As filed with the Securities and Exchange Commission on October 29, 1999
Registration Nos. 33-37426 and 811-6194
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 [X]
Post-Effective Amendment No. 15 [X]
Post-Effective Amendment No. 1 [X]
and/or
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940
Post-Effective Amendment No. 16 [X]
Post-Effective Amendment No. 1 [X}
(Check appropriate box or boxes)
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THE CHACONIA INCOME & GROWTH FUND, INC.
(Exact Name of Registrant as Specified in Charter)
c/o American Data Services, Inc.
The Hauppauge Corporate Center, 150 Motor Parkway, Suite 109,
Hauppauge, New York 11788
(Address of Principal Executive Offices) (Zip Code)
Registrant's Telephone Number, including Area Code:
516-951-0500 or 1-800-368-3322
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The Corporation Trust Company
32 South Street
Baltimore, MD 21202
(Name and Address of Agent for Service)
Copies to:
Ulice Payne, Jr., Esq.
Foley & Lardner
777 East Wisconsin Avenue, Suite 3700, Milwaukee, WI 53202
414-297-5655
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Approximate Date of Proposed Public Offering: As soon as practicable after the
effective date of the registration statement.
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It is proposed that this filing will become effective on October 29, 1999
pursuant to paragraph (b) of Rule 485.
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Registrant will file a Rule 24(f)-2 Notice within 90 days of the fiscal year
ended December 31.
<PAGE>
THE CHACONIA INCOME & GROWTH FUND, INC.
Prospectus October 29, 1999
TABLE OF CONTENTS
Page
----
Cross-Reference Sheet
Cover Sheet
Summary of Fund Expenses 2
Financial Highlights 3
Prospectus Summary 4
Investment Objective and Policies 5
Basic Investment Techniques 7
Certain Investment Strategies and Special Risk Considerations 10
Investment Restrictions 11
Management of the Funds 11
How to Purchase Shares 13
Distribution Plan and Service Fees 15
How to Redeem Shares 15
Retirement Plans 16
Dividends, Distributions and Taxes 17
General Information 18
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No dealer, salesman or other person has been authorized to give any information
or to make any representation other than those contained in this Prospectus, and
if given or made, such information or representation may not be relied upon as
being authorized by the Fund, the Advisor, certain registered broker-dealers
("selected broker-dealers") or any affiliate thereof. This Prospectus does not
constitute an offer to sell or a solicitation of any offer to buy in any state
to any person to whom it is unlawful to make such offer in such state.
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<PAGE>
THE CHACONIA INCOME & GROWTH FUND, INC.
Cross-Reference Sheet
(as required by Rule 495)
Form N-1A Item
Part A
------ Prospectus Caption
------------------
1 Cover Page Cover Page
2 Synopsis Summary of Fund Expenses;
Prospectus Summary
3 Condensed Financial Information Financial Highlights
4 General Description of Registrant Investment Objective and
Policies;
The Fund and Its Management;
Cover Page; Investment
Restrictions; Prospectus Summary
5 Management of the Fund Management; Back Cover;
Investment Objective and
Policies
5A Management's Discussion of Fund Included in Annual Report to
Performance Shareholders
6 Capital Stock and Other Securities Dividends, Distributions and
Taxes; General Information
7 Purchase of Securities Being Offered How to Purchase Shares
8 Redemption or Repurchase How to Redeem Shares
9 Pending Legal Proceedings Legal Proceedings
Part B
------
Statement of Additional Information Caption
-------------------------------------------
10 Cover Page Cover Page
11 Table of Contents Cover Page
12 General Information and History Management
13 Investment Objectives and Policies Investment Objectives and
Policies; Investment
Restrictions;
Portfolio Transactions and
Brokerage
14 Management of the Fund Management
15 Control Persons and Principal Directors and Officers
Holders
of Securities
16 Investment Advisory and Other Management
Services
17 Brokerage Allocation and Other Portfolio Transactions and
Practices Brokerage
18 Capital Stock and Other Securities Prospectus-General Information
19 Purchase, Redemption and Pricing of How to Purchase Shares; How to
Securities Being Offered Redeem Shares
20 Tax Status Dividends, Distributions and
Taxes
21 Underwriters Not applicable
22 Calculation of Performance Data Not applicable
23 Financial Statements Financial Statements
Part C
Information required to be included in Part C is set forth under the
appropriate item, so numbered, in Part C of this Registration Statement.
-ii-
<PAGE>
DATED OCTOBER 29, 1999
THE CHACONIA INCOME & GROWTH FUND, INC.
c/o American Data Services, Inc.
The Hauppauge Corporate Center
150 Motor Parkway
Suite 109
Hauppauge, NY 11788
1-800-368-3322
The Chaconia Income & Growth Fund, Inc. (the "Corporation") is an
open-end, nondiversified management investment company consisting of two
separate portfolios, the Chaconia Income & Growth Fund (the "Chaconia I&G Fund")
and the Chaconia ACS Fund (the "Chaconia ACS Fund") (collectively, the "Funds").
Chaconia I&G Fund.
- -----------------
The investment objective of the Chaconia I&G Fund is to produce
current income and capital appreciation. The Chaconia I&G Fund seeks to achieve
its objective by investing principally in: U.S. Government securities including
U.S. Treasury obligations and obligations issued or guaranteed by U.S.
Government agencies or instrumentalities, investment grade corporate bonds,
investment grade foreign government bonds, equity securities of U.S., Canadian,
British and Trinidad and Tobago companies, the First and Second Unit Schemes
(the "Schemes") of the Trinidad and Tobago Unit Trust Corporation, certificates
of deposit and money market funds.
Chaconia ACS Fund
- -----------------
The Chaconia ACS Fund seeks long-term capital appreciation by
investing primarily in a diversified portfolio of equity and debt securities of
non U.S. issuers domiciled and/or operating in the member, associate member and
observer status countries of the Association of Caribbean States (the "ACS").
The Chaconia ACS Fund is not designed for investors whose primary investment
objective is income.
General
- -------
The minimum initial investment in each Fund is $250. Subsequent
investments will be a minimum of $100, and stockholders have the option of
making subsequent purchases through a continuing automatic transfer plan at a
minimum investment of $50. (See "How to Purchase Shares"). For further
information, contact each Fund at the address or telephone number shown above.
There can be no assurance that each Fund's investment objectives will be
achieved.
INVESCO CAPITAL MGMT. INC. (the "I&G Fund Manager") is the investment
advisor for the Chaconia I&G Fund. Chaconia Fund Services, Inc. (the "ACS Fund
Manager") is the investment advisor for the Chaconia ACS Fund. The ACS Fund
Manager and the I&G Fund Manager are collectively referred to herein as the
"Managers") is the investment advisor for the Chaconia ACS Fund. The ACS Fund
Manager is a wholly owned subsidiary of the Trinidad and Tobago Unit Trust
Corporation. The Managers receive management fees from the Funds and may be
reimbursed by the Funds for certain distribution expenses in connection with a
Rule 12b-1 distribution plan. The Managers makes the investment decisions for
the Funds.
This prospectus concisely sets forth information a prospective
investor should know about the Funds before investing. A Statement of Additional
Information about the Funds and a Semi-Annual Report to Shareholders of the
Chaconia I&G Fund has been filed with the Securities and Exchange Commission and
is available upon request and without charge by calling or writing the Funds at
the above address or by contacting certain registered broker-dealers ("selected
broker-dealers"). The "Statement of Additional Information" is dated October 29,
1999 and is incorporated by reference into this Prospectus in its entirety.
Investors are advised to read this Prospectus and retain it for future
reference.
The Securities and Exchange Commission has not approved or disapproved
these securities or passed upon the adequacy of this prospectus. Any
representation to the contrary is a criminal offense.
<PAGE>
<TABLE>
SUMMARY OF FUND EXPENSES
<CAPTION>
Shareholder Transaction Expenses: I&G ACS
Fund Fund
---- ----
<S> <C> <C>
Maximum Sales Load Imposed on Purchases (as a percentage of offering price) None 4.00%
Maximum Sales Load Imposed on Reinvested Dividends (as a percentage of None None
offering price)
Deferred Sales Load (as a percentage of original purchase price or redemption None None
proceeds, as applicable)
Redemption Fees (as a percentage of amount redeemed) None None*
Exchange Fee None None*
Annual Fund Operating Expenses (as a percentage of average net assets):
Management Fees (variable-- as a percentage of average daily net assets) 0.57%(1) 0.57%(1)
12b-1 Fees 0.50% 0.50%
Service Fees 0.25%(2) 0.25%(2)
Other Expenses 0.67% 0.83%
Total Fund Operating Expenses(1)(2) 1.99% 2.15%
*An investor's broker may charge a fee for wire redemptions and/or exchanges.
(1)The management fees will vary depending on each Fund's average daily net assets and will be the greater of
$50,000 or 0.75% of 1% on the first $10 million, 0.50% of 1% on the next $10 million and 0.25% of 1% over $20 million of
each Fund's average daily net assets. Total operating expenses will vary depending upon each Fund's management fee.
(2)The service fees are payments made by each Fund to registered broker-dealers for personal service and/or
the maintenance of shareholder accounts. As of December 31, 1998, no service fee payments had been earned or paid to
date, but service fees could be paid in the future by the Funds up to 0.25% of 1% of each Fund's net assets. The total
Chaconia I&G Fund Operating Expense ratio was 1.99% as of December 31, 1998. The total operating expenses for the
Chaconia ACS Fund are estimates. It is anticipated that the Chaconia ACS Fund will not commence operations until
December, 1999.
</TABLE>
Example 1 year 3 years 5 years 10 years
------- ------ ------- ------- --------
You would pay the following expenses on a $10,000
investment, assuming (i) 5% annual return and
(ii) redemption at the end of each time period:
I&G Fund..................................... $218 $673 $1,154 $2,483
ACS Fund..................................... N/A N/A N/A N/A
The purpose of this table is to assist the investor in understanding
the various costs and expenses of an investment in the Funds. The example should
not be considered a representation of past or future expenses; actual expenses
may be greater or less than those shown. Total Fund Operating Expenses and Other
Expenses for the Chaconia I&G Fund are based on the actual expenses for the year
ended December 31, 1998. The Total Fund Operating Expenses and Other Expenses
for the Chaconia ACS Fund are based on estimated amounts set forth above. The
example assumes a 5% annual rate of return pursuant to requirements of the
Securities and Exchange Commission. This hypothetical rate of return is not
intended to be representative of past or future performance of any of the Funds.
-2-
<PAGE>
FINANCIAL HIGHLIGHTS
The following Financial Highlights for a share of beneficial interest
outstanding throughout the period shown has been audited by
PricewaterhouseCoopers LLP, independent accountants, whose most recent report on
the financial statements appears in the Chaconia I&G Fund's Annual report to
shareholders, as filed with the Securities and Exchange Commission (the
"Commission") on March 5, 1999. It is anticipated that the Chaconia ACS Fund
will not commence operations until December, 1999. This table should be read in
conjunction with the financial statements and notes thereto which are contained
in such annual and semiannual reports.
Chaconia I&G Fund
- -----------------
<TABLE>
<CAPTION>
For the year ended December 31,
FOR THE SIX
MONTHS
ENDED
JUNE 30, 1999
UNAUDITED 1998 1997 1996 1995 1994
------------- ---------- ---------- ---------- ---------- ----------
Per share operating performance:
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period $ 12.47 $ 11.47 $ 10.44 $ 12.13 $ 9.94 $ 10.20
Income from investment operations:
Net investment income 0.06 0.11 0.08 0.13 0.24 0.13
Net realized and unrealized gain (loss) on
investments 0.28 1.71 2.00 0.55 2.47 (0.13)
---------- --------- --------- --------- --------- ---------
Total from investment operations 0.34 1.82 2.08 0.68 2.71 0.00
Less distributions:
Dividend from net investment income 0.00 (0.11) (0.09) (0.17) (0.23) (0.13)
Distribution in excess of net investment
income 0.00 0.00 0.00 (0.01) 0.00(1) 0.00(1)
Distribution from realized gains 0.00 (0.71) (0.96) (2.15) (0.28) (0.13)
Distribution in excess of net realized
gains on investments 0.00 0.00 0.00 (0.04) 0.00 (0.00)
---------- --------- --------- --------- --------- ---------
Total distributions 0.00 (0.82) (1.05) (2.37) (0.51) (0.26)
---------- --------- --------- --------- --------- ---------
Net asset value, end of period $ 12.81 $ 12.47 $ 11.47 $ 10.44 $ 12.13 $ 9.94
========== ========= ========= ========= ========= =========
Total return 2.73% 15.87% 19.98% 5.61% 27.16% 0%
Ratios/supplemental data:
Net assets, end of period (in thousands) $ 61,140 $ 43,762 $ 18,500 $ 10,132 $ 17,809 $ 12,315
Ratios to average net assets:
Expenses 1.75%(2) 1.99% 2.55% 2.84% 2.37% 2.87%
Net investment income 0.99%(2) 1.21% 0.98% 1.03% 2.09% 1.25%
Portfolio turnover rate 39.43% 41.23% 35.04% 72.91% 26.23% 40.13%
- -----------------------
(1) Less than $0.01 per share.
(2) Annualized.
</TABLE>
-3-
<PAGE>
PROSPECTUS SUMMARY
The following summary is qualified in its entirety by the more
detailed information appearing elsewhere in this Prospectus:
The Corporation: The Corporation is a Maryland corporation,
incorporated on October 24, 1990, and registered as a open-ended,
nondiversified, management investment company under the Investment Company Act
of 1940 ("1940 Act"). The Corporation consists of two funds: the Chaconia I&G
Fund and the Chaconia ACS Fund.
Investment Objective: The Chaconia I&G Fund's investment objective is
to seek high current income and capital appreciation. It seeks to meet its
objective by investing its assets in: U.S. Government securities including U.S.
Treasury obligations and obligations issued or guaranteed by U.S. Government
agencies or instrumentalities, investment grade corporate bonds, investment
grade foreign government bonds, equity securities of U.S., Canadian, British and
Trinidad and Tobago companies, American Depository Receipts ("ADRs"), the
Schemes of the Trinidad and Tobago Unit Trust Corporation, certificates of
deposit and money market funds. Under normal market conditions, the Chaconia I&G
Fund will maintain a level of at least 25% of its total assets invested in debt
securities and at least 25% of its total assets invested in equity securities.
For purposes of this investment policy, equity securities are defined as: common
stocks, preferred stocks, warrants, stock rights, convertible bonds and
convertible debentures.
The Chaconia ACS Fund's investment objective is to seek long-term
capital appreciation by investing primarily in a diversified portfolio of equity
and debt securities of non U.S. issuers domiciled and/or operating in the
member, associate member and observer status countries of the ACS. Under normal
circumstances the Chaconia ACS Fund intends to invest at least 65% of its total
assets in foreign debt securities, stocks and equity-related securities,
including preferred stocks, warrants, convertible securities and other similar
rights. The Chaconia ACS Fund may purchase securities of foreign issuers
directly or in the form of American Depository Receipts (ADRs), European
Depository Receipts (EDRs), Global Depository Receipts (GDRs) or other
securities representing shares of non-U.S. issuers domiciled or operating in the
ACS.
There is no assurance that the Funds will achieve their investment
objective. The investment objective of the Funds and their investment
restrictions described in the Statement of Additional Information are
fundamental and may not be changed without stockholder approval. Their other
investment policies may be changed by the Board of Directors without stockholder
approval.
Investment Risks: All investments, including mutual funds, have risks
and no investment is suitable for all investors. The Chaconia I&G Fund may
invest in both large and small companies. Investment in small companies involve
greater risk than is customarily associated with more established companies. The
Chaconia I&G Fund may invest in short, medium or long term interest bearing
obligations which have the risk of principal fluctuation due to changing
interest rates and the ability of the issuer to repay the obligation at
maturity. The Chaconia I&G Fund may invest in securities of companies and
governments of foreign nations that involve certain risks which are in addition
to the usual risks inherent in U.S. investments.
In addition to the risks of investing in stock of different-sized
companies, investors in the Chaconia ACS Fund face particular risks associated
with foreign investing. Foreign investment risks include currency, liquidity,
political, economic and market risks, as well as risks associated with
governmental regulation and nonuniform corporate disclosure standards. The
Chaconia ACS Fund may invest from 0% to 25% of its net assets in securities
traded in emerging markets, which may entail more risk than investing in
securities traded in mature markets. The greater the percentage of net assets
the Chaconia ACS Fund invests in emerging countries, the greater the investment
risks.
Management and Fees: The Investment Manager is compensated for its
services and its related expenses at an annual rate of the greater of $50,000 or
0.75 of 1% on first $10 million, 0.50 of 1% on next $10 million and 0.25% of 1%
over $20 million of the Chaconia I&G Fund or the Chaconia ACS Fund's average
daily net assets. The Investment Manager may receive 12b-1 fees as reimbursement
for certain distribution expenses related to the Chaconia I&G Fund or the
Chaconia ACS Fund.
How to Purchase Shares: Shares of the Funds may be purchased through
selected broker-dealers and from American Data Services, Inc., Transfer Agent
for the Funds ("Transfer Agent"), at the public offering price per share next
-4-
<PAGE>
determined after receipt of an order by either a registered broker-dealer or the
Transfer Agent, in proper form with accompanying check or other bank wire
payment arrangements satisfactory to the Funds. The minimum initial investment
is $250. Subsequent investments will be a minimum of $100. Stockholders may opt
to make subsequent investments through the continuing automatic transfer plan.
See "How to Purchase Shares." Investments through an Individual Retirement
Account or other retirement plans, however, have different requirements. See
"Retirement Plans."
How to Sell Shares: Shares of the Funds may be redeemed through
selected broker-dealers and the Transfer Agent by the stockholder at any time at
the net asset value per share next determined after the redemption request is
received by either a registered broker-dealer or the Transfer Agent in proper
form. See "How to Redeem Shares."
Dividends and Reinvestment: Each dividend and capital gains
distribution, if any, declared by the Funds on their outstanding shares will,
unless a stockholder elects otherwise, be paid on the payment date in additional
shares of the Funds having an aggregate net asset value as of the ex-dividend
date of such dividend or distribution equal to the cash amount of such
distribution. An election may be changed by notifying the Funds in writing at
any time prior to the record date for a particular dividend or distribution.
There are no sales or other charges in connection with the reinvestment of
dividends and capital gains distributions. There is no fixed dividend rate, and
there can be no assurance that the Funds will pay any dividends or realize any
capital gains. However, the Funds currently intend to pay dividends and capital
gains distributions, if any, on an annual basis. See "Dividends, Distributions
and Taxes."
INVESTMENT OBJECTIVE AND POLICIES
- ---------------------------------
Chaconia I&G Fund
- -----------------
The investment objective of the Chaconia I&G Fund is to seek high
current income and capital appreciation. It seeks to meet its objective by
investing the Chaconia I&G Fund's assets in: U.S. Government securities
including U.S. Treasury obligations and obligations issued or guaranteed by U.S.
