As filed with the Securities and Exchange Commission on June 21, 2000
================================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM N-1A
REGISTRATION STATEMENT UNDER THE
SECURITIES ACT OF 1933 [X]
Registration No. 333-20177
Pre-Effective Amendment No. 3 [X]
Post-Effective Amendment No. _____ [ ]
REGISTRATION STATEMENT UNDER THE
INVESTMENT COMPANY ACT OF 1940 [X]
Registration No. 811-08021
Amendment No. 3 [ ]
ISLAMIA GROUP OF FUNDS
(Exact Name of Registrant as Specified in Declaration of Trust)
2037 Bloomingdale Road, Suite #211
Glendale Heights, Illinois 60139
(Address of Principal Executive Offices) (Zip Code)
Registrant's Telephone Number, Including Area Code: (630) 582-2666
Copies to:
Qamaruddin Ali Yar Khan Eric F. Fess, Esq.
2037 Bloomingdale Road, Suite #211 Chapman and Cutler
Glendale Heights, Illinois 60139 111 West Monroe Street
(Name and Address of Agent for Service) Chicago, Illinois 60603
It is proposed that this filing will become effective (check appropriate box):
[ ] immediately upon filing pursuant to paragraph(b)
[ ] on (date) pursuant to paragraph(b)
[ ] 60 days after filing pursuant to paragraph (a)(1)
[ ] on (date) pursuant to paragraph (a)(1)
[ ] 75 days after filing pursuant to paragraph (a)(2)
[ ] on (date) pursuant to paragraph (a)(2) of Rule 485.
If appropriate, check the following box:
[ ] This post-effective amendment designates a new effective date for a
previously filed post-effective amendment.
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 thereafter become effective in
accordance with Section 8(a) of the Securities Act of 1933 or until the
Registration Statement shall become effective on such date as the Commission,
acting pursuant to Section 8(a), may determine.
================================================================================
<PAGE>
CONTENTS
OF
REGISTRATION STATEMENT
The Registration Statement comprises the following papers and contents:
The Facing 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
<PAGE>
THE
ISLAMIA INCOME FUND
PROSPECTUS
JULY 3, 2000
THE SECURITIES AND EXCHANGE COMMISSION HAS NOT APPROVED OR DISAPPROVED THESE
SECURITIES OR PASSED UPON THE ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO
THE CONTRARY IS A CRIMINAL OFFENSE.
<PAGE>
TABLE OF CONTENTS
PAGE
THE FUND....................................................................1
FUND SUMMARY................................................................2
WHAT ARE THE FUND'S EXPENSES?...............................................3
MANAGEMENT OF THE FUND......................................................4
The Investment Adviser and Distributor of the Fund...................4
INVESTMENT STRATEGIES.......................................................5
Islamic Principles...................................................5
Equity Securities....................................................8
Short Term Investments...............................................8
Foreign Securities...................................................8
Temporary Investments................................................9
PORTFOLIO TURNOVER..........................................................9
INVESTMENT RESTRICTIONS.....................................................9
RISKS AND SPECIAL CONSIDERATIONS............................................9
INVESTMENT RESULTS.........................................................11
HOW TO BUY FUND SHARES.....................................................11
Purchase Price......................................................11
Minimum Investment..................................................11
Opening an Account and Purchasing Shares............................11
Tax-Sheltered Retirement Plans......................................12
HOW TO REDEEM FUND SHARES..................................................12
Written Request.....................................................13
Telephone Request...................................................13
General.............................................................14
PORTFOLIO TRANSACTIONS.....................................................15
NET ASSET VALUE............................................................15
DISTRIBUTIONS AND TAXES....................................................16
GENERAL INFORMATION........................................................16
AVAILABLE INFORMATION ABOUT THE FUND.......................................17
- i -
<PAGE>
ISLAMIA INCOME FUND
THE FUND
The Islamia Income Fund is a mutual fund that is designed to meet the
needs of various investors, and the particular needs of certain Muslims by
investing in accordance with Islamic principles as determined by the Fund. This
Prospectus is intended to provide important information to help you evaluate
whether the Islamia Income Fund may be right for you. Please read it carefully
before investing and keep it for future reference.
To learn more about how the Islamia Income Fund can help you achieve
your financial goals, call us at (888) 513-8700.
<PAGE>
FUND SUMMARY
INVESTMENT OBJECTIVE
The fund seeks to provide primarily current income and as a secondary
objective, appreciation of capital consistent with Islamic principles as
determined by the Fund.
PRINCIPAL STRATEGIES: HOW THE FUND PURSUES ITS OBJECTIVE
The Fund invests primarily in equity securities, including foreign
securities. Investment decisions are made in accordance with Islamic principles
as determined by the Fund. The Fund ordinarily will invest at least 80% of its
assets in dividend paying companies. In selecting securities, the adviser looks
for companies with a history of consistent dividends and earnings. The Fund will
primarily invest in the common stocks of established, large capitalization
companies, but may invest up to 25% of its assets in the common stocks of middle
or small capitalization companies (companies with a market capitalization of
less than $1 billion).
PRINCIPAL RISKS: WHAT ARE THE RISKS OF INVESTING IN THE FUND?
The principal risk of the Fund is market risk. Market risk is the risk
that a particular stock, an industry, or stocks in general may fall in value.
The Fund may invest a portion of its assets in small and medium capitalization
companies. These companies are generally subject to greater market risk. The
Fund may also invest in foreign securities. Foreign companies may be affected by
adverse political, diplomatic and economic developments; changes in foreign
currency exchange rates; taxes; less publicly available information; and other
factors. The Fund is also a new fund without any operating history.
The Fund seeks to invest only in companies whose activities are
believed by the Fund to be consistent with Islamic principles. Income Achievers,
Inc., the Fund's adviser (the "ADVISER"), subject to review by the Fund's Board
of Trustees, interprets the Islamic principles applicable to the Fund and
determines whether the securities are consistent with these principles.
Investors, including certain significant Muslim groups, may disagree with the
interpretations of Islamic principles adopted by the Fund and the Adviser's
determination that certain companies operate consistently with Islamic
principles. In addition, the Fund may have to forego investment opportunities to
remain consistent with its view of Islamic principles and may have to divest
portfolio securities at a disadvantageous time if the Fund determines such
holdings are inconsistent with Islamic principles. These limitations may have an
adverse impact on the Fund's performance. Finally, to comply with Islamic
principles, the Fund may not purchase any securities that pay interest or borrow
money to pay for redemptions or expenses. The Fund may therefore have to hold
larger amounts in cash which will not earn income.
An investment in the Fund is not a deposit of a bank and is not insured
or guaranteed by the Federal Deposit Insurance Corporation or any other
government agency. As with any investment, loss of money is a risk of investing.
-2-
<PAGE>
WHAT ARE THE FUND'S EXPENSES?
This table describes fees and expenses that you may pay if you buy and
hold shares of the Fund.
SHAREHOLDER FEES (fees paid directly from your investment) (1)
Maximum Sales Charge (Load) Imposed on Purchases (as a percentage of
offering price)..................................................3%
Maximum Deferred Sales Charge (Load)...............................NONE
Maximum Sales Charge (Load) Imposed on Reinvested Dividends........NONE
Redemption Fees(2).................................................NONE
Exchange Fee.......................................................NONE
ANNUAL FUND OPERATING EXPENSES (expenses that are deducted from Fund assets)
Management Fees....................................................0.80%
Distribution and Service (12b-1) Fees..............................NONE
Other Expenses(3)..................................................1.89%
Total Annual Fund Operating Expenses...............................2.69%
----------
1 Authorized Dealers and other firms may charge additional fees for
shareholder transactions or for advisory services. Please see their
materials for details.
2 Redemptions from IRA accounts will be charged a $15 fee.
3 The percentage shown for "Other Expenses" is based on estimated amounts for
the current fiscal year ending June 30, 2001. Actual fees and expenses may
be greater or less than those shown, and could be significantly higher.
Although the Adviser may voluntarily waive some of its management fee or
assume certain expenses at its own discretion to reduce Fund expenses, the
Adviser is not required under any contractual obligation to waive fees or
reimburse Fund expenses to keep Fund expenses from exceeding any specified
limit.
-3-
<PAGE>
Example
The following example is intended to help you compare the cost of
investing in the Fund with the cost of investing in other mutual funds. The
example assumes that you invest $10,000 in the Fund for the time periods
indicated and then redeem all of your shares at the end of those periods. The
example also assumes that your investment has a 5% return each year and that the
Fund's operating expenses remain the same. Your actual returns may be higher or
lower.
1 YEAR 3 YEARS
Islamia Income Fund $564 $1110
---------------------
MANAGEMENT OF THE FUND
The management of the Fund, including general supervision of the duties
performed for the Fund by the Adviser under the Investment Management Agreement,
is the responsibility of the Fund's Board of Trustees.
