As filed via EDGAR with the Securities and Exchange Commission on April 14, 2000
File No. 2-70207
ICA No. 811-03115
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 [ X ]
Pre-Effective Amendment No. ___ [ ]
Post-Effective Amendment No. 23 [ X ]
and/or
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 [ X ]
Amendment No. 26 [ X ]
GINTEL FUND
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(Exact name of Registrant as specified in Charter)
6 Greenwich Office Park, Greenwich, Connecticut 06831
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(Address of principal executive offices)
Registrant's Telephone Number, including Area Code (203) 622-6400
Robert M. Gintel
Chief Executive Officer
Gintel Fund
6 Greenwich Office Park
Greenwich, Connecticut 06831
(Name and address of agent for service)
Copies to:
Susan J. Penry-Williams, Esq.
Kramer Levin Naftalis & Frankel LLP
919 Third Avenue
New York, New York 10022
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It is proposed that this filing will become effective:
[X] Immediately upon filing pursuant to paragraph (b)
[ ] 60 days after filing pursuant to paragraph (a)(1)
[ ] 75 days after filing pursuant to paragraph (a)(2)
[ ] on ( ) pursuant to paragraph (b)
[ ] on ( ) pursuant to paragraph (a)(1)
[ ] on ( ) pursuant to paragraph (a)(2) rule 485.
If appropriate, check the following box:
[ ] this post-effective amendment designates a new effective date for a
previously filed post-effective amendment.
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GINTEL FUND
PROSPECTUS
April 17, 2000
The Securities and Exchange Commission has not approved or disapproved these
securities or passed upon the adequacy of this prospectus. Any representation to
the contrary is a criminal offense.
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TABLE OF CONTENTS
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Risk/Return Summary: Investments, Risks and Performance...................... 1
Investment Objective................................................. 1
Principal Investment Strategies...................................... 1
Principal Risks of Investing......................................... 1
Bar Chart............................................................ 2
Performance Table.................................................... 3
Fee Table.................................................................... 3
Principal Investment Strategies and Related Risks............................ 4
Principal Strategies................................................. 4
Principal Risks of Investing in the Fund ............................ 4
Management of the Fund....................................................... 4
Investment Adviser................................................... 4
Portfolio Managers................................................... 5
Administrative Services Agreement.................................... 5
Shareholder Information...................................................... 6
Pricing of Fund Shares............................................... 6
Purchase of Fund Shares.............................................. 6
Redemption of Fund Shares............................................ 8
Dividends and Distributions..........................................10
Tax Matters..........................................................10
Financial Highlights.........................................................12
RISK/RETURN SUMMARY: INVESTMENTS, RISKS AND PERFORMANCE
Investment Objective
The Fund's investment objective is capital appreciation.
Principal Investment Strategies
The Fund seeks capital appreciation by focusing on a limited number of
securities rather than broadly diversifying its portfolio. The Fund will invest
primarily in the equity securities of U.S. companies whose shares are listed or
traded on major U.S. stock exchanges or in the over-the -counter market.
The Fund seeks to maximize capital appreciation by using a bottom-up approach to
select internally researched growth and value securities with long-term
investment opportunities through careful research and then allocating a
meaningful portion of portfolio assets to these selections.
Principal Risks of Investing
The Fund is subject to the risks related to investing in equity securities. The
value of the Fund's portfolio will change with the movement of the market as
well as activities of the individual
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companies in the Fund's portfolio. Therefore, you may lose money by investing in
this Fund if any of these occur:
o the stock market goes down; or
o a stock or stocks in the Fund's portfolio do not perform as well as
expected.
In addition, the Fund is "non-diversified" which means that the Fund could have
a portfolio with as few as twelve issuers. To the extent that the Fund invests
in a small number of issuers, an investment in the Fund may involve a greater
risk of losing money than an investment in a diversified fund.
Bar Chart
The bar chart below shows the risks of investing in the Fund by showing changes
in the Fund's performance from year to year beginning January 1, 1990, through
December 31, 1999. Past performance is not an indication of future performance.
The Fund's annual total return for 1999 was 81.52% The Fund's annual total
return for 1998 was -10.95%. The Fund's annual total return for 1997 was 29.22%.
The Fund's annual total return for 1996 was 31.04%. The Fund's annual total
return for 1995 was 30.97%. The Fund's annual total return for 1994 was -16.46%.
The Fund's annual total return for 1993 was 2.04%. The Fund's annual total
return for 1992 was 24.70%. The Fund's annual total return for 1991 was 15.57%.
The Fund's annual total return for 1990 was -6.66%.
The Fund's highest quarterly return was 54.66% (for the quarter ended 12/31/99).
The lowest quarterly return was -33.44% (for the quarter ended 9/30/98).
Performance Table
The following table shows the Fund's average annual returns for 1, 5 and 10
years compared with those of the Russell 2000. Past performance is not an
indication of future performance.
Average Annual Total
Returns for Period Ending One Five Ten
December 31, 1999 Year Years Years
----------------- ---- ----- -----
Gintel Fund* 81.5%+ 29.1% 15.2%
Russell 2000** 21.3% 16.7% 13.4%
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* Results are net of expenses, with dividends and capital gains
reinvested.
** The Russell 2000 excludes the 1,000 largest companies included in
the Russell 3000. The average capitalization of companies
included in the Russell 2000 is $467.3 million. The Russell 3000
is a weighted index of the 3,000 largest U.S. companies based on
total market capitalization.
+ The Fund's performance in 1999 was fueled by its overweighted
position in a number of technology stocks, the principal one of
which was CheckFree Holdings Corporation.
FEE TABLE
The table below describes the fees and expenses that you may pay if you buy and
hold shares of the Fund.
SHAREHOLDER FEES
(Fees paid directly from your investment)
Maximum Sales Charge Imposed on Purchases None
Maximum Deferred Sales Charge None
Maximum Sales Charge Imposed on Reinvested Dividends None
Redemption Fee on Shares Held 45 days or less
(as a percentage of amount redeemed)* 2.0%
Exchange Fee None
Maximum Account Fee None
ANNUAL FUND OPERATING EXPENSES (Expenses that are deducted from the Fund's
assets, as a percentage of net assets)
Management Fees 1.00%
12b-1 Fees 0.00%
Other Expenses** 0.93%
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Total Annual Expenses 1.93%
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* The redemption fee is paid to the Fund to reimburse it for expenses and
costs associated with redemptions.
** The Fund does not pay brokerage commissions directly for buying and selling
securities, so imputed brokerage commissions, which are paid by Gintel &
Co. under the Fund's Administrative Services Agreement, are excluded.
Example of Expenses
This example assumes that you invest $10,000 in the Fund for the time periods
indicated and then redeem all of your shares at the end of those periods. This
example also assumes that (i) you redeem all of your shares at the end of each
period; (ii) your investment has a 5% return each year; and (iii) the Fund's
operating expenses remain the same. Although your actual costs may be higher or
lower, based on these assumptions your cost would be:
1 YEAR 3 YEARS 5 YEARS 10 YEARS
$196 $607 $1,044 $2,258
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This example does not reflect reinvested dividends. The purpose of the above
table is to assist you in understanding the various costs and expenses that an
investor in the Fund would bear directly or indirectly.
PRINCIPAL STRATEGIES AND RELATED RISKS
Principal Strategies
The Fund's investment adviser performs research to identify and select
reasonably-priced investment opportunities that the investment adviser believes
have exceptional underlying potential or have been overlooked in the
marketplace. Using a bottom-up approach the Fund focuses on individual stocks of
companies with top management talent and balance sheet strength that will
generate significant earnings increases and market value within an 18 to 36
month time frame. The Fund's investment adviser may place significant portions
of portfolio assets in these stocks where the investment adviser believes the
prospects for capital appreciation are greater than alternative investments.
Principal Risks of Investing in the Fund
Investing in the Fund involves certain risks which are described below. We
cannot guarantee that the Fund will meet its investment objective or that it
will perform as it has in the past. You may lose money if you invest in the
Fund.
o Market Risk. The market value of a security may go up or down,
sometimes rapidly and unpredictably. These fluctuations may cause
a security to be worth less than it was at the time of purchase.
Market risk applies to individual securities, a particular sector
or the entire economy.
o Manager Risk. Fund management affects Fund performance. A Fund
may lose money if the investment adviser's investment strategy
does not achieve the Fund's objective or the investment adviser
does not implement the strategy properly.
o Equity Securities Risk. The prices of the equity securities in
which the Fund invests change in response to many factors,
including the historical and prospective earnings of the issuer,
the value of its assets, general economic conditions, interest
rates, investor perceptions and market liquidity.
MANAGEMENT OF THE FUND
Investment Adviser
Gintel Asset Management, Inc., 6 Greenwich Office Park, Greenwich, Connecticut
06831, is the investment adviser of the Fund (the "Investment Adviser"). Since
1971, the Investment Adviser has been managing discretionary investment accounts
for individual investors, corporate pension funds and profit sharing plans,
charitable foundations, universities and others. The Investment Adviser
identifies and analyzes possible investments for the Fund and determines the
amount, timing,
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and form of such investments. The Investment Adviser regularly monitors and
reviews the Fund's portfolio and recommends the ultimate disposition of such
investments. The Investment Adviser is also responsible for the purchase and
sale of securities in the Fund's portfolio, subject to the policies set forth by
the Board of Trustees. For the year ending December 31, 1999, the Fund paid a
monthly advisory fee calculated at an annual rate of 1.0% of the Fund's average
daily net assets.
Portfolio Managers
Robert M. Gintel has spent his entire business career in the investment industry
with more than 45 years of experience as a professional investor. Since 1971,
Mr. Gintel has been Chairman and Chief Executive Officer of Gintel Asset
Management, Inc. Since 1969, he has also been a Senior Partner and founder of
Gintel & Co., a member of the New York Stock Exchange and associate member of
the American Stock Exchange. Mr. Gintel has been Chairman of the Board and Chief
Executive Officer of Gintel Fund since its inception in 1981. He holds a B.A.
degree from Columbia College and an M.B.A. from the Harvard Business School. Mr.
Gintel has served on the Board of Directors of several New York Stock Exchange
listed corporations. Mr. Gintel has lectured and written articles on investments
and has appeared on Wall Street Week as well as other television and radio
programs.
Edward F. Carroll joined Gintel Asset Management, Inc. in 1983 and is a General
Partner of Gintel & Co. Previously, Mr. Carroll had his own consulting firm
specializing in global energy issues and was on the staff of the Ford
Foundation, where he was directly responsible for all energy-related
investments. Mr. Carroll's 40-year career includes experience as an analyst with
the Wall Street firms, Halle & Steiglitz, Henry Hentz & Company, and E. F.
Hutton. He holds a B.G.S. degree from the University of Connecticut.
R. Baxter Brown was an original partner of Robert Gintel and co-founding partner
of Gintel & Co. After an absence of seventeen years during which he was Chief
Executive Officer of Baxter Brown & Company and Brown Asset Management, he
rejoined the Gintel Group. Mr. Brown is Senior Vice President of Gintel Asset
Management, Inc. He began his career in 1956 with the NYSE firm of J.C. Bradford
& Co. He became a general partner and served in both Memphis,
Tennessee and Jackson, Mississippi. He holds a B.A. degree in Economics and
Business Administration from Vanderbilt University.
Administrative Services Agreement
The Administrative Services Agreement between the Fund and Gintel & Co. (the
"Distributor") provides that in consideration for the services provided by the
Distributor and the payment by the Distributor of substantially all of the
Fund's expenses, including but not limited to brokerage commissions, charges for
custody, fund accounting, transfer agency, administration, registration,
printing, legal counsel, independent accountants, shareholder and trustee
meeting expenses and insurance (but excluding the Investment Adviser's fees, the
fees paid to the disinterested Trustees, certain transaction costs, interest,
taxes and extraordinary expenses), the Distributor will receive and pay a fee
based on average daily net assets. The Distributor will pay for any
distribution-related expenses out of its own sources, including legitimate
profits from the administrative services fee received from the Fund.
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SHAREHOLDER INFORMATION
Pricing of Fund Shares
The offering price of each Fund share is the net asset value ("NAV") per share
next determined after your completed application is received by Firstar Mutual
Funds Services, LLC. The NAV per share is calculated as follows:
NAV = Total Assets Less Liabilities
-----------------------------
Number of Shares Outstanding
The Fund determines its NAV per share as of the end of regular trading hours on
the New York Stock Exchange (currently 4:00 p.m. Eastern Time) on days that the
New York Stock Exchange is open.
Purchase of Fund Shares
You pay no sales charges or commissions when you purchase Fund shares. No share
certificates will be issued unless requested in writing. The Fund reserves the
right, in its sole discretion, to reject any subscription for shares of the
Fund.
Tax-Sheltered Retirement Plans
The Fund makes available IRA Plans, including IRA's set up under a Simplified
Employee Pension Plan ("SEP-IRAs") and IRA "Rollover Accounts." Please call the
Fund to obtain further information and forms to purchase shares in conjunction
with tax-sheltered retirement plans. You should consult a tax adviser regarding
the tax consequences of adopting such plans.
Minimum Initial Investments.
o Non-Retirement Accounts $5,000
o Retirement Accounts: IRA and Keogh $2,000
The Fund may reduce or waive the minimum investment requirements in some cases.
There is no minimum for additional investments.
By Mail. You may purchase shares of the Fund by sending a completed application
(included with this Prospectus or obtainable from the Fund) and check payable to
"Gintel Group" to:
Regular Mail: Overnight Mail:
Gintel Fund Gintel Fund
c/o Firstar Mutual Funds Services, c/o Firstar Mutual Fund Services,
LLC LLC
P.O. Box 701 615 East Michigan Street
Milwaukee, WI 53201-0701 Milwaukee, WI 53202-5207
Applications sent to the Fund will be forwarded to Firstar Mutual Funds
Services, LLC, and will not be effective until received by Firstar Mutual Funds
Services, LLC. Firstar Mutual Funds Services, LLC, will charge you $25.00 for
each check returned for insufficient funds.
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Subsequent investments must be accompanied by a letter or reinvestment
slip indicating the name(s) in which the account is registered and the account
number and returned to one of the above addresses.
For IRA subscriptions, please contact the Fund for special forms.
By Exchange. If you authorized telephone exchange in the application, you may
exchange shares of the Fund for shares of any other fund with which the Fund has
an exchange arrangement.
o The new account must be established with the same name(s), address, and
tax identification number as the other account and must meet that fund's
minimum initial investment.
o You may execute a purchase by exchange by mail or telephone, but must
comply with the purchase and redemption procedures set forth in this
Prospectus.
o Firstar Mutual Funds Services, LLC, and the Fund will use reasonable
procedures (such as requesting personal identification) to ensure that
the caller is properly authorized. If reasonable procedures are followed
then neither Firstar Mutual Funds Services, LLC, nor the Fund will be
liable for acting upon your instructions, regardless of the authority or
absence thereof of the person giving the instructions, or for any loss,
expense, or cost arising out of any exchange by telephone, whether or
not properly authorized and directed. You will bear the risk of loss.
o You should verify the accuracy of telephone transactions immediately
after you receive your confirmation statement.
By Wire. To purchase by wire, call Firstar Mutual Funds Services, LLC, at (800)
344-3092 for instructions and confirmation number. Before or immediately after
your bank wires funds, a completed Application should be sent to the Funds'
transfer agent, Firstar Mutual Fund Services, LLC (the "Transfer Agent") by U.S.
mail or overnight courier to the addresses listed above. If you are making a
subsequent purchase, before you wire funds, you should be sure to notify the
Transfer Agent. Please indicate if this is an initial or subsequent investment.
It is essential that your bank include complete information about your account
in all wire instructions. Your bank may charge you a fee for sending a wire to
the Funds.
Your bank should transmit immediately available funds by wire in your
name to:
Firstar Bank
Milwaukee, WI
ABA# 075000022
Firstar MFC
DDA# 112-952-137 Gintel Fund
Account # and Registration
Social Security Number or Tax Identification Number
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By Automatic Investment Plan. You may purchase shares on a regular basis by
automatically transferring a specified dollar amount ($100 minimum) from your
regular checking or NOW account to your specified Gintel Group Account. Please
contact the Fund to obtain special forms required for this automatic investment
plan.
Through Securities Dealers. You may also purchase shares of the Fund through
registered securities dealers who have entered into selected dealer agreements
with the Distributor. A dealer who agrees to process an order on your behalf may
charge you a fee for this service.
Redemption of Fund Shares
The redemption value of Fund shares is the NAV per share next determined after
the redemption request is received in proper form. There is no assurance that
the NAV on redemption will be greater than the NAV that you paid on purchase.
By Mail. You may redeem shares of the Fund by sending a written redemption
request to:
Regular Mail: Overnight Mail:
Gintel Fund Gintel Fund
c/o Firstar Mutual Funds Services, c/o Firstar Mutual Fund Services,
LLC LLC
P.O. Box 701 615 East Michigan Street
Milwaukee, WI 53201-0701 Milwaukee, WI 53202-5207
Any written request sent to the Fund will be forwarded to Firstar Mutual Funds
Services, LLC, and the effective date of the redemption request will be when the
request is received by Firstar Mutual Funds Services, LLC, in proper form.
Your request must include the following:
o The Fund name, the account number, and the number of shares or the
dollar amount to be redeemed and signed by all registered owners exactly
as their names appear on the account.
o Signatures must be guaranteed by an eligible guarantor institution.
Please contact the Transfer Agent at (800) 344-3092 for information
about obtaining a signature guarantee. A notarization and
acknowledgement by a notary public is not an acceptable signature
guarantee.
o Other supporting legal documents, if required, in the case of estates,
trusts, guardianships, corporations, pension and profit sharing plans
and other organizations. You should contact Firstar Mutual Funds
Services, LLC, at (800) 344-3092 for further information on the specific
documentation required.
o If you were issued share certificates, you must endorse the certificates
and include them in the redemption request.
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The Fund will pay you for redeemed shares as soon as practicable, but in no
event later than 7 business days after receipt of redemption notification. The
Fund will pay by check, unless you arrange for the redemption proceeds to be
sent by Federal fund wire to a designated bank account. There is a wire charge
(currently $12.00 per wire) for redemption by wire. The wire charge will be
deducted from the account. Please contact Firstar Mutual Funds Services, LLC, at
(800) 344-3092 to obtain further information on this service and the related
charges.
By Telephone. If you authorized telephone redemptions in the application you may
redeem shares by telephone instructions to Firstar Mutual Funds Services, LLC.
o Firstar Mutual Funds Services, LLC, will wire the redemption proceeds to
the bank and bank account number specified in the application or mail
the proceeds to the address of record.
o Redemptions of less than $1,000 will be mailed.
o Redemptions by wire will be charged a wire fee (currently $12.00 per
wire) which will be deducted from the account. Any change in the bank
account specified in the application must be made in writing with a
signature guarantee as described above for redemptions by mail.
o Firstar Mutual Funds Services, LLC, and the Fund will use reasonable
procedures (such as requesting personal identification) to ensure that
the caller is properly authorized. If reasonable procedures are followed
then neither Firstar Mutual Funds Services, LLC, nor the Fund will be
liable for acting upon such instructions, regardless of the authority or
absence thereof of the person giving the instructions, or for any loss,
expense, or cost arising out of any redemptions by telephone, whether or
not properly authorized and directed.
Automatic Withdrawals. You may establish a Systematic Withdrawal Plan if you own
shares of the Fund with a value of $10,000 or more. You may request a fixed
dollar withdrawal on a specified day of a specified month or months. When you
reach age 59 1/2 and begin to receive distributions from an IRA or other
retirement plan invested in the Fund, you can arrange to have regular
redemptions made under the Systematic Withdrawal Plan. In this case it is not
necessaryfor the account value to be $10,000 or more. Please contact the Fund to
obtain further information on establishing a Systematic Withdrawal Plan.
Through Securities Dealers. You may also redeem shares of the Fund through
registered securities dealers who have entered into selected dealer agreements
with the Distributor. A dealer who agrees to process an order on your behalf may
charge you a fee for this service.
Redemption Issues
o Redemption Fee. There is a redemption fee of 2.0% of the value of the
shares being redeemed from the Fund if the shares are redeemed within 45
days of purchase. The redemption fee is paid to the Fund to reimburse it
for expenses and costs associated with redemptions.
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o Small Accounts. With the exception of IRA accounts, the Fund reserves
the right to close accounts that have dropped below $2,500 in value for
a period of three months or longer other than as a result of a decline
in the NAV per share. You will be given 60 days' prior notice of this
redemption. During that period you may purchase additional shares to
avoid the redemption. However, the Fund does not presently contemplate
making such redemptions.
o Check Clearance. If you purchase shares by check and seek to redeem
immediately after the purchase, the Fund will wait up to 15 days before
accepting your redemption request, while awaiting check clearance.
Suspension of Redemptions
The Fund may suspend at any time redemption of shares or payment when the New
York Stock Exchange is closed for reasons other than customary weekend or
holiday closings.
The Fund may also suspend redemption of shares or payment, as permitted by the
Securities and Exchange Commission, when an emergency exists which makes it
impractical to either dispose of securities or make a fair determination of NAV
or when trading on the New York Stock Exchange is closed or restricted.
Dividends and Distributions
Your ordinary income dividends and capital gains distributions will be
automatically reinvested at NAV. You may choose to have dividends and
distributions paid to you in cash by notifying Firstar Mutual Funds Services,
LLC, in writing at least 30 days before the record date.
Tax Matters
The Fund intends to continue to qualify as a regulated investment company, which
means that it pays no federal income tax on the earnings or capital gains it
distributes to its shareholders. We provide this tax information for your
general information. You should consult your own tax adviser about the tax
consequences of investing in the Fund.
o Ordinary dividends from the Fund, which include net investment
income and realized short-term capital gains, are taxable as
ordinary income.
o Dividends of realized long-term capital gains realized from the
Fund's portfolio are taxable as long-term capital gains.
o Dividends are treated in the same manner for federal income tax
purposes whether you receive them in the form of cash or
additional shares. They may also be subject to state and local
taxes.
o Certain dividends paid to you in January will be taxable as if
they had been paid the previous December.
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o We will mail you tax statements every January showing the amounts
and tax status of the distributions you received.
o When you sell (redeem) or exchange shares of a Fund, you must
recognize any capital gain or loss.
o Because your tax treatment depends on your purchase price and tax
position, you should keep your regular account statements for use
in determining your tax.
o You should review the more detailed discussion of federal income
tax considerations in the Statement of Additional Information.
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FINANCIAL HIGHLIGHTS
This financial highlights table is intended to help you understand the Fund's
financial performance for the past 5 years. Certain information reflects
financial results for a single share of the Fund. The total returns in the table
represent the rate that an investor would have earned (or lost) on an investment
in the Fund assuming reinvestment of all dividends and distributions. Richard A.
Eisner & Company, LLP has audited this information. Richard A. Eisner & Company
LLP's report along with further detail on the Fund's financial statements are
included in the Annual Report which is available upon request.
For a capital share outstanding throughout the period
<TABLE>
<CAPTION>
Year Ended December 31,
1999 1998 1997 1996 1995
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<S> <C> <C> <C> <C> <C>
Net asset value, beginning of year $16.18 $21.78 $18.10 $15.37 $12.46
Income (loss) from investment operations:
Net investment income (.09) .12 .12 .37 (.01)
Net gains or losses on securities 13.28 (2.71) 5.13 4.40 3.86
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Total from investment income (loss) 13.19 (2.59) 5.25 4.77 3.85
- -----------------------------------------------------------------------------------------------
Less distributions:
Dividends from net investment income - .11 .15 .35 .01
Distributions from capital gains - 2.90 1.42 1.69 .93
- -----------------------------------------------------------------------------------------------
Total distributions - 3.01 1.57 2.04 .94
Net asset value, end of year $29.37 $16.18 $21.78 $18.10 $15.37
===============================================================================================
Total Return 81.5% -11.0% 29.2% 31.0% 31.0%
- -----------------------------------------------------------------------------------------------
Ratios/Supplemental Data:
Net assets, end of year (in
thousands) $221,677 $144,419 $180,724 $147,906 $96,739
Ratio of operating expenses to
average net assets * 1.90% 1.70% 1.80% 1.80% 2.30%
Ratio of net investment (.5%) 0.60% 0.80% 2.20% (.10%)
Income (loss) to average net assets
Portfolio turnover rate 95.3% 61.4% 52.0% 61.4% 55.4%
Shares outstanding, end of year 7,547,520 8,923,667 8,295,837 8,171,707 6,295,777
* The Fund's expense ratio for 1995 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. 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. Beginning in
1996 the Fund changed its accounting presentation to extract imputed brokerage
commission from its expense ratio in order to make it easier to compare our Fund to
other funds which do not have a similar fee structure.
</TABLE>
Statement of Additional Information. The Statement of Additional Information
provides a more complete discussion about the Fund and is incorporated by
reference into this prospectus, which means that it is considered a part of this
prospectus.
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Annual, Semi-Annual and Quarterly Reports. The annual, semi-annual and quarterly
reports to shareholders contain additional information about the Fund's
investments, including a discussion of the market conditions and investment
strategies that significantly affected the Fund's performance during its last
fiscal year.
To Review or Obtain this Information. You may call (800) 243-5808 or (203)
622-6400 to (i) obtain a free copy of the Statement of Additional Information,
(ii) obtain a free copy of the annual and semi-annual reports, (iii) request
other information about the Fund, or (iv) make any other inquiries about the
Fund. This information may be reviewed and copied at the Public Reference Room
of the Securities and Exchange Commission in Washington, D.C. Information on the
operation of the Public Reference Room may be obtained by calling (800)
SEC-0330. Copies of this information may also be obtained for a fee by writing
the Public Reference Room of the Securities and Exchange Commission, Washington,
D.C. 20549-6009. Information about the Fund is also available on SEC's World
Wide Web site at http://www.sec.gov.
The Fund's registration number under the Investment Company Act of 1940 is
811-03115.
Investment Adviser
Gintel Asset Management, Inc.
6 Greenwich Office Park
Greenwich, CT 06831
Shareholder Servicing Agent
Firstar Mutual Funds Services, LLC
P.O. Box 701
Milwaukee, WI 53201-0701
1-800-344-3092
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PART B
Statement of Additional Information
April 17, 2000
GINTEL FUND
This Statement of Additional Information ("SAI") is not a prospectus. It
should be read in conjunction with Gintel Fund's current Prospectus (the
"Prospectus"), which is dated April 17, 2000. This SAI is incorporated by
reference in its entirety into the Prospectus. A copy of the Prospectus may be
obtained by writing Gintel Asset Management, Inc. (the "Investment Adviser") at
6 Greenwich Office Park, Greenwich, CT 06831 or calling (800) 243-5808 or (203)
622-6400.
TABLE OF CONTENTS
Page
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General Information.......................................................... 2
Investment Objective, Policies and Risks..................................... 2
Investment Restrictions...................................................... 3
Management................................................................... 5
Investment Adviser and Investment Advisory Agreement......................... 8
Code of Ethics............................................................... 9
Administrative Services Agreement............................................ 9
Portfolio Transactions and Brokerage.........................................10
Allocation of Investments....................................................12
Computation of Net Asset Value...............................................12
Tax Matters..................................................................13
Performance Information......................................................19
Shareholder Reports..........................................................20
Financial Statements.........................................................20
Organization and Description of Shares of the Fund...........................20
Custodian, Transfer Agent and Dividend Paying Agent..........................21
Counsel and Auditors.........................................................21
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GENERAL INFORMATION
Gintel Fund (the "Fund") is an open-end, non-diversified management
investment company. Much of the information contained in this SAI expands on
subjects discussed in the Prospectus. No investment in shares of the Fund should
be made without first reading the Prospectus.
INVESTMENT OBJECTIVE, POLICIES AND RISKS
The following information supplements, and should be read in conjunction
with, the section in the Prospectus entitled "Investment Objective, Principal
Strategies and Related Risks."
Investment Objective and Policies
The Fund's investment objective is capital appreciation. The Fund will
invest primarily in equity securities (common stocks or securities convertible
into common stock of U.S. companies). The 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, commercial paper and repurchase agreements. The Fund may
also invest up to 20% of its total assets in foreign securities, but has no
current intention to do so.
Risks of Investing in Foreign Securities
The following risks apply to the Fund to the extent the Fund invests in
foreign securities.
Currency Risk. The net asset value of the Fund may be adversely affected by a
change in the exchange rate between the U.S. Dollar and the currencies in which
the Fund's securities are denominated.
Stock Exchange and Market Risk. Foreign stock exchanges generally have less
volume than U.S. stock exchanges. Therefore, it may be more difficult to buy or
sell shares of foreign securities, which increases the volatility of share
prices on such markets.
Legal System and Regulation Risk. Foreign countries have different legal systems
and different regulations concerning financial disclosure, accounting and
auditing standards. Corporate financial information that would be disclosed
under U.S. law may not be available. Foreign accounting and auditing standards
may render a foreign corporate balance sheet more difficult to understand and
interpret than one subject to U.S. law and standards. Additionally, government
oversight of foreign stock exchanges and brokerage industries may be less
stringent than in the U.S.
