UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 [X]
Pre-Effective Amendment No._4_______ [X]
Post-Effective Amendment No.________ [ ]
and/or
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 [X]
Amendment No._4____
(Check Appropriate Box or Boxes)
Adhia Funds, Inc.
(Exact Name of Registrant as Specified in Charter)
5102 Longboat Blvd. E., Tampa, FL, 33615
(Address of Principal Executive Offices)
Registrant's Telephone Number (including area code): (813) 289-8440
Hitesh (John) P. Adhia, 1311 N. Westshore Blvd., Suite 110, Tampa, FL, 33607
(Name and Address of Agent for Service)
Approximate Date of Proposed Public Offering:
As soon as Registration becomes Effective.
It is proposed that this filing will become effective:
[ ] immediately upon filing pursuant to paragraph (b)
[ ] on (date) pursuant to paragraph (b)
[ ] 60 days after filing pursuant to paragraph (a)(1)
[ ] on (date) pursuant to paragraph (a)(2)
[ ] 75 days after filing pursuant to paragraph (a)(2)
[ ] on (date) pursuant to paragraph (a)(2) of rule 485.
The registrant hereby amends this Registration Statement to delay its
effectiveness until such date as the Commission may determine.
if appropriate, check the following box:
[ ] this post-effective amendment designates a new effective date
for a previously filed post-effective amendment.
<PAGE>
ADHIA FUNDS, INC..
CROSS REFERENCE SHEET
(Pursuant to Rule 481 showing the location in the Prospectus and
the Statement of Additional Information of the responses to the Items of
Parts A and B of Form N-1A.)
Caption or Subheading in
Prospectus or Statement of
Item No. on Form N-1A Additional Information
A - INFORMATION REQUIRED IN PROSPECTUS
1. Cover Page Cover Page
2. Synopsis Fund Expenses
3. Financial Highlights *
4. General Description of the Fund Introduction; Objective and
Policies
5. Management of the Fund Management and Administration
of the Fund; Brokerage
5A. Management's Discussion of *
Fund Performance
6. Capital Stock and Other Dividend Distributions and Taxes;
Securities Capitalization;
Reports to Shareholders
7. Purchase of Securities Being Purchase of Shares - Reinvestment;
Offered Retirement Plans
8. Redemption or Repurchase Redemption of Shares
9. Legal Proceedings Litigation
PART B - INFORMATION REQUIRED IN STATEMENT
OF ADDITIONAL INFORMATION
10. Cover Page Cover Page
11. Table of Contents Table of Contents
12. General Information and *
History
13. Investment Objectives and Investment Restrictions and
Policies Considerations
14. Management of the Fund Directors and Officers of
the Corporation
15. Control Persons and Principal Stockholders
Principal Holders of
Securities
16. Investment Advisory and Investment Advisor and
Other Services Administrator; Distribution
of Shares; Custodian and
Transfer Agent;
Independent Accountants
17. Brokerage Allocation Allocation of Portfolio
Brokerage
18. Capital Stock and Other Included in Prospectus
Securities under "CAPITALIZATION"
19. Purchase, Redemption and Determination of Net
Pricing of Securities Being Asset Value and Performance;
Offered Distribution of Shares;
Included in Prospectus
under "PURCHASE OF
SHARES - REINVESTMENTS";
"RETIREMENT PLANS";
20. Tax Status Taxes
21. Underwriters *
22. Calculations of Performance Determination of Net Asset
Data Value and Performance
23. Financial Statements Financial Statements
_______________________
* Answer negative or inapplicable
<PAGE>
PROSPECTUS
Adhia Funds Inc.
Adhia Twenty Fund
Tampa, Florida.
(813) 289 8440
Adhia Twenty Fund is an open-end
non-diversified, mutual fund. The Fund's
investment objective is to seek capital
appreciation through investment in fifteen
to twenty-five stocks.
July 21, 1998.
INVESTMENT ADVISOR
Adhia Investment Advisors, Inc.
5102 Longboat Blvd.
Tampa, FL 33615
Table of Contents
FUND EXPENSES......................................... 4
OBJECTIVE AND POLICIES................................ 5
DIVIDEND DISTRIBUTION AND TAXES....................... 6
INVESTMENT RESTRICTIONS............................... 6
INVESTMENT ADVISOR.................................... 7
OFFICERS AND DIRECTORS OF THE FUND.................... 8
CAPITALIZATION........................................ 8
PURCHASE OF SHARES-REINVESTMENT....................... 9
RETIREMENT PLANS...................................... 9
PRICING OF SHARES..................................... 9
REDEMPTION OF SHARES.................................. 10
BROKERAGE............................................. 10
MANAGEMENT AND ADMINISTRATION OF THE FUND............. 10
CUSTODIAN AND TRANSFER AGENT.......................... 11
REPORTS TO SHAREHOLDERS................................ 11
INDEPENDENT ACCOUNTANTS............................... 11
LITIGATION............................................ 11
YEAR 2000 CHALLENGE................................... 11
ADDITIONAL INFORMATION................................ 12
Adhia Twenty Fund
Tampa, FL 33615
(813) 289 8440 Phone
(813) 289 8849 Fax
PROSPECTUS July 21, 1998
The Fund & Investment Objective
Adhia Funds, Inc. (the "Company") is an open-end, non-diversified management
investment company - a mutual fund. The Company presently consists of a single
portfolio, the Adhia Twenty Fund (the "Fund"). The Fund's investment objective
is to seek capital appreciation through investment in an average of about twenty
different stocks. However, the Fund will invest temporarily in money market
funds to defend capital during what it considers to be periods of
falling common stock prices. Thus stock portfolio of the Fund will
fluctuate between fifteen and twenty five different stocks based on market
conditions.
Fund Share Purchase
Shares of the Fund may only be purchased directly from the Fund at net
asset value next determined after receipt of order. The Board of Directors
has established $ 10,000 as the minimum initial purchase and $1,000 for
subsequent purchases.
Additional Information
The Prospectus, which should be retained for future reference, is designed to
set forth concisely the information that you should know before you invest. A
"Statement of Additional Information" containing additional information about
the Fund has been filed with the Securities and Exchange Commission. The
Statement is dated, July 21, 1998, and has been incorporated by reference
into the Prospectus. A copy of the Statement may be obtained without charge,
by writing to the Fund.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY
THE SECURITIES AND EXCHANGE COMMISSION, NOR HAS THE
COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS
PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
FUND EXPENSES
All expenses and fees that a shareholder of the Adhia Twenty Fund will incur
are identified below. All expense information is based on anticipated
expenses for the current fiscal year. Since the Fund does not have any
history, actual expenses may be greater or less than those shown.
Shareholder Transaction Expenses
Sales Load Imposed on Purchase None
Sales Load Imposed on Reinvested Dividends None
Redemption Fees None
Exchange Fees None
Annual Fund Operating Expenses
Management and Advisory Expense 1.0%
12b-1 Fees None
Other Expenses 1.5%
Total Expenses 2.5%
The following table is given to assist investors in understanding the
various costs and expenses that an investor in the Fund will bear directly and
indirectly. It illustrates the expenses paid on an $1000 investment over
various periods assuming (a) 5% annual rate of return and (b) redemption at
the end of each time period. This example should not be considered a
representation of past or future expenses or performance. Actual expenses may
be greater or less than those shown.
1 Year 3 Years
$25 $78
INTRODUCTION
Adhia Funds, Inc. (the "Company") was incorporated under the laws of
Maryland on January 27, 1998 and is an open-end non-diversified management
investment company registered under the Investment Company Act of 1940
(the "Act"). The Company presently consists of a single portfolio, the Adhia
Twenty Fund (the "Fund"). The Fund obtains its assets by continuously selling
shares to the public. Proceeds from such sales are invested by the Fund in
fifteen to twenty-five stocks of exchange listed companies. On an average,
the Fund will own about twenty stocks at a time. The Fund may invest
temporarily in money market funds to defend capital during what it considers to
be periods of falling common stock prices. In this manner, the resources of
many investors are combined and each individual investor has an interest in
every one of the securities and instruments owned by the Fund. The Fund's
registered office is in Tampa, Florida; mail can be addressed to
5102 E. Longboat Blvd., Tampa, FL 33615.
OBJECTIVE AND POLICIES
Objective: The Fund's investment objective is capital appreciation through
investment in fifteen to twenty-five common stocks. Purchase of issues listed
primarily on the US Stock exchanges will be recommended by the Advisor.
The Fund may invest temporarily in money market funds to defend
capital during what it considers to be periods of falling common stock prices.
It must be realized, as is true of almost all securities, there can be no
assurance that the Fund will obtain its ongoing objective of capital
appreciation.
Securities Selection Criteria: To the extent feasible, the Fund will endeavor
to emphasize fundamental corporate considerations related to the prospects of
issuer and its industry, as well as technical market considerations.
Fundamental factors include book value, price to earnings ratios, price to
sales ratios, cyclic nature of industry, management reputation, etc. Technical
indicators like moving averages, changes in volumes, stock momentum, etc. will
be considered as secondary factors in selection criteria.
Portfolio Turnover Policy: The Fund does not propose to purchase securities
for short term trading in the ordinary course of operations. However, there
may be times when the management deems it advisable to substantially alter the
composition of the portfolio when the Fund Advisor believes market valuation
are higher than normal. In this event, the portfolio turnover rate might be
substantially high. At present the Fund expects a portfolio
turnover rate of about 50% during the first year of operation.
Non Diversification Policy: The Fund is classified as being non-diversified
which means that it may invest a relatively high percentage of its assets in
the obligations of a limited number of issues. The Fund, therefore, may be
more susceptible than a more widely diversified fund to any single economic,
political, or regulatory occurrence.
DIVIDEND DISTRIBUTIONS AND TAXES
Under provisions of Subchapter M of the Internal Revenue Code of 1986
as amended, the Fund, by paying out substantially all of its investment income
and realized capital gains, has been and intends to continue to be relieved of
federal income tax on the amount distributed to shareholders. In order to
qualify as a "regulated investment company" under Subchapter M, at least 90%
of the Fund's income must be derived from dividends, interest and gains from
securities transactions, no more than 30% of Fund's profit may be derived from
sales of securities held less than three months, and no more than 50% of the
Fund's assets may be in security holdings that exceed 5% of the total assets
of the Fund at the time of purchase.
Dividends from the Fund's net investment income and distributions from
the Fund's net realized capital gains are taxable to stockholders as ordinary
income, whether received in cash or in additional shares. The 70%
dividends-received deduction for corporations will apply to such dividends and
distributions, subject to proportionate reductions if the aggregate dividends
received by the Fund from domestic corporations in any year are less than 100%
of the net investment company income taxable distributions made by the Fund.
The Fund is required by federal law to withhold 31% of reportable
payment (which may include dividend, capital gains, distributions and
redemption) paid to shareholders who have not complied with IRS regulations.
In order to avoid this withholding requirement, you must certify on a W-9 tax
form supplied by the Fund that your Social Security or Taxpayer Identification
Number provided is correct and that you are not currently subject to back-up
withholding, or that you are exempt from back-up withholding.
INVESTMENT RESTRICTIONS
By-laws of the Fund provide the following fundamental investment
restrictions; The Fund may not, except by the approval of a majority of the
outstanding shares; i.e. a) 67% or more of the voting securities present at a
duly called meeting, if the holders of more than 50% of the outstanding voting
securities are present or represented by proxy, or b) of more than 50% of the
outstanding voting securities, whichever is less:
(a) Act as underwriter for securities of other issuer except insofar as
the Fund may be deemed an underwriter in selling its own portfolio
securities.
(b) Borrow money or purchase securities on margin, but may obtain such
short term credit as amy be necessary for clearance of purchase and
sale of securities for temporary or emergency purposes in an amount
not exceeding 10% of the value of its total assets.
(c) Sell securities short.
(d) Invest in fewer than fifteen or more than twenty-five different
stocks at one time.
(e) Invest more than 20% of its assets at the time of purchase in any one
industry.
(f) Make investments in commodities, commodity contracts or real estate
although the Fund may purchase and sell securities of companies which
deal in real estate or have interest therein.
(g) Make loans. The purchase of a portion of a readily marketable issue of
publicly distributed bond, debentures or other debt securities will
not be considered the making of loan.
(h) Acquire more than 10% of the securities of any class of another issuer,
treating all preferred securities of an issuer as a single class and
all debt securities as a single class, or acquire more than 10% of
the voting securities of another issuer.
(i) Invest in companies for the purpose of acquiring control.
(j) The Fund may not purchase or retain securities of any issuer if
officers and directors of the Fund or its Investment Advisor own
individually more than of 1% of any class of security or collectively
own more than 5% of any class of a securities of such issuer.
(k) Pledge or mortgage any of its assets.
(l) Invest in securities which may be subject to registration under the
Securities Act of 1933 prior to sale to the public or which are not at
the time of purchase readily salable.
(m) Invest more than 5% of the total Fund assets, taken at market value at
the time of purchase, in a single issue.
INVESTMENT ADVISOR
The Adhia Investment Advisors, Inc. (the "Advisor") is a Florida
corporation that acts as an Investment Advisor to the Fund. Mr. Hitesh
(John) P. Adhia is the sole owner, director and officer of the Investment
Advisor and is also the president of the Fund. Mr. Adhia has previously worked
as a stockbroker. However, neither Adhia Investment Advisors, Inc. nor its
owner Hitesh (John) P. Adhia have any prior experience in advising mutual
funds.
On February 10, 1998, the shareholders of the Fund approved a
management and advisory contract with the Adhia Investment Advisors, Inc.
Under the Agreement, the Adhia Investment Advisors, Inc. will furnish
investment advice to the Fund on the basis of a continuous review of
the portfolio and recommend to the Fund when and to what extent securities
should be purchased or disposed of.
The Advisory Agreement may be terminated at any time, without the
payment of any penalty, by the Board of Directors or by vote of a majority of
the outstanding voting securities of the Fund on not more than 60 days' written
notice to the Adhia Investment Advisors, Inc. Ultimate decisions as to the
investment policies are made by the Fund's officers and directors. For
investment advisor's services the Fund has agreed to pay to Adhia Investment
Advisors, Inc. a fee of 1% per year on the net assets of the Fund. All fees
are computed on the average daily closing net asset value of the Fund and are
payable monthly. The fee is higher than the fee paid by most other funds
because of the expected smaller size of the Fund.
Pursuant to its contract with the Fund, the Investment Advisor is
required to render research, statistical, and advisory services to the Fund;
to make specific recommendations based on the Fund's investment requirements;
and to pay the salaries of those of the Fund's employees of the Investment
Advisor. Fees of custodian, registrar transfer agent shall be paid by the
Fund. The Fund pays all other expenses, including fees and expenses of
directors not affiliated with the Advisor, legal and accounting fees,
interest, taxes, and brokerage commissions, etc.
OFFICERS AND DIRECTORS OF THE FUND
<TABLE>
Officers and Directors of the Fund, together with their principal occupations
during the past five years are:
<CAPTION>
Name Position Principal Occupation
Past 5 Yrs.
- ----------------------- --------------------- ----------------------
<S> <C> <C>
Hitesh (John) P. Adhia President-Treasurer CPA
Interested Director
Sheldon Schwartz Non-Interested Director Retired Stockbroker
Pravin D. Patel Non-Interested Director Administrator
Anil Amlani Secretary Chemical Engineer
Interested Director
</TABLE>
CAPITALIZATION
Description of Common Stock: The authorized capital of the Fund
consists of 10,000,000 shares of common stock of $0.0001 par value per share.
Each share has equal dividend, distribution, and liquidation rights. There
are no conversion or preemptive rights applicable to any shares of the Fund.
All shares issued are fully paid and nonassessable. The Fund offers stocks
in book-entry form only; no physical certificates are issued to any
shareholders.
Voting Rights: Each holder of common stocks has one vote for each share held.
Voting rights are noncumulative, which means that the holders of a majority of
shares of common stock can elect all directors of the Fund if they choose, and
the holders of the remaining shares will not be able to elect any person as a
director.
PURCHASE OF SHARES - REINVESTMENTS
The offering price of the shares offered by the Fund is at the net asset value
per share next determined after receipt of the purchase order by the Fund and
is computed in the manner described under the caption "PRICING OF SHARES" in
this Prospectus. The Fund reserves the right at its sole desecration to
terminate the offering of its shares made by this Prospectus at any time and
to reject purchase applications when, in judgment of management such
termination or rejection is in the best interest of the Fund.
Initial Investments: Initial purchase of shares of the Fund may be made only
by application submitted to the Fund. For the convenience of investors, a
Share Purchase Application form is provided with this Prospectus. The minimum
initial purchase of shares is $10,000 which is due and payable three (3)
business days after the purchase date. Less than $10,000 may be accepted
under special circumstances.
Subsequent Purchases: Subsequent purchases may be made by mail or by phone and
are due and payable three (3) business days after the purchase date. The
minimum is $1,000, but less may be accepted under special circumstances.
Reinvestments: The Fund will automatically retain and reinvest dividends and
capital gains distributions in shares and use same for the purchase of
additional shares for the shareholder at net asset value as of the close of
business on the distribution date. Any surplus over whole shares will be paid
on demand or applied to the next transaction according to shareholder
instructions. A shareholder may at any time by letter or forms supplied by
the Fund direct the Fund to pay dividend and/or capital gains distribution, if
any, to such shareholder in cash.
RETIREMENT PLANS
The fund does not offer IRA and/or other retirement plan accounts at this time.
However, the Fund has plans to offer these types of accounts in near future.
PRICING OF SHARES
The net asset value of the Funds shares is determined as of the close of
business of the New York Stock Exchange on each business day of which Exchange
is open (presently 4:00 PM) Monday through Friday exclusive of holidays. The
price is determined by dividing the value of its securities, plus any cash and
other assets less all liabilities, excluding capital surplus, by the number of
shares outstanding. The market value of securities listed on a national
exchange is determined to be the last recent sale price on such exchange.
