SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
FORM N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 / /
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Pre-Effective Amendment No. / /
Post-Effective Amendment No. 2 /X/
and/or
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 / /
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Amendment No. 4 /X /
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(Check appropriate box or boxes.)
TANAKA Funds, Inc. - File Nos. 33-47207 and 811-08683
230 Park Avenue, Suite 960, New York, New York 10169
(Address of Principal Executive Offices) Zip Code
Registrant's Telephone Number, including Area Code: (212) 490-3380
Graham Y. Tanaka, 230 Park Avenue, Suite 960, New York, New York 10169
(Name and Address of Agent for Service)
With copy to:
Donald S. Mendelsohn, Brown, Cummins & Brown Co., L.P.A.
3500 Carew Tower, Cincinnati, Ohio 45202
Approximate Date of Proposed Public Offering:
It is proposed that this filing will become effective:
/ / immediately upon filing pursuant to paragraph (b)
/X/ on January 29, 2000 pursuant to paragraph (b)
/ / 60 days after filing pursuant to paragraph (a)(1)
/ / on (date) pursuant to paragraph (a)(1)
/ / 75 days after filing pursuant to paragraph (a)(2)
/ / on (date) pursuant to paragraph (a)(2) of Rule 485
If appropriate, check the following box:
/ / this post-effective amendment designates a new effective date for a
previously filed post-effective amendment.
<PAGE>
TANAKA GROWTH FUND
CLASS A SHARES AND CLASS B SHARES
PROSPECTUS
JANUARY __, 2000
INVESTMENT OBJECTIVE:
Growth of capital
230 Park Avenue, Suite 960
New York, New York 10169
877-4-TANAKA
THE SECURITIES AND EXCHANGE COMMISSION HAS NOT APPROVED OR DISAPPROVED THESE
SECURITIES OR DETERMINED IF THIS PROSPECTUS IS TRUTHFUL OR COMPLETE. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
<PAGE>
TABLE OF CONTENTS
PAGE
ABOUT THE FUND.................................................................1
FEES AND EXPENSES OF INVESTING IN THE FUND.....................................3
HOW TO BUY SHARES..............................................................4
HOW TO REDEEM SHARES...........................................................6
HOW TO EXCHANGE SHARES.........................................................7
DETERMINATION OF NET ASSET VALUE...............................................7
DIVIDENDS, DISTRIBUTIONS AND TAXES.............................................8
MANAGEMENT OF THE FUND.........................................................8
FINANCIAL HIGHLIGHTS...........................................................8
FOR MORE INFORMATION..................................................BACK COVER
<PAGE>
ABOUT THE FUND
INVESTMENT OBJECTIVE
The investment objective of the TANAKA Growth Fund is growth of capital.
PRINCIPAL STRATEGIES
The Fund invests primarily in common stocks and other equity securities
of small, medium and large capitalization companies. The Fund will invest
primarily in domestic securities, but it may also invest up to 45% of its net
assets, measured at the time of investment, in foreign securities, including
multinational and emerging market securities. The Fund is a non-diversified
fund, which means that the Fund may take larger positions in a small number of
companies than a diversified fund.
The Fund's investments in equity securities will generally consist of
issues which the Fund's adviser believes have capital growth potential due to
factors such as:
o rapid growth in demand in existing markets;
o expansion into new markets;
o new product introductions;
o reduced competitive pressures;
o cost reduction programs;
o changes in management; and
o other fundamental changes which may result in improved earnings growth or
increased asset values.
The investment adviser relies on research, management meetings and
industry contacts to identify: o companies with above-average long-term earnings
growth potential that could exceed market expectations; o industries that are
positioned to participate in strong demographic, societal or economic trends;
and o companies within those industries that have a particular competitive
advantage or niche.
The Fund may sell a security when:
o the fundamentals of the company decline;
o the security reaches a target price or price-to-earnings ratio; or
o the adviser determines to reallocate assets to a security with superior
capital growth potential.
PRINCIPAL RISKS OF INVESTING IN THE FUND
o MANAGEMENT RISK. The advisor's growth-oriented approach may fail to produce
the intended results.
o SMALLER COMPANY RISK. To the extent the Fund invests in smaller
capitalization companies, the Fund will be subject to additional risks.
These include:
o The earnings and prospects of smaller companies are more volatile than
larger companies. o Smaller companies may experience higher failure rates
than do larger companies.
o The trading volume of securities of smaller companies is normally less than
that of larger companies and, therefore, may disproportionately affect
their market price, tending to make them fall more in response to selling
pressure than is the case with larger companies.
o Smaller companies may have limited markets, product lines or financial
resources and may lack management experience.
o COMPANY RISK. The value of the Fund may decrease in response to the
activities and financial prospects of an individual company in the Fund's
portfolio. The value of an individual company can be more volatile than the
market as a whole.
o MARKET RISK. Overall stock market risks may also affect the value of the
Fund. Factors such as domestic economic growth and market conditions,
interest rate levels, and political events affect the securities markets
and could cause the Fund's share price to fall.
o FOREIGN RISK. To the extent the Fund invests in foreign securities, the
Fund could be subject to greater risks because the Fund's performance may
depend on issues other than the performance of a particular company.
Changes in foreign economies and political climates are more likely to
affect the Fund than a mutual fund that invests exclusively in U.S.
companies. The value of foreign securities is also affected by the value of
the local currency relative to the U.S. dollar. There may also be less
government supervision of foreign markets, resulting in non-uniform
accounting practices and less publicly available information.
Investment in securities of issuers based in underdeveloped emerging
markets entails all of the risks of investing in securities of foreign
issuers outlined in this section to a heightened degree. These heightened
risks include: (i) greater risks of expropriation, confiscatory taxation,
nationalization, and less social, political and economic stability; (ii)
the smaller size of the market for such securities and a low or nonexistent
volume of trading, resulting in lack of liquidity and in price volatility;
(iii) certain national policies which may restrict a Fund's investment
opportunities; and (iv) in the case of Eastern Europe and in China and
other Asian countries, the absence of developed capital markets and legal
structures governing private or foreign investment and private property and
the possibility that recent favorable economic and political developments
could be slowed or reversed by unanticipated events.
In addition to brokerage commissions, custodial services and other
costs relating to investment in emerging markets are generally more
expensive than in the United States. Such markets have been unable to keep
pace with the volume of securities transactions, making it difficult to
conduct such transactions.
o NON-DIVERSIFICATION RISK. As a non-diversified fund, the Fund will be
subject to substantially more investment risk and potential for volatility
than a diversified fund because its portfolio may at times focus on a
limited number of companies.
o VOLATILITY RISK. Common stocks tend to be more volatile than other
investment choices. The value of an individual company can be more volatile
than the market as a whole. This volatility affects the value of the Fund's
shares.
o An investment in the Fund is not a deposit of any bank and is not insured
or guaranteed by the Federal Deposit Insurance Corporation or any other
government agency.
o The Fund is not a complete investment program. As with any mutual fund
investment, the Fund's returns will vary and you could lose money.
IS THE FUND RIGHT FOR YOU?
The Fund may be suitable for:
o Long-term investors seeking a fund with a growth investment strategy
o Investors who can tolerate the greater risks associated with common stock
investments
o Investors willing to accept the greater market price fluctuations of
smaller companies
o Investors who can tolerate the increased risks of foreign and emerging
market securities o Investors who can tolerate the increased risks and
price fluctuations associated with a non-diversified fund
GENERAL
The investment objective of the Fund may be changed without shareholder
approval.
From time to time, the Fund may take temporary defensive positions which
are inconsistent with the Fund's principal investment strategies, in attempting
to respond to adverse market, economic, political, or other conditions. For
example, the Fund may hold all or a portion of its assets in money market
instruments or repurchase agreements. If the Fund invests in shares of a money
market fund, the shareholders of the Fund generally will be subject to
duplicative management fees. As a result of engaging in these temporary
measures, the Fund may not achieve its investment objective. The Fund may also
invest in such instruments at any time to maintain liquidity or pending
selection of investments in accordance with its policies.
<PAGE>
HOW THE FUND HAS PERFORMED
Each Fund has three authorized classes of shares: Class A shares, Class
B shares and Class R shares. The information provided below is primarily for
Class R which is the class with the longest history. Its expenses generally are
slightly lower, and its performance higher than Class A and Class B shares. Each
class is subject to different expenses and a different sales charge structure.
Class R shares are offered through a separate prospectus only to certain
investors. The information below provides an indication of the risks of
investing in a fund by showing changes in the Fund's performance from year to
year. Annual returns assume reinvestment of dividends and distributions.
Historical performance of a fund does not necessarily indicate what will happen
in the future. Sales charges have not been deducted from total returns (in the
bar chart). Returns would have been lower had these charges been deducted.
(Total return as of December 31) [Insert bar chart with the following data
points:
1999...............(__)%]
During the period shown, the highest return for a quarter was (__)% (Q_,
1999); and the lowest return was (__)% (Q_, 1999).
AVERAGE ANNUAL TOTAL RETURNS (through December 31, 1999):
One Year Since Inception1
The Fund (___)% (___)%
_____ Index (___)% (___)%
1[insert date of inception]
FEES AND EXPENSES OF INVESTING IN THE FUND
The tables describe the fees and expenses that you may pay if you buy and hold
shares of the Fund.
<TABLE>
<S> <C> <C>
SHAREHOLDER FEES (fees paid directly from your investment) Class A Class B
Maximum Sales Charge (Load) Imposed on Purchases 4.50% NONE
Maximum Deferred Sales Charge (Load) 1.00% 5.00%
Redemption Fee NONE NONE
Exchange Fee NONE NONE
ANNUAL FUND OPERATING EXPENSES (expenses that are deducted from Fund assets)
Management Fees 1.00% 1.00%
Distribution (12b-1) Fees 0.25% 0.75%
Other Expenses* ___% ____%
Total Annual Fund Operating Expenses ___% ____%
Expense Reimbursement** ___% ____%
Net Expenses ___% ____%
</TABLE>
* Estimated.
** The investment adviser has contractually agreed to limit the total expenses
of the Fund (excluding interest, taxes, brokerage, and extraordinary expenses)
until April 1, 2001 to an annual rate of 1.75% of the average net assets of the
Fund attributable to the Class A shares and 2.50% of the average net assets of
the Fund attributable to the Class B shares.
Example:
The example below is intended to help you compare the cost of investing
in the Fund with the cost of investing in other mutual funds. The example uses
the same assumptions as other mutual fund prospectuses: a $10,000 initial
investment for the time periods indicated, reinvestment of dividends and
distributions, 5% annual total return, constant operating expenses, and sale of
all shares at the end of each time period. Although your actual expenses may be
different, based on these assumptions your costs will be:
1 YEAR 3 YEARS [5 YEARS 10 YEARS]
------ -------- ------- ---------
CLASS A
CLASS B
HOW TO BUY SHARES
The minimum initial investment in the Fund is $1,000 and minimum
subsequent investments are $500. The Fund may waive the minimum under certain
circumstances. You may purchase shares of the Fund through brokers and other
financial institutions that have entered into sales agreements with the Fund's
distributor. These institutions may charge a fee for their services and are
responsible for promptly transmitting purchase, redemption and other requests to
the Fund. The Fund is not responsible for the failure of any institution to
promptly forward these requests
INITIAL PURCHASE
BY MAIL- To be in proper form, your initial purchase request must
include: o a completed and signed investment application form (which accompanies
this Prospectus); and o a check (subject to the minimum amounts) made payable to
the Fund.
Mail the application and check to:
U.S. Mail: Overnight:
TANAKA Funds, Inc TANAKA Funds, Inc.
c/o Unified Fund Services, Inc. c/o Unified Fund Services, Inc.
P.O. Box 6110 431 North Pennsylvania Street
Indianapolis, Indiana 46206-6110 Indianapolis, Indiana 46204
BY WIRE- You may also purchase shares of the Fund by wiring federal
funds from your bank, which may charge you a fee for doing so. To wire money,
you must call Unified Fund Services, Inc. the Fund's transfer agent at
877-4-TANAKA to set up your account and obtain an account number. You should be
prepared at that time to provide the information on the application. Then,
provide your bank with the following information for purposes of wiring your
investment:
Firstar Bank, N.A.
ABA #0420-0001-3
Attn: TANAKA Funds, Inc.: TANAKA Growth Fund
Account Name _________________(write in shareholder name)
For the Account # ______________(write in shareholder account number)
D.D.A.#488922451
You must mail a signed application to Firstar Bank, N.A, the Fund's
custodian, at the above address in order to complete your initial wire purchase.
Wire orders will be accepted only on a day on which the Fund, custodian and
transfer agent are open for business. A wire purchase will not be considered
made until the wired money is received and the purchase is accepted by the Fund.
Any delays which may occur in wiring money, including delays which may occur in
processing by the banks, are not the responsibility of the Fund or the transfer
agent. There is presently no fee for the receipt of wired funds, [but the Fund
may charge shareholders for this service in the future].
THROUGH FINANCIAL INSTITUTIONS
If you purchase shares through a broker-dealer or financial
institution, your purchase will be subject to its procedures, which may include
charges, limitations, investment minimums, cutoff times and restrictions in
addition to, or different from, those applicable to shareholders who invest in
the Fund directly. You should acquaint yourself with the institution's
procedures and read this Prospectus in conjunction with any materials and
information provided by your institution. If you purchase Fund shares in this
manner, you may or may not be the shareholder of record and, subject to your
institution's and the Fund's procedures, may have Fund shares transferred into
your name. There is typically a one to five day settlement period for purchases
and redemptions through broker-dealers.
ADDITIONAL INVESTMENTS
You may purchase additional shares of the Fund at any time (subject to
minimum investment requirements) by mail, wire, or automatic investment. Each
additional mail purchase request must contain:
-your name -the name of your account(s)
-your account number(s) -a check made payable to TANAKA Funds, Inc.
Checks should be sent to the TANAKA Funds, Inc. at the address listed
above. A bank wire should be sent as outlined above.
SALES LOADS
CLASS A SHARES
Shares of the Fund are purchased at the public offering price. The
public offering price for Class A shares is the next determined NAV plus a sales
load as shown in the following table.
<TABLE>
<S> <C> <C>
==================================== --------------------------------- ================================
Sales Load as of % of:
Public Net
Offering Amount Dealer Reallowance as % of
Amount of Investment Price Invested Public Offering Price
==================================== --------------------------------- ================================
==================================== ================================= ================================
Less than $100,000 4.50% 4.71% 4.00%
$100,000 but less than $250,000 3.75% 3.90% 3.25%
$250,000 but less than $500,000 2.75% 2.83% 2.50%
$500,000 but less than $1,000,000 2.25% 2.30% 2.00%
$1,000,000 or more See Below See Below See Below
==================================== ================================= ================================
</TABLE>
Investments of $1 million or more are sold with no initial sales charge. A 1%
contingent deferred sales charge may be imposed on certain redemptions made
within one year of purchase by Class A accounts of $1 million or more. A dealer
concession of up to 1% may be paid by the distributor on these investments.
[Investments by certain individuals and entities including employees and other
associated persons of dealers authorized to sell shares of the Fund and the
Investment Adviser are not subject to a sales charge (see "Sales at Net Asset
Value" below)].
REDUCING THE SALES CHARGE. As shown in the table above, the size of the
total investment in the Class A shares of the Fund will affect the sales charge.
Described below are several methods to reduce the applicable sales charge. In
order to obtain a reduction in the sales charge, you must notify, at the time of
purchase, your dealer, the transfer agent or the investment adviser of the
applicability of one of the following:
RIGHTS OF AGGREGATION. The investment schedule above applies to the
total amount being invested by any "person," which term includes an individual,
his spouse and children under the age of 21, a trustee or other fiduciary
purchasing for a single trust, estate or single fiduciary account (including a
pension, profit-sharing or other employee benefit trust created pursuant to a
plan qualified under the Code) although more than one beneficiary is involved,
or any United States bank or investment adviser purchasing shares for its
investment advisory clients or customers. Any such person purchasing for several
accounts at the same time may combine these investments into a single
transaction in order to reduce the applicable sales charge.
RIGHTS OF ACCUMULATION. You may purchase Class A shares of the Fund at
a reduced sales charge by taking into account not only the amount then being
invested, but also the current net asset value of the shares of the Fund already
held. If the current net asset value of the qualifying shares already held plus
the net asset value of the current purchase exceeds a point in the schedule of
sales charges at which the charge is reduced to a lower percentage, the entire
current purchase is eligible for the reduced charge. To be entitled to a reduced
sales charge pursuant to the Rights of Accumulation, you must notify your
dealer, the transfer agent or the distributor at the time of purchase that you
wish to take advantage of such entitlement, and give the numbers of your
account, and those accounts held in the name of your spouse or for a minor
child, and your specific relationship to each such other person.
LETTER OF INTENTION. You may also qualify for a reduced sales charge by
completing a Letter of Intention set forth on a separate form, which is
available from the Fund. This enables you to aggregate purchases of shares of
the Fund during a 12-month period for purposes of calculating the applicable
sales charge. All shares of the Fund currently owned will be credited as
purchases toward the completion of the Letter at the greater of their net asset
value on the date the Letter is executed or their cost. No retroactive
adjustment will be made if purchases exceed the amount indicated in the Letter.
For each investment made, you must notify your dealer, the transfer agent or the
distributor that a Letter is on file along with all account numbers associated
with the Letter.
The Letter is not a binding obligation. However, 5% of the amount
specified in the Letter will be held in escrow, and if your purchases are less
than the amount specified, the you will be requested to remit to the Fund an
amount equal to the difference between the sales charge paid and the sales
charge applicable to the aggregate purchases actually made. If not remitted
within 20 days after written request, an appropriate number of escrowed shares
will be redeemed in order to realize the difference. However, the sales charge
applicable to the investment will in no event be higher than if you had not
submitted a Letter.
SALES AT NET ASSET VALUE. Class A shares of the Fund may be sold at
net asset value (i.e., without a sales charge) to:
o registered representatives or employees (and their immediate families) of
authorized dealers, or to any trust, pension, profit-sharing or other
benefit plan for only such persons;
o banks or trust companies or their affiliates when the bank, trust company,
or affiliate is authorized to make investment decisions on behalf of a
client;
o investment advisers and financial planners who place trades for their own
accounts or the accounts of their clients and who charge a management,
consulting or other fee for their services;
o clients of such investment advisers and financial planners who place trades
for their own accounts if the accounts are linked to the master account of
such investment adviser or financial planner on the books and records of
the broker, agent, investment adviser or financial institution; and
o retirement and deferred compensation plans and trusts used to fund those
plans, including, but not limited to those defined in Section 401(a),
403(b) or 457 of the Code and "rabbi trusts."
Class A shares of the Fund may also be sold at net asset value to current
officers, directors and employees (and their immediate families) of the Fund,
the Investment Adviser, the distributor, employees (and their immediate
families) of certain firms providing services to the Fund (such as the
Custodian and the Administrator), and to any trust, pension, profit-sharing or
other benefit plan for only such persons. The Fund may also issue Class A
shares at net asset value in connection with the acquisition of, or merger or
consolidation with, another investment company.
The sales of Class A shares at net asset value described in this
section are made upon the written assurance of the purchaser that the purchase
is made for investment purposes and that the Class A shares will not be resold
except through redemption. Such notice must be given to the transfer Agent or
the distributor at the time of purchase on a form for this purpose as available
from the Fund.
CLASS B SHARES--DEFERRED SALES CHARGE ALTERNATIVE
The Class B shares can be purchased at net asset value without an
initial sales charge. However, if the Class B shares are redeemed within six
years after purchase, they are subject to a contingent deferred sales charge
(expressed as a percentage of the lesser of the current net asset value or
original cost) which will vary according to the number of years from the
purchase of Class B shares until the redemption of those shares. The amount of
the contingent deferred sales charge on Class B shares is set forth below.
YEAR SINCE PURCHASE CDSC
Less than 1 year 5.0%
1 to 3 year 4.0%
3 to 5 years 2.0%
5 to 6 year 1.0%
6 years or more None
Class B shares are subject to higher distribution fees than Class A
shares for a period of eight years (after which they convert to Class A shares).
Shares purchased through reinvestment of dividends on Class B shares also will
convert automatically to Class A shares along with the underlying shares on
which they were earned. Conversion occurs at the end of the month which precedes
the eighth anniversary of the purchase date.
The higher fees mean a higher expense ratio, so Class B shares pay
correspondingly lower dividends and may have a lower net asset value than Class
A shares.
APPLICATION OF THE CONTINGENT DEFERRED SALES CHARGE. Shares obtained
from dividend or distribution reinvestment are not subject to the contingent
deferred sales charge. The contingent deferred sales charge, if applicable, is
deducted from the amount of the redemption. The contingent deferred sales charge
will be waived on redemptions of shares following the death or disability of a
shareholder or to meet the requirements of certain qualified retirement plans.
GENERAL. In addition to the discount or commission paid to dealers, a
distributor may from time to time pay additional cash or other incentives to
dealers in connection with the sale of shares of the Fund. Such additional
amounts may be utilized, in whole or in part, in some cases together with other
revenues of such dealers, to provide additional compensation to registered
representatives who sell shares of the Fund.
REINSTATEMENT PRIVILEGE. If you redeem Class A shares and then decide
to reinvest them, you may, within 120 calendar days of the date of redemption,
use all or any part of the proceeds of the redemption to reinstate, free of an
initial sales charge, all or any part of the investment in Class A shares of the
Fund. If you redeem Class A shares and the redemption was subject to a
contingent deferred sales charge, you may reinstate all or any part of the
investment in shares of the same class of the Fund within 120 calendar days of
the date of redemption and receive a credit for the applicable contingent
deferred sales charge paid. Such investment will be reinstated at the net asset
value per share established as of the close of trading on the New York Stock
Exchange on the day the request is received. The transfer agent must be informed
that the purchase represents a reinstated investment. Reinstated shares must be
registered exactly and be of the same class as the shares previously redeemed;
and the Fund's minimum initial investment amount must be met at the time of
reinstatement.
DESCRIPTION OF CLASSES
The Fund currently offers three classes of shares: Class A, Class B and
Class R shares. Each Class is subject to different expenses and a different
sales charge structure
When purchasing shares, specify which Class you are purchasing. [All
purchase orders that fail to specify a Class will automatically be invested in
Class R shares.] The differing expenses applicable to the different classes of a
Fund's shares may affect the performance of those classes. Broker/dealers and
others entitled to receive compensation for selling or servicing Fund shares may
receive more with respect to one class than another.
DISTRIBUTION PLANS
Each Class has adopted a plan under Rule 12b-1 that allows the Class to
pay distribution fees for the sale and distribution of its shares and allows the
class to pay for services provided to shareholders. Class A shares pay annual
12b-1 expenses of 0.25%. Class B shares pay annual 12b-1 expenses of 0.75%.
Because these fees are paid out of the Fund's assets on an on-going basis, over
time these fees will increase the cost of your investment and may cost you more
than paying other types of sales charges.
AUTOMATIC INVESTMENT PLAN
You may make regular investments in the Fund with an Automatic
Investment Plan by completing the appropriate section of the account
application, obtainable from the transfer agent. Investments may be made monthly
or quarterly. You may terminate the automatic investment or change the amount of
your monthly purchase at any time by written notification to the Transfer Agent.
TAX SHELTERED RETIREMENT PLANS
Since the Fund is oriented to longer-term investments, the Fund may be
an appropriate investment medium for tax-sheltered retirement plans, including:
individual retirement plans (IRAs); simplified employee pensions (SEPs); 401(k)
plans; qualified corporate pension and profit-sharing plans (for employees); tax
deferred investment plans (for employees of public school systems and certain
types of charitable organizations); and other qualified retirement plans. You
should contact the Fund's transfer agent for the procedure to open an IRA or SEP
plan, as well as more specific information regarding these retirement plan
options. Please consult with an attorney or tax advisor regarding these plans.
You must pay custodial fees for your IRA by redemption of sufficient shares of
the Fund from the IRA unless you pay the fees directly to the IRA custodian.
Call the Fund's transfer agent about the IRA custodial fees.
OTHER PURCHASE INFORMATION
The Fund may limit the amount of purchases and refuse to sell to any
person. If your check or wire does not clear, you will be responsible for any
loss incurred by the Fund. If you are already a shareholder, the Fund can redeem
shares from any identically registered account in the Fund as reimbursement for
any loss incurred. You may be prohibited or restricted from making future
purchases in the Fund.
