Registration No. _________
ICA No. _________
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON OCTOBER 13, 1998
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES
ACT OF 1933 |X|
Pre-Effective Amendment No.__________ | |
Post-Effective Amendment No.__________ | |
and/or
REGISTRATION STATEMENT UNDER THE INVESTMENT
COMPANY ACT OF 1940 |X|
Pre-Effective Amendment No.__________ | |
Post-Effective Amendment No.______________ | |
(Check Appropriate Box or Boxes)
THE MP 63 FUND, INC.
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(Exact Name of Registrant as Specified in Charter)
THE HAUPPAUGE CORPORATE CENTER
150 MOTOR PARKWAY
HAUPPAUGE, NEW YORK 11788
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(Address of Principal Executive Offices)(Zip Code)
(516) 951-0500
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(Registrant's Telephone Number, Including Area Code)
Michael Miola
American Data Services, Inc.
The Hauppauge Corporate Center
150 Motor Parkway
Hauppauge, New York 11788
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(Name and Address of Agent For Service)
With a copy to:
Thomas R. Westle, Esq.
Spitzer & Feldman P.C.
405 Park Avenue
New York, NY 10022
AS SOON AS PRACTICABLE AFTER THE EFFECTIVE DATE
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(Approximate Date of Proposed Public Offering)
SHARES OF COMMON STOCK
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(Title of Securities Being Registered)
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It is proposed that this filing will become effective (check
appropriate box):
| | immediately upon filing pursuant to paragraph (b).
| | on (date) pursuant to paragraph (b).
| | 60 days after filing pursuant to paragraph (a)(1).
| | on (date) pursuant to paragraph (a)(1).
| | 75 days after filing pursuant to paragraph (a)(2).
| | on (date) pursuant to paragraph (a)(2) of Rule 485.
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE
OR DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT
SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A),
MAY DETERMINE.
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THE MP 63 FUND, INC.
REGISTRATION STATEMENT ON FORM N-1A
CROSS REFERENCE SHEET FOR ITEMS REQUIRED BY FORM N-1A
ITEM NO. CAPTION IN PROSPECTUS
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1 Front and Back Cover Pages
2 Investment Objective and Policies
3 Transaction and Operating Expense Table
4 Investment Objective and Policies
5 Dividends and Distributions; Performance Comparisons
6 Management
7 How to Purchase Shares; How to Redeem Shares;
Shareholder Services; Dividends and Distributions;
Valuation of Shares; Tax Status and General Information
8 Not Applicable
9 Not Applicable
CAPTION IN STATEMENT OF ADDITIONAL INFORMATION
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10 Cover Page and Table of Contents
11 Investment Objective, Policies, and Restrictions
12 Trustees and Executive Officers
13 Ownership of Common Stock
14 Investment Advisory and Other Services
15 Portfolio Transactions and Allocation of Brokerage
16 Ownership of Common Stock
17 Net Asset Value and Public Offering Price
18 Taxation
19 Investment Advisory and Other Services
20 Performance Comparisons
21 Financial Statements
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THE MP 63 FUND, INC.
The MP 63 Fund, Inc.(the "Fund") will accumulate shares in a diverse
group of companies that meet the Adviser's criteria for long term accumulation.
Every company purchased and held by the Fund offers its shareholders the option
to make further investments directly without the assistance of a stockbroker
(these investments are made through the company-sponsored dividend reinvestment
plan). The Fund seeks to minimize investment risk by accumulating shares on a
regular basis in the companies it holds. The Fund believes this strategy will
permit it to buy more shares at lower prices. See page __ for a description of
this strategy. In addition, the Fund will invest and operate efficiently for the
purpose of maintaining Fund expenses at a minimum.
The Fund is sold without any initial sales load; however, shareholders
will be subject to a maximum redemption fee payable to the Fund equal to 2.00%
for shares redeemed that are held for less than three years. Shares held for
less than five years but more than three years will incur a 1.00% redemption
fee.
This Prospectus, dated _________, 1998, concisely describes the
information about the Fund that you ought to have before investing. Please read
it carefully before investing and retain it for future reference.
A Statement of Additional Information ("SAI") about the Fund, dated ,
1998, is available free of charge. The address of the Fund is The Hauppauge
Corporate Center, 150 Motor Parkway, Hauppauge, NY 11788 and its telephone
number for shareholder inquiries is (800) ___-____) or (516) 951-0500. The SAI
has been filed with the Securities and Exchange Commission and is incorporated
in its entirety by reference in this Prospectus.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY
THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE
SECURITIES COMMISSION NOR HAS THE SECURITIES AND EXCHANGE
COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON
THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
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TRANSACTION AND OPERATING EXPENSE TABLE
THIS TABLE DESCRIBES THE FEES AND EXPENSES THAT YOU MAY PAY IF YOU BUY
AND HOLD SHARES OF THE FUND.
SHAREHOLDER TRANSACTION FEES (PAID
DIRECTLY FROM YOUR INVESTMENT): (1)
Maximum Sales Load Imposed on Purchases (as a None
percentage of the offering price)
Redemption Fee (for shares held less than 3 years)(2) 2.00%
ESTIMATED ANNUAL FUND OPERATING EXPENSES:
(EXPENSES THAT ARE DEDUCTED FROM FUND ASSETS,
EXPRESSED AS A PERCENTAGE OF NET ASSETS)
Advisory and Administration Fees (3) 0.70%
Distribution (12b-1) Fees None
Other Expenses (4)(5) 0.55%
Total Estimated Fund Operating Expenses (3)(5) 1.25%
EXAMPLE:
This Example is intended to help you compare the cost of investing in the Fund
with the cost of investing in other mutual funds.
The Example assumes that you invest $10,000 in the Fund for the time periods
indicated and then redeem all of your shares at the end of those periods. The
Example also assumes that your investment has a 5% return each year and that the
Fund's operating expenses remain the same. Although your actual costs may be
higher or lower, based on these assumptions your costs would be:
1 year -- $______ 3 years -- $______
You would pay the following expenses if you did not redeem your shares:
1 year -- $______ 3 years -- $______
(1) Shareholder accounts that are opened with less than $2,000 or which have
an average annual account balance of less than $2,000 as of the end of
each calendar year will be charged an account maintenance fee of $10.00
per account, which will be paid to the Administrator.
(2) Shares held less than five years but more than three years will be charged
a 1% Redemption Fee. For an explanation of Redemption Fees see page __.
(3) Each of the Adviser and the Administrative receive annual fees equal to
0.35% of the Fund's average daily net assets. The Adviser, from time to
time thereafter, may, in its discretion, waive some or all of its advisory
fees. The Adviser paid all expenses incurred to organize the Fund and will
be responsible for the costs associated with the management of the Fund.
See page __ for further discussion of the Adviser.
(4) Included among Other Expenses are state registration and custody fees.
(5) Other Expenses and Total Estimated Fund Operating Expenses are based on
estimated amounts assuming net assets of $10 million in the Fund after
waiver of the Adviser's fee.
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INVESTMENT OBJECTIVE AND POLICIES
INVESTMENT OBJECTIVE
The Fund seeks to provide investors with long-term capital
appreciation. The objective of the Fund is to accumulate shares of common stock
of high-quality companies at favorable prices over a period of years. The
Adviser will make no effort to time the market and its investment decisions will
not be influenced by movement in the stock market in general nor will it respond
to the day-to-day ups and downs of the business activities of the companies it
holds.
Unlike other equity mutual funds, the Fund does not view a drop in the
value of the shares held by the Fund as a negative occurrence. When the market
price of its holdings are relatively low, it will be able to buy more shares
than it would if the price were higher. Because the Fund expects to accumulate
shares in the same companies over a period of years, such drops in the market
prices of any of its holdings give the Fund the ability to buy shares at
favorable prices.
Investors are encouraged to maintain their positions in the Fund for at
least five years. Investors redeeming their shares in less than five years will
be subject to a redemption fee. See page __. It is anticipated that over any
ten-year period the Fund will have accumulated more shares at lower prices than
it accumulated at higher prices--thus the long-term investor in the Fund has
increased the likelihood of achieving the investment objective and has reduced
the risk of negative results.
The Fund is not intended to be a complete investment program, and there
is no assurance that it will achieve its objective. The Fund's investment
objective may not be changed without shareholder approval. Specific investment
policies employed by the Adviser to achieve the Fund's objective may be changed
or eliminated by the Fund's Board of Directors, without shareholder approval.
The Fund has also adopted investment restrictions, most of which may not be
changed without shareholder approval. See "Investment Objective, Policies and
Restrictions" in the SAI.
INVESTMENT POLICIES
The Fund seeks to achieve its investment objective by investing in a
diversified portfolio of common stocks of companies, each of which offers a
dividend reinvestment plan. The Fund will have a wide representation among
industries. The Fund, which is based in
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part on the Moneypaper 63 Stock Index, will invest in the 63 companies
identified by its investment adviser, The Moneypaper Advisor, Inc. ("the
Adviser") as having favorable investment characteristics, including growth in
earnings, continuous history of paying dividends, low debt ratios and prospects
for future growth.
The Adviser continually monitors the Fund's portfolio to ensure that
the companies comprising the portfolio continue to meet the investment criteria.
The Adviser's disciplined investment approach differs from certain more
"actively managed" equity funds because the Adviser is not buying or selling
shares of portfolio companies based on swings in economic or market conditions.
The Fund, however, should not be confused with, and is not intended to be, an
index fund. The Fund will follow closely the Moneypaper's MP 63 Stock Index. See
page __ for a description of such Index; however, the Adviser reserves the right
to make independent investment management decisions regarding the composition of
the Fund's portfolio, as well as the weightings of the individual stocks or the
industries in which the Fund will invest.
The Fund expects to receive investments on an on-going basis and will
be making regular investments in the companies it already holds. This process
results in a strategy similar to that of dollar-cost averaging. By utilizing
this strategy when investing additional funds or reinvesting the Fund's
dividends for its shareholders and by minimizing portfolio turnover, the Adviser
believes that the Fund will maximize accumulation, thereby compounding its
value. At its onset, the Fund's assets will be allocated among the common stocks
of 63 companies according to the then-current composition of the MP 63 Stock
Index. To the extent possible, the Adviser will ensure that equal dollar amounts
are invested in each company thereafter.
The Adviser believes that the combination of this strategy of investing
equal dollar amounts in each company, together with a secondary investment
strategy it calls "INVEST%", which identifies companies that have market prices
that are closer to their 52-week high or low and suggests a percentage of the
usual dollar amount to be invested based on such market price, the Fund will be
able to achieve its investment objective. In general, equal dollar amounts will
be invested by the Adviser to acquire additional shares of common stock of
portfolio companies on a monthly basis, with only a relatively small percentage
of the Fund's assets remaining in cash to meet redemptions. At the end of each
calendar quarter, the Adviser will invest any excess uninvested cash in those
companies that have the highest INVEST%, if deemed appropriate by the Adviser on
an individual basis.
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The Fund may invest a portion of its assets in money market instruments
(high quality income securities with maturities of less than one year),
securities of money market funds or U.S. Government repurchase agreements to
maintain liquidity to meet redemptions or pending selection of investments in
accordance with its policies. For the period that the Fund may have invested any
portion of its assets in money market funds, shareholders of the Fund will be
subject to duplicative management fees.
RISK CONSIDERATIONS
As all investment securities are subject to inherent market risks and
fluctuations in value due to earnings, economic and political conditions, and
other factors, the Fund cannot give any assurance that its investment objective
will be achieved. In addition, you should be aware that the Fund has no
operating history and that the Adviser has no prior experience in acting as an
investment adviser to a mutual fund.
MP 63 STOCK INDEX
The Moneypaper 63 Stock Index was created by The Moneypaper, Inc. at
the start of 1994 in order to track a representative sampling of companies that
offer dividend reinvestment plans ("DRPs"). With an emphasis on quality and
diversity, the Index contains companies that can easily serve as "core" holdings
in any portfolio, and typify the long-term aims of the small investor who uses
DRPs to build wealth. The result is a mixture of industrial companies,
utilities, and transportation firms and runs the gamut from pharmaceuticals to
retailers. Included are blue chip companies, banks, food companies and other
companies that should do well over the long-term.
The MP 63 Index is equally weighted among companies, regardless of
size, and basically follows the fate of $100 investments in each company, with
dividends reinvested, individually and in the aggregate. Each company has its
own "index", regardless of price level or stock split history, and the overall
index is the aggregate performance of all stocks. When an individual company has
a reading of 200, it has doubled the value of its initial investment, which was
made at the start of 1994, turning $100 into $200. When the MP 63 passed the 200
level, as it did on June 6, 1997, it meant that an initial investment of $6,300
($100 in each company) had achieved a value of over $12,600.
The MP 63 Index is designed to demonstrate and encourage individual
investors to achieve long-term wealth by investing in a diverse group of
companies, which decreases risk, and to focus on
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high-quality, investor-friendly firms that offer DRPs. The companies included
require ownership of just one share to enroll in their plan and charge minimal
fees, which might otherwise erode the investor's return.
PORTFOLIO TURNOVER
Portfolio turnover generally involves some expense, including brokerage
commissions or dealer markups and other transaction costs on the sale of
securities and investment in other securities. These transactions may also
result in the realization of taxable capital gains, some or all of which may be
short-term capital gains not eligible for favored tax treatment. As a result of
the Fund's investment policies, the Adviser believes that its portfolio turnover
rate will be lower than that of most other equity mutual funds. In general, the
Fund's portfolio turnover rate is expected to be less than 20%.
DIVERSIFICATION
The Fund is a "diversified" investment company under the Investment
Company Act of 1940. This means that with respect to 75% of its total assets,
(a) the Fund may not invest more than 5% of its total assets in the securities
of any one issuer (except U.S. Government securities) and (b) the Fund may not
own more than 10% of the outstanding voting securities of any one issuer. The
remaining 25% of its total assets is not subject to this restriction. To the
extent that the Fund invests a significant portion of its assets in the
securities of a particular issuer, it will be subject to an increased risk of
loss if the market value of such issuer's securities declines.
OTHER INVESTMENT PRACTICES
SECURITIES LENDING. The Fund may lend portfolio securities amounting to
------------------
not more than 25% of its assets to broker-dealers. These transactions must be
fully collateralized at all times with cash and short-term debt obligations.
These transactions involve risk to the Fund only if the other party should
default on its obligation and the Fund is delayed or prevented from recovering
the collateral.
REPURCHASE AGREEMENTS. The Fund may enter into repurchase agreements
---------------------
collateralized by the securities in which it may invest. A repurchase agreement
involves the purchase by the Fund of securities with the condition that the
original seller (a bank or broker-dealer) will buy back the same securities
("collateral") at
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a predetermined price or yield. Repurchase agreements involve certain risks not
associated with direct investments in securities. In the event the original
seller defaults on its obligation to repurchase, the Fund will seek to sell the
collateral, which could involve costs or delays. To the extent proceeds from the
sale of collateral are less than the repurchase price, the Fund would suffer a
loss.
BORROWING. The Fund may borrow money from banks for temporary or
---------
emergency purposes in order to meet redemption requests. The reason the Fund
might borrow would be to avoid selling a portion of its investments at a time
when it may be disadvantageous to do so. Interest paid by the Fund on borrowed
funds would decrease its net earnings.
MANAGEMENT
BOARD OF DIRECTORS
The Fund's Board of Directors has the primary responsibility for
overseeing the overall management of the Fund and electing its officers. The
Fund's Board of Directors is comprised of the following five persons: Ted S.
Gladstone, President, Gladstone Development Corporation; Gloria L. Schaffer,
retired since 1996; prior thereto from 1991-1995, Commissioner of Consumer
Protection for the State of Connecticut; Harold G. Weinreb, Consultant since
1987; prior thereto from 1966 to 1987, employed by W.R. Grace & Co.; Vita
Nelson, Chief Executive Officer of The Moneypaper, Inc.; and Michael Miola,
Chief Executive officer of American Data Services, Inc.
INVESTMENT ADVISER
The Moneypaper Advisor, Inc. (the "Adviser") has been retained under an
Investment Advisory Agreement with the Fund to act as the Fund's investment
adviser subject to the authority of the Board of Directors. Vita Nelson, David
Fish and Rod Drysdale will be responsible for the overall management of the
Fund's portfolio.
Ms. Nelson's first job in the financial industry was as a bond trader
at Granger & Co., in New York, where she made a market in municipal bonds. She
is the Chief Executive Officer of The Moneypaper, Inc. and the editor and
publisher of four well- respected financial publications. Ms. Nelson has, among
her achievements, popularized the use of dividend reinvestment plans (DRPs).
These plans accept investments from individuals directly (thereby permitting the
individual to bypass brokers).
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THE MONEYPAPER'S GUIDE TO DIVIDEND REINVESTMENT PLANS is the
acknowledged authority on the operations of company-sponsored direct investment
plans. The Guide provides eligibility criteria and plan features of more than
1,100 companies that accept direct investments. In addition, Ms. Nelson is the
Editor and Publisher of THE DRP AUTHORITY, DIRECT INVESTING, as well as THE
MONEYPAPER, which began publishing in 1981 as a monthly guide for the
self-reliant investor.
Mr. Fish is the Executive Editor of three publications of The
Moneypaper, Inc.: THE MONEYPAPER, DIRECT INVESTING, and THE DRP AUTHORITY. He is
responsible for the daily management of the MP 63 Stock Index and his
responsibilities at The Moneypaper Inc. include research, editing, and revising
THE MONEYPAPER'S GUIDE TO DIVIDEND REINVESTMENT PLANS. Prior to joining The
Moneypaper, Inc. in 1994, Mr. Fish was a Senior Accountant with Thom McAnn Shoe
Company since 1974. Mr. Fish graduated magna cum laude with a BS in Business
Administration from Worcester State College, Worcester, MA (1974).