Listed securities that have not recently traded and over-the-counter
securities are valued at the last bid price in such market.
Short term paper (debt obligations that mature in less than 61 days) are valued
at amortized cost which approximates market value. Other assets are valued at
fair value as determined in good faith by the Board of Directors.
REDEMPTION OF SHARES
The Fund will redeem all or any part of the shares of any shareholder who
makes a written request for redemption. A proper signature guaranteed either
by a national bank or a member firm of the New York Stock Exchange will be
required unless the shareholder is known to management.
The redemption price is the net asset value per share next determined after
notice is received by the Fund for redemption of shares. The proceeds
received by the shareholder may be more or less than his cost of such shares,
depending upon the net asset value per share at the time of redemption and the
difference should be treated by the shareholder as a capital gain or loss for
federal income tax purposes.
Payment by the Fund will ordinarily be made within three business days after
the tender. The Fund may suspend right of redemption or postpone the date of
payment if: The New York Stock Exchange is closed for other than customary
weekend or holiday closing, or when trading on the New York Stock Exchange is
restricted as determined by the Securities and Exchange Commission or when the
Securities and Exchange Commission has determined that an emergency exists,
making disposal of fund securities or valuation of net assets not reasonably
practicable.
BROKERAGE
The Fund will require all brokers to effect transactions in portfolio
securities in such a manner as to get prompt execution of all orders at the
most favorable price. The Board of Directors evaluates and reviews the
reasonableness of brokerage commission paid semiannually.
MANAGEMENT AND ADMINISTRATION OF THE FUND
As a Maryland corporation, the business and affairs of the Fund are managed
by its board of directors. Shareholders meet annually to elect all members of
the Board of Directors, select an independent auditor, and vote on any other
items deemed pertinent by the incumbent Board. The Directors are in turn
responsible for determining that the Fund operates in accordance with its
stated objectives, policies, and investment restrictions. The Board appoints
officers to run the Fund and selects an Investment Advisor to provide
investment advise. (See Investment Advisors, pg. 5). It meets six times a
year to review Fund progress and status.
Under an Administration Agreement (the "Administration Agreement") with the
Fund, the Advisor supervises all aspects of the Fund's operations except those
performed by it pursuant to the Advisory Agreement. Under the Administration
Agreement, the Advisor at its own expense and without reimbursement from the
Fund, furnishes office space, and all necessary office facilities, equipment
and executive personnel for supervising the fund's operations. For the
foregoing, the Advisor receives a monthly fee of 1/12 of .1% (.1% per annum)
of the first $30,000,000 of daily net assets of the Fund, and 1/12 of .05%
(.05% per annum) of daily net assets of the Fund over $30,000,000.
The Fund pays all of its expenses not assumed by the Advisor
pursuant to the Advisory Agreement or the Administration Agreement
described below including, but not limited to, the professional costs of
preparing and the cost of printing its registration statements required
under the Securities Act of 1933 and the Investment Company Act of 1940
and any amendments thereto, the expense of registering its shares with the
Securities and Exchange Commission and in the various states, the printing
and distribution cost of prospectuses mailed to existing shareholders,
director and officer liability insurance, reports to shareholders, reports
to government authorities and proxy statements, interest charges,
brokerage commissions and expenses in connection with portfolio
transactions. The Fund also pays the fees of directors who are not
interested persons of the Advisor or officers or employees of the Fund,
salaries of administrative and clerical personnel, association membership
dues, auditing and accounting services, fees and expenses of any custodian
or trustees having custody of Fund assets, expenses of repurchasing and
redeeming shares, printing and mailing expenses, charges and expenses of
dividend disbursing agents, registrars and stock transfer agents,
including the cost of keeping all necessary shareholder records and
accounts and handling any problems related thereto.
CUSTODIAN & TRANSFER AGENT
The Fund acts as its own custodian and transfer agent.
REPORTS TO SHAREHOLDERS
The Fund will send all shareholders annual reports containing certified
financial statements. Other periodic reports containing unaudited financial
statements will be sent semiannually. Shareholder and prospective investors
should call at (813) 289 8440 for inquiries and questions.
INDEPENDENT ACCOUNTANTS
Alan K. Geer, PA, Certified Public Accountant, Tampa, FL. has been selected
as the independent accountant and auditors of the Fund. Alan Geer has no
direct or indirect financial interest in the Fund or the Advisors.
LITIGATION
As of the date of this prospectus, there was no pending or threatened
litigation involving the Fund in any capacity whatsoever.
YEAR 2000 CHALLENGE
The common practice in computer programming of using just two digits to
identify a year has resulted in the Year 2000 Challenge throughout the
information technology industry. If unchanged, many computer applications and
systems could misinterpret date occurring after December 31, 1999, leading to
errors or failure. Such failure could adversely affect a fund's operations
including pricing, securities trading, and servicing of shareholder accounts.
Adhia Funds, Inc. is dedicated to providing uninterrupted, high-quality
performance from our computer systems before, during, and after 2000. In October
1998, we completed initial testing of our computer systems. During the test, we
actually changed the dates in our computer programs to check performance. No
problems were observed. The Fund is also planning to contact our external
partners, suppliers, and vendors, including fund managers and other service
providers, to assure that the systems with which we interact remain
operational at all times. This will take place over the next four months, from
November 1998 to February 1999. In addition, the Fund is developing
contingency plans intended to assure that unexpected sustems failures will not
adversely affect the Fund's operations.
However, despite the Fund's efforts and contingency plans, noncompliant
computer systems could have a material adverse effect on the Fund's business,
operations, or financial condition. Additioanly, the Fund's performance could
be hurt if a computer-system failure at a company or governmental unit affects
the price of securities the Fund owns.
ADDITIONAL INFORMATION
This Prospectus omits certain information contained in the registration
statement on file with the Securities & Exchange Commission. The registration
statement may be inspected without charge at the principal office of the
Commission in Washington, DC and copies of all or part thereof may be obtained
upon payment of the fee prescribed by the Commission. Shareholder may also
direct inquiries to the Fund by phone or at the address given on page one of
this Prospectus.
ACCOUNT APPLICATION
ADHIA TWENTY FUND
1. ACCOUNT REGISTRATION (Please print or type)
Please Check ONE type of account:
[] Individual (Cannot be a minor)_______________________________________
[] Joint* (Cannot be a minor) ______________________________________
* Joint tenants with right of survivorship, unless otherwise indicated or
allowed by your State of residency
[] Uniform Gifts/Transfers to _______________________________________
Minors (UGMA/UTMA) Custodian's Name (only one permitted)
Minor's Social Security Number _______________________________________
must be indicated below. Minor's Name (only one permitted)
_______________________________________
Successor Custodian's Name (optional)
[] Trust _______________________________________
Name of trust Date of trust
_______________________________________
Name of Trustee
[] Corporation or other entity _______________________________________
Name of Corporate or other entity
Taxpayer Identification Number
_______________________________ __________________________________________
Social Security Number Employer Identification Number
Check One: [] U. S. Citizen or resident alien
[] Nonresident alien ________________________
Country of residence
============================================================================
2. MAILING ADDRESS: _______________________________________
Address
_______________________________________
City State Zip
(____)______________ (____)______________
Daytime phone Evening phone
============================================================================
3. INVESTMENT:
The initial minimum investment is $10,000 per account; $5,000 for Uniform
Gift/Transfer to Minor account.
Your Investment :_______________ (Make Check Payable to Adhia Funds, Inc.)
============================================================================
4. SIGNATURES (All account owners must sign)
By signing below:
I certify that I have received and read the current prospectus of the fund and
understand its terms are incorporated in this application by reference. I
certify that I have the authority and legal capacity to make this purchase and
I am of legal age in my state of residence.
Under penalty of perjury, I certify that:
1. The Taxpayer Identification Number shown on this application is correct.
2. I am not subject to backup withholding because: (a) I am exempt from backup
withholding; or (b) I have not been notified by the Internal Revenue Service
(IRS) that I am subject to backup withholding as a result of a failure to
report all interest or dividends; or (c) the IRS has notified me that I am
no longer subject to backup withholding. Cross out item 2 if you have been
notified by the IRS that you are currently subject to backup withholding.
The Internal Revenue Service does not require your consent to any provision of
this document other than the certification required to avoid backup
withholding.
_____________________________________________________________________
Signature of owner, trustee, or custodian Date
_____________________________________________________________________
Signature of joint owner or cotrustees (if any) Date
============================================================================
Mail this application along with your check to:
Adhia Funds, Inc.
5102 Longboat Blvd.
Tampa, FL 33615
Phone: (813) 289 8440
============================================================================
<PAGE>
Adhia Twenty Fund
STATEMENT OF ADDITIONAL INFORMATION July 21, 1998
This Statement of Additional Information is not a prospectus and
should be read in conjunction with the prospectus of Adhia Funds, Inc.
(the "Company") dated July 21, 1998. Request for copies of the Prospectus
should be made by writing to Adhia Funds, Inc.,
5102 Longboat Blvd., Tampa, FL 33615, or by calling (813) 289 8440.
ADHIA FUNDS, INC..
Table of Contents Page No.
INVESTMENT RESTRICTIONS AND CONSIDERATIONS................... 2
DIRECTORS AND OFFICERS OF THE CORPORATION.................... 3
PRINCIPAL SHAREHOLDERS....................................... 4
INVESTMENT Advisor AND ADMINISTRATOR......................... 4
DETERMINATION OF NET ASSETS VALUE AND PERFORMANCE............ 5
DISTRIBUTION OF SHARES....................................... 5
ALLOCATION OF PORTFOLIO BROKERAGE............................ 5
CUSTODIAN AND TRANSFER AGENT................................. 6
TAXES........................................................ 6
STOCKHOLDER MEETINGS......................................... 7
DESCRIPTION OF SECURITIES RATINGS............................ 8
INDEPENDENT ACCOUNTANTS...................................... 8
FINANCIAL STATEMENT.......................................... 9
No person has been authorized to give any information or to make
any representations other than those contained in this Statement of Additional
Information and the Prospectus dated July 21, 1998, and, if given or made,
such information or representations may not be relied upon as having been
authorized by Adhia Funds, Inc.
This Statement of Additional Information does not constitute an offer
to sell securities.
INVESTMENT RESTRICTIONS AND CONSIDERATIONS
As set forth in the Prospectus dated July 21, 1998 of Adhia Funds,
Inc. the "Corporation") under the caption "Investment Objective and Policies",
the investment objective of Adhia Twenty Fund (the "Fund") is capital
appreciation. Consistent with its investment objective, the Fund has adopted
the following investment restrictions which are matters of fundamental policy
and cannot be change without approval of the holders of the lesser of:
(i) 67% of the Fund's shares present or represented at a stockholders meeting
at which at he holders of more than 50% of such shares are present or
represented; or (ii) more than 50% of the outstanding shares of the Fund.
(1) The Fund will not act as underwriter for securities of other issuer
except insofar as the Fund may be deemed an underwriter in selling its own
portfolio securities.
(2) The Fund will not borrow money or purchase securities on margin, but
may obtain such short term credit as any be necessary for clearance of
purchase and sale of securities for temporary or emergency purposes
in an amount not exceeding 10% of the value of its total assets.
(3) The Fund will not sell securities short.
(4) The Fund will not invest 20% or more of the value of its total assets,
determined at the time an investment is made, exclusive of U. S. government
securities, in securities issued by companies primarily engaged in the same
industry. In determining industry classifications the Fund will use the
current Directory of Companies Filing Annual Reports with the Securities
and Exchange Commission except to the extent permitted by the Act.
(5) The Fund will not make investments in commodities, commodity contracts
or real estate, although the Fund may purchase and sell securities of
companies which deal in real estate or interest therein.
(6) The Fund will not make loans. The purchase of a portion of a readily
marketable issue of publicly distributed bond, debentures or other debt
securities will not be considered the making of loan.
(7) The fund will not acquire more than 10% of the securities of any class
of another issuer, treating all preferred securities of an issuer as a single
class and all debt securities as a single class, or acquire more than 10% of
the voting of another issuer.
(8) The fund will not invest in companies for the purpose of acquiring control.
(9) The Fund will not purchase or retain securities of any issuer if those
officers and directors of the Fund or its Investment Advisors owning
individually more than 0.5 of 1% of any class of security or collectively
own more than 5% of such class of securities of such issuer.
(10) The fund will not pledge or mortgage any of its assets.
(11) The Fund will not Invest in securities which may be subject to
registration under the Securities Act of 1933 prior to sale to the public or
which are not at the time of purchase readily salable.
(12) The Fund will not Invest more than 5% of the total Fund assets, taken at
market value at the time of purchase, in a single issue.
(13) The Fund will not invest in more than twenty-five different stocks at
one time.
DIRECTORS AND OFFICERS OF THE CORPORATION
The name, address, principal occupation during the part five years,
and other information with respect to each of the directors and officers of
the Fund are as follows:
Pravin (P. D.) Patel Age 54
1005 Old Field Drive
Brandon, FL 33511
( A DIRECTOR OF THE FUND)
Mr. Patel holds a Bachelor's degree in Mechanical Engineering, a
Master's degree in Mechanical Engineering, and also a Master's degree in
Business Administration. He is an Administrator of Forest Hills Health Care,
Inc. and has served in this capacity since February 1991 to present. He also
serves as the Secretary of the Forest Hills Health Care, Inc. Mr. Patel
serves on the Executive Committee and Advisory Board of the local community
associations.
Sheldon R. Schwartz Age 73
2501 Oak Circle
Tarpon Springs, FL 34689-6129
(A DIRECTOR OF THE FUND)
Mr. Schwartz is a retired financial consultant. He has worked as a
stockbroker for Olde Discount Brokers and Oberweis Securities during 1980s.
Hitesh (John) P. Adhia* Age 34
5102 Longboat Blvd E
Tampa, FL 33615
(PRESIDENT, TREASURER, AND A DIRECTOR OF THE FUND)
Mr. Adhia holds a Bachelor's degree in Business Administration and a
Masters degree in Accounting. Mr. Adhia is President and Chief Executive
Officer of Adhia Investment Advisors, Inc. Mr. Adhia is also a Certified
Public Accountant with professional practice in Tampa, Florida. Mr. Adhia
was working as a Financial and Investment Accountant for Florida Farm Bureau
Insurance Companies for the period of 1991 to 1996.
Anil D. Amlani* Age 23
722 Marshall Street
Roanoke Rapids, NC 27870
(SECRETARY AND A DIRECTOR OF THE FUND)
Mr. Amlani has a Bachelors in Chemical Engineering from the University
of South Florida. He works for a Paper making Company since February 1997.
For the years 1991 to 1996 he was a full-time engineering student at University
of Florida and University of South Florida.
The Corporation was organized on January 27, 1998. The table below
set forth the compensation anticipated to be paid by the Corporation to each
of the Directors of the Corporation during the fiscal year ending December 31,
1998;
* denotes interested Director.
<TABLE>
COMPENSATION TABLE
<CAPTION>
Name of Person Aggregate Compensation Pension or Retirement Estimated Annual Total Compensation from
from Corporation Benefits Accrued as Benefits upon Corporation and Fund
Part of Fund Expenses Retirement Complex Paid to Directors
- -------------------- ---------------------- ---------------------- ------------------ -------------------------
<S> <C> <C> <C> <C>
Pravin Patel 600 0 0 600
Sheldon R. Schwartz 600 0 0 600
Hitesh P. Adhia 0 0 0 0
Anil D. Amlani 0 0 0 0
</TABLE>
PRINCIPAL STOCKHOLDERS
As of the date hereof, Hitesh (John) P. Adhia and his family members
and director of the fund own 100% of the Fund's outstanding shares. As of
the date they control the Fund and own sufficient shares of the Fund to approve
or disapprove all matters brought before stockholders of the Corporation,
including the election of directors of the Corporation and the approval of
auditors. The Corporation does not control any person.
INVESTMENT Advisor AND ADMINISTRATOR
As set forth in the Prospectus under the caption "Management of the
Fund" the investment advisor and administrator of the Fund is Adhia
Investment Advisors, Inc. (the "Advisor"). The Advisor is wholly-owned
by Hitesh (John) P. Adhia.
The Advisor has undertaken to reimburse the Fund to the extent that the
aggregate annual operating expenses, including the investment advisory fee
and the administration fee but excluding interest, taxes, brokerage commissions
and extraordinary items, exceed that percentage of the daily net assets of the
Fund for such year, as determined by valuations made as of the close of each
business day of the year, which is the most restrictive percentage provided
by the state laws of the various states in which it shares are qualified for
sale or, if the states in which its shares are qualified for sale impose no
such restrictions, 2.75%. As of the date of this Statement of Additional
Information the percentage applicable to the Fund is 2-1/2% on the first
$30,000,000 of its daily net assets, 2% on the next $70,000,000 of its daily
net assets and 1-1/2% on daily net assets in excess of $100,000,000.
The Fund monitors its expense ratio on a monthly basis. If the accrued amount
of the expenses of the Fund exceeds the expense limitation, the Fund creates
an account receivable from the Advisor for the amount of such excess. In
such a situation the monthly payment of the Advisor's fee will be reduced
by the amount of such excess, subject to adjustment month by month during the
balance of the Fund's fiscal year if accrued expenses thereafter fall below
this limit.
As set forth in the Prospectus under the caption "Management of the
Fund" the Advisor is also the administrator to the Fund. Pursuant to an
administration agreement (the "Administration Agreement") between the Fund
and the Advisor, the Advisor supervises all aspects of the Fund's operations
except those performed by it as investment advisor. In connection with such
supervision the Advisor prepares and maintains the books, accounts and other
documents required by the Investment Company Act of 1940 (the "Act"),
calculates the Fund's net asset value, responds to shareholder inquiries,
prepares the Fund's financial statements and tax returns, prepares reports
and filings with the Securities and Exchange Commission and with state Blue
Sky authorities, furnishes statistical and research data, clerical, accounting
and bookkeeping services and stationery and office supplies, keeps and
maintains the Fund's financial accounts and records and generally assists
in all respects of the Fund's operations.