Government agencies or instrumentalities, investment grade corporate bonds,
investment grade foreign government bonds, equity securities of U.S., Canadian,
British and Trinidad and Tobago companies, ADRs, the Schemes of the Trinidad and
Tobago Unit Trust Corporation, certificates of deposit and money market funds.
There can be no assurance that the Chaconia I&G Fund will be able to achieve its
objective.
The Chaconia I&G Fund intends to invest in the Schemes of the Trinidad
and Tobago Unit Trust Corporation only if the Chaconia I&G Fund determines that
there are no adverse restrictions to realizing an investment in the Schemes of
the Trinidad and Tobago Unit Trust Corporation.
The Chaconia I&G Fund's investment policy will emphasize debt
instruments to achieve the Chaconia I&G Fund's current income objective. Under
normal market conditions, the Chaconia I&G Fund will maintain a level of at
least 25% of its total assets invested in debt securities and at least 25% of
its total assets invested in equity securities. The investment in equity
securities versus debt securities will depend upon the I&G Fund Manager's
evaluation of the relative merits and risks of equity securities versus bonds.
The attractiveness of nongovernment instruments will be judged based
upon their potential return enhancement and creditworthiness. Potential return
is determined by observing the existing yield spread differential within a
historical context and purchasing such instruments only when the differential is
at levels which are above a long-term mean. Within the investment credit
spectrum, to ensure protection of principal, additional credit analysis will be
undertaken in employing the I&G Fund Manager's proprietary analytical techniques
and data bases to further reduce the risk.
In determining the maturity of the debt securities the Chaconia I&G
Fund invests in, the I&G Fund Manager will focus on whether the level of real
yield, after taking into account inflation, is adequate to compensate for the
greater volatility and risks associated with debt securities having a greater
maturity. Generally, the longer the maturity of a debt security, the greater its
price volatility. Conversely, the shorter the maturity, the lower its price
volatility. During a typical credit cycle, the average duration implied by this
discipline will likely average 5 years within a range normally of 2.5 to 8
years. Debt securities are defined as: U.S. and foreign nonconvertible company
bonds, U.S. and foreign government securities and commercial paper.
-5-
<PAGE>
In determining what equity securities the Chaconia I&G Fund will
invest in, the I&G Fund Manager will focus on the actual earnings, return on
equity and dividend history of the company. The I&G Fund Manager will seek to
invest in equity securities of companies whose shares are undervalued based on
the current price relative to the long-term record of the company. For purposes
of this investment policy, equity securities are defined as: U.S. and foreign
common stocks, ADRs, warrants, convertible bonds, convertible debentures,
preferred stock and stock rights. No more than 5% of the Chaconia I&G Fund's net
assets may be used to purchase warrants or stock rights. For purposes of this
investment policy, a warrant is defined as a certificate giving the holder the
right to purchase securities at a stipulated price within a specified time limit
or perpetually. Sometimes a warrant is offered with securities as an inducement
to buy. The prices of warrants do not necessarily correlate with the prices of
the underlying securities. The Chaconia I&G Fund may not purchase options on
equity securities.
The Chaconia I&G Fund intends to invest in a variety of securities,
with differing issuers, maturities and interest rates. If the I&G Fund Manager
believes that stocks in general are overvalued, or that interest rates may rise
substantially, or that the general economic environment may be deteriorating,
the I&G Fund Manager may assume a temporary defensive position and may invest up
to 100% of the Chaconia I&G Fund's assets in high quality commercial paper and
short-term U.S. Government securities such as Treasury Bills and Treasury Notes.
The Chaconia I&G Fund intends to operate as a "regulated investment company"
under Subchapter M of the Internal Revenue Code. See "Dividends, Distributions
and Taxes." The average U.S. dollar weighted duration of the Chaconia I&G Fund's
portfolio is not expected to exceed ten years.
The Chaconia I&G Fund does not expect to trade in securities for
short-term gain. It is anticipated that the annual portfolio turnover rate will
not exceed 100%. The portfolio turnover rate is calculated by dividing the
lesser of sales or purchases of portfolio securities by the average monthly
value of the Chaconia I&G Fund's portfolio securities. For purposes of this
calculation, portfolio securities exclude debt securities having a maturity at
the date of purchase of one year or less.
Subject to its investment policy of normally investing at least 25% of
its total assets in U.S. Government securities, investment grade corporate bonds
and investment grade foreign government bonds, the Chaconia I&G Fund is
permitted to invest in (1) U.S. dollar denominated debt securities, similar in
nature to those described above, regardless of the domicile of the issuers and
(2) income producing equity securities of companies domiciled in the United
States (some of which may be denominated other than in U.S. dollars). Some of
these securities are issued in the Eurodollar market by multinational banks and
companies which may have operations in Trinidad and Tobago.
Chaconia ACS Fund
- -----------------
The Chaconia ACS Fund's investment objective is to seek long-term
capital appreciation by investing primarily in a diversified portfolio of equity
and debt securities of non U.S. issuers domiciled and/or operating in the
member, associate member and observer status countries of the ACS. Under normal
circumstances the Chaconia ACS Fund intends to invest at least 65% of its total
assets in foreign debt securities, common stocks and equity-related securities,
including preferred stocks, warrants, convertible securities and other similar
rights. The Chaconia ACS Fund may purchase securities of foreign issuers
directly or in the form of American Depository Receipts (ADRs), European
Depository Receipts (EDRs), Global Depository Receipts (GDRs) or other
securities representing shares of non-U.S. issuers domiciled or operating in the
ACS.
The ACS facilitates consultation, co-operation and concerted action
among its Member States and Associate Members. It also aims to promote the
implementation of policies and programmes designed to: promote an enhanced
economic space for trade and investment with opportunities for co-operation and
concerted action, in order to increase the benefit which accrue to the peoples
of the Caribbean from their resources and assets, including the Caribbean Sea.
The ACS, which is headquartered in Port of Spain, Trinidad and Tobago, promotes
economic integration, including the liberalization of trade, investment,
transportation and other related areas among its members.
The Member States of the ACS are Antigua and Barbuda, The Bahamas,
Barbados, Belize, Colombia, Costa Rica, Cuba, Dominica, the Dominican Republic,
El Salvador, Grenada, Guatemala, Guyana, Haiti, Honduras, Jamaica, Mexico,
Nicaragua, Panama, St. Kitts and Nevis, St. Lucia, St. Vincent and the
Grenadines, Suriname, Trinidad and Tobago and Venezuela. Currently, France (in
respect of French Guiana, Guadeloupe and Martinique) is an Associate Member of
the ACS. During the Third Ordinary Meeting of the Ministerial Council in
Cartagena de Indias, Colombia in November 1997, the Netherlands Antilles signed
the Convention Establishing the ACS, to be admitted as an Associate Member.
Following ratification, an appropriate Co-operation Agreement will be
negotiated.
-6-
<PAGE>
The states, countries and territories eligible for Associate
Membership in the ACS are Aruba, Anguilla, Bermuda, the British Virgin Islands,
the Cayman Islands, Montserrat, Puerto Rico, Turks and Caicos Islands, and the
United States Virgin Islands. In addition, the following have been admitted as
Observers in the ACS: Argentina, Brazil, Canada, Chile, Ecuador, Egypt, India,
Italy, the Kingdom of the Netherlands (in respect of the Netherlands and Aruba),
Morocco, Peru, the Russian Federation and Spain.
The Chaconia ACS Fund intends to diversify its holdings among several
countries and to have, under normal market conditions, investments in the
securities markets of at least 5 countries outside the U.S. The Chaconia ACS
Fund does not have any limitations on the percentage of it assets that may be
invested in securities primarily traded in any one country. The Chaconia ACS
Fund may invest in securities traded in mature markets, such as Japan, Canada
and the United Kingdom; less developed markets and in emerging markets.
General
- -------
The Funds may not borrow money except for (1) short-term credits from
banks as may be necessary for the clearance of portfolio transactions, and (2)
borrowings from banks for temporary or emergency purposes, including the meeting
of redemption requests, which would otherwise require the untimely disposition
of its portfolio securities. Borrowing for any purpose including redemptions may
not, in the aggregate, exceed 5% of total assets after giving effect to the
borrowing and borrowing for purposes other than meeting redemptions may not
exceed 5% of the value of each Fund's total assets after giving effect to the
borrowing. The Managers will not purchase securities when borrowings exceed 5%
of total assets. The Funds may mortgage, pledge or hypothecate assets to secure
such borrowings.
BASIC INVESTMENT TECHNIQUES
- ---------------------------
Securities Subject to Reorganization
- ------------------------------------
The Funds may invest in both debt and equity securities for which a
tender or exchange offer has been made or announced and in securities of
companies for which a merger, consolidation, liquidation or reorganization
proposal has been announced if, in the judgment of the Managers, there is a
reasonable prospect of capital appreciation significantly greater than the
brokerage and other transaction expenses involved.
Illiquid and Restricted Securities
- ----------------------------------
The Funds may not invest more than 15% of their net assets in (1)
securities which are restricted or for which market quotations are not readily
available; (2) fixed time deposits subject to withdrawal penalties (other than
overnight deposits); (3) repurchase agreements having a maturity of more than
seven days; and (4) other illiquid securities. The Funds will also treat
non-U.S. Government interest-only or principal-only securities as illiquid
securities so long as the staff of the SEC maintains its position that such
securities are illiquid.
Illiquid securities are securities a Fund believes cannot be sold
within seven days in the normal course of business at approximately the amount
at which a Fund has valued or priced the securities and include securities a
Fund may have acquired in private placements that have restrictions on their
resale ("restricted securities"). The Funds deem time deposits and repurchase
agreements maturing in more than seven days illiquid. Because an active market
may not exist for illiquid securities, the Funds may experience delays and
additional costs when trying to sell illiquid securities. The Board of Directors
will establish procedures for determining the liquidity of securities and
delegate the day-to-day liquidity determinations to the Adviser.
Subject to the limitations for illiquid investments stated above, each
Fund may purchase liquid restricted securities eligible for resale under Rule
144A under the Securities Act of 1933 (the "Act"), without regard to the 15%
limitation. Rule 144A permits certain qualified institutional buyers to trade in
privately placed securities not registered under the Act. Institutional markets
for restricted securities have developed as a result of Rule 144A, providing
both readily ascertainable market values for 144A securities and the ability to
liquidate these investments to satisfy redemption orders. However, an
insufficient number of qualified institutional buyers interested in purchasing
certain Rule 144A securities held by a Fund could adversely affect their
marketability, causing a Fund to sell the securities at unfavorable prices.
-7-
<PAGE>
Nonconvertible Debt Securities
- ------------------------------
Under normal market conditions, the Chaconia I&G Fund will invest at
least 25% of its assets in nonconvertible debt securities. For purposes of this
investment policy, nonconvertible debt securities are defined as: (1) Rated
corporate bonds, as well as variable amount master demand notes; (2) Government
securities which include securities of, or guaranteed by, the U.S. Government,
its agencies or instrumentalities; (3) Commercial paper which include commercial
paper of companies rated A-1 or A-2 by Standard & Poor's Corporation ("S&P") or
rated P-1 or P-2 by Moody's Investors Service, Inc. ("Moody's"). Fixed income
securities rated, at the time of investment, less than BBB by S&P or Baa by
Moody's or which are unrated but of comparable quality as determined by the
Investment Manager, are not investment grade. These securities are viewed by the
rating agencies as being predominantly speculative in nature. They may be
characterized by substantial risk concerning payments of interest and principal,
sensitivity to economic conditions and changes in interest rates, as well as by
market price volatility and/or relative lack of secondary market trading, among
other risks. The Chaconia I&G Fund will not invest any of its assets in
noninvestment grade debt securities. The market values of fixed income
securities generally fall when interest rates rise and, conversely, rise when
interest rates fall.
U.S. Government Securities
- --------------------------
The U.S. Government Securities in which the Funds may invest include
direct obligations of the U.S. Treasury, such as Treasury bills, notes and
bonds, and obligations issued or guaranteed by U.S. Government agencies and
instrumentalities, including securities that are supported by the full faith and
credit of the United States, such as Government National Mortgage Association
("GNMA") certificates, securities that are supported by the right of the issuer
to borrow from the U.S. Treasury, such as securities of the Federal Home Loan
Banks, and securities supported solely by the creditworthiness of the issuer,
such as Federal National Mortgage Association ("FNMA") and Federal Home Loan
Mortgage Corporation ("FHLMC") securities. The Funds may invest in
mortgage-backed securities issued or guaranteed by GNMA, FNMA or FHLMC and
representing undivided ownership interests in pools of mortgages. The mortgages
backing these securities include, among others, conventional 30-year fixed-rate
mortgages, 15-year fixed-rate mortgages, graduated payment mortgages and
adjustable rate mortgages. The U.S. Government or the issuing agency guarantees
the payment of the interest on and principal of these securities. The guarantees
do not extend to the securities' yield or value, however, which are likely to
vary inversely with fluctuations in interest rates, and, the guarantees do not
extend to the yield or value of the Funds' shares.
The Schemes of the Trinidad and Tobago Unit Trust Corporation
- -------------------------------------------------------------
The Unit Trust Corporation was created by the Unit Trust Corporation
of Trinidad and Tobago Act, 1981 (Republic of Trinidad and Tobago Act No. 26 of
1981). The Unit Trust Corporation's main office is located in the City of
Port-of-Spain, Trinidad. The affairs of the Unit Trust Corporation are managed
by a board of directors.
The Schemes of the Trinidad and Tobago Unit Trust Corporation are
investment companies as defined under the 1940 Act and their respective
investments are at all times identified separate from the investments of the
Unit Trust Corporation itself. Accounts of each of the Schemes of the Trinidad
and Tobago Unit Trust Corporation are prepared separately from those of the Unit
Trust Corporation. When an investor purchases units from the Unit Trust
Corporation, he is purchasing units issued from the Schemes of the Trinidad and
Tobago Unit Trust Corporation. The transaction is administered by the Unit Trust
Corporation on behalf of the Schemes of the Trinidad and Tobago Unit Trust
Corporation.
The assets of the Schemes of the Trinidad and Tobago Unit Trust
Corporation are predominantly invested in equity securities of Trinidad and
Tobago corporations, and in fixed income securities of those corporations, as
well as in Trinidad and Tobago government securities. As of September 30, 1999,
the Schemes of the Trinidad and Tobago Unit Trust Corporation had an aggregate
of approximately $488,000,000 (U.S. dollars) under management and approximately
263,000 unitholders.
The financial records of the Unit Trust Corporation are examined and
audited by the Auditor General of Trinidad and Tobago. The financial statements
and records of the Unit Trust Corporation are prepared in accordance with the
Trinidad and Tobago Accounting Standards and are reported in Trinidad and Tobago
dollars.
The 1940 Act limits the extent to which the Funds may purchase equity
securities of the Schemes of the Trinidad and Tobago Unit Trust Corporation or
any other investment companies. No more than 10% of each Fund's total assets may
be used
-8-
<PAGE>
to purchase any securities of investment companies. The Funds will not purchase
more than 3% of the total outstanding voting stock of an investment company nor
purchase securities of an investment company having an aggregate value in excess
of 5% of the value of the total assets of the investment company. The Funds will
pay an investment management fee when it invests in the Schemes of the Trinidad
and Tobago Unit Trust Corporation.
As of September 30, 1999, the Unit Trust Corporation beneficially
owned 2.69% of the outstanding voting stock of the Chaconia I&G Fund.
Temporary Defensive Purposes
- ----------------------------
Each of the Funds may adopt a temporary defensive position policy that
allows it to invest up to 100% of its total assets in cash and money market
obligations, including money market mutual funds, short-term investment-grade
fixed-income securities, bankers' acceptances, commercial paper, commercial
paper master notes and repurchase agreements when significant adverse market,
economic, political or other circumstances require immediate action to avoid
losses.
During adverse market conditions, up to 100% of the Chaconia ACS
Fund's total assets may be invested in U.S. securities or in securities
primarily traded in one or more foreign countries, or in debt securities. To the
extent the Chaconia ACS Fund is invested in temporary defensive instruments, it
will not be pursuing its stated investment objective.
Portfolio Turnover
- ------------------
Although the Funds do not purchase securities with the intent of
turning them over rapidly, the Adviser, in pursuit of each Fund's investment
objective, will continuously monitor each Fund's investments and make changes
whenever changes in the markets, industry trends or the outlook for any
portfolio security indicates to them that the objective could be better achieved
by investment in another security, regardless of portfolio turnover. Each Fund's
turnover may increase as a result of large amounts of purchases and redemptions
of shares of a Fund due to economic, market or other factors that are not within
the control of the each Fund's management.
Each Fund's turnover will tend to rise during periods of economic
turbulence and decline during periods of stable growth. A higher turnover rate
(100% or more) increases transaction costs (e.g., brokerage commissions,
portfolio trading costs), which are paid by the Funds, and increases realized
gains and losses. Distributions to shareholders of realized gains, to the extent
they consist of net short-term capital gains, will be considered ordinary income
for federal tax purposes. It is expected that under normal market conditions,
the annual portfolio turnover rate for each of the Funds will not exceed 100%.
Warrants
- --------
Each of the Funds may purchase warrants and similar rights, which are
privileges issued by corporations enabling the owners to subscribe to and
purchase a specified number of shares of the corporation at a specified price
during a specified period of time. The purchase of warrants involves the risk
that a Fund could lose the purchase value of a warrant if the right to subscribe
to additional shares if not exercised prior to the warrant's expiration. Also,
the purchase of warrants involves the risk that the effective price paid for the
warrant added to the subscription price of the related security may exceed the
value of the subscribed security's market price such as when there is no
movement in the level of the underlying security. No more than 5% of each equity
Fund's net assets valued at the time of investment, will be invested in
warrants.
CERTAIN INVESTMENT STRATEGIES AND SPECIAL RISK CONSIDERATIONS
- -------------------------------------------------------------
General
- -------
All investments, including those in mutual funds, have risks. No
investment is suitable for all investors. The Funds are designed for long term
investors who can accept the fluctuations in portfolio value and other risks
associated with the primary objective of seeking current income and capital
appreciation through investment in securities. There can be no assurance that
the Funds will achieve their objective.
-9-
<PAGE>
The Funds will not make significant investments in securities of any
one issuer to reduce risk. Although risk cannot be eliminated, this strategy
reduces the impact of any single investment. The Funds may invest in both large
and small companies. Investments in small companies involve greater risk than is
customarily associated with more established companies. Smaller companies often
have limited product lines, markets, management personnel, research and/or
financial resources. The securities of small companies, which may be thinly
capitalized, may have more limited marketability and be subject to more abrupt
or erratic market movements than securities of larger companies or the market
averages in general.
Any investment by the Funds in short, medium or long term interest
bearing obligations has the risk of principal fluctuation due to changing
interest rates and the ability of the issuer to repay the obligation at
maturity. Fixed income instrument prices are inversely related to interest rate
movements, but proportional to the maturity of the instruments. That is,
long-term instrument prices rise or fall more than short-term instruments for a
given change in interest rates. Certain risk factors are also associated with
other investment practices of the Funds (none of which is expected to involve
more than 25% of each Fund's net assets), including investing in debt securities
and investing in foreign securities. Although the Funds do not purchase
securities with a view of rapid turnover, there are no limitations on the length
of time portfolio securities must be held. Each Funds' portfolio turnover rate
is not expected to exceed 100%. A portfolio turnover exceeding 100% generally
results in increased transaction expenses and the realization of capital gains
and losses.