Expropriation Risk. Certain foreign governments may expropriate the Fund's
investments either directly by restricting the Fund's ability to sell a security
or by imposing exchange controls that restrict the sale of a currency or
indirectly by taxing the Fund's investments at such high levels as to constitute
confiscation of the security.
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Risks of Investing in Debt Securities
The following risks apply to the Fund to the extent the Fund invests in debt
securities.
Interest Rate Risk. The value of a debt security changes in the opposite
direction from a change in interest rates. Accordingly, the value of a debt
security typically declines when interest rates rise. In general, debt
securities with longer maturities are more sensitive to changes in interest
rates.
Credit Risk. The issuer of a debt security may be unable to make timely payments
of principal or interest, or may default on the debt.
Unlike the investment objective and the investment restrictions set forth
below (see "Investment Restrictions"), which may not be changed without
shareholder approval, the Fund has the right to modify the investment policies
described above (not including the Fund's investment objective) without
shareholder approval. However, the Fund does not presently contemplate making
any such modifications.
Risks of Leveraging
The Fund may borrow money to purchase additional securities. Such borrowings are
limited so that immediately after the value of assets (including borrowings)
less liabilities (not including borrowings) is at least three times the amount
of the borrowings. Should the Fund, for any reason, have borrowings that do not
meet the above test then, within three business days, the Fund must reduce such
borrowings so as to meet the necessary test. Under such a circumstance, the Fund
may have to liquidate portfolio 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 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.
INVESTMENT RESTRICTIONS
The Fund has the following restrictions:
(1) with respect to 50% of its assets, the Fund may not
invest more than 5% of its total assets, at market value, in the
securities of one issuer (except the securities of the United States
Government) and may not purchase 10% of the outstanding voting
securities of a single issuer.
(2) with respect to the other 50% of its assets, the Fund
may not invest more than 25% of the market value of its total assets in
a single issuer.
These two restrictions, hypothetically, could give rise to a portfolio
with as few as twelve issuers. To the extent that the Fund's assets are
invested in a smaller number of issuers,
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there may be a greater risk in an investment in the Fund than in a
diversified investment company.
In addition, the Fund will not:
(1) borrow money except that the Fund may, from time to
time, borrow money to the maximum extent permitted by the Investment
Company Act of 1940, as amended (the "1940 Act") from banks at
prevailing interest rates and invest the funds in additional securities.
The 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.
(2) make loans of money or securities other than (i)
through the purchase of securities in accordance with the Fund's
investment objectives, and (ii) by lending portfolio securities in an
amount not to exceed 10% of the Fund's total assets.
(3) buy or sell commodities or commodity futures
contracts.
(4) underwrite securities.
(5) make short sales, except short sales made "against the
box" to defer recognition of taxable gains or losses and in special
arbitrage situations.
(6) invest for the purpose of exercising control or
management.
(7) invest more than 5% of its total assets in the
securities of other investment companies or purchase more than 3% of any
other investment company's securities.(1)
(8) invest in restricted securities (securities that must
be registered under the Securities Act of 1933, as amended, before they
may be offered and sold to the public).
(9) participate in a joint investment account.
(10) issue senior securities.
(11) concentrate 25% or more of its investments in a
particular industry.
- ---------------------
(1) To the extent the Fund invests in other investment companies, duplicate fees
may be incurred.
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These investment restrictions may not be changed without approval by a
vote of a majority of the Fund's outstanding voting securities. Under the 1940
Act, such approval requires the affirmative vote, at a meeting of shareholders
of the lesser of (a) more than 50% of the Fund's outstanding shares, or (b) at
least 67% of shares present or represented at the meeting, provided that the
holders of more than 50% of the Fund's outstanding shares are present in person
or representedby proxy.
Except for the restrictions relating to borrowing and illiquid
securities, if a percentage restriction is adhered to at the time of investment,
a later increase or decrease in percentage resulting from a change in values or
assets will not constitute a violation of that restriction.
While not fundamental policies, the Fund undertakes to comply with the
following investment restrictions:
(a) investments which are not readily marketable are limited
to 15% of the Fund's average net assets at the time of purchase;
(b) the Fund may not purchase securities on margin;
(c) the Fund may loan portfolio securities if collateral values
are continuously maintained at no less than 100% by "marking to market" daily
and the practice is fair, just and equitable as determined by a finding that
adequate provision has been made for margin calls, termination of the loan,
reasonable servicing fees (including finder's fees), voting rights and dividend
rights; and
(d) the Fund will not purchase or sell real property (including
limited partnership interests, but excluding readily marketable interests in
real estate investment trusts or readily marketable securities of companies
which invest in real estate).
MANAGEMENT
Responsibility for management of the Fund is vested in the Board of
Trustees. The Board approves all significant agreements between the Fund and all
persons or companies that furnish services to the Fund, including the Investment
Advisory Agreement and Administrative Services Agreement. The Trustees elect the
Officers of the Fund to supervise actively the day to day operations of the
Fund. The Trustees and Officers of the Fund and their principal occupations for
the past five years are listed below. Unless otherwise indicated the address of
each Trustee and Executive Officer is 6 Greenwich Office Park, Greenwich, CT
06831:
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<PAGE>
Trustees and Officers
Name, Address and Age Position Principal Occupation
- --------------------- -------- --------------------
Robert M. Gintel (72)* Chairman of the Board, Chairman and Chief
Chief Executive Officer, Executive Officer of Gintel
and Trustee Asset Management, Inc.
since 1971; Senior Partner
of Gintel & Co. Limited
Partnership, a member firm
of the New York Stock
Exchange, Inc. and an
associate member firm of
the American Stock
Exchange, Inc. since June
1969; Chairman of the
Board, Chief Executive
Officer and Trustee of the
Fund since November 1980.
Thomas H. Lenagh (80) Trustee Financial Consultant;
13 Allen's Corner Road formerly Chairman and
Flemington, NJ 08822 Trustee, Chief Executive
Officer of Greiner
Engineering Co. (consulting
engineers); financial
advisor to various
institutions since January
1980; special advisor to
the Aspen Institute
(research institute) from
September 1979 until
September 1980 and
Financial Vice President of
the Aspen Institute from
September 1978 until
September 1979; previously
Treasurer and financial
advisor to the Ford
Foundation and director of
Cluster B registered
investment companies
managed by Merrill Lynch
Asset Management, Inc.; and
director of Adams Express
Co. (closed-end investment
company), USLife Corp.
(insurance company), ICN
Biomedics, Inc.
(pharmaceutical company),
SCI Systems, Inc. (computer
peripherals), Irvine
Sensors Corp. (infrared
sensing device
manufacturer), CML Inc.,
(specialty retailing),
Clemente Global (investment
company), and Rexhall, Inc.
(motor home manufacturer);
Trustee of the Fund since
December 1980.
Francis J. Palamara (74) Trustee Business Consultant;
3110 E. Maryland Avenue previously Director and
Phoenix, AZ 85064 Executive President of ARA
Services, Inc. (provides
various services for
industry, institutions and
government); formerly
director and Executive Vice
president of the Pittston
Company (holding company
for coal and other
interests); from 1972 until
1978, Executive Vice
President and Chief
Operating Officer of the
New York Stock Exchange,
Inc.; Glenmede Fund (a
regulated investment
company); Trustee of the
Fund since January 1981.
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Name, Address and Age Position Principal Occupation
- --------------------- -------- --------------------
Russel R. Taylor (82) Trustee Associate Professor of
31 Indian Point Lane Management, College of New
Riverside, CT 06878 Rochelle, since 1977;
founder and Director of
Russel Taylor, Inc.
(manufacturer of women's
fashion) since 1963;
Trustee of the Fund since
December 1985.
Stephen G. Stavrides(53)* President, Treasurer Director, President and
and Trustee Treasurer of Gintel Asset
Management, Inc.; General
Partner of Gintel & Co.
Limited Partnership;
President and Treasurer of
the Fund; previously
Corporate Administrator of
Poten & Partners, Inc. (an
energy and ocean
transportation brokerage
and consulting firm); from
1972-1980, Vice President
of various groups in the D.
K. Ludwig organization
(shipping conglomerate);
and Director of Home
Savings in Houston from
1978-1980; Trustee of the
Fund since December 1981.
Donna K. Grippe (43) Secretary and Secretary and Assistant
Assistant Treasurer Treasurer; previously,
Manager of the Fund
Accounting for American
Investors Fund, Inc.,
American Investors Income
Fund, Inc., and American
Investors Money Market
Fund, Inc.
- ------------------
*Interested person as defined in the 1940 Act.
On January 31, 2000, Robert M. Gintel and his family, Trustees of the
Fund and employees of the Investment Adviser and Gintel & Co. owned directly or
beneficially 3,360,624 shares with a market value of $61,869,088 representing
32.4% of the Fund's outstanding shares.
As of January 31, 2000, Trustees and Officers as a group beneficially
owned 2,584,680 shares of the Fund's common stock which represented 25.0% of the
Fund's outstanding shares.
Remuneration of Trustees
Each Trustee who is not an "interested person" of the Fund receives an
annual fee of $16,500 plus expenses from the Fund for each meeting of the Board
and of shareholders which he attends. The Chairman of the Audit Committee
receives an additional annual fee of $2,500.
Set forth below is information regarding compensation paid the period
from January 1, 1999 through December 31, 1999:
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<TABLE>
<CAPTION>
Pension or
Retirement
Aggregate Benefits Estimated
Compensation Accrued Annual Total
from as Part of Benefits Compensation
Gintel Fund Upon from
Name and Position Fund Expenses Retirement Gintel Fund
----------------- ---- -------- ---------- -----------
<S> <C> <C> <C> <C>
Robert M. Gintel (Trustee, Chairman & -0- $ 0 $ 0 -0-
C.E.O.)
Thomas H. Lenagh (Trustee) $20,625 $ 0 $ 0 $20,625
Francis J. Palamara (Trustee & Chairman $23,750 $ 0 $ 0 $23,750
of Audit Committee)
Stephen G. Stavrides (Trustee & -0- $ 0 $ 0 -0-
President)
Russel R. Taylor (Trustee) $20,625 $ 0 $ 0 $20,625
</TABLE>
INVESTMENT ADVISER AND
INVESTMENT ADVISORY AGREEMENT
The Fund and Gintel Asset Management, Inc. (the "Investment Adviser")
entered into an investment advisory agreement (the "Advisory Agreement") on
September 6, 1986. Robert M. Gintel owns all the outstanding shares of the
Investment Adviser.
Under the Advisory Agreement, the Fund pays all of its expenses,
including the costs incurred in connection with its maintenance of its
registration under the Securities Act of 1933, as amended, and the 1940 Act,
printing and mailing prospectuses to shareholders, transfer taxes on the sales
of portfolio securities, brokerage commissions, custodial and shareholder
transfer charges, legal and auditing expenses, preparation of shareholder
reports, trustees' fees and expenses, and expenses of trustee and shareholder
meetings.
The Advisory Agreement may be terminated without penalty on 60 days'
written notice by a vote of the majority of the Fund's Board of Trustees or by
the Investment Adviser, or by holders or a majority of the Fund's outstanding
shares. The Advisory Agreement was initially approved by the Fund's Board of
Trustees on September 6, 1986 including the affirmative vote of a majority of
the trustees who were not parties to the Advisory Agreement nor interested
persons of any such party, and by the sole shareholder of the Fund on September
6, 1986. The Advisory Agreement continues from year-to-year provided it is
approved at least annually, in the manner stipulated in the 1940 Act. This
requires that the Advisory Agreement and any renewal be approved by a vote of
the majority of the Fund's Trustees who are not parties thereto or interested
persons of any such party, cast in person at a meeting specifically called for
the purpose of voting on such approval.
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<PAGE>
For the fiscal years ended December 31, 1999, 1998, and 1997, the Fund
paid fees to the Investment Adviser of $1,560,194, $1,625,557, and $1,616,405,
respectively.
CODE OF ETHICS
The Codes of Ethics of the Fund and the Investment Adviser prohibit all
affiliated personnel from engaging in personal investment activities that
compete with or attempt to take advantage of the Fund's planned portfolio
transactions. The objective of the Codes of Ethics of both the Investment
Adviser and the Fund is that their operations are not to the detriment of the
Fund's shareholders. Both organizations maintain careful monitoring of
compliance with the Codes of Ethics.
ADMINISTRATIVE SERVICES AGREEMENT
The Administrative Services Agreement (the "Services Agreement") dated
August 24, 1992, provides that in consideration for the services to be provided
by Gintel & Co. (the "Distributor") and the payment by the Distributor of
substantially all of the Fund's expenses currently paid by the Fund directly
(except the Investment Adviser's fees, the fees paid to the disinterested
Trustees, certain transaction costs and expenses, interest, taxes and
extraordinary expenses) the Distributor will receive a fee calculated daily and
paid monthly in arrears based on average daily net assets during the preceding
month at an annual rate of 1.25% of the first $50 million of the average daily
net assets of the Fund; 1.125% of next $50 million of average daily net assets;
and 1.0% of the average daily net assets in excess of $100 million. The Fund's
administrative services fee is higher than that of most other funds which have
an administrator; however, most other funds bear certain of their own expenses
that will be borne by the Distributor on behalf of the Fund.
The Services Agreement also permits the Distributor, at its sole
discretion, to use a portion of its fee, in an amount not to exceed 0.25% of the
Fund's average daily net assets, to compensate itself as well as certain other
registered broker-dealers or financial institutions for certain shareholder
servicing activities. Therefore, the Services Agreement provides that the
Distributor may, from time to time, pay a shareholder servicing fee to certain
registered brokers, including itself for services provided in connection with
the processing of orders for purchase or redemption of the Fund's shares and
certain other persons or entities for furnishing services to specific
shareholder accounts. In addition, the Distributor may use income from sources
other than its fee to compensate persons for distribution and shareholder
servicing or to pay for other distribution-related expenses.
Pursuant to the terms of the Services Agreement, the Distributor will
furnish, without cost to the Fund, offices and office services for the Fund, the
services of the President, Secretary, Treasurer and one or more Vice Presidents
of the Fund, and such other personnel and facilities as are required for the
proper conduct of the Fund's affairs and to carry out their obligations under
the Services Agreement. In addition, the Distributor shall be responsible for
all brokerage commissions in connection with the purchase or sale of the Fund's
portfolio securities (excluding applicable transaction costs such as Securities
and Exchange Commission fees, exchange fees and certain sales
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<PAGE>
and transfer taxes which will be paid by the Fund). However, brokerage
commissions paid ontrades executed through non-affiliated brokers will continue
to be paid by the Fund and credited against the administrative services fee to
be paid to the Distributor. The Distributor or the Investment Adviser will pay
for all expenses incurred regarding the printing and distribution of
prospectuses and any other promotional or sales literature used by the
Distributor or the Investment Adviser or furnished by the Distributor or the
Investment Adviser to purchasers in connection with the public offering of the
Fund's shares, the expenses of advertising in connection with such public
offering and legal expenses in connection with the foregoing.
Except as set forth below, the Distributor shall pay all expenses of the
Fund, including, without limitations: the charges and expenses of any registrar,
custodian, sub-custodian or depository appointed by the Fund for the safekeeping
of its cash, portfolio securities and other property, and any stock transfer,
dividend or accounting agent or agents appointed by the Fund; all fees payable
by the Fund to federal, state or other governmental agencies; the costs and
expenses of engraving or printing stock certificates, if any, representing
shares of the Fund; all costs and expenses in connection with the registration
and maintenance of registration of the Fund and its shares with the Securities
and Exchange Commission and various states and other jurisdictions (including
filing and legal fees and disbursements of counsel); the costs and expenses of
printing, including typesetting and distributing prospectuses and statements of
additional information of the Fund and supplements thereto to the Fund's
shareholders and to potential shareholders of the Fund; all expenses of
shareholders' meetings and of preparing, printing and mailing of proxy
statements and reports to shareholders; all expenses incident to the payment of
any dividend, distribution, withdrawal or redemption, whether in shares or in
cash; charges and expenses of any outside service used for pricing of the Fund's
shares; routine fees and expenses of legal counsel and of independent
accountants, in connection with any matter relating to the Fund; postage;
insurance premiums on property or personnel (including officers and trustees) of
the Fund which inure to its benefit; and all other charges and costs of the
Fund's operations unless otherwise explicitly assumed by the Fund. The Fund is
responsible for the payment of the following expenses not borne by the
Distributor: (i) the investment advisory fees paid to the Investment Adviser
pursuant to the Advisory Agreement with the Fund, (ii) the fees of the Trustees
who are not "interested persons" of the Fund, as defined by the 1940 Act, and
travel and related expenses of trustees for attendance at trustee and
shareholder meetings, (iii) certain transaction costs and expenses such as
regulatory agency fees and certain sales and transfer taxes, (iv) interest, (v)
taxes and (vi) extraordinary expenses, if any, including, but not limited to,
legal claims and liabilities and litigation costs and any indemnification
related thereto. Expenses that are attributable to the Fund are charged against
the income of the Fund in determining net income for dividend purposes.
For the fiscal years ended December 31, 1999, 1998 and 1997, the Fund
paid fees to the Distributor of $1,747,693, $1,813,057, and $1,803,905,
respectively.
PORTFOLIO TRANSACTIONS AND BROKERAGE
Subject to the supervision of the Board of Trustees, decisions to buy
and sell securities for the Fund are made by the Investment Adviser. The Board
of Trustees has authorized the Fund to use Gintel & Co. Limited Partnership
("Gintel & Co."), on an agency basis, to supervise and to
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<PAGE>
effect a substantial amount of the portfolio transactions which are executed on
the New York and American Stock Exchanges, Foreign or Regional Exchanges where
relevant, or which are traded in the over-the-counter market. All such
transactions will be subject to the maximum discount which is presently extended
by Gintel & Co. to the other investment companies advised by the Investment
Adviser and other unaffiliated accounts of the Investment Adviser. Any profits
resulting from brokerage commissions earned by Gintel & Co. as a result of Fund
transactions will accrue to the benefit of the General Partners of Gintel & Co.,
several of whom are officers of the Investment Adviser. The Advisory Agreement
does not provide for any reduction in the investment advisory fee as a result of
profits resulting from brokerage commissions effected through Gintel & Co.
The Board of Trustees has adopted certain procedures incorporating the
standard of Rule 17e-1 issued by the Securities and Exchange Commission under
the 1940 Act which requires that the commissions paid to Gintel & Co. must be
"reasonable and fair compared to the commission, fee or other remuneration
received or to be received by other brokers in connection with comparable
transactions involving similar securities during a comparable period of time."
The Rule and the procedures also contain review requirements and require the
Investment Adviser to furnish reports to the Trustees and to maintain records in
connection with such reviews.
The Investment Adviser is further authorized to allocate the orders
placed by it on behalf of the Fund to such unaffiliated brokers who also provide
research or statistical material, or other services to the Fund or the
Investment Adviser for the Fund's use. Such allocation shall be in such amounts
and proportions as the Investment Adviser shall determine and the Investment
Adviser will report on said allocations regularly to the Board of Trustees
indicating the unaffiliated brokers to whom such allocations have been made and
the basis therefor. In addition, the Investment Adviser may consider sale of
shares of the Fund as a factor in the selection of unaffiliated brokers to
execute portfolio transactions for the Fund, subject to the requirements of best
net price and most favorable execution.
In selecting a broker to execute each particular transaction, the
Investment Adviser will take the following into consideration: the best net
price available; the reliability, integrity and financial condition of the
broker; the size and difficulty in executing the order; and the value of the
expected contribution of the broker to the investment performance of the Fund on
a continuing basis. Accordingly, the cost of the brokerage commissions on a
transaction for the Fund may be greater than that available from other brokers
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 Investment Adviser shall not be deemed to have
acted unlawfully or to have breached any duty solely by reason of its having
caused an unaffiliated broker that provides research services to the Investment
Adviser for the Fund's use to be paid an amount of commission for effecting a
portfolio investment transaction in excess of the amount of commission another
broker would have charged for effecting that transaction, if the Investment
Adviser determines in good faith that such amount of commission was reasonable
in relation to the value of the research service provided by such broker viewed
in terms of either that particular transaction or the Investment Adviser's
ongoing responsibilities with respect to the Fund. Under the Services
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<PAGE>
Agreement, however, the Distributor and not the Fund pays all brokerage
commissions on securitiestransactions.
ALLOCATION OF INVESTMENTS
The Investment Adviser has other advisory clients, which include
investment companies and individuals, trusts, pension and profit sharing funds,
some of which have similar investment objectives to the Fund. As such, there
will be times when the Investment Adviser may recommend purchases and/or sales
of the same portfolio securities for the Fund and its other clients. In such
circumstances, it will be the policy of the Investment Adviser to allocate
purchases and sales among the Fund and its other clients in a manner which the
Investment Adviser deems equitable, taking into consideration such factors as
size of account, concentration of holdings, investment objectives, tax status,
cash availability, purchase cost, holding period and other pertinent factors
relative to each account. Simultaneous transactions could adversely affect the
ability of the Fund to obtain or dispose of the full amount of a security that
it seeks to purchase or sell or the price at which such security can be
purchased or sold.
COMPUTATION OF NET ASSET VALUE
The Fund determines the net asset value of its shares at the close of
the New York Stock Exchange (the "Exchange"), currently 4 p.m., on each day that
the Exchange is open for business and on such other days as there is sufficient
trading in the Fund's securities to affect materially its net asset value per
share except for New Year's Day, President's Day, Good Friday, Memorial Day,
Independence Day, Labor Day, Thanksgiving and Christmas. Subscriptions to
purchase shares of the Fund received prior to the close of trading on the
Exchange, currently 4 p.m., are confirmed at the net asset value determined that
day or on the business day next succeeding the date of receipt, if such orders
are received after the close of trading. The net asset value per share is
determined by dividing the market value of the Fund's securities as of the close
of trading plus any cash or other assets (including dividends and accrued
interest receivable) less all liabilities (including accrued expenses), by the
number of shares outstanding. Portfolio securities are valued at the last sale
price on the securities exchange or national securities market on which such
securities primarily are traded. Securities not listed on an exchange or
national securities market, or securities in which there were no transactions,
are valued at the average of the most recent bid and asked prices. Any
securities or other assets for which recent market quotations are not readily
available are valued at fair value as determined in good faith by the Board of
Trustees. Short-term obligations are valued at amortized costs. Expenses and
fees, including the management fee, are accrued daily and taken into account for
the purpose of determining the net asset value of the Fund shares.
Generally, trading in non-U.S. securities, as well as corporate bonds,
U.S. government securities, money market instruments and repurchase agreements,
is substantially completed each day at various times prior to the close of the
Exchange. The values of such securities used in computing the net asset value of
the shares of the Fund are determined as of such times. Foreign currency
exchange rates are also generally determined prior to the close of the Exchange.
Occasionally, events affecting the value of securities and such exchange rates
may occur between
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<PAGE>
the times at which they are determined and the close of the Exchange, which will
not be reflected inthe computation of net asset value. If during such periods
events occur which materially affect the value of such securities, the
securities will be valued at their fair market value as determined in good faith
by the trustees.
For purposes of determining the net asset value per share of the Fund
all assets and liabilities initially expressed in foreign currencies will be
converted into U.S. dollars at the mean between the bid and offer prices of such
currencies against U.S. dollars quoted by any major bank.
TAX MATTERS
The following is only a summary of certain additional federal income tax
considerations generally affecting the Fund and its shareholders that are not
described in the Prospectus. No attempt is made to present a detailed
explanation of the tax treatment of the Fund or its shareholders, and the
discussion here and in the Prospectus is not intended as a substitute for
careful tax planning.
Qualification as Regulated Investment Company
The Fund has elected to be taxed as a regulated investment company for
federal income tax purposes under subchapter M of the Internal Revenue Code of
1986, as amended (the "Code"). As a regulated investment company, the Fund is
not subject to federal income tax on the portion of its net investment income
(i.e., taxable interest, dividends and other taxable ordinary income, net of
expenses) and capital gain net income (i.e., the excess of capital gains over
capital losses) that it distributes to shareholders, provided that it
distributes at least 90% of its investment company taxable income (i.e., net
investment income and the excess of net short-term capital gain over net
long-term capital loss) for the taxable year (the "Distribution Requirement"),
and satisfies certain other requirements of the Code that are described below.
Distributions by the Fund may during the taxable year or, under specified
circumstances, within twelve months after the close of the taxable year, will be
considered distributions of income and gains of the taxable year and will
therefore satisfy the Distribution Requirement.
In addition to satisfying the Distribution Requirement, a regulated
investment company must: (1) derive at least 90% of its gross income from
dividends, interest, certain payments with respect to securities loans, gains
from the sale or other disposition of stock or securities or foreign currencies
(to the extent such currency gains are directly related to the regulated
investment company's principal business of investing in stock or securities) and
other income (including but not limited to gains from options, futures or
forward contracts) derived with respect to its business of investing in such
stock, securities or currencies (the "Income Requirement").
In general, gain or loss recognized by the Fund on the disposition of an
asset will be capital gain or loss. In addition, gain will be recognized as a
result of certain constructive sales, including short sales "against the box."
However, gain recognized on the disposition of a debt obligation (other than a
municipal obligation) purchased by the Fund at a market discount (generally, at
a price less
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than its principal amount) will be treated as ordinary income to the extent of
the portion of themarket discount which accrued during the period of time the
Fund held the debt obligation. In addition, under the rules of the Code Section
988, gain or loss recognized on the disposition of a debt obligation denominated
in a foreign currency or an option with respect thereto (but only to the extent
attributable to changes in foreign currency exchange rates), and gain or loss
recognized on the disposition of a foreign currency forward contract, futures
contract, option or similar financial instrument, or of foreign currency itself,
except for regulated futures contracts or non-equity options subject to Code
Section 1256 (unless the Fund elects otherwise), will generally be treated as
ordinary income or loss.
In general, for purposes of determining whether capital gain or loss
recognized by the Fund on the disposition of an asset is long-term or
short-term, the holding period of the asset may be affected if (1) the asset is
used to close a "short-sale" (which includes for certain purposes the
acquisition of a put option) or is substantially identical to another asset so
used, (2) the asset is otherwise held by the Fund as part of a "straddle" (which
term generally excludes a situation where the asset is stock and the Fund grants
a qualified covered call option (which, among other things, must not be
deep-in-the-money) with respect thereto or (3) the asset is stock and the Fund
grants an in-the-money qualified covered call option with respect thereto. In
addition, the Fund may be required to defer the recognition of a loss on the
disposition of an asset held as part of a straddle to the extent of any
unrecognized gain on the offsetting position.
Any gain recognized by the Fund on the lapse of, or any gain or loss
recognized by the Fund from a closing transaction with respect to, an option
written by the Fund will be treated as a short-term capital gain or loss.
Treasury regulations permit a regulated investment company, in
determining its investment company taxable income and net capital gain (i.e.,
the excess of net long-term capital gain over net short-term capital loss) for
any taxable year, to elect (unless it has made a taxable year election for
excise tax purposes as discussed below) to treat all or part of any net capital
loss, any net long-term capital loss or any net foreign currency loss incurred
after October 31 as if it had been incurred in the succeeding year.
In addition to satisfying the requirements described above, the Fund
must satisfy an asset diversification test in order to qualify as a regulated
investment company. Under this test, at the close of each quarter of the Fund's
taxable year, at least 50% of the value of the Fund's assets must consist of
cash and cash items, U.S. Government securities, securities of other regulated
investment companies, and securities of other issuers (as to each of which the
Fund has not invested more than 5% of the value of the Fund's total assets in
securities of such issuer and does not hold more than 10% of the outstanding
voting securities of such issuer), and no more than 25% of the value of its
total assets may be invested in the securities of any one issuer (other than
U.S. Government securities and securities of other regulated investment
companies), or in two or more issuers which the Fund controls and which are
engaged in the same or similar trades or businesses.
14
<PAGE>
If for any taxable year the Fund does not qualify as a regulated
investment company, all of its taxable income (including its net capital gain)
will be subject to tax at regular corporate rates without any deduction for
distributions to shareholders, and such distributions will be taxable as
ordinary dividends to the extent of the Fund's current and accumulated earnings
and profits. Such distributions generally will be eligible for the
dividends-received deduction in the case of corporate shareholders.
Excise Tax on Regulated Investment Companies
A 4% non-deductible excise tax is imposed on a regulated investment
company that fails to distribute in each calendar year an amount equal to 98% of
ordinary taxable income for the calendar year and 98% of capital gain net income
for the one-year period ended on October 31 of such calendar year (or, at the
election of a regulated investment company having a taxable year ending November
30 or December 31, for its taxable year (a "taxable year election")). The
balance of such income must be distributed during the next calendar year. For
the foregoing purpose, a regulated investment company is treated as having
distributed any amount of which it is subject to income tax for any taxable year
ending in such a calendar year.
For purposes of this excise tax, a regulated investment company shall:
(1) reduce its capital gain net income (but not below its net capital gain) by
the amount of any net ordinary loss for the calendar year; and (2) exclude
foreign currency gains and losses incurred after October 31 of any year (or
after the end of its taxable year if it has made a taxable year election) in
determining the amount of ordinary taxable income for the current calendar year
(and, instead, include such gains and losses in determining ordinary taxable
income for the succeeding calendar year).
