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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM N-1A
REGISTRATION STATEMENT UNDER THE
SECURITIES ACT OF 1933
Pre-Effective Amendment No. 1
Post-Effective Amendment No. ________
and/or
REGISTRATION STATEMENT UNDER THE
INVESTMENT COMPANY ACT OF 1940
Amendment No. 1
(Check Appropriate Box or Boxes)
e-navigator Fund
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(Exact Name of Registrant as Specified in Charter)
500 Boylston Street, Boston, Massachusetts 02116
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(Address of Principal Executive Offices) (Zip Code)
(800) (333-3204)
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(Registrant's Telephone Number, Including Area Code)
Frederick K. Zimmermann
501 Boylston Street
Boston, Massachusetts 02116
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(Name and Address of Agent for Service)
As soon as practicable after the effective date of this Registration Statement
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(Approximate Date of Proposed Public Offering)
It is proposed that this filing will become effective (check appropriate box):
[ ] Immediately upon filing pursuant [ ] On (date) pursuant to paragraph (b)
to paragraph (b)
[ ] 60 days after filing pursuant to [ ] On (date) pursuant to paragraph
paragraph (a)(1) (a)(1)
[ ] 75 days after filing pursuant to [ ] On (date) pursuant to paragraph
paragraph (a)(2) (a)(2) of rule 485
If appropriate, check the following
box:
[ ] This post-effective amendment designates a new effective date for a
previously filed post-effective amendment.
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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 hereafter 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, may
determine.
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e-navigator Fund
CROSS REFERENCE SHEET
ITEMS REQUIRED BY FORM N-1A
Part A-
Item No. Item Caption Prospectus Caption
<TABLE>
<S> <C> <C>
1. Cover Page Cover Page
2. Synopsis Summary of Expenses
3. Condensed Financial Information Not Applicable
4. General Description of the Registrant The Fund's Investment Objective; Investment
Policies; Two-Tiered Structure; Investment Restrictions and Organization
and History
5. Management of the Fund How the Fund and the Portfolio are Managed
5A. Management's Discussion of Fund Not Applicable
Performance
6. Capital Stock and Other Securities Organization and History; How the Fund and
the Portfolio are Managed; Distributions and Taxes
7. Purchase of Securities Being Offered How the Fund and the Portfolio are Managed; How to Buy Shares
8. Redemption or Repurchase How to Redeem Shares
9. Pending Legal Proceedings Not Applicable
Part B- Statement of Additional Information
Item No. Item Caption Caption
10. Cover Page Cover Page
11. Table of Contents Table of Contents
12. General Information and History Not Applicable
13. Investment Objective and Policies Investment Objective; Investment
Policies; Investment Restrictions
14. Management of the Fund Management of the Fund
15. Control Persons and Principal Holders Principal Holder of Securities
of Securities
16. Investment Advisory and Other Management of the Fund
Services
17. Brokerage Allocation and Other Portfolio Transactions
Practices
18. Capital Stock and Other Securities Shareholder Rights
19. Purchase, Redemption and Pricing of Share Purchases and Redemptions
Securities Being Offered
20. Tax Status Dividends and Tax Matters
21. Underwriters Management of the Fund
22. Calculation of Performance Data Yield Information
23. Financial Statements Not Applicable
</TABLE>
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[_______________], 1999
e-navigator Fund
PROSPECTUS
e-navigator Fund (the "Fund") is a money market mutual fund.
This booklet is the Prospectus of the Fund. It contains basic information about
the Fund that you should know before sending money. You should save this
Prospectus for future reference.
The Fund's investment objective is to provide as high a level of current income
(before Fund expenses) as is consistent with the preservation of capital and
liquidity.
Unlike a traditional mutual fund that invests directly in individual securities,
the Fund currently seeks to achieve its objective by investing all of its
investible assets in Cortland General Money Market Fund, a money market fund
that has the same investment objective and substantially the same investment
policies as the Fund (the "Portfolio").
The Portfolio is a portfolio of Cortland Trust, Inc. ("Cortland"). Except for
certain separate expenses borne by the Fund, the Fund's investment experience
will correspond directly to that of the Portfolio for so long as the Fund
invests all of its investible assets in the Portfolio. The Portfolio is managed
by Reich & Tang Asset Management L.P. (the "Manager").
A Statement of Additional Information relating to the Fund dated [
], 1999 ( the "Statement of Additional Information") and a Statement of
Additional Information relating to the Portfolio (the "Portfolio Statement of
Additional Information") have been filed with the Securities and Exchange
Commission (the "SEC") and are incorporated in this Prospectus by reference.
The Statement of Additional Information and the Portfolio Statement of
Additional Information are available upon request and without charge by writing
to e-navigator Fund, c/o e-navigator Customer Service, P.O. Box 1277, Boston,
Massachusetts 02117-9766, by calling toll free at (800) 333-3204 or from the
e-navigator web site (http://www.enavigator.com). The SEC maintains a web site
(http://www.sec.gov) that contains the Statement of Additional Information, the
Portfolio Statement of Additional Information and other reports and information
regarding the Fund and Cortland which have been filed electronically with the
SEC. The Fund and Cortland are registered with the SEC as diversified open-end
management investment companies.
An investment in the Fund is not insured or guaranteed by the U.S. Government.
There can be no assurance that the $1.00 net asset value per share will be
maintained.
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An investment in the Fund is not a deposit or obligation of, or guaranteed or
endorsed by, any bank and is not insured by the Federal Deposit Insurance
Corporation, the Federal Reserve Board or any other agency.
The Fund offers two classes of shares: Class A and Class B. The first $5,000 an
investor invests in the Fund will be invested in Class A shares; any excess will
be invested in Class B shares. Each day, after processing any purchases
(including reinvested dividends) and redemptions, if any, the Fund will (1)
automatically exchange Class A shares for Class B shares in each investor's
account to the extent necessary to reduce the value of Class A shares in such
account to $5,000, or (2) automatically exchange Class B shares for Class A
Shares in each such account to the extent necessary to increase the value of
Class A shares in such account to $5,000. For a more complete discussion of
this process, see "Rebalancing Transactions."
The Fund bears a higher level of expenses than most other money market funds.
The Fund, in addition to its other operating expenses, pays a fee of 5.00% of
its average daily net assets attributable to Class A shares for the services
provided to investors. Under current market and interest rate conditions, the
expenses attributable to Class A shares of the Fund are expected to be greater
than the yield from the Fund's investment in the Portfolio. Therefore, the Fund
does not currently expect to pay any dividends to investors on Class A shares.
NOT MAY LOSE
FDIC-INSURED. VALUE.
NO BANK
GUARANTEE.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION NOR HAS THE SECURITIES AND EXCHANGE COMMISSION PASSED UPON
THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY
IS A CRIMINAL OFFENSE.
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SUMMARY OF EXPENSES
Expenses are one of several factors to consider when investing in the Fund.
This table summarizes estimated expenses in the Fund's first full fiscal year.
The table may help you to understand the costs and expenses that you could bear
directly or indirectly as an investor in the Fund. The table includes expenses
of the Portfolio (based on the Portfolio's most recent fiscal year), which
indirectly are borne by investors in the Fund. See "How the Fund and the
Portfolio are Managed" and "12b-1 Plan" for more complete descriptions of the
Fund's and the Portfolio's various costs and expenses.
Annual Operating Expenses (as a % of average net assets)
<TABLE>
<CAPTION>
Class A Class B
<S> <C> <C>
Management Fees(1) 0.77% 0.77%
12b-1 fees(2) 0.25% 0.25%
Other expenses
e-navigator Servicing Fee(3)(4) 5.00% None
Administration Fee(5) 0.05% 0.05%
Miscellaneous Expenses 0.20% 0.20%
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Total Other Expenses 5.25% 0.25%
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Total operating expenses 6.27% 1.27%
==== ====
</TABLE>
(1) The Fund does not have an investment adviser. The Management Fees shown
are those paid by the Portfolio to the Manager.
(2) The 12b-1 fees shown are those paid by the Portfolio to Reich & Tang
Distributors, Inc. under a plan adopted by the Portfolio. The Fund has
also adopted a plan under which the Fund may pay 12b-1 fees of up to 0.25%
of the average daily net assets of the Fund to its distributor, New England
Securities Corporation, but no fees will be payable under such plan for so
long as the Fund invests all of its investible assets in the Portfolio.
See "12b-1 Plan."
(3) The table does not include amounts that investors may pay to Interactive
Financial Services, Inc. in connection with the e-navigator Financial
Organizer, financial management software that can facilitate an investor's
communications with the Fund. See "How the Fund and the Portfolio are
Managed; e-navigator Servicing Agent."
(4) Interactive Financial Solutions, Inc. has agreed to waive a portion of the
e-navigator Servicing Fee to the extent that the total operating expenses
would otherwise exceed the daily total return of the Fund's Class A shares.
(5) The Administration Fee is paid to the Manager as compensation for certain
administrative services provided to the Fund. See "Management of the
Fund."
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Example
The following Example shows the cumulative expenses attributable to a
hypothetical $1,000 investment in shares of the Fund for the periods specified,
assuming a 5% annual return. The 5% return and expenses used in this Example
should not be considered indicative of actual or expected Fund performance or
expenses, both of which will vary.
Period: Class A Class B
1 year $50 $
3 years $150 $
This example does not include amounts that investors may pay to Interactive
Financial Services, Inc. in connection with the e-navigator Financial Organizer.
Additionally, investors should note that it is not possible to invest in Class B
shares until an investor has purchased $5,000 of Class A shares (see
"Rebalancing Transactions").
TWO-TIERED STRUCTURE
Unlike other mutual funds which invest directly in individual securities, the
Fund currently seeks to achieve its investment objective by investing all of its
investible assets in the Portfolio. The Portfolio itself is a money market
fund. The Portfolio has the same investment objective and substantially the
same investment policies as the Fund. The Portfolio invests directly in money
market investments of a variety of issuers.
See "The Fund's Investment Objective," "Investment Policies" and "How the Fund
and the Portfolio are Managed" for information concerning the Portfolio's and
the Fund's investment objectives, policies, management and expenses.
An investment in the Fund is subject to certain considerations in addition to
the risks and other considerations associated with a direct investment in the
Portfolio, including the possibility that the Fund's and the Portfolio's
investment objectives may be changed without shareholder approval. Matters
submitted by the Portfolio to its investors for a vote will be passed along by
the Fund to its shareholders, and the Fund will vote its entire interest in the
Portfolio in proportion to the votes actually received from Fund shareholders.
Other investors besides the Fund may invest in the Portfolio, on substantially
the same terms and conditions as the Fund. Each investor in the Portfolio will
bear its proportionate share of the Portfolio's expenses.
The Fund will continue to invest in the Portfolio only as long as the Fund's
Board of Trustees determines it is appropriate and in the best interest of Fund
shareholders to do so. In the event that the Portfolio's investment objective
or policies were changed so as to be inconsistent with the Fund's investment
objective or policies, the Board of Trustees of the Fund would consider
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what action might be taken, including changes to the Fund's investment objective
or policies, withdrawal of the Fund's assets from the Portfolio and investment
of such assets in another pooled investment entity or the direct management of
the Fund's investments by an investment adviser. Certain of these actions would
require Fund shareholder approval. Withdrawal of the Fund's assets from the
Portfolio could result in a distribution by the Portfolio to the Fund of
portfolio securities in kind (as opposed to a cash distribution), and the Fund
could incur brokerage fees or other transaction costs and could realize
distributable taxable gains in converting such securities to cash.
THE FUND'S INVESTMENT OBJECTIVE
The Fund seeks to provide as high a level of current income (before Fund
expenses) as is consistent with the preservation of capital and liquidity.
INVESTMENT POLICIES
The Fund currently invests only in shares of the Portfolio.
The Portfolio invests in U.S. dollar-denominated securities which are rated in
one of the two highest rating categories for debt obligations by at least two
nationally recognized statistical rating organizations ("NRSROs") (or one NRSRO
if the instrument was rated by only one such organization) or, if unrated, are
of comparable quality as determined in accordance with procedures established by
Cortland's Board of Directors. The NRSROs currently rating instruments of the
type the Portfolio may purchase are Moody's Investors Service, Inc., Standard &
Poor's, Duff and Phelps, Inc., Fitch Investors Service, Inc., IBCA Limited and
IBCA Inc. (See the Portfolio Statement of Additional Information for
information with respect to rating criteria for each NRSRO.)
Investments in rated securities not rated in the highest category by at least
two NRSROs (or one NRSRO if the instrument was rated by only one such
organization), and unrated securities not determined by Cortland's Board of
Directors to be comparable to those rated in the highest category, will be
limited to 5% of the Portfolio's total assets, with the investment in any such
issuer being limited to not more than the greater of 1% of the Portfolio's total
assets or $1 million. The Portfolio may invest in obligations issued or
guaranteed by the U.S. Government without any such limitation.
The Portfolio seeks to achieve its objective by investing at least 80% of its
assets in marketable securities and instruments issued or guaranteed by the U.S.
Government or by its agencies or instrumentalities ("U.S. Government
Obligations"), in bank instruments, in trust instruments, in corporate
commercial instruments and in other corporate instruments maturing in thirteen
months or less (collectively, "Money Market Obligations").
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The Portfolio may invest in bank instruments, which consist mainly of
certificates of deposit, bankers' acceptances and time deposits. The Portfolio
may also invest in corporate instruments supported by bank letters of credit.
The Portfolio generally limits investments in bank instruments to (a) those
which are fully insured as to principal by the Federal Deposit Insurance
Corporation (the "FDIC") or (b) those issued by banks which at the date of
their latest public reporting have total assets in excess of $1.5 billion.
However, the total assets of a bank will not be the sole factor determining the
Portfolio's investment decisions, and the Portfolio may invest in bank
instruments issued by institutions which Cortland's Board of Directors believes
present minimal credit risk.
The Portfolio may invest up to 100% of its assets in obligations issued by
banks, and up to 10% of its assets in obligations issued by any one bank,
subject to the provisions of Rule 2a-7 of the Investment Company Act of 1940
(the "1940 Act"). If the bank is a domestic bank, it must be a member of the
FDIC. The Portfolio may invest in U.S. dollar-denominated obligations issued by
foreign branches of domestic banks or foreign branches of foreign banks
("Eurodollar" obligations) and domestic branches of foreign banks ("Yankee
dollar" obligations). The Portfolio will limit its aggregate investments in
foreign bank obligations, including Eurodollar obligations and Yankee dollar
obligations, to 25% of its total assets at the time of purchase, provided that
there is no limitation upon the Portfolio investments in (a) Eurodollar
obligations, if the domestic parent of the foreign branch issuing the obligation
is unconditionally liable in the event that the foreign branch fails to pay on
the Eurodollar obligation for any reason; and (b) Yankee dollar obligations, if
the U.S. branch of the foreign bank is subject to the same regulation as U.S.
banks.
Eurodollar, Yankee dollar and other foreign bank obligations include time
deposits, which are non-negotiable deposits maintained in a bank for a specified
period of time at a stated interest rate. The Portfolio will limit its
purchases of time deposits to those which mature in seven days or less, and will
limit its purchases of time deposits maturing in two to seven days to 10% of the
Portfolio's total assets at the time of purchase.
Eurodollar, Yankee dollar and other foreign obligations involve special
investment risks, including the possibility that liquidity could be impaired
because of future political and economic developments, that the obligations may
be less marketable than comparable domestic obligations of domestic issuers,
that a foreign jurisdiction might impose withholding taxes on interest income
payable on those obligations, that deposits may be seized or nationalized, that
foreign governmental restrictions such as exchange controls may be adopted which
might adversely affect the payment of principal of and interest on those
obligations, that the selection of foreign obligations may be more difficult
because there may be less information publicly available concerning foreign
issuers, that there may be difficulties in enforcing a judgment against a
foreign issuer or that the accounting, auditing and financial reporting
standards, practices and requirements applicable to foreign issuers may differ
from those applicable to domestic issuers. In addition, foreign banks are not
subject to examination by U. S. Government agencies or instrumentalities.
