Registration Statement of an Open-End Management Investment Company — Form N-1A
Filing Table of Contents
Document/Exhibit Description Pages Size
1: N-1A EL Registration Statement of an Open-End Management 45± 184K
Investment Company
2: EX-1 Underwriting Agreement 27± 103K
3: EX-2 Plan of Acquisition, Reorganization, Arrangement, 5± 21K
Liquidation or Succession
N-1A EL — Registration Statement of an Open-End Management Investment Company
Document Table of Contents
UNITED STATES File No. 33-
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549File No. 811-
FORM N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 [X]
Pre-Effective Amendment No. [ ]
Post Effective Amendment No. [ ]
REGISTRATION STATEMENT UNDER THE INVESTMENT
COMPANY ACT OF 1940 [ X ]
Amendment No. [ ]
Beacon Global Advisors Trust
(Exact name of Registrant as Specified in Charter)
8260 Greensboro Drive, Suite 250
McLean, Virginia 22102-3801
(Address of Principal Executive Offices) (Zip Code)
Registrant's Telephone Number, including Area Code(703) 883-0865
Robert J. Henrich, Managing Partner
Beacon Global Advisors, Inc.
8260 Greensboro Drive, Suite 250
McLean, Virginia 22102-3801
(Name and Address of Agent for Service)
COPIES TO:
Arthur Brown, Esq. Joseph M. O'Donnell, Esq.
Kirkpatrick & Lockhart LLP Fund/Plan Services, Inc.
1800 Massachusetts Avenue, N.W. 2 West Elm Street
Washington, DC 20036 Conshohocken, PA 19428
Approximate date of proposed public offering:
As soon as practicable after the effective date of this Registration
Statement.
________________________________________________________________
Registrant hereby elects to register an indefinite number of shares
of its securities under this Registration Statement pursuant to Rule
24f-2 of the Investment Company Act of 1940, as amended. Registrant
will file a Notice pursuant to Rule 24f-2 within two months after its
fiscal year end.
________________________________________________________________
Registrant hereby amends this Registration Statement on such date or
dates as may be necessary to delay its effective date until the
Registrant shall file a further amendment which specifically states
that this Registration Statement shall thereafter become effective in
accordance with Section 8(a) of the Securities Act of 1933 or until
this Registration Statement shall become effective on such date as
the Securities and Exchange Commission, acting pursuant to said
Section 8(a), may determine.
As filed with the U.S. Securities and Exchange
Commission on October 28, 1996
TABLE OF CONTENTS
Registration Statement of Beacon Global Advisors Trust
Page
1. Cross-Reference Sheet. . . . . . . . . . . . . .
2. The Cruelty Free Value Fund - Part A - Prospectus
3. The Cruelty Free Value Fund - Part B - Statement of
Additional Information . . . . . . . . . . . . .
4. The Cruelty Free Value Fund - Part C
Other Information. . . . . . . . . . . . . . . .
5. Signature Page . . . . . . . . . . . . . . . . .
6. Index to Exhibits. . . . . . . . . . . . . . . .
BEACON GLOBAL ADVISORS TRUST
CROSS REFERENCE SHEET PURSUANT TO RULE 481a
Form N-1A Item Caption in Prospectus
Part A INFORMATION REQUIRE IN A PROSPECTUS
1. Cover Page Cover Page of Prospectus
2. Synopsis Expense Summary
3. Condensed Financial Information *
4. General Description of
Registrant Mission Statement;
Introduction;
Investment Objective;
Investment Policies;
Investment Practices and
Risk Factors; Investment
Process;General Information
5. Management of the Fund Management of the Fund;
Distribution Plan
5A. Management's Discussion of Fund
Performance *
6. Capital Stock and Other
Securities General Information; Dividends
and Taxes; Net Asset Value
7. Purchase of Securities Being
Offered How to Purchase Shares
8. Redemption or Repurchase How to Redeem Shares
9. Pending Legal Proceedings *
Part B INFORMATION REQUIRED IN A STATEMENT OF ADDITIONAL
INFORMATION
10. Cover Page Cover Page of the Statement of
Additional Information
11. Table of Contents Table of Contents
12. General Information and
History *
13. Investment Objectives and
Policies Investment Policies and
Techniques;Investment
Restrictions; Portfolio
Transactions
14. Management of the Fund Investment Advisory and Other
Services; Trustees and Officers
15. Control Persons and
Principal Holders of
Securities *
16. Investment Advisory and
Other Services Investment Advisory and Other
Services
17. Brokerage Allocation and
Other Practices Portfolio Transactions
18. Capital Stock and Other
Securities Other Information
19. Purchase, Redemption and
Pricing of Securities Being
Offered Purchases; Redemptions
20. Tax Status Taxes
21. Underwriters Distributor
22. Calculation of Performance
Data Performance Information
23. Financial Statements *
Part C OTHER INFORMATION
Information required to be included in Part C is set forth under
the appropriate Item, so numbered, in Part C of this Registration
Statement.
* Item is inapplicable at this time or answer is negative.
Information contained herein is subject to completion or amendment.
A registration statement relating to these securities has been filed
with the Securities and Exchange Commission. These securities may
not be sold nor may offers to buy be accepted prior to the time the
registration statement becomes effective. This prospectus shall not
constitute an offer to sell or the solicitation of an offer to buy
nor shall there be any sale of these securities in any State in which
such offer, solicitation or sale would be unlawful prior to
registration or qualification
under the securities laws of any such state.
Subject to Completion
Preliminary Prospectus Dated October __, 1996
THE CRUELTY FREE VALUE FUND
8260 Greensboro Drive, Suite 250
McLean, Virginia 22102-3801
PROSPECTUS _____________, 1996
"The greatness of a nation and its moral progress can be judged by
the way its animals are treated."
Mahatma Ghandi
The Cruelty Free Value Fund (the "Fund") is a mutual fund which seeks
capital appreciation by investing in common stocks of companies which
meet the investment adviser's growth profile and its guidelines
regarding the humane treatment of animals.
While providing its shareholders with an investment seeking capital
growth, the Fund is also dedicated to providing an innovative way to
help end the suffering and abuse of animals and the extinction of
hundreds of species annually. All investments made by the Fund will
be screened by the investment adviser, Beacon Global Advisors, Inc.
(the "Advisor"), for their growth potential and further screened using
its guidelines concerning the humane treatment of animals. See "Animal
Policy."
The Fund is a separate series of shares of Beacon Global Advisors
Trust (the "Trust"), an open-end management investment company.
Dreman Value Advisors, Inc. ("Dreman" or the "Subadvisor") has been
retained by the Advisor to act as subadvisor and to manage the day-to-day
investment program of the Fund.
The Fund is designed for long-term investors and not as a trading
vehicle, and is not intended to present a complete investment
program. As an adjunct to Dreman's traditional "long" investment
strategy, however, the Fund will incorporate short-selling techniques
to hedge the portfolio in volatile market environments. There can be
no assurance that the Fund will achieve its investment objective.
This Prospectus sets forth concisely information about the Fund that
an investor should know before investing in the Fund. Please read
this Prospectus carefully and retain it for future reference. A
Statement of Additional Information, dated , 1996,
provides further discussion of certain areas which may be of interest
to some investors. It has been filed with the Securities and
Exchange Commission and is incorporated herein by reference. The
Statement of Additional Information can be obtained without charge by
calling the Fund at (800) 662-9992, or writing to the Fund at the
address above.
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.
TABLE OF CONTENTS
Page
Expense Summary. . . . . . . . . . . . . . . . . . . . . .
Mission Statement. . . . . . . . . . . . . . . . . . . . .
Introduction . . . . . . . . . . . . . . . . . . . . . . .
Investment Objective . . . . . . . . . . . . . . . . . . .
Investment Policies. . . . . . . . . . . . . . . . . . . .
Animal Policy. . . . . . . . . . . . . . . . . . . . . . .
Investment Process . . . . . . . . . . . . . . . . . . . .
Investment Practices and Risk Factors. . . . . . . . . . .
Management of the Fund . . . . . . . . . . . . . . . . . .
Distribution Plan. . . . . . . . . . . . . . . . . . . . .
How to Purchase Shares . . . . . . . . . . . . . . . . . .
How to Redeem Shares . . . . . . . . . . . . . . . . . . .
Net Asset Value. . . . . . . . . . . . . . . . . . . . . .
Dividends and Taxes. . . . . . . . . . . . . . . . . . . .
Performance Information. . . . . . . . . . . . . . . . . .
General Information. . . . . . . . . . . . . . . . . . . .
Distributor: Investment Adviser:
Beacon Global Advisors, Inc. Beacon Global Advisors, Inc.
8260 Greensboro Drive, Suite 250 8260 Greensboro Drive, Suite 250
McLean, Virginia 33102-3801 McLean, Virginia 22102-3801
(800) 662-9992 (800) 662-9992
(703) 883-0865 (703) 883-0865
THIS PROSPECTUS IS NOT AN OFFERING OF THE SECURITIES HEREIN DESCRIBED IN
ANY JURISDICTION OR TO ANY PERSON TO WHOM IT IS UNLAWFUL FOR THE FUND TO
MAKE SUCH AN OFFER OR SOLICITATION. NO SALES REPRESENTATIVE, DEALER, OR
OTHER PERSON IS AUTHORIZED TO GIVE ANY INFORMATION OR MAKE ANY
REPRESENTATION OTHER THAN THOSE CONTAINED IN THIS PROSPECTUS.
Expense Summary
Shareholder Transaction Expenses:
Maximum sales charge imposed on purchases
(as a percentage of offering price) . . . . . . None
Maximum sales charge imposed on reinvested
dividends (as a percentage of offering price) . None
Deferred sales charge (as a percentage of
original purchase price). . . . . . . . . . . . None
Redemption fees (as a percentage of
amount redeemed) (1). . . . . . . . . . . . . . None
(1) If you want to redeem shares by wire transfer, the Fund's
transfer agent charges a fee (currently $9.00) for each wire
redemption. Purchases and redemptions may also be made through
broker-dealers and others who may charge a commission or other
transaction fee for their services.
Annual Fund Operating Expenses:
(as a percentage of average net assets)
Advisory Fees (after fee waivers)(2) . . . . . 0.55%
12b-1 Fees . . . . . . . . . . . . . . . . . . 0.25%
Other Expenses (3) . . . . . . . . . . . . . . 1.70%
Total Fund Operating Expenses (after fee waivers)(3) 2.50%
(2) The above table reflects the Advisor's voluntary undertaking to
waive all or a portion of its fees and to reimburse certain
expenses to limit the total operating expenses of the Fund for
the first year of operations to 2.50% of the Fund's average
daily net assets. The Advisor reserves the right to terminate
this waiver or any reimbursement at any time, in its sole
discretion. Absent such waiver, advisory fees for the Fund
would be 1.25% and presuming first year assets at $10 million,
estimated total operating expenses would be 3.70% of the Fund's
average daily net assets on an annualized basis. See "Management
of the Fund" for advisory fee breakpoints. Although the Advisor
has not previously provided investment advisory services to U.S
registered investment companies, the Advisor has been engaged
in the investment advisory business and has provided investment
advice to individuals, offshore investment funds and
corporations since 1994.
(3) For purposes of this table and because the Fund has no
operating history, "Other Expenses" is based on estimated
amounts for the current fiscal year.
Example
Based on the level of expenses listed above, an investor would pay
the following expenses on a $1,000 investment assuming (i) 5% annual
return and (ii) redemption at the end of each time period:
1 Year $25
3 Years $78
The foregoing example should not be considered a representation of
past or future expenses. Actual expenses may be more or less than
those shown. The purpose of the expense tables and example is to
assist the investor in understanding the various costs and expenses
that may be directly or indirectly borne by shareholders of the Fund.
