[FRONT COVER]

                                                                  Philadelphia
                                                                    Fund, Inc.

                                                              Established 1923

                                                        A diversified open end
                                                       investment company with
                                                     an objective of long-term
                                                             growth of capital
                                                                    and income

                   [Logo]

                                                                 APRIL 1, 2008



As with all mutual funds, the Securities and Exchange Commission has not
approved or disapproved these securities or passed upon the adequacy of this
prospectus. Any representation to the contrary is a criminal offense.


                                  PROSPECTUS

                                 [Back Cover]

                            PHILADELPHIA FUND, INC.
                               Established 1923
                     1200 North Federal Highway, Suite 424
                           Boca Raton, Florida 33432
                                (561) 395-2155

        Shareholders may make inquiries regarding the Fund by calling:
        -------------------------------------------------------------
        |                    Shareholder Services                   |
        |                       1-800-525-6201                      |
        -------------------------------------------------------------

A Statement of Additional Information (dated April 1, 2008) which includes
additional information about the Fund, is incorporated in this prospectus by
reference.

The Fund's Statement of Additional Information, annual report, semi-annual
report  and other information are available, without charge, upon request, by
writing to the above address, by visiting the Fund's Internet website at
http://www.philadelphiafund.com, by electronic request at the Fund's e-mail
address: request@philadelphiafund.com, or by calling 1-800-749-9933.

Additional information about the Fund's investments is available in the Fund's
annual and semi-annual reports to shareholders.  In the Fund's annual report,
you will find a discussion of the market conditions and investment strategies
that significantly affected the Fund's performance during its last fiscal
year.

Information about the Fund, including the Statement of Additional Information,
can be reviewed and copied at the Commission's Public Reference Room in
Washington D.C. You may obtain information on the operation of the Public
Reference Room by calling the Commission at 1-202-942-8090.

Reports, material incorporated by reference, the Statement of Additional
Information, and other information about the Fund are available on the EDGAR
Database on the Commission's Internet site at http://www.sec.gov. Copies of
this information may be obtained, after paying a duplicating fee, by electronic
request at the following E-mail address: publicinfo@sec.gov, or by writing the
Commission's Public Reference Section, Washington, D.C. 20549-0102.

SEC File Nos.: 2-10698 and 811-505



                    TABLE OF CONTENTS
                                                                    PAGE
                    Investments, Risks and Performance  . . . . . .   2
                    Fees and Expenses of the Fund   . . . . . . . .   3
                    Disclosure of Portfolio Holdings  . . . . . . .   4
                    Financial Highlights  . . . . . . . . . . . . .   4
                    Fund History  . . . . . . . . . . . . . . . . .   4
                    Investment Objective and Principal Strategies .   4
                    Policies and Non-Principal Strategies   . . . .   5
[LOGO]              Principal Risks   . . . . . . . . . . . . . . .   6
                    Management of the Fund  . . . . . . . . . . . .   7
                    Purchase of Shares  . . . . . . . . . . . . . .   7
                    Calculation of Net Asset Value  . . . . . . . .   8
                    Special Purchase Plans  . . . . . . . . . . . .   9
                    Redemption of Shares  . . . . . . . . . . . . .   9
                    Frequent Purchases and Redemptions
                       of Fund Shares   . . . . . . . . . . . . . .  10
                    Dividends, Capital Gains Distributions,
                       and Taxes  . . . . . . . . . . . . . . . . .  11
                    Performance . . . . . . . . . . . . . . . . . .  11
                    Fund Service Providers  . . . . . . . . . . . .  12




                                            INVESTMENTS, RISKS AND PERFORMANCE

OBJECTIVE

The Fund's investment objective is to achieve long-term growth of capital and
income.


PRINCIPAL STRATEGIES

The Fund will invest primarily in common stocks traded on the major U.S.
security exchanges and U.S. Treasury notes and bonds and U.S. Government agency
notes and bonds. Securities are bought and held with long-term goals in
view.

Baxter Financial Corporation, the Fund's investment advisor (the "Advisor"),
uses fundamental analysis to select stocks which are believed to be
undervalued.  This undervaluation may be perceived for one or more of the
following reasons: undervalued assets, low price to earnings ratio, low price
in relation to market dominance, ability to control prices, low price to cash
flow, and high percentage return on equity.  Other factors considered before
investing include market capitalization size, corporate business strategy,
industry position, trading liquidity, trading activity of officers, directors
and large stockholders, good management, protection from competition, and
dividend yield.

The Advisor selects U.S. Treasury and U.S. Government agency notes and bonds
based upon the Advisor's analysis of the following factors: the state of the
economy, Federal Reserve Board policies, the historical shape of the yield
curve and the current shape of the yield curve. Based on its analysis, the
Advisor identifies a specific range of maturities of fixed income securities
that the Advisor believes present an enhanced potential for capital gains.  In
some cases, the Advisor will acquire U.S. Treasury and U.S. Government agency
notes and bonds for the Fund that possess greater opportunity for yield.

The Fund generates income by investing in stocks that pay dividends,
commercial paper, and U.S. Treasury and U.S. Government agency fixed income
securities.