Currency Risk
- -------------
Even though a Fund may hold securities denominated or traded in
foreign currencies, a Fund's performance is measured in terms of U.S. dollars,
which may subject a Fund to foreign currency risk. Foreign currency risk is the
risk that the U.S. dollar value of foreign securities (and any income generated
therefrom) held by a Fund may be affected favorably or unfavorably by changes in
foreign currency exchange rates and exchange control regulations. Therefore, the
net asset value of a Fund may go up or down as the value of the dollar falls or
rises compared to a foreign currency. To manage this risk and facilitate the
purchase and sale of foreign securities for a Fund, the Adviser may engage in
foreign currency transactions involving (1) the purchase and sale of forward
foreign currency exchange contracts (agreements to exchange one currency for
another at a future date); (2) options on foreign currencies; (3) currency
futures contracts; or (4) options on currency futures contracts. Although the
Funds may use foreign currency transactions to protect against adverse currency
movements, foreign currency transactions involve the risk that the Adviser may
not accurately predict the currency movements, which could adversely affect a
Fund's total return.
Liquidity Risk
- --------------
Foreign markets or exchanges tend to have less trading volume than the
New York Stock Exchange or other domestic stock exchanges or markets, meaning
the foreign market may have less liquidity. Lower liquidity in a foreign market
can affect the Chaconia ACS Fund's ability to purchase or sell blocks of
securities and obtain the best price in the foreign market. Foreign markets tend
to have greater spreads between bid and asked prices, trading interruptions or
suspensions and brokerage and other transaction costs. Settlement practices vary
from country to country and many foreign markets have longer settlement periods
for their securities in comparison to domestic securities. These differing
practices may cause the Chaconia ACS Fund to lose opportunities for favorable
purchases elsewhere as well as interest income. Also, foreign markets may trade
on days when the Funds do not value their portfolios. This means that a Fund's
Net Asset Value can change on days when an investor's account cannot be
accessed. The Funds may incur extra costs when involved in currency hedging.
Foreign Investment Expenses
- ---------------------------
Investing in foreign securities generally costs more than investing in
U.S. securities because of higher transaction costs, such as the commissions
paid per share. As a result, mutual funds that invest in foreign securities tend
to have higher expenses, particularly those that invest primarily in foreign
securities. In addition to higher commissions, they generally have higher
advisory and custodial fees. However, investors may find investing in a mutual
fund that purchases foreign securities a more efficient way to invest in foreign
securities than investing in individual foreign securities.
Political, Economic and Market Risks
- ------------------------------------
The degree of political and economic stability varies from country to
country. If a country expropriates money from foreigners or nationalizes an
industry, a Fund may lose some or all of any particular investment in that
country. Individual
-10-
<PAGE>
foreign economies may vary favorably or unfavorably from the U.S. economy in
such areas as growth of gross national product, inflation rate, savings, balance
of payments and capital investment, which may affect the value of the Chaconia
ACS Fund's investment in any foreign country.
Governmental Regulation
- -----------------------
Many foreign countries do not subject their markets to the same degree
and type of laws and regulations that cover the U.S. markets. Also, many foreign
governments impose restrictions on investments in their capital markets as well
as taxes or other restrictions on repatriation of investment income. The
regulatory differences in some foreign countries make investing or trading in
their markets more difficult and risky.
Lack of Uniform Corporate Disclosure Standards
- ----------------------------------------------
Many countries have laws making information on publicly traded
companies, banks and governments more difficult to obtain, incomplete or
unavailable. The lack of uniform accounting standards and practices among
countries impairs, the ability of investors to compare common valuation
measures, such as price/earnings ratios, as applied to securities of different
countries.
INVESTMENT RESTRICTIONS
- -----------------------
In addition to specific investment restrictions described in the
Statement of Additional Information, only a vote of the majority of the
outstanding shares can change:
o the policies on borrowing and lending securities; and
o the restriction on concentrating investments in a single
industry, which limits the Funds from investing more than 25% of
its total assets in any single industry. This restriction does
not apply to securities issued or guaranteed by the U.S.
government, its agencies or instrumentalities.
MANAGEMENT OF THE FUNDS
- -----------------------
Board of Directors
- ------------------
The overall management of the business and affairs of the Funds are
vested with the Board of Directors of the Corporation. The Board of Directors
approves all significant agreements between the Funds and persons or companies
furnishing services to each Fund, including the agreements with their Managers,
Sub-Advisor, Custodian, Transfer Agent, selected broker-dealers and
Administrator. The day-to-day operations of the Funds are delegated to the
officers of the Corporation, subject to the investment objectives and policies
of the Funds and to general supervision by the Board of Directors.
The Board of Directors of the Corporation are presently comprised of
five members, four of whom reside outside the United States. Directors Clarry
Benn, Judy Chang, Renrick Nickie and Roosevelt Williams are residents of the
Republic of Trinidad and Tobago. Judy Chang serves as Chair of the Board of
Directors. Clarry Benn and Renrick Nickie also serve as executive officers of
the Corporation.
The Maryland General Corporation Law subjects all directors and
officers of the Corporation to fiduciary duties for the lawful management of the
Corporation's organization and operation, including federal and state securities
laws. Investors of the Funds may not be able to effect service of process within
the United States upon the nonresident directors and officers of the Corporation
for the enforcement of civil liabilities under federal and state securities
laws. The Funds have appointed an agent for service of process in the states
where the Funds have registered their securities for offer and sale.
The United States and the Republic of Trinidad and Tobago are not
parties to a convention governing the mutual recognition and enforcement of
foreign money judgments. Investors of the Funds may not be able to enforce a
United States or Trinidad and Tobago court judgment against nonresident
directors and officers of the Corporation.
-11-
<PAGE>
The Chaconia I&G Fund Manager
- -----------------------------
The I&G Fund Manager serves as investment advisor to the Chaconia I&G
Fund and is subject to the control of the Board of Directors of the Corporation.
The I&G Fund Manager was incorporated as a registered investment advisor in
1971. In November 1985, the I&G Fund Manager entered into a limited partnership
with Britannia Arrow Holdings, PLC, a major U.K. financial services company, to
pursue global investment business. The I&G Fund Manager was the general partner.
In December 1988, the two firms completed a merger, creating the global
investment organization of INVESCO, with offices worldwide. In February 1997, a
subsidiary of INVESCO PLC, ultimate parent of the I&G Fund Manager, merged with
A I M Management Group, Inc., one of the largest mutual fund managers in the
United States, which resulted in a new financial services company, well-equipped
to provide the Chaconia I&G Fund and investors with a competitive spectrum of
investment management capabilities.
The I&G Fund Manager manages over $280 billion in assets for
institutional clients located throughout the U.S., the U.K. and Japan. The I&G
Fund Manager's clients include corporate pension and profit sharing plans,
public funds, joint-trustee funds, endowment and foundation accounts. The I&G
Fund Manager has provided investment advisory services to registered investment
companies.
The I&G Fund Manager is authorized to consider sales of shares of the
Chaconia I&G Fund as a factor in the selection of brokers to execute brokerage
and principal transactions, subject to the requirements of "best execution,"
i.e., prompt and efficient execution at the most favorable securities price.
Under the Investment Management Agreement, between the Chaconia I&G
Fund and the I&G Fund Manager, the Chaconia I&G Fund pays the I&G Fund Manager a
fee, computed daily, and payable monthly, at the annual rate of the greater of
$50,000 or 0.75% of 1% on first $10 million, 0.50% of 1% on next $10 million and
0.25% of 1% over $20 million of the Chaconia I&G Fund's average daily net
assets. The Chaconia I&G Fund and the I&G Fund Manager believe the fee is
appropriate considering the investment objectives of the Chaconia I&G Fund. The
advisory fee paid by the Chaconia I&G Fund for the fiscal year ended December
31, 1998 and the six months ended June 30, 1999 were equal to .51% and .38%
(annualized), respectively of the Chaconia I&G Fund's average net assets.
The ACS Fund Manager
- --------------------
Chaconia Fund Services, Inc., a wholly owned subsidiary of the
Trinidad and Tobago Unit Trust Corporation (the "ACS Fund Advisor") serves as
investment advisor to the Chaconia ACS Fund and is subject to the control of the
Board of Directors of the Corporation. The ACS Fund Advisor was incorporated as
a Delaware corporation in December, 1997 and became a registered investment
advisor on July 8, 1999. As of the date of this Prospectus, the ACS Fund Advisor
has no money under management. The Trinidad and Tobago Unit Trust Corporation
has approximately $550,000,000 (US dollars) under management, and it will
provide investment management support to the ACS Fund Advisor.
The Advisor is authorized to consider sales of shares of the Chaconia
ACS Fund as a factor in the selection of brokers to execute brokerage and
principal transactions, subject to the requirements of "best execution," i.e.,
prompt and efficient execution at the most favorable securities price.
Under the Investment Management Agreement, between the Chaconia ACS
Fund and the ACS Fund Advisor, the Chaconia ACS Fund pays the ACS Fund Advisor a
fee, computed daily, and payable monthly, at the annual rate of the greater of
$50,000 or 0.75% of 1% on first $10 million, 0.50% of 1% on next $10 million and
0.25% of 1% over $20 million of the ACS Fund's average daily net assets. The
Chaconia ACS Fund and the ACS Fund Advisor believe the fee is appropriate
considering the investment objectives of the Chaconia ACS Fund. It is
anticipated that the Chaconia ACS Fund will not commence operations until
December, 1999.
-12-
<PAGE>
Administrator
- -------------
American Data Services, Inc. (the "Administrator"), located at The
Hauppauge Corporate Center, 150 Motor Parkway, Suite 109, Hauppauge, New York
11788, serves as administrator to the Funds pursuant to agreements with the
Funds (the "Administrative Services Agreements"). Pursuant to the Administrative
Services Agreements, subject to the overall authority of the Board of Directors
in accordance with Maryland law, the Administrator will assist in the
administration and operation of the Funds, including, but not limited to, the
preparation of statistical and research data, data processing services,
preparation of management reports for performance and compliance, as well as
prepare and maintain the operating expense budget of the Funds. The
administration fee paid by the Chaconia I&G Fund for the fiscal year ended
December 31, 1998 and the six months ended June 30, 1999 to the Administrator
was equal to .22% and .15% (annualized), respectively, of the Chaconia I&G
Fund's average net assets. It is anticipated that the Chaconia ACS Fund will not
commence operations on until December, 1999.
Fund Operating Expenses
- -----------------------
In addition to the fees payable to the Managers and the Administrator,
the Funds are responsible for its operating expenses, including: (i) interest
and taxes; (ii) brokerage commissions; (iii) insurance premiums; (iv)
compensation and expenses of, directors other than those affiliated with the
Managers; (v) legal and audit expenses; (vi) fees and expenses of the Custodian,
shareholder service or Transfer Agent; (vii) fees and expenses for registration
or qualification of the Funds and their shares under federal or state securities
laws; (viii) expenses of preparing, printing and mailing reports and notices and
proxy material to stockholders; (ix) other expenses incidental to holding any
stockholder meetings; (x) dues or assessments of or contributions to the
Investment Company Institute or any successor; (xi) Rule 12b-1 fees paid by the
Funds in connection with the Distribution Plan; (xii) service fees paid by the
Funds in connection with the personal service and/or maintenance of shareholder
accounts; and (xiii) such nonrecurring expenses as may arise, including
litigation affecting the Funds and the legal obligations with respect to which
the Funds may have to indemnify its officers and directors.
See the Statement of Additional Information for more information as to
the Board of Directors, Officers, the Managers and operating expenses of the
Funds.
HOW TO PURCHASE SHARES
- ----------------------
Opening an Account
- ------------------
In order to invest in the Funds, an investor must first complete and
sign an account application. Shares of the Funds may be purchased either by mail
or by telephone through selected broker-dealers who have a sales agreement with
the Funds or through the Transfer Agent, at the offering price next determined
after receipt of an order by selected broker-dealers or the Transfer Agent, in
proper form. The offering price is the net asset value per share of the Funds.
The Funds may from time to time pay a bonus or other incentive to the
selected dealers that employ a sales representative who sells a minimum dollar
amount of shares of the Funds. Such bonus or other incentives may take the form
of payment for travel expense including lodging, incurred in connection with
trips taken by qualifying registered representatives and members of their
families to places within or without the United States.
The minimum initial investment in each Fund including purchases for an
Individual Retirement Account is $250. See "Retirement Plans." Subsequent
investments are a minimum of $100. The Funds reserve the right to reject any
purchase order.
Automatic Investments
- ---------------------
Shareholders in each Fund may elect to make subsequent investments
through a continuing automatic transfer ("CAT") program. To elect the CAT,
complete the CAT program section of the account application and include a voided
unsigned check from the bank account to be debited. You should consider your
financial ability to participate in the CAT program. The Funds reserve the right
to close your account under certain circumstances or you may find it necessary
to redeem your account, either of which may occur in periods of declining share
prices or during periods of rising prices. The Funds reserve the right to
suspend, modify or terminate the CAT program without notice.
-13-
<PAGE>
The Funds reserve the right to reject any order.
Purchase orders may either be placed with selected broker-dealers or
submitted to the Transfer Agent as follows:
Purchase Placed With Selected Broker-Dealers
- --------------------------------------------
Selected broker-dealers may place orders for shares of each Fund on
behalf of clients at the offering price next determined after receipt of the
client's order made by calling the Transfer Agent. If the order is placed by a
client with a selected dealer prior to 4 p.m. Eastern time on any day the New
York Stock Exchange is open for trading, and forwarded to the Transfer Agent
prior to 5 p.m. Eastern time on that day, it will be confirmed to the selected
dealer at the applicable offering price determined that day. The selected
broker-dealer is responsible for placing purchase orders promptly with the
Transfer Agent and for forwarding payment. The Funds have entered into selected
dealer agreements with Chaconia Financial Services, Inc., a Rhode Island
corporation and wholly owned subsidiary of Chaconia Fund Services, Inc., which
is a wholly owned subsidiary of the Trinidad and Tobago Unit Trust Corporation.
Purchase Placed With Transfer Agent
- -----------------------------------
Investors may mail an application form, together with a check payable
to the Chaconia I&G Fund or the Chaconia ACS Fund, as the case may be, directly
to the Transfer Agent, at the following address:
American Data Services, Inc.
The Hauppauge Corporate Center
150 Motor Parkway
Suite 109
Hauppauge, NY 11788
If the purchase being made is a subsequent investment, the stockholder
should send a stub from a confirmation previously received from the Transfer
Agent in lieu of the application form. If no such stub is available, a brief
letter giving the registration of the account, the name of the Fund and the
account number should accompany the check. In addition, the stockholder's
account number should be written on the check. Checks do not need to be
certified but are accepted subject to face value in United States dollars and
must be drawn on United States banks.
Shares of the Chaconia I&G Fund or the Chaconia ACS Fund will be
purchased for the account of the investor by the Transfer Agent as agent for the
investor's selected dealer at the offering price next determined after receipt
by the Transfer Agent of the check together with the appropriate form or other
identifying information.
Each Fund offers additional services to investors, including plans for
the systematic investment and withdrawal of money as well as prototype
retirement programs. Information about these services is also available in the
Statement of Additional Information or from selected broker-dealers or the
Transfer Agent.
Net Asset Value
- ---------------
Each Fund's net asset value per share is determined on each day that
the New York Stock Exchange (the "Exchange") is open for trading, as of the
close of the Exchange, currently 4 p.m., Eastern time. The net asset value per
share is the value of the Fund's assets, less its liabilities, divided by the
number of shares of the Fund outstanding. The value of the Fund's portfolio
securities will be the market value of such securities. See the Statement of
Additional Information for further information.
DISTRIBUTION PLAN AND SERVICE FEES
- ----------------------------------
The Board of Directors has adopted a Distribution Plan applicable to
the Chaconia I&G Fund and the Chaconia ACS Fund under Section 12(b) of the 1940
Act and Rule 12b-1 thereunder.
Pursuant to each Plan, registered broker-dealers and others
("Qualified Recipients") that have rendered distribution assistance (whether
direct, administrative or both) and that enter into written agreements with a
Fund may receive fees at rates determined by the Board of Directors. In
addition, each Fund will purchase advertising, sales literature, other
promotional
-14-
<PAGE>
material and marketing services. The Funds will reimburse the Managers and
Qualified Recipients for these expenditures, including interest expenses and
other overhead items, during a fiscal year of the Funds, up to a limit of 0.50%
of 1% on an annual basis of the Funds' average daily net assets, subject to
compliance with guidelines adopted from time to time by the Board of Directors.
No reimbursements under the Plan will be made for expenditures or fees
for fiscal years prior to the fiscal year in question or in contemplation of
future fees or expenditures. In addition to payments received pursuant to the
Plan, Qualified Recipients which are selected dealers may receive a service fee
in the amount of .25% of each shareholder account opened with the Funds as a
result of a sale made by them of Fund shares. The service fee is paid by the
Funds to the Qualified Recipient for the personal service and/or maintenance of
shareholder accounts; and the Qualified Recipient may receive commissions on a
Fund's portfolio transactions subject to the provisions of the Management
Agreements (see the Statement of Additional Information).
The enactment of the National Securities Markets Improvement Act in
October 1996 created an amendment to the 1940 Act. The changes in legislation
will enable the Funds to distribute its shares to a larger number of states.
HOW TO REDEEM SHARES
- --------------------
The Funds will redeem for cash all of its full and fractional shares
at the net asset value per share next determined after receipt by the Transfer
Agent of a redemption request in proper form, as described below. A stockholder
wishing to redeem shares may do so at any time by writing to the Funds in care
of its Transfer Agent at The Hauppauge Corporate Center, 150 Motor Parkway,
Suite 109, Hauppauge, New York 11788. The instructions should specify the name
of the Funds, the number of shares to be redeemed and be signed by all
registered owners exactly as the account is registered. The redemption request
will not be accepted unless it contains all required documents in proper form,
as described below.
Proper Form
- -----------
In addition to written instructions, if any shares being redeemed are
represented by stock certificates, the certificates must be surrendered. The
certificates must either be endorsed or accompanied by a stock power signed by
the registered owners, exactly as the certificates are registered. The
signatures on the certificates or stock powers, as well as the signatures on any
redemption request concerning shares not represented by certificates, must
conform to the requirements of the Transfer Agent. Additional documents may be
required from corporations or other organizations, fiduciaries or anyone other
than the stockholder of record. Any questions concerning documents needed should
be directed to the Transfer Agent.
Payments
- --------
Payment for shares tendered will be made within seven days after
receipt by the Transfer Agent of instructions, certificates, if any, and other
documents, all in proper form. Payment may be delayed under unusual
circumstances, as specified in the 1940 Act or as determined by the SEC. Payment
may also be delayed for any shares purchased by check until the Funds have
determined that the purchase check will be honored, which may take up to 15
calendar days.
