As filed with the Securities and Exchange Commission on May 6, 1997
Registration No. 333-00767
ICA No. 811-07531
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. 1 [X]
and/or
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 [X]
Amendment No. 2 [X]
(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
DANA E. SMITH
Amerindo Funds Inc.
One Embarcadero
Suite 2300
San Francisco, CA 94111
(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)
[X] 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.
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AMERINDO FUNDS INC.
Registration Statement on Form N-1A
-----------------------
CROSS REFERENCE SHEET -
Pursuant to Rule 404(c)
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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
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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
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AMERINDO
TECHNOLOGY FUND
PROSPECTUS 1997
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TABLE OF CONTENTS
PAGE
PROSPECTUS SUMMARY ................................................. 3
EXPENSE SUMMARY..................................................... 5
FINANCIAL HIGHLIGHTS................................................ 6
INVESTMENT OBJECTIVE AND POLICIES................................... 7
ADDITIONAL INVESTMENT INFORMATION AND RISK FACTORS.................. 9
INVESTMENT RESTRICTIONS............................................. 12
MANAGEMENT OF THE FUND.............................................. 12
PURCHASE OF SHARES.................................................. 16
REDUCTION OR ELIMINATION OF SALES LOADS............................. 18
REDEMPTION OF SHARES................................................ 19
DIVIDENDS AND DISTRIBUTIONS......................................... 21
NET ASSET VALUE..................................................... 21
DISTRIBUTION AND SERVICE PLAN....................................... 21
PERFORMANCE INFORMATION............................................. 23
DESCRIPTION OF COMMON STOCK......................................... 23
TAXES............................................................... 24
CUSTODIAN, TRANSFER AGENT AND DIVIDEND AGENT........................ 25
COUNSEL AND INDEPENDENT AUDITORS.................................... 25
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PROSPECTUS
May 6, 1997
AMERINDO TECHNOLOGY FUND
One Embarcadero
Suite 2300 399 Park Avenue
San Francisco, CA 18th Floor
94111 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 technology
companies. Technology companies are those companies with primary business
operations in either the technology or science areas. Industries likely to be
represented in the portfolio include computers, networking and internetworking
software, computer aided design, telecommunications, media and information
services, medical devices and biotechnology. 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. Current income is incidental to the Fund's investment
objective. The technology and science areas have exhibited and continue to
demonstrate rapid growth, both through increasing demand for existing products
and services and the broadening of the technology market. 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 AND SHOULD NOT BE USED
AS A SHORT-TERM TRADING VEHICLE. THE FUND IS ALSO DESIGNED AS A SPECIALIZED
INVESTMENT VEHICLE AND IS NOT INTENDED TO BE USED BY AN INVESTOR AS A COMPLETE
INVESTMENT PROGRAM. 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. See "Investment Objective" herein.
The Fund offers two classes of shares to investors, Class A and Class D
shares (each individually a "Class" or collectively the "Classes"). Class A
shares are sold subject to an initial sales load of up to 2.50%. 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, each Class
pays a servicing fee equal to 0.25% of its respective average daily net assets
and Class A pays a distribution fee equal to 0.25% of its average daily net
assets. The minimum initial investment for purchases of Class A shares is
$25,000 and the minimum subsequent investment is $2,500. The minimum initial
investment for purchases of Class D shares is $150,000 and the minimum
subsequent investment is $15,000.
Consistent with the Fund's investment objective of long-term capital
appreciation, shareholders in Class A and Class D shares may be subject to a
3.00% redemption fee for redeeming shares held less than one year. 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"), an annual advisory fee paid monthly at an
annual rate equal to 1.50% of the Fund's average daily net assets. This fee is
higher than the fee paid by most other mutual funds, however, the Board of
C/M: 12034.0001 336637.17
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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
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 May 6, 1997. This information is
incorporated by reference and is available without charge upon request from the
Fund at Amerindo Technology Fund, 399 Park Avenue, 18th Floor, New York, New
York 10022. The Fund is acting as its own distributor until such time as ADS
Distributors, Inc. ("ADS"), 101 Main Street, Safety Harbor, Florida 34695 enters
into a distribution agreement with the Fund, which is expected to occur on or
about May 15, 1997. General information about the Fund may also be requested in
writing to the Fund, Amerindo Technology Fund, 399 Park Avenue, 18th Floor, New
York, New York 10022 or by calling the Fund at (1-888-TECH FUND).
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.
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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 two
classes of shares to investors, Class A 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 technology companies. Technology companies are those
companies with primary business operations in either the technology or science
areas. Industries likely to be represented in the portfolio include computers,
networking and internetworking software, computer aided design,
telecommunications, media and information services, medical devices and
biotechnology. 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 and should not be used as a
trading vehicle. 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
Adviser, an annual advisory fee paid monthly at an annual rate equal to 1.50% of
the Fund's 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.
American Data Services, Inc. serves as the Fund's administrator (the
"Administrator") and receives a monthly fee based on the Fund's average monthly
net assets for rendering such administrative services. See "Administrator's
Fees." 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, each Class pays a servicing fee equal to 0.25%
of its respective average daily net assets and Class A pays a distribution fee
equal to 0.25% 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, plus any applicable sales load, after receipt
of an order by the Fund's 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 2.50%. Class D shares are
sold without an initial sales load. The minimum initial investment in Class A is
$25,000 and the minimum subsequent investment is $2,500. The minimum initial
investment in Class D is $150,000 and the minimum subsequent investment is
$15,000. See "Purchase of Shares".
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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 transfer agent in proper order. Consistent
with the Fund's investment objective of long-term capital appreciation,
shareholders of both Class A and Class D may be subject to a 3.00% fee on the
redemption of shares held for less than one year. 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
and science areas, smaller capitalized companies, and foreign securities.
Companies in rapidly changing fields of technology and science 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.
If you seek an aggressive approach to capital growth and can accept the above
average level of price fluctations that this Fund is expected to experience,
this Fund could be an appropriate part of your overall investment strategy.
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<PAGE>
EXPENSE SUMMARY
INVESTOR TRANSACTION EXPENSES
Class A Class D
------------- -------------
Maximum Sales
Load Imposed
on Purchases
(as a percentage of the
offering price) 2.50% None
Redemption Fees (for shares 3.00% 3.00%
held less than one year)
ESTIMATED ANNUAL OPERATING EXPENSES
(AS A PERCENTAGE OF AVERAGE NET
ASSETS)
Management Fees 1.50% 1.50%
12b-1 Fees 0.50%* 0.25%
Other Expenses (after expense
reimbursements or fee waivers) 0.50% 0.50%
Total Estimated Annual
Operating Expenses (after expense
reimbursements or fee waivers) 2.50% 2.25%
EXAMPLE: An investor in the Fund would pay the following expenses on a
$1,000 investment in the Fund assuming a 5% annual return
reinvested and redemption at the end of each time period:
Year 1 Year 3
Class A $ 80 $ 104
Class D $ 53 $ 73
Assuming no redemption at the end of
each time period:
Year 1 Year 3
Class A $ 50 $ 104
Class D $ 23 $ 73
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 "Total Estimated Annual Operating Expenses", including "Other
Expenses", are based on the Fund's anticipated expenses for the current fiscal
year assuming net assets of $90 million. Absent certain expense reimbursements
or fee waivers "Other Expenses" and "Total Estimated Annual Operating Expenses"
would have been 0.55% for each of Class A and Class D and 2.55% and 2.30% for
each of Class A and Class D, respectively, of the Fund's average daily net
assets. 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.
- ------------------------
*Includes an annual distribution fee of 0.25% and an annual service fee of 0.25%
of the Class A Shares' average daily net assets. 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.
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FINANCIAL HIGHLIGHTS
The following table provides information about the Fund's financial history. It
is based on a single share outstanding throughout the period provided. The table
is part of the Fund's financial statements for the year ended December 31, 1996,
which are available to shareholders upon request.
October 29, 1996
(commencement of
investment
operations)
through
December 31, 1996
Net asset value, beginning of period................... $ 10.00
------
Income (loss) from investment operations (0.04)
Net investment loss....................................
Net realized and unrealized gain (loss) on (0.96)
------
investments............................................
Total from investment operations....................... (1.00)
------
Less distributions
Dividends from net investment income 0.00
Distribution from realized gains from security 0.00
----
transactions...........................................
Total distributions.................................... 0.00
----
Net asset value, end of period......................... $ 9.00
-----
Total return**......................................... (45.69%)*
Ratios/supplemental data
Net assets end of period (in 000's).................... 33,857
Ratio of expenses to average net assets................ 3.82%*
Ratio of expenses to average net assets, net of 2.25%*
reimbursement..........................................
Ratio of net investment income (loss) to average (3.82%)*
net assets.............................................
Ratio of net investment income (loss) to average (2.25%)*
net assets, net of reimbursement.......................
Portfolio turnover rate................................ 0.00%
Average commission rate paid........................... 0.0500
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** Annualized
** Based on net asset value per share
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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 technology companies. Technology companies are those
companies with primary business operations in either the technology or science
areas. Industries likely to be represented in the portfolio include computers,
networking and internetworking software, computer aided design,
telecommunications, media and information services, medical devices and
biotechnology. 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. 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 and should not be
used as a complete investment program.
The Adviser believes that because of rapid advances in technology and science,
an investment in companies with business operations in these areas 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.
The technology and science areas 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 science areas, 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 Fund will not purchase
stocks of companies during their initial public offering or during an additional
public offering of the same security. The Adviser anticipates, however, that a
significant portion of the Fund's holdings will be invested in newly-issued
securities being sold in the secondary market.
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 Adviser does
not currently intend to invest in these other types of securities.
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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 &
Poor's Ratings Services, a division of the McGraw-Hill Companies, Inc. ("S&P"),
Baa by Moody's Investor Service, Inc. ("Moody's"), BBB by Fitch Investors
Services, Inc., or BBB by Duff & Phelps Credit Rating Co.--such ratings may have
speculative characteristics) 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 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, provided, however, that such securities do
not exceed 5% of the Fund's total assets.
The Fund may invest up to 20% of its assets in foreign securities. It is,
however, the present intention of the Fund to limit the investment in foreign
securities to no more than 5% of its assets. 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 30%. (A
portfolio turnover rate of 33% would occur, for example, if all of the stocks in
the Fund were replaced over a period of approximately three 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.
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ADDITIONAL INVESTMENT INFORMATION AND RISK FACTORS
THE TECHNOLOGY AND SCIENCE AREAS. Companies in the rapidly changing fields of
technology and science 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 and science areas 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 and science areas may be subject to greater
governmental regulation than many other areas and changes in governmental
policies and the need for regulatory approvals may have a material adverse
effect on these areas. Additionally, companies in these areas 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.
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
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<PAGE>
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 an amount
equal to one-third of the value of the Fund's total assets less its liabilities
and will be made at prevailing interest rates. The Fund may not, however,
purchase additional securities while borrowings exceed 5% of its total assets.
SHORT SALES. The Fund may make short sales of securities "against-the-box." A
short sale "against-the-box" is a sale of a security that the Fund either owns
an equal amount of or has the immediate and unconditional right to acquire at no
additional cost. The Fund will make short sales "against-the-box" as a form of
hedging to offset potential declines in long positions in the same or similar
securities.
ILLIQUID SECURITIES. The Fund may invest up to 15% of its net assets in illiquid
securities, including restricted securities (i.e., securities subject to certain
restrictions on their transfer) and other securities that are not readily
marketable, such as repurchase agreements maturing in more than one week,
provided, however, that any illiquid securities purchased by the Fund will have
been registered under the Securities Act of 1933 or be securities of a class, or
convertible into a class, which is already publicly traded and the issuer of
which is filing reports required by Sections 13 or 15 of the Securities Exchange
Act of 1934.
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, variable rate demand instruments 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
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<PAGE>
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, as amended.
NON-DIVERSIFIED STATUS. As a "non-diversified" investment company, 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 "Code"). 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 the 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 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.
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<PAGE>
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. 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 the 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% 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 from
banks for extraordinary or emergency purposes (not for leveraging or
investment), provided that such borrowings 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 additional 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" or "Amerindo"), a
registered investment adviser, is a California corporation with its principal
office located at One Embarcadero, Suite 2300, San Francisco, California 94111.
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 $3 billion at December 31, 1996. 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
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<PAGE>
the Fund's day-to-day investment decisions, arranges for the execution of
portfolio transactions and generally manages the portfolio investments.
In the early 1980's, Amerindo pioneered the management of dedicated emerging
technology portfolios of high technology and healthcare stocks designed to
service the financial needs of the institutional investor. As reported in the
Wall Street Journal's Money Manager Scorecard on July 24, 1996, May 1, 1996 and
January 18, 1996, Amerindo ranked first for its one-year and 5-year performance,
respectively. Amerindo did not have a 10-year performance number. Each Money
Manager Scorecard represents a ranking at June 30, 1996, March 31, 1996 and
December 31, 1995, respectively, of the estimated stock-market performance of
U.S. money managers with over $100 million under management. The 1, 5 and
10-year performance rankings were compiled by Thompson Investment Software, CDA
Investment Technologies, utilizing data provided by CDA/Spectrum, with respect
to data on 754, 409, and 217 managers, respectively. This performance
information relates to Amerindo's management of institutional accounts and
should not be interpreted as indicative of future performance of the Fund. The
performance figures upon which these rankings were based do not include a
reduction for any charges or expenses with respect to such accounts. Further,
Amerindo has not independently verified the accuracy, completeness or process
underlying the performance figures upon which these rankings were based and
makes no representation as to the accuracy or completeness of this performance
information.
Amerindo's equity composite includes the portfolios managed in this style of all
clients which are institutions, such as qualified retirement plans, charitable
foundations and educational endowment funds, for which investment income and
realized capital gains are exempt from Federal income tax, and for which
Amerindo has full discretionary authority to manage in accordance with the
firm's equity strategy for separate accounts. Amerindo has elected to comply
with the American Association for Investment Management and Research
presentation standards for the period October 1, 1987 (inception of the
composite) through December 31, 1996. Deloitte & Touche LLP has conducted an
examination with respect to Amerindo for the period October 1, 1987 through
December 31, 1995, and has confirmed that Amerindo's performance presentation
contained herein for such period conforms with AIMR standards. The Independent
Accountants' Report from Deloitte & Touche LLP is available upon request. The
1996 review is currently in progress. The following Schedule represents the
rates of return for the equity composite for the annual investment periods from
January 8, 1988 through December 31, 1996. Accounts benchmarks are the Standard
& Poor's 500 - Composite Stock Index, Hambrecht & Quist Growth Index and the
Russell 2000. The Independent Accountants' Report relates to their examination
of Amerindo's performance from the inception of the composite October 1, 1987,
which is in accordance with AIMR standards. Amerindo has chosen to present
performance starting with 1988, the first full year of the composite. Such
presentation has no effect on quarterly or annual performance, but causes the
annualized investment performance for the investment periods through December
31, 1996 to be somewhat greater than if such presentation included the period
from October 1, to December 31, 1987. This performance information relates to
Amerindo's management of institutional accounts and should not be interpreted as
indicative of future performance of the Fund.
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<PAGE>
<TABLE>
<CAPTION>
Asset Weighted Asset Weighted
Composite Rate of Composite Rate
Return, of Return,
Gross of Net of S&P
Year Advisory Fees Advisory Fees 500 H&Q Russell
- ----- ------------- ------------- ----- --- -------
<S> <C> <C> <C> <C> <C>
1988 8.68% 6.97% 16.50% 1.79% 24.89%
1989 42.49% 40.67% 31.44% 17.41% 16.24%
1990 8.49% 6.75% -3.19% 3.89% -19.50%
1991 78.39% 76.52% 30.55% 94.49% 46.05%
1992 8.73% 7.61% 7.68% -3.57% 18.42%
1993 16.42% 15.08% 10.00% 7.81% 18.89%
1994 -1.53% -2.66% 1.33% 3.38% -1.82%
1995 89.39% 87.51% 37.50% 61.72% 28.44%
1996 9.61% 8.04% 10.86% 16.59% 23.22%
Annualized rates of return for the period
January 1, 1988 to December 31, 1996:
25.56.% 23.99% 16.43% 18.63% 15.04%
</TABLE>
Composite returns are shown both gross and net of investment management
fees. The composite is derived from all fully discretionary, tax-free
sheltered equity accounts in this style with assets above $5,000,000.
Past performance is no guarantee of future results.
In addition to managing the assets of the Fund, the Adviser manages assets on a
discretionary basis for other clients and, as a result, the Adviser may effect
transactions in such clients' accounts in securities in which the Fund currently
holds or, in the near future may hold, a position. The Adviser makes the
determination to purchase or sell a security based on numerous factors,
including those that may be particular to one or more of its clients. Therefore,
it is possible that the Adviser will effect transactions in certain securities
for select clients, which may or may not include the Fund, that it may not deem,
in its sole discretion, as being appropriate for other clients, which may or may
not include the Fund.
Alberto W. Vilar, Dr. Gary A. Tanaka and Ralph H. Cechettini will be primarily
responsible for the day-to-day management of the Fund's portfolio. Their
biographies are provided below along with the other directors of the Fund.
ALBERTO W. VILAR, 55, is Chairman of the Board of Directors and Chief Executive
Officer of the Fund. He 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 Advisors
(U.K.) Limited and Amerindo Investment Advisors, Inc. (Panama) in 1979 and has
served since then as a Principal Portfolio Manager. He 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. He has been a Chartered Financial Analyst since 1975.
DR. GARY A. TANAKA, 51, is Director and President of the Fund. He 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 &
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<PAGE>
Associates in San Francisco. In 1980, he joined the predecessors of Amerindo
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.
DR. JOHN RUTLEDGE, 47, is Director of the Fund. He also is Chairman of Rutledge
& Company, Inc., a merchant banking firm, since 1991 and serves as a director of
Earle M. Jorgensen Company, Lazard Freres Funds, Fluidrive, Inc., General
Medical Corporation, Medical Specialties Group, United Refrigerated Services,
Inc. and Utenduhl Capital Partners and is a special advisor to Kelso &
Companies, Inc. He is the author of books and investment publications, writes a
monthly column in Forbes Magazine and is a frequent contributor to periodicals.
JUDE T. WANNISKI, 59, is a Director of the Fund. He also has been president of
Polyconomics, Inc. since 1978 and serves as a director for Repap Enterprises
Inc.