The Fund intends to make sufficient distributions or deemed
distributions of its ordinary taxable income and capital gain net income prior
to the end of each calendar year to avoid liability for the excise tax. However,
investors should note that the Fund may in certain circumstances be required to
liquidate portfolio investments to make sufficient distributions to avoid excise
tax liability.
Fund Distributions
The Fund anticipates distributing substantially all of its investment
company taxable income for each taxable year. Such distributions will be taxable
to shareholders as ordinary income and treated as dividends for federal income
tax purposes, but they will qualify for the 70% dividends-received deductions
for corporations only to the extent discussed below.
The Fund may either retain or distribute to shareholders its net capital
gain for each taxable year. The Fund currently intends to distribute any such
amounts. Net capital gain that is distributed and designated as a capital gain
dividend will be taxable to shareholders as long-term capital gain, regardless
of the length of time the shareholder has held his shares or whether such gain
was recognized by the Fund prior to the date on which the shareholder acquired
his shares. The Code provides, however, that under certain conditions only 50%
(58% for alternative minimum tax
15
<PAGE>
purposes) of the capital gain recognized upon the Fund's disposition of
domestic "small business" stock will be subject to tax.
Conversely, if the Fund elects to retain its net capital gain, the Fund
will be taxed thereon (except to the extent of any available capital loss
carryovers) at the 35% corporate tax rate. If the Fund elects to retain its net
capital gain, it is expected that the Fund also will elect to have shareholders
of record on the last day of its taxable year treated as if each received a
distribution of his pro rata share of such gain, with the result that each
shareholder will be required to report his pro rata share of such gain on his
tax return as long-term capital gain, will receive a refundable tax credit for
his pro rata share of tax paid by the Fund on the gain, and will increase the
tax basis for his shares by an amount equal to the deemed distribution less the
tax credit.
Ordinary income dividends paid by the Fund with respect to a taxable
year will qualify for the 70% dividends-received deduction generally available
to corporations (other than corporations, such as "S" corporations, which are
not eligible for the deduction because of their special characteristics and
other than for purposes of special taxes such as the accumulated earnings tax
and the personal holding company tax) to the extent of the amount of qualifying
dividends received by the Fund from domestic corporations for the taxable year.
A dividend received by the Fund will not be treated as a qualifying dividend (1)
if it has been received with respect to any share of stock that the Fund has
held for less than 46 days (91 days in the case of certain preferred stock),
excluding for this purpose, under the rules of Code Section 246(c)(3) and (4):
(i) any day more than 45 days (or 90 days in the case of certain preferred
stock) after the date on which the stock becomes ex-dividend and (ii) any period
during which the Fund has an option to sell, is under a contractual obligation
to sell, has made and not closed a short sale of, is the grantor of a
deep-in-the-money or otherwise nonqualified option to buy, or has otherwise
diminished its risk of loss by holding other positions with respect to, such (or
substantially identical) stock; (2) to the extent that the Fund is under an
obligation (pursuant to a short sale or otherwise) to make related payments with
respect to positions in substantially similar or related property; or (3) to the
extent the stock on which the dividend is paid is treated as debt-financed under
the rules of Code Section 246A. Moreover, the dividends-received deduction for a
corporate shareholder may be disallowed or reduced (i) if the corporate
shareholder fails to satisfy the foregoing requirements with respect to its
share of the Fund or (ii) by application of Code Section 246(b) which in general
limits the dividends-received deduction to 70% of the shareholder's taxable
income (determined without regard to the dividends-received deduction and
certain other items).
Alternative minimum tax ("AMT"), imposed in addition to, but only to the
extent it exceeds, the regular tax, is computed at a maximum marginal rate of
28% for noncorporate taxpayers and 20% for corporate taxpayers on the excess of
the taxpayer's alternative minimum taxable income ("AMTI") over an exemption
amount. For purposes of the corporate AMT, the corporate dividends received
deduction is not itself an item of tax preference that must be added back to
taxable income or is otherwise disallowed in determining a corporation's AMTI.
However, a corporate shareholder will generally be required to take the full
amount of any dividend received from the Fund into account (without a
dividends-received deduction) in determining its adjusted current earnings,
which are used in computing an additional corporate preference item (i.e., 75%
of
16
<PAGE>
the excess of a corporate taxpayer's adjusted current earnings over its AMTI
(determined without regard to this item and the AMT net operating loss
deduction) includable in AMTI.
Investment income that may be received by the Fund from sources within
foreign countries may be subject to foreign taxes withheld at the source. The
United States has entered into tax treaties with many foreign countries, which
may entitle the Fund to a reduced rate of, or exemption from, taxes on such
income. It is impossible to determine the effective rate of foreign tax in
advance since the amount of the Fund's assets to be invested in various
countries is not known.
Distributions by the Fund which do not constitute ordinary income
dividends or capital gain dividends will be treated as a return of capital to
the extent of (and in reduction of) the shareholder's tax basis in his shares;
any excess will be treated as gain from the sale of his shares, as discussed
below.
Distributions by the Fund will be treated in the manner described above
regardless of whether such distributions are paid in cash or reinvested in
additional shares of the Fund (or of another fund). Shareholders receiving a
distribution in the form of additional shares will be treated as receiving a
distribution in an amount equal to the fair market value of the shares received,
determined as of the reinvestment date. In addition, if the net asset value at
the time a shareholder purchases shares of the Fund reflects undistributed net
investment income or recognized capital gain net income, or unrealized
appreciation in the value of the assets of the Fund, distributions of such
amounts will be taxable to the shareholder in the manner described above,
although such distributions economically constitute a return of capital to the
shareholder.
Ordinarily, shareholders are required to take distributions by the Fund
into account in the year in which the distributions are made. However, dividends
declared in October, November or December of any year and payable to
shareholders of record on a specified date in such a month will be deemed to
have been received by the shareholders (and made by the Fund) on December 31 of
such a calendar year if such dividends are actually paid in January of the
following year. Shareholders will be advised annually as to the U.S. federal
income tax consequences of distributions made (or deemed made) during the year.
The Fund will be required in certain cases to withhold and remit to the
U.S. Treasury 31% of ordinary income dividends and capital gain dividends, and
the proceeds of redemption of shares, paid to any shareholder (1) who has failed
to provide a correct taxpayer identification number, (2) who is subject to
backup withholding for failure properly to report the receipt of interest or
dividend income properly, or (3) who has failed to certify to the Fund that it
is not subject to backup withholding or that it is an "exempt recipient" (such
as a corporation).
Sale or Redemption of Shares
A shareholder will recognize gain or loss on the sale or redemption of
shares of the Fund in an amount equal to the difference between the proceeds of
the sale or redemption and the shareholder's adjusted tax basis in the shares.
All or a portion of any loss so recognized may be
17
<PAGE>
disallowed if the shareholder purchases other shares of the Fund within 30 days
before or after the sale or redemption. In general, any gain or loss arising
from (or treated as arising from) the sale or redemption of shares of the Fund
will be considered capital gain or loss and will be long-term capital gain or
loss if the shares were held for longer than one year. Long-term capital gain
recognized by an individual shareholder will be taxed at the lowest rates
applicable to capital gains if the holder has held such shares for more than 18
months at the time of the sale. However, any capital loss arising from the sale
or redemption of shares held for six months or less will be treated as a
long-term capital loss to the extent of the amount of capital gain dividends
received on such shares. For this purpose, the special holdings period rules of
Code Section 246(c)(3) and (4) generally will apply in determining the holding
period of shares. Capital losses in any year are deductible only to the extent
of capital gains plus, in the case of a noncorporate taxpayer, $3,000 of
ordinary income.
Foreign Shareholders
Taxation of a shareholder who, as to the United States, is a nonresident
alien individual, foreign trust or estate, foreign corporation, or foreign
partnerships ("foreign shareholder") depends on whether the income from the Fund
is "effectively connected" with a U.S. trade or business carried on by such
shareholder.
If the income from the Fund is not effectively connected with a U.S.
trade or business carried on by a foreign shareholder, ordinary income dividends
paid to a foreign shareholder will be subject to U.S. withholding tax at the
rate of 30% (or lower applicable treaty rate) upon the gross amount of the
dividend. Such a foreign shareholder would generally be exempt from U.S. federal
income tax on gains realized on the sale of shares of the Fund, capital gain
dividends and amounts retained by the Fund that are designated as undistributed
capital gains.
If the income from the Fund is effectively connected with a U.S. trade
or business carried on by a foreign shareholder, then ordinary income dividends,
capital gain dividends, and any gains realized upon the sale of shares of the
Fund will be subject to U.S. federal income tax at the rates applicable to U.S.
citizens or corporations.
In the case of foreign noncorporate shareholders, other than
corporations, the Fund may be required to withhold U.S. federal income tax at a
rate of 31% on distributions that are otherwise exempt from withholding tax (or
taxable at a reduced treaty rate) unless such shareholders furnish the Fund with
proper notification of their foreign status.
The tax consequences to a foreign shareholder entitled to claim the
benefits of an applicable tax treaty may be different from those described
herein. Foreign shareholders are urged to consult their own tax advisers with
respect to the particular tax consequences to them of an investment in the Fund,
including the applicability of foreign taxes.
18
<PAGE>
Effect of Future Legislation; Local Tax Considerations
The foregoing general discussion of U.S. federal income tax consequences
is based on the Code and the Treasury Regulations issued thereunder as in effect
on the date of this SAI. Future legislative or administrative changes or court
decisions may significantly change the conclusions expressed herein, and any
such changes or decisions may have a retroactive effect.
Rules of state and local taxation of ordinary income dividends and
capital gain dividends from regulated investment companies may differ from the
rules for U.S. federal income taxation described above. Shareholders are urged
to consult their tax advisers as to the consequences of these and other state
and local tax rules affecting investment in the Fund.
PERFORMANCE INFORMATION
For the purposes of quoting and comparing the performance of the Fund to
that of other mutual funds and to stock or other relevant indices in
advertisements or in reports to shareholders, performance will be stated in
terms of total return, rather than in terms of yield. Under the rules of the
Securities and Exchange Commission, funds advertising performance must include
total return quotes calculated according to the following formula:
P(1+T)_ = ERV
Where: P = a hypothetical initial payment of $1,000
T = average annual total return
_ = number of years (1, 5 or 10)
ERV = Ending Redeemable Value of a
hypothetical $1,000 payment made at
the beginning of the 1, 5 or 10 year
periods at the end of the 1, 5, 10
year periods (or fractional portion
thereof).
Under the foregoing formula the time periods used in advertising will be
based on rolling calendar quarters, updated to the last day of the most recent
quarter prior to submission of the advertising for publication, and will cover
one, five, and ten year periods or a shorter period dating from the
effectiveness of the Fund's registration statement. Total return, or "T" in the
formula above, is computed by finding the average annual compounded rates of
return over the 1, 5 and 10 year periods (or fractional portion thereof) that
would equate the initial amount invested to the Ending Redeemable Value.
19
<PAGE>
SHAREHOLDER REPORTS
Shareholders will receive reports at least semi-annually showing the
Fund's holdings and other information. In addition, shareholders will receive
annual financial statements audited by Richard A. Eisner & Company, LLP, the
Fund's independent auditors.
FINANCIAL STATEMENTS
The Financial Statements for the year ended December 31, 1999, are
hereby incorporated by reference from the Fund's 1999 Annual Report to
Shareholders.
ORGANIZATION AND DESCRIPTION OF SHARES OF THE FUND
On September 6, 1986, the Fund reorganized as a Massachusetts business
trust under the laws of the Commonwealth of Massachusetts and filed its
Declaration of Trust on July 29, 1986. Under the terms of the Massachusetts
General Corporation Law, the Fund may indemnify any person who was or is a
trustee, officer or employee of the Fund to the maximum extent permitted by the
Massachusetts General Corporation Law; provided, however, that any such
indemnification (unless ordered by a court) shall be made by the Fund only as
authorized in the specific case upon a determination that indemnification of
such persons is proper in the circumstances. Such determination shall be made
(i) by the Board of Trustees, by a majority vote of a quorum which consists of
trustees who are neither "interested persons" of the Fund as defined in Section
2(a)(19) of the 1940 Act, nor parties to the proceeding, or (ii) if the required
quorum is not obtainable or if a quorum of such trustees so directs by
independent legal counsel in a written opinion. No indemnification will be
provided by the Fund to any trustee or officer of the Fund for any liability to
the Fund or its shareholders to which he would otherwise be subject by reason of
willful misfeasance, bad faith, gross negligence or reckless disregard of duty.
The Trustees are permitted to issue an unlimited number of shares of
beneficial interest in the Fund in an unlimited number of series of shares. Each
share has one vote and shares equally in dividends and distributions when and if
declared by the Fund and in the Fund's net assets upon liquidation. All shares,
declared by the Fund and in the Fund's net assets upon liquidation. All shares,
when issued, are fully paid and nonassessable. There are no preemptive,
conversion or exchange rights. Shares of the Fund do not have cumulative voting
rights and, as such, holders of at least 50% of the shares voting for trustees
can elect all trustees and the remaining shareholders would not be able to elect
any trustees. The Board of Trustees may classify or reclassify any unissued
shares of the Fund into shares of any series by setting or changing in any one
or more respects, from time to time, prior to the issuance of such shares, the
preference, conversion or other rights, voting powers, restrictions, limitations
as to dividends, or qualifications of such shares. Any such classification or
reclassification will comply with the provisions of the 1940 Act.
There will not normally be annual shareholder's meetings. The trustees
will promptly call a shareholder's meeting to remove a trustee(s) when requested
to do so in writing by record holders of not less than 10% of the Fund's
outstanding shares.
20
<PAGE>
CUSTODIAN, TRANSFER AGENT AND DIVIDEND PAYING AGENT
Firstar Mutual Funds Services, LLC, 615 East Michigan Street, Milwaukee,
WI 53202 is the transfer agent and dividend-paying agent of the Fund. Firstar
Bank, N.A., 777 East Wisconsin Avenue, Milwaukee, WI 53202 is the Custodian of
the Fund.
COUNSEL AND AUDITORS
Kramer Levin Naftalis & Frankel LLP, 919 Third Avenue, New York, New
York 10022 is counsel to the Fund. Richard A. Eisner & Company, LLP, 575 Madison
Avenue, New York, New York 10022 has been appointed independent auditors for the
Fund. These firms provide similar services to the Investment Adviser and Gintel
& Co.
21
<PAGE>
PART C
OTHER INFORMATION
ITEM 23. Exhibits
Exhibit
Number Description
- ------- -----------
(a) Form of Registrant's Declaration of Trust.*
(b) Form of Registrant's By-Laws. *
(c) The rights of holders of the securities being registered are set
out in Articles II, III, V and IX of the Trust Instrument
referenced in Exhibit (a) above and in Article II of the Bylaws
referenced in Exhibit (b) above.
(d) Form of Investment Advisory Agreement.*
(e) Form of Distribution Agreement. *
(f) Not Applicable.
(g)(a) Form of Custodian Agreement (filed herewith).
(g)(b) Form of Transfer Agency Agreement (filed herewith)
(g)(c) Form of Fund Accounting Agreement (filed herewith)
(h) Not Applicable.
(i)(1) Consent of Kramer Levin Naftalis & Frankel LLP (filed herewith).
(i)(2) Opinion of Kramer Levin Naftalis & Frankel LLP.**
(j) Consent of Richard A. Eisner & Company, LLP (filed herewith).
(k) Not Applicable.
(l) Not Applicable.
(m) Form of Rule 12b-1 Plan.*
(n) Not Applicable.
(p) Code of Ethics (filed herewith).
- ----------------------------------
* Previously filed with the Fund's Post-Effective Amendment No. 12 on
September 9, 1986.
** Previously filed as an exhibit to Form 24F on February 28, 1997.
<PAGE>
ITEM 24. Persons Controlled or under Common Control With Registrant
None.
ITEM 25. Indemnification
Reference is hereby made to Article VIII of the Registrant's
Declaration of Trust.
The Registrant and its officers are insured under a fidelity bond
required by Rule 17g-1 under the Investment Company Act of 1940.
ITEM 26. Business and Other Connections of Investment Adviser
See "Management of the Fund " in the Prospectus.
ITEM 27. Principal Underwriter
Name and Principal Position and Offices with Position and Offices
Business Address* Principal Underwriter with Registrant
- ---------------- ------------------------- ------------------
Robert M. Gintel General Partner Chairman, Trustee and
President
Stephen Stavrides General Partner Trustee, President and
Treasurer
Ellen J. Gerstein General Partner None
Debra Ginsburg General Partner None
Edward F. Carroll General Partner None
R. Baxter Brown General Partner None
(c) Not Applicable.
ITEM 28. Location of Accounts and Records
Gintel Asset Management, Inc., 6 Greenwich Office Park, Greenwich,
Connecticut 06831 maintains physical possession of each such account,
book or other document of the Registrant, except for those maintained
by the Fund's Custodian, The Chase Manhattan Bank, 3 Chase Metrotech
Center, Brooklyn, New York 11245.
ITEM 29. Management Services
None.
- --------
* 6 Greenwich Office Park, Greenwich, Connecticut 06831.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and
the Investment Company Act of 1940, the Registrant certifies that it meets all
of the requirements for effectiveness of this registration statement pursuant to
Rule 485(b) under the Securities Act of 1933 and has duly caused this Amendment
to its registration statement to be signed on its behalf by the undersigned,
thereunto duly authorized, in the City of Greenwich in the State of Connecticut
on the 14th day of April, 2000.
GINTEL FUND
By: /s/ Robert M. Gintel
--------------------------------
Robert M. Gintel
Chairman of the Board
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed below by the following persons in the
capacities and on the dates indicated.
Signatures Title Date
/s/ Robert M. Gintel Chief Executive Officer, April 14, 2000
- --------------------------- Chairman of the Board and
Robert M. Gintel Trustee (Principal Executive
Officer)
* Trustee April 14, 2000
- ---------------------------
Thomas H. Lenagh
*
- --------------------------- Trustee April 14, 2000
Francis J. Palamara
* Trustee April 14, 2000
- ---------------------------
Russel R. Taylor
/s/ Stephen G. Stravides Trustee, Vice President, April 14, 2000
- --------------------------- Secretary and Treasurer
Stephen G. Stavrides (Principal Financial and
Accounting Officer)
- --------------------------------------------------------------------------------
*By /s/ Susan J. Penry-Williams
---------------------------
Susan J. Penry-Williams, Attorney-in-Fact
pursuant to Powers of Attorney previously
filed with the Securities and Exchanges Commission.
<PAGE>
EXHIBIT INDEX
Exhibit
Number Description
EX-99.g(a) Form of Custody Agreement
EX-99.g(b) Form of Transfer Agency Agreement.
EX-99.g(c) Form of Fund Accounting Agreement.
EX-99.i Consent of Kramer Levin Naftalis & Frankel LLP
EX-99.j Consent of Richard A. Eisner & Company, LLP
EX-99.p Code of Ethics
FORM OF
CUSTODY AGREEMENT
This AGREEMENT, dated as of March 1, 2000, by and between the Gintel Fund
(the "Fund"), a Massachusetts business trust organized under the laws of the
Commonwealth of Massachusetts, and FIRSTAR BANK, N.A., a national banking
association (the "Custodian").
W I T N E S S E T H:
WHEREAS, the Fund desires that the Fund's Securities and cash be held and
administered by the Custodian pursuant to this Agreement; and
WHEREAS, the Fund is an open-end management investment company registered
under the Investment Company Act of 1940, as amended (the "1940 Act"); and
WHEREAS, the Custodian represents that it is a bank having the
qualifications prescribed in Section 26(a)(i) of the 1940 Act;
NOW, THEREFORE, in consideration of the mutual agreements herein made, the
Fund and the Custodian hereby agree as follows:
ARTICLE I
DEFINITIONS
Whenever used in this Agreement, the following words and phrases, unless
the context otherwise requires, shall have the following meanings:
1.1 "Authorized Person" means any Officer or other person duly
authorized by resolution of the Board of Trustees to give Oral
Instructions and Written Instructions on behalf of the Fund and
named in Exhibit A hereto or in such resolutions of the Board Of
Trustees, certified by an Officer, as may be received by the
Custodian from time to time.
1.2 "Board Of Trustees" shall mean the Trustees from time to time
serving under the Company's Agreement and Declaration of Trust, as
from time to time amended.
1.3 "Book-Entry System" shall mean a federal book-entry system as
provided in Subpart O of Treasury Circular No. 300, 31 CFR 306, in
Subpart B of 31 CFR Part 350, or in such book-entry regulations of
federal agencies as are substantially in the form of such Subpart O.
-1-
<PAGE>
1.4 "Business Day" shall mean any day recognized as a settlement day by
The New York Stock Exchange, Inc. and any other day for which the
Fund computes the net asset value of Shares of the Fund.
1.5 "Fund Custody Account" shall mean any of the accounts in the name of
the Fund, which is provided for in Section 3.2 below.
1.6 "NASD" shall mean The National Association of Securities Dealers,
Inc.
1.7 "Officer" shall mean the Chairman, President, any Vice President,
any Assistant Vice President, the Secretary, any Assistant
Secretary, the Treasurer, or any Assistant Treasurer of the Fund.
1.8 "Oral Instructions" shall mean instructions orally transmitted to
and accepted by the Custodian because such instructions are: (i)
reasonably believed by the Custodian to have been given by an
Authorized Person, (ii) recorded and kept among the records of the
Custodian made in the ordinary course of business and (iii) orally
confirmed by the Custodian. The Fund shall cause all Oral
Instructions to be confirmed by Written Instructions prior to the
end of the next Business Day. If such Written Instructions
confirming Oral Instructions are not received by the Custodian prior
to a transaction, it shall in no way affect the validity of the
transaction or the authorization thereof by the Fund. If Oral
Instructions vary from the Written Instructions which purport to
confirm them, the Custodian shall notify the Fund of such variance
but such Oral Instructions will govern unless the Custodian has not
yet acted.
1.9 "Proper Instructions" shall mean Oral Instructions or Written
Instructions. Proper Instructions may be continuing Written
Instructions when deemed appropriate by both parties.
1.10 "Securities Depository" shall mean The Depository Trust Company and
(provided that Custodian shall have received a copy of a resolution
of the Board Of Trustees, certified by an Officer, specifically
approving the use of such clearing agency as a depository for the
Fund) any other clearing agency registered with the Securities and
Exchange Commission under Section 17A of the Securities and Exchange
Act of 1934 as amended (the "1934 Act"), which acts as a system for
the central handling of Securities where all Securities of any
particular class or series of an issuer deposited within the system
are treated as fungible and may be transferred or pledged by
bookkeeping entry without physical delivery of the Securities.
1.11 "Securities" shall include, without limitation, common and preferred
stocks, bonds, call options, put options, debentures, notes, bank
certificates of deposit,
-2-
<PAGE>
bankers' acceptances, mortgage-backed securities or other
obligations, and any certificates, receipts, warrants or other
instruments or documents representing rights to receive, purchase or
subscribe for the same, or evidencing or representing any other
rights or interests therein, or any similar property or assets that
the Custodian has the facilities to clear and to service.
1.12 "Shares" shall mean, with respect to a Fund, the units of beneficial
interest issued by the Fund on account of the Fund.
1.13 "Sub-Custodian" shall mean and include (i) any branch of a "U.S.
Bank," as that term is defined in Rule 17f-5 under the 1940 Act,
(ii) any "Eligible Foreign Custodian," as that term is defined in
Rule 17f-5 under the 1940 Act, having a contract with the Custodian
which the Custodian has determined will provide reasonable care of
assets of the Fund based on the standards specified in Section 3.3
below. Such contract shall include provisions that provide: (i) for
indemnification or insurance arrangements (or any combination of the
foregoing) such that the Funds will be adequately protected against
the risk of loss of assets held in accordance with such contract;
(ii) that the Fund's assets will not be subject to any right,
charge, security interest, lien or claim of any kind in favor of the
Sub-Custodian or its creditors except a claim of payment for their
safe custody or administration, in the case of cash deposits, liens
or rights in favor of creditors of the Sub-Custodian arising under
bankruptcy, insolvency, or similar laws; (iii) that beneficial
ownership for the Fund's assets will be freely transferable without
the payment of money or value other than for safe custody or
administration; (iv) that adequate records will be maintained
identifying the assets as belonging to the Fund or as being held by
a third party for the benefit of the Fund; (v) that the Fund's
independent public accountants will be given access to those records
or confirmation of the contents of those records; and (vi) that the
Fund will receive periodic reports with respect to the safekeeping
of the Fund's assets, including, but not limited to, notification of
any transfer to or from a Fund's account or a third party account
containing assets held for the benefit of the Fund. Such contract
may contain, in lieu of any or all of the provisions specified
above, such other provisions that the Custodian determines will
provide, in their entirety, the same or a greater level of care and
protection for Fund assets as the specified provisions, in their
entirety.
1.14 "Written Instructions" shall mean (i) written communications
actually received by the Custodian and signed by an Authorized
Person, or (ii) communications by telex or any other such system
from one or more persons reasonably believed by the Custodian to be
Authorized Persons, or (iii) communications between
electro-mechanical or electronic devices provided that the use of
such devices and the procedures for the use thereof shall have been
approved by resolutions of the
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Board Of Trustees, a copy of which, certified by an Officer, shall
have been delivered to the Custodian.
ARTICLE II
APPOINTMENT OF CUSTODIAN
2.1 Appointment. The Fund hereby constitutes and appoints the Custodian
as custodian of all Securities and cash owned by or in the
possession of the Fund at any time during the period of this
Agreement.
2.2 Acceptance. The Custodian hereby accepts appointment as such
custodian and agrees to perform the duties thereof as hereinafter
set forth.
2.3 Documents to be Furnished. The following documents, including any
amendments thereto, will be provided contemporaneously with the
execution of the Agreement to the Custodian by the Fund:
a. A copy of the Declaration of Trust certified by the
Secretary;
b. A copy of the Bylaws of the Trust certified by the
Secretary;
c. A copy of the resolution of the Board Of Trustees of the
Fund appointing the Custodian, certified by the
Secretary;
d. A copy of the then current Prospectus of the Fund; and
e. A certification of the Chairman and Secretary of the
Fund setting forth the names and signatures of the
current Officers of the Fund and other Authorized
Persons.
2.4 Notice of Appointment of Dividend and Transfer Agent. The Fund
agrees to notify the Custodian in writing of the appointment,
termination or change in appointment of any Dividend and Transfer
Agent of the Fund.
ARTICLE III
CUSTODY OF CASH AND SECURITIES
3.1 Segregation. All Securities and non-cash property held by the
Custodian for the account of the Fund (other than Securities
maintained in a Securities Depository or Book-Entry System) shall be
physically segregated from other Securities and non-cash property in
the possession of the Custodian and shall be identified as subject
to this Agreement.
3.2 Fund Custody Accounts. The Custodian shall open and maintain in its
Fund department a custody account in the name of the Fund coupled
with the name of the Fund, subject only to draft or order of the
Custodian, in which the Custodian shall enter and carry all
Securities, cash and other assets of such Fund which are delivered
to it.
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3.3 Appointment of Agents. (a) In its discretion, the Custodian may
appoint one or more Sub-Custodians to act as Securities Depositories
or as sub-custodians to hold Securities and cash of the Fund and to
carry out such other provisions of this Agreement as it may
determine, provided, however, that the appointment of any such
agents and maintenance of any Securities and cash of the Fund shall
be at the Custodian's expense and shall not relieve the Custodian of
any of its obligations or liabilities under this Agreement.
(b) If, after the initial approval of Sub-Custodians by the Board Of
Trustees in connection with this Agreement, the Custodian wishes to
appoint other Sub-Custodians to hold property of the Fund, it will
so notify the Company and provide it with information reasonably
necessary to determine any such new Sub-Custodian's eligibility
under Rule 17f-5 under the 1940 Act, including a copy of the
proposed agreement with such Sub-Custodian. The Fund shall at the
meeting of the Board Of Trustees next following receipt of such
notice and information give a written approval or disapproval of the
proposed action.
(c) The Agreement between the Custodian and each Sub-Custodian acting
hereunder shall contain the required provisions set forth in Rule
17f-5(a)(1)(iii).
(d) At the end of each calendar quarter, the Custodian shall provide
written reports notifying the Board of Trustees of the placement of
the Securities and cash of the Fund with a particular Sub-Custodian
and of any material changes in the Fund's arrangements. The
Custodian shall promptly take such steps as may be required to
withdraw assets of the Fund from any Sub-Custodian that has ceased
to meet the requirements of Rule 17f-5 under the 1940 Act.