Redemption in Kind
- ------------------
If the Board of Directors determines that it would be detrimental to
the best interests of the remaining stockholders of a Fund to make payment
wholly or partly in cash, the redemption value may be paid in whole or in part
by a distribution in kind of securities from the portfolio of a Fund, in lieu of
cash, in conformity with applicable rules of the SEC. The Funds, however, has
elected to be governed by Rule 18f-1 under the 1940 Act pursuant to which they
are obligated to redeem shares solely in cash up to the lesser of $250,000 or
one percent of the net asset value of a Fund during any 90-day period for any
one stockholder. Should redemptions by any stockholder exceed such limitation,
the Funds will have the option of redeeming the excess in cash or in kind. If
shares are redeemed in kind, the redeeming stockholder would incur brokerage
costs in converting the assets into cash.
Reinvestment Privilege
- ----------------------
A stockholder who has redeemed all or part of his or her shares of a
Fund may reinvest all or part of the redemption proceeds in shares of a Fund at
the net asset value next computed after receipt of the reinvestment order if
such
-15-
<PAGE>
reinvestment is effected within 30 days after the redemption. The privilege may
be exercised only once by a stockholder. However, a stockholder has not used up
this one-time privilege if the sole purpose of a prior redemption was to invest
the proceeds at net asset value in a qualified retirement plan. If the
stockholder has realized a gain on the redemption, the transaction is taxable
and reinvestment will not alter any capital gains tax payable. If there has been
a loss on the redemption, some or all of the loss may not be allowed as a tax
deduction depending on the amount reinvested.
Redemption of Small Accounts
- ----------------------------
The Board of Directors may, in order to reduce the expenses of a Fund,
redeem all of the shares of any stockholder (other than a qualified retirement
plan) whose account has declined to a net asset value of less than $100, as a
result of a transfer or redemption, at the net asset value determined as of the
close of business on the business day preceding the sending of notice of such
redemption. Stockholders will be given 60 days' prior written notice in which to
purchase sufficient shares to avoid such redemption.
RETIREMENT PLANS
- ----------------
Individual shareholders may establish their own tax-sheltered
Individual Retirement Account ("IRA"). The Funds offer two types of IRAs that
can be adopted by executing the appropriate Internal Revenue Service ("IRS")
form. The minimum investment required to open an IRA for investment in shares of
each Fund is $250 for an individual except that both the individual and his or
her spouse would be able to establish separate IRAs if their combined investment
is $400.
Traditional IRA
- ---------------
In a Traditional IRA, amounts contributed to the IRA may be tax
deductible at the time of contribution depending on whether the shareholder is
an "active participant" in an employer-sponsored retirement plan and the
shareholder's income. Distributions from a Traditional IRA will be taxed at
distribution except to the extent that the distribution represents a return of
the shareholder's own contributions for which the shareholder did not claim (or
was not eligible to claim) a deduction. Distributions must commence by April 1
following the calendar year in which the shareholder attains age 70- 1/2.
Failure to begin distributions by this date (or distributions that do not equal
certain minimum thresholds) may result in adverse tax consequences.
Roth IRA
- --------
In a Roth IRA, amounts contributed to the IRA are taxed at the time of
contribution, but distributions from the IRA are not subject to tax if the
shareholder has held the IRA for certain minimum periods of time (generally,
until age 59 1/2). Shareholders whose incomes exceed certain limits are
ineligible to contribute to a Roth IRA. Distributions that do not satisfy the
requirements for tax-free withdrawal are subject to income taxes (and possibly
penalty taxes) to the extent that the distribution exceeds the shareholder's
contributions to the IRA. The minimum distribution rules applicable to the
Traditional IRAs do not apply during the lifetime of the shareholder. Following
the death of the shareholder, certain minimum distribution rules apply.
For Traditional and Roth IRAs, the maximum annual contribution
generally is equal to the lesser of $2,000 or 100% of the shareholder's
compensation (earned income). An individual may also contribute to a Traditional
IRA or Roth IRA on behalf of his or her spouse provided that the individual has
sufficient compensation (earned income). Contributions to a Traditional IRA
reduce the allowable contribution under a Roth IRA, and contributions to a Roth
IRA reduce the allowable contribution to a Traditional IRA.
Each Fund's shares may also be a suitable investment for other types
of qualified pension or profit sharing plans that are employer-sponsored,
including deferred compensation or salary reduction plans known as 401(k) plans
which give participants the right to defer portions of their compensation for
investment on a tax deferred basis until distributions are made from the plans.
-16-
<PAGE>
DIVIDENDS, DISTRIBUTIONS AND TAXES
- ----------------------------------
Dividends and Distributions
- ---------------------------
Each dividend and capital gains distribution, if any, declared by the
Funds on their outstanding shares will, unless the stockholder elects otherwise,
be paid on the payment date fixed by the Board of Directors in additional shares
of the Funds having an aggregate net asset value as to the ex-dividend date of
such dividend or distribution equal to the cash amount of such distribution. An
election to receive dividends and distributions may be changed by notifying the
Funds in writing at any time prior to the record date for a particular dividend
or distribution. There are no sales or other charges in connection with the
reinvestment of dividends and capital gains distributions. There is no fixed
dividend rate, and there can be no assurance that the Funds will pay any
dividends or realize any capital gains. However, the Funds currently intend to
pay dividends and capital gains distributions, if any, on an annual basis.
Taxes
- -----
The Funds intend to qualify for tax treatment as a "regulated
investment company" under Subchapter M of the Internal Revenue Code, as amended
(the "Code"). Such qualification generally will relieve the Funds of liability
for federal income taxes to the extent its earnings are distributed.
The Funds contemplate declaring as dividends each year at least 90% of
its investment company income. An investor who receives a dividend derived from
investment company taxable income (which includes any excess of net short-term
capital gain over net long-term capital loss) treats the dividend, whether paid
in the form of cash or additional shares, as a receipt of ordinary income.
Any dividend or distribution of a Fund's excess of net long-term
capital gain over its net short-term capital loss will be taxable to a
shareholder as a long-term capital gain, regardless of how long the shareholder
has held shares of a Fund. Capital gain dividends that are payable to
individuals, estate or trusts for taxable years ending on or after May 7, 1997
will be designated as a 20% rate gain distribution, an unrecaptured section 1250
gain distribution or a 28% rate gain distribution depending upon a Fund's
holding period for the shares. Capital gain dividends that are payable to
corporations are taxable at a 28% rate if held for more than one year. The 70%
dividends-received deduction for corporations applies to dividends from the
Fund's net investment income, subject to proportionate reductions if aggregate
dividends received by the Funds from domestic corporations in any year are less
than 100% of the distribution of net investment company taxable income made by
the Funds.
The Transfer Agent is required to send stockholders and the Internal
Revenue Service an annual statement detailing federal tax information, including
information about dividends and distributions (both taxable and tax-exempt) paid
to stockholders during the preceding year. This statement should be kept as a
permanent record. A fee may be charged for any duplicate information requested.
Before investing in the Funds, individuals are advised to check the
consequences of local and state tax laws, and the consequences for any
retirement plan offering tax benefits.
GENERAL INFORMATION
- -------------------
Description of Shares, Voting Rights and Liabilities
- ----------------------------------------------------
The Corporation is a Maryland corporation, incorporated on October 24,
1990, and registered as an open-ended, nondiversified, management investment
company under the 1940 Act. The Corporation's capital stock consists of a single
class of common stock which is divisible into an unlimited number of series.
Each Fund represents a separate series of Common Stock. The authorized capital
stock consists of 10,000,000 shares of Common Stock, of which 8,000,000 are
allocated to the Chaconia I&G Fund and 2,000,000 are allocated to the Chaconia
ACS Fund. The Corporation's Board of Directors is authorized to divide the
unissued shares into one or more classes of common stock (which may be referred
to as portfolios, funds or series), each class representing a separate,
additional Corporation portfolio, and to fix the number of shares in any such
class.
-17-
<PAGE>
Shares of all classes will have identical voting rights, except where
by law, certain matters must be approved by a majority of the shares of the
affected class. Each share of any class of shares when issued has equal
dividend, liquidation and voting rights within the class for which it was issued
and each fractional share has those rights in proportion to the percentage that
the fractional share represents of a whole share. Shares will be voted in the
aggregate.
There are no conversion or preemptive rights in connection with any
shares of the Funds. All shares, when issued in accordance with the terms of the
offering, will be fully paid and nonassessable. Shares will be redeemed at net
asset value, at the option of the stockholder.
The Corporation sends semiannual and annual reports to all of its
stockholders which include a list of portfolio securities and each Corporation's
financial statements which shall be audited annually.
The shares of each Fund have noncumulative voting rights which means
that the holders of more than 50% of the shares can elect 100% of the directors
if the holders choose to do so, and, in that event, the holders of the remaining
shares will not be able to elect any person or persons to the Board of
Directors. Unless specifically requested in writing to the Transfer Agent by an
investor who is a stockholder of record, the Funds do not issue certificates
evidencing the Fund's shares.
The Corporation will hold an annual stockholder meeting each year.
Special meetings of the stockholders will be held for the consideration of
proposals requiring stockholder approval by law, such as changing fundamental
policies or upon the written request of 25% of the Corporation's outstanding
shares. The directors will promptly call a meeting of stockholders to consider
the removal of a director or directors when requested to do so by the holders of
not less than 10% of the outstanding shares and that stockholders will receive
communication assistance in connection with calling such a meeting. At any
meeting of stockholders duly called and at which a quorum is present, the
stockholders may, by the affirmative vote of the holders of at least two-thirds
of the votes entitled to be cast thereon, remove any director or directors from
office, with or without cause, and may elect a successor or successors to fill
any resulting vacancies for the unexpired term of the removed director.
The Corporation's organizing documents have been filed with the SEC as
exhibits to the Corporation's registration statement and can be found at the
SEC, at the Corporation's principal office or at the offices of the
Corporation's legal counsel.
Stockholder Approval
- --------------------
Other than the election of directors, which is by plurality, any
matter for which stockholder approval is required by (1) the Maryland General
Corporation Law, requires the affirmative vote of at least a majority of all
votes cast at a meeting at which a quorum is present and (2) the 1940 Act,
requires the affirmative vote of at least a "majority" (as defined by the 1940
Act) of the outstanding voting securities of the Corporation entitled to vote at
a meeting called for the purpose of considering such approval. Pursuant to the
Corporation's Articles of Incorporation, the presence in person or by proxy of
the holders of one-third of the outstanding voting securities entitled to vote
at a meeting of stockholders shall constitute a quorum for the transaction of
any business at all meetings of the stockholders except as otherwise provided by
law or in the Articles of Incorporation. The 1940 Act defines a majority as the
lesser of (1) 67% of the shares represented at a meeting at which more than 50%
of the outstanding shares are present in person or by proxy or (2) more than 50%
of the outstanding shares.
Legal Proceedings
- -----------------
There are currently no pending material legal proceedings against the
Corporation or the Unit Trust Corporation.
Performance Information
- -----------------------
Each Fund may furnish data about its investment performance in
advertisements, sales literature and reports to stockholders. "Total return"
represents the annual percentage change in value of $10,000 invested at the
maximum public offering price for the one and five year periods and the life of
each Fund through the most recent calendar quarter, assuming reinvestment of all
dividends and distributions. Quotations of "yield" will be based on the
investment income per share earned during the particular 30-day period, less
expenses accrued during the period, with the remainder being divided by the
maximum offering price per share on the last day of the period. Each Fund may
also furnish total return and yield calculations for other periods and/or based
on
-18-
<PAGE>
investments at various sales charge levels or net asset values. Any performance
data which is based on a Fund's net asset value per share would be reduced if a
sales charge were taken into account.
Year 2000
- ---------
The Corporation is aware of the "Year 2000" issue. The "Year 2000"
issue stems from the use of a two-digit format to define the year in certain
date-sensitive computer application systems rather than the use of a four-digit
format. As a result, date-sensitive software programs could recognize a date
using "00" as the year 1900 rather than the year 2000. This could result in
major systems or process failures or the generation of erroneous data, which
would lead to disruptions in the Corporation's business operations.
The Corporation has no application systems of its own and is entirely
dependent on its service providers' systems and software. The Corporation is
working with its service providers (including its investment adviser,
administrator, transfer agent and custodian) to identify and remedy any Year
2000 issues. However, the Corporation cannot guarantee that all Year 2000 issues
will be identified and remedied, and the failure to successfully identify and
remedy all Year 2000 issues could result in an adverse impact on the
corporation.
Custodian
- ---------
Firstar Bank, N.A. is the custodian for the Fund's cash and
securities.
Independent Accountants
- -----------------------
PricewaterhouseCoopers LLP has been appointed independent accountants
for the Funds.
Information for Stockholders
- ----------------------------
All stockholder inquiries regarding administrative procedures
including the purchase and redemption of shares should be directed to the
Transfer Agent. For assistance, call 516-951-0500 or 1-800-368-3322.
This Prospectus omits certain information contained in the
Registration Statement filed with the SEC. Copies of the Registration Statement,
including items omitted herein, may be obtained from the Commission by paying
the charges prescribed under its rules and regulations. The Statement of
Additional Information included in such Registration Statement and the Annual
Report to Shareholders of the Funds may be obtained without charge from the
Funds or selected broker-dealers.
-19-
<PAGE>
ACCOUNT APPLICATION
Mail to: American Data Services, Inc.
The Hauppauge Corporate Center
150 Motor Parkway
Suite 109
Hauppauge, NY 11788 U.S.A.
800-368-3322 (U.S.)
For individual, custodial, trust, profit-sharing or pension plan accounts. Do
not use this form for IRAs. Please contact American Data Services, Inc. directly
for IRA information.
ACCOUNT REGISTRATION
- --------------------------------------------------------------------------------
Name of Owner(s) (Individual, Joint, Custodian, Company or Trustee)
- --------------------------------------------------------------------------------
Mailing Address
- --------------------------------------------------------------------------------
City State Zip
- --------------------------------------------------------------------------------
Daytime Telephone Number
- --------------------------------------------------------------------------------
Social Security Number or Taxpayer Identification Number
Date of Birth: ____/____/____
Citizen of:
[ ] United States
[ ] Other (specify) _________________________
INVESTMENT
Please indicate the amount you wish to invest ($250.00 minimum).
Payment by ___ Check ___ Wire
[ ] Chaconia I&G Fund $_____
[ ] Chaconia ACS Fund $_____
Indicate date of wire _________________________
(please call 516-951-0500 or 800-368-3322 (U.S.) for wire instructions)
DISTRIBUTIONS
Distributions will be reinvested in additional shares unless one of the
following boxes is checked.
[ ] Send me a check for all dividends and distributions.
[ ] Send me a check for dividends, but reinvest capital gain distributions.
-20-
<PAGE>
SIGNATURES AND CERTIFICATION
I (we) understand that certificates for the shares purchased hereby will be
issued only upon request. I represent that I am of legal age and have legal
capacity to make this purchase and have received and read a current prospectus
of the Funds. I certify under penalty of perjury that:
1. The social security or other tax identification number stated is correct.
2. I am not subject to backup withholding because*
[ ] A. The IRS has not informed me that I am subject to backup withholding.
[ ] B. The IRS has notified me that I am no longer subject to backup
withholding.
*Check the appropriate box. If this statement is not true and you are subject to
backup withholding, strike out section 2.
--------------------------------- ----------
Signature of Owner, Trustee or Custodian Date
--------------------------------- ----------
Signature of Joint Owner (Required if Joint Date
Registration)
DEALER INFORMATION
- --------------------------------------------------------------------------------
Dealer Name
- --------------------------------------------------------------------------------
Representative's Name
- --------------------------------------------------------------------------------
Branch Address
- --------------------------------------------------------------------------------
Branch Number AE#
- --------------------------------------------------------------------------------
Street
- --------------------------------------------------------------------------------
City
- --------------------------------------------------------------------------------
State Zip
-21-
<PAGE>
CAT PROGRAM
Continuing Automatic Transfer Program
How does it work?
You choose any amount you would like of $50.00 or more to invest each month.
Your transfer agent ("ADS") will establish a file with the applicable Fund's
custodian bank, Firstar Bank, N.A. (the "Custodian"), with the amount you have
chosen to invest. The Custodian then draws an automatic clearinghouse ("ACH")
debit electronically against your checking account each month. Shares of the
applicable Fund are purchased on the same day the Custodian draws the debit, a
confirmation of each purchase is sent to you by ADS, and your bank statement
will reflect the amount of each debit.
How do I set it up?
Existing Shareholders -- Complete this form following the instructions below. Be
sure to check the box below indicating that you already are a shareholder of the
applicable Fund and write your account number in the space provided.
New Shareholder -- You must first complete a regular account application,
enclose a check ($250.00 minimum) made payable to Chaconia I&G Fund or the
Chaconia ACS Fund to open your account and complete this form following the
instructions below. Be sure to check the box below indicating that you are a new
shareholder with the Chaconia I&G Fund or the Chaconia ACS Fund.
Mark one of your personal checks or savings account deposit slips "VOID" and
attach the voided check or savings deposit slip to this form. Mail this form,
with the voided check or savings deposit slip attached, to ADS, at the address
below. As soon as your bank accepts your authorization, monthly debits will be
generated and purchases of the applicable Fund shares will begin. Please note
that your bank must be able to accept ACH transactions and/or be a member of an
ACH association. Your bank manager should be able to tell you about your bank's
capabilities. The Fund cannot guarantee acceptance by your bank. Please allow
one month for processing of the CAT Application before the first monthly debit
occurs.
MAIL TO: The Chaconia Income & Growth Fund, Inc.
c/o American Data Services, Inc.
The Hauppauge Corporate Center
150 Motor Parkway, Suite 109
Hauppauge, NY 11788
FOR ADDITIONAL
INFORMATION CALL:
800-368-3322 (U.S.)
[ ] YES, I authorize the Continuing Automatic Transfer Program ("CAT") be
established for my account with The Chaconia Income & Growth Fund, Inc.
Please begin CAT Investing for me and invest
(i) $ ____________ ($50 minimum) in shares of the Chaconia I&G Fund on the:
[ ] 1st
[ ] 15th of each month.
(ii) $ ___________ ($50 minimum) in shares of the Chaconia ACS Fund on the:
[ ] 1st
[ ] 15th of each month.
-22-
<PAGE>
Check one:
[ ] I am in the process of opening an account with the Chaconia I&G Fund
or the Chaconia ACS Fund. Enclosed is my account application and check
($250 minimum) made payable to Chaconia I&G Fund, or the Chaconia ACS
Fund
[ ] I already have an existing account with the Chaconia I&G Fund or the
Chaconia ACS Fund; my account number is_______________________
- -------------------------------------------------------
Name of my bank
- -------------------------------------------------------
Address of my bank
I understand that my ACH debit for my CAT will be dated each month on the day
specified above. I agree that if such debit is not honored upon presentation,
ADS and the Custodian may discontinue this service, and any purchase of a Fund's
shares may be reversed. I further understand that the net asset value of shares
of the applicable Fund at the time of such reversal may be less than the net
asset value on the day of the original purchase. ADS and the Custodian are
authorized to redeem sufficient additional full and fractional shares from my
account to make up the deficiency. CAT Investing may be discontinued by ADS and
the Custodian upon 30 days' written notice or by the investor by written notice
to ADS (at the above address) provided the notice is received no later than 5
business days prior to the specified investment date.
