As filed with the Securities and Exchange Commission on October 15, 1999
Registration No. 333-00767
ICA No. 811-07531
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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. 5 [X]
and/or
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 [X]
Amendment No. 6 [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)
[ ] immediately upon filing pursuant to paragraph (b)
[ ] on (date) pursuant to paragraph (b)
[x] 60 days after filing pursuant to paragraph (a)(1)
[ ] on (date) pursuant to paragraph (a)(1)
[ ] 75 days after filing pursuant to paragraph (a)(2)
[ ] on (date) pursuant to paragraph (a)(2) of rule 485
If appropriate, check the following box:
[ ] this post-effective amendment designates a new effective date
for a previously filed post-effective amendment.
867316.2
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[Subject to completion, dated December __, 1999]
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AMERINDO FUNDS INC. PROSPECTUS
[December __, 1999]
Class C Shares
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AMERINDO TECHNOLOGY FUND
A mutual fund whose investment objective is to seek
long-term capital appreciation.
The Securities and Exchange Commission Has Not Approved or
Disapproved These Securities or Passed upon the Adequacy of this
Prospectus. Any Representation to the Contrary is a Criminal Offense.
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TABLE OF CONTENTS
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Risk/Return Summary.............................1 How to Purchase Shares..........................9
Fee Table.......................................3 How to Redeem Shares...........................12
Investment Objectives, Principal
Investment Strategies and Related
Risks...........................................4 Dividends and Distributions....................13
Additional Investment Information and
Risk Factors....................................5 Tax Consequences...............................14
Management, Organization and Capital Structure..7 Distribution Arrangements......................14
Pricing of Fund Shares..........................9 Financial Highlights Information...............17
</TABLE>
Information contained herein is subject to completion or amendment. A
registration statement relating to these securities has been filed with the
Securities and Exchange Commission. These securities may not be sold nor any
offers to buy be accepted prior to the time the registration statement becomes
effective. This prospectus shall not constitute an offer to sell or the
solicitation of an offer to buy nor shall there be any sale of these securities
in any State in which such offer, solicitation or sale would be unlawful prior
to registration or qualification under the securities laws of any State.
867314.6
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RISK/RETURN SUMMARY
The Fund is currently composed of one portfolio called the Amerindo Technology
Fund.
Investment Objective
The Fund's investment objective is to seek long-term capital appreciation.
Current income is incidental to the Fund's investment objective. There is no
assurance that the Fund will achieve its investment objective.
Principal Investment Strategies
The Fund seeks to achieve its investment objective by investing at least 65% of
its total 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. In addition to investing at least 65% of its
assets in technology companies, 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.
Principal Risks
o The loss of money is a risk of investing in the Fund.
o The value of the Fund's shares and the securities held by the Fund can
each decline in value.
o Investments in companies in the 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.
o Investments in smaller capitalized companies may involve greater risks,
such as limited product lines, markets and financial or managerial
resources.
o As a non-diversified fund, compared to other mutual funds, this Fund may
invest a greater percentage of its assets in a particular issuer.
Therefore, investors should consider this greater risk versus the safety
that comes with a more diversified portfolio.
o During the Fund's current fiscal year, substantial capital gains were
realized on sales of securities. See "Additional Investment Information
and Risk Factors" for additional information.
Who May Want to Invest in This Fund
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 represent your complete investment program or be
used for short-term trading purposes.
867314.6
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Risk/Return Bar Chart and Table
The following bar chart and table may assist in your decision to invest in the
Fund. The bar chart shows the average annual returns of the Fund for the life of
the Fund. The table shows how the Fund's average annual returns for a one-year
period compares with that of the Hambrecht & Quist Growth Index.* The chart and
table show returns for a Class that is not offered by this Prospectus. The Class
presented has substantially similar returns because the shares are invested in
the same portfolio of securities. The annual returns will differ only to the
extent that the Classes do not have the same expenses. While analyzing this
information, please note that the Fund's past performance is not an indication
of how the Fund will perform in the future. [GRAPHIC OMITTED]
Best Quarter 12/31/98: 49.07% Worst Quarter 3/31/97: (28.89%)
Average Annual Total Returns (for the
periods ending 12/31/98)(3)(4) Past One Year Since Inception (5)
Amerindo Technology Fund - Class D Shares 84.67% 15.22%
Hambrecht & Quist Growth Index * 45.10% 17.59%
* The Hambrecht & Quist Growth Index is a multiple-sector growth stock
composite comprised of the publicly traded stocks of approximately 275
companies that have annual revenues of less than $300 million. The Index
includes companies in the technology, healthcare services, branded
consumer, and Internet sectors. You may not invest in The Hambrecht & Quist
Growth Index and unlike the Fund, it does not incur fees or charges.
(1) Investors purchasing Class D shares are not charged a sales load, therefore
a sales load is not reflected in the Bar Chart.
(2) [The year to date returns for the Class D shares as of September 30, 1999
was ___%.]
(3) Class C shares will have substantially the same returns because the shares
are invested in the same portfolio of securities. The annual returns will
differ only to the extent that the Classes do not have the same expenses.
(4) Shareholder Organizations may charge a fee to investors for purchasing
or redeeming shares. The net return to such investors may be less than if
they had invested in the Fund directly.
(5) The date of inception of the Class D shares was October 28, 1996.
867314.6
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FEE TABLE
This table describes the fees and expenses that you may pay if you buy and hold
shares of the Fund.
Class C
Shareholder Fees
(fees paid directly from your investment)
Maximum Sales Load Imposed on Purchases
(as a percentage of the offering price) None
Maximum Deferred Sales Charge for shares
held less than 1 year (as a percentage
of the lesser of original purchase price or redemption
proceeds) 1.00%
Redemption Fees for shares held less than 1 year
(as a percent of amount redeemed, if applicable) 2.00%
Annual Fund Operating Expenses(1)
(expenses that are deducted from Fund assets)
Management Fees (with fee waiver) 1.50%
Distribution and/or Service 12b-1 Fees 1.00%
Other Expenses(2) 1.00%
-----
Total Annual Fund Operating Expenses 3.50%
Fee Waiver/Expense Reimbursement 0.50%
Net Total Annual Fund Operating Expenses 3.00%
(1) The Advisor is contractually obligated to waive its fees and to reimburse
any expenses to the extent that the Total Annual Operating Expenses exceed
3.00%. This Expense Limitation Agreement will terminate on December 31,
2000 unless renewed.
(2) Estimated because there were no Class C shares issued during the fiscal
year ended [October 31, 1999].
Example: This example is intended to help you compare the cost of investing in
the Fund with the cost of investing in other mutual funds. The Example assumes
that you invest $10,000 in the Fund over the time periods indicated and then
redeem all of your shares at the end of those periods. The Example also assumes
that your investment has a 5% return each year and that the Fund's operating
expenses remain the same. Although your actual costs may be higher or lower,
based on these assumptions your costs would be:
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Year 1 Year 3 Year 5 Year 10
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Class C $303 $927 $1577 $3318
You would pay the following expenses if you did not redeem your shares:
Year 1 Year 3 Year 5 Year 10
Class C $303 $927 $1577 $3318
</TABLE>
867314.6
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INVESTMENT OBJECTIVES, PRINCIPAL INVESTMENT
STRATEGIES AND RELATED RISKS
Investment Objective. The Fund's investment objective is to seek long-term
capital appreciation. There can be no assurance that the Fund's investment
objective will be achieved. The investment objective is fundamental to the Fund
and may not be changed without shareholder approval. Current income is
incidental to the Fund's investment objective.
Principal Investment Strategies. The Fund seeks to achieve its investment
objectives 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. In addition to investing at least 65% of its assets in technology
companies, 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 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.
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, when the investment in
such securities is considered consistent with the Fund's investment objective by
the Adviser.
The Fund will not invest more than 20% of its total assets in convertible
stocks, preferred stocks, bonds and warrants. The bonds in which the Fund may
invest are not required to be rated by a recognized rating agency. As a matter
of policy, however, the Fund will invest only in "investment grade" debt
securities (i.e., rated within the four highest ratings categories by a
nationally recognized statistical rating organization, e.g., BBB or higher by
Standard & Poor's Ratings Services, a division of the McGraw-Hill Companies,
Inc. ("S&P"), Baa or higher by Moody's Investor Service, Inc. ("Moody's"), BBB
or higher by Fitch Investors Services, Inc. ("Fitch"), or BBB or higher by Duff
& Phelps Credit Rating Co.--such securities 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.
867314.6
4
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Portfolio Turnover. Purchases and sales are made for the Fund whenever
necessary, in the Adviser's opinion, to meet the Fund's investment objective,
other investment policies, and the need to meet redemptions. The turnover rate
of the Fund for the fiscal year ended October 31, 1999 was [78.46%]. Fund
turnover may involve the payment by the Fund of dealer spreads or underwriting
commissions, and other transaction costs, on the sale of securities, as well as
on the investment of the proceeds in other securities. The greater the portfolio
turnover the greater the transaction costs to the Fund which could have an
adverse effect on the Fund's total rate of return. The Fund will minimize
portfolio turnover because it will not seek to realize profits by anticipating
short-term market movements and intends to buy securities for long-term capital
appreciation under ordinary circumstances.
Buy/Sell Decisions. The Fund's investment adviser considers the following
factors when buying and selling securities for the Fund: (i) the value of
individual securities relative to other investment alternatives, (ii) trends in
the determinants of corporate profits, (iii) corporate cash flow, (iv) balance
sheet changes, (v) management capability and practices and (vi) the economic and
political outlook.
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.
Concentration. The volatile nature of the technology and science areas could
cause price appreciation in a particular security or securities that results in
that investment increasing its concentration in the portfolio, in some cases,
well above the level at which it was originally purchased. For instance, even
though an investment may have been purchased at a time when it represented less
than 25% of the portfolio, appreciation may cause that concentration to be
significantly greater than 25% at various times in a rising market.
The Adviser reviews the positions of the Fund on a regular basis to ensure that
all tax and regulatory requirements are maintained. In instances where the value
of an investment has risen above 25%, the Adviser will evaluate the
appropriateness of that level of investment in light of the overall investment
strategy of the Fund and applicable regulatory and tax implications.
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.
Capital Gains. During the Fund's current fiscal year, substantial capital gains
were realized on sales of securities. These capital gains are material ($6.13 of
long-term capital gain and $8.92 of short-term capital gain per share based upon
the outstanding shares of the Fund as of April 30, 1999). In accordance with
applicable tax law requirements and the Fund's procedures, it anticipates
distributing its net long-term capital gains and net investment income,
including any net short-term capital gains, either immediately prior to or
shortly after the end of its taxable year ending October 31, 1999. Any Investor
who acquires shares before the Fund pays this dividend will be required to
include that dividend in his/her income even though the dividend represents, in
effect, a return of capital. A
867314.6
5
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distribution of long-term capital gain (increased or decreased by all other
realized long-term capital gain and long or short-term capital losses incurred
during the course of the fiscal year) will be taxed to investors as long-term
capital gain for federal income tax purposes. A distribution of short-term
capital gain (increased or decreased by all other realized short-term capital
gains or ordinary income and long or short-term capital or ordinary losses
incurred during the course of the fiscal year) will be taxed to investors as
ordinary income for federal income tax purposes. Although there is no certainty
that the Fund will pay a dividend or at what level the dividend will be paid,
potential investors should be aware that these capital gains (if not reduced by
other transactions during the course of the fiscal year) may have material tax
consequences to them and should consult their tax advisers before investing in
the Fund.
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.
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 Section 13 or 15 of the Securities Exchange
Act of 1934.
Temporary Investments. When the Adviser believes that adverse business or
financial 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. While taking a
defensive position, the Fund may not achieve its investment objective.
Repurchase Agreements. The Fund's portfolio position in cash or cash equivalents
may include entering into repurchase agreements. A repurchase agreement is an
instrument under which an investor purchases a U.S. Government security from a
vendor, with an agreement by the vendor to repurchase the security at the same
price, plus interest at a specified rate. Repurchase agreements may be entered
into with member banks of the Federal Reserve System or "primary dealers" (as
designated by the Federal Reserve Bank of New York) in U.S. Government
securities. Repurchase agreements usually have a short duration, often less than
one week. The Fund requires continual maintenance by the Fund's custodian of the
market value of underlying collateral in amounts equal to, or in excess of, the
value of the repurchase agreement including the agreed upon interest. If the
institution defaults on the repurchase agreement, the Fund will retain
possession of the underlying securities. In addition, if bankruptcy proceedings
are commenced with respect to the seller, realization on the collateral by the
Fund may be delayed or limited and the Fund may incur additional costs. In such
case the Fund will be subject to risks associated with changes in the market
value of the collateral securities. The Fund intends to limit repurchase
agreements to transactions with institutions believed by the Adviser to present
minimal credit risk. Repurchase agreements may be considered to be loans under
the Investment Company Act of 1940, as amended.
Year 2000 Compliance. As the Year 2000 approaches, an issue has emerged
regarding how existing application software programs and operating systems can
accommodate this date value. Failure to adequately address this issue could have
potentially serious repercussions. The Adviser is in the process of working with
the Fund's service providers to prepare for the Year 2000. Based on information
currently available, the Adviser does not expect that the Fund will incur
significant operating expenses or be required to incur material costs to be Year
2000 compliant. Although the Adviser does not anticipate that the Year 2000
issue will have a material impact on the Fund's ability to provide service at
current levels, there can be no assurance that steps taken in preparation for
the Year 2000 will be sufficient to avoid any adverse impact on the Fund. The
Year 2000 problem may also adversely affect issuers of the
867314.6
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Securities contained in the Fund to varying degrees based upon various factors,
and these may have a corresponding adverse effect on the Fund's performance. The
Manager is unable to predict what effect, if any, the Year 2000 problem will
have on such issues.
Non-Diversified Status. A "non-diversified" fund has the ability to take larger
positions in a smaller number of issuers. Because the appreciation or
depreciation of a single stock may have a greater impact on the net asset value
of a non-diversified fund, its share price can be expected to fluctuate more
than a comparable diversified fund. This fluctuation, if significant, may affect
the performance of the Fund.
MANAGEMENT, ORGANIZATION AND CAPITAL STRUCTURE
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, had assets under management of approximately $2.5 billion as
of December 31, 1998. Alberto W. Vilar and Dr. Gary A. Tanaka are primarily
responsible for the day-to-day management of the Fund's portfolio. Their
biographies are as follows:
Alberto W. Vilar, 58, has been Chairman of the Board of Directors and Chief
Executive Officer of the Fund since its inception. 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. Mr. Vilar was awarded an
Honorary Doctorate of Humanities degree from Washington & Jefferson College. He
has been a Chartered Financial Analyst since 1975.
Dr. Gary A. Tanaka, 55, has been a Director and President of the Fund since its
inception. 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 & 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 and
has served in this position since that time. 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.
Pursuant to the Investment Advisory Contract for the Fund, the Adviser manages
the Fund's portfolio of securities and makes the decisions with respect to the
purchase and sale of investments subject to the general control of the Board of
Directors of the Fund.
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. Any portion of the advisory
fees received by the Adviser may be used by the Adviser to provide investor and
administrative services and for distriubtion of Fund shares. The Adviser may
also voluntarily waive a portion of its fee or assume certain expenses of the
Fund. The Advisor is contractually obligated to waive its fees and to reimburse
any expenses to the extent that the Total Annual Operating Expenses exceed
3.00%. This Expense Limitation Agreement will terminate on December 31, 2000
unless renewed. The contractual waiver and any voluntary waivers or
reimbursements 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 Section V.A.2 of the Statement of Additional Information.
867314.6
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Performance of the Adviser. In the early 1980s, 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 five-year performance, respectively. Amerindo did not have a
ten-year performance number. Amerindo was not ranked by the Money Manager
Scorecard during 1997. 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.
The performance of the Fund may be compared in various financial and news
publications to the performance of various indices and investments for which
reliable performance data is available. The performance of the Fund may be
compared in publications to averages, performance rankings, or other information
prepared by nationally recognized mutual fund ranking and statistical services.
As with other performance data, performance comparisons should not be considered
representative of the Fund's relative performance for any future period.
Amerindo's equity composite includes the portfolios managed in substantially
similar styles to that of the Fund 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, 1998. An independent
accounting firm has conducted an examination with respect to Amerindo for the
period October 1, 1987 through December 31, 1997, and has confirmed that
Amerindo's performance presentation contained herein for such period conforms
with AIMR standards. The 1998 review is currently in progress. The Independent
Accountants' Report is available upon request. AIMR has not been involved with
the preparation or review of the Independent Accountants' Report. The AIMR
method of performance differs from that of the SEC and can contain different
results. The private accounts listed do not have to comply with the Investment
Company Act of 1940 or Subchapter M of the Internal Revenue Code. If this
compliance was necessary, the account's performance could be adversely affected.
