As filed with the Securities and Exchange Commission on July 22, 1997
Securities and Exchange Commission
Washington, D.C. 20549
Form N-1A
REGISTRATION STATEMENT UNDER THE
SECURITIES ACT OF 1933 X( X )
Registration No. 333-20177
Pre-Effective Amendment No. 1 X( X )
Post-Effective Amendment No. _____ X( )
Registration Statement under the
Investment Company Act of 1940 X( X )
Registration No. 811-08021
Amendment No. 1 X( )
ISLAMIA GROUP OF FUNDS
(Exact Name of Registrant as Specified in Declaration of Trust)
1553 Bloomingdale Road, Suite #900 60139
Glendale Heights, Illinois (Zip Code)
(Address of Principal Executive Offices)
Registrant's Telephone Number, Including Area Code: (630) 653-2666
Qamaruddin Ali Yar Khan Copies to:
1553 Bloomingdale Road, Suite #900 Eric F. Fess, Esq.
Glendale Heights, Illinois 60139 Chapman and Cutler
(Name and Address of Agent for 111 W. Monroe
Service) Chicago, Illinois 60603
It is proposed that this filing will become effective (check appropriate
box):
X( ) immediately upon filing pursuant
to paragraph (b)
X( ) on (date) pursuant to paragraph
(b)
X( ) 60 days after filing pursuant to
paragraph (a)(1)
X( ) on (date) pursuant to paragraph (a)(1)
X( ) 75 days after filing pursuant to paragraph (a)(2)
X( ) on (date) pursuant to paragraph (a)(2) of Rule 485.
If appropriate, check the following box:
X( ) This post-effective amendment designates a new effective date
for a previously filed post-effective amendment.
Pursuant to Rule 24f-2 of the Investment Company Act of 1940,
Registrant hereby declares that an indefinite number of shares of the
Trust are being registered under the Securities Act of 1933.
The Registrant hereby amends this Registration Statement under the
Securities Act of 1933 on such date or dates as may be necessary to delay
its effective date until the Registrant shall file a further amendment
which specifically states that this Registration Statement shall there-
after become effective in accordance with Section 8(a) of the Securities
Act of 1933 or until the Registration Statement shall become effective on
such date as the Commission, acting pursuant to Section 8(a), may determine.
CONTENTS
OF
REGISTRATION STATEMENT
The Registration Statement comprises the following papers and contents:
The Facing Sheet
Cross-Reference Sheet
Part A - Prospectus for Islamia Group of Funds
Part B - The Statement of Additional Information
Part C - Other Information
Signatures
Index to Exhibits
Exhibits
CROSS REFERENCE SHEET
FORM N-1A
ITEM
<TABLE>
<CAPTION>
PART A PROSPECTUS CAPTIONS
<S> <C>
1. Cover Page Cover Page
2. Synopsis Summary of Fund Expenses
3. Condensed Financial Statement Not Applicable
4. General Description of Registrant About the Fund; Organization;
Investment Policies; Investment
Restrictions
5. Management of the Fund Management of the Funds; Portfolio
Transactions
5A. Management's Discussion of Fund Performance Not Applicable
6. Capital Stock and Other Securities Organization; Distributions and Taxes
7. Purchase of Securities Being Offered How to Buy Fund Shares; Management of
the Funds; Net Asset Value
8. Redemption or Repurchase How to Redeem Fund Shares
9. Pending Legal Proceedings Not Applicable
PART B Statement of Additional Information
10. Cover Page Cover Page
11. Table of Contents Cover Page
12. General Information and History Not Applicable
13. Investment Objectives & Policies Investment Objectives and Policies of the Funds
14. Management of the Registrant Management of the Funds
15. Control Persons and Principal Holders of Securities Principal Holders of Securities
16. Investment Advisory and Other Services Investment Advisory and Other Services; Independent Public
Accountants and Custodian
17. Brokerage Allocation and other Practices Brokerage Allocation; Portfolio Turnover
18. Capital Stock and Other Securities See "Organization" in the Prospectus
19. Purchase, Redemptions and Pricing Purchase, Redemption and Pricing
of Securities Being Offered of Securities Being Offered
20. Tax Status Tax Status
21. Underwriters Distribution of Shares
22. Calculations of Performance Data Performance Data
23. Financial Statements Financial Statements
</TABLE>
PROSPECTUS
_____________, 1997
ISLAMIA GROUP OF FUNDS
ISLAMIA GROWTH FUND
ISLAMIA INCOME FUND
1553 Bloomingdale Road, Suite #900
Glendale Heights, IL 60139
The Islamia Group of Funds is an open-end diversified management company
designed to meet the needs of various investors, and the particular needs
of Muslims by investing in accordance with Islamic principles. The
Islamia Group of Funds currently offers two series to investors: the
Islamia Growth Fund and the Islamia Income Fund. The Islamia Growth Fund
seeks to provide long-term capital growth to investors. The Islamia Income
Fund seeks to provide current income and capital appreciation by investing
in a portfolio of equity securities.
This Prospectus, which should be retained for future reference, sets forth
information that you should know before you invest. A Statement of
Additional Information dated ___________, has been filed with the Securities
and Exchange Commission and is incorporated by reference into this Prospectus.
For a free copy of the Statement of Additional Information, write to Income
Achievers, Inc., 1553 Bloomingdale Road, Suite #900, Glendale Heights, IL
60139 or call toll-free at 888-786-9200.
SHARES OF THE FUND ARE NOT DEPOSITS OR OBLIGATIONS OF, OR GUARANTEES OR
ENDORSED BY, ANY BANK AND ARE NOT FEDERALLY INSURED BY THE FEDERAL
DEPOSIT INSURANCE CORPORATION, THE FEDERAL RESERVE BOARD, OR ANY OTHER
AGENCY. SHARES OF THE FUND INVOLVE INVESTMENT RISKS, INCLUDING POSSIBLE
LOSS OF PRINCIPAL.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES AUTHORITY NOR HAS THE
COMMISSION OR ANY STATE AUTHORITY PASSED UPON THE ACCURACY OR ADEQUACY OF
THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
TABLE OF CONTENTS
PAGE
SUMMARY OF FUND EXPENSES 1
ABOUT THE FUND 2
INVESTMENT POLICIES 3
PORTFOLIO TURNOVER 6
INVESTMENT RESTRICTIONS 7
INVESTMENT RESULTS 7
HOW TO BUY FUND SHARES 7
HOW TO REDEEM FUND SHARES 8
MANAGEMENT OF THE FUNDS 11
PORTFOLIO TRANSACTIONS 12
NET ASSET VALUE 12
HOW THE FUNDS SHOW PERFORMANCE 12
DISTRIBUTIONS AND TAXES 13
GENERAL INFORMATION 14
SUMMARY OF FUND EXPENSES
The purpose of the table below is to help you understand all expenses and
fees that you would bear directly or indirectly as a Fund shareholder.
The percentages shown are estimated for the current fiscal year. Actual
fees and expenses may be greater or less than those shown. An example of
how the expenses work follows the table.
<TABLE>
<CAPTION>
ISLAMIA ISLAMIA
INCOME GROWTH
Shareholder Transaction Expenses FUND FUND
<S> <C> <C>
Maximum Sales Load Imposed on Purchases
(as a percentage of offering price) 3% 3%
Maximum Sales Load Imposed on Reinvested
Dividends (as a percentage of offering price) NONE NONE
Deferred Sales Loads (as a percentage of
original purchase price or redemption proceeds,
as applicable) NONE NONE
Redemption Fees (as a percentage of
amount redeemed) NONE NONE
Exchange Fee NONE NONE
</TABLE>
<TABLE>
<CAPTION>
ISLAMIA ISLAMIA
Annual Fund Operating Expenses INCOME GROWTH
(as a percentage of average net assets) FUND FUND
<S> <C> <C>
Management and Administrative Fees 0.80% 0.80%
12b-1 Expenses NONE NONE
Other Expenses* 0.52% 0.73%
Total Fund Operating Expenses 1.32% 1.53%
</TABLE>
- ---------
[FN]
* Other Expenses include an estimate of the transfer agency fees payable to
the Adviser for serving as transfer and disbursement agent at an annual
rate of $10 per account based on a projected 400 shareholder accounts.
Page 1
EXAMPLE*
For the Funds listed below, you would pay the following expenses on a $1,000
investment assuming: (1) 5% annual rate of return; and (2) redemption at the
end of each period in the Fund:
1 YEAR 3 YEARS
______ _______
Islamia Growth Fund $45.10 $76.89
Islamia Income Fund $43.04 $70.58
_______________________________
* This example does not represent past or future expenses, which may be
greater or less than those shown. Moreover, the Fund's actual rate of
return may be greater or less than the hypothetical 5% return shown in the
example. This example assumes that the percentage amounts listed under
Annual Operating Expenses remain the same in each of the periods. For
additional information about the Fund's fees and expenses, see Management
of the Funds.
ABOUT THE FUND
Islamia Group of Funds (the "Trust") is designed to meet the needs of various
investors, and the particular needs of Muslims by investing in accordance with
Islamic principles. The Islamia Group of Funds was organized as a Massa-
chusetts business trust on December 23, 1996. The Trust is an open-end
diversified management investment company. The Trust is designed as a series
trust that may offer several separate funds to investors. Currently, the
Trust offers two series: the Islamia Growth Fund and the Islamia Income
Fund (collectively, the "Funds"). The primary objective of the Islamia
Growth Fund is long-term capital growth, consistent with Islamic principles.
The objective of the Islamia Income Fund is current income and appreciation
of capital, consistent with Islamic principles. The provision of current
income is the Islamia Income Fund's primary objective and the appreciation of
capital is a secondary objective. The investment decisions of both Funds
are made in accordance with Islamic principles. The investment objectives of
the Funds cannot be changed without shareholder approval.
RISKS AND SPECIAL CONSIDERATIONS
The Funds pursue their investment objectives by investing in equity
securities, including foreign securities. There can be no assurance that
the Funds will achieve their investment objectives. The Funds have no prior
operating history and the Funds' investment adviser has no previous experience
advising a mutual fund. Further, the value of Fund shares will fluctuate as
the value of the securities in which the Funds invest fluctuate. Accordingly,
an investment in Fund shares should be made with an understanding of the risks
which an investment in common stock entails, including the risk that the
financial condition of the issuers of the underlying securities or the general
condition of the common stock market may worsen, and the value of the under-
Page 2
lying securities and therefore the value of Fund shares may decline. The
Funds also invest only in companies whose activities are consistent with
Islamic principles as described in more detail below. This restriction will
limit the investment opportunities available to the Funds more than is
customary for other mutual funds. The Funds may also have to forego
attractive investment opportunities to remain consistent with Islamic
principles. Consequently, the return on securities chosen by the Funds may
be lower than if the Funds considered only investment criteria when making
their investments. Furthermore, if subsequent to an investment the Adviser or
Board of Trustees determine the security is inconsistent with Islamic
principles, a Fund may have to divest the securities at a disadvantageous
time which may have an adverse impact on the Fund's performance. Finally,
to be consistent with Islamic principles, the Funds are precluded from
purchasing any securities which pay interest, including any securities
issued by the United States government or its agencies, certificates of
deposit, commercial paper, or other short-term corporate notes, bonds or
debentures.
The Funds may also invest in foreign securities; however, they currently
limit such investments to 5% of their assets and intend to invest primarily
in American Depository Receipts ("ADRs") of foreign companies. Such invest-
ments involve opportunities and risks not typically associated with investing
in U.S. companies. In addition, to the extent the Funds invest primarily
in common stocks, the Funds do not necessarily represent a complete invest-
ment program and the Funds may be more susceptible to volatility than a fund
investing in equity securities and non-equity securities, such as fixed in-
come securities.
INVESTMENT POLICIES
The Trust is designed to provide investment alternatives that are consistent
with Islamic principles. Islamic principles generally require that investors
share in profit and loss, that they receive no usury or interest, and that
they do not invest in a business that is not permitted by Islamic principles.
More specifically, one of the most important teachings of Islam is the
prohibition against all sources of unjustified enrichment in business trans-
actions. This prohibition is designed to establish justice and eliminate
exploitation in such transactions. One source of unjustified enrichment is
receiving any monetary advantage in a business transaction without giving a
just countervalue. The receipt of interest (i.e., the fixing in advance of
a positive return on a loan) has been construed as an unjustified monetary
reward. Islamic principles therefore do not permit the payment of interest
on loans regardless of whether the return on the loan is a fixed or variable
percentage of the principle, paid in advance or at maturity, or gifts or
services are received as a condition for the loan. Due to the prohibition
Page 3
on the use of interest, the Funds will not invest their assets in any secur-
ities that pay interest.
Islamic principles, however, do permit returns on investments which vary
depending on the outcome of the business. Substantially all business
financing in an economy operating under Islamic principles is therefore
equity based with the investor sharing in the profits or losses of the
business. Such financing transfers a fair share of the risk of the
investment to the investor as well as the potential return. In light of
these principles, the Funds may invest in the common stock of companies. As
noted, investments in common stock are subject to market risk and the risk
of price fluctuations and thus there is no guaranteed rate of return. As
such, an investment in the common stock of companies is a permitted invest-
ment under Islamic principles. The Funds will also be permitted to invest
in the common stock of companies that have issued bonds or borrowed money
from banks as the Adviser to the Funds (Income Achievers, Inc.) believes
that few companies will have obtained their financing solely from issuing
equities and the Funds only invest in the companies' common stock consistent
with Islamic principles and not in any of the bonds or other debt issued by
the company.