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The Portfolio may invest in short-term corporate obligations and instruments,
including but not limited to corporate commercial paper, notes, bonds and
debentures. Corporate commercial instruments generally consist of short-term
unsecured promissory notes issued by corporations. The Portfolio may also
purchase variable amount master demand notes, which are unsecured demand notes
that permit investment of fluctuating amounts of money at variable rates of
interest pursuant to arrangements with issuers who meet the foregoing quality
criteria.
The interest rate on a variable amount master demand note is periodically
redetermined according to a prescribed formula. Although there is no secondary
market in master demand notes, the payee may demand payment of the principal and
interest upon notice not exceeding five business or seven calendar days. The
Portfolio may also purchase participation interests in loans extended by banks
to companies, provided that both such banks and such companies meet the quality
standards set forth above. (See the Statement of Additional Information for
information with respect to corporate commercial instruments and bond ratings.)
The Portfolio may also invest in fixed or variable rate debt units representing
an undivided interest in a trust's distributions of principal and interest that
a trust receives from an underlying portfolio of bonds issued by a highly rated
corporate or U.S. Government agency issuer and/or payments from re-characterized
distributions made possible by the swap of certain payments due on the
underlying bonds. The Portfolio's investment will be limited solely to the debt
units and in each case, must meet the credit quality standards under Rule 2a-7
of the 1940 Act. Debt units will be purchased by the Portfolio as an
institutional accredited investor pursuant to a private placement memorandum.
Sale of debt units will be effected pursuant to Rule 144A or other exemptions
from registration under the Securities Act of 1933, subject to the eligibility
of the purchaser and compliance with trust agreement requirements. The Manager
will monitor the liquidity of the debt units under the supervision of Cortland's
Board of Directors.
The securities in which the Portfolio invests may not yield as high a level of
current income as longer term or lower grade securities, which generally have
less liquidity and greater fluctuation in value. There can be no assurance that
the Portfolio will achieve its objectives. The values of the securities in
which the Portfolio invests fluctuate based upon interest rates, the financial
stability of the issuers and market factors.
The Portfolio may enter into the following arrangements:
Repurchase Agreements. Under a repurchase agreement, the purchaser (for
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example, the Portfolio) acquires ownership of an obligation and the seller
agrees, at the time of the sale, to repurchase the obligation at a mutually
agreed upon time and price, thereby determining the yield during the purchaser's
holding period. This arrangement results in a fixed rate of return insulated
from market fluctuations during such period. Although the underlying collateral
for repurchase agreements may have maturities exceeding one year, the Portfolio
will not enter into a repurchase agreement if as a result of such investment
more than 10% of such Portfolio's total assets would be invested in illiquid
securities, including repurchase agreements which expire in more than seven
days.
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The Portfolio may, however, enter into "continuing contract" or "open"
repurchase agreements under which the seller is under a continuing obligation to
repurchase the underlying obligation from the Portfolio on demand and the
effective interest rate is negotiated on a daily basis.
In general, the Portfolio will enter into repurchase agreements only with
domestic banks with total assets of at least $1.5 billion or with primary
dealers in U.S. Government securities. However, the total assets of a bank will
not be the sole factor determining the Portfolio's investment decisions, and
the Portfolio may enter into repurchase agreements with other institutions which
Cortland's Board of Directors believes present minimal credit risk.
Nevertheless, if the seller of a repurchase agreement fails to repurchase the
obligation in accordance with the terms of the agreement, the Portfolio may
incur a loss to the extent that the proceeds it realized on the sale of the
underlying obligation are less than the repurchase price. Repurchase agreements
may be considered loans to the seller of the underlying security. Income with
respect to repurchase agreements is not tax-exempt.
Securities purchased pursuant to a repurchase agreement are held by the
Portfolio's custodian and (i) are recorded in the name of the Portfolio with the
Federal Reserve Book-Entry System, or (ii) the Portfolio receives daily written
confirmation of each purchase of a security and a receipt from the custodian.
The Portfolio purchases securities subject to a repurchase agreement only when
the purchase price of the security acquired is equal to or less than its market
price at the time of purchase.
Reverse Repurchase Agreements. The Portfolio may also enter into reverse
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repurchase agreements which involve the sale by the Portfolio of a portfolio
security at an agreed upon price, date and interest payment. The Portfolio will
enter into reverse repurchase agreements for temporary or defensive purposes to
facilitate the orderly sale of portfolio securities, to accommodate abnormally
heavy redemption requests should they occur, or in some cases as a technique to
enhance income. The Portfolio will use reverse repurchase agreements when the
interest income to be earned from the investment of the proceeds of the
transaction is greater than the interest expense of the reverse repurchase
transaction. The Portfolio will enter into reverse repurchase agreements only
in amounts up to 10% of the value of its total assets at the time of entering
into such agreements. Reverse repurchase agreements involve the risk that the
market value of securities retained by the Portfolio in lieu of liquidation may
decline below the repurchase price of the securities sold by the Portfolio which
it is obligated to repurchase. This risk, if encountered, could cause a
reduction in the net asset value of the Portfolio's shares. Reverse repurchase
agreements are considered to be borrowings under the 1940 Act. See "Investment
Restrictions" in the Portfolio's Statement of Additional Information for the
Portfolio's percentage limitations on borrowings.
Delayed Delivery Agreement and When-issued Obligations. Delayed delivery
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agreements are commitments by the Portfolio to dealers or issuers to acquire
securities beyond the customary same-day settlement for money market
instruments. These commitments fix the payment price and interest rate to be
received on the investment. Delayed delivery agreements
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will not be used as a speculative or leverage technique. Rather, from time to
time, the Manager can anticipate that cash for investment purposes will result
from scheduled maturities of existing portfolio instruments or from net sales of
shares of the Portfolio; therefore, to assure that the Portfolio will be as
fully invested as possible in instruments meeting the Portfolio investment
objective, the Portfolio may enter into delayed delivery agreements, but only to
the extent of anticipated funds available for investment during a period of not
more than five business days.
Money Market Obligations are sometimes offered on a "when-issued" basis, that
is, the date for delivery of and payment for the securities is not fixed at the
date of purchase, but is set after the securities are issued (normally within
forty-five days after the date of the transaction). The payment obligation and
the interest rate that will be received on the securities are fixed at the time
the buyer enters into the commitment. The Portfolio will only make commitments
to purchase such Money Market Instruments with the intention of actually
acquiring such securities, but the Portfolio may sell these securities before
the settlement date if it is deemed advisable.
If the Portfolio enters into a delayed delivery agreement or purchases a when-
issued security, the Portfolio will direct its custodian bank to place cash or
other high grade securities (including Money Market Obligations) in a segregated
account of the Portfolio in an amount equal to its delayed delivery agreements
or when-issued commitments. If the market value of such securities declines,
additional cash or securities will be placed in the account on a daily basis so
that the market value of the account will equal the amount of the Portfolio's
delayed delivery agreements and when-issued commitments. To the extent that
funds are in a segregated account, they will not be available for new investment
or to meet redemptions. Investment in securities on a when-issued basis and use
of delayed delivery agreements may increase the Portfolio's exposure to market
fluctuation; or may increase the possibility that the Portfolio will incur a
short-term loss, if the Portfolio must engage in portfolio transactions in order
to honor a when-issued commitment or accept delivery of a security under a
delayed delivery agreement. The Portfolio will employ techniques designed to
minimize these risks.
No additional delayed delivery agreements or when-issued commitments will be
made if more than 25% of the Portfolio's net assets would become so committed.
The Portfolio will enter into when-issued and delayed delivery transactions only
when the time period between trade date and settlement date is at least 30 days
and not more than 120 days.
INVESTMENT RESTRICTIONS
The Portfolio's investment program is subject to a number of investment
restrictions which reflect self-imposed standards as well as federal and state
regulatory limitations. The most significant of these restrictions provide that
the Portfolio will not: (1) purchase securities of any issuer (other than U.S.
Government Obligations, repurchase agreements fully secured by such obligations
and any high quality, short-term municipal obligations guaranteed by the U.S.
Government) if as a result more than 5% of the Portfolio's total assets would be
invested in the securities of such issuer, except that in the case of
certificates of deposit and bankers'
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acceptances, up to 25% of the value of the Portfolio's total assets may be
invested without regard to such 5% limitation, but shall instead be subject to a
10% limitation (in each case, subject to the provisions of Rule 2a-7 of the 1940
Act); (2) purchase any corporate commercial instruments which would cause 25% of
the value of the Portfolio's total assets at the time of such purchase to be
invested in securities of one or more issuers conducting their principal
business activities in the same industry; (3) borrow money or pledge, mortgage
or hypothecate its assets except for temporary or emergency purposes (except to
secure reverse repurchase agreements and then only in an amount not exceeding
15% of the value of the Portfolio's total assets) except that the Portfolio may
purchase delayed delivery and when-issued securities consistent with its
investment objective and policies (the Portfolio will not make additional
investments while borrowings other than when-issued and delayed delivery
purchases and reverse repurchase agreements are outstanding); or (4) lend money
or securities except to the extent that the investments of the Portfolio may be
considered loans.
The Fund will also be subject to the foregoing investment restrictions if the
Fund no longer invests all of its investible assets in shares of the Portfolio.
HOW THE FUND AND THE PORTFOLIO ARE MANAGED
The Fund's trustees formulate the Fund's general policies and oversee the Fund's
affairs. The Fund currently seeks to achieve its investment objective by
investing all of its investible assets in the Portfolio. The Portfolio is
managed by the Manager. Subject to the supervision of Cortland's Board of
Directors, the Manager makes the Portfolio's day-to-day investment decisions,
arranges for the execution of portfolio transactions and generally manages the
Portfolio's investments.
The Manager. For investment advisory and other services provided to the
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Portfolio, Reich & Tang Asset Management L.P. (the "Manager") receives from the
Portfolio a fee at the annual rate of 0.80% of the first $500 million of the
Portfolio's average daily net assets, 0.775% of the next $500 million of such
assets, 0.750% of the next $500 million of such assets and 0.725% of such assets
in excess of $1.5 billion. At current asset levels, the Manager's annual fee
rate is approximately 0.77% of the Portfolio's average daily net assets.
Investors Fiduciary Trust Company, 127 West 10th Street, Kansas City, Missouri
64105, acts as custodian for the Portfolio's securities and cash. Cortland acts
as its own transfer agent for the Portfolio's shares.
The Manager, in addition to providing investment advisory services to the
Portfolio, provides the Fund with certain administrative services and generally
oversees the operation of the Fund. The Fund, pursuant to an Administration
Agreement, pays the Manager a fee for these services at the annual rate of 0.05%
of the Fund's average daily net assets.
The Manager was, at June 30, 1998, investment manager, adviser or supervisor
with respect to assets aggregating in excess of $11.3 billion. The Manager
currently acts as investment manager or administrator of seventeen other
investment companies and also advises pension trusts, profit sharing trusts and
endowments.
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Nvest Companies, L.P. ("Nvest Companies") is the limited partner and owner of a
99.5% interest in the Manager. Reich & Tang Asset Management, Inc. (an indirect
wholly-owned subsidiary of Nvest Companies) is the sole general partner and
owner of the remaining 0.5% interest of the Manager. Reich & Tang Asset
Management, Inc. is an indirect subsidiary of Metropolitan Life Insurance
Company ("MetLife"). Also, MetLife directly and indirectly owns approximately
47% of the outstanding partnership interests of Nvest Companies and may be
deemed a "controlling person" of the Manager. Reich & Tang, Inc. owns, directly
and indirectly, approximately 13% of the outstanding partnership interests of
Nvest Companies.
The Distributor. New England Securities Corporation serves as the Fund's
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distributor (the "Distributor"). The Distributor is an indirect wholly-owned
subsidiary of MetLife.
Under a plan (a "12b-1 Plan") adopted by the Portfolio pursuant to Rule 12b-1
under the 1940 Act, the Portfolio pays Reich & Tang Distributors, Inc. (the
"Portfolio Distributor") a monthly service fee at the annual rate of 0.25% of
the net assets attributable to the Portfolio's shares. The Portfolio
Distributor uses the fees to defray the cost of commissions and service fees
paid to financial service firms which have sold Portfolio shares, and to defray
other expenses such as sales literature, prospectus printing and distribution,
shareholder servicing costs and compensation to wholesalers. Because the 12b-1
Plan is of the type known as a "compensation" plan, should the fees exceed the
Portfolio Distributor's expenses in any year, the Portfolio Distributor would
realize a profit. The Plan also authorizes other payments to the Portfolio
Distributor and its affiliates (including the Manager) which may be construed to
be indirect financing of Portfolio share sales.
There is currently in place a 12b-1 Plan under which the Fund will pay to the
Distributor a monthly service fee at the annual rate of up to 0.25% of the net
assets of each Class of the Fund. However, no fees shall be payable under this
plan for so long as the Fund invests all of its investible assets in the
Portfolio. If the Fund were to invest in securities other than shares of the
Portfolio, no additional shareholder action would be required to commence
payments under the 12b-1 Plan for the Fund.
The Distributor may compensate qualifying brokers for sales of shares and the
maintenance of shareholder accounts. For more information, see "Distribution
Plan" in the SAI.
The Transfer Agent and Dividend Paying Agent. Reich & Tang Services, Inc.
- --------------------------------------------
serves as the Fund's transfer agent (the "Transfer Agent"). The Transfer Agent
receives no fee from the Fund for serving as Transfer Agent.
The Custodian. Investors Fiduciary Trust Company serves as the Fund's custodian
- -------------
("the Custodian").
-11-
<PAGE>
e-navigator Servicing Agent. Interactive Financial Solutions, Inc. ("IFS")
- ---------------------------
provides, directly or indirectly, certain shareholder services to the
shareholders of the Fund. Shareholder services include paper checkwriting,
expense coding on checks to aid investors in expense identification, a
comprehensive annual summary statement, electronic and telephonic bill-payments
and a debit card with various cardholder benefits. In order to effect bill-
payments by personal computer, an investor must obtain the e-navigator Financial
Organizer. The e-navigator Financial Organizer is a stand-alone personal
finance software package. For more information about the Fund's shareholder
services or your account, call 1-800-333-3204.
As compensation for the provision of these shareholder services, IFS receives an
annual fee (the "e-navigator Servicing Fee") equal to 5.00% of the average daily
net assets of the Fund attributable to Class A shares. IFS has agreed to waive
a portion of the e-navigator Servicing Fee to the extent that the daily total
operating expenses of the Fund would otherwise exceed the daily total return of
Class A shares.
Service Systems -- Year 2000. Many of the services provided to the Fund depend
- ----------------------------
on the smooth functioning of computer systems. Many systems in use today cannot
distinguish between the year 1900 and the year 2000. Failure of any of the
service systems to process information properly in the year 2000 could have an
adverse impact on the Fund's operations and services provided to shareholders.
The Manager, the Transfer Agent, the Distributor, the Custodian, IFS, the
Portfolio, the Portfolio's custodian, transfer agent and distributor, and
certain other service providers to the Fund have reported that each expects to
modify its systems, as necessary, prior to January 1, 2000 to address the so-
called "year 2000 problem." However, there can be no assurance that the problem
will be corrected in all respects and that the Fund's operations and services
provided to shareholders will not be adversely affected.
