<PAGE> 1
As filed via EDGAR with the Securities and Exchange Commission
on April 30, 1996
Registration No. 2-74268
================================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
-------------------
FORM N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 [ X ]
Pre-Effective Amendment No. ___ [ ]
Post-Effective Amendment No. 16 [ X ]
and/or
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 [ X ]
Amendment No. 17 [ X ]
(Check appropriate box or boxes.)
GINTEL ERISA FUND
(EXACT NAME OF REGISTRANT AS SPECIFIED IN CHARTER)
6 Greenwich Office Park
Greenwich, Connecticut 06830
(800) 243-5808 or
(203) 622-6400
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES)
REGISTRANT'S TELEPHONE NUMBER
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
(800) 243-5808 or
(203) 622-6400
(NAME AND ADDRESS OF AGENT FOR SERVICE)
Copies to:
Susan J. Penry-Williams, Esq.
Kramer, Levin, Naftalis, Nessen, Kamin & Frankel
919 Third Avenue
New York, New York 10022
--------------------
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.
Indefinite number of shares registered under Rule 24f-2 by filing of initial
registration statement, effective January 15, 1982. Pursuant to paragraph
(b)(1) of Rule 24f-2, Registrant filed on February 23, 1996 a Rule 24f-2
Notice for the fiscal year ended December 31, 1995.
<PAGE> 2
GINTEL ERISA FUND
REGISTRATION STATEMENT ON FORM N-1A
CROSS-REFERENCE SHEET
FORM N-1A
ITEM NUMBER
PART A PROSPECTUS CAPTION
1. Cover Page
2. Expenses
3. Condensed Financial Information; Investment
Performance
4. Cover Page; The Fund; Investment Objective
and Policies
5. (a) Management
(b)-(c) Investment Advisor and Investment Advisory Agreement
(d) Administrative Services Agreement
(e) Custodian, Transfer Agent and Dividend Paying Agent
(f) Expenses; Investment Advisor and Investment Advisory
Agreement
(g) Brokerage Allocation
5A. (a) Investment Peformance
(b) Other Information
6. (a) Organization and Description of Shares of the Fund
(b) Cover Page
(c)-(d) Organization and Description of Shares of the Fund
(e) Cover Page
(f)-(g) Tax Matters
(h) *
7. (a-c) Purchase of Shares
(d) Cover Page; Purchase of Shares
(e) Expenses
8. (a-c) Redemption of Shares
9. *
C-1
<PAGE> 3
STATEMENT OF ADDITIONAL
PART B INFORMATION CAPTION
10. Cover Page
11. Table of Contents
12. *
13. (a-c) Investment Objective and Policy; Investment
Restrictions
14. (a-b) Management
(c) *
15. (a-b) Investment Advisor and Investment Advisory
Agreement
(c) Management
16. (a-c) Investment Advisor and Investment Advisory
Agreement
(d-e) (1)
(f) *
(g) *
(h) See Part A - Custodian,
Transfer Agent and Dividend
Paying Agent; Counsel and
Auditors
(i) *
17. Portfolio Transactions and Brokerage
18. See Part A - Organization and
Description of Shares of the
Funds
19. (a) See Part A - Purchase of Shares; Redemption
of Shares
(b) Computation of Net Asset Value
(c) *
20. Tax Matters
21. Portfolio Transactions and Brokerage
22. Performance Information
23. Financial Statements
PART C
Information required to be included in Part C is set forth under
the appropriate Item, so numbered, in Part C to this Registration Statement.
- ------------------
(1) Not applicable.
C-2
<PAGE> 4
PROSPECTUS MAY 1, 1996
GINTEL
ERISA FUND
Gintel ERISA Fund (the "Fund") is an open-end, non-diversified
investment company which seeks to maximize total investment returns through a
combination of long-term appreciation and current income. It invests in a
manageable number of securities rather than broadly diversifying its portfolio.
The Fund will also invest for short-term gains depending on market conditions.
The Fund's shares are offered exclusively to pension plans, trust, or IRA and
Keogh plans which qualify under Sections 401, 403(b), or 408 of the Internal
Revenue Code of 1986, as amended, (the "Code") and to educational, religious,
and charitable institutions, foundations and other organizations which are
exempt from Federal income taxation under Section 501 of the Code and,
therefore, may invest without regard to the tax consequences for its
shareholders. The Fund offers and redeems its shares at net asset value.
Investors pay no sales charge or commissions to purchase shares of the Fund. The
minimum initial purchase is $10,000 except for IRA and Keogh accounts where the
minimum initial purchase is $2,000. There is no minimum for additional
investments. Gintel Equity Management, Inc. acts as investment advisor to the
Fund.
INVESTMENT OBJECTIVE-- A Combination of Long-Term
Appreciation, Investment Income, and
Short-Term Capital Gains
NO SALES CHARGES-- No Sales Load
No Redemption Fees
No 12b-1 Fees
EXPENSE LIMITATION-- Advisory fees, brokerage commissions,
and operating expenses are limited to a
fixed percentage of assets.
MINIMUM INVESTMENT-- $10,000 ($2,000 for IRA and Keogh
Accounts)
ROUTINE SHAREHOLDER REPORTS-- We update shareholders on the market
and portfolio four times a year,
including Semi-Annual and Annual
Reports.
MANAGEMENT ALSO INVESTS IN THE FUND-- As of March 31, 1996, the employees of
the Advisor and their families owned
13.6% of the Fund's shares.
This Prospectus sets forth concisely the information that a prospective
investor should know before investing in shares of the Fund and should be read
and retained for future reference. A Statement of Additional Information, dated
May 1, 1996, containing additional information about the Fund has been filed
with the Securities and Exchange Commission and is hereby incorporated by
reference into this Prospectus. A copy of the Statement of Additional
Information can be obtained without charge by calling (203) 622-6400 or writing
the Funds' Investment Advisor at 6 Greenwich Office Park, Greenwich, CT 06831.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS
THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED
UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
<PAGE> 5
EXPENSES
SHAREHOLDER TRANSACTION EXPENSES
Maximum Sales Load Imposed on Purchases -- NONE
Maximum Sales Load Imposed on Reinvested Dividends -- NONE
Deferred Sales Load Imposed on Redemptions --NONE
Redemption Fees (as a percentage of assets redeemed) -- NONE
12b-1 Fees -- NONE
ANNUAL FUND OPERATING EXPENSES
(as a percentage of average net assets)
<TABLE>
<S> <C>
Management Fees 1.04%
12b-1 Fees --
Other Expenses* 1.41
-----
Total Fund Operating Expenses 2.45%
</TABLE>
*Includes brokerage commissions, which are paid under the Fund's Administrative
Services Agreement.
Example:
<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
------ ------- ------- --------
<S> <C> <C> <C> <C>
You would pay the following $25 $76 $131 $279
expenses on a $1,000 investment,
assuming (a) 5% annual return and (b)
redemption at the end of each time period:
</TABLE>
The purpose of the foregoing table is to assist an investor in
understanding the various costs and expenses that an investor in the Fund will
bear directly and indirectly. (For more complete descriptions of the various
costs and expenses, see "Investment Advisor and Investment Advisory Agreement",
"Purchase of Shares" and "Distribution Plans".) The expenses and Example
appearing in the table above are based on the Fund's expenses for the year ended
December 31, 1995. The Example shown in the table above should not be considered
a representation of past or future expenses, and actual expenses may be greater
or less than those shown. In addition, the 5% annual return cited in the Example
is hypothetical and is not representative of the Fund's actual performance.
2
<PAGE> 6
CONDENSED FINANCIAL INFORMATION
The following Per Share Income and Capital Changes table has been
examined by Richard A. Eisner & Company, LLP, independent auditors, whose report
dated January 22, 1996 , expresses an unqualified opinion thereon. This table
should be read in conjunction with the financial statements, related notes, and
report of Richard A. Eisner & Company, LLP, all of which are included in the
Statement of Additional Information which may be obtained from the Fund upon
request and without charge. Further information about the Fund's performance is
contained in the annual report, which may be obtained without charge.
PER SHARE INCOME AND CAPITAL CHANGES*
(FOR A SHARE OUTSTANDING THROUGHOUT THE YEAR)
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31
-------------------------------------------------------------------------
1995 1994 1993 1992 1991
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
Net Asset Value,
Beginning of Year $ 22.70 $ 29.41 $ 35.38 $ 31.49 $ 29.29
Income from
Investment Operations
Net Investment Income .27 .45 .41 .57 1.01
Net realized and unrealized
gain(loss) on securities 5.77 (6.71) 1.42 3.96 2.94
- ------------------------------------------------------------------------------------------------------------
Total from Investment Income 6.04 (6.26) 1.83 4.53 3.95
- ------------------------------------------------------------------------------------------------------------
Less: Distributions
Net investment income .33 .45 .41 .57 .84
Capital gains -- -- 7.39 .07 .91
- ------------------------------------------------------------------------------------------------------------
Total Distributions .33 .45 7.80 .64 1.75
- ------------------------------------------------------------------------------------------------------------
Net Asset Value
End of Year 28.41 $ 22.70 $ 29.41 $ 35.38 $ 31.49
- ------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------
Total Return 26.6% -21.3% 5.4% 14.4% 13.5%
- ------------------------------------------------------------------------------------------------------------
Ratios/Supplemental Data
Net assets, end of year(000 ) $ 27,776 $ 30,052 $ 51,094 $ 56,381 $ 73,190
Ratio of operating expense to
average net assets 2.5%** 2.6%** 2.2%** 1.7% 1.5%
Ratio of net investment
income to average net assets 0.9% 1.4% 1.0%** 1.5% 2.4%
Portfolio turnover rate 52.7% 104.4% 99.3% 79.8% 96.8%
Shares outstanding at end
of year (000) 977 1,324 1,737 1,594 2,324
</TABLE>
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31
--------------------------------------------------------------------
1990 1989 1988 1987 1986
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
Net Asset Value,
Beginning of Year $ 32.31 $ 36.34 $ 29.79 $ 45.29 $ 39.48
Income from
Investment Operations
Net Investment Income 1.14 2.52 .82 1.47 .66
Net realized and unrealized
gain(loss) on securities (2.80) 2.88 5.73 (1.57) 7.70
- -------------------------------------------------------------------------------------------------------
Total from Investment Income (1.66) 5.40 6.55 (.10) 8.36
- -------------------------------------------------------------------------------------------------------
Less: Distributions
Net investment income 1.36 3.44 -- 1.99 1.08
Capital gains -- 5.99 -- 13.41 1.47
- -------------------------------------------------------------------------------------------------------
Total Distributions 1.36 9.43 -- 15.40 2.55
- -------------------------------------------------------------------------------------------------------
Net Asset Value
End of Year $ 29.29 $ 32.31 $ 36.34 $ 29.79 $ 45.29
- -------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------
Total Return -5.1% 15.5% 22.0% -1.0% 22.4%
- -------------------------------------------------------------------------------------------------------
Ratios/Supplemental Data
Net assets, end of year(000 ) $ 78,528 $ 86,195 $ 81,266 $ 75,016 $ 88,611
Ratio of operating expense to
average net assets 1.6% 1.3% 1.3% 1.2% 1.3%
Ratio of net investment
income to average net assets 3.5% 5.9% 2.5% 2.9% 1.8%
Portfolio turnover rate 96.6% 85.4% 100.0% 109.1% 69.4%
Shares outstanding at end
of year (000) 2,681 2,668 2,236 2,518 1,956
</TABLE>
* The above per share information is based upon a daily average of shares
outstanding.
