Registration No. 2-90082
File No. 811-3993
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-1A
REGISTRATION STATEMENT UNDER THE
INVESTMENT COMPANY ACT OF 1940 [X]
Amendment No. 16
(Check appropriate box or boxes.)
CHARTERCAPITAL BLUE CHIP GROWTH FUND, INC.
(Exact Name of Registrant as Specified in Charter)
4920 West Vliet Street, Milwaukee, Wisconsin 53208
(Address of Principal Executive Offices) (Zip Code)
Registrant's Telephone Number, including Area Code (414) 257-1842
Lauren E. Toll
4920 West Vliet Street, Milwaukee, Wisconsin 53208
(Name and Address of Agent for Service)
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PART A
INFORMATION REQUIRED IN A PROSPECTUS
Item 1: Not Required
Item 2: Not Required
Item 3: Not Required
Item 4: General Description of Registrant
(a) through (c).
CharterCapital Blue Chip Growth Fund, Inc. (the "Fund") is a
no-load, diversified, open-end investment company (mutual fund) registered
under the Investment Company Act of 1940 (the "1940 Act"). It was
incorporated in Wisconsin as ADTEK Fund, Inc. on March 16, 1984. On
December 20, 1990, the shareholders of the Fund approved a change in the
Fund's investment objective to the production of long-term growth of
capital with current income as a secondary objective from the production
of long-term appreciation and protection of capital and in connection
therewith changed its name from ADTEK Fund, Inc. to CharterCapital Blue
Chip Growth Fund, Inc. On January 27, 1996, the Board of Directors of the
Fund approved a Plan of Liquidation providing for the liquidation of the
Fund. In connection therewith the Board of Directors also approved the
termination of sales of shares of the Fund. The registration statement of
which this Part A forms a part is filed only under the 1940 Act and not
under the Securities Act of 1933, as amended. This Part A, which is dated
April 29, 1996, is not a prospectus. As a "no-load" mutual fund, the Fund
charges no sales commission upon redemption of its shares. Pending the
final liquidation of the Fund, all assets of the Fund will be held in cash
or invested in common stock of "blue chip" companies and other Permitted
Investments (as defined below).
The Fund's investment objective may be changed without a vote of
the holders of a majority of the Fund's voting securities. The Fund
intends, however, to provide notice to all of its shareholders at least 30
days prior to making a material change to its investment objective. The
Fund has no present intention of changing its investment objective.
The Fund invests exclusively in common stocks of "blue chip"
companies and Permitted Investments. Below is a brief discussion of such
common stocks and Permitted Investments. Blue chip companies are defined
by the Adviser as those companies which have market capitalizations of at
least $25,000,000 and are included in the Dow Jones Industrial Average of
the Standard & Poor's Daily Stock Price Index of 500 Common Stocks (the
"S&P 500"). Standard & Poor's Corporation selects stocks for inclusion in
the S&P 500 based upon the following criteria: size, as measured by
aggregate market value; position within a given industry classification;
nature and extent of capitalization; trading volume; prospects for the
company in particular and/or industry as a whole; and responsiveness of
stock price to changes in industry affairs. The 30 industrials used to
compute the Dow Jones Industrial Average are selected because they are
representative of the breadth of American industry. Stocks of blue chip
companies typically have a large number of publicly held shares and high
trading volume, resulting in a high degree of liquidity.
In selecting investments for the Fund, the Adviser will
generally invest in common stocks of companies which exhibit at least four
of the following six criteria (three out of four for companies which pay
no dividends on their common stock):
1. A Value Line Safety Rating of 1, 2 or 3.*
_____________
* In rating common stocks for safety, Value Line Investment Survey, a
securities rating service, considers the financial strength of the
corporation and the historical volatility and growth persistence of the
price per share of the common stock. Companies are then ranked from 1 to
5 (1 for highest safety and 5 for lowest safety). In general, companies
ranked 1 or 2 are considered above average in safety. The Adviser will
rarely invest in common stocks rated below 3 for safety by Value Line.
The Value Line safety rating is basically an appraisal of past performance
of the common stock and the financial strength of the corporation not a
forecast of future market performance.
2. Earnings growth of at least 10% per year over the past
ten years.
3. Dividend growth of at least 3% per year over the past
ten years.
4. Earnings or cash flow increases in at least 7 of the
last 12 years.
5. Dividend increases in at least 7 of the last 12 years.
6. A strong balance sheet.
The Fund invests in the common stocks of companies expected to
demonstrate above-average long-term earnings growth. The Fund will try to
maintain representation in as many market sectors as possible, but will
also look to invest in the strongest sectors of the market at a given
point in the economic cycle. The Fund may invest in securities issued by
foreign companies. Such investments must trade on U.S. securities markets
(e.g., issuer sponsored American Depository Receipts) and will also be
subject to all other policies of the Fund. In general, foreign
investments will not exceed 25% of the assets of the Fund.
The Fund also may invest in United States Government securities,
high quality publicly distributed corporate bonds and debentures and money
market instruments. The Fund will limit its investment in nonconvertible
corporate bonds and debentures to those which have been assigned one of
the two highest ratings of either Standard & Poor's Corporation or Moody's
Investors Services, Inc. See the Statement of Additional Information for
a description of the quality ratings of corporate debt securities in which
the Fund may invest.
Money market instruments include, but are not limited to, U.S.
Treasury Bills which are obligations of the U.S. Treasury, commercial
paper and variable rate demand notes rated Prime-1 by Moody's Investors
Service, Inc. or A-1 by Standard & Poor's corporation, domestic bank
certificates of deposit or banker's acceptances, which the Board of
Directors of the Fund believes present minimal credit risk. See the
Statement of Additional Information for a description of these securities.
The Fund will generally, except for temporary defensive
purposes, have at least 80% of its assets invested in common stocks.
However, the Fund may invest up to 100% of its assets in money market
instruments for temporary defensive purposes, to fund anticipated
redemption requests and to pay liquidating distributions, if any.
A number of investment restrictions, which may not be changed
without the approval of the holders of a majority of outstanding shares,
prohibit the Fund from engaging in certain practices. These restrictions
prevent the Fund from investing more than 25% of its assets in any one
industry, from borrowing money or pledging or mortgaging its assets except
for extraordinary or emergency purposes, from investing more than 5% of
its assets in companies having an operating history of less than three
years or from lending money or securities except to purchase bonds or
other debt obligations of issuers. For a complete statement of these and
other restrictions applicable to the Fund, please refer to the Statement
of Additional Information.
Item 5. Management of the Fund
(a) The Fund's Board of Directors sets the general investment
policy, supervises its Adviser, and is generally responsible for the
management of the Fund's business.
(b) The Fund has an Investment Adviser and Management Agreement
(the "Agreement") with Charter Capital Management, Inc. (the "Adviser"),
pursuant to which the Adviser furnishes continuous investment advisory
services to the Fund.
The Adviser was incorporated in Wisconsin in 1981 and maintains
its principal offices at 4920 West Vliet Street, Milwaukee,
Wisconsin 53208. The common stock of the Adviser is owned by Lauren E.
Toll, one of its officers and directors. The Adviser manages retirement
plans and personal investment accounts, using individual securities,
mutual funds and variable annuities.
The Adviser selects the type of securities for the Fund's assets
and determines when to shift these assets from one type of security to
another, based on its analysis of economic and fundamental data. The
Adviser also is responsible for furnishing all administrative services,
including but not necessarily limited to bookkeeping, clerical,
secretarial and administrative personnel, telephone and other utility
services. In connection with these services, the Adviser is responsible
for preparing, filing and retaining the books, records and other documents
that the Fund is required to file and/or retain under federal or state
law.
The annual fee paid to the Adviser is paid monthly and is based
on the average daily closing net assets of the Fund. The annual advisory
fee is: (i) 1.50% of the first $25,000,000; (ii) 1.15% of the next
$25,000,000; and (iii) 0.75% of the excess over $50,000,000. The fees are
higher than management fees paid by most mutual funds.