THE INVESTMENT ADVISER AND DISTRIBUTOR OF THE FUND
Income Achievers, Inc. (the Adviser) provides the Fund with overall
investment advisory and certain administrative services under an Investment
Management Agreement with the Trust. Subject to any policies established by the
Fund's Board of Trustees, the Adviser makes investment decisions on behalf of
the Fund, makes available any research and statistical data, manages the Fund's
business affairs, and supervises the acquisition and disposition of investments
by the Fund. The Adviser will apply Islamic principles when making investment
decisions for the Fund. See "Investment Strategies - Islamic Principles" for a
description of the Islamic principles. The Adviser also furnishes to the Fund,
among other things, equipment, facilities, certain personnel to carry out the
management of the Fund, 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 principal underwriter of the Fund.
The Adviser was founded in 1995 and currently serves as investment
adviser only to the Fund, but may in the future serve as investment adviser to
other investment companies. The Adviser's principal mailing address is 2037
Bloomingdale Road, Suite #211, Glendale Heights, IL 60139. Qamaruddin Ali Yar
Khan, the Chairman, President and a Trustee of the Fund is a controlling person
of the Adviser through his ownership of a majority of the common stock of the
Adviser.
-4-
<PAGE>
Qamaruddin Ali Yar Khan has served as portfolio manager for the Fund
since its inception. 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. From 1989 to 1998,
Mr. Khan was President and owner of Glenside Accounting and Tax Service. We look
for dividend paying stocks that offer the potential for above-average total
returns. To assess a security's potential, Mr. Khan considers a company's
history of dividends and earnings, position in its industry, capitalization,
management structure, valuation, and future prospects. The Adviser and Mr. Khan
do not have any prior experience managing a mutual fund portfolio.
For its services, the 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, the Fund bears all of its other expenses including, but not limited
to, telephone and other communications facilities, the salary, fees and expenses
(including legal fees) of those trustees, officers and employees of the Fund 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 securities; fees and expenses of the custodian,
administrator and transfer and dividend paying agent; 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.
INVESTMENT STRATEGIES
This section explains how the Adviser pursues the Fund's investment
objective. Unless otherwise noted, the policies outlined in this section can be
changed if deemed appropriate by a majority of the Board of Trustees without
shareholder approval. The investment objective of the Fund, however, cannot be
changed without shareholder approval.
ISLAMIC PRINCIPLES
The Fund is designed to provide an investment alternative that is
consistent with the following 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 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 on the use of interest, the Fund will not
invest its assets in any securities that pay interest.
-5-
<PAGE>
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 Fund may
invest in the common stock of companies. As noted, investments in common stock
are subject to market risk and price fluctuations so there is no guaranteed rate
of return.
The Fund's Adviser, however, believes that few companies will have
obtained their financing solely from issuing equity securities. The Fund may
therefore invest in companies that have issued debt securities subject to
certain limitations. The Fund will consider investments in the common stock of
companies that have issued debt securities or borrowed money from banks to be
consistent with Islamic principles, PROVIDED the company's debt represents no
more than 33% of its total capital. The Fund only invests in a company's common
stock and will not invest in any of the bonds or other debt securities issued by
the company. In addition, the Adviser recognizes that companies may have made
bank deposits or OTHER investments which pay interest. Although the Fund does
not invest in debt securities, the Fund may purchase the common stock of
companies that have bank deposits or other investments that pay interest,
PROVIDED no more than 5% of the company's total revenues are derived from
interest income.
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 Fund will not invest in companies formed to operate a business that is not
consistent with Islamic principles. Businesses considered inconsistent with
Islamic principles include:
-- the production or distribution of liquor or wine;
-- casinos or other gaming establishments;
-- the production or distribution of pornography;
-- 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, and loan associations (that are
not based on Islamic principles)--the Adviser is unaware of any
Islamic banks and loan associations that are traded domestically;
and
-- insurance companies.
You should note that Islamic principles do not preclude the Fund from
investing in companies in the tobacco industry or companies in the munitions and
armament industry and, therefore, the Fund may invest in such industries.
-6-
<PAGE>
Although the Fund seeks to invest in companies operating businesses
that are consistent with Islamic principles, the Adviser recognizes that some
companies or conglomerates may be involved in a variety of businesses. While the
primary source of revenue of these companies may be derived from a business
consistent with Islamic principles, a small source of their revenues may be
derived from an activity the Adviser considers prohibited under Islamic
teachings. In these cases, companies which are primarily engaged in businesses
consistent with Islamic principles but receive a de minimis amount (up to 5%) of
their total revenues from any of the activities considered inconsistent with
such principles shall be construed as consistent with Islamic teachings and
permissible investments for the Fund.
WHO DETERMINES SECURITIES ARE CONSISTENT WITH ISLAMIC PRINCIPLES?
The Adviser is responsible for the selection of investments to meet the
investment objective of the 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 Fund 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 company reports filed with the Securities
and Exchange Commission, research reports prepared on the respective companies,
financial publications, 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
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 the Fund's view of core Islamic teachings.
However, the available information may not reflect that the company is engaged
in a prohibited activity if the activity constitutes only a small portion of the
company's operations. In such cases, the Adviser will not know or be expected to
know the company is engaged in a prohibited activity.
The Adviser may from time to time as it deems necessary consult with
Islamic religious organizations and scholars that specialize in the teachings
and the requirements of the Islamic faith to resolve any questions regarding the
interpretation of Islamic principles. If the Adviser cannot resolve an issue,
the Adviser will rely on the Board of Trustees for a final determination.
HOW WE REVIEW INVESTMENTS FOR COMPLIANCE WITH ISLAMIC PRINCIPLES?
To help insure the Fund's portfolio holdings are consistent with
Islamic principles, the Adviser and Board of Trustees will periodically review
the Fund's investments. More specifically, the Adviser will prepare a list of
the Fund's holdings semi-annually for review by the Board of Trustees, together
with a report regarding the business activities of the issuers of the portfolio
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
-7-
<PAGE>
continued consistency with the Fund's religious criteria. If information becomes
available indicating 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 the Fund's view of Islamic principles 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 the Fund.
EQUITY SECURITIES
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. Some assets may be held as cash to cover short-term needs such as
redemptions. The Islamia Income Fund may invest up to 20% of its assets in
non-income producing securities, including cash for short-term needs. The Fund
will primarily invest in the common stocks of established, large capitalization
companies. The Fund, however, may invest up to 25% of its net assets in the
common stock of middle or small capitalization companies (those companies with
market capitalization of less then $1 billion).
SHORT TERM INVESTMENTS
The Fund 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 generally
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 fixed
income investments which meet Islamic principles that are currently available in
the United States. Most ordinary mutual funds invest in a variety of securities
which pay interest for short-term needs, such as U.S. government securities,
commercial paper and other fixed income securities. Islamic principles prohibit
the use of these interest-producing investments. If short-term investments that
are consistent with Islamic principles become available in the future, the Fund
has the authority to use them.
FOREIGN SECURITIES
The Fund may invest up to 10% of its net assets in equity securities
issued by foreign companies, but currently limits such investments to 5% of its
net assets. The Fund currently intends to invest only in dollar-denominated
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. The above investment policy may be changed by the Fund's
Board of Trustees, without a shareholder vote.
-8-
<PAGE>
TEMPORARY INVESTMENTS
In response to adverse market, economic, political or other conditions,
the Fund may adopt a temporary, defensive position. The Fund 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 Fund's
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 Fund's portfolio holdings. Accordingly, as a temporary defensive
measure, the Fund may hold up to 100% of its assets in cash. During these
periods, the Fund may not be able to achieve its investment objective.
PORTFOLIO TURNOVER
The 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 the 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.
INVESTMENT RESTRICTIONS
In accordance with Islamic principles, the Fund shall not purchase
bonds, debentures, or other interest-paying obligations of indebtedness. The
Fund also may not make loans, lend portfolio securities, make short sales, or
borrow money. The Fund is diversified, and does not invest more than 5% of total
assets in the securities of any one issuer. In addition, the Fund will not
invest more than 25% of its assets in any particular industry.
The above restrictions are fundamental policies and may not be changed
without prior approval by a majority of the outstanding shares of the Fund. For
additional information regarding the investment policies and restrictions of the
Fund, see "Investment Objectives and Policies of the Fund" in the Statement of
Additional Information.
RISKS AND SPECIAL CONSIDERATIONS
Risk is inherent in all investing. Investing in a mutual fund - even
the most conservative - involves risk, including the risk that you may receive
little or no return on your investment or even that you may lose part or all of
your investment. Recently, equity markets have experienced significant
volatility. Therefore, before investing you should consider carefully the
following risks that you assume when you invest in the Fund. Because of these
and other risks, you should consider an investment in the Fund to be a long-term
investment.