The following Schedule represents the rates of return for the equity composite
for the annual investment periods from January 1, 1989 through December 31,
1998. Accounts benchmarks are the Standard & Poor's 500 - Composite Stock Index,
Hambrecht & Quist Growth Index and the Russell 2000 Growth Index. The
Independent Accountants' Report relates to their examination of Amerindo's
performance from the inception of the composite October 1, 1987 through December
31, 1997, which is in accordance with AIMR standards.
The following performance information relates to Amerindo's management of
institutional accounts. This data should not be interpreted as the Fund's
performance nor is it indicative of future performance of the Fund.
867314.6
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<TABLE>
<CAPTION>
Asset Weighted Asset Weighted Russell
Composite Rate Composite Rate H&Q 2000
of Return Net of of Return Gross of S&P Growth Growth
Year Advisory Fees Advisory Fees 500 Index Index Index
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
1989 40.67% 42.49% 31.44% 17.41% 20.16%
1990 6.75% 8.49% -3.19% 3.89% -17.41%
1991 76.52% 78.39% 30.55% 94.49% 51.18%
1992 7.61% 8.73% 7.68% -3.57% 7.77%
1993 15.08% 16.42% 10.00% 7.81% 13.36%
1994 -2.66% -1.53% 1.33% 3.38% -2.43%
1995 87.51% 89.39% 37.50% 61.72% 31.04%
1996 8.04% 9.61% 23.22% 10.86% 11.26%
1997 -26.61% -26.05% 33.34% 2.39% 12.95%
1998 61.67% 64.14% 28.58% 45.04% 1.23%
Annualized rates of return for the period January 1, 1989 to December 31, 1998
22.71% 24.33% 20.38% 20.16% 11.82%
</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.
The Fund's total return for the period October 28, 1996 (commencement of
operations) through December 31, 1998 was 15.22%. The Fund's total return for
the calendar year ended December 31, 1998 was 84.67%.
PRICING OF FUND SHARES
Net asset value per share for Class C shares 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 the net asset value once daily on Monday through Friday, at
the regularly scheduled close of normal trading on the New York Stock Exchange,
which normally occurs at 4:00 p.m. Eastern time, except on Martin Luther King
Jr. Day, New Year's Day, President's Day, Good Friday, Memorial Day,
Independence Day, Labor Day, Thanksgiving and Christmas.
HOW TO PURCHASE SHARES
Initial Investments by Wire. You may purchase Class C shares of the Fund by
wiring immediately available federal funds (subject to the minimum investment)
to Bankers Trust Company from your bank. Your bank may charge a fee for doing so
(see instructions below). The minimum initial investment in Class C shares is
$2,500 ($1,000 for IRA accounts), each of which may be waived by the Fund.
If money is to be wired, you must call the Transfer Agent at 1-888-TECH FUND to
set up your account and obtain an account number. You should be prepared at that
time to provide the information on the application. Then you should provide your
bank with the following information for purposes of wiring your investment:
867314.6
9
<PAGE>
Bankers Trust Company
New York, New York
ABA# 021001033
Account # 01-465-547
F/B/O Amerindo Technology Fund
Class C
Fund Acct. No.
Social Security or Tax Identification No.
You are required to mail a signed application to the Transfer Agent at the above
address in order to complete your initial wire purchase. Wire orders will be
accepted only on a day on which the Fund and the Custodian and Transfer Agent
are open for business. A wire purchase will not be considered made until the
wired money is received and the purchase accepted by the Fund. Shareholders will
receive the next determined net asset value per share after receipt of such wire
and the acceptance of the purchase by the Fund. Any delays which may occur in
wiring money, including delays which may occur in processing by the banks, are
not the responsibility of the Fund or the Transfer Agent. There is presently no
fee for the receipt of wired funds, but the right to charge shareholders for
this service is reserved by the Fund.
Initial Investments by Mail. 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 the minimum investment) payable to:
Amerindo Technology Fund
P.O. Box 446
Portland, ME 04112
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 a minimum subsequent investment of $500) by purchasing shares at net asset
value, by mailing a check to the Fund at the address noted under "Initial
Investments by Mail" (payable to "Amerindo Technology Fund Class C"), by wiring
monies to the clearing bank as outlined above, or by telephone with payment by
Automated Clearing House ("ACH"), electronically transferring Funds from the
investor's designated bank account. In order to purchase shares by telephone and
make payment by ACH, an investor must complete the appropriate sections of the
application. Shareholders who have authorized telephone purchases may effect
purchases by calling the Transfer Agent at 1-888- TECHFUND.
Sales Charges. 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. See "Pricing
of Fund Shares" herein. The Fund sells Class C shares without an initial charge
but if the shares are held less than one year, investors will pay a contingent
deferred sales charge ("CDSC") of 1%. The amount of the CDSC is determined as a
percentage of the lesser of the current market value of the cost of the shares
being redeemed. Thus, when a share that has appreciated in value is redeemed
during the CDSC period, a CDSC is assessed only on its initial purchase price.
Shares acquired by reinvestment of distributions are not subject to the CDSC.
The Fund will also waive the CDSC for: (i) redemptions made within one year
after death of a shareholder or registered joint owner, (ii) minimum required
distributions made from an IRA or other individual retirement plan account after
a shareholder reaches age 70 1/2, or (iii) involuntary redemptions made by the
Fund. Class C shares provide the investor the benefit of putting
867314.6
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<PAGE>
all of the investor's dollars to work from the time the investment is made
rather than paying an upfront sales charge. Class C shares may have a higher
expense ratio and pay lower dividends than other classes of shares offered by
the Fund because the Class C shares bear a higher 12b-1 fee than other classes
and because of other related expenses.
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 CDSC will be assessed. In determining
"one year" the Fund will use the anniversary date of a transaction. Thus, shares
purchased on November 2, 1999, for example, will be subject to the fee if they
are redeemed on or prior to November 1, 2000. If they are redeemed on or after
November 2, 2000, the shares will not be subject to the CDSC. The CDSC 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. In
determining whether a CDSC is payable on any redemption, shares not subject to
any charge will be redeemed first, followed by shares held longest during the
CDSC period. The CDSC ordinarily goes to the investor's broker-dealer as
compensation for the services provided the investor. In addition, Class C
investors will be charged a redemption fee of 2.00% for shares held less than 1
year. See "How to Redeem." The Fund reserves the right to reject any
subscription for shares.
Other Purchase Information. Investors may open accounts in the Fund only through
the exclusive Distributor for the Fund, SEI Investments Distribution Co., which
as agent for the Fund, will solicit orders for the purchase of Fund shares,
provided that any subscriptions and orders will not be binding on the Fund until
accepted by the Fund as principal. See Distribution Arrangements.
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.
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.
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 must 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 Class C shares of
the Fund. The minimum initial investment for all retirement plans is $1,000 with
a subsequent minimum investment of $500. Investors desiring information
regarding investments through IRAs should write or telephone the Fund.
867314.6
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<PAGE>
HOW TO REDEEM 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 at the regularly-scheduled close of normal trading on the
New York Stock Exchange ("NYSE"), which normally occurs at 4:00 p.m. Eastern
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, P.O. Box 446, Portland, ME 04112.
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);
(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.
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 $2,500. 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.
867314.6
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<PAGE>
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 2.00% fee
on the redemption of Class C 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). This fee also does not apply to clients of the Adviser and its
affiliates that hold shares in IRA accounts or in retirement plans (such as
401(k), 403(b), 457, Keogh, Profit Sharing Plans, and Money Purchase Pension
Plans). See "How to Purchase Shares" for a description of the definition of the
one-year holding period.
DIVIDENDS AND DISTRIBUTIONS
At least 90% of Class C'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 Class C, 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 Class C shares 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 Class C 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 Class C shares
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 Class C 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.
867314.6
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<PAGE>
TAX CONSEQUENCES
The Fund intends to elect to qualify as a regulated investment company under the
Internal Revenue Code of 1986, effective for its taxable year beginning November
1, 1998. By qualifying, the Fund generally will not be subject to Federal income
tax on net ordinary income and net realized capital gains paid out to its
stockholders. The Fund can also avoid an annual 4% excess tax if it distributes
substantially all of its taxable income and capital gain each year. 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 (which includes interest,
dividends and net short term capital gains). The Fund has adopted a policy of
declaring dividends annually. Distributions of net ordinary income and net
short-term capital gains are taxable to stockholders as ordinary income.
Although corporate stockholders would generally be entitled to the
dividends-received deduction to the extent that the Fund's income is derived
from qualifying dividends from domestic corporations, the Fund does not believe
that any of its distributions will qualify for this deduction.
The excess of net long-term capital gains over net short-term capital losses
realized and distributed by the Fund as capital gains distributions is taxable
to stockholders as long-term capital gains, without regard to the length of time
the stockholder may have held its shares in the Fund. Long-term capital gains
distributions are not eligible for the dividends-received deduction referred to
above. Long-term capital gains on sales of securities are currently taxable at a
maximum rate of 20% for non-corporate shareholders. Capital gain dividends,
designated in a notice mailed to investors not later than 60 days after the Fund
taxable year closes, will be taxed as long-term capital gain without regard to
the length of time for which the investor has held its shares. In determining
the amount of capital gains to be distributed, any capital loss carryover from
prior years will be taken into account in determining the amount of net 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, for
purposes of determining the length of the holding period, 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.
Distributions are taxable to investors whether received in cash or reinvested in
additional shares of the Fund. Any dividend or distribution received by a
stockholder shortly after the purchase of shares will reduce the net asset value
of the shares by the amount of the dividend or distribution. Furthermore, such
dividend or distribution, is subject to tax even though it is, in effect, a
return of capital.
The redemption of shares may result in the stockholder's receipt of more or less
than the stockholder paid for its shares and, thus, in a taxable gain or loss to
the stockholder. If the redeemed shares have been held for more than one year,
the stockholder will generally realize a long-term capital gain or loss.
The Fund is required, subject to certain exemptions, to withhold at a rate of
31% from dividends paid or credited to stockholders and from the proceeds from
the redemption of Fund shares, if a correct taxpayer identification number,
certified when required, is not on file with the Fund or if the Fund or the
shareholder has been notified by the Internal Revenue Service that the
shareholder is subject to these backup withholding rules. Corporate stockholders
are not subject to this requirement.
If the Fund invests in securities of foreign issuers, it may be subject to
withholding and other similar income taxes imposed by a foreign country.
Dividends and distributions may be subject to state and local taxes. Dividends
paid or credited to accounts maintained by non-resident shareholders may also be
subject to U.S. non-resident withholding taxes. You should consult with your tax
adviser regarding specific questions as to Federal, state and local income and
withholding taxes.
DISTRIBUTION ARRANGEMENTS
Distributor. SEI Investments Distribution Co. ("SIDCO"), an affiliate of the
Administrator, has entered into a distribution agreement with the Fund to serve
as the Fund's distributor. Pursuant to the terms of the Fund's Rule
867314.6
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<PAGE>
12b-1 Plan, SIDCO will be entitled to receive a distribution fee equal to 0.75%
pursuant to the Distribution Agreement and a shareholder servicing fee equal to
0.25% of the Class C shares' average daily net assets pursuant to the
Shareholder Servicing Agreement.
12b-1 Plan. The Fund, on behalf of the Class C shares, has adopted a
distribution and service plan, pursuant to Rule 12b-1 under the Investment
Company Act (the "Plan"). Rule 12b-1 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 this Rule. The Plan provides that the
Distributor will receive compensatory payments from the Fund for soliciting
orders for the purchase of Fund shares and for making payments to broker-dealers
and other financial institutions with which it has written agreements and whose
clients are Fund shareholders, for providing distribution assistance on behalf
of the Fund. The Plan also provides that the Class C shareholders will
compensate the Distributor for certain expenses and costs incurred in connection
with providing shareholder servicing and maintaining shareholder accounts and to
compensate parties with which it has written agreements and whose clients own
shares of Class C for providing servicing to their clients ("shareholder
servicing" ). Because these fees are paid out of the Fund's assets on an ongoing
basis, over time these fees will increase the cost of your investment and may
cost you more than paying other types of sales charges. The total amounts
payable under the Plan by the Class C shares of the Fund may not exceed 1.00%
per annum. Fees paid under the Plan may not be waived for individual
shareholders.
Consistent with the Plan, under the Distribution Agreement the Distributor
receives from the Class C shares of the Fund a compensatory distribution fee
equal to 0.75% per annum of the Class C shares' average daily net assets. This
distribution fee is an asset-based sales charge. The Distributor uses this fee
to make payments to broker-dealers and other financial institutions with which
it has written agreements and whose clients are Class C shareholders for
providing distribution assistance for sales of the Class C shares. The fees are
accrued daily and paid monthly.
Under the Shareholder Servicing Agreement, the Distributor receives a maximum
service fee of 0.25% per annum of the Class C's average daily net assets. The
fees are accrued daily and paid monthly. The Distributor uses this fee to
perform, or to arrange to have others perform, all shareholder servicing fees
not performed by the Fund, the transfer agent for the Fund, or not performed
under the Distribution Agreement. The shareholder servicing agents that the
Distributor retains will perform the following services: (i) 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; (ii) assist shareholders in designating and changing
dividend options, account designations and addresses; (iii) provide necessary
personnel and facilities to establish and maintain shareholder accounts and
records; (iv) assist in processing purchase and redemption transactions; (v)
arrange for the wiring of funds; (vi) transmit and receive funds in connection
with customer orders to purchase or redeem shares; (vii) verify and guarantee
shareholder signatures in connection with redemption orders and transfers and
changes in shareholder designated accounts; (viii) 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 in a timely fashion after
activity is generated in the account; (ix) transmit, on behalf of the Fund,
proxy statements, annual reports, updating prospectuses and other communications
from the Fund to shareholders; (x) receive, tabulate and transmit to the Fund,
proxies executed by shareholders with respect to meetings of shareholders of the
Fund; and (xi) provide such other related services as the Fund or a shareholder
may request.
In addition, the Plan provides that the Distributor may make payments from time
to time from its own resources (which may include past profits) for the
following purposes: (i) to defray the costs of and to compensate others,
including financial intermediaries with whom the Distributor 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, in its 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 the Fund is
required to pay to the Distributor for any fiscal
867314.6
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<PAGE>
year under the shareholder servicing agreements or otherwise. Any servicing fees
paid to the Distributor also may be used for purposes of (i) above and any asset
based sales charges paid to the Distributor also may be used for purposes of
(ii), (iii), or (iv) above.
Shareholder servicing agents and broker-dealers may charge investors a fee in
connection with their use of specialized purchase and redemption procedures
offered to investors by the shareholder servicing agents and broker-dealers. In
addition, shareholder servicing agents and broker-dealers offering purchase and
redemption procedures similar to those offered to shareholders who invest in the
Fund directly may impose charges, limitations, minimums and restrictions in
addition to or different from those applicable to shareholders who invest in the
Fund directly. Accordingly, the net yield to investors who invest through
shareholder servicing agents and broker-dealers may be less than by investing in
the Fund directly. An investor should read the Prospectus in conjunction with
the materials provided by the shareholder servicing agent and broker-dealer
describing the procedures under which Fund shares may be purchased and redeemed
through the shareholder servicing agent and broker-dealer.
867314.6
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<PAGE>
FINANCIAL HIGHLIGHTS INFORMATION
The financial highlights table is intended to help you understand the Fund's
financial performance since its inception. Certain information reflects
financial results for a single Fund share. The highlights reflect an investment
in the Class D shares of the Fund since there were no Class C shares issued
during the periods covered by this table. The total returns in the table
represent the rate that an investor would have earned (or lost) on an investment
in the Class D shares of the Fund (assuming reinvestment of all dividends and
distributions). This information has been audited by Morrison, Brown, Argiz &
Co, P.A., whose report, along with the Fund's financial statements, are included
in the annual report, which is available upon request. [The table is part of the
Fund's financial statements for the year ended October 31, 1999, which are
available to shareholders upon request.]
<TABLE>
<CAPTION>
CLASS D SHARES
For the period
October 29, 1996
(commencement of
[For the fiscal year For the fiscal year investment
ended ended December 31, operations) through
October 31, 1999+] 1998 1997 December 31, 1996
------------------ ---- ---- -----------------
<S> <C> <C> <C>
Net asset value, beginning of period $7.37 $9.00 $10.00
----- ----- ------
Income (loss) from investment operations:
Net investment loss (0.20) (0.16) (0.04)
Net realized and unrealized gain (loss) on
investments 6.44 (1.47) (0.96)
---- ------ ------
Total from investment operations 6.24 (1.63) (1.00)
---- ------ ------
Less distributions:
Dividends from net investment income 0.00 0.00 0.00
Distribution from realized gains from
security transactions 0.00 0.00 0.00
Total distributions 0.00 0.00 0.00
---- ----- ----
Net asset value, end of period $13.61 $7.37 $9.00
====== ===== =====
Total return** 84.67 (18.11%) [(45.69%)]***
Ratios/supplemental data:
Net assets end of period (in 000's) 64,194 40,191 34,210
Ratio of expenses to average net assets 2.75% 2.83% 3.82%*
Ratio of expenses to average net assets,
net of reimbursement 2.25% 2.25% 2.25%*
Ratio of net investment income (loss) to
average net assets (2.72%) (2.83%) (3.82%)*
Ratio of net investment income (loss) to
average net assets, net of reimbursement (2.21%) (2.25%) (2.25%)*
Portfolio turnover rate 78.46% 355.21% 0.00%
- ----------------------
* Annualized
** Based on net asset value per share
*** Not annualized.
[+ Effective [ ], the Fund changed its fiscal year end from December 31 to October 31.]
