As filed, via EDGAR, with the Securities and Exchange Commission
on August 27, 1996
File No.: 333-09227
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
-------------------
FORM N-14
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
|X| Pre-Effective Amendment No. 1
|_| Post-Effective Amendment No. __
(check appropriate box or boxes)
-------------------
GINTEL FUND
(Exact Name of Registrant as Specified in Charter)
203 622-6400
(Area Code and Telephone Number)
6 Greenwich Office Park, Greenwich, Connecticut 06831
(Address of Principal Executive Office) (Zip Code)
---------------------
Stephen G. Stavrides
6 Greenwich Office Park
Greenwich, Connecticut 06831
(Name and address of agent for service)
Copy to:
SUSAN J. PENRY-WILLIAMS, ESQ.
Kramer, Levin, Naftalis & Frankel
919 Third Avenue
New York, New York 10022
-------------------
Approximate Date of Proposed Public Offering: As soon as practicable after the
effective date of this Registration Statement.
The Registrant hereby amends this Registration Statement on such date or dates
as may be necessary to delay its effective date until the Registrant shall file
a further amendment which specifically states that this Registration Statement
shall thereafter become effective in accordance with Section 8(a) of the
Securities Act of 1933 or until the Registration Statement shall become
effective on such date as the Commission, acting pursuant to said Section 8(a),
may determine.
The Registrant has registered an indefinite number of securities under the
Securities Act of 1933 pursuant to Rule 24f-2 under the Investment Company Act
of 1940; accordingly, no fee is payable herewith. A Rule 24f-2 Notice for
Registrant's most recent fiscal year ended December 31, 1995 was filed with the
Commission on February 23, 1996.
<PAGE>
GINTEL FUND
CROSS REFERENCE SHEET
ITEMS REQUIRED BY FORM N-14
PART A
N-14
ITEM NO. ITEM CAPTION PROSPECTUS CAPTION
1. Beginning of Registration Statement Cross Reference Sheet;
and Outside Front Cover Page of Front Cover Page.
Prospectus
2. Beginning and Outside Back Cover
Page of Prospectus Back Cover Page.
3. Fee Table, Synopsis Synopsis; Risk Factors;
Information and Risk Factors Comparison of Fees and
Expenses.
4. Information About the Transaction Reasons for the
Transaction; Synopsis;
Information about the
Transaction.
5. Information About the Registrant Synopsis; Comparison of
the Funds' Investment
Objectives and
Policies; Information
about the Funds;
Additional Information.
6. Information About the Company Synopsis; Comparison of
Being Acquired the Funds' Investment
Objectives and
Policies; Information
about the Funds;
Additional Information.
7. Voting Information Information Relating to
Voting Matters.
8. Interest of Certain Persons and Inapplicable.
Experts
9. Additional Information Required Inapplicable.
for Reoffering by Persons Deemed
to be Underwriters
- i -
<PAGE>
PART B
N-14 STATEMENT OF ADDITIONAL
ITEM NO. ITEM CAPTION INFORMATION CAPTION
10. Cover Page Cover Page.
11. Table of Contents Cover Page.
12. Additional Information About
the Registrant Statement of Additional
Information of Gintel
Fund dated May 1, 1996.
13. Additional Information About
the Company Being Acquired Inapplicable.
14. Financial Statements Statement of Additional
Information of Gintel
Fund, which
incorporates the
audited annual
financial statements of
Gintel Fund and Gintel ERISA
Fund, as of
December 31, 1995 and
the unaudited financial
statements and pro
forma combined
financial statements of
Gintel ERISA Fund and
Gintel Fund, as of June
30, 1996.
PART C
N-14
ITEM NO. ITEM CAPTION PART C CAPTION
15. Indemnification Indemnification.
16. Exhibits Exhibits.
17. Undertakings Undertakings.
- ii -
<PAGE>
GINTEL ERISA FUND
6 GREENWICH OFFICE PARK
GREENWICH, CONNECTICUT 06831
Fellow Shareholder:
We are holding a Special Meeting of Shareholders on September 26,1996,
to seek your approval for the merger of Gintel ERISA Fund into Gintel Fund. On
June 10, 1996, the Board of Trustees approved the proposed reorganization based
upon the recommendations of Gintel Equity Management, Inc., the Adviser to both
Funds.
After the proliferation of mutual funds over the last five years, we are seeing
a growing trend towards consolidation in the mutual fund industry. Many smaller
management companies, such as ours, are merging their funds in order to more
efficiently manage their portfolios, reduce fees for their shareholders through
economies of scale, and better focus their limited marketing resources.
The Board of Trustees and I believe the reorganization of ERISA Fund into Gintel
Fund benefits ERISA Fund shareholders because it lowers operating expenses,
provides a greater number of portfolio investments, enables shareholders to
track the Gintel Fund's performance in the daily newspapers, and allows the
investment staff to focus on producing the best results for one single fund. In
addition, the Gintel Fund has had a superior investment record over the lifespan
of the Funds.
Although the Gintel ERISA Fund also seeks investment income, we wish to point
out that the investment objectives of both Funds are similar -- to achieve
capital appreciation through investment in equities. In addition, the investment
policies and philosophies employed to reach this objective are essentially the
same. The primary difference between these two Funds has been that ERISA Fund
only accepts tax-exempt investors, has been managed somewhat more
conservatively, and has more readily accepted short-term capital gains without
regard for tax consequences.
Our Board of Trustees has concluded that the proposal is in the best interests
of the Gintel ERISA Fund and its shareholders and recommends that you vote FOR
the proposal. In order for the proposal to be approved, the holders of a
majority of the outstanding securities of the Gintel ERISA Fund entitled to vote
at the meeting must vote for the proposal. Please take the time to consider this
important matter and vote now.
In order to make sure that your vote is represented, indicate your choices on
the enclosed proxy card, date and sign it and return it in the enclosed
envelope.
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<PAGE>
I hope you will all join me in voting our shares for this
proposal.
Sincerely,
Robert M. Gintel
Chairman
<PAGE>
GINTEL ERISA FUND
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
SEPTEMBER 26, 1996
A Special Meeting of Shareholders (the "Meeting") of the Gintel ERISA
Fund (the "Gintel ERISA Fund") will be held on September 26, 1996 at 3:00 p.m.
Eastern time, at the offices of Gintel ERISA Fund, 6 Greenwich Office Park,
Greenwich, Connecticut 06831 for the following purposes, which are more fully
described in the accompanying Prospectus/Proxy Statement dated August __, 1996:
1. To approve an Agreement and Plan of Reorganization providing
for the transfer of the assets of the Gintel ERISA Fund to the
Gintel Fund in exchange for shares of the Gintel Fund and the
distribution of such shares to shareholders of the Gintel
ERISA Fund in liquidation of the Gintel ERISA Fund; and
2. To transact such other business as may properly come
before the Meeting or any adjournment or adjournments
thereof.
The Board of Trustees of the Company fixed the close of business on
August 23, 1996 as the record date for determination of shareholders entitled to
notice of, and to vote at, the Meeting or any adjournment thereof. The enclosed
proxy is being solicited on behalf of the Board of Trustees of the Fund.
Each shareholder who does not expect to attend in person is requested
to complete, date, sign and return promptly the enclosed form of proxy.
By order of the Board of
Trustees,
Donna K. Grippe
Secretary
Dated: August __, 1996
YOUR VOTE IS IMPORTANT
Please indicate your voting instructions on the enclosed proxy card, sign and
date it, and return it in the envelope provided, which needs no postage if
mailed in the United States. In order to save any additional expense of further
solicitation, please mail your proxy promptly.
<PAGE>
GINTEL ERISA FUND
6 GREENWICH OFFICE PARK
GREENWICH, CONNECTICUT 06831
COMBINED PROSPECTUS/PROXY STATEMENT
August __, 1996
This Combined Prospectus/Proxy Statement is sent to you in connection
with the solicitation of proxies by the Board of Trustees (the "Board") of the
Gintel ERISA Fund for a Special Meeting of Shareholders (the "Meeting") to be
held at the offices of Gintel ERISA Fund, 6 Greenwich Office Park, Greenwich,
Connecticut 06831 on September 26, 1996, at 3:00 p.m., Eastern time, at which
shareholders of the Gintel ERISA Fund will be asked to consider and approve a
proposed Agreement and Plan of Reorganization (the "Plan").
The Plan provides for the transfer of the assets of the Gintel ERISA
Fund to the Gintel Fund, in exchange for shares of the Gintel Fund. Following
such transfer, shares of the Gintel Fund will be distributed to the existing
shareholders of the Gintel ERISA Fund. As a result of the proposed transactions,
each shareholder of the Gintel ERISA Fund will receive that number of full and
fractional shares of the Gintel Fund equal in value at the close of business on
the date of the exchange to the value of that shareholder's shares of the Gintel
ERISA Fund. These transactions are referred to as the "Reorganization." (The
Gintel Fund and the Gintel ERISA Fund are sometimes referred to as a "Fund" and
together as the "Funds").
Each Fund is an open-end management investment company registered under
the Investment Company Act of 1940, as amended (the "1940 Act"), and each is
organized as a Massachusetts business trust. The investment objective of the
Gintel Fund is to achieve capital appreciation by investing in equities. The
primary investment objective of the Gintel ERISA Fund is to maximize total
investment returns through a combination of long-term appreciation and
investment income, and it also will invest for short-term capital gains, when,
in the Adviser's opinion, market conditions make such action appropriate.
The investment adviser to both Funds is Gintel Equity
Management, Inc. (the "Adviser").
This Prospectus/Proxy Statement, which you should keep for future
reference, sets forth concisely the information about the Gintel Fund that a
prospective investor should know before voting. THIS PROSPECTUS/PROXY STATEMENT
IS ACCOMPANIED BY THE PROSPECTUS OF THE GINTEL FUND DATED MAY 1, 1996, WHICH IS
INCORPORATED BY REFERENCE IN ITS ENTIRETY. A Statement of Additional Information
dated August ___, 1996 relating to this Prospectus/Proxy Statement (the "Related
Statement of Additional
<PAGE>
Information") has been filed with the Securities and Exchange Commission (the
"Commission") and is incorporated by reference into this Prospectus/Proxy
Statement. A Statement of Additional Information dated May 1, 1996, containing
additional information about the Gintel Fund has been filed with the Commission
and is
incorporated into the Related Statement of Additional Information. A copy of the
Related Statement of Additional Information may be obtained without charge by
writing to the Funds at 6 Greenwich Office Park, Greenwich, Connecticut 06831,
or by calling the Funds at 800-243-5808.
- -----------------------------------------------------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE COMMISSION OR
ANY STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS
PROSPECTUS/PROXY STATEMENT. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL
OFFENSE.
- 2 -
<PAGE>
SYNOPSIS
This Synopsis provides a concise summary of the information contained
in this Prospectus/Proxy Statement.
THE AGREEMENT AND PLAN You are being asked to approve an Agreement and
OF REORGANIZATION Plan of Reorganization. Under the Plan, the Gintel
ERISA Fund will transfer its assets to the Gintel
Fund in exchange for shares of the Gintel Fund and
the assumption by the Gintel Fund of the
liabilities of the Gintel ERISA Fund. After the
transaction, you will receive that number of
shares of the Gintel Fund with a total value equal
to the net asset value of your shares of the
Gintel ERISA Fund, as determined at the close of
business on the date of the exchange. You will not
be charged a sales charge for this transaction.
See "Reasons for the Transaction" and "Information
About the Transaction," and the copy of the form
of the Plan, which is attached as Exhibit A.
TAX CONSEQUENCES Each Fund will receive an opinion of counsel to
the effect that no gain or loss will be recognized
by the Gintel ERISA Fund, the Gintel Fund, or the
shareholders of the Gintel ERISA Fund as a result
of the Reorganization. See "Information about the
Transaction."
INVESTMENT OBJECTIVES AND Gintel Fund. The investment objective of the
POLICIES Gintel Fund is to achieve capital appreciation by
investing in equities. Toward this end, the Gintel
Fund invests in common stocks or securities
convertible into common stock.
Gintel ERISA Fund. The primary investment
objective of
- 3 -
<PAGE>
the Gintel ERISA Fund is to maximize total
investment return through a combination of
long-term appreciation and investment income, and
it will also invest for short-term capital gains,
when, in the Advisers's opinion, market conditions
make such action appropriate. Toward this end, the
Gintel ERISA Fund invests in common stocks or
securities convertible into common stock, as well
as fixed income securities or debt instruments.
Each Fund has additional investment policies which
are similar and which are discussed under
"Comparison of the Funds' Investment Objectives
and Policies," below.
MANAGEMENT OF THE FUNDS
Investment Adviser Gintel Equity Management, Inc. (the "Adviser") is
the investment adviser for each Fund. See
"Information About the Funds."
Administrator Gintel & Co. Limited Partnership is the
administrator for each Fund. See "Information
About the Funds."
Fees and Expenses The investment advisory and administrative
services fees are identical for each Fund. Because
the administrative services fees are at
breakpoints based on assets, it is anticipated
that due to a larger asset base shareholders will
be subject to lower overall levels of
administrative services fees and total fund
expenses for the foreseeable future as a result of
the Reorganization. See "Comparison of Fees and
Expenses."
- 4 -
<PAGE>
TRUSTEES AND OFFICERS The Trustees and officers are identical for each
Fund and will remain the same after the
Reorganization.
DISTRIBUTION AND PURCHASE The procedures for purchasing and redeeming shares
PROCEDURES; EXCHANGE RIGHTS; are materially the same for each Fund, and each
REDEMPTION PROCEDURES Fund has materially similar exchange privileges.
OTHER CONSIDERATIONS In the event the shareholders of the Gintel ERISA
Fund do not approve the Reorganization, the Fund
will continue its current operations. Shareholders
have no right of appraisal, but may continue to
redeem their shares in accordance with normal Fund
policies.
This Synopsis is qualified by reference to the more complete information
contained elsewhere in this Prospectus/Proxy Statement, including information
incorporated herein from the attached Prospectus for the Gintel Fund dated May
1, 1996 (the "Prospectus"), and in the form of Agreement and Plan of
Reorganization attached to this Prospectus/Proxy Statement as Exhibit A.
RISK FACTORS
In general, the investment policies and risk factors of the Gintel Fund
and the Gintel ERISA Fund are similar. As described more fully below under
"Comparison of the Funds' Investment Objectives and Policies," the principal
risk factors of investing in the Gintel Fund in comparison to those of the
Gintel ERISA Fund are as follows:(1) the Gintel Fund may invest in non-U.S.
securities while the Gintel ERISA Fund may not;(2) each Fund may lend its
portfolios securities to brokers, dealers and other institutional investors
(although the Gintel Fund may not do so in an amount in excess of 10% of its
total assets); (3) each Fund, subject to certain restrictions, may invest in
other investment companies; (4) each Fund will not make short sales of
securities or maintain short positions unless at all times when a short position
is open the Fund owns an equal amount of such securities or securities
convertible into or exchangeable, without payment of any further consideration,
for securities of the same issues as, and equal in an amount to, the securities
sold short; (5) the Gintel Fund may invest in all types of debt securities, in
any proportion and may invest in
- 5 -
<PAGE>
investment-grade debt securities which are considered to be those rated Baa-3 or
higher by Moody's Investors Service, Inc. or BBB-or higher by Standard & Poor's
Corporation. Securities rated Baa-3 and BBB- are considered to have speculative
characteristics. The Gintel ERISA Fund may invest in fixed income securities or
debt instruments; (6) the Gintel Fund will not invest in securities judged by
the Adviser to be of poor quality, although it may invest in unrated securities
if the Adviser determines that such securities present attractive investment
opportunities and are of comparable quality to the other debt securities in
which the Gintel Fund may invest; (7) the Gintel Fund may, from time to time,
borrow money to the maximum extent permitted by the Investment Company Act from
banks at prevailing interest rates and invest the funds in additional
securities, a technique known as leveraging, (which it has done infrequently and
only for short periods over the lifespan of the Fund) while the Gintel ERISA
Fund may not borrow money, except it may borrow up to 5% of the value of its
total assets at the time of such borrowing from banks for temporary or emergency
purposes (which it has never done); and (8) each Fund has adopted the following
restrictions which may not be changed without shareholder approval:(i)with
respect to 50% of its assets, it will not at the time of purchase invest more
than 5% of its total assets, at market value, in the securities of any one
issuer (except the securities of the United States Government); and (ii) with
respect to the other 50% of its assets, it will not invest at the time of
purchase more than 25% (15%, with respect to the Gintel ERISA Fund) of the
market value of its total assets in any single issuer. These two restrictions,
hypothetically, could give rise to a portfolio with as few as twelve (fourteen,
with respect to the Gintel ERISA Fund) issuers.
COMPARISON OF FEES AND EXPENSES
The following tables summarize and compare the fees and expenses of the
Funds. These tables are intended to assist shareholders in comparing the various
costs and expenses that shareholders indirectly bear with respect to an
investment in the Gintel ERISA Fund and those that they can expect to bear
indirectly as shareholders of the Gintel Fund. Actual expenses may be more or
less than those set forth below. In addition, the "Example" set forth below
should not be considered a representation of future expenses, which will vary
depending upon actual investment returns and expenses.
- 6 -
<PAGE>
Annual Fund Operating Expenses
(as a percentage of average daily net assets)
<TABLE>
<CAPTION>
Total
Management Other Operating
Fee 12b-1 Fees Expenses* Expenses*
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Gintel Fund 0.99% --- 1.26% 2.25%
Gintel ERISA 1.04% --- 1 .41% 2.45%
Fund
Pro Forma 0.96% --- 2.11%
for Combined 1.15%
Fund
</TABLE>
(6-30-96)
* Includes brokerage commissions, which are paid under the Fund's
Administrative Services Agreement. Although the maximum advisory fee is 1%
and the maximum administrative services fee is 1 1/4% of the first $50
million, 1 1/8% of the next $50 million, and 1% on assets over $100
million, timing differences between the way the expense ratio is calculated
(daily, based on net assets for the fiscal year) and the manner in which
the fees are paid (quarterly, based on the previous three months average
daily net assets) may cause the operating expense ratio to exceed or fall
below these fee rates, but in no case is either Fund actually charged more
or less than the prescribed fees.
Example
Using the above expenses, you would pay the following expenses on a $1,000
investment, assuming a 5% annual return and redemption at the end of each of the
periods shown:
<TABLE>
<CAPTION>
1 Year 3 Years 5 Years 10 Years
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Gintel Fund $23 $70 $121 $259
Gintel ERISA 25 76 131 279
Fund
Pro Forma
for Combined 21 66 113 244
Funds
</TABLE>
THIS EXAMPLE SHOULD NOT BE CONSIDERED A REPRESENTATION OF PAST OR FUTURE
EXPENSES. ACTUAL EXPENSES MAY BE GREATER OR LESS THAN THOSE SHOWN.
- 7 -
<PAGE>
INFORMATION ABOUT THE TRANSACTION
AGREEMENT AND PLAN OF REORGANIZATION. The Plan provides that at 9 a.m.
on the Closing Date (as defined below) for the Reorganization, all of the assets
of the Gintel ERISA Fund will be transferred to the Gintel Fund.
In exchange for the transfer of the assets of the Gintel ERISA Fund,
the Gintel Fund will assume the liabilities of the Gintel ERISA Fund and will
issue to the Gintel ERISA Fund full and fractional shares of the Gintel Fund.
The Gintel ERISA Fund will distribute the shares so received to the Shareholders
of the Gintel ERISA Fund, whose shares in the Gintel ERISA Fund will become
void. Shareholders of the Gintel ERISA Fund at the time of the Reorganization
will become shareholders of the Gintel Fund and will receive the same dollar
amount in Gintel Fund shares as the Shareholder had held in the Gintel ERISA
Fund.
The share transfer books of the Gintel ERISA Fund will be permanently
closed as of the close of business on the business day immediately preceding the
Closing Date of the Reorganization. Redemption requests received thereafter by
the Gintel ERISA Fund will be deemed to be redemption requests relating to
shares of the Gintel Fund.
The current fundamental policies (changeable only by shareholder vote)
of the Gintel ERISA Fund, including any limitations set forth in the By-laws of
the Gintel ERISA Fund, could be deemed to prevent it from taking the actions
necessary to effectuate the Reorganization as described in this Combined
Prospectus/Proxy Statement. In general, these policies may prohibit the Gintel
ERISA Fund from purchasing more than a stated percentage of another company
(which may be deemed to include the Gintel Fund, in connection with its
Reorganization). By approving the Plan, Shareholders will be deemed to have
agreed to waive the application of any such fundamental policies to the extent
necessary to consummate its Reorganization.
The Reorganization is subject to a number of other conditions,
including the receipt of certain legal opinions described in the Plan, the
continued accuracy of the representations and warranties in the Plan, certain
regulatory approvals and the parties' performance in all material respects of
their respective agreements and undertakings in the Plan. Assuming satisfaction
of the conditions in the Plan, the closing date for the Reorganizations will be
on September 30, 1996, or such other date as is agreed to by the parties (the
"Closing Date").
The Plan provides that the Board of the Gintel ERISA Fund may terminate
the Plan and abandon the Reorganization at any time prior to the Reorganization,
notwithstanding approval thereof by
- 8 -
<PAGE>
Shareholders, if, in the judgment of the Board, proceeding with the
Reorganization would be inadvisable. The Board of Trustees of the Gintel Fund
may terminate the Plan and abandon the Reorganization contemplated thereby if
any of the conditions set forth in the Plan have not been satisfied. In the
event of any such termination, there will be no liability for damages on the
part of either party to the other.
The Gintel Fund and The Gintel ERISA Fund will pay the ordinary and
reasonable costs and expenses of the Reorganization and all transactions
contemplated by the Plan, prorated according to the relative asset size.
DESCRIPTION OF SHARES OF THE GINTEL FUND. Full and fractional shares of
the Gintel Fund will be issued to the shareholders of the Gintel ERISA Fund in
accordance with the procedures under the Plan as described above. Each share
will be fully paid and nonassessable when issued and transferrable without
restriction and will have no preemptive or conversion rights.
EXPENSES. The Reorganization will be effected for each Gintel ERISA
Fund shareholder at net asset value without the imposition of any sales charges.
No certificates for the Gintel Fund shares will be issued unless requested in
writing.
SHAREHOLDER APPROVAL. Approval of the Plan requires the
affirmative vote of a majority of the votes entitled to be cast
of the Gintel ERISA Fund.
The Board may terminate the Plan at any time prior to the closing of
the transaction.
REASONS FOR THE TRANSACTION
The Board considered the Reorganization at a meeting on June 10, 1996.
At the meeting, the Adviser recommended to the Trustees that they approve, and
recommend to the shareholders of the Gintel ERISA Fund for their approval, a
Reorganization of the Gintel ERISA Fund into the Gintel Fund, in accordance with
the terms of the Plan.
In accepting the Adviser's recommendation, the Board considered the
fact that the Adviser is the investment adviser to both Funds. In addition, the
Board considered the similarities of the investment objectives (each Fund seeks
capital appreciation; the Gintel ERISA Fund also seeks investment income) and
policies of the Funds and the fact that the Funds share the same service
providers. The Board also considered that the investment record of the Gintel
Fund has been superior to that of the Gintel ERISA Fund over a significant
period of time.
Given the above factors and the similarity in the investment
strategies of the Gintel ERISA Fund and the Gintel Fund, the
- 9 -
<PAGE>
Board concluded that combining the two Funds would be appropriate and would
enable the shareholders of the combined portfolio to benefit from certain
economies of scale, including a lower expense ratio than that currently
experienced by the Gintel ERISA Fund, while also affording shareholders the
continuing opportunity to participate in a portfolio of equity securities. In
addition, the Board concluded that the Reorganization benefits the Gintel ERISA
Fund shareholders because a combined fund will provide a greater number of
portfolio investments, will enable shareholders to track the Gintel Fund's
performance in the daily newspapers, and will allow the investment staff to
focus on producing the best results for one combined fund. The Board also agrees
with the Adviser that by combining the Funds, the Adviser will be able to
concentrate its marketing resources on a single equity fund to attract investors
interested in such a fund.
The Adviser indicated to the Board its belief that the most appropriate
method of combining the Gintel ERISA Fund into the Gintel Fund would be through
an acquisition of the assets of the Gintel ERISA Fund by the Gintel Fund.
In reaching its decision to recommend shareholder approval of the
Reorganization, the Board made inquiries into a number of factors. The Board was
informed of the expense ratios of the Funds as described above.
The Board also considered the following comparative investment
performance information regarding the Funds:
Total Return Information
<TABLE>
<CAPTION>
From January 18, 1982
commencement of operations
One Year Period of Gintel ERISA Fund)
ended December 31, 1995 December 31, 1995
----------------------- -------------------
<S> <C> <C>
Gintel Fund 30.97% 446.13%
Gintel ERISA Fund 26.62% 356.97%
</TABLE>
The factors considered by the Board included, among other things: (1)
recent and anticipated asset and expense levels of the Funds and future
prospects of each Fund; (2) the similarity of the investment advisory,
distribution and administration arrangements, the fact that the Funds have the
same custodian, transfer agent, dividend paying agent and independent
accountants (the "Service Providers"); (3) that combining the assets of the two
Funds is expected to result in lower administrative services fees because the
breakpoints, which are based on asset size, will be applied to a larger asset
base; (4) the terms and conditions of the Reorganization; and (5) the similarity
of the investment objectives, policies and restrictions of the two Funds.
- 10 -
<PAGE>
Based upon these factors, the Trustees unanimously determined that the
transaction would not result in dilution of the interests of, and would be in
the best interest of, the shareholders of each of the Funds and recommended that
the shareholders of the Gintel ERISA Fund approve the Reorganization and the
Plan. The Trustees present at the June 10, 1996 Board Meeting constituted a
majority of all of the Trustees and a majority of those Trustees who are not
"interested persons" of the Adviser or the Funds, within the meaning of the 1940
Act (the "Independent Trustees").
FEDERAL INCOME TAX CONSEQUENCES
Consummation of the Reorganization is subject to the condition that the Gintel
ERISA Fund and the Gintel Fund receive an opinion from counsel to the Gintel
Fund stating that for federal income tax purposes: (i) the exchange by the
Gintel ERISA Fund of substantially all its assets in exchange for shares of the
Gintel Fund and the assumption by the Gintel Fund of the liabilities of the
Gintel ERISA Fund pursuant to the Plan will constitute a reorganization within
the meaning of section 368(a)(1)(C) or 368(a)(1)(D) of the Code, respectively,
depending upon whether shareholders of the Gintel ERISA Fund receive in the
aggregate less than fifty percent, or fifty percent or more, of the shares of
the Gintel Fund; (ii) the Gintel ERISA Fund will not recognize any gain or loss
as a result of the Reorganization; (iii) the Gintel Fund will not recognize any
gain or loss on the receipt of the assets of the Gintel ERISA Fund in exchange
for shares of the Gintel Fund; (iv) the shareholders of the Gintel ERISA Fund
will not recognize any gain or loss on the exchange of their Gintel ERISA Fund
shares for the Gintel Fund shares in the Reorganization; (v) the aggregate tax
basis of the shares of the Gintel Fund received by each shareholder of the
Gintel ERISA Fund will be the same as the aggregate tax basis of the shares of
the Gintel ERISA Fund exchanged therefor; (vi) the Gintel Fund's adjusted tax
bases in the assets received from the Gintel ERISA Fund in the Reorganization
will be the same as the adjusted tax basis of such assets in the hands of the
Gintel ERISA Fund immediately prior to the Reorganization; (vii) the holding
period of each former shareholder of the Gintel ERISA Fund in the shares of the
Gintel Fund received in the Reorganization will include the period during which
such shareholder held his shares of the Gintel ERISA Fund as a capital asset;
and (viii) the Gintel Fund's holding periods in the assets received from the
Gintel ERISA Fund in the Reorganization will include the holding periods of such
assets in the hands of the Gintel ERISA Fund immediately prior to the
Reorganization.
The Gintel ERISA Fund and the Gintel Fund have not sought a tax ruling
from the Internal Revenue Service ("IRS") with respect to the tax aspects of the
Reorganization, but will act in reliance upon the opinion of counsel discussed
in the preceding paragraph. Such opinion is not binding on the IRS and does not
preclude the IRS from adopting a contrary position. If for any reason the
Reorganization of the Gintel ERISA Fund did not qualify as a tax-free
reorganization for federal income tax purposes, then (i) the transfer of the
Gintel ERISA Fund's assets to the Gintel Fund would be treated as a taxable sale
or exchange of those assets at fair market value, and (ii) the exchange -- by
the shareholders of the Gintel ERISA Fund -- of their Gintel ERISA Fund shares
for the Gintel Fund shares would be treated as a taxable exchange of the
- 11 -
<PAGE>
Gintel ERISA Fund shares, also at fair market value. Shareholders should consult
their own advisers concerning that and other potential tax consequences of the
Reorganization to them, including any applicable state and local income tax
consequences.
CAPITALIZATION. The following table shows the capitalization of the
Gintel ERISA Fund and the Gintel Fund as of June 30, 1996, and on a pro forma
basis as of that date giving effect to the proposed acquisition of assets at net
asset value:
<TABLE>
<CAPTION>
Gintel ERISA Gintel Pro Forma
Fund Fund Combined
<S> <C> <C> <C>
Net assets $ 28,922,915 $ 109,772,129 $ 138,695,044
(As of 6/30/96)
NAV per share: $ 31.98 $ 17.94 $ 17.94
Shares
outstanding: 904,500 6,118,707 7,730,910
</TABLE>
COMPARISON OF THE FUNDS' INVESTMENT OBJECTIVES AND POLICIES
GENERAL. The investment objectives and policies of the Funds are
similar. Both seek appreciation by investing in a non-diversified portfolio of
common stocks. In addition, the Gintel ERISA Fund seeks investment income. Each
Fund invests in major corporations whose shares are listed on the New York Stock
Exchange or the American Stock Exchange. Each Fund may also invest in securities
traded in the Over-the-Counter market (with respect to the Gintel ERISA Fund,
such securities must, in the opinion of the Adviser, be non-speculative, and
such investments may not exceed 25% of its total assets at time of purchase).
Although each Fund has flexibility to invest in a broad range of corporations,
neither will purchase the securities of any corporation with a record of less
than three years' continuous operations, including that of predecessors. Each
Fund may lend its portfolio securities to brokers, dealers and other
institutional investors (with respect to the Gintel Fund, in an amount not to
exceed 10% of its total assets). Each Fund, subject to certain restrictions, may
invest in other investment companies. Neither Fund will make short sales of
securities or maintain short positions unless at all times when a short position
is open the Fund owns an equal amount of such securities or securities
convertible into or exchangeable, without payment of any further consideration,
for securities of the same issue as, and equal in an amount to the securities
sold short. This is a technique known as selling short "against the box."
The Gintel Fund may, from time to time, borrow money to the maximum
extent permitted by the Investment Company Act from banks at
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<PAGE>
prevailing interest rates and invest the funds in additional securities. Since
inception in 1981, the Gintel Fund has borrowed approximately eight times for
relatively short periods. The Gintel Fund's borrowings are limited so that
immediately after such borrowings the value of assets (including borrowings)
less liabilities (not including borrowings) is at least three times the amount
of the borrowings. Should the Gintel Fund, for any reason, have borrowings that
do not meet the above test then, within three days (not including Sundays and
holidays), the Fund must reduce such borrowings so as to meet the necessary
test. Under such a circumstance, the Gintel Fund may have to liquidate fund
securities at a time when it is disadvantageous to do so. Gains made with
additional funds borrowed will generally cause the net asset value of the Gintel
Fund's shares to rise faster than could be the case without borrowings.
Conversely, if investment results fail to cover the cost of borrowings, the net
asset value of the Fund could decrease faster than if there had been no
borrowings. The Gintel ERISA Fund may not borrow money, except it may borrow up
to 5% of the value of its total assets at the time of such borrowing from banks
for temporary or emergency purposes; however, at no time has the Gintel ERISA
Fund ever borrowed for any purpose.
GINTEL ERISA FUND. The primary investment objective of the Gintel ERISA
Fund is to maximize total investment return through a combination of long-term
appreciation and investment income, and it also will invest for short-term
capital gains, when, in the Adviser's opinion, market conditions make such
action appropriate. Toward this end, the Fund invests in common stocks or
securities convertible into common stock, as well as fixed income securities or
debt instruments.
GINTEL FUND. The investment objective of the Gintel Fund is to achieve
capital appreciation by investing in equities. Toward this end, the Fund invests
in common stocks or securities convertible into common stock. Current income is
not the Fund's investment objective; however, when, in the Adviser's opinion,
market conditions warrant a temporary defensive position, there is no
restriction on the Fund's investment in debt instruments, including tax-exempt
bonds. Similarly, there may be occasions when the Fund will have all or a
portion of its portfolio invested in cash or cash equivalents for such temporary
defensive purposes.
The Gintel Fund may invest in all types of debt securities, in any
proportion, including debt obligations of the U.S. Treasury, its agencies and
instrumentalities, bonds, notes, mortgage securities, government and government
agency obligations, zero coupon securities, convertible securities, and
repurchase agreements. The Fund may invest in investment-grade debt securities
which are considered to be those rated Baa-3 or higher by Moody's Investor
Service, Inc. or BBB- or higher by Standard & Poor's Corporation. Securities
rated Baa-3 and BBB- are considered to have speculative characteristics. The
Fund will not invest in securities judged by the Adviser to be of poor quality,
although it may invest in unrated securities if the Adviser determines that such
securities present
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<PAGE>
attractive investment opportunities and are of comparable quality to the other
debt securities in which the Fund may invest.
Up to 20% of the Gintel Fund's total assets may be invested in non-U.S.
securities however, since inception, the Gintel Fund has only invested in
non-U.S. securities on an infrequent basis. There are certain risks involved in
investing in non-U.S. securities, including those resulting from fluctuations in
currency exchange rates, reevaluation of currencies, future political and
economic developments and the possible imposition of currency exchange
regulations or other foreign governmental laws or restrictions, reduced
availability of public information concerning issuers, and the fact that
non-U.S. companies are not generally subject to uniform accounting, auditing and
financial reporting standards or to other regulatory practices and requirements
comparable to those applicable to domestic companies. Moreover, securities of
many non-U.S. companies may be less liquid and their prices more volatile than
those of securities of comparable domestic companies. In addition, with respect
to certain foreign countries, there is the possibility of expropriation,
confiscatory taxation and limitations on the use or removal of funds or other
assets of the Fund.
INFORMATION ABOUT THE FUNDS
INVESTMENT ADVISORY AGREEMENTS. The investment advisory agreement
between the Gintel Fund and the Adviser (the "Investment Advisory Agreement")
contains terms that are the same as those set forth in the current investment
advisory agreement between the Gintel ERISA Fund and the Adviser.
The Adviser, a Connecticut corporation with its principal offices at 6
Greenwich Office Park, Greenwich, Connecticut 06831, is registered with the
Commission as an investment adviser and, in addition to managing the Funds, has
been managing discretionary investment accounts for individual investors,
corporate pension funds and profit sharing plans, charitable foundations,
universities and others since 1971.
The Investment Advisory Agreement provides that the Adviser identify
and analyze possible investments for the Fund and determine the amount, timing,
and form of such investments. The Adviser has the responsibility of monitoring
and reviewing the Fund's portfolio, on a regular basis, and recommending the
ultimate disposition of such investments. It is the Adviser's responsibility to
cause the purchase and sale of securities in the Fund's portfolio, subject at
all times to the policies set forth by the Board of Trustees.
ADVISORY AND DISTRIBUTION FEES. Under the current investment advisory
agreements of the Gintel ERISA Fund and the Gintel Fund, each Fund pays the
Adviser advisory fees at the rate of 1.00% average daily net assets.
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<PAGE>
ADMINISTRATOR. Gintel & Co. Limited Partnership acts as administrator
for both Funds(the "Administrator"). For each Fund, the Administrator is paid a
maximum administration fee of 1.25% on the first $50 million in average daily
net assets; 1.125% on the next $50 million; and 1.0% over $100 million.
EXPENSE RATIOS. As of December 31, 1995 the Gintel ERISA Fund had total
net assets of approximately $27,766,076 and the Gintel Fund had total net assets
of approximately $96,738,857. As of December 31, 1995, the total expense ratios
for the Gintel ERISA Fund and Gintel Fund were 2.45% and 2.25%, respectively.
See "Comparison of Fees and Expenses," below. The maximum administrative
services fee, payable at the beginning of each quarter based on average daily
net assets during the preceding quarter, is 1.25% of the first $50 million of
the average daily net assets of each Fund, 1.125% of the next $50 million of the
average daily net assets of each Fund and 1.0% of the average daily net assets
in excess of $100 million. The operating expense ratio for each Fund, which is
calculated on the basis of average assets during the fiscal year, may be higher
or lower than these figures due to timing differences caused by payment of these
administrative services fees on a trailing-quarter rather than fiscal-year
basis. After the Reorganization, it is expected that total operating expenses of
the combined Gintel Fund will be approximately 2.17%. (Please note that each
Fund's expense ratio includes brokerage commissions on portfolio transactions
paid for under a Fund's administrative services fee, and, therefore, may appear
higher than those of other mutual funds as well as for the Fund in prior years.
Other mutual funds do not include brokerage commissions in their operating
expense, but instead add then to the cost of securities purchased or deduct from
them from the proceeds of securities sold.)
DIVIDENDS AND DISTRIBUTIONS. It is each Fund's policy to distribute to
shareholders all of its investment income (net of expenses) and any capital
gains (net of capital losses) in accordance with the timing requirements imposed
by the Internal Revenue Code of 1986. Distributions to shareholders will be
treated in the same manner for Federal income tax purposes whether received in
cash or reinvested in additional shares of a Fund.
PURCHASE PROCEDURES AND EXCHANGE PRIVILEGES/CONTINGENT DEFERRED SALES
CHARGE. The Funds have identical purchase procedures (except for the minimum
initial investment required) and exchange privileges. Shares of both Funds are
sold on a continuous basis at net asset value.
REDEMPTION PROCEDURES. The Funds offer identical redemption features
pursuant to which proceeds of a redemption are remitted to shareholders.
GENERAL. Each Fund is a Massachusetts business trust and has identical
rights under its Agreement and Declaration of Trust and applicable Massachusetts
law. Each share of a Fund is entitled to one vote for all purposes.
Massachusetts law does not require
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<PAGE>
registered investment companies, such as the Funds, to hold annual meetings of
shareholders and it is anticipated that shareholder meetings will be held only
when specifically required by federal or state law. Shareholders have available
certain procedures for the removal of Trustees. Each Fund indemnifies trustees
and officers to the fullest extent permitted under Massachusetts law.
ADDITIONAL INFORMATION
This Prospectus/Proxy Statement and the Related Statement of Additional
Information do not contain all of the information set forth in the registration
statement and the exhibits relating thereto filed by the Fund with the
Commission under the Securities Act of 1933 and the 1940 Act, to which reference
is hereby made.
