market Fund." Each Fund may also invest in such instruments at any time to
maintain liquidity or pending selection of investments in accourdance with its
policies.
The Dow Jones Industrial Average is a trademark of Dow Jones & Company,
Inc.; the NanoCap(TM) Stock Index is a trademark of ________________; the Morgan
Stanley REIT Index and the Morgan Stanley Capital International Europe,
Australia and Far East Index are trademarks of _________________; the Standard &
Poor's 500 Composite Stock Price Index is a trademark of _________________; the
Russell 2000 Index is a trademark of ____________________; and the Lehman
Brothers Aggregate Bond Index is a trademark of ___________________. None of the
Funds are sponsored by, nor affiliated with, Dow Jones & Company, Inc. or
_________________.
The Unified Select 30 Index Fund
The Unified Select 30 Index Fund seeks to track the performance of the
Dow Jones Industrial Average, which is made up of the stocks of 30 companies.
The companies in which the Fund invests have a large market capitalization (in
excess of $1.0 billion), an established history of earnings and dividend
payments, a large number of publicly held shares, high trading volume, and a
high degree of liquidity. Under normal circumstances, the Fund will limit its
investments to the equity securities of the 30 companies that comprise the Dow
Jones Industrial Average ("DJIA"). The DJIA is an average of the stock prices of
thirty top U.S. industrial corporations. It is popularly viewed as the principal
stock market indicator and a barometer of investor confidence. The Fund tracks
the DJIA by seeking to invest more than 95% of the Fund's total assets in the
common stock of the 30 companies that comprise the index, in the same proportion
as those stocks have in the index. Initially, and from time to time, the Fund
will invest in other mutual funds, including those that replicate the
performance of the DJIA, and/or the 30 companies that comprise the DJIA.
<PAGE>
The Unified Select 500 Index Fund
The Unified Select 500 Index Fund seeks to track the performance of the
Standard & Poor's 500 Composite Stock Price Index (the "S&P 500"), which
emphasizes stocks of large U.S. companies. The S&P 500 is a capital-weighted
index representing the aggregate market value of the common equity of 500 stocks
primarily traded on the New York Stock Exchange. These 500 widely-traded stocks
are composed of 400 industrial, 40 utility, 40 financial, and 20 transportation
companies. The weight of each stock in the index is proportional to its price
times its shares outstanding. The S&P 500 is often used as an overall measure of
stock market conditions. Under normal circumstances, the Fund's portfolio will
mirror the composition of the S&P 500 or contain a sampling of securities which
the Adviser believes will approximate the performance of the S&P 500. For
example, if 5% of the S&P 500 Index were made up of the assets of a specific
company, the 500 Portfolio would invest the same percentage of its assets in
that company. Initially, and from time to time, the Fund will invest in other
mutual funds, including those that replicate the performance of the S&P 500,
and/or the 500 companies that comprise the S&P 500.
The Unified Select 2000 Index Fund
The Unified Select 2000 Index Fund seeks to track the performance of
the Russell 2000 Index (the "Russell 2000"), which is made up of stocks of
small, generally unseasoned U.S. companies. The Russell 2000 is comprised of the
2,000 smallest U.S. domiciled publicly traded common stocks, which are included
in the Russell 3000 Index. The Russell 3000 Index is an unmanaged index of the
3,000 largest U.S. domiciled publicly traded common stocks by market
capitalization representing approximately 98% of the U.S. publicly traded equity
market. The common stocks included in the Russell 2000 approximately 10% of the
U.S. equity market as measured by market capitalization. Initially, and from
time to time, the Fund will invest in other mutual funds, including those that
replicate the performance of the Russell 2000 and/or the 2000 companies that
comprise the Russell 2000.
The Unified Select International Equity Index Fund
The Unified Select International Equity Index Fund seeks to track the
aggregate price and dividend performance of the securities in the Morgan Stanley
Capital International (MSCI) Europe, Australia and Far East Index (the "EAFE
Index"). The EAFE Index is a broad-based market capitalization weighted index
currently composed of more than 1,100 securities in twenty countries. Fourteen
European countries (Austria, Belgium, Denmark, Finland, France, Germany,
Ireland, Italy, the Netherlands, Norway, Spain, Sweden, Switzerland and the
United Kingdom) constitute approximately 55% of the EAFE Index. Six
Asian/Pacific countries (Australia, Hong Kong, Japan, Malaysia, New Zealand and
Singapore) account for the remaining 45%.
The Fund's portfolio will have aggregate investment characteristics
similar to those of the EAFE Index as a whole. The proportion of the Fund's
assets invested in each country will approximate the weight of each country in
the EAFE Index. Therefore, more than 25% of the portfolio's assets may be
invested in a single country, making the Fund's performance more dependent upon
the political and economic circumstances in that country. Initially, and from
time to time, the Fund will invest in other mutual funds, including those that
replicate the performance of the EAFE index, and/or the approximately 1,100
companies that comprise the EAFE Index. For more information regarding
investments in foreign securities, see "Foreign Securities," below.
<PAGE>
The Unified Select REIT Index Fund
The Unified Select REIT Index Fund seeks to track the performance of
Morgan Stanley REIT Index (the "REIT Index"), a benchmark of U.S. property
trusts, which is made up of stocks issued by real estate investment trusts
(known as REITs). A REIT is a corporation or business trust that invests
substantially all of its assets in interests in real estate. The REIT Index is
made up of the stocks of all publicly traded equity REITs (except health care
REITs) that meet certain criteria. For example, to be included in the REIT
Index, a REIT must have a total market capitalization of at least $100 million
and have enough shares and trading volume to be considered liquid. Under normal
conditions, the Fund will invest at least 95% of its assets in REITs which make
up the REIT Index, in roughly the same proportions as in the index itself. For
example, if 5% of the index were made up of the stock of a specific REIT, the
Fund would invest the same percentage of its noncash assets in that stock.
Initially, and from time to time, the Fund will invest in other mutual funds,
including those that replicate the performance of the Morgan Stanley REIT Index,
and/or the U.S. property trusts that comprise the Morgan Stanley REIT Index.
The Fund is not intended to be a complete investment program. The
concentration of the Fund's investments in the real estate industry will subject
the Fund to risks in addition to those that apply to the general equity market.
Economic, legislative or regulatory developments may occur which significantly
affect the entire real estate industry and thus may subject the Fund to greater
market fluctuations than a fund that does not concentrate in a particular
industry. For more information about investments in REITs, see "Real Estate
Investment Trusts," below.
The Unified Select Bond Index Fund
The Unified Select Bond Index Fund seeks to track the investment
performance of the Lehman Brothers Aggregate Bond Index (the "Bond Index"), a
broad market-weighted index which encompasses four major classes of investment
grade fixed-income securities in the United States: U.S. Treasury and agency
securities, corporate bonds, international (dollar-denominated) bonds, and
mortgage-backed securities, with maturities greater than one year.
The Fund will be unable to hold all of the individual issues which
comprise the Bond Index because of the large number of securities involved.
Under normal circumstances, the Fund will hold a representative sample of the
securities, selecting a few issues to represent entire "classes" or types of
securities in the index which, when taken together, are expected to perform
similarly to the Bond Index. The portfolio will be constructed so as to
approximately match the composition of the Bond Index. Initially, and from time
to time, the Fund will invest in other mutual funds, including those that
replicate the performance of the Bond Index, and/or the securities that comprise
the Bond Index.
The Unified Select NanoCap(TM) Index Fund
The Unified Select NanoCap(TM) Index Fund seeks to track the
performance of the NanoCap(TM) stock index (the "NanoCap(TM) Index"), a
composite stock price index which emphasizes the stocks of NanoCap(TM)
companies. NanoCap(TM) securities are securities issued by extremely small,
publicly reporting companies, which are listed on the NanoCap(TM) Exchange. The
Fund's portfolio will have
<PAGE>
aggregate investment characteristics similar to those of the
NanoCap(TM) Exchange as a whole. The proportion of the Fund's assets invested in
the securities listed on the NanoCap(TM) Exchange will approximate the weight of
each of security in the NanoCap(TM) Index or contain a sampling of securities
which the Adviser believes will approximate the performance of the NanCap(TM)
Index. From time to time, the Fund may invest in other mutual funds. For more
information regarding investments in NanoCap(TM) securities, see "NanoCap(TM)
Securities," below.
The Unified Select Money Market Fund
The Unified Select Money Market Fund seeks a high level of current
income consistent with the preservation of capital and maintenance of liquidity.
The Fund pursues this objective by investing principally in a diversified
portfolio of money market mutual funds that meet three basic criteria: expense
ratios less than 0.50%, upper quartile yield and high investment safety
standards. The Fund intends to maintain a constant net asset value of $1.00 per
share, although there is no assurance that it will be able to do so. The Fund
will invest predominantly in other money market mutual funds, but may also
invest in the short-term money market instruments that those money market funds
hold, such as:
o direct obligations of the U.S. Treasury, such as U.S. Treasury bills,
notes and bonds; notes, bonds, and discount notes of U.S. government
agencies or instrumentalities;
o short-term corporate debt instruments (including commercial paper and
variable rate demand notes) which mature in 270 days or less;
o domestic and foreign issues of corporate debt obligations having
floating or fixed rates of interest and having remaining maturities of
less than 13 months;
o bank instruments described below under "Bank Instruments";
o other short-term investments of a type which the Adviser determines
presents minimal credit risks and which are of "high quality" as
determined by a nationally recognized statistical rating organization,
or, in the case of an instrument that is not rated, of comparable
quality in the judgment of the Adviser; and
o repurchase agreements collateralized by eligible investments.
The Fund, like most other money market mutual funds, may invest only in
securities that, at the time of purchase, have a remaining maturity of less than
13 months and that are "eligible securities" as defined by regulations of the
Securities and Exchange Commission. "Eligible securities" generally include
securities rated in one of the two highest categories by at least two nationally
recognized statistical rating organizations (or by one such rating agency if
only one has issued a rating) or, if unrated, are determined to be of comparable
quality by the Adviser pursuant to policies approved by the Board of Trustees.
If the Fund purchases an eligible security and its rating is subsequently
downgraded so that the security is no longer of high quality, the Fund will
consider and take appropriate action, which may include divesting the security.
The Fund will maintain a dollar-weighted average portfolio maturity of 90 days
or less.
INVESTMENT POLICIES AND TECHNIQUES AND RISK FACTORS
<PAGE>
This section describes certain types of investments, investment
techniques and investment policies and limitations of the Funds. This section
also includes information about the risk factors associated with the investments
and investment techniques. The risks of each Fund depend upon many factors. For
the Funds that invest principally in equity securities, these factors include,
among others, the Fund's investment objective, the types of equity securities
held and the financial position of the issuers of these securities. For the
Funds that invest principally in debt securities, these factors include, among
others, the Fund's investment objective, the average duration of the Fund's
portfolio, credit quality of the securities held and interest rate movements.
For further information, see the Statement of Additional Information.
Equity Securities
The Funds (except the Select Bond Index Fund and the Select Money
Market Fund) may invest, when applicable to their investment objective, in
equity securities, including common stocks, preferred stocks, convertible
securities, warrants and rights issued by corporations in any industry
(industrial, financial or utility) which may be denominated in U.S. dollars or
in foreign currencies. Equity securities fluctuate in value, often based on
factors unrelated to the performance of the issuer of the securities and
fluctuations can be pronounced. Small capitalization issues (especially
NanoCap(TM) issues) and emerging growth company securities, in particular, may
be subject to wider price fluctuations and may be more illiquid than the stock
market as measured by popular indices. Equity securities include S&P Depository
Receipts ("SPDRs") and other similar instruments. SPDRs are shares of a publicly
traded unit investment trust which owns the stocks included in the S&P 500
Index, and changes in the price of SPDRs track the movement of the index
relatively closely.
Small Capitalization Companies
The Unified Select 2000 Index Fund and the Select NanoCap(TM) Index
Fund will invest primarily in small capitalization companies. Companies with
small market capitalization may experience higher growth rates and higher
failure rates than do larger capitalization companies. Small capitalization
companies may have limited product lines, markets or financial resources and may
lack management depth. The trading volume of securities of smaller
capitalization companies is normally less than that or larger capitalization
companies and, therefore, may disproportionately affect their market price,
tending to make them rise more in response to buying demand and fall more in
response to selling pressure than is the case with larger capitalization
companies.
Real Estate Investment Trusts ("REITs")
The Unified Select REIT Index Fund intends to invest primarily in
REITs. Equity REITs are those which purchase or lease land and buildings and
generate income primarily from rental income. Equity REITs may also realize
capital gains (or losses) when selling property that has appreciated (or
depreciated) in value. Mortgage REITs are those which invest in real estate
mortgages and generate income primarily from interest payments on mortgage
loans. Hybrid REITs generally invest in both real property and mortgages.
Economic, legislative or regulatory developments may occur which
significantly affect the entire real estate industry and thus may subject the
Fund to greater market fluctuations than a fund
<PAGE>
that does not concentrate in a particular industry. In addition, the Fund will
generally be subject to risks associated with direct ownership of real estate,
such as decreases in real estate values or fluctuations in rental income caused
by a variety of factors, including increases in interest rates, increases in
property taxes and other operating costs, casualty or condemnation losses,
possible environmental liabilities and changes in supply and demand for
properties.
Risks associated with REIT investments include the fact that equity and
mortgage REITs are dependent upon specialized management skills and are not
fully diversified. These characteristics subject REITs to the risks associated
with financing a limited number of projects. They are also subject to heavy cash
flow dependency, defaults by borrowers, and self-liquidation. Additionally,
equity REITs may be affected by any changes in the value of the underlying
property owned by the trusts, and mortgage REITs may be affected by the quality
of any credit extended.
Bank Instruments
The Select Money Market Fund may invest in time deposits (including
savings deposits and certificates of deposit), deposit notes and bankers
acceptances in commercial banks or savings associations whose accounts are
insured by the Federal Deposit insurance Corporation ("FDIC"), including
certificates of deposit issued by and other time deposits in foreign branches of
FDIC insured financial institutions or who have at least $100 million in
capital. These instruments may also include Eurodollar Certificates of Deposit
("ECDs"), Yankee Certificates of Deposit ("Yankee CDs") and Eurodollar Time
Deposits ("ETDs"). The banks issuing these instruments are not necessarily
subject to the same regulatory requirements that apply to domestic banks, such
as reserve requirements, loan requirements, loan limitations, examinations,
accounting, auditing, and record keeping and the public availability of
information.
Corporate Debt Obligations
The Select Bond Index Fund and Select Money Market Fund may invest to
varying extents in fixed rate corporate debt obligations. Fixed rate securities
tend to exhibit more price volatility during times of rising or falling interest
rates than securities with floating rates of interest. This is because floating
rate securities, as described below, behave like short-term instruments in that
the rate of interest they pay is subject to periodic adjustments based on a
designated interest rate index. Fixed rate securities pay a fixed rate of
interest and are more sensitive to fluctuating interest rates. In periods of
rising interest rates the value of a fixed rate security is likely to fall.
Fixed rate securities with short-term characteristics are not subject to the
same price volatility as fixed rate securities without such characteristics.
Therefore, they behave more like floating rate securities with respect to price
volatility.
Many corporate debt obligations permit the issuers to call the security
and thereby redeem their obligations earlier than the stated maturity dates.
Issuers are more likely to call bonds during periods of declining interest
rates. In these cases, if a Fund owns a bond which is called, the Fund will
receive its return of principal earlier than expected and would likely be
required to reinvest the proceeds at lower interest rates, thus reducing income
to the Fund.
Other Corporate Debt Obligations
<PAGE>
The Select Bond Index Fund and Select Money Market Fund may also invest
in other corporate debt obligations, including those described below.
Floating Rate Obligations. Floating rate securities are generally
offered at an initial interest rate which is at or above prevailing market
rates. The interest rate paid on these securities is then reset periodically
(commonly every 90 days) to an increment over some predetermined interest rate
index. Commonly utilized indices include the three-month Treasury bill rate, the
180- day Treasury bill rate, the one-month or three-month London Interbank
Offered Rate (LIBOR), the prime rate of a bank, the commercial paper rates, or
the longer-term rates on U.S. Treasury securities.
Variable Rate Demand Notes. Variable rate demand notes are long-term
corporate debt instruments that have variable or floating interest rates and
provide the Fund with the right to tender the security for repurchase at its
stated principal amount plus accrued interest. Such securities typically bear
interest at a rate that is intended to cause the securities to trade at par. The
interest rate may float or be adjusted at regular intervals (ranging from daily
to annually), and is normally based on an interest index or a stated percentage
of a prime rate or another published rate. Many variable rate demand notes allow
the Fund to demand the repurchase of the security on not more than seven days
prior notice. Other notes only permit the Fund to tender the security at the
time of each interest rate adjustment or at other fixed intervals.
Mortgage-backed Securities
The Select Bond Index Fund may invest in mortgage-backed securities.
Mortgage-backed securities represent an interest in an underlying pool of
mortgages. Unlike ordinary fixed-income securities, which generally pay a fixed
rate of interest and return principal upon maturity, mortgage-backed securities
repay both interest income and principal as part of their periodic payments.
Because the mortgages underlying mortgage-backed certificates can be prepaid at
any time by homeowners or corporate borrowers, mortgage-backed securities give
rise to certain unique "prepayment" risks.
