<PAGE>
AS FILED WITH THE U.S. SECURITIES AND EXCHANGE COMMISSION
ON JANUARY 29, 1998 REGISTRATION NOS.: 333-14919
811-07879
- --------------------------------------------------------------------------------
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 X
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Pre-Effective Amendment No. [_]
Post-Effective Amendment No. [2]
and/or
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 X
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Amendment No. [4]
BEACON GLOBAL ADVISORS TRUST
----------------------------
(Exact Name of Registrant as Specified in Charter)
8260 Greensboro Drive, Suite 250, McLean, Virginia 22102-3801
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(Address of Principal Executive Offices) (Zip Code)
(703) 883-0865
--------------
(Registrant's Telephone Number, including Area Code)
Robert J. Henrich, Managing Director
Beacon Global Advisors, Inc.
8260 Greensboro Drive, Suite 250
McLean, Virginia 22102-3801
---------------------------
(Name and Address of Agent for Service)
COPIES TO:
Arthur J. Brown, Esq. Michelle A. Whalen
Kirkpatrick & Lockhart LLP FPS Services, Inc.
1800 Massachusetts Avenue, N.W. 3200 Horizon Drive
Washington, DC 20036 P.O. Box 61503
King of Prussia, PA 19406
It is proposed that this filing become effective (check appropriate box):
_____ immediately upon filing pursuant to paragraph (b)
_____ on ( date ) pursuant to paragraph (b)
X 60 days after filing pursuant to paragraph (a)(1)
-----
_____ on (date) pursuant to paragraph (a)(1)
_____ 75 days after filing pursuant to paragraph (a)(2)
_____ on (date) pursuant to paragraph (a)(2) of rule 485
If appropriate, check the following box:
_____ this post-effective amendment designates a new effective date
for a previously filed post-effective amendment
<PAGE>
BEACON GLOBAL ADVISORS TRUST
CROSS-REFERENCE SHEET
[AS REQUIRED BY RULE 481A]
<TABLE>
<CAPTION>
PART A.
ITEM NO. PROSPECTUS CAPTION
- -------- ---------------------------------
<S> <C>
Item 1. Cover Page Cover Page
Item 2. Synopsis Expense Summary
Item 3. Condensed Financial Information Financial Highlights
Item 4. General Description of Registrant Mission Statement and Animal Policy;
Introduction; Investment Objective;
Investment Policies and Strategies;
Investment Process; Investment Practices
and Risk Factors; Description of Shares
of Beneficial Interest
Item 5. Management of the Fund Management of the Fund; Distribution Plan
Item 5a. Management's Discussion of Fund Performance Inapplicable
Item 6. Capital Stock and Other Securities Description of Shares of Beneficial Interest;
Net Asset Value; Dividends and Taxes;
Item 7. Purchase of Securities Being Offered How to Purchase Shares
Item 8. Redemption or Repurchase How to Redeem Shares
Item 9. Legal Proceedings Inapplicable
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
PART B. STATEMENT OF ADDITIONAL
ITEM NO. INFORMATION CAPTION
- -------- -----------------------
<S> <C>
Item 10. Cover Page Cover Page
Item 11. Table of Contents Table of Contents
Item 12. General Information and History The Trust and The Fund
Item 13. Investment Objectives and Policies Additional Information on Investment
Policies and Techniques; Investment
Restrictions; Additional Information
on Portfolio Transactions
Item 14. Management of the Fund Investment Advisory and
Other Services; Trustees and Officers
Item 15. Control Persons and Principal Holders of Principal Shareholders
Securities
Item 16. Investment Advisory and Investment Advisory and
Other Services Other Services
Item 17. Brokerage Allocation and Additional Information on Portfolio
Other Practices Transactions
Item 18. Capital Stock and Other Securities Other Information
Item 19. Purchase, Redemption and Pricing of How to Purchase Shares; How to
Securities Being Offered Redeem Shares (See Prospectus)
Item 20. Tax Status Additional Information Concerning Taxes
Item 21. Underwriters Investment Advisory and Other
Services
Item 22. Calculation of Performance Data Additional Information on Performance
Information
Item 23. Financial Statements Financial Statements
</TABLE>
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 Post-Effective Amendment No. 2 to the
Registration Statement.
<PAGE>
THE CRUELTY FREE VALUE FUND
8260 Greensboro Drive, Suite 250
McLean, Virginia 22102-3801
(800) 892-9626
PROSPECTUS March , 1998
================================================================================
"The greatness of a nation and its moral progress can be judged by the way its
animals are treated. I hold that, the more helpless a creature, the more
entitled it is to protection by man from the cruelty of man."
Mahatma Gandhi
THE CRUELTY FREE VALUE FUND (the "Fund") is a separate, diversified investment
portfolio offered by Beacon Global Advisors Trust (the "Trust"), a no-load,
open-end management investment company. The Fund seeks to achieve capital
appreciation by investing in common stocks of companies which meet a screening
process regarding the humane treatment of animals.
While providing its shareholders with an investment seeking capital
appreciation, 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 will be screened by the investment advisor,
Beacon Global Advisors, Inc. (the "Advisor") using its guidelines concerning the
humane treatment of animals, see "Animal Policy." The Fund will invest
principally in equity securities of small companies with market capitalizations
ranging from $100 million to $1 billion that Scudder Kemper Investments, Inc.
(the "Subadvisor" or "SKI") (formerly known as Zurich Kemper Value Advisors and
Dreman Value Advisors, Inc.) believes to be undervalued.
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
the Subadvisor's traditional "long" investment strategy, however, the Fund may
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 the information about the Fund that an
prospective investor should know before investing in the Fund. It should be
Please read this Prospectus carefully and retained it for future reference. A
Statement of Additional Information ("SAI"), dated March , 1998, about the
Fund. It has been filed with the U.S. Securities and Exchange Commission (the
"SEC") and is incorporated by reference into this Prospectus in its entirety.
The SAI can be obtained without charge by calling the Fund at (800) 892-9626, or
writing to the Fund at the address above. The SAI, material incorporated by
reference into this Prospectus, and any other information regarding the Fund is
maintained electronically with the SEC at its Internet Web sight
(http:\\www.sec.gov).
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE U.S. SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE U.S.
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.
Page 4
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
<S> <C>
Expense Summary
Financial Highlights
Historical Investment Results of the Subadvisor
Mission Statement and Animal Policy
Introduction
Investment Objective
Investment Policies and Strategies
Investment Process
Investment Practices and Risk Factors
Management of the Fund
Distribution Plan
Description of Shares of Beneficial Interest
How to Purchase Shares
How to Redeem Shares
Net Asset Value
Dividends and Taxes
Performance Information
General Information
</TABLE>
DISTRIBUTOR: INVESTMENT ADVISOR:
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
(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.
Page 5
<PAGE>
EXPENSE SUMMARY
The following table illustrates all expenses and fees that a shareholder of the
Fund will incur.
SHAREHOLDER TRANSACTION EXPENSES:
Maximum Sales Load Imposed on Purchases None
Maximum Sales Load Imposed on Reinvested
Dividends None
Deferred Sales Load None
Redemption Fees None
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:
<TABLE>
<CAPTION>
(as a percentage of average net assets)
<S> <C>
Management Fees 0.00% (after reimbursement)
12b-1 Fees 0.25%
Other Expenses 1.70% (after reimbursement)
-----
Total Fund Operating Expenses 1.95% (after reimbursement)
=====
</TABLE>
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:
<TABLE>
<CAPTION>
1 Year 3 Years 5 Years 10 Years
------ ------- ------- --------
<S> <C> <C> <C>
$20 $61 $105 $227
</TABLE>
The above table reflects a continuation of the Advisor's voluntary undertaking
to waive all or a portion of the Management Fees and to reimburse certain
expenses to limit the Total Operating Expenses of the Fund to 1.95% 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. Any
reductions in the Advisor's fee are subject to reimbursement by the Fund within
the following three years, to the extent such reimbursement would not cause
Total Operating Expenses to exceed 1.95%. Absent such fee waivers and
reimbursement of expenses, the Management Fees, Other Expenses, and Total Fund
Operating Expenses, respectively, would be: 1.25%, 28.19%, and 29.69%. See
"Management of the Fund" for advisory fee breakpoints.
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."
Page 6
<PAGE>
FINANCIAL HIGHLIGHTS
The following sets forth information for THE CRUELTY FREE VALUE FUND regarding
per share income and capital changes for the period of commencement of
operations to November 30, 1997, which have been audited by Johnson Lambert &
Co., independent accountants, whose unqualified report on the November 30, 1997
financial statements appears in the Fund's Annual Report to Shareholders. This
information should be read in conjunction with the financial statements and
accompanying notes appearing in the 1997 Annual Report to Shareholders which are
incorporated by reference into the Statement of Additional Information.