** The Fund's expense ratio includes brokerage commissions on portfolio
transactions paid for under the Fund's Administrative Services fee, and,
therefore, may appear higher than those of other mutual funds as well as
for the Fund in prior years.
3
<PAGE> 7
THE FUND
Gintel ERISA Fund is a business trust formed under the laws of the
Commonwealth of Massachusetts. The Fund is an open-end, non-diversified
investment company as defined by the Investment Company Act of 1940, as amended
(the "1940 Act"). As an open-end investment company, the Fund has an obligation
to redeem its shares held by any investor at the net asset value of the shares
next determined after receipt of a redemption request in proper form. (See
"Redemption of Shares" in this Prospectus and "Computation of Net Asset Value"
in the Statement of Additional Information.) The Investment Advisor's office is
at 6 Greenwich Office Park, Greenwich, Connecticut 06831, and the telephone
number is (203) 622-6400.
Gintel ERISA Fund offers its shares exclusively to pension plans,
trust, or IRA and Keogh plans qualified under sections 401, 403(b) or 408 of the
Internal Revenue Code and to educational, religious and charitable institutions,
foundations and other organizations which are exempt from Federal income
taxation under Section 501 of the Internal Revenue Code.
INVESTMENT PERFORMANCE
The following table illustrates the total return from a hypothetical
investment in the Fund at inception. TOTAL RETURN is the percentage change
between the net asset value of one Fund share at the beginning of a period and
the net asset value of such share at the end of the period assuming reinvestment
of all dividends at the net asset value on the reinvestment date. Dividends are
comprised of realized capital gains and investment income. CUMULATIVE TOTAL
RETURN reflects the Fund's performance over a stated period of time. No
adjustments were made for income taxes. All such quotations are based upon
historical data and should not be considered a representation of the Fund's
future performance. The investment return and principal value of an investment
will fluctuate, so that an investor's shares when redeemed may be worth more or
less than their original cost. Performance is a function of portfolio management
in selecting the type and quality of portfolio securities and is affected by
operation expenses.
SUMMARY OF ANNUAL INVESTMENT RESULTS SINCE INCEPTION
(assuming reinvestment of dividends)
<TABLE>
<CAPTION>
Cumula-
1995 1994 1993 1992 1991 1990 1989 1988 1987 1986 1985 1984 1983 1982 tive
- ---- ---- ---- ---- ---- ---- ---- ---- ---- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
26.6% -21.3% 5.4% 14.4% 13.5% -5.1% 15.5% 22.0% -1.0% 22.4% 24.0% 2.2% 27.5% 27.9% 356.9%
</TABLE>
Comparative performance information may be used from time to time in
advertising or marketing of the Fund's shares, including data from major market
indices such as the Dow Jones Industrial Average and Standard & Poor's 500 Stock
Index. Such comparative performance information will be stated in the same terms
in which the performance of such indices are stated. Further information about
the Fund's performance is contained in the Annual Report.
4
<PAGE> 8
INVESTMENT OBJECTIVE AND POLICIES
The primary investment objective of the Fund is to maximize total
investment return through a combination of long-term appreciation and investment
income, and it also will invest for short-term capital gains, when, in the
Investment Advisor's opinion, market conditions make such action appropriate.
This policy differs from that of many other investment companies which, because
of tax considerations, either stress capital appreciation or current income. The
Fund is able to follow this investment policy because it does not have to take
into consideration income tax consequences to its shareholders. Toward this end,
the Fund invests in common stocks or securities convertible into common stock,
as well as fixed income securities or debt instruments. The Fund will invest in
major corporations whose shares are listed on the New York Stock Exchange or the
American Stock Exchange. It may also invest in securities traded in the
Over-the-Counter market which in the opinion of the Investment Advisor are
non-speculative, provided that such investments do not exceed 25% of its total
assets at time of purchase. Although the Fund will have flexibility to invest in
a broad range of corporations, it will not purchase the securities of any
corporation with a record of less than three years' continuous operations,
including that of predecessors.
The Fund intends primarily to seek long-term investment opportunities
offered by holding common stocks. It will also invest for short-term capital
gains when, in the Investment Advisor's opinion market conditions make such
action appropriate; however, defensive investments in money market instruments
may also be made when deemed advisable because of unfavorable economic
conditions or other market considerations. Because of the income tax-deferred
status of its shareholders, the Fund will not be affected by the usual income
tax considerations relating to holding periods for securities in making
investment decisions. Therefore, it may make investments for short swing profits
and may have more flexibility in moving in and out of the securities market than
other investment companies with taxable shareholders. To the extent the Fund may
engage in such short term investments, it will have a higher portfolio turnover,
and, therefore, will pay greater brokerage commissions than investment companies
which do not enter into short-term trading. To the extent that The Fund's assets
are invested in a smaller number of issues, there may be a somewhat greater risk
in an investment in this Fund than in a diversified investment company.
The Fund may lend its portfolio securities to brokers, dealers and
other institutional investors.
The Fund will not make short sales of securities or maintain short
positions unless at all times when a short position is open the Fund owns an
equal amount of such securities or securities convertible into or exchangeable,
without payment of any further consideration, for securities of the same issue
as, and equal in amount to the securities sold short. This is a technique known
as selling short "against the box".
The management of the Fund has determined that the investment objective
will be best served by limiting the offering of its shares to retirement plans
or trusts which are qualified under Sections 401, 403(b) or 408 of the Internal
Revenue Code and to educational, religious and charitable institutions,
foundations and other organizations which are exempt from Federal income taxes
under Section 501 of the Internal Revenue Code. Therefore, applications from new
investors to purchase shares will not be accepted unless the investor represents
in the subscription agreement that it is so qualified or exempt. (See "Purchase
of Shares".) Shareholders who lose their tax-qualified or tax-exempt status
should redeem their shares at net asset value. (See "Redemption of Shares")
The Fund, subject to certain restrictions, may invest in other
investment companies. To the extent that it does, duplicate fees may be
incurred.
The Fund has the right to modify the investment policies described
above without shareholder approval; however, it does not presently contemplate
making any such modifications.
The Fund has adopted the following restrictions which may not be
changed without shareholder approval:
(1) with respect to 50% of its assets, it will not at the time of
purchase invest more than 5% of its total assets, at market
value, in the securities of any one issuer (except the
securities of the United States Government); and
5
<PAGE> 9
(2) with respect to the other 50% of its assets, it will not
invest at the time of purchase more than 15% of the market
value of its total assets in any single issuer.
These two restrictions, hypothetically, could give rise to a portfolio with as
few as fourteen issues.
PURCHASE OF SHARES
The minimum initial investment by a shareholder is $10,000 ($2,000 for
IRA and Keogh accounts). There is no minimum for additional investments. Shares
will only be sold to pension plans or trusts which qualify under Sections 401,
403(b), or 408 of the Internal Revenue Code and to educational, religious and
charitable institutions, foundations and other organizations which are exempt
from Federal income taxation under Section 501 of the Code. Prospective
investors must state on the Subscription Application the basis for their
tax-qualified or tax-exempt status and application from new investors will not
be accepted if they do not contain such representation.
The Fund reserves the right, in its sole discretion, to reject any
subscription. No share certificate will be issued unless requested in writing.
Subscriptions for shares are subject to acceptance by the Fund and are not
binding until accepted. Chase Global Funds Services Company will charge $25.00
for each check returned for insufficient funds.
PURCHASE BY MAIL: Shares of the Fund may be purchased by sending a
completed Application (included with this Prospectus or obtainable from the
Fund) to Gintel Group, c/o Chase Global Funds Services Company, P.O. Box 2798,
Boston, MA 02208-2798, accompanied by a check payable to Gintel Group in payment
for the shares. Applications sent to the Fund will be forwarded to Chase Global
Funds Services Company and will not be effective until received by Chase Global
Funds Services Company. Special forms are required for IRA, Keogh, and 403(b)
subscriptions and may be obtained by contacting the Fund.
PURCHASE BY EXCHANGE: Shares of the Fund may be exchanged for shares of
any other fund with which the Fund has an exchange arrangement. When opening an
account by exchange, 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. Purchase by exchange may be executed by
either mail or telephone but in every instance must comply with the purchase and
redemption procedures set forth in the Prospectus. Neither Chase Global Funds
Services Company 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 exchange by
telephone, whether or not properly authorized and directed. The staff of the
Securities and Exchange commission is currently examining whether such
responsibilities may be disclaimed. An investor will bear the risk of loss, the
accuracy of telephone transactions should be verified immediately upon the
receipt of confirmation statement..
PURCHASE BY WIRE: Investors may purchase shares by wire by first
telephoning Chase Global Funds Services Company at 1-800-344-3092 for
instructions and wire control number and subsequently wiring Federal funds and
registration instructions to: Chase Manhattan Bank N.A., ABA #021000021, Gintel
Group, DDA No. 910-2-732980, for further credit to (Name of Fund), Account
Registration (including account name, account number and wire control number).
PURCHASE BY AUTOMATIC INVESTMENT: Investors may purchase shares on a
regular basis, (the first, the fifteenth, or the first and fifteenth of each
month), by automatically transferring a specified dollar amount ($100 minimum)
from their regular checking or NOW account to their specified Gintel Group
Account. Special forms are required for this automatic investment plan and may
be obtained by contacting the Fund.
Confirmed purchases will be done only at the discretion of the
Investment Advisor.
Purchase of shares of the Fund may also be made through registered
securities dealers who have entered into selected dealer agreements with the
Distributor. A dealer who agrees to process an order on behalf of an investor
may charge the investor a fee for this service.
