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SECURITIES AND EXCHANGE COMMISION
Washington, D.C. 20549
Form N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 and
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940
BANK AND INSURANCE FUND, INC.
4520 EAST WEST HWY, SUITE 540
BETHESDA, MD 20814
(301) 654-9567
www.bowesfunds.com
Approximate Date of Proposed Public Offering:
It is proposed that this filing will become effective (check appropriate box)
[ ]immediately upon filing pursuant to paragraph (b)
[ ]on (date) pursuant to paragraph (b)
[x]60 days after filing pursuant to paragraph (a)(i)
[ ]on (date) pursuant to paragraph (a)(i)
[ ]75 days after filing pursuant to paragraph (a)(ii)
[ ]on January 31, 1998 pursuant to paragraph (a)(ii)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.
Declaration Pursuant to Rule 24f-2. The Registrant has registered an
indefinite number or amount of securities under the Securities Act of 1933
pursuant to Rule 24f-2 under the Investment Company Act of 1940.
The Registrant hereby amends this Registration Statement on such date or
dates as may be necessary to delay its effective date until the Registrant
shall file a further amendment which specifically states that this
Registration Statement shall thereafter become effective in accordance with
Section 8(a) of the Securities Act of 1933 or until this Registration
Statement shall become effective on such date as the Commission, acting
pursuant to Section 8(a), may determine.
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BANK AND INSURANCE FUND, INC.
CROSS REFERENCE SHEET
Form N-1A
Form N-1A
PART A Location in
Item No. Item Name Registration Statement
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<S> <C> <C>
1. Cover Page Cover Page
2. Synopsis Expense Summary
3. Condensed Financial Highlights To be filed by Amendment
4. General Description of the Fund Investment Objectives,
Policies, and Risks
5. Management of the Fund Investment Manager
6. Capital Stock Capital Shares
7. Purchase of Fund Shares How to Purchase Fund
Shares
8. Redeeming Fund Shares How to Redeem Fund Shares
9. Pending Legal Proceedings Not Applicable
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STATEMENT OF ADDITIONAL INFORMATION
PART B Location in Part B (Statement of
Item No. Item Name Additional Information)
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<S> <C> <C>
10. Cover Page Cover Page
11. Table of Contents Table of Contents
12. General Information and History Not Applicable
13. Investment Objectives and Policies Investment Objectives,
Policies, and Risks
14. Management of the Fund Directors and Officers
15. Control Persons and Principal Directors and Officers
Holders of Securities
16. Investment Advisory and Investment Advisor and
Other Services Other Services
17. Brokerage, Allocation and Portfolio Transactions
Other Practices and Brokerage
18. Capital Stock and Not Applicable
Other Securities
19. Purchase, Redemption and Pricing Pricing and Redemption
Of Securities Being Offered of Securities Being Offered
20. Tax Status Not Applicable
21. Underwriters Not Applicable
22. Calculation of Performance Calculation of Performance
Data Data
23. Financial Statements Not Applicable
</TABLE>
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Information contained herein is subject to completion or amendment. A
registration statement relating to these securities has been filed with the
Securities and Exchange Commission. These securities may not be sold nor may
offers to buy be accepted prior to the time the registration statement becomes
effective. This prospectus shall not constitute an offer to sell or the
solicitation of an offer to buy nor shall there be any sale of these securities
in any State in which such offer, solicitation or sale would be unlawful prior
to registration or qualification under the securities laws of any State.
SUBJECT TO COMPLETION-DATED DECEMBER 4, 1997
PROSPECTUS
BANK AND INSURANCE FUND
PROSPECTUS
December 4, 1997
I. BANK AND INSURANCE FUND, INC.
Investment Objective and Policies:
Bank and Insurance Fund, Inc. (the "Fund") is an open-end diversified investment
company of the management type. The Fund's primary investment objective is to
achieve long term capital appreciation, which may occasionally be short term.
The Fund seeks to achieve its investment objective by normally investing at
least 65% of its assets in the equity securities issued by United States based
companies in the banking and insurance industries. Accordingly, the Fund will be
concentrated in the banking and insurance industries. Issuers in the banking and
insurance industries include banks, savings and loan organizations, credit card
companies, consumer finance companies, mortgage lenders, life and health
insurers, property casualty insurers, insurance brokers and agents, and
financial guaranty insurance companies. The Fund's concentration in the banking
and insurance industries is fundamental and may not be changed without a vote of
a majority of the outstanding voting securities. In addition, a non-fundamental
objective of the Fund will be to deposit a portion [not to exceed 10%] of its
assets in savings accounts of mutual bank and thrift institutions and to invest
a portion [not to exceed 10%] of its assets in general account fixed annuities
of mutual life insurance companies, each which may entitle the Fund to
participate in conversions and de-mutualizations, respectively, that may occur
in the future. In order to take advantage of the new 20% maximum capital gains
tax rate, the Fund utilizes tax-sensitive investment strategies designed to
minimize taxable distributions to shareholders and maximize after-tax returns.
The Fund's investment manager is Bowes Funds, LLC (the "Advisor") and its
registered transfer agent is [to be included by pre-effective amendment].
Opening an Account:
To open an account, please complete and return the Account Registration Form [to
be filed by pre-effective amendment]. If you need assistance in completing this
Form, please call Bowes Funds on (301)654-9567. The minimum initial investment
is $1,000 with future investments at no less then $200. The Fund is offered on a
no-load basis (i.e. there are no sales commissions or redemption charges).
However, the Fund incurs expenses for investment advisory, management,
administrative and distribution services.
About this Prospectus:
This prospectus was filed with the Securities and Exchange Commission on
December 4, 1997. This Prospectus is designed to set forth concisely the
information you should know about the Fund before you invest. It should be
retained for future reference. More information about the Fund is contained in a
Statement of Additional Information that has been filed with the Securities and
Exchange Commission. On-line access to this prospectus is available through the
EDGAR Database at www.sec.gov or through www.bowes.gov. To obtain a free copy,
call Bowes Funds at (301)654-9567. The Statement of Additional Information,
which may be revised from time-to-time, is dated December 4, 1997 and is hereby
incorporated by reference into this Prospectus.
SHARES OF THE FUND ARE NOT DEPOSITS OR OBLIGATIONS OF, OR GUARANTEED OR ENDORSED
BY ANY BANK, AND ARE NOT FEDERALLY INSURED BY THE FEDERAL DEPOSIT INSURANCE
CORPORATION, THE FEDERAL RESERVE BOARD, OR ANY OTHER AGENCY OF THE U.S.
GOVERNMENT. SHARES OF THE FUND INVOLVE INVESTMENT RISKS, INCLUDING THE POSSIBLE
LOSS OF PRINCIPAL.
LIKE ALL MUTUAL FUNDS, THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY
THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR
HAS THE SEC OR ANY STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY OR
ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL
OFFENSE.
THIS PROSPECTUS IS NOT AN OFFERING OF THE SECURITIES HEREIN DESCRIBED IN ANY
STATE, JURISDICTION OR COUNTRY IN WHICH THE OFFERING IS NOT AUTHORIZED. NO SALES
REPRESENTATIVE, DEALER, OR OTHER PERSON IS AUTHORIZED TO GIVE ANY INFORMATION OR
MAKE ANY REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THIS PROSPECTUS.
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II. BANK AND INSURANCE FUND, INC. - EXPENSE SUMMARY
The following table illustrates all expenses and fees that you would incur as a
shareholder of the fund.
SHAREHOLDER TRANSACTION EXPENSES
Maximum sales load imposed on purchases ------------------- None
Maximum sales load imposed on reinvested dividends -------- None
Deferred sales load --------------------------------------- None
Redemption Fees ------------------------------------------- None
Exchange Fees --------------------------------------------- None
ANNUAL FUND OPERATING EXPENSES
Management Fees ------------------------------------------- 1.00%
12b-1 Fees ------------------------------------------------ .25%
Other Expenses -------------------------------------------- .73%
------
Total Fund Operating Expenses ----------------------------- 1.98%
The purpose of the above table is to assist you in understanding the various
expenses that you would bear directly or indirectly as an investor in the Fund.
"Management Fees" are paid by the Fund to the Fund's Advisor under the terms of
the Investment Management Agreement dated December [ ], 1997. "12b-1 Fees" are
for distribution, promotional and shareholder servicing costs paid by the Fund
to the Fund's Advisor under the terms of the Distribution Plan dated December
[ ], 1997. "Other Expenses" includes custodian, legal, accounting, transfer
agency and shareholder administration fees, printing, and other customary Fund
expenses. The annual operating expenses are based on estimated amounts for the
current fiscal year. The Fund's fees are discussed in more detail in "Investment
Manager," Item V. in the prospectus.
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The following example illustrates the expenses that you would incur on a $1,000
investment over various periods, assuming (1) a 5% annual rate of return and (2)
redemption at the end of each period.
1 Year 3 Years
------ -------
$20 $ 62
This example should not be considered a representation of past or future
expenses or performance. Actual expenses may be higher or lower than those
shown. Expenses are further discussed in the Statement of Additional
Information.
III. BANK AND INSURANCE FUND, INC. - CONDENSED FINANCIAL INFORMATION
To be filed by Form N-SAR
IV. BANK AND INSURANCE FUND, INC. - INVESTMENT OBJECTIVE, POLICIES, AND RISKS
The Fund is a diversified open-end investment management company organized as a
corporation under the laws of the State of Maryland on November 19, 1997. Shares
of the Fund are fully paid and non-assessable when issued. Each share has a par
value of $.01. All shares issued by the Fund participate equally in dividends
and other distributions by the Fund, and in the residual assets of the Fund in
the event of its liquidation. Each full share of the Fund has one vote. Shares
of the Fund have non-cumulative voting rights, which means that the holders of
more than 50% of the shares voting for the election of directors can elect 100%
of the directors if they choose to do so. Abstaining holders of Fund shares will
not be able to elect any person or persons as directors. The Fund does not
intend to hold annual shareholder meetings. The Board may hold special meetings
for matters requiring shareholder approval. A special shareholders meeting may
be called by shareholders holding at least 10% of the outstanding shares in
order to consider the removal of a director of the Fund. Special meetings will
be held for other purposes if the holders of at least 25% of the outstanding
shares of the Fund so request. Subject to certain limitations, the Fund will
facilitate appropriate communications by shareholders desiring to call a special
meeting for the purpose of considering the removal of a director.
The primary investment objective of the Fund is long-term growth of capital,
which may occasionally be short term. The Fund's primary investment objective is
to invest at least 65% of its assets in the equity securities of United States
based issuers in the banking, savings and loan associations, mortgage and
consumer lending, and insurance industries. As the nature of the banking and
insurance industries are impacted by mergers, regulations, or product line
dynamics, additional types of equity issuers that derive a substantial portion
of their revenues from the banking and insurance industries may be added to the
investment objective of the Fund. The Fund's primary investment objectives are
fundamental policies of the Fund and may not be changed without a vote of a
majority of the outstanding voting securities of the Fund. Of course, there is
no assurance that the Fund's investment objective of long term capital
appreciation will be achieved.