Expenses. The Fund is responsible for payment of all of its expenses that are
- --------
not borne by the Manager, which may include, among other types of expenses, the
following: (i) the costs of preparing, printing and distributing sales
literature; (ii) charges and expenses of any entity appointed by the Fund for
custodial, paying agent, shareholder servicing and plan agent services; (iii)
charges and expenses of independent accountants retained by the Fund; (iv)
charges and expenses of any transfer agents and registrars appointed by the
Fund; (v) brokers' commissions and issue and transfer taxes chargeable to the
Fund in connection with securities transactions to which the Fund is a party;
(vi) taxes and fees payable by Fund to federal, state or other governmental
agencies; (vii) any cost of certificates representing shares of the Fund;
(viii) expenses of meetings of shareholders and trustees of the Fund; and (ix)
interest, including interest on borrowings by the Fund.
ORGANIZATION AND HISTORY
The Fund was organized in 1998 as a Massachusetts business trust and is
authorized to issue an unlimited number of full and fractional shares in
multiple series and classes. The Fund is not required to hold annual
shareholder meetings, but special meetings may be called for certain
-12-
<PAGE>
purposes. Shareholders receive one vote for each Fund share. Shares of the Fund
vote together except when required by law or as otherwise determined by the
Board of Trustees. Shareholders owning in the aggregate ten percent of Fund
shares may call meetings to consider removal of Trustees. Under certain
circumstances, the Fund will provide information to assist shareholders in
calling such a meeting. See the Statement of Additional Information for more
information.
As of January 1, 1999, IFS owned all of the outstanding shares of the Fund.
HOW TO BUY SHARES
Shares of the Fund are offered continuously. Properly completed orders received
prior to the time at which the Fund values its shares will be processed based on
that day's closing net asset value. An order to purchase Fund shares will be
considered properly completed only when it is received in proper form and
payment in the form of federal funds (member bank deposits with the Federal
Reserve Bank) is received by the Fund for investment. The Fund reserves the
right to reject any order for the purchase of shares.
Investors may initially invest any amount greater than $1 and make subsequent
investments in any amount greater than $1.
Fund shares are purchased at the net asset value next determined after
acceptance of the order. Net asset value is normally determined at 4:00 p.m.
Eastern time on each day the New York Stock Exchange is open (a "Business Day").
Because the Portfolio uses the amortized cost method of valuing the securities
held by the Portfolio and rounds the Portfolio's per share net asset value to
the nearest whole cent, it is anticipated that the net asset value of the shares
of the Fund will remain constant at $1.00 per share. However, the Fund makes no
assurance that it can maintain a $1.00 net asset value per share. In order to
earn dividends the next day, purchase orders must be received before 4:00 p.m.
Eastern time; otherwise, the purchase of shares will occur the following
business day. Payments transmitted by check are normally converted into federal
funds within one business day and are accepted subject to collection at full
face amount. Purchases may be made by following the procedures specified below.
The Fund will not issue share certificates but will record each investor's
holdings on the books of the Fund in noncertificate form and record this amount
in the investor's Electronic Money Management Account. See the Statement of
Additional Information for more information.
Initial Purchase of Shares
Mail. You may send a check made payable to "e-navigator Fund" along with a
- ----
completed subscription order form to:
-13-
<PAGE>
e-navigator Fund
c/o e-navigator Customer Service
P.O. Box 1277
Boston, Massachusetts 02117-9766
Checks are accepted subject to collection at full value in U.S. dollars.
Payment by a check drawn on any member bank of the Federal Reserve System can
normally be converted into federal funds within one business day after receipt
of the check. Checks drawn on a nonmember bank may take substantially longer to
convert into federal funds and to be invested in Fund shares. Your subscription
will not be accepted until the Fund receives federal funds.
Bank Wire. To purchase shares of the Fund using the wire system for transmittal
- ---------
of money among banks, you should first obtain instructions on how to open an
account and obtaining an account number by calling the Fund at (800) 333-3204
and then instruct a member commercial bank to wire money immediately to:
Investors Fiduciary Trust Company
ABA #101003631
Reich & Tang Services, Inc.
DDA # 890-752-954-6
For Credit to: [Investor's name and Fund Account Number]
You should then promptly complete and mail the application.
If you plan to wire funds, you should instruct your bank to wire before 12 noon
Eastern time, on the same day. Your bank may charge you for transmitting the
money by bank wire, and may also charge you for the use of federal funds. The
Fund does not charge investors for its receipt of wire transfers. Payment in
the form of a "bank wire" received prior to 4:00 p.m. Eastern time on a Business
Day will be treated as a federal funds payment received on that day.
Subsequent Purchases of Shares
There is a $1.00 minimum for each subsequent purchase. All payments should
clearly indicate the investor's account number. Provided that the information
on the application on file with the Fund is still applicable, an investor may
reopen an account without filing a new application at any time during the year
the investor's account is closed or during the following calendar year.
Subsequent purchases can be made by check through the mail or by bank wire, as
indicated above, by writing to:
e-navigator Fund
c/o Reich & Tang Services, Inc.
600 Fifth Avenue
New York, New York 10020
-14-
<PAGE>
Electronic Funds Transfer (EFT) and Direct Deposit. You may purchase additional
- --------------------------------------------------
shares of the Fund by having salary, dividend payments, interest payments or any
other payments you designate, including social security, or certain veteran's,
military or other payments from the federal government, automatically invested
in Fund shares. You may deposit as much of such payments as you elect. To
enroll in this program, you must file with [the Fund] a completed EFT
Application. EFT Applications may be obtained by calling 1(800)333-3204. To
commence Direct Deposit, you may need to submit to your employer a Direct
Deposit Sign-Up Form (which you may obtain from your employer or by calling
1(800)333-3204. You may elect at any time to terminate EFT or Direct Deposit
purchases by notifying in writing the entity transmitting such payments. Death
or legal incapacity will terminate such purchases. Further, the Fund may
terminate such purchases upon 30 days' notice to you.
HOW TO REDEEM SHARES
You may redeem your shares, in whole or in part, on any day on which the Fund's
net asset value is calculated. Shares are redeemed at the net asset value next
determined after receipt of proper notice of redemption. If you redeem all of
your shares, you will receive payment of all dividends declared but unpaid
through the date of redemption. If you redeem only a portion of the shares in
your account, the dividends declared but unpaid on the shares redeemed will not
be distributed to you until the next regular dividend payment date. If your
redemption order is received prior to 4:00 p.m. Eastern time, payment will
ordinarily be made on the next Business Day. However, under unusual
circumstances, the Fund may suspend redemptions, or postpone payment for more
than seven days, as permitted by federal securities law.
Some of the redemption procedures described below may require you to complete
and file an authorization form in advance. Shares purchased by check may not be
redeemed until the check for the purchase has cleared, which may take up to ten
calendar days after purchase. The Fund will not honor redemptions of shares
purchased by check until the check has cleared. The Fund reserves the right to
change, modify or terminate the redemption procedures described below at any
time upon prior written notice to shareholders. The Fund also reserves the
right to effect the automatic redemption of shares maintained in accounts whose
value falls below a minimum amount that may be set by the Fund's Board of
Trustees. The Fund's Board of Trustees has not yet established any such
minimum amount. Investors will be notified prior to the automatic redemption of
their Fund shares.
Redemptions by Check
You may use the paper draft checking feature of your account to redeem Fund
shares. You can write checks in any amount up to the value of the shares held
in your account.
The payee of a check may cash or deposit the check in the same way as an
ordinary bank check. When a check is presented to the Fund's agent bank for
payment, the agent bank will cause the Fund to redeem a sufficient number of
shares to cover the amount of the check.
-15-
<PAGE>
Shareholders are entitled to dividends on the shares redeemed up until the day
on which the check is presented to the agent bank for payment. Unless you have
notified the Fund that you have entered into an "overdraft protection" agreement
with a third party (which may include IFS or any of its affiliates) and such
third party makes available to the Fund amounts sufficient to cover overdrafts,
checks drawn on insufficient funds will be returned to the payee and the agent
bank will impose a fee (currently $16) on the shareholder. When the Fund
receives a check drawn on insufficient funds from a shareholder who has notified
the Fund that he or she has entered into an "overdraft protection" agreement
with a third party, the Fund will attempt to notify such third party of the
overdraft and, if such third party makes available to the Fund amounts
sufficient to cover such overdraft, will redeem all shares available for
redemption. Shares purchased with a check that has not yet cleared will not
constitute shares available for redemption. Additionally, the agent bank will
impose a fee (currently $20) on shareholders who request stop payment orders.
Electronic or Telephone Bill Payment
You may authorize the redemption of shares in such amounts as may from time to
time be required to pay certain specified bills [(up to an aggregate amount of
$10,000 per month)]. Provided that the account contains sufficient shares
available for redemption to cover the bill payment, shares are automatically
redeemed on the date you specify. Unless you have notified the Fund that you
have entered into an "overdraft protection" agreement with a third party (which
may include IFS or its affiliates) and such third party makes available to the
Fund amounts sufficient to cover overdrafts, bill payments in excess of shares
available for redemption on the specified date will not be made in whole or in
part. When the Fund receives an authorization for redemption of shares in excess
of shares available for redemption from a shareholder who has notified the Fund
that he or she has entered into an "overdraft protection" agreement with a third
party, the Fund will attempt to notify such third party of the overdraft and, if
such third party makes available to the Fund amounts sufficient to cover such
overdraft, will redeem all shares available for redemption. Shares purchased
with a check that has not yet cleared will not constitute shares available for
redemption. Payments are generally delivered to payees within 2 to 10 days of
the redemption of shares. If a payee does not cash or deposit a check generated
by the electronic bill payment feature within 90 days of the date the shares
were redeemed, shares equal to the value of such electronic bill payment will be
re-invested in the investor's account, and the check will be voided. Investors
cease to earn a return on shares redeemed to make electronic bill payments on
the date the electronic check is written. Any uncashed electronic bill payment
checks that are re-invested in the investor's account (after 90 days from the
date on which the electronic check was written), may earn a return for such
investor beginning on the date that they are credited.
Debit Card Redemptions
As described above, you have the option of receiving a debit card that you may
use your debit card to access funds in your account. Although the Fund does not
charge a fee for use of the
-16-
<PAGE>
debit card, some banks and other third parties providing cash, goods or services
that you pay for with the debit card may charge you a fee for using the debit
card at their machine. IFS may, in its discretion, pay some or all of these
fees.
Your use of the debit card will authorize the Fund's agent bank to redeem shares
from your account in the same manner as a check, except that debited amounts are
effectively "presented for payment" on the day the card is used, limiting the
time during which you earn dividends on debited amounts. Unless you have
notified the Fund that you have entered into an "overdraft protection" agreement
with a third party (which may include IFS or its affiliates) and such third
party makes available to the Fund amounts sufficient to cover overdrafts, debit
card redemptions in excess of shares available for redemption will not be made
in whole or in part. When the Fund receives a debit card authorization to redeem
shares in excess of shares available for redemption from a shareholder who has
notified the Fund that he or she has entered into an "overdraft protection"
agreement with a third party, the Fund will attempt to notify such third party
of the overdraft and, if such third party makes available to the Fund amounts
sufficient to cover such overdraft, will redeem all shares available for
redemption.
Telephone Redemptions
Shareholders may redeem Fund shares valued at up to $25,000 by calling 1-800-
333-3204 toll free any Business Day between 9:00 a.m. and 4:00 p.m. The
Transfer Agent will employ reasonable procedures to confirm that instructions
communicated by telephone are genuine and may be liable for losses related to
unauthorized or fraudulent transactions in the event reasonable procedures are
not employed. Such procedures include restrictions on where proceeds of
telephone redemptions may be sent, limitations on the ability to redeem by
telephone shortly after an address change, recording of telephone lines and
requirements that the redeeming shareholder provide certain identifying
information. Shareholders wishing to redeem or exchange shares by telephone may
experience difficulty in reaching the Fund at its toll-free telephone number
during periods of drastic economic or market changes. In that event,
shareholders should follow the procedures for redemption or exchange by mail.
The Fund reserves the right to change, modify or terminate the telephone
redemption services at any time upon prior written notice to shareholders.
Automatic Redemptions
You may establish an automatic redemption plan, under which a specified amount
of $50.00 or more will automatically be redeemed monthly or quarterly, as you
request. You may establish an automatic redemption plan by calling 1-800-333-
3204 or sending a telegram or letter to the Transfer Agent. The proceeds from
such redemption will be mailed or wired only to a previously designated bank
account, and you must complete the telephone redemption authorization included
in the account application in order to make automatic redemptions. The proceeds
from your automatic redemption will not be mailed or wired to other than the
-17-
<PAGE>
designated account. Redemptions of $10,000 or more will be sent by bank wire if
requested. Smaller amounts will normally be mailed to the designated account.
Redemptions by Letter of Instruction
You may redeem shares by sending a letter of instruction to the Transfer Agent
containing:
(a) your account number
(b) your name and telephone number
(c) the dollar amount or number of shares to be redeemed or a statement
that all shares in the account are to be redeemed
(d) payment instructions (normally redemption proceeds will be mailed to
the shareholder's address as registered with the Fund)
(e) signature(s) of the registered shareholder(s)
(f) signature(s) guaranteed stamped under the signature and signed and
guaranteed by an eligible guarantor institution which includes a
domestic bank, a domestic savings and loan institution, a domestic
credit union, a member bank of the Federal Reserve System or a member
firm of a national securities exchange, pursuant to the Fund's
standards and procedures.
The proceeds of redemption are sent to your bank or address as it appears in the
Fund's records. In order to change such designation, you must submit a written
notification to the Fund with the signature guarantee(s) described above.
REBALANCING TRANSACTIONS
The Fund offers two classes of shares: Class A and Class B. The first $5,000 of
your investment in the Fund will be invested in Class A shares. Any amount over
$5,000 that you invest in the Fund will be invested in Class B shares, as
explained below.
At the close of each Business Day, the Transfer Agent will aggregate your
purchases (including reinvested dividends) and redemptions, if any. As
described above, the Fund will not redeem any shares purchased by check until
the check has cleared. Accordingly, shares purchased by checks that have not
yet cleared, shares to be purchased by check and any attempted redemptions of
such shares will be disregarded for these purposes. If there are net
redemptions from your account on a given day, Class B shares and, if there are
insufficient Class B shares to satisfy the redemption, Class A shares, will be
redeemed to the extent necessary to satisfy such redemption. If there are net
purchases into your account on a given day, Class A shares will be purchased to
-18-
<PAGE>
the extent that the value of the Class A shares in such account is less than
$5,000, and Class B shares will be purchased with the remainder of such
purchase.
Immediately after processing all purchases and redemptions as described above,
the Fund will (1) automatically exchange Class A shares for Class B shares in
your account to the extent necessary to reduce the value of Class A shares in
such account to $5,000, or (2) automatically exchange Class B shares for Class A
shares in your account to the extent necessary to increase the value of Class A
shares in such account to $5,000. The transactions described in this paragraph
will occur without regard to any shares in the account that were purchased by a
check that has not yet cleared.
PERFORMANCE INFORMATION
The Fund will provide yield quotations based on its daily dividends.
The Fund may include the yield of both Classes of shares, accompanied by the
total return, in advertising and other written material. Yield will be computed
in accordance with the SEC's standardized formula as described in the Portfolio
Statement of Additional Information and can be expected to fluctuate
substantially over time.