The Advisory Agreement will remain in effect as long as its
continuance is specifically approved at least annually, by (i) the Board of
Directors of the Corporation, or by the vote of a majority (as defined in
the Act) of the outstanding shares of the Fund, and (ii) by the vote of a
majority of the directors of the Corporation who are not parties to the
Advisory Agreement or interested persons of the Advisor, cast in person at a
meeting called for the purpose of voting on such approval. The Administration
Agreement will remain in effect as long as its continuance is specifically
approved at least annually by the Board of Directors of the Corporation.
Both the Advisory Agreement and the Administration Agreement provide that
they may be terminated at any time without the payment of any penalty, by
the Board of Directors of the Corporation or by vote of a majority of the
Fund's stockholders, on sixty days' written notice to the Advisor, and by the
Advisor on the same notice to the Corporation and that they shall be
automatically terminated if they are assigned.
The Advisory Agreement and the Administration Agreement provide that
the Advisor shall not be liable to the Fund or its stockholders for anything
other than willful misfeasance, bad faith, gross negligence or reckless
disregard of its obligations or duties. The Advisory Agreement and the
Administration Agreement also provide that the Advisor and its officers,
directors and employees may engage in other businesses, devote time and
attention to any other business whether or a similar or dissimilar nature,
and render services to others.
DETERMINATION OF NET ASSET VALUE AND PERFORMANCE
As set forth in the Prospectus under the caption "Determination of
Net Asset Value" the net asset value of the Fund will be determined as of the
close of regular trading (4:00 P.M. Eastern Time) on each day the New York
Stock Exchange is open for trading. The New York Stock Exchange is open for
trading Monday through Friday except New Year's Day, Washington's Birthday,
Good Friday, Memorial Day, Independence Day, Labor Day, Thanksgiving Day and
Christmas Day. Additionally, if any of the aforementioned holidays falls on
a Saturday, the New York Stock Exchange will not be open for trading on the
preceding Friday and when any such holiday falls on a Sunday, the New York
Stock Exchange will not be open for trading on the succeeding Monday, unless
unusual business conditions exist, such as the ending of a monthly or the
yearly accounting period.
Any total rate of return quotation for the Fund will be for a period of
three or more months and will assume the reinvestment of all dividends and
capital gains distributions which were made by the Fund during that period.
Any period total rate of return quotation of the Fund will be calculated by
dividing the net change in value of a hypothetical shareholder account
established by an initial payment is $1,000 at the beginning of the period by
1,000. The net change in the value of a shareholder account is determined by
subtracting $1,000 from the product obtained by multiplying the net asset
value per share at the end of the period by the sum obtained by adding (A)
the number of shares purchased at the beginning of the period plus (B) the
number of shares purchased during the period with reinvested dividends and
distributions. Any average annual compounded total rate of return quotation
of the Fund will be calculated by dividing the redeemable value at the end of
the period (i.e., the product referred to in the preceding sentence) by $1,000.
A root equal to the period, measured in years, in question is then determined
and 1 is subtracted from such root to determine the average annual compounded
total rate of return.
The foregoing computation may also be expressed by the following formula:
n
P(1 + T) = ERV
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
stated periods at the end of the stated
periods
DISTRIBUTION OF SHARES
The Fund acts as its own distributor. The Fund does not pay any
broker commission on 12b(1) rebate to any parties.
ALLOCATION OF PORTFOLIO BROKERAGE
Decisions to buy and sell securities for the Fund are made by the
Advisor subject to review by the Corporation's Board of Directors. In placing
purchase and sale orders for portfolio securities for the Fund, it is the
policy of the Advisor to seek the best execution of orders at the most
favorable price in light of the overall quality of brokerage and research
services provided, as described in this and the following paragraph. In
selecting brokers to effect portfolio transactions, the determination of what
is expected to result in best execution at the most favorable price involves
a number of largely judgmental considerations. Among these are the Advisor's
evaluation of the broker's efficiency in executing and clearing transactions,
block trading capability (including the broker's willingness to position
securities and the broker's financial strength and stability). The most
favorable price to the Fund means the best net price without regard to the
mix between purchase or sale price and commission, if any. Over-the-counter
securities are generally purchased and sold directly with principal market
makers who retain the difference in their cost in the security and its selling
price. In some instances, the Advisor feels that better prices are available
from non-principal market makers who are paid commissions directly. The Fund
may place portfolio orders with broker-dealers who recommend the purchase of
Fund shares to clients if the Advisor believes the commissions and transaction
quality are comparable to that available from other brokers and may allocate
portfolio brokerage on that basis.
In allocating brokerage business for the Fund, the Adivsor also takes
into consideration the research, analytical, statistical and other information
and services provided by the broker, such as general economic reports and
information, reports or analyses of particular companies or industry groups,
market timing and technical information, and the availability of the brokerage
firm's analysts for consultation. While the Advisor believes these services
have substantial value, they are considered supplemental to the Advisor's own
efforts in the performance of its duties under the Advisory Agreement. Other
clients of the Advisor may indirectly benefit from the availability of these
services to the Advisor, and the Fund may indirectly benefit from services
available to the Advisor as a result of transactions for other clients. The
Advisory Agreement provides that the Advisor may cause the Fund to pay a
broker which provides brokerage and research services to the Advisor a
commission for effecting a securities transaction in excess of the amount
another broker would have charged for effecting the transaction, if the
Advisor determines in good faith that such amount of commission is reasonable
in relation to the value of brokerage and research services provided by the
executing broker viewed in terms of either the particular transaction or the
Advisor's overall responsibilities with respect to the Fund and the other
accounts as to which it exercises investment discretion. The Fund did not
commence operations until May 09, 1998.
CUSTODIAN AND TRANSFER AGENT
The Fund acts as its own custodian and transfer agent.
TAXES
As set forth in the Prospectus under the caption "Dividends,
Distributions and Taxes" the Fund will endeavor to qualify annually for and
elect tax treatment applicable to a regulated investment company under
Subchapter M of the Internal Revenue Code of 1986, as amended (the "Code").
Under the Code, the Fund will not qualify as a regulated investment
company for any taxable year if more than 30% of the Fund's gross income for
that year is derived from gains on the sale of securities held less than three
months (the "30% Test").
Dividends from the Fund's net investment income and distributions from
the Fund's net realized capital gains are taxable to stockholders as ordinary
income, whether received in cash or in additional shares. The 70%
dividends-received deduction for corporations will apply to such dividends
and distributions, subject to proportionate reductions if the aggregate
dividends received by the Fund from domestic corporations in any year are
less than 100% of the net investment company income taxable distributions made
by the Fund.
Any dividend or capital gain distribution paid shortly after a
purchase of shares of the Fund, will have the effect of reducing the per share
net asset value of such shares by the amount of the dividend or distribution.
Furthermore, if the net asset value of the shares of the Fund immediately
after a dividend or distribution is less than the cost of such shares to the
stockholder, the dividend or distribution will be taxable to the stockholder
even though it results in a return of capital to him.
Redemption of shares will generally result in a capital gain or loss
for income tax purposes. Such capital gain or loss will be long term or
short term, depending upon the holding period. However, if a loss is realized
on shares held for six months or less, and the investor received a capital
gain distribution during that period, then such loss is treated as a long
- -term
capital loss to the net of the capital gain distribution received.
The Fund may be required to withhold Federal income tax at a rate of
31% ("backup withholding") from dividend payments and redemption proceeds if a
shareholder fails to furnish the Fund with his social security or other tax
identification number and certify under penalty of perjury that such number is
correct and that he is not subject to backup withholding due to the under
reporting of income. The certification form is included as part of the share
purchase application and should be completed when the account is opened.
This section is not intended to be a full discussion of present or
proposed federal income tax laws and the effect of such laws on an investor.
Investors are urged to consult with their respective tax advisors for a
complete review of the tax ramifications of an investment in the Fund.
STOCKHOLDER MEETINGS
The Maryland Business Corporation Law permits registered investment
companies, such as the Fund, to operate without an annual meeting of
stockholders under specified circumstances if an annual meeting is not
required by the Act. The Corporation has adopted the appropriate provisions
in its bylaws and may, at its discretion, not hold an annual meeting in any
year in which the election of directors is not required to be acted upon by
the stockholders under the Act.
The Corporation's bylaws also contain procedures for the removal of
directors by its stockholders. At any meeting of stockholders, duly called
and at which a quorum is present, the stockholders may, by the affirmative
vote of the holders of a majority of the votes entitled to be cast thereon,
remove any director or directors from office and may elect a successor or
successors to fill any resulting vacancies for the unexpired terms of removed
directors.
Upon the written request of the holders of shares entitled to not less
than ten percent (10%) of all the votes entitled to be cast at such meeting,
the Secretary of the Corporation shall promptly call a special meeting of
stockholders for the purpose of voting upon the question of removal of any
director. Whenever ten or more stockholders of record who have been such for
at least six months preceding the date of application, and who hold in the
aggregate either shares having a net asset value of at least $25,000 or at
least one percent (1%) of the total outstanding shares, whichever is less,
shall apply to the Corporation's Secretary in writing, stating that they wish
to communicate with other stockholders with a view to obtaining signatures to
a request for a meeting as described above and accompanied by a form of
communication and request which they wish to transmit, the Secretary shall
within five business days after such application either: (1) afford to such
applicants access to a list of the names on the books of the Corporation; or
(2) inform such applicants as to the approximate number of stockholders of
record and the approximate cost of ailing to them the proposed communication
and form of request.
If the Secretary elects to follow the course specified in clause (2)
of the last sentence of the preceding paragraph, the Secretary, upon the
written request of such applicants, accompanied by a tender of the material
to be mailed and of the reasonable expenses of mailing, shall, with reasonable
promptness, mail such material to all stockholders of record at their
addresses as recorded on the books unless within five business days after
such tender the Secretary shall mail to such applicants and file with the
Securities and Exchange Commission, together with a copy of the material to be
mailed, a written statement signed by at least a majority of the Board of
Directors to the effect that in their opinion either such material contains
untrue statements of factor omits to state facts necessary to make the
statements contai
ned therein not misleading, or would be in violation of
applicable law, and specifying the basis of such opinion.
After opportunity for hearing upon the objections specified in the
written statement so file, the Securities and Exchange Commission may, and if
demanded by the Board of Directors or by such applicants shall, enter an order
either sustaining one or more of such objections or refusing to sustain any of
them. If the Securities and Exchange Commission shall enter an order refusing
to sustain any of such objections, or if, after the entry of an order
sustaining one or more of such objections, the Securities and Exchange
Commission shall find, after notice and opportunity for hearing, that all
objections so sustained have been met, and shall enter an order so declaring,
the Secretary shall mail copies of such material to all stockholders with
reasonable promptness after the entry of such order and the renewal of such
tender.
DESCRIPTION OF SECURITIES RATINGS
As set forth in the Corporation's Prospectus, the Fund may invest in
commercial paper and commercial paper master notes assigned ratings of either
Standard & Poor's Corporation ("Standard & Poor's") or Moody's Investors
Service, Inc. ("Moody's"). A brief description of the ratings symbols and
their meanings follows:
Standard & Poor's Commercial Paper Ratings. A Standard & Poor's
commercial paper rating is a current assessment of the likelihood of timely
payment of debt considered short-term in the relevant market. Ratings are
graded into several categories, ranging from A-1 for the highest quality
obligations to D for the lowest. The categories rated A-3 or higher are as
follows:
A-1. This highest category indicates that the degree of safety
regarding timely payment is strong. Those issuers determined to possess
extremely strong safety characteristics are denoted with a plus sign (+)
designation.
A-2. Capacity for timely payment on issues with this designation is
satisfactory. However the relative degree of safety is not as high as for
issuers designed "A-1."
A-3. Issues carrying this designation have adequate capacity for
timely payment. They are, however, more vulnerable to the adverse effects of
changes in circumstances than obligations carrying the higher designation.
Moody's Short-term Debt Ratings. Moody's short-term debt ratings are
opinions of the ability of issuers to repay punctually senior debt obligations
which have an original maturity not exceeding one year. Obligations relying
upon support mechanisms such as letters-of-credit and bonds of indemnity are
excluded unless explicitly rated.
Moody's employs the following three designations, all judged to be
investment grade, to indicate the relative repayment ability of rated issuers:
Prime-1. Issuers rated Prime-1 (or supporting institutions) have a
superior ability for repayment of senior short-term debt obligations. Prime-1
repayment ability will often be evidenced by many of the following
characteristics:
- Leading market positions in well-established industries.
- High rates of return on funds employed.
- Conservative capitalization structure with moderate reliance on
debt and ample asset protection.
- Broad margins in earnings coverage of fixed financial charges
and high internal cash generation.
- Well-established access to a range of financial markets and
assured sources of alternate liquidity.
Prime-2. Issuers rated Prime-2 (or supporting institutions) have a
strong ability for repayment of senior short-term debt obligations. This will
normally be evidenced by many of the characteristics cited above but to a
lesser degree. Earnings trends and coverage ratios, while sound, may be more
subjection variation. Capitalization characteristics, while still appropriate,
may be more affected by external conditions. Ample alternate liquidity is
maintained.
Prime-3. Issuers rated Prime-3 (or supporting institutions) have an
acceptable ability for repayment of senior short-term obligations. The effect
of industry characteristics and market compositions may be more pronounced.
Variability in earnings and profitability may result in changes in the level
of debt protection measurements and may require relatively high financial
leverage. Adequate alternate liquidity is maintained.
INDEPENDENT ACCOUNTANTS
Alan K. Geer, PA, Certified Public Accountant, Tampa, FL. has been selected as
the independent accountant and auditors of the Fund. Alan Geer has no direct
or indirect financial interest in the Fund or the Advisors.
FINANCIAL STATEMENTS
The following financial statements for the Fund are attached hereto:
- Statement of Projected Assets and Liabilities
- Notes to the Projected Financial Statement
ADHIA FUNDS, INC..
ADHIA TWENTY FUND
Statement of Projected Assets and Liabilities
as of Nov 30, 1998
ASSETS
Cash $62,974
Investment in Securities $49,032
_________
Total Assets $112,006
LIABILITIES
None -0-
---------
Total Liabilities -0-
---------
NET ASSETS $112,006
==========
Capital Stock, $ 0.0001 par value; 500,000,000 shares
authorized; 10,000 shares outstanding $112,006
Offering and redemption price/net asset value per share ==========
(based on 11,500 shares of capital stock issued and $9.740
outstanding) ==========
The accompanying notes to the Projected Financial Statement are an integral
part of this statement.
ADHIA FUNDS, INC..
ADHIA TWENTY FUND
I Adhia Funds, Inc. (the "Company") was incorporated under the laws of
the state of Maryland on January 27, 1998 and has had no operations to date
other than those relating to organizational matters and the projected sale of
10,000 shares of its common stock to Hitesh Adhia and his family members - its
sponsor. The Company is an open-end non-diversified management investment
company registered under the Investment Company Act of 1940 (the "1940 Act").
II Adhia Funds, Inc., which consist solely of the Adhia Twenty Fund (the
"Fund"), has an agreement with Adhia Investment Advisors, Inc. (the "Advisor"),
with whom certain officers and directors of Adhia Funds, Inc. are affiliated,
to furnish investment advisory services to the Fund. Under the terms of this
agreement, the Fund will pay the Advisor a monthly fee based on the Fund's
average daily net assets at the annual rate of 1.00%. Under the investment
advisory agreement, if the aggregate annual operating expenses (including the
investment advisory fee and the administration fee but excluding interest,
taxes, brokerage commissions and other costs incurred in connection with the
purchase or sale of portfolio securities and extraordinary items) exceed the
lowest limitation imposed by state securities administrators, the Advisor will
reimburse the Fund for the amount of such excess.
III Organizational costs and initial registration expenses are paid by the
sponsor and Advisor Adhia Investment Advisors, Inc.
PART C
OTHER INFORMATION
Item 24. Financial Statements and Exhibits
(a.) Financial Statement (included in Part B)
Statement of Assets and Liabilities
Notes to Financial Statement
(b.) Exhibits
(1) Registrant's Articles of Incorporation.
(2) Registrant's Bylaws.
(3) None
(4) None
(5) Investment Advisory Agreement with Adhia Investment
Advisors, Inc. relating to Adhia Twenty Fund.
(6) None
(7) None
(8) None
(9) Fund Administration Servicing Agreement with Adhia
Investment Advisors relating to Adhia Twenty Fund.
(10) Opinion of Nilesh M. Patel, Esq., counsel for Registrant
(11) Engagement letter with Alan Geer, CPA.
(12) None
(13) Subscription Agreement (submitted in draft form).
(14) None.
(15) None.
(16) None
(17) None.
(18) None
<27> Financial Data Schedule
Item 25. Persons Controlled by or under Common Control with Registrant
Registrant is controlled by Hitesh (John) P. Adhia and his family
members who own 79% of Registrant's voting securities as of Novembr 30,
1998. Registrant neither controls any person nor is under common control
with any other person.
Item 26. Number of Holders of Securities
Number of Record Holders
Title of Class as of November 30, 1998
Class A Common Stock, $0.0001 4
par value (Adhia Twenty Fund)
Item 27. Indemnification
Pursuant to the authority of the Maryland General Corporation
Law, particularly Section 2-418 thereof, Registrant's Board of Directors has
adopted the following bylaw which is in full force and effect and has not been
modified or canceled:
Article VII
GENERAL PROVISIONS
Section 7. Indemnification.
