POST-EFFECTIVE AMENDMENT NO. 3
AS FILED WITH THE U.S. SECURITIES AND EXCHANGE
COMMISSION ON MARCH 22, 1999
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
-------
Pre-Effective Amendment No. [_]
Post-Effective Amendment No. [3]
and/or
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 X
-------
Amendment No. [5]
BEACON GLOBAL ADVISORS TRUST
----------------------------
(Exact Name of Registrant as Specified in Charter)
4550 Montgomery Ave, # 302 North
Bethesda, MD 20814
-------------------------------------------------------------
(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.
4550 Montgomery Ave, #302 North
Bethesda, MD 20814
---------------------------
(Name and Address of Agent for Service)
COPIES TO:
Arthur J. Brown, Esq.
Kirkpatrick & Lockhart LLP
1800 Massachusetts Avenue, N.W.
Washington, DC 20036
It is proposed that this filing become effective (check appropriate box):
[ ] immediately upon filing pursuant to paragraph (b)
[X] on April 1, 1999 pursuant to paragraph (b)
[ ] 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
Registrant declares hereby that an indefinite number or amount of its securities
has been registered by this Registration Statement.
A Rule 24f-2 Notice for the year ended November 30, 1998 was filed on January
31, 1999.
TOTAL NUMBER OF PAGES _____
EXHIBIT INDEX BEGINS
ON PAGE _____
<PAGE>
BEACON GLOBAL ADVISORS TRUST
CROSS-REFERENCE SHEET
(As required by Rule 495)
<TABLE>
<CAPTION>
ITEM NO. ON FORM N-1A CAPTION OR SUBHEADING IN PROSPECTUS
- --------------------- -----------------------------------
OR STATEMENT OF ADDITIONAL INFORMATION
--------------------------------------
PART A - INFORMATION REQUIRED IN PROSPECTUS
- -------------------------------------------
<S> <C>
1. Front and Back Cover Pages. Cover Page; Back Cover Page
2. Risk/Return Summary: Investments,
Risks, and Performance. Risk/Return Summary; Financial Highlights;
Fees and Expenses
3. Risk/Return Summary/ Fee Table. Fees and Expenses
4. Investment Objectives, Principal Risk/Return Summary;
Investment Strategies, and Related
Risks
5. Management's Discussion of Not covered. Included in Annual
Fund Performance Report of Fund, dated November 30, 1998.
6. Management, Organization and Description of Shares of Beneficial Interest
Capital Structure
7. Shareholder Information How to Purchase Shares; How to Redeem
Shares; Management of the Fund; Dividends
and Taxes; Performance Information
8. Distribution Arrangements Distribution Plan; Brokerage Portfolio
Transactions and Brokerage
9. Financial Highlights Information Financial Highlights
PART B. STATEMENT OF ADDITIONAL INFORMATION
- -------------------------------------------
10. Cover Page and Table of Contents Cover Page; Table of Contents
11. Fund History Not covered in Statement of Additional
Information (covered under Item 6 of
Part A)
12. Description of the Fund and its The Trust and the Fund; Investment
Investments and Risks Restrictions
13. Management of the Fund. Investment Advisory and Other Services;
Trustees and Officers; Other
Information
14. Control Persons and Principal Trustees and Officers; Control Persons
Holders of Securities. And Principal holders of Securities.
15. Investment Advisory and other Investment Advisory and Other Services.
Services.
16. Brokerage Allocation and Other Additional Information on Portfolio
Practices Transactions
17. Capital Stock and Other Other Information
Securities.
18. Purchase, Redemption and Pricing Covered under Item 7 of Part A
of Securities Being Offered
19. Taxation of the Fund. Additional Information Concerning
Taxes
20. Underwriters Additional Information on Portfolio
and Transfer Agents Transactions
21. Calculations of Performance Data. Additional information on Performance
Information
22. Financial Statements Incorporated by reference
to the Fund's Annual Report.
</TABLE>
PART C
Information required to be included in PART C is set forth under the appropriate
Item, so numbered, in PART C of the Registration Statement.
<PAGE>
PART A
PROSPECTUS
THE CRUELTY FREE VALUE FUND
(the "Fund")
4550 Montgomery Avenue, 3302 North
Bethesda, MD 20814
(800) 883-0865
April 1, 1999
================================================================================
"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 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.
The Securities and Exchange Commission has not approved or disapproved these
securities or determined if this prospectus is truthful or complete. Any
representation to the contrary is a criminal offense.
<PAGE>
TABLE OF CONTENTS
RISK/RETURN SUMMARY
Mission Statement
Investment Objectives and Strategies
Selling Short
Principal Risks
FEES AND EXPENSES
Shareholder Fees
Annual Fund Operating Expenses
Example
HOW TO PURCHASE SHARES
General
Purchases By Mail
Purchases By Wire Transfer
Purchases Through Brokers and Dealers
Subsequent investments
Automatic Investment Plan
Net Asset Value
HOW TO REDEEM SHARES
Redemption By Mail
Redemption By Wire of Telephone
General Redemption Information
MANAGEMENT OF THE FUND
Board of Trustees
Investment Advisor
Subadvisor
Distributor
Administrator
Transfer Agent and Fund Accountant
Custodian
Fund Expenses
PORTFOLIO TRANSACTIONS AND BROKERAGE
DESCRIPTION OF SHARES OF BENEFICIAL INTEREST
DIVIDENDS AND TAXES
Dividends
Taxes
The Taxpayer Relief Act of 1997
PERFORMANCE INFORMATION
DISTRIBUTION PLAN
FINANCIAL HIGHLIGHTS
<PAGE>
RISK/RETURN SUMMARY
Mission Statement
- -----------------
The Fund is dedicated to providing an investment program to help end the
suffering, abuse and extinction of animals. The Fund's Advisor, Beacon Global
Advisors, Inc. (the "Advisor"), believes that sound investments may be made
which are compatible with a commitment to protect the well-being of animals. The
Advisor will screen all investments made by the Fund toward achieving such a
policy by using the following guidelines. The Advisor believes that strictly
adhering to 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 Act; or
(6) otherwise have a corporate policy which results in the unnecessary pain and
suffering of animals.
To implement these policies, the Advisor will gather screening information
primarily 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, and publicly available sources such as corporate
annual reports, and newswire services. Any company included on a screening list
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.
Investment Objective and Strategies
- -----------------------------------
The Fund's investment objective is capital appreciation. Delta Capital
Management (the "Subadvisor"), under the supervision of the Advisor, is
responsible for investing the assets of the Fund to attain this objective while
maintaining the Fund's commitment to encourage the humane treatment of animals.
The Fund's investment 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 Fund's Statement of Additional
information ("SAI"). There can be no assurance that the Fund will achieve its
investment objective.
The Fund will attempt to achieve its investment objective by investing 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.
The Subadvisor will seek to invest in companies that it believes may be
undervalued as a result of
1. overreactions by investors to unfavorable news about a company, industry or
the stock markets in general,
2. market declines, poor economic conditions, tax-loss selling or actual or
anticipated unfavorable developments affecting the company.
1
<PAGE>
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. Value investing refers to the process by
which an investment professional chooses certain stocks because that
professional believes that they are undervalued in the marketplace. 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 its 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. The Fund may diversify its holdings among many different companies
and industries which not only meet the Subadvisor's criteria for growth, but
also meet the Advisor's screening process with respect to the humane treatment
of animals. The Subadvisor will at all times comply with the Fund's screening
criteria for the humane treatment of animals, and will make all investments
under the supervision of the Advisor.
The Fund may also engage in portfolio management techniques such as selling
short, selling short against-the-box, and lending securities.
Selling Short
- -------------
The Fund may attempt to limit the Fund's exposure to a possible decline in the
market value of portfolio securities through short sales of securities. The Fund
also may use short sales in an attempt to realize gain. To effect a short sale,
the Fund borrows a security from a brokerage firm to make delivery to the buyer.
The Fund then is obligated to replace the borrowed security by purchasing it at
the market price at the time of replacement. Until the security is replaced, the
Fund is required to pay the lender any accrued interest or dividends and may be
required to pay a premium.
The Fund will realize a gain if the security declines in price between the date
of the short sale and the date on which the Fund replaces the borrowed security.
The Fund will incur a loss if the price of the security increases between those
dates. The amount of any gain will be decreased, and the amount of any loss
increased, by the amount of any premium or interest the Fund may be required to
pay in connection with a short sale. A short position may be adversely affected
by imperfect correlation between movements in the price of the security sold
short and the securities being hedged.
No short sale will be effected which will, at the time of making such short sale
transaction, cause the aggregate market value of all securities sold short to
exceed 25% of the value of the Fund's net assets. 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.
2
<PAGE>
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.
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
its investment objective.
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.
Principal Risks
- ---------------
You can lose money by investing in the Fund. The Fund invests primarily in
small-cap stocks. As a result, the primary risk to your investment is the risk
of declines in the value of those stock holdings. The stock market can be
volatile, with prices frequently rising and declining. The stock market also
tends to be cyclical with prices generally rising or falling over periods of
time. Some of these periods can last for years. Because the Fund invests
primarily in small-cap companies, price risk may be increased. Smaller, newer
companies have more volatile share prices for several reasons. Small companies
often have less liquidity, less management depth, narrower market penetrations,
less diverse product lines, and fewer resources than larger companies. As a
result, their stock prices react more violently to changes in the marketplace.
