As filed with the Securities and Exchange Commission on February 7, 1996
Registration No. _____
ICA No. ___________
_______________________________________________________________________________
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. [ ]
and/or
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 [X]
Amendment No. [ ]
(Check appropriate box or boxes)
AMERINDO FUNDS INC.
(Exact Name of Registrant as Specified in Charter)
c/o Amerindo Funds Inc.
399 Park Avenue, New York, New York 10022
(Address of Principal Executive Offices) (Zip Code)
Registrant's Telephone Number, including Area Code: (212) 371-6360
Charles B. Young
Amerindo Funds Inc.
399 Park Avenue
New York, New York 10022
(Name and Address of Agent for Service)
Copy to: MICHAEL R. ROSELLA, Esq.
Battle Fowler LLP
75 East 55th Street
New York, New York 10022
Approximate Date of Proposed Public Offering: As soon as practicable after this
Registration Statement becomes effective.
It is proposed that this filing will become effective: (check appropriate box)
[ ] immediately upon filing pursuant to paragraph (b)
[ ] on (date) pursuant to paragraph (b)
[ ] 60 days after filing pursuant to paragraph (a)
[ ] on (date) pursuant to paragraph (a) of Rule 485
[ ] 75 days after filing pursuant to paragraph (a)(2)
[ ] on (date) pursuant to paragraph (a)(2) of Rule 485
The Registrant declares that an indefinite amount of its shares of beneficial
interest is being registered by this Registration Statement pursuant to
Section 24(f) under the Investment Company Act of 1940, as amended, and Rule
24f-2 thereunder.
The Registrant hereby amends this Registration Statement on such date or dates
as may be necessary to delay its effective date until the Registrant shall
file a further amendment which specifically states that this Registration
Statement shall thereafter become effective in accordance with Section 8(a) of
the Securities Act of 1933 or until the Registration Statement shall become
effective on such date as the Commission, acting pursuant to said Section
8(a), may declare.
338469.1
<PAGE>
AMERINDO FUNDS INC.
Registration Statement on Form N-1A
________________________
CROSS REFERENCE SHEET -
Pursuant to Rule 404(c)
________________________
Part A
Item No. Prospectus Heading
1. Cover Page................... Cover Page
2. Synopsis..................... Prospectus Summary; Expense Summary
3. Condensed Financial
Information.................. Not Applicable
4. General Description of
Registrant................... Cover Page; Investment Objective and
Policies; Additional Investment
Information and Risk Factors
5. Management of the Fund....... Management of the Fund
5a. Management's Discussion
of the Fund................. Management of the Fund
6. Capital Stock and Other
Securities................... Purchases of Shares; Reduction or
Elimination of Sales Loads; Redemption
of Shares; Description of Common Stock
7. Purchase of Securities
Being Offered................ Purchases of Shares; Description of
Common Stock
8. Redemption or Repurchase..... Redemption of Shares
9. Legal Proceedings............ Not Applicable
-2-
338469.1
<PAGE>
Part B
Item No. Caption in Statement of Additional
Information
10. Cover Page................... Cover Page
11. Table of Contents............ Table of Contents
12. General Information and
History...................... The Fund; Management of the Fund;
Description of Common Stock
13. Investment Objectives and
Policies..................... Investment Objective, Policies and
Restrictions
14. Management of the Fund....... Management of the Fund
15. Control Persons and
Principal Holders of
Securities................... Management of the Fund
16. Investment Advisory and
Other Services............... Management of the Fund; Purchase and
Redemption; Counsel and Independent
Auditors
17. Brokerage Allocation......... Brokerage and Portfolio Turnover
18. Capital Stock and Other
Securities................... Description of Common Stock
19. Purchase, Redemption and
Pricing of Securities
Being Offered................ Purchase and Redemption; Net Asset Value
20. Tax Status................... Taxes
21. Underwriters................. Management of the Fund
22. Calculations of Yield
Quotations of Money Market
Funds........................ Not Applicable
23. Financial Statements......... Financial Statements (To be filed by
Amendment)
-3-
338469.1
<PAGE>
Information contained herein is subject to completion or amendment. A
Registration Statement relating to these securities has been filed with the
Securities and Exchange Commission. These securities may not be sold nor may
offers to buy be accepted prior to the time the registration statement becomes
effective. This is not a prospectus and shall not constitute an offer to sell
or the solicitation of an offer to buy nor shall there be any sale of these
securities in any state in which such offer, solicitation or sale would be
unlawful prior to registration or qualification under the securities laws of
any such State.
Subject to Completion Dated February 7, 1996
_______________________________________________________________________________
PROSPECTUS [ ], 1996
AMERINDO TECHNOLOGY FUND
399 Park Avenue, 18th Floor
New York, New York 10022
_______________________________________________________________________________
Amerindo Technology Fund (the "Fund"), a non-diversified, open-end,
management investment company, is a series of Amerindo Funds Inc. The Fund's
investment objective is to seek long-term capital appreciation by investing at
least 65% of its assets (although the Fund intends, as a non-fundamental
policy, to invest at least 80% of its assets) in the common stocks of
companies with business operations in the technology, technology-related and
science industries. Current income is incidental to the Fund's investment
objective. The technology, technology-related and science industries have
exhibited and continue to demonstrate rapid growth, both through increasing
demand for existing products and services and the broadening of the technology
market. Industries likely to be represented in the portfolio include
computers, networking and internetworking software, computer aided design,
telecommunications, media and information services, hospital supply and
medical devices, biotechnology, and environmental services. The Fund may also
invest in the stocks of companies that should benefit from the
commercialization of technological advances, although they may not be directly
involved in research and development. This Fund is designed for long-term
investors who understand and are willing to accept the risk of loss involved
in seeking long-term capital appreciation. The Fund should not be used as a
trading vehicle. See "Investment Objective" herein.
The Fund offers three classes of shares to investors--Class A, Class C
and Class D shares (collectively "Classes", or each individually, a "Class").
Class A shares are sold subject to an initial sales load of up to 3.00%. Class
C and Class D shares are sold without an initial sales load. The Fund, on
behalf of each Class, has adopted a distribution and service plan (the "Plan")
pursuant to Rule 12b-1 under the Investment Company Act of 1940, as amended.
Under the Plan, Class A and Class D pay a servicing fee equal to 0.25% of
their respective average daily net assets and Class C pays distribution and
servicing fees equal to 0.50% of its average daily net assets. The minimum
initial investment for the Classes is as follows: $5,000 for Class A, $50,000
for Class C and $500,000 for Class D. The minimum subsequent investment is as
follows: Class A, $500, Class C, $5,000 and Class D, $50,000.
Shareholders in each class may be subject to a 1.00% redemption fee for
redeeming shares held less than three years. The redemption fee is assessed
against the net assets redeemed and is retained by the Fund. See "Redemption
of Shares".
The Fund will pay Amerindo Investment Advisors Inc., the Fund's
investment adviser (the "Adviser"), a monthly advisory fee at the annual rate
of 1.50% of each Class' average daily net assets. This fee is higher than the
fee paid by most other mutual funds, however, the Board of Directors believes
it to be reasonable in light of the advisory services the Fund receives
thereunder.
This Prospectus sets forth concisely the information about the Fund and
each Class that a prospective investor ought to know before investing and it
should be retained for future reference. Additional information about the
Fund, including additional information concerning risk factors relating to an
investment in the Fund, has been filed with the Securities and Exchange
Commission in a Statement of Additional Information for the Fund, dated [ ],
1996. This information is incorporated by reference and is available without
charge upon request from Furman Selz LLC (the "Distributor"), 237 Park Avenue,
New York, New York 10017.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION, NOR HAS
THE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION
TO THE CONTRARY IS A CRIMINAL OFFENSE.
_______________________________________________________________________________
336637.5
<PAGE>
PROSPECTUS SUMMARY
The following summary is qualified in its entirety by the more detailed
information appearing in this Prospectus.
The Fund. Amerindo Technology Fund, a non-diversified, open-end, management
investment company, is a series of Amerindo Funds Inc. The Fund offers three
classes of shares to investors--Class A, Class C and Class D shares.
Investment Objective. The Fund's investment objective is to seek long-term
capital appreciation by investing at least 65% of its assets (although the
Fund intends, as a non-fundamental policy, to invest at least 80% of its
assets) in the common stocks of companies with business operations in the
technology, technology-related and science industries. Industries likely to be
represented in the portfolio include computers, networking and internetworking
software, computer aided design, telecommunications, media and information
services, hospital supply and medical devices, biotechnology, and
environmental services. The Fund may also invest in the stocks of companies
that should benefit from the commercialization of technological advances,
although they may not be directly involved in research and development. This
Fund is designed for long-term investors who understand and are willing to
accept the risk of loss involved in seeking long-term capital appreciation.
Current income is incidental to the Fund's investment objective. See
"Investment Objective".
Management and Fees. The Fund will pay Amerindo Investment Advisors Inc., the
Fund's Adviser, a monthly advisory fee at the annual rate of 1.50% of each
Class' average daily net assets. This fee is higher than the fee paid by most
other mutual funds, however, the Board of Directors believes it to be
reasonable in light of the advisory services the Fund receives thereunder.
Furman Selz LLC serves as both the Fund's Administrator and Distributor. For
the services rendered to the Fund by the Administrator, the Fund pays the
Administrator an annual fee paid monthly equal to _________. The Fund, on
behalf of each Class, has adopted a distribution and service plan (the "Plan")
pursuant to Rule 12b-1 under the Investment Company Act of 1940, as amended.
Under the Plan, Class A and Class D pay a servicing fee equal to 0.25% of
their respective average daily net assets and Class C pays distribution and
servicing fees equal to 0.50% of its average daily net assets. See
"Distribution and Service Plan".
How to Purchase Shares. Shares of the Fund may be purchased at the net asset
value per share next determined after receipt of an order by the Fund's
Distributor or transfer agent in proper form with accompanying check or other
bank wire payment arrangements satisfactory to the Fund. Class A shares are
sold subject to an initial sales load of up to 3.00%. Class C and Class D
shares are sold without an initial sales load. The minimum initial investment
for the Classes is as follows: $5,000 for Class A, $50,000 for Class C and
$500,000 for Class D. The minimum subsequent investment is $500 for Class A,
$5,000 for Class C and $50,000 for Class D. See "Purchase of Shares".
How to Sell Shares. Shares of the Fund may be redeemed by a shareholder at any
time at the net asset value per share next determined after the redemption
request is received by the Fund's Distributor or transfer agent in proper
order. Shareholders in each Class may be subject to a 1.00% fee on the
redemption of shares held for less than three years. These redemption fees are
assessed against net assets and will be retained by the Fund. See "Redemption
of Shares".
Dividends and Reinvestment. Each dividend and capital gains distribution, if
any, declared by the Fund on its outstanding shares will, unless a shareholder
elects otherwise, be paid on the payment date in additional shares of the Fund
having an aggregate net asset value as of the ex-dividend date of such
dividend or distribution equal to the cash amount of such distribution.
Shareholders may change this election by notifying their shareholder servicing
agent or broker-dealer in writing at any time prior to the record date for a
particular dividend or distribution. There are no sales or other charges in
connection with the reinvestment of dividends and capital gains distributions.
There is no fixed dividend rate, and there can be no assurance that the Fund
will pay any dividends or realize any capital gains. The Fund, however,
currently intends to pay dividends and capital gains distributions, if any, at
least on an annual basis. See "Dividends and Distributions".
Risk Factors. Investors should consider the risks of investing in the
technology, technology-related and science industries, smaller capitalized
companies, and foreign securities. Companies in rapidly changing fields of
science and technology face special risks such as competitive pressures and
technological obsolescence and may be subject to greater governmental
regulation than many other industries. Investments in smaller capitalized
companies may involve greater risks, such as limited product lines, markets
and financial or managerial resources. Investments in securities of foreign
issuers may involve risks that are not associated with domestic investments.
Foreign issuers may lack uniform accounting, auditing and financial reporting
standards, practices and requirements, and there is generally less publicly
available information about foreign issuers than there is about U.S. issuers.
See "Additional Investment Information and Risk Factors". The Fund should not
be used as a trading vehicle.
-2-
336637.5
<PAGE>
<TABLE>
<CAPTION>
EXPENSE SUMMARY
Investor Transaction Expenses
Class A Class C Class D
<S> <C> <C> <C>
Maximum Sales
Load Imposed on
Purchases (as a
percentage of the
offering price) 3.00% NONE NONE
Redemption Fees 1.00% 1.00% 1.00%
Estimated Annual Operating Expenses
(as a percentage of average net assets)
Management Fees 1.50% 1.50% 1.50%
12b-1 Fees 0.25% 0.50%* 0.25%
Other Expenses ----% ----% ----%
Administration Fees ----%
Operating Expenses ----%
Total Estimated Annual
Operating Expenses ----% ----% ----%
Example: An investor of each Class would pay the following expenses on a
$1,000 investment in the Class assuming a 5% annual return
reinvested in such Class and redemption at the end of each time
period:
Year 1 Year 3
Class A $__ $__
Class C $__ $__
Class D $__ $__
</TABLE>
_______________________________________________________________________________
The purpose of the expense table provided above is to assist investors in
understanding the various costs and expenses that an investor will bear
directly or indirectly. For a further discussion of these fees see "Management
of the Fund." The Adviser, Administrator and the Distributor may voluntarily
waive all or a portion of their respective Management Fee, Administrative Fee
or 12b-1 fees. The expenses reflected above are estimates of the expenses each
Class will incur during its first fiscal year based on approximately $ of
initial net assets of each Class. The "Example" set forth above should not be
considered a representation of past or future expenses; actual expenses may be
greater or less than those shown.
_______________________________________________________________________________
- -------------------
* As a result of the asset-based sales charge, long-term shareholders of the
Fund may pay more than the economic equivalent of the maximum front-end sales
charge permitted by the National Association of Securities Dealers, Inc.
Includes an annual distribution fee of 0.25% and an annual service fee of
0.25% of the average daily net assets of Class C shares.
-3-
336637.5
<PAGE>
INVESTMENT OBJECTIVE AND POLICIES
Investment Objective
The Fund's investment objective is to seek long-term capital appreciation by
investing at least 65% of its assets (although the Fund intends, as a
non-fundamental policy, to invest at least 80% of its assets) in the common
stocks of companies with business operations in the technology,
technology-related and science industries. Current income is incidental to the
Fund's investment objective. The investment objective is fundamental to the
Fund and may not be changed without shareholder approval. There can be no
assurance that the Fund's investment objective will be achieved.
This Fund is designed for long-term investors who understand and are willing
to accept the risk of loss involved in investing in a fund seeking long-term
capital appreciation. Investors should consider their investment goals, their
time horizon for achieving them, and their tolerance for risks before
investing in the Fund. If you seek an aggressive approach to capital growth
and can accept the above average level of price fluctuations that this Fund is
expected to experience, this Fund could be an appropriate part of your overall
investment strategy. The Fund should not be used as a trading vehicle.
The Adviser believes that because of rapid advances in science and technology,
an investment in companies with business operations in these industries will
offer substantial opportunities for long-term capital appreciation. Of course,
prices of common stocks of even the best managed, most profitable corporations
are subject to market risk, which means their stock prices can decline. In
addition, swings in investor psychology or significant trading by large
institutional investors can result in price fluctuations. Industries likely to
be represented in the portfolio include computers, networking and
internetworking software, computer aided design, telecommunications, media and
information services, hospital supply and medical devices, biotechnology, and
environmental services. The Fund may also invest in the stocks of companies
that should benefit from the commercialization of technological advances,
although they may not be directly involved in research and development.
The technology and science industries have exhibited and continue to
demonstrate rapid growth, both through increasing demand for existing products
and services and the broadening of the technology market. In general, the
stocks of large capitalized companies that are well established in the
technology market can be expected to grow with the market and will frequently
be found in the Fund's portfolio. The expansion of technology and
technology-related industries, however, also provides a favorable environment
for investment in small to medium capitalized companies. The Fund's investment
policy is not limited to any minimum capitalization requirement and the Fund
may hold securities without regard to the capitalization of the issuer. The
Adviser's overall stock selection for the Fund is not based on the
capitalization or size of the company but rather on an assessment of the
company's fundamental prospects. The Adviser anticipates that a majority of
the Fund's holdings will be invested in the stocks of companies which are
purchased during their initial public offerings.
Permitted Investments
Although the Fund will primarily invest in common stocks issued by U.S.
companies, the Fund also may invest in other types of securities such as
convertible stocks, preferred stocks, bonds and warrants, as well as in
foreign securities, when the investment in such securities is considered
consistent with the Fund's investment objective by the Adviser.
The Fund will not invest more than 20% of its total assets in convertible
stocks, preferred stocks, bonds and warrants. The bonds in which the Fund may
invest are not required to be rated by a recognized rating agency. As a matter
of policy, however, the Fund will invest only in "investment grade" debt
securities (i.e., rated within the four highest ratings categories by a
nationally recognized statistical rating organization, e.g., BBB by Standard
-4-
336637.5
<PAGE>
& Poor's Corporation ("S&P"), Baa by Moody's Investor Services Inc.
("Moody's"), BBB by Fitch Investors Services, Inc., or BBB by Duff & Phelps
Credit Rating Co.) or, in the case of unrated securities, debt securities that
are, in the opinion of the Adviser, of equivalent quality to "investment
grade" securities. In addition, the Fund, without limitation, will not
necessarily dispose of any securities that fall below investment-grade based
upon the Adviser's determination as to whether retention of such a security is
consistent with the Fund's investment objective.
The Fund will not invest more than 20% of its assets in foreign securities.
However, by investing a portion of its assets in foreign securities, the Fund
will attempt to take advantage of differences among economic trends and the
performance of securities markets in various countries. To date, the market
values of securities of issuers located in different countries have moved
relatively independently of each other. During certain periods, the return on
equity investments in some countries has exceeded the return on similar
investments in the United States. The Adviser believes that, in comparison
with investment companies investing solely in domestic securities, it may be
possible to obtain significant appreciation from a portfolio of foreign
investments and securities from various markets that offer different
investment opportunities and are affected by different economic trends.
International diversification reduces the effect that events in any one
country will have on the Fund's entire investment portfolio. On the other
hand, a decline in the value of the Fund's investments in one country may
offset potential gains from investments in another country.
The Fund's portfolio turnover rate will be influenced by the Fund's investment
objective, other investment policies, and the need to meet redemptions. While
the rate of portfolio turnover will not be a limiting factor when the Adviser
deems changes appropriate, it is anticipated that given the Fund's investment
objective, its annual portfolio turnover should not generally exceed 50%. (A
portfolio turnover rate of 50% would occur, for example, if all of the stocks
in the Fund were replaced over a period of two years.)
The Fund's investment policies, unlike its investment objective, are not
fundamental and may be changed by the Board of Directors without shareholder
approval. If a percentage limitation is adhered to at the time an investment
is made, a later change in percentage resulting from changes in the value of
the Fund's securities will not be considered a violation of the Fund's
policies or restrictions.
ADDITIONAL INVESTMENT INFORMATION AND RISK FACTORS
The Technology and Science Industries. Companies in the rapidly changing
fields of science and technology face special risks. For example, their
products or services may not prove commercially successful or may become
obsolete quickly. The value of the Fund's shares may be susceptible to factors
affecting the technology, technology-related and science industries and to
greater risk and market fluctuation than an investment in a fund that invests
in a broader range of portfolio securities not concentrated in any particular
industry. As such, the Fund is not an appropriate investment for individuals
who are not long-term investors and who, as their primary objective, require
safety of principal or stable income from their investments. The technology,
technology-related and science industries may be subject to greater
governmental regulation than many other industries and changes in governmental
policies and the need for regulatory approvals may have a material adverse
effect on these industries. Additionally, companies in these industries may be
subject to risks of developing technologies, competitive pressures and other
factors and are dependent upon consumer and business acceptance as new
technologies evolve.
Smaller Capitalized Companies. The Adviser believes that smaller capitalized
companies generally have greater earnings and sales growth potential than
larger capitalized companies. The level of risk will be increased to the
extent that the Fund has significant exposure to smaller capitalized or
unseasoned companies (those with less than a three-year operating history).
Investments in smaller capitalized companies may involve greater risks, such
as limited product lines, markets and financial or managerial resources. In
addition, less frequently-traded securities may be subject to more abrupt
price movements than securities of larger capitalized companies.
-5-
336637.5
<PAGE>
Foreign Securities. Investments in securities of foreign issuers may involve
risks that are not associated with domestic investments, and there can be no
assurance that the Fund's foreign investments will present less risk than a
portfolio of domestic securities. Foreign issuers may lack uniform accounting,
auditing and financial reporting standards, practices and requirements, and
there is generally less publicly available information about foreign issuers
than there is about U.S. issuers. Governmental regulation and supervision of
foreign stock exchanges, brokers and listed companies may be less pervasive
than is customary in the United States. Securities of some foreign issuers are
less liquid, and their prices are more volatile, than securities of comparable
domestic issuers. Foreign securities settlements may in some instances be
subject to delays and related administrative uncertainties which could result
in temporary periods when assets of the Fund are uninvested and no return is
earned thereon and may involve a risk of loss to the Fund. Foreign securities
markets may have substantially less volume than U.S. markets and far fewer
traded issues. Fixed brokerage commissions on foreign securities exchanges are
generally higher than in the United States and transaction costs with respect
to smaller capitalization companies may be higher than those of larger
capitalization companies. Income from foreign securities may be reduced by a
withholding tax at the source or other foreign taxes. In some countries, there
may also be the possibility of expropriation or confiscatory taxation (in
which the Fund could lose its entire investment in a certain market),
limitations on the removal of monies or other assets of the Fund, political or
social instability or revolution, or diplomatic developments that could affect
investments in those countries. In addition, it may be difficult to obtain and
enforce a judgment in a court outside the U.S.
Foreign Currency. Investments in foreign securities will usually be
denominated in foreign currency, and the Fund may temporarily hold funds in
foreign currencies. The value of the Fund's investments denominated in foreign
currencies may be affected, favorably or unfavorably, by the relative strength
of the U.S. dollar, changes in foreign currency and U.S. dollar exchange rates
and exchange control regulations. The Fund may incur costs in connection with
conversions between various currencies. The Fund's net asset value per share
will be affected by changes in currency exchange rates. Changes in foreign
currency exchange rates may also affect the value of dividends and interest
earned, gains and losses realized on the sale of securities and net investment
income and gains, if any, to be distributed to shareholders by the Fund. The
rate of exchange between the U.S. dollar and other currencies is determined by
the forces of supply and demand in the foreign exchange markets (which in turn
are affected by interest rates, trade flow and numerous other factors,
including, in some countries, local governmental intervention).
Borrowing. The Fund may from time to time borrow money from banks for
temporary, extraordinary or emergency purposes. Such borrowing will not exceed
5% of the Fund's total assets and will be made at prevailing interest rates.
Illiquid Securities. The Fund may invest up to 15% (currently 10%, subject to
changes in certain state securities regulations) of its net assets in illiquid
securities, including restricted securities (i.e., securities not readily
marketable) and other securities that are not readily marketable, such as
repurchase agreements of more than one week's duration, provided, however,
that any illiquid securities purchased by the Fund will have been registered
under the Securities Act of 1933 (the "1933 Act"). The Fund may purchase
restricted securities that may be offered and sold only to "qualified
institutional buyers" under Rule 144A of the 1933 Act, and the Fund's Board of
Directors may determine, when appropriate, that specific Rule 144A securities
are liquid and not subject to the 15% limitation on illiquid securities.
