Registration Nos. 33-37426
811-6194
SECURITIES AND EXCHANGE COMMISSION
Washington D.C. 20549
-----------------------------
FORM N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 [X]
Pre-Effective Amendment No. [ ]
Post-Effective Amendment No. 18 [X]
and/or
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 [X]
Amendment No. 19 [X]
(Check appropriate box or boxes.)
THE CHACONIA INCOME & GROWTH FUND, INC.
(Exact Name of Registrant as Specified in Charter)
The Corporation Trust Company
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)
(631) 951-0500 or 1-800-368-3322
(Registrant's Telephone Number, including Area Code)
The Corporation Trust Company Copy to:
32 South Street Ulice Payne, Jr., Esq.
Baltimore, MD 21202 Foley & Lardner
-------------------- 777 East Wisconsin Avenue, Suite 3700
(Name and Address of Agent for Service) Milwaukee, Wisconsin 53202
--------------------------
Approximate Date of Proposed Public Offering: As soon as practicable after the
Registration Statement becomes effective.
It is proposed that this filing become effective (check appropriate box):
[X] immediately upon filing pursuant to paragraph (b)
[ ] on (date) pursuant to paragraph (b)
[ ] 60 days after filing pursuant to paragraph (a) (1)
[ ] on (date) pursuant to paragraph (a) (1)
[ ] 75 days after filing pursuant to paragraph (a) (2)
[ ] on (date) pursuant to paragraph (a) (2)
If appropriate, check the following box:
[ ] this post-effective amendment designates a new effective date for a
previously filed post-effective amendment.
<PAGE>
July 31, 2000
P R O S P E C T U S
The Chaconia Income & Growth Fund, Inc.
The Chaconia Income & Growth Fund, Inc. offers two distinct mutual funds
offering different investment strategies.
The Funds are:
o The Chaconia Income & Growth o The Chaconia ACS Fund (invests
Fund (invests mainly in U.S. mainly in equity and debt
Government securities and equity securities of non-U.S. companies
securities of the U.S., Canada located in territories of the
and Trinidad and Tobago) Association of Caribbean States
members)
Please read this Prospectus and keep it for future reference. It contains
important information, including information on how The Funds invest and the
services they offer to shareholders.
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THE SECURITIES AND EXCHANGE COMMISSION HAS NOT APPROVED OR DISAPPROVED THESE
SECURITIES OR DETERMINED IF THIS PROSPECTUS IS ACCURATE OR COMPLETE. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
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TABLE OF CONTENTS
The Chaconia Income & Growth Questions Every Investor Should Ask
Fund, Inc. Before Investing in The Funds ......... 2
c/o American Data Services, Inc. Who Manages the Funds?................... 10
The Hauppauge Corporate Center How Are The Funds' Share Prices
150 Motor Parkway, Suite 109 Determined?............................ 11
Hauppauge, NY 11788 How Do I Open An Account and Purchase
Shares?................................ 11
1-800-368-3322 (U.S.) How Do I Sell My Shares?................. 13
What About Internet Transactions?........ 14
www.trinidad.net/home/tandt/ May Shareholders Make Exchanges
utc/utchome.htm Between Funds?......................... 15
What About Dividends, Capital Gains
Distributions and Taxes?............... 16
Financial Highlights..................... 16
<PAGE>
QUESTIONS EVERY INVESTOR SHOULD ASK BEFORE
INVESTING IN THE FUNDS
1 What are the Goals of The Funds?
The Chaconia I&G Fund
The Chaconia I&G Fund seeks to produce high current income and capital
appreciation.
The Chaconia ACS Fund
The Chaconia ACS Fund seeks to produce long-term capital appreciation.
2. What are the Principal Investment Strategies of The Funds?
The Chaconia I&G Fund
The Chaconia I&G Fund seeks to meet its objective by investing its assets
in:
o U.S. Government securities including U.S. Treasury obligations and
obligations issued or guaranteed by U.S. Government agencies or
instrumentalities;
o investment grade corporate bonds;
o investment grade foreign government bonds;
o equity securities of U.S., Canadian, British and Trinidad and Tobago
companies;
o American Depository Receipts;
o the Schemes of the Trinidad and Tobago Unit Trust Corporation;
o certificates of deposit; and
o money market funds.
Under normal market conditions, the Chaconia I&G Fund will maintain a level
of at least 15% of its total assets invested in debt securities and at least 25%
of its total assets invested in equity securities.
The Schemes of the Trinidad and Tobago Unit Trust Corporation are separate
investment companies created by the Unit Trust Corporation of Trinidad and
Tobago Act of 1981. The assets of the Schemes of the Trinidad and Tobago Unit
Trust Corporation are
<PAGE>
predominantly invested in equity securities and fixed income securities of
Trinidad and Tobago corporations and in Trinidad and Tobago government
securities.
American Depository Receipts (ADR) are U.S. securities that generally
represent a non-U.S. company's publicly traded equity or debt. ADRs are created
when a broker purchases a foreign company's shares on a foreign stock market and
delivers those shares to a local U.S. custodian bank. The broker then instructs
the bank to issue depository receipts. Depository receipts may trade freely,
just like any other security, either on an exchange or any over-the-counter
market.
In purchasing debt securities, the Chaconia I&G Fund manager considers the
maturity of the security as well as the credit quality of the issuer. In
determining what equity securities the Chaconia I&G Fund will invest in, the
Chaconia I&G Fund manager will focus on the actual and prospective earnings and
return on equity of the company and other factors. The Chaconia 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 prospects of
the company.
The Chaconia I&G Fund, in response to adverse market, economic, political
or other conditions, may take temporary defensive positions. This means the
Chaconia I&G Fund will invest some or all of its assets in cash or money market
instruments (like U.S. Treasury Bills, commercial paper or commercial paper
master notes). The Chaconia I&G Fund will not be able to achieve its investment
objective to the extent that it invests in cash or money market instruments.
When the Chacona I&G Fund is not taking a temporary defensive position, it still
may hold some cash and money market instruments in order to take advantage of
investment opportunities, or so it can pay expenses and satisfy redemption
requests.
The Chaconia ACS Fund
The Chaconia ACS Fund seeks to meet its objective 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 ("ACS"), except Cuba. 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 ADRs, European Depository Receipts, Global
Depository Receipts or other securities representing shares of non-U.S. issuers
domiciled or operating in the ACS.
The countries which are members, associate members and observers of the ACS
whose issuers are eligible for the portfolio are as follows:
<PAGE>
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ACS Members
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Antigua and Barbuda Haiti
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The Bahamas Honduras
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Barbados Jamaica
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Belize Mexico
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Colombia Nicaragua
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Costa Rica Panama
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Dominica St. Kitts and Nevis
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The Dominican Republic St. Lucia
----------------------------------- ---------------------------------------
El Salvador St. Vincent and the Grenadines
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Grenada Suriname
----------------------------------- ---------------------------------------
Guatemala Trinidad and Tobago
----------------------------------- ---------------------------------------
Guyana Venezuela
----------------------------------- ---------------------------------------
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ACS Associate Member
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France
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ACS Observers
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Argentina India
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Brazil Italy
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Canada Kingdom of the Netherlands
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Chile Morocco
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Ecuador Peru
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Egypt Russian Federation
----------------------------------- ---------------------------------------
Spain
----------------------------------- ---------------------------------------
The Chaconia ACS Fund intends to diversify its holdings among several
countries. Under normal market conditions, the Chaconia ACS Fund plans to have
investments in the securities of ACS domiciled issuers in not less than five ACS
countries. The Chaconia ACS Fund does not have any limitations on the percentage
of its 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, in less developed markets
and in emerging markets.