For more complete descriptions of the various costs and expenses, see
"Management of the Fund" and "Distribution Plan."
Mission Statement
The Advisor has created The Cruelty Free Value Fund as a means for
individuals or institutions to pool their assets and invest in
companies that satisfy the Advisor's growth profile and also do not
harm animals. Securities considered for investment by the Fund will
be screened by the Advisor and the Advisor will exclude for
investment those companies that, in its opinion, employ animal
testing in their product development, endanger or abuse animals,
sponsor inhumane animal events, or are subsidiaries of companies
involved in these activities.
Also, the Advisor has made a commitment to donate a percentage of its
management fees to fund projects that directly help animals and raise
public awareness of animal-related issues. The Advisor has
established a foundation that will be dedicated to these concerns and
has selected an outside advisory board of directors that will review
specific projects of animal welfare organizations. The board of
directors will review projects submitted by such animal welfare
organizations, then select and financially support those programs
deemed to have the greatest potential impact on improving the lives
of animals. The board of directors will be responsible for the
ongoing due diligence to insure that all donations are being used as
directed. Shareholders of the Fund will be provided with a
newsletter to keep them apprised of the foundation's progress.
Members of the advisory board of the foundation are some of the most
prominent people involved in the animal welfare community and
currently include Tippi Hedren, Linda Blair, and Rue McClanahan.
The Advisor has also selected Dreman Value Advisors, Inc. ("Dreman" or
the "Subadvisor") to provide the day-to-day management of the Fund's
portfolio. Dreman is well-known for their disciplined and
conservative value-oriented strategy for stock selection.
Introduction
This Prospectus provides the information which is needed for a
potential investor to make an informed decision before purchasing
shares of the Fund. The money that an investor uses to purchase
shares of the Fund will be pooled with other shareholders' money and
collectively invested, or "managed," by the Advisor in accordance with
the Fund's investment objective. Other parts of this Prospectus
provide information concerning an investment in the Fund such as the
risk factors involved, the companies which provide services to the
Fund, the expenses of managing the Fund and the procedures by which
shares of the Fund may be purchased or redeemed. Please read this
Prospectus carefully before you invest or send money and keep it for
your future reference.
Investment Objective
The investment objective of the Fund is capital appreciation. The
Advisor will seek to obtain this objective while maintaining the
Fund's commitment to encourage the humane treatment of animals. See
"Animal Policy."
This objective is fundamental and may not be changed without a vote
of the holders of the majority of the outstanding voting securities
of the Fund. The Fund's investment policies described below are not
fundamental and may be changed without shareholder approval.
Additional investment policies and investment restrictions are
described in the Statement of Additional Information. There can be
no assurance that the Fund will achieve its investment objective.
Any income received is secondary to the objective of capital
appreciation.
Investment Policies and Strategies
The Fund's assets will be invested primarily in common stock or
preferred stock. Under normal circumstances, however, the Fund
expects to be almost fully invested in common stocks. Dreman, on
behalf of the Advisor, generally follows a value-oriented investment
approach to the selection of individual securities. See "Investment
Process." The Fund may diversify its holdings among many different
companies and industries which not only pass the screening criteria
for growth described below under "Investment Process", but will also
meet the Advisor's guidelines for the humane treatment of animal.
See "Animal Policy."
The Fund may also engage in portfolio management techniques such as
selling short, selling short against-the-box, and lending securities.
See "Investmen Practices and Risk Factors."
If securities held by the Fund no longer satisfy the Animal Policy,
the Fund will seek to dispose of the securities as soon as is
economically practicable, which may cause the Fund to sell the
securities at a time not desirable from a purely financial
standpoint.
Animal Policy
The Fund is dedicated to providing an innovative investment program
to help end the suffering, abuse and extinction of animals. The
Advisor believes that sound investments may be made which are
compatible with a commitment to protect the well-being of animals.
All investments made by the Fund will be screened toward achieving
such policy and the following guidelines have been established for
such screening process. These guidelines will help to provide a
cruelty free portfolio of investments.
The Fund will not invest in companies that, in the opinion of the
Advisor, (1) employ animal testing in their product development; (2)
indiscriminately endanger and abuse animals; (3) sponsor inhumane
animal events; or (4) are subsidiaries of companies involved in these
activities. The Advisor may gather screening information through
publicly available sources such as corporate annual reports, newswire
services, animal welfare publications (i.e. Audubon Society, National
Wildlife Federation), and financial and business organization
reporting services such as Dun & Bradstreet and Bloomberg.
The Fund's Animal Policy limits the available investments compared
with other mutual funds which do not have such a policy. Under
certain economic conditions, this could cause the Fund's investment
performance to be better or worse than similar funds without an
Animal Policy.
The Board of Trustees will have the authority, without the vote of
shareholders, to determine the manner in which the Fund implements
its stated commitment to encourage the humane treatment of animals.
There can be no assurance that each investment of the Fund will
satisfy the Animal Policy, but only that the Advisor will seek to
screen each security contemplated for investment by the Fund for its
compliance with the Animal Policy. Further, information provided by
companies which the Advisor utilizes for screening purposes may be
incomplete or inaccurate.
Investment Process
The Subadvisor's investment approach for stock selection is centered
around value investing. Value investing refers to the process by
which an investment professional chooses certain stocks because that
professional believes that they are undervalued in the market place.
The initial criteria for stock selection is centered around a stock's
Price/Earnings Ratio ("P/E"). A low P/E value is important because,
in the opinion of the Advisor, it tends to be a historic indicator
of superior performance. After low P/E, the price-to-book ratio is
considered. Concentration is made on stocks whose market price is
low in relation to book value. The last criteria for stock selection
is an above-average dividend yield. Higher yielding stocks tend to
provide, in the Subadvisor's opinion, strong defensive features
during down market cycles. Further quantitative analysis focuses on
adequate trading liquidity, measuring financial strength, and testing
earnings against certain requirements.
The Subadvisor believes that this approach to stock selection is
conservative in nature and only companies that possess strong
financial characteristics be considered for investment. The
Subadvisor closely analyses the stocks and concentrates on those that
have shown above average growth on both a five-and ten-year basis,
exhibit sound finances and demonstrate above-average long term
earnings prospects.
If, in the Subadvisor's opinion, the market warrants the movement of
the assets of the Fund into cash, the Fund is permitted to purchase
and temporarily hold high-grade domestic money market instruments
including, but not limited to, U.S. government obligations,
certificates of deposit, bankers' acceptances, commercial paper, and
repurchase agreements.
Investment Practices and Risk Factors
There is no such thing as a guaranteed investment and no one can see
into the future. The risks inherent in investing in the Fund are
similar to those of equity securities, that is, its value may
fluctuate in response to a variety of situations and factors.
Accordingly, the value of an investment in the Fund will fluctuate
over time and may be valued higher or lower at the time of
redemption. The Fund is designed for long-term investors who can
accept the risks entailed in seeking capital appreciation through
investment primarily in common stocks. An investment in the Fund
should be only a part of an overall investment strategy. No
assurance can be given as to the success of the Advisor's investment
program. The Advisor attempts to reduce the overall risks by
investing in a diversified portfolio through the implementation of
its investment process. Although the Advisor has not previously
provided investment advisory services to registered investment
companies, the Advisor has been engaged in the investment advisory
business providing investment advice to individuals, corporations and
offshore investment funds since 1994. The Fund's Subadvisor, Dreman
Value Advisors, Inc., has eleven years of experience managing various
mutual funds.
Short Sales Against-the-Box
The Fund may make short sales against-the-box, in which it sells
securities short only if it owns or has the right to obtain without
payment of additional consideration an equal amount of the same type
of securities sold. Short selling against-the-box may defer
recognition of gains or losses into a later tax period. This
strategy is employed to protect the asset base in volatile markets.
Short Sales
The Fund may attempt to limit exposure to a possible decline in the
market value of portfolio securities through short sales of
securities which the Advisor believes possess volatility
characteristics similar to those being hedged. The Fund also may use
short sales in an attempt to realize gain. To effect a short sale,
the Fund borrows a security from a brokerage firm to make delivery to
the buyer. The Fund then is obligated to replace the borrowed
security by purchasing it at the market price at the time of
replacement. Until the security is replaced, the Fund is required to
pay the lender any accrued interest or dividends and may be required
to pay a premium.
The Fund will realize a gain if the security declines in price
between the date of the short sale and the date on which the Fund
replaces the borrowed security. The Fund will incur a loss if the
price of the security increases between those dates. The amount of
any gain will be decreased, and the amount of any loss increased, by
the amount of any premium or interest the Fund may be required to pay
in connection with a short sale. A short position may be adversely
affected by imperfect correlation between movements in the price of
the security sold short and the securities being hedged.
No short sale will be effected which will, at the time of making such
short sale transaction, cause the aggregate market value of all
securities sold short to exceed 25% of the value of the Fund's net
assets.
Management of the Fund
The Board of Trustees
The Trust has a Board of Trustees that establishes the Fund's
policies and oversees and reviews the management of the Fund. The
day-to-day operations of the Fund are administered by the officers of
the Trust and by the Advisor and Subadvisor pursuant to the terms of
the Investment Advisory Agreement and Subadvisory Agreement with the
Fund, respectively. The Trustees review the various services
provided by the Advisor to ensure that the Fund's general investment
policies and programs are being properly carried out and that
administrative services are being provided to the Fund in a
satisfactory manner. Information pertaining to the Trustees and
executive officers is set forth in the Statement of Additional
Information.
The Investment Adviser
Beacon Global Advisors, Inc. (the "Advisor") serves as the Fund's
investment adviser and manager, and is an investment adviser
registered as such under the Investment Advisers Act of 1940, as
amended. The Advisor is a subsidiary of Beacon Global Advisors, Ltd.
of Nassau, Bahamas, a company which designs and markets specialized
global asset management programs for pension funds, endowments and
foundations, and other institutional and high net worth individual
investors. Beacon Global Advisors, Ltd. specializes in establishing
offshore investment funds. The Advisor does not have any past
experience managing U.S. mutual funds. The principal business
address of the Advisor is 8260 Greensboro Drive, Suite 250, McLean,
Virginia 22102-3801. As of December 31, 1995, the Advisor had
discretionary authority with respect to $72 million.
The Advisor makes the investment decisions concerning the assets of
the Fund and continuously reviews, supervises and administers the
Fund's investment programs, subject to the supervision of, and
policies established by, the Trustees of the Fund.
For its services as investment adviser, the Fund pays the Adviser a
monthly fee which is calculated daily by applying an annual rate of
1.25% on the first $100 million of average daily net assets, 1.00%
on average net assets from $100 million to $500 million, and 0.75% of
average daily net assets over $500 million. The investment advisory
fee is higher than that paid by most investment companies, although
the Advisor believes the fee to be comparable to that paid by
investment companies with similar investment objectives and policies.
From time to time, the Advisor may voluntarily waive all or a portion
of its management fee and/or absorb certain expenses of the Fund
without further notification of the commencement or termination of
any such waiver or absorption. Any such waiver or absorption will
have the effect of lowering the overall expense ratio of the Fund and
increasing the Fund's overall return to investors at the time any
such amounts are waived and/or absorbed. The Advisor has voluntarily
agreed to waive all or a portion of its fee, and/or to reimburse
expenses of the Fund to the extent necessary in order to limit net
operating expenses for the first year of operations to an annual rate
of not more than 2.50% of the Fund's average daily net assets. The
Advisor reserves the right to terminate its voluntary fee waiver and
reimbursement at any time, and at its sole discretion. Any
reductions in its fee that are made by the Advisor are subject to
reimbursement by the Fund within the following three years, provided
that the Fund is able to effect such reimbursement and remain in
compliance with the expense limitations stated herein.
