UNITED STATES
Securities and Exchange Commission
Washington, DC. 20549
FORM N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 X
and
THE INVESTMENT COMPANY ACT OF 1940 X
Molter Series Funds, Inc. (Exact Name of Registrant as Specified in Charter)
6720 East Camino Principal,
Suite 100, Tucson AZ. 85715 (Address of Principal Executive Offices)
520-298-7000 (Registrants Telephone Number)
Daniel A Molter (Name and Address of Agent for Service)
6720 East Camino Principal, Suite 100,
Tucson AZ. 85715
Approximate Date of Proposed Public Offering: As soon as
practicable after the effective date of this registration.
It is proposed that this filing will become effective
[x] 60 days after filing pursuant to paragraph (a)
Calculation of Registration Fee Under the Securities Act of 1933
Title of Securities Amount Being Proposed Max Proposed Max Amount of
being Registered Registered Offering Aggregate Registration
Price Offering Price Fee
Molter Series Funds, Inc. *
Common Stock $.01 750,000 $10.00 $7,500,000 $2,586.20
par value
* Estimated for the purpose of determining the amount of the registration fee.
This is the actual Net Asset value per share as of the starting date.
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The Registrant hereby amends this Registration Statement on such date or dates
that 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 this Registration Statement shall become
effective on such date as the Commission acting to section 8(A)may determine.
Cross Reference Sheet
INFORMATION REQUIRED CAPTIONS IN FILING
Part A: IN A PROSPECTUS
Item 1. Cover Page Cover Page
Item 2. Synopsis The Fund & Investment Objective
Item 3. Condensed Financial Information Fund Expenses
Item 4. General Description of Registrant The Fund/Objectives & Policies/
Investment Restrictions
Item 5. Management of the Fund Investment Advisor/Officers
& Directors
Item 6. Capital Stock and other Securities Capitalization & Retirement Plans
Item 7. Purchase of Securities being Offered Purchase & Pricint of Shares
Item 8. Redemption or Repurchase Redemption of Shares/Brokerage
Item 9. Legal Proceedings Litigation
Part B: STATEMENT OF ADDITIONAL INFORMATION
Item 10. Cover Page Cover Page
Item 11. Table of Contents Table of Contents
Item 12. General Information and History The Fund
Item 13. Investment Objectives and Policies Objectives and Policies
Item 14. Management of the Registrant Officers & Directors of the Fund
Item 15. Control Persons & Principal Holders Not Applicable
Item 16. Investment Advisory & Other Services Investment Advisor of Securities
Item 17. Brokerage Allocation Brokerage
Item 18. Capital Stock & Other Securities Capitalization
Item 19. Purchase, Redemption & Pricing of Purchase of Shares
Securities Being Offered
Item 20. Tax Status Tax Status
Item 21. Underwriters Not Applicable
Item 22. Calculation of Yield Quotations of Not Applicable
Money Market Funds
Item 23. Financial Statements Financial Statements
Part C: OTHER INFORMATION
Item 24. Financial Statements & Exhibits To be Supplied
Item 25. Persons Controlled by/or under Control Persons
Common Control
Item 26. Number of Holders of Securities Number of Shareholders
Item 27. Indemnifications Indemnification
Item 28. Business & Other Connections of Activities of Investment Advisor
Advisor
Item 29 Principal Underwriters Principal Underwriter
Item 30. Location of Accounnts & Records Location of Accounts & Records
Item 31. Management Services Not Applicable
Item 32. Undertakings Not Applicable
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MOLTER SERIES FUNDS, INC.
TUCSON, AZ. 85715
520-298-7000
PROSPECTUS
January 1, 1999
The Fund & Investment Objective
Molter Series Funds, Inc. ("the Fund") is an open-end non-diversified manage-
ment investment company that seeks capital appreciation through investment in
common stocks and/or securities convertible into common stocks. Criteria used
by the Advisor will be based on the Business Economics, Management Quality,
Financial Condition and Stock Price of each business. Current income from
these investments will be a subordinate consideration.
Fund Share Purchase
Capital shares of the Fund may only be purchased directly from the Fund at net
asset value as next determined after receipt of order. The Board of Directors
has established $1,000 as the minimum initial purchase and $500 for subsequent
purchases.
Additional Information
This Prospectus, which should be held for future reference, is designed to set
forth concisely the information that you should know before you invest. A
"Statement of Additional Information" containing more information about the
Fund has been filed with the Securities and Exchange Commission. Such
Statement is dated January 1, 1999 and has been incorporated by reference into
the Prospectus. A copy of the Statement may be obtained without charge, by
writing to the Fund or by calling the telephone number shown above.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED
BY THE SECURITIES AND EXCHANGE COMMISSION, NOR HAS THE
COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF
THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY
IS A CRIMINAL OFFENSE.
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FUND EXPENSES
The following illustrates all expenses and fees that a shareholder
of the Molter Series Funds, Inc. Fund will incur. The expenses and fees
set forth below are for the 1999 fiscal year.
Shareholder Transaction Expenses:
Sales Load Imposed on Purchases None
Sales Load Imposed on Reinvested Dividends None
Redemption Fees None
Exchange Fees None
IRA Trustee Fees None
Annualized Fund Operating Expenses:
Management Fees 1.0%
12b-1 Fees None
Other Expenses 1.0%
Total Operating Expenses 2.0%
The following table is given to assist investors in understanding the
various costs and expenses that an investor in the Fund will bear directly
and indirectly. It illustrates the expenses paid on a $1,000 investment
over various time periods assuming a) 5% annual rate of return and
b) redemption at the end of each time period. This example should not be
considered a representation of past or future expenses or performance.
Actual expenses may be greater or less than those shown.
1 Year 3 Years 5 Years 10 Years
$20 $63 $111 $252
THE FUND
MOLTER SERIES FUNDS, INC. (also referred to as the "Fund") was
incorporated in Arizona on June 25, 1997. The Fund's registered office
is in Tucson, AZ: mail may be addressed to 6720 East Camino Principal,
Suite 100, Tucson AZ. 85715
OBJECTIVES AND POLICIES
Molter Series Funds, Inc. ("the Fund") is an open-end, non-diversified
management investment company that seeks capital appreciation through
investment in common stocks and/or securities convertible into common stocks.
In seeking its objective, except as described below, this Fund will invest
exclusively in equity securities. Equity securities are common stocks and
preferred stocks and securities convertible into or exchangeable for common
stocks or preferred stocks, including American Depository Receipts ("ADR's").
In selecting equity securities, the Advisor will seek to invest in companies
which have high earnings growth rates and which currently demonstrate superior
long term capital appreciation relative to other equity securities and the
S&P 500. To achieve its investment objective, the Funds Advisor will pursue
a flexible investment strategy emphasizing investment in domestic stocks and
to a lesser extent foreign equity securities. Molter Series Funds, Inc.
intends to invest in equity securities, including common stocks, preferred
stocks, convertible securities and warrants. Criteria used by the Advisor will
be based on the Business Economics, Management Quality, Financial Condition
and Stock Price of each business. The Fund's Advisor will invest the assets
of the Fund in securities of companies that appear to be undervalued relative
to their overall financial and managerial strength. The Advisor follows the
investment strategy of investing in securities with "intrinsic values" which
are not generally recognized by the market. Current income from these
investments will be a subordinate consideration.
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Risk Assessment: Risks associated with the Fund's performance will be those
due to broad market declines and business risks including the possibility
of currency exchange rate fluctuations, revaluation of currencies, less
publicly available information about foreign companies, different accounting,
auditing and financial reporting standards, less stringent securities
regulations, non-negotiable brokerage commissions, different tax provisions,
political or social instability and war or expropriation. It must be realized,
as is true of almost all securities, there can be no assurance that the Fund
will obtain its ongoing objective of capital appreciation.
As a mutual fund, the Fund is subject to market risk. The value of the Fund's
shares will fluctuate in response to changes in economic conditions, interest
rates, and the market's perception of the Fund's underlying portfolio
securities. The Fund should not be considered to be a complete investment
program by itself. You should consider your own investment objectives as
well as your other investments when deciding whether to purchase shares of
the Fund.
The Fund invests directly or indirectly in equity securities, such as common
stocks, preferred stocks, convertible stocks, and warrants. Although equity
securities have a history of long term growth in value, their prices fluctuate
based on changes in a company's financial condition and on overall market and
economic conditions. Equity securities of smaller companies are especially
sensitive to these factors.
The Fund is not intended to provide a balanced investment program to meet all
requirements of every investor. No assurance can be given that the Fund will
achieve its investment objectives. The prices of equity securities fluctuate
based on changes in a company's financial condition and on overall market
and financial conditions. The value of an investment in the Fund may sometimes
decrease instead of increase.
Security Selection Criteria: Criteria used by the Advisor in recommending
purchases of securities will be based on the Business Economics, Management
Quality, Financial Condition and Security Price of each business. The Fund's
Advisor follows the investment strategy of investing in securities with
"intrinsic values." The Fund invests primarily in common stocks which the
Advisor believes are undervalued at the time of acquisition. The stocks are
normally sold when it is believed that they are fairly valued. Using this
approach, the Advisor seeks to identify, in advance of purchase, stocks which
are inexpensive and a catalyst which will drive the price back to fair value.
In making this determination, the Advisor will look for dividend yields
greater than the S&P Index, price/earnings ratios less than the S&P 500
Index and price-to-book ratios less than the S&P 500 Index. In keeping with
a long term approach, a security will not be sold because of a short term
earnings.
Portfolio Turnover Policy: The Fund does not propose to purchase securities
for short term trading in the ordinary course of operations. Accordingly, it
is expected that the annual turnover rate will not exceed 50%, wherein
turnover is computed by dividing the lesser of the Fund's total purchases or
sales of securities within the period by the average monthly portfolio value
of the Fund during such period. There may be times when management deems
it advisable to substantially alter the composition of the portfolio, in
which event, the portfolio turnover rate might slightly exceed 50%; this
would only result from special circumstances and not from the Fund's
normal operations.
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Non-diversification Policy: The Fund is classified as being non-diversified
which means that it may invest a relatively high percentage of its assets
in the obligations of a limited number of issues. The Fund, therefore,
may be more susceptible than a more widely diversified fund to any single
economic, political, or regulatory occurrence. The policy of the Fund, in
the hope of achieving its objective as stated above, is, therefore, one of
selective investments rather than broad diversification. The Fund seeks
only enough diversification for adequate representation among what it
considers to be the best performing securities and to maintain its federal
non-taxable status under Sub-Chapter M of the Internal Revenue Code
(see next paragraph).
TAX STATUS
Under the provisions of Sub-Chapter M of the Internal Revenue Code of 1986
as amended, the Fund, intends to pay out substantially all of its investment
income and realized capital gains, and intends to be relieved of federal
income tax on the amounts distributed to shareholders. In order to qualify
as a "regulated investment company" under Sub-Chapter M, at least 90% of the
Fund's income must be derived from dividends, interest, and gains from
securities transactions, no more than 30% of the Fund's profits may be
derived from securities held less than three months, and no more than 50%
of the Fund assets may be held in security holdings that exceed 5% of the
total assets of the Fund at time of purchase.
Distribution of any net long term capital gains realized by the Fund in 1999
will be taxable to the shareholder as long term capital gains, regardless of
the length of time Fund shares have been held by the investor. All income
realized by the Fund, including short term capital gains, will be taxable to
the shareholder as ordinary income. Dividends from net income will be made
annually or more frequently at the discretion of the Fund's Board of
Directors. Dividends received shortly after purchase of shares by an
investor will have the effect of reducing the per share net asset value of
his shares by the amount of such dividends or distributions and, although in
effect a return of capital, are subject to federal income taxes.
The Fund is required by federal law to withhold 31% of reportable payments
(which may include dividends, capital gains, distributions and redemption)
paid to shareholders who have not complied with IRS regulations. In order
to avoid this withholding requirement, you must certify on a W-9 tax form
supplied by the Fund that your Social Security or Taxpayer Identification
Number provided is correct and that you are not currently subject to back-up
withholding, or that you are exempt from back-up withholding.