The Fund may include total return information for both Classes of shares in
advertisements or other written sales material. The Fund may show the average
annual total return of each Class for the one-, five- and ten-year periods (or
the life of the Class, if shorter) through the end of the most recent calendar
quarter. Total return is measured by comparing the value of a hypothetical
$1,000 investment in a Class at the beginning of the relevant period to the
value of the investment at the end of the period (assuming automatic
reinvestment of all dividends and capital gains distributions). Total return
may be quoted with or without giving effect to any voluntary expense limitations
in effect for the relevant Class during the relevant period. The Fund may also
show the total return of each Class over other periods, on an aggregate basis
for the period presented.
The Fund may also present the distribution rates for both Classes of shares in
its sales literature. These rates will be determined by annualizing
distributions from net investment income and net short-term capital gain over a
recent 12-month, 3-month or 30-day period and dividing that amount by the
maximum offering price or the net asset value on the last day of such period.
Total return will generally be higher for Class B shares than for Class A
shares, because of the e-navigator Servicing Fee paid by Class A shares. You
should remember that the first $5,000 of your Electronic Money Management
Account will automatically be invested in Class A shares, and therefore, you
will earn the higher Class B return only on amounts in excess of $5,000.
DISTRIBUTIONS AND TAXES
-19-
<PAGE>
The Fund intends to qualify as a "regulated investment company" under the
Internal Revenue Code of 1986, as amended (the "Code") and to distribute to its
shareholders net income and any net realized gains at least annually.
As discussed above, the Fund does not expect, under current market and interest
rate conditions, to pay any dividends on Class A shares. The Fund generally
declares distributions daily and pays them monthly. Distributions are invested
in additional shares of the same Class of the Fund at net asset value [unless
the shareholder elects to receive cash]. If an investment is made by federal
funds wire, dividends start accruing on the next Business Day. Regardless of the
shareholder's election, distributions of $10 or less will not be paid in cash to
shareholders but will be invested in additional shares of the same Class of the
Fund at net asset value. If a shareholder has elected to receive dividends
and/or capital gain distributions in cash and the postal or other delivery
service selected by the Transfer Agent is unable to deliver checks to the
shareholder's address of record, such shareholder's distribution option will
automatically be converted to having all dividend and other distributions
reinvested in additional shares. No interest will accrue on amounts represented
by uncashed distribution or redemption checks. To change your election, write
to:
e-navigator Fund
c/o Reich & Tang Services, Inc.
600 Fifth Avenue
New York, New York 10020
It is the Fund's policy to distribute to shareholders all of its net investment
income and any capital gains (net of capital losses) in accordance with the
timing requirements imposed by the Code, so that the Fund will satisfy the
distribution requirement of Subchapter M and not be subject to federal income
taxes or the 4% excise tax. So long as the Fund qualifies for this tax
treatment, the Fund will not be subject to federal income tax on amounts
distributed to shareholders.
Shareholders will be subject to federal income taxes and any applicable state or
local income taxes on amounts distributed as dividends unless such shareholders
are otherwise exempt. It is not expected that any portion of taxable dividends
paid by the Fund will qualify for the federal dividends-received deduction for
corporations.
Distributions to shareholders will be treated in the same manner for federal
income tax purposes whether a shareholder elects to receive them in cash or
reinvest them in additional shares. In general, shareholders take distributions
into account in the year in which they are made. However, shareholders are
required to treat certain distributions made during January as having been paid
and received on December 31 of the preceding year. A statement setting forth
the federal income tax status of all distributions made (or deemed made) during
the year will be sent to shareholders promptly after the end of each year.
-20-
<PAGE>
If the Fund fails to satisfy any of the Code requirements for qualification as a
regulated investment company, it will be taxed at regular corporate tax rates on
all of its taxable income (including capital gains) without any deduction for
distributions to shareholders, and distributions will be taxable to shareholders
as ordinary dividends (even if derived from the Fund's net long-term capital
gains) to the extent of the Fund's current and accumulated earnings and profits.
Such distributions generally will be eligible for the dividends-received
deduction in the case of corporate shareholders.
To avoid being subject to a 31% federal backup withholding on taxable dividends
and redemption payments, each shareholder must furnish the Fund with its
taxpayer identification number and certify, under penalties of perjury, that
such number is correct and that such shareholder is not subject to backup
withholding for any reason.
The foregoing discussion of federal income tax consequences is based on tax laws
and regulations in effect on the date of this Prospectus, and is subject to
change by legislation or administrative action. As the foregoing discussion is
for general information only, shareholders should also review the more detailed
discussion of federal income tax considerations relevant to the Fund that is
contained in the Statement of Additional Information. Shareholders are advised
to consult with their tax advisors concerning the application of state, local
and foreign taxes on investments in the Fund which may differ from the federal
income tax consequences described above.
Manager
Reich & Tang Asset Management L.P.
600 Fifth Avenue
New York, NY 10020
Distributor of the Fund
New England Securities Corporation
399 Boylston Street
Boston, MA 02116
Distributor of the Portfolio
Reich & Tang Distributors, Inc.
600 Fifth Avenue
New York, NY 10020
Transfer Agent
Reich & Tang Services, Inc.
600 Fifth Avenue
New York, NY 10020
Custodian
Investors Fiduciary Trust Company
127 West 10th Street
Kansas City, Missouri 64105
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<PAGE>
Independent Auditors
McGladrey & Pullen, LLP
555 Fifth Avenue
New York, New York 10017-2416
Legal Counsel to the Fund
Ropes & Gray
One International Place
Boston, MA 02110-2624
[ ], 1999
e-navigator Fund
PROSPECTUS
e-navigator Fund seeks to provide as high a level of current income as is
consistent with the preservation of capital and liquidity. The Fund currently
seeks to achieve its objective by investing all of its assets in the Cortland
General Money Market Fund, a diversified open-end management company which has
the same investment objective and policies as the Fund.
For more detailed information about the Fund, call 1-800-333-3204 for the [date]
Statement of Additional Information.
Contents Page
Cover Page...................................Cover
Summary of Expenses............................. 3
Two-tiered Structure............................ 4
The Fund's Investment Objective................. 5
Investment Policies............................. 5
Investment Restrictions......................... 9
How the Fund and the Portfolio Are Managed......10
Organization and History........................13
How to Buy Shares...............................13
How to Redeem Shares............................15
Rebalancing Transactions........................18
Performance Information.........................18
Distributions and Taxes.........................19
-22-
<PAGE>
- --------------------------------------------------------------------------------
e-navigator Fund
================================================================================
STATEMENT OF ADDITIONAL INFORMATION
-----------------------------------
[ ], 1999
Relating to e-navigator Fund's Prospectus
dated [ ], 1999
This Statement of Additional Information (the "SAI") contains information which
may be useful to investors but is not included in the Prospectus of e-navigator
Fund (the "Fund"). The SAI is not a Prospectus. It should be read in
conjunction with the Prospectus which may be obtained by writing to e-navigator
Fund, c/o e-navigator Customer Service, P.O. Box 1277, Boston, Massachusetts
02117-9766, by calling toll free at (800) 333-3204 or from the e-navigator web
site (http://www.enavigator.com). Capitalized terms which are not defined
herein are used as defined in the Prospects. The SAI and other documents
relating to e-navigator Fund may be accessed electronically through the
Securities and Exchange Commission's web site (http://www.sec.gov).
All information contained in the Statement of Additional Information of Cortland
Trust, Inc. dated July 29, 1998 (the "Portfolio SAI") (SEC File No. 811-01479),
pertaining to the Cortland General Money Market Fund (the "Portfolio"), other
than the financial statements and report of independent accountants thereon
(which are incorporated into the Portfolio SAI by reference), is incorporated
herein by reference. A copy of the Portfolio SAI should accompany this SAI, and
additional copies of the Portfolio SAI are available by writing to e-navigator
Fund, c/o e-navigator Customer Service, P.O. Box 1277, Boston, Massachusetts
02117-9766, by calling toll free at (800) 333-3204 or from the e-navigator web
site (http://www.enavigator.com).
Table of Contents
Introduction............................................... 1
Investment Objective....................................... 2
Investment Policies........................................ 2
Investment Agreements................................. 3
When-issued Securities................................ 4
Investment Restrictions.................................... 5
Shareholder Rights......................................... 7
Management of the Fund..................................... 7
Trustees and Officers ................................ 7
Compensation Table.................................... 8
The Manager........................................... 9
The Distributor....................................... 9
e-navigator Servicing Agent........................... 10
Custodian............................................. 11
Transfer Agent........................................ 11
Management of the Portfolio................................ 11
Expenses................................................... 11
Principal Holders of Securities............................ 12
Reports.................................................... 12
Purchases, Redemptions and Rebalancing
Transactions.......................................... 12
Purchases and Redemptions............................. 12
Rebalancing Transactions.............................. 12
Net Asset Value Determination.............................. 13
<PAGE>
Dividends and Tax Matters.................................. 13
Dividends............................................. 13
Tax Matters........................................... 14
Yield Information.......................................... 18
Portfolio Transactions..................................... 19
Performance Comparisons.................................... 19
Description of the Fund.................................... 20
Voting Rights.............................................. 21
Shareholder and Trustee Liability.......................... 22
Investment Ratings......................................... 23
e-navigator Fund is a diversified open-end management investment company (the
"Fund"). The Fund is organized as a Massachusetts business trust pursuant to an
Agreement and Declaration of Trust dated September 3, 1998.
INVESTMENT OBJECTIVE
Information concerning the investment objective of the Fund and the investment
policies implemented to achieve that objective is set forth in the Prospectus
under the captions "The Fund's Investment Objective" and "Investment Policies."
The principal features of the investment policies and the primary risks
associated with the investment policies of the Fund and the Portfolio are
discussed in the Prospectus under "Investment Policies."
As described in the Fund's Prospectus, the Fund currently seeks to achieve its
investment objective by investing all its assets in the Portfolio. There can be
no assurance that the Fund's objective will be achieved.
The Portfolio seeks to achieve its objective by investing in portfolios of
short-term instruments rated high quality by a major rating service or
determined to be of high quality by the Manager under the supervision of the
Board of Directors. There can be no assurance that the Portfolio's objective
will be achieved.
INVESTMENT POLICIES
The following supplements the summary of the Fund's investment program which
appears in the Prospectus. Except as otherwise noted, the policies of the Fund
are not "fundamental" and may be changed without a vote of the majority of the
outstanding shares of the Fund. (See "Shareholder Rights.") As used in the
Prospectus, the term "majority of the outstanding shares" of the Fund means,
respectively, the vote of the lesser of (i) 67% or more of the shares of the
Fund present at a meeting, if the holders of more than 50% of the outstanding
shares of the Fund are present or represented by proxy or (ii) more than 50% of
the outstanding shares of the Fund.
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<PAGE>
Investment Agreements
If the Fund no longer invests all of its investible assets in the Portfolio, the
Fund may enter into Repurchase agreements, which are agreements under which the
purchaser (for example, the Fund) acquires ownership of an obligation (e.g., a
debt instrument or time deposit) and the seller agrees, at the time of the sale,
to repurchase the obligation at a mutually agreed upon time and price, thereby
determining the yield during the purchaser's holding period. This arrangement
results in a fixed rate of return insulated from market fluctuations during such
period. Although the underlying collateral for repurchase agreements may have
maturities exceeding one year, a Fund will not enter into a repurchase agreement
if as a result of such transaction more than 10% of the Fund's total assets
would be invested in liquid securities, including repurchase agreements expiring
in more than seven days. The Fund may, however, enter into a "continuing
contract" or "open" repurchase agreement under which the seller is under a
continuing obligation to repurchase the underlying obligation from the Fund on
demand and the effective interest rate is negotiated on a daily basis. In
general, the Fund will enter into repurchase agreements only with domestic banks
with total assets of at least $1.5 billion or with primary dealers in U.S.
Government securities, but total assets will not be the sole determinative
factor, and the Fund may enter into repurchase agreements with other
institutions which the Board of Trustees believes present minimal credit risks.
Nevertheless, if the seller of a repurchase agreement fails to repurchase the
debt instrument in accordance with the terms of the agreement, the Fund may
incur a loss to the extent that the proceeds it realizes on the sale of the
underlying obligation are less than the repurchase price. Repurchase agreements
are considered to be loans by the Fund under the Investment Company Act of 1940,
as amended (the "1940 Act").
If the Fund no longer invests all of its investible assets in the Portfolio, the
Fund may enter into reverse repurchase agreements involving the sale of money
market instruments held by the Fund, with an agreement that the Fund will
repurchase the instruments at an agreed upon price and date. The Fund will
employ reverse repurchase agreements when necessary to meet unanticipated net
redemptions so as to avoid liquidating other money market instruments during
unfavorable market conditions, or in some cases as a technique to enhance
income, and only in amounts up to 10% of the value of the Fund's total assets at
the time it enters into a reverse repurchase agreement. At the time it enters
into a reverse repurchase agreement, the Fund will place in a segregated
custodial account high-quality debt securities having a dollar value equal to
the repurchase price. The Fund will utilize reverse repurchase agreements when
the interest income to be earned from portfolio investments which would
otherwise have to be liquidated to meet redemptions is greater than the interest
expense incurred as a result of the reverse repurchase transactions.
If the Fund no longer invests all of its investible assets in the Portfolio, the
Fund may enter delayed delivery agreements involving commitments by the Fund to
dealers or issuers to acquire securities or instruments at a specified future
date beyond the customary same-day settlement for money market instruments.
These commitments may fix the payment price and interest rate to be received on
the investment. Delayed delivery agreements will not be used as a speculative
or leverage technique. Rather, from time to time, the Fund's investment adviser
can anticipate that cash for investment purposes will result from scheduled
maturities of existing portfolio instruments or from
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<PAGE>
net sales of shares of the Fund. To assure that the Fund will be as fully
invested as possible in instruments meeting the Fund's investment objective, the
Fund may enter into delayed delivery agreements, but only to the extent of
anticipated funds available for investment during a period of not more than five
business days. Until the settlement date, the Fund will set aside in a
segregated account high-quality debt securities of a dollar value sufficient at
all times to make payment for the delayed delivery securities. Not more than 25%
of the Fund's total assets will be committed to delayed delivery agreements and
when-issued securities, as described below. The delayed delivery securities,
which will not begin to accrue interest until the settlement date, will be
recorded as an asset of the Fund and will be subject to the risks of market
fluctuation. The purchase price of the delayed delivery securities is a
liability of the Fund until settlement. Absent extraordinary circumstances, the
Fund will not sell or otherwise transfer the delayed delivery securities prior
to settlement. If cash is not available to the Fund at the time of settlement,
the Fund may be required to dispose of portfolio securities that it would
otherwise hold to maturity in order to meet its obligation to accept delivery
under a delayed delivery agreement. The Board of Trustees has determined that
entering into delayed delivery agreements does not present a materially
increased risk of loss to shareholders but the Board of Trustees may restrict
the use of delayed delivery agreements if the risk of loss is determined to be
material or if it affects the constant net asset value of the Fund.
When-Issued Securities
Many new issues of Money Market Obligations are offered on a "when-issued"
basis, that is, the date for delivery of and payment for the securities is not
fixed at the date of purchase, but is set after the securities are issued
(normally within forty-five days after the date of the transaction). The
payment obligation and the interest rate that will be received on the securities
are fixed at the time the buyer enters into the commitment. Although the Fund
does not currently intend to invest in Money Market Obligations directly, the
Fund is permitted to make such investments. The Fund will only make commitments
to purchase such Money Market Obligations with the intention of actually
acquiring such securities, but the Fund may sell these securities before the
settlement date if it is deemed advisable. No additional when-issued
commitments will be made if as a result more than 25% of the Fund's net assets
would become committed to purchases of when-issued securities and delayed
delivery agreements.