The Subadvisor
Dreman Value Advisors, Inc. ("Dreman" or the "Subadvisor"), 280 Park
Avenue, 40th Floor, New York, New York 10017-1216, is a wholly-owned
subsidiary of Zurich Kemper Investments, Inc. (formerly named Kemper
Financial Services, Inc.)("ZKI"), which is one of the largest
investment managers in the country and has been engaged in the
management of investment funds for more than forty-six years.
ZKI and its affiliates, including Dreman, provide investment advice
and manage investment portfolios for the Kemper Funds, affiliated
insurance companies and other corporate, pension, profit-sharing and
individual accounts representing approximately $79 billion under
management.
Under the Subadvisory Agreement, Dreman provides the Fund and the
Advisor with investment research, advice, information and
recommendations concerning securities to be acquired, held or sold by
the Fund. Dreman is a registered investment adviser.
Dreman has been retained by the Advisor pursuant to the Subadvisory
Agreement to provide an investment program for the Fund, subject to
the supervision of the Advisor, in accordance with the objective and
policies of the Fund. For its services, Dreman receives from the
Advisor an annual fee of 0.50% of the first $50 million of average
daily net assets; 0.35% of average daily net assets from $50 million
to $100 million; and 0.25% of average daily net assets over $100
million.
While the Advisor has no previous experience managing U.S. registered
investment companies, Dreman has managed mutual funds since 1985 and
is currently responsible for investments with a market value over
$2.3 billion.
The investment management team at Dreman responsible for overseeing
all investments made by the Fund includes William F. Coughlin, CFA,
James R. Neel, CFA, Christian C. Bertelsen, and Thomas F. Sassi.
Their respective biographies follow.
William F. Coughlin, CFA, 39, Managing Director and Portfolio
Manager, Dreman Value Advisors, Inc. Before joining Dreman Value
Advisors, Inc. in 1988 and serving as a Portfolio Manager since that
time, Mr. Coughlin spent seven years working for NYNEX Corporation, [
Address ]. From 1980 to 1983 he was responsible for the financial
planning and corporate finance activities at New England Telephone in
Boston. Through 1986, he served as Investment Director for NYNEX's
$12 billion pension fund. In that capacity he headed investment
research, asset allocation and quantitative equity analysis, and
managed the fund's $650 million in-house portfolio. He also served
as Director of Investments for the NYNEX Foundation during his
tenure.
[Undergraduate and graduate degrees]
James R. Neel, CFA, 53, President and Chief Executive Officer, Dreman
Value Advisors, Inc. from 19__ to present. Most recently, Mr. Neel
was an Executive Vice President and equity portfolio manager for
Kemper Financial Services institutional accounts. Mr. Neel joined
Kemper Financial Services in 1989 as chief equity portfolio
strategist and was responsible for managing various equity mutual
funds including Kemper Blue Chip Fund, Kemper Growth Fund and the
Retirement Fund Series.
[Undergraduate and graduate degrees]
Christian C. Bertelsen, 53, Chief Investment Officer, Dreman Value
Advisors, Inc. from 19__ to present. Mr. Bertelsen is Portfolio
Manager of the Contrarian Fund. Most recently, Mr. Bertelsen was
Senior Vice President of Eagle Asset Management, [ address ], a
subsidiary of Raymond James Financial Inc., where he managed
institutional assets, a variable annuity for Bankers Trust, The
Heritage Value Trust Mutual Fund, as well as assets for private
individuals.
Before joining Eagle Asset Management, Mr. Bertelsen was a Senior
Vice President at Colonial Management Associates in Boston where he
managed the Colonial Fund and headed Colonial Advisory Services. Mr.
Bertelsen previously was a Senior Vice President and portfolio
manager for Batterymarch Financial Management.
Mr. Bertelsen is a member of the Investment Analysts Society of
Boston and the AIMR. He received his BA in History and Economics
from Boston University.
Thomas F. Sassi, 53, Director of Research and a Portfolio Manager at
Dreman Value Advisors, Inc. from 19__ to present. Prior to rejoining
Dreman Value Advisors, Inc., where he served as a Managing Director
and Director of Research from 19__ to 19__, Mr. Sassi was a
consultant to Omega Advisers, [ Address ] and a Senior Vice President
at Dillon Read Investment Management [ Address]. Previously, he was
a Vice President and Portfolio Manager of Met-Life State Street in
Boston and had served for five years as Chief Equity Officer at
Metropolitan Life where he began his career as a security analyst.
Mr. Sassi received a BBA in Management and an MBA in Finance from
Hofstra University.
The Administrator, Transfer Agent and Fund Accountant
FPS Services, Inc. ("FPS"), which has its principal business address
at 3200 Horizon Drive, P.O. Box 61503, King of Prussia, PA 19406-0903,
serves as the Administrator pursuant to an agreement with the
Fund. Under this agreement, FPS provides the Fund with
administrative services including regulatory reporting, compliance
filings, dissmination of certain information to the Fund's
shareholders, and financial and management reporting. FPS also
provides all necessary office space, equipment, personnel and
facilities. FPS receives an annual administrative fee, accrued daily
and paid monthly, of 0.15% of the average daily net assets. The
minimum fee to be paid by the Fund under this agreement is $55,000
annually.
In addition, FPS serves as the Fund's transfer agent. As Transfer
Agent, it maintains the records of each shareholder's account,
answers shareholder inquiries concerning accounts, processes
purchases and redemptions of the Fund's shares, acts as dividend and
distribution disbursing agent and performs other shareholder service
functions.
FPS also serves as fund accountant and performs certain accounting
and pricing services for the Fund, including the daily calculation of
the Fund's net asset value per share.
The Custodian
The Bank of New York, 48 Wall Street, New York, New York 10286,
serves as custodian for the safekeeping of securities, cash and other
assets of the Fund.
Fund Expenses
The Fund is responsible for all of its own expenses. Such expenses
may include, but are not limited to: management fees; legal expenses;
audit fees; printing costs (e.g. costs of printing annual reports,
semi-annual reports and prospectuses which are distributed to
existing shareholders); brokerage commissions for portfolio trades;
the expenses of registering and qualifying shares of the Fund for
sale with the Securities and Exchange Commission and with various
state securities commissions; expenses of the organization of the
Fund; transfer agent, custodian and administrator fees; the expenses
of obtaining quotations of portfolio securities and pricing the
Fund's shares; trade association dues; all costs associated with
shareholder meetings and the preparation and dissemination of proxy
materials (although the Fund is not required to hold annual
shareholder meetings); costs of liability insurance and fidelity
bonds; fees for Trustees who are not officers, directors or employees
of the Advisor; and any extraordinary and nonrecurring expenses which
are not expressly assumed by the Advisor.
Portfolio Transactions and Brokerage
The Advisor will use its best efforts to obtain the best available
price and most favorable execution with respect to all transactions
of the Fund. Subject to policies established by the Board of
Trustees, however, the Fund may pay a broker-dealer (other than the
Advisor) a commission for effecting a portfolio transaction for the
Fund in excess of the amount of commission another broker-dealer
would have charged if the Advisor determines in good faith that the
commission paid was reasonable in relation to the brokerage or
research services provided by such broker-dealer. In selecting and
monitoring broker-dealers and negotiating commissions, consideration
will be given to a broker-dealer's reliability, the quality of its
execution services on a continuing basis and its financial condition.
All commissions paid are reviewed quarterly by the Board of Trustees
of the Trust.
Portfolio Turnover
The Fund may purchase and sell securities without regard to the
length of time the security is intended to be or has been held. A
100% turnover rate occurs, for example, if all of the Fund's
portfolio securities are replaced during one year. High portfolio
activity increases the Fund's transaction costs, including brokerage
commissions. The Fund anticipates that the portfolio turnover
generally will not exceed 100% annually.
Distribution Plan
The Board of Trustees of the Fund has adopted a distribution plan for
the shares pursuant to Rule 12b-1 under the Investment Company Act of
1940, as amended (the "Distribution Plan"). As provided in the
Distribution Plan, the Fund will pay an annual fee up to 0.25% of the
average daily net assets to the Distributor. From this amount, the
Distributor may make payments to financial institutions and
intermediaries such as banks, savings and loan associations,
insurance companies, investment counselors, and broker-dealers who
assist in the distribution of the shares of the Fund or provide
services with respect to shares of the Fund, pursuant to service
agreements with the Fund. The Distribution Plan is characterized as
a compensation plan because the distribution fee will be paid to the
Distributor without regard to the distribution or shareholder service
expenses incurred by the Distributor or the amount of payments made
to financial institutions and intermediaries. The Fund intends to
operate the Distribution Plan in accordance with its terms and within
NASD rules concerning sales charges.
The fees paid to the Distributor under the Distribution Plan are
subject to review and approval by the Trust's independent Trustees
who have the authority to reduce the fees or terminate the
Distribution Plan at any time. All payments made pursuant to the
Distribution Plan shall be made for the purpose of selling shares
issued by the Fund or servicing shareholder accounts.
How to Purchase Shares
General
Shares of the Fund may be purchased from the Fund at the net asset
value next determined after receipt by the Transfer Agent of a
purchase order in proper form. There is no sales load in connection
with the purchase of shares. Shares of the Fund are offered only to
residents of states in which the shares are registered or qualified
for sale.
Purchase orders for shares of the Fund that are received by FPS in
proper form by the close of the New York Stock Exchange
("NYSE")(currently 4:00 p.m. Eastern time), on any day that the NYSE
is open for trading, will be purchased at the Fund's next determined
net asset value. Orders for Fund shares received after 4:00 p.m.
Eastern time will be purchased at the net asset value determined on
the following business day.
The Fund reserves the right to reject any purchase order or suspend
the offering of shares of the Fund. The Fund also reserves the right
to vary the initial and subsequent investment minimums, or to waive
the minimum investment requirements for any investor. Please note
that the Fund willnot accept a check endorsed by a third party for a
purchase order.
Purchases By Mail
Before shares of the Fund may be purchased for the first time, please
complete the application accompanying this Prospectus and mail it to
the Transfer Agent, together with a check payable to "The Cruelty Free
Value Fund." The check or money order and application should be
mailed to FPS Services, Inc, 3200 Horizon Drive, P.O. Box 61503, King
of Prussia, PA 19406-0903. If this is an initial purchase, please
send a minimum of $1,000 (or $2,000 for IRA and SEP accounts).
Purchases By Wire Transfer
Before making an initial investment by wire, an investor must first
telephone the Transfer Agent at (800) 892-9626 or (610) 239-4600 in
order to be assigned an account number. The investor's name, account
number, taxpayer identification number or Social Security number and
address must be specified in the wire. In addition, an account
application should be promptly forwarded to: FPS Services, Inc., 3200
Horizon Drive, P.O. Box 61503, King of Prussia, PA 19406-0903.
Shareholders having an account with a commercial bank that is a
member of the Federal Reserve System may purchase shares of the Fund
by requesting their bank to transmit funds by wire to: United
Missouri Bank KC N.A., ABA #10-10-00695/Attention: FPS Services,
Inc., A/C 98-7037-071-9/FBO "The Cruelty Free Value Fund", along with
the shareholder's name and account number as specified on the
shareholder's account registration.
Additional investments may be made at any time through the wire
procedures described above, which must include a shareholder's name
and account number. The shareholder's bank may impose a fee for
investments by wire. The Fund will not be responsible for the
consequence of delays, including delays in the banking or Federal
Reserve wire systems.