Should the Board of Directors make this determination, it will carefully
monitor the security (focusing on such factors, among others, as trading
activity and availability of information) to determine that the Rule 144A
security continues to be liquid. It is not possible to predict with assurance
exactly how the market for Rule 144A securities will further evolve. This
investment practice could have the effect of increasing the level of
illiquidity in the Fund to the extent that qualified institutional buyers
become for a time uninterested in purchasing Rule 144A securities.
Short Sales. The Fund may sell securities short "against-the-box." A short
sale "against-the-box" is a short sale in which the Fund owns an equal amount
of the securities sold short or securities convertible into or exchangeable
-6-
336637.5
<PAGE>
without payment of further consideration for securities of the same issue as,
and equal in amount to, the securities sold short.
Temporary Investments. When the Adviser believes that market conditions
warrant a temporary defensive position, the Fund may invest up to 100% of its
assets in short-term instruments such as commercial paper, bank certificates
of deposit, bankers' acceptances, or repurchase agreements for such securities
and securities of the U.S. Government and its agencies and instrumentalities,
as well as cash and cash equivalents denominated in foreign currencies.
Investments in domestic bank certificates of deposit and bankers' acceptances
will be limited to banks that have total assets in excess of $500 million and
are subject to regulatory supervision by the U.S. Government or state
governments. The Fund's investments in foreign short-term instruments will be
limited to those that, in the opinion of the Adviser, equate generally to the
standards established for U.S. short-term instruments.
Repurchase Agreements. The Fund's portfolio position in cash or
cash-equivalents may include entering into repurchase agreements. A repurchase
agreement is an instrument under which an investor purchases a U.S. Government
security from a vendor, with an agreement by the vendor to repurchase the
security at the same price, plus interest at a specified rate. Repurchase
agreements may be entered into with member banks of the Federal Reserve System
or "primary dealers" (as designated by the Federal Reserve Bank of New York)
in U.S. Government securities. Repurchase agreements usually have a short
duration, often less than one week. The Fund requires continual maintenance by
the Fund's custodian of the market value of underlying collateral in amounts
equal to, or in excess of, the value of the repurchase agreement including the
agreed upon interest. If the institution defaults on the repurchase agreement,
the Fund will retain possession of the underlying securities. In addition, if
bankruptcy proceedings are commenced with respect to the seller, realization
on the collateral by the Fund may be delayed or limited and the Fund may incur
additional costs. In such case the Fund will be subject to risks associated
with changes in the market value of the collateral securities. The Fund
intends to limit repurchase agreements to transactions with institutions
believed by the Adviser to present minimal credit risk. Repurchase agreements
may be considered to be loans under the Investment Company Act of 1940.
Non-Diversified Status. Because the Fund is "non-diversified", more of the
Fund's assets may be concentrated in the common stock of any single issuer,
which may make the value of Fund shares more susceptible to certain risks than
shares of a diversified mutual fund. The Fund intends to qualify for tax
treatment as a regulated investment company under the Internal Revenue Code of
1986, as amended. The Fund will diversify its assets so that, at the close of
each quarter of its taxable year: (a) at least 50% of the total value of its
assets is represented by cash and cash items, government securities and other
securities with respect to which the Fund will not invest more than 5% of its
total assets, at market value, in the securities of any one issuer or more
than 10% of the outstanding voting securities of any one issuer and (b) not
more than 25% of the total value of its assets is invested in securities of
any one issuer or of any two or more issuers controlled by the Fund, which,
pursuant to the regulations under such Code, may be deemed to be engaged in
the same, similar or related trades or businesses. Changes in the market value
of securities in the Fund's portfolio generally will not cause the Fund to
cease to qualify as a regulated investment company unless any failure to
satisfy these restrictions exists immediately after the acquisition of any
security or other property and is wholly or partly the result of such
acquisition.
Brokerage and Execution Policies. The Adviser is responsible for the selection
of broker-dealers and the negotiation of any brokerage commission rates paid
by the Fund. The Adviser's primary consideration in effecting a security
transaction will be execution at the most favorable price. In the
over-the-counter markets, where a majority of the portfolio securities are
expected to be traded, orders are placed with responsible primary
market-makers unless a more favorable execution or price is believed to be
obtainable. In selecting a broker-dealer to execute exchange-traded
securities, the Adviser will also consider the reliability, integrity and
financial condition of the broker-dealer, the size of and difficulty in
executing the order, the value of the expected contribution of the
broker-dealer to the investment performance of the Fund on a continuing basis,
as well as other factors such as the broker-dealer's ability to engage in
transactions in securities of issuers which are thinly traded. The Adviser
does
-7-
336637.5
<PAGE>
not intend to employ a broker-dealer whose commission rates fall outside of
the prevailing ranges of execution costs charged by other broker-dealers
offering similar services.
Except as noted above, the foregoing investment policies are not fundamental
and the Board of Directors of the Fund may change such policies without the
vote of a majority of outstanding voting securities of the Fund. A more
detailed description of the Fund's investment policies, including a list of
those restrictions on the Fund's investment activities which cannot be changed
without such a vote, appears in the Statement of Additional Information.
INVESTMENT RESTRICTIONS
As a non-diversified investment company, 50% of the assets of the Fund are
subject to the following limitations: (a) it may not invest more than 5% of
its total assets in the securities of any one issuer, except obligations of
the United States Government and its agencies and instrumentalities, and (b)
it may not own more than 10% of the outstanding voting securities of any one
issuer. The classification of the Fund as a diversified investment company is
a fundamental policy of the Fund and may be changed only with the approval of
the holders of a majority of the Fund's outstanding shares. As used in this
Prospectus, the term "majority of the outstanding shares" of the Fund means,
respectively, the vote of the lesser of (i) 67% or more of the shares of the
Fund present at the meeting, if more than 50% of the outstanding shares of the
Fund are present or represented by proxy, or (ii) more than 50% of the
outstanding shares of the Fund.
The Fund operates under certain investment restrictions which are deemed
fundamental policies of the Fund and may be changed only with the approval of
the holders of a majority of Fund's outstanding shares. In addition to other
restrictions listed in the Statement of Additional Information, the Fund may
not (except where specified):
(i) invest more than 15% (currently 10%, subject to certain
states' securities regulations) of the market value of the
Fund's net assets in illiquid investments (as defined herein
under "Illiquid Securities") and including foreign securities
and bank participation interests for which a readily available
market does not exist;
(ii) purchase securities on margin or borrow money, except (a) from
banks for extraordinary or emergency purposes (not for
leveraging or investment) or (b) by engaging in reverse
repurchase agreements, provided that (a) and (b) in the
aggregate do not exceed an amount equal to one-third of the
value of the total assets of the Fund less its liabilities
(not including the amount borrowed) at the time of the
borrowing, and further provided that 300% asset coverage is
maintained at all times;
(iii) purchase securities while borrowings exceed 5% of its total
assets;
(iv) mortgage, pledge or hypothecate any assets except that the
Fund may pledge not more than one-third of its total assets to
secure borrowings made in accordance with paragraph (ii)
above. However, although not a fundamental policy of the Fund,
as a matter of operating policy in order to comply with
certain state statutes, the Fund will not pledge its assets in
excess of an amount equal to 15% of net assets; or
(v) lend portfolio securities of value exceeding in the aggregate
one-third of the market value of the Fund's total assets less
liabilities other than obligations created by these
transactions.
MANAGEMENT OF THE FUND
Adviser. Amerindo Investment Advisors Inc. (the "Adviser"), a registered
investment adviser, is a California corporation with offices located at One
Embarcadero, Suite 2300, San Francisco, California 94111 and 399 Park
-8-
336637.5
<PAGE>
Avenue, New York, New York 10022. The Adviser, an emerging growth stock
manager specializing in the technology and healthcare sectors, has been
retained by the Board of Directors as the investment adviser for the Fund
pursuant to an Investment Advisory Agreement entered into by the Fund on
behalf of each Class. The Adviser had assets under management of approximately
$2.3 billion at December 31, 1995. The Adviser, however, has not managed the
assets of an investment company prior to the Fund. The Adviser supervises all
aspects of the Fund's operations and provides investment advice and portfolio
management services to the Fund. The Fund's Annual Report to Shareholders will
contain information regarding the Fund's performance and will be provided,
without charge, upon request. Subject to the supervision of the Fund's Board
of Directors, the Adviser makes the Fund's day-to-day investment decisions,
arranges for the execution of portfolio transactions and generally manages the
portfolio investments.
The following persons will be primarily responsible for the day-to-day
management of the Fund's portfolio.
Alberto W. Vilar, 54, began his career with Citibank N.A. in New York in 1964
and worked there as an International Credit Officer until 1967. From 1967 to
1971, he served as Vice President, Portfolio Manager and Manager of the
Investment Management Division of Drexel Burnham Lambert in New York. From
1971 to 1973, he served as Executive Vice President, Portfolio Manager and
Director of Equity Strategy at M.D. Sass Investor Services in New York. In
1973, he became Vice President and Portfolio Manager of Endowment Management &
Research Corporation in Boston. From 1977 to 1979, he served as Senior Vice
President, Director of Research, Chief Investment Strategist and Partnership
Manager of the Boston Company in Boston. He founded the predecessors of
Amerindo Investment Advisors (U.K.) Limited and Amerindo Investment Advisors,
Inc. (Panama) in 1979 and has served since then as a Principal Portfolio
Manager. Mr. Vilar holds the degrees of B.A. in Economics from Washington &
Jefferson College and an M.B.A. from Iona College, and he completed the
Doctoral Studies Program in Economics at New York University. Mr. Vilar has
been a Chartered Financial Analyst since 1975.
Gary A. Tanaka, 51, served as a Portfolio Manager for Crocker Bank in San
Francisco from 1971 to 1977, and as a Partnership Manager for Crocker
Investment Management Corp. in San Francisco from 1978 to 1980. From 1975 to
1980, he also served as a Consultant to Andron Cechettini & Associates in San
Francisco. In 1980, he joined the predecessors of Amerindo Investment Advisors
(U.K.) Limited and Amerindo Investment Advisors, Inc. (Panama) as a Principal
Portfolio Manager. Dr. Tanaka holds the degrees of B.S. in Mathematics from
Massachusetts Institute of Technology and Ph.D. in Applied Mathematics from
Imperial College, University of London.
Ralph H. Cechettini, 54, was a Vice President, Portfolio Manager and Partner
of Shuman, Agnew & Company from 1970 until 1976. In 1976, Mr. Cechettini
founded the firm, Cechettini & Company, where he remained until 1979. In 1979,
he started the firm of Andron Cechettini & Associates, Inc., where he was
President and Chief Executive Officer until 1989. In 1989, Mr. Cechettini
founded R.H. Cechettini & Associates, an investment adviser firm. In 1991, Mr.
Cechettini affiliated with Amerindo as a Portfolio Manager and Senior Analyst.
Mr. Cechettini holds a B.S. degree in Business from the University of San
Francisco.
Adviser's Fees. Pursuant to the terms of the Investment Advisory Agreement,
the Fund will pay monthly advisory fees equal to 1.50% of each Class' annual
average daily net assets. This fee is higher than the fee paid by most other
mutual funds, however, the Board of Directors believes it to be reasonable in
light of the advisory services the Fund receives thereunder. Any portion of
the advisory fees received by the Adviser may be used by the Adviser to
provide investor and administrative services and for distribution of Fund
shares. The Adviser may voluntarily waive a portion of its fee or assume
certain expenses of the Fund. This would have the effect of lowering the
overall expense ratio of the Fund and of increasing yield to investors in the
Fund. See "Expense Limitation" in the Statement of Additional Information.
-9-
336637.5
<PAGE>
Administrator. The Administrator for the Fund is Furman Selz LLC (the
"Administrator"), which has its principal office at 230 Park Avenue, New York,
New York 10169, and is primarily an institutional brokerage whose activities
include membership on the New York, American, Boston, Midwest, Pacific and
Philadelphia Stock Exchanges, investment banking activities with offices in
New York and San Francisco, and mutual fund administrative activities with
approximately $20 billion under administration for numerous mutual funds.
The Administrator and its affiliate, Furman Selz Capital Management, Inc.,
serves as a investment adviser to numerous individual and institutional
accounts. The Administrator also serves as administrator and distributor of
other mutual funds. The Fund may invest in these funds or in any other fund
which may in the future be affiliated with the Administrator or any of its
affiliates.
Pursuant to an Administrative Services Agreement with the Fund, the
Administrator provides all administrative services necessary for the Fund,
other than those provided by the Adviser, subject to the supervision of the
Fund's Board of Directors. The Adviser and the Administrator will provide
persons to serve as officers of the Fund. Such officers may be directors,
officers or employees of the Adviser or the Administrator or their affiliates.
Administrator's Fees. For the services rendered to the Fund by the
Administrator, the Fund pays the Administrator an annual fee paid monthly
equal to . The Administrator may voluntarily waive a portion of its fee. For
additional information, see "Custodian, Transfer Agent and Dividend Agent."
Both the Investment Advisory Agreement and the Administrative Services
Agreement is terminable by the Board of Directors of the Fund, the Adviser or
the Administrator, respectively, on sixty days' written notice and terminate
automatically in the event of an "assignment" as defined by the Investment
Company Act. Each Agreement shall remain in effect for two years from the date
of its initial approval, and subject to annual approval of the Fund's Board of
Directors for one-year periods thereafter. Each Agreement provides that in the
absence of willful misfeasance, bad faith or gross negligence on the part of
the Adviser or the Administrator, respectively, or reckless disregard of its
obligations thereunder, the Adviser or the Administrator shall not be liable
for any action or failure to act in accordance with its duties thereunder.
Distributor. Pursuant to the Distribution Agreement entered into with the
Fund, Furman Selz LLC (the "Distributor") will serve as the exclusive
distributor of the Fund's shares. The Distributor pays the promotional and
advertising expenses related to the distribution of the Fund's shares and for
the printing of all Fund prospectuses used in connection with the distribution
and sale of Fund shares. See "Management of Fund" in the Statement of
Additional Information.
Expenses. The Fund is responsible for payment of its expenses, including the
following expenses, without limitation: fees payable to the Adviser,
Administrator, Custodian, Transfer Agent and Dividend Agent; brokerage and
commission expenses; Federal, state or local taxes, including issuance and
transfer taxes incurred by or levied on them; commitment fees, certain
insurance premiums and membership fees and dues in investment company
organizations; interest charges on borrowings; telecommunications expenses;
recurring and nonrecurring legal and auditing expenses; costs of organizing
and maintaining the Fund's existence as a corporation; compensation, including
directors' fees, of any directors, officers or employees who are not the
officers of the Adviser, the Administrator or their affiliates; costs of other
personnel providing administrative and clerical services; costs of
shareholders' services and costs of shareholders' reports, proxy
solicitations, and corporate meetings; fees and expenses of registering the
Fund's shares under the appropriate federal securities laws and of qualifying
its shares under applicable state securities laws, including expenses
attendant upon the initial registration and qualification of these shares and
attendant upon renewals of, or amendments to, those registrations and
qualifications; and expenses of preparing, printing and delivering the
Prospectus to existing investors and of printing investor application forms
for investor accounts. The Adviser and the Administrator have each agreed to a
reduction in the amounts payable to it and to reimburse the Fund, as
necessary, if in any fiscal year the sum of the Fund's expenses exceeds the
limits set by applicable regulations of state securities commissions.
-10-
336637.5
<PAGE>
PURCHASE OF SHARES
Initial Investments by Wire. Subject to acceptance by the Distributor, shares
of the Fund may be purchased by wiring federal funds (subject to each Class'
minimum investment) to (see instructions below). The minimum initial
investment in the Fund varies for each Class. The minimum initial investments
are as follows: $5,000 for Class A, $50,000 for Class C and $500,000 for Class
D. A completed Account Application should be forwarded to the Fund's
Distributor at the address noted below under "Initial Investments by Mail" in
advance of the wire. Notification must be given to the Fund's Distributor at
1-800- - prior to 4:15 p.m., New York time, of the wire date. (Prior
notification must also be received from investors with existing accounts.)
Funds should be wired through the Federal Reserve Bank of New York to:
______________
______________
______________
ABA#
Account #
F/B/O Amerindo Technology Fund
Ref. (Class)
Federal fund purchases will be accepted only on a day on which the Fund, the
Distributor and the custodian bank are open for business.
Initial Investments by Mail. Subject to acceptance by the Fund's Distributor,
an account may be opened by completing and signing an Account Application and
mailing it to the Fund's Distributor at the address noted blow, together with
a check (subject to each Class' minimum investment) payable to The Amerindo
Technology Fund:
Amerindo Technology Fund
237 Park Avenue
New York, New York 10017
The minimum initial investment in the Fund varies for each Class. The minimum
initial investments are as follows: $5,000 for Class A, $50,000 for Class C
and $500,000 for Class D. The Class to be purchased should be designated on
the Account Application. Subject to acceptance by the Fund's Distributor,
payment for the purchase of shares received by mail will be credited to a
shareholder's account at the net asset value per share of the Fund next
determined after receipt. Such payment need not be converted into federal
funds (monies credited to the Fund's custodian bank by a Federal Reserve Bank)
before acceptance by the Fund's Distributor.
Additional Investments. Additional investments may be made at any time
(subject to each Class' minimum subsequent investment of $500 for Class A,
$5,000 for Class C and $50,000 for Class D) by purchasing shares of the Fund
at net asset value by mailing a check to the Distributor at the address noted
under "Initial Investments by Mail" (payable to Amerindo Technology Fund) or
by wiring monies to the custodian bank as outlined above. Notification must be
given to the Fund's Distributor at 1-800- - prior to 4:15 p.m., New York time,
of the wire date.
Other Purchase Information. Investors may open accounts in the Fund only
through the exclusive Distributor for the Fund. Under the Distribution
Agreement, the Distributor, for nominal consideration and as agent for the
Fund, will solicit orders for the purchase of Fund shares, provided that any
subscriptions and orders will not be binding on the Fund until accepted by the
Fund as principal.
-11-
336637.5
<PAGE>
The purchase price paid for shares of each Class is the current public
offering price, that is, the next determined net asset value of the shares
after the order is placed plus any applicable sales charge with respect to
Class A shares only. See "Net Asset Value" herein. The sales load is a
one-time charge paid at the time of purchase of shares, most of which
ordinarily goes to the investor's broker-dealer to compensate him for the
services provided the investor. Class A shares of the Fund are sold on a
continuous basis with a maximum front-end sales charge of 3.00% of the net
asset value per share. Class C and Class D shares are sold without a front-end
sales charge. Volume discounts are provided for both initial purchase, as well
as for additional purchases of Class A shares of the Fund. See "Reduction or
Elimination of Sales Loads" herein. The Fund reserves the right to reject any
subscription for shares of any of its Classes. In addition, the Fund does not
intend to issue certificates.
The Fund must receive an order and payment by the close of business for the
purchase to be effective and dividends to be earned on the same day. If funds
are received after the close of business, the purchase will become effective
and dividends will be earned on the next business day. Purchases made by check
will be invested and begin earning income on the next business day after the
check is received.
Shares of the Fund may be purchased in exchange for securities which are
permissible investments of the Fund, subject to the Adviser's determination
that the securities are acceptable. Securities accepted in exchange will be
valued at the mean between their bid and asked quotations. In addition,
securities accepted in exchange will be liquid securities that are not
restricted as to transfer and will have a value that is readily ascertainable
(and not established only by evaluation procedures) as evidenced by a listing
on NASDAQ, the American Stock Exchange or the New York Stock Exchange, or on
the basis of prices provided by a pricing service. The Fund and the Adviser
reserve the right to reject any such purchase order. Shareholders will bear
any costs associated with a purchase of Fund shares through such an exchange.
All purchases of the Fund's shares will be made in full and fractional shares
of the Fund calculated to three decimal places.
Shares of the Fund may also be sold to corporations or other institutions such
as trusts, foundations or broker-dealers purchasing for the accounts of others
("Shareholder Organizations"). Investors purchasing and redeeming shares of
the Fund through a Shareholder Organization may be charged a transaction-based
fee or other fee for the services of such organization. Each Shareholder
Organization is responsible for transmitting to its customers a schedule of
any such fees and information regarding any additional or different conditions
regarding purchases and redemptions. Customers of Shareholder Organizations
should read this Prospectus in light of the terms governing accounts with
their organization. The Fund does not pay to or receive compensation from
Shareholder Organizations for the sale of the Fund's shares.
The Fund has available a form of Individual Retirement Account ("IRA") which
may be obtained from the Fund's Distributor that permits the IRA to invest in
the Fund. The minimum investment for all such retirement plans is $500 for
Class A, $5,000 for Class C and $50,000 for Class D. Investors desiring
information regarding investments through IRAs should write or telephone the
Fund's Distributor.
FOR CLASS A SHAREHOLDERS ONLY
REDUCTION OR ELIMINATION OF SALES LOADS
Volume Discounts. Volume discounts are provided if the total amount being
invested in Class A shares of the Fund reach the levels indicated in the sales
load schedule provided below. The applicable volume discount available to
investors is determined by aggregating all Class A share purchases of the
Fund. Volume discounts are also available to investors making sufficient
additional purchases of Class A shares. The applicable sales charge may be
determined by adding to the total current value of Class A shares already
owned in the Fund the value of new purchases computed at the offering price on
the day the additional purchase is made. For example, if an investor
-12-
336637.5
<PAGE>
previously purchased, and still holds, Class A shares worth $______ at the
current offering price and purchases an additional $5,000 worth of Class A
shares, the sales charge applicable to the new purchase would be that
applicable to the $_______ to $_______ bracket in the sales load schedule
provided below.
<TABLE>
<CAPTION>
Dealer Discount as a
Sales Sales Charge as a % of %
Amount of Purchase Charge Net Amount Invested of Offering Price
<S> <C> <C> <C>
3.00% ___% ___%
</TABLE>
Letter of Intent. Any investor in Class A may sign a Letter of Intent,
available from the Fund, stating an intention to make purchases of Class A
shares totaling a specified amount on an aggregate basis within a period of
thirteen months. Purchases within the thirteen-month period can be made at the
reduced sales load applicable to the total amount of the intended purchase
noted in the Letter of Intent. If a larger purchase is actually made during
the period, then a downward adjustment will be made to the sales charge based
on the actual purchase size. Any shares purchased within 90 days preceding the
actual signing of the Letter of Intent are eligible for the reduced sales
charge and the appropriate price adjustment will be made on those share
purchases. A number of shares equal to % of the dollar amount of intended
purchases specified in the Letter of Intent is held in escrow by the
Distributor until the purchases are completed. Dividends and distributions on
the escrowed Class A shares are paid to the investor. If the intended
purchases are not completed during the Letter of Intent period, the investor
is required to pay the Fund an amount equal to the difference between the
regular sales load applicable to a single purchase of the number of Class A
shares actually purchased and the sales load actually paid. If such payment is
not made within 20 days after written request by the Fund, then the Fund has
the right to redeem a sufficient number of escrowed Class A shares to effect
payment of the amount due. Any remaining escrowed Class A shares are released
to the investor's account. Agreeing to a Letter of Intent does not obligate
you to buy, or the Fund to sell, the indicated amount of Class A shares. You
should read the Letter of Intent carefully before signing.
Purchased At Net Value. There is no initial sales charge for "Qualified
Persons". Qualified Persons is defined to include persons who are active or
retired Trustees, Directors, officers, partners, employees, shareholders or
registered representatives (including their spouses and children) of the
Investment Adviser, Distributor or any affiliates or subsidiaries thereof (the
Directors, officers or employees of which shall also include their parents and
siblings for all purchases of Fund shares) or any Director, officer, partner,
employee or registered representative (including their spouses and children)
of any Broker-Dealer who has executed a valid and currently active selling
agreement with the Distributor.