<TABLE>
<CAPTION>
For the Period
April 29, 1997/*/ through
November 30, 1997
-------------------------
<S> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 25.00
-------------------------
Income from investment operations:
Net investment loss (0.05)
Net realized and unrealized gain on investments 3.01
-------------------------
Total from investment operations 2.96
-------------------------
NET ASSET VALUE, END OF PERIOD $ 27.96
=========================
TOTAL RETURN 11.84% /1/
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (in 000s) $ 1,168
Ratio of expenses to average net assets:
Before expense reimbursement 29.69% /2/
After expense reimbursement 1.95% /2/
Ratio of net investment loss to average net assets:
Before expense reimbursement (28.16%) /2/
After expense reimbursement (0.42%) /2/
Portfolio turnover rate 15.06% /1/
Average commission rate paid $ 0.0698
</TABLE>
* Commencement of investment operations
/1/ Not Annualized
/2/ Annualized
Page 7
<PAGE>
HISTORICAL INVESTMENT RESULTS OF THE SUBADVISOR
The table below, which was supplied by the Subadvisor, shows composite
performance results relating to certain assets which it manages. This composite
is comprised of the assets of one registered investment company and all those
assets of similarly managed discretionary accounts of the Subadvisor's tax-
exempt clients. These results are not those of the Fund. The investment
objectives of these accounts are substantially similar to that of the Fund and
they are managed using substantially similar investment strategies and
techniques as those of the Fund, except that no screening for the humane
treatment of animals was used by the Subadvisor. If the screening criteria that
had been used in managing the Fund (using data available as of December, 1997)
had been applied with respect to the accounts, of the investments in the
accounts at any one time over the nine year period ending December 31, 1997,
would have been prohibited investments for the Fund and the differential in
performance immaterial. It cannot be determined that future holdings of the Fund
would be substantially identical to those in the otherwise similar accounts
managed by the Subadvisor.
The accounts, with the exception of the registered investment company, are not
subject to certain limitations, diversification requirements and other
restrictions that are imposed by the Investment Company Act of 1940, as amended
(the "Act") and the Internal Revenue Code on investment companies such as the
Fund. If these restrictions had been applicable to the accounts, such
restrictions might have adversely affected the performance reflected below.
The performance presented is not intended to predict or suggest that such
returns will be experienced by the Fund or by an investor investing in the Fund.
An investor should not rely on the following performance information to be an
indication of future performance of the Fund or the composite performance of
similar SKI accounts. Different methods of determining performance from those
described in the footnotes below may result in different performance figures.
SCUDDER KEMPER INVESTMENTS, INC.
SMALL CAP EQUITY COMPOSITE (SCEC) VS. RUSSELL 2000 INDEX
<TABLE>
<CAPTION>
SCEC Russell 2000
Year Total Index
Ended Return Total Return
<S> <C> <C>
1989 + 7.2% +16.2%
1990 -11.6% -19.5%
1991 +50.5% +46.0%
1992 +29.0% +18.4%
1993 + 1.7% +18.9%
1994 + 0.3% - 1.9%
1995 +43.7% +28.5%
1996 +30.5% +16.5%
1997 +18.77% +20.52%
Page 8
</TABLE>
<PAGE>
Another way to consider the above schedule is as follows: a hypothetical $10,000
investment in the Small Cap Equity Composite on December 31, 1988 would have
grown to $______ by December 31, 1997, including reinvestment of dividends. The
average annual rate of return from December 31, 1988 through December 31, 1997,
including reinvestment of dividends, is ______% for the Small Cap Equity
composite ______% and for the Russell 2000 Index. The average annual rate of
return for the period December 31, 1991 through December 31, 1997, including
reinvestment of dividends, is ______% for the Small Cap Equity Composite and
______% for the Russell 2000 Index.
NOTES TO INVESTMENT RESULTS OF SUBADVISOR
1. TYPES OF ACCOUNTS INCLUDED IN THE SMALL CAP EQUITY COMPOSITE
The Small Cap Equity Composite performance figures from 1989 (the year the
Subadvisor began managing assets using the small cap strategy) through 1992 are
the equally-weighted average of the time-weighted returns from within the
composite. From January 1993 onward, performance is portfolio size-weighted
pursuant to new standards established by the Association for Investment
Management and Research ("AIMR") which became effective in January 1993. From
January 1989 through December 1997, the composite includes one registered
investment company and all the Subadvisor's similarly managed discretionary
accounts of tax-exempt clients. At December 31, 1997 the composite, which
included ______ accounts and one registered investment company, had total assets
of $______ million. New accounts are eligible for inclusion in the composite
upon completion of the first full quarter under management. Closed accounts are
eligible for inclusion in the composite through completion of the last full
quarter under management.
2. CALCULATION OF RATES OF RETURN
All rate of return calculations conform to standards established by AIMR. All
accounts are valued monthly based on principal market values. Account returns
are calculated monthly utilizing the Bank Administration Institute methodology
where security and cash flows are "day-weighted" during the month. All amounts
are rounded to the nearest one-tenth of one percent.
3. FEES
Fees are contractual with each individual client and vary among clients.
Performance is net of expenses including investment management fees and
transaction costs. Fund expenses are higher than the average expenses borne by
the accounts.
4. RUSSELL 2000 INDEX
The Russell 2000 Index was chosen for comparison purposes because it contains
companies with market capitalizations similar to the market capitalization of
companies eligible for investment by the Fund. The Russell 2000 Index is a
widely recognized unmanaged index of common stock prices comprised of the
smallest 2000 stocks in the Russell 3000 Index, which is an annual ranking of
3000 common stocks by market capitalization. The Russell 2000 Index represents
approximately 10% of the total market capitalization of the Russell 3000 Index.
MISSION STATEMENT
AND
ANIMAL POLICY
The Advisor has created the Fund as a means for individuals and institutions to
pool their assets and invest in companies that satisfy the Subadvisor's small
cap growth profile and also do not harm animals.
The Fund is dedicated to providing an 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 (or subsidiaries of such companies) that,
in the opinion of the Advisor, (1) employ animal testing in their product
development; (2) sponsor inappropriate uses of animals as entertainment (i.e.
bullfights, rodeos or circuses); (3) slaughter animals by any method; (4) sell
captured wild animals as pets or sell dogs raised in "puppy mills"; (5) have
been found to have violated either a state cruelty law or the Federal Animal
Welfare
Page 9
<PAGE>
Act; or (6) otherwise have a corporate policy which results in the unnecessary
pain and suffering of animals.
The Fund will specifically consider for investment, within the investment style
of the Subadvisor, companies which have adopted cruelty-free or humane policies
towards animals.
The Advisor may gather screening information through publicly available sources
such as corporate annual reports, and newswire services, but mainly through
animal welfare publications by such organizations as People for the Ethical
Treatment of Animals, The National Anti-Vivisection Society and The American
Anti-Vivisection Society. Research information may also be gathered from
financial and business organization reporting services such as Dun & Bradstreet
and Bloomberg. Any company included on lists of companies that are inhumane
provided by the animal welfare organizations selected by the Advisor will be
ineligible for investment. If the Advisor becomes aware of other companies that
are not listed but appear to have inhumane policies, such other companies will
also be ineligible for investment by the Fund.
This method of "screening out" companies could result in the exclusion of a
company that has corrected its practices and policies in the period since it was
listed, or it could result in an investment by the Fund in a company which
engages in inhumane practices but has escaped listing by any of the monitoring
organizations. The Fund will not knowingly invest in a company that does not
pass the screening process.
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.
The Fund's Animal Policy limits the investments available for it to consider
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 that do not have 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
organizations which the Advisor utilizes for screening purposes may be
incomplete or inaccurate.
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 at such time as the Fund attains more than $20 million in
assets. The Advisor will establish 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 foundation will
be funded once the Fund reaches the asset level specified above. The board of
directors of the foundation 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 of the foundation will be responsible for the ongoing due
diligence to ensure that all donations are being used as directed. Shareholders
of the Fund will be informed of the foundation's progress. It is expected that
members of the advisory board of the foundation will be prominent people
involved in the animal rights movement.
INTRODUCTION
This Prospectus provides information which is helpful for potential investors
in making 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 and Subadvisor in accordance with the Fund's investment objective. Other
parts of this Prospectus provide information concerning an investment in the
Fund such as the risks 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 investing or sending money and please retain for future reference.
Page 10
<PAGE>
INVESTMENT OBJECTIVE
The investment objective of the Fund is capital appreciation. The Fund's
Advisor and Subadvisor will seek to attain this objective while maintaining the
Fund's commitment to encourage the humane treatment of animals. See "Mission
Statement and 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 SAI. There can be no assurance
that the Fund will achieve its investment objective.
INVESTMENT POLICIES AND STRATEGIES
The Fund's assets will be invested primarily in common stock or preferred stock
of small capitalization companies, i.e., those companies with market
capitalizations at the time of purchase ranging from $100 million to $1 billion,
that the Subadvisor believes to be undervalued. According to the Subadvisor,
securities of a company may be undervalued as a result of overreactions by
investors to unfavorable news about a company, industry or the stock markets in
general or as a result of market decline, poor economic conditions, tax-loss
selling or actual or anticipated unfavorable developments affecting the company.
