As filed on Registration No. 2-824461
March, 1996
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. 17 [X]
and
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY
ACT OF 1940 [x]
Amendment No. 21
GIBRALTAR EQUITY GROWTH FUND, INC.
(Exact name of Registrant as specified in Charter)
1201 County Line Road, Rosemont, PA 19010
(Address of Principal Executive Offices)
Registrant's Telephone Number: (610) 525-6102
c/o Robert J. Greenleaf
34 High Street, Cambridge, MD 21613
(Name and Address of Agent for Service)
It is proposed that this filing will become effective
(check appropriate box)
______ immediately upon filing pursuant to paragraph (b)
______ on pursuant to paragraph (b)
__X___ 60 days after filing pursuant to paragraph (a) (1)
______ on pursuant to paragraph (a) (1)
______ 75 days after filing pursuant to paragraph (a) (2)
______ on pursuant to paragraph (a) (2)
of Rule 485
DECLARATION PURSUANT TO RULE 24f-2
The Registrant has registered and indefinite number or amount of
securities under the Securities Act of 1933 in accordance with the provisions
of Rule 24f-2 under the Investment Company Act of 1940. The 24f-2 Notice of
the Registrant's fiscal year ended November 30, 1995, was filed on March
21, 1996 and the notice for the current fiscal year ending November 30,
1996, will be filed no later than January 30, 1997.
<PAGE>
GIBRALTAR EQUITY GROWTH FUND, INC.
CROSS REFERENCE SHEET
-----------------------------------------
Form N-1A, Part A Prospectus Caption
- ----------------------- -----------------------------
1 Page 1, Front Cover Page
2 Expenses and Costs of
Investing in the Fund
3 Financial Highlights
4 The Fund; Investment
Objectives and policies;
Investment Restrictions
5 Management of the Fund;
Portfolio Brokerage; Port-
folio Turnover; Investment
Adviser; Transfer Agent and
Custodian; Fund expenses;
Determination of Net Asset
Value; General Information
6 Capital Stock; Taxes;
Performance Data; Divi-
dends and Distributions
7 Purchase of Fund Shares;
Exchange Privileges; Other
Purchase Programs; Distri-
bution Plan
8 Redemption of Fund Shares
9 Not Applicable
Item Number Statement of Additional
Form N-1A, Part B Information Caption
- -------------------- -------------------------------------
10 Page I
11 Page I
12 General Information and
History; Organization of
Service Companies
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13 Investment Objectives and
Policies; Investment Res-
trictions
14 Management of the Fund
15 Control Persons and Prin-
cipal Holders of Securities
16 Investment Advisory and other
Services; Adviser; Accounting
Services; Transfer Agency and
Administration; Distribution
of Fund Shares; Distributor;
Organization of Service Companies
17 Brokerage Allocation
18 Capital Stock
19 Purchase, Redemption and
Pricing of Shares
20 Tax Status covered under
Taxes in Prospectus
21 Distributor; Distribution of
Fund Shares; Organization
of Service Companies
22 Calculation of Performance
Data covered under Per-
formance Data in Prospectus
23 Financial Statements
Item Number Part C
Form N-1A, Part C Other Information Caption
- ----------------------- -------------------------------------
24 Financial Statement and
Exhibits
25 Persons Controlled by or
Under Common Control with
Registrant
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26 Number of Holders of
Securities
27 Indemnification
28 Business and Other Connec-
tions of Investment Adviser
29 Principal Underwriters
30 Location of Accounts and
Records
31 Management Services
32 Undertakings
iii
<PAGE>
G I B R A L T A R E Q U I T Y G R O W T H F U N D, I N C.
1201 County Line Road, Rosemont, PA 19010-2614
(610) 525-6102
Investors are advised to read and retain this Prospectus for future
reference.
Gibraltar Equity Growth Fund, Inc. is a no-load, open-end, diversified
management investment company. Its primary objective is long-term capital
appreciation. The Fund has a secondary objective of realizing current income,
but will pursue this objective only when deemed consistent with its primary
objective. The Fund seeks to achieve its primary investment objective by
investing in common stocks listed on national securities exchanges or traded
over-the-counter which, in the opinion of the Fund's Investment Adviser, are
undervalued and, therefore, may experience significant long-term capital
appreciation. The Fund seeks to achieve its secondary objective by investing in
undervalued common stocks which currently pay dividends and which are likely to
increase dividend payments over the long-term. There can be no assurance that
the Fund will achieve these objectives. In response to adverse market or
economic conditions, the Fund may temporarily assume a defensive position in
order to preserve shareholders' capital by investing in securities such as
short-term money market instruments.
The Fund's Investment Adviser is Barclay Funds Management. Its
Distributor is Barclay Investments, Inc. Their offices are located in
Providence, RI.
This prospectus sets forth the information that a prospective investor
should know before investing in the Fund. A Statement of Additional
Information, dated April, 1996, containing additional and more detailed
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 may be obtained at no charge,
by writing or calling the Fund at the address and General Information number
printed above.
-----------------------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION, NOR HAS THE COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS.
ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
PROSPECTUS - April, 1996
1
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TABLE OF CONTENTS
Page
Expenses and Costs of Investing in the Fund................................3
Financial Highlights.......................................................4
The Fund...................................................................5
Investment Objectives and Policies.........................................5
Investment Restrictions....................................................7
Management of the Fund.....................................................7
Portfolio Brokerage........................................................8
Portfolio Turnover.........................................................8
Investment Adviser.........................................................8
Purchase of Fund Shares....................................................9
Transfer Agent and Custodian..............................................11
Distribution Plan.........................................................11
Fund Expenses.............................................................11
Determination of Net Asset Value..........................................12
Exchange Privilege........................................................12
Dividends and Distributions...............................................12
Performance Data..........................................................13
Taxes.....................................................................13
Other Purchase Programs...................................................14
Redemption of Fund Shares.................................................15
Capital Stock.............................................................16
General Information.......................................................16
Account Application.......................................................18
No person has been authorized to give any information or to make any
representations not contained in this Prospectus in connection with the offering
made by this Prospectus and, if given or made, such information or
representation must not be relied upon as having been authorized by the Fund or
its distributor. This Prospectus does not constitute an offering by the Fund or
by the distributor in any jurisdiction in which such offering may not lawfully
be made.
2
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EXPENSES AND COSTS OF INVESTING IN THE FUND
The following table is designed to assist investors in understanding the various
costs and expenses of investing in the Fund.
Shareholder Transaction Expenses
Sales load to purchase shares None
Sales load to reinvest dividends None
Fees to exchange shares None
Redemption fees or deferred sales charges None
Annual Fund Operating Expenses
(as a percentage of average net assets)
Investment advisory fees 1.50%
12b-1 fees* 00%
Other expenses 4.08%
---------
Total Fund Operating Expenses 5.58%
Example
An investor would pay directly or indirectly the following expenses on a $1,000
investment in the Fund, assuming a 5% annual return and a complete redemption of
the investment at the end of the periods shown.
One Year Three Years Five Years Ten Years
- --------------- -------------------- -------------------- --------------------
$56 $166 $275 $542
The example assumes that all dividends and distributions are reinvested and that
the percentage amounts listed under Annual Fund Operating Expenses remain the
same in the years shown. The example should not be considered a representation
of past or future expenses. The Fund's actual expenses may be higher or lower
than those shown and will depend, in part, on the level of average net assets,
the levels of sales and redemption of shares and the extent to which variable
expenses are incurred.
Expense information is based upon the Fund's latest fiscal year. The assumed 5%
annual return is required by Securities and Exchange Commission regulations
applicable to all mutual Fund's actual or projected performance. For further
information on the investment advisory fee see section hereafter on "Investment
Adviser."
- --------------------------------------------
* The Fund's Distribution Plan has not been implemented. Were the
Plan to be activated, total Fund expenses would be subject to
increase by an amount not exceeding .20% to 5.78%.
3
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The following table has been audited by Tait, Weller & Baker, independent
certified public accountants. Financial statements for the fiscal year ending
November 30, 1995, and the report of Tait, Weller & Baker thereon are included
in the Statement of Additional Information. Further information about the Fund's
performance is included in its Annual Report to Shareholders, a copy of which
(including the independent auditor's report) may be obtained from the Fund upon
request at no charge.
GIBRALTAR EQUITY GROWTH FUND, INC.
FINANCIAL HIGHLIGHTS
- ------------------------------------------------------------------------------
The following table sets forth the per share operating performance data
for a share of capital stock outstanding, total return, ratios to
average net assets, and other supplemental data for each year indicated.
<TABLE>
Years Ended November 30,
---------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1995(1) 1994 1993 1992 1991 1990 1989 1988 1987 1986
------- ---- ---- ---- ---- ---- ---- ---- ---- ----
Net asset value, beginning of year $12.92 $12.86 $15.09 $14.46 $14.31 $14.93 $12.46 $12.05 $13.64 $12.13
------ ------ ------ ------ ------ ------ ------ ------ ------ ------
Income from investment operations
Net investment income(loss) (.43) (.34) (.19) (.21) (.40) (.52) .30 .51 .13 .13
Net realized and unrealized gain
(loss) on investments 4.03 .40 (.57) 1.72 2.30 (.26) 2.57 1.26 (1.30) 1.85
---- --- ----- ---- ---- ----- ---- ---- ----- ----
Total from investment operations 3.60 .06 (.76) 1.51 1.90 (.26) 2.87 1.77 (1.17) 1.98
---- --- ----- ---- ---- ----- ---- ---- ----- ----
Less Distributions from
Net investment income - - - - - .315 .31 .36 .24 .17
Net realized gain from security
transactions .04 - 1.47 .88 1.75 .045 .09 1.00 .18 .30
---- ----- ---- ---- ---- --- ---- --- ---
Total Distributions .04 - 1.47 .88 1.75 .36 .40 1.36 .42 .47
---- ----- ---- ---- --- --- ---- --- ---
Net asset value, end of year $16.48 $12.92 $12.86 $15.09 $14.46 $14.31 $14.93 $12.46 $12.05 $13.64
====== ====== ====== ====== ====== ====== ====== ====== ====== ======
Total Return 27.94% .47% (5.63%) 10.99% 15.07% (1.76%) 23.77% 15.79% (9.37%) 16.41%
Ratios/Supplemental Data
Net assets, end of year (in thousands) $776 $857 $975 $1,025 $869 $606 $1,294 $1,114 $1,059 $1,105
Ratios to average net assets:
Expenses 5.58% 5.03% 4.85% 4.72% 5.75% 6.51% 3.02% 2.00% 2.00% 2.00%
Net Income (2.98%) (2.52%) (2.41%) (2.11%) (2.77%) (3.39%) 2.16% 2.07% .92% 2.17%
Ratio of expenses to average net
assets before expense reimbursement(2) - - - - - - 4.58% 5.57% 5.30% 11.06%
PORTFOLIO TURNOVER RATE 0% 3% 75% 76% 34% 0% 22% 26% 90% 29%
(1) Computed using average shares outstanding determined monthly.
(2) The Investment Adviser voluntarily reimbursed the Fund for all expenses
incurred by the Fund which exceeded the annual rate of 2% of average
daily net assets from the commencement of the Fund's operations until
July 1989.
4
</TABLE>
<PAGE>
THE FUND
Gibraltar Equity Growth Fund, Inc., (the "Fund"), is an open-end, diversified
management investment company or mutual fund, registered under the Investment
Company Act of 1940 (the "1940 Act"). It was incorporated in Maryland on March
2, 1983, and commenced business as Gibraltar Fund, Inc., on December 8, 1983. It
is one of the funds in the Gibraltar Fund Group which is advised, managed and
serviced by Barclay Investments, Inc., and its affiliated companies. Its name
was changed in 1992 to differentiate the Gibraltar funds according to their
investment objectives.
The Fund's shares may be purchased at the next determined net asset value per
share with no front-end sales load, and are redeemable at the next determined
net asset value per share without the imposition of a redemption charge by the
Fund. The Fund maintains a Distribution Plan pursuant to Rule 12b-1 under the
1940 Act. Under the Plan the Fund may finance certain activities related to the
promotion and sale of its shares.
INVESTMENT OBJECTIVES AND POLICIES
The Fund's primary investment objective is long-term capital appreciation, with
the realization of current income as a secondary objective. The Fund seeks to
achieve its primary objective by investing in the common stock of companies
which, in the opinion of the Fund's Advisers, are undervalued. The Fund seeks to
achieve its secondary objective by investing in undervalued common stocks which
pay a dividend from current net income. The Fund's Adviser believes that the
Fund will maximize the total return to its shareholders by investing in
undervalued common stocks which currently pay a dividend and which have the
potential, if held as long-term investments, for significant capital
appreciation and increasing dividend payments. In order to achieve its primary
objective of capital appreciation the Fund may invest in companies which have
either (I) an historical record of earning growth from year to year, or (ii) the
potential, in the opinion of the Fund's Adviser, for significant increases in
earnings in the near future. The Fund will diversify its investments among
various industry classifications and, within those classifications, among
companies without regard to minimum size limitations based upon earnings or
assets.
Securities are purchased for investment and not for short-term trading purposes.
Securities, although purchased for the long-term, will be sold whenever the
Adviser determines that they are no longer compatible with the Fund's investment
objectives. Examples of such incompatibility include: 1) a security which, after
purchase, experiences a rise in market value that the Adviser determines is
excessive in relation to the security's true value; or 2) receipt of what the
Adviser considers adverse information not known at the time of purchase.
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Ordinarily, the Fund will invest at least 65% and up to 100% of its assets in
common stocks. However, if the Adviser determines that adverse market conditions
warrant the assumption of a temporary defensive position, the Fund may maintain
up to 35% of its assets in short term cash positions, cash equivalents or in any
one or a combination of the following: debt securities rated within one of the
three highest grades assigned by Moody's or S & P and having a minimum rating of
A; preferred stocks; money market instruments, maturing in twelve months or
less, such as domestic bank certificates of deposit (of domestic banks which are
insured by the Federal Deposit Insurance Corporation and have total assets at
the time of purchase in excess of $1.5 billion); domestic banker's acceptances
(guaranteed by U.S. commercial banks having total assets at the time of purchase
in excess of $1.5 billion); or obligations issued or guaranteed by the U.S.
government, its agencies or instrumentalities in which category the Fund may
invest for temporary purposes more than 35% of its assets. When the Fund is
invested for temporary defensive purposes it will not be achieving its
investment objectives.
Cash equivalents may include money market funds of custodian banks; repurchase
agreements; and the securities of other open-end, diversified, management
investment companies organized as money market funds for investment primarily in
U.S. government securities, and charging no front-end sales loads or redemption
fees. While investment in such mutual funds would involve a temporary
duplication of administrative expenses, such holdings would be on a short-term
basis and be selected for competitively favorable net yields. The Fund does not
intend to invest to a significant degree in the securities of other investment
companies.
Subject to the provisions of Section 12(d)(1) of the 1940 Act, the Fund will
not: (a) invest more than 10% of the value of its total assets in securities of
other investment companies; (b) invest more than 5% of the value of its total
assets in any other investment company; and (c) acquire more than 3% of the
total outstanding voting securities of any other investment company.
The Fund may enter into repurchase agreements in order to earn additional income
or as a temporary defensive measure. Under a repurchase agreement, the Fund
acquires securities subject to the seller's agreement to repurchase at a stated
time and at a stated price which exceeds the sale price by the agreed upon rate
of interest to be earned. The Fund's position is collateralized during the term
of the repurchase agreement. If the seller does not repurchase the securities,
the Fund could receive less than the repurchase price on a sale of such
securities.
