Securities Act Registration No.______________
Investment Company Act No.______________
________________________________________________________________________
SECURITIES AND EXCHANGE COMMISSION
Washington DC 20546
FORM N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 [x]
Pre-Effective Amendment No. ____
Post-Effective Amendment No. ____
and/or
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 [x]
Amendment No. ____
HUGHES GROWTH AND INCOME FUND, INC.
(Exact name of registrant as specified in Charter)
741 Cox Road
Moorestown NJ 08057
(Address of Principle Executive Offices and Zip Code)
609-234-3903
(Registrant's Telephone Number including Area Code)
Charles J Hughes
741 Cox Road
Moorestown NJ 08057
(Name and Address of Agent for Service)
Approximate Date of Proposed Public Offering: As soon as practicable after the
effective date of this Filing.
Calculation of Registration Fee: Registrant is registering an indefinite number
of shares of its common stock under the Securities Act of 1933 pursuant to the
Investment Company Act Rule 24f-2(a)(1).
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 the Registration Statement shall become
effective on such date as the Commission, acting pursuant to said Section 8(a),
may determine.
HUGHES GROWTH AND INCOME FUND
CROSS-REFERENCE SHEET
[as required by Rule 495]
<TABLE
Item No. on Form N-1A Caption or Subheading in Prospectus
or Statement of Additional Information
PART A - INFORMATION REQUIRED IN PROSPECTUS
- -------------------------------------------
1. Cover Page Cover Page
2. Synopsis General Information;Investment Methods;
Cover Page
3. Condensed Financial Information *
4. General Desription of Registrant General Information; Capital Structure
5. Management of the Fund Management of the Fund; Investment
Adviser
5a.Management's Discussion of Fund *
Performance
6. Capital Stock and Other Capital Structure; Distributions
Securities
7. Purchase of Securities Being Purchasing Shares
Offered
8. Redemption or Repurchase Redeeming Shares; Determinination of
Net Asset Value
9. Legal Proceedings *
PART B. STATEMENT OF ADDITIONAL INFORMATION
- ---------------------------------------------
10. Cover Page Cover Page
11. Table of Contents Table of Contents
12. General Information and History *
13. Investment Objectives and Investment Policies and
Policies Restrictions
14. Management of the Fund Investment Adviser; Directors and
Officers
15. Control Persons and Principal Directors and Officers;
Holders of Securities Investment Adviser
16. Investment Advisory and other Investment Adviser; Custodian;
Services Transfer Agent; Administration
17. Brokerage Allocation Portfolio Transactions
18. Capital Stock and Other Included in Prospectus under
Securities "Capital Structure"
19. Purchase, Redemption and Pricing Purchasing and Redeeming Shares; (See
of Securities Being Offered Prospectus)
20. Tax Status Tax Information
21. Underwriters *
22. Calculations of Performance Data Performance Information
23. Financial Statements *
* Answer negative or not applicable
PART C
Information required to be included in PART C is set forth under the
appropriate Item, so numbered, in PART C of the Registration Statement.
- -------------------------------------------------------------------------
P R O S P E C T U S Dated March ___, 1998
HUGHES GROWTH AND INCOME FUND
741 Cox Road
Moorestown NJ 08057
609-234-3903
The Hughes Growth and Income Fund is a no-load, diversified mutual fund. The
primary investment objective of the fund is growth of capital. The secondary
investment objective is current income.
This Prospectus concisely describes the information which investors should know
before investing. Investors are advised to read this Prospectus and retain it
for future reference. A Statement of Additional Information regarding the Fund
dated the date of this Prospectus has been filed with the Securities and
Exchange Commission and (together with any supplement to it) is incorporated by
reference. Copies of the Statement of Additional Information may be obtained
at no charge by writing or calling the Fund at its address or telephone number
listed above.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION, NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY
IS A CRIMINAL OFFENSE.
- -----------------------------------------------------------------------------
TABLE OF CONTENTS
Fund Expenses Determination of Net Asset Value
Investment Objective Management of the Fund
Investment Methods Investment Adviser
Risk Factors Distributions
Investment Restrictions Federal Income Tax
Purchasing Shares Capital Structure
Redeeming Shares General Information
FUND EXPENSES
Shareholder Transaction Expenses:
Sales Load Imposed on Purchases None
Sales Load Imposed on Reinvested Dividends None
Deferred Sales Load None
Redemption Fee None
Annual Fund Operating Expenses:
(as a percentage of net assets)
Management Fees 1.0%
12b-1 Fees None
Other Expenses 0.5% (after fee waivers)
------
Total Fund Operating Expenses 1.5% (after fee waivers)
Example
The following example illustrates the expenses that a shareholder would pay
on a $1,000 investment, assuming a 5% annual rate of return and redemption at
the end of each time period.
One Year Three Years Five Years
$15 $48 $84
This example should not be considered a representation of past or future
expenses or performance. Actual expenses may be greater or less than those
shown. Because the Fund has no operating history, "Other Expenses" is based on
estimated amounts for the current fiscal year. From time to time, the Adviser
may voluntarily waive receipt of its fees and/or assume certain expenses of the
Fund which would have the effect of lowering the expense ratio but increasing
the yield to investors. The expenses noted above, without reimbursement, would
be: "Management Fees" 1.0%, "Other Expenses" 2.0% and "Total Fund Operating
Expenses" 3.0%.