6
<PAGE> 10
The offering price of each Fund share is the net asset value per share
next computed after the subscriber's application is received by Chase Global
Funds Services Company. 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) less all
liabilities (including accrued expenses) by the number of the Fund's shares
outstanding. The Fund will determine net asset value of its shares on each "Fund
Business Day", which is any day the New York Stock Exchange is open for business
exclusive of national holidays.
All ordinary income dividends and capital gains distributions are
automatically reinvested at net asset value unless the Chase Global Funds
Services Company receives written notice from a shareholder at least 30 days
prior to the record date requesting that the distributions and dividends be
distributed to the investor in cash.
REDEMPTION OF SHARES
Upon receipt by Chase Global Funds Services Company of a request in
proper form, the Fund will redeem shares at its next determined net asset value.
Redemption of shares of the Fund or payments therefore may be suspended at such
times (a) when the New York Stock Exchange is closed, (b) when trading on the
New York Stock Exchange is restricted, (c) when an emergency exists which makes
it impractical for the Fund to either dispose of securities or make a fair
determination of net asset value. There is no assurance that the net asset value
received upon redemption will be greater than that paid by a shareholder upon
purchase.
REDEMPTION BY MAIL: Shares may be redeemed by sending a written
redemption request to Gintel Group, c/o Chase Global Funds Services Company,
P.O. Box 2798, Boston, MA 02208-2798. Any written request sent to the Fund will
be forwarded to Chase Global Funds Services Company and the effective date of
the redemption request will be when the request is received in proper form by
Chase Global Funds Services Company. The redemption value of each Fund share is
the net asset value per share next computed after the redemption request is
received in proper form. Where share certificates have been issued, a
shareholder must endorse the certificates and include them in the redemption
request. "Proper form" means that the request for redemption must include the
following:
1. A letter of instruction specifying 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.
2. Signatures must be guaranteed by an eligible guarantor institution
as described in Rule 17Ad-15 under the Securities and Exchange Act of 1934. Such
institutions include banks, brokers, securities dealers, credit unions,
securities exchanges, clearing agencies and savings associations. The eligible
guarantor institution must be a participant in a recognized signature guarantee
program such at the STAMP program of the Securities Transfer Association.
Eligible guarantor institutions previously approved by Chase Global Funds
Services Company (commercial banks and members of domestic stock exchanges) will
continue to be approved. Eligible guarantor institutions not previously approved
by Chase Global Funds Services Company and not yet members of a recognized
signature guarantee program, must make application to that company. For complete
information or a copy of Chase Global Funds Services Company's signature
guarantee Standards, Procedures and Guidelines, please contact the Transfer
Agent at 1-800-344-3092. A notary public is not an acceptable guarantor.
3. Other supporting legal documents, if required, in the case of
estates, trusts, guardianships, corporations, pension and profit sharing plans
and other organizations. Shareholders should contact Chase Global Funds Services
Company, (800) 344-3092, to obtain further information on the specific
documentation required.
Payment will be made for redeemed shares as soon as practicable, but in
no event later than three business days after proper receipt of redemption
notification. Payment will me made by check, unless a shareholder arranges for
the proceeds of redemption requests to be sent by Federal fund wire to a
designated bank account, in which case a wire charge (currently $8.00
7
<PAGE> 11
per wire) will be deducted from the account. Shareholders should contact Chase
Global Funds Services Company, (800) 344-3092, to obtain further information on
this service and the related charges.
AUTOMATIC REDEMPTIONS: A shareholder who owns shares of the Fund with a
value of $10,000 or more may establish a Systematic Withdrawal Plan. The
Shareholder may request a declining balance withdrawal, a fixed dollar
withdrawal, a fixed share withdrawal, or a fixed percentage withdrawal (based on
the current value of the account) on a monthly, quarterly, semi-annual or annual
basis. Further information on establishing a Systematic Withdrawal Plan may be
obtained by the calling the Fund. When a shareholder reaches age 59-1/2 and
begins to receive distributions from an IRA or other retirement plan invested in
the Fund, the shareholder can arrange to have regular monthly or quarterly
redemptions made under Systematic Withdrawal Plan. In this case it is not
necessary for the account value to be $10,000 or more. Additional information
and the necessary application may be obtained from the Fund.
Sales of shares of the Fund may also be made through registered
securities dealers who have entered into selected dealer agreements with the
Distributor. A dealer who agrees to process an order on behalf of an investor
may charge the investor a fee for this service.
With the exception of Keogh or IRA accounts or shares purchased prior
to April 30, 1983, the Fund reserves the right to close accounts that have
dropped below $5,000 in value for a period of three months or longer other than
as a result of a decline in the net asset value per share. Shareholders are
notified at least 60 days prior to any proposed redemption and invited to add to
their account if they wish to continue as a shareholder of the Fund; however the
Fund does not presently contemplate making such redeptions. The Fund will not
require the redemption of shares held by any shareholder which loses its
tax-qualified or tax-exempt status; however, the Fund recommends that such
shareholders redeem their shares in order to avoid the Federal tax consequences
to such shareholder that might result from the portfolio transactions of the
Fund.
Confirmed redemptions will be done only at the discretion of the
Investment Advisor.
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:
NAME AND OFFICE PRINCIPAL OCCUPATION
- --------------- --------------------
ROBERT GINTEL,* Chairman and Chief Executive Officer of Gintel Equity
Chairman of the Board, Management, Inc. since 1971; Senior Partner of Gintel
Chief Executive Officer & Co. Limited Partnership, a member firm of The New
and Trustee York Stock Exchange, Inc. and an associate member
firm of the American Stock Exchange, Inc. since June
1969; Chairman and Director, Oneita Industries; Vice
Chairman and Director of XTRA Corporation (intermodal
equipment leasing); Chairman of the Board, Chief
Executive Officer and trustee of the Fund since
September 1981 and Gintel Fund since November 1980.
THOMAS H. LENAGH, Financial Consultant; formerly Chairman and Trustee,
Trustee, Chief Executive Officer of Greiner Engineering Co.
1 Brookside Drive (consulting engineers); financial advisor to various
Westport, CT 06880 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 regulated investment companies managed
by Merrill Lynch Asset Management, Inc.; and director
of Adams Express Co. (closed-end investment company),
USLife Corp., ICN Biomedics, Inc., 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 September
1981 and Gintel Fund since December 1980.
8
<PAGE> 12
NAME AND OFFICE PRINCIPAL OCCUPATION
- --------------- --------------------
FRANCIS J. PALAMARA, Business Consultant; previously director and
Trustee, Executive Vice President of ARA Services,
3110 E. Maryland Ave. Inc. (provides various services for
Phoenix, AZ 85064-4024 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.; director of XTRA
Corporation (intermodal equipment leasing);
Glenmede Fund (a regulated investment
company); and Central Tractor Farm & Country
(specialty retailing); trustee of the Fund
since September 1981 and Gintel Fund since
January 1981.
RUSSEL R. TAYLOR, Associate Professor of Management, College
Trustee, of New Rochelle, since 1977; founder and
31 Indian Point Lane director of Russel Taylor, Inc. since 1963;
Riverside, CT 06878 trustee of the Fund and Gintel Fund since
December 1985.
STEPHEN G. STAVRIDES,* Director, President and Treasurer of Gintel
Trustee, Chief Operating Equity Management, Inc.; General Partner of
Officer, President and Treasurer Gintel & Co. Limited Partnership; President
and Treasurer of the Fund and Gintel 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; and Director of Home Savings
in Houston from 1978-1980. Trustee of the
Fund and Gintel Fund since December 1991.
DONNA K. GRIPPE Secretary and Assistant Treasurer of the
Secretary and Assistant Fund and Gintel Fund; previously, Manager of
Treasurer the Fund Accounting for American Investors
Fund, Inc., American Investors Income Fund,
Inc., and American Investors Money Market
Fund, Inc.
On February 29, 1996, Robert M. Gintel and his family, trustees of the
Fund, and employees of Gintel Equity Management, Inc. and Gintel & Co. owned
directly or beneficially 130,212 shares of the Fund with a market value of
$3,786,579, representing 13.8% of the Fund's outstanding shares.
- --------
* Interested person as defined in the 1940 Act.
9
<PAGE> 13
TAX-SHELTERED RETIREMENT PLANS
The Fund makes available Keogh Plans, IRA's including IRA's set up
under a Simplified Employee Pension Plan ("SEP-IRA's") and IRA "Rollover
Accounts", 401(k) Plans and 403(b)(7) Plans. Investors who wish to purchase
shares in conjunction with any such tax-sheltered retirement plan may request
from the Fund, forms for adoption of such plans. All fees charged by the
Custodian described in the appropriate form. The investor should read the plan
and related agreements for further details as to eligibility, service fees and
the summary of certain Federal income tax implications. Further, each investor
should consult a tax advisor regarding the tax consequences of adopting such
plans, since the Fund is not and should not be relied upon to provide tax advice
for each investor.
INVESTMENT ADVISOR AND INVESTMENT ADVISORY AGREEMENT
Gintel Equity Management, Inc., 6 Greenwich Office Park, Greenwich, CT
06831 is the Investment Advisor to the Fund pursuant to the investment advisory
agreement (the "Agreement"). The Agreement provides that the Investment Advisor
identify and analyze possible investments for the Fund and determine the amount,
timing, and form of such investments. The Investment Advisor has the
responsibility of monitoring and reviewing the Fund's portfolio, on a regular
basis, and recommending the ultimate disposition of such investments. It is the
Investment Advisor's responsibility to cause the purchase and sale of securities
in the Fund's portfolio, subject at all times to the policies set forth by the
Board of Trustees.
Robert M. Gintel, owns all the outstanding shares of the Investment
Advisor. Since 1971, the Investment Advisors been managing discretionary
investment accounts for individual investors, corporate pension funds and profit
sharing plans, charitable foundations, universities and others.
The Investment Advisor receives a fee from the Fund, payable at the
beginning of each quarter, for the performance of its services at an annual rate
of 1% (0.25% quarterly) of the average daily net assets of the Fund during the
preceding quarter. The fee is accrued daily for the purposes of determining the
offering and redemption price of the Fund's shares. The advisory fee is higher
than that paid by most investment companies; however, most of those investment
companies are of different size or have different investment objectives from the
Fund. For the fiscal year ended December 31, 1995, the Fund paid fees to the
Investment Advisor of $290,547.
The following are biographies of key personnel who are ultimately
responsible for investment decisions:
ROBERT M. GINTEL has spent his entire business career in the investment
industry with more than 40 years of experience as a professional investor. Mr.