The Fund's portfolio is diversified.

The Fund's portfolio usually consists of 20 - 30 different stocks.

The Advisor takes into consideration the tax implications for shareholders of
Fund trading activity by attempting to balance capital gains and losses
resulting from portfolio transactions.


PRINCIPAL RISKS

MARKET RISK. Stock prices rise and decline in response to investors'
perception of the activities of individual companies and general market and
economic conditions. The value of your investment in the Fund is not
guaranteed and will vary from day to day, which means that you could lose
money.

RISK OF LIMITED HOLDINGS. The price of an individual security may be more
volatile and perform differently from the market as a whole.  As the Fund
usually owns 20 - 30 stocks,  its performance may be more vulnerable to changes
in the market value of a single security than funds with more stocks in their
portfolios.

INTEREST RATE RISK. Increasing interest rates cause decreases in debt
securities' prices and can slow overall economic activity, which often leads to
lower equity prices.

INVESTMENT ADVISOR RISK.  The Fund is actively managed, and the success of the
Fund's investment strategy depends significantly on the Advisor's skill in
assessing the potential of the securities in which the Fund invests.  The
Advisor will apply investment techniques and risk analysis in making investment
decisions for the Fund, but there can be no guarantee that these will produce
the intended results.  The Advisor may be incorrect in its assessment of the
value of securities or its assessment of market trends, which can result in
losses to the Fund.  In some cases, investments may be unavailable, or the
Advisor may choose not to purchase them under market conditions when the
acquisition of such investments, in hindsight, may be determined to be
beneficial to the Fund.

VALUE STYLE RISK.  Value investing involves buying stocks that are out of favor
and/or undervalued in comparison to their peers or their prospects for growth.
Typically, the valuation levels of these stocks are lower than those of growth
stocks.  A company may be undervalued due to market or economic conditions,

                                      2

temporary earnings declines, unfavorable developments affecting the company and
other factors, or because the company is associated with a market sector that
is not favorably regarded by investors.  Because different types of stocks
attract varying levels of interest by investors, depending on market and
economic conditions, the Fund's returns may be adversely affected during market
downturns and when value stocks are not in demand.  Value stocks also may
remain undervalued.  The market may not recognize a company's true intrinsic
value for a long time, or a company judged to be undervalued may be
appropriately priced.  Value stocks, as a group, may underperform the overall
equity market for a long period of time, and may not realize their full
economic value, while the market concentrates on growth stocks.

COMMON STOCK RISK.  The Fund will invest in common stocks. Although common
stocks have historically generated higher average returns than fixed income
securities over the long term, common stocks also have experienced
significantly more volatility in those returns.  An adverse event, such as an
unfavorable earnings report, may depress the value of a particular common stock
held by the Fund.  Also, the price of common stocks are sensitive to general
movements in the stock market, and a drop in the stock market may depress the
prices of common stocks to which the Fund has exposure.  Common stock prices
fluctuate for several reasons, including: changes in investors' perceptions of
the financial condition of an issuer; the general condition of the relevant
stock market; or when political or economic events affecting issuers of common
stock occur.  Common stock prices may be particularly sensitive to rising
interest rates, as the cost of capital rises and borrowing costs increase.

The following information provides some indication of the risks of investing
in the Fund by showing changes in the Fund's performance from year to year and
by showing how the Fund's average annual returns for 1, 5, and 10 years
compare with those of a broad measure of market performance. Past performance,
before and after taxes, is not predictive of future performance.

   [Bar chart showing Fund's annual calendar year total returns as follows.]

                             Philadelphia Fund, Inc.
                         Annual Total Returns 1998 - 2007

                                 1998   11.13%
                                 1999    0.57%
                                 2000    4.73%
                                 2001   -7.02%
                                 2002   -8.58%
                                 2003   18.26%
                                 2004   20.13%
                                 2005    8.34%
                                 2006   12.98%
                                 2007    6.37%


During the periods shown in the bar chart, the highest return for a quarter
was 11.58% (quarter ending June 30, 2003) and the lowest return for a quarter
was -8.90% (quarter ending September 30, 2002).

After-tax returns are calculated using the historical highest individual
federal marginal income tax rates, and do not reflect the impact of state and
local taxes.  Actual after-tax returns depend on an investor's tax situation
and may differ from those shown, and the after-tax returns shown are not
relevant to investors who hold their Fund shares through tax-deferred
arrangements, such as 401(k) plans or individual retirement accounts.



     Average Annual Total Returns as of 12/31/07

                                           
	                         1 Year    5 Years   10 Years
PHILADELPHIA FUND
  Return Before Taxes	        6.37%    13.09%     6.29%

  Return After Taxes
  on Distributions              3.30%    11.54%     4.42%

  Return After Taxes
  on Distributions and          8.26%    11.33%     4.82%
  Sale of Fund Shares (t)

S&P 500 INDEX*
  (reflects no deduction
  for fees, expenses or taxes)  5.49%    12.82%     5.91%




*   The S&P 500(r) Index is a widely recognized unmanaged index of common
    stock prices.


t - Returns After Taxes on Distributions and Sale of Fund Shares may be
    higher than Before Tax Returns due to tax benefits resulting from a net
    capital loss upon the redemption of Fund shares.