The value of the securities of companies subject to purchase by the Fund can and
do fluctuate in the short term. Therefore, investors should be both able and
willing to hold their position in the Fund through interim periods of market
fluctuation. Of course, there can be no assurance that the Fund will achieve its
investment objectives. Investors should also note that, because of the Fund's
long-term investment objectives, it is not a complete investment program. The
Fund's
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investment objectives cannot be changed without the approval of the holders of a
majority of the Fund's outstanding shares.
INVESTMENT RESTRICTIONS
The Fund is registered as a diversified management investment company under the
1940 Act and, accordingly, may not purchase the securities of any one issuer,
other than obligations issued or guaranteed by the U.S. Government or its
agencies or instrumentalities, if, immediately after such purchase, (I) more
than 5% of the value of the Fund's total assets would be invested in such
issuer, or (ii) the Fund would own more than 10% of the outstanding voting
securities of such issuer; except that up to 25% of the value of the Fund's
total assets may be invested without regard to such limitations.
The following investment restrictions and those described in the Statement of
Additional Information are fundamental policies which may be changed only by a
vote of the holders of a majority of the Fund's outstanding shares (as defined
under "General Information"). The Fund may not:
1. Make loans, except that the Fund may purchase or hold debt instruments,
including repurchase agreements, in accordance with its investment
objectives and policies;
2. Enter into repurchase agreements maturing more than seven days after
notice if such investment, together with other illiquid securities held by
the Fund, exceeds 10% of the Fund's net assets;
3. Purchase any securities which would cause more than 25% of the value of
the Fund's assets at the time of the purchase to be invested in the
securities of one or more issuers conducting their principal business
activities in the same industry;
4. Borrow money except from banks as a temporary measure to meet unexpectedly
high levels of share redemptions, and then only in an amount not to exceed
5% of the value of its net assets, taken at the time the loan is made, or
pledge its assets taken at value to any extent greater than 15% of its
total assets taken at cost.
MANAGEMENT OF THE FUND
The business and affairs of the Fund are managed under the direction of the
Board of Directors. The Board of Directors approves agreements between the Fund
and persons or companies furnishing services to the Fund including agreements
with the investment adviser, the distributor, the accounting services and
transfer agent, and the custodian. The day-to-day operations of the Fund are
delegated to its officers who are appointed by the Board of Directors. Further
information regarding the
7
<PAGE>
directors and officers may be found following the General Information Section of
this Prospectus and in the Statement of Additional Information.
PORTFOLIO BROKERAGE
In the purchase and sale of securities the Fund selects brokers based on such
factors as price, execution ability and the broker's reliability and financial
responsibility. The Fund's distributor may also act as broker on portfolio
transactions, consistent with best price and execution and in compliance with
compensation limits specified in the 1940 Act for a broker affiliated with the
Fund.
PORTFOLIO TURNOVER
"For the fiscal years ended November 30, 1995 and 1994, the portfolio turnover
rates were 0% and 3% respectively. The Fund invests for long-term capital
appreciation with realization of current income as a secondary consideration.
Securities are not purchased for short-term trading purposes. The rate of
portfolio turnover may vary depending on investment changes made in response to
varying market and economic conditions in pursuit of the Fund's objectives. The
foregoing turnover rates did not affect transaction expenses or taxes
significantly or involve additional gains or losses for shareholders to a
significant degree."
INVESTMENT ADVISER
BFM, Inc., d/b/a/ Barclay Funds Management, ("BFM"), serves as the Fund's
investment adviser and manager under an investment advisory contract effective
December 1, 1994. It is a Rhode Island corporation organized in 1992 and located
at 66 South Main Street, Providence, RI 02903.
BFM is a wholly-owned subsidiary of Barclay Investments, Inc., ("Barclay"), also
located in Providence, RI. Barclay was established in 1930 and incorporated in
Rhode Island in 1972. As a regional broker-dealer and general securities firm,
Barclay and its subsidiaries provide brokerage services, asset allocation and
investment advice, capital management, corporate finance expertise, and
management services to the mutual fund industry. BFM, a registered investment
adviser, was organized as part of the investment advisory services of Barclay.
While personnel of BFM, through their affiliations with other Barclay
organizations, have previously provided investment advice and market analysis to
managers of institutional and private investment accounts, BFM has had no prior
investment company management experience.
BFM is also investment adviser to Gibraltar U.S. Government Securities Fund,
Inc., a companion fund in the Gibraltar Group of Funds.
The Fund's previous investment adviser was Gibraltar Asset Management, Inc.,
("GAM"), a subsidiary of Internos Partners, Inc., ("Internos"). The Internos
Group of companies also included the Fund's previous distributor and its
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accounting services and transfer agent. In 1994 Internos and its parent,
Convergent Capital Corporation, discontinued the provision, through their
subsidiaries, of support services to the asset management industry.
Accordingly, service contracts were executed with the Barclay organizations
and the new investment advisory contract was approved by the shareholders.
Under the Investment Advisory Contract, the Adviser is required to provide
investment advice regarding the purchase and sale of portfolio securities in
accordance with the Fund's investment objectives, policies and restrictions. The
Investment Committee of the Fund makes investment decisions and has primary
responsibility for the day-to-day management of the Fund's portfolio. The
Adviser also furnishes executive, administrative, and clerical services required
for the overall management of the Fund's business affairs, subject to the
authority of the Board of Directors, other than custodian, transfer agency,
accounting and portfolio pricing services which are provided by the Fund's
custodian and transfer agent. The new contract is the same in all material
respects as relevant terms of the prior contract except for the dates of
execution and the identity of the new advisor.
The Fund pays the adviser for its services an annual fee equal to a percentage
of the Fund's average daily net assets which fee declines as net assets reach
specified levels. Under the current as well as the preceding advisory contract,
the Adviser is paid an annual fee equal to 1.5% of the first $10 million of the
Fund's average daily net assets; 1% of the next $50 million of the Fund's
average daily net assets; and 0.75% of the Fund's average daily net assets in
excess of $60 million. This fee is higher than the fee charged by most other
investment advisers for advisory services rendered to similar mutual funds.
Advisory fees earned for the fiscal year ended November 30, 1995, at 1.50% of
the Fund's average daily net assets were $11,599."
The Adviser has agreed to reimburse the Fund monthly for the amount by which
annual expenses (excluding interest, taxes, brokerage commissions and
extraordinary expenses) would exceed the most restrictive expense limitation
imposed by any state in which its shares are sold. Such reimbursement is limited
to the amount of the yearly investment advisory fee. Any such reimbursable
expenses so deducted may be refunded to the Adviser in subsequent months if the
level of the Fund's expenses during that fiscal year drops below the applicable
percentage limitation and will not again exceed those limitations after giving
effect to the refund. Final adjustment for any expense reimbursement is made at
the end of each fiscal year. The Fund currently is not subject to any such
expense limitation.
PURCHASE OF FUND SHARES
Barclay Investments, Inc., located at 66 South Main Street, Providence, RI
02903, serves as distributor for shares of the Fund under a distribution
agreement effective December 1, 1994. The previous distributor was Dayton,
Hancock, Waltman
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Securities, Inc., ("DHW"), one of the Internos companies. The former agreement
was terminated and a new one executed as previously noted. It is the same in all
material respects as relevant terms of the prior agreement except for the dates
of execution and the identity of the new distributor. Barclay is also
distributor for Gibraltar U.S. Government Securities Fund, Inc., a companion
fund in the Gibraltar Fund Group.
Shares of the Fund are continuously offered for sale and may be purchased
through authorized investment dealers or directly by contacting the Fund, its
distributor, or its transfer agent. The minimum investment to open an account is
$1,000. Subsequent investments must be at least $100. See "Other Purchase
Programs" for tax-qualified plans.
Shares of the Fund are purchased at the net asset value per share next
determined after receipt of an order by an authorized securities dealer and its
prompt transmission to the Fund, or after an order is received by the Fund or
its Distributor. If a shareholder's check is dishonored, his purchase and any
dividends or distributions paid thereon will be reversed and his account may be
charged a collection fee by the transfer agent. The Fund reserves the right to
reject any purchase order.
PURCHASES THROUGH AUTHORIZED INVESTMENT DEALERS. Purchases can be made through
investment dealers who have entered into sales agreements with the Distributor.
PURCHASES THROUGH THE DISTRIBUTOR. Purchases can be made on a subscription basis
directly with the Fund through its distributor, Barclay Investments, Inc., 66
South Main Street, Providence, RI 02903, by completing the account application
provided with the Prospectus and remitting a check made payable to the Fund.
PURCHASES BY MAIL. An account may be opened for the purchase of shares by com
pleting and mailing to the Fund, at 1201 County Line Road, Lower Level,
Rosemont, PA 19010-2614, the account application contained in this prospectus,
accompanied by a check made payable to the Fund.
Subsequent investments may be made by mailing a check payable to the Fund at the
above address.
PURCHASES BY BANK WIRE. Wire Federal Funds to the Bank of New York, ABA No.
021000028, for A/C IOC565 for further credit to Custody A/C Gibraltar Equity
Growth Fund, Inc., No. 132676. A sending bank may charge a shareholder a wire
charge for the wire transfer. The sending bank must provide the Fund with the
name of the shareholder, the Fund name and the shareholder's Fund account
number. In the case of a new account, an investor may call the Fund Monday
through Friday between the hours of 9:00 AM and 4:00 PM at (610) 525-6102. The
Fund will request the investor's name, address and social security number. The
investor must then complete and mail the Account Application accompanying this
Prospectus to the Fund, 1201 County Line Road, Lower Level, Rosemont, PA
19010-2614.
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A shareholder cannot redeem shares until the Fund has received an Account
Application from such shareholder properly completed and signed.
TRANSFER AGENT AND CUSTODIAN
Since February 1, 1996, the Fund has acted as its own transfer agent, accounting
services agent and dividend disbursing agent. It succeeds in these capacities
Barclay Financial Services, Inc., ("BFS"), a wholly-owned subsidiary of Barclay.
BFS terminated its agreements with the Fund for these services on January 31,
1996.
The Bank of New York, One Wall Street, New York, NY 10286 acts as custodian for
the Fund and for Gibraltar U.S. Government Securities Fund, Inc.
DISTRIBUTION PLAN
In accordance with a Distribution Plan adopted pursuant to Rule 12b-1 under the
1940 Act, the Fund finances certain activities in connection with the promotion
and sale of its shares.
The Distribution Plan permits, among other things, payment of compensation for
selling shares and the cost of advertising, the services of public relations
consultants, direct solicitation, entertainment, and awards. Possible recipients
include securities brokers, attorneys, accountants, investment advisers, pension
actuaries, and service organizations. The Fund may expend annually up to 0.2% of
its average daily net assets pursuant to the Distribution Plan to compensate
recipients for providing services under the Plan during a fiscal year. There are
no provisions in the Plan which permit the carrying over of distribution
expenses from one year to the next. The Fund cannot be charged for interest,
carrying or any other financing charges on any unreimbursed distribution or
other expense incurred in a prior plan year, and does not consider itself under
a legal obligation to pay all or part of any such carryovers. The costs of the
Distribution Plan will be reflected in the disclosure of Fund expenses. A more
detailed description of the Distribution Plan is contained in the Statement of
Additional Information. The Fund did not make any payments under the
Distribution Plan for the Fiscal year ended November 30, 1995. The Board of
Directors believes the Plan is in the best interests of the Fund.
FUND EXPENSES
The Fund is responsible for its own expenses other than those borne by the
Adviser and the Distributor under their service contracts. Expenses which the
Fund expects to pay include investment advisory fees; costs of accounting,
transfer and disbursing services; expenses of its distribution plan when
activated; fees of its "non-interested" directors, independent auditors and
legal counsel; fees payable to government agencies related to registration and
qualification of its shares under Federal and state securities laws; brokerage
commissions on portfolio transactions; and certain
11
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miscellaneous expenses and taxes. The Fund's ratio of expenses to average
daily net assets for the fiscal year ending November 30, 1995, was 5.58%
DETERMINATION OF NET ASSET VALUE PER SHARE
Net asset value per share (the price at which shares are purchased and redeemed)
is determined at 4:00 PM, New York time, on each day the New York Stock Exchange
is open and on each additional day on which the Fund's net asset value might be
materially affected by changes in the value of its portfolio securities. It is
obtained by dividing the asset value of the Fund's securities and other assets
minus the Fund's liabilities by the total number of Fund shares outstanding at
the time of valuation.
Securities owned by the Fund and listed or traded on any national securities
exchange are valued on the basis of the last sale on each day the Exchange is
open for business. If there is no sale on any particular day, the value is the
mean between the closing bid and asked prices that day. If there are no such
prices that day, then the value is the last sale on the last day on which a
trade occurred or bid and asked prices were reported. In the case of unlisted
securities, value is determined on the basis of quotations from an established
market maker.
Money market instruments (certificates of deposit, commercial paper, etc.)
having maturities of 60 days or less, are valued using the amortized cost method
which the Board of Directors has determined to equal fair value. The amortized
cost method involves valuing a security at its cost and amortizing any discount
or premium over the period until maturity, regardless of the impact of
fluctuating interest rates on the market value of the security.
EXCHANGE PRIVILEGES
Shares of the Fund may be exchanged for shares of other investment companies in
the Gibraltar Group. Exchanges are made on the basis of the net asset values of
the shares involved plus a sales charge or an adjusted sales charge if one is
applicable. There is no redemption fee. Since the exchange is considered a
redemption and purchase of shares, the shareholder may realize a gain or loss
for Federal income tax purposes. Before any exchange, shareholders should obtain
and review a copy of the current prospectus of the fund into which the exchange
is being made. The exchange privilege may be modified or terminated at any time
upon at least 60 days written notice to investors.
DIVIDENDS AND DISTRIBUTIONS
Dividends of the Fund will be paid annually from net investment income. Net
capital gains from the sale of portfolio securities will be distributed once
each year unless there are offsetting capital loss carryovers from prior years,
in which case no such gains will be distributed to the extent of such capital
loss carryovers. Unless a shareholder requests in his Account Application,
12
<PAGE>
or subsequently in writing, that dividends and distributions be paid in cash
income dividends and capital gains distributions are reinvested automatically
in additional shares without a charge at the next determined net asset
value after the dividend or distribution. A shareholder desiring to
receive dividends and distributions in cash must so indicate in his Account
Application or may do so at a later date by writing to the Fund.
PERFORMANCE DATA
From time to time the Fund may advertise its yield and effective yield in
advertisements or other written sales material. The Fund's yield is a measure of
the net investment income per share earned over a specific period of time such
as seven days or one month. Yield is then annualized by assuming that the same
level of net investment income is generated by the Fund over a period of one
year. Effective yield is similarly calculated but, when annualized, all
dividends and capital gains distribu tions are assumed to be reinvested. Because
of the compounding effect of assumed reinvestment, effective yield will be
slightly higher than yield. The Fund may also show its average annual return
over one, five and ten year periods, or the life of the Fund, if shorter. Yield
and performance information is based on past earnings and is not intended as a
prediction of future performance.
TAXES
The Fund has continued its election to qualify as a regulated investment company
under the Internal Revenue Code. As long as it qualifies for this tax treatment,
it will not be subject to federal income tax on investment income, and on net
capital gains distributed to shareholders. To avoid imposition of a federal
excise tax on certain amounts of undistributed income in each calendar year, the
Fund will distribute during the calendar year at least 98% of its net investment
income and 98% of its capital gain net income for the one-year period ending
November 30th, and 100% of any undistributed ordinary or capital gain net income
from the prior calendar year.
Shareholders are taxed on their proportionate share of dividends and
distributions of realized gain, regardless of whether the dividends or
distributions are paid in cash or reinvested in additional shares. Distributions
of dividends and short-term capital gains are taxable as ordinary income.