</TABLE>
867314.6
17
<PAGE>
<TABLE>
<CAPTION>
AMERINDO TECHNOLOGY FUND
[December __, 1999]
<S> <C>
Investment Adviser A Statement of Additional Information (SAI), dated
Amerindo Investment Advisors Inc. [December __, 1999], and the Fund's Annual and Semi-
San Francisco, California Annual Reports include additional information about the
New York, New York Fund and its investments and are incorporated by reference
into this prospectus. In the Fund's Annual Report is a
Administrator discussion of the market and investment strategies that
SEI Investments Mutual Funds Services significantly affected the Fund's performance during its last
Oaks, Pennsylvania fiscal year. You may obtain the SAI, the Annual and Semi-
Annual Reports and material incorporated by reference
Transfer and Dividend Agent without charge by calling the Fund at 1-888-TECH FUND.
Forum Shareholder Services, LLC To request other information, please call your financial
Portland, Maine intermediary or the Fund.
Distributor A Current SAI has been filed with the Securities and
SEI Investments Distribution Co. Exchange Commission. You may visit the Securities and
Oaks, Pennsylvania Exchange Commission's Internet website (www.sec.gov) to
view the SAI, material incorporated by reference and other
Custodian information. These materials can also be reviewed and
The Northern Trust Company copied at the Commission's Public Reference Room in
Chicago, Illinois Washington, DC. Information on the operation of the
Public Reference Room may be obtained by calling the
Legal Counsel Commission at 1-800-SEC-0330. In addition, copies of
Battle Fowler LLP these materials may be obtained, upon payment of a
New York, New York duplicating fee, by writing the Public Reference Section of
the Commission, Washington, DC 20549-6009.
Independent Auditors
Morrison, Brown, Argiz & Company
Miami, Florida
1-888-TECH FUND
www.amerindo.com
</TABLE>
811-07531
867314.6
<PAGE>
AMERINDO TECHNOLOGY FUND
---------------------------------------------
STATEMENT OF ADDITIONAL INFORMATION
[December __, 1999]
RELATING TO THE AMERINDO TECHNOLOGY FUND PROSPECTUS FOR
THE CLASS A AND D SHARES
DATED SEPTEMBER 20, 1999
AND THE PROSPECTUS FOR THE
CLASS C SHARES
DATED [DECEMBER ___, 1999]
---------------------------------------------
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 Prospectuses.
This Statement of Additional Information is not a prospectus and should
be read in conjunction with each of the Fund's Prospectuses, a copy of which may
be obtained without charge by writing to the Fund at 399 Park Avenue, 22nd
Floor, New York, New York 10022.
The Financial Statements of the Fund have been incorporated by
reference into the Statement of Additional Information from the Fund's Annual
and Semi-Annual Reports. The Annual and Semi-Annual Reports are available,
without charge, upon request by calling the Fund. The material relating to
Purchase, Redemption and Pricing of Shares has been incorporated by reference to
the Prospectus for each Class of shares.
This Statement of Additional Information is incorporated by reference
into each of the Fund's Prospectuses in its entirety.
<TABLE>
<CAPTION>
TABLE OF CONTENTS
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Fund History.................................................... 1 Capital Stock and Other Securities................... 18
Description of the Fund and its Investments and Risks........... 1 Purchase, Redemption and Pricing of Shares........... 19
Management of the Fund ......................................... 8 Taxation of the Fund................................. 19
Control Persons and Principal Holders
of Securities.................................................. 10 Underwriters......................................... 21
Investment Advisory and Other
Services........................................................ 11 Calculation of Performance Data ..................... 22
Brokerage Allocation and Other Practices........................ 16 Financial Statements................................. 23
- ------------------------------------------------------------------------------------------------------------------------------
</TABLE>
867353.4
<PAGE>
I. FUND HISTORY
Amerindo Funds, Inc. (the "Fund") was incorporated in Maryland on
February 6, 1996.
II. DESCRIPTION OF THE FUND AND ITS INVESTMENTS AND RISKS
A. INVESTMENT STRATEGIES AND RISKS
The Fund is a non-diversified, open-end, management investment company.
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.
B. DESCRIPTION OF THE FUND'S INVESTMENT SECURITIES AND DERIVATIVES
1. 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 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
867353.4
-1-
<PAGE>
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.
2. Foreign Securities. 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.
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 settlements may in some instances be subject to delays and
related administrative uncertainties that 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 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 (in
which the Fund could lose its entire investment in a certain market) and the
possible adoption of foreign governmental restrictions such as exchange
controls. There can be no assurance that the Fund's foreign investments will
present less risk then a portfolio of domestic securities.
Foreign Currency. Investments in foreign securities will usually be
denominated in foreign currency, and the Fund may contemporarily hold funds in
foreign currencies. The value of the Fund's investments denominated in foreign
currencies may be affected, favorably or unfavorably, by the relative strength
of the U.S. dollar, changes in foreign currency and U.S. dollar exchange rates
and exchange control regulations. The Fund may incur costs in connection with
conversions between various currencies. The Fund's net asset value per share
will be affected by changes in currency exchange rates. Changes in foreign
currency exchange rates may also affect the value of dividends and interest
earned, gains and losses realized on the sale of securities and net investment
income and gains, if any, to be distributed to shareholders by the Fund. The
rate of exchange between the U.S. dollar and other currencies is determined by
the forces of supply and demand in the foreign exchange markets (which in turn
867353.4
-2-
<PAGE>
are affected by interest rates, trade flow and numerous other factors,
including, in some countries, local governmental intervention).
3. U.S. Government Obligations. U.S. Government obligations are
obligations that are backed by the full faith and credit of the United States,
by the credit of the issuing or guaranteeing agency or by the agency's right to
borrow from the U.S. Treasury. They include (i) U.S. Treasury obligations, which
differ only in their interest rates, maturities and times of issuance as
follows: U.S. Treasury bills (maturity of one year or less), U.S. Treasury notes
(maturity of one year or ten years), U.S. Treasury bonds (generally maturities
of more than ten years), and (ii) obligations issued or guaranteed by U.S.
Government agencies and instrumentalities that are supported by the full faith
and credit of the United States (such as securities issued by the Government
National Mortgage Association, the Federal Housing Administration, the
Department of Housing and Urban Development, the Export-Import Bank, the General
Services Administration and the Maritime Administration, and certain securities
issued by the Farmers' Home Administration and the Small Business
Administration, most of which are explained below under the section entitled
"Mortgage-Backed Securities"). The maturities of U.S. Government obligations
usually range from three months to thirty years.
4. 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 a delay and incur costs before
being able to sell the security. Delays may involve loss of interest or decline
in price of the security. If the court characterized the transaction as a loan
and the Fund has not perfected a security interest in the security, the Fund may
be required to return the security to the seller's estate and be treated as an
unsecured creditor of the seller. As an unsecured creditor, the Fund would be at
the risk of losing some or all of the principal and income involved in the
transaction. As with any unsecured debt obligation purchased for the Fund, the
Adviser seeks to minimize the risk of loss through repurchase agreements by
analyzing the creditworthiness of the obligor, in this case the seller. Apart
from the risk of bankruptcy or insolvency proceedings, there is also the risk
that the seller may fail to repurchase the security, in which case the Fund may
incur a loss if the proceeds of the sale to a third party are less than the
repurchase price. However, if the market value of the securities subject to the
repurchase agreement becomes less than the repurchase price (including
interest), the Fund involved will direct the seller of the security to deliver
additional securities so that the market value of all securities subject to the
867353.4
-3-
<PAGE>
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.
5. 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.
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.
6. 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.
7. Lending of Securities. The Fund may, but does not currently intend
to, lend its portfolio securities to qualified institutions as determined by the
Adviser. By lending its portfolio securities, the Fund attempts to increase its
income through the receipt of interest on the loan. Any gain or loss in the
market price of the securities loaned that may occur during the term of the loan
will be for the account of the Fund in such transaction. The Fund will not lend
portfolio securities if, as a result, the aggregate of such loans exceeds 33% of
the value of its total assets (including such loans). All relevant facts and
circumstances, including the creditworthiness of the qualified institution, will
be monitored by the Adviser, and will be considered in making decisions with
respect to lending of securities, subject to review by the Fund's Board of
Directors. The Fund may
867353.4
-4-
<PAGE>
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.
8. 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. 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.
- --------
* 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.
867353.4
-5-
<PAGE>
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 that the Fund holds VANs with these limits,
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.
C. FUND POLICIES - 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. 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 may not:
(1) Make portfolio investments other than as described herein
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 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. 300%
asset coverage is maintained at all times.
(3) 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 (2)
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.
(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
867353.4
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<PAGE>
the extent that securities subject to a demand obligation
and stand-by commitments may be purchased as set forth
under "Description of the Fund and Its Investments 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, securities that are not readily marketable or
are illiquid investments. Such Securities include foreign
securities and bank participation interests for which a
readily available market does not exist, 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,
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 as described
under "Description of the Fund and Its Investments 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
Objectives, Principal Investment Strategies and Related
Risks" 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
objective 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.
The Fund will not be in violation of any maximum percentage limitation
when the change in the percentage of the Fund's held holdings is due to a change
in value of the Fund's securities. This qualification does not apply to the
restriction on the Fund's ability to purchase additional securities when
borrowings earn 5% of the value of the Fund's total assets. Investment
restrictions that involve a maximum percentage of securities or assets will 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.
867353.4
-7-
<PAGE>
D. TEMPORARY DEFENSIVE POSITIONS
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.
E. PORTFOLIO TURNOVER
The variation in the Fund's portfolio turnover within the two most
recently completed fiscal years (from 355.21% in 1997 to 78.46% in 1998) was due
to less trading by the Fund. In response to current market conditions the Fund
has employed more of a buy and hold strategy which has decreased the portfolio
turnover rate over the last fiscal year. This strategy is consistent with the
Fund's investment objectives and overall investment policies and strategies.
[Update for fiscal end 1999?]
III. MANAGEMENT OF THE FUND
The Fund's Board of Directors is responsible for the overall management
and supervision of the Fund. The Board employs Amerindo Investment Advisors,
Inc. (the "Adviser" or "Amerindo") as the investment adviser to the Fund. The
Adviser supervises all aspects of the Fund's operations and provides investment
advice and portfolio management services to the Fund. Subject to the Board's
supervision, the Adviser makes all of the day-to- day investment decisions,
arranges for the execution of portfolio transactions and generally manages the
portfolio investments.
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 has been Chairman of the Board of Directors and
Amerindo Investment Advisors Inc. Chief Executive Officer of the Fund since its inception. He
One Embarcadero began his career with Citibank N.A. in New York in 1964
Suite 2300 and worked there as an International Credit Officer until
San Francisco, CA 94111 1967. From 1967 to 1971, he served as Vice President,
399 Park Avenue Portfolio Manager and Manager of the Investment
22nd Floor Management Division of Drexel Burnham Lambert in New
New York, NY 10022 York. From 1971 to 1973, he served as Executive Vice
(58) 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
- --------
* "Interested person" of the Fund, as defined in the Investment Company Act.
</TABLE>
867353.4
-8-
<PAGE>
<TABLE>
<S> <C>
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. Mr. Vilar was awarded an Honorary Doctorate
of Humanities Degree from Washington & Jefferson
College. He has been a Chartered Financial Analyst since
1975.
DR. GARY A. TANAKA * Dr. Tanaka has been a Director and President of the Fund
Amerindo Investment Advisors Inc. since its inception. He served as a Portfolio Manager for
43 Upper Grosvenor Street Crocker Bank in San Francisco from 1971 to 1977, and as a
London, England W1X9PG Partnership Manager for Crocker Investment Management
(55) 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 and has served in this
position since that time. 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 has been a Director of the Fund since its
Rutledge & Company, Inc. inception. He also has been Chairman of Rutledge &
One Greenwich Office Park Company, Inc., a merchant banking firm, since 1991 and
Greenwich, CT 06831 serves as a director of Earle M. Jorgensen Company,
(52) 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 has been a Director of the Fund since its
Polyconomics, Inc. inception. He also has been president of Polyconomics,
86 Maple Avenue Inc. since 1978 and serves as a director for Repap
Morristown, NJ 07960 Enterprises Inc.
(63)
- --------
</TABLE>
867353.4
-9-
<PAGE>
<TABLE>
<S> <C>
DANA E. SMITH Ms. Smith has been the Vice President of and Treasurer to
Amerindo Investment Advisors Inc. the Fund since its inception. She has been the Chief
22nd Floor Compliance Officer of Amerindo Investment Advisors Inc.
399 Park Avenue since April 1993. From December 1991 to March 1993,
New York, NY 10022 she was a Mutual Fund Marketing Associate at Lazard
(40) Freres Asset Management and an officer of The Lazard
Funds, Inc.
ANTHONY CIULLA Mr. Ciulla has been Vice President of the Fund since its
Amerindo Investment Advisors Inc. inception and has been the Secretary since [ ]. He has
One Embarcadero been the Senior Trader of Amerindo Investment Advisers
Suite 2300 Inc. since October 1, 1990.
San Francisco, CA 94111
(67)
</TABLE>
<TABLE>
<CAPTION>
COMPENSATION TABLE
(For Fiscal Year Ended [October 31, 1999])
Aggregate Pension or Retirement
Name of Person and Compensation Benefits Accrued as Part Estimated Annual Benefit Total Compensation
Position with Fund From Fund * of Fund Expenses Upon Retirement From the Fund
- ------------------ ------------ ------------------------ ------------------------ ------------------
<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
* 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.
</TABLE>
IV. CONTROL PERSONS AND PRINCIPAL HOLDERS OF SECURITIES
On [October 31, 1999,] there were ______ Class A shares and _______
Class D shares of the Fund outstanding. There were no Class C shares
outstanding. As of this date, the directors and officers of the Fund, as a
group, owned less than 1% of both the Class A and Class D shares.
867353.4
-10-
<PAGE>
The following represents a list of persons who owned 5% or more of the
Fund's outstanding common stock as of [October 31, 1999]:
<TABLE>
<CAPTION>
<S> <C> <C> <C>
CLASS A SHARES Name & Address Percentage of Class Nature of Ownership
-------------- ------------------- -------------------
[Light & Co. [10.54%] [Record]
P.O. Box 1596
Baltimore, MD 21203]
[G. Becker IRA [10.01%] [Beneficial]
1400 Willow - 2006
Louisville, KY 40204]
[E. Tilghman [6.41%] [Beneficial]
4 Bassett Creek Trail N.
Hobe Sound, FL 33445]
[E. Shumaker [6.08%] [Beneficial]
407 Tiffany Drive
Waukegan, IL 60085]
CLASS D SHARES Name and Address Percentage of Class Nature of Ownership
---------------- ------------------- -------------------
[Antar & Co. [8.33%] [Record]
Legacy Trust Company
P.O. Box 1471
Houston, TX 77251-1471]
[Mac & Co. [17.91%] [Record]
Mutual Fund Operations
P.O. Box 3198
Pittsburgh, PA 15230-3198]
</TABLE>
V. INVESTMENT ADVISORY AND OTHER SERVICES
A. INVESTMENT ADVISER
1. General Information. 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 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.
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.
867353.4
-11-
<PAGE>
The Adviser may also 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. On July 13, 1999, the Board voted to extend the term of the
Advisory Agreement to July 30, 2000. The Agreement, which currently extends to
July 30, 2000, 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.
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.
2. 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.
<TABLE>
<CAPTION>
Fees Paid to the Adviser Under the Advisory Agreement
- -------------------------------------------------------------------------------------------------------------------
Fiscal Year Ended,
[October 31, 1999*] December 31, 1998 December 31, 1997
----------------------------------------------------------------------------
<S> <C> <C> <C>
Fees Paid $ $674,525 $609,301
Reimbursements $ $225,991 $234,645
- -------------------------------------------------------------------------------------------------------------------
</TABLE>
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 also voluntarily waive a portion of its fee or assume
certain expenses of the Fund. The Advisor is contractually obligated to waive
its fees and to reimburse any expenses to the extent that the Total Annual Fund
Operating Expenses exceed 2.25% for the Class A and Class D shares and 3.00% for
the Class C shares. This Expense Limitation Agreement will terminate on December
31, 2000 unless renewed. Any fee waivers or expense reimbursements have the
effect of lowering the overall expense ratio of the Fund and of increasing yield
to investors.