The Fund's policy 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 Fund's screening policies,
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 screening policies limit 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 the Fund's screening
policies.
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 Fund's screening policies, but only that
the Advisor will seek to screen each security contemplated for investment by the
Fund for its compliance with the Fund's screening policies. Further, information
provided by organizations which the Advisor utilizes for screening purposes may
be incomplete or inaccurate.
3
<PAGE>
Short Selling poses additional risks to the Fund. These risks include the risk
of loss due to an adverse price movement during the period when the security is
sols short, interest and premium costs which reduce any potential gain, and the
risk that a shorted security cannot be easily repurchased.
The bar chart and table below help show the returns and risks of investing in
the Fund. They show changes in the Fund's yearly performance over the lifetime
of the Fund. They also compare the Fund's performance to the performance of the
Russell 2000 Index** during each period. You should be aware that the Fund's
past performance may not be an indication of how the Fund will perform in the
future.
4
<PAGE>
PERFORMANCE BAR
CHART AND TABLE
YEAR-BY-YEAR TOTAL RETURNS AS OF 12/31
17.04%
- ------
- ------ 5.2%
- ------ ------
- ---------------------------------------
April 29, 1997* Year Ended
Through Dec. 31, 1998
Dec. 31, 1997
Best Quarter: 4th Qtr 1998 17.27%
Worst Quarter: 3rd Qtr 1998 (17.64)%
For the Fund's fiscal years ending on November 30, 1997 and November 30, 1998,
the Fund's Total Annual Returns were 11.84% and (1.23%), respectively.
Average Annual Total Returns (For Periods ending on December 31, 1998)
- ----------------------------------------------------------------------
Fund Russell 2000 Index**
---- --------------------
One Year 5.2% (3.45)%
Inception 9.0% 14.40%
* the Fund commenced investment operations on April 27, 1997.
** The Russell 2000 Index is a widely recognized, unmanaged index of 2000
small-capitalization companies in the United States. The Index assumes
reinvestment of all dividends and distributions and does not reflect any
asset-based charges for investment management or other expenses.
FEES AND EXPENSES
SHAREHOLDER FEES: NONE*
(FEES PAID DIRECTLY FROM YOUR INVESTMENT)
ANNUAL FUND OPERATING EXPENSES:
(EXPENSES THAT ARE DEDUCTED FROM FUND ASSETS)
Management Fees 1.25%
Distribution (12b-1) Fees 0.25%
Other Expenses 0.40%
-----
Total Annual Fund Operating Expenses 1.95%**
=====
5
<PAGE>
EXAMPLE: this Example is intended to help you compare the cost of investing in
the Fund with the cost of investing in other mutual funds.
The Example assumes that you invest $10,000 in the Fund for the time periods
indicated, and then redeem all your shares at the end of those periods. The
Example also assumes that your investment has a 5% return each year and that the
Fund's operating expenses remain the same. Although your actual costs may be
higher or lower, based on these assumptions your costs would be:
1 YEAR 3 YEARS 5 YEARS 10 YEARS
- -------------------------------------------------------------
$198 $612 $1,052 $2,275
Because the Fund does not charge redemption fees or sales loads, your costs
would be the same even if you did not redeem your shares. The fee charged by the
Fund's transfer agent to redeem shares by wire transfer is not included in the
Example. If those fees were included, your costs would be higher.
*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.
**The above table reflects a continuation of the Advisor's voluntary undertaking
to waive all or a portion of its Management Fees and to reimburse certain
expenses to limit the Total Annual Fund Operating Expenses 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 Annual Fund Operating Expenses to exceed 1.95%. Absent such fee waivers
and reimbursement of expenses, for fiscal years ending on November 30, 1997 and
November 30, 1998, Total Annual Fund Operating Expenses, respectively, would be:
29.69% for 1997 and 12.79% for 1998.
HOW TO PURCHASE SHARES
General
- -------
Shares of the Fund are offered on a continuous basis at their net asset value
next determined following receipt by the Fund's transfer agent, Declaration
Service Company (the "Transfer Agent"), of a purchase order in proper form. You
pay no "sales loads" or other transaction fees to purchase shares. This means
that the full amount of your 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.
6
<PAGE>
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 Declaration Service Company, 555 North
Lane, Suite 6160, Conshohocken, PA 19428. 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
- --------------------------
You may also pay for shares by instructing your 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:
First Union National Bank, N.A.
ABA #031201467
For: Declaration Service Company
Account Number: 1422838350
FBO: "THE CRUELTY FREE VALUE FUND"
-----------------------------
Account of (exact name(s) of account registration)
Shareholder Account # _____________________
Before making an initial investment by wire transfer, you must first telephone
the Transfer Agent at (800) 883-0865 or (610) 832-1075 to request an account
number and furnish the Fund with your taxpayer identification number or Social
Security number. In addition, a completed Application with signature(s) of
account owner(s) must be promptly forwarded to: Declaration Service Company, 555
North Lane, Suite 6160, Conshohocken, PA 19428. 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 your 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 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.
7
<PAGE>
Subsequent Investments
- ----------------------
Once an account has been opened, you can make subsequent purchases 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
Declaration Service Company, 555 North Lane, Suite 6160, Conshohocken, PA 19428.
Orders to purchase shares are effective on the day the Transfer Agent receives
the check or money order.
All investments must be made in U.S. dollars and, to avoid fees and delays,
checks must be drawn only on banks located in the United States. A charge
(minimum of $20) will be imposed if any check used for the purchase of shares is
returned. Investors who 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 your account has been opened, you can make additional purchases of shares
of the Fund through an automatic investment plan. You may authorize the
automatic withdrawal of funds from your bank account by opening your Fund
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.
Net Asset Value
- ---------------
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.
8
<PAGE>
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.
HOW TO REDEEM SHARES
You may redeem your shares of the Fund at any time and for any reason without
penalty 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
- ------------------
You may redeem your shares by submitting a written request for redemption to
Declaration Service Company, 555 North Lane, Suite 6160, Conshohocken, PA 19428
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) 883-0865 or (610) 832-1075.
Redemption By Wire or Telephone
- -------------------------------
Shareholders who have so indicated on their application, or have subsequently
arranged in writing to do so, may redeem shares by calling the Transfer Agent at
(800) 883-0865 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."
Shareholders who wish to redeem their shares by telephone must first elect the
option, as described above. Neither the Fund nor any of its service contractors
will be liable for any loss or expense in acting upon telephone instructions
that are reasonably believed to be genuine. In this regard, the Fund and the
Transfer
9
<PAGE>
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.
The Fund reserves the right to refuse a wire or telephone redemption if it is
believed advisable to do so. Procedures for redeeming Fund shares by wire or
telephone may be modified or terminated at any time.
During periods of unusual economic or market changes, telephone redemptions may
be difficult to implement. In such event, shareholders should follow the
procedures for redemption by mail.
General Redemption Information
- ------------------------------
A redemption request will not be deemed to be properly received until the
Transfer Agent receives all required documents in proper form. If you have any
questions with respect to the proper form for redemption requests, please
contact the Transfer Agent at (800) 883-0865 or (610) 832-1075, or write to :
Declaration Service Company
555 North Lane, Suite 6160
Conshohocken, PA 19428.
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 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
as described in the Section of this Prospectus entitled "Net Asset Value." In
the event that an in-kind distribution is made, you 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.
10
<PAGE>
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. You will be notified that the value
of your account is less than the required minimum and you will be allowed at
least 60 days to bring the value of your account up to the minimum before the
redemption is processed.
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 of the Fund is set forth in
the SAI.
The Investment Advisor
- ----------------------
THE INVESTMENT ADVISOR
Beacon Global Advisors, Inc., 4550 Montgomery Avenue, Suite 302 North, Bethesda,
MD 20814, 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. As of December 31, 1997, the Advisor was investment management
consultant to other mutual fund and individuals with respect to approximately
$100 million in assets. The Advisor is a registered broker/dealer in the U.S.
With a correspondent clearing agreement with Bear, Stearns & Co. in New York,
one of the world's leading investment banking firms. The Advisor's international
banking relationship is maintained with MeesPierson (CI) Limited. MeesPierson is
a wholly owned subsidiary of MeesPierson N.V., which in turn is a wholly-owned
subsidiary of Fortis Bank Nederland N.V., part of the international insurance,
banking and investment group, Fortis, headquartered in London, England. As of
December 31, 1998, the Advisor was investment management consultant to other
mutual funds and individuals with respect to approximately $100 million in
assets.
11
<PAGE>
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%.
For the Fund's fiscal years ending on November 30, 1997 and 1998, investment
advisory fees payable to the Advisor were $5,749 and $19,676, respectively, and
the Advisor waived and/or reimbursed total fees and expenses of $127,571and
$170,325, respectively.
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.
