Registration No. 333-65599
ICA No.811-09053
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON DECEMBER __, 1998
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES
ACT OF 1933
Pre-Effective Amendment No. 1 [X]
Post-Effective Amendment No. [ ]
and/or
REGISTRATION STATEMENT UNDER THE INVESTMENT
COMPANY ACT OF 1940
Pre-Effective Amendment No. 1 [X]
Post-Effective Amendment No. ________ [ ]
(Check Appropriate Box or Boxes)
THE MP 63 FUND, INC.
- --------------------------------------------------------------------------------
(Exact Name of Registrant as Specified in Charter)
The Hauppauge Corporate Center
150 Motor Parkway
HAUPPAUGE, NEW YORK 11788
- --------------------------------------------------------------------------------
(Address of Principal Executive Offices)(Zip Code)
(516) 951-0500
- --------------------------------------------------------------------------------
(Registrant's Telephone Number, Including Area Code)
Michael Miola
American Data Services, Inc.
The Hauppauge Corporate Center
150 Motor Parkway
HAUPPAUGE, NEW YORK 11788
- --------------------------------------------------------------------------------
(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
- --------------------------------------------------------------------------------
(Approximate Date of Proposed Public Offering)
Shares of Common Stock
- --------------------------------------------------------------------------------
(Title of Securities Being Registered)
<PAGE>
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 DECLARES THAT AN INDEFINITE AMOUNT OF ITS SHARES OF
COMMON STOCK IS BEING REGISTERED BY THE REGISTRATION STATEMENT PURSUANT TO
SECTION 24(F) UNDER THE INVESTMENT COMPANY ACT OF 1940, AS AMENDED, AND RULE
24F-2 THEREUNDER.
<PAGE>
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
- -------- ---------------------
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
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
<PAGE>
THE MP 63 FUND, INC.
The MP 63 Fund, Inc.(the "Fund") will accumulate shares in a diverse
group of companies that meet the criteria established by The Moneypaper Advisor,
Inc. (the "Adviser")for long term capital appreciation. 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 whose securities are purchased and held by the Fund. The Adviser
believes this strategy will permit the Fund 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 1-877-MP63FUND (676-3386) 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.
1
<PAGE>
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.
<TABLE>
- --------------------------------------------------------------------------------
<S> <C>
SHAREHOLDER TRANSACTION FEES (PAID
DIRECTLY FROM YOUR INVESTMENT): (1)
- --------------------------------------------------------------------------------
Maximum Sales Load Imposed on Purchases None
(as a 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 (after fee waivers)(3) 0.70%
- --------------------------------------------------------------------------------
Distribution (12b-1) Fees None
- --------------------------------------------------------------------------------
Other Expenses (4)(5) 0.55%
- --------------------------------------------------------------------------------
Total Estimated Fund Operating Expenses (after fee waivers) (3)(5) 1.25%
- --------------------------------------------------------------------------------
</TABLE>
EXAMPLE:
You would pay the following expenses on a
$1,000 investment, assuming a 5% annual return
and redemption at the end of each time period:
1 year $33.00
3 years $60.00
THE PURPOSE OF THE ABOVE TABLE IS TO HELP YOU UNDERSTAND THE VARIOUS COSTS AND
EXPENSES THAT YOU, AS A SHAREHOLDER, WILL BEAR DIRECTLY OR INDIRECTLY IN
CONNECTION WITH AN INVESTMENT IN THE FUND. THE EXAMPLE SET FORTH ABOVE ASSUMES
REINVESTMENT OF ALL DIVIDENDS AND USES A 5% ANNUAL RATE OF RETURN AS REQUIRED BY
SEC REGULATIONS.
NEITHER THE 5% RATE OF RETURN NOR THE EXPENSES SHOWN ABOVE SHOULD BE CONSIDERED
INDICATIONS OF PAST OR FUTURE RETURNS AND EXPENSES. ACTUAL RETURNS AND EXPENSES
MAY BE GREATER OR LESS THAN THOSE SHOWN.
- -----------------------
(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. Additionally,
financial institutions selling Fund shares may charge investors a fee for
their services.
(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.
2
<PAGE>
INVESTMENT OBJECTIVE AND POLICIES
INVESTMENT OBJECTIVE
The Fund seeks to provide investors with long-term capital appreciation
through the accumulation of shares of common stock of companies which meet the
Adviser's criteria for investment at favorable prices over a period of years.
The Adviser identifies companies based in part on the Moneypaper 63 Stock Index,
acquiring shares of common stock of companies which encourage shareholders to
participate in their dividend reinvestment plans. The Fund will continue to hold
such common stocks provided the companies continue to meet the Fund's and the
Adviser's investment criteria outlined below. 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 many 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 add to their Fund positions regularly as a
means of accumulating assets slowly over the long-term. 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. However, 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.
3
<PAGE>
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 will invest at least 65% of its total assets in the common
stocks of the 63 companies that comprise the Moneypaper 63 Stock Index. The
Fund's portfolio companies will also satisfy certain other 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 stock selections in 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. For example,
a portfolio company may cease to be listed on the MP 63 Stock Index but continue
to be held by the Fund if the Adviser believes that the Company meets its
criteria for investment or if it would be disadvantageous to the Fund and its
shareholders to sell such stock at such time. This determination may also affect
the weightings of stocks or the industries in which the Fund invests as compared
to similar weightings in the Index during such time.
4
<PAGE>
The Fund expects to receive cash on an on-going basis and will be making
regular investments in the companies it already holds. Initial investments will
go into the Fund in proportion to the current holdings of the MP 63 Stock Index.
After that, on a regular basis, cash will be invested evenly among the Fund's
portfolio companies. 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,at least 65% of the
Fund's total assets will be allocated among the common stocks of the 63
companies comprising the MP 63 Stock Index as of such time. 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 its strategy to invest equal
dollar amounts in each company, together with a secondary investment strategy it
calls "INVEST%", will better enable the Fund to achieve its investment
objective. INVEST% is a proprietary investment strategy which relies on the
relationship of a stock's market price to its 52-week high or 52-week low. The
Adviser uses INVEST% to determine whether to invest more or less than the
predetermined investment amount in a particular stock. In general, the
predetermined investment amount represents the Fund's net assets divided equally
among all of the current portfolio companies. At the end of each calendar
quarter, the Adviser will invest any remaining uninvested cash balance. Such
cash balance will be invested based on the stock's INVEST%, which indicates a
larger amount when a company is selling near its low, and a smaller amount when
it is selling near its high, if deemed appropriate by the Adviser after
reviewing each portfolio holding on an individual basis.
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.
5
<PAGE>
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 MP 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 high-quality, investor-friendly
firms that offer DRPs. By and large, the companies included require ownership of
just one share to enroll in their dividend reinvestment plan. In addition, these
companies do not charge any fees or, in some cases, charge minimal fees for
participating in such plans. Although the Fund may not exactly mirror the
holdings of the MP 63 Stock Index, its investing philosophy, as described above,
is inspired by it.
6
<PAGE>
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.
7
<PAGE>
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 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 six 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.; Angela
Shashoua, commercial real estate developer in Boston, Massachusetts since 1975;
Vita Nelson, Chief Executive Officer of The Moneypaper, Inc.; and Michael Miola,
Chief Executive officer of American Data Services, Inc.
8
<PAGE>
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).
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 McAn 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.
9
<PAGE>
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 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.
10
<PAGE>
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 Los Angeles.
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 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.
11
<PAGE>
TERMINATION
Both the Investment Advisory Agreement and the Administrative Service
Agreement are terminable by the Board of Directors of the Fund, the Adviser, or
the Administrator, on sixty (60) 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, gross negligence on the part of the
Adviser or negligence on the part of 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
ADS ("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."
12
<PAGE>
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 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 or quarterly 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 and the Adviser suggests that
investments be made quarterly, not monthly. Additional information is available
from the Distributor.
13
<PAGE>
PURCHASES BY TELEPHONE
To open an account by telephone, you must first call 1-877-MP63FUND
(676-3386) 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 Star Bank, N.A.
from your 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:
Star Bank, N.A. Cinti/Trust
ABA# 0420-0001-3
Account# 488-922-956
F/B/O MP 63 Fund
Shareholder Acct. No.________________________________
(write in Account Number)
Shareholder Acct. Name______________________________
(write in Shareholder Name)
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:
14
<PAGE>
MP 63 Fund
c/o American Data Services, Inc.
P.O. Box 5536
Hauppauge, NY 11788-0132
Payment received by mail for the purchase of shares 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 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 that exclude the Transfer Agent, the Distributor, and certain of the
Distributor's affiliates 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
(4:00 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.
15
<PAGE>
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.
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 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 or when the redemption amount is to be sent to a shareholder directly. 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 when (1) the proceeds
16
<PAGE>
are to be sent to someone other than to the registered shareholder(s) at the
registered address, and/or (2) shares are requested to be transferred to another
individual or entity other than the shareholder. 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 (1-877-MP63FUND
(676-3386) 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 by all
registered owners of the shares in the exact names in which
they are registered;
(b) any required signature guarantees (see "Signature Guarantees" above);
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
1-877-MP63FUND (676-3386) and requesting that the redemption proceeds be mailed
to the primary
17
<PAGE>
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 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 cleared the banking system
(normally up to 15 days from the purchase date).
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 --
18
<PAGE>
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 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.
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.
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.
19
<PAGE>
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.
The Adviser believes that the use of this program by shareholders should be for
budgetary purposes and not for the purpose of investing through an investor's
individual dollar-cost averaging strategy. Contact the Distributor by calling
1-877-MP63FUND (676-3386), 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 redemption 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:
[ ] 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
20
<PAGE>
[ ] 401(k) plans;
[ ] Profit-sharing plans and pension plans for corporations and
employees.
You can also transfer your tax-deferred plan 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.
CONFIRMATION OF TRANSACTIONS AND REPORTING OF OTHER INFORMATION
The Administrator, on behalf of the Fund, will send 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.
Although the Fund's Adviser believes that accumulating shares through the
reinvestment of all dividends and capital gains distributions contributes to the
success of this investment strategy and suggests that shareholders reinvest all
distributions in additional Fund shares, by law the Fund must allow you to
choose from among the following three options:
21
<PAGE>
-- Reinvest all distributions in additional shares;
-- Receive distributions from net investment income in cash while
reinvesting capital gains distributions, if any, in additional
shares; or
-- 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.
22
<PAGE>
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.
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
this Fund, you should consult your tax adviser regarding the consequences of
your local and state tax laws.
23
<PAGE>
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
comparing the Fund's investment results with those of other mutual funds and
other investment vehicles. 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 October 13, 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 Articles of Incorporation to create additional mutual funds
by issuing additional shares of the Fund's common stock without shareholder
approval. 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.
24
<PAGE>
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, which 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.
If pursuant to the Fund's Bylaws, the holders of shares representing at
least 10% of the Fund's total outstanding shares request that the Fund hold a
special meeting of shareholders it will do so. Unless 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. 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 intends to hold informal meetings of shareholders no less
frequently than annually to discuss the Fund's and the Adviser's current
investment philosophy and to address any concerns that shareholders may have.
Shareholders will receive advance notice of the date, time and location of such
meetings. However, no official business may be conducted at such meetings.
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.
25
<PAGE>
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. McGladrey & Pullen LLP, 555 Fifth Avenue, New York, NY 10017
have been selected as independent accountants for the Fund.
26
<PAGE>
THE MP 63 FUND, INC. PROSPECTUS
INVESTMENT ADVISER
MONEYPAPER ADVISERS, INC.
ADMINISTRATOR, TRANSFER AGENT AND
SHAREHOLDER SERVICING AGENT
AMERICAN DATA SERVICES, INC.
DISTRIBUTOR
ADS DISTRIBUTORS, INC.
CUSTODIAN
STAR BANK, N.A.
INDEPENDENT ACCOUNTANTS
MCGLADREY & PULLEN LLP
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............................................ 8
How to Purchase Shares................................12
How to Redeem Shares..................................14
Shareholder Services..................................18
Dividends and Distributions...........................19
Valuation of Shares...................................20
Tax Status............................................21
Performance Comparisons...............................21
General Information...................................22 _________ , 1998
Custodian, Transfer Agent and
Dividend Agent.......................................23
Counsel and Independent Auditors......................23
<PAGE>
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.........................................7
Portfolio Transactions and Allocation of Brokerage............................10
Taxation......................................................................12
Ownership of Shares...........................................................14
Dividends and Distributions...................................................14
Net Asset Value ..............................................................14
Performance Comparisons.......................................................15
Counsel and Independent Accountants...........................................18
Other Information.............................................................18
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 c/o American Data Services, Inc. at The
Hauppauge Corporate Center, 150 Motor Parkway, Hauppauge, New York 11788 or
telephone 1-877-MP63FUND (676-3386).
<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. Although not currently the intention of the Fund to do
----------------
so, the Fund reserves the right to 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
2
<PAGE>
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 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
3
<PAGE>
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.
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.
4
<PAGE>
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.