Under normal market conditions, at least 65% of the total assets of the Fund
will be invested in securities of companies whose market capitalizations are
less than $1 billion. Under normal circumstances, the Fund expects to be almost
fully invested in common stocks. The Subadvisor 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 meet the Subadvisor's criteria for
growth described below under "Investment Process," but also meet the Advisor's
screening process with respect to the humane treatment of animals. See "Mission
Statement and Animal Policy."
The Fund may also engage in portfolio management techniques such as selling
short, selling short against-the-box, and lending securities. See "Investment
Practices and Risk Factors."
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 utilizes a stock's Price/Earnings Ratio
("P/E"). A low P/E value is important because, in the opinion of the
Subadvisor, it tends to be a historic indicator of undervaluation. The second
criteria considered is the price-to-book ratio. The Subadvisor concentrates on
stocks whose market price is low in relation to book value. Further
quantitative analysis of these stocks 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 will be
considered for investment. The Subadvisor closely analyzes the stocks and
favors 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.
For temporary defensive purposes, the Fund may invest up to 100% of its total
assets in money market instruments. To the extent and for the time period that
the Fund is invested in temporary defensive instruments, it will not be pursuing
Page 11
<PAGE>
its investment objective.
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
investing directly in equity securities, that is, the value of the investment
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 than it was at the time of
purchase. 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 and
Subadvisor's investment program. The Advisor and Subadvisor attempt to reduce
the overall risks by investing in a diversified portfolio through the
implementation of the above-described investment process. The Advisor has been
engaged in the investment advisory business providing investment advice to
individuals, corporations and offshore investment funds since 1994. The
Subadvisor, has over twelve years of experience managing mutual funds.
SMALL CAP SECURITIES
The Fund's investment primarily in smaller companies involves greater risk than
investment in larger, more established companies. Investments in securities of
companies with small market capitalizations are generally considered to offer
greater opportunity for appreciation and to involve greater risks of
depreciation than securities of companies with larger market capitalizations.
Since the securities of companies with small capitalizations are not as broadly
traded as those of companies with larger market capitalizations, these
securities are often subject to wider and more abrupt fluctuations in market
price.
Among the reasons for the greater price volatility of these securities are the
less certain growth prospects of smaller firms, the lower degree of liquidity in
the markets for such stocks compared to larger capitalization stocks, and the
greater sensitivity of small companies to changing economic conditions. In
addition to exhibiting greater volatility, small company stocks may, to a
degree, fluctuate independently of larger company stocks. Small company stocks
may decline in price as large company stock prices rise, or rise in price as
large company stock prices decline. Historically, funds that invest in small
company stocks exhibit more volatility; investors should, therefore, expect that
the value of the Fund's shares may be more volatile than the shares of a fund
that invests in larger capitalization stocks.
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 Subadvisor
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.
Page 12
<PAGE>
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. To secure the Fund's
obligation to replace any borrowed security, it will place in a segregated
account, an amount of cash or liquid securities, at such a level that (i) the
amount deposited in the account plus the amount deposited with the broker as
collateral will equal the current value of the security sold short and (ii) the
amount deposited in the segregated account plus the amount deposited with the
broker as collateral will not be less than the market value of the security at
the time it was sold short; or otherwise cover its short position in accordance
with positions taken by the SEC.
In addition to the short sales discussed above, the Fund may also make short
sales "against the box", i.e., short sales made when the Fund owns securities
identical to those sold short. The Fund may only engage in short sale
transactions in securities listed on one or more national securities exchange or
on NASDAQ.
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, respectively. The Trustees review the various services
provided by the Advisor and Subadvisor to ensure that the Fund's general
investment policies and programs are being carried out and 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 SAI.
THE INVESTMENT ADVISOR
Beacon Global Advisors, Inc., 8260 Greensboro Drive, Suite 250, McLean, Virginia
22102-3801, serves as the Fund's investment advisor and manager, and is an
investment advisor 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. As of December 31,
1997, the Advisor was investment management consultant to other mutual funds
and individuals with respect to approximately $100 million in assets.
The Advisor continuously reviews, supervises and administers the Fund's
investment programs and implements its screening policy, subject to the
supervision of, and policies established by, the Trustees of the Trust. The
Advisor currently delegates certain of these services to the Subadvisor.
For its services as investment advisor, the Fund pays the Advisor a monthly fee
which is calculated daily by applying an annual rate of 1.25% of the first $100
million of average daily net assets, 1.00% of average daily net assets from $100
million to $500 million, and 0.75% of average daily net assets over $500
million. 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 to an annual rate of not more than 1.95% of the Fund's average daily
net assets. The Advisor reserves the right to terminate its voluntary fee waiver
and reimbursement at any time at its sole discretion. Any amounts waived or
reimbursed 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 limitation of
1.95%.
THE SUBADVISORS
Scudder Kemper Investments, Inc., (formerly known as Zurich Kemper Value
Advisors and Dreman Value Advisors, Inc.), 345 Park Avenue New York, New York,
10154 serves as the Fund's investment subadvisor.
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The Subadvisor is one of the largest investment managers in the country and has
been engaged in the management of investment funds for more than forty-eight
years.
The Subadvisor provides investment advice and manages investment portfolios for
the Zurich Kemper Funds and Scudder Funds, affiliated insurance companies and
other corporate, pension, profit-sharing and individual accounts representing
approximately $200 billion under management.
The Subadvisor provides the Fund and the Advisor with investment research,
advice, information and recommendations concerning securities to be acquired,
held or sold by the Fund and places orders to implement those recommendations
that survive the Advisor's screening criteria. For its services, the Advisor
pays to the Subadvisor, 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.
The Subadvisor has managed mutual funds since 1985 and is currently responsible
for investments with a market value over $4 billion.
The investment management team at the Subadvisor responsible for overseeing all
investments made by the Fund includes William F. Coughlin, CFA, Their respective
biographies follow.
William F. Coughlin, CFA, 41, Vice President and Portfolio Manager, Scudder
Kemper Investments, 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. 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. Mr. Coughlin received his BA and MBA degrees in Finance from
Babson College.
THE ADMINISTRATOR
FPS Services, Inc. ("FPS"), 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, dissemination of certain
information to the Fund's shareholders, and financial and management reporting.
FPS also provides all necessary office space, equipment, personnel and
facilities. Subject to a minimum annual fee of $55,000, FPS receives an annual
fee, accrued daily and paid monthly, of 0.15% of the average daily net assets of
the Fund for providing administrative services.
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THE TRANSFER AGENT AND FUND ACCOUNTANT
As Transfer Agent, FPS 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. As Fund Accountant, FPS
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 (i.e. costs of printing annual reports, semi-annual reports and
prospectuses which are distributed to existing shareholders); brokerage
commissions for portfolio trades; registering and qualifying shares of the Fund
for sale with the SEC and with various state securities commissions; the
organization of the Fund; transfer agent, custodian and administrator fees;
obtaining quotations for 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); 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 Subadvisor 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 or Subadvisor) 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 Subadvisor 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.
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 Subadvisor 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.
DISTRIBUTION PLAN
The Board of Trustees of the Trust has adopted a distribution plan (the
"Distribution Plan") for the shares of the Fund pursuant to Rule 12b-1 under the
Act. As provided in the Distribution Plan, the Fund will pay an annual fee up to
0.25% of the average daily net assets of the Fund to Beacon Global Advisors,
Inc. (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
the rules of the National Association of Securities Dealers, Inc. (the "NASD")
concerning sales charges.
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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.
DESCRIPTION OF SHARES OF BENEFICIAL INTEREST
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. 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. All accounts
will be maintained in book entry form and no share certificates will be
issued.
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.
Ms. Caroline Gabel may be deemed to be a "control person" (as defined in the
Act) of the Fund, because as of January 9, 1998, she owned of record 45.86% of
the Fund.
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.
HOW TO PURCHASE SHARES
GENERAL
Shares of the Fund are offered on a continuous basis at the net asset value next
determined following receipt by the Fund's transfer agent, FPS Services, Inc.
(the "Transfer Agent"), of a purchase order in proper form. Purchasers of Fund
shares pay no "sales load"; the full amount of the purchase price goes toward
the purchase of shares of the Fund.
Purchase orders for shares of the Fund that are received by the Transfer Agent
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.
PURCHASES BY MAIL
An account may be opened and shares of the Fund purchased by completing the
Account Application Form (the "Application") accompanying this Prospectus and
mailing it, together with a check or money order for the desired amount, payable
to "THE CRUELTY FREE VALUE FUND" c/o FPS Services, Inc, 3200 Horizon Drive,
P.O.
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Box 61503, King of Prussia, PA 19406-0903. The minimum amount for an initial
purchase of shares is $250. The minimum amount for IRA and SEP accounts is
also $250.