- --------
* [ Effective [ ], the Fund changed its fiscal year from December 31 to
October 31.]
867353.4
-12-
<PAGE>
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: (i) fees payable to the Adviser,
Administrator, Custodian, Transfer Agent and Dividend Agent; (ii) brokerage and
commission expenses; (iii) Federal, state or local taxes, including issuance and
transfer taxes incurred by or levied on it; (iv) commitment fees, certain
insurance premiums and membership fees and dues in investment company
organizations; (v) interest charges on borrowings; (vi) telecommunications
expenses; (vii) recurring and non-recurring legal and accounting expenses;
(viii) costs of organizing and maintaining the Fund's existence as a
corporation; (ix) 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; (x)
costs of stockholders' services and costs of stockholders' reports, proxy
solicitations, and corporate meetings; (xi) 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 (xii)
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.
B. THE 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 Investment Company 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 Plans provide that the Class C shares will compensate the
Distributor and the Class D shares 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 either Class of shares of the
Fund for providing servicing to their clients ("Shareholder Servicing"). These
fees are subject to a maximum of 0.25% per annum of the Class C and Class D
shares' average daily net assets. The Plans also provide that the Distributor is
paid a fee equal to 0.25% of the Class A and 0.75% of the Class C shares'
average daily net assets on an annual basis to permit it to make payments to
broker-dealers and other financial institutions with which it has written
agreements and whose clients are Fund shareholders (each a "broker-dealer") for
providing distribution assistance and promotional support to the Fund. Fees paid
under the Plan may not be waived for individual shareholders.
Under the Plans, each shareholder servicing agent and broker-dealer
will, as agent for its customers, among other things: (i) 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; (ii) assist shareholders in designating
and changing dividend options, account designations and addresses; (iii) provide
necessary personnel and facilities to establish and maintain shareholder
accounts and records; assist in processing purchase and redemption transactions;
(iv) arrange for the wiring of funds; (v) transmit and receive funds in
connection with customer orders to purchase or redeem shares; (vi) verify and
guarantee shareholder signatures in connection with redemption orders and
transfers and changes in shareholder designated accounts; (vii) furnish
quarterly and year-end statements and confirmations within five business days
after activity in the account; (viii) transmit to shareholders of each Class
proxy statements, annual reports, updated prospectuses and other communications;
(ix) receive, tabulate and transmit proxies executed by shareholders with
respect to meetings of shareholders of the Fund; and (x) provide such other
related services as the Fund or a shareholder may request.
867353.4
-13-
<PAGE>
The Plans provides that the Distributor (and/or Adviser with respect to
the Class D shares only) may make payments from time to time from their own
resources (which may include [an asset based sales charges and] past profits)
for the following purposes: (i) to defray the costs of and to compensate others,
including financial intermediaries with whom the Distributor has entered into
written agreements, for performing shareholder servicing and related
administrative functions of each Class; (ii) to compensate certain financial
intermediaries for providing assistance in distributing Class shares; (iii) to
pay the costs of printing and distributing the Fund's Prospectus to prospective
investors; and (iv) to defray the cost of the preparation and printing of
brochures and other promotional materials, mailings to prospective shareholders,
advertising, and other promotional activities, including the salaries and/or
commissions of sales personnel in connection with the distribution of the Fund's
shares. In addition, the Plan provides that under the Shareholder Servicing
Agreement the Distributor (for the Class C shares) or the Adviser (for the Class
D shares) may use their service fees for the purposes enumerated in (i) above
and under the Distribution Agreement, the Distributor may use any of its fees to
pay Broker-Dealers or financial institutions for the purposes set forth in (ii),
(iii) or (iv) above. The Distributor or the Adviser, 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 for any fiscal year under the
distribution agreement, shareholder servicing agreements or otherwise.
For the fiscal year ending [October 31, 1999], the Fund, under the
Plans, made payments of [$523,337] in advertising and related costs, $________
in printing and mailing of prospectuses to other than current shareholders,
$_____________ in compensation to underwriters, $_________________ in
compensation to broker-dealers, $_____________ in compensation to sales
personnel, and $___________ in interest, carrying, or other financing charges.
The excess of such payments over the total payments the Adviser received from
the Fund represents distribution expenses funded by the Adviser from its own
resources including the Advisory fee.
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.
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.
C. ADMINISTRATOR
1. General Information. The Fund and SEI Investment Mutual Funds
Services (the "Administrator") have entered into an administrative agreement
effective September 20, 1999. Prior to September 20, 1999, American Data
Services, Inc. was the Fund's Administrator.
The Administrator, a Delaware business trust, has its principal
business offices at One Freedom Valley Drive, Oaks, Pennsylvania 19456. SEI
Investment Management Corporation ("SIMC"), a wholly-owned subsidiary of SEI
Investment Company ("SEI Investments"), is the owner of all beneficial interests
in the Administrator. SEI Investments and its affiliates, including the
Administrator, are leading providers of funds evaluation services, trust
accounting systems, and
867353.4
-14-
<PAGE>
brokerage and information services to financial institutions, institutional
investors, and money managers. The Administrator and its affiliates also serve
as administrator or sub-administrator to over 34 mutual funds.
Pursuant to an Administration Agreement with the Fund, the
Administrator provides all administrative services necessary for the Fund, other
than those provided by the Adviser, subject to the supervision of the Fund's
Board of Directors. The Administrator will provide persons to serve as officers
of the Fund. Such officers may be directors, officers or employees of the
Administrator or its affiliates.
The Administration Agreement shall remain in effect for 5 years (the
"Initial Term") and each renewal term of 2 years each (each, a "Renewal Term"),
unless terminated (a) by the mutual written agreement of the Fund and the
Administrator; (b) by either the Fund or the Administrator on 90 days' written
notice, as of the end of the Initial Term or the end of any Renewal Term; (c) by
either the Fund or the Administrator on such date as is specified in written
notice given by the terminating party, in the event of a material breach of the
Agreement by the other party, provided the terminating party has notified the
other party of such breach at least 45 days prior to the specified date of
termination and the breaching party has not remedied such breach by the
specified date; (d) effective upon the liquidation of the Administrator; or (e)
as to any portfolio or the Fund, effective upon the liquidation of such
portfolio or the Fund as the case may be. The Agreement shall not be assignable
by the Administrator, without the prior written consent of the Fund, except to
an entity that is controlled by, or under common control, with the
Administrator. The Agreement also provides that the Administrator shall not be
liable for any error of judgment or mistake of law or for any loss suffered by
the Fund in connection with the matters to which the Administration Agreement
relates, except a loss resulting from willful misfeasance, bad faith or gross
negligence on the part of the Administrator in the performance of its duties or
from reckless disregard by it of its duties and obligations thereunder.
Under the Administration Agreement, the Administrator performs or
supervises the performance by others of other administrative services in
connection with the operations of the Portfolios, and, on behalf of the Fund,
investigates, assists in the selection of and conducts relations with
custodians, depositories, accountants, legal counsel, underwriters, brokers and
dealers, corporate fiduciaries, insurers, banks and persons in any other
capacity deemed to be necessary or desirable for the Portfolios' operations. The
Administrator provides the Directors of the Fund with such reports regarding
investment performance as they may reasonably request but shall have no
responsibility for supervising the performance by any investment adviser or
sub-adviser of its responsibilities. The Administrator may appoint a
sub-administrator to perform certain of the services to be performed by the
Administrator hereunder.
The Administrator provides the Fund with administrative services,
regulatory reporting, fund accounting and related portfolio accounting services,
all necessary office space, equipment, personnel, compensation and facilities
(including facilities for Shareholders' and Directors' meetings) for handling
the affairs of the Fund and such other services as the Directors may, from time
to time, reasonably request and the Administrator shall, from time to time,
reasonably determine to be necessary to perform its obligations under the
Agreement. In addition, at the request of the Board of Directors, the
Administrator shall make reports to the Directors concerning the performance of
its obligations hereunder.
2. 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.
867353.4
-15-
<PAGE>
Calculation of Administrator's Monthly Fee
- -----------------------------------------------------------
Fund's Net Assets Fee
- -----------------------------------------------------------
Up to $250 million .125%
Next $250 million .09%
Next $500 million .07%
On assets over $1 Billion .05%
- -----------------------------------------------------------
<TABLE>
<CAPTION>
Fees Paid to the Administrator
- ---------------------------------------------------------------------------------------------
Fiscal Year Ended,
[ October 31, 1999*] December 31, 1998** December 31, 1997**
- ---------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Fees $_______ $73,466 $66,170
- ---------------------------------------------------------------------------------------------
</TABLE>
D. CUSTODIAN, TRANSFER AGENT AND DIVIDEND AGENT
The Northern Trust Company, 50 S. Lasalle Street, Chicago, Illinois
60675, 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. Forum Shareholder Services LLC also acts as the Fund's transfer and
dividend agent. Forum Shareholder Services LLC has its principal office at 2
Portland Square, Portland, Maine 04101.
E. 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,
NY 10022. Morrison, Brown, Argiz & Co., P.A., 1001 Brickel Bay Drive, 9th Floor,
Miami, Florida 33131, have been selected as auditors for the Fund.
VI. BROKERAGE ALLOCATION AND OTHER PRACTICES
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). The Adviser will also
consider the reliability, integrity and financial condition of the
broker-dealer, the size of and difficulty in executing the order,
- --------
* $_____ was paid to American Data Services, Inc., the Fund's Administrator up
until September 15, 1999, and $_____ was paid to SEI Investments Mutual
Funds Services, Inc.
** Fees were paid to American Data Services, Inc.
867353.4
-16-
<PAGE>
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. 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 Conduct Rules 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. For the fiscal years ended [October 31, 1999*],
December 31, 1998, and December 31, 1997, the Fund paid brokerage commissions in
the amount of $_____, $16,443, and $16,944, respectively.
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 Adviser's own internal research and investment strategy
capabilities. Research services furnished by brokers through which the Fund
effects securities transactions are used by the Adviser in carrying out its
investment management responsibilities with respect to all its clients'
accounts. There may be occasions where the transaction cost charged by a broker
may be greater than that which another broker may charge if the Adviser
determines in good faith that the amount of such transaction cost is reasonable
in relation to the value of brokerage and research services provided by the
executing broker. The Adviser may consider the sale of shares of the Fund by
brokers including the Distributor as a factor in its selection of brokers of
Fund transactions.
A majority of the portfolio securities that the Fund purchases or sells
will be done as principal transactions. In addition, debt instruments are
normally purchased directly from the issuer, from banks and financial
institutions or from an underwriter or market maker for the securities. There
usually are not brokerage commissions paid for any such purchases. Any
transactions involving such securities for which the Fund pays a brokerage
commission will be effected at the best price and execution available. Purchases
from underwriters of portfolio securities include a commission or concession
paid by the issuer to the underwriter, and purchases from dealers serving as
market makers include the spread between the bid and asked price. The Fund may
purchase Government Obligations with a demand feature from banks or other
financial institutions at a negotiated yield to the Fund based on the applicable
interest rate adjustment index for the security. The interest received by the
Fund is net of a fee charged by the issuing institution for servicing the
underlying obligation and issuing the participation certificate, letter of
credit, guarantee or insurance and providing the demand repurchase feature.
Allocation of transactions, including their frequency, to various
dealers is determined by the Adviser in its best judgment and in a manner deemed
in the best interest of shareholders of the Fund rather than by a formula. The
primary consideration is prompt execution of orders in an effective manner at
the most favorable price.
Investment decisions for the Fund will be made independently from those
for any other investment companies or accounts that may become managed by the
Adviser or its affiliates. If, however, the Fund and other investment companies
or accounts managed by the Adviser are simultaneously engaged in the purchase or
sale of the 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.
- --------
* [ Effective [ ], the Fund changed its fiscal year from December 31 to
October 31. ]
867353.4
-17-
<PAGE>
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.
VII. CAPITAL STOCK AND OTHER SECURITIES
The authorized capital stock of the Fund consists of one billion shares
of stock having a par value of one-tenth of one cent ($.001) per share. The
Fund's Board of Directors is authorized to divide the unissued shares into
separate classes and series of stock, each series representing a separate,
additional investment portfolio. The Board currently has authorized the division
of the unissued shares into three Classes -- Class A, Class C and Class D.
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 in proportion to the percentage that the fractional share represents of a
whole share. Shares will be voted in the aggregate.
There are no conversion or preemptive rights in connection with any
shares of the Fund. All shares, when issued in accordance with the terms of the
offering, will be fully paid and non-assessable. Shares are redeemable at net
asset value, at the option of the investor.
The shares of the Fund have non-cumulative voting rights, which means
that the holders of more than 50% of the shares outstanding voting for the
election of directors can elect 100% of the directors if the holders choose to
do so, and, in that event, the holders of the remaining shares will not be able
to elect any person or persons to the Board of Directors. Unless specifically
requested by an investor who is an investor of record, the Fund does not issue
certificates evidencing Fund shares.
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.
867353.4
-18-
<PAGE>
VIII. PURCHASE, REDEMPTION AND PRICING OF SHARES
The material relating to purchase, redemption and pricing of shares for
each Class of shares is located in the Shareholder Information section of each
Prospectus and is hereby incorporated by reference.
IX. TAXATION OF THE FUND
Prospective investors should consult their tax advisors with respect to
the tax consequences of an investment in the Fund.
The Fund intends to elect, to be treated as a regulated investment
company under the Internal Revenue Code of 1986 effective for its taxable year
beginning November 1, 1998. To qualify as a regulated investment company, the
Fund must distribute to shareholders at least 90% of its investment company
taxable income (which includes, among other items, dividends, taxable interest
and the excess of net short-term capital gains over net long-term capital
losses), and meet certain diversification of assets, source of income, and other
requirements discussed below. By meeting these requirements, the Fund generally
will not be subject to Federal income tax on investment company taxable income,
and on net capital gains (the excess of net long-term capital gains over net
short-term capital losses) designated by the Fund as capital gain dividends,
distributed to shareholders. In determining the amount of net capital gains to
be distributed, any capital loss carryover from prior years will be applied
against capital gains to reduce the amount of distributions paid. If the Fund
does not meet all of these requirements, it will be taxed as an ordinary
corporation and distributions will generally be taxed to shareholders as
ordinary income.
The Fund's policy is to declare dividends annually and distribute as
dividends each year 100% (and in no event less than 90%) of its investment
company taxable income. Amounts, other than tax-exempt interest, not distributed
on a timely basis may be subject to a nondeductible 4% excise tax. To prevent
imposition of the excise tax, the Fund must distribute for the calendar year an
amount equal to the sum of (1) at least 98% of its ordinary income (excluding
any capital gains or losses) for the calendar year, (2) at least 98% of the
excess of its capital gains over capital losses (adjusted for certain losses)
for the one-year period ending December 31 of such year, and (3) all ordinary
income and capital gain net income (adjusted for certain ordinary losses) for
previous years that were not distributed during such years.
Distributions of investment company taxable income, including net short
term capital gains, generally are taxable to shareholders as ordinary income.
Distributions of net capital gains, if any, designated by the Fund as capital
gain dividends are taxable to shareholders as long-term capital gains,
regardless of the length of time the shareholder has held its shares of the
Fund. Shareholders will be notified annually as to the Federal tax status of
distributions. Distributions are taxable to shareholders whether received in
cash or reinvested in additional shares of the Fund. Shareholders receiving a
distribution in the form of additional shares will be treated as receiving a
distribution in an amount equal to the amount of the cash dividend that
otherwise would have been distributable (where the additional shares are
purchased in the open market), or the fair market value of the shares received,
determined as of the reinvestment date. 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. The Fund does not expect that any of its
distributions will qualify for the dividends-received deduction for
corporations.
In addition to satisfying the distribution requirement described above,
a regulated investment company must derive at least 90% of its gross income from
dividends, interest, certain payments with respect to securities loans, gains
from the sale or other disposition of stock or securities or foreign currencies
(to the extent such currency gains are directly related to the regulated
investment company's principal business of investing in stock or securities) and
other income (including but not limited to gains from options, futures or
forward contracts) derived with respect to its business of investing in such
stock, securities or currencies.
867353.4
-19-
<PAGE>
The Fund must also satisfy an asset diversification test in order to
qualify as a regulated investment company. Under this test, at the close of each
quarter of the Fund's taxable year, at least 50% of the value of the Fund's
assets must consist of cash and cash items, U.S. Government securities,
securities of other regulated investment companies, and securities of other
issuers (as to which the Fund has not invested more than 5% of the value of the
Fund's total assets in securities of such issuer and as to which the Fund does
not hold more than 10% of the outstanding voting securities of such issuer), and
no more than 25% of the value of its total assets may be invested in the
securities of any one issuer (other than U.S. Government securities and
securities of other regulated investment companies), or in two or more issuers
which the Fund controls and which are engaged in the same or similar trades or
businesses. Generally, an option (call or put) with respect to a security is
treated as issued by the issuer of the security not the issuer of the option.