RALPH H. CECHETTINI, 55, 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 (currently named C.I.M.), an investment advisory firm
through which he continues to manage assets for clients and, as a result, may
from time to time purchase or sell securities for the accounts of such clients
substantially similar to those securities purchased or sold by the Fund. Since
February, 1991, Mr. Cechettini has been employed by 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 an annual advisory fee paid monthly equal to 1.50% of the Fund's
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. The Adviser will
also receive the service fees of 0.25% of each Class' average daily net assets.
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
"Voluntary Expense Subsidization" in the Statement of Additional Information.
The Adviser will provide persons to serve as officers of the fund. Such officers
may be directors, officers or employees of the adviser or its affiliates.
ADMINISTRATOR. The Administrator for the Fund is American Data Services, Inc.
(the "Administrator"), which has its principal office at 24 West Carver Street,
Huntington, New York 11743, and is primarily in the business of providing
administrative, fund accounting and stock transfer services to retail and
institutional mutual funds through its offices in New York, Denver and Bermuda.
The Administrator also provides turnkey software system solutions to several
institutional mutual fund groups and approximately $13 billion are processed
through the Administrator's systems annually.
Pursuant to an Administrative Service 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.
ADMINISTRATOR'S FEES. For the services rendered to the Fund by the
Administrator, the Fund pays the Administrator a monthly fee which is based on
the Fund's average net assets. If the Fund's average net assets are: less than
$10 million, the Administrator's fee is $1,500 per month; between $10 to $20
million, the Administrator's fee is $1,750 per month; and in excess of $20
million, the Administrator receives $2,000 per month. The Fund also pays the
Administrator for any out-of-pocket expenses. In addition, the Administrator
serves as the Fund's transfer agent and performs Fund accounting services for
which it is paid separately. For additional information, see "Custodian,
Transfer Agent and Dividend Agent."
Both the Investment Advisory Agreement and the Administrative Service Agreement
are terminable by the Board of Directors of the Fund, the Adviser or the
Administrator, respectively, on sixty days' written notice. The Investment
Advisory Agreement will
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<PAGE>
terminate automatically in the event of an "assignment" as defined by the
Investment Company Act. The Administrative Service Agreement, however, may be
assigned provided the non-assigning party provides prior written consent. 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. Until such time as ADS Distributors, Inc. ("ADS"), an affiliate of
the Administrator, enters into a distribution agreement with the Fund to serve
as distributor, which is expected to occur on or about May 15, 1997, the Fund
will serve as its own issuer. It is expected that after ADS has entered into a
distribution agreement with the Fund it will be entitled to receive a
distribution fee equal to 0.25% of the Class A shares' average daily net assets
under the terms of the Plan and that ADS will pay 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. In addition, pursuant to such distribution agreement,
it is expected that ADS would use a portion of the distribution fee to
compensate financial intermediaries for providing distribution assistance with
respect to the sale of Class A shares. See "Management of Fund" in the Statement
of Additional Information. It is also expected that ADS will enter into a dealer
agreement with Garal & Company, Inc., an affiliate of the Adviser, to
participate in the offer and sale of the shares of the Fund.
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 the Fund; 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 them 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.
PURCHASE OF SHARES
INITIAL INVESTMENTS BY WIRE. Subject to acceptance by the Distributor, shares of
each Class of the Fund may be purchased by wiring immediately available federal
funds (subject to each Class's minimum investment) to The Chase Manhattan Bank
(see instructions below). The minimum initial investment in Class A is $25,000
and the minimum initial investment in Class D is $150,000, each of which may be
waived by the Fund, from time to time. A completed Account Application should be
forwarded to the Fund at the address noted below under "Initial Investments by
Mail" in advance of the wire. Notification must be given to the Fund at
1-888-TECH FUND prior to 4:15 p.m., New York time, with funds to be wired on the
next business day. (Prior notification must also be received from investors with
existing accounts.) Funds should be wired through the Federal Reserve Bank to:
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<PAGE>
The Chase Manhattan Bank
Huntington, New York
----------------------------------------------
ABA# 021000021
Account # 5021120976
F/B/O Amerindo Technology Fund
Ref. (Class)
Fund Acct. No. ___________________________________
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 at the address noted below, together with a check
(subject to each Class's minimum investment) payable to:
Amerindo Technology Fund
c/o American Data Services, Inc.
24 West Carver Street, 2nd Floor
Huntington, New York 11743
The minimum initial investment in Class A is $25,000 and the minimum initial
investment in Class D is $150,000, each of which may be waived by the Fund, from
time to time. 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 particular Class 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. In the event that there are insufficient funds to cover a
check, such prospective investor or investor will be assessed a $15.00 charge.
ADDITIONAL INVESTMENTS. Additional investments may be made at any time (subject
to the minimum subsequent investment in Class A of $2,500 and the minimum
subsequent investment in Class D of $15,000) by purchasing shares of the
particular Class at net asset value, plus any applicable sales load, by mailing
a check to the Fund at the address noted under "Initial Investments by Mail"
(payable to Amerindo Technology Fund Class A/Class D) or by wiring monies to the
clearing bank as outlined above. Notification must be given to the Fund at
1-888-TECH FUND - prior to 4:15 p.m., New York time, with funds to be wired on
the next business day.
OTHER PURCHASE INFORMATION. Investors may open accounts in the Fund only through
the exclusive Distributor for the Fund. It is expected that on or about May 15,
1997, ADS will enter into a distribution agreement with the Fund, under which,
for nominal consideration and as agent for the Fund, ADS 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.
The Fund reserves the right to redeem, after 60 days' written notice, shares in
accounts that fall below the minimum balance by reason of redemption and return
the proceeds to investors. The investors may restore and maintain a minimum
balance during the notice period.
Shareholders that purchase Class D shares during the period that the Fund is not
offering Class A shares for sale will remain Class D shareholders after the date
that Class A shares are offered for sale. Investors who purchase Class D shares
during such period are not required to meet the $150,000 minimum balance
requirement but will be required to maintain a minimum balance of $25,000.
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. See "Net Asset Value" herein. The sales load, with respect to Class A
shares, is a one-time charge paid at the time of purchase of shares, most of
which ordinarily goes to the investor's broker-dealer as compensation 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 2.50% of the net asset
value per share. Class D Shares are sold without a front-end sales load. Volume
discounts are provided for both initial purchase, as well as for additional
purchases of Class A Shares of the Fund. See
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<PAGE>
"Reduction or Elimination of Sales Loads" herein. The Fund reserves the right to
reject any subscription for shares. 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. The Fund does not intend to issue
certificates evidencing Fund shares.
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 that permits the IRA to invest in either Class A or
Class D Shares of the Fund. The minimum investment for all retirement plans
investing in either Class of the Fund is the same as the minimum initial
investment for such Class -- $25,000 for Class A and $150,000 for Class D.
Investors desiring information regarding investments through IRAs should write
or telephone the Fund.
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 reaches 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 Fund 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 previously purchased,
and still holds, Class A shares worth $70,000 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 $75,000 to
$149,999 bracket in the sales load schedule provided below.
<TABLE>
<CAPTION>
Amount of sales charge
reallowed to dealers as
Sales Charge as a % of a percent
Amount of Purchase Sales Charge Net Amount Invested of offering price
- ----------------------- ------------ ------------------------- -------------------------
<S> <C> <C> <C>
$25,000-74,999 2.50% 2.56% 2.50
$75,000-149,999 1.00% 1.01% 1.00
$150,000 and over 0 0 0
</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
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<PAGE>
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 5%
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, clients, independent
professional contractors, 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 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, 24 West
Carver Street, Huntington, New York 11743.
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 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. Signature guarantees may be obtained
from certain eligible financial institutions, including but not limited to, the
following: banks, trust companies, credit unions, securities brokers and
dealers, savings and loan associations and participants in the Securities
Transfer Association Medallion Program ("STAMP"), the Stock Exchange Medallion
Program ("SEMP") or the New York Stock Exchange Medallion Signature Program
("MSP"). Shareholders may contact the Fund at 1-888-TECH FUND for further
details.
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<PAGE>
BY TELEPHONE. Provided the Telephone Redemption Option has been authorized, a
redemption of shares may be requested by calling the Fund at 1-888-TECH FUND 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 may include tape
recording of telephone instructions and requiring some form of personal
identification prior to acting upon instructions received by telephone.
OPTIONAL REDEMPTION BY THE FUND. Investors are required to maintain a minimum
account balance of at least $25,000 for Class A shares and $150,000 for Class D
shares. Certain investors who purchased Class D shares may only be required to
maintain a $25,000 minimum account balance provided that they purchased their
shares during the period when Class A shares were not being offered for sale.
The Fund reserves the right to redeem, after 60 days' written notice, shares in
accounts that fall below the minimum balance by reason of redemption and return
the proceeds to investors. The investors may restore and maintain a minimum
balance during the notice period.
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 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 3.00% fee
on the redemption of shares held for less than one year. 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 also does not
apply to shares held in IRA accounts.
The Fund will use the first-in, first-out (FIFO) method to determine the
one-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 one year, the redemption fee will be assessed. In
determining "one year" the Fund will use the anniversary date of a transaction.
Thus, shares purchased on April 5, 1996, for example, will be subject to the fee
if they are redeemed on or prior to April 4, 1997. If they are redeemed on or
after April 5, 1997, the shares will not be subject to the redemption fee. The
redemption fee will be applied on redemptions of
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C/M: 12034.0001 336637.17
<PAGE>
each investment made by a shareholder that does not remain in the Fund for a
one-year period from the date of purchase.
DIVIDENDS AND DISTRIBUTIONS
At least 90% of each Class'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 each Class, if any, are declared and paid on an annual basis.
Dividends are payable to investors of record at the time of declaration. For a
discussion of the taxation of dividends or distributions, see "Taxes".
The net investment income of each Class 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 each Class 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 each Class 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 dividends and capital gains distributions will be paid
in cash.
NET ASSET VALUE
Net asset value per share for each Class is determined by subtracting from the
value of such Class'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 securities, indications as to values
from dealers and general market conditions.
The Fund computes each Class's 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 Class will compensate the Adviser 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 shares of each Class for providing
servicing to their clients ("shareholder servicing"), which is subject to a
maximum service fee of 0.25% per annum of each Class's average daily net assets.
The Plan also provides that the Distributor is paid a fee equal to 0.25% of
Class A's average daily net assets, on an annual basis, to enable it to provide
promotional support to the Fund and to make payments to broker-dealers and other
financial institutions with which it has written agreements and whose clients
are Class A shareholders (each a "broker-dealer") for
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<PAGE>
providing distribution assistance. Fees paid under the Plan may not be waived
for individual shareholders.
Each shareholder servicing agent 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) quarterly and
year-end statements and confirmations within five business days after activity
in the account; 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; (ii) to compensate certain
financial intermediaries for providing assistance in distributing each Class's
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 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.
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<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 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. Currently, the Fund intends to provide these
reports to investors and prospective investors semi-annually, but may from time
to time, in its sole discretion, provide reports on a more frequent basis, such
as quarterly. 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 monthly income earned by an investment in a
particular 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 the Fund is required to be
included in any advertisement containing each Class's yield. Total return is the
average annual total return for the period which began at the inception of a
particular Class of the Fund 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 of the Fund has been in existence for a shorter
period.
The yields and the net asset values of each Class of shares of the Fund will
vary based on the current market value of the securities held by the Fund and
changes in such Class' 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 a Class of the Fund to yields and total rates of return published for other
investment companies and other investment vehicles.
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 the State of 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 two
Classes. Shares of any series or class will have identical voting rights, except
where, by law, certain matters must be approved by a majority of the shares of
the affected series or class. Each share of any series or class of shares when
issued will have equal dividend, distribution, liquidation and voting rights for
which it will be issued, and each fractional share will have 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.
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<PAGE>
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. The Fund does not intend to issue
certificates evidencing Fund shares. On April 30, 1996, the Adviser purchased
10,000 shares of the Fund at an initial purchase price of $10.00 per share.
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
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,
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<PAGE>
state and local tax consequences of an investment in the Fund in light of their
own individual circumstances.
CUSTODIAN, TRANSFER AGENT AND DIVIDEND AGENT
The Northern Trust Company 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. American Data Services, Inc.,
the Fund's Administrator, also acts as the Fund's transfer and dividend agent.
The Fund pays the Administrator the greater of $900 per month or $9.00 per year
per account, plus out-of-pocket expenses, for rendering such transfer and
dividend agency 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. Morrison, Brown, Argiz & Co., P.A., 9795 South Dixie Highway, Miami,
Florida 33156, have been selected as auditors for the Fund.
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<PAGE>
AMERINDO TECHNOLOGY FUND
BOARD OF DIRECTORS
-------------------------------------
ALBERTO W. VILAR - Amerindo Investment Advisers Inc.
GARY A. TANAKA - Amerindo Investment Advisers Inc.
JOHN RUTLEDGE - Rutledge & Company, Inc.
JUDE T. WANNISKI - Polyconomics, Inc.
OFFICERS OF FUND
-------------------------------
Alberto W. Vilar Chairman of the Board
Gary A. Tanaka President
Anthony Ciulla Vice President
Sarah L. Gordon-Wild Vice President/Secretary
Dana E. Smith Vice President/Treasurer
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<PAGE>
INVESTMENT ADVISOR
- ------------------------------------------
Amerindo Investment Advisors Inc.
San Francisco, California
New York, New York
ADMINISTRATOR AND
TRANSFER AND DIVIDEND AGENT
- ------------------------------------------
American Data Services, Inc.
Huntington, New York
CUSTODIAN
- ------------------------------------------
The Northern Trust Company
Chicago, Illinois
LEGAL COUNSEL
- ------------------------------------------
Battle Fowler LLP
New York, New York
INDEPENDENT ACCOUNTANTS
- ------------------------------------------
Morrison, Brown, Argiz & Company
Miami, Florida
1-888 TECH FUND
www.amerindo.com
AMPRO
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<PAGE>
AMERINDO FUNDS INC. For assistance in completing the
Mail to: Amerindo Technology Fund application,
24 West Carver Street call the Amerindo Technology Fund at
Huntington, New York 11743 1-888-TECH FUND
AMERINDO TECHNOLOGY FUND-NEW ACCOUNT APPLICATION
- --------------------------------------------------------------------------------
1. INITIAL INVESTMENT
/ / Class A $ --------------------------- ($25,000 minimum)
/ / Class D $ --------------------------- ($150,000 minimum)
- --------------------------------------------------------------------------------
2. ACCOUNT REGISTRATION
/ / Individual if joint, check one:
FIRST MIDDLE / / With Right of LAST
Survivorship
/ / Tenants in
Common
/ / Joint Tenant / / Tenants by the
Entireties
FIRST MIDDLE LAST
/ / Uniform Gifts/Transfers to Minors Act ______________________________________
CUSTODIAN'S NAME
Minor's Birthdate ____/____/____
as Custodian for ______________________________________________________ State of
Residency _____________________________________________________
MINOR'S NAME
/ / Corporation, Trust Partnership, or other Entity ____________________________
LEGAL ENTITY NAME
- ----------------------------------------------------------- TRUSTEE'S NAME (FOR
TRUST
ONLY) DATE OF TRUST (IF APPLICABLE)
- --------------------------------------------------------------------------------
3. ACCOUNT ADDRESS
Street Address --------------------------------------------------
City/State/Zip --------------------------------------------------
--------------------------------------------------
Daytime Telephone --------------------------------------------------
Citizen of: / / U.S. / / Other Country
COUNTRY OF RESIDENCE
- --------------------------------------------------------------------------------
4. SOCIAL SECURITY/TAX IDENTIFICATION NUMBER
- ------------------------------------- OR -------------------------------------
SOCIAL SECURITY NUMBER TAXPAYER IDENTIFICATION NUMBER
- --------------------------------------------------------------------------------
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C/M: 12034.0001 336637.17
<PAGE>
- --------------------------------------------------------------------------------
5. SOURCE OF INTEREST (PLEASE SPECIFY)
/ / Advertisement ______________________ / / TV/Newspaper _____________________
/ / Internet / / Referral _____________________ / / Other ____________________
- --------------------------------------------------------------------------------
6. DISTRIBUTIONS
Dividends and capital gains will be automatically reinvested unless otherwise
indicated. If you wish Dividend/Capital Gains to be paid in cash, please check
the appropriate box.
Dividends are to be: / / Paid in Cash Capital gains are to be: / / Paid in Cash
- --------------------------------------------------------------------------------
7. LETTER OF INTENT (LOI) FOR CLASS A SHARES
/ / I agree to the terms of the Letter of Intent and provisions set forth in the
Prospectus. Although I am not obligated to do so, it is my intention to invest
over a 13 month period:
/ / $25,000 - $74,999 / / $75,000 - $149,999 / / $150,000 or more
(PURCHASES MADE WITHIN THE LAST 90 DAYS WILL BE APPLIED TOWARDS LOI AMOUNT)
- ------------------------------------------------------------------ 8. TELEPHONE
REDEMPTIONS
If you do not want telephone redemption privileges, check here. / /
I (we) authorize The Amerindo Funds and its agents to act upon instructions,
from shareholder or dealer of record, received by telephone or letter, to have
amounts wired to my (our) bank account designated below or mailed to the address
of record established for this account. I (we) ratify any such instructions. If
you will be utilizing the bank wiring option, please attach a voided check from
your bank account and complete the information below.
- --------------------------------------------------------------------------------
BANK
NAME STREET CITY STATE ZIP CODE
- --------------------------------------------------------------------------------
ABA ROUTING NUMBER ACCOUNT NAME ACCOUNT NUMBER
- --------------------------------------------------------------------------------
9. SIGNATURE & CERTIFICATION FOR THE IRS (US INVESTORS ONLY)
Each of the undersigned has the authority and legal capacity to purchase mutual
fund shares, each is of legal age in their state and believes each investment is
suitable for themselves. Each of the undersigned has received and read the
Prospectus and agrees to its terms.
CERTIFICATION - UNDER PENALTIES OF PERJURY, I CERTIFY THAT:
(1) The number shown on this form is my correct taxpayer identification number
(or I am waiting for a number to be issued to me), and (2) I am not subject to
backup withholding because: (a) I am exempt from backup withholding, or (b) I
have not been notified by the Internal Revenue Service (IRS) that I am subject
to backup withholding as a result of a failure to report all interest or
dividends, or (c) the IRS has notified me that I am no longer subject to backup
withholding.