INVESTMENT RESTRICTIONS
By-laws of the Fund provide the following fundamental investment restrictions;
The Fund may not, except by the approval of a majority of the outstanding
shares; i.e. (1) 67% or more of the voting securities present at a duly
called meeting, if the holders of more than 50% of the outstanding voting
securities are present or represented by proxy, or 2) of more than 50%
of the outstanding voting securities, whichever is less:
(a) Act as underwriter for securities of other issuers except insofar as the
Fund may be deemed an underwriter in selling its own portfolio securities.
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(b) Borrow money or purchase securities on margin, but may obtain such
short term credit as may be necessary for clearance of purchases and
sales of securities for temporary or emergency purposes in an amount
not exceeding 5% of the value of its total assets.
(c) Sell securities short.
(d) Invest in securities of other investment companies except as part of
a merger, consolidation, or purchase of assets approved by the
Fund's shareholders.
(e) Invest over 25% of its assets at the time of purchase in any one industry.
(f) Make investments in commodities, commodity contracts or real estate
although the Fund may purchase and sell securities of companies which deal
in real estate or interests therein.
(g) Make loans. The purchase of a portion of a readily marketable issue of
publicly distributed bonds, debentures or other debt securities will
not be considered the making of a loan.
(h) Acquire more than 10% of the securities of any class of another issuer,
treating all preferred securities of an issuer as a single class and
all debt securities as a single class, or acquire more than 10% of the
voting securities of another issuer.
(i) Invest in companies for the purpose of acquiring control.
(j) The Fund may not purchase or retain securities of any issuer if those
officers and directors of the Fund or its Investment Advisor owning
individually more than 1/2 of 1% of any class of security or collective-
ly own more than 5% of such class of securities of such issuer.
(k) Pledge, mortgage or hypothecate any of its assets.
(l) Invest in securities which may be subject to registration under the Securi-
ties Act of 1933 prior to sale to the public or which are not at the time
of purchase readily salable.
(m) Invest more than 5% of the total Fund assets, taken at market value at
the time of purchase, in securities of companies with less than three
years' continuous operation, including the operations of any predecessor.
(n) Issue senior securities.
INVESTMENT ADVISOR
Investment Research Associates, Inc. is an Arizona corporation that acts
as an Investment Advisor, to the Fund. Investment Research Associates, Inc.
has no previous experience in advising registered investment companies. Mr.
Daniel A. Molter and Hester Molter established the company in April 1992.
Mr. Molter has an M.B.A. from the Wharton Graduate School of Business and is
a C.P.A. Mr. Molter has held staff and management positions with Mobil Oil,
Union Pacific, and was the Chief Financial Officer of Botany 500/McGregor
Sportswear. On June 25, 1997 shareholders of the Fund approved a management
and Advisory contract with Investment Research Associates, Inc., which was
unanimously approved by the Board of Directors June 25, 1997. This Agreement
will continue on a year to year basis provided that approval is voted at least
annually by specific approval of the Board of Directors of the Fund; or by
vote of the holders of a majority of the outstanding voting securities of
the Fund. In either event, it must also be approved by a majority of the
directors of the Fund who are neither parties to the agreement nor interested
persons as defined in the Investment Company Act of 1940 at a meeting called
for the purpose of voting on such approval. Under the Agreement, Investment
Research Associates, Inc. will furnish investment advice to the Directors of
the Fund on the basis of a continuous review of the portfolio and recommend
to the Fund when and to what extent securities should be purchased or
disposed. The Agreement may be terminated at any time, without the payment
of any penalty, by the Board of Directors or by vote of a majority of the
outstanding voting securities of the Fund on not more than 60 days written
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notice to Investment Research Associates, Inc. In the event of its assign-
ment, the Agreement will terminate automatically. Ultimate decisions as to
the investment policy and as to individual purchases and sales of securities
are made by the Fund's officers and directors. For these services the Fund
has agreed to pay to Investment Research Associates, Inc. a fee of 1% per year
on the net assets of the Fund. All fees are computed on the average daily
closing net asset value of the Fund and are payable monthly. The fee is
higher than the fee paid by most other funds. Not withstanding, the Invest-
ment Advisor would forgo sufficient fees to hold the total expenses of the
Fund to less than 2.0% of the first $10 million in averaged assets and 1.5%
of the next $20 million. These ratios were selected by the Board of Direct-
ors because they are believed to meet the most restrictive state requirements.
Pursuant to its contract with the Fund, the Investment Advisor is required to
render research, statistical and advisory services to the Fund; to make speci-
fic recommendations based on the Fund's investment requirements; and to pay
salaries of the Funds' employees who may be officers or directors or employ-
ees of the Investment Advisor. Excepting these items, the Fund pays all
other fees and expenses incurred in conducting its business affairs. The
Investment Advisor has paid the initial organizational costs of the Fund
and will reimburse the Fund for any and all losses incurred because of
purchase reneges.
OFFICERS AND DIRECTORS OF THE FUND
Officers and Directors of the Fund, together with their addresses, age,
principal occupations and percent of shares outstanding held during
the past five years are:
Occupation Percent
Name and Address Age Position Past 5 Years of Class
Daniel A. Molter* 58 President Investment Advisor 50.00%
6720 E Camino Principal Interested Investment Research
Suite 100, Director Associates, Inc.
Tucson, AZ 85715
Hester v.H. Molter* 46 Vice-President Self-Proprietor 50.00%
6720 E Camino Principal Interested
Suite 100 Director
Tucson, AZ 85715 Wife of President
Lane D. Justus 69 Treasurer Investor 0.00%
4385 N. Camino Cardenal Non-Interested
Tucson AZ 85718 Director
Clifford B. Altfeld 46 Secretary Attorney at Law 0.00%
6273 La Yerba Non-Interested
Tucson, AZ 85750 Director
Mary Ann Finlay 50 Vice President Self-Proprietor 0.00%
5248 Pinehurst Drive Non-Interested
Boulder Co. 80301-3791 Director
*Directors of the Fund who are considered "Interested Directors" as defined
by the Investment Company act of 1940. Mr. Molter is President and effective
joint owner of the Fund and Mrs. Molter is Vice President and joint owner of
the fund.
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The Fund does not compensate its officers and directors affiliated with the
Investment Advisor except as they may benefit through payment of the Advisory
fee. The Fund does not intend to compensate its officers and directors
until assets exceed $2,500,000 although they will be reimbursed for their
expenses.
CAPITALIZATION:
In order to provide the initial capital for the Fund, the Advisor has pur-
chased a total 10,000 Shares of the Fund at $10.00 per share for an aggre-
gate purchase price of $100,000. As long as the Advisor owns more than 25%
of the Fund's shares, it will be deemed to be in "control" of the Fund as
that term is defined in the 1940 Act.
Description of Common Stock: The authorized capitalization of the Fund con-
sists of 10,000 shares of common stock of $0.01 par value per share.
Each share has equal dividend, distribution and liquidation rights with no
conversion or pre-emptive rights. All shares issued are fully paid and
non-accessible.
Voting Rights: Each shareholder has one vote for each share held.
Voting rights are non-cumulative, which means that holders of a majority of
shares can elect all directors of the Fund if they so choose.
Major Shareholders: Investment Research Associates, Inc., as of the date of
this Prospectus, owns all outstanding shares of the Fund.
PURCHASE OF SHARES:
The offering price of the shares offered by the Fund is at the net asset
value per share next determined after receipt of the purchase order by the
Fund and is computed in the manner described under the caption "PRICING
OF SHARES" in this Prospectus. The Fund reserves the right at its sole
discretion to terminate the offering of its shares made by this Prospectus
at any time and to reject purchase applications when, in the judgment of
management such termination or rejection is in the best interests of the
Fund.
Initial Investments: Initial purchase of shares of the Fund may be made
only by application submitted to the Fund. For the convenience of investors,
a Share Purchase Application form is provided with this Prospectus. The mini-
mum initial purchase of shares is $1,000 which is due and payable 3 business
days after the purchase date. Less may be accepted under special circum-
stances. The Fund will be initially registered in Arizona and therefore
restricted to Arizona residents at the time of purchase. There will be no
solicitation of out of the state of Arizona potential shareholders until
registration under the Blue Sky laws of the state of residence have been met.
Subsequent Purchases: Subsequent purchases may be made by mail or by phone
and are due and payable five business days after the purchase date. The
minimum is $500, but less may be accepted under special circumstances.
Reinvestments: The Fund will automatically retain and reinvest dividends and
capital gains distributions and use same for the purchase of additional
shares for the shareholder at net asset value as of the close of business
on the distribution date. A Shareholder may at any time by letter or
forms supplied by the Fund direct the Fund to pay dividends and/or capi-
tal gains distributions, if any, to such shareholder in cash.
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Fractional Shares: Shares will be issued to three decimal places as purchased
from the fund. The fund will maintain an account for each shareholder of
shares for which no certificates have been issued.
RETIREMENT PLANS
Individual Retirement Account: Persons who earn compensation and are not
active participants (and who do not have a spouse who is an active parti-
cipant) in an employee maintained retirement plan may establish Indi-
vidual Retirement Accounts (IRA) using Fund shares. Annual contributions,
limited to the lesser of $2,000 or 100% of compensation, are tax deductible
from gross income. This IRA deduction is also retained for individual
taxpayers and married couples with adjusted gross incomes within certain
specified limits. All individuals may make nondeductible IRA contributions
to separate accounts to the extent that they are not eligible for a
deductible contribution.
Earnings under the IRA are reinvested and are tax-deferred until withdrawals
begin. The maximum annual contribution may be increased to $4,000 if you
have a spouse during the taxable year. A separate and independent Spousal
IRA must be maintained.
You may begin to make non-penalty withdrawals as early as age 59 1/2 or as
late as age 70 1/2. In the event of death or disability, withdrawals may be
made before age 59 1/2 without penalty.
A Disclosure Statement is required by U.S. Treasury Regulations. This State-
ment describes the general provisions of the IRA and is forwarded to all
prospective IRA's. There is no charge to open and maintain a Molter
Series Fund, Inc. Fund IRA. This policy may be changed by the Board of
Directors if they deem it to be in the best interests of all shareholders.
All IRA's may be revoked within 7 days of their establishment with no
penalty.
IRA Enhancements - Taxpayer Relief Act Changes to the Traditional IRA
The 1997 Act restores deductible IRA contributions for individuals at higher
income levels. Currently, deductions for IRA contributions are phased
out as income increases beyond $40,000 for married taxpayers filing jointly
and $25,000 for single taxpayers. Under the Act, these income levels will
gradually increase to $80,000 for married taxpayers filing joint by the
year 2007 and $50,000 for single taxpayers by the year 2005.
Nondeductible Tax-Free Roth IRA
The new Roth IRA is funded solely with after-tax (nondeductible) contri-
butions, but offers the possibility of tax-free earnings which are not taxed
as income when later withdrawn as part of qualified distributions. The prin-
cipal features of the new Roth IRA are:
* Tax deductions are not allowed for contributions to the account, but earn-
ings accumulate tax-free and are not taxed as income when withdrawn as
qualified distributions.
* Income limitations for contributions begin at $150,000 for married tax-
payers filing jointly and $95,000 for single taxpayers.
* The maximum contribution is combined with the deductible IRA and is limit-
ed annually to the maximum IRA contribution allowed for that individual.
* Transfers from Traditional IRAs to Roth IRAs are allowed for single or
married taxpayers with adjusted gross incomes of $100,000 or less.
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* Contributions can be made beyond age 70 1/2, while distributions are not
required to begin at age 70 1/2. Distributions are only required upon
death.
Nondeductible Education IRA
The Education IRA is a trust or custodial account established to help pay
the higher-education expenses of your child, grandchild or other designat-
ed beneficiary. Like the Roth IRA, this account is funded with after-tax
(nondeductible) contributions. The Education IRA has the following princi-
pal features:
* Contributions of up to $500 annually are allowed per student (in addition
to the $2,000 limit for a separate IRA).