Mr. Drysdale is the Chief Financial Officer of Temper of the Times
Communications, Inc., a registered broker-dealer, an affiliate of the Adviser.
From 1989 through 1998, Mr. Drysdale was employed by Citibank, N.A. in both its
retail banking and brokerage services division. He earned a BS in Finance from
the University of Vermont in 1989.
The Adviser furnishes the Fund with investment advice and supervises
the Fund's management and investment programs. The Adviser furnishes at its own
expense all necessary administrative services, office space, equipment and
clerical personnel for servicing the investments of the Fund. The Adviser also
provides investment advisory facilities and executive and supervisory personnel
for managing the investments and effecting the portfolio transactions of the
Fund. In addition, the Adviser pays the salaries and fees of all officers of the
Fund who are affiliated with the Adviser.
Under the Investment Advisory Agreement, the Fund pays the Adviser a
monthly advisory fee equal, on an annual basis, to 0.35% of its average daily
net assets. The Adviser may, from time to time, voluntarily waive a portion of
its fees.
CODE OF ETHICS
The Fund and the Adviser have adopted a Code of Ethics, that restricts
personal investing practices by employees of the Adviser and its affiliates.
Among other provisions, the Code of Ethics
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requires that employees with access to information about the purchase or sale of
securities in the Fund's portfolio obtain preclearance before executing personal
trades. With respect to Ms. Nelson and other investment personnel, the Code of
Ethics prohibits acquisition of securities in an initial public offering, as
well as profits derived from the purchase and sale of the same security within
60 calendar days. These provisions are designed to ensure that the interests of
the Fund and its shareholders come before the interests of the people who manage
the Fund.
PORTFOLIO TRANSACTIONS AND BROKERAGE COMMISSIONS
Portfolio transactions for the Fund will generally be executed with
broker-dealers on an agency basis. The Adviser will be responsible for placing
all orders for purchases and sales of the Fund's securities. In selecting
broker-dealers, the Adviser may consider research and brokerage services
furnished to the Fund as well as to the Adviser and its affiliates. Subject to
seeking the most favorable price and execution available, the Adviser may
consider sales of shares of the Fund's shares (and of those of future series of
the Fund) as a factor in the selection of broker-dealers. In addition, any
portfolio transactions for the Fund that are executed on an agency basis may be
effected through an affiliate of the Adviser. For more information, see
"Portfolio Transactions and Allocation of Brokerage" in the SAI.
FUND ADMINISTRATOR
The Fund's Administrator is American Data Services, Inc. ("ADS" or the
"Administrator"), which has its principal office at The Hauppauge Corporate
Center, 150 Motor Parkway, Hauppauge, NY 11788, and is primarily in the business
of providing administrative, fund accounting, and stock transfer services to
retail and institutional mutual funds with approximately $6 billion in total
assets through its offices in New York, Denver, Tampa, and Bermuda.
Pursuant to an Administrative Service Agreement with the Fund, the
Administrator provides all administrative, transfer agency, and fund accounting
services necessary for the Fund, subject to the supervision of the Board of
Directors.
For the services rendered to the Fund by the Administrator, the Fund
pays the Administrator a monthly fee which is based on its average net assets.
If the Fund's average daily net assets are: less than $75 million, the
Administrator's fee is equal to 0.35% of its average daily net assets; between
$75 million and $200 million, the Administrator's fee is equal to 0.30% of such
assets; between $200 million and $500 million, the Administrator's fee is equal
to
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0.25% of such assets; between $500 million and $1 billion, the Administrator's
fee is equal to 0.20% of such assets; and in excess of $1 billion, the
Administrator receives a fee equal to 0.10% of the Fund's average daily net
assets. The Fund also reimburses the Administrator for printing, postage, and
telephone costs.
TERMINATION
Both the Investment Advisory Agreement and the Administrative Service
Agreement are terminable with cause by the Board of Directors of the Fund, the
Adviser, or the Administrator, on thirty days' written notice. The Investment
Advisory Agreement will terminate automatically in the event of an "assignment"
as defined by the Investment Company Act. The Administrative Service Agreement,
however, may be assigned provided the non-assigning party has given prior
written consent. Each Agreement shall remain in effect for two years from the
date of its initial approval, and subject to annual approval of the Board of
Directors for one-year periods thereafter. Each Agreement provides that in the
absence of willful misfeasance, bad faith or negligence on the part of the
Adviser or the Administrator, or reckless disregard of its obligations
thereunder, the Adviser or the Administrator shall not be liable for any action
or failure to act in accordance with its duties thereunder.
DISTRIBUTOR
American Data Distributors, Inc. ("the Distributor"), an affiliate of
the Administrator, has entered into a distribution agreement with the Fund to
serve as distributor for the Fund's shares. There is no fee paid to the
Distributor for serving in this capacity.
The Adviser and/or the Administrator may, out of its own assets, pay
for certain expenses incurred in connection with the distribution of Fund
shares. In particular, either or both entities may make payments out of its own
assets to sales representatives and broker-dealers in connection with sales of
Fund shares. See "How to Purchase Shares - Purchase Price."
EXPENSES
The Fund pays certain operating expenses directly, including, but not
limited to custodial, auditing, and legal fees; fees of the independent
directors; costs of printing and mailing prospectuses, statements of additional
information, proxy statements, notices, and reports to shareholders; insurance
expenses; and costs of registering its shares for sale under federal and state
securities
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laws. See the SAI for a more detailed discussion of independent
director compensation.
HOW TO PURCHASE SHARES
GENERAL PURCHASE INFORMATION
The minimum initial investment in the Fund is $1,000. The Fund may
waive or reduce the minimum for certain retirement and employee savings plans or
custodial accounts for the benefit of minors. The Fund's shares may be purchased
at its net asset value from the Distributor, from other broker-dealers which are
members of the NASD, and certain financial institutions each of which has
entered into selling agreements with the Distributor.
When orders are placed for shares of the Fund, the public offering
price used for the purchase will be the net asset value per share next
determined. The Fund's net asset value is determined at 4:15 on each business
day. If an order is placed with the Distributor, other broker-dealer, or
financial institution, the broker-dealer or other financial institution is
responsible for promptly transmitting the order to the Fund's Transfer
Agent/Administrator.
Shares of the Fund may be purchased by opening an account either by
mail, by phone or, to the extent available and permitted by applicable law, by
use of the Internet. Shares are deemed to be purchased as of the time of
determination of the Fund's net asset value on the day the purchase order for
the purchase of its shares is received in good form by the Fund or the
Administrator.
Investors may make systematic investments in fixed amounts
automatically on a monthly basis through the Fund's Automatic Investment Plan.
The Adviser believes that the use of this Plan by shareholders should be for
budgetary purposes and not for the purpose of investing through an investor's
individual dollar-cost averaging strategy. Additional information is available
from the Distributor.
PURCHASES BY TELEPHONE
To open an account by telephone, you must first call (516)951- 0500
[(800) ___-____] to obtain an account number and instructions. Information
concerning the account will be taken over the phone. Subject to acceptance by
the Administrator, shares of the Fund may be purchased by wiring immediately
available federal funds (subject to the minimum investment) to The Chase
Manhattan Bank from your
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bank, which may charge a fee for doing so (see instructions below). You should
provide your bank with the following information for purposes of wiring your
investment:
The Chase Manhattan Bank
Huntington, New York
ABA# 021000021
Account# _______________
F/B/O MP 63 Fund
Shareholder Acct. No.
You are required to mail a signed application to the Fund's Transfer
Agent/Administrator at the address listed below in order to complete your
initial wire purchase. Wire orders will be accepted only on a day on which the
Fund, the Custodian and the Transfer Agent are open for business. A wire
purchase will not be considered made until the wired money is received by the
Distributor or the Fund. Any delays that may occur in wiring money, including
delays that may occur in processing by the banks, are not the responsibility of
the Fund or the Transfer Agent/ Administrator. At present, there is no fee for
the receipt of wired funds, but the Fund reserves the right to charge
shareholders for this service.
PURCHASES BY MAIL
Subject to acceptance by the Fund's Administrator, an account may be
opened by completing and signing an account application and mailing it, together
with a check (subject to the Fund's minimum investment) payable to:
MP 63 Fund
c/o American Data Services, Inc.
P.O. Box 5536
Hauppauge, NY 11788-0132
Payment for the purchase of shares received by mail will be credited to
a shareholder's account at the net asset value per share next determined after
receipt. In the event that there are insufficient funds to cover a check, the
shareholder or prospective investor will be assessed a $15.00 charge.
ADDITIONAL INVESTMENTS
Additional investments may be made at any time (subject to the minimum
subsequent investment of $100; $50 for purchases made using the Fund's Automatic
Investment Plan) by purchasing shares of the Fund at net asset value. This may
be done by mailing a check to
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the Fund at the address noted under "Purchases by Mail" or by wiring monies to
the clearing bank, as outlined above, with which the shareholder has an account
and which is a member of the Federal Reserve System with instructions to
transmit federal funds by wire to the Fund.
OTHER PURCHASE INFORMATION
Investors should be aware that the Fund's account application contains
provisions in favor of the Fund, the Transfer Agent, the Distributor, and
certain of the Distributor's affiliates, excluding such entities from certain
liabilities (including, among others, losses resulting from unauthorized
shareholder transactions) relating to the various services (for example,
telephone exchanges) made available to investors.
The Fund must receive an order and payment by the close of business for
the purchase to be effective. If funds are received after the close of business
(__ p.m.), the purchase will become effective on the next business day.
All purchases of the Fund's shares will be made in full and fractional
shares calculated to three decimal places. The Fund will not issue stock
certificates evidencing ownership of Fund shares.
Shares of the Fund may also be sold to corporations or other
institutions, such as trusts, foundations, or broker-dealers, purchasing for the
accounts of others ("shareholder organizations"). Investors purchasing and
redeeming Fund shares through a shareholder organization may be charged a
transaction- based fee or other fee for the services of such organization. Each
shareholder organization is responsible for transmitting to its customers a
schedule of any such fees and information relating to any additional or
different conditions regarding purchases and redemptions. Customers of
shareholder organizations should read this Prospectus in light of the terms
governing accounts with their organization.
HOW TO REDEEM SHARES
GENERAL REDEMPTION INFORMATION
You may redeem all or a portion of your shares on any day that the Fund
values its shares (please refer to "Valuation of Shares" below for more
information). Your shares will be redeemed at the net asset value next
determined after receipt of your instructions in good form as explained below.
The Fund's net asset value will
13
<PAGE>
fluctuate on a daily basis. The value of shares redeemed may be more or less
than the purchase price, depending on the market value of the investment
securities held by the Fund.
If authorized in the account application, you either may contact by
telephone the Transfer Agent, your broker-dealer, or your financial institution
with an oral request or send a written request to these parties. This request
should contain: the dollar amount or number of shares to be redeemed, your Fund
account number, and either a Social Security or tax identification number (as
applicable). You should sign your request in exactly the same way the account is
registered. If there is more than one owner of the shares, all owners must sign.
SIGNATURE GUARANTEES
No signature guarantee is required for redemptions in an amount less
than $2,500. To protect shareholder accounts, the Fund, and its Transfer Agent
from fraud, signature guarantees are required to enable the Fund to verify the
identity of the person who has authorized a redemption from an account.
Signature guarantees are required for (1) any redemptions where the proceeds are
to be sent to someone other than the registered shareholder(s) or the registered
address, and (2) share transfer requests. Signature guarantees may be obtained
from certain eligible financial institutions, including, but not limited to, the
following: banks, trust companies, credit unions, securities brokers and
dealers, savings and loan associations, and participants in the Securities
Transfer Association Medallion Program ("STAMP"), the Stock Exchange Medallion
Program ("SEMP"), or the New York Stock Exchange Medallion Signature Program
("MSP"). Shareholders may contact the Fund at (516) 951-0500 (800)___-____ for
further details.
BY MAIL
The Fund will redeem its shares at the net asset value next determined
after the request is received in "good order." The net asset value per share of
the Fund is determined as of 4:15 p.m., New York time, on each day that the New
York Stock Exchange, Inc. (the "NYSE"), the Fund, and the Distributor are open
for business. Requests should be addressed to: MP 63 Fund, c/o American Data
Services, Inc., P.O. Box 5536, Hauppauge, NY 11788-0132.
Requests in "good order" must include the following documentation:
(a) a letter or standard form of instruction specifying the number of
shares or dollar amount to be redeemed, signed
14
<PAGE>
by all registered owners of the shares in the exact names in
which they are registered;
(b) any required signature guarantees (see "Signature Guarantees"
below); and
(c) other supporting legal documents, if required, in the case of
estates, trusts, guardianships, custodianships, corporations,
pension and profit-sharing plans, and other organizations.
BY TELEPHONE
Provided the Telephone Redemption Option has been authorized, a
redemption of shares may be requested by calling the Fund's Transfer Agent at
(800) _______ and requesting that the redemption proceeds be mailed to the
primary registration address or wired per the authorized instructions. If the
Telephone Redemption Option is authorized, the Fund and its Transfer Agent may
act on telephone instructions from any person representing himself or herself to
be a shareholder and believed by the Fund or its Transfer Agent to be genuine.
The Transfer Agent's records of such telephone instructions are binding
and each shareholder, and not the Fund or its Transfer Agent, bears the risk of
loss in the event of unauthorized instructions reasonably believed by the Fund
or its Transfer Agent to be genuine. The Fund will employ reasonable procedures
to confirm that instructions communicated are genuine and, if it does not, it
may be liable for any losses due to unauthorized or fraudulent instructions. The
procedures employed by the Fund in connection with transactions initiated by
telephone may include tape recording of telephone instructions and requiring
some form of personal identification information prior to acting upon
instructions received by telephone.
PAYMENT OF REDEMPTION PROCEEDS
After your shares have been redeemed, proceeds will normally be paid
within three business days. In no event will payment be made more than seven
days after receipt of your order in good form, except that payment may be
postponed or the right of redemption suspended for more than seven days under
unusual circumstances, such as when trading is not taking place on the NYSE.
Payment of redemption proceeds may also be delayed if the shares to be redeemed
were recently purchased by a check drawn on a bank which is not a member of the
Federal Reserve System, until such check has
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<PAGE>
cleared the banking system (normally up to 15 days from the purchase date).
If the Board of Directors determines that it would be detrimental to
the best interests of the remaining shareholders of the Fund to make a payment
wholly or partly in cash, the Fund may pay the redemption proceeds in whole or
in part by a distribution in-kind of readily marketable securities held by the
Fund in lieu of cash in conformity with applicable rules of the SEC. Investors
generally will incur brokerage charges on the sale of portfolio securities so
received in payment of redemptions.
INVOLUNTARY REDEMPTION
The Fund reserves the right to redeem your account at any time the net
asset value of the account falls below $500 as the result of a redemption
request. You will be notified in writing prior to any such redemption and will
be allowed 30 days to make additional investments before the redemption is
processed.
REDEMPTION FEE
The Fund is designed for long-term investors. It is not designed for
short-term traders whose frequent purchases and redemptions can generate
substantial cash flow. These cash flows can unnecessarily disrupt the Fund's
investment program. Short- term traders often redeem when the market is most
turbulent, thereby forcing the sale of underlying securities held by the Fund at
the worst possible time as far as long-term investors are concerned.
Additionally, short-term trading drives up the Fund's transaction costs --
measured by both commissions and bid/ask spreads -- which are borne by the
remaining long-term investors. For these reasons, the Fund assesses a 2.00% fee
on the redemption of shares held for less than three years. This fee is reduced
to 1% for shares held for more than three years but less than five years and no
fee is charged for shares held for more than five years. Redemption fees will be
paid to the Fund to help offset transaction costs. The fee does not apply to any
shares purchased through reinvested distributions (dividends and capital gains)
or to shares held in retirement plans (such as 401(k), 403(b), 457, Keogh,
profit sharing plans, and money purchase Pension Plans). This fee also does not
apply to shares held in IRA accounts.
To calculate redemption fees, the Fund will use the first-in, first-out
(FIFO) method to determine the holding period. Under this method, the date of
the redemption will be compared with the earliest purchase date of shares held
in the account. If this holding period is less than five years, a redemption fee
will be
16
<PAGE>
assessed. In determining the "five year" or "three year" provision, the Fund
will use the anniversary date of a transaction. Thus, for example, shares
purchased on January 1, 1999, will be subject to a 2% fee if they are redeemed
on or prior to December 31, 2001. Shares redeemed on or after January 1, 2004,
will not be subject to any redemption fee.
SHAREHOLDER SERVICES
We offer several service options to make your account easier to manage.
These are listed on the account application. Please make note of these options
and elect the ones that are appropriate for you.
AUTOMATIC INVESTMENT PROGRAM
You can automatically transfer $50 or more per month from your bank,
savings and loan, or other financial institution to purchase additional shares.
Contact the Distributor or your broker-dealer, financial institution or the
Transfer Agent to obtain authorization forms or for additional information.