HOW TO REDEEM SHARES
You may receive redemption payments by check or federal wire transfer.
The proceeds may be more or less than the purchase price of your shares,
depending on the market value of the Fund's securities at the time of your
redemption. Presently there is no charge for wire redemptions; however, the Fund
may charge for this service in the future. Any charges for wire redemptions will
be deducted from your Fund account by redemption of shares. If you redeem your
shares through a broker/dealer or other institution, you may be charged a fee by
that institution.
BY MAIL - You may redeem any part of your account in the Fund at no
charge by mail. Your request should be addressed to:
TANAKA Funds, Inc.
c/o Unified Fund Services, Inc.
P.O. Box 6110
Indianapolis, Indiana 46206-6110
Requests to sell shares are processed at the net asset value next
calculated after we receive your order in proper form, less any applicable sales
charge. To be in proper form, your request for a redemption must include your
letter of instruction, including the Fund name, account number, account name(s),
the address, and the dollar amount or number of shares you wish to redeem. This
request must be signed by all registered share owner(s) in the exact name(s) and
any special capacity in which they are registered. The Fund may require that
signatures be guaranteed by a bank or member firm of a national securities
exchange. Signature guarantees are for the protection of shareholders. At the
discretion of the Fund or the Fund's transfer agent, a shareholder, prior to
redemption, may be required to furnish additional legal documents to insure
proper authorization.
BY TELEPHONE - You may redeem any part of your account in the Fund by
calling the Fund's transfer agent at 877-4-TANAKA. You must first complete the
Optional Telephone Redemption and Exchange section of the investment application
to institute this option. The Fund, the transfer agent and the custodian are not
liable for following redemption or exchange instructions communicated by
telephone that they reasonably believe to be genuine. However, if they do not
employ reasonable procedures to confirm that telephone instructions are genuine,
they may be liable for any losses due to unauthorized or fraudulent
instructions. Procedures employed may include recording telephone instructions
and requiring a form of personal identification from the caller.
The Fund or the transfer agent may terminate the telephone redemption
procedures at any time. During periods of extreme market activity, it is
possible that shareholders may encounter some difficulty in telephoning the
Fund, although neither the Fund nor the transfer agent has ever experienced
difficulties in receiving and in a timely fashion responding to telephone
requests for redemptions or exchanges. If you are unable to reach the Fund by
telephone, you may request a redemption or exchange by mail.
BY WIRE- If you have elected wire redemption privileges, the Fund will,
upon request, transmit the proceeds of any redemption greater than $10,000 by
Federal Funds wire to a bank account designated on your Account Application.
Presently there is no charge for wire redemptions; however, the Fund reserves
the right to charge for this service. Any charge for wire redemptions will be
deducted from your Fund account by redemption of shares. If you wish to request
bank wire redemptions by telephone, you must also elect telephone redemption
privileges.
ADDITIONAL INFORMATION - If you are not certain of the requirements for
a redemption please call the Fund's transfer agent at 877-4-TANAKA. Redemptions
specifying a certain date or share price cannot be accepted and will be
returned. You will be mailed the proceeds on or before the fifth business day
following the redemption. However, payment for redemption made against shares
purchased by check will be made only after the check has been collected, which
normally may take up to fifteen calendar days. Also, when the New York Stock
Exchange is closed (or when trading is restricted) for any reason other than its
customary weekend or holiday closing, or under any emergency circumstances (as
determined by the Securities and Exchange Commission) the Fund may suspend
redemptions or postpone payment dates.
Because the Fund incurs certain fixed costs in maintaining shareholder
accounts, the Fund may require you to redeem all of your shares in the Fund on
60 days' written notice if the value of your shares in the Fund is less than
$1,000 due to redemption, or such other minimum amount as the Fund may determine
from time to time. An involuntary redemption constitutes a sale. You should
consult your tax advisor concerning the tax consequences of involuntary
redemptions. You may increase the value of your shares in the Fund to the
minimum amount within the 60-day period. Your shares are subject to redemption
at any time if the Board of Trustees determines in its sole discretion that
failure to so redeem may have materially adverse consequences to all or any of
the shareholders of the Fund.
HOW TO EXCHANGE SHARES
[You may exchange your shares for shares of the Unified Taxable Money
Market Fund, a money market fund managed by Unified Investment Advisers, Inc.
and a separate series of the Unified Funds. You may receive a copy of the
prospectus for the Unified Taxable Money Market Fund by writing Unified or
calling toll-free at 877-4-TANAKA. No sales charges are imposed on exchange
between a Fund and the Unified Taxable Money Market Fund. Exchanges into the
Unified Taxable Money Market Fund are subject to the fees charged by that fund
as set forth in the Unified Taxable Money Market Fund prospectus.
EXCHANGE PROCEDURE-You may request an exchange by writing to Unified at
431 North Pennsylvania Street, Indianapolis, Indiana 46204. The minimum amount
for an exchange to open an account in the Unified Taxable Money Market Fund is
$1,000. You do not need to complete a new account application, unless you are
requesting different shareholder privileges for the new account. The Fund
reserves the right to reject any exchange request and may modify or terminate
the exchange privilege at any time. There is no charge for the exchange
privilege or limitation as to frequency of exchanges.
An exchange of shares in a Fund pursuant to the exchange privilege is,
in effect, a redemption of Fund shares (at net asset value) followed by the
purchase of shares of the investment company into which the exchange is made (at
net asset value) and may result in a a taxable gain or loss for Federal income
tax purposes. The exchange privilege is available to shareholders residing in
any state in which shares of Unified Taxable Money Market Fund, as applicable,
may legally be sold.
TELEPHONE EXCHANGES- If you have elected telephone exchange privileges,
you may request an exchange by calling Unified toll-free at 877-4-TANAKA.
Neither the Fund nor Unified is responsible for the authenticity of telephone
instructions or losses, if any, resulting from unauthorized telephone exchange
requests. Unified employs reasonable procedures to insure that telephone orders
are genuine and, if it does not, it may be liable for any losses due to
unauthorized transactions. You should verify the accuracy of telephone
instructions immediately upon receipt of confirmation statements.]
DETERMINATION OF NET ASSET VALUE
The price you pay for your shares is based on the Fund's net asset
value per share (NAV). The NAV is calculated at the close of trading (normally
4:00 p.m. Eastern time) on each day the New York Stock Exchange is open for
business (the Stock Exchange is closed on weekends, Federal holidays and Good
Friday). The NAV is calculated by dividing the value of the Fund's total assets
(including interest and dividends accrued but not yet received) minus
liabilities (including accrued expenses) by the total number of shares
outstanding.
The Fund's assets are generally valued at their market value. If market
prices are not available, or if an event occurs after the close of the trading
market that materially affects the values, assets may be valued by the Fund's
advisor at their fair value, according to procedures approved by the Fund's
board of trustees.
DIVIDENDS, DISTRIBUTIONS AND TAXES
DIVIDENDS AND DISTRIBUTIONS. The Fund typically distributes
substantially all of its net investment income in the form of dividends and
taxable capital gains to its shareholders. These distributions are automatically
reinvested in the Fund unless you request cash distributions on your application
or through a written request. The Fund expects that its distributions will
consist primarily of capital gains.
TAXES. In general, selling shares of the Fund and receiving
distributions (whether reinvested or taken in cash) are taxable events.
Depending on the purchase price and the sale price, you may have a gain or a
loss on any shares sold. Any tax liabilities generated by your transactions or
by receiving distributions are your responsibility. Because distributions of
long-term capital gains are subject to capital gains taxes, regardless of how
long you have owned your shares, you may want to avoid making a substantial
investment when a Fund is about to make a long-term capital gains distribution.
Early each year, the Fund will mail to you a statement setting forth
the federal income tax information for all distributions made during the
previous year. If you do not provide your taxpayer identification number, your
account will be subject to backup withholding.
The tax considerations described in this section do not apply to
tax-deferred accounts or other non-taxable entities. Because each investor's tax
circumstances are unique, please consult with your tax advisor about your
investment.
MANAGEMENT OF THE FUND
Tanaka Capital Management, Inc., 230 Park Avenue, Suite 960, New York,
New York 10169, serves as investment advisor to the Fund. Tanaka Capital
Management, Inc. has been providing portfolio management services since its
founding, in 1986, by Graham Y. Tanaka. In addition to the assets of the Fund,
the investment adviser and its affiliates manage other assets of approximately
$170 million.
Graham Y. Tanaka has been primarily repsonsible for the day-to-day
management of the Fund's portfolio since its inception in December 1998. Mr.
Tanaka has approximately 12 years of experience managing a mutual fund
portfolio, and has approximately 18 years of experience managing investment
portfolios for private clients. From 1973 until 1978, Mr. Tanaka was a research
analyst at Morgan Guaranty Trust. He then worked at Fiduciary Trust Company of
New York as Vice President from 1978-1980. Prior to launching Tanaka Capital,
Mr. Tanaka served as Chairman at Milbank Tanaka & Associates from 1980 to 1986.
He is a member of The Electronic Analyst Group and also a member of the
Healthcare Analyst Association. Mr. Tanaka currently serves on the boards of
TransAct Technologies, Inc. and Tridex Corporation. He is a 1971 graduate of
Brown University (BS, BA), a 1973 graduate of Stanford University (MBA) and a
Chartered Financial Analyst (CFA).
During the fiscal period from December 30, 1998 to November 30, 1999,
the Fund paid the advisor a fee equal to [ %] of its average daily net assets.
The advisor may pay certain financial institutions (which may include banks,
brokers, securities dealers and other industry professionals) a fee for
providing distribution related services and/or for performing certain
admistrative servicing functions for Fund shareholders to the extent these
institutions are allowed to do so by applicable statute, rule or regulation.
FINANCIAL HIGHLIGHTS
The following condensed supplementary financial information for the
period December 30, 1998 (commencement of operations) to November 30, 1999 is
derived from the audited financial statements of the Fund. As of November 30,
1999, the Class A and Class B shares had not been offered for sale. The
following information relates to Class R only. The financial statements of the
Fund have been audited by McCurdy & Associates CPA's, Inc., independent public
accountants, and are included in the Fund's Annual Report. The Annual Report
contains additional performance information and is available upon request and
without charge.
TANAKA Growth Fund - Class R
Financial Highlights for the period December 30, 1998
(Commencement of Operations) to November 30, 1999
Selected Per Share Data
Net asset value, beginning of period $ 10.00
----------
Income from investment operations
Net investment income (0.08)
Net realized and unrealized gain (loss 3.13
----------
----------
Total from investment operations 3.05
----------
Net asset value, end of period $ 13.05
==========
Total Return (b) 30.50%
Ratios and Supplemental Data
Net assets, end of period (000) $1,495
Ratio of expenses to average net assets 1.75% (a)
Ratio of expenses to average net assets
before reimbursement 13.89% (a)
Ratio of net investment income (loss) to
average net assets (0.80)% (a)
Ratio of net investment income (loss) to
average net assets before reimburse (12.94)% (a)
Portfolio turnover rate 53.45% (a)
(a) Annualized
(b) For periods of less than a full year, total returns are not annualized.
<PAGE>
FOR MORE INFORMATION
Several additional sources of information are available to you. The
Statement of Additional Information (SAI), incorporated into this prospectus by
reference, contains detailed information on Fund policies and operations. Annual
and semi-annual reports contain management's discussion of market conditions,
investment strategies and performance results as of the Fund's latest
semi-annual or annual fiscal year end.
Call the Funds at 877-4-TANAKA to request free copies of the SAI and
the Fund's annual and semi-annual reports, to request other information about
the Fund and to make shareholder inquiries.
You may review and copy information about the Fund (including the SAI
and other reports) at the Securities and Exchange Commission (SEC) Public
Reference Room in Washington, D.C. Call the SEC at 1-202-942-8090 for room hours
and operation. You may also obtain reports and other information about the Fund
on the EDGAR Database on the SEC's Internet site at http.//www.sec.gov, and
copies of this information may be obtained, after paying a duplicating fee, by
electronic request at the following e-mail address: [email protected], or by
writing the SEC's Public Reference Section of the SEC, Washington, D.C.
20549-0102.
Investment Company Act #811-9096
<PAGE>
TANAKA GROWTH FUND
R SHARES
PROSPECTUS
JANUARY __, 2000
INVESTMENT OBJECTIVE:
Growth of capital
230 Park Avenue, Suite 960
New York, New York 10169
877-4-TANAKA
THE SECURITIES AND EXCHANGE COMMISSION HAS NOT APPROVED OR DISAPPROVED THESE
SECURITIES OR DETERMINED IF THIS PROSPECTUS IS TRUTHFUL OR COMPLETE. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
<PAGE>
TABLE OF CONTENTS
PAGE
ABOUT THE FUND.................................................................1
FEES AND EXPENSES OF INVESTING IN THE FUND.....................................3
HOW TO BUY SHARES..............................................................4
HOW TO REDEEM SHARES...........................................................6
HOW TO EXCHANGE SHARES.........................................................7
DETERMINATION OF NET ASSET VALUE...............................................7
DIVIDENDS, DISTRIBUTIONS AND TAXES.............................................8
MANAGEMENT OF THE FUND.........................................................8
FINANCIAL HIGHLIGHTS...........................................................8
FOR MORE INFORMATION..................................................BACK COVER
<PAGE>
ABOUT THE FUND
INVESTMENT OBJECTIVE
The investment objective of the TANAKA Growth Fund is growth of capital.
PRINCIPAL STRATEGIES
The Fund invests primarily in common stocks and other equity securities
of small, medium and large capitalization companies. The Fund will invest
primarily in domestic securities, but it may also invest up to 45% of its net
assets, measured at the time of investment, in foreign securities, including
multinational and emerging market securities. The Fund is a non-diversified
fund, which means that the Fund may take larger positions in a small number of
companies than a diversified fund.
The Fund's investments in equity securities will generally consist of
issues which the Fund's adviser believes have capital growth potential due to
factors such as:
o rapid growth in demand in existing markets;
o expansion into new markets;
o new product introductions;
o reduced competitive pressures;
o cost reduction programs;
o changes in management; and
o other fundamental changes which may result in improved earnings growth
or increased asset values.
The investment adviser relies on research, management meetings and
industry contacts to identify: o companies with above-average long-term earnings
growth potential that could exceed market expectations; o industries that are
positioned to participate in strong demographic, societal or economic trends;
and o companies within those industries that have a particular competitive
advantage or niche.
The Fund may sell a security when:
o the fundamentals of the company decline;
o the security reaches a target price or price-to-earnings ratio; or
o the adviser determines to reallocate assets to a security with superior
capital growth potential.
PRINCIPAL RISKS OF INVESTING IN THE FUND
o MANAGEMENT RISK. The advisor's growth-oriented approach may fail to produce
the intended results.
o SMALLER COMPANY RISK. To the extent the Fund invests in smaller
capitalization companies, the Fund will be subject to additional risks.
These include:
o The earnings and prospects of smaller companies are more volatile than
larger companies.
o Smaller companies may experience higher failure rates than do larger
companies.
o The trading volume of securities of smaller companies is normally less than
that of larger companies and, therefore, may disproportionately affect
their market price, tending to make them fall more in response to selling
pressure than is the case with larger companies.
o Smaller companies may have limited markets, product lines or financial
resources and may lack management experience.
o COMPANY RISK. The value of the Fund may decrease in response to the
activities and financial prospects of an individual company in the Fund's
portfolio. The value of an individual company can be more volatile than the
market as a whole.
o MARKET RISK. Overall stock market risks may also affect the value of the
Fund. Factors such as domestic economic growth and market conditions,
interest rate levels, and political events affect the securities markets
and could cause the Fund's share price to fall.
o FOREIGN RISK. To the extent the Fund invests in foreign securities, the
Fund could be subject to greater risks because the Fund's performance may
depend on issues other than the performance of a particular company.
Changes in foreign economies and political climates are more likely to
affect the Fund than a mutual fund that invests exclusively in U.S.
companies. The value of foreign securities is also affected by the value of
the local currency relative to the U.S. dollar. There may also be less
government supervision of foreign markets, resulting in non-uniform
accounting practices and less publicly available information.
Investment in securities of issuers based in underdeveloped emerging
markets entails all of the risks of investing in securities of foreign
issuers outlined in this section to a heightened degree. These heightened
risks include: (i) greater risks of expropriation, confiscatory taxation,
nationalization, and less social, political and economic stability; (ii)
the smaller size of the market for such securities and a low or nonexistent
volume of trading, resulting in lack of liquidity and in price volatility;
(iii) certain national policies which may restrict a Fund's investment
opportunities; and (iv) in the case of Eastern Europe and in China and
other Asian countries, the absence of developed capital markets and legal
structures governing private or foreign investment and private property and
the possibility that recent favorable economic and political developments
could be slowed or reversed by unanticipated events.
In addition to brokerage commissions, custodial services and other
costs relating to investment in emerging markets are generally more
expensive than in the United States. Such markets have been unable to keep
pace with the volume of securities transactions, making it difficult to
conduct such transactions.
o NON-DIVERSIFICATION RISK. As a non-diversified fund, the Fund's portfolio
may at times focus on a limited number of companies and will be subject to
substantially more investment risk and potential for volatility than a
diversified fund.
o VOLATILITY RISK. Common stocks tend to be more volatile than other
investment choices. The value of an individual company can be more volatile
than the market as a whole. This volatility affects the value of the Fund's
shares.
o An investment in the Fund is not a deposit of any bank and is not insured
or guaranteed by the Federal Deposit Insurance Corporation or any other
government agency.
o The Fund is not a complete investment program. As with any mutual fund
investment, the Fund's returns will vary and you could lose money.
IS THE FUND RIGHT FOR YOU?
The Fund may be suitable for:
o Long-term investors seeking a fund with a growth investment strategy
o Investors who can tolerate the greater risks associated with common stock
investments
o Investors willing to accept the greater market price fluctuations of
smaller companies
o Investors who can tolerate the increased risks of foreign and emerging
market securities
o Investors who can tolerate the increased risks and price fluctuations
associated with a non-diversified fund
GENERAL
The investment objective of the Fund may be changed without shareholder
approval.
From time to time, the Fund may take temporary defensive positions which
are inconsistent with the Fund's principal investment strategies, in attempting
to respond to adverse market, economic, political, or other conditions. For
example, the Fund may hold all or a portion of its assets in money market
instruments or repurchase agreements. If the Fund invests in shares of a money
market fund, the shareholders of the Fund generally will be subject to
duplicative management fees. As a result of engaging in these temporary
measures, the Fund may not achieve its investment objective. The Fund may also
invest in such instruments at any time to maintain liquidity or pending
selection of investments in accordance with its policies.
<PAGE>
HOW THE FUND HAS PERFORMED
The bar chart shows changes in the Fund's returns since the Fund's
inception. The performance table shows how the Fund's average annual total
returns compare over time to those of a broad-based securities market index.
(Total return as of December 31) [Insert bar chart with the following data
points:
1999...............(__)%]
During the period shown, the highest return for a quarter was (__)% (Q_,
1999); and the lowest return was (__)% (Q_, 1999).
AVERAGE ANNUAL TOTAL RETURNS (through December 31, 1999):
One Year Since Inception1
The Fund (___)% (___)%
_____ Index (___)% (___)%
1[insert date of inception]
FEES AND EXPENSES OF INVESTING IN THE FUND
The tables describe the fees and expenses that you may pay if you buy and hold
shares of the Fund.
SHAREHOLDER FEES (fees paid directly from your investment)
Maximum Sales Charge (Load) Imposed on Purchases ...........................NONE
Maximum Deferred Sales Charge (Load)........................................NONE
Redemption Fee..............................................................NONE
Exchange Fee................................................................NONE
ANNUAL FUND OPERATING EXPENSES (expenses that are deducted from Fund assets)
Management Fees............................................................1.00%
Distribution (12b-1) Fees*.................................................0.25%
Other Expenses .............................................................___%
Total Annual Fund Operating Expenses .......................................___%
Expense Reimbursement** ....................................................___%
Net Expenses ..............................................................1.75%
*Long-term shareholders may pay more than the economic equivalent of the maximum
front-end sales charge permitted by rules of the National Association of
Securities Dealers, Inc. ** The Investment Adviser has contractually agreed to
limit the total expenses of the Fund (excluding interest, taxes, brokerage, and
extraordinary expenses) to an annual rate of 1.75% of the average net assets of
the Fund attributable to the Class R shares until April 1, 2001.
Example:
The example below is intended to help you compare the cost of investing
in the Fund with the cost of investing in other mutual funds. The example uses
the same assumptions as other mutual fund prospectuses: a $10,000 initial
investment for the time periods indicated, reinvestment of dividends and
distributions, 5% annual total return, constant operating expenses, and sale of
all shares at the end of each time period. Although your actual expenses may be
different, based on these assumptions your costs will be:
1 YEAR 3 YEARS 5 YEARS 10 YEARS
------ -------- ------- --------
HOW TO BUY SHARES
The minimum initial investment in the Fund is $1,000 and minimum
subsequent investments are $500. The Fund may waive the minimum under certain
circumstances.
INITIAL PURCHASE
BY MAIL- To be in proper form, your initial purchase request must
include:
o a completed and signed investment application form (which accompanies
this Prospectus); and
o a check (subject to the minimum amounts) made payable to the Fund.
Mail the application and check to:
U.S. Mail: Overnight:
TANAKA Funds, Inc TANAKA Funds, Inc.
c/o Unified Fund Services, Inc. c/o Unified Fund Services, Inc.
P.O. Box 6110 431 North Pennsylvania Street
Indianapolis, Indiana 46206-6110 Indianapolis, Indiana 46204
BY WIRE- You may also purchase shares of the Fund by wiring federal
funds from your bank, which may charge you a fee for doing so. To wire money,
you must call Unified Fund Services, Inc. the Fund's transfer agent at
877-4-TANAKA to set up your account and obtain an account number. You should be
prepared at that time to provide the information on the application. Then,
provide your bank with the following information for purposes of wiring your
investment:
Firstar Bank, N.A.
ABA #0420-0001-3
Attn: TANAKA Funds, Inc.: TANAKA Growth Fund
Account Name _________________(write in shareholder name)
For the Account # ______________(write in shareholder account number)
D.D.A.#488922451
You must mail a signed application to Firstar Bank, N.A, the Fund's
custodian, at the above address in order to complete your initial wire purchase.
Wire orders will be accepted only on a day on which the Fund, custodian and
transfer agent are open for business. A wire purchase will not be considered
made until the wired money is received and the purchase is accepted by the Fund.
Any delays which may occur in wiring money, including delays which may occur in
processing by the banks, are not the responsibility of the Fund or the transfer
agent. There is presently no fee for the receipt of wired funds, [but the Fund
may charge shareholders for this service in the future].
THROUGH FINANCIAL INSTITUTIONS- You may purchase and redeem shares of the Fund
through brokers and other financial institutions that have entered into sales
agreements with AmeriPrime. These institutions may charge a fee for their
services and are responsible for promptly transmitting purchase, redemption and
other requests to the Fund. The Fund is not responsible for the failure of any
institution to promptly forward these requests.
If you purchase shares through a broker-dealer or financial
institution, your purchase will be subject to its procedures, which may include
charges, limitations, investment minimums, cutoff times and restrictions in
addition to, or different from, those applicable to shareholders who invest in
the Fund directly. You should acquaint yourself with the institution's
procedures and read this Prospectus in conjunction with any materials and
information provided by your institution. If you purchase Fund shares in this
manner, you may or may not be the shareholder of record and, subject to your
institution's and the Fund's procedures, may have Fund shares transferred into
your name. There is typically a one to five day settlement period for purchases
and redemptions through broker-dealers.
ADDITIONAL INVESTMENTS
You may purchase additional shares of the Fund at any time (subject to
minimum investment requirements) by mail, wire, or automatic investment. Each
additional mail purchase request must contain:
-your name -the name of your account(s)
-your account number(s) -a check made payable to TANAKA Funds, Inc.
Checks should be sent to the TANAKA Funds, Inc. at the address listed
above. A bank wire should be sent as outlined above.
DESCRIPTION OF CLASSES
The Fund currently offers three classes of shares: Class A, Class B and
Class R shares. Each Class is subject to different expenses and a different
sales charge structure
When purchasing shares, specify which Class you are purchasing. [All
purchase orders that fail to specify a Class will automatically be invested in
Class R shares.] The differing expenses applicable to the different classes of a
Fund's shares may affect the performance of those classes. Broker/dealers and
others entitled to receive compensation for selling or servicing Fund shares may
receive more with respect to one class than another.