INVESTMENT OBJECTIVE
The primary investment objective of the Fund is growth of capital. Investments
will be made based on management's perception of their potential for capital
appreciation. The secondary investment objective is current income. The Fund
will seek to achieve these objectives by investing primarily in a diversified
portfolio of dividend paying securities. Their can be no assurance that the
Fund's objective will be achieved.
INVESTMENT METHODS
The Fund will invest at least 65% of total assets in a portfolio of dividend
paying securities including common and preferred stocks, foreign stocks, real
estate investment trusts, and debt securities.
The Fund invests primarily in companies with a record of earnings and
dividends, reasonable return on equity, and sound finances. The Fund may
invest in securities that pay no dividends or interest.
The Adviser believes that the Fund's objective can best be met through the
purchase of securities that appear to be undervalued in relation to the
long-term earning power or asset value of their issuers. Consistent earnings
growth is an important factor.
Cash Reserves. To meet liquidity needs or for temporary defensive purposes,
the Fund may hold cash in money market securities or may enter into repurchase
agreements.
Although the Fund's portfolio will normally be fully invested in securities as
described above, a portion of its assets may be invested in equity or futures
options or futures contracts.
RISK FACTORS
The Fund is not intended to present a balanced investment program. It is not
intended to be a vehicle for short term trading, but is intended for investment
for the long term. There are market risks inherent in any investment and there
can be no assurance the objective of the Fund will be realized nor can there be
any assurance against possible loss in the value of the Fund's portfolio.
Common Stocks. Under normal circumstances, the Fund invests primarily in common
stocks. Common stock is issued by companies to raise cash for business purposes
and represents a proportionate interest in the issuing companies. Therefore, the
Fund participates in the success or failure of any company in which it holds
stock. The market values of common stock can fluctuate significantly, reflecting
the business performance of the issuing company, investor perception and general
economic or financial market movements. Smaller companies are especially
sensitive to these factors and may even become valueless. Despite the risk of
price volatility, however, common stocks also offer the greatest potential for
gain on investment, compared to other classes of financial assets such as bonds
or cash equivalents.
Preferred Stock. The Fund may purchase preferred stock. Preferred stock pays
dividends at a specified rate and generally has preference over common stock in
the payments of dividends and the liquidation of the issuer's assets but is
junior to the debt securities of the issuer in those same respects. Unlike
interest payments on debt securities, dividends on preferred stock are generally
payable at the discretion of the issuer's board of directors. Shareholders may
suffer a loss of value if dividends are not paid. The market prices of preferred
stocks are subject to changes in interest rates and are more sensitive to
changes in the issuer's creditworthiness than are the prices of debt securities.
Foreign Securities. The Fund may invest in securities of foreign issuers
which are publicly traded on U.S. exchanges either directly or in the form of
American Depository Receipts (ADRs). The Fund will only invest in ADRs that
are issuer sponsored. Sponsored ADRs typically are issued by a U.S. bank or
trust company and evidence ownership of underlying securities issued by a
foreign corporation. Investments in foreign securities involve greater risks
compared to domestic investments. Foreign companies are not subject to the
regulatory requirements of U.S. companies and, as such, there may be less
publicly available information about issuers than is available in the reports
and ratings published about companies in the U.S. Additionally, foreign
companies are not subject to uniform accounting, auditing and financial
reporting standards. Dividends and interest on foreign securities may be subject
to foreign withholding taxes. Such taxes may reduce the net return to
shareholders. Although the Fund intends to invest in securities of foreign
issuers domiciled in nations which the Adviser considers as having stable and
friendly goverments, there is the possibility of expropriation, confiscation,
taxation, currency blockage or political or social instability which could
affect investments of foreign issuers domiciled in such nations.
Real Estate Investment Trusts. The Fund may invest in real estate investment
trusts (REITs). Equity REITs invest directly in real property while mortgage
REITs invest in mortgages on real property. REITs may be subject to certain
risks associated with the direct ownership of real estate including declines in
the value of real estate, risks related to general and local economic
conditions, overbuilding and increased competition, increases in property taxes
and operating expenses, and variations in rental income. REITs pay dividends to
their shareholders based upon available funds from operations. It is quite
common for these dividends to exceed the REITs taxable earnings and profits
resulting in the excess portion of such dividends being designated as a return
of capital. The Fund intends to include the gross dividends from such REITs in
its distribution to its shareholders and, accordingly, a portion of the Fund's
distributions may also be designated as a return of capital.
Money Market. The Fund may invest in securities issued by other investment
companies that invest in short-term debt securities (i.e., money market fund).
As a shareholder of another investment company, the Fund would bear its pro
rata portion of the other investment company's advisory fees and other expenses.
Such fees and expenses will be borne indirectly by the Fund's shareholders.
Money market funds invest primarily in securities that have interest rates that
are adjusted periodically. The funds seek to maintain a share price of $1.00
per share but there is no guarantee that the share price can be maintained
at $1.00.
Debt Securities. The Fund may invest in corporate or U.S. goverment debt
securities including zero coupon bonds.
Corporate debt securities may be convertible into preferred or common equity. In
selecting corporate debt securities for the Fund, the Adviser reviews and
monitors the creditworthiness of each issuer and issue.
U.S. government securities include direct obligations of the U.S. Treasury and
obligations issued by U.S. government agencies and instumentalities. Neither the
U.S. Government nor any of its agencies or instrumentalities guarantees the
market value of the securities they issue. Therefore, the market value of such
securities can be expected to fluctuate in response to interest rates.