A. The Corporation shall indemnify all of its corporate
representatives against expenses, including attorneys fees, judgments, fines
and amounts paid in settlement actually and reasonably incurred by them in
connection with the defense of any action, suit or proceeding, or threat or
claim of such action, suit or proceeding, whether civil, criminal,
administrative, or legislative, no matter by whom brought, or in any appeal
in which they or any of them are made parties or a party by reason of being or
having been a corporate representative, if the corporate representative acted
in good faith and in a manner reasonably believed to be in or not opposed to
the best interests of the corporation and with respect to any criminal
proceeding, if he had no reasonable cause to believe his conduct was unlawful
provided that the corporation shall not indemnify corporate representatives
in relation to matters as to which any such corporate representative shall be
adjudged in such action, suit or proceeding to be liable for gross negligence,
willful misfeasance, bad faith, reckless disregard of the duties and
obligations involved in the conduct of his office, or when indemnification
is otherwise not permitted by the Maryland General Corporation Law.
B. In the absence of an adjudication which expressly absolves the
corporate representative, or in the event of a settlement, each corporate
representative shall be indemnified hereunder only if there has been a
reasonable determination based on a review of the facts that indemnification
of the corporate representative is proper because he has met the applicable
standard of conduct set forth in paragraph A. Such determination shall be made:
(i) by the board of directors, by a majority vote of a quorum which consists
of directors who were not parties to the action, suit or proceeding, or if
such a quorum cannot be obtained, then by a majority vote of a committee of
the board consisting solely of two or more directors, not, at the time,
parties to the action, suit or proceeding and who were duly designated to act
in the matter by the full board in which the designated directors who are
parties to the action, suit or proceeding may participate; or (ii) by special
legal counsel selected by the board of directors or a committee of the board
by vote as set forth in (i) of this paragraph, or, if the requisite quorum of
the full board cannot be obtained therefor and the committee cannot be
established, by a majority vote of the full board in which directors who are
parties to the action, suit or proceeding may participate.
C. The termination of any action, suit or proceeding by judgment,
order, settlement, conviction, or upon a plea of nolo contendere or its
equivalent, shall create a rebuttable presumption that the person was guilty
of willful misfeasance, bad faith, gross negligence or reckless disregard to
the duties and obligations involved in the conduct of his or her office, and,
with respect to any criminal action or proceeding, had reasonable cause to
believe that his or her conduct was unlawful.
D. Expenses, including attorneys' fees, incurred in the preparation of
and/or presentation of the defense of a civil or criminal action, suit or
proceeding may be paid by the corporation in advance of the final disposition
of such action, suit or proceeding as authorized in the manner provided in
Section 2-418(F) of the Maryland General Corporation Law upon receipt of:
(i) an undertaking by or on behalf of the corporate representative to repay
such amount unless it shall ultimately be determined that he or she is
entitled to be indemnified by the corporation as authorized in this bylaw;
and (ii) a written affirmation by the corporate representative of the
corporate representative's good faith belief that the standard of conduct
necessary for indemnification by the corporation has been met.
E. The indemnification provided by this bylaw shall not be deemed
exclusive of any other rights to which those indemnified may be entitled under
these bylaws, any agreement, vote of stockholders or disinterested directors or
otherwise, both as to action in his or her official capacity and as to action
in another capacity while holding such office, and shall continue as to a
person who has ceased to be a director, officer, employee or agent and shall
inure to the benefit of the heirs, executors and administrators of such a
person subject to the limitations imposed from time to time by the Investment
Company Act of 1940, as amended.
F. This corporation shall have power to purchase and maintain
insurance on behalf of any corporate representative against any liability
asserted against him or her and incurred by him or her in such capacity or
arising out of his or her status as such, whether or not the corporation would
have the power to indemnify him or her against such liability under this bylaw
provided that no insurance may be purchased or maintained to protect any
corporate representative against liability for gross negligence, willful
misfeasance, bad faith or reckless disregard of the duties and obligations
involved in the conduct of his or her office.
G. "Corporate Representative" means an individual who is or was a
director, officer, agent or employee of the corporation or who serves or
served another corporation, partnership, joint venture, trust or other
enterprise in one of these capacities at the request of the corporation and
who, by reason of his or her position, is, was, or is threatened to be made, a
party to a proceeding described herein.
Insofar as indemnification for and with respect to liabilities
arising under the Securities Act of 1933 may be permitted to directors,
officers and controlling persons of Registrant pursuant to the foregoing
provisions or otherwise, Registrant has been advised that in the opinion of the
Securities and Exchange Commission such indemnification is against public
policy as expressed in the Act and is, therefore, unenforceable. In the event
that a claim for indemnification against such liabilities (other than the
payment by Registrant of expenses incurred or paid by a director, officer or
controlling person or Registrant in the successful defense of any action, suit
or proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, Registrant will, unless in
the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question of
whether such indemnification is against public policy as expressed in the Act
and will be governed by the final adjudication of such issue.
Item 28. Business and Other Connections of Investment advisor Incorporated
by reference to pages 4 through 6 of the Statement of Additional Information
pursuant to Rule 411 under the Securities Act of 1933.
Item 29. Principal Underwriters
Not Applicable.
Item 30. Location of Accounts and Records
The accounts, books and other documents required to be maintained
by Registrant pursuant to Section 31(a) of the Investment Company Act of 1940
and the rules promulgated thereunder are in the physical possession of
Registrant's Treasurer, Hitesh (John) P. Adhia, at Registrant's corporate
offices, 5102 E Longboat Blvd., Tampa, FL 33615.
Item 31. Management Services
All management-related service contracts entered into by
Registrant are discussed in Parts A and B of this Registration Statement.
Item 32. Undertakings
With respect to stockholder meetings, Registrant undertakes to
call stockholder meetings in accordance with the provisions of Article I of
its Bylaws, which are discussed in Parts A and B of this Registration
Statement.
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and ]
the Investment Company Act of 1940, the Registrant has duly caused this
Registration Statement to be signed on its behalf by the undersigned,
thereunto duly authorized, in the City of Tampa and State of Florida on the
21st day of July, 1998.
ADHIA FUNDS, INC..
(Registrant)
By: Hitesh P. Adhia
Hitesh (John) P. Adhia, President
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 date(s) indicated.
Name Title Date
/s/Hitesh P. Adhia (Principal Executive, November 30, 1998
Hitesh (John) P. Adhia Financial and Accounting
Officer) and a Director
/s/Pravin D. Patel Director November 30, 1998
Pravin (P. D.) Patel
/s/Anil D. Amlani Secretary and a Director November 30, 1998
Anil D. Amlani
/s/Sheldon R. Schwartz Director November 30, 1998
Sheldon R. Schwartz
<PAGE>
EXHIBIT INDEX
Exhibit No. Exhibit
(1) Registrant's Articles of Incorporation
(2) Registrant's Bylaws
(3) None
(4) None
(5) Investment Advisory Agreement with Adhia Investment
Advisors, Inc. relating to Adhia Twenty Fund
(6) None
(7) None
(8) None
(9) Fund Administration Servicing Agreement with Adhia
Investment Advisors relating to Adhia Twenty Fund
(10) Opinion of Nilesh M. Patel, Esq., counsel for Registrant
(11) Engagement letter with Alan Geer, CPA
(12) None
(13) Subscription Agreement (submitted in draft form)
(14) None
(15) None
(16) None
(17) None
(18) None
<27> Financial Data Schedule
ARTICLES OF INCORPORATION
OF
ADHIA FUNDS, INC..
The undersigned sole incorporator, being at least eighteen years
of age, hereby adopts the following Articles of Incorporation for the purpose
of forming a Maryland corporation under the general laws of the State of
Maryland:
ARTICLE I
The name of the corporation (hereinafter called "Corporation") is:
Adhia Funds, Inc.
ARTICLE II
The period of existence shall be perpetual.
ARTICLE III
The purposes for which the Corporation is formed are to engage in
any lawful business for which corporations may be organized under the Maryland
General Corporation Law.
ARTICLE IV
A. The aggregate number of shares of capital stock which the
Corporation shall have authority to issue is Five Hundred Million (500,000,000)
shares, all with a par value of One Hundredth of a Cent ($0.0001) per share,
to be known and designated as "Common Stock." The aggregate par value of the
authorized shares of the Corporation is Fifty Thousand Dollars ($50,000). The
Board of Directors of the Corporation may increase or decrease the aggregate
number of authorized shares of Common Stock pursuant to Section 2-105 of the
Maryland General Corporation Law or any successor provision thereto. The
Board of Directors of the Corporation may classify or reclassify any unissued
shares of Common Stock and may designate or redesignate the name of any class
of outstanding Common Stock. The Board of Directors may fix the number of
shares of Common Stock in any such class and, except as specifically set forth
in these Articles of Incorporation, may set or change the preferences,
conversion or other rights, voting powers, restrictions, limitations as to
dividends, qualifications and terms or conditions of redemption of any class
of unissued shares of Common Stock. A total of One Hundred Million
(100,000,000) shares of Common Stock shall initially be classified as "Class
A Common Stock" (the "ADHIA TWENTY FUND" or such other name designated by the
Corporation's Board of Directors).
<PAGE>
B. Notwithstanding the authority granted to the Board of
Directors of the Corporation with respect to the designation, classification
and reclassification of the unissued shares of Common Stock of the Corporation,
each class of Common Stock shall have the following preferences, conversion or
other rights, voting powers, restrictions, limitations as to dividends,
qualifications and terms or conditions of redemption:
1. Each holder of shares of Common Stock of the Corporation,
irrespective of the class, shall be entitled to one (1) vote for each full
share (and a fractional vote for each fractional share) then standing in his
or her name on the books of the Corporation; provided, however, that shares of
any class of Common Stock owned, other than in a fiduciary capacity, by the
Corporation or by another corporation in which the Corporation owns shares
entitled to cast a majority of all the votes entitled to be cast by all shares
outstanding and entitled to vote of such corporation, shall not be voted at any
meeting of stockholders. On any matter submitted to a vote of stockholders
all shares of the Corporation's Common Stock then issued and outstanding and
entitled to vote, irrespective of the class, shall be voted in the aggregate
and not by class, except that: (a) when otherwise expressly provided by the
Maryland General Corporation Law, the Investment Company Act of 1940 and the
regulations thereunder, or other applicable law, shares shall be voted by
individual class; and (b) when the matter to be acted upon does not affect any
interest of a particular class of the Corporation's Common Stock, then only
shares of the affected class shall be entitled to vote thereon. At all
elections of directors of the Corporation, each stockholder shall be entitled
to vote the shares owned of record by him for as many persons as there are
directors to be elected, but shall not be entitled to exercise any right of
cumulative voting.
2. All consideration received by the Corporation for the issue
or sale of shares of any class of the Corporation's Common Stock, together with
all assets in which such consideration is invested and reinvested, income,
earnings, profits and proceeds thereof, including any proceeds derived from the
sale, exchange or liquidation thereof, and any such funds or payments derived
from any reinvestment of such proceeds in whatever form the same may be, shall
irrevocably belong to the class of the Corporation's Common Stock with respect
to which such assets, payments or funds were received by the Corporation for
all purposes, subject only to the rights of creditors, and shall be so handled
upon the books of account of the Corporation. Such consideration, assets,
income, earnings, profits and proceeds thereof, including any proceeds derived
from the sale, exchange or liquidation thereof, and any assets derived from any
reinvestment of such proceeds in whatever form, are herein referred to as
"assets belonging to" such class. Any assets, income, earnings, profits and
proceeds thereof, funds or payments which are not readily attributable to any
particular class of the Corporation's Common Stock shall be allocable among
any one or more of the classes of the Corporation's Common Stock in such manner
and on such basis as the Board of Directors, in its sole discretion, shall
deem fair and equitable. The power to make such allocations may be delegated
by the Board of Directors from time to time to one or more of the officers of
the Corporation.
3. The assets belonging to any class of the Corporation's Common
Stock shall be charged with the liabilities in respect of such class of the
Corporation's Common Stock, and shall also be charged with the share of the
general liabilities of the Corporation allocated to such class determined as
hereinafter provided. The determination of the Board of Directors shall be
<PAGE>
conclusive as to: (a) the amount of such liabilities, including the amount of
accrued expenses and reserves; (b) any allocation of the same to a given class;
and (c) whether the same are allocable to one or more classes. The liabilities
so allocated to a class are herein referred to as "liabilities belonging to"
such class. Any liabilities which are not readily attributable to any
particular class of the Corporation's Common Stock shall be allocable among
any one or more of the classes of the Corporation's Common Stock in such
manner and on such basis as the Board of Directors, in its sole discretion,
shall deem fair and equitable. The power to make such allocations may be
delegated by the Board of Directors from time to time to one or more of the
officers of the Corporation.
4. Shares of a class of the Corporation's Common Stock shall be
entitled to such dividends and distributions, in stock or in cash or both, as
may be declared from time to time by the Board of Directors, acting in its
sole discretion, with respect to such class; provided, however, that dividends
and distributions on shares of a class of the Corporation's Common Stock shall
be paid only out of the lawfully available "assets belonging to" such class as
such phrase is defined in this.
5. In the event of the liquidation or dissolution of the
Corporation, stockholders of a class of the Corporation's Common Stock shall be
entitled to receive, as a class, out of the assets of the Corporation available
for distribution to stockholders, but other than general assets not belonging
to any particular class, the assets belonging to such class, and the assets
so distributable to the holders of any class of the Corporation's Common Stock
shall be distributed among such holders in proportion to the number of shares
of such class of the Corporation's Common Stock held by them and recorded on
the books of the Corporation. In the event that there are any general assets
not belonging to any particular class of the Corporation's Common Stock and
available for distribution, such distribution shall be made to the holders of
all classes of the Corporation's Common Stock in proportion to the net asset
values of the respective classes of the Corporation's Common Stock determined
as set forth in the Bylaws of the Corporation.
6. Each share of each class of Common Stock of the Corporation
now or hereafter issued shall be subject to redemption by the stockholders of
the Corporation and, subject to the suspension of such right of redemption as
provided in the Bylaws, each holder of shares of any class of Common Stock of
the Corporation, upon request to the Corporation accompanied by surrender of
the appropriate stock certificate or certificates, if any, in proper form for
transfer and after complying with any other redemption procedures established
by the Board of Directors, shall be entitled to require the Corporation to
redeem all or any part of the shares of such class of Common Stock standing
in the name of such holder on the books of the Corporation at the net asset
value of such shares. In the event that no certificates have been issued to
the holder, the Board of Directors may require the submission of a stock power
with an appropriate signature guarantee. All shares of any class of its
Common Stock redeemed by the Corporation shall be deemed to be canceled and
restored to the status of authorized but unissued shares. The method of
computing the net asset value of shares of each class of Common Stock of the
Corporation for purposes of the issuance and sale, or redemption, thereof, as
well as the time as of which such net asset value shall be computed, shall be
as set forth in the Bylaws. Payment of the net asset value of each share of
<PAGE>
each class of Common Stock of the Corporation surrendered to it for redemption
shall be made by the Corporation within seven (7) days after surrender of such
stock to the Corporation for such purpose, or within such other reasonable
period as may be determined from time to time by the Board of Directors. The
Board of Directors of the Corporation may, upon reasonable notice to the
stockholders of the Corporation, impose a fee for the privilege of redeeming
shares, such fee to be not in excess of two percent (2.0%) of the proceeds of
any such redemption. The Board shall have discretionary authority to rescind
the imposition of any such fee and to re-impose the redemption fee from time
to time upon reasonable notice. Any fee so imposed shall be uniform as to all
stockholders to the extent required by the Investment Company Act of 1940.
7. If, at any time when a request for transfer or redemption of
the shares of any class of Common Stock is received by the Corporation or its
agent, the value (computed as set forth in the Bylaws) of the shares of such
class in a stockholder's account is less than One Thousand Dollars ($1,000.00),
after giving effect to such transfer or redemption, the Corporation may cause
the remaining shares of such class in such stockholder's account to be redeemed
in accordance with such procedures as the Board of Directors shall adopt.
8. Each holder of shares of the Corporation's Common Stock,
irrespective of the class, may, upon request to the Corporation accompanied by
surrender of the appropriate stock certificate or certificates, if any, in
proper form for transfer and after complying with any other conversion
procedures established by the Board of Directors, convert such shares into
shares of any other class of the Corporation's Common Stock on the basis of
their relative net asset values (determined in accordance with the Bylaws of
the Corporation) less a conversion charge or discount determined by the Board
of Directors. Any fee so imposed shall be uniform as to all stockholders to
the extent required by the Investment Company Act of 1940.
9. No holder of shares of any class of Common Stock of the
Corporation shall, as such holder, have any right to purchase or subscribe for
any shares of any class of the Common Stock of the Corporation which it may
issue or sell (whether out of the number of shares authorized by these Articles
of Incorporation, or out of any shares of any class of Common Stock of the
Corporation acquired by it after the issue thereof, or otherwise) other than
such right, if any, as the Board of Directors, in its discretion, may determine.
ARTICLE V
The number of directors constituting the Board of Directors shall
initially be three (3), and the names of the initial directors are Hitesh P.
Adhia, Pravin D. Patel, and Anil D. Amlani. Thereafter, the number of directors
shall be such number as is fixed from time to time by the Bylaws.
ARTICLE VI
The Corporation reserves the right to enter into, from time to
time, investment advisory and administration agreements providing for the
management and supervision of the investments of the Corporation, the furnishing
<PAGE>
of advise to the Corporation with respect to the desirability of investing in,
purchasing or selling securities or other property and the furnishing of
clerical and administrative services to the Corporation. Such agreements shall
contain such other terms, provisions and conditions as the Board of Directors
of the Corporation may deem advisable and as are permitted by the Investment
Company Act of 1940.
The Corporation may designate custodians, transfer agents,
registrars and/or disbursing agents for the stock and assets of the Corporation
and employ and fix the powers, rights, duties, responsibilities and compensation
of each such custodian, transfer agent, registrar and/or disbursing agent.