Purchases Through Broker-Dealers
The Fund may accept telephone orders only from brokers, financial
institutions or service organizations that have been previously
approved by the Fund. It is the responsibility of such brokers,
financial institutions or service organizations to promptly forward
purchase orders and payments for the same to the Fund. Brokers,
financial institutions, service organizations, banks and bank trust
departments through which an investor purchases shares of the Fund,
may charge the shareholder a transaction fee or other fee for its
services at the time of purchase.
Wire orders for shares of the Fund received by dealers prior to 4:00
p.m. Eastern time, and received by the Fund's Distributor before 5:00
p.m. Eastern time on the same day, are confirmed at that day's net
asset value. Dealers may place orders with the Fund's Distributor by
calling (800) 662-9992 or (703) 883-0865. Orders received by dealers
after 4:00 p.m. Eastern time are confirmed at the net asset value on
the following business day. It is the dealer's obligation to place
the order with FPS before 5:00 p.m. Eastern time.
Subsequent Investments
Once an account has been opened, subsequent purchases may be made by
mail, bank wire, automatic investing or direct deposit. The minimum
for subsequent investments is $____for all accounts.
When making subsequent investments by mail, please return the bottom
portion of a previous confirmation with your investment in the
envelope that is provided with each confirmation statement. Your
check should be made payable to "The Cruelty Free Value Fund" and
mailed to FPS Services, Inc., P.O. Box 412797, Kansas City, Missouri
64141-2797. Orders to purchase shares are effective on the day FPS
receives your check or money order.
All investments must be made in U.S. dollars and, to avoid fees and
delays, checks must be drawn only on banks located in the United
States. A charge (minimum of $20) will be imposed if any check used
for the purchase of shares is returned. Investors who puchase Fun
shares by check or money order may not receive redemption proceeds
until there is reasonable belief that thecheck cleared, which may
take up to fifteen calendar days after payment is received. The Fund
and FPS each reserve the right to reject any purchase order in whole
or in part. The Fund and FPS will not accept checks which have been
endorsed by a third party.
Automatic Investment Plan
Once an account has been opened, a shareholder can make additional
purchases of shares of the Fund through an automatic investment plan.
An investor may authorize the automatic withdrawal of funds from his
or her bank account by opening his or her account with a minimum of
$1,000 and completing the appropriate section on the new account
application enclosed with this Prospectus. Subsequent monthly
investments are subject to a minimum required amount of $50. The
automatic deductions may be made on the 10th, 15th or 20th of the
month and may be made monthly, quarterly, semi-annually or annually.
How to Redeem Shares
Shareholders may redeem their shares of the Fund without being
subject to any redemption charge on any business day that the NYSE is
open for business. Redemptions will be effective at the current net
asset value per share next determined after the receipt by the
Transfer Agent of a redemption request meeting the requirements
described below.
Redemption By Mail
Shareholders may redeem their shares by submitting a written request
for redemption to FPS Services, Inc., 3200 Horizon Drive, P.O. Box
61503, King of Prussia, PA 19406-0903.
A written redemption request to the Transfer Agent must be in good
order, which means that it must: (i) identify the shareholder's
account name and account number; (ii) state the number of shares or
dollar amount to be redeemed and (iii) be signed by each registered
owner exactly as the shares are registered. To prevent fraudulent
redemptions, a signature guarantee for the signature of each person
in whose name an account is registered is required for all written
redemption requests exceeding $10,000 or where proceeds are to be
mailed to an address other than the address of record. A guarantee
may be obtained from any commercial bank, credit union, member firm
of a national securities exchange, registered securities association,
clearing agency and savings and loan association. A credit union
must be authorized to issue signature guarantees; notary public
endorsement will not be accepted. Signature guarantees will be
accepted from any eligible guarantor institution that participates in
a signature guarantee program. The Transfer Agent may require
additional supporting documents for redemptions made by corporations,
executors, administrators, trustees or guardians and retirement
plans.
A redemption request will not be deemed to be properly received until
the Transfer Agent receives all required documents in proper form.
Questions with respect to the proper form for redemption requests
should be directed to the Transfer Agent at (800) 892-9626 or (610)
239-4600.
Redemption By Telephone
Shareholders who have so indicated on the application, or have
subsequently arranged in writing to do so, may redeem shares by
calling the Transfer Agent at (800) 892-9626 or (610) 239-4600 during
normal business hours. In order to arrange for redemption by wire or
telephone after an account has been opened, or to change the bank or
account designated to receive redemption proceeds, a written request
with a signature guarantee must be sent to the Tansfer Agent at the
address listed above, under the caption "Redemption By Mail."
The Fund reserves the right to refuse a wire or telephone redemption
if it is believed advisable to do so. Procedures for redeeming Fund
shares by wire or telephone may be modified or terminated at any
time.
During periods of unusual economic or market changes, telephone
redemptions may be difficult to implement. In such event,
shareholders should follow the procedures for redemption by mail.
General Redemption Information
A redemption request will not be deemed to be properly received until
the Transfer Agent receives all required documents in proper form.
If you have any questions with respect to the proper form for
redemption requests you should contact the Transfer Agent at (800)
892-962 or (610) 239-4600.
Redemptions will be processed only on a business day during which the
NYSE is open for business. Redemptions will be effective at the
current net asset value per share next determined after the receipt
by the Transfer Agent of a redemption request meeting the
requirements described above. The Fund will not mail redemption
proceeds until it has been assured that checks received for the
purchase of any shares being redeemed have, or will be, cleared.
Accordingly, redemptions may not be processed until the shares being
redeemed have been on the Fund's books for at least fifteen business
days measured from the date the redemption request is received by the
Fund. Payment may also be made by wire directly to any bank
previously designated by an investor on his or her new account
application. There is a $9.00 charge for redemptions made by wire to
domestic banks. Wires to foreign or overseas banks may be charged at
higher rates. It should also be noted that banks may impose a fee
for wire services. In addition, there may be fees for redemptions
made through brokers, financial institutions and service
organizations.
Except as noted below, redemption requests received in proper form by
the Transfer Agent prior to the close of regular trading hours on the
NYSE on any business day on which the Fund calculates its net asset
value are effective as of that day. Redemption requests received
after the close of the NYSE will be effected at the net asset value
per share determined on the next business day following receipt. No
redemption request will be processed until the Transfer Agent has
received a completed application with respect to the account.
The Fund will satisfy redemption requests for cash to the fullest
extent feasible, as long as such payments would not, in the opinion
of the Board of Trustees, result in the necessity of the Fund to sell
assets under disadvantageous conditions or to the detriment of the
remaining shareholders of the Fund.
Pursuant to the Fund's Trust Instrument, however, payment for shares
redeemed may also be made in kind, or partly in cash and partly in-kind.
The Fund has elected, pursuant to Rule 18f-1 under the 1940
Act to redeem its shares solely in cash up to the lesser of $250,000
or 1% of the net asset value of the Fund, during any 90 day period
for any one shareholder. Any portfolio securities paid or
distributed in-kind would be in readily marketable securities and
valued in the manner described below. See "Net Asset Value." In the
event that an in-kind distribution is made, a shareholder may incur
additional expenses, such as brokerage commissions, on the sale or
other disposition of the securities received from the Fund. In-kind
payments need not constitute a cross-section of the Fund's portfolio.
The Fund may suspend the right of redemption or postpone the date of
payment for more than seven days during any period when (1) trading
on the NYSE is restricted or the NYSE is closed, other than customary
weekend and holiday closings; (2) the Securities and Exchange
Commission has, by order, permitted such suspension; (3) an emergency
exists, as defined by rules of the Securities and Exchange
Commission, making disposal of portfolio investments or determination
of the value of the net assets of the Fund not reasonably
practicable.
Shares of the Fund may be redeemed through certain brokers, financial
institutions, service organizations, banks, and bank trust
departments who may charge the investor a transaction or other fee
for their services at the time of redemption. Such additional
transaction fees would not otherwise be charged if the shares were
redeemed directly from the Fund.
Telephone Transactions
Shareholders who wish to redeem their shares by telephone must first
elect the option, as described above. Neither the Fund nor any of
its service contractors will be liable for any loss or expense in
acting upon telephone instructions that are reasonably believed to be
genuine. In this regard, the Fund and its Transfer Agent require
personal identification information before accepting a telephone
redemption. To the extent that the Fund or the Transfer Agent fail
to use reasonable procedures to verify the genuineness of telephone
instructions, the Fund may be liable for losses due to fraudulent or
unauthorized instructions. The Fund reserves the right to refuse a
telephone redemption if it is believed advisable to do so. Written
confirmation will be provided for all redemption transactions
initiated by telephone. Proceeds from a telephone redemption shall
only be sent to the shareholder's address of record or wired to the
shareholder's bank account on file with the Transfer Agent.
No purchases of shares may be made by telephone.
Minimum Balances
Due to the relatively high cost of maintaining smaller accounts, the
Fund reserves the right to involuntarily redeem shares in any account
at its then current net asset value (which will be promptly paid to
the shareholder) if at any time the total investment does not have a
value of at least $500 as a result of redemptions, but not market
fluctuations. A shareholder will be notified that the value of his
or her account is less than the required minimum and such shareholder
will be allowed at least 60 days to bring the value of his or her
account up to the minimum before the redemption is processed.
NET ASSET VALUE
The net asset value per share is calculated as of the date of this
Prospectus, once daily as of the close of regular trading on the
NYSE, currently 4:00 p.m. Eastern time. Currently, the NYSE is
closed on the following holidays or days on which the following
holidays are observed: New Year's Day, Presidents' Day, Good Friday,
Memorial Day, Independence Day, Labor Day, Thanksgiving Day and
Christmas.
The net asset value per share is computed by adding the value of all
securities and other assets in the portfolio, deducting any
liabilities, and dividing by the total number of outstanding shares.
Expenses are accrued daily and applied when determining the net asset
value. The Fund's equity securities are valued based on market
quotations or, when no market quotations are available, at fair value
as determined in good faith by, or under the direction of, the Board
of Trustees. Market quotations are generally the last reported sales
price on the principal exchange on which the security trades, or if
no sale price is reported, the mean of the latest bid and asked
prices is used. Securities traded over-the-counter are priced at the
mean of the latest bid and asked prices. When market quotations are
not readily available, securities and other assets are valued at fair
value as determined in good faith by the Board of Trustees.
Securities are valued through valuations obtained from a commercial
pricing service or at the most recent mean of the bid and asked
prices provided by investment dealers in accordance with procedures
established by the Board of Trustees.
Short-term investments having a maturity of 60 days or less are
valued at amortized cost, which the Board of Trustees believes
represents fair value. When a security is valued at amortized cost,
it is valued at its cost when purchased, and thereafter by assuming a
constant amortization to maturity of any discount or premium,
regardless of the impact of fluctuating interest rates on the market
value of the instrument. All other securities and other assets are
valued at their fair value as determined in good faith under
procedures established by and under the supervision of the Board of
Trustees.
DIVIDENDS AND TAXES
Dividends
The Fund will distribute its net investment income annually. Any net
gain realized from the sale of portfolio securities also will be
distributed at least annually unless they are used to offset losses
carried forward from prior years, in which case no such gain will be
distributed. Such income dividends and capital gain distributions
are reinvested automatically in additional shares at net asset value,
unless a shareholder elects to receive them in cash. Distribution
options may be changed by writing to the Fund any time prior to the
dividend record date.
Any check tendered in payment of dividends or other distributions
which cannot be delivered by the post office or which remains
uncashed for a period of more than one year may be reinvested in the
shareholder's account at the then current net asset value, and the
dividend option may be changed from cash to reinvest. Dividends are
reinvested on the ex-dividend date at the net asset value determined
at the close of business on that date. Dividends and distributions
are treated the same for tax purposes whether received in cash or
reinvested in additional shares. Please note that shares purchased
shortly before the record date for a dividend or distribution may
have the effect of returning capital although such dividends and
distributions are subject to taxes.
