SEC Info  
    Home      Search      My Interests      Help      Sign In      Please Sign In

Dean Family of Funds – ‘485B24F’ on 10/1/97

As of:  Wednesday, 10/1/97   ·   Effective:  10/1/97   ·   Accession #:  891804-97-327   ·   File #s:  333-18653, 811-07987

Previous ‘485B24F’:  ‘485B24F’ on 4/18/97   ·   Latest ‘485B24F’:  This Filing

Find Words in Filings emoji
 
  in    Show  and   Hints

  As Of                Filer                Filing    For·On·As Docs:Size              Issuer               Agent

10/01/97  Dean Family of Funds              485B24F    10/01/97   21:541K                                   Kelvyn Press Inc/FA

Post-Effective Amendment
Filing Table of Contents

Document/Exhibit                   Description                      Pages   Size 

 1: 485B24F     Dean Family of Funds                                 126    426K 
20: EX-27       Balanced Fund - Class A                                2±    11K 
21: EX-27       Balanced Fund - Class C                                2±    11K 
16: EX-27       Large Cap Value Fund - Class A                         2±    11K 
17: EX-27       Large Cap Value Fund - Class C                         2±    11K 
18: EX-27       Small Cap Value Fund - Class A                         2±    11K 
19: EX-27       Small Cap Value Fund - Class C                         2±    11K 
 7: EX-99       Dir. Def. Comp. Plan                                  17     50K 
 2: EX-99       Index to Exhibits                                      2     10K 
 6: EX-99       Underwriting Agreement                                12     28K 
13: EX-99.B13   Stock Letter                                           2     11K 
14: EX-99.B15I  12B1 Plan for Class A Shares                           3     16K 
15: EX-99.B15II  12B1 Plan for Class C Shares                          4     17K 
 3: EX-99.B5I   Advisory Agreement                                    16     36K 
 5: EX-99.B5III  Sub-Advisory Agreement                               21     45K 
 8: EX-99.B8    Custody Agreement                                     24     78K 
 9: EX-99.B9I   Administration Agreement                               8     29K 
10: EX-99.B9II  Accounting Services Agreement                          9     29K 
11: EX-99.B9III  Trans. Div. Disburs. Shldr. Serv. Agreement          17     53K 
 4: EX-99.BII   Advisory Agreement                                    15     34K 
12: EX-99.BII   Auditors Consent                                       1      9K 


485B24F   —   Dean Family of Funds
Document Table of Contents

Page (sequential) | (alphabetic) Top
 
11st Page   -   Filing Submission
10Expense Information
"Large Cap Value Fund
"Small Cap Value Fund
"Balanced Fund
"International Value Fund
12Investment Objectives, Investment Policies and Risk Considerations
22Additional Investment Information
25U.S. Government obligations
28Portfolio Turnover
"How to Purchase Shares
33Reduced Sales Load
"Purchases at Net Asset Value
34Contingent Deferred Sales Load for Certain Purchases of Class A Shares
37Shareholder Services
38How to Redeem Shares
40Exchange Privilege
41Dividends and Distributions
42Taxes
43Operation of the Funds
46Distribution Plans
48Calculation of Share Price and Public Offering Price
49Performance Information
51Underwriter
"Transfer Agent
55Table of Contents
56The Trust
57Definitions, Policies and Risk Considerations
"Majority
61Strips
66Quality Ratings of Corporate Bonds and Preferred Stocks
68Investment Limitations
70Trustees and Officers
73The Investment Adviser
74The Sub-Adviser
"The Underwriter
76Securities Transactions
79Other Purchase Information
82Redemption in Kind
83Historical Performance Information
85Custodian
"Auditors
86Principal Security Holders
"Countrywide Fund Services, Inc
88Statement of Assets and Liabilities as of March 17, 1997
117Item 24. Financial Statements and Exhibits
119Item 25. Persons Controlled by or Under Common Control With Registrant
"Item 26. Number of Holders of Securities
"Item 27. Indemnification
121Item 28. Business and Other Connections of the Investment Adviser
123Item 29. Principal Underwriters
"Item 30. Location of Accounts and Records
"Item 31. Management Services Not Discussed in Parts A or B
"Item 32. Undertakings
485B24F1st Page of 126TOCTopPreviousNextBottomJust 1st
 