ARTICLE VII
The following provisions define, limit and regulate the powers of
the Corporation, the Board of Directors and the stockholders:
A. The Corporation may issue and sell shares of any class of its
own Common Stock in such amounts and on such terms and conditions, for such
purposes and for such amount or kind of consideration now or hereafter
permitted by the laws of the State of Maryland, the Bylaws and these Articles
of Incorporation, as its Board of Directors may determine; provided, however,
that the consideration per share to be received by the Corporation upon the
sale of any shares of any class of its Common Stock shall not be less than the
net asset value per share of such class of Common Stock outstanding at the time
as of which the computation of said net asset value shall be made.
B. The Board of Directors may, in its sole and absolute
discretion, reject in whole or in part orders for the purchase of shares of
any class of Common Stock and may, in addition, require such orders to be in
such minimum amounts as it shall determine.
C. The holders of any fractional shares of any class Common
Stock shall be entitled to the payment of dividends on such fractional shares,
to receive the net asset value thereof upon redemption, to share in the assets
of the Corporation upon liquidation and to exercise voting rights with respect
thereto.
D. The Board of Directors shall have full power in accordance
with good accounting practice: (a) to determine what receipts of the Corporation
shall constitute income available for payment of dividends and what receipts
shall constitute principal and to make such allocation of any particular
receipt between principal and income as it may deem proper; and (b) from time
to time, in its discretion (i) to determine whether any and all expenses and
other outlays paid or incurred (including any and all taxes, assessments or
governmental charges which the Corporation may be required to pay or hold
under any present or future law of the United States of America or of any other
taxing authority therein) shall be charged to or paid from principal or income
or both, and (ii) to apportion any and all of said expenses and outlays,
including taxes, between principal and income.
<PAGE>
E. The Board of Directors shall have the power to determine from
time to time whether and to what extent and at what time and places and under
what conditions and regulations the books, accounts and documents of the
Corporation or any of them, shall be open to the inspection of stockholders,
except as otherwise provided by applicable law; and except as so provided, no
stockholder shall have any right to inspect any book, account or document of
the Corporation unless authorized to do so by resolution of the Board of
Directors.
ARTICLE VIII
The address of the principal office of the Corporation in Maryland
is c/o The Corporation Trust Incorporated, 300 E. Lombard, Baltimore, Maryland
21202.
ARTICLE IX
The address of the initial registered office is c/o The Corporation
Trust Incorporated, 300 E. Lombard, Baltimore, Maryland 21202.
ARTICLE X
The name of the initial registered agent at such address is The
Corporation Trust Incorporated, a Maryland corporation, 300 E. Lombard,
Baltimore, Maryland 21202.
ARTICLE XI
The name and address of the sole incorporator is:
Name Address
Hitesh P. Adhia 1311 N. Westshore Blvd # 110
Tampa, FL 33607
IN WITNESS WHEREOF, the undersigned incorporator who executed the
foregoing Articles of Incorporation hereby acknowledges the same to be his
act and further acknowledges that, to the best of his knowledge, the matters
and facts set forth therein are true in all material respects under the
penalties of perjury.
Dated this 18th day of January, 1998.
Hitesh P. Adhia
Hitesh P. Adhia
Sole Incorporator
BYLAWS
OF
ADHIA FUNDS, INC..
ARTICLE I
STOCKHOLDERS' MEETINGS
Section 1. Place of Meetings. All meetings of stockholders shall be
held at such location as the Board of Directors shall direct.
Section 2. Annual Meeting.
(a) The annual meeting of stockholders for the election of
directors and the transaction of such other business as may properly come
before it, if the annual meeting shall be held, shall be held during the month
of December of each year (or during such other month as the Board of Directors
shall determine), commencing in 1998, at such date and time as shall be fixed
by the Board of Directors and stated in the notice of such meeting, but in no
event more than one hundred twenty (120) days after the occurrence of the event
requiring the meeting to elect directors. Any business of the corporation may
be transacted at the annual meeting without being specifically designated in
the notice, except such business as is specifically required by statute to be
stated in the notice.
(b) The corporation shall not be required to hold an annual
meeting in any year in which the election of directors is not required to be
acted on by stockholders under the Investment Company Act of 1940.
Section 3. Special Meeting. Special meetings of the stockholders may
be called by the board of directors, the president, any vice president, or the
secretary, and shall be called by the secretary upon the written request of
the holders of shares entitled to not less than ten percent (10%) of all the
votes entitled to be cast at such meeting; provided that such holders prepay
the costs to the corporation of preparing and mailing the notice of the
meeting. The business transacted at any special meeting of stockholders shall
be limited to the purposes stated in the notice.
Section 4. Notice of Meeting. Not less than ten (10) days nor more than
ninety (90) days before the date of every stockholders' meeting, the secretary
shall give to each stockholder entitled to vote at such meeting and to each
other stockholder entitled to notice of such meeting under applicable law,
written or printed notice stating the time and place of the meeting, and in
the case of a special meeting (or where required by applicable law) the purpose
or purposes for which the meeting is called, either by mail, by presenting it
to him personally or by leaving it at his residence or usual place of business.
<PAGE>
If mailed, such notice shall be deemed to be given when deposited in the
United States mail addressed to the stockholder at his post office address as
it appears on the records of the corporation, with postage thereon prepaid.
Section 5. Quorum. At any meeting of stockholders the presence in
person or by proxy of stockholders entitled to cast a majority of the votes
thereat shall constitute a quorum; but this section shall not affect any
requirement under statute or under the charter for the vote necessary for the
adoption of any measure. If at any meeting a quorum is not present or
represented, the chairman of the meeting or the holders of a majority of the
stock present or represented may adjourn the meeting from time to time, without
notice other than announcement at the meeting, until a quorum is present or
represented. At such adjourned meeting at which a quorum is present or
represented, any business may be transacted which might have been transacted
at the meeting as originally called.
Section 6. Stock Entitled to Vote. Each issued share of each class of
stock shall be entitled to vote at any meeting of stockholders except shares
owned, other than in a fiduciary capacity, by the corporation or by another
corporation in which the corporation owns shares entitled to cast a majority
of all the votes entitled to be cast by all shares outstanding and entitled
to vote of such corporation.
Section 7. Voting. Each outstanding share of each class of stock
entitled to vote at a meeting of stockholders shall be entitled to one vote on
each matter submitted to a vote. In all elections for directors every
stockholder shall have the right to vote the shares of each class owned of
record by him for as many persons as there are directors to be elected, but
shall not be entitled to exercise any right of cumulative voting. A
stockholder may vote the shares owned of record by him either in person or by
proxy executed in writing by the stockholder or by his authorized
attorney-in-fact. No proxy shall be valid after eleven (11) months from its
date unless otherwise provided in the proxy. At all meetings of stockholders,
unless the voting is conducted by inspectors, all questions relating to the
qualification of voters, the validity of proxies and the acceptance or
rejection of votes shall be decided by the chairman of the meeting. A majority
of the votes cast at a meeting of stockholders, duly called and at which a
quorum is present, shall be sufficient to take or authorize any action which
may properly come before the meeting, unless a greater number is required by
statute or by the charter.
Section 8. Informal Action. Any action required or permitted to be
taken at any meeting of stockholders may be taken without a meeting, if a
consent in writing, setting forth such action, is signed by all the
stockholders entitled to vote on the subject matter thereof and such consent
is filed with the records of the corporation.
ARTICLE II
DIRECTORS
Section 1. Number. The number of directors of the corporation shall be
three (3). By vote of a majority of the entire board of directors, the number
of directors fixed by the charter or by these bylaws may be increased or
<PAGE>
decreased from time to time to not more than fifteen nor less than three, but
the tenure of office of a director shall not be affected by any decrease in
the number of directors so made by the board.
Section 2. Election and Qualification. Until the first annual meeting of
stockholders and until successors are duly elected and qualify, the board of
directors shall consist of the persons named as such in the charter. At the
first annual meeting of stockholders, the stockholders shall elect directors
to hold office until their successors are elected and qualify. A director need
not be a stockholder of the corporation, but must be eligible to serve as a
director of a registered investment company under the Investment Company Act
of 1940.
Section 3. Vacancies. Any vacancy on the board of directors occurring
between stockholders' meetings called for the purpose of electing directors
may be filled, if immediately after filling any such vacancy at least
two-thirds of the directors then holding office shall have been elected to such
office at an annual or special meeting of stockholders, in the following
manner: (i) for a vacancy occurring other than by reason of an increase in
directors, by a majority of the remaining members of the board, although such
majority is less than a quorum; and (ii) for a vacancy occurring by reason of
an increase in the number of directors, by action of a majority of the entire
board. A director elected by the board to fill a vacancy shall be elected to
hold office until the next annual meeting of stockholders or until his
successor is elected and qualified. If by reason of the death,
disqualification or bona fide resignation of any director or directors, more
than sixty percent (60%) of the members of the board of directors are
interested persons of the corporation, as defined in the Investment Company
Act of 1940, such vacancy shall be filled within thirty (30) days if it may
be filled by the board, or within sixty (60) days if a vote of stockholders
is required to fill such vacancy; provided that such vacancy may be filled
within such longer period as the Securities and Exchange Commission may
prescribe by rules and regulations, upon its own motion or by order upon
application. In the event that at any time less than a majority of the
directors were elected by the stockholders, the board or proper officer shall
forthwith cause to be held as promptly as possible, and in any event within
sixty (60) days, a meeting of the stockholders for the purpose of electing
directors to fill any existing vacancies in the board, unless the Securities
and Exchange Commission shall by order extend such period.
Section 4. Powers. The business and affairs of the corporation shall be
managed under the direction of the board of directors, which may exercise all
of the powers of the corporation, except such as are by law or by the charter
or by these bylaws conferred upon or reserved to the stockholders.
Section 5. Removal.
(a) At any meeting of stockholders, duly called and at which a
quorum is present, the stockholders may, by the affirmative vote of the holders
of a majority of the votes entitled to be cast thereon, remove any director or
directors from office and may elect a successor or successors to fill any
resulting vacancies for the unexpired terms of removed directors.
<PAGE>
(b) Notwithstanding any other provisions of these bylaws, the
secretary of the corporation shall promptly call a special meeting of
stockholders for the purpose of voting upon the question of removal of any
director upon the written request of the holders of shares entitled to not
less than ten percent (10%) of all the votes entitled to be cast at such
meeting.
(c) Whenever ten or more stockholders of record who have been
such for at least six months preceding the date of application, and who hold
in the aggregate either shares having a net asset value of at least $25,000 or
at least one percent (1%) of the total outstanding shares, whichever is less,
shall apply to the corporation's secretary in writing, stating that they wish
to communicate with other stockholders with a view to obtaining signatures to
a request for a meeting pursuant to subsection (b) above and accompanied by a
form of communication and request which they wish to transmit, the secretary
shall within five business days after such application either: (1) afford to
such applicants access to a list of the names and addresses of all stockholders
as recorded on the books of the corporation; or (2) inform such applicants as
to the approximate number of stockholders of record and the approximate cost of
mailing to them the proposed communication and form of request.
(d) If the secretary elects to follow the course specified in
Clause (2) of subsection (c) above, the secretary, upon the written request of
such applicants, accompanied by a tender of the material to be mailed and of
the reasonable expenses of mailing, shall, with reasonable promptness, mail
such material to all stockholders of record at their addresses as recorded on
the books, unless within five (5) business days after such tender the secretary
shall mail to such applicants and file with the Securities and Exchange
Commission, together with a copy of the material to be mailed, a written
statement signed by at least a majority of the board of directors to the effect
that in their opinion either such material contains untrue statements of fact
or omits to state facts necessary to make the statements contained therein
not misleading, or would be in violation of applicable law, and specifying the
basis of such opinion.
(e) After opportunity for hearing upon the objections specified
in the written statement so filed, the Securities and Exchange Commission may,
and if demanded by the board of directors or by such applicants shall, enter
an order either sustaining one or more of such objections or refusing to
sustain any of them. If the Securities and Exchange Commission shall enter an
order refusing to sustain any of such objections, or if, after the entry of an
order sustaining one or more of such objections, the Securities and Exchange
Commission shall find, after notice and opportunity for hearing, that all
objections so sustained have been met, and shall enter an order so declaring,
the secretary shall mail copies of such material to all shareholders with
reasonable promptness after the entry of such order and the renewal of such
tender.
Section 6. Place of Meetings. Meetings of the board of directors,
regular or special, may be held at any place in or out of the State of Maryland
as the board may from time to time determine or as may be specified in the
notice of meeting.
<PAGE>
Section 7. First Meeting of Newly Elected Board. The first meeting of
each newly elected board of directors shall be held without notice immediately
after and at the same general place as the annual meeting of the stockholders,
for the purpose of organizing the board, electing officers and transacting any
other business that may properly come before the meeting.
Section 8. Regular Meetings. Regular meetings of the board of directors
may be held without notice at such time and place as shall from time to time
be determined by the board.
Section 9. Special Meetings. Special meetings of the board of directors
may be called at any time either by the board, the president, a vice president
or a majority of the directors in writing with or without a meeting. Notice
of special meetings shall either be mailed by the secretary to each director
at least three (3) days before the meeting or shall be given personally or
telegraphed to each director at least one (1) day before the meeting. Such
notice shall set forth the time and place of such meeting but need not, unless
otherwise required by law, state the purposes of the meeting.
Section 10. Quorum and Vote Required for Action. At all meetings of the
board of directors a majority of the entire board shall constitute a quorum
for the transaction of business, and the action of a majority of the directors
present at any meetings at which a quorum is present shall be the action of
the board of directors unless the concurrence of a greater proportion is
required for such action by statute, the articles of incorporation or these
bylaws. If at any meeting a quorum is not present, a majority of the directors
present may adjourn the meeting from time to time, without notice other than
announcement at the meeting, until a quorum is present. Members of the board
of directors or a committee of the board may participate in a meeting by
means of a conference telephone or similar communications equipment if all
persons participating in the meeting can hear each other at the same time;
provided, however, that a director may not participate in a meeting by means
of a conference telephone or similar communications equipment if the purpose
of the meeting is to approve the corporation's investment advisory agreement
and/or to approve the selection of the corporation's auditors, or if
participation in such a manner would otherwise violate the Investment Company
Act of 1940 or other applicable laws. Except as set forth in the preceding
sentence, participation in a meeting by these means constitutes presence in
person at the meeting.
Section 11. Executive and Other Committees. The board of directors may
appoint from among its members an executive and other committees composed of
two (2) or more directors. The board may delegate to such committees in the
intervals between meetings of the board any of the powers of the board to
manage the business and affairs of the corporation, except the power to: (i)
declare dividends or distributions upon the stock of the corporation; (ii)
issue stock of the corporation; (iii) recommend to the stockholders any action
which requires stockholder approval; (iv) amend the bylaws; (v) approve any
merger or share exchange which does not require stockholder approval; or (vi)
take any action required by the Investment Company Act of 1940 to be taken by
the independent directors of the corporation or by the full board of directors.
Section 12. Informal Action. Except as set forth in the following
sentence, any action required or permitted to be taken at any meeting of the
board of directors or of a committee of the board may be taken without a
<PAGE>
meeting, if a written consent to such action is signed by all members of the
board or the committee, as the case may be, and such written consent is filed
with the minutes of proceedings of the board or committee. Notwithstanding the
preceding sentence, no action may be taken by the board of directors pursuant
to a written consent with respect to the approval of the corporation's
investment advisory agreement, the approval of the selection of the
corporation's auditors, or any action required by the Investment Company Act of
1940 or other applicable law to be taken at a meeting of the board of directors
to be held in person.
ARTICLE III
OFFICERS AND EMPLOYEES
Section 1. Election and Qualification. At the first meeting of each
newly elected board of directors there shall be elected a president, one or
more vice presidents, a secretary and a treasurer. The board may also elect
one or more assistant secretaries and assistant treasurers. No officer need
be a director. Any two or more offices, except the offices of president and
vice president, may be held by the same person but no officer shall execute,
acknowledge or verify any instrument in more than one capacity, if such
instrument is required by law, charter or these bylaws to be executed,
acknowledged or verified by two or more officers. Each officer must be
eligible to serve as an officer of a registered investment company under the
Investment Company Act of 1940. Nothing herein shall preclude the employment
of other employees or agents by the corporation from time to time without
action by the board.
Section 2. Term, Removal and Vacancies. The officers shall be elected
to serve until the next first meeting of a newly elected board of directors
and until their successors are elected and qualified. Any officer may be
removed by the board, with or without cause, whenever in its judgment the best
interests of the corporation will be served thereby, but such removal shall be
without prejudice to the contractual rights, if any, of the person so removed.
A vacancy in any office shall be filled by the board for the unexpired term.
Section 3. Bonding. Each officer and employee of the corporation who
singly or jointly with others has access to securities or funds of the
corporation, either directly or through authority to draw upon such funds, or
to direct generally the disposition of such securities shall be bonded against
larceny and embezzlement by a reputable fidelity insurance company. Each such
bond, which may be in the form of an individual bond, a schedule or blanket
bond covering the corporation's officers and employees and the officers and
employees of the investment advisor to the corporation and other corporations
to which said investment advisor also acts as investment advisor, shall be in
such form and for such amount (determined at least annually) as the board of
directors shall determine in compliance with the requirements of Section 17(g)
of the Investment Company Act of 1940, as amended from time to time, and the
rules, regulations or orders of the Securities and Exchange Commission
thereunder.
Section 4. President. The president shall be the principal executive
officer of the corporation. He shall preside at all meetings of the
stockholders and directors, have general and active management of the business
<PAGE>
of the corporation, see that all orders and resolutions of the board of
directors are carried into effect, and execute in the name of the corporation
all authorized instruments of the corporation, except where the signing shall
be expressly delegated by the board to some other officer or agent of the
corporation.
Section 5. Vice Presidents. The vice president, or if there be more
than one, the vice presidents in the order determined by the board of
directors, shall, in the absence or disability of the president, perform the
duties and exercise the powers of the president, and shall have such other
duties and powers as the board may from time to time prescribe or the president
delegate.
