A MESSAGE FROM THE UNIFIED FUNDS
Dear Shareholders,
Thank you for investing in The Unified Funds!
Since the early 1990s, the mutual fund industry has grown in excess of 26% per
year and total mutual fund assets now exceed $5.5 trillion. Despite the strength
in long-term mutual fund cash flows, the principal reason for this growth has
been market appreciation. Since the end of 1994, over 60% of long-term mutual
fund asset growth has been due to market appreciation. It is, therefore, no
surprise that the fastest growing long-term mutual fund asset class has been,
and is currently, equities. Since the end of 1994, equities have grown at an
average annual rate of 36%, while long-term bonds have grown at only 15% per
year. While the industry overall has grown at such an explosive rate, growth
within individual fund complexes is becoming increasingly difficult due
predominantly to the loss of market share to the index funds, and, to the power
of distributors.
The index fund phenomenon has become something of a self-fulfilling prophecy.
The equity index funds have tended to outperform their brethren and this
outperformance tends to attract more investors, thereby pushing up the stock
prices in the index, and so on. Index funds have increased their share of assets
to 6.6% at the end of 1998 compared to only 2% in 1993. More importantly, index
funds now command a startlingly high 19% of all net new cash flow compared to
only 3% in 1993.
The indexes have also outperformed 80% of actively managed funds for most of
this decade. As a result, index mutual funds have been consistently and
continually gaining market share in our industry. Within the index phenomenon,
the S&P Index Funds command the largest market share. S&P Index funds represent
70% of the total indexed assets and 62.7% of total indexed flows. Another trend
of note is that Internet brokers seem to be attracting retail customers away
from investing in mutual funds and into individual stocks, especially Internet
stocks. While three months is not necessarily a trend, the migration of retail
customers to the Internet could be the principal reason why cash flows into long
term mutual funds declined by over 50% in the first quarter of 1999 compared to
the same period a year ago.
Partially due to these trends, we have introduced for you the Unified Select
Series, consisting of six 35 basis point select index funds, a yield-oriented
money market fund, and an Internet Fund, and we are most excited about the
potential of this series.
The Unified Select 30 Index Fund seeks to track the performance of the Dow Jones
Industrial Average, which is made up of stocks of 30 companies. The Unified
Select 500 Index Fund seeks to track the performance of the Standard & Poor's
500 Composite Stock Index, which emphasizes stocks of larger 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 Bond Index Fund seeks to track the 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.
In addition to our six index funds, we have created the Unified Select Internet
Fund. It seeks long term capital appreciation by investing principally in
equities of Internet companies. With an expense ratio of 0.35%, it is believed
to have the lowest expense ratio of any Internet fund in the industry.
The Unified Funds and The Unified Select Series are particularly proud of our
innovative program, V.O.I.C.E.(sm) (Vision for Ongoing Investment in Charity and
Education)sm . The V.O.I.C.E.sm Program provides a means by which the individual
and institutional customers of The Unified Funds can cause contributions to be
made to educational, charitable, religious and other philanthropic
"not-for-profit" organizations at no cost to the shareholder or the Fund.
<PAGE>
One of the primary focuses of the V.O.I.C.E.sm Program is to support and
supplement education in America by funding those not-for-profit organizations,
especially endowments, foundations and general scholarship funds, which assist
our universities and colleges. At a time when educational budgets are
consistently being reduced, it is our sincerest hope that V.O.I.C.E.sm will be
just one of the many ways that we can all give "a little bit of ourselves" back
to the community, its schools, colleges, universities and other not-for-profit
organizations.
We maintain a positive long-term outlook on the stock market, but, keep in mind
that financial markets are not one-way streets. The short-term may be volatile
at times in response to news items and mood swings of investors. The Unified
Funds along with the Unified Select Series Funds are designed to provide you
with options for achieving a balanced portfolio of funds and an asset allocation
opportunity to assist you in meeting your long-term financial goals.
Our Unified fund family is well positioned for the future in the marketplace. We
have extremely attractive and inexpensive index choices, and we will continue to
provide you with innovative indexes that reach into special market sectors. We
also have an Internet Fund that is currently believed to be the least expensive
in the industry. It offers the the investor a non-index sector choice that is
invested in a popular sector. We also have provided you with a balanced, asset
allocation product in the index-featured First Lexington Balanced fund-of-funds,
and two money market fund choices, one for service and one for yield. We are
very excited about the recent performance of our more traditional stock fund,
the Starwood Strategic Fund, which is enjoying an excellent year.
In closing, we want to thank you for the opportunity to serve your investment
and philanthropic interests. Your business and personal relationship is
sincerely appreciated here, and we look forward to providing the highest quality
of service to you for many years to come.