Registration Nos. 811-7987 333-18653 U.S. SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM N-1A -- REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 /X/ -- Pre-Effective Amendment No. Post-Effective Amendment No. 3 and/or -- REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 /X/ -- Amendment No. 6 (Check appropriate box or boxes) DEAN FAMILY OF FUNDS (Exact Name of Registrant as Specified in Charter) 2480 Kettering Tower Dayton, Ohio 45423 (Address of Principal Executive Offices) Registrant's Telephone Number, including Area Code: (937) 222-9531 Frank H. Scott C.H. Dean & Associates, Inc. 2480 Kettering Tower Dayton, Ohio 45423 (Name and Address of Agent for Service) Copies to: Tina D. Hosking Countrywide Fund Services, Inc. 312 Walnut Street, 21st Floor Cincinnati, Ohio 45202 It is proposed that this filing will become effective: -- /X/ immediately upon filing pursuant to Rule 485(b) / / on (date) pursuant to Rule 485(b) / / 75 days after filing pursuant to Rule 485(a) / / on (date) pursuant to Rule 485(a) The Registrant has registered an indefinite number of shares under the Securities Act of 1933, as amended, pursuant to Rule 24f-2 under the Investment Company Act of 1940, as amended.
485B24F2nd Page of 126TOC1stPreviousNextBottomJust 2nd
DEAN FAMILY OF FUNDS CROSS REFERENCE SHEET PURSUANT TO RULE 481(A) UNDER THE SECURITIES ACT OF 1933 PART A ITEM NO. REGISTRATION STATEMENT CAPTION CAPTION IN PROSPECTUS 1. Cover Page Cover Page 2. Synopsis Expense Information 3. Condensed Financial Information Performance Information 4. General Description of Registrant Investment Objectives, Investment Policies and Risk Considerations; Operation of the Funds 5. Management of the Fund Operation of the Funds 6. Capital Stock and Other Securities Cover Page; Operation of the Funds; Dividends and Distributions; Taxes 7. Purchase of Securities Being Offered How to Purchase Shares; Shareholder Services; Exchange Privilege; Distribution Plans; Calculation of Share Price and Public Offering Price; Application 8. Redemption or Repurchase How to Redeem Shares; Shareholder Services; Exchange Privilege 9. Pending Legal Proceedings Inapplicable PART B CAPTION IN STATEMENT OF ADDITIONAL ITEM NO. REGISTRATION STATEMENT CAPTION INFORMATION 10. Cover Page Cover Page 11. Table of Contents Table of Contents (i)
485B24F3rd Page of 126TOC1stPreviousNextBottomJust 3rd
12. General Information and History The Trust 13. Investment Objectives and Policies Definitions, Policies and Risk Considerations; Quality Ratings of Corporate Bonds and Preferred Stocks; Investment Limitations; Securities Transactions; Portfolio Turnover 14. Management of the Fund Trustees and Officers 15. Control Persons and Principal Holders Principal Security Holders of Securities 16. Investment Advisory and Other Services The Investment Adviser; The Sub-Adviser; Distribution Plans; Custodian; Auditors; Countrywide Fund Services, Inc. 17. Brokerage Allocation and Other Securities Transactions Practices 18. Capital Stock and Other Securities The Trust 19. Purchase, Redemption and Pricing of Calculation of Share Securities Being Offered Price and Public Offering Price; Other Purchase Information; Redemption in Kind 20. Tax Status Taxes 21. Underwriters The Underwriter 22. Calculation of Performance Data Historical Performance Information 23. Financial Statements Statement of Assets and Liabilities As of March 17, 1997; Financial Statements As of August 31, 1997 PART C The information required to be included in Part C is set forth under the appropriate Item, so numbered, in Part C to this Registration Statement. (ii)
485B24F4th Page of 126TOC1stPreviousNextBottomJust 4th
PROSPECTUS October 1, 1997 DEAN FAMILY OF FUNDS 2480 KETTERING TOWER DAYTON, OHIO 45423 The Dean Family of Funds currently offers four separate series of shares to investors: the Large Cap Value Fund, the Small Cap Value Fund, the Balanced Fund and the International Value Fund (individually a "Fund" and collectively the "Funds"). The LARGE CAP VALUE FUND seeks to provide growth of capital over the long-term by investing primarily in the common stocks of large companies. The SMALL CAP VALUE FUND seeks to provide capital appreciation by investing primarily in the common stocks of small companies. The BALANCED FUND seeks to preserve capital while producing a high total return by allocating its assets among equity securities, fixed-income securities and money market instruments. The INTERNATIONAL VALUE FUND seeks to provide long-term capital growth by investing primarily in the common stocks of foreign companies. Each Fund offers two classes of shares: Class A shares (sold subject to a maximum 5.25% front-end sales load and a 12b-1 fee of up to .25% of average daily net assets) and Class C shares (sold subject to a 1% contingent deferred sales load for a one-year period and a 12b-1 fee of up to 1% of average daily net assets). C.H. Dean & Associates, Inc., dba Dean Investment Associates, 2480 Kettering Tower, Dayton, Ohio 45423 ("Dean Investment Associates"), serves as investment adviser to the Funds. Dean Investment Associates is an independent investment counsel firm which has been advising individual, institutional and corporate clients since 1973. The firm manages approximately $4.0 billion for clients worldwide. Currently, Dean Investment Associates has 100 employees which includes 7 Chartered Financial Analysts (CFA), 10 Certified Public Accounts (CPA) and 3 PhDs. Dean Investment Associates is Dayton, Ohio's largest independent investment manager. This Prospectus sets forth concisely the information about the Funds that potential investors should know before investing. Please retain this Prospectus for future reference. A Statement of Additional Information dated October 1, 1997 has been filed with the Securities and Exchange Commission and is hereby incorporated by reference in its entirety. A copy of the Statement of Additional Information can be obtained at no charge by calling one of the numbers listed below.
485B24F5th Page of 126TOC1stPreviousNextBottomJust 5th
----------------------------------------------------------------- For Information or Assistance in Opening An Account, Please Call: Nationwide (Toll-Free) . . . . . . . . . . . . . . . 888-899-8343 Cincinnati . . . . . . . . . . . . . . . . . . . . . 513-629-2285 ----------------------------------------------------------------- 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.
485B24F6th Page of 126TOC1stPreviousNextBottomJust 6th
FINANCIAL HIGHLIGHTS The following information, which is unaudited, is an integral part of the Funds' financial statements and should be read in conjunction with the financial statements. The financial statements as of August 31, 1997 appear in the Statement of Additional Information of the Funds, which can be obtained at no charge by calling Countrywide Fund Services, Inc. (Nationwide call toll-free 888-899-8343) or by writing to the Funds at the address on the front of this Prospectus.
485B24F7th Page of 126TOC1stPreviousNextBottomJust 7th
[Enlarge/Download Table] DEAN FAMILY OF FUNDS FINANCIAL HIGHLIGHTS Per Share Data for a Share Outstanding Throughout Each period DEAN LARGE CAP VALUE FUND DEAN SMALL CAP VALUE FUND Class A Class C Class A Class C Period Period Period Period Ended Ended Ended Ended August 31, 1997 (A) August 31, 1997 (A) August 31, 1997 (A) August 31, 1997(A) (Unaudited) (Unaudited) (Unaudited) (Unaudited) Net asset value at beginning of period $ 10.00 $ 10.76 $ 10.00 $ 10.95 ---------- -------- ------------ ------------- Income from investment operations: Net investment income 0.02 0.00 0.02 -- Net realized and unrealized gains (losses) on investments 0.69 (0.07) 1.25 0.31 ---------- -------- ------------ ------------- Total from investment operations 0.71 (0.07) 1.27 0.31 ---------- -------- ------------ ------------- Less distributions: Dividends from net investment income (0.01) -- -- -- Distributions from net realized gains -- -- -- -- ---------- -------- ------------ ------------- Total distributions (0.01) -- -- -- ---------- -------- ------------ ------------- Net asset value at end of period $ 10.70 $ 10.69 $ 11.27 $ 11.26 ========== ======== ============ ============= Total return (B) 7.11% (0.65)% 12.70% 2.83% ========== ======== ============ ============= Net assets at end of period $ 6,704,634 $ 5,869 $ 14,800,643 $ 137,339 ========== ======== ============ ============= Ratio of expenses to average net assets: Before waiver of fees by Adviser 2.82% 3.51% 2.12% 2.86% ========== ======== ============ ============= After waiver of fees by Adviser 1.82% 2.51% 1.80% 2.54% ========== ======== ============ ============= Ratio of net investment income (loss) to average net assets (C) 0.63% (1.47)% 0.83% (0.16)% Portfolio turnover rate (C) 20% 20% 51% 51% Average commission rate per share $ 0.0600 $ 0.0600 $ 0.0600 $ 0.0600
485B24F8th Page of 126TOC1stPreviousNextBottomJust 8th
DEAN BALANCED FUND Class A Class C Period Period Ended Ended August 31, 1997 (A) August 31, 1997 (A) (Unaudited) (Unaudited)
Net asset value at beginning of period $ 10.00 $ 10.71 ---------- -------- Income from investment operations: Net investment income 0.05 -- Net realized and unrealized gains (losses) on investments 0.63 (0.06) ---------- -------- Total from investment operations 0.68 (0.06) ---------- -------- Less distributions: Dividends from net investment income (0.03) -- Distributions from net realized gains -- -- ---------- -------- Total distributions (0.03) -- ---------- -------- Net asset value at end of period $ 10.65 $ 10.65 ========== ======== Total return (B) 6.86% (0.56)% ========== ======== Net assets at end of period $ 6,783,871 $192,093 ========== ======== Ratio of expenses to average net assets: Before waiver of fees by Adviser 2.80% 3.54% After waiver of fees by Adviser 1.80% 2.54% Ratio of net investment income (loss) to average net assets (C) 2.06% 0.68% Portfolio turnover rate (C) 44% 44% Average commission rate per share $ 0.0600 $ 0.0600 <FN> (A) Represents the period from the initial public offering of shares (May 28, 1997 for Class A shares of each Fund) through August 31, 1997. The initial public purchase of shares was August 1, 1997 for Class C shares of the Small Cap Value Fund and the Balanced Fund, and August 19, 1997 for Class C shares of the Large Cap Value Fund. (B) The total returns shown do not include the effect of applicable sales loads. (C) Annualized. </FN> See accompanying notes to financial statements.
485B24F9th Page of 126TOC1stPreviousNextBottomJust 9th
- 6 -
485B24F10th Page of 126TOC1stPreviousNextBottomJust 10th
[Download Table] EXPENSE INFORMATION CLASS A CLASS C SHAREHOLDER TRANSACTION EXPENSES SHARES SHARES Maximum Sales Load Imposed on Purchases (as a percentage of offering price). . . . . . 5.25% None Maximum Contingent Deferred Sales Load (as a percentage of original purchase price) . None* 1.00% Sales Load Imposed on Reinvested Dividends . . None None Exchange Fee . . . . . . . . . . . . . . . . . None None Redemption Fee . . . . . . . . . . . . . . . . None** None** <FN> * Purchases at net asset value of amounts totaling $1 million or more may be subject to a contingent deferred sales load of up to 1.00% if a redemption occurred within 12 months of purchase and a commission was paid by the Underwriter to a participating unaffiliated dealer. See "How to Redeem Shares". ** A wire transfer fee is charged in the case of redemptions made by wire. Such fee is subject to change and is currently $8. See "How to Redeem Shares". </FN> [Enlarge/Download Table] ANNUAL FUND OPERATING EXPENSES (as a percentage of average net assets) TOTAL FUND OPERATING MANAGEMENT FEES OTHER EXPENSES (AFTER WAIVERS)(A) 12B-1 FEES(B) EXPENSES (AFTER WAIVERS)(C) LARGE CAP VALUE FUND Class A Shares .75% .25% .85% 1.85% Class C Shares .75% 1.00% .85% 2.60% SMALL CAP VALUE FUND Class A Shares .75% .25% .85% 1.85% Class C Shares .75% 1.00% .85% 2.60% BALANCED FUND Class A Shares .75% .25% .85% 1.85% Class C Shares .75% 1.00% .85% 2.60% INTERNATIONAL VALUE FUND Class A Shares .65% .25% .95% 1.85% Class C Shares .65% 1.00% .95% 2.60% (A) Absent waivers, management fees would be 1.00% for the Large Cap Value Fund, the Small Cap Value Fund and the Balanced Fund and 1.25% for the International Value Fund. (B) Long-term shareholders may pay more than the economic equivalent of the maximum front-end sales charges permitted by the National Association of Securities Dealers. (C) Absent waivers of management fees, total Fund operating expenses would be 2.10% for Class A shares and 2.85% for Class C shares of the Large Cap Value Fund, the Small Cap Value Fund and the Balanced Fund and 2.45% for Class A shares and 3.20% for Class C shares of the International Value Fund. - 7 -
485B24F11th Page of 126TOC1stPreviousNextBottomJust 11th
The purpose of these tables is to assist the investor in understanding the various costs and expenses that an investor in the Funds will bear directly or indirectly. The percentages expressing "Other Expenses" are based on estimated amounts for the current fiscal year. THE EXAMPLE BELOW SHOULD NOT BE CONSIDERED A REPRESENTATION OF PAST OR FUTURE EXPENSES AND ACTUAL EXPENSES MAY BE GREATER OR LESS THAN THOSE SHOWN. EXAMPLE You would pay the following expenses on a $1,000 investment, assuming (1) CLASS A CLASS C 5% annual return and (2) SHARES SHARES redemption at the end of ------- ------ each time period: 1 Year $ 70 $26 3 Years 108 81 - 8 -
485B24F12th Page of 126TOC1stPreviousNextBottomJust 12th
INVESTMENT OBJECTIVES, INVESTMENT POLICIES AND RISK CONSIDERATIONS The Dean Family of Funds (the "Trust") is comprised of four Funds, each with its own portfolio and investment objective. None of the Funds is intended to be a complete investment program, and there is no assurance that the investment objective of any Fund can be achieved. Each Fund's investment objective may be changed by the Board of Trustees without shareholder approval, but only after notification has been given to shareholders and after this Prospectus has been revised accordingly. If there is a change in a Fund's investment objective, shareholders should consider whether such Fund remains an appropriate investment in light of their then current financial position and needs. Unless otherwise indicated, all investment practices and limitations of the Funds are nonfundamental policies which may be changed by the Board of Trustees without shareholder approval. Known primarily for its balanced approach to managing money, Dean Investment Associates strives to generate superior risk-adjusted returns over full market cycles. Dean Investment Associates also has 25 years experience in managing equities via the "value" approach. The "value" approach is a disciplined, prudent approach to equity management that attempts to provide superior capital appreciation on a risk-adjusted basis by investing in equities which are out-of-favor, neglected or misunderstood. The goal is to choose those equities that appear to have the greatest margin of safety. LARGE CAP VALUE FUND The Large Cap Value Fund seeks to provide growth of capital over the long-term by investing primarily in the common stocks of large companies. A "large company" is one which has a market capitalization of greater than $750 million at the time of investment. Under normal circumstances, at least 65% of the Fund's total assets will be invested in common stocks of large companies or securities convertible into common stocks of large companies (such as convertible bonds, convertible preferred stocks and warrants). The Fund may invest in preferred stocks and bonds provided they are rated at the time of purchase in the four highest grades assigned by Moody's Investors Service, Inc. (Aaa, Aa, A or Baa) or Standard & Poor's Ratings Group (AAA, AA, A or BBB) or, if unrated, are determined by Dean Investment Associates to be of comparable quality. Preferred stocks and bonds rated Baa or BBB have speculative characteristics and changes in economic conditions or other circumstances are more likely to lead to a weakened capacity to pay principal and interest or to pay the preferred stock obligations than is the - 9 -
485B24F13th Page of 126TOC1stPreviousNextBottomJust 13th
case with higher grade securities. Subsequent to its purchase by the Fund, a security may cease to be rated or its rating may be reduced below Baa or BBB. Dean Investment Associates will consider such an event to be relevant in its determination of whether the Fund should continue to hold such security. See the Statement of Additional Information for a description of ratings. The stock selection approach of the Fund can best be described in the vernacular of the investment business as a "value" orientation. That is, great emphasis is placed on purchasing stocks that have lower than market multiples of price to earnings, book value, cash flow and revenues and/or high dividend yield. As indicated above, companies in whose securities the Fund may invest will predominantly have large capitalizations in terms of total market value. Usually, but not always, the stocks of such companies are traded on major stock exchanges. Such stocks are usually very liquid, but there may be periods when a particular stock or stocks in general become substantially less liquid. Such periods are usually, but not always, brief and care will be taken by Dean Investment Associates to minimize the overall liquidity risk of the Fund's portfolio. Investments in equity securities are subject to inherent market risks and fluctuations in value due to earnings, economic conditions, quality ratings and other factors beyond the control of Dean Investment Associates. As a result, the return and net asset value of the Fund will fluctuate. The Fund may invest in foreign companies through the purchase of sponsored American Depository Receipts (certificates of ownership issued by an American bank or trust company as a convenience to investors in lieu of the underlying shares which it holds in custody) or other securities of foreign issuers that are publicly traded in the United States. When selecting foreign investments, Dean Investment Associates will seek to invest in securities that have investment characteristics and qualities comparable to the kinds of domestic securities in which the Fund invests. Investment in securities of foreign issuers involves somewhat different investment risks from those affecting securities of domestic issuers. In addition to credit and market risk, investments in foreign securities involve sovereign risk, which includes local political and economic developments, potential nationalization, withholding taxes on dividend or interest payments and currency blockage. Foreign companies may have less public or less reliable information available about them and may be subject to less governmental regulation than U.S. companies. Securities of foreign companies may be less liquid or more volatile than securities of U.S. companies. - 10 -
485B24F14th Page of 126TOC1stPreviousNextBottomJust 14th
The Trust has approved the use of certain options and futures strategies for the Fund, including the purchase and sale of options on equity securities, stock indices and futures contracts and the purchase and sale of stock index futures contracts. For a discussion of these transactions, see "Additional Investment Information." When Dean Investment Associates believes substantial price risks exist for common stocks and securities convertible into common stocks because of uncertainties in the investment outlook or when in the judgment of Dean Investment Associates it is otherwise warranted in selling to manage the Fund's portfolio, the Fund may temporarily hold for defensive purposes all or a portion of its assets in short-term obligations such as bank debt instruments (certificates of deposit, bankers' acceptances and time deposits), commercial paper, U.S. Government obligations having a maturity of less than one year, shares of money market investment companies or repurchase agreements collateralized by U.S. Government obligations. The Fund is also permitted to lend its securities and to borrow money and pledge its assets in connection therewith. See "Additional Investment Information" for a discussion of these transactions. The Fund will not invest more than 10% of its total assets in shares of money market investment companies. Investments by the Fund in shares of money market investment companies may result in duplication of advisory, administrative and distribution fees. SMALL CAP VALUE FUND The Small Cap Value Fund seeks to provide capital appreciation by investing primarily in the common stocks of small companies. A "small company" is one which has a market capitalization of $750 million or less at the time of investment. Under normal circumstances, the Fund will invest at least 65% of its total assets in the common stocks of small companies or securities convertible into common stocks of small companies (such as convertible bonds, convertible preferred stocks and warrants). However, the Fund may invest a portion of its assets in common stocks of larger companies. The Fund may invest in preferred stocks & bonds provided they are rated at the time of purchase in the four highest grades assigned by Moody's Investors Service, Inc. (Aaa, Aa, A or Baa) or Standard & Poor's Ratings Group (AAA, AA, A or BBB) or, if unrated, are determined by Dean Investment Associates to be of comparable quality. Preferred stocks and bonds rated Baa or BBB have speculative characteristics and changes in economic conditions or other circumstances are more likely to lead to a weakened capacity to pay principal and interest or to pay the preferred stock obligations than is the case with higher grade securities. Subsequent to its purchase by the Fund, a security may cease to - 11 -
485B24F15th Page of 126TOC1stPreviousNextBottomJust 15th
be rated or its rating may be reduced below Baa or BBB. Dean Investment Associates will consider such an event to be relevant in its determination of whether the Fund should continue to hold such security. See the Statement of Additional Information for a description of ratings. Investments in equity securities are subject to inherent market risks and fluctuations in value due to earnings, economic conditions and other factors beyond the control of Dean Investment Associates. As a result, the return and net asset value of the Fund will fluctuate. The stock selection approach of the Fund can best be described in the vernacular of the investment business as a "value" orientation. That is, great emphasis is placed on purchasing stocks that have lower than market multiples of price to earnings, book value, cash flow and revenues and/or high dividend yield. The Fund may invest a significant portion of its assets in small, unseasoned companies. While smaller companies generally have potential for rapid growth, they often involve higher risks because they lack the management experience, financial resources, product diversification and competitive strengths of larger corporations. In addition, in many instances, the securities of smaller companies are traded only over-the-counter or on a regional securities exchange and the frequency and volume of their trading is substantially less than is typical of larger companies. Therefore, the securities of smaller companies may be subject to wider price fluctuations. When making large sales, the Fund may have to sell portfolio holdings at discounts from quoted prices or may have to make a series of small sales over an extended period of time. The Fund may invest in foreign companies through the purchase of sponsored American Depository Receipts (certificates of ownership issued by an American bank or trust company as a convenience to investors in lieu of the underlying shares which it holds in custody) or other securities of foreign issuers that are publicly traded in the United States. When selecting foreign investments, Dean Investment Associates will seek to invest in securities that have investment characteristics and qualities comparable to the kinds of domestic securities in which the Fund invests. Investment in securities of foreign issuers involves somewhat different investment risks from those affecting securities of domestic issuers. In addition to credit and market risk, investments in foreign securities involve sovereign risk, which includes local political and economic developments, potential nationalization, withholding taxes on dividend or interest payments and currency blockage. Foreign companies may have less public or less reliable information available about them and may be subject to less governmental regulation than U.S. companies. Securities of foreign companies may be less liquid or more volatile than securities of U.S. companies. - 12 -
485B24F16th Page of 126TOC1stPreviousNextBottomJust 16th
The Trust has approved the use of certain options and futures strategies for the Fund, including the purchase and sale of options on equity securities, stock indices and futures contracts and the purchase and sale of stock index futures contracts. For a discussion of these transactions, see "Additional Investment Information". When Dean Investment Associates believes substantial price risks exist for common stocks and securities convertible into common stocks because of uncertainties in the investment outlook or when in the judgment of Dean Investment Associates it is otherwise warranted in selling to manage the Fund's portfolio, the Fund may temporarily hold for defensive purposes all or a portion of its assets in short-term obligations such as bank debt instruments (certificates of deposit, bankers' acceptances and time deposits), commercial paper, U.S. Government obligations having a maturity of less than one year, shares of money market investment companies or repurchase agreements collateralized by U.S. Government obligations. The Fund is also permitted to lend its securities and to borrow money and pledge its assets in connection therewith. See "Additional Investment Information" for a discussion of these transactions. The Fund will not invest more than 10% of its total assets in shares of money market investment companies. Investments by the Fund in shares of money market investment companies may result in duplication of advisory, administrative and distribution fees. BALANCED FUND The Balanced Fund seeks to preserve capital while producing a high total return by allocating its assets among equity securities, fixed-income securities and money market obligations. Under normal circumstances, the asset mix of the Fund will normally range between 40-75 percent in common stocks and securities convertible into common stocks, 25-60 percent in preferred stocks and bonds, and 0-25 percent in money market instruments. Moderate shifts between asset classes are made in an attempt to maximize returns or reduce risk. Because the Fund intends to allocate its assets among equity securities, fixed-income securities and money market instruments, it may not be able to achieve, at times, a total return as high as that of a portfolio with complete freedom to invest its assets entirely in any one type of security. Likewise, since a portion of the Fund's portfolio will normally consist of fixed-income securities and/or money market instruments, the Fund may not achieve the degree of capital appreciation that a portfolio investing solely in equity securities might achieve. It should be noted that, although the Fund intends to invest in fixed-income securities to reduce the price volatility of the Fund's shares, intermediate and long-term fixed-income securities do fluctuate in value more than money market instruments. - 13 -
485B24F17th Page of 126TOC1stPreviousNextBottomJust 17th
The Fund attempts to achieve growth of capital through its investments in equity securities. The equity securities that the Fund may purchase consist of common stocks or securities having characteristics of common stocks (such as convertible preferred stocks, convertible debt securities or warrants) of domestic issuers. The equity selection approach of the Fund can best be described in the vernacular of the investment business as a "value" orientation. That is, great emphasis is placed on purchasing stocks that have lower than market multiples of price to earnings, book value, cash flow and revenues and/or high dividend yield. The Fund attempts to earn current income and at the same time achieve moderate growth of capital and/or reduce fluctuation in the net asset value of its shares by investing a portion of its assets in fixed-income securities. The fixed-income securities that the Fund may purchase include U.S. Government obligations and corporate debt securities (such as bonds and debentures) maturing in more than one year from the date of purchase and preferred stocks of domestic issuers rated at the time of purchase in the four highest grades assigned by Moody's Investors Service, Inc. (Aaa, Aa, A or Baa) or Standard & Poor's Ratings Group (AAA, AA, A or BBB) or, if unrated, which are determined by Dean Investment Associates to be of comparable quality. Preferred stocks and fixed-income securities rated Baa or BBB have speculative characteristics and changes in economic conditions or other circumstances are more likely to lead to a weakened capacity to pay principal and interest or to pay the preferred stock obligations than is the case with higher grade securities. Subsequent to its purchase by the Fund, a security may cease to be rated or its rating may be reduced below Baa or BBB. Dean Investment Associates will consider such an event to be relevant in its determination of whether the Fund should continue to hold such security. See the Statement of Additional Information for a description of ratings. Investments in fixed-income and equity securities are subject to inherent market risks and fluctuations in value due to changes in earnings, economic conditions, quality ratings and other factors beyond the control of Dean Investment Associates. Fixed-income securities are also subject to price fluctuations based upon changes in the level of interest rates, which will generally result in all those securities changing in price in the same way, i.e., all those securities experiencing appreciation when interest rates decline and depreciation when interest rates rise. As a result, the return and net asset value of the Fund will fluctuate. - 14 -
485B24F18th Page of 126TOC1stPreviousNextBottomJust 18th
The Fund also attempts to earn current income and reduce fluctuation in the net asset value of its shares by investing a portion of its assets in money market instruments. The money market instruments that the Fund may purchase consist of short-term (i.e., maturing in one year or less from the date of purchase) dollar-denominated debt obligations which (i) are U.S. Government obligations, (ii) are issued by domestic banks, or (iii) are issued by domestic corporations, if such corporate debt obligations have been rated at least Prime-2 by Moody's Investors Service, Inc. ("Moody's") or A-2 by Standard & Poor's Ratings Group ("S&P"), or have an outstanding issue of debt securities rated at least A by Moody's or S&P, or are of comparable quality in the opinion of Dean Investment Associates. Money market instruments also include repurchase agreements collateralized by U.S. Government obligations and shares of money market investment companies. The Fund will not invest more than 10% of its total assets in shares of money market investment companies. Investments by the Fund in shares of money market investment companies may result in duplication of advisory, administrative and distribution fees. When Dean Investment Associates believes substantial price risks exist for equity securities and/or fixed-income securities because of uncertainties in the investment outlook or when in the judgment of Dean Investment Associates it is otherwise warranted in selling to manage the Fund's portfolio, the Fund may temporarily hold greater than 25% of its assets in money market instruments for defensive purposes. Investors should be aware that the investment results of the Fund depend upon the ability of Dean Investment Associates to correctly anticipate the relative performance and risk of equity securities, fixed-income securities and money market instruments. Historical evidence indicates that correctly timing portfolio allocations among these asset classes has been an extremely difficult investment strategy to implement successfully. There can be no assurance that Dean Investment Associates will correctly anticipate relative asset class performance in the future on a consistent basis. Investment results would suffer, for example, if only a small portion of the Fund's assets were invested in stocks during a significant stock market advance or if a major portion were invested in stocks during a major decline. The Fund may invest in foreign companies through the purchase of sponsored American Depository Receipts (certificates of ownership issued by an American bank or trust company as a convenience to investors in lieu of the underlying shares which it holds in custody) or other securities of foreign issuers that are publicly traded in the United States. When selecting foreign investments, Dean Investment Associates will seek to invest in securities that have investment characteristics and qualities - 15 -
485B24F19th Page of 126TOC1stPreviousNextBottomJust 19th
comparable to the kinds of domestic securities in which the Fund invests. Investment in securities of foreign issuers involves somewhat different investment risks from those affecting securities of domestic issuers. In addition to credit and market risks, investments in foreign securities involve sovereign risk, which includes local political and economic developments, potential nationalization, withholding taxes on dividend or interest payments and currency blockage. Foreign companies may have less public or less reliable information available about them and may be subject to less governmental regulation than U.S. companies. Securities of foreign companies may be less liquid or more volatile than securities of U.S. companies. The Trust has approved the use of certain options and futures strategies for the Fund, including the purchase and sale of options on equity securities, stock indices and futures contracts and the purchase and sale of stock index futures contracts. The Fund is also permitted to lend its securities and to borrow money and pledge its assets in connection therewith. For a discussion of these transactions, see "Additional Investment Information." INTERNATIONAL VALUE FUND The International Value Fund seeks to provide long-term capital growth by investing primarily in the common stocks of foreign companies. Generally, the stocks purchased by the Fund are issued by companies located in the United Kingdom, Continental Europe and the Pacific Basin, including Japan, Singapore, Malaysia, Hong Kong and Australia. Under normal market conditions, investments will be made in a minimum of three countries other than the United States. Dean Investment Associates has retained Newton Capital Management Ltd. ("Newton Capital") to manage the investments of the International Value Fund. Individual stock selection decisions are based upon Newton's assessment of value based on fundamental research. Fundamental research includes a review of capitalization and valuation measures. Stocks are chosen that Newton Capital believes sell at a discount to the company's true economic value. The stock selection process includes a review of enterprise value to sales; price/earnings relative to the local market; dividend coverage; dividend yield relative to the local market; and price to free cash flow. Preference is given to companies with strong balance sheets and histories of consistent profitability. This strategic framework guides the managers towards the sectors and company characteristics that they believe will lead to future out-performance of the Europe, Australia and Far East Index compiled by Morgan Stanley Capital International. - 16 -
485B24F20th Page of 126TOC1stPreviousNextBottomJust 20th
Over the longer term, stocks are selected which will be able to deliver superior earnings and dividend growth. This will often reflect the company's market position and pricing power. Newton Capital looks for either a dominant position in a competitive market or a well protected niche. The goal is to be able to invest in these companies at valuation levels which do not reflect their future prospects so a wider view is used when analyzing a company's potential. Response to different phases of the market and economic cycle will be made, for instance, through varying the Fund's exposure to more cyclical companies ahead of an expected economic recovery. Other, more specific criteria will also generate some stock selection decisions. Under normal circumstances, at least 65% of the Fund's total assets will be invested in the common stocks of foreign companies and securities convertible into the common stocks of foreign companies (such as convertible bonds, convertible preferred stocks and warrants). The Fund may invest in preferred stocks and bonds provided they are rated at the time of purchase in the four highest grades assigned by Moody's (Aaa, Aa, A or Baa) or S&P (AAA, AA, A or BBB) or, if unrated, are determined by Dean Investment Associates to be of comparable quality. Preferred stocks and bonds rated Baa or BBB have speculative characteristics and changes in economic conditions or other circumstances are more likely to lead to a weakened capacity to pay principal and interest or to pay the preferred stock obligations than is the case with higher grade securities. Subsequent to its purchase by the Fund, a security may cease to be rated or its rating may be reduced below Baa or BBB. Dean Investment Associates will consider such an event to be relevant in its determination of whether the Fund should continue to hold such security. See the Statement of Additional Information for a description of ratings. Investments in equity securities are subject to inherent market risks and fluctuations in value due to earnings, economic conditions, quality ratings and other factors beyond the control of Newton Capital. As a result, the return and net asset value of the Fund will fluctuate. Investment in securities of foreign issuers involves somewhat different investment risks from those affecting securities of domestic issuers. In addition to credit and market risk, investments in foreign securities involve sovereign risk, which includes fluctuations in foreign exchange rates, future political and economic developments, and the possible imposition of exchange controls or other foreign governmental laws or restrictions. In addition, with respect to certain countries, there is the possibility of expropriation of assets, confiscatory taxation, political or social instability or diplomatic developments which could adversely affect investments in those countries. - 17 -