(e) With respect to its responsibilities under this Section 3.3, the
Custodian hereby warrants to the Fund that it agrees to exercise
reasonable care, prudence and diligence such as a person having
responsibility for the safekeeping of property of the Fund. The
Custodian further warrants that a Fund's assets will be subject to
reasonable care, based on the standards applicable to custodians in
the relevant market, if maintained with each Sub-Custodian, after
considering all factors relevant to the safekeeping of such assets,
including, without limitation: (i) the Sub-Custodian's practices,
procedures, and internal controls, for certificated securities (if
applicable), the method of keeping custodial records, and the
security and data protection practices; (ii) whether the
Sub-Custodian has the requisite financial strength to provide
reasonable care for Fund assets; (iii) the Sub-Custodian's general
reputation and standing and, in the case of a Securities Depository,
the Securities Depository's operating history and number of
participants; and (iv) whether the Fund will have jurisdiction over
and be able to enforce judgments against the Sub-Custodian, such as
by virtue of the existence
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of any offices of the Sub-Custodian in the United States or the
Sub-Custodian's consent to service of process in the United States.
(f) The Custodian shall establish a system to monitor the
appropriateness of maintaining the Fund's assets with a particular
Sub-Custodian and the contract governing the Fund's arrangements
with such Sub-Custodian.
3.3 Delivery of Assets to Custodian. The Fund shall deliver, or cause to
be delivered, to the Custodian all of the Fund's Securities, cash
and other assets, including (a) all payments of income, payments of
principal and capital distributions received by the Fund with
respect to such Securities, cash or other assets owned by the Fund
at any time during the period of this Agreement, and (b) all cash
received by the Fund for the issuance, at any time during such
period, of Shares. The Custodian shall not be responsible for such
Securities, cash or other assets until actually received by it.
3.4 Securities Depositories and Book-Entry Systems. The Custodian may
deposit and/or maintain Securities of the Fund in a Securities
Depository or in a Book-Entry System, subject to the following
provisions:
(a) Prior to a deposit of Securities of the Fund in any Securities
Depository or Book-Entry System, the Fund shall deliver to the
Custodian a resolution of the Board Of Trustees, certified by an
Officer, authorizing and instructing the Custodian on an on-going
basis to deposit in such Securities Depository or Book-Entry System
all Securities eligible for deposit therein and to make use of such
Securities Depository or Book-Entry System to the extent possible
and practical in connection with its performance hereunder,
including, without limitation, in connection with settlements of
purchases and sales of Securities, loans of Securities, and
deliveries and returns of collateral consisting of Securities.
(b) Securities of the Fund kept in a Book-Entry System or Securities
Depository shall be kept in an account ("Depository Account") of the
Custodian in such Book-Entry System or Securities Depository which
includes only assets held by the Custodian as a fiduciary, custodian
or otherwise for customers.
(c) The records of the Custodian with respect to Securities of the Fund
maintained in a Book-Entry System or Securities Depository shall, by
book-entry, identify such Securities as belonging to the Fund.
(d) If Securities purchased by the Fund are to be held in a Book-Entry
System or Securities Depository, the Custodian shall pay for such
Securities upon (i) receipt of advice from the Book-Entry System or
Securities Depository that such Securities have been transferred to
the Depository Account, and (ii) the making of
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an entry on the records of the Custodian to reflect such payment and
transfer for the account of such Fund. If Securities sold by the
Fund are held in a Book-Entry System or Securities Depository, the
Custodian shall transfer such Securities upon (i) receipt of advice
from the Book-Entry System or Securities Depository that payment for
such Securities has been transferred to the Depository Account, and
(ii) the making of an entry on the records of the Custodian to
reflect such transfer and payment for the account of the Fund.
(e) The Custodian shall provide the Fund with copies of any report
(obtained by the Custodian from a Book-Entry System or Securities
Depository in which Securities of the Fund are kept) on the internal
accounting controls and procedures for safeguarding Securities
deposited in such Book-Entry System or Securities Depository.
(f) Anything to the contrary in this Agreement notwithstanding, the
Custodian shall be liable to the Fund for any loss or damage to the
Fund resulting (i) from the use of a Book-Entry System or Securities
Depository by reason of any negligence or willful misconduct on the
part of Custodian or any Sub-Custodian appointed pursuant to Section
3.3 above or any of its or their employees, or (ii) from failure of
Custodian or any such Sub-Custodian to enforce effectively such
rights as it may have against a Book-Entry System or Securities
Depository. At its election, the Fund shall be subrogated to the
rights of the Custodian with respect to any claim against a
Book-Entry System or Securities Depository or any other person from
any loss or damage to the Fund arising from the use of such
Book-Entry System or Securities Depository, if and to the extent
that the Fund has not been made whole for any such loss or damage.
3.5 Disbursement of Moneys from Fund Custody Account. Upon receipt of
Proper Instructions, the Custodian shall disburse moneys from the
Fund Custody Account but only in the following cases:
(a) For the purchase of Securities for the Fund but only in
accordance with Section 4.1 of this Agreement and only (i) in
the case of Securities (other than options on Securities,
futures contracts and options on futures contracts), against
the delivery to the Custodian (or any Sub-Custodian appointed
pursuant to Section 3.3 above) of such Securities registered
as provided in Section 3.9 below or in proper form for
transfer, or if the purchase of such Securities is effected
through a Book-Entry System or Securities Depository, in
accordance with the conditions set forth in Section 3._ above;
(ii) in the case of options on Securities, against delivery to
the Custodian (or such Sub-Custodian) of such receipts as are
required by the customs prevailing among dealers in such
options; (iii) in the case of futures contracts and options on
futures contracts, against delivery to
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the Custodian (or such Sub-Custodian) of evidence of title
thereto in favor of the Fund or any nominee referred to in
Section 3._ below; and (iv) in the case of repurchase or
reverse repurchase agreements entered into between the Fund
and a bank which is a member of the Federal Reserve System or
between the Fund and a primary dealer in U.S. Government
securities, against delivery of the purchased Securities
either in certificate form or through an entry crediting the
Custodian's account at a Book-Entry System or Securities
Depository with such Securities;
(b) In connection with the conversion, exchange or surrender, as
set forth in Section 3.6(f) below, of Securities owned by the
Fund;
(c) For the payment of any dividends or capital gain distributions
declared by the Fund;
(d) In payment of the redemption price of Shares as provided in
Section 5.1 below;
(e) For the payment of any expense or liability incurred by the
Fund, including but not limited to the following payments for
the account of the Fund: interest; taxes; administration,
investment advisory, accounting, auditing, transfer agent,
custodian, Trustee and legal fees; and other operating
expenses of the Fund; in all cases, whether or not such
expenses are to be in whole or in part capitalized or treated
as deferred expenses;
(f) For transfer in accordance with the provisions of any
agreement among the Fund, the Custodian and a broker-dealer
registered under the 1934 Act and a member of the NASD,
relating to compliance with rules of The Options Clearing
Corporation and of any registered national securities exchange
(or of any similar organization or organizations) regarding
escrow or other arrangements in connection with transactions
by the Fund;
(g) For transfer in accordance with the provision of any agreement
among the Fund, the Custodian, and a futures commission
merchant registered under the Commodity Exchange Act, relating
to compliance with the rules of the Commodity Futures Trading
Commission and/or any contract market (or any similar
organization or organizations) regarding account deposits in
connection with transactions by the Fund;
(h) For the funding of any uncertificated time deposit or other
interest-bearing account with any banking institution
(including the Custodian), which deposit or account has a term
of one year or less; and
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(i) For any other proper purpose, but only upon receipt, in
addition to Proper Instructions, of a copy of a resolution of
the Board Of Trustees, certified by an Officer, specifying the
amount and purpose of such payment, declaring such purpose to
be a proper corporate purpose, and naming the person or
persons to whom such payment is to be made.
3.6 Delivery of Securities from Fund Custody Account. Upon receipt of
Proper Instructions, the Custodian shall release and deliver
Securities from the Fund Custody Account but only in the following
cases:
(a) Upon the sale of Securities for the account of the Fund but
only against receipt of payment therefor in cash, by certified
or cashiers check or bank credit;
(b) In the case of a sale effected through a Book-Entry System or
Securities Depository, in accordance with the provisions of
Section 3._ above;
(c) To an offeror's depository agent in connection with tender or
other similar offers for Securities of the Fund; provided
that, in any such case, the cash or other consideration is to
be delivered to the Custodian;
(d) To the issuer thereof or its agent (i) for transfer into the
name of the Fund, the Custodian or any Sub-Custodian appointed
pursuant to Section 3.3 above, or of any nominee or nominees
of any of the foregoing, or (ii) for exchange for a different
number of certificates or other evidence representing the same
aggregate face amount or number of units; provided that, in
any such case, the new Securities are to be delivered to the
Custodian;
(e) To the broker selling Securities, for examination in
accordance with the "street delivery" custom;
(f) For exchange or conversion pursuant to any plan or merger,
consolidation, recapitalization, reorganization or
readjustment of the issuer of such Securities, or pursuant to
provisions for conversion contained in such Securities, or
pursuant to any deposit agreement, including surrender or
receipt of underlying Securities in connection with the
issuance or cancellation of depository receipts; provided
that, in any such case, the new Securities and cash, if any,
are to be delivered to the Custodian;
(g) Upon receipt of payment therefor pursuant to any repurchase or
reverse repurchase agreement entered into by the Fund;
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(h) In the case of warrants, rights or similar Securities, upon
the exercise thereof, provided that, in any such case, the new
Securities and cash, if any, are to be delivered to the
Custodian;
(i) For delivery in connection with any loans of Securities of the
Fund, but only against receipt of such collateral as the Fund
shall have specified to the Custodian in Proper Instructions;
(j) For delivery as security in connection with any borrowings by
the Fund requiring a pledge of assets by the Fund, but only
against receipt by the Custodian of the amounts borrowed;
(k) Pursuant to any authorized plan of liquidation,
reorganization, merger, consolidation or recapitalization of
the Fund;
(l) For delivery in accordance with the provisions of any
agreement among the Fund, the Custodian and a broker-dealer
registered under the 1934 Act and a member of the NASD,
relating to compliance with the rules of The Options Clearing
Corporation and of any registered national securities exchange
(or of any similar organization or organizations) regarding
escrow or other arrangements in connection with transactions
by the Fund;
(m) For delivery in accordance with the provisions of any
agreement among the Fund, the Custodian, and a futures
commission merchant registered under the Commodity Exchange
Act, relating to compliance with the rules of the Commodity
Futures Trading Commission and/or any contract market (or any
similar organization or organizations) regarding account
deposits in connection with transactions by the Fund; or
(n) For any other proper corporate purpose, but only upon receipt,
in addition to Proper Instructions, of a copy of a resolution
of the Board Of Trustees, certified by an Officer, specifying
the Securities to be delivered, setting forth the purpose for
which such delivery is to be made, declaring such purpose to
be a proper corporate purpose, and naming the person or
persons to whom delivery of such Securities shall be made.
3.7 Actions Not Requiring Proper Instructions. Unless otherwise
instructed by the Company, the Custodian shall with respect to all
Securities held for the Fund:
(a) Subject to Section 7.4 below, collect on a timely basis all
income and other payments to which the Fund is entitled either
by law or pursuant to custom in the securities business;
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(b) Present for payment and, subject to Section 7.4 below, collect
on a timely basis the amount payable upon all Securities which
may mature or be called, redeemed, or retired, or otherwise
become payable;
(c) Endorse for collection, in the name of the Fund, checks,
drafts and other negotiable instruments;
(d) Surrender interim receipts or Securities in temporary form for
Securities in definitive form;
(e) Execute, as custodian, any necessary declarations or
certificates of ownership under the federal income tax laws or
the laws or regulations of any other taxing authority now or
hereafter in effect, and prepare and submit reports to the
Internal Revenue Service ("IRS") and to the Fund at such time,
in such manner and containing such information as is
prescribed by the IRS;
(f) Hold for the Fund, either directly or, with respect to
Securities held therein, through a Book-Entry System or
Securities Depository, all rights and similar securities
issued with respect to Securities of the Fund; and
(g) In general, and except as otherwise directed in Proper
Instructions, attend to all non-discretionary details in
connection with the sale, exchange, substitution, purchase,
transfer and other dealings with Securities and assets of the
Fund.
3.8 Registration and Transfer of Securities. All Securities held for the
Fund that are issued or issuable only in bearer form shall be held
by the Custodian in that form, provided that any such Securities
shall be held in a Book-Entry System if eligible therefor. All other
Securities held for the Fund may be registered in the name of the
Fund, the Custodian, or any Sub-Custodian appointed pursuant to
Section 3.3 above, or in the name of any nominee of any of them, or
in the name of a Book-Entry System, Securities Depository or any
nominee of either thereof. The Fund shall furnish to the Custodian
appropriate instruments to enable the Custodian to hold or deliver
in proper form for transfer, or to register in the name of any of
the nominees hereinabove referred to or in the name of a Book-Entry
System or Securities Depository, any Securities registered in the
name of the Fund.
3.9 Records.
(a) The Custodian shall maintain, by Fund, complete and accurate
records with respect to Securities, cash or other property
held for the Fund, including (i) journals or other records of
original entry containing an
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itemized daily record in detail of all receipts and deliveries
of Securities and all receipts and disbursements of cash; (ii)
ledgers (or other records) reflecting (A) Securities in
transfer, (B) Securities in physical possession, (C) monies
and Securities borrowed and monies and Securities loaned
(together with a record of the collateral therefor and
substitutions of such collateral), (D) dividends and interest
received, and (E) dividends receivable and interest
receivable; and (iii) canceled checks and bank records related
thereto. The Custodian shall keep such other books and records
of the Fund as the Fund shall reasonably request, or as may be
required by the 1940 Act, including, but not limited to,
Section 31 of the 1940 Act and Rule 31a-2 promulgated
thereunder.
(b) All such books and records maintained by the Custodian shall
(i) be maintained in a form acceptable to the Fund and in
compliance with rules and regulations of the Securities and
Exchange Commission, (ii) be the property of the Fund and at
all times during the regular business hours of the Custodian
be made available upon request for inspection by duly
authorized officers, employees or agents of the Fund and
employees or agents of the Securities and Exchange Commission,
and (iii) if required to be maintained by Rule 31a-1 under the
1940 Act, be preserved for the periods prescribed in Rule
31a-2 under the 1940 Act.
3.10 Fund Reports by Custodian. The Custodian shall furnish the Fund with
a daily activity statement and a summary of all transfers to or from
each Fund Custody Account on the day following such transfers. At
least monthly and from time to time, the Custodian shall furnish the
Fund with a detailed statement of the Securities and moneys held by
the Custodian and the Sub-Custodians for the Fund under this
Agreement.
3.11 Other Reports by Custodian. The Custodian shall provide the Fund
with such reports, as the Fund may reasonably request from time to
time, on the internal accounting controls and procedures for
safeguarding Securities, which are employed by the Custodian or any
Sub-Custodian appointed pursuant to Section 3.3 above.
3.12 Proxies and Other Materials. The Custodian shall cause all proxies
relating to Securities which are not registered in the name of the
Fund, to be promptly executed by the registered holder of such
Securities, without indication of the manner in which such proxies
are to be voted, and shall promptly deliver to the Fund such
proxies, all proxy soliciting materials and all notices relating to
such Securities.
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3.13 Information on Corporate Actions. The Custodian shall promptly
deliver to the Fund all information received by the Custodian and
pertaining to Securities being held by the Fund with respect to
optional tender or exchange offers, calls for redemption or
purchase, or expiration of rights as described in the Standards of
Service Guide attached as Exhibit B. If the Fund desires to take
action with respect to any tender offer, exchange offer or other
similar transaction, the Fund shall notify the Custodian at least
five Business Days prior to the date on which the Custodian is to
take such action. The Fund will provide or cause to be provided to
the Custodian all relevant information for any Security which has
unique put/option provisions at least five Business Days prior to
the beginning date of the tender period.
ARTICLE IV
PURCHASE AND SALE OF INVESTMENTS OF THE FUND
4.1 Purchase of Securities. Promptly upon each purchase of Securities
for the Fund, Written Instructions shall be delivered to the
Custodian, specifying (a) the name of the issuer or writer of such
Securities, and the title or other description thereof, (b) the
number of shares, principal amount (and accrued interest, if any) or
other units purchased, (c) the date of purchase and settlement, (d)
the purchase price per unit, (e) the total amount payable upon such
purchase, and (f) the name of the person to whom such amount is
payable. The Custodian shall upon receipt of such Securities
purchased by the Fund pay out of the moneys held for the account of
a Fund the total amount specified in such Written Instructions to
the person named therein. The Custodian shall not be under any
obligation to pay out moneys to cover the cost of a purchase of
Securities for the Fund, if in the Fund Custody Account there is
insufficient cash available to the Fund for which such purchase was
made.
4.2 Liability for Payment in Advance of Receipt of Securities Purchased.
In any and every case where payment for the purchase of Securities
for the Fund is made by the Custodian in advance of receipt of the
Securities purchased but in the absence of specified Written
Instructions to so pay in advance, the Custodian shall be liable to
the Fund for such Securities to the same extent as if the Securities
had been received by the Custodian.
4.3 Sale of Securities. Promptly upon each sale of Securities by the
Fund, Written Instructions shall be delivered to the Custodian,
specifying (a) the name of the issuer or writer of such Securities,
and the title or other description thereof, (b) the number of
shares, principal amount (and accrued interest, if any), or other
units sold, (c) the date of sale and settlement, (d) the sale price
per unit, (e) the total amount payable upon such sale, and (f) the
person to whom such Securities are to be delivered. Upon receipt of
the total amount payable to the Fund as specified in such Written
Instructions, the Custodian shall deliver such Securities to the
person specified in
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such Written Instructions. Subject to the foregoing, the Custodian
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.
4.4 Delivery of Securities Sold. Notwithstanding Section 4.3 above or
any other provision of this Agreement, the Custodian, when
instructed to deliver Securities against payment, shall be entitled,
if in accordance with generally accepted market practice, to deliver
such Securities prior to actual receipt of final payment therefor.
In any such case, the Fund shall bear the risk that final payment
for such Securities may not be made or that such Securities may be
returned or otherwise held or disposed of by or through the person
to whom they were delivered, and the Custodian shall have no
liability for any for the foregoing.
4.5 Payment for Securities Sold, etc. In its sole discretion and from
time to time, the Custodian may credit the Fund Custody Account,
prior to actual receipt of final payment thereof, with (i) proceeds
from the sale of Securities which it has been instructed to deliver
against payment, (ii) proceeds from the redemption of Securities or
other assets of the Fund, and (iii) income from cash, Securities or
other assets of the Fund. Any such credit shall be conditional upon
actual receipt by Custodian of final payment and may be reversed if
final payment is not actually received in full. The Custodian may,
in its sole discretion and from time to time, permit the Fund to use
funds so credited to the Fund Custody Account in anticipation of
actual receipt of final payment. Any such funds shall be repayable
immediately upon demand made by the Custodian at any time prior to
the actual receipt of all final payments in anticipation of which
funds were credited to the Fund Custody Account.
4.6 Advances by Custodian for Settlement. The Custodian may, in its sole
discretion and from time to time, advance funds to the Fund to
facilitate the settlement of transactions in the Fund Custody
Account. Any such advance shall be repayable immediately upon demand
made by Custodian.
ARTICLE V
REDEMPTION OF FUND SHARES
5.1 Transfer of Funds. From such funds as may be available for the
purpose in the relevant Fund Custody Account, and upon receipt of
Proper Instructions specifying that the funds are required to redeem
Shares of the Fund, the Custodian shall wire each amount specified
in such Proper Instructions to or through such bank as the Fund may
designate with respect to such amount in such Proper Instructions.
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5.2 No Duty Regarding Paying Banks. The Custodian shall not be under any
obligation to effect payment or distribution by any bank designated
in Proper Instructions given pursuant to Section 5.1 above of any
amount paid by the Custodian to such bank in accordance with such
Proper Instructions.
ARTICLE VI
SEGREGATED ACCOUNTS
Upon receipt of Proper Instructions, the Custodian shall establish and
maintain a segregated account or accounts for and on behalf of the Fund, into
which account or accounts may be transferred cash and/or Securities, including
Securities maintained in a Depository Account,
(a) in accordance with the provisions of any agreement among the
Fund, the Custodian and a broker-dealer registered under the
1934 Act and a member of the NASD (or any futures commission
merchant registered under the Commodity Exchange Act),
relating to compliance with the rules of The Options Clearing
Company and of any registered national securities exchange (or
the Commodity Futures Trading Commission or any registered
contract market), or of any similar organization or
organizations, regarding escrow or other arrangements in
connection with transactions by the Fund,
(b) for purposes of segregating cash or Securities in connection
with securities options purchased or written by the Fund or in
connection with financial futures contracts (or options
thereon) purchased or sold by the Fund,
(c) which constitute collateral for loans of Securities made by
the Fund,
(d) for purposes of compliance by the Fund with requirements under
the 1940 Act for the maintenance of segregated accounts by
registered investment companies in connection with reverse
repurchase agreements and when-issued, delayed delivery and
firm commitment transactions, and
(e) for other proper corporate purposes, but only upon receipt of,
in addition to Proper Instructions, a certified copy of a
resolution of the Board Of Trustees, certified by an Officer,
setting forth the purpose or purposes of such segregated
account and declaring such purposes to be proper corporate
purposes.
Each segregated account established under this Article VI shall be
established and maintained for a single Fund only. All Proper Instructions
relating to a segregated account shall specify the Fund involved.
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ARTICLE VII
CONCERNING THE CUSTODIAN
7.1 Standard of Care. The Custodian shall be held to the exercise
of reasonable care in carrying out its obligations under this
Agreement, and shall be without liability to the Fund for any
loss, damage, cost, expense (including attorneys' fees and
disbursements), liability or claim unless such loss, damage,
cost, expense, liability or claim arises from negligence, bad
faith or willful misconduct on its part or on the part of any
Sub-Custodian appointed pursuant to Section 3.3 above. The
Custodian shall be entitled to rely on and may act upon advice
of counsel on all matters, and shall be without liability for
any action reasonably taken or omitted pursuant to such
advice. The Custodian shall promptly notify the Fund of any
action taken or omitted by the Custodian pursuant to advice of
counsel. The Custodian shall not be under any obligation at
any time to ascertain whether the Fund is in compliance with
the 1940 Act, the regulations thereunder, the provisions of
the Fund's charter documents or by-laws, or its investment
objectives and policies as then in effect.
7.2 Actual Collection Required. The Custodian shall not be liable
for, or considered to be the custodian of, any cash belonging
to the Fund or any money represented by a check, draft or
other instrument for the payment of money, until the Custodian
or its agents actually receive such cash or collect on such
instrument.
7.3 No Responsibility for Title, etc. So long as and to the extent
that it is in the exercise of reasonable care, the Custodian
shall not be responsible for the title, validity or
genuineness of any property or evidence of title thereto
received or delivered by it pursuant to this Agreement.
7.4 Limitation on Duty to Collect. Custodian shall not be required
to enforce collection, by legal means or otherwise, of any
money or property due and payable with respect to Securities
held for the Fund if such Securities are in default or payment
is not made after due demand or presentation.
7.5 Reliance Upon Documents and Instructions. The Custodian shall
be entitled to rely upon any certificate, notice or other
instrument in writing received by it and reasonably believed
by it to be genuine. The Custodian shall be entitled to rely
upon any Oral Instructions and any Written Instructions
actually received by it pursuant to this Agreement.
7.6 Express Duties Only. The Custodian shall have no duties or
obligations whatsoever except such duties and obligations as
are specifically set forth in this
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Agreement, and no covenant or obligation shall be implied in
this Agreement against the Custodian.
7.7 Co-operation. The Custodian shall cooperate with and supply
necessary information to the entity or entities appointed by
the Fund to keep the books of account of the Fund and/or
compute the value of the assets of the Fund. The Custodian
shall take all such reasonable actions as the Fund may from
time to time request to enable the Fund to obtain, from year
to year, favorable opinions from the Fund's independent
accountants with respect to the Custodian's activities
hereunder in connection with (a) the preparation of the Fund's
reports on Form N-1A and Form N-SAR and any other reports
required by the Securities and Exchange Commission, and (b)
the fulfillment by the Fund of any other requirements of the
Securities and Exchange Commission.
ARTICLE VIII
INDEMNIFICATION
8.1 Indemnification by Fund. The Fund shall indemnify and hold
harmless the Custodian and any Sub-Custodian appointed
pursuant to Section 3.3 above, and any nominee of the
Custodian or of such Sub-Custodian, from and against any loss,
damage, cost, expense (including attorneys' fees and
disbursements), liability (including, without limitation,
liability arising under the Securities Act of 1933, the 1934
Act, the 1940 Act, and any state or foreign securities and/or
banking laws) or claim arising directly or indirectly (a) from
the fact that Securities are registered in the name of any
such nominee, or (b) from any action or inaction by the
Custodian or such Sub-Custodian (i) at the request or
direction of or in reliance on the advice of the Fund, or (ii)
upon Proper Instructions, or (c) generally, from the
performance of its obligations under this Agreement or any
sub-custody agreement with a Sub-Custodian appointed pursuant
to Section 3.3 above, provided that neither the Custodian nor
any such Sub-Custodian shall be indemnified and held harmless
from and against any such loss, damage, cost, expense,
liability or claim arising from the Custodian's or such
Sub-Custodian's negligence, bad faith or willful misconduct.
8.2 Indemnification by Custodian. The Custodian shall indemnify
and hold harmless the Fund from and against any loss, damage,
cost, expense (including attorneys' fees and disbursements),
liability (including without limitation, liability arising
under the Securities Act of 1933, the 1934 Act, the 1940 Act,
and any state or foreign securities and/or banking laws) or
claim arising from the negligence, bad faith or willful
misconduct of the Custodian or any Sub-Custodian appointed
pursuant to Section 3.3 above, or any nominee of the Custodian
or of such Sub-Custodian.
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<PAGE>
8.3 Indemnity to be Provided. If the Fund requests the Custodian
to take any action with respect to Securities, which may, in
the opinion of the Custodian, result in the Custodian or its
nominee becoming liable for the payment of money or incurring
liability of some other form, the Custodian shall not be
required to take such action until the Fund shall have
provided indemnity therefor to the Custodian in an amount and
form satisfactory to the Custodian.
8.4 Security. If the Custodian advances cash or Securities to the
Fund for any purpose, either at the Fund's request or as
otherwise contemplated in this Agreement, or in the event that
the Custodian or its nominee incurs, in connection with its
performance under this Agreement, any loss, damage, cost,
expense (including attorneys' fees and disbursements),
liability or claim (except such as may arise from its or its
nominee's negligence, bad faith or willful misconduct), then,
in any such event, any property at any time held for the
account of such Fund shall be security therefor, and should
the Fund fail promptly to repay or indemnify the Custodian,
the Custodian shall be entitled to utilize available cash of
such Fund and to dispose of other assets of such Fund to the
extent necessary to obtain reimbursement or indemnification.
ARTICLE IX
FORCE MAJEURE
Neither the Custodian nor the Fund shall be liable for any failure or
delay in performance of its obligations under this Agreement arising out of or
caused, directly or indirectly, by circumstances beyond its reasonable control,
including, without limitation, acts of God; earthquakes; fires; floods; wars;
civil or military disturbances; sabotage; strikes; epidemics; riots; power
failures; computer failure and any such circumstances beyond its reasonable
control as may cause interruption, loss or malfunction of utility,
transportation, computer (hardware or software) or telephone communication
service; accidents; labor disputes; acts of civil or military authority;
governmental actions; or inability to obtain labor, material, equipment or
transportation; provided, however, that the Custodian in the event of a failure
or delay (i) shall not discriminate against the Fund in favor of any other
customer of the Custodian in making computer time and personnel available to
input or process the transactions contemplated by this Agreement and (ii) shall
use its best efforts to ameliorate the effects of any such failure or delay.
ARTICLE X
EFFECTIVE PERIOD; TERMINATION
10.1 Effective Period. This Agreement shall become effective as of its
execution and shall continue in full force and effect until
terminated as hereinafter provided.
10.2 Termination. Either party hereto may terminate this Agreement by
giving to the other party a notice in writing specifying the date of
such termination, which shall
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be not less than sixty (60) days after the date of the giving of
such notice. If a successor custodian shall have been appointed by
the Board Of Trustees, the Custodian shall, upon receipt of a notice
of acceptance by the successor custodian, on such specified date of
termination (a) deliver directly to the successor custodian all
Securities (other than Securities held in a Book-Entry System or
Securities Depository) and cash then owned by the Fund and held by
the Custodian as custodian, and (b) transfer any Securities held in
a Book-Entry System or Securities Depository to an account of or for
the benefit of the Fund at the successor custodian, provided that
the Fund shall have paid to the Custodian all fees, expenses and
other amounts to the payment or reimbursement of which it shall then
be entitled. Upon such delivery and transfer, the Custodian shall be
relieved of all obligations under this Agreement. The Fund may at
any time immediately terminate this Agreement in the event of the
appointment of a conservator or receiver for the Custodian by
regulatory authorities or upon the happening of a like event at the
direction of an appropriate regulatory agency or court of competent
jurisdiction.