Respectfully Submitted,
Timothy L. Ashburn, President
<PAGE>
INVESTMENTS-THE STARWOOD STRATEGIC FUND
- ---------------------------------------
Statement of Net Assets March 31, 1999 (Unaudited)
Number Market
of Shares Value
--------- ---------
Common Stocks - 97.35%
- ----------------------
Apparel - 2.66%
Cintas Corp. 550 $ 35,956
Banks - 3.08%
Citigroup Inc. 650 41,519
Computer Systems - 14.97%
Dell Computer Corp.* 1,000 40,875
Gateway Inc. * 850 58,278
International Business Machines 200 35,450
Yahoo Inc. * 400 67,350
Data Telecommunication - 13.00%
America Online, Inc. * 800 116,800
Tellabs, Inc. * 600 58,650
Drugs & Health Care - 18.98%
Eli Lilly & Company 400 33,950
Genentech Inc. * 600 53,175
Johnson & Johnson 525 49,186
McKesson HBOC Inc. 350 23,100
Medtronic Inc. 450 32,288
Merck & Company, Inc. 600 48,112
Rite Aid Corp. 650 16,250
Entertainment - 2.31%
The Walt Disney Company 1,000 31,125
Investment Companies - 4.00%
Bear Sterns Cos. 1,208 53,960
Number Market
of Shares Value
--------- --------
Media - 4.53%
Gannett Company, Inc. 350 $ 22,050
Time Warner Holdings 550 39,084
Other Consumer Goods - 5.25%
Intervu Inc. * 1,000 44,375
Warner-Lambert Company 400 26,475
Retail - 7.06%
Best Buy Company, Inc. 1,300 67,600
G.K. Services, Inc. "A" 600 27,713
Software Products - 6.40%
BMC Software * 1,000 37,063
Microsoft Corp.* 550 49,294
Telecommunications - 15.11%
AT&T Corporation 675 53,873
Bell Atlantic Corp. 900 46,519
Nokia Corp. * 350 54,513
Sprint Corporation 500 49,062
Total Common Stocks $ 1,313,645
-----------
(cost $ 927,338)
Total Investments - 97.35%
(Identified cost $927,338) $1,313,645
Other Assets and Liabilities, Net - 2.65% 35,735
- ----------------------------------------- ------
Net Assets - 100% $ 1,349,380
===========
*Non-income producing securities.
<PAGE>
<TABLE>
<S> <C> <C> <C> <C>
INVESTMENTS-THE FIRST LEXINGTON BALANCED FUND
- --------------- -----------------------------
Statement of Net Assets March 31,1999 (Unaudited)
Number Market
of Shares Value
--------- -----
Mutual Funds - 85.95%
- ---------------------
Vanguard Index Trust 500 Portfolio 6,978 $ 829,640
Vanguard Extended Market Portfolio 27,585 793,346
Vanguard International Growth 30,253 561,803
Vanguard Specialized Real Estate Index Fund 103,317 1,081,728
Vanguard Total Bond Market Index 164,094 1,650,792
Total Mutual Funds
(Cost $5,091,127) 4,917,309
---------
Repurchase Agreements - 13.77%
- ------------------------------
Star Bank ($ US Treasury Notes, 04/30/00)
Purchase Date 03/31/99, Maturity Date 04/01/99,
Amount Payable at Maturity $788,077
Total Repurchase Agreements
(Cost $788,000) $ 788,000
---------
Total Investments - 99.72%
- --------------------------
(Identified cost $5,879,127) $5,705,309
Other Assets and Liabilities, Net - .28% 15,779
- ---------------------------------------- ------------
Net Assets - 100% $5,721,088
==========
</TABLE>
<PAGE>
<TABLE>
<S> <C> <C>
INVESTMENTS-THE TAXABLE MONEY MARKET FUND
- -----------------------------------------
Statement of Net Assets March 31, 1999 (Unaudited)
Par Value Value (Note 2)
Commercial Paper - 43.26%
Met-Life Funding Inc. 4.83%, 04/21/1999 1,000,000 $ 997,317
GTE Corporation 4.88%, 04/27/1999 2,000,000 1,992,951
Ford Motor Credit Corporation 4.76%, 05/03/1999 2,000,000 1,991,538
IBM Credit Corporation 4.72%, 05/10/1999 2,000,000 1,989,773
Bell South Telecommunication 4.80%, 05/13/1999 1,000,000 994,400
Lucent Technology 4.80%, 05/20/1999 2,000,000 1,986,933
Johnson & Johnson 4.77%, 05/25/1999 1,000,000 992,845
Johnson & Johnson 4.77%, 05/26/1999 1,000,000 992,713
American Home Products 4.79%, 06/02/1999 2,000,000 1,983,501
Coca Cola Company 4.08%, 06/23/1999 2,000,000 1,977,867
Disney Walt Company 4.68%, 06/24/1999 1,000,000 989,080
American Express 4.67%, 07/15/1999 2,000,000 1,972,758