Information about the Gintel Fund is included in the Prospectus dated
May 1, 1996, a copy of which is included herewith and incorporated by reference
herein. Additional information is included in the Statement of Additional
Information dated May 1, 1996, which has been filed as part of the Related
Statement of Additional Information of this Combined Proxy Statement and
Prospectus, dated August __, 1996 and is incorporated herein by reference.
Both Funds file proxy material, reports and other information with the
Commission. These documents and other information can be inspected and copied at
the Public Reference Facilities maintained by the Commission at 450 Fifth
Street, N.W., Washington, D.C. 20549. Copies of such material can also be
obtained from the Public Reference Branch, Office of Consumer Affairs and
Information Services, Securities and Exchange Commission, Washington, D.C. 20549
at prescribed rates.
INFORMATION RELATING TO VOTING MATTERS
GENERAL INFORMATION
This Prospectus/Proxy Statement is being furnished in connection
with the solicitation of proxies by the Board for the Meeting. It is expected
that the solicitation of proxies will be primarily by mail. Representatives of
the Adviser and the Fund and service contractors retained by the Fund, may
contact shareholders directly to discuss the proposals set forth herein, and may
also solicit proxies by telephone, telegraph or personal interview. The Gintel
Fund and the Gintel ERISA Fund will bear the cost of solicitation of proxies. It
is anticipated that banks, broker-dealers and other institutions will be
requested to forward proxy materials to beneficial owners and to obtain
authorization for the execution of proxies. The Gintel Fund and the Gintel ERISA
Fund may, upon request, reimburse banks, broker-dealers and other institutions
for their expenses in forwarding proxy materials to beneficial owners.
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<PAGE>
Only shareholders of record of the Gintel ERISA Fund at the
close of business on August 23, 1996 (the "Record Date"), will be entitled to
vote at the Meeting. As of the Record Date, there were __________ shares of the
Gintel ERISA Fund issued and outstanding. As of August 23, 1996, the following
persons owned of record or beneficially 5% or more of the outstanding shares of
either class of shares of the Gintel ERISA Fund: [ ]
If the accompanying proxy is executed and returned in time for the
Meeting, the shares covered thereby will be voted in accordance with the
instructions thereon. In the absence of any instructions, such proxy will be
voted to approve the Reorganization. Any shareholder giving a proxy may revoke
it at any time before the Meeting by submitting to the Fund a written notice of
revocation or a subsequently executed proxy, or by attending the Meeting and
voting in person.
If a proxy represents a broker "non-vote" (that is, a proxy from a
broker or nominee indicating that such person has not received instructions from
the beneficial owner or other person entitled to vote shares on a particular
matter with respect to which the broker or nominee does have discretionary
power) or marked with an abstention (collectively, "abstentions"), the shares
represented thereby will be considered to be present at the meeting for purposes
of determining the existence of a quorum for the transaction of business.
QUORUM AND ADJOURNMENTS
A quorum is constituted by the presence in person or by proxy of
the holders of a majority of the total number of shares outstanding and entitled
to vote, with respect to the Gintel ERISA Fund. If a quorum is not present at
the Meeting, or if a quorum is present but sufficient votes to approve the
Reorganization are not received, the persons named as proxies may propose one or
more adjournments of the Meeting to permit further solicitation of proxies (but
not more than 120 days after the original record date). In determining whether
to adjourn the Meeting, the following factors may be considered: the nature of
the proposals that are the subject of the Meeting, the percentage of votes
actually cast, the percentage of negative votes actually cast, the nature of any
further solicitation and the information to be provided to shareholders with
respect to the reasons for the solicitation. Any adjournment will require the
affirmative vote of a majority of those shares represented at the Meeting in
person or by proxy. The persons named as proxies will vote for or against an
adjournment based on their determination of what is in the best interests of the
shareholders, taking into consideration the factors discussed above. A
shareholder vote may be taken prior to any adjournment if sufficient votes have
been received for approval.
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<PAGE>
APPRAISAL RIGHTS
The Agreement and Declaration of Trust of the Gintel ERISA
Fund does not grant shareholders any rights of share appraisal. Shareholders
have the right to redeem their shares of the Gintel ERISA Fund at net asset
value at any time until the close of business on the business day prior to the
Closing Date of the Reorganization and, thereafter, shareholders may redeem from
the Gintel Fund the Gintel Fund shares acquired by them in the Reorganization.
OTHER BUSINESS
The Board of Trustees of the Gintel ERISA Fund knows of no other
business to be brought before the Meeting. However, if any other matters come
before the Meeting, proxies that do not contain specific restrictions to the
contrary will be voted on such matters in accordance with the judgment of the
persons named as Proxies.
FUTURE SHAREHOLDER PROPOSALS
Pursuant to rules adopted by the Commission under the Securities
Exchange Act of 1934, as amended (the "1934 Act"), Shareholders may request
inclusion in the Fund's proxy statement for an annual meeting of shareholders
proposals that they intend to introduce at such meeting. Any such proposals must
be presented a reasonable time before the proxy materials for the next meeting
are sent to shareholders. The submission of a proposal does not guarantee its
inclusion in the proxy statement and is subject to limitations under the 1934
Act. The Fund does not hold annual meetings of shareholders. For this reason, no
anticipated date of the next meeting, if any, can be provided.
THE BOARD OF TRUSTEES, INCLUDING A MAJORITY OF THE INDEPENDENT TRUSTEES, OF
GINTEL ERISA FUND RECOMMEND APPROVAL OF THE PLAN.
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<PAGE>
MISCELLANEOUS
FINANCIAL STATEMENTS.
The financial statements of the Funds incorporated by reference in the
Related Statement of Additional Information relating to this Prospectus/Proxy
Statement have been audited by Richard A. Eisner & Company, LLP, independent
accountants, for the periods indicated in their report thereon, which is
included in the annual report to shareholders for the year ended December 31,
1995. The financial statements of the Funds for the six months ended June 30,
1996, which have not been audited, are also incorporated by reference in the
Related Statement of Additional Information.
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THIS COMBINED PROSPECTUS/PROXY
STATEMENT AND IN THE MATERIALS EXPRESSLY INCORPORATED HEREIN BY REFERENCE AND,
IF GIVEN OR MADE, SUCH OTHER INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED
UPON AS HAVING BEEN AUTHORIZED BY GINTEL FUND OR THE ADVISER. THIS
PROSPECTUS/PROXY STATEMENT DOES NOT CONSTITUTE AN OFFERING IN ANY JURISDICTION
IN WHICH SUCH AN OFFERING MAY NOT LAWFULLY BE MADE.
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<PAGE>
EXHIBIT A
AGREEMENT AND PLAN OF REORGANIZATION
- 20 -
<PAGE>
FORM OF
AGREEMENT AND PLAN OF REORGANIZATION
THIS AGREEMENT AND PLAN OF REORGANIZATION (the "Plan") is made this ___ day of
_______, 1996, by and among the Gintel ERISA Fund (the "ERISA Fund") and the
Gintel Fund (the "Gintel Fund"), each a Massachusetts business trust.
W I T N E S S E T H :
WHEREAS, the ERISA Fund is an open-end management investment company registered
under the Investment Company Act of 1940, as amended (the "1940 Act"); and
WHEREAS, this Plan is intended to be and is adopted as a plan of reorganization
within the meaning of Section 368(a)(1)(C) of the Internal Revenue Code of 1986,
as amended, such reorganization to consist of the transfer of all of the assets
of the ERISA Fund in exchange for shares of beneficial interest, no par value,
of the Gintel Fund ("New Shares"), the assumption by the Gintel Fund of the
liabilities of the ERISA Fund, and the distribution, after the Closing (as
defined in Section 3) of New Shares to the shareholders of the ERISA Fund, all
upon the terms and conditions hereinafter set forth in this Plan (the
"Reorganization"); and
WHEREAS, the Board of Trustees of the ERISA Fund and the Gintel Fund , including
a majority of the Trustees who are not interested persons of the ERISA Fund or
the Gintel Fund, within the meaning of the 1940 Act, has determined with regard
to the ERISA Fund and the Gintel Fund that participating in the transactions
contemplated by this Plan is in the best interests of the ERISA Fund and the
Gintel Fund and that the interests of shareholders of the ERISA Fund and the
Gintel Fund will not be diluted as a result of such transactions.
NOW, THEREFORE, the Board of Trustees of the ERISA Fund and the Gintel Fund
hereby adopts and declares the following Plan:
1. TRANSFER OF ASSETS.
Subject to the terms and conditions set forth herein, at the Closing
the ERISA Fund shall transfer all of the assets of the ERISA Fund to the Gintel
Fund, and in consideration therefor, the Gintel Fund shall assume all of the
Liabilities (as defined herein), and issue to the ERISA Fund, on behalf of the
ERISA Fund, New Shares having an aggregate net asset value equal to the value of
the assets of the ERISA Fund transferred less the Liabilities assumed.
"Liabilities" shall mean the liabilities and obligations reflected in an
unaudited statement of assets and liabilities of the ERISA Fund as of the close
of business on the Valuation Date (as hereinafter defined), determined in
accordance with generally accepted accounting principles consistently applied
from the ERISA Fund's most recently completed audit period. The net asset value
of
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<PAGE>
the New Shares and the value of the net assets of the ERISA Fund to be
transferred shall be determined as of the close of regular trading on the New
York Stock Exchange on the business day next preceding the Closing (the
"Valuation Date") using the valuation procedures set forth in the then current
prospectus and statement of additional information of the Gintel Fund.
2. ISSUANCE OF THE NEW SHARES.
Upon the consummation of the transactions referred to in Section 1, the
New Shares will be issued to the ERISA Fund, to be credited to the accounts of
shareholders of record of the ERISA Fund at the close of business on the
Valuation Date. At or as soon as practicable after the Closing, the New Shares
will be distributed to such shareholders in exchange for and in liquidation and
cancellation of the shares of the ERISA Fund, each such shareholder to receive
the number of New Shares that is equal in dollar amount to the value of shares
of beneficial interest of the ERISA Fund held by such shareholder as of the
close of business on the Valuation Date. Such distribution will be accomplished
by the establishment of an open account on the share records of the Gintel Fund
in the name of each shareholder of the ERISA Fund and representing the
respective number of New Shares due such shareholder. For these purposes, the
shareholders of record of the ERISA Fund as of the close of business on the
Valuation Date shall be certified by the ERISA Fund's transfer agent.
3. CLOSING AND CLOSING DATE
The closing for the Reorganization (the "Closing") shall occur on
September 30, 1996, or on such other date as may be mutually agreed upon in
writing by the parties to the Reorganization (the "Closing Date"). The Closing
shall be held at the offices of the ERISA Fund or at any other location mutually
agreeable to the parties hereto. All transactions taking place at the Closing
shall be deemed to take place simultaneously as of 9:00 a.m. eastern time on the
Closing Date unless otherwise provided.
4. COVENANTS WITH RESPECT TO THE GINTEL FUND AND THE ERISA FUND
4.1 The ERISA Fund will call a special meeting of shareholders (the
"Meeting") for the purposes of (i) considering adoption of this Plan by the
shareholders of the ERISA Fund; and (ii) considering such other business as may
properly come before such Meeting.
4.2 The ERISA Fund covenants that the Gintel Fund Shares to be issued
hereunder are not being acquired for the purpose of making any distribution
thereof, other than in connection with the Reorganization contemplated by this
Plan.
4.3 The ERISA Fund will assist the Gintel Fund in obtaining such
information as the Gintel Fund reasonably requests concerning the beneficial
ownership of the shares of the ERISA Fund.
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<PAGE>
4.4 Subject to the provisions hereof, the Gintel Fund and the ERISA
Fund will take, or cause to be taken, all actions, and do or cause to be done,
all things reasonably necessary, proper or advisable to consummate and make
effective the transactions contemplated herein, including the obtaining of any
required regulatory approvals.
4.5 The ERISA Fund shall furnish to the Gintel Fund at the Closing
Date, a final statement of the ERISA Fund's assets and liabilities as of the
Closing Date, which statement shall be certified by the ERISA Fund as being
determined in accordance with generally accepted accounting principles
consistently applied or in accordance with another mutually agreed upon
standard.
4.6 The Gintel Fund has prepared and filed, or will prepare and file,
with the Securities and Exchange Commission (the "SEC") a registration statement
on Form N-14 under the Securities Act of 1933, as amended (the "1933 Act"),
relating to the New Shares of the Gintel Fund (the "Form N-14 Registration
Statement"). The ERISA Fund has provided or will provide the Gintel Fund with
such information and documents relating to the ERISA Fund as are requested by
the Gintel Fund and as are reasonably necessary for the preparation of the
Prospectus/Proxy Statement set forth in the Form N-14 Registration Statement,
and information relating to the notice of meeting and form of proxy, other
information needed for the Form N-14 Registration Statement and any other proxy
solicitation materials to be used in connection with the Meeting (collectively,
the "Proxy Materials"). The Gintel Fund will use all reasonable efforts to have
the Registration Statement become effective under the 1933 Act as soon as
practicable, and will take all actions, if any, required by law to qualify the
New Shares to be issued in the Reorganization under the laws of the states in
which such qualification is required.
4.7 The ERISA Fund: (a) as soon after the Closing Date as is reasonably
practicable, shall prepare and file all federal and other tax returns and
reports as may be required by law to be filed with respect to all periods ending
on or before the Closing Date but not theretofore filed and (b) shall submit for
payment to the Gintel Fund the amount of any federal and other taxes, if any,
shown as due thereon which were not paid on or before the Closing Date and shall
reflect on the unaudited statement of assets and liabilities of the ERISA Fund
referred to in paragraphs 1.3 and 4.5 all Federal and other taxes, if any, that
remain unpaid as of the Closing Date.
4.8 The Gintel Fund agrees to use all reasonable efforts to maintain in
effect the approvals and authorizations required by the 1933 Act, the 1940 Act
and such of the state securities laws as may be necessary and as it may deem
appropriate in order to continue to conduct its operations through the Closing
Date and to consummate the Reorganization, as contemplated herein. The Gintel
Fund agrees to use all reasonable efforts to operate substantially in accordance
with its then current Prospectus and Statement of Additional Information,
including qualifying as a regulated investment company
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<PAGE>
under Subchapter M of the Internal Revenue Code of 1986, as amended (the "Code")
through the Closing Date and for at least one (1) year thereafter, although the
Gintel Fund may merge or consolidate during such one-year period with an
investment company with investment objectives, policies and restrictions and
other characteristics comparable (or, in the case of expense ratios, more
favorable) to those of the Gintel Fund.
5. REPRESENTATIONS AND WARRANTIES
5.1 The Gintel Fund represents and warrants to the ERISA Fund
as follows:
(a) The Gintel Fund is a business trust validly existing under
the laws of the Commonwealth of Massachusetts and is duly registered as
an open-end, management investment company under the 1940 Act;
(b) The Gintel Fund is not in violation of, and the execution,
delivery and performance of this Plan will not result in a violation
of, the Gintel Fund's Agreement and Declaration of Trust or By-Laws or
result in a material breach or violation of, or constitute a material
default under, any agreement or other undertaking to which the Gintel
Fund is a party or by which it or its assets is bound;
(c) The execution, delivery and performance of this Plan has
been duly authorized by all necessary action on the part of the Gintel
Fund, and assuming this Plan is enforceable against the ERISA Fund,
this Plan is a valid and binding obligation of the Gintel Fund
enforceable in accordance with its terms, subject as to enforcement to
bankruptcy, insolvency, reorganization, moratorium and other similar
laws relating to or affecting creditors' rights and to general equity
principles;
(d) Except as disclosed in writing to and accepted by the
ERISA Fund, no litigation or administrative proceeding or investigation
of or before any court or governmental body is presently pending or to
its knowledge threatened against the Gintel Fund or any of its
properties or assets, and the Gintel Fund knows of no facts that might
form the basis for the institution of any such proceedings (other than
routine inquiries and examinations), and the Gintel Fund is not a party
to or subject to the provisions of any order, decree or judgment of any
court or governmental body that materially and adversely affects, or is
reasonably likely to materially and adversely affect, its business or
its ability to consummate the transactions contemplated herein;
(e) All of the Gintel Fund's issued and outstanding shares
representing interests in the Gintel Fund are, and on the Closing Date
will be, duly authorized and validly issued
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<PAGE>
and outstanding, and fully paid and non-assessable (except as disclosed
in the Gintel Fund's Prospectus and recognizing that, under
Massachusetts law, shareholders of the Gintel Fund could, under certain
circumstances, be held personally liable for obligations of the Gintel
Fund), and no shareholder has any preemptive rights to purchase any
such shares, and the Gintel Fund does not have outstanding any options,
warrants or other rights to subscribe for or purchase any of its shares
(other than dividend reinvestment plans of the Gintel Fund or as set
forth in this Plan), nor are there outstanding any securities
convertible into any shares of the Gintel Fund (except pursuant to
exchange privileges described in the current Prospectus and Statement
of Additional Information of the Gintel Fund);
(f) The Gintel Fund Shares to be issued and delivered by the
Gintel Fund to the ERISA Fund pursuant to the terms hereof will have
been duly authorized as of the Closing Date and, when so issued and
delivered, will be duly authorized and validly issued, fully paid and
non-assessable (except as disclosed in the Gintel Fund's Prospectus and
recognizing that, under Massachusetts law, shareholders of the Gintel
Fund could, under certain circumstances, be held personally liable for
obligations of the Gintel Fund), and have been or will be duly
registered under the 1933 Act and qualified for sale under the laws of
such states where such qualification is required;
(g) All issued and outstanding shares of the Gintel Fund have
been offered and sold in compliance in all material respects with
applicable registration requirements of the 1933 Act and applicable
state securities laws;
(h) From the effective date of the Form N-14 Registration
Statement through the time of the Meeting and the Closing Date, the
Form N-14 Registration Statement (exclusive of those portions based
upon written information regarding the ERISA Fund which fully and
fairly discloses such information) (i) complies in all material
respects with the 1933 Act, the Securities Exchange Act of 1934, as
amended (the "1934 Act"), and the 1940 Act, and the rules and
regulations thereunder and (ii) does not and will not contain any
untrue statement of a material fact or omit to state any material fact
required to be stated therein or necessary to make the statements
therein not misleading, and as of such dates and times, any written
information furnished by the Gintel Fund to the ERISA Fund for use in
the Proxy Materials does not contain and will not contain any untrue
statement of a material fact or omit to state a material fact necessary
to make the information provided not misleading;
(i) The Statement of Assets and Liabilities, Statement of
Operations and Statement of Changes in Net Assets of the Gintel Fund as
of and for the Gintel Fund's most recent fiscal year, certified by
Richard A. Eisner & Company, LLP, and the unaudited Statement of Assets
and Liabilities, Statement of
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<PAGE>
Operations and Statement of Changes in Net Assets for the Gintel Fund's
most current completed six month period within the fiscal year, if any
(copies of which have been or will be furnished to the ERISA Fund, if
available) fairly present, in all material respects, the Gintel Fund's
financial condition as of such dates and its results of operations for
such periods in accordance with generally accepted accounting
principles consistently applied, and as of such dates there were no
liabilities of the Gintel Fund (contingent or otherwise) known to the
Gintel Fund that were not disclosed therein but that would be required
to be disclosed therein in accordance with generally accepted
accounting principles;
(j) Since the date of the most recent audited financial
statements, there has not been any material adverse change in the
Gintel Fund's financial condition, assets, liabilities or business,
other than changes occurring in the ordinary course of business, except
as otherwise disclosed in writing to and accepted by the ERISA Fund
prior to the Closing Date (for the purposes of this subparagraph (j),
neither a decline in the Gintel Fund's net asset value per share nor a
decrease in the Gintel Fund's size due to redemptions shall be deemed
to constitute a material adverse change);
(k) All federal and other tax returns and reports of the
Gintel Fund required by law to be filed on or before the Closing Date,
if any, shall have been filed, and all federal and other taxes owed by
the Gintel Fund shall have been paid so far as due, and to the best of
the Gintel Fund's knowledge, no such return is as of the date hereof
under audit and no material assessment has been asserted with respect
to any such return;
(l) For each full and partial taxable year from its inception
through the Closing Date, the Gintel Fund has qualified as a regulated
investment company under Subchapter M of the Code; and
(m) The Gintel Fund will provide to the ERISA Fund the Form
N-1A registration statement concerning the Gintel Fund, which will not
contain any untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary to make any
statements therein, in light of the circumstances under which such
statements were made, not materially misleading.
5.2 The ERISA Fund represents and warrants to the Gintel Fund
as follows:
(a) The ERISA Fund is a business trust validly existing under
the laws of the Commonwealth of Massachusetts, and is duly registered
as an open-end, management investment company under the 1940 Act;
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(b) The ERISA Fund is not in violation of, and the execution,
delivery and performance of this Plan will not result in a violation
of, the ERISA Fund's Agreement and Declaration of Trust or By-Laws each
as amended to date, or result in a material breach or violation of, or
constitute a material default under, any agreement or other undertaking
to which the ERISA Fund is a party or by which it or its assets are
bound;
(c) The execution, delivery and performance of this Plan has
been duly authorized by all necessary action on the part of the ERISA
Fund, and assuming this Plan is enforceable against the Gintel Fund,
this Plan is a valid and binding obligation of the ERISA Fund,
enforceable in accordance with its terms, subject as to enforcement to
bankruptcy, insolvency, reorganization, moratorium and other similar
laws relating to or affecting creditors' rights and to general equity
principles;
(d) Except as otherwise disclosed in writing to and accepted
by the Gintel Fund, no litigation or administrative proceeding or
investigation of or before any court or governmental body is presently
pending or to its knowledge threatened against the ERISA Fund or any of
its properties or assets, and the ERISA Fund knows of no facts that
might form the basis for the institution of any such proceedings (other
than routine inquiries and examinations), and the ERISA Fund is not a
party to or subject to the provisions of any order, decree or judgment
of any court or governmental body that materially and adversely
affects, or is reasonably likely to materially and adversely affect,
its business or its ability to consummate the transactions contemplated
herein;
(e) All of the ERISA Fund's issued and outstanding shares
representing interests in the ERISA Fund are, and on the Closing Date
will be, duly authorized and validly issued and outstanding, and fully
paid and non-assessable (except as disclosed in the ERISA Fund's
Prospectus and recognizing that, under Massachusetts law, shareholders
of the ERISA Fund could, under certain circumstances, be held
personally liable for obligations of the ERISA Fund) and all such
shares will, at the time of the Closing, be held by the Participating
Shareholders of Record as set forth on the books and records of the
ERISA Fund's transfer agent (and in the amounts set forth therein) and
as set forth in any list of Participating Shareholders of Record
provided to the Gintel Fund pursuant to paragraph 3.4, and no
Participating Shareholders of Record will have any preemptive rights to
purchase any of such shares and the ERISA Funds do not have outstanding
any options, warrants or other rights to subscribe for or purchase any
of its shares (other than dividend reinvestment plans of the ERISA Fund
or as set forth in this Plan), nor are there outstanding any securities
convertible into any shares of the ERISA Fund (except pursuant
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to exchange privileges described in the current Prospectus and
Statement of Additional Information of the ERISA Fund);
(f) All of the ERISA Fund's issued and outstanding shares have
been offered and sold in compliance in all material respects with
applicable registration requirements of the 1933 Act and applicable
state securities laws;
(g) From the effective date of the Form N-14 Registration
Statement through the time of the Meeting and the Closing Date, the
ERISA Fund's Proxy Materials (exclusive of any written information
furnished by the Gintel Fund for use in the Proxy Materials which fully
and fairly discloses such information) (i) comply in all material
respects with the applicable provisions of the 1934 Act and the 1940
Act and the rules and regulations thereunder and (ii) do not and will
not contain any untrue statement of a material fact or omit to state
any material fact required to be stated therein or necessary to make
the statements therein not misleading, and as of such dates and time,
any written information furnished by the ERISA Fund to the Gintel Fund
for use in the Form N-14 Registration Statement does not and will not
contain any untrue statement of a material fact or omit to state a
material fact necessary to make the information provided not
misleading;
(h) The Statement of Assets and Liabilities, Statement of
Operations and Statement of Change in Net Assets of the ERISA Fund as
of and for the ERISA Fund's most recent fiscal year, certified by
Richard A. Eisner & Company, LLP and the unaudited Statement of Assets
and Liabilities, Statement of Operations and Statement of Changes in
Net Assets for the ERISA Fund's most recently completed six month
semi-annual fiscal period (copies of which have been or will be
furnished to the Gintel Fund) fairly present, in all material respects,
the ERISA Fund's financial condition as of such dates and its results
of operations for such periods in accordance with generally accepted
accounting principles consistently applied, and as of such dates there
were no liabilities of the ERISA Fund (contingent or otherwise) known
to the ERISA Fund that were not disclosed therein but that would be
required to be disclosed therein in accordance with generally accepted
accounting principles;
(i) Since the date of the most recent audited financial
statements, there has not been any material adverse change in the ERISA
Fund's financial condition, assets, liabilities or business, other than
changes occurring in the ordinary course of business, except as
otherwise disclosed in writing to and accepted by the Gintel Fund prior
to the Closing Date (for the purposes of this subparagraph (i), neither
a decline in the ERISA Fund's net asset value per share nor a decrease
in the ERISA Fund's size due to redemptions shall be deemed to
constitute a material adverse change);
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(j) All federal and other tax returns and reports of the ERISA
Fund required by law to be filed on or before the Closing Date shall
have been filed, and all federal and other taxes owed by the ERISA Fund
shall have been paid so far as due, and to the best of the ERISA Fund's
knowledge, no such return is as of the date hereof under audit and no
material assessment has been asserted with respect to any such return;
(k) For each full and partial taxable year from its inception
through the Closing Date, the ERISA Fund has qualified as a regulated
investment company under Subchapter M of the Code; and
(l) At the Closing Date, the ERISA Fund will have good and
marketable title, through its custodian, to the ERISA Fund Assets and
full right, power and authority to assign, deliver and otherwise
transfer the ERISA Fund Assets hereunder, and upon delivery and payment
for the ERISA Fund Assets as contemplated herein, the Gintel Fund will
acquire good and marketable title thereto, subject to no restrictions
on the ownership or transfer thereof other than such restrictions as
might arise under the 1933 Act.
6. CONDITIONS PRECEDENT TO OBLIGATIONS OF THE ERISA FUND
The obligations of the ERISA Fund to complete the Reorganization shall
be subject, at the ERISA Fund's election, to the performance by the Gintel Fund,
of all the obligations to be performed by it hereunder on or before the Closing
Date, and in addition thereto, the following conditions with respect to the
Gintel Fund:
6.1 All representations and warranties of the Gintel Fund contained
herein shall be true and correct in all material respects as of the date hereof
and, except as they may be affected by the transactions contemplated herein, as
of the Closing Date, with the same force and effect as if made on and as of the
Closing Date.
6.2 The Gintel Fund shall have delivered to the ERISA Fund at the
Closing a certificate executed by one of its officers, dated as of the Closing
Date, to the effect that the representations and warranties of the Gintel Fund
made herein are true and correct at and as of the Closing Date, except as they
may be affected by the transactions contemplated herein, and as to such other
matters as the ERISA Fund shall reasonably request.
6.3 The ERISA Fund shall have received at the Closing an opinion of
legal counsel to the Gintel Fund, dated as of the Closing Date, in form
(including reasonable and customary qualifications and assumptions) reasonably
satisfactory to the ERISA Fund, substantially to the effect that:
(i) the Gintel Fund is a business trust validly existing
under the laws of the Commonwealth of Massachusetts and is duly
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registered as an open-end, management investment company under the 1940
Act; (ii) the execution, delivery and performance of this Plan will not
result in a violation of the Gintel Fund's Agreement and Declaration of
Trust or By-Laws; (iii) the execution, delivery and performance of this
Plan have been duly authorized by all necessary action on the part of
the Gintel Fund, and this Plan has been duly executed and delivered by
the Gintel Fund and is a valid and binding obligation of the Gintel
Fund, enforceable in accordance with its terms, subject to bankruptcy,
insolvency, reorganization, moratorium and other similar laws relating
to or affecting creditors' rights or remedies and to general equity
principles (regardless of whether considered at a proceeding in law or
equity), equitable defenses or waivers and the discretion of the court
before which any proceeding for specific performance, injunctive and
other forms of equitable relief may be brought; (iv) to the knowledge
of such counsel, no consent, approval, authorization or order of any
court or governmental authority of the United States, the Commonwealth
of Massachusetts or the State of New York is required for the
consummation by the Gintel Fund of the Reorganization, except such as
are contemplated hereunder or as are required to be obtained under the
1933 Act, the 1934 Act or the 1940 Act, or such as may be required
under applicable state laws; (v) except as disclosed in writing to the
ERISA Fund, to the best knowledge of such counsel, no litigation or
administrative proceeding or investigation of or before any court or
governmental body is presently pending or, to the best knowledge of
such counsel, threatened against the Gintel Fund or any of its
properties or assets, and, to the best knowledge of such counsel, the
Gintel Fund is not a party to or subject to the provisions of any
order, decree not of general application or judgment of any court or
governmental body that materially and adversely affects its business or
its ability to consummate the transactions contemplated herein; and
(vi) the Gintel Fund Shares to be issued and delivered pursuant to the
terms of this Plan will have been duly authorized as of the Closing
Date and, when so issued and delivered, will be validly issued, fully
paid and non-assessable (except as disclosed in the Gintel Fund's
Registration Statement and recognizing that under Massachusetts law,
shareholders of the Gintel Fund could, under certain circumstances, be
held personally liable for obligations of the Gintel Fund). In
addition, such counsel also shall state that they have participated in
certain conferences with trustees, officers or other representatives of
the Gintel Fund at which the contents of the Prospectus/Proxy Statement
and related matters were discussed and, although they are not passing
upon and do not assume any responsibility for the accuracy,
completeness or fairness of the statements contained in the
Prospectus/Proxy Statement or Registration Statement, on the basis of
the foregoing (relying as to materiality to a large extent upon the
opinions of officers and other representatives of the Gintel Fund), no
facts have come to their attention that lead them to believe that the
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Prospectus/Proxy Statement as of its date, as of the date of the ERISA
Fund's shareholders' meeting, and as of the Closing Date, contained an
untrue statement of a material fact or omitted to state a material fact
required to be stated therein regarding the Gintel Fund or necessary to
make the statements therein regarding the Gintel Fund, in the light of
the circumstances under which they were made, not misleading. Such
opinion may state that such counsel does not express any opinion or
belief as to the financial statements, fee tables, capitalization
tables or other financial data or as to the information relating to the
ERISA Fund, contained in the Prospectus/Proxy Statement or Registration
Statement, and that such opinion is solely for the benefit of the ERISA
Fund, its trustees and its officers. Such opinion also shall include
such other matters incident to the Reorganization as the ERISA Fund may
reasonably request.
In rendering such opinion, legal counsel to the Gintel Fund
may rely on an opinion of Massachusetts counsel (with respect to
matters of Massachusetts law) and on certificates of officers or
trustees of the Gintel Fund, in each case reasonably acceptable to the
ERISA Fund.
6.4 As of the Closing Date, there shall have been no material change in
the investment objective, policies and restrictions of the Gintel Fund nor any
increase in the rate of permissible investment advisory or other fees or charges
payable by the Gintel Fund or its shareholders to the Gintel Fund's investment
adviser, distributor and/or administrator from those fees and charges described
in the current Prospectus of the Gintel Fund delivered to the ERISA Fund, and
there shall have been no change in any fee waiver or expense reimbursement
undertakings described in the Proxy Materials.
6.5 The Board of Trustees of the Gintel Fund, including a majority of
its trustees who are not "interested persons" of the Gintel Fund (as defined in
the 1940 Act), shall have determined that this Plan and the transactions
contemplated hereby are in the best interests of the Gintel Fund and that the
interest of shareholders of the Gintel Fund would not be diluted as a result of
such transactions, and the Gintel Fund shall have delivered to the ERISA Fund at
the Closing, a certificate, executed by an officer, to the effect that the
condition described in this paragraph has been satisfied.
6.6 The Gintel Fund shall have delivered to the ERISA Fund, pursuant to
paragraph 5.1(i), copies of financial statements as of and for its most recently
completed fiscal year.
7. CONDITIONS PRECEDENT TO OBLIGATIONS OF THE GINTEL FUND
The obligations of the Gintel Fund to complete the Reorganization shall
be subject, at the Gintel Fund's election, to the performance by the ERISA Fund
of all the obligations to be performed by it hereunder on or before the Closing
Date and, in
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addition thereto, the following conditions with respect to the ERISA Fund:
7.1 All representations and warranties of the ERISA Fund contained
herein shall be true and correct in all material respects as of the date hereof
and, except as they may be affected by the transactions contemplated herein, as
of the Closing Date, with the same force and effect as if made on and as of the
Closing Date.
7.2 The ERISA Fund shall have delivered, in accordance with Article 1
hereof, to the Gintel Fund a statement of the ERISA Fund Assets and Liabilities
together, if required by the Gintel Fund, with a list of the ERISA Fund's
portfolio securities and other assets showing the respective adjusted bases and
holding periods thereof for income tax purposes, as of the Closing Date,
certified by an appropriate officer of the ERISA Fund.
7.3 The ERISA Fund shall have delivered to the Gintel Fund at the
Closing a certificate executed by one of its officers, and dated as of the
Closing Date, to the effect that the representations and warranties of the ERISA
Fund made herein are true and correct at and as of the Closing Date, except as
they may be affected by the transactions contemplated herein, and as to such
other matters as the Gintel Fund shall reasonably request.
7.4 The Gintel Fund shall have received at the Closing an opinion of
legal counsel to the ERISA Fund, dated as of the Closing Date, in form
(including reasonable and customary qualifications and assumptions) reasonably
satisfactory to the Gintel Fund, substantially to the effect that:
(i) the ERISA Fund is a business trust validly existing under
the laws of the Commonwealth of Massachusetts and is duly registered as
an open-end, management investment company under the 1940 Act; (ii) the
execution, delivery and performance of this Plan will not result in a
violation of the ERISA Fund's Agreement and Declaration of Trust or
By-laws; (iii) the execution, delivery and performance of this Plan
have been duly authorized by all necessary action on the part of the
ERISA Fund, and this Plan has been duly authorized and delivered by the
ERISA Fund and is a valid and binding obligation of the ERISA Fund,
enforceable in accordance with its terms, subject to bankruptcy,
insolvency, reorganization, moratorium and other laws relating to or
affecting creditors' rights or remedies and to general equity
principles (regardless of whether considered in a proceeding in law or
equity), equitable defenses or waivers and the discretion of the court
before which any proceeding for specific performance, injunctive and
other forms of equitable relief may be brought; (iv) to the knowledge
of such counsel, no consent, approval, authorization or order of any
court or governmental authority of the United States or the
Commonwealth of Massachusetts or State of New York is required for the
consummation by the ERISA Fund of the Reorganization, except such as
are contemplated
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<PAGE>
hereunder or as are required to be obtained under the 1933 Act, the
1934 Act or 1940 Act, or such as may be required under applicable state
laws; and (v) except as otherwise disclosed in writing to the Gintel
Fund, to the best knowledge of such counsel, no litigation or
administrative proceeding or investigation of or before any court or
governmental body is presently pending or, to the best knowledge of
such counsel, threatened against the ERISA Fund or any of its
properties or assets, and, to the best knowledge of such counsel, the
ERISA Fund is not a party to or subject to the provisions of any order,
decree not of general application or judgment of any court or
governmental body that materially and adversely affects its business or
its ability to consummate the transactions contemplated herein. Such
counsel also shall state that they have participated in certain
conferences with trustees, officers or other representatives of the
ERISA Fund at which the contents of the Prospectus/Proxy Statement and
related matters were discussed and, although they are not passing upon
and do not assume any responsibility for the accuracy, completeness or
fairness of the statements contained in the Prospectus/Proxy Statement
or Registration Statement, on the basis of the foregoing (relying as to
materiality to a large extent upon the opinions of officers and other
representatives of the ERISA Fund), no facts have come to their
attention that lead them to believe that the Prospectus/Proxy Statement
as of its date, as of the date of the ERISA Fund's shareholders'
meeting, and as of the Closing Date, contained an untrue statement of a
material fact or omitted to state a material fact required to be stated
herein regarding the ERISA Fund or necessary in the light of the
circumstances under which they were made, to make the statements
therein regarding the ERISA Fund not misleading. Such opinion may state
that such counsel does not express any opinion or belief as to the
financial statements, fee tables, capitalization tables or other
financial data, or as to the information relating to the Gintel Fund,
contained in the Prospectus/Proxy Statement or Registration Statement,
and that such opinion is solely for the benefit of the Gintel Fund, its
trustees and officers. Such opinion also shall include such other
matters incident to the Reorganization as the Gintel Fund may
reasonably request.
In rendering such opinion, legal counsel to the ERISA Fund may
rely on an opinion of Massachusetts counsel (with respect to matters of
Massachusetts law) and on certificates of officers or trustees of the trust, in
each case reasonably acceptable to the Gintel Fund.
7.5 The Gintel Fund shall have received from Richard A. Eisner &
Company, LLP a letter addressed to the ERISA Fund and the Gintel Fund and dated
as of the effective date of the Registration Statement in form and substance
satisfactory to the Gintel Fund, to the effect that:
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(a) they are independent public accountants with respect to
the ERISA Fund within the meaning of the 1933 Act and the applicable
regulations thereunder;
(b) in their opinion, the financial statements and per unit
income and capital changes of the ERISA Fund included or incorporated
by reference in the Form N-14 Registration Statement and reported on by
them comply as to form in all material aspects with the applicable
accounting requirements of the 1933 Act and the regulations thereunder;
(c) on the basis of limited procedures agreed upon by the
Gintel Fund and the ERISA Fund and described in such letter (but not an
audit in accordance with generally accepted auditing standards) with
respect to the unaudited pro forma financial statements of the ERISA
Fund included in the Form N- 14 Registration Statement and the Proxy
Materials, and inquiries of appropriate officials of the ERISA Fund or
the trustee(s) thereof responsible for financial and accounting
matters, nothing came to their attention which caused them to believe
that (i) such unaudited pro forma financial statements do not comply as
to form in all material respects with the applicable accounting
requirements of the 1933 Act and the published rules and regulations
thereunder, or (ii) such unaudited pro forma financial statements are
not fairly presented in conformity with generally accepted accounting
principles applied on a basis substantially consistent with that of the
audited financial statements; and
(d) on the basis of limited procedures agreed upon by the
Gintel Fund and the ERISA Fund and described in such letter (but not an
examination in accordance with generally accepted auditing standards),
the information relating to the ERISA Fund appearing in the Form N-14
Registration Statement and the Proxy Materials that is expressed in
dollars or percentages of dollars (with the exception of performance
comparisons) has been obtained from the accounting records of the ERISA
Fund or from schedules prepared by officers of the ERISA Fund having
responsibility for financial and reporting matters and such information
is in agreement with such records, schedules or computations made
therefrom.