Taxes
The Fund intends to conduct its operations so as to qualify as a
"regulated investment company" for purposes of the Internal Revenue
Code of 1986, as amended (the "Code"), which will relieve the Fund of
any liability for federal income tax to the extent that its earnings
and net realized capital gains are distributed to shareholders. To
so qualify, the Fund will, among other things, limit its investments
so that, at the close of each quarter of its taxable year, (i) not
more than 25% of the market value of the Fund's total assets will be
invested in the securities of any single issuer and (ii) with respect
to at least 50% of the market value of its total assets, not more
than 5% of the market value of its total assets will be invested in
the securities of any single issuer, and the Fund will not own more
than 10% of the outstanding voting securities of any single issuer.
An investment in the Fund has certain tax consequences, depending on
the type of account. The Fund will distribute all of its net
investment income to shareholders. Distributions are subject to
federal income tax and may also be subject to state and local income
taxes. Distributions are generally taxable when they are paid,
whether in cash or by reinvestment in additional shares, except that
distributions declared in October, November or December and paid in
the following January are taxable as if they were paid on December
31. If you have a qualified retirement account, taxes are generally
deferred until distributions are made from the retirement account.
For federal income tax purposes, income dividends and short-term
capital gain distributions are taxed as ordinary income.
Distributions of net capital gains (the excess of net long-term
capital gain over net short-term capital loss) are usually taxed as
long-term capital gains, regardless of how long a shareholder has
held the Fund's shares. The tax treatment of distributions of
ordinary income or capital gains will be the same whether the
shareholder reinvests the distributions or elects to receive them in
cash.
Shareholders may be subject to a 31 percent back-up withholding on
reportable dividend and redemption payments if a certified taxpayer
identification number is not on file with the Fund, or if to the
Fund's knowledge, an incorrect number has been furnished. An
individual's taxpayer identification number is his/her social
security number.
Shareholders will be advised annually of the source and tax status of
all distributions for federal income tax purposes. Information
accompanying a shareholder's statement will show the portion of those
distributions that are not taxable in certain states. Further
information regarding the tax consequences of investing in the Fund
is included in the Statement of Additional Information. The above
discussion is intended for general information only. Investors
should consult their own tax advisers for more specific information
on the tax consequences of particular types of distributions.
The Fund intends to make sufficient distributions prior to the end of
each calendar year in order to avoid liability for federal excise
tax.
Sale, exchange or redemption of the Fund's shares is a taxable event
to the shareholder.
PERFORMANCE INFORMATION
Performance information such as total return for the Fund may be
quoted in advertisements or in communications to shareholders. Such
performance information may be useful in reviewing the performance of
the Fund and for providing a basis for comparison with other
investment alternatives. However, because the net investment return
of the Fund changes in response to fluctuations in market conditions,
interest rates and Fund expenses, any given performance quotation
should not be considered representative of the Fund's performance for
any future period. The value of an investment in the Fund will
fluctuate and an investor's shares, when redeemed, may be worth more
or less than their original cost.
The Fund's total return is the change in value of an investment in
the Fund over a particular period, assuming that all distributions
have been reinvested. Thus, total return reflects not only income
earned, but also variations in share prices at the beginning and end
of the period. Average annual return reflects the average percentage
change per year in the value of an investment in the Fund. Aggregate
total return reflects the total percentage change over the stated
period. Please refer to the Statement of Additional Information for
more information on performance.
GENERAL INFORMATION
The Trust
The Trust is an open-end management investment company organized as a
business trust under the laws of the State of Delaware. The Trust is
organized to offer separate series of shares and is currently
offering a single series of shares called The Cruelty Free Value
Fund.
Trustees and Officers of the Fund
The Trustees of the Fund oversee the operation of the Fund. The
officers of the Fund who are employees or officers of the Advisor
serve without compensation from the Fund.
Description of Shares
The Trust is authorized to issue an unlimited number of shares of
beneficial interest with no par value. Shares of the Fund represent
equal proportionate interests in the assets of the Fund only, and
have identical voting, dividend, redemption, liquidation and other
rights. All shares issued are fully paid and non-assessable, and
shareholders have no preemptive or other right to subscribe to any
additional shares. Currently, there is one class of shares issued by
the Fund. The validity of the shares of beneficial interest offered
by this prospectus will be passed on by Kirkpatrick & Lockhart LLP,
1800 Massachusetts Avenue, N.W., Washington, DC 20036-1800. All
accounts will be maintained in book entry form and no share
certificates will be issued.
Voting Rights
A shareholder is entitled to one vote for each full share held and a
fractional vote for each fractional share held. All shares of the
Fund participate equally in regard to dividends, distributions, and
liquidations with respect to the Fund. Shareholders do not have
preemptive, conversion or cumulative voting rights.
Shareholder Meetings
The Trustees are not required, and do not intend, to hold annual
meetings of shareholders. The Trustees have undertaken to the SEC,
however, that they will promptly call a meeting of shareholders for
the purpose of voting upon the question of removal of any Trustee
when requested to do so by holders of not less than 10% of the
outstanding shares of the Fund. In addition, subject to certain
conditions, shareholders of the Fund may apply to the Fund to
communicate with other shareholders to request a shareholders'
meeting to vote upon the removal of a Trustee or Trustees.
Shareholder Reports and Inquiries
The Fund issues unaudited financial information semiannually and
audited financial statements annually. Shareholder inquiries should
be addressed to the Fund c/o Beacon Global Advisors, Inc., 8260
Greensboro Drive, Suite 250, McLean, Virginia 22102-3801 (800) 662-9992
or (703) 883-0865. Purchase and redemption transactions should
be made through the Transfer Agent by calling (800) 892-9626 or (610)
239-4600.
INVESTMENT ADVISER
Beacon Global Advisors, Inc.
8260 Greensboro Drive, Suite 250
McLean, Virginia 22102-3801
(703) 883-0865
UNDERWRITER
Beacon Global Advisors, Inc.
8260 Greensboro Drive, Suite 250
McLean, Virginia 22102-3801
(703) 883-0865
SHAREHOLDER SERVICES
FPS Services, Inc.
3200 Horizon Drive
King of Prussia, Pennsylvania 19406
(800) 892-9626
(610) 239-4600
CUSTODIAN
The Bank of New York
48 Wall Street
New York, New York
LEGAL COUNSEL
Kirkpatrick & Lockhart LLP
1800 Massachusetts Avenue, N.W.
Washington, DC 20036-1800
AUDITORS
Ernst & Young LLP
1225 Connecticut Avenue N.W.
Washington, DC 20036
For Additional Information about The Cruelty Free Value Fund
call:
(800) 662-9992
Subject to Completion - October , 1996
Information contained herein is subject to completion or amendment.
A registration statement relating to these securities has been filed
with the Securities and Exchange Commission. These securities may
not be sold nor may offers to buy be accepted prior to the time the
registration statement becomes effective. This Statement of
Additional Information does not constitute a prospectus.
THE CRUELTY FREE VALUE FUND
STATEMENT OF ADDITIONAL INFORMATION
______________, 1996
This Statement of Additional Information dated __________, 1996 is
not a prospectus but should be read in conjunction with the
Prospectus describing The Cruelty Free Value Fund (the "Fund") dated
, 1996. The Prospectus may be amended or supplemented
from time to time. No investment in shares should be made without
first reading the Prospectus. This Statement of Additional
Information is intended to provide additional information regarding
the activities and operations of the Fund, and should be read in
conjunction with the Prospectus. A copy of the Prospectus may be
obtained without charge from Beacon Global Advisors, Inc. (the
"Advisor") at the address and telephone number below.
Distributor: Investment Adviser:
Beacon Global Advisors, Inc. Beacon Global Advisors, Inc.
8260 Greensboro Drive, Suite 250 8260 Greensboro Drive, Suite 250
McLean, Virginia 22102-3801 McLean, Virginia 22102-3801
(703) 883-0865 (703) 883-0865
No person has been authorized to give any information or to make any
representations not contained in this Statement of Additional
Information or in the Prospectus in connection with the offering made
by the Prospectus and, if given or made, such information or
representations must not be relied upon as having been authorized by
the Trust or its distributor. The Prospectus does not constitute an
offering by the Trust or by the distributor in any jurisdiction in
which such offering may not lawfully be made.
TABLE OF CONTENTS
Page
The Trust and the Fund . . . . . . . . . . . . . . . . . .
Investment Policies and Techniques . . . . . . . . . . . .
Bankers' Acceptances. . . . . . . . . . . . . . . . . .
Certificates of Deposit . . . . . . . . . . . . . . . .
Commerical Paper. . . . . . . . . . . . . . . . . . . .
Common Stock. . . . . . . . . . . . . . . . . . . . . .
Preferred Stock . . . . . . . . . . . . . . . . . . . .
Time Deposits . . . . . . . . . . . . . . . . . . . . .
U.S. Government Securities. . . . . . . . . . . . . . .
Securities Lending. . . . . . . . . . . . . . . . . . .
Illiquid Securities . . . . . . . . . . . . . . . . . .
Short Sales . . . . . . . . . . . . . . . . . . . . . .
Rule 144A Securities. . . . . . . . . . . . . . . . . .
Borrowing . . . . . . . . . . . . . . . . . . . . . . .
Other Investments . . . . . . . . . . . . . . . . . . .
Investment Restrictions. . . . . . . . . . . . . . . . . .
Investment Advisory and Other Services
Investment Advisory Agreement . . . . . . . . . . . . .
Sub-Advisory Agreement. . . . . . . . . . . . . . . . .
Administrator . . . . . . . . . . . . . . . . . . . . .
Distributor . . . . . . . . . . . . . . . . . . . . . .
Trustees and Officers. . . . . . . . . . . . . . . . . . .
Net Asset Value. . . . . . . . . . . . . . . . . . . . . .
Taxes. . . . . . . . . . . . . . . . . . . . . . . . . . .
Federal Income Tax. . . . . . . . . . . . . . . . . . .
Portfolio Transactions . . . . . . . . . . . . . . . . . .
Performance Information
In General. . . . . . . . . . . . . . . . . . . . . . .
Total Return Calculation. . . . . . . . . . . . . . . .
Performance and Advertisements . . . . . . . . . . . .
Other Information. . . . . . . . . . . . . . . . . . . . .
Shareholder Liability . . . . . . . . . . . . . . . . .
Limitations on Trustees' Liability. . . . . . . . . . .
THE TRUST AND THE FUND
This Statement of Additional Information relates to The Cruelty Free
Value Fund (the "Fund"), a separate series of Beacon Global Advisors
Trust (the "Trust"), a diversified, open-end management company
established on August 29, 1996 under Delaware law as a Delaware
business trust. The Trust Instrument permits the Trust to offer
separate series of shares of beneficial interest. The Trust
currently is comprised of one series, which offers its shares through
one class of shares. To the extent that the Trust is a newly formed
entity, it has no prior history.
Much of the information contained in this Statement of Additional
Information expands upon subjects discussed in the Prospectus. No
investment in shares of the Fund should be made without first reading
the Prospectus.
INVESTMENT POLICIES AND TECHNIQUES
The following supplements the information contained in the Prospectus
for the Fund regarding the permitted investments and risk factors and
the investment objective and policies of the Fund.
Bankers' Acceptances
Negotiable bills of exchange or time drafts drawn on and accepted by
a commercial bank, meaning, in effect, that the bank unconditionally
agrees to pay the face value of the instrument on maturity. Bankers'
acceptances are used by corporations to finance the shipment and
storage of goods and to furnish dollar exchanges. Maturities are
generally six months or less.