POSITIONS HELD WITH PRINCIPAL OCCUPATION LAST
NAME AND ADDRESS WITH THE FUND FIVE YEARS
Ted S. Gladstone - Age 56 Director President, Gladstone
183 Round Hill Road Development Corporation.
Greenwich, Connecticut 06831
Gloria L. Schaffer - Age 68 Director Retired since 1996; Prior
51 Tumblebrook Road thereto from 1991-1995,
Woodbridge, Connecticut 06525 Commissioner of Consumer
Protection for the of
State Connecticut
Angela Shashoua - Age 62 Director Developer of commercial
176 Tappan Street real estate in Boston,
Brookline, Massachusetts 02445 Massachusetts since 1975.
Harold G. Weinreb - Age 62 Director Consultant since 1987;
112 Brite Avenue Prior thereto from 1966 to
Scarsdale, New York 10583 1987, employed by W.R.
Grace & Co., most recently
as Director, Corporate
Engineering from 1977-
1987.
*Vita Nelson - Age 60 Chairman of the
l0l0 Mamaroneck Avenue Board of Chief Executive Officer of
Mamaroneck, New York 10543 Directors, Chief the Moneypaper, Inc.
Executive
Officer and
Director
*Michael Miola - Age 46 Director Chief Executive Officer of
The Hauppauge Corporate Center American Data Services,
150 Motor Parkway Inc.
Hauppauge, New York 11788
5
<PAGE>
The executive officers of the Fund are Vita Nelson, President, Rod
Drysdale, Treasurer, Michael Miola, Assistant Treasurer and Lester Nelson,
Secretary. 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. Mr. Nelson is a partner in the law firm of
Nelson & Nelson, 60 East 42nd Street, New York, NY and is the spouse of Vita
Nelson.
The members of the Audit Committee of the Board of Directors are Ted S.
Gladstone, Gloria Schaffer, Angela Shashoua and Harold Weinreb. Ms. Schaffer
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.
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
$1,000 per year for serving as a director of the Fund and $250 for each meeting
attended. 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 November
30, 1999.
6
<PAGE>
AGGREGATE ESTIMATED COMPENSATION
DIRECTOR FROM THE FUND
-------- -------------
Ted S. Gladstone $2,000
Gloria Schaffer $2,000
Angela Shashoua $2,000
Harold Weinreb $2,000
Vita Nelson $0
Michael Miola $0
7
<PAGE>
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.
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 sixty (60) days' written
notice to the Adviser, and by the Adviser on sixty (60) 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.
8
<PAGE>
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 to ensure that they meet the criteria described in the prospectus.
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.
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 by the Board of
Directors of the Fund or the Administrator on sixty (60) 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
9
<PAGE>
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.
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.
10
<PAGE>
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, ADS 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
Fees paid to the Adviser and the Administrator are deducted from income
of the Fund before dividends are paid. In addition, the Fund pays expenses
including, but 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.
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.
11
<PAGE>
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
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. To the
extent that the Adviser receives any payments from such broker-dealers, all such
payments will be used to offset future commission payments of the Fund.
12
<PAGE>
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 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.
13
<PAGE>
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 capital gains
are not expected to be a significant or predictable part of the Fund's
investment return.
14
<PAGE>
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. On December , 1998,
the Moneypaper, Inc. invested $100,000 in shares of the Fund at $10.00 per
share, as seed capital. The Moneypaper, Inc. will control the Fund until public
shareholders come into the Fund.
15
<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. 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
16
<PAGE>
annual compounded rates of return over 1-, 5- and 10-year 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
17
<PAGE>
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.
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
18
<PAGE>
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 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.
19
<PAGE>
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 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.
20
<PAGE>
MP 63 Fund, Inc.
STATEMENT OF ASSETS AND LIABILITIES
DECEMBER 28, 1998
- --------------------------------------------------------------------------------
<TABLE>
ASSETS
<S> <C>
Cash $100,000
LIABILITIES --
--------
NET ASSETS $100,000
========
Net assets applicable to 10,000 shares of common stock
par value $.001 each; 1,000,000,000 shares authorized $100,000
========
Net asset value, and offering price per share $ 10.00
========
</TABLE>
Redemption price per share (Note 4)
See Notes to Financial Statements.
<PAGE>
MP 63 Fund, Inc.
NOTES TO FINANCIAL STATEMENT
- --------------------------------------------------------------------------------
NOTE 1. MP 63 Fund, Inc. ("the Fund") was incorporated under the
laws of the State of Maryland on October 13, 1998. The Fund is
registered with the Securities and Exchange Commission as an
open-end diversified management investment company and has had
no operations to date other than these relating to
organizational matters and the sale and issuance of 10,000
shares of its common stock to The Moneypaper, Inc.
NOTE 2. The Investment Advisory agreement, the Administrative
Service agreement and the distribution agreement are described
elsewhere in the Prospectus and Statement of Additional
Information.
NOTE 3. Organizational expenses are being paid by the Funds Investment Adviser.
NOTE 4. There is a redemption fee payable to the Fund equal to 2.00% for shares
that are held for less than three years and 1.00% for shares that are
held for more than three but less than five years.
<PAGE>
<PAGE>
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 McGladrey & Pullen, LLP, 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 13,
1998.
** Filed herewith.
C-i
<PAGE>
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.
C-ii
<PAGE>
(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 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:
C-iii
<PAGE>
(1) (2) (3)
NAME AND PRINCIPAL POSITIONS AND OFFICES POSITIONS AND OFFICES
BUSINESS ADDRESS* WITH UNDERWRITER WITH REGISTRANT
Michael Miola Treasurer, Director Assistant Treasurer
The Hauppauge 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 Motor Parkway, Hauppauge,
New York 11788. The Custodian's records are located at its offices at Star Bank,
N.A. 425 Walnut Street, Cincinnati, Ohio 45202. 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 Amendment to
the Registration Statement to be signed on its behalf by the undersigned,
thereunto duly authorized, in the City and State of New York, on the 13th day of
December, 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 December 13, 1998
Vita Nelson Directors, Chairman of the
Board and Chief Executive
Officer
- ---------------------
/S/MICHAEL MIOLA December 13, 1998
Michael Miola Director and Chief Financial
Officer
- ---------------------
/S/TED S. GLADSTONE December 13, 1998
Ted S. Gladstone Director
- ---------------------
/S/GLORIA L. SCHAFFER December 13, 1998
Gloria L. Schaffer Director
- ---------------------
/S/HAROLD G. WEINREB December 13, 1998
Harold G. Weinreb Director
The above persons signing as Director are all of the members of the
Registrant's Board of Directors.
MP 63 FUND, INC.
INVESTMENT ADVISORY AGREEMENT
THIS INVESTMENT ADVISORY AGREEMENT is made as of the _____ day
of _________, 1998, by and between MP 63 FUND, INC., a Maryland corporation
(hereinafter called the "Fund") and The Moneypaper Advisor, Inc., a New York
corporation (hereinafter called the "Adviser").
WITNESSETH:
WHEREAS, the Fund is an open-end management investment
company, registered as such under the Investment Company Act of 1940 (the
"Investment Company Act");
WHEREAS, the Adviser is registered as an investment adviser
under the Investment Advisers Act of 1940 and is engaged in the business of
providing investment advice to investment companies; and
WHEREAS, the Fund desires to retain the Adviser to render
advice and services to it pursuant to the terms and provisions of this
Agreement, and the Adviser desires to furnish said advice and services;
NOW, THEREFORE, in consideration of the covenants and the
mutual promises hereinafter set forth, the parties to this Agreement, intending
to be legally bound hereby, mutually agree as follows:
1. APPOINTMENT OF ADVISER. The Fund hereby employs the Adviser and the Adviser
----------------------
hereby accepts such employment, to render investment advice and related services
with respect to the assets of the Fund for the period and on the terms set forth
in this Agreement, subject to the supervision and direction of the Board of
Directors.
<PAGE>
2. DUTIES OF ADVISER.
(1) GENERAL DUTIES. The Adviser shall act as investment adviser to the
--------------
Fund and shall supervise investments of the Fund on behalf of the Fund in
accordance with the investment objective, policies and restrictions of the Fund
as set forth in the Fund's governing documents, including, without limitation,
the Fund's Articles of Incorporation and By-Laws; the prospectus and statement
of additional information; and such other limitations, policies and procedures
as the Directors may impose from time to time in writing to the Adviser. In
providing such services, the Adviser shall at all times adhere to the provisions
and restrictions contained in the federal securities laws, applicable state
securities laws, the Internal Revenue Code, the Uniform Commercial Code and
other applicable law.
Without limiting the generality of the foregoing, the Adviser shall: (i)
furnish the Fund with advice and recommendations with respect to the investment
of the Fund's assets and the purchase and sale of portfolio securities for the
Fund, including the taking of such steps as may be necessary to implement such
advice and recommendations (I.E., placing the orders); (ii) manage and oversee
the investments of the Fund, subject to the ultimate supervision and direction
of the Board of Directors; (iii) vote proxies for the Fund, file ownership
reports under Section 13 of the Securities Exchange Act of 1934 for the Fund,
and take other actions on behalf of the Fund; (iv) maintain the books and
records required to be maintained by the Fund except to the extent arrangements
have been made for such books and records to be maintained by American Data
Services, Inc. (the "Administrator") or another agent of the Fund; (v) furnish
reports, statements and other data on securities, economic conditions and other
matters related to the investment of the Fund's assets which the Board of
Directors or the officers of the Fund may reasonably request; and (vi) render to
the Board of Directors such periodic and special reports with respect to the
Fund's investment activities as the Board may reasonably request, including at
least one in-person appearance annually before the Board of Directors.
(2) BROKERAGE. The Adviser shall be responsible for decisions to buy and
---------
sell securities for the Fund, for broker-dealer selection, and for negotiation
of brokerage commission rates, provided that the Adviser shall not direct orders
to an affiliated person of the Adviser without general prior authorization to
use such affiliated broker or dealer from the Board of Directors. The Adviser's
-2-
<PAGE>
primary consideration in effecting a securities transaction will be execution at
the most favorable price. In selecting a broker-dealer to execute each
particular transaction, the Adviser may take the following into consideration:
the best net price available; the reliability, integrity and financial condition
of the broker-dealer; the size of and difficulty in executing the order; and the
value of the expected contribution of the broker-dealer to the investment
performance of the Fund on a continuing basis. The price to the Fund in any
transaction may be less favorable than that available from another broker-dealer
if the difference is reasonably justified by other aspects of the portfolio
execution services offered.
Subject to such policies as the Board of Directors may determine, the
Adviser shall not be deemed to have acted unlawfully or to have breached any
duty created by this Agreement or otherwise solely by reason of its having
caused the Fund to pay a broker or dealer that provides (directly or indirectly)
brokerage or research services to the Adviser an amount of commission for
effecting a portfolio transaction in excess of the amount of commission another
broker or dealer would have charged for effecting that transaction, if the
Adviser determines in good faith that such amount of commission was reasonable
in relation to the value of the brokerage and research services provided by such
broker or dealer, viewed in terms of either that particular transaction or the
Adviser's overall responsibilities with respect to the Fund. The Adviser is
further authorized to allocate the orders placed by it on behalf of the Fund to
such brokers or dealers who also provide research or statistical material, or
other services, to the Fund, the Adviser, or any affiliate of either. Such
allocation shall be in such amounts and proportions as the Adviser shall
determine, and the Adviser shall report on such allocations regularly to the
Fund, indicating the broker-dealers to whom such allocations have been made and
the basis therefor. The Adviser is also authorized to consider sales of shares
as a factor in the selection of brokers or dealers to execute portfolio
transactions, subject to the requirements of best execution, I.E., that such
brokers or dealers are able to execute the order promptly and at the best
obtainable securities price.
-3-
<PAGE>
On occasions when the Adviser deems the purchase or sale of a security
to be in the best interest of the Fund as well as of other clients (to the
extent that the Adviser may, in the future, have other clients), the Adviser, to
the extent permitted by applicable laws and regulations, may aggregate the
securities to be so purchased or sold in order to obtain the most favorable
price or lower brokerage commissions and the most efficient execution. In such
event, allocation of the securities so purchased or sold, as well as the
expenses incurred in the transaction, will be made by the Adviser in the manner
it considers to be the most equitable and consistent with its fiduciary
obligations to the Fund and to such other clients.
3. REPRESENTATIONS OF THE ADVISER.
------------------------------
(1) The Adviser shall use its best judgment and efforts in rendering the
advice and services to the Fund as contemplated by this Agreement.
(2) The Adviser shall maintain all licenses and registrations necessary
to perform its duties hereunder in good order.
(3) The Adviser shall conduct its operations at all times in conformance
with the Investment Advisers Act of 1940, the Investment Company Act of 1940,
and any other applicable state and/or self-regulatory organization regulations.
4. INDEPENDENT CONTRACTOR. The Adviser shall, for all purposes herein, be deemed
----------------------
to be an independent contractor, and shall, unless otherwise expressly provided
and authorized to do so, have no authority to act for or represent the Fund in
any way, or in any way be deemed an agent for the Fund. It is expressly
understood and agreed that the services to be rendered by the Adviser to the
Fund under the provisions of this Agreement are not to be deemed exclusive, and
the Adviser shall be free to render similar or different services to others so
long as its ability to render the services provided for in this Agreement shall
not be impaired thereby.