7.6 The ERISA Fund shall have delivered to the Gintel Fund, pursuant to
paragraph 5.2(h), copies of financial statements of the ERISA Fund as of and for
its most recently completed fiscal year.
7.7 The Gintel Fund shall have received from Richard A. Eisner &
Company, LLP a letter addressed to the ERISA Fund and the Gintel Fund and dated
as of the Closing Date stating that as of a date no more than three (3) business
days prior to the Closing Date, Richard A. Eisner & Company, LLP performed
limited procedures in connection with the ERISA Fund's most recent unaudited
financial statements and that (a) nothing came to their attention in performing
such limited procedures or otherwise that led them to believe that there had
been
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<PAGE>
any adverse changes in the financial condition, assets, liabilities or business
of the ERISA Fund, other than changes occurring in the ordinary course of
business, since the date of such audited financial statements, and (b) based on
such limited procedures, the representations made in their report on such
audited financial statements of the ERISA Fund remain true and correct.
7.8 On the Closing Date, the ERISA Fund Assets shall include no assets
that the Gintel Fund, by reason of the Gintel Fund's Agreement and Declaration
of Trust, 1940 Act requirements or otherwise, may not legally acquire.
7.9 The Board of Trustees of the ERISA Fund, including a majority of
the trustees who are not "interested persons" of the ERISA Fund (as defined by
the 1940 Act) shall have determined that this Plan and the transactions
contemplated hereby are in the best interests of the ERISA Fund and that the
interests of the shareholders in the ERISA Fund would not be diluted as a result
of such transactions, and the ERISA Fund shall have delivered to the Gintel Fund
at the Closing, a certificate, executed by an officer, to the effect that the
condition described in this subparagraph has been satisfied.
8. FURTHER CONDITIONS PRECEDENT TO OBLIGATIONS OF THE ERISA FUND
AND THE GINTEL FUND
The obligations herein of the ERISA Fund and of the Gintel Fund to
effect the Reorganization are each subject to the further conditions that on or
before the Closing Date:
8.1 This Plan and the transactions contemplated herein shall have been
approved by the requisite vote of the shareholders of the ERISA Fund in
accordance with the applicable provisions of the ERISA Fund's Agreement and
Declaration of Trust and By-laws and the requirements of the 1940 Act, and
evidence of such approval shall have been delivered to the Gintel Fund.
8.2 No action, suit or other proceeding shall be pending or threatened
before any court or governmental agency in which it is sought to restrain or
prohibit, or obtain damages or other relief in connection with, this Plan as it
relates to the Reorganization or any of the transactions related thereto.
8.3 All consents of other parties and all other consents, approvals and
permits of federal, state and local regulatory authorities (including, without
limitation, those of the SEC and of state securities authorities, including
"no-action" positions of or exemptive orders from such federal and state
authorities, and those of the Office of the Comptroller of the Currency ("OCC")
and the Department of Labor with respect to the Employee Retirement Income
Security Act of 1974 ("ERISA") or the Internal Revenue Service with respect to
the Code, deemed necessary by the Gintel Fund or the ERISA Fund to permit
consummation, in all material respects, of the Reorganization and transactions
related thereto shall have been
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obtained, except where failure to obtain any such consent, order or permit would
not, in the reasonable opinion of the party asserting that the condition to
closing has not been satisfied, involve a risk of a material adverse effect on
the assets or properties of the Gintel Fund or the ERISA Fund involved in the
Reorganization.
8.4 The Form N-14 Registration Statement and the Gintel Fund's
registration statement on Form N-1A covering the continuous offering of shares
of the Gintel Fund shall have become and shall be effective under the 1933 Act,
no stop orders suspending the effectiveness thereof shall have been issued and,
to the best knowledge of the ERISA Fund and the Gintel Fund, no investigation or
proceeding for that purpose shall have been instituted or be pending, threatened
or contemplated under the 1933 Act.
8.5 The Gintel Fund and the ERISA Fund shall have received an opinion
of legal counsel to the Gintel Fund, dated the Closing Date of the
Reorganization, addressed to, and in form and substance satisfactory to, the
Gintel Fund and the ERISA Fund to the effect that: (i) the exchange by the ERISA
Fund of substantially all its assets in exchange for shares of the Gintel Fund
and the assumption by the Gintel Fund of the liabilities of the ERISA Fund
pursuant to the Plan will constitute a reorganization within the meaning of
section 368(a)(1)(C) or 368(a)(1)(D) of the Code, respectively, depending upon
whether shareholders of the ERISA Fund receive in the aggregate less than fifty
percent, or fifty percent or more, of the shares of the Gintel Fund; (ii) the
ERISA Fund will not recognize any gain or loss as a result of the
Reorganization; (iii) the Gintel Fund will not recognize any gain or loss on the
receipt of the assets of the Gintel ERISA Fund in exchange for shares of the
Gintel Fund; (iv) the shareholders of the Gintel ERISA Fund will not recognize
any gain or loss on the exchange of their the Gintel ERISA Fund shares for the
Gintel Fund shares in the Reorganization; (v) the aggregate tax basis of shares
of the Gintel Fund received by each shareholder of the Gintel ERISA Fund will be
the same as the aggregate tax basis of the shares of the Gintel ERISA Fund will
be the same as the aggregate tax basis of the shares of the Gintel ERISA Fund
exchanged therefor; (vi) the Gintel Fund's adjusted tax bases in the assets
received from the Gintel ERISA Fund in the Reorganization will be the same as
the adjusted tax bases of such assets in the hands of the Gintel ERISA Fund
immediately prior to the Reorganization; (vii) the holding period of each former
shareholder of the Gintel ERISA Fund in the shares of the Gintel Fund received
in the Reorganization will include the period during which such shareholder held
his shares of the Gintel ERISA Fund as a capital asset; and (viii) the Gintel
Fund's holding periods in the assets received from the Gintel ERISA Fund in the
Reorganization will include the holding periods of such assets in the hands of
the Gintel ERISA Fund immediately prior to the Reorganization.
9. BROKERAGE FEES AND EXPENSES
9.1 The ERISA Fund represents and warrants to the Gintel Fund, and the
Gintel Fund represents and warrants to the ERISA Fund, that there are no brokers
or finders entitled to receive any payments in connection with the transactions
provided for herein.
9.2 The ERISA Fund and the Gintel Fund confirm their understanding that
each party will be responsible for its own expenses in connection with the
Reorganization, whether or not
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consummated (excluding extraordinary expenses such as litigation expenses,
damages and other expenses not normally associated with transactions of the type
contemplated by this Plan).
10. CLOSING.
The Closing shall be held at the offices of the ERISA Fund and shall
occur as of the commencement of business on (a) ________, 1996, or (b) if all
regulatory or shareholder approvals shall not have been received by such date,
then on the first Monday following receipt of all necessary regulatory approvals
and the final adjourned meeting of shareholders of the ERISA Fund at which this
Plan is considered and approved, or (c) such later time as the ERISA Fund may
determine, giving consideration to the best interests of the ERISA Fund. All
acts taking place at the Closing shall be deemed to take place simultaneously
unless otherwise provided.
11. EXPENSES.
The expenses of the transactions contemplated by this Plan shall be
borne by the Gintel Fund and the ERISA Fund, whether or not the transactions
contemplated hereby are consummated.
12. TERMINATION.
12.1 With respect to the ERISA Fund and the Gintel Fund, this Plan may
be terminated, and the Reorganization and any related transactions involving the
ERISA Fund and the Gintel Fund contemplated hereby may be abandoned, at any time
prior to the Closing:
(a) by the mutual written consent of the ERISA Fund and
the Gintel Fund;
(b) by the ERISA Fund by written notice to the Gintel Fund,
without liability to the ERISA Fund on account of such termination
(provided the ERISA Fund is not otherwise in material default or breach
of this Plan) upon a finding by the Board of Trustees of the ERISA Fund
that in the judgment of such Board, proceeding with the Reorganization
would be inadvisable; or
(c) by either the ERISA Fund or the Gintel Fund by written
notice to the other, without liability to the terminating party on
account of such termination (provided the terminating party is not
otherwise in material default or breach of this Plan) if (i) the other
party shall fail to perform in any material respect its agreements
contained herein required to be performed prior to the Closing Date,
(ii) the other party materially breaches or shall have materially
breached any of its representations, warranties or covenants contained
herein, or (iii) any other condition herein expressed to be precedent
to the obligations of the terminating party has
- 37-
<PAGE>
not been met and it reasonably appears that it will not or
cannot be met.
12.2 Termination of this Plan pursuant to paragraph 12.1(a) shall
terminate all obligations of the parties hereto with respect to the ERISA Fund
and the Gintel Fund affected by such termination and there shall be no liability
for damages on the part of the Gintel Fund, the ERISA Fund, or any of their
trustees, officers or employees, to any other party or its trustees, officers or
employees; provided, however, that notwithstanding any termination of this Plan
pursuant to paragraph 12.1, such termination shall not relieve the Gintel Fund
or the Gintel ERISA Fund of their obligations pursuant to paragraphs ___ and
___.
13. AMENDMENTS.
This Plan may be amended, modified or supplemented in such manner as
may be mutually agreed upon in writing by the authorized officers of the ERISA
Fund and the Gintel Fund; provided, however, that following the approval of this
Plan by shareholders with respect to the ERISA Fund, no such amendment may have
the effect of changing the provisions for determining the number of New Shares
to be issued to shareholders of record, or otherwise materially and adversely
affecting the ERISA Fund, without further approval by shareholders of the ERISA
Fund in accordance with paragraph ___ hereof.
14. GOVERNING LAW.
This Plan shall be governed and construed in accordance with the laws
of Massachusetts, without giving effect to the conflicts of laws provisions
thereof.
15. FURTHER ASSURANCES.
The ERISA Fund, with respect to the ERISA Fund and the Gintel Fund,
shall take such further action, prior to, at, and after the Closing, as may be
necessary or desirable and proper to consummate the transactions contemplated
hereby.
IN WITNESS WHEREOF, the Board of Trustees of the ERISA Fund has caused this Plan
to be executed on behalf of the ERISA Fund as of the date first set forth above
by their duly authorized representatives.
GINTEL ERISA FUND
Attest:
By:______________________________
- ----------------
- 38-
<PAGE>
GINTEL FUND
Attest:
By:___________________________
- ------------------
- 39 -
<PAGE>
APPENDIX A
Management's Discussion of Fund Performance
Gintel Fund's net asset value per share increased 31% in 1995, with dividends
reinvested. A number of our key holdings appreciated more than 50%, including
Federal National Mortgage, Capstead Mortgage, Chart Industries, Checkpoint
Systems, and Charter One Financial. During the fourth quarter we decided to lock
in part of our profits and defer taxable gains by selling some of our holdings
short "against-the-box". We closed out these positions in early 1996, generating
long-term capital gains exceeding nine million dollars. At present, the Fund
holds a healthy 21% uninvested cash reserve.
Our predictions at the beginning of 1995 turned out to be remarkably accurate.
We were positive in the fact of inflationary concerns, forecasts of higher
interest rates, and fears of stock market overvaluations. The Dow Jones
Industrial Average gained almost 1300 points, while the bond markets experienced
strong price gains as well, with yields falling close to 15-year lows. Major
reasons for this excellent performance in the financial markets were continuing
economic growth, a 20% rise in corporate profits, minimal wage and price
inflation, an easing of interest rates, and the first serious attempt in
Washington to address the nation's fiscal problems and the way politicians have
managed our affairs.
Looking to the future, we see several crosscurrents which are likely to impact
stock prices in the months ahead:
. Budget talks for the moment are stalemated and the government is being
financed on a month-to-month basis. We believe a solution, either
temporary or permanent, will be reached soon; nevertheless, the
election in November should be particularly controversial and may well
become a great ideological debate over what Americans should expect
from their federal government.
. Weakness at the consumer retail level, where current recessionary
forces are being felt the most, has already precipitated a number of
bankruptcies. This could act as a restraint against wholesale price
pressures that otherwise would be building. We expect these conditions
to abate and retail sales to accelerate later in the year.
. Interest rates, particularly short-term rates, may trend lower if the
Federal Reserve Board moves to counteract recessionary forces which are
beginning to appear in the economy. We expect a reduction in short-term
rates of at least 25 to 50 basis points any time between now and the
end of summer.
. Corporate profits, as a whole, can be expected to rise at a more
moderate rate in the current slow-growth, price-constrained environment
we foresee in the months ahead.
. This year's market will be dominated by sector rotation in stock groups
rather than by the overall price rises which characterized the averages
in 1995.
We do not believe the major stock market indices will rise as sharply as they
did last year. Nevertheless, we are working to find individual stocks that will
produce a superior performance for us in 1996. We are searching for companies
selling at reasonable prices with strong balance sheets and good earnings
potential. We will continue to reevaluate all Fund holdings in this
ever-changing environment, while making new investments when opportunities
present themselves.
On December 28, 1995, a $0.944 per share dividend was paid to Gintel Fund
shareholders of record as of December 19, 1995, representing net investment
income and short-term capital gains of $0.177 per share and long-term capital
gains of $0.767 per share.
For those of our shareholders who also have money market accounts with us, the
UST Master Money Fund and Government Money Fund changed their names at year-end
to Excelsior Money Fund and Excelsior Government Money Fund. Both Funds continue
to be managed by U.S. Trust Company of New York.
<PAGE>
ANNUAL PERFORMANCE
GINTEL FUND
Comparative Performance of a $10,000 investment
1986-1995
S&P 500 GINTEL FUND S&P 500 ERISA FUND
--------------- -------------- --------------- ---------------
Annual Annual Annual Annual
Return Retrun Return Return
1985 $10,000 $10,000 $10,000 24.02% $10,000
1986 18.83% $11,883 20.84% $12,084 18.83% $11,883 22.39% $12,239
1987 5.22% $12,503 -14.26% $10,361 5.22% $12,503 -0.99% $12,118
1988 16.58% $14,576 29.35% $13,402 16.58% $14,576 21.99% $14,783
1989 31.98% $19,238 23.81% $16,593 31.98% $19,238 15.49% $17.072
1990 -3.17% $18,628 -5.66% $15,488 -3.17% $18,628 -5.12% $16,198
1991 30.51% $24,311 15.57% $17,899 30.51% $24,311 13.55% $18,393
1992 7.64% $26,169 24.70% $22,320 7.64% $26,169 14.44% $21,049
1993 10.05% $28,799 2.04% $22,775 10.05% $28,799 5.38% $22,182
1994 1.27% $29,165 -16.46% $19,027 1.27% $29,165 -21.30% $17,457
1995 37.53% $40,110 30.97% $24,919 37.53% $40,100 26.62% $22,104
GINTEL FUND
Average Annual Rates of Return
One(1) Year 31.0%
Five (5) Years 11.4%
Ten (10) Years 11.0%
Investment results are net of expenses, with dividends and capital gains
reinvested. The S&P 500 is a broad market-weighted average dominated by
blue-chip stocks.
Past results offer no assurance as to future performance. The investment return
and principal value of an investment will fluctuate, so that an investor's
shares, when redeemed, may be worth more or less than their original cost. The
Fund's prospectus contains more and should be read carefully.
<PAGE>
PART B
Related Statement of Additional Information
GINTEL FUND
This Related Statement of Additional Information is not a prospectus
but should be read in conjunction with the Combined Prospectus/Proxy Statement
dated August __, 1996, which may be obtained from Gintel Fund, 6 Greenwich
Office Park, Greenwich, Connecticut 06831. Further information about the Gintel
ERISA Fund and the Gintel Fund is contained in and incorporated by reference to
the Statements of Additional Information of the Gintel ERISA Fund and the Gintel
Fund dated May 1, 1996. Incorporated by reference herein are: The audited
financial statements of the Gintel ERISA Fund and the Gintel Fund for the period
ended December 31, 1995 and the unaudited financial statements of the Gintel
ERISA Fund and the Gintel Fund for the period ended June 30, 1996.
The pro forma combined statement of assets and liabilities reflects the
financial position of Gintel Fund at June 30, 1996 as though the Reorganization
occurred as of that date. The pro forma combined statement of operations
reflects the results of operations of the Gintel Fund and Gintel ERISA Fund for
the period ended June 30, 1996 as though the Reorganization occurred at the
beginning of the period presented.
- 40 -
<PAGE>
Pro Forma Statement of Assets and Liabilities
June 30, 1996 (Unaudited)
<TABLE>
<CAPTION>
Gintel Fund
Gintel Gintel (immediately after
Fund ERISA Fund Reorganization)
------ ---------- -------------------
<S> <C> <C> <C>
Assets
Investments in securities, at value----
(identified cost -- Gintel Fund $ 82,306,084 $110,005,437 $30,210,125 $140,215,562
ERISA Fund $ 27,421,576,
Combined Fund $109,727,660)
Cash 35,482 5 35,487
Deposits with brokers for securities sold short 6,402,907 0 6,402,907
Receivables
Securities sold 1,872,737 2,062,306 3,935,044
Due from broker 954,100 0 954,100
Dividends and interest 381,169 53,287 434,455
------------ ----------- ------------
Total assets 119,651,832 32,325,723 151,977,555
------------ ----------- ------------
Liabilities
Securities sold short, at value ----
(proceeds -- Gintel Fund $6,402,907, 6,875,000 0 6,875,000
Combined $6,402,907)
Payables
Securities purchased 2,897,796 3,362,999 6,260,795
Capital stock reaquired 96,664 29,948 126,613
Accrued expenses 10,242 9,861 20,103
------------ ----------- ------------
Total liabilities 9,879,703 3,402,808 13,282,511
------------ ----------- ------------
Net Assets $109,772,129 $28,922,915 $138,695,044
============ =========== ============
Net asset value per share -- (Note F--2) $17.94 $31.98 $17.94
============ =========== ============
(based on shares outstanding -- Gintel Fund 6,118,707
ERISA Fund 904,500,
Combined Fund 7,730,910) of
beneficial interest (offering and redemption price)
</TABLE>
The accompanying notes to financial statements are an integral part hereof.
<PAGE>
PROFORMA SCHEDULE OF INVESTMENTS AS OF JUNE 30, 1996
(Unaudited)
Number
of Market
Shares Value
- --------------------------------------------------------------------------------
COMMON STOCKS
MORTGAGE BANKING (21.1%)
930,000 Capstead Mortgage Corporation $25,923,750
100,000 Federal National Mortgage Association 3,350,000
DIVERSIFIED MANUFACTURING & SERVICES (13.5%)
715,000 Chart Industries, Inc. 10,099,375
50,000 Tyco International LTD 2,037,500
100,000 The Singer Co N.V. 2,025,000
25,000 Johnson Controls, Inc. 1,737,500
75,000 Ogden Corporation 1,359,375
30,000 The Black & Decker Corporation 1,158,750
30,000 Portec, Inc.* 300,000
TECHNOLOGY RELATED (7.2%)
400,000 Intergraph Corporation 4,850,000
100,000 C-Cube Microsystems Inc.* 3,300,000
75,000 CheckFree Corporation* 1,490,625
25,000 Cognex Corporation* 403,125
PAPER - FOREST PRODUCTS (6.9%)
150,000 Union Camp Corporation 7,312,500
52,500 Weyerhaeuser Company 2,231,250
SECURITY PROTECTION SYSTEMS (5.0%)
200,000 Checkpoint Systems, Inc. 6,875,000
PHARMACEUTICAL - HEALTH CARE (4.2%)
70,000 Schering-Plough Corporation 4,392,500
75,000 GranCare, Inc. * 1,490,625
INSURANCE (3.2%)
100,000 Mercury General Corporation 4,375,000
SAVINGS & LOAN (3.0%)
120,000 Charter One Financial Corporation 4,185,000
RETAIL RELATED (2.8%)
100,000 Price/Costco Inc. * 2,162,500
100,000 Mac Frugals Bargains Close-Outs Inc.* 1,775,000
CONSTRUCTION & ENGINEERING (2.3%)
48,000 Fluor Corporation 3,138,000
COPPER PRODUCER (2.3%)
50,000 Phelps Dodge Corporation 3,118,750
OIL & GAS (2.2%)
20,000 Schlumberger Limited 1,685,000
8,000 Exxon Corporation 695,000
10,000 Kerr-McGee Corporation 608,750
<PAGE>
PROFORMA SCHEDULE OF INVESTMENTS AS OF JUNE 30, 1996
(Unaudited)
Number
of Market
Shares Value
- --------------------------------------------------------------------------------
TEXTILE -- APPAREL (2.1%)
890,000 Oneita Industries, Inc. + * 2,781,250
8,000 Haggar Corp. 108,000
DIVERSIFIED CHEMICAL PRODUCER (1.7%)
30,000 E.I. du Pont de Nemours and Company 2,373,750
FOOD PRODUCTS (1.6%)
37,500 H.J. Heinz Company 1,139,062
20,000 Northland Cranberries, Inc. 600,000
12,500 Sara Lee Corporation 404,688
AIRFREIGHT (1.4%)
75,000 Airborne Freight Corporation 1,950,000
BROADCAST EQUIPMENT (1.3%)
100,000 Vertex Communications Corporation * 1,862,500
NATURAL GAS PRODUCING & DISTRIBUTION (1.3%)
30,000 Consolidated Natural Gas Company 1,567,500
10,000 Equitable Resources, Inc. 282,500
OILFIELD SERVICES (1.3%)
50,000 Newpark Resources, Inc. * 1,837,500
ELECTRONIC SYSTEMS & EQUIPMENT (1.3%)
30,000 Harris Corporation 1,830,000
SOFT DRINKS (1.0%)
40,000 PepsiCo. Inc. 1,415,000
ENVIRONMENTAL SERVICES (0.5%)
100,000 OHM Corporation * 700,000
AUTO MANUFACTURING (0.5%)
20,000 Ford Motor Company 647,500
CONSUMER PRODUCTS (0.3%)
10,000 American Brands, Inc. 453,750
MISCELLANEOUS SECURITIES *** (1.7%) 2,320,687
- -------------------------------------------------------------------------------
TOTAL COMMON STOCKS (89.7%) 124,353,562
(Cost Basis:** $93,865,660)
<PAGE>
- --------------------------------------------------------------------------------
PROFORMA SCHEDULE OF INVESTMENTS AS OF JUNE 30, 1996
(Unaudited)
Principal
Amount
- --------------------------------------------------------------------------------
CASH EQUIVALENTS
10,862,000 Chase Securities, Inc. Repurchase Agreement 10,862,000
5.15% due 7/1/96 (Collateralized by U.S
Government Obligations)
5,000,000 General Electric Capital Corporation 5,000,000
5.38% due 7/11/96
- -------------------------------------------------------------------------------
TOTAL CASH EQUIVALENTS(11.4%) 15,862,000
(Cost Basis:** $15,862,000)
- -------------------------------------------------------------------------------
TOTAL INVESTMENTS (101.6%) 140,215,562
===============================================================================
* Non-income producing investments
** Cost basis for Federal income tax
purposes.
*** Includes 14 investments, some of which are non-income producing investments.
+ Robert Gintel is Chairman of the Board of Oneita Industries and owns 16% of
its common stock. As a result, Oneita may be deemed to be an affiliate of
the Fund.
The accompanying notes to financial statements are an integral part hereof.
<PAGE>
PRO FORMA STATEMENT OF OPERATIONS Twelve Months Ended June 30, 1996
(Unaudited)
<TABLE>
<CAPTION>
GINTEL GINTEL ERISA PRO FORMA
FUND FUND ADJUSTMENT PRO FORMA
============ ============ ============= =============
<S> <C> <C> <C> <C>
Dividend and interest income $ 2,779,374 $ 1,102,182 $ 3,881,556
------------ ------------ ------------
Administrative service fee 1,139,526 348,591 (64,389)* 1,423,728
Investment advisory fee 957,356 278,872 1,236,228
Other expenses 33,017 30,963 (2,000)** 61,980
------------ ------------ ------------ ------------
2,129,899 658,426 (66,389) 2,721,936
------------ ------------ ------------ ------------
Net investment income 649,475 443,756 66,389 1,159,620
------------ ------------ ------------ ------------
Net realized gain on investments 18,716,613 5,451,552 24,168,165
Change in unrealized appreciation
for the period 7,103,316 66,161 7,169,477
------------ ------------ ------------
Net gain on investments 25,819,929 5,517,713 31,337,642
------------ ------------ ------------
Net increase in net assets
resulting from operations $ 26,469,404 $ 5,961,469 $ 66,389 $ 32,497,262
============ ============ ============ ============
</TABLE>
* Adjusted to reflect the decrease in the annual rate which would have been in
effect had the funds been combined July 1, 1996.
The accompanying notes to financial statements are an integral part hereof.
<PAGE>
Pro Forma Notes to Financial Statements June 30, 1996
(Unaudited)
(NOTE A ) -- ORGANIZATION:
The Gintel Fund (the "Fund") is a Massachesetts business trust formed under the
laws of the Commonwealth of Massachusetts with authority to issue an unlimited
number of shares of beneficial interest.
(NOTE B) -- SIGNIFICANT ACCOUNTING POLICIES:
1. Security Valuation:
Investments in securities are valued at the last reported sales price on the
last business day of the period, or in the absence of a recorded sale, at the
mean of the closing bid and asked price on that date. Short-term investments are
valued at cost which approximates market value.
2. Federal Income Taxes:
It is the Fund's policy to comply with the requirements of the Internal Revenue
Code applicable to regulated investment companies and to distribute
substantially all of its taxable income and long-term gains to its shareholders.
Therefore, only a nominal Federal income tax provision is required.
3. Other:
As is common in the industry, security transactions are accounted for on the
trade date. Dividend income and distributions to shareholders are recorded on
the ex-dividend date.
Realized gain or loss on security transactions is determined on the basis of
first-in, first-out or specific identification.
(NOTE C ) -- INVESTMENT ADVISORY AGREEMENT:
The Fund has entered into an Investment Advisory Agreement with Gintel Equity
Management Inc., a related party, which provides for an annual fee of 1% to be
paid quarterly, based on the daily value of the Fund's net assets during the
preceding quarter. The fee will be reduced for any fiscal year, if the Fund's
expenses, as defined, exceed certain limitations.
(NOTE D ) -- ADMINISTRATIVE SERVICES AGREEMENT:
The Fund has entered into an Administrative Services Agreement which provides
that in consideration for the services provided by Gintel & Co., the Fund's
Distributor and a related party, and the payment by the Distributor of
substantially all of the Fund's expenses, including but not limited to brokerage
commissions and operating expenses (but excluding the Investment Advisor's fees,
the fees paid to non-interested Trustees, certain transaction costs, interest,
taxes and extraordinary expenses), the Distributor will receive a fee payable at
the beginning of each quarter based on average daily net assets during the
preceding quarter, at an annual rate of 1.25% of the first $50 million of the
average daily net assets of the Fund, 1.125% of the next $50 million of the
average daily net assets and 1.0% of the average daily net assets in excess of
$100 million.
<PAGE>
Pro Forma Notes to Financial Statements - - - continued June 30, 1996
(Unaudited)
(NOTE E ) -- LINE OF CREDIT:
The Fund has a bank line of credit of $15,000,000. Interest is payable at prime.
Loans are collateralized by securities owned by the Fund. At June 30, 1996 the
Fund had no outstanding borrowings.
(NOTE F ) -- OTHER MATTERS:
1. Investments
Unrealized appreciation at June 30, 1996 $40,045,199
Unrealized depreciation at June 30, 1996 (10,029,390)
----------
$30,015,809
===========
PRO FORMA FOR THE TWELVE MONTHS ENDED JUNE 30, 1996
Purchase of securities other than short-term investments $70,137,797
Sales of securities other than short-term investments $89,675,661
2. Acquisition of Gintel ERISA Fund
Pursuant to a plan of reorganization and upon approval by the shareholders of
the Gintel ERISA Fund, the Gintel Fund will acquire all the net assets of the
Gintel ERISA Fund. If the aquisition had occurred on June 30, 1996, the tax free
exchange of 1,612,203 shares of the Gintel Fund (valued at $29 million) for the
904,500 shares of Gintel ERISA Fund would have occurred. Gintel ERISA Fund's net
assets on June 30,1996 ($29 million), would be combined with those of Gintel
Fund. The aggregate net assets of Gintel Fund and Gintel ERISA Fund immediately
before the proposed acquisition were $109,772,129 and $28,922,915 respectively.
The combined net asstes immediately after the acquisition, based on a date of
June 30, 1996, were $138,695,044. Prior to the acquisition, Gintel ERISA Fund
will distribute substantially all of its undistributed net investment income and
net realized gain on investments. As of July 24, 1996, such amount aggregates
$4,000,000, which may increase or decrease prior to the closing. The Fund does
not anticipate that the net assets will decrease materially by the distribution
since the majority of Gintel ERISA Fund's shareholders are expected to reinvest
their distributions.
3. Capital Stock: ( in shares )
PRO FORMA
YEAR ENDED
6/30/96
----------
Shares issued 159,522
Shares issued in connection with the
acquisition of Gintel ERISA Fund 1,612,203
Shares reinvested 231,314
Shares repurchased (742,106)
---------
Net increase (decrease) 1,260,933
=========
<PAGE>
APPENDIX A
GINTEL ERISA FUND
SPECIAL MEETING OF SHAREHOLDERS -- SEPTEMBER 26, 1996
Please refer to the Proxy Statement for a discussion of these matters. THE
UNDERSIGNED HOLDER(S) OF SHARES OF STOCK OF THE GINTEL ERISA FUND HEREBY
CONSTITUTES AND APPOINTS ROBERT M. GINTEL AND STEPHEN G. STAVRIDES, OR EITHER OF
THEM, THE ATTORNEYS AND PROXIES OF THE UNDERSIGNED, WITH FULL POWER OF
SUBSTITUTION, TO VOTE THE SHARES LISTED BELOW AS DIRECTED, AND HEREBY REVOKES
ANY PRIOR PROXIES. To vote, mark an X in blue or black ink on the proxy card
below. THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF TRUSTEES OF GINTEL
ERISA FUND.
- ----Detach card at perforation and mail in postage paid envelope provided-------
- -----------------------
1. Vote on Proposal to approve an Agreement and Plan of Reorganization with
respect to the Gintel ERISA Fund.
FOR AGAINST ABSTAIN
|_| |_| |_|
In their discretion, the proxies are authorized to vote upon such other
business as may properly come before the meeting.
- 41 -
<PAGE>
- ----Detach card at perforation and mail in postage paid envelope provided-------
- -----------------------
GINTEL ERISA FUND
PROXY
THIS PROXY, WHEN PROPERLY EXECUTED AND RETURNED, WILL BE VOTED IN THE MANNER
DIRECTED HEREIN BY THE UNDERSIGNED. IF NO DIRECTION IS MADE, THIS PROXY WILL BE
VOTED FOR APPROVAL OF EACH PROPOSAL.
Please sign exactly as name appears on this card.
When account is joint tenants, all should sign.
When signing as administrator, trustee or
guardian, please give title. If a corporation or
partnership, sign in entity's name and by
authorized person.
x__________________________________________
x__________________________________________
Dated:_______________________________, 1996
- 42-
<PAGE>
Part C
Information required to be included in Part C is set forth under the appropriate
Item, so numbered, in Part C to this Registration Statement.
GINTEL FUND
PART C
Item 15. Indemnification.
Reference is hereby made to Article VIII of the Registrant's
Declaration Trust.
The Trustees and officers of the Registrant and the personnel of the
Registrant's investment adviser, administrator and distributor are insured under
an errors and omissions liability insurance policy. The Registrant and its
officers are also insured under the fidelity bond required by Rule 17g-1 under
the Investment Company Act of 1940.
Item 16. Exhibits.
Exhibit No. Description
EX-99.1 Agreement and Declaration of Trust.
EX-99.2 By- Laws.
EX-99.3 Inapplicable.
EX-99.4 Form of Agreement and Plan of Reorganization (filed
herewith as Exhibit A to Part A).
EX-99.5 Inapplicable.
EX-99.6 Investment Advisory Agreement.
EX-99.7 Distribution Agreement.
EX-99.9(a) Custodian Agreement (1)
EX-99.9(b) Transfer Agency Agreement.
EX-99.11(a) Opinion of Kramer, Levin, Naftalis & Frankel as
to the legality of the securities being issued.
EX-99.11(b) Opinion of Peabody & Brown as to the legality of the
securities being issued.
- 43 -
<PAGE>
EX-99.12 Opinion of Kramer, Levin, Naftalis & Frankel as to
tax consequences.
EX-99.13 Inapplicable.
EX-99.14 Consent of Richard A. Eisner & Company, LLP.
EX-99.15 Inapplicable.
EX-99.16 Powers of Attorney. 2
EX-99.17(a) The Registrant's declaration to register an
indefinite number of shares pursuant to Rule 24f-2
under the Investment Company Act of 1940.3
EX- 99.17(b) Prospectus and Statement of Additional
Information of Gintel Fund including audited
financial statements as of December 31, 1995.4
EX-99.17(c) Audited financial statements of Gintel ERISA Fund
as of December 31, 1995. 5
EX-99.17(d) Unaudited financial statements as of June 30, 1996
for Gintel Fund and Gintel ERISA Fund
- --------
(1) To be filed by amendment.
(2) Incorporated herein by reference to Post-Effective Amendment No. 1 to the
Registration Statement on Form N-1A of the Registrant (File No. 2-70207)
filed on June 5, 1981.
(3) Registrant has registered an indefinite number of its securities under the
Securities Act of 1933 pursuant to Rule 24f-2 under the Investment Company
Act of 1940. The Registrant electronically filed its Rule 24f-2 Notice for
its fiscal year ended December 31, 1995 on February 23, 1996, accession
number 0000922423-96-000072.
(4) Incorporated herein by reference to Post-Effective Amendment No. 19 to the
Registration Statement on Form N-1A of the Registrant (File No. 2-70207) as
filed electronically with the Securities and Exchange Commission on April
30, 1996, accession number 0000950123-96-001954.
(5) Incorporated herein by reference to Part B of Post- Effective Amendment No.
16 to the Registration Statement on Form N-1A of the Registrant (File No.
2- 74268) as filed electronically with the Securities and Exchange
Commission on May 1, 1996, accession number 0000950123-96-001955.
- 44 -
<PAGE>
Item 17. Undertakings
(1) The undersigned Registrant agrees that prior to any
public reoffering of the securities registered through
the use of a prospectus which is a part of this
Registration Statement by any person or party who is
deemed to be an underwriter within the meaning of Rule
145(c) of the Securities Act [17 CFR 230.145c], the
reoffering prospectus will contain the information
called for by the applicable registration form for
reofferings by persons who may be deemed underwriters,
in addition to the information called for by the other
items of the applicable form.
(2) The undersigned Registrant agrees that every prospectus
that is filed under paragraph (1) above will be filed
as a part of an amendment to the Registration Statement
and will not be used until the amendment is effective,
and that, in determining any liability under the 1933
Act, each post-effective amendment shall be deemed to
be a new registration statement for the securities
offered therein, and the offering of the securities at
that time shall be deemed to be the initial bona fide
offering of them.
(3) The undersigned Registrant undertakes to file, by post-
effective amendment, which may be filed under Rule
485(b) under the 1933 Act, an opinion of counsel
supporting the tax consequences of the proposed
reorganizatin within a reasonable time after receipt of
such opinion.
- 45 -
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
Registrant has caused this Pre-Effective Amendment to the Registration Statement
to be signed on its behalf in the City of Greenwich in the State of Connecticut
on the 29th day of July, 1996.
GINTEL FUND
By:/s/ Robert M. Gintel
Robert M. Gintel
Chairman of the Board
As required by the Securities Act of 1933, this Pre-Effective Amendment
to the Registration Statement has been signed by the following persons in the
capacities and on the dates indicated:
<TABLE>
<CAPTION>
Signatures Title Date
<S> <C> <C>
/s/ Robert M. Gintel Chief Executive Officer, Chairman of the July 29, 1996
- -------------------------------- Board and Trustee (Principal Executive
Robert M.Gintel Officer)
* Trustee
Thomas H. Lenagh
* Trustee
Francis J. Palamara
* Trustee
Russel R. Taylor
/s/ Stephen G. Stavrides President and July 29, 1996
- -------------------------------- Treasurer (Principal Financial and
Stephen G. Stavrides Accounting Officer)
*By /s/Susan J. Penry-Williams July 29, 1996
----------------------------
Susan J. Penry-Williams,
Attorney-in-fact, pursuant to
powers of attorney previously filed
with the Securities and Exchange
Commission
</TABLE>
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INDEX TO EXHIBITS
Exhibit Number
EX-99.1 Agreement and Declaration of Trust.
EX-99.2 By-Laws.
EX-99.6 Investment Advisory Agreement.
EX-99.7 Distribution Agreement
EX-99.9(a) Custodian Agreement
EX-99.9(b) Transfer Agency Agreement.
EX-99.11(a) Opinion of Kramer, Levin, Naftalis & Frankel
EX-99.11(b) Opinion of Peabody & Brown
EX-99.12 Opinion of Kramer, Levin, Naftalis & Frankel
EX-99.14 Consent of Richard A. Eisner & Company, LLP.
EX- 99.17(d) Unaudited financial statements as of June 30, 1996, of the
Gintel Fund and Gintel ERISA Fund.
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EX-99.1
Agreement and Declaration of Trust
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AGREEMENT AND DECLARATION OF TRUST
AGREEMENT AND DECLARATION OF TRUST made this 29th day of July, 1986, by the
Trustees hereunder, and by the holders of shares of beneficial interest to be
issued hereunder as hereinafter provided.
WITNESSETH that
WHEREAS, this Trust has been formed to carry on the business of an
investment company; and
WHEREAS, the Trustees have agreed to manage all property coming into their
hands as trustees of a Massachusetts voluntary association with transferable
shares in accordance with the provisions hereinafter set forth.
NOW, THEREFORE, the Trustees hereby declare that they will hold all cash,
securities and other assets, which they may from time to time acquire in any
manner as Trustees hereunder IN TRUST to manage and dispose of the same upon the
following terms and conditions for the pro rata benefit of the holders from time
to time of Shares in this Trust as hereinafter set forth.
ARTICLE I
NAME AND DEFINITIONS
Section 1. Name. This Trust shall be known as "Gintel Fund", and the
Trustees shall conduct the business of the Trust under that name or any other
name as they may from time to time determine.
Section 2. Definitions. Whenever used herein, unless otherwise required by
the context or specifically provided:
(a) The "Trust" refers to the Massachusetts business trust established by
this Agreement and Declaration of Trust, as amended from time to time;
(b) "Trustees" refers to the Trustees of the Trust named herein or elected
in accordance with Article IV:
(c) "Shares" means the equal proportionate transferable units of interest
into which the beneficial interest in the Trust shall be divided from time to
time or, if more than one series of Shares is authorized by the Trustees, the
equal proportionate transferable units into which each series of Shares shall be
divided from time to time;
(d) "Shareholder" means a record owner of Shares;
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(e) The "1940 Act" refers to the Investment Company Act of 1940 and the
Rules and Regulations thereunder, all as amended from time to time;
(f) The terms "Affiliated Person", "Assignment", "Commission", "Interested
Person", "Principal Underwriter" and "Majority Shareholder Vote" (the 67% or 50%
requirement of the third sentence of Section 2(a)(42) of the 1940 Act, whichever
may be applicable) shall have the meanings given them in the 1940 Act;
(g) "Declaration of Trust" shall mean this Agreement and Declaration of
Trust as amended or restated from time to time; and
(h) "By-laws" shall mean the By-laws of the Trust as amended from time to
time.