Certificates of Deposit
Certificates of deposit are a negotiable interest bearing instrument
with a specific maturity. Certificates of deposit are issued by U.S.
commercial banks and savings and loan institutions in exchange for
the deposit of funds and normally can be traded in the secondary
market prior to maturity. Certificates of deposit generally carry
penalties for early withdrawal.
Commercial Paper
Commercial paper represents short-term unsecured promissory notes
issued in bearer form by banks or bank holding companies,
corporations and finance companies.
Common Stock
Common stock is defined as shares of a corporation that entitle the
holder to a pro rata share of the profits of the corporation, if any,
without a preference over any other shareholder or class of
shareholders, including holders of the corporation's preferred stock
and other senior equity. Common stock usually carries with it the
right to vote, and frequently, an exclusive right to do so. Holders
of common stock also have the right to participate in the remaining
assets of the corporation after all other claims, including those of
debt securities and preferred stock, are paid.
Preferred Stock
Generally, preferred stock receives dividends prior to distributions
on common stock and usually has a priority of claim over common
stockholders if the issuer of the stock is liquidated. Unlike common
stock, preferred stock does not usually have voting rights; preferred
stock, in some instances, is convertible into common stock. In order
to be payable, dividends on preferred stock must be declared by the
issuer's Board of Trustees. Dividends on the typical preferred stock
are cumulative, causing dividends to accrue even if not declared by
the issuer. There is, however, no assurance that dividends will be
declared by the issuers of the preferred stocks in which the Fund
invests.
Time Deposits
Time deposits are a non-negotiable receipt issued by a bank in
exchange for the deposit of funds. Like a certificate of deposit, it
earns a specified rate of interest over a definite period of time;
however, it cannot be traded in the secondary market. Time deposits
in excess of seven days with a withdrawal penalty are considered to
be illiquid securities. The Fund will not invest more than 15% of
its net assets in illiquid securities, including such time deposits.
U.S. Government Securities
The Fund may invest in U.S. Government obligations including bills,
notes, bonds and other debt securities issued by the U.S. Treasury
and backed by the "full faith and credit" of the U.S. Government.
These securities are direct obligations of the U.S. Government and
differ mainly in their interest rates and the length of their
maturities.
Securities Lending
The Fund may lend portfolio securities to broker-dealers and
financial institutions provided that (1) the loan is secured
continuously by collateral marked-to-market daily, and maintained in
an amount at least equal to the current market value of the
securities loaned; (2) the Fund may call the loan at any time and
receive the securities loaned; (3) the Fund will receive any interest
or dividends paid on the loaned securities and (4) the aggregate
market value of securities loaned by the Fund will not at any time
exceed 33% of the total assets of the Fund.
Collateral will consist of U.S. government securities, cash
equivalents or irrevocable letters of credit. Loans of securities
involve a risk that the borrower may fail to return the securities or
may fail to maintain the proper amount of collateral. Therefore, the
Fund will only enter into portfolio loans after a review by the
Advisor, under the supervision of the Board of Trustees, including a
review of the creditworthiness of the borrower. Such reviews will be
monitored on an ongoing basis.
Illiquid Securities
The Board of Trustees has delegated the function of making day-to-day
determinations of liquidity to the Advisor pursuant to guidelines
reviewed by the Board of Trustees. The Advisor will monitor the
liquidity of securities held by the Fund, and report periodically on
such determinations to the Board of Trustees. The Fund will not
invest more than 15% of its assets in illiquid securities (securities
that may not be sold within seven days at approximately the price
used in determining the net asset valueof Fund shares), including
restricted securities. See "Rule 144A Securities" below.
Short Sales
To secure the Fund's obligation to replace any borrowed security, it
will place in a segregated account, an amount of cash or U.S.
Government securities equal to the difference between the market
value of the securities sold short at the time of the short sale, and
any cash or U.S. Government securities originally deposited with the
broker in connection with the short sale (excluding the proceeds of
the short sale). The Fund will thereafter maintain daily the
segregated amount at such a level that the amount deposited in it
plus the amount originally deposited with the broker as collateral
will equal the greater of the current market value of the securities
sold short, or the market value of the securities at the time they
were sold short.
Rule 144A Securities
The Fund may invest in securities that are exempt from the
registration requirements of the Securities Act of 1933 pursuant to
Securities Exchange Commission ("SEC") Rule 144A. Those securities,
purchased pursuant to Rule 144A, are traded among qualified
institutional buyers, and are subject to the Fund's limitation on
illiquid investment.
Investing in securities under Rule 144A could have the effect of
increasing the levels of the Fund's illiquidity to the extent that
qualified institutional buyers become, for a time, uninterested in
purchasing these securities. The Fund will limit its investments in
securities of issuers which the Fund is restricted from selling to
the public without registration under the Securities Act of 1933 to
no more than 15% of the Fund's net assets, excluding restricted
securities eligible for resale pursuant to Rule 144A that have been
determined to be liquid by the Fund's Board of Trustees.
Borrowing
The Fund may borrow money as a temporary measure for extraordinary
purposes or to facilitate redemptions. The Fund will not purchase
securities while its borrowings exceed 5% of its total assets. The
Fund has no intention of increasing its net income through borrowing.
Any borrowing will be done from a bank with the required asset
coverage of at least 300%.
Other Investments
Subject to prior disclosure to shareholders, the Board of Trustees
may, in the future, authorize the Fund to invest in securities other
than those listed here and in the prospectus, provided that such
investment would be consistent with the Fund's investment objective,
and that it would not violate any fundamental investment policies or
restrictions applicable to the Fund.
INVESTMENT RESTRICTIONS
The investment restrictions set forth below are fundamental
restrictions and may not be changed without the approval of a
majority of the outstanding voting shares (as defined in the 1940
Act) of the Fund. Unless otherwise indicated, all percentage
limitations listed below apply only at the time of the transaction.
Accordingly, if a percentage restriction is adhered to at the time of
investment, a later increase or decrease in the percentage which
results from a relative change in values or from a change in the
Fund's total assets will not be considered a violation.
Except as set forth under "INVESTMENT OBJECTIVE AND POLICIES" and
"DESCRIPTION OF PERMITTED INVESTMENTS AND RISK FACTORS" in the
Prospectus, the Fund may not:
1. as to 75% of the Fund's total assets, invest more than 5%
of its total assets in the securities of any one issuer.
(This limitation does not apply to cash and cash items,
securities of investment companies, and obligations
issued or guaranteed by the U.S. government, its agencies
or instrumentalities);
2. invest more than 25% of the value of the Fund's total
assets in one particular industry, except for temporary
defensive purposes. For this purpose, "industry" does not
include the U.S. Government, its agencies and
instrumentalities;
3. issue senior securities or borrow money, except the Fund
may borrow from banks (i) for temporary or emergency
purposes in an amount not exceeding 5% of the Fund's
assets or (ii) to meet redemption requests that might
otherwise require the untimely disposition of portfolio
securities, in an amount up to 33 % of the value of the
Fund's total assets (including the amount borrowed)
valued at market less liabilities (not including the
amount borrowed) at the time the borrowing was made.
While borrowing exceeds 5% of the value of the Fund's
total assets, the Fund will not purchase securities.
Interest paid on borrowing will reduce net income.
4. pledge, hypothecate, mortgage or otherwise encumber its
assets, except in an amount up to 33 % of the value of
its net assets but only to secure borrowing for temporary
or emergency purposes, such as to effect redemptions;
5. make loans, except through loans of securities or through
repurchase agreements, provided that, for purposes of
this restriction, the acquisition of bonds, debentures,
other debt securities or instruments, or participations
or other interest therein and investments in government
obligations, commercial paper, certificates of deposit,
bankers' acceptances or similar instruments will not be
considered the making of a loan;
6. engage in the business of underwriting the securities of
others, except to the extent that the Fund might be
considered an underwriter under the Federal securities
laws in connection with its disposition of securities;
7. purchase or sell real estate (except that investments in
securities of issuers that invest in real estate or other
instruments supported by interests in real estate are not
subject to this limitation, and except that the Fund may
exercise rights under agreements relating to such
securities, including the right to enforce security
interests to hold real estate acquired by reason of such
enforcement until that real estate can be liquidated in
an orderly manner);
8. purchase or sell commodities or commodity futures
contracts unless acquired as a result of owning
securities or other instruments.
The following investment limitations are not fundamental and may be
changed by the Fund's Board of Trustees without shareholder approval:
(i) The Fund does not currently intend to purchase securities
on margin, except for short-term credit necessary for
clearance of portfolio transactions.
(ii) The Fund does not currently intend to purchase securities
of other investment companies except as permitted by the
1940 Act and the rules and regulations thereunder.
(iii) The Fund does not currently intend to invest in oil, gas
or mineral exploration or development programs or leases,
except that investment in securities of issuers that
invest in such programs or leases and investments in
asset-backed securities supported by receivables
generated by such programs or leases are not subject to
this prohibition.
INVESTMENT ADVISORY AND OTHER SERVICES
Investment Advisory Agreement
The Fund and the Advisor have entered into an investment advisory
agreement (the "Investment Advisory Agreement"). The Investment
Advisory Agreement provides that the Advisor shall not be protected
against any liability to the Fund or its shareholders if it has
engaged in conduct constituting willful misfeasance, bad faith or
gross negligence on its part in the performance of its duties or from
reckless disregard of its obligations or duties thereunder.
The Investment Advisory Agreement provides that if, for any fiscal
year, any ratio of expenses of the Fund (including amounts payable to
the Advisor but excluding interest, taxes, brokerage, litigation and
other extraordinary expenses) exceeds limitations established by any
state in which the shares of the Fund are registered, the Advisor
will bear the amount of such excess.
The continuance of the Investment Advisory Agreement and Investment
Subadvisory Agreement, after the first two years, must be
specifically approved at least annually (i) by the vote of the
Trustees or by a vote of the shareholders of Fund, and (ii) by the
vote of a majority of the Trustees who are not parties to the
Investment Advisory Agreement or "interested persons" of any party
thereto, cast in person at a meeting called for the purpose of voting
on such approval. The Investment Advisory Agreement and Investment
Subadvisory Agreement will each terminate if assigned, and each is
terminable at any time without penalty by the Trustees of the Fund,
or by a majority of the outstanding shares of the Fund on not less
than 30 days' nor more than 60 days' written notice to the Advisor,
or by the Advisor on 90 days' written notice to the Fund.
Subadvisory Agreement
The Advisor has entered into an Investment Subadvisory Agreement with
Dreman Value Advisors, Inc. ("Dreman" or the "Subadvisor") to assist in
the selection and management of the Fund's investment securities.
It is the responsibility of the Subadvisor, under the direction of
the Advisor, to make the day-to-day investment decisions for the
Fund, to place the purchase and sale orders for the portfolio
transactions of the Fund consistent with the Animal Policy
established by the Advisor, and subject to the general direction of
the Advisor. The Advisor will review the portfolio to ensure
compliance with the Fund's guidelines regarding the humane treatment
of animals and will instruct the Subadvisor as to how to implement
these guidelines.
For its services, Dreman is paid an annual fee by the Advisor equal
to 0.50% of the first $50 million of average net assets, 0.35% of
average net assets from $50 million to $100 million, and 0.25% of
average net assets in excess of $100 million..
Administrator
FPS Services, Inc., 3200 Horizon Drive, P.O. Box 61503, King of
Prussia, PA 19406-0903 (the "Administrator") provides certain
administrative services to the Fund pursuant to an Administrative
Services Agreement.