5. ADVISER'S PERSONNEL. The Adviser shall, at its own expense, maintain such
-------------------
staff and employ or retain such personnel and consult with such other persons as
it shall from time to time determine to be necessary to the performance of its
obligations under this Agreement. Without limiting the generality of the
foregoing, the staff and personnel of the Adviser shall be deemed to include
-4-
<PAGE>
persons employed or retained by the Adviser to furnish statistical information,
research, and other factual information, advice regarding economic factors and
trends, information with respect to technical and scientific developments, and
such other information, advice and assistance as the Adviser or the Board of
Directors may desire and reasonably request.
6. EXPENSES.
--------
(1) With respect to the operation of the Fund, the Adviser shall be
responsible for (i) providing the personnel, office space and equipment
reasonably necessary for the investment management of the Fund, and (ii) the
costs of any special Board of Directors meetings or shareholder meetings
convened for the primary benefit of the Adviser. If the Adviser has agreed to
limit the operating expenses of the Fund, the Adviser shall also be responsible
on a monthly basis for any operating expenses that exceed the agreed upon
expense limitation.
(2) The Fund is responsible for and has assumed the obligation for
payment of all of its expenses, other than as stated in Subparagraph 6(a) above,
including but not limited to: investment advisory and administrative fees
payable to the Adviser or the Administrator under the appropriate agreements
entered into with the Adviser or the Administrator, as the case may be; fees and
expenses incurred in connection with the issuance, registration and transfer of
its shares; brokerage and commission expenses; all expenses of transfer,
receipt, safekeeping, servicing and accounting for the cash, securities and
other property of the Fund including all fees and expenses of its custodian,
shareholder services agent and accounting services agent, to the extent not
already covered under the Fund's Administrative Services Agreement with the
Administrator; interest charges on any borrowings; costs and expenses of pricing
and calculating its daily net asset value and of maintaining its books of
account required under the Investment Company Act, to the extent not already
covered under the Administrative Services Agreement; taxes, if any; a pro rata
-5-
<PAGE>
portion of expenditures in connection with meetings of the Fund's shareholders
and Board of Directors that are properly payable by the Fund; salaries and
expenses of officers and fees and expenses of members of the Board of Directors
or members of any advisory board or committee who are not members of, affiliated
with or interested persons of the Adviser or the Administrator; insurance
premiums on property or personnel of the Fund which inure to its benefit,
including liability and fidelity bond insurance; the cost of preparing and
printing reports, proxy statements, prospectuses and statements of additional
information of the Fund or other communications for distribution to existing
shareholders, to the extent not already covered under the Administrative
Services Agreement; legal, auditing and accounting fees; trade association dues;
fees and expenses (including legal fees) of registering and maintaining
registration of its shares for sale under federal and applicable state and
foreign securities laws; all expenses of maintaining and servicing shareholder
accounts, including all charges for transfer, shareholder recordkeeping,
dividend disbursing, redemption, and other agents for the benefit of the Fund,
to the extent not already covered under the Administrative Services Agreement;
and all other charges and costs of its operation plus any extraordinary and
non-recurring expenses, except as herein otherwise prescribed or, to the extent
covered under the Administrative Services Agreement.
(3) The Adviser may voluntarily absorb certain Fund expenses or waive the
Adviser's own advisory fee. (1)
(4) To the extent the Adviser incurs any costs by assuming expenses which
are an obligation of the Fund as set forth herein, the Fund shall promptly
reimburse the Adviser for such costs and expenses, except to the extent the
Adviser has otherwise agreed to bear such expenses. To the extent the services
for which the Fund is obligated to pay are performed by the Adviser, the Adviser
shall be entitled to recover from the Fund to the extent of the Adviser's actual
costs for providing such services. In determining the Adviser's actual costs,
the Adviser may take into account an allocated portion of the salaries and
overhead of personnel performing such services.
7. INVESTMENT ADVISORY FEE.
------------------------
(1) The Fund shall pay to the Adviser, and the Adviser agrees to accept, as full
compensation for all investment and advisory services furnished or provided to
the Fund pursuant to this Agreement, an annual investment advisory fee at the
rate set forth in Schedule A to this Agreement.
-6-
<PAGE>
(2) The investment advisory fee shall be accrued daily by the Fund and
paid to the Adviser on the first business day of the succeeding month.
(3) The initial fee under this Agreement shall be payable on the first
business day of the first month following the effective date of this Agreement
and shall be prorated as set forth below. If this Agreement is terminated prior
to the end of any month, the fee to the Adviser shall be prorated for the
portion of any month in which this Agreement is in effect which is not a
complete month according to the proportion which the number of calendar days in
the month during which the Agreement is in effect bears to the number of
calendar days in the month, and shall be payable within ten (10) days after the
date of termination.
(4) The fee payable to the Adviser under this Agreement will be reduced
to the extent of any receivable owed by the Adviser to the Fund and as required
under any expense limitation applicable to the Fund.
(5) The Adviser voluntarily may reduce any portion of the compensation or
reimbursement of expenses due to it pursuant to this Agreement and may agree to
make payments to limit the expenses which are the responsibility of the Fund
under this Agreement. Any such reduction or payment shall be applicable only to
such specific reduction or payment and shall not constitute an agreement to
reduce any future compensation or reimbursement due to the Adviser hereunder or
to continue future payments. Any such reduction will be agreed to prior to
accrual of the related expense or fee and will be estimated daily and reconciled
and paid on a monthly basis.
(6) Any fee withheld or voluntarily reduced and any Fund expense absorbed
by the Adviser voluntarily or pursuant to an agreed upon expense cap shall be
reimbursed by the Fund to the Adviser, if so requested by the Adviser, no later
than the fifth fiscal year succeeding the fiscal year of the withholding,
reduction or absorption if the aggregate amount actually paid by the Fund toward
the operating expenses for such fiscal year (taking into account the
reimbursement) do not exceed the applicable limitation on Fund expenses. Such
reimbursement may be paid prior to the Fund's payment of current expenses if so
requested by the Adviser even if such practice may require the Adviser to waive,
reduce or absorb current Fund expenses.
-7-
<PAGE>
(7) The Adviser may agree not to require payment of any portion of the
compensation or reimbursement of expenses otherwise due to it pursuant to this
Agreement. Any such agreement shall be applicable only with respect to the
specific items covered thereby and shall not constitute an agreement not to
require payment of any future compensation or reimbursement due to the Adviser
hereunder.
8. NO SHORTING; NO BORROWING. The Adviser agrees that neither it nor any of its
-------------------------
officers or employees shall take any short position in the shares of the Fund.
This prohibition shall not prevent the purchase of such shares by any of the
officers or employees of the Adviser or any trust, pension, profit-sharing or
other benefit plan for such persons or affiliates thereof, at a price not less
than the net asset value thereof at the time of purchase, as allowed pursuant to
rules promulgated under the Investment Company Act. The Adviser agrees that
neither it nor any of its officers or employees shall borrow from the Fund or
pledge or use the Fund's assets in connection with any borrowing not directly
for the Fund's benefit. For this purpose, failure to pay any amount due and
payable to the Fund for a period of more than thirty (30) days shall constitute
a borrowing.
9. CONFLICTS WITH THE FUND'S GOVERNING DOCUMENTS AND APPLICABLE LAWS. Nothing
-----------------------------------------------------------------
herein contained shall be deemed to require the Fund to take any action contrary
to its Articles of Incorporation, By-Laws, or any applicable statute or
regulation, or to relieve or deprive the Board of Directors of its
responsibility for and control of the conduct of the affairs of the Fund. In
this connection, the Adviser acknowledges that the Directors retain ultimate
plenary authority over the Fund and may take any and all actions necessary and
reasonable to protect the interests of shareholders.
10. REPORTS AND ACCESS. The Adviser agrees to supply such information to the
------------------
Administrator and to permit such compliance inspections by the Administrator as
shall be reasonably necessary to permit the Administrator to satisfy its
obligations and respond to the reasonable requests of the Directors.
-8-
<PAGE>
11. ADVISER'S LIABILITIES AND INDEMNIFICATION.
(1) The Adviser shall have responsibility for the accuracy and
completeness (and liability for the lack thereof) of the statements in the
Fund's offering materials (including the prospectus, the statement of additional
information, advertising and sales materials), except for information supplied
by the Administrator or the Fund or another third party for inclusion therein.
(2) The Adviser shall be liable to the Fund for any loss (including
brokerage charges) incurred by the Fund as a result of any improper investment
made by the Adviser.
(3) In the absence of willful misfeasance, bad faith, gross negligence,
or reckless disregard of the obligations or duties hereunder on the part of the
Adviser, the Adviser shall not be subject to liability to the Fund or to any
shareholder of the Fund for any act or omission in the course of, or connected
with, rendering services hereunder or for any losses that may be sustained in
the purchase, holding or sale of any security by the Fund.
(4) Each party to this Agreement shall indemnify and hold harmless the
other party and the shareholders, directors, officers and employees of the other
party (any such person, an "Indemnified Party") against any loss, liability,
claim, damage or expense (including the reasonable cost of investigating and
defending any alleged loss, liability, claim, damage or expenses and reasonable
counsel fees incurred in connection therewith) arising out of the Indemnified
Party's performance or nonperformance of any duties under this Agreement
provided, however, that nothing herein shall be deemed to protect any
Indemnified Party against any liability to which such Indemnified Party would
otherwise be subject by reason of willful misfeasance, bad faith or negligence
in the performance of duties hereunder or by reason of reckless disregard of
obligations and duties under this Agreement.
(5) No provision of this Agreement shall be construed to protect any
Director or officer of the Fund, or officer of the Adviser, from liability in
violation of Sections 17(h) and (i) of the Investment Company Act.
-9-
<PAGE>
12. NON-EXCLUSIVITY; TRADING FOR ADVISER'S OWN ACCOUNT. The Fund's
--------------------------------------------------
employment of the Adviser is not an exclusive arrangement. The Fund may from
time to time employ other individuals or entities to furnish it with the
services provided for herein. Likewise, the Adviser may act as investment
adviser for any other person, and shall not in any way be limited or restricted
from having, selling or trading any securities for its or their own accounts or
the accounts of others for whom it or they may be acting, provided, however,
that the Adviser expressly represents that it will undertake no activities which
will adversely affect the performance of its obligations to the Fund under this
Agreement; and provided further that the Adviser will adhere to a code of ethics
governing employee trading and trading for proprietary accounts that conforms to
the requirements of the Investment Company Act and the Investment Advisers Act
of 1940 and has been approved by the Fund's Board of Directors.
13. TERM. This Agreement shall become effective at the time the Fund
----
commences operations pursuant to an effective amendment to the Fund's
Registration Statement under the Securities Act of 1933 and shall remain in
effect for a period of two (2) years, unless sooner terminated as hereinafter
provided. This Agreement shall continue in effect thereafter for additional
periods not exceeding one (1) year so long as such continuation is approved for
the Fund at least annually by (i) the Board of Directors or by the vote of a
majority of the outstanding voting securities of the Fund and (ii) the vote of a
majority of the Directors of the Fund who are not parties to this Agreement nor
interested persons thereof, cast in person at a meeting called for the purpose
of voting on such approval. The terms "majority of the outstanding voting
securities" and "interested persons" shall have the meanings as set forth in the
Investment Company Act.
14. TERMINATION; NO ASSIGNMENT.
(1) This Agreement may be terminated by the Fund at any time without
payment of any penalty, by the Board of Directors or by vote of a majority of
the outstanding voting securities of the Fund, upon sixty (60) days' written
notice to the Adviser, and by the Adviser upon sixty (60) days' written notice
to the Fund. In the event of a termination, the Adviser shall cooperate in the
orderly transfer of the Fund's affairs and, at the request of the Board of
Directors, transfer any and all books and records of the Fund maintained by the
Adviser on behalf of the Fund.
-10-
<PAGE>
(2) This Agreement shall terminate automatically in the event of any
transfer or assignment thereof, as defined in the Investment Company Act.
15. SEVERABILITY. If any provision of this Agreement shall be held or
------------
made invalid by a court decision, statute or rule, or shall be otherwise
rendered invalid, the remainder of this Agreement shall not be affected thereby.
16. CAPTIONS. The captions in this Agreement are included for convenience
--------
of reference only and in no way define or limit any of the provisions hereof or
otherwise affect their construction or effect.
17. GOVERNING LAW. This Agreement shall be governed by, and construed in
-------------
accordance with, the laws of the State of New York without giving effect to the
conflict of laws principles thereof; provided that nothing herein shall be
construed to preempt, or to be inconsistent with, any federal law, regulation or
rule, including the Investment Company Act and the Investment Advisers Act of
1940 and any rules and regulations promulgated thereunder.
-11-
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed by their duly authorized officers, all on the day and year first
above written.
MP 63 FUND, INC. THE MONEYPAPER ADVISOR, INC.
By: By:
------------------------------ --------------------------
Name: Name:
Title: Title:
-12-
<PAGE>
Schedule A
ANNUAL FEE RATE
MP 63 Fund, Inc. 0.35% of average daily net assets
-13-
UNDERWRITING AGREEMENT
BETWEEN
THE MP 63 FUND, INC.
AND
ADS DISTRIBUTORS, INC.