DISTRIBUTION PLANS
The Fund has adopted a plan under Rule 12b-1 that allows Class R of the
Fund to pay distribution fees for the sale and distribution of its shares and
allows the class to pay for services provided to shareholders. Class R shares
pay annual 12b-1 expenses of 0.25%. Because these fees are paid out of the
Fund's assets on an on-going basis, over time these fees will increase the cost
of your investment and may cost you more than paying other types of sales
charges.
AUTOMATIC INVESTMENT PLAN
You may make regular investments in the Fund with an Automatic
Investment Plan by completing the appropriate section of the account
application, obtainable from the transfer agent. Investments may be made monthly
or quarterly. You may terminate the automatic investment or change the amount of
your monthly purchase at any time by written notification to the Transfer Agent.
TAX SHELTERED RETIREMENT PLANS
Since the Fund is oriented to longer-term investments, the Fund may be
an appropriate investment medium for tax-sheltered retirement plans, including:
individual retirement plans (IRAs); simplified employee pensions (SEPs); 401(k)
plans; qualified corporate pension and profit-sharing plans (for employees); tax
deferred investment plans (for employees of public school systems and certain
types of charitable organizations); and other qualified retirement plans. You
should contact the Fund's transfer agent for the procedure to open an IRA or SEP
plan, as well as more specific information regarding these retirement plan
options. Please consult with an attorney or tax advisor regarding these plans.
You must pay custodial fees for your IRA by redemption of sufficient shares of
the Fund from the IRA unless you pay the fees directly to the IRA custodian.
Call the Fund's transfer agent about the IRA custodial fees.
OTHER PURCHASE INFORMATION
The Fund may limit the amount of purchases and refuse to sell to any
person. If your check or wire does not clear, you will be responsible for any
loss incurred by the Fund. If you are already a shareholder, the Fund can redeem
shares from any identically registered account in the Fund as reimbursement for
any loss incurred. You may be prohibited or restricted from making future
purchases in the Fund.
HOW TO REDEEM SHARES
You may receive redemption payments by check or federal wire transfer.
The proceeds may be more or less than the purchase price of your shares,
depending on the market value of the Fund's securities at the time of your
redemption. Presently there is no charge for wire redemptions; however, the Fund
may charge for this service in the future. Any charges for wire redemptions will
be deducted from your Fund account by redemption of shares. If you redeem your
shares through a broker/dealer or other institution, you may be charged a fee by
that institution.
BY MAIL - You may redeem any part of your account in the Fund at no
charge by mail. Your request should be addressed to:
TANAKA Funds, Inc.
c/o Unified Fund Services, Inc.
P.O. Box 6110
Indianapolis, Indiana 46206-6110
Requests to sell shares are processed at the net asset value next
calculated after we receive your order in proper form. To be in proper form,
your request for a redemption must include your letter of instruction, including
the Fund name, account number, account name(s), the address, and the dollar
amount or number of shares you wish to redeem. This request must be signed by
all registered share owner(s) in the exact name(s) and any special capacity in
which they are registered. The Fund may require that signatures be guaranteed by
a bank or member firm of a national securities exchange. Signature guarantees
are for the protection of shareholders. At the discretion of the Fund or the
Fund's transfer agent, a shareholder, prior to redemption, may be required to
furnish additional legal documents to insure proper authorization.
BY TELEPHONE - You may redeem any part of your account in the Fund by
calling the Fund's transfer agent at 877-4-TANAKA. You must first complete the
Optional Telephone Redemption and Exchange section of the investment application
to institute this option. The Fund, the transfer agent and the custodian are not
liable for following redemption or exchange instructions communicated by
telephone that they reasonably believe to be genuine. However, if they do not
employ reasonable procedures to confirm that telephone instructions are genuine,
they may be liable for any losses due to unauthorized or fraudulent
instructions. Procedures employed may include recording telephone instructions
and requiring a form of personal identification from the caller.
The Fund or the transfer agent may terminate the telephone redemption
procedures at any time. During periods of extreme market activity, it is
possible that shareholders may encounter some difficulty in telephoning the
Fund, although neither the Fund nor the transfer agent has ever experienced
difficulties in receiving and in a timely fashion responding to telephone
requests for redemptions or exchanges. If you are unable to reach the Fund by
telephone, you may request a redemption or exchange by mail.
BY WIRE- If you have elected wire redemption privileges, the Fund will,
upon request, transmit the proceeds of any redemption greater than $10,000 by
Federal Funds wire to a bank account designated on your Account Application.
Presently there is no charge for wire redemptions; however, the Fund reserves
the right to charge for this service. Any charge for wire redemptions will be
deducted from your Fund account by redemption of shares. If you wish to request
bank wire redemptions by telephone, you must also elect telephone redemption
privileges.
ADDITIONAL INFORMATION - If you are not certain of the requirements for
a redemption please call the Fund's transfer agent at 877-4-TANAKA. Redemptions
specifying a certain date or share price cannot be accepted and will be
returned. You will be mailed the proceeds on or before the fifth business day
following the redemption. However, payment for redemption made against shares
purchased by check will be made only after the check has been collected, which
normally may take up to fifteen calendar days. Also, when the New York Stock
Exchange is closed (or when trading is restricted) for any reason other than its
customary weekend or holiday closing, or under any emergency circumstances (as
determined by the Securities and Exchange Commission) the Fund may suspend
redemptions or postpone payment dates.
Because the Fund incurs certain fixed costs in maintaining shareholder
accounts, the Fund may require you to redeem all of your shares in the Fund on
60 days' written notice if the value of your shares in the Fund is less than
$1,000 due to redemption, or such other minimum amount as the Fund may determine
from time to time. An involuntary redemption constitutes a sale. You should
consult your tax advisor concerning the tax consequences of involuntary
redemptions. You may increase the value of your shares in the Fund to the
minimum amount within the 60-day period. Your shares are subject to redemption
at any time if the Board of Trustees determines in its sole discretion that
failure to so redeem may have materially adverse consequences to all or any of
the shareholders of the Fund.
[HOW TO EXCHANGE SHARES
You may exchange your shares for shares of the Unified Taxable Money
Market Fund, a money market fund managed by Unified Investment Advisers, Inc.
and a separate series of the Unified Funds. You may receive a copy of the
prospectus for the Unified Taxable Money Market Fund by writing Unified or
calling toll-free at 877-4-TANAKA. No sales charges are imposed on exchange
between a Fund and the Unified Taxable Money Market Fund. Exchanges into the
Unified Taxable Money Market Fund are subject to the fees charged by that fund
as set forth in the Unified Taxable Money Market Fund prospectus.
EXCHANGE PROCEDURE-You may request an exchange by writing to Unified at
431 North Pennsylvania Street, Indianapolis, Indiana 46204. The minimum amount
for an exchange to open an account in the Unified Taxable Money Market Fund is
$1,000. Exchanges may only be made between identically registered accounts. You
do not need to complete a new account application, unless you are requesting
different shareholder privileges for the new account. The Fund reserves the
right to reject any exchange request and may modify or terminate the exchange
privilege at any time. There is no charge for the exchange privilege or
limitation as to frequency of exchanges.
An exchange of shares in a Fund pursuant to the exchange privilege is,
in effect, a redemption of Fund shares (at net asset value) followed by the
purchase of shares of the investment company into which the exchange is made (at
net asset value) and may result in a a taxable gain or loss for Federal income
tax purposes. The exchange privilege is available to shareholders residing in
any state in which shares of Unified Taxable Money Market Fund, as applicable,
may legally be sold.
TELEPHONE EXCHANGES- If you have elected telephone exchange privileges,
you may request an exchange by calling Unified toll-free at 877-4-TANAKA.
Neither the Fund nor Unified is responsible for the authenticity of telephone
instructions or losses, if any, resulting from unauthorized telephone exchange
requests. Unified employs reasonable procedures to insure that telephone orders
are genuine and, if it does not, it may be liable for any losses due to
unauthorized transactions. You should verify the accuracy of telephone
instructions immediately upon receipt of confirmation statements.]
DETERMINATION OF NET ASSET VALUE
The price you pay for your shares is based on the Fund's net asset
value per share (NAV). The NAV is calculated at the close of trading (normally
4:00 p.m. Eastern time) on each day the New York Stock Exchange is open for
business (the Stock Exchange is closed on weekends, Federal holidays and Good
Friday). The NAV is calculated by dividing the value of the Fund's total assets
(including interest and dividends accrued but not yet received) minus
liabilities (including accrued expenses) by the total number of shares
outstanding.
The Fund's assets are generally valued at their market value. If market
prices are not available, or if an event occurs after the close of the trading
market that materially affects the values, assets may be valued by the Fund's
advisor at their fair value, according to procedures approved by the Fund's
board of trustees.
Requests to purchase and sell shares are processed at the NAV next
calculated after we receive your order in proper form.
DIVIDENDS, DISTRIBUTIONS AND TAXES
DIVIDENDS AND DISTRIBUTIONS. The Fund typically distributes
substantially all of its net investment income in the form of dividends and
taxable capital gains to its shareholders. These distributions are automatically
reinvested in the Fund unless you request cash distributions on your application
or through a written request. The Fund expects that its distributions will
consist primarily of capital gains.
TAXES. In general, selling shares of the Fund and receiving
distributions (whether reinvested or taken in cash) are taxable events.
Depending on the purchase price and the sale price, you may have a gain or a
loss on any shares sold. Any tax liabilities generated by your transactions or
by receiving distributions are your responsibility. Because distributions of
long-term capital gains are subject to capital gains taxes, regardless of how
long you have owned your shares, you may want to avoid making a substantial
investment when a Fund is about to make a long-term capital gains distribution.
Early each year, the Fund will mail to you a statement setting forth
the federal income tax information for all distributions made during the
previous year. If you do not provide your taxpayer identification number, your
account will be subject to backup withholding.
The tax considerations described in this section do not apply to
tax-deferred accounts or other non-taxable entities. Because each investor's tax
circumstances are unique, please consult with your tax advisor about your
investment.
MANAGEMENT OF THE FUND
Tanaka Capital Management, Inc., 230 Park Avenue, Suite 960, New York,
New York 10169, serves as investment advisor to the Fund. Tanaka Capital
Management, Inc. has been providing portfolio management services since its
founding, in 1986, by Graham Y. Tanaka. In addition to the assets of the Fund,
the investment adviser and its affiliates manage other assets of approximately
$170 million.
Graham Y. Tanaka has been primarily responsible for the day-to-day
management of the Fund's portfolio since its inception in December 1998. Mr.
Tanaka has approximately 12 years of experience managing a mutual fund
portfolio, and has approximately 18 years of experience managing investment
portfolios for private clients. From 1973 until 1978, Mr. Tanaka was a research
analyst at Morgan Guaranty Trust. He then worked at Fiduciary Trust Company of
New York as Vice President from 1978-1980. Prior to launching Tanaka Capital,
Mr. Tanaka served as Chairman at Milbank Tanaka & Associates from 1980 to 1986.
He is a member of The Electronic Analyst Group and also a member of the
Healthcare Analyst Association. Mr. Tanaka currently serves on the boards of
TransAct Technologies, Inc. and Tridex Corporation. He is a 1971 graduate of
Brown University (BS, BA), a 1973 graduate of Stanford University (MBA) and a
Chartered Financial Analyst (CFA).
During the fiscal period from December 30, 1998 to November 30, 1999,
the Fund paid the advisor a fee equal to [ %] of its average daily net assets.
The advisor may pay certain financial institutions (which may include banks,
brokers, securities dealers and other industry professionals) a fee for
providing distribution related services and/or for performing certain
admistrative servicing functions for Fund shareholders to the extent these
institutions are allowed to do so by applicable statute, rule or regulation.
FINANCIAL HIGHLIGHTS
The following condensed supplementary financial information for the
period December 30, 1998 (commencement of operations) to November 30, 1999 is
derived from the audited financial statements of the Fund. The financial
statements of the Fund have been audited by McCurdy & Associates CPA's, Inc.,
independent public accountants, and are included in the Fund's Annual Report.
The Annual Report contains additional performance information and is available
upon request and without charge.
TANAKA Growth Fund - Class R
Financial Highlights for the period December 30, 1998
(Commencement of Operations) to November 30, 1999
Selected Per Share Data
Net asset value, beginning of period $ 10.00
----------
Income from investment operations
Net investment income (0.08)
Net realized and unrealized gain (loss 3.13
----------
----------
Total from investment operations 3.05
----------
Net asset value, end of period $ 13.05
==========
Total Return (b) 30.50%
Ratios and Supplemental Data
Net assets, end of period (000) $1,495
Ratio of expenses to average net assets 1.75% (a)
Ratio of expenses to average net assets
before reimbursement 13.89% (a)
Ratio of net investment income (loss) to
average net assets (0.80)% (a)
Ratio of net investment income (loss) to
average net assets before reimburse (12.94)% (a)
Portfolio turnover rate 53.45% (a)
(a) Annualized
(b) For periods of less than a full year, total returns are not annualized.
<PAGE>
FOR MORE INFORMATION
Several additional sources of information are available to you. The
Statement of Additional Information (SAI), incorporated into this prospectus by
reference, contains detailed information on Fund policies and operations. Annual
and semi-annual reports contain management's discussion of market conditions,
investment strategies and performance results as of the Fund's latest
semi-annual or annual fiscal year end.
Call the Funds at 877-4-TANAKA to request free copies of the SAI and
the Fund's annual and semi-annual reports, to request other information about
the Fund and to make shareholder inquiries.
You may review and copy information about the Fund (including the SAI
and other reports) at the Securities and Exchange Commission (SEC) Public
Reference Room in Washington, D.C. Call the SEC at 1-202-942-8090 for room hours
and operation. You may also obtain reports and other information about the Fund
on the EDGAR Database on the SEC's Internet site at http.//www.sec.gov, and
copies of this information may be obtained, after paying a duplicating fee, by
electronic request at the following e-mail address: [email protected], or by
writing the SEC's Public Reference Section of the SEC, Washington, D.C.
20549-0102.
Investment Company Act #811-9096
<PAGE>
TANAKA FUNDS, INC.
TANAKA GROWTH FUND
230 Park Avenue, Suite 960
New York, New York 10169
877-4-TANAKA (Toll-Free)
Statement of Additional Information
January __, 2000
This Statement of Additional Information ("SAI") is not a prospectus.
It should be read in conjunction with the TANAKA Growth Fund's Prospectus dated
January __, 2000. [This SAI incorporates by reference the Fund's Annual Report
to Shareholders for the fiscal year ended November 30, 1999 ("Annual Report").]
A free copy of the Prospectus or Annual Report can be obtained by writing to
TANAKA Funds, Inc., P.O. Box 6110, Indianapolis, Indiana 46204 or calling
877-4-TANAKA.
TABLE OF CONTENTS PAGE
Additional Information on Investment Techniques........................1
Investment Restrictions................................................3
Taxes..................................................................5
Dividends and Distributions............................................9
Portfolio Transactions and Brokerage...................................9
Portfolio Turnover....................................................10
Net Asset Value.......................................................10
Contingent Deferred Sales Charge......................................12
Directors and Officers................................................13
Investment Adviser....................................................15
Transfer Agent........................................................16
Administrator.........................................................16
Custodian
Distribution..........................................................16
Expenses of the Fund..................................................17
Special Shareholder Services..........................................18
General Information and History.......................................19
Performance...........................................................20
Financial Statements
<PAGE>
TANAKA Funds, Inc. (the "Company"), is an open-end, management
investment company, commonly known as a "mutual fund" and was organized on ____,
199_. The TANAKA Growth Fund (the "Fund"), the sole series of the company, is a
non-diversified series organized on ____________, 199_.
ADDITIONAL INFORMATION ON INVESTMENT TECHNIQUES
The investment policies of the Fund are described in the Fund's
Prospectus. The following discussion supplements the information in the Fund's
Prospectus with respect to the types of securities in which the Fund may invest
and the investment techniques it may use in pursuit of its investment objective
Convertible Securities
The Fund may invest in convertible securities that are bonds, notes,
debentures, preferred stocks and other securities, which are convertible into
common stocks that the investment adviser deems suitable. Investments in
convertible securities may provide incidental income through interest and
dividend payments and/or an opportunity for capital appreciation by virtue of
their conversion or exchange features.
Convertible debt securities and convertible preferred stocks, until
converted, have general characteristics similar to both debt and equity
securities. Although, to a lesser extent than with debt securities generally,
the market value of convertible securities tends to decline as interest rates
increase and, conversely, tends to increase as interest rates decline. In
addition, because of the conversion or exchange feature, the market value of
convertible securities typically changes as the market value of the underlying
common stocks changes, and, therefore, also tends to follow movements in the
general market for equity securities. As the market price of the underlying
common stock declines, convertible securities tend to trade increasingly on a
yield basis, and so may not experience market value declines to the same extent
as the underlying common stock. When the market price of the underlying common
stock increases, the prices of the convertible securities tend to rise as a
reflection of the value of the underlying common stock, although typically not
as much as the underlying common stock. While no securities investments are
without risk, investments in convertible securities generally entail less risk
than investments in common stock of the same issuer.
As debt securities, convertible securities are investments which
provide for a stream of income (or in the case of zero coupon securities,
accretion of income) with generally higher yields than common stocks.
Convertible securities generally offer lower yields than non-convertible
securities of similar quality because of their conversion or exchange features.
Convertible securities are generally subordinated to other similar but
non-convertible securities of the same issuer, although convertible bonds, as
corporate debt obligations, enjoy seniority in right of payment to all equity
securities, and convertible preferred stock is senior to common stock of the
same issuer. However, because of the subordination feature, convertible bonds
and convertible preferred stock typically have lower ratings than similar
non-convertible securities.
Foreign Securities
The Fund expects to invest primarily in the securities of companies
domiciled in the United States, although the Fund may also invest up to 45% of
its net assets, measured at the time of investment, in securities of foreign
issuers which meet the same criteria for investment as domestic companies. Such
investments may be made directly in such issuers or indirectly through American
Depositary Receipts ("ADRs"), American Depositary Shares ("ADSs") or open and
closed-end investment companies. It is possible that some material information
about unsponsored ADRs and ADSs will not be available.
Most foreign stock markets are not as large or liquid as in the United
States, fixed commissions on foreign stock exchanges are generally higher than
the negotiated commissions on U.S. exchanges, and there is generally less
government supervision and regulation of foreign stock exchanges, brokers and
companies than in the United States. Investors should recognize that foreign
markets have different clearance and settlement procedures and in certain
markets there have been times when settlements have been unable to keep pace
with the volume of securities transactions, making it difficult to conduct such
transactions. Delays in settlement could result in temporary periods when assets
of the Fund are uninvested and no return is earned thereon. The inability of the
Fund to make intended security purchases due to settlement problems could cause
the Fund to miss attractive investment opportunities. Inability to dispose of
portfolio securities due to settlement problems either could result in losses to
the Fund due to subsequent declines in value of the portfolio security or, if
the Fund has entered into a contract to sell the security, could result in a
possible liability to the purchaser. Payment for securities without delivery may
be required in certain foreign markets. Further, the Fund may encounter
difficulties or be unable to pursue legal remedies and obtain judgments in
foreign courts. Foreign governments can also levy confiscatory taxes,
expropriate assets, and limit repatriations of assets. Typically, there is less
publicly available information about a foreign company than about a U.S.
company, and foreign companies may be subject to less stringent reserve,
auditing and reporting requirements. It may be more difficult for the Fund's
agents to keep currently informed about corporate actions such as stock
dividends or other matters which may affect the prices of portfolio securities.
Communications between the United States and foreign countries may be less
reliable than within the United States, thus increasing the risk of delayed
settlements of portfolio transactions or loss of certificates for portfolio
securities. Individual foreign economies may differ favorably or unfavorably
from the U.S. economy in such respects as growth of gross national product, rate
of inflation, capital reinvestment, resource self-sufficiency and balance of
payments position.
Because investments in foreign securities will usually involve
currencies of foreign countries, and because the Fund may hold foreign
currencies, the value of the assets of the Fund as measured in U.S. dollars may
be affected favorably or unfavorably by changes in foreign currency exchange
rates and exchange control regulations, and the Fund may incur costs in
connection with conversions between various currencies. Although the Fund values
its assets daily in terms of U.S. dollars, it does not convert its holdings of
foreign currencies into U.S. dollars on a daily basis. It will do so from time
to time, and investors should be aware of the costs of currency conversion.
Although foreign exchange dealers do not charge a fee for conversion, they do
realize a profit based on the difference (the "spread") between the prices at
which they are buying and selling various currencies. Thus, a dealer may offer
to sell a foreign currency to the Fund at one rate, while offering a lesser rate
of exchange should the Fund desire to resell that currency to the dealer. The
Fund will conduct its foreign currency exchange transactions on a spot (i.e.,
cash) basis at the spot rate prevailing in the foreign currency exchange market.
Investment in securities of issuers based in underdeveloped emerging
markets entails all of the risks of investing in securities of foreign issuers
outlined in this section to a heightened degree. These heightened risks include:
(i) greater risks of expropriation, confiscatory taxation, nationalization, and
less social, political and economic stability; (ii) the smaller size of the
market for such securities and a low or nonexistent volume of trading, resulting
in lack of liquidity and in price volatility; (iii) certain national policies
which may restrict a Fund's investment opportunities including restrictions on
investing in issuers or industries deemed sensitive to relevant national
interests; and (iv) in the case of Eastern Europe and in China and other Asian
countries, the absence of developed capital markets and legal structures
governing private or foreign investment and private property and the possibility
that recent favorable economic and political developments could be slowed or
reversed by unanticipated events. So long as the Communist Party continues to
exercise a significant or, in some countries, dominant role in Eastern European
countries or in China and other Asian countries, investments in such countries
will involve risks of nationalization, expropriation and confiscatory taxation.
The Communist governments of a number of Eastern European countries expropriated
large amounts of private property in the past, in many cases without adequate
compensation. There may be no assurance that such expropriation will not occur
in the future in either the Eastern European countries or other countries. In
the event of such expropriation, a Fund could lose a substantial portion of any
investments it has made in the affected countries. Further, no accounting
standards exist in Eastern European countries. Finally, even though certain
Eastern European currencies may be convertible into U.S. dollars, the conversion
rates may be artificial to the actual market values and may be adverse to Fund
shareholders.
In addition to brokerage commissions, custodial services and other
costs relating to investment in emerging markets are generally more expensive
than in the United States. Such markets have been unable to keep pace with the
volume of securities transactions, making it difficult to conduct such
transactions. The inability of a Fund to make intended security purchases due to
settlement problems could cause the Fund to miss attractive investment
opportunities. Inability to dispose of a security due to settlement problems
could result either in losses to the Fund due to subsequent declines in the
value of the security or, if the Fund has entered into a contract to sell the
security, could result in possible liability to the purchaser.
The Fund may invest in shares of open-and closed-end investment
companies that acquire equity securities of issuers in emerging markets
countries. By investing in shares of such investment companies, the Fund would
indirectly pay a portion of the operating expenses, management expenses, and
brokerage costs of such companies, as well as those of the Fund. Federal
securities laws impose limits on such investments with which the Fund will
comply, and may affect the ability of the Fund to acquire or dispose of such
shares.
Warrants
The Fund may invest up to 5% of its net assets, measured at the time of
investment, in warrants or rights. A warrant is a long-term option issued by a
corporation that generally gives the investor the right to buy a specified
number of shares of the underlying common stock of the issuer at a specified
exercise price at any time on or before an expiration date. Rights are similar
to warrants, but normally have shorter durations. If the Fund does not exercise
or dispose of a warrant prior to its expiration, it will expire worthless. The
Fund will make such investments only if the underlying equity securities are
deemed appropriate by the Investment Adviser for inclusion in the Fund's
portfolio.
Repurchase Agreements
The Fund may enter into repurchase agreements (which enables the Fund
to employ its assets pending investment) during short periods of time.
Ordinarily, these agreements permit the Fund to maintain liquidity and earn
higher rates of return than would normally be available from other short term
money-market instruments.
Under a repurchase agreement, the Fund buys an instrument and obtains a
simultaneous commitment from the seller to repurchase the investment at a
specified time and at an agreed upon yield to the Fund. The seller is required
to pledge cash and/or collateral which is equal to at least 100% of the value of
the commitment to repurchase. The collateral is held by the Fund's custodian.