The prices of both corporate and U.S. government debt securities fluctuate in
response to perceptions of the issuer's creditworthiness and also tend to
vary inversely with market interest rates. The value of such securities is
likely to decline in times of rising interest rates. Conversely, when rates
fall, the value of these investments is likely to rise. The longer the time to
maturity the greater are such variations.
Zero coupon bonds do not provide for cash interest payments but instead are
issued at a discount from face value. Each year, a holder of such bonds must
accrue a portion of the discount as income. Because issuers of zero coupon bonds
do not make periodic interest payments, their prices can be very volatile when
market interest rates change.
Repurchase Agreements. Repurchase agreements are agreements under which the
seller of a security agrees at the time of sale to repurchase it at an agreed
time and price. In the event of a bankruptcy or other default of the seller, the
Fund could experience both delays in liquidating the underlying securities and
losses, including:(a) possible decline in the value of the underlying security
during the period while the Fund seeks to enforce its rights thereto; (b)
possible subnormal levels of income or proceeds and lack of access to income and
proceeds during this period; and (c) expenses of enforcing its rights.
Futures and Options Transactions. The Fund may invest in futures and options
transactions, including puts and calls. Such investments derive their value
from the value of the underlying security or index. Such investments involve
risks that are different from those presented by investing directly in the
securities themselves. While utilization of options and futures contracts may
be advantageous to the Fund, if the adviser is not successful in employing such
instruments in managing the Fund's investments, the Fund's performance will be
worse than if the Fund did not make such investments.
The Fund will not enter into any futures or options contracts if the sum of the
initial margin deposits would exceed 10% of the Fund's total assets.
Illiquid Securities. The Fund may invest in securities for which there is not
an active trading market, or which have resale restrictions. These types of
securities generally offer a higher return than more readily marketable
securities, but carry the risk that the Fund may not be able to dispose of them
at an advantageous time or price.
INVESTMENT RESTRICTIONS
The Fund will not:
1. To the extent of 75% of its assets (valued at time of investment), invest
more than 5% of the Fund's total net assets (valued at time of investment) in
the securities of any one issuer (excluding U.S. Government securities);
2. Acquire securities of any one issuer that at time of investment (a) represent
more than 10% of the voting securities of the issuer or (b) have a value greater
than 10% of the value of the outstanding securities of the issuer;
3. Invest more than 5% of its assets (valued at time of investment) in
securities that are not readily marketable;
4. Invest more than 25% of the Funds total assets in companies of any one
industry.
These restrictions cannot be changed without the approval of the holders of a
"majority of the outstanding voting securities" as defined in the Investment
Company Act. All of the Fund's investment restrictions are set forth in the
Statement of Additional Information.
Borrowing. As a matter of fundamental policy, the Fund may not borrow money,
except as permitted under Federal law. Further, as a matter of non-fundamental
policy, the Fund may not borrow money in an amount greater than 5% of total
assets, except for temporary or emergency purposes.
Lending. As a matter of fundamental policy, the Fund may not make loans except
through the purchase of debt securities or entering into repurchase agreements.
PURCHASING SHARES
To purchase shares of the Fund an investor should complete and sign a New
Account Purchase Application and mail it, together with a check for the total
purchase price, to Hughes Growth and Income Fund, 741 Cox Road, Moorestown, NJ
08057. The purchase price is the net asset value per share as described under
"Determination of Net Asset Value". Checks are accepted subject to collection
at full face value in United States currency.If shares of the Fund are purchased
with a check that does not clear, the purchase will be cancelled and the
purchaser will be subject to any losses or fees incurred in the transaction.
If shares are purchased by check and redeemed by letter within seven business
days of purchase the Fund may hold redemption proceeds until the purchase check
has cleared, which may take up to ten business days.
Each investment in shares of the Fund, including dividends and capital gains
distributions reinvested in Fund shares, is acknowledged by a statement showing
the number of shares purchased, the net asset value at which shares are
purchased, and the new balance of Fund shares owned. The Fund does not issue
stock certificates for the shares purchased. All full and fractional shares will
be carried on the books of the Fund without the issuance of certificates.
Shares of the Fund are purchased at the net asset value next computed after the
receipt and acceptance of the purchase order, as described under "Determination
of Net Asset Value." There are no sales commissions or underwriting discounts.
The minimum initial investment is $2,000, except for Individual Retirement
Accounts (IRAs) where the minimum is $1,000. Minimum subsequent purchases in all
cases are $1,000, excluding reinvestments of dividends and capital gains
distributions.
All applications to purchase capital stock are subject to acceptance or
rejection by authorized officers of the Fund and are not binding until accepted.
The Fund reserves the right not to accept purchase orders under circumstances or
in amounts considered disadvantageous to existing shareholders.
REDEEMING SHARES
Upon receipt by the Fund of a redemption request in proper form, shares of the
Fund will be redeemed at their next determined net asset value. Redemption
requests must be in writing and delivered to the Fund at 741 Cox Road,
Moorestown, N.J. 08057. The redemption request must:
1. Specify the number of shares or dollar amount to be redeemed, if less than
all shares are to be redeemed;
2. Be signed by all owners exactly as their names appear on the account;
3. Include a signature guarantee from any "eligible guarantor institution" as
defined by the rules under the Securities Exchange Act of 1934. Eligible
guarantor institutions include banks, brokers, dealers, credit unions,
national securities exchanges, registered securities associations, clearing
agencies and savings associations. A notary public is not an eligible
guarantor.
Further documentation, such as copies of corporate resolutions and instruments
of authority may be requested from corporations, administrators, executors,
personal representatives, trustees, or custodians to evidence the authority of
the person or entity making the redemption request.