PLEASE NOTE: The Fund will not accept third party checks for the purchase of
shares. Third party checks are those that are made out to someone other than
the Fund and are endorsed over to the Fund. In order to ensure receipt of good
funds, the Fund reserves the right to delay sending redemption proceeds up to 15
days if shares were recently purchased by check. A $20 fee will be charged to
the account for any payment check returned to the custodian.
PURCHASES BY WIRE TRANSFER
Shareholders may also pay for shares by instructing their commercial bank
that is a member of the Federal Reserve System to wire Federal funds to the
Transfer Agent. The bank must include the full name(s) in which the account is
registered and the Fund account number, and should address its wire as
follows:
UMB Bank KC NA
ABA #10-10-00695
For: FPS Services, Inc.
Account Number: 98-7037-071-9
FBO: "THE CRUELTY FREE VALUE FUND"
-----------------------------
Account of (exact name(s) of account registration)
Shareholder Account # _____________________
Before making an initial investment by wire transfer, an investor must first
telephone the Transfer Agent at (800) 892-9626 or (610) 239-4600 to request an
account number and furnish the Fund with the appropriate taxpayer identification
number or Social Security number. In addition, a completed Application with
signature(s) of account owner(s) must be promptly forwarded to: FPS Services,
Inc., 3200 Horizon Drive, P.O. Box 61503, King of Prussia, PA 19406-0903. The
bank may impose a fee for investments by wire transfer. 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
Shares of the Fund may also be purchased by telephone through an investor's
broker, financial institution or service organization that has 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 their 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 Transfer Agent before 5:00 p.m. Eastern time
on the same day, are confirmed at that day's net asset value. 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 $100 for all accounts.
When making subsequent investments by mail, please return the bottom portion of
a previous confirmation with a check or money order for the desired amount 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 the Transfer Agent receives the check
or money order.
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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 purchase Fund shares by check or money order may not
receive redemption proceeds until there is reasonable belief that the check has
cleared, which may take up to fifteen calendar business days after the purchase
date. The Fund and the Transfer Agent each reserves the right to reject any
purchase order in whole or in part. The Fund and the Transfer Agent 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 signature guarantee may be obtained
from any commercial bank, credit union, member firm of a national securities
exchange, registered securities association, clearing agency or savings and loan
association. A credit union must be authorized to issue signature guarantees.
Signature guarantees will be accepted from any eligible guarantor institution
that participates in a signature guarantee program. Notary public endorsement
will not be accepted. 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 Transfer 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
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A redemption request will not be deemed to be properly received until the
Transfer Agent receives all required documents in proper form. If there are any
questions with respect to the proper form for redemption requests the Transfer
Agent can be contacted at (800) 892-9626 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 may,
however, delay mailing the proceeds of a redemption until it is reasonably
satisfied that the check used to pay for the shares has cleared, which may take
up to 15 business days after the purchase date. 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. 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 need for 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 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 SEC has, by order, permitted such suspension; (3) an emergency
exists, as defined by rules of the SEC, 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.
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 $250 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.
TELEPHONE REDEMPTIONS
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
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are reasonably believed to be genuine. In this regard, the Fund and the Transfer
Agent require personal identification information before accepting a telephone
redemption. To the extent that the Fund or the Transfer Agent fails 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.
NET ASSET VALUE
The net asset value per share is calculated 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, Martin Luther King, Jr. 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 intends to distribute its net investment income, if any, annually.
Any net gain realized from the sale of portfolio securities also will be
distributed at least annually unless it is 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
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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. The Fund intends to make sufficient distributions prior to the
end of each calendar year in order to avoid liability for federal excise tax.
An investment in the Fund has certain tax consequences, depending on the type of
account. 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. Sale or
redemption of the Fund's shares are a taxable event to the shareholder. For
qualified retirement accounts, taxes are generally deferred until distributions
are made from the retirement account.
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 SAI. 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.
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.
THE TAXPAYER RELIEF ACT OF 1997
The Taxpayer Relief Act of 1997 (the "Relief Act"), which was signed into law on
August 5, 1997, is the most wide-ranging tax legislation since 1986. Several
provisions therein will impact the taxation of capital gains.
The Relief Act has lowered the tax rate on individuals, estates and trusts for
long-term capital gains from 28% to 20%, but increases the holding period of the
assets from more than one year to more than eighteen months. For persons in the
15% income tax bracket, the new rate is 10%. Realized gains from capital assets
held more than one year, but eighteen months or less, will be taxed at a 28%
rate. Such gains will be termed "mid-term" capital gains. Also, capital gains
in property held for more than five years will be eligible for an 18% tax rate,
but this only applies to assets acquired after December 31, 2000; therefore, a
shareholder would not benefit from this provision until the year 2006.
The rates which applied under prior law are effective for sales of capital
before May 7, 1997. Sale of capital assets on or after May 7, 1997, but before
July 29, 1997, will be subject to a 20% tax rate for assets held more than one
year. These new tax rates, including the new mid-term category, apply to the
sales of capital assets on or after July 29, 1997.
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
Page 21
<PAGE>
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 SAI for more information on performance.
Page 22
<PAGE>
INVESTMENT ADVISOR
Beacon Global Advisors, Inc.
8260 Greensboro Drive, Suite 250
McLean, Virginia 22102-3801
(800) 662-9992
(703) 883-0865
DISTRIBUTOR
Beacon Global Advisors, Inc.
8260 Greensboro Drive, Suite 250
McLean, Virginia 22102-3801
(800) 662-9992
(703) 883-0865
SHAREHOLDER SERVICES
FPS Services, Inc.
3200 Horizon Drive, P.O. Box 61503
King of Prussia, Pennsylvania 19406-0903
(800) 892-9626
(610) 239-4600
CUSTODIAN
The Bank of New York
48 Wall Street
New York, New York 10286
LEGAL COUNSEL
Kirkpatrick & Lockhart LLP
1800 Massachusetts Avenue, N.W.
Washington, DC 20036-1800
AUDITORS
Johnson Lambert & Co.
7500 Old Georgetown Road
Bethesda, MD 20814
For Additional Information about
The Cruelty Free Value Fund call (800) 892-9626
http://www.crueltyfree.com
Page 23
<PAGE>
THE CRUELTY FREE VALUE FUND
8260 Greensboro Drive, Suite 250
McLean, Virginia 22102-3801
(800) 892-9626
STATEMENT OF ADDITIONAL INFORMATION
MARCH , 1998
================================================================================
This Statement of Additional Information is not a prospectus but should be read
in conjunction with the current Prospectus for THE CRUELTY FREE VALUE FUND (the
"Fund"), a series of Beacon Global Advisors, Inc. (the "Trust"), dated March ,
1998, and is incorporated by reference in its entirety into 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 the Fund's Distributor, Beacon Global Advisors,
Inc. at the address or telephone number below.
DISTRIBUTOR: INVESTMENT ADVISOR:
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
(800) 662-9992 (800) 662-9992
(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.
Page 24
<PAGE>
TABLE OF CONTENTS
<TABLE>
<S> <C>
The Trust and the Fund
Additional Information on Investment Policies and Techniques
Common Stock
Preferred Stock
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, Transfer Agent and Fund Accountant
Distributor
Trustees and Officers
Compensation Table
Control Persons and Principal Holders of Securities
Net Asset Value
Additional Information Concerning Taxes
Federal Income Tax
Additional Information on Portfolio Transactions
Additional Information on Performance Information
In General
Total Return Calculation
Performance and Advertisements
Other Information
</TABLE>
Page 25
<PAGE>
THE TRUST AND THE FUND
This Statement of Additional Information provides additional information
regarding 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.
This Statement of Additional Information should be read in conjunction with the
Prospectus of the Fund having the same date as this Statement of Additional
Information. 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.
ADDITIONAL INFORMATION ON
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. Although the Fund may purchase the
securities or engage in investment practices noted below, the Fund has no
current intention to lend securities, purchase illiquid securities, purchase
Rule 144A securities or borrow securities during the coming year.
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 Directors or 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.
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 (including accrued interest and
dividends); (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 securities loans
after a review by the Advisor, under guidelines established by the supervision
of the Board of Trustees, including a review of the creditworthiness of the
borrower. Such reviews will be monitored by the Board of Trustees 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 or Subadvisor pursuant to guidelines
approved 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 net assets
in illiquid securities (securities that may not be sold within seven days at
approximately the price used in determining the net asset value of Fund shares),
including restricted securities. See "Rule 144A Securities" below.
Page 26
<PAGE>
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 liquid 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 liquid 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 U.S. Securities Exchange
Commission (the "SEC") Rule 144A. Those securities, purchased pursuant to Rule
144A, are traded among qualified institutional buyers, and may be 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 5% 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 Investment Company Act of 1940, as amended, (the
"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" "INVESTMENT POLICIES AND
STRATEGIES" "INVESTMENT PROCESS" and "INVESTMENT PRACTICES 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 25% or more of the value of the Fund's total assets in one
particular industry.
3. Issue any senior securities (as defined in the Act) or borrow money,
except 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.