The Fund will enter into only repurchase agreements involving U.S. Government
securities in which the Fund may otherwise invest. Repurchase agreements are
considered securities issued by the seller for purposes of the diversification
test under Subchapter M of the Internal Revenue Code of 1986, as amended (the
"Code"), and not cash, a cash item or a U.S. Government security.
The term "U.S. Government securities" refers to a variety of securities
which are issued or guaranteed by the United States Treasury, by various
agencies of the United States Government, and by various instrumentalities which
have been established or sponsored by the United States Government. U.S.
Treasury securities are backed by the "full faith and credit" of the United
States. Securities issued or guaranteed by Federal agencies and U.S. Government
sponsored instrumentalities may or may not be backed by the full faith and
credit of the United States. In the case of securities not backed by the full
faith and credit of the United States, the investor must look principally to the
agency or instrumentality issuing or guaranteeing the obligation for ultimate
repayment, and may not be able to assert a claim against the United States
itself in the event the agency or instrumentality does not meet its
commitment.An instrumentality of the U.S. Government is a government agency
organized under Federal charter with government supervision.
The Fund will always seek to perfect its security interest in the
collateral. If the seller of a repurchase agreement defaults, the Fund may incur
a loss if the value of the collateral securing the repurchase agreement
declines. The Investment Adviser monitors the value of the collateral to ensure
that its value equals or exceeds the repurchase price and also monitors the
financial condition of the issuer of the repurchase agreement. If the seller
defaults, the Fund may incur disposition costs in connection with liquidating
the collateral of that seller. If bankruptcy proceedings are commenced with
respect to the seller, realization upon the collateral by the Fund may be
delayed or limited.
Illiquid or Restricted Securities
The Fund may invest up to 15% of its net assets, measured at the time of
investment, in illiquid securities, for which there is a limited trading market
and for which a low trading volume of a particular security may result in abrupt
and erratic price movements. The Fund may be unable to dispose of its holdings
in illiquid securities at acceptable prices and may have to dispose of such
securities over extended periods of time. The Fund may invest in (i) securities
that are sold in private placement transactions between their issuers and their
purchasers and that are neither listed on an exchange nor traded
over-the-counter, and (ii) securities that are sold in transactions between
qualified institutional buyers pursuant to Rule 144A under the Securities Act of
1933, as amended. Such securities are subject to contractual or legal
restrictions on subsequent transfer. As a result of the absence of a public
trading market, such restricted securities may in turn be less liquid and more
difficult to value than publicly traded securities. Although these securities
may be resold in privately negotiated transactions, the prices realized from the
sales could, due to illiquidity, be less than those originally paid by the Fund
or less than their fair value and in some instances, it may be difficult to
locate any purchaser. In addition, issuers whose securities are not publicly
traded may not be subject to the disclosure and other investor protection
requirements that may be applicable if their securities were publicly traded. If
any privately placed or Rule 144A securities held by the Fund are required to be
registered under the securities laws of one or more jurisdictions before being
resold, the Fund may be required to bear the expenses of registration.
Securities which are freely tradable under Rule 144A may be treated as liquid if
the Board of Directors of the Company is satisfied that there is sufficient
trading activity and reliable price information. Investing in Rule 144A
securities could have the effect of increasing the level of illiquidity of the
Fund's portfolio to the extent that qualified institutional buyers become, for a
time, uninterested in purchasing such 144A securities.
INVESTMENT RESTRICTIONS
The policies set forth below are fundamental policies of the Fund and
may not be changed without approval of a majority of the outstanding voting
securities of the Fund. As used in this Statement of Additional Information, a
"majority of the outstanding voting securities of the Fund" means the lesser of
(1) 67% or more of the voting securities present at a shareholders meeting, if
the holders of more than 50% of the outstanding voting securities of the Fund
are present or represented by proxy at such meeting; or (2) more than 50% of the
outstanding voting securities of the Fund.
As a matter of fundamental policy, the Fund may not:
1. Borrow money, except as permitted under the Investment Company Act
of 1940, as amended, and as interpreted or modified by a regulatory authority
having jurisdiction, from time to time;
2. concentrate its investments in a particular industry, as that term
is used in the Investment Company Act of 1940, as amended, and as interpreted or
modified by a regulatory authority having jurisdiction, from time to time;
3. act as an underwriter of securities issued by others, except to the
extent that it may be deemed an underwriter in connection with the disposition
of portfolio securities of the Fund;
4. make loans to other persons, except (a) loans of portfolio
securities, and (b) to the extent that the entry into repurchase agreements and
the purchase of debt securities in accordance with its investment objective and
investment policies may be deemed to be loans;
5. issue senior securities, except as permitted under the Investment
Company Act of 1940, as amended, and as interpreted or modified by a regulatory
authority having jurisdiction, from time to time; provided that the segregation
of assets or other collateral arrangements with respect to currency-related
contracts, futures contracts, options or other permitted investments, including
deposits of initial and variation margin, are not considered to be the issuance
of senior securities for purposes of this restriction, and obligations for which
the Fund segregates assets in accordance with securities regulatory requirements
will not be deemed to be senior securities;
6. purchase or sell real estate (except that the Fund may invest in (i)
securities of companies which deal in real estate, or mortgages, and (ii)
securities secured by real estate or interests therein, and that the Fund
reserves freedom of action to hold and to sell real estate acquired as a result
of the Fund's ownership of securities); or
7. purchase or sell physical commodities or contracts relating to
physical commodities.
The Fund has voluntarily adopted certain policies and restrictions,
which are observed in the conduct of its affairs. These represent intentions of
the Board of Directors based upon current circumstances. They differ from
fundamental investment policies in that they may be changed or amended by action
of the Board of Directors without prior notice to or approval of shareholders.
The following policies are non-fundamental policies and may be changed without
shareholder approval. The Fund currently may not:
(a) purchase or sell futures contracts or options thereon;
(b) make short sales;
(c) pledge, mortgage or hypothecate its assets in excess, together with
permitted borrowings, of 1/3 of its total assets;
(d) purchase securities on margin, except that the Fund may obtain such
short term credits as are necessary for the clearance of transactions;
(e) invest more than 15% of its net assets in securities which are
illiquid or not readily marketable; and
(f) write put or call options.
If a percentage restriction on investment or utilization of assets as
set forth under "Investment Restrictions" above is adhered to at the time an
investment is made, a later change in percentage resulting from changes in the
value or the total cost of the Fund's assets will not be considered a violation
of the restriction.
TAXES
The Fund will seek to qualify as a regulated investment company under
Subchapter M of the Internal Revenue Code of 1986, as amended (the "Code"). A
regulated investment company qualifying under Subchapter M of the Code is
required to distribute to its shareholders at least 90% of its investment
company taxable income (including net short term capital gain) and generally is
not subject to federal income tax (assuming the Fund meets the 90% gross income
test and the tax diversification test of Subchapter M, described below) to the
extent that it distributes annually its investment company taxable income and
net realized capital gains in the manner required under the Code. The Fund
intends to distribute at least annually all of its investment company taxable
income and net realized capital gains and therefore generally does not expect to
pay federal income taxes.
In order to meet the tax diversification test, at the close of each
quarter of its fiscal year, (I) at least 50% of the value of the Fund's total
assets must be represented by cash and cash items including receivables, U.S.
Government securities, and securities of other regulated investment companies,
and other securities limited in respect of any one issuer to an amount not
greater than 5% of the value of its total assets, and to not more than 10% of
the outstanding voting securities of such issuer, and (ii) not more than 25% of
the value of its total assets may be invested in the securities of any one
issuer (other than U.S.Government securities and the securities of other
regulated investment companies.)
The Fund will meet the 90% of gross income test if 90% of its annual
gross income is derived from dividends, interest, payments with respect to
certain securities loans, and gain from the sale or disposition of stock or
securities or foreign currencies, or other income (including, but not limited
to, gains from options, futures, or forward contracts) derived with respect to
its business of investing in such stock, securities, or currencies.
The Fund is subject to a 4% nondeductible excise tax on amounts
required to be but which are not distributed under a prescribed formula. The
formula requires payment to shareholders during a calendar year of distributions
representing at least 98% of the Fund's ordinary income for the calendar year,
at least 98% of the excess of its capital gains over capital losses (adjusted
for certain ordinary losses prescribed by the Code) realized during the one-year
period ending October 31 during such year, and all ordinary income and capital
gains for prior years that were not previously distributed.
Investment company taxable income generally includes dividends,
interest, net short-term capital gains in excess of net long-term capital
losses, and net foreign currency gains, if any, less expenses. Realized net
capital gains for a fiscal year are computed by taking into account any capital
loss carry forward of the Fund.
If any net realized long term capital gains in excess of net realized
short-term capital losses are retained by the Fund for reinvestment, requiring
federal income taxes to be paid thereon by the Fund, the Fund intends to elect
to treat such capital gains as having been distributed to shareholders. As a
result, each shareholder will report such capital gains as long-term capital
gains, will be able to claim his/her share of federal income taxes paid by the
Fund on such gains as a credit against his/her own federal income tax liability,
and will be entitled to increase the adjusted tax basis of his/her Fund shares
by the difference between his/her pro rata share of such gains and his/her tax
credit.
Distributions of investment company taxable income are taxable to
shareholders as ordinary income. If a portion of the Fund's income consists of
dividends from U.S. corporations, a portion of the dividends paid by the Fund
may qualify for the corporate dividends-received deduction.
Distributions of the excess of net long-term capital gain over net
short-term capital loss are taxable to shareholders as long-term capital gain,
regardless of the length of time the shares of the Fund have been held by such
shareholders. Such distributions are not eligible for a dividends-received
deduction for corporate investors.
Distributions of investment company taxable income and net realized
capital gains will be taxable as described above, whether received in shares or
in cash. Shareholders electing to receive distributions in the form of
additional shares will have a cost basis for federal income tax purposes in each
share so received equal to the net asset value of a share on the reinvestment
date.
If shares are held in a tax-deferred account, such as a retirement
plan, income and gain will not be taxable each year. Instead, the taxable
portion of amounts held in a tax-deferred account generally will be subject to
tax as ordinary income only when distributed from that account.
All distributions of investment company taxable income and realized net
capital gain, whether received in shares or in cash, must be reported by each
shareholder on his or her federal income tax return. Dividends and capital gains
distributions declared in October, November or December and payable to
shareholders of record in such a month will be deemed to have been received by
shareholders on December 31 if paid during January of the following year.
Redemptions of shares, including exchanges for shares of another fund
(to the extent such exchanges may be available), may result in tax consequences
(gain or loss) to the shareholder and are also subject to information reporting
requirements. Any loss recognized on a sale or exchange will be disallowed to
the extent shares disposed of are replaced within a period of 61 days beginning
30 days before and ending 30 days after the disposition. In such a case, the
basis of the acquired shares will be adjusted to reflect the disallowed loss.
Any loss realized by a shareholder on a disposition of Fund shares held by the
shareholder for six months or less may be treated as a long-term capital loss to
the extent of any distributions of net capital gains received by the shareholder
with respect to such shares.
In some cases, shareholders will not be permitted to take sales charges
into account for purposes of determining the amount of gain or loss realized on
the disposition of their Fund shares. This prohibition generally applies where
(1) the shareholder incurs a sales charge in acquiring the shares, (2) the
shares are disposed of before the 91st day after the date on which they were
acquired, and (3) the shareholder subsequently acquires shares of the same or
another fund and the otherwise applicable sales charge is reduced under a
"reinvestment right" received upon the initial purchase of shares. The term
"reinvestment right" means any right to acquire stock of one or more funds
(including the Fund) without the payment of a sales charge or with the payment
of a reduced sales charge. Sales charges affected by this rule are treated as if
they were incurred with respect to the shares acquired under the reinvestment
right. This provision may be applied to successive acquisitions of Fund shares.
Distributions by the Fund result in a reduction in the net asset value
of its shares. Should a distribution reduce the net asset value below a
shareholder's cost basis, such distribution would nevertheless be taxable to the
shareholder as ordinary income or capital gain as described above, even though
it may constitute a partial return of capital. In particular, investors should
consider the tax implications of buying shares just prior to a distribution. The
price of shares purchased at that time includes the amount of the forthcoming
distribution. Those purchasing just prior to a distribution will then receive a
partial return of their invested capital upon the distribution, which will
nevertheless be taxable to them.
If the Fund has a large enough percentage of its assets invested in
foreign securities, the Fund intends to qualify for and may make the election
permitted under Section 853 of the Code so that shareholders may (subject to
limitations) be able to claim a credit or deduction on their federal income tax
returns for, and may be required to treat as part of the amounts distributed to
them, their pro rata portion of qualified taxes paid by the Fund to foreign
countries (which taxes relate primarily to investment income). The Fund may make
an election under Section 853 of the Code, provided that more than 50% of the
value of the total assets of the Fund at the close of the taxable year consists
of securities in foreign corporations. The foreign tax credit available to
shareholders is subject to certain limitations imposed by the Code.
If the Fund invests in stock of certain foreign investment companies,
the Fund may be subject to U.S. federal income taxation on a portion of any
"excess distribution" with respect to, or gain from the disposition of, such
stock. The tax would be determined by allocating such distribution or gain
ratably to each day of the Fund's holding period for the stock. The distribution
or gain so allocated to any taxable year of the Fund, other than the taxable
year of the excess distribution or disposition, would be taxed to the Fund at
the highest ordinary income rate in effect for such year, and the tax would be
further increased by an interest charge to reflect the value of the tax deferral
deemed to have resulted from the ownership of the foreign company's stock. Any
amount of distribution or gain allocated to the taxable year of the distribution
or disposition would be included in the Fund's investment company taxable income
and, accordingly, would not be taxable to the Fund to the extent distributed by
the Fund as a dividend to its shareholders.
Alternatively, the Fund may elect to mark to market its foreign
investment company stock, resulting in the stock being treated as sold at fair
market value on the last business day of each taxable year. Any resulting gain
would be reported as ordinary income; any resulting loss and any loss from an
actual disposition of the stock would be reported as ordinary loss to the extent
of any net mark-to-market gains previously included in income. The Fund also may
elect, in lieu of being taxable in the manner described above, to include
annually in income its pro rata share of the ordinary earnings and net capital
gain of the foreign investment company.
Under the Code, gains or losses attributable to fluctuations in
exchange rates which occur between the time the Fund accrues receivables or
liabilities denominated in a foreign currency and the time the Fund actually
collects such receivables, or pays such liabilities, generally are treated as
ordinary income or ordinary loss. Gain similarly, on disposition of debt
securities denominated in a foreign currency and on disposition of certain
forward contracts, gains or losses attributable to fluctuations in the value of
foreign currency between the date of acquisition of the security or contract and
the date of disposition are also treated as ordinary gain or loss. These gains
or losses, referred to under the Code as "Section 988" gains or losses, may
increase or decrease the amount of the Fund's investment company taxable income
to be distributed to its shareholders as ordinary income.
The Fund will be required to report to the U.S. Internal Revenue
Service ("IRS") all distributions of investment company taxable income and
capital gains as well as gross proceeds from the redemption or exchange of Fund
shares, except in the case of certain exempt shareholders. Under the backup
withholding provisions of Section 3406 of the Code, distributions of investment
company taxable income and capital gains and proceeds from the redemption or
exchange of the shares of a regulated investment company may be subject to
withholding of federal income tax at the rate of 31% in the case of non-exempt
shareholders who fail to furnish the investment company with their Taxpayer
Identification Numbers and with required certifications regarding their status
under the federal income tax law. Withholding may also be required if the Fund
is notified by the IRS or a broker that the Taxpayer Identification Number
furnished by the shareholder is incorrect or that the shareholder has previously
failed to report interest or dividend income. If the withholding provisions are
applicable, any such distributions and proceeds, whether taken in cash or
reinvested in additional shares, will be reduced by the amounts required to be
withheld. Amounts withheld are applied against the shareholder's tax liability
and a refund may be obtained from the IRS, if withholding results in overpayment
of taxes. A shareholder should contact the Fund or the Transfer Agent (as
defined in "Transfer Agent" below) if the shareholder is uncertain whether a
proper Taxpayer Identification Number is on file with the series.
Shareholders of the Fund may be subject to state and local taxes on
distributions received from the Fund and on redemptions or exchanges of the
Fund's shares. Each investor should consult his or her own tax adviser as to the
applicability of these taxes.
In January of each year the Company's Transfer Agent issues to each
shareholder a statement of the federal income tax status of all distributions.
The foregoing discussion of U.S. federal income tax law relates solely to
the application of that law to U.S. persons, i.e., U.S. citizens and residents
and U.S. corporations, partnerships, trusts and estates. Each shareholder who is
not a U.S. person should consider the U.S. and foreign tax consequences of
ownership of Fund shares. Each shareholder who is not a U.S. person should also
consider the U.S. estate tax implications of holding Fund shares at death. The
U.S. estate tax may apply to such holdings if an investor dies while holding
shares of the Fund. Each investor should consult his or her own tax adviser
about the applicability of these taxes. A distribution of net investment income
to nonresident aliens and foreign corporations that are not engaged in a trade
or business in the U.S. to which the distribution is effectively connected, will
be subject to a withholding tax imposed at the rate of 30% upon the gross amount
of the distribution in the absence of a Tax Treaty providing for a reduced rate
or exemption from U.S. taxation. A distribution of net long-term capital gains
realized by the Fund is not subject to tax unless the distribution is
effectively connected with the conduct of the shareholder's trade or business
within the United States, or the foreign shareholder is a non-resident alien
individual who was physically present in the U.S. during the tax year for more
than 182 days.
The foregoing is a general abbreviated summary of present Federal
income taxes on dividends and distributions. Shareholders should consult their
tax advisers about the application of the provisions of the tax law described in
this Statement of Additional Information in light of their particular tax
situations and about any state and local taxes applicable to dividends and
distributions.
<PAGE>
DIVIDENDS AND DISTRIBUTIONS
As stated previously, it is the policy of the Fund to distribute
substantially all of its net investment income and net realized capital gains,
if any, shortly before the close of the fiscal year (November 30th).
All dividend and capital gains distributions, if any, will be
reinvested in full and fractional shares based on net asset value (without a
sales charge) as determined on the ex-dividend date for such distributions.
Shareholders may, however, elect to receive all such payments, or the dividend
or distribution portion thereof, in cash, by sending written notice to this
effect to the Transfer Agent. This written notice will be effective as to any
subsequent payment if received by the Transfer Agent prior to the record date
used for determining the shareholders' entitlement to such payment. Such an
election will remain in effect unless or until the Transfer Agent is notified by
the shareholder in writing to the contrary.
PORTFOLIO TRANSACTIONS AND BROKERAGE
Subject to the supervision of the Directors, decisions to buy and sell
securities for the Fund and negotiation of their brokerage commission rates are
made by the Investment Adviser. Transactions on U.S. stock exchanges involve the
payment by the Fund of negotiated brokerage commissions. There is generally no
stated commission in the case of securities traded in the over-the-counter
market but the price paid by the Fund usually includes an undisclosed dealer
commission or mark-up. In certain instances, the Fund may make purchases of
underwritten issues at prices which include underwriting fees. Consistent with
the Rules of Fair Practice of the National Association of Securities Dealers,
Inc., and subject to its obligation of seeking best qualitative execution, the
Fund's adviser may give consideration to sales of shares of the Trust as a
factor in the selection of brokers and dealers to execute portfolio
transactions.
In selecting a broker to execute each particular transaction, the
Investment Adviser takes the following into consideration: the best net price
available; the reliability, integrity and financial condition of the broker; the
size and difficulty in executing the order; and the value of the expected
contribution of the broker to the investment performance of the Fund on a
continuing basis. Accordingly, the cost of the brokerage commissions to the Fund
in any transaction may be greater than that available from other brokers if the
difference is reasonably justified by other aspects of the portfolio execution
services offered. For example, the Investment Adviser will consider the research
and investment services provided by brokers or dealers who effect or are parties
to portfolio transactions of the Fund or the Investment Adviser's other clients.
Such research and investment services include statistical and economic data and
research reports on particular companies and industries as well as research
software. Subject to such policies and procedures as the Directors may
determine, the Investment Adviser shall not be deemed to have acted unlawfully
or to have breached any duty solely by reason of its having caused the Fund to
pay a broker that provides research services to the Investment Adviser an amount
of commission for effecting a portfolio investment transaction in excess of the
amount another broker would have charged for effecting that transaction, if the
Investment Adviser determines in good faith that such amount of commission was
reasonable in relation to the value of the research service provided by such
broker viewed in terms of either that particular transaction or the Investment
Adviser's ongoing responsibilities with respect to the Fund.
Research and investment information is provided by these and other
brokers at no cost to the Investment Adviser and is available for the benefit of
other accounts advised by the investment adviser and its affiliates, and not all
of the information will be used in connection with the Fund. While this
information may be useful in varying degrees and may tend to reduce the
Investment Adviser's expenses, it is not possible to estimate its value and in
the opinion of the Investment Adviser it does not reduce the Investment
Adviser's expenses in a determinable amount. The extent to which the Investment
Adviser makes use of statistical, research and other services furnished by
brokers is considered by the Investment Adviser in the allocation of brokerage
business but there is no formula by which such business is allocated. The
Investment Adviser does so in accordance with its judgment of the best interests
of the Fund and its shareholders.
PORTFOLIO TURNOVER
Average annual portfolio turnover rate is the ratio of the lesser of
sales or purchases to the monthly average value of the portfolio securities
owned during the year, excluding from both the numerator and the denominator all
securities with maturities at the time of acquisition of one year or less. A
higher rate involves greater transaction expenses to the Fund and may result in
the realization of net capital gains, which would be taxable to shareholders
when distributed. Purchases and sales are made for the Fund's portfolio whenever
necessary, in the Investment Adviser's opinion, to meet the Fund's objective.
The Investment Adviser anticipates that the Fund's average annual portfolio
turnover rate will be less than 100%.
NET ASSET VALUE
The Fund's net asset value ("NAV") per share is calculated daily from
Monday through Friday on each business day on which the New York Stock Exchange
(the "Exchange") is open. The Exchange is currently closed on weekends and on
the following holidays: New Year's Day, Martin Luther King, Jr. Day, Presidents'
Day, Good Friday, Memorial Day, Independence Day, Labor Day, Thanksgiving Day
and Christmas Day, and the preceding Friday or subsequent Monday when any of
these holidays falls on a Saturday or Sunday, respectively.
The Board of Directors has determined that the Fund's NAV be calculated
as of the close of trading of the Exchange (generally 4:00 p.m., Eastern Time)
on each business day from Monday to Friday or on each day (other than a day
during which no security was tendered for redemption and no order to purchase or
sell such security was received by the Fund) in which there is a sufficient
degree of trading in the Fund's portfolio securities that the current NAV of the
Fund's shares might be materially affected by changes in the value of such
portfolio security. The Fund may compute its NAV per share more frequently if
necessary to protect shareholders' interests.
NAV per share is determined by dividing the total value of the Fund's
securities and other assets, less liabilities (including proper accruals of
taxes and other expenses), by the total number of shares then outstanding, and
rounding the result to the nearer cent.
Generally, securities owned by the Fund are valued at market value. In
valuing the Fund's assets, portfolio securities, including American Depositary
Receipts ("ADRs") and American Depositary Shares ("ADSs"), which are traded on
the Exchange, will be valued at the last sale price prior to the close of
regular trading on the Exchange, unless there are indications of substantially
different valuations. Lacking any sales, the security will be valued at the last
bid price prior to the close of regular trading on the Exchange. ADRs and ADSs
for which such a value cannot be readily determined on any day will be valued at
the closing price of the underlying security adjusted for the exchange rate. In
cases where securities are traded on more than one exchange, the securities are
valued on the exchange designated in accordance with procedures approved by the
Board of Directors of the Fund as the primary market. Securities will be valued
using quotations on the exchange and lacking any sales, securities will be
valued at the last reported bid price prior to the Fund's valuation time, unless
the Fund is aware of a material change in the value prior to the time it values
its securities.
Unlisted securities which are quoted on the National Market System of
the National Association of Securities Dealers, Inc. (the "NASD"), for which
there have been sales of such securities, shall be valued at the last sale price
reported on such system. If there are no such sales, the value shall be the high
or "inside" bid, which is the bid supplied by the NASD on its NASDAQ Screen for
such securities in the over-the-counter market. The value of such securities
quoted on the NASDAQ System, but not listed on the NASD's National Market
System, shall be valued at the high or "inside" bid. Unlisted securities which
are not quoted on the NASDAQ System and for which the over-the-counter market
quotations are readily available will be valued at the current bid prices for
such securities in the over-the-counter market. Other unlisted securities (and
listed securities subject to restriction on sale) may be valued at their fair
value as determined in good faith by the Board of Directors.