The Subadvisor
- --------------
Delta Capital Management, Inc., 745 5th Avenue, 8th Floor New York, New
York,10151 serves as the Fund's investment sub-advisor under a contract with the
Fund and the Advisor dated September 14, 1998. The Subadvisor provides
investment advice and manages investment portfolios for individuals,
institutions, registered investment companies and pension and profit-sharing
accounts. 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. As of November 31, 1998, the Advisor paid fees of $9,838 to
the Subadvisor.
12
<PAGE>
Mr. Francis L. Frankel is founder, Chairman and a controlling shareholder of the
Subadvisor. The investment management team at the Subadvisor responsible for
overseeing all investments is led by Mr. William F. Coughlin, CFA, who
previously served as portfolio manager to the Fund when he was affiliated with
the Fund's previous sub-advisers.
Before joining Delta in 1998 as Managing Director, Mr. Coughlin, 41, was
Managing Director at Scudder Kemper Investments, Inc and at a predecessor firm,
Dreman Value Advisors, Inc. from 1988 to 1998. He also served as portfolio
manager and a member of the investment committee at each during the same period.
Distibutor
- ----------
Beacon Global Advisors, Inc., 4550 Montgomery Avenue, Bethesda, MD 20814, serves
as distributor and principal underwriter of the Fund's shares. The Distributor
is not compensated for its services to the Fund, other than through 12b-1 fees.
Administrator
- -------------
Declaration Service Company, 555 North Lane, Suite 6160, Conshohocken, PA 19428
("DSC"), serves as the Administrator pursuant to an agreement with the Fund
dated November 1, 1998. Under this agreement, DSC 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. DSC also provides all necessary office space,
equipment, personnel and facilities. Administrative fees of $103,331 were
charged for administrative, transfer agent and accounting services for fiscal
year 1998. These services were provided by FirstData Corporation for the period
December 1, 1997 through October 31, 1998. Declaration Service Company provided
these services from November 1, 1998 to the present.
Transfer Agent And Fund Accountant
- ----------------------------------
As Transfer Agent, DSC 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, DSC
performs certain accounting and pricing services for the Fund, including the
daily calculation of the Fund's net asset value per share.
Custodian
- ---------
First Union National Bank, Philadelphia, PA, 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.
13
<PAGE>
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.
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 December 1, 1998, she owned of record 32.1% 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.
14
<PAGE>
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 you elect 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 your 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 Sub Chapter m of the Internal Revenue Code
of 1986, as amended (the "Code"), which will relieve the Fund of any liability
for federal income tax to the extent that its earnings and net realized capital
gains are distributed to shareholders. To so qualify, the Fund will, among other
things, limit its investments so that, at the close of each quarter of its
taxable year, (i) not more than 25% of the market value of the Fund's total
assets will be invested in the securities of any single issuer and (ii) with
respect to at least 50% of the market value of its total assets, not more than
5% of the market value of its total assets will be invested in the securities of
any single issuer, and the Fund will not own more than 10% of the outstanding
voting securities of any single issuer. 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.
You will be advised annually of the source and tax status of all distributions
for federal income tax purposes. Information accompanying your 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. You should consult your own tax advisers for more specific information on
the tax consequences of particular types of distributions.
You 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.
15
<PAGE>
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 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.
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.
16
<PAGE>
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. For the Fund's
fiscal year ending on November 30, 1998, 12b-1 Plan fees payable to the
Distributor were $3,935.
FINANCIAL HIGHLIGHTS
The following sets forth information for THE CRUELTY FREE VALUE FUND regarding
per share income and capital changes for its fiscal year ending on November 30,
1998 and 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 1998 Annual Report to Shareholders which are incorporated by reference into
the Statement of Additional Information.
April 29, 1997*
Year Ended Through
November 30, November 30,
1998 1997
-------- --------
NET ASSET VALUE,
BEGINNING OF PERIOD $ 27.96 $ 25.00
-------- --------
INVESTMENT OPERATIONS:
Net Investment Income (0.09) (0.05)
Net realized and unrealized
Gain (Loss) on Investments (0.26) 3.01
Total From Investment Operations (0.35) 2.96
-------- --------
Distributions:
From Net Investment Income 0.00 --
From Net Realized Capital Gains (0.30) --
Total Distributions (0.30) 0.00
-------- --------
NET ASSET VALUE, END OF PERIOD $ 27.31 $ 27.96
======== ========
TOTAL RETURN (1.23%) 11.84%1
RATIOS/SUPPLEMENTAL DATA
Net Assets, end of period (in 000's) $ 1,665 $ 1,168
Ratio of expenses to average net assets
Before Expense Reimbursement 12.79% 29.69%2
After Expense Reimbursement 1.95% 1.95%2
Portfolio Turnover Rate 21.70% 15.06%1
*Commencement of investment operations
1. Not Annualized
2. Annualized
17
<PAGE>
FOR MORE INFORMATION
Additional information about the Trust is available in the Trust's annual report
to shareholders, dated November 30, 1998 and its semi-annual report to
shareholders, dated June 30, 1998. In the Trust's annual and semi-annual
reports, you will find a discussion of the market conditions and investment
strategies that significantly affected the Trust's performance during its last
year of operations.
STATEMENT OF ADDITIONAL BY MAIL:
INFORMATION (SAI)
Beacon Global Advisors Trust.
The SAI contains more detailed c/o Declaration Service Company
Information on all aspects of the 555 North Lane, Suite 6160
Trust. A current SAI, dated April 1, Conshohocken, PA 19428
1999, has been filed with the SEC
and is incorporated by reference BY PHONE: 1-800-662-9992
into (is legally a part of) this
prospectus. ON THE INTERNET:
www.crueltyfree.com
To request a free copy of the SAI,
or the Trust's latest annual or semi- Or you may view or obtain these
annual Report, please contact the Trust. documents from the SEC.
IN PERSON: at the SEC's Public
Reference Room in Washington, D.C.
BY PHONE: 1-800-SEC-0330
BY MAIL: Public Reference Section,
Securities and Exchange Commission,
Washington, D.C. 20549-6009
(duplicating fee required)
ON THE INTERNET:
www.sec.gov
Beacon Global Advisors Trust
Investment Company Act No.
811-07879
<PAGE>
Part B
STATEMENT OF ADDITIONAL INFORMATION
April 1, 1999
================================================================================
This Statement of Additional Information ("SAI") 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
April 1, 1999, 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.
4550 Montgomery Avenue, 3302 North 4550 Montgomery Avenue, 3302 North
Bethesda, MD 20814 Bethesda, MD 20814
(800) 662-9992 (800) 662-9992
(301) 664-5600 (301) 664-5600
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. If persons give such information, it was not 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>
TABLE OF CONTENTS
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
<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, The
Cruelty-Free Value Fund, 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
1
<PAGE>
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.
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.
2
<PAGE>
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 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.
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.
3
<PAGE>
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.
4
<PAGE>
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. For fiscal years ending November 30,
1997 and 1998, advisory fees payable to the advisor were $5,749 and 19,676,
respectively. The Advisor waived all fees in both years.
SUBADVISORY AGREEMENTS
The Advisor has entered into a Subadvisory Agreement with Delta Capital
management. (the "Subadvisor") to assist in the selection and management of the
Fund's investment securities. It is the responsibility of the Subadvisor, under
the direction of the Advisor, to make the day-to-day investment decisions for
the Fund, and to place the purchase and sale orders for the portfolio
transactions of the Fund, consistent with the Fund's screning criteria
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.
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.For fiscal years
ending November 30, 1997 and 1998, the Advisor paid fees of $5,749 and $9,838,
respectivley. For the period December 1, 1997 through September 14, 1998, these
services were provided by Scudder Kemper Investments, Inc.. From September 14,
1998 to the present, these services have been provided by Delta Capital
Management.
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
Declaration Service Company ("DSC"), 555 North lane, Suite 6160, Conshohocken,
PA 19428 has been engaged by the Trust to provide most of the back office
services on the Trust's behalf. DSC 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
to be effective as of November 1, 1998. The management of the Trust oversees DSC
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 DSC 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
5
<PAGE>
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 First Data Corporation, the Fund's former service provider, for Fund
Accounting and Fund Administration services, respectively. From December 1, 1997
through November 30, 1998, the Fund paid $53, 245 and 26,662 in Administration
and transfer agency fees.
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 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, 1997and 1998, Beacon Global Advisors, Inc.
was paid $1,150 and $3,935, respectively, pursuant to the Distribution Plan.
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.
6
<PAGE>
TRUSTEES AND OFFICERS
The Trustees and executive officers of the Trust, their position with the Trust,
their 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.
The Business Address for each Trustee is 4550 Montgomery Avenue, 3302 North,
Bethesda, MD 20814.
<TABLE>
<CAPTION>
Name Age Position with Principal Occupation During
Trust the past five years
- ----------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Louis T. Donatelli 65 Trustee President and sole stockholder of
Donatelli & Klein, Inc., an investment
company specializing in real estate
development and corporate acquisitions
including television properties. Mr.