Gintel is Chairman and Chief Executive Officer of Gintel Equity Management, Inc.
He is also a Senior Partner and founder of Gintel & Co., a member of the New
York Stock Exchange and associate member of the American Stock Exchange, and
Chairman of the Board and Chief Executive Officer of Gintel Fund and Gintel
ERISA Fund. 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 and is currently Chairman of
the Board of Oneita Industries and Vice Chairman of the Board of XTRA
Corporation. Mr. Gintel has lectured and written articles on investments and has
appeared on Wall Street Week as well as other television and radio programs.
CECIL A. GODMAN, III joined the Gintel organization in 1985 and became
Chief Investment Officer in 1991. He also serves as a director of Gintel Equity
Management, Inc. and is a General Partner of Gintel & Co. Before joining Gintel
Equity Management Inc. Mr. Godman spent two years as a securities analyst with
First Tennessee Investment Management, Inc., a $1.8 billion asset management
subsidiary of First Tennessee National Corporation, where he was a member of the
Investment Policy Committee and the Equity Selection Group. Prior to that Mr.
Godman had been a commercial loan officer in the small business division at
First Tennessee Bank. Mr. Godman has been interviewed by BARRON'S and has been a
featured speaker at the Donoghue's Mutual Fund Conferences. He received his B.A.
in Business Administration and Economics from Rhodes College in 1982.
10
<PAGE> 14
EDWARD F. CARROLL joined Gintel Equity 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 35-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.
The Code of Ethics of the Advisor and the Fund prohibits all affiliated
personnel from engaging in personal investment activities which compete with or
attempt to take advantage of the Fund's planned portfolio transactions. The
objective of the Code of Ethics of both the Advisor and the Fund is that their
operations be carried out for the exclusive benefit of the Fund's shareholders.
Both organizations maintain careful monitoring of compliance with the Code of
Ethics.
ADMINISTRATIVE SERVICES AGREEMENT
The Administrative Services Agreement dated April 1, 1993, 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
previously paid by the Fund directly, 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 Advisor's fees, the fees paid to the non-interested Trustees, certain
transaction costs, interest, taxes and extraordinary expenses), the Distributor
will receive a fee payable at the beginning of each quarter based on average
daily net assets during the preceding quarter, at an annual rate of 1.25% of the
first $50 million of the average daily net assets of the Fund, 1.125% of the
next $50 million of average daily net assets and 1.0% of the average daily net
assets in excess of $100 million. 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. For the
fiscal year ended December 31, 1995, the Fund paid fees to the Distributor of
$363,186.
BROKERAGE ALLOCATION
Subject to the supervision of the Board of Trustees, decisions to buy
and sell securities are made by officers of the Fund with the assistance of the
Investment Advisor. The Board of Trustees has authorized the Fund to use Gintel
& Co. Limited Partnership ("Gintel & Co."), on an agency basis, to supervise and
to effect a substantial amount of the portfolio transactions which are executed
on the New York or American Stock Exchanges, Regional Exchanges where relevant,
or which are traded in the Over-the-Counter market. Under the Administrative
Services Agreement, however, the Distributor and not the Fund pays all brokerage
commissions on securities transactions.
TAX MATTERS
The Fund intends to qualify as a regulated investment company by
satisfying the requirements under Subchapter M of the Internal Revenue Code of
1986, as amended (the "Code"), including the requirements with respect to
diversification of assets, distribution of income and sources of income. It is
the Fund's policy to distribute to shareholders all of their investment income
(net of expenses) and any capital gains (net of capital losses) in accordance
with the timing requirements imposed by the Code, so that the Fund will satisfy
the distribution requirement of Subchapter M and not be subject to Federal
income taxes or the 4% excise tax.
The Fund is organized as a Massachusetts business trust. So long as it
qualifies as a regulated investment company for Federal income tax purposes, it
will not be subject to any income tax in the Commonwealth of Massachusetts.
Distributions to shareholders will be treated in the same manner for
Federal income tax purposes whether received in cash or reinvested in additional
shares of the Fund. In general, distributions by a Fund are taken into account
by the shareholders in the year in which thay are made. However, certain
distributions made during January will be treated as having
11
<PAGE> 15
been paid by the Fund and received by the shareholders on December 31 of the
preceding year. A statement setting forth the Federal income tax status of all
distributions made (or deemed made) during the year will be sent to shareholders
promptly after the end of each year.
Under the back-up withholding rules of the Code, certain shareholders
may be subject to 31% withholding of Federal income tax on ordinary income
dividends, capital gain dividends and redemption payments made by the Fund. In
order to avoid this back-up withholding, a shareholder must provide the Fund
with a correct taxpayer identification number (which for an individual is
usually his Social Security number) and certify that it is a corporation or
otherwise exempt from or not subject to back-up withholding. The new account
application included with this Prospectus provides for shareholder compliance
with these certification requirements.
As all of the shareholders of the Fund are exempt from taxation under
the Code, it is not anticipated that there will be any tax consequences to its
shareholders from distribution of either net investment income or net realized
capital gains or from gains attributable to the sale of interests in the Fund,
except for any shareholder defined as a "private foundation" under Section
509(a) and therefore subject to the taxes assessed under Chapter 42 of the Code
or for any shareholder whose interest in the Fund is treated as "debt-financed"
under the Code.
The foregoing discussion of Federal income tax consequences is based on
tax laws and regulations in effect on the date of this Prospectus, and is
subject to change by legislative or administrative action. As the foregoing
discussion is for general information only, a prospective shareholder should
also review the more detailed discussion of federal income tax considerations
relevant to the Fund that is contained in the Statement of Additional
Information for the Fund. In addition, each prospective shareholder should
consult with his own tax adviser as to the tax consequences of investments in
the Fund, including the application of state and local taxes which may differ
from the Federal income tax consequences described above.
ORGANIZATION AND DESCRIPTION OF SHARES OF THE FUND
The Fund is an open-end, non-diversified management investment company
and was incorporated in Maryland on September 2, 1981 with authorized capital of
10,000,000 shares of common stock par value $0.01. On March 21, 1986, it
reorganized as a Massachusetts business trust under the laws of The Commonwealth
of Massachusetts and filed its Declaration of Trust filed March 7, 1986.
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,
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 Fund,
however, at its discretion, may continue to hold meetings of its shareholders to
discuss portfolio management and shareholder relations but such meetings will
not be subject to the rules and regulations of the securities laws with respect
to proxy solicitation. 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.
CUSTODIAN, TRANSFER AGENT AND DIVIDEND PAYING AGENT
The transfer agent, dividend paying agent and custodian for all cash
and securities of the Fund is Chase Manhattan Bank, N.A., 770 Broadway, New
York, New York 10003.
12
<PAGE> 16
COUNSEL AND AUDITORS
The firm of Kramer, Levin, Naftalis, Nessen, Kamin & Frankel is counsel
for the Fund. Richard A. Eisner & Company, LLP, has been appointed independent
auditors for the Fund. These firms provide similar services to the Investment
Advisor and Gintel & Co.
OTHER INFORMATION
This Prospectus omits certain information contained in the registration
statement filed with the Securities and Exchange Commission. Copies of the
registration statement, including items omitted herein, may be obtained from the
Commission by paying the charges prescribed under its rules and regulations. The
Statement of Additional Information for the Fund included in such registration
statement may be obtained without charge from the Fund.
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATION OTHER THAN THOSE CONTAINED IN THIS PROSPECTUS, AND INFORMATION OR
REPRESENTATIONS NOT HEREIN CONTAINED, IF GIVEN OR MADE, MUST NOT BE RELIED UPON
AS HAVING BEEN AUTHORIZED BY THE FUND. THIS PROSPECTUS DOES NOT CONSTITUTE AN
OFFER OR SOLICITATION IN ANY JURISDICTION IN WHICH SUCH OFFERING MAY NOT
LAWFULLY BE MADE.
[GRAPH]
GINTEL ERISA FUND
Average Annual Rates of Return
One (1) Year 26.6%
Five (5) YEars 7.7%
Ten (10) Years 9.2%
Investment results are net of expenses, with dividends and capital gains
reinvested. The S&P 500 is a broad market-weighted average dominated by
blue-chip stocks.
Past results offer no assurance as to future performance. The investment return
and principal value of an investment will fluctuate, so that an investor's
shares, when redeemed, may be worth more or less than their original cost. The
Fund's prospectus contains more complete information and should be read
carefully.
13
<PAGE> 17
GINTEL ERISA FUND
PROSPECTUS
MAY 1, 1996
Gintel Group
c/o Chase Global Funds Services Company
P.O. Box 2798
Boston, MA 02208-2798
Toll Free
800 344-3092
GINTEL
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Expenses 2
Condensed Financial Information 3
The Fund 4
Investment Performance 4
Investment Objective and Policies 5
Purchase of Shares 6
Redemption of Shares 7
Management 8
Tax Sheltered Retirement Plans 10
Investment Advisor
and Investment Advisory Agreement 10
Administrative Services Agreement 11
Brokerage Allocation 11
Tax Matters 11
Organization and Description of Shares
of the Fund 12
Custodian, Transfer Agent
and Dividend Paying Agent 12
Counsel and Auditors 13
Other Information 13
</TABLE>
INVESTMENT ADVISOR
Gintel Equity Management, Inc.
6 Greenwich Office Park
Greenwich, CT 06831
SHAREHOLDER SERVICING AGENT
Chase Global Funds Services Company
P.O. Box 2798
Boston, MA 02208-2798
<PAGE> 18
STATEMENT OF ADDITIONAL INFORMATION
MAY 1, 1996
GINTEL ERISA FUND
(FOR TAX-EXEMPT INVESTORS)
Gintel ERISA Fund (the "Fund") is an open-end, non-diversified
management investment company whose primary investment objective is to maximize
total investment return through a combination of long-term appreciation and
investment income. The Fund also invests for short-term capital gains. The
Fund's shares are offered exclusively to pension plans, trusts or IRA and Koegh
plans which qualify under Section 401, 403(b) or 408 of the Internal Revenue
Code and to educational, religious and charitable institutions, foundations and
other organizations which are exempt from Federal income taxation under Section
501 of the Internal Revenue Code. The Fund offers and redeems its shares at net
asset value. Investors pay no sales charge or commissions to purchase Fund
shares. The minimum initial purchase is $10,000 except for IRA and Keogh
accounts where the minimum initial purchase is $2,000. Minimum individual
initial investments may be waived for omnibus arrangements with certain broker
dealers. There is no minimum for additional investments.