The Fund pays its own brokerage commissions, legal and auditing
fees, insurance premiums, custodian fees, shareholder servicing fees, the
cost of stock certificates, fees to the Adviser, proxy and shareholder
meeting costs, fees of directors who are not interested parties of the
Adviser, the cost of reports to shareholders and costs incurred in
complying with laws regulating the issue or sale of Fund shares, including
printing and distributing the prospectus to existing shareholders.
There is no fixed limit on expenses relative to average net
assets, and no provision for reimbursement of any expenses. Since
securities are at times purchased and sold without regard to current
income, it is possible that expenses may exceed income in any fiscal year.
In the case, expenses would be paid from assets and, thereby, reduce the
net asset value.
(c) Lauren E. Toll is the portfolio manager for the Adviser and
as such is responsible for the day-to-day management of the Fund's
portfolio. Mr. Toll has managed the Fund's portfolio since July 31, 1990
and has been President and Treasurer of the Adviser since 1984 and 1994,
respectively.
(d) Not applicable.
(e) The Fund's custodian, transfer agent and dividend
disbursing agent is Firstar Trust Company, 615 East Michigan Street,
Milwaukee, Wisconsin 53202.
(f) The Fund's total expenses as a percentage of average net
assets for the fiscal year ended December 31, 1995 were 2.75%.
(g) Not applicable.
Item 5A. Not Required
Item 6. Capital Stock and Other Securities
(a) The Fund is closed to new investments and is not offering
its securities for sale. The Fund is authorized to issue 10,000,000
shares of Capital Stock, with a par value of $.01 per share. The Fund's
shares are fully paid and nonassessable when issued, except as provided in
Section 180.0622 of the Wisconsin Business Corporation Law. Each share
has one vote and all shares participate equally in dividends and other
distributions of the Fund and in the residual assets of the Fund in the
event of liquidation. Fractional shares have the same rights
proportionately as do full shares. Fund shares have no preemptive,
conversion or subscription rights. Shareholders are entitled to redeem
shares as set forth below under Item 8.
The Wisconsin Business Corporation Law permits registered
investment companies, such as the Fund, to operate without an annual
meeting of shareholders under specified circumstances if an annual meeting
is not required by the 1940 Act. The Fund has adopted the appropriate
provisions in its Bylaws and does not anticipate holding an annual meeting
in any year in which none of the following matters is required to be acted
on by shareholders under the 1940 Act: (i) election of directors;
(ii) approval of any investment advisory agreement; (iii) ratification of
the selection of independent public accountants; or (iv) approval of a
distribution agreement.
(b) As of March 31, 1996, no person controlled the Fund.
(c) Not applicable.
(d) Not applicable.
(e) Reports containing financial statements and other
information are mailed to shareholders twice a year. The annual report
contains audited statements. Any inquiries concerning the Fund may be
made by calling (414) 257-1842, or by writing the Fund at 4920 West Vliet
Street, Milwaukee, Wisconsin 53208.
(f) and (g) Income dividends are paid once a year from net
investment income, if any. Any gains realized from the sale of portfolio
securities are also distributed once a year unless there are off-setting
losses carried forward from prior years, in which case no such gain will
be distributed. Dividends and/or capital gains are automatically
reinvested in additional shares unless the shareholder has requested on
the account application, or in writing to Firstar Trust Company later,
that they be paid in cash.
The Fund will endeavor annually to qualify for and elect tax
treatment applicable to a regulated investment company under Subchapter M
of the Code and did so for the fiscal year ended December 31, 1995. As a
regulated investment company, the Fund, generally, will distribute
substantially all of its net investment income and net realized capital
gain, if any (after utilization of any available capital loss
carryforwards). This will be distributed to its shareholders so as to
avoid paying income tax on its net investment income and net realized
capital gains or being subject to a federal excise tax on undistributed
net investment income or net realized capital gains.
Income dividends and capital gains distributions are taxable for
federal income tax purposes whether they are received in cash or invested
in additional shares. Shareholders not subject to tax on their income
will not be required to pay federal income taxes on amounts distributed to
them. Information concerning the tax status of dividends and
distributions is mailed to shareholders shortly after the end of each
calendar year.
(h) Not applicable.
Item 7. Purchase of Securities Being Offered
(a) The Fund is closed to new investments and is not offering
its securities for sale.
(b) The net asset value of shares based on the market value of
the Fund's portfolio is determined once daily as of the close of regular
trading on the New York Stock Exchange. The net asset value is computed
by dividing the total net assets (i.e., assets less liabilities) by the
total number of shares of capital stock outstanding. A security that is
traded on any securities exchange is valued at the last sale price of the
day (or if no sale occurred, at the last bid price) on the principal
exchange where it is traded; and over-the-counter securities are valued at
the last bid price if no sale is reported. Money market instruments with
maturities of 60 days or less are valued at amortized cost. Any other
investment assets and other securities will be taken at fair market value
as determined in good faith under the procedures approved by the Fund's
Board of Directors.
(c) Not applicable.
(d) Not applicable.
(e) Not applicable.
(f) Not applicable.
Item 8. Redemption or Repurchase
(a) A shareholder who wishes to redeem his or her shares may
sell them back to the Fund at the next determined net asset value by
telephone, pursuant to a systematic withdrawal plan or by sending a
written request as described below.
Telephone Redemptions. Any shareholder who has elected the
telephone redemption privilege on the purchase application may call
Firstar Trust Company (1-414-765-4124) to redeem his or her shares. If
the shareholder has furnished the proper information on the application,
he or she may elect to have the proceeds wired into a bank account on
settlement date (normally five business days after the transaction date).
A fee of $7.50 is currently imposed on such wire transfers and will be
deducted from the amount of such a redemption. The shareholder's bank may
also charge a fee.
If no bank account information is provided on the account
application, a check for the proceeds of a telephone redemption is issued
to the registered shareholder on the fifth business day after the
redemption date. Any telephone redemption to be paid by check will be
limited to a maximum of $15,000. The Fund and Firstar Trust Company
reserve the right to refuse a telephone redemption or to limit the amount
or frequency of telephone redemptions. Procedures for redeeming shares of
the Fund by telephone may be modified or terminated by the Fund upon sixty
days written notice to shareholders. At the option of the Fund, telephone
redemptions may be paid by wire if the redemption amount is $1,000 or
more, or by check if the redemption is for less than $1,000. Neither the
Fund nor the shareholder servicing agent, Firstar Trust Company, will be
liable for following instructions for telephone redemption transactions
that they reasonably believe to be genuine, provided reasonable procedures
are used to confirm the genuineness of the telephone instructions, but may
be liable for any losses due to unauthorized or fraudulent instructions if
they fail to follow such procedures. These procedures include requiring
some form of personal identification before acting upon telephone
instructions, providing written confirmation of any transaction request by
telephone and tape recording any instructions received by telephone.
During periods of substantial economic market change, telephone
redemptions may be difficult to implement. If an investor is unable to
contact Firstar Trust Company by telephone, shares of the Fund may be
redeemed by mailing the redemption request to First Trust Company as
described below. A telephone redemption will produce a gain or loss for
individual income tax purposes in the same manner as the other redemption
methods.
Systematic Withdrawal Plan. Any shareholder who owns shares of
the Fund worth at least $10,000 may elect to receive automatic payments of
a designated amount monthly or quarterly. To use this service, the
shareholder should obtain information and complete a Systematic Withdrawal
Application which is available from the Fund. To the extent that
dividends do not cover the payments under such a plan, principal will be
used for payments, and it is possible that a shareholder's principal may
be depleted. Redemption of shares under this plan will produce a gain or
loss for individual income tax purposes in the same manner as the other
redemption methods.
Written Redemptions. A shareholder may redeem his or her shares
by sending a written request in good order to:
CharterCapital Blue Chip Growth Fund, Inc.
c/o Firstar Trust Company
P.O. Box 701
Milwaukee, Wisconsin 53201-0701
Redemption requests sent by overnight or express mail should be
directed to CharterCapital Blue Chip Growth Fund, Inc., c/o Firstar Trust
Company, Mutual Fund Services, 3rd Floor, 615 East Michigan Street,
Milwaukee, Wisconsin 53202. If a redemption request is inadvertently
sent to the Fund at its corporate address, it will be forwarded to Firstar
Trust Company, and the effective date of redemption will be delayed until
the request is received by Firstar Trust Company.