Under the Administrative Services Agreement, the Administrator: (1)
coordinates with the Custodian and Transfer Agent and monitors the
services they provide to the Fund; (2) coordinates with and monitors
any other third parties furnishing services to the Fund; (3) provides
the Fund with necessary office space, telephones and other
communications facilities and personnel competent to perform
administrative and clerical functions; (4) supervises the maintenance
by third parties of such books and records of the Fund as may be
required by applicable federal or state law; (5) supervises the
preparation by third parties of all federal, state and local tax
returns and reports of the Fund required by applicable law; (6)
prepares and, after approval by the Fund, files and arranges for the
distribution of proxy materials and periodic reports to shareholders
of the Fund as required by applicable law; (7) prepares and, after
approval by the Fund, arranges for the filing of such registration
statements and other documents with the SEC and other federal and
state regulatory authorities as may be required by applicable law;
(8) reviews and submits to the officers of the Fund for their
approval invoices or other requests for payment of the Fund's
expenses and instructs the Custodian to issue checks in payment
thereof and (9) takes such other action with respect to the Fund as
may be necessary in the opinion of the Administrator to perform its
duties under the agreement.
Pursuant to this Administrative Services Agreement, FPS receives a
fee computed at the annual rate of 0.15% of the first $50 million of
total average net assets, 0.10% of the next $50 million of total average
net assets and 0.05% of total net assets in excess of $100 million.
Pursuant to the Administrative Services Agreement, aggregate administration
fees shall not be less than $55,000.
Distributor
Beacon Global Advisors, Inc. serves as the Fund's Distributor
pursuant to a Distribution Agreement (the "Distribution Agreement").
Shares of the Fund are subject to a distribution plan (the
"Distribution Plan") pursuant to Rule 12b-1 under the 1940 Act. As
provided in the Distribution Plan, the Fund will pay an annual fee of
0.25% of the Fund's average daily net assets to Beacon Global
Advisors, Inc. as compensation for its services. From this amount,
Beacon Global Advisors, Inc. may make payments to financial
institutions and intermediaries such as banks, savings and loan
associations, insurance companies, investment counselors and
broker-dealers as compensation for services, reimbursement of expenses
incurred in connection with distribution assistance or provision of
shareholder services. The Distribution Plan is characterized as a
compensation plan because the distribution fee will be paid to the
distributor without regard to the distribution or shareholder service
expenses incurred by Beacon Global Advisors, Inc. or the amount of
payments made to financial institutions and intermediaries. The Fund
intends to operate the Distribution Plan in accordance with its terms
and within the rules of the National Association of Securities
Dealers, Inc. concerning sales charges. Pursuant to such rules, the
distributor is required to limit aggregate initial sales charges and
asset-based sales charges to 6.25% of total gross sales.
The Distribution Plan will continue in effect from year to year,
provided that each such continuance is approved at least annually by
a vote of the Board of Trustees, including a majority vote of the
Rule 12b-1 trustees, cast in person at a meeting called for the
purpose of voting on such continuance. The Distribution Plan may be
terminated at any time, without penalty, by vote of a majority of the
Rule 12b-1 trustees or by vote of the holders of a majority of the
outstanding shares of the applicable class on not more than 60 days',
nor less than 30 days' written notice to any other party to the
Distribution Plan. The Distribution Plan may not be amended to
increase materially the amounts to be spent for the services
described herein without approval by the shareholders, and all
material amendments are required to be approved by the Board of
Trustees. The Distribution Plan will automatically terminate in the
event of its assignment. Pursuant to the Distribution Plan, the
Board of Trustees will review at least quarterly a written report of
the distribution expenses incurred on behalf of the Fund. The report
will include an itemization of the distribution expenses and the
purpose of such expenditures.
TRUSTEES AND OFFICERS
The Trustees and executive officers of the Fund and their principal
occupations for the last five years are set forth below. Each Trustee
who is an "interested person" of the Fund, as that term is defined in the
1940 Act, is indicated by an asterisk.
[ TRUSTEE INFORMATION TO BE INCLUDED AT THE NEXT FILING]
NET ASSET VALUE
A more complete discussion of the Fund's determination of net asset
value is contained in the Prospectus. The net asset value per share
is computed by dividing the value of the assets of the Fund, less its
liabilities, by the number of shares outstanding.
The net asset value of all outstanding shares will be computed on a
pro-rata basis for each outstanding share based on the proportionate
participation in the Fund represented by the value of shares. All
income earned and expenses incurred by the Fund will be borne on a
pro-rata basis by each outstanding share.
Portfolio securities are valued and net asset value per share is
determined as of the close of regular trading on the New York Stock
Exchange ("NYSE") which currently is 4:00 p.m. (Eastern Time), on
each day the NYSE is open for trading. The NYSE is open for trading
every day except Saturdays, Sundays and the following holidays: New
Year's Day, Presidents' Day, Good Friday, Memorial Day, Independence
Day, Labor Day, Thanksgiving and Christmas. Additionally, if any of
the aforementioned holidays falls on a Saturday, the NYSE will not be
open for trading on the preceding Friday and when such holiday falls
on a Sunday, the NYSE will not be open for trading on the succeeding
Monday, unless unusual business conditions exist, such as the ending
of a monthly or the yearly accounting period.
TAXES
The following is only a summary of certain federal tax considerations
generally affecting the Fund and its shareholders that are not
described in the Prospectus, and is not intended as a substitute for
careful tax planning. Shareholders are urged to consult their tax
advisors with specific reference to their own tax situations,
including their state and local tax liabilities. Non-U.S. investors
should consult their tax advisors concerning the tax consequences of
ownership of shares of the Fund, including the possibility that
distributions may be subject to a 30% United States withholding tax.
Federal Income Tax
The following discussion of federal income tax consequences is based
on the Code and the regulations issued thereunder as in effect on the
date of this Statement of Additional Information. New legislation,
as well as administrative changes or court decisions, may
significantly change the conclusions expressed herein, and may have a
retroactive effect with respect to the transactions contemplated
herein.
The Fund intends to qualify as a "regulated investment company"
("RIC") as defined under Subchapter M of the Code. By following such
a policy, the Fund expects to eliminate or reduce to a nominal amount
the federal income taxes to which it may be subject. In order to
qualify for treatment as a RIC under the Code, the Fund generally
must distribute annually to its shareholders at least 90% of its
investment company taxable income (generally, net investment income
plus net short-term capital gain) (the "Distribution Requirement")
and also must meet several additional requirements. Among these
requirements are the following: (i) at least 90% of the Fund's gross
income each taxable year must be derived from dividends, interest,
payments with respect to securities loans, and gains from the sale or
other disposition of stock or securities, or certain other income;
(ii) the Fund must derive less than 30% of its gross income each
taxable year from the sale or other disposition of stocks or
securities held for less than three months; (iii) at the close of
each quarter of the Fund's taxable year, at least 50% of the value of
its total assets must be represented by cash and cash items, U.S.
Government securities, securities of other RICs and other securities,
with such other securities limited, in respect to any one issuer, to
an amount that does not exceed 5% of the value of the Fund's assets
and that does not represent more than 10% of the outstanding voting
securities of such issuer and (iv) at the close of each quarter of
the Fund's taxable year, not more than 25% of the value of its assets
may be invested in securities (other than U.S. Government securities
or the securities of other RICs) of any one issuer or of two or more
issuers which the Fund controls and which are engaged in the same,
similar or related trades or businesses. Notwithstanding the
Distribution Requirement described above, which requires only that
the Fund distribute at least 90% of its annual investment company
taxable income and does not require any minimum distribution of net
capital gain (the excess of net long-term capital gain over net
short-term capital loss), the Fund will be subject to a nondeductible
4% federal excise tax to the extent that it fails to distribute by
the end of any calendar year 98% of its ordinary income for that year
and 98% of its capital gain net income (the excess of short- and
long-term capital gains over short- and long-term capital losses) for
the one-year period ending on October 31 of that year, plus certain
other amounts. The Fund intends to make sufficient distributions of
its ordinary income and capital gain net income prior to the end of
each calendar year to avoid liability for federal excise tax.
Any gain or loss recognized on a sale, redemption or exchange of
shares of the Fund by a non-exempt shareholder who is not a dealer in
securities generally will be treated as a long-term capital gain or
loss if the shares have been held for more than twelve months and
otherwise generally will be treated as a short-term capital gain or
loss. If shares of the Fund on which a net capital gain distribution
has been received are subsequently sold, redeemed or exchanged and
such shares have been held for six months or less, any loss
recognized will be treated as a long-term capital loss to the extent
of the long-term capital gain distribution.
In certain cases, the Fund will be required to withhold, and remit to
the United States Treasury, 31% of any distributions paid to a
shareholder who (1) has failed to provide a correct taxpayer
identification number, (2) is subject to backup withholding by the
Internal Revenue Service or (3) has not certified to the Fund that
such shareholder is not subject to backup withholding.
If the Fund fails to qualify as a RIC for any taxable year, it will
be subject to tax on its taxable income at regular corporate rates.
In such an event, all distributions from the Fund generally would be
eligible for the corporate dividend received deduction for corporate
shareholders.
PORTFOLIO TRANSACTIONS
The Fund does not have an obligation to deal with any broker/dealer
or group of broker/dealers in the execution of transactions in
portfolio securities.
Subject to policies established by the Trustees, the Advisor is
responsible for placing the orders to execute transactions for the
Fund. In placing orders, it is the policy of the Fund to seek to
obtain the best net results taking into account such factors as price
(including the applicable dealer spread), the size, type and
difficulty of the transaction involved, the firm's general execution
and operational facilities, and the firm's risk in positioning the
securities involved. While the Advisor generally seeks reasonably
competitive spreads, the Fund will not necessarily be paying the
lowest spread available.
It is not the Fund's practice to allocate brokerage or principal
business on the basis of sales of its shares which may be made
through brokers or dealers. However, the Advisor may place portfolio
orders with qualified broker/dealers who recommend the Fund to
clients, and may, when a number of brokers and dealers can provide
best net results on a particular transaction, consider such
recommendations by a broker or dealer in selecting among
broker/dealers.
PERFORMANCE INFORMATION
In General
From time to time, the Fund may include general comparative
information, such as statistical data regarding inflation, securities
indices or the features or performance of alternative investments, in
advertisements, sales literature and reports to shareholders. The
Fund may also include calculations, such as hypothetical compounding
examples or tax-free compounding examples, which describe
hypothetical investment results in such communications. Such
performance examples will be based on an express set of assumptions
and are not indicative of the performance of the Fund.
From time to time, the total return of the Fund may be quoted in
advertisements, shareholder reports or other communications to
shareholders.
Total Return Calculation
The Fund computes average annual total return by determining the
average annual compounded rate of return during specified periods
that equate the initial amount invested to the ending redeemable
value of such investment. This is done by dividing the ending
redeemable value of a hypothetical $1,000 initial payment by $1,000
and raising the quotient to a power equal to one divided by the
number of years (or fractional portion thereof) covered by the
computation and subtracting one from the result. This calculation
can be expressed as follows:
Average Annual Total Return = P (1 + T)n = ERV
Where: ERV = ending redeemable value at the end of
the period covered by the computation of
a hypothetical $1,000 payment made at the
beginning of the period.
P = hypothetical initial payment of $1,000.
n = period covered by the computation,
expressed in terms of years.
T = average annual total return.
The Fund computes the aggregate total return by determining the
aggregate compounded rate of return during specified period that
likewise equate the initial amount invested to the ending redeemable
value of such investment. The formula for calculating aggregate
total return is as follows:
Aggregate Total Return = [ ERV - 1 ]
P
Where: ERV = ending redeemable value at the end of
the period covered by the computation of
hypothetical $1,000 payment made at the
beginning of the period.