CERTIFICATION INSTRUCTIONS - you must cross out item (2) above if you have been
notified by the IRS that you are currently subject to backup withholding because
of underreporting interest or dividends on your tax return.
The Internal Revenue Service does not require your consent to any provision of
this document other than the certifications required to avoid backup
withholding.
- --------------------------------------------------------------------- SIGNATURE
SIGNATURE DATE
* If joint account, all tenants must sign ** If corporate account or other legal
entity, authorized person must sign in capacity
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<PAGE>
(This page has been left blank intentionally.)
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<PAGE>
AMERINDO TECHNOLOGY FUND
- -------------------------------------------------------------------------------
STATEMENT OF ADDITIONAL INFORMATION
May 6, 1997
- -------------------------------------------------------------------------------
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 May 6, 1997 (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 at 399 Park Avenue, 18th Floor, New York, New York 10022. This Statement of
Additional Information is incorporated by reference into the Prospectus in its
entirety.
THE FUND'S CLASS A SHARES ARE NOT CURRENTLY BEING OFFERED FOR SALE
C/M: 12034.0001 338027.12
<PAGE>
TABLE OF CONTENTS
PAGE
THE FUND....................................................................1
INVESTMENT OBJECTIVE, POLICIES AND RESTRICTIONS.............................1
DESCRIPTION OF THE FUND'S INVESTMENT SECURITIES AND DERIVATIVES.............1
The Technology and Science Areas..........................................1
Foreign Securities........................................................2
U.S. Government Obligations...............................................2
Repurchase Agreements.....................................................3
Hedging Transactions......................................................4
Options Transactions......................................................4
Lending of Securities.....................................................4
Variable-Amount Master Demand Notes.......................................5
INVESTMENT RESTRICTIONS.....................................................6
Percentage Restrictions...................................................8
MANAGEMENT OF THE FUND......................................................8
Investment Adviser.......................................................10
Adviser's Fees...........................................................11
Expense Limitation.......................................................11
Administrator............................................................11
Administrator's Fees.....................................................12
Custodian, Transfer Agent and Dividend Agent.............................12
TAXES......................................................................13
PURCHASE AND REDEMPTION....................................................15
DIVIDENDS AND DISTRIBUTIONS................................................16
NET ASSET VALUE............................................................16
COMPUTATION OF YIELD AND PERFORMANCE INFORMATION...........................16
Computation of Total Return..............................................17
DESCRIPTION OF COMMON STOCK................................................17
SHAREHOLDER SERVICING AND DISTRIBUTION PLAN................................18
BROKERAGE AND PORTFOLIO TURNOVER...........................................20
Brokerage................................................................20
Portfolio Turnover.......................................................21
COUNSEL AND INDEPENDENT AUDITORS...........................................21
FINANCIAL STATEMENTS.......................................................22
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<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 two classes of shares to
investors -- Class A and Class D shares (a "Class" or the "Classes"). 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 IS
ALSO DESIGNED AS A SPECIALIZED INVESTMENT VEHICLE AND IS NOT INTENDED TO BE USED
BY AN INVESTOR AS A COMPLETE INVESTMENT PROGRAM. 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 technology companies. Technology companies are those companies with
primary business operations in either the technology or science areas. 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 AREAS. The Adviser believes that because of rapid
advances in technology and science, an investment in companies with business
operations in these areas 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, medical devices and
biotechnology. 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 areas have exhibited and continue to exhibit rapid
growth, both through increasing demand for existing products and services and
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<PAGE>
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 its 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 Fund will not purchase
stocks of companies during their initial public offering or during an additional
public offering of the same security. The Adviser anticipates, however, that a
significant portion of the Fund's holdings will be invested in newly-issued
securities being sold in the secondary market.
Companies in the rapidly changing fields of technology and science 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 and science areas 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 and science
areas may be subject to greater governmental regulation than many other areas
and changes in governmental policies and the need for regulatory approvals may
have a material adverse effect on these areas. Additionally, companies in these
areas 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
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<PAGE>
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 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
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<PAGE>
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.
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
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<PAGE>
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.
VARIABLE-AMOUNT MASTER DEMAND NOTES. The Fund may purchase variable amount
master demand notes ("VANs"). VANs are debt obligations that provide for a
periodic adjustment in the interest rate paid on the instrument and permit the
holder to demand payment of the unpaid principal balance plus accrued interest
at specified intervals upon a specified number of days' notice either from the
issuer or by drawing on a bank letter of credit, a guarantee, insurance or other
credit facility issued with respect to such instrument.
The VANs in which the Fund may invest are payable on not more than seven
calendar days' notice either on demand or at specified intervals not exceeding
one year depending upon the terms of the instrument. The terms of the
instruments provide that interest rates are adjustable at intervals ranging from
daily to up to one year and their adjustments are based upon the prime rate of a
bank or other appropriate interest rate adjustment index as provided in the
respective instruments. The Fund will decide which variable rate demand
instruments it will purchase in accordance with procedures prescribed by its
Board of Directors to minimize credit risks.
The VANs that the Fund may invest in include participation certificates
purchased by the Fund from banks, insurance companies or other financial
institutions in fixed or variable rate, or taxable debt obligations (VANs) owned
by such institutions or affiliated organizations. A participation certificate
gives the Fund an undivided interest in the obligation in the proportion that
the Fund's participation interest bears to the total principal amount of the
obligation and provides the demand repurchase feature described below. Where the
institution issuing the participation does not meet the Fund's high quality
standards, the participation is backed by an irrevocable letter of credit or
guaranty of a bank (which may be a bank issuing a confirming letter of credit,
or a bank serving as agent of the issuing bank with respect to the possible
repurchase of the certificate of participation or a bank serving as agent of the
issuer with respect to the possible repurchase of the issue) or insurance policy
of an insurance company that the Board of Directors of the Fund has determined
meets the prescribed quality standards for the Fund. The Fund has the right to
sell the participation certificate back to the institution and, where
applicable, draw on the letter of credit, guarantee or insurance after no more
than 30 days' notice either on demand or at specified intervals not exceeding
397 days (depending on the terms of the participation), for all or any part of
the full principal amount of the Fund's participation interest in the security,
plus accrued interest. The Fund intends to exercise the demand only (1) upon a
default under the terms of the bond documents, (2) as needed to provide
liquidity to the Fund in order to make redemptions of the Fund's shares, or (3)
to maintain a high quality investment portfolio. The institutions issuing the
participation certificates will retain a service and letter of credit fee (where
applicable) and a fee for providing the demand repurchase feature, in an amount
equal to the excess of the interest paid on the instruments over the negotiated
yield at which the participations were purchased by the Fund. The total fees
generally range from 5% to 15% of the applicable prime rate* or other interest
rate index.
- --------
* The "prime rate" is generally the rate charged by a bank to its most
creditworthy customers for short term loans. The prime rate of a particular
bank may differ from other banks and will be the rate announced by each
bank on a particular day. Changes in the prime rate may occur with great
frequency and generally become effective on the date announced.
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<PAGE>
With respect to insurance, the Fund will attempt to have the issuer of the
participation certificate bear the cost of the insurance, although the Fund
retains the option to purchase insurance if necessary, in which case the cost of
insurance will be an expense of the Fund subject to the expense limitation on
investment company expenses prescribed by any state in which the Fund's shares
are qualified for sale. The Adviser has been instructed by the Fund's Board of
Directors to continually monitor the pricing, quality and liquidity of the
variable rate demand instruments held by the Fund, including the participation
certificates, on the basis of published financial information and reports of the
rating agencies and other bank analytical services to which the Fund may
subscribe. Although these instruments may be sold by the Fund, the Fund intends
to hold them until maturity, except under the circumstances stated above.
While the value of the underlying variable rate demand instruments may change
with changes in interest rates generally, the variable rate nature of the
underlying variable rate demand instruments should minimize changes in value of
the instruments. Accordingly, as interest rates decrease or increase, the
potential for capital appreciation and the risk of potential capital
depreciation is less than would be the case with a portfolio of fixed income
securities. The Fund may contain VANs on which stated minimum or maximum rates,
or maximum rates set by state law limit the degree to which interest on such
VANs may fluctuate; to the extent it does, increases or decreases in value may
be somewhat greater than would be the case without such limits. In the event
that interest rates increased so that the variable rate exceeded the fixed-rate
on the obligations, the obligations could no longer be valued at par and this
may cause the Fund to take corrective action, including the elimination of the
instruments. Because the adjustment of interest rates on the VANs is made in
relation to movements of the applicable banks' "prime rate", or other interest
rate adjustment index, the VANs are not comparable to long-term fixed-rate
securities. Accordingly, interest rates on the VANs may be higher or lower than
current market rates for fixed-rate obligations or obligations of comparable
quality with similar maturities.
For purposes of determining whether a VAN held by a Fund matures within 397 days
from the date of its acquisition, the maturity of the instrument will be deemed
to be the longer of (1) the period required before the Fund is entitled to
receive payment of the principal amount of the instrument or (2) the period
remaining until the instrument's next interest rate adjustment. If a variable
rate demand instrument ceases to meet the investment criteria of the Fund, it
will be sold in the market or through exercise of the repurchase demand.
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 one-third 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
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<PAGE>
borrowing was made. While borrowings exceed 5% of the value of the Fund's
total assets, the Fund will not purchase additional securities. 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 net assets and only to secure
borrowings for temporary or emergency purposes.
(4) Sell securities short, except short sales "against-the-box," 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
permitted in the Prospectus or this Statement of Additional Information or,
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."
(9) Invest more than 25% of its assets in the securities of "issuers" in any
single industry, except in the technology and science areas as set forth
under "Investment Objective and Policies" in the Prospectus, provided also
that 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.
-7-
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<PAGE>
PERCENTAGE RESTRICTIONS. Any investment restrictions herein which involve a
maximum percentage of securities or assets, other than the restriction that the
Fund may not purchase additional securities while borrowings exceed 5% of the
value of the Fund's total assets, shall not be considered to be violated if the
change in the percentage holding results from changes in the value of the Fund's
securities. Investment restrictions that involve a maximum percentage of
securities or assets will be considered to be violated, however, if an excess
over the percentage occurs immediately after, and is caused by, an acquisition
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, as amended) of the Fund.
Unless otherwise indicated, the address of each director and officer is 399 Park
Avenue, New York, New York 10022.
<TABLE>
<CAPTION>
OFFICERS AND DIRECTORS OF THE FUND
<S> <C>
*ALBERTO W. VILAR Mr. Vilar is Chairman of the Board of
Amerindo Investment Advisors Inc. Directors and Chief Executive Officer of
One Embarcadero the Fund. He began his career with
Suite 2300 Citibank N.A. in New York in 1964 and
San Francisco, CA 94111 worked there as an International Credit
399 Park Avenue Officer until 1967. From 1967 to 1971,
18th Floor he served as Vice President, Portfolio
New York, NY 10022 Manager and Manager of the Investment
(55) 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
Advisors (U.K.) Limited and Amerindo
Investment Advisors, Inc. (Panama) in
1979 and has served since then as a
Principal Portfolio Manager. He 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. He
has been a Chartered Financial Analyst
since 1975.
</TABLE>
- --------
* "Interested person" of the Fund, as defined in the Investment Company Act.
-8-
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<PAGE>
<TABLE>
<S> <C>
*DR. GARY A. TANAKA Dr. Tanaka is Director and President of
Amerindo Investment Advisors Inc. the Fund. He served as a Portfolio
43 Upper Grosvenor Street Manager for Crocker Bank in San
London, England W1X9PG Francisco from 1971 to 1977, and as a
(51) 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 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.
DR. JOHN RUTLEDGE Dr. Rutledge is Director of the Fund.
Rutledge & Company, Inc. He also is Chairman of Rutledge &
One Greenwich Office Park Company, Inc., a merchant banking firm,
Greenwich, CT 06831 since 1991 and serves as a director of
(47) Earle M. Jorgensen Company, Lazard
Freres Funds, Fluidrive,
Inc., General Medical
Corporation, Medical
Specialties Group,
United Refrigerated
Services, Inc. and
Utenduhl Capital
Partners and is a
special advisor to Kelso
& Companies, Inc. He is
the author of books and
investment publications,
writes a monthly column
in Forbes Magazine and
is a frequent
contributor to
periodicals.
JUDE T. WANNISKI Mr. Wanniski is a Director of the Fund.
Polyconomics, Inc. He also has been president of
86 Maple Avenue Polyconomics, Inc. since 1978 and serves
Morristown, NJ 07960 as a director for Repap Enterprises Inc.
(59)
SARAH L. GORDON-WILD Ms. Gordon-Wild is the Vice President of
Amerindo Investment Advisors Inc. and Secretary to the Fund.
399 Park Avenue She has been a biotechnology analyst
New York, NY 10022 with Amerindo Investment Advisors Inc.
(37) since March 1990.
DANA E. SMITH Ms. Smith is the Vice President of and
Amerindo Investment Advisors Inc. Treasurer to the Fund. She has been the
399 Park Avenue Compliance Officer of Amerindo
New York, NY 10022 Investment Advisors Inc. since April
(37) 1993. From December 1991 to March 1993,
she was a Mutual Fund Marketing
Associate at Lazard Freres Asset
Management and an officer of The Lazard
Funds, Inc.
</TABLE>
- --------
* "Interested person" of the Fund, as defined in the Investment Company Act.
-9-
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<PAGE>
<TABLE>
<S> <C>
ANTHONY CIULLA Mr. Ciulla is the Vice President of the
Amerindo Investment Advisors Inc. Fund. He has been the Senior Trader of
One Embarcadero Amerindo Investment Advisers Inc. since
Suite 2300 October 1, 1990.
San Francisco, CA 94111
(64)
</TABLE>
<TABLE>
<CAPTION>
COMPENSATION TABLE
(ESTIMATED FOR THE YEAR ENDED APRIL 30, 1998)
<S> <C> <C> <C> <C>
Alberto W. Vilar $ 0 $ 0 $ 0 $ 0
Director
Dr. Gary A. Tanaka 0 0 0 0
Director
Dr. John Rutledge 30,000 0 0 30,000
Director
Jude T. Wanniski 30,000 0 0 30,000
Director
</TABLE>
Each Director who is not an interested person of the Fund receives a base annual
fee of $25,000 which is paid by the Fund, plus $1,250 for each meeting attended.
INVESTMENT ADVISER. Amerindo Investment Advisors Inc., a registered investment
adviser, is a California corporation, with its principal office located at One
Embarcadero, Suite 2300, San Francisco, California 94111. 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 on
behalf of each Class. 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 May 14, 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, as amended) of the Fund or the Adviser.
The Advisory Agreement has a term which extends to July 30, 1998 and may be
continued in force thereafter for successive twelve-month periods beginning each
July 31, 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.
-10-
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<PAGE>
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 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 an annual advisory fee paid monthly equal to
1.50% of the Fund's average daily net assets. 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.
VOLUNTARY EXPENSE SUBSIDIZATION. 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 any such
voluntary assumption of certain expenses by the Adviser, 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 American Data Services, Inc.
(the "Administrator"), which has its principal office at 24 West Carver Street,
Huntington, New York 11743, and is primarily in the business of providing
administrative, fund accounting and stock transfer services to retail and
institutional mutual funds through its offices in New York, Denver and Bermuda.
The Administrator also provides turnkey software system solutions to several
institutional mutual fund groups and approximately $13 billion are processed
through the Administrator's systems annually.
Pursuant to an Administrative Service 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
-11-
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<PAGE>
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.
The Administrative Service Agreement is terminable by the Board of Directors of
the Fund or the Administrator on sixty days' written notice and may be assigned
provided the non-assigning party provides prior written consent. 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 Service 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; (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; and (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.
The Administrator, pursuant to the Fund Accounting Service Agreement, provides
the Fund with all accounting services, including, without limitation: (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; (v) calculation of yield and total return
for the Fund; (vi) 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; and (vii) monitoring and evaluating daily income
and expense accruals, and sales and redemptions of shares of the Fund.
ADMINISTRATOR'S FEES. For the services rendered to the Fund by the
Administrator, the Fund pays the Administrator a monthly fee based on the Fund's
average net assets. The Fund also pays the Administrator for any out-of-pocket
expenses.
In return for providing the Fund with all accounting related services, the Fund
pays the Administrator a monthly fee based on the Fund's average net assets,
plus any out-of-pocket expenses for such services.
CUSTODIAN, TRANSFER AGENT AND DIVIDEND AGENT. The Northern Trust Company 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.
American Data Services, Inc., the Fund's Administrator, also acts as the Fund's
transfer and dividend agent.
-12-
C/M: 12034.0001 338027.12
<PAGE>
FIVE PERCENT SHAREHOLDERS. As of April 21, 1997, Antar & Co., c/o Legacy Trust
Co., P.O. Box 1471, Houston, Texas 77251-1471, owned beneficially 290,647 shares
(5.8%) of the Fund.
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 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 company taxable 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 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. 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
-13-
C/M: 12034.0001 338027.12
<PAGE>
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 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'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
-14-
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<PAGE>
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. 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
Until such time as ADS Distributors, Inc. ("ADS"), an affiliate of the
Administrator, has entered into a distribution agreement with the Fund to serve
as distributor, which is expected to occur on or about May 15, 1997, the Fund
will be its own issuer. Investors may open accounts in the Fund through the
Distributor for the Fund. It is expected that pursuant to its distribution
agreement with the Fund, for nominal consideration and as agent for the Fund,
ADS 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 Class A may be purchased at the net asset value per share next
determined, plus any applicable sales load, after receipt of an order by the
Fund's transfer agent in proper form with accompanying check or other bank wire
payment arrangements satisfactory to the Fund. Shares of Class D are sold
without an initial sales load. Class A shares are sold subject to an initial
sales load of up to 3.00%. The Fund's minimum initial investment for Class A
shares is $25,000 and the minimum subsequent investment for Class A Shares is
$2,500. The minimum initial investment for Class D shares is $150,000 and the
minimum subsequent investment for Class D shares is $15,000.
Shareholders that purchase Class D shares during the period that the Fund is not
offering Class A shares for sale will remain Class D shareholders after the date
that Class A shares are offered for sale. Investors who purchase Class D shares
during such period are not required to meet the $150,000 minimum balance
requirement but will be required to maintain a minimum balance of $25,000.