This Statement of Additional Information is not a prospectus. It should
be read in conjunction with the Fund's current Prospectus, a copy of which may
be obtained by writing Gintel ERISA Fund's Investment Advisor at 6 Greenwich
Office Park, Greenwich, CT 06831 or calling (203) 622-6400.
This Statement of Additional Information related to the Fund's
Prospectus dated May 1, 1996.
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Investment Objective and Policy............................. 2
Investment Restrictions..................................... 2
Management.................................................. 3
Investment Advisor and Investment Advisory Agreement........ 3
Administrator and Administrative Services Agreement......... 4
Portfolio Transactions and Brokerage........................ 5
Allocation of Investments................................... 6
Computation of Net Asset Value.............................. 6
Tax Matters................................................. 7
Performance Information..................................... 9
Shareholder Reports......................................... 9
Report of Independent Certified Public Accountants.......... F-1
Financial Statements........................................ F-2
</TABLE>
1
<PAGE> 19
INVESTMENT OBJECTIVE AND POLICY
The following information supplements, and should be read in
conjunction with the section in the Fund's prospectus entitled "Investment
Objective and Policy".
As described in the Fund's Prospectus, the Fund invests in common
stocks or securities convertible into common stock, as well as fixed income
securities or debt instruments. The Fund invests in major corporations whose
shares are listed on the New York Stock Exchange or the American Stock Exchange.
It may also invest in non-speculative securities traded in the Over the Counter
market, provided that such investments do not exceed 25% of the Fund's total
assets at time of purchase. Although the Fund will have flexibility to invest in
a broad range of corporations, it will not purchase the securities of any
corporation with a record of less than three years continuous operations,
(including that of predecessors) if such investment would exceed 5% of the
Fund's total assets at time of purchase.
The Fund may lend its portfolio securities to brokers, dealers and
other institutional investors in an amount not to exceed 10% of the Fund's total
assets under circumstances where the borrower of such securities provides cash
or cash equivalents as collateral (such cash equivalents will be limited to
securities issued or guaranteed by the United States Government, its agencies or
instrumentalities) at all times in an amount at least equal to the value of the
borrowed securities, and the Fund will retain the right to obtain any dividend,
interest or other distribution on the securities and any increase in their
market value and reserves the right to terminate such arrangement at any time
(such right of termination may be exercised, among other reasons, to obtain the
return of the securities on loan for the purpose of voting on any matters
considered material by the Fund's management).
Unlike the investment objective of maximizing total investment return
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 without shareholder approval.
However, the Fund does not presently contemplate making any such modifications.
INVESTMENT RESTRICTIONS
The Fund is a non-diversified management investment company and
(1) with respect to 50% of its assets, the Fund will not at the time of
purchase 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);
(2) with respect to the other 50% of its assets, the Fund will not
invest at the time of purchase more than 15% of the market value of its total
assets in any single issuer.
These two restrictions, hypothetically, could give rise to a portfolio
as few as fourteen issues.
In addition, the Fund will not:
(1) purchase more than 10% of the outstanding voting securities of any
issuer;
(2) invest more than 25% of its assets in any one industry;
(3) make loans of money or securities other than (a) through the
purchase of securities in accordance with the Fund's investment objectives, and
(b) by lending portfolio securities;
(4) buy or sell commodities of commodity futures contracts;
(5) underwrite securities;
(6) make short sales unless sales are against the box;
(7) borrow money, except that the Fund may borrow up to 5% of the value
of its total assets at the time of such borrowing from banks for temporary or
emergency purposes;
(8) invest for the purposes of exercising control or management;
(9) 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;
2
<PAGE> 20
(10) 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);
(11) participate in a joint investment account; or
(12) issue senior securities.
These investment restrictions may not be changed without approval by a
vote of a majority of the Fund's outstanding voting securities. Under the
Investment Company Act of 1940 (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 represented by proxy.
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
each Fund's average net assets at the time of purchase; included in this
category are "restricted" securities, and any other assets for which an active
and substantial market does not exist at the time of purchase or subsequent
valuation; restricted securities for purposes of this limitation do not include
securities eligible for resale pursuant to Rule 144A of the Securities Act of
1933 which have been determined to be liquid by the respective Fund's Board of
Directors based upon the trading markets of the securities;
(b) the Fund may not purchase securities on margin;
(c) investments in warrants, valued at the lower of cost or market, may
not exceed 5.0% of the value of the Fund's net assets; included in such amount,
but not to exceed 2.0% of the value of a Fund's net assets, may be warrants
which are not listed on the New York Stock Exchange or the American Stock
Exchange; and, warrants acquired by a Fund may be deemed to be without value;
(d) the Fund may not invest in oil, gas and other mineral leases
(excluding readily marketable securities of companies which invest in oil, gas
and other mineral leases); and
(e) 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
Reference is made to the Fund's current prospectus for the names of the
trustees and executive officers of the Fund and their principal occupations for
the last five years. Interested trustees do not receive trustees fees. Each of
the other trustees receives an annual fee of $8,250 paid by the Fund plus
expenses for each meeting of the Board and shareholder meeting he attends. The
Chairman of the Audit Committee receives an additional annual fee of $1,250.
Set forth below is information regarding compensation paid the period
from January 1, 1995-December 31, 1995:
<TABLE>
<CAPTION>
Pension or Retirement Estimated Annual
Name & Position Total Compensation Benefits Accrued as Part Benefits Upon Total Compensation from
from Gintel ERISA Fund of Fund Expenses Retirement Gintel ERISA Fund & Gintel Fund
<S> <C> <C> <C> <C>
Robert M. Gintel
(Chairman & C.E.O.) - 0 - $ 0 $ 0 - 0 -
Thomas H. Lenagh (Trustee) $ 8,250 $ 0 $ 0 $ 16,500
Francis J. Palamara (Trustee
& Chairman of Audit
Committee) $ 9,500 $ 0 $ 0 $ 19,000
Stephen G. Stavrides
(Trustee & President) - 0 - $ 0 $ 0 - 0 -
Russel R. Taylor (Trustee) $ 8,250 $ 0 $ 0 $ 16,500
</TABLE>
As of February 29, 1996, trustees and officers as a group beneficially
owned 126,422 shares of the Fund which represented 13.4% of the Fund's
outstanding shares.
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.
INVESTMENT ADVISOR AND INVESTMENT ADVISORY AGREEMENT
Gintel Equity Management, Inc., ("the Investment Advisor") 6 Greenwich
Office Park, Greenwich, Connecticut 06831 is the
3
<PAGE> 21
Investment Advisor to the Fund under an investment advisory agreement (the
"Agreement") entered into March 21, 1986. The Agreement is identical in all
material respects to the investment advisory agreement of the Fund's corporate
predecessor except for a change in the expense limitation and calculation of the
advisory fee based upon daily instead of weekly net asset value. The agreement
provides that the Investment Advisor identify and analyze possible investments
for the Fund, determine the amount and timing of such investments, and the form
of investment. The investment advisor has the responsibility of monitoring and
reviewing the Fund's portfolio, on a regular basis, to recommend the ultimate
disposition of such investments . It is the invest Advisor's responsibility to
cause the purchase and the ultimate disposition of such investments. It is the
Investment Advisor's responsibility to cause the purchase and sale of securities
in the Fund's portfolio, subject at all times to the policies set forth by the
Fund's Board of Trustees.
Robert M. Gintel owns all the outstanding shares of the Investment
Advisor. Since 1971, the Investment Advisor has been managing discretionary
investment accounts for individual investors, corporate pension funds and profit
sharing plans, charitable foundations, universities and others.
The Investment Advisor receives a fee, payable at the beginning of each
quarter, for the performance of its services at an annual rate of 1% (.25
quarterly) of the average daily net assets of the Fund during the preceding
quarter. The advisory fee is higher than that paid by most management investment
companies; however, many of those investment companies are of different size or
have different investment objectives from the Fund.
The Investment Advisor's fee will be reduced for any fiscal year by any
amount necessary to prevent Fund expenses and liabilities (exclusive of taxes,
interest, brokerage commissions and extraordinary expenses, determined by the
Fund or the Investment Advisor for the Fund, but inclusive of the Investment
Advisor's fee) from exceeding the most restrictive expense limitations imposed
by the securities laws or regulations of those states or jurisdictions in which
the Fund's share are registered or qualified for sale. Currently, the most
restrictive of such expense limitation would require the Investment Advisor to
reduce its fee so that ordinary expenses (excluding interest, taxes, brokerage
commissions and extraordinary expenses) for any fiscal year do not exceed 2.5%
of the first $30 million of the Fund's average daily net assets, plus 2.0% of
the next $70 million, plus 1.5% of the Fund's average daily net assets in excess
of $100 million. The amount of any such reduction shall be deducted from the
quarterly advisory fee, or if such amount exceeds the quarterly fee otherwise
payable, the Investment Advisor will repay such excess promptly.
Under the terms of the Agreement, the Fund pays all of its expenses,
including the costs incurred in connection with the 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
reports, trustees' fees and expenses, and expenses of trustee and shareholder
meetings.
The Investment Advisor also serves as Investment Advisor to Gintel Fund,
a non-diversified investment company, and receives an annual fee, payable
quarterly, of 1% of the Gintel Fund's average daily net assets. The approximate
net assets of Gintel Fund as of March 31, 1995, were $101 million.
The 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 Advisor, or by holders of a majority of the Fund's outstanding
shares. The Agreement was initially approved by the Fund's Board of Trustees on
March 21, 1986, including the affirmative vote of a majority of the trustees who
were not parties to the Agreement nor interested persons of any such party, and
by the sole shareholder of the Fund on March 21, 1986. The Agreement was
continued by the Board of Trustees on February 23, 1992. The Agreement will
continue from year-to-year provided it is approved, at least annually, in the
manner stipulated in the 1940 Act. This requires that the 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.
For the fiscal year ended December 31, 1995, the Fund paid fees to the
Investment Advisor of $290,547. For the fiscal year ended December 31, 1994, the
Fund paid fees to the Investment Advisor of $453,735. For the fiscal year ended
December 31, 1993, the Fund paid fees to the Investment Advisor of $549,258.
ADMINISTRATOR AND ADMINISTRATIVE SERVICES AGREEMENT
The Administrative Services Agreement provides that in consideration
for the services to be provided by 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 Advisor's fees, the fees paid to the
non-interested Trustees, certain transaction costs and expenses, interest, taxes
and extraordinary expenses) the Distributor will receive a fee payable at the
beginning of each quarter based on average daily net assets during the preceding
quarter at an annual rate of 1.25% of the first $50 million of the average daily
net assets of the Fund, 1.125% of the next $50 million of 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.