- --------------------------------------------------------------------------------
Signature of depositor Date Signature of Co-Depositor Date
(required for joint accounts)
-23-
<PAGE>
DATED OCTOBER 29, 1999
THE CHACONIA INCOME & GROWTH FUND, INC.
Statement of Additional Information
Information contained herein is subject to completion or amendment. A
registration statement relating to these securities has been filed with the
Securities and Exchange Commission (the "SEC"). These securities may not be sold
nor many any offers to buy be accepted prior to the time the registration
becomes effective.
This Statement of Additional Information is not a prospectus, and it
should be read in conjunction with the Prospectus of The Chaconia Income &
Growth Fund, Inc. (the "Corporation") relating to two separate portfolios, the
Chaconia Income & Growth Fund (the "Chaconia I&G Fund") and the Chaconia ACS
Fund (the "Chaconia ACS Fund") (collectively, the "Funds"). A copy of the
Prospectus may be obtained from the Fund c/o American Data Services, Inc., The
Hauppauge Corporate Center, 150 Motor Parkway, Suite 109, Hauppauge, New York
11788.
<PAGE>
TABLE OF CONTENTS
Cross-Reference
to Page in the
Page Prospectus
---- ---------------
Investment Objective and Policies 1 5
Basic Investment Techniques 3 7
U.S. Government Securities 4 8
Certain Investment Strategies and Special 5 10
Risk Considerations
Investment Restrictions 6 11
Management 7 11
Portfolio Transactions and Brokerage 11 -
Purchase and Redemption of Shares 12 13 & 15
Retirement Plans 13 16
Dividends, Distributions and Taxes 13 17
Investment Performance Information 14 -
General Information 15 18
Financial Statements 16 -
Appendix-Description of Ratings 16 -
-i-
<PAGE>
INVESTMENT OBJECTIVE AND POLICIES
- ---------------------------------
Chaconia I&G Fund
- -----------------
The investment objective of the Chaconia I&G Fund is to seek high
current income and capital appreciation. It seeks to meet its objective by
investing the Chaconia I&G Fund's assets in: U.S. Government securities
including U.S. Treasury obligations and obligations issued or guaranteed by U.S.
Government agencies or instrumentalities, investment grade corporate bonds,
investment grade foreign government bonds, equity securities of U.S., Canadian,
British and Trinidad and Tobago companies, ADRs, the Schemes of the Trinidad and
Tobago Unit Trust Corporation, certificates of deposit and money market funds.
There can be no assurance that the Chaconia I&G Fund will be able to achieve its
objective.
The Chaconia I&G Fund intends to invest in the Schemes of the Trinidad
and Tobago Unit Trust Corporation only if the Chaconia I&G Fund determines that
there are no adverse restrictions to realizing an investment in the Schemes of
the Trinidad and Tobago Unit Trust Corporation and the I&G Fund Manager believes
the potential rewards from the Schemes of the Trinidad and Tobago Unit Trust
Corporation are greater than the other investments described above.
The Chaconia I&G Fund's investment policy will emphasize debt
instruments to achieve the Chaconia I&G Fund's current income objective. Under
normal market conditions, the Chaconia I&G Fund will maintain a level of at
least 25% of its total assets invested in debt securities and at least 25% of
its total assets invested in equity securities. The investment in equity
securities versus debt securities will depend upon the I&G Fund Manager's
evaluation of the relative merits and risks of equity securities versus bonds.
The attractiveness of nongovernment instruments will be judged based
upon their potential return enhancement and creditworthiness. Potential return
is determined by observing the existing yield spread differential within a
historical context and purchasing such instruments only when the differential is
at levels which are above a long-term mean. Within the investment credit
spectrum, to ensure protection of principal, additional credit analysis will be
undertaken in employing the I&G Fund Manager's proprietary analytical techniques
and data bases to further reduce the risk.
In determining the maturity of the debt securities the Chaconia I&G
Fund invests in, the I&G Fund Manager will focus on whether the level of real
yield, after taking into account inflation, is adequate to compensate for the
greater volatility and risks associated with debt securities having a greater
maturity. Generally, the longer the maturity of a debt security, the greater its
price volatility. Conversely, the shorter the maturity, the lower its price
volatility. During a typical credit cycle, the average duration implied by this
discipline will likely average 5 years within a range normally of 2.5 to 8
years. Debt securities are defined as: U.S. and foreign nonconvertible company
bonds, U.S. and foreign government securities and commercial paper.
In determining what equity securities the Chaconia I&G Fund will
invest in, the I&G Fund Manager will focus on the actual earnings, return on
equity and dividend history of the company. The I&G Fund Manager will seek to
invest in equity securities of companies whose shares are undervalued based on
the current price relative to the long-term record of the company. For purposes
of this investment policy, equity securities are defined as: U.S. and foreign
common stocks, ADRs, warrants, convertible bonds, convertible debentures,
preferred stock and stock rights. No more than 5% of the Chaconia I&G Fund's net
assets may be used to purchase warrants or stock rights. For purposes of this
investment policy, a warrant is defined as a certificate giving the holder the
right to purchase securities at a stipulated price within a specified time limit
or perpetually. Sometimes a warrant is offered with securities as an inducement
to buy. The prices of warrants do not necessarily correlate with the prices of
the underlying securities. The Chaconia I&G Fund may not purchase options on
equity securities.
The Chaconia I&G Fund intends to invest in a variety of securities,
with differing issuers, maturities and interest rates. If the I&G Fund Manager
believes that stocks in general are overvalued, or that interest rates may rise
substantially, or that the general economic environment may be deteriorating,
the I&G Fund Manager may assume a temporary defensive position and may invest up
to 100% of the Chaconia I&G Fund's assets in high quality commercial paper and
short-term U.S. Government securities such as Treasury Bills and Treasury Notes.
The Chaconia I&G Fund intends to operate as a "regulated investment company"
under Subchapter M of the Internal Revenue Code. See "Dividends, Distributions
and Taxes." The average U.S. dollar weighted duration of the Chaconia I&G Fund's
portfolio is not expected to exceed ten years.
<PAGE>
The Chaconia I&G Fund does not expect to trade in securities for
short-term gain. It is anticipated that the annual portfolio turnover rate will
not exceed 100%. The portfolio turnover rate is calculated by dividing the
lesser of sales or purchases of portfolio securities by the average monthly
value of the Chaconia I&G Fund's portfolio securities. For purposes of this
calculation, portfolio securities exclude debt securities having a maturity at
the date of purchase of one year or less.
Subject to its investment policy of normally investing at least 25% of
its total assets in U.S. Government securities, investment grade corporate bonds
and investment grade foreign government bonds, the Chaconia I&G Fund is
permitted to invest in (1) U.S. dollar denominated debt securities, similar in
nature to those described above, regardless of the domicile of the issuers and
(2) income producing equity securities of companies domiciled in the United
States (some of which may be denominated other than in U.S. dollars). Some of
these securities are issued in the Eurodollar market by multinational banks and
companies which may have operations in Trinidad and Tobago.
Chaconia ACS Fund
- -----------------
The Chaconia ACS Fund's investment objective is to seek long-term
capital appreciation by investing primarily in a diversified portfolio of equity
and debt securities of non U.S. issuers domiciled and/or operating in the member
countries of the ACS. Under normal circumstances the Chaconia ACS Fund intends
to invest at least 65% of its total assets in foreign debt securities, common
stocks and equity-related securities, including preferred stocks, warrants,
convertible securities and other similar rights. The Chaconia ACS Fund may
purchase securities of foreign issuers directly or in the form of American
Depository Receipts (ADRs), European Depository Receipts (EDRs), Global
Depository Receipts (GDRs) or other securities representing shares of non-U.S.
issuers domiciled or operating in the ACS.
The ACS facilitates consultation, co-operation and concerted action
among its Member States and Associate Members. It also aims to promote the
implementation of policies and programmes designed to: promote an enhanced
economic space for trade and investment with opportunities for co-operation and
concerted action, in order to increase the benefit which accrue to the peoples
of the Caribbean from their resources and assets, including the Caribbean Sea.
The ACS, which is headquartered in Port of Spain, Trinidad and Tobago, promotes
economic integration, including the liberalization of trade, investment,
transportation and other related areas among its members.
The Member States of the ACS are Antigua and Barbuda, The Bahamas,
Barbados, Belize, Colombia, Costa Rica, Cuba, Dominica, the Dominican Republic,
El Salvador, Grenada, Guatemala, Guyana, Haiti, Honduras, Jamaica, Mexico,
Nicaragua, Panama, St. Kitts and Nevis, St. Lucia, St. Vincent and the
Grenadines, Suriname, Trinidad and Tobago and Venezuela. Currently, France (in
respect of French Guiana, Guadeloupe and Martinique) is an Associate Member of
the ACS. During the Third Ordinary Meeting of the Ministerial Council in
Cartagena de Indias, Colombia in November 1997, the Netherlands Antilles signed
the Convention Establishing the ACS, to be admitted as an Associate Member.
Following ratification, an appropriate Co-operation Agreement will be
negotiated.
The states, countries and territories eligible for Associate
Membership in the ACS are Aruba, Anguilla, Bermuda, the British Virgin Islands,
the Cayman Islands, Montserrat, Puerto Rico, Turks and Caicos Islands, and the
United States Virgin Islands. In addition, the following have been admitted as
Observers in the ACS: Argentina, Brazil, Canada, Chile, Ecuador, Egypt, India,
Italy, the Kingdom of the Netherlands (in respect of the Netherlands and Aruba),
Morocco, Peru, the Russian Federation and Spain.
The Chaconia ACS Fund intends to diversify its holdings among several
countries and to have, under normal market conditions, investments in the
securities markets of at least 5 countries outside the U.S. The Chaconia ACS
Fund does not have any limitations on the percentage of it assets that may be
invested in securities primarily traded in any one country. The Chaconia ACS
Fund may invest in securities traded in mature markets, such as Japan, Canada
and the United Kingdom; less developed markets in emerging markets.
General
- -------
The Funds may not borrow money except for (1) short-term credits from
banks as may be necessary for the clearance of portfolio transactions, and (2)
borrowings from banks for temporary or emergency purposes, including the meeting
of redemption requests, which would otherwise require the untimely disposition
of its portfolio securities. Borrowing for any purpose
-2-
<PAGE>
including redemptions may not, in the aggregate, exceed 5% of total assets after
giving effect to the borrowing and borrowing for purposes other than meeting
redemptions may not exceed 5% of the value of each Fund's total assets after
giving effect to the borrowing. The Managers will not purchase securities when
borrowings exceed 5% of total assets. The Funds may mortgage, pledge or
hypothecate assets to secure such borrowings.
BASIC INVESTMENT TECHNIQUES
- ---------------------------
Securities Subject to Reorganization
- ------------------------------------
The Funds may invest in both debt and equity securities for which a
tender or exchange offer has been made or announced and in securities of
companies for which a merger, consolidation, liquidation or reorganization
proposal has been announced if, in the judgment of the Managers, there is a
reasonable prospect of capital appreciation significantly greater than the
brokerage and other transaction expenses involved.
In general, securities which are the subject of such an offer or
proposal sell at a premium to their historic market price immediately prior to
the announcement of the offer or may also discount what the stated or appraised
value of the security would be if the contemplated transaction were approved or
consummated. Such investments may be advantageous when the discount
significantly overstates the risk of the contingencies involved; significantly
undervalues the securities, assets or cash to be received by stockholders of the
prospective portfolio company as a result of the contemplated transaction; or
fails adequately to recognize the possibility that the offer or proposal may be
replaced or superseded by an offer or proposal of greater value. The evaluation
of such consistencies requires unusually broad knowledge and experience on the
part of the Investment Manager which must appraise not only the value of the
issuer and its component businesses, as well as the assets or securities to be
received as a result of the contemplated transaction but also the financial
resources and business motivation of the offeror and the dynamics and business
climate when the offer or proposal is in process. In making these investments,
the Funds will not violate any of their investment restrictions including the
requirement that: (a) as to 75% of its total assets, it will not invest more
than 5% of its total assets in the securities of any one issuer, and (b) it will
not invest more than 25% of its total assets in any one industry. Since such
investments are ordinarily short-term in nature, they will tend to increase the
turnover ratio of the Funds, thereby increasing its brokerage and other
transaction expenses, as well as make it more difficult for the Funds to meet
the test for favorable tax treatment as a "Regulated Investment Company" under
Subchapter M of the Internal Revenue Code of 1986 (the "Code") (see "Dividends,
Distributions and Taxes"). The Investment Manager intends to select investments
of the type described which, in its view, have a reasonable prospect of capital
appreciation which is significant in relation to both risk involved and the
potential of available alternative investments, as well as to monitor the effect
of such investments on the tax qualifications test of the Code.
Nonconvertible Debt Securities
- ------------------------------
Under normal market conditions, the Chaconia I&G Fund will invest at
least 25% of its assets in nonconvertible debt securities. For purposes of this
investment policy, nonconvertible debt securities are defined as: (1) Rated
corporate bonds, as well as variable amount master demand notes; unrated bonds
are more speculative in nature than rated bonds; (2) Government securities which
include securities of, or guaranteed by, the U.S. Government, its agencies or
instrumentalities; and (3) Commercial paper which include commercial paper of
companies rated A-1 or A-2 by Standard & Poor's Corporation ("S&P") or rated P-1
or P-2 by Moody's Investors Service, Inc. ("Moody's"). Fixed income securities
rated, at the time of investment, less than BBB by S&P or Baa by Moody's or
which are unrated but of comparable quality as determined by the Investment
Manager, are not investment grade and are viewed by the rating agencies as being
predominantly speculative in character and are characterized by substantial risk
concerning payments of interest and principal, sensitivity to economic
conditions and changes in interest rates, as well as by market price volatility
and/or relative lack of secondary market trading, among other risks. The
Chaconia I&G Fund will not invest any of its assets in noninvestment grade debt
securities.
The market values of fixed income securities generally fall when
interest rates rise and, conversely, rise when interest rates fall.
If the Investment Manager believes that stocks in general are
overvalued, or that interest rates may rise substantially, or that the general
economic environment may be deteriorating, the Investment Manager may assume a
temporary defensive position and may invest up to 100% of the Chaconia I&G
Fund's assets in high quality commercial paper and short term U.S. Government
securities such as Treasury Bills and Treasury Notes.
-3-
<PAGE>
Warrants and Rights
- -------------------
Each of the Funds may invest up to 5% of its net assets in warrants or
rights (other than those acquired in units or attached to other securities)
which entitle the holder to buy equity securities at a specific price during or
at the end of a specific period of time. The Funds will not invest more than 2%
of its total assets in warrants or rights which are not listed on the New York
or American Stock Exchange. For purposes of this investment policy, a warrant is
defined as a certificate giving the holder the right to purchase securities at a
stipulated price within a specific time limit or perpetually. Sometimes a
warrant is offered with securities as an inducement to buy. The prices of
warrants do not necessarily correlate with the prices of the underlying
securities.
When Issued, Delayed Delivery Securities and Forward Commitments
- ----------------------------------------------------------------
The Funds may enter into forward commitments for the purchase or sale
of securities, including on a "when issued" or "delayed delivery" basis in
excess of customary settlement periods for the type of security involved. In
some cases, a forward commitment may be conditioned upon the occurrence of a
subsequent event, such as approval and consummation of a merger, corporate
reorganization or debt restructuring, i.e., a when, as and if issued security.
When such transactions are negotiated, the price is fixed at the time of the
commitment, with payment and delivery taking place in the future, generally a
month or more after the date of the commitment. While the Funds will only enter
into a forward commitment with the intention of actually acquiring the security,
the Funds may sell the security before the settlement date if it is deemed
advisable.
Borrowing
- ---------
The Funds may not borrow money except for (1) short-term credits from
banks as may be necessary for the clearance of portfolio transactions, and (2)
borrowings from banks for temporary or emergency purposes, including the meeting
of redemption requests, which would otherwise require the untimely disposition
of its portfolio securities. Borrowing for any purpose including redemptions may
not, in the aggregate, exceed 5% of total assets after giving effect to the
borrowing and borrowing for purposes other than meeting redemptions may not
exceed 5% of the value of each Fund's total assets after giving effect to the
borrowing. The Investment Manager of the Funds will not purchase securities when
borrowings exceed 5% of total assets. The Funds may mortgage, pledge or
hypothecate assets to secure such borrowings.
Loans of Portfolio Securities
- -----------------------------
To increase income, the Funds may lend its portfolio securities to
securities broker-dealers or financial institutions if (1) the loan is
collateralized in accordance with applicable regulatory requirements (2) the
loan is subject to termination by the Funds at any time, (3) the Funds receives
reasonable interest or fee payments on the loan, (4) the Funds are able to
exercise all voting rights with respect to the loaned securities and (5) the
loan will not cause the value of all loaned securities to exceed 33% of the
value of each Fund's assets.
U.S. Government Securities
- --------------------------
The U.S. Government securities in which the Funds may invest include
direct obligations of the U.S. Treasury, such as Treasury bills, notes and
bonds, and obligations issued or guaranteed by U.S. Government agencies and
instrumentalities, including securities that are supported by the full faith and
credit of the United States, such as Government National Mortgage Association
("GNMA") certificates, securities that are supported by the right of the issuer
to borrow from the U.S. Treasury, such as securities of the Federal Home Loan
Banks, and securities supported solely by the creditworthiness of the issuer,
such as Federal National Mortgage Association ("FNMA") and Federal Home Loan
Mortgage Corporation ("FHLMC") securities.
The Funds may invest in mortgage-backed securities issued or
guaranteed by GNMA, FNMA or FHLMC and representing undivided ownership interests
in pools of mortgages. The mortgages backing these securities include, among
others, conventional 30-year fixed-rate mortgages, 15-year fixed-rate mortgages,
graduated payment mortgages and adjustable rate mortgages. The U.S. Government
or the issuing agency guarantees the payment of the interest on and principal of
these securities. The guarantees do not extend to the securities' yield or
value, however, which are likely to vary inversely with fluctuations in interest
rates, and, the guarantees do not extend to the yield or value of each Fund's
shares. These securities are in most cases "pass-through" instruments, through
which the holders receive a share of all interest and principal payments from
the mortgages underlying the securities, net of certain fees. The principal
amounts of such underlying mortgages generally may be prepaid in
-4-
<PAGE>
whole or in part by the mortgagees at any time without penalty and the
prepayment characteristics of the underlying mortgages may vary. During periods
of declining interest rates, prepayment of mortgages underlying mortgage-backed
securities can be expected to accelerate. When the mortgage obligations are
prepaid, the Funds will reinvest the prepaid amounts in other income producing
securities, the yields of which will reflect interest rates prevailing at the
time. Accelerated prepayments adversely affect yields for pass-through
securities purchased at a premium and may involve additional risk of loss of
principal because the premium may not have been fully amortized at the time the
obligation is repaid. The opposite is true for pass-through securities purchased
at a discount.