Donatelli has a long career in the
investment business, beginning in 1956
at Harris Upham & Co. In 1963, he joined
Hayden, 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* 57 Trustee Senior Policy Advisor to a member of the
House of Representatives since 1970. In
this capacity, she is responsible for
legislation within the jurisdiction of
the 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.
7
<PAGE>
- ----------------------------------------------------------------------------------------------
Robert J. Henrich, Jr.* 47 Executive Founder and Managing Director of Beacon
Vice Global Advisors, Inc. Mr. Henrich served
President as a First Vice President with E.F.
Treasurer, Hutton & Co. and Paine Webber, Inc. from
Trustee 1979 President, through 1994. Before
joining E.F. Hutton, Mr. Henrich was a
pension plan consultant with Jefferson
Standard Insurance Company. Mr. Henrich
received his Bachelor of Science degree
in Geology from the University of
Maryland and earned his MBA degree from
the Florida Institute of Technology.
- ----------------------------------------------------------------------------------------------
Peter G. Koltnow 69 Trustee Engineering consultant to the Koltnow
American Trucking Associations and Board
Member of the ATA Foundation since 1991.
He is a life member of the American
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.
8
<PAGE>
- ----------------------------------------------------------------------------------------------
Richard A. Ollen* 66 Chairman of President and Director (1970 through
The Board of 1978) and as Vice President (1965
Trustees 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 29 Secretary Senior Corporate Compliance Admin-
istrator, (December 1997 to present),
Corporate Compliance Administrator (June
1994 to December 1997) FPS Services,
Inc.; Mutual Fund/ Corporate Admin-
istrator, Keane Tracers, Inc. (January
1992 to May 1994); 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>
9
<PAGE>
COMPENSATION TABLE
The officers and Trustees of the Trust who are also officers or employees of the
Advisor or DSC 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, 1998.
Total
Aggregate Compensation from
Compensation from Trust and Fund
Name of Trustee Trust Complex Paid to Trustees
- --------------- ------------------- ------------------------
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
CONTROL PERSONS AND PRINCIPAL HOLDERS OF SECURITIES
As of December 1, 1998, the Trustees and officers, together as a group, owned
beneficially 25,445 shares or 38.5% of the Fund and Trust. As of December 1,
1998, the following persons owned of record and beneficially more than 5% of the
outstanding voting shares of the Fund and Trust:
Name & Address of Beneficial Owners Percentage
Caroline D. Gabel 32.1%
654 F Street NE
Washington, DC 20002
Robert J. Henrich 6.4%
Trst Beacon Global Advisors Ltd.
4550 Montgomery Avenue, 3302 North
McLean, VA 22102
10
<PAGE>
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 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
11
<PAGE>
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
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.
12
<PAGE>
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.
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.
13
<PAGE>
The calculations of average annual total return and aggregate total return
assume the reinvestment of all dividends and capital gain distributions on the
reinvestment dates during the period. The ending redeemable value (variable
"ERV" in each formula) is determined by assuming complete redemption of the
hypothetical investment and the deduction of all nonrecurring charges at the end
of the period covered by the computations.
Since performance will fluctuate, performance data for the Fund should not be
used to compare an investment in the Fund's shares with bank deposits, savings
accounts and similar investment alternatives which often provide an agreed-upon
or guaranteed fixed yield for a stated period of time. Shareholders should
remember that performance is generally a function of the kind and quality of the
instruments held in a portfolio, portfolio maturity, operating expenses and
market conditions.
PERFORMANCE AND ADVERTISEMENTS
From time to time, in marketing and other fund literature, the Fund's
performance may be compared to the performance of other mutual funds in general
or to the performance of particular types of mutual funds with similar
investment goals, as tracked by independent organizations. Among these
organizations, Lipper Analytical Services, Inc. ("Lipper"), a widely used
independent research firm which ranks mutual funds by overall performance,
investment objectives and assets, may be cited. Lipper performance figures are
based on changes in net asset value, with all income and capital gains dividends
reinvested. Such calculations do not include the effect of any sales charges
imposed by other funds. The Fund will be compared to Lipper's appropriate fund
category, that is, by fund objective and portfolio holdings. The Fund's
performance may also be compared to the average performance of its Lipper
category.
The Fund's performance may also be compared to the performance of other mutual
funds by Morningstar, Inc. ("Morningstar") which ranks funds on the basis of
historical risk and total return. Morningstar's rankings range from five stars
(highest) to one star (lowest) and represent Morningstar's assessment of the
historical risk level and total return of a fund as a weighted average for
three-, five- and ten-year periods. Ranks are not absolute or necessarily
predictive of future performance. The Fund may also compare its performance to a
wide variety of indices.
In assessing such comparisons of yield, return or volatility, an investor should
keep in mind that the composition of the investments in the reported indices and
averages is not identical to 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.
14
<PAGE>
CUSTODIAN
First union National Bank, N.A., Philadelphia. PA, 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 1998 Annual Report are 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.
15
<PAGE>
PART C - OTHER INFORMATION
ITEM 23. Exhibits:
Exhibits filed pursuant to Form N-1A:
(A) Trust Instrument is incorporated by reference to Exhibit No. (1)
of Registration Statement No. 333-14919 filed on October 28,
1996.
(B) By-Laws are incorporated by reference to Exhibit No. (2) of
Registration Statement No. 333-14919 filed on October 28, 1996.
(C) All Instruments Defining the Rights of Holders -- None
(D) 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 Delta Capital Management and
Beacon Global Advisors, Inc. is incorporated by reference
from Definitive Proxy on Form N-14A filed on December 11,
1998.
(E) 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.
(F) Bonus, Profit Sharing, Pension or Other Similar Contracts -- None
(G) 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.
(H) Investment Company Services Agreement between Declaration Service
Company and the Registrant is filed herewith.
(I) (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.
(J) Consent of Independent Auditors is filed herewith.
(K) Financial Statements Omitted from Item 22 -- None
<PAGE>
(L) Agreements or Understandings Made in Consideration for Providing
the Initial Capital --None
(M) 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.
(N) Financial Data Schedule is filed herewith
(O) Plan of Distribution pursuant to Rule 18f-3 with respect to
Multiple Class Shares -- None
(P) 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 24. Persons Controlled By or Under Common Control with Registrant.
Not Applicable.
<PAGE>
Item 25. 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, except if a Trustee engages in willful misfeasance, bad
faith, gross negligenceor reckless disregard of the duties involved in the
conduct of his or her office.
Item 26. Business and Other Connections of Investment Adviser.
Beacon Global Advisors, Inc., 4550 Montgomery Avenue, 3302 North, 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, 1999.
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.
<PAGE>
Item 27. Principal Underwriter.
(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:
POSITION POSITION AND
NAME AND PRINCIPAL AND OFFICES OFFICES WITH
BUSINESS ADDRESS WITH UNDERWRITER REGISTRANT
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
(c) Not Applicable.
Item 28. 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 29. Management Services.
There are no management-related service contracts not discussed in Part A or
Part B.
Item 30. Undertakings.
Not applicable.
<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 Bethesda,
and State of Maryland on the 22nd day of march, 1999.
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 March 22, 1999
- -------------------------- and Chairman of the Board
Richard A. Ollen
/s/ Robert J. Henrich* Executive Vice President, March 22, 1999
- -------------------------- Treasurer & Trustee
Robert J. Henrich
/s/ Louis T. Donatelli* Trustee March 22, 1999
- --------------------------
Louis T. Donatelli
/s/ Caroline D. Gabel* Trustee March 22, 1999
- --------------------------
Caroline D. Gabel
/s/ Peter G. Koltnow* Trustee March 22, 1999
- --------------------------
Peter G. Koltnow
* /s/ Michelle A. Whalen
- --------------------------
Michelle A. Whalen, as Attorney-in-fact and Agent
pursuant to Power-of-Attorney
<PAGE>
Index to Exhibits to Form N-1A
Exhibit
EXHIBIT 23(H) Investment Company Services Agreement
EXHIBIT 23(J) Consent of Independent Auditors
EXHIBIT 23(N) Financial Data Schedule for THE CRUELTY FREE VALUE FUND
EXHIBIT 23(H)
INVESTMENT COMPANY SERVICES AGREEMENT
INVESTMENT COMPANY SERVICES AGREEMENT
BEACON GLOBAL ADVISORS TRUST
THIS AGREEMENT, dated as of the 1st day of November, 1998 , made by and
between Beacon Global Advisors Trust ("Fund"), a corporation operating as an
open-end, management investment company registered under the Investment Company
Act of 1940, as amended (the "Act"), duly organized and existing under the laws
of the State of Delaware, and Declaration Service Company ("Declaration"), a
corporation duly organized under the laws of the Commonwealth of Pennsylvania
(collectively, the "Parties").
WITNESSETH THAT:
WHEREAS, the Fund is authorized by its Articles of Incorporation and By-
Laws to issue separate series of shares representing interests in separate
investment portfolios which are identified on Schedule "C" attached hereto and
which Schedule "C" may be amended from time to time by mutual agreement of the
Fund and Declaration; and
WHEREAS, the Parties desire to enter into an agreement whereby Declaration
will provide the services to the Fund as specified herein and set forth in
particular in Schedule "A" which is attached hereto and made a part hereof.