Merrill Lynch 4.70%, 07/26/1999 2,000,000 1,969,711
Disney Walt Company 4.66%, 08/09/1999 1,000,000 983,172
General Electric Capital Corporation 4.83%, 08/23/1999 2,000,000 1,961,360
Total Commercial Paper
(Cost $23,768,078) $23,775,918
-----------
U.S. Government Securities - 50.26%
- -----------------------------------
Federal Farm Credit Bank 4.69%, 05/06/1999 1,000,000 $ 995,440
Federal Home Loan Mortgage 4.75%, 04/14/1999 2,000,000 1,996,569
Federal National Mortgage Association 4.81%, 04/01/1999 3,000,000 3,000,000
Federal National Mortgage Association 4.65%, 05/17/1999 2,000,000 1,988,117
Federal National Mortgage Association 4.76%, 05/26/1999 3,000,000 2,978,184
Federal National Mortgage Association 4.68%, 06/08/1999 1,000,000 991,160
Federal National Mortgage Association 4.62%, 07/07/1999 1,000,000 987,552
Federal National Mortgage Association 4.64%, 07/14/1999 2,000,000 1,973,191
Federal National Mortgage Association 4.76%, 08/04/1999 2,000,000 1,966,944
Federal National Mortgage Association 4.61%, 08/10/1999 1,000,000 983,225
Federal National Mortgage Association 4.68%, 08/23/1999 2,000,000 1,962,560
Federal National Mortgage Association 4.74%, 09/15/1999 2,000,000 1,956,023
Federal National Mortgage Association 4.74%, 09/16/1999 2,000,000 1,955,760
Federal National Mortgage Association 4.71%, 09/21/1999 2,000,000 1,954,732
Federal National Mortgage Association 4.66%, 12/13/1999 2,000,000 1,933,725
Total U.S. Government Securities
(Cost $27,614,505) $27,623,182
----------
Repurchase Agreements - 6.83%
Star Bank ($3,825,727 US Treasury 04/30/00) Purchase Date
03/31/99, Maturity Date 04/01/99, Amount Payable at Maturity $3,750,365
Total Repurchase Agreements
(Cost $3,750,000) $ 3,750,000
-----------
Total Investments - 100.35%
(Amortized cost $55,132,583) $55,149,100
Other Assets and Liabilities, Net - (.35) % (176,567)
- ------------------------------------------- ------------
Net Assets - 100% $54,972,533
===========
</TABLE>
<PAGE>
<TABLE>
<S> <C> <C> <C>
STATEMENTS OF ASSETS AND LIABILITIES
- ------------------------------------
As of March 31, 1999 (Unaudited)
First Taxable
Starwood Lexington Money
Strategic Balanced Market
Fund Fund Fund
---- ---- ----
ASSETS
Investments, at value (Note 2) ........ $ 1,313,645 $ 5,705,309 $ 55,149,100
Cash ................................. 17,775 809 33,748
Dividend receivable ................... --- 14,663 ---
Interest receivable ................ 895 77 365
Other receivable....................... --- --- 13,729
Receivable for shares sold............. 18,692 6,106 ---
----------- ----------- ----------
Total assets .......................... 1,351,007 5,726,964 55,196,942
LIABILITIES
Payable for shares redeemed............ --- 891 169,408
Accrued expenses (Note 2).............. 1,627 4,985 55,001
----------- ---------- ----------
Total liabilities...................... 1,627 5,876 224,409
----------- ---------- ----------
NET ASSETS ................................. $ 1,349,380 $ 5,721,088 $ 54,972,533
========= ========= ==========
Net assets consist of:
Paid-in capital ....................... 1,063,566 5,567,782 54,972,533
Undistributed net realized gain
on investments ................... (100,493) 327,124 ---
Net unrealized appreciation (depreciation) in
value of investment............... 386,307 (173,818) ---
---------- ----------- ------------
Net assets ................................. $ 1,349,380 $ 5,721,088 $ 54,972,533
========= ========= ==========
Shares of capital stock
outstanding (no par value,
unlimited shares authorized)........... 127,320 514,497 54,972,533
Net asset value per share, offering
and redemption price .................. $ 10.60 $ 11.12 $ 1.00
The accompanying notes are an integral part ofthese financial statements.