                                                 FEES AND EXPENSES OF THE FUND

This table describes the fees and expenses that you may pay if you buy and
hold shares of the Fund.

                                      3

                               SHAREHOLDER FEES
                   (fees paid directly from your investment)

                 None
                        ANNUAL FUND OPERATING EXPENSES
                 (expenses that are deducted from Fund assets)

              Management Fee ..........................    .75%
              Administrative Fee ......................    .25%
              12b-1 Fees     ..........................    .15%
              Other Expenses ..........................    .35%
                                                         -----
                 Total Annual Fund Operating Expenses..   1.50%
                                                         =====

EXAMPLE

This Example is intended to help you compare the cost of investing in the Fund
with the cost of investing in other mutual funds.

The Example illustrates the expenses that you would pay on a $10,000
investment for the time periods indicated, assuming:

  [BULLET]  a 5% annual rate of return
  [BULLET]  redemption at the end of each time period
  [BULLET]  Fund operating expenses remain the same

Although your actual costs may be higher or lower, based on these assumptions
your costs would be:

                      1 YEAR  3 YEARS  5 YEARS  10 YEARS
                      ------  -------  -------  --------
                       $153    $474     $818     $1,791


                                               DISCLOSURE OF PORTFOLIO HOLDINGS

A description of the Fund's policies and procedures with respect to the
disclosure of the Fund's portfolio holdings is available in the Fund's
Statement of Additional Information.


                                                          FINANCIAL HIGHLIGHTS

The data set forth under the caption "Financial Highlights" in the Annual
Report to Stockholders for the fiscal year ended November 30, 2007 is
incorporated herein by reference. Additional information about the Fund's
investments is available in the Fund's annual and semi-annual reports to
shareholders.  In the Fund's annual report, you will find a discussion of the
market conditions and investment strategies that significantly affected the
Fund's performance during its last fiscal year. The Fund's annual report and
semi-annual report are available, without charge, upon request, by writing to
the address or by calling the number on the back cover of this prospectus. The
annual and semi-annual reports are also available on the Fund's Internet
website at http://www.philadelphiafund.com.


                                                                  FUND HISTORY

The Fund, a Maryland corporation, is the surviving corporation of a merger
with Philadelphia Fund, Inc., a Delaware corporation.  On November 30,
1984, the Fund was reorganized for the purpose of continuing the operations
of the Delaware corporation.  The sole purpose of the merger was to change the
Fund's state of incorporation from Delaware to Maryland.  The Delaware
corporation was incorporated on July 5, 1945 for the purpose of acquiring and
continuing the business of the Securities Fund, an unincorporated investment
company organized in 1923.

The Securities Fund, predecessor of the Philadelphia Fund, was organized in
1923 by W. Wallace Alexander.  He and his associates managed the Securities
Fund until December 1928 when W. Wallace Alexander, Inc. became the manager.
W. Wallace Alexander, Inc. remained the manager of the Securities Fund until
its acquisition by Philadelphia Fund, when Alexander Investment Management Co.
became the manager.  Over the years, the Fund has been managed by several
investment advisors.  The Fund's current investment advisor is Baxter
Financial Corporation.


                                INVESTMENT OBJECTIVE AND PRINCIPAL STRATEGIES

The Fund's investment objective is to achieve long-term growth of capital and
income.  This goal may be changed only by the vote of a majority of the shares
of the Fund. The Advisor endeavors to meet the Fund's objective but there can
be no assurance that the Fund's investments will achieve the Advisor's
expectations.

The shares of the Fund provide a convenient way for investors
to own, at a reasonable cost, an interest in a

                                      4


carefully selected and supervised portfolio of investments.   The shares
represent ownership of a program designed and managed for long-term growth
of capital and income.

The Fund will invest primarily in common stocks with a market value greater
than $150 million traded on the major U.S. security exchanges.

The Advisor uses fundamental analysis to select stocks which are believed to
be undervalued.  The Advisor considers the following criteria to evaluate
whether a stock may be undervalued:

     [BULLET] Price to earnings ratio less than growth rate of
              sales and/or earnings.
     [BULLET] Return on equity greater than 15%.
     [BULLET] Price to sales ratio less than 1.
     [BULLET] Price to book ratio less than 1.
     [BULLET] Price to cash flow ratio less than 6.

Each of these criteria may indicate that a stock is undervalued.  The Advisor
considers stocks with as many of these criteria as possible, but does not
require that all or any exist prior to investment.  Other factors considered
before investing include low price in relation to market dominance, ability to
control prices, market capitalization size, corporate business strategy,
industry position, trading liquidity, trading activity of officers, directors
and large stockholders, good management, protection from competition, and
dividend yield. Investments are held until the stock meets the Advisor's
projections, the original criteria used to select the investment no longer
exist, or an investment opportunity believed to be superior presents itself.