TELEPHONE TRANSACTION PRIVILEGES
Shareholders purchasing shares directly from the Fund will hold their
shares with the Fund's Transfer Agent. However, whether you hold your shares in
an account with the Transfer Agent, your broker-dealer or financial institution,
you may authorize telephone transaction privileges by completing the required
form. Contact the Transfer Agent, your broker-dealer, or financial institution
for an application or for more details. It may be difficult to reach the Fund by
telephone during periods when market or economic conditions foster an unusually
large volume of telephone requests. Although the Adviser believes that this
would not be an advantageous time to redeem your shares, you may still elect to
do so. If you cannot reach the Fund by telephone, you should contact your
broker-dealer, financial institution or issue written instructions to the
Transfer Agent at P.O. Box 5536, Hauppauge, New York 11788-0132. The Fund
reserves the right to suspend or terminate its telephone services at any time
without notice.
TAX-QUALIFIED RETIREMENT PLANS
The Fund is available for your tax-deferred retirement plan. Call or
write us and request the appropriate forms for:
17
<PAGE>
| | Individual Retirement Accounts ("IRAs"): simple IRAs, Roth
IRAs, Education IRAs, or any other form of IRA permitted by law;
| | 403(b) plans for employees of public school systems and
non-profit organizations; or
| | 401(k) plans;
| | Profit-sharing plans and pension plans for corporations
and employees.
You can also transfer your tax-deferred plan to us from another fund or
custodian. The shareholder bears the responsibility for any tax obligations
incurred, such as with respect to the conversion of a tax-deductible IRA to a
Roth IRA. Call or write to us for a Request to Transfer form.
CONFIRMATION OF TRANSACTIONS AND REPORTING OF OTHER INFORMATION
The Administrator, on behalf of the Fund, will mail you confirmations
of all of your purchases or redemptions of Fund shares. If there is no activity
in your Fund account, you will receive account statements on a quarterly basis.
This information will be provided to you from either the Distributor, your
broker-dealer, your financial institution, or the Transfer Agent. In addition,
you will receive various IRS forms after the first of each year detailing
important tax information, and the Fund is required to supply annual and
semi-annual reports that list securities held by the Fund and include its then
current financial statements.
DIVIDENDS AND DISTRIBUTIONS
The Fund will distribute its net investment income, if any, and net
realized capital gains, if any, annually. Distributions from capital gains are
made after applying any available capital losses and/or capital loss carryovers.
As a shareholder in the Fund, you may choose from among three
distribution options:
o Reinvest all distributions in additional shares;
o Receive distributions from net investment income in cash while
reinvesting capital gains distributions, if any, in additional
shares; or
18
<PAGE>
o Receive all distributions in cash.
You can change your distribution option by notifying the Fund in
writing. If you do not select an option when you open your account, all
distributions will be reinvested in additional shares. You will receive a
statement confirming reinvestment of distributions in additional shares promptly
following the end of each calendar year.
If a check representing a distribution is not cashed within a specified
period (generally 3 months), the Transfer Agent will notify you that you have
the option either of requesting another check or of reinvesting the distribution
in the Fund. If the Transfer Agent does not receive your election, the
distribution will be reinvested in the Fund. Similarly, if correspondence sent
by the Fund or the Transfer Agent is returned as "undeliverable," all Fund
distributions will automatically be reinvested in the Fund. Be sure to send the
Transfer Agent notification of any change of address.
VALUATION OF SHARES
The Fund computes its net asset value (or price per share) on each day
the NYSE is open for business. The calculation is made as of the regular close
of the Exchange (currently 4:15 p.m., New York time).
Portfolio securities for which market quotations are readily available
are valued at market value. Portfolio securities for which market quotations are
not considered readily available are stated at fair value on the basis of
valuations furnished by a pricing service approved by the Board of Directors.
The pricing service determines valuations for normal, institutional-size trading
units of such securities using methods based on market transactions for
comparable securities and various relationships between securities that are
generally recognized by institutional traders.
Short-term investments held by the Fund that mature in 60 days or less
are valued at amortized cost, which approximates market value. All other
securities and assets are valued at their fair value following procedures
approved by the Board of Directors.
19
<PAGE>
TAX STATUS
The Fund is treated as a corporation for federal income tax purposes
under the Internal Revenue Code of 1986, as amended (the "Code"). The Fund
intends to qualify and to elect to be treated as a regulated investment company.
If so qualified, the Fund will not be liable for federal income taxes to the
extent that it distributes its taxable income to shareholders.
Distributions of income by the Fund are generally taxable to
shareholders as ordinary income. Certain Fund distributions may be considered as
short- or long-term capital gain. Interest income from direct investment by
noncorporate taxpayers in U.S. Government obligations (but not repurchase
agreements) generally is not subject to state taxation. However, some states may
tax mutual fund dividends attributable to such income. The Transfer Agent will
send a notice to each shareholder (Form 1099 or 1099 substitute) advising the
shareholder of any taxable income or capital gains distributed by the Fund for
each taxable year.
A sale of Fund shares is a taxable event that may result in a capital
gain or loss.
For a more detailed discussion of the federal income tax consequences
of investing in shares of the Fund, see "Taxation" in the SAI. Before investing
in the Fund, you should consult your tax adviser regarding the consequences of
your local and state tax laws.
PERFORMANCE COMPARISONS
Advertisements and other sales literature may refer to the Fund's total
return. The total return for the one-, five- and 10- year periods (or for the
life of the Fund until the Fund is in existence for such longer periods) through
the most recent calendar quarter represents the average annual compounded rate
of return on an investment of $1,000 in the Fund at the public offering price,
plus any applicable sales load. Total return may also be presented for other
periods.
All data are based on past investment results and do not predict future
performance. Investment performance, which will vary, is based on many factors,
including market conditions, portfolio composition, and Fund operating expenses.
Investment performance also often reflects the risks associated with the Fund's
investment objective and policies. These factors should be considered when
20
<PAGE>
comparing the Fund's investment results with those of other mutual funds and
other investment vehicles.
Quotations of investment performance for any period when an expense
limitation is in effect will be greater than if the limitation had not been in
effect. Fund performance may be compared with that of various indexes.
For additional information regarding comparative performance
information and the calculation of total return, see "Performance Comparisons"
in the SAI.
GENERAL INFORMATION
The Fund is a diversified, open-end management investment company which
was incorporated under the laws of the State of Maryland on ___________, 1998.
The Fund's business and affairs are managed by its officers under the direction
of its Board of Directors. The Fund currently offers its shares in one series,
which is being offered for sale in this prospectus. The Board of Directors is
authorized under the Fund's Articles of Incorporation to issue additional series
of the Fund's common stock (" the shares") without shareholder approval in order
to create any additional mutual funds. In addition, the Board of Directors may,
without shareholder approval, create and issue one or more classes of shares
within each series. This will not cause any dilution to existing shareholders.
All shares of the Fund, when issued, will be fully paid and
nonassessable and will be redeemable. They can be issued as full or fractional
shares. A fractional share has, pro rata, the same rights and privileges as a
full share. The shares possess no preemptive or conversion rights. The shares of
the Fund will share ratably in the dividends of the Fund, if any, as may be
declared by the Board of Directors, and in the distribution of any net assets
upon liquidation of the Fund, after the payment of all debts and liabilities of
the Fund.
Each share of the Fund has one vote (with proportionate voting for
fractional shares) regardless of the relative net asset values of the Fund's
shares. Cumulative voting is not authorized. This means that the holders of more
than 50% of the shares voting for the election of the Board of Directors can
elect all of the directors if they choose to do so, and, in such event, the
holders of the remaining shares will be unable to elect any directors.
21
<PAGE>
Except as may be required under the Investment Company Act, the Fund
will not necessarily hold annual meetings of shareholders. As a result,
shareholders may not vote each year on the election of members of the Board of
Directors or the appointment of auditors. However, pursuant to the Fund's
Bylaws, the holders of shares representing at least 10% of the Fund's total
outstanding shares may request that the Fund hold a special meeting of
shareholders. The Fund will assist in the communication with other shareholders.
In addition, the Investment Company Act requires a shareholder vote for all
amendments to the Fund's fundamental investment objective and policies and
investment restrictions and for any amendments to investment advisory contracts.
The Fund reserves the right to amend any of its nonfundamental
policies, practices, and procedures described in this Prospectus, including the
SAI, without shareholder approval.
CUSTODIAN, TRANSFER AGENT, AND DIVIDEND AGENT
[Star Bank, N.A.] serves as custodian for the Fund's cash and
securities. The Custodian does not assist in, and is not responsible for,
investment decisions involving assets of the Fund. American Data Services, Inc.,
the Fund's Administrator, also acts as the Fund's Transfer Agent and Dividend
Disbursing Agent.
COUNSEL AND INDEPENDENT AUDITORS
Legal matters in connection with the issuance of shares of common stock
of the Fund are passed upon by Spitzer & Feldman P.C., 405 Park Avenue, New
York, NY 10022. ______________ _______________________________________ have been
selected as independent accountants for the Fund.
22
<PAGE>
Registration No. _________
THE MP 63 FUND, INC. PROSPECTUS
INVESTMENT ADVISER
MONEYPAPER ADVISERS, INC.
ADMINISTRATOR, TRANSFER AGENT AND
SHAREHOLDER SERVICING AGENT
AMERICAN DATA SERVICES, INC.
DISTRIBUTOR
AMERICAN DATA DISTRIBUTORS, INC.
CUSTODIAN
[STAR BANK, N.A.]
INDEPENDENT ACCOUNTANTS
LEGAL COUNSEL THE MP 63 FUND, INC.
SPITZER & FELDMAN P.C.
TABLE OF CONTENTS PAGE
Introduction.......................................... 1
Transaction and Operating
Expense Table........................................ 2
Investment Objective and
Policies............................................. 3
Management............................................ 7
How to Purchase Shares................................11
How to Redeem Shares..................................13
Shareholder Services..................................17
Dividends and Distributions...........................18
Valuation of Shares...................................19
Tax Status............................................20
Performance Comparisons...............................20
General Information...................................21 ----------, 1998
Custodian, Transfer Agent and
Dividend Agent.......................................22
Counsel and Independent Auditors......................22
23
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MP 63 FUND, INC.
STATEMENT OF ADDITIONAL INFORMATION
--------------------, 1998
TABLE OF CONTENTS
PAGE
Investment Objective, Policies and Restrictions...............................2
Directors and Executive Officers..............................................4
Investment Advisory and Other Services........................................6
Portfolio Transactions and Allocation of Brokerage...........................10
Taxation.....................................................................11
Ownership of Shares..........................................................13
Dividends and Distributions..................................................14
Net Asset Value .............................................................14
Performance Comparisons......................................................14
Counsel and Independent Accountants..........................................17
Other Information............................................................17
Financial Statements.........................................................18
This Statement of Additional Information is not a prospectus, but
should be read in conjunction with the Fund's Prospectus dated ----------- ,
1998. A copy of the Prospectus may be obtained from the Fund at The Hauppauge
Corporate Center, 150 Motor Parkway, Hauppauge, New York 11788 or telephone
(516) 951-0500.
-1-
<PAGE>
INVESTMENT OBJECTIVE, POLICIES AND RESTRICTIONS
The Fund is an open-end, diversified management investment company. The
Fund's investment objective and a summary of its investment policies are set
forth in the Prospectus. Additional information regarding the Fund's investment
policies and restrictions is set forth below.
INVESTMENT POLICIES
-------------------
The following paragraphs provide a more detailed description of the
investment policies identified in the Prospectus. Unless otherwise noted, the
policies described in this Statement of Additional Information are not
fundamental and may be changed by the Board of Directors.
REPURCHASE AGREEMENTS. The Fund may invest in repurchase agreements. A
---------------------
repurchase agreement involves the purchase by the Fund of the securities with
the condition that after a stated period of time the original seller will buy
back the same securities at a predetermined price or yield. The Fund's custodian
will hold the securities underlying any repurchase agreement or such securities
will be part of the Federal Reserve Book Entry System. The market value of the
collateral underlying the repurchase agreement will be determined on each
business day. If at any time the market value of the Fund's collateral falls
below the repurchase price of the repurchase agreement (including any accrued
interest), the Fund will promptly receive additional collateral (so the total
collateral is an amount at least equal to the repurchase price plus accrued
interest).
SECURITIES LOANS. The Fund may make secured loans of its portfolio
----------------
securities, on either a short-term or long-term basis, amounting to not more
than 25% of its total assets, thereby realizing additional income. The risks in
lending portfolio securities, as with other extensions of credit, consist of
possible delay in recovery of the securities or possible loss rights in the
collateral should the borrower fail financially. As a matter of policy,
securities loans are made to broker-dealers pursuant to agreements requiring
that the loans be continuously secured by collateral consisting of cash or
short-term debt obligations at least equal at all times to the value of the
securities on loan, "marked-to-market" daily. The borrower pays to the Fund an
amount equal to any dividends or interest received on securities lent. The Fund
retains all or a portion of the interest received on investment of the cash
collateral or
2
<PAGE>
receives a fee from the borrower. Although voting rights, or rights to consent,
with respect to the loaned securities may pass to the borrower, the Fund retains
the right to call the loans at any time on reasonable notice, and it will do so
to enable the Fund to exercise voting rights on any matters materially affecting
the investment. The Fund may also call such loans in order to sell the
securities.
INVESTMENT RESTRICTIONS
In addition to the investment objective and policies set forth in the
Prospectus and in this Statement of Additional Information, the Fund is subject
to certain fundamental and non- fundamental investment restrictions, as set
forth below. Fundamental investment restrictions may not be changed with respect
to the Fund, without the vote of a majority of the Fund's outstanding shares.
Non-fundamental investment restrictions of the Fund may be changed by the Board
of Directors.
As fundamental investment restrictions, the Fund will not:
1. Invest 25% or more of the value of its total assets in the
securities of issuers conducting their principal business activities in any one
industry. This restriction also does not apply to securities of the U.S.
Government or its agencies and instrumentalities and repurchase agreements
relating thereto.
2. Purchase the securities of any issuer (other than securities issued
or guaranteed by the U.S. Government, its agencies or instrumentalities), if, as
a result, as to 75% of the Fund's total assets, more than 5% of its net assets
would be invested in the securities of one issuer or the Fund would hold more
than 10% of the outstanding voting securities of any one issuer.
3. Issue any senior securities, as defined in the Investment Company
Act of 1940, as amended (the "1940 Act"), other than as set forth in restriction
number 4 below.
4. Borrow amounts in excess of 10% of the cost or 5% of the market
value of its total assets, whichever is less, and then only from a bank and as a
temporary measure for extraordinary or emergency purposes. To secure any such
borrowing, the Fund may pledge or hypothecate not in excess of 15% of the value
of its total assets.
5. Purchase or sell real estate, commodities or commodity futures
contracts.
3
<PAGE>
6. Act as an underwriter of securities of other issuers, except insofar
as the Fund may be technically deemed an underwriter under the federal
securities laws in connection with the disposition of portfolio securities.
7. Engage in any short-selling operations.
8. Lend money other than through the purchase of debt securities in
accordance with its investment policies.
9. Engage in margin transactions or in transactions involving puts,
calls, straddles, or spreads, except as permitted by the Fund under its
investment policies.
10. Acquire or retain more than 5% of the securities of any other
investment company.
The Fund is also subject to the following restrictions that are not
fundamental and may therefore be changed by the Board of Directors without
shareholder approval.
The Fund will not:
1. Acquire securities for the purpose of exercising control over
management.
2. Invest more than 15% of its net assets in illiquid securities.
Unless otherwise indicated, percentage limitations included in the
restrictions apply at the time the Fund enters into a transaction. Accordingly,
any later increase or decrease beyond the specified limitation resulting from a
change in the Fund's net assets will not be considered in determining whether it
has complied with its investment restrictions.
DIRECTORS AND EXECUTIVE OFFICERS
The following table contains information concerning the directors and
officers of the Fund and their principal occupations during the past five years.
Directors who are interested persons, as defined by the 1940 Act, are indicated
by asterisk.
4
<PAGE>
POSITIONS HELD PRINCIPAL OCCUPATION
NAME AND ADDRESS WITH WITH THE LAST FIVE YEARS
FUND
[Projected Disinterested
Directors]
Ted S. Gladstone - Age 56 Director President, Gladstone
183 Round Hill Road Development
Greenwich, Connecticut 06831 Corporation.
Gloria L. Schaffer - Age 68 Director Retired since 1996;
51 Tumblebrook Road Prior thereto from
Woodbridge, Connecticut 06525 1991-1995, Commissioner
of Consumer Protection
for the State of
Connecticut
Harold G. Weinreb - Age 62 Director Consultant since 1987;
112 Brite Avenue Prior thereto from 1966
Scarsdale, New York 10583 to 1987, employed by
W.R. Grace & Co., most
recently as Director,
Corporate Engineering
from 1977-1987.
*Vita Nelson - Age 60 Chairman of the Chief Executive Officer
l0l0 Mamaroneck Avenue Board of of the Moneypaper, Inc.
Mamaroneck, New York 10543 Directors, Chief
Executive
Officer and
Director
*Michael Miola - Age 46 Director Chief Executive Officer
The Hauppauge Corporate Center of American Data
150 Motor Parkway Services, Inc.
Hauppauge, New York 11788
(Insert Exec. Officer's Biographies)
The members of the Audit Committee of the Board of Directors are Ted S.
Gladstone, Gloria Schaffer and Harold Weinreb. _______ acts as the chairperson
of such committee. The Audit Committee oversees the Fund's financial reporting
process, reviews audit results and recommends annually to the Fund a firm of
independent certified public accountants.
5
<PAGE>
Those Directors who are officers or employees of the Adviser, the
Administrator or their affiliates receive no remuneration from the Fund. Each
disinterested Director receives a fee from the Fund for each regular quarterly
and in-person special meeting of the Board of Directors attended. Each Member of
the Board who is not affiliated with the Adviser or the Administrator receives
$5,000 per year for serving as a director of the Fund. In addition, each
Director who is not affiliated with the Adviser or the Administrator is
reimbursed for expenses incurred in connection with attending meetings.