The redemption price per share is net asset value determined as described under
"Determination of Net Asset Value." There is no redemption charge.The redemption
value of the shares may be more or less than the cost, depending upon the value
of the Fund's portfolio securities at the time of redemption. If the net asset
value of the shares in an account is less than $1,000 as a result of previous
redemptions and not market price declines, the Fund may notify the registered
holder that unless the account value is increased to at least the minimum within
60 days the Fund will redeem all shares in the account and pay the redemption
price to the registered holder.
Payment for shares redeemed is made within seven days after receipt by the Fund
of a request for redemption in good order. The Fund reserves the right to
suspend or postpone redemptions during any period when (a) trading on any of the
major U.S. stock exchanges is restricted, as determined by the Securities and
Exchange Commission, or that the major exchanges are closed for other than
customary weekend and holiday closings, (b) the Commission has by order
permitted such suspension, or (c) an emergency, as determined by the Commission,
exists making disposal of portfolio securities or valuation of net assets of the
Fund not reasonably practicable.
DETERMINATION OF NET ASSET VALUE
For purposes of computing the net asset value of a share of the Fund, securities
traded on security exchanges, or in the over-the-counter market in which
transaction prices are reported, are valued at the last sales price at the time
of valuation or, lacking any reported sales on that day, at the most recent bid
quotations. Securities for which quotations are not available and any other
assets are valued at a fair value as determined in good faith by the board of
directors. The price per share for a purchase order or redemption request is the
net asset value next determined after receipt of the order.
The net asset value of a share of the Fund is determined as of the close of
regular session trading on the New York Stock Exchange, currently 4:00 PM New
York City time, on any day on which that exchange is open for trading, by
dividing the market value of the Fund's assets, less its liabilities, by the
number of shares outstanding, and rounding the result to the nearest full cent.
MANAGEMENT OF THE FUND
The board of directors has overall resposibility for the conduct of the Fund's
affairs. The day-to-day operations of the Fund are managed by the Fund's
President subject to the bylaws of the Fund and review by the Board of
Directors. The Board of Directors are elected by the shareholders. Information
relating to the directors and officers of the Fund is provided in the "Statement
of Additional Information."
INVESTMENT ADVISER
The Fund has entered into an Investment Advisory Contract (the "Contract") with
Hughes Investment Advisors LLC, (the "Adviser"), 741 Cox Road, Moorestown NJ
08057. Charles J Hughes is the president of the Adviser and is responsible for
all its investment decisions, including the day-to-day management of the
portfolio. Mr. Hughes also serves as the President and as a Director of the
Fund. The Adviser manages the investment of the assets of the Fund in
accordance with the Fund's investment objective, policies, and restrictions. The
Adviser is a newly formed company. Mr. Hughes does not have any previous
experience in providing investment management services to any registered
investment company.
The Adviser receives from the Fund, as compensation for its services, a fee,
accrued daily and payable monthly, at an annual rate of 1.00% of the Fund's net
assets. The Adviser has obligated itself to reimburse the Fund to the extent the
Fund's total annual expenses, excluding taxes, interest and extraordinary
litigation expenses, during any of its fiscal years, exceed 1.5% of its average
daily net asset value in such year.
Under the Contract, the Adviser furnishes at its own expense office space to
the Fund and all necessary office facilities, equipment, and personnel for
managing the assets of the Fund. The Adviser also pays all expenses of marketing
shares of the Fund, placement of securities orders and related bookkeeping.
The Fund pays all expenses incident to its operations and business not
specifically assumed by the Adviser, including expenses relating to custodial,
legal, and auditing charges; printing and mailing of reports and prospectuses to
existing shareholders; taxes and corporate fees; maintaining registration of the
Fund under the Investment Company Act and registration of its shares under the
Securities Act of 1933; and qualifying and maintaining qualification of its
shares under the securities laws of certain states.
DISTRIBUTIONS
The Fund intends to distribute to shareholders substantially all net investment
income and any net capital gains realized from sales of the Fund's portfolio
securities. Dividends from net investment income and distributions from any net
realized capital gains are reinvested in additional shares of the Fund unless
the shareholder has requested in writing to have them paid by check.
FEDERAL INCOME TAX
The Fund intends to qualify to be taxed as a regulated investment company under
the Internal Revenue Code so as to be relieved of federal income tax on its
capital gains and net investment income currently distributed to its
shareholders. Dividends from investment income and net short-term capital gains
are taxable as ordinary income. Distributions of long-term capital gains are
taxable as long-term capital gains regardless of the length of time shares in
the Fund have been held. Distributions are taxable, whether received in cash or
reinvested in shares of the Fund.
Each shareholder is advised annually of the source of distributions for federal
income tax purposes. A shareholder who is not subject to federal income tax will
not be required to pay tax on distributions received.
If shares are purchased shortly before a record date for a distribution, the
shareholder will, in effect, receive a return of a portion of his investment,
but the distribution will be taxable to him even if the net asset value of the
shares is reduced below the shareholder's cost. However, for federal income tax
purposes the original cost would continue as the tax basis.
If a shareholder fails to furnish his social security or other tax
identification number or to certify properly that it is correct, the Fund may be
required to withhold federal income tax at the rate of 31% (backup witholding)
from dividend, capital gain and redemption payments to him. Dividend and capital
gain payments may also be subject to backup witholding if the shareholder fails
to certify properly that he is not subject to backup witholding due to the
under-reporting of certain income.