The Chaconia ACS Fund 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, when significant adverse market, economic, political or other
circumstances require immediate action to avoid losses. During adverse market
conditions, the Chaconia ACS Fund may also invest up to 100% of its assets in
U.S. securities or in securities primarily traded in one or more foreign
countries, or in debt securities. If the Chaconia ACS Fund is invested in
defensive instruments, it will not be able to achieve its stated investment
objective. When the Chaconia ACS Fund is not taking a temporary defensive
position, it still may hold some cash and money
<PAGE>
market instruments in order to take advantage of investment opportunities, or so
it can pay expenses and satisfy redemption requests.
All Funds.
Neither of the Funds attempts to achieve its investment objectives by
frequent trading of securities. However, each of the Funds' turnover may
increase due to economic, market or other factors that are not within the
control of each of the Fund's management. It is expected that under normal
market conditions, the annual portfolio turnover rate for each of the Funds will
not exceed 100%.
Other than securities issued or guaranteed by the U.S. government, neither
of the Fund's may invest more than 25% of its total assets in any single
industry, nor invest more than 15% of its net assets in illiquid securities.
Illiquid securities are securities that cannot be sold within seven days in the
normal course of business at approximately the amount at which one of the Funds
has valued or priced the securities. Securities acquired by one of the Funds in
private placements that have restrictions on their resale are generally
considered illiquid.
3. What are the Principal Risks of Investing in the Funds?
Investors in the Funds may lose money. There are risks associated with
investments in the types of securities in which the Funds invest. These
risks include:
o Market Risk: The prices of the securities in which the Funds invest
may decline for a number of reasons. The price declines of common
stocks and bonds may be steep, sudden and/or prolonged.
o Currency Risk: Foreign currency risk is the risk that the U.S. dollar
value of foreign securities held by one of the Funds may be affected
favorably or unfavorably by changes in foreign currency exchange rates
and exchange control regulations. The value of the Funds may go up and
down as the value of the dollar rises and falls compared to a foreign
currency.
o 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, and to a lesser extent the Chaconia I&G Fund's, ability to
purchase or sell blocks of securities and obtain the best price in the
foreign market. This may cause the Funds to lose opportunities for
favorable purchases or sales of investments. Because foreign markets
trade at times and on days different than U.S. markets, each Fund's
value may change when an investor's account cannot be accessed.
o Foreign Investment Expense Risk: 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
<PAGE>
foreign securities tend to have higher expenses due to higher
commissions and higher advisory and custodial fees.
o Foreign Political and Economic Risks: The degree of political and
economic stability varies from country to country. If a country
confiscates money from foreigners or takes over an industry, one of
the Funds may lose some or all of any particular investment in that
country. Parts of individual foreign economies may vary favorably or
unfavorably from the U.S. economy (e.g., inflation rate) which may
affect the value of each Fund's investment in any foreign country.
o Governmental Regulation Risk: 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 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.
o Corporate Disclosure Standard Risk: 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, for securities of different countries.
o Interest Rate Risk: The Funds may invest in debt securities. In
general, the value of bonds and other debt securities rises when
interest rates fall and falls when interest rates rise. Longer term
obligations are usually more sensitive to interest rate changes than
shorter term obligations. While bonds and other debt securities
normally fluctuate less in price than common stocks, there have been
extended periods of increases in interest rates that have caused
significant declines in bond prices.
o Credit Risk: Each Fund may invest in debt securities not backed by the
full faith and credit of the United States. The issuers of such bonds
and other debt securities may not be able to make interest or
principal payments. Even if these issuers are able to make interest or
principal payments, they may suffer adverse changes in financial
condition that would lower the credit quality of the issuer, leading
to greater volatility in the price of the security.
o Prepayment Risk: The issuers of bonds and other debt securities held
by the Funds may prepay principal due on securities, particularly
during periods of declining interest rates. Securities subject to
prepayment risk generally offer less potential for gain when interest
rates decline, and may offer a greater potential for loss when
interest rates rise. Rising interest rates may cause prepayments to
occur at a slower than expected rate. This will increase the
<PAGE>
average life of the security and make the security more sensitive to
interest rate changes.
Because of these risks the Funds are a suitable investment only for those
investors who have long-term investment goals. Prospective investors who
are uncomfortable with an investment that will increase and decrease in
value should not invest in the Funds.
4. How has the Chaconia I&G Fund Performed?
The bar chart and tables that follow provide some indication of the risks
of investing in the Funds. The page illustrating the Chaconia I&G Fund
shows changes in its performance from year to year and how its average
annual returns over various periods compares to the performance of the S&P
500 (50%) and the Lehman Brothers Government and Corporate Bond Index
(50%). The Chaconia ACS Fund plans to commence operations during October,
2000. Please remember that each Fund's past performance is not necessarily
an indication of its future performance. It may perform better or worse in
the future.
<PAGE>
The Chaconia I&G Fund
(Total return per calendar year)
[GRAPHIC OMITTED]
30%
27.16%
------
20% 19.98%
------
15.87%
------
10%
5.61%
-----
2.40% 2.73%
----- -----
0% 0%
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1993 1994 1995 1996 1997 1998 1999
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Note: During the seven-year period shown on the bar chart, the Chaconia I&G
Fund's highest total return for a quarter was 11.44% (quarter ended
June 30, 1997) and the lowest total return for a quarter was -6.66%
(quarter ended September 30, 1999).
The Fund's 2000 year to date total return is -1.13% (January 1, through
June 30, 2000).
Since the
Past Inception of the
Average Annual Total Returns Past Five Fund (May 11,
(for the periods ending December 31, 1999) Year Years 1993)
------------------------------------------ ----- ------ ----------------
The Chaconia I&G Fund* 2.73% 13.89% 10.68%
The Benchmark** 9.45% 18.09% 14.14%
----------------------
* The Chaconia I&G Fund commenced operations on May 11, 1993.
** The Chaconia I&G Fund's performance is compared to a balance of the S&P 500
(50%) and the Lehman Brothers Government and Corporate Bond Index (50%).
<PAGE>
FEES AND EXPENSES
The table below describes the fees and expenses that you may pay if you buy
and hold shares of the Funds.
SHAREHOLDER FEES (fees paid directly from your investment)
The Chaconia The Chaconia
I&G Fund ACS Fund
Maximum Sales Load imposed on Purchases
(as a percentage of offering price)....... None 4.00%
Maximum Deferred Sales Load (as a
percentage of original, purchase price
or redemption proceeds, as applicable).... None None
Maximum Sales Load imposed on
Reinvested Dividends (as a percentage
of offering price)........................ None None
Redemption Fee (as a percentage of
amount redeemed).......................... None* None*
Exchange Fee................................ None* None*
---------------------
*An investor's broker may charge a fee for wire redemptions and/or exchanges
ANNUAL FUND OPERATING EXPENSES
(as a percentage of average net assets)
(expenses that are deducted from Fund assets)
Management Fees............................. 0.38%(1) 0.75%(1)
Distribution (12b-1) Fees................... 0.50% 0.50%
Service Fees ............................... 0.25%(2) 0.25%(2)
Other Expenses.............................. 0.60% 0.65%
Total Annual Fund Operating Expenses........ 1.73% 2.15%(3)
--------------------
(1) The management fee will vary depending upon the Chaconia I&G 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 the Chaconia I&G Fund's average daily net assets. Total
Chaconia I&G Fund operating expenses will vary depending upon the
management fee.