The Fund may purchase mortgage-backed securities issued by the
Government National Mortgage Association (GNMA), the Federal Home Loan Mortgage
Corporation (FHLMC), the Federal National Mortgage Association (FNMA), and the
Federal Housing Authority (FHA). GNMA securities are guaranteed by the U.S.
Government as to the timely payment of principal and interest; securities from
other Government-sponsored entities are generally not secured by an explicit
pledge of the U.S. Government. The Fund may also invest in conventional mortgage
securities, which are packaged by private corporations and are not guaranteed by
the U.S. Government. Mortgage securities that are guaranteed by the U.S.
Government are guaranteed only as to the timely payment of principal and
interest. The market values of the securities are not guaranteed and may
fluctuate.
<PAGE>
Zero Coupon Securities. The Select Bond Index Fund may invest in
corporation zero coupon secuities. Corporate zero coupon securities are: (i)
notes or debentures which do not pay current interest and are issued at
substantial discounts from par value, or (ii) notes or debentures that pay no
current interest until a stated date one or more years into the future, after
which the issuer is obligated to pay interest until maturity, usually at a
higher rate than if interest were payable fro the datej of issuance.
Investments in Other Mutual Funds
All of the Funds will invest to some extent in the securities of other
open-end registered investment companies ("mutual funds"), and may invest up to
100% of their assets in other mutual funds. The funds of the Trust, considered
together, may not invest in more than 3% of the outstanding voting securities of
any one mutual fund. The foregoing limitation is not applicable to investment
company securities acquired as part of a merger, consolidation, reorganization
or other acquisition.
The Trust believes that investing in other mutual funds will provide
the Funds with opportunities to achieve greater diversification of portfolio
securities and investment techniques than the Funds could achieve by investing
in individual securities. [The Funds will invest only in other mutual funds that
do not impose up-front sales loads or deferred sales loads or redemption fees.]
However, the Funds may invest in funds that have 12b-1 plans or shareholder
services plans which permit the funds to pay certain distribution and other
expenses from fund assets. To the extent that a Fund invests in other mutual
funds, the Fund will indirectly bear its proportionate share of any fees and
expenses paid by such funds in addition to the fees and expenses payable
directly by the Fund. Therefore, to the extent that a Fund invests in other
mutual funds, the Fund will incur higher expenses, many of which may be
duplicative. (For example, the Unified Select Money Market Fund pays the Adviser
a fee of 0.35% of its average net assets to manage its investment portfolio of
other mutual funds, each of which pays its own investment adviser a fee to
manage its own portfolio securities.) In addition, to the extent that a Fund
invests in other mutual funds, the Fund's shareholders may receive capital gains
distributions to a greater extent than if the shareholder owned the underlying
mutual funds directly.
The Funds are independent from any of the other mutual funds in which
they invest and have little voice in or control over the investment practices,
policies or decisions of those funds. If a Fund disagrees with those practices,
policies or decisions, it may have no choice other than to liquidate its
investment in that fund, which can entail further losses. However, a mutual fund
is not required to redeem any of its shares owned by another mutual fund in an
amount exceeding 1% of the underlying fund's shares during any period of less
than 30 days. As a result, to the extent that a Fund owns more than 1% of
another mutual fund's shares, the Fund may not be able to liquidate those shares
in the event of adverse market conditions or other considerations.
[Also, the investment advisers of the mutual funds in which a Fund
invests may simultaneously pursue inconsistent or contradictory courses of
action. For example, one fund may be purchasing securities of the same issuer
whose securities are being sold by another fund, with the result that the Fund
would incur an indirect expense without any corresponding investment or economic
benefit.]
Asset-Backed Securities
<PAGE>
The Unified Select Money Market Fund may invest in mortgage related
asset-backed securities that are considered U.S. government securities.
Asset-backed securities are created by the grouping of certain governmental,
government related and private loans, receivables and other lender assets into
pools. Interests in these pools are sold as individual securities. Payments from
the asset pools may be divided into several different tranches of debt
securities, with some tranches entitled to receive regular installments of
principal and interest, other tranches entitled to receive regular installments
of interest, with principal payable at maturity or upon specified call dates,
and other tranches only entitled to receive payments of principal and accrued
interest at maturity or upon specified call dates. Different tranches of
securities will bear different interest rates, which may be fixed or floating.
Because the loans held in the asset pool often may be prepaid without
penalty or premium, asset-backed securities can be subject to higher prepayment
risks than most other types of debt instruments. Prepayments may result in a
capital loss to the Fund to the extent that the prepaid mortgage securities were
purchased at a market premium over their stated amount. Conversely, the
prepayment of mortgage securities purchased at a market discount from their
stated principal amount will accelerate the recognition of interest income by
the Fund, which would be taxed as ordinary income when distributed to the
shareholders.
The credit characteristics of asset-backed securities also differ in a
number of respects from those of traditional debt securities. The credit quality
of most asset-backed securities depends primarily upon the credit quality of the
assets underlying such securities, how well the entity issuing the securities is
insulated from the credit risk of the originator or any other affiliated
entities, and the amount and quality of any credit enhancement to such
securities.
Foreign Securities
The Select International Equity Index Fund will invest in foreign
securities and the Select Money Market Fund may invest in foreign securities,
including foreign securities not publicly traded in the United States.
Investments in foreign securities involve special risks that differ
from those associated with investments in domestic securities. The risks
associated with investments in foreign securities apply to securities issued by
foreign corporations and sovereign governments. These risks relate to political
and economic developments abroad, as well as those that result from the
differences between the regulation of domestic securities and issuers and
foreign securities and issuers. These risks may include, but are not limited to,
expropriation and nationalization, confiscatory taxation, reduced levels of
government regulation of securities markets, currency fluctuations and
restrictions on, and costs associated with, the exchange of currencies,
withholding taxes on interest, limitations on the use or transfer of assets,
political or social instability and adverse diplomatic developments. It may also
be more difficult to enforce contractual obligations or obtain court judgments
abroad than would be the case in the United States because of differences in the
legal systems. If the issuer of the debt or the governmental authorities that
control the repayment of the debt may be unable or unwilling to repay principal
or interest when due in accordance with the terms of such debt, the Fund may
have limited legal recourse in the event of a default. Moreover, individual
foreign economies may differ favorably or unfavorably from the domestic economy
in
<PAGE>
such respects as growth of gross national product, the rate of inflation,
capital reinvestment, resource self-sufficiency and balance of payments
position.
Additional differences exist between investing in foreign and domestic
securities. Examples of such differences include: less publicly available
information about foreign issuers; credit risks associated with certain foreign
governments; the lack of uniform financial accounting standards applicable to
foreign issuers; less readily available market quotations on foreign issues; the
likelihood that securities of foreign issuers may be less liquid or more
volatile; generally higher foreign brokerage commissions; and unreliable mail
service between countries.
The Select International Equity IndexFund may invest in World Equity
Benchmark Shares ("WEBS"). Each WEBS share represents a broad portfolio of
publicly traded stocks in a selected country, in WEBS Index Series currently
covering selected equity markets. Each WEBS Index Series seeks to generate
investment results that generally correspond to the market yield performance of
a given Morgan Stanley Capital International ("MSCI") index. MSCI Indices are
leading country index benchmarks, widely used by U.S. investors for their
international investments.
Foreign Currency Transactions. The Select International Equity Index
Fund, when applicable to its investment objectives may enter into foreign
currency transactions to obtain the necessary currencies to settle securities
transactions. Currency transactions may be conducted either on a spot or cash
basis at prevailing rates or through forward foreign currency exchange
contracts.
The Fund, when applicable to its investment objectives, may also enter
into foreign currency transactions to protect Fund assets against adverse
changes in foreign currency exchange rates or exchange control regulations. Such
changes could unfavorably affect the value of Fund assets which are denominated
in foreign currencies, such as foreign securities or funds deposited in foreign
banks, as measured in U.S. dollars. Although foreign currency transactions may
be used by the Fund to protect against a decline in the value of one or more
currencies, such efforts may also limit any potential gain that might result
from a relative increase in the value of such currencies and might, in certain
cases, result in losses to the Fund.
NanoCap(TM) Securities.
NanoCap(TM) securities are those securities listed on the Nanocap(TM)
exchange which consist of small, publicly reporting companies which are listed
on the NanoCap(TM) exchange. The number of securities on this exchange will
change frequently, as new issuers are added to the exchange. The NanoCap(TM)
Exchange is a new order entry/matching system established by SBX, Inc. ("SBX").
SBX, the Small Business Exchange, was founded in 1997 and is a Member of the
National Association of Securities Dealers, Inc. The primary business of SBX is
to provide NanoCap(TM) securities order matching services through the SBX system
(System). NanoCap(TM) securities are securities issued by SEC-reporting,
publicly reporting, companies under the Securities Act of 1934 which are not
listed on NASDAQ or an exchange. SBX makes systems and collects information that
allows its Subscribers to post firm orders and to match existing orders for
NanoCap(TM) securities.
<PAGE>
SBX, which has a service mark on the NanoCap(TM) name, has designed and
created the following products and services: a system that does real time
securities order matching; an Internet interface for System Subscribers and site
visitors that displays corporate information culled from SEC reports, the open
order book, and the matched trade history for every NanoCap(TM); a NanoCap(TM)
database of symbols traded on the System, including publicly reporting companies
not traded on NASDAQ or the exchanges; a NanoCap(TM) Index comprised of selected
securities traded on the System; and a NanoCap(TM) Data Feed of last trade and
inside market for securities matched on the System. The System's NanoCap(TM)
order book display and company information are available to anyone free of
charge over the Internet. SBX plans to add after hours matching of NASDAQ and
exchange-listed securities, transmission and matching of international
securities and transmission and matching of non-equity securities. Investors
should be aware that no other market-wide product exists specifically designed
for automated NanoCap(TM) order-matching.
On September 28, 1998, SBX received a Securities and Exchange
Commission ("SEC") No-Action Letter stating that, subject to certain S.E.C.
requests that "the Division will not recommend that the Commission take
enforcement action under Section 5 of the Exchange Act against SBX or the
System, if the System is operated without registration as a national securities
exchange, as described." This Letter, received after nearly a two-year process,
finally allows SBX to immediately commence utilizing its order entry matching
system.
No other market-wide product exists specifically designed for automated
NanoCap(TM) order-matching.
The Adviser has established procedures, approved by the Trust's Board
of Trustees, to account for those circumstances when the Adviser will need to
determine an initial price for a new issuer on the Index which will not have
experienced a purchase of its shares, therefore, an initial price will have
never been established. Once the initial price has been established due to the
Fund's purchase of the security, the market will then dictate the future price.
[The Adviser and the Distributor are affiliated with SBX]
U.S. Government Obligations
The Select Bond Index Fund and the Select Money Market Fund may invest
in U.S. government obligations. These securities are either issued or guaranteed
by the U.S. government, its agencies or instrumentalities. The government
securities in which the Funds may invest are backed in a variety of ways by the
U.S. government or its agencies or instrumentalities. Some of these securities,
such as Government National Mortgage Association ("GNMA") mortgage-backed
securities, are backed by the full faith and credit of the U.S. government.
Other securities, such as obligations of the Federal National Mortgage
Association ("FNMA") or Federal Home Loan Mortgage Corporation ("FHLMC"), are
backed by the credit of the agency or instrumentality issuing the obligations
but not the full faith and credit of the U.S. government. No assurances can be
given that the U.S. government will provide financial support to these other
agencies or instrumentalities, because it is not obligated to do so.
<PAGE>
Repurchase Agreements
Each Fund may invest in repurchase agreements fully collateralized by
U.S. Government obligations. A repurchase agreement is a short-term investment
in which the purchaser (i.e., the Fund) acquires ownership of a U.S. Government
obligation (which may be of any maturity) and the seller agrees to repurchase
the obligation at a future time at a set price, thereby determining the yield
during the purchaser's holding period (usually not more than seven days from the
date of purchase). Any repurchase transaction in which the Fund engages will
require full collateralization of the seller's obligation during the entire term
of the repurchase agreement. In the event of a bankruptcy or other default of
the seller, the Fund could experience both delays in liquidating the underlying
security and losses in value. However, the Funds intend to enter into repurchase
agreements only with Star Bank, N.A. (the Fund's Custodian), other banks with
assets of $1 billion or more and registered securities dealers determined by the
Adviser (subject to review by the Board of Trustees) to be creditworthy. The
Adviser monitors the creditworthiness of the banks and securities dealers with
which the Funds engage in repurchase transactions.
Options Transactions
Each Fund (except the Select Money market Fund) may purchase put and
call options, write (sell) covered put and call options on their respective
stock indices and engage inrelated closing transactions. An option on a stock
index gives the holder the right to receive, upon exercising the option, a cash
settlement amount based on the difference between the exercise price and the
value of the underlying stock index. Receipt of this cash amount will depend
upon the closing level of the stock index upon which the option is based being
greater than (in the case of a call) or less than (in the case of a put) the
exercise price of the option. The amount of cash received will be equal to such
difference between the closing price of the index, and the exercise price of the
option expressed in dollars. The writer of the option is obligated, in return
for the premium received, to make delivery of this amount.
To cover the potential obligations involved in writing option
transactions, the Fund will either own a position opposite to the option or hold
a portfolio of stocks substantially replicating the movement of the index, or,
to the extent the Fund does not own such a position or hold such a portfolio,
will sigregate with the Custodian high grade liquid dept obligations equal to
the market value of the stock index option, marked to market daily. Risks
associated with writing options include the possible inability to effect closing
transactions at favorable prices and an appreciation limit on the securities set
aside for settlement, as well as exposure to an indeterminate liability. Risks
associated with purchasing options include the loss of the premium if the option
is not exercised. It is not the Adviser's intention to buy options for
speculative purposes, or to write options on an uncovered or unhedged basis.
Because the value of an index option depends upon movements in the
level of the index rather than the price of a particular stock, whether the Fund
will realize a gain or loss from the purchase or writing of options on an index
depends upon movements in the level of stock prices in the stock market
generally or, in the case of certain indices, in an industry or market segment,
rather than movements in the price of a particular stock. Options may fail as
hedging techniques when price movements of the securities underlying the options
do not follow the price movements of the portfolio securities subject to the
hedge. Accordingly, successful use by each Fund of options on stock indices will
be subject to the Adviser's ability to predict correct movements in the
direction of the stock market tgenerally or of a particular industry. This
requires different skills and techniques than predicting changes in the price of
individual stocks. A Fund will likely be unable to control losses by closing its
position where a liquid secondary market does not exist.
Each of the Funds, when applicable to its particular investment
objective (except the Unified Select Money Market Fund), may attempt to hedge
all or a portion of its portfolio by buying put options on portfolio securities.
The Funds may also write covered call options on portfolio securities to attempt
to increase current income. Each Fund may write covered call options and secured
put options on up to 25% of its net assets and may purchase put and call options
provided that no more than 5% of the fair market value of its net assets may be
invested in premiums on such options.
A call option gives the purchaser the right to buy, and the writer the
obligation to sell, the underlying currency, security or other asset at the
exercise price during the option period. A put option gives the purchaser the
right to sell, and the writer the obligation to buy, the underlying currency,
security or other asset at the exercise price during the option period. The
writer of a covered call owns assets that are acceptable for escrow and the
writer of a secured put invests an amount not less than the exercise price in
eligible assets to the extent that it is obligated as a writer. If a call
written by a Fund is exercised, the Fund forgoes any possible profit from an
increase in the market price of the underlying asset over the exercise price
plus the premium received. In writing puts, there is a risk that the Fund may be
required to take delivery of the underlying asset at a disadvantageous price.
Over-the-counter options ("OTC options") differ from exchange traded
options in several respects. They are transacted directly with dealers and not
with a clearing corporation, and there is a risk of nonperformance by the dealer
as a result of the insolvency of such dealer or otherwise, in which event the
fund may experience material losses. However, in writing options the premium is
paid in advance by the dealer. OTC options, which may not be continuously
liquid, are available for a greater variety of assets, and a wider range of
expiration dates and exercise prices, than are exchange traded options. The
Funds intend to treat OTC options as illiquid securities.
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<PAGE>
Temporary Investments
All of the Funds may invest temporarily in cash or short-term money
market instruments during times of unusual market conditions for defensive
purposes, without limitation. These temporary investments may include the
instruments described above under "The Unified Select Money Market Fund". The
Funds may also invest in these instruments temporarily to maintain liquidity in
anticipation of favorable investment opportunities.
General
In order to generate additional income, each Fund may lend portfolio
securities on a short-term or a long-term basis up to 5% of the value of its
total assets to broker/dealers, banks, or other institutional borrowers of
securities. [The Select 500 Index Fund and Select 2000 Index Fund may invest up
to 5% of their assets in the following: warrants, convertible securities, swap
agreements, stock futures and options contracts. The Select International Equity
Index Fund may invest up to 5% of its assets in stock futures and options
contracts.]
Portfolio Turnover
Each Fund may trade or dispose of portfolio securities as considered
necessary to meet its investment objective. Each of the Funds intends to make
investments based on long-term investment considerations as opposed to
short-term trading. However, each Fund may take advantage of opportunities for
short-term profits as they arise. Higher portfolio turnover results in increased
Fund expenses, including brokerage commissions, dealer mark-ups and other
transaction costs on the sale of securities and on the reinvestment in other
securities, and results in the acceleration of realization of capital gains or
losses for tax purposes. [The Funds cannot accurately predict their portfolio
turnover rates, but it is anticipated that each Fund's annual turnover rate
generally will not exceed 100% (excluding the Select Money Market Fund, which
must invest in short-term instruments).]