</TABLE>
<PAGE>
<TABLE>
<S> <C> <C> <C> <C>
STATEMENTS OF OPERATIONS
- ------------------------
For the six-months ended March 31, 1999 (Unaudited)
First Taxable
Starwood Lexington Money
Strategic Balanced Market
Fund Fund Fund
---- ---- ----
INVESTMENT INCOME:
Interest .............................. $ 1,402 $ 8,186 $ 1,498,175
Dividends ............................. 4,722 122,026 ---
--------- ----------- -----------
Total net income ................. 6,124 130,212 1,498,175
--------- ----------- ---------
EXPENSES:
Investment adviser fees (Note 3) ...... 7,364 24,360 266,173
12B-1 fees (Note 3).................... 557 3,248 29,575
Shareholder servicing fees (Note 2) ... 880 4,844 44,362
---------- ----------- ----------
Total net expenses ................ 8,801 32,452 340,110
--------- ---------- ----------
NET INVESTMENT INCOME (LOSS) ............... (2,677) 97,760 1,158,065
---------- ---------- ---------
REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS
Net realized gain (loss) on investments (45,891) 177,771 ---
Net realized gains from other
Investment companies.............. --- 142,803 ---
Change in net unrealized
appreciation of investments ...... 398,368 148,761 ---
--------- --------- ----------
Net gain (loss) on investments ........ 352,477 469,335 ---
--------- --------- ----------
INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS ............. $ 349,800 $ 567,095 $ 1,158,065
========= ========= =========
The accompanying notes are an integral part of these financial statements.
</TABLE>
<PAGE>
<TABLE>
<S> <C> <C>
STATEMENTS OF CHANGES IN NET ASSETS
- -----------------------------------
(Unaudited)
Starwood Strategic Fund
Six Months Year
Ended Ended
March 31, Sept 30,
1999 1998
---- ----
INCREASE (DECREASE) IN NET ASSETS
Operations:
Net investment income (loss) ................... $ (2,677) $ (3,226)
Net realized gain (loss) on investments ........ (45,891) 195,443
Change in net unrealized appreciation of investments 398,368 (198,366)
-------- ---------
Net Increase (Decrease) in net assets resulting from operations 349,800 (6,149)
Dividends and distributions to shareholders from:
Net realized gains ................................ (195,436) ---
Net investment Income ............................... --- ---
--------- ---------
TOTAL INCREASE (DECREASE) ........................... 154,364 (6,149)
Capital share transactions:
Proceeds from shares sold ...................... 410,521 173,696
Value of shares issued to shareholders in
reinvestment of dividends and distributions 193,107 ---
--------- ----------
603,628 173,696
Cost of shares redeemed .......................... (411,676) (301,469)
---------- ----------
Net increase in net assets resulting from
capital share transactions ................ 191,952 (127,773)
---------- ----------
TOTAL INCREASE (DECREASE) IN NET ASSETS........ 346,316 (133,922)
NET ASSETS:
Beginning of period ............................ 1,003,064 1,136,986
------------ ----------
End of period (including undistributed
End of period (including undistributed
net investment income/net investment loss) $ 1,349,380 $ 1,003,064
=========== ==========
Shares of capital stock of the Fund sold and redeemed:
Shares sold .................................... 41,562 17,636
Shares issued to shareholders in reinvestment
Shares issued to shareholders in reinvestment
dividends and distributions .................... 20,922 ---
----------- -----------
62,484 17,636
Shares redeemed
Shares redeemed................................. (42,539) (32,480)
------------- ----------
NET INCREASE (DECREASE) IN NUMBER OF
SHARES OUTSTANDING ............................. 19,945 (14,844)
=========== ==========
The accompanying notes are an integral part of these financial statements.
</TABLE>
<PAGE>
STATEMENTS OF CHANGES IN NET ASSETS
- -----------------------------------
(Unaudited)
<TABLE>
<S> <C> <C> <C> <C>
First Lexington Taxable Money
Balanced Fund Market Fund
------------- -----------
Six Months Year Six Months Year
Ended Ended Ended Ended
March 31, Sept 30, March 31, Sept 30,
1999 1998 1999 1998
---- ---- ---- ----
INCREASE (DECREASE) IN NET ASSETS
Operations:
Net investment income (loss) ...................$ 97,760 $ 208,537 $ 1,158,065 $ 2,352,943
Net realized gain (loss) on investments ........ 320,574 148,980 --- ---
Change in net unrealized appreciation of investment 148,761 (466,122) --- ---
------- -------- ------- -------
Net Increase (Decrease) in net assets resulting from
operations 567,095 (108,605) 1,158,065 2,352,943
Dividends and distributions to shareholders from
Net realized gains.............................. (31,834) (85,407) --- ---