* Qualified distributions are not taxed as income unless they exceed quali-
fied higher education expensed, in which case amounts in excess of quali-
fied expenses will be taxable as income and subject to the 10% penalty.
* Contributions may be made regardless of whether the beneficiary has gross
income, but may not be made after the beneficiary reaches age 18.
* Income limitations for contributions begin for taxpayers whose adjusted
gross income is between $150,000 to $160,000 for married taxpayers filing
jointly and $95,000 and $110,000 for single taxpayers.
For further information contact your tax advisor.
PRICING OF SHARES
The net asset value of the Fund's shares is determined as of the close of
business of the New York Stock Exchange on each business day of which that
Exchange is open (presently 4:00 p.m.) Monday through Friday exclusive of
Washington's Birthday, Good Friday, Memorial Day, July 4th, Labor Day,
Thanksgiving, Christmas & New Year's Day. The price is determined by
dividing the value of its securities, plus any cash and other assets less
all liabilities, excluding capital surplus, by the number of shares
outstanding. The market value of securities listed on a national exchange
is determined to be the last recent sales price on such exchange. Listed
securities that have not recently traded and over-the-counter securities
are valued at the last bid price in such market.
Short term paper (debt obligations that mature in less than 60 days) are
valued at amortized cost which approximates market value. Other assets are
valued at fair market value. Other assets are valued at fair value as
determined in good faith by the Board of Directors.
REDEMPTION OF SHARES
The Fund will redeem all or any part of the shares of any shareholder who
tenders a request for redemption (if certificates have not been issued) or
certificates with respect to shares for which certificates have been issued.
In either case, proper endorsements guaranteed either by a national bank
or a member firm of the New York Stock Exchange will be required unless
the shareholder is personally known to management.
The redemption price is the net asset value per share next determined after
notice is received by the Fund for redemption of shares. The proceeds
received by the shareholder may be more or less than his cost of
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such shares, depending upon the net asset value per share at the time of
redemption and the difference should be treated by the shareholder as a
capital gain or loss for federal income tax purposes.
Payment by the Fund will ordinarily be made within three business days
After tender. The Fund may suspend the right of redemption or postpone
the date of payment if: The New York Stock Exchange is closed for other
than customary weekend or holiday closings, or when trading on the New
York Stock Exchange is restricted as determined by the Securities and
Exchange Commission or when the Securities and Exchange Commission has
determined that an emergency exists, making disposal of fund securities
or valuation of net assets not reasonably practicable. The Fund intends
to make payments in cash, however, the Fund reserves the right to make
payments in kind.
BROKERAGE
The Fund requires all brokers to effect transactions in portfolio securities
in such a manner as to get prompt execution of the orders at the most
favorable price. The Fund will place all orders for purchases and sales of
its portfolio securities through the Fund's President who is answerable to
the Fund's Board of Directors. In accordance with rule 17e-1 of the Invest-
ment Company Act of 1940, if the Fund's President is also a registered
representative of a New York Stock Exchange or NASDAQ Member Firm he may
place orders through his concern at as low commission rates as possible
and never to exceed rates that are higher than would be available through
any other national brokerage firm. The Directors will review each trans-
action at least quarterly made with affiliated firms to determine the
reasonableness of commissions paid. Any unreasonable charge will be deduct-
ed from the fees paid to the Advisor. The Fund's President may select
other brokers who meet the primary requirements of execution and price,
and also have furnished statistical or other factual information and
services which appear helpful or necessary to the Fund's normal operations.
No effort will be made in any given circumstance to determine the value
of these services or the amount they might have reduced Advisor expenses.
Other than as set forth above, the Fund has no fixed policy, formula,
method or criteria which it uses in allocating brokerage business to
firms furnishing these materials and services. The Board of Directors
will evaluate and review the reasonableness of brokerage commissions paid
to brokers not affiliated with Fund officers or the Advisor on a monthly
basis initially and, after the first year of operation at least semi-
annually.
MANAGEMENT OF THE FUND
Shareholders meet annually to elect all members of the Board of Directors,
select an independent auditor, and vote on any other items deemed pertinent
by the incumbent Board. The Directors are in turn responsible for determin-
ing that the Fund operates in accordance with its stated objectives, polic-
ies, and investment restrictions. The Board appoints officers to run the
Fund and selects an Investment Advisor to provide investment advice.
(See Investment Advisor, pg. 5). The Board of Directors meets four times
a year to review Fund progress and status. In addition, a non-interest-
ed Director performs an independent audit whenever requested by the Board.
CUSTODIAN & TRANSFER AGENT
The Fund acts as its own custodian and transfer agent.
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<PAGE>
SERVICE SYSTEMS - Year 2000 Problems
Many of the services provided to the Fund depend on the smooth functioning
of computer systems. Many systems in use today cannot distinguish between
the year 1900 and the year 2000. Should any of the service systems fail to
process informatio properly, that could have an adverse impact on the Funds'
operations and services provided to shareholders. The Advisor, Distributor,
Sharehold Servicing and Transfer agent, custodian, and certain other service
providers are working toward mitigating the risks associated with the so
called "year 2000 problem." However, there can be no assurance that the
problem will be corrected in all respects and that the Funds' operations
and services provided to shareholders will not be adversely affected.
REPORTS TO SHAREHOLDERS
The Fund sends all shareholders annual reports containing certified fi-
nancial statements and other periodic reports, at least semiannually,
containing unaudited financial statements.
AUDITORS
Landsburg, Platt, Reschiatore & Dalton, Certified Public Accountants
Philadelphia, PA. have been selected as the independent accountant and
auditor of the Fund. Landsburg, Platt, Reschiatore and Dalton has no
direct or indirect financial interest in the Fund or the Advisor.
LITIGATION
As of the date of this prospectus, there was no pending or threatened
Litigation involving the Fund in any capacity whatsoever.
ADDITIONAL INFORMATION
This Prospectus omits certain information contained in the registration
statement on file with the Securities & Exchange Commission. The reg-
istration statement may be inspected without charge at the principal
office of the Commission in Washington, D.C. and copies of all or part
thereof may be obtained upon payment of the fee prescribed by the Comm-
ission. Shareholders may also direct inquiries to the Fund by phone or
at the address given on pg. 1 of this Prospectus.
- 11 -
<PAGE>
SHARE PURCHASE APPLICATION
A) Please fill out one of the following four types of accounts:
1) ** Individual Accounts **
______________________ __ _____________________ ______________________
First Name MI Last Name Social Security Number
2) ** Joint Accounts **
______________________ __ _____________________ ______________________
First Name MI Last Name Social Security Number
______________________ __ _____________________ ______________________
First Name MI Last Name Social Security Number
3) ** Custodial Accounts **
______________________ __ ______________________
Custodian's First Name MI Custodian's Last Name
______________________ __ ______________________ ______________________
Minor's First Name MI Minor's Last Name Minor's Social Sec #
4) ** All Other Accounts **
__________________________________________________ ______________________
Name of Account Tax Identification #
__________________________________________________
(Use this second line if you need it)
B) Biographical and other information about the new account:
Number & Street
____________________________________________________________
City_______________________________ St_____ Zip__________________________
Citizen of__________________ Home Phone____________ Bus Phone____________
Dividend Direction: Reinvest all distributions_________ Pay in Cash__________
Signature of Owner, Trustee or Custodian:
___________________________________
Signature of Joint Owner (if joint account):
___________________________________
Please make check payable to: Molter SERIES FUNDS, INC.
Amount of Investment Attached $______________ (Minimum initial purchase $1,000)
All applications are accepted in Arizona and under Arizona laws.
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<PAGE>
FORM W-9
(March 1994)
Department of Treasury
Internal Revenue Service
PAYER'S REQUEST FOR TAXPAYER
IDENTIFICATION NUMBER
Name as shown on account (if joint account, give name corresponding to TIN)
_________________________________________________
Street Address
_________________________________________________
City, State & Zip Code
_________________________________________________
Part 1.- Taxpayer Identification Number Part 2. -Backup Withholding
Social Security Number ______________________ Check if you are NOT subject
to backup withholding under
or the provisions of section
3406(a) (1)(C) of the In-
Employer ID Number ______________________ ternal Revenue Code ________
Certification - Under the penalty of perjury, I certify that the information
provided on this form is true, correct and complete.
Signature ___________________________________ Date _______________________
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<PAGE>
Part B
STATEMENT OF ADDITIONAL INFORMATION
January 1, 1999
This Statement is not a prospectus, but should be read in conjunction with the
Fund's current prospectus dated January 1, 1999. To obtain the Prospectus,
please write the Fund or call either of the telephone numbers that are shown
above.
TABLE OF CONTENTS
The Fund ................................ 2
Objectives & Policies ................... 2
Objectives ......................... 2
Security Selection Criteria ........ 3
Portfolio Turnover Policy .......... 3
Nondiversification Policy .......... 3
Tax Status .............................. 3
Investment Restrictions ................. 4
Investment Advisor ...................... 5
Officers and Directors of the Fund ...... 6
Capitalization .......................... 6
Description of Common Stock ........ 6
Voting Rights ...................... 7
Major Shareholders ................. 7
Purchase of Shares - Reinvestment ....... 7
Initial Investments ................ 7
Subsequent Purchases ............... 7
Reinvestments ...................... 7
Fractional Shares .................. 7
Retirement Plans ........................ 7
IRA ................................ 8
Pricing of Shares . . . . . . . . . . . . 9
Redemption of Shares .................... 9
Brokerage ...............................10
Auditor's Report ........................11
Statement of Assets & Liabilities .......12
Statement of Investments in Securities ..13
Statement of Operations .................14
Statement of Changes in Net Assets ......14
Notes to Financial Statements ...........14
Supplemental Data .......................14
- 1 -
<PAGE>
THE FUND MOLTER SERIES FUNDS, INC. (also referred to as the "Fund") was
incorporated in Arizona on June 25, 1997. The Fund's registered office
is in Tucson, AZ: mail may be addressed to 6720 East Camino Principal,
Suite 100, Tucson AZ. 85715
OBJECTIVES AND POLICIES
Molter Series Funds, Inc. ("the Fund") is an open-end, non-diversified
management investment company that seeks capital appreciation through
investment in common stocks and/or securities convertible into common
stocks. In seeking its objective, except as described below, this Fund will
invest exclusively in equity securities. Equity securities are common
stocks and preferred stocks and securities convertible into or exchangeable
for common stocks or preferred stocks, including American Depository Rec-
eipts ("ADR's"). In selecting equity securities, the Advisor will seek to
invest in companies which have high earnings growth rates and which current-
ly demonstrate superior long term capital appreciation relative to other
equity securities and the S&P 500. To achieve its investment objective,
the Funds Advisor will pursue a flexible investment strategy emphasizing
investment in domestic stocks and to a lesser extent foreign equity
securities. Molter Series Funds, Inc. intends to invest in equity securit-
ies, including common stocks, preferred stocks, convertible securities and
warrants. Criteria used by the Advisor will be based on the Business
Economics, Management Quality, Financial Condition and Stock Price of
each business. The Fund's Advisor will invest the assets of the Fund in
securities of companies that appear to be undervalued relative to their
overall financial and managerial strength. The Advisor follows the
investment strategy of investing in securities with "intrinsic values"
which are not generally recognized by the market. Current income from
these investments will be a subordinate consideration.
Risk Assessment: Risks associated with the Fund's performance include
Market risks and business risks including the possibility of currency
Exchange rate fluctuations, revaluation of currencies, lack of publicly
Available information about foreign companies, different accounting,
auditing and financial reporting standards, less stringent securities
regulations, non-negotiable brokerage commissions, different tax
provisions, political or social instability and war or expropriation.
As is true of almost all securities, there can be no assurance that the
Fund will obtain its ongoing objective of capital appreciation.
As a mutual fund, the Fund is subject to market risk. The value of the
Fund's shares will fluctuate in response to changes in economic conditions,
interest rates, and the market's perception of the Fund's underlying port-
folio securities. The Fund should not be considered to be a complete invest-
ment program by itself. You should consider your own investment objectives
as well as your other investments when deciding whether to purchase shares
of the Fund.