Section 6. Secretary and Assistant Secretaries. The secretary shall
give notice of, attend and record the minutes of meetings of stockholders and
directors, keep the corporate seal and, when authorized by the board, affix
the same to any instrument requiring it, attesting to the same by his
signature, and shall have such further duties and powers as are incident to
his office or as the board may from time to time prescribe. The assistant
secretary, if any, or, if there be more than one, the assistant secretaries in
the order determined by the board, shall in the absence or disability of the
secretary, perform the duties and exercise the powers of the secretary, and
shall have such other duties and powers as the board may from time to time
prescribe or the secretary delegate.
Section 7. Treasurer and Assistant Treasurers. The treasurer shall be
the principal financial and accounting officer of the corporation. He shall
be responsible for the custody and supervision of the corporation's books of
account and subsidiary accounting records, and shall have such further duties
and powers as are incident to his office or as the board of directors may from
time to time prescribe. The assistant treasurer, if any, or, if there be more
than one, the assistant treasurers in the order determined by the board, shall
in the absence or disability of the treasurer, perform all duties and exercise
the powers of the treasurer, and shall have such other duties and powers as
the board may from time to time prescribe or the treasurer delegate.
ARTICLE IV
RESTRICTIONS ON COMPENSATION
TRANSACTIONS AND INVESTMENTS
Section 1. Salary and Expenses. Directors and executive officers as
such shall not receive any salary for their services or reimbursement for
expenses from the corporation; provided that the corporation may pay fees in
such amounts and at such times as the board of directors shall determine to
directors who are not interested persons of the corporation for attendance at
meetings of the board of directors. Clerical employees shall receive
compensation for their services from the corporation in such amounts as are
determined by the board of directors.
Section 2. Compensation and Profit from Purchase and Sales. No
affiliated person of the corporation, as defined in the Investment Company Act
of 1940, or affiliated person of such person, shall, except as permitted by
Section 17(e) of the Act, or the rules, regulations or orders of the Securities
and Exchange Commission thereunder, (i) acting as agent, accept from any source
any compensation for the purchase or sale of any property or securities to or
for the corporation or any
controlled company of the corporation, as defined
in such Act, or (ii) acting as a broker, in connection with the sale of
<PAGE>
securities to or by the corporation or any controlled company of the
corporation, receive from any source a commission, fee or other remuneration
for effecting such transaction.
Section 3. Transactions with Affiliated Person. No affiliated person of
the corporation, as defined in the Investment Company Act of 1940, or
affiliated person of such person shall knowingly (i) sell any security or other
property to the corporation or to any company controlled by the corporation, as
defined in the Act, except shares of stock of the corporation or securities of
which such person is the issuer and which are part of a general offering to the
holders of a class of its securities, (ii) purchase from the corporation or any
such controlled company any security or property except shares of stock of the
corporation or securities of which such person is the issuer, (iii) borrow
money or other property from the corporation or any such controlled company,
or (iv) acting as a principal effect any transaction in which the corporation
or controlled company is a joint or joint and several participant with such
person; provided, however, that this section shall not apply to any transaction
permitted by Sections 17(a), (b), (c), (d) or 21(b) of the Investment Company
Act of 1940 or the rules, regulations or orders of the Securities and Exchange
Commission thereunder, and shall not prohibit the joint participation by the
corporation and an affiliate in a fidelity bond arrangement.
Section 4. Investment Advisor. The corporation shall employ one or
more investment advisors, the employment of which shall be pursuant to written
agreements in accordance with Section 15 of the Investment Company Act of 1940,
as amended from time to time.
ARTICLE V
STOCK CERTIFICATES AND TRANSFER BOOKS
Section 1. Certificates. Each holder of shares of any class of stock of
the corporation shall be entitled to a certificate or certificates, in such
form as the board of directors shall from time to time approve, representing
and certifying the number of shares of such class of stock owned by him in the
corporation. Each certificate shall be signed, manually or by facsimile
signature, by the president or a vice president, countersigned, manually or by
facsimile signature, by the secretary, an assistant secretary, the treasurer
or an assistant treasurer and sealed with the corporate seal or facsimile
thereof. In case any officer who has signed any certificate, or whose
facsimile signature appears thereon, ceases to be an officer of the corporation
before the certificate is issued, the certificate may nevertheless be issued
with the same effect as if the officer had not ceased to be such officer as of
the date of its issue. Each certificate shall contain on its face or back a
full statement or summary of the designations and any preferences, conversion
and other rights, voting powers, restrictions, limitations as to dividends,
qualifications and terms of each class of stock of the corporation or shall
state that the corporation will furnish such information to the stockholder on
request and without charge. Any certificate representing stock which is
restricted or limited as to transferability also shall have a full statement
of such restriction or limitation plainly stated thereon or shall state that
the corporation will furnish such information to the stockholder on request
and without charge.
<PAGE>
Section 2. Lost Certificates. The board of directors may direct a new
certificate or certificates to be issued in place of any certificate or
certificates theretofore issued by the corporation alleged to have been lost,
stolen, destroyed or mutilated (or may delegate such authority to one or more
officers of the corporation) upon the making of an affidavit of that fact by
the person claiming the certificate to be lost, stolen, destroyed or mutilated.
The board or such officer may, in its or his discretion, require the owner of
such certificate or his legal representative to give bond with sufficient
surety to the corporation to indemnify it against any loss or claim which may
arise or expense which may be incurred by reason of the issuance of a new
certificate.
Section 3. Stock Ledger. The corporation shall maintain at its office
or at the office of its principal transfer agent, if any, an original or
duplicate stock ledger containing the names and addresses of all stockholders
and the number of shares of each class of stock held by each stockholder.
Section 4. Registered Stockholders. The corporation shall be entitled
to recognize the exclusive right of a person registered on its books as such,
as the owner of shares for all purposes, and shall not be bound to recognize
any equitable or other claim to or interest in such shares on the part of any
other person, whether or not it shall have express or other notice thereof,
except as otherwise provided by the laws of Maryland.
Section 5. Transfer Agent and Registrar. The corporation may maintain
one or more transfer offices or agencies, each in charge of a transfer agent
designated by the board of directors, where the shares of each class of stock
of the corporation shall be transferable. The corporation may also maintain
one or more registry offices, each in charge of a registrar designated by the
board, where the shares of such classes of stock shall be registered.
Section 6. Transfers of Stock. Upon surrender to the corporation or a
transfer agent of a certificate for shares of any class duly endorsed or
accompanied by proper evidence of succession, assignment or authority to
transfer, it shall be the duty of the corporation to issue a new certificate
to the person entitled thereto, cancel the old certificate and record the
transaction upon its books.
Section 7. Fixing of Record Dates and Closing of Transfer Books. The
board of directors may fix, in advance, a date as the record date for the
purpose of determining stockholders entitled to notice of, or to vote at, any
meeting of stockholders, or stockholders entitled to receive payment of any
dividend or the allotment of any rights, or in order to make a determination
of stockholders for any other proper purpose. Such date, in any case, shall
be not more than ninety (90) days, and in case of a meeting of stockholders
not less than ten (10) days, prior to the date on which the particular action
requiring such determination of stockholders is to be taken. In lieu of fixing
a record date, the board may provide that the stock transfer books shall be
closed for a stated period but not to exceed, in any case, twenty (20) days.
If the stock transfer books are closed or a record date is fixed for the
purpose of determining stockholders entitled to vote at a meeting of
stockholders, such books shall be closed for at least ten (10) days immediately
preceding such action.
<PAGE>
ARTICLE VI
ACCOUNTS, REPORTS, CUSTODIAN AND INVESTMENT ADVISOR
Section 1. Inspection of Books. The board of directors shall determine
from time to time whether, and, if allowed, when and under what conditions and
regulations the accounts and books of the corporation (except such as may by
statute be specifically open to inspection) or any of them, shall be open to
the inspection of the stockholders, and the stockholders' rights in this
respect are and shall be limited accordingly.
Section 2. Reliance on Records. Each director and officer shall, in
the performance of his duties, be fully protected in relying in good faith on
the books of account or reports made to the corporation by any of its officials
or by an independent public accountant.
Section 3. Preparation and Maintenance of Accounts, Records and
Statements. The president, a vice president or the treasurer shall prepare or
cause to be prepared annually, a full and correct statement of the affairs of
the corporation, including a balance sheet or statement of financial condition
and a financial statement of operations for the preceding fiscal year, which
shall be submitted at the annual meeting of the stockholders and filed within
twenty (20) days thereafter at the principal office of the corporation. If the
corporation is not required to hold an annual meeting of stockholders, the
statement of affairs shall be placed on file at the corporation's principal
office within one hundred twenty (120) days after the end of the fiscal year.
The proper officers of the corporation shall also prepare, maintain and
preserve or cause to be prepared, maintained and preserved the accounts, books
and other documents required by Section 2-111 of the Maryland General
Corporation Law and Section 31 of the Investment Company Act of 1940 and shall
prepare and file or cause to be prepared and filed the reports required by
Section 30 of such Act. No financial statement shall be filed with the
Securities and Exchange Commission unless the officers or employees who
prepared or participated in the preparation of such financial statement have
been specifically designated for such purpose by the board of directors.
Section 4. Auditors. No independent public accountant shall be retained
or employed by the corporation to examine, certify or report on its financial
statements for any fiscal year unless such selection: (i) shall have been
approved by a majority of the entire board of directors within thirty (30) days
before or after the beginning of such fiscal year or before the annual
ratification by the stockholders; (ii) shall have been ratified by the
stockholders, provided that any vacancy occurring between such annual
ratification due to the death or resignation of such accountant may be filled
by the board of directors; and (iii) shall otherwise meet the requirements of
Section 32 of the Investment Company Act of 1940.
Section 5. Custodianship. All securities owned by the corporation and
all cash, including, without limiting the generality of the foregoing, the
proceeds from sales of securities owned by the corporation and from the
issuance of shares of the capital stock of the corporation, payments of
principal upon securities owned by the corporation, and distributions in
respect of securities owned by the corporation which at the time of payment are
represented by the distributing corporation to be capital distributions, shall
be held by a custodian, NASD Broker Dealer custodian, or custodians which shall
<PAGE>
be a bank, as that term is defined in the Investment Company Act of 1940,
having capital, surplus and undivided profits aggregating not less than
$2,000,000. The terms of custody of such securities and cash shall include
provisions to the effect that the custodian shall deliver securities owned by
the corporation only (a) upon sales of such securities for the account of the
corporation and receipt by the custodian of payment therefor, (b) when such
securities are called, redeemed or retired or otherwise become payable, (c)
for examination by any broker selling any such securities in accordance with
"street delivery" custom, (d) in exchange for or upon conversion into other
securities alone or other securities and cash whether pursuant to any plan of
merger, consolidation, reorganization, recapitalization or readjustment, or
otherwise, (e) upon conversion of such securities pursuant to their terms into
other securities, (f) upon exercise of subscription, purchase or other similar
rights represented by such securities, (g) for the purpose of exchanging
interim receipts or temporary securities for definitive securities, (h) for the
purpose of redeeming in kind shares of the capital stock of the corporation, or
(i) for other proper corporate purposes. Such terms of custody shall also
include provisions to the effect that the custodian shall hold the securities
and funds of the corporation in a separate account or accounts and shall have
sole power to release and deliver any such securities and draw upon any such
account, any of the securities or funds of the corporation only on receipt by
such custodian of written instruction from one or more persons authorized by
the board of directors to give such instructions on behalf of the corporation,
and that the custodian shall deliver cash of the corporation required by this
Section 5 to be deposited with the custodian only upon the purchase of
securities for the portfolio of the corporation and the delivery of such
securities to the custodian, for the purchase or redemption of shares of the
capital stock of the corporation, for the payment of interest, dividends,
taxes, management or supervisory fees or operating expenses, for payments in
connection with the conversion, exchange or surrender of securities owned by
the corporation, or for other proper corporate purposes. Upon the resignation
or inability to serve of any such custodian the corporation shall (a) use its
best efforts to obtain a successor custodian, (b) require the cash and
securities of the corporation held by the custodian to be delivered directly
to the successor custodian, and (c) in the event that no successor custodian
can be found, submit to the stockholders of the corporation, before permitting
delivery of such cash and securities to anyone other than a successor
custodian, the question whether the corporation shall be dissolved or shall
function without a custodian; provided, however, that nothing herein contained
shall prevent the termination of any agreement between the corporation and any
such custodian by the affirmative vote of the holders of a majority of all the
shares of the capital stock of the corporation at the time outstanding and
entitled to vote. Upon its resignation or inability to serve, the custodian
may deliver any assets of the corporation held by it to a qualified bank or
trust company selected by it, such assets to be held subject to the terms of
custody which governed such retiring custodian, pending action by the
corporation as set forth in this Section 5.
Section 6. Termination of Custodian Agreement. Any employment agreement
with a custodian shall be terminable on not more than sixty (60) days' notice
in writing by the board of directors or the custodian and upon any such
termination the custodian shall turn over only to the succeeding custodian
designated by the board of directors all funds, securities and property and
documents of the corporation in its possession.
<PAGE>
Section 7. Checks and Requisitions. Except as otherwise authorized by
the board of directors, all checks and drafts for the payment of money shall be
signed in the name of the corporation by a custodian, and all requisitions or
orders for the payment of money by a custodian or for the issue of checks and
drafts therefore, all promissory notes, all assignments of stock or securities
standing in the name of the corporation, and all requisitions or orders for the
assignment of stock or securities standing in the name of a custodian or its
nominee, or for the execution of powers to transfer the same, shall be signed
in the name of the corporation by not less than two persons (who shall be among
those persons, not in excess of five, designated for this purpose by the board
of directors) at least one of which shall be an officer. Promissory notes,
checks or drafts payable to the corporation may be endorsed only to the order
of a custodian or its nominee by the treasurer or president or by such other
person or persons as shall be thereto authorized by the board of directors.
Section 8. Investment Advisory Contract. Any investment advisory
contract in effect after the first annual meeting of stockholders of the
corporation, to which the corporation is or shall become a party, whereby,
subject to the control of the board of directors of the corporation, the
investment portfolio with respect to any class of Common Stock of the
corporation shall be managed or supervised by the other party to such contract,
shall be effective and binding only upon the affirmative vote of a majority of
the outstanding voting securities of such class of Common Stock of the
corporation (as defined in the Investment Company Act of 1940), and the
investment advisory contract currently in effect with respect to any class of
Common Stock shall be submitted to the holders of shares of such class of
Common Stock for ratification by the affirmative vote of such majority. Any
investment advisory contract to which the corporation shall be a party whereby,
subject to the control of the board of directors of the corporation, the
investment portfolio with respect to any class of Common Stock of the
corporation shall be managed or supervised by the other party to such contract,
shall provide, among other things, that such contract cannot be assigned. Such
investment advisory contract shall prohibit the other party thereto from making
short sales of shares of capital stock of the corporation; and such investment
advisory contract shall prohibit such other party from purchasing shares
otherwise than for investment, and shall require such other party to advise the
corporation of any sales of shares of the capital stock of the corporation made
by such person or organization less than two months after the date of any
purchase by him or it of shares of the capital stock of the corporation.
Unless any such contract shall expressly otherwise provide, any provisions
therein for the termination thereof by action of the board of directors of the
corporation shall be construed to require that such termination can be
accomplished only upon the vote of a majority of the entire board.
ARTICLE VII
GENERAL PROVISIONS
Section 1. Offices. The registered office of the corporation in the
State of Maryland shall be in the City of Baltimore. The corporation may also
have offices at such other places within and without the State of Maryland as
the board of directors may from time to time determine. Except as otherwise
required by statute, the books and records of the corporation may be kept
outside the State of Maryland.
<PAGE>
Section 2. Seal. The corporate seal shall have inscribed thereon the
name of the corporation, and the words "Corporate Seal" and "Maryland". The
seal may be used by causing it or a facsimile thereof to be impressed, affixed,
reproduced or otherwise.
Section 3. Fiscal Year. The fiscal year of the corporation shall be
fixed by the board of directors.
Section 4. Notice of Waiver of Notice. Whenever any notice of the time,
place or purpose of any meeting of stockholders or directors is required to be
given under the statute, the charter or these bylaws, a waiver thereof in
writing, signed by the person or persons entitled to such notice and filed with
the records of the meeting, either before or after the holding thereof, or
actual attendance at the meeting of stockholders in person or by proxy or at
the meeting of directors in person, shall be deemed equivalent to the giving
of such notice to such person. No notice need be given to any person with
whom communication is made unlawful by any law of the United States or any
rule, regulation, proclamation or executive order issued by any such law.
Section 5. Voting of Stock. Unless otherwise ordered by the board of
directors, the president shall have full power and authority, in the name and
on behalf of the corporation, (i) to attend, act and vote at any meeting of
stockholders of any company in which the corporation may own shares of stock
of record, beneficially (as the proxy or attorney-in-fact of the record holder)
or of record and beneficially, and (ii) to give voting directions to the record
stockholder of any such stock beneficially owned. At any such meeting, he
shall possess and may exercise any and all rights and powers incident to the
ownership of such shares which, as the holder or beneficial owner and proxy of
the holder thereof, the corporation might possess and exercise if personally
present, and may delegate such power and authority to any officer, agent or
employee of the corporation.
Section 6. Dividends. Dividends upon any class of stock of the
corporation, subject to the provisions of the charter, if any, may be declared
by the board of directors in any lawful manner. The source of each dividend
payment shall be disclosed to the stockholders receiving such dividend, to the
extent required by the laws of the State of Maryland and by Section 19 of the
Investment Company Act of 1940 and the rules and regulations of the Securities
and Exchange Commission thereunder.
Section 7. Indemnification.