-9-
<PAGE>
MARKET RISK. Because the Fund invests in common stocks, it is subject
to market risk. This is the risk that a particular stock, an industry, or stocks
in general may fall in value. The value of Fund shares will fluctuate as the
value of the securities in which the Fund invests fluctuate. If the value of the
Fund's portfolio securities decline, the value of the Fund's shares will
decline. The Fund may also invest in small and medium market capitalization
companies. Such companies may be more vulnerable to adverse general market or
economic developments, may be less liquid and may experience greater price
volatility than larger capitalization companies. Accordingly, such companies are
generally subject to greater market risk than larger capitalization companies.
In addition, to the extent the Fund invests primarily in common stocks, the Fund
does not necessarily represent a complete investment program and the Fund may be
more susceptible to volatility than a fund investing in equity securities and
non-equity securities, such as fixed income securities.
LACK OF OPERATING HISTORY AND EXPERIENCE. The Fund has no prior
operating history. Because the Fund is a new fund, the Fund's expenses shown in
the fee table under "What Are the Fund's Expenses?" are based on estimated
amounts of expenses incurred for the current fiscal year and based on projected
sales of $5 million. Actual expenses may be higher or lower and could be
significantly higher if sales do not meet the projected expectations. In
addition, the Fund's Adviser, Income Achievers, Inc., has no experience advising
a mutual fund or other accounts. None of the principals, officers, or trustees
of the Fund or the Adviser have ever registered, operated, or supervised the
operation of a registered investment company. There can be no assurances that
management's past experiences will enable it to successfully manage the Fund or
that the Fund will achieve its investment objective.
ISLAMIC RESTRICTIONS. The Fund seeks to invest only in companies whose
activities are believed by the Fund to be consistent with Islamic principles as
described in more detail below. The Fund's investment adviser, subject to review
by the Fund's Board of Trustees, interprets the Islamic principles applicable to
the Fund and determines whether the securities are consistent with Islamic
principles. Investors, including certain significant Muslim groups, however, may
disagree with the interpretations of the Islamic teachings adopted by the Fund
and the Adviser's determination that certain companies operate consistently with
Islamic principles. Investors therefore should carefully read the prospectus to
determine if the Fund's policies and interpretations of Islamic principles are
in accordance with their own individual views of Islamic principles.
Investing in accordance with Islamic principles will also limit the
investment opportunities available to the Fund more than is customary for other
mutual funds. The Fund may have to forego attractive investment opportunities to
remain consistent with its view of Islamic principles. Consequently, the return
on securities chosen by the Fund may be lower than if the Fund considered only
investment criteria when making its investments. Furthermore, if subsequent to
an investment the Adviser or Board of Trustees determines the security is
inconsistent with Islamic principles, the 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 Fund is
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. Unlike other mutual funds, the Fund may also not borrow money from
banks to meet redemptions or expenses. The Fund may therefore have to sell
securities at a disadvantageous time or may have to hold larger amounts in cash
which will not earn interest in order to meet redemptions or pay for expenses.
-10-
<PAGE>
FOREIGN SECURITIES. The Fund may also invest in foreign securities;
however, the Fund currently limits such investments to 5% of its net assets and
intends to invest primarily in American Depository Receipts ("ADRS") of foreign
companies. Foreign investment presents risks beyond those of securities of U.S.
issuers. Such risks include political or economic instability, changes in
foreign currency exchange rates, different accounting methods, restrictions of
the withdrawal of investments, tax withholding on dividends, and less publicly
available information.
INVESTMENT RESULTS
Shareholders receive a financial report showing the investments, income
and expenses of the Fund every six months. You may obtain current share values
any time by calling the Adviser at 888-513-8700.
HOW TO BUY FUND SHARES
PURCHASE PRICE
You may purchase shares of the 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). Authorized dealer commissions as a percentage of the public offering
price is 2.50%. The Fund receives the entire net asset value of all of its
shares that are sold. Income Achievers, Inc. serves as the Fund's distributor
and it retains the full sales charge from which it pays the dealer reallowance.
The share price you pay for Fund shares is based on the next
calculation of the net asset value for shares of the Fund after the order is
placed. The net asset value per share for the Fund is determined as of the close
of trading of the New York Stock Exchange (generally 4:00 p.m. Eastern Time) on
each day the New York Stock Exchange is open for business. Generally, the
Exchange is closed on weekends, national holidays and Good Friday. See "Net
Asset Value," below for a description of how net asset value is calculated.
MINIMUM INVESTMENT
Your first purchase of the Fund's shares needs to be for $2,000 or
more. Additional purchases may be in the amounts of $100 or more. These minimums
may be changed at any time by the Fund.
-11-
<PAGE>
OPENING AN ACCOUNT AND PURCHASING SHARES
To open an account, complete and sign the Account Application. Make
your check payable to the Islamia Income Fund. Mail your completed Account
Application, together with your check to: American Data Services, Inc., P.O. Box
5536, Hauppauge, New York 11788-0132. After your initial purchase, you may
purchase additional shares by mailing to American Data Services at the above
address a check in the amount of your purchase made payable to the Islamia
Income Fund 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, credit cards or third party checks 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 Fund and its transfer agent or administrator,
including without limitation a $20 fee to cover bank handling charges for
returning checks due to insufficient funds. When purchases are made by check,
the Fund can hold payment on redemption of shares so purchased until the check
has cleared, which may take up to 15 business days.
The Fund will not issue certificates to represent Shares. If you choose
to invest in the Fund, an account will be opened and maintained for you by
American Data Services, Inc., the Fund's transfer agent and administrator
("AMERICAN DATA SERVICES" or the "ADMINISTRATOR"). 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 Fund
reserves 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 Fund reserves the right to suspend the continuous
offering of its shares at any time, but no suspension shall affect your right of
redemption.
TAX-SHELTERED RETIREMENT PLANS
Shares of the Fund are available for purchase in connection with
certain types of tax-sheltered retirement plans, including Traditional/Roth IRA
accounts, Education IRA accounts 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 Fund, c/o Income Achievers, 2037
Bloomingdale Road, Suite #211, Glendale Heights, IL 60139 or call
1-888-513-8700. Additional administration fees will be assessed for IRA
accounts. See the materials to establish an IRA account for additional
information.
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 (except a $15 fee is assessed for distributions
from IRA accounts).
-12-
<PAGE>
WRITTEN REQUEST
You may redeem shares by sending an unconditional written request for
redemption directly to American Data Services, Inc., P.O. Box 5536, Hauppauge,
New York 11788-0132. To properly complete your redemption request, your
redemption request must include the following information:
-- The Fund's name;
-- Your name and account number;
-- The dollar or share amount you wish to redeem;
-- The signature of each owner exactly as it appears on the account;
-- The name of the person to whom you want your redemption proceeds
paid (if other than to the shareholder of record);
-- The address where you want your redemption proceeds sent (if other
than the address of record); and
-- Any required signature guarantees--a signature guarantee from a
national bank or trust company, brokerage firm or other financial
intermediary that is a member of an approved Medallion Guarantee
Program or is otherwise approved by the Fund.
Signature guarantees are required when redemption proceeds exceed $50,000 or
proceeds are payable other than to the shareholder of record at the address of
record (which address shall not have been changed in the preceding 60 days). A
notary public cannot provide a signature guarantee. If you are redeeming from an
IRA, you must instruct us as to the proper tax withholding. If no withholding
tax instructions are given, the Transfer Agent will automatically withhold 10%
of the redemption proceeds.
You will receive payment based on the net asset value per share next
determined after receipt by the Fund of a properly completed redemption request.
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. If you
purchased shares by check, the Fund will not mail the redemption proceeds until
your check has cleared, which may take up to 15 business days from the date of
purchase.
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 American Data Services at 877-881-2750. 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 purchased shares by check, the Fund will not mail redemption proceeds until
your check has cleared, which may take up to 15 business days.
-13-
<PAGE>
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 American Data Services at 877-881-2750. If a redemption
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 normally 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.
To redeem by telephone, you need to complete the telephone redemption
authorization section of the enclosed Application Form and return it to American
Data Services. If you did not authorize telephone redemption when you opened
your account, you may obtain a telephone redemption authorization form by
writing American Data Services or by calling toll-free at 877-881-2750. Proceeds
of share redemptions made by wire will be transferred by Federal Reserve wire
only to the commercial bank account specified by the shareholder on the
Application Form. You need to send a written request to American Data Services
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,
brokerage firm or other financial intermediary that is a member of an approved
Medallion Guarantee Program or that is otherwise approved by 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 Fund and American Data Services, the
Fund's transfer agent and administrator, will not be liable for following
telephone instructions reasonably believed to be genuine. The Fund employs
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 Fund does not follow reasonable procedures for protecting
shareholders against loss on telephone transactions, it may be liable for any
losses due to unauthorized or fraudulent telephone instructions.
-14-
<PAGE>
GENERAL
The Fund may suspend the right of redemption of their shares or delay
payment more than seven days:
-- when the New York Stock Exchange is closed (other than weekends or
holidays) or trading is restricted as determined by the SEC;
-- when an emergency exists, making disposal of portfolio securities
or the valuation of net assets not reasonably practicable as
determined by the SEC; or
-- during any period when the SEC has by order permitted a suspension
of redemption for the protection of shareholders.