4
<PAGE> 22
The Administrative 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 Administrative 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 Administrative 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 such 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
and transfer taxes which will be paid by the Fund). However, brokerage
commissions paid on trades 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 Fund's Investment Advisor
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 Advisor or furnished by the Distributor or the
Investment Advisor 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
safe keeping 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
shareholder's 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 Advisor
pursuant to the terms of its 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 which are attributable to the Fund are charged against
the income of the Fund in determining net income for dividend purposes.
The Investment Advisor and the Distributor have agreed to reduce their
aggregate fees for any fiscal year, or reimburse the Fund, to the extent
required, so that the amount of the ordinary expenses of the Fund paid or
incurred by the Fund does not exceed the expense limitations applicable to the
Fund imposed by the securities laws or regulations of those states or
jurisdictions in which the Fund's shares are registered or qualified for sale.
Expense reductions under state securities laws are unlikely because most of the
expense of the Fund can be expected to be borne by the Distributor.
For the fiscal year ended December 31, 1995, the Fund paid fees to the
Distributor of $363,186. For the fiscal year ended December 31, 1994, the Fund
paid fees to the Distributor of $571,060. For the nine month period from April
1, 1993 to December 31, 1993, the Fund paid fees to the distributor of $512,448.
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 Advisor. The Board
of Trustees has authorized the Fund to use Gintel & Co. on an agency basis, to
supervise and to effect a substantial amount of the portfolio transactions which
are executed on the New York or American Stock Exchanges, 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
Advisor and other unaffiliated accounts of the Investment Advisor. 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 Advisor. The Investment 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.
5
<PAGE> 23
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 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 Advisor to furnish reports to the trustees and to maintain records in
connection with such reviews.
The Investment Advisor 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 Advisor for the Fund's use. Such allocation shall be in such amounts
and proportions as the Investment Advisor shall determine and the Investment
Advisor will report on said allocations regularly to the Board of Trustees
indicating the unaffiliated brokers to whom such allocation have been made and
the basis therefore. In addition, the Investment Advisor may consider sale of
shares of the Fund and of Gintel Fund as a factor in the selection of
unaffiliated brokers to execute portfolio transactions for the Fund, subject to
the requirements of best execution.
In selecting a broker to execute each particular transaction, the
Investment Advisor 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 Advisor 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
Advisor 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
Advisor determines in good faith that such amount of commission was reasonable
in relation to the value of the research service provided by such broker viewed
in terms of either that particular transaction or the Investment Advisor's
ongoing responsibilities with respect to the Fund.
For the fiscal years end December 31, 1995 and 1994, the Fund paid no
commissions, pursuant to the Administrative Services Agreement with the
Distributor under which all brokerage commissions are paid for by the
Distributor. For the first three months of the fiscal year ended December 31,
1993, the Fund paid commissions of $35,259 of which $28,759 (81.6%) was paid to
Gintel & Co.
ALLOCATION OF INVESTMENTS
The Investment Advisor 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 Advisor 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 Advisor to allocate
purchases and sales among the Fund and its other clients in a manner which the
Investment Advisor 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 which
it seeks to purchase 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, 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 New York Stock Exchange, 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's shares.
6
<PAGE> 24
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
New York Stock 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 the times at which they are determined and the
close of the Exchange, which will not be reflected in the 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.
TAX MATTERS
The following is only a summary of certain additional tax considerations
generally affecting the Fund and its shareholders that are not described in the
Prospectus. No attempt is made to present a detailed explanation of the tax
treatment of the Fund or its shareholders, and the discussions here and in the
Fund's Prospectus are not intended as a substitute for careful tax planning.
Since the shareholders of the Fund are tax-exempt entities, they should
generally not be subject to federal income tax consequences as a result of
ownership and disposition of shares of the Fund. However, the special tax rules
affecting tax-exempt investors are not discussed herein or in the prospectus,
and thus, each prospective investor should consult its own tax advisor regarding
the purchase of an investment in the Fund.
QUALIFICATION AS REGULATED INVESTMENT COMPANY
The Fund has elected to be taxed as a regulated investment company
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 made during the
taxable year, or under specified circumstances, within twelve months after the
close of the taxable year, will be considered distributions of income and gains
of the taxable year and can 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"); and (2) derive less
than 30% of its gross income (exclusive of certain gains on designated hedging
transactions that are offset by realized or unrealized losses on offsetting
positions) from the sale or other disposition of stock, securities or foreign
currencies (or options, futures or forward contracts thereon) held for less than
three months (the "Short-Short Gain Test"). However, foreign currency gains,
including those derived from options, futures and forwards, will not in any
event be characterized as Short-Short Gain if they are directly related to the
regulated investment company's investments in stock or securities (or options or
futures thereon). Because of the Short-Short Gain Test, the Fund may have to
limit the sale of appreciated securities that it has held for less than three
months. However, the Short-Short Gain Test will not prevent the Fund from
disposing of investments at a loss, since the recognition of a loss before the
expiration of the three-month holding period is disregarded for this purpose.
Interest (including original issue discount) received by the Fund at maturity or
upon the disposition of a security held for less than three months will not be
treated as gross income derived from the sale or other disposition of such
security within the meaning of the Short-Short Gain Test. However, income that
is attributable to realized market appreciation will be treated as gross income
from the sale or other disposition of securities for this purpose.
In general, gain or loss recognized by the Fund on the disposition of an
asset will be a capital gain or loss. 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 than its principal
amount) will be treated as ordinary income to the extent of the portion of the
market discount which accrued during the period of time the Fund held the debt
obligation.
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, or (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-
7
<PAGE> 25
money qualified covered call option with respect thereto. However, for purposes
of the Short-Short Gain Test, the holding period of the asset disposed of may be
reduced only in the case of clause (1) above. 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.
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 which the Fund has
not invested more than 5% of the value of the Fund's total assets in securities
of such issuer and as to which the Fund does not hold more than 10% 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 more issuers which the Fund controls and which are engaged
in the same or similar trades or businesses.
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.
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 purposes, a regulated investment company is treated as having
distributed any amount on which it is subject to income tax for any taxable year
ending in such calendar year.
For purposes of the excise tax, a 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
Ordinarily, shareholders are required to take distributions by the
Fund into account in the year in which the distributions are made. However,
dividends declared in October, November or December of any year and payable to
shareholders of record on a specified date in such a month will be deemed to
have been received by the shareholders (and made by the Fund) on December 31 of
such calendar year if such dividends are actually paid in January of the
following year. Shareholders will be advised annually as to the U.S. federal
income tax consequences of distributions made (or deemed made) during the year.
The Fund will be required in certain cases to withhold and remit to
the U.S. Treasury 31% of ordinary income dividends and capital gain dividends,
and the proceeds of redemption of shares, paid to any shareholder (1) who has
provided either an incorrect tax identification number or no number at all, (2)
who is subject to backup withholding by the IRS for failure to report the
receipt 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 a
corporation or other "exempt recipient."
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 Statement of Additional Information. Future
legislative or administrative changes or court
8
<PAGE> 26
decisions may significantly change the conclusions expressed herein, and any
such changes or decisions may have a retroactive effect with respect to the
transactions contemplated herein.
Rules of state and local taxation of ordinary income dividends and
capital gain dividends from regulated investment companies often differ from the
rules for U.S. federal income taxation described above. Shareholders are urged
to consult their tax advisers as to the consequences of these and other state
and local tax rules affecting investment in the Fund.
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, a fund's advertising performance must
include total return quotes calculated according to the following formula:
n
P(1+T) = ERV
Where: P = a hypothetical initial payment of $1,000
T = average annual total return
n = 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.
The total return of the Fund for the period from December 31, 1985
through December 31, 1995 was as follows:
- ending redeemable value of initial $1,000 investment
pursuant to SEC rules: $2,210
The total return of the Fund for the five-year period from December 31,
1989 through December 31, 1995 was as follows:
- ending redeemable value of initial $1,000 investment
pursuant to SEC rules: $1,365
The total return of the Fund for the one-year period from December 31,
1994 through December 31, 1995 was as follows:
- ending redeemable value of initial $1,000 investment
pursuant to SEC rules: $1,266
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.
9
<PAGE> 27
REPORT OF INDEPENDENT AUDITORS
Board of Trustees and Shareholders
Gintel ERISA Fund
Greenwich, Connecticut
We have audited the statement of net assets of the Gintel ERISA Fund as of
December 31, 1995, and the related statement of operations for the year then
ended, statements of 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 years
in the five-year period then ended. These financial statements and condensed
financial information are the responsibility of the Fund's management. Our
responsibility is to express an opinion on these financial statements and
condensed financial information based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and condensed
financial information are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements. Our procedures included confirmation of securities
owned as of December 31, 1995, with the custodian. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements and condensed financial information
enumerated above present fairly, in all material respects, the financial
position of Gintel ERISA Fund as of December 31, 1995, the results of its
operations for the year then ended, the changes in its net assets for each of
the years in the two-year period then ended, and the condensed financial
information for each of the years in the five-year period then ended, in
conformity with generally accepted accounting principles.
/s/ Richard A. Eisner & Company, LLP
New York, New York
January 22, 1996
F-1
<PAGE> 28
GINTEL ERISA FUND Statement of Net Assets As of December 31, 1995
<TABLE>
<CAPTION>
NUMBER
OF MARKET
SHARES COST** VALUE
- ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
COMMON STOCKS
MORTGAGE INVESTMENTS (14.8%)
180,000 Capstead Mortgage Corporation $1,850,958 $4,117,500
DIVERSIFIED INDUSTRIES (11.7%)
300,000 Chart Industries, Inc. 1,420,685 2,287,500
30,000 Ogden Corporation 659,700 641,250
33,000 Portec, Inc.* 388,845 317,625
COPPER PRODUCER (11.2%)
50,000 Phelps Dodge Corporation 3,025,297 3,112,500
FOOD PRODUCTS (7.7%)
37,500 H.J. Heinz Company 1,059,375 1,242,188
50,000 Northland Cranberries, Inc. 766,880 887,500
ELECTRONIC SYSTEMS & EQUIPMENT (5.9%)
30,000 Harris Corporation 1,244,371 1,638,750
ENVIRONMENTAL SERVICES (5.3%)
50,000 Browning-Ferris Industries, Inc. 1,411,036 1,475,000
TEXTILE -- APPAREL (5.3%)
225,000 Oneita Industries, Inc.+* 3,010,290 1,462,500
OILFIELD SERVICES (5.0%)
20,000 Schlumberger Limited 1,190,437 1,385,000
OIL & GAS (4.6%)
8,000 Exxon Corporation 461,000 641,000
10,000 Kerr-McGee Corporation 538,125 635,000
FOREST PRODUCTS - PAPER (4.3%)
25,000 Union Camp Corporation 1,319,375 1,190,625
INTEGRATED STEEL PRODUCER (4.1%)
20,000 Nucor Corporation 989,563 1,142,500
INSURANCE (3.4%)
20,000 Mercury General Corporation 771,938 955,000
</TABLE>
F-2
<PAGE> 29
GINTEL ERISA FUND Statement of Net Assets (continued) As of December 31, 1995
<TABLE>
<CAPTION>
NUMBER
OF MARKET
SHARES COST** VALUE
- ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
NATURAL GAS PRODUCING & DISTRIBUTION (2.5%)
15,000 Consolidated Natural Gas Company 667,000 680,625
TRANSPORTATION - RAILROAD (2.2%)
9,000 Union Pacific Corporation 573,000 594,000
FOOD PRODUCTS (1.4%)
12,500 Sara Lee Corporation 268,000 398,437
Miscellaneous Securities (0.3%) 91,875 90,000
- ------------------------------------------------------------------------------------------------------------------------
Total Common Stocks (89.7%) 21,707,750 24,894,500
- ------------------------------------------------------------------------------------------------------------------------
PRINCIPAL
AMOUNT
- ------------------------------------------------------------------------------------------------------------------------
CASH EQUIVALENTS
2,847,000 Chase Securities, Inc. Repurchase Agreement
5.35% due 1/2/96 (Collateralized by U.S.