The Fund expects that its annual portfolio turnover rate will not exceed 50%
under normal conditions. However, there can be no assurance that the Fund will
not exceed this rate, and the portfolio turnover rate may vary from year to
year. High portfolio turnover in any year will result in the payment by
shareholders of above-average amounts of taxes on realized investment gains.
Distributions to shareholders of such investment gains, to the extent they
consist of short-term capital gains, will be considered ordinary income for
federal income tax purposes.
CAPITAL STRUCTURE
The Fund was incorporated in Maryland on December 15, 1997. The Fund's Articles
of Incorporation permit the Board of Directors to issue 100,000,000 shares of
common stock. The Board of Directors has the power to designate one or more
classes ("series") of shares of common stock and to classify or reclassify any
unissued shares with respect to such series. Currently the shares of the Fund
are the only class of shares being offered by the Fund. Shareholders are
entitled: (i) to one vote per full share; (ii) to such distributions as may be
declared by the Fund's Board of Directors out of funds legally available; and
(iii) upon liquidation, to participate ratably in the assets available for
distribution. There are no conversion or sinking fund provisions applicable to
the shares, and the holders have no preemptive rights and may not cumulate their
votes in the election of directors. The shares are redeemable and are
transferable. All shares issued and sold by the Fund will be fully paid and
nonassessable.
GENERAL INFORMATION
The Fund will not issue stock certificates evidencing shares. Instead the
shareholder's account will be credited with the number of shares purchased,
relieving shareholders of responsibility for safekeeping of certificates and the
need to deliver them upon redemption. Written confirmations are issued for all
purchases of shares. The Fund acts as transfer agent and dividend disbursing
agent.
Shareholders will be provided at least semi-annually with a report showing the
Fund's portfolio and other information and annually after the close of the
Fund's fiscal year, which ends December 31, with an annual report containing
audited financial statements.
The Fund may provide information about its total return and average annual total
return in letters to shareholders or in sales materials. Total return is the
percentage change in value during a specified period of an investment in the
Fund. Average annual return is the average annual compounded rate of change in
value represented by the total return for the period. Performance quotations for
any period when an expense limitation is in effect will be greater than if the
limitation had not been in effect.
All performance data will be based on the Fund's past investment results and
does not predict future performance. Investment performance, which will vary,
is based on many factors, including market conditions, the composition of the
Fund's portfolio, and the Fund's operating expenses. Investment performance also
reflects the risks associated with the Fund's investment objective and policies.
These factors should be considered when comparing the Fund's investment results
to those of other funds and other investment vehicles.
According to the law of Maryland, under which the Fund is incorporated, and the
Fund's bylaws, the Fund is not required to hold an annual meeting of
shareholders unless required to do so under the Investment Company Act.
Inquiries regarding the Fund should be directed to the Fund at its address or
telephone number shown on the front cover.
The Fund will call a meeting of shareholders for the purpose of voting upon the
question and removal of a director or directors when requested in writing to do
so by record holders of at least 10% of the Fund's outstanding common shares,
and in connection with such meeting will comply with the provisions of section
16(c) of the Investment Company Act concerning assistance with a record
shareholder communication asking other record shareholders to join in that
request.
HUGHES GROWTH AND INCOME FUND INC.
(a no-load Fund)
Investment Adviser:
Hughes Investment Advisors LLC
741 Cox Road
Moorestown NJ 08057
Custodian:
CoreStates Bank, N.A.
1345 Chestnut Street
Philadelphia PA 19101
Transfer and Dividend Disbursing Agent:
Hughes Investment Advisors LLC
741 Cox Road
Moorestown NJ 08057
Independent Auditors:
DeAngelis and Higgins LLC
39 North Main Street
Cranbury NJ 08512
Board Of Directors:
Charles J Hughes
Frank G Solecki
Neal K Smith
STATEMENT OF ADDITIONAL INFORMATION March __, 1998
HUGHES GROWTH AND INCOME FUND
741 Cox Road
Moorestown NJ 08057
This Statement of Additional Information is not a prospectus and should be read
in conjunction with the Prospectus of Hughes Growth and Income Fund, Inc., dated
March __, 1998. Requests for copies of the Prospectus should be made by writing
to Hughes Growth and Income Fund, 741 Cox Road, Moorestown NJ 08057 or by
calling 609-234-3903.
TABLE OF CONTENTS
Investment Policies and Restrictions Custodian
Investment Adviser Transfer Agent
Directors and Officers Administration
Performance Information Independent Accountants
Purchasing and Redeeming Shares Independent Auditors Report *
Tax Information Financial Statements *
Portfolio Transactions
* to be filed by amendment
INVESTMENT POLICIES AND RESTRICTIONS
The Fund's investment objective is stated in the prospectus. The manner in which
the Fund pursues its investment objective is discussed in the prospectus under
the captions "Investment Methods" and "Risk Factors." The complete list of
investment restrictions are listed below.
The Fund will not:
1. To the extent 75% of its assets (valued at time of investment), invest
more than 5% of its assets (valued at such time) in securities of any one
issuer, except in obligations of the United States Government and its
agencies and instrumentalities;
2. Acquire securities of any one issuer that at the time of investment
(a) represent more than 10% of the voting securities of the issuer or
(b) have a value greater than 10% of the value of the outstanding securities
of the issuer;
3. Invest more than 25% of its assets (valued at time of investment) in
securities of companies in any one industry;
4. Borrow money except from banks for temporary or emergency purposes in amounts
not exceeding 10% of the value of the Fund's assets at the time of borrowing
(the Fund will not purchase additional securities when its borrowings exceed
5% of the value of its assets);
5. Underwrite the distribution of securities of other issuers, or acquire
"restricted" securities that, in the event of a resale, might be required to
be registered under the Securities Act of 1933 on the ground that the Fund
could be regarded as an underwriter as defined by that Act with respect to
such resale;
6. Make margin purchases or short sales of securities;
7. Invest in companies for the purpose of management or the exercise of control;
8. Lend money (but this restriction shall not prevent the Fund from investing in
debt securities or repurchase agreements, subject to the 5% limitation
stated in restriction 4 above) and will not lend its portfolio securities.