REDEMPTION OF SHARES
Shares of the Fund may be redeemed by mail, or, if authorized, by telephone.
The value of shares redeemed may be more or less than the purchase price,
depending on the market value of the investment securities held by the Fund.
By Mail. The Fund will redeem its shares at the net asset value next
determined after the request is received in "good order". The net asset value
per share of the Fund is determined as of 4:15 p.m., New York time, on each
-13-
336637.5
<PAGE>
day that the New York Stock Exchange, Inc. (the "NYSE"), the Fund and the
Distributor are open for business. Requests should be addressed to Amerindo
Technology Fund, 237 Park Avenue, New York, New York 10017.
Requests in "good order" must include the following documentation:
(a) a letter of instruction, if required, or a stock assignment
specifying the number of shares or dollar amount to be
redeemed, signed by all registered owners of the shares in
the exact names in which they are registered;
(b) any required signature guarantees (see "Signature
Guarantees" below); and
(c) other supporting legal documents, if required, in the case
of estates, trusts, guardianships, custodianships,
corporations, pension and profit sharing plans and other
organizations.
Signature Guarantees. To protect shareholder accounts, the Fund and its
transfer agent from fraud, signature guarantees are required to enable the
Fund's Distributor to verify the identity of the person who has authorized a
redemption from an account. Signature guarantees are required for (1)
redemptions where the proceeds are to be sent to someone other than the
registered shareholder(s) and the registered address, and (2) share transfer
requests.
Shareholders may contact the Fund at 1-800- - for further details.
By Telephone. Provided the Telephone Redemption Option has been authorized, a
redemption of shares may be requested by calling the Fund at 1-800- - and
requesting that the redemption proceeds be mailed to the primary registration
address or wired per the authorized instructions. If the Telephone Redemption
Option is authorized, the Fund and its transfer agent may act on telephone
instructions from any person representing himself or herself to be a
shareholder and believed by the Fund or its transfer agent to be genuine. The
transfer agent's records of such instructions are binding and shareholders,
and not the Fund or its transfer agent, bear the risk of loss in the event of
unauthorized instructions reasonably believed by the Fund or its transfer
agent to be genuine. The Fund will employ reasonable procedures to confirm
that instructions communicated are genuine and, if it does not, it may be
liable for any losses due to unauthorized or fraudulent instructions. The
procedures employed by the Fund in connection with transactions initiated by
telephone include tape recording of telephone instructions and requiring some
form of personal identification prior to acting upon instructions received by
telephone.
Further Redemption Information. Redemption proceeds for shares of the Fund
recently purchased by check may not be distributed until payment for the
purchase has been collected, which may take up to fifteen business days from
the purchase date. Shareholders can avoid this delay by utilizing the wire
purchase option.
Other than as described above, payment of the redemption proceeds will be made
within seven days after receipt of an order for a redemption. The Fund may
suspend the right of redemption or postpone the date at times when the NYSE or
the bond market is closed or under any emergency circumstances as determined
by the United States Securities and Exchange Commission (the "SEC").
If the Board of Directors determines that it would be detrimental to the best
interests of the remaining shareholders of the Fund to make a payment wholly
or partly in cash, the Fund may pay the redemption proceeds in whole or in
part by a distribution in-kind of readily marketable securities held by a Fund
in lieu of cash in conformity with applicable rules of the SEC. Investors
generally will incur brokerage charges on the sale of portfolio securities so
received in payment of redemptions.
Redemption Fee. The Fund is designed for long-term investors willing to accept
the risks associated with a long-term investment in the common stocks of
companies in the technology, technology-related and science industries. The
Fund is not designed for short-term traders whose frequent purchases and
redemptions can generate substantial cash flow. These cash flows can
unnecessarily disrupt the Fund's investment program. Short-term traders often
-14-
336637.5
<PAGE>
redeem when the market is most turbulent, thereby forcing the sale of
underlying securities held by the Fund at the worst possible time as far as
long-term investors are concerned. Additionally, short-term trading drives up
the Fund's transaction costs -- measured by both commissions and bid/ask
spreads -- which are borne by the remaining long-term investors. For these
reasons, the Fund assesses a 1.00% fee on the redemption of shares held for
less than three years. Redemption fees will be paid to the Fund to help offset
transaction costs. The fee does not apply to any shares purchased through
reinvested distributions (dividends and capital gains) or to shares held in
retirement plans (such as 401(k), 403(b), 457, Keogh, Profit Sharing Plans,
and Money Purchase Pension Plans). This fee does not apply to shares held in
IRA accounts and to shares purchased through automatic investment plans.
The Fund will use the first-in, first-out (FIFO) method to determine the
three-year holding period. Under this method, the date of the redemption will
be compared to the earliest purchase date of shares held in the account. If
this holding period is less than three years, the redemption fee will be
assessed. In determining "three years" the Fund will use the anniversary date
of a transaction. Thus, shares purchased on April 5, 1995, for example, will
be subject to the fee if they are redeemed on or prior to April 4, 1998. If
they are redeemed on or after April 5, 1998, the shares will not be subject to
the redemption fee.
DIVIDENDS AND DISTRIBUTIONS
At least 90% of the Fund's net investment income, will be declared as
dividends and paid annually. If an investor's shares are redeemed prior to the
date on which dividends are normally declared and paid, accrued but unpaid
dividends will be paid with the redemption proceeds. Substantially all the
realized net capital gains for the Fund, if any, are declared and paid on an
annual basis. Dividends are payable to investors of record at the time of
declaration.
The net investment income of the Fund for each business day is determined
immediately prior to the determination of net asset value. Net investment
income for other days is determined at the time net asset value is determined
on the prior business day. Shares of the Fund earn dividends on the business
day their purchase is effective but not on the business day their redemption
is effective. See "Purchase of Shares" and "Redemption of Shares."
Choosing A Distribution Option. Distribution of dividends from the Fund may be
made in accordance with several options. A shareholder may select one of three
distribution options:
1. Automatic Reinvestment Option. Both dividends and capital gains
distributions will be automatically reinvested in additional shares of
the Fund unless the investor has elected one of the other two options.
2. Cash Dividend Option. Dividends will be paid in cash, and capital gains,
if any, will be reinvested in additional shares.
3. All Cash Option. Both dividend and capital gains distributions will be
paid in cash.
NET ASSET VALUE
Net asset value per share for the Fund is determined by subtracting from the
value of the Fund's total assets the amount of its liabilities and dividing
the remainder by the number of its outstanding shares. The value of each
security for which readily available market quotations exist is based on a
decision as to the broadest and most representative market for the security;
the value is based either on the last sale price on a national securities
exchange, or, in the absence of recorded sales, at the readily available
closing bid price on such exchanges, or at the quoted bid price in the
over-the-counter market. Assets for which market quotations are not readily
available are valued in accordance with procedures established by the Fund's
Board of Directors, including use of an
-15-
336637.5
<PAGE>
independent pricing service or services which use prices based on yields or
prices of comparable securities, indications as to values from dealers and
general market conditions.
The Fund computes its net asset value once daily on Monday through Friday, at
4:15 p.m. New York time, except on the holidays listed under "Net Asset Value"
in the Statement of Additional Information.
DISTRIBUTION AND SERVICE PLAN
The Fund, on behalf of each Class, has adopted a distribution and service
plan, pursuant to Rule 12b-1 under the Act (the "Rule"). The Rule provides
that an investment company which bears any direct or indirect expense of
distributing its shares must do so only in accordance with a plan permitted by
the Rule. The Plan provides that each of Class A and Class D will compensate
the Distributor for certain expenses and costs incurred in connection with
providing shareholder servicing and maintaining shareholder accounts and to
compensate parties with which it has written agreements and whose clients own
Class A or Class D shares of the Fund for providing servicing to their clients
("shareholder servicing"), which in the aggregate are subject to a maximum
service fee of 0.25% per annum of each Class' average daily net assets. The
Plan also provides that with respect to Class C only, the Distributor is paid
a fee equal to 0.25% of the Class C share's average daily net assets, on an
annual basis, to enable it to make payments to broker-dealers and other
financial institutions with which it has written agreements and whose clients
are Fund shareholders (each a "broker-dealer") for providing distribution
assistance and promotional support to the Fund and a service fee equal to
0.25% per annum of Class C's average daily net assets to compensate it and
other parties for providing shareholder servicing.
Each shareholder servicing agent and broker-dealer will, as agent for its
customers, among other things; answer customer inquiries regarding account
status and history, the manner in which purchases and redemptions of shares of
the Fund may be effected and certain other matters pertaining to the Fund;
assist shareholders in designating and changing dividend options, account
designations and addresses; provide necessary personnel and facilities to
establish and maintain shareholder accounts and records; assist in processing
purchase and redemption transactions; arrange for the wiring of funds;
transmit and receive funds in connection with customer orders to purchase or
redeem shares; verify and guarantee shareholder signatures in connection with
redemption orders and transfers and changes in shareholder designated
accounts; furnish (either separately or on an integrated basis with other
reports sent to a shareholder by the Fund) monthly and year-end statements and
confirmations of purchases and redemptions, as required by Rule 10b-10 under
the Securities Exchange Act of 1934; transmit, on behalf of the Fund, proxy
statements, annual reports, updating prospectuses and other communications
from the Fund to shareholders; receive, tabulate and transmit to the Fund,
proxies executed by shareholders with respect to meetings of shareholders of
the Fund; and provide such other related services as the Fund or a shareholder
may request.
The Plan provides that the Adviser and the Distributor may make payments from
time to time from their own resources which may include the advisory fee and
past profits for the following purposes: (i) to defray the costs of and to
compensate others, including financial intermediaries with whom the
Distributor or Adviser has entered into written agreements, for performing
shareholder servicing and related administrative functions on behalf of each
Class; (ii) to compensate certain financial intermediaries for providing
assistance in distributing each Class' shares; (iii) to pay the costs of
printing and distributing the Fund's prospectus to prospective investors; and
(iv) to defray the cost of the preparation and printing of brochures and other
promotional materials, mailings to prospective shareholders, advertising, and
other promotional activities, including the salaries and/or commissions of
sales personnel in connection with the distribution of the Fund's shares. The
Distributor or the Adviser, as the case may be, in their sole discretion, will
determine the amount of such payments made pursuant to the Plan with the
shareholder servicing agents and broker-dealers they have contracted with,
provided that such payments made pursuant to the Plan will not increase the
amount which the Fund is required to pay to the Distributor or the Adviser for
any fiscal year under the shareholder servicing agreements or otherwise. Any
servicing fees paid to the Adviser
-16-
336637.5
<PAGE>
or the Distributor also may be used for purposes of (i) above and any asset
based sales charges paid to the Distributor also may be used for purposes of
(ii), (iii) or (iv) above.
Shareholder servicing agents and broker-dealers may charge investors a fee in
connection with their use of specialized purchase and redemption procedures
offered to investors by the shareholder servicing agents and broker-dealers.
In addition, shareholder servicing agents and broker-dealers offering purchase
and redemption procedures similar to those offered to shareholders who invest
in the Fund directly may impose charges, limitations, minimums and
restrictions in addition to or different from those applicable to shareholders
who invest in the Fund directly. Accordingly, the net yield to investors who
invest through shareholder servicing agents and broker-dealers may be less
than by investing in the Fund directly. An investor should read the Prospectus
in conjunction with the materials provided by the shareholder servicing agent
and broker-dealer describing the procedures under which Fund shares may be
purchased and redeemed through the shareholder servicing agent and
broker-dealer.
The Glass-Steagall Act limits the ability of a depository institution to
become an underwriter or distributor of securities. However, it is the Fund's
position that banks are not prohibited from acting in other capacities for
investment companies, such as providing administrative and shareholder account
maintenance services and receiving compensation from the Distributor for
providing such services. However, this is an unsettled area of the law and if
a determination contrary to the Fund's position is made by a bank regulatory
agency or court concerning shareholder servicing and administration payments
to banks from the Distributor, any such payments will be terminated and any
shares registered in the banks' names, for their underlying customers, will be
re-registered in the name of the customers at no cost to the Fund or its
shareholders. In addition, state securities laws on this issue may differ from
the interpretation of federal law expressed herein and banks and financial
institutions may be required to register as dealers pursuant to state law.
In accordance with the Rule, the Plan provides that all written agreements
relating to the Plan entered into by the Fund, on behalf of each Class, the
Distributor or the Adviser, and the shareholder servicing agents,
broker-dealers, or other organizations must be in a form satisfactory to the
Fund's Board of Directors. In addition, the Plan requires the Fund and the
Distributor to prepare, at least quarterly, written reports setting forth all
amounts expended for distribution purposes by the Fund and the Distributor
pursuant to the Plan and identifying the distribution activities for which
those expenditures were made.
PERFORMANCE INFORMATION
The Fund, on behalf of each Class, may from time to time include yield,
effective yield and total return information in advertisements or reports to
investors or prospective investors. The "yield" refers to income generated by
an investment in a particular Class of the Fund over a thirty-day period. This
income is then "annualized." That is, the amount of income generated by the
investment during that month is assumed to be generated each month over a
12-month period and is shown as a percentage of the investment. The "effective
yield" is calculated similarly but, when annualized, the income earned by an
investment in a Class of the Fund is assumed to be reinvested. The "effective
yield" will be slightly higher than the "yield" because of the compounding
effect of this assumed reinvestment. The "total return" of a particular Class
of the Fund is required to be included in any advertisement containing the
yield of such Class. Total return is the average annual total return for the
period which began at the inception of a particular Class and ended on the
date of the most recent balance sheet, and is computed by finding the average
annual compound rates of return over the period that would equate the initial
amount invested to the ending redeemable value. For a description of the
methods used to calculate total return, see the Statement of Additional
Information. Yield, effective yield and total return may fluctuate daily and
do not provide a basis for determining future yields, effective yields or
total returns. For Class A shares, the annual total rate of return and yield
figures will assume payment of the maximum initial sales load at the time of
purchase. One-, five- and ten-year periods will be shown, unless the Class has
been in existence for a shorter period.
-17-
336637.5
<PAGE>
The yields and the net asset values of the Classes of shares of the Fund will
vary based on the current market value of the securities held by the Fund and
changes in the Class or the Fund's expenses. The Adviser, the Administrator or
the Distributor may voluntarily waive a portion of their fees on a
month-to-month basis. These actions would have the effect of increasing the
net income (and therefore the yield and total rate of return) of a Class of
shares of the Fund during the period such waivers are in effect. These factors
and possible differences in the methods used to calculate the yields and total
rates of return should be considered when comparing the yields or total rates
of return of the Classes of shares of the Fund to yields and total rates of
return published for other investment companies and other investment vehicles
(including different Classes of shares).
The Fund's Annual Report to Shareholders will contain information regarding
the Fund's performance and will be provided, without charge, upon request.
DESCRIPTION OF COMMON STOCK
The Fund was incorporated in Maryland on February 6, 1996. The authorized
capital stock of the Fund consists of one billion shares of stock having a par
value of [one-tenth of one cent ($.001)] per share. The Fund's Board of
Directors is authorized to divide the unissued shares into separate series of
stock, each series representing a separate, additional investment portfolio.
The Board currently has authorized the division of the unissued shares into
three Classes. Shares of each Class 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, distribution, liquidation and voting rights for which it was issued,
and each fractional share has those rights in proportion to the percentage
that the fractional share represents of a whole share. Shares will be voted in
the aggregate. There are no conversion or preemptive rights in connection with
any shares of the Fund. All shares, when issued in accordance with the terms
of the offering, will be fully paid and non-assessable. Shares are redeemable
at net asset value, at the option of the investor.
The shares of the Fund have non-cumulative voting rights, which means that the
holders of more than 50% of the shares outstanding voting for the election of
directors 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
by an investor who is an investor of record, the Fund does not issue
certificates evidencing Fund shares.
TAXES
The Fund intends to elect to qualify under the Internal Revenue Code of 1986,
as amended (the "Code"), as a regulated investment company. As a regulated
investment company, the Fund will not be subject to federal income taxes on
the investment company taxable income and long-term capital gains that it
distributes to its investors, provided that at least 90% of its investment
company taxable income for the taxable year is distributed. The Fund's policy
is to distribute as dividends each year 100% (and in no event less than 90%)
of its investment company taxable income. If for any taxable year a Portfolio
does not qualify as a regulated investment company, all of its taxable income
will be taxed to it at corporate rates and no distribution will be deductible.
The Fund has adopted a policy of declaring dividends annually, in an amount
based on its net investment income. Dividends paid from taxable income and
distributions of any realized short-term capital gains are taxable to
investors as ordinary income for federal income tax purposes, whether received
in cash or reinvested in additional shares of the Fund. Distributions of net
realized capital gains after utilization of capital loss carryforwards, if
any, are made annually to meet applicable distribution and excise tax
requirements. If shares that are redeemed have been held by the investor for
more than one year, the investor will generally realize a long-term capital
gain or loss upon a
-18-
336637.5
<PAGE>
redemption. An investor who acquires shares shortly before the Fund pays a
dividend will be required to include the dividend in income even though the
dividend represents, in effect, a return of capital.
The Fund is required, subject to certain exemptions, to withhold at a rate of
31% from dividends paid or credited to investors in addition to the proceeds
from the redemption of Fund shares, if a correct taxpayer identification
number, certified when required, is not on file with the Fund. Corporate
investors are not subject to this requirement.
The Code imposes a nondeductible 4% excise tax on the Fund unless it meets
certain requirements with respect to distributions of net ordinary income and
capital gain net income. It is anticipated that this provision will not have
any material impact on the Fund.
Dividends and interest paid by foreign issuers may be subject to withholding
and other foreign taxes, which may decrease the net return on foreign
investments as compared to dividends and interest paid by domestic issuers.
The Fund does not expect that it will qualify to elect to pass through to its
investors the right to take a foreign tax credit for foreign taxes withheld
from dividends and interest payments.
For federal income tax purposes, distributions of net capital gains (the
excess of net long-term capital gains over net short-term capital loss), if
any, are taxable as net capital gains regardless of the length of time
investors have owned their shares. A preferential tax rate for net capital
gains is currently applicable for individual shareholders. Generally, on the
sale or exchange of obligations held for more than one year, gain realized by
the Fund will be long-term capital gain. Such capital gain, if any, will be
distributed as capital gain dividends. Capital gain dividends, designated as
such in a written notice to investors mailed not later than 60 days after the
Fund taxable year closes, will be taxed as long-term capital gain. However, if
an investor receives a capital gain dividend and sells shares after holding
them for six months or less (not including periods during which the investor
holds an offsetting position), then any loss realized on the sale will be
treated as long-term capital loss to the extent of such capital gain dividend.
The federal, state and local income tax rules that apply to the Fund and its
investors have changed extensively in recent years, and investors should
recognize that additional changes may be made in the future, some of which
could have an adverse effect on the Fund and its investors for federal and/or
state and local income tax purposes. Investors in the Fund should consult
their tax advisors about the federal, state and local tax consequences of an
investment in the Fund in light of their own individual circumstances.
CUSTODIAN, TRANSFER AGENT
AND DIVIDEND AGENT
_____________________ serves as custodian for the Fund's cash and securities.
The Custodian does not assist in, and is not responsible for, investment
decisions involving assets of the Fund. Furman Selz LLC, the Fund's
Administrator and Distributor, also acts as the Fund's transfer and dividend
agent. The Fund pays the Administrator $__ per year per account, plus
out-of-pocket expenses, for such services.
COUNSEL AND INDEPENDENT AUDITORS
Legal matters in connection with the issuance of shares of common stock of the
Fund are passed upon by Battle Fowler LLP, 75 East 55th Street, New York, New
York 10022. [________________________________________], independent certified
public accountants, have been selected as auditors for the Fund.
-19-
336637.5
<PAGE>
TABLE OF CONTENTS
PAGE
EXPENSE SUMMARY....................................................... 3
INVESTMENT OBJECTIVE AND POLICIES..................................... 4
ADDITIONAL INVESTMENT INFORMATION AND RISK FACTORS.................... 5
INVESTMENT RESTRICTIONS............................................... 8
MANAGEMENT OF THE FUND................................................ 8
PURCHASE OF SHARES.................................................... 11
REDUCTION OR ELIMINATION OF SALES LOADS............................... 12
REDEMPTION OF SHARES.................................................. 13
DIVIDENDS AND DISTRIBUTIONS........................................... 15
NET ASSET VALUE....................................................... 15
DISTRIBUTION AND SERVICE PLAN......................................... 16
PERFORMANCE INFORMATION............................................... 17
DESCRIPTION OF COMMON STOCK........................................... 18
TAXES ............................................................. 18
CUSTODIAN, TRANSFER AGENT AND DIVIDEND AGENT.......................... 19
COUNSEL AND INDEPENDENT AUDITORS...................................... 19
-i-
336637.5
<PAGE>
AMERINDO TECHNOLOGY FUND
_______________________________________________________________________________
STATEMENT OF ADDITIONAL INFORMATION
[ ,] 1996
_______________________________________________________________________________
This Statement of Additional Information sets forth information which
may be of interest to investors but which is not necessarily included in the
Fund's Prospectus, dated [ ], 1996 (the "Prospectus"). This Statement of
Additional Information is not a prospectus and should be read in conjunction
with the Prospectus, a copy of which may be obtained without charge by writing
to the Fund's distributor, Furman Selz LLC, 237 Park Avenue, New York, New
York 10017. This Statement of Additional Information is incorporated by
reference into the Prospectus in its entirety.
338027.2
<PAGE>
THE FUND
Amerindo Technology Fund (the "Fund"), a non-diversified, open-end,
management investment company, is a series of Amerindo Funds Inc. which was
incorporated under Maryland law on February 6, 1996. The Fund offers three
Classes of shares to investors--Class A, Class C and Class D (collectively
"Classes", or each individually, a "Class"). This Fund is designed for
long-term investors who understand and are willing to accept the risk of loss
involved in seeking long-term capital appreciation. The Fund should not be
used as a trading vehicle. Amerindo Investment Advisors Inc. (the "Adviser"),
manages the investments of the Fund from day-to-day in accordance with the
Fund's investment objective and policies.
INVESTMENT OBJECTIVE, POLICIES AND RESTRICTIONS
A detailed description of the types and quality of the securities in
which the Fund may invest is given in the Prospectus and is incorporated
herein by reference. The investment objective is fundamental and may be
changed only with the approval of a majority of the Fund's outstanding shares.
There can be no assurance that the Fund's investment objective will be
achieved.
The Fund's investment objective is to seek long-term capital
appreciation by investing at least 65% of its assets (although the Fund
intends, as a non-fundamental policy, to invest at least 80% of its assets) in
the common stocks of companies with business operations in the technology,
technology-related and science industries. Current income is incidental to the
Fund's investment objective. The investment objective is fundamental to the
Fund and may not be changed without shareholder approval. There can be no
assurance that the Fund's investment objective will be achieved.
This Fund is designed for long-term investors who understand and are
willing to accept the risk of loss involved in investing in a mutual fund
seeking long-term capital appreciation. Investors should consider their
investment goals, their time horizon for achieving them, and their tolerance
for risks before investing in the Fund. If you seek an aggressive approach to
capital growth and can accept the above average level of price fluctuations
that this Fund is expected to experience, this Fund could be an appropriate
part of your overall investment strategy. The Fund should not be used as a
trading vehicle.