A. The corporation shall indemnify all of its corporate
representatives against expenses, including attorneys' fees, judgments, fines
and amounts paid in settlement actually and reasonably incurred by them in
connection with the defense of any action, suit or proceeding, or threat or
claim of such action, suit or proceeding, whether civil, criminal,
administrative, or legislative, no matter by whom brought, or in any appeal in
which they or any of them are made parties or a party by reason of being or
having been a corporate representative, if the corporate representative acted
in good faith and in a manner reasonably believed to be in or not opposed to
the best interests of the corporation and with respect to any criminal
proceeding, if he had no reasonable cause to believe his conduct was unlawful
<PAGE>
provided that the corporation shall not indemnify corporate representatives in
relation to matters as to which any such corporate representative shall be
adjudged in such action, suit or proceeding to be liable for gross negligence,
willful misfeasance, bad faith, reckless disregard of the duties and
obligations involved in the conduct of his office, or when indemnification is
otherwise not permitted by the Maryland General Corporation Law.
B. In the absence of an adjudication which expressly absolves the
corporate representative, or in the event of a settlement, each corporate
representative shall be indemnified hereunder only if there has been a
reasonable determination based on a review of the facts that indemnification
of the corporate representative is proper because he has met the applicable
standard of conduct set forth in paragraph A. Such determination shall be made:
(i) by the board of directors, by a majority vote of a quorum which consists of
directors who were not parties to the action, suit or proceeding, or if such a
quorum cannot be obtained, then by a majority vote of a committee of the board
consisting solely of two or more directors, not, at the time, parties to the
action, suit or proceeding and who were duly designated to act in the matter by
the full board in which the designated directors who are parties to the action,
suit or proceeding may participate; or (ii) by special legal counsel selected
by the board of directors or a committee of the board by vote as set forth in
(i) of this paragraph, or, if the requisite quorum of the full board cannot be
obtained therefor and the committee cannot be established, by a majority vote
of the full board in which directors who are parties to the action, suit or
proceeding may participate.
C. The termination of any action, suit or proceeding by judgment,
order, settlement, conviction, or upon a plea of nolo contendere or its
equivalent, shall create a rebuttable presumption that the person was guilty of
willful misfeasance, bad faith, gross negligence or reckless disregard to the
duties and obligations involved in the conduct of his or her office, and, with
respect to any criminal action or proceeding, had reasonable cause to believe
that his or her conduct was unlawful.
D. Expenses, including attorneys' fees, incurred in the preparation
of and/or presentation of the defense of a civil or criminal action, suit or
proceeding may be paid by the corporation in advance of the final disposition
of such action, suit or proceeding as authorized in the manner provided in
Section 2-418(F) of the Maryland General Corporation Law upon receipt of:
(i) an undertaking by or on behalf of the corporate representative to repay
such amount unless it shall ultimately be determined that he or she is entitled
to be indemnified by the corporation as authorized in this bylaw; and (ii) a
written affirmation by the corporate representative of the corporate
representative's good faith belief that the standard of conduct necessary for
indemnification by the corporation has been met.
E. The indemnification provided by this bylaw shall not be deemed
exclusive of any other rights to which those indemnified may be entitled under
these bylaws, any agreement, vote of stockholders or disinterested directors or
otherwise, both as to action in his or her official capacity and as to action
in another capacity while holding such office, and shall continue as to a
person who has ceased to be a director, officer, employee or agent and shall
inure to the benefit of the heirs, executors and administrators of such a
person subject to the limitations imposed from time to time by the Investment
Company Act of 1940, as amended.
<PAGE>
F. This corporation shall have power to purchase and maintain
unsurance on behalf of any corporate representative against any liability
asserted against him or her and incurred by him or her in such capacity or
arising out of his or her status as such, whether or not the corporation would
have the power to indemnify him or her against such liability under this bylaw
provided that no insurance may be purchased or maintained to protect any
corporate representative against liability for gross negligence, willful
misfeasance, bad faith or reckless disregard of the duties and obligations
involved in the conduct of his or her office.
G. "Corporate Representative" means an individual who is or was a
director, officer, agent or employee of the corporation or who serves or served
another corporation, partnership, joint venture, trust or other enterprise in
one of these capacities at the request of the corporation and who, by reason of
his or her position, is, was, or is threatened to be made, a party to a
proceeding described herein.
Section 8. Amendments.
A. These bylaws may be altered, amended or repealed and new
bylaws may be adopted by the stockholders by affirmative vote of not less than
a majority of the shares of all classes of stock present or represented at any
annual or special meeting of the stockholders at which a quorum is in
attendance.
B. These bylaws may also be altered, amended or repealed and new
bylaws may be adopted by the Board of Directors by affirmative vote of a
majority of the number of directors present at any meeting at which a quorum is
in attendance; but no bylaw adopted by the stockholders shall be amended or
repealed by the Board of Directors if the bylaws so adopted so provides.
C. Any action taken or authorized by the stockholders or by the
Board of Directors, which would be inconsistent with the bylaws then in effect
but is taken or authorized by affirmative vote of not less than the number of
shares or the number of directors required to amend the bylaws so that the
bylaws would be consistent with such action, shall be given the same effect as
though the bylaws had been temporarily amended or suspended so far, but only so
far, as was necessary to permit the specific action so taken or authorized.
Section 9. Reports to Stockholders. The books of account of the
corporation shall be examined by an independent firm of public accountants at
the close of each annual fiscal period of the corporation and at such other
times, if any, as may be directed by the Board of Directors of the corporation.
A report to the stockholders based upon each such examination shall be mailed
to each stockholder of the corporation of record on such date with respect to
each report as may be determined by the Board of Directors at his address as
the same appears on the books of the corporation. Each such report shall
include the financial information required to be transmitted to stockholders
by rules or regulations of the Securities and Exchange Commission under the
<PAGE>
Investment Company Act of 1940 and shall be in such form as the Board of
Directors shall determine pursuant to rules and regulations of the Securities
and Exchange Commission.
Section 10. Information to Accompany Dividends. At the time of the
payment by the corporation of any dividend to the holders of any class of stock
of the corporation, each stockholder to whom such dividend is paid shall be
notified of the account or accounts from which it is paid and the amount
thereof paid from each such account.
ARTICLE VIII
SALES, REDEMPTION AND
NET ASSET VALUE OF SHARES
Section 1. Sales of Shares. Shares of any class of Common Stock of the
corporation shall be sold by it for the net asset value per share of such class
of Common Stock outstanding at the time as of which the computation of said
net asset value shall be made as hereinafter provided in these bylaws.
Section 2. Periodic Investment and Dividend Reinvestment Plans. The
corporation acting by and through the Board of Directors shall have the right
to adopt and to offer to the holders of each class of stock and to the public
a periodic investment plan and an automatic reinvestment of dividend plan
subject to the limitations and restrictions imposed thereon and as set forth
in the Investment Company Act of 1940 and any rule or regulation adopted or
issued thereunder.
Section 3. Shares Issued for Securities. In the case of shares of any
class of stock of the corporation issued in whole or in part in exchange for
securities, there may, at the discretion of the board of directors of the
corporation, be included in the value of said securities, for the purpose of
determining the number of shares of such class stock of the corporation
issuable in exchange therefor, the amount, if any, of brokerage commissions
(not exceeding an amount equal to the rates payable in connection with the
purchase of comparable securities on the New York Stock Exchange) or other
similar costs of acquisition of such securities paid by the holder of said
securities in acquiring the same.
Section 4. Redemption of Shares. Each share of each class of Common
Stock of the corporation now or hereafter issued shall be subject to
redemption, as provided in the Articles of Incorporation of the corporation.
Section 5. Suspension of Right of Redemption. The Board of Directors of
the corporation may suspend the right of the holders of any class of Common
Stock of the corporation to require the corporation to redeem shares of such
class:
(1) for any period (a) during which the New York Stock Exchange
is closed other than customary weekend and holiday closings, or (b) during
which trading on the New York Stock Exchange is restricted;
<PAGE>
(2) for any period during which an emergency, as defined by rules
of the Securities and Exchange Commission or any successor thereto, exists as
a result of which (a) disposal by the corporation of securities owned by it is
not reasonably practicable, or (b) it is not reasonably practicable for the
corporation fairly to determine the value of its net assets; or
(3) for such other periods as the Securities and Exchange
Commission or any successor thereto may by order permit for the protection of
security holders of the corporation.
Section 6. Computation of Net Asset Value. For purposes of these
bylaws, the following rules shall apply:
A. The net asset value of each share of each class of Common
Stock of the corporation shall be determined at such time or times as may be
disclosed in the then currently effective Prospectus relating to such class of
Common Stock of this corporation. The Board of Directors may also, from time
to time by resolution, designate a time or times intermediate of the opening
and closing of trading on the New York Stock Exchange on each day that said
Exchange is open for trading as of which the net asset value of each share of
each class of Common Stock of the corporation shall be determined or estimated.
Any determination or estimation of net asset value as provided in
this subparagraph A shall be effective at the time as of which such
determination or estimation is made.
The net asset value of each share of each class of Common Stock
of the corporation for purposes of the issue of such class of Common Stock
shall be the net asset value which becomes effective as provided in this
Subparagraph A, next succeeding receipt of the subscription to such share of
such class Common Stock. The net asset value of each share of each class of
Common Stock of the corporation tendered for redemption shall be the net asset
value which becomes effective as provided in this Subparagraph A, next
succeeding the tender of such share of such class of Common Stock for
redemption.
B. The net asset value of each share of each class of Common
Stock of the corporation, as of the close of business on any day, shall be
the quotient obtained by dividing the value at such close of the net assets
belonging to such class (meaning the assets belonging to such class and any
other assets allocated to such class less the liabilities belonging to such
class and any other liabilities allocated to such class excluding capital and
surplus) of the corporation by the total number of shares of such class
outstanding at such close.
(i) The assets belonging to any class of Common Stock shall
be that portion of the total assets of the corporation as determined in
accordance with the provisions of Article IV of the Articles of Incorporation
of the corporation. The assets of the corporation shall be deemed to include
(a) all cash on hand, on deposit, or on call, (b) all bills and notes and
accounts receivable,(c) all shares of stock and subscription rights and other
securities owned or contracted for by the corporation, other than its own
common stock, (d) all stock and cash dividends and cash distributions, to be
received by the corporation, and not yet received by it but declared to
stockholders of record on a date on or before the date as of which the net
asset value is being determined, (e) all interest accrued on any
<PAGE>
interest-bearing securities owned by the corporation, and (f) all other
property of every kind and nature including prepaid expenses; the value of such
assets to be determined in accordance with the corporation's registration
statement filed with the Securities and Exchange Commission.
(ii) The liabilities belonging to any class of Common Stock
shall be that portion of the total liabilities of the corporation as determined
in accordance with the provisions of Article IV of the Articles of
Incorporation of the corporation. The liabilities of the corporation shall be
deemed to include (a) all bills and notes and accounts payable, (b) all
administration expenses payable and/or accrued (including investment advisory
fees), (c) all contractual obligations for the payment of money or property
including the amount of any unpaid dividend declared upon the corporation's
stock and payable to stockholders of record on or before the day as of which
the value of the corporation's stock is being determined, (d) all reserves, if
any, authorized or approved by the Board of Directors for taxes, including
reserves for taxes at current rates based on any unrealized appreciation in the
value of the assets of the corporation, and (e) all other liabilities of the
corporation of whatever kind and nature except liabilities represented by
outstanding capital stock and surplus of the corporation.
(iii) For the purposes hereof: (a) shares of each class
of Common Stock subscribed for shall be deemed to be outstanding as of the time
of acceptance of any subscription and the entry thereof on the books of the
corporation and the net price thereof shall be deemed to be an asset belonging
to such class; and (b) shares of each class of Common Stock surrendered for
redemption by the corporation shall be deemed to be outstanding until the time
as of which the net asset value for purposes of such redemption is determined
or estimated.
C. The net asset value of each share of each class of Common
Stock of the corporation, as of any time other than the close of business on
any day, may be determined by applying to the net asset value as of the close
of business on the preceding business day, computed as provided in Paragraph
B of this Section of these bylaws, such adjustments as are authorized by or
pursuant to the direction of the Board of Directors and designed reasonably to
reflect any material changes in the market value of securities and other assets
held and any other material changes in the assets or liabilities of the
corporation and in the number of its outstanding shares which shall have taken
place since the close of business on such preceding business day.
D. In addition to the foregoing, the Board of Directors is
empowered, in its absolute discretion, to establish other bases or times, or
both, for determining the net asset value of each share of each class of the
Common Stock of the corporation.
INVESTMENT ADVISORY AGREEMENT
Agreement made this 10th day of February, 1998 between Adhia
Funds, Inc., a Maryland corporation (the "Company"), and Adhia Investment
Advisors, Inc., a Florida corporation (the "Advisor").
W I T N E S S E T H:
WHEREAS, the Company is in the process of registering with the
Securities and Exchange Commission under the Investment Company Act of 1940
(the "Act") as an open-end management investment company consisting initially
of one series Adhia Twenty Fund (the "Fund"); and
WHEREAS, the Company desires to retain the Advisor, which is an
investment advisor registered under the Investment Advisors Act of 1940, as the
investment advisor for the Fund.
NOW, THEREFORE, the Company and the Advisor do mutually promise
and agree as follows:
1. Employment. The Company hereby employs the Advisor to
manage the investment and reinvestment of the assets of the Fund for the period
and on the terms set forth in this Agreement. The Advisor hereby accepts such
employment for the compensation herein provided and agrees during such period
to render the services and to assume the obligations herein set forth.
2. Authority of the Advisor. The Advisor shall supervise and
manage the investment portfolio of the Fund, and, subject to such policies as
the directors of the Company may determine, direct the purchase and sale of
investment securities in the day-to-day management of the Fund. The Advisor
shall for all purposes herein be deemed to be an independent contractor and
shall, unless otherwise expressly provided or authorized, have no authority to
act for or represent the Company or the Fund in any way or otherwise be deemed
an agent of the Company or the Fund. However, one or more shareholders,
officers, directors or employees of the Advisor may serve as directors and/or
officers of the Company, but without compensation or reimbursement of expenses
for such services from the Company. Nothing herein contained shall be deemed
to require the Company to take any action contrary to its Articles of
Incorporation or By-Laws or any applicable statute or regulation, or to relieve
or deprive the directors of the Company of their responsibility for, and
control of, the affairs of the Fund.
<PAGE>
3. Expenses. The Advisor, at its own expense and without
reimbursement from the Company or the Fund, shall furnish office space, and all
necessary office facilities, equipment and executive personnel for managing the
investments of the Fund. The Fund shall bear all expenses initially incurred
by it, provided that the total expenses borne by the Fund, including the
Advisor's fee but excluding all federal, state and local taxes, interest,
brokerage commissions and extraordinary items, shall not in any year exceed
that percentage of the average net assets of the Fund for such year, as
determined by valuations made as of the close of each business day, which is
the most restrictive percentage provided by the state laws of the various
states in which the Fund's shares are qualified for sale or, if the states in
which the Fund's shares are qualified for sale impose no such restrictions,
2.75%. The expenses of the Fund's operations borne by the Fund include by way
of illustration and not limitation, director's fees paid to those directors
who are not officers of the Company, the costs of preparing and printing its
registration statements required under the Securities Act of 1933 and the Act
(and amendments thereto), the expense of registering its shares with the
Securities and Exchange Commission and in the various states, payments made
pursuant to the Service and Distribution Plan, the printing and distribution
cost of prospectuses mailed to existing shareholders, the cost of share
certificates (if any), director and officer liability insurance, reports to
shareholders, reports to government authorities and proxy statements, interest
charges, taxes, legal expenses, salaries of administrative and clerical
personnel, association membership dues, auditing and accounting services,
insurance premiums, brokerage and other expenses connected with the execution
of portfolio securities transactions, fees and expenses of the custodian of
the Fund's assets, expenses of calculating the net asset value and repurchasing
and redeeming shares, charges and expenses of dividend disbursing agents,
registrars and stock transfer agents and the cost of keeping all necessary
shareholder records and accounts.
The Company shall monitor the expense ratio of the Fund on a
monthly basis. If the accrued amount of the expenses of the Fund exceeds the
expense limitation established herein, the Company shall create an account
receivable from the Advisor for the amount of such excess. In such a situation
the monthly payment of the Advisor's fee will be reduced by the amount of such
excess, subject to adjustment month by month during the balance of the
Company's fiscal year if accrued expenses thereafter fall below the expense
limitation.
4. Compensation of the Advisor. For the services and facilities
to be rendered and the charges and expenses to be assumed by the Advisor
hereunder, the Company, through and on behalf of the Fund shall pay to the
Advisor an advisory fee, paid monthly, based on the average net assets of the
Fund, as determined by valuations made as of the close of each business day of
the month. The monthly advisory fee shall be 1/12 of 1% (1% per annum) of
such average net assets. For any month in which this Agreement is not in
effect for the entire month, such fee shall be reduced proportionately on the
basis of the number of calendar days during which it is in effect and the fee
computed upon the average net assets of the business days during which it is
so in effect.
5. Ownership of Shares of the Fund. Except in connection with
the initial capitalization of the Fund, the Advisor shall not take, and shall
not permit any of its shareholders, officers, directors or employees to take,
a long or short position in the shares of the Fund, except for the purchase of
<PAGE>
shares of the Fund for investment purposes at the same price as that available
to the public at the time of purchase.
6. Exclusivity. The services of the Advisor to the Fund
hereunder are not to be deemed exclusive and the Advisor shall be free to
furnish similar services to others as long as the services hereunder are not
impaired thereby. Although the Advisor has permitted and is permitting the
Fund and the Company to use the name "Adhia," it is understood and agreed that
the Advisor reserves the right to use and to permit other persons, firms or
corporations, including investment companies, to use such name, and that the
Fund and the Company will not use such name if the Advisor ceases to be the
Fund's sole investment advisor. During the period that this Agreement is in
effect, the Advisor shall be the Fund's sole investment advisor.