Islamic teachings also consider some activities as "haram" or prohibited
including the consumption of alcohol or drugs, the eating of pork, gambling,
pornography, abortion (except when performed based on medical advice to save
the life of the mother), and, as noted above, interest-based lending. The
Funds will not invest in businesses that are not consistent with Islamic
principles including businesses involving liquor, wine, casinos, porno-
graphy, gambling, the production or distribution of pork products, the
production or distribution of contraceptives or birth control products
(except for hospitals or pharmacies which may distribute such products as
an incidental service to their general business), the performance of
abortion-related services (except for hospitals or other medical facilities
which perform abortion-related services based on medical advice to save the
mother's life), credit unions, mortgage companies, banks and loan
associations (that are not based on Islamic principles). The investment
adviser to the Funds is not aware of any Islamic banks or loan
associations whose securities are traded domestically. Furthermore, Islamic
principles do not preclude the Funds from investing in companies in the
tobacco industry or companies in the munitions and armament industry and
thus the Funds may invest in such industries. The Funds will also not invest
in insurance companies.
Notwithstanding the foregoing, the investment adviser recognizes that some
companies or conglomerates may be involved in a variety of businesses and
while their primary source of revenue is derived from a business consistent
with Islamic principles, a small source of their revenue may be derived from
an activity prohibited under Islamic teachings. In these cases, companies
which are primarily engaged in businesses consistent with Islamic
principles but receive a de minimis amount of their revenues from activities
inconsistent with such principles shall be construed as consistent with
Islamic teachings and permissible investments for the Funds.
Income Achievers, Inc. ("Income Achievers" or the "Adviser") is responsible
for the selection of investments to meet the particular investment objectives
of each separate Fund. The Adviser will also determine whether the
securities are consistent with Islamic principles, subject to review by the
Board of Trustees. The portfolio manager of the Funds and President of the
Adviser, Qamaruddin Ali Yar Khan, is Muslim and is familiar with the basic
tenets and core teachings of the Islamic faith. In selecting the potential
investments, the Adviser may review, among other things, reports the issuers
of the securities have filed with Securities and Exchange Commission, re-
search reports prepared on the respective companies, financial publications,
Page 4
and any other publicly available information the Adviser deems necessary
to determine whether the issuer's activities are consistent with Islamic
principles.
The Adviser will make a good faith effort, using the best publicly available
information obtainable by it, to identify those companies and other issuers
of securities whose products, services and/or activities are substantially
consistent with core Islamic teachings. To resolve any questions regarding
the interpretation of Islamic principles, the Adviser may also from time to
time as it deems necessary consult with Islamic religious organizations
that specialize in the teachings and requirements of the Islamic faith. If
the Adviser cannot resolve an issue, the Adviser will rely on the Board of
Trustees for a final determination. To further help insure the issuers are
consistent with Islamic principles, the Adviser will prepare a list of the
Funds' holdings semi-annually for review by the Board of Trustees, together
with a report regarding the business activities of the issuers of the port-
folio securities. Each member of the Board of Trustees is Muslim and is
familiar with the teachings of the Islamic religion. The members of the
Board of Trustees will then make a good faith effort to determine whether
the business of the issuers of the securities on the investment list is
consistent with Islamic principles. If the Board of Trustees determines
that the investment is inconsistent with Islamic principles, the Trustees
will determine whether the securities should be divested. The Adviser will
also review periodically, but at least quarterly, the information available
on the portfolio securities to determine the securities continued consistency
with the Fund's religious criteria. If information becomes available in-
dicating that a portfolio security may no longer be consistent with the
Islamic principles, the Adviser will notify the Board of Trustees. The
Trustees will re-evaluate the issuer's activities with respect to compliance
with Islamic teachings and will determine whether the stock of that company
should be divested by the Fund. Immediate divesting may have an adverse
impact on the investment performance of a Fund.
The policy of the Islamia Income Fund is to invest at least 80% of its assets
in income-producing equity securities, such as dividend-paying common stocks.
Page 5
Some assets may be held as cash to cover short-term needs such as redemp-
tions. The Islamia Income Fund may invest up to 20% of its assets in non-income
producing securities, including cash for short-term needs, for use in covered
option writing to earn premium income.
Under normal circumstances, it is the policy of the Islamia Growth Fund to
invest at least 80% of assets in common stocks. Investments in common
stocks involve greater risk, and commensurately greater opportunity for
reward, than some other investments, such as investments in short-term
bonds and money market instruments. The value of investments in common
stocks fluctuates and may be greater than or less than the investment made.
The Islamia Growth Fund selects investments primarily on the expectation of
increases in earnings and share price, and not current dividend-paying abil-
ity. In addition, while the Funds may engage in covered option writing, they
currently do not do so. The Funds also currently do not invest in preferred
stock or warrants.
The policies outlined in this section can be changed if deemed appropriate by
a majority of the Board of Trustees.
Page 6
SHORT TERM INVESTMENTS
The Funds may use short-term income producing investments to the extent the
Board of Trustees and the Adviser agree that those investments are consistent
with Islamic principles. Short-term investments are securities which mature
or have a remaining maturity of twelve months or less from the date of
purchase. The Adviser does not know of any short-term investments which
meet Islamic requirements that are currently available in the United States.
Most ordinary mutual funds use a variety of investments which produce
interest for short-term needs. Islamic principles prohibit the use of these
interest-producing investments. If short-term Islamic investments become
available in the future, the Funds have the power to use them.
FOREIGN SECURITIES
Each Fund may invest up to 10% of its assets in foreign securities not
traded publicly in the U.S., but currently limit such investments to 5%. The
Funds intend to invest only in foreign securities available for trading and
settlement in the U.S., primarily in American Depository Receipts ("ADRs")
for foreign securities. ADRs are receipts typically issued by a U.S. bank
or trust company evidencing ownership of the underlying foreign security and
denominated in U.S. dollars. ADRs do not eliminate all the risk inherent in
investing in foreign issuers, such as changes in foreign currency exchange
rates. However, by investing in ADRs rather than directly in foreign issuers
stock, the Fund avoids currency risks during the settlement period.
TEMPORARY INVESTMENTS
During uncertain market or economic conditions, the Funds may adopt a
temporary, defensive position. The Funds cannot invest in interest-paying
instruments frequently used by mutual funds for this purpose, such as U.S.
government securities, certificates of deposits, commercial paper or short-
term corporate notes, bonds or debentures. When markets are unattractive,
the Adviser chooses between continuing to follow the Funds' investment
policy or converting securities to cash for temporary, defensive purposes.
This choice is based on the Adviser's evaluation of market conditions and
the Funds' portfolio holdings. Accordingly, as a temporary defensive
measure, each Fund may hold up to 100% of its assets in cash.
PORTFOLIO TURNOVER
Each Fund anticipates that its annual portfolio turnover will not exceed
100% under normal market conditions. A turnover rate of 100% would occur,
for example, if the Fund sold and replaced securities valued at 100% of its
net assets within one year. In the event a Fund were to have a turnover rate
of 100% or more in any year, it would result in the payment by the Fund of
increased brokerage costs and could result in the payment by shareholders of
increased taxes on realized investment gains.
Page 7
INVESTMENT RESTRICTIONS
In accordance with Islamic principles, the Funds shall not purchase bonds,
debentures, or other interest-paying obligations of indebtedness. The Funds
also may not make loans, lend portfolio securities, make short sales, or
borrow money. Both Funds are diversified, and do not invest more than 5% of
total assets in the securities of any one issuer. In addition, the Funds
will not invest more than 25% of its assets in any particular industry.
The above restrictions are fundamental policies and may not be changed with-
out prior approval by a majority of the outstanding shares of a Fund.
For additional information regarding the investment policies and restrictions
of the Funds, see "Investment Objectives and Policies of the Funds" in the
Statement of Additional Information.
INVESTMENT RESULTS
Shareholders receive a financial report showing the investments, income and
expenses of your Fund every six months. You may obtain current share values
any time by calling the Adviser at 888-786-9200.
HOW TO BUY FUND SHARES
Purchase Price
You may purchase shares of a Fund at a public offering price equal to the
applicable net asset value per share plus an up-front sales load imposed at
the time of purchase of 3% of the public offering price (3.093% of net
amount invested). The applicable Fund receives the entire net asset value
of all of its shares that are sold. Income Achievers is the Funds' dis-
tributor and it retains the full sales charge.
The price at which you purchase shares of a Fund is based on the next cal-
culation of the net asset value for shares of that Fund after the order is
placed. The net asset value per share for each Fund is determined as of the
close of trading (generally 4:00 p.m. Eastern Time) on each day the New York
Stock Exchange is open for business. See "Net Asset Value," below for a
description of how net asset value is calculated.
Minimum Investment
Your first purchase of any Fund's shares needs to be for $2,000 or more.
the shareholder may split the $2,000 initial investment between funds in-
vesting $1,000 in each of the Islamia Growth Fund and Islamia Income Fund.
Additional purchases may be in the amounts of $100 or more. These minimums
may be changed at any time by the funds.
Page 8
Opening an Account and Purchasing Shares
To open an account, complete and sign the Account Application. Make your
check payable to the Islamia Growth Fund or Islamia Income Fund, whichever
is applicable. Mail your completed Account Application, together with your
check to: Income Achievers, Inc., 1553 Bloomingdale Road, Suite #900,
Glendale Heights IL 60139. After your initial purchase, you may purchase
additional shares by mailing to Income Achievers at the above address a check
in the amount of your purchase made payable to the Islamia Growth Fund or
Islamia Income Fund (whichever is applicable) and indicating your account
number on the check.
All purchases must be made in U.S. dollars and checks must be drawn on U.S.
banks. Cash will not be accepted for the purchase of shares. If a check
fails to clear, the purchase to which the check relates will be canceled and
the prospective investor will be liable for any losses or fees incurred
by the respective Fund and its transfer agent, including without limitation
a $20 fee to cover bank handling charges for returning checks due to insuf-
ficient funds. When purchases are made by check, the respective Fund can
hold payment on redemption of shares so purchased until it is reasonably
satisfied that the check has cleared.
The Funds will not issue certificates to represent Shares. If you choose
to invest in a Fund, an account will be opened and maintained for you by
Income Achievers, the Funds' transfer agent. With each purchase, you will
receive a statement showing the details of the transaction and the current
number and value of shares owned. You may purchase full and fractional
shares, expressed to three decimal places. A change in registration or
transfer of shares held in the name of your financial adviser's firm can
only be made by an order in good form from the financial adviser acting on
your behalf. The Funds reserve the right to reject any purchase order and
to waive or increase minimum investment requirements. Subject to the rules
and regulations of the Securities and Exchange Commission, the Funds reserve
the right to suspend the continuous offering of its shares at any time, but
no suspension shall affect your right of redemption as described below.
TAX-SHELTERED RETIREMENT PLANS.
Shares of the Funds are available for purchase in connection with certain
types of tax-sheltered retirement plans, including Individual Retirement
Accounts for individuals and in connection with Simplified Employee Pension
Plans for employees. In order to receive the necessary materials to create
an IRA account, please write to the Funds, c/o Income Achievers, 1553
Bloomingdale Road, Suite #900, Glendale Heights, IL 60139 or call 1-888-
786-9200.
HOW TO REDEEM FUND SHARES
You may redeem your Fund shares at any time for cash at the net asset value
next computed after the redemption instructions and any required documents
are received in proper form, as described below. There is no charge for the
redemption of any Fund's shares.
Written Request
You may redeem shares by sending a written request for redemption directly
to Income Achievers, Inc., 1553 Bloomingdale Road, Suite #900, Glendale
Page 9
Heights, IL 60139. Requests for redemption must be signed by each share-
holder and, if the redemption proceeds exceed $50,000 or are payable other
than to the shareholder of record at the address of record (which address
may not have changed in the preceding 60 days), the signature must be
guaranteed by a national bank or trust company, by a member of a national
securities exchange or in such other manner as may be acceptable to the Fund.
You will receive payment based on the net asset value per share next deter-
mined after receipt by the Fund of a properly executed redemption request
in proper form. A check for the redemption proceeds will be mailed to you
within seven days after receipt of your redemption request. For accounts
registered in the name of a broker-dealer, payment will be forwarded within
three business days. However, if any shares to be redeemed were purchased by
check within 15 days prior to the date the redemption request is received,
the Fund will not mail the redemption proceeds until the check received for
the purchase of shares has cleared, which may take up to 15 days.
Telephone Request
If you have authorized telephone redemption and your account address has not
changed within the last 60 days, you can redeem shares that are worth $50,000
or less by calling Income Achievers at 888-786-9200. While you or anyone
authorized by you may make telephone redemption requests, redemption checks
will be issued only in the name of the shareholder of record and will be
mailed to the address of record. If your telephone request is received
prior to 4:00 p.m. eastern time, the redemption check will normally be mailed
the next business day. For requests received after 4:00 p.m. eastern time,
the redemption will be effected at 4:00 p.m. eastern time the following
business day and the check will normally be mailed on the second business day
after the request.