Net investment income .......................... (97,656) (208,527) (1,158,065) (2,352,943)
----------- ----------- ----------- -----------
TOTAL INCREASE (DECREASE)....................... 437,605 (402,539) --- ---
Capital share transactions:
Proceeds from shares sold ...................... 679,887 4,552,823 68,516,543 192,713,015
Value of shares issued to shareholders in
reinvestment of dividends and distributions 161,014 292,861 972,737 2,176,703
------------ ------------ ------------ -------------
840,901 4,845,684 69,489,280 194,889,718
Cost of shares redeemed ............................ (1,898,791) (1,166,283) (80,092,054) (179,934,121)
------------ ------------ ------------ -------------
Net increase in net assets resulting from
Net increase in net assets resulting from
capital share transactions ................ (1,057,890) 3,679,401 (10,602,774) 14,955,597
------------- ------------ ------------- -----------
TOTAL INCREASE (DECREASE) IN NET ASSETS ............ (620,285) 3,276,862 (10,602,774) 14,955,597
NET ASSETS:
Beginning of period ............................ 6,341,373 3,064,511 65,575,307 50,619,710
----------- ------------ ----------- -----------
End of period (including undistributed net
investment income/net investment loss) ... $ 5,721,088 $ 6,341,373 $ 54,972,533 $ 65,575,307
========== =========== ========== ==========
Shares of capital stock of the Fund sold and redeemed:
Shares sold .................................... 61,359 414,909 68,516,543 192,713,015
Shares issued to shareholders in reinvestment
dividends and distributions ............... 14,416 26,891 972,737 2,176,703
----------- ---------- ----------- ------------
75,775 441,800 69,489,280 194,889,718
Shares redeemed ................................ (170,730) (110,676) (80,092,054) (179,934,121)
----------- ----------- ----------- ------------
NET INCREASE (DECREASE) IN NUMBER OF
SHARES OUTSTANDING ............................. (94,955) 331,124 (10,602,774) 14,955,597
=========== =========== ============ =============
The accompanying notes are an integral part of these financial statements.
</TABLE>
<PAGE>
FINANCIAL HIGHLIGHTS
- --------------------
(Unaudited)
The following table includes selected data for a share outstanding throughout
each fiscal year or period and other performance information derived from the
financial statements.
<TABLE>
<S> <C> <C> <C> <C> <C>
Starwood Starwood Starwood Starwood Starwood
Strategic Strategic Strategic Strategic Strategic
Fund Fund Fund Fund Fund
---- ---- ---- ---- ----
1999(a) 1998 1997 1996 1995(b)
PER SHARE OPERATING
PERFORMANCE:
Net asset value, beginning .... $9.34 $ 9.30 $7.69 $10.00 $ 10.00
Income from investment
Operations:
Net investment income .... (0.02) (0.03) (0.26) (3.23) 0.00
Net realized and unrealized
gain (loss) on investments 3.03 0.07 2.00 0.92 0.00
---- ----- ----- ----- ------
Total from investment income 3.01 0.04 1.74 (2.31) 0.00
Less distributions:
Dividends from realized gains (1.75) 0.00 (0.13) 0.00 0.00
Dividends from net
investment income ........ 0.00 0.00 0.00 0.00 0.00
---- ----- ----- ----- ----
Total from distributions ...... 0.00 0.00 (0.13) 0.00 0.00
---- ---- ------ ----- ----
Net asset value at end of period $10.60 $ 9.34 $ 9.30 $7.69 $10.00
===== ===== ===== ==== =====
TOTAL ANNUALIZED
RETURN (%) ............... 34.97 0.43 (e) 20.94(e) (3.97)(d)(e) (c)
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period 1,349,380 1,003,064 1,136,986 483,458 2,705
Ratio of expenses to
average net assets .. 1.50% 2.59% 4.26% 15.99% 0.00%
Ratio of expenses
(after reimbursement) to
average net assets .. N/A 1.50% 2.54% 15.25% 0.00%
Ratio of net investment
Income to average net assets (.45)% (1.40)% (2.97)% (14.42)% 0.00%
Ratio of net investment
income (after reimbursement)
to average net assets N/A (0.31)% (1.25)% (13.68)% 0.00%
Portfolio turnover............. 60.02% 119.97% 76.09% 169.83% 0.00%
(a) For the Six months-ended March 31, 1999.
(b) For the Period June 2, 1995 (commencement of operations) to September 30,
1995.
(c) Investment in accordance with objective had not commenced at this time.
(d) For the period April 4, 1996 (commencement of investment in accordance with
objective) to September 30, 1996.
(e) Total return would have been lower had certain expenses not been reduced
during the periods shown (see Note 3).
</TABLE>
<PAGE>
<TABLE>
<S> <C> <C> <C> <C> <C>
FINANCIAL HIGHLIGHTS
- --------------------
(Unaudited)
The following table includes selected data for a share outstanding throughout
each fiscal year or period and other performance information derived from the
financial statements.