The Schemes of the Trinidad and Tobago Unit Trust Corporation
- -------------------------------------------------------------
The Unit Trust Corporation was created by the Unit Trust Corporation
of Trinidad and Tobago Act, 1981 (Republic of Trinidad and Tobago Act No. 26 of
1981). The Unit Trust Corporation's main office is located in the City of
Port-of-Spain, Trinidad. The affairs of the Unit Trust Corporation are managed
by a board of directors.
The Schemes of the Trinidad and Tobago Unit Trust Corporation are
investment companies as defined under the 1940 Act and their respective
investments are at all times identified separate from the investments of the
Unit Trust Corporation itself. Accounts of each of the Schemes of the Trinidad
and Tobago Unit Trust Corporation are prepared separately from those of the Unit
Trust Corporation. When an investor purchases units from the Unit Trust
Corporation, he is purchasing units issued from the Schemes of the Trinidad and
Tobago Unit Trust Corporation. The transaction is administered by the Unit Trust
Corporation on behalf of the Schemes of the Trinidad and Tobago Unit Trust
Corporation.
The assets of the Schemes of the Trinidad and Tobago Unit Trust
Corporation are predominantly invested in equity securities of Trinidad and
Tobago corporations, and in fixed income securities of those corporations, as
well as in Trinidad and Tobago government securities. As of September 30, 1999,
the Schemes of the Trinidad and Tobago Unit Trust Corporation had an aggregate
of approximately $488,000,000 (U.S. dollars) under management and approximately
263,000 unitholders.
The financial records of the Unit Trust Corporation are examined and
audited by the Auditor General of Trinidad and Tobago. The financial statements
and records of the Unit Trust Corporation are prepared in accordance with the
Trinidad and Tobago Accounting Standards and are reported in Trinidad and Tobago
dollars.
The 1940 Act limits the extent to which the Funds may purchase equity
securities of the Schemes of the Trinidad and Tobago Unit Trust Corporation or
any other investment companies. No more than 10% of each Fund's total assets may
be used to purchase any securities of investment companies. The Funds will not
purchase more than 3% of the total outstanding voting stock of an investment
company nor purchase securities of an investment company having an aggregate
value in excess of 5% of the value of the total assets of the investment
company.
As of September 30, 1999, the Unit Trust Corporation beneficially
owned 2.60% of the outstanding voting stock of the Chaconia I&G Fund.
CERTAIN INVESTMENT STRATEGIES AND SPECIAL RISK CONSIDERATIONS
- -------------------------------------------------------------
All investments, including those in mutual funds, have risks. No
investment is suitable for all investors. The Funds are designed for long term
investors who can accept the fluctuations in portfolio value and other risks
associated with the primary objective of seeking current income and capital
appreciation through investment in securities. There can be no assurance that
the Funds will achieve their objective.
The Funds will not make significant investments in securities of any
one issuer to reduce risk. Although risk cannot be eliminated, this strategy
reduces the impact of any single investment. The Funds may invest in both large
and small companies. Investments in small companies involve greater risk than is
customarily associated with more established companies. Smaller companies often
have limited product lines, markets, management personnel, research and/or
financial resources. The securities of small companies, which may be thinly
capitalized, may have more limited marketability and be subject to more abrupt
or erratic market movements than securities of larger companies or the market
averages in general.
-5-
<PAGE>
Any investment by the Funds in short, medium or long term interest
bearing obligations has the risk of principal fluctuation due to changing
interest rates and the ability of the issuer to repay the obligation at
maturity. Fixed income instrument prices are inversely related to interest rate
movements, but proportional to the maturity of the instruments. That is,
long-term instrument prices rise or fall more than short-term instruments for a
given change in interest rates. Certain risk factors are also associated with
other investment practices of the Funds (none of which is expected to involve
more than 25% of each Fund's net assets), including investing in debt securities
and investing in foreign securities. Although the Funds do not purchase
securities with a view of rapid turnover, there are no limitations on the length
of time portfolio securities must be held. Each Fund's portfolio turnover rate
is not expected to exceed 100%. A portfolio turnover exceeding 100% generally
results in increased transaction expenses and the realization of capital gains
and losses.
There are certain risks involved in investing in securities of
companies and governments of foreign nations that are in addition to the usual
risks inherent in U.S. investments. These risks include those resulting from
fluctuations in currency exchange rates, devaluation of currencies, future
adverse political and economic developments and the possible imposition of
currency exchange blockages or from other foreign governmental laws or
restrictions. Changes in foreign currency exchange rates may affect the value of
each Fund's assets, the value of dividends and interest earned, gains and losses
realized on the sale of securities and net investment income and gains to be
distributed to stockholders by each Fund. In addition, many of the securities
held by each Fund will not be registered with, nor the issuers thereof be
subject to reporting requirements of, the Securities and Exchange Commission
(the "SEC"). Accordingly, there may be less publicly available information about
the securities and about the foreign company or government issuing them than is
available about a U.S. company or U.S. Government entity. Foreign issuers are
not subject to uniform financial reporting standards, practices and requirements
comparable to those applicable to U.S. issuers. Furthermore, with respect to
some foreign countries, there is the possibility of expropriation,
nationalization or confiscatory taxation, limitations on the removal of funds or
other assets of the Funds, including the withholding of dividends, political or
social instability or domestic developments that could affect U.S. investments
in those countries. Moreover, individual foreign economies may differ favorably
or unfavorably from the U.S. economy in such respects as growth of gross
national product, rate of inflation, capital investment, resource
self-sufficiency and balance of payments positions. The Funds may invest in
securities of foreign governments (or agencies or instrumentalities thereof) and
many, if not all, of the foregoing considerations apply to such investments as
well. Finally, securities of some foreign companies are less liquid and their
prices are more volatile than securities of comparable U.S. companies, and
certain foreign countries are known to experience long delays between the trade
and settlement dates of securities purchased or sold.
Foreign securities may be subject to foreign government taxes that
would reduce the net return on such securities and the Funds may be affected
unfavorably by exchange control regulations. Investment in foreign securities
will also result in higher expenses due to the cost of converting foreign
currency into U.S. dollars, the payment of fixed brokerage commissions on
foreign exchanges and the expense of maintaining securities with foreign
custodians.
INVESTMENT RESTRICTIONS
- -----------------------
The Funds have adopted the following restrictions as fundamental
policies, which may not be changed without the favorable vote of the holders of
a "majority," as defined in the Investment Company Act of 1940 (the "1940 Act"),
of each Fund's outstanding voting securities. Under the 1940 Act, the vote of
the holders of a majority of each Fund's outstanding voting securities means the
vote of the holders of the lesser of (i) 67% of the shares of each Fund
represented at a meeting at which the holders of more than 50% of its
outstanding shares are represented or (ii) more than 50% of the outstanding
shares.
The Funds may not:
1. Purchase securities on margin, except such short-term credits as
may be necessary for the clearance of transactions.
2. Make short sales of securities or maintain a short position and may
not purchase or write options on securities, indices, foreign currencies or
futures.
3. Issue senior securities, borrow money or pledge its assets, except
that the Funds may borrow on an unsecured basis from banks for temporary or
emergency purposes or for the clearance of transactions in amounts not exceeding
5% of its total
-6-
<PAGE>
assets (not including the amount borrowed) and will not purchase securities
while borrowings in excess of 5% of the value of the Fund's total assets are
outstanding.
4. Buy or sell commodities or commodity contracts including futures
contracts or buy or sell real estate or interests in real estate (although it
may purchase and sell securities which are secured by real estate and securities
of companies which invest or deal in real estate).
5. Make loans (except for purchases of publicly-traded debt securities
consistent with each Fund's investment policies).
6. Make investments for the purpose of exercising control or
management.
7. Act as underwriter (except to the extent the Funds may be deemed to
be an underwriter in connection with the sale of securities in each Fund's
investment portfolios), exclusive of purchases of restricted securities (i.e.,
securities that must be registered under the Securities Act of 1933 before they
may be offered or sold to the public) if such purchases at the time thereof
would not cause more than 15% of the value of each Fund's net assets to be
invested in all such restricted or illiquid assets.
8. Invest 25% or more of its total assets at the time of purchase in
any securities of issuers in one industry. U.S. Government securities are
excluded from this restriction.
The Funds observe the following restrictions as a matter of operating
policy but not fundamental policy, pursuant to positions taken by federal and
state regulatory authorities:
The Funds may not:
1. Invest more than 15% of its net assets in (i) securities which are
restricted or for which market quotations are not readily available; (ii) fixed
time deposits subject to withdrawal penalties (other than overnight deposits);
and (iii) repurchase agreements having a maturity of more than seven days.
2. Purchase any security if as a result the Funds would then hold more
than 10% of any class of securities of an issuer (taking all common stock issues
as a single class, all preferred stock issues as a single class, and all debt
issues as a single class) or more than 10% of the outstanding voting securities
of an issuer.
3. Invest in securities of any issuer if, to the knowledge of the
Funds, any officer or director of the Funds or of the Investment Manager owns
more than 1/2 of 1% of the outstanding securities of such issuer, and such
directors who own more than 1/2 of 1% own in the aggregate more than 5% of the
outstanding securities of such issuer.
4. Invest more than 5% of the value of its net assets in warrants
(included, in that amount, but not to exceed 2% of the value of each Funds' net
assets, may be warrants which are not listed on the New York or American Stock
Exchange).
5. Invest in any security if as a result the Funds would have more
than 5% of its total assets invested in securities of companies which together
with any predecessor have been in continuous operation for fewer than three
years.
6. Invest in real estate limited partnerships, or oil, gas and other
mineral leases.
MANAGEMENT
- ----------
Board of Directors
- ------------------
The overall management of the business and affairs of the Corporation
is vested with its Board of Directors. The Board of Directors approves all
significant agreements between the Funds and persons or companies furnishing
services to it, including each Fund's agreement with the Managers, their
Custodian, their Transfer Agent, selected broker-dealers and their
Administrator. The day-to-day operations of the Corporation are delegated to its
officers, subject to the investment objectives and policies of the Corporation
and to general supervision by the Board of Directors.
-7-
<PAGE>
The Board of Directors is presently comprised of five members, four of
whom reside outside the United States. Directors Clarry Benn, Judy Chang,
Renrick Nickie and Roosevelt Williams are residents of the Republic of Trinidad
and Tobago. Judy Chang serves as Chair of the Board of Directors. Clarry Benn
and Renrick Nickie also serve as executive officers of the Corporation.
The Maryland General Corporation Law subjects all directors and
officers of the Corporation to fiduciary duties for the lawful management of the
Corporation's organization and operation, including federal and state securities
laws. Investors of the Funds may not be able to effect service of process within
the United States upon the Corporation's nonresident directors and officers for
the enforcement of civil liabilities under federal and state securities laws.
The Corporation has appointed an agent for service of process in the states
where the Corporation has registered its securities for offer and sale.
The United States and the Republic of Trinidad and Tobago are not
parties to a convention governing the mutual recognition and enforcement of
foreign money judgments. Investors of the Funds may not be able to enforce a
United States or Trinidad and Tobago court judgment against nonresident
directors and officers of the Corporation.
The directors and officers of the Corporation, their business
addresses and principal occupations during the past five years are as follows.
Directors deemed to be "interested persons" of the Corporation for purposes of
the 1940 Act are indicated by an asterisk.
<TABLE>
<CAPTION>
Position(s) Held Principal Occupation
Name and Address With Registrant During Last Five Years
---------------- --------------- ----------------------
<S> <C> <C>
*Judy Y. Chang Director and Chairman Chairman of Trinidad and Tobago Unit
Trinidad and Tobago Unit Trust Trust Corporation, 8-97 to Present;
Corporation Consultant, 7-97 to Present; Partner,
74 Independence Square Price Waterhouse, 1-80 to 6-97.
Port-of-Spain
Trinidad and Tobago, W.I.
*Clarry Benn Director and President Executive Director, 9-96 to Present;
Trinidad and Tobago Unit Trust Executive Manager, Investments and
Corporation Financial Trust Accounting, 8-92 to 8-96.
74 Independence Square
Port-of-Spain
Trinidad and Tobago, W.I.
*Renrick Nickie Director, Vice President Executive Manager, Marketing and
Trinidad and Tobago Unit Trust and Treasurer Operations, 8-92 to Present.
Corporation
74 Independence Square
Port-of-Spain
Trinidad and Tobago, W.I.
Dr. John A. Cole Director Dean of the School of Professional Programs,
1600 Harden Street 8-98 to Present, Benedict College;
Columbia, SC 29204 Visiting Professor of Finance, 8-97 to 8-98,
University of North Carolina at Charlotte;
Professor of Finance, 8-95 to Present,
South Carolina State University;
Associate Professor of Finance, 8-89 to 7-95,
Florida A&M University.
</TABLE>
-8-
<PAGE>
<TABLE>
<CAPTION>
Position(s) Held Principal Occupation
Name and Address With Registrant During Last Five Years
---------------- --------------- ----------------------
<S> <C> <C>
Dr. Roosevelt J. Williams Director Director, Cipriani College of Labour and
Cipriani College of Labour and Cooperative Studies, 8-97 to Present;
Cooperative Studies Education Consultant, 1-96 to 7-97;
Churchill Roosevelt Highway Professor at Howard University, 1989 to
Valsayn, Trinidad and Tobago, W.I. 12-95.
Ulice Payne, Jr. Secretary Attorney and Partner, Foley &
Foley & Lardner Lardner, 2-98 to Present; Attorney
777 East Wisconsin Avenue and Shareholder, Reinhart,
Suite 3700 Boerner, Van Deuren, Norris &
Milwaukee, WI 53202 Rieselbach, s.c., 2-90 to 2-98.
</TABLE>
The Corporation pays directors of the Funds $500 per meeting of the
board attended by the director. Directors also are reimbursed by the Corporation
for any expenses incurred in attending meetings.
Ownership of Management and Principal Shareholders
- --------------------------------------------------
As of August 31, 1999, all officers and directors of the Corporation
as a group (6 persons) beneficially owned 18,625 shares of the Chaconia I&G Fund
(which constituted .39% of its then outstanding shares). As of such date, there
is no beneficial holder of more than 5% of the Chaconia I&G Fund's shares.
I&G Fund Managers
- -----------------
Subject to supervision by the Board of Directors, investment
management and administration services will be provided to the Chaconia I&G Fund
by INVESCO CAPITAL MGMT. Inc. (the "I&G Fund Manager") pursuant to an investment
management agreement executed by the Chaconia I&G Fund on October 29, 1992 ("I&G
Contract"). Under the I&G Contract, the I&G Fund Manager will provide a
continuous investment program for the Chaconia I&G Fund and make decisions and
place orders to buy, sell or hold particular securities and futures. The I&G
Fund Manager also will supervise all matters relating to the operation of the
Chaconia I&G Fund and will obtain clerical staff, office space, equipment and
services. As compensation for its services, the I&G Fund Manager will receive a
monthly fee at an annual rate of the greater of $50,000 or 0.75% of 1% on first
$10 million, 0.50% of 1% on next $10 million and 0.25% of 1% over $20 million of
the Chaconia I&G Fund's average daily net assets. During the fiscal years ended
December 31, 1998, 1997 and 1996, the Chaconia I&G Fund paid the I&G Fund
Manager advisory fees of $147,275, $93,537 and $90,164, respectively
Under the I&G Contract, the I&G Fund Manager will not be liable to the
Chaconia I&G Fund for any error of judgment by the I&G Fund Manager or any loss
sustained by the Chaconia I&G Fund except in the case of a breach of fiduciary
duty with respect to the receipt of compensation for services (in which case any
award of damages will be limited as provided in the 1940 Act) or of willful
misfeasance, bad faith, gross negligence or reckless disregard of duty.
The I&G Contract was approved by the Board of Directors and by a
majority of the directors who neither are interested persons of the Chaconia I&G
Fund nor have any direct or indirect financial interest in the I&G Contract or
any agreement related thereto ("Independent Directors"). In February 1997, a
subsidiary of INVESCO PLC, ultimate parent of the I&G Fund Manager, merged with
AIM Management Group, Inc., resulting in a new financial services company. This
transaction was deemed a change in control of the I&G Fund Manager under the
1940 Act. The Independent Directors and the Board of Directors unanimously
approved the I&G Contract in February 1997. The I&G Contract was approved by
vote of a majority of the outstanding voting securities of the Chaconia I&G Fund
at a special shareholders' meeting in November 1997. The I&G Contract will
remain in effect until terminated by either party. The I&G Contract shall be
specifically approved at least annually (i) by a majority vote of the
Independent Directors cast in person at a meeting called for the purpose of
voting on such approval, and (ii) by the Board of Directors or by vote of a
majority of the outstanding voting securities of the Chaconia I&G Fund.
-9-
<PAGE>
The I&G Contract is terminable by vote of the Board of Directors or by
the holders of a majority of the outstanding voting securities of the Chaconia
I&G Fund at any time without penalty, on 60 days' written notice to the I&G Fund
Manager. The I&G Contract also may be terminated by the I&G Fund Manager on 60
days' written notice to the Chaconia I&G Fund. The I&G Contract terminates
automatically upon its assignment (as defined in the 1940 Act).
ACS Fund Manager
- ----------------
Subject to supervision by the Board of Directors, investment
management and administration services will be provided to the Chaconia ACS Fund
by Chaconia Fund Services, Inc. (the "ACS Fund Manager") pursuant to an
investment management agreement executed by the Chaconia ACS Fund on October 28,
1999 ("ACS Contract," together with the I&G Contract collectively referred to
herein as the "Management Contracts"). Under the ACS Contract, the ACS Fund
Manager will provide a continuous investment program for the Chaconia ACS Fund
and make decisions and place orders to buy, sell or hold particular securities
and futures. The ACS Fund Manager also will supervise all matters relating to
the operation of the Chaconia ACS Fund and will obtain clerical staff, office
space, equipment and services. As compensation for its services, the ACS Fund
Manager will receive a monthly fee at an annual rate of the greater of $50,000
or 0.75% of 1% on first $10 million, 0.50% of 1% on next $10 million and 0.25%
of 1% over $20 million of the Chaconia ACS Fund's average daily net assets. It
is anticipated that the Chaconia ACS Fund will not commence operations until
December, 1999.
Under the ACS Contract, the ACS Fund Manager will not be liable to the
Chaconia ACS Fund for any error of judgment by the ACS Fund Manager or any loss
sustained by the Chaconia ACS Fund except in the case of a breach of fiduciary
duty with respect to the receipt of compensation for services (in which case any
award of damages will be limited as provided in the 1940 Act) or of willful
misfeasance, bad faith, gross negligence or reckless disregard of duty.
The ACS Contract was approved by the Board of Directors and by a
majority of the Independent Directors. The ACS Contract will remain in effect
until terminated by either party. The ACS Contract shall be specifically
approved at least annually (i) by a majority vote of the Independent Directors
cast in person at a meeting called for the purpose of voting on such approval,
and (ii) by the Board of Directors or by vote of a majority of the outstanding
voting securities of the Chaconia ACS Fund.