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In addition, a secondary non-fundamental objective of the Fund will be to
deposit a portion [not to exceed 10%] of its assets in savings accounts of
domestic mutual bank and thrift institutions and in invest a portion [not to
exceed 10%] of its assets in general account fixed annuities of domestic mutual
life insurance companies, each which may entitle the Fund to participate in
conversions and de-mutualizations, respectively, that may occur in the future.
The Fund intends to achieve its primary investment objectives through the
Advisor's utilization of traditional fundamental investment analysis and
research supported by Advisor principal and/or staff background and experience
in financial institution corporate finance, financial analysis, and merger
evaluation. The opportunities for capital appreciation by investing in the
banking and insurance industries can be summarized four areas as follows:
(A) MERGERS & PRODUCT LINE EXPANSION
The financial health and record high capital and earnings levels of the
banking and insurance industries, coupled with regulations permitting
geographic and product line expansion has created a dynamic merger
environment that has seen the number of banking institutions decrease from
over 20,000 in 1992 to approximately 9,000 today. Economies of scale have
become more important to financial institution profitability prospects.
Disparity in the price to earnings ratio and price to book value ratios
among banking and among insurance institutions has also been conducive to
mergers.
(B) MANAGEMENT; UTILIZATION OF TECHNOLOGY
Improved marketing techniques, the greater application of improved
underwriting policies and management decisions to implement technological
upgrades to improve efficiency has tended to contribute to earnings growth
of the banking and insurance industries. More sophisticated financial
management techniques to protect against risk to earnings from changes in
interest rates have been widely implemented. Institutions with seemingly
identical balance sheets and product lines may be oppositely sensitive to
interest rate moves or asset and liability re-pricing, depending on each
company's use of asset liability management tools and the view of each
company's management. Bank management decisions to invest in their own
institutions in the form of share repurchase programs have been favorable
to the share price dynamics of bank stocks. These buyback programs have
become more frequent in the past two years as institutions have decided
that among their best investments is in their own institution shares.
(C) MUTUAL CONVERSIONS
Access to capital markets by mutual institutions may be expanded, the
opportunity for policyholders and depositors to realize liquid shareholder
value, and ultimate acquisition or merger with other industry participants
are key benefits contemplated in decisions to convert from mutual form to
public ownership. Banking and insurance industry regulators, whose primary
functions are to protect policyholders and depositors and to ensure
capital adequacy, have adopted policies to allow mutual depositors and
mutual
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policyholders to become stockholders of their institutions, usually at a
discount to the institutions pro-forma tangible book value and, depending
on industry pricing and market trends at the time, usually at a
substantial discount to a publicly traded institution merger transaction
value. The Fund is a depositor and policyholder in [ ] mutual banking,
thrift and insurance institutions and would be entitled to subscription
rights if and when any of those institutions decide to de-mutualize.
Additionally, the Fund will invest in initial public offerings of mutual
conversions and de-mutualizations.
(D) MODERNIZATION OF REGULATIONS
Strengthened and uniform regulation of the thrift, insurance and banking
industries have assisted in creating an environment where industry
participants can achieve improved financial performance. Recent
regulations have permitted banks and insurers to offer additional products
and services that may have higher marginal profitability than a narrower
more traditional product line. Regulations allowing geographic expansion
have allowed issuers to achieve improved economies of scale.
Growth And Value Stocks
Growth investing and value investing are two styles employed by stock fund
managers. Growth funds generally focus on companies that, due to their strong
earnings and revenue potential, offer above-average prospects for capital
growth, with less emphasis on dividend income. Value funds generally emphasize
companies that, considering their assets and earnings history, are attractively
priced and may provide dividend income. Value stocks may be issuers that have
experienced recent price weakness yet maintain a strong underlying franchise
value or solid financial condition. The banking and insurance sectors contain
both growth and value stock opportunities. The Fund will be investing in the
securities of issuers that may be classified as either growth or value stocks or
both depending on the particular type and characteristics of the institutions.
Regardless of issuer style classification, the Fund will strive to identify
undervalued issuers representing solid opportunity for long term appreciation
without a specific focus on dividend income.
Tax Sensitive Investing For The Long Term
Bank and Insurance Fund, Inc. is intended to be a long-term investment vehicle
and is not designed to provide investors with a means of speculating on
short-term fluctuations in the stock market. In order to capitalize on the
Taxpayer Relief Act of 1997, which lowers the maximum capital gains tax rate
from 28% to 20% on shares held longer than 18 months, the Fund utilizes
tax-sensitive investment strategies designed to generate maximize after-tax
returns.
Portfolio Turnover
While it is difficult to predict, the Advisor expects that the annual portfolio
turnover rates of the Fund will not exceed 50%. Higher portfolio turnover rates
involve greater transaction costs to the Fund and may result in the realization
of net capital gains which would be taxable to shareholders when distributed.
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Market Timing
Some investors try to profit from investing in a fund or stock when they expect
prices to rise, and taking money out when they expect the market to fall. With
this buying and selling revolving door, a fund incurs expenses for buying and
selling securities. These costs are borne by the remaining long term fund
shareholders. In addition, investors attempting to time the markets may face
higher tax rates on short term capital gains and/or losses. The Fund reserves
the right to reject any purchase request that it regards as disruptive to the
efficient management of the Fund. This could be because of the timing of the
investment or because of a history of excessive trading by the investor.
Cash Reserves
To accommodate future investment opportunities and for possible redemptions, the
Fund maintains cash deposits with mutual savings banks and thrifts and short
term investment securities that can easily and quickly be converted to cash.
Investment Limitations
To reduce risk and maintain diversification, the Fund has adopted limits on some
of its investment policies. Specifically, the Fund will not:
(a) Borrow money, except for temporary emergency purposes, in an amount that
will exceed 15% of its assets. If the Fund borrows more than 5% of its
assets, it will stop making investments,
(b) Invest more than 5% in the securities of any one company
(c) Buy more than 5% of the outstanding voting shares of any company
(d) Purchase or otherwise acquire illiquid securities if, as a result, more
than 15% of its net assets would be invested in securities that are
illiquid (included in this limitation is the Fund's investment in general
account fixed annuities of mutual life insurance companies),and
For more detail about the Fund's investment restrictions, see the Statement of
Additional Information.
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Risks of Investing in Banks and Insurers
The Fund is subject to market, industry, or issuer specific risks described
below and in the Statement of Additional Information. These risks may cause your
investment in the Fund, as with any investment in common stocks, to decrease in
value. Financial services companies are subject to extensive government
regulation that may limit both the amount and types of loans and commitments
they can make, and the interest rates and fees they can charge. Financial
performance depends, in part, on issuers access to capital, and can fluctuate
when interest rates change. Credit losses resulting from financial difficulties
of borrowers can adversely impact the banking, consumer finance, and mortgage
lending industry. Insurance companies, among other factors, may be subject to
poor investment performance, policy pricing competition, higher claims and claim
processing expenses, adverse mortality and morbidity experience, marketing
competition and general economic conditions. Individual insurance companies may
be subject to material risks including reserve inadequacy and the inability to
collect from reinsurance carriers.
V. BANK AND INSURANCE FUND, INC. - MANAGEMENT OF THE FUND
BOARD OF DIRECTORS
The Advisor, subject to the authority of the Fund's Board of Directors, is
responsible for the overall management of the Fund's business affairs. The
Directors set broad policies for the Fund and choose the Fund's Officers. The
Directors are responsible for the approval and review of the Fund's material
contracts.
The Fund's Board of Directors is comprised of one officer and director of the
Advisor, and three Disinterested Directors, as that term is defined in the
Investment Company Act of 1940 (collectively, the "Directors"). A list of
Directors and Officers of the Fund and a statement of their present positions
and principal occupations during the past five years can be found in the
Statement of Additional Information.
INVESTMENT ADVISER
Bowes Funds, LLC (the "Advisor"), located at 4520 East West Highway, Suite 540
Bethesda, MD 20814, serves as the investment adviser to the Fund pursuant to an
Investment Management Agreement (the "Agreement") entered into with the Fund,
which provides that the Advisor will furnish continuous investment advisory and
management services to the Fund. Robert B. Bowes is President and Chief
Executive Officer of Bowes Funds, LLC and has voting control of the company.
Prior to forming Bowes Funds, LLC in October, 1997, Mr. Bowes had 13 years of
experience as a financial manager, including 8 years most recently as Vice
President of The Chase Manhattan Bank, N. A. in its North America Corporate
Finance - Financial Institutions Group, 4 years in which he served as President
of Fund Commission Services, Inc., a mutual fund financial advisory company, and
one year in which he served as Chief Financial Officer of Financial Institution
Partners, L.P., a private institutional equity investment partnerships with
total invested assets of approximately $87 million as of September 30, 1997.
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The Advisor supervises and manages the investment portfolio of the Fund, and
subject to such policies as the Board of Directors may determine, directs the
purchase or sale of investment securities in the day-to-day management of the
Fund's investment portfolio. For the foregoing, the Advisor receives a monthly
fee of the accrued portion of a 1.00% per annum investment management fee on the
average daily net assets of the Fund.
Under the Agreement, the Advisor, at its own expense and without reimbursement
from the Fund, furnishes office space and all necessary office facilities,
equipment and executive personnel for making the investment decisions necessary
for managing that Fund and maintaining its organization, and will pay the
salaries and fees of all officers and directors of the Fund (except the fees
paid to disinterested Directors).
Operating Expenses
The Fund pays all of its own expenses, including, without limitation, the cost
of preparing and printing its registration statements required under the
Securities Act of 1933 and the 1940 Act and any amendments thereto, the expense
of registering its shares with the Securities and Exchange Commission and in the
various states, advisory and administration fees, costs of organization and
maintenance of corporate existence, the printing and distribution costs of
prospectuses mailed to existing investors, reports to investors, reports to
government authorities and proxy statements, costs of meetings of shareholders,
fees paid to Directors who are not interested persons of the Advisor, interest
charges, taxes, legal expenses, association membership dues, auditing services,
insurance premiums, brokerage commissions and expenses in connection with
portfolio transactions, fees and expenses of the custodian of the Fund's assets,
charges of securities pricing services, printing and mailing expenses and
charges and expenses of dividend disbursing agents, accounting services and
stock transfer agents. The Fund has entered into an Administration Agreement
date December [ ], 1997 with [ ] to provide certain shareholder and Fund
administrative services.
Distribution Fees
Rule 12b-1 Fees or distribution fees under which the Fund pays or reimburses
Distributors or others for the expenses of activities that are primarily
intended to sell shares of the class. These expenses may include, but not be
limited to, distribution or service fees paid to financial intermediaries or
others who have executed a servicing agreement with the Fund, advertising and
promoting the Fund, printing prospectuses and reports used for sales purposes,
and the costs of preparing and distributing sales literature. The Fund's 12b-1
fees are equal to .25% of the average daily net asset value of the Fund.