Distributions of net capital gains (the excess of net long-term capital gains
over net short-term capital losses) are taxable as long-term capital gains,
regardless of how long the Fund shares have been held. Net capital gains are
taxed at the same rate as ordinary income except that, beginning in 1991, a
statutory formula provides an effective 28% top marginal rate for net capital
gains.
Redemption of Fund shares is a taxable event and may result in a capital gain or
loss to the redeeming shareholder depending upon whether redemption proceeds
exceed or are less than the adjusted basis for the redeemed shares.
13
<PAGE>
The Fund is required to withhold 31% of all dividends, capital gain
distributions and redemption proceeds payable to shareholders who do not provide
the Fund with a correct taxpayer identification number and a certification that
they are not subject to backup withholding.
The foregoing is only a brief statement of significant federal tax provisions
affecting the Fund and its shareholders. No attempt is made here to present a
comprehensive explanation of the federal, state and local income tax treatment
of the Fund and its shareholders.
Information concerning the tax status of dividends and distributions is mailed
to shareholders shortly after the end of each calendar year. Dividends, capital
gains distributions and redemptions of Fund shares may be subject to state and
local, as well as federal income taxes. Shareholders are advised to consult
their tax advisers regarding their own tax situations and possible changes in
federal, state and local income tax laws.
OTHER PURCHASE PROGRAMS
Retirement Plans. The Fund offers individual retirement account plans for use by
individuals (IRA's). Minimum investment requirements in accounts for such
tax-qualified plans sponsored by the Fund will be subject only to any such
requirements specified in the plans. If a shareholder fails to maintain his
account at any minimum required by the plan, the Fund would redeem the account
and distribute the proceeds to the trustee or custodian of the plan. Premature
distribution of the proceeds would be prohibited by the terms of the plan so
that proceeds would remain uninvested until the shareholder became entitled to a
distribution or made additional contributions to his account to return the
account to the minimum level required.
Anyone under the age of 70 1/2 earning wages or self-employment income is
eligible to establish and contribute to an IRA or Spousal IRA, regardless of
whether or not such person is also an active participant in various types of
qualified pension, profit sharing, stock bonus or annuity plans. The individual
may contribute 100% of income, up to a maximum of $2,000 per year. In addition,
individuals who receive certain lump sum distributions from employer-sponsored
retirement plans may make rollover contributions to an IRA and by doing so defer
taxes on the distribution and shelter any investment earnings.
An investor considering the establishment of an IRA Plan available through the
Fund, should review the applicability of federal tax law provisions which limit
the amount and deductibility of contributions based upon adjusted gross income
or earned income levels, and whether or not the investor also participates in
various types of qualified plans. Income on contributions can be sheltered from
tax until distribution. Contributions in excess of those permitted by law incur
a penalty, as do premature distributions and prohibited transactions.
14
<PAGE>
Detailed information regarding the Fund's IRA retirement plan, and disclosures
required pursuant to Internal Revenue Service and Department of Labor
regulations, may be obtained by writing or calling the Fund, Monday through
Friday between the hours of 9 AM and 5 PM at (610) 525-6102. Applicable trustee
fees, enrollment procedures, and contribution limitations will be explained upon
request.
Shares of the Fund are available for purchase by other types of individual,
partnership or employer sponsored tax qualified retirement plans which allow for
investment in mutual funds. The purchase of Fund shares may be limited by the
plans' provisions and does not itself establish such plans.
It is important to note that retirement plans are legally binding documents with
tax consequences for covered participants. The foregoing discussion relates only
to federal income taxes. An investor considering establishing an IRA or
purchasing Fund shares in connection with a retirement plan should obtain
competent legal and tax advice.
REDEMPTION OF FUND SHARES
A shareholder may redeem shares at any time without a redemption charge by
writing directly to the Fund, 1201 County Line Road, Lower Level, Rosemont, PA
19010. Requests for redemption must be signed by all shareholders, if a joint
account, and the signature(s) must be guaranteed by a commercial bank or trust
company, or a member firm of a national securities exchange. Further
documentation may be required as to the authority of the person requesting
redemption of shares held of record in the name of corporations, executors,
administrators, trustees or guardians. The value of shares on redemption may be
more or less than the shareholder's purchase price, depending upon the net asset
value of Fund shares at the time of redemption.
Redemption payments are made at the net asset value next determined after
receipt of a redemption request in proper form. Proceeds are generally mailed
within seven (7) days thereafter. However, the Fund will not mail redemption
payments until checks (including certified checks or cashier`s checks) received
for the purchase of shares have cleared, which may take up to fifteen (15)
calendar days after a purchase order is received. The Fund reserves the right
to: (1) suspend the right of redemption or postpone the date of payment during
any period when (a) trading on the New York Stock Exchange is suspended for
other than customary weekend and holiday closings; (b) the Securities and
Exchange Commission has by order permitted such suspension; or (c) an Emergency
(as defined by the rules of the Securities and Exchange Commission) exists
making disposal of portfolio securities or determinations of the value of net
assets not reasonably practical; and (2) pay the redemption price in whole or
part by a distribution in kind from its portfolio securities and other assets,
in lieu of cash.
15
<PAGE>
The Fund reserves the right, in its discretion, to redeem shares in any account
if the account balance falls below $1,000 as a result of redemptions by the
shareholder. Before such a redemption is effected, the shareholder will be
allowed thirty days after written notice from the Fund to make an additional
investment sufficient to bring the value of the account up to $1,000. In the
event a shareholder fails to keep an IRA or Keogh account at any minimum
required by such a tax-qualified plan, the Fund would, after 30 days notice to
the shareholder, redeem the account and distribute the proceeds to the trustee
or custodian of the plan.
CAPITAL STOCK
The Fund is authorized to issue 1,000,000 shares of common stock, par value $.01
per share. Each share or fractional share is nonassessable and has equal rights
as to dividends, distributions and voting. When voting on nominees for the
election of directors there is no cumulative voting. Shareholders have no
preemptive rights to acquire shares offered publicly by the Fund. Fund shares
may be freely transferred; however, such transfer will not be effective unless
duly noted on the books maintained by the Fund. Each share is entitled to one
vote. Fractional shares are entitled to fractional votes.
Control Persons. As of February 28, 1996, no person, company or group owned
beneficially, either directly or through one or more controlled companies, more
than 25% of the outstanding shares of the Fund.
GENERAL INFORMATION
As used in the Prospectus, a vote of the holders of a majority of the Fund's
shares means the affirmative vote of the lesser of (a) 67% or more of the shares
present at a meeting if more than 50% of the outstanding shares of the Fund are
represented at the meeting in person or by proxy, or (b) more than 50% of the
outstanding shares.
The Maryland General Corporation Law does not require corporations registered
under the 1940 Act to hold routine annual meetings of shareholders in any year
in which the election of directors is not required to be acted upon under the
1940 Act. The Fund does not intend to hold such routine annual meetings.
In compliance with the 1940 Act, shareholder meetings will be held to elect
directors whenever fewer than a majority of the directors holding office have
been elected by the shareholders or, if necessary in the case of filling
vacancies, to assure that at least two-thirds of the directors holding office
after vacancies are filled have been elected by the shareholders. The Fund may
hold meetings to approve changes in investment policy, a new investment advisory
agreement or other matters requiring shareholder action under the 1940 Act.
16
<PAGE>
A meeting may also be called by shareholders holding at least 10% of the shares
entitled to vote at the meeting for the purpose of voting upon the removal of
directors, in which case shareholders may receive assistance in communicating
with other shareholders similar to the provisions contained in Section 16 (c) of
the 1940 Act. In addition, Maryland General Corporation Law provides for the
calling of a special meeting by the written request of shareholders holding at
least 25% of the shares entitled to vote at the meeting.
Neither the Fund, its Adviser nor its Distributor are involved in any pending
legal proceedings.
A copy of an account application for the Fund is contained in the back of this
Prospectus. To establish an IRA Plan account, please call or write the Fund for
a separate account application and/or transfer form. Shareholders may call
(610) 525-6102 for information regarding their accounts and for general
information regarding the Fund.
------------------------------------------------------------------
DIRECTORS AND OFFICERS INVESTMENT ADVISER
OF THE COMPANY
Timothy R. Hutchinson1 Barclay Funds Management
Director 66 South Main Street
Providence, RI 02903
Robert Scandone3
Director; Attorney-at-Law DISTRIBUTOR
M. David Chassen3 Barclay Investments, Inc.
Director; 66 South Main Street
Registered Operations Trader Providence, RI 02903
Philadelphia Stock Exchange
SHAREHOLDER SERVICING AGENT
Norman M. McAvoy2,3 AND TRANSFER AGENT
Director;
Investment Consultant Gibraltar Equity Growth
Fund, Inc.
Bruce H. Rogove1 1201 County Line Road
Vice President Rosemont, PA 19010
S. Grey Dayton, Jr.2 CUSTODIAN
Vice President
The Bank of New York
J. G. Gordon Yocum2,4 One Wall Street
Secretary New York, NY 10286
David F. Ganley1,2 AUDITORS
Treasurer
Tait, Weller & Baker
Independent Certified
Public Accountants
Two Penn Center Plaza
Suite 700
Philadelphia, PA 19102
- ----------------------------------------------------------
1. Affiliated with Barclay Companies.
2. Messrs. Waltman, McAvoy, Dayton, Yocum and Ganley were previously
affiliated in various capacities with the Fund and/or its former
service companies.
3. "Non-Interested" Director.
4. Mr. Yocum is also Legal Counsel for the Fund.
17
<PAGE>
GIBRALTAR EQUITY GROWTH FUND INC.
ACCOUNT APPLICATION
- -------------------
MAIL TO: GIBRALTAR EQUITY GROWTH FUND, INC.
1201 County Line Road
Rosemont, PA 19010-2614
INITIAL INVESTMENT
- ------------------
BY MAIL:
Attached is a check for $___________ payable to
"GIBRALTAR EQUITY GROWTH FUND, INC."
(Minimum initial investment: $1,000;
Minimum subsequent investments $100)
BY WIRE:
An initial purchase of $____________ was wired on (date) _________________
by _____________________________________ to _________________________________
(Name of your bank) (Account number assigned)
Before making an initial investment by wire, be assigned an account number by
calling (610) 525-6102. Then direct your Federal funds wire to THE BANK OF NEW
YORK, ABA #021000018, for A/C IOC565 for further credit to Custody A/C Gibraltar
Equity Growth Fund, Inc. No. 132676. Be sure to include your name and account
number on the wire. Please complete and mail this application to the above
address, so that we have your signature on file.
Include account number assigned by phone on line above.
REGISTRATION OF SHARES
- ----------------------
Individual Investor ______________________________ ________________________
(Social Security #)
Joint
Tenant*
___________________________________ ________________________
(Social Security #)
* Shares will be registered as "Joint Tenants with Rights of Survivorship"
unless otherwise indicated.
Gifts to Minors ____________________________ C/F _______________________
Custodian (only one) Minor (only one)
Under the __________________________________ Uniform Gifts to Minors Act.
(State of Residence)
__________________________
(Minor's Social Security #)
Other _________________________________________ ______________________
(Corporation, Partnership, Trustee, etc.) (Tax I.D.#)
18
<PAGE>
ADDRESS
- -------
Street or P.O. Box ___________________________________________________________
City _______________________________________ State _____ Zip Code ___________
Home Phone ( ) - Work Phone ( ) -
DIVIDEND AND CAPITAL GAINS DISTRIBUTIONS
- ----------------------------------------
Dividends ________Paid in CASH ________REINVESTED
Capital Gains ________Paid in CASH ________REINVESTED
The preceding instructions will apply to all future purchase of fund shares.
They may be changed only by written notice to the Fund. If no box is checked,
distributions will be REINVESTED in additional shares of the Fund.
RETIREMENT PLANS/SPECIAL PLANS
- ------------------------------
These plans require separate applications, available from the Fund. Please call
(610) 525-6102 for more information. Separate transfer instruction forms are
also available to move retirement plan assets from one Custodian to another
Custodian.
SIGNATURES
- ----------
I am of legal age and capacity to make this purchase, and a citizen of
_____________________. I have received a copy of the GIBRALTAR EQUITY GROWTH
FUND, INC. prospectus. Under the penalties of perjury, I certify that the tax
identifying or Social Security number contained herein is true, correct and
complete and I am not subject to backup withholding under Section 3406 (a) (1)
(c).
Signature:
__________________________________________________ ___________________
Owner, Trustee, Custodian, Office, Partner(s) etc. Date
_________________________________ ___________________
Signature of Joint Owner (if any) Date
DEALER INFORMATION
- ------------------
_______________________________ ______________________ ______________
Name of Firm Representative's Name Rep. #
_______________________________ ______________________ ______________
Address City and State Zip Code
_______________________________ ______________________ ______________
Branch Address (if different) City and State Zip Code
_______________________________ ________________________________________
Phone Number Authorized Signature
19
<PAGE>
G I B R A L T A R E Q U I T Y G R O W T H F U N D, I N C.
1201 County Line Road, Rosemont, PA 19010
(610) 525-6102
------------------------------------
STATEMENT OF ADDITIONAL INFORMATION
April, 1996
This Statement of Additional Information is not a Prospectus and should be read
in conjunction with the Prospectus of Gibraltar Equity Growth Fund, Inc., dated
April, 1996. Because this Statement of Additional Information is not a
prospectus, no investment in shares of the Fund should be made solely upon the
information contained herein. A copy of the Prospectus may be obtained by
writing the Fund at 1201 County Line Road, Rosemont, PA 19010-2614. Or telephone
(610) 525-6102.
------------------------------------
TABLE OF CONTENTS
PAGE
General Information and History............................................1
Investment Objectives and Policies.........................................1
Policies, Objectives and Strategies...................................1
Repurchase Agreements.................................................2
Investment Restrictions...............................................2
Portfolio Turnover....................................................3
Management of the Fund.....................................................4
Directors and Officers................................................4
Control Persons and Principal Holders of Securities........................7
Investment Advisory and Other Services.....................................8
Adviser...............................................................8
Accounting Services..................................................10
Transfer Agency and Administration...................................10
Distribution of Fund Shares..........................................11
Distributor..........................................................13
Organization of Service Companies....................................13
Brokerage Allocation......................................................14
Capital Stock.............................................................16
Purchase, Redemption and Pricing of Shares................................16
Other Information.........................................................17
Majority Vote........................................................17
Custodian............................................................17
Independent Certified Public Accountants.............................17
Legal Counsel........................................................17
Registration Statement...............................................17
Financial Statements......................................................C1
i
<PAGE>
GENERAL INFORMATION AND HISTORY
Gibraltar Equity Growth Fund, Inc., (the "Fund"), is an open-end, diversified
management investment company or mutual fund, registered under the Investment
Company Act of 1940 (the "1940 Act"). It was incorporated in Maryland on March
2, 1983, and commenced business as Gibraltar Fund, Inc., on December 8, 1983. It
is one of the funds in the Gibraltar Fund Group which is advised, managed and
serviced by Barclay investments, Inc., and its affiliated companies. The Fund
charges no sales load.
INVESTMENT OBJECTIVES AND POLICIES
The primary investment objective of the Fund is long-term capital appreciation.
It seeks this objective by investing in common stocks traded on national
securities exchanges or over the counter and which, in the opinion of the Fund's
advisers, are undervalued and, therefore, may experience significant long-term
capital appreciation. A secondary objective of the Fund is the realization of
current income by investing in undervalued common stocks which currently pay
dividends and which are likely to increase dividend payments over the long term.