ARTICLE II
PURPOSE OF TRUST
The purpose of the Trust is to provide investors a managed investment
primarily in securities and debt instruments.
ARTICLE III
SHARES
Section 1. Division of Beneficial Interest. The Shares of the Trust shall
be issued in one or more series as the Trustees may, without shareholder
approval, authorize. Each series shall be preferred over all other series in
respect of the assets allocated to that series. The beneficial interest in each
series shall at all times be divided into Shares, without par value, each of
which shall represent any equal proportionate interest in the series with each
other Share of the same series, none having priority or preference over another.
The number of Shares authorized shall be unlimited. The Trustees may from time
to time divide or combine the Shares into a greater or lesser number without
thereby changing the proportionate beneficial interests in the series.
Section 2. Ownership of Shares. The ownership of Shares shall be recorded
on the books of the Trust or a transfer or similar agent. No certificates
certifying the ownership of Shares shall be issued except as the Trustees may
otherwise determine from time to time. The Trustees may make such rules as they
consider appropriate for the issuance of Share certificates,
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the transfer of Shares and similar matters. The record books of the Trust as
kept by the Trust or any transfer or similar agent, as the case may be, shall be
conclusive as to who are the Shareholders of each series and as to the number of
Shares of each series held from time to time by each Shareholder.
Section 3. Investment in the Trust. The Trustees shall accept investments
in the Trust from such persons and on such terms and for such consideration,
which may consist of cash or tangible or intangible property or a combination
thereof, as they from time to time authorize.
All consideration received by the Trust for the issue or sale of Shares of
each series, together with all income, earnings, profits, and proceeds thereof,
including any proceeds derived from the sale, exchange or liquidation thereof,
and any funds or payments derived from any reinvestment of such proceeds in
whatever form the same may be, shall irrevocably belong to the series of Shares
with respect to which the same were received by the Trust for all purposes,
subject only to the rights of creditors, and shall be so handled upon the books
of account of the Trust and are herein referred to as "assets of" such series.
Section 4. No Preemptive Rights. Shareholders shall have no preemptive or
other right to subscribe to any additional Shares or other securities issued by
the Trust.
Section 5. Status of Shares and Limitation of Personal Liability. Shares
shall be deemed to be personal property giving only the rights provided in this
instrument. Every Shareholder by virtue of having become a Shareholder shall be
held to have expressly assented and agreed to the terms hereof and to have
become a party hereto. The death of a Shareholder during the continuance of the
Trust shall not operate to terminate the same nor entitle the representative of
any deceased Shareholder to an accounting or to take any action in court or
elsewhere against the Trust or the Trustees, but only to the rights of said
decedent under this Trust. Ownership of Shares shall not entitle the Shareholder
to any title in or the whole or any part of the Trust property or right to call
for a partition or division of the same or for an accounting, nor shall the
ownership of Shares constitute the Shareholders partners. Neither the Trust nor
the Trustees, nor any officer, employee or agent of the Trust shall have any
power to bind personally any Shareholder, nor except as specifically provided
herein to call upon any Shareholder for the payment of any sum of money or
assessment whatsoever other than such as the Shareholder may at any time
personally agree to pay.
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ARTICLE IV
THE TRUSTEES
Section 1. Election. The persons who shall act as Trustees until the first
annual meeting or until their successors are duly chosen and qualify are the
initial Trustees executing this Agreement and Declaration of Trust or any
counterpart thereof. The number of Trustees shall be as provided in the Bylaws
or as fixed from time to time by the Trustees. The shareholders may elect
Trustees at any meeting of Shareholders called by the Trustees for that purpose.
Each Trustee shall serve during the continued lifetime of the Trust until he
dies, resigns, or is removed, or, if sooner, until the next meeting of
Shareholders called for the purpose of electing Trustees and the election and
qualification of his successor. Any Trustee may resign at any time by written
instrument signed by him and delivered to any officer of the Trust, to each
other Trustee or to a meeting of the Trustees. Such resignation shall be
effective upon receipt unless specified to be effective at some other time.
Except to the extent expressly provided in a written agreement with the Trust,
no Trustee resigning and no Trustee removed shall have any right to any
compensation for any period following his resignation or removal, or any right
to damages on account of such removal.
Section 2. Effect of Death, Resignation, etc. of a Trustee. The death,
declination, resignation, retirement, removal or incapacity of the Trustees, or
any one of them, shall not operate to annul the Trust or to revoke any existing
agency created pursuant to the terms of this Declaration of Trust.
Section 3. Powers. Subject to the provisions of this Declaration of Trust,
the business of the Trust shall be managed by the Trustees, and they shall have
all powers necessary or convenient to carry out that responsibility. Without
limiting the foregoing, the Trustees may adopt By-laws not inconsistent with
this Declaration of Trust providing for the conduct of the business of the Trust
and may amend and repeal them to the extent that such By-laws do not reserve
that right to the Shareholders; they may enlarge or reduce their number, may
fill vacancies in their number, including vacancies caused by enlargement of
their number, and may remove Trustees with or without cause; they may elect and
remove, with or without cause, such officers and appoint and terminate such
agents as they consider appropriate; they may appoint from their own number, and
terminate, any one or more committees consisting of two or more Trustees,
including an executive committee which may, when the Trustees are not in
session, exercise some or all of the power and authority of the Trustees as the
Trustees may determine; they may employ one or more custodians of the assets of
the Trust and may authorize such
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custodians to employ subcustodians and to deposit all or any part of such assets
in a system or systems for the central handling of securities, retain a transfer
agent or a Shareholder servicing agent, or both, provide for the distribution of
Shares by the Trust, through one or more principal underwriters or otherwise,
set record dates for the determination of Shareholders with respect to various
matters, and in general delegate such authority as they consider desirable to
any officer of the Trust, to any committee of the Trustees and to any agent or
employee of the Trust or to any such custodian or underwriter.
Without limiting the foregoing, the Trustees shall have power and
authority:
(a) To invest and reinvest cash, and to hold cash uninvested;
(b) To sell, exchange, lend, pledge, mortgage, hypothecate, write options
on and lease any or all of the assets of the Trust;
(c) To act as a distributor of shares and as underwriter of, or broker or
dealer in, securities or other property;
(d) To vote or give assent, or exercise any rights of ownership, with
respect to stock or other securities or property; and to execute and deliver
proxies or powers of attorney to such person or persons as the Trustees shall
deem proper, granting to such person or persons such power and discretion with
relation to securities or property as the Trustees shall deem proper;
(e) To exercise powers and rights of subscription or otherwise which in any
manner arise out of ownership of securities;
(f) To hold any security or property in a form not indicating any trust,
whether in bearer, unregistered or other negotiable form, or in the name of the
Trustees or of the Trust or in the name of a custodian, sub-custodian or other
depositary or a nominee or nominees or otherwise;
(g) To allocate assets, liabilities and expenses of the Trust to a
particular series of Shares or to apportion the same among two or more series,
provided that any liabilities or expenses incurred by a particular series of
Shares shall be payable solely out of the assets of that series;
(h) To consent to or participate in any plan for the reorganization,
consolidation or merger of any corporation or issuer, any security of which is
or was held in the Trust; to consent to any contract, lease, mortgage, purchase
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or sale of property by such corporation or issuer, and to pay calls or
subscriptions with respect to any security held in the Trust;
(i) To join with other security holders in acting through a committee,
depositary, voting trustee or otherwise, and in that connection to deposit any
security with, or transfer any security to, any such committee, depositary or
trustee, and to delegate to them such power and authority with relation to any
security (whether or not so deposited or transferred) as the Trustees shall deem
proper, and to agree to pay, and to pay, such portion of the expenses and
compensation of such committee, depositary or trustee as the Trustees shall deem
proper;
(j) To compromise, arbitrate or otherwise adjust claims in favor of or
against the Trust or any matter in controversy, including but not limited to
claims for taxes;
(k) To enter into joint ventures, general or limited partnerships and any
other combinations or associations;
(l) To borrow funds;
(m) To enter into contracts of every kind and description;
(n) To endorse or guarantee the payment of any notes or other obligations
of any person; to make contracts of guaranty or suretyship, or otherwise assume
liability for payment thereof; and to mortgage and pledge the Trust property or
any part thereof to secure any of or all such obligations;
(o) To purchase and pay for entirely out of Trust property such insurance
as they may deem necessary or appropriate for the conduct of the business,
including without limitation, insurance policies insuring the assets of the
Trust and payment of distributions and principal on its portfolio investments,
and insurance policies insuring the Shareholders, Trustees, officers, employees,
agents, investment advisers or managers, principal underwriters, or independent
contractors of the Trust individually against all claims and liabilities of
every nature arising by reason of holding, being or having held any such office
or position, or by reason of any action alleged to have been taken or omitted by
any such person as Shareholder, Trustee, officer, employee, agent, investment
adviser or manager, principal underwriter, or independent contractor, including
any action taken or omitted that may be determined to constitute negligence,
whether or not the Trust would have the power to indemnify such person against
such liability;
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(p) To pay pensions for faithful service, as deemed appropriate by the
Trustees, and to adopt, establish and carry out pension, profitsharing, share
bonus, share purchase, savings, thrift and other retirement, incentive and
benefit plans, trusts and provisions, including the purchasing of life insurance
and annuity contracts as a means of providing such retirement and other
benefits, for any or all of the Trustees, officers, employees and agents of the
Trust; and
(q) To engage in any other lawful act or activity in which corporations
organized under the Massachusetts Business Corporation Law may engage.
The Trustees shall not in any way be bound or limited by any present or
future law or custom in regard to investments by trustees.
Except as otherwise provided herein or from time to time in the By-laws,
any action to be taken by the Trustees may be taken by a majority of the
Trustees present at a meeting of Trustees (a quorum being present), within or
without Massachusetts, including any meeting held by means of a conference
telephone or other communications equipment by means of which all persons
participating in the meeting can hear each other at the same time and
participation by such means shall constitute presence in person at a meeting, or
by written consents of a majority of the Trustees then in office.
Section 4. Payment of Expenses by Trust. The Trustees are authorized to pay
or to cause to be paid out of the principal or income of the Trust, or partly
out of principal and partly out of income, as they deem fair, all expenses,
fees, charges, taxes and liabilities incurred or arising in connection with the
Trust, in connection with the management thereof, or in connection with the
financing of the sales of Shares, including, but not limited to, the Trustees'
compensation and such expenses and charges for the services of the Trust's
officers, employees, any investment adviser, manager, or sub-adviser, principal
underwriter, auditor, counsel, custodian, transfer agent, shareholder servicing
agent, and such other agents or independent contractors and such other expenses
and charges as the Trustees may deem necessary or proper to incur, provided,
however, that all expenses, fees, charges, taxes and liabilities incurred or
arising in connection with a particular series of Shares as determined by the
Trustees, shall be payable solely out of the assets of that series.
Section 5. Ownership of Assets of the Trust. Title to all of the assets of
each series of Shares and of the Trust shall at all times be considered as
vested in the Trustees.
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Section 6. Advisory, Management and Distribution Services. The Trustees
may, at any time and from time to time, contract for exclusive or nonexclusive
advisory and/or management services with any corporation, trust, association or
other organization (the "Manager"), every such contract to comply with such
requirements and restrictions as may be set forth in the Bylaws; and any such
contract may provide for one or more subadvisers who shall perform all or part
of the obligations of the Manager under such contract and may contain such other
terms interpretive of or in addition to said requirements and restrictions as
the Trustees may determine, including, without limitation, authority to
determine from time to time what investments shall be purchased, held, sold or
exchanged and what portion, if any, of the assets of the Trust shall be held
uninvested and to make changes in the Trust's investments. The Trustees may
also, at any time and from time to time, contract with the Manager or any other
corporation, trust, association or other organization, appointing it exclusive
or nonexclusive distributor or principal underwriter for the Shares, every such
contract to comply with such requirements and restrictions as may be set forth
in the By-laws; and any such contract may contain such other terms interpretive
of or in addition to said requirements and restrictions as the Trustees may
determine.
The fact that:
(i) any of the Shareholders, Trustees or officers of the Trust is a
shareholder, director, officer, partner, trustee, employee, manager, adviser,
principal underwriter or distributor or agent of or for any corporation, trust,
association, or other organization, or of or for any parent or affiliate of any
organization, with which an advisory or management contract, or principal
underwriter's or distributor's contract, or transfer, shareholder servicing or
other agency contract may have been or may hereafter be made, or that any such
organization, or any parent or affiliate thereof, is a Shareholder or has an
interest in the Trust, or that
(ii) any corporation, trust, association or other organization with which
an advisory or management contract or principal underwriter's or distributor's
contract, or transfer, shareholder servicing or other agency contract may have
been or may hereafter be made also has an advisory or management contract, or
principal underwriter's or distributor's contract, or transfer, shareholder
servicing or other agency contract with one or more other corporations, trusts,
associations or other organizations, or has other business or interests shall
not affect the validity of any such contract or disqualify any Shareholder,
Trustee or officer of the Trust from voting upon or executing the same or create
any liability or accountability to the Trust or its Shareholders.
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ARTICLE V
SHAREHOLDERS' VOTING POWERS AND MEETINGS
Shareholders shall have such power to vote as is provided for in, and may
hold meetings and take actions pursuant to the provisions of the By-laws. A
majority of the outstanding Trust shares may vote to remove a trustee at a
special meeting, called for that purpose or by a written declaration filed with
the Trust's custodian. A special meeting of Shareholders for the purpose of
removal of a trustee will be called upon the written request of at least 10
percent of the Trust shares then outstanding.
ARTICLE VI
DISTRIBUTIONS, REDEMPTIONS AND REPURCHASES
Section 1. Distributions. The Trustees may each year, or more frequently if
they so determine, distribute to the Shareholders of each series such income and
capital gains relating to such series, accrued or realized, as the Trustees may
determine, after providing for actual and accrued expenses and liabilities
(including such reserves as the Trustees may establish) determined in accordance
with good accounting practices. The Trustees shall have full discretion to
determine which items shall be treated as income and which items as capital and
their determination shall be binding upon the Shareholders. Distributions of
each year's income of each series shall be distributed pro rata to Shareholders
of a series in proportion to the number of Shares of such series held by each of
them. Such distributions shall be made in cash or Shares or a combination
thereof as determined by the Trustees. Any such distribution paid in Shares of a
series will be paid at the net asset value thereof as determined in accordance
with the By-laws.
Section 2. Redemptions and Repurchases. The Trust shall purchase such
Shares as are offered by any Shareholder for redemption, upon the presentation
of any certificate for the Shares to be purchased, a proper instrument of
transfer and a request directed to the Trust or a person designated by the Trust
that the Trust purchase such Shares, or in accordance with such other procedures
for redemption as the Trustees may from time to time authorize; and the Trust
will pay therefor the net asset value thereof, as next determined in accordance
with the By-laws, less such redemption charge or fee as the Trustees may
determine from time to time. Payment for said Shares shall be made by the Trust
to the Shareholder within seven days after the date on which the request is
made. The obligation set forth in this
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Section 2 is subject to the provision that in the event that any time the New
York Stock Exchange is closed for other than customary weekends or holidays or
if permitted by rules of the Commission, during periods when trading on the
Exchange is restricted or during any emergency which makes it impractical for
the Trust to dispose of its investments or to determine fairly the value of its
net assets, or during any other period permitted by order of the Commission for
the protection of investors, such obligation may be suspended or postponed by
the Trustees. The Trust may also purchase or repurchase Shares at a price not
exceeding the net asset value of such Shares in effect when the purchase or
repurchase or any contract to purchase or repurchase is made.
Section 3. Redemptions at the Option of the Trust. The Trust shall have the
right at its option and at any time to redeem Shares of any Shareholder at the
net asset value thereof as determined in accordance with the By-laws: (i) if at
such time such Shareholder owns fewer Shares of a particular series than, or
Shares of a particular series having an aggregate net asset value of less than,
an amount determined from time to time for such series by the Trustees; or (ii)
to the extent that such Shareholder owns Shares of a particular series of Shares
equal to or in excess of a percentage of the outstanding Shares of that series
determined from time to time by the Trustees; or (iii) to the extent that such
Shareholder owns Shares of the Trust representing a percentage equal to or in
excess of such percentage of the aggregate number of outstanding Shares of the
Trust or the aggregate net asset value of the Trust determined from time to time
by the Trustees.
Section 4. Dividends, Distributions, Redemptions and Repurchases. No
dividends or distribution (including, without limitation, any distribution paid
upon termination of the Trust or of any series) with respect to, nor any
redemption or repurchase of, the Shares of any series shall be affected by the
Trust other than from the assets allocated to such series.
ARTICLE VII
COMPENSATION AND LIMITATION OF LIABILITY OF TRUSTEES
Section 1. Compensation. The Trustees as such shall be entitled to
reasonable compensation from the Trust; they may fix the amount of their
compensation. Nothing herein shall in any way prevent the employment of any
Trustee for advisory, management, legal, accounting, investment banking,
underwriting, brokerage, or investment dealer or other services and payment for
the same by the Trust.
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<PAGE>
Section 2. Limitation of Liability. The Trustees shall not be responsible
or liable in any event for any neglect or wrongdoing of any officer, agency,
employee, manager or principal underwriter of the Trust, nor shall any Trustee
be responsible for the act or omission of any other Trustee, but nothing herein
contained shall protect any Trustee against any liability 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.
Every note, bond, contract, instrument, certificate or undertaking and
every other act or thing whatsoever executed or done by or on behalf of the
Trust or the Trustees or any of them in connection with the Trust shall be
conclusively deemed to have been executed or done only in or with respect to
their or his or her capacity as Trustees or Trustee, and such Trustees or
Trustee shall not be personally liable thereon.
ARTICLE VIII
INDEMNIFICATION
Section 1. Trustees, Officers, etc. The Trust shall indemnify each of its
Trustees and officers (including persons who serve at the Trust's request as
directors, officers or trustees of another organization in which the Trust has
any interest as a shareholder, creditor or otherwise) (hereinafter referred to
as a "Covered Person") against all liabilities and expenses, including but not
limited to amounts paid in satisfaction of judgments, in compromise or as fines
and penalties and counsel fees reasonably incurred by any Covered Person in
connection with the defense or disposition of any action, suit or other
proceeding, whether civil or criminal, before any court or administrative or
legislative body, in which such Covered Person may be or may have been involved
as a party or otherwise or with which such Covered Person may be or may have
been threatened, while in office or thereafter, by reason of being or having
been such a Covered Person except with respect to any matter as to which such
Covered Person shall have been finally adjudicated in any such action, suit or
other proceeding (a) not to have acted in good faith in the reasonable belief
that such Covered Person's action was in the best interests of the Trust or (b)
to be liable to the Trust or its Shareholders by reason of wilful misfeasance,
bad faith, gross negligence or reckless disregard of the duties involved in the
conduct of such Covered Person's office. Expenses, including counsel fees so
incurred by any such Covered Person (but excluding amounts paid in satisfaction
of judgments, in compromise or as fines or penalties) shall be paid from time to
time by the Trust in advance of the final disposition of any such action, suit
or
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proceeding upon receipt of any undertaking by or on behalf of such Covered
Person to repay amounts so paid to the Trust if it is ultimately determined that
indemnification of such expenses is not authorized under this Article, provided,
however, that either (a) such Covered Person shall have provided appropriate
security for such undertaking, (b) the Trust shall be insured against losses
arising from any such advance payments or (c) either a majority of the
disinterested Trustees acting on the matter (provided that a majority of the
disinterested Trustees then in office act on the matter), or independent legal
counsel in a written opinion shall have determined, based upon a review of
readily available facts (as opposed to a full trial type inquiry) that there is
a reason to believe that such Covered Person will be found entitled to
indemnification under this Article.
Section 2. Compromise Payment. As to any matter disposed of (whether by a
compromise payment, pursuant to a consent decree or otherwise) without an
adjudication by a court, or by any other body before which the proceeding was
brought, that such Covered Person either (a) did not act in good faith in the
reasonable belief that his or her action was in the best interests of the Trust
or (b) is liable to the Trust or its Shareholders by reason of wilful
misfeasance, bad faith, gross negligence or reckless disregard of the duties
involved in the conduct of his or her office, indemnification shall be provided
if (a) approved as in the best interests of the Trust, after notice that it
involves such indemnification, by at least a majority of the disinterested
Trustees acting on the matter (provided that a majority of the disinterested
Trustees then in office act on the matter) upon a determination, based upon a
review of readily available facts (as opposed to a full trial type inquiry) that
such Covered Person acted in good faith in the reasonable belief that his or her
action was in the best interests of the Trust and is not liable to the Trust or
its Shareholders by reasons of wilful misfeasance, bad faith, gross negligence
or reckless disregard, of the duties involved in the conduct of his or her
office, or (b) there has been obtained in opinion in writing of independent
legal counsel, based upon a review of readily available facts (as opposed to a
full trial type inquiry) to the effect that such Covered Person appears to have
acted in good faith in the reasonable belief that his or her action was in the
best interests of the Trust and that such indemnification would not protect such
Covered Person against any liability to the Trust to which he or she would
otherwise be subject by reason of wilful misfeasance, bad faith, gross
negligence or reckless disregard of the duties involved in the conduct of his or
her office. Any approval pursuant to this Section shall not prevent the recovery
from any Covered Person of any amount paid to such Covered Person in accordance
with this Section as indemnification if such Covered Person is subsequently
adjudicated by a court of competent jurisdiction not to have acted in good faith
in the reasonable belief that such Covered Person's action was in the best
interests of the Trust or to have
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been liable to the Trust or its Shareholders by reason of wilful misfeasance,
bad faith, gross negligence or reckless disregard of the duties involved in the
conduct of such Covered Person's office.
Section 3. Indemnification Not Exclusive. The right of indemnification
hereby provided shall not be exclusive of or affect any other rights to which
such Covered Person may be entitled. As used in this Article VIII, the term
"Covered Person" shall include such person's heirs, executors and administrators
and a "disinterested Trustee" is a Trustee who is not an "interested person" of
the Trust as defined in Section 2(a)(19) of the 1940 Act (or who has been
exempted from being an "interested person" by any rule, regulation or order of
the Commission) and against whom none of such actions, suits or other
proceedings or another action, suit or other proceeding on the same or similar
grounds is then or has been pending. Nothing contained in this Article shall
affect any rights to indemnification to which personnel of the Trust, other than
Trustees or officers, and other persons may be entitled by contract or otherwise
under law, nor the power of the Trust to purchase and maintain liability
insurance on behalf of any such person; provided, however, that the Trust shall
not purchase or maintain any such liability insurance in contravention of
applicable law, including without limitation the 1940 Act.
Section 4. Shareholders. In case any Shareholder or former Shareholder
shall be held to be personally liable solely by reason of his or her being or
having been a Shareholder and not because of his or her acts or omissions or for
some other reason, the Shareholder or former Shareholder (or his or her heirs,
executors, administrators or other legal representatives or in the case of a
corporation or other entity, its corporate or other general successor) shall be
entitled to be held harmless from and indemnified against all loss and expense
arising from such liability, but only out of the assets of the particular series
of Shares of which he or she is or was a Shareholder.
ARTICLE IX
MISCELLANEOUS
Section 1. Trustees, Shareholders, etc. Not Personally Liable; Notice. All
persons extending credit to, contracting with or having any claim against the
Trust or a particular series of Shares shall look only to the assets of the
Trust or the assets allocated to that particular series of Shares for payment
under such credit, contract or claim; and neither the Shareholders nor the
Trustees, nor any of the Trust's officers, employees or agents, whether past,
present or future, shall be
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personally liable therefor. Nothing in this Declaration of Trust shall protect
any Trustee against any liability to which such Trustee would otherwise be
subject by reason of wilful misfeasance, bad faith, gross negligence or reckless
disregard of the duties involved in the conduct of the office of Trustees.
Every note, bond, contract, instrument, certificate or undertaking made or
issued by the Trustees or by any officer or officers shall give notice that this
Declaration of Trust is on file with the Secretary of The Commonwealth of
Massachusetts and shall recite that the same was executed or made by or on
behalf of the Trust or by them as Trustee or Trustees or as officers or officer
and not individually and that the obligations of such instrument are not binding
upon any of them or the Shareholders individually but are binding only upon the
assets and property of the Trust, and may contain such further recital as he or
she or they may deem appropriate, but the omission thereof shall not operate to
bind any Trustee or Trustees or officer or officers or Shareholder or
Shareholders individually.
Section 2. Trustee's Good Faith Action, Expert Advice, No Bond or Surety.
The exercise by the Trustees of their powers and discretions hereunder shall be
binding upon everyone interested. A Trustee shall be liable for his or her own
wilful misfeasance, bad faith, gross negligence or reckless disregard of the
duties involved in the conduct of the office of Trustee, and for nothing else,
and shall not be liable for errors of judgment or mistakes of fact or law. The
Trustees may take advice of counsel or other experts with respect to the meaning
and operation of this Declaration of Trust, and shall be under no liability for
any act or omission in accordance with such advice or for failing to follow such
advice. The Trustees shall not be required to give any bond as such, nor any
surety if a bond is required.
Section 3. Liability of Third Persons Dealing with Trustees. No person
dealing with the Trustees shall be bound to make any inquiry concerning the
validity of any transaction made or to be made by the Trustees or to see to the
application of any payments made or property transferred to the Trust or upon
its order.
Section 4. Duration and Termination of Trust. Unless terminated as provided
herein, the Trust shall continue without limitation of time. The Trust may be
terminated at any time by the vote of Shareholders holding at least a majority
of the Shares of each series entitled to vote or by the Trustees by written
notice to the Shareholders. Any series of Shares may be terminated at any time
by vote of Shareholders holding at least a majority of the Shares of such series
entitled to vote or by the Trustees by written notice to the Shareholders of
such series.
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<PAGE>
Upon termination of the Trust or of any one or more series of Shares, after
paying or otherwise providing for all charges, taxes, expenses and liabilities,
whether due or accrued or anticipated, of the Trust or of the particular series
as may be determined by the Trustees, the Trust shall in accordance with such
procedures as the Trustees consider appropriate reduce the remaining assets to
distributable form in cash or shares or other securities, or any combination
thereof, and distribute the proceeds to the Shareholders of the series involved,
ratably according to the number of Shares of such series held by the several
Shareholders of such series on the date of termination.
Section 5. Filing of Copies, References, Headings. The original or a copy
of this instrument and of each amendment hereto shall be kept at the office of
the Trust where it may be inspected by any Shareholder. A copy of this
instrument and of each amendment hereto shall be filed by the Trust with the
Secretary of the Commonwealth of Massachusetts and with the Boston City Clerk,
as well as any other governmental office where such filing may from time to time
be required. Anyone dealing with the Trust may rely on a certificate by an
officer of the Trust as to whether or not any such amendments have been made and
as to any matters in connection with the Trust hereunder, and, with the same
effect as if it were the original, may rely on a copy certified by an officer of
the Trust to be a copy of this instrument or of any such amendments. In this
instrument and in any such amendment, references to this instrument and all
expressions like "herein", "hereof" and "hereunder" shall be deemed to refer to
this instrument as amended or affected by any such amendments. Headings are
placed herein for convenience of reference only and shall not be taken as a part
hereof or control or affect the meaning, construction or effect of this
instrument. This instrument may be executed in any number of counterparts each
of which shall be deemed an original.
Section 6. Applicable Law. This Declaration of Trust is created under and
is to be governed by and construed and administered according to the laws of The
Commonwealth of Massachusetts. The Trust shall be of the type commonly called a
Massachusetts business trust, and without limiting the provisions hereof, the
Trust may exercise all powers which are ordinarily exercised by such a trust.
Section 7. Amendments. This Declaration of Trust may be amended from time
to time by an instrument in writing signed by a majority of the then Trustees
when authorized to do so by vote of Shareholders holding a majority of the
Shares of each series entitled to vote, expect that an amendment which shall
affect the holders of one or more series of Shares but not the holders of all
outstanding series shall be authorized by vote of the Shareholders holding a
majority of the Shares entitled to
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<PAGE>
vote of each series affected and no vote of Shareholders of a series not
affected shall be required. Amendments having the purpose of changing the name
of the Trust or of supplying any omission, curing any ambiguity or curing,
correcting or supplementing any defective or inconsistent provision contained
herein shall not require authorization by Shareholder vote.
Section 8. Use of Word "Gintel". Robert M. Gintel ("RMG") and Gintel Equity
Management, Inc. ("GEM, Inc.") have consented to the use by the Trust of the
identifying word "Gintel" in the name of the Trust. Such consent is conditioned
upon the employment of GEM, Inc. or a subsidiary thereof as investment adviser
of the Trust. As between the Trust and Themselves, RMG and GEM, Inc. control the
use of the name of the Trust insofar as such name contains the identifying word
"Gintel". RMG or GEM, Inc. may from time to time use the identifying word
"Gintel" in other connections and for other purposes, including, without
limitation, in the names of other investment companies, corporations, or
businesses which they or either of them may manage, advise, sponsor or own or in
which they or either of them may have a financial interest.
Section 9. Counterparts. This Agreement may be executed in counterparts,
each of which shall constitute an original and all of which, when taken
together, shall constitute one agreement, and any party hereto may execute this
Agreement by signing one or more counterparts thereof.
IN WITNESS WHEREOF, the undersigned have executed this instrument as of the
day and year first above written.
/s/Robert M. Gintel
Robert M. Gintel,
Chairman and Trustee
/s/Thomas H. Lenagh
Thomas H. Lenagh, Trustee
/s/Theodore Levitt
Theodore Levitt, Trustee
/s/Francis J. Palamara
Francis J. Palamara, Trust
/s/Russel R. Taylor
Russel R. Taylor, Trustee
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<PAGE>
STATE OF CONNECTICUT)
: ss.:
COUNTY OF FAIRFIELD )
On this 23rd day of July, 1986 before me personally appeared Robert M.
Gintel, to me known to be one of the persons described in and who executed the
foregoing instrument, and acknowledged that he executed the same as his free act
and deed.
/s/Marianne Robertson
Notary Public
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<PAGE>
STATE OF NEW YORK)
: ss.:
COUNTY OF NEW YORK)
On this 29th day of July, 1986 before me personally appeared Thomas H.
Lenagh, to me known to be one of the persons described in and who executed the
foregoing instrument, and acknowledged that he executed the same as his free act
and deed.
/s/Louise Poglinco
Notary Public
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<PAGE>
STATE OF MASSACHUSETTS)
: ss.:
COUNTY OF MIDDLESEX )
On this 16th day of July, 1986 before me personally appeared Theodore
Levitt, to me known to be one of the persons described in and who executed the
foregoing instrument, and acknowledged that he executed the same as his free act
and deed.
/s/Elizabeth Ford
Notary Public
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<PAGE>
STATE OF )
: ss.:
COUNTY OF )
On this 16th day of July, 1986 before me personally appeared Francis J.
Palamara, to me known to be one of the persons described in and who executed the
foregoing instrument, and acknowledged that he executed the same as his free act
and deed.
/s/Irene B. Fares
Notary Public
- 20 -
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<PAGE>
STATE OF CONNECTICUT )
: ss.:
COUNTY OF FAIRFIELD )
On this 17th day of July, 1986 before me personally appeared Russell R.
Taylor, to me known to be one of the persons described in and who executed the
foregoing instrument, and acknowledged that he executed the same as his free act
and deed.
/s/Marianne Robertson
Notary Public
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EX-99.2
By-Laws
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<PAGE>
FORM OF
BY-LAWS
OF
GINTEL FUND
ARTICLE I
DEFINITIONS
The terms "Majority Shareholder Vote", "1940 Act", "Shareholder", "Shares",
"Trust" and "Trustees" have the respective meanings given them in the Agreement
and Declaration of Trust of Gintel Fund.
ARTICLE I
OFFICES
Section 1. Principal Office. Until changed by the Trustees, the principal
office of the Trust in the Commonwealth of Massachusetts shall be in the City of
Boston, County of Suffolk.
Section 2. Other Offices. The Trust may have offices in such other places
without as well as within the Commonwealth of Massachusetts as the Trustees may
from time to time determine.
ARTICLE II
SHAREHOLDERS
Section 1. Meetings. Meetings of Shareholders may be called at any time by
a majority of the Trustees and shall be called by any Trustee upon written
request, which shall specify the purpose or purposes for which such meeting is
to be called, of Shareholders holding in the aggregate not less than 10% of the
outstanding Shares entitled to vote on the matters specified in such written
request. Any such meeting shall be held within or without the Commonwealth of
Massachusetts on such day and at such time as the Trustees shall designate. The
holders of a majority of outstanding Shares entitled to vote present in person
or by proxy shall constitute a quorum at any meeting of Shareholders, except
that where any provision of law, the Agreement and Declaration of Trust (the
"Declaration") or these By-Laws permits or requires that holders of any series
shall vote as a series, then a majority of the aggregate number of Shares of
that series entitled to vote shall be necessary to constitute a quorum for the
transaction of business by that series. In the absence of a quorum, a majority
of outstanding Shares entitled to vote present in person or by proxy
<PAGE>
may adjourn the meeting from time to time until a quorum shall be present.
Section 2. Notice of Meetings. Notice of all meetings of Shareholders,
stating the time, place and purposes of the meeting, shall be given by the
Trustees by mail to each Shareholder entitled to vote at such meeting at his
address as recorded on the register of the Trust, mailed at least 10 days and
not more than 60 days before the meeting. Only the business stated in the notice
of the meeting shall be considered at such meeting. Any adjourned meeting may be
held as adjourned without further notice. No notice need be given to any
Shareholder who shall have failed to inform the Trust of his current address or
if a written waiver of notice, executed before or after the meeting by the
Shareholder or his attorney thereunto authorized, is filed with the records of
the meeting.
Section 3. Record Date. For the purpose of determining the Shareholders who
are entitled to notice of and to vote at any meeting, or to participate in any
distribution, or for the purpose of any other action, the Trustees may from time
to time close the transfer books for such period, not exceeding 30 days, as the
Trustees may determine; or without closing the transfer books the Trustees may
fix a date not more than 90 days prior to the date of any meeting of
Shareholders or distribution or other action as a record date for the
determination of the persons to be treated as Shareholders of record for such
purpose.
Section 4. Proxies. At any meeting of Shareholders, any holder of Shares
entitled to vote thereat may vote by proxy, provided that no proxy shall be
voted at any meeting unless it shall have been placed on file with the
Secretary, or with such other officer or agent of the Trust as the Secretary may
direct, for verification prior to the time at which such vote shall be taken.
Pursuant to a vote of a majority of the Trustees, proxies may be solicited in
the name of one or more Trustees or one or more of the officers of the Trust.
Only Shareholders of record shall be entitled to vote. Each full Share shall be
entitled to one vote and fractional Shares shall be entitled to a vote of such
fraction. When any Share is held jointly by several persons, any one of them may
vote at any meeting in person or by proxy in respect of such Share, but if more
than one of them shall be present at such meeting in person or by proxy, and
such joint owners or their proxies so present disagree as to any vote to be
cast, such vote shall not be received in respect of such Share. A proxy
purporting to be executed by or on behalf of a Shareholder shall be deemed valid
unless challenged at or prior to its exercise, and the burden of proving
invalidity shall rest on the challenger. If the holder of any such Share is a
minor or a person of unsound mind, and subject to guardianship or to the legal
control of any other person as regards the charge or management of such Share,
such Share may be voted by such guardian or such other person as regards the
charge or management of such Share, such Share may be voted by such
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<PAGE>
guardian or such other person appointed or having such control, and such vote
may be given in person or by proxy.
Section 5. Inspection of Records. The records of the Trust shall be open to
inspection by the Shareholders to the same extent as is permitted shareholders
of a Massachusetts business corporation.
Section 6. Action without Meeting. Any action which may be taken by
Shareholders may be taken without a meeting if a majority of Shareholders
entitled to vote on the matter (or such larger proportion thereof as shall be
required by law, the Declaration or these By-Laws for approval of such matter)
consent to the action in writing and the written consents are filed with the
records of the meetings of Shareholders. Such consent shall be treated for all
purposes as a vote taken at a meeting of Shareholders.
ARTICLE III
TRUSTEES
Section 1. Meetings of the Trustees. The Trustees may in their discretion
provide for regular or stated meetings of the Trustees. Notice of regular or
stated meetings need not be given. Meetings of the Trustees other than regular
or stated meetings shall be held whenever called by the Chairman or by any
Trustee. Notice of the time and place of each meeting other than regular or
stated meetings shall be given by the Secretary or an Assistant Secretary or by
the officer or Trustee calling the meeting and shall be mailed to each Trustee
at least two days before the meeting, or shall be telegraphed, cabled, or
wirelessed to each Trustee at his business address, or personally delivered to
him at least one day before the meeting. Such notice may, however, be waived by
any Trustee. Notice of a meeting need not be given to any Trustee if a written
waiver of notice, executed by him before or after the meeting, is filed with the
records of the meeting, or to any Trustee who attends the meeting without
protesting prior thereto or at its commencement the lack of notice to him. A
notice or waiver of notice need not specify the purpose of any meeting. The
Trustees may meet by means of a telephone conference circuit or similar
communications equipment by means of which all persons participating in the
meeting can hear each other, which telephone conference meeting shall be deemed
to have been held at a place designated by the Trustees at the meeting.
Participation in a telephone conference meeting shall constitute presence in
person at such meeting. Any action required or permitted to be taken at any
meeting of the Trustees may be taken by the Trustees without a meeting if all
the Trustees consent to the action in writing and the written consents are filed
with the records of the Trustees'
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<PAGE>
meetings. Such consents shall be treated as a vote for all purposes.
Section 2. Quorum and Manner of Acting. A majority of the Trustees present
in person at any regular or special meeting of the Trustees shall constitute a
quorum for the transaction of business at such meeting and (except as otherwise
required by law, the Declaration or these By-Laws) the act of a majority of the
Trustees present at any such meeting, at which a quorum is present, shall be the
act of the Trustees. In the absence of a quorum, a majority of the Trustees
present may adjourn the meeting from time to time until a quorum shall be
present. Notice of an adjourned meeting need not be given.
ARTICLE IV
COMMITTEES AND ADVISORY BOARD
Section 1. Executive and Other Committees. The Trustees by vote of a
majority of all the Trustees may elect from their own number an Executive
Committee to consist of not less than three Trustees to hold office at the
pleasure of the Trustees. While the Trustees are not in session, the Executive
Committee shall have the power to conduct the current and ordinary business of
the Trust, including the purchase and sale of securities and the designation of
securities to be delivered upon redemption of Shares of the Trust, and such
other powers of the Trustees as the Trustees may, from time to time, delegate to
the Executive Committee except those powers which by law, the Declaration or
these By-Laws the Trustees are prohibited from so delegating. The Trustees may
also elect from their own number other Committees from time to time, the number
composing such Committees, the powers conferred upon the same (subject to the
same limitations as with respect to the Executive Committee) and the terms of
membership on such Committees to be determined by the Trustees. The Trustees may
designate a chairman of any such Committee. In the absence of such designation a
Committee may elect its own chairman.