If you have authorized redemption proceeds to be sent by wire, you can
take advantage of the following expedited redemption procedures to redeem
shares that are worth at least $1,000. You may make redemption requests
for a wire transfer by calling Income Achievers at 888-786-9200. If a re-
demption request is received by 4:00 p.m. eastern time, the redemption will
be made as of 4:00 p.m. that day. If the redemption request is received
after 4:00 p.m. eastern time, the redemption will be made as of 4:00 p.m.
the following business day. Under this type of request, proceeds will nor-
mally be wired on the second business day following the redemption, but may
be delayed one additional business day if the Federal Reserve Bank of Boston
or the Federal Reserve Bank of New York is closed on the day redemption
proceeds would ordinarily be wired. The Fund reserves the right to charge a
fee for this service.
Page 10
To redeem by telephone, you need to complete the telephone redemption
authorization section of the enclosed Application Form and return it to
Income Achievers. If you did not authorize telephone redemption when you
opened your account, you may obtain a telephone redemption authorization
form by writing Income Achievers or by calling toll-free at 888-786-9200.
Proceeds of share redemptions made by wire will be transferred by Federal
Reserve wire only to the commercial bank account specified by the share-
holder on the Application Form. You need to send a written request to
Income Achievers in order to establish multiple accounts, or to change the
account or accounts designated to receive redemption proceeds. These
requests must be signed by each account owner with signatures guaranteed by
a national bank or trust company or by a member of a national security
exchange or in such other manner as may be acceptable to the Fund.
Further documentation may be required from corporations, executors, trustees
or personal representatives.
The Funds reserve the right to refuse telephone redemptions and, at its
option, may limit the timing, amount or frequency of these redemptions.
Telephone or wire redemption procedures may be modified or terminated at
any time, on 30 days' notice, by the Fund. The Funds and Income Achievers
will not be liable for following telephone instructions reasonably believed
to be genuine. The Funds employ procedures reasonably designed to confirm
that telephone instructions are genuine. These procedures may include
recording all telephone instructions and requiring up to three forms of
identification prior to acting upon a caller's instructions. If the Funds
do not follow reasonable procedures for protecting shareholders against loss
on telephone transactions, it may be liable for any losses due to unauth-
orized or fraudulent telephone instructions.
General
Each Fund may suspend the right of redemption of their shares or delay
payment more than seven days (a) during any period when the New York Stock
Exchange is closed (other than customary weekend and holiday closings), (b)
when trading in the markets the Fund normally utilizes is restricted, or an
emergency exists as determined by the Securities and Exchange Commission so
that trading of the Fund's investments or determination of its net asset
value is not reasonably practicable, or (c) for any other periods that the
Securities and Exchange Commission by order may permit for protection of
Fund shareholders.
Except for the minimum investment requirements imposed on initial and sub-
sequent purchases of Fund shares (as described under "Minimum Investment" in
the "How to Buy Fund Shares" section), the Funds currently do not have a
minimum total investment which must be maintained in the account. The Funds,
however, may in the future from time to time establish a minimum total in-
vestment for their Fund shareholders, and the Funds reserve the right to
redeem your shares if your investment is less than the minimum after giving
you at least 30 days' notice. If any minimum total investment is es-
tablished, and if your account is below the minimum, you will be allowed
30 days following the notice in which to purchase sufficient shares to meet
the minimum.
Page 11
MANAGEMENT OF THE FUNDS
The management of the Funds, including general supervision of the duties
performed for the Funds by the Adviser under the Investment Management
Agreement, is the responsibility of the Trust's Board of Trustees.
Investment Adviser
Income Achievers provides the Funds with overall investment advisory and
administrative services under an Investment Management Agreement with the
Trust. Subject to any policies established by the Trust's Board of Trustees,
the Adviser makes investment decisions on behalf of each Fund, makes avail-
able any research and statistical data, manages each Fund's business affairs,
and supervises the acquisition and disposition of investments by the Fund.
The Adviser also furnishes to the Trust, among other things, equipment,
facilities, certain personnel to carry out the management of the Trust, and
certain accounting and bookkeeping services as set forth in the Investment
Management Agreement. The Adviser shall pay for all executive and other
personnel, office space and office facilities that it is required to render
under the Investment Management Agreement. The Adviser is also the dis-
tributor and transfer agent of the Funds.
The Adviser was founded in 1995 and currently serves as investment adviser
only to the Trust, but may in the future serve as investment adviser to
other investment companies. The Adviser's principal mailing address is
1553 Bloomingdale Road, Suite #900, Glendale Heights IL 60139. Qamaruddin
Ali Yar Khan, the Chairman, President and a Trustee of the Trust is a
controlling person of the Adviser through his ownership of all of the common
stock of the Adviser.
For its services, each Fund pays the Adviser an annual advisory fee of .8
of 1% of the Fund's average daily net assets. In addition to the fee paid
to the Adviser, each Fund bears all of its other expenses including, but
not limited to, telephone and other communications facilities, a pro rata
portion of salary, fees and expenses (including legal fees) of those trust-
ees, officers and employees of the Trust who are not officers, trustees or
employees of the Adviser; taxes and governmental fees; brokerage commissions
and other expenses incurred in acquiring or disposing of portfolio se-
curities; fees and expenses of the custodian and transfer agent, registrar
and dividend disbursing agency; expenses of registering and qualifying
shares for sale with the Securities and Exchange Commission and state
securities commissions; accounting and legal costs; insurance premiums;
expenses of maintaining the Fund's legal existence and of shareholder
meetings; expenses of preparation and distribution to existing shareholders
of reports, proxies and prospectuses; and fees and expenses of membership in
industry organizations. For the first few years of operation, the Adviser
may at its discretion bear some of these expenses.
Income Achievers also acts as transfer agent, maintaining all shareowner
records for which it is paid a fee per account. For prompt response to all
shareholder inquiries, please write to the Adviser at its address above or
call 888-786-9200.
Page 12
Portfolio Manager
Qamaruddin Ali Yar Khan has served as portfolio manager for the Funds since
commencement of their operations. Mr. Khan received his bachelor of science
from Osmania University in Hyderabad, India. Mr. Khan is a certified public
accountant and has been Controller of Sonoscan, Inc. since 1990. Mr. Khan
also is President and owner of Glenside Accounting & Tax Service. Mr. Khan
does not have any prior experience managing a mutual fund portfolio.
PORTFOLIO TRANSACTIONS
Subject to the discretion of the Board of Trustees, the Adviser is respon-
sible for the placement of the portfolio transactions of the Funds with
brokers or dealers selected by the Adviser. It is the policy of the Adviser
to seek the best execution at the best security price available with respect
to each transaction, and with respect to brokered transactions, in light of
overall quality and research services provided. In selecting broker-dealers
and negotiating their commissions, the Adviser may take into account such
factors as the firm's reliability, the quality of its execution services,
its financial condition, and the sale of Fund shares.
NET ASSET VALUE
Each Fund's net asset value per share is determined as of the close of trad-
ing (normally 4:00 p.m. eastern time) on each day the New York Stock
Exchange is open for business. The Fund's net asset value may not be cal-
culated on days during which the respective Fund receives no orders to pur-
chase shares and no shares are tendered for redemption. Net asset value is
calculated by taking the fair value of the Fund's total assets, including
dividends accrued but not yet collected, less all liabilities, and
dividing by the total number of shares outstanding. The result, rounded to
the nearest cent, is the net asset value per share. In determining net
asset value, expenses are accrued and applied daily and securities and other
assets for which market quotations are available are valued at market value.
Common stocks and other equity-type securities are valued at the last
sales price on the national securities exchange or Nasdaq on which such
securities are primarily traded; however, securities traded on a national
securities exchange or Nasdaq for which there were no transactions on a
given day or securities not listed on a national securities exchange or
Nasdaq are valued at the most recent bid prices. Any securities or other
Page 13
assets for which market quotations are not readily available are valued at
fair value as determined in good faith by the Board of Trustees.
HOW THE FUNDS SHOW PERFORMANCE
The Funds may quote their respective yield or total return in reports to
shareholders, sales literature and advertisements. The Funds may also from
time to time compare their investment results to various passive indices
or other mutual funds with similar investment objectives. Comparative perfor-
mance information may include data from Lipper Analytical Services, Inc.,
Morningstar, Inc. and other industry publications. See the Statement of
Additional Information for a more detailed discussion.
The yield of a Fund refers to the income generated by an investment in the
Fund over a one-month period (which period will be stated in the advertise-
ment). This income is then "annualized." That is, the amount of income
generated by the investment during the month is assumed to be generated
each month over a 12-month period and is shown as a percentage of the invest-
ment. All total return figures assume the reinvestment of all dividends
and measure the net investment income generated by, and the effect of any
realized and unrealized appreciation or depreciation of, the underlying
investments in the Funds over a specified period of time. Average annual
total return figures are annualized and therefore represent the average
annual percentage change over the specified period. Cumulative total
return figures are not annualized and represent the aggregate percentage or
dollar value change over a stated period of time. Yield and total return
are based upon the historical results of the respective Fund and are not
necessarily representative of the future performance of such Fund.
DISTRIBUTIONS AND TAXES
Each Fund intends to operate as a "Regulated Investment Company" under Sub-
chapter M of the Internal Revenue Code, and therefore will not be liable
for federal income taxes to the extent earnings are distributed on a timely
basis.
For federal income tax purposes, unless you are exempt from taxation or en-
titled to a tax deferral, all dividends paid by a Fund that are derived from
net investment income and net short-term capital gains are, to the extent
of the Fund's current and accumulated earnings and profits, taxable as ordi-
nary income, and distributions paid by a Fund from net long-term capital
gains are taxable as long-term capital gain, whether received in cash or
reinvested in additional shares. The capital gain holding period for this
purpose is determined by the length of time the Fund has held the security
and not the length of time you have held shares in the Fund. Long-term
capital gain distributions received by individual shareholders are taxed
at a maximum rate of 28%. Investors are informed annually as to the amount
and nature of all dividends and capital gains paid during the prior year.
Such capital gains and dividends may also be subject to state or local taxes.
Page 14
Income dividends are usually distributed quarterly, and capital gains, if
any, are usually distributed annually in December. When a dividend or
capital gain is distributed, the Funds' net asset value decreases by the
amount of the payment. Any such distribution will be subject to federal
income tax, even if the distribution occurs shortly after a purchase of Fund
shares. All dividends or capital gains distributions will automatically be
reinvested in additional shares of the respective Fund at the then pre-
vailing net asset value unless an investor specifically requests that either
dividends or capital gains, or both, be paid in cash. The election to
receive dividends or reinvest them may be changed by writing to: Income
Achievers, Inc., 1553 Bloomingdale Road, Suite #900, Glendale Heights, IL
60139. Such notice needs to be received at least 5 days prior to the record
date of any dividend or capital gain distribution.
Under certain circumstances, a corporate shareholder may be entitled to a
dividends received deduction with respect to such shareholder's taxable
dividends which are attributable to dividends received by the Fund on its
equity securities.
If you do not furnish the applicable Fund with your correct social security
number, employer identification number, or appropriate certification, the
Fund is required by federal law to withhold federal income tax from your
distributions and redemption proceeds at a rate of 31%.
This section is not intended to be a full discussion of federal income tax
laws and the effect of such laws on you. A more detailed summary
appears in the Statement of Additional Information. There may be other
federal, state, or local tax considerations applicable to a particular
investor. You are urged to consult your own tax adviser.
GENERAL INFORMATION
Custodian and Transfer Agent
The custodian of the assets of the Funds is Firstar Trust Company, located
at 615 E. Michigan Street, Milwaukee, Wisconsin 53201. The custodian also
provides certain accounting services to the Funds. The Funds' Adviser is
also the Funds' transfer, shareholder services and dividend paying agent
and therefore performs bookkeeping, data processing and administrative ser-
vices for the maintenance of shareholder accounts.
Organization
Each Fund is a series of the Islamia Group of Funds (the "Trust"), an open-
end diversified management investment company under the Investment Company
Act of 1940. The Trust was organized as a Massachusetts business trust on
December 23, 1996. The Board of Trustees of the Trust is authorized to
issue an unlimited number of shares in one or more series or "Funds," which
may be divided into classes of shares. Currently, there are two series
authorized and outstanding, each of which has only one class of shares.
Page 15
Each share of a Fund has equal rights as to voting, redemption, dividends,
and liquidation as the other shares of that Fund. On matters affecting an
individual Fund (such as advisory contracts or changes in fundamental policy
of a Fund) a separate vote of the shares of that Fund is required. Shares
of a Fund are not entitled to vote on any matter not affecting that Fund.
There are no conversion, preemptive or other subscription rights. The Board
of Trustees has the right to establish additional series in the future, to
change those series and to determine the preferences, voting powers, rights
and privileges thereof.
In the interest of economy and convenience, certificates representing shares
purchased will not be ordinarily issued. The investor, however, will have
the same rights of ownership with respect to such shares as if certificates
had been issued.