The Fund's portfolio usually consists of 20 - 30 different stocks, which is
less than the number of stocks held by the typical diversified mutual fund.
This strategy stems from the belief that there are a limited number of
investment ideas available and allows the Advisor to focus on companies with
the greatest potential for investment return balanced with minimal risk.

The Fund generates income by investing in stocks that pay dividends,
commercial paper, and U.S. Treasury notes and bonds and U.S. Government agency
notes and bonds.  U.S. Treasury and U.S. Government agency notes and bonds are
selected based upon the Advisor's analysis of the following factors: the state
of the economy, Federal Reserve Board policies, the historical shape of the
yield curve and the current shape of the yield curve. Based on its analysis,
the Advisor identifies a specific range of maturities of fixed income
securities that the Advisor believes present an enhanced potential for capital
gains.  In some cases, the Advisor will acquire U.S. Treasury and U.S.
Government agency notes and bonds for the Fund that possess greater opportunity
for yield. When the Advisor believes a decline in interest rates is imminent,
fixed income investments may also be purchased for the purpose of capital
appreciation, as prices tend to rise as interest rates fall.  When the Fund
invests in fixed income securities for this reason, it may invest in any rated
or unrated security.

The Advisor takes into consideration the tax implications for shareholders by
attempting to balance capital gains and losses resulting from portfolio
transactions. Unexpected declines in securities prices sometimes cause the
Advisor to realize capital losses.  Unexpected increases in securities prices
sometimes cause the Advisor to realize capital gains.  Both of these actions
are taken with full consideration given to the Fund's current realized and
unrealized gain (loss) position and the tax implications to shareholders.


                                         POLICIES AND NON-PRINCIPAL STRATEGIES

The Fund may, from time to time, take temporary defensive positions that are
inconsistent with the Fund's principal investment strategies in attempting to
respond to adverse market, economic, political or other conditions.  Under
these conditions, the Fund may place some or all of its assets in cash or cash
equivalents in an attempt to preserve capital and avoid potential losses.
However, it is possible the Fund may not achieve its investment objective
under these circumstances.

Cash balances in excess of daily operating needs are invested in the highest
rated commercial paper available and U.S. Treasury Bills.

The Fund may hold cash, cash equivalents, bonds, and/or preferred stocks to
the extent deemed prudent to achieve its investment objective.

                                      5

The Fund will not at the time of purchase invest more than 5% of its assets in
the securities of any one company nor will the Fund buy more than 10% of the
voting stock of any one company.

The Fund may invest in rated or unrated fixed income securities.

The Fund will not purchase securities of companies if such purchase would
cause more than 25% of the Fund's assets to be invested in the securities of
companies in any single industry.

The Fund may buy and sell covered (options on securities owned by the Fund)
and uncovered (options on securities not owned by the Fund) call and put
options which are issued by the Options Clearing Corporation and are listed on
national securities exchanges. Generally, options would be used either to
generate income or to limit the downside risk of a portfolio holding.

The Fund may buy and sell financial futures contracts and options on such
contracts. Futures contracts may be used to implement a number of different
hedging strategies.

The Fund's portfolio usually has a low turnover ratio because securities,
other than options, are bought and held with long-term goals in view and this
normally results in the infrequent replacement of the portfolio's investments.
However, the Advisor is free to make any portfolio changes which, in its
judgment, are in the best interests of shareholders.


                                                               PRINCIPAL RISKS

MARKET RISK. Stocks prices rise and decline in response to investors'
perceptions of the activities of individual companies and general market and
economic conditions. The value of your investment in the Fund is not
guaranteed, and will vary from day to day, which means that you could lose
money. Political upheaval and social unrest, wars, threat of war, and the
numerous factors of the human race have an impact on economic conditions.  In
turn, this influences the decisions to retain different stocks in the
portfolio or to reinvest in the stocks of companies which are better suited
to a changing or changed environment.  The portfolio may suffer losses in this
replacement process.

RISK OF LIMITED HOLDINGS. The price of an individual security may be more
volatile and perform differently from the market as a whole.  As the Fund
usually owns 20 - 30 stocks, its performance may be more vulnerable to changes
in the market value of a single security than funds with more stocks in their
portfolios.  For example, a portfolio owning 20 stocks of equal value will be
influenced twice as much by the fortunes or misfortunes of one company than a
portfolio holding 40 stocks of equal value.

INTEREST RATE RISK. Increasing interest rates cause decreases in debt
securities' prices and can slow overall economic activity, which often leads to
lower equity prices.  The level of interest rates in the economy is the
primary determinant of the level of economic activity which determines if
there is growth and at what rate.  It determines the level of employment and
influences every aspect of economic endeavor.  The level of interest rates in
foreign countries influences those respective economies, which over the
long run may effect the American economy.  Misjudging the trend of interest
rates may have a negative effect on the portfolio.