DESCRIPTION OF THE FUND'S INVESTMENT SECURITIES AND DERIVATIVES
The Technology and Science Industries
The Adviser believes that because of rapid advances in science and
technology, an investment in companies with business operations in these
industries will offer substantial opportunities for long-term capital
appreciation. Of course, prices of common stocks of even the best managed,
most profitable corporations are subject to market risk, which means their
stock prices can decline. In addition, swings in investor psychology or
significant trading by large institutional investors can result in price
fluctuations. Industries likely to be represented in the portfolio include
computers, networking and internetworking software, computer aided design,
telecommunications, media and information services, hospital supply and
medical devices, biotechnology, and environmental services. The Fund may also
invest in the stocks of companies that should benefit from the
commercialization of technological advances, although they may not be directly
involved in research and development.
The technology and science industries have exhibited and continue to
exhibit rapid growth, both through increasing demand for existing products and
services and the broadening of the technology market. In general, the stocks
of large capitalized companies that are well established in the technology
market can be expected to grow with the market and will frequently be found in
the Fund's portfolio. The expansion of technology and technology-related
industries, however, also provides a favorable environment for investment in
small to medium capitalized companies. The Fund's investment policy is not
limited to any minimum capitalization requirement and the Fund may hold
securities without regard to the capitalization of the issuer. The Adviser's
overall stock selection for the Fund is not based on the
-2-
338027.2
<PAGE>
capitalization or size of the company but rather on an assessment of the
company's fundamental prospects. The Adviser anticipates that a majority of
the Fund's holdings will be invested in the stocks of companies which are
purchased during their initial public offerings.
Companies in the rapidly changing fields of science and technology
face special risks. For example, their products or services may not prove
commercially successful or may become obsolete quickly. The value of the
Fund's shares may be susceptible to factors affecting the technology,
technology-related and science industries and to greater risk and market
fluctuation than an investment in a fund that invests in a broader range of
portfolio securities not concentrated in any particular industry. As such, the
Fund is not an appropriate investment for individuals who are not long-term
investors and who, as their primary objective, require safety of principal or
stable income from their investments. The technology, technology-related and
science industries may be subject to greater governmental regulation than many
other industries and changes in governmental policies and the need for
regulatory approvals may have a material adverse effect on these industries.
Additionally, companies in these industries may be subject to risks of
developing technologies, competitive pressures and other factors and are
dependent upon consumer and business acceptance as new technologies evolve.
Foreign Securities
The Fund may invest in certain foreign securities. Investment in
obligations of foreign issuers and in direct obligations of foreign nations
involves somewhat different investment risks from those affecting obligations
of United States domestic issuers. There may be limited publicly available
information with respect to foreign issuers and foreign issuers are not
generally subject to uniform accounting, auditing and financial standards and
requirements comparable to those applicable to domestic companies. There may
also be less government supervision and regulation of foreign securities
exchanges, brokers and listed companies than in the United States. Foreign
securities markets have substantially less volume than domestic securities
exchanges and securities of some foreign companies are less liquid and more
volatile than securities of comparable domestic companies. Brokerage
commissions and other transaction costs on foreign securities exchanges are
generally higher than in the United States. Dividends and interest paid by
foreign issuers may be subject to withholding and other foreign taxes, which
may decrease the net return on foreign investments as compared to dividends
and interest paid to the Fund by domestic companies. Additional risks include
future political and economic developments, the possibility that a foreign
jurisdiction might impose or change withholding taxes on income payable with
respect to foreign securities, the possible seizure, nationalization or
expropriation of the foreign issuer or foreign deposits and the possible
adoption of foreign governmental restrictions such as exchange controls.
U.S. Government Obligations
U.S. Government obligations are obligations which are backed by the
full faith and credit of the United States, by the credit of the issuing or
guaranteeing agency or by the agency's right to borrow from the U.S. Treasury.
They include (i) U.S. Treasury obligations, which differ only in their
interest rates, maturities and times of issuance as follows: U.S. Treasury
bills (maturity of one year or less), U.S. Treasury notes (maturity of one
year or ten years), U.S. Treasury bonds (generally maturities of more than ten
years); and (ii) obligations issued or guaranteed by U.S. Government agencies
and instrumentalities that are supported by the full faith and credit of the
United States (such as securities issued by the Government National Mortgage
Association, the Federal Housing Administration, the Department of Housing and
Urban Development, the Export-Import Bank, the General Services Administration
and the Maritime Administration, and certain securities issued by the Farmers'
Home Administration and the Small Business Administration, most of which are
explained below under the section entitled "Mortgage-Backed Securities"). The
maturities of U.S. Government obligations usually range from three months to
thirty years.
Repurchase Agreements
When the Fund purchases securities, it may enter into a repurchase
agreement with the seller wherein the seller agrees, at the time of sale, to
repurchase the security at a mutually agreed upon time and price. The Fund may
enter into repurchase agreements with member banks of the Federal Reserve
System and with broker-dealers who are recognized as primary dealers in United
States government securities by the Federal Reserve Bank of New York. Although
the securities subject to the repurchase agreement might bear maturities
exceeding one year, settlement for the repurchase would never be more than 397
days after the Fund's acquisition of the securities and normally would be
within a shorter period of time. The resale price will be in excess of the
purchase price, reflecting an agreed upon market rate effective for the period
of time the Fund's money will be invested in the security, and will not be
related to
-3-
338027.2
<PAGE>
the coupon rate of the purchased security. At the time the Fund enters into a
repurchase agreement the value of the underlying security, including accrued
interest, will be equal to or exceed the value of the repurchase agreement,
and, in the case of a repurchase agreement exceeding one day, the seller will
agree that the value of the underlying security, including accrued interest,
will at all times be equal to or exceed the value of the repurchase agreement.
The Fund may engage in a repurchase agreement with respect to any security in
which it is authorized to invest, even though the underlying security may
mature in more than one year. The collateral securing the seller's obligation
must be of a credit quality at least equal to the Fund's investment criteria
for securities in which it invests and will be held by the Custodian or in the
Federal Reserve Book Entry System.
For purposes of the Investment Company Act of 1940, a repurchase
agreement is deemed to be a loan from the Fund to the seller subject to the
repurchase agreement and is therefore subject to the Fund's investment
restriction applicable to loans. It is not clear whether a court would
consider the securities purchased by the Fund subject to a repurchase
agreement as being owned by the Fund or as being collateral for a loan by the
Fund to the seller. In the event of the commencement of bankruptcy or
insolvency proceedings with respect to the seller of the securities before
repurchase of the security under a repurchase agreement, the Fund may
encounter delay and incur costs before being able to sell the security. Delays
may involve loss of interest or decline in price of the security. If the court
characterized the transaction as a loan and the Fund has not perfected a
security interest in the security, the Fund may be required to return the
security to the seller's estate and be treated as an unsecured creditor of the
seller. As an unsecured creditor, the Fund would be at the risk of losing some
or all of the principal and income involved in the transaction. As with any
unsecured debt obligation purchased for the Fund, the Adviser seeks to
minimize the risk of loss through repurchase agreements by analyzing the
creditworthiness of the obligor, in this case the seller. Apart from the risk
of bankruptcy or insolvency proceedings, there is also the risk that the
seller may fail to repurchase the security, in which case the Fund may incur a
loss if the proceeds of the sale to a third party are less than the repurchase
price. However, if the market value of the securities subject to the
repurchase agreement becomes less than the repurchase price (including
interest), the Fund involved will direct the seller of the security to deliver
additional securities so that the market value of all securities subject to
the repurchase agreement will equal or exceed the repurchase price. It is
possible that a Fund will be unsuccessful in seeking to impose on the seller a
contractual obligation to deliver additional securities.
Hedging Transactions
The Fund may, but does not currently intend to, enter into hedging
transactions. Hedging is a means of transferring risk which an investor does
not desire to assume during an uncertain market environment. The Fund is
permitted to enter into the transactions solely (a) to hedge against changes
in the market value of portfolio securities or (b) to close out or offset
existing positions. The transactions must be appropriate to reduction of risk;
they cannot be for speculation. In particular, the Fund may write covered call
options on securities or stock indices. By writing call options, the Fund
limits its profit to the amount of the premium received. By writing a covered
call option, the Fund assumes the risk that it may be required to deliver the
security having a market value higher than its market value at the time the
option was written. The Fund will not write options if immediately after such
sale the aggregate value of the obligations under the outstanding options
would exceed 25% of the Fund's net assets.
To the extent the Fund uses hedging instruments which do not involve
specific portfolio securities, offsetting price changes between the hedging
instruments and the securities being hedged will not always be possible, and
market value fluctuations of the Fund may not be completely eliminated. When
using hedging instruments that do not specifically correlate with securities
in the Fund, the Adviser will attempt to create a very closely correlated
hedge.
Options Transactions
The Fund may, but does not currently intend to, enter into options
transactions. The Fund may purchase call and put options on securities and on
stock indices in an attempt to hedge its portfolio and to increase its total
return. Call options may be purchased when it is believed that the market
price of the underlying security or index will increase above the exercise
price. Put options may be purchased when the market price of the underlying
security or index is expected to decrease below the exercise price. The Fund
may also purchase all options to provide a hedge against an increase in the
price of a security sold short by it. When the Fund purchases a call option,
it will pay a premium to the party writing the option and a commission to the
broker selling the option. If the option is exercised by the Fund, the amount
of the premium and the commission paid may be greater than the amount of the
brokerage commission that would be charged if the security were purchased
directly.
-4-
338027.2
<PAGE>
In addition, the Fund may write covered call options on securities or
stock indices. By writing options, the Fund limits its profits to the amount
of the premium received. By writing a call option the Fund assumes the risk
that it may be required to deliver the security at a market value higher than
its market value at the time the option was written plus the difference
between the original purchase price of the stock and the strike price. By
writing a put option, the Fund assumes the risk that it may be required to
purchase the underlying security at a price in excess of its current market
value.
Lending of Securities
The Fund may, but does not currently intend to, lend its portfolio
securities to qualified institutions as determined by the Adviser. By lending
its portfolio securities, the Fund attempts to increase its income through the
receipt of interest on the loan. Any gain or loss in the market price of the
securities loaned that may occur during the term of the loan will be for the
account of the Fund in such transaction. The Fund will not lend portfolio
securities if, as a result, the aggregate of such loans exceeds 33% of the
value of its total assets (including such loans). All relevant facts and
circumstances, including the creditworthiness of the qualified institution,
will be monitored by the Adviser, and will be considered in making decisions
with respect to lending of securities, subject to review by the Fund's Board
of Directors. The Fund may pay reasonable negotiated fees in connection with
loaned securities, so long as such fees are set forth in a written contract
and their reasonableness is determined by the Fund's Board of Directors.
INVESTMENT RESTRICTIONS
The Fund has adopted the following fundamental investment
restrictions which may not be changed unless approved by a majority of the
Fund's outstanding shares. The Fund may not:
(1) Make portfolio investments other than as described under
"Investment Objective, Policies and Restrictions" or any other form of
investment, where applicable, which meets the Fund's investment criteria, as
determined by the Adviser and the Board of Directors, and which is consistent
with the Fund's objective and policies.
(2) Borrow Money. This restriction shall not apply to borrowing from
banks for temporary or emergency (not leveraging) purposes, including the
meeting of redemption requests that might otherwise require the untimely
disposition of securities, in an amount up to 15% of the value of the Fund's
total assets (including the amount borrowed) valued at market less liabilities
(not including the amount borrowed) at the time the borrowing was made. While
borrowings exceed 5% of the value of the Fund's total assets, the Fund will
not make any investments. Interest paid on borrowings will reduce net income.
(3) Pledge, hypothecate, mortgage or otherwise encumber its assets,
except in an amount up to 15% of the value of its total assets and only to
secure borrowings for temporary or emergency purposes.
(4) Sell securities short or purchase securities on margin, or engage
in the purchase and sale of put, call, straddle or spread options or in
writing such options, except to the extent that securities subject to a demand
obligation and stand-by commitments may be purchased as set forth under
"Investment Objective, Policies and Risks."
(5) Underwrite the securities of other issuers, except insofar as the
Fund may be deemed an underwriter under the Securities Act of 1933 in
disposing of a portfolio security.
(6) Invest more than an aggregate of 15% of its net assets in
repurchase agreements maturing in more than seven days, variable rate demand
instruments exercisable in more than seven days or securities that are not
readily marketable, except as described in the Fund's Prospectus.
(7) Purchase or sell real estate, real estate investment trust
securities, commodities or commodity contracts, or oil and gas interests, but
this shall not prevent the Fund from investing in Government obligations
secured by real estate or interests in real estate.
(8) Make loans to others, except through the purchase of portfolio
investments, including repurchase agreements, as described under "Investment
Objective, Policies and Risks."
-5-
338027.2
<PAGE>
(9) Invest more than 25% of its assets in the securities of "issuers"
in any single industry other than the technology, technology-related and
science industries, and provided also that, (i) there shall be no limitation
on the Fund to purchase obligations issued or guaranteed by the United States
government, its agencies or instrumentalities. When the assets and revenues of
an agency, authority, instrumentality or other political subdivision are
separate from those of the government creating the issuing entity and a
security is backed only by the assets and revenues of the entity, the entity
would be deemed to be the sole issuer of the security. Similarly, in the case
of an industrial revenue bond, if that bond is backed only by the assets and
revenues of the non-governmental issuer, then such non-governmental issuer
would be deemed to be the sole issuer. If, however, in either case, the
creating government guarantees a security, such a guarantee would be
considered a separate security and would be treated as an issue of such
government.
(10) Invest in securities of other investment companies, except (i)
the Fund may purchase unit investment trust securities where such unit
investment trusts meet the investment objectives of the Fund and then only up
to 5% of the Fund's net assets, except as they may be acquired as part of a
merger, consolidation or acquisition of assets and (ii) as permitted by
Section 12(d) of the Act.
(11) Issue senior securities except insofar as the Fund may be deemed
to have issued a senior security in connection with any permitted borrowing.
Percentage Restrictions
Any investment restrictions herein which involve a maximum percentage
of securities or assets shall not be considered to be violated unless an
excess over the percentage occurs immediately after, and is caused by, an
acquisition or encumbrance of securities or assets of, or borrowings by, the
Fund.
MANAGEMENT OF THE FUND
The directors and officers of the Fund and their principal
occupations during the past five years are set forth below. Their titles may
have varied during this period. Asterisks indicate that those directors are
"interested persons" (as defined in the Investment Company Act of 1940) of the
Fund. Unless otherwise indicated, the address of each director and officer is
399 Park Avenue, New York, New York 10022.
Officers and Directors of the Fund
*
Biographies
- --------
* "Interested person" of the Fund, as defined in the Investment Company Act.
-6-
338027.2
<PAGE>
COMPENSATION TABLE
(Estimated for the fiscal year ended March 31, 1997)
<TABLE>
<CAPTION>
Pension or Total Compensation
Aggregate Retirement Benefits Estimated Annual from Fund and
Name of Person Compensation from Accrued as Part of Benefits upon Fund Complex
Position Fund Fund Expenses Retirement Paid to Directors
<S> <C> <C> <C> <C>
Director
Director
Director
Director
Director
</TABLE>
Each Director who is not an interested person of the Fund receives a
base annual fee of $ , which is paid by the Fund.
Investment Adviser
Amerindo Investment Advisors Inc., a registered investment adviser,
is a California corporation, with offices located at One Embarcadero, Suite
2300, San Francisco, California 94111 and 399 Park Avenue, New York, New York
10022. The Adviser has been employed by the Board of Directors to serve as the
investment adviser of the Fund pursuant to an Investment Advisory Agreement
entered into by the Fund. Currently, the Adviser's only investment company
client is the Fund. The Adviser supervises all aspects of the Fund's
operations and provides investment advice and portfolio management services to
the Fund. Pursuant to the Advisory Agreement and subject to the supervision of
the Fund's Board of Directors, the Adviser makes the Fund's day-to-day
investment decisions, arranges for the execution of portfolio transactions and
generally manages the Fund's investments.
The Adviser provides persons satisfactory to the Board of Directors
of the Fund to serve as officers of the Fund. Such officers, as well as
certain other employees and directors of the Fund, may be directors, officers
or employees of the Adviser or its affiliates.
The Adviser also may provide the Fund with supervisory personnel who
will be responsible for supervising the performance of administrative
services, accounting and related services, net asset value and yield
calculation, reports to and filings with regulatory authorities, and services
relating to such functions. However, the Administrator will provide personnel
who will be responsible for performing the operational components of such
services. The personnel rendering such supervisory services may be employees
of the Adviser, of its affiliates or of other organizations. The Advisory
Agreement was approved on ____________, 1996 by the Board of Directors,
including a majority of the directors who are not interested persons (as
defined in the Investment Company Act of 1940) of the Fund or the Adviser.
The Advisory Agreement has a term which extends to __________, 1998
and may be continued in force thereafter for successive twelve-month periods
beginning each ___________, provided that such continuance is specifically
approved annually by majority vote of the Fund's outstanding voting securities
or by the Board of Directors, and in either case by a majority of the
directors who are not parties to the Advisory Agreement or interested persons
of any such party, by votes cast in person at a meeting called for the purpose
of voting on such matter.
The Advisory Agreement is terminable without penalty by the Fund on
sixty days' written notice when authorized either by majority vote of the
outstanding voting shares of the Fund or by a vote of a majority of the Fund's
Board of Directors, or by the Adviser on sixty days' written notice, and will
automatically terminate in the event of its assignment. The Advisory Agreement
provides that in the absence of willful misfeasance, bad faith or gross
negligence
-7-
338027.2
<PAGE>
on the part of the Adviser, or of reckless disregard of its obligations
thereunder, the Adviser shall not be liable for any action or failure to act
in accordance with its duties thereunder.
Adviser's Fees
Pursuant to the terms of the Advisory Agreement, the Fund, on behalf
of each Class, will pay a monthly advisory fee equal to 1.50% of the Fund's
average daily net asset per annum. This fee is higher than the fee paid by
most other mutual funds; however, the Board of Directors believes that this
fee is reasonable in light of the advisory services performed by the Adviser
for the Fund. Any portion of the advisory fees received by the Adviser may be
used by the Adviser to provide investor and administrative services and for
distribution of Fund shares. The Adviser may voluntarily waive a portion of
its fee or assume certain expenses of the Fund. This would have the effect of
lowering the overall expense ratio of the Fund and of increasing yield to
investors. See "Expense Limitation" below.
Expense Limitation
The Adviser has agreed to reimburse the Fund for its expenses
(exclusive of interest, taxes, brokerage, and extraordinary expenses) which in
any year exceed the limits on investment company expenses prescribed by any
state in which the Fund's shares are qualified for sale. For the purpose of
this obligation to reimburse expenses, the Fund's annual expenses are
estimated and accrued daily, and any appropriate estimated payments are made
to it on a monthly basis. From time to time, the Adviser may voluntarily
assume certain expenses of the Fund. This would have the effect of lowering
the overall expense ratio and of increasing yield to investors. Subject to the
obligations of the Adviser to reimburse the Fund for its excess expenses as
described above, the Fund has, under the Advisory Agreement, confirmed its
obligation for payment of all other expenses, including without limitation:
fees payable to the Adviser, Administrator, Custodian, Transfer Agent and
Dividend Agent; brokerage and commission expenses; federal, state or local
taxes, including issuance and transfer taxes incurred by or levied on it;
commitment fees, certain insurance premiums and membership fees and dues in
investment company organizations; interest charges on borrowings;
telecommunications expenses; recurring and non-recurring legal and accounting
expenses; costs of organizing and maintaining the Fund's existence as a
corporation; compensation, including directors' fees, of any directors,
officers or employees who are not also officers of the Adviser or its
affiliates and costs of other personnel providing administrative and clerical
services; costs of stockholders' services and costs of stockholders' reports,
proxy solicitations, and corporate meetings; fees and expenses of registering
its shares under the appropriate Federal securities laws and of qualifying its
shares under applicable state securities laws, including expenses attendant
upon the initial registration and qualification of these shares and attendant
upon renewals of, or amendments to, those registrations and qualifications;
and expenses of preparing, printing and delivering the Prospectus to existing
shareholders and of printing shareholder application forms for shareholder
accounts.
The Fund may from time-to-time hire its own employees or contract to
have management services performed by third parties, and the management of the
Fund intends to do so whenever it appears advantageous to the Fund. The Fund's
expenses for employees and for such services are among the expenses subject to
the expense limitation described above.
Administrator
The Administrator for the Fund is Furman Selz LLC (the
"Administrator"), which has its principal office at 237 Park Avenue, New York,
New York 10017, and is primarily an institutional brokerage firm with
membership on the New York, American, Boston, Midwest, Pacific and
Philadelphia Stock Exchanges.
The Administrator serves as a investment adviser to numerous
individual and institutional accounts. The Administrator also serves as
administrator and distributor of other mutual funds. The Fund may invest in
these mutual funds or in any other mutual fund which may in the future be
affiliated with the Administrator or any of its affiliates.
Pursuant to an Administrative Services Agreement with the Fund, the
Administrator provides all administrative services necessary for the Fund,
other than those provided by the Adviser, subject to the supervision of the
Fund's Board of Directors. The Administrator will provide persons to serve as
officers of the Fund. Such officers may be directors, officers or employees of
the Administrator or its affiliates.
-8-
338027.2
<PAGE>
The Administrative Services Agreement is terminable by the Board of
Directors of the Fund or the Administrator on sixty days' written notice and
terminates automatically in the event of its "assignment" as defined by the
1940 Act. The Agreement shall remain in effect for two years from the date of
its initial approval, and subject to annual approval of the Fund's Board of
Directors for one-year periods thereafter. The Agreement provides that in the
absence of willful misfeasance, bad faith or gross negligence on the part of
the Administrator or reckless disregard of its obligations thereunder, the
Administrator shall not be liable for any action or failure to act in
accordance with its duties thereunder.
Under the Administrative Services Agreement, the Administrator
provides all administrative services, including, without limitation: (i)
provides services of persons competent to perform such administrative and
clerical functions as are necessary to provide effective administration of the
Fund, including maintaining certain books and records described in Rule 31a-1
under the 1940 Act, and reconciling account information and balances among the
Fund's Custodian and Adviser; (ii) overseeing the performance of
administrative and professional services to the Fund by others, including the
Fund's Custodian; (iii) preparing, but not paying for, the periodic updating
of the Fund's Registration Statement, Prospectus and Statement of Additional
Information in conjunction with Fund counsel, including the printing of such
documents for the purpose of filings with the Securities and Exchange
Commission and state securities administrators, preparing the Fund's tax
returns, and preparing reports to the Fund's shareholders and the Securities
and Exchange Commission; (iv) preparing in conjunction with Fund counsel, but
not paying for, all filings under the securities or "Blue Sky" laws of such
states or countries as are designated by the Distributor, which may be
required to register or qualify, or continue the registration or
qualification, of the Fund and/or its shares under such laws; (v) preparing
notices and agendas for meetings of the Fund's Board of Directors and minutes
of such meetings in all matters required by the 1940 Act to be acted upon by
the Board; (vi) monitoring daily and periodic compliance with respect to all
requirements and restrictions of the Investment Company Act, the Internal
Revenue Code and the Prospectus; and (vii) monitoring and evaluating daily
income and expense accruals, and sales and redemptions of shares of the Fund.
The Administrator also provides the Fund with all accounting
services, including: (i) daily computation of net asset value; (ii)
maintenance of security ledgers and books and records as required by the
Investment Company Act; (iii) production of the Fund's listing of portfolio
securities and general ledger reports; (iv) reconciliation of accounting
records; and (v) calculation of yield and total return for the Fund.
Administrator's Fees
For the services rendered to the Fund by the Administrator, the Fund
pays the Administrator an annual fee paid monthly equal to [ ]% of the Fund's
aggregate average daily net assets.