Government Obligations) 2,847,000 2,847,000
- ------------------------------------------------------------------------------------------------------------------------
Total Cash Equivalents (10.2%) 2,847,000 2,847,000
- ------------------------------------------------------------------------------------------------------------------------
Total Investments (99.9%) $24,554,750 27,741,500
Other assets net of liabilities (0.1%) 24,576
- ------------------------------------------------------------------------------------------------------------------------
Net Assets Applicable to Outstanding Shares (100.0%) $27,766,076
========================================================================================================================
Net asset value per share-based on 977,447 shares of
beneficial interest (offering and redemption price) $28.41
========================================================================================================================
</TABLE>
* Non-income producing investments
** Cost basis for Federal income tax purposes
+ Robert Gintel is Chairman of the Board of Oneita Industries and owns 16% of
its common stock. As a result, Oneita may be deemed to be an affiliate of
the Fund.
The accompanying notes to financial statements are an integral part hereof.
F-3
<PAGE> 30
GINTEL ERISA FUND Statement of Operations Year Ended December 31, 1995
<TABLE>
<S> <C> <C>
INVESTMENT INCOME:
Dividends $723,900
Interest 207,259
----------
Total investment income 931,159
EXPENSES:
Administrative services fee (Note D) $363,186
Investment advisory fee (Note C) 290,547
Trustees' fees 28,675
Taxes 2,000
---------
Total Expenses 684,408
----------
NET INVESTMENT INCOME 246,751
NET REALIZED GAIN ON INVESTMENTS 176,028
NET INCREASE IN UNREALIZED APPRECIATION OF INVESTMENTS 6,130,781
---------
NET GAIN ON INVESTMENTS 6,306,809
----------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $6,553,560
==========
</TABLE>
The accompanying notes to financial statements are an integral part hereof.
F-4
<PAGE> 31
GINTEL ERISA FUND Statements of Changes in Net Assets Year Ended December 31
<TABLE>
<CAPTION>
1995 1994
--------------------------------------------------------------------------------------------
<S> <C> <C>
OPERATIONS:
Net investment income $246,751 $587,258
Net realized gain (loss) on investments 176,028 (1,956,031)
Net increase (decrease) in unrealized appreciation
of investments 6,130,781 (8,704,711)
----------- -----------
Net increase (decrease) in net assets from operations 6,553,560 (10,073,484)
DISTRIBUTIONS TO SHAREHOLDERS:
Investment income (320,221) (581,627)
Net realized gains from investments
----------- -----------
Net decrease from distributions (320,221) (581,627)
CAPITAL SHARE TRANSACTIONS:
Proceeds from shares issued 276,201 1,962,228
Reinvestment of dividends 319,573 579,374
Cost of shares repurchased (9,115,210) (12,928,744)
----------- -----------
Net decrease from capital
share transactions (8,519,436) (10,387,142)
Total Decrease (2,286,097) (21,042,253)
Net Assets - Beginning of Year 30,052,173 51,094,426
----------- -----------
Net Assets - End of Year $27,766,076 $30,052,173
=========== ===========
NET ASSETS CONSIST OF:
Capital Stock $26,438,824 $34,958,260
Undistributed net investment income (loss) (67,839) 5,631
Undistributed net realized losses
from security transactions (1,791,659) (1,967,687)
Unrealized appreciation (depreciation) on investments 3,186,750 (2,944,031)
----------- -----------
$27,766,076 $30,052,173
=========== ===========
</TABLE>
The accompanying notes to financial statements are an integral part hereof.
F-5
<PAGE> 32
GINTEL ERISA FUND Condensed Financial Information (Per Share Income and
Capital Changes*) Year Ended December 31
<TABLE>
<CAPTION>
1995 1994 1993 1992 1991
- -------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net Asset Value,
Beginning of Year $22.70 $29.41 $35.38 $31.49 $29.29
Income from
Investment Operations
Net investment income .27 .45 .41 .57 1.01
Net realized and unrealized
gain (loss) on securities 5.77 (6.71) 1.42 3.96 2.94
- -------------------------------------------------------------------------------------------------------------
Total from Investment Income 6.04 (6.26) 1.83 4.53 3.95
- -------------------------------------------------------------------------------------------------------------
Less: Distributions
Net investment income .33 .45 .41 .57 .84
Capital gains 7.39 .07 .91
- -------------------------------------------------------------------------------------------------------------
Total Distributions .33 .45 7.80 .64 1.75
- -------------------------------------------------------------------------------------------------------------
Net Asset Value, End of Year $28.41 $22.70 $29.41 $35.38 $31.49
=============================================================================================================
Total Return 26.6% -21.3% 5.4% 14.4% 13.5%
- -------------------------------------------------------------------------------------------------------------
Ratios/Supplemental Data
Net assets, end of year $27,766,076 $30,052,173 $51,094,426 $56,380,619 $73,190,436
Ratio of operating expenses to
average net assets (Note D) 2.5%** 2.6%** 2.2%** 1.7% 1.5%
Ratio of net investment
income to average net assets 0.9% 1.4% 1.0% 1.5% 2.4%
Portfolio turnover rate 52.7% 104.4% 99.3% 79.8% 96.8%
Shares outstanding, end of year 977,447 1,323,836 1,737,287 1,593,610 2,324,490
</TABLE>
* The above per share information is based upon a daily average of shares
outstanding.
** The Fund's expense ratio includes brokerage commissions on portfolio
transactions paid for under the Fund's Administrative Services fee, and,
therefore, may appear higher than those of other mutual funds as well as
for the Fund in prior years. Other mutual funds do not include brokerage
commissions in their operating expenses, but instead add them to the cost
of securities purchased or deduct them from the proceeds of securities
sold.
The accompanying notes to financial statements are an integral part hereof.
F-6
<PAGE> 33
GINTEL ERISA FUND Notes to Financial Statements December 31, 1995
(NOTE A) -- ORGANIZATION:
The Gintel ERISA Fund (the "Fund") is a Massachusetts business trust formed
under the laws of the Commonwealth of Massachusetts with authority to issue an
unlimited number of shares of beneficial interest.
(NOTE B) -- SIGNIFICANT ACCOUNTING POLICIES:
1. Security Valuation:
Investments in securities are valued at the last reported sales price on the
last business day of the period, or in the absence of a recorded sale, at the
mean of the closing bid and asked price on that date. Short-term investments are
valued at cost which approximates market value.
2. Federal Income Taxes:
It is the Fund's policy to comply with the requirements of the Internal Revenue
Code applicable to regulated investment companies and to distribute
substantially all of its taxable income and long-term gains to its shareholders.
Therefore, only a nominal Federal income tax provision is required. At December
31, 1995, the Fund had available a capital loss carryforward of approximately
$1,800,000, $1,055,000 expiring principally in 2002 and $745,000 expiring
principally in 2003.
3. Other:
As is common in the industry, security transactions are accounted for on the
trade date. Dividend income and distributions to shareholders are recorded on
the ex-dividend date.
Realized gain or loss on security transactions is determined on the basis of
first-in, first-out or specific identification.
(NOTE C) -- INVESTMENT ADVISORY AGREEMENT:
The Fund has entered into an Investment Advisory Agreement with Gintel Equity
Management, Inc., a related party, which provides for an annual fee of 1% to be
paid quarterly, based on the daily value of the Fund's net assets during the
preceding quarter. The fee will be reduced for any fiscal year, if the Fund's
expenses, as defined, exceed certain limitations.
(NOTE D) -- ADMINISTRATIVE SERVICES AGREEMENT:
The Fund entered into an Administrative Services Agreement dated April 1, 1993,
which provides that in consideration for the services provided by Gintel & Co.,
the Fund's Distributor and a related party, and the payment by the Distributor
of substantially all of the Fund's expenses previously paid by the Fund
directly, including but not limited to brokerage commissions and operating
expenses (but excluding the Investment Advisor's fees, the fees paid to
non-interested Trustees, certain transaction costs, interest, taxes and
extraordinary expenses), the Distributor will receive a fee payable at the
beginning of each quarter based on average daily net assets during the preceding
quarter, at an annual rate of 1.25% of the first $50 million of the average
daily net assets of the Fund, 1.125% of the next $50 million of the average
daily net assets and 1.0% of the average daily net assets in excess of $100
million.
F-7
<PAGE> 34
GINTEL ERISA FUND Notes to Financial Statements -- continued December 31, 1995
(NOTE E) -- OTHER MATTERS:
<TABLE>
<S> <C>
1. Investments
Unrealized appreciation at December 31, 1995 $4,954,835
Unrealized depreciation at December 31, 1995 (1,768,085)
----------
$3,186,750
==========
FOR THE YEAR ENDED DECEMBER 31, 1995
Purchases of securities other than short-term investments $12,694,773
Sales of securities other than short-term investments $21,560,842
</TABLE>
2. Capital Stock: (in shares)
<TABLE>
<CAPTION>
YEAR ENDED YEAR ENDED
DECEMBER 31, 1995 DECEMBER 31, 1994
<S> <C> <C>
Shares issued 10,686 72,736
Shares reinvested 11,305 25,579
Shares repurchased (368,380) (511,766)
-------- --------
Net decrease (346,389) (413,451)
======== ========
</TABLE>
F-8
<PAGE> 35
PART C
OTHER INFORMATION
ITEM 24 (a) FINANCIAL STATEMENTS
In Part A:
Condensed Financial Information for the years
ended December 31, 1985, 1986, 1987, 1988, 1989, 1990,
1991, 1992, 1993, 1994 and 1995.