Portfolio Transactions and Brokerage
Subject to the supervision of the Directors, decisions to buy and sell
securities for the Fund and negotiation of its brokerage commission rates are
made by the Advisor. In selecting a broker to execute each particular
transaction, the Advisor may take a number of factors into consideration, only
one of which may be the best net price available. Among the additional factors
the Advisor may take into consideration when selecting a broker are the research
and investment services that a broker may provide. Accordingly, the cost of the
brokerage commissions to the Fund in any transaction may be greater than that
available from
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other brokers if the difference is reasonably justified by other aspects of the
portfolio execution services being offered.
The directors of the Fund have authorized the Advisor to consider sales of
shares of the Fund by a broker-dealer and the recommendations of a broker-dealer
to its customers that they purchase Fund shares as factors in the selection of
broker-dealers to execute portfolio transactions for the Fund. In placing
portfolio business with such broker-dealers, the Advisor will seek the best
execution of each transaction.
VI. BANK AND INSURANCE FUND, INC. - CAPITAL SHARES
The Fund is an open-end management investment company organized as a Maryland
Business Corporation on November 19, 1997. The Bank and Insurance Fund, Inc.
authorizes the Directors to issue an unlimited number of shares. Each share of
the Fund has equal voting, dividend, distribution and liquidation rights.
Shares of the Fund have no preemptive rights and only such conversion or
exchange rights as the Board may grant in its discretion. When issued for
payment the Fund's shares will be fully paid and non-assessable.
Shareholders are entitled to one vote for each full share held, and fractional
votes for fractional shares held, and will vote in the aggregate except as
otherwise required by the 1940 Act or applicable Maryland law.
Notwithstanding any provision of Maryland law requiring for any purpose the
concurrence of a proportion greater than a majority of all votes entitled to be
cast at a meeting at which a quorum is present, the affirmative vote of the
holders of a majority of the total number of shares of the Fund outstanding will
be effective, except to the extent otherwise required by the 1940 Act and rules
thereunder.
Shareholder account inquiries may be made by contacting the Fund's Transfer
Agent at 1-888-[ ] or in writing to Bank and Insurance Fund, Inc. c/o [ ].
Statements and Reports
We will send you clear, concise account and tax statements to help you keep
track of your Bank and Insurance Fund account throughout the year as well as
when you are preparing your income tax returns. In order to assist you in
evaluating Fund performance, a detailed financial statement showing a statement
of operations and balance sheet including a listing of portfolio holdings will
be mailed to you in February and August. For tax matters, a report of the
previous year's dividend distributions, proceeds from the sale of shares, and
distributions from IRAs or other retirement accounts will be sent to you in
early February of each year.
Confirmation and Account Statements
You will be sent, each time you buy or sell shares, a confirmation statement
indicating details with respect to the date and the amount of your transaction.
A statement of your account value will be sent to you at the end of each
statement period showing the market value of your account at the close of the
statement
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period, as well as distributions, purchases, sales, and exchanges for the
current calendar year.
Dividends, Capital Gains, and Taxes
Each December, the Fund distributes to shareholders virtually all of its income
from interest and dividends, as well as any capital gains realized from the sale
of securities. The Fund may make in-kind distributions. Your distributions of
income and capital gains will be automatically reinvested in more shares of the
Fund, unless you elect to receive these distributions in cash. In either case,
distributions of dividends and capital gains that are declared in December, even
if paid to you in January, are taxed as if they had been paid to you in
December.
The dividends and short-term capital gains that you receive are taxable to you
as ordinary dividend income. Any distributions of net long-term capital gains by
the Fund are taxable to you as long-term capital gains, no matter how long
you've owned shares in the Fund. Both dividends and capital gains distributions
are taxable to you whether received in cash or reinvested in additional shares.
Although the Fund does not seek to realize any particular amount of capital
gains during a year, such gains are realized from time to time as byproducts of
the ordinary investment activities of the Fund. Consequently, distributions may
vary considerably from year to year.
If you sell or exchange shares of the Fund, any gain or loss you have is a
taxable event, which means that you may have a capital gain to report as income,
or a capital loss as a deduction, when you complete your Federal income tax
return.
Distributions of dividends or capital gains, and capital gains or losses from
your sale or exchange (if such option becomes available in the future) of Fund
shares, may be subject to state and local taxes as well.
The tax information in this prospectus is provided as general information and
will not apply to you if you are investing in a tax-deferred account such as an
IRA. You should consult your own tax advisor about the tax consequences of an
investment in the Fund. It is important that you call Bowes Funds before you
redeem a large dollar amount. The Fund must consider the interests of all Fund
shareholders and so reserve the right to delay your redemption proceeds--up to
seven days--if the amount will disrupt the Fund's operation or performance.
The Fund has elected and intends to continue to qualify as a regulated
investment company under Subchapter M of the Internal Revenue Code. By
distributing all of its income and meeting certain other requirements relating
to the sources of its income and diversification of its assets, the Fund will
generally not be liable for federal income or excise taxes. If the Fund
distributes annually less than 98% of its income and gain, it may be subject to
a nondeductible excise tax equal to 4% of the shortfall.
Any distributions designated as realized net capital gain (the excess of net
long-term capital gain over net short-term capital loss) will be taxable as
long-term capital gain, regardless of the holding period of your shares. All or
a portion of any dividends paid by the Fund to corporate shareholders may, under
certain circumstances, be eligible for the dividends received deduction.
If you buy shares shortly before the record date, please keep in mind that any
distribution will lower the value of the Fund's shares by the amount of the
distribution and generally be subject to tax.
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The IRS requires backup withholding of federal income tax of 31% of the gross
amount of dividends, capital gain distributions, and redemption proceeds paid or
credited to shareholders who do not furnish a valid social security or taxpayer
identification number. If you are using the Fund as a medium for tax qualified
retirement plans, you may be subject to a 20% mandatory withholding upon
withdrawal under certain circumstances. Redemptions of shares will be taxable
transactions for federal income tax purposes. Generally, gain or loss will be
recognized in an amount equal to the difference between your basis in your
shares and the amount received. Assuming that such shares are held as a capital
asset, such gain or loss will be a capital gain or loss and will be a long-term
capital gain or loss if you have held your shares for a period of more than
eighteen months. If you redeem shares at a loss and make an additional
investment in the same series 30 days before or after your redemption, the loss
may be disallowed under the wash sale rules. The election to receive dividends
or distributions in cash or to reinvest them in Fund shares may be changed by
calling the Bowes Funds at 301-654-9567 or by written request to the Bowes Funds
and must be received at least ten days prior to the record date of any dividend
or capital gains distribution. The preceding is only a brief summary of the
Federal income tax considerations affecting the Fund and its shareholders.
Accordingly, potential investors should consult their tax advisors with specific
reference to their own tax situation.
VII. BANK AND INSURANCE FUND, INC. - HOW TO PURCHASE FUND SHARES
The minimum purchase requirements, which may be altered in certain
circumstances, are:
<TABLE>
<CAPTION>
Initial Investment Subsequent Investments
------------------ ----------------------
<S> <C> <C>
Regular Accounts $1,000 $200
IRA's and IRA Rollovers 500 200
Gifts to Minors 500 200
Automatic Investment Plan 500 200
Defined Contribution Plans 1,000 200
</TABLE>
Initial Investments
To purchase shares in the Fund, simply complete an account application form [to
be enclosed by pre-effective amendment] in the Prospectus. Then mail it along
with a check payable to "Bank and Insurance Fund" as follows:
Bowes Bank and Insurance Fund
4520 East West Hwy, Suite #540
Bethesda, Maryland 20814
A confirmation indicating the details of the transaction will be sent to you
promptly. Unless you specify full shares only, the purchase will be made in full
and fractional shares calculated to three decimal places.
In addition, Fund shares may be purchased through certain broker-dealers that
have established mutual fund programs and certain other organizations connected
with
13
<PAGE> 14
pension and retirement plans. These broker-dealers and other organizations
may charge investors a transaction or other fee for their services, may require
different minimum initial and subsequent investments than the Fund and may
impose other charges or restrictions different from those applicable to
shareholders who invest in the Fund directly. Fees charged by these
organizations will have the effect of reducing a shareholder's total return on
an investment in Fund shares. No such charge will be paid by an investor who
purchases the Fund shares directly from the Fund as described above.
The Fund will, at its discretion, accept orders transmitted by these
organizations although not accompanied by payment for the shares being
purchased. Payment must be received by the Fund within three business days after
acceptance of the order. The price at which a purchase will be effected is based
on the next calculation of net asset value after the order is received by the
Fund's transfer agent or any other authorized agent of the Fund.
Subsequent Investments
Shareholders may, at any time, make subsequent investment by purchasing
additional shares subject to a minimum investment of $200.00. A check made
payable to "Bank and Insurance Fund" in the amount to be invested, should be
sent to the Fund at the address listed above. Please be sure to include your
name and account number.
Automatic Investment Plan
By completing the Automatic Investment Plan section of the account application,
you may authorize the Fund to debit your bank account for the periodic purchase
of Fund shares on or about the 10th day of each month. Automatic investments are
subject to the minimum initial investment of $1,000, a minimum investment of
$200.00 per month and are unrestricted as to the permitted maximum. You will
receive confirmation of automatic investments after the end of each calendar
quarter.
Telephone Investments
The Fund will, at its discretion, accept purchase orders from existing
shareholders by telephone although not accompanied by payment for the shares
being purchased. To receive the net asset value for a specific day, a telephone
purchase request must be received before the close of the New York Stock
Exchange on that day. Payment for shares ordered by telephone must be received
by the Fund within three business days after acceptance of the order. In order
to make sure that payment is received on time, shareholders are encouraged to
remit payment by electronic funds transfer. Shareholders may also remit payment
by wire or by overnight delivery. If payment is not received on time, the Fund
may cancel the order and redeem shares held in the shareholder's account to
compensate the Fund for any decline in the value of the purchased shares.
Telephone purchase orders may not exceed ten times the value of an account on
the date the order is placed.
Payment for Fund Share Purchases
Payment for shares purchased should be made by check or money order drawn on a
United States bank and made payable to the Bank and Insurance Fund. Checks not
14
<PAGE> 15
made payable to the Bank and Insurance Fund, the account registrant, transfer
agent or retirement account custodian will not be accepted. Alternatively,
payment for shares purchased by telephone may be made by wire or electronic
funds transfer from the investor's bank to Bank and Insurance Fund as follows:
[Financial Institution]
[ABA #]
[FBO -Custodian]
[Custodian Account #]
[FFCT: Bank and Insurance Fund]
[Fund Account #]
The Fund will not accept purchases by cash or credit card or checks drawn on
foreign banks unless provision is made for payment through a U.S. bank in U.S.
dollars. The Fund reserves the right in its sole discretion to withdraw all or
any part of the offering made by this Prospectus or to reject purchase orders,
when in the judgment of management, such withdrawal or rejection is in the best
interest of the Fund. The Fund also reserves the right at any time to waive the
minimum investment requirements applicable to initial or subsequent investments
or to increase minimum investment or account balance requirements following
notice. No application to purchase shares is binding on the Fund until accepted
in writing.