If the Fund purchases a when-issued security, it will direct its custodian bank
to collateralize the when-issued commitment by establishing a segregated account
in the same fashion as required for a Delayed Delivery Agreement. The special
custody account will likewise be marked-to-market, and the amount in the special
custody account will be increased if necessary to maintain adequate coverage of
the when-issued commitments.
Securities purchased on a when-issued basis and the securities held by the Fund
are subject to changes in market value based upon the public's perception of the
creditworthiness of the issuer and changes in the level of interest rates (which
will generally result in all of those securities changing in value in the same
way, i.e., all those securities experiencing appreciation when interest rates
rise).
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<PAGE>
Therefore, if, in order to achieve higher interest income, the Fund is to
remain substantially fully invested at the same time that it has purchased
securities on a when-issued basis, there will be a possibility that the market
value of the Fund's assets will fluctuate to a greater degree. Furthermore,
when the time comes for the Fund to meet its obligations under when-issued
commitments, the Fund will do so by using then-available cash flow, by sale of
the securities held in the separate account, by sale of other securities or,
although it would not normally expect to do so, by directing the sale of the
when-issued securities themselves (which may have a market value greater or less
than the Fund's payment obligation).
A sale of securities to meet such obligations carries with it a greater
potential for the realization of net short-term capital gains, which are not
exempt from federal income taxes. The value of when-issued securities on the
settlement date may be more or less than the purchase price.
INVESTMENT RESTRICTIONS
The most significant investment restrictions applicable to the Portfolio's
investment program (and the Fund's investment program, should the Fund no longer
invest all of its investible assets in shares of the Portfolio) are set forth in
Prospectus under the caption "Investment Restrictions." Additionally, as a
matter of fundamental policy which may not be changed without the vote of a
majority of the outstanding shares (as that term is defined above), the Fund may
not:
1. Borrow money in excess of 50% of the value (taken at the lower of cost or
current value) of its total assets (not including the amount borrowed) at
the time the borrowing is made, and then only from banks as a temporary
measure to facilitate the meeting of redemption requests (not for leverage)
which might otherwise require the untimely disposition of portfolio
investments or for extraordinary or emergency purposes. Such borrowings
will be repaid before any additional investments are purchased.
2. Underwrite securities issued by other persons except to the extent that, in
connection with the disposition of its portfolio investments, it may be
deemed to be an underwriter under certain federal securities laws.
3. Purchase or sell real estate, although it may purchase securities of
issuers which deal in real estate, securities which are secured by
interests in real estate, and securities which represent interests in real
estate, and it may acquire and dispose of real estate or interests in real
estate acquired through the exercise of its rights as a holder of debt
obligations secured by real estate or interests therein.
4. Purchase or sell commodities or commodity contracts, except that the Fund
may purchase and sell financial futures contracts and options and may enter
into foreign exchange contracts and other financial transactions not
involving physical commodities.
-5-
<PAGE>
5. Make loans, except by purchase of debt obligations in which the Fund may
invest consistent with its investment policies, by entering into repurchase
agreements, or by lending its portfolio securities.
6. With respect to 75% of its total assets, invest in the securities of any
issuer if, immediately after such investment, more than 5% of the total
assets of the Fund (taken at current value) would be invested in the
securities of such issuer; provided that this limitation does not apply to
obligations issued or guaranteed as to interest or principal by the U.S.
government or its agencies or instrumentalities, or to securities of any
registered investment company.
7. With respect to 75% of its total assets, acquire more than 10% of the
outstanding voting securities of any issuer other than a registered
investment company.
8. Purchase securities (other than securities of the U.S. government, its
agencies or instrumentalities, or securities of a registered investment
company) if, as a result of such purchase, more than 25% of the Fund's
total assets would be invested in any one industry.
9. Issue any class of securities which is senior to the Fund's shares of
beneficial interest, except for permitted borrowings.
The Fund is also subject to certain additional non-fundamental investment
restrictions. As a matter of non-fundamental policy, the Fund may not:
1) purchase any Money Market Obligation, if, as a result of such
purchase, more than 5% of the Fund's total assets would be invested in
securities of issuers, which, with their predecessors, have been in
business for less than three years;
2) invest in shares of any other investment company, other than shares of
the Portfolio or in connection with a merger, consolidation,
reorganization or acquisition of assets;
3) invest more than 10% of the value of the Fund's total assets in
illiquid securities, including variable amount master demand notes (if
such notes provide for prepayment penalties) and repurchase agreements
with remaining maturities in excess of seven days;
4) invest in companies for the purpose of exercising control;
5) sell securities short or purchase any securities on margin, except for
such short-term credits as are necessary for the clearance of
transactions;
6) mortgage, pledge or hypothecate any assets held by the Fund except to
secure permitted borrowing and reverse repurchase agreements and then
only in an amount
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<PAGE>
up to 15% of the value of the Fund's total assets, respectively, at
the time of borrowing or entering into a reverse repurchase agreement;
or
7) purchase or sell commodities or commodity futures contracts or
interests in oil, gas or other mineral exploration or development
program (the Fund may, however, purchase and sell securities of
companies engaged in the exploration, development, production,
refining, transporting and marketing of oil, gas or minerals).
For a complete description of the fundamental investment restrictions of the
Portfolio, see "Investment Program and Restrictions" in the Portfolio SAI.
SHAREHOLDER RIGHTS
Shareholders of the Fund do not have cumulative voting rights, and therefore the
holders of more than 50% of the outstanding shares of the Fund voting together
for the election of Trustees may elect all of the members of the Board of
Trustees.
The Board of Trustees may classify or reclassify any unissued shares to create a
new class or classes in addition to those already authorized by setting or
changing in any one or more respects, from time to time, prior to the issuance
of such shares, the preferences, conversion or other rights, voting powers,
restrictions, limitations as to dividends, qualifications, or terms or
conditions of redemption, of such shares.
As described in the Prospectus, the Fund will not normally hold annual
shareholders' meetings. Under Massachusetts law and the Fund's By-Laws, an
annual meeting is not required to be held in any year in which the election of
trustees is not required to be acted upon under the 1940 Act. At such time as
less than a majority of the trustees have been elected by the shareholders, the
trustees then in office will call a shareholders' meeting for the election of
trustees.
Except as otherwise disclosed in the Prospectus and in this Statement of
Additional Information, the trustees shall continue to hold office and may
appoint their successors.
MANAGEMENT OF THE FUND
Trustees and Officers
The trustees and executive officers of the Fund and their principal occupations
during the last five years are set forth below. Unless otherwise noted, the
address of each trustee and officer is 501 Boylston Street, Boston,
Massachusetts 02116.
FREDERICK K. ZIMMERMANN* (46)-- Chairman of the Board, Chief Executive Officer,
-----------------------------------------------
President and Trustee; Chief Investment Officer and Executive Vice President,
- ---------------------
New England Financial ("NEF"); Chairman of the Board and President, TNE
Advisers, Inc; Chairman of the
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<PAGE>
Board, Chief Executive Officer, President and Trustee, New England Zenith Fund;
Director and Vice President-Investments, NEF until 1996; Chairman of the Board
and President, New England Pension and Annuity Company.
PATRICIA [ ] BAILLEUIL (age)-- Trustee; [past 5 yrs]
-------
HANSCOM [ ] ROBBINS (age)-- Trustee; [past 5 yrs]
-------
*Denotes a trustee who is an "interested person" as defined in the 1940 Act.
Each trustee who is not an "interested person" receives an annual fee from the
Fund of $7,500 for his or her services as a trustee and a fee of $1,000 for each
Board meeting attended, and all trustees are reimbursed by the Fund for expenses
incurred in connection with attendance at meetings of the Board of Trustees.
The following table shows estimated amounts to be paid to each trustee by the
Fund for the Fund's first full fiscal year.
COMPENSATION TABLE
<TABLE>
<CAPTION>
(1) (2) (3) (4) (5)
Aggregate Pension or
Compensation Retirement Estimated Total
Name of Person, from Registrant Benefits Annual Benefits Compensation
Position for Fiscal Year Accrued as Part upon Retirement from Fund to be
of Fund Paid to Trustees
Expenses
<S> <C> <C> <C> <C>
P. Bailleuil, $12,500 0 0 $12,500
Trustee
H. Robbins, $12,500 0 0 $12,500
Trustee
</TABLE>
The Manager
In addition to serving as investment adviser and administrator to the Portfolio,
Reich & Tang Asset Management L.P. serves as administrator of the Fund.
Nvest Companies, L.P. ("Nvest Companies") is the limited partner and owner of a
99.5% interest in the Manager. Reich & Tang Asset Management, Inc. (an indirect
wholly-owned subsidiary of Nvest Companies) is the sole general partner and
owner of the remaining 0.5% interest of the Manager. Reich & Tang Asset
Management, Inc. is an indirect subsidiary of Metropolitan Life Insurance
Company ("MetLife"). Also, MetLife directly and indirectly owns approximately
47% of the outstanding partnership interests of Nvest Companies and may be
deemed a "controlling person" of the Manager. Reich & Tang, Inc. owns, directly
and indirectly, approximately 13% of the outstanding partnership interests of
Nvest Companies.
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<PAGE>
The Administration Agreement. Reich & Tang Asset Management L.P. serves as
- -----------------------------
Manager of the Fund pursuant to an Administration Agreement dated [ ]
(the "Administration Agreement"). Pursuant to the terms of the Administration
Agreement, the Manager, either directly or through separate contracts (at no
additional cost to the Fund): (a) provides the Fund with office space and
supplies as may be agreed upon by the Fund and the Manager; (b) provides the
Fund certain executive, administrative and clerical services necessary to manage
the affairs of the Fund; and (c) provides all services, other than service of
counsel, required in connection with the preparation of registration statements
and prospectuses, all annual and semiannual reports and notices and proxy
solicitation materials ([other than/including] state securities filings) to the
extent the foregoing relate to the Fund. For these services and facilities, the
Fund pays a fee at the annual rate of 0.05% of the average daily net assets of
the Fund.
The Distributor
New England Securities Corporation, the Distributor, serves as the principal
underwriter of the Fund's shares pursuant to a distribution agreement dated [
], (the "Distribution Agreement"). The Distributor has an office located at 399
Boylston Street, Boston, Massachusetts 02116.
Distribution Agreement. Pursuant to the Distribution Agreement, the
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Distributor: (a) solicits and receives orders for the purchase of shares of the
Fund, accepts or rejects such orders on behalf of the Fund in accordance with
the Fund's currently effective Prospectus and transmits such orders as are
accepted to the Fund as promptly as possible; (b) receives requests for
redemptions and transmits such redemption requests to the Fund as promptly as
possible; (c) responds to inquiries from e-navigator Customers concerning the
status of their accounts and the operation of the Fund; and (d) provides daily
information concerning yields and dividend rates to shareholders. The
Distributor shall not be liable to the Fund or to its shareholders for any act
or omission or any loss sustained by the Fund or its shareholders except in the
case of the Distributor's willful misfeasance, bad faith, gross negligence or
reckless disregard of duty. The Distributor currently receives no compensation
from the Fund for its services.
Distribution Plan. The Fund has adopted a plan of distribution under Rule 12b-1
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of the 1940 Act (the "Plan"). Pursuant to the Plan, the Distributor may pay
certain promotional and advertising expenses and may compensate certain
registered securities dealers and financial institutions for services provided
in connection with the processing of orders for purchase or redemption of the
shares of the Fund and furnishing other shareholder services. Payments by the
Distributor may be paid out of distribution plan payments received by the
Distributor from the Fund, out of past profits or from any other source
available to the Distributor.
Under the Plan, the Fund will pay the Distributor a monthly service fee at an
annual rate of up to 0.25% of the net assets attributable to the Fund's shares.
The Plan is a "compensation" type plan of distribution, which means that should
the fees collected under the Plan exceed the Distributor's expenses, the
Distributor may make a profit. No fees shall be payable under this plan for so
long
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<PAGE>
as the Fund invests all of its investible assets in the Portfolio, however,
no additional shareholder action would be required to commence or effect the
payment of the monthly fee by the Fund if the Fund no longer invests all of its
investible assets in the Portfolio.
Although it is a primary objective of the Plan to reduce expenses of the Fund by
fostering growth in the Fund's net assets, there can be no assurance that this
objective of the Plan will be achieved; however, based on the data and
information presented to the Board of Trustees, the Board of Trustees determined
that there is a reasonable likelihood that the benefits of growth in the size of
the Fund can be accomplished under the Plan.
The Distribution Agreement and the Plan will continue in effect from year to
year if specifically approved at least annually by the Board of Trustees and the
affirmative vote of a majority of the trustees who are not parties to the
Distribution Agreement or "interested persons" of any such party by votes cast
in person at a meeting called for such purpose. In approving the Plan, the
trustees of the Fund determined, in the exercise of their business judgment and
in light of their fiduciary duties as trustees of the Fund, that there was a
reasonable likelihood that the Plan would benefit the Fund and its shareholders.
The Plan may only be renewed if the trustees of the Fund make a similar
determination for each subsequent year. The Plan may not be amended to increase
the maximum amount of payments by the Fund without shareholder approval, and all
material amendments to the provisions of the Plan must be approved by the Board
of Trustees and by the trustees of the Fund who have no direct or indirect
financial interest in the Plan, by votes cast in person at a meeting called for
the purpose of such vote. The Board of Trustees or the shareholders of the Fund
may terminate the Distribution Agreement without penalty on 60 days' written
notice and New England Securities Corporation may terminate the Distribution
Agreement without penalty on 90 days' written notice. The Distribution
Agreement terminates automatically in the event of its "assignment," as defined
in the 1940 Act. The services of the Distributor to the Fund are not exclusive,
the Distributor is free to render similar services to others.
The Distributor may pay to certain brokers and representatives a fee to
compensate them for sales of shares of the Fund.
e-navigator Servicing Agent
Interactive Financial Solutions, Inc. ("IFS"), 500 Boylston Street, Boston,
Massachusetts 02116 acts as e-navigator servicing agent to the Fund (the
"e-navigator Servicing Agent") pursuant to a service agreement with the Fund.
e-navigator Servicing Agreement. Pursuant to a service agreement (the
- --------------------------------
"e-navigator Servicing Agreement"), IFS provides, or has arranged for the
provision of (at no further cost to the Fund), the following services:
a. paper checkwriting,
b. expense coding on checks to aid shareholders in expense
identification,
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<PAGE>
c. a comprehensive annual summary statement,
d. electronic and telephonic bill-payments, and
e. a debit card.
For more information about these services or your account call 1(800) 333-3204.
As compensation for the provision of these shareholder services, IFS receives an
annual fee (the "e-navigator Servicing Fee") equal to 5.00% of the average daily
net assets of the Fund attributable to Class A shares. IFS has agreed to waive
a portion of the e-navigator Servicing Fee to the extent that the daily total
operating expenses of the Fund (without giving effect to the Financial Organizer
Fee, as described below) exceed the daily total return of Class A shares.
In addition, when IFS redeems shares from an e-navigator Customer's account and
issues a check to satisfy such e-navigator Customer's bill payment request (as
described in the Prospectus in "How to Redeem Shares"), any benefit deriving
from holding funds after such redemption will accrue to IFS until such check is
presented for payment to IFS or until 90 days have elapsed, at which time IFS
will reinvest in such e-navigator Customer's account funds equal to the value of
shares redeemed for such check and cancel the outstanding check.
Custodian
Investors Fiduciary Trust Company serves as the Fund's custodian (the
"Custodian"). As such, the Custodian is the registered owner of securities held
in book-entry form belonging to the Fund. Upon instruction, the Custodian
receives and delivers cash and securities of the Fund. The Custodian also
maintains certain accounts and records of the Fund and calculates the total net
asset value, total net income and net asset value per share of the Fund on a
daily basis.