First First First Municipal Municipal
Lexington Lexington Lexington Fixed Fixed
Balanced Balanced Balanced Income Income
Fund Fund Fund Fund Fund
---- ---- ---- ---- ----
1999(a) 1998 1997(f) 1996 1995(b)
PER SHARE OPERATING
PERFORMANCE:
Net asset value, beginning .... $ 10.41 $ 11.01 $ 22.60(g) $200.00(g) $200.00(g)
Income from investment
Operations:
Net investment income .... 0.41 0.50 (12.54) (177.40) 0.00
Net realized and unrealized
gain (loss) on investments 0.58 (0.61) .99 0.00 0.00
---- ------- ------- -------- ----
Total from investment income 0.99 (0.11) (11.05) (177.40) 0.00
Less distributions:
Dividends from realized gains (0.22) (0.14) (0.01) 0.00 0.00
Dividends from net
investment income ........ (0.05) (0.35) (0.03) 0.00 0.00
------ ------- ----- --------- --------
Total from distributions ...... (0.28) (0.49) (0.04) 0.00 0.00
------ ----- ----- --------- --------
Net asset value at end of period $ 11.12 $ 10.41 $11.01 $ 22.60 $200.00
===== ====== ===== ======== ======
TOTAL ANNUALIZED
RETURN (%) ............... 9.50 (1.09) 18.54(d)(e) (c) (c)
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period 5,721,088 6,341,373 3,064,511 8,988 100
Ratio of expenses to
average net assets .. 1.00% 1.26% 3.06% 181.72% 0.00%
Ratio of expenses (after
reimbursement) to
average net assets .. N/A 1.00% 2.35% 181.01% 0.00%
Ratio of net investment
Income to average net assets 7.44% 3.01% 0.30% (181.58)% 0.00%
Ratio of net investment
income (after reimbursement)
to average net assets N/A 3.27% 1.01% (180.86)% 0.00%
Portfolio turnover........ 17.04% 17.79% 6.60% 0.00% 0.00%
(a) For the Six-months ended March 31, 1999.
(b) For the Period June 2, 1995 (commencement of operations) to September 30,
1995.
(c) Investment in accordance with objective had not commenced at this time.
(d) For the period March 13, 1997 (commencement of investment in accordance
with objective) to September 30, 1997.
(e) Total return would have been lower had certain expenses not been reduced
during the periods shown (see Note 3).
(f) The name of the fund was changed during the period (see note 1).
(g) Beginning balance adjusted for reverse stock split (see Note 1)
</TABLE>
<PAGE>
FINANCIAL HIGHLIGHTS
- --------------------
(Unaudited)
The following table includes selected data for a share outstanding throughout
each fiscal year or period and other performance information derived from the
financial statements.
<TABLE>
<S> <C> <C> <C> <C> <C>
Taxable Taxable Taxable Taxable Taxable
Money Money Money Money Money
Market Market Market Market Market
Fund Fund Fund Fund Fund
1999(a) 1998 1997 1996 1995(b)
PER SHARE OPERATING
PERFORMANCE:
Net asset value, beginning .... $1.00 $1.00 $ 1.00 $ 1.00 $ 1.00
Income from investment
Operations:
Net investment income .... 0.02 0.04 0.03 0.04 0.002
Net realized and unrealized
gain (loss) on investments 0.00 0.00 0.00 0.00 0.000
---- ---- ---- ---- -----
Total from investment income . 0.02 0.04 0.03 0.04 0.002
Less Distribution :
Dividends from net
investment income ... (0.02) (0.04) (0.03) (0.04) (0.002)
----- ----- ----- ----- ------
Total from distributions (0.02) (0.04) (0.03) (0.04) (0.002)
----- ----- ----- ----- ------
Net asset value at end of period $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
======== ======== ======== ========= ====
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period 54,972,533 5,575,307 50,619,710 50,544,511 1,230,385
Ratio of expenses to
average net assets .. 1.15% 1.30% 1.44% 1.25% 12.82%
Ratio of expenses (after
reimbursement) to
average net assets .. N/A 1.10% 1.12% 1.16% 0.47%
Ratio of net investment
Income to average
net assets.... 3.91% 4.12% 3.86% 4.12% (11.94%)
Ratio of net investment
income (after
reimbursement) to average
net assets ......... N/A 4.33% 4.19% 4.21% 0.65%
Portfolio turnover ....... 0.00% 0.00% 0.00% 0.00% 0.00%
(a) For the Six-months ended March 31, 1999.
(b) For the Period June 2, 1995 (commencement of operations) to September 30,
1995.
</TABLE>
<PAGE>
NOTES TO FINANCIAL STATEMENTS
(Unaudited)
Note 1 - General
The Unified Funds (the "Trust") is an Ohio business trust authorized to offer
separate classes and sub-classes of beneficial interest. The Trust, which was
organized on November 20, 1997, is the successor to the operations of the
Vintage Funds. The Trust consists of a family of no-load mutual funds with three
separate portfolios, each having its own investment objective and policies,
including The Starwood Strategic Fund, The First Lexington Balanced Fund, and
The Taxable Money Market Fund.