"In good order" means that the request must be signed by all
registered shareholders of the account and accompanied by any certificates
that may have been issued. Signatures need not be guaranteed unless the
redemption request exceeds $25,000 or the proceeds of the redemption are
requested to be sent by wire transfer to a person other than the
registered holder or holders of the shares to be redeemed or to be mailed
to other than the address of record, in which cases each signature must be
guaranteed by a commercial bank, trust company, member firm of a national
securities exchange, credit union or other eligible guarantory
institution. Further documentation may be required as to the authority of
the person requesting redemption of shares held in the name of
corporations, executors, administrators, trustees, guardians or other
fiduciaries. If certificates have been issued, they must be properly
endorsed and delivered with the redemption request, and any documents
required by special situations must also be included before a redemption
request can be honored. To avoid processing delays, the redemption
request should include the name of the Fund, the account number, the exact
name(s) of the shareholder(s) as shown on the statement and the number of
shares or dollar amount that the shareholder wishes to sell.
Redemptions are made at a price equal to the net asset value per
share computed at the close of regular trading on the New York Stock
Exchange on the day that the written request, in good order, is received
by Firstar Trust Company if it is received before the close of regular
trading on the New York Stock Exchange (currently 3:00 p.m. Milwaukee
time). If the request is received after the close of regular trading on
the New York Stock Exchange, shares will be redeemed at the net asset
value that is computed on the next day that the New York Stock Exchange is
open for business. Proceeds are generally mailed within five business
days of the redemption date.
(b) Not applicable.
(c) The Fund reserves the right to redeem shares in any account
at the next determined net asset value, if at any time, as a result of
redemptions by the shareholder, the shares in the account have a value of
less than $250. The Fund also reserves the right to redeem the shares in
any account which may have been opened under a waiver of minimum purchase
requirements if enough additional shares were not subsequently purchased
to meet the minimum requirements.
(d) Not applicable.
Item 9. Pending Legal Proceedings
Not applicable.
PART B
INFORMATION REQUIRED IN A STATEMENT OF ADDITIONAL INFORMATION
Item 10. Cover Page.
(a) and (b) This Statement of Additional Information
relates to CharterCapital Blue Chip Growth Fund, Inc.
(the "Fund"). This Statement of Additional Information
is not a prospectus and should be read in conjunction
with Part A of the Fund's registration statement, which
is attached hereto and dated the date hereof. This
Statement of Additional Information is dated April 29,
1996.
Item 11. Table of Contents
Item Page
Item 12. General Information and History (Also see Item 4) . B-2
Item 13. Investment Policies and Restrictions(Also see
Item 4) . . . . . . . . . . . . . . . . . . . . . B-2
Item 14. Management of the Fund (Also see Item 5) . . . . . B-8
Item 15. Control Persons and Principal Holders of Securities
(Also see Item 6) . . . . . . . . . . . . . . . . B-9
Item 16. Investment Advisory and Other Services (Also see
Item 5) . . . . . . . . . . . . . . . . . . . . . B-9
Item 17. Brokerage Allocation and Other Practices . . . . . B-12
Item 18. Capital Stock and Other Securities (Also see
Items 6 and 8) . . . . . . . . . . . . . . . . . . B-13
Item 19. Purchase, Redemption and Pricing of Securities
Being Offered (Also see Items 7 and 8) . . . . . . B-14
Item 20. Tax Status (Also see Item 6) . . . . . . . . . . . B-14
Item 21. Underwriters (Also see Item 7) . . . . . . . . . . B-15
Item 22. Calculation of Performance Data . . . . . . . . . . B-15
Item 23. Financial Statements . . . . . . . . . . . . . . . B-16
Item 12. General Information and History. Not applicable.
See Part A, Item 4.
Item 13. Investment Policies and Restrictions.
(a) See Part A, Item 4.
Money Market Instruments
1. U.S. Treasury Bills, Notes and Bonds
U.S. Treasury Bills are direct obligations of the U.S. Treasury
with maturities of 12 months or less at the time of issue. U.S. Treasury
Notes and Bonds are also direct obligations of the U.S. Treasury with
maturities greater than one year at the time of issue.
2. Federal Agency Notes and Bonds
Federal Agency securities are issued or guaranteed as to
principal by agencies and instrumentalities authorized by the U.S.
Government. The securities of some of these agencies and instrumentalities
are supported by the full faith and credit of the U.S. Treasury, others
are supported by the right of the agency to borrow from the U.S. Treasury,
others are supported by the discretion of the U.S. Government to purchase
the agency's obligations, while others are supported only by the credit of
the agency or instrumentality. Agencies or instrumentalities whose
securities are supported by the full faith and credit of the U.S. Treasury
include, but are not limited to, the Federal Housing Administration,
Farmers Home Administration, Export-Import Bank of the United States,
Small Business Administration and Government National Mortgage
Association. Examples of agencies or instrumentalities whose securities
are supported by the right of the agency to borrow from the U.S. Treasury
include, but are not limited to, the Federal Home Loan Banks, Federal
Intermediate Credit Banks and Tennessee Valley Authority. Agencies or
instrumentalities whose securities are supported by the discretionary
authority of the U.S. Government to purchase the agency's obligations
include the Federal National Mortgage Association. Agencies or
instrumentalities whose securities are supported solely by the credit of
the agency or instrumentality include the Student Loan Marketing
Association. Maturities can range from six months to 25 years at the time
of issue. While the U.S. Government currently provides financial support
to such U.S. Government-sponsored instrumentalities, no assurance can be
given that it will always do so. The U.S. Government, its agencies and
instrumentalities do not guaranty the market value of their securities,
and consequently, the value of such securities may fluctuate.
3. Certificates of Deposit and Banker's Acceptances
Certificates of deposit are negotiable certificates issued
against funds deposited in a commercial bank for a definite period of time
and earning a specified return.
Banker's acceptances are negotiable drafts or bills of exchange,
normally drawn by an importer or exporter to pay for specific merchandise,
which are "accepted" by a bank, meaning, in effect, that the bank
unconditionally agrees to pay the face value of the instrument on
maturity.
Investments in certificates of deposit and banker's acceptances
will be limited to obligations of banks or other financial institutions
organized under the laws of the United States or any state or territory
thereof whose deposits are insured by the Federal Deposit Insurance
Corporation ("FDIC") and either (a) the principal amount of the obligation
is insured in full by the FDIC, or (b) the issuer of such obligation has
capital, surplus and undivided profits in excess of $100 million or total
assets of $1 billion (as reported in its most recently published financial
statements prior to the date of investment).
4. Corporate Obligations
Commercial paper issued by corporations, or variable demand
notes issued by corporations whose commercial paper, at the time of
purchase: (a) is rated "A-1" by Standard & Poor's Corporation or
"Prime-1" by Moody's Investors Services, Inc., or (b) if not rated, is
issued by a company which at the date of investment has an outstanding
debt issue rated at least "A" by Standard & Poor's or by Moody's and as to
which the Fund's Board of Directors has made an independent determination
that the instrument presents minimal credit risks and is of "high
quality." Corporate bonds and debentures, which at the time of purchase
have a rating of at least "AA" by Standard & Poor's or "Aa" by Moody's and
which mature in one year or less at the time of purchase. Variable rate
demand notes are unsecured demand instruments bearing interest at rates
which are fixed to known lending rates and automatically adjusted when
such lending rates change.
A. Description of Commercial Paper Ratings
Standard & Poor's Commercial Paper Ratings. A Standard & Poor's
commercial paper rating is a current assessment of the likelihood of
timely payment of debt considered short-term in the relevant market.
Ratings are graded into several categories, ranging from A-1 for the
highest quality obligations to D for the lowest. These categories are as
follows:
A-1. This highest category indicates that the degree of safety
regarding timely payment is strong. Those issuers determined to possess
extremely strong safety characteristics are denoted with a plus sign (+)
designation.
A-2. Capacity for timely payment on issues with this
designation is satisfactory. However the relative degree of safety is not
as high as for issuers designed "A-1".
A-3. Issues carrying this designation have adequate capacity
for timely payment. They are, however, more vulnerable to the adverse
effects of changes in circumstances than obligations carrying the higher
designation.