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 3.00% fee on the redemption of shares held for less than one
year. These redemption fees are assessed against net assets and will be retained
by the Fund. The redemption fee will be applied on redemptions of each
investment made by a shareholder that does not remain in the Fund for a one-year
period from the date of purchase.
The Fund reserves the right to redeem, after 60 days' written notice, shares in
accounts that fall below the minimum balance by reason of redemption and return
the
-15-
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<PAGE>
proceeds to investors. The investors may restore and maintain a minimum balance
during the notice period.
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. 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 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 AND PERFORMANCE INFORMATION
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).
-16-
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<PAGE>
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
$1000 payment made at the beginning of the
1-, 5- or 10-year periods at the end of the
1-, 5-or 10-year periods (or fractions
thereof).
Because the Fund has not had a registration in effect for 1, 5 or 10 years, the
period during which the registration has been effective shall be substituted.
Yield information may be useful for reviewing the performance of the Fund and
for providing a basis for comparison with other investment alternatives.
However, unlike bank deposits or other investments which pay a fixed yield for a
stated period of time, the Fund's yield does fluctuate, and this should be
considered when reviewing performance or making comparisons.
From time to time evaluations of performance of the Fund made by independent
sources may be used in advertisements. These sources may include Lipper
Analytical Services, Wiesenberger Investment Company Service, Donoghue's Money
Fund Report, Barron's, Business Week, Changing Times, Financial World, Forbes,
Fortune, Money, Personal Investor, Bank Rate Monitor, and The Wall Street
Journal. From time to time evaluations of performance of the Adviser made by
independent sources may be used in advertisements of the Fund.
DESCRIPTION OF COMMON STOCK
The Fund was incorporated in the State of Maryland on February 6, 1996. The
authorized capital stock of the Fund consists of one billion shares of stock
having a par value of one-tenth of one cent ($.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 two Classes. Shares of any class or series will have identical
voting rights, except where, by law, certain matters must be approved by a
majority of the shares of the affected class or series. Each share of any class
or series of shares when issued has equal dividend, distribution, liquidation
and voting rights within the class or series for which it was issued, and each
fractional share has those rights
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C/M: 12034.0001 338027.12
<PAGE>
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
Fund's 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 Class of the Fund will compensate the Distributor or the
Adviser 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 shares of
either Class of shares of the Fund for providing servicing to their clients
("shareholder servicing"), which is subject to a maximum of 0.25% per annum of
each Class' average daily net assets. The Plan also provides that the
Distributor is also paid a fee equal to 0.25% of the Class A 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
-18-
C/M: 12034.0001 338027.12
<PAGE>
written agreements and whose clients are Fund shareholders (each a
"broker-dealer") for providing distribution assistance and promotional support
to the Fund. Fees paid under the Plan may not be waived for individual
shareholders.
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 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 quarterly and year-end statements and confirmations within five business
days after activity in the account; transmit to shareholders of each Class proxy
statements, annual reports, updated prospectuses and other communications;
receive, tabulate and transmit 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 form of distribution
agreement (expected to be entered into between the Fund and ADS) each provide
that the Adviser and ADS 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 ADS or the
Adviser has entered into written agreements, for performing shareholder
servicing and related administrative functions of each Class; to compensate
certain financial intermediaries for providing assistance in distributing 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 ADS also may be used for purposes of (ii) or (iii) above.
ADS 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 ADS 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. It is the Fund's position, however,
that banks are not prohibited from acting in other capacities for investment
companies,
-19-
C/M: 12034.0001 338027.12
<PAGE>
such as providing administrative and shareholder account maintenance services
and receiving compensation from the distributor for providing such services.
This is an unsettled area of the law, however, 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.
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.
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 NASD, 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
-20-
C/M: 12034.0001 338027.12
<PAGE>
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
same security, the transactions will 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.
In addition to managing the assets of the Fund, the Adviser manages assets on a
discretionary basis for other clients and, as a result, the Adviser may effect
transactions in such clients' accounts in securities in which the Fund currently
holds or, in the near future may hold, a position. The Adviser makes the
determination to purchase or sell a security based on numerous factors,
including those that may be particular to one or more of its clients. Therefore,
it is possible that the Adviser will effect transactions in certain securities
for select clients, which may or may not include the Fund, that it may not deem,
in its sole discretion, as being appropriate for other clients, which may or may
not include the Fund.
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 low. 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. Morrison, Brown, Argiz & Co., P.A., 9795 South Dixie Highway, Miami,
Florida 33156, have been selected as auditors for the Fund.
-21-
C/M: 12034.0001 338027.12
<PAGE>
FINANCIAL STATEMENTS
The financial statements for the year ended December 31, 1996 are available,
without charge, upon request. Shareholders will receive Semi-Annual and Annual
Reports from the Fund. The annual financial statements are audited by the Fund's
independent financial accountants. Copies are available, without charge, upon
request.
-22-
C/M: 12034.0001 338027.12
<PAGE>
PART C - OTHER INFORMATION
Item 24. FINANCIAL STATEMENTS AND EXHIBITS.
* (A) FINANCIAL STATEMENTS
Included in Prospectus:
(1) Expense Summary
(2) Selected Financial Information
Included in Statement of Additional Information:
None
Included in Part C:
Annual Report to Shareholders dated December 31, 1996,
including the Report of Independent Accountants
(B) EXHIBITS
* (1) Articles of Incorporation of the Registrant.
* (2) By-Laws of the Registrant.
(3) Not applicable.
(4) Not applicable.
** (5) Form of Investment Advisory Agreement.
+ (6) Form of Distribution Agreement.
(7) Not applicable.
** (8) Form of Custody Agreement.
+ (9) Administration Service Agreement.
+ (9.1) Transfer Agency and Service Agreement.
+ (9.2) Fund Accounting Service 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 Morrison, Brown, Argiz & Company,
certified public accountants.
+ (12) Annual Report to Shareholders dated December 31,
1996, including the Report of Independent
Accountants.
** (13) Subscription Letter.
(14) Not Applicable.
** (15) Distribution and Service Plan.
- --------
* Filed as an exhibit to the Registrant's Registration Statement,
333-00767, filed on February 7, 1996 and incorporated herein by
reference.
** Filed as an exhibit to Pre-Effective Agreement No. 1 to the
Registrant's Registration Statement, 333-00767, filed on May 23, 1996
and incorporated herein by reference.
+ Filed herein.
-4-
C/M: 12034.0001 450218.1
<PAGE>
** (15.1)Shareholder Servicing Agreements.
(16) Not applicable.
+ (17) Financial Data Schedule (for EDGAR filing only)
** (18) Multi-Class Plan pursuant to Rule 18f-3 under the 1940
Act.
** (19) Powers of Attorney.
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 April 21, 1997
--------------- -----------------------
Shares of Common Stock 680
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
- --------
** Filed as an exhibit to Pre-Effective Agreement No. 1 to the
Registrant's Registration Statement, 333-00767, filed on May 23, 2996
and incorporated herein by reference.
-5-
C/M: 12034.0001 450218.1
<PAGE>
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 the proposed Distribution Agreement relating to the
securities being offered hereby, the Registrant agrees to
indemnify and hold harmless any person who controls the Fund's
distributor, ADS Distributors, Inc., within the meaning of the
Securities Act of 1933, against certain types of civil
liabilities arising in connection with the Registration Statement
or Prospectus.
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. [Subject to formalizing the distribution
agreement with the Fund]
(a) ADS Distributors, Inc., located at 101 Main Street,
Safety Harbor, Florida 34695 is the Registrant's Distributor.
(b) The following are the directors and officers of ADS
Distributors, Inc. The principal business address of each of these persons is
101 Main Street, Safety Harbor, Florida 34695:
<TABLE>
<CAPTION>
Positions and Offices Positions and Offices
Name With the Distributor With Registrant
<S> <C> <C>
Michael G. Rogan President None
Alan L. Rosenberg Vice President/Secretary None
Michael Miola Treasurer Assistant Secretary
</TABLE>
(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, in general, are maintained in the physical possession of Registrant
at Amerindo Funds Inc., 399 Park Avenue, New York, New York 10022; American Data
Services, Inc., 24 West Carver Street, Huntington, New York 11743, the
Registrant's transfer and accounting agent will maintain physical possession of
Registrant's shareholder and fund accounting records; and The Northern Trust
Company, the custodian will maintain physical possession of the Registrant's
custodial records.
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.
(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.
C/M: 12034.0001 450218.1
<PAGE>
(d) The Registrant undertakes (although not required to hold
annual shareholder meetings) if requested to do so by
the holders of at least 10% of its outstanding shares,
to call a meeting of shareholders for the purpose of
voting upon the question of removal of a director or
directors and to assist in communications with other
shareholders as required by Section 16(c).
C/M: 12034.0001 450218.1
<PAGE>
Exhibit Index
(B) EXHIBITS
* (1) Articles of Incorporation of the Registrant.
* (2) By-Laws of the Registrant.
(3) Not applicable.
(4) Not applicable.
** (5) Form of Investment Advisory Agreement.
+ (6) Form of Distribution Agreement.
(7) Not applicable.
** (8) Form of Custody Agreement.
+ (9) Administration Service Agreement.
+ (9.1) Transfer Agency and Service Agreement.
+ (9.2) Fund Accounting Service 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 Morrison, Brown, Argiz & Company,
certified public accountants.
+ (12) Annual Report to Shareholders dated December 31,
1996, including the Report of Independent
Accountants.
** (13) Subscription Letter.
(14) Not Applicable.
** (15) Distribution and Service Plan.
** (15.1) Shareholder Servicing Agreements.
(16) Not applicable.
(17) Financial Data Schedule (for EDGAR filing only).
** (18) Multi-Class Plan pursuant to Rule 18f-3 under the
1940 Act.
** (19) Powers of Attorney.
- --------
* Filed as an exhibit to the Registrant's Registration Statement,
333-00767, filed on February 7, 1996 and incorporated herein by
reference.
** Filed as an exhibit to Pre-Effective Agreement No. 1 to the
Registrant's Registration Statement, 333-00767, filed on May 23, 1996
and incorporated herein by reference.
+ Filed herein.
C/M: 12034.0001 450218.1
<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
Post-Effective Amendment No. 1 to its Registration Statement to be signed on its
behalf by the undersigned, the 24th day of April, 1997.
AMERINDO FUNDS INC.
By:/s/ ALBERTO W. VILAR
Alberto W. Vilar, Chairman
and Chief Executive Officer
Pursuant to the requirements of the Securities Act of 1933,
this Post-Effective Amendment No. 1 to its Registration Statement has been
signed below by the following persons in the capacities indicated below on April
24, 1997.
<TABLE>
<CAPTION>
Signature Title Date
<S> <C> <C>
(1) Principal Executive Officers:
By:/s/ ALBERTO W. VILAR Chairman and April 24, 1997
Alberto W. Vilar Chief Executive
Officer
By:/s/ DANA E. SMITH Vice President April 24, 1997
Dana E. Smith and Treasurer
(2) Majority of Directors
Alberto W. Vilar Director April 24, 1997
By: /s/ ALBERTO W. VILAR
Gary A. Tanaka Director April 24, 1997
By: /s/ GARY A. TANAKA
John Rutledge Director April 24, 1997
By: /s/ JOHN RUTLEDGE
Jude T. Wanniski Director April 24, 1997
By: /s/ JUDE T. WANNISKI
</TABLE>
C/M: 12034.0001 450218.1
Exhibit 6
C/M 12034.0001 489335.1
<PAGE>
FORM OF
DISTRIBUTION AGREEMENT
AMERINDO TECHNOLOGY FUND
A series of Amerindo Funds Inc. (the "Fund")
One Embarcadero
Suite 2300
San Francisco, California 94111
May __, 1997
ADS Distributors, Inc.
101 Main Street
Safety Harbor, Florida 34695
Gentlemen:
1. In consideration of the agreements on your part herein contained and of
the payment by us to you of a front-end sales load as described in our most
current Prospectus as in effect from time to time and of a compensatory
asset-based sales charges in an amount not to exceed 0.25% per annum of the
Fund's common stock designated Class A shares' (the "Class A Shares") average
daily net assets and on the terms and conditions set forth herein, we have
agreed that you shall be, for the period of this agreement, a distributor, as
our agent, for the unsold portion of the Class A Shares, $.001 par value per
share, as may be effectively registered from time-to-time under the Securities
Act of 1933, as amended (the "1933 Act"). This Agreement is being entered into
and the payment of the asset-based sales charges are being made to you pursuant
to the Distribution and Service Plan (the "Plan") adopted by us on behalf of the
Fund in accordance with Rule 12b-l under the Investment Company Act of 1940, as
amended (the "1940 Act").
2. You will make payments from time-to-time from your fees payable
hereunder and your own resources and past profits for the following purposes:
(i) to compensate certain financial intermediaries with whom you have
written contracts for providing assistance in distributing the Class A
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
364788.1
<PAGE>
promotional activities, including salaries and/or commissions of sales
personnel in connection with the distribution of the Class A shares.
3. We hereby agree that you will act as our agent, and hereby appoint you
our agent, to offer, and to solicit offers to subscribe to, the unsold balance
of the Class A Shares of the Fund represented by the Fund as shall then be
effectively registered under the 1933 Act. You shall have the right, as
principal, to purchase Class A Shares of the Fund represented by the Fund at its
respective net asset value and to sell such shares to the public against orders
therefor at the applicable public offering price, as defined below. You shall
also have the right, as principal, to sell shares to dealers against orders
therefor at the public offering price less a concession determined in accordance
with the terms of the Fund's current Prospectus. The public offering price shall
be the net asset value of the Class A Shares, plus any applicable sales charges,
all as set forth in the Fund's current Prospectus and Statement of Additional
Information.
4. All subscriptions for Class A Shares obtained by you shall be directed
to us for acceptance and shall not be binding on us until accepted by us. You
shall have no authority to make binding subscriptions on our behalf. We reserve
the right to sell Class A Shares through other distributors or directly to
investors through subscriptions received by us at our principal office. The
right given to you under this Agreement shall not apply to any Class A Shares
issued in connection with (a) the merger or consolidation of any other
investment company with us, (b) our acquisition by purchase or otherwise of all
or substantially all of the assets or stock of any other investment company, or
(c) the reinvestment in shares of our common stock by our stockholders of
dividends or other distributions or any other offering by us of securities to
our stockholders.
5. You will use your best efforts to obtain subscriptions to the Class A
Shares upon the terms and conditions contained herein and in our Prospectus, as
in effect from time-to-time. You will send to us promptly all subscriptions
placed with you. We shall furnish you from time-to-time, for use in connection
with the offering of the Class A Shares, such other information with respect to
us and the Class A Shares as you may reasonably request. We shall supply you
with such copies of our Registration Statement and Prospectus, as in effect from
time-to-time, as you may request. Except as we may authorize in advance and in
writing, you are not authorized to give any information or to make any
representation that is not contained in the Registration Statement or
Prospectus, as then in effect. You may use employees, agents and other persons,
at your cost and expense, to assist you in carrying out your obligations
hereunder, but no such employee, agent or other person shall be deemed to be our
agent or have any rights under this Agreement. You may sell our Class A Shares
to or through qualified brokers, dealers and financial institutions under
selling and servicing agreements, provided that no dealer, financial institution
or other person shall be appointed or authorized to act as our agent without our
prior written consent. We acknowledge that you as Distributor to the Fund in
connection with the Fund's Class A Shares, pursuant to the Distribution and
Service Plan with the Fund, may arrange for broker-dealers whose customers or
clients are Fund shareholders (each a "Broker-Dealer") to enter
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364788.1
<PAGE>
into agreements with you as the Distributor pursuant to which the Broker-Dealers
will be compensated directly by the Distributor for functions not performed by
the Adviser, the Adviser's Shareholder Servicing Agents, the Distributor, the
Administrator or the Transfer Agent. Such payments will be made only pursuant to
written agreements approved in form and substance by our Board of Directors to
be entered into by the Distributor and the Broker Dealers. It is recognized that
we shall have no obligation or liability to you, the people or entities with
whom you contract or any Broker-Dealer for any such payments under such
agreements with Broker-Dealers. Our obligation is solely to make payments to the
Adviser under both the Advisory Agreement and the Shareholder Servicing
Agreement and to you the Distributor, under this Distribution Agreement. All
sales of our shares effected through you will be made in compliance with all
applicable federal securities laws and regulations and the Constitution, rules
and regulations of the National Association of Securities Dealers, Inc.
6. We reserve the right to suspend the offering of the Class A Shares at
any time, in the absolute discretion of our Board of Directors, and upon notice
of such suspension, you shall cease to offer the Class A Shares hereunder.
7. Both of us will cooperate with each other in taking such action as may
be necessary to qualify the Class A Shares for sale under the securities laws of
such states as we may designate, provided, that you shall not be required to
register as a broker-dealer or file a consent to service of process in any such
state where you are not now so registered. Pursuant to the Advisory Agreement
dated May 14, 1996 between us and the Adviser, we will pay all fees and expenses
of registering the Class A Shares under the 1933 Act and of qualification of the
Class A Shares, and to the extent necessary, our qualification under applicable
state securities laws. You will pay all expenses relating to your broker-dealer
qualification.
8. We represent to you that our Registration Statement and Prospectus have
been carefully prepared to date in conformity with the requirements of the 1933
Act and the 1940 Act and the rules and regulations of the Securities and
Exchange Commission (the "SEC") thereunder. We represent and warrant to you, as
of the date hereof, that our Registration Statement and Prospectus contain all
statements required to be stated therein in accordance with the 1933 Act and the
1940 Act and the SEC's rules and regulations thereunder; that all statements of
fact contained therein are or will be true and correct at the time indicated or
the effective date, as the case may be; and that neither our Registration
Statement nor our Prospectus, when they shall become effective or be authorized
for use, will include an untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary to make the statements
therein not misleading to a purchaser of the Class A Shares. We will from
time-to-time file such amendment or amendments to our Registration Statement and
Prospectus as, in the light of future development, shall, in the opinion of our
counsel, be necessary in order to have our Registration Statement and Prospectus
at all times contain all material facts required to be stated therein or
necessary to make any statements therein not misleading to a purchaser of shares
of our common stock. If we shall not file such amendment or amendments within
fifteen days after our receipt of a
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364788.1
<PAGE>
written request from you to do so, you may, at your option, terminate this
agreement immediately. We will not file any amendment to our Registration
Statement or Prospectus without giving you reasonable notice thereof in advance;
provided, however, that nothing in this agreement shall in any way limit our
right to file such amendments to our Registration Statement or Prospectus, of
whatever character, as we may deem advisable, such right being in all respects
absolute and unconditional. We represent and warrant to you that any amendment
to our Registration Statement or Prospectus hereafter filed by us will be
carefully prepared in conformity within the requirements of the 1933 Act and the
1940 Act and the SEC's rules and regulations thereunder and will, when it
becomes effective, contain all statements required to be stated therein in
accordance with the 1933 Act and the 1940 Act and the SEC's rules and
regulations thereunder; that all statements of fact contained therein will, when
the same shall become effective, be true and correct; and that no such
amendment, when it becomes effective, will include an untrue statement of a
material fact or omit to state a material fact required to be stated therein or
necessary to make the statements therein not misleading to a purchaser of our
shares.