The Starwood Strategic Fund seeks growth of capital. The Fund pursues this
objective by investing principally in a diversified portfolio of equity
securities of seasoned, financially strong growth companies.
The First Lexington Balanced Fund seeks long term growth of capital and current
income. The Fund pursues this objective by investing principally in a
diversified portfolio of other no-load mutual funds selected from six major
financial assets classes.
The Taxable 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 short-term
money market instruments.
On February 1, 1997, The Municipal Fixed Income Fund changed its name to The
First Lexington Balanced Fund. In addition to the name change, the Fund changed
its policy and sub-adviser. On March 6, 1997, The First Lexington Balanced Fund
exercised a 1 for 20 reverse stock split.
Note 2 - Significant Accounting Policies
The following is a summary of the significant accounting policies followed by
the Trust in the preparation of its financial statements.
A) Security Valuations
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.
B) Securities Transactions and Related Income
Securities transactions are recorded on a trade date basis. Realized gains and
losses from securities transactions are recorded on the identified cost basis.
For federal income tax purposes, the cost of investments owned on March 31, 1999
was the same as identified cost. Interest income is recorded on the accrual
basis and dividend income is recorded on the ex-dividend date.
As of March 31, 1999, the composition of unrealized appreciation (the excess of
value over tax cost) and depreciation (the excess of tax cost over value) was as
follows:
Note 2 - Significant Accounting Policies (continued)
(Unaudited)
Net Appreciation
Fund Appreciation Depreciation (Depreciation)
---- ------------ ------------ --------------
Starwood Strategic $ 414,093 $ (27,786) $ 386,307
First Lexington Balanced 147,230 (321,048) (173,818)
<PAGE>
C) Dividends and Distributions to Shareholders
Dividends, if any, from net investment income for The Starwood Strategic Fund
and The First Lexington Balanced Fund are paid quarterly. Dividends, if any,
from net investment income for The Taxable Money Market Fund are paid on a daily
basis. Net realized long term capital gains, if any, are paid at least annually
for each Fund. However, to the extent that net realized gains of any Fund could
be reduced by any capital loss carry-overs from the Fund, such gains will not be
distributed. Dividend distributions are recorded on the ex-dividend date.
D) Federal Income Taxes
It is the policy of each Fund to meet the requirements of the Internal Revenue
Code applicable to regulated investment companies and to distribute all of its
taxable income to its shareholders.
E) Expenses
Prior to February 2, 1998, each Fund paid its own expenses. Effective February
2, 1998, the Adviser and the Unified Funds entered into a Management Agreement
pursuant to which the Adviser pays all of the operating expenses of the Unified
Funds except shareholder servicing fees, brokerage fees, taxes, interest, 12b-1
fees, and extraordinary expenses. Each Fund pays a management fee to the Adviser
as described in note 3.
F) Estimates
Preparation of financial statements in accordance with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and the reported amounts
of revenues and expenses during the reporting period. Actual results could
differ from those estimates.
G) Repurchase Agreements
Under the terms of a typical repurchase agreement, a Fund writes a financial
contract with a counterparty and takes possession of a government debt
obligation as collateral. The Fund also agrees with the counterparty to allow
the counterparty to repurchase the financial contract at a specific date and
price, thereby determining the yield during the Fund's holding period. This
arrangement will result in a fixed-rate of return not subject to the market's
fluctuation during the holding period indicated in the contract. The value of
the collateral is at least equal to the total amount of the repurchase
obligation, including interest. In the event of default by the counterparty, a
Fund has the right to use the collateral to offset any losses incurred.
Note 3 - Agreements and Other Transactions with Affliates
(Unaudited)
The Trust has entered into a Management Agreement with Unified Investment
Advisers, Inc. (the "Adviser"). The Adviser was formerly known as Vintage
Advisers, Inc. In turn, the Adviser has entered into an Investment Sub-Advisory
Agreement with Health Financial, Inc. The Trust has entered into an
Administration Agreement with Unified Fund Services, Inc. ("Unified") to serve
as transfer agent and shareholder service agent and provide fund accounting
services. The Fund retains Unified Management Corporation (the "Distributor") as
the principal distributor of the Fund's shares.
As investment adviser, the Adviser supervises and assists in the management of
the Trust, pursuant to the terms of the Management Agreement.
Effective February 2, 1998, the Adviser provides investment advisory services
and pays certain Fund expenses (see note 2) for which each Fund pays on a
monthly basis, an annual fee as follows:
<TABLE>
<S> <C> <C> <C>
% of Average Net % of Average Net
Fund Assets of the Fund Fund Assets of the Fund
- ---- ------------------ ---- ------------------
Starwood Strategic 1.25% First Lexington Balanced .75%
Taxable Money Market .90%
</TABLE>
<PAGE>
The Adviser has engaged Health Financial, Inc. (the "Sub-Adviser") to serve as
sub-adviser to the First Lexington Balanced Fund. The Sub-Adviser receives an
annual investment management fee, paid by the Adviser, for its management
services. The fee is payable monthly, at the following rates: 0.40% of net
assets up to $250 million; 0.35% of the next $250 million; and 0.30% of net
assets in excess of $500 million.