INVESTMENT ADVISOR RISK.  The Fund is actively managed, and the success of the
Fund's investment strategy depends significantly on the Advisor's skill in
assessing the potential of the securities in which the Fund invests.  The
Advisor will apply investment techniques and risk analysis in making investment
decisions for the Fund, but there can be no guarantee that these will produce
the intended results.  The Advisor may be incorrect in its assessment of the
value of securities or the assessment of market trends, which can result in
losses to the Fund.  In some cases, investments may be unavailable, or the
Advisor may choose not to purchase them under market conditions when the
acquisition of such investments, in hindsight, may be determined to be
beneficial to the Fund.

VALUE STYLE RISK.  Value investing involves buying stocks that are out of favor
and/or undervalued in comparison to their peers or their prospects for growth.
Typically, the valuation levels of these stocks are lower than those of growth
stocks.  A company may be

                                      6

undervalued due to market or economic conditions, temporary earnings declines,
unfavorable developments affecting the company and other factors, or because
the company is associated with a market sector that is not favorably regarded
by investors.  Because different types of stocks attract varying levels of
interest by investors, depending on market and economic conditions, the Fund's
returns may be adversely affected during market downturns and when value stocks
are not in demand.  Value stocks also may remain undervalued.  The market may
not recognize a company's true intrinsic value for a long time, or a company
judged to be undervalued may be appropriately priced.  Value stocks, as a
group, may underperform the overall equity market for a long period of time,
and may not realize their full economic value, while the market concentrates
on growth stocks.

COMMON STOCK RISK.  The Fund will invest in common stocks. Although common
stocks have historically generated higher average returns than fixed income
securities over the long term, common stocks also have experienced
significantly more volatility in those returns.  An adverse event, such as an
unfavorable earnings report, may depress the value of a particular common stock
held by the Fund.  Also, the prices of common stocks are sensitive to general
movements in the stock market, and a drop in the stock market may depress the
prices of common stocks to which the Fund has exposure.  Common stock prices
fluctuate for several reasons, including: changes in investors' perceptions of
the financial condition of an issuer; the general condition of the relevant
stock market; or when political or economic events affecting issuers of common
stock occur.  Common stock prices may be particularly sensitive to rising
interest rates, as the cost of capital rises and borrowing costs increase.


                                                        MANAGEMENT OF THE FUND

The strength of Philadelphia Fund, and any success it may achieve for
shareholders, depend chiefly upon the character, experience, and judgment of
the persons managing its activities. Baxter Financial Corporation ("BFC" or
the "Advisor") provides the Fund with investment advice and recommendations
regarding the investment and reinvestment of the Fund's assets. For the fiscal
year ended November 30, 2007, the Fund paid BFC total advisory fees equal to
..75% of the Fund's average net assets on an annual basis. A discussion
regarding the basis for the Fund's board of directors' approval of the
investment advisory agreement between the Fund and the Advisor is available in
the Fund's semi-annual report to shareholders for the six month period ended
May 31, 2007.

Donald H. Baxter, President, Treasurer, Director, and sole shareholder of the
Advisor, is responsible for selecting brokers to execute Fund portfolio
transactions and is authorized to place Fund securities transactions with
dealers who sell shares of the Fund. Mr. Baxter is primarily responsible for
the day-to-day management of the Fund's portfolio.  He has been the Fund's
portfolio manager since May, 1987. Mr. Baxter is also President and Director of
the Fund and Eagle Growth Shares, Inc., another registered investment company.
BFC also serves as investment advisor to other institutional and individual
investors, including Eagle Growth Shares, Inc.  Further information about the
Fund's portfolio manager's compensation, other accounts managed by Mr. Baxter,
and Mr. Baxter's ownership of Fund shares, is found in the Fund's Statement of
Additional Information.

Under a Distribution Plan approved by the Board of Directors, the Fund may
make monthly payments of not more than 1/24 of 1% (.5% annually) of the net
assets of the Fund to defray: (a) expenses associated with the sale of Fund
shares, and (b) services to existing shareholders. The service fee, which may
not exceed, on an annual basis, .25% of the average net asset value of the
Fund, is intended to defray the cost of providing personal services to the
Fund's existing shareholders.  For the fiscal year ended November 30, 2007,
the Fund paid distribution expenses under the Plan equal to .15% of average
net assets. BFC has agreed to reduce the Fund's 12b-1 fees to .15% per
annum of the Fund's average net assets until further notice. As a consequence
of the Fund's Distribution Plan, long-term shareholders may pay more than the
economic equivalent of the maximum front-end sales charge permitted by the
NASD Conduct Rules.


                                                            PURCHASE OF SHARES

The shares of the Fund are available through the distributor of the
Fund's shares.