485B24F21st Page of 126TOC1stPreviousNextBottomJust 21st
There may be less publicly available information about a foreign company than about a U.S. company, and accounting, auditing and financial reporting standards and requirements may not be comparable. Securities of many foreign companies are less liquid and their prices more volatile than securities of comparable U.S. companies. Transaction costs of investing in foreign securities markets are generally higher than in the U.S. and there is generally less governmental supervision and regulation of exchanges, brokers and issuers than there is in the U.S. The Fund might have greater difficulty taking appropriate legal action in foreign courts. Depository receipts that are not sponsored by the issuer may be less liquid. Dividend and interest income from foreign securities will generally be subject to withholding taxes by the country in which the issuer is located and may not be recoverable by the Fund or the investor. The Fund's investments that are denominated in a currency other than the U.S. dollar are subject to the risk that the value of a particular currency will change in relation to one or more other currencies including the U.S. dollar. Among the factors that may affect currency values are trade balances, the level of short-term interest rates, differences in relative values of similar assets in different currencies, long-term opportunities for investment and capital appreciation and political developments. The Fund may try to hedge these risks by investing in foreign currencies, currency futures contracts and options thereon, forward currency exchange contracts, or any combination thereof, but there can be no assurance that such strategies will be effective. The risks of foreign investing are of greater concern in the case of investments in emerging markets, which may exhibit greater price volatility and have less liquidity. Furthermore, the economies of emerging market countries generally are heavily dependent upon international trade and, accordingly, have been and may continue to be adversely affected by trade barriers, managed adjustments in relative currency values, and other protectionist measures applied internally or imposed by the countries with which they trade. These emerging market economies also have been and may continue to be adversely affected by economic conditions in the countries with which they trade. The Fund presently intends to limit its investments in emerging market countries to no more than 10% of its net assets. The Trust has approved the use of certain options and futures strategies for the Fund, including the purchase and sale of options on equity securities, stock indices and futures contracts and the purchase and sale of stock index futures contracts and forward currency exchange contracts. For a discussion of these transactions, see "Additional Investment Information." - 18 -
485B24F22nd Page of 126TOC1stPreviousNextBottomJust 22nd
When Newton Capital believes substantial price risks exist for common stocks and securities convertible into common stocks because of uncertainties in the investment outlook or when in the judgment of Newton Capital it is otherwise warranted in selling to manage the Fund's portfolio, the Fund may temporarily hold for defensive purposes all or a portion of its assets in short-term obligations such as bank debt instruments (certificates of deposit, bankers' acceptances and time deposits), commercial paper, U.S. Government obligations having a maturity of less than one year, shares of money market investment companies or repurchase agreements collateralized by U.S. Government obligations. The Fund is also permitted to lend its securities and to borrow money and pledge its assets in connection therewith. See "Additional Investment Information" for a discussion of these transactions. The Fund will not invest more than 10% of its total assets in shares of money market investment companies. Investments by the Fund in shares of money market investment companies may result in duplication of advisory, administrative and distribution fees. ADDITIONAL INVESTMENT INFORMATION OPTIONS AND FUTURES. Each Fund may write covered call and covered put options on equity securities that the particular Fund is eligible to purchase. Call options written by a Fund give the holder the right to buy the underlying securities from the Fund at a stated exercise price; put options give the holder the right to sell the underlying security to the Fund. These options are covered by the Fund because, in the case of call options, it will own the underlying securities as long as the option is outstanding or because, in the case of put options, it will maintain a segregated account of cash, U.S. Government obligations or other high-quality debt securities which can be liquidated promptly to satisfy any obligation of the Fund to purchase the underlying securities. The Funds may also write straddles (combinations of puts and calls on the same underlying security). A Fund will receive a premium from writing a put or call option, which increases the Fund's return in the event the option expires unexercised or is closed out at a profit. The amount of the premium will reflect, among other things, the relationship of the market price of the underlying security to the exercise price of the option and the remaining term of the option. By writing a call option, the Fund limits its opportunity to profit from any increase in the market value of the underlying security above the exercise price of the option. By writing a put option, the Fund assumes the risk that it may be required to purchase the underlying security for an exercise price higher than its then current market value, resulting in a potential capital loss unless the security subsequently appreciates in value. - 19 -
485B24F23rd Page of 126TOC1stPreviousNextBottomJust 23rd
The purchaser of an option risks a total loss of the premium paid for the option if the price of the underlying security does not increase or decrease sufficiently to justify exercise. The seller of an option, on the other hand, will recognize the premium as income if the option expires unrecognized but forgoes any capital appreciation in excess of the exercise price in the case of a call option and may be required to pay a price in excess of current market value in the case of a put option. Options purchased and sold other than on an exchange in private transactions also impose on the Funds the credit risk that the counterparty will fail to honor its obligations. If the price of the security sold short increases between the time of the short sale and the time a Fund replaces the borrowed security, the Fund will incur a loss; conversely, if the price declines, a Fund will realize a capital gain. Although a Fund's gain is limited to the price at which it sold the security short, its potential loss is theoretically unlimited. Each Fund may purchase put options to hedge against a decline in the value of its portfolio. By using put options in this manner, a Fund will reduce any profit it might otherwise have realized in the underlying security by the amount of the premium paid for the put option and by transaction costs. A Fund may purchase call options on securities or on relevant stock indices to hedge against an increase in the value of securities that the Fund wants to buy sometime in the future. The premium paid for the call option and any transaction costs will increase the cost of securities acquired, upon exercise of the option, and, unless the price of the underlying security rises sufficiently, the option may expire worthless. The Funds may purchase either exchange-traded or over-the-counter options on securities. A Fund's ability to terminate options positions established in the over-the-counter market may be more limited than in the case of exchange-traded options and may also involve the risk that securities dealers participating in such transactions would fail to meet their obligations to the Fund. The Funds may purchase and sell futures contracts to hedge against changes in prices. The Funds will not engage in futures transactions for speculative purposes. A Fund may also write call options and purchase put options on futures contracts as a hedge to attempt to protect securities in its portfolio against decreases in value. When a Fund writes a call option on a futures contract, it is undertaking the obligation of selling a futures contract at a fixed price at any time during a specified period if the option is exercised. Conversely, as purchaser of a put option on a futures contract, a Fund is entitled (but not obligated) to sell a futures contract at the fixed price during the life of the option. - 20 -
485B24F24th Page of 126TOC1stPreviousNextBottomJust 24th
A Fund may not purchase or sell futures contracts or related options if immediately thereafter the sum of the amount of margin deposits on a Fund's existing futures positions and premiums paid for related options would exceed 5% of the market value of a Fund's total assets. When a Fund purchases futures contracts, an amount of cash and cash equivalents, equal to the underlying commodity value of the futures contracts (less any related margin deposits), will be deposited in a segregated account with the Fund's custodian (or the broker, if legally permitted) to collateralize the position and thereby insure that the use of such futures contract is unleveraged. When a Fund sells futures contracts, it will either own or have the right to receive the underlying future or security, or will make deposits to collateralize the position as discussed above. When a Fund uses futures and options on futures as hedging devices, there is a risk that the prices of the securities subject to the futures contracts may not correlate perfectly with the prices of the securities in a Fund's portfolio. This may cause the futures contract and any related options to react differently than the portfolio securities to market changes. In addition, the investment adviser could be incorrect in its expectations about the direction or extent of market factors such as stock price movements. In these events, the Fund may lose money on the futures contract or option. It is not certain that a secondary market for positions in futures contracts or for options will exist at all times. Although the investment adviser will consider liquidity before entering into these transactions, there is no assurance that a liquid secondary market on an exchange or otherwise will exist for any particular futures contract or option at any particular time. A Fund's ability to establish and close out futures and options positions depends on this secondary market. FORWARD CURRENCY EXCHANGE CONTRACTS. The International Value Fund may enter into forward currency exchange contracts. When Newton Capital believes that the currency of a particular foreign country may suffer a substantial decline against the U.S. dollar, it may attempt to hedge some portion or all of this anticipated risk by entering into a forward contract to sell an amount of foreign currency approximating the value of some or all of the International Value Fund's portfolio obligations denominated in such foreign currency. It may also enter into such contracts to protect against loss between trade and settlement dates resulting from changes in foreign currency exchange rates. Such contracts will also have the effect of limiting any gains to the International Value Fund between trade and settlement dates resulting from changes in such rates. - 21 -
485B24F25th Page of 126TOC1stPreviousNextBottomJust 25th
U.S. GOVERNMENT OBLIGATIONS. "U.S. Government obligations" include securities which are issued or guaranteed by the United States Treasury, by various agencies of the United States Government, and by various instrumentalities which have been established or sponsored by the United States Government. U.S. Treasury obligations are backed by the "full faith and credit" of the United States Government. U.S. Treasury obligations include Treasury bills, Treasury notes, and Treasury bonds. U.S. Treasury obligations also include the separate principal and interest components of U.S. Treasury obligations which are traded under the Separate Trading of Registered Interest and Principal of Securities ("STRIPS") program. Agencies or instrumentalities established by the United States Government include the Federal Home Loan Banks, the Federal Land Bank, the Government National Mortgage Association, the Federal National Mortgage Association, the Federal Home Loan Mortgage Corporation, the Student Loan Marketing Association, the Small Business Administration, the Bank for Cooperatives, the Federal Intermediate Credit Bank, the Federal Financing Bank, the Federal Farm Credit Banks, the Federal Agricultural Mortgage Corporation, the Resolution Funding Corporation, the Financing Corporation of America and the Tennessee Valley Authority. Some of these securities are supported by the full faith and credit of the United States Government while others are supported only by the credit of the agency or instrumentality, which may include the right of the issuer to borrow from the United States Treasury. In the case of securities not backed by the full faith and credit of the United States, the investor must look principally to the agency issuing or guaranteeing the obligation for ultimate repayment, and may not be able to assert a claim against the United States in the event the agency or instrumentality does not meet its commitments. Shares of the Funds are not guaranteed or backed by the United States Government. REPURCHASE AGREEMENTS. Each Fund may enter into repurchase agreements. Repurchase agreements are transactions by which a Fund purchases a security and simultaneously commits to resell that security to the seller at an agreed upon time and price, thereby determining the yield during the term of the agreement. In the event of a bankruptcy or other default of the seller of a repurchase agreement, a Fund could experience both delays in liquidating the underlying security and losses. To minimize these possibilities, each Fund intends to enter into repurchase agreements only with its Custodian, banks having assets in excess of $10 billion and the largest and, in the judgment of the investment adviser, most creditworthy primary U.S. Government securities dealers. Each Fund will enter into repurchase agreements which are collateralized by U.S. Government obligations. Collateral for repurchase agreements is held in safekeeping in the customer-only account of the Funds' Custodian - 22 -
485B24F26th Page of 126TOC1stPreviousNextBottomJust 26th
at the Federal Reserve Bank. At the time a Fund enters into a repurchase agreement, the value of the collateral, including accrued interest, will equal or exceed the value of the repurchase agreement and, in the case of a repurchase agreement exceeding one day, the seller agrees to maintain sufficient collateral so the value of the underlying collateral, including accrued interest, will at all times equal or exceed the value of the repurchase agreement. A Fund will not enter into a repurchase agreement not terminable within seven days if, as a result thereof, more than 15% of the value of the net assets of the Fund would be invested in such securities and other illiquid securities. COMMERCIAL PAPER. Commercial paper consists of short-term (usually from one to two hundred seventy days) unsecured promissory notes issued by corporations in order to finance their current operations. The Funds will only invest in commercial paper within the two top ratings of either Moody's (Prime-1 or Prime-2) or S&P (A-1 or A-2), or which, in the opinion of the investment adviser is of equivalent investment quality. Certain notes may have floating or variable rates. Variable and floating rate notes with a demand notice period exceeding seven days will be subject to each Fund's restriction on illiquid investments unless, in the judgment of the investment adviser, such note is liquid. WHEN-ISSUED SECURITIES. Obligations issued on a when-issued or to-be-announced basis are settled by delivery and payment after the date of the transaction, usually within 15 to 45 days. In a to-be-announced transaction, a Fund has committed to purchasing or selling securities for which all specific information is not yet known at the time of the trade, particularly the face amount in transactions involving mortgage-related securities. The Funds will only make commitments to purchase obligations on a when-issued or to-be-announced basis with the intention of actually acquiring the obligations, but a Fund may sell these securities before the settlement date if it is deemed advisable as a matter of investment strategy or in order to meet its obligations, although it would not normally expect to do so. The Funds will purchase securities on a when- issued basis or TBA basis only if delivery and payment for the securities takes place within 120 days after the date of the transaction. Purchases of securities on a when-issued or to-be-announced basis are subject to market fluctuations and their current value is determined in the same manner as other portfolio securities. When effecting such purchases for a Fund, a segregated account of cash or liquid securities of the Fund in an amount sufficient to make payment for the portfolio securities to be purchased will be maintained with the Fund's Custodian at the trade date and valued daily at market for the purpose of determining the adequacy of - 23 -
485B24F27th Page of 126TOC1stPreviousNextBottomJust 27th
the securities in the account. If the market value of segregated securities declines, additional cash or securities will be segregated on a daily basis so that the market value of the Fund's segregated assets will equal the amount of the Fund's commitments to purchase when-issued obligations and securities on a to-be-announced basis. A Fund's purchase of securities on a when-issued or to-be-announced basis may increase its overall investment exposure and involves a risk of loss if the value of the securities declines prior to the settlement date or if the broker-dealer selling the securities fails to deliver after the value of the securities has risen. BORROWING AND PLEDGING. Each Fund may borrow money from banks, provided that, immediately after any such borrowings, there is asset coverage of 300% for all borrowings of the Fund. A Fund will not make any borrowing which would cause its outstanding borrowings to exceed one-third of the value of its total assets. Each Fund may pledge assets in connection with borrowings but will not pledge more than one-third of its total assets. Borrowing magnifies the potential for gain or loss on the portfolio securities of the Funds and, therefore, if employed, increases the possibility of fluctuation in a Fund's net asset value. This is the speculative factor known as leverage. Each Fund's policies on borrowing and pledging are fundamental policies which may not be changed without the affirmative vote of a majority of its outstanding shares. It is the Funds' present intention, which may be changed by the Board of Trustees without shareholder approval, to borrow only for emergency or extraordinary purposes and not for leverage. LENDING PORTFOLIO SECURITIES. Each Fund may, from time to time, lend securities on a short-term basis (i.e., for up to seven days) to banks, brokers and dealers and receive as collateral cash, U.S. Government obligations or irrevocable bank letters of credit (or any combination thereof), which collateral will be required to be maintained at all times in an amount equal to at least 100% of the current value of the loaned securities plus accrued interest. Although each of the Funds does have the ability to make loans of all of its portfolio securities, it is the present intention of the Trust, which may be changed without shareholder approval, that such loans will not be made with respect to a Fund if as a result the aggregate of all outstanding loans exceeds one-third of the value of the Fund's total assets. Securities lending will afford a Fund the opportunity to earn additional income because the Fund will continue to be entitled to the interest payable on the loaned securities and also will either receive as income all or a portion of the interest on the investment of any cash loan collateral or, in the case of collateral other than cash, a fee negotiated with the borrower. Such loans will be terminable at any time. Loans of securities involve risks of delay in receiving additional collateral or in recovering the securities lent or even loss of rights in the - 24 -
485B24F28th Page of 126TOC1stPreviousNextBottomJust 28th
collateral in the event of the insolvency of the borrower of the securities. A Fund will have the right to regain record ownership of loaned securities in order to exercise beneficial rights. A Fund may pay reasonable fees in connection with arranging such loans. PORTFOLIO TURNOVER. The Funds do not intend to use short-term trading as a primary means of achieving their investment objectives. However, each Fund's rate of portfolio turnover will depend upon market and other conditions, and it will not be a limiting factor when portfolio changes are deemed necessary or appropriate by the investment adviser. Although the annual portfolio turnover rate of each of the Funds cannot be accurately predicted, it is not expected to exceed 100% with respect to any of the Funds, but may be either higher or lower. A 100% turnover rate would occur, for example, if all the securities of a Fund were replaced once in a one-year period. High turnover involves correspondingly greater commission expenses and transaction costs and increases the possibility that a Fund would not qualify as a regulated investment company under Subchapter M of the Internal Revenue Code. A Fund will not qualify as a regulated investment company if it derives 30% or more of its gross income from gains (without offset for losses) from the sale or other disposition of securities held for less than three months. High turnover may result in a Fund recognizing greater amounts of income and capital gains, which would increase the amount of income and capital gains which the Fund must distribute to shareholders in order to maintain its status as a regulated investment company and to avoid the imposition of federal income or excise taxes (see "Taxes"). HOW TO PURCHASE SHARES The initial investment in a Fund ordinarily must be at least $1,000 ($250 for tax-deferred retirement plans). The Funds may, in Dean Investment Associates' sole discretion, accept certain accounts with less than the stated minimum initial investment. Investors may open an account and make an initial investment through securities dealers having a sales agreement with the Trust's principal underwriter, 2480 Securities LLC (the "Underwriter"). Investors may also make an initial investment directly by sending a check and a completed account application to Countrywide Fund Services, Inc. (the "Transfer Agent"), P.O. Box 5354, Cincinnati, Ohio 45201-5354. Checks should be made payable to the "Large Cap Value Fund", the "Small Cap Value Fund", the "Balanced Fund" or the "International Value Fund", whichever is applicable. An account application is included in this Prospectus. Additional shares may be purchased through the Open Account Program described below. - 25 -
485B24F29th Page of 126TOC1stPreviousNextBottomJust 29th
The Trust mails investors a confirmation of all purchases or redemptions of Fund shares. Certificates representing shares are not issued. The Trust and the Underwriter reserve the right to limit the amount of investments and to refuse to sell to any person. Investors should be aware that the Funds' account application contains provisions in favor of the Trust, the Underwriter, the Transfer Agent and certain of their affiliates, excluding such entities from certain liabilities (including, among others, losses resulting from unauthorized shareholder transactions) relating to the various services (for example, telephone exchanges) made available to investors. Should an order to purchase shares be canceled because the check does not clear, the investor will be responsible for any resulting losses or fees incurred by the Trust or the Transfer Agent in the transaction. OPEN ACCOUNT PROGRAM. Please direct inquiries concerning the services described in this section to the Transfer Agent at the address or numbers listed below. After an initial investment, all investors are considered participants in the Open Account Program. The Open Account Program helps investors make purchases of shares of the Funds over a period of years and permits the automatic reinvestment of dividends and distributions of the Funds in additional shares without a sales load. Under the Open Account Program, the investor may purchase and add shares to his or her account at any time either through a securities dealer or by sending a check to Countrywide Fund Services, Inc., P.O. Box 5354, Cincinnati, Ohio 45201-5354. The check should be made payable to the applicable Fund. Under the Open Account Program, investors may also purchase shares of the Funds by bank wire. Please telephone the Transfer Agent (Nationwide call toll-free 888-899-8343; in Cincinnati call 629-2285) for instructions. The bank may impose a charge for sending a wire. There is presently no fee for receipt of wired funds, but the Transfer Agent reserves the right to charge shareholders for this service upon thirty days' prior notice to shareholders. Each additional purchase request must contain the name of the account and the account number to permit proper crediting to the account. While there is no minimum amount required for subsequent investments, the Trust reserves the right to impose such a requirement. All purchases under the Open Account Program - 26 -
485B24F30th Page of 126TOC1stPreviousNextBottomJust 30th
are made at the public offering price next determined after receipt of a purchase order by the Trust. If a broker-dealer received concessions for selling shares of the Funds to a current shareholder, such broker-dealer will receive the concessions described above with respect to additional investments by the shareholder. SALES LOAD ALTERNATIVES Each Fund offers two classes of shares which may be purchased at the election of the purchaser. The two classes of shares each represent interests in the same portfolio of investments of a Fund, have the same rights and are identical in all material respects except that (i) Class C shares bear the expenses of higher distribution fees; (ii) certain other class specific expenses will be borne solely by the class to which such expenses are attributable, including transfer agent fees attributable to a specific class of shares, printing and postage expenses related to preparing and distributing materials to current shareholders of a specific class, registration fees incurred by a specific class of shares, the expenses of administrative personnel and services required to support the shareholders of a specific class, litigation or other legal expenses relating to a specific class of shares, Trustees' fees or expenses incurred as a result of issues relating to a specific class of shares and accounting fees and expenses relating to a specific class of shares; and (iii) each class has exclusive voting rights with respect to matters relating to its own distribution arrangements. The net income attributable to Class C shares and the dividends payable on Class C shares will be reduced by the amount of the incremental expenses associated with the distribution fee (see "Distribution Plans"). The Funds' alternative sales arrangements permit investors to choose the method of purchasing shares that is most beneficial given the amount of the purchase, the length of time the investor expects to hold his or her shares and other relevant circumstances. Investors should determine whether under their particular circumstances it is more advantageous to incur a front-end sales load and be subject to lower ongoing charges, as discussed below, or to have all of the initial purchase price invested in the Funds with the investment thereafter being subject to higher ongoing charges. A salesperson or any other person entitled to receive any portion of a distribution fee may receive different compensation for selling Class A or Class C shares. As an illustration, investors who qualify for significantly reduced sales loads, as described below, might elect the Class A sales load alternative because similar sales load reductions are not available for purchases under the Class C sales load - 27 -
485B24F31st Page of 126TOC1stPreviousNextBottomJust 31st
alternative. Moreover, shares acquired under the Class A sales load alternative would be subject to lower ongoing distribution fees as described below. Investors not qualifying for reduced initial sales loads who expect to maintain their investment for an extended period of time might also elect the Class A sales load alternative because over time the accumulated continuing distribution fees on Class C shares may exceed the difference in initial sales loads between Class A and Class C shares. Again, however, such investors must weigh this consideration against the fact that less of their funds will be invested initially under the Class A sales load alternative. Furthermore, the higher ongoing distribution fees will be offset to the extent any return is realized on the additional funds initially invested under the Class C sales load alternative. Some investors might determine that it would be more advantageous to utilize the Class C sales load alternative to have more of their funds invested initially, despite being subject to higher ongoing distribution fees and, for a one-year period, being subject to a contingent deferred sales load. For example, based on estimated fees and expenses, an investor subject to the maximum 5.25% initial sales load on Class A shares who elects to reinvest dividends in additional shares would have to hold the investment in Class A shares approximately 6 years before the accumulated ongoing distribution fees on the alternative Class C shares would exceed the initial sales load plus the accumulated ongoing distribution fees on Class A shares. In this example and assuming the investment was maintained for more than 6 years, the investor might consider purchasing Class A shares. This example does not take into account the time value of money which reduces the impact of the higher ongoing Class C distribution fees, fluctuations in net asset value or the effect of different performance assumptions. In addition to the compensation otherwise paid to securities dealers, the Underwriter may from time to time pay from its own resources additional cash bonuses or other incentives to selected dealers in connection with the sale of shares of the Funds. On some occasions, such bonuses or incentives may be conditioned upon the sale of a specified minimum dollar amount of the shares of the Funds during a specific period of time. Such bonuses or incentives may include financial assistance to dealers in connection with conferences, sales or training programs for their employees, seminars for the public, advertising, sales campaigns and other dealer-sponsored programs or events. CLASS A SHARES Class A shares are sold on a continuous basis at the public offering price next determined after receipt of a purchase order by the Trust. Purchase orders received by dealers prior to 4:00 - 28 -
485B24F32nd Page of 126TOC1stPreviousNextBottomJust 32nd
p.m., Eastern time, on any business day and transmitted to the Transfer Agent by 5:00 p.m., Eastern time, that day are confirmed at the public offering price determined as of the close of the regular session of trading on the New York Stock Exchange on that day. It is the responsibility of dealers to transmit properly completed orders so that they will be received by the Transfer Agent by 5:00 p.m., Eastern time. Dealers may charge a fee for effecting purchase orders. Direct purchase orders received by the Transfer Agent by 4:00 p.m., Eastern time, are confirmed at that day's public offering price. Direct investments received by the Transfer Agent after 4:00 p.m., Eastern time, and orders received from dealers after 5:00 p.m., Eastern time, are confirmed at the public offering price next determined on the following business day. The public offering price of Class A shares is the next determined net asset value per share plus a sales load as shown in the following table. DEALER REALLOWANCE SALES LOAD AS % OF: AS % OF PUBLIC NET PUBLIC OFFERING AMOUNT OFFERING AMOUNT OF INVESTMENT PRICE INVESTED PRICE -------------------- -------- -------- ------ Less than $25,000 5.25% 5.54% 4.75% $25,000 but less than $50,000 4.75 4.99 4.25 $50,000 but less than $100,000 4.00 4.17 3.50 $100,000 but less than $250,000 3.25 3.36 2.75 $250,000 but less than $500,000 2.50 2.56 2.25 $500,000 but less than $1,000,000 2.25 2.30 2.00 $1,000,000 or more None* None* None * There is no front-end sales load on purchases of $1 million or more but a contingent deferred sales load of up to 1.00% may apply with respect to Class A shares if a commission was paid by the Underwriter to a participating unaffiliated dealer and the shares are redeemed within twelve months from the date of purchase. Under certain circumstances, the Underwriter may increase or decrease the reallowance to dealers. Dealers engaged in the sale of shares of the Funds may be deemed to be underwriters under the Securities Act of 1933. The Underwriter retains the entire sales load on all direct initial investments in the Funds and on all investments in accounts with no designated dealer of record. For initial purchases of Class A shares of the Funds of $1,000,000 or more and subsequent purchases further increasing the size of the account, a dealer's commission of 1.00% of such purchases from $1 million to $3 million, .75% of such purchases - 29 -
485B24F33rd Page of 126TOC1stPreviousNextBottomJust 33rd
from $3 million to $5 million and .50% of such purchases in excess of $5 million of the purchase amount may be paid by the Underwriter to participating unaffiliated dealers through whom such purchases are effected. In determining a dealer's eligibility for such commission, purchases of Class A shares of the Funds may be aggregated. Dealers should contact the Underwriter concerning the applicability and calculation of the dealer's commission in the case of combined purchases. An exchange from other funds will not qualify for payment of the dealer's commission, unless such exchange is from a fund with assets as to which a dealer's commission or similar payment has not been previously paid. Redemptions of Class A shares may result in the imposition of a contingent deferred sales load if the dealer's commission described in this paragraph was paid in connection with the purchase of such shares. See "Contingent Deferred Sales Load for Certain Purchases of Class A Shares" below. REDUCED SALES LOAD. A "purchaser" (defined below) may use the Right of Accumulation to combine the cost or current net asset value (whichever is higher) of his existing Class A shares of any Fund in the Dean Family of Funds with the amount of his current purchases in order to take advantage of the reduced sales loads set forth in the table above. Purchases made of shares of any Fund in the Dean Family of Funds pursuant to a Letter of Intent may also be eligible for the reduced sales loads. The minimum initial investment under a Letter of Intent is $10,000. Shareholders should contact the Transfer Agent for information about the Right of Accumulation and Letter of Intent. PURCHASES AT NET ASSET VALUE. Banks, bank trust departments and savings and loan associations, and employees of such institutions, in their fiduciary capacity or for their own accounts, may purchase Class A shares of the Funds at net asset value. To the extent permitted by regulatory authorities, a bank trust department may charge fees to clients for whose account it purchases shares at net asset value. Federal and state credit unions may also purchase Class A shares at net asset value. In addition, Class A shares of the Funds may be purchased at net asset value by broker-dealers who have a sales agreement with the Underwriter and their registered personnel and employees, including members of the immediate families of such registered personnel and employees. Clients of investment advisers and financial planners may also purchase Class A shares of the Funds at net asset value if their investment adviser or financial planner has made arrangements to permit them to do so with the Trust and the Underwriter. The investment adviser or financial planner must notify the Transfer Agent that an investment qualifies as a purchase at net asset value. - 30 -
485B24F34th Page of 126TOC1stPreviousNextBottomJust 34th