9. We agree to indemnify, defend and hold you, and any person who controls
you within the meaning of Section 15 of the 1933 Act, free and harmless from and
against any and all claims, liabilities and expenses (including the cost of
investigating or defending such claims, demands or liabilities and any counsel
fees incurred in connection therewith) which you or any such controlling person
may incur, under the 1933 Act or the 1940 Act, or under common law or otherwise,
arising out of or based upon any alleged untrue statement of a material fact
contained in our Registration Statement or Prospectus in effect from
time-to-time or arising out of or based upon any alleged omission to state a
material fact required to be stated in either of them or necessary to make the
statements in either of them not misleading, provided, however, that in no event
shall anything herein contained be so construed as to protect you against any
liability to us or our security holders to which you would otherwise be subject
by reason of willful misfeasance, bad faith, or gross negligence in the
performance of your, duties, or by reason of your reckless disregard of your
obligations and duties under this agreement. Our agreement to indemnify you and
any such controlling person is expressly conditioned upon our being notified of
any action brought against you or any such controlling person, such notification
to be given by letter or by telegram addressed to us at our principal office and
sent to us by the person against whom such action is brought within ten days
after the summons or other first legal process shall have been served. The
failure so to notify us of any such action shall not relieve us from any
liability which we may have to the person against whom such action is brought
other than on account of our indemnity agreement contained in this paragraph 9.
We will be entitled to assume the defense of any suit brought to enforce any
such claim, and to retain counsel of good standing chosen by us and approved by
you. In the event we do elect to assume the defense of any such suit and retain
counsel of good standing approved by you, the defendant or defendants in such
suit shall bear the fees and expenses of any additional counsel retained by any
of them; but in case we do not elect to assume the defense of any such suit, or
in case you, in good faith, do not approve of counsel chosen by us, we will
reimburse you or the controlling person or persons named as defendant or
defendants in such
-4-
364788.1
<PAGE>
suit, for the fees and expenses of any counsel retained by you or them. Our
indemnification agreement contained in this paragraph 9 and our representations
and warranties in this Agreement shall remain in full force and effect
regardless of any investigation made by or on behalf of you or any controlling
person and shall survive the sale of any Class A Shares made pursuant to
subscriptions obtained by you. This agreement of indemnity will inure
exclusively to your benefit, to the benefit of your successors and assigns, and
to the benefit of any of your controlling persons and their successors and
assigns. We agree promptly to notify you of the commencement of any litigation
or proceeding against us in connection with the issue and sale of any Class A
Shares.
10. You agree to indemnify, defend and hold us, our several officers and
directors, and any person who controls us within the meaning of Section 15 of
the 1933 Act, free and harmless from and against any and all claims, demands,
liabilities, and expenses (including the cost of investigating or defending such
claims, demands or liabilities and any reasonable counsel fees incurred in
connection therewith) which we, our officers or directors, or any such
controlling person may incur under the 1933 Act or under common law or
otherwise, but only to the extent that such liability or expense incurred by us,
our officers or directors or such controlling person shall arise out of or be
based upon any alleged untrue statement of a material fact contained in
information furnished in writing by you to us for use in our Registration
Statement or Prospectus as in effect from time-to-time, or shall arise out of or
be based upon any alleged omission to state a material fact in connection with
such information required to be stated in the Registration Statement or
Prospectus or necessary to make such information not misleading. Your agreement
to indemnify us, our officers and directors, and any such controlling person is
expressly conditioned upon your being notified of any action brought against us,
our officers or directors or any such controlling person, such notification to
be given by letter or telegram addressed to you at your principal office and
sent to you by the person against whom such action is brought, within ten days
after the summons or other first legal process shall have been served. You shall
have a right to control the defense of such action, with counsel of your own
choosing, satisfactory to us, if such action is based solely upon such alleged
misstatement or omission on your part, and in any other event you and we, our
officers or directors or such controlling person shall each have the right to
participate in the defense or preparation of the defense of any such action. The
failure to notify you of any such action shall not relieve you from any
liability which you may have to us, to our officers or directors, or to such
controlling person other than on account of your indemnity agreement contained
in this paragraph 10.
11. We agree to advise you immediately:
(a) of any request by the SEC for amendments to our Registration
Statement or Prospectus or for additional information,
(b) of the issuance by the SEC of any stop order suspending the
effectiveness of our Registration Statement or Prospectus or the initiation of
any proceedings for that purpose,
-5-
364788.1
<PAGE>
(c) of the happening of any material event which makes untrue any
statement made in our Registration Statement or Prospectus or which requires the
making of a change in either of them in order to make the statements therein not
misleading, and
(d) of all action of the SEC with respect to any amendments to our
Registration Statement or Prospectus.
12. This Agreement will become effective on the date hereof and will remain
in effect thereafter for successive twelve-month periods (computed from each May
1), provided that such continuation is specifically approved at least annually
by vote of our Board of Directors and of a majority of those of our directors
who are not interested persons (as defined in the 1940 Act) and have no direct
or indirect financial interest in the operation of the Plan or in any agreements
related to the Plan, cast in person at a meeting called for the purpose of
voting on this Agreement. In the event that the Distribution and Service Plan is
either terminated or is no longer valid, this Agreement automatically and
immediately terminates. This Agreement may be terminated at any time, without
the payment of any penalty, by vote of a majority of our entire Board of
Directors and by a vote of a majority of our Directors who are not interested
persons (as defined in the 1940 Act) and who have no direct or indirect
financial interest in the operation of the Plan or in any agreement related to
the Plan, or by vote of a majority of our outstanding voting securities, as
defined in the Act, on sixty days' written notice to you, or by you on sixty
days' written notice to us.
13. This Agreement may not be transferred, assigned, sold or in any manner
hypothecated or pledged by you and this Agreement shall terminate automatically
in the event of any such transfer, assignment, sale, hypothecation or pledge by
you. The terms "transfer", "assignment" and "sale" as used in this paragraph
shall have the meanings ascribed thereto by governing law and in applicable
rules or regulations of the SEC thereunder.
14. Except to the extent necessary to perform your obligations hereunder,
nothing herein shall be deemed to limit or restrict your right, or the right of
any of your officers, directors or employees who may also be a director, officer
or employee of ours, or of a person affiliated with us, as defined in the 1940
Act, to engage in any other business or to devote time and attention to the
management or other aspects of any other business, whether of a similar or
dissimilar nature, or to render services of any kind to another corporation,
firm, individual or association.
-6-
364788.1
<PAGE>
If the foregoing is in accordance with your understanding, will you kindly
so indicate by signing and returning to us the enclosed copy hereof.
Very truly yours,
AMERINDO FUNDS INC.,
AMERINDO TECHNOLOGY FUND
By: ------------------------------------
Name:
Title:
Accepted:
May __, 1997
ADS DISTRIBUTORS, INC.
By: ------------------------------
Name:
Title:
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364788.1
<PAGE>
Exhibit 9
C/M 12034.0001 489335.1
<PAGE>
===============================================================================
ADMINISTRATIVE SERVICE AGREEMENT
between
AMERINDO FUNDS, INC.
and
AMERICAN DATA SERVICES, INC.
[GRAPHIC OMITTED]
===============================================================================
<PAGE>
===============================================================================
INDEX
===============================================================================
1. DUTIES OF THE ADMINISTRATOR.............................................3
2. COMPENSATION OF THE ADMINISTRATOR.......................................4
3. RESPONSIBILITY AND INDEMNIFICATION......................................4
4. REPORTS.................................................................5
5. ACTIVITIES OF THE ADMINISTRATOR.........................................5
6. RECORDS.................................................................5
7. CONFIDENTIALITY.........................................................6
8. DURATION AND TERMINATION OF THE AGREEMENT...............................6
9. ASSIGNMENT..............................................................6
10. NEW YORK LAWS TO APPLY.................................................6
11. AMENDMENTS TO THIS AGREEMENT............................................6
12. MERGER OF AGREEMENT.....................................................6
13. NOTICES.................................................................6
SCHEDULE A..................................................................8
(A) ADMINISTRATIVE SERVICE FEE:.............................................8
(B) EXPENSES................................................................8
(C) STATE REGISTRATION (BLUE SKY) SURCHARGE:................................8
(D) SPECIAL REPORTS.........................................................9
(E) SERVICE DEPOSIT.........................................................9
SCHEDULE B.................................................................10
<PAGE>
ADMINISTRATIVE SERVICES AGREEMENT
AGREEMENT made the 25th day of October, 1996, by and between Amerindo Funds,
Inc. on behalf of its series, Amerindo Technology Fund, a Maryland corporation,
(the "Fund") having its principal offices and places of business at One
Embarcadero, Suite 2300, San Francisco, CA 94111 and 399 Park Avenue, New York,
NY 10022 , and American Data Services, Inc., a New York corporation having its
principal office and place of business at 24 West Carver Street., Huntington,
New York 11743 (the "Administrator").
BACKGROUND
WHEREAS, the Fund is a non-diversified open-end management investment
company registered with the United States Securities and Exchange Commission
under the Investment Company Act of 1940, as amended (the "1940 Act"); and
WHEREAS, the Administrator is a corporation experienced in providing
administrative services to mutual funds and possesses facilities sufficient to
provide such services; and
WHEREAS, the Fund desires to avail itself of the experience, assistance and
facilities of the Administrator and to have the Administrator perform for the
Fund certain services appropriate to the operations of the Fund and the
Administrator is willing to furnish such services in accordance with the terms
hereinafter set forth.
TERMS
NOW, THEREFORE, in consideration of the promises and mutual
covenants hereinafter contained, the Fund and the Administrator hereby agree to
the following:
1. DUTIES OF THE ADMINISTRATOR.
The Administrator will provide the Fund with the necessary office space,
communication facilities and personnel to perform the following services for the
Fund:
(a) Monitor all regulatory (1940 Act, IRS and state) and prospectus
restrictions for compliance;
(b) Prepare and coordinate the printing of semi-annual and annual
financial statements, other communications to shareholders, including,
notices, proxy statements and forms of proxy;
(c) Prepare selected management reports for performance and compliance
analyses as agreed upon by the Fund and Administrator from time to
time;
(d) Prepare selected financial data required for directors' meetings as
agreed upon by the Fund and the Administrator from time to time and
coordinate directors meeting agendas with outside legal counsel to the
Fund;
(e) Determine income and capital gains available for distribution and
calculate distributions required to meet regulatory, income, and
excise tax requirements, to be reviewed by the Fund's independent
public accountants;
(f) Prepare the Fund's federal, state, and local tax returns to be
reviewed by the Fund's independent public accountants;
3
<PAGE>
(g) Prepare and maintain the Fund's operating expense budget to determine
proper expense accruals to be charged to the Fund, including the
calculation of contractual expense limitations, expense waivers, and
all Fund disbursements, in order to calculate it's daily net asset
value,;
(h) 1940 ACT filings -
In conjunction with the Fund's outside legal counsel the
Administrator will:
. Prepare the Fund's Form N-SAR reports;
. Update all financial sections of the Fund's Statement of
Additional Information and coordinate its completion;
. Update all financial sections of the Fund's prospectus and
coordinate its completion;
. Update all financial sections of the Fund's proxy statement and
coordinate its completion;
. Prepare an annual update to Fund's 24f-2 filing (if applicable);
(i) Monitor services provided by the Fund's custodian bank as well as any
other service providers to the Fund;
(j) Provide appropriate financial schedules (as requested by the Fund's
independent public accountants or SEC examiners), coordinate the
Fund's annual or SEC audit, and provide office facilities as may be
required;
(k) Attend management and board of directors meetings as requested;
(l) The preparation and filing (filing fee to be paid by the Fund) of
applications and reports as necessary to register or maintain the
Funds registration under the securities or "Blue Sky" laws of the
various states selected by the Fund or its Distributor.
The Administrator shall, for all purposes herein, be deemed to be an independent
contractor and shall, unless otherwise expressly provided or authorized, have no
authority to act for or represent the Fund in any way or otherwise be deemed an
agent of the Fund.
2. COMPENSATION OF THE ADMINISTRATOR.
In consideration of the services to be performed by the Administrator as
set forth herein for each portfolio listed in Schedule B, the Administrator
shall be entitled to receive compensation and reimbursement for all reasonable
out-of-pocket expenses. The Fund agrees to pay the Administrator the fees and
reimbursement of out-of-pocket expenses as set forth in the fee schedule
attached hereto as Schedule A.
3. RESPONSIBILITY AND INDEMNIFICATION.
(a) The Administrator shall be held to the exercise of reasonable care in
carrying out the provisions of the Agreement, but shall be without liability to
the Fund for any action taken or omitted by it in good faith without negligence,
bad faith, willful misconduct or reckless disregard of its duties hereunder. It
shall be entitled to rely upon and may act upon the accounting records and
reports generated by the Fund, advice of the Fund, or of counsel for the Fund
and upon statements of the Fund's independent accountants, and shall be without
liability for any action reasonably taken or omitted pursuant to such records
and reports or advice, provided that such action is not, to the knowledge of the
Administrator, in
4
<PAGE>
violation of applicable federal or state laws or regulations,
and provided further that such action is taken without negligence, bad faith,
willful misconduct or reckless disregard of its duties.
(b) The Administrator shall not be liable to the Fund for any error of
judgment or mistake of law or for any loss arising out of any act or omission by
the Administrator in the performance of its duties hereunder except as
hereinafter set forth. Nothing herein contained shall be construed to protect
the Administrator against any liability to the Fund or its security holders to
which the Administrator shall otherwise be subject by reason of willful
misfeasance, bad faith, negligence in the performance of its duties on behalf of
the Fund, reckless disregard of the Administrator's obligations and duties under
this Agreement or the willful violation of any applicable law.
(c) Except as may otherwise be provided by applicable law, neither the
Administrator nor its stockholders, officers, directors, employees or agents
shall be subject to, and the Fund shall indemnify and hold such persons harmless
from and against, any liability for and any damages, reasonable expenses
(including attorney's fees) or losses incurred by reason of the inaccuracy of
information furnished to the Administrator by the Fund or its authorized agents
or in connection with any error in judgment or mistake of law or any act or
omission in the course of, connected with or arising out of any services to be
rendered hereunder, except by reason of willful misfeasance, bad faith or
negligence in the performance of its duties, by reason of reckless disregard of
the Administrator's obligations and duties under this Agreement or the willful
violation of any applicable law.
4. REPORTS.
(a) The Fund shall provide to the Administrator on a quarterly basis a
report of a duly authorized officer of the Fund representing that all
information furnished to the Administrator during the preceding quarter was
true, complete and correct to the best of its knowledge. The Administrator shall
not be responsible for the accuracy of any information furnished to it by the
Fund, and the Fund shall hold the Administrator harmless in regard to any
liability incurred by reason of the inaccuracy of such information.
(b) The Administrator shall provide to the Board of Directors of the Fund,
on a quarterly basis, a report, in such a form as the Administrator and the Fund
shall from time to time agree, representing that, to its knowledge, the Fund was
in compliance with all requirements of applicable federal and state law,
including without limitation, the rules and regulations of the Securities and
Exchange Commission and the Internal Revenue Service, or specifying any
instances in which the Fund was not so in compliance. Whenever, in the course of
performing its duties under this Agreement, the Administrator determines, on the
basis of information supplied to the Administrator by the Fund, that a violation
of applicable law has occurred, or that, to its knowledge, a possible violation
of applicable law may have occurred or, with the passage of time, could occur,
the Administrator shall promptly notify the Fund and its counsel of such
violation.
5. ACTIVITIES OF THE ADMINISTRATOR.
The Administrator shall be free to render similar services to others so
long as its services hereinunder are not impaired thereby.
6. RECORDS.
The records maintained by the Administrator shall be the property of the
Fund, and shall be made available to the Fund promptly upon request by the Fund
in the form in which such records have been maintained or preserved. The
Administrator agrees to maintain a back-up set of accounts and records of the
Fund (which back-up set shall be updated on at least a weekly basis) at a
location other than that where the original accounts and records are stored. The
Administrator shall, upon approval of the Fund, assist the
5
<PAGE>
Fund's independent auditors, or, any regulatory body, in any requested review of
the Fund's accounts and records. The Administrator shall preserve the records in
its possession (at the expense of the Fund) as required by Rule 31a-1 of the
1940 Act.
7. CONFIDENTIALITY.
The Administrator agrees that it will, on behalf of itself and its officers
and employees, treat all transactions contemplated by this Agreement, and all
other information germane thereto, as confidential and such information shall
not be disclosed to any person except as may be authorized by the Fund.
8. DURATION AND TERMINATION OF THE AGREEMENT.
This Agreement shall become effective as of the date hereof and shall
continue to remain in force, provided however, that both parties to this
Agreement have the option to terminate the Agreement, upon sixty (60) days prior
written notice.
Should the Fund exercise its right to terminate, all reasonable
out-of-pocket expenses associated with the movement of records and material will
be borne by the Fund. Additionally, the Administrator reserves the right to
charge for any other reasonable expenses associated with such termination.
9. ASSIGNMENT.
This Agreement shall extend to and shall be binding upon the parties hereto
and their respective successors and assigns; provided, however, that this
Agreement shall not be assignable by the Fund without the prior written consent
of the Administrator, or by the Administrator without the prior written consent
of the Fund.