The Trust is not required and does not intend to hold annual meetings of
shareholders. Shareholders owning more than 10% of the outstanding shares
of a Fund have the right to call a special meeting to remove Trustees or for
any other purpose.
Under Massachusetts law applicable to Massachusetts business trusts, share-
holders of such a trust may, under certain circumstances, be held personally
liable as partner for its obligations. However, the Declaration of Trust
of the Trust contains an express disclaimer of shareholder liability for
acts or obligations of the Trust and requires that notice of this disclaimer
be given in each agreement, obligation or instrument entered into or exe-
cuted by the Trust or the Trustees. The Trust's Declaration of Trust further
provides for indemnification out of the assets and property of the Trust for
all loss and expense of any shareholder held personally liable for the
obligations of the Trust. Thus, the risk of a shareholder incurring
financial loss on account of shareholder liability is limited to circum-
stances in which both inadequate insurance existed and the Trust or Fund
itself was unable to meet its obligations. The Trust believes the
likelihood of the occurrence of these circumstances is remote.
Page 16
Statement of Additional Information
[ ]
Islamia Group of Funds
1553 Bloomingdale Road
Suite #900
Glendale Heights, IL 60137
ISLAMIA GROUP OF FUNDS
ISLAMIA INCOME FUND
ISLAMIA GROWTH FUND
This Statement of Additional Information is not a prospectus. A prospectus
may be obtained from Income Achievers, Inc. at 1553 Bloomingdale Road, Suite
#900, Glendale Heights, IL 60137. This Statement of Additional Information
relates to, and should be read in conjunction with the prospectus for the
Funds, dated [ ].
TABLE OF CONTENTS
PAGE
GENERAL INFORMATION B-1
INVESTMENT OBJECTIVES AND POLICIES OF THE FUNDS B-1
PORTFOLIO TURNOVER B-3
PERFORMANCE DATA B-3
MANAGEMENT OF THE FUNDS B-5
PRINCIPAL HOLDERS OF SECURITIES B-7
INVESTMENT ADVISORY AND OTHER SERVICES B-7
BROKERAGE ALLOCATION B-8
PURCHASE, REDEMPTION AND PRICING OF SECURITIES BEING OFFERED B-10
DISTRIBUTION OF SHARES B-10
TAX STATUS B-11
INDEPENDENT PUBLIC ACCOUNTANTS AND CUSTODIANS B-15
FINANCIAL STATEMENTS B-15
GENERAL INFORMATION
Islamia Income Fund and Islamia Growth Fund (individually a "Fund" and
collectively, the "Funds") are series of the Islamia Group of Funds (the
"Trust"), an open-end diversified series investment company. Each series
of the Trust represents shares of beneficial interest in a separate port-
folio of securities and other assets, with its own objectives and policies.
Currently, two series of the Trust are authorized and outstanding. The
Trust was organized on December 23, 1996 and the Funds have no prior ope-
rating history.
Certain matters under the Investment Company Act of 1940 which must be
submitted to a vote of the holders of the outstanding voting securities
of a series company shall not be deemed to have been effectively acted
upon unless approved by the holders of a majority of the outstanding
voting securities of each series affected by such matter.
INVESTMENT OBJECTIVES AND POLICIES OF THE FUNDS
The investment objectives and certain investment policies of each Fund are
described in the Prospectus. All investments are subject to the overall
policy of making investment decisions according to Islamic principles. The
investment objectives of each Fund, as well as certain other policies and
restrictions described in the Prospectus and herein are fundamental and
may not be changed without approval by holders of a "majority of the Fund's
outstanding voting shares." As defined in the Investment Company Act of
1940, this means the vote of (i) 67% or more of the Fund's shares present
at a meeting, if the holders of more than 50% of the Fund's shares are
present or represented by proxy, or (ii) more than 50% of the Fund's shares,
whichever is less.
Fundamental investment restrictions limiting investments of the Funds provide
that the Funds may not:
(1) issue senior securities, except the Funds may engage in certain tra-
ding practices which are permitted under the Investment Company Act of 1940
and are consistent with Islamic principles;
(2) purchase securities on margin or effect short sales of securities;
(3) invest in oil, gas, or other mineral exploration leases and programs;
(4) purchase or sell real estate, real estate limited partnerships (except
master limited partnerships that are publicly traded on a national
securities exchange or Nasdaq's National Market System);
Page B-1
(5) purchase or sell commodities or commodity contracts including futures
contracts;
(6) make loans of cash or portfolio securities or borrow money or property;
(7) underwrite the securities of other issuers except that a Fund might
be deemed to be an underwriter for purposes of the Securities Act of 1933 in
connection with the purchase and sale of certain securities;
(8) purchase more than 10% of the outstanding voting securities of an
issuer, or invest in a company to get control or manage it;
(9) invest more than 5% of the Fund's total assets in securities of an
issuer;
(10) purchase the securities of any issuer if, as a result, more than 25%
of the Fund's total assets would be invested in the securities of issuers
whose principal business activities are in the same industry;
(11) purchase or retain the securities of any issuer if the officers,
directors, advisers, or managers of the Fund owning beneficially more than
one and one-half of one percent of the securities of such issuer together
own beneficially 5% of such securities; provided no officer or director
shall be deemed to own beneficially securities held in other accounts
managed by such person or held in employee or similar plans for which such
person acts as trustee;
(12) purchase securities of other investment companies unless (a) such
securities are consistent with the investment objectives of the Funds
and the investment companies operate in a manner consistent with Islamic
principles and (b) such purchase is in compliance with the Investment
Company Act of 1940 and applicable state law. However, no such restriction
shall apply to a purchase of investment company securities in connection
with a merger, consolidation, acquisition or reorganization;
(13) purchase the securities of any issuer if, as a result, more than 10%
of its total assets would be invested in the securities of issuers that,
including predecessors or unconditional guarantors, have a record of less
than three years of continuous operation. This policy does not apply to
securities of pooled investment vehicles.
In addition to the foregoing fundamental restrictions, the Funds have
adopted the following non-fundamental policies which may be changed by the
Board of Trustees:
(1) each Fund has authority to invest up to 10% of its assets in foreign
securities not publicly traded in the U.S. Although the Funds occasionally
invest in such foreign securities, current policy limits such investments
up to 5% of Fund assets. The Funds intend to invest only in foreign
securities available for trading and settlement in the United States,
primarily in American Depository Receipts ("ADRs") for foreign securities.
These are certificates issued by United States banks, representing the
right to receive securities of the foreign issuer deposited in that bank
or a correspondent bank. The Adviser does not plan to invest the Funds'
assets in foreign securities that are not traded and settled domestically;
(2) each Fund will not purchase or sell options, except each Fund has the
power to use covered call options as a method to increase the income
received from common stocks owned by that Fund. The Funds may sell (write)
covered call options and purchase call options to close out call options
previously written. The Funds currently do not write covered call options;
(3) the Funds do not invest in preferred stock;
(4) the Funds will not invest their net assets in warrants; and
(5) the Funds will not purchase "restricted securities" (those which are
subject to legal or contractual restrictions on resale, including securities
that may be sold pursuant to Rule 144A under the Securities Act of 1933).
Notwithstanding the foregoing, the Funds may invest up to 10% of its net
assets in illiquid securities (excluding restricted securities) but cur-
rently have no intention to do so.
If a percentage restriction is adhered to at the time of investment, a
later increase in percentage resulting from a change in market value of
the investment or the total assets will not constitute a violation of that
restriction.
PORTFOLIO TURNOVER
The Trust places no restrictions on portfolio turnover and will buy or
sell investments according to the Adviser's appraisal of the factors affect-
ing the market and the economy.
PERFORMANCE DATA
The historical investment performance of the Funds may be shown in the
form of "average annual total return," "cumulative total return," and
"current yield." PERFORMANCE FIGURES REPRESENT PAST PERFORMANCE AND ARE
NOT PREDICTIVE OF FUTURE RESULTS.
The average annual total return quotation is computed in accordance with
a standardized method prescribed by rules of the Securities and Exchange
Commission ("SEC"). The average annual total return for a specific period
is found by taking a hypothetical, $1,000 investment ("initial investment")
in Fund shares on the first day of the period, reducing the amount to
reflect the maximum sales charge, and computing the "redeemable value" of
that investment at the end of the period. The redeemable value is then
divided by the initial investment, and this quotient is taken to the Nth
root (N representing the number of years in the period) and 1 is subtracted
from the result, which is then expressed as a percentage. The calculation
assumes that all income and capital gains distributions have been rein-
vested in Fund shares at net asset value on the reinvestment dates during
the period.
Calculation of cumulative total return is not subject to a prescribed
formula. Cumulative total return for a specific period is calculated by
first taking a hypothetical initial investment in Fund shares on the first
day of the period, deducting (in some cases) the maximum sales charge, and
computing the "redeemable value" of that investment at the end of the
period. The cumulative total return percentage is then determined by
subtracting the initial investment from the redeemable value and dividing
the remainder by the initial investment and expressing the result as a
percentage. The calculation assumes that all income and capital gains
distributions by a Fund have been reinvested at net asset value on the
reinvestment dates during the period. Cumulative total return may also be
shown as the increased dollar value of the hypothetical investment over
the period. Cumulative total return calculations that do not include the
effect of the sales charge would be reduced if such charge were included.
Current yield is computed in accordance with a formula prescribed by the
SEC. Current yield is computed by dividing the net investment income per
share earned, over a 30 day period for which the yield is presented, by the
maximum offering price per share on the last day of the period, and annual-
ize the results. The formula used is:
Yield=2{(a-b/cd +1)(to the power of 6) -1}
Where a = dividends accrued during the period
b = expenses accrued for the period (net of reimbursements)
c = the average daily number of shares outstanding during
the period that were entitled to receive dividends
d = the maximum offering price per share on the last day
of the period
The Funds have no interest income. For the purpose of computing yield,
the Funds recognize dividend income by accruing 1/360 of the stated annual
dividend rate of the security each day in the last 30 days that the security
is in the portfolio.
In reports or other communications to shareholders or in advertising and
sales literature, a Fund may compare its performance with that of other
mutual funds as reported by Lipper Analytical Services, Inc. ("Lipper"),
Morningstar, Inc. ("Morningstar"), Wiesenberger Investment Companies Ser-
vices ("Wiesenberger") and CDA Investment Technologies, Inc. ("CDA"), or
similar independent services which monitor the performance of mutual funds,
or other industry or financial publications such as Barron's, Changing
Times, Forbes and Money Magazine. Performance comparisons by these
indexes, services or publications may rank mutual funds over different
periods of time by means of aggregate, average, year by year, or other
types of total return and performance figures. The Funds may use compar-
ative performance as computed in a ranking by these or other independent
services. Any given performance quotation or performance comparison should
not be considered as representative of the performance of the Funds for any
future period.
The Funds may also compare themselves to the Consumer Price Index, a widely
recognized measure of inflation, and to other indexes and averages such as,
the Dow Jones Industrials, Standard & Poor's 500 Composite Stock Price
Index, Wilshire 5000, Russell 2000, Dow Jones Utilities, Nasdaq Composite,
New York Stock Exchange Composite and Ibbotson Common Stocks.
The composition of these indexes or averages differs from that of the
Funds. Comparison of a Fund to an alternative investment should be made
with consideration of the differences in features and expected performance
of the investments.
All of the indexes and averages noted above will be obtained from the indi-
cated sources or reporting services, which the Trust believes to be gen-
erally accurate. A Fund may also note its mention or recognition in other
newspapers, magazines or media from time to time. However, the Trust
assumes no responsibility for the accuracy of such data.
MANAGEMENT OF THE FUNDS
The management of the Trust, including general supervision of the duties
performed for the Fund under the Investment Management Agreement, is the
responsibility of its Board of Trustees. The number of trustees of the
Trust is fixed at 5, 2 of whom are "interested persons" (as the term
"interested persons" is defined in the Investment Company Act of 1940) and
3 of whom are "disinterested persons." The names and business addresses of
the trustees and officers of the Trust and their principal occupations and
other affiliations during the past five years are set forth below, with
those trustees who are "interested persons" of the Trust indicated by an
asterisk. In addition, Ms. Hussain, noted below as an interested person of
the Trust, is also the daughter of Qamarrudin Ali Yar Khan.
<TABLE>
<CAPTION>
POSITION AND OFFICES PRINCIPAL OCCUPATIONS
NAME AND ADDRESS AGE WITH TRUST DURING PAST FIVE YEARS
<S> <C> <C> <C>
Qamaruddin Ali Yar Khan* 53 Chairman, President and President, Director, and
1553 Bloomingdale Road, Suite #900 Trustee shareholder of Income
Glendale Heights, IL 60139 Achievers, Inc. (since its
inception in 1995 to present);
Controller of Sonoscan, Inc.
(manufacturer of ultrasonic test-
ing equipment) (since 1990 to
present) and manager of Sonoscan's
accounting department (1987-1990);
and owner of Glenside Accounting &
Tax Services (since 1989).