Except for the minimum investment requirements imposed on initial and
subsequent purchases of Fund shares (as described under "Minimum Investment" in
the "How to Buy Fund Shares" section), the Fund currently does not have a
minimum total investment which must be maintained in the account. The Fund,
however, may in the future from time to time establish a minimum total
investment for its shareholders, and the Fund reserves 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 established, 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 investment amount.
PORTFOLIO TRANSACTIONS
Subject to the discretion of the Board of Trustees, the Adviser is
responsible for the placement of the portfolio transactions of the Fund 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
The Fund's net asset value per share is determined as of the close of
trading (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 calculated
on days during which the Fund receives no orders to purchase shares and no
shares are tendered for redemption. Net asset value is calculated by taking 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 the Nasdaq
Stock Market on which such securities are primarily traded. If the securities,
however, did not trade that day or the securities are not listed on a national
securities exchange or the Nasdaq Stock Market, such securities will be valued
at the mean between the last bid and ask prices. Any securities or other assets
for which market quotations are not readily available are valued at fair value
as determined in good faith by the Board of Trustees.
-15-
<PAGE>
DISTRIBUTIONS AND TAXES
The Fund pays income dividends usually semi-annually, and capital
gains, if any, are usually distributed annually in December. When a dividend or
capital gain is distributed, the Fund's net asset value decreases by the amount
of the payment. All dividends or capital gains distributions will automatically
be reinvested in additional shares of the Fund at the then prevailing 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: American Data Services, Inc., P.O. Box 5536,
Hauppauge, New York 11788-0132. Such notice needs to be received at least 5 days
prior to the record date of any dividend or capital gain distribution.
The Fund intends to make distributions that may be taxed as ordinary
income or capital gains (which may be taxable at different rates depending on
the length of time the Fund holds its assets). Dividends from the Fund's
long-term capital gains are taxable as capital gains, while dividends from
short-term capital gains and net investment income are generally taxable as
ordinary income. The tax you pay on a given capital gains distribution depends
generally on how long the Fund has held the portfolio securities it sold. It
does not depend on how long you have owned your Fund shares. The tax status of
your dividends from the Fund is not affected by whether you reinvest your
dividends in additional shares or receive them in cash.
If you sell shares, any gain or loss you have is a taxable event, which
means that you may have a capital gain to report as income, or a capital loss to
report as a deduction, when you complete your federal income tax return. For tax
purposes, an exchange is the same as a sale.
Distributions of dividends or capital gains, and capital gains or
losses from your sale of Fund shares, may be subject to state and local income
taxes as well.
Early in each year, you will receive a statement detailing the amount
and nature of all dividends and capital gains that you were paid during the
prior year. You will receive this statement from the firm where you purchased
your Fund shares if you hold your investment in street name. The Fund will send
you this statement if you hold your shares in registered form.
The tax information in this prospectus is provided as general
information and will not apply to you if you are investing in a tax-deferred
account such as an IRA. Tax laws also are subject to change, so we urge you to
consult your tax adviser about your particular tax situation and how it might be
affected by current tax law. Please note that if you do not furnish us with your
correct Social Security number or employer identification number, federal law
requires us to withhold federal income tax from your distributions and
redemption proceeds at a rate of 31%.
-16-
<PAGE>
GENERAL INFORMATION
Custodian, Administrator and Transfer Agent
The custodian of the assets of the Fund is Union Bank of California,
N.A., located at 350 California Street, San Francisco, California 94104. The
Administrator of the Fund is American Data Services, Inc., located at Hauppauge
Corporate Center, 150 Motor Parkway, Suite 109, Hauppauge, New York 11788-0132.
Pursuant to an Administration & Accounting Service Agreement with the
Fund, American Data Services provides certain administrative services necessary
for the operations of the Fund, subject to the supervision of the Fund's Board
of Trustees and performs Fund accounting services. For the services rendered to
the Fund by the Administrator, the Fund pays the Administrator a monthly fee
equal to the greater of: (a) $3,000 for average net assets under $5 million,
$3,500 for average net assets from $5 to $10 million, $4,000 for average net
assets from $10 to $20 million and $4,500 for average net assets above $20
million or (b) 1/12 of .15% of the Fund's first $75 million of average monthly
net assets, plus 1/12 of .10% of the Fund's next $75 million of average monthly
net assets, plus 1/12 of .07% of the average monthly net assets over $150
million. The Fund also pays the Administrator for any out-of-pocket expenses and
additional fees for special reports, if any, and for state filings. In addition,
the Administrator serves as the Fund's transfer and dividend paying agent for
which it is paid separately.
AVAILABLE INFORMATION ABOUT THE FUND
Several additional sources of information are available to you. The
Statement of Additional Information (SAI), incorporated by reference into this
prospectus, contains additional information about the Fund. The SAI is
available, without charge, upon request. Call Income Achievers at (888) 513-8700
to request a free copy of the SAI or for other Fund information.
Information about the Fund (including the SAI) can be reviewed and
copied at the Commission's Public Reference Room in Washington D.C. Information
on the operation of the Public Reference Room may be obtained by calling the
Commission at 202-942-8090. Reports and other information about the Fund are
also available on the EDGAR Database on the Commission's Internet site at
http://www.sec.gov. Copies of this information may be obtained, after paying a
duplicating fee by electronic request at the following E-mail address:
[email protected], or by writing the Commission's Public Reference Section,
Washington D.C. 20549-0102.
Islamia Group of Funds
Islamia Income Fund
2037 Bloomingdale Road
Suite #211
Glendale Heights, IL 60137
(888) 513-8700
The Fund's Investment Company Act file no. is 811-08021.
-17-
<PAGE>
Statement of Additional Information
July 3, 2000
Islamia Group of Funds
2037 Bloomingdale Road
Suite #211
Glendale Heights, IL 60137
ISLAMIA GROUP OF FUNDS
ISLAMIA INCOME FUND
This Statement of Additional Information is not a prospectus. A prospectus may
be obtained by writing Income Achievers, Inc. at 2037 Bloomingdale Road, Suite
#211, Glendale Heights, IL 60137 or by calling Income Achievers at (888)
513-8700. This Statement of Additional Information relates to, and should be
read in conjunction with the prospectus for the Fund, dated July 3, 2000.
TABLE OF CONTENTS
PAGE
GENERAL INFORMATION.........................................................B-1
INVESTMENT OBJECTIVES AND POLICIES OF THE FUND..............................B-1
PORTFOLIO TURNOVER..........................................................B-3
PERFORMANCE DATA............................................................B-3
MANAGEMENT OF THE FUND......................................................B-5
PRINCIPAL HOLDERS OF SECURITIES.............................................B-7
INVESTMENT ADVISORY AND OTHER SERVICES......................................B-8
CODE OF ETHICS.............................................................B-12
BROKERAGE ALLOCATION.......................................................B-12
PURCHASE, REDEMPTION AND PRICING OF SECURITIES BEING OFFERED...............B-13
DISTRIBUTION OF SHARES.....................................................B-14
TAX STATUS.................................................................B-14
INDEPENDENT PUBLIC ACCOUNTANTS AND CUSTODIAN...............................B-18
FINANCIAL STATEMENTS.......................................................B-20
<PAGE>
GENERAL INFORMATION
Islamia Income Fund (the "FUND") is a series of the Islamia Group of
Funds (the "TRUST"), an open-end diversified series investment company.
Currently, there is only one series of the Trust outstanding. The Trust was
organized on December 23, 1996 and the Fund has no prior operating history.
INVESTMENT OBJECTIVE AND POLICIES OF THE FUND
The investment objective and certain investment policies of the Fund
are described in the Prospectus. All investments are subject to the overall
policy of making investment decisions according to Islamic principles, as
described in the Fund's Prospectus. The investment objective of the Fund, as
well as certain other policies and restrictions described 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 Fund
provide that the Fund may not:
(1) issue senior securities, except as permitted under the Investment
Company Act of 1940 and as 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 Stock Market);
(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 the 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;
<PAGE>
(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 securities of other investment companies unless (a) such
securities are consistent with the investment objective of the Fund 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; and
(12) 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 Fund has
adopted the following non-fundamental policies which may be changed by the Board
of Trustees:
(1) the Fund has authority to invest up to 10% of its net assets in
securities issued by foreign companies, but currently limits such investments to
5% of its net assets. The Fund currently will invest only in dollar-denominated
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 Fund does not intend to invest in foreign securities
that are not traded and settled in the U.S. although the Board of Trustees may
determine to do so in the future;
(2) the Fund will not purchase or sell options, except the Fund has the
power to use covered call options as a method to increase the income received
from common stocks owned by the Fund. The Fund may sell (write) covered call
options and purchase call options to close out call options previously written.
The Fund currently does not write covered call options;
(3) the Fund does not invest in preferred stock;
(4) the Fund will not invest their net assets in warrants; and
(5) the Fund 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 Fund may invest up to 10% of its net assets
in illiquid securities (excluding restricted securities) but currently 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.