Transfer Agent
Reich & Tang Services, Inc., 600 Fifth Avenue, New York, New York 10020, acts as
Transfer Agent to the Fund. All costs associated with performing such services
are borne by the Manager.
MANAGEMENT OF THE PORTFOLIO
For a complete description of the management of the Portfolio, see "General
Information about the Company," "Manager and Investment Advisor" and
"Distributor and Plan of Distribution" in the Portfolio SAI.
EXPENSES
The Fund is responsible for payment of all expenses not borne by the Manager,
which may include the following: (i) any of the costs of preparing, printing and
distributing sales literature; (ii) the charges and expenses of any entity
appointed by the Fund for custodial, paying agent, shareholder
-11-
<PAGE>
servicing and plan agent services; (iii) charges and expenses of independent
accountants retained by the Fund; (iv) charges and expenses of any transfer
agents and registrars appointed by the Fund; (v) brokers' commissions and issue
and transfer taxes chargeable to the Fund in connection with securities
transactions to which the Fund is a party; (vi) taxes and fees payable by Fund
to federal, state or other governmental agencies; (v) any cost of certificates
representing shares of the Fund; (vi) expenses of meetings of shareholders and
trustees of the Fund; and (vii) interest, including interest on borrowings by
the Fund.
Expenses which are attributable to the Fund are charged against the income of
the Fund in determining net income for dividend purposes.
PRINCIPAL HOLDERS OF SECURITIES
As of January 1, 1999, New England Life Insurance Company owned of record
beneficially all of the outstanding shares of the Fund. New England Life
Insurance Company is organized under the laws of Massachusetts and is located at
501 Boylston Street, Boston, Massachusetts 02116.
REPORTS
The Fund furnishes shareholders with semi-annual reports containing information
about the Fund and its operations, including the financial statements for the
Fund. The annual financial statements are audited by the Fund's independent
auditors. The Board of Trustees has selected McGladrey & Pullen as the Fund's
independent auditors to audit the Fund's financial statements and to review the
Fund's tax returns.
PURCHASES, REDEMPTIONS
Purchases and Redemptions
A complete description of the manner in which the Fund's shares may be purchased
and redeemed appears in the Prospectus under the captions "How to Buy Shares"
and "How to Redeem Shares."
As described under the caption "How to Redeem Shares," accounts that fall below
a minimum value (which may be set by the Trustees in the future) may be subject
to automatic redemption. If the Board of Trustees establishes such a minimum
value and authorizes automatic redemption of accounts under that value, the
holders of such shares will be notified that they must increase their investment
to the minimum value or their shares will be redeemed on or after the 30th day
following such notice.
The right of redemption may be suspended or the date of payment postponed when
(a) trading on the New York Stock Exchange is restricted, as determined by
applicable rules and regulations of the SEC, (b) the New York Stock Exchange is
closed for other than customary weekend and holiday closings, (c) the SEC has by
order permitted such suspension, or (d) an emergency as determined
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<PAGE>
by the SEC exists making disposal of portfolio securities or the valuation of
the net assets of the Fund not reasonably practicable.
Net Asset Value Determination
The total net asset value of the Fund is determined as of the close of regular
trading (normally 4:00 p.m. Eastern time) on each Business Day.
For the purpose of determining the price at which shares of the Fund are issued
and redeemed, the net asset value per share is calculated immediately after the
daily dividend declaration by: (a) valuing the securities held by the Fund, (b)
deducting the Fund's liabilities; (c) dividing the resulting amount by the
number of shares outstanding of the Fund; and (d) rounding the per share net
asset value to the nearest whole cent. As discussed below, it is the intention
of the Fund to maintain a net asset value per share of $1.00 for the Fund.
For a complete description of how the Portfolio calculates its net asset value,
see "Share Purchases and Redemptions" in the Portfolio SAI.
DIVIDENDS AND TAX MATTERS
Dividends
All of the net income earned by the Fund is declared daily as dividends to the
respective holders of record of shares of the Fund. The Fund expects to earn no
net income under current market and interest rate conditions.
Should the Fund incur or anticipate any unusual expense, loss or depreciation
which would adversely affect the net asset value per share or net income per
share of the Fund for a particular period, the Board of Trustees would at that
time consider whether to adhere to the present dividend policy described above
or to revise it in light of then prevailing circumstances. For example, if the
net asset value per share of the Fund were reduced, or was anticipated to be
reduced, below $1.00, the Board of Trustees may suspend further dividend
payments with respect to the Fund until the net asset value per share returns to
$1.00. Thus, such expense, loss or depreciation might result in a shareholder
receiving no dividends for the period during which he or she held shares of the
Fund and/or in his or her receiving upon redemption a price per share lower than
the price paid.
Dividends on the Fund's shares are normally payable on the first day following
the date that a share purchase order is effective and, for shareholders who
redeem all of their shares, on the date that a redemption order is effective.
The net income of the Fund for dividend purposes is determined immediately prior
to the determination of the Fund's net asset value on that day. Dividends are
declared daily and reinvested in additional full and fractional shares of the
Fund at net asset value. A shareholder may elect to have the declared dividends
paid monthly to him by check.
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<PAGE>
Tax Matters
The following is only a summary of certain additional tax considerations
generally affecting the Fund and its shareholders that are not described in the
Prospectus. No attempt is made to present a detailed explanation of the tax
treatment of the Fund or its shareholders, and the discussions here and in the
Prospectus are not intended as substitutes for careful tax planning.
Qualification as a Regulated Investment Company
- -----------------------------------------------
The Fund has elected to be taxed as a regulated investment company (a "RIC")
under Subchapter M of the Internal Revenue Code of 1986, as amended (the
"Code"). As a RIC, the Fund is not subject to federal income tax on the portion
of its net investment income (i.e., taxable interest, dividends and other
taxable ordinary income, net of expenses) and capital gain net income (i.e., the
excess of capital gains over capital losses) that it distributes to
shareholders, provided that it distributes at least 90% of its investment
company taxable income (i.e., net investment income and the excess of net short-
term capital gain over net long-term capital loss) and tax-exempt income for the
taxable year (the "Distribution Requirement"), and satisfies certain other
requirements of the Code that are described below. Distributions by the Fund
made during the taxable year or, under specified circumstances, within twelve
months after the close of the taxable year, will be considered distributions of
income and gains of the taxable year for purposes of satisfying the Distribution
Requirement. If the Fund has net capital loss (i.e., the excess of capital
losses over capital gains) for any year, the amount thereof may be carried
forward up to eight years and treated as a short-term capital loss which can be
used to offset capital gains in such years.
In addition to satisfying the Distribution Requirement, a RIC must derive at
least 90% of its gross income from dividends, interest, certain payments with
respect to securities loans, gains from the sale or other disposition of stock
or securities or foreign currencies and other income (including but not limited
to gains from options, futures or forward contracts) derived with respect to its
business of investing in such stock, securities or currencies (the "Income
Requirement").
Treasury Regulations permit a regulated investment company, in determining its
investment company taxable income and net capital gain (i.e., the excess of net
long-term capital gain over net short-term capital loss) for any taxable year,
to elect (unless it has made a taxable year election for excise tax purposes as
discussed below) to treat all or any part of any net capital loss, any net long-
term capital loss or any net foreign currency loss incurred after October 31 as
if it had been incurred in the succeeding year.
In addition to satisfying the requirements described above, the Fund must
satisfy an asset diversification test in order to qualify as a RIC. Under this
test, at the close of each quarter of each Fund's taxable year, at least 50% of
the value of the Fund's assets must consist of cash and cash items, U.S.
Government securities, securities of other regulated investment companies, and
securities of other issuers (as to each of which the Fund has not invested more
than 5% of the value of the Fund's total assets in securities of such issuer and
as to which the Fund does not hold more than 10%
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of the outstanding voting securities of such issuer), and no more than 25% of
the value of its total assets may be invested in the securities of any one
issuer (other than U.S. Government securities and securities of other regulated
investment companies), or in two or more issuers which the Fund controls and
which are engaged in the same or similar trades or businesses. Due to the fact
that the Fund expects to invests solely in the Portfolio, which also has elected
to qualify as a RIC, the Fund expects to satisfy the asset diversification test.
However, in the event that the Portfolio no longer qualifies as a RIC, the Fund
would cease to qualify as a RIC.
If for any taxable year the Fund were to fail to qualify or be eligible for
treatment as a RIC, all of its taxable income (including its net capital gain)
would be subject to tax at regular corporate rates without any deduction for
distributions to shareholders, and such distributions would be taxable to the
shareholders as ordinary dividends to the extent of the Fund's current and
accumulated earnings and profits. Such distributions generally would be
eligible for the dividends-received deduction in the case of corporate
shareholders.
Excise Tax on Regulated Investment Companies
- --------------------------------------------
A 4% non-deductible excise tax is imposed on a RIC to the extent that the RIC
fails to distribute in each calendar year an amount equal to at least the sum of
98% of ordinary taxable income for the calendar year, and 98% of capital gain
net income for the one-year period ended on October 31 of such calendar year
(or, at the election of a regulated investment company having a taxable year
ending November 30 or December 31, for its taxable year (a "taxable year
election")) and certain undistributed amounts from previous years. (Tax-exempt
interest on municipal obligations is not subject to the excise tax.) The
balance of such income must be distributed during the next calendar year. For
the foregoing purposes, a RIC is treated as having distributed any amount on
which it is subject to income tax for any taxable year ending in such calendar
year.
For purposes of the excise tax, a RIC shall: (1) reduce its capital gain net
income (i.e., the excess of capital gains over capital losses), but not below
its net capital gain(i.e., the excess of net long-term capital gain over net
short-term capital loss) by the amount of any net ordinary loss for the calendar
year; and (2) exclude foreign currency gains and losses incurred after October
31 of any year (or after the end of its taxable year if it has made a taxable
year election) in determining the amount of ordinary taxable income for the
current calendar year (and, instead, include such gains and losses in
determining ordinary taxable income for the succeeding calendar year).
The Fund intends to make sufficient distributions or deemed distributions of its
ordinary taxable income and capital gain net income prior to the end of each
calendar year to avoid liability for the excise tax. However, investors should
note that the Fund may in certain circumstances be required to liquidate
portfolio investments to make sufficient distributions to avoid excise tax
liability.
Fund Distributions
- ------------------
The Fund anticipates distributing substantially all of its investment company
taxable income for each taxable year. Such distributions will be taxable to
shareholders as ordinary income and treated as dividends for federal income tax
purposes.
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The Fund may either retain or distribute to shareholders its net capital gain,
if any, for each taxable year. The Fund currently intends to distribute any
such amounts. Net capital gain that is distributed and designated as a capital
gain dividend will be taxable to shareholders as long-term capital gain,
regardless of the length of time the shareholder has held his or her shares or
whether such gain was recognized by the Fund prior to the date on which the
shareholder acquired his or her shares.
Conversely, if the Fund elects to retain its net capital gain, the Fund will be
taxed thereon (except to the extent of any available capital loss carryovers) at
the 35% corporate tax rate. If the Fund elects to retain its net capital gain,
it is expected that the Fund also will elect to have shareholders of record on
the last day of its taxable year treated as if each received a distribution of
his or her pro rata share of such gain, with the result that each shareholder
will be required to report his or her pro rata share of such gain on his tax
return as long-term capital gain, will receive a refundable tax credit for his
pro rata share of tax paid by the Fund on the gain and will increase the tax
basis for his or her shares by an amount equal to the deemed distribution less
the tax credit.
Distributions by the Fund that do not constitute ordinary income dividends,
exempt-interest dividends or capital gain dividends will be treated as a return
of capital to the extent of (and in reduction of) the shareholder's tax basis in
his or her shares; any excess will be treated as gain from the sale of his or
her shares, as discussed below.
Distributions by the Fund will be treated in the manner described above
regardless of whether such distributions are paid in cash or reinvested in
additional shares of the Fund (or of another fund). Shareholders receiving a
distribution in the form of additional shares will be treated as receiving a
distribution in an amount equal to the fair market value of the shares received,
determined as of the reinvestment date. In addition, if the net asset value at
the time a shareholder purchases shares of the Fund reflects undistributed net
investment income or recognized capital gain net income, or unrealized
appreciation in the value of the assets of the Fund, distributions of such
amounts will be taxable to the shareholder in the manner described above,
although they economically constitute a return of capital to the shareholder.
Ordinarily, shareholders are required to take distributions by the Fund into
account in the year in which the distributions are made. However, dividends
declared in October, November or December of any year and payable to
shareholders of record on a specified date in such a month will be deemed to
have been received by the shareholders (and made by the Fund) on December 31 of
such calendar year if such dividends are actually paid in January of the
following year. Shareholders will be advised annually as to the U.S. federal
income tax consequences of distributions made (or deemed made) during the year.
The Fund will be required in certain cases to withhold and remit to the U.S.
Treasury 31% of ordinary income dividends and capital gain dividends, and the
proceeds of redemption of shares, paid to any shareholder (1) who has provided
either an incorrect tax identification number or no number at all, (2) who is
subject to backup withholding by the IRS for failure to report the receipt
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of interest or dividend income properly, or (3) who has failed to certify to the
Fund that it is not subject to backup withholding or that it is an "exempt
recipient" (such as a corporation).
Sale or Redemption of Fund Shares
- ---------------------------------
The Fund seeks to maintain a stable net asset value of $1.00 per share; however,
there can be no assurance that the Fund will be able to do so. A shareholder
may therefore recognize gain or loss on the sale or redemption of shares of the
Fund in an amount equal to the difference between the proceeds of the sale or
redemption and the shareholder's adjusted tax basis in the shares. All or a
portion of any loss so recognized may be disallowed if the shareholder purchases
other shares of the Fund within 30 days before or after the sale or redemption.
In general, any gain or loss arising from (or treated as arising from) the sale
or redemption of shares of the Fund will be considered capital gain or loss and
will be long-term capital gain or loss if the shares were held for longer than
one year. However, any capital loss arising from the sale or redemption of
shares held for six months or less will be disallowed to the extent of the
amount of exempt-interest dividends received on such shares and (to the extent
not disallowed) will be treated as a long-term capital loss to the extent of the
amount of capital gain dividends received on such shares. For this purpose, the
special holding period rules of Code Section 246(c)(3) and (4) (suspending the
holding period in certain cases where the shareholder's risk of loss is
diminished) generally will apply in determining the holding period of shares.
Although it is unlikely that a shareholder would recognize long-term capital
gain in respect of his or her Fund shares, such gains are, in the case of
noncorporate shareholders, generally subject to tax at 20% rate. Capital losses
in any year are deductible only to the extent of capital gains plus, in the case
of a noncorporate taxpayer, $3,000 of ordinary income.
Foreign Shareholders
- --------------------
Taxation of a shareholder who, as to the United States, is a nonresident alien
individual, foreign trust or estate, foreign corporation, or foreign partnership
("foreign shareholder"), depends on whether the income from a Fund is
"effectively connected" with a U.S. trade business carried on by such
shareholder.
If the income from the Fund is not effectively connected with a U.S. trade or
business carried on by a foreign shareholder, ordinary income dividends paid to
a foreign shareholder will be subject to U.S. withholding tax at the rate of 30%
(or lower applicable treaty rate) upon the gross amount of the dividend. Such a
foreign shareholder would generally be exempt from U.S. federal income tax on
gains realized on the sale of shares of the Fund, capital gain dividends and
exempt-interest dividends and amounts retained by the Fund that are designated
as undistributed capital gains.
If the income from the Fund is effectively connected with a U.S. trade or
business carried on by a foreign shareholder, then ordinary income dividends,
capital gain dividends, and any gains realized upon the sale of shares of the
Fund will be subject to U.S. federal income tax at the rates applicable to U.S.
citizens or domestic corporations.