Moody's Short-Term Debt Ratings. Moody's short-term debt
ratings are opinions of the ability of issuers to repay punctually senior
debt obligations which have an original maturity not exceeding one year.
Obligations relying upon support mechanisms such as letters-of-credit and
bonds of indemnity are excluded unless explicitly rated.
Moody's employs the following three designations, all judged to
be investment grade, to indicate the relative repayment ability of rated
issuers:
Prime-1. Issuers rated Prime-1 (or supporting institutions)
have a superior ability for repayment of senior short-term debt
obligations. Prime-1 repayment ability will often be evidenced by many of
the following characteristics:
- Leading market positions in well-established industries.
- High rates of return on funds employed.
- Conservative capitalization structure with moderate reliance on
debt and ample asset protection.
- Broad margins in earnings coverage of fixed financial charges
and high internal cash generation.
- Well-established access to a range of financial markets and
assured sources of alternate liquidity.
Prime-2. Issuers rated Prime-2 (or supporting institutions)
have a strong ability for repayment of senior short-term debt obligations.
This will normally be evidenced by many of the characteristics cited above
but to a lesser degree. Earnings trends and coverage ratios, while sound,
may be more subject to variation. Capitalization characteristics, while
still appropriate, may be more affected by external conditions. Ample
alternate liquidity is maintained.
Prime-3. Issuers rated Prime-3 (or supporting institutions)
have an acceptable ability for repayment of senior short-term obligations.
The effect of industry characteristics and market compositions may be more
pronounced. Variability in earnings and profitability may result in
changes in the level of debt protection measurements and may require
relatively high financial leverage. Adequate alternate liquidity is
maintained.
B. Description of Bond Ratings
Bonds are rated by Moody's Investors Services, Inc. and Standard
& Poor's Corporation for the purpose of providing a simple system of
gradation by which the relative investment qualities of bonds may be
noted. The ratings are explained below.
Moody's Corporate Bond Ratings.
Aaa - Bonds which are rated Aaa are judged to be of the best
quality. They carry the smallest degree of investment risk and are
generally referred to as "gilt edge." Interest payments are protected by
a large or by an exceptionally stable margin and principal is secure.
While the various protective elements are likely to change, such changes
as can be visualized are most unlikely to impair the fundamentally strong
position of such issues.
Aa - Bonds which are rated Aa are judged to be of high quality
by all standards. Together with the Aaa group they comprise what are
generally known as high-grade bonds. They are rated lower than the best
bonds because margins of protection may not be as large as Aaa securities
or fluctuation of protective elements may be of greater amplitude, or
there may be other elements present which make the long-term risks appear
somewhat larger than in Aaa securities.
A - Bonds which are rated A possess many favorable investment
attributes and are to be considered as upper medium grade obligations.
Factors giving security to principal and interest are considered adequate
but elements may be present which suggest a susceptibility to impairment
sometime in the future.
Moody's applies numerical modifiers 1, 2 and 3 in each generic
rating classification from Aa to B. The modifier 1 indicates that the
company ranks in the higher end of its generic rating category; the
modifier 2 indicates a mid-range ranking; and the modifier 3 indicates
that the company ranks in the lower end of its generic rating category.
Standard & Poor's Debt Ratings. A Standard & Poor's corporate
or municipal debt rating is a current assessment of the creditworthiness
of an obligor with respect to a specific obligation. This assessment may
take into consideration obligors such as guarantors, insurers or lessees.
The debt rating is not a recommendation to purchase, sell or
hold a security, inasmuch as it does not comment as to market price or
suitability for a particular investor.
The ratings are based on current information furnished by the
issuer or obtained by Standard & Poor's from other sources it considers
reliable. Standard & Poor's does not perform any audit in connection with
any rating and may, on occasion, rely on unaudited financial information.
The ratings may be changed, suspended or withdrawn as a result of changes
in, or unavailability of, such information, or for other circumstances.
The ratings are based, in varying degrees, on the following
considerations:
I. Likelihood of default - capacity and willingness of the
obligor as to the timely payment of interest and repayment
of principal in accordance with the terms of the
obligation;
II. Nature of and provisions of the obligation;
III. Protection afforded by, and relative position of the
obligation in the event of bankruptcy, reorganization or
other arrangement under the laws of bankruptcy and other
laws affecting creditors' rights;
AAA - Debt rated AAA has the highest rating assigned by Standard
& Poor's. Capacity to pay interest and repay principal is extremely
strong.
AA - Debt rated AA has a very strong capacity to pay interest
and repay principal and differs from the higher rated issues only in small
degree.
A - Debt rated A has a strong capacity to pay interest and repay
principal although it is somewhat more susceptible to the adverse effects
of changes in circumstances and economic conditions than debt in the
higher rated categories.
(b) The Fund has adopted the following policies and restrictions
which cannot be changed without the approval of the holders of a majority
of the Fund's shares. Accordingly, the Fund may NOT:
1. Invest for the purpose of exercising control of
management.
2. Invest in oil, gas or other mineral exploration or
development programs, or in real estate, mortgage loans,
commodities or commodity contracts, except that the Fund may buy
or sell financial futures contracts involving financial indexes.
3. Underwrite any securities, except insofar as it may be
deemed an underwriter for the purposes of the Securities Act of
1933 on disposition of securities.
4. Sell short, buy on margin except for futures
contracts, or write or purchase puts, calls or spreads.
5. Invest more than 5% of assets taken at market value in
one issuer.
6. Concentrate more than 25% of assets taken at market
value in one industry.
7. Issue senior securities or borrow money, except for
futures contracts, in excess of 5% of total assets taken at
market value or 10% of total assets taken at cost, whichever is
lower, and then only as a temporary measure for extraordinary or
emergency purposes.
8. Pledge, mortgage or hypothecate any assets, except as
a temporary measure for extraordinary or emergency purposes, and
then not in excess of 15% of assets taken at cost, except for
futures contracts.
9. Purchase more than 10% of the voting securities of an
issuer or more than 10% of any other class of securities of such
an issuer.
10. Invest in shares of any other mutual fund except
through merger or consolidation.
11. Invest more than 5% of assets taken at market value in
the securities of companies which, including predecessor
companies, have a record of less than 3 years' continuous
operation.
12. Retain securities of an issuer if the Fund's officers
and directors or those of the Adviser who individually own more
than 1/2 of 1% of the shares or securities of an issuer together
own more than 5% of the securities.
13. Lend money or securities, except to purchase bonds or
other debt securities that constitute part of an issue.
14. Participate on a joint or joint and several basis in
any trading account in securities.
15. Purchase securities directly from or sell securities
directly to the Fund's officers and directors.
16. Invest in securities restricted as to marketability.
(c) See Part A, Item 4.
(d) For the fiscal year ended December 31, 1995, the Fund's
portfolio turnover rate was 99%. The Fund anticipates that its portfolio
turnover rate may in the future be less than such rate due to its pending
liquidation. The annual portfolio turnover rate indicates changes in the
Fund's portfolio and is calculated by dividing the lesser of purchases or
sales of portfolio securities (excluding securities having maturities at
acquisition of one year or less) for the fiscal year by the monthly
average of the value of the portfolio securities (excluding securities
having maturities at acquisition of one year or less) owned by the Fund
during the fiscal year.
Item 14. Management of the Fund.
(a) and (b) The following table sets forth the name, address,
position with the Fund and principal occupation for the last five years of
each of the directors and officers.
Position with Principal Occupation
Name, Address and Age the Fund During Last Five Years
Lauren E. Toll* President, President and Director of the
4920 W. Vliet Street Treasurer and Adviser since December 31,
Milwaukee, WI 53208 Director 1984; Treasurer of the Adviser
54 since March 9, 1994; Vice
President, Secretary and
Director of the Adviser prior
to December 31, 1984.
Joel T. Hassler Secretary Assistant Vice President of
4920 W. Vliet Street the Adviser since April 13,
Milwaukee, WI 53208 1993; Assistant Analyst,
27 Kemper Securities, Inc. during
1992; student prior to 1992.