10. NEW YORK LAWS TO APPLY
The provisions of this Agreement shall be construed and interpreted in
accordance with the laws of the State of New York as at the time in effect and
the applicable provisions of the 1940 Act. To the extent that the applicable law
of the State of New York, or any of the provisions herein, conflict with the
applicable provisions of the 1940 Act, the latter shall control.
11. AMENDMENTS TO THIS AGREEMENT.
This Agreement may be amended by the parties hereto only if such amendment
is in writing and signed by both parties.
12. MERGER OF AGREEMENT
This Agreement constitutes the entire agreement between the parties hereto
and supersedes any prior agreement with respect to the subject matter hereof
whether oral or written.
13. NOTICES.
All notices and other communications hereunder shall be in writing, shall
be deemed to have been given when delivered in person or by certified mail,
return receipt requested, and shall be given to the following addresses (or such
other addresses as to which notice is given):
6
<PAGE>
To the Fund: To the Administrator:
Ms. Dana Smith Michael Miola
Vice President President
Amerindo Funds, Inc. American Data Services, Inc.
399 Park Avenue 24 West Carver Street
New York, New York 10022 Huntington, New York 11743
With a copy to:
Thomas R. Westle, Esq.
Battle Fowler LLP
75 East 55th Street
New York, New York 10022
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the
day and year first above written.
AMERINDO FUNDS, INC. AMERICAN DATA SERVICES, INC.
By:____________________________ By:__________________________
Dana Smith, Vice President Michael Miola, President
7
<PAGE>
SCHEDULE A
(a) ADMINISTRATIVE SERVICE FEE:
For the services rendered by the Administrator in its capacity as
administrator, as specified in Paragraph 1. DUTIES OF THE ADMINISTRATOR., the
Fund shall pay the Administrator within fifteen (15) days after receipt of an
invoice from the Administrator at the beginning of each month, a fee equal to
the greater of:
NOTE: The following fees are per portfolio serviced.
MINIMUM FEE:
CALCULATED FEE WILL BE BASED UPON PRIOR MONTH AVERAGE NET ASSETS:
(No prorating partial months)
Each Portfolio
Under $10 million ................... $1,500
From $10 million to $20 million...... 1,750
From $20 million on.................. 2,000
OR,
NET ASSET CHARGE:
1/12th of 0.085% (8.5 basis points) of average net assets
of portfolio for month.
(b) EXPENSES.
The Fund shall reimburse the Administrator for any direct out-of-pocket
expenses , exclusive of salaries, advanced by the Administrator in connection
with but not limited to the printing or filing of documents for the Fund,
travel, telephone, quotation services, facsimile transmissions, stationery and
supplies, record storage, postage, telex, and courier charges, incurred in
connection with the performance of its duties hereunder. the Administrator shall
provide the Fund with a monthly invoice of such expenses and the Fund shall
reimburse the Administrator within fifteen (15) days after receipt thereof.
(c) STATE REGISTRATION (BLUE SKY) SURCHARGE:
The fees enumerated in paragraph (a) above include the initial state
registration, renewal and maintenance of registrations (as detailed in Paragraph
1(l) DUTIES OF THE ADMINISTRATOR) for three states. Each additional state
registration requested will be subject to the following fees:
8
<PAGE>
Initial registration ............ $295.00
Registration renewal ............ $150.00
Sales reports (if required) ..... $ 25.00
(d) SPECIAL REPORTS.
All reports and /or analyses requested by the Fund, its auditors, legal
counsel, portfolio manager, or any regulatory agency having jurisdiction over
the Fund, that are not in the normal course of fund administrative activities as
specified in Section 1 of this Agreement shall be subject to an additional
charge, agreed upon in advance, based upon the following rates:
Labor:
Senior staff - $150.00/hr.
Junior staff - $ 75.00/hr.
Computer time - $45.00/hr.
(e) SERVICE DEPOSIT.
The Fund will remit to the Administrator upon execution of this Agreement a
service deposit equal to one (1) month's minimum fee under this Agreement,
computed in accordance with the number of portfolios listed in Schedule B of
this Agreement. The Fund will have the option to have the service deposit
applied to the last month's service fee, or applied to any new contract between
the Fund and the Administrator.
9
<PAGE>
SCHEDULE B
PORTFOLIOS TO BE SERVICED UNDER THIS AGREEMENT:
AMERINDO TECHNOLOGY FUND
10
<PAGE>
Exhibit 9.1
C/M 12034.0001 489335.1
<PAGE>
===============================================================================
TRANSFER AGENCY AND SERVICE AGREEMENT
between
AMERINDO FUNDS, INC.
and
AMERICAN DATA SERVICES, INC.
[GRAPHIC OMITTED]
===============================================================================
<PAGE>
===============================================================================
INDEX
===============================================================================
1. TERMS OF APPOINTMENT; DUTIES OF ADS......................................3
2. FEES AND EXPENSES........................................................4
3. REPRESENTATIONS AND WARRANTIES OF ADS....................................4
4. REPRESENTATIONS AND WARRANTIES OF THE FUND...............................5
5. INDEMNIFICATION..........................................................5
6. COVENANTS OF THE FUND AND ADS............................................6
7. TERMINATION OF AGREEMENT.................................................7
8. ASSIGNMENT...............................................................7
9. AMENDMENT................................................................7
10. NEW YORK LAWS TO APPLY..................................................8
11. MERGER OF AGREEMENT.....................................................8
12. NOTICES.................................................................8
FEE SCHEDULE.................................................................9
(A) ACCOUNT MAINTENANCE CHARGE:..............................................9
(B) TRANSACTION FEES:........................................................9
(C) 24 HOUR AUTOMATED VOICE RESPONSE:.......................................10
(D) FUND/SERV...............................................................10
(E) IRA PLAN FEES: (IF APPLICABLE)..........................................10
(F) EXPENSES:...............................................................10
(G) SPECIAL REPORTS:........................................................11
(H) SERVICE DEPOSIT:........................................................11
(I) CONVERSION CHARGE: (EXISTING FUNDS ONLY, NEW FUNDS PLEASE IGNORE).......11
SCHEDULE A..................................................................12
2
<PAGE>
TRANSFER AGENCY AND SERVICE AGREEMENT
AGREEMENT made the 25th day of October, 1996, by and between Amerindo Funds,
Inc. on behalf of its series, Amerindo Technology Fund, a Maryland corporation,
(the "Fund") having its principal offices and places of business at One
Embarcadero, Suite 2300, San Francisco, CA 94111 and 399 Park Avenue, New York,
NY 10022 , and American Data Services, Inc., a New York corporation having its
principal office and place of business at 24 West Carver Street., Huntington,
New York 11743 ("ADS").
WHEREAS, the Fund desires to appoint ADS as its transfer agent, dividend
disbursing agent and agent in connection with certain other activities, and ADS
desires to accept such appointment;
NOW, THEREFORE, in consideration of the mutual covenants herein contained,
the parties hereto agree as follows:
1. TERMS OF APPOINTMENT; DUTIES OF ADS
1.01 Subject to the terms and conditions set forth in this agreement, the
Fund hereby employs and appoints ADS to act as, and ADS agrees to act as its
transfer agent for the Fund's authorized and issued shares of its common stock,
$0.001 par value, ("Shares"), dividend disbursing agent and agent in connection
with any accumulation, open-account or similar plans provided to the
shareholders of the Fund ("Shareholders") set out in the currently effective
prospectus and statement of additional information ("prospectus") of the Fund.
1.02 ADS agrees that it will perform the following services:
(a) In accordance with procedures established from time to time by
agreement between the Fund and ADS, ADS shall:
I. Receive for acceptance, orders for the purchase of Shares, and promptly
deliver payment and appropriate documentation therefore to the Custodian of
the Fund authorized by the Board of Directors of the Fund (the
"Custodian");
II. Pursuant to purchase orders, issue the appropriate number of Shares and
hold such Shares in the appropriate Shareholder account;
III. Receive for acceptance redemption requests and redemption directions and
deliver the appropriate documentation therefore to the Custodian;
IV. At the appropriate time as and when it receives monies paid to it by the
Custodian with respect to any redemption, pay over or cause to be paid over
in the appropriate manner such monies as instructed by the redeeming
Shareholders;
V. Effect transfers of Shares by the registered owners thereof upon receipt of
appropriate instructions;
VI. Prepare and transmit payments for dividends and distributions declared by
the Fund;
VII. Maintain records of account for and advise the Fund and its Shareholders as
to the foregoing; and
VIII.Record the issuance of shares of the Fund and maintain pursuant to SEC Rule
17Ad-10(e) a record of the total number of shares of the Fund which are
authorized, based upon data provided to it by the
3
<PAGE>
Fund, and issued and outstanding. ADS shall also provide the Fund on a
regular basis with the total number of shares which are authorized and
issued and outstanding and shall have no obligation, when recording the
issuance of shares, to monitor the issuance of such shares or to take
cognizance of any laws relating to the issue or sale of such shares, which
functions shall be the sole responsibility of the Fund.
(b) In addition to and not in lieu of the services set forth in the above
paragraph (a), ADS shall:
I. Perform all of the customary services of a transfer agent, dividend
disbursing agent, including but not limited to: maintaining all Shareholder
accounts, preparing Shareholder meeting lists, mailing proxies, receiving
and tabulating proxies, mailing Shareholder reports and prospectuses to
current Shareholders, withholding taxes on U.S. resident and non-resident
alien accounts, preparing and filing U.S. Treasury Department Forms 1099
and other appropriate forms required with respect to dividends and
distributions by federal authorities for all Shareholders, preparing and
mailing confirmation forms and statements of account to Shareholders for
all purchases redemption's of Shares and other confirmable transactions in
Shareholder accounts, preparing and mailing activity statements for
Shareholders, and providing Shareholder account information and (ii)
provide a system and reports which will enable the Fund to monitor the
total number of Shares sold in each State.
Procedures applicable to certain of these services may be established from
time to time by agreement between the Fund and ADS.
2. FEES AND EXPENSES
2.01 For performance by ADS pursuant to this Agreement, the Fund agrees to
pay ADS an annual maintenance fee for each Shareholder account and transaction
fees for each portfolio or class of shares serviced under this Agreement (See
Schedule A) as set out in the fee schedule attached hereto. Such fees and out-of
pocket expenses and advances identified under Section 2.02 below may be changed
from time to time subject to mutual written agreement between the Fund and ADS.
2.02 In addition to the fee paid under Section 2.01 above, the Fund agrees
to reimburse ADS for direct out-of-pocket expenses or advances incurred by ADS
for the items set out in the fee schedule attached hereto. In addition, any
other expenses incurred by ADS at the request or with the consent of the Fund,
will be reimbursed by the Fund.
2.03 The Fund agrees to pay all fees and reimbursable expenses within five
days following the receipt of the respective billing notice. Postage for mailing
of dividends, proxies, Fund reports and other mailings to all shareholder
accounts shall be advanced to ADS by the Fund at least seven (7) days prior to
the mailing date of such materials.
3. REPRESENTATIONS AND WARRANTIES OF ADS
ADS represents and warrants to the Fund that:
3.01 It is a corporation duly organized and existing and in good standing
under the laws of The State of New York.
3.02 It is duly qualified to carry on its business in The State of New
York.
3.03 It is empowered under applicable laws and by its charter and by-laws
to enter into and perform this Agreement.
4
<PAGE>
3.04 All requisite corporate proceedings have been taken to authorize it to
enter into and perform this Agreement.
3.05 It has and will continue to have access to the necessary facilities,
equipment and personnel to perform its duties and obligations under this
Agreement.
3.06 ADS is duly registered as a transfer agent under the Securities Act of
1934 and shall continue to be registered throughout the remainder of this
Agreement.
4. REPRESENTATIONS AND WARRANTIES OF THE FUND
The Fund represents and warrants to ADS that;
4.01 It is a corporation duly organized and existing and in good standing
under the laws of Maryland.
4.02 It is empowered under applicable laws and by its Articles of
Incorporation and By-Laws to enter into and perform this Agreement.
4.03 All corporate proceedings required by said Articles of Incorporation
and By-Laws have been taken to authorize it to enter into and perform this
Agreement.
4.04 It is an open-end and non-diversified management investment company
registered under the Investment Company Act of 1940.
4.05 A registration statement under the Securities Act of 1933 is currently
or will become effective and will remain effective, and appropriate state
securities law filings as required, have been or will be made and will continue
to be made, with respect to all Shares of the Fund being offered for sale.
5. INDEMNIFICATION
5.01 ADS shall not be responsible for, and the Fund shall indemnify and
hold ADS harmless from and against, any and all losses, damages, reasonable
costs, charges, reasonable counsel fees, payments, expenses and liability
arising out of or attributable to:
(a) All actions of ADS or its agents or subcontractors appointed with prior
approval of Fund required to be taken pursuant to this Agreement, provided
that such actions are taken in good faith and without negligence or willful
misconduct.
(b) The Fund's refusal or failure to comply with the terms of this Agreement,
or which arise out of the Fund's lack good faith, negligence or willful
misconduct or which arise out of the breach of any representation or
warranty of the Fund hereunder.
(c) The reliance on or use by ADS or its agents or subcontractors of
information, records and documents which (i) are received by ADS or its
agents or subcontractors and furnished to it by or on behalf of the Fund,
and (ii) have been prepared and/or maintained by the Fund or any other
person or firm on behalf of the Fund.
(d) The reliance on, or the carrying out by ADS or its agents or subcontractors
of any instructions or requests of the Fund.
5
<PAGE>
(e) The offer or sale of Shares in violation of any requirement under the
federal securities laws or regulations or the securities laws or
regulations of any state that such Shares be registered in such state or in
violation of any stop order or other determination or ruling by any federal
agency or any state with respect to the offer or sale of such Shares in
such state.
5.02 ADS shall indemnify and hold the Fund harmless from and against any
and all losses, damages, costs, charges, reasonable counsel fees, payments,
expenses and liability arising out of or attributable to any action or failure
or omission to act by ADS as a result of ADS's lack of good faith, negligence or
willful misconduct.
5.03 At any time ADS may apply to any officer of the Fund for instructions,
and may consult with legal counsel with respect to any matter arising in
connection with the services to be performed by ADS under this Agreement, and
ADS and its agents or subcontractors shall not be liable and shall be
indemnified by the Fund for any action taken or omitted by it in reliance upon
such instructions or upon the opinion of such counsel. ADS, its agents and
subcontractors shall be protected and indemnified in acting upon any paper or
document furnished by or on behalf of the Fund, reasonably believed to be
genuine and to have been signed by the proper person or persons, or upon any
instruction, information, data, records or documents provided ADS or its agents
or subcontractors by machine readable input, telex, CRT data entry or other
similar means authorized by the Fund, and shall not be held to have notice of
any change of authority of any person, until receipt of written notice thereof
from the Fund. ADS, its agents and subcontractors shall also be protected and
indemnified in recognizing stock certificates which are reasonably believed to
bear the proper manual or facsimile signatures of the officers of the Fund, and
the proper countersignature of any former transfer agent or registrar, or of a
co-transfer agent or co-registrar.
5.04 In the event either party is unable to perform its obligations under
the terms of this Agreement because of acts of God, strikes, equipment or
transmission failure or damage reasonably beyond its control, or other causes
reasonably beyond its control, such party shall not be liable for damages to the
other for any damages resulting from such failure to perform or otherwise from
such causes.
5.05 Neither party to this Agreement shall be liable to the other party for
consequential damages under any provision of this Agreement or for any act or
failure to act hereunder.
5.06 In order that the indemnification provisions contained in this Article
5 shall apply, upon the assertion of a claim for which either party may be
required to indemnify the other, the party of seeking indemnification shall
promptly notify the other party of such assertion, and shall keep the other
party advised with respect to all developments concerning such claim. The party
who may be required to indemnify shall have the option to participate with the
party seeking indemnification the defense of such claim. The party seeking
indemnification shall in no case confess any claim or make any compromise in any
case in which the other party may be required to indemnify it except with the
other party's prior written consent.
6. COVENANTS OF THE FUND AND ADS
6.01 The Fund Shall promptly furnish to ADS a certified copy of the
resolution of the Board of Directors of the Fund authorizing the appointment of
ADS and the execution and delivery of this Agreement.
6
<PAGE>
6.02 ADS hereby agrees to establish and maintain facilities and procedures
reasonably acceptable to the Fund for safekeeping of stock certificates, check
forms and facsimile signature imprinting devices, if any; and for the
preparation or use, and for keeping account of, such certificates, forms and
devices.
6.03 ADS shall keep records relating to the services to be performed
hereunder, in the form and manner as it may deem advisable. To the extent
required by Section 31 of the Investment Company Act of 1940, as amended, and
the Rules thereunder, ADS agrees that all such records prepared or maintained by
ADS relating to the services to be performed by ADS hereunder are the property
of the Fund and will be preserved, maintained and made available in accordance
with such Section and Rules, and will be surrendered promptly to the Fund on and
in accordance with its request.
6.04 ADS and the Fund agree that all books, records, information and data
pertaining to the business of the other party which are exchanged or received
pursuant to the negotiation or the carrying out of this Agreement shall remain
confidential, and shall not be voluntarily disclosed to any other person, except
as may be required by law.
6.05 In case of any requests or demands for the inspection of the
Shareholder records of the Fund, ADS will notify the Fund and secure
instructions from an authorized officer of the Fund as to such inspection. ADS
reserves the right, however, to exhibit the Shareholder records to any person
whenever it is advised by its counsel that it may be held liable for the failure
to exhibit the Shareholder records to such person, and shall promptly notify the
Fund of any unusual request to inspect or copy the shareholder records of the
Fund or the receipt of any other unusual request to inspect, copy or produce the
records of the Fund.
7. TERMINATION OF AGREEMENT
7.01 This Agreement shall become effective as of the date hereof and shall
continue to remain in force, provided however, that both parties to this
Agreement have the option to terminate the Agreement, upon sixty (60) days prior
written notice.
7.02 Should the Fund exercise its right to terminate, all reasonable
out-of-pocket expenses associated with the movement of records and material will
be borne by the Fund. Additionally, ADS reserves the right to charge for any
other reasonable expenses associated with such termination.
8. ASSIGNMENT
8.01 Neither this Agreement nor any rights or obligations hereunder may be
assigned by either party without the written consent of the other party.
8.02 This Agreement shall inure to the benefit of and be binding upon the
parties and their respective permitted successors and assigns.