The Fund invests directly or indirectly in equity securities, such as common
stocks, preferred stocks, convertible stocks, and warrants. Although equity
securities have a history of long term growth in value, their prices fluctuate
based on changes in a company's financial condition and on overall market and
economic conditions. Equity securities of smaller companies are especially
sensitive to these factors.
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<PAGE>
The Fund is not intended to provide a balanced investment program to meet all
requirements of every investor. No assurance can be given that the Fund will
achieve its investment objectives. The prices of equity securities fluctuate
based on changes in a company's financial condition and on overall market
and financial conditions. The value of an investment in the Fund may some-
times decrease instead of increase.
Security Selection Criteria: Criteria used by the Advisor in recommending
purchases of securities will be based on the Business Economics, Management
Quality, Financial Condition and Security Price of each business. The Fund's
Advisor follows the investment strategy of investing in securities with
"intrinsic values." The Fund invests primarily in common stocks which the
Advisor believes are undervalued at the time of acquisition. The stocks are
normally sold when it is believed that they are fairly valued. Using this
approach, the Advisor seeks to identify, in advance of purchase, stocks which
are inexpensive and a catalyst which will drive the price back to fair value.
In making this determination, the Advisor will look for dividend yields
greater than the S&P Index, price/earnings ratios less than the S&P 500
Index and price-to-book ratios less than the S&P 500 Index. In keeping with
a long-term approach, a security will not be sold because of a short term
earnings.
Portfolio Turnover Policy: The Fund does not propose to purchase securities
for short term trading in the ordinary course of operations. Accordingly, it
is expected that the annual turnover rate will not exceed 50%, wherein
turnover is computed by dividing the lesser of the Fund's total purchases or
sales of securities within the period by the average monthly portfolio value
of the Fund during such period. There may be times when management deems
it advisable to substantially alter the composition of the portfolio, in
which event, the portfolio turnover rate might slightly exceed 50%; this
would only result from special circumstances and not from the Fund's
normal operations.
Non-diversification Policy: The Fund is classified as being non-diversified
which means that it may invest a relatively high percentage of its assets
in the obligations of a limited number of issues. The Fund, therefore,
may be more susceptible than a more widely diversified fund to any single
economic, political, or regulatory occurrence. The policy of the Fund, in
the hope of achieving its objective as stated above, is, therefore, one of
selective investments rather than broad diversification. The Fund seeks
only enough diversification for adequate representation among what it
considers to be the best performing securities and to maintain its federal
non-taxable status under Sub-Chapter M of the Internal Revenue Code
(see next paragraph).
TAX STATUS
Under the provisions of Sub-Chapter M of the Internal Revenue Code of 1986
as amended, the Fund, intends to pay out substantially all of its investment
income and realized capital gains, and intends to be relieved of federal
income tax on the amounts distributed to shareholders. In order to qualify
as a "regulated investment company" under Sub-Chapter M, at least 90% of the
Fund's income must be derived from dividends, interest, and gains from
securities transactions, no more than 30% of the Fund's profits may be
derived from securities held less than three months, and no more than 50%
of the Fund assets may be held in security holdings that exceed 5% of the
total assets of the Fund at time of purchase.
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<PAGE>
Distribution of any net long term capital gains realized by the Fund in 1999
will be taxable to the shareholder as long term capital gains, regardless of
the length of time Fund shares have been held by the investor. All income
realized by the Fund, including short term capital gains, will be taxable to
the shareholder as ordinary income. Dividends from net income will be made
annually or more frequently at the discretion of the Fund's Board of
Directors. Dividends received shortly after purchase of shares by an
investor will have the effect of reducing the per share net asset value of
his shares by the amount of such dividends or distributions and, although in
effect a return of capital, are subject to federal income taxes.
The Fund is required by federal law to withhold 31% of reportable payments
(which may include dividends, capital gains, distributions and redemption)
paid to shareholders who have not complied with IRS regulations. In order
to avoid this withholding requirement, you must certify on a W-9 tax form
supplied by the Fund that your Social Security or Taxpayer Identification
Number provided is correct and that you are not currently subject to back-up
withholding, or that you are exempt from back-up withholding.
INVESTMENT RESTRICTIONS
By-laws of the Fund provide the following fundamental investment restrict-
ions; The Fund may not, except by the approval of a majority of the out-
standing shares; i.e. (1) 67% or more of the voting securities present
at a duly called meeting, if the holders of more than 50% of the outstand-
ing voting securities are present or represented by proxy, or 2) of more
than 50% of the outstanding voting securities, whichever is less:
a) Act as underwriter for securities of other issuers except insofar as
the Fund may be deemed an underwriter in selling its own portfolio
securities.
(b) Borrow money or purchase securities on margin, but may obtain such
short term credit as may be necessary for clearance of purchases and
sales of securities for temporary or emergency purposes in an amount
not exceeding 5% of the value of its total assets.
(c) Sell securities short.
(c) Invest in securities of other investment companies except as part of
a merger, consolidation, or purchase of assets approved by the
Fund's shareholders.
(e) Invest over 25% of its assets at the time of purchase in any one
industry.
(f) Make investments in commodities, commodity contracts or real estate
although the Fund may purchase and sell securities of companies which
deal in realestate or interests therein.
(g) Make loans. The purchase of a portion of a readily marketable issue of
publicly distributed bonds, debentures or other debt securities will
not be considered the making of a loan.
(h) Acquire more than 10% of the securities of any class of another issuer,
treating all preferred securities of an issuer as a single class and
all debt securities as a single class, or acquire more than 10% of the
voting securities of another issuer.
(i) Invest in companies for the purpose of acquiring control.
(j) The Fund may not purchase or retain securities of any issuer if those
officers and directors of the Fund or its Investment Advisor owning
individually more than 1/2 of 1% of any class of security or collective-
ly own more than 5% of such class of securities of such issuer.
(k) Pledge, mortgage or hypothecate any of its assets.
-4-
<PAGE>
(l) Invest in securities which may be subject to registration under the Securi-
ties Act of 1933 prior to sale to the public or which are not at the time
of purchase readily salable.
(m) Invest more than 5% of the total Fund assets, taken at market value at
the time of purchase, in securities of companies with less than three
years' continuous operation, including the operations of any predecessor.
(n) Issue senior securities.
INVESTMENT ADVISOR
Investment Research Associates, Inc. is an Arizona corporation that acts
as an Investment Advisor, to the Fund. Investment Research Associates, Inc.
has no previous experience in advising registered investment companies. Mr.
Daniel A. Molter and Hester Molter established the company in April 1992.
Mr. Molter has an M.B.A. from the Wharton Graduate School of Business and is
a C.P.A. Mr. Molter has held staff and management positions with Mobil Oil,
Union Pacific, and was the Chief Financial Officer of Botany 500/McGregor
Sportswear. On June 25, 1997 shareholders of the Fund approved a management
and Advisory contract with Investment Research Associates, Inc., which was
unanimously approved by the Board of Directors June 25, 1997. This Agreement
will continue on a year to year basis provided that approval is voted at least
annually by specific approval of the Board of Directors of the Fund; or by
vote of the holders of a majority of the outstanding voting securities of
the Fund. In either event, it must also be approved by a majority of the
directors of the Fund who are neither parties to the agreement nor interested
persons as defined in the Investment Company Act of 1940 at a meeting called
for the purpose of voting on such approval. Under the Agreement, Investment
Research Associates, Inc. will furnish investment advice to the Directors of
the Fund on the basis of a continuous review of the portfolio and recommend
to the Fund when and to what extent securities should be purchased or
disposed. The Agreement may be terminated at any time, without the payment
of any penalty, by the Board of Directors or by vote of a majority of the
outstanding voting securities of the Fund on not more than 60 days written
notice to Investment Research Associates, Inc. In the event of its assign-
ment, the Agreement will terminate automatically. Ultimate decisions as to
the investment policy and as to individual purchases and sales of securities
are made by the Fund's officers and directors. For these services the Fund
has agreed to pay to Investment Research Associates, Inc. a fee of 1% per
year on the net assets of the Fund. All fees are computed on the average
daily closing net asset value of the Fund and are payable monthly. The
fee is higher than the fee paid by most other funds. Not withstanding, the
Investment Advisor would forgo sufficient fees to hold the total expenses
of the Fund to less than 2.0% of the first $10 million in averaged assets
and 1.5% of the next $20 million. These ratios were selected by the Board of
Directors because they are believed to meet the most restrictive state
requirements.
Pursuant to its contract with the Fund, the Investment Advisor is required
to render research, statistical and advisory services to the Fund; to make
specific recommendations based on the Fund's investment requirements; and
to pay salaries of the Funds' employees who may be officers or directors
or employees of the Investment Advisor. Excepting these items, the Fund
pays all other fees and expenses incurred in conducting its business aff-
airs. The Investment Advisor has paid the initial organizational costs
of the Fund and will reimburse the Fund for any and all losses incurred
because of purchase reneges.
-5-
<PAGE>
OFFICERS AND DIRECTORS OF THE FUND
Officers and Directors of the Fund, together with their addresses, age,
principal occupations and percent of shares outstanding held during
the past five years are:
Occupation Percent
Name and Address Age Position Past 5 Years of Class
Daniel A. Molter* 58 President Investment Advisor 50.00%
6720 E Camino Principal Interested Investment Research
Suite 100, Director Associates, Inc.
Tucson, AZ 85715
Hester v.H. Molter* 46 Vice President Self-Proprietor 50.00%
6720 E Camino Principal Interested
Suite 100 Director
Tucson, AZ 85715 Wife of President
Lane D. Justus 69 Treasurer Investor 0.00%
4385 N. Camino Cardenal Non-Interested
Tucson AZ 85718 Director
Clifford B. Altfeld 46 Secretary Attorney at Law 0.00%
6273 La Yerba Non-Interested
Tucson, AZ 85750 Director
Mary Ann Finlay 50 Vice President Self-Proprietor 0.00%
5248 Pinehurst Drive Non-Interested
Boulder Co. 80301-3791 Director
* Directors of the Fund who are considered "Interested Directors" as
defined by the Investment Company act of 1940. Mr. Molter is President
and effective joint owner of the Fund and Mrs. Molter is a Vice President
and effective joint owner of the Fund.
The Fund does not compensate its officers and directors affiliated with the
Investment Advisor except as they may benefit through payment of the Advisory
fee. The Fund does not intend to compensate its officers and directors
until assets exceed $2,500,000 although they will be reimbursed for their
expenses.
CAPITALIZATION:
In order to provide the initial capital for the Fund, the Advisor has pur-
Chased a total 10,000 Shares of the Fund at $10.00 per share for an aggre-
gate purchase price of $100,000. As long as the Advisor owns more than 25%
of the Fund's shares, it will be deemed to be in "control" of the Fund as
that term is defined in the 1940 Act.
Description of Common Stock: The authorized capitalization of the Fund con-
sists of 10,000 shares of common stock of $0.01 par value per share.
Each share has equal dividend, distribution and liquidation rights with
no conversion or pre-emptive rights. All shares issued are fully paid and
non-accessible.
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<PAGE>
Voting Rights: Each shareholder has one vote for each share held.
Voting rights are non-cumulative, which means that holders of a majority of
shares can elect all directors of the Fund if they so choose.
Major Shareholders: Investment Research Associates, Inc., as of the date of
this Prospectus, own all outstanding shares of the Fund.
PURCHASE OF SHARES:
The offering price of the shares offered by the Fund is at the net asset
value per share next determined after receipt of the purchase order by the
Fund and is computed in the manner described under the caption "PRICING
OF SHARES" in this Prospectus. The Fund reserves the right at its sole
discretion to terminate the offering of its shares made by this Prospectus
at any time and to reject purchase applications when, in the judgment of
management such termination or rejection is in the best interests of the
Fund.
Initial Investments: Initial purchase of shares of the Fund may be made
only by application submitted to the Fund. For the convenience of invest-
ors, a Share Purchase Application form is provided with this Prospectus.