Section 2. Meeting, Quorum and Manner of Acting. The Trustees may (i)
provide for stated meetings of any Committee, (ii) specify the manner of calling
and notice required for special meetings of any Committee, (iii) specify the
number of members of a Committee required to constitute a quorum and the number
of members of a Committee required to exercise specified powers delegated to
such Committee, (iv) authorize the making of decisions to exercise specified
powers by written assent of the requisite number of members of a Committee
without a meeting, and (v) authorize the members of a Committee to meet by means
of a telephone conference circuit.
Each Committee shall keep regular minutes of its meetings and records of
decisions taken without a meeting and cause them to
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<PAGE>
be recorded in a book designated for that purpose and kept in the
office of the Trust.
Section 3. Advisory Board. The Trustees may appoint an Advisory Board to
consist in the first instance of not less than three members. Members of such
Advisory Board shall not be Trustees or officers and need not be Shareholders. A
member of such Advisory Board shall hold office for such period as the Trustees
may by vote provide and may resign therefrom by a written instrument signed by
him which shall take effect upon its delivery to the Trustees. The Advisory
Board shall have no legal powers and shall not perform the functions of Trustees
in any manner, such Advisory Board being intended merely to act in an advisory
capacity. Such Advisory Board shall meet at such times and upon such notice as
the Trustees may provide.
ARTICLE V
OFFICERS
Section 1. General Provisions. The officers of the Trust shall be a
Chairman, a President, a Treasurer and a Secretary, who shall be elected by the
Trustees. The Trustees may elect or appoint such other officers or agents as the
business of the Trust may require, including one or more Vice Presidents, one or
more Assistant Treasurers, and one or more Assistant Secretaries. The Trustees
may delegate to any officer or committee the power to appoint any subordinate
officers or agents.
Section 2. Term of Office and Qualifications. Except as otherwise provided
by law, the Declaration or these By-Laws, the Chairman, the President, the
Treasurer and the Secretary shall hold office until his respective successor
shall have been duly elected and qualified, and all other officers shall hold
office at the pleasure of the Trustees. The Secretary and Treasurer may be the
same person. A Vice President and the Treasurer or a Vice President and the
Secretary may be the same person, but the offices of Vice President, Secretary
and Treasurer shall not be held by the same person. Neither the Chairman nor the
President shall hold any other office. Except as above provided, any two offices
may be held by the same person. Any officer may be, but none need be, a Trustee
or Shareholder.
Section 3. Removal. The Trustees, at any regular or special meeting of the
Trustees, may remove any officer with or without cause by a vote of a majority
of the Trustees. Any officer or agent appointed by any officer or committee may
be removed with or without cause by such appointing officer or committee.
Section 4. Powers and Duties of the Chairman. The Chairman may call
meetings of the Trustees and of any Committee thereof when he deems it necessary
and shall preside at all meetings of the Shareholders. Subject to the control of
the
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<PAGE>
Trustees and any Committee of the Trustees, the Chairman shall at all times
exercise a general supervision and direction over the affairs of the Trust. The
Chairman shall have the power to employ attorneys and counsel for the Trust and
to employ such subordinate officers, agents, clerks and employees as he may find
necessary to transact the business of the Trust. The Chairman shall also have
the power to grant, issue, execute or sign such powers of attorney, proxies or
other documents as may be deemed advisable or necessary in furtherance of the
interests of the Trust. The Chairman shall have such other powers and duties as,
from time to time, may be conferred upon or assigned to him by the Trustees.
Section 5. Powers and Duties of the President. In the absence or disability
of the Chairman, the President shall perform all the duties and may exercise any
of the powers of the Chairman, subject to the control of the Trustees. The
President shall perform such other duties as may be assigned to him from time to
time by the Trustees or the Chairman.
Section 6. Powers and Duties of Vice Presidents. In the absence or
disability of the President, the Vice President or, if there be more than one
Vice President, any Vice President designated by the Trustees shall perform all
the duties and may exercise any of the powers of the President, subject to the
control of the Trustees. Each Vice President shall perform such other duties as
may be assigned to him from time to time by the Trustees or the President.
Section 7. Powers and Duties of the Treasurer. The Treasurer shall be the
principal financial and accounting officer of the Trust. The Treasurer shall
deliver all funds of the Trust which may come into his hands to such custodian
as the Trustees may employ pursuant to Article X hereof. The Treasurer shall
render a statement of condition of the finances of the Trust to the Trustees as
often as they shall require the same and shall in general perform all the duties
incident to the office of Treasurer and such other duties as from time to time
may be assigned to him by the Trustees. The Treasurer shall give a bond to the
faithful discharge of his duties, if required to do so by the Trustees, in such
sum and with such surety or sureties as the Trustees shall require.
Section 8. Powers and Duties of the Secretary. The Secretary shall keep the
minutes of all meetings of the Shareholders in the proper books provided for
that purpose; shall keep the minutes of all meetings of the Trustees; shall have
custody of the seal of the Trust; and shall have charge of the Share transfer
books, lists and records unless the same are in the charge of a transfer agent
or shareholder servicing agent of the Trust. The Secretary shall attend to the
giving and serving of all notices by the Trust in accordance with the provisions
of these By- Laws and as required by law; and subject to these By-Laws, shall in
general perform all duties incident to the office of Secretary and
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<PAGE>
such other duties as from time to time may be assigned to him by
the Trustees.
Section 9. Powers and Duties of Assistant Treasurers. In the absence or
disability of the Treasurer, any Assistant Treasurer designated by the Trustees
shall perform all the duties, and may exercise any of the powers, of the
Treasurer. Each Assistant Treasurer shall perform such other duties as from time
to time may be assigned to him by the Trustees. Each Assistant Treasurer shall
give a bond for the faithful discharge of his duties, if required to do so by
the Trustees, in such sum and with such surety or sureties as the Trustees shall
require.
Section 10. Powers and Duties of Assistant Secretaries. In the absence or
disability of the Secretary, any Assistant Secretary designated by the Trustees
shall perform all of the duties, and may exercise any of the powers of the
Secretary. Each Assistant Secretary shall perform such other duties as from time
to time may be assigned to him by the Trustees.
Section 11. Compensation of Officers and Trustees and Members of the
Advisory Board. Subject to any applicable law or provision of the Declaration,
the compensation of the officers and Trustees and members of the Advisory Board
shall be fixed from time to time by the Trustees or, in the case of officers, by
any Committee or officer upon whom such power may be conferred by the Trustees.
No officer shall be prevented from receiving such compensation as such officer
by reason of the fact that he is also a Trustee.
ARTICLE VI
FISCAL YEAR
The fiscal year of the Trust shall begin on the first day of January in
each year and shall end on the last day of December in each year, provided,
however, that the Trustees may from time to time change the fiscal year.
ARTICLE VII
SEAL
The Trustees shall adopt a seal which shall be in the form and shall have
such inscription thereon as the Trustees may from time to time prescribe.
ARTICLE VIII
WAIVERS OF NOTICE
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<PAGE>
Whenever any notice is required to be given by law, the Declaration or
these By-Laws, a waiver thereof in writing, signed by the person or persons
entitled to such notice, whether before or after the time stated therein, shall
be deemed equivalent thereto. A notice shall be deemed to have been telegraphed,
cabled or wirelessed for the purposes of these By-Laws when it has been
delivered to a representative of any telegraph, cable or wireless company with
instruction that it be telegraphed, cabled or wirelessed. Any notice shall be
deemed to be given at the time when the same shall be mailed, telegraphed,
cabled or wirelessed.
ARTICLE IX
CUSTODIAN
Section 1. Appointment and Duties. The Trustees shall at all times employ a
bank or trust company having a capital, surplus and undivided profits of at
least $5,000,000 as custodian with authority as its agent, but subject to such
restrictions, limitations and other requirements, if any, as may be contained in
the Declaration, these By-Laws and the 1940 Act:
(i) to hold the securities owned by the Trust and deliver the same
upon written order;
(ii) to receive and receipt for any monies due to the Trust and
deposit the same in its own banking department or elsewhere as the
Trustees may direct;
(iii) to disburse such funds upon orders or vouchers;
(iv) if authorized by the Trustees, to keep the books and accounts of
the Trust and furnish clerical and accounting services; and
(v) if authorized to do so by the Trustees, to compute the net income
of the Trust and the net asset value of Shares;
all upon such basis of compensation as may be agreed upon between the Trustees
and the custodian.
The Trustees may also authorize the custodian to employ one or more
sub-custodians from time to time to perform such of the acts and services of the
custodian and upon such terms and conditions as may be agreed upon between the
custodian and such sub-custodian and approved by the Trustees, provided that in
every case such sub-custodian shall be a bank or trust company organized under
the laws of the United States or one of the states thereof and having capital,
surplus and undivided profits of at least $5,000,000.
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<PAGE>
Section 2. Central Certificate System. Subject to such rules, regulations
and orders as the Commission may adopt, the Trustees may direct the custodian to
deposit all or any part of the securities owned by the Trust in a system for the
central handling of securities established by a national securities exchange or
a national securities association registered with the Commission under the
Securities Exchange Act of 1934, or such other person as may be permitted by the
Commission, or otherwise in accordance with the 1940 Act, pursuant to which
system all securities of any particular class or series of any issuer deposited
within the system are treated as fungible and may be transferred or pledged by
bookkeeping entry without physical delivery of such securities, provided that
all such deposits shall be subject to withdrawal only upon the order of the
Trust or its custodian.
Section 3. Acceptance of Receipts in Lieu of Certificates. Subject to such
rules, regulations and orders as the Commission may adopt, the Trustees may
direct the custodian to accept written receipts or other written evidences
indicating purchases of securities held in book-entry form in the Federal
Reserve System in accordance with regulations promulgated by the Board of
Governors of the Federal Reserve System and the local Federal Reserve Banks in
lieu of receipt of certificates representing such securities.
Section 4. Provisions of Custodian Contract. The following provisions shall
apply to the employment of a custodian pursuant to this Article X and to any
contract entered into with the custodian so employed:
(a) The Trustees shall cause to be delivered to the custodian all ---
securities owned by the Trust or to which it may become entitled, and shall
order the same to be delivered by the custodian only upon completion of a
sale, exchange, transfer, pledge, or other disposition thereof, and upon
receipt by the custodian of the consideration therefor or a certificate of
deposit or a receipt of an issuer or of its transfer agent, all as the
Trustees may generally or from time to time require or approve, or to a
successor custodian; and the Trustees shall cause all funds owned by the
Trust or to which it may become entitled to be paid to the custodian, and
shall order the same disbursed only for investment against delivery of the
securities acquired, or in payment of expenses, including management
compensation, and liabilities of the Trust, including distributions to
Shareholders, or to a successor custodian; provided, however, that nothing
herein shall prevent delivery of securities for examination to the broker
purchasing the same in accord with the "street delivery" custom whereby
such securities are delivered to such broker in exchange for a delivery
receipt exchanged on the same day for an uncertified check of such broker
to be presented on the same day for certification.
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<PAGE>
(b) In case of the resignation, removal or inability to serve of any such
custodian, the Trust shall promptly appoint another bank or trust company
meeting the requirements of this Article X as successor custodian. The
agreement with the custodian shall provide that the retiring custodian
shall, upon receipt of notice of such appointment, deliver all Trust
property in its possession to such successor, and that pending appointment
of a successor custodian, or a vote of the Shareholders to function without
a custodian, the custodian shall not deliver any Trust property to the
Trust, but may deliver all or any part of the Trust property to a bank or
trust company, of its own selection, having an aggregate capital, surplus
and undivided profits (as shown in its last published report) of at least
$5,000,000; provided that arrangements are made for the Trust property to
be held under terms similar to those on which they were held by the
retiring custodian.
ARTICLE X
AMENDMENTS
These By-Laws, or any of them, may be altered, amended or repealed, or new
By-Laws may be adopted (a) by Majority Shareholder Vote, or (b) by the Trustees,
provided, however, that no By-Law may be amended, adopted or repealed by the
Trustees if such amendment, adoption or repeal requires, pursuant to law, the
Declaration or these By-Laws, a vote of the Shareholders.
Dated: ______________, 1996
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EX-99.6
Investment Advisory Agreement.
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<PAGE>
INVESTMENT ADVISORY AGREEMENT
This Agreement is made this 6th day of September, 1986 by and between GINTEL
FUND, a Massachusetts business trust (the "Fund") and GINTEL EQUITY MANAGEMENT,
INC., a Connecticut corporation (the "Advisor"), with respect to the following
recital of fact:
RECITAL
The Fund and the Advisor desire to enter into an agreement to provide for
the management of the Fund's assets on the terms and conditions hereinafter set
forth.
The Fund desires the Advisor to pay certain organizational expenses of the
Fund.
NOW THEREFORE, in consideration of the mutual covenants herein contained
and other good and valuable consideration, the receipt whereof is hereby
acknowledged, the parties hereto agree as follows:
1. Management. The Advisor shall act as investment manager for the Fund and
shall, in such capacity, supervise the investment and reinvestment of the cash,
securities or other properties comprising the Fund's assets, subject at all
times to the policies and control of the Fund's Board of Trustees. The Advisor
shall give the Fund the benefit of its best judgment, efforts and facilities in
rendering its services as investment manager.
2. Investment Analysis and Implementation. In carrying out its obligation
under paragraph 1 hereof, the Advisor shall:
(a) obtain and evaluate pertinent information about significant
developments and economic, statistical and financial data, domestic,
foreign or otherwise, whether affecting the economy generally or the Fund,
and whether concerning the individual companies whose securities are
included in the Fund or the activities in which they engage, or with
respect to securities which the Advisor considers desirable for inclusion
in the Fund's portfolio;
(b) determine what industries and companies shall be represented in
the Fund's portfolio and regularly report them to the Fund's Board of
Trustees;
(c) formulate and implement continuing programs for the purchases and
sales of the securities of such companies and regularly report thereon to
the Fund's Board of Trustees; and
(d) take, on behalf of the Fund, all actions which appear to the Fund
necessary to carry into effect such purchase and sale programs and
supervisory functions as
<PAGE>
aforesaid, including the placing of orders for the purchase and sale of
portfolio securities.
3. Broker-Dealer Relationships. The Advisor is responsible for decisions to
buy and sell securities for the Fund, broker-dealer selection, and negotiation
of its brokerage commission rates. The Advisor may select Gintel & Co. as the
broker-dealer to effect all or substantially all of the security transactions
which are effected on the New York Stock Exchange, Inc. or the American Stock
Exchange or which are listed on NASDAQ. The Advisor's primary consideration in
effecting a security transaction will be execution at a price that is reasonable
and fair compared to the commission, fee or other remuneration received or to be
received by other brokers in connection with comparable transactions including
similar securities being purchased or sold on a securities exchange during a
comparable period of time.
In selecting a broker-dealer to execute each particular transaction, the
Advisor will take the following into consideration: the best net price
available; the reliability, integrity and financial condition of the
broker-dealer, the size of and difficulty in executing the order and the value
of the expected contribution of the broker-dealer to the investment performance
of the Fund on a continuing basis. Accordingly, the price to the Fund in any
transaction may be less favorable than that available from another broker-dealer
if the difference is reasonably justified by other aspects of the portfolio
execution services offered. Subject to such policies and procedures as the Board
of Trustees may determine, the Advisor shall not be deemed to have acted
unlawfully or to have breached any duty created by this Agreement or otherwise
solely by reason of its having caused the Fund to pay a broker or dealer that
provides brokerage and research services to the Advisor for the Fund's use an
amount of commission for effecting a portfolio investment transaction in excess
of the amount of commission another broker or dealer would have charged for
effecting that transaction, if the Advisor determines in good faith that such
amount of commission was reasonable in relation to the value of the brokerage
and research services provided by such broker or dealer, viewed in terms of
either that particular transaction or the Advisor's overall responsibilities
with respect to the Fund. The Advisor is further authorized to allocate the
orders placed by it on behalf of the Fund to such brokers and dealers who also
provide research or statistical material, or other services to the Fund or the
Advisor for the Fund's use. Such allocation shall be in such amounts and
proportions as the Advisor shall determine and the Advisor will report on said
allocations regularly to the Board of Trustees of the Fund indicating the
brokers to whom such allocations have been made and the basis therefor.
4. Control by Board of Trustees. Any investment program undertaken by the
Advisor pursuant to this Agreement, as well as any other activities undertaken
by the Advisor on behalf of the
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<PAGE>
Fund pursuant thereto, shall at all items be subject to any directives of the
Board of Trustees of the Fund.
5. Control with Applicable Requirements. In carrying out its obligations
under this Agreement, the Advisor shall at all times conform to:
(a) All applicable provisions of the Investment Company Act of 1940
and any rules and regulations adopted thereunder as amended; and
(b) the provisions of the Registration Statements of the Fund under
the Securities Act of 1933 and the Investment Company Act of 1940, as
amended; and
(c) the provisions of the Declaration of Trust of the Fund; and
(d) the provisions of the By-laws of the Fund; and
(e) any other applicable provisions of state and federal law.
6. Expenses. The expenses connected with the Fund shall be allocable
between the Fund and the Advisor as follows:
(a) The Advisor shall furnish, at its expense and without cost to the
Fund, the services of a President, Secretary and one or more Vice
Presidents of the Fund, to the extent that such additional officers may be
required by the Fund for the proper conduct of its affairs.
(b) The Advisor shall further maintain, at its expense and without
cost to the Fund, a trading function in order to carry out its obligations
under subparagraph (d) of paragraph 2 hereof to place orders for the
purchase and sale of portfolio securities for the Fund.
(c) Nothing in subparagraph (a) hereof shall be construed to require
the Advisor to bear:
(i) any of the costs (including applicable office space,
facilities and equipment) of the services of a principal financial officer
of the Fund whose normal duties consist of maintaining the financial
accounts and books and records of the Fund, including the reviewing of
calculations of daily net asset value and preparing tax returns; or
(ii) any of the costs (including applicable office space,
facilities and equipment) of the services of any of the personnel operating
under the direction of such principal financial officer.
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<PAGE>
Notwithstanding the obligation of the Fund to bear the expense of the functions
referred to in clauses (i) and (ii) of this subparagraph (c), the Advisor may
pay the salaries, including any applicable employment or payroll taxes and other
salary costs, of the principal financial officer and other personnel carrying
out such functions and the Fund shall reimburse the Advisor therefor upon proper
accounting.
(d) All of the ordinary business expenses incurred in the operations
of the Fund and the offering of its shares shall be borne by the Fund
unless specifically provided otherwise in this paragraph 6. These expenses
include but are not limited to brokerage commissions, legal, auditing,
taxes or governmental fees, the cost of preparing share certificates,
custodian, transfer and shareholder service agent costs, expenses of issue,
sale, redemption and repurchase of shares, expenses of registering and
qualifying shares for sale, expenses relating to trustee and shareholder
meetings, the cost of preparing and distributing reports and notices to
shareholders, the fees and other expenses incurred by the Fund in
connection with membership in investment company organizations and the cost
of printing copies of prospectuses and statements of additional information
distributed to shareholders.
7. Delegation of Responsibilities. Upon the request of the Fund's Board of
Trustees, the Advisor may perform services on behalf of the Fund which are not
required by this Agreement. Such services will be performed on behalf of the
Fund and the Advisor's cost in rendering such services may be billed monthly to
the Fund, subject to examination by the Fund's independent accountants. Payment
or assumption by the Advisor of any Fund expenses that the Advisor is not
required to pay or assume under this Agreement shall not relieve the Advisor of
any of its obligations to the Fund nor obligate the Advisor to pay or assume any
similar Fund expense on any subsequent occasion.
8. Compensation. The Fund shall pay the Advisor in full compensation for
services rendered hereunder an annual investment advisory fee, payable at the
beginning of each quarter, of 1% of the average daily net assets of the Fund
during the preceding quarter. The average daily net asset value of the Fund
shall be determined in the manner set forth in the Declaration of Trust and
prospectus of the Fund.
9. Expense Litigation. If, for any fiscal year, the total of all ordinary
business expenses of the Fund, including all investment advisory fees but
excluding brokerage commissions and fees, taxes, interest and extraordinary
expenses such as litigation, would exceed the most restrictive expense limits
imposed by any statute or regulatory authority of any jurisdiction in which
shares of the Fund are offered for sale, the investment advisory fee shall be
reduced by the amount of such excess. The amount of any such reduction to be
borne by the
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<PAGE>
Advisor shall be deducted from the quarterly investment advisory fee otherwise
payable to the Advisor during such fiscal year; and if such amount should exceed
such quarterly fee, the Advisor agrees to pay to the Fund such excess expenses
no later than the last day of the first month of the next succeeding fiscal
year. For the purposes of this paragraph, the term "fiscal year" shall exclude
the portion of the current fiscal year which shall have elapsed prior to the
date hereof and shall include the portion of the then current fiscal year which
shall have elapsed at the date of termination of this Agreement.
10. Non-Exclusivity. The services of the Advisor to the Fund are not to be
deemed to be exclusive, and the Advisor shall be free to render investment
advisory and corporate administrative or other services to others (including
other investment companies) and to engage in other activities. It is understood
and agreed that officers or directors of the Advisor may serve as officers or
trustees of the Fund, and that officers or trustees of the Fund may serve as
officers or directors of the Advisor to the extent permitted by law; and that
the officers and directors of the Advisor are not prohibited from engaging in
any other business activity or from rendering services to any other person, or
from serving as partners, officers or directors of any other firm or
corporation, including other investment companies.
11. Term and Approval. This Agreement shall become effective at the close
of business on the date hereof and shall remain in force and effect until the
first regular or special meeting of the Fund's shareholders following the Fund's
initial public offering. If approved at such meeting, this Agreement shall
thereafter continue in force and effect from year to year, provided that such
continuance is specifically approved at least annually:
(a)(i) by the Fund's Board of Trustees or (ii) by the vote of a
majority of the Fund's outstanding voting securities (as defined in Section
2(a)(42) of the Investment Company Act of 1940, as amended), and
(b) by the affirmative vote of a majority of the Trustees who are not
parties to this Agreement or interested persons of a party to this
agreement (other than as Fund directors), by votes cast in person at a
meeting specifically called for such purpose.
12. Termination. This Agreement may be terminated at any time, without the
payment of any penalty, by vote of the Fund's Board of Trustees or by vote of a
majority of the Fund's outstanding voting securities, or by the Advisor, on
sixty (60) days' written notice to the other party. The notice provided for
herein may be waived by either party. This Agreement shall automatically
terminate in the event of its assignment, the term "assignment" for the purpose
having the meaning defined in
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<PAGE>
Section 2(a)(4) of the Investment Company Act of 1940, as amended.
13. Liability of Advisor and Indemnification. In the absence of willful
misfeasance, bad faith, gross negligence or reckless disregard of obligations or
duties hereunder on the part of the Advisor, the Fund agrees to indemnify the
Advisor against any and all claims, demands, liabilities and expenses which the
Advisor may incur under the Securities Act of 1933, or common law or otherwise,
arising out of or based upon any alleged untrue statement of a material fact
contained in any registration statement, prospectus or statement of additional
information of the Fund, or any omission to state a material fact therein, the
omission of which makes any statement contained therein misleading, unless such
statement or omission was made in reliance upon, and in conformity with
information furnished to the Fund in connection therewith by or on behalf of the
Advisor. The Advisor agrees to indemnify the Fund against any and all claims,
demands, liabilities and expenses which the Fund may incur arising out of or
based upon any act or deed of its employees which is outside the scope of their
authority.
14. Notices. Any notices under this Agreement shall be in writing,
addressed and delivered or mailed postage paid to the other party at such
address as such other party may designate for the receipt of such notice. Until
further notice to the other party, it is agreed that the address of the Fund and
that of the Advisor shall be Greenwich Office Park #6, Greenwich, Connecticut
06830.
15. Questions of Interpretation. Any question of interpretation of any term
or provision of this Agreement having a counterpart in or otherwise derived from
a term or provision of the Investment Company Act of 1940, as amended, shall be
resolved by reference to such term or provision of the Act and to
interpretations thereof, if any, by the United States Courts or in the absence
of any controlling decision of any such court, by rules, regulations or orders
of the Securities and Exchange Commission issued pursuant to said Act. In
addition, where the effect of a requirement of the Investment Company Act of
1940, as amended, reflected in any provision of this Agreement is released by
rules, regulations or order of the Securities and Exchange Commission, such
provision shall be deemed to incorporate the effect of such rule, regulation or
order.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed in duplicate by this respective officers on the day and year first
above written.
GINTEL FUND
Attest: By __________________________
Robert M. Gintel,
Chairman of the Board
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GINTEL EQUITY MANAGEMENT, INC.
Attest: By ___________________________
Robert M. Gintel
Chairman of the Board
- --------------------------------
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EX-99.7
Distribution Agreement
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<PAGE>
DISTRIBUTION AGREEMENT
between
GINTEL FUND
AND
GINTEL & CO.
THIS AGREEMENT made this 6th day of September, 1986, by and between GINTEL
FUND, a Massachusetts business trust (hereinafter referred to as the "Trust"),
and GINTEL & CO., a Connecticut partnership (hereinafter referred to as the
"Distributor").
W I T N E S S E T H:
In consideration of the mutual covenants herein contained and other good
and valuable consideration, the receipt whereof is hereby acknowledged, the
parties hereto agree as follows:
FIRST: The Trust hereby appoints the Distributor as its underwriter to
promote and sell shares of beneficial interest of the Trust to the public
through its sales representatives and to investment dealers in the states set
forth in Exhibit A.
SECOND: The Trust shall not sell any of its shares of beneficial interest
in the states set forth in Exhibit A except to the Distributor and under the
terms and conditions set forth in paragraph FOURTH below. Notwithstanding the
provisions of the foregoing sentence, however,
(A) the Trust may issue its shares of beneficial interest to any other
investment company or personal holding company, or to the shareholders thereof,
in exchange for all or a majority of the shares or assets of any such company;
and
(B) the Trust may issue its shares at their net asset value to any
shareholder of the Trust purchasing such shares with dividends or other cash
distributions received from the Trust pursuant to an offer made to all
shareholders; and
(C) the Trust may sell its shares at their net asset value to such persons
as may qualify under Regulations Section 270.22d-1 under the Investment Company
Act of 1940, and to any trust, pension, profit-sharing or other benefit plans
for the benefit of such persons, upon the terms and conditions provided by the
said Regulations Section 270.22d-1; and
<PAGE>
(D) the Trust may issue its shares of beneficial interest to shareholders
of other investment companies, which investment companies are participating with
the Trust in an approved exchange privilege, as set forth in the then current
prospectus of the Trust, in exchange for shares of such investment companies at
the respective net asset values per share of the investment companies involved.
THIRD: The Distributor hereby accepts appointment as underwriter for the
sale of the shares of beneficial interest of the Trust in the states set forth
in Exhibit A and agrees that it will use its best efforts to sell such shares of
beneficial interest; provided, however, that:
(A) the Distributor may, and when requested by the Trust shall, suspend its
efforts to effectuate sales of the shares of beneficial interest at any time
when in the opinion of the Distributor or of the Trust no sales should be made
because of market or other economic considerations or abnormal circumstances of
any kind; and
(B) the Trust may withdraw the offering of its shares of beneficial
interest (i) at any time with the consent of the Distributor, or (ii) without
such consent when so required by the provisions of any statute or of any order,
rule or regulation of any governmental body having jurisdiction. It is mutually
understood and agreed that the Distributor does not undertake to sell all or any
specific portion of the shares of beneficial interest of the Trust.
FOURTH: The price at which the shares may be sold (the "offering price")
shall be the net asset value per share. For the purpose of computing the
offering price, the net asset value per share shall be determined in the manner
provided in the Declaration of Trust of the Trust as amended from time to time.
The Distributor may charge a reasonable administrative charge in connection with
sales of the shares of beneficial interest of the Trust.
FIFTH: The Trust shall bear:
(A) the expenses of qualification of the shares for sale in connection with
such public offerings in such states as shall be selected by the Distributor and
of continuing the qualification therein until the Distributor notifies the Trust
that it does not wish such qualification continued; and
(B) all legal expenses in connection with the foregoing.
SIXTH: The Distributor shall bear:
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<PAGE>
(A) the expenses of printing and distributing prospectuses (other than
those prospectuses required by applicable laws and regulations to be distributed
to shareholders by the Trust) and any other promotional or sales literature
which are used by the Distributor or furnished by the Distributor to purchasers
or dealers in connection with the Distributor's activities pursuant to this
Agreement;
(B) expenses of any advertising used by the Distributor in connection with
such public offering; and
(C) all legal expenses in connection with the foregoing.
SEVENTH: The Distributor will accept orders for shares of beneficial
interest of the Trust only to the extent of purchase orders actually received
and not in excess of such orders, and it will not avail itself of any
opportunity of making a profit by expediting or withholding orders.
EIGHTH:
(A) The Trust and the Distributor shall each comply with all applicable
provisions of the Investment Company Act of 1940, the Securities Act of 1933,
and of all other Federal and state laws, rules and regulations governing the
issuance and sale of shares of beneficial interest of the Trust.
(B) In absence of willful misfeasance, bad faith, gross negligence or
reckless disregard of obligations or duties hereunder on the part of the
Distributor, the Trust agrees to indemnify the Distributor against any and all
claims, demands, liabilities and expenses which the Distributor may incur under
the Securities Act of 1933, or common law or otherwise, arising out of or based
upon any alleged untrue statement of a material fact contained in any
registration statement or prospectus of the Trust, or any omission to state a
material fact therein, the omission of which makes any statement contained
therein misleading, unless such statement or omission was made in reliance upon,
and in conformity with information furnished to the Trust in connection
therewith by or on behalf of the Distributor. The Distributor agrees to
indemnify the Trust against any and all claims, demands, liabilities and
expenses which the Trust may incur arising out of or based upon any act or deed
of sales representatives of the Distributor which is outside the scope of their
authority.
(C) The Distributor agrees to indemnify the Trust against any and all
claims, demands, liabilities and expenses which the Trust may incur under the
Securities Act of 1933, or common law or otherwise, arising out of or based upon
any alleged untrue statement of a material fact contained in any registration
statement or prospectus of the Trust, or any omission to state a
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<PAGE>
material fact therein if such statement or omission was made in reliance upon,
and in conformity with, information furnished to the Trust in connection
therewith by or on behalf of the Distributor.
NINTH: Nothing herein contained shall require the Trust to take any action
contrary to any provision of its charter or to any applicable statute or
regulation.
TENTH: This Agreement shall become effective at the close of business on
the date hereof, and shall remain in force and effect until the First Annual
Meeting of the Trust's shareholders. If approved at such meeting the Agreement
shall continue in force and effect for two years and continue from year to year
thereafter, provided, that such continuance is specifically approved at least
annually (a)(i) by the Board of Trustees of the Trust, or (ii) by vote of a
majority of the Trust's outstanding voting securities (as defined in Section
2(a)(42) of the Investment Company Act), and (b) by vote of a majority of the
Company's Trustees who are not interested persons (as defined in Section
2(a)(19) of the Investment Company Act) of the Distributor by votes cast in
person at a meeting called for such purpose.
ELEVENTH:
(A) This Agreement may be terminated at any time, without the payment of
any penalty, by vote of the Board of Trustees of the Trust or by vote of a
majority of the outstanding voting securities of the Trust, or by the
Distributor, on sixty (60) days written notice to the other party.
(B) This Agreement shall automatically terminate in the event of its
assignment, the term "assignment" for this purpose having the meaning defined in
Section 2(a)(4) of the Investment Company Act.
TWELFTH: Any notice under this Agreement shall be in writing, addressed and
delivered, or mailed, postage paid, to the other party at such address as such
other party may designate for the receipt of such notices. Until further notice
to the other party, it is agreed that the address of the Trust shall be
Greenwich Office Park OP-6, Greenwich, Connecticut 06830, and that of the
Distributor shall be Greenwich Office Park OP-6, Greenwich, Connecticut 06830.
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<PAGE>
IN WITNESS WHEREOF, the parties have caused this Agreement to be executed
in duplicate on the day and year first above written.
ATTEST: GINTEL FUND
_________________________ By:___________________________
,Secretary Robert M. Gintel, President
ATTEST: GINTEL & CO.
_________________________ By:____________________________
General Partner
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EX-99.9(a)
Custodian Agreement
<PAGE>
MUTUAL FUND and CUSTODY AGREEMENT
Between
GINTEL FUND
and
THE UNITED STATES TRUST COMPANY OF NEW YORK
All references to United States Trust Company of New York, U.S. Trust Company of
New York, and U.S. Trust are, and shall be, deemed to be references to the Chase
Manhattan Bank, N.A. All references to Mutual Funds Service Company are, and
shall be, deemed to be references to Chase Global Funds Services Company.
<PAGE>
MUTUAL FUND
CUSTODY AGREEMENT
THIS AGREEMENT is made as of this 29th day of June, 1989, by and between
Gintel Fund (the "Fund") and UNITED STATES TRUST COMPANY OF NEW YORK, a New York
corporation ("U.S. Trust").
R E C I T A L
WHEREAS, the Fund is registered as an open-end non-diversified, management
investment company under the Investment Company Act of 1940, as amended ("the
1940 Act"); and
WHEREAS, the Company desires to retain U.S. Trust to serve as the Fund's
custodian and U.S. Trust is willing to furnish such services;
NOW, THEREFORE, in consideration of the premises and mutual covenants
herein contained, it is agreed between the parties hereto as follows:
1. Appointment. The Fund hereby appoints U.S. Trust to act as custodian of
its portfolio securities, cash and other property and on the terms set forth in
this Agreement. U.S. Trust accepts such appointment and agrees to furnish the
services herein set forth in return for the compensation as provided in
Paragraph 21 of this Agreement.
2. Delivery of Documents. The Fund has furnished U.S. Trust with copies
properly certified or authenticated of each of the following:
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<PAGE>
(a) Resolutions of the Fund's Board of Trustees authorizing the
appointment of U.S. Trust as Custodian of the portfolio securities, cash and
other property of the Fund and approving this Agreement;
(b) Incumbency and signature certificates identifying and containing
the signatures of the Fund's officers and/or the persons authorized to sign
Written Instructions, as hereinafter defined, on behalf of the Fund;
(c) The Fund's Declaration of Trust filed with the Secretary of State
of the State of Massachusetts on 7/29/86, and all amendments thereto (such
Declaration of Trust, as currently in effect and as it shall from time to time
be amended, is herein called the "Trust");
(d) The Fund's By-Laws and all amendments thereto (such By- Laws, as
currently in effect and as they shall from time to time be amended, are herein
called the "By-Laws");
(e) Resolutions of the Fund's Board of Trustees appointing the
investment advisor to the portfolio of the Fund and resolutions of the Fund's
Board of Trustees and Fund Shareholders approving the proposed Investment
Advisory Agreement between the Fund and the advisor dated as of 9/6/86, (the
"Advisory Agreement");
(f) Resolutions of the Fund Board of Trustees appointing Gintel & Co.,
Limited Partnership as the Fund distributor and approving a proposed
Distribution Agreement between Gintel & Co., Limited Partnership and the Fund
dated as of 9/6/86, (the "Distribution Agreement");
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<PAGE>
(g) The Advisory Agreement and the Distribution Agreement;
(h) The Fund's Notification of Registration filed pursuant to Section
8(a) of the 1940 Act on Form N-8A with the Securities and Exchange Commission
("SEC").
(i) The Fund's Registration Statement on Form N-lA under the 1940 Act
and the Securities Act of 1933, as amended ("the 1933 Act") as filed with the
SEC; and
(j) The Fund's most recent prospectus (such prospectus, as currently
in effect, and all amendments and supplements thereto are herein called the
"Prospectus").
The Fund will furnish U.S. Trust from time to time with copies of all
amendments of or supplements to the foregoing, if any. The Fund will also
furnish U.S. Trust with an opinion of counsel for the Fund with respect to the
validity of the Shares and the status of such Shares under the Securities Act of
1933 and any other applicable federal law or regulation.
3. Definitions.
(a) "Authorized Person". As used in this Agreement, the term
"Authorized Person" means the Fund's President, Treasurer and any other person,
whether or not any such person is an officer or employee of the Fund, duly
authorized by the Board of Trustees of the Fund to give Written Instructions on
behalf of the Fund and listed on Attachment A which may be amended from time to
time.
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<PAGE>
(b) "Book-Entry System". As used in this Agreement, the term
"Book-Entry System" means the Federal Reserve/Treasury book-entry system for
United States and federal agency securities, its successor or successors and its
nominee or nominees.
(c) "Property". The term "Property," as used in this Agreement, means:
(i) any and all securities and other property of the Fund which
may from time to time deposit, or cause to be deposited, with U.S. Trust or
which U.S. Trust may from time to time hold for any Fund;
(ii) all income in respect of any of such securities or other
property;
(iii) all proceeds of the sale of any of such securities or other
property; and
(iv) all proceeds of the sale of securities issued by the Fund,
which are received by U.S. Trust from time to time from or on behalf of the
Fund.
(d) "Securities Depository". As used in this Agreement, the term
"Securities Depository" shall mean The Depository Trust Company, a clearing
agency registered with the SEC or its successor or successors and its nominee or
nominees; and shall also mean any other registered clearing agency, its
successor or successors specifically
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<PAGE>
identified in a certified copy of a resolution of the Company's Board of
Directors approving deposits by U.S. Trust therein.
(e) "Written Instructions". Means instructions
(i) instructions delivered by mail, tested telegram, cable,
telex, facsimile sending device, and received by U.S. Trust, signed by two
Authorized Persons or by persons reasonably believed by U.S. Trust to be
Authorized Persons; or
(ii) transmitted electronically through the U.S. Trust Asset
Management System or any similar electronic instruction system acceptable
to U.S. Trust.
4. Delivery and Registration of the Property. The Fund will deliver or
cause to be delivered to U.S. Trust all securities and all moneys owned by it,
including cash received for the issuance of its Shares, at any time during the
period of this Agreement, except for securities and moneys to be delivered to
any subcustodian appointed pursuant to Paragraph 7 hereof. U.S. Trust will not
be responsible for such securities and such moneys until actually received by
it. All securities delivered to U.S. Trust or to any such subcustodian (other
than in bearer form) shall be registered in the name of the Fund or in the name
of a nominee of the Fund or in the name of U.S. Trust or any nominee of U.S.
Trust (with or without indication of fiduciary status) or in the name of any
subcustodian or any nominee of such subcustodian appointed pursuant to Paragraph
7 hereof or shall be properly endorsed and in form for transfer satisfactory to
U.S. Trust.