How the Net Asset Value Is Determined
The price of Fund shares is based on the net asset value of the Fund, which is
determined at the close of the regular trading session of the New York Stock
Exchange (the "Exchange") (normally 4:00 p.m., New York time) each day that the
Exchange is open.
The per share net asset value of the Fund is determined by dividing the total
value of its securities and other assets, less liabilities, by the total number
of shares outstanding. In determining net asset value, securities are valued at
market value or, if market quotations are not readily available, at their fair
value determined in good faith pursuant to consistently applied procedures
established by the directors. Money market instruments maturing within 60 days
are valued at amortized cost, which approximates market value. Investments in
mutual insurance company fixed general account annuities are valued at their
cash surrender value.
Since the Fund does not impose any sales commission or redemption fee, both the
purchase price and the redemption price of a Fund share is the same and will be
equal to the next calculated net asset value of a share of the Fund.
Open Account System and Share Certificates
Unless otherwise directed, all investor accounts are maintained on a book-entry
basis. Share certificates will not be issued unless requested by the
shareholder. Shares purchased by dividend reinvestment or under an Automatic
Investment Plan, will be confirmed after the end of each calendar quarter.
Following any other investment or redemption, the investor will receive a
printed confirmation indicating the dollar amount of the transaction, the per
share price of the transaction and the number of shares purchased or redeemed.
15
<PAGE> 16
VIII. BANK AND INSURANCE FUND, INC. - HOW TO REDEEM FUND SHARES
The Fund will buy back from any investor, at current net asset value, all shares
of the Fund offered for redemption. The redemption price of shares tendered for
redemption will be the net asset value next determined after receipt of all
required documents by the Fund or other authorized agent of the Fund. To receive
the net asset value for a specific day, a redemption request must be received
before the close of the Exchange on that day. The written request for redemption
must be signed by each registered owner exactly as the shares are registered and
must clearly identify the account and the number of shares or the dollar amount
to be redeemed. If a share certificate has been issued, the certificate,
properly endorsed by the registered owner, must be submitted with the written
redemption request.
Signatures Guarantees On Certain Redemptions
The use of signature guarantees is intended to protect the shareholder and the
Fund from a possibly fraudulent application for redemption. The signatures of
the redeeming shareholders must be guaranteed by a national or state bank, a
member firm of a domestic stock exchange or the National Association of
Securities Dealers (NASD), a credit union, a federal savings and loan
association or another eligible guarantor institution if the redemption: exceeds
$100,000; is being made payable other than exactly as registered; is being
mailed to an address which has been changed within 30 days of the redemption
request; or is being mailed to an address other than the one on record. A notary
public is not an acceptable guarantor. The Fund also reserves the right to
require a signature guarantee under other circumstances. The signature
guarantees must appear, together with the signatures of the registered owners
(i) on the written request for redemption which clearly identifies the account
and the number of shares to be redeemed, (ii) on a separate instrument of
assignment ("stock power") which may be obtained from a bank or broker, or (iii)
on any share certificates tendered for redemption. The use of signature
guarantees is intended to protect the shareholder and the Fund from a possibly
fraudulent application for redemption.
Additional documents such as corporate authorizations are required for proper
account establishment prior to redemptions by corporations, executors,
administrators, trustees and guardians. The Fund's Advisor will be pleased to
assist you with the proper forms required for corporate or other non-individual
account set-up and can be reached at 301-654-9567.
Telephone Redemptions
All shareholders have Telephone Privileges to authorize purchases, exchanges or
redemptions unless they specifically decline this service on the account
application or by writing to Bank and Insurance Fund, c/o [ ]. Shareholders
may redeem shares by telephone. The telephone redemption option is not available
for shares held in retirement accounts. Telephone redemption requests may be
made by calling 1-800-[ ]. To receive the net asset value for a specific day,
a redemption request must be received before the close of the New York Stock
Exchange on that day. As discussed above, certain requests must be in writing
and the signature of a redeeming shareholder must be signature guaranteed
All telephone transactions are recorded and written confirmations indicating
their details will promptly be sent to the shareholder of record. Prior to
accepting a telephone transaction, the shareholder placing the order may be
required to provide certain identifying information. A shareholder electing to
communicate
16
<PAGE> 17
instructions by telephone may be giving up some level of security that would
otherwise be present were the shareholder to request a transaction in writing.
Neither the Fund nor its Transfer Agent or Advisor assume responsibility for the
authenticity of instructions communicated by telephone or other medium which are
reasonably believed to be genuine and which comply with the foregoing
procedures. The Fund, and/or its Transfer Agent, may be liable for losses
resulting from unauthorized or fraudulent telephone or on-line instructions in
the event these procedures are not followed.
In times of extreme economic or market conditions, redeeming shares by telephone
may be difficult.
The Fund may terminate or modify the procedures concerning the telephone and
wire transfer services at any time, although shareholders of the Fund will be
given at least 60 days' prior notice of any termination or material
modification.
Payment for Redeemed Shares
Payment for shares redeemed upon written request will be made by check and
generally will be mailed within three business days after receipt by the
transfer agent of the properly executed redemption request and any outstanding
certificates for the shares to be redeemed. Payment for shares redeemed by
telephone will be made by check payable to the account name(s)and address
exactly as registered, and generally will be mailed within three business days
following the date of the request for redemption. A shareholder may request that
payment for redeemed shares of the Fund be made by wire or electronic funds
transfer. Shareholders may elect to use these services on the account
application or by providing the Fund with a signature guaranteed letter
requesting these services and designating the bank to receive all wire or
electronic funds transfers. A shareholder may change the pre-designated bank of
record by providing the Fund with written, signature guaranteed instructions.
Wire and electronic funds transfers are subject to a $5,000 minimum and a
$100,000 maximum limitation. Redemption proceeds paid by wire transfer generally
will be transmitted to the shareholder's pre-designated bank account on the next
business day after receipt of the shareholder's redemption request. There is a
$10 fee for each wire payment for shares redeemed by the Fund. Redemption
proceeds paid by electronic funds transfer will be electronically transmitted to
the shareholder's pre-designated bank account on the second business day after
receipt of the shareholder's redemption request. There is $5 fee for electronic
funds transfer of proceeds from the redemption of Fund shares.
Shareholders may encounter delays in redeeming shares purchased by check (other
than cashier's or certified checks), electronic funds transfer or through the
Automatic Investment Program if the redemption request is made within 15 days
after the date of purchase. In those situations, the redemption check will be
mailed within 15 days after the transfer agent's receipt of the purchase
instrument, provided that it has not been dishonored or cancelled during that
time. The foregoing policy is to ensure that all payments for the shares being
redeemed have been honored. In addition to the foregoing restrictions, no
redemption payment can be made for shares that have been purchased by telephone
order until full payment for the shares has been received. In any event, valid
redemption requests concerning shares for which full payment has been made will
be priced at the net asset value next determined after receipt of the request.
Involuntary Redemptions
As a means of reducing its expenses, the Fund is authorized to redeem
involuntarily all shares held in accounts with a value of less than $1,000.
17
<PAGE> 18
Such redemptions will be permitted only when the account is reduced below the
minimum value by redemption, and not by declines in per share net asset value.
As a result, accounts established with the applicable minimum investment might
be subject to redemption after only a small redemption has been made by the
shareholder. At least 30 days' written notice will be given to a shareholder
before such an account is redeemed. During that time, the shareholder may add
sufficient funds to the account. If such amount is not added to the account, the
shares will be redeemed, at the per share net asset value next determined after
the 30th day following the notice. A check for the proceeds will be sent to the
shareholder unless a share certificate has been issued, in which case payment
will be made upon surrender of the certificate.
IX. BANK AND INSURANCE FUND, INC. - PENDING LEGAL PROCEDINGS
Not Applicable
Part B STATEMENT OF ADDITIONAL INFORMATION
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
STATEMENT OF ADDITIONAL INFORMATION
BANK AND INSURANCE FUND, INC.
4520 East West Hwy, Suite #540
Bethesda, MD 20814
(301) 654- 9567
www.bowesfunds.com
This statement of Additional Information is not a prospectus and should be read
in conjunction with the prospectus filed December 4, 1997 with the Securities
and Exchange Commission. To obtain a free copy of the prospectus call
301-654-9567. This Statement of Additional Information, which may be revised
from time to time, is dated December 4, 1997.
18
<PAGE> 19
December 4, 1997
BANK AND INSURANCE FUND, INC.
STATEMENT OF ADDITIONAL INFORMATION
<TABLE>
<CAPTION>
TABLE OF CONTENTS
<S> <C>
INVESTMENT OBJECTIVES, POLICIES AND RISKS............................ 19
DIRECTORS AND OFFICERS .............................................. 24
INVESTMENT MANAGER .................................................. 28
INVESTMENT ADVISORY AND OTHER SERVICES............................... 28
PROMOTION OF FUND SHARES AND 12B-1 PLAN.............................. 28
PORTFOLIO TRANSACTIONS AND BROKERAGE................................. 29
PRICING AND REDEMPTION OF SECURITIES BEING OFFERED .................. 30
CALCULATION OF PERFORMANCE .......................................... 31
APPENDIX ............................................................ 33
</TABLE>
INVESTMENT OBJECTIVE, POLICIES AND RISKS
The primary investment objective of the Fund is long term capital appreciation,
which may occasionally be short term. The Fund's primary investment objective is
to invest at least 65% of its assets in the equity securities of United States
based issuers in the banking, savings and loan associations, mortgage and
consumer lending, and insurance industries. As the nature of the banking and
insurance industries are impacted by mergers, regulations, or product line
dynamics, additional types of equity issuers that derive a substantial portion
of their revenues from those industries may be added to the investment objective
of the Fund. The Fund's primary investment objectives are fundamental policies
of the
19
<PAGE> 20
Fund and may not be changed without a vote of a majority of the
outstanding voting securities of the Fund. Of course, there is no assurance that
the Fund's investment objective of long term capital appreciation will be
achieved.
In addition, a secondary non-fundamental objective of the Fund will be to
deposit a portion [not to exceed 10%] of its assets in savings accounts of
domestic mutual bank and thrift institutions and in invest a portion [not to
exceed 10%] of its assets in general account fixed annuities of domestic mutual
life insurance companies, each which may entitle the Fund to participate in
conversions and de-mutualizations, respectively, that may occur in the future.
The Fund intends to achieve its primary investment objectives by fundamental
investment analysis to uncover opportunities for capital appreciation because of
(i) mergers & product line expansion,
(ii) management effectiveness and utilization of technology,
(iii) mutual conversions, and
(iv) modernization of regulations.
Investment Limitations
The Fund is subject to the following restrictions that may not be changed
without the approval of the lesser of (i) 67 percent or more of the voting
securities present at a meeting if the holders of more than 50 percent of the
outstanding voting securities of the Fund are present or represented by proxy,
or (ii) more than 50 percent of the outstanding voting securities of the Fund.