Richard H. Havener Director Past President, J.F. Cook,
1177 W. Northbranch Dr. Inc., a seller, servicer and
Oak Creek, WI 53154 installer of building
72 products.
Barbra R. Lasky, CPA Director President, Hafner, Lasky &
11575 Theodore Diller, S.C., a certified
Trecker Way public accounting firm.
Milwaukee, WI 53214
45
Lawrence A. Liebe Director President, Office Essentials,
2725 S. 163rd St. Inc., a retailer of office
New Berlin, WI 53151 products, furniture and
58 equipment.
_______________
* This director is an interested person of the Fund or the Adviser as
defined in Section 2(a)(19) of the Investment Company Act of 1940.
(c) The Fund does not compensate its officers or its directors who
are interested persons of the Fund or the Adviser. During the year ended
December 31, 1995, the Fund paid a total of $2,250 to the disinterested
directors.
Pension or
Retirement Total
Benefits Estimated Compensation
Accrued as Annual From Fund
Aggregate Part of Benefits and Fund
Compensation Fund Upon Complex Paid
Name of Person From Fund Expenses Retirement to Directors
Lauren E. Toll 0 0 0 0
Joel T. Hassler 0 0 0 0
Richard H. Havener $750 0 0 $750
Barbra R. Lasky 750 0 0 750
Lawrence A. Liebe 750 0 0 750
Item 15. Control Persons and Principal Holders of Securities.
(a) Not applicable.
(b) The following table sets forth certain information at March 31,
1996 regarding the beneficial ownership of each person known by the Fund
to own of record or beneficially 5% or more of the Fund's capital stock.
Number of Shares Percentage
Name and Address Owned of Record of Ownership
Emjayco 10,125 6.9%
f/b/o Dr. Kent Schaefer & Assoc.
Pension Plan #330
P.O. Box 17909
Milwaukee, Wisconsin 53217-0909
(c) As of March 31, 1996, the Company's officers and directors as a
group (5 persons) beneficially owned 7.1% of the outstanding shares of the
Fund.
Item 16. Investment Advisory and Other Services.
(a)-(d) See Item 5. Pursuant to an Investment Adviser and
Management Agreement (the "Agreement"), Charter Capital Management, Inc.
(the "Adviser") manages the investment and reinvestment of the assets of
the Fund in accordance with the Fund's investment objectives, and
investment policies and restrictions. The Adviser is owned by Lauren E.
Toll. The Adviser determines the type of securities in which the Fund's
assets are to be invested at any given time and when to shift assets from
one type of security to another. The Adviser pays the salaries and fees
of the officers and directors who are interested persons of the Adviser.
Such management is subject to the supervision of the Board of Directors of
the Fund.
Under the Agreement, the Adviser also is responsible for providing
the administrative services, the office space, and clerical, bookkeeping
and administrative personnel, as may be necessary in the operation and
recordkeeping functions of the Fund. In addition, the Adviser, under the
supervision of the Board of Directors of the Fund, is responsible for the
preparation and filing of all regulatory documents. The Adviser has
retained Sunstone Financial Group, Inc., 207 East Buffalo Street, Suite
400, Milwaukee, Wisconsin 53202 (the "Administrator") and Firstar Trust
Company (the "Fund Accountant") to perform certain of the administrative
and accounting services the Adviser is required to perform under the
Agreement.
The Fund Accountant and the Adviser have entered into a Fund
Accounting Servicing Agreement pursuant to which the Fund Accountant
provides accounting services to the Fund on behalf of the Adviser. The
Fund Accountant maintains and keeps current the books, accounts, journals
and other records of original entry relating to the business of the Fund
and calculates the Fund's net asset value on a daily basis. The
Administrator and the Adviser have entered into an Administration
Agreement pursuant to which the Administrator provides administrative
services to the Fund on behalf of the Adviser. The Administrator oversees
the Fund's insurance relationships, participates in the preparation of the
Fund's registration statement, proxy statement and reports, prepares
compliance filings pursuant to state securities laws, compiles data for
and prepares notices to the Securities and Exchange Commission, prepares
annual and semiannual reports to the Securities and Exchange Commission
and current investors, monitors the Fund's expense accounts, monitors the
Fund's status as a regulated investment company under Subchapter M of the
Internal Revenue Code of 1986, as amended, monitors compliance with the
Fund's investment policies and restrictions and generally assists in the
Fund's administrative operations.
The Adviser is paid, on an annual basis, in monthly installments, a
fee equal to the sum of the following amounts based on the average daily
closing net assets of the Fund: (i) 1.50% of the first $25,000,000; (ii)
1.15% of the next $25,000,000; and (iii) 0.75% of the excess over
$50,000,000. The Fund paid the Adviser $160,786, $121,206 and $68,039 in
the fiscal years ended December 31, 1993, December 31, 1994 and December
31, 1995, respectively.
In consideration of the services performed by the Fund Accountant
pursuant to the Fund Accounting Servicing Agreement the Adviser pays
monthly to the Fund Accountant a fee based on the Fund's average daily net
assets, with a minimum annual amount, and reimburses it for its out-of-
pocket expenses. The Adviser paid the Fund Accountant $1,372 during the
period from December 6, 1993 to December 31, 1993, the first year such
agreement was in effect, $16,364 in the fiscal year ended December 31,
1994 and $16,110 in the fiscal year ended December 31, 1995. In
consideration of the services performed by the Administrator pursuant to
the Administration Agreement, the Adviser pays monthly to the
Administrator a fee based on the Fund's average daily net assets, with a
minimum annual amount, and reimburses it for its out-of-pocket expenses.
The Adviser paid the Administrator $1,042 during the period from December
15, 1993 to December 31, 1993, the first year such agreement was in
effect, $25,000 in the fiscal year ended December 31, 1994 and $26,750 in
the fiscal year ended December 31, 1995.
The Fund pays all expenses incidental to its organization,
operations, and business not specifically covered by the Agreement,
including but not limited to: taxes; brokerage commissions; legal and
accounting fees; fees of the custodian, shareholder servicing, transfer,
dividend disbursing, and redemption agents; membership dues in
associations; costs in connection with annual or special meetings of
shareholders, including proxy material preparation and distribution; the
cost of printing and mailing reports to shareholders; the cost of stock
certificates; costs relating to bond and insurance coverage; costs
incurred in complying with laws regulating the issue or sale of its
securities, including printing the prospectus and mailing to existing
shareholders; charges incurred in the issue and redemption of its own
shares; and fees to directors who are not interested persons of the
Adviser.
The Adviser provides all sales and promotion expenses in connection
with the distribution of the shares of the Fund and is the sole judge of
the extent to which such sales or promotion expenses are incurred. Costs
incurred in complying with laws regulating the issue or sale of the Fund's
securities are not deemed sales and promotion expenses and are paid by the
Fund.
The Agreement may be terminated at any time without payment of any
penalty by a vote of a majority of the Board of Directors of the Fund or
by a vote of a majority of the outstanding shares of the Fund or by the
Adviser upon sixty (60) days written notice to the other party. The
Agreement is not assignable, and, in the event of assignment, will
automatically terminate. The Agreement will remain in effect as long as
its continuance is approved at least annually by the directors who are not
parties to the Agreement, or interested persons of the Adviser.
(e) Not applicable.
(f) Not applicable.
(g) Not applicable.
(h) Firstar Trust Company, 777 East Wisconsin Avenue, Milwaukee,
Wisconsin 53202, acts as custodian for the Fund. As such, Firstar Trust
Company holds all securities and cash of the Fund, delivers and receives
payment for securities sold, receives and pays for securities purchased,
collects income from investments and performs other duties, all as
directed by officers of the Fund. Firstar Trust Company does not exercise
any supervisory function over the management of the Fund, the purchase and
sale of securities or the payment of distributions to shareholders.
Firstar Trust Company also acts as the Fund's transfer agent and dividend
disbursing agent.
Arthur Andersen LLP, 100 East Wisconsin Avenue, Milwaukee, Wisconsin
53202, has been selected as the independent public accountants for the
Fund. In addition to auditing the Fund's annual financial statements,
they also prepare the Fund's income tax returns.
(i) Not applicable.
Item 17. Brokerage Allocation and Other Practices.