Sharmeen F. Hussain* 26 Treasurer/Trustee Data Base Manager (since 1993 to
137 Horizon Circle present) and analyst (from 1990 to
Carol Stream, IL 60188 1993) for Performance Analytics, Inc.,
Certified Public Accountant for
Consultant Coda Inc. (since
March 1996 to present).
M. A. Rahman Khan 60 Trustee President and Owner of
3705 Briar Lane Management Systems Ltd. (since
Hazel Crest, IL 60429 1985 to present) (computer consult-
ing organization); Professor of
Computer Science at City
Colleges of Chicago (since
September, 1990 to present).
Syed Shamshad Hussain 62 Trustee Managing Director of IQRA
1046 Longford Road International Education
Bartlett, IL 60103 Foundation (since 1995 to
present) (publisher of Islamic
religious books); Manager at All
State Insurance Company (from
1968 to 1994).
Syed K. Raheemullah 50 Trustee Member of the technical staff for
25 W. 181 Salem Lucent Technologies (since 1986
Naperville, IL 60540 to present) (manufacturer of
telephone equipment).
</TABLE>
Although the Board of Trustees has authority to establish an Executive
Committee with the power to act on behalf of the Board between meetings
and to exercise all powers of the Trustees in the management of the Trust,
no Executive Committee has been established at this time.
The following table sets forth estimated compensation to be paid by the
Trust to each of the trustees who are not designated "interested persons"
during the Trust's first full fiscal year. The Trust has no retirement or
pension plans. The officers and trustees affiliated with the Adviser serve
without any compensation from the Trust.
TOTAL**
ESTIMATED* COMPENSATION FROM
AGGREGATE TRUST AND FUND
COMPENSATION COMPLEX PAID TO
NAME OF TRUSTEE FROM THE TRUST TRUSTEES
M.A. Rahman Khan $400 $400
Syed Shamshad Hussain $400 $400
Syed K. Raheemullah $400 $400
* The estimated compensation to be paid by the Trust to the independent
trustees for the current fiscal year.
** Independent Trustees serve only as trustees for the two Funds.
Each trustee who is not affiliated with the Adviser receives $100 per day
plus expenses for attendance at all meetings held on a day on which a
regularly scheduled board meeting is held and $50 per day plus expenses
for attendance by telephone at a meeting held on each day on which no
regular board meeting is held. The annual fees and expenses are allocated
between the Funds on the basis of relative net asset sizes. The Trust
requires no employees other than its officers, all of whom are compensated
by Income Achievers.
PRINCIPAL HOLDERS OF SECURITIES
As of [ ], [ ] owned all of the outstanding shares
of each Fund.
INVESTMENT ADVISORY AND OTHER SERVICES
ADVISER
Income Achievers, Inc. acts as adviser to the Funds, with responsibility
for the overall management of each Fund. Its address is 1553 Bloomingdale
Road, Suite #900, Glendale Heights, IL 60137. Pursuant to its Investment
Management Agreement, Income Achievers provides investment advisory and
administrative services for the Funds. In performing its duties, the
Adviser will also determine if the securities are in accordance with Islamic
principles. Subject to the policies the Board of Trustees may determine,
the Adviser makes investment decisions on behalf of each Fund, makes avail-
able research and any statistical data therewith, and supervises the
acquisition and disposition of investments by each Fund, including the
selection of broker-dealers to carry out portfolio transactions. The
Adviser will permit any of its officers and directors to serve without
compensation from the Funds as trustees or officers of the Trust if elected
to such positions.
Qamaruddin Ali Yar Khan, Chairman, President and a trustee of the Trust,
is also President and sole shareholder of the Adviser. Accordingly, the
Adviser is controlled by Mr. Khan by virtue of his stock ownership.
In addition to the advisory services noted above, the Adviser will also
provide certain administrative services to the Trust, subject to the
supervision of the Board of Trustees and the terms of the Investment
Management Agreement. Under the Investment Management Agreement, the
Adviser will provide to the Trust facilities, equipment, statistical and
research data, clerical, accounting and bookkeeping services, internal
auditing and legal services, and personnel to carry out all management
services required for operation of the business and affairs of the Funds
other than those services performed by the Trust's distributor, custodian,
transfer agent, accountant, and those services normally performed by the
Trust's counsel and auditors. The Adviser at its own expense shall furnish
all executive and other personnel, office space, and office facilities re-
quired to render the investment management and administrative services
set forth in the Investment Management Agreement. Unless expressly
assumed by the Adviser, the Adviser shall not be obligated to pay any
costs or expenses incidental to the organization, operations or business of
the Trust. For its services, each Fund will pay the Adviser monthly a fee
at the annual rate of .8 of 1% of the Fund's average daily net assets. In
addition to the fee, each Fund bears all of its other expenses, including
but not limited to, telephone and other communications facilities, a pro
rata portion of salary, fees and expenses (including legal fees) of those
trustees, officers and employees of the Funds who are not officers, dir-
ectors or employees of the Adviser; interest expenses; fees and expenses of
the custodian and transfer agent; taxes and government fees; brokerage
commissions and other expenses incurred in acquiring or disposing of port-
folio securities; expenses of registering and qualifying shares for sale
with the SEC and state securities commissions; accounting costs (including
those provided by the Adviser), legal costs; insurance premiums; expenses of
maintaining the Fund's legal existence and of shareholders' meetings; ex-
penses of preparation and distribution to existing shareholders of reports,
proxies and prospectuses; and fees and expenses of membership in industry
organizations. For the first few years of the Funds' operations, the Adviser
may bear some of these expenses at its own discretion.
The Investment Management Agreement will continue in effect for a period of
more than two years only so long as it is approved at least annually by the
Trust's Board of Trustees or by a vote of the outstanding voting securities
of the Fund and in either case by a majority of the Trustees who are not
parties to the Agreement or interested persons of any such party. The Agree-
ment terminates automatically if it is assigned and may be terminated without
penalty by either party upon at least 60 days' written notice. The Agree-
ment provides that the Adviser shall not be liable for any loss sustained
by reason of the purchase, sale or retention of any security, if such recom-
mendation shall have been selected with due care and in good faith, except
for loss resulting from willful misfeasance, bad faith or gross negligence
on the part of the Adviser in the performance of its duties or by reason of
reckless disregard of its obligations and duties under the Agreement.
Income Achievers also provides services as the transfer agent and dividend-
paying agent for the Funds. As transfer agent, Income Achievers furnishes
to each shareholder a statement after each transaction, a historical state-
ment at the end of each year showing all transactions during the year, and
Form 1099 tax forms. Income Achievers also, on behalf of the Trust,
responds to shareholders' questions or correspondence. Further, the transfer
agent regularly furnishes the Funds with current shareholder lists and infor-
mation necessary to keep the shares in balance with the Trust's records.
The mailing of all financial statements, notices and prospectuses to share-
holders is performed by the transfer agent. The transfer agent maintains
records of contributions, disbursements and assets as required for IRAs and
other qualified retirement accounts.
As compensation for services as transfer agent and dividend disbursement
agent, the Funds pay Income Achievers an annual fee of $10 per account. The
Funds reimburse Income Achievers for any out-of-pocket expense for forms and
mailing costs used in performing its functions.
BROKERAGE ALLOCATION
The Adviser is responsible for decisions to buy and sell securities for the
Funds and for the placement of the Funds' securities business, the nego-
tiation of the commissions to be paid on brokered transactions, the prices
for principal trades in securities, and the allocation of portfolio broker-
age and principal business. It is the policy of the Adviser to seek the
best execution at the best security price available with respect to each
transaction, and with respect to brokered transactions, in light of the
overall quality of brokerage and research services provided to the respec-
tive Adviser and its advisees. The best price to the Funds means the
best net price without regard to the mix between purchase or sale price
and commission, if any. Portfolio securities transactions will normally be
effected through brokers on securities exchanges. Purchases may also be
made from underwriters, dealers, and, on occasion, the issuers. Purchases
and sales of portfolio securities through brokers involve a commission to
the broker. The purchase price of portfolio securities purchased from an
underwriter or dealer may include underwriting commissions and dealer
spreads. The Funds may pay mark-ups on principal transactions. In
selecting broker-dealers and in negotiating commissions, the portfolio
manager considers the firm's reliability, the quality of its execution
services on a continuing basis and its financial condition. The Adviser
may also consider sales of a Fund's shares as a factor in the selection
of broker-dealers to execute portfolio transactions, subject to the policy
of obtaining best price and execution.
Section 28(e) of the Securities Exchange Act of 1934 ("Section 28(e)")
permits an investment adviser, under certain circumstances, to cause an
account to pay a broker or dealer who supplies brokerage and research
services a commission for effecting a transaction in excess of the amount
of commission another broker or dealer would have charged for effecting
the transaction. Brokerage and research services include (a) furnishing
advice as to the value of securities, the advisability of investing, pur-
chasing or selling securities, and the availability of securities or pur-
chasers or sellers of securities; (b) furnishing analyses and reports
concerning issuers, industries, securities, economic factors and trends,
portfolio strategy, and the performance of accounts; and (c) effecting
securities transactions and performing functions incidental thereto (such as
clearance, settlement, and custody).
In selecting brokers, the Adviser also considers investment and market
information and other research, such as economic, securities, financial
and performance measurement research, provided by such brokers, and the
quality and reliability of brokerage services, including execution capa-
bility, performance, and financial responsibility. Accordingly, the com-
missions charged by any such broker may be greater than the amount another
firm might charge if the Adviser determines in good faith that the amount
of such commissions is reasonable in relation to the value of the research
information and brokerage services provided by such broker to the Adviser
or the Funds. The Adviser believes that the research information received
in this manner provides the Funds with benefits by supplementing the re-
search otherwise available to the Funds. The research supplied, however,
may or may not be of value or used in making investment decisions for the
Funds. Further, although as of the date of this Statement of Additional
Information the Adviser did not have any advisory accounts other than the
Funds, the Adviser may in the future advise other accounts. In such case,
the Adviser may use such research in servicing all of its accounts and not
all such services may be used by the Adviser in connection with the Funds.
The Investment Management Agreement provides that such higher commissions
will not be paid by the Funds unless the Adviser determines in good faith
that the amount is reasonable in relation to the services provided. The
investment advisory fees paid by the Funds to the Adviser under the Invest-
ment Management Agreement are not reduced as a result of receipt by the
Adviser of research services.
The Adviser seeks to allocate portfolio transactions equitably whenever con-
current decisions are made to purchase or sell securities by the Funds or
with another advisory account. In some cases, this procedure could have
an adverse effect on the price or the amount of securities available to
the Funds. In making such allocations between a Fund and other advisory
accounts, the main factors considered by the Adviser are the respective
investment objectives, the relative size of portfolio holdings of the same
or comparable securities, the availability of cash for investment and the
size of investment commitments generally held.
PURCHASE, REDEMPTION AND PRICING OF SECURITIES BEING OFFERED
As described in the Prospectus, you may purchase shares of the Funds at a
price equal to their net asset value plus an up-front sales charge. For
information regarding the up-front sales charge, see "Summary of Fund Ex-
penses" and "How to Buy Fund Shares" in the Prospectus. Set forth is an
example of the method of computing the offering price of the shares of each
of the Funds. The example assumes a purchase on [__________________] of
shares from a Fund at a price based upon the net asset value of the shares.
Net Asset Value per share $
Per Share Sales Charge-3% of public offering price
(3.093% of net asset value) $
Per Share Offering Price to the Public $
Net asset value per share is determined by dividing the value of all se-
curities and other assets, less liabilities, by the number of shares out-
standing. The net asset value is determined for each Fund as of the close
of trading on the New York Stock Exchange (generally 4 p.m. New York time)
on each day the Exchange is open for trading. The Exchange is generally
closed on: New Year's Day, Washington's Birthday/President's Day, Good
Friday, Memorial Day, Independence Day (observance), Labor Day, Thanks-
giving Day and Christmas Holiday.
DISTRIBUTION OF SHARES
Income Achievers, the Funds' investment adviser, also acts as the distribu-
tor of the shares of the Funds as provided by a distribution agreement with
the Trust (the "Distribution Agreement"). Pursuant to the Distribution
Agreement, the Trust appointed Income Achievers to be its agent for the
distribution of the Funds' shares on a continuous offering basis. Income
Achievers has agreed to use its "best efforts" to distribute the Funds'
shares, but has not committed to purchase or sell any specific number of
shares. The Distribution Agreement for the Funds shall continue in effect
for a period of more than two years only so long as its continuance is ap-
proved annually by the vote of the Trustees at a meeting called for such
purpose. The Distribution Agreement will automatically terminate in the
event of its assignment. Pursuant to the Distribution Agreement, Income
Achievers may sell the Funds' shares directly to retail customers or to or
through brokers, dealers, banks, or other qualified financial intermed-
iaries. Under the Distribution Agreement, Income Achievers at its own
expense will finance certain activities incident to the sale and distri-
bution of the Funds' shares including, printing and distributing pros-
pectuses and statements of additional information to other than existing
shareholders, the printing and distributing of advertising and sales liter-
ature (except such expenses shall not include expenses incurred by the Funds
in connection with the preparation, printing and distribution of any report
or other communication to shareholders in their capacity as such), and
giving of concessions to any dealers. Income Achievers receives for its
services the excess, if any, of the sales price of a Fund's shares less the
net asset value of those shares, and may reallow a majority or all of such
amounts to any dealers who sold the shares.