[GRAPHIC OMITTED]
<PAGE>
UNDERWRITING AGREEMENT
AGREEMENT made as of this ________ day of ____________, 1998 between The MP 63
Fund, Inc., a Maryland Corporation (the "Fund"), and ADS Distributors, Inc., a
Florida Corporation (the "Underwriter").
1. The Underwriter will receive orders from purchasers for and the Fund will
sell, issue and deliver from time to time to such purchasers, such part of
the authorized shares of capital stock of the Fund remaining un-issued as
from time to time shall be effectively registered under the Securities Act
of 1933, as amended (the "33 Act"), at prices determined as hereinafter
provided and on the terms hereinafter set forth, all subject to applicable
Federal and State laws and regulations and to the charter of the Fund.
2. The Underwriter shall present all orders received by it for shares of
capital stock of the Fund to the Fund by telegraphic or written purchase
orders and each such order shall be subject to the acceptance or rejection
by the Fund in its sole discretion
2.1 Notwithstanding any other provision hereof, whenever in the judgment of
the Fund such action is warranted by market, economic or political
conditions or by abnormal circumstances of any kind, the Fund may suspend
the offer of shares in effect and may, without liability under the provision
of this Agreement, decline to accept or confirm any orders or make any sales
of shares or capital stock under this Agreement until such time as the Fund
shall deem it advisable to resume the offering of such shares, provided that
as soon as practicable after the taking of any such action a special meeting
of the Board of Directors shall be called to be held as soon as practicable
thereafter to determine whether or not such action shall then continue to be
effective, and the period during, or the circumstance under, which such
action shall continue or cease to be effective. During any period during
which the offer of shares shall be suspended or the Fund shall decline to
acceptor confirm any such orders or make any such sales, the Fund shall be
under no obligation to confirm or accept any such orders or make any such
sale at any price.
2.2 The Fund will use its best efforts to keep effectively registered under
the 33 Act for sale as herein contemplated such shares of its capital stock
as the Underwriter shall reasonably request and as the Securities and
Exchange Commission (the "SEC") shall permit to be so registered.
3. Sales by the Underwriter shall be made as agent for the Fund and all such
sales be made to or though qualified dealers or others in such manner, not
inconsistent with the provisions hereof and the then effective registration
statement of the Fund under the 33 Act, (and related prospectus), as the
Underwriter may determine from time to time.
2
<PAGE>
4. All shares of capital stock offered for sale or sold by the Underwriter
shall be so offered or sold at a price per share (the "Offering Price")
equal to the net asset value per share (determined as authorized from time
to time by the Board of Directors of the Fund pursuant to its charter).
4.1 For the purpose of determining the offering price, the net asset value
of any such shares shall be so determined in accordance with the then
current offering prospectus. The Fund, or its authorized agent, will
promptly furnish to the Underwriter a statement of the Offering Price as
often as such net asset value is determined and such statement shall at the
request of the Underwriter show the basis of computation of the Offering
Price.
4.2 Orders presented by the Underwriter for shares, if accepted by the Fund,
shall be accepted and confirmed by it or its duly authorized agent at the
Offering Price in effect at the time of its receipt of such order at its
principal office.
4.3 The Underwriter will not in any event (a) offer for sale or sell shares
of capital stock in excess of the number then effectively registered under
the 33 Act, and available for sale, or (b) offer for sale or sell any shares
in violation of any applicable Federal or State law, rule or regulation.
5. The Fund will execute any and all documents and furnish any and all
information which may be reasonably necessary in connection with the
qualification of its shares of capital stock in such states as the
Underwriter may reasonably request (it being understood that the Fund shall
not be required without its consent to qualify to do business in any
jurisdiction or to comply with any requirement which in its opinion is
unduly burdensome). The Underwriter, at its own expense, will effect all
qualifications as dealer or broker.
6. The Fund will furnish to the Underwriter from time to time such information
with respect to its shares as the Underwriter may reasonably request for
use in connection with the sale of shares. The Underwriter will not use or
distribute or authorize the use, distribution or dissemination by its
dealers or others in connection with such sale of any literature,
advertising or selling aids in any form or through any medium, written or
oral, without prior written specific approval thereof by the Fund.
7. Nothing herein contained shall limit the right of the Fund, in its absolute
discretion, to issue or sell shares of its capital stock for such other
considerations (whether in connection with the acquisition of assets or
shares or securities of another corporation or entity or with the merger or
consolidation of any other corporation into or with the Fund, or otherwise)
as and to the extent permitted by its charter and any applicable laws, or
to issue or sell any such shares directly to the shareholders of the Fund,
upon such terms and conditions and for such consideration, if any, as may
be determined by the Board of Directors, whether pursuant to the
distribution of subscription or purchase rights to such holders or by way
of dividends or otherwise.
3
<PAGE>
8. At the request of the Fund, the Underwriter agrees to act as agent for the
Fund for the repurchase or redemption of shares of the Fund at such prices
as the Fund from time to time shall prescribe.
9. In selling or reacquiring shares, the Underwriter agrees to conform to the
requirements of all state and Federal laws relating to such sale or
reacquisition, as the case may be, and will indemnify and hold the Fund
harmless from any damage or expense on account of any wrongful act by the
Underwriter or any employee, representative or agent of the Underwriter.
The Underwriter will observe and be bound by all the provisions of the
charter of the Fund and any fundamental policies adopted by the Fund
pursuant to the Investment Company Act of 1940, as amended (the "40 Act"),
notice of which has been given to the Underwriter.
10. Neither the Underwriter, any dealer nor any other person is authorized by
the Fund to give any information or to make any representation other than
those contained (a) in the latest effective registration statement (and
related prospectus) filed with the SEC under the 33 Act as such
registration statement (and prospectus) may be amended from time to time,
or (b) in any statement expressly authorized by the Fund for use in
connection with any sale or reacquisition of capital stock for the account
of the Fund.
11. This Agreement shall continue in effect until such time as there remain no
unsold balance of shares of capital stock effectively registered under the
33 Act; provided, however, that (a) this Agreement shall continue in effect
for a period more than two years from the date hereof only so long as such
continuance is specifically approved at least annually by the Board of
Directors or a majority of the outstanding voting securities of the Fund,
and (b) either party hereto may terminate this Agreement on any date by
giving the other party at least six months prior written notice of such
termination specifying the date fixed therefor..
11.1 This Agreement shall automatically terminate in the event of its
assignment by the Underwriter, the term "assignment" having the meaning
defined in Section 2(a)(4) of the 40 Act.
12. Any notice under this Agreement shall be in writing addressed and delivered
by mail, postage prepaid, to the party to whom addressed at the address
given below, or at such other address as such party shall theretofore have
designated (by notice given to the other party as herein provided) in
writing for the receipt of such notice:
TO THE FUND: TO THE UNDERWRITER:
Mrs. Vita Nelson Mr. Michael Miola
Treasurer Treasurer
The MP 63 Fund, Inc. ADS Distributors, Inc.
1010 Mamaroneck Avenue c/o American Data Services, Inc.
Mamaroneck, NY 10543 150 Motor Parkway
Hauppauge, New York 11788
4
<PAGE>
IN WITNESS WHEREOF, The Fund and the Underwriter have each
caused this Agreement to be executed on its behalf by an officer thereunto duly
authorized on the day and year first above written.
The MP 63 Fund, Inc. ADS Distributors, Inc.
By: _________________________ By: ___________________________
Vita Nelson, President Michael Miola, Treasurer
5
CUSTODY AGREEMENT
This agreement (the "Agreement") is entered into as of the_____day of
_________, 1998, by and between MP 63 Fund, Inc., (the "Fund"), a corporation
organized under the laws of the State of Maryland and having its office 150
Motor Parkway, Suite 109, Hauppauge, New York 11788, and Star Bank, N.A. (the
"Custodian"), a national banking association having its principal office and
place of business at Star Bank Center, 425 Walnut Street, Cincinnati, Ohio
45202.
WHEREAS, THE FUND HEREBY APPOINTS THE CUSTODIAN AS CUSTODIAN
OF ALL THE FUND'S SECURITIES AND MONEYS AT ANY TIME OWNED BY THE FUND DURING THE
TERM OF THIS AGREEMENT (THE "FUND ASSETS").
WHEREAS, THE CUSTODIAN HEREBY ACCEPTS SUCH APPOINTMENT AS CUSTODIAN AND
AGREES TO PERFORM THE DUTIES THEREOF AS HEREINAFTER SET FORTH.
THEREFORE, IN CONSIDERATION OF THE MUTUAL PROMISES HEREINAFTER SET
FORTH, THE FUND AND THE CUSTODIAN AGREE AS FOLLOWS:
ARTICLE I
DEFINITIONS
-----------
The following words and phrases, when used in this Agreement, unless
the context otherwise requires, shall have the following meanings:
AUTHORIZED PERSON - the Chairman, President, Secretary, Treasurer,
-----------------
Controller, or Senior Vice President of the Fund, or any other person, whether
or not any such person is an officer or employee of the Fund, duly authorized by
the Board Of Directors of the Fund to give Oral Instructions and Written
Instructions on behalf of the Fund, and listed in the Certificate annexed hereto
as Appendix A, or such other Certificate as may be received by the Custodian
from time to time.
BOOK-ENTRY SYSTEM - the Federal Reserve Bank book-entry system for
-----------------
United States Treasury securities and federal agency securities.
DEPOSITORY - The Depository Trust Company ("DTC"), a limited purpose
----------
trust company its successor(s) and its nominee(s) or any other person or
clearing agent
DIVIDEND AND TRANSFER AGENT - the dividend and transfer agent
---------------------------
appointed, from time to time, pursuant to a written agreement between the
dividend and transfer agent and the Fund
1
<PAGE>
FOREIGN SECURITIES - a) securities issued and sold primarily outside of
------------------
the United States by a foreign government, a national of any foreign country, or
a trust or other organization incorporated or organized under the laws of any
foreign country OR; b) securities issued or guaranteed by the government of the
United States, by any state, by any political subdivision or agency thereof, or
by any entity organized under the laws of the United States or of any state
thereof, which have been issued and sold primarily outside of the United States.
MONEY MARKET SECURITY - debt obligations issued or guaranteed as to
---------------------
principal and/or interest by the government of the United States or agencies or
instrumentalities thereof, commercial paper, obligations (including certificates
of deposit, bankers' acceptances, repurchase agreements and reverse repurchase
agreements with respect to the same), and time deposits of domestic banks and
thrift institutions whose deposits are insured by the Federal Deposit Insurance
Corporation, and short-term corporate obligations where the purchase and sale of
such securities normally require settlement in federal funds or their equivalent
on the same day as such purchase and sale, all of which mature in not more than
thirteen (13) months.
OFFICERS - the Chairman, President, Secretary, Treasurer, Controller,
--------
and Senior Vice President of the Fund listed in the Certificate annexed hereto
as Appendix A, or such other Certificate as may be received by the Custodian
from time to time.
ORAL INSTRUCTIONS - verbal instructions received by the Custodian from
-----------------
an Authorized Person (or from a person that the Custodian reasonably believes in
good faith to be an Authorized Person) and confirmed by Written Instructions in
such a manner that such Written Instructions are received by the Custodian on
the business day immediately following receipt of such Oral Instructions.
PROSPECTUS - the Fund's then currently effective prospectus and
----------
Statement of Additional Information, as filed with and declared effective from
time to time by the Securities and Exchange Commission.
SECURITY OR SECURITIES - Money Market Securities, common stock,
----------------------
preferred stock, options, financial futures, bonds, notes, debentures, corporate
debt securities, mortgages, and any certificates, receipts, warrants, or other
instruments representing rights to receive, purchase, or subscribe for the same
or evidencing or representing any other rights or interest therein, or any
property or assets.
WRITTEN INSTRUCTIONS - communication received in writing by the
--------------------
Custodian from an Authorized Person.
2
<PAGE>
ARTICLE II
DOCUMENTS AND NOTICES TO BE FURNISHED BY THE FUND
-------------------------------------------------
A The following documents, including any amendments thereto, will be
provided contemporaneously with the execution of the Agreement, to the Custodian
by the Fund:
1. A copy of the Articles of Incorporation of the Fund certified
by the Secretary.
2. A copy of the By-Laws of the Fund certified by the Secretary.
3. A copy of the resolution of the Board Of Directors of the Fund
appointing
the Custodian, certified by the Secretary.
4. A copy of the then current Prospectus.
5. A Certificate of the President and Secretary of the Fund
setting forth the names and signatures of the Officers of the
Fund.
B. The Fund agrees to notify the Custodian in writing of the
appointment of any Dividend and Transfer Agent.
ARTICLE III
RECEIPT OF FUND ASSETS
----------------------
A. During the term of this Agreement, the Fund will deliver or cause to
be delivered to the Custodian all moneys constituting Fund Assets. The Custodian
shall be entitled to reverse any deposits made on the Fund's behalf where such
deposits have been entered and moneys are not finally collected within 30 days
of the making of such entry.
B. During the term of this Agreement, the Fund will deliver or cause to
be delivered to the Custodian all Securities constituting Fund Assets. The
Custodian will not have any duties or responsibilities with respect to such
Securities until actually received by the Custodian.