9. Acquire or retain any security issued by a company, an officer or director of
which is an officer or director of the Fund or an officer, director or other
affiliated person of its investment adviser.
10.Invest in oil, gas or other mineral exploration or development programs,
although it may invest in marketable securities of companies engaged in
oil, gas or mineral exploration;
11.Purchase or sell real estate or real estate loans or real estate limited
partnerships, although it may invest in marketable securities of companies
that invest in real estate or interests in real estate.
Restrictions 1 through 11 listed above are fundamental policies, and may be
changed only with the approval of a "majority of the outstanding voting
securities" as defined in the Investment Company Act.
The Fund has also adopted the following restrictions that may be changed by the
Board of Directors without shareholder approval:
a. Invest more than 5% of its assets (valued at time of investment) in
securities of issuers with less than three years' operation (including
predecessors);
b. Invest more than 5% of its assets (valued at time of investment) in
securities that are not readily marketable;
c. Acquire securities of other investment companies except (a) by purchase in
the open market, where no commission or profit to a sponsor or dealer results
from such purchase other than the customary broker's commission and (b) where
acquisition results from a dividend or merger, consolidation or other
reorganization (in addition to this investment restriction, the Investment
Company Act of 1940 provides that the Fund may neither purchase more than 3%
of the voting securities of any one investment company nor invest more than
10% of the Funds assets (valued at time of investment) in all investment
company securities purchased by the Fund);
d. Pledge, mortgage or hypothecate its assets, except for temporary or emergency
purposes and then to an extent not greater than 10% of its total assets at
cost;
e. Invest more than 10% of the Fund's assets (valued at time of investment)
in initial margin deposits of options or futures contracts;
f. Invest more than 5% of its net assets (valued at time of investment) in
warrants;
INVESTMENT ADVISER
Information on the Fund's investment adviser, Hughes Investment Advisors LLC, is
set forth in the prospectus under "Investment Adviser," and is incorporated
herein by reference.
The adviser is a New Jersey Limited Liability Company. Charles J Hughes is the
President with a 70% interest in the company and his three minor children
are members of the company with a 30% interest. Mr. Hughes does not have any
previous experience in providing investment management services to any
registered investment company.
The Advisory Agreement provides that the adviser shall not be liable for any
loss suffered by the Fund or its shareholders as a consequence of any act or
omission in connection with services under the Agreement, except by reason of
the adviser's willful misfeasance, bad faith, gross negligence, or reckless
disregard of its obligations and duties under the Advisory Agreement.
The Advisory Agreement expires on June 30, 1999, but may be continued from year
to year only so long as the continuance is approved annually (a) by the vote of
a majority of the Directors of the Fund who are not "interested persons" of the
Fund or the adviser cast in person at a meeting called for the purpose of voting
on such approval, and (b) by the Board of Directors or by the vote of a majority
(as defined in the 1940 Act) of the outstanding shares of the Fund. The
Agreement will terminate automatically in the event of its assignment (as
defined in the 1940 Act).
DIRECTORS AND OFFICERS
The board of directors has overall responsibility for conduct of the Fund's
affairs. The day-to-day operations of the Fund are managed by the Fund's
president subject to the bylaws of the Fund and review by the Board of
Directors. The directors of the Fund, including those directors who are also
officers are listed below:
Name, Age, Address, Position Principal Occupation For the
with Fund Last Five Years
Charles J Hughes Age 47 * Fund Adviser
741 Cox Road President Hughes Trading LLC
Moorestown NJ 08057 Pilot for American Airlines
President, Treasurer & Director BA Degree LaSalle University
Frank G Solecki Age 52 Director of Manufacturing PCD
48 Cove Road Division of FMC Corporation
Moorestown NJ 08057 BS Degree PennState University
Secretary and Director
Neal K Smith Age 46 Sales Engineer for Del-Val
144 Knotty Oak Dr. Equipment,Inc.
Mount Laurel NJ 08054 BS Degree Grove City College
Director
* Indicates an "interested person" as defined in the Investment Company Act of
1940.
The Corporation was organized on December 15, 1997. The table below sets forth
the compensation anticipated to be paid by the Corporation to each of the
directors of the Corporation during the fiscal year ending December 31, 1998.
Name of Director Compensation Pension Annual Total Compensation
from Corp. Benefits Benefits Paid to Director
Charles J Hughes 0 0 0 0
Frank G Solecki $500 0 0 $500
Neal K Smith $500 0 0 $500
Charles J Hughes intends to purchase 10,000 shares of Fund prior to the
effective date of the Fund's registration and will initially control the Fund.
The Fund will call a meeting of shareholders for the purpose of voting upon the
question of removal of a director or directors when requested in writing to do
so by record holders of at least 10% of the Fund's outstanding common shares.