(2) The service fees are payments made by the Chaconia I&G Fund to registered
broker-dealers for personal service and/or the maintenance of shareholder
accounts. Service fees could be paid by the Funds up to 0.25 of 1% of the
Fund's net assts. For the period ended December 31, 1999, $9,694 of service
fees were accrued and paid.
(3) The total operating expenses for the Chaconia ACS Fund are estimates. The
Chaconia ACS Fund plans to commence operations during October 2000.
EXAMPLE
This Example is intended to help you compare the cost of investing in the
Funds with the cost of investing in other mutual funds.
The Example assumes that you invest $10,000 in a Fund for the time periods
indicated and then redeem all of your shares at the end of these periods. The
Example also assumes that your investment has a 5% return each year and that the
Fund's operating expenses
<PAGE>
remain the same. Although your actual costs may be higher or lower, based on
these assumptions, your costs would be:
1 Year 3 Years 5 Years 10 Years
The Chaconia I&G Fund $176 $ 545 $939 $2,041
Chaconia ACS Fund $609 $1,046 N/A N/A
WHO MANAGES THE FUNDS?
On June 20, 2000, the shareholders voted to approve a new investment
management agreement with Earnest Partners, LLC. Consequently, Earnest Partners,
LLC (the "I&G Manager") is the investment adviser to the Chaconia I&G Fund. The
I&G Manager began managing the Fund's assets on July 5, 2000. The I&G Manager's
address is:
Earnest Partners, LLC
75 Fourteenth Street, Suite 2300
Atlanta, Georgia 30309
The I&G Manager was organized as a Georgia limited liability company on
December 22, 1997 and registered as an investment advisor on January 12, 1999.
As the investment adviser to the Chaconia I&G Fund, the I&G Manager manages the
investment portfolio of the Chaconia I&G Fund. As compensation for its services,
the I&G Manager receives 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.
This compensation is identical to the compensation paid to the prior investment
advisor for the I&G Fund. During the last fiscal year, the Chaconia I&G Fund
would have paid the I&G Manager an annual investment advisory fee equal to 0.38%
of average net assets.
Chaconia Fund Services, Inc. (the "ACS Manager") is the investment advisor
for the Chaconia ACS Fund. The ACS Manger's address is:
Chaconia Fund Services, Inc.
1000 Brickell Avenue, Suite 600
Miami, Florida 33131
The ACS Manager was incorporated as a Delaware corporation on December 8,
1997 and registered as an investment advisor on July 8, 1999. As the investment
advisor to the Chaconia ACS Fund, the ACS Manager will manage the investment
portfolio of the
<PAGE>
Chaconia ACS Fund when it commences operations. The ACS Manager is a wholly
owned subsidiary of the Trinidad and Tobago Unit Trust Corporation.
HOW ARE THE FUNDS' SHARE PRICES DETERMINED?
The price at which investors purchase shares of each Fund and at which
shareholders redeem shares of each Fund is called its net asset value. The Funds
calculate their net asset values as of the close of regular trading on the New
York Stock Exchange (normally 4:00 p.m. Eastern Time) on each day the New York
Stock Exchange is open for trading. The New York Stock Exchange is closed on
holidays and weekends. The net asset value purchase is the value of each Fund's
assets, less its liabilities, divided by the number of shares outstanding of
each Fund. Each Fund will process purchase orders that it receives and accepts
and redemption orders that it receives prior to the close of regular trading on
a day that the New York Stock Exchange is open at the net asset value determined
later that day. It will process purchase orders that it receives and accepts and
redemption orders that it receives after the close of regular trading at the net
asset value determined at the close of regular trading on the next day the New
York Stock Exchange is open.
HOW DO I OPEN AN ACCOUNT AND PURCHASE SHARES?
Investors can purchase shares of the Funds either through American Data
Services, Inc., the Funds' Transfer Agent, or through selected broker-dealers.
How to Purchase Shares from the Transfer Agent
1. Read this Prospectus carefully.
2. Determine how much you want to invest keeping in mind the following
minimums:
o New accounts $250
o Continuing Automatic Transfer Program $ 50
o Dividend reinvestment No Minimum
o Additional investments: $100
3. Complete an account application, carefully following the instructions. For
additional investments, send a stub from the confirmation previously
received from the Transfer Agent or include a brief letter giving the
registration of the account, the name of the Fund and the account number.
If you have any questions or need applications or forms, please call
1-800-368-3322 (U.S.).
<PAGE>
4. If paying by check, make your check payable to The Chaconia I&G Fund or The
Chaconia ACS Fund. If paying by wire transfer, call 1-800-368-3322 (U.S.)
for wire transfer instructions.
5. Send the application and check to:
BY FIRST CLASS MAIL
The Chaconia Income & Growth Fund, Inc.
c/o American Data Services, Inc.
The Hauppauge Corporate Center
150 Motor Parkway, Suite 109
Hauppauge, NY 11788
Purchasing Shares from 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 by calling the Transfer Agent. The Funds have entered into selected dealer
agreements with Chaconia Financial Services, Inc., a Rhode Island corporation
and a wholly owned subsidiary of the ACS Manager. The broker-dealer may charge
investors a fee either at the time of purchase or redemption. The fee, if
charged, is retained by the broker-dealer and not remitted to the Funds or their
investment advisors.
Other Information about Purchasing Shares of the Funds
The Funds may reject any account application or any purchase order for any
reason. The Funds will not issue certificates evidencing shares purchased unless
the investor makes a written request for a certificate. The Funds will send
investors a written confirmation for all purchases of shares, whether or not
evidenced by certificates.
Shareholders in each Fund may elect to make subsequent investments through
a continuing automatic transfer ("CAT") program. To elect the CAT, complete the
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.
The Funds also offer the following retirement plans:
o Traditional IRA
o Roth IRA
<PAGE>
Investors can obtain further information about the CAT and the retirement plans
by calling the Funds at 1-800-368-3322. The Funds recommend that investors
consult with a competent financial and tax advisor regarding the retirement
plans before investing through them.
HOW DO I SELL MY SHARES?
How to Redeem (Sell) Shares Directly With the Funds
1. Prepare a letter of instruction containing:
o the name of the Fund(s)
o account number(s)
o the amount of money or number of shares being redeemed
o the name(s) on the account
o additional information that the Funds may require for redemptions by
corporations, executors, administrators, trustees, guardians, or
others who hold shares in a fiduciary or representative capacity.
Please contact the Transfer Agent in advance, at 1-800-368-3322 if you
have any questions.
2. Sign the letter of instruction exactly as the shares are registered. Joint
ownership accounts must be signed by all owners.
3. If there are certificates representing your shares, enclose and endorse the
certificates or execute a stock power exactly as your shares are
registered.
4. Send the letter of instruction 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
Redemption Price
The redemption price per share you receive for redemption requests is the
next determined net asset value after the Transfer Agent receives your written
request in proper form with all required information.