The Fund will not:
1) make investments in commodities or real estate, although it may purchase
and sell securities of companies which deal in real estate or interests
therein, and except that the Fund may invest in index option contracts and
stock options for hedging purposes to the extent that not more than 5% of
its assets are invested in such contracts and options at any time;
2) make loans, except (i) by purchasing bonds, debentures or similar
obligations (including repurchase agreements) which are either publicly
distributed or customarily purchased by institutional investors;
3) engage in the business of underwriting securities issued by others except
to the extent that the Fund may technically be deemed to be an underwriter
under the Securities Act of 1933, as amended, in disposing of portfolio
securities;
4) purchase or otherwise acquire illiquid securities if, as a result, more
than 15% of its net assets would be invested in securities that are
illiquid (included in this limitation is investments in mutual insurance
company general fixed annuities);
5) purchase securities on margin or make short sales (except for tax
management reasons)
20
<PAGE> 21
6) invest for the purpose of exercising control over management of any
company;
7) invest its assets in the securities of other investment companies except
as may be acquired as part of a merger, consolidation or acquisition of
assets approved by the Fund's shareholders or otherwise to the extent
permitted by Section 12 of the Investment Company Act of 1940. The Fund
will invest only in investment companies which have investment objectives
and investment policies consistent with those of the Fund;
8) purchase the securities of any issuer (except obligations of the United
States government and its instrumentalities) if as a result the Fund would
hold more than 5% of the outstanding voting securities of the issuer, or
more than 5% of the value of the Fund's total assets would be invested in
the securities of such issuer;
9) pledge, mortgage, or hypothecate any of its assets to an extent greater
than 10% of its total assets at fair market value; and
10)borrow money, except that the Fund may borrow from banks, for temporary or
emergency purposes, including the meeting of redemption requests which
might otherwise require the untimely disposition of securities, in an
amount not exceeding 15% of the value of the Fund's net assets at the time
the borrowing is made. Whenever borrowings exceed 5% of the value of the
Fund's net assets, the Fund will not make any additional investments.
Portfolio Turnover
In pursuit of the Fund's investment objective, management continuously monitors
Fund investments and (considering tax strategies) makes portfolio changes
whenever changes in the market, industry trends or the outlook for the growth of
any portfolio security indicate to management that the objective could be better
achieved by investment in another security, regardless of portfolio turnover. In
addition, portfolio turnover may increase as a result of large amounts of
purchases and redemptions of shares of the Fund due to economic, market or other
factors that are not within the control of management. The annual portfolio
turnover rates of the Fund may at times exceed 50%. Increased portfolio turnover
to accommodate redemptions may result in the acceleration of net taxable gains
and additional Fund brokerage commissions.
Other Risks You Should Consider
The Fund may invest in securities of companies with small- or mid-sized market
capitalizations. Market capitalization is defined as total current market value
of a company's outstanding common stock. Investments in companies with smaller
market capitalizations may involve greater risks and price volatility than
investments in larger, more mature companies since smaller companies may be at
an earlier stage of development and may have limited product lines, reduced
daily volume of trading in their shares, limited financial resources or less
depth in management than larger or more established companies. Smaller companies
also may be adversely impacted by competition from larger industry companies.
While
21
<PAGE> 22
smaller companies may be subject to these additional risks, they may also
realize more substantial growth than larger or more established companies.
The Fund may invest in securities of unseasoned issuers. Unseasoned issuers are
companies with a record of less than three years' continuous activity as a
publicly traded company, even though they may have a longer history of
operations as a private or mutually owned institution. Unseasoned issuers may
not yet have established the market institutional analyst following of a
seasoned public company.
The Fund is authorized to invest in securities which are illiquid or not readily
marketable because they are subject to restrictions on their resale ("restricted
securities"), or because, based upon their nature or the market for such
securities, no ready market is available ("thinly-traded securities"), or
because the Fund has subscribed for shares in an initial public offering and
will not receive subscribed shares of the issuer within a seven day period
("when-issued securities"). However, the Fund may not purchase any security, the
purchase of that would cause the Fund to invest more than 15% of its net assets,
measured at the time of purchase, in illiquid securities. If securities become
illiquid following purchase or other circumstances cause more than 15% of the
Fund's net assets to be invested in illiquid securities, the Directors, in
consultation with the Advisor, will determine what action, if any, is
appropriate in light of all relevant circumstances. Certain restricted
securities, such as Rule 144A securities, may be treated as liquid under this
restriction if a determination is made that such securities are readily
marketable. Investments in illiquid securities involve certain risks to the
extent that the Fund may be unable to dispose of such a security at the time
desired or at a reasonable price or, in some cases, may be unable to dispose of
it at all. In addition, in order to resell a restricted security, the Fund might
have to incur the potentially substantial expense and delay associated with
effecting registration.
Supervision and Regulatory Environment
THE FOLLOWING REFERENCES TO MATERIAL STATUTES AND REGULATIONS AFFECTING
FINANCIAL INSTITUTIONS ARE ONLY BRIEF SUMMARIES THEREOF AND DO NOT PURPORT TO BE
COMPLETE AND THEY ARE QUALIFIED IN THEIR ENTIRETY BY REFERENCE TO SUCH STATUTES
AND REGULATIONS. ANY CHANGES IN APPLICABLE LAW OR REGULATION MAY HAVE A MATERIAL
EFFECT ON THE BUSINESS AND RESULTS OF OPERATIONS OF A PARTICULAR FINANCIAL
INSTITUTION OR INDUSTRY SEGMENT. PROSPECTIVE INVESTORS IN THE FUND ARE URGED TO
REFER TO SUCH STATUTES, REGULATIONS AND SUCH INFORMATION, AS APPLICABLE.
The financial performance and management of banks and insurers is not only
influenced by company management and by general economic conditions (e.g.
interest rates, real estate and business cycles, volatility of the capital
markets, and property casualty loss experience) but also by policies of various
governmental authorities. Depending on the particular type of financial
institution, the governmental authorities include but are not limited to,
National Association of Insurance Commissions ("NAIC"), State Insurance
Departments, the Federal Reserve Board ("FRB"), The Federal Deposit Insurance
Corporation ("FDIC"), the Office of the Comptroller of the Currency ("OCC"), the
Office of Thrift Supervision ("OTS"), the Securities and Exchange Commission
("SEC"), the Internal Revenue Service ("IRS"), and state securities and banking
and taxing authorities. These regulatory authorities regulate the scope of the
financial institutions business, investment activities, capital levels, reserves
against losses and deposits, collateral requirements, the establishment of
offices in additional locations,
22
<PAGE> 23
mergers, acquisitions, the issuance of equity and debt securities, and the
payment of dividends. These authorities also establish a comprehensive method
for the periodic examination of financial institutions and an enforcement
mechanism for violations of applicable laws and regulations. This system of
supervision and regulation is intended primarily for the protection of
depositors and policyholders rather than the shareholders of financial
institutions.
The financial institutions in which the Fund will invest that are subject to the
registration requirements of the Securities Act of 1933 and /or the Securities
Exchange Act of 1934 (the "Exchange Act"), as amended must register its
securities with the SEC. Consequently such companies are subject to the
information and periodic reporting requirements, proxy solicitation, insider
trading and other restrictions and requirements of the SEC under the Exchange
Act. Similarly, the OCC, the FDIC and the OTS, each of which regulates a segment
of the banking industry, administers the provisions of the Exchange Act as they
relate to national banks, banks other than member banks, and savings
associations, respectively. These banking agencies also require that such
institutions subject to their jurisdiction and the registration requirements of
the Exchange Act register their securities with such federal banking agencies
and, although securities issued by banks and savings associations are exempt
from the registration requirements of the Securities Act of 1933, that they
comply with their rules and regulations with respect to the offering of their
securities to the public.
In recent years, the laws governing regulation of these industries have
undergone simplification and have become more uniform and coordinated among
jurisdictions. Further reforms of the banking and insurance regulations have
been proposed by the industries nationally and in the states. While the current
regulatory environment has been in place, the banking and insurance industries
have experienced overall financial condition improvement. For example, the
adoption of interstate banking legislation in 1994 resulted in the removal of
substantially all geographic barriers for banks and thrifts. In addition, the
Financial Institutions Reform, Recovery, and Enforcement Act of 1989 ("FIRREA")
and the Federal Deposit Insurance Corporation Improvement Act of 1991
("FDICIA"), which provided banks and thrifts with the initial eligibility to
merge, coupled with legislation enacted in the early autumn of 1996 which
virtually eliminated all remaining impediments to the mergers of banks and
thrifts by substantially altering the treatment of bad debt reserves and by
recapitalizing the Savings Association Insurance Fund ("SAIF"), has resulted in
the rapid consolidation of the banking and thrift industries. Legislative
initiatives have facilitated the conversion of mutual banks, thrifts and
insurers to stock ownership form. There is risk that the rules and regulations
could change to be more restrictive to create (or because of) a less favorable
industry operating environment. For example, regulator could alter (a) minimum
capitalization, (b) asset quality standards, (c) limitations on the separation
of various banking, securities, insurance and deposit taking, and (d)
limitations on market share and concentration.
23
<PAGE> 24
DIRECTORS AND OFFICERS
The Directors and Officers of Bank and Insurance Fund, Inc. and their principal
occupations during the past five years are set forth below.
<TABLE>
<CAPTION>
Principal
Name Age Address Occupation in the Past 5yrs
- ---- --- ------- ---------------------------
<S> <C> <C> <C>
Harry M.K. Johnston 61 11 West Chestnut Hill Bank Executive, Consultant.
Philadelphia, PA 19118 Division Manager, Public
Savings Bank since 1996;
Contract Consultant to
Resolution Trust Company
from 1993 to 1996;
Independent Consultant
from 1991 to 1993;
President and CEO,
Chestnut Hill National
Bank from 1984 to 1991;
Past Chairman, Committees
of the Pennsylvania
Bankers Association.
Louis M. Marmon, M.D., 41 1019 Willowleaf Way Physician, Professor
Ph.D. Potomac, MD 20850 Medicine.
Director of Pediatric
Surgery, Shady Grove
Adventist Hospital since
1994; Director of
Pediatric Surgical
Research, Georgetown
University School of
Medicine from 1990 to
1994; Clinical Assistant
Professor of Surgery,
Georgetown University
School of Medicine since
1994; Medical Director,
Chartwell Health
Management, Inc. since
March, 1997.
</TABLE>
* Directors who are "interested persons" of the Fund, as defined in the
Investment Company Act of 1940, as amended, (the "1940 Act"). Director(s)
of the Fund who are officers or employees of the investment adviser
receive no remuneration from the Fund. Each of the other Directors is paid
a fee of $500 for each meeting attended and is reimbursed for the expenses
of attending meetings.
24
<PAGE> 25
Directors of Bank and Insurance Fund, Inc. (continued)
<TABLE>
<CAPTION>
Principal
Name Age Address Occupation in the Past 5yrs
- ---- --- ------- ---------------------------
<S> <C> <C> <C>
Thomas P.F. Kiely 42 4767 Berkeley Ter, NW Attorney, Aviator and
Washington, DC 20007 Engineer.
Major, U.S. Army Reserve -
General's Corps. since May,
1997; Attorney, Federal
Aviation Administration -
Office of the Chief
Counsel, Procurement
Litigation Division from
1993 to May 1997; Federal
Aviation
Administration - Flight
Standards Service, Commuter
and Air Taxi Safety from
1992 to 1993; Major, U.S.