C. As and when received, the Custodian shall deposit to the account(s)
of the Fund any and all payments for shares of the Fund issued or sold from time
to time as they are received from the Fund's distributor or Dividend and
Transfer Agent or from the Fund itself.
ARTICLE IV
DISBURSEMENT OF FUND ASSETS
---------------------------
A. The Fund shall furnish to the Custodian a copy of the resolution of
the Board Of Directors of the Fund, certified by the Fund's Secretary, either
(i) setting forth the date of the declaration of any dividend or distribution in
3
<PAGE>
respect of shares of the Fund, the date of payment thereof, the record date as
of which Fund shareholders entitled to payment shall be determined, the amount
payable per share to Fund shareholders of record as of that date, and the total
amount to be paid by the Dividend and Transfer Agent on the payment date, OR
(II) AUTHORIZING THE DECLARATION OF DIVIDENDS AND DISTRIBUTIONS IN RESPECT OF
SHARES OF THE FUND ON A DAILY BASIS AND AUTHORIZING THE CUSTODIAN TO RELY ON A
CERTIFICATE SETTING FORTH THE DATE OF THE DECLARATION OF ANY SUCH DIVIDEND OR
DISTRIBUTION, THE DATE OF PAYMENT THEREOF, THE RECORD DATE AS OF WHICH FUND
SHAREHOLDERS ENTITLED TO PAYMENT SHALL BE DETERMINED, THE AMOUNT PAYABLE PER
SHARE TO FUND SHAREHOLDERS OF RECORD AS OF THAT DATE, AND THE TOTAL AMOUNT TO BE
PAID BY THE DIVIDEND AND TRANSFER AGENT ON THE PAYMENT DATE.
On the payment date specified in such resolution or
Certificate described above, the Custodian shall segregate such amounts from
moneys held for the account of the Fund so that they are available for such
payment.
B. Upon receipt of Written Instructions so directing it, the Custodian
shall segregate amounts necessary for the payment of redemption proceeds to be
made by the Dividend and Transfer Agent from moneys held for the account of the
Fund so that they are available for such payment.
C. Upon receipt of a Certificate directing payment and setting forth
the name and address of the person to whom such payment is to be made, the
amount of such payment, and the purpose for which payment is to be made, the
Custodian shall disburse amounts as and when directed from the Fund Assets. The
Custodian is authorized to rely on such directions and shall be under no
obligation to inquire as to the propriety of such directions.
D. Upon receipt of a Certificate directing payment, the Custodian shall
disburse moneys from the Fund Assets in payment of the Custodian's fees and
expenses as provided in Article VIII hereof.
ARTICLE V
CUSTODY OF FUND ASSETS
----------------------
A. The Custodian shall open and maintain a separate bank account or
accounts in the United States in the name of the Fund, subject only to draft or
order by the Custodian acting pursuant to the terms of this Agreement, and shall
hold all cash received by it from or for the account of the Fund, other than
cash maintained by the Fund in a bank account established and used by the Fund
in accordance with Rule 17f-3 under the Act. Moneys held by the Custodian on
4
<PAGE>
behalf of the Fund may be deposited by the Custodian to its credit as Custodian
in the banking department of the Custodian. Such moneys shall be deposited by
the Custodian in its capacity as such, and shall be withdrawable by the
Custodian only in such capacity.
B. The Custodian shall hold all Securities delivered to it in
safekeeping in a separate account or accounts maintained at Star Bank, N.A. for
the benefit of the Fund.
C. All Securities held which are issued or issuable only in bearer
form, shall be held by the Custodian in that form; all other Securities held for
the Fund shall be registered in the name of the Custodian or its nominee. The
Fund agrees to furnish to the Custodian appropriate instruments to enable the
Custodian to hold, or deliver in proper form for transfer, any Securities that
it may hold for the account of the Fund and which may, from time to time, be
registered in the name of the Fund.
D. With respect to all Securities held for the Fund , the Custodian
shall on a timely basis (concerning items 1 and 2 below, as defined in the
Custodian's Standards of Service Guide, as amended from time to time, annexed
hereto as Appendix C):
1.) Collect all income due and payable with respect to such
Securities;
2.) Present for payment and collect amounts payable upon all
Securities which may mature or be called, redeemed, or
retired, or otherwise become payable;
3.) Surrender Securities in temporary form for definitive
Securities; and
4.) Execute, as agent, any necessary declarations or certificates
of ownership under the Federal income tax laws or the laws or
regulations of any other taxing authority, including any
foreign taxing authority, now or hereafter in effect.
E. Upon receipt of a Certificate AND NOT OTHERWISE, THE CUSTODIAN
SHALL: 1.) Execute and deliver to such persons as may be
designated in such
Certificate proxies, consents, authorizations, and any other
instruments whereby the authority of the Fund as beneficial
owner of any Securities may be exercised;
2.) Deliver any Securities in exchange for other Securities or
cash issued or paid in connection with the liquidation,
reorganization, refinancing, merger, consolidation, or
recapitalization of any trust, or the exercise of any
conversion privilege;
5
<PAGE>
3.) Deliver any Securities to any protective committee,
reorganization committee, or other person in connection with
the reorganization, refinancing, merger, consolidation,
recapitalization, or sale of assets of any trust, and receive
and hold under the terms of this Agreement such certificates
of deposit, interim receipts or other instruments or
documents as may be issued to it to evidence such delivery;
4.) Make such transfers or exchanges of the assets of the Fund
and take such other steps as shall be stated in said
Certificate to be for the purpose of effectuating any duly
authorized plan of liquidation, reorganization, merger,
consolidation or recapitalization of the Fund; and
5.) Deliver any Securities held for the Fund to the depository
agent for tender or other similar offers.
F. The Custodian shall promptly deliver to the Fund all notices, proxy
material and executed but unvoted proxies pertaining to shareholder meetings of
Securities held by the Fund. The Custodian shall not vote or authorize the
voting of any Securities or give any consent, waiver or approval with respect
thereto unless so directed by a Certificate or Written Instruction.
G. The Custodian shall promptly deliver to the Fund all information
received by the Custodian and pertaining to Securities held by the Fund with
respect to tender or exchange offers, calls for redemption or purchase, or
expiration of rights.
ARTICLE VI
PURCHASE AND SALE OF SECURITIES
-------------------------------
A. Promptly after each purchase of Securities by the Fund, the Fund
shall deliver to the Custodian (i) with respect to each purchase of Securities
which are not Money Market Securities, Written Instructions, and (ii) with
respect to each purchase of Money Market Securities, Written Instructions or
Oral Instructions, specifying with respect to each such purchase the;
6
<PAGE>
1.) name of the issuer and the title of the Securities,
2.) principal amount purchased and accrued interest, if any,
3.) date of purchase and settlement,
4.) purchase price per unit,
5.) total amount payable, and
6.) name of the person from whom, or the broker through
which, the purchase was made.
The Custodian shall, against receipt of Securities purchased by or for the Fund,
pay out of the Fund Assets, the total amount payable to the person from whom or
the broker through which the purchase was made, provided that the same conforms
to the total amount payable as set forth in such Written Instructions or Oral
Instructions, as the case may be.
B. Promptly after each sale of Securities by the Fund, the Fund shall
deliver to the Custodian (i) with respect to each sale of Securities which are
not Money Market Securities, Written Instructions, and (ii) with respect to each
sale of Money Market Securities, Written Instructions or Oral Instructions,
specifying with respect to each such sale the;
1.) name of the issuer and the title of the Securities,
2.) principal amount sold and accrued interest, if any,
3.) date of sale and settlement,
4.) sale price per unit,
5.) total amount receivable, and
6.) name of the person to whom, or the broker through which,
the sale was made.
The Custodian shall deliver the Securities against receipt of the total amount
receivable, provided that the same conforms to the total amount receivable as
set forth in such Written Instructions or Oral Instructions, as the case may be.
C. On contractual settlement date, the account of the Fund will be
charged for all purchased Securities settling on that day, regardless of whether
or not delivery is made. Likewise, on contractual settlement date, proceeds from
the sale of Securities settling that day will be credited to the account of the
Fund, irrespective of delivery.
D. Purchases and sales of Securities effected by the Custodian will be
made on a delivery versus payment basis. The Custodian may, in its sole
discretion, upon receipt of a Certificate, elect to settle a purchase or sale
transaction in some other manner, but only upon receipt of acceptable
indemnification from the Fund.
E. The Custodian shall, upon receipt of a Written Instructions so
directing it, establish and maintain a segregated account or accounts for and on
behalf of the Fund. Cash and/or Securities may be transferred into such account
or accounts for specific purposes, to-wit:
7
<PAGE>
1.) in accordance with the provision of any agreement among
the Fund, the Custodian, and a broker-dealer registered
under the Securities and Exchange Act of 1934, as
amended, and also a member of the National Association
of Securities Dealers (NASD) (or any futures commission
merchant registered under the Commodity Exchange Act),
relating to compliance with the rules of the Options
Clearing Corporation and of any registered national
securities exchange, the Commodity Futures Trading
Commission, any registered contract market, or any
similar organization or organizations requiring escrow
or other similar arrangements in connection with
transactions by the Fund;
2.) for purposes of segregating cash or government
securities in connection with options purchased,
sold, or written by the Fund or commodity futures
contracts or options thereon purchased or sold by the
Fund;
3.) for the purpose of compliance by the fund with the
procedures required for reverse repurchase agreements,
firm commitment agreements, standby commitment
agreements, and short sales by Act Release No. 10666, or
any subsequent release or releases or rule of the
Securities and Exchange Commission relating to the
maintenance of segregated accounts by registered
investment companies; and
4.) for other corporate purposes, ONLY IN THE CASE OF
THIS CLAUSE 4 UPON RECEIPT OF A COPY OF A RESOLUTION
OF THE BOARD OF DIRECTORS OF THE FUND, CERTIFIED BY
THE SECRETARY OF THE FUND, SETTING FORTH THE PURPOSES
OF SUCH SEGREGATED
ACCOUNT.
F. Except as otherwise may be agreed upon by the parties hereto, the
Custodian shall not be required to comply with any Written Instructions to
settle the purchase of any Securities on behalf of the Fund unless there is
sufficient cash in the account(s) at the time or to settle the sale of any
Securities from an account(s) unless such Securities are in deliverable form.
Notwithstanding the foregoing, if the purchase price of such Securities exceeds
the amount of cash in the account(s) at the time of such purchase, the Custodian
may, in its sole discretion, advance the amount of the difference in order to
settle the purchase of such Securities. The amount of any such advance shall be
8
<PAGE>
deemed a loan from the Custodian to the Fund payable on demand and bearing
interest accruing from the date such loan is made up to but not including the
date such loan is repaid at a rate per annum customarily charged by the
Custodian on similar loans.
ARTICLE VII
FUND INDEBTEDNESS
-----------------
In connection with any borrowings by the Fund, the Fund will cause to
be delivered to the Custodian by a bank or broker requiring Securities as
collateral for such borrowings (including the Custodian if the borrowing is from
the Custodian), a notice or undertaking in the form currently employed by such
bank or broker setting forth the amount of collateral. The Fund shall promptly
deliver to the Custodian a Certificate specifying with respect to each such
borrowing: (a) the name of the bank or broker, (b) the amount and terms of the
borrowing, which may be set forth by incorporating by reference an attached
promissory note duly endorsed by the Fund, or a loan agreement, (c) the date,
and time if known, on which the loan is to be entered into, (d) the date on
which the loan becomes due and payable, (e) the total amount payable to the Fund
on the borrowing date, and (f) the description of the Securities securing the
loan, including the name of the issuer, the title and the number of shares or
the principal amount. The Custodian shall deliver on the borrowing date
specified in the Certificate the required collateral against the lender's
delivery of the total loan amount then payable, provided that the same conforms
to that which is described in the Certificate. The Custodian shall deliver, in
the manner directed by the Fund, such Securities as additional collateral, as
may be specified in a Certificate, to secure further any transaction described
in this Article VII. The Fund shall cause all Securities released from
collateral status to be returned directly to the Custodian and the Custodian
shall receive from time to time such return of collateral as may be tendered to
it.
The Custodian may, at the option of the lender, keep such collateral in
its possession, subject to all rights therein given to the lender because of the
loan. The Custodian may require such reasonable conditions regarding such
collateral and its dealings with third-party lenders as it may deem appropriate.
ARTICLE VIII
CONCERNING THE CUSTODIAN
------------------------
A. Except as otherwise provided herein, the Custodian shall not be
liable for any loss or damage resulting from its action or omission to act or
otherwise, except for any such loss or damage arising out of its own gross
negligence or willful misconduct. The Fund shall defend, indemnify and hold
harmless the Custodian and its directors, officers, employees and agents with
respect to any loss, claim, liability or cost (including reasonable attorneys'
fees) arising or alleged to arise from or relating to the Fund's duties
hereunder or any other action or inaction of the Fund or its Directors,
officers, employees or agents, except such as may arise from the negligent
action, omission, willful misconduct or breach of this Agreement by the
9
<PAGE>
Custodian. The Custodian may, with respect to questions of law, apply for and
obtain the advice and opinion of counsel, at the expense of the Fund, and shall
be fully protected with respect to anything done or omitted by it in good faith
in conformity with the advice or opinion of counsel. The provisions under this
paragraph shall survive the termination of this Agreement.