<PAGE>
Payment of Redemption Proceeds
o For those shareholders who redeem shares by mail, Transfer Agent will
mail a check in the amount of the redemption proceeds no later than
the seventh day after it receives the redemption request in proper
form with all required information.
Other Redemption Considerations
When redeeming shares of the Funds, shareholders should consider the
following:
o The redemption may result in a taxable gain.
o Shareholders who redeem shares held in an IRA must indicate on their
redemption request whether or not to withhold federal income taxes. If
not, these redemptions, as well as redemptions of other retirement
plans not involving a direct rollover to an eligible plan, will be
subject to federal income tax withholding.
o The Funds may delay the payment of redemption proceeds for up to seven
days in all cases.
o If you purchased shares by check, the Funds may delay the payment of
redemption proceeds until they are reasonably satisfied the check has
cleared (which may take up to 15 days from the date of purchase).
o If your account balance falls below $100 because you redeem shares,
you will be given 60 days to make additional investments so that your
account balance is $100 or more. If you do not, the Funds may close
your account and mail the redemption proceeds to you.
o While highly unlikely, the Funds may pay redemption requests "in
kind." This means that the Funds may pay redemption requests entirely
or partially with securities rather than with cash. For any one
shareholder the Funds are obligated to redeem shares solely in cash up
to the lesser of $250,000 or 1% of the net asset value of a Fund
during any 90 day period. However, for redemptions exceeding these
levels, any redemption value may be paid in whole or in part by a
distribution in kind of securities from the portfolio of a Fund. If
shares are redeemed in kind, the redeeming shareholder would incur
brokerage costs in converting the assets into cash.
WHAT ABOUT INTERNET TRANSACTIONS?
It is anticipated that the Funds will make available a service on the
Internet which will permit shareholders to request purchases, exchanges and
redemptions of shares
<PAGE>
after an account is opened on-line. For further information on availability of
this service and to authorize this service after it is available, call the
Transfer Agent at 1-800-368-3322, and follow the instructions you receive.
MAY SHAREHOLDERS MAKE EXCHANGES BETWEEN FUNDS?
At this time shareholders may not make exchanges between Funds. It is
expected that the Funds will permit shareholders to make exchanges between the
Funds in the near future. For further information on availability of this
service, call the Transfer Agent at 1-800-368-3322.
WHAT ABOUT DIVIDENDS, CAPITAL GAINS DISTRIBUTIONS AND TAXES?
The Funds intend to pay dividends and capital gains distribution, if any,
on an annual basis. Unless the shareholder elects otherwise, dividend and
capital gains distributions will be paid in additional shares of the Funds.
Shareholders may elect to receive dividends and distributions by notifying the
Funds in writing.
You may make this election on the Account Application. You may change your
election by writing to the Transfer Agent or by calling 1-800-368-3322.
Each Fund's distributions, whether received in cash or additional shares of
each Fund, may be subject to federal and state income tax. These distributions
may be taxed as ordinary income and capital gains (which may be taxed at
different rates depending on the length of time the Fund holds the assets
generating the capital gains). The Funds expect that their distributions will
consist of both ordinary income and long-term capital gains.
FINANCIAL HIGHLIGHTS
The financial highlights table is intended to help you understand the
Chaconia I&G Fund's financial performance for the past five fiscal years of
operations. Certain information reflects financial results for a single share.
The total returns in the table represent the rate that an investor would have
earned on an investment in the Chaconia I&G Fund (assuming reinvestment of all
dividends and distributions). This information has been audited by
PricewaterhouseCoopers LLP, whose report, along with the Chaconia I&G Fund's
financial statements, is included in the Annual Report which is available upon
request. The Chaconia ACS Fund plans to commence operations during October 2000.
<PAGE>
The Chaconia I&G Fund
<TABLE>
<CAPTION>
Six Months
Ended
June 30, For the Years Ended December 31,
---------- --------------------------------
2000(1) 1999 1998 1997 1996 1995
------- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
Per Share Operating Performance:
Net asset value, beginning of year.......... $12.34 $12.47 $11.47 $10.44 $12.13 $9.94
------- ------- ------- ------- ------- -------
Income from Investment Operations:
Net investment income....................... .06 0.14 0.11 0.08 0.13 0.24
Net realized and unrealized gain
(loss) on investments .................... (.20) 0.20 1.71 2.00 0.55 2.47
------- ------- ------- ------- ------- -------
Total from investment operations............ (.14) 0.34 1.82 2.08 0.68 2.71
------- ------- ------- ------- ------- -------
Less distributions:
Dividend from net investment income......... 0.0 (0.14) (0.11) (0.09) (0.17) (0.23)
Distribution in excess of
net investment Income..................... 0.0 0.00(2) 0.00 0.00 (0.01) 0.00(2)
Distribution from net realized gains ....... 0.0 (0.33) (0.71) (0.96) (2.15) (0.28)
Distribution in excess of net
realized gains on investments............. 0.0 0.00 0.00 0.00 (0.04) 0.00
------- ------- ------- ------- ------- -------
Total distributions......................... 0.0 (0.47) (0.82) (1.05) (2.37) (0.51)
------- ------- ------- ------- ------- -------
Net asset value, end of year ............... 12.20 $12.34 $12.47 $11.47 $10.44 $12.13
======= ======= ======= ======= ======= =======
Total investment return .................... (1.13%) 2.73% 15.87% 19.98% 5.61% 27.16%
-------
Ratios and supplemental data:
Net assets, end of period (000s)............ $53,422 $62,900 $43,762 $18,500 $10,132 $17,809
Ratios to average net assets:
Expenses.................................... 1.84%(3) 1.73% 1.99% 2.55% 2.84% 2.37%
Net investment income....................... (.89%)(3) 1.19% 1.21% 0.98% 1.03% 2.09%
Portfolio turnover.......................... 14.69% 65.75% 41.23% 35.04% 72.91% 26.23%
</TABLE>
(1) Unaudited.
(2) Less than $0.01 per share.
(3) Annualized
<PAGE>
To learn more about the Funds you may want to read the Statement of
Additional Information (or "SAI") which contains additional information about
the Funds. The Funds have incorporated the SAI into the Prospectus by reference.
This means that you should consider the contents of the SAI to be part of the
Prospectus.
You also may learn more about each Fund's investments by reading the annual
and semi-annual reports to shareholders. The annual report includes a discussion
of the market conditions and investment strategies that significantly affected
the performance of the Funds during their last fiscal year.
The SAI and the annual and semi-annual reports are all available to
shareholders and prospective investors without charge, simply by calling
American Data Services, Inc. at 1-800-368-3322.
Prospective investors and shareholders who have questions about the Funds
may call the above number, write to the address below, or visit our Web site
also shown below:
The Chaconia Income & Growth Fund, Inc.
c/o American Data Services, Inc.
The Hauppauge Corporate Center
150 Motor Parkway, Suite 109
Hauppauge, NY 11788
www.trinidad.net/home/tondt/utc/utchome.htm
The general public can review and copy information about the Funds
(including the SAI) at the Securities and Exchange Commission's Public Reference
Room in Washington, D.C. (Please call 1-202-942-8090 for information on the
operations of the Public Reference Room.) Reports and other information about
the Chaconia Funds are also available on the EDGAR Database at the Securities
and Exchange Commission's Internet site at http://www.sec.gov and copies of this
information may be obtained, upon payment of a duplicating fee, by electronic
request at the following E-mail address: [email protected]. or by writing to:
Public Reference Section
Securities and Exchange Commission
Washington, D.C. 20549-0102
Please refer to the Securities Act and Investment Company Act File Nos.