Marine Corps; 1977
Graduate United States
Naval Academy
Robert B. Bowes,* 36 9410 Fernwood Road President and CEO,
President and Bethesda, MD 20817 Bowes Funds, LLC since
Chief Executive Officer October, 1997; Chief
Financial Officer -
Financial Institution
Partners, L.P., Hovde
Financial, Inc. and
affiliates from September,
1996 to September, 1997;
President - Fund Commission
Services, Inc. from June,
1992 to August, 1996; Vice
President - The Chase
Manhattan Bank, N.A. -
Financial Institutions
Group from October, 1985 to
June, 1992.
</TABLE>
* Directors who are "interested persons" of the Fund, as defined in the
Investment Company Act of 1940, as amended, (the "1940 Act"). Director(s) of
the Fund who are officers or employees of the investment adviser receive no
remuneration from the Fund. Each of the other Directors is paid a fee of $500
for each meeting attended and is reimbursed for the expenses of attending
meetings.
25
<PAGE> 26
Officers of Bank and Insurance Fund, Inc.
<TABLE>
<CAPTION>
Name of Person, Principal
Position with Fund Age Address Occupation for past 5yrs
- ------------------ --- ------- ------------------------
<S> <C> <C> <C>
Robert B. Bowes, 36 9410 Fernwood Road President and CEO,
President and Bethesda, MD 20817 Bowes Funds, LLC since
Chief Executive Officer October, 1997; Chief
Financial Officer -
Financial Institution
Partners, L.P., Hovde
Financial, Inc. and
affiliates from September,
1996 to September, 1997;
President - Fund Commission
Services, Inc. from June,
1992 to August, 1996; Vice
President - The Chase
Manhattan Bank, N.A. -
Financial Institutions
Group from October, 1985 to
June, 1992.
Thomas I. Carocci, 27 1410 Ingleside Av Vice President and Secretary
Vice President and McLean, VA 22101 Bank and Insurance Fund,
Secretary Inc. since November, 1997;
Controller, Mackenzie &
Co. (Election Consultants)
from February, 1996 to
November, 1997; Lebouef,
Lamb, Green & MacRae,
Legal Intern during 1993
and 1994; Received J.D.
degree from Duquesne
University School of Law -
June, 1995.
</TABLE>
26
<PAGE> 27
COMPENSATION TABLE
<TABLE>
<CAPTION>
Pension or
Retirement
Benefits Estimated Total Compensation
Aggregate Accrued as Benefits from Registrant and
Name of Person, Compensation Part of Fund Upon Mutual Fund Complex
Fund Position from Registrant Expenses Retirement and Directors Fees
- ------------- --------------- -------- ---------- ------------------
<S> <C> <C> <C> <C>
Robert B. Bowes, $ -0- $ -0- $ -0- $ -0-
President and
Chief Executive
Officer; Director
Thomas I. Carocci, -0- -0- -0- -0-
Vice President and
Secretary
Harry M.K. Johnston 2,000 -0- -0- 2,000
Director
Louis M. Marmon,M.D., 2,000 -0- -0- 2,000
Ph.D.
Director
Thomas P.F. Kiely 2,000 -0- -0- 2,000
Director
</TABLE>
The preceding table sets forth information regarding projected compensation
(expressed in dollars) of the Directors by the Fund for the fiscal year ended
December 31, 1998. Officers of the Fund and Director(s) who are interested
persons of the Fund do not receive any compensation from the Fund.
27
<PAGE> 28
INVESTMENT MANAGER
The Advisor invested $100,000 seed money on January [ ], 1998 as required by the
Investment Company Act of 1940. There is no agreement for the redemption of such
share purchase.
As of January 1, 1998, the Officers and Directors of the Fund owned [ ]% of the
outstanding shares of capital stock of the Fund. The Fund knows of no person who
owns beneficially more than 5% of the shares of beneficial interest of the Fund.
INVESTMENT ADVISORY AND OTHER SERVICES
The Advisor of the Fund is BOWES FUNDS, LLC (the "Advisor"). The Advisor is
wholly-owned and controlled by Robert B. Bowes.
Under the terms of the Agreement, BOWES FUNDS, LLC furnishes overall investment
management for the Fund, provides research and credit analysis, oversees the
purchase and sales of portfolio securities, maintains books and records with
respect Fund securities transactions and provides periodic and special reports
to the Board of Directors as required.
For the advisory services provided and expenses assumed by it, the Advisor has
agreed to a fee from the Fund, computed daily and payable monthly, at an annual
rate of 1.00% of average daily net assets. The Agreement expires two years from
the date of its effectiveness, at which time it can be renewed to continue in
effect for successive one year periods thereafter, provided that each
continuance is specifically approved annually by (a) the vote of a majority of
the Directors who are not parties to the Agreement or interested persons (as
defined in the 1940 Act), cast in person at a meeting called for the purpose of
voting on approval, and (b) either (i) with respect to the Fund, the vote of a
majority of the outstanding voting securities of that Fund, or (ii) the vote of
a majority of the Directors.
The Agreement may be terminated at any time by (a) the vote of a majority of the
Directors who are not interested persons (as defined in the 1940 Act)or (b) the
vote of a majority of the outstanding voting securities of that Fund, without
penalty, on 60 days' written notice to the Advisor. The Advisor may also
terminate its advisory relationship with the Fund without penalty on 90 days'
written notice to the Fund. The Agreement terminates automatically in the event
of its assignment (as defined in the 1940 Act).
PROMOTION OF FUND SHARES AND 12B-1 PLAN
The Fund has adopted a 12b-1 plan (the "Plan") pursuant to Rule 12b-1 under the
Investment Company Act of 1940, which permits the Fund to pay certain costs for
the distribution of its shares. The Plan provides for the payment to Bowes
Funds, LLC of a 12b-1 fee of .25 of 1% (0.25%) per annum of the Fund's average
daily net assets to finance activities primarily intended to result in the sale
of Fund shares. The expenses paid by Bowes Funds, LLC include, but are not
limited to, payments made to and expenses of persons (including employees of
Bowes Funds, LLC) who are engaged in, or provide support services in connection
with, the
28
<PAGE> 29
distribution of Fund shares, such as answering routine telephone inquiries and
processing shareholder requests for information; compensation (including
incentive compensation and/or continuing compensation based on the amount of
customer assets maintained in the Fund) paid to securities dealers, financial
institutions and other organizations which render distribution and
administrative services in connection with the distribution of Fund shares;
costs related to the formulation and implementation of marketing and promotional
activities, including direct mail promotions and television, radio, newspaper,
magazine and other mass media advertising; costs of printing and distributing
prospectuses and reports to prospective shareholders of the Fund; costs involved
in preparing, printing and distributing sales literature for the Fund; costs
involved in obtaining whatever information, analyses and reports with respect to
market and promotional activities on behalf of the Fund that Bowes Funds, LLC
deems advisable; and such other costs as may from time to time be agreed upon by
the Fund. Such payments are to be made monthly by the Fund to Bowes Funds, LLC
with respect to each fiscal year of the Fund without regard to the actual
distribution expenses incurred by Bowes Funds, LLC in such year; that is, if the
distribution expenditures incurred by Bowes Funds, LLC are less than the total
of such payments in such year, the difference is not to be reimbursed to the
Fund by Bowes Funds, LLC, and if the distribution expenditures incurred by Bowes
Funds, LLC are more than the total of such payments, the excess is not to be
reimbursed to Bowes Funds, LLC by the Fund. From time to time the Fund may
engage in activities to promote the sale of the shares of the Fund and other
funds that are or may in the future be advised or administered by Bowes Funds,
LLC, which costs are not readily identifiable as related to any one fund. In
such cases, Bowes Funds, LLC allocates the cost of the activity among the funds
involved on the basis of their respective net assets, unless otherwise directed
by the directors.
The current 12b-1 Plans will continue in effect until the end of December 1998,
and from year to year thereafter if approved at least annually by a majority of
the Fund's directors who are not interested persons of the Fund and have no
direct or indirect financial interest in the operation of the Plan or any
related agreements by votes cast in person at a meeting called for such purpose.
Administration of the Plan is regulated by Rule 12b-1 under the 1940 Act, which
includes requirements that the Directors receive and review at least quarterly
reports concerning the nature and qualification of expenses which are made, that
the Directors approve all agreements implementing the Plan and that the Plan may
be continued from year-to-year only if the Directors conclude at least annually
that continuation of the Plan is likely to benefit shareholders.
The Plan may not be amended to increase materially the amount to be spent on
distribution of shares of the Fund without shareholder approval.
The Fund's custodian is [ ]. The Fund's independent auditor is [ ]. The Fund's
Legal Counsel is [ ]. The Fund's Distributor is [ ].
PORTFOLIO TRANSACTIONS AND BROKERAGE
Subject to the supervision of the Directors, decisions to buy and sell
securities for the Fund and negotiation of their brokerage commission rates are
made by the Advisor. Transactions on exchanges involve the payment by the Fund
of negotiated brokerage commissions. There is generally no stated commission in
the case of securities traded in the over-the-counter market but the price paid
by the Fund usually includes an undisclosed dealer commission or mark-up. In
certain instances, the Fund may make purchases of underwritten issues at prices
that include underwriting fees.
29
<PAGE> 30
In selecting a broker to execute each particular transaction, the Advisor takes
the following into consideration: the best net price available; the reliability,
integrity and financial condition of the broker; the size and difficulty in
executing the order; and the value of the expected contribution of the broker to
the investment performance of the Fund on a continuing basis. Accordingly, the
cost of the brokerage commissions to the Fund in any transaction may be greater
than that available from other brokers if the difference is reasonably justified
by other aspects of the portfolio execution services offered. For example, the
Advisor will consider the research and investment services provided by brokers
or dealers who effect or are parties to portfolio transactions of the Fund or
the Advisor's other clients. Such research and investment services include
statistical and economic data and research reports on particular companies and
industries as well as research software. Subject to such policies and procedures
as the Directors may determine, the Advisor shall not be deemed to have acted
unlawfully or to have breached any duty solely by reason of its having caused
the Fund to pay a broker that provides research services to the investment
adviser an amount of commission for effecting a portfolio investment transaction
in excess of the amount another broker would have charged for effecting that
transaction, if the Advisor determines in good faith that such amount of
commission was reasonable in relation to the value of the research service
provided by such broker viewed in terms of either that particular transaction or
the Advisor's ongoing responsibilities with respect to the Fund.
PRICING AND REDEMPTIONS OF SECURITIES BEING OFFERED
The Fund continuously offers fund shares for sale and redemption without sales
or redemption charges at net asset value calculated in accordance with generally
accepted accounting principals as referred to in the Fund's Prospectus dated
December 4, 1997.