P = hypothetical initial payment of $1,000.
The calculations of average annual total return and aggregate total
return assume the reinvestment of all dividends and capital gain
distributions on the reinvestment dates during the period. The
ending redeemable value (variable "ERV" in each formula) is
determined by assuming complete redemption of the hypothetical
investment and the deduction of all nonrecurring charges at the end
of the period covered by the computations.
Since performance will fluctuate, performance data for the Fund
should not be used to compare an investment in the Fund's shares with
bank deposits, savings accounts and similar investment alternatives
which often provide an agreed-upon or guaranteed fixed yield for a
stated period of time. Shareholders should remember that performance
is generally a function of the kind and quality of the instruments
held in a portfolio, portfolio maturity, operating expenses and
market conditions.
Performance and Advertisements
From time to time, in marketing and other fund literature, the Fund's
performance may be compared to the performance of other mutual funds
in general or to the performance of particular types of mutual funds
with similar investment goals, as tracked by independent
organizations. Among these organizations, Lipper Analytical
Services, Inc. ("Lipper"), a widely used independent research firm
which ranks mutual funds by overall performance, investment
objectives and assets, may be cited. Lipper performance figures are
based on changes in net asset value, with all income and capital
gains dividends reinvested. Such calculations do not include the
effect of any sales charges imposed by other funds. The Fund will be
compared to Lipper's appropriate fund category, that is, by fund
objective and portfolio holdings. The Fund's performance may also be
compared to the average performance of its Lipper category.
The Fund's performance may also be compared to the performance of
other mutual funds by Morningstar, Inc. ("Morningstar") which ranks
funds on the basis of historical risk and total return.
Morningstar's rankings range from five stars (highest) to one star
(lowest) and represent Morningstar's assessment of the historical
risk level and total return of a fund as a weighted average for
three, five and ten year periods. Ranks are not absolute or
necessarily predictive of future performance. The Fund may also
compare its performance to a wide variety of indices.
In assessing such comparisons of yield, return or volatility, an
investor should keep in mind that the composition of the investments
in the reported indices and averages is not identical to those of the
Fund, that the averages are generally unmanaged, and that the items
included in the calculations of such averages may not be identical to
the formula used by the Fund to calculate its figures.
OTHER INFORMATION
Shareholder Liability
The Trust is an entity of the type commonly known as a "Delaware
business trust." Under Delaware law, shareholders of such a trust
could, under certain circumstances, be held personally liable as
partners for the obligations of the trust. Even if, however, the
Fund were held to be a partnership, the possibility of the
shareholders incurring financial loss for that reason appears remote
because the Trust Instrument contains an express disclaimer of
shareholder liability for obligations of the Trust and requires that
notice of such disclaimer be given in each agreement, obligation or
instrument entered into or executed by or on behalf of the Trust or
the Trustees, and because the Trust Instrument provides for
indemnification out of the Trust property for any shareholder held
personally liable for the obligations of the Trust.
Limitation of Trustees' Liability
The Trust Instrument provides that a Trustee shall be liable only for
his own willful defaults and, if reasonable care has been exercised
in the selection of officers, agents, employees or investment
advisers, shall not be liable for any neglect or wrongdoing of any
such person. The Trust Instrument also provides that the Trust will
indemnify its Trustees and officers against liabilities and expenses
incurred in connection with actual or threatened litigation in which
they may be involved because of their offices with the Trust unless
it is determined in the manner provided in the Trust Instrument that
they have not acted in good faith in the reasonable belief that their
actions were in the best interests of the Trust. However, nothing in
the Trust Instrument shall protect or indemnify a Trustee against any
liability for his willful misfeasance, bad faith, gross negligence or
reckless disregard of his duties.
Custodian
The Bank of New York, 48 Wall Street, New York, New York 10286 is
custodian of the Fund's assets pursuant to a custody agreement.
Under the custody agreement, The Bank of New York (i) maintains a
separate account or accounts in the name of the Fund, (ii) holds and
transfers portfolio securities on account of the Fund, (iii) accepts
receipts and makes disbursements of money on behalf of the Fund, (iv)
collects and receives all income and other payments and distributions
on account of the Fund's securities, and (v) makes periodic reports
to the Board of Trustees concerning the Fund's operations.
Independent Accountants
Ernst & Young LLP, 1225 Connecticut Avenue, N.W., Washington, DC
20036 has been selected as the independent accountants for the Fund.
Ernst & Young LLP provides audit and tax services. The books of the
Fund will be audited at least once a year by Ernst & Young LLP.
Reports to Shareholders
Shareholders will receive unaudited semi-annual reports describing
the Fund's investment operations and annual financial statements
audited by independent accountants.
Shareholder Inquiries
Inquiries regarding the Fund may be directed to the Advisor by
calling (800) 662-9992.
BEACON GLOBAL ADVISORS TRUST
Form N-1A
Part C -- Other Information
Part C. Other Information
Item 24. Financial Statements and Exhibits.
(a) Financial Statements.
(To be filed by amendment.)
(b) Exhibits:
Exhibits filed pursuant to Form N-1A:
(1) Trust Instrument filed herewith.
(2) By-Laws are filed herewith.
(3) Voting Trust Agreement -- None
(4) All Instruments Defining the Rights of Holders --
None
(5) Investment Advisory Contracts -- (To be filed by
Amendment.)
(6) Underwriting Agreement -- (To be filed by
Amendment.)
(7) Bonus, Profit Sharing, Pension or Other Similar
Contracts -- None
(8) Custodian Agreements -- (To be filed by
Amendment.)
(9) (a) Transfer Agent Services Agreement -- (To
be filed by Amendment.)
(b) Administration Agreement -- (To be filed
by Amendment.)
(c) Accounting Services Agreement -- (To be
filed by Amendment.)
(10) (a) Opinion and Consent of Kirkpatrick &
Lockhart LLP regarding the legality of
the securities being issued -- (To be
filed by Amendment.)
(11) Consent of Independent Auditors -- (To be filed
by Amendment.)
(12) Financial Statements Omitted from Item 23.-- None
(13) Agreements or Understandings Made inConsideration
for Providing the Initial Capital -- None
(14) Model Plan -- None
(15) Plan of Distribution pursuant to Rule 12b-1 --
(To be filed by Amendment.)
(16) Schedule for Computation of Performance
Quotations -- None.
(17) Financial Data Schedule -- None.
(18) Plan of Distribution pursuant to Rule 18f-3 with
respect to Multiple Class Shares -- None.
(19) Trustees' Powers of Attorney -- (To be filed by
Amendment.)
Item 25. Persons Controlled by or Under Common Control with
Registrant.
None.
Item 26. Number of Holders of Securities.
None.
Item 27. Indemnification.
Reference is made to Article X of the Registrant's Trust
Instrument (filed herewith as Exhibit 1.)
Insofar as indemnification for liabilities arising under
the Securities Act of 1933 may be permitted to trustees,
officers and controlling persons of the Registrant by the
Registrant pursuant to the Trust's Trust Instrument, its
By-Laws or otherwise, the Registrant is aware that in the
opinion of the Securities and Exchange Commission, such
indemnification is against public policy as expressed in
the Act and, therefore, is 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 trustees, officers or controlling
persons of the Registrant in connection with the
successful defense of any act, suit or proceeding) is
asserted by such trustees, officers or controlling
persons in connection with shares 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 issues.
Item 28. Business and Other Connections of Investment Adviser.
Beacon Global Advisors, Inc., 8260 Greensboro Drive,
Suite 250, McLean, Virginia 22102-380 provides investment
advisory services to individual and institutional
investors, and as of September 30, 1996 had approximately
$____ million in assets under management.
For information as to any other business, vocation or
employment of a substantial nature in which each Trustee
or officer of the Registrant's investment adviser has
been engaged for his own account or in the capacity of
Trustee, officer, employee, partner or trustee, reference
is made to Form ADV (File #801-_____) filed by it under
the Investment Advisers Act of 1940.
Item 29. Principal Underwriter.
(a) Beacon Global Advisors, Inc., the principal
underwriter for the Registrant's securities,
currently acts as principal underwriter for the
following entities:
[ NEED INFORMATION ]
(b) The table below sets forth certain information as to
the Underwriter's Directors, Officers and Control
Persons:
Position Position and
Name and Principal and Offices Offices with
Business Address with Underwriter Registrant
[ NEED INFORMATION ]
(c) Not Applicable.
tem 30. Location of Accounts and Records.
All records described in Section 31(a) of the 1940 Act and
the Rules 17 CFR 270.31a-1 to 31a-3 promulgated thereunder,
are maintained by the Trust's Investment Adviser, Beacon
Global Advisors, Inc., 8260 Greensboro Drive, Suite 250,
McLean, Virginia 22102, except for those maintained by the
Fund's Custodian, The Bank of New York, 48 Wall Street, New
York, New York 10172 and the Trust's Administrator, Transfer
Agent and Fund Accounting Services Agent, FPS Services Inc.,
3200 Horizon Drive, P.O. Box 61503, King of Prussia, PA
19406-0903.
Item 31. Management Services.
There are no management-related service contracts not
discussed in Part A or Part B.
Item 32. Undertakings.
(a) Registrant hereby undertakes to file an amendment to
this Registration Statement with certified financial
statements showing the initial capital received
before accepting subscriptions from any person in
excess of 25 if Registrant proposes to raise its
initial capital pursuant to Section 14(a)(3) of the
1940 Act.
(b) Registrant hereby undertakes to file a post-effective
amendment within four to six months from the
effective date of this Registration Statement under
the Securities Act of 1933. Registrant understands
that such post-effective amendment will contain
reasonably current financial statements which need
not be certified by independent public accountants.
(c) Registrant hereby undertakes to furnish each person
to whom a prospectus is delivered with a copy of the
Registrant's latest Annual Report to Shareholders
upon request and without charge.
(d) The Registrant hereby undertakes to promptly call a
meeting of shareholders for the purpose of voting
upon the question of removal of any director or
directors when requested in writing to do so by the
record holders of not less than 10 percent of the
Registrant's outstanding shares and to assist its
shareholders in accordance with the requirements of
Section 16(c) of the Investment Company Act of 1940
relating to shareholder communications.
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940 the Registrant has duly caused this
Registration Statement to be signed on its behalf by the undersigned,
thereunto duly authorized, in the City of McLean, and State of
Virginia on the 28th day of October, 1996.
Beacon Global Advisors Trust
Registrant
By /s/ Robert J. Henrich
Robert J. Henrich
President
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement of Beacon Global Advisors Trust has been
signed below by the following persons in the capacities and on the
date indicated.
Signature Capacity Date
/s/ Robert J. Henrich As Sole Trustee 10/28/96
Robert J. Henrich
/s/ Robert J. Henrich As President and 10/28/96
Robert J. Henrich Principal Executive Officer
/s/ Robert J. Henrich As Treasurer and 10/28/96
Robert J. Henrich Principal Accounting and
Financial Officer
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BEACON GLOBAL ADVISORS TRUST
Index to Exhibits to Form N-1A
Exhibit Page
99.B1 Trust Instrument
99.B2 By-Laws
Dates Referenced Herein and Documents Incorporated by Reference
| Referenced-On Page |
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| This ‘N-1A EL’ Filing | | Date | | First | | Last | | | Other Filings |
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| |  |
| Corrected on: | | 4/21/04 |
| Changed as of: | | 8/31/99 |
| Filed on: | | 10/28/96 | | 1 | | | | | N-8A |
| | 9/30/96 | | 10 |
| | 8/29/96 | | 9 |
| | 12/31/95 | | 5 |
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