33-37426 and 811-6194 when seeking information about the Chaconia Funds from the
Securities and Exchange Commission.
<PAGE>
ACCOUNT APPLICATION
Mail to: Chaconia Income & Growth Fund, Inc.
c/o 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 631-951-0500 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.
<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 Date
or Custodian
---------------------------------- --------
Signature of Joint Owner (Required Date
if Joint Registration)
DEALER INFORMATION
--------------------------------------------------------------------------------
Dealer Name
--------------------------------------------------------------------------------
Representative's Name
--------------------------------------------------------------------------------
Branch Address
--------------------------------------------------------------------------------
Branch Number AE#
--------------------------------------------------------------------------------
Street
--------------------------------------------------------------------------------
City
--------------------------------------------------------------------------------
State Zip
<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.
<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 Signature of Co-Depositor (Required
for Joint Accounts)
-------------------------------------- -------------------------------------
Name (Printed or typed) Name (Printed or typed)
-------------------------------------- -------------------------------------
Date Date
<PAGE>
STATEMENT OF ADDITIONAL INFORMATION July 31, 2000
-----------------------------------
THE CHACONIA INCOME & GROWTH FUND, INC.
This Statement of Additional Information is not a prospectus and should be
read in conjunction with the prospectus of The Chaconia Income & Growth Fund,
Inc. dated July 31, 2000. Requests for copies of the prospectus should be made
in writing to The Chaconia Income & Growth Fund, Inc., c/o American Data
Services, Inc., the Hauppauge Corporate Center, 150 Motor Parkway, Suite 109,
Hauppauge, New York 11788, or by calling 1-800-368-3322.
The following financial statements are incorporated by reference from the
Annual Report, dated December 31, 1999 (File Nos. 33-37426 and 811-6194), as
filed with the Securities and Exchange Commission on April 14, 2000:
The Chaconia I&G Fund
Schedule of Investments
Statement of Assets and Liabilities
Statement of Operations
Statement of Changes in Net Assets
Financial Highlights
Notes to Financial Statements
Report of Independent Auditors
Shareholders may obtain a copy of the Annual Report, without charge, by calling
1-800-368-3322.
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
<PAGE>
THE CHACONIA INCOME & GROWTH FUND, INC.
Table of Contents
Page No.
--------
General Information and History.............................................3
Investment Restrictions.....................................................3
Investment Considerations...................................................4
Directors and Officers of the Company.......................................8
Ownership of Management and Principal Shareholders.........................10
Fund Managers and Administrator............................................11
Distribution Plan and Service Fees.........................................13
Determination of Net Asset Value...........................................14
Retirement Plans...........................................................15
Performance and Yield Information..........................................16
Purchase, Redemption and Exchange of Shares................................17
Portfolio Transactions and Brokerage.......................................18
Custodian..................................................................19
Dividends, Distributions and Taxes.........................................19
Independent Auditors.......................................................20
General Corporate Information .............................................20
Description of Securities Ratings..........................................22
No person has been authorized to give any information or to make any
representations other than those contained in this Statement of Additional
Information and the Prospectus dated July 31, 2000 and, if given or made, such
information or representations may not be relied upon as having been authorized
by The Chaconia Income & Growth Fund, Inc.
This Statement of Additional Information does not constitute an offer to
sell securities.
2
<PAGE>
GENERAL INFORMATION AND HISTORY
The Chaconia Income & Growth Fund, Inc. (the "Company") is an open-end,
diversified management company registered under the Investment Company Act of
1940. The Company is a Maryland corporation, incorporated on October 24, 1990.
The Chaconia Income & Growth Fund, Inc. consists of a series of two funds:
Chaconia I&G Fund and Chaconia ACS Fund. (The Chaconia I&G Fund and The Chaconia
ACS Fund are hereinafter individually referred to as a "Fund" and collectively
as the "Funds").
INVESTMENT RESTRICTIONS
Each of the Funds has adopted the following investment restrictions which
are matters of fundamental policy. Each Fund's fundamental investment policies
cannot be changed without approval of the holders of the lesser of: (i) 67% of
that Fund's shares present or represented at a shareholders' meeting at which
the holders of more than 50% of such shares are present or represented; or (ii)
more than 50% of the outstanding shares of that Fund.
Each Fund 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
each Fund 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 assets (not including the amount borrowed) and will not purchase
securities while borrowings in excess of 5% of the value of its 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 each Fund may be deemed to be
an underwriter in connection with the sale of securities in its 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.
3
<PAGE>
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.
Each Fund observes the following restrictions as a matter of operating
policy but not fundamental policy, pursuant to positions taken by federal and
state regulatory authorities:
Each Fund 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 one of 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 one of the
Funds, any officer or director of that Fund or its 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 Fund's 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 one of 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.
INVESTMENT CONSIDERATIONS
Securities Subject to Reorganization
Each Fund 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 each Fund's manager, there is a reasonable
prospect of capital appreciation significantly greater than the brokerage and
other transaction expenses involved. In making these investments, each Fund 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
4
<PAGE>
assets in any one industry. Since such investments are ordinarily short-term in
nature, they will tend to increase the turnover ratio of each Fund, thereby
increasing its brokerage and other transaction expenses, as well as make it more
difficult for the Fund 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").
Nonconvertible Debt Securities
Under normal market conditions, the Chaconia I&G Fund will invest at least
15% 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. Speculative securities 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 I&G 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. In taking a
temporary defensive position, the Investment Manager 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.
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. Each Fund 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.
5
<PAGE>
When Issued, Delayed Delivery Securities and Forward Commitments
Each Fund 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 each Fund will only enter
into a forward commitment with the intention of actually acquiring the security,
a Fund may sell the security before the settlement date if it is deemed
advisable.
Borrowing
Each Fund 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 I&G Manager will not purchase securities when borrowings exceed
5% of total assets. Each Fund may mortgage, pledge or hypothecate assets to
secure such borrowings.
Loans of Portfolio Securities
To increase income, each Fund 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 Fund at any time, (3) the Fund receives
reasonable interest or fee payments on the loan, (4) the Fund is 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 the Fund's assets.
U.S. Government Securities
The U.S. Government securities in which each Fund 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.
6
<PAGE>
Each Fund 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 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, each Fund 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. 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 December 31, 1999, the Schemes of the Trinidad and Tobago Unit
Trust Corporation had an aggregate of approximately $470,446,000 (U.S. dollars)
under management and approximately 266,956 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 each Fund 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. Each Fund 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
7
<PAGE>
of the investment company. As of April 14, 2000, the Unit Trust Corporation
beneficially owned 2.75% of the outstanding voting stock of the Chaconia I&G
Fund.
DIRECTORS AND OFFICERS
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 each Fund and persons or companies furnishing
services to it. 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.
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.
8
<PAGE>
Position(s) Held Principal Occupation
Name and Address With Registrant During Last Five Years
---------------- ---------------- ----------------------
*Judy Y. Chang Director and Chairman of Trinidad and
Trinidad and Tobago Unit Chairman Tobago Unit Trust Corporation,
Trust Corporation 8-97 to Present; Consultant,
74 Independence Square 7-97 to Present; Partner,
Port-of-Spain Price Waterhouse, 1-80 to
Trinidad and Tobago, W.I. 6-97.