The minimum initial purchase of shares is $1,000 which is due and payable 3
business days after the purchase date. Less may be accepted under special
circumstances. The Fund will be initially registered in Arizona and
therefore restricted to Arizona residents at the time of purchase. There
will be no solicitation of out of the state of Arizona potential share-
holders until registration under the Blue Sky laws of the state of resi-
dence have been met.
Subsequent Purchases: Subsequent purchases may be made by mail or by phone
And are due and payable five business days after the purchase date. The
minimum is $500, but less may be accepted under special circumstances.
Reinvestments: The Fund will automatically retain and reinvest dividends and
capital gains distributions and use same for the purchase of additional
shares for the shareholder at net asset value as of the close of business
on the distribution date. A Shareholder may at any time by letter or
forms supplied by the Fund direct the Fund to pay dividends and/or capital
gains distributions, if any, to such shareholder in cash.
Fractional Shares: Shares will be issued to three decimal places as pur-
chased from the fund. The fund will maintain an account for each share-
holder of shares for which no certificates have been issued.
RETIREMENT PLANS
Individual Retirement Account: Persons who earn compensation and are not
Active participants (and who do not have a spouse who is an active
participant) in an employee maintained retirement plan may establish Indi-
vidual Retirement Accounts (IRA) using Fund shares. Annual contributions,
limited to the lesser of $2,000 or 100% of compensation, are tax deduct-
ible from gross income. This IRA deduction is also retained for individual
taxpayers and married couples with adjusted gross incomes within certain
specified limits. All individuals may make nondeductible IRA contributions
to separate accounts to the extent that they are not eligible for a deduct-
ible contribution.
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<PAGE>
Earnings under the IRA are reinvested and are tax-deferred until withdrawals
begin. The maximum annual contribution may be increased to $4,000 if
you have a spouse during the taxable year. A separate and independent
Spousal IRA must be maintained.
You may begin to make non-penalty withdrawals as early as age 59 1/2 or as
late as age 70 1/2. In the event of death or disability, withdrawals may be
made before age 59 1/2 without penalty.
A Disclosure Statement is required by U.S. Treasury Regulations. This
statement describes the general provisions of the IRA and is forwarded to
all prospective IRA's. There is no charge to open and maintain a Molter
Series Fund, Inc. Fund IRA. This policy may be changed by the Board
of Directors if they deem it to be in the best interests of all share-
holders. All IRA's may be revoked within 7 days of their establishment
with no penalty.
IRA Enhancements - Taxpayer Relief Act Changes to the Traditional IRA
The 1997 Act restores deductible IRA contributions for individuals at
higher income levels. Currently, deductions for IRA contributions are phased
out as income increases beyond $40,000 for married taxpayers filing jointly
and $25,000 for single taxpayers. Under the Act, these income levels will
gradually increase to $80,000 for married taxpayers filing joint by the
year 2007 and $50,000 for single taxpayers by the year 2005.
Effective Date:
Nondeductible Tax-Free Roth IRA
The new Roth IRA is funded solely with after-tax (nondeductible) contri-
butions, but offers the possibility of tax-free earnings which are not taxed
as income when later withdrawn as part of qualified distributions. The prin-
cipal features of the new Roth IRA are:
* Tax deductions are not allowed for contributions to the account, but earn-
ings accumulate tax-free and are not taxed as income when withdrawn as
qualified distributions.
* Income limitations for contributions begin at $150,000 for married tax-
payers filing jointly and $95,000 for single taxpayers.
* The maximum contribution is combined with the deductible IRA and is limit-
ed annually to the maximum IRA contribution allowed for that individual.
* Transfers from Traditional IRAs to Roth IRAs are allowed for single or
married taxpayers with adjusted gross incomes of $100,000 or less.
* Contributions can be made beyond age 70 1/2, while distributions are not
required to begin at age 70 1/2. Distributions are only required upon
death.
Nondeductible Education IRA
The Education IRA is a trust or custodial account established to help pay
the higher-education expenses of your child, grandchild or other designat-
ed beneficiary. Like the Roth IRA, this account is funded with after-tax
(nondeductible) contributions. The Education IRA has the following princi-
pal features:
* Contributions of up to $500 annually are allowed per student (in addition
to the $2,000 limit for a separate IRA).
* Qualified distributions are not taxed as income unless they exceed quali-
fied higher education expensed, in which case amounts in excess of quali-
fied expenses will be taxable as income and subject to the 10% penalty.
- 8 -
<PAGE>
* Contributions may be made regardless of whether the beneficiary has gross
income, but may not be made after the beneficiary reaches age 18.
* Income limitations for contributions begin for taxpayers whose adjusted
gross income is between $150,000 to $160,000 for married taxpayers filing
jointly and $95,000 and $110,000 for single taxpayers.
For further information contact your tax advisor.
PRICING OF SHARES
The net asset value of the Fund's shares is determined as of the close of
business of the New York Stock Exchange on each business day of which that
Exchange is open (presently 4:00 p.m.) Monday through Friday exclusive of
Washington's Birthday, Good Friday, Memorial Day, July 4th, Labor Day,
Thanksgiving, Christmas & New Year's Day. The price is determined by
dividing the value of its securities, plus any cash and other assets less
all liabilities, excluding capital surplus, by the number of shares out-
standing. The market value of securities listed on a national exchange
is determined to be the last recent sales price on such exchange. Listed
securities that have not recently traded and over-the-counter securities
are valued at the last bid price in such market.
Short term paper (debt obligations that mature in less than 60 days) are
valued at amortized cost which approximates market value. Other assets are
valued at fair market value. Other assets are valued at fair value as deter-
mined in good faith by the Board of Directors.
REDEMPTION OF SHARES
The Fund will redeem all or any part of the shares of any shareholder who
tenders a request for redemption (if certificates have not been issued)or
certificates with respect to shares for which certificates have been issued.
In either case, proper endorsements guaranteed either by a national bank
or a member firm of the New York Stock Exchange will be required unless
the shareholder is personally known to management.
The redemption price is the net asset value per share next determined
after notice is received by the Fund for redemption of shares. The
proceeds received by the shareholder may be more or less than his cost of
such shares, depending upon the net asset value per share at the time of
redemption and the difference should be treated by the shareholder as a
capital gain or loss for federal income tax purposes.
Payment by the Fund will ordinarily be made within three business days
After tender. The Fund may suspend the right of redemption or postpone
the date of payment if: The New York Stock Exchange is closed for other
than customary weekend or holiday closings, or when trading on the New
York Stock Exchange is restricted as determined by the Securities and
Exchange Commission or when the Securities and Exchange Commission has
determined that an emergency exists, making disposal of fund securities
or valuation of net assets not reasonably practicable. The Fund intends
to make payments in cash, however, the Fund reserves the right to make
payments in kind.
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<PAGE>
BROKERAGE
The Fund requires all brokers to effect transactions in portfolio securities
in such a manner as to get prompt execution of the orders at the most
favorable price. The Fund will place all orders for purchases and sales of
its portfolio securities through the Fund's President who is answerable to
the Fund's Board of Directors. In accordance with rule 17e-1 of the Invest-
ment Company Act of 1940, if the Fund's President is also a registered
representative of a New York Stock Exchange or NASDAQ Member Firm he may
place orders through his concern at as low commission rates as possible
and never to exceed rates that are higher than would be available through
any other national brokerage firm. The Directors will review each trans-
action at least quarterly made with affiliated firms to determine the
reasonableness of commissions paid. Any unreasonable charge will be deduct-
ed from the fees paid to the Advisor. The Fund's President may select
other brokers who meet the primary requirements of execution and price,
and also have furnished statistical or other factual information and
services which appear helpful or necessary to the Fund's normal operations.
No effort will be made in any given circumstance to determine the value
of these services or the amount they might have reduced Advisor expenses.
Other than as set forth above, the Fund has no fixed policy, formula,
method or criteria which it uses in allocating brokerage business to
firms furnishing these materials and services. The Board of Directors
will evaluate and review the reasonableness of brokerage commissions paid
to brokers not affiliated with Fund officers or the Advisor on a monthly
basis initially and, after the first year of operation at least semi-
annually.
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<PAGE>
Independent Auditor's Report To Be Supplied
- 11 -
<PAGE>
Financial Statements to be supplied with audit
- 12 -
<PAGE>
The financial statements will be supplied with audit.
-13-
<PAGE>
Organization: Molter Series Funds, Inc. (the "Fund") was incorporated on
June 25, 1997 and commenced operations on January 1, 1999. The Fund has no
operations prior to the commencement of operations other than matters
relating to its organization and registration as an open-end non-diversif-
ied management investment company under the Investment Company Act of
1940 and its securities under the Securities Act of 1933, the sale and
issuance of 10,000 shares of common stock ("initial shares") to its ini-
tial investors on December 19, 1998.
Significant Accounting Policies: Accounting policies consistently followed
by the Fund in the preparation of its financial statements are in conform-
ity with generally accepted accounting principles and include:
Security valuations - The Fund values investment secuities, where market
quotations are available, at market value based on the last recorded sales
prices as reported by the principal securities exchange on which the secur-
ity is traded, or if the security is not traded on an exchange, market
value is based on the latest bid price. Short term investments are valued at
cost, approximating market value.
Federal income taxes - The Fund's policy is to comply with the requirements
of the Internal Revenue Code that are applicable to regulated investment
companies and to distribute all its taxable income to its shareholders.
Therefore, no federal income tax provision is required.
Distribution to shareholders - The Fund intends to distrbute to share-
holders substantially all of its net investment income, if any, and net
realized capital gains, if any, at year end.
Organizational costs and Registration fees - Organizational costs and
Registration fees were all borne by the Fund's Investment Advisor.
Other - The Fund records security transactions on the trade date. Speci-
Fic identification is used for determining gains or losses for financial
statements & income tax purposes. Dividend income is recorded on the ex-
dividend date and interest income is recorded on an accrual basis.
NOTE 2 INVESTMENT ADVISORY AGREEMENT & OTHER RELATED
TRANSACTIONS: The Fund has an investment advisory agreement with Invest-
ment Research Associates, Inc., whereby Investment Research Associates,
Inc. receives a fee of 1% per year on the net assets of the Fund. All
fees are computed on the average daily closing net asset value of the Fund
and are payable monthly. In accordance with State Regulations, Invest-
ment Research Associates, Inc. has agreed to reimburse the Fund to hold
the Fund's aggregate annual operating expenses to 2.0% of the first
$10,000,000 and 1.5% of the average net assets over $10,000,000. Mr.
Daniel Molter is the President and effective joint owner of the Fund and
Mrs. Hester Molter is the Vice-President and effective joint owner of
the Fund.
NOTE 3 INVESTMENTS: Not Applicable
NOTE 4 CAPITAL SHARE TRANSACTIONS: As of December 30, 1998 there were
10,000 shares of capital stock with a nominal net asset value of $10.00
per share outstanding aggregating $100,000.
- 14 -
<PAGE>
FORM N-1A
PART C - OTHER INFORMATION
a. Contents Page #
1. Financial Statements & Exhibits 1
2. Control Persons 1
3. Number of Shareholders 1
4. Indemnification 1
5. Activities of Investment Advisor 2
6. Principal Underwriters 2
7. Location of Accounts & Records 2
8. Management Services 2
9. Distribution Expenses 2
10. Undertakings 2
11. Auditor's Consent 3
12. Signatures 4
b. Exhibits
1. Articles of Incorporation 3 i
2. By-Laws 3 ii
3. Investment Advisory Contract 10 i
4. Reimbursement Agreements - Officers/Directors 10 ii
1. a. Financial Statements - Will be supplied with audit.
A post-effective amendment containing reasonably current financial state-
ments which will not be certified will be filed with the Securities and
Exchange Commission within 4 to 6 months of the effective date of this
filing.
b. Exhibits - All exhibits believed to be applicable to this filing
include:
(3.i) Articles of Incorporation
(3.ii) By-Laws
(10.1) Investment Advisory Contract
(10.2) Reimbursement Agreements with Officers and/or Directors
2. Control Persons - Not applicable
3. Number of Shareholders - There is 1 shareholder of the Molter Series
Funds, Inc. Fund, as of this filing.