10.3 Failure to Appoint Successor Custodian. If a successor custodian is
not designated by the Fund on or before the date of termination
specified pursuant to Section 10.1 above, then the Custodian shall
have the right to deliver to a bank or corporation or company of its
own selection, which (a) is a "bank" as defined in the 1940 Act and
(b) has aggregate capital, surplus and undivided profits as shown on
its then most recent published report of not less than $25 million,
all Securities, cash and other property held by Custodian under this
Agreement and to transfer to an account of or for the Fund at such
bank or company all Securities of the Fund held in a Book-Entry
System or Securities Depository. Upon such delivery and transfer,
such bank or company shall be the successor custodian under this
Agreement and the Custodian shall be relieved of all obligations
under this Agreement.
ARTICLE XI
COMPENSATION OF CUSTODIAN
The Custodian shall be entitled to compensation as agreed upon from time
to time by the Fund and the Custodian. The fees and other charges in effect on
the date hereof and applicable to the Fund are set forth in Exhibit C attached
hereto.
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<PAGE>
ARTICLE XII
LIMITATION OF LIABILITY
It is expressly agreed that the obligations of the Fund hereunder shall
not be binding upon any of the Trustees, shareholders, nominees, officers,
agents or employees of the Fund personally, but shall bind only the property of
the Fund as provided in the Fund's Agreement and Declaration of Trust, as from
time to time amended. The execution and delivery of this Agreement have been
authorized by the Trustees, and this Agreement has been signed and delivered by
an authorized officer of the Fund, acting as such, and neither such
authorization by the Trustees nor such execution and delivery by such officer
shall be deemed to have been made by any of them individually or to impose any
liability on any of them personally, but shall bind only the corporation
property of the Fund as provided in the above-mentioned Agreement and
Declaration of Trust.
ARTICLE XIII
NOTICES
Unless otherwise specified herein, all demands, notices, instructions, and
other communications to be given hereunder shall be in writing and shall be sent
or delivered to the recipient at the address set forth after its name
hereinbelow:
To the Fund:
------------
Gintel Fund
6 Greenwich Office Park
Greenwich, CT 06831-5197
Attention: Stephen Stavrides
To Custodian:
-------------
Firstar Bank, N.A.
425 Walnut Street, M.L. CN-WN-06TC
Cincinnati, Ohio 45202
Attention: Mutual Fund Custody Services
Telephone: (513) 632_____
Facsimile: (513) 632-3299
or at such other address as either party shall have provided to the other by
notice given in accordance with this Article XIII. Writing shall include
transmissions by or through teletype, facsimile, central processing unit
connection, on-line terminal and magnetic tape.
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<PAGE>
ARTICLE XIV
MISCELLANEOUS
14.1 Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of Ohio.
14.2 References to Custodian. The Fund shall not circulate any printed
matter which contains any reference to Custodian without the prior
written approval of Custodian, excepting printed matter contained in
the prospectus or statement of additional information for the Fund
and such other printed matter as merely identifies Custodian as
custodian for the Fund. The Fund shall submit printed matter
requiring approval to Custodian in draft form, allowing sufficient
time for review by Custodian and its counsel prior to any deadline
for printing.
14.3 No Waiver. No failure by either party hereto to exercise, and no
delay by such party in exercising, any right hereunder shall operate
as a waiver thereof. The exercise by either party hereto of any
right hereunder shall not preclude the exercise of any other right,
and the remedies provided herein are cumulative and not exclusive of
any remedies provided at law or in equity.
14.4 Amendments. This Agreement cannot be changed orally and no amendment
to this Agreement shall be effective unless evidenced by an
instrument in writing executed by the parties hereto.
14.5 Counterparts. This Agreement may be executed in one or more
counterparts, and by the parties hereto on separate counterparts,
each of which shall be deemed an original but all of which together
shall constitute but one and the same instrument.
14.6 Severability. If any provision of this Agreement shall be invalid,
illegal or unenforceable in any respect under any applicable law,
the validity, legality and enforceability of the remaining
provisions shall not be affected or impaired thereby.
14.7 Successors and Assigns. This Agreement shall be binding upon and
shall inure to the benefit of the parties hereto and their
respective successors and assigns; provided, however, that this
Agreement shall not be assignable by either party hereto without the
written consent of the other party hereto.
14.8 Headings. The headings of sections in this Agreement are for
convenience of reference only and shall not affect the meaning or
construction of any provision of this Agreement.
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<PAGE>
IN WITNESS WHEREOF, each of the parties hereto has caused this Agreement
to be executed and delivered in its name and on its behalf by its
representatives thereunto duly authorized, all as of the day and year first
above written.
ATTEST: GINTEL FUND
______________________________ By:_____________________________
Print:__________________________ Print:____________________________
Title:__________________________ Title:_____________________________
Date:__________________________ Date:_____________________________
ATTEST: FIRSTAR BANK, N.A.
______________________________ By:________________________________
Print:_________________________ Print:_______________________________
Title:_________________________ Title:_______________________________
Date:_________________________ Date:_______________________________
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<PAGE>
EXHIBIT A
AUTHORIZED PERSONS
Set forth below are the names and specimen signatures of the persons
authorized by the Fund to administer the Fund Custody Accounts.
Authorized Persons Specimen Signatures
- ------------------ -------------------
President: ___________________
Secretary: ___________________
Treasurer: ___________________
Vice President: ___________________
Adviser Employees: ___________________
Transfer Agent/Fund Accountant
Employees: ___________________
___________________
___________________
___________________
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<PAGE>
EXHIBIT B
Firstar Bank, N.A.
Standards of Service Guide
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<PAGE>
EXHIBIT C
Firstar Bank, N.A.
Domestic Custody Fee Schedule
Firstar Bank, N.A., as Custodian, will receive monthly compensation for services
according to the terms of the following Schedule:
Custody Services
Annual Fee Schedule - Domestic Funds
o Annual Fee based upon market value
o 1 basis point per year
o Minimum annual fee per fund - $3,000
o Investment transactions (purchase, sale, exchange, tender, redemption,
maturity, receipt, delivery):
o $12.00 per book entry security (depository or Federal Reserve system)
o $25.00 per definitive security (physical)
o $25.00 per mutual fund trade
o $75.00 per Euroclear
o $8.00 per principal reduction on pass-through certificates
o $6.00 per short sale/liability transaction
o $35.00 per option/futures contract
o $15.00 per variation margin
o $15.00 per Fed wire deposit or withdrawal
o Variable Amount Demand Notes: Used as a short-term investment, variable
amount notes offer safety and prevailing high interest rates. Our charge,
which is 1/4 of 1%, is deducted from the variable amount note income at
the time it is credited to your account.
o Plus out-of-pocket expenses, and extraordinary expenses based upon
complexity
o Fees are billed monthly, based upon market value at the beginning of the
month
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FORM OF
TRANSFER AGENT SERVICING AGREEMENT
THIS AGREEMENT is made and entered into as of this fourteenth day of April,
2000, by and between Gintel Fund a Massachusetts business trust organized under
the laws of the Commonwealth of Massachusetts (hereinafter referred to as the
"Fund") and Firstar Mutual Fund Services, LLC, a limited liability company
organized under the laws of the State of Wisconsin (hereinafter referred to as
"FMFS").
WHEREAS, the Fund is a registered investment company under the
Investment Company Act of 1940;
WHEREAS, FMFS is in the business of providing, among other things, transfer
agent and dividend disbursing agent services to investment companies; and
WHEREAS, the Fund desires to retain FMFS to provide transfer agent
services.
NOW, THEREFORE, in consideration of the mutual agreements herein made, the
Fund and FMFS agree as follows:
1. Appointment of Transfer Agent
The Fund hereby appoints FMFS as Transfer Agent on the terms and
conditions set forth in this Agreement, and FMFS hereby accepts such appointment
and agrees to perform the services and duties set forth in this Agreement in
consideration of the compensation provided for herein.
2. Duties and Responsibilities of FMFS
FMFS shall perform all of the customary services of a transfer agent and
dividend disbursing agent, and as relevant, agent in connection with
accumulation, open account or similar plans (including without limitation any
periodic investment plan or periodic withdrawal program), including but not
limited to:
A. Receive orders for the purchase of shares;
B. Process purchase orders with prompt delivery, where appropriate, of
payment and supporting documentation to the Fund's custodian, and
issue the appropriate number of uncertificated shares with such
uncertificated shares being held in the appropriate shareholder
account;
<PAGE>
Page 2
C. Arrange for issuance of Shares obtained through transfers of funds
from Shareholders' accounts at financial institutions and arrange
for the exchange of Shares for shares of other eligible investment
companies, when permitted by Prospectus.
D. Process redemption requests received in good order and, where
relevant, deliver appropriate documentation to the Fund's custodian;
E. Pay monies upon receipt from the Fund's custodian, where relevant,
in accordance with the instructions of redeeming shareholders;
F. Process transfers of shares in accordance with the shareholder's
instructions;
G. Process exchanges between funds and/or classes of shares of funds;
H. Prepare and transmit payments for dividends and distributions
declared by the Fund, after deducting any amount required to be
withheld by any applicable laws, rules and regulations and in
accordance with shareholder instructions;
I. Make changes to shareholder records, including, but not limited to,
address changes in plans (i.e., systematic withdrawal, automatic
investment, dividend reinvestment, etc.);
J. Record the issuance of shares of the Fund and maintain, pursuant to
Rule 17ad-10(e) promulgated under the Securities Exchange Act of
1934, as amended (the "Exchange Act"), a record of the total number
of shares of the Fund which are authorized, issued and outstanding;
K. Prepare shareholder meeting lists and, if applicable, mail, receive
and tabulate proxies;
L. Mail shareholder reports and prospectuses to current shareholders;
M. Prepare and file U.S. Treasury Department Forms 1099 and other
appropriate information returns required with respect to dividends
and distributions for all shareholders;
N. Provide shareholder account information upon request and prepare and
mail confirmations and statements of account to shareholders for all
purchases, redemption's and other confirmable transactions as agreed
upon with the Company;
O. Mail requests for shareholders' certifications under penalties of
perjury and pay on a timely basis to the appropriate Federal
authorities any taxes to be withheld on dividends and distributions
paid by the Fund, all as required by applicable Federal tax laws and
regulations;
P. Provide a Blue Sky System, which will enable the Fund to monitor the
total number of shares sold in each state. In addition, the Fund or
its agent, including FMFS, shall
<PAGE>
Page 3
identify to FMFS in writing those transactions and assets to be
treated as exempt from the Blue Sky reporting for each state. The
responsibility of FMFS for the Company's Blue Sky state registration
status is solely limited to the initial compliance by the Company
and the reporting of such transactions to the Company or its agent;
Q. Answer correspondence from shareholders, securities brokers and
others relating to FMFS's duties hereunder and such other
correspondence as may from time to time be mutually agreed upon
between FMFS and the Fund.
Reimburse the Fund each month for all material losses resulting from "as
of" processing errors for which FMFS is responsible in accordance with the "as
of" processing guidelines set forth in the attached Exhibit B.
3. Compensation
FMFS shall be compensated for providing the services set forth in this
Agreement in accordance with the Fee Schedule attached hereto as Exhibit A and
as mutually agreed upon and amended from time to time. The Fund agrees to pay
all fees and reimbursable expenses within ten (10) business days following the
receipt of the billing notice.
4. Representations of FMFS
FMFS represents and warrants to the Fund that:
A. It is a corporation duly organized, existing and in good standing
under the laws of Wisconsin;
B. It is a registered transfer agent under the Exchange Act;
C. It is duly qualified to carry on its business in the State of
Wisconsin;
D. It is empowered under applicable laws and by its charter and bylaws to
enter into and perform this Agreement;
E. All requisite corporate proceedings have been taken to authorize it to
enter into and perform this Agreement;
F. It has and will continue to have access to the necessary facilities,
equipment and personnel to perform its duties and obligations under
this Agreement; and
G. It will comply with all applicable requirements of the Securities Act
of 1933, as amended, and the Exchange Act, the 1940 Act, and any laws,
rules, and regulations of governmental authorities having
jurisdiction.
<PAGE>
Page 4
5. Representations of the Fund
The Fund represents and warrants to FMFS that:
A. The business trust is an open-end investment company under the 1940
Act;
B. The business trust is organized, existing, and in good standing under
the laws of the Commonwealth of Massachusetts;
C. The Fund is empowered under applicable laws and by its Declaration of
Trust and Bylaws to enter into and perform this Agreement;
D. All necessary proceedings required by the Declaration of Trust have
been taken to authorize it to enter into and perform this Agreement;
E. The Fund will comply with all applicable requirements of the
Securities Act, the Exchange Act, the 1940 Act, and any laws, rules
and regulations of governmental authorities having jurisdiction; and
F. A registration statement under the Securities Act is effective and
will remain effective, and appropriate state securities law filings
have been made and will continue to be made, with respect to all
shares of the Fund being offered for sale.
6. Performance of Service; Limitation of Liability
FMFS shall exercise reasonable care in the performance of its duties
under this Agreement. FMFS shall not be liable for any error of judgment or
mistake of law or for any loss suffered by the Fund in connection with matters
to which this Agreement relates, including losses resulting from mechanical
breakdowns or the failure of communication or power supplies beyond FMFS's
control, except a loss arising out of or relating to the FMFS's refusal or
failure to comply with the terms of this Agreement or from bad faith,
negligence, or willful misconduct on its part in the performance of its duties
under this Agreement. Notwithstanding any other provision of this Agreement, if
FMFS has exercised reasonable care in the performance of its duties under this
Agreement, the Fund shall indemnify and hold harmless FMFS from and against any
and all claims, demands, losses, expenses, and liabilities (whether with or
without basis in fact or law) of any and every nature (including reasonable
attorneys' fees) which FMFS may sustain or incur or which may be asserted
against FMFS by any person arising out of any action taken or omitted to be
taken by it in performing the services hereunder, except for any and all claims,
demands, losses, expenses, and liabilities of any and every nature (including
reasonable attorney's fees) arising out of or relating to FMFS's refusal or
failure to comply with the terms of this Agreement or from bad faith, negligence
or from willful misconduct on its part in performance of its duties under this
Agreement, (i) in accordance with the foregoing standards, or (ii) in reliance
upon any written or oral instruction provided to FMFS by any duly authorized
officer of the Fund, such duly authorized officer to be
<PAGE>
Page 5
included in a list of authorized officers furnished to FMFS and as amended from
time to time in writing by resolution of the Board of Trustees of the Fund.
The Fund will indemnify and hold FMFS harmless against any and all losses,
claims, damages, liabilities or expenses (including reasonable counsel fees and
expenses) resulting from any claim, demand, action, or suit as a result of the
negligence of the Fund or the principal underwriter (unless contributed to by
FMFS breach of this Agreement or other Agreements between the Fund and FMFS, or
FMFS's own negligence or bad faith); or as a result of FMFS acting upon
telephone instructions relating to the exchange or redemption of shares received
by FMFS and reasonably believed by FMFS under a standard of care customarily
used in the industry to have originated from the record owner of the subject
shares; or as a result of acting in reliance upon any genuine instrument or
stock certificate signed, countersigned, or executed by any person or persons
authorized to sign, countersign, or execute the same.
FMFS shall indemnify and hold the Fund harmless from and against any and
all claims, demands, losses, expenses, and liabilities (whether with or without
basis in fact or law) of any and every nature (including reasonable attorneys'
fees) which the Fund may sustain or incur or which may be asserted against the
Fund by any person arising out of any action taken or omitted to be taken by
FMFS as a result of FMFS's refusal or failure to comply with the terms of this
Agreement, its bad faith, negligence, or willful misconduct.
In the event of a mechanical breakdown or failure of communication or power
supplies beyond its control, FMFS shall take all reasonable steps to minimize
service interruptions for any period that such interruption continues beyond
FMFS's control. FMFS will make every reasonable effort to restore any lost or
damaged data and correct any errors resulting from such a breakdown at the
expense of FMFS. FMFS agrees that it shall, at all times, have reasonable
contingency plans with appropriate parties, making reasonable provision for
emergency use of electrical data processing equipment to the extent appropriate
equipment is available. Representatives of the Fund shall be entitled to inspect
FMFS's premises and operating capabilities at any time during regular business
hours of FMFS, upon reasonable notice to FMFS.
Regardless of the above, FMFS reserves the right to reprocess and correct
administrative errors at its own expense.
In order that the indemnification provisions contained in this section
shall apply, it is understood that if in any case the indemnitor may be asked to
indemnify or hold the indemnitee harmless, the indemnitor shall be fully and
promptly advised of all pertinent facts concerning the situation in question,
and it is further understood that the indemnitee will use all reasonable care to
notify the indemnitor promptly concerning any situation which presents or
appears likely to present the probability of a claim for indemnification. The
indemnitor shall have the option to defend the indemnitee against any claim,
which may be the subject of this indemnification. In the event that the
indemnitor so elects, it will so notify the indemnitee and thereupon the
indemnitor shall take over complete defense of the claim, and the indemnitee
shall in such situation initiate no further legal or other expenses for which it
shall seek indemnification under this section. The indemnitee shall in no case
confess any claim or make any compromise in any
<PAGE>
Page 6
case in which the indemnitor will be asked to indemnify the indemnitee except
with the indemnitor's prior written consent.
7. Proprietary and Confidential Information
FMFS agrees on behalf of itself and its directors, officers, and employees
to treat confidentially and as proprietary information of the Fund all records
and other information relative to the Fund and prior, present, or potential
shareholders (and clients of said shareholders) and not to use such records and
information for any purpose other than the 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 FMFS may be exposed to civil or criminal contempt proceedings for
failure to comply after being requested to divulge such information by duly
constituted authorities, or when so requested by the Fund.
8. Term of Agreement
This Agreement shall become effective as of the date hereof and, unless
sooner terminated as provided herein, shall continue automatically in effect for
successive annual periods. The Agreement may be terminated by either party upon
giving ninety (90) days prior written notice to the other party or such shorter
period as is mutually agreed upon by the parties. This Agreement may be amended
by mutual written consent of the parties.
9. Records
FMFS shall keep records relating to the services to be performed
hereunder, in the form and manner, and for such period as it may deem advisable
and is agreeable to the Fund but not inconsistent with the rules and regulations
of appropriate government authorities, in particular, Section 31 of the 1940 Act
and the rules thereunder. FMFS agrees that all such records prepared or
maintained by FMFS relating to the services to be performed by FMFS hereunder
are the property of the Fund and will be preserved, maintained, and made
available with such section and rules of the 1940 Act and will be promptly
surrendered to the Fund on and in accordance with its request.
10. Governing Law
This Agreement shall be construed and the provisions thereof interpreted
under and in accordance with the laws of the State of Wisconsin. However,
nothing herein shall be construed in a manner inconsistent with the 1940 Act or
any rule or regulation promulgated by the Securities and Exchange Commission
thereunder.
11. Duties in the Event of Termination
In the event that, in connection with termination, a successor to any of
FMFS's duties or responsibilities hereunder is designated by the Fund by written
notice to FMFS, FMFS will
<PAGE>
Page 7
promptly, upon such termination and at the expense of the Fund, transfer to such
successor all relevant books, records, correspondence, and other data
established or maintained by FMFS under this Agreement in a form reasonably
acceptable to the Fund (if such form differs from the form in which FMFS has
maintained, the Fund shall pay any expenses associated with transferring the
data to such form), and will cooperate in the transfer of such duties and
responsibilities, including provision for assistance from FMFS's personnel in
the establishment of books, records, and other data by such successor.
12. Notices
Notices of any kind to be given by either party to the other party shall
be in writing and shall be duly given if mailed or delivered as follows: Notice
to FMFS shall be sent to:
Firstar Mutual Fund Services, LLC
615 East Michigan Street
Milwaukee, WI 53202
and notice to the Fund shall be sent to:
Gintel Fund
6 Greenwich Office Park
Greenwich, CT 06831-5197
Attention: Stephen Stavrides
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed
by a duly authorized officer or one or more counterparts as of the day and year
first written above.
GINTEL FUND FIRSTAR MUTUAL FUND SERVICES, LLC
By:_________________________ By: _______________________________
Print:______________________ Print:_____________________________
Title:______________________ Title:_____________________________
Attest:_____________________ Attest:____________________________
Date:_______________________ Date:______________________________
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Transfer Agent and Shareholder Servicing
Annual Fee Schedule
Exhibit A
Name of Series Date Added
-------------- -----------
Gintel Fund ______________
Annual Fee
$15.00 per shareholder account - no-load fund
Minimum annual fees of $24,000 for the first no-load fund,
$15,000 for each additional no-load fund or class
Extraordinary services quoted separately.
Plus Out-of-Pocket Expenses, including but not limited to:
Telephone - toll free lines Proxies
Postage, Stationery, Envelopes Retention of records
Programming - Special Reports Microfilm/fiche of records
Programming for select data All other out-of pocket expenses
requests - $150.00/hr NSCC charges
Mailing Insurance
Programming to add funds/classes
- $150.00 per hr
Check books
Services to locate lost shareholders
File transfers - $160.00 per month
and $.01 per record
Activity Charges
o Telephone Call - $1.00 per call
o Draft Check Processing - $1.00 per draft
o Daily Valuation Trades - $6.75 per trade
ACH Shareholder Services
$125.00 per month per fund group
$ .50 per account setup and/or change
$ .50 per ACH item
$5.00 per correction, reversal, return item
Qualified Plan Fees (Billed to Investors) *
Annual maintenance fee per account $12.50/acct. (Cap at $25.00
per SSN)
Education IRA $ 5.00/acct. (Cap at $25.00/
per SSN)
Transfer to successor trustee $15.00/trans.
Distribution to participant $15.00/trans.(Exclusive of SWP)
Refund of excess contribution $15.00/trans.
*No maintenance fees will be charged to accounts in 1999. Firstar will charge
$1.00 per qualified plan account per month in 1999 on the transfer agent
invoices. All other qualified plan fees apply immediately. IRA maintenance fees
will be charged to accounts in the year 2000.
Additional Shareholder Fees (Billed to Investors)
Any outgoing wire transfer $12.00/wire
Telephone Exchange $ 5.00/exchange transaction
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Return check fee $25.00/item
Stop payment $20.00/stop
(Liquidation, dividend, draft check)
Research fee $ 5.00/item
(For requested items of the second calendar year [or previous] to
the request)(Cap at $25.00)
o Fees and out-of-pocket expenses are billed to the fund monthly.
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EXHIBIT B
Firstar Mutual Fund Services, LLC As Of Processing Policy
Firstar Mutual Fund Services, LLC (FMFS) will reimburse the Fund(s) for
any net material loss that may exist on the Fund(s) books and for which FMFS is
responsible, at the end of each calendar month. "Net Material Loss" shall be
defined as any remaining loss, after netting losses against any gains, which
impacts the Fund's net asset value by more than 1/2 cent. Gains and losses will
be accumulated on a daily basis, will be reflected on the Fund's daily share
sheet, and will be settled on a monthly basis. FMFS will notify the Fund's
advisor on the daily share sheet of any losses for which the Fund's adviser may
be held accountable.
NSCC and DAZL
Out-of-Pocket Charges
NSCC Interfaces
Setup
Fund/SERV, Networking ACATS, $5,000 setup (one time)
Exchanges
Commissions $5,000 setup (one time)
Processing
Fund/SERV $ 50.00/ month
Networking $ 250.00/ month
CPU Access $ 40.00/ month
Fund/SERV Transactions $ .35/ trade
Networking - per item $ .025/ monthly dividend fund
Networking - per item $ .015/ non-mo. dividend fund
First Data $ .10/ next-day Fund/SERV trade
First Data $ .15/ same-day Fund?SERV trade
NSCC Implementation
8 to 10 weeks lead time
DAZL (Direct Access Zip Link - Electronic mail interface to financial advisor
network)
Setup $5,000 / fund group
Monthly Usage $1,000 / month
Transmission $ .015 / price record
$ .025 / other record
Enhancement $ 125 / hour
Fees and out-of-pocket expenses are billed to Gintel Asset Management monthly.
<PAGE>
FORM OF
FUND ACCOUNTING SERVICING AGREEMENT
THIS AGREEMENT is made and entered into as of this 1st day of March, 2000,
by and between Gintel Fund, a Massachusetts business trust organized under the
laws of the Commonwealth of Massachusetts (hereinafter referred to as the
"Fund") and Firstar Mutual Fund Services, LLC, a limited liability corporation
organized under the laws of the State of Wisconsin (hereinafter referred to as
"FMFS").
WHEREAS, the Fund is a registered investment company under the Investment
Company Act of 1940, as amended (the "1940 Act");
WHEREAS, FMFS is in the business of providing, among other things, mutual
fund accounting services to investment companies; and
WHEREAS, the Fund desires to retain FMFS to provide accounting services to
the portfolio of the Fund.
NOW, THEREFORE, in consideration of the mutual agreements herein made, the
Fund and FMFS agree as follows:
1. Appointment of Fund Accountant
The Fund hereby appoints FMFS as Fund Accountant of the Fund on the terms
and conditions set forth in this Agreement, and FMFS hereby accepts such
appointment and agrees to perform the services and duties set forth in this
Agreement in consideration of the compensation provided for herein.
2. Duties and Responsibilities of FMFS
A. Portfolio Accounting Services:
(1) Maintain portfolio records on a trade date+1 basis using
security trade information communicated from the investment manager.
(2) For each valuation date, obtain prices from a pricing source
approved by the Board of Trustees of the Fund and apply those prices
to the portfolio positions. For those securities where market
quotations are not readily available, the Board of Trustees of the
Fund shall approve, in good faith, the method for determining the fair
value for such securities.
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(3) Identify interest and dividend accrual balances as of each
valuation date and calculate gross earnings on investments for the
accounting period.
(4) Determine gain/loss on security sales and identify them as,
short-term or long-term; account for periodic distributions of gains
or losses to shareholders and maintain undistributed gain or loss
balances as of each valuation date.
B. Expense Accrual and Payment Services:
(1) For each valuation date, calculate the expense accrual
amounts as directed by Fund as to methodology, rate or dollar amount.
(2) Record payments for Fund expenses upon receipt of written
authorization from Fund.
(3) Account for Fund expenditures and maintain expense accrual
balances at the level of accounting detail, as agreed upon by FMFS and
the Fund.
(4) Provide expense accrual and payment reporting.
C. Fund Valuation and Financial Reporting Services:
(1) Account for Fund share purchases, sales, exchanges,
transfers, dividend reinvestments, and other Fund share activity as
reported by the transfer agent on a timely basis.
(2) Apply equalization accounting as directed by the Fund.
(3) Determine net investment income (earnings) for the Fund as of
each valuation date. Account for periodic distributions of earnings to
shareholders and maintain undistributed net investment income balances
as of each valuation date.
(4) Maintain a general ledger and other accounts, books, and
financial records for the Fund in the form as agreed upon.
(5) Determine the net asset value of the Fund according to the
accounting policies and procedures set forth in the Fund's Prospectus.
(6) Calculate per share net asset value, per share net earnings,
and other per share amounts reflective of Fund operations at such time
as required by the nature and characteristics of the Fund.
(7) Communicate, at an agreed upon time, the per share price for
each valuation date to parties as agreed upon from time to time.
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(8) Prepare monthly reports, which document the adequacy of
accounting detail to support month-end ledger balances.
D. Tax Accounting Services:
(1) Maintain accounting records for the investment portfolio of
the Fund to support the tax reporting required for IRS-defined
regulated investment companies.
(2) Maintain tax lot detail for the investment portfolio.
(3) Calculate taxable gain/loss on security sales using the tax
lot relief method designated by the Fund.
(4) Provide the necessary financial information to support the
taxable components of income and capital gains distributions to the
transfer agent to support tax reporting to the shareholders.
E. Compliance Control Services:
(1) Support reporting to regulatory bodies and support financial
statement preparation by making the Fund's accounting records
available to the Fund, the Securities and Exchange Commission, and the
outside auditors.
(2) Maintain accounting records according to the 1940 Act and
regulations provided thereunder
F. FMFS will perform the following accounting functions on a daily
basis:
(1) Reconcile cash and investment balances of each Portfolio with
the Custodian, and provide the Advisor with the beginning cash balance
available for investment purposes;
(2) Transmit or mail a copy of the portfolio valuation to the
Advisor;
(3) Review the impact of current day's activity on a per share
basis, review changes in market value.
G. In addition, FMFS will:
(1) Prepare monthly security transactions listings;
(2) Supply various Fund, Portfolio and class statistical data as
requested on an ongoing basis.
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3. Pricing of Securities
For each valuation date, obtain prices from a pricing source selected by FMFS
but approved by the Fund's Board of Trustees and apply those prices to the
portfolio positions of the Fund. For those securities where market quotations
are not readily available, the Fund's Board of Directors shall approve, in good
faith, the method for determining the fair value for such securities.
If the Fund desires to provide a price, which varies from the pricing source,
the Fund shall promptly notify and supply FMFS with the valuation of any such
security on each valuation date. All pricing changes made by the Fund will be in
writing and must specifically identify the securities to be changed by CUSIP,
name of security, new price or rate to be applied, and, if applicable, the time
period for which the new price(s) is/are effective.
4. Changes in Accounting Procedures
Any resolution passed by the Board of Trustees of the Fund that affects
accounting practices and procedures under this Agreement shall be effective upon
written receipt and acceptance by the FMFS.