NET ASSET VALUE
Net asset value per share (the price at which shares are purchased and
redeemed) is determined as of the close of regular trading on the New York Stock
Exchange (currently 4:00 p.m., Eastern time), on each business day the Exchange
is open for business. Net asset value per share of the Select Money Market Fund
is also determined as of 12:00 noon (Eastern time) on such days. Each Fund's net
asset value per share is determined by dividing the sum of the market value of
all securities and all other assets of the applicable Fund, less liabilities of
the Fund, by the number of the Fund's shares outstanding.
The net asset value per share will fluctuate for each Fund other than
the Select Money Market Fund. The portfolio securities of the Select Money
Market Fund are valued utilizing the amortized cost method of valuation, which
normally approximates market value, and which is intended to result in a
constant net asset value of $1.00 per share. Although every effort is made to
maintain the net asset value of the Select Money Market Fund at $1.00 per share,
there can be no assurance that this constant net asset value will be maintained
at all times. For example, in the event of rapid and sharp increases in current
interest rates, a national credit crisis, or a default by
- 21 -
<PAGE>
one or more of the issuers of the Fund's portfolio securities, then it is
possible that the Fund's net asset value could decline below $1.00 per share.
HOW TO BUY SHARES
Shares of the Funds are sold each day the New York Stock Exchange is
open at the applicable Fund's net asset value per share next calculated after
receipt of the purchase order in proper form. The Trust reserves the right to
reject any purchase request. Investors may be charged a fee if they effect
transactions through a broker or agent.
Minimum Investment
The minimum initial investment in each Fund is $l,000, except an IRA
for which the minimum initial investment is $500. [Former shareholders of the
Unified family of funds, or the Quest funds which acquired the Unified family of
funds, may open an account with less than the required minimum.] However, they
are subject to a one-time $4.50 administrative charge to establish the account.
The minimum investment may also be waived for certain other types of retirement
accounts and direct deposit accounts. Subsequent investments may be made in
amounts of at least $100, except for an IRA, which must be in amounts of at
least $50. Minimum investments for certain other types of retirement accounts
and direct deposit accounts may be different. See "Shareholder Services."
Opening An Account
An account may be opened by mail or bank wire, as follows:
By Mail. To open a new account by mail:
Complete and sign the account application. (Be sure to specify the name of the
Fund(s) in which an investment is made.)
Enclose a check payable to each Fund specified in the application.
Mail the application and the check to the Fund's Transfer Agent, Unified Fund
Services, Inc. (the "Transfer Agent") at the following address: The Unified
Funds, c/o Unified Fund Services, Inc., P.O. Box 6110, Indianapolis, Indiana
46206-6110.
By Wire. To open a new account (or to open an additional account in a
different Fund) by wire, call the Transfer Agent at 1-800-408-4682. A
representative will assist you to obtain an account application by telecopy (or
mail), which must be completed, signed and telecopied (or mailed) to the
Transfer Agent before payment by wire may be made. Then, request your financial
institution to wire immediately available funds to:
Star Bank, N.A.
ABA # 04-20000-13
Attention: Name of Fund (see below)
Number of Fund (see below)
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Credit Account # ________ (see below)
The applicable Fund and account numbers are as follows:
Fund Name Fund Number Account Number
The Unified Select 30 Index Fund
The Unified Select 500 Index Fund
The Unified Select 2000 Index Fund
The Unified Select International Equity Index Fund
The Unified Select REIT Index Fund
The Unified Select Bond Index Fund
The Unified Select NanoCap(TM) Index Fund
The Unified Select Money Market Fund
The order is considered received when Star Bank, N.A., the Trust's
custodian (the "Custodian"), receives payment by wire. However, the completed
account application must be mailed to the Transfer Agent on the same day the
wire payment is made. See "Opening an Account -- By Mail" above. The Trust will
not permit redemptions until the Transfer Agent receives the application in
proper form. Financial institutions may charge a fee for wire transfers.
Subsequent Investments
Once an account is open, additional purchases of Fund shares may be
made at any time in minimum amounts of $100, except for an IRA, which must be in
amounts of at least $50.
Additional purchases may be made:
By sending a check, made payable to the applicable Fund, to The Unified Funds,
[Name of Fund], P.O. Box 640689, Cincinnati, Ohio 45264-0689. The Trust will
charge a $15 fee against a shareholder's account for any check returned for
insufficient funds. The shareholder also will be responsible for any losses
suffered by the Trust as a result.
By wire to the applicable Fund account as described above under "Opening an
Account -- By Wire". Shareholders should call the Transfer Agent at
1-800-408-4682 before wiring funds.
By electronic funds transfer from a financial institution through the Automated
Clearing House ("ACH"), as described below.
By telephone order, as described below.
By Automated Clearing House (ACH). Once an account is open, shares may
be purchased or redeemed through ACH in minimum amounts of $100. ACH is the
electronic transfer of funds directly between an account with a financial
institution and the applicable Fund. In order to use the ACH service, the ACH
Authorization section of the account application must be completed. For existing
accounts, an ACH Authorization Form may be obtained by calling the
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Transfer Agent at 1-800-408-4682. Allow at least two weeks for preparation
before using ACH. To order a purchase or redemption by ACH, call the Transfer
Agent at 1-800-408-4682. There are no charges for ACH transactions imposed by
the Fund or the Transfer Agent. ACH transactions are completed approximately two
business days following the placement of the transfer order.
ACH may be used to make direct deposits into a Fund account of part or
all of recurring payments made to a shareholder by his or her employer
(corporate, federal, military, or other) or by the Social Security
Administration.
By Telephone Order. Once an account is open, shares may be purchased at
a certain day's price by calling the Transfer Agent at 1-800-408-4682, before
the close of regular trading on the New York Stock Exchange (currently 4:00
p.m., Eastern time) on that day. Orders must be for $1,000 or more and may not
be for an amount greater than twice the value of the existing account at the
time the order is placed. Payment by check or wire must be received within three
business days after the order is placed, or the order will be canceled and the
shareholder will be responsible for any resulting loss to the Fund. Payment of
telephone orders by check may not be mailed to the Transfer Agent's P.O. Box
address herein, but must be mailed to the Transfer Agent at Unified Fund
Services, Inc., 431 North Pennsylvania Street, Indianapolis, Indiana 46204.
Payment must be accompanied by the order number given at the time the order is
placed. A written confirmation with complete purchase information will be sent
to the shareholder of record shortly after payment is received.
DIVIDENDS AND DISTRIBUTIONS
The Select 500 Index Fund, the Select 2000 Index Fund, the Select
NanoCap(TM) Index Fund, and the Select International Equity Index Fund declare
and pay dividends on an annual basis. The Select 30 Index Fund, and the Select
REIT Index Fund declare and pay dividends on a quarterly basis. The Select Bond
Index Fund declares and pay dividends on a monthly basis. The Select Money
Market Fund and declares and pays dividends on a daily basis.
The Funds make distributions of any net realized long-term capital
gains at least once every twelve months. Dividends and distributions are
automatically reinvested in additional shares on payment dates at the
ex-dividend net asset value, unless cash payments are requested on the account
application or in writing to the Transfer Agent. If cash payments are requested
with respect to the Select Money Market Fund, daily dividends will accumulate
and be paid at the end of each month, as requested in writing. All shareholders
on the record date are entitled to the dividend.
If an order for shares is received on a business day prior to receipt
of wire payment, shares purchased by wire begin earning dividends on the
business day wire payment is received by the Transfer Agent. If the order for
shares and payment by wire are received on the same day, shares begin earning
dividends on the next business day. Shares purchased by check begin earning
dividends on the business day after the check is converted into federal funds.
Shares earn dividends through the business day that proper written redemption
instructions are received by the Transfer Agent. Certain transactions in the
Select Money Market Fund are treated differently, as described below.
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Timing of Certain Money Market Fund Transactions
The Select Money Market Fund has two transaction times each day, at
12:00 noon (Eastern time) and the close of regular trading on the New York Stock
Exchange (currently 4:00 p.m., Eastern time). New investments represented by
federal funds or bank wires received by the Custodian prior to 12:00 noon are
paid the full dividend for that day; such investments received after 12:00 noon
do not begin to receive daily dividends until the next day. Redemption orders
received prior to 12:00 noon are effected at 12:00 noon, and the redemption
proceeds are normally available that day. Redemption orders received after 12:00
noon are effected at the close of regular trading on the New York Stock
Exchange, and the redemption proceeds are normally remitted the next business
day. Redemption orders received at any time during a day do not earn that day's
dividend.
EXCHANGE PRIVILEGE
Shares of any fund may be exchanged for shares of any other fund of the
Trust at net asset value, without any additional charges. The shares exchanged
must have been registered in the shareholder's name for at least five days prior
to the exchange request, and must have a net asset value which at least meets
the minimum investment required for the fund into which the exchange is being
made.
Exchange requests may be made by telephone or in writing. Exchanges
will be effected at the respective net asset values per share of the funds
involved, next determined after the exchange request is received in proper form.
If an exchange request is received by the Transfer Agent in proper form on a
Trust business day before the close of regular trading on the New York Stock
Exchange (currently 4:00 p.m., Eastern time), the exchange will be effected that
day. An exchange of shares purchased by check will be delayed until the check
has been converted into federal funds and redemption proceeds are available for
purchase of the newly acquired shares, which could take up to 15 days.
By Telephone. Exchange requests may be made by telephone by calling the
Transfer Agent at 1-800-408-4682. Exchange requests made by telephone will be
effected only if (1) the shareholder's existing account has authorized telephone
redemption privileges (see "How to Redeem Shares -- By Telephone" below) and (2)
no account information will change as a result of the exchange. The Transfer
Agent requires personal identification before accepting any exchange request by
telephone, and telephone exchange requests may be recorded.
By Mail or Telecopy. Exchange requests made in writing should be sent
to The Unified Funds c/o Unified Fund Services, Inc., P.O. Box 6110,
Indianapolis, Indiana 46206-6110. A written request to exchange shares having a
net asset value of less than $5,000 may be sent by telecopy, by first calling
the Transfer Agent at 1-800-408-4682. Regardless of whether the request is sent
by mail or by telecopy, the request must be signed exactly as the shareholder's
name appears on the Trust's account records. If the shares to be exchanged have
a net asset value of $5,000 or more, the request must be mailed, and all
signatures must be properly guaranteed as described below under "How to Redeem
Shares -- Signatures." If shares are to be exchanged into a new account
registered in a different name, or if any account information will change as a
result
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<PAGE>
of the exchange, a separate account application must be received by the Transfer
Agent by mail before the exchange may be effected.
The exchange privilege is designed to accommodate changes in
shareholder investment objectives. It is not designed for frequent trading in
response to short-term market fluctuations. Accordingly, the Trust reserves the
right to limit a shareholder's use of the exchange privilege. The exchange
privilege may be modified or terminated at any time.
Any exchange involves a redemption of shares of one fund and an
investment of the redemption proceeds in shares of another fund. Before
requesting an exchange, a shareholder should read carefully the parts of the
Prospectus describing the fund into which the exchange will be made. Also, an
exchange is treated for federal income tax purposes as a sale of the shares
given in exchange, and the shareholder may realize a taxable gain or loss on the
exchange.
HOW TO REDEEM SHARES
Shares of each Fund may be redeemed on any day on which the Fund
computes it net asset value. Shares are redeemed at their net asset value next
determined after the Transfer Agent receives the redemption request in proper
form. Redemption requests may be made by mail or by telephone.
By Mail. A shareholder may redeem shares by mailing a written request to
The Unified Funds, c/o Unified Fund Services, Inc., P.O. Box 6110, Indianapolis,
Indiana 46206-6110. Written requests must state the shareholder's name, the name
of the Fund, the account number and the shares or dollar amount to be redeemed
and be signed exactly as the shares are registered.
Signatures. Shareholders requesting a redemption of $5,000 or more, or
a redemption of any amount payable to a person other than the shareholder of
record or to be sent to an address other than that on record with the Trust,
must have all signatures on written redemption requests guaranteed. The Transfer
Agent will accept signatures guaranteed by a financial institution whose
deposits are insured by the FDIC; a member of the New York, American, Boston,
Midwest, or Pacific Stock Exchange; or any other "eligible guarantor
institution," as defined in the Securities Exchange Act of 1934. The Transfer
Agent will not accept signatures guaranteed by a notary public. The Transfer
Agent has adopted standards for accepting signature guarantees from the above
institutions. The Trust may elect in the future to limit eligible signature
guarantors to institutions that are members of a signature guarantee program.
The Trust and its Transfer Agent reserve the right to amend these standards at
any time without notice.
Redemption requests by corporate and fiduciary shareholders must be
accompanied by appropriate documentation establishing the authority of the
person seeking to act on behalf of the account. Forms of resolutions and other
documentation to assist in compliance with the Transfer Agent's procedures may
be obtained by calling the Transfer Agent.
By Telephone. You may also redeem shares by telephone by calling the
Transfer Agent at 1-800-408-4682. In order to make redemption requests by
telephone, the Telephone Privileges section of the account application must be
completed. For existing accounts, a Telephone Privileges form may be obtained by
calling the Transfer Agent at 1-800-408-4682.
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<PAGE>
Telephone redemptions may be requested only if the proceeds are to be
issued to the shareholder of record and mailed to the address on record with the
Fund. Upon request, proceeds of $100 or more may be transferred by ACH, and
proceeds of $1,000 or more may be transferred by wire, in either case to the
account stated on the account application. Shareholders will be charged for
outgoing wires.
Telephone privileges and account designations may be changed by sending
the Transfer Agent a written request with all signatures guaranteed as described
above.
The Transfer Agent requires personal identification before accepting
any redemption request by telephone, and telephone redemption instructions may
be recorded. If reasonable procedures are not followed by the Trust, it may be
liable for losses due to unauthorized or fraudulent telephone instructions. In
the event of drastic economic or market changes, a shareholder may experience
difficulty in redeeming by telephone. If such a case should occur, redemption by
mail should be considered.
Receiving Payment
The Trust normally will make payment for all shares redeemed within
three business days after receipt by the Transfer Agent of a redemption request
in proper form, except as provided by the rules of the Securities and Exchange
Commission. A requested wire of redemption proceeds normally will be effected
the following business day, but in no event more than three business days, after
receipt of the redemption request in proper form. However, when shares are
purchased by check or through ACH, the proceeds from the redemption of those
shares are not available, and the shares may not be exchanged, until the
purchase check or ACH transfer has been converted to federal funds, which could
take up to 15 calendar days.
Check Writing (Select Money Market Fund Only)
Under the Funds' check writing service, shareholders of the Select
Money Market Fund may write checks payable to any payee in any amount of $250 or
more. There is no check writing privilege for the non-money market Funds. A
shareholder with check writing privileges may present for payment three checks
per month free of charge; additional checks will result in a charge of $0.30 per
check. Daily dividends will continue to accrue on the shares redeemed by check
until the day the check is presented for payment.
The Check Writing Privileges section of the account application must be
completed in order to initiate check writing privileges. For existing accounts,
check writing privileges may be initiated by sending a written request to the
Transfer Agent with all signatures guaranteed. A book of checks will be sent to
the shareholder of record upon the Transfer Agent's receipt of the request.
A check should not be used to close out an account with the Fund
because the balance of the account will continue to increase by the amount of
daily dividends until the check is presented for payment. The Transfer Agent may
impose a charge for checks returned unpaid for insufficient funds or for
effecting stop-payment instructions.
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<PAGE>
Minimum Account Balance
Due to the high cost of maintaining accounts with low balances, the
Trust may involuntarily redeem shares in any account, and pay the proceeds to
the shareholder, if the account balance falls below a required minimum value of
$1,000 ($500 for an IRA) due to shareholder redemptions. This requirement does
not apply, however, if the balance falls below the minimum because of changes in
a Fund's net asset value. Before shares are redeemed to close an account, the
shareholder is notified in writing and allowed 30 days to purchase additional
Shares to meet the minimum requirement. The Transfer Agent reserves the right
and may charge shareholders an administrative fee to cover the cost of
maintaining and properly servicing lost accounts and accounts with balances
below the required minimums.
SHAREHOLDER SERVICES
Each time shares are purchased or redeemed, a statement will be mailed
showing the details of the transaction and the number and value of shares owned
after the transaction. Transactions made in brokerage sweep accounts will be
detailed on a monthly brokerage statement. Share certificates are not issued.
Financial reports showing investments, income and expenses of the Funds are
mailed to shareholders semi-annually. After the end of each year, shareholders
receive a statement of all their transactions for the year.
The Trust provides a number of plans and services to meet the special
needs of certain investors, including (1) an automatic investment plan, (2) a
payroll deduction plan, (3) a systematic withdrawal plan to provide monthly
payments, (4) retirement plans such as IRA and 403(b), and (5) corporate pension
and profit sharing plans, including a 401(k) plan. Brochures describing these
plans and related charges and account applications are available from the
Transfer Agent by calling 1-800-408-4682.
THE TRUST AND ITS MANAGEMENT
The Unified Select Index Series consists of eight portfolios of the
Unified Funds (the "Trust"). The Trust is an Ohio business trust authorized to
offer separate series and classes of shares of beneficial interest. The Trust,
which was organized on November 20, 1997, is the successor to the operations of
The Vintage Funds. At the date of this Prospectus, the Trust has established
each of the eight Funds described herein and the four Funds described in a
separate Prospectus as a separate series of its shares. The Trust's offices are
at 431 North Pennsylvania Street, Indianapolis, Indiana 46204. The business
affairs of the Trust are under the direction of its Board of Trustees.