The value of a security traded or dealt in upon an exchange may be
valued at what the Company's pricing agent determines is fair market value on
the basis of all available information, including the last determined value, if
there was no sale on a given day and the pricing agent determines that the last
bid does not represent the value of the security, or if such information is not
available. For example, the pricing agent may determine that the price of a
security listed on a foreign stock exchange that was fixed by reason of a limit
on the daily price change does not represent the fair market value of the
security. Similarly, the value of a security not traded or dealt in upon an
exchange may be valued at what the pricing agent determines is fair market value
if the pricing agent determines that the last sale does not represent the value
of the security, provided that such amount is not higher than the current bid
price.
Notwithstanding the foregoing, money market investments with a
remaining maturity of less than 60 days shall be valued by the amortized cost
method described below; debt securities are valued by appraising them at prices
supplied by a pricing agent approved by the Fund, which prices may reflect
broker-dealer supplied valuations and electronic data processing techniques and
are representative of market values at the close of the Exchange.
The value of an illiquid security which is subject to legal or
contractual delays in or restrictions on resale by the Fund shall be the fair
value thereof as determined in accordance with procedures established by the
Fund's Board, on the basis of such relevant factors as the following: the cost
of such security to the Fund, the market price of unrestricted securities of the
same class at the time of purchase and subsequent changes in such market price,
potential expiration or release of the restrictions affecting such security, the
existence of any registration rights, the fact that the Fund may have to bear
part or all of the expense of registering such security, and any potential sale
of such security to another investor. The value of other property owned by the
Fund shall be determined in a manner which, in the discretion of the pricing
agent of the Fund, most fairly reflects fair market value of the property on
such date.
Following the calculation of security values in terms of the currency
in which the market quotation used is expressed ("local currency"), the pricing
agent shall, prior to the next determination of the NAV of the Fund's shares,
calculate these values in terms of U.S. dollars on the basis of the conversion
of the local currencies (if other than U.S. dollars) into U.S. dollars at the
rates of exchange prevailing at the valuation time as determined by the pricing
agent.
U.S. Treasury bills, and other short-term obligations issued or
guaranteed by the U.S. Government, its agencies or instrumentalities, with
original or remaining maturities in excess of 60 days are valued at the mean of
representative quoted bid and asked prices for such securities or, if such
prices are not available, are valued at the mean of representative quoted bid
and asked prices for securities of comparable maturity, quality and type.
Short-term securities, with 60 days or less to maturity, are amortized to
maturity based on their cost if acquired within 60 days of maturity or, if
already held, on the 60th day prior to maturity, based on the value determined
on the 61st day prior to maturity.
Any purchase order may be rejected by a distributor or by the Fund.
The Company has reserved the right to redeem its shares by payment of
its portfolio securities in-kind but does not intend to do so under normal
circumstances.
CONTINGENT DEFERRED SALES CHARGES
Class A Shares
With respect to purchases of $1 million or more, Class A shares
redeemed within one year of purchase will be subject to a contingent deferred
sales charge equal to 1% of the lesser of the cost of the shares being redeemed
or their net asset value at the time of redemption. Accordingly, no sales charge
will be imposed on increases in net asset value above the initial purchase
price. In addition, no charge will be assessed on shares derived from
reinvestment of dividends or capital gains distributions. In determining, the
contingent deferred sales charge applicable to a redemption of Class A shares,
it will be assumed that the redemption is, first, of any shares that are not
subject to a contingent deferred sales charge (for example, because an initial
sales charge was paid with respect to the shares, or they have been held beyond
the period during which the charge applies or were acquired upon the
reinvestment of dividends and distributions) and, second, of shares held longest
during the time they are subject to the sales charge. Proceeds from the
contingent deferred sales charge on Class A shares are paid to the distributors
of the Fund's Class A shares, and are used by the distributor to defray the
expenses related to providing distribution-related services to the Fund in
connection with the sales of Class A shares, such as the payment of compensation
to selected dealers or financial intermediaries for selling Class A shares.
Class B Shares
Class B shares that are redeemed within six years of purchase will be
subject to a contingent deferred sales charge at the rates set forth in the
Prospectus charged as a percentage of the dollar amount subject thereto. The
charge will be assessed on an amount equal to the lesser of the cost of the
shares being redeemed or their net asset value at the time of redemption.
Accordingly, no sales charge will be imposed on increases in net asset value
above the initial purchase price. In addition, no charge will be assessed on
shares derived from reinvestment of dividends or capital gains distributions.
Proceeds from the contingent deferred sales charge on the Class B
shares are paid to the distributor and are used to defray the expenses related
to providing distribution-related services to the Fund in connection with the
sale of the Class B shares, including payments to dealers and other financial
intermediaries for selling Class B shares and interest and other financing costs
associated with the Class B shares.
In determining the contingent deferred sales charge applicable to a
redemption of Class B shares, it will be assumed that the redemption is, first,
of any shares that were acquired upon the reinvestment of dividends or
distributions and, second, of any shares held longest during the time they are
subject to the sales charge.
The contingent deferred sales charge is waived on redemptions of shares
(i) following the death or disability, as defined in the Code, of a shareholder,
(ii) to the extent that the redemption represents a minimum required
distribution from an individual retirement account or other retirement plan to a
shareholder who has attained the age of 70 1/2, or (iii) that had been purchased
by present or former directors of the Fund, by the relative of any such person,
by any trust, individual retirement account or retirement plan account for the
benefit of any such person or relative, or by the estate of any such person or
relative.
Conversion Feature
At the end of the month which precedes the eighth anniversary of the
purchase date of a shareholder's Class B shares, the Class B shares will
automatically convert to Class A shares and will no longer be subject to higher
distribution and service fees. Such conversion will occur on the basis of the
relative net asset values of the two classes, without the imposition of any
sales charge, fee or other charge. The purpose of the conversion feature is to
reduce the distribution and service fees paid by holders of Class B shares that
have been outstanding long enough for the distributor to have been compensated
for distribution expenses incurred in the sale of such shares.
For purposes of conversion to Class A, Class B shares purchased through
the reinvestment of dividends and distributions paid in respect of Class B
shares in a shareholder's account will be considered to be held in a separate
sub-account. Each time any Class B shares in the shareholder's account (other
than those in the sub-account) convert to Class A, an equal pro-rata portion of
the Class B shares in the sub-account will also convert to Class A.
Class R Shares
Class R shares are not subject to a contingent deferred sales charge.
DIRECTORS AND OFFICERS
The Board of Directors supervises the business activities of the
corporation. The Board of Directors approves all significant agreements between
the Fund and persons or companies furnishing services to it, including the
Fund's agreements with its investment adviser, administrator, fund accountant,
transfer agent and custodian. The management of the Fund's day-to-day operations
is delegated to its officers, the Investment Adviser and the administrator,
subject always to the investment objective and policies of the Fund and to
general supervision by the Board of Directors. A list of the Company's Directors
and Officers and their principal occupations during the past five years are set
forth below. The address of each director and Officer is c/o Tanaka Capital
Management, Inc., 230 Park Avenue, Suite 960, New York, New York 10169.
*Graham Y. Tanaka, Chairman, Chief Executive Officer and President of the
Company (02/23/48)
Mr. Tanaka is currently the President of Tanaka Capital Management, Inc.
("Tanaka Capital"), having founded the firm in December 1986. From 1973 until
1978, Mr. Tanaka was a research analyst at Morgan Guaranty Trust. He then worked
at Fiduciary Trust Company of New York as Vice President from 1978-1980. Prior
to launching Tanaka Capital, Mr. Tanaka served as Chairman at Milbank Tanaka &
Associates from 1980 to 1986. He is a member of The Electronic Analyst Group and
also a member of the Healthcare Analyst Association. Mr. Tanaka currently serves
on the boards of TransAct Technologies, Inc. and Tridex Corporation. He is a
1971 graduate of Brown University (BS, BA), a 1973 graduate of Stanford
University (MBA) and a Chartered Financial Analyst (CFA).
Charles A. Dill, Director (11/29/39)
Mr. Dill is a General Partner of Gateway Associates, a St. Louis-based
venture capital firm. From 1991 until 1995, Mr. Dill served as President, Chief
Executive Officer and Director of Bridge Information Systems. From 1988 to 1991,
Mr. Dill was President, Chief Operating Officer and Director of AVX Corporation.
Prior to 1988, Mr. Dill was Senior Vice President and a member of the Office of
the Chief Executive of Emerson Electric. Mr. Dill serves on the boards of Stifel
Financial Corp., Zoltek, TransAct Technologies, Inc., Pinnacle Automation and DT
Industries, as well as the boards of several private companies. He is a 1961
graduate of Yale University (BSME) and a 1963 graduate of Harvard University
(MBA).
David M. Fox, Director (8/31/48)
Mr. Fox, is the President and CEO of myTVshop.com, Inc. since January
1999. From March 1992 until joining myTVshop.com he was Unapix Entertainment's
President, Chief Executive Officer and a Director. From June 1991 until joining
Unapix Entertainment in March 1992, he was the Chief Executive Officer of David
Fox and Associates, a company which he founded and which provided international
programming consulting services and acted as United States sales agent for
producers worldwide. From 1981 until June 1991, Mr. Fox served as Chief
Executive Officer and head of Domestic Syndication and Cable Television for
Fox/Lorber Associates, Inc. ("Fox/Lorber"), a corporation which he co-founded
and which engaged in the worldwide distribution of feature films, home video and
television programs. From March 1990 to June 1991, Mr. Fox also served as
Director of GAGA Communications, a Japanese company engaged in home video and
theatrical distribution. Prior to founding Fox/Lorber, Mr. Fox was Eastern and
Midwest Sales Manager for D.L. Taffner Ltd., syndicator of Three's Company and
The Benny Hill Show. He is a 1970 graduate of Brown University (BA) and a 1974
graduate of Harvard (MBA).
Thomas R. Schwarz, Director (6/1/36)
Mr. Schwarz was President and Chief Operating Officer of Dunkin Donuts Inc.
(1966-1989); Chairman of the Board and Chief Executive Officer of Grossmans Inc.
(1989-1994) and retired in 1994. Mr. Schwarz currently sits on the following
boards: TransAct Technologies, Inc., Tridex Corporation, A&W Restaurants,
Lebhar-Friedman Publishing and Foilmark Inc. He is a 1958 graduate of Williams
College (BA) and a 1964 graduate of Harvard University (MBA).
Scott D. Stooker, Director (6/16/54)
Mr. Stooker has been the owner and President of 1st Team Communications
Inc. since 1990. He has served as a member on the board of directors of The
Advertising Club of Delaware, Big Brothers/Little Sisters of Delaware, and
currently serves on the board of Saint Anthony's Community Center. He is a 1976
graduate of University of Kansas (BSJ, BFA).
Robert L. Grant, Secretary (insert birth date)
[insert biography].
Paul L. Bellany, Treasurer and Chief Financial Officer (insert birth date)
[insert biography].
Persons deemed to be "interested" persons of the Company under the
Investment Company Act of 1940.
[With the exception of Fund shares owned by Graham Y. Tanaka in the
amount of the $100,000 initial capital he paid to the Fund, as of the date of
this Statement of Additional Information, the Directors and Officers of the
Company own less than 1% of the Fund.]
Compensation of Directors and Certain Officers
The Directors of the Fund who are employees of the Investment Adviser
or officers or employees of any of its affiliates receive no remuneration from
the Fund. Each of the other Directors is paid up to $2,500 per year, which is
divided into a number of payments equal to the number of in person meetings.
Each Director is also reimbursed for the expenses of attendance at such
meetings. Directors will be paid only that portion of the $2,500 total which is
proportionate to the number of meetings which the Director actually attended
during the year. The fees paid to Directors will be deferred until such time as
the Fund has net assets of $15 million.
The following table sets forth information regarding compensation of
Directors by the Fund for the fiscal year ended November 30, 1999. Officers of
the Fund and Directors who are interested persons of the Fund do not receive any
compensation from the Fund. The Fund does not provide compensation in the form
of pension or retirement benefits to any of its Directors.
Compensation Table
Fiscal Year Ended November 30, 1999
================================================================================
Name of Person, Position Aggregate Compensation from Registrant
================================================================================
================================================================================
================================================================================
* Member of the Audit Committee
** "Interested person," as defined in the 1940 Act, of the Fund because of
the affiliation with Tanaka Capital Management, Inc.
INVESTMENT ADVISER
Tanaka Capital Management, Inc. (the "Investment Adviser"), 230 Park
Avenue, Suite 960, New York, New York 10169, manages the investment of the
assets of the Fund pursuant to an Investment Advisory Agreement (the "Advisory
Agreement"). The Advisory Agreement will be effective for a period of two years
from December 14, 1998 and may be renewed thereafter only so long as such
renewal and continuance is specifically approved at least annually by the
Company's Board of Directors or by vote of a majority of the outstanding voting
securities of the Fund, provided the continuance is also approved by a majority
of the Directors who are not "interested persons" of the Company or the
Investment Adviser by vote cast in person at a meeting called for the purpose of
voting on such approval. The Advisory Agreement is terminable without penalty on
60 days' notice by the Company's Board of Directors or by the Investment
Adviser. The Advisory Agreement provides that it will terminate automatically in
the event of its assignment.
The Company has designated Graham Y. Tanaka, President and a Director
of the Investment Adviser, as the Chairman, President and Chief Executive
Officer of the Company.
The Investment Adviser is paid a fee to be accrued daily at an annual
rate of 1.00% of the average daily net assets of the Fund. All expenses not
specifically assumed by the Investment Adviser are assumed by the Fund. For the
period _____, 1998 (commencement of operations) through November 30, 1999, the
corporation paid advisory fees of $____.
TRANSFER AGENT
Unified Fund Services, Inc. ("Unified"), 431 North Pennsylvania Street,
Indianapolis, Indiana 46204, is the Fund's transfer agent and dividend
disbursing agent, pursuant to a Mutual Fund Services Agreement dated December
14, 1998. Unified also provides fund accounting services to the Fund under this
agreement. Unified is compensated pursuant to a schedule of fees for its
services, and by reimbursement for out-of-pocket expenses. The schedule calls
for a minimum payment by the Fund of $15,000 per year plus $7,500 per year per
additional class. For the period _____, 1998 (commencement of operations) though
November 30, 1999, Unified received $___, from the Adviser for these services.
ADMINISTRATOR
AmeriPrime Financial Services, Inc. (the "Administrator"), 1793
Kingswood Drive, Suite 200, Southlake, Texas 76092, is the Fund's administrator
pursuant to an Administrative Services Agreement, which is dated December 14,
1998 (the "Administration Agreement"). The Administration Agreement is described
in the Fund's Prospectus. The Administration Agreement continues in effect from
year to year for a period of one year only if the Board of Directors, including
a majority of the Directors who are not interested persons of the Company or the
Administrator, approve the extension at least annually. For the period ___, 1998
(commencement of operations) through November 30, 1999, the Administrator
received $___, from the Advisor for these services.
Custodian
Firstar Bank, N.A. (the "Custodian"), 425 Walnut Street, Cincinnati,
Ohio 45202, is the custodian for the Fund. The Custodian collects income when
due and holds all of the Fund's portfolio securities and cash. The Custodian is
authorized to appoint other entities to act as sub-custodians to provide for the
custody of foreign securities which may be acquired and held by the Fund outside
the United States.
DISTRIBUTION
Distributor
AmeriPrime Financial Securities, Inc. (the "Distributor" or
"AmeriPrime"), 1793 Kingswood Drive, Suite 200, Southlake, Texas 76092, acts as
a distributor of the Fund's shares pursuant to a Distribution Agreement between
the Fund and the Distributor.
Distribution and Service Plans
The Company has adopted, in accordance with Rule 12b-1 under the 1940
Act, separate Rule 12b-1 distribution and/or service plans pertaining to the
Fund's Class A, Class B and Class R shares (each, a "Plan"). In adopting each
Plan, a majority of the Independent Directors have concluded in accordance with
the requirements of Rule 12b-1 that there is a reasonable likelihood that each
Plan will benefit the Fund and its shareholders. The Directors of the Company
believe that the Plans should result in greater sales and/or fewer redemptions
of the Fund's shares, although it is impossible to know for certain the level of
sales and redemptions of the Fund's shares in the absence of a Plan or under an
alternative distribution arrangement.
Under the Plan applicable to the Class R shares of the Fund, payments
may be made by the Fund for the purpose of financing any activity primarily
intended to result in the sales of Class R shares of the Fund as determined by
the Board of Directors. Such activities typically include advertising;
compensation for sales and sales marketing activities of financial service
agents and others, such as dealers or distributors; shareholder account
servicing; production and dissemination of prospectuses and sales and marketing
materials; and capital or other expenses of associated equipment, rent,
salaries, bonuses, interest and other overhead. To the extent any activity on
behalf of the Class R shares is one which the Fund may finance without a Plan,
the Fund may also make payments to finance such activity outside of the Plan and
not subject to its limitations. Payments under the Class R Plan are not tied
exclusively to actual distribution and service expenses, and the payments may
exceed distribution and service expenses actually incurred on behalf of the
Class R shares.
Under the Plans for the Class A and Class B shares, the Fund may pay a
service fee, accrued daily and paid monthly, at the annual rate of up to 0.25%
of the average daily net assets attributable to its Class A or Class B shares,
as the case may be. The services for which service fees may be paid include,
among other things, advising clients or customers regarding the purchase, sale
or retention of shares of the Fund, answering routine inquiries concerning the
Fund, assisting shareholders in changing options or enrolling in specific plans
and providing shareholders with information regarding the Fund and related
developments. Pursuant to each Plan, service fee payments made out of or charged
against the assets attributable to the Fund's Class A or Class B shares must be
in reimbursement for services rendered for or on behalf of the affected class.
The expenses not reimbursed in any one month may be reimbursed in a subsequent
month.
Under the Fund's Class B Plan, the Fund may also pay a distribution
fee, accrued daily and paid monthly, at the annual rate of 0.75% of the average
daily net assets attributable to its Class B shares. The distribution fee
compensates a distributor for expenses incurred in connection with activities
primarily intended to result in the sale of the Fund's Class B shares,
including, but not limited to, compensation to broker-dealers that have entered
into a Dealer Agreement with the distributor; compensation to and expenses of
employees of the distributor who engage in or support distribution of the Fund's
Class B shares; telephone expenses; interest expense; printing of prospectuses
and reports for other than existing shareholders; preparation, printing and
distribution of sales literature and advertising materials; and profit on the
foregoing.
Among other things, each Plan provides that (1) the distributor or the
Investment Adviser, as the case may be, will submit to the Board at least
quarterly, and the Directors will review, written reports regarding all amounts
expended under the Plan and the purposes for which such expenditures were made;
(2) each Plan will continue in effect only so long as such continuance is
approved at least annually, and any material amendment thereto is approved, by
the votes of a majority of the Board, including the Independent Directors, cast
in person at a meeting called for that purpose; (3) payments by the Fund under
each Plan shall not be materially increased without the affirmative vote of the
holders of a majority of the outstanding shares of the relevant class; and (4)
while each Plan is in effect, the selection and nomination of Directors who are
not "interested persons" (as defined in the 1940 Act) of the Fund shall be
committed to the discretion of the Directors who are not "interested persons" of
the Company.
A report of the amount expended pursuant to each Plan, and the purposes
for which such expenditures were incurred, must be made to the Board for its
review at least quarterly.
[As of the date of this SAI, no payments had been made under the Plans with
respect to the Fund.]
Each Plan may be amended at any time with respect to the class of
shares of the Fund to which the Plan relates by vote of the Directors, including
a majority of the Independent Directors, cast in person at a meeting called for
the purpose of considering such amendment provided that approval of the
shareholders of the applicable class is required for any amendment to increase
materially the costs which a class may bear for distribution pursuant to the
Plan. Each Plan may be terminated at any time with respect to the class of
shares of the Fund to which the Plan relates, without payment of any penalty, by
vote of a majority of the Independent Directors, or by vote of a majority of the
outstanding voting securities of that class.
EXPENSES OF THE FUND
The Fund will pay its expenses not assumed by the Investment Adviser,
including, but not limited to, the following: distribution expenses; custodian
fees and expenses; stock transfer and dividend disbursing fees and expenses;
taxes; expenses of the issuance and redemption of Fund shares (including
registration and qualification fees and expenses); legal and auditing expenses;
and the cost of stationery and forms prepared exclusively for the Fund.
The allocation of the general expenses of the Company among the Fund
and any other series of the Company that may be created in the future will be
made on a basis that the Company's Board of Directors deems fair and equitable,
which may be based on the relative net assets of the series of the Company or
the nature of the services performed and relative applicability to each seriesof
the Company.
SPECIAL SHAREHOLDER SERVICES
As described briefly in the Prospectus, the Fund offers the following
shareholder services:
Regular Account: The regular account allows for voluntary investments
to be made at any time and is available to individuals, custodians,
corporations, trusts, estates, corporate retirement plans and others. Investors
are free to make additions and withdrawals to or from their regular account as
often as they wish. Simply use the Account Application provided with the
rospectus to open your regular account.
Telephone Transactions: You may redeem shares by telephone if you
request this service at the time you complete the initial Account Application.
If you do not elect this service at that time, you may do so at a later date by
putting your request in writing to the Transfer Agent and having your signature
guaranteed.
The Fund and the Transfer Agent employ reasonable procedures designed
to confirm the authenticity of your instructions communicated by telephone and,
if the Fund or Transfer Agent does not, they may be liable for any losses due to
unauthorized or fraudulent transactions. As a result of this policy, a
shareholder authorizing a telephone redemption bears the risk of loss which may
result from unauthorized or fraudulent transactions which the Fund or Transfer
Agent believes to be genuine. When you request a telephone redemption, or
exchange, if available, you will be asked to respond to certain questions
designed to confirm your identity as a shareholder of record. Your cooperation
with these procedures will protect your account and the Fund from unauthorized
transactions.
Automatic Investment Plan: Shareholders may also purchase additional
Fund shares at regular, pre-selected intervals by authorizing the automatic
transfer of funds from a designated bank account maintained with a United States
banking institution which is an Automated Clearing House member. Under the
program, existing shareholders may authorize amounts to be debited from their
bank account and invested in the Fund monthly or quarterly. Shareholders wishing
to participate in this program may obtain the applicable forms from the Transfer
Agent. Shareholders may terminate their automatic investments or change the
amount to be invested at any time by written notification to the Transfer Agent.
Individual Retirement Account (IRA):
Traditional IRA: An individual may make a deductible contribution to a
traditional individual retirement account ("IRA") of up to $2,000 or, if less,
the amount of the individual's earned income for any taxable year prior to the
year the individual reaches age 70 1/2 if neither the individual nor his or her
spouse is an active participant in an employer's retirement plan. An individual
who is (or who has a spouse who is) an active participant in an employer
retirement plan also may be eligible to make deductible IRA contributions; the
amount, if any, of IRA contributions that are deductible by such an individual
is determined by the individual's (and spouse's, if applicable) adjusted gross
income for the year. Even if an individual is not permitted to make a deductible
contribution to an IRA for a taxable year, however, the individual nonetheless
may make nondeductible contributions up to $2,000, or 100% of earned income if
less, for that year. One spouse also may contribute up to $2,000 per year to the
other spouse's own IRA, even if the other spouse has earned income of less than
$2,000, as long as the spouses' joint earned income is at least $4,000. There
are special rules for determining how withdrawals are to be taxed if an IRA
contains both deductible and nondeductible amounts. In general, a proportionate
amount of each withdrawal will be deemed to be made from nondeductible
contributions; amounts treated as a return of nondeductible contributions will
not be taxable. If you receive a lump sum distribution from another qualified
retirement plan, you may roll over all or part of that distribution into a
traditional IRA. Such a rollover contribution is not subject to the limits on
annual IRA contributions. By complying with applicable rollover rules, you can
continue to defer federal income taxes on your rollover contribution and on any
income that is earned on that contribution.