TAX STATUS
The following discussion of federal income tax matters is based upon the
advice of Chapman and Cutler, counsel to the Trust.
As described in the Prospectus, each of the Funds intends to qualify under
Subchapter M of the Internal Revenue Code of 1986, as amended (the "Code")
for tax treatment as a regulated investment company. In order to qualify
as a regulated investment company, a Fund (i) must elect to be treated as a
regulated investment company and (ii) for each taxable year thereafter, must
satisfy certain requirements relating to the source of its income, diversi-
fication of its assets, and distributions of its income to shareholders.
First, the Fund must derive at least 90% of its annual gross income from
dividends, interest, payments with respect to securities loans, gains from
the sale or other disposition of stock or securities, foreign currencies or
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 (the "90% gross income test"). Second, a
Fund must derive less than 30% of its annual gross income from the sale or
other disposition of any of the following which was held for less than three
months: stock, securities and certain options, futures, or forward con-
tracts, or foreign currencies but only if such currencies are not directly
related to the Fund's principal business of investing in stock or securities
(the "short-short test"). Third, the Fund must diversify its holdings so
that, at the close of each quarter of its taxable year, (i) at least 50%
of the value of its total assets is comprised of cash, cash items, United
States Government securities, securities of other regulated investment
companies and other securities limited in respect of any one issuer to an
amount not greater in value than 5% of the value of the Fund's total assets
and to not more than 10% of the outstanding voting securities of such
issuer, and (ii) not more than 25% of the value of the Fund's total assets
is invested in the securities of any one issuer (other than United States
Government securities and securities of other regulated investment companies)
or two or more issuers controlled by a Fund and engaged in the same, similar
or related trades or businesses.
As a regulated investment company, a Fund will not be subject to federal
income tax in any taxable year for which it distributes at least 90% of its
"investment company taxable income" (without regard to its net capital gain,
i.e., the excess of its net long-term capital gain over its short-term capi-
tal loss). In addition, to the extent the Fund timely distributes to
shareholders at least 98% of its taxable income (including any net capital
gain), it will not be subject to the 4% excise tax on certain undistri-
buted income of regulated investment companies. The Fund intends to make
timely distributions in compliance with these requirements and consequently
it is anticipated that they generally will not be required to pay the excise
tax. A Fund may retain for investment its net capital gain. However, if
the Fund retains any net capital gain or any investment company taxable
income, it will be subject to federal income tax at regular corporate rates
on the amount retained. If the Fund retains any net capital gain, such Fund
may designate the retained amount as undistributed capital gains in a notice
to its shareholders who, if subject to federal income tax on long-term
capital gains, (i) will be required to include in income for federal income
tax purposes, as long-term capital gain, their shares of such undistributed
amount, and (ii) will be entitled to credit their proportionate shares of the
tax paid by such Fund against their federal income tax liabilities if any,
and to claim refunds to the extent the credit exceeds such liabilities.
For federal income tax purposes, the tax basis of shares owned by a share-
holder of the Fund will be increased by an amount equal under current law
to 65% of the amount of undistributed net capital gains included in the
shareholder's gross income. Each Fund intends to distribute at least
annually to its shareholders all or substantially all of its investment
company taxable income and net capital gain.
Treasury regulations permit a regulated investment company, in determining
its investment company taxable income and net capital gain, to elect (unless
it has made a taxable year election for excise tax purposes as discussed
below) to treat all or part of any net capital loss, any net long-term
capital loss or any net foreign currency loss incurred after October 31
as if they had been incurred in the succeeding year.
If any of the Funds engages in hedging transactions involving financial
futures and options, these transactions will be subject to special tax
rule, the effect of which may be to accelerate income to a Fund, defer a
Fund's losses, cause adjustments in the holding periods of a Fund's se-
curities, convert long-term capital gains into short-term capital gains
and convert short-term capital losses into long-term capital losses. These
rules could therefore affect the amount, timing and character of distri-
butions to shareholders.
Prior to purchasing shares in one of the Funds, the impact of dividends or
distributions which are expected to be or have been declared, but not
paid, should be carefully considered. Any dividend or distribution declared
shortly after a purchase of such shares prior to the record date will have
the effect of reducing the per share net asset value by the per share amount
of the dividend or distribution and will be subject to federal income tax
to the extent it is a distribution of ordinary income or capital gain.
In any taxable year of a Fund, distributions from the Fund, other than distri-
butions which are designated as capital gain dividends will to the extent of
the earnings and profits on such Fund constitute dividends for Federal in-
come tax purposes which are taxable as ordinary income to shareholders.
To the extent that distributions to a shareholder in any year exceed the
Fund's current and accumulated earnings and profits, they will be treated
as a return of capital and will reduce the shareholder's basis in his or
her shares and, to the extent that they exceed his or her basis, will
be treated as gain from the sale of such shares as discussed below. It
should be noted that certain legislative proposals have been made which
could affect the calculation of basis for shareholders holding securities
that are substantially identical to the Funds' securities. Distributions
of the Fund's net capital gain which are properly designated as capital
gain dividends by the Fund will be taxable to the shareholders as long-
term capital gain, regardless of the length of time the shares have been
held by a shareholder.
Although dividends generally will be treated as distributed when paid,
dividends declared in October, November or December, payable to share-
holders of record on a specified date in one of those months and paid
during the following January, will be treated as having been dis-
tributed by each Fund (and received by the shareholders) on December 31
of the year such dividends are declared.
The redemption or exchange of the shares of a Fund normally will result
in capital gain or loss to the shareholders. Generally, a shareholder's
gain or loss will be long-term gain or loss if the shares have been held
for more than one year. If a shareholder holds shares for six months or
less and subsequently sells such shares at a loss, the loss will be treated
as a long-term capital loss to the extent that any long-term capital gain
distribution is made with respect to such shares during the six-month
period or less that the shareholder owns the shares. Legislative proposals
have been made that would treat certain transactions designed to reduce or
eliminate risk of loss and opportunities for gain as constructive sales for
purposes of recognition of gain (but not loss).
Present law taxes both long- and short-term capital gains of corporations
at the rates applicable to ordinary income. For non-corporate taxpayers,
however, net capital gains (i.e., the excess of net long-term capital gain
over net short-term capital loss) will be taxed at a maximum marginal rate
of 28%. However, it should be noted that legislative proposals are intro-
duced from time to time that affect tax rates and could affect relative dif-
ferences between at which ordinary income and capital gains are taxed.
Because of the limitations on itemized deductions and the deduction for
personal exemptions applicable to higher income taxpayers, the effective
tax rate may be higher in certain circumstances. Because some or all
capital gains are taxed at a comparatively lower rate under the Revenue
Reconciliation Act of 1993 (the "Tax Act"), the Tax Act includes a provi-
sion that recharacterizes capital gains as ordinary income in the case of
certain financial transactions that are "conversion transactions" effec-
tive for transactions entered into after April 30, 1993. Shareholders and
prospective investors should consult with their tax advisers regarding the
potential effect of this provision on their investment in shares.
Under the Code, certain miscellaneous itemized deductions, such as invest-
ment expenses, tax return preparation fees and employee business expenses,
will be deductible by individuals only to the extent they exceed 2% of
adjusted gross income. Miscellaneous itemized deductions subject to this
limitation under present law do not include expenses incurred by the Fund as
long as the shares of the Fund are held by or for 500 or more persons at
all times during the taxable year or another exception is met. In the event
the shares of the Fund are held by fewer than 500 persons, additional
taxable income may be realized by the individual (and other noncor-
porate) shareholders in excess of the distributions received from the Fund.
All or a portion of a sales load paid in purchasing shares of a Fund cannot
be taken into account for purposes of determining gain or loss on the redemp-
tion or exchange of such shares within 90 days after their purchase to the
extent shares of a Fund or another fund are subsequently acquired without
payment of a sales load or with the payment of a reduced sales load pur-
suant to the reinvestment or exchange privilege. Any disregarded portion of
such load will result in an increase in the shareholder's tax basis in the
shares subsequently acquired. Moreover, losses recognized by a shareholder
on the redemption or exchange of shares of a Fund held for six months or
less are disallowed to the extent of any distribution of exempt-interest
dividends received with respect to such shares and, if not disallowed, such
losses are treated as long-term capital losses to the extent of any distri-
butions of long-term capital gains made with respect to such shares. In
addition, no loss will be allowed on the redemption or exchange of shares
of a Fund if the shareholder purchases other shares of such Fund (whether
through reinvestment of distributions or otherwise) or the shareholder ac-
quires or enters into a contract or option to acquire securities that are
substantially identical to shares of a Fund within a period of 61 days be-
ginning 30 days before and ending 30 days after such redemption or ex-
change. If disallowed, the loss will be reflected in an adjustment to the
basis of the shares acquired.
If in any year a Fund should fail to qualify under Subchapter M for tax
treatment as a regulated investment company, the Fund would incur a regular
corporate federal income tax upon its income for that year, and distri-
butions to its shareholders would be taxable to shareholders as ordinary
dividend income for federal income tax purposes to the extent of the Fund's
available earnings and profits.
The Funds are required in certain circumstances to withhold 31% of taxable
dividends and certain other payments paid to non-corporate holders of
shares who have not furnished to the Funds their correct taxpayer identi-
fication number (in the case of individuals, their social security number)
and certain certifications, or who are otherwise subject to backup with-
holding.
Shareholders who are non-resident aliens are subject to U.S. withholding
tax on ordinary income dividends at a rate of 30% or such lower rate as pre-
scribed by an applicable tax treaty.
A corporate shareholder may be entitled to a 70% dividends received deduc-
tion with respect to any portion of such shareholder's ordinary income divi-
dends which are attributable to dividends received by a Fund on certain
portfolio securities (other than corporate shareholders, such as "S" cor-
porations, which are not eligible for the deduction because of their special
characteristics and other than for purposes of special taxes such as the accu-
mulated earnings tax and the personal holding corporation tax). A Fund will
designate the portion of any taxable dividend which is eligible for this
deduction. However, a corporate shareholder should be aware that Sections
246 and 246A of the Code impose additional limitations on the eligibility
of dividends for the 70% dividends received deduction. These limitations
include a requirement that stock (and therefore shares of a Fund) must
generally be held at least 46 days (as determined under Section 246(c) of
the Code). Regulations have been issued which address special rules that
must be considered in determining whether the 46 days holding requirement
is met. Moreover, the allowable percentage of the deduction will generally
be reduced from 70% if a corporate shareholder owns Shares of the Fund
the financing of which is directly attributable to indebtedness incurred by
such corporation. It should be noted that various legislative proposals
that would affect the dividends received deduction have been introduced.
To the extent dividends received by a Fund are attributable to foreign
corporations, a corporate shareholder will not be entitled to the dividends
received deduction with respect to its share of such foreign dividends
since the dividends received deduction is generally available only with
respect to dividends paid by domestic corporations. It should be noted
that payments to a Fund of dividends on portfolio securities that are at-
tributable to foreign corporations may be subject to foreign withholding
taxes. Corporate shareholders should consult with their tax advisers with
respect to the limitations on, and possible modifications to, the dividends
received deduction.
The foregoing is a general and abbreviated summary of the provisions of the
Code and Treasury Regulations presently in effect as they directly govern
the federal income taxation of the Funds and their shareholders and relates
only to the federal income tax status of the Fund and to the tax treatment
of distributions by the Fund to United States shareholders. For complete
provisions, reference should be made to the pertinent Code sections and
Treasury Regulations. The Code and Treasury Regulations are subject to
change by legislative or administrative action, and any such change may be
retroactive with respect to Fund transactions. Shareholders are advised to
consult their own tax advisers for more detailed information concerning the
federal taxation of the Funds and the income tax consequences to their
shareholders, as well as with respect to foreign, state and local tax conse-
quences of ownership of Fund shares.
INDEPENDENT PUBLIC ACCOUNTANTS AND CUSTODIAN
Firstar Trust Company located at 615 E. Michigan Street, Milwaukee, Wiscon-
sin 53201 is the custodian of the Funds. As custodian for the Funds, the
bank holds in custody all securities and cash, settles for all securities
transactions, receives money from sale of shares and on order of the Funds
pays the authorized expenses of the Funds. When Fund shares are redeemed by
investors, the proceeds are paid to the shareowner from an account at the
custodian bank.
Arthur Andersen LLP are the independent accountants for the Trust and the
Funds. The accountants will conduct an annual audit of the Funds and
assist the Adviser in any accounting matters throughout the year.
FINANCIAL STATEMENTS
To be filed by pre-effective amendment.
PART C - OTHER INFORMATION
Item 24: FINANCIAL STATEMENTS AND EXHIBITS
(a) Financial Statements:
Included in the Prospectus:
Not Applicable
Included in Statement of Additional Information:
Statements of Net Assets, [ ], for each Fund.
Report of Independent Public Accountants dated
[ ].