NOW THEREFORE, in consideration of the premises and mutual covenants
contained herein, and in exchange for good and valuable consideration, the
sufficiency and receipt of which are hereby acknowledged, the Parties hereto,
intending to be legally bound, do hereby agree as follows:
GENERAL PROVISIONS
SECTION 1. APPOINTMENT. The Fund hereby appoints Declaration as servicing agent
to the Fund and Declaration hereby accepts such appointment. In order that
Declaration may perform its duties under the terms of this Agreement, the Board
of Directors of the Fund shall direct the officers, investment adviser, legal
counsel, independent accountants and custodian of the Fund to cooperate fully
with Declaration and, upon request of Declaration, to provide such information,
documents and advice relating to the Fund which Declaration requires to execute
its responsibilities hereunder. In connection with its duties, Declaration shall
be entitled to rely, and will be held harmless by the Fund when acting in
reasonable reliance, upon any instruction, advice or document relating to the
Fund as provided to Declaration by any of the aforementioned persons on behalf
of the Fund. All fees charged by any such persons acting on behalf of the Fund
will be deemed an expense of the Fund.
Any services performed by Declaration under this Agreement will conform to the
requirements of:
(a) the provisions of the Act and the Securities Act of 1933, as amended,
and any rules or regulations in force thereunder;
(b) any other applicable provision of state and federal law;
(c) the provisions of the Articles of Incorporation and the by-laws of the
Fund, as amended from time to time and delivered to Declaration;
(d) any policies and determinations of the Board of Directors of the Fund
which are communicated to Declaration; and
(e) the policies of the Fund as reflected in the Fund's registration
statement as filed with the U.S. Securities and Exchange Commission.
Nothing in this Agreement will prevent Declaration or any officer thereof from
providing the same or comparable services for or with any other person, firm or
corporation. While the services supplied to the Fund may be different than those
supplied to other persons, firms or corporations, Declaration will provide the
Fund equitable treatment in supplying services. The Fund recognizes that it will
not receive preferential treatment from Declaration as compared with the
treatment provided to other Declaration clients.
SECTION 2. DUTIES AND OBLIGATIONS OF DECLARATION.
Subject to the provisions of this Agreement, Declaration will provide to
the Fund the specific services as set forth in Schedule "A" attached hereto.
SECTION 3. DEFINITIONS. For purposes of this Agreement:
"CERTIFICATE" will mean any notice, instruction, or other instrument in
writing, authorized or required by this Agreement. To be effective, such
Certificate shall be given to and received by the custodian and shall be
signed on behalf of the Fund by any two of its designated officers, and the
term Certificate shall also include instructions communicated to the
custodian by Declaration.
1
<PAGE>
"CUSTODIAN" will refer to that agent which provides safekeeping of the
assets of the Fund.
"INSTRUCTIONS" will mean communications containing instructions transmitted
by electronic or telecommunications media including, but not limited to,
Industry Standardization for Institutional Trade Communications,
computer-to-computer interface, dedicated transmission line, facsimile
transmission (which may be signed by an officer or unsigned) and tested
telex.
"ORAL INSTRUCTION" will mean an authorization, instruction, approval, item
or set of data, or information of any kind transmitted to Declaration in
person or by telephone, telegram, telecopy or other mechanical or
documentary means lacking original signature, by a person or persons
reasonably identified to Declaration to be a person or persons so
authorized by a resolution of the Board of Directors of the Fund to give
Oral Instructions to Declaration on behalf of the Fund.
"SHAREHOLDERS" will mean the registered owners of the shares of the Fund in
accordance with the share registry records maintained by Declaration for
the Fund.
"SHARES" will mean the issued and outstanding shares of the Fund.
"SIGNATURE GUARANTEE" will mean the guarantee of signatures by an "eligible
guarantor institution" as defined in Rule 17Ad-15 under the Securities
Exchange Act of 1934, as amended (the "Exchange Act"). Eligible guarantor
institutions include banks, brokers, dealers, credit unions, national
securities exchanges, registered securities associations, clearing agencies
and savings associations. Broker-dealers guaranteeing signatures must be
members of a clearing corporation or maintain net capital of at least
$100,000. Signature guarantees will be accepted from any eligible guarantor
institution which participates in a signature guarantee program.
"WRITTEN INSTRUCTION" will mean an authorization, instruction, approval,
item or set of data or information of any kind transmitted to Declaration
in an original writing containing an original signature or a copy of such
document transmitted by telecopy including transmission of such signature
reasonably identified to Declaration to be the signature of a person or
persons so authorized by a resolution of the Board of Directors of the
Fund, or so identified by the Fund to give Written Instructions to
Declaration on behalf of the Fund.
CONCERNING ORAL AND WRITTEN INSTRUCTIONS For all purposes under this
Agreement, Declaration is authorized to act upon receipt of the first of
any Written or Oral Instruction it receives from the Fund or its agents. In
cases where the first instruction is an Oral Instruction that is not in the
form of a document or written record, a confirmatory Written Instruction or
Oral Instruction in the form of a document or written record shall be
delivered. In cases where Declaration receives an Instruction, whether
Written or Oral, to enter a portfolio transaction onto the Fund's records,
the Fund shall cause the broker/dealer executing such transaction to send a
written confirmation to the Custodian.
Declaration shall be entitled to rely on the first Instruction received.
For any act or omission undertaken by Declaration in compliance therewith, it
shall be free of liability and fully indemnified and held harmless by the Fund,
provided however, that in the event a Written or Oral Instruction received by
Declaration is countermanded by a subsequent Written or Oral Instruction
received prior to acting upon such countermanded Instruction, Declaration shall
act upon such subsequent Written or Oral Instruction. The sole obligation of
2
<PAGE>
Declaration with respect to any follow-up or confirmatory Written Instruction or
Oral Instruction in documentary or written form shall be to make reasonable
efforts to detect any such discrepancy between the original Instruction and such
confirmation and to report such discrepancy to the Fund. The Fund shall be
responsible and bear the expense of its taking any action, including any
reprocessing, necessary to correct any discrepancy or error. To the extent such
action requires Declaration to act, the Fund shall give Declaration specific
Written Instruction as to the action required. The Fund will file with
Declaration a certified copy of each resolution of the Fund's Board of Directors
authorizing execution of Written Instructions or the transmittal of Oral
Instructions as provided above.
SECTION 4. INDEMNIFICATION.
(a) Declaration, its directors, officers, employees, shareholders, and
agents will be liable for any loss suffered by the Fund resulting from the
willful misfeasance, bad faith, gross negligence or reckless disregard on the
part of Declaration in the performance of its obligations and duties under this
Agreement.
(b) Any director, officer, employee, shareholder or agent of Declaration,
who may be or become an officer, director, employee or agent of the Fund, will
be deemed, when rendering services to the Fund, or acting on any business of the
Fund (other than services or business in connection with Declaration' duties
hereunder), to be rendering such services to or acting solely for the Fund and
not as a director, officer, employee, shareholder or agent of, or under the
control or direction of Declaration even though such person may be receiving
compensation from Declaration.
(c) The Fund agrees to indemnify and hold Declaration harmless, together
with its directors, officers, employees, shareholders and agents from and
against any and all claims, demands, expenses and liabilities (whether with or
without basis in fact or law) of any and every nature which Declaration may
sustain or incur or which may be asserted against Declaration by any person by
reason of, or as a result of:
(i) any action taken or omitted to be taken by Declaration except
claims, demands, expenses and liabilities arising from willful misfeasance, bad
faith, negligence or reckless disregard on the part of Declaration in the
performance of its obligations and duties under this Agreement; or
(ii) any action taken or omitted to be taken by Declaration in
reliance upon any Certificate, instrument, order or stock certificate or other
document reasonably believed by Declaration to be genuine and signed,
countersigned or executed by any duly authorized person, upon the Oral
Instructions or Written Instructions of an authorized person of the Fund, or
upon the written opinion of legal counsel for the Fund or Declaration; or
(iii) the offer or sale of shares of the Fund to any person, natural
or otherwise, which is in violation of any state or federal law.
If a claim is made against Declaration as to which Declaration may seek
indemnity under this Section, Declaration will notify the Fund promptly after
receipt of any written assertion of such claim threatening to institute an
action or proceeding with respect thereto and will notify the Fund promptly of
any action commenced against Declaration within ten (10) days after Declaration
has been served with a summons or other legal process. Failure to notify the
Fund will not, however, relieve the Fund from any liability which it may have on
account of the indemnity under this Section so long as the Fund has not been
prejudiced in any material respect by such failure.
3
<PAGE>
The Fund and Declaration will cooperate in the control of the defense
of any action, suit or proceeding in which Declaration is involved and for which
indemnity is being provided by the Fund to Declaration. The Fund may negotiate
the settlement of any action, suit or proceeding subject to Declaration's
approval, which will not be unreasonably withheld. Declaration reserves the
right, but not the obligation, to participate in the defense or settlement of a
claim, action or proceeding with its own counsel. Costs or expenses incurred by
Declaration in connection with, or as a result of such participation, will be
borne solely by the Fund if:
(i) Declaration has received an opinion of counsel from counsel to the
Fund stating that the use of counsel to the Fund by Declaration would
present an impermissible conflict of interest;
(ii) the defendants in, or targets of, any such action or proceeding
include both Declaration and the Fund, and legal counsel to
Declaration has reasonably concluded that there are legal defenses
available to it which are different from or additional to those
available to the Fund or which may be adverse to or inconsistent with
defenses available to the Fund (in which case the Fund will not have
the right to direct the defense of such action on behalf of
Declaration); or
(iii) the Fund authorizes Declaration to employ separate counsel at
the expense of the Fund.