The Corporation's bylaws contain procedures for the removal of directors by its
stockholders. At any meeting of stockholders, duly called and at which a quorum
is present, the stockholders may by the affirmative vote of the holders of a
majority of the votes entitled to be cast thereon, remove any director or
directors from office and may elect a successor or successors to fill any
resulting vacancies for the unexpired terms of the removed directors.
PERFORMANCE INFORMATION
From time to time the Fund may quote total return figures. "Total Return" for a
period is the percentage change in value during the period of an investment in
Fund shares, including the value of shares acquired through reinvestment of all
dividends and capital gains distributions. "Average Annual Total Return" is the
average annual compounded rate of change in value represented by the Total
Return Percentage for the period.
n
Average Annual Total Return is computed as follows: P(1+T) = ERV
Where: P = amount of initial investment in Fund shares
T = average annual total return
n = number of years
ERV = ending redeemable value of shares at the end of the period
The Fund imposes no sales charge and pays no distribution expenses. Income taxes
are not taken into account. The Fund's performance is a function of conditions
in the securities markets, portfolio management, and operating expenses.
Although information such as that shown above is useful in reviewing the Fund's
performance and in providing some basis for comparison with other investment
alternatives, it should not be used for comparison with other investments using
different reinvestment assumptions or time periods.
In sales literature, the Fund's performance may be compared with that of market
indices and other mutual funds. In addition to the above computations, the Fund
might use comparative performance as computed in a ranking determined by Lipper
Analytical Services, Morningstar, Inc., or that of another service.
PURCHASING AND REDEEMING SHARES
Purchases and redemptions are discussed in the Fund's prospectus under the
headings "Purchasing Shares" and "Redeeming Shares." All of that information is
incorporated herein by reference.
Redemptions will be made at net asset value. See "Determination of Net Asset
Value" in the prospectus, which information is incorporated herein by reference.
The Fund's net asset value is determined on days on which the New York Stock
Exchange is open for trading.
The Fund has elected to be governed by rule 18f-1 under the Investment Company
Act pursuant to which it is obligated to redeem shares solely in cash up to the
lesser of $250,000 or 1% of the net asset value of the Fund during any 90 day
period for any one sharholder. Redemptions in excess of the above amounts will
normally be paid in cash, but may be paid wholly or partly by a distribution in
kind of securities.
TAX INFORMATION
See "Federal Income Tax" in the prospectus. All that information is incorporated
herein by reference.
PORTFOLIO TRANSACTIONS
The Fund will generally purchase and sell securities without regard to the
length of time the security has been held. Accordingly, it can be expected that
the rate of portfolio turnover may be substantial. Since investment decisions
are based on the anticipated contribution of a security to the Fund's investment
objective, the rate of portfolio turnover is not a factor when the Adviser
believes a change is in order to achieve those objectives.
The Fund expects that its annual portfolio turnover rate will not exceed 50%
under normal conditions. However, there can be no assurance that the Fund will
not exceed this rate,and the portfolio turnover rate may vary from year to year.
High portfolio turnover in any year will result in the payment by the Fund of
above-average transaction costs and could result in the payment by shareholders
of above-average amounts of taxes on realized investment gains. Distributions to
shareholders of such investment gains, to the extent they consist of short-term
capital gains, will be considered ordinary income for federal income tax
purposes.
Decisions to buy and sell securities for the Fund are made by the Adviser
subject to review by the Corporation's Board of Directors. In placing purchase
and sale orders for portfolio securities for the Fund, it is the policy of the
Adviser to seek the best execution of orders at the most favorable price. In
selecting brokers to effect portfolio transactions, the determination of what is
expected to result in the best execution at the most favorable price involves a
number of largely judgmental considerations. Among these are the Adviser's
evaluation of the broker's efficiency in executing and clearing transactions.
Over-the-counter securities are generally purchased and sold directly with
principal market makers who retain the difference in their cost in the security
and its selling price. In some instances, the Adviser feels that better prices
are available from non-principal market makers who are paid commissions
directly.
CUSTODIAN
CoreStates Bank, 1345 Chestnut Street, Philadelphia PA 19101, acts as custodian
for the Fund. As such, CoreStates Bank holds all securities and cash of the
Fund, delivers and receives payment for securities sold, receives and pays for
securities purchased, collects income from investments and performs other
duties, all as directed by officers of the Fund. CoreStates does not exercise
any supervisory function over management of the Fund, the purchase and sale of
securities or the payment of distributions to shareholders.
TRANSFER AGENT
Hughes Investment Advisors LLC, the Adviser to the Fund, also acts as transfer,
dividend disbursing, and shareholder servicing agent for the Fund pursuant to a
written agreement with the Fund. Under the agreement, Hughes Investment Advisors
is responsible for administering and performing transfer agent functions,
dividend distribution, shareholder administration, and maintaining necessary
records in accordance with applicable rules and regulations.
For the services to be rendered as transfer agent, The Fund shall pay Hughes
Investment Advisors a fee, paid monthly, based on the average net assets of the
Fund, as determined by valuations made as of the close of each business day of
the month. The transfer agent fee shall be 1/12 of 0.1% (one tenth of one
percent per annum) of such average net assets up to and including $30,000,000,
and 1/12 of 0.05% (0.05% per annum) of such average net assets of the Fund in
excess of $30,000,000.
Hughes Investment Advisors has agreed not to charge the Fund fees related to
transfer agent services until June 30, 1999. After this date, the board of
directors of the Fund will determine if Hughes Investment Advisors may charge
the Fund transfer agent fees.