The following table sets forth the estimated compensation expected to
be received by each director from the Fund during the fiscal year ended , 1999.
AGGREGATE ESTIMATED
DIRECTOR COMPENSATION FROM THE FUND
Ted S. Gladstone $5,000
Gloria Schaffer $5,000
Harold Weinreb $5,000
Vita Nelson $0
Michael Miola $0
INVESTMENT ADVISORY AND OTHER SERVICES
The investment adviser for the Fund is The Moneypaper Advisor, Inc.
(the "Adviser"). The Adviser will act as such pursuant to a written agreement
which, after its initial two-year period, must be annually re-approved by the
Board of Directors. The address of the Adviser is 1010 Mamaroneck Avenue,
Mamaroneck, New York 10543.
CONTROL OF THE ADVISER
The stock of the Adviser is owned by The Moneypaper, Inc., of which
Vita Nelson is the majority shareholder.
6
<PAGE>
INVESTMENT ADVISORY AGREEMENT
The Adviser acts as the investment adviser of the Fund under an
Investment Advisory Agreement which has been approved by the Board of Directors
(including a majority of the Directors who are not parties to the agreement, or
interested persons of any such party).
The Investment Advisory Agreement will terminate automatically in the
event of its assignment. In addition, the agreement is terminable at any time,
without penalty, by the Board of Directors or by vote of a majority of the
Fund's outstanding voting securities on not more than 30 days' written notice to
the Adviser, and by the Adviser on 30 days' written notice to the Fund. Unless
sooner terminated, the agreement shall continue in effect for more than two
years after its execution only if such continuance is specifically approved at
least annually by either the Board of Directors or by a vote of a majority of
the outstanding shares of the Fund, provided that in either event such
continuance is also approved by a vote of a majority of the Directors who are
not parties to such agreement, or interested persons of such parties, cast in
person at a meeting called for the purpose of voting on such approval.
Pursuant to its Investment Advisory Agreement, the Fund will pay the
Adviser monthly an advisory fee equal, on an annual basis, to 0.35% of its
average daily net assets. The Adviser may waive a portion of its fees from time
to time.
Under the Investment Advisory Agreement, the Adviser provides the Fund
with advice and assistance in the selection and disposition of the Fund's
investments. All investment decisions are subject to review by the Fund's Board
of Directors. The Adviser is obligated to pay the salaries and fees of any
affiliates of the Adviser serving as officers of the Fund.
ADMINISTRATOR
The Administrator for the Fund is American Data Services, Inc. (the
"Administrator"), which has its principal office at The Hauppauge Corporate
Center, 150 Motor Parkway, Hauppauge, New York 11788, and is primarily in the
business of providing administrative, fund accounting and stock transfer
services to retail and institutional mutual funds through its offices in New
York, Denver and Bermuda.
7
<PAGE>
Pursuant to an Administrative Service Agreement with the Fund, the
Administrator provides all administrative services necessary for the Fund,
subject to the supervision of the Board of Directors. The Administrator also
acts as the Fund's transfer agent and dividend disbursing agent. The
Administrator will provide persons to serve as officers of the Fund. Such
officers may be directors, officers or employees of the Administrator or its
affiliates.
The Administrative Service Agreement is terminable with cause by the
Board of Directors of the Fund or the Administrator on thirty days' written
notice and may be assigned provided the non- assigning party provides prior
written consent. The Agreement shall remain in effect for two years from the
date of its initial approval, and subject to annual approval of the Board of
Directors for one-year periods thereafter. The Agreement provides that in the
absence of willful misfeasance, bad faith or negligence on the part of the
Administrator or reckless disregard of its obligations thereunder, the
Administrator shall not be liable for any action or failure to act in accordance
with its duties thereunder.
Under the Administrative Service Agreement, the Administrator provides
all administrative services, including, without limitation: (i) provides entry
of all data from shareholders' applications; (ii) provides services of persons
competent to perform such administrative and clerical functions as are necessary
to provide effective administration of the Fund; (iii) overseeing the
performance of administrative and professional services to the Fund by others,
including the Fund's Custodian; (iv) preparing, but not paying for, the periodic
updating of the Fund's Registration Statement, Prospectus and Statement of
Additional Information in conjunction with Fund counsel, including the printing
of such documents for the purpose of filings with the Securities and Exchange
Commission and state securities administrators, preparing the Fund's tax
returns, and preparing reports to the Fund's shareholders and the Securities and
Exchange Commission; (v) preparing in conjunction with Fund counsel, but not
paying for, all filings under the securities or "Blue Sky" laws of such states
or countries as are designated by the Distributor, which may be required to
register or qualify, or continue the registration or qualification, of the Fund
and/or its shares under such laws; (vi) preparing notices and agendas for
meetings of the Board of Directors and minutes of such meetings in all matters
required by the 1940 Act to be acted upon by the Board; and (vii) monitoring
daily and periodic compliance with respect to all requirements and restrictions
of the Investment Company Act, the Internal Revenue Code and the Prospectus.
8
<PAGE>
The Administrator also provides the Fund with all accounting services,
including, without limitation: (i) daily computation of net asset value; (ii)
maintenance of security ledgers and books and records as required by the
Investment Company Act; (iii) production of the Fund's listing of portfolio
securities and general ledger reports; (iv) reconciliation of accounting
records; (v) calculation of yield and total return for the Fund; (vi)
maintaining certain books and records described in Rule 31a-1 under the 1940
Act, and reconciling account information and balances among the Fund's Custodian
and Adviser; and (vii) monitoring and evaluating daily income and expense
accruals, and sales and redemptions of shares of the Fund.
ADMINISTRATOR'S FEES
For the administrative, fund accounting, transfer agent and disbursing
agent services rendered to the Fund by the Administrator, the Fund pays the
Administrator a monthly fee based on the Fund's average net assets. The Fund
also pays the Administrator for out-of-pocket expenses for printing, postage and
telephone costs.
CUSTODIAN, TRANSFER AGENT AND DIVIDEND AGENT
[Star Bank, N.A.] serves as custodian for the Fund's cash and
securities. Pursuant to a Custodian Agreement, it is responsible for maintaining
the books and records of the Fund's portfolio securities and cash. The Custodian
does not assist in, and is not responsible for, investment decisions involving
assets of the Fund.
DISTRIBUTION AGREEMENT
Pursuant to a Distribution Agreement, American Data Distributors, Inc.
(the "Distributor") has agreed to act as the principal underwriter for the Fund
in the sale and distribution to the public of shares of the Fund, either through
dealers or otherwise. The Distributor has agreed to offer such shares for sale
at all times when such shares are available for sale and may lawfully be offered
for sale and sold.
OTHER EXPENSES
The Fund pays certain operating expenses that are not assumed by the
Adviser, the Administrator, or any of their respective affiliates. These
expenses, together with fees paid to the Adviser and the Administrator are
deducted from income of the
9
<PAGE>
Fund before dividends are paid. These expenses include, but are not limited to,
the expenses of reports to shareholders, shareholders' meetings and proxy
solicitations, fees and expenses of officers and Directors who are not
affiliated with the Adviser, the Administrator or any of their respective
affiliates, taxes, interest, legal fees, custodian fees, audit fees, brokerage
fees and commissions, fees and expenses of registering and qualifying the Fund
and its shares for distribution under federal and state securities laws, and
PORTFOLIO TRANSACTIONS AND ALLOCATION OF BROKERAGE
The Fund's assets are invested by the Adviser in a manner consistent
with its investment objectives, policies, and restrictions and with any
instructions the Board of Directors may issue from time to time. Within this
framework, the Adviser is responsible for making all determinations as to the
purchase and sale of portfolio securities and for taking all steps necessary to
implement securities transactions on behalf of the Fund.
U.S. Government securities generally are traded in the over-the-counter
market through broker-dealers. A broker-dealer is a securities firm or bank that
makes a market for securities by offering to buy at one price and sell at a
slightly higher price. The difference between the prices is known as a spread.
In placing orders for the purchase and sale of portfolio securities for
the Fund, the Adviser will use its best efforts to obtain the best possible
price and execution and will otherwise place orders with broker-dealers subject
to and in accordance with any instructions the Board of Directors may issue from
time to time. The Adviser will select broker-dealers, including Temper of the
Times Communications, Inc., its affiliates, to execute portfolio transactions on
behalf of the Fund primarily on the basis of best price and execution.
Transactions on U.S. stock exchanges and other agency transactions
involve the payment by the Fund of negotiated brokerage commissions. Such
commissions vary among different brokers. A particular broker may charge
different commissions according to such factors as the difficulty and size of
the transaction.
It has for many years been a common practice in the investment advisory
business for advisers of investment companies and other institutional investors
to receive brokerage and research services (as defined in the Securities
Exchange Act of 1934, as amended (the "1934 Act")) from broker-dealers that
10
<PAGE>
execute portfolio transactions for the clients of such advisers and from third
parties with which such broker-dealers have arrangements. Consistent with this
practice, the Adviser may receive brokerage and research services and other
similar services from many broker-dealers with which the Adviser may place the
Fund's portfolio transactions and from third parties with which these
broker-dealers have arrangements. These services include such matters as general
economic and market reviews, industry and company reviews, evaluations of
investments, recommendations as to the purchase and sale of investments,
newspapers, magazines, pricing services, quotation services, news services and
personal computers utilized by the Adviser. Where the services referred to above
are not used exclusively by the Adviser for research purposes, the Adviser,
based upon its own allocations of expected use, bears that portion of the cost
of these services which directly relates to their non-research use.
As permitted by Section 28(e) of the 1934 Act, the Adviser may cause
the Fund to pay a broker-dealer which provides "brokerage and research services"
(as defined in the 1934 Act) to the Adviser an amount of disclosed commission
for effecting securities transactions on stock exchanges and other transactions
for the Fund on an agency basis in excess of the commission which another
broker-dealer would have charged for effecting that transaction. The Adviser's
authority to cause the Fund to pay any such greater commissions is also subject
to such policies as the Directors may adopt from time to time. The Adviser does
not currently intend to cause the Fund to make such payments. It is the position
of the staff of the Securities and Exchange Commission that Section 28(e) does
not apply to the payment of such greater commissions in "principal"
transactions. Accordingly, the Adviser will use its best effort to obtain the
most favorable price and execution available with respect to such transactions,
as described above.
Consistent with the Conduct Rules of the National Association of
Securities Dealers, Inc. and subject to seeking the most favorable price and
execution available and such other policies as the Directors may determine, the
Adviser may consider sales of shares of the Fund as a factor in the selection of
broker-dealers to execute portfolio transactions for the Fund.
TAXATION
The Fund intends to qualify each year as a "regulated investment
company" under Subchapter M of the Internal Revenue
11
<PAGE>
Code of 1986, as amended (the "Code"). By so qualifying, the Fund will not incur
federal income or state taxes on its net investment income and on net realized
capital gains to the extent distributed as dividends to shareholders.
Amounts not distributed on a timely basis in accordance with a calendar
year distribution requirement are subject to a nondeductible 4% excise tax at
the Fund level. To avoid the tax, the Fund must distribute during each calendar
year an amount equal to the sum of (a) at least 98% of its ordinary income (not
taking into account any capital gains or losses) for the calendar year, (b) at
least 98% of its capital gains in excess of capital losses (adjusted for certain
ordinary losses) for a one-year period generally ending on October 31st of the
calendar year, and (c) all ordinary income and capital gains for previous years
that were not distributed during such years.
Under the Code, dividends derived from interest, and any short-term
capital gains, are taxable to shareholders as ordinary income for federal and
state tax purposes, regardless of whether such dividends are taken in cash or
reinvested in additional shares. Distributions made from the Fund's net realized
long-term capital gains (if any) and designated as capital gain dividends are
taxable to shareholders as long-term capital gains, regardless of the length of
time Fund shares are held. Corporate investors are not eligible for the
dividends-received deduction with respect to distributions derived from interest
on short-or long-term capital gains from the Fund but may be entitled to such a
deduction in respect to distributions attributable to dividends received by the
Fund. A distribution will be treated as paid on December 31st of a calendar year
if it is declared by the Fund in October, November or December of the year with
a record date in such a month and paid by the Fund during January of the
following year. Such distributions will be taxable to shareholders in the
calendar year the distributions are declared, rather than the calendar year in
which the distributions are received.
Distributions paid by the Fund from net long-term capital gains (excess
of long-term capital gains over long-term capital losses), if any, whether
received in cash or reinvested in additional shares, are taxable as long-term
capital gains, regardless of the length of time you have owned shares in the
Fund. Distributions paid by the Fund from net short-term capital gains (excess
of short-term capital gains over short-term capital losses), if any, whether
received in cash or reinvested in additional shares are taxable as ordinary
income. Capital gains distributions are made when the Fund realizes net capital
gains on sales of portfolio securities during the year. Realized
12
<PAGE>
capital gains are not expected to be a significant or predictable part of the
Fund's investment return.
A sale of the Fund's shares is a taxable event and may result in a
capital gain or loss. A capital gain or loss may be realized from an ordinary
redemption of shares, a checkwriting redemption, or an exchange of shares
between two mutual funds (or two portfolios of a mutual fund).
Dividend distributions, capital gains distributions, and capital gains
or losses from redemptions and exchanges may be subject to state and local
taxes.
Ordinarily, distributions and redemption proceeds earned by the Fund
shareholder are not subject to withholding of federal income tax. However, 31%
of the Fund's distributions and redemption proceeds must be withheld if the Fund
shareholder fails to supply the Fund or its agent with such shareholder's
taxpayer identification number or if the Fund shareholder who is otherwise
exempt from withholding fails to properly document such shareholder's status as
an exempt recipient.
The information above is only a summary of some of the tax
considerations generally affecting the Fund and its shareholders. No attempt has
been made to discuss individual tax consequences. To determine whether the Fund
is a suitable investment based on his or her tax situation, a prospective
investor may wish to consult a tax advisor.
OWNERSHIP OF SHARES
Each share has one vote in the election of Directors. Cumulative voting
is not authorized. This means that the holders of more than 50% of the shares
voting for the election of Directors can elect 100% of the Directors if they
choose to do so, and, in that event, the holders of the remaining shares will be
unable to elect any Directors.
On ------------, 1998, the Adviser invested $100,000 in shares of the
Fund at $10.00 per share, as seed capital. The Adviser will control the Fund
until public shareholders come into the Fund.
13
<PAGE>
DIVIDENDS AND DISTRIBUTIONS
Net investment income, if any, is declared as dividends and paid
annually. Substantially all the realized net capital gains for the Fund, if any,
are also declared and paid on an annual basis. Dividends are payable to
shareholders of record at the time of declaration.
Dividends are automatically reinvested in additional Fund shares unless
the shareholder has elected to have them paid in cash.
The net investment income of the Fund for each business day is
determined immediately prior to the determination of net asset value. Net
investment income for other days is determined at the time net asset value is
determined on the prior business day. See "Purchase of Shares" and "Redemption
of Shares" in the Prospectus.
NET ASSET VALUE
The method for determining the Fund's net asset value is summarized in
the Prospectus in the text following the heading "Valuation of Shares." The net
asset value of the Fund's shares is determined on each day on which the New York
Stock Exchange is open, provided that the net asset value need not be determined
on days when no Fund shares are tendered for redemption and no order for Fund
shares is received. The New York Stock Exchange is not open for business on the
following holidays (or on the nearest Monday or Friday if the holiday falls on a
weekend): New Year's Day, President's Day, Good Friday, Memorial Day,
Independence Day, Labor Day, Thanksgiving and Christmas.
PERFORMANCE COMPARISONS
Total return quoted in advertising and sales literature reflects all
aspects of the Fund's return, including the effect of reinvesting dividends and
capital gain distributions and any change in the Fund's net asset value during
the period.
The Fund's total return must be displayed in any advertisement
containing the Fund's yield. Total return is the average annual total return for
the 1-, 5- and 10-year period ended on the date of the most recent balance sheet
included in the Statement of Additional Information, computed by finding the
average annual compounded rates of return over 1-, 5- and 10-year
14
<PAGE>
periods that would equate the initial amount invested to the ending redeemable
value according to the following formula:
P(1 + T)n = ERV
Where:
P = a hypothetical initial investment of $1000
T = average annual total return
n = number of years
ERV = ending redeemable value of a hypothetical
$1000 payment made at the beginning of the
1-, 5- or 10-year periods at the end of the
1-, 5-or 10-year periods (or fractions
thereof).
Because the Fund has not had a registration in effect for 1, 5 or 10
years, the period during which the registration has been effective shall be
substituted.
Average annual total return is calculated by determining the growth or
decline in value of a hypothetical historical investment in the Fund over a
stated period and then calculating the annual compounded percentage rate that
would have produced the same result if the rate of growth or decline in value
had been constant throughout the period. For example, a cumulative total return
of 100% over 10 years would produce an average annual total return of 7.18%,
which is the steady annual rate that would result in 100% growth on a compounded
basis in 10 years. While average annual total returns are a convenient means of
comparing investment alternatives, investors should realize that the Fund's
performance is not constant over time, but changes from year to year, and that
average annual total returns represent average figures as opposed to actual
year-to-year performance.
In addition to average annual total returns, the Fund may quote
unaveraged or cumulative total returns reflecting the simple change in value of
an investment over a stated period. Average annual and cumulative total returns
may be quoted as a percentage or as a dollar amount and may be calculated for a
single investment, a series of investments, or a series of redemptions over any
time period. Performance information may be quoted numerically or in a table,
graph, or similar illustration.