4. Indemnification - Insofar as indemnification for liability arising
under the Securities Act of 1933 may be permitted to directors, officers
and controlling persons of the registrant, 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 indemni-
fication against such liabilities (other than the payment by the registrant
of expenses incurred or paid by a director, officer or controlling person
of the registrant in the successful defense of any action, suit or
proceeding is asserted by such director, officer 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 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.
- 1 -
<PAGE>
Indemnification of Officers, Directors, Employees and Agents: Subject to
the further provisions hereof, the Corporation shall indemnify any and all
of its existing and former directors, officers, employees, and agents
against all expenses incurred by them and each of them, including but not
limited to legal fees, judgment, penalties and amounts paid in settlement
or compromise, which may arise or be incurred, rendered, or levied in any
legal action brought or threatened against any of them for or on account
or omission alleged to have been committed while acting within the scope
of employment as director, officer, employee, or agent of the Corporation,
whether or not any action is or has been filed against them and whether or
not any settlement or compromise is approved by a court. No such
indemnification shall be available with respect to liabilities under the
Securities Act of 1933, and the Corporation shall have the right to refuse
indemnification in any instance in which the person to whom indemnification
would otherwise have been applicable shall have unreasonably refused to
permit the Corporation, at its own expense through counsel of its own
choosing, to defend him or her in the action.
5. Activities of Investment Advisor - The Molter Series Funds, Inc.'s
activity at the present time is performance on its Investment Advisory
Contract currently effective with Investment Research Associates, Inc.
Mr. Dan Molter, owner, officer and director of Investment Research Assoc-
iates, Inc., is also President of the Bookkeeper Corporation.
6. Principal Underwriter - The Fund acts as its own underwriter.
7. Location of Accounts & Records - All fund records are held at
Corporate headquarters - 6720 E Camino Principal, Suite 100, Tucson AZ
85715 - with the exception of security certifications which are in a
safe deposit box at the Bank of America, 7077 E. Tanque Verde Rd.,
Tucson, AZ. 85750
8. Not applicable
9. Distribution Expenses - The fund currently bears no distribution
expenses.
10. Not applicable
- 2 -
<PAGE>
CONSENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
TO BE SUPPLIED
- 3 -
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the Invest-
ment Company Act o f 1940, the MOLTER SERIES FUNDS, INC. certifies that
it meets all of the requirements for effectiveness of this Registration
Statement and has duly caused this amendment to the Registration Statement
to be signed on its behalf by the undersigned, thereunto duly authorized,
in the City of Tucson and State of Arizona, on the 1st day of August 1997.
MOLTER SERIES FUNDS, INC.
Daniel A. Molter
President
Pursuant to the requirements of the Securities Act of 1933, this
Amendment to the Registration Statement has been signed below by the
following persons in the capacities and on the dates indicated.
Signatures Title Date
Daniel A. Molter President, Chairman of the Board December 19, 1998
& Director
Hester VH. Molter Vice President & Director December 19, 1998
Lane D. Justus Treasurer & Director December 19, 1998
Mary Ann Finlay Vice President & Director December 19, 1998
Clifford B. Altfeld Secretary & Director December 19, 1998
Darla Rogers Assistant Secretary/Treasurer December 19, 1998
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<PAGE>
EXHIBIT - 3 i
Filed with the Arizona Corporation Commission on June 25, 1997
ARTICLES OF INCORPORATION-
OF
MOLTER SERIES FUNDS, INC.
A Business-stock Corporation
DSCB:15-1306/2102/2303/2702/2903/3101/7102A(Rev 91)
1. Name: The name of the corporation (hereafter called Corporation)
shall be: Molter Series Funds, Inc.
2. Purpose: The purpose for which this Corporation is organized
are the transaction of any and all lawful business for which
corporations may be incorporated under the laws of the State of
Arizona, as they may be amended from time to time, and
specifically but in limitation thereof, the purpose of acting as
an open-ended non diversified investment company.
3. Business: The corporation initially intends to conduct the
business of acting as an open-end non diversified investment
company.
4. Authorized Capital: The authorized capital of the
Corporation shall be One Hundred Thousand Dollars ($100,000)
divided into One Million (1,000,000) shares of the par value of
Ten Cents ($0.10) each. The stock shall be issued when paid for
in cash services or property and shall be issued as fully paid
and shall be forever nonassessable. The judgment of the Board
of Directors as to the value of property taken or services
rendered in exchange for stock shall be conclusive in absence of
fraud
5. Statutory Agent: The name and business address of initial
statutory agent of the Corporation is:
Darla Rogers
Investment Research Associates, Inc.
6720 East Camino Principal, suite 100
Tucson, AZ 85715
6. Known Place of Business: The known place of business of the
Corporation shall be: 6720 East Camino Principal, Tucson Arizona
85715, but a different and other offices and places for
conducting business, both within and without the State of
Arizona, may be established from time to time by the Board of
Directors.
7. Board of Directors: The initial Board of Directors shall
consist of two (2) directors. The persons who are to serve as
directors until the first annual meeting of shareholders or
until their successors are elected and qualified are:
- 1 -
<PAGE>
Daniel Alan Molter
6720 East Camino Principal, Suite 100
Tucson, Arizona 85715
Hester Molter
6720 East Camino Principal, Suite 100
Tucson, Arizona 85715
Otherwise, the number of persons to serve on the Board of
Directors shall be fixed by the Bylaws of the Corporation.
8. Quorum: A quorum at the meeting of the Board of Directors
shall consist of two-thirds of the number of directors then
serving; provided that when a Board comprised of one member is
authorized, the one director shall constitute a quorum.
9. Incorporators: The names and addresses of the incorporators
of the Corporation are:
Daniel Alan Molter
6720 East Camino Principal, Suite 100
Tucson, Arizona 85715
Hester Molter
6720 East Camino Principal, Suite 100
Tucson, Arizona 85715
all powers, duties and responsibilities of the incorporators
shall cease at the time of delivery of these Articles of
Incorporation to the Arizona Corporation Commission for filing.
10. Distribution From Capital Surplus: The Board of Directors of
the Corporation may, from time to time, distribute on a pro rata
basis to its shareholders out of the capital surplus of the
Corporation a portion of its assets, in cash or in property.
11. Indemnification of Officers, Directors, Employees and
Agents: Subject to the further provisions hereof, the
Corporation shall indemnify any and all of its existing and
former directors, officers, employees, and agents against all
expenses incurred by them and each of them, including but not
limited to legal fees, judgment, penalties and amounts paid in
settlement or compromise, which may arise or be incurred,
rendered, or levied in any legal action brought or threatened
against any of them for or on account or omission alleged to
have been committed while acting within the scope of employment
as director, officer, employee, or agent of the Corporation,
whether or not any action is or has been filed against them and
whether or not any settlement or compromise is approved by a
court. No such indemnification shall be available with respect
to liabilities under the Securities Act of 1933, and the
Corporation shall have the right to refuse indemnification in
any instance in which the person to whom indemnification would
otherwise have been applicable shall have unreasonably refused
to permit the Corporation, at its own expense through counsel of
its own choosing, to defend him or her in the action.
- 2 -
<PAGE>
12. Repurchase Of Shares: the Board of Directors of the
Corporation may, from time to time, cause the Corporation to
purchase its own shares to the extent of the unreserved and
unrestricted earned and capital surplus of the Corporation.
IN TESTIMONY WHEREOF the incorporator has signed these Articles of
Incorporation this 1st day of August, 1997.
Daniel Molter Hester Molter
_______________ _____________
Signature Signature
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<PAGE>
EXHIBIT 3 ii
MOLTER SERIES FUNDS, INC. BY-LAWS
ARTICLE I - OFFICES
Section I. The principal office of the Corporation shall be in the
City of Tucson, County of Pima, State of Arizona. The Corporation shall
also have offices at such other places as the Board of Directors may
from time to time determine and the business of the Corporation may
require.
ARTICLE II - STOCKHOLDERS AND STOCK CERTIFICATES
Section 1. Every stockholder of record shall be entitled to a stock
Certificate representing the shares owned by him. Stock certificates
shall be in such form as may be required by law and as the Board of
Directors shall prescribe. Every stock certificate shall be signed by
the President or a Vice President and by the Treasurer or an Assist-
ant Treasurer, or the Secretary or an Assistant Secretary, and sealed
with the corporate seal, which may be a facsimile, either engraved or
printed. Whenever permitted by law, the Board of Directors may authorize
the issuance of stock certificates bearing the facsimile signatures of
the officers authorized to sign such certificates.
Section 2. Shares of the capital stock of the Corporation shall be
transferable only on the books of the Corporation by the person in whose
name such shares are registered, or by his duly authorized transfer agent.
In case of transfers by executors, administrators, guardians or other
legal representatives, duly authenticated evidence of their authority
shall be produced, and may be required to be deposited and remain with
the corporation or its duly authorized transfer agent. No transfer shall
be made unless and until the certificate issued to the transferor shall
be delivered to the Corporation, or its duly authorized transfer agent,
properly endorsed.
Section 3. Any person desiring a certificate for shares of the capital
stock of the Corporation to be issued in lieu of one lost or destroyed
shall make an affidavit or affirmation setting forth the loss or
destruction of such stock certificate, and shall advertise such loss
or destruction in such manner as the Board of Directors may require,
and shall, if the Board of Directors shall so require, give the
Corporation a bond of indemnity, in such form and with such security
as may be satisfactory to the Board, indemnifying the Corporation
against any loss that may result upon the issuance of a new stock
certificate. Upon receipt of such affidavit and proof of publication
of the advertisement of such loss or destruction, and the bond, if any,
required by the Board of Directors, a new stock certificate may be issued
of the same tenor and for the same number of shares as the one alleged
to have been lost or destroyed.
Section 4. The Corporation shall be entitled to treat the holder of
record any share or shares of its capital stock as the owner thereof,
and accordingly, shall not be bound to recognize any equitable or other
claim to or interest in such share or shares on the part of any other
person, whether or not the Corporation shall have express or other
notice thereof, except as otherwise provided by the laws of the State
of Arizona. - 1 -
<PAGE>
ARTICLE III - MEETING OF STOCKHOLDERS
Section 1. The annual meeting of the stockholders of the Corporation
for the election of directors and for the transaction of general business
shall be held at the principal office of the Corporation, or at such
other place within or without the State of Arizona as the Board of
Directors may from time to time prescribe, on the third Tuesday in
November at 8:00 PM in each year, unless that day shall be duly
designated as a legal holiday, in which event the annual meeting of
the stockholders shall be held on the first day following which is
not a holiday. The place of the annual meeting of the stockholders of
the Corporation shall not be changed within sixty days next before the
day on which such meeting is to be held. A notice of any change in
the place of the annual meeting shall be given to each stockholder twenty
days before the election is held.
Section 2. Special meetings of the stockholders may be called at any time
by the President, and shall be called at any time by the President, or by
the Secretary, upon the written request of a majority of the members of
the Board of Directors, or upon the written request of the holders of
a majority of the shares of the capital stock of the Corporation issued
and outstanding and entitled to vote at such meeting. Upon receipt of a
written request from any person or persons entitled to call a special
meeting, which shall state the object of the meeting, it shall be the
duty of the President; or, in his absence, the Secretary, to call such
meeting to be held not less than ten days nor more than sixty days after
the receipt of such request. Special meetings of the stockholders
shall be held at the principal office of the Corporation, or at such
other place within or without the State of Arizona as the Board of
Directors may from time to time direct, or at such place within or with-
out the State of Arizona as shall be specified in the notice of such
meeting.
Section 3. Notice of the time and place of the annual or any special
meeting of the stockholders shall be given to each stockholder entitled
to notice of such meeting at least ten days prior to the date of
such meeting. In the case of special meetings of the stockholders, the
notice shall specify the object or objects of such meeting, and no busi-
ness shall be transacted at such meeting other than that mentioned in
the call.