In Part B:
(1) Accountants' Report
(2) Statement of Net Assets as of December 31, 1995
(3) Statement of Operations for the year ended
December 31, 1995
(4) Statement for Cash Flow for the year ended December 31,
1995
(5) Statement of Changes in Net Assets for the years ended
December 31, 1994 and 1995.
(6) Notes to Financial Statements
In Part C:
None
(b) Exhibits
EXHIBIT
NUMBER DESCRIPTION
EX-99.B1 - Form of Registrant's Declaration of Trust.(1)
EX-99.B2 - Form of Registrant's By-Laws.*
EX-99.B3 - None.
EX-99.B4 - Specimen Security.*
EX-99.B5 - Form of Investment Advisory Agreement.*
EX-99.B6 - Form of Distribution Agreement.*
EX-99.B7 - None.
- ----------------
(1) Previously filed with the Fund's Post-Effective Amendment No. 6 on
February 18, 1986.
C-3
<PAGE> 36
EXHIBIT
NUMBER DESCRIPTION
EX-99.B8 - Custodian Agreement and Transfer Agency Agreement
EX-99.B9 - None.
EX-99.B10 - Consent of Kramer, Levin, Naftalis, Nessen, Kamin & Frankel.
EX-99.B11 - Consent of Richard A. Eisner & Company, LLP.
EX-99.B12 - None.
EX-99.B13 - None.
EX-99.B14 - None.
EX-99.B15 - Form of Rule 12b-1 Plan.(2)
EX-99.B16 - Calculation of Total Return(3)
EX-27.B17 - Financial Data Schedule
- ----------------
(2) Previously filed with the Fund's Post-Effective Amendment No. 6 on
February 18, 1986.
(3) Previously filed with the Fund's Post-Effective Amendment No. 11 on
April 29, 1988.
C-4
<PAGE> 37
ITEM 25. PERSONS CONTROLLED OR UNDER COMMON CONTROL WITH REGISTRANT
None.
ITEM 26. NUMBER OF HOLDERS OF SECURITIES
<TABLE>
<CAPTION>
NUMBER OF RECORD HOLDERS
TITLE CLASS MARCH 31, 1996
----------- ------------------------
<S> <C>
Shares of beneficial 1,037
interest, par value
.01 per share
</TABLE>
ITEM 27. INDEMNIFICATION
Reference is hereby made to Article VIII of the Registrant's
Declaration Trust.
The Trustees and officers of the Registrant and the personnel of
the Registrant's investment adviser, administrator and distributor are insured
under an errors and omissions liability insurance policy. The Registrant and its
officers are also insured under the fidelity bond required by Rule 17g-1 under
the Investment Company Act of 1940.
ITEM 28. BUSINESS AND OTHER CONNECTIONS OF INVESTMENT ADVISER
See "Management" in the Prospectus.
ITEM 29. PRINCIPAL UNDERWRITER
(a) Gintel Fund
<TABLE>
<CAPTION>
NAME AND PRINCIPAL POSITION AND OFFICES WITH POSITION AND OFFICES
BUSINESS ADDRESS(1) PRINCIPAL UNDERWRITER WITH REGISTRANT
------------------ ------------------------- --------------------
<S> <C> <C>
Robert M. Gintel General Partner Chairman, Trustee and
Chief Executive Officer
Stephen Stavrides General Partner Trustee, President and
Treasurer
Cecil A. Godman III General Partner None
Ellen J. Berman General Partner None
Debra Jonas General Partner None
Edward F. Carroll General Partner None
</TABLE>
- ------------------
(1) 6 Greenwich Office Park, Greenwich, Connecticut 06830.
C-5
<PAGE> 38
(c) Not Applicable
ITEM 30. LOCATION OF ACCOUNTS AND RECORDS
Gintel Equity Management, Inc., 6 Greenwich Office Park,
Greenwich, Connecticut 06830 will maintain physical possession of each such
account, book or other document of the Registrant, except for those maintained
by the Fund's Custodian, Chase Manhattan Bank, N.A., 770 Broadway, New York,
N.Y. 10003.
ITEM 31. MANAGEMENT SERVICES
None.
ITEM 32. UNDERTAKINGS
The Fund undertakes that whenever ten or more shareholders of
record of the Fund who have been such for at least six months preceding the date
of application, and who hold in the aggregate either shares having a net asset
value of at least $25,000 or at least 1 percent of the outstanding shares of the
Fund, whichever is less, shall apply to the directors or trustees of the Fund in
writing, stating that they wish to communicate with the other shareholders with
a view to obtaining signatures to a request for meeting pursuant to Section
16(c) of the Investment Company Act and accompanied by a form of communication
and request which they wish to transmit, the Fund shall thereafter comply in all
respects with the provisions of said Section 16(c) insofar as they relate to
such shareholder communications.
C-6
<PAGE> 39
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 30th day of April, 1996.
GINTEL ERISA 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.
<TABLE>
<CAPTION>
Signatures Title Date
- ---------- ----- ----
<S> <C> <C>
/s/ Robert M. Gintel
- ------------------------ Chief Executive Officer, April 30, 1996
Robert M. Gintel Chairman of the Board
and Trustee (Principal
Executive Officer)
/s/ *
- ------------------------ Trustee April 30, 1996
Thomas H. Lenagh
/s/ *
- ------------------------ Trustee April 30, 1996
Francis J. Palamara
/s/ *
- ------------------------ Trustee April 30, 1996
Russel R. Taylor
/s/ *
- ------------------------ Trustee, Vice President, April 30, 1996
Stephen G. Stavrides Secretary and Treasurer
(Principal Financial and
Accounting Officer)
*By /s/ Susan Penry-Williams April 30, 1996
- ----------------------------
Susan Penry-Williams Attorney-in-Fact,
pursuant to powers of attorney
previously filed with the Securities
and Exchange Commission
</TABLE>
<PAGE> 40
EXHIBITS
<PAGE> 41
EXHIBIT INDEX
EXHIBIT
NUMBER DESCRIPTION
EX-99.B1 - Form of Registrant's Declaration of Trust.(1)
EX-99.B2 - Form of Registrant's By-Laws.*
EX-99.B3 - None.
EX-99.B4 - Specimen Security.*
EX-99.B5 - Form of Investment Advisory Agreement.*
EX-99.B6 - Form of Distribution Agreement.*
EX-99.B7 - None.
EX-99.B8 - Custodian Agreement and Transfer Agency Agreement
EX-99.B9 - None.
EX-99.B10 - Consent of Kramer, Levin, Naftalis, Nessen, Kamin & Frankel.
EX-99.B11 - Consent of Richard A. Eisner & Company, LLP.
EX-99.B12 - None.
EX-99.B13 - None.
EX-99.B14 - None.
EX-99.B15 - Form of Rule 12b-1 Plan.(2)
EX-99.B16 - Calculation of Total Return(3)
EX-27.B17 - Financial Data Schedule
- ----------------
(1) Previously filed with the Fund's Post-Effective Amendment No. 6 on
February 18, 1986.
(2) Previously filed with the Fund's Post-Effective Amendment No. 6 on
February 18, 1986.
(3) Previously filed with the Fund's Post-Effective Amendment No. 11 on
April 29, 1988.
<PAGE> 1
[KRAMER, LEVIN, NAFTALIS, NESSEN, KAMIN & FRANKEL LETTERHEAD]
April 26, 1996
Gintel ERISA Fund
6 Greenwich Office Park
Greenwich, CT 06831
Re: Gintel ERISA Fund
Registration No. 2-74268
Post-Effective Amendment No. 16
Gentlemen:
We consent to the reference to our Firm in the prospectus and statement
of additional information portions of the above-mentioned Registration
Statement.
Very truly yours,
/s/ Kramer, Levin, Naftalis,
Nessen, Kamin & Frankel
<PAGE> 1
CONSENT OF INDEPENDENT AUDITORS
We hereby consent to the inclusion in the Statement of Additional
Information of the post-effective amendment to the Registration Statement (No.
2-74268) being filed under the Securities Act of 1933 and the Investment
Company Act of 1940 on Form N-1A by Gintel ERISA Fund of our report dated
January 22, 1996, relating to the statement of net assets of Gintel ERISA Fund
as at December 31, 1995, the related statements of operations for the year then
ended, changes in net assets for each of the years in the two-year period then
ended, and the condensed financial information for each of the periods
indicated appearing in the Prospectus; we also consent to the reference to our
Firm under the captions "Counsel and Auditors" in the Prospectus and
"Shareholder Reports" in the Statement of Additional Information.
/s/ Richard A. Eisner & Company, LLP
New York, New York
April 26, 1996
<TABLE> <S> <C>
<ARTICLE> 6
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> DEC-31-1995
<INVESTMENTS-AT-COST> 24,555
<INVESTMENTS-AT-VALUE> 27,742
<RECEIVABLES> 48
<ASSETS-OTHER> 1
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 27,791
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 25
<TOTAL-LIABILITIES> 25
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 26,439
<SHARES-COMMON-STOCK> 977
<SHARES-COMMON-PRIOR> 1,037
<ACCUMULATED-NII-CURRENT> (68)
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> (1,792)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 3,187
<NET-ASSETS> 27,766
<DIVIDEND-INCOME> 724
<INTEREST-INCOME> 207
<OTHER-INCOME> 0
<EXPENSES-NET> 684
<NET-INVESTMENT-INCOME> 247
<REALIZED-GAINS-CURRENT> 176
<APPREC-INCREASE-CURRENT> 6,131
<NET-CHANGE-FROM-OPS> 6,554
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 320
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 276
<NUMBER-OF-SHARES-REDEEMED> (9,115)
<SHARES-REINVESTED> 319
<NET-CHANGE-IN-ASSETS> 2,286
<ACCUMULATED-NII-PRIOR> 6
<ACCUMULATED-GAINS-PRIOR> (1,968)
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 290
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 684
<AVERAGE-NET-ASSETS> 27,907
<PER-SHARE-NAV-BEGIN> 22.70
<PER-SHARE-NII> .27
<PER-SHARE-GAIN-APPREC> 5.77
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> (.33)
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 28.41
<EXPENSE-RATIO> 2.5
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