15
<PAGE>
The Fund's performance may be compared with the performance of other
funds with comparable investment objectives, tracked by fund rating services or
with other indexes of market performance. Sources of economic data that may be
considered in making such comparisons may include, but are not limited to,
rankings of any mutual fund or mutual fund category tracked by Lipper Analytical
Services, Inc. or Morningstar, Inc.; data provided by the Investment Company
Institute; major indexes of stock market performance; and indexes and historical
data supplied by major securities brokerage or investment advisory firms. The
Fund may also utilize reprints from newspapers and magazines furnished by third
parties to illustrate historical performance.
The agencies listed below measure performance based on their own
criteria rather than on the standardized performance measures described in the
preceding section.
Lipper Analytical Services, Inc. distributes mutual fund rankings
monthly. The rankings are based on total return performance
calculated by Lipper, generally reflecting changes in net asset
value adjusted for reinvestment of capital gains and income
dividends. They do not reflect deduction of any sales charges.
Lipper rankings cover a variety of performance periods, including
year-to-date, 1-year, 5-year, and 10-year performance. Lipper
classifies mutual funds by investment objective and asset
category.
Morningstar, Inc. distributes mutual fund ratings twice a month.
The ratings are divided into five groups: highest, above average,
neutral, below average and lowest. They represent the fund's
historical risk/reward ratio relative to other funds in its broad
investment class as determined by Morningstar, Inc. Morningstar
ratings cover a variety of performance periods, including 1-year,
3-year, 5-year, 10-year and overall performance. The performance
factor for the overall rating is a weighted-average assessment of
the fund's 1-year, 3-year, 5-year, and 10-year total return
performance (if available) reflecting deduction of expenses and
sales charges. Performance is adjusted using quantitative
techniques to reflect the risk profile of the fund. The ratings
are derived from a purely quantitative system that does not
utilize the subjective criteria customarily employed by rating
agencies such as Standard & Poor's and Moody's Investor Service,
Inc.
CDA/Weisenberger's Management Results publishes mutual fund
rankings and is distributed monthly. The rankings are based
entirely on total return calculated by Weisenberger for
16
<PAGE>
periods such as year-to-date, 1-year, 3-year, 5-year and 10-year.
Mutual funds are ranked in general categories (e.g.,
international bond, international equity, municipal bond, and
maximum capital gain). Weisenberger rankings do not reflect
deduction of sales charges or fees.
Independent publications may also evaluate the Fund's performance. The
Fund may from time to time refer to results published in various periodicals,
including Barrons, Financial World, Forbes, Fortune, Investor's Business Daily,
Kiplinger's Personal Finance Magazine, Money, U.S. News and World Report and The
Wall Street Journal.
Independent, unmanaged indexes, such as those listed below, may be used
to present a comparative benchmark of the Fund's performance. The performance
figures of an index reflect changes in market prices, reinvestment of all
dividend and interest payments and, where applicable, deduction of foreign
withholding taxes, and do not take into account brokerage commissions or other
costs. Because the Fund is a managed portfolio, the securities it owns will not
match those in an index. Securities in an index may change from time to time.
The Dow Jones Industrial Average is an index of 30 common stocks
frequently used as a general measure of stock market performance.
Standard & Poor's 500 Composite Stock Price Index is an index of
common stocks frequently used as a general measure of stock
market performance.
COUNSEL AND INDEPENDENT ACCOUNTANTS
Legal matters in connection with the issuance of shares of common stock
of the Fund are passed upon by Spitzer & Feldman P.C., 405 Park Avenue, New
York, New York 10022. [McGladrey & Pullen LLP, 555 Fifth Avenue, New York, New
York 10017] have been selected as independent accountants for the Fund.
OTHER INFORMATION
The Adviser has been registered with the Securities Exchange Commission
(SEC) under the Investment Advisers Act of 1940 since __________, 199_. The Fund
has filed a registration statement under the Securities Act of 1933 and the 1940
Act with respect to
17
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the shares offered. Such registrations do not imply approval or supervision of
the Fund or the Adviser by the SEC.
For further information, please refer to the registration statement and
exhibits on file with the SEC in Washington, D.C. These documents are available
upon payment of a reproduction fee. Statements in the Prospectus and in this
Statement of Additional Information concerning the contents of contracts or
other documents, copies of which are filed as exhibits to the registration
statement, are qualified by reference to such contracts or documents.
FINANCIAL STATEMENTS
[Audited balance sheet]
18
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PART C
ITEM 23. EXHIBITS:
* (1) Articles of Incorporation.
* (2) Bylaws of the Fund.
(3) Not Applicable.
**(4) Investment Advisory Agreement.
**(5) Distribution Agreement.
(6) Not Applicable.
**(7) Custody Agreement.
**(8) Administrative Service Agreement.
**(9) Opinion of Spitzer & Feldman P.C. as to the
legality of the securities being registered,
including their consent to the filing thereof
and as to the use of their names in the
Prospectus.
**(10) Consent of _______________________,
independent accountants.
(11) Not Applicable.
**(12) Subscription Letter.
(13) Not Applicable.
**(14) Financial Data Schedule
(15) Not Applicable
- -----------------------
* Filed with the Securities and Exchange Commission herewith as an
Exhibit to the Registrant's Registration Statement on October __,
1998.
** To be filed by amendment.
C-i
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ITEM 24. PERSONS CONTROLLED BY OR UNDER COMMON CONTROL WITH
REGISTRANT.
Not applicable
ITEM 25. INDEMNIFICATION.
(a) In accordance with Section 2-418 of the General Corporation
Law of the State of Maryland, Article NINTH of the Registrant's
Articles of Incorporation provides as follows:
"NINTH:(1) The Corporation shall indemnify (i) its currently
acting and former directors and officers, whether serving the
Corporation or at its request any other entity, to the fullest
extent required or permitted by the General Laws of the State of
Maryland now or hereafter in force, including the advance of
expenses under the procedures and to the fullest extent permitted
by law, and (ii) other employees and agents to such extent as
shall be authorized by the Board of Directors or the By-Laws and
as permitted by law. Nothing contained herein shall be construed
to protect any director or officer of the Corporation against any
liability to the Corporation or its security holders to which he
would otherwise be subject by reason of willful misfeasance, bad
faith, gross negligence, or reckless disregard of the duties
involved in the conduct of his office. The foregoing rights of
indemnification shall not be exclusive of any other rights to
which those seeking indemnification may be entitled. The Board of
Directors may take such action as is necessary to carry out these
indemnification provisions and is expressly empowered to adopt,
approve and amend from time to time such by-laws, resolutions or
contracts implementing such provisions or such indemnification
arrangements as may be permitted by law. No amendment of the
charter of the Corporation or repeal of any of its provisions
shall limit or eliminate the right of indemnification provided
hereunder with respect to acts or omissions occurring prior to
such amendment or repeal.
(2) To the fullest extent permitted by Maryland statutory or
decisional law, as amended or interpreted, and the Investment
Company Act of 1940, no director or officer of the Corporation
shall be personally liable to the Corporation or its stockholders
for money
C-ii
<PAGE>
damages; provided, however, that nothing herein shall be
construed to protect any director or officer of the Corporation
against any liability to the Corporation or its security holders
to which he would otherwise be subject by reason of willful
misfeasance, bad faith, gross negligence, or reckless disregard
of the duties involved in the conduct of his office. No amendment
of the charter of the Corporation or repeal of any of its
provisions shall limit or eliminate the limitation of liability
provided to directors and officers hereunder with respect to any
act or omission occurring prior to such amendment or repeal."
ITEM 26. BUSINESS AND OTHER CONNECTIONS OF INVESTMENT ADVISER.
The Moneypaper Advisors, Inc. serves as investment adviser to the Fund.
Set forth below are the names of the directors and officers of the Adviser:
Vita Nelson President and CEO, CFO and
Director
ITEM 27. PRINCIPAL UNDERWRITER.
(a) The principal underwriter of the Fund's shares currently acts
as a principal underwriter for other investment companies.
(b) The following table contains information with respect to each
director, officer or partner of each principal underwriter
named in the answer to Item 20:
(1) (2) (3)
NAME AND PRINCIPAL POSITIONS AND OFFICES POSITIONS AND OFFICES
BUSINESS ADDRESS* WITH UNDERWRITER WITH REGISTRANT
Michael Miola Treasurer, Director President, CFO and
The Hauppauge Chairman Director
Corporate Center
150 Motor Parkway
Hauppauge, NY 11788
ITEM 28. LOCATION OF ACCOUNTS AND RECORDS.
The accounts and records of the Fund are located, in whole or in part,
at the office of the Fund and the Administrator: American Data Services, Inc.,
The Hauppauge Corporate Center, 150
C-iii
<PAGE>
Motor Parkway, Hauppauge, New York 11788. The Custodian's records are located at
its offices at _____________________. the Adviser's records are located at its
offices at 1010 Mamaroneck Avenue, Mamaroneck, New York 10543.
ITEM 29 MANAGEMENT SERVICES.
Not Applicable
ITEM 30. UNDERTAKINGS.
to file an amendment to the registration statement with
certified financial statements showing the initial capital
received before accepting subscriptions from any persons in
excess of 25 if the Fund proposes to raise its initial capital
pursuant to Section 14(a)(3) of the 1940 Act.
C-iv
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940 the registrant has duly caused this registration
statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Mamaroneck and State of New York, on the 9th day of
October, 1998.
MP 63 FUND, INC.
By:/S/ VITA NELSON
----------------------------
Vita Nelson, 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 indicated.
/S/ VITA NELSON October 9, 1998
- -------------------
Vita Nelson Directors, Chairman of the
Board and Chief Executive
Officer
/S/ MICHAEL MIOLA October 9, 1998
- -------------------
Michael Miola Director
The above persons signing as Director are all of the members
of the Fund's Board of Directors.
Michael Miola
C-v
ARTICLES
OF
INCORPORATION
OF
THE MP63 FUND, INC.
The undersigned, being a natural person and acting as incorporator,
does hereby adopt the following Articles of Incorporation for the purposes of
forming a business corporation in the State of Maryland, pursuant to the
provisions of the Maryland General Corporation Law.
FIRST: (1) The name of the incorporator is Thomas R. Westle.
(2) The said incorporator's post office address is 405 Park
Avenue, Sixth Floor, New York, New York 10022.
(3) The said incorporator is over eighteen years of age.
(4) The said incorporator is forming the corporation named in
these Articles of Incorporation under the Maryland General Corporation Law.
SECOND: The name of the corporation (hereinafter called the
"Corporation") is THE MP63 FUND, INC.
THIRD: The purposes for which the Corporation is formed are:
(1) to conduct, operate and carry on the business of an
investment company;
(2) to subscribe for, invest in, reinvest in, purchase or
otherwise acquire, hold, pledge, sell, assign, transfer, exchange, distribute or
otherwise dispose of notes, bills, bonds, debentures and other negotiable or
non-negotiable instruments, obligations and evidences of indebtedness issued or
guaranteed as to principal and interest by the United States Government, or any
agency or instrumentality thereof, any State or local government or any agency
or instrumentality thereof, or any other securities of any kind issued by any
corporation or other issuer organized under the laws of the United States or any
State, territory or possession thereof or any foreign government.
(3) to conduct research and investigations in respect of
securities, organizations, business and general business and financial
conditions in the United States of America and elsewhere for the purpose of
obtaining information pertinent to the investment and
1
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employment of the assets of the Corporation and to procure any and all of the
foregoing to be done by others as independent contractors and to pay
compensation therefor;
(4) to borrow money or otherwise obtain credit and to secure the
same by mortgaging, pledging or otherwise subjecting as security the assets of
the Corporation, and to endorse, guarantee or undertake the performance of any
obligation, contract or engagement of any other person, firm, association or
corporation;
(5) to issue, sell, distribute, repurchase, redeem, retire,
cancel, acquire. hold, resell, reissue, dispose of, transfer, and otherwise deal
in, shares of stock of the Corooration, including shares of stock of the
Corporation in fractional denominations and to apply to any such repurchase,
redemption, retirement, cancellation or acquisition of shares of stock of the
Corporation, any funds or property of the Corporation, whether capital or
surplus or otherwise, to the full extent now or hereafter permitted by the laws
of the State of Maryland and by these Articles of Incorporation;
(6) to conduct its business, promote its purposes, and carry on
its operations in any and all of its branches and maintain offices both within
and without the State of Maryland, in any and all States of the United States of
America, in the District of Columbia, and in any or all commonwealths,
territories, dependencies, colonies, possessions, agencies, or instrumentalities
of the United States of America and of foreign governments;
(7) to carry out all or any part of the foregoing purposes or
objects as principal or agent, or in conjunction with any other person, firm,
association, corporation or other entity, or as a partner or member of a
partnership, syndicate or joint venture or otherwise, and in any part of the
world to the same extent and as fully as natural persons might or could do;
(8) to have and exercise all of the powers and privileges
conferred by the laws of the State of Maryland upon corporations formed under
the laws of such State; and
(9) to do any and all such further acts and things and to
exercise any and all such further powers and privileges as may be necessary,
incidental, relative, conducive, appropriate or desirable for the foregoing
purposes.
The enumeration herein of the objects and purposes of the
Corporation shall be construed as powers as well as objects and purposes and
shall not be deemed to exclude by inference any powers, objects or purposes
which the Corporation is empowered to exercise, whether expressly by force of
the laws of the State of Maryland now or hereafter in effect, or impliedly by
the reasonable construction of the said law.
FOURTH: The post office address of the principal office of the
Corporation within the State of Maryland is c/o CSC-Lawyers Incorporating
Service Company, 11 East Chase Street, Baltimore City, Maryland 21202.
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FIFTH: The resident agent of the Corporation in the State of Maryland
is CSC- Lawyers Incorporating Service Company, at 11 East Chase Street,
Baltimore, Maryland 21202.
SIXTH: (1) The total number of shares of stock of all Classes
and Series which the Corporation initially has authority to issue is one billion
(1,000,000,000) shares of capital stock (par value of One Tenth of One Cent,
$.001, per share), amounting in aggregate par value to $1,000,000. All of such
shares are classified as "Common Stock".
(2) The Board of Directors may classify or reclassify any
unissued shares of capital stock (whether or not such shares have been
previously classified or reclassified) from time to time by setting or changing
in any one or more respects the preferences, conversion or other rights, voting
powers, restrictions, limitations as to dividends, qualifications, or terms or
conditions of redemption of such shares of stock.
(3) Unless otherwise prohibited by law, so long as the
Corporation is registered as a open-end management company under the Investment
Company Act of 1940, the Board of Directors shall have the power and authority,
without the approval of the holders of any outstanding shares, to increase or
decrease the number of shares of capital stock or the number of shares of
capital stock of any Class or Series that the Corporation has authority to
issue.
(4) Until such time as the Board of Directors shall provide
otherwise in accordance with Section (2) of this Article SIXTH, one hundred
million (100,000,000) shares of the authorized shares of stock of the
Corporation, $.001 par value per share, shall be allocated to the initial Series
of Common Stock, The MP63 Fund. The balance of nine hundred million
(900,000,000) shares of such stock may be issued in these Series, or in any new
Series or Class, each comprising such number of shares and having such
designations, limitations and restrictions thereof as shall be fixed and
detemmined from time-to-time by resolution or resolutions providing for the
issuance of such stock adopted by the Board of Directors.
(5) Any series of Common Stock shall be referred to herein
individually as a "Series" and collectively, together with any further series
from time to time established, as the "Series".
(6) The following is a description of the preferences, conversion
and other rights, voting powers, restrictions, limitations as to dividends,
qualifications, and terms and conditions of redemption of the shares of Common
Stock of the Corporation (unless provided otherwise by the Board of Directors
with respect to any such additional Series at the time it is established and
designated):
(a) ASSET BELONGING TO SERIES. All consideration received by
-------------------------
the Corporation from the issue or sale of shares of a particular Series,
together with all assets in which such consideration is invested or reinvested,
all income, eamings, profits and proceeds thereof, including any proceeds
derived from the sale, exchange or liquidation of such assets, and any funds or
payments derived from any investment or reinvestment of such proceeds in
whatever form the same may be, shall irrevocably belong to that Series for all
purposes, subject only to the rights of
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creditors, and shall be so recorded upon the books of account of the
Corporation. Such consideration, assets, income, eamings, profits and proceeds,
together with any General Items allocated to that Series as provided in the
following sentence, are herein referred to collectively as "assets belonging to"
that Series. In the event that there are any assets, income, eamings, profits or
proceeds which are not readily identifiable as belonging to any particular
Series (collectively, "General Items"), such General Items shall be allocated by
or under the supervision of the Board of Directors to and among any one or more
of the Series established and designated from time to time in such manner and on
such basis as the Board of Directors, in its sole discretion, deems fair and
equitable; and any General Items so allocated to a particular Series shall
belong to that Series. Each such allocation by the Board of Directors shall be
conclusive and binding for all purposes.
(b) LIABILITIES OF SERIES. The assets belonging to each
---------------------
particular Series shall be charged with the liabilities of the Corporation in
respect of that Series and all expenses, costs, charges and reserves
attributable to that Series, and any general liabilities, expenses, costs,
charges or reserves of the Corporation which are not readily identifiable as
pertaining to any particular Series, shall be allocated and charged by or under
the supervision of the Board of Directors to and among any one or more of the
Series established and designated from time to time in such manner and on such
basis as the Board of Directors, in its sole discretion, deems fair and
equitable. The liabilities, expenses, costs, charges and reserves allocated and
so charged to a Series are herein referred to collectively as "liabilities of"
that Series. Each allocation of liabilities, expenses, costs, charges and
reserves by or under the supervision of the Board of Directors shall be
conclusive and binding for all purposes.