The Fund will pursue this latter objective only when deemed consistent with its
primary objective. These are fundamental objectives and policies which cannot be
changed without the approval of a majority of the outstanding voting shares of
the Fund.
The discussion in this Statement of Additional Information on policies and
strategies supplements material contained in the Prospectus. There is no
guarantee that the Fund's objectives will be achieved.
The Fund retains the flexibility to respond to adverse changes in market or
economic conditions and to take temporary defensive positions to preserve
shareholders' capital. For such purposes the Fund may also invest in investment
grade debt securities rated within one of the three highest grades by recognized
investors' services; preferred stocks; money market certificates of deposit or
domestic bankers' acceptances; obligations issued or guaranteed by the U.S.
government, its agencies or instrumentalities; repurchase agreements entered
into with banks when the underlying securities are any of the foregoing; money
market funds of custodian banks; and securities of other open-end, diversified
management investment companies organized as money market funds for investment
primarily in U.S. government securities and charging no front-end sales loads or
redemption fees. See Investment Restrictions section, page 4, regarding
investments in securities of other investment companies.
The Fund will not invest in debt securities of foreign banks or foreign
branches of domestic banks. The Fund will invest in the debt securities of
those issuers selected by the Adviser in accordance with standards established
by the Fund's Board of Directors to assure that such investments present
minimal credit risks. Investments will not be made in any company with the
objective of exercising control or management.
1
<PAGE>
REPURCHASE AGREEMENTS. Securities held by the Fund may be subject to repurchase
agreements. Under a repurchase agreement, the seller of a security commits
itself at the time of the sale to repurchase that security from the buyer at a
mutually agreed upon time and price. The repurchase price exceeds the sale price
reflecting an agreement by the seller of the security subject to the repurchase
agreement to pay an agreed upon rate of interest on the security. When investing
in repurchase agreements, the Fund will make payment for such securities only
upon physical delivery of the underlying security, or evidence of book entry
transfer, to the account of the custodian or bank acting as agent for the Fund.
Repurchase agreements are considered to be loans by the Fund under the 1940 Act
collateralized by the underlying securities.
In the event of a bankruptcy or other default of the party obligated to
repurchase, the Fund could experience both delays in liquidating the underlying
securities and losses including: a) possible decline in the value of the
underlying securities while the Fund seeks to enforce its rights thereto; b)
below market levels of income and lack of access to income on that security
during this period; c) expenses incurred in enforcing its rights.
INVESTMENT RESTRICTIONS. Without the vote of the holders of a majority of the
Fund's outstanding shares, the Fund may not:
(a) issue senior securities;
(b) borrow money except from banks as a temporary measure to meet
unexpectedly high levels of share redemptions, and then only in
an amount not to exceed 5% of the value of its net assets, taken
at the time the loan is made, or pledge its assets taken at value
to any extent greater than 15% of its total assets taken at cost;
(c) act as an underwriter of securities of other issuers;
(d) invest in real estate or real estate loans;
(e) purchase or sell commodities, commodity contracts, futures
contacts or options on futures contracts;
(f) lend its cash or portfolio securities to any other person except
for the following which is permitted: the purchase of publicly
distributed bonds, debentures or other debt instruments,
certificates of deposit or U.S. Government debt securities, as
specified in its investment objectives and policies; and the
execution of repurchase agreements; provided, however, that
repurchase agreements covering a period greater than seven days,
2
<PAGE>
together with other illiquid securities, are limited to not more
than 10% of the value of the Fund's net assets;
(g) purchase the securities of any one issuer, other than obligations
issued or guaranteed by the United States government and its
agencies and instrumentalities, if, immediately after such
purchase, (I) more that 5% of the value of the Fund's total
assets would be invested in such issuer, or (ii) the Fund would
own more than 10% of the outstanding voting securities of such
issuer; except that up to 25% of the value of the Fund's total
assets may be invested without regard to such limitations;
(h) purchase any securities on margin, make any so called "short"
sale of securities, or participate in any joint or joint and
several trading account;
(I) invest more than 25% of its net assets valued at the time of
purchase in the securities of companies in any one industry;
(j) invest in restricted securities or in securities for which there
is no readily available market quotation except for repurchase
agreements;
(k) invest in securities of companies which have a record of less
than three year's continuous operation, if, at the time of such
purchase, more than 5% of the Fund's total assets (taken at
value) would be so invested;
(I) purchase participations or other direct interests in oil, gas or
other mineral exploration or development programs;
(m) write put or call options.
Notwithstanding (b) above, because of certain state investment restrictions, the
Fund's operating policy is to not pledge assets having a value in excess of 10%
of the Fund's net asset value; however, this policy is subject to change without
shareholder approval.
As noted in the prospectus, the Fund may invest on a short term basis in
securities of other investment companies organized as money market funds for
investment primarily in U.S. government securities and which charge no front-end
sales loads or redemption fees. The Fund does not intend to follow such policy
to a significant degree. Subject to the provisions of Section 12 (d) (1) of the
1940 Act, the Fund will not: (a) invest more than 10% of the value of its total
assets in securities of other investment companies; (b) invest more than 5% of
the value of its total assets in any other investment company; and (c) acquire
more than 3% of the total outstanding voting securities of any other investment
company.
PORTFOLIO TURNOVER. Portfolio turnover rates for the fiscal years ended
November 30, 1995 and 1994 were 0% and 3% respectively. Investment changes are
made in response to varying market and economic conditions in pursuit of the
3
<PAGE>
Fund's objective of long-term growth of capital. Absent unusual market
conditions, portfolio turnover is not expected to affect transaction
expenses or taxes significantly.
MANAGEMENT OF THE FUND
Directors and Officers. The names and addresses, positions with the Fund,
affiliations and principal occupations during the past five years of the
directors and officers are listed below. Directors deemed to be "interested
persons" of the Fund as defined in the Investment Company Act of 1940 are
indicated by an asterisk (*).
<TABLE>
Positions with the Fund;
Principal Occupations During
Name and Address Past Five years
- ----------------------------------------------------------------------------------------------------
<S> <C>
Timothy R. Hutchinson* Director of the Fund and of Gibraltar U.S.
Barclay Investments, Inc. Government Securities Fund, Inc.; Branch
14 Washington Rd., Ste. 701 Manager, Barclay Investments, Inc.;
Princeton Junction, NJ 08550 President and Director, Barclay Funds
Management; Vice President and Director,
Barclay Financial Services, Inc.
Robert Scandone Director of the Fund and of Gibraltar U.S.
1135 Land Title Bldg. Government Securities Fund, Inc., Attorney-at-
Philadelphia, PA 19110 Law.
M. David Chassen Director of the Fund and of Gibraltar U.S.
Philadelphia Stock Exchange Government Securities Fund, Inc.; Registered
1900 Market Street Options Trader, Phila. Stock exchange;
Philadelphia, PA 19103 formerly: director of both Gibraltar funds;
equity and options specialist, Phila. and
American Stock Exchanges; partner of Spear,
Leeds & Kellogg, broker-dealer.
Norman M. McAvoy Director of the Fund and of Gibraltar U.S.
Gibraltar Fund Group Government Securities Fund, Inc.; self-
1201 County Line Rd. employed as an investment consultant; former
Rosemont, PA 19010 positions included: investment consultant,
Widman Blee & Co.; Treas., C.W. Benedum
Foundation; Sr. Vice Pres., Insurance Co. Of
N. America; member, Phila. Stock Exchange.
</TABLE>
4
<PAGE>
<TABLE>
<S> <C>
Joseph J. Waltman President of the Fund and of Gibraltar U.S.
Gibraltar Fund Group Government Securities Fund, Inc., formerly
1201 County Line Rd. Chairman and Director of both funds; formerly
Rosemont, PA 19010 President and Director, Barclay Financial
Services, Inc.; President and Director, Dayton,
Hancock, Waltman Securities, Inc.; licensed
general insurance agent and general securities
principal, Trans Financial Investment Services, Inc.;
President and Director of the former Gibraltar Asset
Management, Inc., and Gibraltar Service
Corporation.
Bruce H. Rogove Vice President of the Fund and of Gibraltar
Barclay Investments, Inc. U.S. Government Securities Fund, Inc.;
14 Washington Rd., Ste. 701 Director, Barclay Investments, Inc., and
Princeton Junction, NJ 08550 Barclay Financial Services, Inc.; Vice President
and Director, Barclay Funds Management;
formerly First Vice President, Dominick &
Dominick, Inc.
S. Grey Dayton, Jr. Vice President of the Fund and of Gibraltar
Gibraltar Fund Group U.S. Government Securities Fund, Inc.;
1201 County Line Rd. formerly Director of both funds; Vice
Rosemont, PA 19010 President, Dayton, Hancock, Waltman
Securities, Inc., and Birchwood Securities
Corp.; principal, D.C. Options, Inc.; Vice
president and Director of the former Gibraltar
Asset Management, Inc., and Gibraltar Service
Corporation; former positions included:
President and Governor, Phila. Stock
Exchange.
J. G. Gordon Yocum Secretary of the Fund and of Gibraltar U.S.
Gibraltar Fund Group Government Securities Fund, Inc.; legal
1201 County Line Rd. counsel to the funds; counsel to Henderson,
Rosemont, PA 19010 Wetherill, O'Hey & Horsey; former positions
included: Vice President and General Counsel,
Phila. Stock Exchange and its clearing and
depositary subsidiaries.
</TABLE>
5
<PAGE>
<TABLE>
<S> <C>
David F. Ganley Treasurer of the Fund and of Gibraltar U.S.
Gibraltar Fund Group Government Securities Fund, Inc.; formerly
1201 County Line Rd. President of both funds; Treasurer, Barclay
Rosemont, PA 19010 Funds Management, Inc.; formerly Director
and Treasurer, Barclay Financial Services, Inc.;
Treasurer, Dayton, Hancock, Waltman Securities,
Inc.; officer of the former Gibraltar Asset
Management, Inc.; officer and director of the
former Gibraltar Service Corporation.
</TABLE>
-----------------------------------------------------------------------
COMPENSATION TABLE
------------------------------------
<TABLE>
Pension or Total
Aggregate Retirement Estimated Compensation
Name of Person Compensation Benefits Annual From Registrant
Position From Accrued As Benefits Upon and Fund
Registrant Part of Fund Retirement Complex Paid
Expenses To Directors
- -------------------------------------------- ------------------ ------------------------ ------------------ -------------------
<S> <C> <C> <C> <C>
Robert Scandone $150 -0- -0- $300 (1)
Director
Charles H. Jones, Jr. (3) -0- -0- -0- -0- (1)
Director
M. David Chassen (4) -0- -0- -0- -0- (1)
Director
Norman M. McAvoy $150 -0- -0- $300 (1)
Director
Basil C. Williams (5) -0- -0- -0- -0-
Director (*)
Timothy R. Hutchinson -0- -0- -0- -0-
Director (*)
Officers (2) -0- -0- -0- -0-
- -------------------------------------------- ------------------ ------------------------ ---------------------- ----------------
</TABLE>
(*) "Interested Persons."
(1) Includes the one other investment company in fund complex. Each
"non-interested" director's annual fee is not to exceed $1,000 from any
one fund in the complex. Compensation amounts shown are for the fiscal
year ended November 30, 1995.
(2) The officers of the Fund, (President, Secretary and Treasurer), listed in
the preceding section, serve without compensation and have no retirement
benefits from the Fund and the one other fund in the complex. Mr. Yocum
receives compensation as counsel to the Fund and the one other fund in the
complex.
(3) Resigned August, 1995.
(4) Appointed October, 1995.
(5) Resigned October, 1995.
6
<PAGE>
CONTROL PERSONS AND PRINCIPAL HOLDERS OF VOTING SECURITIES
- ------------------------------------------------------------------------------
The following table shows as of February 28, 1996, any person (including any
"group" as the term is used in Section 13(d)(3) of the Securities Exchange Act
of 1934 known by the Fund to be the beneficial owner (as defined by Rule
13(d)(3) under the 1934 Act) of more than 5% of any class of voting stock of the
Fund and also the voting stock held by all officers and directors of the Fund as
a group. The address of each, unless otherwise noted, is 1201 County Line Road,
Rosemont, PA 19010-2614.
NAME AND ADDRESS OF AMOUNT OF BENEFICIAL PERCENT OF CLASS
BENEFICIAL OWNER OWNERSHIP IN SHARES
- ------------------------------------------------------------------------------
Lawrence W. Gory 9,455.485 (1) 16.243
T. David Shihadeh
910 Morris Avenue 7,637.279 (2) 13.120
Bryn Mawr, PA 19010
Jeanne S. Shihadeh
910 Morris Avenue 7,637.279 (3) 13.120
Bryn Mawr, PA 19010
John M. Peterson
2209 Diamond Street 4,915.423 (4) 8.444
Sellersville, PA 18960
Joseph P. France
923 Hillside Drive 4,396.732 (5) 7.553
Southampton, PA 18966
David F. Ganley 3,953.724 (6) 6.792
S. Grey Dayton, Jr.
613 Glendale Road 3,787.881 (7) 6.507
Newtown Square, PA 19073
Lowell D. Hackman
340 Ashford Drive 3,602.680 6.189
Lancaster, PA 17601
All Officers and
Directors as a Group 10,139.224 (8) 17.418
(1) Mr. Gory's total is composed of 6,853.184 shares held individually;
2,417.098 shares held by a family member; and 185.203 shares held by
a family member as fiduciary for a family member.
(2) Mr. T. David Shihadeh's total is composed of 4,266.272 shares held
individually and 3,371.007 shares held by a family member.
7
<PAGE>
(3) Mrs. Jeanne S. Shihadeh's total is composed of 3,371.007 shares held
individually and 4,266.272 shares held by a family member.
(4) Mr. John M. Peterson's total is composed of 4,787.617 shares held
individually and 127.806 shares held by a family member.
(5) Mr. Joseph P. France's total is composed of 2,198.366 shares held
individually and 2,198.366 shares held by a family member.
(6) Mr. Ganley's total is composed of 3,851.440 shares held individually and
102.284 shares held as fiduciary for a family member.
(7) Mr. S. Grey Dayton's total is composed of 502.528 shares held
individually and 3,285.353 shares held by family members.
(8) The beneficial ownership of all officers and directors presently
constituted as a group, is composed as follows: by Mr. Ganley, Treasurer
(3,851.440) individually, and (102.284) as fiduciary for a family
member; by Mr. S. Grey Dayton, Jr., Vice President (502.528)
individually and (3,285.353) by family members; by Mr. M. David Chassen,
Director (2,041.742) individually; and by Mr. Robert Scandone, Director
(184.487) individually and (171.390) by a family member; Mr. Waltman and
Directors Norman M. McAvoy and Timothy R. Hutchinson own no shares
either individually or in a fiduciary capacity.
As of February 28, 1996, no person, company or group owned beneficially, either
directly or through one or more controlled companies, more than 25% of the
outstanding shares of the Fund.
INVESTMENT ADVISORY AND OTHER SERVICES
ADVISER. The Adviser to the Fund, BFM, Inc, d/b/a/ Barclay Funds Management,
("BFM"), is a wholly-owned subsidiary of Barclay Investments, Inc., ("Barclay").
Timothy R. Hutchinson is a Director of the Fund and a Director and President of
the Adviser. Bruce H. Rogove is a Vice President of the Fund and the Adviser and
a Director of the latter. David F. Ganley is Treasurer of the Fund and the
Adviser. For further information see section hereafter entitled "Organization of
Service Companies".