Section 4. The Board of Directors may close the stock transfer books
of the corporation for a period not exceeding sixty days preceding
the date of any meeting of stockholders, or the date for payment of
any dividends, or the date for the allotment of rights, or the date when
any change or conversion or exchange of capital stock shall go into effect,
or for a period of not exceeding sixty days in connection with the obtain-
ing of the consent of stockholders for any purpose; provided, however, that
in lieu of closing the stock transfer books as aforesaid, the Board of
Directors may fix in advance a date, not exceeding sixty days preceding
the date of any meeting of stockholders, or the date for the payment of
any dividend, or the date for the allotment of rights of the date when any
change or conversion or exchange of capital stock shall go into effect, or
a date in connection with obtaining such consent, as a record date for
the determination of the stockholders entitled to notice of, and to vote
at, such meeting and any adjournment thereof, or to receive payment of
such dividend, or to receive such allotment of rights, or to exercise such
rights, or to give such consent, as the case may be, notwithstanding any
transfer of any stock on the books of the Corporation after any such record
date as aforesaid.
- 2 -
<PAGE>
Section 5. At least ten days before every election of directors of the
Corporation, the Secretary shall prepare and file in the office where the
election is to be held a complete list of the stockholders entitled to
vote at the ensuing election, arranged in alphabetical order, with the
residence of each stockholder and the number of voting shares held by him,
and such list shall at all times, during the usual hours for business and
during the whole time of said election, be open to the examination of any
stockholder.
Section 6. At all meetings of the stockholders, a quorum shall consist
of the persons representing a majority of the outstanding shares of the
capital stock of the Corporation entitled to vote at such meeting. In the
absence of a quorum no business shall be transacted except that the
stockholders present in person or by proxy and entitled to vote at such
meeting shall have power to adjourn the meeting from time to time without
notice other than announcement at the meeting until a quorum shall be
present. At any such adjourned meeting at which a quorum shall be present,
any business may be transacted which might have been transacted at the
meeting on the date specified in the original notice. If a quorum is present
at any meeting the holders of the majority of the shares of the Corporation
issued and outstanding and entitled to vote at the meeting who shall be
present in person or by proxy at the meeting shall have power to act upon
all matters properly before the meeting, and shall also have power to
adjourn the meeting to any specific time or times, and no notice of any
such adjourned meeting need be given to stockholders absent or otherwise.
Section 7. At all meetings of the stockholders the following order of
Business shall be substantially observed, as far as it is consistent with
the purpose of the meeting:
Election of Directors
Ratification of Elections of Auditors
New Business
Section 8. At any meeting of the stockholders of the Corporation every
stockholder having the right to vote shall be entitled in person or by proxy
appointed by an instrument in writing subscribed by such stockholder and
bearing a date not more than three years prior to said meeting unless
such instrument provides for a longer period, to one vote for each share
of stock having voting power registered in his name on the books of the
corporation.
ARTICLE IV - DIRECTORS
Section 1. The Board of Directors shall consist of not less than three nor
more than twelve members, who may be any persons, whether or not they hold
any sharesof the capital stock of the corporation.
Section 2. The directors shall be elected annually by the stockholders
of the Corporation at their annual meeting, and shall hold office for the
term of one year and until their successors shall be duly elected and
shall qualify.
- 3 -
<PAGE>
Section 3. The Board of Directors shall have the control and management of
the business of the Corporation, and in addition to the powers and
authority by these by-laws expressly conferred upon them, may, subject
to the provisions of the laws of the State of Arizona and of the
Certificate of Incorporation, exercise all such powers of the Corporation
and do all such acts and things as are not required by law or by the
Certificate of Incorporation to be exercised or done by the stockholders.
Section 4. If the office of any director becomes or is vacant by reason
of death, resignation, removal, disqualification or otherwise, the
remaining directors may by vote of a majority of said directors choose a
successor or successors who shall hold office for the unexpired term;
provided that vacancies on the Board of Directors may be so filled only
if, after the filling of the same, at least two-thirds of the directors then
holding office would be directors elected to such office by the stock-
holders at a meeting or meetings called for the purpose. In the event
that at any time less than a majority of the directors were so elected
promptly as possible and in any event within sixty days for the purpose
of electing directors to fill any vacancy which has not been filled by
the directors in office. Any other vacancies in the Board of Directors
not filled by the directors may also be filled for an unexpired term by
the stockholders at a meeting called for that purpose.
Section 5. The Board of Directors shall have power to appoint, and at
its discretion to remove or suspend, any officer, officers, managers,
superintendents, subordinates, assistants, clerks, agents & employees,
permanently or temporarily, as the Board may think fit, and to determine
their duties and to fix, and from time to time change, their salaries
or emoluments, & to require security in such instances and in such amounts
as it may deem proper. No contract of employment for services to be
rendered to the Corporation shall be of longer duration than two weeks,
unless such contract of employment shall be in writing, signed by the
officers of the Corporation and approved by the Board of Directors.
Section 6. In case of the absence of an officer of the Corporation, or
for any other reason which may seem sufficient to the Board of Directors,
the Board may delegate his powers and duties for the time being to any
other officer of the Corporation or to any director.
Section 7. The Board of Directors may, be resolution or resolutions
passed by a majority of the whole Board, designate one or more committees,
each committee to consist of two or more of the directors of the Corp-
oration, which to the extent provided in such resolution or resolutions,
shall have and may exercise the powers of the Board of Directors in the
management of the business and affairs of the Corporation, and may have
power to authorize the seal of the Corporation to be affixed to all
papers which may require it. Such committee or committees shall have
such name or names as may be determined from time to time by resolution
adopted by the Board of Directors. Any such committee shall keep regular
minutes of its proceedings, and shall report the same to the Board when
required.
Section 8. The Board of Directors may hold their meetings and keep the
books of the Corporation, except the original or duplicate stock ledger,
outside of the State of Arizona at such place or places as they may from
time to time determine.
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<PAGE>
Section 9. The Board of Directors shall have power to fix, and from time
to time to change the compensation, if any, of the directors of the
Corporation.
Section 10. The Board of Directors shall present at each annual meeting
of the shareholders, and, when called for by vote of the stockholders, at
any special meeting of the stockholders, a full and clear statement of the
business and condition of the Corporation.
ARTICLE V - DIRECTORS MEETINGS
Section 1. Regular meetings of the Board of Directors shall be held
without notice at such times and places as may be free from time to
time prescribed by the Board.
Section 2. Special meetings of the Board of Directors may be called at any
time by the President, and shall be called by the President upon the
written request of a majority of the members of the Board of Directors.
Unless notice is waived by all the members of the Board of Directors,
notice of any special meeting shall be sent to each director at least
twenty-four hours prior to the date of such meeting, and such notice shall
state the time, place and object or objects of such special meeting.
Section 3. Three member of the Board of Directors shall constitute a quorum
for the transaction of business at any meeting. The act of a majority of
the directors present at any meeting where there is a quorum shall be the
act of the Board of Directors, except as may be otherwise specifically
provided by statue or by the Certificate of Incorporation or by these
by-laws.
Section 4. The order of business at meetings of the Board of Directors
shall be described from time to time by the Board.
ARTICLE VI - OFFICERS AND AGENTS
Section 1. At the first meeting of the Board of Directors after the election
of directors in each year, the Board shall elect a President, a Secretary
and a Treasurer, and may elect or appoint one or more Vice Presidents,
Assistant Secretaries, Assistant Treasurers, and such other officers and
agents as the Board may deem necessary and as the business of the Corp-
oration may require.
Section 2. The President and the Chairman of the Board shall be elected
from the membership of the Board of Directors, but other officers need not
be members of the Board of Directors. Any two or more offices may be held
by the same person. All officers of the Corporation shall serve for one
year and until their successors shall have been duly elected and shall
have qualified; provided, however, that any officer may be removed at any
time, either with or without cause, by action of the Board of Directors.
Section 3. The salaries of all officers and agents of the Corporation
shall be fixed by the Board of Directors.
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<PAGE>
ARTICLE VII - DUTIES OF OFFICERS
PRESIDENT
Section 1. The President shall be the Chief Executive Officer and head
of the Corporation, and in the recess of the Board of Directors shall
have the general control and management of its business and affairs,
subject, however, to the regulations of the Board of Directors. He shall
preside at all meetings of the stockholders and shall be a member
exofficio of all standing committees.
Section 2. The President shall call all special or other meetings of the
stockholders and Board of Directors. In case the President shall at any
time neglect or refuse to call a special meeting of the stockholders when
requested so to do by a majority of the directors, or by the stockholder
representing a majority of the stock of the Corporation, as is elsewhere
in these by-laws provided, then and in such case, such special meeting
shall be called by the Secretary, or in the event of his neglect or
refusal to call such meeting, may be called by a majority of the directors
or by the stockholders representing a majority of the stock of the
Corporation, who desire such special meeting, as the case may be, upon
notice as hereinbefore provided. In case the President shall at any
time neglect or refuse to call a special meeting of the Board of
Directors when requested to do so by a majority of the Directors, as
is elsewhere in these by-laws provided, then and in such case, such
special meeting may be called by the majority of the directors desiring
such special meeting, upon notice as hereinbefore provided.
VICE PRESIDENTS
Section 3. In case of the absence of the President, the Vice President,
or, if there be more than one Vice President, then the Vice Presidents,
according to their seniority, shall preside at the meetings of the
stockholders of the Corporation. In the event of the absence,
resignation, disability or death of the President, such Vice President
shall exercise all the powers and perform all the duties of the President
until the return of the President or until such disability shall have
been removed or until a new President shall have been elected.
THE SECRETARY AND ASSISTANT SECRETARIES
Section 4. The Secretary shall attend all meetings of the stockholders
and shall record all the proceedings thereof in a book to be kept for
that purpose and he shall record all the proceedings thereof in a book
to be kept for that purpose and he shall be the custodian of the corp-
orate seal of the Corporation. In the absence of the Secretary, an
Assistant Secretary or any other person appointed or elected by the
Board of Directors, as is elsewhere in these by-laws provided, may
exercise the rights and perform the duties of the Secretary.
Section 5. The Assistant Secretary, or, if there be more than one
Assistant Secretary, then the Assistant Secretaries in the order of
their seniority shall, in the absence or disability of the Secretary,
perform the duties and exercise the powers of the Secretary. Any
Assistant Secretary elected by the Board shall also perform such other
duties and exercise such other powers as the Board of Directors shall
from time to time prescribe.
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<PAGE>
THE TREASURER AND ASSISTANT TREASURERS
Section 6. The Treasurer shall keep full and correct accounts of the
receipts and expenditures of the Corporation in books belonging to the
Corporation, and shall deposit all moneys and valuable effects in the
name and to the credit of the Corporation and in such depositories as
may be designated by the Board of Directors, and shall, if the Board
shall so direct, give bond with sufficient security and in such
amount as may be required by the Board of Directors for the faithful
performance of his duties. He shall disburse funds of the Corporation
as may be ordered by the Board of Directors, taking proper vouchers for
such disbursements, and shall render to the President and Board of
Directors at the regular meetings of the Board, or whenever they may
require it, an account of all his transactions as the chief fiscal
officer of the corporation, and of the financial condition of the
Corporation.
Section 7. The Assistant Treasurer, or if there be more than one
Assistant Treasurer, then the Assistant Treasurers in the order of
their seniority, shall, in the absence or disability of the Treasurer,
perform the duties and exercise the powers of the Treasurer. Any
Assistant Treasurer elected by the Board shall also perform such
duties and exercise such powers as the Board of Directors shall
from time to time prescribe.
ARTICLE VIII - CHECKS, DRAFTS, NOTES, ETC.
Section 1. All checks shall bear the signature of such person or persons
as the Board of Directors may from time to time direct.
Section 2. All notes and other similar obligations and acceptances of
drafts by the Corporation shall be signed by such person or persons
as the Board of Directors may from time to time direct.