When making an initial investment, shares may be purchased by completing and
signing the General

                                      7

Account Application, which should be remitted, together with payment for the
shares, to the Fund's transfer agent at the following address: Unified Fund
Services, Inc., P.O. Box 6110, Indianapolis, IN 46206-6110. Once an account
is established, subsequent investments should be sent to Unified Fund Services,
Inc., P.O. Box 6110, Indianapolis, IN 46206-6110.  Subsequent purchase orders
must contain your name, your account number(s), the name(s) on your account(s)
and payment for the shares.  A confirmation will be mailed to the investor
showing the shares purchased, the exact price paid for the shares, and the
total number of shares that are owned. If payment is not received with the
purchase request, the transaction will not be processed (unless made by a
financial intermediary with a current dealer agreement with the Fund) and the
shareholder will be contacted for further instructions. Investors who are
interested in information about purchasing shares may also contact the Fund
at 1-800-749-9933.  The minimum initial investment in the Fund is $1,000, and
there is no minimum amount for subsequent investments in the Fund.  The Fund
retains the right to waive the minimum initial investment at its discretion.
Purchases of shares will be made in full and fractional shares calculated to
three decimal places.  Certificates for shares of stock will not be issued.
Shares may also be purchased and sold through securities firms which may
charge a service fee or commission for such transactions.  No fee or
commission is charged on shares which are purchased from or redeemed by the
Fund directly.

Orders received by Unified Fund Services, Inc., the Fund's transfer agent,
prior to the close of the New York Stock Exchange, generally 4:00 p.m., Eastern
time, will be confirmed at the offering price next calculated, provided the
order is received by the transfer agent prior to that time. Orders received
subsequent to that time will be confirmed at the offering price effective at
the close of the New York Stock Exchange on the next business day.

Automatic Investment Plan investors and Check Withdrawal Plan investors will
receive confirmations of purchases and redemptions of Fund shares on a
quarterly basis, not later than five business days after the end of each
calendar quarter in which a transaction takes place. The confirmation will
show the date of each transaction during the period, number of shares, and
price paid or received for shares purchased or redeemed, including dividends
and distributions, and total number of shares owned by the investor as of the
end of the period.


                                                CALCULATION OF NET ASSET VALUE

The price of your Fund shares is based on the Fund's net asset value. The
Fund's net asset value is determined using the closing sales prices of the
Fund's investment securities on the markets on which they are principally
traded, except those securities traded on the Nasdaq NMS and Small Cap
exchanges ("Nasdaq"). Securities traded on Nasdaq will be valued at the Nasdaq
Official Closing Price. If market quotations are not readily available, or
become unreliable, securities will be valued by the Advisor at their fair
values as determined in good faith in accordance with procedures approved
by the Board of Directors. The Fund will also value a security at fair value
if an event that materially affects the value of the security occurs after
the close of the principal market on which such security trades, but before
the Fund calculates its net asset value.

If market quotations or official closing prices are not readily available, or
have become unreliable, the securities will be priced using fair valuation
methods approved by the Board.  The Advisor may value a portfolio security
using fair value pricing if the exchange on which the security is principally
traded closes early, or if trading in the security is halted during the day
and does not resume prior to the time that the Fund calculates its net asset
value. The price of a security determined using fair value procedures may
differ from the security's most recent exchange closing price, and from the
prices used by other mutual funds that own the security to calculate their net
asset values.

The net asset value is computed as of the close of the New York Stock
Exchange, generally 4:00 p.m., Eastern time, on each day the New York
Stock Exchange is open for trading.

Orders for Fund shares received by the Fund's transfer agent, Unified Fund
Services, Inc., prior to that time are priced at the net asset value next
calculated, provided the order is received together with payment for the
shares prior to such close of the New York Stock Exchange.  In addition,
new accounts must include a completed account application.  Orders received

                                      8

subsequent to the close of the New York Stock Exchange will be priced at the
net asset value calculated at the close of the New York Stock Exchange on the
next business day.


                                                       SPECIAL PURCHASE PLANS

TAX SHELTERED PLANS. The Fund makes available through its transfer agent the
following Retirement Accounts:


               [Bullet] Traditional Individual Retirment Account (IRA)

               [Bullet] Roth IRA

               [Bullet] SIMPLE IRA

               [Bullet] SEP-IRA

               [Bullet] Coverdell Education Savings Account

               [Bullet] 403(b)(7) Custodial Account

For self-employed individuals, partnerships, and corporations, investments in
shares of the Fund can be made through a prototype Profit Sharing/Money
Purchase Pension Plan which has been approved by the Internal Revenue Service.

Forms to establish any of the above plans are available from the Fund or Baxter
Financial Corporation.

AUTOMATIC INVESTMENT PLAN.  The Automatic Investment Plan enables
shareholders to make regular monthly investments in shares through automatic
charges to their bank checking accounts.  The Fund's $1,000 minimum initial
investment shall be waived for Automatic Investment Plan participants making
regular monthly payments of at least $50.00 per month.


                                                          REDEMPTION OF SHARES

Investors may redeem their shares by requesting a redemption in writing to
Unified Fund Services, Inc., P.O. Box 6110, Indianapolis, IN 46206-6110.  Upon
redemption, the investor will receive the net asset value of his shares
calculated as of the close of the New York Stock Exchange (generally 4:00 p.m.
Eastern time) following the receipt of properly tendered shares.  A proper
tender of shares means that if the investor holds share certificates, they must
be signed as registered and the signatures must be guaranteed.  To redeem
shares for which certificates have not been issued - those held for the
account of the investor by Unified Fund Services, Inc. - all registered
holders must sign and deliver to the Fund or to Unified Fund Services, Inc. a
written request for redemption specifying the shares to be redeemed with
signatures guaranteed.