In the case of a foreign noncorporate shareholder, the Fund may be required to
withhold U.S. federal income tax at a rate of 31% on distributions that are
otherwise exempt from withholding tax (or
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taxable at a reduced treaty rate) unless such shareholder furnishes the Fund
with proper notification of its foreign status.
The tax consequences to a foreign shareholder entitled to claim the benefits of
an applicable tax treaty may be different from those described herein. Foreign
shareholders are urged to consult their own tax advisers with respect to the
particular tax consequences to them of an investment in the Fund, including the
applicability of foreign taxes.
Effect of Future Legislation and State and Local Tax Considerations
- -------------------------------------------------------------------
The foregoing general discussion of U.S. federal income tax consequences is
based on the Code and the Treasury Regulations issued thereunder as in effect on
the date of this Statement of Additional Information. Future legislative or
administrative changes or court decisions may significantly change the
conclusions expressed herein, and any such changes or decisions may have a
retroactive effect with respect to the transactions contemplated herein.
Rules of state and local taxation of ordinary income dividends, exempt-interest
dividends and capital gain dividends from regulated investment companies often
differ from the rules for U.S. federal income taxation described above.
Shareholders are urged to consult their tax advisers as to the consequences of
these and other state and local tax rules affecting investment in the Fund.
YIELD INFORMATION
The yield for each Class of the Fund can be obtained by calling the Distributor
toll free at 1(800) 333-3204. Quotations of yield for each Class of the Fund
may also appear from time to time in the financial press and in advertisements.
The current yield quoted will be the net average annualized yield for an
identified period, usually seven consecutive calendar days. Yield for each
Class of the Fund will be computed by assuming that an account was established
with a single share of that Class of the Fund (the "Single Share Account") on
the first day of the period. To arrive at the quoted yield, the net change in
the value of the Single Share Account for the period (which would include
dividends accrued with respect to the share, and dividends declared on shares
purchased with dividends accrued and paid, if any, but would not include
realized gains and losses or unrealized appreciation or depreciation) will be
multiplied by 365 and then divided by the number of days in the period, with the
resulting figure carried to the nearest hundredth of 1%. The Fund may also
furnish a quotation of effective yield for each Class of that assumes the
reinvestment of dividends for a 365 day year and a return for the entire year
equal to the average annualized yield for the period, which will be computed by
compounding the unannualized current yield for the period by adding 1 to the
unannualized current yield, raising the sum to a power equal to 365 divided by
the number of days in the period, and then subtracting 1 from the result.
Historical yields are not necessarily indicative of future yields. Rates of
return will vary as interest rates and other conditions affecting money market
instruments change. Yields also depend on the quality, length of maturity and
type of instruments held by the Portfolio and the Fund's and the Portfolio's
operating expenses. Quotations of yield will be accompanied by
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information concerning the average weighted maturity of the Fund. Comparison of
the quoted yields of various investments is valid only if yields are calculated
in the same manner and for identical limited periods. When comparing the yield
for a Class of the Fund with yields quoted with respect to other investments,
shareholders should consider (a) possible differences in time periods, (b) the
effect of the methods used to calculate quoted yields, (c) the quality and
average-weighted maturity of portfolio investments, expenses, convenience,
liquidity and other important factors, and (d) the taxable or tax-exempt
character of all or part of dividends received.
PORTFOLIO TRANSACTIONS
For so long as the Fund invests all of its investible assets in shares of the
Portfolio, all orders for the purchase and sale of Portfolio shares by the Fund
will be transmitted to the Portfolio by the Transfer Agent. No brokerage
commissions will be paid by the Fund on such transactions.
For a complete discussion of the portfolio transactions of the Portfolio, See
"Portfolio Transactions" in the Portfolio SAI.
PERFORMANCE COMPARISONS
Yield and total return will generally be higher for Class B shares than for
Class A shares because of the imposition of the e-navigator Servicing Fee on
Class A shares. You should remember that the first $5,000 of your investment in
the Fund will automatically be invested in Class A shares, and therefore, you
will earn the higher Class B return only on amounts in excess of $5,000.
The Fund may from time to time include yield and total return for each Class in
advertisements or in information furnished to present or prospective
shareholders. The Fund may from time to time include in advertisements total
return for each Class and the ranking of those performance figures relative to
such figures for groups of mutual funds categorized by Lipper Analytical
Services, Inc. ("Lipper") as having similar investment objectives. Lipper is an
independent service that monitors the performance of over 1,300 mutual funds,
and calculates total return for the funds grouped by investment objectives.
Lipper's Mutual Fund Performance Analysis and Mutual Fund Indices measure total
return and average yield for the mutual fund industry. Rankings of individual
fund performance over specified time periods assume reinvestment of all
distributions, exclusive of sales charges.
Articles and releases, developed by the Fund and other parties, about the Fund
regarding performance, rankings, statistics and analyses of the Fund's asset
levels and sales volume, numbers of shareholders, statistics and analyses of
industry sales volumes and asset levels, and other characteristics may appear in
advertising, promotional literature and publications and on various computer
networks, such as the Internet. In particular, some or all of these
publications may publish their own rankings or performance reviews of mutual
funds, including, but not limited to, Lipper and Morning Star. References to
these rankings or reviews or reprints of such articles may be used in the Fund's
advertising and promotional literature. Such advertising and promotional
literature may
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<PAGE>
refer to the Fund, the Manager, NEF and Nvest, as well as NEF and Nvest's
structure, goals and objectives and the advisory subsidiaries of NEF and Nvest,
including their portfolio management responsibilities, portfolio managers and
their categories and background, their tenure, styles and strategies and their
shared commitment to fundamental investment principles and may identify specific
clients, as well as discuss the types of institutional investors who have
selected the advisers to manage their investment portfolios and the reasons for
that selection. The references may discuss the independent, entrepreneurial
nature of each advisory organization and allude to or include excerpts from
articles appearing in the media regarding NEF, Nvest, each of their advisory
subsidiaries and their personnel.
The Fund's advertising and sales literature may refer to historical, current and
prospective political, social, economic and financial trends and developments
that affect domestic and international investment as it relates to the Fund.
The Fund's advertising and sales literature may include historical and current
performance and total returns of investment alternatives to the Fund. Articles,
releases, advertising and literature may discuss the range of services offered
by the Fund and NEF with respect to investing in shares of the Fund. Such
materials may discuss the multiple classes of shares available through the Fund
and their features and benefits, including the details of the pricing structure.
In addition, sales literature may be published concerning topics of general
investor interest for the benefit of registered representatives and the Fund's
prospective shareholders. These materials may include, but are not limited to,
discussions of college planning, retirement planning, reasons for investing and
historical examples of the investment performance of various classes of
securities, securities markets and indices.
DESCRIPTION OF THE FUND
The Fund is organized as a Massachusetts business trust pursuant to a
Declaration of Trust dated September 3, 1998 (the "Declaration of Trust"). The
Declaration of Trust currently permits the Fund's trustees to issue an unlimited
number of full and fractional shares. The Fund is a "series" company as
described in Section 18(f)(2) of the 1940 Act, although the Fund currently
consists of only one series. The Declaration of Trust further permits the Fund's
trustees to divide the shares of the Fund into any number of separate classes,
each having such rights and preferences relative to the other classes as the
trustees may determine. The shares of the Fund do not have any preemptive
rights. Upon termination of the Fund, whether pursuant to liquidation of the
Fund or otherwise, shareholders of each class of the Trust are entitled to share
pro rata in the net assets attributable to that class of shares of the Fund
available for distribution to shareholders. The Declaration of Trust also
permits the trustees to charge shareholders directly for custodial, transfer
agency and servicing expenses.
The shares of the Fund are currently divided into two classes: Class A and Class
B. The Fund offers such classes of shares as set forth in the Prospectus. All
expenses of the Fund other than the e-navigator Servicing Fee are borne by the
Class A and Class B shares on a pro rata basis.
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<PAGE>
The Declaration of Trust also permits the Fund's trustees, without shareholder
approval, to establish one or more series or classes and to subdivide any series
or class of shares into various sub-series or sub-classes with such dividend
preferences and other rights as the trustees may designate. Although the
trustees of the Fund have no current intention to exercise this power, it is
intended to allow them to provide for an equitable allocation of the impact of
any future regulatory requirements which might affect various classes of
shareholders differently. The trustees may also, without shareholder approval,
merge two or more existing series or classes.
The Declaration of Trust provides for the perpetual existence of the Fund. The
Fund, however, may be terminated at any time by vote of at least two-thirds of
the outstanding shares of the Fund. Similarly, any class within a series may be
terminated by a vote of at least two-thirds of the outstanding shares of each
class. Although the Declaration of Trust further provides that the Board of
Trustees may also terminate the Fund upon written notice to its shareholders,
the 1940 Act requires that the Fund receive the authorization of a majority of
its outstanding shares in order to change the nature of its business so as to
cease to be an investment company.
VOTING RIGHTS
As summarized in the Prospectus, shareholders are entitled to one vote for each
full share held (with fractional votes for each fractional share held) and may
vote (to the extent provided therein) in the election of trustees and the
termination of the Trust and on other matters submitted to the vote of
shareholders.
The Declaration of Trust provides that on any matter submitted to a vote of all
shareholders of the Fund, all Fund shares entitled to vote shall be voted
together irrespective of series or class unless the rights of a particular class
or series would be adversely affected by the vote, in which case a separate vote
of that series or class shall also be required to decide the question. Also, a
separate vote shall be held whenever required by the 1940 Act or any rule
thereunder. Rule 18f-2 under the 1940 Act provides in effect that a series or
class shall be deemed to be affected by a matter unless it is clear that the
interests of each series or class in the matter are substantially identical or
that the matter does not affect any interest of such series or class. On
matters affecting an individual series or class, only shareholders of all series
or class are entitled to vote. Consistent with the current position of the SEC,
shareholders of all series and classes vote together, irrespective of series or
class, on the election of trustees and the selection of the Fund's independent
accountants, but shareholders of each series vote separately on other matters
requiring shareholder approval, such as certain changes in investment policies
of that series or the approval of the investment advisory agreement (if any)
relating to that series, and shareholders of each class within a series vote
separately as to the Rule 12b-1 plan (if any) relating to that class.
There will normally be no meetings of shareholders for the purpose of electing
trustees except that, in accordance with the 1940 Act, (i) the Fund will hold a
shareholders' meeting for the election of trustees at such time as less than a
majority of the trustees holding office have been elected by shareholders, and
(ii) if, as a result of a vacancy on the Board of Trustees, less than two-thirds
of the
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trustees holding office have been elected by the shareholders, that vacancy may
be filled only by a vote of the shareholders. In addition, trustees may be
removed from office by a written consent signed by the holders of two-thirds of
the outstanding shares and filed with the Custodian or by a vote of the holders
of two-thirds of the outstanding shares at a meeting duly called for that
purpose, which meeting shall be held upon the written request of the holders of
not less than 10% of the outstanding shares.
Except as set forth above, the trustees shall continue to hold office and may
appoint successor trustees. Shareholder rights are not cumulative.
No amendment may be made to the Declaration of Trust without the affirmative
vote of a majority of the outstanding shares of the Fund except (i) to change
the Fund's name or to cure technical problems in the Declaration of Trust, (ii)
to establish and designate new series or classes of Fund shares and (iii) to
establish, designate or modify new and existing series or classes of Fund shares
or other provisions relating to Fund shares in response to applicable laws or
regulations.
SHAREHOLDER AND TRUSTEE LIABILITY
Under Massachusetts law, shareholders could, under certain circumstances, be
held personally liable for the obligations of the Fund. However, the
Declaration of Trust disclaims shareholder liability for acts or obligations of
a Fund and require that notice of such disclaimer be given in each agreement,
obligation or instrument entered into or executed by the Fund or the trustees.
The Declaration of Trust provides for indemnification out of the Fund's property
for all loss and expense of any shareholder held personally liable for the
obligation of the Fund by reason of owning shares of the Fund. Thus, the risk
of a shareholder incurring financial loss on account of shareholder liability is
considered remote since it is limited to circumstances in which the disclaimer
is inoperative and the Fund itself would be unable to meet its obligations.
The Declaration of Trust further provides that the Board of Trustees will not be
liable for errors of judgment or mistakes of fact or law. However, nothing in
the Declaration of Trust protects a trustee against any liability to which the
trustee 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. The By-Laws of the Fund provide for indemnification by the
Fund of trustees and officers of the Fund, except with respect to any matter as
to which any such person did not act in good faith in the reasonable belief that
his or her action was in or not opposed to the best interests of the Fund. Such
person may not be indemnified against any liability to the Fund or the Fund's
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.
INVESTMENT RATINGS
The following is a description of the two highest commercial paper, bond,
municipal bond and other short- and long-term categories assigned by Standard &
Poor's Rating Services, a division of the
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McGraw-Hill Companies ("S&P"), Moody's Investors Service, Inc. ("Moody's"),
Fitch Investors Service, Inc. ("Fitch"), Duff and Phelps ("Duff"), and IBCA Inc.
and IBCA Limited ("IBCA"):
Commercial Paper and Short-Term Ratings
The designation A-1 by S&P indicates that the degree of safety regarding timely
payment is either overwhelming or very strong. Those issues determined to
possess overwhelming safety characteristics are denoted with a plus sign (+)
designation. Capacity for timely payment on issues with an A-2 designation is
strong. However, the relative degree of safety is not as high as for issues
designated A-1.
The rating Prime-1 (P-1) is the highest commercial paper rating assigned by
Moody's. Issuers of P-1 paper must have a superior capacity for repayment of
short-term promissory obligations, and ordinarily will be evidenced by leading
market positions in well established industries, high rates of return of funds
employed, conservative capitalization structures with moderate reliance on debt
and amble asset protection, broad margins in earnings coverage of fixed
financial charges and high internal cash generation, and well established access
to a range of financial markets and assured sources of alternate liquidity.
Issues rated Prime-2 (P-2) have a strong capacity for repayment of short-term
promissory obligations. This ordinarily will be evidenced by many of the
characteristics cited above but to a lesser degree. Earnings trends and
coverage ratios, while sound, will be more subject to variation. Capitalization
characteristics, while still appropriate, may be more affected by external
conditions. Ample alternative liquidity is maintained.
The rating Fitch-1 (Highest Grade) is the highest commercial rating assigned by
Fitch. Paper rated Fitch-1 is regarded as having the strongest degree of
assurance for timely payment. The rating Fitch-2 (Very Good Grade) is the
second highest commercial paper rating assigned by Fitch which reflects an
assurance of timely payment only slightly less in degree than the strongest
issues.
The rating Duff-1 is the highest commercial paper rating assigned by Duff.
Paper rated Duff-1 is regarded as having very high certainty of timely payment
with excellent liquidity factors which are supported by ample asset protection.
Risk factors are minor. Paper rated Duff-2 is regarded as having good certainty
of timely payment, good access to capital markets and sound liquidity factors
and company fundamentals. Risk factors are small.
The designation A1 by IBCA indicates that the obligation is supported by a very
strong capacity for timely repayment. Those obligations rated A1+ are supported
by the highest capacity for timely repayment. Obligations rated A2 are
supported by a strong capacity for timely repayment, although such capacity may
be susceptible to adverse changes in business, economic or financial conditions.
Bond and Long-Term Ratings
Bonds rated AAA are considered by S&P to be the highest grade obligations and
possesses an extremely strong capacity to pay principal and interest. Bonds
rated AA by S&P are judged by S&P
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to have a very strong capacity to pay principal and interest, and in the
majority of instances, differ only in small degrees from issues rated AAA.