5. Changes in Equipment, Systems, Service, Etc.
FMFS reserves the right to make changes from time to time, as it deems
advisable, relating to its services, systems, programs, rules, operating
schedules and equipment, so long as such changes do not adversely affect the
service provided to the Fund under this Agreement.
6. Compensation
FMFS shall be compensated for providing the services set forth in this Agreement
in accordance with the Fee Schedule attached hereto as Exhibit A and as mutually
agreed upon and amended from time to time. The Fund agrees to pay all fees and
reimbursable expenses within ten (10) business days following the receipt of the
billing notice.
7. Performance of Service; Limitation of Liability
A. FMFS shall exercise reasonable care in the performance of its
duties under this Agreement. FMFS shall not be liable for any error of
judgment or mistake of law or for any loss suffered by the Fund in
connection with matters to which this Agreement relates, including losses
resulting from mechanical breakdowns or the failure of communication or
power supplies beyond FMFS's control, except a loss arising out of or
relating to FMFS's refusal or failure to comply with the terms of this
Agreement or from bad faith, negligence, or willful misconduct on its part
in the performance of its duties under this Agreement. Notwithstanding any
other provision of this Agreement, if FMFS has exercised reasonable care
in the performance of its duties under this Agreement, the Fund shall
indemnify and hold harmless FMFS from and against any and all claims,
demands, losses, expenses, and liabilities (whether with or without basis
in fact or law) of
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Page 5
any and every nature (including reasonable attorneys' fees) which FMFS may
sustain or incur or which may be asserted against FMFS by any person
arising out of any action taken or omitted to be taken by it in performing
the services hereunder, except for any and all claims, demands, losses,
expenses, and liabilities arising out of or relating to FMFS's refusal or
failure to comply with the terms of this Agreement or from bad faith,
negligence or from willful misconduct on its part in performance of its
duties under this Agreement, (i) in accordance with the foregoing
standards, or (ii) in reliance upon any written or oral instruction
provided to FMFS by any duly authorized officer of the Fund, such duly
authorized officer to be included in a list of authorized officers
furnished to FMFS and as amended from time to time in writing by
resolution of the Board of Trustees of the Fund.
FMFS shall indemnify and hold the Fund harmless from and against any
and all claims, demands, losses, expenses, and liabilities (whether with
or without basis in fact or law) of any and every nature (including
reasonable attorneys' fees) which the Fund may sustain or incur or which
may be asserted against the Fund by any person arising out of any action
taken or omitted to be taken by FMFS as a result of FMFS's refusal or
failure to comply with the terms of this Agreement, its bad faith,
negligence, or willful misconduct.
In the event of a mechanical breakdown or failure of communication or
power supplies beyond its control, FMFS shall take all reasonable steps to
minimize service interruptions for any period that such interruption
continues beyond FMFS's control. FMFS will make every reasonable effort to
restore any lost or damaged data and correct any errors resulting from
such a breakdown at the expense of FMFS. FMFS agrees that it shall, at all
times, have reasonable contingency plans with appropriate parties, making
reasonable provision for emergency use of electrical data processing
equipment to the extent appropriate equipment is available.
Representatives of the Fund shall be entitled to inspect FMFS's premises
and operating capabilities at any time during regular business hours of
FMFS, upon reasonable notice to FMFS.
Regardless of the above, FMFS reserves the right to reprocess and
correct administrative errors at its own expense.
B. In order that the indemnification provisions contained in this
section shall apply, it is understood that if in any case the indemnitor
may be asked to indemnify or hold the indemnitee harmless, the indemnitor
shall be fully and promptly advised of all pertinent facts concerning the
situation in question, and it is further understood that the indemnitee
will use all reasonable care to notify the indemnitor promptly concerning
any situation which presents or appears likely to present the probability
of a claim for indemnification. The indemnitor shall have the option to
defend the indemnitee against any claim, which may be the subject of this
indemnification. In the event that the indemnitor so elects, it will so
notify the indemnitee and thereupon the indemnitor shall take over
complete defense of the claim, and the indemnitee shall in such situation
initiate no further legal or other expenses for which it shall seek
indemnification under this
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Page 6
section. Indemnitee shall in no case confess any claim or make any
compromise in any case in which the indemnitor will be asked to indemnify
the indemnitee except with the indemnitor's prior written consent.
8. Proprietary and Confidential Information
FMFS agrees on behalf of itself and its directors, officers, and employees to
treat confidentially and as proprietary information of the Fund all records and
other information relative to the Fund and prior, present, or potential
shareholders of the Fund (and clients of said shareholders), and not to use such
records and information for any purpose other than the 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 FMFS 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.
9. Term of Agreement
This Agreement shall become effective as of the date hereof and, unless sooner
terminated as provided herein, shall continue automatically in effect for
successive annual periods. This Agreement may be terminated by either party upon
giving ninety (90) days prior written notice to the other party or such shorter
period as is mutually agreed upon by the parties. This Agreement may be replaced
or modified by a subsequent written agreement between the parties.
10. Records
FMFS shall keep records relating to the services to be performed hereunder, in
the form and manner, and for such period as it may deem advisable and is
agreeable to the Fund but not inconsistent with the rules and regulations of
appropriate government authorities, in particular, Section 31 of the 1940 Act,
and the rules thereunder. FMFS agrees that all such records prepared or
maintained by FMFS relating to the services to be performed by FMFS hereunder
are the property of the Fund and will be preserved, maintained, and made
available in accordance with such section and rules of the 1940 Act and will be
promptly surrendered to the Fund on and in accordance with its request.
11. Governing Law
This Agreement shall be construed in accordance with the laws of the State of
Wisconsin. However, nothing herein shall be construed in a manner inconsistent
with the 1940 Act or any rule or regulation promulgated by the SEC thereunder.
12. Duties in the Event of Termination
In the event that in connection with termination, a successor to any of FMFS's
duties or responsibilities hereunder is designated by the Fund by written notice
to FMFS, FMFS will
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Page 7
promptly, upon such termination and at the expense of the Fund transfer to such
successor all relevant books, records, correspondence and other data established
or maintained by FMFS under this Agreement in a form reasonably acceptable to
the Fund (if such form differs from the form in which FMFS has maintained the
same, the Fund shall pay any expenses associated with transferring the same to
such form), and will cooperate in the transfer of such duties and
responsibilities, including provision for assistance from FMFS's personnel in
the establishment of books, records and other data by such successor.
13. No Agency Relationship
Nothing herein contained shall be deemed to authorize or empower FMFS to act as
agent for the other party to this Agreement, or to conduct business in the name
of, or for the account of the other party to this Agreement.
14. Data Necessary to Perform Services
The Fund or its agent, which may be FMFS, shall furnish to FMFS the data
necessary to perform the services described herein at such times and in such
form as mutually agreed upon. If FMFS is also acting in another capacity for the
Fund, nothing herein shall be deemed to relieve FMFS of any of its obligations
in such capacity.
15. Notification of Error
The Fund will notify FMFS of any balancing or control error caused by FMFS the
later of: within three (3) business days after receipt of any reports rendered
by FMFS to the Fund; within three (3) business days after discovery of any error
or omission not covered in the balancing or control procedure, or within three
(3) business days of receiving notice from any shareholder.
16. Notices
Notices of any kind to be given by either party to the other party shall be
in writing and shall be duly given if mailed or delivered as follows: Notice
to FMFS shall be sent to:
Firstar Mutual Fund Services, LLC
615 East Michigan Street
Milwaukee, WI 53202
and notice to the Fund shall be sent to:
Gintel Fund
6 Greenwich Office Park
Greenwich, CT 06831-5197
Attention: Stephen Stavrides
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by a duly authorized officer on one or more counterparts as of the day
and year first written above.
GINTEL FUND FIRSTAR MUTUAL FUND SERVICES, LLC
By: _______________________________ By: _________________________________
Print:______________________________ Print:_______________________________
Title:______________________________ Title:_______________________________
Date:_______________________________ Date:________________________________
Attest: __________________________ Attest:______________________________
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Fund Accounting Services
Annual Fee Schedule
Exhibit A
Name of Series Date Added
Gintel Fund ____________________
Domestic Equity Funds
o $30,000 for the first $100 million
o 1.25 basis point on the next $200 million
o .75 basis point on the balance
Plus out-of-pocket expenses, including but not limited to, pricing service:
Domestic and Canadian Equities $.15
Options $.15
Corp/Gov/Agency Bonds $.50
CMO's $.80
International Equities and Bonds $.50
Municipal Bonds $.80
Money Market Instruments $.80
Mutual Funds $125/fund/Mo.
Fees and out-of-pocket expenses are billed to the Gintel Fund monthly.
<PAGE>
KRAMER LEVIN NAFTALIS & FRANKEL LLP
919 THIRD AVENUE
NEW YORK, N.Y. 10022 - 3852
TEL (212) 715-9100 47, Avenue Hoche
FAX (212) 715-8000 75008 Paris
France
April 11, 2000
Gintel Fund
6 Greenwich Office Park
Greenwich, CT 06831
Re: Post-Effective Amendment No. 23 to
Registration Statement on Form N-1A
File No. 2-70207
------------------------------------
Gentlemen:
We hereby consent to the reference to our firm as counsel in this
Registration Statement on Form N-1A.
Very truly yours,
/s/ Kramer Levin Naftalis & Frankel LLP
INDEPENDENT AUDITORS' CONSENT
We hereby consent to the incorporation by reference in the Statement of
Additional Information of the post-effective amendment filed on or about April
14, 2000 to the Registration Statement (No. 2-70207) being filed under the
Securities Act of 1933 and the Investment Company Act of 1940 on Form N-1A by
Gintel Fund of our report dated January 21, 2000, relating to our audit of the
statement of net assets of Gintel Fund as of December 31, 1999, 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 Prospectus; we
also consent to the reference to our Firm under the captions "Financial
Highlights" in the Prospectus and "Shareholder Reports" and "Counsel and
Auditors" in the Statement of Additional Information.
/s/ Richard A. Eisner & Company, LLP
New York, New York
April 14, 2000
GINTEL ASSET MANAGEMENT, INC.
GINTEL & CO.
and
THE GINTEL FUND
CODE OF ETHICS
(As Amended March 4, 1995,
June 20, 1995, and February 17, 1996)
WHEREAS, GINTEL ASSET MANAGEMENT, INC. (the "Adviser") provides
investment advisory services to investment companies and other clients; and
WHEREAS, Gintel & Co. provides distribution services to the Fund and
provides brokerage services to the Fund and to other clients, including accounts
of the Adviser; and
WHEREAS, the investment advisory business involves decisions and
information which may have at least a temporary impact on the market price of
securities, thus creating a potential for conflicts of interest between the
persons engaged in such business and their clients; and
WHEREAS, the Adviser has a fiduciary relationship with respect to each
portfolio under management and the interests of the client accounts and of the
shareholders of the Advisers investment company clients must take precedence
over the personal interests of the employees of the Adviser, thus requiring a
rigid adherence to the highest standards of conduct by such employees; and
WHEREAS, every practical step must be taken to ensure that no
intentional or inadvertent action is taken by an employee of the Adviser which
is, or appears to be, adverse to the interests of the Adviser or any of its
client accounts, including the defining of standards of behavior for such
employees, while at the same time avoiding unnecessary interference with the
privacy or personal freedom of such employees; and
WHEREAS, GINTEL FUND (the "Fund") is each open end management investment
companies, registered under the Investment Company Act of 1940 (the "1940 Act");
and
WHEREAS, Gintel & Co., the Adviser and the Fund adopted a Code of Ethics
("the Code") and each now deems it advisable to update and revise said Code in
light of changing circumstances in the securities markets in which the Adviser
conducts business; and
WHEREAS, the Fund is managed by the Adviser; and
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NOW, THEREFORE, the Boards of Directors of the Adviser and Gintel & Co.
and the Board of Directors (Trustees) of the Fund hereby adopt the following
revised Code pursuant to the provisions of Rule 17j-1 under the 1940 Act.
I. Applicability
Unless otherwise indicated, the term "employee" as used herein means:
(i) all officers, directors, partners, registered representatives, and
employees, including "investment persons", "portfolio managers" and "access
persons", as defined in the rules and procedures ("Procedures") adopted
hereunder, of the Adviser and Gintel & Co. and its affiliates and wholly owned
and indirect subsidiaries, if any, and (ii) officers, directors and partners
(who maintain offices at the Adviser and or Gintel & Co.) and employees who have
an active part in the management, portfolio selection, underwriting or
shareholder functions with respect to the Adviser's investment company clients
or provide one or more similar services for non-investment company clients.
o The term "employee" does not include directors of any
investment company managed by the Adviser provided that
they do not regularly obtain information concerning the
investment recommendations or decisions made by the
Adviser on behalf of client accounts ("independent
directors").
o The names of various officers of the Adviser and Gintel
& Co. referred to in the Code are set forth in Exhibit A
hereto.
o Any securities owned by Access Persons, Investment
Persons, or Employees prior to adoption of this Code of
Ethics on March 4, 1995, are not subject to the blackout
restrictions and short-term trading procedures
incorporated into this Code.
o Investment Persons serving at the time this Code was
adopted on March 4, 1995, as directors or trustees of
companies whose securities were owned by Clients are
exempted from the prohibitions in Section V.C. of the Code
only with respect to those companies.
II. Interpretation and Enforcement
The Chief Executive Officer of the Adviser and Gintel & Co. shall
appoint a Code of Ethics Compliance Officer (the "Compliance Officer"). The
Compliance Officer shall have the responsibility for interpreting the provisions
of the Code, for adopting and implementing Procedures for the enforcement of the
provisions of the Code, and for determining whether a violation of the
provisions of the Code, or of any such related Procedures has occurred. The
Compliance Officer will monitor personal investment
2
<PAGE>
activity by "access persons" (as defined in the Procedures adopted hereunder),
both before and after any trade occurs and to prepare periodic and annual
reports, conduct education seminars and obtain annual employee certifications as
deemed appropriate. In the event of a finding that a violation has occurred, the
Compliance Officer shall take such action as it deems appropriate, which may
include recommendations to the Boards of Directors of the Adviser or Gintel &
Co. on the imposition of sanctions or initiation of disgorgement proceedings.
The Compliance Officer shall also make recommendations and submit reports to the
Boards of Directors/Trustees of the Adviser's investment company clients.
III. Procedures Adopted Under the Code
From time to time, the Compliance Officer shall adopt Procedures to
carry out the intent of the Code. Among other things, the Procedures
require certain new employees to complete an Asset Disclosure Form and
such other forms as deemed appropriate by the Compliance Officer . Such
Procedures are hereby incorporated into the Code and are made a part of
the Code. Therefore, a violation of the Procedures shall be deemed a
violation of the Code itself.
IV. Compliance with Governing Laws, Regulations and Procedures
A. Each employee, director and partner of the Adviser and Gintel &
Co. shall have and maintain knowledge of and shall comply
strictly with all applicable federal and state laws and all
rules and regulations of any governmental agency or
self-regulatory organization governing his/her actions as an
employee, director or partner of the Adviser and Gintel & Co.
B. Each employee, director and partner of the Adviser and Gintel &
Co. shall comply with all laws and regulations and the Policy
Statement on Insider Trading (see Appendix 1). Trading on
material non-public information, or "inside information", of any
sort, whether obtained in the course of research activities,
through a client relationship or otherwise, is strictly
prohibited.
C. Each employee, director and partner shall comply with the
procedures and guidelines established by the Adviser and Gintel
& Co. to ensure compliance with applicable federal and state
laws and regulations of governmental agencies and
self-regulatory organizations. No employee shall knowingly
participate in, assist, or condone any act in violation of any
statute or regulation governing the Adviser and Gintel & Co. or
any act that would violate any provision of this Code, or of the
Procedures adopted hereunder.
3
<PAGE>
D. Each employee, director and partner shall have and maintain
knowledge of and shall comply strictly with the provisions of
this Code and any Procedures adopted hereunder.
E. Each employee having supervisory responsibility shall exercise
reasonable supervision over employees subject to his/her
control, with a view to preventing any violation by such persons
of applicable statutes or regulations, or the provisions of the
Code, including the Policy Statement on Insider Trading or the
Procedures adopted hereunder.
F. Any employee obtaining evidence that an act in violation of
applicable statutes, regulations or provisions of the Code,
including the Policy Statement on Insider Trading, or of any
Procedures adopted hereunder has occurred shall immediately
report such evidence to the Compliance Officer of the Adviser.
Such action by the employee will remain confidential, unless the
employee waives confidentiality or federal or state authorities
compel disclosure. Failure to report such evidence may result in
disciplinary proceedings and may include sanctions as set forth
in Section VI hereof.
V. Ethical Standards
A. Employees shall conduct themselves in a manner consistent with
the highest ethical and fiduciary standards. They shall avoid
any action, whether for personal profit or otherwise, that
results in an actual or potential conflict of interest with the
Adviser, Gintel & Co. or its client accounts (as defined in the
Procedures adopted hereunder), or which may be otherwise
detrimental to the interests of the members of the Adviser,
Gintel & Co. or its client accounts.(1)
- --------
(1) Conflicts of interest generally result from a situation in which an
individual has a personal interest in a matter that is or may be competitive
with his or her responsibilities to other persons or entities (such as the
Adviser, Gintel & Co. or its client accounts) or where an individual has or may
have competing obligations or responsibilities to two or more persons or
entities. In the case of the relationship between a client account on the one
hand, and the Adviser or Gintel & Co. or their officers, directors, partners and
employees, on the other hand, such conflict may result from the purchase or sale
of securities for a client account and for the personal account of the
individual involved or the account of any "affiliate" of such individual as such
term is defined in the 1940 Act. Such conflict may also arise from the purchase
or sale for a client account of securities in which an officer, director,
partner or employee of the Adviser has an economic interest. Moreover, such
conflict may arise in connection with vendor relationship in which such employee
has direct or indirect financial interest family interests or other personal
interest. To the extent of conflicts of interest between the Adviser or Gintel &
Co. and a vendor, such conflicts must be resolved in a manner that is not
disadvantageous to the Adviser or Gintel & Co. In any such case, potential
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B. Employees and directors shall act in a manner consistent with
their fiduciary obligation to clients of the Adviser or Gintel &
Co., and shall not deprive any client account of an investment
opportunity in order to personally benefit from that
opportunity.
C. Without the knowledge and approval of the Compliance Officer
employees shall not engage in a business activity or practice
for compensation in competition with the Adviser or Gintel & Co.
Each employee, who is deemed to be an "investment person" as
defined in the Procedures adopted hereunder, shall obtain the
written approval of the Compliance Officer to participate on a
board of directors/trustees of any the following organizations:
o publicly traded company, partnership or trusts;
o hospital or philanthropic institution:*
o local or state municipal authority:* and/or
o charitable organization.*
* These restrictions relate to organizations that have or intend
to raise proceeds in a public securities offering.
D. Each employee, in making an investment recommendation or taking
any investment action, shall exercise diligence and
thoroughness, and shall have a reasonable and adequate basis for
any such recommendation or action.
E. Each employee and director shall not attempt to improperly
influence for such person's personal benefit any investment
strategy to be followed or investment action to be taken for
client accounts.
F. Each employee and director shall not improperly use for such
person's personal benefit any knowledge, whether obtained
through such person's relationship with the Adviser, Gintel &
Co. or otherwise, of any investment recommendation made or to be
made, or of any investment action taken or to be taken by the
Adviser or Gintel & Co. for its client accounts.
(..continued)
or actual conflicts must be disclosed to the Adviser or Gintel & Co. and the
first preference and priority must be to avoid such conflicts of interest
wherever possible and, where they unavoidably occur, to resolve them in a manner
that is not disadvantageous to a client.
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G. Employees and independent directors shall not disclose any
non-public information relating to a client account's portfolio
or transactions or to the investment recommendations of the
Adviser or Gintel & Co., nor shall any employee disclose any
non-public information relating to the business or operations of
the Adviser or Gintel & Co. unless properly authorized to do so.
H. Employees shall not accept, directly or indirectly, from a
broker-dealer or other vendor who transacts business with the
Adviser, Gintel & Co. or its client accounts, any gifts,
gratuities or other things of such value or significance that
their acceptance might reasonably be expected to interfere with
or influence the exercise of independent and objective judgment
in carrying out such person's duties or otherwise gives the
appearance of a possible impropriety.
I. Each employee who is deemed to be an "Investment person" as
defined in the Procedures adopted hereunder (or registered
representative and/or principal(2) of Gintel & Co.) shall not
acquire securities for an account for which he/she has a direct
or indirect beneficial interest in an initial public offering
("IPO") or on behalf of any person, entity or organization that
is not a client of the Adviser.
J. All personal securities transactions by employees must be
conducted consistent with this Code and the Procedures adopted
hereunder, and in such a manner as to avoid any actual or
potential conflicts of interest or any abuse of such employee's
position of trust and responsibility. Unless an exemption is
available, employee's who are deemed to be "access persons" as
defined in the Procedures adopted hereunder, shall pre-clear all
transactions in securities in accordance with the Procedures
adopted hereunder.
K. Each employee, who is deemed to be an "investment person" as
defined in the Procedures adopted hereunder, (or registered
representative and/or principal of Gintel & Co.) shall refrain
from engaging in personal securities transactions in connection
with a security that is not registered under Section 12 of the
Securities Act of 1933 (i.e., a private placement security)
unless such transaction has been pre-approved by the Compliance
Officer.
L. Employees, who are deemed to be "access persons" as defined in
the Procedures adopted hereunder (and registered representatives
and principals of Gintel & Co.) shall not execute a parallel
transaction in connection with the
- ----------
(2) Under Article III, Section I of the NASD's Rules of Fair Practice,
registered representatives and principals may not purchase a new offering until
all public clients have been satisfied.
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purchase or sale of a security on any day during which any of
the Adviser's clients, including investment company clients, has
a pending buy or sell order in that same security until that
order is executed or withdrawn. In addition, employees, who are
deemed to be "investment persons" as defined in the Procedures
adopted hereunder, may not engage in a transaction in connection
with the purchase or sale of a security within seven calendar
days before and after an investment company client of the
Adviser trades in that security.
M. At each meeting of the Board of Trustees of Gintel Fund, the
Board will review the personal short-term (60 days) trading
activities of employees deemed to be investment persons for the
period since the previous report. In the event the Board
determines that the level or pattern of trading is inconsistent
with such investment persons' fiduciary responsibilities and
could be detrimental to the Adviser, Gintel & Co. and Fund
accounts any profits realized upon such disposition are subject
to disgorgement and/or such other penalties as the Gintel Asset
Management, Inc., Gintel & Co., and/or the Board of the Fund may
determine.
VI. Sanctions
Employees violating the provisions of the Code or any Procedures adopted
hereunder may be subject to sanctions, which may include, among other
things, restrictions on such person's personal securities transactions;
a letter of admonition, education or formal censure; fines, suspension,
reassignment, demotion or termination of employment; or other
significant remedial action. Employees may also be subject to
disgorgement proceedings for transactions in securities that are
inconsistent with Sections V.L. and V.M. above.
VII. Additional Disclosure
This Code, including the Policy Statement on Insider Trading, and
related Procedures under the Code cannot, and do not, cover every
situation in which choices and decisions must be made, because other
company policies, practices and procedures (as well as good common
sense) and good business judgment also apply, Employees should read and
understand these documents thoroughly. They present important rules of
conduct and operating controls for all employees. Employees are also
expected to present questions to the attention of their supervisors and
to the Compliance Officer (or designee) and to report suspected
violations as set forth in these documents.
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VIII. Policy Statement on Insider Trading
The Policy Statement on Insider Trading is attached as Appendix I
hereto. Said Policy Statement applies to all employees and other persons
associated with the Adviser, Gintel & Co. or the Fund.
Gintel Asset Management
By:
________________________________
________________________________
Date
Gintel & Co.
By:
________________________________
________________________________
Date
Gintel Fund
By:
________________________________
________________________________
Date
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Appendix I
GINTEL ASSET MANAGEMENT
GINTEL & CO.
and
THE GINTEL FUND
Policy Statement on Insider Trading
The following policies have been established to aid employees and other persons
associated with Gintel Asset Management (the "Adviser") Gintel & Co. and the
Gintel Fund (the "Fund") in avoiding "insider trading" and to aid the Adviser
and Gintel & Co. in preventing, detecting and imposing sanctions against
"insider trading". All employees and other persons must follow these policies or
risk serious sanctions, including dismissal, substantial personal liability and
criminal penalties. If an employee or other person has a question about these
procedures, such person should contact the Compliance Officer.
IX. Description of Insider Trading
The term "insider trading" is not defined in the federal securities
laws, but generally is used to refer to the use of material non-public
information to trade in securities (whether or not someone is an
"insider") and to communications of material non-public information to
others.
While the law concerning "insider trading" is not static, it is
generally understood that the law prohibits:
o trading by an insider while in possession of material non-public
information; or
o trading by a non-insider while in possession of material
non-public information, where the information was either
disclosed to the non-insider in violation of an insider's duty to
keep it confidential or was misappropriated; or
o communicating material non-public information to others.
The elements of "insider trading" and the penalties for such unlawful
conduct are discussed below:
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A. Who is an Insider?
The concept of "insider" is broad. It includes all employees of a
company. In addition, a person can be a "temporary insider" if he/she
enters into a special confidential relationship in the conduct of a
company's affairs and as a result is given access to information solely
for the company's purposes. A temporary insider can include, among
others, a company's attorneys, accountants, consultants, bank lending
officers and the employees of such organizations. In addition, an
employee may become a temporary insider for a company it advises or for
which it performs other services. According to the Supreme Court, the
company must expect an outsider to keep the disclosed non-public
information confidential and the relationship must at least imply such a
duty before the outsider will be considered an insider.
B. What is Material Information?
Trading on inside information is not a basis for liability unless the
information is material. "Material information" is generally defined as
information for which there is a substantial likelihood that a
reasonable investor would consider it important in making his/her
investment decisions or information that is reasonably certain to have a
substantial effect on the price of a company's securities. Information
that employees should consider material includes but is not limited to:
dividend changes, earnings estimates, changes in previously released
earnings estimates, significant merger or acquisition proposals or
agreements, major litigation, liquidation problems and extraordinary
management developments.
Material information does not have to relate to a company's business.
For example, in Carpenter v. U.S. 108 U.S. 316 (1987), the Supreme Court
considered as material certain information about the contents of a
forthcoming newspaper column that was expected to affect the market
price of a security. In that case, a reporter for The Wall Street
Journal was found criminally liable for disclosing to others the dates
that reports on various companies would appear in The Wall Street
Journal and whether those reports would be favorable or not.
C. What is Non-Public Information?
Information is non-public until it has been effectively communicated to
the marketplace. One must be able to point to some fact to show that the
information is generally public. For example, information found in a
report filed with the Securities and Exchange Commission, or appearing
in Dow Jones, Reuters Economic Services, The Wall Street Journal or
other publications of general circulation would be considered public.
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D. Penalties
Penalties for trading on or communicating material non-public
information are severe, both for individuals involved in such unlawful
conduct and their employers. A person can be subject to some or all of
the penalties below even if he/she does not personally benefit from the
violation. Penalties include:
o civil injunctions;
o treble damages;
o disgorgement of profits;
o jail sentences;
o fines for the person who committed the violation of up to three
times the profit gained or loss avoided, whether or not the
person actually benefited; and
o fines for the employer or other controlling person of up to the
greater of $1,000,000 or three times the profit gained or loss
avoided.
In addition, any violations of this Policy Statement on Insider Trading
will be subject to the sanctions described in Section VI. of the Code.
X. Identifying Inside Information
Before an employee enters into a transaction in the securities of a
company about which he/she may have potential inside information, the
following questions must be resolved:
A. Is the information material? Is this information that an
investor would consider important in making his/her investment
decisions? Is this information that would substantially affect
the market price of the securities if generally disclosed?
B. Is the information non-public? To whom has this information been
provided? Has the information been effectively communicated to
the marketplace by being published in Reuters Economic Services,
The Wall Street Journal or other publications of general
circulation?
If, after consideration of the above, the employee believes that
the information is material and non-public, or if he/she has any
questions as to
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<PAGE>
whether the information is material and non-public, the employee
must take the following steps:
o report the matter immediately to the Compliance Officer;
o refrain from purchasing or selling the securities in a
personal securities transaction or on behalf of others,
including client accounts;
o refrain from communicating the information inside or
outside the Adviser and Gintel & Co., other than to the
Compliance Officer; and
o after the Compliance Officer has reviewed the issue, the
employee will be instructed to continue the prohibitions
against trading and communications, or will be allowed
to trade on and communicate the information.
XI. Restricting Access to Material Non-Public Information
Information in the possession of any employee that may be considered
identified as material and non-public may not be communicated to anyone,
including persons within the Adviser or Gintel & Co., except as provided
in Section II.B. above. In addition, care should be taken so that such
information is secure. For example, files containing material non-public
information should be sealed and access to computer files containing
material non-public information should be restricted.
XII. Resolving Issues Concerning Insider Trading
If, after consideration of the items set forth in Section II.B. above,
doubt remains as to whether information is material or non-public, or if
there is any unresolved question as to the applicability or
interpretation of the foregoing procedures or as to the propriety of any
action, it must be discussed with the Compliance Officer before trading
on or communicating the information to anyone.