In return for providing the Fund with all accounting related
services, the Fund pays the Administrator [$ ] per year plus out-of-pocket
expenses for such services.
Custodian, Transfer Agent and Dividend Agent
[ ] serves as custodian for the Fund's cash and securities. Pursuant
to a Custodian Agreement with the Fund, it is responsible for maintaining the
books and records of the Fund's portfolio securities and cash. The Custodian
does not assist in, and is not responsible for, investment decisions involving
assets of the Fund. Furman Selz LLC, the Fund's Administrator, also acts as
the Fund's transfer and dividend agent.
SUBJECT TO REVIEW BY BF TAX DEPT
TAXES
The Fund will elect to qualify under the Internal Revenue Code of
1986, as amended ("the Code"), as a regulated investment company. As a
regulated investment company, the Fund will not be subject to federal income
taxes on its investment company taxable income and the long-term capital gains
that it distributes to its shareholders, provided that at least 90% of its
investment company taxable income and at least 90% of its tax-exempt net
interest income for the taxable year is distributed, and numerous other
requirements concerning regulated investment companies are satisfied. The
Fund's policy is to distribute as dividends each year 100% (and in no event
less than 90%) of its investment
-9-
338027.2
<PAGE>
company taxable income and tax exempt net interest income. The Fund will be
treated as a separate corporation and generally will have to comply with the
qualifications and other requirements applicable to regulated investment
companies. If for any taxable year the Fund does not qualify as a regulated
investment company, all of its taxable income would be taxable at corporate
rates and no distributions would qualify as tax exempt.
The Fund has adopted a policy of declaring dividends annually in an
amount based on its net investment income. The amount of each dividend may
differ from actual net investment income calculated in accordance with federal
income tax principles. Dividends paid from taxable income, if any, and
distributions of any realized short term capital gains (whether from tax
exempt or taxable obligations) are taxable to shareholders as ordinary income,
whether received in cash or reinvested in additional shares of the Fund.
Distributions of net realized capital gains after utilization of capital loss
carryforwards, if any, are made annually to meet applicable distribution and
excise tax requirements. Distributions paid by the Fund may result in a
liability (or increased liability) under the alternative minimum tax.
The Fund may be subject to state or local tax in jurisdictions in
which the Fund is organized or may be deemed to be doing business. However,
Maryland taxes regulated investment companies in a manner that is generally
similar to the federal income tax rules described herein.
Distributions may be subject to state and local income taxes. In
addition, the treatment of the Fund and its shareholders in those states that
have income tax laws might differ from their treatment under the federal
income tax laws. Some states exempt from state personal income tax
distributions received from the Fund only to the extent such distributions are
derived from interest on obligations issued by such state or its
municipalities or political subdivisions. Shareholders should consult with
their own tax advisors with respect to any state or local taxes. In addition,
shareholders should review with their tax advisors the state and local income
tax consequences of the Fund's investing in certain instruments issued by
agencies and instrumentalities of the U.S. Government, and in repurchase and
reverse repurchase agreements, and of the Fund's engaging in securities loans.
If the Fund acquires debt instruments that were originally issued at
a discount, e.g., zero coupon bonds, it will be required to include annually
in gross income or, in the case of tax-exempt instruments issued at a
discount, in tax-exempt income, a portion of the "original issue discount"
that accrues over the term of the obligation regardless of whether the income
is received by the Fund, and to make distributions accordingly. To insure that
the Fund has sufficient cash to meet this distribution requirement, the Fund
may borrow funds on a short-term basis or sell certain investments. Since a
substantial percentage of the Fund's dividends are expected to be reinvested
and dividends that are declared and automatically reinvested satisfy the
distribution requirement, the Fund expects to satisfy the distribution
requirement even if it owns obligations with original issue discount.
Shareholders will realize taxable income on the automatic reinvestment of
dividends that are attributable to original issue discount on taxable
obligations.
The Code imposes a nondeductible 4% excise tax on the Fund unless it
meets certain requirements with respect to distributions of ordinary income
and capital gain net income. The formula requires payment to shareholders
during a calendar year of distributions representing at least 98% of the
Fund's ordinary income for the calendar year, plus at least 98% of the excess
of its capital gains over its capital losses realized during the one-year
period ending October 31 during such year, which shall be reduced (but not
below net capital gain) by the amount of the Fund's net ordinary loss for the
year. It is anticipated that this provision will not have any material impact
on the Fund.
Dividends and interest paid by foreign issuers may be subject to
withholding and other foreign taxes, which may decrease the net return on
foreign investments as compared to dividends and interest paid by domestic
issuers. The Fund does not expect that it will qualify to elect to pass
through to its shareholders the right to take a foreign tax credit for foreign
taxes withheld from dividends and interest payments.
For federal income tax purposes, distributions of net capital gains
(the excess of net long-term capital gains over net short-term capital loss),
if any, are taxable as net capital gains regardless of the length of time
shareholders have owned their shares. Although the Tax Reform Act of 1986
eliminated the preferential treatment previously available for net capital
gains, the preferential treatment for net capital gains was restored, to some
extent, by the Revenue Reconciliation Act of 1990, which, in limited
circumstances, places a 28% ceiling on the marginal rate applicable to net
capital gains realized by individuals. Distributions attributable to
short-term capital gains (whether from tax exempt or taxable obligations) are
taxable as ordinary income for federal income tax purposes. Generally, on the
sale or exchange of obligations held for more than one year, gain realized by
the Fund that is not attributable to original issue discount or certain market
discount will be long-term capital gain. Such capital gain, if any, will be
distributed as
-10-
338027.2
<PAGE>
capital gain dividends. Gain on the disposition of a tax-exempt bond purchased
at a market discount generally will be treated as ordinary income, rather than
capital gain, to the extent of accrued market discount. Capital gain
dividends, designated as such in a written notice to investors mailed not
later than 60 days after the Fund's taxable year closes, will be taxed as
long-term capital gain. However, if an investor receives a capital gain
dividend and sells shares after holding them for six months or less (not
including periods during which the shareholder holds an offsetting position),
then any loss realized on the sale will be treated as long-term capital loss
to the extent of such capital gain dividend. If any net capital gains are
retained by the Fund for reinvestment, requiring federal income taxes thereon
to be paid by it, the Fund will elect to treat such capital gains as having
been distributed to shareholders. As a result, shareholders will report such
capital gains as net capital gains, will be able to claim their share of
federal income taxes paid by the Fund on such gains as a credit against their
own federal income tax liability, and will be entitled to increase the
adjusted tax basis of their Fund shares by 65% of their share of the
undistributed gain. Distributions of net capital gains are not eligible for
the dividends received deduction.
All taxable dividends from investment company taxable income are
taxable as ordinary income. It is not expected that any income distributions
from the Fund will qualify for the dividends received deduction for
corporations.
Distributions of investment company taxable income and net realized
capital gains will be taxable as described above, whether received in shares
or in cash. Shareholders electing to receive distributions in the form of
additional shares will have a cost basis for federal income tax purposes in
each share so received equal to the value of a share on the reinvestment date.
Redemptions of shares may result in tax consequences (gain or loss)
to shareholders and are also subject to reporting requirements.
The Tax Reform Act of 1986 contained a provision limiting
miscellaneous itemized deductions for individuals and certain other
shareholders, such as estates and trusts, to the extent such miscellaneous
itemized deductions do not exceed 2% of adjusted gross income for a taxable
year. However, the Revenue Reconciliation Act of 1989 provided an exemption
from the limitation for publicly-offered regulated investment companies.
Interest incurred or continued to purchase shares of the Fund is
generally treated as investment interest, and in the case of non-corporate
taxpayers is deductible only to the extent of net investment income. Under
rules used by the Internal Revenue Service to determine when borrowed funds
are used for the purpose of purchasing or carrying particular assets, the
purchase of shares may be considered to have been made with borrowed funds
even though the borrowed funds are not directly traceable to the purchase of
shares.
Under the federal income tax law, the Fund will be required to report
to the Internal Revenue Service all distributions of taxable income and
capital gains as well as gross proceeds from the redemption or exchange of
Fund shares, except in the case of exempt shareholders, which include most
corporations. Under the backup withholding provisions of Section 3406 of the
Code, distributions of taxable income and capital gains and proceeds from the
redemption or exchange of the shares of a regulated investment company may be
subject to withholding of federal income tax at the rate of 31% in the case of
non-exempt shareholders who fail to furnish the investment company with their
taxpayer identification numbers and their required certifications regarding
their status under the federal income tax law. If the withholding provisions
are applicable, any such distributions and proceeds, whether taken in cash or
reinvested in additional shares, will be reduced by the amounts required to be
withheld. Corporate shareholders should provide the Fund with their taxpayer
identification numbers and should certify their exempt status in order to
avoid possible erroneous application of backup withholding.
The foregoing discussion of U.S. federal income tax law relates
solely to the application of that law to U.S. persons, i.e., U.S. citizens and
residents and U.S. domestic corporations, partnerships, trusts and estates.
Each shareholder who is not a U.S. person should consider the U.S. and foreign
tax consequences of ownership of Fund shares, including the possibility that
such a shareholder may be subject to a U.S. withholding tax at a rate of 30%
(or at a lower rate under an applicable income tax treaty) on amounts
constituting ordinary income received by such person, where such amounts are
treated as income from U.S. sources under the Code.
The federal, state and local income tax rules that apply to the Fund
and its shareholders have changed extensively in recent years, and investors
should recognize that additional changes may be made in the future, some of
which could have an adverse affect on the Fund and its investors for federal
and/or state and local tax purposes.
-11-
338027.2
<PAGE>
Shareholders should consult their tax advisors about the application of the
provisions of tax law described in this statement of additional information in
light of their particular federal and state tax situations.
PURCHASE AND REDEMPTION
Furman Selz LLC serves as the exclusive distributor of the Fund's
shares pursuant to its Distribution Agreement with the Fund (the
"Distributor"). Investors may open accounts in the Fund only through the
exclusive Distributor for the Fund. Under the Distribution Agreement, the
Distributor, for nominal consideration and as agent for the Fund, will solicit
orders for the purchase of Fund shares, provided that any subscriptions and
orders will not be binding on the Fund until accepted by the Fund as
principal.
Shares of the Fund may be purchased at the net asset value per share
next determined after receipt of an order by the Fund's Distributor or
transfer agent in proper form with accompanying check or other bank wire
payment arrangements satisfactory to the Fund. Class A shares are sold subject
to an initial sales load of up to 3.00%. Class C and Class D shares are sold
without an initial sales load. The minimum initial investment for the Classes
is as follows: $5,000 for Class A, $50,000 for Class C and $500,000 for Class
D. The minimum subsequent investment is $500 for Class A, $5,000 for Class C
and $50,000 for Class D.
Shares of the Fund may be redeemed by a shareholder at any time at
the net asset value per share next determined after the redemption request is
received by the Fund's Distributor or transfer agent in proper order.
Shareholders in each Class may be subject to a 1.00% fee on the redemption of
shares held for less than three years. These redemption fees are assessed
against net assets and will be retained by the Fund.
The material relating to the purchase, redemption and exchange of
Fund shares in the Prospectus is incorporated herein by reference and
investors should refer to the Prospectus for information relating to these
areas.
DIVIDENDS AND DISTRIBUTIONS
Net investment income is declared as dividends and paid annually; if
an investor's shares are redeemed prior to the payment of a dividend, accrued
but unpaid dividends are paid with the redemption proceeds. Substantially all
the realized net capital gains for the Fund, if any, are declared and paid on
an annual basis. Dividends are payable to shareholders of record at the time
of declaration.
Dividends of the Fund are automatically reinvested in additional Fund
shares unless the shareholder has elected to have them paid in cash.
The net investment income of the Fund for each business day is
determined immediately prior to the determination of net asset value. Net
investment income for other days is determined at the time net asset value is
determined on the prior business day. See "Purchase of Shares" and "Redemption
of Shares" in the Prospectus.
NET ASSET VALUE
Net asset value per share is determined by subtracting from the value
of the Fund's total assets the amount of its liabilities and dividing the
remainder by the number of its outstanding shares. The value of each security
for which readily available market quotations exist is based on a decision as
to the broadest and most representative market for the security; the value is
based either on the last sale price on a national securities exchange, or, in
the absence of recorded sales, at the readily available closing bid price on
such exchanges, or at the quoted bid price in the over-the-counter market.
Assets for which market quotations are not readily available are valued in
accordance with procedures established by the Fund's Board of Directors,
including use of an independent pricing service or services which use prices
based on yields or prices of comparable Government obligations, indications as
to values from dealers and general market conditions.
The Fund computes its net asset value once daily on Monday through
Friday, except that the net asset value is not computed for the Fund on the
holidays listed herein. The Fund does not determine net asset value per share
-12-
338027.2
<PAGE>
on the following holidays: New Year's Day, President's Day, Good Friday,
Memorial Day, Independence Day, Labor Day, Thanksgiving and Christmas.
The Fund computes net asset value at 4:15 p.m. New York Time. The
days on which a Fund's net asset value is determined are its business days.
COMPUTATION OF YIELD
The Fund computes yield based on a 30-day (or one month) period ended
on the date of the most recent balance sheet included in the registration
statement, computed by dividing the net investment income per share earned
during the period by the maximum offering price per share on the last day of
the period, according to the following formula:
YIELD = 2[( a-b + 1)6 - 1]
-----
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 dividends.
d = the maximum offering price per share on the last day
of the period.
Actual future yields will depend on the type, quality, and maturities
of the investments held by the Fund, changes in interest rates on investments,
and the Fund's expenses during the period.
Computation of Total Return
The total return must be displayed in any advertisement containing
the Fund's yield. Total return is the average annual total return for the 1-,
5- and 10-year period ended on the date of the most recent balance sheet
included in the Statement of Additional Information, computed by finding the
average annual compounded rates of return over 1-, 5- and 10-year periods that
would equate the initial amount invested to the ending redeemable value
according to the following formula:
P(1+T)n = ERV
Where:
P = a hypothetical initial investment of $1000
T = average annual total return
n = number of years
ERV = ending redeemable value of a hypothetical $1000 payment made
at the beginning of the 1-, 5- or 10-year periods at the end
of the 1-, 5- or 10-year periods (or fractions thereof).
Because the Fund has not had a registration in effect for 1, 5 or 10 years,
the period during which the registration has been effective shall be
substituted.
Yield information may be useful for reviewing the performance of the
Fund and for providing a basis for comparison with other investment
alternatives. However, unlike bank deposits or other investments which pay a
fixed yield for a stated period of time, the Fund's yield does fluctuate, and
this should be considered when reviewing performance or making comparisons.
-13-
338027.2
<PAGE>
From time to time evaluations of performance of the Fund made by
independent sources may be used in advertisements. These sources may include
Lipper Analytical Services, Wiesenberger Investment Company Service,
Donoghue's Money Fund Report, Barron's, Business Week, Changing Times,
Financial World, Forbes, Fortune, Money, Personal Investor, Bank Rate Monitor,
and The Wall Street Journal.
DESCRIPTION OF COMMON STOCK
The Fund was incorporated in Maryland on February 6, 1996. The
authorized capital stock of the Fund consists of one billion shares of stock
having a par value of one-tenth of one cent ($.001) per share. The Fund's
Board of Directors is authorized to divide the unissued shares into separate
Classes and series of stock, each series representing a separate, additional
investment portfolio. The Board currently has authorized the division of the
unissued shares into three classes. Shares of each Class 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, distribution, liquidation and voting
rights within the Class for which it was issued, and each fractional share has
those rights in proportion to the percentage that the fractional share
represents of a whole share. Shares will be voted in the aggregate. There are
no conversion or preemptive rights in connection with any shares of the Fund.
All shares, when issued in accordance with the terms of the offering, will be
fully paid and non-assessable. Shares are redeemable at net asset value, at
the option of the investor.
The shares of the Fund have non-cumulative voting rights, which means
that the holders of more than 50% of the shares outstanding voting for the
election of directors 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 by an investor who is a investor of record, the Fund
does not issue certificates evidencing Fund shares.
As a general matter, the Fund will not hold annual or other meetings
of the Funds' shareholders. This is because the By-laws of the Fund provide
for annual meetings only (a) for the election of directors, (b) for approval
of revisions to the Fund's investment advisory agreement, (c) for approval of
revisions to the Fund's distribution agreement with respect to a particular
class or series of stock, and (d) upon the written request of holders of
shares entitled to cast not less than twenty-five percent of all the votes
entitled to be cast at such meeting. Annual and other meetings may be required
with respect to such additional matters relating to the Fund as may be
required by the Investment Company Act of 1940 (the "Act") including the
removal of Fund directors and communication among shareholders, any
registration of the Fund with the Securities and Exchange Commission or any
state, or as the Directors may consider necessary or desirable. Each Director
serves until the next meeting of shareholders called for the purpose of
considering the election or reelection of such Director or of a successor to
such Director, and until the election and qualification of his or her
successor, elected at such meeting, or until such Director sooner dies,
resigns, retires or is removed by the vote of the shareholders.
Rule 18f-2 under the Act provides that any matter required to be
submitted by the provisions of the Act or applicable state law, or otherwise,
to the holders of the outstanding voting securities of an investment company
such as the Fund shall not be deemed to have been effectively acted upon
unless approved by the holders of a majority of the outstanding shares of each
class or series affected by such matter, i.e., by a majority of the Fund's
outstanding shares. Rule 18f-2 further provides that a class or series shall
be deemed to be affected by a matter unless it is clear that the interests of
each class or series in the matter are substantially identical or that the
matter does not affect any interest of such class or series. However, the Rule
exempts the selection of independent public accountants, the approval of
principal distribution contracts and the election of directors from the
separate voting requirements of the Rule.
SHAREHOLDER SERVICING AND DISTRIBUTION PLAN
The Fund, on behalf of each Class, has adopted a distribution and
service plan, pursuant to Rule 12b-1 under the Act (the "Rule"). The Rule
provides that an investment company which bears any direct or indirect expense
of distributing its shares must do so only in accordance with a plan permitted
by the Rule. The Plan provides that each of Class A and Class D will
compensate the Distributor for certain expenses and costs incurred in
connection with providing shareholder servicing and maintaining shareholder
accounts and to compensate parties with which it has written agreements and
whose clients own Class A or Class D shares of the Fund for providing
servicing to their clients
-14-
338027.2
<PAGE>
("shareholder servicing"), which in the aggregate are subject to a maximum of
0.25% per annum of each Class' average daily net assets. The Plan also
provides that, with respect to Class C only, the Distributor is paid a fee
equal to 0.25% of the Class C shares' average daily net assets on an annual
basis to permit it to make payments to broker-dealers and other financial
institutions with which it has written agreements and whose clients are Fund
shareholders (each a "broker-dealer") for providing distribution assistance
and promotional support to the Fund, and a service fee equal to .25% per annum
of Class C's average daily net assets to compensate it and other parties for
providing shareholder servicing.
Each shareholder servicing agent and broker-dealer will, as agent for
its customers, among other things: answer customer inquiries regarding account
status and history, the manner in which purchases and redemptions of shares of
each Class may be effected and certain other matters pertaining to the Fund;
assist shareholders in designating and changing dividend options, account
designations and addresses; provide necessary personnel and facilities to
establish and maintain shareholder accounts and records; assist in processing
purchase and redemption transactions; arrange for the wiring of funds;
transmit and receive funds in connection with customer orders to purchase or
redeem shares; verify and guarantee shareholder signatures in connection with
redemption orders and transfers and changes in shareholder designated
accounts; furnish monthly and year-end statements and confirmations of
purchases and redemptions, as required by Rule 10b-10 under the Securities
Exchange Act of 1934; transmit to shareholders, on behalf of each Class, proxy
statements, annual reports, updated prospectuses and other communications;
receive, tabulate and transmit to each Class proxies executed by shareholders
with respect to meetings of shareholders of the Fund; and provide such other
related services as the Fund or a shareholder may request.
The Plan, the shareholder servicing agreements and the Distribution
Agreement each provide that the Adviser and the Distributor may make payments
from time to time from their own resources which may include the advisory fee
and the asset based sales charges and past profits for the following purposes:
(i) to defray the costs of and to compensate others, including financial
intermediaries with whom the Distributor or Adviser has entered into written
agreements, for performing shareholder servicing and related administrative
functions on behalf of each Class; to compensate certain financial
intermediaries for providing assistance in distributing each Class' shares;
(ii) to pay the costs of printing and distributing the Fund's prospectus to
prospective investors; and (iii) to defray the cost of the preparation and
printing of brochures and other promotional materials, mailings to prospective
shareholders, advertising, and other promotional activities, including the
salaries and/or commissions of sales personnel in connection with the
distribution of the Fund's shares. Further, it provides that the Adviser may
use its service fee for the purposes enumerated in (i) above and any asset
based sales charges paid to the Distributor also may be used for purposes of
(ii) or (iii) above. The Distributor or the Adviser, as the case may be, in
their sole discretion, will determine the amount of such payments made
pursuant to the Plan with the shareholder servicing agents and broker-dealers
with whom they have contracted, provided that such payments made pursuant to
the Plan will not increase the amount which a Class is required to pay to the
Distributor or the Adviser for any fiscal year under the shareholder servicing
agreements or otherwise.
Shareholder servicing agents and broker-dealers may charge investors
a fee in connection with their use of specialized purchase and redemption
procedures offered to investors by the shareholder servicing agents and
broker-dealers. In addition, shareholder servicing agents and broker-dealers
offering purchase and redemption procedures similar to those offered to
shareholders who invest in the fund directly may impose charges, limitations,
minimums and restrictions in addition to or different from those applicable to
shareholders who invest in the Fund directly. Accordingly, the net yield to
investors who invest through shareholder servicing agents and broker-dealers
may be less than realized by investing in the Fund directly. An investor
should read the Prospectus in conjunction with the materials provided by the
shareholder servicing agent and broker-dealer describing the procedures under
which Fund shares may be purchased and redeemed through the shareholder
servicing agent and broker-dealer.
The Glass-Steagall Act limits the ability of a depository institution
to become an underwriter or distributor of securities. However, it is the
Fund's position that banks are not prohibited from acting in other capacities
for investment companies, such as providing administrative and shareholder
account maintenance services and receiving compensation from the Distributor
for providing such services. However, this is an unsettled area of the law and
if a determination contrary to the Fund's position concerning shareholder
servicing and administration payments to banks from the Distributor is made by
a bank regulatory agency or court, any such payments will be terminated and
any shares registered in the banks' names, for their underlying customers,
will be re-registered in the names of the customers at no cost to each Class
or its shareholders. In addition, state securities laws on this issue may
differ from the interpretation of federal law expressed herein and banks and
financial institutions may be required to register as dealers pursuant to
state law.
-15-
338027.2
<PAGE>
In accordance with the Rule, the Plan provides that all written
agreements relating to the Plan entered into by the Fund, on behalf of a
Class, the Distributor or the Adviser, and the shareholder servicing agents,
broker-dealers, or other organizations, must be in a form satisfactory to the
Fund's Board of Directors. In addition, the Plan requires the Fund and the
Distributor to prepare, at least quarterly, written reports setting forth all
amounts expended for distribution purposes by the Fund and the Distributor
pursuant to the Plan and identifying the distribution activities for which
those expenditures were made.