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<PAGE>
5. Voting Rights. With respect to all securities, however registered, it is
understood that the voting and other rights and powers shall be exercised by the
Fund. U.S. Trust's only duty shall be to mail to the Fund any documents
received, including proxy statements and offering circulars, with any proxies
for securities registered in a nominee name executed by such nominee. Where
warrants, options, tenders or other securities have fixed expiration dates, the
Fund understands that in order for U.S. Trust to act, U.S. Trust must receive
the Fund's instructions at its offices in New York, addressed as U.S. Trust may
from time to time request, by no later than noon (N.Y. City time) at least one
business day prior to the last scheduled date to act with respect thereto (or
such earlier date or time as U.S. Trust may notify the Fund). Absent U.S.
Trust's timely receipt of such instructions, such instruments will expire
without liability to U.S. Trust. Corporate reports need not be forwarded to the
Fund.
6. Receipt and Disbursement of Money.
(a) U.S. Trust shall open and maintain a custody account for the Fund,
subject only to draft or order by U.S. Trust acting pursuant to the terms of
this Agreement, and shall hold in such account, subject to the provisions
hereof, all cash received by it from or for the Fund. U.S. Trust shall make
payments of cash to, or for the account of, the Fund from such cash only (i) for
the purchase of securities for the Fund as provided in Paragraph 12 hereof; (ii)
for the redemption on Shares class as provided in subparagraph (b) of Paragraph
10 hereof; (iii) upon receipt of Written Instructions, for the payment of
dividends or other distributions of Shares, or for the payment of interest,
taxes, administration, distribution or advisory fees or expenses which are to be
borne by the Fund under the terms of this Agreement, the Advisory Agreement, the
Sub-Administration
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<PAGE>
Agreement, or the Distribution Agreement; (iv) upon receipt of Written
Instructions for payments in connection with the conversion, exchange or
surrender of securities owned or subscribed to by the Fund and held by or to be
delivered to U.S. Trust; (v) to a subcustodian pursuant to Paragraph 7 hereof;
or (vi) upon receipt of Written Instructions for other corporate purposes.
(b) U.S. Trust is hereby authorized to endorse and collect all checks,
drafts or other orders for the payment of money received as custodian for the
Fund.
7. Receipt of Securities.
(a) Except as provided by Paragraph 8 hereof, U.S. Trust shall hold
all securities and non-cash property received by it for the Fund. All such
securities and non-cash property are to be held or disposed of by U.S. Trust for
the Fund pursuant to the terms of this Agreement. In the absence of Written
Instructions accompanied by a certified resolution authorizing the specific
transaction by the Fund's Board, U.S. Trust shall have no power or authority to
withdraw, deliver, assign, hypothecate, pledge or otherwise dispose of any such
securities and investments, except in accordance with the express terms provided
for in this Agreement. In no case may any trustee, officer, employee or agent of
the Fund withdraw any securities. In connection with its duties under this
Paragraph 7, U.S. Trust may, at its own expense, enter into subcustodian
agreements with other banks or trust companies for the receipt of certain
securities and cash to be held by U.S. Trust for the account of the Fund
pursuant to this Agreement; provided that each such bank or trust company has an
aggregate capital, surplus and undivided profits, as shown by its last published
report, of not less than twenty million dollars ($20,000,000) and that such bank
or
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<PAGE>
trust company agrees with U.S. Trust to comply with all relevant provisions of
the 1940 Act and applicable rules and regulations thereunder. U.S. Trust will be
liable for acts or omissions of any such subcustodian.
(b) Promptly after the close of business on each day U.S. Trust shall
furnish the Fund with confirmations and a summary of all transfers to or from
the account of the Fund during said day. Where securities are transferred to the
Fund established pursuant to Paragraph 8 hereof, U.S. Trust shall also by
book-entry or otherwise identify as belonging to such Fund the quantity of
securities in a fungible bulk of securities registered in the name of U.S. Trust
(or its nominee) or shown in U.S. Trust's account on the books of a Securities
Depository of the Book-Entry System. At least monthly and from time to time,
U.S. Trust shall furnish the Fund with a detailed statement of the Property held
for the Fund under this Agreement.
8. Use of Securities Depository of the Book-Entry System. The Fund shall
deliver to U.S. Trust a certified resolution of the Board of Trustees of the
Fund approving, authorizing and instructing U.S. Trust on a continuous and
ongoing basis until instructed to the contrary by Written Instructions actually
received by U.S. Trust (i) to deposit in a Securities Depository or the
Book-Entry System all securities of the Fund eligible for deposit therein and
(ii) to utilize a Securities Depository or the Book-Entry System to the extent
possible in connection with the performance of its duties hereunder, including
without limitation settlements of purchases and sales of securities by the Fund,
and deliveries and returns of securities collateral in connection with
borrowings. Without
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<PAGE>
limiting the generality of such use, it is agreed that the following provisions
shall apply thereto:
(a) Securities and any cash of the Fund deposited in a Securities
Depository or the Book-Entry System will at all times be segregated from any
assets and cash controlled by U.S. Trust in other than a fiduciary or custodian
capacity but may be commingled with other assets held in such capacities. U.S.
Trust will effect payment for securities and receive and deliver securities in
accordance with accepted industry practices in the place where the transaction
is settled, unless Fund has given U.S. Trust Written Instructions to the
contrary.
(b) All books and records maintained by U.S. Trust which relate to the
Fund participation in a Securities Depository or the Book-Entry System will at
all times during U.S. Trust's regular business hours be open to the inspection
of the Fund's duly authorized employees or agents, and the Fund will be
furnished with all information in respect of the services rendered to it as it
may require.
9. Instructions Consistent with Trust, etc. Unless otherwise provided in
this Agreement, U.S. Trust shall act only upon Written Instructions. U.S. Trust
may assume that any Written Instructions received hereunder are not in any way
inconsistent with any provision of such Trust or By-Laws or any vote or
resolution of the Fund's Board of Trustees, or of any committee thereof. U.S.
Trust shall be entitled to rely upon any Written Instructions actually received
by U.S. Trust pursuant to this Agreement. The Fund agrees that U.S. Trust shall
incur no liability to the Fund in acting upon Written Instructions given to U.S.
Trust. In accord with instructions from the Fund, as required by accepted
industry
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<PAGE>
practice or as U.S. Trust may elect in effecting the execution of Fund
instructions, advances of cash or other Property made by U.S. Trust, arising
from the purchase, sale, redemption, transfer or other disposition of Property
of the Fund, or in connection with the disbursement of funds to any party, or in
payment of fees, expenses, claims or liabilities owed to U.S. Trust by the Fund,
or to any other party which has secured judgment in a Court of Law against the
Fund which creates an overdraft in the Accounts or overdelivery of Property
shall be deemed a loan by U.S. Trust to the Fund, payable on demand, bearing
interest at such rate customarily charged by U.S. Trust for similar loans.
The Fund agrees that test arrangements, authentication methods or other
security devices to be used with respect to instructions which the Fund may give
by telephone, telex, TWX, facsimile transmission, bank wire or other
teleprocess, or through an electronic instruction system, shall be processed in
accordance with terms and conditions for the use of such arrangements, methods
or devices as U.S. Trust may put into effect and modify from time to time. The
Fund shall safeguard any test keys, identification codes or other security
devices which U.S. Trust makes available to the Fund and agrees that the Fund
shall be responsible for any loss, liability or damage incurred by U.S. Trust or
by the Fund as a result of U.S. Trust's acting in accordance with instructions
from any unauthorized person using the proper security device, provided that
such person did not obtain such security device solely as a result of U.S.
Trust's negligence or willful misconduct. U.S. Trust may electronically record,
but shall not be obligated to so record, any instructions given by telephone and
any other telephone discussions with respect to the Account. In the event that
the Fund uses U.S. Trust's Asset Management System or any successor electronic
communications or information system, the Fund agrees that U.S. Trust is not
responsible
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<PAGE>
for the consequences of the failure of that system to perform for any reason,
beyond the reasonable control of U.S. Trust, or for the failure to perform for
any reason, beyond the reasonable control of U.S. Trust, of any communications
carrier, utility, communications network or the failure to perform for any
reason, beyond the reasonable control of U.S. Trust, of communications or
computer equipment. In the event that system is inoperable, the Fund agrees to
notify U.S. Trust immediately, and U.S. Trust agrees that it will accept the
communication of transaction instructions by telephone, facsimile transmission
on equipment compatible to U.S. Trust's facsimile receiving equipment or by
letter, at no additional charge to the Fund.
10. Transactions Not Requiring Instructions. U.S. Trust is authorized to
take the following action without Written Instructions:
(a) Collection of Income and Other Payments. U.S. Trust shall:
(i) collect and receive for the account of the Fund, all income
and other payments and distributions, including (without limitation) stock
dividends, rights, warrants and similar items, included or to be included
in the Property of the Fund, and promptly advise the Fund of such receipt
and shall credit such income, as collected, to the Fund. From time to time,
U.S. Trust may elect to credit, but shall not be so obligated, the account
with interest, dividends or principal payments on payable or contractual
settlement date, in anticipation of receiving same from a payor, central
depository, broker or other agent employed by the Fund or U.S. Trust. Any
such crediting and posting shall be at the Fund's sole risk, and U.S. Trust
shall be authorized to reverse any such advance posting in the event it
does not
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<PAGE>
receive good funds from any such payor, central depository, broker or agent
of the Customer.
(ii) with respect to securities of foreign issue, effect
collection of dividends, interest and other income, and to notify the Fund
of any call for redemption, offer of exchange, right of subscription,
reorganization, or other proceedings affecting such securities, or any
default in payments due thereon. It is understood, however, that U.S. Trust
shall be under no responsibility for any failure or delay in effecting such
collections or giving such notice with respect to securities of foreign
issue, regardless of whether or not the relevant information is published
in any financial service available to it unless such failure or delay is
due to its negligence; however, this sentence shall not be construed as
creating any such responsibility with respect to securities of non-foreign
issue, other than such responsibility as may be part of the general
responsibility of U.S. Trust. Collections of income in foreign currency
are, to the extent possible, to be converted into United States dollars
unless otherwise instructed in writing, and in effecting such conversion
U.S. Trust may use such methods or agencies as it may see fit, including
the facilities of its own foreign division at customary rates. All risk and
expenses incident to such collection and conversion is for the account of
the Fund and U.S. Trust shall have no responsibility for fluctuations in
exchange rates affecting any such conversion.
(iii) endorse and deposit for collection in the name of the Fund,
checks, drafts, or other orders for the payment of money on the same day as
received;
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<PAGE>
(iv) receive and hold for the account of the Fund all securities
received by the Fund as a result of a stock dividend, share split-up or
reorganization, recapitalization, readjustment or other rearrangement or
distribution of rights or similar securities issued with respect to any
portfolio securities of the Fund held by U.S. Trust hereunder;
(v) present for payment and collect the amount payable upon all
securities which may mature or be called, redeemed or retired, or otherwise
become payable on the date such securities become payable;
(vi) take any action which may be necessary and proper in
connection with the collection and receipt of such income and other
payments and the endorsement for collection of checks, drafts and other
negotiable instruments;
(vii) with respect to domestic securities, to exchange securities
in temporary form for securities in definitive form, to effect an exchange
of the shares where the par value of stock is changed, and to surrender
securities at maturity or when advised of earlier call for redemption,
against payment therefore in accordance with accepted industry practice.
The Fund understands that U.S. Trust subscribes to one or more nationally
recognized services that provide information with respect to calls for
redemption of bonds or other corporate actions. U.S. Trust shall not be
liable for failure to redeem any called bond or take other action if notice
of such call or action was not provided by any service to which it
subscribes. U.S. Trust shall have no duty to notify the Fund of any rights,
duties, limitations, conditions or other information set forth in any
security (including mandatory or
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<PAGE>
optional put, call and similar provisions), but U.S. Trust shall forward to
Fund or the Investment Managers any notices or other documents subsequently
received in regard to any such security. When fractional shares of stock of
a declaring corporation are received as a stock distribution, U.S. Trust is
authorized to sell the fraction received and credit the Fund's account.
Unless specifically instructed to the contrary in writing, U.S. Trust is
authorized to exchange securities in bearer form for securities in
registered form. If any Property registered in the name of a nominee of
U.S. Trust or in the nominee of any entity employed by U.S. Trust is called
for partial redemption by the issuer of such Property, U.S. Trust is
authorized to allot the called portion to the respective beneficial holders
of the Property in such manner deemed to be fair and equitable by U.S.
Trust in its sole discretion.
(b) Miscellaneous Transactions. U.S. Trust is authorized to deliver or
cause to be delivered Property against payment or other consideration or written
receipt therefor in the following cases:
(i) for examination by a broker selling for the account of the
Fund in accordance with street delivery custom;
(ii) for the exchange of interim receipts or temporary securities
for definitive securities;
(iii) for transfer of securities into the name of the Fund or
U.S. Trust or a nominee of either, or for exchange of securities for a
different number of bonds, certificates, or other evidence, representing
the same aggregate face amount or
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<PAGE>
number of units bearing the same interest rate, maturity date and call
provisions, if any; provided that, in any such case, the new securities are
to be delivered to U.S. Trust.
11. Transactions Requiring Instructions. Upon receipt of Written
Instructions and not otherwise, U.S. Trust, directly or through the use of a
Securities Depository or the Book-Entry System, shall:
(a) Execute and deliver to such persons as may be designated in such
Written Instructions, proxies, consents, authorizations, and any other
instruments whereby the authority of the Fund as owner of any securities may be
exercised;
(b) Deliver any securities held for the Fund against receipt of other
securities or cash issued or paid in connection with the liquidation,
reorganization, refinancing, merger, consolidation or recapitalization of any
corporation, or the exercise of any conversion privilege;
(c) Deliver any securities held for the Fund to any protective
committee, reorganization committee or other person in connection with the
reorganization, refinancing, merger, consolidation, recapitalization or sale of
assets of any corporation, against receipt of such certificates of deposit,
interim receipts or other instruments or documents as may be issued to it to
evidence such delivery;
(d) Make such transfers or exchanges of the assets of the Fund and
take such other steps as shall be stated in said instructions to be for the
purpose of
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<PAGE>
effectuating any duly authorized plan of liquidation, reorganization, merger,
consolidation or recapitalization of the Fund;
(e) Release securities belonging to the Fund to any bank or trust
company for the purpose of pledge or hypothecation to secure any loan incurred
by the Fund; provided, however, that securities shall be released only upon
payment to U.S. Trust of the monies borrowed, except that in cases where
additional collateral is required to secure a borrowing already made, subject to
proper prior authorization, further securities may be released for that purpose;
and pay such loan upon redelivery to it of the securities pledged or
hypothecated therefor and upon surrender of the note or notes evidencing the
loan; and
(f) Deliver any securities held for the Fund upon the exercise of a
covered call option written by the Fund on such securities.
12. Purchase of Securities. Promptly after each purchase of securities by
the investment advisor, the Fund shall deliver to U.S. Trust (as Custodian)
Written Instructions specifying with respect to each such purchase: (a) the name
of the issuer and the title of the securities, (b) the number of shares of the
principal amount purchased and accrued interest, if any, (c) the dates of
purchase and settlement, (d) the purchase price per unit, (e) the total amount
payable upon such purchase, (f) the name of the person from whom or the broker
through whom the purchase was made and (g) the Fund for which the purchase was
made. U.S. Trust shall upon receipt of securities purchased by or for the Fund
pay out of the moneys held for the account of such Fund the total amount payable
to the person from whom or the broker through whom the purchase was made,
provided that the same conforms to the total amount payable as set forth in such
Written Instructions.
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<PAGE>
13. Sales of Securities. Promptly after each sale of securities by the
investment advisor, the Fund shall deliver to U.S. Trust (as Custodian) Written
Instructions, specifying with respect to each such sale: (a) the name of the
issuer and the title of the security, (b) the number of shares or principal
amount sold, and accrued interest, if any, (c) the date of sale, (d) the sale
price per unit, (e) the total amount payable to the Fund upon such sale, (f) the
name of the broker through whom or the person to whom the sale was made and (g)
the Fund for which the sale was made. U.S. Trust shall deliver the securities
upon receipt of the total amount payable to the Fund upon such sale, provided
that the same conforms to the total amount payable as set forth in such Written
Instructions. Subject to the foregoing, U.S. Trust may accept payment in such
form as shall be satisfactory to it, and may deliver securities and arrange for
payment in accordance with the customs prevailing among dealers in securities.
14. Authorized Shares. The Fund has unlimited shares of each class of its
securities.
15. Records.
The books and records pertaining to the Fund which are in the possession of
U.S. Trust shall be the property of the Fund. Such books and records shall be
prepared and maintained as required by the 1940 Act, as amended, and other
applicable securities laws and rules and regulations. The Fund, or the Fund's
authorized representatives, shall have access to such books and records at all
times during U.S. Trust's normal business hours, and such books and records
shall be surrendered to the Fund promptly upon request. Upon the
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<PAGE>
reasonable request of the Fund, copies of any such books and records shall be
provided by U.S. Trust to the Fund or the Fund's authorized representative at
the Fund's expense.
16. Cooperation with Accountants. U.S. Trust shall cooperate with the
Fund's independent certified public accountants and shall take all reasonable
action in the performance of its obligations under this Agreement to assure that
the necessary information is made available to such accountants for the
expression of their unqualified opinion, including but not limited to the
opinion included in the Fund's semi-annual report on Form NSAR.
17. Confidentiality. U.S. Trust agrees on behalf of itself and its
employees to treat confidentially and as the proprietary information of the Fund
all records and other information relative to the Fund and its prior, present or
potential Shareholders and relative to the advisors and its prior, present or
potential customers, and not to use such records and information for any purpose
other than performance of its responsibilities and duties hereunder, except
after prior notification to and approval in writing by the Fund, which approval
shall not be unreasonably withheld and may not be withheld where U.S. Trust may
be exposed to civil or criminal contempt proceedings for failure to comply, when
requested to divulge such information by duly constituted authorities, or when
so requested by the Fund. Nothing contained herein, however, shall prohibit U.S.
Trust from advertising or soliciting the public generally with respect to other
products or services, regardless of whether such advertisement or solicitation
may include prior, present or potential Shareholders of the Fund.
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<PAGE>
18. Equipment Failures. In the event of equipment failures beyond U.S.
Trust's control, U.S. Trust shall, at no additional expense to the Fund, take
reasonable steps to minimize service interruptions but shall have no liability
with respect thereto. U.S. Trust shall enter into and shall maintain in effect
with appropriate parties one or more agreements making reasonable provision for
emergency use of electronic data processing equipment to the extent appropriate
equipment is available.
19. Right to Receive Advice.
(a) Advice of Fund. If U.S. Trust shall be in doubt as to any action
to be taken or omitted by it, it may request, and shall receive, from the Fund
directions or advice.
(b) Advice of Counsel. If U.S. Trust shall be in doubt as to any
question of law involved in any action to be taken or omitted by U.S. Trust, it
may request advice at its own cost from counsel of its own choosing (who may be
counsel for the Fund or U.S. Trust, at the option of U.S. Trust).
(c) Conflicting Advice. In case of conflict between directions or
advice received by U.S. Trust pursuant to subparagraph (a) of this paragraph and
advice received by U.S. Trust pursuant to subparagraph (b) of this paragraph,
U.S. Trust shall be entitled to rely on and follow the advice received pursuant
to the latter provision alone.
(d) Protection of U.S. Trust. U.S. Trust shall be protected in any
action or inaction which it takes or omits to take in reliance on any directions
or advice received pursuant to subparagraphs (a) or (b) of this paragraph which
U.S. Trust, after
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<PAGE>
receipt of any such directions or advice, in good faith believes to be
consistent with such directions or advice. However, nothing in this paragraph
shall be construed as imposing upon U.S. Trust any obligation (i) to seek such
directions or advice, or (ii) to act in accordance with such directions or
advice when received, unless, under the terms of another provision of this
Agreement, the same is a condition to U.S. Trust's properly taking or omitting
to take such action. Nothing in this subparagraph shall excuse U.S. Trust when
an action or omission on the part of U.S. Trust constitutes willful misfeasance,
bad faith, negligence or reckless disregard by U.S. Trust of its duties under
this Agreement.
20. Compliance with Governmental Rules and Regulations. The Fund assumes
full responsibility for insuring that the contents of each Prospectus of the
Fund complies with all applicable requirements of the 1933 Act, the 1940 Act,
and any laws, rules and regulations of governmental authorities having
jurisdiction.
21. Compensation. As compensation for the services rendered by U.S. Trust
during the term of this Agreement, the Fund will pay to U.S. Trust, in addition
to reimbursement of its out-of-pocket expenses, monthly fees as outlined in
attachment B Fee.
22. Indemnification. The Fund, as sole owner of the Property, agrees to
indemnify and hold harmless U.S. Trust and its nominees from all taxes, charges,
expenses, assessments, claims and liabilities (including, without limitation,
liabilities arising under the 1933 Act, the Securities Exchange Act of 1934, the
1940 Act, and any state and foreign securities and blue sky laws, all as or to
be amended from time to time) and expenses, including (without limitation)
attorneys' fees and disbursements, arising directly or indirectly (a) from the
fact that securities included in the Property are registered in the name of any
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<PAGE>
such nominee or (b) without limiting the generality of the foregoing clause (a)
from any action or thing which U.S. Trust takes or does or omits to take or do
(i) at the request or on the direction of or in reliance on the advice of the
Fund, or (ii) upon Written Instructions, provided, that neither U.S. Trust nor
any of its nominees or subcustodian shall be indemnified against any liability
to the Fund or to its Shareholders (or any expenses incident to such liability)
arising out of (x) U.S. Trust's or such nominee's or subcustodians own willful
misfeasance, bad faith, gross negligence or reckless disregard of its duties
under this Agreement or any agreement between U.S. Trust and any nominee or
subcustodian or (y) U.S. Trust's own negligent failure to perform its duties
under this Agreement. In the event of any advance of cash for any purpose made
by U.S. Trust resulting from orders or Written Instructions of the Fund, or in
the event that U.S. Trust or its nominee or subcustodian shall incur or be
assessed any taxes, charges, expenses, assessments, claims or liabilities in
connection with the performance of this Agreement, except such as may arise from
its or its nominee's or subcustodian's own negligent action, negligent failure
to act, willful misconduct, or reckless disregard.
23. Responsibility of U.S. Trust. U.S. Trust shall be under no duty to take
any action on behalf of the Fund except as specifically set forth herein or as
may be specifically agreed to by U.S. Trust in writing. In the performance of
its duties hereunder, U.S. Trust shall be obligated to exercise care and
diligence and to act in good faith and to use its best efforts within reasonable
limits to insure the accuracy of all services performed under this Agreement.
U.S. Trust shall be responsible for its own negligent failure or that of any
subcustodian it shall appoint to perform its duties under this Agreement but to
the extent that duties, obligations and responsibilities are not expressly set
forth in this Agreement,
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<PAGE>
U.S. Trust shall not be liable for any act or omission which does not constitute
willful misfeasance, bad faith or negligence on the part of U.S. Trust or
reckless disregard of such duties, obligations and responsibilities. Without
limiting the generality of the foregoing or of any other provision of this
Agreement, U.S. Trust in connection with its duties under this Agreement shall
not be under any duty or obligation to inquire into and shall be liable for or
in respect of (a) the validity or invalidity or authority or lack thereof of any
advice, direction, notice or other instrument which conforms to the applicable
requirements of this Agreement, if any, and which U.S. Trust believes to be
genuine, (b) the validity of the issue of any securities purchased or sold by
the Fund, the legality of the purchase or sale thereof or the propriety of the
amount paid or received therefor, (c) the legality of the issue or sale of any
Shares, or the sufficiency of the amount to be received therefore, (d) the
legality of the redemption of any Shares, or the propriety of the amount to be
paid therefore, (e) the legality of the declaration or payment of any dividend
or distribution on Shares, or (f) delays or errors or loss of data occurring by
reason of circumstances beyond U.S. Trust's control, including acts of civil or
military authority, national emergencies, labor difficulties, fire, mechanical
breakdown (except as provided in Paragraph 17), flood or catastrophe, acts of
God, insurrection, war, riots or failure of the mails, transportation,
communication or power supply.
24. Collections. All collections of monies or other property in respect, or
which are to become part, of the Property (but not the safekeeping thereof upon
receipt by U.S. Trust) shall be at the sole risk of the Fund. In any case in
which U.S. Trust does not receive any payment due the Fund within a reasonable
time after U.S. Trust has made proper demands for the same, it shall so notify
the Fund in writing, including copies of all demand
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<PAGE>
letters, any written responses thereto, and memoranda of all oral responses
thereto and to telephonic demands, and await instructions from the Fund. U.S.
Trust shall not be obliged to take legal action for collection unless and until
reasonably indemnified to its satisfaction. U.S. Trust shall also notify the
Fund as soon as reasonably practicable whenever income due on securities is not
collected in due course.
25. Duration and Termination. This Agreement shall be effective as of the
date hereof and shall continue until termination by the Fund or by U.S. Trust on
60 day's written notice. Upon any termination of this Agreement, pending
appointment of a successor to U.S. Trust or a vote of the Shareholders of the
Fund to dissolve or to function without a custodian of its cash, securities or
other property, U.S. Trust shall not deliver cash, securities or other property
of the Fund to the Fund, but may deliver them to a bank or trust company of its
own selection, having an aggregate capital, surplus and undivided profits, as
shown by its last published report of not less than twenty million dollars
($20,000,000) as a custodian for the Fund to be held under terms similar to
those of this Agreement, provided, however, that U.S. Trust shall not be
required to make any such delivery or payment until full payment shall have been
made by the Fund of all liabilities constituting a charge on or against the
properties then held by U.S. Trust or on or against U.S. Trust and until full
payment shall have been made to U.S. Trust of all of its fees, compensation,
costs and expenses, subject to the provisions of Paragraph 21 of this Agreement.
26. Notices. All notices and other communications (collectively referred to
as "Notice" or "Notices" in this paragraph) hereunder shall be in writing or by
confirming telegram, cable, telex or facsimile sending device. Notices shall be
addressed (a) if to U.S.
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Trust, at U.S. Trust's address, 45 Wall Street, New York, New York 10005; (b) if
to the Fund, at the address of the Fund; or (c) if to neither of the foregoing,
at such other address as shall have been notified to the sender of any such
Notice or other communication. If the location of the sender of a Notice and the
address of the addressee thereof are, at the time of sending, more than 100
miles apart, the Notice may be sent by first-class mail, in which case it shall
be deemed to have been given three days after it is sent, or if sent by
confirming telegram, cable, telex or facsimile sending device, it shall be
deemed to have been given immediately, and, if the location of the sender of a
Notice and the address of the addressee thereof are, at the time of sending, not
more than 100 miles apart, the Notice may be sent by first-class mail, in which
case it shall be deemed to have been given two days after it is sent, or if sent
by messenger, it shall be deemed to have been given on the day it is delivered,
or if sent by confirming telegram, cable, telex or facsimile sending device, it
shall be deemed to have been given immediately. All postage, cable, telegram,
telex and facsimile sending device charges arising from the sending of a Notice
hereunder shall be paid by the sender.
27. Further Actions. Each party agrees to perform such further acts and
execute such further documents as are necessary to effectuate the purposes
hereof.
28. Amendments. This Agreement or any part hereof may be changed or waived
only by an instrument in writing signed by the party against which enforcement
of such change or waiver is sought.
29. Miscellaneous. This Agreement embodies the entire Agreement and
understanding between the parties hereto, and supersedes all prior agreements
and understandings relating to the subject matter hereof. Appendix A hereto is
incorporated into
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<PAGE>
and constitutes an integral part of this Agreement. The captions in this
Agreement are included for convenience of reference only and in no way define or
delimit any of the provisions hereof or otherwise affect their construction or
effect. This Agreement shall be deemed to be a contract made in New York and
governed by New York law. If any provision of this Agreement shall be held or
made invalid by a court decision, statute, rule or otherwise, the remainder of
this Agreement shall not be affected thereby. This Agreement shall be binding
upon and shall inure to the benefit of the parties hereto and their respective
successors.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their officers designated below as of the day and year first above
written.
[SEAL]
Attest: By
[SEAL] UNITED STATES TRUST COMPANY
OF NEW YORK
Attest: By
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<PAGE>
December 26, 1990
Mr. Stephen G. Stavrides, President
Gintel Equity Management, Inc.
6 Greenwich Office Park
Greenwich, CT 06831-5197
Re: A/C 899564 Gintel Fund
899565 Gintel Erisa Fund
899567 Gintel Capital Appreciation Fund
772358 SBSF Repo Collateral Account
Dear Steve:
You have entered into a Mutual Fund Custody Agreement (the
"Agreement") with the Trust Company dated June, 1989.
A recent addition to the New York Uniform Commercial Code
(Article 4A Funds Transfers) effective January 1, 1991, provides a comprehensive
body of law defining rights and obligations that arise from funds transfer.
Article 4A requires that the Trust Company and its customers
agree to commercially reasonable security procedures for verifying the
authenticity of payment orders to transfer funds. All payment orders, and
communications requesting cancellation or amendment of payment orders, issued in
your name are subject to verification by the Trust Company pursuant to security
procedures as mutually agreed and described in Exhibit "A" hereto. On and after
January 1, 1991, payment orders for the transfer of funds from the Account and
receipt of payment orders for the Account shall be governed by Article 4A, the
Agreement and this letter. You shall be responsible for any unauthorized use or
disclosure of security procedure materials entrusted to you.
In executing payment orders for the transfer of funds from, or
the receipt of payment orders for the Account, the Trust Company uses whatever
transfer and communication system(s) are appropriate in its judgment. As a
participant in such transfer and communication systems the Trust Company is
required to abide by certain rules. You agree that the Trust Company shall not
incur any additional liability to you as a result of its good faith compliance
with such rules.
The Trust Company may rely upon identifying numbers, such as
ABA number, and account number furnished us in executing payment orders. In the
event of an inconsistency between the name and the identifying number of a party
to a payment order, the Trust Company shall not be responsible for any loss,
damage or liability as a result of its reliance on identifying numbers.
- 26 -
<PAGE>
The Trust Company shall not be liable for loss, cost, expense
or damage resulting from events or circumstances beyond its reasonable control
and shall in no event be liable for any special or consequential damages. The
Trust Company shall be liable to you for valid and proven compensation claims in
accordance with the interbank compensation rules to which the Trust Company
subscribes, provided that such claims are submitted in writing to the Trust
Company within 90 days of the transaction on which such claim for compensation
is based.
Sincerely yours
Anne J. Marino
- 27 -
<PAGE>
EXHIBIT A
Security Procedures
Standing Instructions
If we have on file standing instructions for the Account, we will continue to
follow such instructions.
Any requests for changes to these instructions must be in writing and such
requests will be confirmed by a telephone call back.
Special Instructions
Instructions to transfer funds from the Account not contained in the Standing
Instructions will be subject to the following procedure:
a) written confirmation is required for all third party transfer requests
unless covered by Standing Instructions and a call back is required
for all third party transfers whether or not covered by Standing
Instructions.
b) Call back is not required for same party transfers unless the Standing
Instructions require a call back.
Our internal policy requires that all funds transfer requests must be approved
by two authorized Trust Company individuals.
- 28 -
EX-99.9(b)
Transfer Agency Agreement.
- 53 -
<PAGE>
TRANSFER AGENCY AND SERVICE AGREEMENT
Between
GINTEL FUND
and
THE UNITED STATES TRUST COMPANY OF NEW YORK
All references to United States Trust Company of New York, U.S. Trust Company of
New York, and U.S. Trust are, and shall be, deemed to be references to the Chase
Manhattan Bank, N.A. All references to Mutual Funds Services Company are, and
shall be, deemed to be references to Chase Global Funds Services Company.
<PAGE>
U.S. TRUST
==========
TRANSFER AGENCY AND SERVICE AGREEMENT
Between
GINTEL FUND
and
THE UNITED STATES TRUST COMPANY OF NEW YORK
-i-
<PAGE>
This AGREEMENT made this 29th day of June, 1989, by and between Gintel
Fund, a Massachusetts Business Trust with offices at Greenwich Office Park #6,
Greenwich, CT, 06830 (the "Fund"), and The United States Trust Company of New
York, a Delaware corporation having its principal office at 45 Wall Street, New
York, New York, 10005 ("UST"),
W I T N E S S E T H T H A T:
WHEREAS, the Fund desires to appoint UST as the transfer agent, dividend
disbursing agent and agent in connection with certain other activities of the
Fund and UST desires to accept such appointment;
NOW, THEREFORE, in consideration of the mutual covenants contained herein,
the parties hereto agree as follows:
1. Appointment. The Fund hereby appoints and employs UST as transfer agent
for its authorized and issued shares of beneficial interest (the "Shares") of
the Fund, dividend disbursing agent and agent in connection with such plans for
the purchase or periodic redemption of shares as are described in the prospectus
and/or statement of additional information of the Fund corresponding to the date
of this Agreement; and UST hereby accepts such appointment and agrees to act in
such capacities under the terms and conditions set forth herein.
2. Representations and Warranties.
(a) UST represents and warrants to the Fund that:
(i) it is a corporation duly organized and existing and in good
standing under the laws of the State of Delaware;
(ii) it is duly qualified to carry on its business in The State
of New York;
<PAGE>
(iii) it is empowered under applicable laws and by its
Certificate of Incorporation and Bylaws to enter into and perform this
Agreement;
(iv) all requisite corporate proceedings have been taken to
authorized it to enter into and perform this Agreement;
(v) it has and will continue to have access to the facilities,
personnel and equipment required to perform its duties and obligations
hereunder, and will make reasonable attempts to make alternative
arrangements for access to facilities, personnel and equipment in the event
of any disruption; and
(vi) its entrance into this Agreement shall not cause a material
breach or be in material conflict with any other agreement or obligation of
UST.
(b) The Fund represents and warrants to UST that:
(i) it is a Massachusettes Business Trust duly organized and
existing and in good standing under the laws of Massachusetts;
(ii) it is empowered under applicable laws and by its Declaration
of Trust and Bylaws to enter into and perform this Agreement;
(iii) all requisite corporate proceedings have been taken to
authorize it to enter into and perform this Agreement;
(iv) it is an investment company registered under the Investment
Company Act of 1940, as amended; and
(v) a registration statement on Form N-1A (including a prospectus
and statement of additional information) is currently
-2-
<PAGE>
effective and will remain effective, and appropriate filings under the
securities laws of the states have been made and will continue to be
made, with respect to all Shares being offered for sale.
3. Documents Furnished by the Fund.
(a) The Fund shall promptly furnish to UST the following documents:
(i) a copy of the Organizational Documents of the Fund;
(ii) a specimen certificate representing outstanding Shares in
the form approved by the Board of Trustees of the Fund;
(iii) copies of all account application forms and other documents
related to shareholder accounts or any plans for the purchase or periodic
redemption of Shares; and
(iv) copies of the Fund's registration statement on Form N-1A as
amended and declared effective by the Securities & Exchange Commission.
(b) From time to time the Fund shall also furnish to UST the following
documents:
(i) copies of all amendments to the Organizational Documents of
the Fund;
(ii) copies of all post-effective amendments to the Fund's
registration statement on Form N-1A; and
(iii) such other certificates, documents and opinions as UST
shall deem to be appropriate or necessary for the proper performance of its
duties hereunder.
-3-
<PAGE>
4. Purchase of Shares. Upon receipt by UST of any order for the purchase of
Shares, UST shall stamp such order with the date and time of receipt, promptly
deposit all funds received to the account of the Fund maintained with the entity
then acting as custodian for the portfolio securities and cash of the Fund (the
"Custodian"), compute (to the nearest three decimal places) the number of shares
to be purchased according to the public offering price in effect for purchases
made on the date of such receipt as set forth in the Fund's current prospectus,
notify the Fund daily of the deposit of such funds to the Fund's account with
the Custodian and the number of Shares subscribed for, and prepare and mail
confirmations of such purchases to the addresses specified by the persons making
them and send copies of such confirmations to the purchaser's Broker/Dealer. All
such actions are subject to any instructions which the Fund or Gintel Equity
Management, Inc. (the "Advisor") may give to UST with respect to acceptance of
orders for shares so received by it.
Unless otherwise requested by a purchaser, all Shares purchased shall be
credited to a book share account maintained for the purchaser by UST.
If a purchaser or existing shareholder specifically requests in writing,
UST as Transfer Agent, shall countersign, register, issue and mail by first
class mail to the purchaser or shareholder, or pursuant to the instructions of
the Investment Advisor, a share certificate for any whole number of Shares
purchased or held in his book share account, but no share certificate shall be
mailed until the purchase price of the Shares represented thereby shall have
been received.
5. Unpaid Checks. In the event that any check or other order for payment of
money with respect to any purchase of Shares is returned unpaid for any reason,
UST shall promptly notify the Fund and purchaser of such
-4-
<PAGE>
nonpayment, and, in the absence of other instructions from the Fund or the
Investment Advisor, take such steps as may be necessary to cancel promptly any
shares purchased on the basis of such returned check and shall cancel
accumulated dividends for such account, and return such check or other order to
the purchaser.
6. Redemption of Shares. Upon receipt of any request for the redemption of
Shares, UST shall stamp such request with the date and time of receipt,
determine whether such request complies with all requirements for redemption set
forth in the Fund's current prospectus, and if so, compute the redemption price
in the manner set forth therein. If such request does not comply with such
requirements for redemption, UST shall notify the redeeming shareholder of the
respects in which compliance is lacking and effect redemption at such time as
all requirements for redemption are complied with.
UST shall notify the Fund daily of the amount of funds required for payment
upon redemption of Shares and the number of Shares redeemed. Upon the receipt of
such funds from the Custodian, UST shall pay over or cause to be paid over the
redemption proceeds to redeeming shareholders as instructed by them in the
manner described in the Fund's current prospectus, and prepare and mail
confirmations of such redemptions and send copies of such confirmations to the
appropriate Broker/Dealer. UST shall cancel all share certificates representing
redeemed Shares.
7. Transfer of Shares. Upon receipt by UST of documentation in proper form
to effect a transfer of Shares, including in the case of Shares for which
certificates have been issued the share certificates in proper form for
transfer, UST shall register such transfer on the Fund's shareholder records
maintained by UST pursuant to instructions received from the transferor, cancel
the certificates representing such Shares, if
-5-
<PAGE>
any, and if so requested, countersign, register, issue and mail by first class
mail new certificates for the same or a smaller whole number of Shares.
8. Administration of Plans. UST shall administer such plans for the
purchase or periodic redemption of Shares as are described in the prospectus
and/or statement of additional information of the Fund corresponding to the date
of this Agreement in accordance with the terms of such plans, or as UST and the
Fund may mutually agree from time to time.