9. AMENDMENT
9.01 This Agreement may be amended or modified by a written agreement
executed by both parties and authorized or approved by a resolution of the Board
of Directors of the Fund.
7
<PAGE>
10. NEW YORK LAWS TO APPLY
10.01 The provisions of this Agreement shall be construed and interpreted
in accordance with the laws of the State of New York as at the time in effect
and the applicable provisions of the 1940 Act. To the extent that the applicable
law of the State of New York, or any of the provisions herein, conflict with the
applicable provisions of the 1940 Act, the latter shall control.
11. MERGER OF AGREEMENT
11.01 This Agreement constitutes the entire agreement between the parties
hereto and supersedes any prior agreement with respect to the subject matter
hereof whether oral or written.
12. NOTICES.
All notices and other communications hereunder shall be in writing, shall
be deemed to have been given when received or when sent by telex or facsimile,
and shall be given to the following addresses (or such other addresses as to
which notice is given):
To the Fund: To ADS:
Ms. Dana Smith Michael Miola
Vice President President
Amerindo Funds, Inc. American Data Services, Inc.
399 Park Avenue 24 West Carver Street
New York, New York 10022 Huntington, New York 11743
With a copy to:
Thomas R. Westle, Esq.
Battle Fowler LLP
75 East 55th Street
New York, New York 10022
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the day and year first above written.
AMERINDO FUNDS, INC. AMERICAN DATA SERVICES, INC.
By:____________________________ By:__________________________
Dana Smith, Vice President Michael Miola, President
8
<PAGE>
FEE SCHEDULE
For the services rendered by ADS in its capacity as transfer agent, the
Fund shall pay ADS, within fifteen (15) days after receipt of an invoice from
ADS at the beginning of each month, a fee, calculated as a combination of
account maintenance charges and transaction charges as follows:
(a) ACCOUNT MAINTENANCE CHARGE:
The Greater of (No prorating for partial months):
(1) Minimum maintenance charge per portfolio/class $900.00/ month
OR,
(2) Based upon the total of all open/closed accounts (1) per portfolio/class
upon the following annual rates (billed monthly):
Fund Type:
Dividend calculated and
paid annually, semi-annually, quarterly.................. $ 9.00 per account
Dividend calculated and paid monthly...................... $10.50 per account
Dividend accrued daily and paid monthly .................. $14.00 per account
Closed accounts ................. $ 2.00 per account (2)
(1) All accounts closed during a calendar year will be considered as open
accounts for billing purposes until the end of that calendar year.
(2) Closed accounts remain on the shareholder files until all 1099's and 5498's
have been distributed to the shareholders and send via mag-media to the
IRS.
(b) TRANSACTION FEES:
Trade Entry (purchase/liquidation) and maintenance transactions ..$ 1.35 each
New account set-up ...............................................$ 2.50 each
Customer service calls ...........................................$ 1.00 each
Correspondence/ information requests .............................$ 1.25 each(2)
Check preparation ................................................$ .50 each
Liquidation's paid by wire transfer ..............................$ 3.00 each
ACH charge .......................................................$ .30 each
SWP ..............................................................$ .90 each
9
<PAGE>
(c) 24 HOUR AUTOMATED VOICE RESPONSE:
Initial set-up charge per portfolio - $150.00
Monthly maintenance charge per portfolio - $50.00
All calls processed through automated voice response will be billed as a
customer service call listed above.
(d) Fund/SERV
All portfolios processed through Fund/SERV will be subject to an additional
monthly charge of $250.00
All transactions processed through Fund/SERV will be billed at the transaction
fee rates listed in (b) above.
(e) IRA PLAN FEES: (If applicable)
The following fees will be charged directly to the shareholder account:
Annual maintenance fee .............................$15.00 /account*
Incoming transfer from prior custodian ............ $12.00
Distribution to a participant ......................$15.00
Refund of excess contribution ......................$15.00
Transfer to successor custodian ....................$15.00
Automatic periodic distributions ...................$15.00/year per account
* Includes $5.00 Bank Custody Fee.
(f) EXPENSES:
The Fund shall reimburse ADS for any direct out-of-pocket expenses,
exclusive of salaries, advanced by ADS in connection with but not limited to the
costs for printing fund documents, (i.e. printing of confirmation forms,
shareholder statements, redemption/dividend checks, envelopes, financial
statements, proxy statement, fund prospectus, etc.) proxy solicitation and
mailing expenses, travel requested by the Fund, telephone toll charges, 800-line
costs and fees, facsimile and data transmission costs, stationery and supplies
(related to Fund records), record storage, postage (plus a $0.085 service charge
for all mailings), pro-rata portion of annual SAS-70 audit letter, telex and
courier charges incurred in connection with the performance of its duties
hereunder. ADS shall provide the Fund with a monthly invoice of such expenses
and the Fund shall reimburse ADS within fifteen (15) days after receipt thereof.
10
<PAGE>
(g) SPECIAL REPORTS:
All reports and/or analyses requested by the Fund that are not included in
the fee schedule, shall be subject to an additional charge, agreed upon in
advance, based upon the following rates:
Labor:
Senior staff - $150.00/hr.
Junior staff - $ 75.00/hr.
Computer time - $45.00/hr.
(h) SERVICE DEPOSIT:
The Fund will remit to ADS upon execution of this Agreement a service
deposit of equal to one (1) month's shareholder service fee. The service deposit
computation will be based either on the total number of shareholder accounts
(open and closed) of each portfolio to be serviced or the minimum fee, whichever
is greater, as of the execution date of this Agreement. The Fund will have the
option to have the service deposit applied to the last month's service fee, or
applied to any new contract between the Fund and ADS.
(i) CONVERSION CHARGE: (existing funds only, new funds please ignore)
There will be a $1,000 charge to convert the Fund's shareholder accounting
records on to the ADS stock transfer system. In addition, ADS will be reimbursed
for all reasonable out-of-pocket expenses, enumerated in paragraph (b) above and
data media conversion costs, incurred during the conversion process.
The conversion charge will be estimated and agreed upon in advance by the
Fund and ADS. The charge will be based upon the quantity of records to be
converted and the condition of the previous service agents records.
11
<PAGE>
SCHEDULE A
PORTFOLIOS TO BE SERVICED UNDER THIS AGREEMENT:
AMERINDO TECHNOLOGY FUND
12
<PAGE>
Exhibit 9.2
C/M 12034.0001 489335.1
<PAGE>
===============================================================================
FUND ACCOUNTING SERVICE AGREEMENT
between
AMERINDO FUNDS INC.
and
AMERICAN DATA SERVICES, INC.
[GRAPHIC OMITTED]
===============================================================================
<PAGE>
===============================================================================
INDEX
===============================================================================
1. DUTIES OF ADS.........................................................3
2. COMPENSATION OF ADS...................................................4
3. LIMITATION OF LIABILITY OF ADS........................................4
4. REPORTS...............................................................5
5. ACTIVITIES OF ADS.....................................................5
6. ACCOUNTS AND RECORDS..................................................5
7. CONFIDENTIALITY.......................................................5
8. DURATION AND TERMINATION OF THIS AGREEMENT............................6
9. ASSIGNMENT............................................................6
10. NEW YORK LAWS TO APPLY..............................................6
11. AMENDMENTS TO THIS AGREEMENT.........................................6
12. MERGER OF AGREEMENT..................................................6
13. NOTICES..............................................................6
SCHEDULE A...............................................................8
(A) FUND ACCOUNTING SERVICE FEE:.........................................8
(B) EXPENSES.............................................................8
(C) SPECIAL REPORTS......................................................9
(D) SERVICE DEPOSIT......................................................9
(E) CONVERSION CHARGE....................................................9
SCHEDULE B:.............................................................10
2
<PAGE>
FUND ACCOUNTING SERVICE AGREEMENT
AGREEMENT made the 25th day of October, 1996, by and between Amerindo Funds,
Inc. on behalf of its series, Amerindo Technology Fund, a Maryland corporation,
(the "Fund") having its principal offices and places of business at One
Embarcadero, Suite 2300, San Francisco, CA 94111 and 399 Park Avenue, New York,
NY 10022 , and American Data Services, Inc., a New York corporation having its
principal office and place of business at 24 West Carver Street., Huntington,
New York 11743 ("ADS").
BACKGROUND
WHEREAS, the Fund is a non-diversified, open-end management investment company
registered with the United States Securities and Exchange Commission under the
Investment Company Act of 1940, as amended (the "1940 Act"); and
WHEREAS, ADS is a corporation experienced in providing accounting services to
mutual funds and possesses facilities sufficient to provide such services; and
WHEREAS, the Fund desires to avail itself of the experience, assistance and
facilities of ADS and to have ADS perform for the Fund certain services
appropriate to the operations of the Fund, and ADS is willing to furnish such
services in accordance with the terms hereinafter set forth.
TERMS
NOW, THEREFORE, in consideration of the promises and mutual covenants
hereinafter contained, the Fund and ADS hereby agree as follows:
1. DUTIES OF ADS.
ADS will provide the Fund with the necessary office space, communication
facilities and personnel to perform the following services for the Fund:
(a) Obtain daily securities quotations for all securities in the Fund's
portfolio from independent pricing services and determination of
unrealized appreciation/depreciation of portfolio securities..
(b) Timely calculate and transmit to NASDAQ the Fund's daily net asset
value and communicate such value to the Fund and its transfer agent;
(c) Maintain and keep current all books and records of the Fund as
required by Rule 31a-1 under the 1940 Act, as such rule or any
successor rule may be amended from time to time ("Rule 31a-1"), that
are applicable to the fulfillment of ADS's duties hereunder, as well
as any other documents necessary or advisable for compliance with
applicable regulations as may be mutually agreed to between the Fund
and ADS. Without limiting the generality of the foregoing, ADS will
prepare and maintain the following records upon receipt of information
in proper form from the Fund or its authorized agents:
. Cash receipts journal
. Cash disbursements journal
3
<PAGE>
. Dividend record
. Purchase and sales - portfolio securities
. journals Subscription and redemption journals
. Security ledgers Broker ledger General ledger
. Daily expense accruals Daily income accruals
. Securities and monies borrowed or loaned and
. collateral therefore Foreign currency journals
. Trial balances
(d) Provide the Fund and its investment adviser with daily portfolio
valuation, net asset value calculation and other standard operational
reports as requested from time to time.
(e) Provide all raw data available from our fund accounting system (PAIRS)
for the Administrator's preparation of the following:
1. Semi-annual financial statements;
2. Semi-annual form N-SAR;
3. Annual tax returns;
4. Financial data necessary to update form N-1a;
5. Annual proxy statement.
(f) Provide facilities to accommodate annual audit and any audits or
examinations conducted by the Securities and Exchange Commission or
any other governmental or quasi-governmental entities with
jurisdiction.
(g) Verify and reconcile with the Fund's custodian bank all daily trade
activity.
ADS shall for all purposes herein be deemed to be an independent contractor and
shall, unless otherwise expressly provided or authorized, have no authority to
act for or represent the Fund in any way or otherwise be deemed an agent of the
Fund.
2. COMPENSATION OF ADS.
In consideration of the services to be performed by ADS as set forth herein
for each portfolio listed in Schedule B, ADS shall be entitled to receive
compensation and reimbursement for all reasonable out-of-pocket expenses. The
Fund agrees to pay ADS the fees and reimbursement of out-of-pocket expenses as
set forth in the fee schedule attached hereto as Schedule A.
3. LIMITATION OF LIABILITY OF ADS.
(a) ADS shall be held to the exercise of reasonable care in carrying out
the provisions of the Agreement, but shall be without liability to the Fund for
any action taken or omitted by it in good faith without gross negligence, bad
faith, willful misconduct or reckless disregard of its duties hereunder. It
shall be entitled to rely upon and may act upon the accounting records and
reports generated by the Fund, advice of the Fund, or of counsel for the Fund
and upon statements of the Fund's independent accountants, and shall be without
liability for any action reasonably taken or omitted pursuant to such records
and reports or advice, provided that such action is not, to the knowledge of
ADS, in violation of applicable federal or state
4
<PAGE>
laws or regulations, and provided further that such action is taken without
negligence, bad faith, willful misconduct or reckless disregard of its duties.
(b) Nothing herein contained shall be construed to protect ADS against any
liability to the Fund or its security holders to which ADS shall otherwise be
subject by reason of willful misfeasance, bad faith, negligence in the
performance of its duties on behalf of the Fund, reckless disregard of ADS'
obligations and duties under this Agreement or the willful violation of any
applicable law.
(c) Except as may otherwise be provided by applicable law, neither ADS nor
its stockholders, officers, directors, employees or agents shall be subject to,
and the Fund shall indemnify and hold such persons harmless from and against,
any liability for and any damages, reasonable expenses (including attorney's
fees) or losses incurred by reason of the inaccuracy of information furnished to
ADS by the Fund or its authorized agents.
4. REPORTS.
(a) The Fund shall provide to ADS on a quarterly basis a report of a duly
authorized officer of the Fund representing that all information furnished to
ADS during the preceding quarter was true, complete and correct in all material
respects. ADS shall not be responsible for the accuracy of any information
furnished to it by the Fund or its authorized agents, and the Fund shall hold
ADS harmless in regard to any liability incurred by reason of the inaccuracy of
such information.
(b) Whenever, in the course of performing its duties under this Agreement,
ADS determines, on the basis of information supplied to ADS by the Fund or its
authorized agents, that a violation of applicable law has occurred or that, to
its knowledge, a possible violation of applicable law may have occurred or, with
the passage of time, would occur, ADS shall promptly notify the Fund and its
counsel of such violation.
5. ACTIVITIES OF ADS.
The services of ADS under this Agreement are not to be deemed exclusive,
and ADS shall be free to render similar services to others so long as its
services hereunder are not impaired thereby.
6. ACCOUNTS AND RECORDS.
The accounts and records maintained by ADS shall be the property of the
Fund, and shall be surrendered to the Fund promptly upon request by the Fund in
the form in which such accounts and records have been maintained or preserved.
ADS agrees to maintain a back-up set of accounts and records of the Fund (which
back-up set shall be updated on at least a weekly basis) at a location other
than that where the original accounts and records are stored. ADS shall assist
the Fund's independent auditors, or, upon approval of the Fund, any regulatory
body, in any requested review of the Fund's accounts and records. ADS shall
preserve the accounts and records in its possession (at the expense of the Fund)
as they are required to be maintained and preserved by Rule 31a-1.
7. CONFIDENTIALITY.
ADS agrees that it will, on behalf of itself and its officers and
employees, treat all transactions contemplated by this Agreement, and all other
information germane thereto, as confidential and not to be disclosed to any
person except as may be authorized by the Fund.
5
<PAGE>
8. DURATION AND TERMINATION OF THIS AGREEMENT.
This Agreement shall become effective as of the date hereof and shall
continue to remain in force, provided however, that both parties to this
Agreement have the option to terminate the Agreement, upon sixty (60) days prior
written notice.
Should the Fund exercise its right to terminate, all reasonable
out-of-pocket expenses associated with the movement of records and material will
be borne by the Fund. Additionally, ADS reserves the right to charge for any
other reasonable expenses associated with such termination.
9. ASSIGNMENT.
This Agreement shall extend to and shall be binding upon the parties hereto
and their respective successors and assigns; provided, however, that this
Agreement shall not be assignable by the Fund without the prior written consent
of ADS, or by ADS without the prior written consent of the Fund.
10. NEW YORK LAWS TO APPLY
The provisions of this Agreement shall be construed and interpreted in
accordance with the laws of the State of New York as at the time in effect and
the applicable provisions of the 1940 Act. To the extent that the applicable law
of the State of New York, or any of the provisions herein, conflict with the
applicable provisions of the 1940 Act, the latter shall control.
11. AMENDMENTS TO THIS AGREEMENT.
This Agreement may be amended by the parties hereto only if such amendment
is in writing and signed by both parties.
12. MERGER OF AGREEMENT
This Agreement constitutes the entire agreement between the parties hereto
and supersedes any prior agreement with respect to the subject matter hereof
whether oral or written.
13. NOTICES.
All notices and other communications hereunder shall be in writing, shall
be deemed to have been given when received or when sent by telex or facsimile,
and shall be given to the following addresses (or such other addresses as to
which notice is given):
To the Fund: To ADS:
Ms. Dana Smith Michael Miola
Vice President President
Amerindo Funds, Inc. American Data Services, Inc.
399 Park Avenue 24 West Carver Street
New York, New York 10022 Huntington, New York 11743
With a copy to:
Thomas R. Westle, Esq.
Battle Fowler LLP
75 East 55th Street
New York, New York 10022
6
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the
day and year first above written.
AMERINDO FUNDS, INC. AMERICAN DATA SERVICES, INC.
By:____________________________ By:__________________________
Dana Smith, Vice President Michael Miola, President
7
<PAGE>
SCHEDULE A
(a) FUND ACCOUNTING SERVICE FEE:
For the services rendered by ADS in its capacity as fund accounting agent,
as specified in Paragraph 1. DUTIES OF ADS, the Fund shall pay ADS, within ten
(10) days after receipt of an invoice from ADS at the beginning of each month, a
fee equal to:
Calculated Fee Will Be Based Upon Prior Month Average Net Assets:
(No prorating partial months)
MONTHLY FEE PER PORTFOLIO:
Portfolio Type
Net Assets (in millions) Global Domestic Money Mkt
Under $2 ........................ $1,000 $ 900 $ 800
From $2 to $ ................... 1,375 1,100 950
From $5 to $10 ................. 1,750 1,400 1,250
From $10 to $20................. 2,125 1,700 1,475
From $20 to $25 ................ 2,500 2,000 1,700
From $25 to $40.................. 3,000 2,500 2,000
Excess of $40 million:
The fee for assets from $25
million to $40 million
plus 1/12 of ................ 3.50BP* 2.20BP 2.00BP
* Basis Points
MULTI-CLASS PROCESSING CHARGE
$300 per month will be charged for each additional class of stock per portfolio.
(b) EXPENSES.
The Fund shall reimburse ADS for any direct out-of-pocket expenses,
exclusive of salaries, advanced by ADS in connection with but not limited to the
printing or filing of documents for the Fund, travel, telephone, quotation
services, facsimile transmissions, stationery and supplies, record storage,
NASDAQ insertion fee (if applicable) of $22 per month, Pro-rata portion of
annual SAS 70 review, postage, telex, and courier charges, incurred in
connection with the performance of its duties hereunder. ADS shall provide the
Fund with a monthly invoice of such expenses and the Fund shall reimburse ADS
within fifteen (15) days after receipt thereof.