BROKERAGE AND PORTFOLIO TURNOVER
Brokerage
The Adviser makes the Fund's portfolio decisions. In the
over-the-counter market, where a majority of the portfolio securities are
expected to be traded, orders are placed with responsible primary
market-makers unless a more favorable execution or price is believed to be
obtainable. Regarding exchange-traded securities, the Adviser determines the
broker to be used in each specific transaction with the objective of
negotiating a combination of the most favorable commission and the best price
obtainable on each transaction (generally defined as best execution). When
consistent with the objective of obtaining best execution, brokerage may be
directed to persons or firms supplying investment information to the Adviser,
or portfolio transactions may be effected by the Adviser. Neither the Fund nor
the Adviser has entered into agreements or understandings with any brokers
regarding the placement of securities transactions because of research
services they provide. To the extent that such persons or firms supply
investment information to the Adviser for use in rendering investment advice
to the Fund, such information may be supplied at no cost to the Adviser and,
therefore, may have the effect of reducing the expenses of the Adviser in
rendering advice to the Fund. While it is impossible to place an actual dollar
value on such investment information, its receipt by the Adviser probably does
not reduce the overall expenses of the Adviser to any material extent.
Consistent with the Rules of Fair Practice of the National Association of
Securities Dealers, Inc., and subject to seeking best execution, the Adviser
may consider sales of shares of the Fund as a factor in the selection of
brokers to execute portfolio transactions for the Fund.
The investment information provided to the Adviser is of the type
described in Section 28(e) of the Securities Exchange Act of 1934 and is
designed to augment the Advisor's own internal research and investment
strategy capabilities. Research services furnished by brokers through which
the Fund effects securities transactions are used by the Adviser in carrying
out its investment management responsibilities with respect to all its
clients' accounts. There may be occasions where the transaction cost charged
by a broker may be greater than that which another broker may charge if the
Adviser determines in good faith that the amount of such transaction cost is
reasonable in relation to the value of brokerage and research services
provided by the executing broker. The Adviser may consider the sale of shares
of the Fund by brokers including the Distributor as a factor in its selection
of brokers of Fund transactions.
A majority of the portfolio securities that the Fund purchases or
sells will be done as principal transactions. In addition, debt instruments
are normally purchased directly from the issuer, from banks and financial
institutions or from an underwriter or market maker for the securities. There
usually are not brokerage commissions paid for any such purchases. Any
transactions involving such securities for which the Fund pays a brokerage
commission will be effected at the best price and execution available.
Purchases from underwriters of portfolio securities include a commission or
concession paid by the issuer to the underwriter, and purchases from dealers
serving as market makers include the spread between the bid and asked price.
The Fund may purchase Government obligations with a demand feature from banks
or other financial institutions at a negotiated yield to the Fund based on the
applicable interest rate adjustment index for the security. The interest
received by the Fund is net of a fee charged by the issuing institution for
servicing the underlying obligation and issuing the participation certificate,
letter of credit, guarantee or insurance and providing the demand repurchase
feature.
Allocation of transactions, including their frequency, to various
dealers is determined by the Adviser in its best judgment and in a manner
deemed in the best interest of shareholders of the Fund rather than by a
formula. The primary consideration is prompt execution of orders in an
effective manner at the most favorable price.
Investment decisions for the Fund will be made independently from
those for any other investment companies or accounts that may become managed
by the Adviser or its affiliates. If, however, the Fund and other investment
companies or accounts managed by the Adviser are simultaneously engaged in the
purchase or sale of the
-16-
338027.2
<PAGE>
same security, the transactions may be averaged as to price and allocated
equitably to each account. In some cases, this policy might adversely affect
the price paid or received by the Fund or the size of the position obtainable
for the Fund. In addition, when purchases or sales of the same security for
the Fund and for other investment companies managed by the Adviser occur
contemporaneously, the purchase or sale orders may be aggregated in order to
obtain any price advantage available to large denomination purchasers or
sellers.
Portfolio Turnover
The Fund's average annual portfolio turnover rate, i.e., the ratio of
the lesser of sales or purchases to the monthly average value of the portfolio
(excluding from both the numerator and the denominator all securities with
maturities at the time of acquisition of one year or less) is expected to be
high. Purchases and sales are made for the Fund whenever necessary in the
Adviser's opinion, to meet the Fund's investment objective. In order to
qualify as a regulated investment company, less than 30% of the Fund's gross
income (including tax exempt income) must be derived from the sale or other
disposition of stock, securities or certain investments held for less than
three months. Although increased Fund turnover may increase the likelihood of
additional capital gains for the Fund, the Fund expects to satisfy the 30%
income test.
COUNSEL AND INDEPENDENT AUDITORS
Legal matters in connection with the issuance of shares of common
stock of the Fund are passed upon by Battle Fowler LLP, 75 East 55th Street,
New York, New York 10022. [ _________________________________________ ],
independent certified public accountants, have been selected as auditors for
the Fund.
-17-
338027.2
<PAGE>
TABLE OF CONTENTS
PAGE
THE FUND ............................................................... 2
INVESTMENT OBJECTIVE, POLICIES AND RESTRICTIONS......................... 2
DESCRIPTION OF THE FUND'S INVESTMENT SECURITIES......................... 2
The Technology and Science Industries.......................... 2
Foreign Securities............................................. 3
U.S. Government Obligations.................................... 3
Repurchase Agreements.......................................... 3
Hedging Transactions........................................... 4
Options Transactions........................................... 4
Lending of Securities.......................................... 5
INVESTMENT RESTRICTIONS................................................. 5
Percentage Restrictions........................................ 6
MANAGEMENT OF THE FUND.................................................. 6
Officers and Directors of the Fund............................. 6
Investment Adviser............................................. 7
Adviser's Fees................................................. 8
Expense Limitation............................................. 8
Administrator.................................................. 8
Administrator's Fees........................................... 9
Custodian, Transfer Agent and Dividend Agent................... 9
TAXES ............................................................... 9
PURCHASE AND REDEMPTION................................................. 12
DIVIDENDS AND DISTRIBUTIONS............................................. 12
NET ASSET VALUE......................................................... 12
COMPUTATION OF YIELD.................................................... 13
Computation of Total Return.................................... 13
DESCRIPTION OF COMMON STOCK............................................. 14
SHAREHOLDER SERVICING AND DISTRIBUTION PLAN............................. 14
BROKERAGE AND PORTFOLIO TURNOVER........................................ 16
Brokerage...................................................... 16
Portfolio Turnover............................................. 17
COUNSEL AND INDEPENDENT AUDITORS........................................ 17
338027.2
-i-
<PAGE>
PART C - OTHER INFORMATION
Item 24. FINANCIAL STATEMENTS AND EXHIBITS.
* (A) FINANCIAL STATEMENTS
Included in Prospectus:
(1) Expense Summary
Included in Statement of Additional Information:
* (1) Report of independent accountants dated ____________; and
* (2) Statement of Assets and Liabilities dated __________
(B) EXHIBITS
(1) Articles of Incorporation of the Registrant.
(2) By-Laws of the Registrant.
(3) Not applicable.
(4) Not applicable.
* (5) Investment Advisory Agreement.
* (6) Distribution Agreement.
(7) Not applicable.
* (8) Custody Agreement.
* (9) Administrative Services Agreement.
* (10) Consent of Battle Fowler LLP as to the legality of the
securities being registered, including their consent to the
filing thereof and as to the use of their name under the
heading "Counsel and Independent Auditors" in the Prospectus
and Statement of Additional Information.
* (11) Consent of Independent Accountants.
(12) Not Applicable.
(13) Not Applicable.
(14) Not Applicable.
* (15) Distribution and Service Plan.
(16) Not applicable.
(17) Not Applicable.
* (18) Multi-Class Plan pursuant to Rule 18f-3 under the 1940 Act.
* (19) Power of Attorney.
- -------------
* To be filed by Amendment
-4-
338469.1
<PAGE>
Item 25. PERSONS CONTROLLED BY OR UNDER COMMON CONTROL WITH REGISTRANT.
None.
Item 26. NUMBER OF HOLDERS OF SECURITIES.
Number of Record Holders
Title of Class as of February 7 1996
Shares of Common Stock -0-
Item 27. INDEMNIFICATION.
(a) In accordance with Section 2-418 of the General Corporation Law
of the State of Maryland, Article NINTH of the Registrant's
Articles of Incorporation provides as follows:
"NINTH: (1) The Corporation shall indemnify (i) its currently
acting and former directors and officers, whether serving the
Corporation or at its request any other entity, to the fullest
extent required or permitted by the General Laws of the State of
Maryland now or hereafter in force, including the advance of
expenses under the procedures and to the fullest extent permitted
by law, and (ii) other employees and agents to such extent as shall
be authorized by the Board of Directors or the By-Laws and as
permitted by law. Nothing contained herein shall be construed to
protect any director or officer of the Corporation against any
liability to the Corporation or its security holders to which he
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. The foregoing rights of
indemnification shall not be exclusive of any other rights to which
those seeking indemnification may be entitled. The Board of
Directors may take such action as is necessary to carry out these
indemnification provisions and is expressly empowered to adopt,
approve and amend from time to time such by-laws, resolutions or
contracts implementing such provisions or such indemnification
arrangements as may be permitted by law. No amendment of the
charter of the Corporation or repeal of any of its provisions shall
limit or eliminate the right of indemnification provided hereunder
with respect to acts or omissions occurring prior to such amendment
or repeal.
(2) To the fullest extent permitted by Maryland statutory or
decisional law, as amended or interpreted, and the Investment
Company Act of 1940, no director or officer of the Corporation
shall be personally liable to the Corporation or its stockholders
for money damages; provided, however, that nothing herein shall be
construed to protect any director or officer of the Corporation
against any liability to the Corporation or its security holders to
which he 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. No amendment of
the charter of the Corporation or repeal of any of its provisions
shall limit or eliminate the limitation of liability provided to
directors and officers hereunder with respect to any act or
omission occurring prior to such amendment or repeal."
[(b) In Section [ ] of the Distribution Agreement relating to
the securities being offered hereby, the Registrant agrees to
indemnify and hold harmless any person who controls Furman Selz
LLC, within the meaning of the Securities Act of 1933, against
certain types of civil liabilities arising in connection with the
Registration Statement or Prospectus.]
-5-
338469.1
<PAGE>
Item 28. BUSINESS AND OTHER CONNECTIONS OF INVESTMENT ADVISER.
The description of the Registrant's adviser, Amerindo Investment
Advisors Inc., under the caption "Management of the Fund" in the Prospectus
and "Management of the Fund" in the Statement of Additional Information
constituting parts A and B, respectively, of the Registration Statement are
incorporated herein by reference.
Item 29. PRINCIPAL UNDERWRITERS.
(a) Furman Selz LLC located at 230 Park Avenue, New York, New York
10169 is the Registrant's Distributor.
(b) The following are the directors and officers of Furman Selz LLC.
The principal business address of each of these persons is 230 Park Avenue,
New York, New York 10169:
Positions and Offices Positions and Offices
Name With the Distributor With Registrant
Edmund A. Hajim Chairman of the Board & CEO None
Roy L. Furman President None
Bernard T. Selz Chairman of the None
Executive Committee
Steven D. Blecher Executive Vice President None
and Secretary
Michael C. Petrycki Executive Vice President None
John Steinhardt Executive Vice President None
William Shutzer Executive Vice President None
Fred Fraenkel Executive Vice President None
Michael Weisberg Executive Vice President None
William P. Collins Executive Vice President None
Brian P. Friedman Executive Vice President None
Elizabeth Q. Solazzo Executive Vice President and None
Assistant Secretary
Robert J. Miller Treasurer None
Thalia M. Cody Assistant Secretary None
(c) There are no affiliated persons of the Underwriter who are not
affiliated with the Registrant.
Item 30. LOCATION OF ACCOUNTS AND RECORDS.
Accounts, books and other documents required to be maintained by
Section 31(a) of the Investment Company Act of 1940 and the Rules promulgated
thereunder are maintained in the physical possession of Registrant at Amerindo
Funds Inc., 399 Park Avenue, New York, New York 10022, the Registrant's
Adviser; Furman Selz LLC, 230 Park Avenue, New York, New York 10169, the
Registrant's transfer and accounting agent; and [ ], the custodian.
Item 31. MANAGEMENT SERVICES.
Not Applicable.
Item 32. UNDERTAKINGS.
(a) Not applicable.
(b) The Registrant undertakes to file a post-effective amendment,
using financial statements which need not be certified, within
four to six months from the effective date of its Securities
Act Registration Statement.
-6-
338469.1
<PAGE>
(c) The Registrant undertakes to furnish each person to whom a
prospectus is delivered with a copy of the registrants latest
annual report to shareholders, upon request and without charge.
Exhibit Index
(1) Articles of Incorporation of the Registrant.
(2) By-Laws of the Registrant.
(3) Not applicable.
(4) Not applicable.
* (5) Investment Advisory Agreement.
* (6) Distribution Agreement.
(7) Not applicable.
* (8) Custody Agreement.
* (9) Administrative Services Agreement.
* (10) Consent of Battle Fowler LLP as to the legality of the
securities being registered, including their consent to the
filing thereof and as to the use of their name under the
heading "Counsel and Independent Auditors" in the Prospectus
and Statement of Additional Information.
* (11) Consent of Independent Accountants.
(12) Not Applicable.
(13) Not Applicable.
(14) Not Applicable.
* (15) Distribution and Service Plan.
(16) Not applicable.
(17) Not Applicable.
* (18) Multi-Class Plan pursuant to Rule 18f-3 of the 1940 Act.
* (19) Power of Attorney
- -------------
* To be filed by Amendment
-7-
338469.1
<PAGE>
SIGNATURES
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, the 7th
day of February, 1996.
AMERINDO FUNDS INC.
By:/s/ Charles B. Young
-----------------------------
Charles B. Young, President
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed below by the following persons in the
capacities indicated below on February 7, 1996.
Signature Title Date
(1) Principal Executive Officer:
February 7, 1996
By: /s/ Charles B. Young
-------------------------
Charles B. Young
(2) Majority of Directors
Charles B. Young Director February 7, 1996
By: /s/Charles B. Young
-------------------------
Dana E. Smith Director February 7, 1996
By: /s/Dana E. Smith
-------------------------
ARTICLES OF INCORPORATION
OF
AMERINDO FUNDS INC.
FIRST: (1) The name of the incorporator is Amy McGuffin.
(2) The incorporator's post office address is 75 East 55th
Street, New York, New York 10022.
(3) The incorporator is over eighteen years of age.
(4) The incorporator is forming the corporation named in
these Articles of Incorporation under the General Corporation Law of the State
of Maryland.
SECOND: The name of the corporation (hereinafter called the
"Corporation") is Amerindo Funds Inc.
THIRD: The purposes for which the Corporation is formed are:
(1) to conduct, operate and carry on the business of an
investment company;
(2) to subscribe for, invest in, reinvest in, purchase or
otherwise acquire, hold, pledge, sell, assign, transfer, exchange,
distribute or otherwise dispose of notes, bills, bonds, debentures
and other negotiable or non-negotiable instruments, obligations and
evidences of indebtedness issued or guaranteed as to principal and
interest by the United States Government, or any agency or
instrumentality thereof, any State or local government, or any
agency or instrumentality thereof, or any other securities of any
kind issued by any corporation or other issuer organized under the
laws of the United States or any State, territory or possession
thereof or any foreign country or any subdivision thereof or
otherwise, to pay for the same in cash or by the issue of stock,
including treasury stock, bonds and notes of the Corporation or
otherwise; and to exercise any and all rights, powers and privileges
of ownership or interest in respect of any and all such investments
of every kind and description, including and without limitation, the
right to consent and otherwise act with respect thereto, with power
to designate one or more persons, firms, associations or
corporations to exercise any of
337846.1
<PAGE>
said rights, powers and privileges in respect of any said
investments;
(3) to conduct research and investigations in respect of
securities, organizations, business and general business and
financial conditions in the United States of America and elsewhere
for the purpose of obtaining information pertinent to the investment
and employment of the assets of the Corporation and to procure any
and all of the foregoing to be done by others as independent
contractors and to pay compensation therefor;
(4) to borrow money or otherwise obtain credit and to
secure the same by mortgaging, pledging or otherwise subjecting as
security the assets of the Corporation, and to endorse, guarantee or
undertake the performance of any obligation, contract or engagement
of any other person, firm, association or corporation;
(5) to issue, sell, distribute, repurchase, redeem, retire,
cancel, acquire, hold, resell, reissue, dispose of, transfer, and
otherwise deal in, shares of stock of the Corporation, including
shares of stock of the Corporation in fractional denominations, and
to apply to any such repurchase, redemption, retirement,
cancellation or acquisition of shares of stock of the Corporation,
any funds or property of the Corporation, whether capital or surplus
or otherwise, to the full extent now or hereafter permitted by the
laws of the State of Maryland and by these Articles of
Incorporation;
(6) to conduct its business, promote its purposes, and
carry on its operations in any and all of its branches and maintain
offices both within and without the State of Maryland, in any and
all States of the United States of America, in the District of
Columbia, and in any or all commonwealths, territories,
dependencies, colonies, possessions, agencies, or instrumentalities
of the United States of America and of foreign governments;
(7) to carry out all or any part of the foregoing purposes
or objects as principal or agent, or in conjunction with any other
person, firm, association, corporation or other entity, or as a
partner or member of a partnership, syndicate or joint venture or
otherwise, and in any part of the world to the same extent and as
fully as natural persons might or could do;
-2-
337846.1
<PAGE>
(8) to have and exercise all of the powers and privileges
conferred by the laws of the State of Maryland upon corporations
formed under the laws of such State; and
(9) to do any and all such further acts and things and to
exercise any and all such further powers and privileges as may be
necessary, incidental, relative, conducive, appropriate or desirable
for the foregoing purposes.
The enumeration herein of the objects and purposes of the
Corporation shall be construed as powers as well as objects and purposes and
shall not be deemed to exclude by inference any powers, objects or purposes
which the Corporation is empowered to exercise, whether expressly by force of
the laws of the State of Maryland now or hereafter in effect, or impliedly by
the reasonable construction of the said law.
FOURTH: The post office address of the principal office of the
Corporation within the State of Maryland is 11 East Chase Street, Baltimore
City, Maryland 21202.
FIFTH: The resident agent of the Corporation in the State of
Maryland is The Prentice-Hall Corporation System, Maryland, at 11 East Chase
Street, Baltimore, Maryland 21202.
SIXTH: (1) The total number of shares of stock of all classes and
series which the Corporation initially has authority to issue is one billion
(1,000,000,000) shares of capital stock (par value of One Tenth of One Cent
$.001 per share), amounting in aggregate par value to $100,000. All of such
shares are classified as "Common Stock".
(2) The Board of Directors may classify or reclassify any unissued
shares of capital stock (whether or not such shares have been previously
classified or reclassified) from time to time by setting or changing in any
one or more respects the preferences, conversion or other rights, voting
powers, restrictions, limitations as to dividends, qualifications, or terms or
conditions of redemption of such shares of stock.
(3) Unless otherwise prohibited by law, so long as the Corporation
is registered as a open-end management company under the Investment Company
Act of 1940, the Board of Directors shall have the power and authority,
without the approval of the holders of any outstanding shares, to increase or
decrease the number of shares of capital stock or the number of shares of
capital stock of any class or series that the Corporation has authority to
issue.
-3-
337846.1
<PAGE>
(4) Until such time as the Board of Directors shall provide
otherwise in accordance with Section (2) of this Article SIXTH one hundred
million (100,000,000) shares of the authorized shares of stock of the
Corporation shall be allocated to the following series of Common Stock:
Amerindo Technology Fund. The balance of nine hundred million (900,000,000)
shares of such stock may be issued in this series, or in any new series each
comprising such number of shares and having such designations, limitations and
restrictions thereof as shall be fixed and determined from time-to-time by
resolution or resolutions providing for the issuance of such stock adopted by
the Board of Directors.
(5) Any series of Common Stock shall be referred to herein
individually as a "Series" and collectively, together with any further series
from time to time established, as the "Series".
(6) The following is a description of the preferences, conversion
and other rights, voting powers, restrictions, limitations as to dividends,
qualifications, and terms and conditions of redemption of the shares of Common
Stock of the Corporation (unless provided otherwise by the Board of Directors
with respect to any such additional Series at the time it is established and
designated):
(a) Asset Belonging to Series. All consideration received
by the Corporation from the issue or sale of shares of a particular
Series, together with all assets in which such consideration is
invested or reinvested, all income, earnings, profits and proceeds
thereof, including any proceeds derived from the sale, exchange or
liquidation of such assets, and any funds or payments derived from
any investment or reinvestment of such proceeds in whatever form the
same may be, shall irrevocably belong to that Series for all
purposes, subject only to the rights of creditors, and shall be so
recorded upon the books of account of the Corporation. Such
consideration, assets, income, earnings, profits and proceeds,
together with any General Items allocated to that Series as provided
in the following sentence, are herein referred to collectively as
"assets belonging to" that Series. In the event that there are any
assets, income, earnings, profits or proceeds which are not readily
identifiable as belonging to any particular Series (collectively,
"General Items"), such General Items shall be allocated by or under
the supervision of the Board of Directors to and among any one or
more of the Series established and designated from time to time in
such manner and on such basis as the Board of Directors, in its sole
discretion, deems fair and equitable; and any General
-4-
C/M: 12034.0001 337846.1
<PAGE>
Items so allocated to a particular Series shall belong to that
Series. Each such allocation by the Board of Directors shall be
conclusive and binding for all purposes.
(b) Liabilities of Series. The assets belonging to each
particular Series shall be charged with the liabilities of the
Corporation in respect of that Series and all expenses, costs,
charges and reserves attributable to that Series, and any general
liabilities, expenses, costs, charges or reserves of the Corporation
which are not readily identifiable as pertaining to any particular
Series, shall be allocated and charged by or under the supervision
of the Board of Directors to and among any one or more of the Series
established and designated from time to time in such manner and on
such basis as the Board of Directors, in its sole discretion, deems
fair and equitable. The liabilities, expenses, costs, charges and
reserves allocated and so charged to a Series are herein referred to
collectively as "liabilities of" that Series. Each allocation of
liabilities, expenses, costs, charges and reserves by or under the
supervision of the Board of Directors shall be conclusive and
binding for all purposes.
(c) Dividends and Distributions. Dividends and capital
gains distributions on shares of a particular Series may be paid
with such frequency, in such form and in such amount as the Board of
Directors may determine by resolution adopted from time to time, or
pursuant to a standing resolution or resolutions adopted only once
or with such frequency as the Board of Directors may determine,
after providing for actual and accrued liabilities of that Series.
All dividends on shares of a particular Series shall be paid only
out of the income belonging to that Series and all capital gains
distributions on shares of a particular series shall be paid only
out of the capital gains belonging to that Series. All dividends and
distributions on shares of a particular Series shall be distributed
pro rata to the holders of that Series in proportion to the number
of shares of that Series held by such holders at the date and time
of record established for the payment of such dividends or
distributions, except that in connection with any dividend or
distribution program or procedure, the Board of Directors may
determine that no dividend or distribution shall be payable on
shares as to which the stockholder's purchase order and/or payment
have not been received by the time or times established by the Board
of Directors under such program or procedure.
-5-
337846.1
<PAGE>
Dividends and distributions may be paid in cash, property
or additional shares of the same or another Series, or a combination
thereof, as determined by the Board of Directors or pursuant to any
program that the Board of Directors may have in effect at the time
for the election by stockholders of the form in which dividends or
distributions are to be paid. Any such dividend or distribution paid
in shares shall be paid at the current net asset value thereof.