*Clarry Benn Director and Executive Director, 9-96 to
Trinidad and Tobago Unit President Present; Executive Manager,
Trust Corporation Investments and Financial
74 Independence Square Trust Accounting, 8-92 to
Port-of-Spain 8-96.
Trinidad and Tobago, W.I.
*Renrick Nickie Director, Executive Manager, Marketing
Trinidad and Tobago Unit Vice President and Operations, 8-92 to
Trust Corporation and Treasurer Present.
74 Independence Square
Port-of-Spain
Trinidad and Tobago, W.I.
Dr. John A. Cole Director Dean of the School of
1600 Harden Street Professional Programs, 8-98 to
Columbia, SC 29204 Present, Benedict College;
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.
Dr. Roosevelt J. Williams Director Director, Cipriani College of
Cipriani College of Labour Labour and Cooperative
and Cooperative Studies Studies, 8-97 to Present;
Churchill Roosevelt Education Consultant, 1-96 to
Highway 7-97; Professor at Howard
Valsayn, Trinidad and University, 1989 to 12-95.
Tobago, W.I.
Ulice Payne, Jr. Secretary Attorney and Partner, Foley &
Foley & Lardner Lardner, 2-98 to Present;
777 East Wisconsin Avenue Attorney and Shareholder,
Suite 3700 Reinhart, Boerner, Van Deuren,
Milwaukee, WI 53202 Norris & Rieselbach, S.C.,
2-90 to 2-98.
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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. The table below sets forth the
compensation paid by the Fund to each of the directors of the Fund during the
fiscal year ended December 31, 1999:
COMPENSATION TABLE
Pension or
Retirement Total
Benefits Estimated Compensation
Accrued Annual from
Aggregate As Part of Benefits Company
Compensation Company Upon Paid to
Name of Person From Company Expenses Retirement Directors
-------------- ------------ ---------- ---------- ------------
Judy Y. Chang $500 $0 $0 $500
Clarry Benn $500 $0 $0 $500
Renrick Nickie $500 $0 $0 $500
John A. Cole* $12,500 $0 $0 $12,500
Roosevelt J. Williams* $12,500 $0 $0 $12,500
* This year, John A. Cole and Roosevelt J. Williams received payment for all
Board of Directors meetings they attended from 1993 through December 31, 1999
The Company and the Adviser have adopted a code of ethics pursuant to Rule
17j-1 under the Act. This code of ethics permits personnel subject thereto to
invest in securities, including securities that may be purchased or held by the
Funds. This code of ethics prohibits, among other things, persons subject
thereto from purchasing or selling securities if they know at the time of such
purchase or sale that the security is being considered for purchase or sale by a
Fund or is being purchased or sold by a Fund.
OWNERSHIP OF MANAGEMENT
AND PRINCIPAL SHAREHOLDERS
As of December 31, 1999, no person known by the Company owns more than 5%
of either Fund's outstanding shares. All directors and officers of the Company
as a group owned approximately 15,703.5 shares or .0031% of the Chaconia I&G
Fund's outstanding shares, as of December 31, 1999.
FUND MANAGERS AND ADMINISTRATOR
I&G Fund Manager
Subject to supervision by the Board of Directors, investment management
services are provided to the Chaconia I&G Fund by Earnest Partners, LLC (the
"I&G Fund Manager") pursuant to an investment management agreement executed by
the Chaconia I&G
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Fund on June 20, 2000 ("I&G Contract"). The I&G Fund Manager began managing the
Fund's assets on July 5, 2000.
Under the I&G Contract, the I&G Fund Manager provides a continuous
investment program for the Chaconia I&G Fund and makes decisions and places
orders to buy, sell or hold particular securities and futures. The I&G Fund
Manager also supervises all matters relating to the operation of the Chaconia
I&G Fund and provides clerical staff, office space, equipment and services. As
compensation for its services, the I&G Fund Manager receives 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,
1999, 1998 and 1997, the Chaconia I&G Fund would have paid the I&G Fund Manager
advisory fees of $216,700, $147,275 and $93,537, respectively. These fees are
the same as those earned by the prior investment advisor.
A Special Meeting of Shareholders was held on June 20, 2000, at which time
shareholders voted to approve the I&G Contract. The I&G Contract was also
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.
The I&G Fund Manager, a Georgia limited liability company organized on
December 22, 1997, is registered as an investment adviser under the Investment
Advisers Act of 1940, as amended. The I&G Fund Manager is a wholly owned
subsidiary of Earnest Holdings, LLC, a Delaware limited liability company. The
principal executive office of Earnest Holdings, LLC is located at the same
address as the I&G Fund Manager. As of March 31, 2000, the I&G Fund Manager had
$1,100,000,000 in assets under management. The I&G Fund Manager provides
investment counsel, utilizing investment strategies substantially similar to
that of the Fund, to individuals, banks and thrift institutions, pension and
profit sharing plans, trusts, estates, charitable organizations, and
corporations.
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. The I&G Contract will remain in effect until terminated by either
party. 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 30 days' written notice to the I&G Fund
Manager. The I&G Contract also may be terminated by the I&G Fund Manager on 30
days' written notice to the Chaconia I&G Fund. The I&G Contract terminates
automatically upon its assignment (as defined in the 1940 Act).
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
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provided in the 1940 Act) or of willful misfeasance, bad faith, gross negligence
or reckless disregard of duty.
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 Company on behalf of the Chaconia ACS Fund
on October 28, 1999 ("ACS Contract," together with the I&G Contract collectively
referred to herein as the "Management Contracts") and ratified by the Board of
Directors of the Company on May 17, 2000. 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.
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 30 days' written notice to the ACS Fund
Manager. The ACS Contract also may be terminated by the ACS Fund Manager on 30
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
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<PAGE>
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, 1999, 1998 and 1997, the
Chaconia I&G Fund paid the Administrator $83,431, $65,161 and $52,499,
respectively, pursuant to its Administrative Services Agreement. It is
anticipated that the Chaconia ACS Fund will commence operations during
October, 2000.
On May 17, 2000, the Board of Directors of the Company voted to terminate
the service agreements with American Data Services, Inc. and enter into similar
agreements with Firstar Mutual Fund Services, LLC.
Fund Operating Expenses
In addition to the fees payable to the Investment Managers and the
Administrator, each Fund is 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 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 Fund and its shares under federal or
state securities laws; (viii) expenses of preparing, printing and mailing
reports and notices and proxy material to shareholders; (ix) other expenses
incidental to holding any shareholder meetings; (x) dues or assessments of or
contributions to the Investment Company Institute or any successor; (xi) Rule
12b-1 fees paid by the Fund in connection with the Distribution Plan; (xii)
service fees paid by the Fund in connection with the personal service and/or
maintenance of shareholder accounts; and (xiii) such nonrecurring expenses as
may arise, including litigation affecting the Fund and the legal obligations
with respect to which the Fund may have to indemnify its officers and directors.
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 the 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 material and
marketing services. Each Fund will reimburse the Managers and Qualified
Recipients for these expenditures, including interest expenses and other
overhead items, during a fiscal year of the Fund, up to a limit of 0.50 of 1% on
an annual basis of the Fund's average daily net assets, subject to compliance
with guidelines adopted from time to time by the Board of Directors.