B. Without limiting the generality of the foregoing, the Custodian,
acting in the capacity of Custodian hereunder, shall be under no obligation to
inquire into, and shall not be liable for:
1.) The validity of the issue of any Securities purchased by
or for the account of the Fund, the legality of the
purchase thereof, or the propriety of the amount paid
therefor;
2.) The legality of the sale of any Securities by or for the
account of the Fund, or the propriety of the amount for
which the same are sold;
3.) The legality of the issue or sale of any shares of
the Fund, or the sufficiency of the amount to be
received therefor;
4.) The legality of the redemption of any shares of the
Fund, or the propriety of the amount to be paid
therefor;
5.) The legality of the declaration or payment of any
dividend by the Fund in respect of shares of the
Fund;
6.) The legality of any borrowing by the Fund on behalf
of the Fund, using Securities as collateral;
C. The Custodian shall not be under any duty or obligation to take
action to effect collection of any amount due to the Fund from any Dividend and
Transfer Agent of the Fund nor to take any action to effect payment or
distribution by any Dividend and Transfer Agent of the Fund of any amount paid
by the Custodian to any Dividend and Transfer Agent of the Fund in accordance
with this Agreement.
D. Notwithstanding Section D of Article V, the Custodian shall not be
under any duty or obligation to take action to effect collection of any amount,
if the Securities upon which such amount is payable are in default, or if
payment is refused after due demand or presentation, unless and until (i) it
shall be directed to take such action by a Certificate and (ii) it shall be
assured to its satisfaction (including prepayment thereof) of reimbursement of
its costs and expenses in connection with any such action.
E. The Fund acknowledges and hereby authorizes the Custodian to hold
Securities through its various agents described in Appendix B annexed hereto.
The Fund hereby represents that such authorization has been duly approved by the
Board Of Directors of the Fund as required by the Act. The Custodian
acknowledges that although certain Fund Assets are held by its agents, the
Custodian remains primarily liable for the safekeeping of the Fund Assets.
10
<PAGE>
In addition, the Fund acknowledges that the Custodian may appoint one
or more financial institutions, as agent or agents or as sub-custodian or
sub-custodians, including, but not limited to, banking institutions located in
foreign countries, for the purpose of holding Securities and moneys at any time
owned by the Fund. The Custodian shall not be relieved of any obligation or
liability under this Agreement in connection with the appointment or activities
of such agents or sub-custodians. Any such agent or sub-custodian shall be
qualified to serve as such for assets of investment companies registered under
the Act. Upon request, the Custodian shall promptly forward to the Fund any
documents it receives from any agent or sub-custodian appointed hereunder which
may assist trustees of registered investment companies fulfill their
responsibilities under Rule 17f-5 of the Act.
F. The Custodian shall not be under any duty or obligation to ascertain
whether any Securities at any time delivered to or held by it for the account of
the Fund are such as properly may be held by the Fund under the provisions of
the Articles of Incorporation and the Fund's By-Laws.
G. The Custodian shall treat all records and other information relating
to the Fund and the Fund Assets as confidential and shall not disclose any such
records or information to any other person unless (i) the Fund shall have
consented thereto in writing or (ii) such disclosure is required by law.
H. The Custodian shall be entitled to receive and the Fund agrees to
pay to the Custodian such compensation as shall be determined pursuant to
Appendix D attached hereto, or as shall be determined pursuant to amendments to
such Appendix D. The Custodian shall be entitled to charge against any money
held by it for the account of the Fund, the amount of any of its fees, any loss,
damage, liability or expense, including counsel fees. The expenses which the
Custodian may charge against the account of the Fund include, but are not
limited to, the expenses of agents or sub-custodians incurred in settling
transactions involving the purchase and sale of Securities of the Fund.
I. The Custodian shall be entitled to rely upon any Oral Instructions
and any Written Instructions. The Fund agrees to forward to the Custodian
Written Instructions confirming Oral Instructions in such a manner so that such
Written Instructions are received by the Custodian, whether by hand delivery,
facsimile or otherwise, on the same business day on which such Oral Instructions
were given. The Fund agrees that the failure of the Custodian to receive such
confirming instructions shall in no way affect the validity of the transactions
or enforceability of the transactions hereby authorized by the Fund. The Fund
agrees that the Custodian shall incur no liability to the Fund for acting upon
Oral Instructions given to the Custodian hereunder concerning such transactions.
J. The Custodian will (i) set up and maintain proper books of account
and complete records of all transactions in the accounts maintained by the
Custodian hereunder in such manner as will meet the obligations of the Fund
under the Act, with particular attention to Section 31 thereof and Rules 31a-1
and 31a-2 thereunder and those records are the property of the Fund, and (ii)
preserve for the periods prescribed by applicable Federal statute or regulation
11
<PAGE>
all records required to be so preserved. All such books and records shall be the
property of the Fund, and shall be open to inspection and audit at reasonable
times and with prior notice by Officers and auditors employed by the Fund.
K. The Custodian shall send to the Fund any report received on the
systems of internal accounting control of the Custodian, or its agents or
sub-custodians, as the Fund may reasonably request from time to time.
L. The Custodian performs only the services of a custodian and shall
have no responsibility for the management, investment or reinvestment of the
Securities from time to time owned by the Fund. The Custodian is not a selling
agent for shares of the Fund and performance of its duties as custodian shall
not be deemed to be a recommendation to the Fund's depositors or others of
shares of the Fund as an investment.
M. The Custodian shall take all reasonable action, that the Fund may
from time to time request, to assist the Fund in obtaining favorable opinions
from the Fund's independent accountants, with respect to the Custodian's
activities hereunder, in connection with the preparation of the Fund's Form
N-1A, Form N-SAR, or other annual reports to the Securities and Exchange
Commission.
N. The Fund hereby pledges to and grants the Custodian a security
interest in any Fund Assets to secure the payment of any liabilities of the Fund
to the Custodian, whether acting in its capacity as Custodian or otherwise, or
on account of money borrowed from the Custodian. This pledge is in addition to
any other pledge of collateral by the Fund to the Custodian.
ARTICLE IX
FORCE MAJEURE
-------------
Neither the Custodian nor the Corporation shall be liable for any
failure or delay in performance of its obligations under this Agreement arising
out of or caused, directly or indirectly, by circumstances beyond its reasonable
control, including, without limitation, acts of God; earthquakes; fires; floods;
wars; civil or military disturbances; sabotage; strikes; epidemics; riots; labor
disputes; acts of civil or military authority; governmental actions; or
inability to obtain labor, material, equipment or transportation; provided,
however, that the Custodian, in the event of a failure or delay, shall use its
best efforts to ameliorate the effects of such failure or delay.
ARTICLE X
TERMINATION
-----------
A. Either of the parties hereto may terminate this Agreement for any
reason by giving to the other party a notice in writing specifying the date of
such termination, which shall be not less than ninety (90) days after the date
12
<PAGE>
of giving of such notice. If such notice is given by the Fund, it shall be
accompanied by a copy of a resolution of the Board Of Directors of the Fund,
certified by the Secretary of the Fund, electing to terminate this Agreement and
designating a successor custodian or custodians. In the event such notice is
given by the Custodian, the Fund shall, on or before the termination date,
deliver to the Custodian a copy of a resolution of the Board Of Directors of the
Fund, certified by the Secretary, designating a successor custodian or
custodians to act on behalf of the Fund. In the absence of such designation by
the Fund, the Custodian may designate a successor custodian which shall be a
bank or trust company having not less than $100,000,000 aggregate capital,
surplus, and undivided profits. Upon the date set forth in such notice this
Agreement shall terminate, and the Custodian, provided that it has received a
notice of acceptance by the successor custodian, shall deliver, on that date,
directly to the successor custodian all Securities and moneys then owned by the
Fund and held by it as Custodian. Upon termination of this Agreement, the Fund
shall pay to the Custodian on behalf of the Fund such compensation as may be due
as of the date of such termination. The Fund agrees on behalf of the Fund that
the Custodian shall be reimbursed for its reasonable costs in connection with
the termination of this Agreement.
B. If a successor custodian is not designated by the Fund, or by the
Custodian in accordance with the preceding paragraph, or the designated
successor cannot or will not serve, the Fund shall, upon the delivery by the
Custodian to the Fund of all Securities (other than Securities held in the
Book-Entry System which cannot be delivered to the Fund) and moneys then owned
by the Fund, be deemed to be the custodian for the Fund, and the Custodian shall
thereby be relieved of all duties and responsibilities pursuant to this
Agreement, other than the duty with respect to Securities held in the Book-Entry
System, which cannot be delivered to the Fund, which shall be held by the
Custodian in accordance with this Agreement.
ARTICLE XI
MISCELLANEOUS
-------------
A. Appendix A sets forth the names and the signatures of all Authorized
Persons, as certified by the Secretary of the Fund. The Fund agrees to furnish
to the Custodian a new Appendix A in form similar to the attached Appendix A, if
any present Authorized Person ceases to be an Authorized Person or if any other
or additional Authorized Persons are elected or appointed. Until such new
Appendix A shall be received, the Custodian shall be fully protected in acting
under the provisions of this Agreement upon Oral Instructions or signatures of
the then current Authorized Persons as set forth in the last delivered Appendix
A.
B. No recourse under any obligation of this Agreement or for any claim
based thereon shall be had against any organizer, shareholder, Officer,
Director, past, present or future as such, of the Fund or of any predecessor or
successor, either directly or through the Fund or any such predecessor or
successor, whether by virtue of any constitution, statute or rule of law or
equity, or be the enforcement of any assessment or penalty or otherwise; it
being expressly agreed and understood that this Agreement and the obligations
thereunder are enforceable solely against the Fund, and that no such personal
liability whatever shall attach to, or is or shall be incurred by, the
13
<PAGE>
organizers, shareholders, Officers, Directors of the Fund or of any predecessor
or successor, or any of them as such. To the extent that any such liability
exists, it is hereby expressly waived and released by the Custodian as a
condition of, and as a consideration for, the execution of this Agreement.
C. The obligations set forth in this Agreement as having been made by
the Fund have been made by the Board Of Directors, acting as such Directors for
and on behalf of the Fund, pursuant to the authority vested in them under the
laws of the State of Maryland, the Articles of Incorporation and the By-Laws of
the Fund. This Agreement has been executed by Officers of the Fund as officers,
and not individually, and the obligations contained herein are not binding upon
any of the Directors, Officers, agents or holders of shares, personally, but
bind only the Fund.
D. Provisions of the Prospectus and any other documents (including
advertising material) specifically mentioning the Custodian (other than merely
by name and address) shall be reviewed with the Custodian by the Fund prior to
publication and/or dissemination or distribution, and shall be subject to the
consent of the Custodian.
E. Any notice or other instrument in writing, authorized or required by
this Agreement to be given to the Custodian, shall be sufficiently given if
addressed to the Custodian and mailed or delivered to it at its offices at Star
Bank Center, 425 Walnut Street, M. L. 6118, Cincinnati, Ohio 45202, attention
Mutual Fund Custody Department, or at such other place as the Custodian may from
time to time designate in writing.
F. Any notice or other instrument in writing, authorized or required by
this Agreement to be given to the Fund shall be sufficiently given when
delivered to the Fund or on the second business day following the time such
notice is deposited in the U.S. mail postage prepaid and addressed to the Fund
c/o American Data Services, Inc., 150 Motor Parkway, Suite 109, Hauppauge, NY
11788 or at such other place as the Fund may from time to time designate in
writing.
G. This Agreement, with the exception of the Appendices, may not be
amended or modified in any manner except by a written agreement executed by both
parties with the same formality as this Agreement, and authorized and approved
by a resolution of the Board Of Directors of the Fund.
H. This Agreement shall extend to and shall be binding upon the parties
hereto, and their respective successors and assigns; provided, however, that
this Agreement shall not be assignable by the Fund or by the Custodian, and no
attempted assignment by the Fund or the Custodian shall be effective without the
written consent of the other party hereto.
I. This Agreement shall be construed in accordance with the laws
of the State of Ohio.
14
<PAGE>
J. This Agreement may be executed in any number of counterparts, each
of which shall be deemed to be an original, but such counterparts shall,
together, constitute only one instrument.
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed by their respective Officers, thereunto duly authorized
as of the day and year first above written.
ATTEST: MP 63 FUND, INC.
______________________ By: ________________________
Title: ______________________
ATTEST: STAR BANK, N.A.
_______________________ By: ________________________
Title: _______________________
15
<PAGE>
APPENDIX A
AUTHORIZED PERSONS SPECIMEN SIGNATURES\cf31
Chairman: ____________________ ____________________
President: _____________________ _____________________
Secretary: ______________________ _____________________
Treasurer: ______________________ _____________________
Controller: ______________________ _____________________
Adviser Employees: _______________________ _____________________
_______________________ _____________________
_______________________ _____________________
Transfer Agent/Fund Accountant
Employees:
_______________________ _____________________
_______________________ ____________________
_______________________ ____________________
16
<PAGE>
APPENDIX B
The following agents are employed currently by Star Bank, N.A. for securities
processing and control . . .