The ACS Contract is terminable by vote of the Board of Directors or by
the holders of a majority of the outstanding voting securities of the Chaconia
ACS Fund at any time without penalty, on 60 days' written notice to the ACS Fund
Manager. The ACS Contract also may be terminated by the ACS Fund Manager on 60
days' written notice to the Chaconia ACS Fund. The ACS Contract terminates
automatically upon its assignment (as defined in the 1940 Act).
Administrator
- -------------
American Data Services, Inc. (the "Administrator") is located at The
Hauppauge Corporate Center, 150 Motor Parkway, Suite 109, Hauppauge, New York
11788, and serves as administrator to the Funds pursuant to agreements with the
Funds (the "Administrative Services Agreements"). Pursuant to the Administrative
Services Agreements, subject to the overall authority of the Board of Directors
in accordance with Maryland law, the Administrator will assist in each Fund's
administration and operation, including, but not limited to, the preparation of
statistical and research data, data processing services, preparation of
management reports for performance and compliance, as well as prepare and
maintain each Fund's operating expense budget. During the fiscal years ended
December 31, 1998, 1997 and 1996, the Chaconia I&G Fund paid the Administrator
$65,161, $52,499 and $50,677, respectively, pursuant to its Administrative
Services Agreement. It is anticipated that the Chaconia ACS Fund will not
commence operations until December.
Fund Operating Expenses
- -----------------------
In addition to the fees payable to the Managers, the Advisor and the
Administrator, the Funds are responsible for their operating expenses,
including: (i) interest and taxes; (ii) brokerage commissions; (iii) insurance
premiums; (iv) compensation and expenses of, directors other than those
affiliated with the Managers and the Advisor; (v) legal and audit expenses; (vi)
fees and expenses of the Custodian, shareholder service or Transfer Agent; (vii)
fees and expenses for registration or qualification of the Funds and their
shares under federal or state securities laws; (viii) expenses of preparing,
printing and mailing reports and notices and proxy material to stockholders;
(ix) other expenses incidental to holding any stockholder meetings; (x) dues or
assessments of
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or contributions to the Investment Company Institute or any successor; (xi) Rule
12b-1 fees paid by the Funds in connection with the Distribution Plan; (xii)
service fees paid by the Funds in connection with the personal service and/or
maintenance of shareholder accounts; and (xiii) such nonrecurring expenses as
may arise, including litigation affecting the Funds and the legal obligations
with respect to which the Funds may have to indemnify their officers and
directors.
PORTFOLIO TRANSACTIONS AND BROKERAGE
- ------------------------------------
The Management Contracts state that in connection with its duties to
arrange for the purchase and the sale of securities and futures held in the
portfolio of the Funds by placing purchase and sale orders for the Funds, the
Managers shall select such registered broker-dealers ("brokers") as shall, in
its judgment, achieve the policy of "best execution," i.e., prompt and efficient
execution at the most favorable securities price. In making such selection, the
Managers are authorized in the Management Contracts to consider the reliability,
integrity and financial condition of the brokers. The Managers are also
authorized by the Management Contracts to consider whether the brokers provide
brokerage and/or research services to the Funds and/or other accounts of the
Managers.
The Management Contracts state that the commissions paid to brokers
may be higher than other brokers would have charged if a good faith
determination is made by the Managers that the commission is reasonable in
relation to the services provided, viewed in terms of either that particular
transaction on the Managers' overall responsibilities as to the accounts as to
which it exercises investment discretion and that the Managers shall use its
judgment in determining that the amount of commissions paid are reasonable in
relation to the value of brokerage and research services provided and need not
place or attempt to place a specific dollar value on such services or on the
portion of commission rates reflecting such services. The Management Contracts
provide that to demonstrate that such determinations were in good faith, and to
show the overall reasonableness of commissions paid, the Managers shall be
prepared to show that commission paid (i) were for purposes contemplated by the
Management Contracts; (ii) were for products or services which provide lawful
and appropriate assistance to its decision making process; and (iii) were within
a reasonable range as compared to the rates charged by brokers to other
institutional investors as such rates may become known from available
information. The Managers also are authorized to consider sales of shares of the
Funds and/or of any other investment companies for which the Managers act as
Managers or advisor as a factor in the selection of brokers to execute brokerage
and principal transactions, subject to the requirements of "best execution," as
defined above.
The research services discussed above may be in written form or
through direct contact with individuals and may include information as to
particular companies and securities as well as market, economic or institutional
areas and, information assisting the Funds in the valuation of their
investments. The research which the Managers receive for brokerage commissions,
whether or not useful to the Funds, may be useful to it in managing the accounts
of its other advisory clients. Similarly, the research received for the
commissions of such accounts may be useful to the Funds.
The debt securities which will be the principal component of each
Fund's portfolio are generally traded on a "net" basis with dealers acting as
principal for their own accounts without a stated commission although the price
of the security usually includes a profit to the dealer. Money market
instruments usually trade on a "net" basis as well. On occasion, certain money
market instruments may be purchased by the Funds directly from an issuer in
which case no commissions or discounts are paid. In underwritten offerings,
securities are purchased at a fixed price which includes an amount of
compensation to the underwriter, generally referred to as the underwriter's
concession or discount.
Brokerage commissions in Trinidad and Tobago, as in the U.S., are
negotiable. Trinidad and Tobago brokers, which act as agent, and dealers, which
act as principal, are subject to government regulation if they deal with public
investors.
PURCHASE AND REDEMPTION OF SHARES
- ---------------------------------
The procedures for purchasing shares of the Funds are summarized in
the prospectus under "How to Purchase Shares" and the procedures for redemption
of shares are summarized in the prospectus under "How to Redeem Shares."
Investors may now elect to purchase shares through the continuing automatic
transfer plan as described in the prospectus.
The Funds will redeem shares solely in cash up to the lesser of
$250,000 or 1% of the net asset value during any 90-day period for any one
stockholder. The Funds reserve the right to pay other redemptions, either total
or partial, by a distribution in kind of readily marketable securities (instead
of cash) from each Fund's portfolio. The securities distributed in such a
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distribution would be valued at the same amount as that assigned to them in
calculating the net asset value for the shares being redeemed. If a stockholder
receives a distribution in kind, he or she should expect to incur transaction
costs when he or she converts the securities to cash.
Cancellation of purchase orders for each Fund's shares (as, for
example, when checks submitted to purchase shares are returned unpaid) cause a
loss to be incurred when the net asset value of each Fund's shares on the date
of cancellation is less than the original date of purchase. The investor is
responsible for such loss and the Funds may reimburse itself or selected
broker-dealers for such loss by automatically redeeming shares from any account
registered in that stockholder's name, or by seeking other redress.
Determination of Net Asset Value
- --------------------------------
The net asset value of each Fund's shares will fluctuate and is
determined as of the close of trading on the New York Stock Exchange (the
"Exchange") (currently 4 p.m. Eastern time) each business day. The Exchange
annually announces the days on which it will not be open for trading. The most
recent announcement indicates that it will not be, open on the following days:
New Years Day, Presidents Day, Good Friday, Memorial Day, Independence Day,
Labor Day, Thanksgiving Day and Christmas Day. However, the Exchange may close
on days not included in that announcement.
The net asset value per share is computed by dividing the value of the
securities held by each Fund plus any cash or other assets (including interest
and dividends accrued but not yet received) minus all liabilities (including
accrued expenses) by the total number of each Fund's shares outstanding at such
time. Each Fund values its assets based on their current market value when
market quotations are readily available. If such value cannot be established,
assets are valued at fair value as determined in good faith by or under the
direction of the Board of Directors.
Securities for which market quotations are not readily available are
valued at fair market value as determined in good faith under procedures
established by the Board of Directors. Short-term debt securities which mature
in more than 60 days are valued at current market quotations. Short-term debt
securities which mature in 60 days or less are valued at amortized cost if their
term to maturity from the date of purchase was 60 days or less, or by amortizing
their value on the 61st day prior to maturity, if their term to maturity from
the date of purchase exceeded 60 days, unless the Board of Directors determines
that such valuation does not represent fair value.
Following the calculation of security values in terms of currency in
which the market quotation used is expressed ("local currency"), the valuing
agent shall calculate these values in terms of United States dollars on the
basis of the conversion of the local currencies (if other than U.S.) into United
States dollars at the rates of exchange prevailing at the value time as
determined by the valuing agent. The value of other property owned by the Funds
shall be determined in a manner which, in the discretion of the valuing agent of
the Funds, most fairly reflects fair market value of the property on such date.
Trading in securities on European securities exchanges and
over-the-counter markets is normally completed well before the close of business
on each business day in New York (i.e., a day on which the New York Stock
Exchange is open). In addition, European securities trading generally or in a
particular country or countries may not take place on all business days in New
York. Furthermore, trading takes place in various foreign markets on days which
are not business days in New York and on which each Fund's net asset value is
not calculated. Each Fund calculates its net asset value per share and,
therefore, effects sales, redemptions and repurchases of its shares, as of the
close of the New York Stock Exchange once on each day on which the New York
Stock Exchange is open. Such calculation does not take place contemporaneously
with the determination of the prices of the majority of the portfolio securities
used in such calculation. If events materially affecting the value of such
securities occur between the time when their price is determined and the time
when each Fund's net asset value is calculated, such securities will be valued
at fair value as determined in good faith by the Board of Directors.
RETIREMENT PLANS
- ----------------
Individual shareholders may establish their own tax-sheltered
Individual Retirement Account ("IRA"). The Funds offer two types of IRAs that
can be adopted by executing the appropriate Internal Revenue Service ("IRS")
form. The minimum investment required to open an IRA for investment in shares of
each Fund is $250 for an individual except that both the individual and his or
her spouse would be able to establish separate IRAs if their combined investment
is $400.
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<PAGE>
Traditional IRA
- ---------------
In a Traditional IRA, amounts contributed to the IRA may be tax
deductible at the time of contribution depending on whether the shareholder is
an "active participant" in an employer-sponsored retirement plan and the
shareholder's income. Distributions from a Traditional IRA will be taxed at
distribution except to the extent that the distribution represents a return of
the shareholder's own contributions for which the shareholder did not claim (or
was not eligible to claim) a deduction. Distributions prior to age 59-1/2 may be
subject to an additional 10% tax applicable to certain premature distributions.
Distributions must commence by April 1 following the calendar year in which the
shareholder attains age 70-1/2. Failure to begin distributions by this date (or
distributions that do not equal certain minimum thresholds) may result in
adverse tax consequences.
Roth IRA
- --------
In a Roth IRA, amounts contributed to the IRA are taxed at the time of
contribution, but distributions from the IRA are not subject to tax if the
shareholder has held the IRA for certain minimum periods of time (generally,
until age 59-1/2). Shareholders whose incomes exceed certain limits are
ineligible to contribute to a Roth IRA. Distributions that do not satisfy the
requirements for tax-free withdrawal are subject to income taxes (and possibly
penalty taxes) to the extent that the distribution exceeds the shareholder's
contributions to the IRA. The minimum distribution rules applicable to the
Traditional IRAs do not apply during the lifetime of the shareholder. Following
the death of the shareholder, certain minimum distribution rules apply.
For Traditional and Roth IRAs, the maximum annual contribution
generally is equal to the lesser of $2,000 or 100% of the shareholder's
compensation (earned income). An individual may also contribute to a Traditional
IRA or Roth IRA on behalf of his or her spouse provided that the individual has
sufficient compensation (earned income). Contributions to a Traditional IRA
reduce the allowable contribution under a Roth IRA, and contributions to a Roth
IRA reduce the allowable contribution to a Traditional IRA.
Each Fund's shares may also be a suitable investment for other types
of qualified pension or profit sharing plans which are employer-sponsored,
including deferred compensation or salary reduction plans known as 401(k) plans
which give participants the right to defer portions of their compensation for
investment on a tax deferred basis until distributions are made from the plans.
DIVIDENDS, DISTRIBUTIONS AND TAXES
- ----------------------------------
Taxes
- -----
The Funds intend to qualify for tax treatment as a "regulated
investment company" under Subchapter M of the Internal Revenue Code, as amended
(the "Code"). Such qualification generally will relieve the Funds of liability
for federal income taxes to the extent its earnings are distributed.
The Funds contemplate declaring as dividends each year at least 90% of
its investment company income. An investor who receives a dividend derived from
investment company taxable income (which includes any excess of net short-term
capital gain over net long-term capital loss) treats the dividend, whether paid
in the form of cash or additional shares, as a receipt of ordinary income.
Dividends derived from exempt-interest income generally may be treated by
shareholders as items of interest, excludable from their gross income under
section 103(a) of the Code, unless such exclusion from income would be
disallowed.
Under the Code, amounts not distributed on a timely basis in
accordance with certain distribution requirements are subject to a nondeductible
4% excise tax. To avoid the tax, the Funds must distribute, during each calendar
year, an amount equal to, at the minimum, the sum of (1) 98% of its ordinary
income (not taking into account any capital gains or losses) for the calendar
year; (2) 98% of its capital gains in excess of its capital losses for the
12-month period ending on October 31 of the calendar year; and (3) all ordinary
income and net capital gains for previous years that were not previously
distributed. A distribution will be treated as paid during the calendar year if
it is paid during the calendar year or declared by the Funds in October,
November or December of the year, payable to stockholders of record on a date
during such month and paid by the Funds during January of the following year.
Any such distributions paid during January of the following year will be deemed
to be received on December 31 of the year the distributions are declared, rather
than when the distributions are received.
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<PAGE>
Dividends and Distributions
- ---------------------------
Any dividend or distribution of the Fund's excess of net long-term
capital gain over its net short-term capital loss will be taxable to a
shareholder as a long-term capital gain, regardless of how long the shareholder
has held shares of the Funds. Capital gain dividends that are payable to
individuals, estate or trusts for taxable years ending on or after May 7, 1997
will be designated as a 20% rate gain distribution, an unrecaptured section 1250
gain distribution or a 28% rate gain distribution depending upon the Fund's
holding period for the shares. Capital gain dividends that are payable to
corporations are taxable at a 28% rate if held for more than one year. The 70%
dividends-received deduction for corporations applies to dividends from each
Fund's net investment income, subject to proportionate reductions if aggregate
dividends received by each Fund from domestic corporations in any year are less
than 100% of the distribution of net investment company taxable income made by
each Fund.
The Transfer Agent is required to send stockholders and the Internal
Revenue Service an annual statement detailing federal tax information, including
information about dividends and distributions (both taxable and tax-exempt) paid
to stockholders during the preceding year. This statement should be kept as a
permanent record. A fee may be charged for any duplicate information requested.
Before investing in the Funds, individuals are advised to check the
consequences of local and state tax laws, and the consequences for any
retirement plan offering tax benefits. Stockholders are urged to consult their
attorneys or tax advisors regarding specific questions as to federal, state or
local taxes.
The Corporation reserves the right to offer investors a range of
investment opportunities by providing a choice of investments in various
portfolios and, consequently, the right to create and issue a number of
different series shares each of which relate to the assets of the separate
portfolios. In such case the shares of each series would participate equally in
the earnings, dividends and assets of a particular portfolio and would vote
separately to approve management agreements or changes in investment policies.
However, shares of all series would vote together in the election or selection
of directors, principal underwriters and accountants and on any proposed
material amendment to the Corporation's Certificate of Incorporation. For
federal tax purposes, each "fund" of a series is treated as a separate
corporation.
Upon liquidation of the Funds or any series, stockholders of the
affected series would be entitled to share pro rata in the net assets of their
respective series available for distribution to such stockholders.
Backup Withholding
- ------------------
The Funds may be required to withhold federal income tax at the rate
of 31% of all taxable distributions payable to stockholders who fail to provide
the Funds with their correct taxpayer identification number or to make required
certifications or who have been notified by the Internal Revenue Service that
they are subject to backup withholding. Backup withholding is not an additional
tax. Any amounts withheld may be credited against a stockholder's federal income
tax liability.
INVESTMENT PERFORMANCE INFORMATION
- ----------------------------------
The Funds may furnish data about its investment performance in
advertisements, sales literature and reports to stockholders. "Total return"
represents the annual percentage change in value of $10,000 invested at the
maximum public offering price for the one year period and the life of the Funds
through the most recent calendar quarter, assuming reinvestment of all dividends
and distributions. The Funds may also furnish total return calculations for
these and other periods based on investments at various sales charge levels or
net asset value.
Quotations of yield will be based on the investment income per share
earned during a particular 30-day (or one month) period, less expenses accrued
during the period ("net investment income") and will be computed by dividing net
investment income by the maximum offering price per share on the last day of the
period, according to the following formula:
2 [(a-b + 1) 6 - 1]
---
YIELD = cd
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where a = dividends and interest earned during the period, b = expenses accrued
for the period (net of reimbursements), c = the average daily number of shares
outstanding during the period that were entitled to receive dividends and d =
the maximum offering price per share on the last day of the period.
Quotations of total return will reflect only the performance of a
hypothetical investment in the Funds during the particular time period shown.
Each Fund's total return and current yield may vary from time to time depending
on market conditions, the compositions of each Fund's portfolio and operating
expenses. These factors and possible differences in the methods used in
calculating yield should be considered when comparing each Fund's current yield
to yields published for other investment companies and other investment
vehicles. Total return and yield should also be considered relative to changes
in the value of the Fund's shares and the risks associated with each Fund's
investment objectives and policies. At any time in the future, total returns and
yields may be higher or lower than past total returns and yields and there can
be no assurance that any historical return or yield will continue.
In connection with communicating its yield or total return to current
or prospective stockholders, the Funds may also compare these figures to the
performance of other mutual funds tracked by mutual fund rating services or to
other unmanaged indexes which may assume reinvestment of dividends but generally
do not reflect deductions for administrative and management costs.
Quotations of each Fund's total return will represent the average
annual compounded rate of return of a hypothetical investment in the Funds over
periods of one, five and ten years (up to the life of the Funds), and are
calculated pursuant to the following formula:
P (1 + T)n = ERV
(where P = a hypothetical initial payment of $10,000, T = the average annual
total return, n = the number of years and ERV = the redeemable value at the end
of the period of a $10,000 payment made at the beginning of the period). All
total return figures will reflect the deduction of Fund expenses (net of certain
expenses reimbursed by the Advisor) on an annual basis and will assume that all
dividends and distributions are reinvested and will deduct the maximum sales
charge, if any is imposed.
GENERAL INFORMATION
- -------------------
The Corporation, incorporated in the State of Maryland on October 24,
1990, is authorized to issue 10,000,000 shares of common stock, $.01 par value
(the "Common Stock"), of which 8,000,000 are allocated to the Chaconia I&G Fund
and 2,000,000 are allocated to the Chaconia ACS Fund. The Corporation's capital
stock consists of a single class of common stock, which is divisible into an
unlimited number of series. Each Fund represents a separate series of common
stock. Shares of the Corporation, when issued, are fully transferable and
redeemable at the option of the holder. Shares are also redeemable at the option
of the Corporation in certain circumstances as described in the Prospectus under
"How to Redeem Shares." All shares are equal as to earnings assets and voting
privileges. There are no conversion, preemption or other subscription rights.