If for any taxable year the Fund did not qualify as a regulated
investment company, all of its taxable income (including its net capital gain)
would be subject to tax at regular corporate rates without any deduction for
distributions to shareholders, and any distributions would be taxable to the
shareholders as ordinary dividends to the extent of the Fund's current or
accumulated earnings and profits. Such distributions generally would be eligible
for the dividends received deduction in the case of corporate shareholders.
Investors should carefully consider the tax implications of buying
shares prior to a distribution by the Fund. The price of shares purchased at
that time includes the amount of the forthcoming distributions. Distributions by
the Fund reduce the net asset value of the Fund's shares, and if a distribution
reduces the net asset value below a stockholder's cost basis, such distribution,
nevertheless, would be taxable to the shareholder as ordinary income or capital
gain as described above, even though, from an investment standpoint, it may
constitute a partial return of capital.
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. Gains or losses attributable to
fluctuations in exchange rates resulting from transactions the Fund accrues
interest or other receivables or accrues expenses or other liabilities
denominated in a foreign currency generally are treated as ordinary income or
ordinary loss. These gains or losses, may increase, decrease, or eliminate the
amount of the Fund's investment company taxable income to be distributed to its
shareholders as ordinary income.
Upon the taxable disposition (including a sale or redemption) of shares
of the Fund, a shareholder may realize a gain or loss depending upon its basis
in the shares. Such gain or loss will be treated as capital gain or loss if the
shares are capital assets in the shareholder's hands, and will be long-term or
short-term, generally depending upon the shareholder's holding period for the
shares. Non-corporate shareholders are subject to tax at a maximum rate of 20%
on capital gains resulting from the disposition of shares held for more than 12
months (10% if the taxpayer is, and would be after accounting for such gains,
subject to the 15% tax bracket for ordinary income). However, a loss realized by
a shareholder on the disposition of Fund shares with respect to which capital
gains dividends have been paid will, to the extent of such capital gain
dividends, also be treated as long-term capital loss if such shares have been
held by the shareholder for six months or less. Further, a loss realized on a
disposition will be disallowed to the extent the shares disposed of are replaced
(whether by reinvestment of distributions or otherwise) within a period of 61
days beginning 30 days before and ending 30 days after the shares are disposed
of. In such a case, the basis of the shares acquired will be adjusted to reflect
the disallowed loss. Shareholders receiving distributions in the form of
additional shares will have a cost basis for Federal income tax purposes in each
share received equal to the net asset value of a share of the Fund on the
reinvestment date. Capital losses in any year are deductible only to the extent
of capital gains plus, in the case of a noncorporate taxpayer, $3,000 of
ordinary income ($1,500 for married individuals filing separately).
If any net capital gains are retained by the Fund for reinvestment,
requiring federal income taxes thereon to be paid by it, the Fund can elect to
treat such capital gains as having been distributed to shareholders. In that
event, shareholders will report such capital gains as net capital gains, will be
able to claim their share of federal income taxes paid
867353.4
-20-
<PAGE>
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.
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, distributions of taxable income and capital gains and proceeds from
the redemption or exchange of the shares of a regulated investment company may
be subject to withholding of federal income tax at the rate of 31% in the case
of non-exempt shareholders who fail to furnish the investment company with their
taxpayer identification numbers and their required certifications regarding
their status under the federal income tax law. If the withholding provisions are
applicable, any such distributions and proceeds, whether taken in cash or
reinvested in additional shares, will be reduced by the amounts required to be
withheld. Corporate shareholders should provide the Fund with their taxpayer
identification numbers and should certify their exempt status in order to avoid
possible erroneous application of backup withholding.
The foregoing discussion of U.S. federal income tax law relates solely
to the application of that law to U.S. persons, i.e., U.S. citizens and
residents and U.S. domestic corporations, partnerships, trusts and estates. Each
shareholder who is not a U.S. person should consider the U.S. and foreign tax
consequences of ownership of Fund shares, including the possibility that such a
shareholder may be subject to a U.S. withholding tax at a rate of 30% (or at a
lower rate under an applicable income tax treaty) on amounts received by such
person.
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.
X. UNDERWRITERS
The Fund sells and redeems its shares on a continuing basis at their
net asset value and imposes a sales charge. The Distributor does not receive an
underwriting commission. In effecting sales of Fund shares under the
Distribution Agreement, the Distributor, for nominal consideration (i.e. $1.00)
and as agent for the Fund, will solicit orders for the purchase of the Fund's
shares, provided that any subscriptions and orders will not be binding on the
Fund until accepted by the Fund as a principal. In addition, as further
described in "B, The Distribution and Service Plan," the Distributor receives a
fee equal to 0.25% of the Class A shares' and 0.75% of the Class C shares'
average daily net assets on an annual basis to permit it to make payments to
broker-dealers and other financial institutions with which it has written
agreements and whose clients are Fund shareholders for providing distribution
assistance and shareholder support to the Fund.
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, 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.
867353.4
-21-
<PAGE>
XI. CALCULATION OF PERFORMANCE DATA
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. For Class C shares, the annual total
rate of return and yield figures will assume payment of the 1% contingent
deferred sales load. 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's expenses. The Adviser, the Administrator or the
Distributor may voluntarily waive a portion of their fees on a month-to-month
basis. These actions would have the effect of increasing the net income (and
therefore the yield and total rate of return) of a Class of shares of the Fund
during the period such waivers are in effect. These factors and possible
differences in the methods used to calculate the yields and total rates of
return should be considered when comparing the yields or total rates of return
of a Class of the Fund to yields and total rates of return published for other
investment companies and other investment vehicles.
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
<TABLE>
<S> <C> <C> <C>
Where: a = dividends and interest earned during the period.
b = expenses accrued for the period (net of reimbursements).
c = the average daily number of shares outstanding during the period that were entitled to
dividends.
d = the maximum offering price per share on the last day of the period.
</TABLE>
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
867353.4
-22-
<PAGE>
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
<TABLE>
<S> <C> <C> <C>
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).
</TABLE>
Because the Fund has not had a registration in effect for 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.
XII. FINANCIAL STATEMENTS
The interim, unaudited financial statements for the six months ended
April 30, 1999 and the audited financial statements for the year ended [October
31, 1999] are available, without charge, upon request. The annual financial
statements are audited by the Fund's independent financial accountants. The
interim, unaudited financial statements for the six months ended June 30, 1999
and the audited financial statements for the Fund dated [October 31, 1999] and
the Report of Morrison, Brown, Argiz & Co. thereon, are incorporated herein by
reference to the Annual Report to Shareholders dated [October 31, 1999].
Shareholders will receive Semi-Annual and Annual Reports from the Fund.
867353.4
-23-
<PAGE>
<TABLE>
<CAPTION>
PART C - OTHER INFORMATION
Item 23. EXHIBITS
<S> <C> <C>
* (a) Articles of Incorporation of the Registrant.
* (b) By-Laws of the Registrant.
(c) Not applicable.
* (d) Form of Investment Advisory Agreement.
(e) Form of Distribution Agreement for all Classes.
(f) Not applicable.
* (g) Form of Custody Agreement.
(h) Form of Administration Agreement.
* (h.1) Transfer Agency and Service Agreement.
** (h.2) Fund Accounting Service Agreement.
(h.3) Form of Expense Limitation Agreement.
* (i) Opinion of Battle Fowler LLP as to the legality of the securities
being registered and consent.
** (i.1) Consent of Battle Fowler LLP.
(j) Consent of Morrison, Brown, Argiz & Company,
certified public accountants.
*** (k) Audited Financial Statements, for fiscal year ended December 31, 1998,
including the Report of Independent Accountants.
* (l) Subscription Letter.
* (m) Distribution and Service Plan for Class A and D shares.
(m.1) Form of Distribution and Service Plan for Class C shares.
* (m.2) Shareholder Servicing Agreement for Class A and D shares.
(m.3) Form of Shareholder Servicing Agreement for the Class C shares.
(n) Not applicable.
(o) Form of Amendment No. 1 to the Multi-Class Plan pursuant to Rule 18f-3
under the 1940 Act.
* (p) Powers of Attorney.
- --------
* Filed as an exhibit to Pre-Effective Amendment No. 1 to the
Registrant's Registration Statement, 333-00767, filed on May 23, 1996
and incorporated herein by reference.
** Filed as an exhibit to Post-Effective Amendment No. 1 to the
Registrant's Registration Statement, 333-00767, filed on May 6, 1997
and incorporated herein by reference.
*** Filed with Annual Report and incorporated herein by reference.
</TABLE>
867316.2
<PAGE>
Item 24. PERSONS CONTROLLED BY OR UNDER COMMON CONTROL WITH REGISTRANT
None.
Item 25. INDEMNIFICATION
(a) In accordance with Section 2-418 of the General
Corporation Law of the State of Maryland, Article NINTH of the
Registrant's Articles of Incorporation provides as follows:
"NINTH: (1) The Corporation shall indemnify (i) its
currently acting and former directors and officers, whether
serving the Corporation or at its request any other entity, to
the fullest extent required or permitted by the General Laws
of the State of Maryland now or hereafter in force, including
the advance of expenses under the procedures and to the
fullest extent permitted by law, and (ii) other employees and
agents to such extent as shall be authorized by the Board of
Directors or the By-Laws and as permitted by law. Nothing
contained herein shall be construed to protect any director or
officer of the Corporation against any liability to the
Corporation or its security holders to which he would
otherwise be subject by reason of willful misfeasance, bad
faith, gross negligence, or reckless disregard of the duties
involved in the conduct of his office. The foregoing rights of
indemnification shall not be exclusive of any other rights to
which those seeking indemnification may be entitled. The Board
of Directors may take such action as is necessary to carry out
these indemnification provisions and is expressly empowered to
adopt, approve and amend from time to time such by-laws,
resolutions or contracts implementing such provisions or such
indemnification arrangements as may be permitted by law. No
amendment of the charter of the Corporation or repeal of any
of its provisions shall limit or eliminate the right of
indemnification provided hereunder with respect to acts or
omissions occurring prior to such amendment or repeal.
(2) To the fullest extent permitted by Maryland statutory
or decisional law, as amended or interpreted, and the
Investment Company Act of 1940, no director or officer of the
Corporation shall be personally liable to the Corporation or
its stockholders for money damages; provided, however, that
nothing herein shall be construed to protect any director or
officer of the Corporation against any liability to the
Corporation or its security holders to which he would
otherwise be subject by reason of willful misfeasance, bad
faith, gross negligence, or reckless disregard of the duties
involved in the conduct of his office. No amendment of the
charter of the Corporation or repeal of any of its provisions
shall limit or eliminate the limitation of liability provided
to directors and officers hereunder with respect to any act or
omission occurring prior to such amendment or repeal."
(b) In 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, SEI Investments Distribution Co., within the
meaning of the Securities Act of 1933, against certain types
of civil liabilities arising in connection with the
Registration Statement or Prospectus.
867316.2
<PAGE>
Item 26. BUSINESS AND OTHER CONNECTIONS OF INVESTMENT ADVISER
The description of the Registrant's adviser, Amerindo
Investment Advisors Inc., under the caption "Management, Organization and
Capital Structure" 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 27. PRINCIPAL UNDERWRITERS
(a) SEI Investments Distribution Co., located at One Freedom
Valley Drive, Oaks, PA 19456, is the Registrant's Distributor.
(b) The following are the directors and officers of SEI
Investments Distribution Co. The principal business address of each of these
persons is One Freedom Valley Drive, Oaks, PA 19456:
<TABLE>
<CAPTION>
Positions and Offices Positions and Offices
Name With the Distributor With the Registrant
- ---- --------------------- ----------------------
<S> <C> <C>
Alfred P. West, Jr. Director, Chairman of the Board of None
Directors
Richard B. Lieb Director, Executive Vice President None
Carmen V. Romeo Director None
Mark J. Held President & Chief Operating Officer None
Gilbert L. Beebower Executive Vice President None
Dennis J. McGonigle Executive Vice President None
Robert M. Silvestri Chief Financial Officer & Treasurer None
Leo J. Dolan, Jr. Senior Vice President None
Carl A. Guarino Senior Vice President None
Larry Hutchison Senior Vice President None
Jack May Senior Vice President None
Hartland J. McKeown Senior Vice President None
Kevin P. Robins Senior Vice President & General Counsel None
Patrick K. Walsh Senior Vice President None
Robert Aller Vice President None
Gordon W. Carpenter Vice President None
Todd Cipperman Vice President & Assistant Secretary None
S. Courtney Vice President & Assistant Secretary None
E. Collier Vice President & Assistant Secretary None
Robert Crudup Vice President & Managing Director None
Richard A. Deak Vice President & Assistant Secretary None
Barbara Doyne Vice President None
Jeff Drennen Vice President None
James R. Foggo Vice President & Assistant Secretary None
Vic Galef Vice President & Managing Director None
Lydia A. Gavalis Vice President & Assistant Secretary None
Greg Gettinger Vice President & Assistant Secretary None
Kathy Heilig Vice President None
Jeff Jacobs Vice President None
Samuel King Vice President None
Kim Kirk Vice President & Managing Director None
John Krzeminski Vice President & Managing Director None
Carolyn McLaurin Vice President & Managing Director None
Mark Nagle Vice President None
Joanne Nelson Vice President None
Cynthia M. Parrish Vice President & Secretary None
867316.2
<PAGE>
Positions and Offices Positions and Offices
Name With the Distributor With the Registrant
- ---- --------------------- ---------------------
Kim Rainey Vice President None
Rob Redican Vice President None
Maria Rinehart Vice President None
Edward T. Searle Vice President & Assistant Secretary None
Steve Smith Vice President None
Daniel Spaventa Vice President None
Kathryn L. Stanton Vice President None
Lynda J. Striegel Vice President & Assistant Secretary None
Lori L. White Vice President & Assistant Secretary None
Wayne M. Withrow Vice President & Managing Director None
</TABLE>
(c) There are no affiliated persons of the Underwriter who are
not affiliated with the Registrant.
Item 28. 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; SEI
Investments Mutual Funds Services, One Freedom Valley Drive, Oaks, PA 19456, 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 29. MANAGEMENT SERVICES
Not Applicable.
Item 30. UNDERTAKINGS
Not Applicable.
867316.2
<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. 5 to its Registration Statement to be signed on its
behalf by the undersigned, the 14th day of October, 1999.
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. 5 to its Registration Statement has been
signed below by the following persons in the capacities indicated below on
September 21st, 1999.
<TABLE>
<CAPTION>
Signature Title Date
<S> <C> <C>
(1) Principal Executive Officers:
By:/s/ ALBERTO W. VILAR Chairman and October 14, 1999
--------------------------- Chief Executive
Alberto W. Vilar Officer
By:/s/ DANA E. SMITH Vice President October 14, 1999
--------------------------- and Treasurer
Dana E. Smith
(2) Majority of Directors
Alberto W. Vilar Director October 14, 1999
By: /s/ ALBERTO W. VILAR
---------------------------
Gary A. Tanaka Director October 14, 1999
By: /s/ GARY A. TANAKA
---------------------------
John Rutledge Director October 14, 1999
By: /s/ JOHN RUTLEDGE
---------------------------
Jude T. Wanniski Director October 14, 1999
By: /s/ JUDE T. WANNISKI
---------------------------
</TABLE>
867316.2
<PAGE>
[DRAFT]
DISTRIBUTION AGREEMENT
THIS AGREEMENT is made as of this 13th day of July, 1999, between
AMERINDO FUNDS, INC., a Maryland corporation (the "Fund"), and SEI Investments
Distribution Co. (the "Distributor"), a Pennsylvania corporation.
WHEREAS, the Fund is registered as an investment company with the
Securities and Exchange Commission ("SEC") under the Investment Company Act of
1940, as amended ("1940 Act"), and its Shares are registered with the SEC under
the Securities Act of 1933, as amended ("1933 Act"); and
WHEREAS, the Distributor is registered as a broker-dealer with the
SEC under the Securities Exchange Act of 1934, as amended; and
WHEREAS, the Fund desires to appoint the Distributor to act as
distributor and shareholder servicing agent for the shares of the Fund's
portfolios, as now in existence or hereinafter created from time to time
(collectively, the "Shares"), in accordance with the terms and conditions of
this Agreement;
NOW, THEREFORE, in consideration of the mutual covenants hereinafter
contained, the Fund and Distributor hereby agree as follows:
ARTICLE 1. Sale of Shares. The Fund grants to the Distributor the
exclusive right to sell units (the "Shares") of the portfolios (the
"Portfolios") of the Fund at the net asset value per Share, plus any applicable
sales charge, in accordance with the current prospectus, as agent and on behalf
of the Fund, during the term of this Agreement and subject to the registration
requirements of the 1933 Act, the rules and regulations of the SEC and the laws
governing the sale of securities in the various states ("Blue Sky Laws").