Roth IRA: An individual also may make nondeductible contributions to a
Roth IRA of up to $2,000 or, if less, the amount of the individual's earned
income for any taxable year if the individual's (and spouse's, if applicable)
adjusted gross income for the year is less than $95,000 for single individuals
or $150,000 for married individuals. The maximum contribution amount phases out
and falls to zero between $95,000 and $110,000 for single persons and between
$150,000 and $160,000 for married persons. Contributions to a Roth IRA may be
made even after the individual attains age 70 1/2. Distributions from a Roth IRA
that satisfy certain requirements will not be taxable when taken; other
distributions of earnings will be taxable. An individual with adjusted gross
income of $100,000 or less generally may elect to roll over amounts from a
traditional IRA to a Roth IRA. The full taxable amount held in the traditional
IRA that is rolled over to a Roth IRA will be taxable in the year of the
rollover, except rollovers made for 1998, which may be included in taxable
income over a four year period.
SEP and SIMPLE Plans: There are special IRA programs available for
corporate employers under which the employers may establish IRA accounts for
their employees in lieu of establishing corporate retirement plans. Known as
SEP-IRAs (Simplified Employee Pension-IRA) and SIMPLE IRAs, they free the
corporate employer of a number of the recordkeeping requirments of establishing
and maintaining a qualified corporate pension or profit sharing plan.
How to Establish IRAs: Please call the Fund to obtain information
regarding the establishment of IRAs. The IRA plan custodian charges your IRA
nominal fees in connection with establishing and maintaining the IRA. These fees
are detailed in the IRA plan documents.
You should consult with a competent adviser for specific advice
concerning your tax status and the possible benefits to you of establishing one
or more IRAs. The description above is only very general, there are numerous
other rules applicable to these plans and considerations of which you should be
aware before establishing one.
GENERAL INFORMATION AND HISTORY
The Company is authorized to issue up to 250,000,000 shares of common
stock, par value $0.01 per share, of which it has currently allocated
150,000,000 shares to the Fund. The Board of Directors can allocate the
remaining authorized but unissued shares to the Fund, or may create additional
series or classes and allocate shares to such series or classes. Each series is
required to have a suitable investment objective, policies and restrictions, to
maintain a separate portfolio of securities suitable to its purposes, and
generally to operate in the manner of a separate investment company as required
by the 1940 Act. The Company does not issue share certificates.
If additional series were to be formed, the rights of existing series
shareholders would not change, and the objective, policies and investments of
each series would not necessarily be changed. A share of any series would
continue to have a priority in the assets of that series in the event of a
liquidation.
The shares of each series when issued will be fully paid and
non-assessable, will have no preference over other shares of the same series as
to conversion, dividends, or retirement, and will have no preemptive rights. The
shares of any series will be redeemable from the assets of that series at any
time at a shareholder's request at the current net asset value of that series
determined in accordance with the provisions of the 1940 Act and the rules
thereunder. The Company's general corporate expenses (including administrative
expenses) will be allocated among the series in proportion to net assets or as
determined in good faith by the Board.
As of ______, 1999, [___________________] was the record owner of __% of the
corporation. As a result, ____ may be deemed to control the corporation.
[As of _______, 1999, the officers and directors as a group own less than
one percent of the corporation.]
Each outstanding share of the Company is entitled to one vote for each
full share of stock and a fractional vote for each fractional share of stock.
All shareholders vote on matters that concern the Company as a whole. Election
of Directors or ratification of the independent accountants are examples of
matters to be voted upon by all shareholders. The Company is not required to
hold a meeting of shareholders each year. The Company intends to hold meetings
of shareholders when it is required to do so by the General Corporation Law of
Maryland or the 1940 Act. Each series will vote separately on matters (1) when
required by the General Corporation Law of Maryland, (2) when required by the
1940 Act, and (3) when matters affect only the interest of the particular
series. An example of a matter affecting only one series is a proposed change in
an investment restriction of that series. The Fund shares will not have
cumulative voting rights, which means that the holders of more than 50% of the
shares voting for the election of Directors can elect all of the Directors if
they choose to do so.
PERFORMANCE
Total return and current yield are the two primary methods of measuring
investment performance. Occasionally, however, the Fund may include its
distribution rate in sales literature. Yield, in its simplest form, is the ratio
of income per share derived from the Fund's portfolio investments to the current
maximum offering price expressed in terms of percent. The yield is quoted on the
basis of earnings after expenses have been deducted. Total return, on the other
hand, is the total of all income and capital gains paid to shareholders,
assuming reinvestment of all distributions, plus (or minus) the change in the
value of the original investment, expressed as a percentage of the purchase
price. The distribution rate is the amount of distributions per share made by
the Fund over a twelve-month period divided by the current maximum offering
price.
Performance quotations by investment companies are subject to certain
rules adopted by the Securities and Exchange Commission (the "Commission").
These rules require the use of standardized performance quotations, or
alternatively, that every non-standardized performance quotation furnished by
the Fund be accompanied by certain standardized performance information computed
as required by the Commission. Current yield and total return quotations used by
the Fund are based on the standardized methods of computing performance mandated
by the Commission.
Current Yield. As indicated below, current yield is determined by
dividing the net investment income per share earned during the period by the
maximum offering price per share on the last day of the period and annualizing
the result. Expenses accrued for the period include any fees charged to all
shareholders during the 30-day (or one-month) base period ended on the date for
which the yield is quoted. According to the Commission formula:
Yield = 2 [(a-b + 1)6 -1]
cd
where:
a = dividends and interest earned during the period.
b = expenses accrued for the period (net of reimbursements).
c = the average daily number of shares outstanding during the
period that were entitled to receive dividends.
d = the maximum offering price per share on the last day of the
period.
Total Return. The Fund may periodically advertise "average annual total
return". As the following formula indicates, the "average annual total return"
is determined by multiplying a hypothetical initial purchase order of $1,000 by
the average annual compound rate of return (including capital
appreciation/depreciation and dividends and distributions paid and reinvested)
for the stated period, less any fees charged to all shareholder accounts, and
annualizing the result. The calculation assumes the maximum sales load is
deducted from the initial $1,000 purchase order and that all dividends and
distributions are reinvested at the public offering price on the reinvestment
dates during the period. The quotation assumes the account was completely
redeemed at the end of each one-, five- and ten-year period or the period since
inception if shorter than the one-, five- or ten-year period and the deduction
of all applicable charges and fees. According to the Commission formula:
P(1+T)n = ERV
where:
P = a hypothetical initial payment of $1,000
T = average annual total return
n = number of years
ERV = ending redeemable value of a hypothetical $1,000
payment made at the beginning of the one-, five-, or
ten-year period at the end of the one-,five-, or
ten-year periods (or fractional portion thereof).
Sales literature pertaining to the Fund may quote a distribution rate
in addition to the yield or total return. The distribution rate is the amount of
distributions per share made by the Fund over a twelve-month period divided by
the current maximum offering price. The distribution rate differs from the yield
because it measures what the Fund paid to shareholders rather than what the Fund
earned from investments. It also differs from the yield because it may include
dividends paid from premium income from option writing, if applicable, and
short-term capital gains in addition to dividends from investment income. Under
certain circumstances, such as when there has been a change in the amount of
dividend payout, or a fundamental change in investment policies, it might be
appropriate to annualize the distributions paid over the period such policies
were in effect, rather than using the distributions paid during the past twelve
months.
Occasionally, statistics may be used to specify the Fund's volatility
or risk. Measures of volatility or risk are generally used to compare the Fund's
changes in net asset value, or its performance, relative to a market index. One
measure of volatility is beta. Beta is the volatility of the Fund relative to
the total market as represented by the Standard & Poor's 500 Stock Index. A beta
of more than 1.00 indicates volatility greater than the market, and a beta of
less than 1.00 indicates volatility less than the market. Another measure of
volatility or risk is standard deviation. Standard deviation is used to measure
variability of net asset value or total return around an average, over a
specified period of time. The premise is that greater volatility connotes
greater risk undertaken in achieving performance.
Regardless of the method used, past performance is not necessarily
indicative of future results, but is an indication of the yield or return to
shareholders only for the limited historical period used.
Comparison of Portfolio Performance
Comparison of the quoted non-standardized performance of various
investments is valid only if performance is calculated in the same manner. Since
there are different methods of calculating performance, investors should
consider the effect of the methods used to calculate performance when comparing
performance of the Fund with performance quoted with respect to other investment
companies or types of investments.
In connection with communicating its performance to current or
prospective shareholders, the Fund also may compare these figures to the
performance of unmanaged indices which may assume reinvestment of dividends or
interest but generally do not reflect deductions for administrative and
management costs. Examples include, but are not limited to the Dow Jones
Industrial Average, the Consumer Price Index, Standard & Poor's 500 Composite
Stock Total Return Index ("S&P 500"), the NASDAQ OTC Composite Index, the NASDAQ
Industrials Index, and the Russell 2000 Index.
From time to time, in advertising, marketing and other Fund literature,
the performance of the Fund may be compared to the performance of broad groups
of mutual funds with similar investment goals, as tracked by independent
organizations such as Investment Company Data, Inc., Lipper Analytical Services,
Inc., CDA Investment Technologies, Inc., Morningstar, Inc., Value Line Mutual
Fund Survey and other independent organizations. When these organizations'
tracking results are used, the Fund will be compared to the appropriate fund
category, that is, by fund objective and portfolio holdings or the appropriate
volatility grouping, where volatility is a measure of a fund's risk. From time
to time, the average price-earnings ratio and other attributes of the Fund's or
the model portfolio's securities, may be compared to the average price-earnings
ratio and other attributes of the securities that comprise the S&P 500.
Statistical and other information, as provided by the Social Security
Administration, may be used in marketing materials pertaining to retirement
planning in order to estimate future payouts of social security benefits.
Estimates may be used on demographic and economic data.
Marketing and other Fund literature may include a description of the
potential risks and rewards associated with an investment in the Fund. The
description may include a "risk/return spectrum" which compares the Fund to
other Tanaka funds or broad categories of funds, such as money market, bond or
equity funds, in terms of potential risks and returns. Money market funds are
designed to maintain a constant $1.00 share price and have a fluctuating yield.
Share price, yield and total return of a bond fund will fluctuate. The share
price and return of an equity fund also will fluctuate. The description may also
compare the Fund to bank products, such as certificates of deposit. Unlike
mutual funds, certificates of deposit are insured up to $100,000 by the U.S.
government and offer a fixed rate of return.
Risk/return spectrums also may depict funds that invest in both
domestic and foreign securities or a combination of bond and equity securities.
Financial Statements
The financial statements and independent auditor's report required to
be included in the Statement of Additional Information are incorporated herein
by reference to the Fund's Annual Report to Shareholders for the period ended
November 30, 1999. The Trust will provide the Annual Report without charge by
calling the Fund at 1-877-4-TANAKA.
<PAGE>
<PAGE>
PART C
OTHER INFORMATION
Item 23. Exhibits.
(a) Articles of Incorporation. Amended and Restated Articles of Incorporation,
which were filed as an Exhibit to Registrant's Pre-Effective Amendment No.
2, are hereby incorporated by reference.
(b) By-laws. By-laws, which were filed as an Exhibit to Registrant's
Pre-Effective Amendment No. 1, are hereby incorporated by reference.
(c) Instruments Defining Rights of Security Holders - None.
Investment Advisory Contracts.
Form of Investment Advisory Agreement between TANAKA Capital Management, Inc.
and the Registrant on behalf of the TANAKA GROWTH FUND, which was filed as an
Exhibit to Registrant's Pre-Effective Amendment No. 2, is hereby incorporated by
reference.
Signature page of the Investment Advisory Agreement between TANAKA Capital
Management, Inc. and the Registrant on behalf of the TANAKA GROWTH FUND is filed
herewith.
Underwriting Contracts
(i ) Form of Distribution Agreement between AmeriPrime Financial Securities,
Inc. and the Registrant on behalf of the TANAKA GROWTH FUND, which was
filed as an Exhibit to Registrant's Pre-Effective Amendment No. 2, is
hereby incorporated by reference.
(ii) Signature page of the Distribution Agreement between AmeriPrime Financial
Securities, Inc. and the Registrant on behalf of the TANAKA GROWTH FUND is
filed herewith.
(iii) Form of Dealer Agreement is filed herewith.
(f) Bonus or Profit Sharing Contracts - None.
Custodial Agreements.
(i) Form of Registrant's agreement with the custodian, Firstar Bank, N.A.,
which was filed as an Exhibit to Registrant's Pre-Effective Amendment No.
2, is hereby incorporated by reference.
(ii) Signature page of the Registrant's agreement with the custodian,
Firstar Bank, N.A. is filed herewith.
Other Material Contracts.
Form of Mutual Fund Services Agreement between Unified Fund Services, Inc. and
the Registrant on behalf of the TANAKA GROWTH FUND, which was filed as an
Exhibit to Registrant's Pre-Effective Amendment No. 2, is hereby incorporated by
reference.
Signature page of Mutual Fund Services Agreement between Unified Fund Services,
Inc. and the Registrant on behalf of the TANAKA GROWTH FUND is filed herewith.
Form of Administrative Services Agreement between AmeriPrime Financial Services,
Inc. and the Registrant on behalf of the TANAKA GROWTH FUND, which was filed as
an Exhibit to Registrant's Pre-Effective Amendment No. 2, is hereby incorporated
by reference.
Signature page of Administrative Services Agreement between AmeriPrime Financial
Services, Inc. and the Registrant on behalf of the TANAKA GROWTH FUND is filed
herewith.
Legal Opinion. Opinion and Consent of Gordon, Feinblatt, Rothman, Hoffberger &
Hollander, LLC is filed herewith.
Other Opinions. Consent of McCurdy & Associates, CPA's, Inc. is filed herewith.
Omitted Financial Statements - None.
Initial Capital Agreements - Investment Representations Letter, which was filed
as an Exhibit to Registrant's Pre-Effective Amendment No. 2, is hereby
incorporated by reference.
Rule 12b-1 Plan.
Distribution and Service Plan (Class A shares only) is filed herewith.
Distribution and Service Plan (Class B shares only) is filed herewith.
Distribution and Service Plan (Class R shares only), which was filed as
an Exhibit to Registrant's Pre-Effective Amendment No. 2, is hereby incorporated
by reference.
Form of Shareholder Service Agreement (Class A and Class B shares) is filed
herewith.
Form of Letter Agreement (Class R shares) is filed herewith.
Financial Data Schedule - None.
Rule 18f-3 Plan. Multiple Class Plan is filed herewith.
Power of Attorney.
Powers of Attorney for the Registrant (and certificate with respect thereto) and
certain directors and officers of the Registrant which were filed as an Exhibit
to Post-Effective Amendment No. 1, are hereby incorporated by reference.
(ii) Powers of Attorney for the Treasurer and a director of the Registrant are
filed herewith.
Item 24. Control Persons.
None.
Item 25. Indemnification.
The Registrant is incorporated under the General Corporation Law (the "GCL") of
the State of Maryland. The Registrant's Articles of Incorporation provide for
indemnification of directors, officers and other agents of the corporation to
the fullest extent permitted under the GCL. The articles limit such
indemnification so as to comply with the prohibition against indemnifying such
persons under Section 17 of the 1940 Act for certain conduct set forth in that
section ("Disabling Conduct"). Contracts between the Fund and various service
providers include provisions for indemnification, but also forbid the Registrant
to indemnify affiliates for Disabling Conduct.
The Registrant may maintain a standard mutual fund and investment advisory
professional and directors and officers liability policy. The policy, if
maintained, would provide coverage to the Registrant, its directors and
officers, and could cover its Adviser, among others. Coverage under the policy
would include losses by reason of any act, error, omission, misstatement,
misleading statement, neglect or breach of duty.
Item 26. Business and Other Connections of Investment Adviser
TANAKA Capital Management, Inc. ("TANAKA"), 230 Park Avenue, Suite 960 New York,
New York 10169, is adviser to the TANAKA Growth Fund.
TANAKA has engaged in no other business during the past two fiscal years.
(b) For information as to any other business, profession, vocation or employment
of a substantial nature in which each director, officer or partner of TANAKA is
or has been, at any time during the past two fiscal years, engaged for his own
account or in the capacity of director, officer, employee, partner or trustee,
reference is made to the Adviser's Form ADV (File #801-28990), currently on file
with the Commission as required by the Investment Advisors Act of 1940, as
amended.
Item 27. Principal Underwriter.
AmeriPrime Financial Securities, Inc., is the Registrant's principal
underwriter. Kenneth D. Trumpfheller, 1793 Kingswood Drive, Suite 200,
Southlake, Texas 76092, is the President, Secretary and Treasurer of the
underwriter, and the assistant Secretary, Treasurer and Chief Financial Officer
of the Registrant. It is also the underwriter for the AmeriPrime Insurance
Trust, the Kenwood Funds, the Rockland Funds Trust and the AmeriPrime Funds.
Information with respect to each director and officer of AmeriPrime Financial
Securities, Inc. is incorporated by reference to Schedule A of Form BD filed by
it under the Securities Exchange Act of 1934 (File No. 8-48143). 1 Not
applicable.
Item 28. Location of Accounts and Records.
Accounts, books and other documents required to be maintained by Section 31(a)
of the Investment Company Act of 1940 and the rules promulgated thereunder are
maintained by the Registrant at 230 Park Avenue, Suite 960 New York, New York
10169 and/or by the Registrant's Custodian, Firstar Bank, N.A., 425 Walnut
Street, Cincinnati, Ohio 45202, and/or the Registrant's transfer and shareholder
service agent, Unified Fund Services, Inc., 431 Pennsylvania Street,
Indianapolis, IN 46204.
Item 29. Management Services not discussed in Parts A or B - None.
Item 30. Undertakings - None.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, the Registrant certifies that it meets all the
requirements for effectiveness of this Post-Effective Amendment No. 2 to its
Registration Statement pursuant to Rule 485(b) under the Securities Act of 1933
and has duly caused this Post-Effective Amendment No. 2 to its Registration
Statement to be signed on its behalf by the undersigned, duly authorized, in the
City of Cincinnati, State of Ohio, on the 28th day of January, 2000.
By:_____/s/_______________________
Donald S. Mendelsohn,
Attorney-in-Fact
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed below by the following persons in the
capacities and on the dates indicated.
Graham Y. TANAKA* By: ___/s/__________________
President and Director *Donald S. Mendelsohn, Attorney-in-Fact
Charles A. Dill, Director*
David M. Fox, Director* January 28, 2000
Thomas R. Schwarz, Director*
Scott D. Stooker, Director*
Kenneth D. Trumpfheller, Treasurer*
<PAGE>
EXHIBIT INDEX
1. Signature Page of Investment Advisory Agreement............Ex-99.23.d.1
2. Signature Page of Distribution Agreement...................EX-99.23.e.1
3. Form of Dealer Agreement...................................EX-99.23.e.2
4. Signature Page of Custodial Agreement........................EX-99.23.g
5. Signature Page of Mutual Fund Services Agreement...........EX-99.23.h.1
6. Signature Page of Administrative Services Agreement........EX-99.23.h.2
7. Legal Opinion and Consent...................................EX-99.23.i
8. Consent of Accountant........................................EX-99.23.j
9. 12b-1 Plan (Class A Shares Only)...........................EX-99.23.m.1
10. 12b-1 Plan (Class B Shares Only)...........................EX-99.23.m.2
11. Form of Shareholder Service Agreement (Class A and Class B)....
......................................EX-99.23.m.3
12. Form of Letter Agreement (Class R).........................EX-99.23.m.4
13. 18f-3 Plan...................................................EX-99.23.o
14. Powers of Attorney.......................................EX-99.23.p
Signature Page for Investment Advisory Agreement
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed all as of the day and year first above written.
TANAKA FUNDS, INC.
Graham Y. Tanaka
Name:
Title: President
TANAKA CAPITAL MANAGEMENT, INC.
Graham Y. Tanaka
Name:
Title: President
Signature Page for Distribution Agreement
IN WITNESS WHEREOF, the parties have duly executed this Agreement as of
the day and year first above written.
TANAKA FUNDS, INC.
By: Graham Y. Tanaka
President
AMERIPRIME FINANCIAL SECURITIES, INC.
By: Kenneth D. Trumpfheller
President
TANAKA CAPITAL MANAGEMENT
By: Graham Y. Tanaka
President
TANAKA FUNDS, INC.
DEALER AGREEMENT
AmeriPrime Financial Securities, Inc. (the "Distributor") invites you,
as a selected dealer, to participate as principal in the distribution of shares
(the "Shares") of the mutual funds set forth on Schedule A to this Agreement
(the "Funds"), of which it is the exclusive Distributor. Distributor agrees to
sell to you, subject to any limitations imposed by the Funds, Shares issued by
the Funds and to promptly confirm each sale to you. All sales will be made
according to the following terms:
1. All offerings of any of the Shares by you must be made at the
public offering prices, and shall be subject to the conditions of offering, set
forth in the then current Prospectus of the applicable Fund and to the terms and
conditions herein set forth, and you agree to comply with all requirements
applicable to you of all applicable laws, including federal and state securities
laws, the rules and regulations of the Securities and Exchange Commission, and
the Rules of Fair Practice of the National Association of Securities Dealers,
Inc. (the "NASD"), including Section 24 of the Rules of Fair Practice of the
NASD. You will not offer the Shares for sale in any state or other jurisdiction
where they are not qualified for sale under the Blue Sky Laws and regulations of
such state or jurisdiction, or where you are not qualified to act as a dealer.
Upon request to Distributor, Distributor will inform you as to the states or
other jurisdictions in which Distributor believes the Shares may legally be
sold.
2. (a) On sales of Shares which are made subject to a sales charge,
you will receive a discount from the public offering price ("concession") on all
Shares purchased by you from Distributor as indicated on Schedule A, as it may
be amended by Distributor from time to time.
(b) In all transactions in open accounts in which you are designated as Dealer
of Record, you will receive the concessions as set forth on Schedule A.
On sales of Shares which are subject to an asset-based fee or sales
charge payable to the selling dealer, you will be paid any continuing fees
("Fees") in accordance with any applicable plan of distribution adopted by the
applicable Fund as in effect from time to time (in accordance with SEC Rule
12b-1 and NASD Conduct Rule 2830) as set forth in the applicable Fund's
Prospectus or Statement of Additional Information. (See Schedule A.)
You hereby authorize Distributor to act as your agent in connection
with all transactions in open accounts in which you are designated as Dealer of
Record. All designations as Dealer of Record, and all authorizations of
Distributor to act as your agent pursuant thereto, shall cease upon the
termination of this Agreement or upon the investor's instructions to transfer
his open account to another Dealer of Record. No dealer concessions or Fees will
be allowed on purchases generating less than $1.00 in dealer concessions or
Fees.
(e) As the exclusive Distributor of the Shares, Distributor reserves the
privilege of revising the discounts and Fees specified on Schedule A at any time
by written notice.
3. Concessions and Fees will be paid to you at the address of your
principal office, as indicated below in your acceptance of this Agreement.
4. Distributor reserves the right to cancel this Agreement at any time
without notice if any Shares shall be offered for sale by you at less than the
then current public offering prices determined by, or for, the Funds.
5. All orders are subject to acceptance or rejection (in whole or in
part) by Distributor in its sole discretion. Distributor reserve the right, in
its discretion, without notice, to suspend sales or withdraw the offering of
Shares entirely.
6. Payment shall be made to the Funds and shall be received by its
Transfer Agent within three (3) business days after the acceptance of your order
or such shorter time as may be required by law. With respect to all Shares
ordered by you for which payment has not been received, you hereby assign and
pledge to Distributor all of your right, title and interest in such Shares to
secure payment therefor. You appoint Distributor as your agent to execute and
deliver all documents necessary to effectuate any of the transactions described
in this paragraph. If such payment is not received within the required time
period, Distributor reserves the right, without notice, and at its option,
forthwith (a) to cancel the sale, (b) to sell the Shares ordered by you back to
the Funds, or (c) to assign your payment obligation, accompanied by all pledged
Shares, to any person. You agree that Distributor may hold you responsible for
any loss, including loss of profit, suffered by the Funds, its Transfer Agent or
Distributor, resulting from your failure to make payment within the required
time period.
7. No person is authorized to make any representations concerning
Shares of the Funds except those contained in the current applicable Prospectus
and Statement of Additional Information and in sales literature issued and
furnished by Distributor supplemental to such Prospectus. Distributor will
furnish additional copies of the current Prospectus and Statement of Additional
Information and such sales literature and other releases and information issued
by Distributor in reasonable quantities upon request.
8. Under this Agreement, you act as principal and are not employed by
Distributor as broker, agent or employee. You are not authorized to act for
Distributor nor make any representation on its behalf; and in purchasing or
selling Shares hereunder, you rely only upon the current Prospectus and
Statement of Additional Information furnished to you by Distributor from time to
time and upon such written representations as may hereafter be made by
Distributor to you over its signature.