B-2
<PAGE>
In addition to the foregoing, as described in the Fund's prospectus,
the Fund may invest in the common stock of companies that have issued debt
securities or borrowed money from banks, provided the company's debt represents
no more than 33% of its total capital. In addition to the foregoing restriction,
the Fund will also write a letter to the company explaining that it is not in
agreement with the company's debt financing policy.
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 affecting
the market and the economy.
PERFORMANCE DATA
The historical investment performance of the Fund may be shown in the
form of "average annual total return," "cumulative total return," and "current
yield." The Fund may quote its respective yield or total return in reports to
shareholders, sales literature and advertisements. 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 reinvested 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 the 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.
B-3
<PAGE>
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 annualize
the results. The formula used is:
Yield = 2{(a-b/cd +1)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 Fund has no interest income. For the purpose of computing yield,
the Fund recognizes 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 computing yield, the Fund follows certain standardized
accounting practices specified by the SEC rules. These practices are not
necessarily consistent with those that the Fund uses to prepare its annual and
interim financial statements in conformity with generally accepted accounting
principles. Thus, yield may not equal the income paid to shareholders or the
income reported in the Fund's financial statements.
In reports or other communications to shareholders or in advertising
and sales literature, the 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 Services
("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 Fund may use comparative 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 Fund for any future period.
The Fund 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
Fund. Comparison of the 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
indicated sources or reporting services, which the Trust believes to be
generally accurate. The 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.
B-4
<PAGE>
MANAGEMENT OF THE FUND
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 7, 2 of whom are "interested persons" (as the term "INTERESTED PERSONS"
is defined in the Investment Company Act of 1940) and 5 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.
Khan, noted below as an interested person of the Trust, is also the daughter of
Qamaruddin Ali Yar Khan.
<TABLE>
<CAPTION>
PRINCIPAL OCCUPATIONS DURING PAST
NAME AND ADDRESS AGE POSITION AND OFFICES WITH TRUST FIVE YEARS
---------------- --- ------------------------------- ----------
<S> <C> <C> <C>
Qamaruddin Ali Yar Khan* 55 Chairman, President and Trustee President, Director, and shareholder
2037 Bloomingdale Road, Suite #211 of Income Achievers, Inc. (since its
Glendale Heights, IL 60139 inception in 1995 to present); Controller
of Sonoscan, Inc. (manufacturer of
ultrasonic testing equipment) (since
1990 to present) and manager of
Sonoscan's accounting department (1987-1990);
and owner of Glenside Accounting & Tax
Services (1989-1998).
Sharmeen F. Khan* 28 Treasurer, Trustee Certified Public Accountant, Data
253 East Delaware Place Base Manager (1993 to 1996);
Suite #21F Consultant for Peoples Soft
Chicago, IL 60611 (software company) (1996 to present).
B-5
<PAGE>
M. A. Rahman Khan 62 Trustee President and Owner of Management
3705 Briar Lane Systems Ltd. (since 1985 to present)
Hazel Crest, IL 60429 (computer consulting organization);
Professor of Computer Science at
City Colleges of Chicago (since
September, 1990 to present).
Syed Shamshad Husain 64 Trustee Managing Director of IQRA
1046 Longford Road International Education Foundation
Bartlett, IL 60103 (since 1995 to present) (publisher
of Islamic religious books); Manager
at All State Insurance Company (from
1968 to 1994).
Syed K. Raheemullah 52 Trustee Member of the technical staff for
25 W. 181 Salem Lucent Technologies (since 1986 to
Naperville, IL 60540 present) (manufacturer of telephone
equipment).
Hamid Reza Zarafshar 41 Trustee Consulting Member of the technical
30 W. 292 Maple Tree Lane staff of Lucent Technologies (since
West Chicago, IL 60185 1984 to present) (manufacturer of
telephone equipment).
Shakir Moiduddin 55 Trustee Physician in own practice in Burr
106 Circle Ridge Drive Ridge (since 1993 in this practice
Burr Ridge, IL 60521 to present).
Sabina Abdul Qadir 28 Secretary College Student (during last 5
2037 Bloomingdale Road years).
Suite #211
Glendale Heights, IL 60139
Farooq Sultan 56 Controller Mobil Franchisee (since 1995 to
2037 Bloomingdale Road present)
Suite #211
Glendale Heights, IL 60139
</TABLE>
B-6
<PAGE>
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 Income Achievers, Inc., the
Fund's adviser (the "ADVISER") serve without any compensation from the Trust.
TOTAL**
ESTIMATED* COMPENSATION FROM
NAME OF TRUSTEE AGGREGATE COMPENSATION TRUST AND FUND COMPLEX
FROM THE TRUST PAID TO TRUSTEES
-------------- ----------------
M.A. Rahman Khan $400 $400
Syed Shamshad Husain $400 $400
Syed K. Raheemullah $400 $400
Hamid Reza Zarafshar $400 $400
Shakir Moiduddin $400 $400
--------------------
* The estimated compensation to be paid by the Trust to the independent
trustees for the current fiscal year ending June 30, 2001.
** The Fund is the only investment company in the fund complex and the
Independent Trustees serve only as trustees for the Fund.
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 Trust requires no employees other than its officers, all of whom are
compensated by Income Achievers, Inc.
B-7
<PAGE>
PRINCIPAL HOLDERS OF SECURITIES
As of June 15, 2000, the following persons owned beneficially 5% or
more of the Fund's outstanding equity securities:
PERCENTAGE OF
NAME AND ADDRESS OF OWNER RECORD OWNERSHIP
------------------------- ----------------
Qamaruddin Ali 25%
Yar Khan and
Sabera Khan
2037 Bloomingdale Road, Suite #211
Glendale Heights, IL 60139
Shamim Qureshi 10%
6715 Kingswood Drive
Willowbrook, IL 60521
Farooq & Sara Sultan 20%
637D Dana Court
Naperville, IL 60563
Omer Sultan 10%
637D Dana Court
Naperville, IL 60563
Zareena Abbas 10%
1008 West Foster Avenue
Chicago, IL 60640
Mohammed Misbahuddin and Afzal Misbah 5%
152 Fleetwood Drive
Glendale Heights, IL 60139
Raj Mohammed 5%
85 Pleasant Street
Hoffman Estates, IL 60194
As Mr. Qamaruddin Ali Yar Khan is the Chairman, President and a Trustee
of the Fund and Mr. Farooq Sultan is the Controller for the Fund, the officers
and Trustees of the Fund as a group owned 45% of the Fund's securities as of
June 15, 2000. Because Mr. Qamaruddin Ali Yar Khan and Sabera Khan owns 25% of
the Fund's shares, they may be presumed to control the Fund. However, it is
expected that as a result of the public offering, this percentage of ownership
will decrease.
INVESTMENT ADVISORY AND OTHER SERVICES
Adviser
Income Achievers, Inc. acts as adviser to the Fund, with responsibility
for the overall management of the Fund. Its address is 2037 Bloomingdale Road,
Suite #211, Glendale Heights, IL 60137. Pursuant to its Investment Management
Agreement, Income Achievers provides investment advisory and certain
administrative services for the Fund. In performing its duties, the Adviser will
also determine if the securities are in accordance with Islamic principles.
B-8
<PAGE>
Subject to the policies the Board of Trustees may determine, the Adviser makes
investment decisions on behalf of the Fund, makes available research and any
statistical data therewith, and supervises the acquisition and disposition of
investments by the 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 Fund 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 majority 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 Fund other than those services performed by the Trust's
distributor, custodian, transfer agent and administrator, 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 required 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, this 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
this fee, the 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 Fund who are not officers, directors or employees of the
Adviser; interest expenses; fees and expenses of the custodian, transfer agent
and administrator; taxes and government fees; brokerage commissions and other
expenses incurred in acquiring or disposing of portfolio 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
B-9
<PAGE>
and of shareholders' 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 the
Fund's 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
Agreement terminates automatically if it is assigned and may be terminated
without penalty by either party upon at least 60 days' written notice. The
Agreement provides that the Adviser shall not be liable for any loss sustained
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 investigation
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
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.
Administrator
The administrator for the Fund is American Data Services, Inc. (the
"ADMINISTRATOR"), which has its principal office at The Hauppauge Corporate
Center, 150 Motor Parkway, Hauppauge, New York 11788, and is primarily in the
business of providing administrative, fund accounting and stock transfer
services to retail and institutional mutual funds. Pursuant to an Administration
& Accounting Service Agreement with the Fund, the Administrator provides certain
administrative services necessary for the operations of the Fund, subject to the
supervision of the Fund's Board of Trustees.