Investment Advisory Arrangements
Investment Adviser. Unified Investment Advisers, Inc., 431 North
Pennsylvania Street, Indianapolis, Indiana 46204, serves as the Trust's
investment adviser. The Adviser supervises and assists in the management of the
Funds under an Investment Advisory Agreement between the Adviser and the Trust,
subject to the overall authority of the Board of Trustees. The Adviser also is
responsible for monitoring and evaluating the performance of the Sub-Adviser, as
described below.
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<PAGE>
The Adviser was organized in December 1994 and is a registered
investment adviser. It has no prior operating history and does not act as the
investment adviser to any other investment companies. The Adviser is a wholly
owned subsidiary of Unified Financial Services, Inc. Unified Financial Services
is also the parent of Unified Management Corporation (the Funds' Distributor)
and Unified Fund Services, Inc. (the Funds' transfer agent, fund accountant,
administrator and shareholder services agent).
Portfolio Managers' Backgrounds
Jack R. Orben and Dr. Gregory W. Kasten, portfolio managers at the
Adviser, are the two portfolio managers for the Unified Select Series. Mr. Orben
has been the Chairman of Fiduciary Counsel, a registered investment adviser that
manages approximately $450 million in assets, since 1979. Prior to that time, he
was President of Orben & Associates, Inc., an investment consultant to bank
trust departments. Since 1979, Mr. Orben has been a member of Fiduciary
Counsel's Investment Policy Committee and Chairman of its Executive Committee.
Mr. Orben graduated from Tufts University in 1960, and has nearly 25 years of
investment experience.
Dr. Gregory W. Kasten has served as president of Health Financial, Inc.
since 1986. Prior to 1994, Dr. Kasten practiced medicine with Anesthesia
Associates, PSC, Lexington, Kentucky. Dr. Kasten has completed the two year
program from the Denver College of Financial Planning and is a Certified
Financial Planner. Dr. Kasten has also completed the two year program from the
American Society of Pension Actuaries, and he received from that program the
Certificate of Pension Consultant designation. In 1990, he received his M.B.A.
in Finance from the University of Kentucky.
Advisory Fees
Each Fund in the Unified Select Series pays the Adviser an annual
advisory fee, payable monthly, based on its average daily net assets. The fee is
equal to 0.35% of the Fund's average daily net assets. The Adviser pays all of
the operating expenses of the Funds except brokerage, taxes, interest and
extraordinary expenses.
Distribution Services
Distributor. Unified Management Corporation (the "Distributor"), 431
North Pennsylvania Street, Indianapolis, Indiana 46024, acts as each Fund's
distributor pursuant to a Distribution Agreement with the Trust. The Distributor
is a subsidiary of Unified Financial Services, Inc.
Administration of the Trust
Administrator. Unified Fund Services, Inc., 431 North Pennsylvania St.,
Indianapolis, Indiana 46204, serves as the Trust's administrator (the
"Administrator"). Pursuant to a Mutual Fund Services Agreement with the Trust,
the Administrator provides certain administrative personnel and services
(including administration, transfer agency and fund accounting services)
necessary to operate the Funds. For its services, the Administrator receives
from the Adviser an annual fee, payable monthly, based on each Fund's average
daily net assets. The fee is equal to 0.08% of the average daily net assets for
Funds in the Unified Index Series.
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<PAGE>
The Glass-Steagall Act limits the ability of a depository institution
(such as a commercial bank or a savings and loan association) to become an
underwriter or distributor of securities. In the event the Glass-Steagall Act is
deemed to prohibit depository institutions from acting in the capacities
described above or should Congress relax current restrictions on depository
institutions, the Board of Trustees will consider appropriate changes in the
services. State securities laws governing the ability of depository institutions
to act as underwriters or distributors of securities may differ from
interpretations given to the Glass-Steagall Act and, therefore, banks and
financial institutions may be required to register as dealers pursuant to state
law.
Consistent with the Rules of Fair Practice of the National Association
of Securities Dealers, Inc., and subject to its obligation of seeking best
qualitative execution, the Adviser may give consideration to sales of shares of
the Fund as a factor in the selection of brokers and dealers to execute
portfolio transactions. The Adviser (not the Fund) may pay certain financial
institutions (which may include banks, brokers, securities dealers and other
industry professionals) a "servicing fee" for performing certain administrative
functions for Fund shareholders to the extent these institutions are allowed to
do so by applicable statute, rule or regulation.
Transfer Agent, Fund Accounting Agent and Custodian
Unified Fund Services, Inc., P.O. Box 6110, Indianapolis, Indiana
46206-6110, acts as the Trust's transfer agent (the "Transfer Agent") and fund
accounting agent.
Star Bank, N.A., 425 Walnut Street, Cincinnati, Ohio 45201, acts as the
Trust's custodian. General correspondence to the Custodian should be addressed
to Star Bank, N.A., P.O. Box 1038, Location 6118, Cincinnati, Ohio 45201. Share
purchase orders mailed directly to the custodian (See "How to Buy Shares --
Subsequent Investments") should be addressed to The Unified Funds, [Name of
Applicable Fund], P.O. Box 640689, Cincinnati, Ohio 45264-0689.
Portfolio Transactions
The Adviser selects the firms that effect brokerage transactions for
their respective Funds, subject to the overall direction and review of the
Adviser and the Board of Trustees. The initial criterion that must be met by the
Adviser in selecting brokers and dealers is whether the firm can obtain the most
favorable combination of price and execution for the transaction. This does not
mean that the execution decision must be based solely on whether the lowest
possible commission costs may be obtained. In seeking the best combination of
price and execution, the Adviser evaluates the execution capability of the firms
and the services they provide, including their general execution capability,
reliability and integrity, willingness to take positions in securities, and
general operational and financial condition.
Subject to this primary objective, the Adviser may select for brokerage
transactions those firms which furnish brokerage and research services to the
Funds, or the Advisers. The Adviser may also give consideration to firms that
have sold Fund shares. The Board of Trustees has authorized the Funds to pay
brokerage commissions to firms that are affiliated with the Adviser subject to
the foregoing criteria.
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[V.O.I.C.E. Logo]
The Adviser has established The Unified Funds University and
Philanthropic Program (the "Program"), entitled V.O.I.C.E. sm (Vision for
Ongoing Investment in Charity and Education)sm pursuant to which the Adviser
will make donations from its own income to certain accredited college or
university endowments or general scholarship funds ("Eligible Institutions")
designated by qualified shareholders. Philanthropic institutions outside of the
area of education may be proposed by qualifying shareholders and may, at the
sole discretion of the Adviser, be accepted for inclusion as an Eligible
Institution.
All Unified Select Index Funds shareholders maintaining an average
annualized aggregate net asset value of $25,000 or more over the period of an
entire calendar quarter ("Qualified Shareholders") will be qualified to
designate one or more Eligible Institutions to receive a donation under the
Program with respect to that period. A shareholder making an initial investment
of $25,000 or more in Fund shares may designate one Eligible Institution on the
V.O.I.C.E.sm Program Application. A shareholder making an initial investment of
$1,000,000 or more (or maintaining that amount for an entire quarterly period)
may designate one additional Eligible Institution for each $l,000,000 invested
(or maintained for such period).
The Adviser will donate, on a quarterly basis, donate annually from its
own income an amount equal to 0.25% of the average daily aggregate net asset
value of the shares owned by the Qualified Shareholder for the preceding
quarterly period. This donation will be made on a quarterly basis for so long as
the average daily aggregate net asset value of the shares owned by the Qualified
Shareholder remains above $25,000 for such the applicable quarterly period.
Donations will be made by the Adviser in the name of the Qualified Shareholder
to the Eligible Institution(s) designated by the Qualified Shareholder. However,
while the donation will be made in the Qualified Shareholder's name, the
Qualified Shareholder will not be entitled to any tax deductions for such
donation.
All Qualified Shareholders desiring to change their designated Eligible
Institution(s) may do so twice a year, in January and July. If a Qualified
Shareholder was entitled to designate, and did designate, more than one Eligible
Institution, the amount donated will be allocated according to the percentages
designated on the V.O.I.C.E.sm Program Application.
Donations will be made by the Adviser from its own income and,
therefore, will have no impact on the expenses or yield of the Funds. There can
be no assurances that the Adviser will have income from which to make donations.
The preceding information is only a summary of the V.O.I.C.E.sm Program
and is qualified in its entirety by the more complete information available from
the Adviser.
Information about the V.O.I.C.E.sm Program, including applications to
participate in the Program, may be obtained from the Adviser by calling
1-800-408-4682.
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<PAGE>
TAXES
It is intended that each Fund will qualify as a "regulated investment
company" under the Internal Revenue Code of 1986, as amended (the "Code"), as
long as such qualification is in the best interest of the Fund's shareholders.
Such qualification relieves each Fund of liability for federal income tax to the
extent its earnings are distributed in accordance with the Code.
A shareholder receiving a distribution of ordinary income and/or an
excess of net short-term capital gain over net long-term capital loss ordinarily
would treat it as a receipt of ordinary income in the computation of the
shareholder's gross income, whether such distribution is received in cash or
reinvested in additional shares. Any distribution of the excess of net long-term
capital gain over net short-term capital loss ordinarily is taxable to
shareholders as long-term capital gain regardless of how long the shareholder
has held shares. Dividends and distributions also may be subject to state and
local taxes.
Shareholders will receive statements as to the tax status of dividends
and distributions annually, as well as periodic account summaries that will
include information as to any dividends and distributions from securities gains
paid during the year. Shareholders should consult their own tax advisers with
questions regarding federal, state or local taxes.
Backup Withholding
The Trust may be required to withhold federal income tax at a rate of
31% from dividends and redemption proceeds paid to non-corporate shareholders.
This tax may be withheld from dividends if a shareholder fails to furnish the
Trust with the shareholder's correct taxpayer identification number, the
Internal Revenue Service (the "IRS") notifies the Trust that the shareholder has
failed to report certain income to the IRS, or the shareholder fails to certify
that he or she is not subject to backup withholding when required to do so.
Backup withholding is not an additional tax and the shareholder may credit any
amounts withheld against the shareholder's federal income tax liability.
PERFORMANCE INFORMATION
From time to time the Trust may publish performance information
relative to the Funds, and may include such information in advertisements, sales
literature or shareholder reports. Each Fund may periodically advertise "average
annual total return." The "average annual total return" of a Fund refers to the
average annual compounded rate of return over the stated period that would
equate an initial amount invested at the beginning of a stated period to the
ending redeemable value of the investment. The calculation of "average annual
total return" assumes the reinvestment of all dividends and distributions.
The Fund may also advertise performance information (a
"non-standardized quotation") which is calculated differently from "average
annual total return." A non-standardized 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
non-standardized quotation may be an
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<PAGE>
indication of the value of a $10,000 investment (made on the date of the initial
public offering of the Fund's shares) as of the end of a specified period. A
non-standardized quotation will always be accompanied by the Fund's "average
annual total return" as described above.
The Select Money Market Fund may quote its current yields and effective
yields. The "yield" of the Fund refers to the income generated by an investment
in the Fund over a seven-day period (which period will be stated in the
advertisement). This income is then annualized. That is, the amount of income
generated by investments during the week is assumed to be generated each week
over a 52 week period and is shown as a percentage of the investment. The
"effective yield" is calculated similarly but, when annualized, the income
earned by an investment in the Fund is assumed to be reinvested. The effective
yield will be slightly higher than the yield because of the compounding effect
of this assumed reinvestment.
The Funds may also include in advertisements data comparing performance
with other mutual funds as reported in non-related investment media, published
editorial comments and performance rankings compiled by independent
organizations and publications that monitor the performance of mutual funds
(such as Lipper Analytical Services, Inc., Morningstar, Inc., Fortune or
Barron's). Performance information may be quoted numerically or may be presented
in a table, graph or other illustration. In addition, Fund performance may be
compared to indices of market performance including the Standard & Poor's (S&P)
500 Index, the Dow Jones Industrial Average, the Russell 2000 Index, the Morgan
Stanley Capital International Europe, Australia and Far East Index, the Morgan
Stanley REIT Index, the NanoCap(TM) Index or the Lehman Brothers Aggregate Bond
Index.
The advertised performance data of each Fund is based on historical
performance and is not intended to indicate future performance. Rates of total
return quoted by a Fund may be higher or lower than past quotations, and there
can be no assurance that any rate of total return will be maintained. The
principal value of an investment in a non-money market Fund will fluctuate so
that a shareholder's shares, when redeemed, may be worth more or less than the
shareholder's original investment.
GENERAL INFORMATION
Any Trustee of the Trust may be removed by vote of the shareholders
holding not less than two-thirds of the outstanding shares of the Trust. The
Trust does not hold an annual meeting of shareholders. When matters are
submitted to shareholders for a vote, each shareholder is entitled to one vote
for each whole share he owns and fractional votes for fractional shares he owns.
All shares of the Fund have equal voting rights and liquidation rights. The
Declaration of Trust can be amended by the Trustees, except that any amendment
that adversely affects the rights of shareholders must be approved by the
shareholders affected.
Each Fund acknowledges that it is solely responsible for the
information or any lack of information about it in this joint Prospectus and in
the joint Statement of Additional Information, and no other Fund is responsible
therefor. There is a possibility that one Fund might be deemed liable for
misstatements or omissions regarding another Fund in this Prospectus or in the
joint Statement of Additional Information; however, the Funds deem this
possibility slight.
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Shareholder inquiries may be made by writing to The Unified Funds, c/o
Unified Fund Services, Inc., P.O. Box 6110, Indianapolis, Indiana 46206-6110, or
by calling 1-800-408-4682.
THE UNIFIED FUNDS
The Unified Select 30 Index Fund
The Unified Select 500 Index Fund
The Unified 2000 Index Fund
The Unified International Equity Index Fund
The Unified REIT Index Fund
The Unified Bond Index Fund
The Unified Select Money Market Fund
PROSPECTUS
___________, 1999
TRANSFER AGENT
Unified Fund Services, Inc.
431 N. Pennsylvania Street
Indianapolis, Indiana 46204
CUSTODIAN
Star Bank, N.A.
425 Walnut Street
Cincinnati, Ohio 45201
INVESTMENT ADVISER
Unified Investment Advisers, Inc.
431 N. Pennsylvania Street
Indianapolis, Indiana 46204
AUDITORS
McCurdy & Associates CPA's, Inc.
27955 Clemens Road
Westlake, Ohio 44145
LEGAL COUNSEL
Brown, Cummins & Brown Co., L.P.A.
3500 Carew Tower, 441 Vine Street
Cincinnati, Ohio 45202
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THE UNIFIED FUNDS
THE UNIFIED SELECT SERIES
STATEMENT OF ADDITIONAL INFORMATION
__________, 1999
This Statement of Additional Information, which is not a prospectus,
supplements and should be read in conjunction with the current Prospectus of The
Unified Select Series (the "Funds"), dated __________, 1999, as may be revised
from time to time. To obtain a copy of the Funds' Prospectus, please write to
The Unified Funds at P.O. Box 6110, Indianapolis, Indiana 46206-6110, or call
1-800-408-4682.
TABLE OF CONTENTS
Page
Description of the Trust...................................................2
Types of Investments and Investment Techniques............................ 2
Investment Limitations....................................................11
Management of the Trust...................................................14
Investment Advisory Arrangements..........................................15
Distribution Arrangements.................................................16
Administrative Services Arrangements......................................17
Brokerage Transactions....................................................17
Purchase and Redemption...................................................18
Determination of Net Asset Value..........................................18
Tax Status................................................................19
Performance Information...................................................19
Custodian, Transfer Agent, Fund Accounting Agent,
and Independent Accountants..............................................21
Financial Statements......................................................22
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DESCRIPTION OF THE TRUST
The Unified Funds (the "Trust") is an open-end investment company
established under the laws of Ohio by an Agreement and Declaration of Trust
dated November 19, 1997 (the "Trust Agreement"). The Trust is the successor
entity to The Vintage Funds. The Trust Agreement permits the Trustees to issue
an unlimited number of shares of beneficial interest of separate series without
par value. There are twelve series currently authorized by the Trustees, eight
of which comprise the Unified Select Series (the "Funds").
Each share of a series represents an equal proportionate interest in
the assets and liabilities belonging to that series with each other share of
that series and is entitled to such dividends and distributions out of income
belonging to the series as are declared by the Trustees. The Shares do not have
cumulative voting rights or any preemptive or conversion rights, and the
Trustees have the authority from time to time to divide or combine the shares of
any series into a greater or lesser number of shares of that series so long as
the proportionate beneficial interest in the assets belonging to that series and
rights of shares of any other series are in no way affected. In case of any
liquidation of a series, the holders of shares of the series being liquidated
will be entitled to receive as a class a distribution out of the assets, net of
the liabilities, belonging to that series. Expenses attributable to any series
are borne by that series. Any general expenses of the Trust not readily
identifiable as belonging to a particular series are allocated by or under the
direction of the Trustees in such manner as the Trustees determine to be fair
and equitable. No shareholder is liable to further calls or to assessment by the
Trust without his or her express consent.
For other information concerning the purchase and redemption of shares
of the Funds, see "How to Buy Shares" and "How to Redeem Shares" in the Funds'
Prospectus. For a description of the methods used to determine the share price
and value of each Fund's assets, see "Net Asset Value" in the Funds' Prospectus.