XIII. Control Procedures
The role of the Compliance Officer is critical to the implementation and
maintenance of the Adviser and Gintel & Co.'s policies and procedures
against "insider trading". Control procedures include prevention and
detection of "insider trading".
To prevent "insider trading", the Compliance Officer should:
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<PAGE>
o provide on a regular basis, an educational program to
familiarize employees with the policies and procedures against
"insider trading";
o answer questions regarding the policies and procedures;
o resolve issues of whether information received by an employee is
material and non-public;
o review on a regular basis and update as necessary the Code and
related Procedures of the Adviser, Gintel & Co. and the Fund;
o promptly review and either approve or disapprove, in writing,
each request of an employee for clearance to trade in specified
securities; and
o when it has been determined that an employee has material
non-public information:
o implement measures to prevent dissemination of such
information; and
o if necessary, restrict employees from trading the
securities.
To detect "insider trading", the Compliance Officer has also established
internal auditing controls.
XIV. Special Reports to Management
Promptly, upon learning of an actual or potential violation of this
Policy Statement, the Compliance Officer shall prepare and maintain in
the Adviser or Gintel & Co.'s records a written report providing full
details of the situation and the remedial action taken. Annually, the
Compliance Officer shall report to the Boards of Directors/Trustees of
the Fund with regard to any issues that arose during the year, under
this Policy Statement. (See Section VI.E. of the Procedures adopted
hereunder.)
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<PAGE>
GINTEL ASSET MANAGEMENT
GINTEL & CO.
and
THE GINTEL FUND
Rules And Procedures Adopted Under The Code Of Ethics
(As Revised March 4, 1995 and June 20, 1995)
XV. Introduction
These rules and procedures (collectively, "Procedures") have been
adopted by Gintel Asset Management (the "Adviser") and Gintel (the
"Fund") to carry out the intent of the Code of Ethics ("Code") of the
Adviser and the Fund and are incorporated by reference into and made a
part of the Adviser and the Fund' Code. The Code has been approved by
the Adviser and by each of the Boards of Directors/Trustees of the Fund.
The Compliance Officer has the responsibility for interpreting the
provisions of the Code, for adopting and implementing these Procedures,
and for determining whether a violation of the provisions of the Code or
of these Procedures has occurred and, if so, for imposing appropriate
sanctions in accordance with the rules adopted by the Compliance
Officer. Further, the Code authorizes the Compliance Officer to adopt
procedures, rules and guidelines designed to establish, maintain and
enforce written policies and procedures reasonably designed to prevent
the misuse of material non-public information.
XVI. Applicability
These Procedures apply to employees of the Adviser and Gintel & Co. as
defined in the Code. Any questions regarding the Code or the Procedures
should be referred to the Compliance Officer (or designee).
XVII. Definitions
For purposes of these Procedures, the following terms shall have the
meanings set forth below:
A. "Beneficial Ownership" means:
1. the receipt of benefits substantially equivalent to
those of ownership through relationship, understanding,
agreement, contract or other arrangements; or
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<PAGE>
2. the power to vest ownership in oneself at once or at
some future time.
Generally, a person will be regarded as having a direct
or indirect beneficial ownership interest in securities
held in his/her name, as well as in the name of a
spouse, minor children who live with such person, and
any other relative (parents, adult children, brothers,
sisters, in-laws, etc.) whose investments the employee
directs or controls, whether the person lives with the
employee or not. See Exhibit B to these Procedures for a
more complete description of beneficial ownership, as
well as examples of beneficial ownership.
B. "Employee" the same meaning as set forth in Section I of the
Code, In addition, the following definitions apply.
1. "Access Person" includes all directors, partners,
officers and employees of the Adviser or Gintel & Co.
who, in the ordinary course of their regular functions
and duties, participates in or may obtain information
concerning recommendations by the Adviser in connection
with the purchase or sale of a security by one or more
of the Adviser's client accounts.
2. "Investment Person" includes all directors, partners,
officers and employees of the Adviser or Gintel & Co.
who have access to information concerning investment
activities for the Adviser's client accounts, and/or who
give investment advice or support to, or otherwise
assist in, the execution of a portfolio manager's
decisions (i.e. traders and securities analysts, as well
as all "portfolio managers").
3. "Portfolio Manager" includes those employees who
actively participate in the portfolio selection,
monitoring and reporting with respect to one or more of
the Adviser's client accounts.
4.4. "Client Accounts" includes all private accounts and
investment companies who have entered into investment
management administrative and advisory agreements or
sub-advisory agreements with the Adviser and/or Gintel &
Co. and any discretionary accounts of Gintel & Co. as
described in the Code.
C. "Security" means any note, stock, treasury stock, bond,
debenture, evidence of indebtedness, certificate of interest or
participation in any profit-sharing agreement, collateral-trust
certificate, pre-organization certificate or subscription,
transferable share, investment contract, voting-trust
certificate, certificate of deposit for a security, fractional
undivided interest in oil, gas or other mineral rights, any put,
call, straddle, option or
15
<PAGE>
privilege on any security or on any group or index of securities
(including any interest therein or based on the value thereof),
any put, call, straddle, option or privilege entered into on a
national securities exchange relating to foreign currency, or,
in general, any interest or instrument commonly known as a
"security," or any certificate of interest or participation in,
temporary or interim certificate for, receipt for, guarantee of,
or warrant or right to subscribe to or purchase, any of the
foregoing.
1. "Equivalent Security means a security that: (1) is
convertible into another security or (2) gives its
holder the right to purchase another security of the
same issuer. For example, a bond or preferred stock may
be convertible into another security of the same issuer.
or an option or warrant may give the holder the right to
purchase, stock of the same issuer.
D. "Reportable Security" means any security that must be reported
to the Compliance Officer (or designee) after execution of a
trade (see Exhibit C for examples).
E. "Security Requiring Prior Approval" means any reportable
security that must be pre-cleared by the Compliance Officer (or
designee) prior to execution of a trade (see Exhibit C for
examples).
XVIII. Prohibitions
The Adviser, Gintel & Co. and the Fund have determined that the
following courses of conduct are prohibited for all employees:
A. Insider Trading
Any employee is forbidden from trading personally, for clients
or on behalf of any others, on material non-public information
or communicating material non-public information to others in
violation of the law. This conduct is frequently referred to as
"insider trading". This policy applies to every employee of the
Adviser and extends to activities within and outside their
duties at the Adviser or Gintel & Co. See Appendix I of the Code
for a description of "insider trading" and special procedures
that are designed to detect and prevent "insider trading".
B. Transactions in Securities on the Restricted List
The Compliance Officer shall maintain a Restricted List
containing the names of all equity issuers held in Client
Accounts, under consideration for Client Accounts or which for
any other reason shall be deemed Restricted. The equity
securities so listed may not be purchased or sold by any
employees.
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<PAGE>
The CEO/Senior Partner may exempt a transaction by an employee
in a security on the Restricted List. Any such transaction shall
be subject to the prohibitions in this Section IV including the
applicable "blackout" periods. All such permitted transactions
in Restricted List securities shall be reported to the
Compliance Officer. (See Pre-Clearance Form)
Special Procedures may be adopted, from time to time, by the
Adviser and Gintel & Co. to address special situations. Copies
of such special Procedures will be distributed to all employees
and made a part of this Code of Ethics and Procedures until
rescinded.
C. Solicitation or Acceptance of Significant Gifts and Gratuities
Except as noted below, an employee shall not solicit or accept
from a broker/dealer or other vendor that transacts business
with the Adviser, Gintel & Co. or its client accounts, any gifts
or gratuities or other things of value. For this purpose, gifts
and gratuities and other things of value do not include
unsolicited entertainment (including meals or tickets to
cultural or sporting events) that are not so frequent or
extensive as to raise any question of impropriety. An employee
may not accept unsolicited gifts or other things of value of
more than de minimis value from any person or entity that does
business with or on behalf of an investment company client
account. In any such case, the value may not exceed $100 per
giver per year.
D. Independent Practice for Compensation
Employees shall not undertake a business activity or practice
for compensation that is in competition with the Adviser or
Gintel & Co. unless they have received the written consent of
the Compliance Officer. For this purpose, "business activity or
practice" includes any service that the Adviser or Gintel & Co.
currently makes available for compensation. In addition,
employees who are deemed to be investment persons are prohibited
from serving on the board of directors/trustees of certain
organizations without prior written approval from the Compliance
Officer (see Section V.C. of the Code). In the relatively small
number of instances in which board service is authorized,
investment persons serving as directors normally should be
isolated from those making investment decisions through "Chinese
Wall" or other procedures.
Employees shall also avoid any action, whether for personal
profit or otherwise, that results in an actual or potential
conflict of interest with the Adviser, Gintel & Co. or client
accounts, or which may be otherwise detrimental to the interest
of the Adviser, Gintel & Co. or client accounts. Such conflict
may also arise from the purchase and sale for a client
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<PAGE>
account of securities in which an officer, director or employee
has an economic interest. Moreover, such conflict may arise in
connection with vendor relationships in which such employee has
any direct or indirect financial interest, family interests or
other personal interest. Such conflicts must be resolved in
favor of the client, or if a vendor, in favor of the Adviser or
Gintel & Co.
E. Failure to Disclose Personal Interests in a Security
Upon commencement of duty with the Adviser or Gintel & Co., each
investment person shall disclose, on the appropriate form, all
holdings of securities to the Compliance Officer (or designee).
An employee who is deemed to be an investment person shall not
cause or attempt to cause client accounts to acquire or dispose
of any such security (including any option, warrant or other
right or interest relating to such security) unless the employee
shall first disclose to the Compliance Officer all facts
reasonably necessary to assure that any conflicts of interest
relating to such security are resolved in a manner that is not
disadvantageous to client accounts.
The disclosures as described above are intended to bring to the
attention of the Compliance Officer any actual or apparent
conflicts of interest and to prevent employees from exerting, or
appearing to exert, improper influence on the management of
client accounts.
F. Depriving Client Accounts of Investment Opportunities
The failure of an employee who is deemed to be a portfolio
manager to recommend an investment opportunity to, or to
purchase an investment opportunity for, a client account in
order to obtain a personal benefit will be considered a course
of conduct that deprives a client account of an investment
opportunity. Therefore, such conduct will be considered to be a
violation of Section V.B. of the Code. An example of this type
of prohibited conduct is to effect a personal transaction in a
security and to intentionally fail to recommend, or to fail to
effect, a suitable client account transaction in such security
in order to avoid the appearance of a conflict of interest.
G. "Scalping" or "Front-Running"
Employees shall not acquire or dispose of beneficial ownership
of a security if such acquisition or disposition is based upon
the employee's knowledge of actions already taken, being taken
or being considered by the Adviser on behalf of any of its
client accounts. Such prohibited conduct will be considered to
violate one or more of Sections V.A., V.B.
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<PAGE>
and V.F. of the Code. Examples of this type of prohibited
conduct include:
o for personal gain, an employee uses knowledge of a
future purchase of a security by a client account and
buys the security or acquires direct or indirect
beneficial ownership of the security before the client
account buys the security; or
o for personal gain, an employee uses knowledge of a
future sale of a security by a client account and sells
the security for any account with respect to which the
employee is the direct or indirect beneficial owner
before the client account sells the security (e.g., the
employee sells short a security based on knowledge of a
future sale of the security by a client account).
H. Restricted Trading Periods ("Blackout Periods")
1. Same Day Restriction
Employees who are deemed to be "access persons" (and
registered representatives and/or principals of Gintel &
Co. are prohibited from executing a parallel securities
transaction on any day during which a client account has
a pending "buy" or "sell" order in the same (or
equivalent) security of the same issuer, until that
order is executed or withdrawn.
2. Seven-Day Restriction
Employees who are deemed to be access persons (and
registered representatives and/or principals of Gintel &
Co. are prohibited from buying or selling a security for
seven calendar days after a client account executes an
opposite trade in the same (or equivalent) security of
the same issuer. For example if a client account sold a
security within the last seven calendar days, access
persons (and registered representatives and/or
principals of Gintel & Co. would be prohibited from
buying the same (or equivalent) security of the same
issuer. (Note: The day of the last client account trade
is counted as the first day of this seven calendar day
period.)
Employees who are deemed to be investment persons are
prohibited from buying or selling a security within at
least seven calendar days before or after a client
account trades in the same (or equivalent) security of
the same issuer. (Note: The day of the last client
account trade is counted as the first day of this seven
calendar day period.) If any client account purchases or
sells a security within seven days before or after a
trade by an investment person, the Compliance Officer
will require that the employee take
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<PAGE>
such action as necessary to unwind, reverse or disgorge
such securities. The Compliance Officer will direct the
employee to disgorge any profits obtained as a result of
such subsequent trade.
Depending on the circumstances in each case, it may be
appropriate for the Compliance Officer (or designee) to
impose a "cooling-off period" longer or shorter than the
seven calendar day period described above. Some of these
circumstances could include whether the security is
thinly traded, the number and dollar volume of
transactions of employees and client accounts,
completion of trading programs, and the employee's level
of involvement in the investment process.
3. Short-Term (60-Days) Trading Reports
Employees who are deemed investment persons are not
prohibited from profiting, within a 60 calendar day
period, from the purchase and voluntary sale, or sale
and voluntary purchase, of the same (or equivalent)
securities owned by one or more client accounts;
however, at each meeting of the Board of Trustees of
Gintel Fund, the Board will review the personal
short-term (60 days) trading activities of employees
deemed to be investment persons for the period since the
previous report. In the event the Board determines that
the level or pattern of trading is inconsistent with
such investment persons' fiduciary responsibilities and
could be detrimental to the Adviser, Gintel & Co. and
Fund accounts any profits realized upon such disposition
are subject to disgorgement and/or such other penalties
as the Gintel Asset Management, Inc., Gintel & Co.,
and/or the Board of the Fund may determine. Such 60 day
period shall be measured on a first in, first out basis
unless the Compliance Officer determines otherwise.
Note: The Adviser and Gintel & Co. believe that
short-term trading by employees who are deemed to be
investment persons is inconsistent with their fiduciary
duties and can be detrimental to both the Adviser,
Gintel & Co. and their Client accounts. It is,
therefore, the Adviser and Gintel & Co.'s judgment that
excessive short-term trading can be a time-consuming
distraction, can interfere with an employee's ability to
perform his/her duties in a diligent and thorough manner
and can act in a manner inconsistent with the fiduciary
duty to clients. Such trading increases the possibility
of actual or apparent conflicts of interests.
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I. Disclosure of Confidential Information
Except in the ordinary course of assigned duties, employees
shall not disclose to any non-employee information concerning
particular securities that are held or being considered for
purchase or sale by client accounts, any information concerning
client accounts or any other information deemed confidential by
the Adviser or Gintel & Co.
J. Purchase of Non-Investment Grade Corporate Bonds Held in Client
Accounts
Employees who are deemed to be access persons (and registered
representatives and/or principals of Gintel & Co.) shall not
acquire direct or indirect beneficial ownership of a corporate
bond if, at the time of such acquisition, any debt security of
the issuer of such bond is held in a client account and such
corporate bond is rated less than investment grade by either
Moody's Investors Services, Inc. ("Moody's") or Standard and
Poor's Corporation ("S&P"). (Note: for this purpose, a bond that
is not rated by either Moody's or S&P will be treated as a bond
that is rated less than investment grade.)
K. New Issue Purchases During an Initial Public Offering
Employees who are deemed to be investment persons (and
registered representatives and/or principals of the Adviser or
any broker-dealer affiliate) shall not acquire direct or
indirect beneficial ownership of, or otherwise purchase,
securities issued during an initial public offering ("IPO")
L. Private Placements
Employees who are deemed to be investment persons (or registered
representatives and/or principals of the Adviser or any
broker-dealer affiliate) are prohibited from acquiring an
unregistered security issued in a private placement without the
prior written approval of the Compliance Officer (or designee).
Under normal circumstances, such approval will not be withheld
if the employee demonstrates in writing that: (1) the investment
is not suitable for one or more client accounts: (2) the
investment opportunity was unique to the individual
circumstances of the employee; (3) the investment did not
involve employment with the Adviser as a consideration by the
offeree: and (4) no overreaching would or could occur.
Investment persons who have been authorized to acquire
securities in a private placement must disclose such investment
to the Compliance Officer when such investment person plays a
part in any subsequent consideration of any investment in the
issuer by a client account. The decision to purchase securities
of the issuer for a client account shall be subject to an
independent review by the Compliance Officer.
21
<PAGE>
XIX. Personal Securities Trading
A. Opening of Brokerage Accounts
Each "access person" (and registered representative and/or
principal of Gintel & Co.) shall supply to the Compliance
Officer (or designee) a completed Asset Disclosure Form (see
Exhibit D), identifying all brokerage, company and other
institutional accounts subject to the Code and related
Procedures in which the employee has a direct or indirect
beneficial ownership interest, as defined in Section III.A.
herein.
It is the Adviser and Gintel & Co.'s policy that all securities
transactions by employees be transacted through Gintel & Co.
unless the Compliance Officer authorizes an exemption.
Each employee is required to provide an updated Asset Disclosure
Form to the Compliance Officer (or designee) at any time the
employee opens or closes any brokerage, company or other
institutional account in which he/she has a direct or indirect
beneficial ownership interest.
B. Pre-Clearance of Personal Securities Transactions
1. Each employee who is deemed to be an access person (or
registered representative and/or principal of any
broker-dealer affiliate) shall obtain written approval
from the Compliance Officer (or designee) prior to
buying or selling a security listed on the Restricted
List or otherwise requiring prior approval. This
requirement applies to the purchase or sale of each
security requiring prior approval in which the employee
has a direct or indirect beneficial ownership interest
such as purchases or sales for the account(s) of the
employee, his/her spouse or minor children, or for
accounts of a trust for which the employee is a trustee
or in which the employee has a direct or indirect
beneficial ownership interest.
2. Pre-clearance may be obtained from the Chief Executive
Officer ("CEO"), Chief Investment Officer ("CIO") or
Compliance Officer (or designee) as listed on Exhibit A
of the Adviser or Gintel & Co.
3. Notwithstanding Section V.B. I. above, an employee shall
not be required to obtain prior approval for
transactions in securities that are made for any
account(s) over which the employee has no direct or
indirect beneficial interest, influence or control.
4. Employees seeking pre-clearance of securities
transactions shall complete Part I of the PreClearance
Form (see Appendix H- 1) and
22
<PAGE>
submit the form to the CEO, CIO or Compliance Officer
(or designee). Employees who are not located at the home
office of the Adviser or Gintel & Co. may either fax the
completed form or verbally provide the CEO, CIO or
Compliance Officer (or designee) with the information
necessary to complete Part I of the form.
For the purpose of approving or disapproving the
securities transactions of employees, the CEO, CIO or
Compliance Officer (or designee) shall follow the
pre-clearance procedures set forth in Exhibit H, and
such other procedures approved by the Adviser for
internal control purposes.
5. Securities transactions in discretionary accounts of
access persons must also be approved by the CEO, CIO or
Compliance Officer (or designee) prior to execution of
the trade if the security requires prior approval, as
defined herein. The employee must provide a copy of the
discretionary agreement to the Compliance Officer upon
commencement of employment or upon opening a
discretionary account.
C. Reporting of Personal Securities Transactions
1. General Reporting Requirement
Each employee who is deemed to be an investment person
shall submit, at the time of employment and annually
thereafter, to the Compliance Officer (or designee) a
report ("Asset Disclosure Form"), of every position held
in a reportable security with respect to which the
employee has a direct or indirect beneficial ownership
interest.
Notwithstanding the provisions of Section V.C.I. above,
an investment person shall not be required to report
transactions in reportable securities for any account
over which the employee has no direct or indirect
beneficial interest, influence or control, or for
nonvolitional transactions.
2. Provision of Duplicate Confirmations
In the event the Compliance Officer exempts an employee
from the requirement that all brokerage transactions be
effected through Gintel & Co., the following procedures
shall apply. Except as to the annual report requirement
by the employee who is deemed to be an investment
person, the reporting requirement for investment persons
described in Section V.C.1. above may be satisfied
23
<PAGE>
through the provision of duplicate confirmations and
monthly/quarterly brokerage statements to the Compliance
Officer (or designee). Access persons are also required
to provide duplicate confirmations and monthly/quarterly
brokerage statements for all transactions in reportable
securities. The Compliance Officer (or designee) will
request each broker/dealer identified on an employee's
current Asset Disclosure Form to provide duplicate
confirmations and monthly/quarterly brokerage statements
for all securities transactions in the employee's
account(s). Therefore, it is incumbent upon each
employee to make certain that his/her Asset Disclosure
Form is maintained on a current basis (i.e., all of the
employee's brokerage, company and other institutional
accounts are identified) and provided to the Compliance
Officer (or designee) in a timely manner. Failure to
keep such Asset Disclosure Form current shall result in
disciplinary action.
In cases where it is not possible for the access
person's broker/dealer or other institution to provide
duplicate confirmations to the Compliance Officer (or
designee) for transactions in reportable securities (or
in case confirmations are otherwise not available), the
employee is required to furnish a Transaction Report
(see Exhibit G) to the Compliance Officer (or designee),
no later than 10 days after each transactions.
3. Annual Disclosure of Personal Securities Holdings
Employees who are deemed to be investment persons must
verify annually (as of December 31st) all holdings of
personal securities and other financial property for
which they have direct or indirect beneficial interest.
Upon adoption of these Procedures, each employee who is
deemed an investment person must provide to the
Compliance Officer (or designee) a complete report, on
the Asset Disclosure Form (see Exhibit D), listing each
of the securities held as of December 31st, for which
the employee has direct or indirect beneficial
ownership. This initial listing of personal securities
must be submitted no later than March 31st. Subsequent
revised lists must be provided to the Compliance Officer
(or designee) no later than 20 calendar days (after the
end of each subsequent Year. In the event that no
securities are held as of the above reporting dates, the
report should specify that such employee did not hold
securities on the respective reporting date. This report
should include book entry shares held at companies,
broker/dealers, investment advisers or other
institutions and physically issued certificates held in
a safe deposit
24
<PAGE>
box, at one's home, or in the trust department of a bank
or trust company.
25
<PAGE>
XX. Administrative Procedures
A. Distribution of Code of Ethics and Procedures Adopted Under the
Code
Upon commencement of duty with the Adviser or Gintel & Co. each
new employee shall receive a copy of the Code and related
Procedures. Thereafter, each such employee shall file an Initial
Acknowledgment Statement (see Exhibit E) with the Compliance
Officer (or designee) in a timely manner, indicating that he/she
has read and understands the Code, including the Policy
Statement on Insider Trading, and the Procedures under the Code.
The employee must also attend an orientation session with
respect to the Code and related Procedures within 30 days of
employment unless a supervisor requests in writing that a 30-day
extension of time be granted in order to complete current
business.
On an annual basis, each employee shall file with the Compliance
Officer (or designee) an Annual Acknowledgment Statement (see
Exhibit F) indicating that the employee has reviewed and
understands the provisions of the Code, including the Policy
Statement on Insider Trading, and the Procedures under the Code,
and that he/she has complied and will continue to comply, with
the requirements thereof, unless otherwise previously disclosed
to the Compliance Officer (or designee).
B. Record Keeping Responsibilities
The Compliance Officer (or designee) shall be responsible for
maintaining custody of the following records for a period of
five years:
o all forms supplied to the CEO, CIO or Compliance Officer
(or designee) by employees;
o all duplicate confirmations, Transaction Reports and
brokerage statements supplied to the Compliance Officer
designee pursuant to the requirements of Section V.C.2.
of these Procedures;
o all lists of employees used for the purpose of
administering the Code and related Procedures;
o all Pre-Clearance Forms relating to the personal
securities transactions of employees; a copy of Code and
each set of Procedures adopted thereunder;
26
<PAGE>
o a written record of each violation of the Code or
related Procedures, and a written record of any action
taken as a result of each such violation; and
o all employee Acknowledgment Statements referred to in
Section V.C.3. of the Procedures.
C. Monitoring of Securities Transactions of Employees
The duplicate confirmations supplied to the Compliance Officer
(or designee) pursuant to Section V.C.2. of these Procedures
shall be reviewed by the Compliance Officer (or designee) in
order to monitor compliance with the Code and related
Procedures. The Compliance Officer shall develop review
procedures necessary to ensure compliance with the Code,
including the Policy Statement on Insider Trading, and
Procedures related thereto.
D. Annual Seminars
Annually, the Compliance Officer will conduct a seminar for the
purpose of reviewing with all employees the Code and related
Procedures. Attendance at the Annual Review is mandatory. It is
the responsibility of each supervisor to ensure that employees
subject to such person's supervision attend the Annual Review.
Failure to attend such review will result in a letter of
admonition, censure or other sanction as deemed appropriate by
the Compliance Officer. Such document will be placed in the
violations file. Such file is required to be maintained under
the rules of the Investment Advisers Act of 1940.
E. Special Reports for Directors
The Compliance Officer will prepare on a timely basis a report
to the Directors/Trustees of any investment company managed by
the Adviser explaining significant remedial action taken by the
Compliance Officer or the Adviser in response to violations of
the Code, including the Policy Statement on Insider Trading, and
the related Procedures under the Code.
F. Annual Reports
Once each year, the Compliance Officer will report to the Boards
of Trustees of the Adviser's investment company client accounts
with regard to evolving industry practices or developments in
applicable laws or regulations during the past year, recommended
changes in the Policy Statement on Insider Trading or Procedures
under the Code, any violative conduct of a substantial nature
requiring significant remedial action
27
<PAGE>
occurring during the last year, and other information as
requested by the director/trustees.
The Compliance Officer will establish and review procedures with
respect to monitoring all personal security transactions by
employees and make periodic reports to the Boards of Trustees of
the Adviser's investment company clients.
XXI. Penalties for Violations of the Code
Employees violating or about to violate the provisions of the Code or
these Procedures may be subject to sanctions, which may include, among
other things, restrictions on such person's personal securities
transactions; a letter of admonition, education or formal censure;
fines; suspension, reassignment demotion or termination of employment;
or other significant remedial action.
Employees may also be subject to disgorgement proceedings for
transactions in securities that are inconsistent with Sections V.L. and
V.M. of the Code. Any profits realized on trades within any proscribed
period (see Section IV.H.) are required to be disgorged to charitable
organizations, eleemosynary institutions or nonprofit entities as
determined by the Compliance Officer.
28
<PAGE>
Exhibit A
OFFICERS OF GINTEL ASSET MANAGEMENT, INC.
GINTEL & CO., GINTEL FUND
I. GINTEL ASSET MANAGEMENT
Chief Executive Officer - Robert M. Gintel
Chief Investment Officer - Cecil Godman
Compliance Officer - Stephen G. Stavrides
II. GINTEL & CO.
Senior Partner/Chief Executive Officer - Robert M. Gintel
Chief Investment Officer - None
Compliance Officer - Debra Jonas
III. GINTEL FUND
Chief Executive Officer - Robert M. Gintel
Chief Investment Officer - None
Compliance Officer - Stephen G. Stavrides
29
<PAGE>
Exhibit B
BENEFICIAL OWNERSHIP
The purpose of this exhibit is to illustrate situations in which an employee has
or does not have direct or indirect beneficial ownership of a security. If an
employee has direct or indirect beneficial ownership of a "reportable security"
he/she is required to report transactions in the security according to the
provisions of Section VI. of the procedures adopted under the Code of Ethics
(the "Procedures"). If an employee has or acquires beneficial ownership of a
"security requiring prior approval," he/she is required to pre-clear
transactions in such security according to the provisions of Section VI. of the
Procedures. In other words, with respect to securities beneficially owned by an
employee, the employee reports transactions in "reportable securities" and
pre-clears transactions in securities requiring prior approval as if the
transactions were his/her own.
A. General Description of Beneficial Ownership
As used in the Procedures, beneficial ownership will be interpreted in
the same manner as it would be in determining whether a person is
subject to Section 16 of the Securities Exchange Act of 1934, except
that the determination of such ownership shall apply to all securities,
including equity securities. For the purpose of that Act, beneficial
ownership means:
o the receipt of benefits substantially equivalent to those of
ownership through relationship, understanding, agreement,
contract or other arrangements; or
o the power to vest such ownership in oneself at once, or at some
future time.
Using the above general definition as a broad guideline, the ultimate
determination of beneficial ownership will be made in light of the facts
of the particular case. Key factors are the degree of the individual's
ability to exercise control over the security and the ability of the
individual to benefit from the proceeds of the security. Employees are
encouraged to seek the advice of the Compliance Officer if they have any
questions concerning whether or not they have beneficial ownership of
any security.
B. General Rules
1. Securities Held by Family Members
As a general rule, a person is regarded as the beneficial owner
of securities held in his/her name, as well as the name of
his/her spouse and their minor
30
<PAGE>
children. These relationships ordinarily confer to the holders
benefits substantially equivalent to ownership. In addition,
absent countervailing facts, it is expected that securities held
by relatives who share the same home as the reporting person
will be reported as beneficially owned by such person.