9. Dividends and Distributions. Upon the declaration of any cash dividend
or distribution upon the Shares, the Fund shall furnish to UST a certified copy
of a resolution of the Fund's Board setting forth the date of payment of such
dividend or distribution, the record date as of which shareholders entitled to
payment thereof shall be determined, and the amount payable per share to
shareholders of record as of such record date. In the case of dividends declared
daily or at other regular intervals, such certified resolution may be a standing
resolution setting forth the method of calculating such dividends and the Fund
or its agent shall advise UST of the amount of such dividend at the appropriate
intervals. UST shall notify the Fund and the Custodian of the amount of cash
required to pay the dividend or distribution so that the Fund may instruct its
Custodian to make sufficient funds available on or before the payment date.
Upon receipt of such funds from the Custodian, UST shall prepare and mail
to shareholders, at their addresses as they appear on the records maintained by
UST or pursuant to any written order of a shareholder on file with UST, checks
representing any dividends and distributions to which they are entitled. If a
shareholder is entitled to
-6-
<PAGE>
receive additional Shares by reason of his decision to reinvest all or a portion
of a dividend or distribution, appropriate credits shall be made to this book
share account, and, if specifically so requested in writing, UST shall
countersign, register, issue and mail by first class mail to the shareholder or
pursuant to his instructions a share certificate for any whole number of Shares
purchased. UST shall prepare and mail confirmations of such purchases and send
copies of such confirmations to the Fund.
10. Tax Returns and Reports. UST shall prepare, file with the Internal
Revenue Service and with appropriate state or local agencies, and mail to
shareholders such returns for reporting dividends, distributions and redemptions
as are required to be so prepared, filed and/or mailed, and withhold from the
accounts of shareholders such sums as are required to be withheld, under
applicable federal, state and local tax laws, rules and regulations in effect
from time to time.
11. Share Certificates. The Fund shall supply UST with sufficient supplies
of blank share certificates. Such blank share certificates shall be properly
signed, manually or by facsimile signature, by the fully authorized officers of
the Fund, and shall bear the seal or a facsimile thereof of the Fund.
Notwithstanding the death, resignation or removal of any officer of the
Fund authorized to sign such share certificates, UST may continue to countersign
certificates which bear the manual or facsimile signature of such officer until
otherwise directed by the Fund.
UST shall establish and maintain facilities and procedures reasonably
acceptable to the Fund for safekeeping of share certificates, check forms and
facsimile signature imprinting devices if any, and for the
-7-
<PAGE>
preparation or use and for keeping account of such certificates, forms and
devices.
UST shall issue a replacement share certificate in lieu of a certificate
which has been lost, stolen or destroyed without any further action by the
Fund's Board or any officer of the Fund, upon receipt by UST of a properly
executed affidavit with respect to such loss, theft or destruction and a lost
certificate bond, in a form satisfactory to UST.
12. Shareholder Mailings, Inquiries and Meetings. UST shall address and
mail all communications by the Fund to its shareholders promptly following the
delivery by the Fund of the material to be mailed.
UST shall answer all correspondence it receives from shareholders and
former shareholders of the Fund relating to their ownership of shares. In
connection with meetings of shareholders, UST shall prepare shareholder lists,
mail and certify as to the mailing of proxy materials, receive and tabulate
proxy cards, render periodic reports to the Fund on the progress of such
tabulation, and provide the Fund with inspectors of election at any meeting of
shareholders.
13. Other Reports and Information. UST shall furnish to the Fund such
information, including shareholder lists, sales information on a state by state
basis and other statistical information, in such form and at such intervals as
may be reasonably requested by the Fund and supported by the UST system.
14. Record Keeping. UST shall keep records relating to the services to be
performed hereunder, in such form and manner as it may deem advisable. To the
extent required by Section 31 of the Investment Company Act of 1940, as amended,
and the rules promulgated thereunder, UST agrees that all such records prepared
or maintained by UST relating to the
-8-
<PAGE>
services to be performed by UST hereunder are the property of the Fund and will
be preserved, for the periods prescribed under Rule 31 A-2 of said rules as
specifically noted below, maintained at the expense of the Fund, and made
available in accordance with such section and rules. UST shall forthwith upon
the Fund's demand surrender promptly to the Fund and cease to retain in its
files records and documents created and maintained by UST pursuant to this
Agreement.
If not so turned over to the Fund, such records and documents will be
retained by UST for six years from the year of creation, during the first two of
which such documents will be in readily accessible form. At the end of the
six-year period, such records and documents will either be turned over to the
Fund or destroyed in accordance with the Fund's authorization.
In the case of any requests or demands for the inspection of the
shareholder records of the Fund, UST shall endeavor to notify the Fund and to
secure instructions from an officer of the Fund as to such inspection. UST
reserves the right, however, to exhibit shareholder records to any person
whenever it is advised in writing by its counsel, with a copy to the Fund, that
it may be held liable for the failure to do so.
15. Confidentiality. All books, records, information and data pertaining to
the business of the parties which are exchanged or received pursuant to the
negotiation or the performance of this Agreement shall remain confidential, and
shall not be voluntarily disclosed to any other person, except as may be
required by law.
16. Compensation. For the services to be performed by UST pursuant to this
Agreement, the Fund agrees to pay UST in accordance with the schedules and terms
set forth in Exhibit A and as follows:
-9-
<PAGE>
(a) Shareholder Service Fee. The Fund agrees to pay UST an Annual
Service Fee per Shareholder account. A "Shareholder account" is an account
holding at least a fraction of a Share and shall be deemed to exist after it is
in fact terminated until the final tax filing for the calendar year in which
termination occurs. The Annual Service Fee is prorated and payable monthly based
on the total number of accounts on the system at the billing date each month.
Service charges for a partial month's service will be prorated on a thirty (30)
day month basis.
A minimum monthly service fee will be charged if calculated service
fees are less than the minimum.
(b) Out-of-Pocket Expenses. The Fund agrees to reimburse UST for any
equipment and supplies specially ordered by the Fund through UST and for any
other expenses UST may incur at the request of or consented to by the Fund,
including but not limited to expenses for stationery, postage, telephone and
telegraph line toll charges, data communications lines, modems, direct access
storage devices for account history longer than eighteen months, terminal access
charges, shipping charges, messenger services, forms, supplies and costs
associated with the termination of services pursuant to this Agreement.
Out-of-pocket charges, except for such items as travel and living
expenses, will include an administrative or handling charge, where applicable.
Postage and the cost of materials for mailings to shareholder accounts shall be
advanced to UST by the Fund at least five (5) business days prior to the mailing
date of such materials.
(c) Additional Services. The Fund may request additional services,
additional processing, or special reports. Such requests may be provided by UST
at additional charges. In this event, the Fund shall
-10-
<PAGE>
submit such requests in writing together with such specifications as may be
reasonably required by UST, and UST shall respond to such requests in the form
of a price quotation. The Fund's written acceptance of the quotation must be
received prior to implementation of such request.
(d) Terms of Payment. All fees, out-of-pocket expenses, or additional
charges of UST shall be billed on a monthly basis and shall be due and payable
upon receipt of the invoice.
UST will render, after the close of each month in which services have
been furnished, a statement reflecting all of the charges for such month.
Charges remaining unpaid after thirty (30) days shall bear interest or finance
charges equivalent to, in the aggregate, the Prime Rate (as determined by the
Trust Company of New York) plus two (2) points per year and all costs and
expenses of effecting collection of any such sums, including reasonable
attorney's fees, shall be paid by the Fund to UST.
In the event that the Fund is more than sixty (60) days delinquent in
its payments of monthly billings in connection with this Agreement (with the
exception of specific amounts which may be contested in good faith by the Fund),
this Agreement may be terminated upon thirty days written notice to the Fund by
UST. The Fund must notify UST in writing of any contested amounts within thirty
(30) days of receipt of a billing for such amounts. Disputed amounts are not due
and payable while they are being investigated.
(e) Taxes. In addition to any other charges specified hereunder, the
Fund shall pay any sales and/or use tax, transfer tax, excise tax, tariff, duty,
or any other tax or payment in lieu thereof imposed by any governmental
authority or agency as a direct result of the
-11-
<PAGE>
provision by UST of goods or services hereunder, except for taxes based on UST's
net income.
17. Indemnification.
(a) UST shall not be responsible for, and the Fund shall indemnify and
hold UST harmless from and against, any and all losses, damages, costs, charges,
reasonable attorney's fees, payments, expenses and liability arising out of or
attributable to:
(i) all actions of UST or its agents or subcontractors required
to be taken pursuant to this Agreement, provided that such actions are taken in
good faith and without negligence or willful misconduct;
(ii) the Fund's refusal or failure to comply with the terms of
this Agreement, or the Fund's lack of good faith, negligence or willful
misconduct, or the breach of any representation or warranty of the Fund
hereunder;
(iii) the reliance on or use by UST or its agents or
subcontractors of information, records or documents which are received by UST or
its agents or subcontractors and furnished to it by or on behalf of the Fund,
and which have been prepared an/or maintained by the Fund or any other person or
firm (other than UST or its agents or subcontractors) on behalf of the Fund;
(iv) the reliance on, or the carrying out by UST or its agents or
subcontractors, of any instructions or requests of the Fund; or
(v) the offer or sale of Shares by the Fund in violation of any
requirement under the federal securities laws or regulations or the securities
laws or regulations of any state that such shares be registered
-12-
<PAGE>
in such state, or in violation of any stop order or other determination or
ruling by any federal agency or any state with respect to the offer or sale of
such Shares in such state.
(b) UST shall indemnify and hold the Fund harmless from and against
any and all losses, damages, costs, charges, reasonable attorney's fees,
payments, expenses and liability arising out of or attributable to UST's refusal
or failure to comply with the terms of this Agreement, or UST's lack of good
faith, negligence or willful misconduct, or the breach of any representation or
warranty of UST hereunder.
(c) At any time UST may apply to any officer of the Fund for
instructions, and may request, through an officer of the Fund, the opinion of
the Fund's legal counsel, with respect to any matter arising in connection with
the services to be performed by UST under this agreement, and UST and its agents
and subcontractors shall not be liable and shall be indemnified by the Fund for
any action taken or omitted by it in reliance upon such instructions or upon the
opinion of such counsel. UST, its agents and subcontractors shall be protected
and indemnified in acting in a reasonable manner upon any papers or documents
furnished by or on behalf of the Fund, any shareholder of the Fund or any
representative of a shareholder, reasonably believed to be genuine and to have
been signed by the proper person or persons, or upon any instructions,
information, data, records or documents provided UST or its agents or
subcontractors by telephone, in person, or by machine readable input, telex, CRT
data entry or similar means authorized by the Fund, and UST, its agents and
subcontractors shall not be held to have notice absent actual notice of any
change of authority of any person until receipt of written notice thereof from
the Fund. UST, its agents and subcontractors shall also be protected and
indemnified in recognizing share certificates which are reasonably believed to
bear the proper manual or facsimile signatures of
-13-
<PAGE>
the officers of the Fund, and the proper countersignature of any former transfer
agent or registrar, or of a co-transfer agent or co-registrar.
(d) In the event either party is unable to perform its obligations
under the terms of this Agreement because of acts of God, strikes, interruption
of electrical power or other utilities, equipment or transmission failure or
damage reasonably beyond its control, or other causes reasonably beyond its
control, such party shall not be liable to the other for any damages resulting
from such failure to perform or otherwise from such causes. UST shall use its
best efforts to minimize the likelihood of all damage, loss of data, delays and
errors resulting from uncontrollable events, and should such damage, loss of
data, delays or errors occur, UST shall use its best efforts to mitigate the
effects of such occurrence.
(e) Neither party to this Agreement shall be liable to the other party
for consequential, special or incidental damages under any provision of this
Agreement or for any act or failure to act hereunder.
(f) In order that the indemnification provisions contained in this
Section 17 shall apply, upon the assertion of a claim for which either party may
be required to indemnify the other, the party seeking indemnification shall
promptly notify the other party of such assertion and shall keep the other party
advised with respect to all developments concerning such claim.
The party who may be required to indemnify shall have the option to
participate with the party seeking indemnification in the defense of such claim.
The party seeking indemnification shall in no case confess any claim or make any
compromise in any case in which the other party may be required to indemnify it,
except with the other party's prior written consent.
-14-
<PAGE>
18. Commencement, Term and Termination.
(a) The commencement date for the shareholder services provided
hereunder shall be July 1, 1989.
(b) This Agreement shall remain in effect for twelve months from the
commencement date (the "Initial Term"). Subsequent to the Initial Term, this
Agreement shall remain in effect indefinitely unless terminated by either party,
without penalty, upon ninety (90) days prior written notice.
(c) Notwithstanding the foregoing, either party hereto may terminate
this Agreement upon written notice if the other party hereto is substantially
unable to perform its duties hereunder because of a force majeure condition
which lasts for more than seven days.
(d) This Agreement may be terminated by either party hereof if the
other party is in material breach of this Agreement. In order to so terminate
this Agreement, written notice shall be given to an officer of the other party
of the non-breaching party's intention to terminate due to a failure to comply
with, or breach of, a material term or condition of this Agreement. Said written
notice shall specifically state the material term and conditions claimed to be
breached and shall provide at least fifteen (15) days in which to correct such
alleged breach. If such breach is not corrected in the time period allowed to
correct, then the notice giving party may terminate this Agreement immediately,
upon written notice.
(e) Should the Fund exercise its right to terminate, all out-of-pocket
expenses reasonably incurred by UST in connection with the movement of records
and materials shall be borne by the Fund.
-15-
<PAGE>
Nothing herein shall be construed to excuse the Fund from payment of
all charges due and payable to UST for Services and out-of-pocket expenses and
disbursements provided prior to termination. In the event of termination as
provided for in this Section 18, neither party shall be liable to the other
except for any payments which may be due as provided for in this Agreement and
except that the provisions of Section 15, "Confidentiality" shall survive the
termination of this Agreement for any reason.
19. Use of UST's Name. The Fund shall not use UST's name in any prospectus
or statement of additional information, shareholder report, sales literature or
other material relating to the Fund, otherwise than for the purpose of merely
identifying and describing the functions or UST hereunder, in a manner not
approved by UST in writing before such use; provided, however, that UST shall
consent to all uses of its name required by the Securities and Exchange
Commission, any state securities commission, or any federal or state regulatory
authority and provided, further, that in no case will such approval be
unreasonably withheld.
20. Assignment. Except as hereinafter provided, neither this Agreement nor
any rights or obligations hereunder may be assigned by either party without the
written consent of the other party. This Agreement shall inure to the benefit of
and be binding upon the parties and their respective permitted successors and
assigns. UST may, without further consent on the part of the Fund, subcontract
for the performance hereof with third parties, or subsidiaries or other
affiliates of UST; provided, however, that UST shall be as fully responsible to
the Fund for the acts and omissions of any subcontractor as it is for its own
acts and omissions and shall be responsible for its choice of subcontractor.
-16-
<PAGE>
21. Amendment. This Agreement may not be amended or modified in any manner
except by a written instrument executed by both parties.
22. Exhibits(s). The Exhibits listed below the signature lines hereof and
which are attached hereto are made a part of this agreement as if fully included
in the text hereof. In the event of any conflict or inconsistency between
provisions contained in such Exhibits and provisions contained in the main body
of the Agreement, the provisions contained in the Exhibits shall prevail.
23. Miscellaneous. This Agreement shall be governed by and construed in
accordance with the laws of The State of New York. The captions in this
Agreement are included for convenience of reference only and in no way define or
delimit any of the provisions hereof or otherwise affect their construction or
effect. This Agreement may be executed simultaneously in two or more
counterparts, each of which shall be deemed an original, but all of which taken
together shall constitute the entire Agreement between the parties hereto and
supersede any prior oral or written Agreement with respect to the subject matter
hereof.
-17-
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed under seal by their officers thereunto duly authorized as of the date
first above written.
THE UNITED STATES TRUST COMPANY OF
NEW YORK
By_____________________________
Signature
_______________________________
Name
Title
By_____________________________
Signature
_______________________________
Name
Title
Schedule of Exhibits
A. Fee Schedule
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<PAGE>
U.S. TRUST COMPANY
FULL SERVICE TRANSFER AGENT PROCESSING
FEE PROPOSAL
TO
Gintel Equity Management, Inc.
The Gintel Family of Funds
6/21/89
Annual Fees
Maintain Customer Record $ 6.50
Letter of Intent 10.00
Trustee Fee - IRA (Billed to Participant) 10.00
Transaction Fees
Open New Account 5.00
Additional Investment .50
Redemption (Request by Mail) 2.00
Redemption (Telephone/Check) 2.00
Exchange (Telephone/Mail) 2.00
Systematic Withdrawal Plan 2.00 set-up
.15 payment
Transfer of Shares 2.00
Dividend Check Preparation .10 per check
Dividend Reinvestment .05 per confirm
Proxy Preparation .40 per proxy
Proxy Tabulation .50 per proxy
Wire Order Processing (Cashiering) 5.00 per order
Shareholder Inquiry (Letter) 4.00
Shareholder Inquiry (Telephone) 1.00
Returned Checks 25.00
Electronic Transactions .15 per transaction
Transfer of Assets - In or Out
(Billed To Participant) 10.00
Minimum Monthly Processing Charge:
Minimum Monthly Processing Per Fund 2,250.00
Out-of-Pocket Expenses
Costs of postage, telephone, etc. billed at cost.
Cost of forms, telecommunication lines and devices billed at
cost plus 15% service charge.
-19-
<PAGE>
U.S. TRUST
==========
TABLE OF CONTENTS
PAGE
Recitals..............................................................1
1. Appointment..................................................1
2. Representations and Warranties...............................1
3. Documents Furnished by the Fund..............................3
4. Purchase of Shares...........................................4
5. Unpaid Checks................................................4
6. Redemption of Shares.........................................5
7. Transfer of Shares...........................................5
8. Administration of Plans......................................6
9. Dividends and Distributions..................................6
10. Tax Returns and Reports......................................7
11. Share Certificates...........................................7
12. Shareholder Mailings, Inquiries and Meetings.................8
13. Other Reports and Information................................8
14. Record Keeping...............................................8
15. Confidentiality..............................................9
16. Compensation.................................................9
17. Indemnification.............................................12
18. Commencement, Term and Termination..........................15
19. Use of U.S. Trust Company's Name............................16
20. Assignment..................................................16
21. Amendment...................................................17
22. Exhibits....................................................17
23. Miscellaneous...............................................17
Signatures...........................................................18
Exhibits.............................................................19
-i-
EX-99.11(a)
Opinion of Kramer, Levin, Naftalis & Frankel
- 54 -
<PAGE>
KRAMER, LEVIN, NAFTALIS & FRANKEL
919 THIRD AVENUE
NEW YORK, N.Y. 10022-3852
(212) 715-9100
ARTHUR H. AUFSES III RICHARD MARLIN SHERWIN KAMIN
THOMAS D. BALLIETT THOMAS E. MOLNER ARTHUR B. KRAMER
JAY G. BARIS THOMAS H. MORELAND MAURICE N. NESSEN
SAUL E. BURIAN ELLEN R. NADLER FOUNDING PARTNERS
BARRY MICHAEL CASS GARY P. NAFTALIS COUNSEL
THOMAS E. CONSTANCE MICHAEL J. NASSAU -----
MICHAEL J. DELL MICHAEL S. NELSON MARTIN BALSAM
KENNETH H. ECKSTEIN JAY A. NEVELOFF JOSHUA M. BERMAN
CHARLOTTE M. FISCHMAN MICHAEL S. OBERMAN JULES BUCHWALD
DAVID S. FRANKEL PAUL S. PEARLMAN RUDOLPH DE WINTER
MARVIN E. FRANKEL SUSAN J. PENRY-WILLIAMS MEYER EISENBERG
ALAN R. FRIEDMAN BRUCE RABB ARTHUR D. EMIL
CARL FRISCHLING ALLAN E. REZNICK MAXWELL M. RABB
MARK J. HEADLEY SCOTT S. ROSENBLUM JAMES SCHREIBER
ROBERT M. HELLER MICHELE D. ROSS COUNSEL
PHILIP S. KAUFMAN MAX J. SCHWARTZ -----
PETER S. KOLEVZON MARK B. SEGALL M. FRANCES BUCHINSKY
KENNETH P. KOPELMAN JUDITH SINGER DEBORA K.GROBMAN
MICHAEL PAUL KOROTKIN HOWARD A. SOBEL CHRISTIAN S. HERZECA
KEVIN B. LEBLANG JEFFREY S. TRACHTMAN PINCHAS MENDELSON
DAVID P. LEVIN D. GRANTVINGOE LYNN R. SAIDENBERG
EZRA G. LEVIN HAROLD PL WEINBERGER JONATHAN M. WAGNER
LARRY M. LOEB E. LISK WYCKOFF, JR. SPECIAL COUNSEL
MONICA C. LORD -----
FAX
(212) 715-8000
WRITER'S DIRECT NUMBER
(212) 715-9100
August 23, 1996
Gintel Fund
6 Greewich Office Park
Greenwich, Connecticut 06831
Gintel ERISA Fund
6 Greenwich Office Park
Greenwich, COnnecticut 06831
Re: Registration Statement on Form N-14
Gentlemen:
Reference is made to the Registration Statement on FormUN-14 under the
Securities Act of 1933, as amended (the "Registration Statement"), to be_filed
with the Securities and Exchange Commission (the "Commission") to register
shares of beneficial interest, without par value ("Shares") of Gintel Fund (the
"Gintel Fund"), a Massachusetts business trust. Such shares are to be issued in
connection with an Agreement and Plan of Reorganization (the "Agreement")
whereby all of the then-existing assets ofCGintel ERISA Fund (the "ERISA Fund")
will be transferred to Gintel Fund in exchange for (i) the assumption of all the
obligations and liabilities of ERISA Fund by Gintel Fund and (ii) the issuance
and delivery to ERISA Fund of full and fractional shares ofRGintel.Fund's shares
of beneficial interest (the "Shares"), and such Shares shall be distributed by
ERISAB Fund pro rata to its shareholders upon its liquidation. The Agreement was
approved by the Board of Trustees of ERISA Fund and the Board of Trustees of
Gintel Fund on June 10, 1996 and is to become effective upon its approval by
shareholders of ERISA Fund.
<PAGE>
We have reviewed the Declaration of Trust of Gintel Fund, its By-Laws,
resolutions of the Trustees of Gintel Fund, and the Registration
Statement.(including exhibits thereto). We have also made such inquiries and
have examined originals, certified copies or copies otherwise identified to our
satisfaction of such documents, records and other instruments as we have deemed
necessary or appropriate for the purposes of this opinion. For purposes of such
examination, we have assumed the genuineness ofAall signatures on original
documents and the conformity to the original documents of all copies submitted.
In addition, we have assumed that the representations to be made as of the
closing date by Gintel Fund and ERISA Fund will be made by such parties in the
form acceptable to us and that Gintel Fund's and ERISA Fund's activities in
connections with the Agreement and the transactions contemplated therein have
been and will be conducted in the manner provided in such documents and as set
forth herein.
The opinions expressed herein are limited to matters of law which
govern the due organization of Gintel Fund and the authorization)and5issuance of
the Shares. We are members of the Bar of the State of New York and do not hold
ourselves out as experts as to the law of any other state or jurisdiction. As to
matters of Massachusetts law, we have relied upon the opinion of Peabody &
Brown. Based upon and subject to the foregoing and provided that the terms of
Reorganization occur in accordance with the terms of the Agreement, as of the
date of the closing, we are of the opinion that, and so advise you as follows:
(1) Gintel Fund is duly incorporated and validly existing as a
business trust in good standing under the laws of the Commonwealth of
Massachusetts; and
(2) The Shares have been duly authorized for issuance by all necessary
corporate action on the part of Gintel Fund and, when issued and delivered in
exchange for, and conversion and reclassification from, validly issued shares of
ERISA Fund, as contemplated by the Registration Statement, will be validly
issued, fully paid and nonassessable.
This opinion is solely for your information and is not to be quoted in
whole or in part, summarized or otherwise referred to, nor is it to be filed
with or supplied to or relied upon by any governmental agency or other person
without the prior written consent of this firm. This opinion is as of the date
hereof. We disclaim any responsibility to update or supplement this opinion to
reflect any events or state of facts which may hereafter come to our attention,
or any changes in statutes or regulations or any court decisions which may
hereafter occur.
We consent to the filing of this opinion as an exhibit to the
Registration Statement and to the references therein to our firm as Counsel to
Gintel Fund.
Very truly yours,
/s/Kramer, Levin, Naftalis & Frankel
EX-99.11(b)
Opinion of Peabody & Brown
- 55 -
<PAGE>
PEABODY & BROWN
A LAW PARTNERSHIP INCLUDING PROFESSIONAL CORPORATIONS
101 FEDERAL STREET
BOSTON, MASSACHUSETS 02110-1832
(617) 345-1000
August 22, 1996
Kramer, Levin, Naftalis & Frankel
919 Third Avenue
New York, New York 10022-3862
Gentlemen:
We have acted as special counsel in connection with your delivery of an
opinion letter as counsel to the Gintel Fund, a Massachusetts business trust
(the "Fund") in connection with the Registration Statement on Form N-14 under
the Securities Act of 1933, as amended (the "Registration Statement"), filed
with the Securities and Exchange Commission on July 30, 1996 to register shares
of beneficial interest, without par value ("Shares") of the Fund. Such shares
are to be issued in connection with an Agreement and Plan of Reorganization (the
"Plan") whereby all the assets of the Gintel ERISA Fund (the "ERISA Fund") will
be transferred to the Gintel Fund in exchange for the Shares and such Shares
shall be distributed to shareholders of the ERISA Fund upon its liquidation.
In rendering this opinion, we have examined and are familiar with the
following:
(a) the Declaration of Trust, (the "Trust Agreement"), certified by the
Secretary of State of the Commonwealth of Massachusetts, and the By-Laws, as
amended of the Fund, certified by the Fund's Secretary;
(b) a certificate of the Secretary of State of the Commonwealth of
Massachusetts as to the legal existence and good standing of the Fund in
Massachusetts dated August 15, 1996; and
(c) the votes of the Board of Trustees of the fund adopted on June 10,
1996, certified by the Fund's Secretary, approving the Plan and the transactions
contemplated thereby.
Our opinion in paragraph 1 below, as it relates to the valid existence and
good standing of the Fund, is based solely upon the certificate of the Secretary
of State of the
<PAGE>
Kramer, Levin, Naftalis & Frankel
August 22, 1996
Page 2
Commonwealth of Massachusetts referred to in (b) above and is limited
accordingly, and as to such matters our opinion is rendered as of the date of
such certificate.
Our opinion in paragraph 2 below, as it relates to the nonassessability of
the shares of the Fund, is qualified to the extent that under Massachusetts law,
shareholders of a Massachusetts business trust may be held personally liable for
the obligations of the Fund. In this regard, however, please be advised that the
Trust Agreement disclaims shareholder liability for acts or obligations of the
Fund and requires that notice of such disclaimer be given in each agreement,
obligation or instrument entered into or executed by the Fund or the Trustees.
Also, the Trust Agreement provides for indemnification out of the Fund's
property for all loss and expense of any shareholder held personally liable for
the obligations of the Fund.
Insofar as our opinions relate to factual matters, information with respect
to which is in the possession of the Fund, we have made inquiries to the extent
we believe reasonable with respect to such matters, and have relied upon
representations made to us by one or more officers of the Fund.
We express no opinion as to compliance with any state or federal securities
laws. For purposes of this opinion letter, we have not made an independent
review of the laws of any state or jurisdiction other than the Commonwealth of
Massachusetts and express no opinion with respect to the laws of any
jurisdiction other than the laws of the Commonwealth of Massachusetts.
Based on, in reliance upon, and subject to the foregoing, we are of the
opinion that:
1. The Fund is a duly organized and validly existing business trust in good
standing under the laws of the Commonwealth of Massachusetts.
2. The Shares when issued in accordance with the terms of the Plan and the
Fund's Registration Statement on Form N-14, will be validly issued, fully paid
and non- assessable by the Fund.
We understand you will be delivering an opinion to the Fund as to, among
other things, the legality of the Shares, which opinion will be filed as an
exhibit to the Registration Statement. This opinion letter is solely for your
use in connection with the delivery of your opinion to the Fund, and we consent
to the inclusion of this opinion with your opinion to the Fund, as an exhibit to
the Registration Statement.
<PAGE>
Kramer, Levin, Naftalis & Frankel
August 22, 1996
Page 3
This opinion may not be used for any other purpose or relied upon by any
you or by other person or entity without our prior written consent.
Very truly yours,
/s/Peabody & Brown
KRAMER, LEVIN, NAFTALIS & FRANKEL
919 THIRD AVENUE
NEW YORK, N.Y. 10022-3852
(212) 715-9100
ARTHUR H. AUFSES III RICHARD MARLIN SHERWIN KAMIN
THOMAS D. BALLIETT THOMAS E. MOLNER ARTHUR B. KRAMER
JAY G. BARIS THOMAS H. MORELAND MAURICE N. NESSEN
SAUL E. BURIAN ELLEN R. NADLER FOUNDING PARTNERS
BARRY MICHAEL CASS GARY P. NAFTALIS COUNSEL
THOMAS E. CONSTANCE MICHAEL J. NASSAU -----
MICHAEL J. DELL MICHAEL S. NELSON MARTIN BALSAM
KENNETH H. ECKSTEIN JAY A. NEVELOFF JOSHUA M. BERMAN
CHARLOTTE M. FISCHMAN MICHAEL S. OBERMAN JULES BUCHWALD
DAVID S. FRANKEL PAUL S. PEARLMAN RUDOLPH DE WINTER
MARVIN E. FRANKEL SUSAN J. PENRY-WILLIAMS MEYER EISENBERG
ALAN R. FRIEDMAN BRUCE RABB ARTHUR D. EMIL
CARL FRISCHLING ALLAN E. REZNICK MAXWELL M. RABB
MARK J. HEADLEY SCOTT S. ROSENBLUM JAMES SCHREIBER
ROBERT M. HELLER MICHELE D. ROSS COUNSEL
PHILIP S. KAUFMAN MAX J. SCHWARTZ -----
PETER S. KOLEVZON MARK B. SEGALL M. FRANCES BUCHINSKY
KENNETH P. KOPELMAN JUDITH SINGER DEBORA K.GROBMAN
MICHAEL PAUL KOROTKIN HOWARD A. SOBEL CHRISTIAN S. HERZECA
KEVIN B. LEBLANG JEFFREY S. TRACHTMAN PINCHAS MENDELSON
DAVID P. LEVIN D. GRANTVINGOE LYNN R. SAIDENBERG
EZRA G. LEVIN HAROLD PL WEINBERGER JONATHAN M. WAGNER
LARRY M. LOEB E. LISK WYCKOFF, JR. SPECIAL COUNSEL
MONICA C. LORD -----
FAX
(212) 715-8000
WRITER'S DIRECT NUMBER
(212) 715-9100
September __, 1996
Gintel Fund
6 Greenwich Office Park
Greenwich, Connecticut 06831
Gintel ERISA Fund
6 Greenwich Office Park
Greenwich, Connecticut 06831
Ladies and Gentlemen:
We have acted as counsel to the Gintel Fund, a Massachusetts business
trust, and the Gintel ERISA Fund, a Massachusetts business trust, in connection
with the planned transfer by the Gintel ERISA Fund of substantially all of its
assets to the Gintel Fund, solely in exchange for Gintel Fund voting stock1 and
the assumption by the Gintel Fund of the liabilities of the Gintel ERISA Fund,
followed by the pro rata distribution by the Gintel ERISA Fund of such Gintel
Fund stock to its shareholders in exchange for their Gintel ERISA Fund stock
(the "Reorganization") pursuant to the Agreement and Plan of Reorganization
approved by the Board of Trustees of the Gintel Fund and the Board of Trustees
of the Gintel ERISA Fund on June 10, 1996 (the "Plan").
- --------
1 Under Massachusetts law, ownership interests in the Gintel Fund and the
Gintel ERISA Fund constitute shares of beneficial interest. Such interests
are considered stock for federal income tax purposes and are referred to as
"stock" in this opinion.
<PAGE>
KRAMER, LEVIN, NAFTALIS & FRANKEL
Gintel Fund
Gintel ERISA Fund
September __, 1996
Page 2
The opinions expressed in this letter are based solely upon current
law, including the Internal Revenue Code of 1986, as amended (the "Code"),
applicable Treasury Regulations promulgated or proposed thereunder, current
positions of the Internal Revenue Service (the "IRS") contained in published
Revenue Rulings and Revenue Procedures, other current administrative positions
of the IRS, and existing judicial decisions, all of which are subject to change
or modification at any time, and any such changes or modifications could apply
retroactively. No ruling has been (or will be) sought from the IRS by the Gintel
ERISA Fund or the Gintel Fund as to the federal income tax consequences of any
aspect of the Reorganization. There can be no assurance that the IRS or a court
of competent jurisdiction will not disagree with the opinions expressed herein.
Any inaccuracy in, or breach of, any the representations or assumptions set
forth below or any change after the date hereof in applicable law could
adversely affect our opinion. We do not undertake, and hereby disclaim any
obligation, to advise you of any changes in any matters on which the opinions
set forth herein are based.
For purposes of the opinions set forth below, we have reviewed and
relied upon (i) the Plan, (ii) the most recent audited financial statements of
the Gintel ERISA Fund, and (iii) such other documents, records, and instruments
as we have deemed necessary or appropriate as a basis for our opinion. In
addition, in rendering our opinion we have assumed that at the time of the
Reorganization we will receive representations from the Gintel ERISA Fund, the
Gintel Fund, Gintel Equity Management, Inc., Robert M. Gintel, and Brophy and
Graving, Co., which representations will be satisfactory, in form and substance,
to us and which we will neither investigate nor verify. Also, we have assumed
that (i) at all relevant times, the Gintel ERISA Fund and the Gintel Fund will
continue to be operated as regulated investment companies within the meaning of
Subchapter M of the Code; (ii) all documents we have reviewed are true and
accurate, accurately reflect the originals, and have been properly executed; and
(iii) the activities of the Gintel ERISA Fund and the Gintel Fund in connection
with the Plan and the transactions contemplated therein have been and will be
conducted in the manner provided in such documents and as set forth herein.
Furthermore, we have assumed that (i) all representations which are made "to the
best knowledge" of any person will be true, correct, and complete as if made
without such qualification; (ii) the Reorganization will be consummated
substantially in accordance with the Plan; and (iii) there are no shareholders
that will directly own, at the time of the Reorganization, more than five
percent (5%) of the shares of the Gintel ERISA Fund, other than Robert M. Gintel
and Brophy and Graving, Co.
Based on and subject to the foregoing, we are of the opinion that:
(1) The exchange by the Gintel ERISA Fund of substantially all of its
assets in exchange for shares of the Gintel Fund and the assumption by the
Gintel Fund of
<PAGE>
KRAMER, LEVIN, NAFTALIS & FRANKEL
Gintel Fund
Gintel ERISA Fund
September __, 1996
Page 3
the liabilities of the Gintel ERISA Fund, and the subsequent liquidation of the
Gintel ERISA Fund pursuant to the Plan will constitute a reorganization within
the meaning of Code section 368(a)(1)(C), and the Gintel ERISA Fund and the
Gintel Fund will each be "a party to a reorganization" within the meaning of
Code section 368(b);
(2) Pursuant to Code sections 357(a) and 361(a) and (c), the Gintel
ERISA Fund will not recognize any gain or loss as a result of the
Reorganization;
(3) Pursuant to Code section 1032(a), the Gintel Fund will not
recognize any gain or loss on the receipt of the assets of the Gintel ERISA Fund
in exchange for shares of the Gintel Fund;
(4) Pursuant to Code section 354(a)(1), the shareholders of the Gintel
ERISA Fund will not recognize any gain or loss on the exchange of their shares
of the Gintel ERISA Fund for shares of the Gintel Fund;
(5) Pursuant to Code section 358(a)(1), the aggregate tax basis of
shares of the Gintel Fund received by each shareholder of the Gintel ERISA Fund
will be the same as the aggregate tax basis of the shares of the Gintel ERISA
Fund exchanged therefor;
(6) Pursuant to Code section 362(b), the Gintel Fund's adjusted tax
bases in the assets received from the Gintel ERISA Fund in the Reorganization
will be the same as the adjusted tax bases of such assets in the hands of the
Gintel ERISA Fund immediately prior to the Reorganization;
(7) Pursuant to Code section 1223(1), the holding period of each former
shareholder of the Gintel ERISA Fund in the shares of the Gintel Fund received
in the Reorganization will include the period during which such shareholder held
his shares of the Gintel ERISA Fund as a capital asset; and
(8) Pursuant to Code section 1223(2), the Gintel Fund's holding periods
in the assets received from the Gintel ERISA Fund in the Reorganization will
include the holding periods of such assets in the hands of the Gintel ERISA Fund
immediately prior to the Reorganization.
No opinion is expressed as to any matter addressed in this letter other
than as set forth above.
We are members of the bar of the State of New York and are not admitted
to practice law in any other jurisdiction. Accordingly, we express no opinion
with respect to
<PAGE>
KRAMER, LEVIN, NAFTALIS & FRANKEL
Gintel Fund
Gintel ERISA Fund
September __, 1996
Page 4
the laws of any jurisdiction other than the federal law of the United States in
respect of the matters set forth herein.
We hereby consent to the filing of this opinion as an exhibit to the
Joint Proxy Statement/Prospectus on Form N-14 (the "Registration Statement") and
the reference to this firm under the caption "Federal Income Tax Consequences"
in the Joint Proxy Statement/Prospectus and in the Registration Statement. The
giving of this consent, however, does not constitute an admission that we are
"experts" within the meaning of Section 11 of the Securities Act of 1933, as
amended, or within the category of persons whose consent is required by Section
7 of said Act.
Very truly yours,
/s/Kramer, Levin, Naftalis & Frankel
EX-99.14
Consent of Richard A. Eisner & Company, LLP
- 56 -
<PAGE>
CONSENT OF INDEPENDENT AUDITORS
We hereby consent to the incorporation by reference in the Statement of
Additional Information of Pre-Effective Amendment No. 1 to the Registration
Statement being filed under the Securities Act of 1933 on Form N-14 by Gintel
Fund of our reports dated January 22, 1996, relating to the statement of net
assets of Gintel Fund and Gintel ERISA Fund as at December 31, 1995, the related
statements of operations for the year then ended, changes in net assets for each
of the years in the two-year period then ended, and the condensed financial
information for each of the periods indicated appearing in the Forms N-1/A of
Gintel Fund and Gintel Erisa Fund; we also consent to the reference to our Firm
under the caption "Financial Statements" in the Registration Statement.
/s/ Richard A. Eisner & Company, LLP
New York, New York
August 27, 1996
- 57 -
EX-99.17(d)
Unaudited financial statements as of June 30,
1996, of the Gintel Fund and Gintel ERISA Fund.
- 58 -
<PAGE>
1
[GINTEL LOGO]
GINTEL ERISA FUND
SEMIANNUAL REPORT TO
SHAREHOLDERS
JUNE 30. 1996
<PAGE>
2
GINTEL ERISA FUND
A growth and income fund exclusively for conservative, tax-exempt equity
investors, including corporate pension/profit sharing plans, endowment funds,
Keogh and IRA plans. The minimum initial investment for corporate pension
plans is $10,000; for IRA's and Keogh's the minimum is $2,000. There is no
minimum on additional investments.