(a) For the fiscal years ended December 31, 1993, December 31, 1994
and December 31, 1995, brokerage commissions were $177,669 on total
transactions of $54.4 million, $54,467 on total transactions of $20.7
million and $32,022 on total transactions of $21.9 million. In each
period brokerage commissions were allocated for information, execution or
market transactions. During the fiscal year ended December 31, 1993,
brokerage commissions were significantly higher than brokerage commissions
for the fiscal years ended December 31, 1992 and December 31, 1994 because
the Fund shifted investments to stocks of more economically sensitive blue
chip companies resulting in changes in the Fund's portfolio.
(b) Not applicable.
(c) Decisions to buy and sell specific securities for the Fund are
made by the Adviser subject to review by the Fund's Board of Directors.
The Adviser selects the broker through whom, and the commission rates at
which, securities transactions for the Fund are executed. The primary
considerations in selecting brokers are prompt, efficient and reliable
execution, best market price and competitive commission rates. Subject to
those considerations, the Adviser considers all transaction costs,
including brokerage commissions, as well as research services such as
research reports, subscriptions to financial publications and research
compilations, and compilations of securities prices, earnings, dividends
and similar data. Transactions in unlisted securities are generally
carried out through brokers or dealers who make the primary market for
such securities unless, in the judgment of the Adviser, a more favorable
price can be obtained by carrying out such transactions through other
brokers or dealers.
(d) Subject to the above, the Adviser may allocate a portion of the
Fund's brokerage commissions to brokers and dealers who furnish the
Adviser with supplemental investment and statistical information or
furnish market quotations to the Fund or other mutual funds managed by the
Adviser. In those instances a higher commission may be paid than would be
paid to another broker or dealer who would not furnish such services,
provided the Adviser believes the commission is reasonable relative to the
services that are provided. However, commissions paid to such brokers or
dealers are not higher than would be paid to other brokers or dealers who
would also furnish such services.
Factors that the Adviser considers in evaluating the brokerage
commissions include, but are not necessarily limited to, the estimated
value of advice, analyses, reports, the execution of securities
transactions, and performance of such brokerage functions as clearance and
settlement and the wire transmission of daily net asset values for
publication.
The quality, nature and quantity of the research services are all
considered on a continuing basis because it is impossible to assign a
specific dollar value to such research services. The overall effect of
these services on the Adviser's costs cannot be determined. The brokerage
and research services are used for the Fund, other mutual funds and
clients of the Adviser. Therefore, all services that are paid for with
the Fund's commissions are not necessarily used by the Fund, and,
conversely, the Adviser's other mutual funds' and clients' commissions may
pay for services that are used by the Fund.
(e) Not applicable.
Item 18. Capital Stock and Other Securities.
(a) See Items 6 and 8. The Fund's capital structure consists of 10
million shares of one class of capital stock with a par value of $.01 per
share. All shares are transferable and have equal rights as to voting,
redemption, dividends and liquidation. They have no cumulative voting or
preemptive rights.
The Wisconsin Business Corporation Law permits registered investment
companies, such as the Fund, to operate without an annual meeting of
shareholders under specified circumstances if an annual meeting is not
required by the Investment Company Act of 1940. The Fund has adopted the
appropriate provisions in its bylaws and may not, at its discretion, hold
annual meetings of shareholders for the following purposes unless required
to do so: (1) election of directors; (2) approval of any investment
advisory agreement; (3) ratification of the selection of independent
auditors; and (4) approval of any distribution agreement.
The Fund's Bylaws also contain procedures for the removal of
directors by its shareholders. At any meeting of shareholders, duly
called and at which a quorum is present, the shareholders may, by the
affirmative vote of the holders of a majority of the votes entitled to be
cast thereon, remove any director or directors from office and may elect a
successor or successors to fill any resulting vacancies for the unexpired
terms of removed directors.
Upon the written request of the holders of shares entitled to not
less than ten percent (10%) of all the votes entitled to be cast at such
meeting, the Secretary of the Fund shall promptly call a special meeting
of shareholders for the purpose of voting upon the question of removal of
any director. Whenever ten or more shareholders of record who have been
such for at least six months preceding the date of application, and who
hold in the aggregate either shares having a net asset value of at least
$25,000 or at least one percent (1%) of the total outstanding shares,
whichever is less, shall apply to the corporation's Secretary in writing,
stating that they wish to communicate with other shareholders with a view
to obtaining signatures to a request for a meeting as described above and
accompanied by a form of communication and request which they wish to
transmit, the Secretary shall within five business days after such
application either: (1) afford to such applicants access to a list of the
names and addresses of all shareholders as recorded on the books of the
Fund; or (2) inform such applicants as to the approximate number of
shareholders of record and the approximate cost of mailing to them the
proposed communication and form of request.
If the Secretary elects to follow the course specified in clause (2)
of the last sentence of the preceding paragraph, the Secretary, upon the
written request of such applicants, accompanied by a tender of the
material to be mailed and of the reasonable expenses of mailing, shall,
with reasonable promptness, mail such material to all shareholders of
record at their addresses as recorded on the books unless within five
business days after such tender the Secretary shall mail to such
applicants and file with the Securities and Exchange Commission, together
with a copy of the material to be mailed, a written statement signed by at
least a majority of the Board of Directors to the effect that in their
opinion either such material contains untrue statements of fact or omits
to state facts necessary to make the statements contained therein not
misleading, or would be in violation of applicable law, and specifying the
basis of such opinion.
After opportunity for hearing upon the objections specified in the
written statement so filed, the Securities and Exchange Commission may,
and if demanded by the Board of Directors or by such applicants shall,
enter an order either sustaining one or more of such objections or
refusing to sustain any of them. If the Securities and Exchange
Commission shall enter an order refusing to sustain any of such
objections, or if, after the entry of an order sustaining one or more of
such objections, the Securities and Exchange Commission shall find, after
notice and opportunity for hearing, that all objections so sustained have
been met, and shall enter an order so declaring, the Secretary shall mail
copies of such material to all shareholders with reasonable promptness
after the entry of such order and the renewal of such tender.
(b) Not applicable.
Item 19. Purchase, Redemption and Pricing of Securities Being Offered.
(a) The Fund is closed to new investments and is not offering its
securities for sale.
(b) See Item 7.
As set forth in the Prospectus under the caption "Net Asset Value,"
the net asset value of the Fund is determined once daily as of the close
of the New York Stock Exchange. The New York Stock Exchange is open for
trading Monday through Friday except New Year's Day, Presidents' Day, Good
Friday, Memorial Day, Independence Day, Labor Day, Thanksgiving Day and
Christmas Day. Additionally, if any of the aforementioned holidays falls
on a Saturday, the New York Stock Exchange will not be open for trading on
the preceding Friday and when any such holiday falls on a Sunday, the New
York Stock Exchange will not be open for trading on the succeeding Monday,
unless unusual business conditions exist, such as the ending of a monthly
or the yearly accounting period.
(c) Not applicable.
Item 20. Tax Status.
See Item 6(f) and (g). Dividends from the Fund's net investment
income and distributions from the Fund's net realized short-term capital
gains are taxable to shareholders as ordinary income, whether received in
cash or in additional shares of common stock. The 70% dividends-received
deduction for corporations applies to such dividends and distributions,
subject to proportionate reductions if the aggregate dividends received by
the Fund from domestic corporations in any year are less than 100% of the
Fund's gross income (inclusive of the excess of net short-term capital
gains over net long-term capital losses). Distributions from the Fund's
net long-term capital gains, without regard to the length of time
shareholders have owned their shares of common stock, are taxable to
shareholders for federal income tax purposes as long-term capital gains
and are not eligible for the 70% dividends-received deduction.
Any dividend or capital gain distribution paid shortly after a
purchase of shares of Common Stock will have the effect of reducing the
per share net asset value of such shares by the amount of the dividend or
distribution. Furthermore, if the net asset value of the shares of Common
Stock immediately after a dividend or distribution is less than the cost
of such shares to the shareholder, the dividend or distribution will be
taxable to the shareholder, even though it results in a return of capital
to him.