(d) The terms of this Section will survive the termination of this
Agreement.
SECTION 5. REPRESENTATIONS AND WARRANTIES.
(a) Declaration represents and warrants that:
(i) it is a corporation duly organized and existing and in good
standing under the laws of Pennsylvania;
(ii) it is empowered under applicable laws and by its Certificate of
Incorporation and by-laws to enter into and perform this Agreement;
(iii) all requisite corporate proceedings have been taken to authorize
Declaration to enter into and perform this Agreement;
(iv) it has and will continue to have access to the facilities,
personnel and equipment required to fully perform its duties and
obligations hereunder;
(v) no legal or administrative proceedings have been instituted or
threatened which would impair Declaration's ability to perform its
duties and obligations under this Agreement;
(vi) its entrance into this Agreement shall not cause a material
breach or be in material conflict with any other agreement or
obligation of Declaration or any law or regulation applicable to it;
(vii) it is registered as a transfer agent under Section 17A(c)(2) of
the Exchange Act;
(viii) this Agreement has been duly authorized by Declaration and,
when executed and delivered, will constitute valid, legal and binding
obligation of Declaration, enforceable in accordance with its terms.
4
<PAGE>
(b) The Fund represents and warrants that:
(i) it is a business trust duly organized and existing and in good
standing under the laws of the State of Delaware;
(ii) it is empowered under applicable laws and by its Declaration of
Trust and by-laws to enter into and perform this Agreement;
(iii) all requisite proceedings have been taken to authorize the Fund
to enter into and perform this Agreement;
(iv) no legal or administrative proceedings have been instituted or
threatened which would impair the Fund's ability to perform its duties
and obligations under this Agreement;
(v) the Fund's entrance into this Agreement shall not cause a material
breach or be in material conflict with any other agreement or
obligations of the Fund, or any law or regulation applicable to
either;
(vi) the Shares are properly registered or otherwise authorized for
issuance and sale;
(vii) this Agreement has been duly authorized by the Fund and, when
executed and delivered, will constitute valid, legal and binding
obligation of the Fund, enforceable in accordance with its terms.
(d) Delivery of Documents
The Fund will furnish or cause to be furnished to Declaration the following
documents;
(i) current Prospectus and Statement of Additional Information;
(ii) most recent Annual Report;
(iii) most recent Semi-Annual Report for registered investment
companies on Form N-SAR;
(iv) certified copies of resolutions of the Fund's Board of Directors
authorizing the execution of Written Instructions or the transmittal
of Oral Instructions and those persons authorized to give those
Instructions.
(e) Record Keeping and Other Information
Declaration will create and maintain all records required of it pursuant to
its duties hereunder and as set forth in Schedule "A" in accordance with all
applicable laws, rules and regulations, including records required by Section
31(a) of the Act. All such records will be the property of the Fund and will be
available during regular business hours for inspection, copying and use by the
Fund. Where applicable, such records will be maintained by Declaration for the
periods and in the places required by Rule 31a-2 under the Act. Upon termination
of this Agreement, Declaration will deliver all such records to the Fund or such
person as the Fund may designate.
5
<PAGE>
In case of any request or demand for the inspection of the Share records of
the Fund, Declaration shall notify the Fund and secure instructions as to
permitting or refusing such inspection. Declaration may, however, exhibit such
records to any person in any case where it is advised by its counsel that it may
be held liable for failure to do so.
SECTION 6. COMPENSATION. The Fund agrees to pay Declaration compensation for its
services, and to reimburse it for expenses at the rates, times, manner and
amounts as set forth in Schedule "B" attached hereto and incorporated herein by
reference and as will be set forth in any amendments to such Schedule "B" agreed
upon in writing by the Parties. Upon receipt of an invoice therefor, the Adviser
agrees to pay such fees within ten (10) business days. In addition, the Adviser
agrees to reimburse Declaration for any out-of-pocket expenses paid by
Declaration on behalf of the Fund within ten (10) calendar days of the Fund's
receipt of an invoice therefor. In the event Adviser is unable to pay such
invoices for services or out- of- pocket expenses, for any reason, the Fund
agrees to pay Declaration the full amount(s) due within ten (10) additional
business days.
For the purpose of determining fees payable to Declaration, the value of
the Fund's net assets will be computed at the times and in the manner specified
in the Fund's Prospectus and Statement of Additional Information then in effect.
During the term of this Agreement, should the Fund seek services or
functions in addition to those outlined below or in Schedule "A" attached
hereto, a written amendment to this Agreement specifying the additional services
and corresponding compensation will be executed by the Parties.
In the event that Fund is more than thirty (30) days delinquent in its
payments of monthly billings in connection with this Agreement (with the
exception of specific amounts which may be contested in good faith by the Fund),
this Agreement may be terminated upon thirty (30) days' written notice by
Declaration. The Adviser must notify Declaration in writing of any contested
amounts within ten (10) days of receipt of a billing for such amounts. Disputed
amounts are not due and payable while they are being disputed.
SECTION 7. DAYS OF OPERATION. Nothing contained in this Agreement is intended to
or will require Declaration, in any capacity hereunder, to perform any functions
or duties on any holiday, day of special observance or any other day on which
the New York Stock Exchange ("NYSE") is closed. Functions or duties normally
scheduled to be performed on such days will be performed on and as of the next
succeeding business day on which the NYSE is open. Notwithstanding the
foregoing, Declaration will compute the net asset value of the Fund on each day
required pursuant to Rule 22c-1 promulgated under the Act.
SECTION 8. ACTS OF GOD, ETC. Declaration will not be liable or responsible for
delays or errors caused by acts of God or by reason of circumstances beyond its
control including, acts of civil or military authority, national emergencies,
labor difficulties, mechanical breakdown, insurrection, war, riots, or failure
or unavailability of transportation, communication or power supply, fire, flood
or other catastrophe.
In the event of equipment failures beyond Declaration's control,
Declaration will, at no additional expense to the Fund, take reasonable steps to
minimize service interruptions but will have no liability with respect thereto.
The foregoing obligation will not extend to computer terminals located outside
of premises maintained by Declaration. Declaration has entered into and
maintains in effect agreements making reasonable provision for emergency use of
electronic data processing equipment to the extent appropriate equipment is
available.
6
<PAGE>
SECTION 9. INSPECTION AND OWNERSHIP OF RECORDS. In the event of a request or
demand for the inspection of the records of the Fund, Declaration will use its
best efforts to notify the Fund and to secure instructions as to permitting or
refusing such inspection. Declaration may, however, make such records available
for inspection to any person in any case where it is advised in writing by its
counsel that it may be held liable for failure to do so after notice to the
Fund.
Declaration recognizes that the records it maintains for the Fund are the
property of the Fund and will be surrendered to the Fund upon written notice to
Declaration as outlined under Section 10(c) below. The Fund is responsible for
the payment in advance of any fees owed to Declaration. Declaration agrees to
maintain the records and all other information of the Fund in a confidential
manner and will not use such information for any purpose other than the
performance of Declaration' duties under this Agreement.
SECTION 10. DURATION AND TERMINATION.
(a) The initial term of this Agreement will be for the period of two (2)
years, commencing on the date hereinabove first written (the "Effective Date")
and will continue thereafter subject to termination by either Party as set forth
in subsection (c) below.
(b) The fee schedules set forth in Schedule "B" attached hereto will be
fixed for the initial term commencing on the Effective Date of this Agreement
and will continue thereafter subject to their review and any adjustment.
(c) After the initial term of this Agreement, a Party may give written
notice to the other (the day on which the notice is received by the Party
against which the notice is made shall be the "Notice Date") of a date on which
this Agreement shall be terminated ("Termination Date"). The Termination Date
shall be set on a day not less than ninety (90) days after the Notice Date. The
period of time between the Notice Date and the Termination Date is hereby
identified as the "Notice Period". Any time up to, but not later than fifteen
(15) days prior to the Termination Date, the Adviser or the Fund will pay to
Declaration such compensation as may be due as of the Termination Date and will
likewise reimburse Declaration for any out-of-pocket expenses and disbursements
reasonably incurred or expected to be incurred by Declaration up to and
including the Termination Date.
(d) In connection with the termination of this Agreement, if a successor to
any of Declaration' duties or responsibilities under this Agreement is
designated by the Fund by written notice to Declaration, Declaration will
promptly, on the Termination Date and upon receipt by Declaration of any
payments owed to it as set forth in Section 10(c) above, transfer to the
successor, at the Adviser's expense, all records which belong to the Fund and
will provide appropriate, reasonable and professional cooperation in
transferring such records to the named successor.