ARTICLE 2. Solicitation of Sales. In consideration of these rights
granted to the Distributor, the Distributor agrees to use all reasonable
efforts, consistent with its other business, in connection with the distribution
of Shares of the Fund; provided, however, that the Distributor shall not be
prevented from entering into like arrangements with other issuers. The
provisions of this paragraph do not obligate the Distributor to register as a
broker or dealer under the Blue Sky Laws of any jurisdiction when it determines
it would be uneconomical for it to do so or to maintain its registration in any
jurisdiction in which it is now registered nor obligate the Distributor to sell
any particular number of Shares, so long as the Distributor provides the Fund
with not less than sixty days prior written notice of its intention
867016.1
<PAGE>
to neither register nor maintain a current registration and/or to sell any
particular number of shares.
ARTICLE 3. Authorized Representations. The Distributor is not
authorized by the Fund to give any information or to make any representations
other than those contained in the current registration statements and
prospectuses of the Fund filed with the SEC or contained in Shareholder reports
or other material that may be prepared by or on behalf of the Fund for the
Distributor's use. The Distributor may prepare and distribute sales literature
and other material, as it may deem appropriate, provided that such literature
and materials have been prepared in accordance with applicable rules and
regulations.
ARTICLE 4. Registration of Shares. The Fund agrees that it will take
all action necessary to register Shares under the federal and state securities
laws so that there will be available for sale the number of Shares the
Distributor may reasonably be expected to sell and to pay all fees associated
with said registration. The Fund shall make available to the Distributor such
number of copies of its currently effective prospectus and statement of
additional information as the Distributor may reasonably request. The Fund shall
furnish to the Distributor copies of all information, financial statements and
other papers, which the Distributor may reasonably request for use in connection
with the distribution of Shares of the Fund.
ARTICLE 5. Compensation. As compensation for providing the services
under this Agreement:
(a) The Distributor shall receive from the Trust:
(1) all distribution and service fees, as applicable,
at the rate and under the terms and conditions set forth in
each Distribution and Shareholder Services Plan adopted by
the appropriate class of shares of each of the Portfolios,
as such Plans may be amended from time to time, and subject
to any further limitations on such fees as the Board of
Trustees of the Trust may impose;
(2) if applicable, all contingent deferred sales
charges ("CDSCs") applied on redemptions of CDSC Class
Shares of each Portfolio on the terms and subject to such
waivers as are described in the Trust's Registration
Statement and current prospectuses, as amended from time to
time, or as otherwise required pursuant to applicable law;
and
(3) all front-end sales charges, if any, on purchases
of Class A Shares of each Portfolio sold subject to such
charges as described in the Trust's Registration Statement
and current prospectuses, as amended from time to time. The
Distributor, or brokers, dealers and other financial
institutions and intermediaries that have entered into
sub-distribution agreements with the
867016.1
-2-
<PAGE>
Distributor, may collect the gross proceeds derived from
the sale of such Class A Shares, remit the net asset value
thereof to the Trust upon receipt of the proceeds and
retain the applicable sales charge.
(b) The Distributor may reallow any or all of the
distribution or service fees, contingent deferred sales charges (if
applicable) and front-end sales charges which it is paid by the Trust
to such brokers, dealers and other financial institutions and
intermediaries as the Distributor may from time to time determine.
ARTICLE 6. Indemnification of Distributor. The Fund agrees to
indemnify and hold harmless the Distributor and each of its directors and
officers and each person, if any, who controls the Distributor within the
meaning of Section 15 of the 1933 Act against any loss, liability, claim,
damages or expense (including the reasonable cost of investigating or defending
any alleged loss, liability, claim, damages, or expense and reasonable counsel
fees and disbursements incurred in connection therewith), arising by reason of
any person acquiring any Shares, based upon the ground that the registration
statement, prospectus, Shareholder reports or other information filed or made
public by the Fund (as from time to time amended) included an untrue statement
of a material fact or omitted to state a material fact required to be stated or
necessary in order to make the statements made not misleading. However, the Fund
does not agree to indemnify the Distributor or hold it harmless to the extent
that the statements or omission was made in reliance upon, and in conformity
with, information furnished to the Fund by or on behalf of the Distributor.
In no case (i) is the indemnity of the Fund to be deemed to protect
the Distributor against any liability to the Fund or its Shareholders to which
the Distributor or such person otherwise would be subject by reason of willful
misfeasance, bad faith or gross negligence in the performance of its duties or
by reason of its reckless disregard of its obligations and duties under this
Agreement, or (ii) is the Fund to be liable to the Distributor under the
indemnity agreement contained in this paragraph with respect to any claim made
against the Distributor or any person indemnified unless the Distributor or
other person shall have notified the Fund in writing of the claim within a
reasonable time after the summons or other first written notification giving
information of the nature of the claim shall have been served upon the
Distributor or such other person (or after the Distributor or the person shall
have received notice of service on any designated agent). However, failure to
notify the Fund of any claim shall not relieve the Fund from any liability which
it may have to the Distributor or any person against whom such action is brought
otherwise than on account of its indemnity agreement contained in this
paragraph.
The Fund shall be entitled to participate at its own expense in the
defense or, if it so elects, to assume the defense of any suit brought to
enforce any claims subject to this indemnity provision. If the Fund elects to
assume the defense of any such claim, the defense shall be conducted by counsel
chosen by the Fund and satisfactory to the indemnified defendants in the suit
whose approval shall not be unreasonably withheld. In the event that the
867016.1
-3-
<PAGE>
Fund elects to assume the defense of any suit and retain counsel, the
indemnified defendants shall bear the fees and expenses of any additional
counsel retained by them. If the Fund does not elect to assume the defense of a
suit, it will reimburse the indemnified defendants for the reasonable fees and
expenses of any counsel retained by the indemnified defendants.
The Fund agrees to notify the Distributor promptly of the
commencement of any litigation or proceedings against it or any of its officers
or Directors in connection with the issuance or sale of any of its Shares.
ARTICLE 7. Indemnification of Fund. The Distributor covenants and
agrees that it will indemnify and hold harmless the Fund and each of its
Directors and officers and each person, if any, who controls the Fund within the
meaning of Section 15 of the Act, against any loss, liability, damages, claim or
expense (including the reasonable cost of investigating or defending any alleged
loss, liability, damages, claim or expense and reasonable counsel fees incurred
in connection therewith) based upon the 1933 Act or any other statute or common
law and arising by reason of any person acquiring any Shares, and alleging a
wrongful act of the Distributor or any of its employees or alleging that the
registration statement, prospectus, Shareholder reports or other information
filed or made public by the Fund (as from time to time amended) included an
untrue statement of a material fact or omitted to state a material fact required
to be stated or necessary in order to make the statements not misleading,
insofar as the statement or omission was made in reliance upon and in conformity
with information furnished to the Fund by or on behalf of the Distributor.
In no case (i) is the indemnity of the Distributor in favor of the
Fund or any other person indemnified to be deemed to protect the Fund or any
other person against any liability to which the Fund or such other person would
otherwise be subject by reason of willful misfeasance, bad faith or gross
negligence in the performance of its duties or by reason of its reckless
disregard of its obligations and duties under this Agreement, or (ii) is the
Distributor to be liable under its indemnity agreement contained in this
paragraph with respect to any claim made against the Fund or any person
indemnified unless the Fund or person, as the case may be, shall have notified
the Distributor in writing of the claim within a reasonable time after the
summons or other first written notification giving information of the nature of
the claim shall have been served upon the Fund or upon any person (or after the
Fund or such person shall have received notice of service on any designated
agent). However, failure to notify the Distributor of any claim shall not
relieve the Distributor from any liability which it may have to the Fund or any
person against whom the action is brought otherwise than on account of its
indemnity agreement contained in this paragraph.
The Distributor shall be entitled to participate, at its own expense,
in the defense or, if it so elects, to assume the defense of any suit brought to
enforce the claim, but if the Distributor elects to assume the defense, the
defense shall be conducted by counsel chosen by the Distributor and satisfactory
to the indemnified defendants whose approval shall not be unreasonably withheld.
In the event that the Distributor elects to assume the defense of any
867016.1
-4-
<PAGE>
suit and retain counsel, the defendants in the suit shall bear the fees and
expenses of any additional counsel retained by them. If the Distributor does not
elect to assume the defense of any suit, it will reimburse the indemnified
defendants in the suit for the reasonable fees and expenses of any counsel
retained by them.
The Distributor agrees to notify the Fund promptly of the
commencement of any litigation or proceedings against it in connection with the
issue and sale of any of the Fund's Shares.
ARTICLE 8. Effective Date. This Agreement shall be effective upon its
execution, and unless terminated as provided, shall continue in force for two
year(s) from the effective date and thereafter from year to year, provided that
such annual continuance is approved by (i) either the vote of a majority of the
Directors of the Fund, or the vote of a majority of the outstanding voting
securities of the Fund, and (ii) the vote of a majority of those Directors of
the Fund who are not parties to this Agreement or the Fund's Distribution Plan
or interested persons of any such party ("Qualified Directors"), cast in person
at a meeting called for the purpose of voting on the approval. This Agreement
shall automatically terminate in the event of its assignment. As used in this
paragraph the terms "vote of a majority of the outstanding voting securities",
"assignment" and "interested person" shall have the respective meanings
specified in the 1940 Act. In addition, this Agreement may at any time be
terminated without penalty by the Distributor, by a vote of a majority of
Qualified Directors or by vote of a majority of the outstanding voting
securities of the Fund upon not less than sixty days prior written notice to the
other party.
ARTICLE 9. Year 2000 Compliant. The Distributor warrants that all
software code owned or under control by it, used in the performance of its
obligations hereunder, will be Year 2000 Compliant. For purposes of this
paragraph, "Year 2000 Compliant" means that the software will continue to
operate beyond December 31, 1999 without creating any logical or mathematical
inconsistencies concerning any date after December 31, 1999 and without
decreasing the functionality of the system applicable to dates prior to January
1, 2000 including, but not limited to, making changes to (a) date and data
century recognition; (b) calculations which accommodate same- and multi- century
formulas and date values; and (c) input/output of date values which reflect
century dates. All changes described in this paragraph will be made at no
additional cost to the Fund.
ARTICLE 10. Notices. Any notice required or permitted to be given by
either party to the other shall be deemed sufficient if sent by registered or
certified mail, postage prepaid, addressed by the party giving notice to the
other party at the last address furnished by the other party to the party giving
notice: if to the Fund, at 339 Park Avenue, New York, New York 10022, attention:
Dana E. Smith; and if to the Distributor, One Freedom Valley Drive, Oaks,
Pennsylvania 19456.
867016.1
-5-
<PAGE>
C Governing Law. This Agreement shall be construed in
accordance with the laws of the State of Maryland and the applicable provisions
of the 1940 Act. To the extent that the applicable laws of the State of Maryland
or any of the provisions herein conflict with the applicable provisions of the
1940 Act, the latter shall control.
ARTICLE 12. Multiple Originals. This Agreement may be executed in two
or more counterparts, each of which when so executed shall be deemed to be an
original, but such counterparts shall together constitute but one and the same
instrument.
IN WITNESS, the Fund and Distributor have each duly executed this
Agreement, as of the day and year above written.
AMERINDO FUNDS, INC.
By:
Attest:
SEI INVESTMENTS DISTRIBUTION CO.
By:
Attest:
867016.1
-6-
<PAGE>
[DRAFT]
ADMINISTRATION AGREEMENT
THIS AGREEMENT is made as of this 15th day of September, 1999, by and
between AMERINDO FUNDS, INC. (the "Fund"), a Maryland corporation, and SEI
Investments Mutual Funds Services (the "Administrator"), a Delaware business
trust.
WHEREAS, the Fund is an open-end diversified management investment
company registered under the Investment Company Act of 1940, as amended (the
"1940 Act"), consisting of several series of shares of Common Stock; and
WHEREAS, the Fund desires the Administrator to provide, and the
Administrator is willing to provide, management and administrative services to
such portfolios of the Fund as the Fund and the Administrator may agree on
("Portfolios") and as listed on the schedules attached hereto ("Schedules") and
made a part of this Agreement, on the terms and conditions hereinafter set
forth;
NOW, THEREFORE, in consideration of the premises and the covenants
hereinafter contained, the Fund and the Administrator hereby agree as follows:
ARTICLE 1. Retention of the Administrator. The Fund hereby retains
the Administrator to act as the administrator of the Portfolios and to furnish
the Portfolios with the management and administrative services as set forth in
Article 2 below. The Administrator hereby accepts such employment to perform the
duties set forth below.
The Administrator shall, for all purposes herein, be deemed to be an
independent contractor and, unless otherwise expressly provided or authorized,
shall have no authority to act for or represent the Fund in any way and shall
not be deemed an agent of the Fund.
ARTICLE 2. Administrative and Accounting Services. The Administrator
shall perform or supervise the performance by others of other administrative
services in connection with the operations of the Portfolios, and, on behalf of
the Fund, will investigate, assist in the selection of and conduct relations
with custodians, depositories, accountants, legal counsel, underwriters, brokers
and dealers, corporate fiduciaries, insurers, banks and persons in any other
capacity deemed to be necessary or desirable for the Portfolios' operations. The
Administrator shall provide the Directors of the Fund with such reports
regarding investment performance as they may reasonably request but shall have
no responsibility for supervising the performance by any investment adviser or
sub-adviser of its responsibilities. The Administrator may appoint a sub-
administrator to perform certain of the services to be performed by the
Administrator hereunder.
867013.1
<PAGE>
The Administrator shall provide the Fund with administrative
services, regulatory reporting, fund accounting and related portfolio accounting
services, all necessary office space, equipment, personnel, compensation and
facilities (including facilities for Shareholders' and Directors' meetings) for
handling the affairs of the Portfolios and such other services as the Directors
may, from time to time, reasonably request and the Administrator shall, from
time to time, reasonably determine to be necessary to perform its obligations
under this Agreement. In addition, at the request of the Board of Directors (the
"Directors"), the Administrator shall make reports to the Directors concerning
the performance of its obligations hereunder.
Without limiting the generality of the foregoing, the Administrator shall:
(a) calculate contractual Fund expenses and control all
disbursements for the Fund, and as appropriate compute the
Fund's yields, total return, expense ratios, portfolio turnover
rate and, if required, portfolio average dollar-weighed
maturity;
(b) assist Fund counsel with the preparation of prospectuses,
statements of additional information, registration statements,
proxy materials;
(c) prepare such reports, applications and documents (including
reports regarding the sale and redemption of Shares as may be
required in order to comply with Federal and state securities
law) as may be necessary or desirable to register the Fund's
shares with state securities authorities, monitor sale of Fund
shares for compliance with state securities laws, and file with
the appropriate state securities authorities the registration
statements and reports for the Fund and the Fund's shares and
all amendments thereto, as may be necessary or convenient to
register and keep effective the Fund and the Fund's shares with
state securities authorities to enable the Fund to make a
continuous offering of its shares;
(d) develop and prepare communications to shareholders, including
the annual report to shareholders, coordinate mailing
prospectuses, notices, proxy statements, proxies and other
reports to Fund shareholders, and supervise and facilitate the
solicitation of proxies solicited by the Fund for all
shareholder meetings, including tabulation process for
shareholder meetings;
(e) coordinate with Fund counsel the preparation and negotiation
of, and administer contracts on behalf of the Fund with, among
others, the Fund's investment adviser, distributor, custodian,
and transfer agent;
(f) maintain the Fund's general ledger and prepare the Fund's
financial statements, including expense accruals and payments,
determine the net asset value of the Fund's assets and of the
Fund's shares, and supervise the Fund's transfer agent with
respect to the payment of dividends and other distributions to
shareholders;
867013.1
-2-
<PAGE>
(g) calculate performance data of the Fund and its portfolios for
dissemination to information services covering the investment
company industry;
(h) coordinate and supervise the preparation and filing of the
Fund's tax returns;
(i) examine and review the operations and performance of the
various organizations providing services to the Fund or any
Portfolio of the Fund, including, without limitation, the
Fund's investment adviser, distributor, custodian, transfer
agent, outside legal counsel and independent public
accountants, and at the request of the Board of Directors,
report to the Directors on the performance of organizations;
(j) assist with the layout and printing of publicly disseminated
prospectuses and assist with and coordinate layout and printing
of the Fund's semi-annual and annual reports to shareholders;
(k) provide internal legal and administrative services as requested
by the Fund from time to time, including but not limited to
preparation of materials for the quarterly meetings of the
Board of Directors;
(l) assist with the design, development, and operation of the Fund,
including new portfolio and class investment objectives,
policies and structure;
(m) provide individuals acceptable to the Directors for nomination,
appointment, or election as officers of the Fund, who will be
responsible for the management of certain of the Fund's affairs
as determined by the Directors;
(n) advise the Fund and its Directors on matters concerning the
Fund and its affairs;
(o) obtain and keep in effect fidelity bonds and directors and
officers/errors and omissions insurance policies for the Fund
in accordance with the requirements of Rules 17g-1 and 17d-1(7)
under the 1940 Act as such bonds and policies are approved by
the Fund's Board of Directors;
(p) monitor and advise the Fund and its Portfolios on their
registered investment company status under the Internal Revenue
Code of 1986, as amended;
(q) perform all administrative services and functions of the Fund
and each Portfolio to the extent administrative services and
functions are not provided to the Fund or such Portfolio
pursuant to the Fund's or such Portfolio's investment advisory
agreement, distribution agreement, custodian agreement and
transfer agent agreement;
867013.1
-3-
<PAGE>
(r) furnish advice and recommendations with respect to other
aspects of the business and affairs of the Portfolios as the
Fund and the Administrator shall determine desirable; and
(s) prepare and file with the SEC the semi-annual report for the
Fund on Form N-SAR and all required notices pursuant to Rule
24f-2.