Section 3. Any officer of the Corporation or any other employee, as the
Board of Directors may from time to time direct, shall have full power
to endorse for deposit all checks and all negotiable paper drawn payable
to his or their order or to the order of the Corporation.
ARTICLE IX - CORPORATE SEAL
Section 1. The corporate seal of the Corporation shall have inscribed
thereon the name of the Corporation, the year of its organization, and the
words Corporate Seal, Arizona. Such seal may be used by causing it or
a facsimile thereof to be impressed or affixed or reproduced or otherwise.
ARTICLE X - DIVIDENDS
Section 1. Dividends upon the shares of the capital stock of the Corp-
oration may, subject to the provisions of the Certificate of Incorporation,
if any, be declared by the Board of Directors at any regular or special
meeting, pursuant to law. Dividends may be paid in cash, in property, or
in shares of the capital stock of the Corporation.
Section 2. Before payment of any dividend there may be set aside out of
any funds of the Corporation available for dividends such sum or sums
as the Board of Directors may, from time to time, in their absolute
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discretion, think proper as a reserve fund to meet contingencies, or
for equalizing dividends, or for repairing or maintaining any property
of the Corporation, or for such other purpose as the Board of Directors
shall deem to be for the best interests of the Corporation, and the
Board of Directors may abolish any such reserve in the manner in which
it was created.
ARTICLE XI - FISCAL YEAR
Section 1. The fiscal year of the Corporation shall begin on January 1
of each year, and end on December 31 of each year.
ARTICLE XII - NOTICES
Section 1. Whenever under the provisions of these by-laws notice is
required to be given to any director or stockholder, it shall not be
construed to mean personal notice, and such notice may be given in
writing, by mail, by depositing the same in the post office or letter
box, in a postpaid sealed wrapper, addressed to such director or
stockholder at such address as shall appear on the books of the
Corporation, or, if the address of such director or stockholder
does not appear on the books of the Corporation, to such director or
stockholder at the General Post Office in the City of Tucson, Arizona
and such notice shall be deemed to be given at the time it shall be so
deposited in the postoffice or letter box. In the case of directors,
such notice may also be given by telephone, telegraph or cable.
Section 2. Any notice required to be given under these by-laws may be
waived in writing, signed by the person or persons entitled to such
notice, whether before or after the time stated therein.
Section 3. Each director and officer (and his heirs, executors,
and administrators) shall be indemnified by the Corporation against
reasonable costs and expenses incurred by him in connection with any
action, suit or proceeding to which he may be made a party by reason of
his being or having been a director or officer of the Corporation, except
in relation to any action, suits or proceedings in which he has been
adjudged liable because of willful misfeasance, bad faith, gross
negligence or reckless disregard of the duties involved in the conduct
of his office. In the absence of any adjudication which expressly
finds that the director or officer is so liable or which expressly
absolves him of liability for willful misfeasance, bad faith, gross
negligence or reckless disregard of the duties involved in the conduct
of his office, or in the event of a settlement, each director and officer
(and his heirs, executors and administrators) shall be indemnified by
the Corporation against payments made, including reasonable costs
determination by a written opinion of independent counsel. Amounts
paid in settlement shall not exceed costs, fees and expenses which
would have been reasonably incurred if the action, suit or proceeding
had been litigated to a conclusion. Such a determination by independent
counsel, and the payments of amounts by the Corporation on the basis
thereof shall not prevent a stockholder from challenging such indemni-
fication by appropriate legal proceedings on the grounds that the person
indemnified was liable to the Corporation or its security holders by
reason of the conduct as used herein. The foregoing provisions shall
be exclusive of any other rights of indemnification to which the
officers and directors might otherwise be entitled.
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ARTICLE XIII - AMENDMENTS
Section 1. These by-laws may be amended, altered, repealed or added to
at the annual meeting of the stockholders of the Corporation or of the
Board of Directors, or at any special meeting of the stockholders or
of the Board of Directors called for that purpose, by the affirmative
vote of the holders of a majority of the shares of capital stock of
the Corporation then issued and outstanding and entitled to vote, or
by a majority of the Whole Board of Directors, as the case may be.
ARTICLE XIV - INVESTMENT RESTRICTIONS
The by-laws of the Fund provide the following fundamental investment
restrictions; the Fund may not, except by approval of a majority of the
voting securities present at a duly called meeting, if the holders of
more than 50% of the outstanding voting securities are present or
represented by proxy, or (b) of more than 50% of the outstanding voting
securities, whichever is less: (a) Act as underwriter for securities of
other issuers. (b) Borrow money or purchase securities on margin, but
may obtain such short term credit as may be necessary for clearance of
purchases and sales of securities for temporary or emergency purposes
in an amount not exceeding 5% of the value of its total assets.
(c) Sell securities short. (d) Invest in securities of other investment
companies except as part of a merger, consolidation, or purchase of
assets approved by the Funds shareholders or by purchases with no more
than 10% of the Fund's assets in the open market involving only
customary broker's commissions. (e) Invest more than 25% of its assets
at the time of purchase in any one industry. (f) Make investments
in commodities, commodity contracts or real estate although the Fund
may purchase and sell securities of companies which deal in real estate
or interests therein. (g) Make loans. The purchase of a portion of
a readily marketable issue of publicly distributed bonds, debentures or
other debt securities will not be considered the making of a loan.
(h) Acquire more than 10% of the securities of any class of another
issue, treating all preferred securities of an issuer as a single
class and all debt securities as a single class, or acquire more than 10%
of the voting securities of another issuer. (i) Invest in companies
for the purpose of acquiring control. (j) The Fund may not purchase
or retain securities of any issuer if those officers and directors of
the Fund or its Investment Advisor owning individually more than 1/2
of 1% of any class of security collectively own more than 5% of such
class of securities of such issuer. (k) Pledge, mortgage or hypoth-
ecate any of its assets. (l) Invest in securities which may be subject
to registration under the Securities Act of 1933 prior to sale to the
public or which are not at the time of purchase readily saleable.
(m) Invest more than 5% of the total Fund assets, taken at market value
at the time of purchase, in securities of companies with less than
three year's continuing operation, including the operation of any
predecessor. (n) Issue senior securities.
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Exhibit - 10 i
INVESTMENT ADVISORY CONTRACT
AGREEMENT, made by and between Molter Series Funds, Inc., an Arizona
Corporation, (hereinafter called "Fund") and Investment Research Assoc-
iates, Inc., an Arizona Corporation (hereinafter called "Investment
Advisor").
WITNESSETH: WHEREAS, Fund engages in the business of investing and
reinvesting its assets and property in various stocks and securities and
Investment Advisor engages in the business of providing investment
advisory services.
1. The Fund hereby employs the Investment Advisor, for the period set
Forth in Paragraph 6 hereof, and on the terms set forth herein, to
render invest ment advisory services to the Fund, subject to the supervision
and direction of the Board of Directors of the Fund. The Investment
Advisor hereby accepts such employment and agrees, during such period, to
render the services and assume the obligations herein set forth, for the
compensation provided. The Investment Advisor shall, for all purposes
herein, be deemed to be an independent contractor, and shall, unless
otherwise expressly provided and authorized, have no authority to act
for or represent the Fund in any way, or in any way be deemed an agent
of the Fund.
2. As a compensation for the services to be rendered to the Fund by the
Investment Advisor under the provisions of this Agreement, the Fund
shall pay to the Investment Advisor monthly a fee equal to one-twelfth
of one percent per month, (the equivalent of 1% per annum) of the daily
average net assets of the Fund during the month. The first payment of
fee hereunder shall be prorated on a daily basis from the date this
Agreement takes effect.
3. It is expressly understood and agreed that the services to be
rendered by the Investment Advisor to the Fund under the provisions of
this Agreement are not to be deemed to be exclusive, and the Investment
Advisor shall be free to render similar or different services to others
so long as its ability to render the services provided for in this
Agreement shall not be impaired thereby.
4. It is understood and agreed that directors, officers, employees,
agents and shareholders of the Fund may be interested in the Investment
Advisor as directors, officers, employees, agents and shareholders, and
that directors, officers, employees, agents and shareholders of the
Investment Advisor may be interested in the Fund, as directors, officers,
employees, agents and shareholders or otherwise, and that the investment
Advisor, itself, may be interested in the Fund as a shareholder or
otherwise, specifically, it is understood and agreed that directors,
officers, employees, agents and shareholders of the Investment Advisor
may continue as directors, officers, employees, agents and shareholders
of the Fund; that the Investment Advisor, its directors, officers,
employees, agents and shareholders may engage in other business, may
render investment advisory services to other investment companies, or
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to any other corporation, association, firm or individual, may render
underwriting services to the Fund, or to any other investment company,
corporation, association, form or individual. The Fund shall bear
expenses and salaries necessary and incidental to the conduct of its
business, including but not in limitation of the foregoing, the costs
incurred in the maintenance of its own books, records, and procedures;
dealing with its own shareholders; the payment of dividends; transfers
of stock (including issuance & redemption of shares); reports and notices
to shareholders; expenses of annual stockholders; meetings; miscellaneous
office expenses; brokerage commissions; taxes; and custodian, legal,
accounting and registration fees. Employees, officers and agents of the
Investment Advisor who are, or may in the future be, directors and/or
senior officers of the Fund shall receive no remuneration from the Fund
or acting in such capacities for the Fund. In the conduct of the
respective businesses of the parties hereto and in the performance
of this agreement, the Fund & Investment Advisor may share common
facilities and personnel common to each, with appropriate proration
of expenses.
5. Investment Advisor shall give the Fund the benefit of its best judgment
and efforts in rendering these services, and Fund agrees as an inducement
to the undertaking of these services that Investment Advisor shall not
be liable hereunder for any mistake of judgment or any event whatsoever,
provided that nothing herein shall be deemed to protect, or purport to
protect, Investment Advisor against any liability to Fund or to its
security holders to which Investment Advisor would otherwise be subject
by reason of willful misfeasance, bad faith or gross negligence in the
performance of duties hereunder, or by reason of reckless disregard of
obligations and duties hereunder.
6. This agreement shall continue in effect until December 31, 1998, and,
thereafter, only so long as such continuance is approved at least
annually by votes of the Fund's Board of Directors, cast in person at
a meeting called for the purpose of voting on such approval, including
the votes of a majority of the Directors who are not parties to such
agreement or interested persons of any such party. This agreement may
be terminated at any time upon 60 days prior written notice, without
the payment of any penalty, by the Fund's Board of Directors or by vote
of a majority of the outstanding voting securities of the Fund. The
contract will automatically terminate in the event of its assignment
by the Investment Advisor (within the meaning of the Investment Company
Act of 1940), which shall be deemed to include a transfer of control
of the Investment Advisor. Upon the termination of this agreement,
the obligations of all the parties hereunder shall cease and terminate
as of the date of such termination, except for any obligation to respond
for a breach of this Agreement committed prior to such termination
and except for the obligation of the Fund to pay to the Investment
Advisor the fee provided in Paragraph 2 hereof, prorated to the date
of termination.
7. This Agreement shall not be assigned by the Fund without prior
written consent thereto of the Investment Advisor. This Agreement shall
terminate automatically in the event of its assignment by the Investment
Advisor unless an exemption from such automatic termination is granted
by order or rule of the Securities and Exchange Commission.
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IN WITNESS WHEREOF, the parties hereto have caused their corporate seals
to be affixed and duly attested and their presence to be signed by their
duly authorized officers this 1st day of January, 1999.
Molter Series Funds, Inc. By___________________________
Daniel A. Molter, President
Attest: ________________
Hester v.H. Molter
Investment Research Associates, Inc. By____________________________
Daniel A. Molter, President
Attest: ________________
Hester v.H. Molter
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Exhibit - 10 ii
Reimbursement Agreements
The Fund will reimburse officers and directors not affiliated with the
Investment Advisor to compensate for travel expenses associated with
performance of their duties.
The Fund has no plans to, compensate officers and directors who are
Affiliated with the Investment Advisor except indirectly through payment
of the management fee.
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