(c) DIVIDENDS AND DISTRIBUTIONS. Dividends and capital gains
---------------------------
distributions on shares of a particular Series may be paid with such frequency,
in such form and in such amount as the Board of Directors may determine by
resolution adopted from time to time, or pursuant to a standing resolution or
resolutions adopted only once or with such frequency as the Board of Directors
may determine, after providing for actual and accrued liabilities of that
Series. All dividends on shares of a particular Series shall be paid only out of
the income belonging to that Series and all capital gains distributions on
shares of a particular Series shall be paid only out of the capital gains
belonging to that Series. All dividends and distributions on shares of a
particular Series shall be distributed pro rata to the holders of that Series in
proportion to the number of shares of that Series held by such holders at the
date and time of record established for the payment of such dividends or
distributions, except that in connection with any dividend or distribution
program or procedure, the Board of Directors may determine that no dividend or
distribution shall be payable on shares as to which the stockholder's purchase
order and/or payment have not been received by the time or times established by
the Board of Directors under such program or procedure.
Dividends and distributions may be paid in cash, property or additional
shares of the same or another Series, or a combination thereof, as determined by
the Board of Directors or pursuant to any program that the Board of Directors
may have in effect at the time for the election by stockholders of the form in
which dividends or distributions are to be paid. Any such dividend or
distribution paid in shares shall be paid at the current net asset value
thereof.
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(d) VOTING. On each matter submitted to a vote of the
------
stockholders, each holder of shares shall be entitled to one vote for each share
standing in his name on the books of the Corporation, irrespective of the Series
thereof, and all shares of all Series shall vote as a single class ("Single
Class Voting"); provided, however, that (i) as to any matter with respect to
which a separate vote of any Series is required by the Investment Company Act of
1940 or by the Maryland General Corporation Law, such requirement as to a
separate vote by that Series shall apply in lieu of Single Class Voting; (ii) in
the event that the separate vote requirement referred to in clause (i) above
applies with respect to one or more Series, then, subject to clause (iii) below,
the shares of all other Series shall vote as a single class; and (iii) as to any
matter which does not affect the interest of a particular Series, including
liquidation of another Series as described in subsection (7) below, only the
holders of shares of the one or more affected Series shall be entitled to vote.
(e) REDEMPTION BV STOCKHOLDERS. Each holder of shares of a
--------------------------
particular Series shall have the right at such times as may be permitted by the
Corporation to require the Corporation to redeem all or any part of his shares
of that Series, at a redemption price per share equal to the net asset value per
share of that Series next determined after the shares are properly tendered for
redemption, less such redemption fee or sales charge, if any, as may be
established from time to time by the Board of Directors in its sole discretion.
Payment of the redemption price shall be in cash; provided, however, that if the
Board of Directors determines, which determination shall be conclusive, that
conditions exist which make payment wholly in cash unwise or undesirable, the
Corporation may, to the extent and in the manner permitted by the Investment
Company Act of 1940, make payment wholly or partly in securities or other assets
belonging to the Series of which the shares being redeemed are a part, at the
value of such securities or assets used in such determination of net asset
value.
Payment by the Corporation for shares of stock of the
Corporation surrendered to it for redemption shall be made by the Corporation
within such period from surrender as may be required under the Investment
Company Act of 1940 and the rules and regulations thereunder. Notwithstanding
the foregoing, the Corporation may postpone payment of the redemption price and
may suspend the right of the holders of shares of any Series to require the
Corporation to redeem shares of that Series during any period or at any time
when and to the extent permissible under the Investment Company Act of 1940.
(f) REDEMPTION BY CORPORATION. The Board of Directors may
-------------------------
cause the Corporation to redeem at their net asset value the shares of any
Series held in an account having, because of redemptions or exchanges, a net
asset value on the date of the notice of redemption less than the Minimum
Amount, as defined below, in that Series or class thereof specified by the Board
of Directors from time to time in its sole discretion, provided that at least 30
days prior written notice of the proposed redemption has been given to the
holder of any such account by first class mail, postage prepaid, at the address
contained in the books and records of the Corporation and such holder has been
given an opportunity to purchase the required value of additional shares.
(i) The term "Minimum Amount" when used herein shall
mean Five Hundred Dollars ($500) unless otherwise fixed by the Board of
Directors from time to time, provided that the Minimum Amount may not in any
event exceed Twenty-Five Thousand Dollars
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($25,000). The Board of Directors may establish differing Minimum Amounts for
each Class and Series of the Corporation's stock and for holders of shares of
each such Class and Series of stock based on such criteria as the Board of
Directors may deem appropriate.
(ii) The Corporation shall be entitled but not required
to redeem shares of stock from any stockholder or stockholders, as provided in
this subsection (6), to the extent and at such times as the Board of Directors
shall, in its absolute discretion, determine to be necessary or advisable to
prevent the Corporation from qualifying as a "personal holding company", within
the meaning of the Internal Revenue Code of 1986, as amended from time to time.
(g) LIQUIDATION. In the event of the liquidation of a
-----------
particular Series, the stockholders of the Series that is being liquidated shall
be entitled to receive, when and as declared by the Board of Directors, the
excess of the assets belonging to that Series over the liabilities of that
Series. The holders of shares of any particular Series shall not be entitled
thereby to any distribution upon liquidation of any other Series. The assets so
distributable to the stockholders of any particular Series shall be distributed
among such stockholders in proportion to the number of shares of that Series
held by them and recorded on the books of the Corporation, or in such other
manner as may be determined by the Board of Directors in accordance with law.
(h) NET ASSET VALUE PER SHARE. The net asset value per share
-------------------------
of any Series shall be the quotient obtained by dividing the value of the net
assets of that Series (being the value of the assets belonging to that Series
less the liabilities of that Series) by the total number of shares of that
Series outstanding, all as determined by or under the direction of the Board of
Directors in accordance with generally accepted accounting principles and the
Investment Company Act of 1940. Subject to the applicable provisions of the
Investment Company Act of 1940, the Board of Directors, in its sole discretion,
may prescribe and shall set forth in the By-Laws of the Corporation or in a duly
adopted resolution of the Board of Directors such bases and times for
determining the value of the assets belonging to, and the net asset value per
share of outstanding shares of, each Series, or the net income attributable to
such shares, as the Board of Directors deems necessary or desirable. The Board
of Directors shall have full discretion, to the extent not inconsistent with the
Maryland General Corporation Law and the Investment Company Act of 1940, to
determine which item shall be treated as income and which items as capital and
whether any item of expense shall be charged to income or capital. Each such
determination and allocation shall be conclusive and binding for all purposes.
The Board of Directors may determine to maintain the net
asset value per share of any Series at a designated constant dollar amount and
in connection therewith may adopt procedures not inconsistent with the
Investment Company Act of 1940 for the continuing declaration of income
attributable to that Series as dividends and for the handling of any losses
attributable to that Series. Such procedures may provide that in the event of
any loss, each stockholder shall be deemed to have contributed to the capital of
the Corporation attributable to that Series his pro rata portion of the total
number of shares required to be canceled in order to permit the net asset value
per share of that Series to be maintained, after reflecting such loss, at the
designated constant dollar amount. Each stockholder of the Corporation shall be
deemed to have agreed, by his investment in any Series with respect to which the
Board of Directors shall have
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adopted any such procedure, to make the contribution referred to in the
preceding sentence in the event of any such loss.
(i) EQUALITY. All shares of each particular Series shall
--------
represent an equal proportionate interest in the assets belonging to that Series
(subject to the liabilities of that Series), and each share of any particular
Series shall be equal to each other share of that Series.
(j) CONVERSION OR EXCHANGE RIGHTS. Subject to compliance
-----------------------------
with the requirements of the Investment Company Act of 1940, the Board of
Directors shall have the authority to provide that holders of shares of any
Series shall have the right to convert or exchange said shares into shares of
one or more other Series of shares in accordance with such requirements and
procedures as may be established by the Board of Directors.
(7) The Board of Directors may, from time to time and without
stockholder action, classify and reclassify unissued shares of a particular
Series into one or more additional Classes of that Series, the voting, dividend,
liquidation and other rights of which shall differ from the other Classes of
common stock of that Series to the extent provided in Articles Supplementary for
such additional Class, such Articles to be filed for record with the appropriate
authorities of the State of Maryland. Any Class of a Series of Common Stock
shall be referred to herein individually as a "Class" and collectively, together
with any further Class or Classes of such Series from time to time established,
as the "Classes".
(8) All Classes of a particular Series of Common Stock of the
Corporation shall represent the same interest in the Corporation and have
identical voting, dividend, liquidation and other rights with any other shares
of Common Stock of that Series; provided, however, that notwithstanding anything
in the charter of the Corporation to the contrary:
(a) Any Class of shares may be subject to such sales loads,
contingent deferred sales charges, Rule 12b-1 fees, administrative fees, service
fees, or other fees, however designated, in such amounts as may be established
by the Board of Directors from time to time in accordance with the Investment
Company Act of 1940.
(b) Expenses related solely to a particular Class of a
Series (including, without limitation, distribution expenses under a Rule 12b-1
plan and administrative expenses under an administration or service agreement,
plan or other arrangement, however designated) shall be borne by that Class and
shall be appropriately reflected (in the manner determined by the Board of
Directors) in the net asset value, dividends, distributions and liquidation
rights of the shares of that Class.
(c) As to any matter with respect to which a separate vote
of any Class of a Series is required by the Investment Company Act of 1940 or by
the Maryland General Corporation Law (including, without limitation, approval of
any plan, agreement or other arrangement referred to in subsection (b) above),
such requirement as to a separate vote by that Class shall apply in lieu of
Single Class Voting, and if permitted by the Investment Company Act of 1940 or
the Maryland General Corporation Law, the Classes of more than one Series shall
vote
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together as a single class on any such matter which shall have the same effect
on each such Class. As to any matter which does not affect the interest of a
particular Class of a Series, only the holders of shares of the affected Classes
of that Series shall be entitled to vote.
(d) At such times as may be determined by the Board of
Directors (or with the authorization of the Board of Directors, by the officers
of the Corporation) in accordance with the Investment Company Act of 1940,
applicable rules and regulations thereunder and applicable rules and regulations
of the National Association of Securities Dealers, Inc. and from time to time
reflected in the registration statement of the Corporation (the "Corporation's
Registration Statement"), shares of a particular Class of a Series of the
Corporation or certain shares of a particular Class of a Series of the
Corporation may be automatically converted into shares of another Class of that
Series of the Corporation based on the relative net asset values of such Classes
at the time of conversion; subject, however, to any conditions of conversion
that may be imposed by the Board of Directors (or with the authorization of the
Board of Directors, by the officers of the Corporation) and reflected in the
Corporation's Registration Statement. The terms and conditions of such
conversion may vary within and among the Classes of a Series, and among the
Classes of the various Series, to the extent determined by the Board of
Directors (or with the authorization of the Board of Directors, by the off'cers
of the Corporation) and set forth in the Corporation's Registration Statement.
(9) The Corporation may issue and sell fractions of shares of
capital stock having pro rata all of the rights of full shares, including,
without limitation, the right to vote and to receive dividends, but excluding
any right to receive a stock certificate representing fractional shares, and
wherever the words "share" or "shares" are used in the charter or By-Laws of the
Corporation, they shall be deemed to include fractions of shares where the
context does not clearly indicate that only full shares are intended.
(10) The Corporation shall not be obligated to issue certificates
representing shares of any Class or Series of capital stock. At the time of
issue or transfer of shares without certificates, the Corporation shall provide
the stockholder with such information as may be required under the Maryland
General Corporation Law.
(11) No holder of any shares of stock of the Corporation shall be
entitled as of right to subscribe for, purchase, or otherwise acquire any such
shares which the Corporation shall issue or propose to issue; and any and all of
the shares of stock of the Corporation, whether now or hereafler authorized, may
be issued, or may be reissued or transferred if the same have been reacquired
and have treasury status, by the Board of Directors to such persons, firms,
corporations and associations, and for such lawful consideration, and on such
terms, as the Board of Directors in its discretion may determine, without first
offering same, or any thereof, to any said holder.
(12) All persons who shall acquire stock or other securities of
the Corporation shall acquire the same subject to the provisions of these
Articles of Incorporation, as from time to time amended.
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SEVENTH: The number of directors of the Corporation, until such number
shall be increased pursuant to the By-Laws of the Corporation, shall be two. The
number of directors shall never be less than the number prescribed by the
General Corporation Law of the State of Maryland and shall never be more than
twenty. The names of the persons who shall act as directors of the Corporation
until their successors are duly chosen and qualify are Vita Nelson and Michael
Miola.
EIGHTH: The following provisions are inserted for the purpose of
defining, limiting and regulating the powers of the Corporation and of the Board
of Directors and stockholders.
(1) The business and affairs of the Corporation shall be managed
under the direction of the Board of Directors which shall have and may exercise
all powers of the Corporation except those powers which are by law, by these
Articles of Incorporation or by the By-Laws conferred upon or reserved to the
stockholders. In furtherance and not in limitation of the powers conferred by
law, the Board of Directors shall have power:
(a) to make, alter and repeal the By-Laws of the
Corporation;
(b) to issue and sell, from time to time, shares of any
Class or Series of the Corporation's stock in such amounts and on such terms and
conditions, and for such amount and kind of consideration, as the Board of
Directors shall determine;
(c) from time to time to set apart out of any assets of the
Corporation otherwise available for dividends a reserve or reserves for working
capital or for any other proper purpose or purposes, and to reduce, abolish or
add to any such reserve or reserves from time to time as said Board of Directors
may deem to be in the best interests of the Corporation; and to determine in its
discretion what part of the assets of the Corporation available for dividends in
excess of such reserve or reserves shall be declared in dividends and paid to
the stockholders of the Corporation; and
(d) from time to time to determine to what extent and at
what times and places and under what conditions and regulations the accounts,
books and records of the Corporation, or any of them, shall be open to the
inspection of the stockholders; and no stockholder shall have any right to
inspect any account or book or document of the Corporation, except as conferred
by the laws of the State of Maryland, unless and until authorized to do so by
resolution of the Board of Directors of the Corporation.
(2) Notwithstanding any provision of the General Corporation Law
of the State of Maryland requiring a greater proportion than a majority of the
votes of all Classes or Series or of any Class or Series of the Corporation's
stock entitled to be cast in order to take or authorize any action, any such
action may be taken or authorized upon the concurrence of a majority of the
aggregate number of votes entitled to be cast thereon subject to any applicable
requirements of the Investment Company Act of 1940, as from time to time in
effect, or rules or orders of the Securities and Exchange Commission or any
successor thereto.
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(3) The presence in person or by proxy of the holders of
one-third of the shares of stock of the Corporation entitled to vote (without
regard to Series or Class) shall constitute a quorum at any meeting of the
stockholders except with respect to any matter which, under applicable statutes
or regulatory requirements requires approval by a separate vote of one or more
Series or Classes of stock, in which case the presence in person or by proxy of
the holders of one-third of the shares of stock of each Series or Class required
to vote separately shall constitute a quorum with respect to such Series or
Class.
(4) Any determination made in good faith and, so far as
accounting matters are involved, in accordance with generally accepted
accounting principles by or pursuant to the discretion of the Board of
Directors, as to the amount of the assets, debts, obligations, or liabilities of
the Corporation, as to the amount of any reserves or charges set up and the
propriety thereof, as to the time of or purposes for creating such reserves or
charges, as to the use, alteration or cancellation of any reserves or charges
(whether or not any debt, obligation or liability for which such reserves or
charges shall have been created shall have been paid or discharged or shall by
then or thereafter required to be paid or discharged), as to the value of or the
method of valuing any investment owned or held by the Corporation, as to the
market value or fair value of any investment or fair value of any other asset of
the Corporation, as to the allocation of any asset of the Corporation to a
particular Class or Classes or Series of the Corporation's stock, as to the
charging of any liability of the Corporation to a particular Class or Classes or
Series of the Corporation's stock, as to the number of shares of the Corporation
or of any Class or Series outstanding, as to the estimated expense to the
Corporation in connection with purchases of its shares, as to the ability to
liquidate investments in orderly fashion, or as to any other matters relating to
the issue, sale, purchase and/or other acquisition or disposition of investments
or shares of the Corporation, shall be final and conclusive and shall be binding
upon the Corporation and all holders of its shares, past, present and future,
and shares of the Corporation are issued and sold on the condition and
understanding that any and all such determinations shall be binding as
aforesaid.
(5) Except to the extent prohibited by the Investment Company Act
of 1940, as amended, or rules, regulations or orders thereunder promulgated by
the Securities and Exchange Commission or any successor thereto or by the
By-Laws of the Corporation, a director, offcer or employee of the Corporation
shall not be disqualified by his position from dealing or contracting with the
Corporation, nor shall any transaction or contract of the Corporation be void or
voidable by reason of the fact that any director, offcer or employee or any firm
of which any director, officer or employee is a member or any corporation of
which any director, officer or employee is a stockholder, offcer or director, is
in any way interested in such transaction or contract; provided that in case a
director, or a firm or corporation of which a director is a member, stockholder,
officer or director, is so interested, such fact shall be disclosed to or shall
have been known by the Board of Directors or a majority thereof; and any
director of the Corporation who is so interested, or who is a member,
stockholder, officer or director of such firm or corporation, may be counted in
determining the existence of a quorum at any meeting of the Board of Directors
of the Corporation which shall authorize any such transaction or contract, with
like force and effect as if he were not such director, or member, stockholder,
officer or director of such firm or corporation.