_______________________________________________________________________________
|                                                                             |
| A signature guarantee helps protect you and the Fund against fraud.         |
| You may obtain a signature guarantee from commercial banks, securities      |
| dealers, trust companies, member firms of a domestic stock exchange         |
| (such as the New York Stock Exchange or a regional stock exchange),         |
| certain credit unions, certain savings associations, overseas banks with a  |
| domestic correspondent or branch, or other eligible guarantor institutions. |
| A signature guarantee may not be obtained through a notary public.  All     |
| documentation requiring a signature guarantee must utilize a New Technology |
| Medallion Stamp.                                                            |
|_____________________________________________________________________________|

Any questions regarding which institutions may guarantee signatures should be
directed to Unified Fund Services, Inc. at 1-800-525-6201.  Neither the Fund
nor its underwriter charge any fee on these transactions.  The Fund's policy
is to pay promptly when shares are presented for redemption; it is obligated
to pay within seven days after the date of tender, except when the securities
exchanges are closed or an emergency exists.

Proceeds for the redemption of Fund shares purchased by check, ACH, or through
the Automatic Investment Program will be delayed until the Fund verifies that
it has received good payment, which may take up to 15 business days.  If you
purchase shares by Federal funds, you will avoid this delay.

The Fund reserves the right, after sending the shareholder at least sixty
(60) days prior written notice, to redeem the shares held by any shareholder
if the shareholder's account has been inactive for a period of six (6) months
preceding the notice of redemption and the total value of the shareholder's
shares does not exceed $500 as of the proposed redemption date.  An account
will be considered inactive if no new purchases have been made (excluding
shares purchased through the reinvestment of dividends and capital gains)
within the specified time period. Any redemptions by the Fund pursuant to
this procedure will be at the net asset value of the shares calculated as of
the close of the New York

                                      9

Stock Exchange on the stated redemption date and a check for the redemption
proceeds will be sent to the shareholder not more than seven (7) days later.

When in the best interests of the Fund, the Fund may make a redemption payment,
in whole or in part, by a distribution of liquid portfolio securities in lieu
of cash (an "in-kind" redemption).  Such distributions will be made in
accordance with the federal securities laws and regulations governing mutual
funds. Investors may incur brokerage charges and other transaction costs
selling securities that were received in payment of redemptions.  The investor
also would bear the risk that the prices of the securities distributed in an
"in-kind" redemption could rise or decline before the securities can be sold.

The Fund also makes available a Check Withdrawal Plan about which further
information may be obtained by writing or calling the Fund, or by obtaining a
copy of the Statement of Additional Information.


                              FREQUENT PURCHASES AND REDEMPTIONS OF FUND SHARES

The Fund is designed for long-term investors, and is not intended for investors
that engage in excessive short-term trading activity that may be harmful to the
Fund, including but not limited to market timing.  The Fund discourages
frequent purchases and redemptions of Fund shares by investors, and will not
accommodate investors seeking to make frequent purchases and redemptions of
Fund shares.  This policy includes purchases and redemptions in response to
short-term market fluctuations.  The frequent trading into and out of the Fund
presents a number of risks, including interfering with or disrupting the Fund's
portfolio management strategies, harming Fund performance and increased
brokerage and administrative costs for the Fund, which dilute the value of Fund
shares held by the Fund's long-term shareholders (who do not generate these
costs).

In order to deter market timing in Fund shares, the Board of Directors of the
Fund has adopted policies and procedures that provide that the Fund may refuse
or cancel purchase orders that the Fund or the Advisor believes are made on
behalf of market timers.  The Fund and its agents reserve the right to reject
any purchase request by any investor indefinitely if the Fund or its agents
believe that any combination of trading activity is potentially disruptive to
the Fund.  Any restrictions that are imposed to prevent or minimize frequent
purchases and redemptions are uniformly applied, including trades that occur
through omnibus accounts at financial intermediaries ("Intermediaries"), such
as investment advisers, broker-dealers, transfer agents, third party
administrators and insurance companies.  In addition, the Fund may impose
further restrictions on suspected market timers' trading activities in the
future.

The following procedures have been implemented in order to discourage Fund
share transactions initiated by market timers:

  [BULLET] Any shareholder that purchases shares of the Fund in an amount
           greater than $25,000 and redeems those shares within 10 business
           days will be  prohibited from purchasing additional Fund shares for
           12 months from the redemption date.  The prohibition on purchasing
           additional Fund shares for 12 months from the redemption date may
           be waived for shareholders that participate in an Automatic
           Investment Program.  The Advisor will determine whether the
           prohibition should be waived on a case by case basis for Automatic
           Investment Program participants.

  [BULLET] Management reserves the right to reject any Fund share purchase
           request greater than $250,000 if management believes the order is
           being made by a market timer.

Although these policies and procedures are designed to discourage market timing
and excessive trading, none of these tools alone, nor all of them together,
completely eliminates the potential for frequent trading.