(b) Exhibits:
1(a). Declaration of Trust of Registrant.(1)
1(b). Certificate of Establishment and Designation of Series.(1)
2. Bylaws of Registrant.(1)
3. Not Applicable.
4. Not Applicable.
5(a). Form of Investment Management Agreement between Registrant and
Income Achievers, Inc.
6(a). Form of Distribution Agreement between Registrant and Income
Achievers, Inc.(1)
7. Not Applicable.
8. Form of Custodian Agreement between Registrant and Firstar
Trust Company.(1)
9(a). Not applicable.
10(a). Opinion and consent of Chapman and Cutler, dated
.*
11. Consent of Independent Public Accountants.*
12. Not Applicable.
13. Subscription Agreement with .*
14. Not Applicable.
15. Not Applicable.
16. Not Applicable.
17. Financial Data Schedule.*
18. Not applicable.
*To be filed by pre-effective amendment.
(1) Incorporated by reference to the initial registration statement filed
on Form N-1A for Registrant.
ITEM 25. PERSONS CONTROLLED BY OR UNDER COMMON CONTROL WITH REGISTRANT
Not applicable
ITEM 26. NUMBER OF HOLDERS OF SECURITIES
As of [ ] the following information is furnished for
the Trust:
(1) (2)
Title of Series Number of Record Holders
Islamia Income Fund [_________]
Islamia Growth Fund [_________]
ITEM 27. INDEMNIFICATION
Section 4 of Article XII of Registrant's Declaration of Trust provides as
follows:
Subject to the exceptions and limitations contained in this Section 4,
every person who is, or has been, a Trustee, officer, employee or agent of
the Trust, including persons who serve at the request of the Trust as
directors, trustees, officers, employees or agents of another organization
in which the Trust has an interest as a shareholder, creditor or otherwise
(hereinafter referred to as a "Covered Person"), shall be indemnified by
the Trust to the fullest extent permitted by law against liability and
against all expenses reasonably incurred or paid by him in connection with
any claim, action, suit or proceeding in which he becomes involved as a
party or otherwise by virtue of his being or having been such a Trustee,
director, officer, employee or agent and against amounts paid or incurred
by him in settlement thereof.
No indemnification shall be provided hereunder to a Covered Person:
(a) against any liability to the Trust or its Shareholders by reason of a
final adjudication by the court or other body before which the proceeding
was brought that he engaged in willful misfeasance, bad faith, gross negli-
gence or reckless disregard of the duties involved in the conduct of his
office;
(b) with respect to any matter as to which he shall have been finally adjud-
icated not to have acted in good faith in the reasonable belief that his
action was in the best interests of the Trust; or
(c) in the event of a settlement or other disposition not involving a final
adjudication (as provided in paragraph (a) or (b)) and resulting in a pay-
ment by a Covered Person, unless there has been either a determination that
such Covered Person did not engage in willful misfeasance, bad faith, gross
negligence or reckless disregard of the duties involved in the conduct of
his office by the court or other body approving the settlement or other dis-
position or a reasonable determination, based on a review of readily avail-
able facts (as opposed to a full trial-type inquiry), that he did not engage
in such conduct:
(i) by a vote of a majority of the Disinterested Trustees acting on the
matter (PROVIDED that a majority of the Disinterested Trustees then in
office act on the matter); or
(ii) by written opinion of independent legal counsel.
The rights of indemnification herein provided may be insured against by
policies maintained by the Trust, shall be severable, shall not affect any
other rights to which any Covered Person may now or hereafter be entitled,
shall continue as to a person who has ceased to be such a Covered Person
and shall inure to the benefit of the heirs, executors and administrators
of such a person. Nothing contained herein shall affect any rights to
indemnification to which Trust personnel other than Covered Persons may be
entitled by contract or otherwise under law.
Expenses of preparation and presentation of a defense to any claim, action,
suit or proceeding subject to a claim for indemnification under this Section
4 shall be advanced by the Trust prior to final disposition thereof upon
receipt of an undertaking by or on behalf of the recipient to repay such
amount if it is ultimately determined that he is not entitled to indemnifi-
cation under this Section 4, PROVIDED that either:
(a) such undertaking is secured by a surety bond or some other appropriate
security or the Trust shall be insured against losses arising out of
any such advances; or
(b) a majority of the Disinterested Trustees acting on the matter (PROVIDED
that a majority of the Disinterested Trustees then in office act on the
matter) or independent legal counsel in a written opinion shall determine,
based upon a review of the readily available facts (as opposed to a full
trial-type inquiry), that there is reason to believe that the recipient
ultimately will be found entitled to indemnification.
As used in this Section 4, a "Disinterested Trustee" is one (x) who is
not an Interested Person of the Trust (including, as such Disinterested
Trustee, anyone who has been exempted from being an Interested Person
by any rule, regulation or order of the Commission), and (y) against whom
none of such actions, suits or other proceedings or another action, suit or
other proceeding on the same or similar grounds is then or has been pending.
As used in this Section 4, the words "claim," "action," "suit" or "proceeding"
shall apply to all claims, actions, suits, proceedings (civil, criminal,
administrative or other, including appeals), actual or threatened; and the
word "liability" and "expenses" shall include without limitation, attorneys'
fees, costs, judgments, amounts paid in settlement, fines, penalties and
other liabilities.
The trustees and officers of the Registrant are covered by Investment Trust
Errors and Omission policies in the aggregate amount of $[____________]
(with a maximum deductible of $[____________]) against liability and ex-
penses of claims of wrongful acts arising out of their position with the
Registrant, except for matters which involved willful acts, bad faith,
gross negligence and willful disregard of duty (i.e., where the insured
did not act in good faith for a purpose he or she reasonably believed to
be in the best interest of Registrant or where he or she shall have had
reasonable cause to believe this conduct was unlawful).
Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to the officers, trustees or controlling
persons of the Registrant pursuant to the Declaration of Trust of the
Registrant or otherwise, the Registrant has been advised that in the opinion
of the Securities and Exchange Commission such indemnification is against
public policy as expressed in the Act and is, therefore, unenforceable.
In the event that a claim for indemnification against such liabilities
(other than the payment by the Registrant of expenses incurred or paid
by an officer or trustee or controlling person of the Registrant in the
successful defense of any action, suit or proceeding) is asserted by such
officer, trustee or controlling person in connection with the securities
being registered, the Registrant will, unless in the opinion of its
counsel the matter has been settled by controlling precedent, submit to a
court of appropriate jurisdiction the question of whether such indemnifi-
cation by it is against public policy as expressed in the Act and will be
governed by the final adjudication of such issue.
ITEM 28. BUSINESS AND OTHER CONNECTIONS OF INVESTMENT ADVISER
The following table sets forth any other business, profession, vocation
or employment of a substantial nature in which any director or officer of
the Adviser has engaged during the last two years for his account or in the
capacity of director, officer, employee, partner or trustee.
<TABLE>
<CAPTION>
RELATIONSHIP WITH
NAME AND ADDRESS POSITION WITH ADVISER OTHER BUSINESSES
<S> <C> <C>
Qamaruddin Ali Yar Khan President and sole shareholder Chairman, President and
1553 Bloomingdale Road Trustee of the Islamia Group
Suite #900 of Funds; Controller of
Glendale Heights, IL 60137 Sonoscan, Inc.; President and
owner of Glenside
Accounting and Tax Services.
Sabera Khan Secretary Lab Manager of Vaughan's
1553 Bloomingdale Road Seed Company.
Suite #900
Glendale Heights, IL 60137
</TABLE>
ITEM 29. PRINCIPAL UNDERWRITERS
(a) The Adviser acts as investment adviser and distributor to the Funds.
The Adviser does not presently act as investment adviser or distributor
to any other investment company.
(b)
<TABLE>
<CAPTION>
NAME AND ADDRESS POSITION WITH UNDERWRITER POSITIONS AND OFFICES WITH REGISTRANT
<S> <C> <C>
Qamaruddin Ali Yar Khan President and sole shareholder Chairman, President and a
1553 Bloomingdale Road Trustee of the Islamia Group.
Suite #900 of Funds
Glendale Heights, IL
60137
Sabera Khan Secretary None.
1553 Bloomingdale Road
Suite #900
Glendale Heights, IL
60137
</TABLE>
(c) Not applicable.
ITEM 30. LOCATION OF ACCOUNTS AND RECORDS
With the exception of those records maintained by the Custodian, all records
of the Trust are physically in the possession of the Trust and maintained at
the offices of Income Achievers, 1553 Bloomingdale Road, Suite #900, Glendale
Heights, IL 60137.
ITEM 31. MANAGEMENT SERVICES
Not applicable.
ITEM 32. UNDERTAKINGS
(a) Not applicable.
(b) The Registrant undertakes to file a post-effective amendment to its
registration statement, using financial statements which need not be
certified, within four to six months from the effective date of Registrant's
1933 Act registration statement.
(c) The Registrant undertakes to furnish each person to whom a prospectus
is delivered with a copy of the Registrant's latest Annual Report to Share-
holders upon request and without charge.
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the Investment
Company Act of 1940, the Registrant has duly caused this Registration State-
ment to be signed on its behalf by the undersigned, thereunto duly authorized
in the City of Glendale Heights, State of Illinois, on the 18th day of July.
ISLAMIA GROUP OF FUNDS
By
/s/ Q. Ali Yar Khan
Qamaruddin Ali Yar Khan,
President
Pursuant to the requirements of the Securities Act of 1933, and the Invest-
ment Company Act of 1940, this Registration Statement has been signed below
by the following persons in the capacities and on the date indicated.
SIGNATURE TITLE DATE
/s/ Q. Ali Yar Khan Trustee, Chairman of the July 18, 1997
Board, and President
Qamaruddin Ali Yar Khan
EXHIBIT INDEX
<TABLE>
<CAPTION>
SEQUENTIALLY
EXHIBIT NUMBERED
NUMBER EXHIBIT PAGE
<S> <C> <C>
1(a). Declaration of Trust of Registrant. (1)
1(b). Certificate of Establishment and Designation of Series. (1)
2. Bylaws of Registrant. (1)
3. Not Applicable.
4. Not Applicable.
5(a). Form of Investment Management Agreement between
Registrant and Income Achievers, Inc.
6(a). Form of Distribution Agreement between Registrant and
Income Achievers, Inc.(1)
7. Not Applicable.
8. Form of Custodian Agreement between Registrant and
Firstar Trust Company.(1)
9(a). Not applicable.
10(a). Opinion and consent of Chapman and Cutler, dated .*
11. Consent of Independent Public Accountants.*
12. Not Applicable.
13. Subscription Agreement with .*
14. Not Applicable.
15. Not Applicable.
16. Not Applicable.
17. Financial Data Schedule.*
18. Not Applicable.
</TABLE>
*To be filed by pre-effective amendment.
(1) Incorporated by reference to the initial registration statement filed
on Form N-1A for Registrant.
Exhibit (b)5(a)
MANAGEMENT AGREEMENT
BETWEEN
ISLAMIA GROUP OF FUNDS
AND
INCOME ACHIEVERS, INC.
ISLAMIA GROUP OF FUNDS, a Massachusetts business trust registered under the
Investment Company Act of 1940 (the "1940 Act") as an open-end diversified
management series investment company (the "Trust"), hereby appoints INCOME
ACHIEVERS, INC., an Illinois corporation registered under the Investment
Advisers Act of 1940 as an investment adviser (the "Manager"), to furnish
investment advisory and management services and certain administrative
services with respect to the assets represented by the shares of beneficial
interest issued in each series listed in Schedule A hereto, as such schedule
may be amended from time to time (each such series hereinafter referred to
as the "Fund"). The Trust and the Manager hereby agree that:
1. INVESTMENT MANAGEMENT SERVICES. The Manager shall manage the invest-
ment operations of the Trust and each Fund, subject to the terms of this
Agreement and to the supervision and control of the Trust's Board of
Trustees (the "Trustees"). The Manager agrees to perform, or arrange for
the performance of, the following services with respect to each Fund:
(a) to obtain and evaluate such information relating to economies, indus-
tries, businesses, securities and commodities markets, and individual secu-
rities, commodities and indices as it may deem necessary or useful in dis-
charging its responsibilities hereunder;
(b) to formulate and maintain a continuous investment program in a manner
consistent with and subject to (i) the Trust's Declaration of Trust and By-
laws; (ii) the Fund's investment objectives, policies, and restrictions as
set forth in written documents furnished by the Trust to the Manager; (iii)
all securities, commodities, and tax laws and regulations applicable to the
Fund and Trust; and (iv) any other written limits or directions furnished by
the Trustees to the Manager;
(c) unless otherwise directed by the Trustees, to determine from time to
time securities, commodities, interests or other investments to be pur-
chased, sold, retained or lent by the Fund, and to implement those deci-
sions, including the selection of entities with or through which such pur-
chases, sales or loans are to be effected;
(d) to determine if the securities purchased for a Fund are consistent with
Islamic principles as applicable pursuant to the Fund's investment object-
ives, policies and restrictions. In making such a determination, the
Manager shall make a good faith effort, using the best publicly available
information obtainable by it, to identify those companies and other issuers
of securities whose products, services and/or activities are substantially
consistent with core Islamic teachings;
(e) to use reasonable efforts to manage the Fund so that it will qualify
as a regulated investment company under subchapter M of the Internal Rev-
enue Code of 1986, as amended;
(f) to make the recommendations as to the manner in which voting rights,
rights to consent to the Trust or the Fund, and any other rights pertaining
to the Trust or the Fund shall be exercised;
(g) to make available to the Trust promptly upon request all of the Fund's
records and ledgers and any reports or information reasonably requested by
the Trust; and
(h) to the extent required by law, to furnish to regulatory authorities
any information or reports relating to the services provided pursuant to
this Agreement.