The Adviser serves the Fund under an Investment Advisory Contract, effective
December 1, 1994, and is paid an annual fee, in monthly installments equal to a
percentage of its average daily net assets, as follows: 1.5% of the first $10
million; 1.0% of the next $50 million; and 0.75% of the amount in excess of $60
million. Advisory fees paid for the fiscal year ended November 30, 1995, were
$11,599. Advisory fees paid to the prior adviser, Gibraltar Asset Management,
Inc., for the fiscal years ended November 30, 1994 and 1993 were $13,614 and
$14,689 respectively.
8
<PAGE>
From and after February 1, 1996, for a three month period, BFM waived its
investment advisory and management services fee. The officers of the Fund, as
the latter's agents, are responsible for compensating the providers of such
services at the same rates as those provided in the contract.
The investment advisory contract has been approved by the shareholders and
continues in effect from year to year if such continuation is specifically
approved at least annually by vote of the holders of a majority of the
outstanding shares of the Fund or by the vote of a majority of the Fund's
directors and by a majority of the non- interested directors. The contract may
be terminated by either party upon 60 days' notice provided, that in the case of
termination by the Fund, the termination shall have been authorized by
resolution of the Board of Directors or by vote of the holders of a majority of
the outstanding shares of the Fund. The Investment Advisory Contract will
terminate automatically upon assignment by either party thereto.
The Adviser has agreed to reimburse the Fund monthly for the amount by which
annual expenses (excluding interest, taxes, brokerage commissions, and
extraordinary expenses) would exceed the most restrictive expense limitation
imposed by any state in which its shares are sold. Such reimbursement is limited
to the amount of the yearly investment advisory fee. Any such reimbursable
expenses so deducted may be refunded to the Adviser in subsequent months if the
level of the Fund's expenses during that fiscal year drops below the applicable
percentage limitation and will not again exceed those limitations after giving
effect to the refund. Final adjustment for any expense reimbursement is made at
the end of each fiscal year. The Fund currently is not subject to any such
expense limitation.
The Adviser provides the Fund with a program of general
administration including:
1. office space, equipment, supplies and utility services as required by the
Fund to conduct its business;
2. supervision of all persons performing the executive, administrative, and
clerical functions necessary for the conduct of the Fund's business;
3. supervision of accounting and record keeping;
4. preparation and distribution of reports to shareholders and regulatory
bodies;
5. supervision of the daily determination of the purchase and redemption
price of Fund shares; and
6. other facilities, services, and activities necessary for the conduct of
the Fund's business, except for services provided by the Fund's custodian,
registrar, transfer agent, accounting services agent, dividend disbursing
auditors, and legal counsel.
9
<PAGE>
The Adviser also provides the Fund with a program of shareholder services
including:
1. the supervision of the issuance of timely and accurate confirmations of
share purchases and redemptions; the supervision of the activities of the
Fund's custodian, registrar, and transfer agent; and the supervision of
the issuance of appropriate statements of transactions and shareholders'
accounts;
2. the services of persons competent to receive and respond to inquiries from
shareholders as to the status of their accounts, the disposition of their
funds, and the meaning and the use of the programs for share purchases;
and
3. all other facilities, services, and activities necessary for the general
assistance of the Fund's shareholders.
The Adviser also pays the compensation of the Fund's Directors, officers and
employees who are also employees of the Adviser. The Fund pays all other
expenses incurred in the organization and operation of the Fund and the
continuous offering of its shares including the fees and expenses of the Fund's
legal counsel and auditors, fees incurred in connection with the Fund's
organization and registration, fees of the Fund's Custodian, Transfer Agent,
Accounting Services Agent or Dividend Disbursing Agent, income or other taxes,
fees payable to governmental agencies in connection with the qualification or
registration of fund shares for sale, insurance premiums, costs of printing and
mailing prospectuses, reports, proxies and other notices to shareholders,
brokerage fees or commissions on portfolio transactions, and distribution
expenses pursuant to the Distribution Plan.
The Investment Committee receives recommendations from the Adviser for purchases
and sales of securities and has primary responsibility for the management of the
Fund's portfolio.
ACCOUNTING SERVICES -- TRANSFER AGENCY AND ADMINISTRATION. Barclay Financial
Services, Inc., ("BFS"), a wholly-owned subsidiary of Barclay, performed
accounting and record keeping functions for the Fund under an accounting
services agreement effective December 1, 1994. Under a transfer agency and
administration agreement effective December 1, 1994, BFS also served as the
Fund's transfer agent, dividend disbursing agent and redemption agent. On
January 31, 1996, BFS terminated such agreements with the Fund and also the BFS
affiliations of Messrs. Waltman and Ganley, the principal BFS operating
officers.
Since February 1, 1996, the Fund has acted as its own accounting services and
transfer agent. As President and Treasurer respectively of the Fund, Messrs.
Waltman and Ganley continue the performance of such services as agents of the
Fund.
10
<PAGE>
Pursuant to the Accounting Services Agreement, BFS examined and reviewed the
Fund's existing accounts, records, and other documents and systems to determine
or recommend how such accounts, records, and other documents and systems should
be maintained. BFS kept the books, accounts, records, journals, and other
records of original entry relating to the business of the Fund. It also
calculated the Fund's net asset value in accordance with the Fund's currently
effective Prospectus. Net asset value per share (the price at which shares are
purchased and redeemed) is determined at 4:00 P.M., Philadelphia time, on each
day the New York Stock Exchange is open and on each additional day on which the
Fund's net asset value might be materially affected by changes in the value of
its portfolio. BFS was paid an annual fee on the Fund's net assets as follows:
$10,000 on the first $10 million in assets; $6,000 on the next $10 million in
assets. Accounting services fees paid by the Fund to BFS for the fiscal year
ended November 30, 1995 were $10,000. For each of the fiscal years ending
November 30, 1994 and 1993, the Fund paid, under the service agreement then in
effect, an annual fee of $10,000 to its prior accounting services agent,
Gibraltar Service Corporation, ("GSC").
Under the transfer agency agreement BFS was paid a fee of $4 per shareholder
account annually or a minimum monthly fee of $325 plus its our-of-pocket
expenses. For the fiscal year ending November 30, 1995, the Fund paid BFS fees
of $3,900. For each of the fiscal years ending November 30, 1994 and 1993, the
Fund paid, under the service agreement then in effect, an annual fee of $3,900
to its prior transfer agent, GSC.
The Fund was authorized to act as its own accounting services and transfer agent
by resolution of the Board of Directors, effective February 1, 1996. Messrs.
Waltman and Ganley, as officers of the Fund, were directed to act as its agents
in the provision of these services and perform the functions as stated in
specified sections of the terminated accounting services and transfer agency
agreements. The costs to the Fund for accounting and transfer agency services
will be at the same rates as those specified in the terminated agreements with
BFS for such services. The officers of the Fund, as its agents, shall be
responsible for compensating the providers of the foregoing services.
DISTRIBUTION OF FUND SHARES. The Fund has adopted a Distribution Plan pursuant
to Rule 12b-1 under the 1940 Act which permits the Fund to finance certain
activities in connection with the promotion and sale of its shares. The
shareholders approved the Distribution Plan at the annual meeting held on March
11, 1985. Although the Distributor otherwise bears the expense of all
promotional and distribution and related activities on behalf of the Fund, the
Distribution Plan provides that the Fund may make reimbursements for the
activities and services described below which may foster additional sales of
fund shares: (1) compensation to sales representatives and other broker-dealers
for selling shares; (2) compensation to securities brokers and dealers,
accountants, attorneys, investment advisers, pension actuaries, and service
organizations, for services rendered by them to their clients in reviewing the
Fund's prospectuses and other selling materials, reviewing the various plans or
programs
11
<PAGE>
offered by the Fund or its Adviser or any affiliates of the Adviser, and in
explaining or interpreting any of the foregoing to their clients; (3) cost of
advertising; (4) cost of telephone, mail and other direct solicitation of
prospective investors and of responding to the inquiries; (5) cost of preparing
and printing prospectuses and other selling materials and the cost of
distribution; (6) reimbursement of travel and entertainment expenses in
promoting the Fund; (7) payment of fees of public relations consultants; and (8)
payment of awards (such as bonuses for meeting sales targets) to broker-dealers.
Pursuant to the Distribution Plan the Fund may expend annually an amount not
exceeding .20% of the average daily net assets of the Fund to compensate the
Distributor for providing services under the Plan during a Fiscal Year. Under
the Distribution Plan, a report of the amounts expended and the purpose of the
expenditures must be made to and reviewed by the Board of Directors at least
quarterly. There are no provisions in the Plan which permit the carrying over of
distribution expenses from one year to the next. The Fund cannot be charged for
interest, carrying or any other financing charges on any unreimbursed
distribution or other expense incurred in a prior plan year, and does not
consider itself under a legal obligation to pay all or part of any such
carryovers. In addition, the Distribution Plan may not be amended to materially
increase the costs which the Fund may bear for distribution pursuant to the
Distribution Plan without stockholder approval and other material amendments
must be approved by the Board of Directors, and by the non- interested directors
who have no direct or indirect financial interest in the operation of the
Distribution Plan or in any related service agreement. The Distribution Plan and
any related service agreement are terminable at any time by vote of a majority
of the non-interested directors who have no direct or indirect financial
interest in the operation of the Distribution Plan or in any related service
agreements or by vote of the majority of the Fund's shares. Any related service
agreement automatically terminates in the event of assignment. The Distribution
Plan will continue in effect if approved at least annually by the vote of the
holders of a majority of the outstanding shares of the Fund or by the vote of a
majority of the Fund's directors and by a majority of the non-interested
directors. The Board of Directors believes the Plan is in the best interests of
the Fund.
During the time the Distribution Plan is effective the selection and nomination
of the "non-interested" directors is committed to the discretion of the
directors who are "non-interested" directors.
It is anticipated that the expenditures under the Distribution Plan will result
in the sale of additional shares of the Fund thereby increasing the Fund's asset
base to permit greater flexibility in diversifying its portfolio and reduce
expense ratios. Although no agreements have been reached with any person
pursuant to the Distribution Plan, the Fund may enter into agreements whereby
companies with which some of the directors and officers are affiliated will be
paid for their assistance in explaining the Fund, its investment objectives and
policies, and its retirement plans, to their clients.
12
<PAGE>
The costs of the Distribution Plan will be reflected in the disclosure of Fund
expenses. When no amounts are expended under the Plan, as in the fiscal year
ended November 30, 1995, expenses will be correspondingly reduced.
DISTRIBUTOR. The Fund's Distributor is Barclay Investments, Inc. Certain
officers and directors of Barclay are affiliated in various capacities with the
Fund and its investment adviser, BFM. For further information see section
hereafter entitled "Organization of Service Companies".
The Distributor and the Fund have executed a Distribution Agreement, effective
December 1, 1994. The new agreement is the same in all material respects as
relevant terms of the prior agreement except for the dates of execution and the
identity of the distributor. Under its terms the Distributor, as agent for the
Fund, offers for sale the Fund's shares at the current offering price which
shall be the net asset value per share as determined in accordance with the
currently effective Prospectus. The Distributor is entitled to amounts payable
by the Fund under any Plan of Distribution adopted by the Fund pursuant to Rule
12b-1 under the 1940 Act. Such a plan has been adopted and is available to the
Fund should it wish to use it. The agreement may be terminated by either party
upon 60 days notice provided, that in the case of termination by the Fund, the
termination shall have been authorized by resolution of the Board of Directors
or by a vote of the holders of a majority of the outstanding shares of the Fund.
The Distributor bears the cost of printing and distributing any Prospectus and
Statement of Additional Information to persons who are not shareholders, and
preparing, printing and distributing any literature, advertisement or material
which is primarily intended to result in the sale of shares. It arranges for and
oversees the proper execution of account applications by potential investors and
holders of the Fund's shares. The Fund pays expenses incurred in the
preparation, printing and distribution to shareholders of prospectuses, reports
and other communications; in the registration of shares under the Securities
Acts; and in the qualification of the shares for sale in jurisdictions
reasonably designated by the Distributor.
In the fiscal years ending November 30, 1995, 1994 and 1993, the Fund, with a
no-load classification, paid no commissions for the sales of its shares.
ORGANIZATION OF SERVICE COMPANIES. Barclay Investments, Inc., (Barclay), was
established in 1930 and incorporated in Rhode Island in 1972. As a registered
broker-dealer with locations in providence, RI; New York City; Princeton
Junction, NJ; and an affiliate in central Europe, Barclay seeks investment
opportunities worldwide. Barclay and its subsidiaries provide brokerage
services, asset allocation and investment advice, capital management, corporate
finance expertise, and management services to the mutual fund industry.
Barclay's wholly-owned subsidiaries include Barclay Financial Management, (BFM),
a registered investment adviser organized in 1992, and Barclay Financial
Services,
13
<PAGE>
Inc., (BFS), an accounting services and registered transfer agent organized in
1994. Both are Rhode Island corporations. BFM was organized as part of the
investment advisory services of Barclay. BFS was organized to provide accounting
and transfer agency services to mutual funds as well as origination and
servicing of new funds.
Barclay and BFM are located at 66 Main Street, Providence, RI 02903. BFS
operated from an office at 1201 County Line Road, Rosemont, PA 19010, until
February 1, 1996. As heretofore indicated, it ceased to provide accounting
services and transfer agency services to the Fund on February 1, 1996.
Prior to December, 1994, the Fund was serviced by the Internos Group of
companies owned by Internos Partners, Inc., and its parent, Convergent Capital
Corporation. These companies were Gibraltar Asset Management, Inc., Dayton,
Hancock, Waltman Securities, Inc., and Gibraltar Service Corporation which
acted, respectively, as investment adviser, distributor, and accounting services
and transfer agent. The companies discontinued some operations and curtailed
others. Accordingly, new service agreements were executed with the Barclay
organizations.
BROKERAGE ALLOCATION
When selecting brokers and dealers for the purchase and sale of securities, the
Adviser looks for best execution of portfolio transactions, taking into
consideration such relevant factors as price, execution ability and the broker's
reliability and financial responsibility. Commission rates, as a component of
price, are also considered. In transactions with dealers, the Adviser will
generally use those who are recognized dealers in specific portfolio investments
unless a more favorable result is obtainable elsewhere.
Purchases and sales of securities for the Fund's portfolio may include a
brokerage commission charged by the broker effecting the transaction. Commission
rates on Exchange orders are subject to negotiation. While there is no duty or
obligation to seek competitive bidding for the most favorable negotiated
commission, consideration will be given to such "posted" commission rates, if
any, as may be applicable to a particular transaction, as well as to any other
information available at the time concerning the level of commissions known to
be charged on comparable transactions by qualified brokerage firms.
In the most recent fiscal year ending November 30, 1995, the Fund paid an
aggregate dollar amount of $3,890 for brokerage commissions on portfolio
transactions. Dayton, Hancock, Waltman Securities, Inc., (DHW), the prior
distributor, was paid 100% of this amount but retained only $2,322, or 60%
thereof, after payments of $1,568 for clearing agent services. Such transactions
represented 100% of the Fund's aggregate dollar amount of transactions involving
the payment of commissions. All such transactions were entered on an agency
basis.
14
<PAGE>
In the fiscal year ending November 30, 1994, an aggregate of $1,445 was spent
for such commissions of which DHW retained $939 after payments of $506 for
clearing agent services. In the fiscal year ending November 30, 1993, an
aggregate of $10,865 was spent for such commissions of which DHW retained $7,062
after payments of $3,803 for clearing agent services. The amount of commission
payments in 1993 reflects adjustments in portfolio composition.