Class A shares may also be purchased at net asset value by organizations which qualify under section 501(c)(3) of the Internal Revenue Code as exempt from Federal income taxes, their employees, alumni and benefactors, and family members of such individuals. Trustees, directors, officers and employees of the Trust, Dean Investment Associates, the Underwriter or the Transfer Agent, including members of the immediate families of such individuals and employee benefit plans established by such entities, may also purchase Class A shares of the Funds at net asset value. CONTINGENT DEFERRED SALES LOAD FOR CERTAIN PURCHASES OF CLASS A SHARES. A contingent deferred sales load is imposed upon certain redemptions of Class A shares (or shares into which such Class A shares were exchanged) purchased at net asset value in amounts totaling $1 million or more, if the dealer's commission described above was paid by the Underwriter and the shares are redeemed within twelve months from the date of purchase. The contingent deferred sales load will be paid to the Underwriter and will be equal to the commission percentage paid at the time of purchase (either 1.00%, .75% or .50% depending on the amount of purchase) as applied to the lesser of (1) the net asset value at the time of purchase of the Class A shares being redeemed or (2) the net asset value of such Class A shares at the time of redemption. In determining whether the contingent deferred sales load is payable, it is assumed that shares not subject to the contingent deferred sales load are the first redeemed followed by other shares held for the longest period of time. The contingent deferred sales load will not be imposed upon shares representing reinvested dividends or capital gains distributions, or upon amounts representing share appreciation. If a purchase of Class A shares is subject to the contingent deferred sales load, the investor will be so notified on the confirmation for such purchase. Redemptions of such Class A shares of the Funds held for at least 12 months will not be subject to the contingent deferred sales load and an exchange of such Class A shares into another fund is not treated as a redemption and will not trigger the imposition of the contingent deferred sales load at the time of such exchange. A fund will "tack" the period for which such Class A shares being exchanged were held onto the holding period of the acquired shares for purposes of determining if a contingent deferred sales load is applicable in the event that the acquired shares are redeemed following the exchange; however, the period of time that the redemption proceeds of such Class A shares are held in a money market fund will not count toward the holding period for determining whether a contingent deferred sales load is applicable. See "Exchange Privilege". - 31 -
485B24F35th Page of 126TOC1stPreviousNextBottomJust 35th
The contingent deferred sales load is currently waived for any partial or complete redemption following death or disability (as defined in the Internal Revenue Code) of a shareholder (including one who owns the shares with his or her spouse as a joint tenant with rights of survivorship) from an account in which the deceased or disabled is named. The Underwriter may require documentation prior to waiver of the charge, including death certificates, physicians' certificates, etc. ADDITIONAL INFORMATION. For purposes of determining the applicable sales load and for purposes of the Letter of Intent and Right of Accumulation privileges, a purchaser includes an individual, his or her spouse and their children under the age of 21 purchasing shares for his, her or their own account; or a trustee or other fiduciary purchasing shares for a single fiduciary account although more than one beneficiary is involved; or employees of a common employer, provided that economies of scale are realized through remittances from a single source and quarterly confirmation of such purchases; or an organized group, provided that the purchases are made through a central administration or a single dealer, or by other means which result in economy of sales effort or expense. Contact the Transfer Agent for additional information concerning purchases at net asset value or at reduced sales loads. CLASS C SHARES Class C shares are sold on a continuous basis at the net asset value next determined after receipt of a purchase order by the Trust. Purchase orders received by dealers prior to 4:00 p.m., Eastern time, on any business day and transmitted to the Transfer Agent by 5:00 p.m., Eastern time, that day are confirmed at the net asset value determined as of the close of the regular session of trading on the New York Stock Exchange on that day. It is the responsibility of dealers to transmit properly completed orders so that they will be received by the Transfer Agent by 5:00 p.m., Eastern time. Dealers may charge a fee for effecting purchase orders. Direct purchase orders received by the Transfer Agent by 4:00 p.m., Eastern time, are confirmed at that day's net asset value. Direct investments received by the Transfer Agent after 4:00 p.m., Eastern time, and orders received from dealers after 5:00 p.m., Eastern time, are confirmed at the net asset value next determined on the following business day. A contingent deferred sales load is imposed on Class C shares if an investor redeems an amount which causes the current value of the investor's account to fall below the total dollar amount of purchase payments subject to the deferred sales load, except that no such charge is imposed upon shares representing reinvested dividends or capital gains distributions, or upon amounts representing share appreciation. - 32 -
485B24F36th Page of 126TOC1stPreviousNextBottomJust 36th
Whether a contingent deferred sales load is imposed will depend on the amount of time since the investor made a purchase payment from which an amount is being redeemed. Purchases are subject to the contingent deferred sales load according to the following schedule: Year Since Purchase Contingent Deferred Payment Was Made Sales Load ------------------- ------------------- First Year 1% Thereafter None In determining whether a contingent deferred sales load is payable, it is assumed that the purchase payment from which the redemption is made is the earliest purchase payment (from which a redemption or exchange has not already been effected). If the earliest purchase from which a redemption has not yet been effected was made within one year before the redemption, then a deferred sales load at the rate of 1% will be imposed. The following example will illustrate the operation of the contingent deferred sales load. Assume that an individual opens an account and purchases 1,000 shares at $10 per share and that six months later the net asset value per share is $12 and, during such time, the investor has acquired 50 additional shares through reinvestment of distributions. If at such time the investor should redeem 450 shares (proceeds of $5,400), 50 shares will not be subject to the load because of dividend reinvestment. With respect to the remaining 400 shares, the load is applied only to the original cost of $10 per share and not to the increase in net asset value of $2 per share. Therefore, $4,000 of the $5,400 redemption proceeds will be charged the load. At the rate of 1%, the contingent deferred sales load would be $40. In determining whether an amount is available for redemption without incurring a deferred sales load, the purchase payments made for all Class C shares in the shareholder's account are aggregated, and the current value of all such shares is aggregated. All sales loads imposed on redemptions are paid to the Underwriter. The Underwriter intends to pay a commission of 1% of the purchase amount to participating brokers at the time the investor purchases Class C shares. The contingent deferred sales load is currently waived for any partial or complete redemption following death or disability (as defined in the Internal Revenue Code) of a shareholder (including one who owns the shares with his or her spouse as a joint tenant with rights of survivorship) from an account in which the deceased or disabled is named. The Underwriter may require documentation prior to waiver of the charge, including death certificates, physicians' certificates, etc. - 33 -
485B24F37th Page of 126TOC1stPreviousNextBottomJust 37th
SHAREHOLDER SERVICES Contact the Transfer Agent (Nationwide call toll-free 888- 899-8343; in Cincinnati call 629-2285) for additional information about the shareholder services described below. AUTOMATIC WITHDRAWAL PLAN If the shares in an account have a value of at least $5,000, the shareholder may elect to receive, or may designate another person to receive, monthly or quarterly payments in a specified amount of not less than $50 each. There is no charge for this service. Purchases of additional Class A shares while the plan is in effect are generally undesirable because a sales load is incurred whenever purchases are made. TAX-DEFERRED RETIREMENT PLANS Shares of the Funds are available for purchase in connection with the following tax-deferred retirement plans: -- Keogh Plans for self-employed individuals -- Individual retirement account (IRA) plans for individuals and their non-employed spouses -- Qualified pension and profit-sharing plans for employees, including those profit-sharing plans with a 401(k) provision -- 403(b)(7) custodial accounts for employees of public school systems, hospitals, colleges and other non-profit organizations meeting certain requirements of the Internal Revenue Code DIRECT DEPOSIT PLANS Shares of the Funds may be purchased through direct deposit plans offered by certain employers and government agencies. These plans enable a shareholder to have all or a portion of his or her payroll or social security checks transferred automatically to purchase shares of the Funds. AUTOMATIC INVESTMENT PLAN Shareholders may make automatic monthly investments in a Fund from their bank, savings and loan or other depository institution account. The minimum initial and subsequent investments must be $50 under the plan. The Transfer Agent pays the costs associated with these transfers, but reserves the - 34 -
485B24F38th Page of 126TOC1stPreviousNextBottomJust 38th
right, upon thirty days' written notice, to make reasonable charges for this service. A shareholder's depository institution may impose its own charge for debiting an account which would reduce the return from an investment in the Funds. REINVESTMENT PRIVILEGE If a shareholder has redeemed shares of a Fund, he or she may reinvest all or part of the proceeds without any additional sales load. This reinvestment must occur within ninety days of the redemption and the privilege may only be exercised once per year. HOW TO REDEEM SHARES Shareholders may redeem shares of a Fund on each day that the Trust is open for business by sending a written request to the Transfer Agent. The request must state the number of shares or the dollar amount to be redeemed and the account number. The request must be signed exactly as the shareholder's name appears on the Trust's account records. If the shares to be redeemed have a value of $25,000 or more, the shareholder's signature must be guaranteed by any eligible guarantor institution, including banks, brokers and dealers, municipal securities brokers and dealers, government securities brokers and dealers, credit unions, national securities exchanges, registered securities associations, clearing agencies and savings associations. Shareholders may also redeem shares by placing a wire redemption request through a securities broker or dealer. Unaffiliated broker-dealers may impose a fee on the shareholder for this service. Shareholders will receive the net asset value per share next determined after receipt by the Transfer Agent of the wire redemption request. It is the responsibility of broker-dealers to properly transmit wire redemption orders. If the instructions request a redemption by wire, the shareholder will be charged an $8 processing fee by the Funds' custodian. The Trust reserves the right, upon thirty days' written notice, to change the processing fee. All charges will be deducted from the shareholder's account by redemption of shares in the account. The shareholder's bank or brokerage firm may also impose a charge for processing the wire. In the event that wire transfer of funds is impossible or impractical, the redemption proceeds will be sent by mail to the designated account. Redemption requests may direct that the proceeds be deposited directly in the shareholder's account with a commercial bank or other depository institution via an Automated Clearing House (ACH) transaction. There is currently no charge for ACH transactions. Contact the Transfer Agent for more information about ACH transactions. - 35 -
485B24F39th Page of 126TOC1stPreviousNextBottomJust 39th
A contingent deferred sales load may apply to a redemption of Class C shares or to a redemption of certain Class A shares purchased at net asset value. See "How to Purchase Shares". Shares are redeemed at their net asset value per share next determined after receipt by the Transfer Agent of a proper redemption request in the form described above, less any applicable contingent deferred sales load. Payment is normally made within three business days after tender in such form, provided that payment in redemption of shares purchased by check will be effected only after the check has been collected, which may take up to fifteen days from the purchase date. To eliminate this delay, shareholders may purchase shares of the Funds by certified check or wire. The Trust and the Transfer Agent will consider all written and verbal instructions as authentic and will not be responsible for the processing of exchange instructions received by telephone which are reasonably believed to be genuine or the delivery or transmittal of the redemption proceeds by wire. The affected shareholders will bear the risk of any such loss. The privilege of exchanging shares by telephone is automatically available to all shareholders. The Trust or the Transfer Agent, or both, will employ reasonable procedures to determine that telephone instructions are genuine. If the Trust and/or the Transfer Agent do not employ such procedures, they may be liable for losses due to unauthorized or fraudulent instructions. These procedures may include, among others, requiring forms of personal identification prior to acting upon telephone instructions, providing written confirmation of the transactions and/or tape recording telephone instructions. At the discretion of the Trust or the Transfer Agent, corporate investors and other associations may be required to furnish an appropriate certification authorizing redemptions to ensure proper authorization. The Trust reserves the right to require shareholders to close an account if at any time the value of the shares in the account is less than $1,000 (based on actual amounts invested including any sales load paid, unaffected by market fluctuations), or $250 in the case of tax-deferred retirement plans, or such other minimum amount as the Trust may determine from time to time. After notification of the Trust's intention to close an account, the shareholder will be given thirty days to increase the value of the account to the minimum amount. The Trust reserves the right to suspend the right of redemption or to postpone the date of payment for more than three business days under unusual circumstances as determined by the Securities and Exchange Commission. - 36 -
485B24F40th Page of 126TOC1stPreviousNextBottomJust 40th
EXCHANGE PRIVILEGE Shares of the Funds may be exchanged for each other or for the following series of Countrywide Investment Trust: Short Term Government Income Fund -- a money market fund which invests in short-term U.S. Government obligations backed by the "full faith and credit" of the United States and seeks high current income, consistent with protection of capital. Intermediate Term Government Income Fund -- invests in intermediate term U.S. Government obligations and seeks high current income, consistent with protection of capital. Capital appreciation is a secondary objective. Class A shares of a Fund which are not subject to a contingent deferred sales load may be exchanged for Class A shares of any other Fund, for shares of the Short Term Government Income Fund and for shares of the Intermediate Term Government Income Fund (provided such shares are not subject to a contingent deferred sales load). Class C shares of a Fund, as well as Class A shares of a Fund subject to a contingent deferred sales load, may be exchanged, on the basis of relative net asset value per share, for shares of any other Fund subject to a contingent deferred sales load, for shares of the Short Term Government Income Fund and for any shares of the Intermediate Term Government Income Fund subject to a contingent deferred sales load. A fund will "tack" the period for which the shares being exchanged were held onto the holding period of the acquired shares for purposes of determining if a contingent deferred sales load is applicable in the event that the acquired shares are redeemed following the exchange. The period of time that shares are held in the Short Term Government Income Fund will not count toward the holding period for determining whether a contingent deferred sales load is applicable. Shareholders may request an exchange by sending a written request to the Transfer Agent. The request must be signed exactly as your name appears on the Trust's account records. Exchanges may also be requested by telephone. If you are unable to execute your transaction by telephone (for example during times of unusual market activity) consider requesting your exchange by mail or by visiting the Trust's offices at 2480 Kettering Tower, Dayton, Ohio 45423. An exchange will be effected at the next determined net asset value after receipt of a request by the Transfer Agent. Exchanges may only be made for shares of funds then offered for sale in your state of residence and are subject to the applicable minimum initial investment requirements. The exchange privilege may be modified or terminated by the Board of Trustees upon 60 days' prior notice to shareholders. An exchange results - 37 -
485B24F41st Page of 126TOC1stPreviousNextBottomJust 41st
in a sale of fund shares, which may cause you to recognize a capital gain or loss. Before making an exchange, contact the Transfer Agent to obtain more information about exchanges among the Funds. DIVIDENDS AND DISTRIBUTIONS The Large Cap Value Fund, the Balanced Fund and the International Value Fund each expects to distribute substantially all of its net investment income, if any, on a quarterly basis. The Small Cap Value Fund expects to distribute substantially all of its net investment income, if any, on an annual basis. Each Fund expects to distribute any net realized long-term capital gains at least once each year. Management will determine the timing and frequency of the distributions of any net realized short-term capital gains. Distributions are paid according to one of the following options: Share Option - income distributions and capital gains distributions reinvested in additional shares. Income Option - income distributions and short-term capital gains distributions paid in cash; long-term capital gains distributions reinvested in additional shares. Cash Option - income distributions and capital gains distributions paid in cash. The choice of option should be indicated on the application. If no option is specified, distributions will automatically be reinvested in additional shares. All distributions will be based on the net asset value in effect on the payable date. If the Income Option or the Cash Option is selected and the U.S. Postal Service cannot deliver the checks or if the checks remain uncashed for six months, dividends may be reinvested in the account at the then-current net asset value and the account will be converted to the Share Option. No interest will accrue on amounts represented by uncashed distribution checks. An investor who has received in cash any dividend or capital gains distribution from any Fund may return the distribution within thirty days of the distribution date to the Transfer Agent for reinvestment at the net asset value next determined after its return. The investor or his dealer must notify the Transfer Agent that a distribution is being reinvested pursuant to this provision. - 38 -
485B24F42nd Page of 126TOC1stPreviousNextBottomJust 42nd
TAXES Each Fund intends to qualify for the special tax treatment afforded a "regulated investment company" under Subchapter M of the Internal Revenue Code so that it does not pay federal taxes on income and capital gains distributed to shareholders. Each Fund intends to distribute substantially all of its net investment income and any net realized capital gains to its shareholders. Distributions of net investment income and from net realized short-term capital gains, if any, are taxable as ordinary income. Dividends distributed by the Funds from net investment income may be eligible, in whole or in part, for the dividends received deduction available to corporations. Distributions resulting from the sale of foreign currencies and foreign obligations, to the extent of foreign exchange gains, are taxed as ordinary income or loss. If these transactions result in reducing the Fund's net income, a portion of the income may be classified as a return of capital (which will lower a shareholder's tax basis). If the Fund pays nonrefundable taxes to foreign governments during the year, the taxes will reduce the Fund's net investment income but still may be included in a shareholder's taxable income. However, a shareholder may be able to claim an offsetting tax credit or itemized deduction on his return for his portion of foreign taxes paid by the Fund. Distributions of net realized long-term capital gains are taxable as long-term capital gains regardless of how long a shareholder has held Fund shares. Redemptions and exchanges of shares of the Funds are taxable events on which a shareholder may realize a gain or loss. Under applicable tax law, the Fund may be required to limit its gains from hedging in foreign currency forwards, futures and options. Although it is anticipated the Fund will comply with such limits, the Fund's use of these hedging techniques involves greater risk of unfavorable tax consequences than funds not engaging in such techniques. Hedging may also result in the application of the mark-to-market and straddle provisions of the Internal Revenue Code. These provisions could result in an increase (or decrease) in the amount of taxable dividends paid by the Fund as well as affect whether dividends paid by the Fund are classified as capital gains or ordinary income. The Funds will mail to each of their shareholders a statement indicating the amount and federal income tax status of all distributions made during the year. In addition to federal taxes, shareholders of the Funds may be subject to state and local taxes on distributions. Shareholders should consult their tax advisors about the tax effect of distributions and withdrawals from the Funds and the use of the Automatic Withdrawal Plan and the Exchange Privilege. The tax consequences described in this section apply whether distributions are taken in cash or reinvested in additional shares. - 39 -
485B24F43rd Page of 126TOC1stPreviousNextBottomJust 43rd
OPERATION OF THE FUNDS The Funds are diversified series of the Dean Family of Funds, an open-end management investment company organized as an Ohio business trust on December 18, 1996. The Board of Trustees supervises the business activities of the Trust. Like other mutual funds, the Trust retains various organizations to perform specialized services for the Funds. The Trust retains Dean Investment Associates, 2480 Kettering Tower, Dayton, Ohio, to manage the Funds' investments. Dean Investment Associates is an independent investment counsel firm which has been advising individual, institutional and corporate clients since 1973. Dean Investment Associates currently provides investment advisory services to three registered investment companies which serve as underlying vehicles for variable annuity insurance products. The firm manages approximately $4.0 billion for clients worldwide. Currently, Dean Investment Associates has 100 employees which includes 7 Chartered Financial Analysts (CFA), 10 Certified Public Accounts (CPA) and 3 PhDs. Dean Investment Associates is Dayton, Ohio's largest independent investment manager. The controlling shareholder of Dean Investment Associates is Chauncey H. Dean. The Large Cap Value Fund, the Small Cap Value Fund and the Balanced Fund each pays Dean Investment Associates a fee for its services equal to the annual rate of 1.00% of the average value of its daily net assets. The International Value Fund pays Dean Investment Associates a fee for its services equal to the annual rate of 1.25% of the average value of its daily net assets. As the owner of greater than 25% of its shares, Chauncey H. Dean may be deemed to control each of the Funds. Dirk H. Van Dijk and Arvind K. Sachdeva are primarily responsible for managing the portfolio of the Large Cap Value Fund. Mr. Van Dijk is currently Senior Equity Analyst and has been employed by Dean Investment Associates since 1994. He previously was an Equity Analyst with Bartlett & Co., an investment adviser. Mr. Sachdeva is currently Director of Research and has been employed by Dean Investment Associates in various capacities since 1993. He previously was a portfolio manager for Carillon Advisers, an investment management firm. Dirk H. Van Dijk and Amit Dugar are the persons primarily responsible for managing the portfolio of the Small Cap Value Fund. Mr. Dugar has been employed by Dean Investment Associates as an Equity Analyst since 1994. He formerly was a Quantitative Analyst with Renaissance Investment Management, an investment adviser. - 40 -
485B24F44th Page of 126TOC1stPreviousNextBottomJust 44th
Arvind K. Sachdeva, James C. Hunter, David S. Oda and James G. Tillar are primarily responsible for managing the portfolio of the Balanced Fund. Mr. Hunter has been employed as an Equity Analyst by Dean Investment Associates since 1993. He previously was a Security Analyst for Star Bank, N.A. Mr. Oda, Senior Fixed Income Analyst, has been employed by Dean Investment Associates since 1990. Mr. Tillar, Assistant Vice President, has been employed by Dean Investment Associates since 1987. Newton Capital Management Ltd., 71 Queen Victoria Street, London, England EC4V 4DR ("Newton Capital"), has been retained by Dean Investment Associates to manage the investments of the International Value Fund. Newton Capital is a United Kingdom investment advisory firm registered with the Securities and Exchange Commission. Newton Capital is affiliated with Newton Investment Management Ltd., an English investment advisory firm which has been managing assets for institutional investors, mutual funds and individuals since 1977. Dean Investment Associates (not the Fund) pays Newton Capital a fee for its services equal to the rate of .50% of the average value of the Fund's daily net assets. Paul Butler is International Equities Director for Newton Capital Management and is primarily responsible for managing the portfolio of the International Value Fund. Paul graduated from Cambridge University in 1986 with a degree in Natural Sciences and joined Newton in 1987. Paul worked as an International Equities analyst for five years before becoming a Portfolio Manager in 1992. In 1993, Paul was appointed as a director of Newton and promoted to his current position as Director of International Equities. The Funds are responsible for the payment of all operating expenses, including fees and expenses in connection with membership in investment company organizations, brokerage fees and commissions, legal, auditing and accounting expenses, expenses of registering shares under federal and state securities laws, expenses related to the distribution of the Funds' shares (see "Distribution Plans"), insurance expenses, taxes or governmental fees, fees and expenses of the custodian, transfer agent and accounting and pricing agent of the Funds, fees and expenses of members of the Board of Trustees who are not interested persons of the Trust, the cost of preparing and distributing prospectuses, statements, reports and other documents to shareholders, expenses of shareholders' meetings and proxy solicitations, and such extraordinary or non-recurring expenses as may arise, including litigation to which the Funds may be a party and indemnification of the Trust's officers and Trustees with respect thereto. - 41 -
485B24F45th Page of 126TOC1stPreviousNextBottomJust 45th
2480 Securities LLC, 2480 Kettering Tower, Dayton, Ohio (the "Underwriter"), an affiliate of Dean Investment Associates, serves as principal underwriter for the Funds and, as such, is the exclusive agent for the distribution of shares of the Funds. The Trust retains Countrywide Fund Services, Inc., P.O. Box 5354, Cincinnati, Ohio 45201-5354 (the "Transfer Agent"), to serve as the Funds' transfer agent, dividend paying agent and shareholder servicing agent. The Transfer Agent is a wholly-owned indirect subsidiary of Countrywide Credit Industries, Inc., a New York Stock Exchange listed company principally engaged in residential mortgage lending. The Transfer Agent also provides accounting and pricing services to the Funds. The Transfer Agent receives a monthly fee from each Fund for calculating daily net asset value per share and maintaining such books and records as are necessary to enable it to perform its duties. In addition, the Transfer Agent has been retained to provide administrative services to the Funds. In this capacity, the Transfer Agent supplies executive, administrative and regulatory services, supervises the preparation of tax returns, and coordinates the preparation of reports to shareholders and reports to and filings with the Securities and Exchange Commission and state securities authorities. Each Fund pays the Transfer Agent a fee for these administrative services at the annual rate of .10% of the average value of its daily net assets up to $100,000,000, .075% of such assets from $100,000,000 to $200,000,000 and .05% of such assets in excess of $200,000,000; provided, however, that the minimum fee is $1,000 per month with respect to each Fund. Consistent with the Rules of Fair Practice of the National Association of Securities Dealers, Inc., and subject to its objective of seeking best execution of portfolio transactions, Dean Investment Associates, and with respect to the International Value Fund, Newton Capital, may give consideration to sales of shares of the Funds as a factor in the selection of brokers and dealers to execute portfolio transactions of the Funds. Subject to the requirements of the Investment Company Act of 1940 (the "1940 Act") and procedures adopted by the Board of Trustees, the Funds may execute portfolio transactions through any broker or dealer and pay brokerage commissions to a broker (i) which is an affiliated person of the Trust, or (ii) which is an affiliated person of such person, or (iii) an affiliated person of which is an affiliated person of the Trust, Dean Investment Associates, Newton Capital or the Underwriter. Shares of each Fund have equal voting rights and liquidation rights, and are voted in the aggregate and not by Fund except in matters where a separate vote is required by the 1940 Act or when the matter affects only the interests of a particular Fund. Each - 42 -
485B24F46th Page of 126TOC1stPreviousNextBottomJust 46th
class of shares of a Fund shall vote separately on matters relating to its plan of distribution pursuant to Rule 12b-1 (see "Distribution Plans"). When matters are submitted to shareholders for a vote, each shareholder is entitled to one vote for each full share owned and fractional votes for fractional shares owned. The Trust does not normally hold annual meetings of shareholders. The Trustees shall promptly call and give notice of a meeting of shareholders for the purpose of voting upon the removal of any Trustee when requested to do so in writing by shareholders holding 10% or more of the Trust's outstanding shares. The Trust will comply with the provisions of Section 16(c) of the 1940 Act in order to facilitate communications among shareholders. DISTRIBUTION PLANS CLASS A SHARES. Pursuant to Rule 12b-1 under the 1940 Act, the Funds have adopted a plan of distribution (the "Class A Plan") under which the Funds' Class A shares may directly incur or reimburse the Underwriter for certain distribution-related expenses, including payments to securities dealers and others who are engaged in the sale of shares of the Funds and who may be advising investors regarding the purchase, sale or retention of Fund shares; expenses of maintaining personnel who engage in or support distribution of shares or who render shareholder support services not otherwise provided by the Transfer Agent; expenses of formulating and implementing marketing and promotional activities, including direct mail promotions and mass media advertising; expenses of preparing, printing and distributing sales literature and prospectuses and statements of additional information and reports for recipients other than existing shareholders of the Funds; expenses of obtaining such information, analyses and reports with respect to marketing and promotional activities as the Trust may, from time to time, deem advisable; and any other expenses related to the distribution of the Funds' Class A shares. Pursuant to the Class A Plan, the Funds may make payments to dealers and other persons, including the Underwriter and its affiliates, who may be advising investors regarding the purchase, sale or retention of Class A shares. The annual limitation for payment of expenses pursuant to the Class A Plan is .25% of each Fund's average daily net assets allocable to Class A shares. Unreimbursed expenditures will not be carried over from year to year. In the event the Class A Plan is terminated by a Fund in accordance with its terms, the Fund will not be required to make any payments for expenses incurred by the Underwriter after the date the Class A Plan terminates. - 43 -
485B24F47th Page of 126TOC1stPreviousNextBottomJust 47th
CLASS C SHARES. Pursuant to Rule 12b-1 under the 1940 Act, the Funds have adopted a plan of distribution (the "Class C Plan") which provides for two categories of payments. First, the Class C Plan provides for the payment to the Underwriter of an account maintenance fee, in an amount equal to an annual rate of .25% of a Fund's average daily net assets allocable to Class C shares, which may be paid to other dealers based on the average value of Fund shares owned by clients of such dealers. In addition, the Class C shares may directly incur or reimburse the Underwriter in an amount not to exceed .75% per annum of a Fund's average daily net assets allocable to Class C shares for certain distribution-related expenses incurred in the distribution and promotion of the Fund's Class C shares, including payments to securities dealers and others who are engaged in the sale of shares of the Funds and who may be advising investors regarding the purchase, sale or retention of such shares; expenses of maintaining personnel who engage in or support distribution of shares or who render shareholder support services not otherwise provided by the Transfer Agent; expenses of formulating and implementing marketing and promotional activities, including direct mail promotions and mass media advertising; expenses of preparing, printing and distributing sales literature and prospectuses and statements of additional information and reports for recipients other than existing shareholders of the Funds; expenses of obtaining such information, analyses and reports with respect to marketing and promotional activities as the Trust may, from time to time, deem advisable; and any other expenses related to the distribution of the Funds' Class C shares. Pursuant to the Class C Plan, the Funds may make payments to dealers and other persons, including the Underwriter and its affiliates, who may be advising investors regarding the purchase, sale or retention of Class C shares. Unreimbursed expenditures will not be carried over from year to year. In the event the Class C Plan is terminated by a Fund in accordance with its terms, the Fund will not be required to make any payments for expenses incurred by the Underwriter after the date the Class C Plan terminates. The Underwriter may make payments to dealers and other persons in an amount up to .75% per annum of the average value of Class C shares owned by their clients, in addition to the .25% account maintenance fee described above. GENERAL. Pursuant to the Plans, the Funds may also 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 Trust believes that the Glass- - 44 -
485B24F48th Page of 126TOC1stPreviousNextBottomJust 48th
Steagall Act should not preclude a bank from providing such services. However, state securities laws on this issue may differ from the interpretations of federal law expressed herein and banks and financial institutions may be required to register as dealers pursuant to state law. If a bank were prohibited from continuing to perform all or a part of such services, management of the Trust believes that there would be no material impact on the Funds or their 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. The National Association of Securities Dealers, in its Rules of Fair Practice, places certain limitations on asset-based sales charges of mutual funds. These Rules require fund-level accounting in which all sales charges - front-end load, 12b-1 fees or contingent deferred load - terminate when a percentage of gross sales is reached. CALCULATION OF SHARE PRICE AND PUBLIC OFFERING PRICE On each day that the Trust is open for business, the share price (net asset value) of Class C shares and the public offering price (net asset value plus applicable sales load) of Class A shares is determined as of the close of the regular session of trading on the New York Stock Exchange, currently 4:00 p.m., Eastern time. The Trust is open for business on each day the New York Stock Exchange is open for business and on any other day when there is sufficient trading in a Fund's investments that its net asset value might be materially affected. Securities held by the Fund may be primarily listed on foreign exchanges or traded in foreign markets which are open on days (such as Saturdays and U.S. holidays) when the New York Stock Exchange is not open for business. As a result, the net asset value per share of the Fund may be significantly affected by trading on days when the Trust is not open for business. The net asset value per share of each Fund is calculated by dividing the sum of the value of the securities held by the Fund plus cash or other assets minus all liabilities (including estimated accrued expenses) by the total number of shares outstanding of the Fund, rounded to the nearest cent. U.S. Government obligations are valued at their most recent bid prices as obtained from one or more of the major market makers for such securities. Other portfolio securities are valued as follows: (i) securities which are traded on stock exchanges or are quoted by NASDAQ are valued at the last reported sale price as of the close of the regular session of trading on - 45 -