Page 27
<PAGE>
4. Mortgage, pledge, hypothecate, 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, 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, which are not fundamental and may be
changed by the Fund's Board of Trustees without shareholder approval, provide
that the Fund may not:
1. Purchase securities on margin.
2. Purchase securities of other investment companies.
3. Invest or sell interests in oil, gas or other mineral exploration or
development programs or leases.
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 if
such liability results from reckless disregard of its obligations or duties
thereunder.
The continuance of the Investment Advisory 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
will terminate if assigned, and 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
60 days' written notice to the Advisor.
SUBADVISORY AGREEMENTS
- ----------------------
The Advisor has entered into a Subadvisory Agreement with Scudder Kemper
Investments, Inc. (the "Subadvisor") (formerly known as Zurich Kemper Value
Advisors and Dreman Value Advisors, Inc.) 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, and 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 proposed investments and 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.
Page 28
<PAGE>
For its services, the Subadvisor receives an annual fee equal to 0.50% of the
first $50 million of the Fund's average daily net assets, 0.35% of the Fund's
average daily net assets from $50 million to $100 million, and 0.25% of the
Fund's average daily net assets in excess of $100 million.
The continuance of the respective 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 Subadvisory Agreement or
"interested persons" of any party thereto, cast in person at a meeting called
for the purpose of voting on such approval. The Subadvisory Agreement will
terminate if assigned, and is terminable at any time without penalty by the
Advisor, Subadvisor or by the Trustees of the Fund, or by a majority of the
outstanding shares of the Fund on 60 days' written notice to the Advisor,
Subadvisor or the Fund.
SERVICE PROVIDER TO THE TRUST
- -----------------------------
FPS Services, Inc. ("FPS"), 3200 Horizon Drive, P.O. Box 61503, King of Prussia,
Pennsylvania 19406-0903 has been engaged by the Trust to provide most of the
back office services on the Trust's behalf. Pursuant to an agreement entitled
"Multiple Services Agreement" (the "Agreement"), FPS provides the services
commonly and separately referred to as: Fund Administration, Fund Accounting,
Transfer Agency and Custody Administration. The Agreement was approved by the
Board of Trustees at the organizational meeting of the Trust which was held on
January 27, 1997. The management of the Trust oversees FPS in the fulfillment
of its obligations under the Agreement and FPS reports to the Board on a
quarterly basis with regard to those obligations.
Included among the many tasks which FPS performs on behalf of the Trust are: (1)
coordination and monitoring, through the Fund Administration function, the
activities of any other third party service provider providing services to the
Fund (e.g. the Fund's independent auditors, printers, etc.); (2) providing the
Fund with necessary office space, telephones and other communications facilities
and personnel competent to perform the responsibilities under the Agreement; (3)
maintenance of such books and records of the Fund as may be required by
applicable federal or state law; (4) preparing and, after approval by the Fund,
filing and arranging for the distribution of proxy materials and periodic
reports to shareholders of the Fund as required by applicable law; (5)
preparing and, after approval by the Fund, arranging for the filing of such
registration statements and other documents with the SEC and any other federal
or state regulatory authorities as may be required by applicable law; (6)
reviewing and submitting 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 (7) taking such other action with
respect to the Fund as may be deemed necessary by FPS to appropriately perform
its duties under the Agreement.
For the fiscal year ended November 30, 1997, the Fund paid $14,000 and $32,440
in fees to FPS for Fund Accounting and Fund Administration services,
respectively.
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 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
Page 29
<PAGE>
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.
For the period ending November 30, 1997, Beacon Global Advisors, Inc. was paid
$1,150, pursuant to the Distribution Plan. The following costs were incurred
for distribution: compensation to dealers $1,150.
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 Trustees who are not parties to the
Distribution Plan or "interested persons" of any party thereto ("Disinterested
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 Disinterested Trustees or by vote of the
holders of a majority of the outstanding shares of the Fund 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 Trust, their position with the Trust,
their addresses, affiliations, if any, with the Investment Advisor, and
principal occupations during the past five years are set forth below. Each
Trustee who is an "interested person" of the Fund, as that term is defined in
the Act, is indicated by an asterisk.
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
Name and Address Age Position with Principal Occupation During the past five years
Trust
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Louis T. Donatelli 64 Trustee President and sole stockholder of Donatelli & Klein, Inc., an investment company
Artery Plaza specializing in real estate development and corporate acquisitions including
7200 Wisconsin Avenue television properties. Mr. Donatelli has a long career in the investment
Suite 310 business, beginning in 1956 at Harris Upham & Co. In 1963, he joined Hayden,
Bethesda, MD 20814 Stone & Company, a New York Stock Exchange member firm, and achieved Partner
status by 1968. Mr. Donatelli founded Donatelli & Klein, Inc. in 1974. Mr.
Donatelli holds a Bachelor of Science degree from Villanova University and has a
graduate degree in Business Management from American University. Mr. Donatelli
has been a member of the Board of Trustees of the Rushmore Natural Gas Index Fund
since 1992. He previously served as a member of the Board of Trustees at
Villanova University and is a Knight of Malta.
- ------------------------------------------------------------------------------------------------------------------------------------
Caroline D. Gabel* 56 Trustee Senior Policy Advisor to a member of the House of Representatives since 1970. In
654 F Street, NE this capacity, she is responsible for legislation within the jurisdiction of the
Washington, DC 20002 House Committee on Transportation and Infrastructure, including the Clean Water
Act, Superfund, aviation, highways, mass transit, water resources, railroads and
economic development. Ms. Gabel currently serves as a member of the Boards of
Directors of Orangutan Foundation International and Defenders of Wildlife and is
a member of the Board of Trustees of The Washington Opera. She is on the Board
of Advisors of the National Zoological Park and the Smithsonian Institution and
is a member of the Directors' Circle and Friends of the National Zoo. Ms. Gabel
is a graduate of Wellesley College where she received a Bachelor of Arts degree
in French, and of the University of Pennsylvania, where she received an MBA
degree in International Relations.
- ------------------------------------------------------------------------------------------------------------------------------------
Robert J. Henrich, Jr.* 47 Executive Founder and Managing Director of Beacon Global Advisors, Inc. Mr. Henrich served
8260 Greensboro Drive Vice as a First Vice President with E.F. Hutton & Co. and Paine Webber, Inc. from 1979
Suite 250 President, through 1994. Before joining E.F. Hutton, Mr. Henrich was a pension plan
McLean, VA 22102-3801 Treasurer and consultant with Jefferson Standard Insurance Company. Mr. Henrich received his
Trustee Bachelor of Science degree in Geology from the University of Maryland and earned
his MBA degree from the Florida Institute of Technology.
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
<TABLE>
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Peter G. Koltnow 68 Trustee Engineering consultant to the Koltnow American Trucking Associations and Board
9210 Fernwood Member of the ATA Foundation since 1991. He is a life member of the American
Bethesda, MD 20817 Society of Civil Engineers and served as Chairman of the Executive Committee of
the Transportation Research Board of the National Research Council in 1979. Mr.
Koltnow was counselor to the President of the American Trucking Association from
1985 through 1990. He was President of the Highway Users Federation from 1974 to
1985, and Vice President of this same organization from 1970 to 1974. From 1953
to 1967, he held traffic engineering positions in Dayton, Ohio and Fresno, and
Los Angeles, California. Mr. Koltnow has spent his entire working career in the
civil engineering field. Mr. Koltnow has served as a trustee on the Board of
Directors of the following mutual funds: Growth Fund of Washington, the GEICO
Government Securities Cash Fund and the GEICO Qualified Dividend Fund. He was
the co-founder and first President of the Candlelighters, an international
organization providing education and support to families faced with childhood
cancers, from 1970 through 1971. He is a former board member of the D.C.
Division of the American Cancer Society. Mr. Koltnow received his Bachelor of
Science degree from Antioch College and his Master of Science degree in civil
engineering from the University of California at Berkeley, California.
- ------------------------------------------------------------------------------------------------------------------------------------
Richard A. Ollen* 65 President and Principal Officer for the Richard Ollen Management Co. since 1993 and is also a
18 Summit Drive Chairman of Director and Registered Principal of Beacon Global Advisors, Inc. since 1995.
Grantham, NH 03753 the Board Mr. Ollen was past President and Director of American Guaranty & Trust Company,
Wilmington, Delaware from 1991 through 1993. Prior to that, he was President and
Director of GEICO Investment Services Company from 1981 through 1991. Mr. Ollen
was formerly Chairman and President (1985 through 1991) for the Board of The
Growth Fund of Washington and President and Trustee of Government Securities Cash
Fund and GEICO Qualified Dividend Fund (1982 through 1991). Prior to joining
GEICO, Mr. Ollen served as President and Director (1970 through 1978) and as Vice
President (1965 through 1970) of the Massachusetts Company Distributors, Inc., a
subsidiary of the Massachusetts Company, one of the oldest corporate trustees in
the United States. Mr. Ollen currently serves as a member of the Board of
Overseers of Northeastern University in Boston, Massachusetts. He has served as
a member of the Board of Regents (1980 through 1985) and as Chairman of the Board
of Regents (1983 through 1985) of the College for Financial Planning in Denver,
Colorado, and as a Director of the International Board of Standards and Practices
for Certified Financial Planners, Inc. (IBCFP)(1986 through 1989). Mr. Ollen
received his Bachelor of Science degree in Business Administration from
Northeastern University. He received his MBA degree from the University of
Pennsylvania, Wharton School of Finance.