TYPES OF INVESTMENTS AND INVESTMENT TECHNIQUES
Convertible Securities
The Select 500 Index Fund and the Select 2000 Index Fund may invest up
to 5% of their assets in convertible securities. Convertible securities are
fixed income securities that may be exchanged or converted into a predetermined
number of shares of the issuer's underlying common stock at the option of the
holder during a specified period. Convertible securities may take the form of
convertible preferred stock, convertible bonds or debentures, units consisting
of "usable" bonds and warrants or a combination of the features of several of
these securities. The investment characteristics of each convertible security
vary widely, which allows convertible securities to be employed for a variety of
investment strategies.
The will exchange or convert convertible securities into shares of
underlying common stock when, in the opinion of the investment adviser, the
investment characteristics of the underlying common shares will assist the Fund
in achieving its investment objective. The Funds may also elect to hold or trade
convertible shares. In selecting convertible securities, a Fund's investment
adviser evaluates the investment characteristics of the convertible security as
a fixed income instrument, and the investment potential of the underlying equity
security for capital appreciation. In evaluating these matters with respect to a
particular convertible security, the investment adviser considers numerous
factors, including the economic and political outlook, the value of the security
relative to other investment alternatives, trends in the determinants of the
issuer's profits, and the issuer's management capability and practices.
Warrants
The Select 500 Index Fund and the Select 2000 Index Fund may invest up
to 5% of their assets in warrants. Warrants are basically options to purchase
common stock at a specific price (usually at a premium above the market value of
the optioned common stock at issuance) valid for a specific period of time.
Warrants may have a life ranging from less than one year to twenty years, or
they may be perpetual. However, most warrants have expiration dates after which
they are worthless. In addition, a warrant is worthless if the market price of
the common stock does not exceed the warrant's exercise price during the life of
the warrant. Warrants have no voting rights, pay no dividends, and have no
rights with respect to the assets of the corporation issuing them. The
percentage increase or decrease in the market price of the warrant may tend to
be greater than the percentage
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increase or decrease in the market price of the optioned common stock. Warrants
acquired in units or attached to securities may be deemed to be without value
for purposes of this policy.
Corporate Debt Obligations
The Select Bond Index Fund may invest in corporate debt obligations,
including corporate bonds, notes, medium term notes, and debentures, which may
have floating or fixed rates of interest.
Ratings. The Fund will not invest in corporate debt obligations having
a rating of less than A by Moody's Investors Service, Inc. ("Moody's"), Standard
& Poor's Corporation ("S&P"), Fitch Investors Service ("Fitch"), Duff & Phelps,
Inc. ("Duff") or Thompson Bankwatch ("Bankwatch"). (The Taxable Money Market
Fund has higher rating requirements, as described in the Prospectus.) In certain
cases the Adviser may choose bonds which are unrated if it determines that such
bonds are of comparable quality or have similar characteristics to investment
grade bonds. Downgraded securities will be evaluated on a case-by-case basis by
the Adviser. The Adviser will determine whether or not the security continues to
be an acceptable investment. If not, the security will be sold.
Medium Term Notes and Deposit Notes. Medium term notes ("MTNs") and
Deposit Notes are similar to Variable Rate Demand Notes as described in the
Prospectus. MTNs and Deposit Notes trade like commercial paper, but may have
maturities from 9 months to ten years.
Section 4(2) Commercial Paper. Section 4(2) commercial paper is
commercial paper issued in reliance on the exemption from registration afforded
by Section 4(2) of the Securities Act of 1933. Section 4(2) commercial paper is
restricted as to disposition under federal securities law and is generally sold
to institutional investors, such as the Funds, who agree that they are
purchasing the paper for investment purposes and not with a view to public
distribution. Any resale by the purchaser must be in an exempt transaction.
Section 4(2) commercial paper is normally resold to other institutional
investors like the Funds through or with the assistance of the issuer or
investment dealers who make a market in Section 4(2) commercial paper, this
providing liquidity. The Trust believes that the criteria for liquidity
established by the Board of Trustees are quite liquid. The Funds intend,
therefore, to treat the restricted securities which meet the criteria for
liquidity established by the Trustees, including Section 4(2) commercial paper,
as determined by the Funds' investment advisers, as liquid and not subject to
the investment limitation applicable to illiquid securities. In addition,
because Section 4(2) commercial paper is liquid, the Trust intends to not
subject such paper to the limitation applicable to restricted securities.
Variable and Floating Rate Securities.
The interest rates payable on certain securities in which the Select
Bond Index Fund may invest are not fixed and may fluctuate based upon changes in
market rates. A variable rate obligation has an interest rate which is adjusted
at predesignated periods. Interest on a floating rate obligation is adjusted
whenever there is a change in the market rate of interest on which the interest
rate payable is based. Variable or floating rate obligations generally permit
the holders of such obligations to demand payment of principal from the issuer
or a third party at any time or at stated intervals. Variable and floating rate
obligations are less effective than fixed rate instruments at locking in a
particular yield. Nevertheless, such obligations may fluctuate in value in
response to interest rate changes if there is a delay between changes in market
interest rates and the interest reset date for an obligation. The Fund will take
demand features into consideration in determining the average portfolio duration
of the Fund and the effective maturity of individual municipal securities. In
addition, the absence of an unconditional demand feature exercisable within
seven days will, and the failure of the issuer or a third party to honor its
obligations under a demand feature might, require a variable or floating rate
obligation to be treated as illiquid for purposes of a Funds 15% limitation on
illiquid investments.
The Fund may invest in floating rate corporate debt obligations,
including increasing rate securities. Floating rate securities are generally
offered at an initial interest rate which is at or above prevailing market
rates. The interest rate paid on these securities is then reset periodically
(commonly every 90 days) to an increment over some predetermined interest rate
index. Commonly utilized indices include the three-month Treasury bill rate, the
six-month Treasury bill rate, the one-month or three-month London Interbank
Offered Rate (LIBOR), the prime rate of a bank, the commercial paper rates, or
the longer-term rates on U.S. Treasury securities.
Some of these floating rate corporate debt obligations include floating
rate corporate debt securities issued by savings and loans and collateralized by
adjustable rate mortgage loans, also known as collateralized thrift notes. Many
of these
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collateralized thrift notes have received AAA ratings from nationally recognized
statistical rating organizations. Collateralized thrift notes differ from
traditional "pass through" certificates in which payments made are linked to
monthly payments made by individual borrowers net of any fees paid to the issuer
or guarantor of such securities. Collateralized thrift notes pay a floating
interest rate which is tied to a pre-determined index, such as the six-month
Treasury bill rate. Floating rate corporate debt obligations also include
securities issued to fund commercial real estate construction.
Increasing rate securities, which currently do not make up a
significant share of the market in corporate debt securities, are generally
offered at an initial interest rate which is at or above prevailing market
rates. Interest rates are reset periodically (most commonly every 90 days) at
different levels on a predetermined scale. These levels of interest are
ordinarily set at progressively higher increments over time. Some increasing
rate securities may, by agreement, revert to a fixed rate status. These
securities may also contain features which allow the issuer the option to
convert the increasing rate of interest to a fixed rate under such terms,
conditions, and limitations as are described in each issue's prospectus.
Asset-Backed Securities
The Select Money Market Fund may invest in mortgage-related
asset-backed securities that are considered U.S. government securities. The
other Funds may invest in these and, to varying extents as described in the
Prospectus, in other asset- backed securities.
Asset-backed securities are created by the grouping of certain
governmental, government related and private loans, receivables and other lender
assets into pools. Interests in these pools are sold as individual securities.
Payments from the asset pools may be divided into several different tranches of
debt securities, with some tranches entitled to receive regular installments of
principal and interest, other tranches entitled to receive regular installments
of interest, with principal payable at maturity or upon specified call dates,
and other tranches only entitled to receive payments of principal and accrued
interest at maturity or upon specified call dates. Different tranches of
securities will bear different interest rates, which may be fixed or floating.
Because the loans held in the asset pool often may be prepaid without
penalty or premium, asset backed securities are generally subject to higher
prepayment risks than most other types of debt instruments. Prepayment risks on
mortgage securities tend to increase during periods of declining mortgage
interest rates, because many borrowers refinance their mortgages to take
advantage of the more favorable rates. Depending upon market conditions, the
yield that a Fund receives from the reinvestment of such prepayments, or any
scheduled principal payments, may be lower than the yield on the original
mortgage security. As a consequence, mortgage securities may be a less effective
means of "locking in" interest rates than other types of debt securities having
the same stated maturity and may also have less potential for capital
appreciation. For certain types of asset pools, such as collateralized mortgage
obligations, prepayments may be allocated to one tranche of securities ahead of
other tranches, in order to reduce the risk of prepayment for the other
tranches.
Prepayments may result in a capital loss to the Fund to the extent that
the prepaid mortgage securities were purchased at a market premium over their
stated amount. Conversely, the prepayment of mortgage securities purchased at a
market discount from their stated principal amount will accelerate the
recognition of interest income by the Fund, which would be taxed as ordinary
income when distributed to the shareholders.
The credit characteristics of asset-backed securities also differ in a
number of respects from those of traditional debt securities. The credit quality
of most asset-backed securities depends primarily upon the credit quality of the
assets underlying such securities, how well the entity issuing the securities is
insulated from the credit risk of the originator or any other affiliated
entities, and the amount and quality of any credit enhancement to such
securities.
Foreign Securities
The Select International Equity Index Fund may invest in foreign
securities, including foreign securities not publicly traded in the United
States. As described in the Prospectus, investments in foreign securities
involve special risks that differ from those associated with investments in
domestic securities.
Currency Risks. Foreign securities are denominated in foreign
currencies. Therefore, the value in U.S. dollars of a Fund's assets and income
may be affected by changes in exchange rates and regulations. Although each Fund
values its assets
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daily in U.S. dollars, it will not convert its holdings of foreign currencies to
U.S. dollars daily. When a Fund converts its holdings to another currency, it
may incur conversion costs. Foreign exchange dealers realize a profit on the
difference between the prices at which they buy and sell currencies.
A Fund may engage in foreign currency exchange transactions in
connection with its investments in foreign securities. The Fund will conduct its
foreign currency exchange transactions either on a spot (i.e., cash) basis at
the spot rate prevailing in the foreign currency exchange market or through
forward contracts to purchase or sell foreign currencies.
Forward Foreign Currency Exchange Contracts. A forward foreign currency
exchange contract involves an obligation to purchase or sell a specific currency
at a future date, which may be any fixed number of days from the date of the
contract agreed upon by the parties, at a price set at the time of the contract.
These contracts are traded directly between currency traders usually large
commercial banks) and their customers. When a Fund enters into a contract for
the purchase or sale of a security denominated in a foreign currency, it may
want to establish the U.S. dollar cost or proceeds, as the case may be. By
entering into a forward contract in U.S. dollars for the purchase or sale of the
amount of foreign currency involved in an underlying security transaction, the
Fund is able to protect itself against a possible loss between trade and
settlement dates resulting from an adverse change in the relationship between
the U.S. dollar and such foreign currency. However, this tends to limit
potential gains which might result from a positive change in such currency
relationships.
A Fund will not enter into forward foreign currency exchange contracts
or maintain a net exposure in such contracts where the Fund would be obligated
to deliver an amount of foreign currency in excess of the value of the Fund's
securities or other assets denominated in that currency or denominated in a
currency or currencies that the adviser believes will reflect a high degree of
correlation with the currency with regard to price movements. The Fund generally
will not enter into forward foreign currency exchange contracts with a term
longer than one year.
Foreign Currency Options. A foreign currency option provides the option
buyer with the right to buy or sell a stated amount of foreign currency at the
exercise price on a specified date or during the option period. The owner of a
call option has the right, but not the obligation, to buy the currency.
Conversely, the owner of a put option has the right, but not the obligation, to
sell the currency. When the option is exercised, the seller (i.e., writer) of
the option is obligated to fulfill the terms of the sold option. However, either
the seller or the buyer may, in the secondary market, close its position during
the option period at any time prior to expiration.
A call option on foreign currency generally rises in value if the
underlying currency appreciates in value, and a put option on foreign currency
generally falls in value if the underlying currency depreciates in value.
Although purchasing a foreign currency option can protect a Fund against an
adverse movement in the value of a foreign currency, the option will not limit
the movement in the value of such currency. For example, if the Fund was holding
securities denominated in a foreign currency that was appreciating and had
purchased a foreign currency put to hedge against a decline in the value of the
currency, the Fund would not have to exercise their put option. Likewise, if the
Fund were to enter into a contract to purchase a security denominated in foreign
currency and, in conjunction with that purchase, were to purchase a foreign
currency call option to hedge against a rise in value of the currency, and if
the value of the currency instead depreciated between the date of purchase and
the settlement date, the Fund would not have to exercise its call. Instead, the
Fund could acquire in the spot market the amount of foreign currency needed for
settlement.
Buyers and sellers of foreign currency options are subject to the same
risks that apply to options generally. In addition, there are certain additional
risks associated with foreign currency options. The markets in foreign currency
options are relatively new, and a Fund's ability to establish and close out
positions on such options is subject to the maintenance of a liquid secondary
market. Although a Fund will not purchase or write such options unless and
until, in the opinion of the Fund's investment adviser, the market for them has
developed sufficiently to ensure that the risks in connection with such options
are not greater than the risks in connection with the underlying currency, there
can be no assurance that a liquid secondary market will exist for a particular
option at any specific time. In addition, options on foreign currencies are
affected by all of those factors that influence foreign exchange rates and
investments generally. Foreign currency options that are considered to be
illiquid are subject to each Fund's 15% limitation on illiquid securities.
The value of a foreign currency option depends upon the value of the
underlying currency relative to the U.S. dollar. As a result, the price of the
option position may vary with changes in the value of either or both currencies
and may have no relationship to the investment merits of a foreign security.
Because foreign currency transactions occurring in the interbank
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market involve substantially larger amounts than those that may be involved in
the use of foreign currency options, investors may be disadvantaged by having to
deal in an odd lot market (generally consisting of transactions of less than $1
million) for the underlying foreign currencies at prices that are less favorable
than for round lots.
There is no systematic reporting of last sale information for foreign
currencies or any regulatory requirement that quotations available through
dealers or other market sources be firm or revised on a timely basis. Available
quotation information is generally representative of very large transactions in
the interbank market and thus may not reflect relatively smaller transactions
(i.e., less than $1 million) where rates may be less favorable. The interbank
market in foreign currencies is a global, around the-clock market. To the extent
that the U.S. option markets are closed while the markets for the underlying
currencies remain open, significant price and rate movements may take place in
the underlying markets that cannot be reflected in the options markets until
they reopen.
Foreign Bank Instruments
The Select Money Market Fund may invest in foreign bank instruments,
including Eurodollar Certificates of Deposit ("ECDs"), Eurodollar Time Deposits
("ETDs"),Yankee Certificates of Deposit ("Yankee Cds"), and Europaper. These
instruments are subject to somewhat different risks than domestic obligations of
domestic issuers. Examples of these risks include international, economic and
political developments, foreign governmental restrictions that may adversely
affect the payment of principal or interest, foreign withholdings or other taxes
on interest income, difficulties in obtaining or enforcing a judgment against
the issuing bank, and the possible impact of interruptions of the flow of
international currency transactions. Different risks may also exist for ECDs,
ETDs, and Yankee Cds because the banks issuing these instruments, or their
domestic or foreign branches, are not necessarily subject to the same regulatory
requirements that apply to domestic banks, such as reserve requirements, loan
requirements, loan limitations, examinations, accounting, auditing, and
recording keeping and the public availability of information. These factors will
be carefully considered by a Fund's adviser in selecting investments for the
Fund.
U.S. Government Securities
The Select Bond Fund may invest in obligations issued or guaranteed by
the U.S. Treasury and U.S. governmental agency securities. The Select Money
Market Fund may invest in U.S. government or governmental agency securities.
Some U.S. government securities, such as Treasury bills, notes and bonds, which
differ only in their interest rates, maturities and times of issuance, are
supported by the full faith and credit of the United States of America. Others,
such as obligations issued or guaranteed by U.S. government agencies,
authorities or instrumentalities, are supported either by (a) the full faith and
credit of the U.S. government (such as securities of the Small Business
Administration), (b) the right of the issuer to borrow from the Treasury (such
as securities of Federal Home Loan Banks), (c) the discretionary authority of
the U.S. government to purchase the agency's obligations (such as securities of
the Federal National Mortgage Association), or (d) only the credit of the issuer
(such as securities of the Financing Corporation). The U.S. government is under
no legal obligation to purchase the obligations of its agencies, authorities and
instrumentalities. Securities guaranteed as to principal and interest by the
U.S. government and its agencies, authorities or instrumentalities are deemed to
include (i) securities for which the payment of principal and interest is based
by a guaranty of the U.S. government or its agencies, authorities or
instrumentalities, and (ii) participations in loans made to foreign governments
or their agencies that are so guaranteed. The secondary market for certain of
these participations is limited. Such participations may therefore be regarded
as illiquid.
Options
The Select 500 Index Fund, the Select 2000 Index Fund and the Select
International Equity Index Fund may invest up to 5% of their assets in options.
Purchasing Put Options on Portfolio Securities. A Fund may purchase put
options on portfolio securities to protect against price movements in particular
securities in its portfolio. A put option gives the Fund, in return for a
premium, the right to sell the underlying security to the writer (seller) at a
specified price during the term of the option.