485B24F49th Page of 126TOC1stPreviousNextBottomJust 49th
the New York Stock Exchange on the day the securities are being valued, or, if not traded on a particular day, at the closing bid price, (ii) securities traded in the over-the-counter market, and which are not quoted by NASDAQ, are valued at the last sale price (or, if the last sale price is not readily available, at the last bid price as quoted by brokers that make markets in the securities) as of the close of the regular session of trading on the New York Stock Exchange on the day the securities are being valued, (iii) securities which are traded both in the over-the-counter market and on a stock exchange are valued according to the broadest and most representative market, and (iv) securities (and other assets) for which market quotations are not readily available are valued at their fair value as determined in good faith in accordance with consistently applied procedures established by and under the general supervision of the Board of Trustees. The net asset value per share of each Fund will fluctuate with the value of the securities it holds. PERFORMANCE INFORMATION From time to time, each Fund may advertise its "average annual total return." Each Fund may also advertise "yield." Both yield and average annual total return figures are based on historical earnings and are not intended to indicate future performance. The "average annual total return" of a Fund refers to the average annual compounded rates of return over the most recent 1, 5 and 10 year periods or, where the Fund has not been in operation for such period, over the life of the Fund (which periods will be stated in the advertisement) that would equate an initial amount invested at the beginning of a stated period to the ending redeemable value of the investment. The calculation of "average annual total return" assumes the reinvestment of all dividends and distributions and the deduction of the current maximum sales load from the initial investment. A Fund may also advertise total return (a "nonstandardized quotation") which is calculated differently from "average annual total return." A nonstandardized quotation of total return may be a cumulative return which measures the percentage change in the value of an account between the beginning and end of a period, assuming no activity in the account other than reinvestment of dividends and capital gains distributions. A nonstandardized quotation of total return may also indicate average annual compounded rates of return over periods other than those specified for "average annual total return." These nonstandardized returns do not include the effect of the applicable sales load which, if included, would reduce total return. A nonstandardized quotation of total return will always be accompanied by a Fund's "average annual total return" as described above. - 46 -
485B24F50th Page of 126TOC1stPreviousNextBottomJust 50th
The "yield" of a Fund is computed by dividing the net investment income per share earned during a thirty-day (or one month) period stated in the advertisement by the maximum public offering price per share on the last day of the period (using the average number of shares entitled to receive dividends). The yield formula assumes that net investment income is earned and reinvested at a constant rate and annualized at the end of a six-month period. From time to time, the Funds may advertise their performance rankings as published by recognized independent mutual fund statistical services such as Lipper Analytical Services, Inc. ("Lipper"), or by publications of general interest such as FORBES, MONEY, THE WALL STREET JOURNAL, BUSINESS WEEK, BARRON'S, FORTUNE or MORNINGSTAR MUTUAL FUND VALUES. The Funds may also compare their performance to that of other selected mutual funds, averages of the other mutual funds within their categories as determined by Lipper, or recognized indicators such as the Dow Jones Industrial Average and the Standard & Poor's 500 Stock Index. In connection with a ranking, the Funds may provide additional information, such as the particular category of funds to which the ranking relates, the number of funds in the category, the criteria upon which the ranking is based, and the effect of fee waivers and/or expense reimbursements, if any. The Funds may also present their performance and other investment characteristics, such as volatility or a temporary defensive posture, in light of Dean Investment Associates' or Newton Capital's view of current or past market conditions or historical trends. - 47 -
485B24F51st Page of 126TOC1stPreviousNextBottomJust 51st
DEAN FAMILY OF FUNDS 2480 Kettering Tower Dayton, Ohio 45423 BOARD OF TRUSTEES Victor S. Curtis Chauncey H. Dean Robert D. Dean Frank J. Perez Dr. David H. Ponitz Frank H. Scott Gilbert P. Williamson INVESTMENT ADVISER C.H. DEAN & ASSOCIATES, INC. 2480 Kettering Tower Dayton, Ohio 45423 UNDERWRITER 2480 SECURITIES LLC 2480 Kettering Tower Dayton, Ohio 45423 TRANSFER AGENT COUNTRYWIDE FUND SERVICES, INC. P.O. Box 5354 Cincinnati, Ohio 45201-5354 SHAREHOLDER SERVICE Nationwide: (Toll-Free) 888-899-8343 Cincinnati: 513-629-2285 TABLE OF CONTENTS PAGE Expense Information. . . . . . . . . . . . . . . . . . . . . Investment Objectives, Investment Policies and Risk Considerations . . . . . . . . . . . . . . . . . . . . . . . How To Purchase Shares . . . . . . . . . . . . . . . . . . . Shareholder Services . . . . . . . . . . . . . . . . . . . . How To Redeem Shares . . . . . . . . . . . . . . . . . . . . Exchange Privilege . . . . . . . . . . . . . . . . . . . . . Dividends and Distributions. . . . . . . . . . . . . . . . . Taxes. . . . . . . . . . . . . . . . . . . . . . . . . . . . Operation of the Funds . . . . . . . . . . . . . . . . . . . Distribution Plans. . . . . . . . . . . . . . . . . . . . . Calculation of Share Price and Public Offering Price . . . . Performance Information. . . . . . . . . . . . . . . . . . . - 48 -
485B24F52nd Page of 126TOC1stPreviousNextBottomJust 52nd
No person has been authorized to give any information or to make any representations, other than those contained in this Prospectus, in connection with the offering contained in this Prospectus, and if given or made, such information or representations must not be relied upon as being authorized by the Trust. This Prospectus does not constitute an offer by the Trust to sell shares in any State to any person to whom it is unlawful for the Trust to make such offer in such State. - 49 -
485B24F53rd Page of 126TOC1stPreviousNextBottomJust 53rd
[Logo] DEAN family of funds_______ [Logo] Prospectus October 1, 1997 - 50 -
485B24F54th Page of 126TOC1stPreviousNextBottomJust 54th
DEAN FAMILY OF FUNDS STATEMENT OF ADDITIONAL INFORMATION October 1, 1997 Large Cap Value Fund Small Cap Value Fund Balanced Fund International Value Fund This Statement of Additional Information is not a prospectus. It should be read in conjunction with the Prospectus of the Dean Family of Funds dated October 1, 1997. A copy of the Funds' Prospectus can be obtained by writing the Trust at 312 Walnut Street, 21st Floor, Cincinnati, Ohio 45202, or by calling the Trust nationwide toll-free 888-899-8343. - 1 -
485B24F55th Page of 126TOC1stPreviousNextBottomJust 55th
STATEMENT OF ADDITIONAL INFORMATION Dean Family of Funds 2480 Kettering Tower Dayton, Ohio 45423 TABLE OF CONTENTS THE TRUST..................................................... 3 DEFINITIONS, POLICIES AND RISK CONSIDERATIONS................. 4 QUALITY RATINGS OF CORPORATE BONDS AND PREFERRED STOCKS....... 13 INVESTMENT LIMITATIONS........................................ 15 TRUSTEES AND OFFICERS......................................... 17 THE INVESTMENT ADVISER........................................ 20 THE SUB-ADVISER............................................... 21 THE UNDERWRITER............................................... 21 DISTRIBUTION PLANS............................................ 22 SECURITIES TRANSACTIONS....................................... 23 PORTFOLIO TURNOVER............................................ 25 CALCULATION OF SHARE PRICE AND PUBLIC OFFERING PRICE.......... 25 OTHER PURCHASE INFORMATION.................................... 26 TAXES ..................................................... 27 REDEMPTION IN KIND............................................ 29 HISTORICAL PERFORMANCE INFORMATION............................ 30 CUSTODIAN..................................................... 32 AUDITORS ..................................................... 32 PRINCIPAL SECURITY HOLDERS.................................... 33 COUNTRYWIDE FUND SERVICES, INC................................ 33 STATEMENT OF ASSETS AND LIABILITIES AS OF MARCH 17, 1997...... 35 UNAUDITED FINANCIAL STATEMENTS AS OF AUGUST 31, 1997.......... 40 - 2 -
485B24F56th Page of 126TOC1stPreviousNextBottomJust 56th
THE TRUST The Dean Family of Funds (the "Trust") was organized as an Ohio business trust on December 18, 1996. The Trust currently offers four series of shares to investors: the Large Cap Value Fund, the Small Cap Value Fund, the Balanced Fund and the International Value Fund (referred to individually as a "Fund" and collectively as the "Funds"). Each Fund has its own investment objective(s) and policies. Each share of a Fund represents an equal proportionate interest in the assets and liabilities belonging to that Fund with each other share of that Fund and is entitled to such dividends and distributions out of the income belonging to the Fund as are declared by the Trustees. The shares do not have cumulative voting rights or any preemptive or conversion rights, and the Trustees have the authority from time to time to divide or combine the shares of any Fund into a greater or lesser number of shares of that Fund so long as the proportionate beneficial interest in the assets belonging to that Fund and the rights of shares of any other Fund are in no way affected. In case of any liquidation of a Fund, the holders of shares of the Fund being liquidated will be entitled to receive as a class a distribution out of the assets, net of the liabilities, belonging to that Fund. Expenses attributable to any Fund are borne by that Fund. Any general expenses of the Trust not readily identifiable as belonging to a particular Fund are allocated by or under the direction of the Trustees in such manner as the Trustees determine to be fair and equitable. Generally, the Trustees allocate such expenses on the basis of relative net assets or number of shareholders. No shareholder is liable to further calls or to assessment by the Trust without his express consent. Both Class A shares and Class C shares of a Fund represent an interest in the same assets of such Fund, have the same rights and are identical in all material respects except that (i) Class C shares bear the expenses of higher distribution fees; (ii) certain other class specific expenses will be borne solely by the class to which such expenses are attributable, including transfer agent fees attributable to a specific class of shares, printing and postage expenses related to preparing and distributing materials to current shareholders of a specific class, registration fees incurred by a specific class of shares, the expenses of administrative personnel and services required to support the shareholders of a specific class, litigation or other legal expenses relating to a class of shares, Trustees' fees or expenses incurred as a result of issues relating to a specific class of shares and accounting fees and expenses relating to a specific class of shares; and (iii) each class has exclusive voting rights with respect to matters relating to its own distribution arrangements. The Board of Trustees may classify and reclassify the shares of a Fund into additional classes of shares at a future date. - 3 -
485B24F57th Page of 126TOC1stPreviousNextBottomJust 57th
DEFINITIONS, POLICIES AND RISK CONSIDERATIONS A more detailed discussion of some of the terms used and investment policies described in the Prospectus (see "Investment Objectives and Policies") appears below: MAJORITY. As used in the Prospectus and this Statement of Additional Information, the term "majority" of the outstanding shares of the Trust (or of any Fund) means the lesser of (1) 67% or more of the outstanding shares of the Trust (or the applicable Fund) present at a meeting, if the holders of more than 50% of the outstanding shares of the Trust (or the applicable Fund) are present or represented at such meeting or (2) more than 50% of the outstanding shares of the Trust (or the applicable Fund). COMMERCIAL PAPER. Commercial paper consists of short-term (usually from one to two hundred seventy days) unsecured promissory notes issued by corporations in order to finance their current operations. The Funds will only invest in commercial paper rated A-1 or A-2 by Standard & Poor's Ratings Group ("S&P") or Prime-1 or Prime-2 by Moody's Investors Service, Inc. ("Moody's") or which, in the opinion of the investment Advisor, is of equivalent investment quality. Certain notes may have floating or variable rates. Variable and floating rate notes with a demand notice period exceeding seven days will be subject to each Fund's restrictions on illiquid investments (see "Investment Limitations") unless, in the judgment of the investment adviser, subject to the direction of the Board of Trustees, such note is liquid. The rating of Prime-1 is the highest commercial paper rating assigned by Moody's. Among the factors considered by Moody's in assigning ratings are the following: Evaluation of the management of the issuer; economic evaluation of the issuer's industry or industries and an appraisal of speculative-type risks which may be inherent in certain areas; evaluation of the issuer's products in relation to competition and customer acceptance; liquidity; amount and quality of long-term debt; trend of earnings over a period of 10 years; financial strength of the parent company and the relationships which exist with the issuer; and recognition by the management of obligations which may be present or may arise as a result of public interest questions and preparations to meet such obligations. These factors are all considered in determining whether the commercial paper is rated Prime-1 or Prime-2. Commercial paper rated A-1 (highest quality) by S&P has the following characteristics: liquidity ratios are adequate to meet cash requirements; long-term senior debt is rated "A" or better, although in some cases "BBB" credits may be allowed; the issuer has access to at least two additional channels of borrowing; basic earnings and cash flow have an upward trend with allowance made for unusual - 4 -
485B24F58th Page of 126TOC1stPreviousNextBottomJust 58th
circumstances; typically, the issuer's industry is well established and the issuer has a strong position within the industry; and the reliability and quality of management are unquestioned. The relative strength or weakness of the above factors determines whether the issuer's commercial paper is rated A-1 or A-2. BANK DEBT INSTRUMENTS. Bank debt instruments in which the Funds may invest consist of certificates of deposit, bankers' acceptances and time deposits issued by national banks and state banks, trust companies and mutual savings banks, or banks or institutions the accounts of which are insured by the Federal Deposit Insurance Corporation or the Federal Savings and Loan Insurance Corporation. Certificates of deposit are negotiable certificates evidencing the indebtedness of a commercial bank to repay funds deposited with it for a definite period of time (usually from fourteen days to one year) at a stated or variable interest rate. Bankers' acceptances are credit instruments evidencing the obligation of a bank to pay a draft which has been drawn on it by a customer, which instruments reflect the obligation both of the bank and of the drawer to pay the face amount of the instrument upon maturity. Time deposits are non-negotiable deposits maintained in a banking institution for a specified period of time at a stated interest rate. Investments in time deposits maturing in more than seven days will be subject to each Fund's restrictions on illiquid investments (see "Investment Limitations"). REPURCHASE AGREEMENTS. Repurchase agreements are transactions by which a Fund purchases a security and simultaneously commits to resell that security to the seller at an agreed upon time and price, thereby determining the yield during the term of the agreement. In the event of a bankruptcy or other default of the seller of a repurchase agreement, a Fund could experience both delays in liquidating the underlying security and losses. To minimize these possibilities, each Fund intends to enter into repurchase agreements only with its Custodian, with banks having assets in excess of $10 billion and with broker-dealers who are recognized as primary dealers in U.S. Government obligations by the Federal Reserve Bank of New York. Collateral for repurchase agreements is held in safekeeping in the customer-only account of the Funds' Custodian at the Federal Reserve Bank. A Fund will not enter into a repurchase agreement not terminable within seven days if, as a result thereof, more than 15% of the value of its net assets would be invested in such securities and other illiquid securities. Although the securities subject to a repurchase agreement might bear maturities exceeding one year, settlement for the repurchase would never be more than one year after a Fund's acquisition of the securities and normally would be within a - 5 -
485B24F59th Page of 126TOC1stPreviousNextBottomJust 59th
shorter period of time. The resale price will be in excess of the purchase price, reflecting an agreed upon market rate effective for the period of time the Fund's money will be invested in the securities, and will not be related to the coupon rate of the purchased security. At the time a Fund enters into a repurchase agreement, the value of the underlying security, including accrued interest, will equal or exceed the value of the repurchase agreement, and in the case of a repurchase agreement exceeding one day, the seller will agree that the value of the underlying security, including accrued interest, will at all times equal or exceed the value of the repurchase agreement. The collateral securing the seller's obligation must be of a credit quality at least equal to the Fund's investment criteria for portfolio securities and will be held by the Custodian or in the Federal Reserve Book Entry System. For purposes of the Investment Company Act of 1940, a repurchase agreement is deemed to be a loan from a Fund to the seller subject to the repurchase agreement and is therefore subject to that Fund's investment restriction applicable to loans. It is not clear whether a court would consider the securities purchased by a Fund subject to a repurchase agreement as being owned by that Fund or as being collateral for a loan by the Fund to the seller. In the event of the commencement of bankruptcy or insolvency proceedings with respect to the seller of the securities before repurchase of the security under a repurchase agreement, a Fund may encounter delay and incur costs before being able to sell the security. Delays may involve loss of interest or decline in price of the security. If a court characterized the transaction as a loan and a Fund has not perfected a security interest in the security, that Fund may be required to return the security to the seller's estate and be treated as an unsecured creditor of the seller. As an unsecured creditor, a Fund would be at the risk of losing some or all of the principal and income involved in the transaction. As with any unsecured debt obligation purchased for a Fund, the investment adviser seeks to minimize the risk of loss through repurchase agreements by analyzing the creditworthiness of the obligor, in this case, the seller. Apart from the risk of bankruptcy or insolvency proceedings, there is also the risk that the seller may fail to repurchase the security, in which case a Fund may incur a loss if the proceeds to that Fund of the sale of the security to a third party are less than the repurchase price. However, if the market value of the securities subject to the repurchase agreement becomes less than the repurchase price (including interest), the Fund involved will direct the seller of the security to deliver additional securities so that the market value of all securities subject to the repurchase agreement will equal or exceed the repurchase price. It is possible that a Fund will be unsuccessful in seeking to enforce the seller's contractual obligation to deliver additional securities. - 6 -
485B24F60th Page of 126TOC1stPreviousNextBottomJust 60th
LOANS OF PORTFOLIO SECURITIES. Each Fund may lend its portfolio securities subject to the restrictions stated in the Prospectus. Under applicable regulatory requirements (which are subject to change), the loan collateral must, on each business day, at least equal the value of the loaned securities. To be acceptable as collateral, letters of credit must obligate a bank to pay amounts demanded by a Fund if the demand meets the terms of the letter. Such terms and the issuing bank must be satisfactory to the Fund. The Funds receive amounts equal to the dividends or interest on loaned securities and also receive one or more of (a) negotiated loan fees, (b) interest on securities used as collateral, or (c) interest on short-term debt securities purchased with such collateral; either type of interest may be shared with the borrower. The Funds may also pay fees to placing brokers as well as custodian and administrative fees in connection with loans. Fees may only be paid to a placing broker provided that the Trustees determine that the fee paid to the placing broker is reasonable and based solely upon services rendered, that the Trustees separately consider the propriety of any fee shared by the placing broker with the borrower, and that the fees are not used to compensate the investment adviser or any affiliated person of the Trust or an affiliated person of the investment adviser or other affiliated person. The terms of the Funds' loans must meet applicable tests under the Internal Revenue Code and permit the Funds to reacquire loaned securities on five days' notice or in time to vote on any important matter. WHEN-ISSUED SECURITIES AND SECURITIES PURCHASED ON A TO-BE-ANNOUNCED BASIS. Each Fund will only make commitments to purchase securities on a when-issued or to-be-announced ("TBA") basis with the intention of actually acquiring the securities. In addition, each Fund may purchase securities on a when-issued or TBA basis only if delivery and payment for the securities takes place within 120 days after the date of the transaction. In connection with these investments, each Fund will direct the Custodian to place cash or U.S. Government obligations in a segregated account in an amount sufficient to make payment for the securities to be purchased. When a segregated account is maintained because a Fund purchases securities on a when-issued or TBA basis, the assets deposited in the segregated account will be valued daily at market for the purpose of determining the adequacy of the securities in the account. If the market value of such securities declines, additional cash or securities will be placed in the account on a daily basis so that the market value of the account will equal the amount of a Fund's commitments to purchase securities on a when-issued or TBA basis. To the extent funds are in a segregated account, they will not be available for new investment or to meet redemptions. Securities purchased on a when-issued or TBA basis and the securities held in a Fund's portfolio are subject to changes in market value based upon changes in the level of interest rates (which will - 7 -
485B24F61st Page of 126TOC1stPreviousNextBottomJust 61st
generally result in all of those securities changing in value in the same way, i.e., all those securities experiencing appreciation when interest rates decline and depreciation when interest rates rise). Therefore, if in order to achieve higher returns, a Fund remains substantially fully invested at the same time that it has purchased securities on a when-issued or TBA basis, there will be a possibility that the market value of the Fund's assets will have greater fluctuation. The purchase of securities on a when-issued or TBA basis may involve a risk of loss if the broker-dealer selling the securities fails to deliver after the value of the securities has risen. When the time comes for a Fund to make payment for securities purchased on a when-issued or TBA basis, the Fund will do so by using then available cash flow, by sale of the securities held in the segregated account, by sale of other securities or, although it would not normally expect to do so, by directing the sale of the securities purchased on a when-issued or TBA basis themselves (which may have a market value greater or less than the Fund's payment obligation). Although a Fund will only make commitments to purchase securities on a when-issued or TBA basis with the intention of actually acquiring the securities, the Fund may sell these securities before the settlement date if it is deemed advisable by the investment adviser as a matter of investment strategy. WARRANTS AND RIGHTS. Warrants are options to purchase equity securities at a specified price and are valid for a specific time period. Rights are similar to warrants, but normally have a short duration and are distributed by the issuer to its shareholders. Each Fund may purchase warrants and rights, provided that the Fund does not invest more than 5% of its net assets at the time of purchase in warrants and rights other than those that have been acquired in units or attached to other securities. Of such 5%, no more than 2% of a Fund's assets at the time of purchase may be invested in warrants which are not listed on either the New York Stock Exchange or the American Stock Exchange. STRIPS. STRIPS are U.S. Treasury bills, notes and bonds that have been issued without interest coupons or stripped of their unmatured interest coupons, interest coupons that have been stripped from such U.S. Treasury securities, and receipts or certificates representing interests in such stripped U.S. Treasury securities and coupons. A STRIPS security pays no interest in cash to its holder during its life although interest is accrued for federal income tax purposes. Its value to an investor consists of the difference between its face value at the time of maturity and the price for which it was acquired, which is generally an amount significantly less than its face value. Investing in STRIPS may help to preserve capital during periods of declining interest rates. - 8 -
485B24F62nd Page of 126TOC1stPreviousNextBottomJust 62nd
STRIPS do not entitle the holder to any periodic payments of interest prior to maturity. Accordingly, such securities usually trade at a deep discount from their face or par value and will be subject to greater fluctuations of market value in response to changing interest rates than debt obligations of comparable maturities which make periodic distributions of interest. On the other hand, because there are no periodic interest payments to be reinvested prior to maturity, STRIPS eliminate the reinvestment risk and lock in a rate of return to maturity. Current federal tax law requires that a holder of a STRIPS security accrue a portion of the discount at which the security was purchased as income each year even though the Fund received no interest payment in cash on the security during the year. FOREIGN SECURITIES. Subject to the Fund's investment policies and quality and maturity standards, a Fund may invest in the securities (payable in U.S. dollars) of foreign issuers. Because the Funds may invest in foreign securities, an investment in the Funds involves risks that are different in some respects from an investment in a fund which invests only in securities of U.S. domestic issuers. Foreign investments may be affected favorably or unfavorably by changes in currency rates and exchange control regulations. There may be less publicly available information about a foreign company than about a U.S. company, and foreign companies may not be subject to accounting, auditing and financial reporting standards and requirements comparable to those applicable to U.S. companies. There may be less governmental supervision of securities markets, brokers and issuers of securities. Securities of some foreign companies are less liquid or more volatile than securities of U.S. companies, and foreign brokerage commissions and custodian fees are generally higher than in the United States. Settlement practices may include delays and may differ from those customary in United States markets. Investments in foreign securities may also be subject to other risks different from those affecting U.S. investments, including local political or economic developments, expropriation or nationalization of assets, restrictions on foreign investment and repatriation of capital, imposition of withholding taxes on dividend or interest payments, currency blockage (which would prevent cash from being brought back to the United States), and difficulty in enforcing legal rights outside the United States. FORWARD FOREIGN CURRENCY EXCHANGE CONTRACTS. The value of the International Value Fund's portfolio securities which are invested in non-U.S. dollar denominated instruments as measured in U.S. dollars may be affected favorably or unfavorably by changes in foreign currency exchange rates and exchange control regulations, and the Fund may incur costs in connection with conversions between various currencies. The Fund will conduct its foreign currency exchange transactions either on a spot (i.e., cash) basis at the spot rate prevailing in the foreign - 9 -
485B24F63rd Page of 126TOC1stPreviousNextBottomJust 63rd
currency exchange market, or through forward contracts to purchase or sell foreign currencies. A forward foreign currency exchange contract involves an obligation to purchase or sell a specific currency at a future date, which may be any fixed number of days from the date of the contract agreed upon by the parties, at a price set at the time of the contract. These contracts are traded directly between currency traders (usually large commercial banks) and their customers. The Fund will not, however, hold foreign currency except in connection with purchase and sale of foreign portfolio securities. The International Value Fund will enter into forward foreign currency exchange contracts as described hereafter. When the Fund enters into a contract for the purchase or sale of a security denominated in a foreign currency, it may desire to establish the cost or proceeds relative to another currency. The forward contract may be denominated in U.S. dollars or may be a "cross-currency" contract where the forward contract is denominated in a currency other than U.S. dollars. However, this tends to limit potential gains which might result from a positive change in such currency relationships. The forecasting of a short-term currency market movement is extremely difficult and the successful execution of a short-term hedging strategy is highly uncertain. The International Value Fund may enter into such forward contracts if, as a result, not more than 50% of the value of its total assets would be committed to such contracts. Under normal circumstances, consideration of the prospect for currency parities will be incorporated into the longer term investment decisions made with regard to overall diversification strategies. However, the Trustees believe that it is important to have the flexibility to enter into forward contracts when the Sub-Adviser determines it to be in the best interests of the Fund. The Custodian will segregate cash, U.S. Government obligations or other liquid high-grade debt obligations in an amount not less than the value of the Fund's total assets committed to foreign currency exchange contracts entered into under this type of transaction. If the value of the segregated securities declines, additional cash or securities will be added on a daily basis, i.e., "marked to market," so that the segregated amount will not be less than the amount of the Fund's commitments with respect to such contracts. Generally, the International Value Fund will not enter into a forward foreign currency exchange contract with a term of greater than 90 days. At the maturity of the contract, the Fund may either sell the portfolio security and make delivery of the foreign currency, or may retain the security and terminate the obligation to deliver the foreign currency by purchasing an "offsetting" forward contract with the same currency trader obligating the Fund to purchase, on the same maturity date, the same amount of the foreign currency. - 10 -
485B24F64th Page of 126TOC1stPreviousNextBottomJust 64th
It is impossible to forecast with absolute precision the market value of portfolio securities at the expiration of the contract. Accordingly, it may be necessary for the Fund to purchase additional foreign currency on the spot market (and bear the expense of such purchase) if the market value of the security is less than the amount of foreign currency the Fund is obligated to deliver and if a decision is made to sell the security and make delivery of the foreign currency. Conversely, it may be necessary to sell on the spot market some of the foreign currency received upon the sale of the portfolio security if its market value exceeds the amount of foreign currency the Fund is obligated to deliver. If the International Value Fund retains the portfolio security and engages in an offsetting transaction, the Fund will incur a gain or a loss (as described below) to the extent that there has been movement in forward contract prices. If the Fund engages in an offsetting transaction, it may subsequently enter into a new forward contract to sell the foreign currency. Should forward prices decline during the period between entering into a forward contract for the sale of a foreign currency and the date the Fund enters into an offsetting contract for the purchase of the foreign currency, the Fund will realize a gain to the extent the price of the currency the Fund has agreed to sell exceeds the price of the currency it has agreed to purchase. Should forward prices increase, the Fund will suffer a loss to the extent the price of the currency the Fund has agreed to purchase exceeds the price of the currency the Fund has agreed to sell. The International Value Fund's dealings in forward foreign currency exchange contracts will be limited to the transactions described above. The Fund is not required to enter into such transactions with regard to its foreign currency-denominated securities and will not do so unless deemed appropriate by the Sub-Adviser. It should also be realized that this method of protecting the value of the Fund's portfolio securities against a decline in the value of a currency does not eliminate fluctuations in the underlying prices of the securities held by the Fund. It simply establishes a rate of exchange which one can achieve at some future point in time. Additionally, although such contracts tend to minimize the risk of loss due to a decline in the value of the hedged currency, at the same time, they tend to limit any potential gain which might result should the value of such currency increase. WRITING COVERED CALL OPTIONS. Each Fund may write covered call options on equity securities or futures contracts to earn premium income, to assure a definite price for a security it has considered selling, or to close out options previously purchased. A call option gives the holder (buyer) the right to purchase a security or futures contract at a specified price (the exercise price) at any time until a certain date (the expiration date). A call option is "covered" if a Fund owns the underlying security subject to the call option at all times during the option period. - 11 -
485B24F65th Page of 126TOC1stPreviousNextBottomJust 65th
A covered call writer is required to deposit in escrow the underlying security in accordance with the rules of the exchanges on which the option is traded and the appropriate clearing agency. The writing of covered call options is a conservative investment technique which Dean Investment Associates believes involves relatively little risk. However, there is no assurance that a closing transaction can be effected at a favorable price. During the option period, the covered call writer has, in return for the premium received, given up the opportunity for capital appreciation above the exercise price should the market price of the underlying security increase, but has retained the risk of loss should the price of the underlying security decline. A Fund may write covered call options if, immediately thereafter, not more than 30% of its net assets would be committed to such transactions. As long as the Securities and Exchange Commission continues to take the position that unlisted options are illiquid securities, a Fund will not commit more than 15% of its net assets to unlisted covered call transactions and other illiquid securities. WRITING COVERED PUT OPTIONS. Each Fund may write covered put options on equity securities and futures contracts to assure a definite price for a security if it is considering acquiring the security at a lower price than the current market price or to close out options previously purchased. A put option gives the holder of the option the right to sell, and the writer has the obligation to buy, the underlying security at the exercise price at any time during the option period. The operation of put options in other respects is substantially identical to that of call options. When a Fund writes a covered put option, it maintains in a segregated account with its Custodian cash or obligations in an amount not less than the exercise price at all times while the put option is outstanding. The risks involved in writing put options include the risk that a closing transaction cannot be effected at a favorable price and the possibility that the price of the underlying security may fall below the exercise price, in which case a Fund may be required to purchase the underlying security at a higher price than the market price of the security at the time the option is exercised. A Fund may not write a put option if, immediately thereafter, more than 25% of its net assets would be committed to such transactions. OPTIONS TRANSACTIONS GENERALLY. Option transactions in which the Funds may engage involve the specific risks described above as well as the following risks: the writer of an option may be assigned an exercise at any time during the option period; - 12 -