- ------------------------------------------------------------------------------------------------------------------------------------
Michelle A. Whalen 28 Secretary Senior Corporate Compliance Administrator, (December 1997 to present), Corporate
3200 Horizon Drive Compliance Administrator (June 1994 to December 1997) FPS Services, Inc.; Mutual
King of Prussia, PA Fund/Corporate Administrator, Keane Tracers, Inc. (January 1992 to May 1994);
19406-0903 Assistant Secretary of Trainer Wortham First Mutual Funds (October 1995 to
Present). She received her Paralegal Certification from The Philadelphia
Institute and her Bachelor of Arts Degree in English from LaSalle University.
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
COMPENSATION TABLE
The officers and Trustees of the Trust who are also officers or employees of the
Advisor or FPS receive no direct compensation from the Trust for services to it.
The Trust pays each of the other Trustees an annual retainer of $1,000 plus a
fee of $500 for attendance at Board Meetings and reimburses each Trustee and
officer for out-of-pocket expenses in connection with travel and attendance at
such meetings. Members of the audit committee, Ms. Gabel and Messrs. Donatelli
and Koltnow, each receive $300 per audit committee meeting attended. Set forth
are the total fees which were paid to each of the Trustees from the commencement
of operations until December 31, 1997.
<TABLE>
<CAPTION>
Total
Aggregate Compensation from
Compensation from Trust and Fund
Name of Trustee Trust Complex Paid to Trustees
- --------------- ------------------- ------------------------
<S> <C> <C>
</TABLE>
Page 31
<PAGE>
<TABLE>
<S> <C> <C>
Louis T. Donatelli $1,500 $1,500
Caroline D. Gabel $1,000 $1,000
Robert J. Henrich, Jr. $ 0 $ 0
Peter G. Koltnow $1,500 $1,500
Richard A. Ollen $ 0 $ 0
</TABLE>
CONTROL PERSONS AND PRINCIPAL HOLDERS OF SECURITIES
As of January 9, 1998, the Trustees and officers, together as a group, owned
beneficially 25,445 shares or 58% of the Fund and Trust. As of January 9, 1998,
the following persons owned of record and beneficially more than 5% of the
outstanding voting shares of the Fund and Trust:
<TABLE>
<CAPTION>
Name & Address of Beneficial Owners Percentage
<S> <C>
Caroline D. Gabel 45.86%
654 F Street NE
Washington, DC 20002
Robert J. Henrich 9.15%
Trst Beacon Global Advisors Ltd.
8260 Greensboro Drive, Suite 250
McLean, VA 22102
Rick F. Gartner and 5.11%
Lauralee C. Blanchard JT WROS
581 Cress Street
Laguna Beach, CA 92651
</TABLE>
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.
ADDITIONAL INFORMATION
CONCERNING 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
Page 32
<PAGE>
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
Internal Revenue Code of 1986, as amended (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.
ADDITIONAL INFORMATION ON
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 Subadvisor 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
Page 33
<PAGE>
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 Subadvisor generally seeks reasonably competitive
spreads, the Fund will not necessarily be paying the lowest spread available.
ADDITIONAL INFORMATION ON
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. The Fund also may include historical
performance of the Dreman advisory accounts with substantially similar
investment policies.
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:
P (1 + T)/n/ = ERV
Where: ERV = ending redeemable value at the end of the period
covered by the computation of a hypothetical
initial payment of $1,000. made at the beginning
of the period.
P = hypothetical intitial 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 periods 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
Page 34
<PAGE>
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 that 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
LIMITATION OF TRUSTEES' LIABILITY
- ---------------------------------
The Trust Instrument provides that a Trustee shall be liable only for his or her
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 AUDITORS
- --------------------
Johnson Lambert & Co., 7500 Old Georgetown Road, Bethesda, MD 20814 has been
selected as the independent auditors for the Fund to provide audit and tax
services. The books of the Fund will be audited at least once a year by Johnson
Lambert & Co.
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.
FINANCIAL STATEMENTS
The audited financial statements and notes thereto for the Fund contained in the
Fund's 1997 Annual Report are
Page 35
<PAGE>
incorporated by reference into this Statement of Additional Information and have
been audited by Johnson Lambert & Co, whose report also appears in the Annual
Report and is also incorporated by reference herein. No other parts of the
Annual Report are incorporated by reference herein. Such financial statements
and notes thereto have been incorporated herein in reliance on the report of
Johnson Lambert & Co, independent accountants given on the authority of said
firm as experts in auditing and accounting, incorporated by reference from the
Fund's 1997 Annual Report to Shareholders.
Page 36
<PAGE>
PART C - OTHER INFORMATION
ITEM 24. FINANCIAL STATEMENTS AND EXHIBITS
(a) Financial Statements
Included in Part A:
Financial Highlights for THE CRUELTY VALUE FUND for the period ended
November 30, 1997.
Included in Part B:
THE CRUELTY FREE VALUE FUND
Portfolio of Investments at November 30, 1997, Statement of Assets and
Liabilities at November 30, 1997, Statements of Operations for the
period ended November 30, 1997, Statement of Changes in Net Assets for
the period ended November 30, 1997, Statement of Changes in Net Assets
for the period ended November 30, 1997, Financial Highlights for the
period ended November 30, 1997, and Notes to Financial Statements for
the period ended November 30, 1997.
(b) Exhibits:
Exhibits filed pursuant to Form N-1A:
(1) Trust Instrument is incorporated by reference to Exhibit No. (1)
of Registration Statement No. 333-14919 filed on October 28, 1996.
(2) By-Laws are incorporated by reference to Exhibit No. (2) of
Registration Statement No. 333-14919 filed on October 28, 1996.
(3) Voting Trust Agreement -- None
(4) All Instruments Defining the Rights of Holders -- None
(5) Investment Advisory Contracts -- Investment Advisory Contract is
incorporated by reference to Exhibit No. (5) of Pre-Effective
Amendment No. 1 to the Registration Statement No. 333-14919 filed
on February 12, 1997.
(a) Sub-Advisory Agreement between Scudder Kemper Investments,
Inc. and Beacon Global Advisors, Inc. is filed herewith.
(6) Underwriting Agreement -- Underwriting Agreement is incorporated
by reference to Exhibit No. (6) of Pre-Effective Amendment No. 1
to the Registration Statement No. 333-14919 filed on February 12,
1997.
(7) Bonus, Profit Sharing, Pension or Other Similar Contracts -- None
Page 37
<PAGE>
(8) Custodian Agreements -- Custody Agreement is incorporated by
reference to Exhibit No. (8) of Pre-Effective Amendment No. 1 to
the Registration Statement No. 333-14919 filed on February 12,
1997.
(9) Multiple Services Agreement -- Multiple Services Agreement is
incorporated by reference to Exhibit No. (9) of Pre-Effective
Amendment No. 1 to the Registration Statement No. 333-14919 filed
on February 12, 1997.
(10) (a) Opinion and Consent of Kirkpatrick & Lockhart LLP regarding
the legality of the securities being issued is incorporated by
reference to Exhibit (10)(a) of Pre-Effective No. 2 to the
Registration Statement No. 333-14919 filed on April 2, 1997.
(11) Consent of Independent Auditors is filed herewith.
(12) Financial Statements Omitted from Item 23 -- None
(13) Agreements or Understandings Made in Consideration for Providing
the Initial Capital --None
(14) Model Plan -- None
(15) Plan of Distribution pursuant to Rule 12b-1 --Distribution and
Services Plan pursuant to Rule 12b-1 is incorporated by reference
to Exhibit No. (15) of Pre-Effective Amendment No. 1 to
Registration Statement No. 333-14919 filed on February 12, 1997.
(16) Schedule for Computation of Performance Quotations -- None
(17) Financial Data Schedule is filed herewith
(18) Plan of Distribution pursuant to Rule 18f-3 with respect to
Multiple Class Shares -- None
(19) Trustees' Powers of Attorney -- Powers of Attorney for
Messrs. Donatelli, Henrich, Koltnow and Ollen are incorporated by
reference to Exhibit No. (19) of Pre-Effective Amendment No. 1 to
Registration Statement No. 333-14919 filed on February 12, 1997.
(a) Power of Attorney for Caroline D. Gabel is incorporated
by reference to Exhibit (19)(A) of Pre-Effective No. 2
to the Registration Statement No. 333-14919 filed on
April 2, 1997.
Item 25. Persons Controlled By or Under Common Control with Registrant.
Not Applicable.
Item 26. Number of holders of securities.