The Fund may be required to withhold Federal income tax at a rate of
31% ("backup withholding") from dividend payments and redemption proceeds
if a shareholder fails to furnish the Fund with his social security or
other tax identification number and certify under penalty of perjury that
such number is correct and that he is not subject to backup withholding
due to the underreporting of income. The certification form is included
as part of the share purchase application and should be completed when the
account is opened.
Item 21. Not applicable.
Item 22. Calculation of Performance Data.
(a) Not applicable.
(b) The Fund may quote its performance in the form of an average
annual total return. The average annual return is computed by finding the
average annual compounded rates of return over the given period that would
equate the initial amount invested to the ending redeemable value,
according to the following formula:
n
P(1 + T) = ERV
P = a hypothetical initial payment of $1,000
T = average annual total return
n = number of years or periods
ERV = ending redeemable value of a hypothetical $1,000
payment made at the beginning of the period at the end
of the given period.
The Fund's average annual compounded return for the one-year period
ended December 31, 1995 was 22.64%. The Fund's average annual compounded
return for the five-year period ended December 31, 1995 was 10.33%. For
the ten-year period ended December 31, 1995, the average annual compounded
return was 7.03%.
The Fund may also quote its performance in the form of a total
return. The Fund's total return for the year ended December 31, 1995 was
22.64%. Principal and investment return will fluctuate and an investor's
shares, at redemption, may be worth more or less than their original cost.
The Fund may compare its performance to other mutual funds with
similar investment objectives and to the industry as a whole, as reported
by Lipper Analytical Services, Inc., Money, Forbes, Business Week and
Barron's magazines, and The Wall Street Journal. The Fund may also
compare its performance to the Dow Jones Industrial Average, Nasdaq
Composite Index, Nasdaq Industrials Index, Value Line Composite Index, the
Standard & Poor's 500 Stock Index and the Consumer Price Index. Such
comparisons may be made in advertisements, shareholder reports or other
communications to shareholders.
Item 23. Financial Statements.
The Fund mails financial statements and other information to
shareholders in February and August. The financial statements in the
Fund's annual report, which is mailed in February, are audited and should
be read in conjunction with this Statement of Additional Information. An
additional copy of the annual report will be provided, without charge, to
any shareholder who so requests. All such requests should be directed to
Lauren E. Toll, 4920 West Vliet Street, Milwaukee, Wisconsin, 53208,
(414-257-1842). The following information is incorporated by reference to
the Fund's Annual Report for the fiscal year ended December 31, 1995 (File
No. 811-3993), as filed with the Securities and Exchange Commission
through the EDGAR System on March 1, 1996:
(1) Report of Independent Public Accountants
(2) Statement of Assets and Liabilities as of December 31, 1995
(3) Schedule of Investments as of December 31, 1995
(4) Statement of Operations for the fiscal year ended
December 31, 1995
(5) Statements of Changes in Net Assets for the fiscal years
ended December 31, 1995 and 1994
(6) Financial Highlights
(7) Notes to Financial Statements
PART C
Other Information
Item 24. Financial Statements and Exhibits
(a). The following financial statements are incorporated by reference
to CharterCapital Blue Chip Growth Fund, Inc.'s Annual Report
for the fiscal year ended December 31, 1995 (File No. 811-3993)
as filed with the Securities and Exchange Commission through the
EDGAR System on March 1, 1996.
(1) Report of Independent Public Accountants
(2) Statement of Assets and Liabilities as of December 31, 1995
(3) Schedule of Investments as of December 31, 1995
(4) Statement of Operations for the fiscal year ended December
31, 1995
(5) Statements of Changes in Net Assets for the fiscal years
ended December 31, 1995 and 1994
(6) Financial Highlights
(7) Notes to Financial Statements
(b). The following exhibits are included in this Registration
Statement.
(1.1) Articles of Incorporation. Incorporated by reference
to Post-Effective Amendment No. 1 which was filed on
January 4, 1985, Registration No. 2-90082.
(1.2) Articles of Amendment. Incorporated by reference to
Post-Effective Amendment No. 10, which was filed on
March 1, 1991, Registration No. 2-90082.
(2) By-Laws. Incorporated by reference to Post-Effective
Amendment No. 11, which was filed on March 31, 1992,
Registration No. 2-90082.
(3) None.
(4) Specimen Stock Certificate. Incorporated by reference to
Pre-Effective Amendment No. 1, which was filed on May 31,
1984, Registration No. 2-90082 (hereafter "Pre-Effective
Amendment No. 1").
(5) Investment Adviser and Management Agreement, as amended.
Incorporated by reference to Post-Effective Amendment No. 6
which was filed on August 31, 1988, Registration No.
2-90082.
(6) Not applicable.
(7) None.
(8) Custodian Agreement. Incorporated by reference to
Post-Effective Amendment No. 2, which was filed on
September 30, 1985, Registration No. 2-90082 (hereafter
"Amendment No. 2").
(9.1) Shareholder Servicing Agreement. Incorporated by reference
to Amendment No. 2.
(9.2) Fund Accounting Servicing Agreement. Incorporated by
reference to Post-Effective Amendment No. 13, which was
filed on April 29, 1994, Registration No. 2-90082
(hereafter "Amendment No. 13").
(9.3) Administration Agreement. Incorporated by reference to
Amendment No. 13.
(9.4) Plan of Liquidation.
(10) Not applicable.
(11) Not applicable.
(12) Not applicable.
(13) None.
(14) Model Plans.
(a) Individual Retirement Account Custodial Agreement, as
amended. Incorporated by reference to Post-Effective
Amendment No. 12, which was filed on April 28, 1993,
Registration No. 2-90082 (hereinafter "Amendment No.
12").
(b) Section 403(b)(7) Retirement Plan, as amended.
Incorporated by reference to Amendment No. 12.
(c) Prototype Defined Contribution Retirement Plan, as
amended. Incorporated by reference to Amendment No.
12.
(15) None.
(16) Schedule for Computation of Performance Quotations.
(17) Financial Data Schedule.
(18) None.
Item 25. Persons Controlled by or Under Common Control with Registrant
None.
Item 26. Number of Holders of Securities
Number of Record Holders
as of March 31, 1996
Title of Class
Capital Stock, $.01 Par Value 214
Item 27. Indemnification
The Wisconsin Business Corporation Law and Section 10.01 of the
Fund's Bylaws provide for the indemnification of the Fund's
directors and officers in a variety of circumstances, which may
include liabilities under the Securities Act of 1933.
Section 180.0851 of the Wisconsin Business Corporation Law
provides for mandatory indemnification (a) if a director or
officer was successful on the merits or otherwise in the defense
of a proceeding, and (b) if a director or officer was not
successful on the merits or otherwise but the liability incurred
was not the result of a breach or failure to perform a duty
which constituted any of the following: (i) a willful failure to
deal fairly with the corporation or its shareholders in
connection with a matter in which the director or officer has a
material conflict of interest; (ii) a violation of criminal law,
unless the director or officer has reasonable cause to believe
his or her conduct was lawful or no reasonable cause to believe
his or her conduct was unlawful; (iii) a transaction from which
the director or officer derived an improper personal benefit; or
(iv) willful misconduct.
Article VII of the Fund's Bylaws generally provides that
officers and directors of the Fund shall be indemnified to the
fullest extent authorized by the Wisconsin Business Corporation
Law.
Insofar as indemnification for liabilities arising under the
Securities Act of 1933, as amended, may be permitted to
directors, officers and controlling persons of the Registrant
pursuant to the foregoing provisions, or otherwise, the
Registrant has been previously 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 Fund of expenses incurred or paid by a director, officer
or controlling persons of the Fund in the successful defense of
any action, suit or proceeding) is asserted by such director,
officer or controlling person in connection with the securities
which have been registered, the Registrant will, unless in the
opinion of 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.