9. You appoint the Transfer Agent for the Funds as your agent to
execute the purchase transactions of Shares in accordance with the terms and
provisions of any account, program, plan or service established or used by your
customers and to confirm each purchase to your customers on your behalf, and you
guarantee the legal capacity of your customers so purchasing such Shares and any
co-owners of such Shares.
10. You will (a) maintain all records required by law relating to
transactions in the Shares, and upon the request of Distributor, or the request
of the Funds, promptly make such of these records available to Distributor or to
the Funds as are requested, and (b) promptly notify Distributor if you
experience any difficulty in maintaining the records required in the foregoing
clause in an accurate and complete manner. In addition, you will establish
appropriate procedures and reporting forms and schedules, approved by
Distributor and by the Funds, to enable the parties hereto and the Funds to
identify all accounts opened and maintained by your customers.
11. Each party hereto represents that it is at present, and at all
times during the term of this Agreement will be, a member in good standing of
the NASD and agrees to abide by all its Rules of Fair Practice including, but
not limited to, the following provisions:
(a) You shall not withhold placing customers' orders for any Shares so
as to profit yourself as a result of such withholding. You shall not purchase
any Shares from Distributor other than for investment, except for the purpose of
covering purchase orders already received.
(b) All conditional orders received by Distributor must be at a
specified definite price.
(c) If any Shares purchased by you are repurchased by the Funds (or by
Distributor for the account of the Funds) or are tendered for redemption within
seven business days after confirmation of the original sale of such Shares (1)
you agree to forthwith refund to Distributor the full concession allowed to you
on the original sale, such refund to be paid by Distributor to the Funds, and
(2) Distributor shall forthwith pay to the Funds that part of the discount
retained by Distributor on the original sale. Notice will be given to you of any
such repurchase or redemption within ten days of the date on which the
repurchase or redemption request is made.
(d) Neither Distributor, as exclusive Distributor for the Funds, nor
you as principal, shall purchase any Shares from a record holder at a price
lower than the net asset value then quoted by, or for, the Funds. Nothing in
this sub-paragraph shall prevent you from selling Shares for the account of a
record holder to Distributor or the Funds at the net asset value currently
quoted by, or for, the Funds and charging the investor a fair commission for
handling the transaction.
(e) You warrant on behalf of yourself and your registered
representatives and employees that any purchase of Shares at net asset value by
the same pursuant to the terms of the Prospectus of the applicable Fund is for
investment purposes only and not for purposes of resale. Shares so purchased may
be resold only to the Fund which issued them.
12. You agree that you will indemnify Distributor, each Fund, each
Fund's Transfer Agent, each Fund's Investment Adviser, and each Fund's Custodian
and hold such persons harmless from any losses, claims, liabilities and expenses
(including legal expenses) relating to the lawfulness of your company's
participation in this Agreement and the transactions contemplated hereby or
relating to any activities of any persons or entities affiliated with your
company which are performed in connection with the discharge of your
responsibilities under this Agreement. If any claims are asserted, the
indemnified parties shall have the right to engage in their own defense,
including the selection and engagement of legal counsel of their choosing, and
all costs of such defense shall be borne by you.
13. This Agreement will automatically terminate in the event of its
assignment. Either party hereto may cancel this Agreement without penalty upon
ten days' written notice. This Agreement may also be terminated as to any Fund
at any time without penalty by the vote of a majority of the members of the
Board of Directors of the terminating Fund who are not "interested persons" (as
such term is defined in the Investment Company Act of 1940) or by a vote of a
majority of the outstanding voting securities of the terminating Fund on ten
days' written notice.
14. All communications to Distributor should be sent to AmeriPrime
Financial Securities, Inc., 1793 Kingswood Drive, Suite 200, Southlake, Texas
76092, or at such other address as Distributor may designate in writing. Any
notice to you shall be duly given if mailed or telegraphed to you at the address
of your principal office, as indicated below in your acceptance of this
Agreement.
15. This Agreement supersedes any other agreement with you relating to
the offer and sale of the Shares, and relating to any other matter discussed
herein.
16. This Agreement shall be binding (i) upon placing your first order
with Distributor for the purchase of Shares, or (ii) upon receipt by Distributor
in Southlake, Texas of a counterpart of this Agreement duly accepted and signed
by you, whichever shall occur first. THIS AGREEMENT SHALL BE CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF TEXAS.
17. The undersigned, executing this Agreement on behalf of Dealer,
hereby warrants and represents that he is duly authorized to so execute this
Agreement on behalf of Dealer.
If the foregoing is in accordance with your understanding of our
agreement, please sign and return to us one copy of this Agreement.
AMERIPRIME FINANCIAL SECURITIES, INC.
By: _____________________________________
Kenneth D. Trumpfheller, President
ACCEPTED BY DEALER:
- -----------------------------------------
Firm Name
By: _____________________________________
Authorized Signature, Position
__________________________________
Type or Print Name
ADDRESS (Principal Office):
- -----------------------------------------
- -----------------------------------------
Date: ___________________________________
<PAGE>
SCHEDULE A
TANAKA FUNDS, INC.
FUND NAME CUSIP
TANAKA Growth Fund
[Insert information regarding Concessions and Fees]
Class A
Class B
Class R
Signature Page for Custodial Agreement
IN WITNESS WHEREOF, each of the parties hereto has caused this
Agreement to be executed and delivered in its name and on its behalf by its
representatives thereunto duly authorized, all as of the day and year first
above written.
ATTEST:
TANAKA FUNDS, INC.
Victoria A. McCann By: Graham Y. Tanaka
Secretary President
ATTEST: FIRSTAR BANK, N.A.
Lynnette C. Gibson By: Martha A. Croxton
Senior Vice President
Signature Page for Mutual Fund Services Agreement
TANAKA FUNDS, INC.
By: _/s/_______________ Date: 12/14/98
Print Name: Graham Y. Tanaka, President
Attest: Robert L. Grant
UNIFIED FUND SERVICES, INC.
By ____/s/_______________________ Date: 12/23/98
Print Name: David A. Bogaert
Title: President
By: ___/s/__________________ Date: 12/23/98
Print Name: Linda Lawson
Title: Senior Vice President, C.O.O.
Attest: Carol J. Highsmith
IN WITNESS WHEREOF, the parties have duly executed this Agreement as of
the day and year first above written.
TANAKA Funds Inc.
By: Graham Y. Tanaka
Its: President
AmeriPrime Financial Services, Inc.
By: Kenneth D. Trumpfheller
Its: President
January 27, 2000
Tanaka Funds, Inc.
230 Park Avenue, Suite 960
New York, New York 10169
Gentlemen:
We are special Maryland counsel to Tanaka Funds, Inc., a Maryland
corporation (the "Fund"). We are furnishing this opinion in connection with the
filing by the Fund with the Securities and Exchange Commission of Post-Effective
Amendment No. 2 under the Securities Act of 1933 to its Registration Statement
on Form N-1A covering the Class A, Class B and Class R shares of common stock,
$.01 par value per share, of the Fund.
We have examined copies of (i) the Amended and Restated Articles of
Incorporation of the Fund, (ii) the Bylaws of the Fund, (iii) copies of
proceedings of the Board of Directors of the Fund with respect to the issuance
of the Shares, and (iv) such other documents as we have deemed necessary for the
purpose of this opinion. In our review, we have assumed the genuineness of all
signatures and the conformity to original documents of all copies furnished to
us. Based on the foregoing, we are of the opinion that the Shares, upon issuance
and payment therefore, in accordance with the then current Prospectuses and
Statement of Additional Information of the Fund, will be legally issued, fully
paid and non-assessable.
We hereby consent to the filing of this opinion as an exhibit to
Post-Effective Amendment No. 2 to the Registration Statement of the Fund.
Very truly yours,
Gordon, Feinblatt, Rothman, Hoffberger and Hollander, LLC
By: __/s/___________________
Edward E. Obstler, Member
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the use of our report
dated December 16, 1999 and to all references to our firm included in or made a
part of this Post-Effective Amendment No. 2 to TANAKA Funds, Inc. Registration
Statement on Form N-1A (file No. 33-47207), including the references to our firm
under the heading "Financial Highlights" in the Prospectus and heading
"Accountants" in the Statement of Additional Information.
___/s/______________________
McCurdy & Associates CPA's, Inc.
Westlake, Ohio
January 27, 2000
DISTRIBUTION AND SERVICE PLAN
(Class A Shares Only)
WHEREAS, TANAKA Funds, Inc. (the "Company") is registered as an
open-end management investment company under the Investment Company Act of 1940
(the "Act") and consists of one or more separate investment portfolios (the
"Funds") as may be established and designated from time to time;
WHEREAS, the Board of Directors of the Company has determined to adopt
a Distribution and Service Plan (the "Plan") in accordance with the requirements
of the Act and has determined that there is a reasonable likelihood that the
Plan will benefit the Company and its shareholders;
WHEREAS, the Company desires to enter into agreements with dealers and
other financial service organizations to obtain various distribution-related
and/or shareholder services for the Funds, all as permitted and contemplated by
Rule 12b-1 adopted under the Act, it being understood that to the extent any
activity is one which the Funds may finance without a Rule 12b-1 plan, the Funds
may also make payments to finance such activity outside such a plan and not
subject to its limitation;
NOW THEREFORE, the Company hereby adopts the Plan to apply only to
Class A shares on the following terms and conditions:
1. The Plan will pertain to the Class A shares of TANAKA Growth Fund and
the Class A shares of such other Funds as shall be designated from time to time
by the Board of Directors in any supplement to the Plan.
2. The Funds may charge a fee for distribution and shareholder services on
an annualized basis of 0.25% of each Fund's average daily net assets
attributable to the Class A shares; provided that, at any time such payment is
made, whether or not this Plan continues in effect, the making thereof will not
cause the limitation upon such payments established by this Plan to be exceeded.
Such fee shall be calculated and accrued daily and paid at such intervals as the
Board of Directors of the Company shall determine, subject to any applicable
restriction imposed by rules of the National Association of Securities Dealers,
Inc. A Fund may pay such distribution expenses directly, or the investment
adviser of the Fund or the distributor of the Fund may pay such distribution
expenses and obtain reimbursement from the Fund. Costs and expenses for the
services rendered pursuant to paragraphs 2 and 3 not reimbursed in any one given
month may be reimbursed in a subsequent month. If this Plan is terminated with
respect to a Fund the Fund will owe no payments other than any portion of the
fee accrued through the effective date of termination but then unpaid.
3. The amount set forth in paragraph 2 of this Plan shall be paid for
services in connection with any activities or expenses primarily intended to
result in the sale of Class A shares of a Fund, including, but not limited to
the following: (a) payments, including incentive compensation, to securities
dealers or other financial intermediaries, financial institutions, investment
advisors and others that are engaged in the sale of Class A shares, or that may
be advising shareholders of the Company regarding the purchase, sale or
retention of Class A shares (b) payments, including incentive compensation, to
securities dealers or other financial intermediaries, financial institutions,
investment advisors and others that hold Class A shares for shareholders in
omnibus accounts or as shareholders of record or provide shareholder support or
administrative services to the Fund and its shareholders; (c) expenses of
maintaining personnel (including personnel of organizations with which the
Company has entered into agreements related to this Plan) who engage in or
support distribution of Class A shares or who render shareholder support
services not otherwise provided by the Company's transfer agent, including, but
not limited to, allocated overhead, office space and equipment, telephone
facilities and expenses, answering routine inquiries regarding the Company,
processing shareholder transactions, and providing such other shareholder
services as the Company, may reasonably request; (d) costs of preparing,
printing and distributing prospectuses and statements of additional information
and reports of the Fund for recipients other than existing shareholders of the
Fund; (e) costs of formulating and implementing marketing and promotional
activities, including, but not limited to, sales seminars, direct mail
promotions and television, radio, newspaper, magazine and other mass media
advertising; (f) costs of preparing, printing and distributing sales literature;
(g) costs of obtaining such information, analyses and reports with respect to
marketing and promotional activities as the Trust may, from time to time, deem
advisable; and (h) costs of implementing and operating this Plan. The Company is
authorized to engage in the activities listed above, and in any other activities
related to the distribution of Class A shares, either directly or through other
persons. Payments under the Plan are not tied exclusively to actual distribution
and service expenses, and the payments may exceed distribution and service
expenses actually incurred. Any payments received by service providers to the
Fund, including without limitation the investment adviser of the Fund and the
distributor of the Fund, are in addition to fees paid by the Fund for the
applicable advisory or distribution services.
4. The Plan shall not take effect with respect to the Class A shares
of a Fund until it has been approved by a vote of at least a majority of the
outstanding Class A voting securities of a Fund (as defined in the Act) if the
Class A shares of the Fund have already been publicly offered. With respect to
the submission of the Plan for such a vote, it shall have been effectively
approved with respect to the Class A shares of a Fund if a majority of the
outstanding Class A voting securities of the Fund votes for approval of the
Plan, notwithstanding that the matter has not been approved by a majority of the
outstanding voting securities of the Company or of any other Fund or class. In
the event no shareholder approval is required because the Class A shares of a
Fund have not been publicly offered, the Plan shall take effect on the day
before the first public offering of the Class A shares of the Fund.
5. The Plan shall not take effect until it has been approved, together
with any related agreements and supplements, by the vote of a majority of both
(a) the Board of Directors of the Company, and (b) those Directors of the
Company who are not "interested persons" (as defined in the Act) and have no
direct or indirect financial interest in the operation of the Plan or any
agreements related to it (the "Plan Directors"), cast in person at a meeting (or
meetings) called for the purpose of voting on the Plan and such related
agreements.
6. The Plan shall continue in effect so long as such continuance is
specifically approved at least annually in the manner provided for approval of
the Plan in paragraph 5.
7. Any person authorized to direct the disposition of monies paid or
payable by the Company pursuant to the Plan or any related agreements shall
provide to the Company's Board of Directors, and the Board shall review, at
least quarterly, a written report of the amounts so expended and the purposes
for which such expenditures were made.
8. Any agreement related to the Plan shall be in writing and shall provide:
(a) that such agreement may be terminated at any time as to a Fund, without
payment of any penalty, by vote of a majority of the Plan Directors or by vote
of a majority of the outstanding Class A voting securities of the Fund (as
defined in the Act), on not more than sixty (60) days' written notice to any
other party to the agreement; and (b) that such agreement shall terminate
automatically in the event of its assignment.
9. The Plan may be terminated at any time with respect to a Fund,
without payment of any penalty, by vote of a majority of the Plan Directors, or
by vote of a majority of the outstanding Class A voting securities of the Fund
(as defined in the Act).
10. The Plan may be amended at any time with respect to a Fund by the
Company's Board of Directors, provided that (a) any amendment to increase
materially the costs which a Fund may bear for distribution pursuant to the Plan
shall be effective only upon approval by a vote of a majority of the outstanding
Class A voting securities of the Fund (as defined in the Act), and (b) any
material amendments of the terms of the Plan shall become effective only upon
approval as provided in paragraph 5 hereof
11. While the Plan is in effect, the selection and nomination of Directors
who are not interested persons (as defined in the Act) of the Company shall be
committed to the discretion of the Directors who are not interested persons.
12. The Company shall preserve copies of the Plan, any related
agreement and any report made pursuant to paragraph 7 hereof, for a period of
not less than six (6) years from the date of the Plan, such agreement or report,
as the case may be, the first two (2) years of which shall be in an easily
accessible place.
13. It is understood and expressly stipulated that neither the holders of
shares of the Company nor any Director, officer, agent or employees of the
Company shall be personally liable hereunder, nor shall any resort be had to
other private property for the satisfaction of any claim or obligation
hereunder, but the Company only shall be liable.
IN WITNESS WHEREOF, the Company has adopted this Distribution and Service
Plan effective as of the 7th day of December, 1999.
TANAKA FUNDS, INC.
By: /s/
Name: Graham Y. Tanaka
Title: President
DISTRIBUTION AND SERVICE PLAN
(Class B Shares Only)
WHEREAS, TANAKA Funds, Inc. (the "Company") is registered as an
open-end management investment company under the Investment Company Act of 1940
(the "Act") and consists of one or more separate investment portfolios (the
"Funds") as may be established and designated from time to time;
WHEREAS, the Board of Directors of the Company has determined to adopt
a Distribution and Service Plan (the "Plan") in accordance with the requirements
of the Act and has determined that there is a reasonable likelihood that the
Plan will benefit the Company and its shareholders;
WHEREAS, the Company desires to enter into agreements with dealers and
other financial service organizations to obtain various distribution-related
and/or shareholder services for the Funds, all as permitted and contemplated by
Rule 12b-1 adopted under the Act, it being understood that to the extent any
activity is one which the Funds may finance without a Rule 12b-1 plan, the Funds
may also make payments to finance such activity outside such a plan and not
subject to its limitation;
NOW THEREFORE, the Company hereby adopts the Plan to apply only to
Class B shares on the following terms and conditions:
1. The Plan will pertain to the Class B shares of TANAKA Growth Fund and
the Class B shares of such other Funds as shall be designated from time to time
by the Board of Directors in any supplement to the Plan.
2. The Funds may charge a fee for distribution and shareholder services on
an annualized basis of 1.00% of each Fund's average daily net assets
attributable to the Class B shares; provided that, at any time such payment is
made, whether or not this Plan continues in effect, the making thereof will not
cause the limitation upon such payments established by this Plan to be exceeded.
Such fee shall be calculated and accrued daily and paid at such intervals as the
Board of Directors of the Company shall determine, subject to any applicable
restriction imposed by rules of the National Association of Securities Dealers,
Inc. A Fund may pay such distribution expenses directly, or the investment
adviser of the Fund or the distributor of the Fund may pay such distribution
expenses and obtain reimbursement from the Fund. Costs and expenses for the
services rendered pursuant to paragraphs 2, 3, 4 and 5 not reimbursed in any one
given month may be reimbursed in a subsequent month. If this Plan is terminated
with respect to a Fund, the Fund will owe no payments other than any portion of
the fee accrued through the effective date of termination but then unpaid.
3. The amount set forth in paragraph 2 of this Plan shall be paid for
services in connection with any activities or expenses primarily intended to
result in the sale of Class B shares of a Fund, including, but not limited to
the following: (a) payments, including incentive compensation, to securities
dealers or other financial intermediaries, financial institutions, investment
advisors and others that are engaged in the sale of Class B shares, or that may
be advising shareholders of the Company regarding the purchase, sale or
retention of Class B shares (including financing costs with respect to such
payments); (b) payments, including incentive compensation, to securities dealers
or other financial intermediaries, financial institutions, investment advisors
and others that hold Class B shares for shareholders in omnibus accounts or as
shareholders of record or provide shareholder support or administrative services
to the Fund and its shareholders; (c) expenses of maintaining personnel
(including personnel of organizations with which the Company has entered into
agreements related to this Plan) who engage in or support distribution of Class
B shares or who render shareholder support services not otherwise provided by
the Company's transfer agent, including, but not limited to, allocated overhead,
office space and equipment, telephone facilities and expenses, answering routine
inquiries regarding the Company, processing shareholder transactions, and
providing such other shareholder services as the Company, may reasonably
request; (d) costs of preparing, printing and distributing prospectuses and
statements of additional information and reports of the Fund for recipients
other than existing shareholders of the Fund; (e) costs of formulating and
implementing marketing and promotional activities, including, but not limited
to, sales seminars, direct mail promotions and television, radio, newspaper,
magazine and other mass media advertising; (f) costs of preparing, printing and
distributing sales literature; (g) costs of obtaining such information, analyses
and reports with respect to marketing and promotional activities as the Trust
may, from time to time, deem advisable; and (h) costs of implementing and
operating this Plan. The Company is authorized to engage in the activities
listed above, and in any other activities related to the distribution of Class B
shares, either directly or through other persons. Payments under the Plan are
not tied exclusively to actual distribution and service expenses, and the
payments may exceed distribution and service expenses actually incurred. Any
payments received by service providers to the Fund, including without limitation
the investment adviser of the Fund and the distributor of the Fund, are in
addition to fees paid by the Fund for the applicable advisory or distribution
services.
4. Included as part of the amount set forth in paragraph 2 of this Plan
shall be a portion equal to .25% of each Fund's average daily net assets
attributable to the Class B shares for account maintenance and personal service
to shareholders, including without limitation payments made to securities
dealers or other financial intermediaries, financial institutions, investment
advisors and others that (a) hold Class B shares for shareholders in omnibus
accounts or as shareholders of record or provide shareholder support or
administrative services to the Fund and its shareholders or (b) render
shareholder support services not otherwise provided by the Company's transfer
agent, including, but not limited to, allocated overhead, office space and
equipment, telephone facilities and expenses, answering routine inquiries
regarding the Company, processing shareholder transactions, and providing such
other shareholder services as the Company may reasonably request ("service
fees"). If the NASD adopts a definition of "service fees" for purposes of
Section 26(d) of the Rules of Fair Practice of the NASD (or any successor to
such rule) that differs from the definition of service fees hereunder, the
definition of service fees hereunder shall be automatically amended, without
further action of the parties, to conform to such NASD definition.
5. Class B shares are sold without an initial sales charge. The entire
purchase price is invested in the applicable Fund and the investment adviser of
the Fund pays the fee or commission of the Fund's distributor and the
participating broker-dealer. Included as part of the amount set forth in
paragraph 2 of the Plan shall be a portion equal to 0.75% of each Fund's average
daily net assets attributable to the Class B shares, which portion the Fund will
pay to the investment adviser of the Fund as compensation for financing the
Class B broker-dealer fees and commissions. The investment adviser will also
receive any contingent deferred sales charge ("CDSC") imposed in accordance with
the Fund's then current Prospectus and Statement of Additional Information.
6. The Plan shall not take effect with respect to the Class B shares of a
Fund until it has been approved by a vote of at least a majority of the
outstanding Class B voting securities of a Fund (as defined in the Act) if the
Class B shares of the Fund have already been publicly offered. With respect to
the submission of the Plan for such a vote, it shall have been effectively
approved with respect to the Class B shares of a Fund if a majority of the
outstanding Class B voting securities of the Fund votes for approval of the
Plan, notwithstanding that the matter has not been approved by a majority of the
outstanding voting securities of the Company or of any other Fund or class. In
the event no shareholder approval is required because the Class B shares of a
Fund have not been publicly offered, the Plan shall take effect on the day
before the first public offering of the Class B shares of the Fund.
7. The Plan shall not take effect until it has been approved, together
with any related agreements and supplements, by the vote of a majority of both
(a) the Board of Directors of the Company, and (b) those Directors of the
Company who are not "interested persons" (as defined in the Act) and have no
direct or indirect financial interest in the operation of the Plan or any
agreements related to it (the "Plan Directors"), cast in person at a meeting (or
meetings) called for the purpose of voting on the Plan and such related
agreements.
8. The Plan shall continue in effect so long as such continuance is
specifically approved at least annually in the manner provided for approval of
the Plan in paragraph 7.
9. Any person authorized to direct the disposition of monies paid or
payable by the Company pursuant to the Plan or any related agreements shall
provide to the Company's Board of Directors, and the Board shall review, at
least quarterly, a written report of the amounts so expended and the purposes
for which such expenditures were made.
10. Any agreement related to the Plan shall be in writing and shall provide:
(a) that such agreement may be terminated at any time as to a Fund, without
payment of any penalty, by vote of a majority of the Plan Directors or by vote
of a majority of the outstanding Class B voting securities of the Fund (as
defined in the Act), on not more than sixty (60) days' written notice to any
other party to the agreement; and (b) that such agreement shall terminate
automatically in the event of its assignment.
11. The Plan may be terminated at any time with respect to a Fund,
without payment of any penalty, by vote of a majority of the Plan Directors, or
by vote of a majority of the outstanding Class B voting securities of the Fund
(as defined in the Act).
12. The Plan may be amended at any time with respect to a Fund by the
Company's Board of Directors, provided that (a) any amendment to increase
materially the costs which a Fund may bear for distribution pursuant to the Plan
shall be effective only upon approval by a vote of a majority of the outstanding
Class B voting securities of the Fund (as defined in the Act), and (b) any
material amendments of the terms of the Plan shall become effective only upon
approval as provided in paragraph 7 hereof.
13. While the Plan is in effect, the selection and nomination of Directors
who are not interested persons (as defined in the Act) of the Company shall be
committed to the discretion of the Directors who are not interested persons.