Under the Administration & Accounting Service Agreement, the
Administrator, subject to the direction and control of the Board of Trustees,
shall manage all aspects of the Trust's operations with respect to the Fund
except those that are the responsibility of any other service provider hired by
the Trust, all in such manner and to such extent as may be authorized by the
Board. The Administrator will provide persons suitable to the Board to serve as
officers of the Trust and will provide the Fund with adequate office space,
communication facilities and personnel to perform certain administrative
services including, but not limited to: (i) overseeing the performance of
administrative and professional services rendered to the Trust by others,
including its custodian, transfer agent as well as legal, auditing, shareholder
services and other services performed for the Fund; (ii) assisting the Adviser
in monitoring Fund holdings for compliance with Prospectus investment
restrictions and assist in preparation of periodic compliance reports, as
applicable; (iii) preparing and coordinating the printing of semi-annual and
annual financial statements; (iv) preparing selected management reports for
performance and compliance analyses as may be agreed upon from time to time; (v)
advising the Trust and the Board on matters concerning the Trust and its
affairs; (vi) with the cooperation of counsel, the Adviser, officers of the
Trust and other relevant parties, preparing and disseminating materials for
Board meetings, including agendas and selected financial data as may be agreed
upon, attending and participating in Board meetings to the extent requested; and
preparing or causing to be prepared minutes of the Board meeting; (vii)
determining the income and capital gains available for distribution and
calculating the distributions required to meet regulatory, income and excise tax
requirements, each function to be reviewed by the Fund's independent public
accountants; (viii) preparing the Fund's federal, state and local tax returns to
be reviewed by the Fund's independent public accountants; (ix) preparing and
maintaining the Fund's operating expense budget; (x) in consultation with the
Fund's outside counsel, assisting in and overseeing the preparation, filing and
printing of amendments to the Fund's registration statement, periodic reports to
shareholders and the SEC, notices pursuant to Rule 24f-2, proxy materials and
reports to the SEC on Form N-SAR; (xi) coordinating the Fund's annual or SEC
audit by assisting the independent auditors and upon approval of the Fund, any
regulatory body in a review of the Fund's accounts and records, providing
appropriate financial schedules, and providing office facilities, as may be
required; (xii) after consultation with the Trust and Adviser, determining the
jurisdictions in which the shares of the Fund will be registered or qualified
for sale and registering or preparing applicable filings with respect to the
B-10
<PAGE>
shares with the various states (PROVIDED that fees for registration with the
states or for qualifying the Fund shall be paid by the Fund); (xiii) monitoring
sales of shares to ensure that the Fund's shares are properly and duly
registered with the SEC; (xiv) overseeing the calculation of performance data;
(xv) preparing or causing to be prepared expense and financial reports; and
(xvi) assisting in the selection of other service providers.
Pursuant to the Fund Administration & Accounting Service Agreement, the
Administrator also provides the Fund with accounting services, including (i)
daily calculating of the Fund's net asset value; (ii) calculating each item of
income, expense, deduction, credit gain and loss, if any, as required by the
Trust and in accordance with specified applicable tax and accounting standards;
(iii) preparing and maintaining books and records required by Rule 31a-1 of the
Investment Company Act of 1940 applicable to the Administrator's fulfillment of
its duties, and such other documents as necessary or advisable for compliance
with applicable regulations as may be agreed upon; (iv) making adjustments as
the Administrator and Trust agree are necessary to accruals of estimated
expenses or income; (v) providing daily portfolio valuation, net asset
calculation and other standard operational reports as requested; (vi) providing
certain accounting data in connection with the preparation of the Fund's
semi-annual reports and financial statements, tax returns, updating the
financial information in its registration statement, and proxy statements; (vii)
providing facilities to accommodate annual or SEC audits; (viii) transmitting to
and receiving from the Fund's transfer agent appropriate data on a daily basis
and reconciling certain data with the transfer agent; (ix) periodically
reconciling appropriate data with the Fund's custodian; and (x) performing such
other recordkeeping, reporting and other tasks as may be requested upon notice
and for mutually acceptable compensation. In addition to administrative and
accounting services, the Administrator also serves as the Fund's transfer and
dividend paying agent.
For the services rendered by the Administrator, the Fund pays the
Administrator a monthly fee. These fees are set forth in the Fund's prospectus
under the section entitled "General Information - Custodian, Administrator and
Transfer Agent." The Fund also pays the Administrator for any out-of-pocket
expenses.
The Administration & Accounting Service Agreement shall remain in
effect for three years following its initial approval and subject to annual
approval of the Board, one-year periods thereafter. If at any time during the
initial or any subsequent term of the Agreement, the Administrator is replaced
as transfer agent for any reason other than for a material breach of the
Administration & Accounting Service Agreement which the Administrator does not
cure within a reasonable time, or the Fund is merged into or sells all (or
substantially all) of its assets to another fund or family of funds for which
the Administrator does not serve as transfer agent, then the Fund shall,
immediately upon demand by the Administrator, make a one-time cash payment equal
to the net present value of the revenues the Administrator would have earned
during the remainder of the initial or subsequent term of the Agreement, as the
case may be, at the fee rate in effect at the time of such event (including any
applicable minimum). The Administration & Accounting Service Agreement may not
be assigned by the Fund without prior written consent. The Agreement provides
that the Administrator shall be held to the exercise of reasonable care in
carrying out the provisions of the Agreement, but shall be without liability to
the Fund for any action taken or omitted by it in good faith without gross
negligence, bad faith, willful misconduct or reckless disregard of its duties
under the Agreement.
B-11
<PAGE>
CODE OF ETHICS
You should also note that the Income Achievers, Inc., the Fund's
Adviser and underwriter, and the Fund have adopted a code of ethics under Rule
17j-1 of the 1940 Act. The purpose of a code is to avoid potential conflicts of
interest and to prevent fraud, deception or misconduct with respect to the Fund.
Such code of ethics permits personnel subject to the Code to invest in
securities, including securities that may be purchased or held by the Fund.
BROKERAGE ALLOCATION
The Adviser is responsible for decisions to buy and sell securities for
the Fund and for the placement of the Fund's securities business, the
negotiation of the commissions to be paid on brokered transactions, the prices
for principal trades in securities, and the allocation of portfolio brokerage
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 respective Adviser and its
advisees. The best price to the Fund 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 Fund 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, purchasing or selling securities, and
the availability of securities or purchasers 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).
B-12
<PAGE>
In selecting brokers, the Adviser also may consider 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 capability,
performance, and financial responsibility. Accordingly, the commissions 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 Fund. The Adviser
believes that the research information received in this manner provides the Fund
with benefits by supplementing the research otherwise available to the Fund. The
research supplied, however, may or may not be of value or used in making
investment decisions for the Fund. Further, although as of the date of this
Statement of Additional Information the Adviser did not have any advisory
accounts other than the Fund, 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 Fund. The Investment Management Agreement provides that such higher
commissions will not be paid by the Fund 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 Fund to the Adviser under the Investment
Management Agreement are not reduced as a result of receipt by the Adviser of
research services.
In addition, if the Adviser advises other accounts in the future, the
Adviser will seek to allocate portfolio transactions equitably whenever
concurrent decisions are made to purchase or sell securities by the Fund 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 Fund. In making
such allocations between the Fund and any other advisory account, 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 Fund at
a public offering price equal to the applicable net asset value per share plus
an up-front sales charge imposed at the time of purchase. For information
regarding the up-front sales charge, see "Summary of Fund Expenses" 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 the Fund. The example assumes a
purchase on June 14, 2000 of shares from the Fund at a price based upon the net
asset value of the shares.
Net Asset Value per share...............................................$10.00
Per Share Sales Charge--3% of public offering price
(3.093% of net asset value).....................................$.309
Per Share Offering Price to the Public.................................$10.309
B-13
<PAGE>
The Fund receives the entire net asset value of all shares that are
sold. Income Achievers, as underwriter of the Fund, retains the full applicable
sales charge from which it pays the uniform allowances shown in the Prospectus
to authorized dealers. Net asset value per share is determined by dividing the
value of all securities and other assets, less liabilities, by the number of
shares outstanding. The net asset value is determined for the 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, Thanksgiving Day and Christmas
Holiday.
DISTRIBUTION OF SHARES
Income Achievers, the Fund's investment adviser, also acts as the
distributor of the shares of the Fund 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 Fund's shares on a continuous offering basis. Income
Achievers has agreed to use its "best efforts" to distribute the Fund's shares,
but has not committed to purchase or sell any specific number of shares. The
Distribution Agreement for the Fund shall continue in effect for a period of
more than two years only so long as its continuance is approved annually by the
vote of the Trustees and the disinterested 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 Fund's shares directly to retail customers or to or through brokers,
dealers, banks, or other qualified financial intermediaries. Under the
Distribution Agreement, Income Achievers at its own expense will finance certain
activities incident to the sale and distribution of the Fund's shares including,
printing and distributing prospectuses and statements of additional information
to other than existing shareholders, the printing and distributing of
advertising and sales literature (except such expenses shall not include
expenses incurred by the Fund 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. The staff of the
Commission takes the position that dealers who receive 90% or more of the
applicable sales charge may be deemed underwriters under the Securities Act of
1933, as amended.