Writing Covered Call Options on Portfolio Securities. A Fund may also
write covered call options to generate income. As writer of a call option, the
Fund has the obligation upon exercise of the option during the option period to
deliver the underlying security upon payment of the exercise price. The Fund may
only sell call options either on securities held in its
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portfolio or on securities which it has the right to obtain without payment of
further consideration (or has segregated cash in the amount of any additional
consideration).
Purchasing and Writing Over-The-Counter Options. A Fund may purchase
and write over-the-counter options on portfolio securities in negotiated
transactions with the buyers or writers of the options for those options on
portfolio securities held by the Fund and not traded on an exchange.
Over-the-counter options are two party contracts with price and terms negotiated
between buyer and seller. In contrast, exchange traded options are third party
contracts with standardized strike prices and expiration dates and are purchased
from a clearing corporation. Exchange-traded options have a continuous liquid
market while over-the-counter options may not.
Options on Securities Indices. Each Fund (except the Select Money
Market Fund) may purchase and write (sell) call and put options on their
respective securities indices. Such options give the holder the right to receive
a cash settlement during the term of the option based upon the difference
between the exercise price and the value of the index.
A Fund may terminate its obligation as the writer of a call or put
option by purchasing an option with the same exercise price and expiration date
as the option previously written. This transaction is called a "closing purchase
transaction." The Fund will realize a profit or loss for a closing purchase
transaction if the amount paid to purchase an option is less or more, as the
case may be, than the amount received from the sale thereof. To close out a
position as a purchaser of an option, the Fund may make a `closing sale
transaction' which involves liquidating the Fund's position by selling the
option previously purchased.
When a Fund writes an option, an amount equal to the net premium
received by the Fund is included in the liability section of the Fund's
Statement of Assets and Liabilities as a deferred credit. The amount of the
deferred credit will be subsequently marked to market to reflect the current
market value of the option written. The current market value of a traded option
is the last sale price or, in the absence of a sale, the mean between the
closing bid and asked price. If an option expires on its stipulated expiration
date or if the Fund enters into a closing purchase transaction, the Fund will
realize a gain (or loss if the cost of a closing purchase transaction exceeds
the premium received when the option was sold), and the deferred credit related
to such option will be eliminated. If a call option is exercised, the Fund will
realize a gain or loss from the sale of the underlying security and the proceeds
of the sale will be increased by the premium originally received. The writing of
covered call options may be deemed to involve the pledge of the securities
against which the option is being written. Securities against which call options
are written will be segregated on the books of the Custodian for the Fund.
Options on securities indices entail risks in addition to the risks of
options on securities. The absence of a liquid secondary market to close out
options positions on securities indices is more likely to occur, although the
Fund generally will only purchase or write such an option if the Advisor
believes the option can be closed out.
Use of options on securities indices also entails the risk that trading
in such options may be interrupted if trading in certain securities included in
the index is interrupted. The Fund will not purchase such options unless the
Advisor believes the market is sufficiently developed such that the risk of
trading in such options is no greater than the risk of trading in options on
securities.
Price movements in a Fund's holdings may not correlate precisely with
movements in the level of an index and, therefore, the use of options on indices
cannot serve as a complete hedge. Because options on securities indices require
settlement in cash, the Advisor may be forced to liquidate Fund securities to
meet settlement obligations.
Futures Contracts. When a Fund purchases a futures contract, it agrees
to purchase a specified underlying instrument at a specified future date. When
the Fund sells a futures contract, it agrees to sell the underlying instrument
at a specified future date. The price at which the purchase and sale will take
place is fixed when the Fund enters into the contract. Some currently available
futures contracts are based on specific securities, such as U.S. Treasury bonds
or notes, and some are based on indices of securities such as the Standard &
Poor's 500 Composite Stock Price Index ("S&P 500"). Futures can be held until
their delivery dates, or can be closed out before then if a liquid secondary
market is available.
The value of a futures contract tends to increase and decrease in
tandem with the value of its underlying instrument or precious metal. Therefore,
purchasing futures contracts will tends to increase a Fund's exposure to
positive and negative price fluctuations in the underlying instrument or
precious metal, much as if it had purchased the underlying instrument or
precious
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metal directly. When a Fund sells a futures contract, by contrast, the value of
its futures position will tend to move in a direction contrary to the market.
Selling futures contracts, therefore, will tend to offset both positive and
negative market price changes, much as if the underlying instrument or precious
metal had been sold.
Futures Margin Payments. The purchaser or seller of a futures contract
is not required to deliver or pay for the underlying instrument or precious
metal unless the contact is held until the delivery date. However, both the
purchaser and seller are required to deposit "initial margin" with futures
broker, known as a futures commission merchant ("FCM"), when the contract is
entered into. Initial margin deposits are typically equal to a percentage of the
contract's value. If the value of either party's position declines, that party
will be required to make additional "variation margin" payments to settle the
change in value on a daily basis. The party that has a gain may be entitled to
receive all or a portion of this amount. Initial and variation margin payments
do not constitute purchasing securities on margin for purposes of the Fund's
investment limitations. In the event of the bankruptcy of the FCM that holds
margin on behalf of a Fund, the Fund may be entitled to return of margin owed to
it only in proportion to the amount received by the FCM's other customers,
potentially resulting in losses to the Fund.
Portfolio Turnover
The Funds will not attempt to set or meet a portfolio turnover rate
since any turnover would be incidental to transactions undertaken in an attempt
to achieve a Fund's investment objective, without regard to the length of time a
particular security may have been held. The Adviser does not anticipate that
portfolio turnover will result in adverse tax consequences.
INVESTMENT LIMITATIONS
Fundamental. The investment limitations described below have been
adopted by the Trust with respect to each Fund and are fundamental
("Fundamental"), i.e., they may not be changed without the affirmative vote of a
majority of the outstanding shares of each Fund. As used in the Prospectus and
the Statement of Additional Information, the term "majority" of the outstanding
shares of the Fund means the lesser of (1) 67% or more of the outstanding shares
of the Fund present at a meeting, if the holders of more than 50% of the
outstanding shares of the Fund are present or represented at such meeting; or
(2) more than 50% of the outstanding shares of the Fund. Other investment
practices which may be changed by the Board of Trustees without the approval of
shareholders to the extent permitted by applicable law, regulation or regulatory
policy are considered non- fundamental ("Non-Fundamental").
1. Borrowing Money. The Funds will not borrow money, except (a) from a
bank, provided that immediately after such borrowing there is an asset coverage
of 300% for all borrowings of the Fund; or (b) from a bank or other persons for
temporary purposes only, provided that such temporary borrowings are in an
amount not exceeding 5% of the Fund's total assets at the time when the
borrowing is made. This limitation does not preclude the Fund from entering into
reverse repurchase transactions, provided that the Fund has an asset coverage of
300% for all borrowings and repurchase commitments of the Fund pursuant to
reverse repurchase transactions.
2. Senior Securities. The Funds will not issue senior securities. This
limitation is not applicable to activities that may be deemed to involve the
issuance or sale of a senior security by the Fund, provided that the Fund's
engagement in such activities is consistent with or permitted by the Investment
Company Act of 1940, as amended, the rules and regulations promulgated
thereunder or interpretations of the Securities and Exchange Commission or its
staff.
3. Underwriting. The Funds will not act as underwriter of securities
issued by other persons.This limitation is not applicable to the extent that, in
connection with the disposition of portfolio securities (including restricted
securities), the Fund may be deemed an underwriter under certain federal
securities laws.
4. Real Estate. The Funds will not purchase or sell real estate. This
limitation is not applicable to investments in marketable securities which are
secured by or represent interests in real estate. This limitation does not
preclude the Fund from investing in mortgage-related securities or investing in
companies engaged in the real estate business or that have a significant portion
of their assets in real estate (including real estate investment trusts).
5. Commodities. The Funds will not purchase or sell commodities unless
acquired as a result of ownership of securities or other investments. This
limitation does not preclude the Fund from purchasing or selling options or
futures contracts, from investing in securities or other instruments backed by
commodities or from investing in companies which are engaged in a commodities
business or have a significant portion of their assets in commodities.
6. Loans. The Funds will not make loans to other persons, except (a) by
loaning portfolio securities, (b) by engaging in repurchase agreements, or (c)
by purchasing nonpublicly offered debt securities. For purposes of this
limitation, the term "loans" shall not include the purchase of a portion of an
issue of publicly distributed bonds, debentures or other securities.
7. Concentration. No Fund will invest 25% or more of its total assets
in a particular industry. This limitation is not applicable to investments in
obligations issued or guaranteed by the U.S. government, its agencies and
instrumentalities or repurchase agreements with respect thereto.
With respect to the percentages adopted by the Trust as maximum
limitations on its investment policies and limitations, an excess above the
fixed percentage will not be a violation of the policy or limitation unless the
excess results immediately and directly from the acquisition of any security or
the action taken. This paragraph does not apply to the borrowing policy set
forth in paragraph 1 above.
Notwithstanding any of the foregoing limitations, any investment
company, whether organized as a trust, association or corporation, or a personal
holding company, may be merged or consolidated with or acquired by the Trust,
provided that if such merger, consolidation or acquisition results in an
investment in the securities of any issuer prohibited by said paragraphs, the
Trust shall, within ninety days after the consummation of such merger,
consolidation or acquisition, dispose of all of the securities of such issuer so
acquired or such portion thereof as shall bring the total investment therein
within the limitations imposed by said paragraphs above as of the date of
consummation.
Non-Fundamental. The following limitations have been adopted by the
Trust with respect to each Fund and are Non-Fundamental (see "Investment
Restrictions" above).
1. Pledging. The Funds will not mortgage, pledge, hypothecate or in any
manner transfer, as security for indebtedness, any assets of the Fund except as
may be necessary in connection with borrowings described in limitation (1)
above. Margin deposits, security interests, liens and collateral arrangements
with respect to transactions involving options, futures contracts, short sales
and other permitted investments and techniques are not deemed to be a mortgage,
pledge or hypothecation of assets for purposes of this limitation.
2. Borrowing. No Fund will purchase any security while borrowings
(including reverse repurchase agreements) representing more than 33 1/3% of its
total assets are outstanding.
3. Margin Purchases. No Fund will purchase securities or evidences of
interest thereon on "margin." This limitation is not applicable to short term
credit obtained by a Fund for the clearance of purchases and sales or redemption
of securities, or to arrangements with respect to transactions involving
options, futures contracts, short sales and other permitted investments and
techniques.
<PAGE>
4. Options. No Fund will purchase or sell puts, calls, options or
straddles except as described in the Funds' Prospectus and Statement of
Additional Information.
5. Illiquid Investments. No Fund will invest more than 15% of its net
assets in securities for which there are legal or contractual restrictions on
resale and other illiquid securities.
6. Loans of Portfolio Securities. Each Fund may lend portfolio
securities up to 5% of the value of its total assets.
<PAGE>
MANAGEMENT OF THE TRUST
Trustees and Officers of the Trust
Trustees and officers of the Trust, together with information as to
their principal business occupations during at least the last five years, are
shown below. Each Trustee who is an "interested person" of the Trust, as defined
in the Investment Company Act of 1940, is indicated by an asterisk. The officers
of the Trust listed below are affiliated persons of the Trust and the Adviser.
- 10 -
<PAGE>
<TABLE>
NAME, ADDRESS AND AGE POSITIONS WITH THE TRUST AND PRINCIPAL OCCUPATION
<S> <C>
* Timothy L. Ashburn (48) Trustee (Chairman of the Board) and President of the Trust and of the Star
431 N. Pennsylvania St. Select Funds; Chairman of the Board and President, Unified Investment
Indianapolis, IN 46204 Advisers, Inc. (December 1994 to present); Chairman of the Board, Unified
Corporation, Unified Management Corporation and Unified Fund
Services, Inc. (December 1989 to present); Trust Division Manager
and Senior Trust Officer, Vine Street Trust Company (July 1991 to
April 1994).
David Bottoms (59) Trustee of the Trust; President and Chief Executive Officer, Fiduciary
30 Wall Street Management Corporation (August 1997 to present); President and Chief
New York, NY 10005 Executive Officer, Assets Corporation (August 1997 to present); Vice
President, CFA Asset (August 1997 to present); President, Laidlaw
Holdings Asset Management (1992 through August 1997); Chief
Executive Officer and Chief Investment Officer, Howe Rustling
(a broker/dealer) (January 1996 to November 1996).
Daniel J. Condon (48) Trustee of the Trust and of the Star Select Funds; Vice President and Officer,
101 Carley Court International Crankshaft, Inc. (1990 to present); General Manager, Van Leer
Georgetown, KY 40324 Container, Inc. (1998 to 1990).
Philip L. Conover (52) Trustee of the Trust and of the Star Select Funds; Private Investor and
8218 Cypress Hollow Financial Consultant; Adjunct Professor of Finance, University of South
Saraota, FL 34238 Florida (August 1994 to present); Managing Director and Chief Operating
Officer, Federal Housing Board (November 1990 to April 1994);
President and CEO, Trustcorp Bank (February 1989 to November 1990).
John Hinkel (44) Trustee of the Trust; Partner, Fowler Measle & Bell (1986 to present).
300 W. Vine St.
Lexington, KY 40507
David E. LaBelle (49) Trustee of the Trust and of the Star Select Funds; Vice President of
5005 LBJ Freeway Compensation Benefits, Occidental Chemical Corporation (May 1993 to
Dallas, TX 76092 present); Vice President Human Resources, Island Creek Coal Company (A
subsidiary of Occidental Petroleum)(June 1990 to April 1993); Director of
Human Resources, Occidental Chemical Corporation (March 1989 to May
1990).
Thomas G. Napurano (57) Treasurer of the Trust and of the Star Select Funds; Chief Financial Officer,
431 N. Pennsylvania St. Unified Investment Advisers, Inc. (January 1995 to Present); Senior Vice
Indianapolis, IN 46204 President and Chief Financial Officer of Unified Financial Services, Unified
Management Corporation and Unified Fund Services, Inc.
Carol Highsmith (34) Secretary of the Trust and of the Star Select Funds; Secretary of Unified
431 N. Pennsylvania St. Financial Services, Inc. and Unified Investment Advisers, Inc. (October
Indianapolis, IN 46204 1996 to present); employed by Unified Fund Services, Inc. (November 1994
to present).
</TABLE>
No executive officer of the Trust receives compensation from
the Trust, and no Trustee or executive officer of the Trust receives any pension
or retirement benefits from the Trust. The table sets forth the compensation
received by each Trustee during the fiscal year ended September 30, 1998, all of
which consists of meeting fees. During the period from October 1, 1997 through
February 2, 1998, the compensation was paid by The Vintage Funds (the
predecessor entity to the Trust). During the remainder of the fiscal year, the
Adviser paid the Trustees' compensation.
Name of Trustee Total Compensation
- 11 -
<PAGE>
Timothy L. Ashburn $0
Daniel J. Condon $9600
Philip L. Conover $7200
David E. LaBelle $9600
John Hinkel
David Bottoms
INVESTMENT ADVISORY ARRANGEMENTS
Investment Adviser
The Trust's investment adviser is Unified Investment Advisers, Inc.
(the "Adviser"). Timothy L. Ashburn, Chairman of the Board and President of the
Trust, is the Chairman of the Board and Chief Executive Officer of the Adviser.
Mr. Ashburn, Jack R. Orben, and Dr. Gregory W. Kasten each may be deemed to
control the Adviser, because of their ownership interest in the Adviser and/or
Unified Financial Services, Inc. Thomas G. Napurano, Treasurer of the Trust, is
the Executive Vice President and Chief Financial Officer of the Adviser. Carol
J. Highsmith, Secretary of the Trust, is Secretary of the Adviser.
Under the terms of the advisory agreement (the "Agreement"), the
Adviser retains the right to use the name "Unified", in connection with another
investment company or business enterprise with which the Adviser is or may
become associated. The Trust's right to use the name "Unified" automatically
ceases ninety days after termination of the Agreement and may be withdrawn by
the Adviser on ninety days written notice.
The Adviser may make payments to banks or other financial institutions
that provide shareholder services and administer shareholder accounts. The
Glass-Steagall Act prohibits banks from engaging in the business of
underwriting, selling or distributing securities. Although the scope of this
prohibition under the Glass-Steagall Act has not been clearly defined by the
courts or appropriate regulatory agencies, management of the Funds 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 a dealers pursuant to state law. If a bank were prohibited
from continuing to perform all or a part of such services, management of the
Funds believes that there would be no material impact on the Funds or its
shareholders. Banks may charge their customers fees for offering these services
to the extent permitted by applicable regulatory authorities, and the overall
return to those shareholders availing themselves of the bank services will be
lower than to those shareholders who do not. The Funds may from time to time
purchase securities issued by banks which provide such services; however, in
selecting investments for the Funds, no preference will be shown for such
securities.
BROKERAGE TRANSACTIONS
When selecting brokers and dealers to handle the purchase and sale of
portfolio instruments, a Fund's investment adviser looks for prompt execution of
the order at a favorable price. In working with dealers, the adviser will
generally use those who are recognized dealers in specific portfolio
instruments, except when a better price and execution of the order can be
obtained elsewhere. The Adviser makes decisions on portfolio transactions and
select brokers and dealers subject to review by the Board of Trustees.
The Adviser may select brokers and dealers who offer brokerage and
research services. These services may be furnished directly to the Fund or to
the Adviser and may include advice as to the advisability of investing in
securities, security analysis and reports, economic studies, industry studies,
receipt of quotations for portfolio evaluations and similar services.