Prior to February 2, 1998, the Adviser provided investment advisory services to
each Fund and was paid on a monthly basis, an annual fee as follows:
<TABLE>
<S> <C> <C> <C>
% of Average Net % of Average Net
Fund Assets of the Fund Fund Assets of the Fund
- ---- ----------------- ---- ------------------
Starwood Strategic .75% First Lexington Balanced .50%
Taxable Money Market .50%
</TABLE>
Until February 2, 1998, the Adviser engaged Health Financial, Inc. to serve as
sub-adviser to the First Lexington Balanced Fund under the same fee arrangement
as described above. Until February 2, 1998, the Adviser engaged Starwood
Corporation to serve as sub-adviser to The Starwood Strategic Fund, and
Fiduciary Counsel, Inc., to serve as sub-adviser to The Taxable Money Market
Fund. Each of these sub-advisers was entitled to an annual fee, paid by the
Adviser, for its management services. The fees were payable monthly, at the
following rates for each Fund respectively:
Fund Fee (Percentage of Assets of the Fund)
- ---- --------------------------------------
Starwood Strategic 0.35% of net assets up to $250 million;
0.30% of next $250 million
of net assets; 0.25% of net
assets in excess of $500
million
Taxable Money Market 0.07% of net assets up to $1 billion;
0.05% of net assets of $1 billion or more
Note 3 - Agreements and Other Transactions with Affliates - (continued)
(Unaudited)
Unified is an affiliate of the Adviser. Unified, as administrator, receives an
annual fee, payable monthly by each Fund. The fee is equal to 0.435% of the
Fund's average net assets for The Starwood Strategic Fund. For The First
Lexington Balanced Fund and The Taxable Money Market Fund, the fee is equal to
0.185% of the Fund's average net assets. Effective February 2, 1998, these fees
are paid by the Adviser.
The Trust has adopted a Distribution Plan (the "Plan") pursuant to Rule 12b-1
under the Investment Company Act of 1940. Under the Plan, the Trust pays the
Distributor an annual fee, payable monthly, of up to 0.10 % of the respective
Fund's average daily net assets.
<PAGE>
The Distributor is a registered broker/dealer and effected substantially all of
the investement portfolio transactions for the funds. For the six months ended
March 31, 1999, brokerage commissions paid to the Distributor by the Funds are
as follows:
<TABLE>
<S> <C> <C> <C>
Fund Amount Fund Amount
- ---- ------ ---- ------
Starwood Strategic $ 584 First Lexington Balanced $ 3,246
Taxable Money Market 30,284
</TABLE>
The Trust has adopted a Shareholder Services Plan (with respect to each Fund) in
which financial institutions may enter into a shareholder services agreement
with the Trust to provide administrative support services to the Funds. In
return for these services, a financial institution may receive payments from
each Fund at a rate not exceeding 0.15% of the Funds average net assets owned
beneficially by the institution's clients.
Certain Trustees and officers of the Trust are "interested persons" (as defined
in the Act) of the Trust. Each "non-interested" Trustee is entitled to receive a
quarterly Board of Trustees meeting fee of $2,400 and $400 per additional
meeting attended, plus expenses for services relating to the Trust.
Note 4- Securities Transactions
For the six months ending March 31, 1999, purchases and sales of investment
securities, excluding short-term investments were as follows:
Purchases Sales
--------- -----
Starwood Strategic $ 759,171 $ 734,539
First Lexington Balanced 1,020,000 2,539,237
Note 5- Subsequent Events
Subsequent to March 31, 1999, the Trust offers eight additional funds, each with
its own investment objective and policies. They are: 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 Internet Fund, and
The Unified Select Money Market Fund.
Year 2000 Issue. Like other mutual funds, financial and business organizations
and individuals around the world, the Fund could be adversely affected if the
computer systems used by the Adviser, Administrator or other service providers
to the Fund do not properly process and calculate date-related information and
data from January 1, 2000. This is commonly known as the "Year 2000 Issue". The
Adviser and Administrator have taken steps that they believe are reasonably
designed to address the Year 2000 Issue with respect to computer systems that
are used and to obtained reasonable assurances that comparable steps are being
taken by the Fund's major service providers. At this time, however, there can be
no assurance that these steps will be sufficient to avoid any adverse impact on
the Fund. In addition, the Adviser cannot make any assurances that the Year 2000
issue will not affect the companies in which the Fund invests or worldwide
markets and economies.