Bonds which are rated Aaa are judged to be of the best quality. They carry the
smallest degree of investment risk and are general referred to as "gilt edge."
Bonds rated Aa by Moody's are judged by Moody's to be of high quality by all
standards. Together with the Aaa group they comprise what are generally known
as high-grade bonds. They are rated lower than Aaa bonds because margins of
protection may not be as large or fluctuations of protective elements may be of
greater amplitude or there may be other elements present which make the long-
term risks appear somewhat larger. Moody's applies numerical modifiers 1, 2 and
3 in the Aa rating category. The modifier 1 indicates a ranking for the
security in the higher end of this rating category, the modifier 2 indicates a
mid-range ranking, and the modifier 3 indicates a ranking in the lower end of
the rating category.
Bonds rated AAA by Fitch are judged by Fitch to be strictly high grade, broadly
marketable, suitable for investment by trustees and fiduciary institutions and
are liable to but slight market fluctuation other than through changes in the
money rate. The prime feature of an AAA bond is a showing of earnings several
times or many times interest requirements, with such stability of applicable
earnings that safety is beyond reasonable question whatever changes occur in
conditions. Bonds rated AA by Fitch are judged by Fitch to be of safety
virtually beyond question and are readily salable, whose merits are not unlike
those of the AAA class, but whose margin of safety is less strikingly broad. The
issue may be the obligation of a small company, strongly secured but influenced
as to rating by the lesser financial power of the enterprise and more local type
market.
Bonds rated Duff-1 are judged by Duff to be of the highest credit quality with
negligible risk factors; only slightly more than U.S. Treasury debt. Bonds
rated Duff-2, 3 and 4 are judged by Duff to be of high credit quality with
strong protection factors. Risk is modest but may vary slightly from time to
time because of economic conditions.
Obligations rated AAA by IBCA have the lowest expectation of investment risk.
Capacity for timely repayment of principal and interest is substantial, such
that adverse changes in business, economic or financial conditions are unlikely
to increase investment risk significantly. Obligations for which there is a
very low expectation of investment risk are rated AA by IBCA.
Capacity for timely repayment of principal and interest is substantial. Adverse
changes in business, economic or financial conditions may increase investment
risk albeit not very significantly.
Municipal Bond Ratings
S&P's Municipal Bond Ratings cover obligations of states and political
subdivisions. Ratings are assigned to general obligations and revenue bonds.
General obligation bonds are usually secured by all resources available to the
municipality and the factors outlined in the rating definitions below are
weighed in determining the rating. Because revenue bonds in general are payable
from
-24-
<PAGE>
specifically pledged revenues, the essential element in the security for a
revenue bond is the quantity of the pledged revenues available to pay debt
service.
Although an appraisal of most of the same factors that bear on the quality of
general obligation bond credit is usually appropriate in the rating analysis of
a revenue bond, other facts are also important, including particularly the
competitive position of the municipal enterprise under review and the basic
security covenants. Although a rating reflects S&P's judgment as to the
issuer's capacity for the timely payment of debt service, in certain
circumstances it may also reflect a mechanism or procedure for an assured and
prompt cure of a default, should one occur, i.e., an insurance program, federal
or state guaranty, or the automatic withholding and use of state aid to pay the
default debt service.
AAA
These are obligations of the highest quality. They have the strongest capacity
for timely payment of debt service.
General Obligation Bonds - In a period of economic stress, the issuers will
suffer the smallest declines in income and will be least susceptible to
autonomous decline. Debt burden is moderate. A strong revenue structure appears
more than adequate to meet future expenditure requirements. Quality of
management appears superior.
Revenue Bonds - Debt service coverage has been, and is expected to remain,
substantial. Stability of the pledged revenues is also exceptionally strong,
due to the competitive position of the municipal enterprise or to the nature of
the revenues. Basic security provisions (including rate covenants, earing tests
for insurance of additional bonds, and debt service reserve requirements) are
rigorous. There is evidence of superior management.
AA
The investment characteristics of general obligation and revenue bonds in this
group are only slightly less marked than those of the AAA category. Bonds rated
"AA" have the second strongest capacity for payment of debt service.
S&P's bond letter ratings may be modified by the addition of a plus (+) or a
minus (-) sign which designates a bond's relative quality within the major
rating categories, except in the AAA category.
S&P Tax-Exempt Demand Bonds Ratings
S&P assigns "dual" ratings to all long-term debt issues that have as part of
their provisions a demand feature.
-25-
<PAGE>
The first rating addresses the likelihood of repayment of principal and interest
as due, the second rating addresses only the demand feature. The long-term debt
rating symbols are used for bonds to denote the long-term maturity, and the
commercial paper rating symbols are used to denote the put option (e.g., "AAA/A-
1+").
Moody's Municipal Bond Ratings
Aaa
Bonds which are judged to be of the highest quality are rated "Aaa." They carry
the smallest degree of investment risk and are generally referred to as "gilt
edge." Interest payments are protected by a large or by an exceptionally stable
margin, and principal is secure. While the various protective elements are
likely to change, such changes as can be anticipated are most unlikely to impair
the fundamentally strong position of such issues.
Aa
Bonds which are rated Aa are judged to be of high quality by all standards.
Together with the Ass group they comprise what are generally known as "high
grade" bonds. They are rated lower than the Aaa bonds because margins of
protection may not be as large as the Aaa securities or the fluctuation of
protective elements may be of greater amplitude, or other elements may be
present which make the long-term risks appear somewhat larger than in Aaa
securities.
Moody's State and Municipal Short-Term Ratings
Moody's assigns state and municipal notes, as well as other short-term
obligations, a Moody's Investment Grade ("MIG") rating. Factors affecting the
liquidity of the borrower and short-term cyclical elements are critical in
short-term ratings, while other factors of major importance in evaluating bond
risk may be less important over the short run.
MIG 1
Notes bearing this designation are of the best quality. The notes enjoy strong
"protection" by established cash flows, superior liquidity support or a
demonstrated broad-based access to the market for refinancing.
MIG 2
Notes bearing this designation are of high quality. Margins of protection are
ample although not as large as in the preceding group.
Moody's Tax-Exempt Demand Ratings
-26-
<PAGE>
Moody's assigns issues which have demand features (i.e., variable rate demand
obligations) a VMIG symbol. This symbol reflects such characteristics as
payment upon periodic demand rather than fixed maturity, and payment relying on
external liquidity. The VMIG rating is modified by the numbers 1, 2 or 3.
VMIG1 represents the best quality in the VMIG category and VMIG2 represents high
quality.
International and U.S. Bank Ratings
An IBCA bank rating represents IBCA's current assessment of the strength of the
bank and whether such bank would receive support should it experience
difficulties. In its assessment of a bank, IBCA uses a dual rating system
comprised of Legal Ratings and Individual Ratings. In addition, IBCA assigns
banks Long- and Short-Term Ratings as used in the corporate ratings discussed
above. Legal Ratings, which range in gradation from 1 through 5, address the
question of whether the bank would receive support provided by central banks or
shareholders if it experienced difficulties, and such ratings are considered by
IBCA to be a prime factor in its assessment of credit risk. Individual Ratings,
which range in gradations from A through E, represent IBCA's assessment of a
bank's economic merits and address the question of how the bank would be viewed
if it were entirely independent and could not rely on support from state
authorities or its owners.
-27-
<PAGE>
e-navigator Fund Part C
-----------------------
Item 24. Financial Statements and Exhibits
---------------------------------
(a) Financial Statements: To be filed by amendment
(b) Exhibits:
(1) Agreement and Declaration of Trust filed as an Exhibit to the Initial
Registration Statement on September 23, 1998.
(2) By-Laws filed as an Exhibit to the Initial Registration Statement on
September 23, 1998.
(3) None.
(4) None.
(5) None.
(6) Form of Distribution Agreement between New England Securities
Corporation and the Fund filed as an Exhibit to the Initial
Registration Statement on September 23, 1998.
(7) None.
(8) Form of Custodian Contract among the Fund, New England Mutual Life
Insurance Company ("New England Financial") and Investors Fiduciary
Trust Company ("IFTC") filed as an Exhibit to the Initial Registration
Statement on September 23, 1998.
(9)(a) Form of Transfer Agency Agreement by and between the Fund and Reich
& Tang Services, L.P. filed as an Exhibit to the Initial Registration
Statement on September 23, 1998.
(b) Form of Service Agreement between the Fund and Interactive Financial
Solutions, Inc. filed as an Exhibit to the Initial Registration
Statement on September 23, 1998.
(c) Form of Administration Agreement between the Fund and Reich & Tang
Asset Management L.P. filed as an Exhibit to the Initial Registration
Statement on September 23, 1998.
<PAGE>
(10) Form of Opinion and Consent of counsel filed as an Exhibit to the
Initial Registration Statement on September 23, 1998.
(11) Consent of Independent Accountants to be filed by amendment.
(12) None.
(13) Investment Letter of New England Financial to be filed by amendment.
(14) None.
(15) Form of 12b-1 Plan relating to shares of the Fund filed as an Exhibit
to the Initial Registration Statement on September 23, 1998.
(16) None.
(17) None.
(18) None.
Item 25. Persons Controlled by or Under Common Control with Registrant
-------------------------------------------------------------
None.
Item 26. Number of Holders of Securities
-------------------------------
The number of record holders of shares of the Fund as of [ ], 1998
is ___________.
Item 27. Indemnification
-----------------------
See Article 4 of the Fund's By-Laws filed herewith as Exhibit 2. In
addition, the Fund maintains a trustees and officers liability insurance policy
with a maximum coverage of $[ ] million under which the Fund and its trustees
and officers are named insureds.
Insofar as indemnification for liability arising under the Securities Act
of 1933 may be permitted to trustees, officers and controlling persons of the
Registrant pursuant to the Fund's By-Laws, or otherwise, the Registrant has been
advised that in the opinion of the Securities and Exchange Commission such
indemnification is against public policy as expressed in the Act and is,
therefore, 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 a trustee, officer or
-2-
<PAGE>
controlling person of the Registrant in the successful defense of any action,
suit of proceeding) is asserted by such trustee, officer or controlling person
in connection with the securities being registered, the Registrant will, unless
in the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in the
Securities Act of 1933 and will be governed by the final adjudication of such
issue.
Item 28. Business and other Connections of Manager
----------------------------------------------------
None.
Item 29. Principal Underwriters
----------------------
(a) New England Securities Corporation also serves as principal underwriter for:
New England Variable Life Separate Account
New England Variable Annuity Fund I
New England Life Retirement Investment Account
The New England Variable Account
New England Variable Annuity Separate Account
New England Zenith Fund
(b) The directors and officers of the Registrant's principal underwriter, New
England Securities Corporation, and their addresses are as follows:
<TABLE>
<CAPTION>
Positions and Officer's
Name Principal Underwriter Offices with Registrant
---- ----------------------- -----------------------
<S> <C> <C>
Thomas W. McConnell** President, Director and Chief None
Executive Officer
Frederick K. Zimmermann * Chairman of the Board, Director Chairman of the Board,
President, Treasurer, Clerk
and Trustee
Michael E. Toland** Vice President, Chief None
Financial Officer, Treasurer,
Assistant Secretary, Assistant
Clerk and Chief Financial
</TABLE>
-3-
<PAGE>
<TABLE>
<S> <C> <C>
Officer
John Peruzzi** Assistant Vice President and None
Controller
Anne M. Goggin* Vice President, General None
Counsel, Secretary and Clerk
Mark F. Greco** Vice President and Chief None
Operating Officer
Bradley Anderson** Vice President and Chief None
Operating Officer
Laura A. Hutner** Vice President
None
Mitchell A. Karman* Vice President None
Robert F. Regan*** Vice President None
Jonathan M. Rozek** Vice President None
Larry Thiel Vice President None
Robert E. Schneider* Director None
</TABLE>
* Business Address: 501 Boylston Street, Boston, MA 02116
** Business Address: 399 Boylston Street, Boston, MA 02116
*** Business Address: 500 Boylston Street, Boston, MA 02116
Item 30. Location of Accounts and Records
--------------------------------
The following companies maintain possession of the documents required
by the specified rules:
(a) Registrant
Rule 31a-1(a)(4)
Rule 31a-2(a)
(b) Investors Fiduciary Trust Company
127 West 10th Street
Kansas City, Missouri 64105
-4-
<PAGE>
Rule 31a-1(a)
Rule 31a-1(b)(1), (2), (3), (5), (6),
(7), (8)
Rule 31a-2(a)
(c) Reich & Tang Asset Management L.P.
600 Fifth Avenue
New York, NY 10020-2302
Rule 31a-1(a); 31a-1(b)(9), (10),
(11); 31a-1(f)
Rule 31a-2(a); 31a-2(e)
(d) New England Securities Corporation
399 Boylston Street
Boston, Massachusetts 02116
Rule 31a-1(d)
Rule 31a-2(c)
Item 31. Management Services
-------------------
Not applicable.
Item 32. Undertakings
------------
(a) The Registrant undertakes to provide the Fund's annual report to any
person who receives a Fund prospectus and who requests the annual report.
********
A copy of the Agreement and Declaration of Trust establishing e-navigator Fund
is on file with the Secretary of State of the Commonwealth of Massachusetts, and
notice is hereby given that this Registration Statement is executed on behalf of
the Fund by officers of the Fund as officers and not individually and that the
obligations of or arising out of this Registration Statement are not binding
upon any of the Trustees, officers or shareholders individually but are binding
only upon the assets and property of the Fund.
-5-
<PAGE>
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, thereto duly authorized
in the city of Boston and the Commonwealth of Massachusetts on the twenty-ninth
day of January, 1999.
e-navigator Fund
By /s/ Frederick K. Zimmermann
----------------------------
Frederick K. Zimmermann
President
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed below by the following person in the
capacities and on the date indicated.
/s/ Frederick K. Zimmermann
------------------------------------------
Frederick K. Zimmermann
President (principal executive officer)
January 29, 1999
/s/ Richard DeSanctis
------------------------------------------
Richard DeSanctis
Treasurer (principal financial officer)
January 29, 1999
/s/ Frederick K. Zimmermann
------------------------------------------
Frederick K. Zimmermann
Trustee
January 29, 1999
*
------------------------------------------
Patricia P Baillieul
Trustee
January 29, 1999
*
------------------------------------------
Hanson C. Robbins
Trustee
January 29, 1999
* By: /s/ Frederick K. Zimmermann
--------------------------------
Frederick K. Zimmermann, as
attorney-in-fact
<PAGE>
[EXHIBIT 24]
POWER OF ATTORNEY
-----------------
We, the undersigned officers and trustees of e~navigator Fund (the
"Trust"), hereby severally appoint Fred Zimmermann, Rich DeSantis and Bernadette
Finn and each of them singly, our true and lawful attorneys, with full power to
them and each of them to sign for us, and in our names in the capacities
indicated below, any and all amendments (including post-effective amendments) to
the initial registration statement on Form N-1A filed September 23, 1998 by the
Trust (File Nos. 333-64061, 811-9015), and generally to do all such things in
our names and on our behalf in the capacities indicated below to enable the
Trust to comply with the provisions of the Securities Act of 1933, as amended,
the Investment Company Act of 1940, as amended, and all requirements of the
Securities and Exchange Commission, hereby ratifying and confirming our
signatures as they may be signed by our said attorneys to all amendments to said
registration statement.
Witness our hands and common seal on the respective dates set forth below.
<PAGE>
/s/ Hanson C. Robbins Trustee January 13, 1999
-------------------------
HANSON C. ROBBINS
/s/ Patricia P. Baillieul Trustee January 13, 1999
-------------------------------
PATRICIA P. BAILLIEUL