Research services provided by brokers may be used by the Adviser in
advising the Fund's and other clients. To the extent that receipt of these
services may supplant services for which the Adviser might otherwise have paid,
it would tend to reduce their expenses.
PURCHASE AND REDEMPTION
- 12 -
<PAGE>
Terms of Purchase
The Trust reserves the right to reject any purchase order and to change
the amount of the minimum initial and subsequent investments in the Funds upon
notice.
Reopening an Account
A shareholder may reopen a closed account with a minimum investment of
$1,000 without filing a new account application, during the calendar year the
account is closed or during the following calendar year, provided that the
information on the existing account application remains correct.
Brokers
The Trust has authorized one or more brokers to accept purchase and
redemption orders on behalf of the Funds. Authorized brokers are permitted to
designate other intermediaries to accept purchase and redemption orders on the
Funds' behalf. A Fund will be deemed to have received a purchase or redemption
order when an authorized broker or, if applicable, an authorized broker's
designee, accepts the order. Orders will be priced at the Fund's net asset value
next computed after the order is accepted by an authorized broker or the
authorized broker's designee.
Redemption in Kind
The Trust has committed to pay in cash all redemption requests by a
shareholder of record, limited in amount during any 90-day period up to the
lesser of $250,000 or 1% of the value of the particular Fund's net assets at the
beginning of such period. Such commitment is irrevocable without the prior
approval of the Securities and Exchange Commission. In the case of requests for
redemption in excess of such amount, the Board of Trustees reserves the right to
make payments in whole or in part in securities or other assets of the
particular Fund. In this event, the securities would be valued in the same
manner as the particular Fund's net asset value is determined. If the recipient
sold such securities, brokerage charges would be incurred.
Suspension of Redemptions
The right of redemption may be suspended or the date of payment
postponed (a) during any period when the New York Stock Exchange is closed, (b)
when trading in the markets the particular Fund normally uses is restricted, or
when an emergency exists as determined by the Securities and Exchange Commission
so that disposal of the particular Fund's investments or determination of its
net asset value is not reasonably practicable, or (c) for such other periods as
the Securities and Exchange Commission by order may permit to protect the
particular Fund's shareholders.
DETERMINATION OF NET ASSET VALUE
The methods and days on which net asset value is calculated by each
Fund are described in the Prospectus.
Valuation of Portfolio Securities
Portfolio securities owned by a Fund and listed or traded on any
national securities exchange are valued on the basis of the last sale on such
exchange each day the exchange is open for business. Securities not listed on an
exchange or national securities market, or securities in which there were no
transactions, are valued at the average of the most recently reported bid and
asked prices. Bid price is used when no asked price is available. Options are
valued at the last sales price on an exchange. Options for which there were no
transactions are valued at the average of the most recently reported bid and
asked prices. Money market instruments (certificates of deposit, commercial
paper, etc.) are valued at amortized cost if not materially different from
market value. Portfolio securities for which market quotations are not readily
available are to be valued in good faith as determined by the Board of Trustees.
Other assets, which include cash, prepaid and accrued items and amounts
receivable as income on investment and from the sale of portfolio securities,
are carried at book value, as are all liabilities.
TAX STATUS
- 13 -
<PAGE>
Status of the Funds
The Funds intend to pay no federal income tax because they expect to
meet the requirements of Subchapter M of the Internal Revenue Code applicable to
regulated investment companies and to receive the special tax treatment afforded
to such companies. To qualify for this treatment, a Fund must, among other
requirements:
o derive at least 90% of its gross income from dividends, interest, and gains
from the sale of securities;
o invest in securities within certain statutory limits; and
o distribute to its shareholders at least 90% of its net income earned during
the year.
Shareholders' Tax Status
Shareholders are subject to federal income tax on dividends and capital
gains received as cash or additional shares. Depending on the composition of a
Fund's income, a portion of the dividends from net investment income may qualify
for the dividends received deduction allowable to certain U.S. corporations. In
general, dividend income of a Fund distributed to certain U.S. corporate
shareholders will be eligible for the corporate dividends received deduction
only to the extent that (i) the Fund's income consists of dividends paid by
certain U.S. corporations and (ii) the Fund would have been entitled to the
dividends received deduction with respect to such dividend income if the Fund
were not a regulated investment company.
The foregoing tax consequences apply whether dividends are received in
cash or as additional shares. No portion of any income dividend paid by any Fund
is eligible for the dividends received deduction available to corporations.
Capital Gains
Shareholders will pay federal tax at capital gains rates on long-term
capital gains distributed to them regardless of how long they have held the Fund
shares.
Foreign Taxes
Dividend and interest income received by a Fund from sources outside
the U.S. may be subject to withholding and other taxes imposed by such foreign
jurisdictions. Tax conventions between certain countries and the U.S. may reduce
or eliminate these foreign taxes, however, and foreign countries generally do
not impose taxes on capital gains respecting investments by foreign investors.
PERFORMANCE INFORMATION
Quotations of a Fund's performance are based on historical earnings,
show the performance of a hypothetical investment, and are not intended to
indicate future performance of a Fund. An investor's shares when redeemed may be
worth more or less than their original cost. Performance of a Fund will vary
based on changes in market conditions and the level of the Fund's expenses.
Total Return
"Average annual total return," as defined by the Securities and
Exchange Commission, is computed by finding the average annual compounded rates
of return (over the one and five year periods and the period from initial public
offering through the end of a Fund's most recent fiscal year) that would equate
the initial amount invested to the ending redeemable value, according to the
following formula:
P(1+T)n = ERV
Where: P = a hypothetical $1,000 initial investment
- 14 -
<PAGE>
T = average annual total return
n = number of years
ERV = ending redeemable value at the end of the
applicable period of the hypothetical $1,000
investment made at the beginning of the
applicable period.
The computation assumes that all dividends and distributions are reinvested at
the net asset value on the reinvestment dates and that a complete redemption
occurs at the end of the applicable period.
Yield
The yield of a Fund's shares (other than the Select Money Market Fund)
is determined each day by dividing the net investment income per share (as
defined by the Securities and Exchange Commission) earned by the Fund over a
thirty-day period by the net asset value per share of the Fund on the last day
of the period. This value is annualized using semi-annual compounding. This
means that the amount of income generated during the thirty-day period is
assumed to be generated each month over a 12-month period and is reinvested
every six months.
The "yield" of a money market Fund refers to the income generated by an
investment in the Fund over a seven-day period. This income is then annualized.
The amount of income generated by investments during the week is assumed to be
generated each week over a 52-week period and is shown as a percentage of the
investment. The "effective yield" is calculated similarly but, when annualized,
the income earned by an investment in the Fund is assumed to be reinvested. The
effective yield will be slightly higher than the yield because of the
compounding effect of this assumed reinvestment.
The yield of does not necessarily reflect income actually earned by the
applicable shares because of certain adjustments required by the Securities and
Exchange Commission and, therefore, may not correlate to the dividends or other
distributions paid to shareholders. To the extent that financial institutions
and broker/dealers charge fees in connection with services provided in
conjunction with an investment in the Fund, performance will be reduced for
those shareholders paying those fees.
Performance Comparisons
A comparison of the quoted non-standard performance of various
investments is valid only if performance is calculated in the same manner.
Because there are different methods of calculating performance, investors should
consider the effect of the methods used to calculate performance when comparing
performance of a particular Fund with the performance quoted with respect to
other investment companies or types of investments.
From time to time, in advertising and marketing literature, a Fund's
performance may be compared to the performance of broad groups of mutual funds
with similar investment goals, as tracked by independent organizations such as
Investment Company Data, Inc. ("ICD"), Lipper Analytical Services, Inc.
("Lipper"), CDA Investment Technologies, Inc. ("CDA"), Morningstar, Inc. And
other independent organizations. When these organizations' tracking results are
used, a Fund will be compared to the appropriate fund category, that is, by fund
objective and portfolio holdings or the appropriate volatility grouping, where
volatility is a measure of a fund's risk. Rankings may be listed among one or
more of the asset-size classes as determined by the independent ranking
organization. Footnotes in advertisements and other marketing literature will
include the organization issuing the ranking, time period, and asset size class,
as applicable, for the ranking in question.
In addition, a particular Fund's performance may be compared to
unmanaged indices of securities that are comparable in their terms and intent to
those in which the Fund invests such as the Dow Jones Industrial Average
("DJIA"), Standard & Poor's 500 Stock Index ("S&P 500"), the Lehman Brothers
Aggregate Bond Index, the Russell 2000 Index, the Morgan Stanley Capital
International Europe, Australia and Far East Index, the Morgan Stanley REIT
Index, the NanoCap(TM) Index and the Consumer Price Index ("CPI"). The DJIA and
S&P 500 are unmanaged indices widely regarded as representative of the equity
market in general. The CPI is a commonly used measured of inflation.
Marketing and other literature for the Funds may include a description
of the potential risks and rewards associated with an investment in a particular
Fund. The description may include a comparison of a particular Fund to broad
categories of comparable funds in terms of potential risks and returns. The
description may also compare a particular Fund to bank products, such as
certificates of deposit. Unlike mutual funds, certificates of deposit are
insured up to $100,000 by the U.S. government
- 15 -
<PAGE>
and offer a fixed rate of return. Because bank products guarantee the principal
value of an investment and money market funds seek stability of principal, these
investments are considered to be less risky than investments in either bond or
equity funds, which may involve loss of principal.
The risks and rewards associated with an investment in bond or equity
funds depend upon many factors. For fixed income funds these factors include,
but are not limited to a fund's overall investment objective, the average
portfolio maturity, credit quality of the securities held, and interest rate
movements. For equity funds, factors include a fund's overall investment
objective, the types of equity securities held and the financial position of the
issuers of the securities. The risks and rewards associated with an investment
in international bond or equity funds will also depend upon currency exchange
rate fluctuation. Shorter-term bond funds generally are considered less risky
and offer the potential for less return than longer-term fixed income funds. The
same is true of domestic bond funds relative to international fixed income
funds, and fixed income funds that purchase higher quality securities relative
to bond funds that purchase lower quality securities. Growth and income equity
funds are generally considered to be less risky and offer the potential for less
return than growth funds. In addition, international equity funds usually are
considered more risky than domestic equity fund but generally offer the
potential for greater return.
CUSTODIAN, TRANSFER AGENT, FUND ACCOUNTING AGENT,
AND INDEPENDENT ACCOUNTANTS
Star Bank, N.A., 425 Walnut Street, Cincinnati, Ohio 45201
("Custodian") serves as the custodian for each of the Funds. General
correspondence to the Custodian, such as for IRA information, etc., should be
addressed to: Star Bank, P.O. Box 1038 Location 6118, Cincinnati, Ohio 45201.
When Fund purchases or deposits require delivery directly to the Custodian,
those correspondences should be addressed to: The Unified Funds, [name of
specific Fund in which you are purchasing shares], P.O.
Box 640689, Cincinnati, Ohio, 45264-0689.
Unified Fund Services, Inc., P.O. Box 6110, Indianapolis, Indiana
46206-6110, acts as the transfer agent, fund accounting agent and administrator
for the Trust (the "Transfer Agent"). The Transfer Agent maintains the records
of each shareholder's account, answers shareholders' inquiries concerning their
accounts, processes purchases and redemptions of shares, acts as dividend and
distribution disbursing agent and performs other accounting and shareholder
service functions. The Transfer Agent provides the Trust with certain monthly
reports, record-keeping and other management-related services. For its services
the Transfer Agent receives a monthly fee at an annual rate of .025% and .0675%
of the net assets of the money market fund and the non-money market funds,
respectively. The Transfer Agent and Unified Management Corporation are both
wholly owned subsidiaries of Unified Financial Services, Inc.
Neither the Custodian nor Unified Fund Services, Inc., has any part in
determining the investment policies of the Trust or any of the Funds or which
securities are to be purchased or sold by the Funds, and neither can provide
protection to shareholders against possible depreciation of assets.
McCurdy & Associates CPA's Inc., 27955 Clemens Road, Westlake, OH
44145, independent accountants, have been selected as the Trust's auditors.
- 16 -
<PAGE>
PART C. OTHER INFORMATION
Item 24. Financial Statements and Exhibits.
(a) Financial Statements:
Included in Part A: None
Included in part B: None
(b) Exhibits:
Description
*** 1.(a) Declaration of Trust.
*** 2.(a) By-Laws.
3. Not applicable.
4. Not applicable.
*** 5.(a) Management Agreement between the Registrant and Unified
Investment Advisers, Inc. for the Starwood Strategic Fund,
Laidlaw Fund, First Lexington Balanced Fund, and Taxable Money
Market Fund.
*** (b) Investment Sub-Advisory Agreement between Unified Investment
Advisers, Inc. and Health Financial, Inc.
* (c) Proposed form of Management Agreement for the Select 30 Index
Fund, the Select 500 Index Fund, the Select 2000 Index Fund,
the Select International Equity Index Fund, the Select REIT
Index Fund, the Select NanoCap Index Fund, the Select Bond
Index Fund, and the Select Money Market Fund.
*** 6. Distribution Agreement between the Registrant and Unified
Management Corporation.
7. Not applicable.
*** 8. Custody Agreement between the Registrant and Star Bank, N.A.
*** 9.(a) Mutual Fund Services Agreement (Fund Administration
Services, Fund Accounting Services, Transfer Agency Services)
between the Registrant and Unified Fund Services, Inc.
*** (b) Shareholder Services Plan.
*** (c) Form of Shareholder Services Agreement pursuant to Shareholder
Services Plan.
*** (d) Letter Agreement between the Registrant and Unified Investment
Advisers, Inc. with respect to The Unified Funds University and
Philanthropic Program.
*** 10.(a) Opinion and Consent of Counsel.
* 11. Consent of McCurdy & Associates.
<PAGE>
12. Not applicable.
*** 13. Subscription Agreement between the Registrant and Unified
Investment Advisers, Inc.
14.(a) Model Plan used in Establishment of any Retirement Plan - None.
*** 15.(a) Distribution Plan.
*** (b) Form of Distribution Agreement pursuant to Distribution Plan.
** 16. Schedule for computation of performance data.
17. Financial Data Schedules - None.
18. Not Applicable.
*** 19. Powers of Attorney.
-------------------------
* Filed herewith.
** Filed with Post-Effective Amendment No. 8 to the Registration
Statement and hereby incorporated by reference.
*** Filed with Post-Effective Amendment No. 9 to the Registration Statement
and hereby incorporated by reference
<PAGE>
Item 25. Persons Controlled by or Under Common Control with Registrant.
As of November 30, 1998, no person owns beneficially, either directly or
through one or more controlled companies, more than 25% of the outstanding
shares of any Fund.
Item 26. Number of Holders of Securities.
Number of Record Holders
Title of Class at November 15, 1998
Shares of beneficial interest, without par value of the:
Starwood Strategic Fund 89
Laidlaw Fund 150
First Lexington Balanced Fund 252
Taxable Money Market Fund 5014
Select 30 Index Fund 0
Select 500 Index Fund 0
Select 2000 Index Fund 0
Select International Equity Index Fund 0
Select REIT Index Fund 0
Select Nano Cap Index Fund 0
Select Bond Index Fund 0
Select Money Market Fund 0
Item 27. Indemnification.
Reference is hereby made to Section 6 of the Registrant's Declaration of
Trust (filed as Exhibit 1 to this Registration Statement), which contains
provisions regarding the indemnification by the Registrant of its Trustees,
officers, employees and agents under certain circumstances.
The Distribution Agreement (Exhibit 6) provides for indemnification of
Unified Management Corporation by the Registrant for certain civil liabilities,
including certain liabilities under the Securities Act of 1933. In addition, the
Mutual Fund Services Agreement (Exhibit 9(a)) provides for the indemnification
of Unified Fund Services, Inc. by the Registrant under certain circumstances.
The foregoing indemnification arrangements are subject to the provisions of
Sections 17(h) and (i) of the Investment Company Act of 1940.
Insofar as indemnification by the Registrant for liabilities arising under
the Securities Act of 1933 may be permitted to Trustees, officers and
controlling persons of the Registrant pursuant to the foregoing provisions, or
otherwise, the Registrant has been advised that in the opinion of the Securities
and Exchange Commission such indemnification is against public policy as
expressed in the Act and is, therefore, unenforceable. In the event that a claim
for indemnification against such liabilities (other than the payment by the
Registrant of expenses incurred or paid by a Trustee, officer or controlling
person of the Registrant in the successful defense of any action, suit or
proceeding) is asserted against the Registrant by such Trustee, officer or
controlling person in connection with the securities being registered, the
Registrant will, unless in the opinion of counsel the matter has been settled by
controlling precedent, submit to a court of appropriate jurisdiction the
question whether such indemnification by it is against public policy as
expressed in the Act and will be governed by the final adjudication of such
issue.
<PAGE>
The Registrant maintains an insurance policy which insures its Trustees and
officers against certain civil liabilities.
Item 28. Business and Other Connections of Investment Adviser.
Incorporated herein by reference is the information under the captions "The
Trust and its Management -- Investment Advisory Arrangements" and "-- Portfolio
Managers' Backgrounds" in the Prospectus, and under the captions "Management of
the Trust" and "Investment Advisory Arrangements" in the Statement of Additional
Information, incorporated by reference into Parts A and B, respectively, of this
Registration Statement.