(e) Should the Fund desire to move any of the services outlined in this
Agreement to a successor service provider prior to the Termination Date,
Declaration shall make a good faith effort to facilitate the conversion on such
prior date, however, there can be no guarantee that Declaration will be able to
facilitate a conversion of services prior to the end of the Notice Period.
Should services be converted to a successor service provider prior to the end of
the Notice Period, or if the Fund is liquidated or its assets merged or
purchased or the like with another entity, payment of fees to Declaration shall
be accelerated to a date prior to the conversion or termination of services and
calculated as if the services had remained at Declaration until the expiration
of the Notice Period and shall be calculated at the asset levels on the Notice
Date.
7
<PAGE>
(f) Notwithstanding any other provisions of Paragraph 10, in the event the
Fund deregisters as an Investment Company with the United States Securities and
Exchange Commission ("SEC"), this Agreement may be terminated by the Fund upon
ninety (90) days written notice to Declaration. The Termination Date shall be
ninety (90) days after the receipt of such notice by Declaration. Any time up
to, but not later than fifteen (15) days prior to the Termination Date, the
Adviser or the Fund will pay to Declaration such compensation as may be due as
of the Termination Date and will likewise reimburse Declaration for any out-
of-pocket expenses and disbursements reasonably incurred or expected to be
incurred by Declaration up to and including the Termination Date.
(g) Notwithstanding the foregoing, this Agreement may be terminated at any
time by either Party in the event of a material breach by the other Party
involving negligence, willful misfeasance, bad faith or a reckless disregard of
its obligations and duties under this Agreement provided that such breach shall
have remained unremedied for sixty (60) days or more after receipt of written
specification thereof.
SECTION 11. RIGHTS OF OWNERSHIP. All computer programs and procedures developed
to perform services required to be provided by Declaration under this Agreement
are the property of Declaration. All records and other data except such computer
programs and procedures are the exclusive property of the Fund and all such
other records and data will be furnished to the Fund in appropriate form as soon
as practicable after termination of this Agreement for any reason.
SECTION 12. AMENDMENTS TO DOCUMENTS. The Fund will furnish Declaration written
copies of any amendments to, or changes in, the Articles of Incorporation,
by-laws, Prospectus or Statement of Additional Information in a reasonable time
prior to such amendments or changes becoming effective. In addition, the Fund
agrees that no amendments will be made to the Prospectus or Statement of
Additional Information of the Fund which might have the effect of changing the
procedures employed by Declaration in providing the services agreed to hereunder
or which amendment might affect the duties of Declaration hereunder unless the
Fund first obtains Declaration' approval of such amendments or changes.
SECTION 13. CONFIDENTIALITY. Both Parties hereto agree that any non-public
information obtained hereunder concerning the other Party is confidential and
may not be disclosed to any other person without the consent of the other Party,
except as may be required by applicable law or at the request of the U.S.
Securities and Exchange Commission or other governmental agency. Declaration
agrees that it will not use any non-public information for any purpose other
than performance of its duties or obligations hereunder. The obligations of the
Parties under this Section will survive the termination of this Agreement. The
Parties further agree that a breach of this Section would irreparably damage the
other Party and accordingly agree that each of them is entitled, without bond or
other security, to an injunction or injunctions to prevent breaches of this
provision.
SECTION 14. NOTICES. Except as otherwise provided in this Agreement, any notice
or other communication required by or permitted to be given in connection with
this Agreement will be in writing and will be delivered in person or sent by
first class mail, postage prepaid or by prepaid overnight delivery service to
the respective parties as follows:
If to the Fund: If to Declaration:
--------------- ------------------
Beacon Global Advisors Trust Declaration Service Company
4550 Montgomery Ave., #302 North 555 North Lane, Suite 6160
Bethesda, MD 20814 Conshohocken, PA 19428
Attention: Robert J. Henrich Attention: Terence P. Smith
President President
8
<PAGE>
SECTION 15. AMENDMENT. No provision of this Agreement may be amended or modified
in any manner except by a written agreement properly authorized and executed by
the Parties. This Agreement may be amended from time to time by supplemental
agreement executed by the Parties and the compensation stated in Schedule "B"
attached hereto may be adjusted accordingly as mutually agreed upon.
SECTION 16. AUTHORIZATION. The Parties represent and warrant to each other that
the execution and delivery of this Agreement by the undersigned officer of each
Party has been duly and validly authorized; and when duly executed, this
Agreement will constitute a valid and legally binding enforceable obligation of
each Party.
SECTION 17. COUNTERPARTS. This Agreement may be executed in two or more
counterparts, each of which when so executed will be deemed to be an original,
but such counterparts will together constitute but one and the same instrument.
SECTION 18. ASSIGNMENT. This Agreement will extend to and be binding upon the
Parties hereto and their respective successors and assigns; provided, however,
that this Agreement will not be assignable by any of the parties without the
written consent of the other parties, which consents shall be authorized or
approved by a resolution by its respective Boards of Directors.
SECTION 19. GOVERNING LAW. This Agreement will be governed by the laws of the
State of Pennsylvania.
SECTION 20. SEVERABILITY. If any part, term or provision of this Agreement is
held by any court to be illegal, in conflict with any law or otherwise invalid,
the remaining portion or portions will be considered severable and not be
affected and the rights and obligations of the parties will be construed and
enforced as if the Agreement did not contain the particular part, term or
provision held to be illegal or invalid, provided that the basic agreement is
not thereby materially impaired.
IN WITNESS WHEREOF, the Parties hereto have caused this Agreement
consisting of twenty (13) typewritten pages, together with Schedules "A," "B"
and "C" (Pages 14-21, attached), to be signed by their duly authorized officers
as of the day and year first above written.
BEACON GLOBAL ADVISORS TRUST DECLARATION SERVICE COMPANY
- --------------------------- ------------------------
By: Robert J. Henrich By: Terence P. Smith
President President
<PAGE>
SCHEDULE A
ACCOUNTING SERVICES PROVIDED BY DECLARATION SERVICE COMPANY
- --------------------------------------------------------------------------------
o Journalize each Portfolio's investment, capital share and income and
expense activities.
o Verify investment buy/sell trade tickets when received from the adviser and
transmit trades to the Fund's custodian for proper settlement.
o Maintain individual ledgers for investment securities.
o Maintain historical tax lots for each security.
o Reconcile cash and investment balances of each Portfolio with the
custodian, and provide the adviser with the beginning cash balance
available for investment purposes.
o Update the cash availability throughout the day as required by the adviser.
o Post to and prepare each Portfolio's Statement of Assets and Liabilities
and Statement of Operations.
o Calculate expenses payable pursuant to the Fund's various contractual
obligations.
o Control all disbursements from the Fund on behalf of each Portfolio and
authorize such disbursements upon instructions of the Fund.
o Calculate capital gains and losses.
o Determine each Portfolio's net income.
o At the Portfolio's expense, obtain security market prices or if such market
prices are not readily available, then obtain such prices from services
approved by the adviser, and in either case calculate the market or fair
value of each Portfolio's investments.
o Where applicable, calculate the amortized cost value of debt instruments.
o Transmit or mail a copy of the portfolio valuations to the adviser.
o Compute the net asset value of each Portfolio.
o Report applicable net asset value and performance data to performance
tracking organizations.
o Compute each Portfolio's yields, total returns, expense ratios and
portfolio turnover rate.
o Prepare and monitor the expense accruals and notify Fund management of any
proposed adjustments.
o Prepare monthly financial statements, which will include, without
limitation, the Schedule of Investments, the Statement of Assets and
Liabilities, the Statement of Operations, the Statement of Changes in Net
Assets, the Cash Statement, and the Schedule of Capital Gains and Losses.
<PAGE>
o Prepare monthly security transactions listings.
o Prepare monthly broker security transactions summaries.
o Supply various Fund and Portfolio statistical data as requested on an
ongoing basis.
o Assist in the preparation of support schedules necessary for completion of
Federal and state tax returns.
o Assist in the preparation and filing of the Fund's annual and semiannual
reports with the SEC on Form N-SAR.
o Assist in the preparation and filing of the Fund's annual and semiannual
reports to shareholders and proxy statements.
o Assist with the preparation of amendments to the Fund's Registration
Statements on From N-1A and other filings relating to the registration of
shares.
o Monitor each Portfolio's status as a regulated investment company under
Subchapter M of the Internal Revenue Code of 1986, as amended from time to
time ("Code").
o Determine the amount of dividends and other distributions payable to
shareholders as necessary to, among other things, maintain the
qualification as a regulated investment company of each Portfolio of the
Fund under the Code.
o Provide other accounting services as may be agreed upon from time to time
in writing by the Fund and Declaration.
ADMINISTRATIVE SERVICES PROVIDED BY DECLARATION SERVICE COMPANY
- --------------------------------------------------------------------------------
o Provide overall day-to-day Fund administrative management, including
coordination of investment adviser, custodian, transfer agency,
distribution and pricing and accounting services.
o Preparation and filing of all Federal and State reports including:
o Fund's post-effective amendments under the Securities Act of 1933 and
the Investment Company Act of 1940.
o Form N-SAR - Semi-Annual report for Registered Investment Companies.
o The Fund's Annual and Semi-Annual Report.
o Rule 24f-2 Notice - filing regarding sale(s) of securities.