Also, the Administrator will perform other services for the Fund as agreed from
time to time, including, but not limited to performing internal audit
examinations; mailing the annual reports of the Portfolios; preparing an annual
list of shareholders; and mailing notices of shareholders' meetings, proxies and
proxy statements, for all of which the Fund will pay the Administrator's
out-of-pocket expenses.
ARTICLE 3. Allocation of Charges and Expenses.
(A) The Administrator. The Administrator shall furnish at its own
expense the executive, supervisory and clerical personnel necessary to perform
its obligations under this Agreement. The Administrator shall also provide the
items which it is obligated to provide under this Agreement, and shall pay all
compensation, if any, of officers of the Fund as well as all Directors of the
Fund who are affiliated persons of the Administrator or any affiliated
corporation of the Administrator; provided, however, that unless otherwise
specifically provided, the Administrator shall not be obligated to pay the
compensation of any employee of the Fund retained by the Directors of the Fund
to perform services on behalf of the Fund.
(B) The Fund. The Fund assumes and shall pay or cause to be paid all
other expenses of the Fund not otherwise allocated herein, including, without
limitation, organizational costs, taxes, expenses for legal and auditing
services, the expenses of preparing (including typesetting), printing and
mailing reports, prospectuses, statements of additional information, proxy
solicitation material and notices to existing Shareholders, all expenses
incurred in connection with issuing and redeeming Shares, the costs of pricing
services, the costs of custodial services, the cost of initial and ongoing
registration of the Shares under Federal and state securities laws, fees and
out-of-pocket expenses of Directors who are not affiliated persons of the
Administrator or the investment adviser to the Fund or any affiliated
corporation of the Administrator or the investment Adviser, the costs of
Directors' meetings, insurance, interest, brokerage costs, litigation and other
extraordinary or nonrecurring expenses, and all fees and charges of investment
advisers to the Fund.
ARTICLE 4. Compensation of the Administrator.
(A) Administration Fee. For the services to be rendered, the
facilities furnished and the expenses assumed by the Administrator pursuant to
this Agreement, the Fund shall pay to the Administrator compensation at an
annual rate specified in the Schedule. Such compensation shall
867013.1
-4-
<PAGE>
be calculated and accrued daily, and paid to the Administrator monthly. The Fund
shall also reimburse the Administrator for its reasonable out-of-pocket
expenses, including the travel and lodging expenses incurred by officers and
employees of the Administrator in connection with attendance at meetings of the
Fund's Board of Directors.
If this Agreement becomes effective subsequent to the first day of a
month or terminates before the last day of a month, the Administrator's
compensation for that part of the month in which this Agreement is in effect
shall be prorated in a manner consistent with the calculation of the fees as set
forth above. Payment of the Administrator's compensation for the preceding month
shall be made promptly.
(B) Compensation from Transactions. The Fund hereby authorizes any
entity or person associated with the Administrator which is a member of a
national securities exchange to effect any transaction on the exchange for the
account of the Fund which is permitted by Section 11 (a) of the Securities
Exchange Act of 1934 and Rule 11a2-2(T) thereunder, and the Fund hereby consents
to the retention of compensation for such transactions in accordance with Rule
11a2-2(T) (a) (2) (iv).
(C) Survival of Compensation Rates. All rights of compensation under
this Agreement for services performed as of the termination date shall survive
the termination of this Agreement.
ARTICLE 5. Limitation of Liability of the Administrator. The duties
of the Administrator shall be confined to those expressly set forth herein, and
no implied duties are assumed by or may be asserted against the Administrator
hereunder. The Administrator shall not be liable for any error of judgment or
mistake of law or for any loss arising out of any investment or for any act or
omission in carrying out its duties hereunder, except a loss resulting from
willful misfeasance, bad faith or gross negligence in the performance of its
duties, or by reason of reckless disregard of its obligations and duties
hereunder, except as may otherwise be provided under provisions of applicable
law which cannot be waived or modified hereby. (As used in this Article 5, the
term "Administrator" shall include directors, officers, employees and other
agents of the Administrator as well as that corporation itself.)
So long as the Administrator acts in good faith and with due
diligence the Fund assumes full responsibility and shall indemnify the
Administrator and hold it harmless from and against any and all actions, suits
and claims, whether groundless or otherwise, and from and against any and all
losses, damages, costs, charges, reasonable counsel fees and disbursements,
payments, expenses and liabilities (including reasonable investigation expenses)
arising directly or indirectly out of said administration, transfer agency, and
dividend disbursing relationships to the Fund or any other service rendered to
the Fund hereunder. The indemnity and defense provisions set forth herein shall
indefinitely survive the termination of this Agreement.
The rights hereunder shall include the right to reasonable advances
of defense expenses in the event of any pending or threatened litigation with
respect to which indemnification hereunder
867013.1
-5-
<PAGE>
may ultimately be merited. In order that the indemnification provision contained
herein shall apply, however, it is understood that if in any case the Fund may
be asked to indemnify or hold the Administrator harmless, the Fund shall be
fully and promptly advised of all pertinent facts concerning the situation in
question, and it is further understood that the Administrator will use all
reasonable care to identify and notify the Fund promptly concerning any
situation which presents or appears likely to present the probability of such a
claim for indemnification against the Fund, but failure to do so in good faith
shall not affect the rights hereunder.
The Fund shall be entitled to participate at its own expense or, if
it so elects, to assume the defense of any suit brought to enforce any claims
subject to this indemnity provision. If the Fund elects to assume the defense of
any such claim, the defense shall be conducted by counsel chosen by the Fund and
satisfactory to the Administrator, whose approval shall not be unreasonably
withheld. In the event that the Fund elects to assume the defense of any suit
and retain counsel, the Administrator shall bear the fees and expenses of any
additional counsel retained by it. If the Fund does not elect to assume the
defense of a suit, it will reimburse the Administrator for the reasonable fees
and expenses of any counsel retained by the Administrator.
The Administrator may apply to the Fund at any time for instructions
and may consult counsel for the Fund or its own counsel and with accountants and
other experts with respect to any matter arising in connection with the
Administrator's duties, and the Administrator shall not be liable or accountable
for any action taken or omitted by it in good faith in accordance with such
instruction or with the opinion of such counsel, accountants or other experts.
Also, the Administrator shall be protected in acting upon any
document which it reasonably believes to be genuine and to have been signed or
presented by the proper person or persons. Nor shall the Administrator be held
to have notice of any change of authority of any officers, employee or agent of
the Fund until receipt of written notice thereof from the Fund.
ARTICLE 6. Activities of the Administrator. The services of the
Administrator rendered to the Fund are not to be deemed to be exclusive. The
Administrator is free to render such services to others and to have other
businesses and interests. It is understood that Directors, officers, employees
and Shareholders of the Fund are or may be or become interested in the
Administrator, as directors, officers, employees and shareholders or otherwise
and that directors, officers, employees and shareholders of the Administrator
and its counsel are or may be or become similarly interested in the Fund, and
that the Administrator may be or become interested in the Fund as a Shareholder
or otherwise.
ARTICLE 7. Confidentiality. The Administrator agrees on behalf of
itself and its employees to treat confidentially all records and other
information relative to the Fund and its prior, present or potential
Shareholders and relative to the Adviser and its prior, present or potential
customers, except, after prior notification to and approval in writing by the
Fund, which approval shall not be unreasonably withheld and may not be withheld
where the Administrator may
867013.1
-6-
<PAGE>
be exposed to civil or criminal contempt proceedings for failure to comply, when
requested to divulge such information by duly constituted authorities, or when
so requested by the Fund.
ARTICLE 8. Equipment Failures. In the event of equipment failures
beyond the Administrator's control, the Administrator shall, at no additional
expense to the Fund, take reasonable steps to minimize service interruptions but
shall have no liability with respect thereto. The Administrator shall develop
and maintain a plan for recovery from equipment failures which may include
contractual arrangements with appropriate parties making reasonable provision
for emergency use of electronic data processing equipment to the extent
appropriate equipment is available.
ARTICLE 9. Year 2000 Compliant. The Administrator warrants that all
software code owned or under control by it, used in the performance of its
obligations hereunder will be Year 2000 Compliant. For purposes of this
paragraph, "Year 2000 Compliant" means that the software will continue to
operate beyond December 31, 1999 without creating any logical or mathematical
inconsistencies concerning any date after December 31, 1999 and without
decreasing the functionality of the system applicable to dates prior to January
1, 2000 including, but not limited to, making changes to (a) date and data
century recognition; (b) calculations which accommodate same- and multi- century
formulas and date values; and (c) input/output of date values which reflect
century dates. All changes described in this paragraph will be made at no
additional cost to the Fund.
ARTICLE 10. Compliance With Governmental Rules and Regulations. The
Administrator undertakes to comply with all applicable requirements of the 1933
Act, the 1934 Act, the 1940 Act and any laws, rules and regulations of
governmental authorities having jurisdiction with respect to the duties to be
performed by the Administrator hereunder.
ARTICLE 11. Duration and Termination of this Agreement. This
Agreement shall become effective on the date set forth in the Schedules and
shall remain in effect for the initial term of the Agreement (the "Initial
Term") and each renewal term thereof (each, a "Renewal Term"), each as set forth
in the Schedules, unless terminated in accordance with the provisions of this
Article 10. This Agreement may be terminated only: (a) by the mutual written
agreement of the parties; (b) by either party hereto on 90 days' written notice,
as of the end of the Initial Term or the end of any Renewal Term; (c) by either
party hereto on such date as is specified in written notice given by the
terminating party, in the event of a material breach of this Agreement by the
other party, provided the terminating party has notified the other party of such
breach at least 45 days prior to the specified date of termination and the
breaching party has not remedied such breach by the specified date; (d)
effective upon the liquidation of the Administrator; or (e) as to any Portfolio
or the Fund, effective upon the liquidation of such Portfolio or the Fund, as
the case may be. For purposes of this Article 10, the term "liquidation" shall
mean a transaction in which the assets of the Administrator, the Fund or a
Portfolio are sold or otherwise disposed of and proceeds therefrom are
distributed in cash to the shareholders in complete liquidation of the interests
of such shareholders in the entity.
867013.1
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<PAGE>
This Agreement shall not be assignable by the Administrator, without
the prior written consent of the Fund, except to an entity that is controlled
by, or under common control with, the Administrator.
ARTICLE 12. Amendments. This Agreement or any part hereof may be
changed or waived only by an instrument in writing signed by the party against
which enforcement of such change or waiver is sought.
ARTICLE 13. Certain Records. The Administrator shall maintain
customary records in connection with its duties as specified in this Agreement.
Any records required to be maintained and preserved pursuant to Rules 31a-1 and
31a-2 under the 1940 Act which are prepared or maintained by the Administrator
on behalf of the Fund shall be prepared and maintained at the expense of the
Administrator, but shall be the property of the Fund and will be made available
to or surrendered promptly to the Fund on request.
In case of any request or demand for the inspection of such records
by another party, the Administrator shall notify the Fund and follow the Fund's
instructions as to permitting or refusing such inspection; provided that the
Administrator may exhibit such records to any person in any case where it is
advised by its counsel that it may be held liable for failure to do so, unless
(in cases involving potential exposure only to civil liability) the Fund has
agreed to indemnify the Administrator against such liability.
ARTICLE 14. Definitions of Certain Terms. The terms "interested
person" and "affiliated person," when used in this Agreement, shall have the
respective meanings specified in the 1940 Act and the rules and regulations
thereunder, subject to such exemptions as may be granted by the Securities and
Exchange Commission.
ARTICLE 15. Notice. Any notice required or permitted to be given by
either party to the other shall be deemed sufficient if sent by registered or
certified mail, postage prepaid, addressed by the party giving notice to the
other party at the last address furnished by the other party to the party giving
notice: if to the Fund, 339 Park Avenue, New York, New York 10022, attention:
Dana E. Smith; and if to the Administrator at One Freedom Valley Drive, Oaks,
Pennsylvania 19456.
ARTICLE 16. Governing Law. This Agreement shall be construed in
accordance with the laws of the State of Maryland and the applicable provisions
of the 1940 Act. To the extent that the applicable laws of the State of
Maryland, or any of the provisions herein, conflict with the applicable
provisions of the 1940 Act, the latter shall control.
ARTICLE 17. Multiple Originals. This Agreement may be executed in
two or more counterparts, each of which when so executed shall be deemed to be
an original, but such counterparts shall together constitute but one and the
same instrument.
867013.1
-8-
<PAGE>
ARTICLE 18. Binding Agreement. This Agreement, and the rights and
obligations of the parties and the Portfolios hereunder, shall be binding on,
and inure to the benefit of, the parties and the Portfolios and the respective
successors and assigns of each of them.
IN WITNESS WHEREOF, the parties hereto have executed and delivered
this Agreement as of the day and year first above written.
AMERINDO FUNDS, INC.
By:
Attest:
SEI INVESTMENTS MUTUAL FUNDS SERVICES
By:
Attest:
867013.1
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<PAGE>
SCHEDULE
TO THE ADMINISTRATION AGREEMENT
DATED AS OF SEPTEMBER 15, 1999
BETWEEN
AMERINDO FUNDS, INC.
AND
SEI INVESTMENTS MUTUAL FUNDS SERVICES
Portfolios: This Agreement shall apply to all Portfolios of Amerindo Funds,
Inc. (the "Fund") either now or hereafter created. The current
portfolios of the Fund are set forth below: Technology Fund
(collectively, the "Portfolios").
Fees: Pursuant to Article 4, Section A, the Fund shall pay the
Administrator compensation for services rendered to the
Portfolios at an annual rate, which is calculated daily and paid
monthly according to the following schedule:
Fee (on average annual assets) Assets in Fund
------------------------------ --------------
.125% to $250 Million
.09% Next $250 Million
.07% Next $500 Million
.05% On assets over $1 Billion
The annual minimum fee for each domestic Portfolio will be
$85,000 and the annual minimum fee for each international
Portfolio will be $100,000, payable monthly. The annual fee for
each additional class of shares is $15,000.
Term: This Agreement shall become effective on September 15,
1999 and shall remain in effect for an Initial Term of five (5)
years from such date and, thereafter, for successive Renewal
Terms of two (2) years each, unless and until this Agreement is
terminated in accordance with the provisions of Article 10
hereof.
867013.1
-10-
<PAGE>
EXPENSE LIMITATION AGREEMENT
AGREEMENT made as of this ____ day of __________, 1999, by and between
Amerindo Funds Inc., a Maryland corporation (the "Company"), and Amerindo
Investment Advisors Inc., a California corporation (the "Adviser").
The Adviser hereby agrees to limit annual total operating expenses of the
Amerindo Technology Fund, a portfolio of the Company (the "Fund"), to not more
than the following amounts:
Class % of Average Net Assets
----- -----------------------
A 2.25%
C 3.00%
D 2.25%
This Agreement shall remain in effect until December 31, 2000 and will
automatically renew for successive one-year periods thereafter unless otherwise
terminated by either party.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed as of the day and year first written above.
AMERINDO FUNDS INC. AMERINDO INVESTMENT
ADVISORS INC.
By:
------------------------------
By:
----------------------------
Title:
---------------------------
Title:
-----------------------
Morrison, Brown, Argiz & Company
INDEPENDENT AUDITOR'S CONSENT
-----------------------------
We consent to the use of our report, dated February 1, 1999 in this
Post-Effective Amendment to the Registration Statement of Amerindo Funds Inc. on
Form N-1A, incorporated by reference in the Prospectus and Statement of
Additional Information, which are part of this Registration Statement.
We also consent to the reference to us under the heading "Financial Highlights"
in the Prospectus and under the headings "Counsel and Independent Auditors" and
"Financial Highlights" in the Statement of Additional Information.
/s/Morrison, Brown, Argiz & Company
Certified Public Accountants
Miami, Florida
October 13, 1999
709782.1
<PAGE>
[DRAFT]
AMERINDO TECHNOLOGY FUND
A series of Amerindo Funds Inc.