The Fund is aware that the staff of the Securities and Exchange
Commission is of the view that an indemnification provision does
not violate Section 17(h) or (i) of the Investment Company Act
of 1940 ("1940 Act") if it precluded indemnification for any
liability, whether or not there is an adjudication of liability,
arising by reason of willful misfeasance, bad faith, gross
negligence, or reckless disregard of duties as described in
Section 17(h) and (i) ("disabling conduct") and sets forth
reasonable and fair means for determining whether
indemnification shall be made. In the staff's view, "reasonable
and fair means" would include (1) a final decision on the merits
by a court or other body before whom the proceeding was brought
that the person to be indemnified ("indemnitee") was not liable
by reason of disabling conduct or, (2) in the absence of such a
decision, a reasonable determination, based upon a review of the
facts, that the indemnitee was not liable by reason of disabling
conduct, by (a) the vote of the majority of a quorum of
directors who are neither an "interested person" of the company
as defined in Section 2(a)(19) of the 1940 Act nor parties to
the proceeding ("disinterested, non-party directors"), or (b) an
independent legal counsel in a written opinion.
The Fund is also aware that the staff continues to believe,
however, that an indemnification provision which requires or
permits indemnification except when the person to be indemnified
has been adjudged by a court to be liable by reason of disabling
conduct violates Section 17(h) or (i), since it would, for
example, protect a person whose conduct constitutes disabling
conduct but who avoids judgment by settlement.
The Fund is aware that the staff further believes that an
indemnification provision does not violate Section 17(h) or (i)
simply because it requires or permits the company to advance
attorneys' fees or other expenses incurred by its directors,
officers, investment adviser, or principal underwriter in
defending a proceeding, upon the undertaking by or on behalf of
the indemnitee to repay the advance unless it is ultimately
determined that he is entitled to indemnification, so long as
the provision also requires at least one of the following as a
condition to the advance: (1) the indemnitee shall provide a
security for his undertaking; (2) the investment company shall
be insured against losses arising by reason of any lawful
advances, or (3) a majority of a quorum of the disinterested,
non-party directors of the investment company, or an independent
legal counsel in a written opinion, shall determine, based on a
review of readily available facts (as opposed to a full
trial-type inquiry), that there is reason to believe that the
indemnitee ultimately will be found entitled to indemnification.
Item 28. Business and Other Connections of Investment Adviser
Charter Capital Management, Inc. -- None
Item 29. Principal Underwriters
None
Item 30. Location of Accounts and Records
Registrant's Articles of Incorporation, By-Laws, Minutes of
Directors' and shareholders' Meetings, contracts and accounting
records are in the physical possession of Charter Capital
Management, Inc., 4920 West Vliet Street, Milwaukee, Wisconsin,
53208. Shareholder records are maintained by the shareholder
service agent, Firstar Trust Company, 777 East Wisconsin Avenue,
Milwaukee, Wisconsin, 53202. Custodian records are also
maintained by Firstar Trust Company.
Item 31. Management Services
All management related service contracts between the Fund and
third parties have been fully disclosed in Parts A and B of this
Registration Statement.
Item 32. Undertaking
Not required.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Investment Company Act of
1940, the Registrant has duly caused this Amended Registration Statement
to be signed on its behalf by the undersigned, thereto duly authorized, in
the City of Milwaukee, and State of Wisconsin on the 25th day of April,
1996.
CHARTERCAPITAL BLUE CHIP
GROWTH FUND, INC.
(Registrant)
By /s/ Lauren E. Toll
President and Treasurer
(Signature and Title)
<PAGE>
EXHIBIT INDEX
Exhibit No. Exhibit Page No.
(1.1) Registrant's Articles of Incorporation, *
as amended
(1.2) Articles of Amendment *
(2) Registrant's By-Laws, as amended *
(3) None
(4) Specimen Stock Certificate *
(5) Investment Adviser and Management *
Agreement, as amended
(6) Not applicable
(7) None
(8) Custodian Agreement *
(9.1) Shareholder Servicing Agreement *
(9.2) Fund Accounting Servicing Agreement *
(9.3) Administration Agreement *
(9.4) Plan of Liquidation
(10) Not applicable
(11) Not applicable
(12) Not applicable
(13) None
(14) Model Plans
(a) Individual Retirement Account
Custodial Agreement, as *
amended
(b) Section 403(b)(7) Retirement *
Plan, as amended
(c) Prototype Defined *
Contribution Retirement Plan,
as amended
(15) None
(16) Schedule for Computation of Performance
Quotations
(17) Financial Data Schedule
(18) None
_______________
* Incorporated by reference.
EXHIBIT 9.4
PLAN OF LIQUIDATION
THIS PLAN OF LIQUIDATION provides for the complete liquidation
and dissolution of CharterCapital Blue Chip Growth Fund, Inc. (the
"Fund"), a Wisconsin business corporation:
1. The Fund shall carry on no business except for the
purpose of winding up its affairs.
2. All of the assets of the Fund shall be sold or
otherwise disposed of at such time and in such manner as the
officers of the Fund shall determine. Charter Capital
Management, Inc. (the "Adviser") may supervise and manage the
sale of the portfolio securities of the Fund.
3. All of the debts, obligations and liabilities of the
Fund shall be paid or otherwise provided for as determined by
the officers of the Fund; provided, however, that all known
obligations of the Fund that have not been paid prior to the
date of the final liquidating distribution as well as any
unknown or contingent liabilities of the Fund shall be assumed
by the Adviser.
4. The proceeds of sale or other disposition of the
assets of the Fund remaining after paying or providing for all
of its debts, obligations and liabilities, together with any
other assets not sold, shall be distributed to the shareholders
of the Fund according to their respective rights at such time
and in such manner as the officers of the Fund shall determine.
5. The liquidation of the Fund shall be completed as soon
as practicable.
EXHIBIT 16
CharterCapital Blue Chip Growth Fund, Inc.
SCHEDULE FOR COMPUTATION OF
PERFORMANCE QUOTATIONS
COMPOUNDED ANNUAL
TOTAL RETURN
A. Formula
n n _____
P(1 + T) = ERV OR T = \ /ERV/P - 1
Where: P = a hypothetical initial payment of $10,000
T = average annual total return
n = number of years
ERV = ending redeemable value of a hypothetical $10,000
payment made at the beginning of the 1, 5 or 10 year
periods at the end of the 1, 5 or 10 year periods (or
fractional portion thereof):
B. Calculation
n
T = \ /ERV/P - 1
1. One-year period 12-31-94 through 12-31-95
1 __________________
22.64% = 1\ /$12,264.13/$10,000 - 1
2. Five-year period 12/31/90 through 12/31/95
1 ______________________
10.33% = 5\ /$16,350.32/$10,000 - 1
3. Ten-year period 12/31/85 through 12/31/95
1 ______________________
7.03% = 10\ /$19,728.66/$10,000 - 1
<TABLE> <S> <C>
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<NAME> CHARTERCAPITAL BLUE CHIP GROWTH FUND, INC.
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JAN-01-1995
<PERIOD-END> DEC-31-1995
<INVESTMENTS-AT-COST> 2,777,097
<INVESTMENTS-AT-VALUE> 3,039,331
<RECEIVABLES> 11,510
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 3,050,841
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<OTHER-ITEMS-LIABILITIES> 48,916
<TOTAL-LIABILITIES> 48,916
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 3,483,504
<SHARES-COMMON-STOCK> 200,764
<SHARES-COMMON-PRIOR> 496,422
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
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<OVERDISTRIBUTION-GAINS> 0
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<DIVIDEND-INCOME> 122,054
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<EXPENSES-NET> 124,513
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<REALIZED-GAINS-CURRENT> 545,666
<APPREC-INCREASE-CURRENT> 413,895
<NET-CHANGE-FROM-OPS> 981,655
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 36,454
<DISTRIBUTIONS-OF-GAINS> 0
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<NUMBER-OF-SHARES-SOLD> 6,427
<NUMBER-OF-SHARES-REDEEMED> 309,482
<SHARES-REINVESTED> 7,397
<NET-CHANGE-IN-ASSETS> (3,109,863)
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<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 124,513
<AVERAGE-NET-ASSETS> 4,531,611
<PER-SHARE-NAV-BEGIN> 12.31
<PER-SHARE-NII> 0.11
<PER-SHARE-GAIN-APPREC> 2.67
<PER-SHARE-DIVIDEND> (0.14)
<PER-SHARE-DISTRIBUTIONS> 0
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<AVG-DEBT-PER-SHARE> 0
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