ADMINISTRATION
Hughes Investment Advisors LLC, the Adviser to the Fund, also acts as
Administrator to the Fund pursuant to a written agreement with the Fund. The
Administrator supervises all aspects of the operations of the Fund except those
performed by the Fund's investment adviser under the Fund's investment advisory
agreement. The Administrator is responsible for:
(a) calculating the Fund's net asset value
(b) preparing and maintaining the books and accounts specified in Rule 31a-1
and 31a-2 of the Investment Company Act of 1940
(c) preparing financial statements contained in reports to stockholders of the
Fund
(d) preparing the Fund's federal and state tax returns
(e) preparing reports and filings with the Securities and Exchange Commission
(f) preparing filings with state Blue Sky authorities
(g) maintaining the Fund's financial accounts and records
For the services to be rendered as Administrator, The Fund shall pay Hughes
Investment Advisors a fee, paid monthly, based on the average net assets of the
Fund, as determined by valuations made as of the close of each business day of
the month. The Administration fee shall be 1/12 of 0.1% (one tenth of one
percent per annum) of such average net assets up to and including $30,000,000,
and 1/12 of 0.05% (0.05% per annum) of such average net assets of the Fund in
excess of $30,000,000.
Hughes Investment Advisors has agreed not to charge the Fund fees related to
Administration services until June 30, 1999. After this date, the board of
directors of the Fund will determine if Hughes Investment Advisors may charge
the Fund Administration fees.
INDEPENDENT ACCOUNTANTS
DeAngelis & Higgins LLC, 39 North Main Street, Cranbury NJ 08512 has been
selected as the independent accountants for the Fund. As such DeAngelis &
Higgins LLC performs audits of the Fund's financial statements.
PART C
OTHER INFORMATION
Item 24 Financial Statements and Exhibits
(a) Financial Statements included in Part B
Independent Auditors Report *
Statement of Assets and Liabilities *
(b) Exhibits
1. Articles of Incorporation 10. Opinion of Counsel *
2. Bylaws of Registrant 11. Consent of Independent Auditors *
3. None 12. None
4. None 13. Subscription Agreement
5. Investment Advisory Agreement 13.1 New Account Application
6. None 14. Individual Retirement Account
7. None Custodial Agreement
8. Custodian Agreement 15. None
9. Transfer Agent Agreement 16. None
9.1 Administration Agreement 27. Financial Data Schedule *
* to be filed by amendment
Item 25 Persons Controlled by or under Common Control with Registrant.
No person is directly or indirectly controlled by, or under common control with
the Registrant.
Item 26 Number of Holders of Securities.
As of the date of filing of this registration statement there were no record
holders of capital stock of registrant.
Item 27 Indemnification.
Section 2-418 of the General Corporation Law of Maryland authorizes the
registrant to indemnify its directors and officers under specified cicumstances.
Section 7 of Article VII of the bylaws of the registrant (exhibit 2 to the
registration statement, which is incorporated herein by reference) provides in
effect that the registrant shall provide certain indemnification to its
directors and officers. In accordance with section 17(h) of the Investment
Company Act, this provision of the bylaws shall not protect any person against
any liability to the registrant or its shareholders to which he or she would
otherwise be subject by reason of willful misfeasance, bad faith, gross
negligence or reckless disregard of the duties involved in the conduct of his or
her office.
Item 28 Business and Other Connections of Investment Adviser.
The Adviser has been a pilot with American Airlines since 1988. He is also the
president of Hughes Trading LLC a company that markets financial software.
Item 29 Principal Underwriters.
Registrant has no principal underwriters.
Item 30 Location of Accounts and Records.
Hughes Investment Advisors LLC
741 Cox Road
Moorestown NJ 08057
Item 31 Management Services.
None
Item 32 Undertakings.
The Registrant will file a post effective amendment containing financial
statements which need not be certified, within four to six months from the
effective date of this registration statement.
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the Investment
Company Act of 1940, the Registrant certifies that it meets all of the
requirements for effectiveness of this Registration Statement pursuant to Rule
485(b) under the Securities Act of 1933 and has duly caused this Registration to
be signed on its behalf by the undersigned, thereto duly authorized, in the
City of Moorestown and State of New Jersey on the 11th day of February, 1998.
Hughes Growth and Income Fund, Inc.
(Registrant)
By: /s/ Charles J Hughes, President
Pursuant to the requirements of the Securities Act of 1933, this Registration
Statement has been signed below by the following persons in the capacities and
on the date indicated.
Name Title Date
/s/ Charles J Hughes President, Treasurer February 11, 1998
Director
/s/ Frank G Solecki Secretary, Director February 11, 1998
/s/ Neal K Smith Director February 11, 1998
EXHIBIT INDEX
Exhibit No. Exhibit
EX-99.B1 Registrant's Articles of Incorporation
EX-99.B2 Registrant's Bylaws
EX-99.B3 None
EX-99.B4 None
EX-99.B5 Investment Advisory Agreement with Hughes Investment Advisors
EX-99.B6 None
EX-99.B7 None
EX-99.B8 Custodian Agreement with CoreStates Bank
EX-99.B9 Transfer Agent Agreement
EX-99.B9.1 Administration Agreement
EX-99.B10 Opinion of Counsel *
EX-99.B11 Consent of Independent Auditors *
Ex-99.B12 None
EX-99.B13 Subscription Agreement
EX-99.B13.1 New Account Application
EX-99.B14 Individual Retirement Account Custodial Agreement
EX-99.B15 None
EX-99.B16 None
EX-27 Financial Data Schedule *
* To be filed by amendment.