The Depository Trust Company (New York)
7 Hanover Square
New York, NY 10004
The Federal Reserve Bank
Cincinnati and Cleveland Branches
Bankers Trust Company
16 Wall Street
New York, NY 10005
(For Foreign Securities and certain non-DTC eligible Securities)
17
<PAGE>
APPENDIX C
STANDARDS OF SERVICE GUIDE
18
<PAGE>
APPENDIX D
SCHEDULE OF COMPENSATION
19
ADMINISTRATIVE SERVICE AGREEMENT
BETWEEN
THE MP 63 FUND, INC.
AND
AMERICAN DATA SERVICES, INC.
[GRAPHIC OMITTED]
<PAGE>
- --------------------------------------------------------------------------------
INDEX
- --------------------------------------------------------------------------------
1. DUTIES OF THE ADMINISTRATOR................................................3
ADMINISTRATION.................................................................4
FUND ACCOUNTING................................................................5
STOCK TRANSFER.................................................................5
2. COMPENSATION OF THE ADMINISTRATOR..........................................6
3. INDEMNIFICATION............................................................7
4. REPORTS....................................................................8
5. ACTIVITIES OF THE ADMINISTRATOR............................................8
6. CONFIDENTIALITY............................................................8
7. DURATION AND TERMINATION OF THE AGREEMENT..................................8
8. ASSIGNMENT.................................................................8
9. NEW YORK LAWS TO APPLY.....................................................9
10. AMENDMENTS TO THIS AGREEMENT...............................................9
11. MERGER OF AGREEMENT........................................................9
12. NOTICES....................................................................9
13. REGARDING THE ADMINISTRATOR................................................9
SCHEDULE A....................................................................10
- ----------
(A) ADMINISTRATIVE SERVICE FEE:...............................................10
(B) EXPENSES..................................................................10
(C) FEES TO BE CHARGED DIRECTLY TO SHAREHOLDER ACCOUNTS:......................10
(C) SPECIAL REPORTS...........................................................11
SCHEDULE B....................................................................12
- ----------
2
<PAGE>
ADMINISTRATIVE SERVICES AGREEMENT
---------------------------------
AGREEMENT dated as of _______________________, by and between The MP 63 Fund,
Inc., a Maryland Corporation, having an office and place of business at 1010
Mamaroneck Avenue, Mamaroneck, New York 10543 (the "Fund"), and American Data
Services, Inc., a New York corporation having its principal office and place of
business at the Hauppauge Corporate Center, 150 Motor Parkway, Suite 109,
Hauppauge, New York 11788 (the "Administrator").
BACKGROUND
WHEREAS, the Fund is an open-end management investment company
registered with the United States Securities and Exchange Commission under the
Investment Company Act of 1940, as amended (the "1940 Act");
WHEREAS, the Administrator is a corporation experienced in
providing administrative, fund accounting, and stock transfer services to mutual
funds and possesses facilities sufficient to provide such services;
WHEREAS, the Fund desires to have Mr. Michael Miola as President of
American Data Services, Inc. serve as an "Interested Director" on its Board of
Directors for the life of this Agreement and the Administrator is willing to
provide Mr. Miola's services as an "Interested Director"; and
WHEREAS, the Fund desires to avail itself of the experience,
assistance and facilities of the Administrator and to have the Administrator
perform for the Fund certain services appropriate to the operations of the Fund
and the Administrator is willing to furnish such services in accordance with the
terms hereinafter set forth.
NOW, THEREFORE, in consideration of the mutual covenants herein
contained, the parties hereto agree as follows:
TERMS
Subject to the terms and conditions set forth in this Agreement, the Fund
hereby employs and appoints the Administrator to act as the Fund's
administrator, fund accounting agent, transfer agent for the Fund's authorized
and issued shares of its common stock, ("Shares"), dividend disbursing agent and
agent in connection with any IRA or any other qualified retirement plan provided
to the shareholders of the Fund ("Shareholders") set out in the currently
effective prospectus and statement of additional information ("prospectus") of
the Fund.
1. DUTIES OF THE ADMINISTRATOR.
The Administrator agrees that it will provide all administrative
services necessary and customary to administer a mutual fund, as well as all
necessary and customary fund accounting services other than those provided by
the Fund's independent accountants, as well as all necessary and customary stock
transfer services to the Fund, and will provide the Fund with the necessary
office space, communication and data processing facilities and personnel to
perform such services for the Fund, including:
3
<PAGE>
ADMINISTRATION
(a) Monitor all regulatory (1940 Act and IRS) and prospectus restrictions for
compliance;
(b) Prepare and print semi-annual and annual financial statements (printing
costs to be considered an out-of-pocket expense as noted in Schedule A,
paragraph (b);
(c) Prepare and print management reports for performance and compliance
analyses as reasonably requested by the Fund from time to time;
(d) Prepare selected financial data required for directors' meetings as agreed
upon by the Fund and the Administrator from time to time and coordinate
directors meeting agendas with outside legal counsel to the Fund;
(e) Determine income and capital gains available for distribution and calculate
distributions required to meet regulatory, income, and excise tax requirements,
to be reviewed by the Fund's independent public accountants;
(f) Prepare the Fund's federal, state, and local tax returns to be reviewed by
the Fund's independent public accountants;
(g) Prepare and maintain the Fund's operating expense budget to determine proper
expense accruals to be charged to the Fund in order to calculate it's daily net
asset value; and prepare all payment authorizations to be sent to the custodian
bank to initiate vendor payments.
(h) 1933 and 1940 ACT filings -
In conjunction with the Fund's outside legal counsel the Administrator
will:
--Prepare the Fund's Semi-Annual Form N-SAR reports;
--Update all financial sections of the Fund's
Statement of Additional Information and
coordinate its completion with Fund Counsel;
--Update all financial sections of the Fund's prospectus and
coordinate its completion with Fund Counsel;
--Update all financial sections of the Fund's proxy statement and
coordinate its completion with Fund Counsel;
--Prepare the annual update to Fund's 24f-2 filing.
(i) Monitor services provided by the Fund's custodian bank, auditors, legal
counsel, as well as any other service providers to the Fund;
(j) Provide appropriate financial schedules (as requested by the Fund's
independent public accountants or SEC examiners), coordinate the Fund's annual
or SEC audit, and provide office facilities as may be required;
(k) Attend all management and Board of Directors meetings, and in connection
therewith provide notice of meetings, agendas and minutes;
(l) The preparation and filing (filing fee to be paid by the Fund) of
applications and reports as necessary to register or maintain the Funds
registration under the securities or "Blue Sky" laws of the various states
selected by the Fund.
(m) Administer adequate cash flow for the Fund.
4
<PAGE>
(n) Coordinate the printing of all fund materials with printers that have been
selected by the Fund.
(o) Provide customer service function for the Fund.
FUND ACCOUNTING
(a) Timely calculate and transmit to NASDAQ the Fund's daily net asset value
and communicate such value to the Fund and its transfer agent. Net asset
value as determined by 1940 Act and prospectus;
(b) Maintain and keep current all books and records of the Fund as required by
Rule 31a-1 under the 1940 Act, as such rule or any successor rule may be
amended from time to time ("Rule 31a-1"), that are applicable to the
fulfillment of Administrator's duties hereunder, as well as any other
documents necessary or advisable for compliance with applicable regulations
as may be mutually agreed to between the Fund and the Administrator.
Without limiting the generality of the foregoing, the Administrator will
prepare and maintain the following records:
--Cash receipts journal
--Cash disbursements journal
--Dividend record
--Purchase and sales - portfolio securities journals
--Subscription and redemption journals
--Security ledgers
--Broker ledger
--General ledger
--Daily expense accruals
--Daily income accruals
--Securities and monies borrowed or loaned
and collateral therefore
--Foreign currency journals
--Trial balances
(c) Provide the Fund and its investment adviser with daily cash forecast
report, portfolio valuation, securities transaction report, net asset value
calculation, daily income and expense accrual report, and other standard
operational reports.
(d) Provide facilities to accommodate annual audit and any audits or
examinations conducted by the Securities and Exchange Commission or any
other governmental or quasi-governmental entities with jurisdiction.
(e) Provide facilities to accommodate the Fund's review of its books and records
maintained by the Administrator.
STOCK TRANSFER
(a) In accordance with procedures established from time to time by agreement
between the Fund and the Administrator, the Administrator shall:
I. Receive for acceptance and process orders for the purchase of Shares, and
promptly deliver payment and appropriate documentation therefor to the
Custodian of the Fund (the "Custodian") approved by the Board of Directors
of the Fund;
5
<PAGE>
II. Pursuant to purchase orders, issue the appropriate number of Shares and
hold such Shares in the appropriate Shareholder account;
III. Receive for acceptance redemption requests and redemption directions and
provide Custodian with the appropriate documentation and instructions to
transfer monies from the Fund's custodian account to the Fund's redemption
account at the custodian bank;
IV. At the appropriate time as and when monies are transferred from the Fund's
custodian account to the Fund's redemption account by the Custodian with
respect to any redemption, pay over or cause to be paid over in the
appropriate manner such monies as instructed by the redeeming Shareholders;
V. Effect transfers of Shares by the registered owners thereof upon receipt of
appropriate instructions;
VI. Prepare and transmit payments for dividends and distributions declared by
the Fund;
VII. Maintain records of account for and advise the Fund and its Shareholders
as to the foregoing; and
VIII.Record the issuance of shares of the Fund and maintain pursuant to SEC
Rule 17Ad-10(e) a record of the total number of shares of the Fund which
are authorized and issued and outstanding
(b) In addition to and not in lieu of the services set forth in the above
paragraph (a), the Administrator shall:
Perform all of the customary services of a transfer agent, dividend disbursing
agent, including but not limited to: maintaining all Shareholder accounts,
preparing Shareholder meeting lists, mailing proxies, receiving and tabulating
proxies, mailing Shareholder reports and prospectuses to current Shareholders,
withholding taxes on U.S. resident and non-resident alien accounts, preparing
and filing U.S. Treasury Department Forms 1099 and other appropriate forms
required with respect to dividends and distributions by federal authorities for
all Shareholders, preparing and mailing confirmation forms and statements of
account to Shareholders for all purchases redemption's of Shares and other
confirmable transactions in Shareholder accounts, preparing and mailing activity
statements for Shareholders, and providing Shareholder account information and
(ii) provide a system and reports which will enable the Fund to monitor the
total number of Shares sold in each State.
Procedures applicable to certain of these services may be established from time
to time by agreement between the Fund and the Administrator.
The Administrator shall, for all purposes herein, be deemed to be an independent
contractor and shall, unless otherwise expressly provided or authorized, have no
authority to act for or represent the Fund in any way or otherwise be deemed an
agent of the Fund.
2. COMPENSATION OF THE ADMINISTRATOR.
In consideration of the services to be performed by the Administrator
as set forth herein for each Fund listed in Schedule B, the Administrator shall
be entitled to receive and the Fund agrees to pay the Administrator the fees and
reimburse those of out-of-pocket expenses set forth on the fee schedule attached
hereto as Schedule A.
6
<PAGE>
3. INDEMNIFICATION.
The Administrator shall not be responsible for, and the Fund shall
indemnify and hold the Administrator harmless from and against, any and all
losses, damages, costs, charges, reasonable counsel fees, payments, expenses and
liability arising out of or attributable to:
(a) All actions of the Administrator required to be taken or taken pursuant
to this Agreement, provided that such actions are taken in good faith
and without negligence or willful misconduct or violation of applicable
law.
(b) The Fund's refusal or failure to comply with the terms of this
Agreement, or which arise out of the Fund's lack of good faith,
negligence or willful misconduct or violation of applicable law.
(c) The offer or sale of Shares in violation of any requirement under the
federal securities laws or regulations or the securities laws or
regulations of any state that such Shares be registered in such state
or in violation of any stop order or other determination or ruling by
any federal agency or any state with respect to the offer or sale of
such Shares in such state, except if such sale is conducted with the
knowledge of the Administrator or against the written advice of the
Administrator.
At any time the Administrator may apply to any officer of the Fund for
instructions, and may consult with the Fund's legal counsel with respect to any
matter arising in connection with the services to be performed by the
Administrator under this Agreement, and the Administrator shall not be liable
and shall be indemnified by the Fund for any action taken or omitted by it in
reliance upon such instructions or upon the opinion of such counsel except if
the Administrator knew or should have known that such conduct was illegal or
improper. The Administrator shall be protected and indemnified in acting upon
any paper or document furnished by or on behalf of the Fund or its Advisor,
reasonably believed to be genuine and to have been signed by the proper person
or persons, or upon any instruction, information, data, records or documents
provided the Administrator by machine readable input, telex, CRT data entry or
other similar means authorized by the Fund, and shall not be held to have notice
of any change of authority of any person, until receipt of written notice
thereof from the Fund.
In the event either party is unable to perform its obligations under the terms
of this Agreement because of acts of God, strikes, equipment or transmission
failure or damage reasonably beyond its control, or other causes reasonably
beyond its control, such party shall not be liable for damages to the other for
any damages resulting from such failure to perform or otherwise from such
causes.
Neither party to this Agreement shall be liable to the other party for
consequential damages under any provision of this Agreement or for any act or
failure to act hereunder.