Class C Shares
Distribution and Service Plan Pursuant to Rule
12b-l Under the Investment Company Act of 1940
The Plan is adopted by Amerindo Technology Fund, a series of
Amerindo Funds Inc. (the "Fund"), on behalf of the Class C shares, in accordance
with the provisions of Rule 12b-1 under the Investment Company Act of 1940, as
amended (the "1940 Act").
The Plan
--------
1. The Fund has entered into a Distribution Agreement with the
Distributor, as defined in the Fund's Prospectus, in a form satisfactory to the
Fund's Board of Directors, under which the Distributor will act as distributor
of the Fund's shares. Pursuant to the Distribution Agreement, the Distributor
will receive compensatory payments from the Fund in an amount as set forth in
such Agreement and, as agent of the Fund (i) will solicit orders for the
purchase of the Fund's shares, provided that any subscriptions and orders for
the purchase of the Fund's shares will not be binding on the Fund until accepted
by the Fund as principal; and (ii) will make payments to broker-dealers
("Broker-Dealers") and other financial institutions with which it has written
agreements and whose clients are Fund shareholders, for providing distribution
assistance on behalf of the Fund.
2. The Fund also has entered into a Shareholder Servicing
Agreement with the Distributor, in a form satisfactory to the Fund's Board of
Directors, which provides that the Distributor will receive shareholder
servicing fees from the Fund in an amount as set forth in such Agreement for
performing shareholder servicing functions. The Distributor may use such fees to
compensate other parties (each a "Shareholder Servicing Agent") with which it
has written agreements and whose clients are Fund shareholders for performing
shareholder servicing functions on behalf of the Fund.
3. Additionally, the Distributor may make payments from time to
time from its own resources (which may include past profits) for the following
purposes:
(i) to defray the costs of, and to compensate others,
including financial intermediaries with whom the Distributor has
entered into written agreements, for
878239.1
<PAGE>
performing shareholder servicing and related administrative functions
on behalf of the Fund;
(ii) to compensate certain financial intermediaries with whom
the Distributor has entered into written agreements for providing
assistance in distributing the Fund'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
salaries and/or commissions of sales personnel in connection with the
distribution of the Fund's shares.
The Distribution Agreement, pursuant to the Plan, will further provide that the
Distributor, in its sole discretion, will determine the amount of the payments
to be paid to the Broker-Dealers or other financial institutions with whom it
has contracted, provided, however, that such payments will not increase the
amount that the Fund is otherwise required to pay to the Distributor during any
fiscal year under the Distribution Agreement. The Shareholder Servicing
Agreement, pursuant to the Plan, will further provide that the Distributor, in
its sole discretion, will determine the amount of the payments to be paid to the
Shareholder Servicing Agents with whom it has contracted, provided that such
payments will not increase the amount which the Fund is otherwise required to
pay to the Distributor during any fiscal year under the Shareholder Servicing
Agreement.
4. In addition, under the Shareholder Servicing Agreement, the
Distributor may make payments from time to time from its servicing fees to
Shareholder Servicing Agents for the purpose enumerated in paragraph 3(i) above
and the Distributor may make payments from time to time from its fees under the
Distribution Agreement to Broker-Dealers or other financial institutions for the
purpose enumerated in paragraphs 3(ii), (iii) and (iv).
5. The Fund will pay for (i) telecommunications expenses,
including the cost of dedicated lines and CRT terminals, incurred by the
Distributor in carrying out its obligations under their respective Distribution
and Shareholder Servicing Agreements, and (ii) typesetting, printing and
delivering the Fund's prospectus to existing shareholders and preparing and
printing subscription application forms for shareholder accounts.
6. Payments by the Distributor to Broker-Dealers or other
financial institutions and payments by the Distributor to Shareholder Servicing
Agents for the purpose of distributing the Fund's shares and providing
shareholder servicing are subject to compliance by the Distributor with the
terms of written agreements in a form satisfactory to the Fund's Board
-2-
878239.1
<PAGE>
of Directors to be entered into between the Distributor and the Broker-Dealers,
and between the Distributor and the Shareholder Servicing Agents.
7. The Fund and the Distributor will prepare and furnish to the
Fund's Board of Directors, at least quarterly, written reports setting forth all
amounts expended for these purposes by the Distributor, pursuant to the Plan and
identifying the activities for which such expenditures were made.
8. The Plan became effective upon approval by (i) a majority of
the outstanding voting securities of the Fund (as defined in the 1940 Act), and
(ii) a majority of the Board of Directors of the Fund, including a majority of
the Directors who are not interested persons (as defined in the 1940 Act) of the
Fund and who have no direct or indirect financial interest in the operation of
the Plan or in any agreement entered into in connection with the Plan, pursuant
to a vote cast in person at a meeting called for the purpose of voting on the
approval of the Plan.
9. The Plan will remain in effect from year to year after its
adoption, unless earlier terminated in accordance with its terms, and thereafter
may continue in effect for successive annual periods if approved each year in
the manner described in clause (ii) of paragraph 8 hereof.
10. The Plan may be amended at any time with the approval of the
Board of Directors of the Fund, provided that (i) any material amendments of the
terms of the Plan will be effective only upon approval as provided in clause
(ii) of paragraph 8 hereof, and (ii) any amendment which increases materially
the amount which may be spent by the Fund pursuant to the Plan will be effective
only upon the additional approval as provided in clause (i) of paragraph 8
hereof.
11. The Plan may be terminated without penalty at any time (i) by
a vote of the majority of the entire Board of Directors of the Fund and by a
vote of a majority of the Directors of the Fund 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 (ii) by a vote of a majority of the outstanding voting securities of the Fund
(as defined in the Act).
Dated: November ___, 1999
-3-
878239.1
<PAGE>
[DRAFT]
SHAREHOLDER SERVICING AGREEMENT
AMERINDO TECHNOLOGY FUND
A series of Amerindo Funds Inc. (the "Fund")
Class C Shares
One Embarcadero
Suite 2300
San Francisco, California 94111
SEI Investments Distribution Co.
One Freedom Valley Drive,
Oaks, PA 19456
Gentlemen:
We herewith confirm our agreement with you as follows:
1. We hereby employ you, the Distributor, pursuant to the
Distribution and Service Plan dated _____________, 1999 adopted by us in
accordance with Rule 12b-l (the "Plan") under the Investment Company Act of
1940, as amended (the "1940 Act"), to provide the services listed below:
(a) You will perform, or arrange for others including
broker-dealers, banks, savings and loans and other financial institutions with
which you have written agreements and whose clients are Class C Fund
shareholders (each institution a "Shareholder Servicing Agent") to perform, all
shareholder servicing functions not performed by us, by the Distributor or by
our Transfer Agent.
(b) In consideration of the foregoing we will pay you a fee at the
annual rate of one quarter of one percent (0.25%) of the Fund's Class C shares'
(the "Class C Shares") average daily net assets to compensate you for providing
shareholder services to our Class C shareholders. Your payment will be accrued
by us daily, and will be payable on the last day of each calendar month for
services performed hereunder during that month or on such other schedule as you
shall request us in writing. You may waive your right to any fee or payment to
which you are entitled hereunder, provided such waiver is delivered to us in
writing.
(c) You may make payments from time to time from your Shareholder
Servicing Fee to defray the costs of, and to compensate other Shareholder
Servicing Agents with whom
867287.2
<PAGE>
you shall enter into a written agreement for performing shareholder servicing
and related administrative functions on behalf of the Class C Shares.
You will in your sole discretion determine the amount of any
payments made by you pursuant to this Agreement, and you may from time to time
in your sole discretion increase or decrease the amount of such payments;
provided, however, that no such payment will increase the amount which we are
required to pay to you under this Agreement.
2. Except as otherwise provided herein, you will be responsible
for the payment of all expenses incurred by you in rendering the foregoing
services, except that we will pay (i) telecommunications expenses, including the
cost of dedicated lines and CRT terminals, incurred by you, the Distributor, the
Broker-Dealers (as defined in our Distribution Agreement with our distributor)
and Shareholder Servicing Agents in rendering such services, and (ii) the cost
of typesetting, printing and delivering our prospectus to existing Class C
shareholders of the Fund and of preparing and printing subscription application
forms for Class C shareholder accounts.
3. (a) The written agreements between you and Shareholder
Servicing Agents may only be made with Shareholder Servicing Agents who maintain
a servicing relationship, and will, as agents for their customers, perform the
following services for Class C Shareholders, including but not limited to:
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 addressees; 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 Class C shareholder by the Fund) monthly and
year-end statements and confirmation of purchases and redemptions; transmit, on
behalf of the Fund, proxy statements, annual reports, updating prospectuses and
other communications from the Fund to Class C shareholders of the Fund; receive,
tabulate and transmit to the Fund proxies executed by shareholders with respect
to meeting of Class C shareholders of the Fund; and provide such other related
services as the Fund or a Class C shareholder may request. Shareholder Servicing
Agents may waive all or a portion of their Shareholder Servicing Fees.
(b) Payments to Shareholder Servicing Agents to compensate them
for providing shareholder servicing and related administrative functions are
subject to compliance by them with the terms of written agreements satisfactory
to our Board of Directors to be entered into between you and the Shareholder
Servicing Agents.
-2-
867287.2
<PAGE>
(c) Shareholder Servicing Agents will be compensated directly by
you. We shall have no obligation or liability to you, them or any Shareholder
Servicing Agent for any such payments under such agreements with Shareholder
Servicing Agents. Our obligation is solely to make payments to you under this
Shareholder Servicing Agreement, to the Advisor under the Advisory Agreement and
to the Distributor under the Distribution Agreement.
4. We will expect of you, and you will give us the benefit of,
your best judgment and efforts in rendering these services to us, and we agree
as an inducement to your undertaking these services that you will not be liable
hereunder for any mistake of judgment or for any other cause, provided that
nothing herein shall protect you against any liability to us or to our Class C
shareholders by reason of willful misfeasance, bad faith or gross negligence in
the performance of your duties hereunder, or by reason of your reckless
disregard of your obligations and duties hereunder.
5. This Agreement will become effective on the date hereof and
will remain in effect until [November 31, 2000] and thereafter for successive
twelve-month periods (computed from each [December 1st]) 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.
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 Class C voting securities, as defined in the 1940 Act, on sixty
days' written notice to you, or by you on sixty days' written notice to us.
6. 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 Securities and Exchange Commission
thereunder.
7. 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.
-3-
867287.2
<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:
, 1999
- ------------------
SEI INVESTMENTS DISTRIBUTION CO.
By:
--------------------------------
Name:
Title:
-4-
867287.2
<PAGE>
[DRAFT]
AMERINDO TECHNOLOGY FUND
a series of
AMERINDO FUNDS INC.
AMENDMENT NO. 1 TO RULE 18f-3 MULTI-CLASS PLAN
[November __, 1999]
I. Introduction.
Pursuant to Rule 18f-3 under the Investment Company Act of 1940,
as amended (the "1940 Act"), the following sets forth the method for allocating
fees and expenses between the Class A, Class C and Class D shares of Amerindo
Technology Fund, a series of Amerindo Funds Inc. (the "Fund"). In addition, this
Rule 18f-3 Multi-Class Plan (the "Plan") sets forth the shareholder servicing
and distribution arrangements between the Class A, Class C and Class D shares of
the Fund.
The Fund is a non-diversified, open-end, management investment
company registered under the 1940 Act and the shares of which are registered on
Form N-1A under the Securities Act of 1933, as amended and the 1940 Act. Upon
the initial effective date of this Plan, the Fund had elected to offer multiple
classes of shares pursuant to the provisions of Rule 18f-3 and this Plan. This
Amendment No. 1 serves to create an additional class of shares that will be
offered by the Fund - Class C shares. This new class of shares is being offered
in addition to the multiple classes of shares already offered pursuant to the
provisions of Rule 18f-3 and this Plan.
II. Allocation of Expenses.
Pursuant to Rule 18f-3 under the 1940 Act, the Fund shall allocate
to each of the Class A, Class C and Class D shares of the Fund (i) any fees and
expenses incurred by the Fund in connection with the distribution of each class
of shares under a distribution and service plan adopted for such class of shares
pursuant to Rule 12b-1, and (ii) any fees and expenses incurred by the Fund
under a shareholder servicing plan in connection with the provision of
shareholder services to the holders of each class of shares. In addition,
pursuant to Rule 18f-3, the Fund may allocate the following fees and expenses to
a particular class of shares:
(i) transfer agent fees identified by the transfer agent as
being attributable to such class of shares;
(ii) printing and postage expenses related to preparing and
distributing materials such as shareholder reports,
prospectuses,
867266.1
<PAGE>
reports, and proxies to current shareholder of such
class of shares or to regulatory agencies with respect
to such class of shares;
(iii) blue sky registration or qualification fees incurred by
such class of shares;
(iv) Securities and Exchange Commission registration fees
incurred by such class of shares;
(v) the expense of administrative personnel and services
(including, but not limited to, those of a fund
accountant, [custodian]1 or divided paying agent charged
with calculating net asset values or determining or
paying dividends) as required to support the
shareholders of such class of shares;
(vi) litigation or other legal expenses relating solely to
such class of shares;
(vii) fees of the Fund's Directors incurred as a result of
issues relating to such class of shares; and
(viii) independent accountants' fees relating solely to such
class of shares.
The initial determination of the class expenses that will be
allocated by the Fund to a particular class of shares and any subsequent changes
thereto will be reviewed by the Board of Directors and approved by a vote of the
Directors of the Fund, including a majority of the Directors who are not
interested persons of the Fund.
Income, realized and unrealized capital gains and losses, and any
expenses of the Fund not allocated to a particular class pursuant to this Plan
shall be allocated to each class of the Fund on the basis of the net assets of
that class in relation to the total net assets of the Fund.
III. Class Arrangements.
The following summarizes the Rule 12b-1 distribution and
shareholder servicing fees applicable to each class of shares of the Fund.
Additional details regarding such fees and
- ------------
1. Rule 18f-3 requires that related to the management of the portfolio's
assets, such as custodial, be borne by the fund and not by class.
-2-
867266.1
<PAGE>
services, as well as any other services offered to shareholders, are set forth
in the Fund's current Prospectuses and Statement of Additional Information.
A. Class A Shares -
1. Initial Maximum Sales Load: 5.75%.*
2. Contingent Deferred Sales Charge: None.
3. Redemption Fee: 2.00% for shares held less than one
year.
4. Rule 12b-1 Distribution Fees: 0.25% per annum of the
average daily net assets of the Class to be paid to
Distributor.
5. Rule 12b-1 Shareholder Servicing Fees: None.
6. Conversion Features: None.
7. Exchange Privileges: None.
8. Other Incidental Shareholder Services: As provided in
the Prospectus.
B. Class C Shares -
1. Initial Maximum Sales Load: None.
2. Contingent Deferred Sales Charge: 1.00% for shares held
less than 1 year.
3. Redemption Fee: 2.00% for shares held less than one
year.
4. Rule 12b-1 Distribution Fees: 0.75% per annum of the
average daily net assets of the Class to be paid to the
Distributor.
5. Rule 12b-1 Shareholder Servicing Fees: 0.25% per annum
of the average daily net assets of the Class to be paid
to the Distributor.
6. Conversion Features: None.
- --------
*. Increased from ____%, effective ___________.
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7. Exchange Privileges: None.
8. Other Incidental Shareholder Services: As provided in
the Prospectus.
C. Class D Shares -
1. Initial Maximum Sales Load: None.
2. Contingent Deferred Sales Charge: None.
3. Redemption Fee: 2.00% for shares held less than one
year.
4. Rule 12b-1 Distribution Fees: None.
5. 12b-1 Shareholder Servicing Fees: 0.25% per annum of the
average daily net assets of the Class to be paid to the
Advisor.
6. Conversion Features: None.
7. Exchange Privileges: None.
8. Other Incidental Shareholder Services:
As provided in the Prospectus.
IV. Board Review.
The Board of Directors of the Fund shall review this Plan as
frequently as they deem necessary. Prior to any material amendments to this
Plan, the Fund's Board of Directors, including a majority of the Directors that
are not interested persons of the Fund, shall find that the Plan, as proposed to
be amended (including any proposed amendments to the method of allocating class
and/or fund expenses, is in the best interest of each class of shares of the
Fund individually and the Fund as a whole. In considering whether to approve any
proposed amendments(s) to the Plan, the Directors of the Fund shall request and
evaluate such information as they consider reasonably necessary to evaluate the
proposed amendments(s) to the Plan.
In making its determination to amend this Plan, the Board has
focused on, among other things, the relationship between or among the classes
and has examined potential conflicts of interest among classes regarding the
allocation of fees, services, waivers and reimbursement of expenses, and voting
rights. The Board has evaluated the level of services provided to each class and
the cost of those services to ensure that the services are appropriate
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and the allocation of expenses is reasonable. In approving any subsequent
amendments to this Plan, the Board shall focus on and evaluate such factors as
well as any others deemed necessary by the Board.
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