Under the Corporation's Certificate of Incorporation, the Board of Directors may
authorize the creation of additional series of common stock, with such
preferences, privileges, limitations and voting and dividend rights as the board
may determine. Each outstanding share is entitled to share equally in dividends
and other distributions and in the net assets of the Funds on liquidation.
Accordingly, in the event of liquidation, each share of each Fund's common stock
is entitled to its portion of each Fund's assets after all debts and expenses
have been paid. The shares of the Funds do not have cumulative voting rights for
the election of directors.
The Corporation will hold an annual stockholder meeting each year.
Special meetings of the stockholders will be held for the consideration of
proposals requiring stockholder approval by law, such as changing fundamental
policies or upon the written request of 25% of each Fund's outstanding shares.
The directors will promptly call a meeting of stockholders to consider the
removal of a director or directors when requested to do so by the holders of not
less than 10% of the outstanding shares and that stockholders will receive
communication assistance in connection with calling such a meeting. At any
meeting of stockholders duly called and at which a quorum is present, the
stockholders may, by the affirmative vote of the holders of at least two-thirds
of the votes entitled to be cast thereon, remove any director or directors from
office, with or without cause, and may elect a successor or successors to fill
any resulting vacancies for the unexpired term of the removed director.
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<PAGE>
The Corporation's organizing documents have been filed with the SEC as
exhibits to the Corporation's registration statement and can be found at the SEC
or at the Corporation's principal office or at the offices of the Corporation's
legal counsel.
Other than the election of directors, which is by plurality, any
matter for which stockholder approval is required by (1) the Maryland General
Corporation Law, requires the affirmative vote of at least a majority of all
votes cast at a meeting at which a quorum is present and (2) the 1940 Act,
requires the affirmative vote of at least a "majority" (as defined by the 1940
Act) of the outstanding voting securities of the Funds entitled to vote at a
meeting called for the purpose of considering such approval. Pursuant to the
Corporation's Articles of Incorporation, the presence in person or by proxy of
the holders of one-third of the outstanding voting securities entitled to vote
at a meeting of stockholders shall constitute a quorum for the transaction of
any business at all meetings of the stockholders except as otherwise provided by
law or in the Articles of Incorporation. The 1940 Act defines a majority as the
lesser of (1) 67% of the shares represented at a meeting at which more than 50%
of the outstanding shares are present in person or by proxy or (2) more than 50%
of the outstanding shares.
CUSTODIAN
- ----------
Firstar Bank, N.A., Star Bank Center, 425 Walnut Street, ML 6118,
Cincinnati, OH 45201, acts as custodian for the Funds. As such, Firstar Bank
holds all securities and cash of the Funds, 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
Corporation. Star Bank does not exercise any supervisory function over the
management of the Funds, the purchase and sale of securities or the payment of
distributions to shareholders.
INDEPENDENT ACCOUNTANTS
- -----------------------
PricewaterhouseCoopers LLP, New York, NY, serves as the independent
accountants for the Funds.
FINANCIAL STATEMENTS
- --------------------
The Chaconia I&G Fund's audited financial statements are incorporated
by reference to the Annual Report, dated December 31, 1998, as filed with the
SEC on March 5, 1999. The Chaconia I&G Fund's unaudited financial statements are
incorporated by reference to the Semi-Annual Report, dated June 30, 1999, as
filed with the SEC on August 30, 1999.
APPENDIX--DESCRIPTION OF RATINGS
APPENDIX A TO STATEMENT OF ADDITIONAL INFORMATION
Description of Moody's Investors Service, Inc.'s ("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 as 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 in Aaa securities or fluctuation of protective
elements may be of greater amplitude or there may be other elements present
which made 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. Baa: Bonds
which are rated Baa are considered as medium grade obligations, i.e., they are
neither highly protected nor poorly secured. Interest payments and principal
security appear adequate for the present but certain protective elements may be
lacking or may be characteristically unreliable over any great length of time.
Such bonds lack outstanding investment characteristics and, in fact, have
speculative characteristics, as well. Ba: Bonds which are rated Ba are judged to
have speculative elements; their future cannot be considered as well assured.
Often the protection of interest and principal payments may be very moderate and
thereby not well safeguarded during both good and bad times over the future.
Uncertainty of position characterizes bonds in this class. B: Bonds which are
rated B generally lack characteristics of the desirable investment. Assurance of
interest and principal payments or of maintenance of other terms of the contract
over any long period of
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<PAGE>
time may be small. Caa: Bonds which are rated Caa are of poor standing. Such
issues may be in default or there may be present elements of danger with respect
to principal or interest. Ca: Bonds which are rated Ca represent obligations
which are speculative in a high degree. Such issues are often in default or
there may be marked shortcomings. C: Bonds which are rated C are the lowest
rated class of bonds and issues so rated can be regarded as having extremely
poor prospects of ever attaining any real investment standing.
Note: Moody's may apply numerical modifiers, 1, 2 and 3 in each
generic rating classification from Aa through B in its corporate bond rating
system. The modifier 1 indicates that the security ranks in higher end of its
generic rating category; the modifier 2 indicates a mid-range ranking; and the
modifier 3 indicates that the issue ranks in the lower end of its generic rating
category.
Description of Standard & Poor's Corporation's ("S&P's") Corporate Debt Ratings
AAA: Debt rated AAA has the highest rating assigned by S&P'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
highest 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 higher rated categories. BBB: Debt rated BBB is regarded as having
adequate capacity to pay interest and repay principal. Whereas it normally
exhibits protection parameters, adverse economic conditions or changing
circumstances are more likely to lead to a weakened capacity to pay interest and
repay principal for debt in this category than for debt in higher rated
categories. BB, B, CCC, CC, C: Debt rated BBB, B, CCC, CC and C is regarded, on
balance, as predominantly speculative with respect to capacity to pay interest
and repay principal in accordance with the terms of the obligation. BB indicates
the lowest degree of speculation and C the highest degree of speculation. While
such debt will likely have some quality and protective characteristics, these
are outweighed by large uncertainties or major risk exposures to adverse
conditions. Cl: The rating Cl is reserved for income bonds on which no interest
is being paid. D: Debt rated D is in payment default. The D rating category is
used when interest payments or principal payments are not made on the date due
even if the applicable grace period has not expired, unless S&P's believes that
such payments will be made during such grace period. The D rating also will be
used upon the filing of a bankruptcy petition if debt service payments are
jeopardized.
Plus (+) or Minus (-): The ratings from "AA" to "CCC" may be modified
by the addition of a plus or minus sign to show relative standing within the
major rating categories.
Description of Moody's Preferred Stock Ratings
aaa: An issue which is rated aaa is considered to be a top-quality
preferred stock. This rating indicates good asset protection and the least risk
of dividend impairment within the universe of preferred stocks. aa: An issue
which is rated aa is considered a high-grade preferred stock. This rating
indicates that there is reasonable assurance that earnings and asset protection
will remain relatively well maintained in the foreseeable future. a: An issue
which is rated a is considered to be an upper medium grade preferred stock.
While risks are judged to be somewhat greater than in the aaa and aa
classifications, earnings and asset protection are nevertheless expected to be
maintained at adequate levels. baa: An issue which is rated baa is considered to
be medium grade, neither highly protected nor poorly secured. Earnings and asset
protection appear adequate at present, but may be questionable over great length
of time. ba: An issue which is rated ba is considered to have speculative
elements and its future cannot be considered well assured. Earnings and asset
protection may be very moderate and not well safeguarded during adverse periods.
Uncertainty of position characterizes preferred stocks in this class. b: An
issue which is rated b generally lacks the characteristics of a desirable
investment. Assurance of dividend payments and maintenance of other terms of the
issue over any long period of time may be small. caa: An issue which is rated
caa is likely to be in arrears on dividend payments. This rating designation
does not purport to indicate the future status of payment. ca: An issue which is
rated ca is speculative in a high degree and is likely to be in arrears on
dividends with the little likelihood of eventual payment. c: This is the lowest
rated class of preferred or preference stock. Issues so rated can be regarded as
having extremely poor prospects of ever attaining any real investment standing.
Note: Moody's may apply numerical modifiers 1, 2 and 3 in each rating
classification from "aa" through "b" in its preferred stock rating system. The
modifier 1 indicates that the security 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 issue ranks in the lower end of its generic rating
category.
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Description of S&P's Preferred Stock Ratings
AAA: This is the highest rating that may be assigned by S&P's to a
preferred stock issue and indicates an extremely strong capacity to pay the
preferred stock obligations. AA: A preferred stock issue rated AA also qualifies
as a high-quality fixed income security. The capacity to pay preferred stock
obligations is very strong, although not as overwhelming as for issues rated
AAA. A: An issue rated A is backed by a sound capacity to pay the preferred
stock obligations, although it is somewhat more susceptible to the adverse
effect of changes in circumstances and economic conditions. BBB: An issue rated
BBB is regarded as backed by an adequate capacity to pay the preferred stock
obligations. Whereas it normally exhibits adequate protection parameters,
adverse economic conditions or changing circumstances are more likely to lead to
a weakened capacity to make payments for a preferred stock in this category than
for issues in the A category. BB, B, CCC: Preferred stock rated BB, B and CCC
are regarded on balance as predominantly speculative with respect to the
issuer's capacity to pay preferred stock obligations. BB indicates the lowest
degree of speculation and CCC the highest degree of speculation. While such
issues will likely have some quality and protective characteristics, these are
outweighed by large uncertainties or major risk exposures to adverse conditions.
CC: The rating CC is reserved for a preferred stock in arrears on dividends or
sinking Equity Fund payments but that is a nonpaying issue with the issuer in
default on debt instruments.
Plus (+) or Minus (-): The ratings from "AA" to "B" may be modified by
the addition of a plus or minus sign to show relative standing within the major
rating categories.
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PART C
OTHER INFORMATION
Item 24. Financial Statements and Exhibits.
(a) Audited Financial Statements (Financial Highlights included in
Part A and all incorporated by reference to Annual Report, dated December 31,
1998, as filed with the SEC on May 5, 1999).
Schedule of Investments
Statement of Assets and Liabilities
Statement of Operations
Statements of Changes in Net Assets
Financial Highlights
Notes to Financial Statements
Report of Independent Accountants
(b) Unaudited Financial Statements (Financial Highlights included in
Part A and all incorporated by reference to the Semi-Annual Report, dated June
30, 1998, as filed with the SEC on August 30, 1999).
Schedule of Investments
Statement of Assets and Liabilities
Statement of Operations
Statements of Changes in Net Assets
Financial Highlights
Notes to Financial Statements
(c) Exhibits:
(1) Articles of Incorporation, as amended
(2) By-Laws, as amended(2)
(3) Not Applicable
(4) Specimen Stock Certificate(1)
(5.1) Investment Management Agreement between the
Chaconia I&G Fund and INVESCO Capital
Management, Inc.(1)
(5.2) Investment Management Agreement between the
Chaconia ACS Fund and INVESCO Capital
Management, Inc.
(6) Distribution Agreement(1)
(7) Not Applicable
(8.1) Custody Agreement between the Chaconia I&G Fund
and Star Bank, N.A.(3) (8.2) Custody Agreement
between the Chaconia ACS Fund and Star Bank, N.A.
(9.1) Fund Accounting Service Agreement between the
Chaconia I&G Fund and American
Data Services, Inc.(1)
(9.2) Shareholder Servicing Agent Agreement between the
Chaconia I&G Fund and American Data Services, Inc.(1)
(9.3) Administrative Services Agreement between the
Chaconia I&G Fund and American Data Services, Inc.(1)
(9.4) Fund Accounting Service Agreement between
the Chaconia ACS Fund and American Data
Services, Inc.
(9.5) Transfer Agency and Service Agreement
between the Chaconia ACS Fund and American
Data Services, Inc.
(9.6) Administrative Services Agreement between the
Chaconia ACS Fund and American Data Services, Inc.
(10) Opinion and Consent of Counsel
(11) Consent of Independent Accountants
(12) Not Applicable
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<PAGE>
(13) Subscription Agreement(1)
(14) IRA Disclosure Documents(3)
(15) Distribution Plan(2)
(16) Not Applicable
Item 25. Persons Controlled by or under Common Control with Registrant.
See "Management" in Part A of this Registration Statement.
1. Previously filed as an exhibit to Pre-Effective Amendment No. 2 to
Registrant's Registration Statement on Form N-1A and incorporated by
reference thereto. Pre-Effective Amendment No. 2 was filed with the SEC on
October 30, 1992 and its File No. is 33-37426.
2. Previously filed as an exhibit to Post-Effective Amendment No. 5 to
Registrant's Registration Statement on Form N-1A and incorporated by
reference thereto. Amendment No. 5 was filed with the SEC on January 17,
1995 and its File Nos. are 33-37426 and 811-6194.
3. Previously filed as an exhibit to Post-Effective Amendment No. 9 to
Registrant's Registration Statement on Form N-1A and incorporated by
reference thereto. Amendment No. 9 was filed with the SEC on December 26,
1996 and its File Nos. are 33-37426 and 811-6194.
As of June 30, 1999, the approximate number of holders were:
(1) (2)
Number of
Title of Class Record Holders
-------------- --------------
Chaconia I&G Fund Common 10,623
Chaconia ACS Fund Common N/A
Item 27. Indemnification.
The basic effect of the respective indemnification provisions of the
Registrant's Articles of Incorporation and By-Laws and section 2-418 of the
Maryland General Corporation Law is to indemnify each officer and director of
both the Registrant, the Investment Manager and selected broker-dealers, to the
full extent permitted under the General Laws of the State of Maryland, except
that such indemnity shall not protect any such person against any liability to
which such person would otherwise be subject by reason of willful misfeasance,
bad faith, gross negligence or reckless disregard of the duties involved in the
conduct of his office.
Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers and controlling
persons of the Registrant, Investment Manager and selected broker-dealers
pursuant to the foregoing provisions 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 1940 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, office or controlling person of the Registrant and the
principal underwriter in connection with the successful defense of any action,
suit or proceeding) is asserted against the Registrant by such director, officer
or controlling person or the Investment Manager and selected broker-dealers in
connection with the shares 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 1940 Act and
will be governed by the final adjudication of such issue.
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<PAGE>
Item 28. Business and Other Connections of Investment Advisor.
Reference is made to Part A of this Registration Statement and to Form
ADV filed under the Investment Advisers Act of 1940 by the Investment Manager.
Item 29. Principal Underwriters.
The Funds have no principal underwriters and have adopted Distribution
Plans pursuant to section 12 of the Investment Company Act of 1940 and Rule
12b-1 thereunder.
Item 30. Location of Accounts and Records.
The accounts, books and other documents required to be maintained by
Registrant pursuant to Section 31(a) of the 1940 Act and the rules promulgated
thereunder are in the possession of Registrant and Registrant's custodian, as
follows: the documents required to be maintained by paragraphs (4), (5), (6),
(7), (10) and (11) of Rule 31a-1(b) will be maintained by the Registrant, and
all other records will be maintained by the Custodian.
Item 31. Management Services.
The Registrant is not party to any management-related services
contract not discussed in Part A or Part B hereof.
Item 32. Undertakings.
Registrant undertakes to provide its Annual Report to Shareholders
without charge to any recipient of its Prospectus who requests the information.
Registrant undertakes to call a meeting of shareholders for the
purpose of voting upon the question of the removal of a director or directors
when requested in writing to do so by the holders of at least 10% of the
Registrant's outstanding shares and in connection with such meeting to comply
with the provisions of section 16(c) of the Investment Company Act of 1940
relating to shareholder communications.
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<PAGE>
SIGNATURE
Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, the Registrant has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Port-of-Spain, Country of Trinidad and Tobago, on the
28th day of October, 1999.
THE CHACONIA INCOME & GROWTH FUND, INC.
BY /s/ Clarry Benn
----------------------------------
Clarry Benn, President
On behalf of the Board of Directors pursuant to Power of Attorney
granted in Post-Effective Amendment No. 16
BY /s/ Clarry Benn
----------------------------------
*Attorney-in-Fact
Board of Directors:
Clarry Benn*
John A. Cole*
Roosevelt Williams *
Renrick Nickie*
Judy Y. Chang*
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Conforming Changes
Exhibit Index
Pursuant to Securities Act Rule 483
Exhibit 1 Articles of Incorporation, as amended
Exhibit 2 By-Laws, as amended*
Exhibit 3 Not Applicable
Exhibit 4 Specimen Stock Certificate*
Exhibit 5.1 Investment Management Agreement between the Chaconia I&G Fund and
INVESCO Capital Management, Inc.*
Exhibit 5.2 Investment Management Agreement between the Chaconia ACS Fund and
INVESCO Capital Management, Inc.
Exhibit 6 Distribution Agreement*
Exhibit 7 Not Applicable*
Exhibit 8.1 Custody Agreement between the Chaconia I&G Fund and Star Bank,
N.A.*
Exhibit 8.2 Custody Agreement between the Chaconia ACS Fund and Star Bank,
N.A.
Exhibit 9.1 Fund Accounting Service Agreement between the Chaconia I&G Fund
and American Data Services, Inc.*
Exhibit 9.2 Shareholder Servicing Agreement Agent Agreement between the
Chaconia I&G Fund and American Data Services, Inc.*
Exhibit 9.3 Administrative Services Agreement between the Chaconia I&G Fund
and American Data Services, Inc.*
Exhibit 9.4 Fund Accounting Service Agreement between the Chaconia ACS Fund
and American Data Services, Inc.
Exhibit 9.5 Transfer Agency and Service Agreement between the Chaconia ACS
Fund and American Data Services, Inc.
Exhibit 9.6 Administrative Services Agreement between the Chaconia ACS Fund
and American Data Services, Inc.
Exhibit 10 Opinion and Consent of Counsel
Exhibit 11 Consent of Independent Accountants
Exhibit 12 Not Applicable
Exhibit 13 Subscription Agreement*
Exhibit 14 IRA Disclosure Documents*
Exhibit 15 Distribution Plan*
Exhibit 16 Not Applicable*
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<PAGE>
The Chaconia Income & Growth Fund, Inc. (the "Chaconia I&G Fund") is
incorporating by reference Parts A, B and C of Pre-Effective Amendment No. 5 to
the Registration Statement of the Fund, file nos. 33-37426 and 811-6194, dated
March 19, 1993.
- ----------------
* Incorporated by reference.
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EXHIBIT 11
[COOPERS & LYBRAND LETTERHEAD]
CONSENT OF INDEPENDENT ACCOUNTANTS
---------------
We consent to the incorporation by reference in this Post-Effective Amendment
No. 16 to the Registration Statement of The Chaconia Income & Growth Fund, Inc.,
on Form N-1A (File Nos. 33-37426 and 811-6194) of our report dated February 24,
1999, on our audit of the financial statements and financial highlights of The
Chaconia Income & Growth Fund, Inc., which report is included in the Annual
Report to Shareholders for the year ended December 31, 1998, which is also
incorporated by reference in this Post-Effective Amendment to the Registration
Statement.
We also consent to the reference to our firm under the captions "Financial
Highlights" and "Independent Accountants" in the Prospectus and under the
caption "Independent Accountants" in the Statement of Additional information.
/s/ PricewaterhouseCoopers LLP
PricewaterhouseCoopers LLP
New York, New York
October 29, 1999