Either the Adviser or the Distributor may act as broker in connection with the
purchase or sale of portfolio securities for the Fund. Should they do so,
neither of them will receive from any source a commission, fee or other
remuneration for effecting such transactions which exceeds (A) the usual and
customary broker's commission if the sale is effected on a securities exchange,
or (B) 2 per centum of the sales price if the sale is effected in connection
with a secondary distribution of such securities, or (C) 1 per centum of the
purchase or sale price of such securities if the sale is otherwise effected. The
Board of Directors, including a majority of the "non-interested" directors, will
conduct periodic reviews to determine that any such compensation is consistent
with the foregoing standards.
No adviser or distributor for the Fund will, acting as principal, accept orders
for the purchase or sale of portfolio securities.
The Adviser, BFM, does not plan to act as broker in the purchase and sale of
Fund portfolio securities. The Distributor, Barclay, may act in such capacity.
Neither the Adviser nor the Distributor will knowingly participate in
commissions paid by the Fund to other brokers or dealers and will not seek or
knowingly receive any reciprocal business as the result of the payment of such
commissions. In the event either learns it has received reciprocal business, it
will so inform the Board. To the extent that either may receive brokerage
commissions on the Fund's portfolio transac tions, officers and directors of the
Fund who are affiliated persons of the Adviser or Distributor may receive
indirect compensation from the Fund through their partici pation in the profits
of the Adviser or the Distributor.
In selecting brokers to execute portfolio transactions, the Board of Directors
will consider their ability to provide research and statistical services. If the
Board of Directors determines in good faith that the amount of commissions
charged by such brokers is reasonable in relation to the value of the brokerage
and research services provided by such brokers, the Fund may pay commissions to
such brokers in an amount greater than the amount another firm might charge on
the same transaction. Research so obtained may consist of reports on particular
companies of interest to the Fund, statistical data of interest to management or
directors regarding the mutual fund industry (such as performance ratings, sales
and redemption figures, cost comparisons, and expenses ratio comparisons), or
may consist of evaluations of industry-wide trends, economic factors in general,
or factors applicable to particular companies, industries or economies, domestic
or foreign. Research obtained through brokerage commissions paid by the fund may
be used by the Adviser for the benefit
15
<PAGE>
of its other clients. Conversely, research obtained through brokerage
commissions paid by other clients of the Adviser may benefit the Fund. The Board
of Directors be lieves that the investment information received in this manner
assists the Fund by supplementing the research otherwise available to it. In
order to assure that the Fund is paying reasonable commissions, the Fund will
attempt to determine the rates being paid by other institutional investors of
similar size.
There is no formula for the allocation of orders to brokers who provide research
and, since it is generally not possible to place a value on such research, no
direct correlation between the amount of brokerage commissions generated by
portfolio activities of the Fund and the research received by it is expected to
exist. Situations may arise in which the Fund might wish to receive some
research available to it either for a cash payment or in return for a stipulated
amount of brokerage commissions. In such instances, brokerage commissions would
normally be used. Brokerage is not allocated as an inducement or reward for
selling the Fund's shares.
The Adviser may be the investment manager with respect to various individual
accounts. In the event that the same security is being purchased or sold for
more than one account simultaneously, the Adviser would expect to place a single
order and pro-rate the combined order based upon the size of the order for each
account. While such a procedure could generally be expected to benefit all
accounts, there is a possibility that it might adversely affect the price of the
security and/or the quantity which may be bought or sold for each account.
CAPITAL STOCK
The Fund has 1,000,000 shares of common stock, par value of $.01 per share,
currently authorized. Each share or fractional share is non-assessable and has
equal rights as to dividends, distributions, the proceeds of liquidation and
voting. When voting on nominees for the election of directors, there is no
cumulative voting. Shareholders have no preemptive rights to acquire shares
offered publicly by the Fund. Each share is entitled to one vote (and fractional
shares to fractional votes) in the election of directors and on other matters
submitted to a vote of shareholders. Shares may be freely transferred but such
transfers will not be effective unless noted on the books maintained by the Fund
PURCHASE, REDEMPTION AND PRICING OF SHARES
The following discussion supplements the information in the Prospectus
describing the manner in which the Fund's securities are offered to the public,
see Prospectus sections "Purchase of Fund Shares" and "Determination of Net
Asset Value."
If a purchaser's check is dishonored, his purchase of shares and the payment of
any dividends thereon will be reversed and his account may be charged a
collection fee by the Fund. The Fund's Adviser will reimburse the Fund the
amount of any uncollected loss on such transaction.
16
<PAGE>
If shares are purchased by check, the Fund will delay payment of redemption
proceeds until a check used to purchase shares has cleared, which may take up to
fifteen (15) calendar days subsequent to the date the shares are purchased. The
Board of Directors has notified the Securities and Exchange Commission of its
election under Rule 18f-1 of the 1940 Act to commit itself to pay in cash all
redemptions by a shareholder of record, subject to the provisions of that rule
which are to the general effect that the Fund must pay in cash each redemption
of not more than $250,000 or 1% of its net asset value (whichever is less), made
by any shareholder during any 90 day period. It is the present intention of the
Fund to redeem only in cash. If, however, the Fund were to redeem in kind, the
shareholder could be required to pay brokerage commissions to dispose of the
securities distributed to the shareholder.
Net asset value per share (the price at which shares are purchased and redeemed)
is determined at 4:00 P.M., Philadelphia time, on each day the New York Stock
Exchange is open and on each additional day on which the Fund's net asset value
might be materially affected by changes in the value of its portfolio
securities. The New York Stock Exchange is not open for business on those days
on which it observes the following holidays: New Year's Day, Presidents' Day,
Good Friday, Memorial Day, Independence Day, Labor Day, Thanksgiving Day and
Christmas Day.
OTHER INFORMATION
MAJORITY VOTE. As used in the Prospectus and the Statement of Additional
Information, a vote of the holders of a majority of the Fund's shares means the
affirmative vote of the lesser of (a) 67% or more of the shares present at a
meeting if more than 50% of the outstanding shares of the Fund are represented
at the meeting in person or by proxy, or (b) more than 50% of the outstanding
shares.
CUSTODIAN. The Fund's custodian is the Bank of New York, One Wall Street, New
York, NY 10286. Under the Custodian Agreement, the Bank acts as the custodian of
the Fund's securities and cash and collects dividends and interest paid on the
Fund's portfolio and securities.
INDEPENDENT ACCOUNTANTS. The Fund's independent certified public accountants are
Tait, Weller & Baker, Two Penn Center Plaza, Suite 700, Philadelphia, PA 19102.
The accountants examine the books and records of the Fund and provide audit
services and consultation in connection with their review of filings by the Fund
with the Securities and Exchange Commission.
LEGAL COUNSEL. J.G. Gordon Yocum, 1201 County Line Road, Lower Level,
Rosemont, PA 19010, acts as counsel to the Fund and has passed upon the legality
of the shares offered hereby.
REGISTRATION STATEMENT. The Prospectus and this Statement of Additional
Information do not contain all the information included in the Fund's
Registration Statement filed with the Securities and Exchange Commission under
the Securities Act of 1933 with respect to the shares offered hereby.
17
<PAGE>
respect to the shares offered hereby. The complete Registration Statement,
including the exhibits filed therewith and other information pursuant to rules
and regulations of the Securities and Exchange Commission, may be examined at
the office of the Securities and Exchange Commission in Washington, D.C.
Statements contained in the Prospectus and this Statement of Additional
Information as to the contents of any contract or other documents are not
necessarily complete, and, in each instance, reference is made to the copy of
such contract or other documents filed as an exhibit to the Registration
Statement. Each such statement is qualified in all respects by such reference.
18
<PAGE>
GIBRALTAR EQUITY GROWTH FUND, INC.
ANNUAL REPORT TO SHAREHOLDERS
NOVEMBER 30, 1994
<PAGE>
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
To the Shareholders and Board of Directors of
Gibraltar Equity Growth Fund, Inc.
Rosemont, Pennsylvania
We have audited the accompanying statement of assets and liabilities of
Gibraltar Equity Growth Fund, Inc., including the portfolio of investments, as
of November 30, 1995, and the related statement of operations for the year then
ended, the statement of changes in net assets for each of the two years in the
period then ended, and the financial highlights for each of the ten years in the
period then ended. These financial statements and financial highlights are the
responsibility of the Fund's management. Our responsibility is to express an
opinion on these financial statements and financial highlights 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 financial
highlights 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
November 30, 1995, by correspondence 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 financial highlights referred to
above present fairly, in all material respects, the financial position of
Gibraltar Equity Growth Fund, Inc. at November 30, 1995, the results of its
operations for the year then ended, the changes in its net assets for each of
the two years in the period then ended, and the financial highlights for each of
the ten years in the period then ended, in conformity with generally accepted
accounting principles.
\s\Tait, Weller & Baker
Philadelphia, Pennsylvania
December 18, 1995 (except for Note 5 as
to which the date is December 29, 1995)
<PAGE>
GIBRALTAR EQUITY GROWTH FUND, INC.
PORTFOLIO OF INVESTMENTS
November 30, 1995
- -------------------------------------------------------------------------------
VALUE
Shares COMMON STOCKS - 76.1% (Note 1-A)
- ------ --------------------- ----------
BANKING (3.2%)
800 Dauphin Deposit Corp. $ 24,600
---------
CHEMICALS (2.6%)
300 E.I. duPont de Nemours & Co., Inc. 19,950
----------
DIVERSIFIED INDUSTRIAL & MANUFACTURING (4.3%)
500 General Electric Co. 33,625
----------
DRUGS (13.9%)
350 American Home Products 31,937
300 Merck & Co., Inc. 18,563
1,000 Schering-Plough Inc. 57,375
70 Therapeutic Discovery Corp., Class A * 473
----------
108,348
ENERGY & OIL SERVICE GROUP (4.8%)
500 Texaco. Inc. 37,062
----------
ENTERTAINMENT & RECREATION (3.1%)
400 Disney (Walt) Inc. 24,050
----------
FINANCIAL & PERSONAL SERVICES (6.9%)
500 Automatic Data Processing 39,813
300 H & R Block, Inc. 13,350
----------
53,163
FOOD, BEVERAGE & CONSUMER PRODUCTS (18.3%)
500 Cola-Cola, Inc. 37,875
600 McDonald's, Inc. 26,850
1,000 Pepsico, Inc. 55,375
250 Philip Morris Cos. 21,937
----------
142,037
HOUSEHOLD PRODUCTS (9.5%)
300 Colgate-Palmolive Co. 21,938
600 Proctor & Gamble 51,825
----------
73,763
RETAILING & SPECIALTY (3.7%)
1,200 Wal-Mart Stores, Inc. 28,800
----------
TELECOM & COMPUTER PERIPHERALS (5.8%)
200 International Business Machines Corp. 19,350
200 Microsoft Corp. * 17,400
500 Novell Inc. * 8,437
-----------
45,187
Total value of Common Stocks (cost $296,401) 76.1% 590,585
Other Assets, less Liabilities 23.9 185,291
------ -----------
Net Assets 100.0% $775,876
====== ===========
* Non-income producing security
- -------------------------------------------------------------------------------
See notes to financial statements
<PAGE>
GIBRALTAR EQUITY GROWTH FUND, INC.
STATEMENT OF ASSETS AND LIABILITIES
November 30, 1995
- -------------------------------------------------------------------------------
ASSETS
Investments in securities, at value
(Identified cost $296,401)(Note 1-A) $590,585
Cash and cash equivalents 190,595
Dividends and interest receivable 1,919
--------
Total assets 783,099
--------
LIABILITIES
Accrued advisory fees 939
Other accrued expenses 6,284
--------
Total liabilities 7,223
--------
NET ASSETS
(Applicable to 47,083 shares of capital stock outstanding;
1,000,000 shares authorized, $.01 par value) $775,876
========
SOURCE OF NET ASSETS
Capital paid-in $360,000
Accumulated net realized gain on investment transactions 121,692
Net unrealized appreciation of investments 294,184
--------
Total $775,876
========
NET ASSET VALUE, OFFERING PRICE AND REDEMPTION
PRICE PER SHARE
($775,876 / 47,083 shares of capital stock outstanding) $16.48
======
- -------------------------------------------------------------------------------
See notes to financial statements
<PAGE>
GIBRALTAR EQUITY GROWTH FUND, INC.
STATEMENT OF OPERATIONS
Year ended November 30, 1995
- -------------------------------------------------------------------------------
INVESTMENT INCOME
Income
Dividends $ 15,777
Interest 4,373
--------
Total income 20,150
--------
Expenses (Note 2)
Investment advisory fee 11,599
Professional fees 14,300
Accounting services fees 10,000
Transfer agent fees 3,900
Custodian fees 1,033
Registration fees 850
Other expenses 1,529
--------
Total expenses 43,211
--------
Net investment loss (23,061)
REALIZED AND UNREALIZED GAIN ON INVESTMENTS (Note 3)
Net realized gain from security transactions 121,737
Net unrealized appreciation of investments 91,650
Net realized and unrealized gain on investments 213,387
--------
Net increase in net assets resulting
from operations $190,326
========
- -------------------------------------------------------------------------------
See notes to financial statements
<PAGE>
GIBRALTAR EQUITY GROWTH FUND, INC.
STATEMENT OF CHANGES IN NET ASSETS
Years ended November 30, 1995 and 1994
- -------------------------------------------------------------------------------
1995 1994
INCREASE (DECREASE) IN NET ASSETS FROM
OPERATIONS
Net investment loss $ (23,061) $ (22,785)
Net realized gain from security transactions 121,737 6,109
Net unrealized appreciation of investments 91,650 20,064
---------- ----------
Net increase in net assets
resulting from operations 190,326 3,388
---------- ----------
DISTRIBUTIONS TO SHAREHOLDERS FROM
Net realized gain on investments (2,511) -
---------- ----------
CAPITAL SHARE TRANSACTIONS * (269,035) (121,784)
---------- ----------
Net decrease in net assets (81,220) (118,396)
NET ASSETS
Beginning of year 857,096 975,492
---------- ----------
End of year $ 775,876 $ 857,096
========== ==========
* Transactions in capital shares were as follows:
1995 1994
----------------- -----------------
Shares Amount Shares Amount
Capital stock sold 153 $ 2,000 8,509 $ 108,834
Capital stock issued
to shareholders
in reinvestment
of distributions
from net realized gain on
investments 190 2,476 - -
------- -------- ------- ----------
343 4,476 8,509 108,834
Capital stock redeemed (19,578) (273,511) (18,063) (230,618)
------- -------- ------- ----------
Net decrease (19,235) $(269,035) (9,554) $(121,784)
======= ======== ======= =========
- -------------------------------------------------------------------------------
See notes to financial statements
<PAGE>
GIBRALTAR EQUITY GROWTH FUND, INC.
NOTES TO FINANCIAL STATEMENTS
November 30, 1995
- -------------------------------------------------------------------------------
(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Gibraltar Equity Growth Fund, Inc. (the "Fund") is registered under the
Investment Company Act of 1940 (the "Act"), as a diversified, open-end
management investment company. The primary objective of the Fund is
long-term capital appreciation, with a secondary objective of realizing
current income.
A. SECURITY VALUATION
Investments in securities traded on a national securities exchange or
the NASDAQ National Market System are valued at the last reported
sales price on the last business day of the period; listed securities
for which no sale was reported are valued at the mean between the
last reported bid and asked prices. In the case of unlisted
securities, value is determined on the basis of quotations from an
established market maker.
B. CASH EQUIVALENTS
Funds on deposit in short-term money market accounts are considered
to be a cash equivalent.
C. DISTRIBUTIONS TO SHAREHOLDERS
Distributions, if any, are declared annually and are recorded on the
ex-dividend date. Distributions from net investment income and
capital gains distributions are determined in accordance with income
tax regulations which may differ from generally accepted accounting
principles. The differences are primarily due to differing treatments
for net operating losses.