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, the Fund 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, the 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,
diversification of its assets, and distributions of its income to shareholders.
First, the Fund must derive at least 90% of its annual gross income (including
B-14
<PAGE>
tax-exempt interest) 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, 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 the Fund
and engaged in the same, similar or related trades or businesses.
As a regulated investment company, the Fund will not be subject to
federal income tax in any taxable year for which it distributes at least 90% of
the sum of (i) 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 capital loss) and (ii) its net tax-exempt interest (the excess of its
gross tax-exempt interest income over certain disallowed deductions). 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 undistributed 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. The 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 the Fund engages in hedging transactions involving financial futures
and options, these transactions will be subject to special tax rules, the effect
of which may be to accelerate income to the Fund, defer the Fund's losses, cause
adjustments in the holding periods of the Fund's securities, 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 distributions to shareholders.
Prior to purchasing shares in the Fund, a shareholder should carefully
consider the impact of dividends or distributions which are expected to be or
have been declared, but not paid. 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.
B-15
<PAGE>
In any taxable year of the Fund, distributions from the Fund, other
than distributions which are designated as capital gain dividends, will to the
extent of the earnings and profits on such Fund constitute dividends for Federal
income 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. 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. Distributions will be taxed
in the manner described (I.E., as ordinary income, long-term capital gain or
return of capital) even if reinvested in additional shares of the Fund.
Although dividends generally will be treated as distributed when paid,
dividends declared in October, November or December, payable to shareholders of
record on a specified date in one of those months and paid during the following
January, will be treated as having been distributed by the Fund (and received by
the shareholders) on December 31 of the year such dividends are declared.
The redemption or exchange of the shares of the 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.
Present law taxes both long- and short-term capital gains of
corporations at the rates applicable to ordinary income. The Internal Revenue
Service Restructuring and Reform Act of 1998 (the "1998 TAX ACT") provides that
for taxpayers other than corporations, net capital gain (which is defined as net
long-term capital gain over net short-term capital loss for the taxable year)
realized from property (with certain exclusions) is subject to a maximum
marginal stated tax rate of 20% (10% in the case of certain tax payers in the
lowest tax bracket). Capital gain or loss is long-term if the holding period for
the asset is more than one year, and is short-term if the holding period for the
asset is one year or less. The date on which a share is acquired (I.E., the
"TRADE DATE") is excluded for purposes of determining the holding period of the
share. Capital gains realized from assets held for one year or less are taxed at
the same rates as ordinary income. In addition, please note that capital gains
may be recharacterized as ordinary income in the case of certain financial
transactions that are "conversion transactions" effective 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 of the Fund. Note that if a sale of shares held
for less than six months results in a loss, the loss will be treated as
long-term capital loss to the extent of any capital gain distribution made with
respect to such shares during the period those shares are held by the
shareholder.
In addition, please note that capital gains may be recharacterized as
ordinary income in the case of certain financial transactions that are
considered "conversion transactions" effective for transactions entered into
after April 30, 1993. Shareholders and prospective investors should consult with
their tax advisors regarding the potential effect of this provision on their
investment in shares of the Fund.
B-16
<PAGE>
Under the Code, certain miscellaneous itemized deductions, such as
investment 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 noncorporate) shareholders in excess of the
distributions received from the Fund.
All or a portion of a sales load paid in purchasing shares of the Fund
cannot be taken into account for purposes of determining gain or loss on the
redemption or exchange of such shares within 90 days after their purchase to the
extent shares of the Fund or another fund are subsequently acquired without
payment of a sales load or with the payment of a reduced sales load pursuant 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. In addition, no loss will be allowed on the redemption or
exchange of shares of the Fund if the shareholder purchases other shares of such
Fund (whether through reinvestment of distributions or otherwise) or the
shareholder acquires or enters into a contract or option to acquire securities
that are substantially identical to shares of the Fund within a period of 61
days beginning 30 days before and ending 30 days after such redemption or
exchange. If disallowed, the loss will be reflected in an adjustment to the
basis of the shares acquired.
If in any year the 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 distributions 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 Fund is 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 Fund their correct taxpayer identification
number (in the case of individuals, their social security number) and certain
certifications, or who are otherwise subject to backup withholding.
A shareholder who is a foreign investor (I.E., an investor other than a
United States citizen or resident or a United States corporation, partnership,
estate or trust) should be aware that, generally, subject to applicable tax
treaties, distributions from the Fund which constitute dividends for Federal
income tax purposes (other than dividends which the Fund designates as capital
gain dividends) will be subject to United States income taxes, including
withholding taxes. However, distributions received by a foreign investor from
the Fund that are designated by the Fund as capital gain dividends should not be
subject to United States Federal income taxes, including withholding taxes, if
all of the following conditions are met: (i) the capital gain dividend is not
effectively connected with the conduct by the foreign investor of a trade or
business within the United States, (ii) the foreign investor (if an individual)
is not present in the United States for 183 days or more during his or her
taxable year, and (iii) the foreign investor provides all certification which
may be required of his status (foreign investors may contact the Fund to obtain
a Form W-8 BEN which must be filed with the Fund and refiled every three
calendar years thereafter). Foreign investors should consult their tax advisors
with respect to United States tax consequences of ownership of shares. Shares in
the Fund and Fund distributions may also be subject to state and local taxation
and shareholders should consult their tax advisors in this regard.
B-17
<PAGE>
A corporate shareholder may be entitled to a 70% dividends received
deduction with respect to any portion of such shareholder's ordinary income
dividends which are attributable to dividends received by the Fund on certain
equity securities. This rule does not apply to certain corporate shareholders,
such as "S" corporations, which are not eligible for the deduction because of
their special characteristics and also does not apply for purposes of special
taxes such as the accumulated earnings tax and the personal holding corporation
tax. The 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 the 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 the 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 the Fund of dividends on
equity securities that are attributable 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 Fund 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 Fund and the income tax consequences to their shareholders, as well as with
respect to foreign, state and local tax consequences of ownership of Fund
shares.
INDEPENDENT PUBLIC ACCOUNTANTS AND CUSTODIAN
Union Bank of California, N.A., 350 California Street, San Francisco,
California 94104, is the custodian of the Fund. As custodian for the Fund, 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 Fund pays
the authorized expenses of the Fund. When Fund shares are redeemed by investors,
the proceeds are paid to the shareowner from an account at the custodian bank.
B-18
<PAGE>
McCurdy & Associates CPA's Inc., 27955 Clemens Road, Westlake, Ohio
44145, are the independent accountants for the Trust and the Fund. The
accountants will conduct an annual audit of the Fund and assist the Adviser in
any accounting matters throughout the year.
Organization
The 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 is one series authorized and
outstanding, which has only one class of shares. Each share of the Fund has
equal rights as to voting, redemption, dividends, and liquidation as the other
shares of the 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
the Fund have the right to call a special meeting to remove Trustees or for any
other purpose.
Under the Declaration of Trust of the Trust, the Trust or any series of
the Trust (including the Fund) may be terminated at any time by the Trustees by
written notice to the shareholders of the Trust, or such series as the case may
be, without a vote of the shareholders of the Trust, or of such series, or the
Trust or any series of the Trust may be terminated by the affirmative vote of
the shareholders in accordance with provisions of the Declaration of Trust.
Under Massachusetts law applicable to Massachusetts business trusts,
shareholders of such a trust may, under certain circumstances, be held
personally liable as partners 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 executed 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 circumstances 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.
B-19
<PAGE>
FINANCIAL STATEMENTS
THE ISLAMIA INCOME FUND
STATEMENTS OF ASSETS AND LIABILITIES
JUNE 14, 2000
--------------------------------------------------------------------------------
INCOME
FUND
ASSETS
Cash...................................................... $ 100,000
---------
NET ASSETS................................................ $ 100,000
---------
Shares of common stock outstanding
(Unlimited shares authorized,
No par value)............................................. 10,000
---------
Net asset value, offering price and
redemption price per share................................ $ 10.00
---------
The accompanying notes are an integral part of this statement
B-20
<PAGE>
THE ISLAMIA INCOME FUND
NOTES TO STATEMENTS OF ASSETS AND LIABILITIES
AS OF JUNE 14, 2000
--------------------------------------------------------------------------------
1. The Islamia Income Fund (the "FUND") is a series of The Islamia Group
of Funds (the "TRUST"). The Fund is a diversified, open-end management
investment company, which is sold with a 3% load. The Fund's primary
objective is to provide current income and, as a secondary objective,
appreciation of capital, each consistent with Islamic principles. The
Trust was organized as a Massachusetts business trust on December 23,
1996. On June 14, 2000, 10,000 shares of the Fund were issued for cash
at a purchase price of $10.00 per share. The Fund has had no operations
except for the initial issuance of shares.
2. Expenses incurred in connection with the organization of the Fund and
the initial offering of shares will be permanently absorbed by Income
Achievers, Inc. (the "ADVISER").