8
<PAGE>
(c) SPECIAL REPORTS.
All reports and /or analyses requested by the Fund, its auditors, legal
counsel, portfolio manager, or any regulatory agency having jurisdiction over
the Fund, that are not in the normal course of fund accounting activities as
specified in Section 1 of this Agreement shall be subject to an additional
charge, agreed upon in advance, based upon the following rates:
Labor:
Senior staff - $150.00/hr.
Junior staff - $ 75.00/hr.
Computer time - $45.00/hr.
(d) SERVICE DEPOSIT.
The Fund will remit to ADS upon execution of this Agreement a service deposit
equal to one (1) month's minimum fee under this Agreement, computed in
accordance with the number of portfolios listed in Schedule B of this Agreement.
The Fund will have the option to have the service deposit applied to the last
month's service fee, or applied to any new contract between the Fund and ADS.
(e) CONVERSION CHARGE.
NOTE: FOR EXISTING FUNDS ONLY (new funds please ignore):
There will not be any charge to convert the Fund's portfolio accounting
records on to the ADS fund accounting system (PAIRS). However, ADS will be
reimbursed for direct all out-of-pocket expenses, enumerated in paragraph (b)
above, incurred during the conversion process.
9
<PAGE>
SCHEDULE B:
PORTFOLIOS TO BE SERVICED UNDER THIS AGREEMENT:
AMERINDO TECHNOLOGY FUND
10
<PAGE>
Exhibit 11
C/M 12034.0001 489335.1
<PAGE>
M O R R I S O N, B R O W N, A R G I Z & C O M P A N Y
---------------------------------------------------------
C E R T I F I E D P U B L I C A C C O U N T A N T S
INDEPENDENT AUDITOR'S CONSENT
We consent to the use in this Registration Statement of Amerindo Funds Inc. on
Form N-lA of our report dated April 30, 1997, appearing in the Prospectus, which
is part of this Registration Statement.
We also consent to the reference to us under the headings "Selected Financial
Data" and "Experts" in such Prospectus.
/s/Morrison, Brown, Argiz & Company
Certified Public Accountants
Miami, Florida
April 30, 1997
Post Office Box 560068 . 9795 South Dixie Highway . Miami, Florida 33156 .
Telephone (305) 667-3500 . FAX (305) 661-9542 SunBank Center . 200 South Orange
Avenue . Suite 1400 . Orlando, Florida 32801 . Telephone (407) 649-2100 . FAX
(407) 649-4202 . 1675 Broadway o Suite 1800 o Denver, Colorado 80202 .
Telephone (303) 615-9500 . (FAX (303) 615-9572 Members: American Institute of
Certified Public Accountants . SEC Practice Section . Private Companies
Practice Section Florida Institute of Certified Public Accountants . Accounting
Firms Associated, inc.
C/M 12034.0001 489339.1
Exhibit 12
C/M 12034.0001 489335.1
<PAGE>
AMERINDO TECHNOLOGY FUND
STATEMENT OF OPERATIONS
For the period October 29, 1996 (inception of operations)
through December 31, 1996
INVESTMENT INCOME:
Income ..................................... $ -0-
------------
Expenses:
Investment advisory fees (Note 4).... $ 62,809
Directors' fees and expenses......... 20,975
Professional services................ 17,480
Administration and accounting fees... 10,350
Distributor fees..................... 10,468
Amortization of organization
expenses (Note 2 )................. 9,812
Registration fees.................... 9,795
Transfer agent fees.................. 4,724
Printing expense..................... 3,204
Custodian fees....................... 2,700
Miscellaneous........................ 7,678
------------
Total expenses....................... 159,995
Less:
Reimbursed expenses (Note 4)......... (65,782)
------------
Net expenses......................... 94,213
------------
Net investment loss.................. (94,213)
NET REALIZED AND UNREALIZED GAINS
(LOSSES) ON INVESTMENTS
(Note 2)
Net realized gain (loss) from
investment transactions.............. -0-
Net unrealized depreciation of
investments.......................... (3,582,246)
------------
Net realized and unrealized gain
(loss) on investments................ (3,582,246)
------------
Net decrease in net assets resulting
from operations...................... $ (3,676,459)
============
See notes to financial statements.
<PAGE>
AMERINDO TECHNOLOGY FUND
STATEMENT OF ASSETS AND LIABILITIES
December 31, 1996
ASSETS:
Investments in securities, at value
(cost $35,509,346) (Note 2)..... $ 31,927,100
Cash.................................. 1,160,861
Receivable for Fund shares sold....... 2,603,370
Deferred organization expenses
(Note 2 )....................... 269,995
Other assets.......................... 17,269
--------------
Total Assets.................... 35,978,595
LIABILITIES:
Payables:
Investment securities purchased. $ 1,387,438
Due to investment advisor....... 307,079
Distribution fees............... 10,468
Other payables and accrued
expenses...................... 63,930
-------------
Total Liabilities............... 1,768,915
--------------
Net Assets............................ $ 34,209,680
==============
NET ASSETS CONSIST OF:
Capital stock, $.001 par value;
unlimited shares authorized;
3,798,883 shares outstanding.. $ 3,798
Additional paid in capital...... 37,882,341
Net investment loss............. (94,213)
Unrealized depreciation on
investments................... (3,582,246)
-------------
Net Assets............................ $ 34,209,680
==============
Net asset value, redemption and
offering price per share
($34,209,680/3,798,883 shares
of capital stock outstanding)
(Note 5 )........................ 9.00
==============
See notes to financial statements.
<PAGE>
AMERINDO TECHNOLOGY FUND
STATEMENT OF CHANGES IN NET ASSETS
For the period October 29, 1996 (inception of operations)
through December 31, 1996
Net investment loss.................................... $ (94,213)
Net realized gain/(loss) from investment transactions.. -0-
Net unrealized depreciation of investments............. (3,582,246)
---------------
Net decrease in net assets resulting from operations... (3,676,459)
Net capital share transactions (Note 5 )............... 37,786,139
---------------
Net increase in net assets............................. 34,109,680
NET ASSETS:
Beginning of period.................................... 100,000
---------------
End of period.......................................... $ 34,209,680
===============
See notes to financial statements.
<PAGE>
AMERINDO TECHNOLOGY FUND
FINANCIAL HIGHLIGHTS
(For a fund share outstanding throughout the period)
For the period October 29, 1996 (inception of operations)
through December 31, 1996
Net asset value, beginning of period............. $ 10.00
-----------
Income (loss) from investment operations
Net investment loss.............................. (0.04)
Net realized and unrealized gain (loss) on
investments................................. (0.96)
-----------
Total from investment operations................. (1.00)
-----------
Less distributions
Dividends from net investment income............. 0.00
Distribution from realized gains from security
transactions................................ 0.00
-----------
Total distributions.............................. 0.00
-----------
Net asset value, end of period................... $ 9.00
===========
Total return**................................... (45.69%)*
Ratios/supplemental data
Net assets end of period (in 000's).............. 34,210
Ratio of expenses to average net assets.......... 3.82%*
Ratio of expenses to average net assets, net of
reimbursement............................... 2.25%*
Ratio of net investment income (loss) to average
net assets.................................. (3.82%)*
Ratio of net investment income (loss) to average
net assets, net of reimbursement............ (2.25%)*
Portfolio turnover rate.......................... 0.00%
Average commission rate paid..................... 0.0500
* Annualized
** Based on net asset value per share
<PAGE>
AMERINDO TECHNOLOGY FUND
SCHEDULE OF INVESTMENTS
December 31, 1996
COMMON STOCKS - 93.33%
Market
Shares Value
- ------------- -----------
110,000 + Ascend Communications, Inc............. $ 6,820,000
200,000 + Avant! Corporation..................... 6,300,000
122,500 + Cascade Communications Corp............ 6,752,813
25,000 + Fore Systems, Inc...................... 821,875
140,700 + Netscape Communications Corporation.... 7,984,725
16,500 + Security Dynamics Technologies, Inc.... 517,687
97,500 + Xylan Corporation...................... 2,730,000
-----------
TOTAL INVESTMENTS
(Cost $35,509,346)..................... 93.33% 31,927,100
OTHER INVESTMENTS LESS LIABILITIES 6.67% 2,282,580
------- -----------
TOTAL NET ASSETS.......................100.00% $ 34,209,680
======= ===========
(1) Federal Tax Information: At December 31, 1996 the net
unrealized depreciation based on cost for Federal
Income tax purposes of $35,509,346 was as follows:
Aggregate gross unrealized appreciation for
all investments in which there was an
excess of value over cost........................... $ 691,423
Aggregate gross unrealized depreciation for
all investments in which there was an
excess of cost over value........................... (4,273,669)
-----------
Net unrealized depreciation......................... $ (3,582,246)
===========
+ Non-income producing security
See notes to financial statements.
<PAGE>
AMERINDO TECHNOLOGY FUND
Notes to Financial Statements
December 31, 1996
Note 1. Organization
The Amerindo Technology Fund (the "Fund") is a series of the Amerindo Funds
Inc., a Maryland Corporation incorporated on February 6, 1996. The Fund is an
open-end, non-diversified management investment company under the Investment
Company Act of 1940, authorized to issue an unlimited number of shares of
capital stock in separate series, with each series representing interests in a
separate portfolio of securities and other assets, each with its own investment
objectives and policies.
The Fund offers two classes of shares to investors, Class A and Class D shares.
Class A shares are sold subject to an initial sales load of up to 2.50% with a
minimum investment of $25,000. Class D shares are sold without an initial sales
load with a minimum investment of $150,000. As of December 31, 1996, only Class
D shares were being offered for sale by the Fund with a reduced minimum
investment of $25,000.
The Fund is the only current series of the Amerindo Funds Inc..
Note 2. Summary of significant accounting policies
The following is a summary of the significant accounting policies followed by
the Fund in the preparation of its financial statements. These policies are in
conformity with generally accepted accounting principles for investment
companies. The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that effect the reported amounts of assets and liabilities at the
date of the financial statements and the reported amounts of revenue and
expenses during the period. Actual results could differ from these estimates.
Security Valuation-Securities which are traded on any exchange or on the NASDAQ
over-the-counter market are valued at the last quoted sale price. Lacking a last
sale price, a security is valued at its closing bid price on such exchanges, or
at the quoted bid price in the over-the-counter market. Securities 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 upon yields or
prices of comparable securities, indications as to values from dealers, and
general market conditions.
Short term investments in fixed income securities with maturities of less
than 60 days when acquired, or which subsequently are within 60 days of
maturity, are valued by using the amortized cost method of valuation, which the
Board has determined will represent fair value.
Federal Income Taxes-During the period October 29, 1996 (commencement of
operations) through December 31, 1996 the Fund was in the process of structuring
its portfolio and did not meet certain requirements of the Internal Revenue Code
of 1986, as amended (the "IRC") and will not be taxed as a regulated investment
company. During that period, the Fund incurred an taxable operating loss of
$84,401. Therefore, no provision for federal income tax has been made.
The Fund intends to qualify each subsequent year as a "regulated investment
company" under the IRC. By so qualifying, the Fund will not be subject to
federal income taxes to the extent that it distributes substantially all of its
net investment income and any realized capital gains.
<PAGE>
Dividends and Distributions-The Fund intends to distribute substantially
all of its net investment income as dividends to its shareholders on an annual
basis. The Fund intends to distribute its net long term capital gains and its
net short term capital gains at least once a year.
Organization expenses- During its organization and initial registration
with the Securities and Exchange Commission (the "SEC"), the Fund incurred
organization expenses of $279,807. The Fund has elected to defer these expenses
and amortize them on a straight-line basis over a 60 month period beginning with
the Funds' commencement of operations. During the period ended December 31,
1996, $9,812 was amortized.
Other- The Fund follows industry practice and records security transactions
on the trade date. The specific identification method is used for determining
gains or losses for financial statements and income tax purposes. Dividend
income is recorded on the ex-dividend date and interest income is recorded on an
accrued basis.
Note 3. Purchases and Sales of Securities
Purchases and sales of investment securities, during the period October 29,
1996 (commencement of operations) through December 31, 1996, aggregated
$35,509,346 and $0 respectively.
Note 4. Investment Advisory Agreement
The Fund has an agreement with Amerindo Investment Advisors Inc. (the
"Advisor"), with whom certain officers and directors of the Fund are affiliated)
to serve as investment advisor and manager. Under the terms of the agreement, a
monthly fee is paid to the investment advisor based on 1/12th of 1.50% (1.50% on
an annual basis) of the average daily net asset value. This advisory agreement
is subject to an annual review by the Directors of the Fund.
The Advisor has agreed to a reduction in the amounts payable to it and to
reimburse the Fund for any expenses (including the advisory fee, but excluding
taxes, interest and brokerage fees and extraordinary expenses incurred in
connection with any matter not in the ordinary course of business of the Fund)
over 2.25% of the average daily net asset value of the Class D shares of the
Fund.
For the period October 29, 1996 (commencement of operations) through December
31, 1996, the Advisor earned advisory fees of $62,809 and reimbursed the Fund
$65,782 in expenses.
The Fund has agreements with American Data Services, Inc. (the
"Administrator") to provide shareholder servicing , fund accounting and
administrative services to the Fund. The services to be provided under the
agreements include day-to-day administration of matters related to the corporate
existence of the Fund (other than rendering investment advice), maintenance of
its records, preparation of reports, supervision of the Fund's arrangement with
its custodian and assistance in the preparation of the Fund's registration
statement under federal and state laws. Costs incurred totaled $15,192 for the
period October 29, 1996 (commencement of operations) through December 31, 1996.
Note 5. Capital Stock
At December 31, 1996 there was an unlimited number of shares of $0.001 par value
capital stock authorized. Transactions in capital stock during the period
October 29, 1996 (commencement of operations) through December 31, 1996 were as
follows:
<PAGE>
<TABLE>
<CAPTION>
Shares Amount
<S> <C> <C>
Shares Sold ........................................................ 3,788,883 $37,786,139
Shares issued for reinvestment dividends and distribution
from realized gains .............................................. -0- -0-
Shares redeemed .................................................... -0- -0-
--------- -----------
Net increase ....................................................... 3,788,883 $37,786,139
========= ===========
</TABLE>
<PAGE>
M O R R I S O N, B R O W N, A R G I Z & C O M P A N Y
---------------------------------------------------------
C E R T I F I E D P U B L I C A C C O U N T A N T S
REPORT OF INDEPENDENT ACCOUNTANTS
To the Shareholders of Amerindo Funds Inc.; Amerindo Technology Fund and Board
of Directors of Amerindo Funds Inc.; Amerindo Technology Fund
We have audited the accompanying statement of assets and liabilities of Amerindo
Funds Inc.; Amerindo Technology Fund (the "Fund"), including the statement of
investments in securities and net assets, as of December 31, 1996, and the
related statement of operations for the period, October 29, 1996 (inception of
operations) through December 31, 1996, the statement of changes in net assets
for the period then ended and the financial highlights for the period indicated
therein. These financial statements and financial highlights are the
responsibility of the Fund's management. Our responsibility is to express an
opinion on these financial statements and financial highlights based on our
audit.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements and financial highlights are
free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements. Our
procedures included confirmation of securities owned as of December 31, 1996, by
correspondence with the custodian. An audit also includes assessing the
accounting principles used and significant estimates made by management, as well
as evaluating the overall financial statement presentation. We believe that our
audit provides a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of
Amerindo Funds Inc.; Amerindo Technology Fund as of December 31, 1996, the
results of its operations for the period then ended, the changes in its net
assets for the period then ended, and the financial highlights for the period
indicated therein, in conformity with generally accepted accounting principles.
/s/Morrison, Brown, Argiz & Company
Certified Public Accountants
Miami, Florida
April 30, 1997
Post Office Box 50068 . 9795 South Dixie Highway . Miami, Florida 33156 .
Telephone (305) 667-3500 . FAX (305) 661-9542 SunBank Center . 200 South Orange
Avenue . Suite 1400 . Orlando, Florida 32801 . Telephone (407) 649-2100 .
FAX (407) 649-4202 . 1675 Broadway . Suite 1800 . Denver, Colorado 80202 .
Telephone (303) 615-9500 . (FAX (303) 615-9572 . Members: American Institute
of Certified Public Accountants . SEC Practice Section . Private
Companies Practice Section Florida Institute of Certified Public Accountants .
Accounting Firms Associated, inc.
C/M 12034.0001 489339.1
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
The Schedule contains summary financial information extracted from the financial
statements and supporting schedules as of the end of the most current period and
is qualified in its entirety by reference to such financial statements.
</LEGEND>
<SERIES>
<NUMBER> 01
<NAME> Amerindo Funds Inc., Amerindo Technology Fund
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> Year
<FISCAL-YEAR-END> Dec-31-1996
<PERIOD-END> Dec-31-1996
<INVESTMENTS-AT-COST> 35,509,346
<INVESTMENTS-AT-VALUE> 31,927,100
<RECEIVABLES> 2,248,370
<ASSETS-OTHER> 269,995
<OTHER-ITEMS-ASSETS> 17,169
<TOTAL-ASSETS> 35,623,595
<PAYABLE-FOR-SECURITIES> 1,387,438
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 381,477
<TOTAL-LIABILITIES> 1,768,915
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 37,531,139
<SHARES-COMMON-STOCK> 3,759,439
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> (94,213)
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> (3,582,246)
<NET-ASSETS> 33,854,680
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 0
<OTHER-INCOME> 0
<EXPENSES-NET> 94,213
<NET-INVESTMENT-INCOME> (94,213)
<REALIZED-GAINS-CURRENT> 0
<APPREC-INCREASE-CURRENT> (3,582,246)
<NET-CHANGE-FROM-OPS> (3,676,459)
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 3,759,439
<NUMBER-OF-SHARES-REDEEMED> 0
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 33,745,680
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 62,809
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 159,995
<AVERAGE-NET-ASSETS> 23,880,392
<PER-SHARE-NAV-BEGIN> 10.00
<PER-SHARE-NII> (.04)
<PER-SHARE-GAIN-APPREC> (.96)
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 9.00
<EXPENSE-RATIO> 2.25
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