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(6) Specifically and without limitation of the foregoing
subsection (5) but subject to the exception therein prescribed, the Corporation
may enter into management or advisory, underwriting, distribution and
administration contracts and other contracts, and may otherwise do business,
with The Moneypaper, Inc. or American Data Services, Inc. and any parent,
subsidiary, partner, or affliate of such firm or any afflliates of any such
affliate, or the stockholders, members, directors, officers, partners and
employees thereof, and may deal freely with one another notwithstanding that the
Board of Directors of the Corporation may be composed in part of directors,
officers, partners or employees of such firm and/or its parents, subsidiaries or
affiliates and that offcers of the Corporation may have been, be or become
directors, officers, or employees of such firm, and/or its parents, subsidiaries
or affiliates, and neither such management or advisory, underwriting,
distribution or administration contracts nor any other contract or transaction
between the Corporation and such firm and/or its parents, subsidiaries or
affiliates shall be invalidated or in any way affected thereby, nor shall any
director or offcer of the Corporation be liable to the Corporation or to any
stockholder or creditor thereof or to any person for any loss incurred by it or
him under or by reason of such contract or transaction; provided that nothing
herein shall protect any director or officer of the Corporation against any
liability to the Corporation or to its security holders to which he would
otherwise be subject by reason of willful misfeasance, bad faith, gross
negligence or reckless disregard of the duties involved in the conduct of his
office.
NINTH: (1) The Corporation shall indemnify (i) its currently acting and
former directors and officers, whether serving the Corporation or at its request
any other entity, to the fullest extent required or permitted by the General
Laws of the State of Maryland now or hereafter in force, including the advance
of expenses under the procedures and to the fullest extent permitted by law, and
(ii) other employees and agents to such extent as shall be authorized by the
Board of Directors or the By-Laws and as permitted by law. Nothing contained
herein shall be construed to protect any director or officer of the Corporation
against any liability to the Corporation or its security holders to which he
would otherwise be subject by reason of willful misfeasance, bad faith, gross
negligence, or reckless disregard of the duties involved in the conduct of his
office. The foregoing rights of indemnification shall not be exclusive of any
other rights to which those seeking indemnification may be entitled. The Board
of Directors may take such action as is necessary to carry out these
indemnification provisions and is expressly empowered to adopt, approve and
amend from time to time such by-laws, resolutions or contracts implementing such
provisions or such indemnification arrangements as may be permitted by law. No
amendment of the charter of the Corporation or repeal of any of its provisions
shall limit or eliminate the right of indemnification provided hereunder with
respect to acts or omissions occurring prior to such amendment or repeal.
(2) To the fullest extent permitted by Maryland statutory or
decisional law, as amended or interpreted, and the Investment Company Act of
1940, no director or officer of the Corporation shall be personally liable to
the Corporation or its stockholders for money damages; provided, however, that
nothing herein shall be construed to protect any director or officer of the
Corporation against any liability to the Corporation or its stockholders to
which he would otherwise be subject by reason of willful misfeasance, bad faith,
gross negligence, or reckless disregard of the duties involved in the conduct of
his office. No amendment of the charter of the Corporation or repeal of any of
its provisions shall limit or eliminate the limitation of liability provided to
directors
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and officers hereunder with respect to any act or omission occurring prior to
such amendment or repeal.
TENTH: The Corporation reserves the right to amend, alter, change or
repeal any provision contained in the Charter of the Corporation, including,
without limitation, any amendment which would alter the contract rights of any
Series or Class of outstanding stock as expressly set forth in the Charter and
all rights conferred upon stockholders herein are granted subject to this
reservation.
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IN WITNESS WHEREOF, I have adopted and signed these Articles of
Incorporation and do hereby acknowledge that the adoption and signing are my
act.
Date: October 9, 1998
/S/ THOMAS R. WESTLE
-----------------------------------
Thomas R. Westle
I hereby consent to my designation in this document as resident agent
for this corporation.
CSC-Lawyers Incorporating Service Company
Signed by:--------------------------------------
, Authorized Representative
13
BY-LAWS
OF
THE MP63 FUND, INC.
a Maryland corporation
ARTICLE I
OFFICES
Section 1. PRINCIPAL OFFICE .The Corporation shall maintain its
----------------
principal office in Hauppauge, New York. The registered agent of the Corporation
in Maryland, for statutory purposes, shall be c/o CSC-Lawyers Incorporating
Service Company, 11 East Chase Street, Baltimore City, Maryland 21202.
Section 2. OTHER OFFICES. The Corporation may have offices also at such
-------------
other places within and without the State of Maryland as the Board of Directors
may from time to time determine or as the business of the Corporation may
require.
ARTICLE II
MEETINGS OF STOCKHOLDERS
Section 1. PLACE OF MEETING. Meetings of stockholders shall be held at
----------------
such place, either within the State of Maryland or at such other place within
the United States, as shall be fixed from time to time by the Board of
Directors.
Section 2. ANNUAL MEETINGS. The Corporation shall not be required to
---------------
hold an annual meeting of its stockholders in any year in which the election of
directors is not required to be acted on by the holders of any class or series
of stock under the Investment Company Act of 1940. In the event that the
Corporation shall be required to hold an annual meeting of stockholders by the
Investment Company Act of 1940, such meeting of stockholders shall be held on a
date fixed from time to time by the Board of Directors within one hundred twenty
days after the occurrence of the event requiring the meeting. The Board of
Directors, in its discretion, may call annual meetings in other years, which
shall be held on a date fixed by the Board of Directors not less than ninety nor
more than one hundred and twenty days following the end of such fiscal year of
the Corporation.
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Section 3. NOTICE OF ANNUAL MEETING. Written or printed notice of an
------------------------
annual meeting, stating the place, date and hour thereof, shall be given to each
stockholder entitled to vote thereat not less than ten nor more than ninety days
before the date of the meeting.
Section 4. SPECIAL MEETINGS. Special meetings of stockholders may be
----------------
called by the chairman, the president or by the Board of Directors and shall be
called by the secretary upon the written request of holders of shares entitled
to cast not less than twenty-five percent of all the votes entitled to be cast
at such meeting. Such request shall state the purpose or purposes of such
meeting and the matters proposed to be acted on thereat. In the case of such
request for a special meeting, upon payment by such stockholders to the
Corporation of the estimated reasonable cost of preparing and mailing a notice
of such meeting, the secretary shall give the notice of such meeting. The
secretary shall not be required to call a special meeting to consider any matter
which is substantially the same as a matter acted upon at any special meeting of
stockholders held within the preceding twelve months unless requested to do so
by the holders of shares entitled to cast not less than a majority of all votes
entitled to be cast at such meeting. Notwithstanding anything to the contrary
herein, a special meeting of stockholders shall be called for the specific
purpose of the removal of directors upon the written request of holders of
shares entitled to cast not less than ten percent of all of the votes entitled
to be cast at such meeting.
Section 5. NOTICE OF SPECIAL MEETING. Written or printed notice of
-------------------------
special meeting of stockholders, stating the place, date, hour and purpose
thereof, shall be given by the secretary to each stockholder entitled to vote
thereat not less than ten nor more than ninety days before the date fixed for
the meeting.
Section 6. BUSINESS OF SPECIAL MEETINGS. Business transacted at any
----------------------------
special meeting of stockholders shall be limited to the purposes stated in the
notice thereof.
Section 7. QUORUM. The holders of one-third of the stock issued and
------
outstanding and entitled to vote thereat (without regard to Series or Class),
present in person or represented by proxy, shall constitute a quorum at all
meetings of the stockholders for the transaction of business, except with
respect to any matter which, under applicable statutes or regulatory
requirements, requires approval by a separate vote of one or more Series or
Classes of stock, in which case the presence in person or by proxy of the
holders of one-third of the shares of stock of each Series or Class required to
vote separately on the matter shall constitute a quorum with respect to such
Series or Class. In the absence of a quorum, the stockholders present in person
or by proxy, by a majority vote and without notice other than announcement at
the meeting, may adjourn the meeting from time to time, but not for a period
exceeding 120 days after the original date, until a quorum shall attend. Any
business may be transacted at the adjourned meeting that could have been
transacted at the meeting originally called.
Section 8. VOTING. When a quorum is present at any meeting, the
affirmative vote of a majority of the votes cast shall decide any question
brought before such meeting (except with respect to election of directors which
shall be by plurality of votes cast), unless the question is one upon which by
express provision of the Investment Company Act of 1940, as from time to time in
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effect, or other statutes or rules or orders of the Securities and Exchange
Commission or any successor thereto or of the Charter or Maryland law, a
different vote is required, in which case such express provision shall govern
and control the decision of such question.
Section 9. PROXIES. Each stockholder shall at every meeting of
-------
stockholders be entitled to one vote in person or by proxy for each share of the
stock having voting power held by such stockholder, but no proxy shall be voted
after eleven months from its date, unless otherwise provided in the proxy.
Section 10. RECORD DATE. In order that the Corporation may determine
-----------
the stockholders entitled to notice of or to vote at any meeting of stockholders
or any adjournment thereof, to express consent to corporate action in writing
without a meeting, or to receive payment of any dividend or other distribution
or allotment of any rights, or entitled to exercise any rights in respect of any
change, conversion or exchange of stock or for the purpose of any other lawful
action, the Board of Directors may fix, in advance, a record date which shall be
not more than ninety days and, in the case of a meeting of stockholders, not
less than ten 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 of Directors may provide that the stock transfer books shall be
closed for a stated period, but not to exceed, in any case, twenty days. If the
stock transfer books are closed for the purpose of determining stockholders
entitled to notice of or to vote at a meeting of stockholders, such books shall
be closed for at least ten days immediately preceding such meeting. If no record
date is fixed and the stock transfer books are not closed for the determination
of stockholders: (1) the record date for the determination of stockholders
entitled to notice of, or to vote at, a meeting of stockholders shall be at the
close of business on the day on which notice of the meeting of stockholders is
mailed or the day thirty days before the meeting, whichever is the closer date
to the meeting; and (2) the record date for the determination of stockholders
entitled to receive payment of a dividend or an allotment of any rights shall be
at the close of business on the day on which the resolution of the Board of
Directors, declaring the dividend or allotment of rights, is adopted, provided
that the payment or allotment date shall not be more than sixty days after the
date of the adoption of such resolution.
Section 11. INSPECTORS OF ELECTION. The directors, in advance of any
----------------------
meeting, may, but need not, appoint one or more inspectors to act at the meeting
or any adjournment thereof. If an inspector or inspectors are not appointed, the
person presiding at the meeting may, but need not, appoint one or more
inspectors. In case any person who may be appointed as an inspector fails to
appear or act, the vacancy may be filled by appointment made by the directors in
advance of the meeting or at the meeting by the person presiding thereat. Each
inspector, if any, before entering upon the discharge of his or her duties,
shall take and sign an oath faithfully to execute the duties of inspector at
such meeting with strict impartiality and according to the best of his or her
ability. The inspectors, if any, shall determine the number of shares
outstanding and the voting power of each, the shares represented at the meeting,
the existence of a quorum, and the validity and effect of proxies, and shall
receive votes, ballots or consents, hear and determine all challenges and
questions arising in connection with the right to vote, count and tabulate all
votes, ballots or consents, determine the result, and do such acts as are proper
to conduct the election or
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vote with fairness to all stockholders. On request of the person presiding at
the meeting or any stockholder, the inspector or inspectors, if any, shall make
a report in writing of any challenge, question or matter determined by him or
her or them and execute a certificate of any fact found by him or her or them.
Section 12. INFORMAL ACTION BY STOCKHOLDERS. Except to the extent
-------------------------------
prohibited by the Investment Company Act of 1940, as from time to time in
effect, or rules or orders of the Securities and Exchange Commission or any
successor thereto, 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 any other stockholders entitled to notice of a
meeting of stockholders (but not to vote thereat) have waived in writing any
rights which they may have to dissent from such action, and such consent and
waiver are filed with the records of the Corporation.
ARTICLE III
BOARD OF DIRECTORS
Section 1. NUMBER OF DIRECTORS. The number of directors shall be fixed
-------------------
at no less than two, or such greater number as required by Maryland law, nor
more than twenty. Within the limits specified above, the number of directors
shall be fixed from time to time by the Board of Directors, but the tenure of
office of a director in office at the time of any decrease in the number of
directors shall not be affected as a result thereof. The directors shall be
elected to hold office at the annual meeting of stockholders, except as provided
in Section 2 of this Article, and each director shall hold office until the next
annual meeting of stockholders or until his successor is elected and qualified.
Any director may resign at any time upon written notice to the Corporation. Any
director may be removed, either with or without cause, at any meeting of
stockholders duly called and at which a quorum is present by the affirmative
vote of the majority of the votes entitled to be cast thereon, and the vacancy
in the Board of Directors caused by such removal may be filled by the
stockholders at the time of such removal. Directors need not be stockholders.
Section 2. VACANCIES AND NEWLY CREATED DIRECTORSHIPS. Any vacancy
-----------------------------------------
occurring in the Board of Directors for any cause, including an increase in the
number of directors, may be filled by the stockholders or by a majority of the
remaining members of the Board of Directors even if such majority is less than a
quorum. So long as the Corporation is a registered investment company under the
Investment Company Act of 1940, vacancies in the Board of Directors may be
filled by a majority of the remaining members of the Board of Directors only if,
immediately after filing any such vacancy, at least two-thirds of the directors
then holding office shall have been elected to such office at a meeting of
stockholders. A director elected by the Board of Directors to fill a vacancy
shall be elected to hold office until the next annual meeting of stockholders or
until his successor is elected and qualifies.
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Section 3. POWERS. The business and affairs of the Corporation shall be
------
managed under the direction of the Board of Directors which shall exercise all
such powers of the Corporation and do all such lawful acts and things as are not
by statute or by the Articles of Incorporation or by these By-Laws conferred
upon or reserved to the stockholders.
Section 4. MEETINGS. The Board of Directors of the Corporation or any
--------
committee thereof may hold meetings, both regular and special, either within or
without the State of Maryland. Regular meetings of the Board of Directors may be
held without notice at such time and at such place as shall from time to time be
determined by the Board of Directors. Special meetings of the Board of Directors
may be called by the chairman, the president or by two or more directors. Notice
of special meetings of the Board of Directors shall be given by the secretary to
each director at least three days before the meeting if by mail or at least 24
hours before the meeting if given in person or by telephone, facsimile or by
telegraph. The notice need not specify the business to be transacted.
Section 5. QUORUM AND VOTING. At meetings of the Board of Directors,
-----------------
two of the directors in office at the time, but in no event less than one-third
of the entire Board of Directors, shall constitute a quorum for the transaction
of business. When required pursuant to Section 15(c) under the Investment
Company Act of 1940 or Rule 12b-1 thereunder a quorum shall also require the
presence in person of a majority of directors who are not parties to a contract
or agreement to be voted upon or interested persons of any such party. The
action of a majority of the directors present at a meeting at which a quorum is
present shall be the action of the Board of Directors. If a quorum shall not be
present at any meeting of the Board of Directors, the directors present thereat
may adjourn the meeting from time to time, without notice other than
announcement at the meeting, until a quorum shall be present.
Section 6. COMMITTEES. The Board of Directors may, by resolution passed
----------
by a majority of the entire Board of Directors, appoint from among its members
an executive committee and other committees of the Board of Directors, each
committee to be composed of two or more of the directors of the Corporation. The
Board of Directors may, to the extent provided in the resolution, delegate to
such committees, in the intervals between meetings of the Board of Directors,
any or all of the powers of the Board of Directors in the management of the
business and affairs of the Corporation, to the extent permitted by law. Such
committee or committees shall have the name or names as may be determined from
time to time by resolution adopted by the Board of Directors. Unless the Board
of Directors designates one or more directors as alternate members of any
committee, who may replace an absent or disqualified member at any meeting of
the committee, the members of any such committee present at any meeting and not
disqualified from voting may, whether or not they constitute a quorum,
unanimously appoint another member of the Board of Directors to act at the
meeting in the place of any absent or disqualified member of such committee. At
meetings of any such committee, a majority of the members or alternate members
of such committee shall constitute a quorum for the transaction of business and
the act of a majority of the members or alternate members present at any meeting
at which a quorum is present shall be the act of the committee.
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Section 7. MINUTES OF COMMITTEE MEETINGS. The committees shall keep
-----------------------------
regular minutes of their proceedings.
Section 8. INFORMAL ACTION BY BOARD OF DIRECTORS AND COMMITTEES. Any
-----------------------------------------------------
action, except approving the Rule 12b-1 Plan and the Advisory Agreement,
required or permitted to be taken at any meeting of the Board of Directors or of
any committee thereof may be taken without a meeting if a written consent
thereto is signed by all members of the Board of Directors or of such committee,
as the case may be, and such written consent is filed with the minutes of
proceedings of the Board of Directors or committee.
Section 9. MEETINGS BY CONFERENCE TELEPHONE. Except to the extent
--------------------------------
prohibited by the Investment Company Act of 1940, as from time to time in
effect, or rules or orders of the Securities and Exchange Commission or any
successor thereto, the members of the Board of Directors or any committee
thereof may participate in a meeting of the Board of Directors or committee by
means of a conference telephone or similar communications equipment by means of
which all persons participating in the meeting can hear each other at the same
time and such participation shall constitute presence in person at such meeting.