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<PAGE>
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 one of the Funds as a
result of a sale made by them of a Fund's shares. The service fee is paid by the
Fund 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). During the fiscal year
ended December 31, 1999, the Chaconia I&G Fund incurred distribution costs of
$163,999.50, all of which was spent on advertising and promotional activities,
including printing and mailing of prospectuses to other than current
shareholders.
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 each Fund shall be
determined in a manner which, in the discretion of the valuing agent of the
Fund, most fairly reflects fair market value of the property on such date.
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<PAGE>
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"). Each Fund offers 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.
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<PAGE>
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.
PERFORMANCE AND YIELD INFORMATION
Each Fund may furnish data about its investment performance in
advertisements, sales literature and reports to shareholders. "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 one of the
Funds through the most recent calendar quarter, assuming reinvestment of all
dividends and distributions. Each Fund 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
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 one of 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 each 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.
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In connection with communicating its yield or total return to current or
prospective shareholders, each Fund 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 one of the Funds over
periods of one, five and ten years (up to the life of the Fund), 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 respective Investment Manager) 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. The Chaconia I&G Fund's average
annual compounded rate of return for the one year and five year periods ended
December 31, 1999, and for the period from the Fund's commencement of operations
(May 11, 1993) through December 31, 1999 were 2.73%, 13.89% and 10.68%
respectively.
PURCHASE, REDEMPTION AND EXCHANGE OF SHARES
The procedure for purchasing shares of one of the Funds is summarized in
the prospectus under "How to Purchase Shares" and the procedure for redemption
of shares is 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.
Each Fund 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 shareholder. Each
Fund reserves 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 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 shareholder 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 each Fund may reimburse itself or selected
broker-dealers for such loss by automatically redeeming shares from any account
registered in that shareholder's name, or by seeking other redress.
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At this time Shareholders may not make exchanges between Funds. It is
expected that the Funds will permit Shareholders to make exchanges between the
Funds in the near future. For further information on the availability of this
service, call the Transfer Agent at 1-800-368-3322.
PORTFOLIO TRANSACTIONS AND BROKERAGE
The Management Contracts state that in connection with their duties to
arrange for the purchase and the sale of securities and futures held in the
portfolio of each Fund by placing purchase and sale orders for each Fund, 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 a Fund 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 commissions 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 a
Fund 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 one of 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 one of 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
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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 one of
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.
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. Firstar Bank does not exercise any supervisory function over the
management of either of the Funds, the purchase and sale of securities or the
payment of distributions to shareholders.
DIVIDENDS, DISTRIBUTIONS AND TAXES
Dividends and Distributions
Each dividend and capital gains distribution, if any, declared by one of
the Funds on its outstanding shares will, unless the shareholder elects
otherwise, be paid on the payment date fixed by the Board of Directors in
additional shares of that Fund 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 relevant Fund 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 either Fund will pay any dividends or realize any capital gains. However,
each Fund currently intends to pay dividends and capital gains distributions, if
any, on an annual basis.
Taxes
Each Fund intends 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 Fund of liability for
federal income taxes to the extent its earnings are distributed.
Each Fund contemplates 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
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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 Fund
from domestic corporations in any year are less than 100% of the distribution of
net investment company taxable income made by the Fund.
The Transfer Agent is required to send shareholders 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 shareholders 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 either Fund, individuals are advised to check the
consequences of local and state tax laws, and the consequences for any
retirement plan offering tax benefits.
INDEPENDENT AUDITORS
The Funds' independent auditors, PricewaterhouseCoopers LLP, New York, New
York, audit and report on each Fund's annual financial statements, review
certain regulatory reports and each Fund's federal income tax returns, and
perform other professional accounting, auditing, tax and advisory services when
engaged to do so by a Fund. Shareholders will receive annual audited financial
statements and semiannual unaudited financial statements.
GENERAL CORPORATE INFORMATION
Description of Shares, Voting Rights and Liabilities
The Company is a Maryland corporation, incorporated on October 24, 1990,
and registered as an open-ended, nondiversified, management investment company
under the 1940 Act. The Company'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 Company'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,
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funds or series), each class representing a separate, additional Company
portfolio, and to fix the number of shares in any such class.
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 either Fund. 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 shareholder.
The Company sends semiannual and annual reports to all of its shareholders
which include a list of portfolio securities and the Company's financial
statements which shall be audited annually.
The shares 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
shareholder of record, neither Fund issues certificates evidencing the Fund's
shares.
The Company will hold an annual shareholder meeting each year. Special
meetings of the shareholders will be held for the consideration of proposals
requiring shareholder approval by law, such as changing fundamental policies or
upon the written request of 25% of the Company's outstanding shares. The
directors will promptly call a meeting of shareholders 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 shareholders will receive
communication assistance in connection with calling such a meeting. At any
meeting of shareholders duly called and at which a quorum is present, the
shareholders may, by the affirmative vote of the holders of 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 Company's organizing documents have been filed with the SEC as exhibits
to the Company's registration statement and can be found at the SEC, at the
Company's principal office or at the offices of the Company's legal counsel.
Shareholder Approval
Other than the election of directors, which is by plurality, any matter for
which shareholder 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
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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 Company entitled to vote at a meeting called for the purpose of considering
such approval. Pursuant to the Company'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 shareholders shall constitute a
quorum for the transaction of any business at all meetings of the shareholders
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.
DESCRIPTION OF SECURITIES RATINGS
Standard & Poor's Corporation ("Standard & Poor's") Debt Ratings. A
Standard & Poor's corporate debt rating is a current assessment of the
creditworthiness of an obligor with respect to a specific obligation. This
assessment may take into consideration obligors such as guarantors, insurers or
lessees.
The debt rating is not a recommendation to purchase, sell or hold a
security, inasmuch as it does not comment as to market price or suitability for
a particular investor.
The ratings are based on current information furnished by the issuer or
obtained by Standard & Poor's from other sources it considers reliable. Standard
& Poor's does not perform any audit in connection with any rating and may, on
occasion, rely on unaudited financial information. The ratings may be changed,
suspended or withdrawn as a result of changes in, or unavailability of, such
information, or for other circumstances.
The ratings are based, in varying degrees, on the following considerations:
I. Likelihood of default - capacity and willingness of the obligor
as to the timely payment of interest and repayment of principal
in accordance with the terms of the obligation;
II. Nature of and provisions of the obligation;
III. Protection afforded by, and relative position of the obligation
in the event of bankruptcy, reorganization or other arrangement
under the laws of bankruptcy and other laws affecting creditors'
rights;
AAA - Debt rated AAA has the highest rating assigned by Standard & Poor's.
Capacity to pay interest and repay principal is extremely strong.
AA - Debt rated AA has a very strong capacity to pay interest and repay
principal and differs from the higher rated issues only in small degree.
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A - Debt rated A has a strong capacity to pay interest and repay principal
although it is somewhat more susceptible to the adverse effects of changes in
circumstances and economic conditions than debt in the higher rated categories.
BBB - Debt rated BBB has an adequate capacity to pay interest and repay
principal. Whereas such debt normally exhibits adequate 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 in higher rated categories.
BB, B, CCC, CC - Debt rated BB, B, CCC or CC 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 CC 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.
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.
Moody's Investors Service, Inc. ("Moody's") Bond Ratings.