3. Reference is made to the Prospectus and the Statement of Additional
Information for a description of the Management Agreement, the
Administration & Accounting Service Agreement, the Transfer Agency
Agreement, tax aspects of the Fund and the calculation of the net asset
value of the shares of the Fund.
B-21
<PAGE>
To The Shareholders and Board of Trustees
Islamia Group of Funds:
We have audited the accompanying statement of assets and liabilities of Islamia
Group of Funds (comprising, respectively, the Islamia Income Fund) as of June
14, 2000. This financial statement is the responsibility of the Company's
management. Our responsibility is to express an opinion on this financial
statement based on our audit.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the statement of assets and liabilities is free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the statement of assets and
liabilities. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
statement of assets and liabilities presentation. Our procedures included
confirmation of cash held by the custodian as of June 14, 2000, by
correspondence with the custodian. We believe that our audit provides a
reasonable basis for our opinion.
In our opinion, the statement of assets and liabilities referred to above
presents fairly, in all material respects, the financial position of the Islamia
Income Fund constituting Islamia Group of Funds as of June 14, 2000, in
conformity with generally accepted accounting principles.
McCurdy & Associates CPA's, Inc.
Westlake, Ohio
June 16, 2000
B-22
<PAGE>
PART C -- OTHER INFORMATION
ITEM 22: FINANCIAL STATEMENTS AND EXHIBITS
(a) Financial Statements:
Included in the Prospectus:
Not Applicable
Included in Statement of Additional Information:
Statements of Assets and Liabilities, June 14, 2000, for the
Fund.
Report of Independent Public Accountants dated June 16, 2000.
ITEM 23: EXHIBITS:
(a) Declaration of Trust of Registrant.(1)
(a)(1) Certificate of Establishment and Designation of Series.(1)
(b) Bylaws of Registrant.(2)
(c) Not Applicable.
(d) Investment Management Agreement between Registrant and Income
Achievers, Inc.(2)
(e)(1) Distribution Agreement between Registrant and Income Achievers, Inc.(2)
(e)(2) Dealer Agreement.(2)
(f) Not Applicable.
(g) Form of Custodian Agreement between Registrant and Union Bank of
California, N.A.(2)
(h)(1) Transfer Agency Agreement between Registrant and American Data
Services, Inc.(2)
(h)(2) Administration & Accounting Service Agreement between Registrant and
American Data Services, Inc.(2)
(i) Opinion and consent of Chapman and Cutler, dated June 20, 2000.(2)
(j) Consent of Independent Public Accountants.(2)
(k) Not Applicable.
<PAGE>
(l) Subscription Agreements.(2)
(m) Not Applicable.
(n) Not Applicable.
(o) Not Applicable.
(p) Code of Ethics and Reporting Requirements.(2)
--------------------
(1) Incorporated by reference to the initial registration statement filed on
Form N-1A for Registrant on January 22, 1997.
(2) Filed herewith.
ITEM 24. PERSONS CONTROLLED BY OR UNDER COMMON CONTROL WITH REGISTRANT
Not applicable
ITEM 25. 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 negligence 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 adjudicated not to have acted in good faith in the reasonable
belief that his action was in the best interests of the Trust; or
-2-
<PAGE>
(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 payment 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 disposition or a
reasonable determination, based on a review of readily available 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 indemnification 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.
-3-
<PAGE>
The trustees and officers of the Registrant are covered by Investment
Trust Errors and Omission policies in the aggregate amount of $500,000 (with a
maximum deductible of $25,000) against liability and expenses 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
indemnification by it is against public policy as expressed in the Act and will
be governed by the final adjudication of such issue.
ITEM 26. 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.
-4-
<PAGE>
<TABLE>
<CAPTION>
RELATIONSHIP WITH
NAME AND ADDRESS POSITION WITH ADVISER OTHER BUSINESSES
<S> <C> <C>
Qamaruddin Ali Yar Khan President and Chairman, President and Trustee of the
2037 Bloomingdale Road majority shareholder Islamia Group of Funds; Controller of
Suite #211 Sonoscan, Inc. (1990 to June 2000), 2149
Glendale Heights, IL 60137 East Pratt Blvd., Elk Grove Village, IL
60007; President and owner of Glenside
Accounting and Tax Services (1989 to
1998), 1553 Bloomingdale Road, Suite
1000, Glendale Heights, IL 60139.
Sabera Khan Secretary Lab Manager of Novartis Seed Inc., 5300
2037 Bloomingdale Road Katrine Avenue, Downers Grove, IL 60515.
Suite #211
Glendale Heights, IL 60137
</TABLE>
ITEM 27. PRINCIPAL UNDERWRITERS
(a) The Adviser acts as investment adviser and distributor to the Fund.
As of the date of filing this registration statement, the Adviser does not act
as investment adviser or distributor to any other investment company.
(b)
<TABLE>
<CAPTION>
POSITIONS AND OFFICES
NAME AND ADDRESS POSITION WITH UNDERWRITER WITH REGISTRANT
<S> <C> <C>
Qamaruddin Ali Yar Khan President and Chairman, President and a Trustee
2037 Bloomingdale Road majority shareholder of the Islamia Group of Funds.
Suite #211
Glendale Heights, IL 60137
Sabera Khan Secretary None.
2037 Bloomingdale Road
Suite #211
Glendale Heights, IL 60137
</TABLE>
(c) Not applicable.
-5-
<PAGE>
ITEM 28. LOCATION OF ACCOUNTS AND RECORDS
Income Achievers, Inc., 2037 Bloomingdale Road, Suite #211, Glendale
Heights, IL 60137, maintains the Declaration of Trust, By-Laws, minutes of
trustees and shareholder meetings and contracts of the Registrant and all
advisory material of the investment adviser.
Union Bank of California, N.A., 350 California Street, San Francisco,
CA 94104, maintains all general and subsidiary ledgers, journals, trial
balances, records of portfolio purchases and sales and all other required
records not maintained by Income Achievers, Inc. or American Data Services, Inc.
American Data Services, Inc., Hauppauge Corporate Center, 150 Motor
Parkway, Suite 109, Hauppauge, New York 11788-0132, maintains all the required
records in its capacity as administrator and transfer and dividend paying agent
for the Registrant.
ITEM 29. MANAGEMENT SERVICES
Not applicable.
ITEM 30. UNDERTAKINGS
(a) Not applicable.
(b) The Registrant undertakes to furnish each person to whom a
prospectus is delivered with a copy of the Registrant's latest Annual Report to
Shareholders upon request and without charge.
-6-
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, the Registrant has duly caused this
pre-effective amendment no. 3 to the Registration Statement to be signed on its
behalf by the undersigned, thereunto duly authorized in the City of Glendale
Heights, State of Illinois, on the 19th day of June, 2000.
ISLAMIA GROUP OF FUNDS
By /s/ QAMARUDDIN ALI YAR KHAN
---------------------------
Qamaruddin Ali Yar Khan,
President
Pursuant to the requirements of the Securities Act of 1933, and the
Investment Company Act of 1940, this pre-effective amendment no. 3 to the
Registration Statement has been signed below by the following persons in the
capacities and on the date indicated.
SIGNATURE TITLE DATE
/s/ FAROOQ SULTAN Controller (Principal June 19, 2000
---------------------------
Farooq Sultan Accounting Officer)
/s/ QAMARUDDIN ALI YAR KHAN Trustee, Chairman of the June 19, 2000
---------------------------
Qamaruddin Ali Yar Khan Board and President
/s/ SHARMEEN F. KHAN Trustee, Treasurer June 19, 2000
---------------------------
Sharmeen F. Khan
/s/ M.A. RAHMAN KHAN Trustee June 19, 2000
---------------------------
M.A. Rahman Khan
/s/ SYED SHAMSHAD HUSAIN Trustee June 19, 2000
---------------------------
Syed Shamshad Husain
/s/ SYED K. RAHEEMULLAH Trustee June 19, 2000
---------------------------
Syed K. Raheemullah
/s/ HAMID REZA ZARAFSHAR Trustee June 19, 2000
---------------------------
Hamid Reza Zarafshar
/s/ SHAKIR MOIDUDDIN Trustee June 19, 2000
---------------------------
Shakir Moiduddin
-7-
<PAGE>
EXHIBIT INDEX
EXHIBIT SEQUENTIALLY
NUMBER EXHIBIT NUMBERED PAGE
(b) Bylaws of Registrant.
(d) Investment Management Agreement between Registrant and Income
Achievers, Inc.
(e)(1) Distribution Agreement between Registrant and Income Achievers, Inc.
(e)(2) Dealer Agreement.
(g) Form of Custodian Agreement between Registrant and Union Bank of
California, N.A.
h(1) Transfer Agency Agreement.
h(2) Administration & Accounting Service Agreement.
(i) Opinion and consent of Chapman and Cutler, dated June 20, 2000.
(j) Consent of Independent Public Accountants.
(l) Subscription Agreements.
(p) Code of Ethics and Reporting Requirements.