Title of Class
Common Stock Number of Record Holders
(Par Value $.001) As of January 9, 1998
THE CRUELTY FREE VALUE FUND 137
Item 27. Indemnification.
Reference is made to Article X of the Registrant's Trust Instrument (previously
filed herewith as Exhibit 1 of Registration Statement No. 333-14919 filed on
October 28, 1996.)
The Trust Instrument limits the liabilities of a Trustee to that of gross
negligence and in the event a Trustee is sued for his or her activities
concerning the Trust, the Trust will indemnify that Trustee to the fullest
extent permitted by law,
Page 38
<PAGE>
except if a Trustee engages in willful misfeasance, bad faith, gross negligence
or reckless disregard of the duties involved in the conduct of his or her
office.
Item 28(a) Business and Other Connections of Investment Adviser.
Beacon Global Advisors, Inc., 8260 Greensboro Drive, Suite 250, McLean, Virginia
22102-380 provides investment management consulting to individual and
institutional investors, with respect to approximately $100 million in assets,
as of January 9, 1998.
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 is or has been engaged for his own account or in the capacity
of Trustee, officer, employee, partner or trustee, reference is made to Form ADV
for Beacon Global Advisors, Inc. (File #801-48567) filed under the Investment
Advisers Act of 1940 which is incorporated herein by reference.
Item 28(b) Business and Other Connections of Officers and Directors of Scudder
Kemper Investments, Inc. ("SKI"), the investment Subadvisor. SKI, 345 Park
Avenue New York, New York, 10154 , provides investment advisory service to
mutual fund investors, retirement and pension plans, institutional and corporate
clients, insurance companies, and private family and individual accounts with
respect to $200 billion in assets as of December 31, 1997.
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 sub-adviser is or has been engaged for his own account or in the
capacity of Trustee, officer, employee, partner or trustee, reference is made to
Form ADV for SKI (File #801-252) filed under the Investment Advisers Act of 1940
which is incorporated herein by reference.
- --
Page 39
<PAGE>
Item 29. Principal Underwriter.
Page 40
<PAGE>
(a) Beacon Global Advisors, Inc., the principal underwriter for the
Registrant's securities, does not act as underwriter for any other
entities.
(b) The table below sets forth certain information as to the Underwriter's
Directors, Officers and Control Persons:
<TABLE>
<CAPTION>
POSITION POSITION AND
NAME AND PRINCIPAL AND OFFICES OFFICES WITH
BUSINESS ADDRESS WITH UNDERWRITER REGISTRANT
<S> <C> <C>
Robert J. Henrich Managing Director Executive President
Beacon Global Advisors, Inc. Vice President,
8260 Greensboro Drive Treasurer and
Suite 250 Trustee
McLean, VA 22102-3801
John Groth Managing Director None
Same as Above
Richard A. Ollen Director President and
Same as Above Chairman of the Board
</TABLE>
(c) Not Applicable.
Item 30. Location of Accounts and Records.
All records described in Section 31(a) of the Investment Company Act of 1940, as
amended and the Rules 17 CFR 270.31a-1 to 31a-3 promulgated thereunder, are
maintained by the Trust's Investment Advisor, 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.
Not applicable.
Page 41
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the Investment
Company Act of 1940. as amended, the Registrant certifies that it meets all of
the requirements for effectiveness of this registration statement pursuant to
Rule 485(b) under the Securities Act of 1933 and has duly caused this Post-
Effective Amendment No. 2 to its 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 29th day of January, 1998.
Beacon Global Advisors Trust
Registrant
By: /s/ Richard A. Ollen
-------------------------------
Richard A. Ollen, President
Pursuant to the requirements of the Securities Act of 1933, this Post-Effective
Amendment No. 2 to the 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/ Richard A. Ollen* President January 29, 1998
- --------------------------
Richard A. Ollen and Chairman of the Board
/s/ Robert J. Henrich* Executive Vice President, January 29, 1998
- --------------------------
Robert J. Henrich Treasurer & Trustee
/s/ Louis T. Donatelli* Trustee January 29, 1998
- --------------------------
Louis T. Donatelli
/s/ Caroline D. Gabel* Trustee January 29, 1998
- --------------------------
Caroline D. Gabel
/s/ Peter G. Koltnow* Trustee January 29, 1998
- --------------------------
Peter G. Koltnow
* /s/ Michelle A. Whalen
- --------------------------
Michelle A. Whalen, as Attorney-in-fact and Agent
pursuant to Power-of-Attorney
Page 42
<PAGE>
BEACON GLOBAL ADVISORS TRUST
Index to Exhibits to Form N-1A
Exhibit
(5b) Sub-Advisory Agreement between Scudder Kemper Investments, Inc. and
Beacon Global Advisors, Inc.
(11) Consent of Independent Auditors
(17) Financial Data Schedule for THE CRUELTY FREE VALUE FUND
Page 43
<PAGE>
SUB-INVESTMENT MANAGEMENT AGREEMENT
Agreement made this 5th day of January, 1998, by and between SCUDDER KEMPER
INVESTMENTS, INC., a Delaware corporation and registered investment adviser
("Sub-Adviser") and BEACON GLOBAL ADVISORS, INC., a corporation and registered
investment adviser ("Adviser").
WHEREAS, Beacon Global Advisors Trust, a Delaware business trust ("Trust")
is an open-end management investment company registered under the Investment
Company Act of 1940, as amended ("1940 Act"), the shares of beneficial interest
of the initial series of which are called The Cruelty Free Value Fund ("Fund")
and are registered under the Securities Act of 1933, as amended ("1933 Act");
WHEREAS, the Trust has retained the Adviser to render to it investment
advisory and management services pursuant to an Investment Management Agreement,
dated April 8, 1997 ("Management Agreement"); and
WHEREAS, the Adviser desires at this time to retain the Sub-Adviser to
render investment advisory and management services for the Fund and the Sub-
Adviser is willing to render such services;
NOW THEREFORE, in consideration of the mutual covenants hereinafter
contained, it is hereby agreed by and between the parties hereto as follows:
1. Appointment. The Adviser hereby appoints the Sub-Adviser, and the Sub-
-----------
Adviser accepts the appointment, to manage the investment and reinvestment of
the assets of the Fund and to furnish other services for the period and on the
terms set forth herein.
2. Delivery of Documents.
---------------------
(a) Adviser has furnished Sub-Adviser with copies properly certified or
authenticated of each of the following:
(i) Certificate of Trust, as filed with the Secretary of State of
Delaware on September 16, 1996, and all amendments thereto or restatements
thereof;
(ii) Trust Instrument and Trust's By-Laws and amendments thereto;
(iii) resolutions of Trust's Board of Trustees authorizing the
appointment of Sub-Adviser and approving this Agreement;
(iv) Trust's Notification of Registration on Form N-8A under the 1940
Act as filed with the Securities and Exchange Commission ("SEC") on October
28, 1996 and all amendments thereto; and
(v) Trust's Registration Statement on Form N-1A under the 1933 Act
(File No. 333-14919) and under the 1940 Act as filed with the SEC and all
amendments thereto.
<PAGE>
Adviser will furnish Sub-Adviser from time to time with copies of all
amendments of or supplements to the foregoing and Trust's most recent prospectus
and Statement of Additional Information (such prospectus and Statement of
Additional Information, as presently in effect, and all amendments and
supplements thereto are herein collectively called the "Prospectus").
(b) By executing this Agreement, the Adviser acknowledges prior receipt of
the Sub-Adviser's Part II of Form ADV filed with the Securities and Exchange
Commission.
3. Management. The Sub-Adviser will: (i) manage the investment and
----------
reinvestment of the Fund's assets in accordance with the applicable investment
objectives, policies and limitations set forth in the Trust's Prospectus and
applicable laws and regulations; (ii) be subject to the supervision of the
Adviser and the Board of Trustees; and (iii) place orders for the purchase or
sale of securities for the Fund's account with brokers or dealers selected by
the Sub-Adviser. The Sub-Adviser is authorized, on behalf of the Fund to give
instructions to the custodian of the Fund as to the deliveries of securities and
payments of cash for the account of the Fund. The Sub-Adviser shall have access
to such reports and records of the Fund it deems necessary to perform it
services hereunder.
Except as specifically stated in this Section 3 and Section 10, the Sub-
Adviser shall not be responsible for providing (i) compliance monitoring,
reporting or testing; (ii) record maintenance or preparation; or (iii)
accounting, tax or other services to the Fund. The Sub-Adviser will prepare and
maintain the following: trade orders and written correspondence with brokers or
dealers regarding such trade orders, written correspondence with the
custodian(s) and accountants for the Fund and all communications with issuers
regarding the voting of securities.