Section 10. FEES AND EXPENSES. The directors may be paid their expenses
-----------------
of attendance at each meeting of the Board of Directors and may be paid a fixed
sum for attendance at each meeting of the Board of Directors or a stated salary
as director. No such payment shall preclude any director from serving the
Corporation in any other capacity and receiving compensation therefor. Members
of special or standing committees may be allowed like reimbursement and
compensation for attending committee meetings.
ARTICLE IV
NOTICES
Section 1. GENERAL. Notices to directors and stockholders mailed to
-------
them at their post office addresses appearing on the books of the Corporation
shall be deemed to be given at the time when deposited in the United States
mail.
Section 2. WAIVER OF NOTICE. Whenever any notice is required to be
----------------
given under the provisions of the statutes, of the Articles of Incorporation or
of these By-Laws, a waiver thereof in writing, signed by the person or persons
entitled to said notice, whether before or after the time stated therein, shall
be deemed the equivalent of notice. Attendance of a person at a meeting shall
constitute a waiver of notice of such meeting except when the person attends a
meeting for the express purpose of objecting, at the beginning of the meeting,
to the transaction of any business because the meeting is not lawfully called or
convened.
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ARTICLE V
OFFICERS
--------
Section 1. GENERAL. The officers of the Corporation shall be chosen by
-------
the Board of Directors at its first meeting of each fiscal year and shall be a
Chairman of the Board of Directors, a president, a secretary and a treasurer.
The Board of Directors may also choose such vice presidents and additional
officers or assistant officers as it may deem advisable. Any number of offices,
except the offices of president and vice president, may be held by the same
person. No officer shall execute, acknowledge or verify any instrument in more
than one capacity if such instrument is required by law to be executed,
acknowledged or verified by two or more officers.
Section 2. OTHER OFFICERS AND AGENTS. The Board of Directors may
-------------------------
appoint such other officers and agents as it desires who shall hold their
offices for such terms and shall exercise such power and perform such duties as
shall be determined from time to time by the Board of Directors.
Section 3. TENURE OF OFFICERS. The officers of the Corporation shall
------------------
hold office at the pleasure of the Board of Directors. Each officer shall hold
his or her office until his or her successor is elected and qualifies or until
his or her earlier resignation or removal. Any officer may resign at any time
upon written notice to the Corporation. Any officer elected or appointed by the
Board of Directors may be removed at any time by the Board of Directors when, in
its judgment, the best interests of the Corporation will be served thereby. Any
vacancy occurring in any office of the Corporation by death, resignation,
removal or otherwise shall be filled by the Board of Directors.
Section 4. CHAIRMAN OF THE BOARD OF DIRECTORS. The Chairman of the
----------------------------------
Board of Directors shall be the chief executive officer of the Corporation,
shall preside at all meetings of the stockholders and of the Board of Directors,
shall have general and active management of the business of the Corporation and
shall see that all orders and resolutions of the Board of Directors are carried
into effect. The chairman shall execute on behalf of the Corporation, and may
affix the seal or cause the seal to be affixed to, all instruments requiring
such execution except to the extent that signing and execution thereof shall be
expressly delegated by the Board of Directors to some other officer or agent of
the Corporation.
Section 5. PRESIDENT. The president shall, in the absence of the
---------
chairman of the Board of Directors, preside at all meetings of the stockholders
or of the Board of Directors. The president shall have general and active
management of the business of the Corporation and shall see that all orders and
resolutions of the Board of Directors are carried into effect. The president
shall execute bonds, mortgages and other contracts requiring a seal, under the
seal of the Corporation, except where required or permitted by law to be
otherwise signed and executed and except where the signing and execution thereof
shall be expressly delegated by the Board of Directors to some other officer or
agent of the Corporation.
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Section 6. VICE PRESIDENTS. The vice presidents shall act under the
---------------
direction of the president and in the absence or disability of the president
shall perform the duties and exercise the power of the president. They shall
perform such other duties and have such other powers as the president or the
Board of Directors may from time to time prescribe. The Board of Directors may
designate one or more executive vice presidents or may otherwise specify the
order of seniority of the vice presidents and, in that event, the duties and
powers of the president shall descend to the vice presidents in the specified
order of seniority.
Section 7. SECRETARY. The secretary shall act under the direction of
---------
the president. Subject to the direction of the president, the secretary shall
attend all meetings of the Board of Directors and all meetings of stockholders
and record the proceedings in a book to be kept for that purpose and shall
perform like duties for the committees designated by the Board of Directors when
required. The secretary shall give, or cause to be given, notice of all meetings
of stockholders and special meetings of the Board of Directors, and shall
perform such other duties as may be prescribed by the president or the Board of
Directors. The secretary shall keep in safe custody the seal of the Corporation
and shall affix the seal or cause it to be affixed to any instrument requiring
it.
Section 8. ASSISTANT SECRETARIES. The assistant secretaries in the
---------------------
order of their seniority, unless otherwise determined by the president or the
Board of Directors, shall, in the absence or disability of the secretary,
perform the duties and exercise the powers of the secretary. They shall perform
such other duties and have such other powers as the president or the Board of
Directors may from time to time prescribe.
Section 9. TREASURER. The treasurer shall act under the direction of
---------
the president. Subject to the direction of the president he shall have the
custody of the corporate funds and securities and shall keep full and accurate
accounts of receipts and disbursements in books belonging to the Corporation and
shall deposit all monies and other valuable effects in the name and to the
credit of the Corporation in such depositories as may be designated by the Board
of Directors. The treasurer shall disburse the funds of the Corporation as may
be ordered by the president or the Board of Directors, taking proper vouchers
for such disbursements, and shall render to the president and the Board of
Directors, at its regular meetings, or when the Board of Directors so requires,
an account of all his or her transactions as treasurer and of the financial
condition of the Corporation.
Section 10. ASSISTANT TREASURERS. The assistant treasurers in the order
--------------------
of their seniority, unless otherwise determined by the president or the Board of
Directors, shall, in the absence or disability of the treasurer, perform the
duties and exercise the powers of the treasurer. They shall perform such other
duties and have such other powers as the president or the Board of Directors may
from time to time prescribe.
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ARTICLE VI
CERTIFICATES OF STOCK
Section 1. GENERAL. Every holder of stock of the Corporation who has
-------
made full payment of the consideration for such stock shall be entitled upon
request to have a certificate, signed by, or in the name of the Corporation by,
the Chairman, the president or any vice president and countersigned by the
treasurer or an assistant treasurer or the secretary or an assistant secretary
of the Corporation, certifying the number and class of whole shares of stock
owned by such holder in the Corporation.
Section 2. SIGNATURES ON CERTIFICATES. Any of or all the signatures on
--------------------------
a certificate may be a facsimile. In case any officer who has signed or whose
facsimile signature has been placed upon a certificate shall cease to be such
officer before such certificate is issued, it may be issued with the same effect
as if he or she were such officer at the date of issue. The seal of the
Corporation or a facsimile thereof may, but need not, be affixed to certificates
of stock.
Section 3. LOST, STOLEN OR DESTROYED 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 or destroyed, upon the making of any affidavit of that
fact by the person claiming the certificate or certificates to be lost, stolen
or destroyed. When authorizing such issue of a new certificate or certificates,
the Board of Directors may, in its discretion and as a condition precedent to
the issuance thereof, require the owner of such lost, stolen or destroyed
certificate or certificates, or his or her legal representative, to give the
Corporation a bond in such sum as it may direct as indemnity against any claim
that may be made against the Corporation with respect to the certificate or
certificates alleged to have been lost, stolen or destroyed.
Section 4. TRANSFER OF SHARES. Upon request by the registered owner of
------------------
shares, and if a certificate has been issued to represent such shares upon
surrender to the Corporation or a transfer agent of the Corporation of a
certificate for shares of stock duly endorsed or accompanied by proper evidence
of succession, assignment or authority to transfer, subject to the Corporation's
rights to redeem or purchase such shares, it shall be the duty of the
Corporation, if it is satisfied that all provisions of the Articles of
Incorporation, of the By-Laws and of the law regarding the transfer of shares
have been duly complied with, to record the transactions upon its books, issue a
new certificate to the person entitled thereto upon request for such
certificate, and cancel the old certificate, if any.
Section 5. REGISTERED OWNERS. The Corporation shall be entitled to
-----------------
recognize the person registered on its books as the owner of shares to be the
exclusive owner for all purposes including, redemption, voting and dividends,
and the Corporation shall not be bound to recognize any equitable or other claim
to or interest in such share or shares on the part of any other person,
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whether or not it shall have express or other notice thereof, except as
otherwise provided by the laws of Maryland.
ARTICLE VII
MISCELLANEOUS
-------------
Section 1. RESERVES. There may be set aside out of any funds of the
--------
Corporation available for dividends such sum or sums as the Board of Directors
from time to time, in their absolute discretion, think proper as a reserve or
reserves to meet contingencies, or for repairing or maintaining any property of
the Corporation, or for the purchase of additional property, or for such other
purpose as the Board of Directors shall think conducive to the interest of the
Corporation, and the Board of Directors may modify or abolish any such reserve.
Section 2. DIVIDENDS. Dividends upon the stock of the Corporation may,
---------
subject to the provisions of the Articles of Incorporation and of the provisions
of applicable law, be declared by the Board of Directors at any time. Dividends
may be paid in cash, in property or in shares of the Corporation's stock,
subject to the provisions of the Articles of Incorporation and of applicable
law.
Section 3. CAPITAL GAINS DISTRIBUTIONS. The amount and number of
---------------------------
capital gains distributions paid to the stockholders during each fiscal year
shall be determined by the Board of Directors. Each such payment shall be
accompanied by a statement as to the source of such payment, to the extent
required by law.
Section 4. CHECKS. All checks or demands for money and notes of the
------
Corporation shall be signed by such officer or officers or such other person or
persons as the Board of Directors may from time to time designate.
Section 5. FISCAL YEAR. The fiscal year of the Corporation shall be
-----------
fixed by resolution of the Board of Directors.
Section 6. SEAL. The corporate seal shall have inscribed thereon the
----
name of the Corporation, the year of its organization and the words, "Corporate
Seal, Maryland". The seal may be used by causing it or a facsimile thereof to be
impressed or affixed or in another manner reproduced.
Section 7. FILING OF BY-LAWS. A certified copy of the By-Laws,
-----------------
including all amendments, shall be kept at the principal office of the
Corporation in the State of Maryland.
Section 8. ANNUAL REPORT. 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
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the Corporation. Within one hundred and twenty days of the close of each annual
fiscal period a report based upon such examination at the close of that fiscal
period shall be mailed to each stockholder of the Corporation of record at the
close of such annual fiscal period, unless the Board of Directors shall set
another record date, at his address as the same appears on the books of the
Corporation. Each such report shall contain such information as is required to
be set forth therein by the Investment Company Act of 1940 and the rules and
regulations promulgated by the Securities and Exchange Commission thereunder.
Such report shall also be submitted at the annual meeting of the stockholders
and filed within twenty days thereafter at the principal office of the
Corporation in the State of Maryland but, in any event, within one hundred and
twenty days after the end of the fiscal year.
Section 9. STOCK LEDGER. The Corporation shall maintain at its
------------
principal office outside of the State of Maryland an original or duplicate stock
ledger containing the names and addresses of all stockholders and the number of
shares of stock held by each stockholder. Such stock ledger may be in written
form or in any other form capable of being converted into written form within a
reasonable time for visual inspection.
Section 10. RATIFICATION OF ACCOUNTANTS BY STOCKHOLDERS. At every
-------------------------------------------
annual meeting of the stockholders of the Corporation otherwise called there
shall be submitted for ratification or rejection the name of the firm of
independent public accountants which has been selected for the current fiscal
year in which such annual meeting is held by a majority of those members of the
Board of Directors who are not investment advisers of, or interested person (as
defined in the Investment Company Act of 1940) of an investment adviser of, or
officers or employees of, the Corporation.
Section 11. INVESTMENT ADVISERS. The Corporation may enter into one or
-------------------
more management or advisory, underwriting, distribution or administration
contracts with any person, firm, partnership, association or corporation but
such contract or contracts shall continue in effect only so long as such
continuance is specifically approved annually by a majority of the Board of
Directors or by vote of the holders of a majority of the voting securities (as
defined in the Investment Company Act of 1940)of the Corporation, and in either
case by vote of a majority of the directors who are not parties to such
contracts or interested persons (as defined in the Investment Company Act of
1940) of any such party cast in person at a meeting called for the purpose of
voting on such approval.
ARTICLE VIII
INDEMNIFICATION AND INSURANCE
Section 1. INDEMNIFICATION OF DIRECTORS AND OFFICERS. Any person who
-----------------------------------------
was or is a party or is threatened to be made a party in any threatened, pending
or completed action, suit or proceeding, whether civil, criminal, administrative
or investigative, by reason of the fact that such
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person is a current or former director or officer of the Corporation, or is or
was serving while a director or officer of the Corporation at the request of the
Corporation as a director, officer, partner, trustee, employee, agent or
fiduciary of another corporation, partnership, joint venture, trust, enterprise
or employee benefit plan, shall be indemnified by the Corporation against
judgments, penalties, fines, excise taxes, settlements and reasonable expenses
(including attorneys' fees) actually incurred by such person in connection with
such action, suit or proceeding to the full extent permissible under the
Maryland General Corporation Law, the Securities Act of 1933, as amended (the
'Securities Act"), and the Investment Company Act of 1940, as such statutes are
now or hereafter in force, except that such indemnity shall not protect any such
person against any liability to the Corporation or any stockholder thereof to
which such person would otherwise be subject by reason of willful misfeasance,
bad faith, gross negligence or reckless disregard of the duties involved in the
conduct of his office ("disabling conduct").
Section 2. ADVANCES. Any current or former director or officer of the
--------
Corporation claiming indemnification within the scope of this Article VIII shall
be entitled to advances from the Corporation for payment of the reasonable
expenses incurred by him in connection with proceedings to which he is a party
in the manner and to the full extent permissible under the Maryland General
Corporation Law, the Securities Act and the Investment Company Act of 1940, as
such statutes are now or hereafter in force; provided, however, that the person
seeking indemnification shall provide to the Corporation a written affirmation
of his good faith belief that the standard of conduct necessary for
indemnification by the Corporation has been met and a written undertaking to
repay any such advance unless it is ultimately determined that he is entitled to
indemnification, and provided further that at least one of the following
additional conditions is met: (a) the person seeking indemnification shall
provide a security in form and amount acceptable to the Corporation for his
undertaking; (b) the Corporation is insured against losses arising by reason of
the advance; or (c) a majority of a quorum of directors of the Corporation who
are neither "interested persons" as defined in Section 2(a)(19) of the
Investment Company Act of 1940, nor parties to the proceeding ("disinterested
non-party directors"), or independent legal counsel, in a written opinion, shall
determine, based on a review of facts readily available to the Corporation at
the time the advance is proposed to be made, that there is reason to believe
that the person seeking indemnification will ultimately be found to be entitled
to indemnification.
Section 3. PROCEDURE. At the request of any current or former director
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or officer, or any employee or agent whom the Corporation proposes to indemnify,
the Board of Directors shall determine, or cause to be determined, in a manner
consistent with the Maryland General Corporation Law, the Securities Act and the
Investment Company Act of 1940, as such statutes are now or hereafter in force,
whether the standards required by this Article VIII have been met; provided,
however, that indemnification shall be made only following: (a) a final decision
on the merits by a court or other body before whom the proceeding was brought
that the person to be indemnified was not liable by reason of disabling conduct;
or (b) in the absence of such a decision, a reasonable determination, based upon
a review of the facts, that the person to be indemnified was not liable by
reason of disabling conduct by, (I) the vote of a majority of a quorum of
disinterested non-party directors, or (ii) an independent legal counsel in a
written opinion.
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<PAGE>
Section 4. INDEMNIFICATION OF EMPLOYEES AND AGENTS. Employees and
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agents who are not officers or directors of the Corporation may be indemnified,
and reasonable expenses may be advanced to such employees or agents, in
accordance with the procedures set forth in this Article VIII to the extent
permissible under the Investment Company Act of 1940, the Securities Act and
Maryland General Corporation Law, as such statutes are now or hereafter in
force, to the extent, consistent with the foregoing, as may be provided by
action of the Board of Directors or by contract.
Section 5. OTHER RIGHTS. The indemnification provided by this Article
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VIII shall not be deemed exclusive of any other rights, in respect of
indemnification or otherwise, to which those seeking such indemnification may be
entitled under any insurance or other agreement, vote of stockholders or
disinterested directors or otherwise, both as to action by a director or officer
of the Corporation in his official capacity and as to action by such person in
another capacity while holding such office or position, and shall continue as to
a person who has ceased to be a director or officer and shall inure to the
benefit of the heirs, executors and administrators of such a person.
Section 6. INSURANCE. The Corporation shall have the power to purchase
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and maintain insurance on behalf of any person who is or was a director,
officer, employee or agent of the Corporation, or who, while a director,
officer, employee or agent of the Corporation, is or was serving at the request
of the Corporation as a director, officer, partner, trustee, employee, agent or
fiduciary of another corporation, partnership, joint venture, trust, enterprise
or employee benefit plan, against any liability asserted against and incurred by
him in any such capacity, or arising out of his status as such, provided that no
insurance may be obtained by the Corporation for liabilities against which it
would not have the power to indemnify him under this Article VIII or applicable
law.
ARTICLE IX
AMENDMENTS
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The Board of Directors shall have the power, by a majority vote of the
entire Board of Directors at any meeting thereof, to make, alter and repeal
By-Laws of the Corporation.
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