D. FEDERAL INCOME TAXES
No provision has been made for federal taxes on net income or capital
gains since it is the policy of the Fund to continue to comply with
the provisions of the Internal Revenue Code applicable to investment
companies and to make sufficient distributions of income and capital
gains (in excess of any available capital loss carryovers) to relieve
it from all, or substantially all, such taxes.
E. OTHER
Security transactions are accounted for on the date the securities
are purchased or sold. Cost is determined, and gains and losses are
based, on the identified cost basis for both financial statement and
federal income tax purposes. Dividend income and distributions to
shareholders are recorded on the ex-dividend date. Interest income
and estimated expenses are accrued daily.
F. RECLASSIFICATIONS
During the current year, a net operating loss amounting to $23,061
was reclassified from undistributed net investment income to capital
paid-in. Net investment loss, net realized gain on investments, and
net assets were not affected by this change.
- -------------------------------------------------------------------------------
<PAGE>
GIBRALTAR EQUITY GROWTH FUND, INC.
NOTES TO FINANCIAL STATEMENTS - (Continued)
November 30, 1995
- -------------------------------------------------------------------------------
(2) INVESTMENT ADVISORY AND OTHER TRANSACTIONS WITH AFFILIATES
Prior to December 1, 1994, the Fund was serviced by the Internos group of
companies composed of Gibraltar Asset Management, Inc. ("GAM"), its
investment adviser; Dayton, Hancock, Waltman Securities, Inc. ("DHW"),
its distributor; and Gibraltar Service Corp. ("GSC"), its accounting
services and transfer agent.
The directors unanimously approved the termination of the above mentioned
advisory, distribution, and accounting services and transfer agent
contracts and the execution of a new investment advisory contract with
Barclay Funds Management, Inc. ("BFM"); a new distribution agreement with
Barclay Investments, Inc. ("Barclay"); and a new accounting services and
transfer agent agreement with Barclay Financial Services, Inc. ("BFS").
BFM is a registered investment adviser and wholly-owned subsidiary of
Barclay (a regional broker-dealer and general securities firm). BFS, also
a wholly-owned subsidiary of Barclay, is a registered transfer agent.
The new contracts are the same in all material respects to the prior
contracts except for the dates of execution and the identities of the
parties. The contracts became effective on December 1, 1994. The
investment advisory contract was also approved by shareholders at the
January 23, 1995 shareholders' meeting.
Under the terms of both Investment Advisory Contracts, the Adviser is
required to provide investment advice regarding the purchase and sale of
portfolio securities in accordance with the Fund's investment objectives,
policies and restrictions. The Adviser also furnishes all executive and
clerical services required for the overall management of the Fund's
business affairs, subject to the authority of the Board of Directors,
other than those services which are provided by the Fund's custodian and
transfer agent.
The annual advisory fee, which is payable monthly, is equal to 1.5% of the
first $10 million of the Fund's average daily net assets; 1% of the next
$50 million of average daily net assets; and 0.75% of average daily net
assets in excess of $60 million.
Pursuant to certain state regulations, the Adviser has agreed to reimburse
the Fund by the amount which the Fund's annual expenses (excluding
interest, taxes, brokerage commissions and extraordinary expenses) exceed
the most restrictive expense limitation imposed by any state in which the
Fund's shares are sold. The amount of any such reimbursement is limited to
the annual advisory fee. For the year ended November 30, 1995, no
reimbursement was required pursuant to this provision.
BFS replaced GSC, as the Fund's accounting services agent. The annual
accounting service agent fee, under both contracts, is payable monthly and
is equal to $10,000 per year on the first $10 million of the Fund's net
assets; $6,000 on the next $10 million; and $3,000 on each additional $10
million of net assets.
BFS also replaced GSC as the Fund's transfer agent. The annual transfer
agent fee (which is also unchanged under both contracts) is payable
monthly and is equal to $4 per shareholder account annually or a minimum
monthly fee of $325.
For the year ended November 30, 1995, the Fund paid $3,890 in brokerage
commissions to DHW, the former distributor, on portfolio transactions of
which DHW retained $2,322 after payments of $1,568 for clearing agent
services.
- -------------------------------------------------------------------------------
<PAGE>
GIBRALTAR EQUITY GROWTH FUND, INC.
NOTES TO FINANCIAL STATEMENTS - (Continued)
November 30, 1995
- -------------------------------------------------------------------------------
Certain officers and Directors of the Fund were also officers and
Directors of GAM, DHW, GSC and Internos. Certain officers and Directors of
the Fund are also officers and Directors of Barclay, BFM and BFS.
During the year ended November 30, 1995, Directors of the Fund who were
not "interested persons" received Directors' fees of $300. All other
officers and Directors served without compensation from the Fund. Also
during 1995, legal fees of $6,000 were accrued to Mr. Yocum as legal
counsel for the Fund. Mr. Yocum is Secretary of the Fund.
(3) SECURITIES PURCHASED AND SOLD
For the year ended November 30, 1995, purchases and sales of investment
securities (excluding U.S. Government obligations and short-term
securities) were $-0- and $469,083, respectively.
At November 30, 1995, the cost of investments for federal income tax
purposes was $296,401. Accumulated net unrealized appreciation on
investments was $294,184, consisting of $300,176 gross unrealized
appreciation and $5,992 gross unrealized depreciation.
(4) DISTRIBUTION PLAN
In accordance with a Distribution Plan for the Sale of Shares (the "Plan")
pursuant to Rule 12b-1 under the Act, the Fund may finance certain
activities in connection with the promotion and sale of its shares.
The Plan permits, among other things, payment of compensation for selling
shares and the cost of advertising, the services of public relations
consultants, direct solicitation, entertainment, and awards. Possible
recipients include securities brokers, attorneys, accountants, investment
advisers, pension actuaries, and service organizations. The Fund may
expend annually up to 0.2% of its average daily net assets pursuant to the
Plan to compensate recipients for providing services under the Plan during
a fiscal year. There are no provisions in the Plan which permit the
carrying over of distribution expenses from one year to the next. The Fund
did not make any payments under the Plan during the year ended November
30, 1995.
(5) DISTRIBUTION TO SHAREHOLDERS
Realized gains from security transactions are distributed to shareholders
in the December following the end of the fiscal year. A distribution of
$2.31 a share from realized gains was declared on December 29, 1995. The
distribution is payable on December 29, 1995 to shareholders of record on
December 29, 1995.
- -------------------------------------------------------------------------------
<PAGE>
PART C
OTHER INFORMATION
FINANCIAL STATEMENTS AND EXHIBITS
(a) FINANCIAL STATEMENTS
PART A:
Financial Highlights -- ten years ended November 30, 1995
PART B:
Report of Independent Certified Public Accountants Portfolio
of Investments at November 30, 1995
Statement of Assets and Liabilities at November 30, 1995
Statement of Operations for year ended November 30, 1995
Statement of Changes in Net Assets for the years ended
November 30, 1995, and November 30, 1994
Notes to Financial Statements
(b) EXHIBITS
1. Articles of Incorporation, effective March 7, 1983
Articles of Amendment, effective October 14, 1983
Included in Post-Effective Amendment No.2 filed on
February 15, 1985
Articles of Amendment, dated January 31, 1992
Included in Post-Effective Amendment No. 13 filed on
February 18, 1992
2. Bylaws, approved March 5, 1983
Included In Post-Effective Amendment No. 2 filed on
February 15, 1985
Amendment to Bylaws, Dated January 31, 1992.
Included in Post-Effective Amendment No. 13 filed on
February 18, 1992
3. None
C-1
<PAGE>
4. Specimen Stock Certificate
Included in Post-Effective Amendment No. 13 filed on
February 18, 1992
5. Investment Advisory Contract, effective December 1, 1994
Included in Post-Effective Amendment No. 16 filed on
January 30, 1995
6. Distribution Agreement, effective December 1, 1994
Included In Post-Effective Amendment No. 16 filed on
January 30, 1995
7. None
8. Custodian Agreement, dated April 20, 1994
Included in Post-Effective Amendment No. 16 filed on
January 30, 1995
9. (a) Accounting Services Agreement, effective December 1,
1994 Included in Post-Effective Amendment No. 16
filed on January 30, 1995
(b) Transfer Agency Agreement, effective December 1, 1994
Included in Post-Effective Amendment No. 16 filed on
January 30, 1995
10. Opinion and consent of counsel as to the legality of
the securities being registered, filed pursuant to
Registrant's Rule 24f-2 Notice.
11. (a) Consent of Tait, Weller & Baker, independent
certified public accountants
Filed herewith
(b) Consent of J.G. Gordon Yocum, counsel
Filed herewith
12. None
13. Agreements for Initial Capital
Included in Pre-Effective Amendment No. 3 filed on
October 24, 1983
14. IRA Plan
Included in Post-Effective Amendment No. 13 filed on
February 18, 1992
C-2
<PAGE>
15. Distribution Plan
Included in Post-Effective Amendment No. 2 filed on
February 25, 1985
Amendment, dated January 31, 1992, to Distribution Plan
Included in Post-Effective Amendment No. 13 filed on
February 18, 1992
16. Selling Dealer Agreement
Included in Post-Effective Amendment No. 8 filed on
March 17, 1988
17. Power of Attorney Forms appointing David F. Ganley and J.G.
Gordon Yocum and each of them, Attorneys-in-Fact, to
sign the Registration Statement on Form N-1A and any
Post-Effective Amendments thereto
Included in Post-Effective Amendment No. 16 filed on
January 30, 1995
18. Resolution of Board of Directors authorizing Fund to act
as accounting services and transfer agent
PERSONS CONTROLLED BY OR UNDER COMMON CONTROL WITH REGISTRANT
No persons are directly or indirectly controlled by or under common control
with the Registrant.
NUMBER OF HOLDERS OF SECURITIES
As of February 28, 1996
TITLE OF CLASS NUMBER OF RECORD HOLDERS
Common Stock 45
INDEMNIFICATION
Sections 10.01-10.3 of Article X of the Corporation's Bylaws provide for the
indemnification by the Corporation, under certain circumstances, of its
officers, directors, employees, agents or other persons against liability to the
Company or its shareholders. None of the foregoing persons are entitled to such
indemnification by reason of willful misfeasance, bad faith, gross negligence or
reckless disregard of
C-3
<PAGE>
duties with respect to the Corporation. The aforementioned bylaw sections are
incorporated herein by reference.
Insofar as indemnification for liability arising under the Securities Act of
1933 may be permitted to directors, officers and controlling persons of the
Registrant pursuant to the provisions referenced above, or otherwise, the
Registrant has been advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as expressed in the Act
and is, therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the Registrant of expenses
incurred or paid by a director, officer or controlling person of the Registrant
in the successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the Registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Act and will be governed by the final adjudication of
such issue.
BUSINESS AND OTHER CONNECTIONS OF INVESTMENT ADVISER
The business activities of the Investment Adviser, BFM, Inc., d/b/a Barclay
Funds Management, (BFM), and its officers and directors during the past two
years are as follows:
BFM was organized in 1992 as a wholly-owned subsidiary of Barclay Investments,
Inc., (Barclay), a general services broker-dealer, which was organized in 1930
and incorporated in 1972. BFM is part of the investment advisory services of
Barclay and is also the investment adviser of Gibraltar U.S. Government
Securities Fund, Inc., ("GIB GOV FUND"). It may act for other accounts.
An affiliated company is Barclay Financial Services, Inc., (BFS), organized in
1994 as a wholly-owned subsidiary of Barclay. BFS, an accounting services and
transfer agent, acquired the facilities of the former Gibraltar Service
Corporation.
BFM's officers and directors are: Timothy R. Hutchinson, President and Director;
Bruce H. Rogove, Vice President and Director; Michael McGovern, Secretary and
Director; David F. Ganley, Treasurer; and Basil C. Williams, Director. Their
other affiliations are:
Mr. Hutchinson - Vice President and Director of BFS; Director of the Fund and
of GIB GOV FUND;
Mr. Rogove - Director of Barclay and of BFS; Vice President of the Fund and of
GIB GOV FUND;
Michael McGovern - Secretary and Director of BFS and Barclay; Counsel to Barclay
companies;
C-4
<PAGE>
David F. Ganley - Treasurer of the Fund and of GIB GOV FUND; Officer and/or
Director of the Internos companies which serviced the Gibraltar Funds; (the
Internos companies were Gibraltar Asset Management, Inc., Dayton, Hancock,
Waltman Securities, Inc., and Gibraltar Service Corporation);
Basil C. Williams - President and Director of Barclay; Director of BFS.
The principal business address of BFM, BFS and Barclay is 66 South Main Street,
Providence, RI 02903.
PRINCIPAL UNDERWRITERS
Barclay is Distributor and Principal Underwriter for the Fund and also for
Gibraltar U.S. Government Securities Fund, Inc. Barclay's officers and
directors are:
Michael J. McGovern, Secretary and Director
Basil C. Williams, President and Director; also Director of the Fund;
Keith E. Cich, Treasurer and Director;
Bruce H. Rogove, Director; also Vice President of the Fund;
The principal business address of the foregoing officials is 66 South Main
Street, Providence, RI 02903.
No commissions and other compensation have been received by any principal
underwriter who was not an affiliated person of the Registrant or an affiliated
person of such an affiliated person, directly or indirectly, from the Registrant
during its last fiscal year.
LOCATION OF ACCOUNTS AND RECORDS
The Fund's Articles of Incorporation, Bylaws, minutes of directors' and
shareholders' meetings, contracts and certain accounts and records required to
be maintained by Section 31(a) of the Investment Company Act of 1940 are in the
physical possession of the Fund at 1201 County Line Road, Rosemont, PA 19010,
where the Fund's offices are located. Custodial records are retained by the
Fund's custodian, The Bank of New York, One Wall Street, New York, NY 10286. Any
of the records not so retained will be kept in the custody of the Adviser or the
Distributor.
MANAGEMENT SERVICES
None.
UNDERTAKINGS
The additional performance information called for by item 5A of Form N-1A is
contained in the latest annual report to shareholders. Registrant undertakes to
furnish each person to whom a prospectus is delivered with a copy of
Registrant's latest annual report to shareholders, upon request and without
charge.
C-5
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the Investment
Company Act of 1940, Registrant has duly caused this Registration Statement to
be signed on its behalf by the undersigned, thereto duly authorized, in
Rosemont, Pennsylvania, on March ,1996.
GIBRALTAR EQUITY GROWTH FUND, INC.
By /S/ Joseph J. Waltman
PRESIDENT
Pursuant to the requirements of the Securities Act of 1933, this Registration
Statement has been signed below by the following persons in the capacities and
on the dates indicated:
Signature Title Date
- ---------------------- --------------------------- --------------------------
/S/ Joseph J. Waltman
Joseph J. Waltman President March 18, 1996
Bruce H. Rogove Vice President March , 1996
S. Grey Dayton, Jr. Vice President March , 1996
/S/ J.G. Gordon Yocum
J.G. Gordon Yocum Secretary March 18, 1996
/S/ David F. Ganley
David F. Ganley Treasurer March 18, 1996
C-6
<PAGE>
/S/ Timothy R. Hutchinson
Timothy R. Hutchinson Director March 18, 1996
Robert Scandone Director March , 1996
/S/ David Chassen
M. David Chassen Director March 18, 1996
/S/ Norman M. McAvoy
Norman M. McAvoy Director March 18, 1996
By David F. Ganley March , 1996
Attorney-in-Fact
By J. G. Gordon Yocum March , 1996
Attorney-in-Fact
C-7
<PAGE>
EXHIBIT 11(a)
C-8
TAIT, WELLER & BAKER
Certified Public Accountants
CONSENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
Gibraltar Equity Growth Fund, Inc.