In connection with the selection of brokers or dealers by the Sub-Adviser
and the placing of orders with said brokers or dealers, the Sub-Adviser will
seek for the Fund best execution of orders. The Sub-Adviser shall not be deemed
to have acted unlawfully or to have breached any duty, created by this Agreement
or otherwise, solely by reason of its having caused the Fund to pay a broker or
dealer an amount of commission for effecting a securities transaction in excess
of the amount of commission another broker or dealer would have charged for
effecting that transaction, if the Sub-Adviser determined in good faith that
such amount of commission was reasonable in relation to the value of the
brokerage and research services provided by such broker or dealer viewed in
terms of either that particular transaction or the Sub-Adviser's overall
responsibilities with respect to the clients of the Sub-Adviser as to which the
Sub-Adviser exercises investment discretion. The Adviser recognizes that all
research services and research that the Sub-Adviser receives or generates are
available for all clients and that the Fund and other clients may benefit
thereby.
The Sub-Adviser shall for all purposes herein provided be deemed to be an
independent contractor and, unless otherwise expressly provided or authorized,
shall have no authority to act for or represent the Fund or the Adviser in any
way or otherwise be deemed an agent of the Fund or the Adviser.
-2-
<PAGE>
4. Additional Series. In the event that the Trust establishes one or more
-----------------
additional series with respect to which the Adviser desires to retain the Sub-
Adviser to render investment advisory and management services hereunder, the
Adviser shall notify the Sub-Adviser in writing. If the Sub-Adviser is willing
to render such services, it shall notify the Adviser in writing whereupon such
series shall become subject to this Agreement.
5. Compensation. For the services described in Section 3, the Adviser will
------------
pay to the Sub-Adviser as of the close of business on the last business day of
each calendar quarter, a sub-advisory fee computed at an annual rate of .50 of
1% of the Fund's first $50 million of average daily net assets, .35 of 1% of the
Fund's next $50 million of average daily net assets and .25 of 1% of average
daily net assets over $100 million.
The fee as computed above shall be computed separately for each series of
the Trust subject to this Agreement based on the average daily net assets of
such series. For the quarter and year in which this Agreement becomes effective
or terminates, there shall be an appropriate proration on the basis of the
number of days that the Agreement is in effect during the quarter and year,
respectively.
All sub-advisory fees hereunder will be invoiced directly to the Adviser at
the address immediately below and be due no later than thirty (30) days after
the date of the invoice.
Beacon Global Advisors, Inc.
8260 Greensboro Drive
Suite 250
McLean, VA 22102-3801
6. Non-Exclusivity. The services of the Sub-Adviser under this Agreement are
---------------
not to be deemed exclusive, and the Sub-Adviser shall be free to render similar
services or other services to others so long as its services hereunder are not
impaired thereby.
7. Net Asset Value. The net asset value for each series of the Trust shall be
---------------
calculated in accordance with the provisions of the Prospectus. On each day
when net asset value is not calculated, the net asset value of a series shall be
deemed to be the net asset value of such series as of the close of business on
the last day on which such calculation was made for the purpose of the foregoing
computations.
8. Limitation of Liability. The Sub-Adviser shall not be liable for any error
-----------------------
of judgment or of law or for any loss suffered by the Trust or the Adviser in
connection with the matters to which this Agreement relates, except loss
resulting from willful misfeasance, bad faith or gross negligence on the part of
the Sub-Adviser in the performance of its obligations and duties or by reason of
its reckless disregard of its obligations and duties under this Agreement.
9. Duration and Termination. This Agreement shall become effective with
------------------------
respect to the Fund on the date hereof and shall remain in full force for two
years thereafter, unless sooner terminated as
-3-
<PAGE>
hereinafter provided. This Agreement shall continue in force from year to year
thereafter with respect to each series subject to this Agreement, but only as
long as such continuance is specifically approved for each series at least
annually in the manner required by the 1940 Act and the rules and regulations
thereunder; provided, however, that if the continuation of this Agreement is not
approved for a series, the Sub-Adviser may continue to serve in such capacity
for such series in the manner and to the extent permitted by the 1940 Act and
the rules and regulations thereunder.
This Agreement shall automatically terminate in the event of its assignment
or in the event of the termination of the Management Agreement and may be
terminated at any time with respect to any series without the payment of any
penalty by the Adviser or by the Sub-Adviser on sixty (60) days written notice
to the other party. The Trust may effect termination with respect to any series
without payment of any penalty by action of the Board of Trustees or by vote of
a majority of the outstanding voting securities of such series on sixty (60)
days written notice to the Adviser and the Sub-Adviser.
This Agreement may be terminated with respect to any series at any time
without the payment of any penalty by the Board of Trustees of the Trust, by
vote of a majority of the outstanding voting securities of such series or by the
Adviser in the event that it shall have been established by a court of competent
jurisdiction that the Sub-Adviser or any officer or director of the Sub-Adviser
has taken any action which results in a breach of the covenants of the Sub-
Adviser set forth herein.
The terms "assignment" and "vote of a majority of the outstanding voting
securities" shall have the meanings set forth in the 1940 Act and the rules and
regulations thereunder.
Termination of this Agreement shall not affect the right of the Sub-Adviser
to receive payments on any unpaid balance of the compensation described in
Section 5 earned prior to such termination.
10. Proxies, Tender Offers, Class Actions, Etc. The Sub-Adviser will act as
-------------------------------------------
the Trust's agent and attorney-in-fact to vote, tender, convert, endorse,
transfer and deliver securities in the Fund, to elect the form of dividend
payments and to execute proxies, waivers, consents and other instruments with
respect to such securities, subject to any written instructions received from
the Adviser or the Trust within a reasonable period prior to the action. The
Sub-Adviser shall disclose to the Adviser any material conflict of interest it
or its affiliates may have with respect to the vote or other requested action,
within a reasonable period prior to the action.
11. Severability. If any provision of this Agreement shall be held or made
------------
invalid by a court decision, statute, rule or otherwise, the remainder shall not
be thereby affected.
12. Notice. Any notice under this Agreement shall be in writing, addressed and
------
delivered or mailed, postage prepaid, to the other party at such address as such
other party may designate for the receipt of such notice.
13. Governing Law. This Agreement shall be construed in accordance with
-------------
applicable federal law and the laws of the State of Delaware, without giving
effect to the conflicts of law principles thereof,
-4-
<PAGE>
and in accordance with the 1940 Act. To the extent that the applicable laws of
the State of Delaware conflict with the applicable provisions of the 1940 Act,
the latter shall control.
14. Amendment. No provision of this Agreement may be changed, waived,
---------
discharged or terminated orally, but only by a written instrument signed on
behalf of each of the parties.
-5-
<PAGE>
15. Entire Agreement. This Agreement is the entire contract between the
----------------
parties relating to the subject matter hereof and supersedes all prior
agreements between the parties relating to the subject matter hereof.
IN WITNESS WHEREOF, the Adviser and the Sub-Adviser have caused this
Agreement to be executed as of the day and year first above written.
SCUDDER KEMPER INVESTMENTS, INC.
By:____________________________
Title:_________________________
BEACON GLOBAL ADVISORS, INC.
By:____________________________
Title:_________________________
-6-
<PAGE>
CONSENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
We have issued our report dated December 12, 1997 accompanying the financial
statements of The Cruelty Free Value Fund which are incorporated by reference in
Part B of the Post-Effective Amendment to this Registration Statement and
Prospectus. We consent to the use of the aforementioned report in this
Registration Statement and Prospectus.
JOHNSON LAMBERT & CO.
Bethesda, Maryland
January 27, 1998
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<CIK> 0001030881
<NAME> BEACON GLOBAL ADVISORS TRUST
<SERIES>
<NUMBER> 1
<NAME> THE CRUELTY FREE VALUE FUND
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> 7-MOS
<FISCAL-YEAR-END> NOV-30-1997
<PERIOD-START> APR-29-1997
<PERIOD-END> NOV-30-1997
<INVESTMENTS-AT-COST> 1,010,066
<INVESTMENTS-AT-VALUE> 1,079,866
<RECEIVABLES> 46,294
<ASSETS-OTHER> 67,108
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 1,193,268
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 24,867
<TOTAL-LIABILITIES> 24,867
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 1,085,378
<SHARES-COMMON-STOCK> 41,790
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> (1,948)
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 15,171
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 69,800
<NET-ASSETS> 1,168,401
<DIVIDEND-INCOME> 3,910
<INTEREST-INCOME> 3,111
<OTHER-INCOME> 0
<EXPENSES-NET> 8,969
<NET-INVESTMENT-INCOME> (1,948)
<REALIZED-GAINS-CURRENT> 15,171
<APPREC-INCREASE-CURRENT> 69,800
<NET-CHANGE-FROM-OPS> 83,023
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 38,051
<NUMBER-OF-SHARES-REDEEMED> 261
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 1,068,401
<ACCUMULATED-NII-PRIOR> 0
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<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 5,749
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 136,540
<AVERAGE-NET-ASSETS> 780,837
<PER-SHARE-NAV-BEGIN> 25.00
<PER-SHARE-NII> (.05)
<PER-SHARE-GAIN-APPREC> 3.01
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 27.96
<EXPENSE-RATIO> 1.95
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