Incorporated herein by reference are (a) the descriptions of the businesses
of Unified Fund Services, Inc. and Health Financial, Inc. under the caption "The
Trust and its Management" in the Prospectus incorporated by reference into Part
A of this Registration Statement and (b) the biographical information pertaining
to Timothy L. Ashburn, Thomas G. Napurano, Andrew E. Beer, Jack R. Orben and
Gregory W. Kasten under the captions "Management of the Trust -- Portfolio
Managers' Backgrounds" in the Prospectus, and under the captions "Management of
the Trust" and "Investment Advisory Arrangements" in the Statement of Additional
Information, incorporated by reference into Parts A and B, respectively, of this
Registration Statement.
For information concerning the business, vocation or employment of a
substantial nature of the directors and officers of Unified Investment Advisers,
Inc., reference is hereby made to the Form ADV filed by it under the Investment
Advisers Act of 1940 (file no. 801-48493).
For information concerning the business, vocation or employment of a
substantial nature of the directors and officers of Health Financial, Inc.,
reference is hereby made to the Form ADV filed by it under the Investment
Advisers Act of 1940 (file no. 801-29028).
Item 29. Principal Underwriters.
(a) Unified Management Corporation, the Registrant's distributor, also acts
as distributor for the Star Select Funds, the Saratoga Advantage Trust,
Securities Management & Timing Funds, Veredus Funds, Sparrow
Funds and Labrador Funds.
(b) Information with respect to each director and officer of Unified
Management Corporation is incorporated by reference to Schedule A of
Form BD filed by it under the Securities Exchange Act of 1934 (File No.
8-23508).
(c) Not applicable.
Item 30. Location of Accounts and Records.
The Registrant's custodian, Star Bank, N.A., 425 Walnut Street, Cincinnati,
Ohio 45201, has possession of and maintains the accounts, books and other
documents relating to its function as custodian. All other accounts, books and
other documents of the Registrant required to be maintained by Section 31(a) of
the Investment company Act of 1940 and Rules 31a-1 to 31a-3 thereunder are in
the possession of Unified Investment Advisers, Inc. or Unified Fund Services,
Inc., each of which is located at 431 North Pennsylvania Street, Indianapolis,
Indiana 46204.
<PAGE>
Item 3l. Management Services.
Not Applicable.
Item 32. Undertakings.
(a) Registrant hereby undertakes to comply with the provisions of
Section 16(c) of the 1940 Act with respect to the removal of
Trustees and the calling of special shareholder meetings by
shareholders.
(b) Registrant hereby undertakes to furnish each person to whom a
prospectus is delivered with a copy of the Registrant's latest
annual report to shareholders, upon request and without charge.
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, the Registrant has duly caused this amendment to
the Registration Statement to be signed on its behalf by the undersigned,
thereunto duly authorized, in the City of Indianapolis, and State of Indiana, on
the 30th day of November, 1998.
THE UNIFIED FUNDS
By /s/ Carol J. Highsmith
Carol J. Highsmith
Secretary
<PAGE>
Pursuant to the requirements of the Securities Act of 1933, this amendment
to the Registration Statement has been signed below by the following persons in
the capacities indicated on November 30, 1998.
Signature Title
* Trustee, Chairman of the Board
Timothy L. Ashburn and President
(principal executive officer)
/s/Thomas G. Napurano Treasurer
Thomas G. Napurano (principal financial officer
and principal accounting officer)
* Trustee
Daniel J. Condon
* Trustee
David E. LaBelle
* Trustee
Philip L. Conover
* Trustee
David Bottoms
* Trustee
John Hinkel
* By /s/ Carol J. Highsmith
Carol J. Highsmith
Attorney-in-Fact
<PAGE>
EXHIBIT LIST
Exhibit Description
- ------- -----------
1. Form of Management Agreement..........................Ex-99.B5.1
2. Consent of Accountants................................Ex-99.B11
MANAGEMENT AGREEMENT
TO:
Dear Sirs:
The Unified Funds (the "Trust") herewith confirms our agreement with
you.
The Trust has been organized to engage in the business of an investment
company. The Trust currently offers several series of shares to investors, one
of which is _________________ (the "Fund").
You have been selected to act as the sole investment adviser of the
Fund and to provide certain other services, as more fully set forth below, and
you are willing to act as such investment adviser and to perform such services
under the terms and conditions hereinafter set forth. Accordingly, the Trust
agrees with you as follows effective upon the date of the execution of this
Agreement.
1. ADVISORY SERVICES
You will regularly provide the Fund with such investment
advice as you in your discretion deem advisable and will furnish a continuous
investment program for the Fund consistent with the Fund's investment objectives
and policies. You will determine the securities to be purchased for the Fund,
the portfolio securities to be held or sold by the Fund and the portion of the
Fund's assets to be held uninvested, subject always to the Fund's investment
objectives, policies and restrictions, as each of the same shall be from time to
time in effect, and subject further to such policies and instructions as the
Board may from time to time establish. You will advise and assist the officers
of the Trust in taking such steps as are necessary or appropriate to carry out
the decisions of the Board and the appropriate committees of the Board regarding
the conduct of the business of the Fund.
2. ALLOCATION OF CHARGES AND EXPENSES
You will pay all operating expenses of the Fund, including the
compensation and expenses of any employees of the Fund and of any other persons
rendering any services to the Fund; clerical and shareholder service staff
salaries; office space and other office expenses; fees and expenses incurred by
the Fund in connection with membership in investment company organizations;
legal, auditing and accounting expenses; expenses of registering shares under
federal and state securities laws, [including expenses incurred by the Fund in
connection with the organization and initial registration of shares of the
Fund]; insurance expenses; fees and expenses of the custodian, transfer agent,
dividend disbursing agent, shareholder service agent, plan agent, administrator,
accounting and pricing services agent and underwriter of the Fund; expenses,
including clerical expenses, of issue, sale, redemption or repurchase of shares
of the Fund; the cost of preparing and distributing reports and notices to
shareholders, the cost of printing or preparing prospectuses and statements of
additional information for delivery to the Fund's current and prospective
shareholders; the cost of printing or preparing stock certificates
<PAGE>
or any other documents, statements or reports to shareholders; expenses of
shareholders' meetings and proxy solicitations; advertising, promotion and other
expenses incurred directly or indirectly in connection with the sale or
distribution of the Fund's shares, excluding expenses which the Fund is
authorized to pay pursuant to Rule 12b-1 under the Investment Company Act of
1940, as amended (the "1940 Act"); and all other operating expenses not
specifically assumed by the Fund.
The Fund will pay all brokerage fees and commissions, taxes,
interest, fees and expenses of the non-interested person trustees 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 trustees and
officers with respect thereto. The Fund will also pay expenses which it is
authorized to pay pursuant to Rule 12b-1 under the 1940 Act. You may obtain
reimbursement from the Fund, at such time or times as you may determine in your
sole discretion, for any of the expenses advanced by you, which the Fund is
obligated to pay, and such reimbursement shall not be considered to be part of
your compensation pursuant to this Agreement.
3. COMPENSATION OF THE ADVISER
For all of the services to be rendered and payments to be made
as provided in this Agreement, as of the last business day of each month, the
Fund will pay you a fee at the annual rate of % of the average value of its
daily net assets.
The average value of the daily net assets of the Fund shall be
determined pursuant to the applicable provisions of the Declaration of Trust of
the Trust or a resolution of the Board, if required. If, pursuant to such
provisions, the determination of net asset value of the Fund is suspended for
any particular business day, then for the purposes of this paragraph, the value
of the net assets of the Fund as last determined shall be deemed to be the value
of the net assets as of the close of the business day, or as of such other time
as the value of the Fund's net assets may lawfully be determined, on that day.
If the determination of the net asset value of the Fund has been suspended for a
period including such month, your compensation payable at the end of such month
shall be computed on the basis of the value of the net assets of the Fund as
last determined (whether during or prior to such month).
4. EXECUTION OF PURCHASE AND SALE ORDERS
In connection with purchases or sales of portfolio securities
for the account of the Fund, it is understood that you will arrange for the
placing of all orders for the purchase and sale of portfolio securities for the
account with brokers or dealers selected by you, subject to review of this
selection by the Board from time to time. You will be responsible for the
negotiation and the allocation of principal business and portfolio brokerage. In
the selection of such brokers or dealers and the placing of such orders, you are
directed at all times to seek for the Fund the best qualitative execution,
taking into account such factors as price (including the applicable brokerage
commission or dealer spread), the execution capability, financial responsibility
and responsiveness of the broker or dealer and the brokerage and research
services provided by the broker or dealer.
<PAGE>
You should generally seek favorable prices and commission
rates that are reasonable in relation to the benefits received. In seeking best
qualitative execution, you are authorized to select brokers or dealers who also
provide brokerage and research services to the Fund and/or the other accounts
over which you exercise investment discretion. You are authorized to pay a
broker or dealer who provides such brokerage and research services a commission
for executing a Fund portfolio transaction which is in excess of the amount of
commission another broker or dealer would have charged for effecting that
transaction if you determine in good faith that the amount of the commission is
reasonable in relation to the value of the brokerage and research services
provided by the executing broker or dealer. The determination may be viewed in
terms of either a particular transaction or your overall responsibilities with
respect to the Fund and to accounts over which you exercise investment
discretion. The Fund and you understand and acknowledge that, although the
information may be useful to the Fund and you, it is not possible to place a
dollar value on such information. The Board shall periodically review the
commissions paid by the Fund to determine if the commissions paid over
representative periods of time were reasonable in relation to the benefits to
the Fund.
Consistent with the Rules of Fair Practice of the National
Association of Securities Dealers, Inc., and subject to seeking best qualitative
execution as described above, you may give consideration to sales of shares of
the Fund as a factor in the selection of brokers and dealers to execute Fund
portfolio transactions.
Subject to the provisions of the 1940 Act, and other
applicable law, you, any of your affiliates or any affiliates of your affiliates
may retain compensation in connection with effecting the Fund's portfolio
transactions, including transactions effected through others. If any occasion
should arise in which you give any advice to clients of yours concerning the
shares of the Fund, you will act solely as investment counsel for such client
and not in any way on behalf of the Fund. Your services to the Fund pursuant to
this Agreement are not to be deemed to be exclusive and it is understood that
you may render investment advice, management and other services to others,
including other registered investment companies.
5. LIMITATION OF LIABILITY OF ADVISER
You may rely on information reasonably believed by you to be
accurate and reliable. Except as may otherwise be required by the 1940 Act or
the rules thereunder, neither you nor your shareholders, members, officers,
directors, employees, agents, control persons or affiliates of any thereof shall
be subject to any liability for, or any damages, expenses or losses incurred by
the Trust in connection with, any error of judgment, mistake of law, any act or
omission connected with or arising out of any services rendered under, or
payments made pursuant to, this Agreement or any other matter to which this
Agreement relates, except by reason of willful misfeasance, bad faith or gross
negligence on the part of any such persons in the performance of your duties
under this Agreement, or by reason of reckless disregard by any of such persons
of your obligations and duties under this Agreement.
Any person, even though also a director, officer, employee,
member, shareholder or agent of you, who may be or become an officer, director,
trustee, employee or agent of the Trust, shall be deemed, when rendering
services to the Trust or acting on any business of the Trust (other than
services or business in connection with your duties hereunder), to be rendering
such services to or acting solely for the Trust and not as a director, officer,
employee, member, shareholder or agent of you, or one under your control or
direction, even
<PAGE>
though paid by you.
6. DURATION AND TERMINATION OF THIS AGREEMENT
This Agreement shall take effect on the date of its execution,
and shall remain in force for a period of two (2) years from the date of its
execution, and from year to year thereafter, subject to annual approval by (i)
the Board or (ii) a vote of a majority of the outstanding voting securities of
the Fund, provided that in either event continuance is also approved by a
majority of the trustees who are not interested persons of you or the Trust, by
a vote cast in person at a meeting called for the purpose of voting such
approval.
If the shareholders of the Fund fail to approve the Agreement
in the manner set forth above, upon request of the Board, you will continue to
serve or act in such capacity for the Fund for the period of time pending
required approval of the Agreement, of a new agreement with you or a different
adviser or other definitive action; provided that the compensation to be paid by
the Fund to you for your services to and payments on behalf of the Fund will be
equal to the lesser of your actual costs incurred in furnishing such services
and payments or the amount you would have received under this Agreement for
furnishing such services and payments.
This Agreement may, on sixty days written notice, be
terminated with respect to the Fund, at any time without the payment of any
penalty, by the Board, by a vote of a majority of the outstanding voting
securities of the Fund, or by you. This Agreement shall automatically terminate
in the event of its assignment.
7. USE OF NAME
The Trust and you acknowledge that all rights to the name " "
or any variation thereof belong to you, and that the Trust is being granted a
limited license to use such words in its Fund name or in any class name. In the
event you cease to be the adviser to the Fund, the Trust's right to the use of
the name " " shall automatically cease on the ninetieth day following the
termination of this Agreement. The right to the name may also be withdrawn by
you during the term of this Agreement upon ninety (90) days' written notice by
you to the Trust. Nothing contained herein shall impair or diminish in any
respect, your right to use the name " " in the name of, or in connection with,
any other business enterprises with which you are or may become associated.
There is no charge to the Trust for the right to use this name.
8. AMENDMENT OF THIS AGREEMENT
No provision of this Agreement may be changed, waived,
discharged or terminated orally, and no amendment of this Agreement shall be
effective until approved by the Board, including a majority of the trustees who
are not interested persons of you or of the Trust, cast in person at a meeting
called for the purpose of voting on such approval, and (if required under
interpretations of the 1940 Act by the Securities and Exchange Commission or its
staff) by vote of the holders of a majority of the outstanding voting securities
of the series to which the amendment relates.
<PAGE>
9. LIMITATION OF LIABILITY TO TRUST PROPERTY
The term "[insert name of Trust]" means and refers to the
Trustees from time to time serving under the Trust's Declaration of Trust as the
same may subsequently thereto have been, or subsequently hereto be, amended. It
is expressly agreed that the obligations of the Trust hereunder shall not be
binding upon any of the trustees, shareholders, nominees, officers, agents or
employees of the Trust personally, but bind only the trust property of the
Trust, as provided in the Declaration of Trust of the Trust. The execution and
delivery of this Agreement have been authorized by the trustees and shareholders
of the Trust and signed by officers of the Trust, acting as such, and neither
such authorization by such trustees and shareholders nor such execution and
delivery by such officers shall be deemed to have been made by any of them
individually or to impose any liability on any of them personally, but shall
bind only the trust property of the Trust as provided in its Declaration of
Trust. A copy of the Agreement and Declaration of Trust of the Trust is on file
with the Secretary of the State of Ohio.
10. SEVERABILITY
In the event any provision of this Agreement is determined to
be void or unenforceable, such determination shall not affect the remainder of
this Agreement, which shall continue to be in force.
11. QUESTIONS OF INTERPRETATION
(a) This Agreement shall be governed by the laws of the State
of Ohio.
(b) For the purpose of this Agreement, the terms "majority of
the outstanding voting securities," "control" and "interested person" shall have
their respective meanings as defined in the 1940 Act and rules and regulations
thereunder, subject, however, to such exemptions as may be granted by the
Securities and Exchange Commission under the 1940 Act; and the term "brokerage
and research services" shall have the meaning given in the Securities Exchange
Act of 1934.
(c) Any question of interpretation of any term or provision of
this Agreement having a counterpart in or otherwise derived from a term or
provision of the 1940 Act shall be resolved by reference to such term or
provision of the 1940 Act and to interpretation thereof, if any, by the United
States courts or in the absence of any controlling decision of any such court,
by the Securities and Exchange Commission or its staff. In addition, where the
effect of a requirement of the 1940 Act, reflected in any provision of this
Agreement, is revised by rule, regulation, order or interpretation of the
Securities and Exchange Commission or its staff, such provision shall be deemed
to incorporate the effect of such rule, regulation, order or interpretation.
12. NOTICES
Any notices under this Agreement shall be in writing,
addressed and delivered or mailed postage paid to the other party at such
address as such other party may designate for the receipt of such notice. Until
further notice to the other party, it is agreed that the address of the Trust is
, and your address for this purpose shall be .
<PAGE>
13. COUNTERPARTS
This Agreement may be executed in one or more counterparts,
each of which shall be deemed an original, but all of which together shall
constitute one and the same instrument.
14. BINDING EFFECT
Each of the undersigned expressly warrants and represents that
he has the full power and authority to sign this Agreement on behalf of the
party indicated, and that his signature will operate to bind the party indicated
to the foregoing terms.
15. CAPTIONS
The captions in this Agreement are included for convenience of
reference only and in no way define or delimit any of the provisions hereof or
otherwise affect their construction or effect.
If you are in agreement with the foregoing, please sign the
form of acceptance on the accompanying counterpart of this letter and return
such counterpart to the Trust, whereupon this letter shall become a binding
contract upon the date thereof.
Yours very truly,
ATTEST:
[insert Trust name]
By: By:
Name/Title: Name/Title:
Dated: ___________, 1998
ACCEPTANCE
The foregoing Agreement is hereby accepted.
ATTEST:
[insert Adviser name]
By: By:
Name/Title: Name/Title:
Dated: ___________, 1998
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the use in this
Post-Effective Amendment Number 11 to the Unified Funds (formerly the Vintage
Funds) Registration Statement of all references to our firm included in or made
a part of this Post-Effective Amendment.
McCurdy & Associates CPA's, Inc.
November 30, 1998