485B24F66th Page of 126TOC1stPreviousNextBottomJust 66th
disruptions in the markets for underlying instruments could result in losses for options investors; imperfect or no correlation between the option and the securities being hedged; the insolvency of a broker could present risks for the broker's customers; and market imposed restrictions may prohibit the exercise of certain options. In addition, the option activities of a Fund may affect its portfolio turnover rate and the amount of brokerage commissions paid by a Fund. The success of a Fund in using the option strategies described above depends, among other things, on Dean Investment Associates' or the Sub-Adviser's ability to predict the direction and volatility of price movements in the options, futures contracts and securities markets and Dean Investment Associates' or the Sub-Adviser's ability to select the proper time, type and duration of the options. QUALITY RATINGS OF CORPORATE BONDS AND PREFERRED STOCKS The ratings of Moody's Investors Service, Inc. and Standard & Poor's Ratings Group for corporate bonds in which the Funds may invest are as follows: MOODY'S INVESTORS SERVICE, INC. Aaa - Bonds which are rated Aaa are judged to be of the best quality. They carry the smallest degree of investment risk and are generally referred to as "gilt edge." Interest payments are protected by a large or by an exceptionally stable margin and principal is secure. While the various protective elements are likely to change, such changes as can be visualized are most unlikely to impair the fundamentally strong position of such issues. Aa - Bonds which are rated Aa are judged to be of high quality by all standards. Together with the Aaa group they comprise what are generally known as high grade bonds. They are rated lower than the best bonds because margins of protection may not be as large as in Aaa securities or fluctuation of protective elements may be of greater amplitude or there may be other elements present which make the long-term risks appear somewhat larger than in Aaa securities. A - Bonds which are rated A possess many favorable investment attributes and are to be considered as upper medium grade obligations. Factors giving security to principal and interest are considered adequate but elements may be present which suggest a susceptibility to impairment sometime in the future. - 13 -
485B24F67th Page of 126TOC1stPreviousNextBottomJust 67th
Baa - Bonds which are rated Baa are considered as medium grade obligations, i.e., they are neither highly protected nor poorly secured. Interest payments and principal security appear adequate for the present but certain protective elements may be lacking or may be characteristically unreliable over any great length of time. Such bonds lack outstanding investment characteristics and in fact have speculative characteristics as well. STANDARD & POOR'S RATINGS GROUP AAA - Bonds rated AAA have the highest rating assigned by Standard & Poor's to a debt obligation. Capacity to pay interest and repay principal is extremely strong. AA - Bonds rated AA have a very strong capacity to pay interest and repay principal and differ from the highest rated issues only in small degree. A - Bonds rated A have a strong capacity to pay interest and repay principal although they are somewhat more susceptible to the adverse effects of changes in circumstances and economic conditions than bonds in higher rated categories. BBB - Bonds rated BBB are regarded as having an adequate capacity to pay interest and repay principal. Whereas they normally exhibit adequate protection parameters, adverse economic conditions or changing circumstances are more likely to lead to a weakened capacity to pay interest and repay principal for bonds in this category than for bonds in higher rated categories. The ratings of Moody's Investors Service, Inc. and Standard & Poor's Ratings Group for preferred stocks in which the Funds may invest are as follows: MOODY'S INVESTORS SERVICE, INC. aaa - An issue which is rated aaa is considered to be a top-quality preferred stock. This rating indicates good asset protection and the least risk of dividend impairment within the universe of preferred stocks. aa - An issue which is rated aa is considered a high-grade preferred stock. This rating indicates that there is reasonable assurance that earnings and asset protection will remain relatively well maintained in the foreseeable future. a - An issue which is rated a is considered to be an upper- medium grade preferred stock. While risks are judged to be somewhat greater than in the "aaa" and "aa" classifications, earnings and asset protection are, nevertheless, expected to be maintained at adequate levels. - 14 -
485B24F68th Page of 126TOC1stPreviousNextBottomJust 68th
baa - An issue which is rated baa is considered to be medium grade, neither highly protected nor poorly secured. Earnings and asset protection appear adequate at present but may be questionable over any great length of time. STANDARD & POOR'S RATINGS GROUP AAA - This is the highest rating that may be assigned by Standard & Poor's to a preferred stock issue and indicates an extremely strong capacity to pay the preferred stock obligations. AA - A preferred stock issue rated AA also qualifies as a high-quality fixed income security. The capacity to pay preferred stock obligations is very strong, although not as overwhelming as for issues rated AAA. A - An issue rated A is backed by a sound capacity to pay the preferred stock obligations, although it is somewhat more susceptible to the diverse effects of changes in circumstances and economic conditions. BBB - An issue rated BBB is regarded as backed by an adequate capacity to pay the preferred stock obligations. Whereas it normally exhibits adequate protection parameters, adverse economic conditions or changing circumstances are more likely to lead to a weakened capacity to make payments for a preferred stock in this category than for issues in the A category. INVESTMENT LIMITATIONS The Trust has adopted certain fundamental investment limitations designed to reduce the risk of an investment in each Fund. These limitations may not be changed with respect to any Fund without the affirmative vote of a majority of the outstanding shares of that Fund. 1. BORROWING MONEY. The Fund will not borrow money, except from a bank, provided that immediately after such borrowing there is asset coverage of 300% for all borrowings of the Fund. The Fund will not make any borrowing which would cause its outstanding borrowings to exceed one-third of the value of its total assets. This limitation is not applicable to when- issued purchases. 2. PLEDGING. The Fund will not mortgage, pledge, hypothecate or in any manner transfer, as security for indebtedness, any security owned or held by the Fund except as may be necessary in connection with borrowings described in limitation (1) above. The Fund will not mortgage, pledge or hypothecate more than one-third of its assets in connection with borrowings. - 15 -
485B24F69th Page of 126TOC1stPreviousNextBottomJust 69th
3. MARGIN PURCHASES. The Fund will not purchase any securities or evidences of interest thereon on "margin" (except such short-term credits as are necessary for the clearance of transactions or to the extent necessary to engage in transactions described in the Prospectus and Statement of Additional Information which involve margin purchases). 4. OPTIONS. The Fund will not purchase or sell puts, calls, options, futures, straddles, commodities or commodities futures contracts except as described in the Prospectus and Statement of Additional Information. 5. REAL ESTATE. The Fund will not purchase, hold or deal in real estate or real estate mortgage loans, except that the Fund may purchase (a) securities of companies (other than limited partnerships) which deal in real estate or (b) securities which are secured by interests in real estate. 6. AMOUNT INVESTED IN ONE ISSUER. The Fund will not invest more than 5% of its total assets in the securities of any issuer; provided, however, that there is no limitation with respect to investments and obligations issued or guaranteed by the United States Government or its agencies or instrumentalities or repurchase agreements with respect thereto. 7. SHORT SALES. The Fund will not make short sales of securities, or maintain a short position, other than short sales "against the box." 8. MINERAL LEASES. The Fund will not purchase oil, gas or other mineral leases or exploration or development programs. 9. UNDERWRITING. The Fund will not act as underwriter of securities issued by other persons, either directly or through a majority owned subsidiary. This limitation is not applicable to the extent that, in connection with the disposition of its portfolio securities (including restricted securities), the Fund may be deemed an underwriter under certain federal securities laws. 10. ILLIQUID INVESTMENTS. The Fund will not purchase securities which cannot be readily resold to the public because of legal or contractual restrictions on resale or for which no readily available market exists or engage in a repurchase agreement maturing in more than seven days if, as a result thereof, more than 15% of the value of the Fund's net assets would be invested in such securities. 11. CONCENTRATION. The Fund will not invest 25% or more of its total assets in the securities of issuers in any particular industry; provided, however, that there is no limitation with respect to investments in obligations issued or guaranteed by the United States Government or its agencies or instrumentalities or repurchase agreements with respect thereto. - 16 -
485B24F70th Page of 126TOC1stPreviousNextBottomJust 70th
12. INVESTING FOR CONTROL. The Fund will not invest in companies for the purpose of exercising control. 13. OTHER INVESTMENT COMPANIES. The Fund will not invest more than 10% of its total assets in securities of other investment companies. The Fund will not invest more than 5% of its total assets in the securities of any single investment company. 14. SENIOR SECURITIES. The Fund will not issue or sell any senior security. This limitation is not applicable to short-term credit obtained by the Fund for the clearance of purchases and sales or redemptions of securities, or to arrangements with respect to transactions involving options, futures contracts, short sales and other similar permitted investments and techniques. 15. LOANS. The Fund will not make loans to other persons, except (a) by loaning portfolio securities, or (b) by engaging in repurchase agreements. For purposes of this limitation, the term "loans" shall not include the purchase of bonds, debentures, commercial paper or corporate notes, and similar marketable evidences of indebtedness. With respect to the percentages adopted by the Trust as maximum limitations on each Fund's investment policies and restrictions, an excess above the fixed percentage (except for the percentage limitations relative to the borrowing of money and the holding of illiquid securities) will not be a violation of the policy or restriction unless the excess results immediately and directly from the acquisition of any security or the action taken. The Trust does not intend to pledge, mortgage or hypothecate the assets of any Fund. The statements of intention in this paragraph reflect nonfundamental policies which may be changed by the Board of Trustees without shareholder approval. TRUSTEES AND OFFICERS The following is a list of the Trustees and executive officers of the Trust. Each Trustee who is an "interested person" of the Trust, as defined by the Investment Company Act of 1940, is indicated by an asterisk. - 17 -
485B24F71st Page of 126TOC1stPreviousNextBottomJust 71st
Estimated Annual Compensation NAME AGE POSITION HELD FROM THE TRUST ---- --- ------------- -------------- *Frank H. Scott 52 President/Trustee $ 0 *Chauncey H. Dean 72 Trustee 0 *Robert D. Dean 63 Trustee 0 *Victor S. Curtis 35 Trustee 0 +Frank J. Perez 53 Trustee 6,000 +David H. Ponitz 66 Trustee 6,000 +Gilbert P. Williamson 59 Trustee 6,000 Robert G. Dorsey 40 Vice President 0 Mark J. Seger 35 Treasurer 0 Tina D. Hosking 29 Secretary 0 John F. Splain 41 Asst. Secretary 0 * Mr. Scott, Mr. Chauncey Dean, Mr. Robert Dean and Mr. Curtis, as affiliated persons of C.H. Dean & Associates, Inc., the Trust's investment adviser, and 2480 Securities LLC, the Trust's principal underwriter, are "interested persons" of the Trust within the meaning of Section 2(a)(19) of the Investment Company Act of 1940. + Member of Audit Committee. The principal occupations of the Trustees and executive officers of the Trust during the past five years are set forth below: FRANK H. SCOTT, 2480 Kettering Tower, Dayton, Ohio 45423, is Senior Vice President of C.H. Dean & Associates, Inc. (the investment adviser to the Trust) and President of 2480 Securities LLC (the Trust's principal underwriter). CHAUNCEY H. DEAN, 2480 Kettering Tower, Dayton, Ohio 45423, is Chairman & Chief Executive Officer and the controlling shareholder of C.H. Dean & Associates. He is also the controlling shareholder of 2480 Securities LLC. ROBERT D. DEAN, 2480 Kettering Tower, Dayton, Ohio 45423, is President and Chief Investment Officer of C.H. Dean & Associates. He previously was Professor of Economics at the University of Memphis. VICTOR S. CURTIS, 2480 Kettering Tower, Dayton, Ohio 45423, is Portfolio Manager of C. H. Dean & Associates. He previously was Assistant Vice President of Corporate Banking for PNC Bank. FRANK J. PEREZ, 3535 Southern Blvd., Kettering, Ohio 45429 is President and Chief Executive Officer of Kettering Medical Center. - 18 -
485B24F72nd Page of 126TOC1stPreviousNextBottomJust 72nd
DAVID H. PONITZ, 444 W. Third Street, Dayton, Ohio 45402, is President of Sinclair Community College. GILBERT P. WILLIAMSON, 2320 Kettering Tower, Dayton, Ohio 45423, is a Director of S.C.O., Inc. (a software company), Retix, Inc. (a communications company), Roberds, Inc. (a retail company) and Citizens Federal Bank. He formerly was Chairman and Chief Executive Officer of NCR Corp. ROBERT G. DORSEY, 312 Walnut Street, Cincinnati, Ohio 45202, is President and Treasurer of Countrywide Fund Services, Inc. (a registered transfer agent) and Treasurer of Countrywide Investments, Inc. (a registered broker-dealer and investment adviser) and Countrywide Financial Services, Inc. (a financial services company and parent of Countrywide Fund Services, Inc. and Countrywide Investments, Inc.) He is also Vice President of Brundage, Story and Rose Investment Trust, PRAGMA Investment Trust, Markman MultiFund Trust, The New York State Opportunity Funds and Maplewood Investment Trust and Assistant Vice President of Interactive Investments, Schwartz Investment Trust, The Tuscarora Investment Trust, Williamsburg Investment Trust and The Gannett Welsh & Kotler Funds (all of which are registered investment companies). MARK J. SEGER, C.P.A., 312 Walnut Street, Cincinnati, Ohio 45202, is Vice President of Countrywide Financial Services, Inc. and Vice President and Chief Operating Officer of Countrywide Fund Services, Inc. He is also Treasurer of Countrywide Investment Trust, Countrywide Tax-Free Trust, Countrywide Strategic Trust, Brundage, Story and Rose Investment Trust, Markman MultiFund Trust, PRAGMA Investment Trust, Williamsburg Investment Trust, The New York State Opportunity Funds and Maplewood Investment Trust and Assistant Treasurer of Interactive Investments, Schwartz Investment Trust, The Tuscarora Investment Trust and The Gannett Welsh & Kotler Funds. TINA D. HOSKING, 312 Walnut Street, Cincinnati, Ohio 45202, is Assistant Vice President and Counsel of Countrywide Fund Services, Inc. She is also Secretary of PRAGMA Investment Trust and The New York State Opportunity Funds and Assistant Secretary of The Gannett Welsh & Kotler Funds. JOHN F. SPLAIN, 312 Walnut Street, Cincinnati, Ohio 45202, is Secretary and General Counsel of Countrywide Fund Services, Inc., Countrywide Investments, Inc. and Countrywide Financial Services, Inc. He is also Secretary of Countrywide Investment Trust, Countrywide Tax-Free Trust, Countrywide Strategic Trust, Brundage, Story and Rose Investment Trust, Markman MultiFund Trust, The Tuscarora Investment Trust, Williamsburg Investment Trust and Maplewood Investment Trust and Assistant Secretary of Interactive Investments, Schwartz Investment Trust, PRAGMA Investment Trust, The New York State Opportunity Funds and The Gannett Welsh & Kotler Funds. - 19 -
485B24F73rd Page of 126TOC1stPreviousNextBottomJust 73rd
Each non-interested Trustee will receive an annual retainer of $2,000 and a $1,000 fee for each Board meeting attended and will be reimbursed for travel and other expenses incurred in the performance of their duties. THE INVESTMENT ADVISER C.H. Dean & Associates, Inc. ("Dean Investment Associates") is the Funds' investment manager. Chauncey H. Dean is the controlling shareholder of Dean Investment Associates. Mr. Dean, by reason of such affiliation, may directly or indirectly receive benefits from the advisory fees paid to Dean Investment Associates. Mr. Dean is also the controlling shareholder of the Trust's principal underwriter, 2480 Securities LLC. Under the terms of the advisory agreements between the Trust and Dean Investment Associates, Dean Investment Associates manages the Funds' investments. The Large Cap Value Fund, the Small Cap Value Fund and the Balanced Fund each pay Dean Investment Associates a fee computed and accrued daily and paid monthly at an annual rate of 1.00% of its average daily net assets. The International Value Fund pays Dean Investment Associates a fee computed and accrued daily and paid monthly at an annual rate of 1.25% of its average daily net assets. The Funds are responsible for the payment of all expenses incurred in connection with the organization, registration of shares and operations of the Funds, including such extraordinary or non-recurring expenses as may arise, such as litigation to which the Trust may be a party. The Funds may have an obligation to indemnify the Trust's officers and Trustees with respect to such litigation, except in instances of willful misfeasance, bad faith, gross negligence or reckless disregard by such officers and Trustees in the performance of their duties. The compensation and expenses of any officer, Trustee or employee of the Trust who is an officer, director, employee or stockholder of Dean Investment Associates are paid by Dean Investment Associates. By its terms, the advisory agreement on behalf of each Fund will remain in force until April 1, 1999 and from year to year thereafter, subject to annual approval by (a) the Board of Trustees or (b) a vote of the majority of a Fund's outstanding voting securities; provided that in either event continuance is also approved by a majority of the Trustees who are not interested persons of the Trust, by a vote cast in person at a meeting called for the purpose of voting such approval. Each of the Trust's advisory agreements may be terminated at any time, on sixty days' written notice, without the payment of any penalty, by the Board of Trustees, by a vote of the majority of a Fund's outstanding voting securities, or by Dean Investment Associates. Each of the advisory agreements automatically terminates in the event of its assignment, as defined by the Investment Company Act of 1940 and the rules thereunder. - 20 -
485B24F74th Page of 126TOC1stPreviousNextBottomJust 74th
Dean Investment Associates may use the name "Dean" or any derivation thereof in connection with any registered investment company or other business enterprise with which it is or may become associated. THE SUB-ADVISER Newton Capital Management Ltd. (the "Sub-Adviser") has been retained to manage the investments of the International Value Fund. The Sub-Adviser is a United Kingdom investment advisory firm registered with the Securities and Exchange Commission. Newton is affiliated with Newton Investment Management Ltd., an English investment advisory firm which has been managing assets for institutional investors, mutual funds and individuals since 1977. The Adviser (not the Fund) pays the Sub-Adviser a fee computed and accrued daily and paid monthly at an annual rate of .50% of the average value of the Fund's daily net assets. By its terms, the Trust's Sub-Advisory Agreement will remain in force until April 1, 1999 and from year to year thereafter, subject to annual approval by (a) the Board of Trustees or (b) a vote of the majority of the International Value Fund's outstanding voting securities; provided that in either event continuance is also approved by a majority of the Trustees who are not interested persons of the Trust, by a vote cast in person at a meeting called for the purpose of voting on such approval. The Trust's Sub-Advisory Agreement may be terminated at any time, on sixty days' written notice, without the payment of any penalty, by the Board of Trustees, by a vote of the majority of the International Value Fund's outstanding voting securities, or by the Adviser or Sub-Adviser. The Sub-Advisory Agreement automatically terminates in the event of its assignment, as defined by the Investment Company Act of 1940 and the rules thereunder. THE UNDERWRITER 2480 Securities LLC (the "Underwriter") is the principal underwriter of the Funds and, as such, is the exclusive agent for distribution of shares of the Funds. The Underwriter is obligated to sell the shares on a best efforts basis only against purchase orders for the shares. Shares of each Fund are offered to the public on a continuous basis. The Underwriter currently allows concessions to dealers who sell shares of the Funds. The Underwriter receives that portion of the sales load which is not reallowed to the dealers who sell shares of the Funds. The Underwriter retains the entire sales load on all direct initial investments in the Funds and on all investments in accounts with no designated dealer of record. The Underwriter bears promotional expenses in connection with the distribution of the Funds' shares to the extent that such expenses are not assumed by the Funds under their plans of distribution. - 21 -
485B24F75th Page of 126TOC1stPreviousNextBottomJust 75th
The Funds may compensate dealers, including the Underwriter and its affiliates, based on the average balance of all accounts in the Funds for which the dealer is designated as the party responsible for the account. See "Distribution Plans" below. DISTRIBUTION PLANS CLASS A SHARES -- As stated in the Prospectus, the Funds have adopted a plan of distribution with respect to the Class A shares of the Funds (the "Class A Plan") pursuant to Rule 12b-1 under the Investment Company Act of 1940 which permits each Fund to pay for expenses incurred in the distribution and promotion of that Fund's Class A shares, including but not limited to, the printing of prospectuses, statements of additional information and reports used for sales purposes, advertisements, expenses of preparation and printing of sales literature, promotion, marketing and sales expenses, and other distribution-related expenses, including any distribution fees paid to securities dealers or other firms who have executed a distribution or service agreement with the Underwriter. The Class A Plan expressly limits payment of the distribution expenses listed above in any fiscal year to a maximum of .25% of the average daily net assets of a Fund allocable to its Class A shares. Unreimbursed expenses will not be carried over from year to year. CLASS C SHARES -- The Funds have also adopted a plan of distribution (the "Class C Plan") with respect to the Class C shares of the Funds. The Class C Plan provides for two categories of payments. First, the Class C Plan provides for the payment to the Underwriter of an account maintenance fee, in an amount equal to an annual rate of .25% of the average daily net assets of a Fund allocable to its Class C shares, which may be paid to other dealers based on the average value of the Fund's Class C shares owned by clients of such dealers. In addition, a Fund may pay up to an additional .75% per annum of that Fund's daily net assets allocable to its Class C shares for expenses incurred in the distribution and promotion of the shares, including but not limited to, prospectus costs for prospective shareholders, costs of responding to prospective shareholder inquiries, payments to brokers and dealers for selling and assisting in the distribution of Class C shares, costs of advertising and promotion and any other expenses related to the distribution of the Class C shares. Unreimbursed expenditures will not be carried over from year to year. The Funds may make payments to dealers and other persons in an amount up to .75% per annum of the average value of Class C shares owned by their clients, in addition to the .25% account maintenance fee described above. The continuance of the Plans must be specifically approved at least annually by a vote of the Trust's Board of Trustees and by a vote of the Trustees who are not interested persons of the Trust and have no direct or indirect financial interest in the Plans (the "Independent Trustees") at a meeting called for the purpose of voting on such continuance. A Plan may be terminated - 22 -
485B24F76th Page of 126TOC1stPreviousNextBottomJust 76th
at any time by a vote of a majority of the Independent Trustees or by a vote of the holders of a majority of the outstanding shares of a Fund or the applicable class of a Fund. In the event a Plan is terminated in accordance with its terms, the affected Fund (or class) will not be required to make any payments for expenses incurred by the Underwriter after the termination date. The Plans may not be amended to increase materially the amount to be spent for distribution without shareholder approval. All material amendments to the Plans must be approved by a vote of the Trust's Board of Trustees and by a vote of the Independent Trustees. In approving the Plans, the Trustees determined, in the exercise of their business judgment and in light of their fiduciary duties as Trustees, that there is a reasonable likelihood that the Plans will benefit the Funds and their shareholders. The Board of Trustees believes that expenditure of the Funds' assets for distribution expenses under the Plans should assist in the growth of the Funds which will benefit the Funds and their shareholders through increased economies of scale, greater investment flexibility, greater portfolio diversification and less chance of disruption of planned investment strategies. The Plans will be renewed only if the Trustees make a similar determination for each subsequent year of the Plans. There can be no assurance that the benefits anticipated from the expenditure of the Funds' assets for distribution will be realized. While the Plans are in effect, all amounts spent by the Funds pursuant to the Plans and the purposes for which such expenditures were made must be reported quarterly to the Board of Trustees for its review. Distribution expenses attributable to the sale of more than one class of shares of a Fund will be allocated at least annually to each class of shares based upon the ratio in which the sales of each class of shares bears to the sales of all the shares of such Fund. In addition, the selection and nomination of those Trustees who are not interested persons of the Trust are committed to the discretion of the Independent Trustees during such period. By reason of his ownership of shares of Dean Investment Associates, Chauncey H. Dean may be deemed to have a financial interest in the operation of the Plans. SECURITIES TRANSACTIONS Decisions to buy and sell securities for the Funds and the placing of the Funds' securities transactions and negotiation of commission rates where applicable are made by Dean Investment Associates and are subject to review by the Board of Trustees of the Trust. In the purchase and sale of portfolio securities, Dean Investment Associates seeks best execution for the Funds, - 23 -
485B24F77th Page of 126TOC1stPreviousNextBottomJust 77th
taking into account such factors as price (including the applicable brokerage commission or dealer spread), the execution capability, financial responsibility and responsiveness of the broker or dealer and the brokerage and research services provided by the broker or dealer. Dean Investment Associates generally seeks favorable prices and commission rates that are reasonable in relation to the benefits received. The Funds may attempt to deal directly with the dealers who make a market in the securities involved unless better prices and execution are available elsewhere. Such dealers usually act as principals for their own account. On occasion, portfolio securities for the Funds may be purchased directly from the issuer. Dean Investment Associates is specifically authorized to select brokers who also provide brokerage and research services to the Funds and/or other accounts over which Dean Investment Associates exercises investment discretion and to pay such brokers a commission in excess of the commission another broker would charge if Dean Investment Associates determines in good faith that the commission is reasonable in relation to the value of the brokerage and research services provided. The determination may be viewed in terms of a particular transaction or Dean Investment Associates' overall responsibilities with respect to the Funds and to accounts over which it exercises investment discretion. Research services include securities and economic analyses, reports on issuers' financial conditions and future business prospects, newsletters and opinions relating to interest trends, general advice on the relative merits of possible investment securities for the Funds and statistical services and information with respect to the availability of securities or purchasers or sellers of securities. Although this information is useful to the Funds and Dean Investment Associates, it is not possible to place a dollar value on it. Research services furnished by brokers through whom the Funds effect securities transactions may be used by Dean Investment Associates in servicing all of its accounts and not all such services may be used by Dean Investment Associates in connection with the Funds. The Funds have no obligation to deal with any broker or dealer in the execution of securities transactions. However, the Underwriter and other affiliates of the Trust or Dean Investment Associates may effect securities transactions which are executed on a national securities exchange or transactions in the over-the-counter market conducted on an agency basis. No Fund will effect any brokerage transactions in its portfolio securities with Dean Investment Associates if such transactions would be unfair or unreasonable to its shareholders. Over-the-counter - 24 -
485B24F78th Page of 126TOC1stPreviousNextBottomJust 78th
transactions will be placed either directly with principal market makers or with broker-dealers. Although the Funds do not anticipate any ongoing arrangements with other brokerage firms, brokerage business may be transacted from time to time with other firms. Neither Dean Investment Associates nor affiliates of the Trust or the Underwriter will receive reciprocal brokerage business as a result of the brokerage business transacted by the Funds with other brokers. CODE OF ETHICS. The Trust and Dean Investment Associates and the Sub-Adviser have each adopted a Code of Ethics under Rule 17j-1 of the Investment Company Act of 1940. The Code significantly restricts the personal investing activities of all employees of the Trust, Dean Investment Associates and the Sub- Adviser. No employee may purchase or sell any security which at the time is being purchased or sold (as the case may be), or to the knowledge of the employee, is being considered for purchase or sale by any Fund. PORTFOLIO TURNOVER A Fund's portfolio turnover rate is calculated by dividing the lesser of purchases or sales of portfolio securities for the fiscal year by the monthly average of the value of the portfolio securities owned by the Fund during the fiscal year. High portfolio turnover involves correspondingly greater brokerage commissions and other transaction costs, which will be borne directly by the Funds. Dean Investment Associates anticipates that each Fund's portfolio turnover rate normally will not exceed 100%. A 100% turnover rate would occur if all of a Fund's portfolio securities were replaced once within a one year period. Generally, each Fund intends to invest for long-term purposes. However, the rate of portfolio turnover will depend upon market and other conditions, and it will not be a limiting factor when Dean Investment Associates or, when appropriate, the Sub-Adviser, believes that portfolio changes are appropriate. CALCULATION OF SHARE PRICE AND PUBLIC OFFERING PRICE The share price (net asset value) and the public offering price (net asset value plus applicable sales load) of the shares of each Fund are determined as of the close of the regular session of trading on the New York Stock Exchange (currently 4:00 p.m., Eastern time), on each day the Trust is open for business. The Trust is open for business on every day except Saturdays, Sundays and the following holidays: New Year's Day, Martin Luther King, Jr. Day, President's Day, Good Friday, Memorial Day, Independence Day, Labor Day, Thanksgiving Day and Christmas Day. The Trust may also be open for business on other days in which there is sufficient trading in a Fund's portfolio securities that - 25 -
485B24F79th Page of 126TOC1stPreviousNextBottomJust 79th
its net asset value might be materially affected. For a description of the methods used to determine the share price and the public offering price, see "Calculation of Share Price and Public Offering Price" in the Prospectus. The value of non-dollar denominated portfolio instruments held by the International Value Fund will be determined by converting all assets and liabilities initially expressed in foreign currency values into U.S. dollar values at the mean between the bid and offered quotations of such currencies against U.S. dollars as last quoted by any recognized dealer. If such quotations are not available, the rate of exchange will be determined in accordance with policies established in good faith by the Board of Trustees. Gains or losses between trade and settlement dates resulting from changes in exchange rates between the U.S. dollar and a foreign currency are borne by the International Value Fund. To protect against such losses, the Fund may enter into forward foreign currency exchange contracts, which will also have the effect of limiting any such gains. OTHER PURCHASE INFORMATION The Prospectus describes generally how to purchase shares of the Funds. Additional information with respect to certain types of purchases of shares of the Class A shares of the Funds is set forth below. RIGHT OF ACCUMULATION. A "purchaser" (as defined in the Prospectus) of shares of a Fund has the right to combine the cost or current net asset value (whichever is higher) of his existing Class A shares of any Fund in the Dean Family of Funds with the amount of his current purchases in order to take advantage of the reduced sales loads set forth in the tables in the Prospectus. The purchaser or his dealer must notify Countrywide Fund Services, Inc. ("Countrywide") that an investment qualifies for a reduced sales load. The reduced load will be granted upon confirmation of the purchaser's holdings by Countrywide. LETTER OF INTENT. The reduced sales loads set forth in the tables in the Prospectus may also be available to any "purchaser" (as defined in the Prospectus) of shares of a Fund who submits a Letter of Intent to Countrywide. The Letter must state an intention to invest within a thirteen month period in any Fund in the Dean Family of Funds a specified amount which, if made at one time, would qualify for a reduced sales load. A Letter of Intent may be submitted with a purchase at the beginning of the thirteen month period or within ninety days of the first purchase under the Letter of Intent. Upon acceptance of this Letter, the purchaser becomes eligible for the reduced sales load applicable to the level of investment covered by such Letter of Intent as if the entire amount were invested in a single transaction. - 26 -
485B24F80th Page of 126TOC1stPreviousNextBottomJust 80th