2. Securities Held by a Corporation or Partnership
Generally, ownership of securities in a company (i.e.,
corporation, partnership, etc.) does not constitute beneficial
ownership with respect to the holdings of the company in the
securities of another issuer. However, an owner of securities
issued by a company will be deemed to have beneficial ownership
in the securities holdings of the company where:
o the company is merely a medium through which one or
several persons in a small group invest or trade in
securities;
o the owner owns 25% or more of the outstanding voting
securities of, or a 25% or more equity interest in, the
company; and
o the company has no other substantial business.
In such cases, the person or persons who are in a position of
control of the company are deemed to have a beneficial ownership
interest in the securities of the company.
3. Securities Held in Trust
Beneficial ownership of securities in a private trust includes:
o the ownership of securities as a trustee where either
the trustee or members of his "immediate family" have a
vested interest in the income or corpus of the trust;
o the ownership of a vested beneficial interest in a
trust; and
o the ownership of securities as a settler of a trust in
which the settler has the power to revoke the trust
without obtaining the consent of all beneficiaries.
As used in this section, the "immediate family" of a trustee
means:
o a son or daughter of the trustee, or a descendent of
either;
o a stepson or stepdaughter of the trustee;
31
<PAGE>
o the father or mother of the trustee; and
o a spouse of the trustee.
For the purpose of determining whether any of the foregoing
relations exists, a legally adopted child of a person shall be
considered a child of such person by blood.
4. Securities Not Beneficially Owned
Beneficial ownership does not include, however, indirect
investment by any person in portfolio securities held by:
o any holding company registered under the Public Utility
Holding Company Act;
o any investment company registered under the Investment
Company Act;
o a pension or retirement plan holding securities of an
issuer whose employees generally are the beneficiaries
of the plan; and
o a business trust with over twenty-five beneficiaries.
Participation in a pension or retirement plan will result in
beneficial ownership of the portfolio securities if plan
participants can withdraw and trade the securities without
withdrawing from the plan.
Upon selling, transferring or otherwise disposing of securities
in another company's 401(k) plan, the transaction must be
pre-cleared with the Compliance Department, if it consists of
"reportable securities."
C. Examples of Beneficial Ownership
1. Securities Held by Family Members
Example 1-A. X and Y are married. Although Y has an independent
source of income from a family inheritance and segregates her funds from those
of her husband's, Y contributes to the maintenance of the family's home. X and Y
have engaged in joint estate planning and have the same financial advisor. Since
X and Y's resources are clearly significantly directed toward their common
property, they will be deemed to be beneficial owners of each other's
securities.
32
<PAGE>
Example 1-B. X and Y are separated and have filed for divorce.
Neither party contributes to the support of the other. X has no
control over the financial affairs of his wife. X is not a
beneficial owner of Y's securities.
Example 1-C X's adopted son Z lives in X's home. Z is self
supporting and contributes to household expenses. X is a
beneficial owner of Z's securities.
Example 1-D. X's mother A, lives alone and is financially
independent. X has power of attorney over his mother's estate,
pays all her bills and manages her investment affairs. X borrows
freely from A without being required to pay back funds with
interest, if at all. X takes out personal loans from A's bank in
A's name, and the interest from such loans is paid from A's
account. X is a significant heir of A's estate. X is a
beneficial owner of A's estate.
2. Securities Held by a Company
Example 2-A. 0 is a holding company with five shareholders.
Although O's company does no business on its own, it has several
wholly owned subsidiaries which manufacture oil related
products. X is a controlling shareholder of O's company. X has a
beneficial interest in the securities holdings of 0.
3. Securities Held in Trust
Example 3-A. X is trustee of a trust created for his minor
children. When both of X's children reach 21, each will receive
an equal share of the corpus of the trust. X is a beneficial
owner of the trust.
Example 3-B. X is trustee of an irrevocable trust for his
daughter. X is a director of the issuer of the equity securities
held by the trust. The daughter is entitled to the income of the
trust until she is 25 years old and is then entitled to the
corpus. If the daughter dies before reaching 25, X is entitled
to the corpus. X should report and pre-clear the securities
transactions of the trust as his own.
4. Book Entry Shares in Public Companies
Certain widely held public companies provide for automatic share
accumulation programs directly from the respective companies.
Initial transactions pursuant to these programs must be
pre-cleared by the Compliance Officer (or designee), but
subsequent investments do not require preclearance. However,
such holdings should be reported on the Initial/Annual Asset
Disclosure Form (see Exhibit D). Other types of automatic
programs that do not require pre-clearance include:
33
<PAGE>
o automatic withdrawal from checking account, monthly, for
investments in book entry shares in public companies;
and
o automatic reinvestment of dividends in established book
entry accounts with public companies.
5. Investment Clubs
Transactions by an Investment Club in which an employee is a
participant, partner or otherwise has a direct or indirect
beneficial ownership, are subject to the pre-clearance and
reporting provisions described in the Procedures.
34
<PAGE>
Exhibit C
Distinction Between "Reportable Securities" and "Securities Requiring Prior
Approval"
The Procedures under the Code of Ethics require that certain employees obtain
the approval of the Compliance Officer (or designee) before purchasing or
selling any security requiring prior approval, and that such employees enable
the Compliance Officer to receive duplicate confirmation for all of their
transactions in reportable securities. The table below is intended to show the
types of securities that are considered to be securities requiring prior
approval and reportable securities. This list does not purport to be an
exhaustive list of securities requiting prior approval and reportable
securities, and questions should be directed to the Compliance Officer (or
designee) when clarification is necessary.
================================================================================
Securities Reportable
Types of Securities Requiring Securities
Prior
Approval
- --------------------------------------------------------------------------------
Securities issued or guaranteed by the U.S.
Government, its agencies or instrumentalities No No
- --------------------------------------------------------------------------------
Money market instruments, such as bankers'
acceptances, certificates of deposit or No No
repurchase agreements
- --------------------------------------------------------------------------------
Securities issued by an open-end investment
company (including the Adviser's clients) and No Yes
unit investment trusts
- --------------------------------------------------------------------------------
Securities and stock options issued by the
Adviser, if any. No Yes
- --------------------------------------------------------------------------------
Options on a stock market index, foreign No Yes
currency, etc.
- --------------------------------------------------------------------------------
Unregistered or private placement securities Yes Yes
- --------------------------------------------------------------------------------
Securities issued by a closed-end investment
company Yes Yes
- --------------------------------------------------------------------------------
Securities issued or guaranteed by any foreign
government, its agencies or instrumentalities No No
- --------------------------------------------------------------------------------
Variable annuities issued by insurance company
separate accounts No No
- --------------------------------------------------------------------------------
All securities, other than those described above,
which appear on the Restricted List:
================================================================================
================================================================================
Notes
================================================================================
35
<PAGE>
================================================================================
The following transactions are exempted from the pre-clearance and/or reporting
process, even it the security involved requires pre-clearance and/or reporting:
- - Automatic reinvestment plans for mutual funds and other securities (the
initial investment is not exempted from this process)
- - Purchases and sales that are non-violation
Private securities transactions involving securities that require preclearance
and/or reporting are not exempted from this process.
================================================================================
36
<PAGE>
Exhibit E
(Privileged And Confidential Information)
GINTEL ASSET
MANAGEMENT
and
GINTEL & CO.
CODE OF ETHICS
INITIAL ACKNOWLEDGMENT FORM
I have read Gintel Asset Management and Gintel & Co.'s Code of Ethics,
the Policy Statement on Insider Trading and the related Procedures, and I
understand the requirements thereof. I certify that I will comply with the
above. I understand that any violation of the Policy Statement on Insider
Trading or the Code and the related Procedures may lead to sanctions or other
significant remedial action.
Print Name_______________________________
Signature_________________________________
Date_______________________________________
37
<PAGE>
(Privileged And Confidential Information)
GINTEL ASSET
MANAGEMENT
and
GINTEL & CO.
CODE OF ETHICS
INITIAL ACKNOWLEDGMENT FORM
(Investment Persons)
I have read the Code of Ethics, the Policy Statement on Insider Trading
and the related Procedures, and I understand the requirements thereof. I certify
that I will comply with the above. I understand that any violation of the Policy
Statement on Insider Trading or the Code and the related Procedures may lead to
sanctions or other significant remedial action. I understand that I may also be
subject to disgorgement proceedings for any short-term transactions that I may
conduct that are inconsistent with Sections V.L. and V.M. of the Code.
I have disclosed to the Compliance Office all personal securities
holdings for which I have direct or indirect beneficial ownership and I will
continue to do so on an annual basis as long as I am employed with Gintel Asset
Management or Gintel & Co. and I will continue to keep this information current
with the Compliance Offices.
I understand that there are prohibitions, restrictions and blackout
periods on certain types of securities transactions and that I am prohibited
from acquiring any securities in an initial public offering (IPO).
Print Name_________________________________
Signature__________________________________
Date_______________________________________
38
<PAGE>
Exhibit F
(Privileged And Confidential Information)
GINTEL ASSET
MANAGEMENT
and
GINTEL & CO.
CODE OF ETHICS
ANNUAL ACKNOWLEDGMENT FORM
I have read the Code of Ethics, the Policy Statement on Insider Trading
and the related Procedures. I understand the requirements thereof, and except as
otherwise disclosed to the Compliance Office, I certify that I have, to date,
complied with, and will continue to comply with, such requirements. I understand
that any violation of the Policy Statement on Insider Trading or the Code and
the related Procedures may lead to sanctions or significant remedial action.
Print Name_________________________________
Signature__________________________________
Date_______________________________________
39
<PAGE>
(Privileged And Confidential Information)
GINTEL ASSET
MANAGEMENT
and
GINTEL & CO.
CODE OF ETHICS
ANNUAL ACKNOWLEDGMENT FORM
(Investment Persons)
I have read the Code of Ethics, the Policy Statement on Insider Trading
and the related Procedures. I understand the requirements thereof, and except as
otherwise disclosed to the Compliance Office, I certify that I have, to date,
complied with, and will continue to comply with, such requirements. I understand
that any violation of the Policy Statement on Insider Trading or the Code and
the related Procedures may lead to sanctions or significant remedial action. I
understand that I may also be subject to disgorgement proceedings for any
short-term transactions that I may conduct that are inconsistent with Sections
V.L. and V.M. of the Code.
In addition, I have reported or disclosed all personal securities
transactions required to be reported or disclosed pursuant to the requirements
of the Code and the related Procedures. I have reported to the Compliance Office
all additions and/or deletions of accounts for reportable securities for which I
have direct or indirect beneficial ownership held at broker/dealers, companies
or other institutions. I have disclosed all personal securities for which I have
direct or indirect beneficial ownership. I will continue to do so on an annual
basis as long as I am employed by Gintel Asset Management or Gintel & Co.
I understand that there are prohibitions, restrictions and blackout
periods on certain types of securities transactions and that I am prohibited
from acquiring any securities in an initial public offering (IPO).
Print Name_________________________________
Signature__________________________________
Date_______________________________________
40
<PAGE>
Exhibit G
MEMORANDUM
To: Compliance Officer
From: (Please print or type)
Date:
Subject: Personal Securities Transaction Report*
This Personal Securities Transaction Report ("Report") is submitted pursuant to
the Procedures under Gintel Asset Management and Gintel & Co.'s Code of Ethics.
The table below lists information with respect to purchases or sales in any
reportable security in which I may be deemed to have a direct or indirect
beneficial ownership interest. I understand that I may have direct or indirect
beneficial ownership of securities of which certain other persons are the record
owners as well as securities of which I am the record owner, and I have included
transactions in such securities in this Report where applicable. I also
understand that I am not required to include in this Report transactions
effected for any account over which I do not have any direct or indirect
beneficial interest, influence or control.
I hereby certify that:
1. I am fully familiar with the Code of Ethics and the related Procedures
and the Policy Statement on Insider Trading of Gintel Asset Management
and Gintel & Co.
2. To the best of my knowledge, the information furnished in this Report is
complete, true and correct.
Employee Signature
<TABLE>
<CAPTION>
- ------------ ------- ------------- ------------- ------------- -------- ------------ ------
Shares or Broker,
Date of Title of Principal **Nature of Price/ Dealer or
Transaction Issuer Security Amount Transaction UnitUnit Bank ***
- ------------ ------- ------------- ------------- ------------- -------- ------------ ------
<S> <C> <C> <C> <C> <C> <C> <C>
- ------------ ------- ------------- ------------- ------------- -------- ------------ ------
- ------------ ------- ------------- ------------- ------------- -------- ------------ ------
- ------------ ------- ------------- ------------- ------------- -------- ------------ ------
- ------------ ------- ------------- ------------- ------------- -------- ------------ ------
- ------------ ------- ------------- ------------- ------------- -------- ------------ ------
- ------------ ------- ------------- ------------- ------------- -------- ------------ ------
</TABLE>
* Important Note: This Report is due no later than 10 calendar days after
the trade date. The trade date is counted as the first day.
** Purchase, sale, other type of disposition or acquisition.
*** Enter "X" in this column, if you wish to disclaim beneficial ownership
of any security listed on this Report.
41
<PAGE>
Exhibit H
Procedures For The Pre-Clearance Of Personal Securities Transactions
XXII. Securities Transactions Requiring Pre-Clearance
Employees who are deemed to be access persons (and registered
representatives and/or principals of Gintel & Co.) desiring to purchase
or sell a security requiring prior approval must request approval from
the Compliance Officer, CEO or CIO prior to execution of such
transaction. (Note: Pre-clearance is also required for transactions in
securities requiring prior approval whenever an employee has or acquires
a beneficial ownership interest in such security.) Failure to obtain
pre-clearance when required will generally be considered a violation of
these Procedures.
Employees are encouraged to seek pre-clearance for all of their
transactions in reportable securities; however, preclearance is required
only for transactions in securities requiring prior approval. Exhibit C
summarizes the difference between reportable securities and securities
requiring prior approval.
XXIII. Pre-Clearance Procedure
The procedure described below shall be followed in order to ascertain
whether a proposed personal securities transaction by an employee should
be approved or disapproved. Employees should recognize that this
procedure is designed to provide legal protection to the Adviser, its
clients and employees.
A. Completion of Part I of Pre-Clearance Form
Requests for the pre-clearance of securities transactions shall
be documented by completion of the Pre-Clearance Form (see
Appendix H- 1). The employee seeking to purchase or sell a
security requiring prior approval shall complete Part I of the
form in full and submit it to the Compliance Officer or
designee, and shall provide all of the information required by
Part I of the form.)
B. Completion of Part II of Pre-Clearance Form
The Compliance Officer, CEO or CIO (or designee) shall review
the information in Part I of the Pre-Clearance Form for
completeness. If the proposed transaction requires
pre-clearance, or the employee seeks preclearance even though it
is not required, the Compliance Officer or designee will work
with the CEO or CIO to complete Part II of the form.
Part II of the Pre-Clearance Form is completed for the purpose
of ascertaining whether there are any potential conflicts of
interest between
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recent or anticipated securities transactions in client accounts
and proposed transactions by employees. However, the Adviser and
Gintel & Co. believe that before an employee engages in any
securities transaction, such employee has a duty to determine
that the proposed transaction would not be in conflict with
recent or proposed securities transactions in client accounts
and would otherwise be in compliance with the Code and these
Procedures.
C. Considerations During the Pre-Clearance Process
1. Anticipated Client Account Trades
For access persons (and registered representatives
and/or principals of the Adviser or its broker-dealer
affiliate), if any client account is considering the
purchase of the same or equivalent security, the
Compliance Officer disapproves the proposed transaction
if it is a purchase of the same or equivalent security
of the same issuer. If any client account is considering
the sale of the same or equivalent security, the
Compliance Officer disapproves the transaction if it is
a sale of the same or equivalent security of the same
issuer.
2. Parallel Transactions
For access persons (and registered representatives
and/or principals of Gintel & Co.) if a client account
has recently purchased a security, ordinarily there is
no reason for the Compliance Officer to disapprove a
subsequent purchase of the same or equivalent security
of the same issuer, provided all client account
transactions have taken precedence over the employee's
proposed transaction and there are no anticipated client
account transactions in the same or equivalent security
of the same issuer. Likewise, if a client account has
recently sold a security, ordinarily there is no reason
for the Compliance Officer to disapprove a subsequent
sale of the same or equivalent security, so long as
there are no anticipated client account transactions in
the same or equivalent security of the same issuer.
Investment persons are subject to the seven-day blackout
period on all proposed transactions as described in
Section II.C.4. below.
3. Opposite Transactions
If any client account has, within the past seven
calendar days, sold the same or equivalent security of
the same issuer, the Compliance Officer disapproves the
access person's proposed security transaction if it is a
purchase. If any client account has, within the
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past seven calendar days, purchased the same or
equivalent security of the same issuer, the Compliance
Officer disapproves the access person's transaction if
it is a sale. Investment persons are subject to the
seven-day blackout period on all proposed transactions
as described in Section H.C.4. below.
Depending on the circumstances in each case, it may be
appropriate for the Compliance Officer to impose a
"cooling-off period" longer or shorter than the
seven-day period described above. Some of these
circumstances could include whether the security is
thinly traded, the number and dollar volume of
transactions of employees and client accounts, and the
employee's involvement in the investment process. (Note:
The day of the last client account trade is counted as
the first day of this five day period.)
4. Blackout Periods
A. Same Day
Access persons (and registered representatives
and/or principals of Gintel & Co.) are prohibited
from executing a securities transaction on any day
during which a client account has a pending "buy"
or "sell" order in that same or equivalent security
until that order is executed or withdrawn.
B. Seven-Day
Employees who are deemed to be access
persons (and registered representatives and/or
principals of Gintel & Co. are prohibited from
buying or selling a security for seven calendar
days after a client account executes an opposite
trade in the same (or equivalent) security of the
same issuer. For example if a client account sold a
security within the last seven calendar days,
access persons (and registered representatives
and/or principals of Gintel & Co. would be
prohibited from buying the same (or equivalent)
security of the same issuer. (Note: The day of the
last client account trade is counted as the first
day of this seven calendar day period.)
Investment persons are prohibited from buying or
selling a security within at least seven calendar
days before or after a client account trades in the
same or equivalent security. (Note: The day of the
last client account trade is counted as the first
day of this seven calendar day period.)
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If any client account purchases or sells a security
within seven days before or after a trade by an
investment person, the Compliance Officer has the
authority to require that the employee's trade be
unwound or canceled. The Compliance Officer shall
require that the employee take such action as
necessary to unwind, reverse or disgorge such
securities. The Compliance Officer shall direct the
employee to relinquish any profits obtained as a
result of unwinding or canceling the trade. Any
losses or associated commissions realized on trades
within the prescribed period are the responsibility
of the employee who executed the trade during a
blackout period and as a result had to unwind or
cancel the trade.
C. 60-Day
Investment persons are not prohibited from
profiting in the purchase and voluntary sale, or
sale and voluntary purchase, within 60 calendar
days, of the same or equivalent security owned by
any client account; however, at each meeting of the
Board of Trustees of Gintel Fund, the Board will
review the personal short-term (60 days) trading
activities of employees deemed to be investment
persons for the period since the previous report .
In the event the Board determines that the level or
pattern of trading is inconsistent with their
fiduciary responsibilities and can be detrimental
to the Adviser, Gintel & Co. and their Client
accounts any profits realized upon such disposition
are subject to disgorgement and/or such other
penalties as the Gintel Asset Management, Inc.,
Gintel & Co., and/or the Board of the Fund may
determine.
D. Conflict of Interest Monitoring
All personal trades executed by access persons (and
registered representatives and/or principals of any
broker-dealer affiliate) will be monitored by the
Compliance Officer for current and future conflicts
of interest with client accounts.
5. Initial Public Offering (IPOs)
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Investment persons (and registered representatives and/or
principals of Gintel & Co.) may not acquire direct or
indirect beneficial ownership or otherwise purchase
securities issued in an IPO.
6. Private Placements
Investment persons (and registered representatives and/or
principals of Gintel & Co.) are prohibited from acquiring
an unregistered security issued in a private placement
without the prior written approval of the Compliance
Officer. Under normal circumstances, such approval will
not be withheld if the employee demonstrates in writing
that: (1) the investment is not suitable for one or more
of the Adviser's clients, (2) the investment opportunity
was unique to the individual circumstances of the
employee, (3) the investment did not involve employment
with the Adviser or its affiliated broker-dealer as a
consideration by the offeree, and (4) no overreaching
would or could occur. Investment persons who have been
authorized to acquire securities in a private placement
must disclose such investment to the CEO and CIO when such
investment person plays a part in any subsequent
consideration of any investment in the issuer by a client
account and that the client's decision to purchase
securities of the issuer should be subject to an
independent review by the CEO and CIO.
7. Non-Investment Grade Corporate Bonds
If an access person (or registered representative and/or
principal of Gintel & Co.) wishes to purchase a corporate
bond that is held in one or more client accounts and which
is currently not rated or rated less than investment
grade, the Compliance Officer disapproves the proposed
transaction. (For further details, see Section IV.J. of
the Procedures adopted under the Code.)
D. Approval
Unless the employee's proposed transaction has been
disapproved, the Compliance Officer indicates his approval
of the transaction by signing the Pre-Clearance Form. The
form is kept on file in the Compliance Office, as required
under Section VI.B. of the Procedures.
Ordinarily, the securities transactions of employees will
be disapproved if they fail to meet the foregoing approval
criteria. However, in some circumstances it may be
appropriate for a
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securities transaction to be approved even though one or
more of the above criterion indicates that the
transaction should be disapproved. In such cases, the
reason for justifying such a trade will be described in
the "Comments" section of the Pre-Clearance Form or on a
supplemental sheet to the form.
XXIV. Approval Period
Execution of an approved securities transaction is permissible
through the date indicated in Part I of the Pre-Clearance Form,
provided that, ordinarily, execution shall be effected no later
than the day following the date of the request for pre-clearance.
XXV. Procedure for Appealing Disapproved Securities Transactions
If any employee believes that a disapproved securities
transaction should have been approved, he/she may appeal the
decision of the Compliance Officer by presenting a written
request for approval to the CEO.
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Appendix H-1
Pre-Clearance of Personal Securities Transactions
PART 1: To be completed by Gintel Asset Management or Gintel & Co.
employee seeking pre-clearance.
- ---------- ---------------------------------------------------------------------
1. Employee Name:
- ---------- ---------------------------------------------------------------------
2. Date of Request: Date by which proposed transaction
is to be completed:
- ---------- ---------------------------------------------------------------------
3. Name of Issuer/Security:
- ---------- ---------------------------------------------------------------------
4. Quantity (specify Par/Shares/Contracts):
- ---------- ---------------------------------------------------------------------
5. Is this a purchase or sell transaction?
- ---------- ---------------------------------------------------------------------
6. Is this security a new issue (IPO)?
- ---------- ---------------------------------------------------------------------
7. Is this an unregistered or private placement security?
- ---------- ---------------------------------------------------------------------
8. Is this security a corporate bond that is unrated below investment
grade?
- ---------- ---------------------------------------------------------------------
9. Have you purchased or sold equivalent securities of the same issuer
within the past 60 calendar days:
- ---------- ---------------------------------------------------------------------
- --------------------------------------------------------------------------------
Employee Certification:
I have read the Gintel Asset Management and Gintel & Co. Code of Ethics and
related Procedures and the Policy Statement on Insider Trading within the past
year, and I believe that this transaction complies with the Code and related
Procedures and with the Statement of Policy on Insider Trading.
Employee's Signature:
- --------------------------------------------------------------------------------
Part II: To be completed by Trading Desk, Compliance Office and Senior Partner
- --------------------------------------------------------------------------------
1. Issuer/Security Name:
- --------------------------------------------------------------------------------
2. Do any client accounts currently hold this security?
- --------------------------------------------------------------------------------
Reviewed By: _______________________________
(Head Trader)
Reviewed By: _______________________________
(Compliance Officer)
Approved By: _______________________________
(Senior Partner)
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Exhibit II
SPECIAL PROCEDURES FOR GENERAL AUTOMATION SECURITIES
o The Fund, Client accounts, officers, directors, partners and
employees of the Fund, the Adviser or Gintel & Co. are prohibited
from investing in General Automation securities. If a client
account already holds General Automation shares, it may not buy
any back once it sells its shares.
o A "three-day" rule will apply whereby client accounts will be
prohibited from selling General Automation stock and brokerage
accounts will be prohibited from buying or selling General
Automation stock on the day prior to, the day of, and the day
after issuance of press releases by General Automation.
o No trades will be executed in General Automation securities for
any account without confirmation from General Automation's
President or Chief Financial Officer that there is no material,
nonpublic information available which should preclude trading in
General Automation securities.
o Paul Morigi will be liable and responsible for his own purchases
and sales; however, under circumstances where self-reporting is
inadequate, an objective third-party review by Stephen G.
Stavrides should take place to determine whether material,
nonpublic information was possessed prior to buying or selling
General Automation shares.
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GINTEL ASSET MANAGEMENT, INC.
GINTEL & CO.
THE GINTEL FUND
QUARTERLY SECURITIES TRANSACTION REPORT
For The Calendar Quarter Ended __________
Instructions
1. List all transactions in Covered Securities in any account in which you
have a Beneficial Ownership**. Use additional sheets if necessary.
2. Write "none" if you have no transactions in Covered Securities during
the quarter.
3. If you submit copies of your monthly brokerage statements to the
Compliance Officer, and those monthly brokerage statements disclose the
required information with respect to all Covered Securities in which you
have Beneficial Ownership, you need not file this form unless you have
established a new account during the quarter.
<TABLE>
<CAPTION>
====================================================================================================================================
Date of No. of Shares or Broker, Dealer or Other Party Through Whom
Name of Security Transaction Purchase/Sale Principal Amount Price Transaction Was Made
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
====================================================================================================================================
New Accounts: Complete the following information if you have opened a new securities account during the quarter. Transactions in
securities should be listed above.
</TABLE>
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------------
Name and Mailing Address of
Title of Account Institution at which account was opened Account Number
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
- -----------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
I certify that the information provided above is correct.
Date:____________________ Signature:__________________________ Name:___________________________
**Accounts for which you have a direct or indirect beneficial ownership interest include, for example, your own accounts as well as
accounts of your spouse and/or minor children or adults living in your home who are financially dependent on you, and trusts for
which you are trustee or in which you have a beneficial ownership Interest. Please call the Compliance Officer if you are unsure if
you have a beneficial ownership interest in a brokerage account.
</TABLE>
<PAGE>
GINTEL ASSET MANAGEMENT, INC.
GINTEL & CO.
THE GINTEL FUND
INITIAL ASSET CERTIFICATION OF ACCESS PERSONS
Instructions:
1. You must list each Covered Security in which you have Beneficial
Ownership**, that you hold. Use additional sheets if necessary
2. You must complete and sign this certification whether or not you or your
broker sends statements directly to the Compliance Officer.
<TABLE>
<CAPTION>
====================================================================================================================================
Name of Security Number of Shares or Registration on Security or Nature of Broker, Dealer or Other Party Account
Principal Amount Account Interest Through Whom Transaction Was Made Number
or With Whom Securities Are Held
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
====================================================================================================================================
Certifications: I hereby certify that:
1. The securities listed above reflect all the Covered Securities in which I have Beneficial Ownership as of the date
listed above.
2. I have read the Code of Ethics and certify that I am in compliance with it.
Date:_________________________ Signature:____________________________ Name:_________________________
**Accounts for which you have a direct or indirect beneficial ownership interest include, for example, your own accounts as well as
accounts of your spouse and/or minor children or adults living in your home who are financially dependent on you, and trusts for
which you are trustee or in which you have a beneficial ownership Interest. Please call the Compliance Officer if you are unsure if
you have a beneficial ownership interest in a brokerage account.
</TABLE>
<PAGE>
GINTEL ASSET MANAGEMENT, INC.
GINTEL & CO.
THE GINTEL FUND
ANNUAL ASSET CERTIFICATION OF ACCESS PERSONS
For the Year Ended __________
Instructions:
1. You must list each Covered Security in which you have Beneficial
Ownership**, that you hold at the end of the year indicated above. Use
additional sheets if necessary.
2. Write "none" if you own no Covered Securities at year end.
3. You must complete and sign this form for annual certification whether or
not you or your broker sends statements directly to the Compliance
Officer.
<TABLE>
<CAPTION>
====================================================================================================================================
Name of Security Number of Shares and Registration on Security or Nature of Broker, Dealer or Other Party Account
Principal Amount Account Interest Through Whom Transaction Was Made Number
or With Whom Securities Are Held
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
====================================================================================================================================
Certifications: I hereby certify that:
1. The securities listed above reflect all the Covered Securities in which I have Beneficial Ownership at the end of
the period.
2. I have read the Code of Ethics and certify that I am in compliance with it.
Date:_________________________ Signature:____________________________ Name:_________________________
**Accounts for which you have a direct or indirect beneficial ownership interest include, for example, your own accounts as well as
accounts of your spouse and/or minor children or adults living in your home who are financially dependent on you, and trusts for
which you are trustee or in which you have a beneficial ownership Interest. Please call the Compliance Officer if you are unsure if
you have a beneficial ownership interest in a brokerage account.
</TABLE>