1201 County Line Road
Rosemont, PA 19010
We consent to the use in Post-Effective Amendment No. 17 to Form N-1A,
Registration Statement (File No. 2-824461), of our Report dated December 18,
1995, except for Note 5 as to which the date is December 29, 1995 accompanying
the November 30, 1995 financial statements of Gibraltar Equity Growth Fund,
Inc., which are included in Part B of said Registration Statement.
/S/ Tait, Weller & Baker
TAIT, WELLER & BAKER
Philadelphia, Pennsylvania
March 15, 1996
<PAGE>
EXHIBIT 11(b)
C-10
GIBRALTAR EQUITY GROWTH FUND, INC.
CONSENT OF COUNSEL
Gibraltar Equity Growth Fund, Inc.
1201 County Line Road
Rosemont, PA 19010
I consent to the use of my name and to the reference to myself as
"counsel" included in and made part of Parts A and B of Form N-1A used for
filing Post-Effective Amendment No. 17 under the Securities Act of 1933 and
Amendment No. 21 under the Investment Company Act of 1940, to the Registration
Statement of Gibraltar Equity Growth Fund, Inc., File No. 2-824461.
/s/ J.G. Gordon Yocum
J.G. Gordon Yocum
Counsel
Rosemont, PA
March 18, 1996
<PAGE>
EXHIBIT 18
C-12
GIBRALTAR EQUITY GROWTH FUND, INC.
RESOLUTION OF BOARD OF DIRECTORS AUTHORIZING AND PROVIDING
FOR THE PERFORMANCE OF ACCOUNTING SERVICES AND TRANSFER
AGENCY AND ADMINISTRATION SERVICES
WHEREAS the following conditions exist:
(A) Gibraltar Equity Growth Fund, Inc., (the "Fund"), and Barclay
Financial Services, Inc., ("BFS"), executed an Accounting Services Agreement,
dated and effective December 1, 1995;
(B) Under the Accounting Services Agreement BFS agreed to act as
accounting services agent for the Fund to maintain and keep current the books,
accounts, records, journals or other records of original entry relating to the
business of the Fund in accordance with the provisions of the Agreement;
(C) The Fund and BFS executed a Transfer Agency and Administration
Agreement, dated and effective on December 1, 1995;
(D) Under the Transfer Agency Agreement BFS agreed to act as transfer,
redemption and dividend disbursing agent, administrator of the Plans of the Fund
and in other respects as stated in said agreement;
(E) The Fund and BFM, Inc. (d/b/a/ Barclay Funds Management), ("BFM"),
executed an Investment Advisory Contract, dated November 1, 1995, and effective
December 1, 1995, whereunder BFM provides investment advisory services and a
program of general administration and servicing as specified in Sections II, III
and Iv of said contract;
(F) BFS and BFM are wholly owned subsidiaries of Barclay Investments,
Inc., ("Barclay"), which acts as distributor for the Fund under a Distribution
Agreement effective December 1, 1995. Michael J. McGovern is Secretary of and
Counsel for Barclay. Joseph J. Waltman is President and a director of BFS and
the Fund. David F. Ganley is Treasurer and a director of BFS and the Fund.
(G) On December 21, 1995, Mr. McGovern reported that the Barclay Board
of Directors had requested that Messrs. Waltman and Ganley, as officers of BFS,
submit to Barclay a plan of dissolution for BFS with a proposed date of January
31, 1996, such submission to include the steps necessary to implement such a
plan and its impact upon the Barclay service contracts and the operations of the
Fund and its companion fund, Gibraltar U.S. Government Securities Fund, Inc. A
plan was submitted on December 22, 1995.
1
<PAGE>
(H) Barclay, through Mr. McGovern, stated that a dissolution plan for
BFS might depend on whether or not the latter, in January, 1996, would acquire
contracts for the origination and servicing of additional mutual funds. BFS was
unable to make such acquisitions.
(I) Pursuant to agreement reached on January 31, 1996, the following
events occurred:
(a) On and after February 1, 1996, BFS terminated its services
for the Fund under the accounting services agreement and the transfer agency
agreement. After such date, BFS will receive no servicing fees and will pay no
administrative expenses of the Fund;
(b) The affiliations of Messrs. Waltman and Ganley with BFS
were terminated as of February 1, 1996;
(c) On and after February 1, 1996, the Fund, by its officers,
namely Mr. Waltman, President, and Mr. Ganley, Treasurer, will act as it own
accounting services and transfer agent;
(d) BFM, while continuing as investment adviser under the
foregoing contract, waived for the period February through April, 1996, its
investment advisory and management fee and will pay no administrative expenses
of the Fund;
(e) The costs to the Fund for investment advisory and management
services shall be at the same rates as those specified in the Investment
Advisory Contract with BFM and in the former Accounting Services and Transfer
Agency Agreements with BFS. The officers of the Fund, as its agents, shall be
responsible for compensating the providers of such services.
THEREFORE, BE IT RESOLVED THAT THE FOLLOWING ACTIONS AND
CONDITIONS ARE HEREBY RATIFIED AND APPROVED:
(1) The Fund is authorized to act as its own accounting services
agent and transfer agent;
(2) The following officers of the Fund, namely Joseph J. Waltman,
President, and David F. Ganley, Treasurer, are authorized and directed to act as
agents for the Fund in the performance of these accounting and transfer agency
services. Messrs. Waltman and Ganley have heretofore performed such services for
the Fund as agents for BFS prior to the termination of the foregoing agreements
and the termination of their affiliations with BFS.
(3) The functions of accounting services agent are specified in
Sections 2 through 9, 10 (a) (b) and (c), 11, 13 and 18 of the former accounting
services agreement. The Fund shall perform the functions specified for itself in
the aforesaid sections and shall assume, for itself, the functions specified for
the former accounting
2
<PAGE>
services agent in the aforesaid sections which are incorporated by reference
in this resolution.
(4) The functions of transfer and dividend disbursing agent are
specified in Sections 2, 3, 4, 5, 6, 7, 8, 9, 10, 11, 12, 14, 15 (b), and 18 of
the former transfer agency agreement. The Fund shall perform the functions
specified for itself in the aforesaid sections and shall assume, for itself, the
functions specified for the former transfer agent in the aforesaid sections
which are incorporated by reference in this resolution.
(5) (a) The fees heretofore payable for the cost of investment advisory
and administrative services under the investment advisory contract are specified
in Section 5 of that contract.
(b) The fees heretofore payable for the cost of accounting
services are specified in Schedule A of the former Accounting Services
Agreement, which schedule is incorporated herein by reference.
(c) The fees heretofore payable for the cost of transfer agency
services are specified in Schedule A of the former Transfer Agency Agreement,
which schedule is incorporated herein by reference.
(d) From and after February 1, 1996, the cost to the Fund for
the services specified in subsections (a), (b) and (c) of this Section 5 shall
be at the same rates as those specified in such subsections. The officers of the
Fund, as its agents, shall be responsible for compensating the providers of such
services.
March , 1996
3
<TABLE> <S> <C>
<ARTICLE> 6
<CIK> 0000716611
<NAME> Gibralter Equity Growth Fund, Inc.
<SERIES>
<NUMBER> 01
<NAME> Gibralter Equity Growth
<MULTIPLIER> 1
<CURRENCY> US Dollars
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> NOV-30-1995
<PERIOD-START> DEC-01-1994
<PERIOD-END> NOV-30-1995
<EXCHANGE-RATE> 01
<INVESTMENTS-AT-COST> 296,401
<INVESTMENTS-AT-VALUE> 590,585
<RECEIVABLES> 1,919
<ASSETS-OTHER> 190,595
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 783,099
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 7,223
<TOTAL-LIABILITIES> 7,223
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 360,000
<SHARES-COMMON-STOCK> 47,083
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 121,692
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 294,184
<NET-ASSETS> 775,876
<DIVIDEND-INCOME> 15,777
<INTEREST-INCOME> 4,373
<OTHER-INCOME> 0
<EXPENSES-NET> 43,211
<NET-INVESTMENT-INCOME> (23,061)
<REALIZED-GAINS-CURRENT> 121,737
<APPREC-INCREASE-CURRENT> 91,650
<NET-CHANGE-FROM-OPS> 190,326
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 2,511
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 153
<NUMBER-OF-SHARES-REDEEMED> 19,578
<SHARES-REINVESTED> 190
<NET-CHANGE-IN-ASSETS> (81,220)
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 11,599
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 43,211
<AVERAGE-NET-ASSETS> 774,000
<PER-SHARE-NAV-BEGIN> 12.92
<PER-SHARE-NII> (.43)
<PER-SHARE-GAIN-APPREC> 4.03
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> .04
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 16.48
<EXPENSE-RATIO> 5.58
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
EXHIBIT 11(a)
C-8
TAIT, WELLER & BAKER
Certified Public Accountants
CONSENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
Gibraltar Equity Growth Fund, Inc.
1201 County Line Road
Rosemont, PA 19010
We consent to the use in Post-Effective Amendment No. 17 to Form N-1A,
Registration Statement (File No. 2-824461), of our Report dated December 18,
1995, except for Note 5 as to which the date is December 29, 1995 accompanying
the November 30, 1995 financial statements of Gibraltar Equity Growth Fund,
Inc., which are included in Part B of said Registration Statement.
/S/ Tait, Weller & Baker
TAIT, WELLER & BAKER
Philadelphia, Pennsylvania
March 15, 1996
EXHIBIT 11(b)
C-10
GIBRALTAR EQUITY GROWTH FUND, INC.
CONSENT OF COUNSEL
Gibraltar Equity Growth Fund, Inc.
1201 County Line Road
Rosemont, PA 19010
I consent to the use of my name and to the reference to myself as
"counsel" included in and made part of Parts A and B of Form N-1A used for
filing Post-Effective Amendment No. 17 under the Securities Act of 1933 and
Amendment No. 21 under the Investment Company Act of 1940, to the Registration
Statement of Gibraltar Equity Growth Fund, Inc., File No. 2-824461.
/s/ J.G. Gordon Yocum
J.G. Gordon Yocum
Counsel
Rosemont, PA
March 18, 1996
EXHIBIT 18
C-12
GIBRALTAR EQUITY GROWTH FUND, INC.
RESOLUTION OF BOARD OF DIRECTORS AUTHORIZING AND PROVIDING
FOR THE PERFORMANCE OF ACCOUNTING SERVICES AND TRANSFER
AGENCY AND ADMINISTRATION SERVICES
WHEREAS the following conditions exist:
(A) Gibraltar Equity Growth Fund, Inc., (the "Fund"), and Barclay
Financial Services, Inc., ("BFS"), executed an Accounting Services Agreement,
dated and effective December 1, 1995;
(B) Under the Accounting Services Agreement BFS agreed to act as
accounting services agent for the Fund to maintain and keep current the books,
accounts, records, journals or other records of original entry relating to the
business of the Fund in accordance with the provisions of the Agreement;
(C) The Fund and BFS executed a Transfer Agency and Administration
Agreement, dated and effective on December 1, 1995;
(D) Under the Transfer Agency Agreement BFS agreed to act as transfer,
redemption and dividend disbursing agent, administrator of the Plans of the Fund
and in other respects as stated in said agreement;
(E) The Fund and BFM, Inc. (d/b/a/ Barclay Funds Management), ("BFM"),
executed an Investment Advisory Contract, dated November 1, 1995, and effective
December 1, 1995, whereunder BFM provides investment advisory services and a
program of general administration and servicing as specified in Sections II, III
and Iv of said contract;
(F) BFS and BFM are wholly owned subsidiaries of Barclay Investments,
Inc., ("Barclay"), which acts as distributor for the Fund under a Distribution
Agreement effective December 1, 1995. Michael J. McGovern is Secretary of and
Counsel for Barclay. Joseph J. Waltman is President and a director of BFS and
the Fund. David F. Ganley is Treasurer and a director of BFS and the Fund.
(G) On December 21, 1995, Mr. McGovern reported that the Barclay Board
of Directors had requested that Messrs. Waltman and Ganley, as officers of BFS,
submit to Barclay a plan of dissolution for BFS with a proposed date of January
31, 1996, such submission to include the steps necessary to implement such a
plan and its impact upon the Barclay service contracts and the operations of the
Fund and its companion fund, Gibraltar U.S. Government Securities Fund, Inc. A
plan was submitted on December 22, 1995.
1
<PAGE>
(H) Barclay, through Mr. McGovern, stated that a dissolution plan for
BFS might depend on whether or not the latter, in January, 1996, would acquire
contracts for the origination and servicing of additional mutual funds. BFS was
unable to make such acquisitions.
(I) Pursuant to agreement reached on January 31, 1996, the following
events occurred:
(a) On and after February 1, 1996, BFS terminated its services
for the Fund under the accounting services agreement and the transfer agency
agreement. After such date, BFS will receive no servicing fees and will pay no
administrative expenses of the Fund;
(b) The affiliations of Messrs. Waltman and Ganley with BFS
were terminated as of February 1, 1996;
(c) On and after February 1, 1996, the Fund, by its officers,
namely Mr. Waltman, President, and Mr. Ganley, Treasurer, will act as it own
accounting services and transfer agent;
(d) BFM, while continuing as investment adviser under the
foregoing contract, waived for the period February through April, 1996, its
investment advisory and management fee and will pay no administrative expenses
of the Fund;
(e) The costs to the Fund for investment advisory and management
services shall be at the same rates as those specified in the Investment
Advisory Contract with BFM and in the former Accounting Services and Transfer
Agency Agreements with BFS. The officers of the Fund, as its agents, shall be
responsible for compensating the providers of such services.
THEREFORE, BE IT RESOLVED THAT THE FOLLOWING ACTIONS AND
CONDITIONS ARE HEREBY RATIFIED AND APPROVED:
(1) The Fund is authorized to act as its own accounting services
agent and transfer agent;
(2) The following officers of the Fund, namely Joseph J. Waltman,
President, and David F. Ganley, Treasurer, are authorized and directed to act as
agents for the Fund in the performance of these accounting and transfer agency
services. Messrs. Waltman and Ganley have heretofore performed such services for
the Fund as agents for BFS prior to the termination of the foregoing agreements
and the termination of their affiliations with BFS.
(3) The functions of accounting services agent are specified in
Sections 2 through 9, 10 (a) (b) and (c), 11, 13 and 18 of the former accounting
services agreement. The Fund shall perform the functions specified for itself in
the aforesaid sections and shall assume, for itself, the functions specified for
the former accounting
2
<PAGE>
services agent in the aforesaid sections which are incorporated by reference
in this resolution.
(4) The functions of transfer and dividend disbursing agent are
specified in Sections 2, 3, 4, 5, 6, 7, 8, 9, 10, 11, 12, 14, 15 (b), and 18 of
the former transfer agency agreement. The Fund shall perform the functions
specified for itself in the aforesaid sections and shall assume, for itself, the
functions specified for the former transfer agent in the aforesaid sections
which are incorporated by reference in this resolution.
(5) (a) The fees heretofore payable for the cost of investment advisory
and administrative services under the investment advisory contract are specified
in Section 5 of that contract.
(b) The fees heretofore payable for the cost of accounting
services are specified in Schedule A of the former Accounting Services
Agreement, which schedule is incorporated herein by reference.
(c) The fees heretofore payable for the cost of transfer agency
services are specified in Schedule A of the former Transfer Agency Agreement,
which schedule is incorporated herein by reference.
(d) From and after February 1, 1996, the cost to the Fund for
the services specified in subsections (a), (b) and (c) of this Section 5 shall
be at the same rates as those specified in such subsections. The officers of the
Fund, as its agents, shall be responsible for compensating the providers of such
services.
March , 1996
3