<TABLE>
<CAPTION>
SUMMARY OF INVESTMENT RESULTS*
<S> <C>
1996(6 mos.) 12.6%
1995 26.6%
1994 -21.3%
1993 5.4%
1992 14.4%
1991 13.5%
1990 -5.1%
1989 15.5%
1988 22.0%
1987 -1.0%
1986 22.4%
1985 24.0%
1984 2.2%
1983 27.5%
1982 27.9%
Average Annual Total
Return Since Inception 12.9%
</TABLE>
*Investment results are net of expenses, with
dividends and capital gains reinvested.
Past results offer no assurance as to future performance. The
investment return and principal value of an investment will fluctuate,
so that an investor's shares when redeemed may be worth more or less
than their original cost. The Fund's prospectus contains more complete
information and should be read carefully.
<PAGE>
3
July 12, 1996
Fellow Shareholders:
We are pleased to report that the Fund's net asset value per share increased
6.7% in the second quarter and 12.6% for the first six months of 1996. Because
of these strong financial results, our Fund ranked number 2 out of 60 growth
and income funds in its size category; number 37 out of all 553 growth and
income funds; and number 804 out of 5932 long-term taxable funds, according to
Lipper Analytical Services, Inc. These gains, along with last year's 23%
increase in net asset value per share, have more than made up the decline we
suffered in 1994.
During the quarter we took advantage of rising prices to lock in gains in Chart
Industries, Northland Cranberries, Phelps Dodge, Union Camp, Union Pacific and
Browning Ferris. We added to our holdings in Ogden Corporation and Mercury
General and took several new positions including Equitable Resources, American
Brands, and Intergraph. Our cash position increased to $7.2 million, or 25% of
the portfolio, by the end of the quarter.
Our short-term market and economic outlook is much more cautious than it has
been previously. We are very much troubled by the price volatility in certain
segments of the market and the recent emphasis on hot new issues and
speculative stocks. Historically, excesses such as these precede a market
correction.
From an economic point of view, we foresee a period of slower growth along with
inflationary pressure on profit margins because of rising labor costs and
higher commodity prices. The possibility of higher interest rates cannot be
ruled out either. We wonder, too, if the pending elections this fall won't
have a dampening effect on market psychology in the months immediately ahead.
For these and other reasons we are carrying large cash reserves until we become
more comfortable with the market environment or with the outlook for corporate
profits. We will still make selected investments when we think the price is
right and will take advantage of both short-term trading and long-term
investment opportunities as they are presented to us.
After the proliferation of mutual funds over the last five years, we are seeing
a growing trend towards consolidation in the mutual fund industry. Many
smaller management companies, such
<PAGE>
4
as ours, are merging their funds in order to more efficiently manage their
portfolios, reduce fees for their shareholders through economies of scale, and
better focus their limited marketing resources.
For these reasons, we, too, are actively considering merging the ERISA Fund
into Gintel Fund later this summer, making Gintel Fund the surviving entity.
We have already contacted a number of the larger ERISA Fund shareholders and
have received their preliminary support for the idea pending review of the
proxy material when it is completed. The merger benefits ERISA Fund
shareholders because it lowers operating expenses, provides greater portfolio
diversification, enables shareholders to track the Fund's performance in the
daily newspapers, and allows the investment staff to focus on producing the
best results for one single fund. In addition, the Gintel Fund has had a
better investment record over the years. We are preparing proxy materials for
review by the Securities and Exchange Commission and hopefully will hold a
Shareholders' Meeting in early September to discuss and approve the proposal.
For the past seven years we have been offering U.S. Trust's money market funds
as a convenience to our shareholders. In view of Chase Manhattan Bank's
purchase of U.S. Trust Company's mutual fund division, we have decided to
switch from the U.S. Trust-managed Excelsior Money Fund and Excelsior
Government Money Fund to comparable money market funds managed by Chase
Manhattan Bank. Shareholders who currently have money market accounts with us
will be receiving documentation in the next few weeks with respect to this
transfer from U.S. Trust's Excelsior Funds to either Vista Cash Management Fund
or Vista Federal Money Market Fund.
We thank you for your continued trust and confidence and look forward to seeing
those of you who can attend the special shareholder meeting.
Cordially,
/s/ ROBERT M. GINTEL /s/ CECIL A. GODMAN, III /s/ EDWARD F. CARROLL
- -------------------- ------------------------ -----------------------
Robert M. Gintel Cecil A. Godman, III Edward F. Carroll
Chairman Investment Manager Investment Manager
<PAGE>
5
GINTEL ERISA FUND Statement of Net Assets As of June 30, 1996
(Unaudited)
<TABLE>
<CAPTION>
NUMBER
OF MARKET
SHARES COST** VALUE
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
COMMON STOCKS
MORTGAGE BANKING (17.4%)
------------------------
180,000 Capstead Mortgage Corporation $1,850,958 $5,017,500
OIL & GAS (10.3%)
-----------------
20,000 Schlumberger Limited 1,190,437 1,685,000
8,000 Exxon Corporation 461,000 695,000
10,000 Kerr-McGee Corporation 538,125 608,750
FOOD PRODUCTS (7.4%)
--------------------
37,500 H.J. Heinz Company 1,059,375 1,139,062
20,000 Northland Cranberries, Inc. 285,000 600,000
12,500 Sara Lee Corporation 268,000 404,688
DIVERSIFIED MANUFACTURING & SERVICES (6.5%)
-------------------------------------------
75,000 Ogden Corporation 1,483,287 1,359,375
30,000 Portec, Inc.* 352,549 300,000
15,000 Chart Industries, Inc. 210,249 211,875
NATURAL GAS PRODUCING & DISTRIBUTION (6.4%)
-------------------------------------------
30,000 Consolidated Natural Gas Company 1,348,650 1,567,500
10,000 Equitable Resources, Inc. 285,000 282,500
ELECTRONIC SYSTEMS & EQUIPMENT (6.3%)
-------------------------------------
30,000 Harris Corporation 1,244,371 1,830,000
COMPUTER GRAPHIC SYSTEMS (4.2%)
-------------------------------
100,000 Intergraph Corporation 1,265,124 1,212,500
INSURANCE (3.8%)
----------------
25,000 Mercury General Corporation 994,438 1,093,750
TEXTILE -- APPAREL (2.8%)
-------------------------
225,000 Oneita Industries, Inc. + * 3,010,290 703,125
8,000 Haggar Corp. 129,000 108,000
AIRFREIGHT (2.2%)
-----------------
25,000 Airborne Freight Corporation 691,225 650,000
AUTO MANUFACTURING (2.2%)
-------------------------
20,000 Ford Motor Company 647,636 647,500
</TABLE>
<PAGE>
6
GINTEL ERISA FUND Statement of Net Assets (continued) As of June 30, 1996
(Unaudited)
<TABLE>
<CAPTION>
NUMBER
OF MARKET
SHARES COST** VALUE
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
CONSUMER PRODUCTS (1.6%)
------------------------
10,000 American Brands, Inc. 458,750 453,750
TECHNOLOGY (1.4%)
-----------------
25,000 Cognex Corporation* 410,112 403,125
DIVERSIFIED CHEMICAL PRODUCER (1.4%)
------------------------------------
5,000 E. I. du Pont de Nemours and Company 396,250 395,625
Miscellaneous Securities (1.1%) 312,750 312,500
- ------------------------------------------------------------------------------------------------------------------------------------
Total Common Stocks (75.0%) 18,892,576 21,681,125
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
CASH EQUIVALENTS
5,000,000 General Electric Capital Corporation
5.38% due 7/11/96 5,000,000 5,000,000
3,529,000 Chase Securities, Inc. Repurchase Agreement
5.15% due 7/1/96 (Collateralized by U.S.
Government Obligations) 3,529,000 3,529,000
- ------------------------------------------------------------------------------------------------------------------------------------
Total Cash Equivalents (29.5%) 8,529,000 8,529,000
- ------------------------------------------------------------------------------------------------------------------------------------
Total Investments (104.5%) $27,421,576 30,210,125
===========
Liabilities net of other assets (-4.5%) (1,287,210)
- ------------------------------------------------------------------------------------------------------------------------------------
Net Assets Applicable to Outstanding Shares (100.0%) $28,922,915
====================================================================================================================================
Net asset value per share-based on 904,500 shares of
beneficial interest (offering and redemption price) $31.98
====================================================================================================================================
</TABLE>
* Non-income producing investments
** Cost basis for Federal income tax purposes
+ Robert Gintel is Chairman of the Board of Oneita Industries and owns 16% of
its common stock. As a result, Oneita may be deemed to be an
affiliate of the Fund.
The accompanying notes to financial statements are an integral part hereof.
<PAGE>
7
GINTEL ERISA FUND Statement of Operations June 30, 1996
(Unaudited)
<TABLE>
<S> <C> <C>
INVESTMENT INCOME:
Dividends $510,980
Interest 94,589
---------
Total investment income 605,569
EXPENSES:
Administrative services fee (Note D) $174,126
Investment advisory fee (Note C) 139,301
Trustees' fees 13,921
Taxes 994
---------
Total Expenses 328,342
----------
NET INVESTMENT INCOME 277,227
NET REALIZED GAIN ON INVESTMENTS 3,458,446
NET DECREASE IN UNREALIZED APPRECIATION OF INVESTMENTS (398,201)
---------
NET GAIN ON INVESTMENTS 3,060,245
----------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $3,337,472
==========
</TABLE>
The accompanying notes to financial statements are an integral part hereof.
<PAGE>
8
GINTEL ERISA FUND Statements of Changes in Net Assets
(Unaudited)
<TABLE>
<CAPTION>
Six Months Year
Ended 6/30/96 Ended 12/31/95
------------- --------------
<S> <C> <C>
OPERATIONS:
Net investment income $277,227 $246,751
Net realized gain on investments 3,458,446 176,028
Net increase (decrease) in unrealized appreciation
of investments (398,201) 6,130,781
---------- -----------
Net increase in net assets from operations 3,337,472 6,553,560
DISTRIBUTIONS TO SHAREHOLDERS:
Investment income -- (320,221)
Net realized gains from investments -- --
---------- -----------
Net decrease from distributions -- (320,221)
CAPITAL SHARE TRANSACTIONS:
Proceeds from shares issued 234,265 276,201
Reinvestment of dividends -- 319,573
Cost of shares repurchased (2,414,898) (9,115,210)
----------- -----------
Net decrease from capital
share transactions (2,180,633) (8,519,436)
Total Increase (Decrease) 1,156,839 (2,286,097)
Net Assets - Beginning of Year 27,766,076 30,052,173
----------- -----------
Net Assets - End of Period $28,922,915 $27,766,076
=========== ===========
NET ASSETS CONSIST OF:
Capital Stock $24,258,191 $26,438,824
Undistributed net investment income (loss) 209,388 (67,839)
Undistributed net realized gains (losses)
from security transactions 1,666,787 (1,791,659)
Unrealized appreciation on investments 2,788,549 3,186,750
----------- -----------
$28,922,915 $27,766,076
=========== ===========
</TABLE>
The accompanying notes to financial statements are an integral part hereof.
<PAGE>
9
GINTEL ERISA FUND Condensed Financial Information (Per Share Income and Capital
Changes*) (Unaudited)
<TABLE>
<CAPTION>
Year Ended December 31
Six Months --------------------------------------------------------------------------
Ended 6/30/96 1995 1994 1993 1992
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net Asset Value,
Beginning of Year $28.41 $22.70 $29.41 $35.38 $31.49
Income from
Investment Operations
Net investment income .22 .27 .45 .41 .57
Net realized and unrealized
gain (loss) on securities 3.35 5.77 (6.71) 1.42 3.96
- --------------------------------------------------------------------------------------------------------------------------------
Total from Investment Income 3.57 6.04 (6.26) 1.83 4.53
- --------------------------------------------------------------------------------------------------------------------------------
Less: Distributions
Net investment income -- .33 .45 .41 .57
Capital gains -- -- -- 7.39 .07
- --------------------------------------------------------------------------------------------------------------------------------
Total Distributions -- .33 .45 7.80 .64
- --------------------------------------------------------------------------------------------------------------------------------
Net Asset Value, End of Period $31.98 $28.41 $22.70 $29.41 $35.38
=================================================================================================================================
Total Return 12.6% 26.6% -21.3% 5.4% 14.4%
- --------------------------------------------------------------------------------------------------------------------------------
Ratios/Supplemental Data
Net assets, end of period $28,922,915 $27,766,076 $30,052,173 $51,094,426 $56,380,619
Ratio of operating expenses to
average net assets (Note D) 2.3%** 2.5%** 2.6%** 2.2%** 1.7%
Ratio of net investment
income to average net assets 2.0% 0.9% 1.4% 1.0% 1.5%
Portfolio turnover rate 54.1% 52.7% 104.4% 99.3% 79.8%
Shares outstanding, end of period 904,500 977,447 1,323,836 1,737,287 1,593,610
</TABLE>
* The above per share information is based upon a daily average of shares
outstanding.
** The Fund's expense ratio includes brokerage commissions on portfolio
transactions paid for under the Fund's Administrative Services fee, and,
therefore, may appear higher than those of other mutual funds as well as
for the Fund in prior years. Other mutual funds do not include brokerage
commissions in their operating expenses, but instead add them to the cost
of securities purchased or deduct them from the proceeds of securities
sold.
The accompanying notes to financial statements are an integral part hereof.
<PAGE>
10
GINTEL ERISA FUND Notes to Financial Statements June 30, 1996
(Unaudited)
(NOTE A) -- ORGANIZATION:
The Gintel ERISA Fund (the "Fund") is a Massachusetts business trust formed
under the laws of the Commonwealth of Massachusetts with authority to issue an
unlimited number of shares of beneficial interest.
(NOTE B) -- SIGNIFICANT ACCOUNTING POLICIES:
1. Security Valuation:
Investments in securities are valued at the last reported sales price on the
last business day of the period, or in the absence of a recorded sale, at the
mean of the closing bid and asked price on that date. Short-term investments
are valued at cost which approximates market value.
2. Federal Income Taxes:
It is the Fund's policy to comply with the requirements of the Internal Revenue
Code applicable to regulated investment companies and to distribute
substantially all of its taxable income and long-term gains to its
shareholders. Therefore, only a nominal Federal income tax provision is
required.
3. Other:
As is common in the industry, security transactions are accounted for on the
trade date. Dividend income and distributions to shareholders are recorded on
the ex-dividend date.
Realized gain or loss on security transactions is determined on the basis of
first-in, first-out or specific identification.
(NOTE C) -- INVESTMENT ADVISORY AGREEMENT:
The Fund has entered into an Investment Advisory Agreement with Gintel Equity
Management, Inc., a related party, which provides for an annual fee of 1% to be
paid quarterly, based on the daily value of the Fund's net assets during the
preceding quarter. The fee will be reduced for any fiscal year, if the Fund's
expenses, as defined, exceed certain limitations.
(NOTE D) -- ADMINISTRATIVE SERVICES AGREEMENT:
The Fund entered into an Administrative Services Agreement dated April 1, 1993,
which provides that in consideration for the services provided by Gintel & Co.,
the Fund's Distributor and a related party, and the payment by the Distributor
of substantially all of the Fund's expenses previously paid by the Fund
directly, including but not limited to brokerage commissions and operating
expenses (but excluding the Investment Advisor's fees, the fees paid to
non-interested Trustees, certain transaction costs, interest, taxes and
extraordinary expenses), the Distributor will receive a fee payable at the
beginning of each quarter based on average daily net assets during the
preceding quarter, at an annual rate of 1.25% of the first $50 million of the
average daily net assets of the Fund, 1.125% of the next $50 million of the
average daily net assets and 1.0% of the average daily net assets in excess of
$100 million.
<PAGE>
11
GINTEL ERISA FUND Notes to Financial Statements -- continued June 30, 1996
(Unaudited)
<TABLE>
<S> <C>
(NOTE E) -- OTHER MATTERS:
1. Investments
Unrealized appreciation at June 30, 1996 $5,402,522
Unrealized depreciation at June 30, 1996 (2,613,973)
-----------
$2,788,549
===========
FOR THE SIX MONTHS ENDED JUNE 30, 1996
Purchases of securities other than short-term investments $6,475,209
Sales of securities other than short-term investments $12,748,829
</TABLE>
2. Capital Stock: (in shares)
<TABLE>
<CAPTION>
SIX MONTHS ENDED YEAR ENDED
JUNE 30, 1996 DECEMBER 31, 1995
------------- -----------------
<S> <C> <C>
Shares issued 7,876 10,686
Shares reinvested -- 11,305
Shares repurchased (80,823) (368,380)
-------- ---------
Net decrease (72,947) (346,389)
======== =========
</TABLE>
<PAGE>
12
GINTEL ERISA FUND TRUSTEES AND OFFICERS
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
Robert M. Gintel Chairman, Trustee, and Chief Executive Officer
Chairman and Chief Executive Officer, Gintel Equity Management, Inc.;
Senior Partner, Gintel & Co. Limited Partnership; Chairman and Director,
Oneita Industries; Vice Chairman and Director, XTRA Corporation;
Chairman, Trustee, and Chief Executive Officer, Gintel Fund.
Thomas H. Lenagh Trustee
Financial Consultant; formerly Chairman and Chief Executive Officer
of Greiner Engineering Co.; Director, Adams Express Co., USLife Corp.,
ICN Biomedics, Inc., SCI Systems, Inc., Irvine Sensors Corp., CML
Inc., Clemente Global, Rexhall Inc.; Trustee, Gintel Fund.
Francis J. Palamara Trustee
Business Consultant; previously Director and Executive Vice President
of ARA Services, Inc.; formerly Executive Vice President and Chief
Operating Officer of the New York Stock Exchange, Inc.; Director,
Glenmede Fund, XTRA Corporation, Central Tractor Farm & Country;
Trustee, Gintel Fund.
Russel R. Taylor Trustee
Associate Professor of Management and Marketing, Director of H.W.
Taylor Institute of Entrepreneurial Studies, College of New Rochelle;
Founder of Russel Taylor, Inc.; Trustee, Gintel Fund.
Stephen G. Stavrides Trustee, President, and Treasurer
President, Gintel Equity Management, Inc.; General Partner and Chief
Operating Officer, Gintel & Co. Limited Partnership; Trustee, President,
and Treasurer, Gintel Fund.
Donna K. Grippe Secretary and Assistant Treasurer
INVESTMENT ADVISOR GINTEL GROUP
Gintel Equity Management, Inc. c/o Mutual Funds Service Company
6 Greenwich Office Park P. O. Box 2798
Greenwich, CT 06831-5197 Boston, MA 02208-2798
203 622-6400 800 344-3092
</TABLE>
<PAGE>
1
[GINTEL LOGO]
GINTEL FUND
SEMIANNUAL REPORT TO
SHAREHOLDERS
JUNE 30, 1996
<PAGE>
2
GINTEL FUND
The investment objective is to achieve capital appreciation through investing
in equities. The minimum initial investment in the Gintel Fund is $5,000,
including IRA's and Keogh's. There is no minimum on additional investments.
SUMMARY OF INVESTMENT RESULTS*
<TABLE>
<S> <C>
1996(6 mos.) 16.7%
1995 31.0%
1994 -16.5%
1993 2.0%
1992 24.7%
1991 15.6%
1990 -6.7%
1989 23.8%
1988 29.4%
1987 -14.3%
1986 20.8%
1985 20.0%
1984 -2.6%
1983 34.3%
1982 34.1%
1981 (6/10/81-12/31/81) 7.6%
Average Annual Total
Return Since Inception 14.6%
</TABLE>
*Investment results are net of expenses, with
dividends and capital gains reinvested.
Past results offer no assurance as to future performance. The investment
return and principal value of an investment will fluctuate, so that an
investor's shares when redeemed may be worth more or less than their original
cost. The Fund's prospectus contains more complete information and should be
read carefully.
<PAGE>
3
July 12, 1996
Fellow Shareholders:
Net asset value per share increased 8.4% in the second quarter of 1996 and
16.7% for the six months year-to-date. This strong investment performance was
well above the general market indices and better than the results achieved by
most other mutual funds so far this year. In fact, according to Lipper
Analytical Services, Inc., we rank as number 4 out of 103 growth funds in the
$100 million-$250 million category; number 36 out of all 705 growth funds; and
number 362 out of 5932 long-term taxable funds. Needless to say, we are
pleased to be able to report these excellent results, coming as they do on top
of the 31% gain in net asset value per share achieved in 1995. It's nice to be
up amongst the best-performing funds once again after the humbling experience
of 1994.
Our short-term outlook is somewhat more conservative than it has been in the
recent past. We hope to keep a steady hand on the tiller while charting an
investment course through potentially treacherous waters. As we enter the
second half of 1996, we see a mature, slower-growth economy facing increasing
inflationary pressures and possibly somewhat higher short- and long-term
interest rates. Long-deferred wage increases and a more militant union
leadership should result in higher labor costs and increased pressures on
profit margins. The consequence could be little or no growth in corporate
profits, except for those able to increase efficiency and productivity through
technological advances. The pending presidential and congressional elections
could be an additional market depressant until the outcome is known in early
November.
Some of the recent stock market gyrations cannot be comforting for any rational
investor. Mutual fund and other professional money managers are finding it
extremely difficult to manage carefully the ever-increasing amounts of money
pouring into their hands from the investing public. More than ever, investment
managers are forced to focus on short-term results by clients who have come to
expect large short-term gains from playing the stock market and from the army
of consultants who now rate everyone's short-term performance. The market has
been flooded with hot new issues and money is pouring into small-cap mutual
funds because that's where the action is. But, let one of these companies
hiccup and its stock price will plummet, as professional money managers dump
their shares mercilessly.
<PAGE>
4
Too many investors today buy and sell stocks not knowing and little caring
what they own and why they own it. Chartists, momentum players, and program
traders, among other short-term investors, create excessive volatility in stock
prices, aided by Wall Street Research staffs, one of whose major criteria for
a stock's valuation has to do with how closely a company may reach "the
Street's" consensus estimates of quarterly earnings. Our financial performance
in the first half of 1996 was not the result of investing in hot new issues,
speculative small growth companies, or leveraging the portfolio. We stayed
with sound, long-term investments that increased in value for the right reasons
and found new stocks that also performed well.
Gintel Fund shareholders should know that we are planning to ask Gintel ERISA
Fund shareholders to vote on merging the ERISA Fund into Gintel Fund towards
summer's end. This will create a combined $140 million fund, reduce fee costs
for the shareholders of both funds, save taxes for Gintel Fund shareholders,
and enable the investment staff to manage the Funds' assets more efficiently.
For the past seven years we have been offering U.S. Trust's money market funds
as a convenience to our shareholders. In view of Chase Manhattan Bank's
purchase of U.S. Trust Company's mutual fund division, we have decided to
switch from the U.S. Trust-managed Excelsior Money Fund and Excelsior
Government Money Fund to comparable money market funds managed by Chase
Manhattan Bank. Shareholders who currently have money market accounts with us
will be receiving documentation in the next few weeks with respect to this
transfer from U.S. Trust's Excelsior Funds to either Vista Cash Management Fund
or Vista Federal Money Market Fund.
In order to better inform shareholders about our major investments, we have
enclosed synopses of the Funds' principal holdings.
We thank our shareholders once again for staying with us through thick and thin
and are delighted that at this point in time your patience and confidence has
paid off.
Cordially,
/s/ ROBERT M. GINTEL /s/ CECIL A. GODMAN, III /s/ EDWARD F. CARROLL
Robert M. Gintel Cecil A. Godman, III Edward F. Carroll
Chairman Investment Manager Investment Manager
<PAGE>
5
GINTEL FUND Statement of Net Assets As of June 30, 1996
(Unaudited)
<TABLE>
<CAPTION>
NUMBER
OF MARKET
SHARES COST** VALUE
- --------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
COMMON STOCKS
MORTGAGE BANKING (22.1%)
------------------------
750,000 Capstead Mortgage Corporation $15,985,177 $20,906,250
100,000 Federal National Mortgage Association 834,712 3,350,000
DIVERSIFIED MANUFACTURING(15.3%)
--------------------------------
700,000 Chart Industries, Inc. 3,205,420 9,887,500
50,000 Tyco International LTD 1,278,937 2,037,500
100,000 The Singer Co. N.V. 2,208,014 2,025,000
25,000 Johnson Controls, Inc. 1,195,850 1,737,500
30,000 The Black & Decker Corporation 750,260 1,158,750
PAPER -- FOREST PRODUCTS (8.7%)
-------------------------------
150,000 Union Camp Corporation 6,750,336 7,312,500
52,500 Weyerhaeuser Company 2,101,374 2,231,250
TECHNOLOGY-RELATED (7.7%)
-------------------------
300,000 Intergraph Corporation 3,954,002 3,637,500
100,000 C-Cube Microsystems Inc.* 3,055,796 3,300,000
75,000 CheckFree Corporation* 1,566,438 1,490,625
SECURITY PROTECTION SYSTEMS (6.3%)
----------------------------------
200,000 Checkpoint Systems, Inc. 758,778 6,875,000
PHARMACEUTICAL -- HEALTH CARE (5.4%)
------------------------------------
70,000 Schering-Plough Corporation 1,638,868 4,392,500
75,000 GranCare, Inc.* 1,058,736 1,490,625
SAVINGS & LOAN (3.8%)
---------------------
120,000 Charter One Financial Corporation 868,021 4,185,000
RETAIL-RELATED (3.6%)
---------------------
100,000 Price/Costco Inc.* 1,498,688 2,162,500
100,000 Mac Frugals Bargains Close-Outs Inc.* 1,262,500 1,775,000
INSURANCE (3.0%)
----------------
75,000 Mercury General Corporation 3,208,125 3,281,250
CONSTRUCTION & ENGINEERING (2.9%)
---------------------------------
48,000 Fluor Corporation 2,223,496 3,138,000
COPPER PRODUCER (2.8%)
----------------------
50,000 Phelps Dodge Corporation 2,992,527 3,118,750
TEXTILE--APPAREL (1.9%)
------------------------
665,000 Oneita Industries, Inc.+* 8,414,133 2,078,125
DIVERSIFIED CHEMICAL PRODUCER (1.8%)
------------------------------------
25,000 E. I. du Pont de Nemours and Company 1,396,470 1,978,125
</TABLE>
<PAGE>
6
GINTEL FUND Statement of Net Assets (continued) As of June 30, 1996
(Unaudited)
<TABLE>
<CAPTION>
NUMBER
OF MARKET
SHARES COST** VALUE
- --------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
BROADCAST EQUIPMENT (1.7%)
--------------------------
100,000 Vertex Communications Corporation* 1,550,000 1,862,500
OILFIELD SERVICES (1.7%)
------------------------
50,000 Newpark Resources, Inc.* 779,065 1,837,500
SOFT DRINKS (1.3%)
------------------
40,000 PepsiCo. Inc. 696,562 1,415,000
AIRFREIGHT (1.2%)
-----------------
50,000 Airborne Freight Corporation 1,266,564 1,300,000
ENVIRONMENTAL SERVICES (0.6%)
-----------------------------
100,000 OHM Corporation* 693,749 700,000
Security Sold Short (-6.3%) (6,402,907) (6,875,000)
Miscellaneous Securities*** (1.8%) 1,780,486 2,008,187
- --------------------------------------------------------------------------------------------------------------------
Total Common Stocks (87.3%) 68,570,177 95,797,437
- --------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT
- --------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
CASH EQUIVALENTS
7,333,000 Chase Securities, Inc. Repurchase Agreement
5.15% due 7/1/96(Collateralized by U.S.
Government Obligations) 7,333,000 7,333,000
- --------------------------------------------------------------------------------------------------------------------
Total Cash Equivalents (6.7%) 7,333,000 7,333,000
- --------------------------------------------------------------------------------------------------------------------
Total Investments (94.0%) $75,903,177 103,130,437
===========
Other assets net of liabilities (6.0%) 6,641,692
- --------------------------------------------------------------------------------------------------------------------
Net Assets Applicable to Outstanding Shares (100.0%) $109,772,129
====================================================================================================================
Net asset value per share--based on 6,118,707 shares of
beneficial interest (offering and redemption price) $17.94
====================================================================================================================
</TABLE>
* Non-income producing investments
** Cost basis for Federal income tax purposes
*** Includes 13 investments, some of which are non-income producing
investments.
+ Robert Gintel is Chairman of the Board of Oneita Industries and owns 16% of
its common stock. As a result, Oneita may be deemed to be an affiliate of
the Fund.
The accompanying notes to financial statements are an integral part hereof.
<PAGE>
7
GINTEL FUND Statement of Operations June 30, 1996
(Unaudited)
<TABLE>
<S> <C> <C>
INVESTMENT INCOME:
Dividends $1,393,990
Interest 377,629
-------------
Total investment income 1,771,619
EXPENSES:
Administrative services fee (Note D) $579,962
Investment advisory fee (Note C) 487,743
Trustees' fees 13,921
State taxes 994
-------------
Total expenses 1,082,620
-------------
NET INVESTMENT INCOME 688,999
NET REALIZED GAIN ON INVESTMENTS 16,211,902
NET DECREASE IN UNREALIZED APPRECIATION OF INVESTMENTS (1,081,806)
-------------
NET GAIN ON INVESTMENTS 15,130,096
-------------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $15,819,095
=============
</TABLE>
The accompanying notes to financial statements are an integral part hereof.
<PAGE>
8
GINTEL FUND Statements of Changes in Net Assets (Unaudited)
<TABLE>
<CAPTION>
Six Months Year
Ended 6/30/96 Ended 12/31/95
------------- --------------
<S> <C> <C>
OPERATIONS:
Net investment income (loss) $688,999 $ (60,026)
Net realized gain on investments 16,211,902 5,682,632
Net increase (decrease) in unrealized appreciation
of investments (1,081,806) 19,306,875
------------- --------------
Net increase in net assets from operations 15,819,095 24,929,481
DISTRIBUTIONS TO SHAREHOLDERS:
Investment income -- (51,107)
Net realized gains from investment -- (5,689,197)
------------- --------------
Net decrease from distributions -- (5,740,304)
CAPITAL SHARE TRANSACTIONS:
Proceeds from shares issued 2,052,325 1,577,646
Reinvestment of dividends -- 3,363,935
Cost of shares repurchased (4,838,148) (15,669,171)
------------- --------------
Net decrease from capital
share transactions (2,785,823) (10,727,590)
Total Increase (Decrease) 13,033,272 8,461,587
Net Assets - Beginning of Year 96,738,857 88,277,270
------------- --------------
Net Assets - End of Period $109,772,129 $96,738,857
============= ==============
NET ASSETS CONSIST OF:
Capital Stock $75,529,047 $78,314,870
Undistributed net investment gains (losses) 422,707 (266,292)
Undistributed net realized gains
from security transactions 16,265,952 54,050
Unrealized appreciation on investments 17,554,423 18,636,229
------------- --------------
$109,772,129 $96,738,857
============= ==============
</TABLE>
The accompanying notes to financial statements are an integral part hereof.
<PAGE>
9
GINTEL FUND Condensed Financial Information
(Per Share Income and Capital Changes*) (Unaudited)
<TABLE>
<CAPTION>
Year Ended December 31
Six Months -------------------------------------------------------------
Ended 6/30/96 1995 1994 1993 1992
- ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net Asset Value,
Beginning of Year $15.37 $12.46 $15.11 $16.45 $13.48
Income from
Investment Operations
Net investment income (loss) .11 (.01) .04 (.06) .09
Net realized and unrealized
gain (loss) on securities 2.46 3.86 (2.53) .37 3.23
- ------------------------------------------------------------------------------------------------------------------------
Total from Investment Income 2.57 3.85 (2.49) .31 3.32
- ------------------------------------------------------------------------------------------------------------------------
Less: Distributions
Net investment income -- .01 .04 .10
Capital gains -- .93 .12 1.65 .25
- ------------------------------------------------------------------------------------------------------------------------
Total Distributions -- .94 .16 1.65 .35
- ------------------------------------------------------------------------------------------------------------------------
Net Asset Value, End of Period $17.94 $15.37 $12.46 $15.11 $16.45
========================================================================================================================
Total Return 16.7% 31.0% -16.5% 2.0% 24.7%
- ------------------------------------------------------------------------------------------------------------------------
Ratios/Supplemental Data
Net assets, end of period $109,772,129 $96,738,857 $88,277,270 $136,110,294 $164,620,218
Ratio of operating expenses to
average net assets (Note D) 2.1%** 2.3%** 2.4%** 2.2%** 1.7%**
Ratio of net investment
income (loss) to average net assets 1.3% (.1%) .3% (.3%) .9%
Portfolio turnover rate 75.1% 55.4% 69.6% 50.8% 56.0%
Shares outstanding, end of period 6,118,707 6,295,777 7,085,466 9,008,802 10,009,980
</TABLE>
* The above per share information is based upon a daily average of shares
outstanding, which has been restated to reflect the 5.241835/1 split on
September 25, 1992
** The Fund's expense ratio includes brokerage commissions on portfolio
transactions paid for under the Fund's Administrative Services fee, and,
therefore, may appear higher than those of other mutual funds as well as
for the Fund in prior years. Other mutual funds do not include brokerage
commissions in their operating expenses, but instead add them to the cost
of securities purchased or deduct them from the proceeds of securities
sold.
<PAGE>
10
GINTEL FUND Notes to Financial Statements June 30, 1996
(Unaudited)
(NOTE A) -- ORGANIZATION:
The Gintel Fund (the "Fund") is a Massachusetts business trust formed under the
laws of the Commonwealth of Massachusetts with authority to issue an unlimited
number of shares of beneficial interest.
(NOTE B) -- SIGNIFICANT ACCOUNTING POLICIES:
1. Security Valuation:
Investments in securities are valued at the last reported sales price on the
last business day of the period, or in the absence of a recorded sale, at the
mean of the closing bid and asked price on that date. Short-term investments
are valued at cost which approximates market value.
2. Federal Income Taxes:
It is the Fund's policy to comply with the requirements of the Internal Revenue
Code applicable to regulated investment companies and to distribute
substantially all of its taxable income and long-term gains to its
shareholders. Therefore, only a nominal Federal income tax provision is
required.
3. Other:
As is common in the industry, security transactions are accounted for on the
trade date. Dividend income and distributions to shareholders are recorded on
the ex-dividend date.
Realized gain or loss on security transactions is determined on the basis of
first-in, first-out or specific identification.
(NOTE C) -- INVESTMENT ADVISORY AGREEMENT:
The Fund has entered into an Investment Advisory Agreement with Gintel Equity
Management, Inc., a related party, which provides for an annual fee of 1% to be
paid quarterly, based on the daily value of the Fund's net assets during the
preceding quarter. The fee will be reduced for any fiscal year, if the Fund's
expenses, as defined, exceed certain limitations.
(NOTE D) -- ADMINISTRATIVE SERVICES AGREEMENT:
The Fund has entered into an Administrative Services Agreement which provides
that in consideration for the services provided by Gintel & Co., the Fund's
Distributor and a related party, and the payment by the Distributor of
substantially all of the Fund's expenses, including but not limited to
brokerage commissions and operating expenses (but excluding the Investment
Advisor's fees, the fees paid to non-interested Trustees, certain transaction
costs, interest, taxes and extraordinary expenses), the Distributor will
receive a fee payable at the beginning of each quarter based on average daily
net assets during the preceding quarter, at an annual rate of 1.25% of the
first $50 million of the average daily net assets of the Fund, 1.125% of the
next $50 million of the average daily net assets and 1.0% of the average daily
net assets in excess of $100 million.
<PAGE>
11
GINTEL FUND Notes to Financial Statements -- continued June 30, 1996
(Unaudited)
(NOTE E) -- LINE OF CREDIT:
The Fund has a bank line of credit of $15,000,000. Interest is payable at
prime. Loans are collateralized by securities owned by the Fund. At June 30,
1996 the Fund had no outstanding borrowings.
(NOTE F) -- OTHER MATTERS:
1. Investments
<TABLE>
<S> <C>
Unrealized appreciation at June 30, 1996 $34,642,677
Unrealized depreciation at June 30, 1996 (7,415,417)
-------------
$27,227,260
=============
FOR THE SIX MONTHS ENDED JUNE 30, 1996
Purchases of securities other than short-term investments $31,572,202
Sales of securities other than short-term investments $37,980,070
</TABLE>
2. Capital Stock: (in shares)
<TABLE>
<CAPTION>
SIX MONTHS ENDED YEAR ENDED
JUNE 30, 1996 DECEMBER 31, 1995
---------------- -----------------
<S> <C> <C>
Shares issued 116,410 115,098
Shares reinvested -- 220,009
Shares repurchased (293,480) (1,124,796)
------------- --------------
Net decrease (177,070) (789,689)
============= ==============
</TABLE>
<PAGE>
12
GINTEL FUND TRUSTEES AND OFFICERS
- --------------------------------------------------------------------------------
Robert M. Gintel Chairman, Trustee, and Chief Executive Officer
Chairman and Chief Executive Officer, Gintel
Equity Management, Inc.; Senior Partner,
Gintel & Co. Limited Partnership; Chairman
and Director, Oneita Industries; Vice
Chairman and Director, XTRA Corporation;
Chairman, Trustee and Chief Executive
Officer, Gintel ERISA Fund.
Thomas H. Lenagh Trustee
Financial Consultant; formerly Chairman and
Chief Executive Officer of Greiner
Engineering Co.; Director, Adams Express
Co., USLife Corp., ICN Biomedics, Inc., SCI
Systems, Inc., Irvine Sensors Corp., CML
Inc., Clemente Global, Rexhall Inc.;
Trustee, Gintel ERISA Fund.
Francis J. Palamara Trustee
Business Consultant; previously Director and
Executive Vice President of ARA Services,
Inc.; formerly Executive Vice President and
Chief Operating Officer of the New York
Stock Exchange, Inc.; Director, Glenmede
Fund, XTRA Corporation, Central Tractor Farm
& Country; Trustee, Gintel ERISA Fund.
Russel R. Taylor Trustee
Associate Professor of Management and
Marketing, Director of H.W. Taylor Institute
of Entrepreneurial Studies, College of New
Rochelle; Founder of Russel Taylor, Inc.;
Trustee, Gintel ERISA Fund.
Stephen G. Stavrides Trustee, President, and Treasurer
President, Gintel Equity Management, Inc.;
General Partner and Chief Operating Officer,
Gintel & Co. Limited Partnership; Trustee,
President, and Treasurer, Gintel ERISA Fund.
Donna K. Grippe Secretary and Assistant Treasurer
<TABLE>
<S> <C>
INVESTMENT ADVISOR GINTEL GROUP
Gintel Equity Management, Inc. Chase Global Funds Services Company
6 Greenwich Office Park P. O. Box 2798
Greenwich, CT 06831-5197 Boston, MA 02208-2798
203 622-6400 800 344-3092
</TABLE>