7. Liability. In the absence of willful misfeasance, bad faith,
negligence or reckless disregard of obligations or duties hereunder on
the part of the Advisor, the Advisor shall not be subject to liability to the
Fund or to any shareholder of the Fund for any act or omission in the course
of, or connected with, rendering services hereunder, or for any losses that
ay be sustained in the purchase, holding or sale of any security.
8. Brokerage Commissions. The Advisor may cause the Fund to
pay a broker-dealer which provides brokerage and research services, as such
services are defined in Section 28(e) of the Securities Exchange Act of 1934
(the "Exchange Act"), to the Advisr a commission for effecting a securities
transaction in excess of the amount another broker-dealer would have charged
for effecting such transaction, if the Advisor determines in good faith that
such amount of commission is reasonable in relation to the value of brokerage
and research services provided by the executing broker-dealer viewed in terms
of either that particular transaction or his overall responsibilities with
respect to the accounts as to which he exercises investment discretion (as
defined in Section 3(a)(35) of the Exchange Act).
9. Amendments. This Agreement may be amended by the mutual
consent of the parties; provided, however, that in no event may it be amended
without the approval of the directors of the Company in the manner required by
the Act, and, if required by the Act, by the vote of the majority of the
outstanding voting securities of the Fund, as defined in the Act.
10. Termination. This Agreement may be terminated at any time,
without the payment of any penalty, by the directors of the Company or by a
vote of the majority of the outstanding voting securities of the Fund, as
defined in the Act, upon giving sixty (60) days' written notice to the Advisor.
This Agreement may be terminated by the Advisor at any time upon the giving of
sixty (60) days' written notice to the Company. This Agreement shall
terminate automatically in the event of its assignment (as defined in Section
2(a)(4) of the Act). Subject to prior termination as herein before provided,
this Agreement shall continue in effect for two (2) years from the date hereof
and indefinitely thereafter, but only so long as the continuance after such
two (2) year period is specifically approved annually by (i) the directors of
the Company or by the vote of the majority of the outstanding voting securities
of the Fund, as defined in the Act, and (ii) the directors of the Company in
the manner required by the Act, provided that any such approval may be made
effective not more than sixty (60) days thereafter.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement
to be executed on the day first above written.
ADHIA INVESTMENT ADVISORS, INC.. ADHIA FUNDS, INC...
(the "Advisor") (the "Company")
By: Hitesh P. Adhia By: Hitesh P. Adhia
President President
FUND ADMINISTRATION SERVICE AGREEMENT
Agreement made this 10th day of February, 1998, between Adhia
Funds, Inc., a Maryland corporation (the "Company"), and Adhia Investment
Advisors, Inc., a Florida corporation (the "Administrator").
W I T N E S S E T H:
WHEREAS, the Company is in the process of registering with the
Securities and Exchange Commission under the Investment Company Act of 1940
(the "Act") as an open-end management investment company consisting initially
of one series Adhia Twenty Fund (the "Fund"); and
WHEREAS, the Company desires to retain the Administrator to be
the Administrator for the Fund and as such to perform the services set forth in
this Agreement.
NOW, THEREFORE, the Company and the Administrator do mutually
promise and agree as follows:
1. Employment. The Company hereby employs the Administrator to
be the Administrator for the Fund for the period and on the terms set forth in
this Agreement. The Administrator hereby accepts such employment for the
compensation herein provided and agrees during such period to render the
services and to assume the obligations herein set forth.
2. Authority and Duties of the Administrator. The Administrator
shall supervise all aspects of the operations of the Fund except those
performed by the Fund's investment advisor under the Fund's investment advisory
agreement, subject to such policies as the board of directors of the Company
may determine. The Administrator shall for all purposes herein be deemed to be
an independent contractor and shall, unless otherwise expressly provided or
authorized, have no authority to act for or represent the Company or the Fund
in any way or otherwise be deemed to be an agent of the Company or the Fund.
However, one or more shareholders, officers, directors or employees of the
Administrator may serve as directors and/or officers of the Company, but
without compensation or reimbursement of expenses for such services from the
Company. Nothing herein contained shall be deemed to require the Company
to take any action contrary to its Articles of Incorporation or any applicable
statute or regulation, or to relieve or deprive the board of directors of the
Company of its responsibility for and control of the affairs of the Fund.
In connection with its supervision of the operations of the Fund,
the Administrator shall perform the following services for the Fund:
<PAGE>
(a) Prepare and maintain the books, accounts and other documents
specified in Rule 31a-1, under the Act in accordance with the requirements of
Rule 31a-1 and Rule 31a-2 under the Act;
(b) Calculate the Fund's net asset value in accordance with the
provisions of the Company's Articles of Incorporation and By-Laws and its
Registration Statement;
(c) Respond to stockholder inquiries forwarded to it by the Fund:
(d) Prepare the financial statements contained in reports to
stockholders of the Fund:
(e) Prepare for execution by the Company and file all of the
Fund's federal and state tax returns;
(f) Prepare reports to and filings with the Securities and
Exchange Commission;
(g) Prepare reports to and filings with state Blue Sky
authorities;
(h) Furnish statistical and research data, clerical, accounting
and bookkeeping services and stationery and office supplies; and
(i) Keep and maintain the Fund's financial accounts and records,
and generally assist in all aspects of the Fund's operations to the extent
agreed to by the Administrator and the Company.
3. Expenses. The Administrator, at its own expense and without
reimbursement from the Company or the Fund, shall furnish office space, and
all necessary office facilities, equipment and executive personnel for
performing the services required to be performed by it under the Agreement.
The Administrator shall not be required to pay any expenses of the Fund. The
expenses of the Fund's operations borne by the Fund include by way of
illustration and not limitation, directors fees paid to those directors who are
not officers of the Company, the professional costs of preparing and the costs
of printing its registration statements required under the Securities Act of
1933 and the Act (and amendments thereto), the expense of registering its
shares with the Securities and Exchange Commission and in the various states,
the printing and distribution cost of prospectuses mailed to existing
shareholders, the cost of stock certificates (if any), director and officer
liability insurance, the printing and distribution and distribution costs of
reports to stockholders, reports to government authorities and proxy
statements, interest charges, taxes, legal expenses, association membership
dues, auditing services, insurance premiums, brokerage and other expenses
connected with the execution of portfolio securities transactions, fees and
expenses of the custodian of the Fund's assets, printing and mailing expenses
and charges and expenses of dividend disbursing agents, registrars and stock
transfer agents.
4. Compensation of the Administrator. For the services to be
rendered by the Administrator hereunder, the Company, through and on behalf of,
the Fund shall pay to the Administrator an administration fee, paid monthly,
<PAGE>
based on the average net assets of the Fund, as determined by valuations made
as of the close of each business day of the month. The administration fee
shall be 1/12 of 0.1% of such average net assets up to and including
$30,000,000, and 1/12 of 0.05% of such average net assets of the Company in
excess of $30,000,000; provided, however, that for any month in which this
Agreement is not in effect for the entire month, such fee shall be reduced
proportionately on the basis of the number of calendar days during which it is
in effect and the fee computed upon the daily net assets of the business days
during which it is so in effect.
5. Ownership of Shares of the Company. Except in connection
with the initial capitalization of the Fund, the Administrator shall not take
an ownership position in the Fund, and shall not permit any of its
shareholders, officers, directors or employees to take a long or short position
in the shares of the Fund, except for the purchase of shares of the Fund for
investment purposes at the same price as that available to the public at the
time of purchase.
6. Exclusivity. The services of the Administrator to the Fund
hereunder are not to be deemed exclusive and the Administrator shall be free
to furnish similar services to others as long as the services hereunder are
not impaired thereby. During the period that this Agreement is in effect, the
Administrator shall be the Fund's sole administrator.
7. Liability. In the absence of willful misfeasance, bad faith,
negligence or reckless disregard of obligations or duties hereunder on
the part of the Administrator, the Administrator shall not be subject to
liability to the Fund or to any shareholder of the Fund for any act or omission
in the course of, or connected with, rendering services hereunder, or for any
losses that may be sustained in the purchase, holding or sale of any security.
8. Amendments. This Agreement may be amended by the mutual
consent of the parties; provided, however, that in no event may it be amended
without the approval of the board of directors of the Company in the manner
required by the Act.
9. Termination. This Agreement may be terminated at any time,
without the payment of any penalty, by the board of directors of the Company or
by a vote of the majority of the outstanding voting securities of the Company
as defined in the Act, upon the giving of sixty (60) days' written notice to
the Administrator. This Agreement may be terminated by the Administrator at
any time upon the giving of sixty (60) days' written notice to the Company.
This Agreement shall terminate automatically in the event of its assignment (as
defined in Section 2(a)(4) of the Act). Subject to prior termination as herein
before provided, the Agreement shall continue in effect for two (2) years
from the date hereof and indefinitely thereafter, but only so long as the
continuance after such two (2) year period is specifically approved annually
by (i) the board of directors of the Company. Upon termination of the
Agreement the Administrator shall deliver to the Company all books, accounts
and other documents then maintained by it pursuant to Section 2 hereof.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement
to be executed on the day first above written.
ADHIA INVESTMENT ADVISORS, INC.
(the "Administrator")
By: Hitesh P. Adhia
President
ADHIA FUNDS, INC..
(the "Fund")
By: Hitesh P. Adhia
President
Nilesh M. Patel
Attorney at Law
609 West DeLeon Street
Old Hyde Park
Tampa, Florida 33606
Telephone: 813-258-0035 Facsimile: 813-258-1026
February 11, 1998
Adhia Funds, Inc.
5102 Longboat Boulevard
Tampa, FL 33615
Gentleman:
We have acted for you in connection with the preparation of a
Registration Statement on Form N-1A relating to sale by you of an indefinite
amount of Adhia Funds, Inc. Common Stock, $0.0001 par value (such Common Stock
being hereinafter referred to as the "Stock") in the manner set forth in the
Registration Statement to which reference is made. In this connection we have
examined: (a) the Registration Statement on Form N-1A; (b) your Articles of
Incorporation and Bylaws, as amended to date; (c) corporate proceedings
relative to the authorization for issuance of the Stock; and (d) such other
proceedings, documents and records as we have deemed necessary to enable us to
render this opinion.
Based on the foregoing, we are of the opinion that the share of Stock
when sold as contemplated in the Registration Statement will be legally issued,
fully paid and nonassessable.
We hereby consent to the use of this opinion as an exhibit to Form N-1A
Registration Statement. In giving this consent, we do not admit that we are
experts within the meaning of Section 11 of the Securities Act of 1933, as
amended, or within the category of persons whose consent is required by
Section 7 of the Act.
Very truly yours,
Nilesh M. Patel
Law Office of Nilesh M. Patel
Alan K. Geer, P.A.
Certified Public Accountants
5033 East Busch Boulevard, Suite 7
Tampa, FL 33617
(813) 988-9564
(800) 940-9564
Fax (813) 988-1815
February 13, 1998
Adhia Funds, Inc.
5102 E. Longboat Blvd.
Tampa, FL 33615
This letter is to confirm our understanding of the terms and objectives
of our engagement and the nature and limitations of the services we will
provide.
We will audit the balance sheet of Adhia Funds, Inc. as of December 31, 1998
and the related statements of income, retained earnings, and cash flows for
the twelve months then ended.
Our audit will be made in accordance with generally accepted auditing standards
and will include tests of your accounting records and other procedures we
consider necessary to enable us to express an opinion that your financial
statements are fairly presented in conformity with the generally accepted
accounting principles consistently applied. If our opinion is other than
unqualified, we will fully discuss the reasons with you in advance.
Our procedures will include tests of documentary evidence supporting the
transactions recorded in the accounts, tests of the physical existence of fixed
assets, and direct confirmation of certain assets, and liabilities by
correspondence with selected customers, creditors, and banks. At the
conclusion of our examination, we will also request certain written
representations from you about the financial statements and related matters.
An audit is based primarily on the selective testing of accounting records and
related data; therefore, our audit will involve judgment about the number of
transactions to be examined and the areas to be tested. Because we will not
perform an examination of all transactions, there is a risk that material
errors, irregularities, or illegal acts, including fraud or defalcations, may
exist and not be detected by us. We will advise you, however, of any matters of
that nature that come to our attention.
We understand that you will provide us with the basic information required for
our audit and that you are responsible for the accuracy and completeness of
that information. We will advise you about appropriate accounting principles
and their application, but the responsibility for the financial statements
remain with you. This responsibility includes the maintenance and adequate
records and related controls, the selection and application of accounting
principles, and the safeguarding of assets.
We understand that your employees will type all cash and other confirmations we
request and will locate any invoices selected by us for testing.
Our examination is not specifically designed and cannot be relied on to
disclose material weakness in accounting controls. However, during the audit,
if we become aware of such material weakness in internal accounting control or
ways that we believe management practices can be improved, we will communicate
them to you in a separate letter.
Our fee for this engagement will be based on the time it takes to complete this
audit at our standard billing rates. We appreciate the opportunity to be of
service to you and believe this letter accurately summarizes the significant
terms of our engagement. If you have any questions, please let me know. If you
agree with the terms of our engagement as described in this letter, please sign
the enclosed copy and return it to me.
Sincerely,
Alan K. Geer
Alan K. Geer, CPA, P.A.
Officer signature: Hitesh P. Adhia
Title: President
Date: 02/16/98
SUBSCRIPTION AGREEMENT
Adhia Funds, Inc.
5102 E. Longboat Blvd
Tampa, FL 33607
Gentlemen:
The undersigned has subscribed to 7,000 shares of the Common
Stock, $0.0001 par value of Adhia Funds, Inc., and and has paid to the said
corporation the sum of $70,000 in cash.
It is understood that upon acceptance hereof by said corporation
the shares subscribed for shall be issued to the undersigned and that said
shares shall be deemed to be fully paid and nonassessable.
The undersigned agrees that the shares are being purchased for
investment with no present intention of reselling or redeeming
said shares.
Dated and effective as of this 20th day of May, 1998.
By: /s/ Hitesh P. Adhia
Hitesh (John) P. Adhia
The foregoing subscription is hereby accepted. Dated and
effective as of this 20th day of May, 1998.
Adhia Funds, Inc.
By: /s/ Hitesh P. Adhia
Hitesh (John) P, Adhia, President
<PAGE>
SUBSCRIPTION AGREEMENT
Adhia Funds, Inc.
5102 E. Longboat Blvd
Tampa, FL 33607
Gentlemen:
The undersigned has subscribed to 1,000 shares of the Common
Stock, $0.0001 par value of Adhia Funds, Inc., and and has paid to the said
corporation the sum of $10,000 in cash.
It is understood that upon acceptance hereof by said corporation
the shares subscribed for shall be issued to the undersigned and that said
shares shall be deemed to be fully paid and nonassessable.
The undersigned agrees that the shares are being purchased for
investment with no present intention of reselling or redeeming
said shares.
Dated and effective as of this 20th day of May, 1998.
By: /s/ Dhansukh G. Amlani
Dhansukh G. Amlani
The foregoing subscription is hereby accepted. Dated and
effective as of this 20th day of May, 1998.
Adhia Funds, Inc.
By: /s/ Hitesh P. Adhia
Hitesh (John) P, Adhia, President
<PAGE>
SUBSCRIPTION AGREEMENT
Adhia Funds, Inc.
5102 E. Longboat Blvd
Tampa, FL 33607
Gentlemen:
The undersigned has subscribed to 1,000 shares of the Common
Stock, $0.0001 par value of Adhia Funds, Inc., and and has paid to the said
corporation the sum of $10,000 in cash.
It is understood that upon acceptance hereof by said corporation
the shares subscribed for shall be issued to the undersigned and that said
shares shall be deemed to be fully paid and nonassessable.
The undersigned agrees that the shares are being purchased for
investment with no present intention of reselling or redeeming
said shares.
Dated and effective as of this 20th day of May, 1998.
By: /s/ Nalini Karia
Nalini Karia
The foregoing subscription is hereby accepted. Dated and
effective as of this 20th day of May, 1998.
Adhia Funds, Inc.
By: /s/ Hitesh P. Adhia
Hitesh (John) P, Adhia, President
<PAGE>
SUBSCRIPTION AGREEMENT
Adhia Funds, Inc.
5102 E. Longboat Blvd
Tampa, FL 33607
Gentlemen:
The undersigned has subscribed to 2,500 shares of the Common
Stock, $0.0001 par value of Adhia Funds, Inc., and and has paid to the said
corporation the sum of $25,000 in cash.
It is understood that upon acceptance hereof by said corporation
the shares subscribed for shall be issued to the undersigned and that said
shares shall be deemed to be fully paid and nonassessable.
The undersigned agrees that the shares are being purchased for
investment with no present intention of reselling or redeeming
said shares.
Dated and effective as of this 20th day of May, 1998.
By: /s/ Parvin D. Patel
Pravin D. Patel
The foregoing subscription is hereby accepted. Dated and
effective as of this 20th day of May, 1998.
Adhia Funds, Inc.
By: /s/ Hitesh P. Adhia
Hitesh (John) P, Adhia, President
<TABLE> <S> <C>
<ARTICLE> 6
<S> <C>
<PERIOD-TYPE> OTHER
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> NOV-30-1998
<INVESTMENTS-AT-COST> 0
<INVESTMENTS-AT-VALUE> 112,006
<RECEIVABLES> 0
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 112,006
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<PAID-IN-CAPITAL-COMMON> 115,000
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<ACCUMULATED-NET-GAINS> (2,994)
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<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
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<NUMBER-OF-SHARES-SOLD> 11,500
<NUMBER-OF-SHARES-REDEEMED> 0
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 115,000
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 0
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 0
<AVERAGE-NET-ASSETS> 0
<PER-SHARE-NAV-BEGIN> 10.000
<PER-SHARE-NII> 0
<PER-SHARE-GAIN-APPREC> (0.260)
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 9.740
<EXPENSE-RATIO> 0
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