14. The Company shall preserve copies of the Plan, any related
agreement and any report made pursuant to paragraph 8 hereof, for a period of
not less than six (6) years from the date of the Plan, such agreement or report,
as the case may be, the first two (2) years of which shall be in an easily
accessible place.
15. It is understood and expressly stipulated that neither the holders of
shares of the Company nor any Director, officer, agent or employees of the
Company shall be personally liable hereunder, nor shall any resort be had to
other private property for the satisfaction of any claim or obligation
hereunder, but the Company only shall be liable.
IN WITNESS WHEREOF, the Company has adopted this Distribution and Service
Plan effective as of the 7th day of December, 1999.
TANAKA FUNDS, INC.
By: _/s/_____________________________
Name: Graham Y. Tanaka
Title: President
SHAREHOLDER SERVICE AGREEMENT
(CLASS A AND CLASS B SHARES)
By this agreement, dated ____________, 19___ (the "Agreement"),
AmeriPrime Financial Securities, Inc., with its principal office located at 1793
Kingswood Drive, Suite 200, Southlake, TX 76092 ( the "Distributor") and
______________________________________________, with its principal offices
located at ________________________________, ("Service Provider"), hereby
covenant, warrant and agree as follows:
1. The TANAKA Funds, Inc. (the "Trust") is an open-end management
investment company registered under the Investment Company Act of 1940 (the
"Act"). The Trust operates a series called the TANAKA Growth Fund (the "Fund").
The Trust is further authorized to issue shares of beneficial interest in the
Fund ("Shares"). Pursuant to Rule 12b-1 under the Act, Class A and Class B of
the Fund have each adopted a plan of distribution (each a "Distribution Plan")
pursuant to which the applicable Class may utilize a portion of its assets to
engage in any activities related to the distribution of its Shares, including,
but not limited to, the following:
payments, including incentive compensation, to securities
dealers or other financial intermediaries, financial institutions, investment
advisors and others that are engaged in the sale of Shares, or that may be
advising shareholders of the Fund regarding the purchase, sale or retention of
Shares;
payments including incentive compensation, to securities
dealers or other financial intermediaries, financial institutions, investment
advisors and others that hold Shares for shareholders in omnibus accounts or as
shareholders of record or provide shareholder support or administrative services
to the Fund and its shareholders;
expenses of maintaining personnel (including personnel of
organizations with which the Trust has entered into agreements related to this
Plan) who engage in or support distribution of Shares or who render shareholder
support services not otherwise provided by the Trust's transfer agent,
including, but not limited to, allocated overhead, office space and equipment,
telephone facilities and expenses, answering routine inquiries regarding the
Trust, processing shareholder transactions, and providing such other shareholder
services as the Trust may reasonably request;
costs of preparing, printing and distributing prospectuses and
statements of additional information and reports of the Fund for recipients
other than existing shareholders of the Fund;
costs of formulating and implementing marketing and promotional
activities, including, but not limited to, sales seminars, direct mail
promotions and television, radio, newspaper, magazine and other mass media
advertising;
costs of preparing, printing and distributing sales literature;
costs of obtaining such information, analyses and reports with respect
to marketing and promotional activities as the Trust may, from time to time,
deem advisable; and
costs of implementing and operating the Plans.
Pursuant to the terms of this Agreement, Service Provider agrees, upon
request of the Trust, to undertake from time to time distribution efforts to
promote the sale of Shares, including without limitation any of the activities
set forth in paragraph 1 above. Service Provider warrants to the Trust that in
fulfilling its obligations herein, Service Provider will not solicit, offer,
promote, or sell Shares of the Fund to its clients or to third parties unless
Service Provider is first properly registered as a broker/dealer and has signed
a separate written agreement with the Distributor to sell Shares (a "Dealer
Agreement"). It is expressly understood and agreed by each party that this
Agreement is not a Dealer Agreement.
3. As compensation for providing the services set forth in paragraph 2
above, the Distributor agrees to pay to Service Provider, subject to the
limitations as hereinafter set forth, Monthly Compensation based on the
following formula:
(Monthly Average Assets x .0025) / 12 = Monthly Compensation
Monthly Average Assets means the total closing daily value of assets
invested in the applicable Class for each day of the month, averaged over that
month, by Shareholders for whom Service Provider provides the services set forth
in Paragraph 2 above. This includes Shares which are owned of record by the
Service Provider as nominee for Service Provider's customers or which are owned
by the customers for which Service Provider is the customer's dealer or service
provider of record (as maintained by the Trust or its designee). The Distributor
may increase, decrease or discontinue the fee at any time in its sole discretion
upon written notice to Service Provider.
4. The Distributor shall make the determination of the net asset value
of the applicable Class, which determination shall be made in the manner
specified in the Fund's current Prospectus, and pay to Service Provider, on the
basis of such determination, the fee specified above, to the extent permitted
under the Plan. Payment of such fee shall be made promptly after the close of
each quarter for which such fees are payable. No such fee will be paid to the
Service Provider with respect to shares purchased by the Service Provider and
redeemed or repurchased by the Fund, its agent or the Distributor within seven
(7) business days after the date of confirmation of such purchase. In addition,
no such fee will be paid to the Service Provider with respect to any of its
customers if the amount of such fee based upon the value of such customer's
shares will be less that $25.00.
5. The Distributor agrees to provide, upon request and at its sole
expense and discretion, current copies of the Trust's prospectuses and sales and
marketing literature to Service Provider for use by Service Provider in the
discharge of its obligations as heretofore described. Service Provider agrees to
comply with the provisions contained in all applicable securities laws governing
the distribution of Prospectuses to persons to whom it offers Shares of the
Trust. Service Provider further agrees to deliver, upon the request of the
Trust, copies of any amended Prospectus to purchasers whose Shares it is holding
in omnibus accounts or as shareholder of record and to deliver to such persons
materials of the Trust. The Trust will conduct its business in accordance with
the procedures set forth in, and the requirements of, the Prospectus, including
the prompt execution of orders for the purchase and redemption of Shares and the
servicing of shareholder accounts.
6. This Agreement will automatically terminate in the event of its
assignment or upon a failure by the Trust's Board of Trustees to continue to
approve the Distribution Plan. This Agreement may be terminated by any of the
parties, without penalty, upon thirty (30) days' prior written notice to the
other parties. This Agreement may also be terminated as to any Class at any time
without penalty by the vote of a majority of the members of the Board of
Trustees of the Trust who are not "interested persons" and who have no direct or
indirect financial interest in the applicable Plan or in any agreement relating
to such Plan, including this Agreement, or by a vote of a majority of the
outstanding voting securities of the applicable Class on thirty days' written
notice.
7. This Agreement shall remain in full force and effect for a period
of one year from the date first noted above and from year to year thereafter,
subject to annual approval by the Board of Trustees and of the trustees who are
not "interested persons" (as such term is defined in the Investment Company Act
of 1940) of the Trust and have no direct or indirect financial interest in the
operation of the Distribution Plans or in any agreements related to the
Distribution Plans.
8. The parties acknowledge and agree that Service Provider is acting
as an independent contractor, and nothing contained in this Agreement shall be
construed in such a manner that Service Provider shall be considered an agent or
employee of the Trust or the Distributor. The parties to this Agreement
expressly state and affirm that Service Provider is not an agent or employee of
the Trust or Distributor.
9. Notwithstanding anything to the contrary herein, Service Provider
will indemnify the Trust, the Distributor, the advisor, transfer agent and
custodian of the Trust, and their respective officers, directors, trustees,
partners, employees and agents, and hold them harmless from any claims or
assertions relating to the lawfulness of Service Provider's participation in
this Agreement and the transactions contemplated hereby or relating to any
activities or omissions of any persons or entities affiliated with Service
Provider's company which are performed in connection with the discharge of its
responsibilities under this Agreement. If any such claims are asserted, the
indemnified parties shall have the right to engage in their own defense,
including the selection and engagement of legal counsel of their choosing, and
all costs of such defense shall be borne by Service Provider.
10. The Trust shall have full authority to take such action as it may
deem advisable in respect to all matters pertaining to the offering of Shares,
including the right in its discretion, without notice, to suspend sales or
withdraw the offering of Shares entirely. The Distributor will promptly notify
Service Provider of any such actions.
11. Service Provider will (i) maintain all records required by law
relating to transactions in Shares and, upon request by the Distributor,
promptly make such records available as the Distributor may reasonably request
in connection with its operations; and (ii) promptly notify the Distributor if
Service Provider experiences any difficulty in maintaining the records described
in the foregoing clause in accurate and complete manner. In addition, Service
Provider and the Distributor will establish appropriate procedures and reporting
forms and schedules to enable the parties hereto to identify all accounts opened
and maintained by Service Provider's customers.
12. This Agreement as set forth herein constitutes the entire
agreement and under-standing of the parties as to the subject matter hereof, and
supersedes all previous discussions and agreements between the parties as to the
matters herein addressed. No party shall be bound by any representation with
respect to the subject matter of this Agreement other than as expressly set
forth herein. This Agreement may be amended or modified only by a writing signed
by all parities hereto.
13. This Agreement shall be governed and construed in accordance with
the laws of the
State of Texas, except that any conflict of law rule of that
jurisdiction that may require reference to the laws of some other jurisdiction
shall be disregarded.
14. If any provision of this Agreement is or may be held by a court of
competent jurisdiction to be invalid, void, or unenforceable, the remaining
provisions shall nevertheless survive and continue in full force and effect
without impairment.
15. This Agreement may be executed in one or more counterparts, each
of which shall be deemed an original, but all of which together shall constitute
one and the same instrument.
IN WITNESS WHEREOF, this Agreement has been executed by the parties
hereto to be effective as of the date first noted above.
AmeriPrime Financial Securities, Inc. Service Provider:
By: By:
Its: Its:
AmeriPrime Financial Securities, Inc.
1793 Kingswood Drive
Suite 200
Southlake, Texas 76092
Ladies and Gentlemen:
This letter will confirm our understanding and agreement with respect
to payments to be made to you pursuant to a Distribution and Shareholder
Servicing Plan, as amended, (the "Plan") adopted by TANAKA Funds, Inc. (the
"Corporation"), on behalf of the TANAKA Growth Fund (the "Fund"), pursuant to
Rule 12b-1 under the Investment Company Act of 1940, as amended (the "Act"). The
Plan and this Related Agreement (the "Rule 12b-1 Related Agreement") have been
approved by a majority of the Board of Directors of the Corporation, including a
majority of the Board of Directors who are not "interested persons" of the
Corporation, as defined in the Act, and who have no direct or indirect financial
interest in the operation of the Plan or in this or any other Rule 12b-1 Related
Agreement (the "Disinterested Directors"), cast in person at a meeting called
for the purpose of voting thereon. Such approval included a determination by the
Board of Directors that there was a reasonable likelihood that the Plan would
benefit the Fund's shareholders.
1. To the extent you provide distribution and marketing services in the
promotion of the Fund's shares, including furnishing services and assistance to
your customers who invest in and own shares, including, but not limited to,
answering routine inquiries regarding the Fund and assisting in changing account
designations and addresses, we shall pay you a fee of up to __% of the average
daily net assets of the Fund's shares (computed on an annual basis) which are
owned of record by your firm as nominee for your customers or which are owned by
those customers of your firm whose records, as maintained by the Corporation or
its agent, designate your firm as the customer's dealer or service provider of
record. We reserve the right to increase, decrease or discontinue the fee at any
time in our sole discretion upon written notice to you.
We shall make the determination of the Fund's net asset value, which
determination shall be made in the manner specified in the Fund's current
Prospectus, and pay to you, on the basis of such determination, the fee
specified above, to the extent permitted under the Plan. Payment of such fee
shall be made promptly after the close of each quarter for which such fees are
payable. No such fee will be paid to you with respect to shares purchased by you
and redeemed or repurchased by the Fund, its agent or us within seven (7)
business days after the date of our confirmation of such purchase. In addition,
no such fee will be paid to you with respect to any of your customers if the
amount of such fee based upon the value of such customer's shares will be less
than $25.00.
2. You shall furnish us with such information as shall reasonably be
requested by the Board of Directors, on behalf of the Fund, with respect to the
fees paid to you pursuant to this Rule 12b-1 Related Agreement.
3. We shall furnish to the Board of Directors, for its review, on a
quarterly basis, a written report of the amounts expended under the Plan by us
and the purposes for which such expenditures were made.
4. This Rule 12b-1 Related Agreement may be terminated by the vote of
(a) a majority vote of the Fund's shareholders, (b) a majority of the
Disinterested Directors, on sixty (60) days' written notice, without payment of
any penalty or (c) by any act which terminates the Plan. In addition, this Rule
12b-1 Related Agreement shall terminate immediately in the event of its
assignment. This Rule 12b-1 Related Agreement may be amended by us upon written
notice to you, and you shall be deemed to have consented to such amendment upon
effecting any purchases of shares for your own account or on behalf of any of
your customer's accounts following your receipt of such notice.
5. This Rule 12b-1 Related Agreement shall become effective on the date
accepted by you and shall continue in full force and effect so long as the
continuance of the Plan and this Rule 12b-1 Related Agreement are approved at
least annually by a vote of the Board of Directors of the Corporation and of the
Disinterested Directors, cast in person at a meeting called for the purpose of
voting thereon. All communications to us should be sent to the above address.
Any notice to you shall be duly given if mailed to you at the address specified
by you below. This Rule 12b-1 Related Agreement shall be construed under the
laws of the State of Maryland.
<PAGE>
AMERIPRIME FINANCIAL SECURITIES, INC.
On behalf of TANAKA Growth Fund
By:
Kenneth D. Trumpfheller, President
Accepted:
(Dealer or Service Provider Name)
(Street Address)
(City) (State) (ZIP)
(Telephone No.)
(Facsimile No.)
By:
(Name and Title)
FORM OF
MULTIPLE CLASS PLAN
PURSUANT TO RULE 18f-3
FOR
TANAKA FUNDS, INC.
WHEREAS, TANAKA Funds, Inc. (the "Company") engages in business as an
open-end, management investment company and is registered as such under the
Investment Company Act of 1940, as amended (the "Act");
WHEREAS, the Company has one series designated TANAKA Growth Fund (the
"Fund");
WHEREAS, the Company desires to adopt a Multiple Class Plan pursuant to
Rule 18f-3 under the Act (the "Plan") with respect to the Fund; and
NOW, THEREFORE, the Company, on behalf of the Fund, hereby adopts the
Plan, in accordance with Rule 18f-3 under the Act on the following terms and
conditions:
1. Features of the Classes. The Fund issues its shares of common stock
in three classes: "Class A Shares," "Class B Shares," and "Class R Shares."
Shares of each class of the Fund shall represent an equal pro rata interest in
the Fund and, generally, shall have identical voting, dividend, distribution,
liquidation, and other rights, preferences, powers, restrictions, limitations,
qualifications, and terms and conditions, except that: (a) each class shall have
a different designation; (b) each class of shares shall bear any Class Expenses,
as defined in Section 5 below; and (c) each class shall have exclusive voting
rights on any matter submitted to shareholders that relates solely to its
distribution arrangement and each class shall have separate voting rights on any
matter submitted to shareholders in which the interests of one class differ from
the interests of any other class. In addition, Class A, Class B and Class R
shares of the Fund shall have the features described in Sections 2, 3 and 4
below.
2. Service Fee. The Company has adopted a Service Plan with respect to
the Class A and Class B shares of the Fund, which provides that the Fund may pay
a service fee at an annual rate up to 0.25% of the average daily net asset value
of the Class A and Class B shares. The Class R shares are not subject to a
service fee.
The services for which service fees may be paid include, among other
things, advising clients or customers regarding the purchase, sale or retention
of shares of the Fund, answering routine inquiries concerning the Fund and
assisting shareholders in changing options or enrolling in specific plans.
3. Distribution Fee. The Fund has adopted Distribution and Service
Plans with respect to the Class B and Class R shares of the Fund pursuant to
Rule 12b-1 promulgated under the Securities Exchange Act of 1934. The Class R
Distribution and Service Plan authorizes payments by the Fund in connection with
the distribution of its Class R shares at an annual rate of up to 0.25% of the
average net asset value of the Class R shares. The Class B Distribution and
Service Plan authorizes payments by the Fund in connection with the distribution
of its Class B shares at an annual rate of up to 0.75% of the average net asset
value of the Class B shares. Payments may be made by the Fund under the Plans
for the purpose of financing any activity primarily intended to result in the
sales of shares of the Fund as determined by the Board of Directors. Such
activities typically include advertising; compensation for sales and sales
marketing activities of financial service agents and others, such as dealers or
distributors; shareholder account servicing; production and dissemination of
prospectuses and sales and marketing materials; and capital or other expenses of
associated equipment, rent, salaries, bonuses, interest and other overhead.
4. Allocation of Income and Expenses. (a) The gross income of the Fund
shall, generally, be allocated to each class on the basis of net assets. To the
extent practicable, certain expenses (other than Class Expenses as defined below
which shall be allocated more specifically) shall be subtracted from the gross
income on the basis of the net assets of each class of the Fund. These expenses
include:
Expenses incurred by the Fund (for example, fees of Directors, auditors
and legal counsel) not attributable to a particular class of shares of the Fund
("Fund Level Expenses"); and
Expenses incurred by the Fund not attributable to any particular class
of the Fund's shares (for example, advisory fees, custodial fees, or other
expenses relating to the management of the Fund's assets) ("Fund Expenses").
(b) Expenses attributable to a particular class ("Class Expenses")shall
be limited to: (i) payments made pursuant to a distribution plan and/or a
service plan; (ii) transfer agent fees attributable to a specific class;
(iii)printing and postage expenses related to preparing and distributing
materials such as shareholder reports, prospectuses and proxies to current
shareholders of a specific class; (iv) Blue Sky registration fees incurred by a
class; (v) SEC registration fees incurred by a class; (vi) the expense of
administrative personnel and services to support the shareholders of a specific
class; (vii) litigation or other legal expenses relating solely to one class;
and (viii) directors' fees incurred as a result of issues relating to one class.
Expenses in category (i) above must be allocated to the class for which such
expenses are incurred. All other "Class Expenses" listed in categories
(ii)-(viii) above maybe allocated to a class but only if the President and Chief
Financial Officer have determined, subject to Board approval or ratification,
which of such categories of expenses will be treated as Class Expenses
consistent with applicable legal principles under the Act and the Internal
Revenue Code of 1986,as amended.
Therefore, expenses of the Fund shall be apportioned to each class of
shares depending on the nature of the expense item. Fund Level Expenses and Fund
Expenses will be allocated among the classes of shares based on their relative
net asset values. Approved Class Expenses shall be allocated to the particular
class to which they are attributable. In addition, certain expenses may be
allocated differently if their method of imposition changes. Thus, if a Class
Expense can no longer be attributed to a class, it shall be charged to the Fund
for allocation among classes, as determined by the Board of Directors. Any
additional Class Expenses not specifically identified above which are
subsequently identified and determined to be properly allocated to one class of
shares shall not be so allocated until approved by the Board of Directors of the
Company in light of the requirements of the Act and the Internal Revenue Code
of1986, as amended.
5. Conversion Features. There shall be no conversion features
associated with the Class A or Class R shares of the Fund. The Class B shares of
the Fund convert automatically into Class A shares at the end of the month which
precedes the eighth anniversary of the purchase date.
6. Quarterly and Annual Reports. The Directors shall receive quarterly
and annual statements concerning all allocated Class Expenses and distribution
and servicing expenditures complying with paragraph (b)(3)(ii) of Rule 12b-1, as
it may be amended from time to time. In the statements, only expenditures
properly attributable to the sale or servicing of a particular class of shares
will be used to justify any distribution or servicing fee or other expenses
charged to that class. Expenditures not related to the sale or servicing of a
particular class shall not be presented to the Directors to justify any fee
attributable to that class. The statements, including the allocations upon which
they are based, shall be subject to the review and approval of the independent
Directors in the exercise of their fiduciary duties.
7. Waiver or Reimbursement of Expenses. Expenses may be waived or
reimbursed by any adviser to the Fund or any other provider of services to the
Fund without the prior approval of the Fund's Board of Directors.
8. Effectiveness of Plan. The Plan shall not take effect until it has
been approved by votes of a majority of both (a) the Directors of the Fund and
(b) those Directors of the Fund who are not "interested persons" of the Fund (as
defined in the Act) and who have no direct or indirect financial interest in the
operation of this Plan, cast in person at a meeting (or meetings) called for the
purpose of voting on this Plan.
9. Material Modifications. This Plan may not be amended to modify
materially its terms unless such amendment is approved in the manner provided
for initial approval in Paragraph 8 hereof.
10. Limitation of Liability. The Directors and the shareholders of the
Fund shall not be liable for any obligations of the Fund under this Plan, and
Underwriter or any other person, in asserting any rights or claims under this
Plan, shall look only to the assets and property of the Fund in settlement of
such right or claim, and not to such Directors or shareholders.
IN WITNESS WHEREOF, the Company, on behalf of the Fund, has adopted
this Multiple Class Plan as of the 7th day of December, 1999, to be effective
January 31, 2000.
TANAKA FUNDS, INC.
By: _/s/________________
Name: Graham Y. Tanaka
Title: President
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS:
WHEREAS, TANAKA FUNDS, INC., a corporation organized under the laws of
the State of Maryland (hereinafter referred to as the " Company "), periodically
files amendments to its Registration Statement with the Securities and Exchange
Commission under the provisions of the Securities Act of 1933 and the Investment
Company Act of 1940, as amended; and
WHEREAS, the undersigned is the Treasurer of the Company;
NOW, THEREFORE, the undersigned hereby constitutes and appoints JAMES
R. CUMMINS and DONALD S. MENDELSOHN, and each of them, his attorneys for him and
in his name, place and stead, and in his office and capacity in the Company, to
execute and file any Amendment or Amendments to the Company's Registration
Statement, hereby giving and granting to said attorneys full power and authority
to do and perform all and every act and thing whatsoever requisite and necessary
to be done in and about the premises as fully to all intents and purposes as he
might or could do if personally present at the doing thereof, hereby ratifying
and confirming all that said attorneys may or shall lawfully do or cause to be
done by virtue hereof.
IN WITNESS WHEREOF, the undersigned has hereunto set his hand this 7th
day of January, 2000.
__/s/________________________________
Kenneth D. Trumpfheller
Treasurer
STATE OF TEXAS )
) ss:
COUNTY OF TARRANT )
Before me, a Notary Public, in and for said county and state,
personally appeared KENNETH D. TRUMPFHELLER, known to me to be the person
described in and who executed the foregoing instrument, and who acknowledged to
me that he executed and delivered the same for the purposes therein expressed.
WITNESS my hand and official seal this 7 day of January, 2000.
Matthew D. Denton
Notary Public
My commission expires: 1/07/2003
<PAGE>
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS:
WHEREAS, TANAKA FUNDS, INC., a corporation organized under the laws of
the State of Maryland (hereinafter referred to as the "Company"), periodically
files amendments to its Registration Statement with the Securities and Exchange
Commission under the provisions of the Securities Act of 1933 and the Investment
Company Act of 1940, as amended; and
WHEREAS, the undersigned is a Director of the Company;
NOW, THEREFORE, the undersigned hereby constitutes and appoints JAMES
R. CUMMINS and DONALD S. MENDELSOHN, and each of them, his attorneys for him and
in his name, place and stead, and in his office and capacity in the Company, to
execute and file any Amendment or Amendments to the Company's Registration
Statement, hereby giving and granting to said attorneys full power and authority
to do and perform all and every act and thing whatsoever requisite and necessary
to be done in and about the premises as fully to all intents and purposes as he
might or could do if personally present at the doing thereof, hereby ratifying
and confirming all that said attorneys may or shall lawfully do or cause to be
done by virtue hereof.
IN WITNESS WHEREOF, the undersigned has hereunto set his hand this 7th
day of December, 1999.
___/s/____________________________
Scott D. Stooker
Director
STATE OF NEW YORK )
) ss:
COUNTY OF NEW YORK )
Before me, a Notary Public, in and for said county and state,
personally appeared SCOTT D. STOOKER, known to me to be the person described in
and who executed the foregoing instrument, and who acknowledged to me that he
executed and delivered the same for the purposes therein expressed.
WITNESS my hand and official seal this 7th day of December, 1999.
C. Randolph Holladay
Notary Public
My commission expires: 8/3/2000
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