The Letter of Intent is not a binding obligation on the purchaser to purchase, or the Trust to sell, the full amount indicated. During the term of a Letter of Intent, shares representing 5% of the intended purchase will be held in escrow. These shares will be released upon the completion of the intended investment. If the Letter of Intent is not completed during the thirteen month period, the applicable sales load will be adjusted by the redemption of sufficient shares held in escrow, depending upon the amount actually purchased during the period. The minimum initial investment under a Letter of Intent is $10,000. A ninety-day backdating period can be used to include earlier purchases at the purchaser's cost (without a retroactive downward adjustment of the sales charge). The thirteen month period would then begin on the date of the first purchase during the ninety-day period. No retroactive adjustment will be made if purchases exceed the amount indicated in the Letter of Intent. The purchaser or his dealer must notify Countrywide that an investment is being made pursuant to an executed Letter of Intent. OTHER INFORMATION. The Trust either does not impose a front-end sales load or imposes a reduced sales load in connection with purchases of shares of a Fund made under the reinvestment privilege or the purchases described in the "Reduced Sales Load," "Purchases at Net Asset Value" or "Exchange Privilege" sections in the Prospectus because such purchases require minimal sales effort by Dean Investment Associates. Purchases described in the "Purchases at Net Asset Value" section may be made for investment only, and the shares may not be resold except through redemption by or on behalf of the Trust. TAXES The Prospectus describes generally the tax treatment of distributions by the Funds. This section of the Statement of Additional Information includes additional information concerning federal taxes. Each Fund intends to qualify for the special tax treatment afforded a "regulated investment company" under Subchapter M of the Internal Revenue Code so that it does not pay federal taxes on income and capital gains distributed to shareholders. To so qualify a Fund must, among other things, (i) derive at least 90% of its gross income in each taxable year from dividends, interest, payments with respect to securities loans, gains from the sale or other disposition of stock, securities or foreign currency, or certain other income (including but not limited to gains from options, futures and forward contracts) derived with respect to its business of investing in stock, securities or currencies and (ii) diversify its holdings so that at the end of each quarter of its taxable year the following two conditions are - 27 -
485B24F81st Page of 126TOC1stPreviousNextBottomJust 81st
met: (a) at least 50% of the value of the Fund's total assets is represented by cash, U.S. Government securities, securities of other regulated investment companies and other securities (for this purpose such other securities will qualify only if the Fund's investment is limited in respect to any issuer to an amount not greater than 5% of the Fund's assets and 10% of the outstanding voting securities of such issuer) and (b) not more than 25% of the value of the Fund's assets is invested in securities of any one issuer (other than U.S. Government securities or securities of other regulated investment companies). A Fund's net realized capital gains from securities transactions will be distributed only after reducing such gains by the amount of any available capital loss carryforwards. Capital losses may be carried forward to offset any capital gains for eight years, after which any undeducted capital loss remaining is lost as a deduction. A federal excise tax at the rate of 4% will be imposed on the excess, if any, of a Fund's "required distribution" over actual distributions in any calendar year. Generally, the "required distribution" is 98% of a Fund's ordinary income for the calendar year plus 98% of its net capital gains recognized during the one year period ending on October 31 of the calendar year plus undistributed amounts from prior years. The Funds intend to make distributions sufficient to avoid imposition of the excise tax. The Trust is required to withhold and remit to the U.S. Treasury a portion (31%) of dividend income on any account unless the shareholder provides a taxpayer identification number and certifies that such number is correct and that the shareholder is not subject to backup withholding. Investments by the International Value Fund in certain options, futures contracts and options on futures contracts are "section 1256 contracts." Any gains or losses on section 1256 contracts are generally considered 60% long-term and 40% short-term capital gains or losses ("60/40"). Section 1256 contracts held by the International Value Fund at the end of each taxable year are treated for federal income tax purposes as being sold on such date for their fair market value. The resultant paper gains or losses are also treated as 60/40 gains or losses. When the section 1256 contract is subsequently disposed of, the actual gain or loss will be adjusted by the amount of any preceding year-end gain or loss. The use of section 1256 contracts may force the International Value Fund to distribute to shareholders paper gains that have not yet been realized in order to avoid federal income tax liability. - 28 -
485B24F82nd Page of 126TOC1stPreviousNextBottomJust 82nd
Foreign currency gains or losses on non-U.S. dollar denominated bonds and other similar debt instruments and on any non-U.S. dollar denominated futures contracts, options and forward contracts that are not section 1256 contracts generally will be treated as ordinary income or loss. Certain hedging transactions undertaken by the International Value Fund may result in "straddles" for federal income tax purposes. The straddle rules may affect the character of gains (or losses) realized by the International Value Fund. In addition, losses realized by the International Value Fund on positions that are part of a straddle may be deferred, rather than being taken into account in calculating taxable income for the taxable year in which such losses are realized. Because only a few regulations implementing the straddle rules have been promulgated, the tax consequences of hedging transactions to the International Value Fund are not entirely clear. The hedging transactions may increase the amount of short-term capital gain realized by the International Value Fund which is taxed as ordinary income when distributed to shareholders. The International Value Fund may make one or more of the elections available under the Internal Revenue Code of 1986, as amended, which are applicable to straddles. If the International Value Fund makes any of the elections, the amount, character and timing of the recognition of gains or losses from the affected straddle positions will be determined under rules that vary according to the elections made. The rules applicable under certain of the elections operate to accelerate the recognition of gains or losses from the affected straddle positions. Because application of the straddle rules may affect the character of gains or losses, defer losses and/or accelerate the recognition of gains or losses from the affected straddle positions, the amount which must be distributed to shareholders, and which will be taxed to shareholders as ordinary income or long-term capital gain in any year, may be increased or decreased substantially as compared to a fund that did not engage in such hedging transactions. The diversification requirements applicable to the International Value Fund's assets may limit the extent to which the International Value Fund will be able to engage in transactions in options, futures contracts or options on futures contracts. REDEMPTION IN KIND Under unusual circumstances, when the Board of Trustees deems it in the best interests of a Fund's shareholders, the Fund may make payment for shares repurchased or redeemed in whole or in part in securities of the Fund taken at current value. If any such redemption in kind is to be made, each Fund intends to make an election pursuant to Rule 18f-1 under the Investment Company - 29 -
485B24F83rd Page of 126TOC1stPreviousNextBottomJust 83rd
Act of 1940. This election will require the Funds to redeem shares solely in cash up to the lesser of $250,000 or 1% of the net asset value of each Fund during any 90 day period for any one shareholder. Should payment be made in securities, the redeeming shareholder will generally incur brokerage costs in converting such securities to cash. Portfolio securities which are issued in an in-kind redemption will be readily marketable. HISTORICAL PERFORMANCE INFORMATION From time to time, each Fund may advertise average annual total return. Average annual total return quotations will be computed by finding the average annual compounded rates of return over 1, 5 and 10 year periods that would equate the initial amount invested to the ending redeemable value, according to the following formula: P (1 + T)n = ERV Where: P = a hypothetical initial payment of $1,000 T = average annual total return n = number of years ERV = ending redeemable value of a hypothetical $1,000 payment made at the beginning of the 1, 5 and 10 year periods at the end of the 1, 5 or 10 year periods (or fractional portion thereof) The calculation of average annual total return assumes the reinvestment of all dividends and distributions and the deduction of the current maximum sales load from the initial $1,000 payment. If a Fund has been in existence less than one, five or ten years, the time period since the date of the initial public offering of shares will be substituted for the periods stated. Each Fund may also advertise total return (a "non-standardized quotation") which is calculated differently from average annual total return. A nonstandardized quotation of total return may be a cumulative return which measures the percentage change in the value of an account between the beginning and end of a period, assuming no activity in the account other than reinvestment of dividends and capital gains distributions. This computation does not include the effect of the applicable sales load which, if included, would reduce total return. A nonstandardized quotation may also indicate average annual compounded rates of return without including the effect of the applicable sales load or over periods other than those specified for average annual total return. A nonstandardized quotation of total return will always be accompanied by the Fund's average annual total return as described above. - 30 -
485B24F84th Page of 126TOC1stPreviousNextBottomJust 84th
From time to time, each of the Funds may advertise its yield. A yield quotation is based on a 30-day (or one month) period and is computed by dividing the net investment income per share earned during the period by the maximum offering price per share on the last day of the period, according to the following formula: Yield = 2[(a-b/cd +1)6 -1] Where: a = dividends and interest earned during the period b = expenses accrued for the period (net of reimbursements) c = the average daily number of shares outstanding during the period that were entitled to receive dividends d = the maximum offering price per share on the last day of the period Solely for the purpose of computing yield, dividend income is recognized by accruing 1/360 of the stated dividend rate of the security each day that a Fund owns the security. Generally, interest earned (for the purpose of "a" above) on debt obligations is computed by reference to the yield to maturity of each obligation held based on the market value of the obligation (including actual accrued interest) at the close of business on the last business day prior to the start of the 30-day (or one month) period for which yield is being calculated, or, with respect to obligations purchased during the month, the purchase price (plus actual accrued interest). With respect to the treatment of discount and premium on mortgage or other receivables-backed obligations which are expected to be subject to monthly paydowns of principal and interest, gain or loss attributable to actual monthly paydowns is accounted for as an increase or decrease to interest income during the period and discount or premium on the remaining security is not amortized. To help investors better evaluate how an investment in a Fund might satisfy their investment objective, advertisements regarding each Fund may discuss various measures of Fund performance, including current performance ratings and/or rankings appearing in financial magazines, newspapers and publications which track mutual fund performance. Advertisements may also compare performance (using the calculation methods set forth in the Prospectus) to performance as reported by other investments, indices and averages. When advertising current ratings or rankings, the Funds may use the following publications or indices to discuss or compare Fund performance: Lipper Mutual Fund Performance Analysis measures total return for the mutual fund industry and ranks individual mutual fund performance over specified time periods assuming reinvestment of all distributions, exclusive of sales loads. In - 31 -
485B24F85th Page of 126TOC1stPreviousNextBottomJust 85th
addition, the Funds may use comparative performance information appearing in relevant indices, including the S&P 500 Index, the Dow Jones Industrial Average, and the Russell 2000 Index. The S&P 500 Index is an unmanaged index of 500 stocks, the purpose of which is to portray the pattern of common stock price movement. The Dow Jones Industrial Average is a measurement of general market price movement for 30 widely held stocks listed on the New York Stock Exchange. The Russell 2000 Index is an unmanaged index comprised of the 2,000 smallest U.S. domiciled publicly-traded common stocks in the Russell 3000 Index (an unmanaged index of the 3,000 largest U.S. domiciled publicly-traded common stocks by market capitalization). The International Value Fund may compare its performance to the Europe, Australia and Far East Index, which is generally considered to be representative of the performance of unmanaged common stocks that are publicly traded in the securities markets located outside the United States. In assessing such comparisons of performance an investor should keep in mind that the composition of the investments in the reported indices and averages is not identical to the Funds' portfolios, that the averages are generally unmanaged and that the items included in the calculations of such averages may not be identical to the formula used by the Funds to calculate their performance. In addition, there can be no assurance that the Funds will continue this performance as compared to such other averages. CUSTODIAN Bank One Trust Company, N.A., 100 East Broad Street, Columbus, Ohio, has been retained to act as Custodian for the investments of the Large Cap Value Fund, the Small Cap Value Fund and the Balanced Fund. Bank One acts as each Fund's depository, safekeeps its portfolio securities, collects all income and other payments with respect thereto, disburses funds as instructed and maintains records in connection with its duties. The Northern Trust Company, 50 South LaSalle Street, Chicago, Illinois, has been retained to act as Custodian for the investments of the International Value Fund. Northern Trust acts as the Fund's depository, safekeeps its portfolio securities, collects all income and other payments with respect thereto, disburses funds as instructed and maintains records in connection with its duties. AUDITORS The firm of Ernst & Young LLP has been selected as independent auditors for the Trust for the fiscal year ending March 31, 1998. Ernst & Young LLP, 1300 Chiquita Center, Cincinnati, Ohio, performs an annual audit of the Trust's financial statements and advises the Trust as to certain accounting matters. - 32 -
485B24F86th Page of 126TOC1stPreviousNextBottomJust 86th
PRINCIPAL SECURITY HOLDERS As of September 19, 1997, Merrill Lynch Pierce Fenner & Smith - Mutual Fund Operations, 4800 Deer Lake Drive East, 3rd Floor, Jacksonville, Florida, owned of record 31.4% of the outstanding Class A shares of the Large Cap Value Fund, 89.3% of the outstanding Class C shares of the Large Cap Value Fund, 30.0% of the outstanding Class A shares of the Small Cap Value Fund, 90.9% of the outstanding Class C shares of the Small Cap Value Fund, 27.2% of the outstanding Class A shares of the Balanced Fund and 97.0% of the outstanding Class C shares of the Balanced Fund. Merrill Lynch Pierce Fenner & Smith - Mutual Fund Operations may be deemed to control the Class A and Class C shares of the Large Cap Value Fund, the Small Cap Value Fund and the Balanced Fund by virtue of the fact that they own of record more than 25% of such shares. As of September 19, 1997, Chauncey H. Dean and Zada G. Dean, 7777 Taylorsville Road, Huber Heights, Ohio, owned of record 47.0% of the outstanding Class A shares of the Large Cap Value Fund, 43.2% of the outstanding Class A shares of the Small Cap Value Fund and 45.0% of the outstanding Class A shares of the Balanced Fund. Chauncey H. Dean and Zada G. Dean may be deemed to control the Class A shares of the Large Cap Value Fund, the Small Cap Value Fund and the Balanced Fund by virtue of the fact that they own of record more than 25% of such shares. As of September 19, 1997, Zada G. Dean, 7777 Taylorsville Road, Huber Heights, Ohio, owned of record 15.9% of the outstanding Class A shares of the Large Cap Value Fund, 7.4% of the outstanding Class A shares of the Small Cap Value Fund and 15.1% of the outstanding Class A shares of the Balanced Fund. As of September 19, 1997, McDonald & Co., C/FBO Ellen Emmel IRA, 2159 Deer Meadow Drive, Cincinnati, Ohio, owned of record 10.7% of the outstanding Class C shares of the Large Cap Value Fund. For purposes of voting on matters submitted to shareholders, any person who owns more than 50% of the outstanding shares of a Fund generally would be able to cast the deciding vote. As of September 19, 1997, the Trustees and officers of the Trust as a group owned of record and beneficially 47.0% of the outstanding Class A shares of the Large Cap Value Fund, 43.2% of the outstanding Class A shares of the Small Cap Value Fund and 45.0% of the outstanding Class A shares of the Balanced Fund and less than 1% of the outstanding shares of each other Fund (or Class thereof). COUNTRYWIDE FUND SERVICES, INC. The Trust's transfer agent, Countrywide Fund Services, Inc. ("Countrywide"), maintains the records of each shareholder's account, answers shareholders' inquiries concerning their accounts, processes purchases and redemptions of the Funds' shares, acts as dividend and distribution disbursing agent and - 33 -
485B24F87th Page of 126TOC1stPreviousNextBottomJust 87th
performs other shareholder service functions. Countrywide receives for its services as transfer agent a fee from the Fund payable monthly at an annual rate of $20 per account from each of the Funds; provided, however, that the minimum fee is $1,200 per month for each class of shares of a Fund. In addition, the Funds pay out-of-pocket expenses, including but not limited to, postage, envelopes, checks, drafts, forms, reports, record storage and communication lines. Countrywide also provides accounting and pricing services to the Funds. For calculating daily net asset value per share and maintaining such books and records as are necessary to enable Countrywide to perform its duties, each Fund will pay Countrywide a fee in accordance with the following schedule: AVERAGE MONTHLY NET ASSETS MONTHLY FEE $ 0 - $ 50,000,000 $3,000 50,000,000 - 100,000,000 3,500 100,000,000 - 200,000,000 4,000 200,000,000 - 300,000,000 5,000 Over 300,000,000 6,000 + .001% of average monthly net assets. In addition, each Fund pays all costs of external pricing services. Countrywide also provides administrative services to the Funds. In this capacity, Countrywide supplies non-investment related statistical and research data, internal regulatory compliance services and executive and administrative services. Countrywide supervises the preparation of tax returns, reports to shareholders of the Funds, reports to and filings with the Securities and Exchange Commission and state securities commissions, and materials for meetings of the Board of Trustees. For the performance of these administrative services, each Fund pays Countrywide a fee at the annual rate of .10% of the average value of its daily net assets up to $100,000,000, .075% of such assets from $100,000,000 to $200,000,000 and .05% of such assets in excess of $200,000,000; provided, however, that the minimum fee is $1,000 per month for each Fund. - 34 -
485B24F88th Page of 126TOC1stPreviousNextBottomJust 88th
LARGE CAP VALUE FUND SMALL CAP VALUE FUND BALANCED FUND OF DEAN FAMILY OF FUNDS STATEMENT OF ASSETS AND LIABILITIES AS OF MARCH 17, 1997 TOGETHER WITH AUDITORS' REPORT - 35 -
485B24F89th Page of 126TOC1stPreviousNextBottomJust 89th
REPORT OF INDEPENDENT AUDITORS To the Board of Trustees and Shareholder Dean Family of Funds: We have audited the accompanying statement of assets and liabilities of Dean Family of Funds (comprised of the Large Cap Value Fund, the Small Cap Value Fund, and the Balanced Fund)(the Fund) as of March 17, 1997. This statement of assets and liabilities is the responsibility of the Fund's management. Our responsibility is to express an opinion on this statement of assets and liabilities based on our audit. We conducted our audit in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the statement of assets and liabilities is free of material misstatements. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the statement of assets and liabilities. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall statement of assets and liabilities presentation. We believe that our audit provides a reasonable basis for our opinion. In our opinion, the statement of assets and liabilities referred to above presents fairly, in all material respects, the financial position of each of the portfolios comprising Dean Family of Funds at March 17, 1997, in conformity with generally accepted accounting principles. /s/ Ernst & Young, LLP Ernst & Young, LLP Cincinnati, Ohio March 18, 1997 - 36 -
485B24F90th Page of 126TOC1stPreviousNextBottomJust 90th
DEAN FAMILY OF FUNDS STATEMENT OF ASSETS AND LIABILITIES AS OF MARCH 17, 1997 [Download Table] LARGE CAP SMALL CAP VALUE VALUE BALANCED FUND FUND FUND ASSETS: Cash $34,000 $33,000 $33,000 Organization costs (Note 2) 17,000 17,000 17,000 ------- ------- ------- Total assets 51,000 50,000 50,000 ------- ------- ------- LIABILITIES: Accrued expenses (Note 2) 17,000 17,000 17,000 ------- ------- ------- Total Liabilities 17,000 17,000 17,000 ------- ------- ------- Net assets for shares of beneficial interest outstanding (Note 1) $34,000 $33,000 $33,000 ======= ======= ======= Shares outstanding (Note 1) 3,400 3,300 3,300 ======= ======= ======= Net asset value per share $10.00 $10.00 $10.00 ======= ======= ======= - 37 -
485B24F91st Page of 126TOC1stPreviousNextBottomJust 91st
DEAN FAMILY OF FUNDS NOTES TO STATEMENT OF ASSETS AND LIABILITIES AS OF MARCH 17, 1997 (1) The Dean Family of Funds (the Trust) is an open-end management investment company established as an Ohio business trust under a Declaration of Trust dated December 18, 1996. The Trust has established three fund series to date, the Large Cap Value Fund, the Small Cap Value Fund and the Balanced Fund (the Funds). The Funds each offer two classes of shares: Class A shares (sold subject to maximum front-end sales load of 5.25% and a distribution fee of up to 0.25% of average daily net assets of each Fund) and Class C shares (sold subject to maximum contingent deferred sales load of 1% if redeemed within a one-year period from purchase and a distribution fee of up to 1% of average daily net assets). Each Class A and Class C share of the Fund represents identical interests in the Fund's investment portfolio and has the same rights, except that (i) Class C shares bear the expenses of higher distribution fees, which is expected to cause Class C shares to have a higher expense ratio and to pay lower dividends than Class A shares; (ii) certain other class specific expenses will be borne solely by the class to which such expenses are attributable; and (iii) each class has exclusive voting rights with respect to matters relating to its own distribution arrangements. The Trust has had no operations except for the initial issuance of Class A shares. On March 17, 1997, 3,400 shares, 3,300 shares and 3,300 shares of each fund, respectively, were issued for cash at $10.00 per share. (2) Expenses incurred in connection with the organization of the Funds and the initial offering of shares are estimated to be $51,000, which includes $45,000 paid to Countrywide Fund Services, Inc., the Trust's administrator. These expenses have been paid by Dean Investment Associates (the Adviser). Upon commencement of the public offering of shares of the Funds, the Funds will reimburse the Adviser for such expenses, with that amount being capitalized and amortized on a straight-line basis over five years. As of March 17, 1997, all outstanding shares of the Funds were held by the Adviser, who purchased these initial shares in order to provide the Trust with its required capital. In the event the initial shares of the Funds are redeemed by any holder thereof at any time prior to the complete amortization of organizational expenses, the redemption proceeds payable with respect to such shares will be reduced by the pro rata share (based upon the - 38 -
485B24F92nd Page of 126TOC1stPreviousNextBottomJust 92nd
portion of the shares redeemed in relation to the required capitalization) of the unamortized deferred organizational expenses as of the date of such redemption. (3) Reference is made to the Prospectus and this Statement of Additional Information for a description of the Management Agreement, the Underwriting Agreement, the Distribution Expense Plan, the Administration Agreement, tax aspects of the Funds and the calculation of the net asset value of shares of each Fund. - 39 -
485B24F93rd Page of 126TOC1stPreviousNextBottomJust 93rd
DEAN FAMILY OF FUNDS: LARGE CAP VALUE FUND SMALL CAP VALUE FUND BALANCED FUND INTERIM REPORT August 31, 1997 (Unaudited)
485B24F94th Page of 126TOC1stPreviousNextBottomJust 94th
[Enlarge/Download Table] DEAN FAMILY OF FUNDS STATEMENTS OF CHANGES IN NET ASSETS For the Five Months Ended August 31, 1997 (Unaudited) DEAN DEAN LARGE CAP SMALL CAP DEAN VALUE VALUE BALANCED FUND FUND FUND FROM OPERATIONS: Net investment income $ 7,693 $ 19,997 $ 26,014 Net realized gains from security transactions 18,360 136,897 50,339 Net change in unrealized appreciation/ depreciation on investments 222,500 1,024,805 215,738 ------------- ------------ ----------- Net increase in net assets from operations 248,553 1,181,699 292,091 ------------- ------------ ----------- FROM DISTRIBUTIONS TO SHAREHOLDERS: Dividends from net investment income, Class A (3,594) -- (9,211) Dividends from net investment income, Class C -- -- -- ------------- ------------ ----------- Decrease in net assets from distributions to shareholders (3,594) -- (9,211) ------------- ------------ ----------- FROM CAPITAL SHARE TRANSACTIONS (A): CLASS A Proceeds from shares sold 6,424,350 13,609,409 6,512,148 Net asset value of shares issued in reinvestment of distributions to shareholders 3,308 -- 8,412 Payments for shares redeemed (2,022) (20,673) (52,988) ------------ ----------- ----------- Net increase in net assets from Class A share transactions 6,425,636 13,588,736 6,467,572 ------------ ----------- ----------- CLASS C Proceeds from shares sold 5,908 134,547 192,512 Net asset value of shares issued in reinvestment of distributions to shareholders -- -- -- Payments for shares redeemed -- -- -- ------------ ----------- ----------- Net increase in net assets from Class C share transactions 5,908 134,547 192,512 ------------ ----------- ----------- Net increase from capital share transactions 6,431,544 13,723,283 6,660,084 ------------ ----------- ----------- TOTAL INCREASE IN NET ASSETS 6,676,503 14,904,982 6,942,964 NET ASSETS: Beginning of period 34,000 33,000 33,000 ------------ ----------- ----------- End of period $ 6,710,503 $14,937,982 $ 6,975,964 ============ =========== =========== UNDISTRIBUTED NET INVESTMENT INCOME $ 4,099 $ 19,997 $ 16,803 ============ =========== =========== (A) Summary of capital share activity: CLASS A Shares sold 623,339 1,311,686 637,212 Shares issued in reinvestment of distributions to shareholders 325 -- 835 Shares redeemed (201) (1,813) (4,911) ------------ ----------- ----------- Net increase in shares outstanding 623,463 1,309,873 633,136 Shares outstanding, beginning of period 3,400 3,300 3,300 ------------ ----------- ----------- Shares outstanding, end of period 626,863 1,313,173 636,436 ============ =========== =========== CLASS C Shares sold 549 12,194 18,031 Shares issued in reinvestment of distributions to shareholder -- -- -- Shares redeemed -- -- -- ------------ ----------- ----------- Net increase in shares outstanding 549 12,194 18,031 Shares outstanding, beginning of period -- -- -- ------------ ----------- ----------- Shares outstanding, end of period 549 12,194 18,031 ============ =========== =========== See accompanying notes to financial statements.
485B24F95th Page of 126TOC1stPreviousNextBottomJust 95th
[Enlarge/Download Table] DEAN FAMILY OF FUNDS FINANCIAL HIGHLIGHTS Per Share Data for a Share Outstanding Throughout Each period DEAN LARGE CAP VALUE FUND DEAN SMALL CAP VALUE FUND Class A Class C Class A Class C Period Period Period Period Ended Ended Ended Ended August 31, 1997 (A) August 31, 1997 (A) August 31, 1997 (A) August 31, 1997(A) (Unaudited) (Unaudited) (Unaudited) (Unaudited) Net asset value at beginning of period $ 10.00 $ 10.76 $ 10.00 $ 10.95 ---------- -------- ------------ ------------- Income from investment operations: Net investment income 0.02 0.00 0.02 -- Net realized and unrealized gains (losses) on investments 0.69 (0.07) 1.25 0.31 ---------- -------- ------------ ------------- Total from investment operations 0.71 (0.07) 1.27 0.31 ---------- -------- ------------ ------------- Less distributions: Dividends from net investment income (0.01) -- -- -- Distributions from net realized gains -- -- -- -- ---------- -------- ------------ ------------- Total distributions (0.01) -- -- -- ---------- -------- ------------ ------------- Net asset value at end of period $ 10.70 $ 10.69 $ 11.27 $ 11.26 ========== ======== ============ ============= Total return (B) 7.11% (0.65)% 12.70% 2.83% ========== ======== ============ ============= Net assets at end of period $ 6,704,634 $ 5,869 $ 14,800,643 $ 137,339 ========== ======== ============ ============= Ratio of expenses to average net assets: Before waiver of fees by Adviser 2.82% 3.51% 2.12% 2.86% ========== ======== ============ ============= After waiver of fees by Adviser 1.82% 2.51% 1.80% 2.54% ========== ======== ============ ============= Ratio of net investment income (loss) to average net assets (C) 0.63% (1.47)% 0.83% (0.16)% Portfolio turnover rate (C) 20% 20% 51% 51% Average commission rate per share $ 0.0600 $ 0.0600 $ 0.0600 $ 0.0600
485B24F96th Page of 126TOC1stPreviousNextBottomJust 96th
DEAN BALANCED FUND Class A Class C Period Period Ended Ended August 31, 1997 (A) August 31, 1997 (A) (Unaudited) (Unaudited)
Net asset value at beginning of period $ 10.00 $ 10.71 ---------- -------- Income from investment operations: Net investment income 0.05 -- Net realized and unrealized gains (losses) on investments 0.63 (0.06) ---------- -------- Total from investment operations 0.68 (0.06) ---------- -------- Less distributions: Dividends from net investment income (0.03) -- Distributions from net realized gains -- -- ---------- -------- Total distributions (0.03) -- ---------- -------- Net asset value at end of period $ 10.65 $ 10.65 ========== ======== Total return (B) 6.86% (0.56)% ========== ======== Net assets at end of period $ 6,783,871 $192,093 ========== ======== Ratio of expenses to average net assets: Before waiver of fees by Adviser 2.80% 3.54% After waiver of fees by Adviser 1.80% 2.54% Ratio of net investment income (loss) to average net assets (C) 2.06% 0.68% Portfolio turnover rate (C) 44% 44% Average commission rate per share $ 0.0600 $ 0.0600 <FN> (A) Represents the period from the initial public offering of shares (May 28, 1997 for Class A shares of each Fund) through August 31, 1997. The initial public purchase of shares was August 1, 1997 for Class C shares of the Small Cap Value Fund and the Balanced Fund, and August 19, 1997 for Class C shares of the Large Cap Value Fund. (B) The total returns shown do not include the effect of applicable sales loads. (C) Annualized. </FN> See accompanying notes to financial statements.
485B24F97th Page of 126TOC1stPreviousNextBottomJust 97th
- 40 - DEAN FAMILY OF FUNDS NOTES TO FINANCIAL STATEMENTS August 31, 1997 (Unaudited) 1. ORGANIZATION The Dean Family of Funds (the Trust) is registered under the Investment Company Act of 1940, as amended (the 1940 Act), as an open-end management investment company. The Trust was organized as an Ohio business trust under a Declaration of Trust dated December 18, 1996. The Trust has established three fund series to date, the Large Cap Value Fund, the Small Cap Value Fund and the Balanced Fund (the Funds). The Large Cap Value Fund seeks to provide growth of capital over the long-term by investing primarily in the common stocks of large companies. The Small Cap Value Fund seeks to provide capital appreciation by investing primarily in the common stocks of small companies. The Balanced Fund seeks to preserve capital while producing a high total return by allocating its assets among equity securities, fixed-income securities and money market instruments. The Funds each offer two classes of shares: Class A shares (sold subject to a maximum front-end sales load of 5.25% and a distribution fee of up to 0.25% of the average daily net assets of each Fund) and Class C shares (sold subject to a maximum contingent deferred sales load of 1% if redeemed within a one-year period from purchase and a distribution fee of up to 1% of average daily net assets). Each Class A and Class C share of a Fund represents identical interests in the Fund's investment portfolio and has the same rights, except that (i) Class C shares bear the expenses of higher distribution fees, which is expected to cause Class C shares to have a higher expense ratio and to pay lower dividends than Class A shares; (ii) certain other class specific expenses will be borne solely by the class to which such expense are attributable; and (iii) each class has exclusive voting rights with respect to matters relating to its own distribution arrangements. 2. SIGNIFICANT ACCOUNTING POLICIES The following is a summary of the Trust's significant accounting policies: Security valuation -- The Funds' portfolio securities are valued as of the close of business of the regular session of trading on the New York Stock Exchange (currently 4:00 p.m., Eastern time). Securities traded on a national stock exchange or quoted by NASDAQ are valued based upon the closing price on the principal exchange where the security is traded, or, if not traded on a particular day, at the closing bid price. U.S. Government obligations are valued at their most recent bid prices as obtained from one or more of the major market makers for such securities. Share valuation -- The net asset value per share of each class of shares of each Fund is calculated daily by dividing the total value of a Fund's assets attributable to that class, less liabilities attributable to that class, by the number of shares of that class outstanding. The maximum offering price of Class A shares of each Fund is equal to the net asset value per share plus a sales load equal to 5.54% of the net asset value (or 5.25% of the offering price). The offering price of Class C shares of each Fund is equal to the net asset value per share.
485B24F98th Page of 126TOC1stPreviousNextBottomJust 98th
DEAN FAMILY OF FUNDS NOTES TO FINANCIAL STATEMENTS August 31, 1997 (Unaudited) The redemption price per share of Class A shares and Class C shares of each Fund is equal to net asset value per share. However, Class C shares of each Fund are subject to a contingent deferred sales load of 1% of the original purchase price if redeemed within a one-year period from the date of purchase. Investment income -- Dividend income is recorded on the ex-dividend date. Interest income is accrued as earned. Discounts and premiums on securities purchased are amortized in accordance with income tax regulations which approximate generally accepted accounting principles. Distributions to shareholders -- The Large Cap Value Fund and the Balanced Fund each expects to distribute substantially all of its net investment income, if any, on a quarterly basis. The Small Cap Value Fund expects to distribute substantially all of its net investment income, if any, on an annual basis. Each Fund expects to distribute any net realized long-term capital gains at least once each year. Management will determine the timing and frequency of the distributions of any net realized short-term capital gains. Organization expenses -- Expenses of organization have been capitalized and are being amortized on a straight-line basis over five years. In the event any of the initial shares of the Fund are redeemed during the amortization period, the redemption proceeds will be reduced by a pro rata portion of any unamortized organization expenses in the same proportion as the number of initial shares being redeemed bears to the number of initial shares of the Fund outstanding at the time of the redemption. Security transactions -- Security transactions are accounted for on the trade date. Securities sold are valued on a specific identification basis. Estimates -- The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Federal income tax -- It is each Fund's policy to comply with the special provisions of the Internal Revenue Code available to regulated investment companies. As provided therein, in any fiscal year in which a Fund so qualifies and distributes at least 90% of its taxable net income, the Fund (but not the shareholders) will be relieved of federal income tax on the income distributed. Accordingly, no provision for income taxes has been made. In order to avoid imposition of the excise tax applicable to regulated investment companies, it is also each Fund's intention to declare as dividends in each calendar year at least 98% of its net investment income (earned during the calendar year) and 98% of its net realized capital gains (earned during the twelve months ended October 31) plus undistributed amounts from prior years.
485B24F99th Page of 126TOC1stPreviousNextBottomJust 99th