<PAGE>
o Rule 17g-1 filing with the SEC regarding Fidelity Bond coverage.
o Ongoing monitoring and filing of State Blue Sky registrations.
o Prepare and file such reports, applications and documents as may be
necessary or desirable to register the Fund's shares with the Federal and
state securities authorities, and monitor the sale of Fund shares for
compliance with Federal and state securities laws.
o Prepare and file reports to shareholders, including the annual report to
shareholders, and coordinate mailing Prospectuses, notices, proxy
statements, proxies and other reports to shareholders.
o Assist with layout and printing of shareholder communications, including
Prospectuses and reports to shareholders.
o Administer contracts on behalf of the Fund with, among others, the Fund's
investment adviser, custodian, transfer agent/shareholder servicing agent,
distributor, and accounting services agent.
o Prepare and maintain materials for directors/management meetings including,
agendas, minutes, attendance records and minute books.
o Coordinate shareholder meetings, including assisting Fund counsel in
preparation of proxy materials, preparation of minutes and tabulation of
results.
o Monitor and pay Fund bills, maintain Fund budget and report budget expenses
and variances to Fund management.
o Monitor the Fund's compliance with the investment restrictions and
limitations imposed by the 1940 Act and state Blue Sky laws and applicable
regulations thereunder, the fundamental and non-fundamental investment
policies and limitations set forth in the Fund's Prospectuses and Statement
of Additional Information, and the investment restrictions and limitations
necessary for each Portfolio of the Fund to qualify as a regulated
investment company under Subchapter M of the Internal Revenue Code of 1986,
as amended, or any successor statute.
o Prepare and distribute to appropriate parties notices announcing the
declaration of dividends and other distributions to shareholders.
o Provide administrative services as may be agreed from time to time in
writing by Declaration.
Blue Sky Administration
- --------------------------------------------------------------------------------
o Produce and mail the following required filings:
o Initial Filings - produce all required forms and follow-up on any
comments, including notification of SEC effectiveness.
o Renewals - produce all renewal documents and mail to states, includes
follow-up to ensure all is in order to continue selling in states.
o Sales Reports - produce all the relevant sales reports for the states
and complete necessary documents to properly file sales reports with
states.
<PAGE>
o Annual Report Filings - file copies of all annual reports with states.
o Prospectus Filings - file all copies of Definitive SAI & Prospectuses
with the states.
o Post-Effective Amendment Filing - file all Post-Effective Amendments
with the states, as well as, any other required documents.
o On demand additional states - complete filing for any states that you would
like to add.
o Amendments to current permits - file in a timely manner any amendment to
registered share amounts.
o Update and file hard copy of all data pertaining to individual permits.
TRANSFER AGENT, SHAREHOLDER SERVICING AGENT AND DIVIDEND DISBURSING AGENT
SERVICES PROVIDED BY DECLARATION SERVICE COMPANY
- --------------------------------------------------------------------------------
o Examine and process new accounts, subsequent payments, liquidations,
exchanges, transfers, telephone transactions, check redemptions automatic
withdrawals, and wire order trades.
o Reinvest or pay dividends and make other distributions.
o Answer investor and dealer telephone and/or written inquiries, except as
otherwise agreed by the Transfer Agent and the Fund.
o Process and confirm address changes.
o Process standard account record changes as required, i.e. Dividend Codes,
etc.
o Microfilm and/or store source documents for transactions, such as account
applications and correspondence.
o Perform backup withholding for those accounts in accordance with Federal
regulations.
o Solicit missing taxpayer identification numbers.
o Provide remote access inquiry to Fund records via Fund supplied hardware
(fund responsible for connection line and monthly fee).
o Maintain the following shareholder information in such a manner as the
Transfer Agent shall determine:
o Name and address, including zip code.
o Balance of Shares.
o Number of Shares, issuance date of each share outstanding and
cancellation date of each share no longer outstanding, if issued.
o Balance of dollars available for redemption.
o Dividend code (daily accrual, monthly reinvest, monthly cash or
quarterly cash).
o Type of account code.
o Establishment date indicating the date an account was opened, carrying
forward pre-conversion data as available.
o Original establishment date for accounts opened by exchange.
o W-9 withholding status and periodic reporting.
o State of residence code.
o Social security or taxpayer identification number, and indication of
certification.
o Historical transactions on the account for the most recent 18 months,
or other period as mutually agreed to from time to time.
o Indication as to whether phone transaction can be accepted for this
account. Beneficial owner code, i.e. male, female, joint tenant, etc.
o Provide the following reports and statements:
o Prepare daily journals for Fund reflecting all shares and dollar
activity for the previous day.
o Supply information monthly for Fund's preparation of Blue Sky
reporting.
o Supply monthly purchase, redemption and liquidation information for
use in Fund's N-SAR report.
o Provide monthly average daily balance reports for the Fund.
o Prepare and mail copies of summary statements to dealers and
investment advisers.
o Mail transaction confirmation statements daily to investors.
o Address and mail four periodic financial reports (material must be
adaptable to Transfer Agent's mechanical equipment as reasonably
specified by the Transfer Agent).
o Mail periodic statement to investors.
o Compute, prepare and furnish all necessary reports to governmental
authorities: Forms 1099R, 1099DIV, 1099B, 1042 and 1042S.
o Enclose various marketing material as designated by the Fund in
statement mailings, i.e. monthly and quarterly statements (material
must be adaptable to mechanical equipment as reasonably specified by
the Transfer Agent).
o Prepare and mail confirmation statements to dealers daily.
o Prepare certified list of stockholders for proxy mailing.
<PAGE>
SCHEDULE B
Compensation Schedule for Services Provided by Declaration Service Company
PER PORTFOLIO
- -------------
0.20% on first $25 million of average annual assets
0.15% on next $25 million of average annual assets
0.10% on next $50 million of average annual assets
0.075% in excess of $100 million of average annual assets
Transfer Agent/ Shareholder Services:
- -------------------------------------
$ 7.50 per Shareholder Account
Minimum annual fees:
- --------------------
Year one (1) $ 56,000
Year two (2) $ 67,000
Year three (3) $ 78,000
Thereafter $ 89,000
PLUS OUT-OF-POCKET EXPENSES TO INCLUDE, BUT NOT LIMITED TO: wire fees, Fund/SERV
and Networking fees, bank service charges, printing, copying, postage, courier,
account statement/ confirmation (including programming costs for specialized
statements/ confirmations), portfolio price quotation service, asset allocation
charges, travel, telephone, registration fees, and other standard miscellaneous
items.
ADDITIONAL CLASSES OF SHARES PER PORTFOLIO
Each category of fee ( including annual minimums) increases by 50% for the
second class of shares per portfolio, and by 25% for each additional class of
shares per portfolio.
<PAGE>
SCHEDULE C
BEACON GLOBAL ADVISORS TRUST
Portfolios covered by this Agreement:
The Cruelty-Free Value Fund
EXHIBIT 23(J)
CONSENT OF INDEPENDENT AUDITORS
CONSENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
We have issued our report dated January 22, 1999 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 22, 1999
<TABLE> <S> <C>
<ARTICLE> 6
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> NOV-30-1998
<PERIOD-START> JAN-01-1997
<PERIOD-END> NOV-30-1998
<INVESTMENTS-AT-COST> 1,375,726
<INVESTMENTS-AT-VALUE> 1,547,133
<RECEIVABLES> 3,811
<ASSETS-OTHER> 5,000
<OTHER-ITEMS-ASSETS> 128,182
<TOTAL-ASSETS> 1,684,126
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 19,144
<TOTAL-LIABILITIES> 19,144
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 1,648,477
<SHARES-COMMON-STOCK> 60,955
<SHARES-COMMON-PRIOR> 56,729
<ACCUMULATED-NII-CURRENT> (7,278)
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> (140,171)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 171,407
<NET-ASSETS> 1,664,982
<DIVIDEND-INCOME> 12,943
<INTEREST-INCOME> 12,638
<OTHER-INCOME> 0
<EXPENSES-NET> 30,911
<NET-INVESTMENT-INCOME> (5,330)
<REALIZED-GAINS-CURRENT> (155,342)
<APPREC-INCREASE-CURRENT> 101,607
<NET-CHANGE-FROM-OPS> 59,065
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 12,783
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 31,212
<NUMBER-OF-SHARES-REDEEMED> 12,496
<SHARES-REINVESTED> 449
<NET-CHANGE-IN-ASSETS> 496,581
<ACCUMULATED-NII-PRIOR> (1,948)
<ACCUMULATED-GAINS-PRIOR> 15,171
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 19,676
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 201,236
<AVERAGE-NET-ASSETS> 1,561,183
<PER-SHARE-NAV-BEGIN> 27.96
<PER-SHARE-NII> (0.09)
<PER-SHARE-GAIN-APPREC> (0.26)
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> (0.30)
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 27.31
<EXPENSE-RATIO> 1.95
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