Aaa - Bonds which are rated Aaa are judged to be the best quality. They
carry the smallest degree of investment risk and are generally referred to as
"gilt edged." 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 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 make
the long-term risks appear somewhat larger than in Aaa securities.
A - Bonds which are rate 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
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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 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 have other marked
shortcomings.
Moody's applies numerical modifiers 1, 2 and 3 in each of the foregoing
generic rating classifications. The modifier 1 indicates that the company ranks
in the higher end of its generic rating category; the modifier 2 indicates a
mid-range ranking; and the modifier 3 indicates that the company ranks in the
lower end of its generic rating category.
Standard & Poor's Commercial Paper Ratings. A Standard & Poor's commercial
paper rating is a current assessment of the likelihood of timely payment of debt
considered short-term in the relevant market. Ratings are graded into several
categories, ranging from A-1 for the highest quality obligations to D for the
lowest. These categories are as follows:
A-1. This highest category indicates that the degree of safety regarding
timely payment is strong. Those issuers determined to possess extremely strong
safety characteristics are denoted with a plus sign (+) designation.
A-2. Capacity for timely payment on issues with this designation is
satisfactory. However the relative degree of safety is not as high as for
issuers designated "A-1".
A-3. Issues carrying this designation have adequate capacity for timely
payment. They are, however, more vulnerable to the adverse effects of changes in
circumstances than obligations carrying a higher designation.
Moody's Short-Term Debt Ratings. Moody's short-term debt ratings are
opinions of the ability of issuers to repay punctually senior debt obligations
which have an original maturity not exceeding one year. Obligations relying upon
support mechanisms such as letters-of-credit and bonds of indemnity are excluded
unless explicitly rated.
Moody's employs the following three designations, all judged to be
investment grade, to indicate the relative repayment ability of rated issuers:
Prime-1. Issuers rated Prime-1 (or supporting institutions) have a superior
ability for repayment of senior short-term debt obligations. Prime-1 repayment
ability will often be evidenced by many of the following characteristics:
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o Leading market positions in well-established industries.
o High rates of return on funds employed.
o Conservative capitalization structure with moderate reliance on debt
and ample asset protection.
o Broad margins in earnings coverage of fixed financial charges and high
internal cash generation.
o Well-established access to a range of financial markets and assured
sources of alternate liquidity.
Prime-2. Issuers rated Prime-2 (or supporting institutions) have a strong
ability for repayment of senior short-term debt obligations. This will normally
be evidenced by many of the characteristics cited above but to a lesser degree.
Earnings trends and coverage ratios, while sound, may be more subject to
variation. Capitalization characteristics, while still appropriate, may be more
affected by external conditions. Ample alternate liquidity is maintained.
Prime-3. Issuers rated Prime-3 (or supporting institutions) have an
acceptable ability for repayment of senior short-term obligations. The effect of
industry characteristics and market compositions may be more pronounced.
Variability in earnings and profitability may result in changes in the level of
debt protection measurements and may require relatively high financial leverage.
Adequate alternate liquidity is maintained.
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.
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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.
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 23. Exhibits.
(a) Articles of Incorporation, as amended [4]
(b) By-Laws, as amended
(c) None
(d)(i) Chaconia I&G Fund Investment Management Agreement between the
Company and Earnest Partners, LLC [5]
(d)(ii) Chaconia ACS Fund Investment Management Agreement between the
Company and Chaconia Fund Services, Inc.
(e) Distribution Agreement between the Company and Chaconia Financial
Services, Inc.
(f) None
(g) Custody Agreement between the Company and Firstar, N.A. [3]
(h)(i) Chaconia I&G Fund Accounting Service Agreement between the Company
and American Data Services, Inc. [1]
(h)(ii) Chaconia I&G Fund Shareholder Servicing Agent Agreement between
the Company and American Data Services, Inc. [1]
(h)(iii) Chaconia I&G Fund Administrative Services Agreement between the
Company and American Data Services, Inc. [1]
(h)(iv) Chaconia ACS Fund Accounting Service Agreement between the Company
and American Data Services, Inc. [4]
(h)(v) Chaconia ACS Fund Transfer Agency and Service Agreement between
the Company and American Data Services, Inc. [4]
(h)(vi) Chaconia ACS Fund Administrative Services Agreement between the
Company and American Data Services, Inc. [4]
(i) Opinion and Consent of Counsel
(j) Consent of Independent Accountants
(k) None
(l) Subscription Agreement [1]
(m) Distribution Plan [2]
(n) None
(o) Not Applicable
(p) Code of Ethics
(q) Power of Attorney
[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.
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[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.
[4] Previously filed as an exhibit to Post-Effective Amendment No. 14 to
Registrant's Registration Statement on Form N-1A and incorporated by
reference thereto. Amendment No. 14 was filed with the SEC on November 30,
1998 and its File Nos. are 33-37426 and 811-6194.
[5] Previously filed as an exhibit to the Proxy Statement filed with the SEC on
April 20, 2000 and incorporated by reference hereto. The proxy statement's
File Nos. are 33-37426 and 811-6194.
Item 24. Persons Controlled by or under Common Control with Registrant.
None.
Item 25. 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
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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.
Item 26. Business and Other Connections of Investment Advisor.
Reference is made to Part B of this Registration Statement and to Form ADV
filed under the Investment Advisers Act of 1940 by the Investment Manager.
Item 27. 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 28. 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 29. Management Services.
The Registrant is not party to any management-related services contract not
discussed in Part A or Part B hereof.
Item 30. 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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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
July 31, 2000.
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 attached
to Post Effective Amendment No. 18
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 (a) Articles of Incorporation, as amended*
Exhibit (b) By-Laws, as amended
Exhibit (c) None
Exhibit (d)(i) Chaconia I&G Fund Investment Management Agreement between the
Company and Earnest Partners, LLC*
Exhibit (d)(ii) Chaconia ACS Fund Investment Management Agreement between
the Company and Chaconia Fund Services, Inc.
Exhibit (e) Distribution Agreement between the Company and Chaconia
Financial Services, Inc.
Exhibit (f) None
Exhibit (g) Custody Agreement between the Company and Firstar Bank, N.A.*
Exhibit (h)(i) Chaconia I&G Fund Accounting Service Agreement between the
Company and American Data Services, Inc.*
Exhibit (h)(ii) Chaconia I&G Fund Shareholder Servicing Agreement Agent
Agreement between the Company and American Data Services, Inc.*
Exhibit (h)(iii) Chaconia I&G Fund Administrative Services Agreement between the
Company and American Data Services, Inc.*
Exhibit (h)(iv) Chaconia ACS Fund Accounting Service Agreement between the
Company and American Data Services, Inc. *
Exhibit (h)(v) Chaconia ACS Fund Transfer Agency and Service Agreement between
the Company and American Data Services, Inc. *
Exhibit (h)(vi) Chaconia ACS Fund Administrative Services Agreement between the
Company and American Data Services, Inc. *
Exhibit (i) Opinion and Consent of Counsel
Exhibit (j) Consent of Independent Accountants
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Exhibit (k) None
Exhibit (l) Subscription Agreement*
Exhibit (m) Distribution Plan*
Exhibit (n) None
Exhibit (o) Not Applicable
Exhibit (p) Code of Ethics
Exhibit (q) Power of Attorney
* Incorporated by reference.