DEAN FAMILY OF FUNDS NOTES TO FINANCIAL STATEMENTS August 31, 1997 (Unaudited) The following information is based upon the federal income tax cost of portfolio investments as of August 31, 1997: [Download Table] LARGE CAP SMALL CAP VALUE VALUE BALANCED FUND FUND FUND Gross unrealized appreciation $ 336,703 $ 1,301,309 $ 270,948 Gross unrealized depreciation (114,203) (276,504) (55,210) ------------ ----------- ----------- Net unrealized appreciation $ 222,500 $ 1,024,805 $ 215,738 ============ =========== =========== The Federal income tax cost of portfolio investments is equal to book cost as shown on the statement of assets and liabilities. 3. INVESTMENT TRANSACTIONS During the five months ended August 31, 1997, purchases and proceeds from sales of portfolio securities, other than short-term investments, amounted to $6,495,388 and $132,582, respectively, for the Large Cap Value Fund, $14,243,720 and $717,641, respectively, for the Small Cap Value Fund, and $6,094,868 and $276,081, respectively, for the Balanced Fund. 4. TRANSACTIONS WITH AFFILIATES Certain trustees and officers of the Trust are also officers of C.H. Dean & Associates, Inc. (the Adviser) or of Countrywide Fund Services, Inc. (CFS), the administrative services agent, shareholder servicing and transfer agent, and accounting services agent for the Trust. INVESTMENT ADVISORY AGREEMENT The Funds' investments are managed by the Adviser pursuant to the terms of an Advisory Agreement. Each Fund pays the Adviser an investment management fee, computed and accrued daily and paid monthly, at an annual rate of 1.00% of average daily net assets of each Fund. ADMINISTRATION AGREEMENT Under the terms of an Administration Agreement, CFS supplies non-investment related administrative and compliance services for the Funds. CFS supervises the preparation of tax returns, reports to shareholders, reports to and filings with the Securities and Exchange Commission and state securities commissions, and materials for meetings of the Board of Trustees. For these services, CFS receives a monthly fee from each Fund at an annual rate of 0.10% on its average daily net assets up to $100 million; 0.075% on the next $100 million of such net assets and 0.05% on such net assets in excess of $200 million, subject to a $1,000 minimum monthly fee.
485B24F100th Page of 126TOC1stPreviousNextBottomJust 100th
DEAN FAMILY OF FUNDS NOTES TO FINANCIAL STATEMENTS August 31, 1997 (Unaudited) TRANSFER AGENT AND SHAREHOLDER SERVICING AGREEMENT Under the terms of a Transfer, Dividend, Shareholder Service and Plan Agency Agreement, CFS maintains the records of each shareholder's account, answers shareholders' inquiries concerning their accounts, processes purchases and redemptions of the Funds shares, acts as dividend and distribution disbursing agent and performs other shareholder service functions. For these services, CFS receives a monthly fee based on the number of shareholder accounts in each class of each Fund, subject to a $1,200 minimum monthly fee for each class of shares of a Fund. In addition, each Fund pays out-of-pocket expenses, including but not limited to, postage and supplies. ACCOUNTING SERVICES AGREEMENT Under the terms of an Accounting Services Agreement, CFS calculates the daily net asset value per share and maintains the financial books and records of the Funds. For these services, CFS receives a monthly fee of $3,000 from each Fund.
485B24F101st Page of 126TOC1stPreviousNextBottomJust 101st
[Download Table] LARGE CAP VALUE FUND PORTFOLIO OF INVESTMENTS AUGUST 31, 1997 (Unaudited) SHARES VALUE COMMON STOCKS-98.4% AIRLINES-1.0% 2,500 Southwest Airlines Co. $ 70,000 ---------------- AUTOMOTIVE-4.0% 4,500 Chrysler Corp. 158,063 2,500 Ford Motor Co. 107,500 ---------------- 265,563 ---------------- CAPITAL GOODS-3.5% 4,500 Agco Corp. 146,250 2,000 Foster Wheeler Corp. 91,375 ---------------- 237,625 ---------------- CHEMICALS-6.2% 1,000 Dow Chemical Co. 88,500 3,000 Great Lakes ChemicalCorp. 139,500 2,500 Potash Corp. Saskatchewan 184,844 ---------------- 412,844 ---------------- DATA STORAGE-1.7% 3,000 Seagate Technology, Inc.(a) 114,562 ---------------- ELECTRONICS-3.8% 1,200 Arrow Electronics, Inc.(a) 73,725 1,500 Avnet, Inc. 103,781 1,400 Raytheon Co. 77,000 ---------------- 254,506 ---------------- ENERGY-2.9% 1,000 Atlantic Richfield Co. 75,000 2,500 Phillips Petroleum Co. 118,906 ---------------- 193,906 ---------------- FINANCIAL SERVICES-14.3% 1,700 Ambac, Inc. 137,381 4,000 Bear Stearns Co., Inc. 158,250 1,700 Beneficial Corp. 121,656 1,500 Chase Manhattan Corp. 166,781 3,000 Edwards (A.G.), Inc. 119,250 3,500 Green Tree Financial Corp. 153,781 400 Merrill Lynch & Company, Inc. 24,600 3,000 United Asset Management Corp. 80,438 ---------------- 962,137 ----------------
485B24F102nd Page of 126TOC1stPreviousNextBottomJust 102nd
SHARES VALUE Government Sponsored Enterprises-1.6% 2,500 Federal National Mortgage Association $ 110,000 ---------------- HOUSING-2.5% 10,000 Clayton Homes, Inc. 168,125 ---------------- INSURANCE-9.0% 2,000 Aflac, Inc. 110,125 1,200 American General Corp. 57,825 1,000 American National Insurance Co. 97,000 600 General RE Corp. 116,325 800 TransAmerica Corp. 78,850 2,000 TransAtlantic Holdings, Inc. 141,375 ---------------- 601,500 ---------------- MEDIA-1.4% 6,000 News Corporation LTD.(ADR) 90,750 ---------------- Metals-2.0% 1,500 Alumax, Inc. (a) 62,156 900 Aluminum Co. of America 74,025 ---------------- 136,181 ---------------- MISCELLANEOUS-14.3% 1,800 CSX Corp. 102,937 2,500 Columbia/ HCA Healthcare Corp. 78,906 2,500 Hasbro, Inc. 67,188 500 Norfolk Southern Corp. 49,000 1,500 Parker Hannifin Corp. 96,469 2,000 Phelps Dodge Corp. 160,875 1,500 SAFECO, Inc. 73,688 3,500 Union Texas Petroleum Holdings, Inc. 81,594 2,000 Vulcan Materials Co. 175,750 1,700 York International Corp. 76,287 ---------------- 962,694 ---------------- MORTGAGE SERVICES-5.0% 2,500 Countrywide Credit Industries, Inc.. 84,219 1,200 MBIA, Inc. 135,900 2,000 PMI Group, Inc. 115,625 ---------------- 335,744 ----------------
485B24F103rd Page of 126TOC1stPreviousNextBottomJust 103rd
SHARES VALUE RETAIL-4.0% 2,500 Dillard's, Inc. $ 100,000 15,000 Food Lion, Inc. 111,094 1,000 J.C. Penney Company, Inc. 60,000 ---------------- 271,094 ---------------- SEMICONDUCTOR-1.1% 800 Intel Corp. 73,700 ---------------- TECHNOLOGY-2.3% 5,000 Cabletron Systems, Inc. (a) 151,250 ---------------- TELECOMMUNICATIONS-6.2% 7,000 360 Communications Co. (a) 128,625 1,400 AT&T Corp. 54,600 2,000 Century Telephone Enterprises, Inc. 72,625 3,000 Frontier Corp. 66,188 2,000 Sprint Corp. 94,000 ---------------- 416,038 ---------------- TOBACCO-4.2% 1,500 Loews Corp. 152,906 1,600 Phillip Morris Cos., Inc. 69,800 2,000 Ust, Inc. 57,750 ---------------- 280,456 ---------------- UTILITIES-7.4% 2,000 Consolidated Edison Co. of New York 61,250 4,000 DPL, Inc. 94,750 3,000 Houston Industries, Inc. 60,750 4,000 Illinova Corporation 92,000 2,500 Nipsco Industries, Inc. 102,031 4,000 Southern Co. 84,250 ---------------- 495,031 ---------------- TOTAL COMMON STOCKS (COST $6,381,206) $ 6,603,706 ----------------
485B24F104th Page of 126TOC1stPreviousNextBottomJust 104th
FACE VALUE VALUE MONEY MARKET-1.0% $67,038 One Group Prime Money Market Fund $ 67,038 ---------------- TOTAL INVESTMENTS AT VALUE-99.4% (COST $6,448,244) $ 6,670,744 OTHER ASSETS IN EXCESS OF LIABILITIES - 0.6% 39,759 ---------------- NET ASSETS - 100.0% $ 6,710,503 ================ <FN> (a) Non-income producing securities. </FN>
485B24F105th Page of 126TOC1stPreviousNextBottomJust 105th
[Download Table] DEAN SMALL CAP VALUE FUND PORTFOLIO OF INVESTMENTS AUGUST 31, 1997 (Unaudited) SHARES VALUE COMMON STOCKS-98.3% AUTOMOTIVE-2.8% 6,000 Excel Industries, Inc. $ 153,000 7,000 Oshkosh Truck Corp. 105,875 7,000 Republic Automotive Parts, Inc. (a) 108,500 7,000 TBC Corp. (a) 57,750 ---------------- 425,125 ---------------- AUTOMOTIVE PARTS-1.1% 12,000 Durakon Industries, Inc. (a) 106,500 9,000 Jason, Inc. (a) 67,500 ---------------- 174,000 ---------------- BUILDING PRODUCTS-4.6% 7,000 BMC West Corp. (a) 91,000 6,000 Dayton Superior Corp. (a) 93,000 1,000 Florida Rock Industries, Inc. 49,375 21,000 Martin Industries, Inc. 123,375 15,000 Morgan Products LTD (a) 122,813 7,000 Patrick Industries, Inc. 104,125 8,000 Shelter Components Corp. 108,000 ---------------- 691,688 ---------------- BUILDING SUPPLIES-0.7% 9,000 Wolohan Lumber Co. 109,125 ---------------- CAPITAL GOODS-5.3% 40,000 Baldwin Technology-Class A (a) 207,500 11,000 Bridgeport Machines, Inc. (a) 118,250 4,000 Central Sprinkler Corp. (a) 70,000 6,000 Defiance, Inc. 50,250 3,000 GEHL Co. (a) 67,125 3,000 Hardinge, Inc. 103,125 1,500 Nacco Industries, Inc.-Class A 129,375 7,000 Perini Corp. (a) 49,000 ---------------- 794,625 ---------------- CHEMICALS-0.7% 5,000 Mississippi Chemical Corp. 108,438
485B24F106th Page of 126TOC1stPreviousNextBottomJust 106th
SHARES VALUE ELECTRONICS-2.8% 9,000 Bel Fuse, Inc. (a) $ 160,875 8,760 Bell Industries, Inc. (a) 154,395 6,500 ESCO Electronics Corp. (a) 107,656 ---------------- 422,926 ---------------- ENERGY-4.9% 8,000 Aquila Gas Pipeline Corp. 83,500 8,000 BP Prudhoe Bay Royalty Trust 139,500 15,000 Burlington Res Coal Seam Gas Royalty Trust 106,875 10,000 Castle Energy Corp. (a) 140,000 4,000 Giant Industries, Inc. 73,750 5,000 NUI Corp. 115,000 8,000 Torch Energy Royalty Trust 79,500 ---------------- 738,125 ---------------- FINANCIAL SERVICES-0.6% 2,700 Arcadia Financial LTD (a) 26,831 1,800 Everen Capital Corp. 59,175 ---------------- 86,006 ---------------- FOOD-2.0% 6,000 Fleming Cos., Inc. 113,250 10,000 Mauna Loa Macadamia Partners LP-Class A 40,625 7,000 Nash-Finch Co. 149,625 ---------------- 303,500 ---------------- FURNITURE-0.9% 8,000 Flexsteel Industries, Inc. 94,000 2,000 Pulaski Furniture Corp. 34,500 ---------------- 128,500 ---------------- GAMING-1.7% 6,000 Grand Casinos, Inc. (a) 92,625 7,000 Harveys Casino Resorts 120,750 6,000 Station Casinos, Inc. (a) 45,375 ---------------- 258,750 ---------------- HEALTH CARE-1.0% 1,000 Mine Safety Appliances Co. (a) 63,000 30,000 Staff Builders, Inc.-Class A (a) 84,375 ---------------- 147,375 ----------------
485B24F107th Page of 126TOC1stPreviousNextBottomJust 107th
SHARES VALUE HOUSING-7.9% 6,000 Beazer Homes U.S.A., Inc. (a) $ 113,250 10,000 Cavalier Homes, Inc. 102,500 5,000 Continental Homes Holding Corp. 115,000 10,000 Engle Homes, Inc. 140,000 17,000 Hovnanian Enterprises Inc.-Class A (a) 114,750 8,000 MDC Holdings, Inc. 83,000 8,000 M/I Schottenstein Homes (a) 108,000 3,200 NVR, Inc. (a) 68,400 4,000 Pacific Greystone Corp. (a) 69,500 1,100 Pulte Corp. 40,287 8,000 Webb (Del E.) Corp. 140,000 9,000 Zaring National Corp. (a) 87,187 ---------------- 1,181,874 ---------------- INSURANCE-8.7% 2,000 Allied Life Financial Corp. 40,500 2,500 Chartwell RE Corp. 85,625 1,300 Citizens Corp. 36,725 1,733 Donegal Group, Inc. 35,093 8,000 EMC Insurance Group, Inc. 108,000 3,000 FBL Financial Group, Inc.-Class A 96,000 1,300 Farm Family Holdings, Inc. (a) 37,700 3,500 First American Financial Corp. 156,625 1,500 Guaranty National Corp. 42,281 900 Harleysville Group, Inc. 38,138 6,000 Lawyers Title Corp. 167,250 600 Navigators Group, Inc. (a) 11,100 3,300 Omni Insurance Group, Inc. (a) 43,313 3,000 PXRE Corp. 89,625 1,000 Selective Insurance Group, Inc. 49,250 4,900 Sphere Drake Holdings LTD 42,875 6,000 Stewart Information Services Corp. 147,375 3,000 Terra Nova (Bermuda) Holding LTD-Class A 67,875 ---------------- 1,295,350 ----------------
485B24F108th Page of 126TOC1stPreviousNextBottomJust 108th
SHARES VALUE METALS-6.8% 6,000 Ampco-Pittsburgh Corp. $ 107,250 8,000 A.P. Green Industries, Inc. 82,000 4,000 Chaparral Steel Co. 60,500 3,000 Cleveland-Cliffs, Inc. 125,062 3,000 Commercial Metals Co. 92,250 9,000 National Steel Corp.-Class B (a) 169,313 1,600 Pitt-Des Moines, Inc. 54,800 6,000 Roanoke Electric Steel Co. 130,500 4,000 Rouge Industries, Inc.-Class A 61,500 4,000 Texas Industries, Inc. 133,250 ---------------- 1,016,425 ---------------- MISCELLANEOUS-6.6% 2,000 Arvin Industries, Inc. 69,625 6,000 Atchison Casting Corp. (a) 115,875 5,000 Burlington Industries, Inc. (a) 60,313 8,000 Cameron Ashley Building Products (a) 120,000 7,000 Continental Can, Inc. (a) 138,687 11,000 Designer Holdings LTD. (a) 68,750 5,000 Global Industrial Technologies, Inc. (a) 94,687 3,000 PMC Commerical Trust 57,375 9,000 Primesource Corp. 91,125 8,000 R & B, Inc. (a) 64,000 6,000 Superior Surgical Manufacturing Co. 92,250 ---------------- 972,687 ---------------- MORTGAGE SERVICES-1.1% 2,200 North American Mortgage Co. 56,925 4,000 Scpie Holdings, Inc. 112,000 ---------------- 168,925 ---------------- PAPER AND CONTAINERS-1.3% 10,000 Mercer International, Inc. 103,750 6,000 Paragon Trade Brands, Inc. (a) 95,625 ---------------- 199,375 ---------------- POLLUTION-0.6% 6,000 Graphic Industries, Inc. 96,750 ----------------
485B24F109th Page of 126TOC1stPreviousNextBottomJust 109th
SHARES VALUE RESTAURANTS-2.0% 11,000 Bertuccin's, Inc.(a) $ 66,688 5,000 El Chico Restaurants, Inc. (a) 50,313 10,000 Morrison Restaurants, Inc. 47,500 5,000 Rare Hospitality International, Inc. (a) 62,500 8,000 Ryan's Family Steak Houses, Inc. (a) 74,000 ---------------- 301,001 ---------------- RETAIL-17.5% 13,000 Advanced Marketing Service, Inc. (a) 139,750 9,000 Blair Corp. 141,750 16,000 Bon-Ton Stores, Inc. (a) 153,000 20,000 Books A Million, Inc. (a) 122,500 9,000 Brookstone, Inc. (a) 91,125 6,000 Brown Group, Inc. 100,125 5,000 Burlington Coat Factory Warehouse 115,000 8,000 Dixie Group, Inc. (a) 106,500 10,000 Duckwall-Alco Stores, Inc. (a) 136,250 25,000 Donnkenny, Inc. (a) 92,188 10,000 Dyersburg Corp. 110,000 11,000 GT Bicycles, Inc. (a) 86,625 9,000 Haverty Furniture Co., Inc. 118,125 6,000 Hills Stores Co. (a) 22,500 5,000 Ingles Markets, Inc.-Class A 66,875 40,000 Jan Bell Marketing, Inc. (a) 100,000 10,000 Maris Christina, Inc. (a) 51,250 6,000 Marsh Supermarkets, Inc.-Class B 90,000 11,000 Mikasa, Inc. 130,625 30,000 Movie Gallery, Inc. (a) 127,500 8,000 Rex Stores Corp. (a) 79,000 3,000 The Rival Co. 55,125 30,000 Service Merchandise Co., Inc. (a) 116,250 3,000 Supreme International Corp. (a) 39,000 21,000 Tultex Corp. (a) 120,750 13,000 Worldtex, Inc. (a) 83,687 ---------------- 2,595,500 ----------------
485B24F110th Page of 126TOC1stPreviousNextBottomJust 110th
SHARES VALUE REAL ESTATE-5.6% 1,000 Capstone Capital Corp $ 23,750 9,000 Commercial Net Lease Realty 141,750 10,000 Dynex Capital, Inc. 141,875 5,000 Health Care REIT, Inc. 130,625 10,000 Horizon Group, Inc. 125,625 7,000 RFS Hotel Investors, Inc. 129,500 6,000 Thornburg Mortgage Asset Corp. 138,750 ---------------- 831,875 ---------------- TECHNOLOGY-2.4% 8,000 Franklin Electronic Publisher, Inc. (a) 98,000 14,000 Microtest, Inc. (a) 69,125 5,600 Software Spectrum, Inc. (a) 84,700 10,000 Spacehab, Inc. (a) 101,250 ---------------- 353,075 ---------------- TELECOMMUNICATIONS-1.2% 8,000 Atlantic Tele-Network, Inc. (a) 104,500 9,000 Audiovox Corp.- Class A (a) 70,313 ---------------- 174,813 ---------------- TRANSPORTATION-1.0% 5,000 InternationalShipholding Corp. 82,187 2,100 Petroleum Helicopters Inc. 29,400 1,500 Sea Containers LTD-Class A 35,625 ---------------- 147,212 ---------------- UTILITY-6.5% 8,000 Bangor Hydro-Electric Co. (a) 43,500 4,000 Central Hudson Gas & Electric 133,500 6,000 Central Maine Power Co. 76,125 9,000 Central Vermont Public Service 108,562 4,000 Commonwealth Energy System 98,500 5,000 Eastern Utilities Association 95,625 2,000 Orange & Rockland Utilities, Inc. 67,875 5,000 Rochester Gas & Electric Corp. 117,812 3,000 Southern California Water Co. 65,625 3,000 TNP Enterprises, Inc. 70,313 2,500 United Illuminating Co. 87,344 ---------------- 964,781 ---------------- TOTAL COMMON STOCKS (COST $13,663,021) $ 14,687,826 ----------------
485B24F111th Page of 126TOC1stPreviousNextBottomJust 111th
FACE VALUE VALUE MONEY MARKET AND EQUIVALENTS-1.4% $ 87,736 One Group Prime Money Market Fund $ 87,736 125,000 Merrill Lynch CP 9/3/97 124,883 ---------------- TOTAL MONEY MARKET AND EQUIVALENTS (COST $212,619) $ 212,619 ---------------- TOTAL INVESTMENTS AT VALUE-99.7% (COST $13,875,640) $ 14,900,445 OTHER ASSETS IN EXCESS OF LIABILITIES-0.3% 37,537 ---------------- NET ASSETS - 100.0% $ 14,937,982 ================ <FN> (a) Non-income producing securities. </FN>
485B24F112th Page of 126TOC1stPreviousNextBottomJust 112th
[Download Table] DEAN BALANCED FUND PORTFOLIO OF INVESTMENTS AUGUST 31, 1997 (Unaudited) SHARES VALUE COMMON STOCKS-54.8% AIRLINES-1.3% 3,500 Comair Holdings, Inc. $ 94,062 ---------------- AUTOMOTIVE-2.7% 3,000 Chrysler Corp. 105,375 2,000 Ford Motor Co. 86,000 ---------------- 191,375 ---------------- CAPITAL GOODS-2.6% 4,000 Agco Corp. 130,000 1,100 Briggs & Stratton Corp. 53,144 ---------------- 183,144 ---------------- CHEMICALS-2.5% 700 Dow Chemical Co. 61,950 1,550 Potash Corp. Saskatchewan 114,603 ---------------- 176,553 ---------------- DATA STORAGE-1.7% 3,150 Seagate Technology, Inc.(a) 120,291 ---------------- ELECTRONICS-2.5% 1,050 Arrow Electronics, Inc.(a) 64,509 2,050 Raytheon Co. 112,750 ---------------- 177,259 ---------------- FINANCIAL SERVICES-3.1% 1,000 Ambac, Inc. 80,812 3,100 Green Tree Financial Corp. 136,206 ---------------- 217,018 ---------------- GOVERNMENT SPONSORED ENTERPRISES-0.9% 1,500 Federal National Mortgage Association 66,000 ---------------- HOUSING-1.5% 6,200 Clayton Homes, Inc. 104,238 ----------------
485B24F113th Page of 126TOC1stPreviousNextBottomJust 113th
SHARES VALUE INSURANCE-0.8% 1,000 Aflac, Inc. $ 55,063 ---------------- MEDIA-4.2% 4,000 Comcast Corp. 93,750 4,000 Cox Communications-Class A (a) 108,250 6,000 News Corporation LTD. (ADR) 90,750 ---------------- 292,750 ---------------- METALS-3.0% 2,000 Alumax, Inc. (a) 82,875 1,500 Aluminum Co. of America 123,375 ---------------- 206,250 ---------------- MISCELLANEOUS-1.9% 4,000 CCA Prison Realty Trust (a) 132,500 ---------------- MORTGAGE SERVICES-3.6% 3,000 Countrywide Credit Industries, Inc. 101,063 2,600 PMI Group, Inc. 150,313 ---------------- 251,376 ---------------- RETAIL-3.4% 4,200 Fingerhut Companies Inc. 85,050 1,000 Payless Shoesource, Inc. (a) 64,125 2,500 Toys R Us, Inc. (a) 86,406 ---------------- 235,581 ---------------- REAL ESTATE-4.3% 1,500 Health Care Property Investors, Inc. 55,781 2,000 Merry Land & Investment Co., Inc. 43,500 2,000 Simon Debartolo Group, Inc. 63,375 3,000 Trizec Hahn Corp. 67,687 5,000 United Dominion Realty Trust, Inc. 70,625 ---------------- 300,968 ---------------- SEMICONDUCTOR-1.9% 800 Intel Corp. 73,700 2,000 MEMC Electronic Materials, Inc. (a) 58,000 ---------------- 131,700 ----------------
485B24F114th Page of 126TOC1stPreviousNextBottomJust 114th
SHARES VALUE TECHNOLOGY-3.1% 3,550 Cabletron Systems (a) $ 107,388 3,000 NCR Corp. (a) 106,312 ---------------- 213,700 ---------------- TELECOMMUNICATIONS-3.2% 7,200 360 Communications Co. (a) 132,300 2,000 Sprint Corp. 94,000 ---------------- 226,300 ---------------- TOBACCO-2.0% 3,150 Phillip Morris Cos., Inc. 137,419 ---------------- UTILITIES-4.6% 4,000 Houston Industries, Inc. 81,000 4,000 Illinova Corporation 92,000 2,000 Nipsco Industries, Inc. 81,625 3,000 Southern Co. 63,188 ---------------- 317,813 ---------------- TOTAL COMMON STOCKS (COST $3,619,773) $ 3,831,360 ---------------- FIXED INCOME-32.3% 300,000 U.S. Treasury Note 6.375% 7/15/99 $ 302,344 200,000 U.S. Treasury Note 6.250% 2/15/03 199,938 200,000 U.S. Treasury Note 6.125% 9/30/00 200,063 300,000 U.S. Treasury Note 6.375% 3/31/01 301,969 250,000 U.S. Treasury Note 6.125% 8/31/98 250,781 300,000 U.S. Treasury Note 5.875% 11/15/99 299,156 250,000 U.S. Treasury Note 6.125% 12/31/01 249,219 200,000 U.S. Treasury Note 6.625% 3/31/02 203,062 250,000 Hilton Hotels 7.000% 7/15/04 246,946 ---------------- Total Fixed Income (Cost $2,249,327) $ 2,253,478 ---------------- VALUE VALUE MONEY MARKET AND EQUIVALENTS-12.9% 145,053 One Group Prime Money Market Fund $ 145,053 250,000 4 Winds Commercial Paper 9/3/97 249,922 125,000 Korea Dev Bank Commercial Paper 9/12/97 124,780 100,000 Merrill Lynch Commercial Paper 9/3/97 99,969 ---------------- 273,000 Sumitomo Bank Cap Commercial Paper 9/9/97 272,661 ---------------- TOTAL MONEY MARKET AND EQUIVALENTS (COST $892,385) $ 892,385 ---------------- TOTAL INVESTMENTS AT VALUE-100% (COST $6,761,485) $ 6,977,223 ---------------- LIABILITIES IN EXCESS OF OTHER ASSETS-0.0% (1,259) ---------------- NET ASSETS - 100.0% $ 6,975,964 ================ <FN> (a) Non-income producing securities. </FN>
485B24F115th Page of 126TOC1stPreviousNextBottomJust 115th
[Enlarge/Download Table] DEAN FAMILY OF FUNDS STATEMENTS OF ASSETS AND LIABILITIES AUGUST 31, 1997 (UNAUDITED) DEAN DEAN LARGE CAP SMALL CAP DEAN VALUE VALUE BALANCED FUND FUND FUND ASSETS Investments in securities: At acquisition cost $ 6,448,244 $ 13,875,640 $ 6,761,485 =============== ============== ============== At value (Note 2) $ 6,670,744 $ 14,900,445 $ 6,977,223 Dividends and interest receivable 12,712 20,034 43,659 Receivable for capital shares sold -- 158,256 16,280 Receivable for securities sold -- 23,188 -- Organization expenses, net (Note 2) 14,720 14,720 14,720 Other assets 20,807 22,564 20,466 --------------- -------------- -------------- TOTAL ASSETS 6,718,983 15,139,207 7,072,348 --------------- -------------- -------------- LIABILITIES Payable for securities purchased -- 152,578 86,695 Payable to affiliates (Note 4) 6,400 22,590 6,400 Payable for capital shares redeemed -- 20,333 -- Other liabilities 2,080 5,724 3,289 --------------- -------------- -------------- TOTAL LIABILITIES 8,480 201,225 96,384 --------------- -------------- -------------- NET ASSETS $ 6,710,503 $ 14,937,982 $ 6,975,964 =============== ============== ============== Net assets consist of: Paid-in capital $ 6,465,544 $ 13,756,283 $ 6,693,084 Undistributed net investment income 4,099 19,997 16,803 Accumulated net realized gains from security transactions 18,360 136,897 50,339 Net unrealized appreciation on investments 222,500 1,024,805 215,738 --------------- -------------- -------------- Net assets $ 6,710,503 $ 14,937,982 $ 6,975,964 =============== ============== ============== PRICING OF CLASS A SHARES Net assets applicable to Class A shares $ 6,704,634 $ 14,800,643 $ 6,783,871 =============== ============== ============== Shares of beneficial interest outstanding (unlimited number of shares authorized, no par value) 626,863 1,313,173 636,436 =============== ============== ============== Net asset value and redemption price per share (Note 2) $ 10.70 $ 11.27 $ 10.66 =============== ============== ============== Maximum offering price per share (Note 2) $ 11.29 $ 11.89 $ 11.25 =============== ============== ============== PRICING OF CLASS C SHARE Net assets applicable to Class C shares $ 5,869 $ 137,339 $ 192,093 =============== ============== ============== Shares of beneficial interest outstanding (unlimited number of shares authorized, no par value) 549 12,194 18,031 =============== ============== ============== Net asset value and offering price per share (Note 2) $ 10.69 $ 11.26 $ 10.65 =============== ============== ============== <FN> See accompanying notes to financial statements. </FN>
485B24F116th Page of 126TOC1stPreviousNextBottomJust 116th
[Download Table] DEAN FAMILY OF FUNDS STATEMENTS OF OPERATIONS For the Five Months Ended August 31, 1997 (Unaudited) DEAN DEAN LARGE CAP SMALL CAP DEAN VALUE VALUE BALANCED FUND FUND FUND INVESTMENT INCOME Dividends $ 23,030 $ 48,956 $ 12,566 Interest 6,953 14,569 36,322 -------- ---------- -------- TOTAL INVESTMENT INCOME 29,983 63,525 48,888 -------- ---------- -------- EXPENSES Investment advisory fees (Note 4) 12,048 23,500 12,331 Registration fees - Common 965 965 965 Registration fees - Class A 2,444 3,069 2,444 Registration fees - Class C 2,455 2,455 2,455 Accounting services fees (Note 4) 6,000 6,000 6,000 Custodian fees 3,775 5,430 4,359 Shareholder services and transfer agent fees - Class A (Note 4) 2,400 2,400 2,400 Shareholder services and transfer agent fees - Class C (Note 4) 1,200 1,200 1,200 Administration fees (Note 4) 2,000 2,190 2,000 Amortization of organization expenses (Note 2) 1,051 1,051 1,051 Other expenses -- 2,768 -- -------- ---------- -------- TOTAL EXPENSES 34,338 51,028 35,205 Fees waived (12,048) (7,500) (12,331) -------- ---------- -------- NET EXPENSES 22,290 43,528 22,874 -------- ---------- -------- 7,693 19,997 26,014 -------- ---------- -------- NET INVESTMENT INCOME REALIZED AND UNREALIZED GAINS ON INVESTMENTS Net realized gains from security transactions 18,360 136,897 50,339 Net change in unrealized appreciation/depreciation on investments 222,500 1,024,805 215,738 -------- ---------- -------- NET REALIZED AND UNREALIZED GAINS ON INVESTMENTS 240,860 1,161,702 266,077 -------- ---------- -------- NET INCREASE IN NET ASSETS FROM OPERATIONS $248,553 $1,181,699 $292,091 ======== ========== ======== See accompanying notes to financial statements.
485B24F117th Page of 126TOC1stPreviousNextBottomJust 117th
DEAN FAMILY OF FUNDS PART C. OTHER INFORMATION ITEM 24. FINANCIAL STATEMENTS AND EXHIBITS (a) (i) Financial Statements included in Part A: Financial Highlights for the Period Ended August 31, 1997 (ii) Financial Statements included in Part B: Statement of Assets and Liabilities, March 17, 1997, Notes to Statement of Assets and Liabilities, Report of Independent Auditors Statement of Assets & Liabilities, August 31, 1997 (unaudited) Statement of Operations for the Period Ended August 31, 1997 (unaudited) Statement of Changes in Net Assets for the Period Ended August 31, 1997 (unaudited) Financial Highlights for the Period Ended August 31, 1997 (unaudited) Portfolio of Investments, August 31, 1997 (unaudited) (b) Exhibits (1) Agreement and Declaration of Trust* (2) Bylaws* (3) Inapplicable (4) Inapplicable (5)(i) Advisory Agreement with C.H. Dean & Associates, Inc. for the Large Cap Fund, the Small Cap Fund and the Balanced Fund (ii) Form of Advisory Agreement with C.H. Dean & Associates, Inc. for the International Value Fund (iii) Form of Sub-Advisory Agreement with Newton Capital Management Ltd. - 41 -
485B24F118th Page of 126TOC1stPreviousNextBottomJust 118th
(6) Underwriting Agreement with 2480 Securities LLC (7) Directors Deferred Compensation Plan (8)(i) Custody Agreement with Bank One Trust Company (ii) Form of Custody Agreement with The Northern Trust Company (9)(i) Administration Agreement with Countrywide Fund Services, Inc. (ii) Accounting Services Agreement with Countrywide Fund Services, Inc. (iii) Transfer, Dividend Disbursing, Shareholder Service and Plan Agency Agreement with Countrywide Fund Services, Inc. (10) Opinion and Consent of Counsel* (11) Consent of Independent Auditors (12) Inapplicable (13) Agreement Relating to Initial Capital (14) Inapplicable (15)(i) Plan of Distribution Pursuant to Rule 12b-1 for Class A Shares (ii) Plan of Distribution Pursuant to Rule 12b-1 for Class C Shares (16) Inapplicable (17)(i) Financial Data Schedule for Large Cap Value Fund (ii) Financial Data Schedule for Small Cap Value Fund (iii) Financial Data Schedule for Balanced Fund (18) Rule 18f-3 Multi-Class Plan* -------------------------------------- * Incorporated by reference to the Trust's Registration Statement on Form N-1A. - 42 -
485B24F119th Page of 126TOC1stPreviousNextBottomJust 119th
ITEM 25. PERSONS CONTROLLED BY OR UNDER COMMON CONTROL WITH REGISTRANT. After commencement of the public offering of the Registrant's shares, the Registrant expects that no person will be directly or indirectly controlled by or under common control with the Registrant. ITEM 26. NUMBER OF HOLDERS OF SECURITIES. As of August 31, 1997, there are 335 holders of the shares of beneficial interest of the Registrant. ITEM 27. INDEMNIFICATION Article VI of the Registrant's Agreement and Declaration of Trust provides for indemnification of officers and Trustees as follows: "SECTION 6.4 INDEMNIFICATION OF TRUSTEES, OFFICERS, ETC. Subject to and except as otherwise provided in the Securities Act of 1933, as amended, and the 1940 Act, the Trust shall indemnify each of its Trustees and officers, including persons who serve at the Trust's request as directors, officers or trustees of another organization in which the Trust has any interest as a shareholder, creditor or otherwise (hereinafter referred to as a "Covered Person") against all liabilities, including but not limited to amounts paid in satisfaction of judgments, in compromise or as fines and penalties, and expenses, including reasonable accountants' and counsel fees, incurred by any Covered Person in connection with the defense or disposition of any action, suit or other proceeding, whether civil or criminal, before any court or administrative or legislative body, in which such Covered Person may be or may have been involved as a party or otherwise or with which such person may be or may have been threatened, while in office or thereafter, by reason of being or having been such a Trustee or officer, director or trustee, and except that no Covered Person shall be indemnified against any liability to the Trust or its Shareholders to which such Covered Person would otherwise be subject by reason of willful misfeasance, bad faith, gross negligence or reckless disregard of the duties involved in the conduct of such Covered Person's office. - 43 -
485B24F120th Page of 126TOC1stPreviousNextBottomJust 120th
SECTION 6.5 ADVANCES OF EXPENSES. The Trust shall advance attorneys' fees or other expenses incurred by a Covered Person in defending a proceeding to the full extent permitted by the Securities Act of 1933, as amended, the 1940 Act, and Ohio Revised Code Chapter 1707, as amended. In the event any of these laws conflict with Ohio Revised Code Section 1701.13(E), as amended, these laws, and not Ohio Revised Code Section 1701.13(E), shall govern. SECTION 6.6 INDEMNIFICATION NOT EXCLUSIVE, ETC. The right of indemnification provided by this Article VI shall not be exclusive of or affect any other rights to which any such Covered Person may be entitled. As used in this Article VI, "Covered Person" shall include such person's heirs, executors and administrators. Nothing contained in this article shall affect any rights to indemnification to which personnel of the Trust, other than Trustees and officers, and other persons may be entitled by contract or otherwise under law, nor the power of the Trust to purchase and maintain liability insurance on behalf of any such person. Insofar as indemnification for liability arising under the Securities Act of 1933 may be permitted to Trustees, officers and controlling persons of the Registrant pursuant to the foregoing provisions, or otherwise, the Registrant has been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the Registrant of expenses incurred or paid by a Trustee, officer or controlling person of the Registrant in the successful defense of any action, suit or proceeding) is asserted by such Trustee, officer or controlling person in connection with the securities being registered, the Registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Act and will be governed by the final adjudication of such issue. The Registrant maintains a standard mutual fund and investment advisory professional and directors and officers liability policy. The policy provides - 44 -
485B24F121st Page of 126TOC1stPreviousNextBottomJust 121st
coverage to the Registrant, its Trustees and officers, C.H. Dean & Associates, Inc. ("Dean Investment Associates") and 2480 Securities LLC. Coverage under the policy will include losses by reason of any act, error, omission, misstatement, misleading statement, neglect or breach of duty. The Advisory Agreements with Dean Investment Associates each provide that Dean Investment Associates shall not be liable for any action taken, omitted or suffered to be taken by it in its reasonable judgment, in good faith and believed by it to be authorized or within the discretion or rights or powers conferred upon it by the applicable Advisory Agreement, or in accordance with (or in the absence of) specific directions or instructions from the Trust; provided, however, that such acts or omissions shall not have resulted from Dean Investment Associates' willful misfeasance, bad faith or gross negligence, a violation of the standard of care established by and applicable to Dean Investment Associates in its actions under the appropriate Advisory Agreement or breach of its duty or of its obligations under the appropriate Advisory Agreement. The Sub-Advisory Agreement with the Sub-Adviser provides that the Sub-Adviser shall give the International Value Fund the benefit of its best judgment and effort in rendering services under the Sub-Advisory Agreement, but that neither the Sub-Adviser nor any of its officers, directors, employees, agents or controlling persons shall be liable for any act or omission or for any loss sustained by the International Value Fund in connection with the matters to which the Sub-Advisory Agreement relates, except a loss resulting from the Sub-Adviser's willful misfeasance, bad faith or gross negligence in the performance of its duties, or by reason of its reckless disregard of its obligations and duties under the Sub-Advisory Agreement; provided, however, that the foregoing shall not constitute a waiver of any rights which the Trust may have which may not be waived under applicable law. ITEM 28. BUSINESS AND OTHER CONNECTIONS OF THE INVESTMENT ADVISER (a) Dean Investment Associates is a registered investment adviser, providing investment advisory services to the Registrant. Dean Investment - 45 -
485B24F122nd Page of 126TOC1stPreviousNextBottomJust 122nd
Associates has been engaged since 1973 in the business of providing investment advisory services to individual, institutional and corporate clients. The Sub-Adviser is a United Kingdom investment advisory firm registered with the Securities and Exchange Commission. The Sub-Adviser is affiliated with Newton Investment Management Ltd., an English investment advisory firm which has been managing assets for institutional investors, mutual funds and individuals since 1977. (b) The directors and officers of Dean Investment Associates and any other business, profession, vocation or employment of a substantial nature engaged in at any time during the past two years: (i) Chauncey H. Dean - Chairman of the Board, Chief Executive Officer and controlling shareholder of Dean Investment Associates. A Trustee of the Trust. (ii) Dennis D. Dean - Treasurer of Dean Investment Associates. He formerly was President, Chief Operating Officer and Secretary of Dean Investment Associates. (iii) Zada L. Dean - Secretary of Dean Investment Associates. (iv) Robert D. Dean - Director of Research of Dean Investment Associates. He formerly was Professor of Economics of the University of Memphis. A Trustee of the Trust. (v) Frank H. Scott - Senior Vice President of Dean Investment Associates. President and a Trustee of the Trust. (vi) Richard M. Luthman - Senior Vice President of Dean Investment Associates. The directors and officers of Newton Capital Management Ltd. and any other business, profession, vocation or employment of a substantial nature engaged in at any time during the past two years: - 46 -
485B24F123rd Page of 126TOC1stPreviousNextBottomJust 123rd
(i) Guy Bowles - Chairman of the Sub-Adviser. (ii) Colin R. Harris - Director and Chief Operating Officer of the Sub-Adviser. (iii) Shreekant P. Panday - Director of the Sub-Adviser. (iv) Andrew J.W. Powell - Director of the Sub-Adviser. ITEM 29. PRINCIPAL UNDERWRITERS (a) Inapplicable (b) POSITION WITH POSITION WITH NAME UNDERWRITER REGISTRANT Frank H. Scott President President and a Trustee Edward J. Blake Vice President None Stephen M. Miller Treasurer None The address of the above-named persons is 2480 Kettering Tower, Dayton, Ohio 45423. (c) Inapplicable ITEM 30. LOCATION OF ACCOUNTS AND RECORDS Accounts, books and other documents required to be maintained by Section 31(a) of the Investment Company Act of 1940 and the Rules promulgated thereunder will be maintained by the Registrant at its offices located at 2480 Kettering Tower, Dayton, Ohio 45423 as well as at the offices of the Registrant's transfer agent located at 312 Walnut Street, 21st Floor, Cincinnati, Ohio 45202. ITEM 31. MANAGEMENT SERVICES NOT DISCUSSED IN PARTS A OR B Inapplicable ITEM 32. UNDERTAKINGS (a) Inapplicable
485B24F124th Page of 126TOC1stPreviousNextBottomJust 124th
(b) The Registrant undertakes to file a post-effective amendment, using financial statements of the International Value Fund which need not be certified, within four to six months from the effective date of this Registration Statement. (c) The Registrant 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. (d) The Registrant undertakes to call a meeting of shareholders, if requested to do so by holders of at least 10% of the Fund's outstanding shares, for the purpose of voting upon the question of removal of a trustee or trustees and to assist in communications with other shareholders as required by Section 16(c) of the Investment Company Act of 1940.
485B24F125th Page of 126TOC1stPreviousNextBottomJust 125th
SIGNATURES Pursuant to the requirements of the Securities Act of 1933 and the Investment Company Act of 1940, the Registrant certifies that it meets all of the requirements for effectiveness of the Registration Statement pursuant to Rule 485(b) under the Securities Act of 1933 and has duly caused this Registration Statement to be signed below on its behalf by the undersigned, thereunto duly authorized, in the City of Dayton and State of Ohio, on the 1st day of October, 1997. DEAN FAMILY OF FUNDS By:/S/ FRANK H. SCOTT Frank H. Scott President Pursuant to the requirements of the Securities Act of 1933, this Registration Statement has been signed below by the following persons in the capacities and on the dates indicated. SIGNATURE TITLE DATE /S/ FRANK H. SCOTT President October 1, 1997 Frank H. Scott and Trustee /S/ MARK J. SEGER Treasurer October 1, 1997 ---------------------------- Mark J. Seger /S/ CHAUNCEY H. DEAN Trustee October 1, 1997 ----------------------------- Chauncey H. Dean /S/ ROBERT D. DEAN Trustee October 1, 1997 ----------------------------- Robert D. Dean /S/ VICTOR S. CURTIS Trustee October 1, 1997 ----------------------------- Victor S. Curtis
485B24FLast Page of 126TOC1stPreviousNextBottomJust 126th
Trustee Frank J. Perez* By:/S/TINA D. HOSKING Tina D. Hosking Attorney-in-Fact* October 1, 1997 Trustee David H. Ponitz* Trustee Gilbert P. Williamson*

Dates Referenced Herein   and   Documents Incorporated by Reference

Referenced-On Page
This ‘485B24F’ Filing    Date First  Last      Other Filings
4/1/997374
3/31/988524F-2NT,  N-30D,  NSAR-B
Filed on / Effective on:10/1/974126
9/19/9786
8/31/973119
8/19/97896
8/1/97896
5/28/97896
3/18/9789
3/17/973117
12/18/964397
 List all Filings 
Top
Filing Submission 0000891804-97-000327   –   Alternative Formats (Word / Rich Text, HTML, Plain Text, et al.)

Copyright © 2024 Fran Finnegan & Company LLC – All Rights Reserved.
AboutPrivacyRedactionsHelp — Fri., Mar. 29, 8:15:01.2am ET