(d) Voting. On each matter submitted to a vote of the
stockholders, each holder of shares shall be entitled to one vote
for each share standing in his name on the books of the Corporation,
irrespective of the Series thereof, and all shares of all Series
shall vote as a single class ("Single Class Voting"); provided,
however, that (i) as to any matter with respect to which a separate
vote of any Series is required by the Investment Company Act of 1940
or by the Maryland General Corporation Law, such requirement as to a
separate vote by that Series shall apply in lieu of Single Class
Voting; (ii) in the event that the separate vote requirement
referred to in clause (i) above applies with respect to one or more
Series, then, subject to clause (iii) below, the shares of all other
Series shall vote as a single class; and (iii) as to any matter
which does not affect the interest of a particular Series, including
liquidation of another Series as described in subsection (7) below,
only the holders of shares of the one or more affected Series shall
be entitled to vote.
(e) Redemption by Stockholders. Each holder of shares of a
particular Series shall have the right at such times as may be
permitted by the Corporation to require the Corporation to redeem
all or any part of his shares of that Series, at a redemption price
per share equal to the net asset value per share or that Series next
determined after the shares are properly tendered for redemption,
less such redemption fee or sales charge, if any, as may be
established from time to time by the Board of Directors in its sole
discretion. Payment of the redemption price shall be in cash;
provided, however, that if the Board of Directors determines, which
determination shall be conclusive, that conditions exist which make
payment wholly in cash unwise or undesirable, the Corporation may,
to the extent and in the manner permitted by the Investment Company
Act of 1940, make payment wholly or partly in securities or other
assets belonging to the Series of which the shares being redeemed
are a part,
-6-
337846.1
<PAGE>
at the value of such securities or assets used in such determination
of net asset value.
Payment by the Corporation for shares of stock of the
Corporation surrendered to it for redemption shall be made by the
Corporation within such period from surrender as may be required
under the Investment Company Act and the rules and regulations
thereunder. Notwithstanding the foregoing, the Corporation may
postpone payment of the redemption price and may suspend the right
of the holders of shares of any Series to require the Corporation to
redeem shares of that Series during any period or at any time when
and to the extent permissible under the Investment Company Act of
1940.
(f) Redemption by Corporation. The Board of Directors may
cause the Corporation to redeem at their net asset value the shares
of any Series held in an account having, because of redemptions or
exchanges, a net asset value on the date of the notice of redemption
less than the Minimum Amount, as defined below, in that Series
specified by the Board of Directors from time to time in its sole
discretion, provided that at least 30 days prior written notice of
the proposed redemption has been given to the holder of any such
account by first class mail, postage prepaid, at the address
contained in the books and records of the Corporation and such
holder has been given an opportunity to purchase the required value
of additional shares.
(i) The term "Minimum Amount" when used herein shall
mean One Thousand Dollars ($1,000) unless otherwise fixed
by the Board of Directors from time to time, provided that
the Minimum Amount may not in any event exceed Twenty-Five
Thousand Dollars ($25,000). The Board of Directors may
establish differing Minimum Amounts for each class and
series of the Corporation's stock and for holders of shares
of each such class and series of stock based on such
criteria as the Board of Directors may deem appropriate.
(ii) The Corporation shall be entitled but not required
to redeem shares of stock from any stockholder or
stockholders, as provided in this subsection (6), to the
extent and at such times as the Board of Directors shall,
in its absolute discretion, determine to be necessary or
advisable to prevent the Corporation from qualifying as a
"personal holding company", within the meaning of
-7-
337846.1
<PAGE>
the Internal Revenue Code of 1986, as amended from time to
time.
(g) Liquidation. In the event of the liquidation of a
particular Series, the stockholders of the Series that is being
liquidated shall be entitled to receive, as a class, when and as
declared by the Board of Directors, the excess of the assets
belonging to that Series over the liabilities of that Series. The
holders of shares of any particular Series shall not be entitled
thereby to any distribution upon liquidation of any other Series.
The assets so distributable to the stockholders of any particular
Series shall be distributed among such stockholders in proportion to
the number of shares of that Series held by them and recorded on the
books of the Corporation. The liquidation of any particular Series
in which there are shares then outstanding may be authorized by vote
of a majority of the Board of Directors then in office, subject to
the approval of a majority of the outstanding voting securities of
that Series, as defined in the Investment Company Act of 1940, and
without the vote of the holders of shares of any other Series. The
liquidation of a particular Series may be accomplished, in whole or
in part, by the transfer of assets of such Series to another Series
or by the exchange of shares of Series for the shares of another
Series.
(h) Net Asset Value Per Share. The net asset value per
share of any Series shall be the quotient obtained by dividing the
value of the net assets of that Series (being the value of the
assets belonging to that Series less the liabilities of that Series)
by the total number of shares of that Series outstanding, all as
determined by or under the direction of the Board of Directors in
accordance with generally accepted accounting principles and the
Investment Company Act of 1940. Subject to the applicable provisions
of the Investment Company Act of 1940, the Board of Directors, in
its sole discretion, may prescribe and shall set forth in the
By-Laws of the Corporation or in a duly adopted resolution of the
Board of Directors such bases and times for determining the value of
the assets belonging to, and the net asset value per share of
outstanding shares of, each Series, or the net income attributable
to such shares, as the Board of Directors deems necessary or
desirable. The Board of Directors shall have full discretion, to the
extent not inconsistent with the Maryland General Corporation Law
and the Investment Company Act of 1940, to determine which item
shall be treated as income and which items
-8-
337846.1
<PAGE>
as capital and whether any item of expense shall be charged to
income or capital. Each such determination and allocation shall be
conclusive and binding for all purposes.
The Board of Directors may determine to maintain the net
asset value per share of any Series at a designated constant dollar
amount and in connection therewith may adopt procedures not
inconsistent with the Investment Company Act of 1940 for the
continuing declaration of income attributable to that Series as
dividends and for the handling of any losses attributable to that
Series. Such procedures may provide that in the event of any loss,
each stockholder shall be deemed to have contributed to the capital
of the Corporation attributable to that Series his pro rata portion
of the total number of shares required to be canceled in order to
permit the net asset value per share of that Series to be
maintained, after reflecting such loss, at the designated constant
dollar amount. Each stockholder of the Corporation shall be deemed
to have agreed, by his investment in any Series with respect to
which the Board of Directors shall have adopted any such procedure,
to make the contribution referred to in the preceding sentence in
the event of any such loss.
(i) Equality. All shares of each particular Series shall
represent an equal proportionate interest in the assets belonging to
that Series (subject to the liabilities of that Series), and each
share of any particular Series shall be equal to each other share of
that Series. The Board of Directors may from time to time divide or
combine the shares of any particular Series into a greater or lesser
number of shares of that series without thereby changing the
proportionate interest in the assets belonging to that Series or in
any way affecting the rights of holders of shares of any other
Series.
(j) Conversion or Exchange Rights. Subject to compliance
with the requirements of the Investment Company Act of 1940, the
Board of Directors shall have the authority to provide that holders
of shares of any Series shall have the right to convert or exchange
said shares into shares of one or more other Series of shares in
accordance with such requirements and procedures as may be
established by the Board of Directors.
(7) The Board of Directors may, from time to time and without
stockholder action, classify shares of a particular
-9-
337846.1
<PAGE>
Series into one or more additional classes of that Series, the voting,
dividend, liquidation and other rights of which shall differ from the classes
of common stock of that Series to the extent provided in Articles
Supplementary for such additional class, such Articles to be filed for record
with the appropriate authorities of the State of Maryland. Each class so
created shall consist, until further changed, of the lesser of (x) the number
of shares classified in Section (5) of this Article SIXTH or (y) the number of
shares that could be issued by issuing all of the shares of that Series
currently or hereafter classified less the total number of shares of all
classes of such Series then issued and outstanding. Any class of a Series of
Common Stock shall be referred to herein individually as a "Class" and
collectively, together with any further class or classes of such Series from
time to time established, as the "Classes".
(8) All Classes of a particular Series of Common Stock of the
Corporation shall represent the same interest in the Corporation and have
identical voting, dividend, liquidation and other rights with any other shares
of Common Stock of that Series; provided, however, that notwithstanding
anything in the charter of the Corporation to the contrary:
(a) Any class of shares may be subject to such sales loads,
contingent deferred sales charges, Rule 12b-1 fees, administrative
fees, service fees, or other fees, however designated, in such
amounts as may be established by the Board of Directors from time to
time in accordance with the Investment Company Act of 1940.
(b) Expenses related solely to a particular Class of a
Series (including, without limitation, distribution expenses under a
Rule 12b-1 plan and administrative expenses under an administration
or service agreement, plan or other arrangement, however designated)
shall be borne by that Class and shall be appropriately reflected
(in the manner determined by the Board of Directors) in the net
asset value, dividends, distributions and liquidation rights of the
shares of that Class.
(c) As to any matter with respect to which a separate vote
of any Class of a Series is required by the Investment Company Act
of 1940 or by the Maryland General Corporation Law (including,
without limitation, approval of any plan, agreement or other
arrangement referred to in subsection (b) above), such requirement
as to a separate vote by that Class shall apply in lieu of Single
Class Voting, and if permitted by the Investment Company Act of 1940
or the Maryland General Corporation Law, the Classes of more than
one Series
-10-
337846.1
<PAGE>
shall vote together as a single class on any such matter which shall
have the same effect on each such Class. As to any matter which does
not affect the interest of a particular Class of a Series, only the
holders of shares of the affected Classes of that Series shall be
entitled to vote.
(9) The Corporation may issue and sell fractions of shares of
capital stock having pro rata all the rights of full shares, including,
without limitation, the right to vote and to receive dividends, and wherever
the words "share" or "shares" are used in the charter or By-Laws of the
Corporation, they shall be deemed to include fractions of shares where the
context does not clearly indicate that only full shares are intended.
(10) The Corporation shall not be obligated to issue certificates
representing shares of any Class or Series of capital stock. At the time of
issue or transfer of shares without certificates, the Corporation shall
provide the stockholder with such information as may be required under the
Maryland General Corporation Law.
(11) No holder of any shares of stock of the Corporation shall be
entitled as of right to subscribe for, purchase, or otherwise acquire any such
shares which the Corporation shall issue or propose to issue; and any and all
of the shares of stock of the Corporation, whether now or hereafter
authorized, may be issued, or may be reissued or transferred if the same have
been reacquired and have treasury status, by the Board of Directors to such
persons, firms, corporations and associations, and for such lawful
consideration, and on such terms, as the Board of Directors in its discretion
may determine, without first offering same, or any thereof, to any said
holder.
(12) All persons who shall acquire stock or other securities of the
Corporation shall acquire the same subject to the provisions of these Articles
of Incorporation, as from time to time amended.
SEVENTH: The number of directors of the Corporation, until such
number shall be increased pursuant to the By-Laws of the Corporation, shall be
two. The number of directors shall never be less than the number prescribed by
the General Corporation Law of the State of Maryland and shall never be more
than twenty. The names of the persons who shall act as directors of the
Corporation until their successors are duly chosen and qualify are Charles B.
Young and Dana E. Smith.
EIGHTH: The following provisions are inserted for the purpose of
defining, limiting and regulating the powers of the Corporation and of the
Board of Directors and stockholders.
-11-
337846.1
<PAGE>
(1) The business and affairs of the Corporation shall be managed
under the direction of the Board of Directors which shall have and may
exercise all powers of the Corporation except those powers which are by law,
by these Articles of Incorporation or by the By-Laws conferred upon or
reserved to the stockholders. In furtherance and not in limitation of the
powers conferred by law, the Board of Directors shall have power:
(a) to make, alter and repeal the By-Laws of the
Corporation;
(b) to issue and sell, from time to time, shares of any
class or series of the Corporation's stock in such amounts and on
such terms and conditions, and for such amount and kind of
consideration, as the Board of Directors shall determine, provided
that the consideration per share to be received by the Corporation
shall be not less than the greater of the net asset value per share
of that class of stock at such time computed in accordance with
Article SIXTH hereof or the par value thereof;
(c) from time to time to set apart out of any assets of the
Corporation otherwise available for dividends a reserve or reserves
for working capital or for any other proper purpose or purposes, and
to reduce, abolish or add to any such reserve or reserves from time
to time as said Board of Directors may deem to be in the best
interests of the Corporation; and to determine in its discretion
what part of the assets of the Corporation available for dividends
in excess of such reserve or reserves shall be declared in dividends
and paid to the stockholders of the Corporation; and
(d) from time to time to determine to what extent and at
what times and places and under what conditions and regulations the
accounts, books and records of the Corporation, or any of them,
shall be open to the inspection of the stockholders; and no
stockholder shall have any right to inspect any account or book or
document of the Corporation, except as conferred by the laws of the
State of Maryland, unless and until authorized to do so by
resolution of the Board of Directors or of the stockholders of the
Corporation.
(2) Notwithstanding any provision of the General Corporation Law of
the State of Maryland requiring a greater proportion than a majority of the
votes of all classes or of any class of the Corporation's stock entitled to be
cast in order to take or authorize any action, any such action may be taken or
authorized upon the concurrence of a majority of the aggregate number of votes
entitled to be cast thereon subject to any
-12-
337846.1
<PAGE>
applicable requirements of the Investment Company Act of 1940, as from time to
time in effect, or rules or orders of the Securities and Exchange Commission
or any successor thereto.
(3) Except as may otherwise be expressly provided by applicable
statutes or regulatory requirements, the presence in person or by proxy of the
holders of one-third of the shares of stock of the Corporation entitled to
vote shall constitute a quorum at any meeting of the stockholders.
(4) Any determination made in good faith and, so far as accounting
matters are involved, in accordance with generally accepted accounting
principles by or pursuant to the discretion of the Board of Directors, as to
the amount of the assets, debts, obligations, or liabilities of the
Corporation, as to the amount of any reserves or charges set up and the
propriety thereof, as to the time of or purposes for creating such reserves or
charges, as to the use, alteration or cancellation of any reserves or charges
(whether or not any debt, obligation or liability for which such reserves or
charges shall have been created shall have been paid or discharged or shall by
then or thereafter required to be paid or discharged), as to the value of or
the method of valuing any investment owned or held by the Corporation, as to
the market value or fair value of any investment or fair value of any other
asset of the Corporation, as to the allocation of any asset of the Corporation
to a particular class or classes of the Corporation's stock, as to the
charging of any liability of the Corporation to a particular class or classes
of the Corporation's stock, as to the number of shares of the Corporation
outstanding, as to the estimated expense to the Corporation in connection with
purchases of its shares, as to the ability to liquidate investments in orderly
fashion, or as to any other matters relating to the issue, sale, purchase
and/or other acquisition or disposition of investments or shares of the
Corporation, shall be final and conclusive and shall be binding upon the
Corporation and all holders of its shares, past, present and future, and
shares of the Corporation are issued and sold on the condition and
understanding that any and all such determinations shall be binding as
aforesaid.
(5) Except to the extent prohibited by the Investment Company Act of
1940, as amended, or rules, regulations or orders thereunder promulgated by
the Securities and Exchange Commission or any successor thereto or by the
By-Laws of the Corporation, a director, officer or employee of the Corporation
shall not be disqualified by his position from dealing or contracting with the
Corporation, nor shall any transaction or contract of the Corporation be void
or voidable by reason of the fact that any director, officer or employee or
any firm of which any director, officer or employee is a member or any
corporation of which any director, officer or employee is a stockholder,
officer or director, is in any way interested in such transaction or
-13-
337846.1
<PAGE>
contract; provided that in case a director, or a firm or corporation of which
a director is a member, stockholder, officer or director, is so interested,
such fact shall be disclosed to or shall have been known by the Board of
Directors or a majority thereof; and any director of the Corporation who is so
interested, or who is a member, stockholder, officer or director of such firm
or corporation, may be counted in determining the existence of a quorum at any
meeting of the Board of Directors of the Corporation which shall authorize any
such transaction or contract, with like force and effect as if he were not
such director, or member, stockholder, officer or director of such firm or
corporation.
(6) Specifically and without limitation of the foregoing subsection
(e) but subject to the exception therein prescribed, the Corporation may enter
into management or advisory, underwriting, distribution and administration
contracts and other contracts, and may otherwise do business, with Furman Selz
Incorporated, and any parent, subsidiary, partner, or affiliate of such firm
or any affiliates of any such affiliate, or the stockholders, members,
directors, officers, partners and employees thereof, and may deal freely with
one another notwithstanding that the Board of Directors of the Corporation may
be composed in part of directors, officers, partners or employees of such firm
and/or its parents, subsidiaries or affiliates and that officers of the
Corporation may have been, be or become directors, officers, or employees of
such firm, and/or its parents, subsidiaries or affiliates, and neither such
management or advisory, underwriting, distribution or administration contracts
nor any other contract or transaction between the Corporation and such firm
and/or its parents, subsidiaries or affiliates shall be invalidated or in any
way affected thereby, nor shall any director or officer of the Corporation be
liable to the Corporation or to any stockholder or creditor thereof or to any
person for any loss incurred by it or him under or by reason of such contract
or transaction; provided that nothing herein shall protect any director or
officer of the Corporation against any liability to the Corporation or to its
security holders to which he 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; and provided always that such contract
or transaction shall have been on terms that were not unfair to the
Corporation at the time at which it was entered into.
NINTH: (1) The Corporation shall indemnify (i) its currently acting
and former directors and officers, whether serving the Corporation or at its
request any other entity, to the fullest extent required or permitted by the
General Laws of the State of Maryland now or hereafter in force, including the
advance of expenses under the procedures and to the fullest extent permitted
by law, and (ii) other employees and agents to
-14-
337846.1
<PAGE>
such extent as shall be authorized by the Board of Directors or the By-Laws
and as permitted by law. Nothing contained herein shall be construed to
protect any director or officer of the Corporation against any liability to
the Corporation or its security holders to which he 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. The foregoing
rights of indemnification shall not be exclusive of any other rights to which
those seeking indemnification may be entitled. The Board of Directors may take
such action as is necessary to carry out these indemnification provisions and
is expressly empowered to adopt, approve and amend from time to time such
by-laws, resolutions or contracts implementing such provisions or such
indemnification arrangements as may be permitted by law. No amendment of the
charter of the Corporation or repeal of any of its provisions shall limit or
eliminate the right of indemnification provided hereunder with respect to acts
or omissions occurring prior to such amendment or repeal.
(2) To the fullest extent permitted by Maryland statutory or
decisional law, as amended or interpreted, and the Investment Company Act of
1940, no director or officer of the Corporation shall be personally liable to
the Corporation or its stockholders for money damages; provided, however, that
nothing herein shall be construed to protect any director or officer of the
Corporation against any liability to the Corporation or its security holders
to which he 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. No amendment of the charter of the Corporation or
repeal of any of its provisions shall limit or eliminate the limitation of
liability provided to directors and officers hereunder with respect to any act
or omission occurring prior to such amendment or repeal.
TENTH: The Corporation reserves the right to amend, alter, change or
repeal any provision contained in these Articles of Incorporation or in any
amendment hereto in the manner now or hereafter prescribed by the laws of the
State of Maryland and all rights conferred upon stockholders herein are
granted subject to this reservation.
IN WITNESS WHEREOF, the undersigned, being the incorporator of the
Corporation, has adopted and signed these Articles of Incorporation for the
purpose of forming the corporation described herein pursuant to the General
Corporation
-15-
337846.1
<PAGE>
law of the State of Maryland and does hereby acknowledge that said adoption
and signing are her act.
_______________________________
Amy McGuffin
Dated: February 2, 1996
-16-
337846.1
BY-LAWS
OF
AMERINDO FUNDS INC.
a Maryland corporation
ARTICLE I
Offices
Section 1. Principal Office in Maryland. The Corporation shall have a
principal office in the City of Baltimore, State of Maryland.
Section 2. Other Offices. The Corporation may have offices also at
such other places within and without the State of Maryland as the Board of
Directors may from time to time determine or as the business of the
Corporation may require.
ARTICLE II
Meetings of Stockholders
Section 1. Place of Meeting. Meetings of stockholders shall be held
at such place, either within the State of Maryland or at such other place
within the United States, as shall be fixed from time to time by the Board of
Directors.
Section 2. Annual Meetings. The Corporation shall not be required to
hold an annual meeting of its stockholders in any year in which none of the
following is required to be acted on by the holders of any class or series of
stock under the Investment Company Act of 1940: (a) election of the directors,
(b) approval of the Corporation's investment advisory agreement with respect
to a particular class or series; (c) ratification of the selection of
independent public accountants; and (d) approval of the Corporation's
distribution agreement with respect to a particular class or series. In the
event that the Corporation shall be required to hold an annual meeting of
stockholders by the Investment Company Act of 1940, such meeting of
stockholders shall be held on a date fixed from time to time by the Board of
Directors not less than ninety nor more than one hundred twenty days following
the end of such fiscal year of the Corporation.
Section 3. Notice of Annual Meeting. Written or printed notice of an
annual meeting, stating the place, date and hour thereof, shall be given to
each stockholder entitled to vote
337850.1
<PAGE>
thereat not less than ten nor more than ninety days before the date of the
meeting.
Section 4. Special Meetings. Special meetings of stockholders may be
called by the chairman, the president or by the Board of Directors and shall
be called by the secretary upon the written request of holders of shares
entitled to cast not less than twenty-five percent of all the votes entitled
to be cast at such meeting. Such request shall state the purpose or purposes
of such meeting and the matters proposed to be acted on thereat. In the case
of such request for a special meeting, upon payment by such stockholders to
the Corporation of the estimated reasonable cost of preparing and mailing a
notice of such meeting, the secretary shall give the notice of such meeting.
The secretary shall not be required to call a special meeting to consider any
matter which is substantially the same as a matter acted upon at any special
meeting of stockholders held within the preceding twelve months unless
requested to do so by the holders of shares entitled to cast not less than a
majority of all votes entitled to be cast at such meeting.
Section 5. Notice of Special Meeting. Written or printed notice of a
special meeting of stockholders, stating the place, date, hour and purpose
thereof, shall be given by the secretary to each stockholder entitled to vote
thereat not less than ten nor more than ninety days before the date fixed for
the meeting.
Section 6. Business of Special Meetings. Business transacted at any
special meeting of stockholders shall be limited to the purposes stated in the
notice thereof.
Section 7. Quorum. Except as may otherwise be expressly provided by
applicable statutes or regulations, the holders of one-third of the stock
issued and outstanding and entitled to vote thereat, present in person or
represented by proxy, shall constitute a quorum at all meetings of the
stockholders for the transaction of business.
Section 8. Voting. When a quorum is present at any meeting, the
affirmative vote of a majority of the votes cast shall decide any question
brought before such meeting, unless the question is one upon which by express
provision of the Investment Company Act of 1940, as from time to time in
effect, or other statutes or rules or orders of the Securities and Exchange
Commission or any successor thereto or of the Articles of Incorporation, a
different vote is required, in which case such express provision shall govern
and control the decision of such question.
Section 9. Proxies. Each stockholder shall at every meeting of
stockholders be entitled to one vote in person or by
-2-
337850.1
<PAGE>
proxy for each share of the stock having voting power held by such
stockholder, but no proxy shall be voted after eleven months from its date,
unless otherwise provided in the proxy.