Except as otherwise instructed from time to time by the Trustees, with re-
spect to execution of transactions for the Trust on behalf of a Fund, the
Manager shall place, or arrange for the placement of, all orders for pur-
chases, sales, or loans with issuers, brokers, dealers or other counterparts
or agents selected by the Manager. In connection with the selection of all
such parties for the placement of all such orders, the Manager shall attempt
to obtain most favorable execution and price, but may nevertheless in its
sole discretion as a secondary factor, purchase and sell portfolio securities
from and to brokers and dealers who provide the Manager with statistical, re-
search and other information, analysis, advice, and similar services. In
recognition of such services or brokerage services provided by a broker or
dealer, the Manager is hereby authorized to pay such broker or dealer a com-
mission or spread in excess of that which might be charged by another broker
or dealer for the same transaction if the Manager determines in good faith
that the commission or spread is reasonable in relation to the value of the
services so provided. The Manager may also act as broker to execute trades
on behalf of a Fund subject to the above policies and applicable federal and
state securities laws.
The Trust hereby authorizes any entity or person associated with the Manager
that is a member of a national securities exchange to effect any transaction
on the exchange for the account of a Fund to the extent permitted by and in
accordance with Section 11(a) of the Securities Exchange Act of 1934 and
Rule 11a2-2(T) thereunder. The Trust hereby consents to the retention by
such entity or person of compensation for such transactions in accordance
with Rule 11a-2-2(T)(a)(iv).
Transactions for each Fund managed by the Manager generally will be effected
independently. The Manager, however, may, where it deems to be advisable,
aggregate orders for its other customers together with any securities of
the same type to be sold or purchased for the Trust or one or more Funds in
order to obtain best execution or lower brokerage commissions. In such
event, the Manager shall allocate the shares so purchased or sold, as well
as the expenses incurred in the transaction, in a manner it considers to be
equitable and fair and consistent with its fiduciary obligations to the
Trust, the Funds, and the Manager's other customers.
The Manager shall for all purposes be deemed to be an independent contractor
and not an agent of the Trust and shall, unless otherwise expressly provided
or authorized, have no authority to act for or represent the Trust in any way.
2. Administrative Services. Subject to the terms of this Agreement and to
the supervision and control of the Trustees, the Manager shall provide to
the Trust facilities, equipment, statistical and research data, clerical,
accounting and bookkeeping services, internal auditing and legal services,
and personnel to carry out all management services required for operation of
the business and affairs of the Funds other than those services to be per-
formed by the Trust's Distributor pursuant to the Distribution Agreement,
those services to be performed by the Trust's Custodian pursuant to the
Custody Agreement, those services to be performed by the Trust's Transfer
Agent pursuant to the Transfer Agency Agreement, those services to be pro-
vided by the Trust's accountant pursuant to the Accounting Agreement and
those services normally performed by the Trust's counsel and auditors.
3. Use of Affiliated Companies and Subcontractors. In connection with the
services to be provided by the Manager under this Agreement, the Manager
may, to the extent it deems appropriate, and subject to compliance with the
requirements of applicable laws and regulations, make use of (i) its affil-
iated companies and their directors, trustees, officers, and employees and
(ii) subcontractors selected by the Manager, provided that the Manager shall
supervise and remain fully responsible for the services of all such third
parties in accordance with and to the extent provided by this Agreement.
All costs and expenses associated with services provided by any such third
parties shall be borne by the Manager of such parties.
4. Expenses Borne by the Trust. Except to the extent expressly assumed by
the Manager herein or under a separate agreement between the Trust and the
Manager and except to the extent required by law to be paid by the Manager,
the Manager shall not be obligated to pay any costs or expenses incidental
to the organization, operations or business of the Trust. Without limita-
tion, such costs and expenses shall include but not be limited to:
(a) all charges of depositories, custodians and other agencies for the safe-
keeping and servicing of its cash, securities, and other property;
(b) all charges for equipment or services used for obtaining price quota-
tions or for communication between the Manager or the Trust and the custo-
dian, transfer agent or any other agent selected by the Trust;
(c) all charges for and accounting services provided to the Trust by the
Manager, or any other provider of such services;
(d) all charges for services of the Trust's independent auditors and for
services to the Trust by legal counsel;
(e) all compensation of the Trustees, other than those affiliated with the
Manager, all expenses incurred in connection with their services to the
Trust, and all expenses of meetings of the Trustees or committees thereof;
(f) all expenses incidental to holding meetings of holders of shares of
interest in the Trust ("Shareholders"), including printing and of supplying
each record-date Shareholder with notice and proxy solicitation material,
and all other proxy solicitation expenses;
(g) all expenses of printing of annual or more frequent revisions of the
Trust prospectus(es) and of supplying each then-existing Shareholder with
a copy of a revised prospectus;
(h) all expenses related to preparing and transmitting certificates (if
any) representing the Trust shares;
(i) all expenses of bond and insurance coverage required by law or deemed
advisable by the Board of Trustees;
(j) all brokers' commissions and other normal charges incident to the
purchase, sale, or lending of portfolio securities;
(k) all taxes and governmental fees payable to Federal, state or other
governmental agencies, domestic or foreign, including all stamp or other
transfer taxes;
(l) all expenses of registering and maintaining the registration of the
Trust under the 1940 Act and, to the extent no exemption is available,
expenses of registering the Trust's shares under the 1933 Act, of qualifying
and maintaining qualification of the Trust and of the Trust's shares for
sale under securities laws of various states or other jurisdictions and of
registration and qualification of the Trust under all other laws applicable
to the Trust or its business activities;
(m) all interest on indebtedness, if any, incurred by the Trust or a
Fund; and
(n) all fees, dues and other expenses incurred by the Trust in connection
with membership of the Trust in any trade association or other investment
company organization.
5. Allocation of Expenses Borne by the Trust. Any expenses borne by the
Trust that are attributable solely to the organization, operation or
business of a Fund shall be paid solely out of Fund assets. Any expense
borne by the Trust which is not solely attributable to a Fund, nor solely
to any other series of shares of the Trust, shall be apportioned in such
manner as the Manager determines is fair and appropriate, or as otherwise
specified by the Board of Trustees.
6. Expenses Borne by the Manager. The Manager at its own expense shall
furnish all executive and other personnel, office space, and office faci-
lities required to render the investment management and administrative
services set forth in this Agreement.
In the event that the Manager pays or assumes any expenses of the Trust or
a Fund not required to be paid or assumed by the Manager under this Agree-
ment, the Manager shall not be obligated hereby to pay or assume the same
or similar expense in the future; provided that nothing contained herein
shall be deemed to relieve the Manager of any obligation to the Trust or a
Fund under any separate agreement or arrangement between the parties.
7. Management Fee. For the services rendered, facilities provided, and
charges assumed and paid by the Manager hereunder, the Trust shall pay to
the Manager out of the assets of each Fund fees at the annual rate for such
Fund as set forth in Schedule B to this Agreement. For each Fund, the manage-
ment fee shall accrue on each calendar day, and shall be payable monthly on
the first business day of the next succeeding calendar month. The daily fee
accrual shall be computed by multiplying the fraction of one divided by the
number of days in the calendar year by the applicable annual rate of fee,
and multiplying this product by the net assets of the Fund, determined in
the manner established by the Board of Trustees, as of the close of busi-
ness on the last preceding business day on which the Fund's net asset value
was determined.
8. Retention of Sub-Adviser. Subject to obtaining the initial and periodic
approvals required under Section 15 of the 1940 Act, the Manager may retain
one or more sub-advisers at the Manager's own cost and expense for the pur-
pose of furnishing one or more of the services described in Section 1 hereof
with respect to the Trust or one or more Funds. Retention of a sub-adviser
shall in no way reduce the responsibilities or obligations of the Manager
under this Agreement, and the Manager shall be responsible to the Trust and
its Funds for all acts or omissions of any sub-adviser in connection with
the performance of the Manager's duties hereunder.
9. Non-Exclusivity. The services of the Manager to the Trust hereunder are
not to be deemed exclusive and the Manager shall be free to render similar
services to others.
10. Standard of Care. The Manager shall not be liable for any loss sus-
tained by reason of the purchase, sale or retention of any security, whether
or not such purchase, sale or retention shall have been based upon the inves-
tigation and research made by any other individual, firm or corporation, if
such recommendation shall have been selected with due care and in good
faith, except loss resulting from willful misfeasance, bad faith, or gross
negligence on the part of the Manager in the performance of its obligations
and duties, or by reason of its reckless disregard of its obligations and
duties under this Agreement.
11. Amendment. This Agreement may not be amended as to the Trust or any
Fund without the affirmative votes (a) of a majority of the Board of
Trustees, including a majority of those Trustees who are not "interested
persons" of the Trust or of the Manager, voting in person at a meeting
called for the purpose of voting on such approval, and (b) of a "majority
of the outstanding shares" of the Trust or, with respect to any amendment
affecting an individual Fund, a "majority of the outstanding shares" of
that Fund. The terms "interested persons" and "vote of a majority of the
outstanding shares" shall be construed in accordance with their respective
definitions in the 1940 Act and, with respect to the latter term, in accor-
dance with Rule 18f-2 under the 1940 Act.
12. Effective Date and Termination. This Agreement shall become effective
as to any Fund as of the effective date for that Fund specified in Schedule
A hereto. This Agreement may be terminated at any time, without payment of
any penalty, as to any Fund by the Board of Trustees of the Trust, or by a
vote of a majority of the outstanding shares of that fund, upon at least
sixty (60) days' written notice to the Manager. This Agreement may be ter-
minated by the Manager at any time upon at least sixty (60) days' written
notice to the Trust. This Agreement shall terminate automatically in the
event of its "assignment" (as defined in the 1940 Act). Unless terminated
as provided above, this Agreement shall continue in effect with respect to
any Fund until the end of the initial term applicable to that Fund specified
in Schedule A and thereafter from year to year only so long as such continu-
ance is specifically approved with respect to that Fund at least annually
(a) by a majority of those Trustees who are not interested persons of the
Trust or of the Manager, voting in person at a meeting called for the pur-
pose of voting on such approval, and (b) by either the Board of Trustees of
the Trust or by a "vote of a majority of the outstanding shares" of the Fund.
13. Ownership of Records; Interparty Reporting. All records required to be
maintained and preserved by the Trust pursuant to the provisions of rules or
regulations of the Securities and Exchange Commission under Section 31(a) of
the 1940 Act or other applicable laws or regulations which are maintained
and preserved by the Manager on behalf of the Trust and any other records
the parties mutually agree shall be maintained by the Manager on behalf of
the Trust, are the property of the Trust and shall be surrendered by the
Manager promptly on request by the Trust; provided that the Manager may at
its own expense make and retain copies of any such records.
The Trust shall furnish or otherwise make available to the Manager such
copies of the financial statements, proxy statements, reports, and other
information relating to the business and affairs of each Fund as the Manager
may, at any time or from time to time, reasonably require in order to dis-
charge its obligations under this Agreement.
The Manager shall prepare and furnish to the Trust as to each Fund statis-
tical data and other information in such form and at such intervals as the
Trust may reasonably request.
14. Non-Liability of Trustees and Shareholders. Any obligation of the
Trust hereunder shall be binding only upon the assets of the Trust (or the
applicable Fund thereof) and shall not be binding upon any Trustee, officer,
employee, agent or shareholder of the Trust. Neither the authorization of
any action by the Trustees or shareholders of the Trust nor the execution
of this Agreement on behalf of the Trust shall impose any liability upon
any Trustee or any shareholder.
15. References and Headings. In this Agreement and in any such amendment,
references to this Agreement and all expressions such as "herein," "hereof,"
and "hereunder'" shall be deemed to refer to this Agreement as amended or
affected by any such amendments. Headings are placed herein for convenience
of reference only and shall not be taken as a part hereof or control or
affect the meaning, construction, or effect of this Agreement. This Agree-
ment may be executed in any number of counterparts, each of which shall be
deemed an original.
Dated: ____________
ISLAMIA GROUP OF FUNDS
ATTEST By __________________________
INCOME ACHIEVERS, INC.
ATTEST By _________________________________-
ISLAMIA GROUP OF FUNDS
SCHEDULE A
The Funds of the Trust currently subject to this Agreement and the effective
date of each are as follows:
FUND EFFECTIVE DATE INITIAL TERM
Islamia Growth Fund __________________ ________________
Islamia Income Fund __________________ ________________
ISLAMIA GROUP OF FUNDS
MANAGEMENT AGREEMENT
SCHEDULE B
Compensation pursuant to Section 7 of this Agreement shall be calculated
with respect to each Fund in accordance with the following rate: .80 of 1%
of the average daily net assets of the Fund annually.