How to Redeem Fund Shares
The right of redemption may be suspended, or the date of payment postponed
beyond the normal seven-day period by the Fund, under the following conditions
authorized by the 1940 Act: (1) for any period (a) during which the New York
Stock Exchange is closed, other than customary weekend or holiday closing, or
(b) during which trading on the New York Stock Exchange is restricted; (2) for
any period during which an emergency exists as a result of which (a) disposal by
the Fund of securities owned by it is not reasonably practical, or (b)it is not
reasonably practical for the Fund to determine the fair value of its net assets;
and (3) for such other periods as the Securities and Exchange Commission may by
order permit for the protection of the Fund's shareholders.
The value of shares of the Fund on redemption may be more or less than the
shareholder's cost, depending upon the market value of the Fund's assets at the
time. Shareholders should note that if a loss has been realized on the sale of
shares of the Fund, the loss may be disallowed for tax purposes if shares of the
Fund are purchased within (before or after) 30 days of the sale.
It is possible that conditions may exist in the future which would, in the
opinion of the Directors, make it undesirable for the Fund to pay for
redemptions in cash. In such cases the Directors may authorize payment to be
made in portfolio securities of the Fund. However, the Fund is obligated under
the 1940 Act to redeem for cash all shares presented for redemption by any one
shareholder up to
30
<PAGE> 31
$250,000 (or 1% of the Fund's net assets if that is less) in any 90-day period.
Securities delivered in payment of redemptions are valued at the same value
assigned to them in computing the net asset value per share. Shareholders
receiving such securities generally will incur brokerage costs on their sales.
CALCULATION OF PERFORMANCE DATA
Average annual total return is the average annual compound rate of return for
various time periods (such as, one year, five years and ten years, all ended on
the last day of a recent calendar quarter). Average annual total return
quotations reflect changes in the price of the Fund's shares and assume that all
dividends and capital gains distributions during the respective periods were
reinvested in Fund shares. Average annual total return is calculated by
computing the average annual compound rates of return of a hypothetical
investment over such periods, according to the following formula (average annual
total return is then expressed as a percentage):
T = (ERV/P) - 1
Where:
T = average annual total return
P = a hypothetical initial investment of $1,000
n = number of years
ERV = ending redeemable value: ERV is the value,
at the end of the applicable period, of a
hypothetical $1,000 investment made at the
beginning of the applicable period.
It should be noted that average annual total return is based on historical
earnings and is not intended to indicate future performance. Average annual
total return for the Fund will vary based on changes in market conditions and
the level of the Fund's expenses.
In connection with communicating its average annual total return to current or
prospective shareholders, the Fund also may compare these figures to the
performance of other mutual funds tracked by mutual fund rating services or to
unmanaged indices which may assume reinvestment of dividends but generally do
not reflect deductions for administrative and management costs.
Comparison of Portfolio Performance
Comparison of the quoted non-standardized performance of various investments is
valid only if performance is calculated in the same manner. Since there are
different methods of calculating performance, investors should consider the
effect of the methods used to calculate performance when comparing performance
of the Fund with performance quoted with respect to other investment companies
or types of investments.
In connection with communicating its performance to current or prospective
shareholders, the Fund also may compare these figures to the performance of
unmanaged indices which may assume reinvestment of dividends or interest but
generally do not reflect deductions for administrative and management costs.
Examples include, but are not limited to the Dow Jones Industrial Average,
31
<PAGE> 32
Standard & Poor's 500 Composite Stock Price Index (S&P 500), the Philadelphia
Stock Exchange Bank Index, and the Russell 2000 Index.
From time to time, in advertising, marketing and other Fund literature, the
performance of the Fund may be compared to the performance of broad groups of
mutual funds with similar investment goals, as tracked by independent
organizations such as Investment Company Data, Inc., Lipper Analytical Services,
Inc., CDA Investment Technologies, Inc., Morningstar, Inc., and other
independent organizations. When these organizations' tracking results are used,
the Fund will be compared to the appropriate fund category, that is, by fund
objective and portfolio holdings or the appropriate volatility grouping, where
volatility is a measure of the Fund's risk. From time to time, the average
price-earnings ratio and other attributes of the Fund's or the model portfolio's
securities, may be compared to the average price-earnings ratio and other
attributes of the securities that comprise the S&P 500.
The total return of the Fund is calculated for any specified period of time by
assuming the purchase of shares of the Fund at the net asset value at the
beginning of the period. Each dividend or other distribution paid by the Fund is
assumed to have been reinvested at the net asset value on the reinvestment date.
The total number of shares then owned as a result of this process is valued at
the net asset value at the end of the period. The percentage increase is
determined by subtracting the initial value of the investment from the ending
value and dividing the remainder by the initial value.
The Fund's total return reflects the Fund's performance over a stated period of
time. An average annual total return reflects the hypothetical annually
compounded return that would have produced the same total return if the Fund's
performance had been constant over the entire period. Total return figures are
based on the overall change in value of a hypothetical investment in the Fund.
Because average annual total returns for more than one year tend to smooth out
variations in the Fund's return, investors should recognize that such figures
are not the same as actual year-by-year results.
32
<PAGE> 33
PART C APPENDIX
OTHER INFORMATION
<TABLE>
<CAPTION>
Financial Statements and Exhibits
<S> <C>
(a) Financial Statements and audited Statement of Assets and Liabilities will
be filed by Pre-Effective Amendment.
(b) Exhibits
(1) Articles of Incorporation
(2) By-Laws to be filed by pre-effective amendment
(3) Not Applicable
(4) Specimen Share Certificate to be filed by pre-effective amendment
(5)(a) Investment Advisory Agreement between Registrant and Bowes Funds, LLC
to be filed by pre-effective amendment
(6) Underwriting Agreement between the Registrant and Bowes Funds, LLC to
be filed by pre-effective amendment
(7) Not Applicable
(8) Custodian Agreement between Registrant and [ ] to be filed by
pre-effective amendment
(9)(a) Shareholder Services Agreement between Registrant and [ ] to be
filed by pre-effective amendment
(b) Transfer Agency Agreement between Registrant and [ ] to be filed by
pre-effective amendment
(10) Opinion and consent of Counsel between Registrant and [ ] to be
filed by pre-effective amendment
(11) Consent of Independent Auditors between Registrant and [ ] to be
filed by pre-effective amendment
(12) Not Applicable
(13) Initial Capital Agreement between Registrant and [ ] to be filed by
pre-effective amendment
(14) Not Applicable
(15) 12b-1 Distribution Plan between Registrant and [ ] to be filed by
pre-effective amendment
(16) Not Applicable
(17) Not Applicable
(18) Not Applicable
</TABLE>
Persons Controlled by or Under Common Control with Registrant
Not applicable.
33
<PAGE> 34
Number of Record Holders
As of the date of this Registration Statement, there were no shareholders of
record of the Registrant's shares.
Indemnification
Reference is made to Seventh Article of the Registrant's Articles of
Incorporation. Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers and controlling
persons of the Registrant by the Registrant pursuant to the Articles of
Incorporation or otherwise, the Registrant is aware that in the opinion of the
Securities and Exchange Commission, such indemnification is against public
policy as expressed in the Act and, therefore, is unenforceable. In the event
that a claim for indemnification against such liabilities (other than the
payment by the Registrant of expenses incurred or paid by directors, officers or
controlling persons of the Registrant in connection with the successful defense
of any act, suit or proceeding) is asserted by such directors, officers or
controlling persons in connection with the shares being registered, the
Registrant will submit to a court of appropriate jurisdiction the question
whether such indemnification by it is against public policy as expressed in the
Act and will be governed by the final adjudication of such issues.
Business and Other Connections of Investment Adviser
Bowes Funds, LLC serves as the investment adviser for the Registrant. The
business and other connections of Bowes Funds, LLC are set forth in the Uniform
Application for Investment Adviser Registration ("Form ADV") of Bowes Funds, LLC
as currently filed with the SEC which is incorporated by reference herein.
Principal Underwriter
[to be filed by amendment]
Location of Accounts and Records
The accounts, books, and other documents required to be maintained by Registrant
pursuant to Section 31(a) of the Investment Company Act of 1940 and rules
promulgated thereunder are in the possession of [to be filed by pre-effective
amendment].
Management Services
Not Applicable.
Undertakings
(a) Not Applicable.
(b) Registrant undertakes to file a Post-Effective Amendment, using
financial statements which need not be certified, within four to six
months from the effective date of this Registration Statement under
the Securities Act of 1933 or the date on which Registrant becomes
operational.
34
<PAGE> 35
(c) Registrant undertakes to furnish each person to whom a prospectus is
delivered a copy of the Registrant's latest annual report to
shareholders, upon request and without charge, in the event that the
information called for by Item 5A of Form N-1A has been presented in
the Registrant's latest annual report to shareholders.
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the Investment
Company Act of 1940, the Registrant has duly caused this Registration Statement
to be signed on its behalf by the undersigned, thereunto duly authorized, in
Bethesda, Maryland in the State of Maryland on the 4th day of December, 1997.
BANK AND INSURANCE FUND, INC.
By: /s/
Robert B. Bowes
President
By: /s/
Thomas I. Carocci
Secretary
INVESTMENT MANAGER
BOWES FUNDS, LLC
4520 EAST WEST HWY, SUITE #540
BETHESDA, MARYLAND 20184
(301) 654-9567
www.bowesfunds.com
SHAREHOLDER SERVICING AGENT
[ ]
TRANSFER AGENT
[ ]
CUSTODIAN
[ ]
LEGAL COUNSEL
[ ]
INDEPENDENT AUDITORS
[ ]
PROSPECTUS
DECEMBER 4, 1997
35
<PAGE> 1
EXHIBIT 99.B1
ARTICLES OF INCORPORATION
OF
BANK AND INSURANCE FUND, INC.
BANK AND INSURANCE FUND, INC., a Maryland corporation (hereinafter called
"Corporation"), hereby certifies to the State Department of Assessments and
Taxation of Maryland that:
FIRST: The name of the corporation (which is hereinafter called the
"Corporation") is: Bank and Insurance Fund, Inc.
SECOND: The address of the principal office of the Corporation in the
State of Maryland is 4520 East West Highway, Suite 540, Bethesda, Maryland
20814-3319
THIRD: The purposes for which the Corporation is formed are as follows:
(i) To act as a diversified open-end investment company to be registered
as such with the Securities and Exchange Commission pursuant to the
Investment Company Act of 1940, and
(ii) To carry on any business activity permitted by the Maryland General
Corporation Law which may be deemed desirable by the Board of
Directors of the Corporation, whether or not identical with or
related to the business described in the foregoing paragraph of this
Article; as well as all activities and things necessary and
incidental thereto, to the full extent of such laws.
FOURTH: The total number of shares of stock of which the Corporation has
authority to issue is one-hundred million (100,000,000) shares of the par value
of One tenth of One Cent ($.001) and of the aggregate par value of one hundred
thousand ($100,000). Each share of capital stock of the Corporation shall
consist of Common Stock that shall have identical voting, dividend, liquidation
and other Rights.