Section 10. Record Date. In order that the Corporation may determine
the stockholders entitled to notice of or to vote at any meeting of
stockholders or any adjournment thereof, to express consent to corporate
action in writing without a meeting, or to receive payment of any dividend or
other distribution or allotment of any rights, or entitled to exercise any
rights in respect of any change, conversion or exchange of stock or for the
purpose of any other lawful action, the Board of Directors may fix, in
advance, a record date which shall be not more than ninety days and, in the
case of a meeting of stockholders, not less than ten days prior to the date on
which the particular action requiring such determination of stockholders is to
be taken. In lieu of fixing a record date, the Board of Directors may provide
that the stock transfer books shall be closed for a stated period, but not to
exceed, in any case, twenty days. If the stock transfer books are closed for
the purpose of determining stockholders entitled to notice of or to vote at a
meeting of stockholders, such books shall be closed for at least ten days
immediately preceding such meeting. If no record date is fixed and the stock
transfer books are not closed for the determination of stockholders: (1) the
record date for the determination of stockholders entitled to notice of, or to
vote at, a meeting of stockholders shall be at the close of business on the
day on which notice of the meeting of stockholders is mailed or the day thirty
days before the meeting, whichever is the closer date to the meeting; and (2)
the record date for the determination of stockholders entitled to receive
payment of a dividend or an allotment of any rights shall be at the close of
business on the day on which the resolution of the Board of Directors,
declaring the dividend or allotment of rights, is adopted, provided that the
payment or allotment date shall not be more than ninety days after the date of
the adoption of such resolution.
Section 11. Inspectors of Election. The directors, in advance of any
meeting, may, but need not, appoint one or more inspectors to act at the
meeting or any adjournment thereof. If an inspector or inspectors are not
appointed, the person presiding at the meeting may, but need not, appoint one
or more inspectors. In case any person who may be appointed as an inspector
fails to appear or act, the vacancy may be filled by appointment made by the
directors in advance of the meeting or at the meeting by the person presiding
thereat. Each inspector, if any, before entering upon the discharge of his or
her duties, shall take and sign an oath faithfully to execute the duties of
inspector at such meeting with strict impartiality and according to the best
of his or her ability. The inspectors, if any, shall determine the number of
shares outstanding and the voting power
-3-
337850.1
<PAGE>
of each, the shares represented at the meeting, the existence of a quorum, the
validity and effect of proxies, and shall receive votes, ballots or consents,
hear and determine all challenges and questions arising in connection with the
right to vote, count and tabulate all votes, ballots or consents, determine
the result, and do such acts as are proper to conduct the election or vote
with fairness to all stockholders. On request of the person presiding at the
meeting or any stockholder, the inspector or inspectors, if any, shall make a
report in writing of any challenge, question or matter determined by him or
her or them and execute a certificate of any fact found by him or her or them.
Section 12. Informal Action by Stockholders. Except to the extent
prohibited by the Investment Company Act of 1940, as from time to time in
effect, or rules or orders of the Securities and Exchange Commission or any
successor thereto, any action required or permitted to be taken at any meeting
of stockholders may be taken without a meeting if a consent in writing,
setting forth such action, is signed by all the stockholders entitled to vote
on the subject matter thereof and any other stockholders entitled to notice of
a meeting of stockholders (but not to vote thereat) have waived in writing any
rights which they may have to dissent from such action, and such consent and
waiver are filed with the records of the Corporation.
ARTICLE III
Board of Directors
Section 1. Number of Directors. The number of directors shall be
fixed at no less than two nor more than twenty. Within the limits specified
above, the number of directors shall be fixed from time to time by the Board
of Directors, but the tenure of office of a director in office at the time of
any decrease in the number of directors shall not be affected as a result
thereof. The directors shall be elected to hold office at the annual meeting
of stockholders, except as provided in Section 2 of this Article, and each
director shall hold office until the next annual meeting of stockholders or
until his successor is elected and qualified. Any director may resign at any
time upon written notice to the Corporation. Any director may be removed,
either with or without cause, at any meeting of stockholders duly called and
at which a quorum is present by the affirmative vote of the majority of the
votes entitled to be cast thereon, and the vacancy in the Board of Directors
caused by such removal may be filled by the stockholders at the time of such
removal. Directors need not be stockholders.
-4-
337850.1
<PAGE>
Section 2. Vacancies and Newly Created Directorships. Any vacancy
occurring in the Board of Directors for any cause, including an increase in
the number of directors, may be filled by the stockholders or by a majority of
the remaining members of the Board of Directors even if such majority is less
than a quorum. So long as the Corporation is a registered investment company
under the Investment Company Act of 1940, vacancies in the Board of Directors
may be filled by a majority of the remaining members of the Board of Directors
only if, immediately after filing any such vacancy, at least two-thirds of the
directors then holding office shall have been elected to such office at a
meeting of stockholders. A director elected by the Board of Directors to fill
a vacancy shall be elected to hold office until the next annual meeting of
stockholders or until his successor is elected and qualifies.
Section 3. Powers. The business and affairs of the Corporation shall
be managed under the direction of the Board of Directors which shall exercise
all such powers of the Corporation and do all such lawful acts and things as
are not by statute or by the Articles of Incorporation or by these By-Laws
conferred upon or reserved to the stockholders.
Section 4. Annual Meeting. The first meeting of each newly elected
Board of Directors shall be held immediately following the adjournment of the
annual meeting of stockholders and at the place thereof. No notice of such
meeting to the directors shall be necessary in order legally to constitute the
meeting, provided a quorum shall be present. In the event such meeting is not
so held, the meeting may be held at such time and place as shall be specified
in a notice given as hereinafter provided for special meetings of the Board of
Directors.
Section 5. Other Meetings. The Board of Directors of the Corporation
or any committee thereof may hold meetings, both regular and special, either
within or without the State of Maryland. Regular meetings of the Board of
Directors may be held without notice at such time and at such place as shall
from time to time be determined by the Board of Directors. Special meetings of
the Board of Directors may be called by the chairman, the president or by two
or more directors. Notice of special meetings of the Board of Directors shall
be given by the secretary to each director at least three days before the
meeting if by mail or at least 24 hours before the meeting if given in person
or by telephone or by telegraph. The notice need not specify the business to
be transacted.
Section 6. Quorum and Voting. At meetings of the Board of Directors,
two of the directors in office at the time, but in no event less than
one-third of the entire Board of Directors, shall constitute a quorum for the
transaction of business. When required pursuant to Section 15(c) under the
-5-
337850.1
<PAGE>
Investment Company Act of 1940 or Rule 12b-1 thereunder a quorum shall also
require the presence in person of a majority of directors who are not parties
to a contract or agreement to be voted upon or interested persons of any such
party. The action of a majority of the directors present at a meeting at which
a quorum is present shall be the action of the Board of Directors. If a quorum
shall not be present at any meeting of the Board of Directors, the directors
present thereat may adjourn the meeting from time to time, without notice
other than announcement at the meeting, until a quorum shall be present.
Section 7. Committees. The Board of Directors may, by resolution
passed by a majority of the entire Board of Directors, appoint from among its
members an executive committee and other committees of the Board of Directors,
each committee to be composed of two or more of the directors of the
Corporation. The Board of Directors may, to the extent provided in the
resolution, delegate to such committees, in the intervals between meetings of
the Board of Directors, any or all of the powers of the Board of Directors in
the management of the business and affairs of the Corporation, except the
power to declare dividends, to issue stock, to recommend to stockholders any
action requiring stockholders' approval, to amend the By-Laws or to approve
any merger or share exchange which does not require stockholders' approval.
Such committee or committees shall have the name or names as may be determined
from time to time by resolution adopted by the Board of Directors. Unless the
Board of Directors designates one or more directors as alternate members of
any committee, who may replace an absent or disqualified member at any meeting
of the committee, the members of any such committee present at any meeting and
not disqualified from voting may, whether or not they constitute a quorum,
unanimously appoint another member of the Board of Directors to act at the
meeting in the place of any absent or disqualified member of such committee.
At meetings of any such committee, a majority of the members or alternate
members of such committee shall constitute a quorum for the transaction of
business and the act of a majority of the members or alternate members present
at any meeting at which a quorum is present shall be the act of the committee.
Section 8. Minutes of Committee Meetings. The committees shall keep
regular minutes of their proceedings.
Section 9. Informal Action by Board of Directors and Committees. Any
action, except approving the Rule 12b-1 Plan and the Advisory Agreement,
required or permitted to be taken at any meeting of the Board of Directors or
of any committee thereof may be taken without a meeting if a written consent
thereto is signed by all members of the Board of Directors or of such
committee, as the case may be, and such written consent is filed with the
minutes of proceedings of the Board of Directors or committee.
-6-
337850.1
<PAGE>
Section 10. Meetings by Conference Telephone. Except to the extent
prohibited by the Investment Company Act of 1940, as from time to time in
effect, or rules or orders of the Securities and Exchange Commission or any
successor thereto, the members of the Board of Directors or any committee
thereof may participate in a meeting of the Board of Directors or committee by
means of a conference telephone or similar communications equipment by means
of which all persons participating in the meeting can hear each other at the
same time and such participation shall constitute presence in person at such
meeting.
Section 11. Fees and Expenses. The directors may be paid their
expenses of attendance at each meeting of the Board of Directors and may be
paid a fixed sum for attendance at each meeting of the Board of Directors or a
stated salary as director. No such payment shall preclude any director from
serving the Corporation in any other capacity and receiving compensation
therefor. Members of special or standing committees may be allowed like
reimbursement and compensation for attending committee meetings.
ARTICLE IV
Notices
Section 1. General. Notices to directors and stockholders mailed to
them at their post office addresses appearing on the books of the Corporation
shall be deemed to be given at the time when deposited in the United States
mail.
Section 2. Waiver of Notice. Whenever any notice is required to be
given under the provisions of the statutes, of the Articles of Incorporation
or of these By-Laws, a waiver thereof in writing, signed by the person or
persons entitled to said notice, whether before or after the time stated
therein, shall be deemed the equivalent of notice. Attendance of a person at a
meeting shall constitute a waiver of notice of such meeting except when the
person attends a meeting for the express purpose of objecting, at the
beginning of the meeting, to the transaction of any business because the
meeting is not lawfully called or convened.
ARTICLE V
Officers
Section 1. General. The officers of the Corporation shall be chosen
by the Board of Directors at its first meeting after each annual meeting of
stockholders and shall be a chairman
-7-
337850.1
<PAGE>
of the Board of Directors, a president, a secretary and a treasurer. The Board
of Directors may also choose such vice presidents and additional officers or
assistant officers as it may deem advisable. Any number of offices, except the
offices of president and vice president, may be held by the same person. No
officer shall execute, acknowledge or verify any instrument in more than one
capacity if such instrument is required by law to be executed, acknowledged or
verified by two or more officers.
Section 2. Other Officers and Agents. The Board of Directors may
appoint such other officers and agents as it desires who shall hold their
offices for such terms and shall exercise such power and perform such duties
as shall be determined from time to time by the Board of Directors.
Section 3. Tenure of Officers. The officers of the Corporation shall
hold office at the pleasure of the Board of Directors. Each officer shall hold
his or her office until his or her successor is elected and qualifies or until
his or her earlier resignation or removal. Any officer may resign at any time
upon written notice to the Corporation. Any officer elected or appointed by
the Board of Directors may be removed at any time by the Board of Directors
when, in its judgment, the best interests of the Corporation will be served
thereby. Any vacancy occurring in any office of the Corporation by death,
resignation, removal or otherwise shall be filled by the Board of Directors.
Section 4. Chairman of the Board of Directors. The chairman of the
Board of Directors shall be the chief executive officer of the Corporation,
shall preside at all meetings of the stockholders and of the Board of
Directors, shall have general and active management of the business of the
Corporation and shall see that all orders and resolutions of the Board of
Directors are carried into effect. The chairman shall execute on behalf of the
Corporation, and may affix the seal or cause the seal to be affixed to, all
instruments requiring such execution except to the extent that signing and
execution thereof shall be expressly delegated by the Board of Directors to
some other officer or agent of the Corporation.
Section 5. President. The president shall, in the absence of the
chairman of the Board of Directors, preside at all meetings of the
stockholders or of the Board of Directors. The president shall have general
and active management of the business of the Corporation and shall see that
all orders and resolutions of the Board of Directors are carried into effect.
The president shall execute bonds, mortgages and other contracts requiring a
seal, under the seal of the Corporation, except where required or permitted by
law to be otherwise signed and executed and except where the signing and
execution thereof shall be expressly delegated by the Board of Directors to
some other officer or agent of the Corporation.
-8-
337850.1
<PAGE>
Section 6. Vice Presidents. The vice presidents shall act under the
direction of the president and in the absence or disability of the president
shall perform the duties and exercise the power of the president. They shall
perform such other duties and have such other powers as the president or the
Board of Directors may from time to time prescribe. The Board of Directors may
designate one or more executive vice presidents or may otherwise specify the
order of seniority of the vice presidents and, in that event, the duties and
powers of the president shall descend to the vice presidents in the specified
order of seniority.
Section 7. Secretary. The secretary shall act under the direction of
the president. Subject to the direction of the president, the secretary shall
attend all meetings of the Board of Directors and all meetings of stockholders
and record the proceedings in a book to be kept for that purpose and shall
perform like duties for the committees designated by the Board of Directors
when required. The secretary shall give, or cause to be given, notice of all
meetings of stockholders and special meetings of the Board of Directors, and
shall perform such other duties as may be prescribed by the president or the
Board of Directors. The secretary shall keep in safe custody the seal of the
Corporation and shall affix the seal or cause it to be affixed to any
instrument requiring it.
Section 8. Assistant Secretaries. The assistant secretaries in the
order of their seniority, unless otherwise determined by the president or the
Board of Directors, shall, in the absence or disability of the secretary,
perform the duties and exercise the powers of the secretary. They shall
perform such other duties and have such other powers as the president or the
Board of Directors may from time to time prescribe.
Section 9. Treasurer. The treasurer shall act under the direction of
the president. Subject to the direction of the president he shall have the
custody of the corporate funds and securities and shall keep full and accurate
accounts of receipts and disbursements in books belonging to the Corporation
and shall deposit all monies and other valuable effects in the name and to the
credit of the Corporation in such depositories as may be designated by the
Board of Directors. The treasurer shall disburse the funds of the Corporation
as may be ordered by the president or the Board of Directors, taking proper
vouchers for such disbursements, and shall render to the president and the
Board of Directors, at its regular meetings, or when the Board of Directors so
requires, an account of all his or her transactions as treasurer and of the
financial condition of the Corporation.
Section 10. Assistant Treasurers. The assistant treasurers in the
order of their seniority, unless otherwise determined by the president or the
Board of Directors, shall, in
-9-
337850.1
<PAGE>
the absence or disability of the treasurer, perform the duties and exercise
the powers of the treasurer. They shall perform such other duties and have
such other powers as the president or the Board of Directors may from time to
time prescribe.
ARTICLE VI
Certificates of Stock
Section 1. General. Every holder of stock of the Corporation who has
made full payment of the consideration for such stock shall be entitled upon
request to have a certificate, signed by, or in the name of the Corporation
by, the president or a vice president and countersigned by the treasurer or an
assistant treasurer or the secretary or an assistant secretary of the
Corporation, certifying the number and class of whole shares of stock owned by
such holder in the Corporation.
Section 2. Fractional Share Interests or Scrip. The Corporation may,
but shall not be obliged to, issue fractions of a share of stock, arrange for
the disposition of fractional interests by those entitled thereto, pay in cash
the fair value of fractions of a share of stock as of the time when those
entitled to receive such fractions are determined, or issue scrip or other
evidence of ownership which shall entitle the holder to receive a certificate
for a full share of stock upon the surrender of such scrip or other evidence
of ownership aggregating a full share. Fractional shares of stock shall have
proportionately to the respective fractions represented thereby all the rights
of whole shares, including the right to vote, the right to receive dividends
and distributions and the right to participate upon liquidation of the
Corporation, excluding, however, the right to receive a stock certificate
representing such fractional shares. The Board of Directors may cause such
scrip or evidence of ownership to be issued subject to the condition that it
shall become void if not exchanged for certificates representing full shares
of stock before a specified date or subject to the condition that the shares
of stock for which such scrip or evidence of ownership is exchangeable may be
sold by the Corporation and the proceeds thereof distributed to the holders of
such scrip or evidence of ownership, or subject to any other reasonable
conditions which the Board of Director shall deem advisable, including
provision for forfeiture of such proceeds to the Corporation if not claimed
within a period of not less than three years after the date of the original
issuance of scrip certificates.
Section 3. Signatures on Certificates. Any of or all the signatures
on a certificate may be a facsimile. In case any officer who has signed or
whose facsimile signature has been placed upon a certificate shall cease to be
such officer before
-10-
337850.1
<PAGE>
such certificate is issued, it may be issued with the same effect as if he or
she were such officer at the date of issue. The seal of the Corporation or a
facsimile thereof may, but need not, be affixed to certificates of stock.
Section 4. Lost, Stolen or Destroyed Certificates. The Board of
Directors may direct a new certificate or certificates to be issued in place
of any certificate or certificates theretofore issued by the Corporation
alleged to have been lost, stolen or destroyed, upon the making of any
affidavit of that fact by the person claiming the certificate or certificates
to be lost, stolen or destroyed. When authorizing such issue of a new
certificate or certificates, the Board of Directors may, in its discretion and
as a condition precedent to the issuance thereof, require the owner of such
lost, stolen or destroyed certificate or certificates, or his or her legal
representative, to give the Corporation a bond in such sum as it may direct as
indemnity against any claim that may be made against the Corporation with
respect to the certificate or certificates alleged to have been lost, stolen
or destroyed.
Section 5. Transfer of Shares. Upon request by the registered owner
of shares, and if a certificate has been issued to represent such shares upon
surrender to the Corporation or a transfer agent of the Corporation of a
certificate for shares of stock duly endorsed or accompanied by proper
evidence of succession, assignment or authority to transfer, subject to the
Corporation's rights to redeem or purchase such shares, it shall be the duty
of the Corporation, if it is satisfied that all provisions of the Articles of
Incorporation, of the By-Laws and of the law regarding the transfer of shares
have been duly complied with, to record the transactions upon its books, issue
a new certificate to the person entitled thereto upon request for such
certificate, and cancel the old certificate, if any.
Section 6. Registered Owners. The Corporation shall be entitled to
recognize the person registered on its books as the owner of shares to be the
exclusive owner for all purposes including, redemption, voting and dividends,
and the Corporation shall not be bound to recognize any equitable or other
claim to or interest in such share or shares on the part of any other person,
whether or not it shall have express or other notice thereof, except as
otherwise provided by the laws of Maryland.
ARTICLE VII
Miscellaneous
Section 1. Reserves. There may be set aside out of any funds of the
Corporation available for dividends such sum or sums as the Board of Directors
from time to time, in their
-11-
337850.1
<PAGE>
absolute discretion, think proper as a reserve or reserves to meet
contingencies, or for repairing or maintaining any property of the
Corporation, or for the purchase of additional property, or for such other
purpose as the Board of Directors shall think conducive to the interest of the
Corporation, and the Board of Directors may modify or abolish any such
reserve.
Section 2. Dividends. Dividends upon the stock of the Corporation
may, subject to the provisions of the Articles of Incorporation and of the
provisions of applicable law, be declared by the Board of Directors at any
time. Dividends may be paid in cash, in property or in shares of the
Corporation's stock, subject to the provisions of the Articles of
Incorporation and of applicable law.
Section 3. Capital Gains Distributions. The amount and number of
capital gains distributions paid to the stockholders during each fiscal year
shall be determined by the Board of Directors. Each such payment shall be
accompanied by a statement as to the source of such payment, to the extent
required by law.
Section 4. Checks. All checks or demands for money and notes of the
Corporation shall be signed by such officer or officers or such other person
or persons as the Board of Directors may from time to time designate.
Section 5. Fiscal Year. The fiscal year of the Corporation shall be
fixed by resolution of the Board of Directors.
Section 6. Seal. The corporate seal shall have inscribed thereon the
name of the Corporation, the year of its organization and the words,
"Corporate Seal, Maryland". The seal may be used by causing it or a facsimile
thereof to be impressed or affixed or in another manner reproduced.
Section 7. Filing of By-Laws. A certified copy of the By-Laws,
including all amendments, shall be kept at the principal office of the
Corporation in the State of Maryland.
Section 8. Annual Report. The books of account of the Corporation
shall be examined by an independent firm of public accountants at the close of
each annual fiscal period of the Corporation and at such other times, if any,
as may be directed by the Board of Directors of the Corporation. Within one
hundred and twenty days of the close of each annual fiscal period a report
based upon such examination at the close of that fiscal period shall be mailed
to each stockholder of the Corporation of record at the close of such annual
fiscal period, unless the Board of Directors shall set another record date, at
his address as the same appears on the books of the Corporation. Each such
-12-
337850.1
<PAGE>
report shall contain such information as is required to be set forth therein
by the Investment Company Act of 1940 and the rules and regulations
promulgated by the Securities and Exchange Commission thereunder. Such report
shall also be submitted at the annual meeting of the stockholders and filed
within twenty days thereafter at the principal office of the Corporation in
the State of Maryland.
Section 9. Stock Ledger. The Corporation shall maintain at its
principal office outside of the State of Maryland an original or duplicate
stock ledger containing the names and addresses of all stockholders and the
number of shares of stock held by each stockholder. Such stock ledger may be
in written form or in any other form capable of being converted into written
form within a reasonable time for visual inspection.
Section 10. Ratification of Accountants by Stockholders. At every
annual meeting of the stockholders of the Corporation otherwise called there
shall be submitted for ratification or rejection the name of the firm of
independent public accountants which has been selected for the current fiscal
year in which such annual meeting is held by a majority of those members of
the Board of Directors who are not investment advisers of, or interested
person (as defined in the Investment Company Act of 1940) of an investment
adviser of, or officers or employees of, the Corporation.
Section 11. Custodian. All securities and similar investments owned
by the Corporation shall be held by a custodian which shall be either a trust
company or a national bank of good standing, having a capital surplus and
undivided profits aggregating not less than two million dollars ($2,000,000),
or a member firm of the New York Stock Exchange, Inc. The terms of custody of
such securities and cash shall include such provisions required to be
contained therein by the Investment Company Act of 1940 and the rules and
regulations promulgated thereunder by the Securities and Exchange Commission.
Upon the resignation or inability to serve of any such custodian the
Corporation shall: (a) use its best efforts to obtain a successor custodian,
(b) require the cash and securities of the Corporation held by the custodian
to be delivered directly to the successor custodian, and (c) in the event that
no successor custodian can be found, submit to the stockholders of the
Corporation, before permitting delivery of such cash and securities to anyone
other than a successor custodian, the question whether the Corporation shall
be dissolved or shall function without a custodian; provided, however, that
nothing herein contained shall prevent the termination of any agreement
between the Corporation and any such custodian by the affirmative vote of the
holders of a majority of all the stock of the Corporation at the time
outstanding and entitled to vote. Upon
-13-
337850.1
<PAGE>
its resignation or inability to serve and pending action by the Corporation as
set forth in this section, the custodian may deliver any assets of the
Corporation held by it to a qualified bank or trust company in the City of New
York, or to a member firm of the New York Stock Exchange, Inc. selected by it,
such assets to be held subject to the terms of custody which governed such
retiring custodian.
Section 12. Investment Advisers. The Corporation may enter into one
or more management or advisory, underwriting, distribution or administration
contract with any person, firm, partnership, association or corporation but
such contract or contracts shall continue in effect only so long as such
continuance is specifically approved annually by a majority of the Board of
Directors or by vote of the holders of a majority of the voting securities of
the Corporation, and in either case by vote of a majority of the directors who
are not parties to such contracts or interested persons (as defined in the
Investment Company Act of 1940) of any such party cast in person at a meeting
called for the purpose of voting on such approval.
ARTICLE VIII
Amendments
The Board of Directors shall have the power, by a majority vote of
the entire Board of Directors at any meeting thereof, to make, alter and
repeal By-Laws of the Corporation.
-14-
337850.1