The ability to monitor trades that are placed through omnibus accounts
maintained by Intermediaries is severely limited.  Omnibus accounts aggregate
the transactions of underlying shareholders, thus making it difficult to
identify individual underlying account holder activity.  In addition, some
Intermediaries may be unable, or unwilling, to abide by any Fund-imposed
trading or exchange restrictions.  For these reasons, the procedures cannot
eliminate completely the possibility of excessive short-term trading.  The Fund
seeks

                                      10

compliance by Intermediaries with the policies by requesting that the
Intermediaries, from time to time, identify to the Fund those investors known
to the Intermediaries to have investment horizons inconsistent with those of
the Fund.


                                                      DIVIDENDS, CAPITAL GAINS
                                                      DISTRIBUTIONS, AND TAXES

The Fund intends to pay dividends of its net investment income on a quarterly
basis.  Any capital gain distributions will be paid annually on approximately
December 31st.

If you are a taxable investor and invest in the Fund shortly before it pays a
dividend or makes a capital gain distribution, you may receive some of your
investment back in the form of a taxable dividend or distribution.

Dividends and capital gain distributions paid to taxable investors are subject
to Federal income tax. This is true whether you elect to receive dividends and
capital gain distributions in additional shares of the Fund at net asset
value or to receive cash.  If you are a taxable investor, dividends, together
with distributions of any short-term capital gains, are taxable as ordinary
income.  Taxable investors pay Federal income taxes at long-term capital gains
rates on realized long-term capital gains which are distributed to them no
matter how long the investors have owned Fund shares.  A portion of dividends
designated by the Fund may be qualified dividend income eligible for taxation
by individual shareholders at long-term capital gains rates, provided certain
holding period requirements are met.

Annually, the Fund will provide each shareholder with a statement regarding
the tax status of dividends and distributions paid for the year.  Dividends
and capital gains distributed in January ordinarily will be included in the
shareholder's income for the previous year.

Shareholders who sell Fund shares may realize a gain or loss on those shares
based on the difference between the purchase price and the sale price of each
share. For shares held less than one year, your gain or loss is considered to
be short-term and is taxable as ordinary income.  For shares held longer than
one year, your gain or loss is considered to be long-term and generally is
taxable at your capital gains rate.

Dividends and capital gain distributions paid to shareholders and gains from
the sale or exchange of Fund shares generally are subject to state and local
taxes.  Non-U.S. investors may be subject to U.S. withholding and/or estate
tax, and are subject to special U.S. tax certification requirements.

By law, the Fund must withhold 28% of your taxable distributions and
redemption proceeds unless you:

     [BULLET] provide your correct social security or taxpayer identification
              number,

     [BULLET] certify that this number is correct,

     [BULLET] certify that you are not subject to backup withholding, and

     [BULLET] certify that you are a U.S. person (including a U.S. resident
              alien).

The Fund must also withhold if the IRS instructs it to do so.


                                                                   PERFORMANCE

Occasionally, total return data may be included in advertisements pertaining
to the Fund.  Standardized "total return" of the Fund refers to the average
annual compounded rates of return over certain periods of time that would
equate the initial amount invested in the Fund to the ending redeemable value
of the investment, and includes reinvestment of dividends and distributions
over the period for which performance is shown.  The Fund may advertise total
return figures which shall represent Fund performance over one or more time
periods, including (1) one-year to date, and (2) May 1, 1987 to date, the
latter being the date on which Mr. Donald H. Baxter assumed exclusive portfolio
management responsibilities for the Fund. Non-standardized total return
quotations may also be presented along with standardized figures.  Such
quotations may exclude certain types of deductions, such as certain Fund
expenses, which would otherwise reduce total return quotations.

The Fund may also advertise its investment performance by comparison to market
indices such as the S&P Index and to mutual fund indices such as those
reported by Lipper, Inc.  Such indices may group funds by investment objective
(in the Fund's case, typically in the "Growth and Income Funds" category),

                                      11

or may involve a more general ranking reflecting the Fund's overall performance
as compared to any number or variety of funds, regardless of investment
objective.


                                                     FUND SERVICE PROVIDERS

                         INVESTMENT ADVISOR, ADMINISTRATOR, AND DISTRIBUTOR
                                               Baxter Financial Corporation
                                      1200 North Federal Highway, Suite 424
                                                 Boca Raton, Florida  33432

                                                                  CUSTODIAN
                                                            U.S. Bank, N.A.
                                                          425 Walnut Street
                                                       Cincinnati, OH 45202

                               TRANSFER AGENT AND DIVIDEND DISBURSING AGENT
                                                Unified Fund Services, Inc.
                                                              P.O. Box 6110
                                                Indianapolis, IN 46206-6110

                                                              LEGAL COUNSEL
                                      Stradley, Ronon, Stevens & Young, LLP
                                                   2600 One Commerce Square
                                                     Philadelphia, PA 19103


                              INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
                                           Briggs, Bunting & Dougherty, LLP
                                                      Two Penn Center Plaza
                                                    Philadelphia, PA  19102

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