FIFTH: The number of directors of the Corporation shall be one and the
name of the founding director and who will serve as such director until the
election of directors next succeeding his election and until his successors are
duly chosen and qualified is as follows:
Robert B. Bowes
The By-Laws of the Corporation may fix the number of directors at a number
greater or less than that named in these Articles of Incorporation and may
authorize the Board of Directors, by the vote of a majority of the entire Board
of Directors, to increase or decrease the number of directors fixed by these
Articles of Incorporation or by the By-Laws within the limits specified from
time to time in the By-Laws, provided that in no case shall the number of
directors be less than one nor greater than nine, and to fill the vacancies
created by any such increase in the number of directors. Unless otherwise
provided by the By-Laws of the Corporation, the directors of the Corporation
need not be stockholders therein.
1
<PAGE> 2
SIXTH: The following provisions are hereby adopted for the purpose of
defining, limiting and regulating the powers of the Corporation and of the
directors and stockholders:
(a) The Board of Directors of the Corporation is hereby empowered to
authorize the issuance from time to time of shares of its stock, whether
now or hereafter authorized for such consideration as the Board of
Directors may deem advisable.
(b) The Board of Directors of the Corporation shall be authorized,
from time to time, to classify or to reclassify any unissued shares of
stock of the Corporation by setting or changing in any one or more
respects the designations, preferences, conversion or other rights, voting
powers, restrictions, limitations as to dividends, qualifications, or
terms and conditions of redemption of such shares of stock pursuant to
such classification or reclassification to increase or decrease the number
of authorized shares of any class. Without limiting the generality of the
foregoing, the dividends and distribution of investment income and capital
gains with respect to the stock of the Corporation shall be in such amount
as may be declared from time to time by the Board of Directors, and such
dividends and distribution may vary to such extent and for such purposes
as the Board of Directors may deem appropriate, including but not limited
to, the purpose of complying with the requirements of regulatory or
legislative authorities. The shares of stock shall at all times be divided
into shares having a par value of $.001.
(c) The Board of Directors of this Corporation is hereby empowered
to authorize the issuance from time to time of fractional shares of stock
of this Corporation, whether now or hereafter authorized. Any fractional
shares so issued shall entitle the holders thereof to exercise voting
rights, receive dividends and participate in the distribution of assets of
the Corporation in the event of liquidation or dissolution to the extent
of their proportionate interest represented by such fractional shares.
(d) Except to the extent otherwise prohibited by applicable law, the
Corporation may enter into any management or investment advisory contract
or underwriting contract or any other type of contract with, and may
otherwise engage in any transaction or do business with, any person, firm
or corporation or any subsidiary or other affiliate of any such person,
firm or corporation and may authorize such person, firm or corporation or
such subsidiary or other affiliate to enter into any other contracts or
arrangements with any other person, firm or corporation which relate to
the Corporation or the conduct of its business, notwithstanding that any
directors or officers of the Corporation are or may subsequently become
partners, directors, officers, stockholders or employees of such person,
firm or corporation or of such subsidiary or other affiliate or may have a
material financial interests in any such contract, transaction or
business; and except to the extent otherwise provided by applicable law,
no such contract or transaction or business shall be invalidated or
voidable or in any way affected thereby nor shall any such directors or
officers of the corporation be liable to the Corporation or to any
stockholder or creditor thereof or to any other person for any loss
incurred solely because of the entering into and performance of such
contracts or the engaging of such transaction or business or the existence
of such material financial interests therein, provided that such
relationship to such person, firm or corporation or said subsidiary or
affiliate or such material financial
2
<PAGE> 3
interest was disclosed or otherwise known to the Board of Directors prior
to the Corporation's entering into such contract or engaging in such
transaction or business and in the case of directors of the Corporation
that any requirements of the Maryland General Corporation Law have been
satisfied; and provided further that nothing herein shall protect any
director or officer of the Corporation from liability to the Corporation
or its security holders to which he would be otherwise subject by reason
of willful misfeasance, bad faith, gross negligence or reckless disregard
of the duties involved in the conduct of this office.
(e) The method of computing the "net asset value" of each share of
stock of the Corporation shall be determined by or pursuant to the
direction of the Board of Directors of the Corporation; and subject to the
authority of the Board of Directors to change the method of such
computation. The net asset value referred to in the preceding sentence
shall be computed as follows:
The net asset value per share is determined on a daily basis, by dividing
the value of the Corporation's portfolio securities plus all cash and
other assets (including dividends accrued but not collected) less all
liabilities (including accrued expenses but excluding capital and surplus)
by the number of shares outstanding. The net asset value per share will be
made available for publication.
Portfolio securities will be valued according to the most recent closing
price per share as indicated by the exchange on which the securities
trade, National Association of Securities Dealers Automated Quotation
System, or National Market System. Portfolio securities in which there
were no transactions on the valuation date will be valued by taking the
mean between the latest "bid" and "asked" prices. Securities for which
quotations are not readily available and other assets will be valued at
fair value as determined in good faith by the Board of Directors. Not
withstanding the above, Short Term Debt Securities with maturities of 60
days or less are valued at amortized cost. The Board of Directors is
empowered in its absolute discretion to establish other methods of
determining the net asset value of the shares of stock whenever such
methods are deemed by it to be necessary or desirable in order (a) to
enable the Corporation to comply with any provision of the Investment
Company Act of 1940, or any rule or regulation thereunder, or (b) to more
fairly and accurately reflect the net asset value for such shares of
stock.
(f) Any determination made in good faith and, so far as accounting
matters are involved, in accordance with generally accepted accounting
principles by or pursuant to the direction of the Board of Directors as to
the amount of the assets, debts or obligations or liabilities of the
Corporations, as to the amount of any reserves or changes set up and the
propriety thereof, as to the time of or purpose for creating such reserves
or charges, as to the use, alteration or cancellation of any reserves or
charges (whether or not any debt, obligation or liability for which such
reserves or charges shall have been created shall have been paid or
discharged or shall be then or thereafter required to be paid or
discharged), as to the price or closing bid or asked price of any
investment owned or held by the Corporation, as to the market value of any
investment or fair value of any other asset of the Corporation, as to the
number of shares of the Corporation outstanding, as to the ability to
liquidate investments in orderly fashion, or as to any other matters
relating to the issue, sale, purchase or other acquisition or disposition
of investment or
3
<PAGE> 4
shares of the Corporation, shall be final and conclusive and shall be
binding upon the Corporation and all holders of its shares, past present
and future, and shares of the Corporation are issued and sold on the
condition and understanding that any and all such determinations shall be
binding as aforesaid.
(g) Unless otherwise expressly provided in the Articles of
Incorporation, on each matter submitted to a vote of the stockholders,
each holder of a share of capital stock of the Corporation shall be
entitled to one vote for each share standing in such holder's name on the
books of the Corporation.,
(h) The stockholders of the Corporation may remove any director of
the Corporation prior to the expiration of his term of office for cause,
and not otherwise, by the affirmative vote of a majority to all votes
entitled to be cast for the election of the directors.
(i) The Corporation reserves the right to make, from time to time,
any amendments of its Articles of Incorporation which may now or hereafter
be authorized by law.
(j) Except to the extent otherwise specifically provided in the
Articles of Incorporation or By-Laws of the Corporation, the Corporation
may authorize or take any corporate action (including, but without
limitation, any amendments to its Articles of Incorporation) upon the
affirmative vote of the holders of a majority of the outstanding shares of
stock entitled to vote thereon, notwithstanding any provision of the
Maryland General Corporation Law which would otherwise require more than a
majority vote of the outstanding shares of stock to authorize or take such
action.
(k)(1) All shares now and hereafter authorized shall be subject to
redemption and redeemable at the option of the stockholder pursuant to the
applicable provisions of the Investment Company Act of 1940, as amended,
and laws of the State of Maryland, including any applicable rules and
regulations thereunder. Each holder of shares of capital stock of the
Corporation shall be entitled to require the Corporation to redeem all or
any part of the shares of capital stock of the Corporation registered in
the name of such holder on the books of the Corporation. All shares of
capital stock issued by the Corporation shall be subject to redemption by
the Corporation, subject to the right of the Board of Directors of the
Corporation to suspend the right of redemption of shares of capital stock
of the Corporation or postpone the date of payment of such redemption
price in accordance with provisions of applicable law. The redemption
price of shares of capital stock of the Corporation shall be the net asset
value thereof as determined by the Board of Directors of the Corporation
from time to time in accordance with the provisions of applicable law. The
Board of Directors may establish procedures for redemption of stock.
(2)(i) The term "Minimum Amount" when used herein shall mean one
thousand dollars ($1,000) unless otherwise fixed by the Board of Directors
from time to time. The Board of Directors many establish different Minimum
Amounts from time to time for holders of stock based on such criteria as
the Board of Directors may deem appropriate.
(ii)If the net asset value of the shares of stock held by a stockholder
shall be less than the minimum amount then in effect with respect to the
category of holders in which the stockholder is included, the Corporation
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may redeem all of those shares, upon notice given to the holder in
accordance with paragraph (iii) of this subsection (k), to the extent that
the Corporation may lawfully effect such redemption under the laws of the
State of Maryland.
(iii)The notice referred to in paragraph (ii) of this subsection (iii)
shall be in writing personally delivered or deposited in the mail at least
sixty days (or such other time as the Board of Directors may specify from
time to time) prior to such redemption. If mailed, notice shall be
addressed to the stockholder at his post office address as shown on the
books of the Corporation and sent by first class mail, postage prepaid.
The price for shares acquired by the Corporation pursuant to this
subsection (iii) shall be an amount equal to the net asset value of such
shares.
(iv) Payment by the Corporation for shares of stock of the Corporation
surrendered to it for redemption shall be made by the Corporation within
seven days of such surrender out of the funds legally available therefor,
provided that the Corporation may suspend the right of the stockholders to
redeem shares of stock and may postpone the right of those holders to
receive payment for any shares when permitted or required to do so by
applicable statutes or regulations. Payments of the aggregate price of
shares surrendered for redemption may be made in cash or, at the option of
the Corporation, wholly or partly in such portfolio securities of the
Corporation as the Corporation shall select.
SEVENTH: The following provision is hereby adopted for the purpose of
indemnifying the directors of the Corporation: To the maximum extent permitted
by the Maryland General Corporation Law as from time to time amended, but
subject to any limitations which may be imposed pursuant to the Investment
Company Act of 1940 or any rule or regulation thereunder, the Corporation shall
indemnify its currently acting and its former directors, officers and agents and
those persons who, at the request of the Corporation, serve and have served
another corporation, partnership, joint venture, trust or other enterprise in
one or more such capacities.
EIGHTH: The duration of the Corporation shall be perpetual.
NINTH: The Corporation's resident agent in the State of Maryland is
Robert B. Bowes. The resident agent's address in Maryland is 4520 East West
Highway, Suite #540 Bethesda, Maryland 20184.
IN WITNESS WHEREOF, BANK AND INSURANCE FUND, INC. has caused these
articles to be signed in its name and on its behalf by its President and
witnessed by its Secretary on November 19, 1997.
By: /s/ THOMAS I. CAROCCI
---------------------------------
Thomas I. Carocci, Incorporator
Witnessed By:
/s/ ROBERT B. BOWES
- ----------------------
Robert B. Bowes
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