The Administrator shall indemnify and hold the Fund harmless from and against,
any and all losses, damages, costs, charges, reasonable counsel fees, payments,
expenses and liability arising out of or attributable to the Administrator's
negligence or willful misconduct or violation of applicable law.
In order that the indemnification provisions contained in this Article shall
apply, upon the assertion of a claim for which either party may be required to
indemnify the other, the party seeking indemnification shall promptly notify the
other party of such assertion, and shall keep the other party advised with
respect to all developments concerning such claim. The party who may be required
to indemnify shall have the option to participate with the party seeking
indemnification the defense of such claim. The party seeking indemnification
shall in no case confess any claim or make any compromise in any case in which
the other party may be required to indemnify it except with the other party's
prior written consent. The party seeking indemnification shall notify the other
party in a reasonable period of time after reviewing any claim. A copy of the
claim shall accompany such notice. The other party shall have the right to
choose counsel to defend against such claim after consultation with the party
seeking indemnification.
7
<PAGE>
4. REPORTS.
The Administrator shall provide to the Board of Directors of the Fund,
on a quarterly basis, a report, in such a form as the Administrator and the Fund
shall from time to time agree, representing that, to its knowledge, the Fund was
in compliance with all requirements of applicable federal and state law,
including without limitation, the rules and regulations of the Securities and
Exchange Commission and the Internal Revenue Service, or specifying any
instances in which the Fund was not so in compliance. Whenever, in the course of
performing its duties under this Agreement, the Administrator determines, on the
basis of information supplied to the Administrator by the Fund, that a violation
of applicable law has occurred, or that, to its knowledge, a possible violation
of applicable law may have occurred or, with the passage of time, could occur,
the Administrator shall promptly notify the Fund and its counsel of such
violation.
5. ACTIVITIES OF THE ADMINISTRATOR.
The Administrator shall be free to render similar services to others so
long as its services hereinunder are not impaired thereby.
6. CONFIDENTIALITY.
The Administrator agrees that it will, on behalf of itself and its
officers and employees, treat all transactions contemplated by this Agreement,
and all other information germane thereto, as confidential and such information
shall not be disclosed to any person except as may be authorized by the Fund.
7. DURATION AND TERMINATION OF THE AGREEMENT.
This Agreement shall become effective as of the date the Fund `s
registration statement is declared effective by the SEC and shall remain in
force for a period of two (2) years. This Agreement may be extended for one (1)
year terms thereafter by the approval of the Board of Directors and the
Administrator.
The Fund, however, can terminate this agreement on 60 days written
notice to the Administrator in the event the Administrator is not performing the
services required hereunder in a usual and customary manner; and provided
further that the Administrator can terminate this contract upon 60 days prior
written notice to the Fund.
Upon termination of this Agreement, the Administrator shall deliver all
unissued and canceled stock certificates representing Shares, if any, remaining
in its possession, and all Shareholder records, books stock ledgers, instruments
and other documents (including computer or other electronically stored
information) made or accumulated in the performance of its duties hereunder
(which Administrator acknowledges are the property of the Fund), along with a
certified locator document clearly indicating the complete contents therein, to
such successor as may be specified in a notice of termination or other
instruction.7
8. ASSIGNMENT.
This Agreement shall extend to and shall be binding upon the parties
hereto and their respective successors and assigns; provided, however, that this
Agreement shall not be assignable by the Fund without the prior written consent
of the Administrator, or by the Administrator without the prior written consent
of the Fund.
8
<PAGE>
9. NEW YORK LAWS TO APPLY
The provisions of this Agreement shall be construed and interpreted in
accordance with the laws of the State of New York as at the time in effect and
the applicable provisions of the 1940 Act. To the extent that the applicable law
of the State of New York or any of the provisions herein, conflict with the
applicable provisions of the 1940 Act, the latter shall control.
10. AMENDMENTS TO THIS AGREEMENT.
This Agreement may be amended by the parties hereto only if such
amendment is in writing and signed by both parties.
11. MERGER OF AGREEMENT
This Agreement constitutes the entire agreement between the parties
hereto and supersedes any prior agreement with respect to the subject matter
hereof whether oral or written.
12. NOTICES.
All notices and other communications hereunder shall be in writing,
shall be deemed to have been given when delivered in person or by certified
mail, return receipt requested, or by telecopier and shall be given to the
following addresses (or such other addresses as to which notice is given):
To the Fund:...... To the Administrator:
Mrs. Vita Nelson.. Michael Miola
President......... President
The MP 63 Fund, Inc. American Data Services, Inc.
1010 Mamaroneck Avenue 150 Motor Parkway, Suite 109
Mamaroneck, NY 10543 Hauppauge, NY 11788
13. REGARDING THE ADMINISTRATOR.
The Administrator warrants and represents that it is duly authorized and
permitted to act as transfer agent and dividend disbursing agent under all
applicable laws and that it will immediately notify the Fund of any revocation
of such authority or permission or of the commencement of any proceeding or
other action which may lead to such revocation.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the
day and year first above written.
THE MP 63 FUND, INC. AMERICAN DATA SERVICES, INC.
By:____________________________ By:__________________________
Vita Nelson, President Michael Miola, President
9
<PAGE>
SCHEDULE A
(A) ADMINISTRATIVE SERVICE FEE:
For the services rendered by the Administrator in its capacity as
administrator, as specified in Paragraph 1. DUTIES OF THE ADMINISTRATOR., the
Fund shall pay the Administrator within ten (10) days after receipt of an
invoice from the Administrator at the beginning of each month, a fee computed as
follows:
CALCULATED FEE WILL BE BASED UPON PRIOR MONTH'S AVERAGE NET ASSETS:
(No prorating partial months)
Monthly Fee
First $75 million of average net assets of Fund
................................................1/12th of 0.35%(35 basis points)
Next $125 million of average net assets of Fund
.............................................. 1/12th of 0.30% (30 basis points)
Next $300 million of average net assets of Fund
..................................... .........1/12th of 0.25% (25 basis points)
Next $500 million of average net assets of Fund
.............................................. 1/12th of 0.20% (20 basis points)
All average net assets of Fund in excess of $1 billion
.............................................. 1/12th of 0.10% (10 basis points)
(B) EXPENSES.
The Fund shall reimburse the Administrator for any direct out-of-pocket
expenses, incurred by the Administrator in connection with the performance of
its duties hereunder to include: costs for printing, and filing with the SEC via
EDGAR when applicable, fund documents (i.e. shareholder transaction confirmation
statements, periodic shareholder transaction statements, redemption/dividend
checks, envelopes, financial statements, forms 1099 and 5498, proxy statements,
fund prospectus, IRA and any other qualified plan kits offered by the Fund,
etc.), initial 800-line installation cost and monthly recurring invoice from
AT&T for incoming calls, postage, costs incurred by a mail fulfillment house (1)
utilized for mailing the following (periodic shareholder account statements,
semi-annual and annual financial statements, proxy statement, Fund prospectus),
pro-rata portion (not to exceed $300) of annual SAS-70 audit letter, and any
authorized courier charges.
The Administrator shall provide the Fund with a monthly invoice of such expenses
and the Fund shall reimburse the Administrator within fifteen (15) days after
receipt thereof.
(1) Fund management reserves the right to approve the selection of the
fulfillment house utilized or to utilize their internal facilities to do the
mailing.
(C) FEES TO BE CHARGED DIRECTLY TO SHAREHOLDER ACCOUNTS:
IRA ACCOUNTS
Account establishment fee - $25.00*
Annual account maintenance fee (after 1st year account is opened) - $25.00*
Account Liquidation fee (in lieu of annual maintenance fee) - $25.00*
10
<PAGE>
* Includes custodian fee (currently $8.00 per year) charged by custodian to the
Administrator. If this fee is increased by Custodian Bank, the account
establishment, maintenance and liquidation fee charged to IRA accounts by the
Administrator will increase accordingly.
REGULAR ACCOUNTS
Non IRA Accounts (regular accounts) opened for an amount under $2,000 ** will be
subject to a $10.00 account establishment fee and a $10.00 annual maintenance
fee as long as the amount subscribed to the account is under $2,000.
** The Administrator may request from the Board of Directors, permission to
increase this threshold level to $5,000 if after the first year of Fund
operations, or at any point in time thereafter, it is determined that a
substantial portion (40% or more) of non IRA shareholder accounts in the Fund
hold between $2,000 and $5,000 in subscribed capital.
(C) SPECIAL REPORTS.
All reports and /or analyses requested by the Fund, its auditors, legal
counsel, portfolio manager, or any regulatory agency having jurisdiction over
the Fund, that are not in the normal course of fund administrative activities as
specified in Section 1 of this Agreement shall be subject to an additional
charge, agreed upon in advance, based upon the following rates:
Labor:
Senior staff - $150.00/hr.
Junior staff - $ 75.00/hr.
11
<PAGE>
SCHEDULE B
PORTFOLIOS TO BE SERVICED UNDER THIS AGREEMENT:
THE MP 63 FUND, INC.
12
Spitzer & Feldman P.C.
405 Park Avenue
New York, NY 10022
December 30, 1998
MP 63 Fund, Inc.
c/o American Data Services, Inc.
The Hauppauge Corporate Center
150 Motor Parkway
Hauppauge, NY 11788
Gentlemen:
We have acted as counsel to MP 63 Fund, Inc. (the "Company"),
a Maryland corporation, in connection with the preparation and filing of
Registration Statement No. 333-65599; ICA No. 811-09053 on Form N-1A and
Pre-Effective Amendment No. 1 thereto (the "Registration Statement") covering
shares of Common Stock, par value $.001 per share, of the Company.
We have examined copies of the Articles of Incorporation, the
By-Laws of the Company, the Registration Statement, and such other corporate
records, proceedings and documents, including the consents of the Board of
Directors of the Company, as we have deemed necessary for the purpose of this
opinion. In our examination of such material, we have assumed the genuineness of
all signatures and the conformity to original documents of all copies submitted
to us. As to various questions of fact material to such opinion, we have relied
upon statements and certificates of officers and representatives of the Company
and others.
We are not admitted to the practice of law in any jurisdiction
but the State of New York and we do not express any opinion as to the laws of
other states or jurisdictions, except as to matters of Federal law. For purposes
of Maryland corporate law, we have assumed that for purposes of this opinion
they are substantially similar to those of the State of New York.
Based upon and subject to the foregoing, we are of the opinion
that the shares of Common Stock, par value $.001 per share, of the Company, to
be issued in accordance with the terms of the offering, as set forth in the
Prospectus and Statement of Additional Information included as part of the
Registration Statement, and when issued and paid for, will constitute validly
authorized and legally issued shares of Common Stock, fully paid and
non-assessable.
We hereby consent to the filing of this opinion as an exhibit
to the Registration Statement and to the reference to us in the Company's
Prospectus and the Statement of Information, included as part of the
Registration Statement.
Very truly yours,
Spitzer & Feldman P.C.
McGLADREY & PULLEN, LLP
-----------------------
CERTIFIED PUBLIC ACCOUTANTS AND CONSULTANTS
CONSENT OF INDEPENDENT AUDITORS
We consent to the use of our report dated December 29, 1998 on the financial
statement of MP 63 Fund, Inc. referred to therein in the Registration Statement
on Form N-1A, file No. 333-65599 as filed with the Securities and Exchange
Commission.
/S/McGLADREY & PULLEN, LLP
- --------------------------
New York, New York
December 29, 1998
<PAGE>
McGLADREY & PULLEN, LLP
-----------------------
CERTIFIED PUBLIC ACCOUTANTS AND CONSULTANTS
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
To the Board of
Directors and Shareholders
We have audited the accompanying statement of assets and liabilities of MP 63
Fund, Inc. as of December 28, 1998. Our responsibility is to express an opinion
on these financial statements based on our audit.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the financial statement referred to above presents fairly, in
all material respects, the financial position MP 63 Fund, Inc. as of December
28, 1998, in conformity with generally accepted accounting principles.
/S/McGLADREY & PULLEN, LLP
- --------------------------
New York, New York
December 29, 1998
The Moneypaper, Inc.
1010 Mamaroneck Avenue
Mamaroneck, New York 10543
December 28, 1998
Board of Directors of
MP 63 Fund, Inc.
The Hauppauge Corporate Center
150 Motor Parkway
Hauppauge, New York 11788
Gentlemen:
I hereby subscribe for 10,000 shares of the Common Stock, $.001 par value
per share, of MP 63 Fund, Inc. (the "Fund"), a Maryland corporation (the
"Company") at $10.000 per share for an aggregate purchase price of $100,000. My
payment in full is confirmed.
I hereby represent and agree that I am purchasing these shares of stock
for investment purposes, for my own account and risk and not with a view to any
sale, division or other distribution thereof within the meaning of the
Securities Act of 1933 as amended, nor with any present intention of
distributing or selling such shares. I further agree that if any of such shares
redeemed during the period that the deferred organizational expenses of the
Company are being amortized, I will reimburse the Company then unamortized
organizational expenses in the same ratio as the number of shares redeemed bears
to the number of such shares held at the time of redemption.
Very truly yours,
By: /s/ VITA NELSON
--------------------
The Moneypaper, Inc.
Vita Nelson, Chief Executive Officer
Confirmed and Accepted:
MP 63 Fund, Inc.
By: /s/ ROD DRYSDALE
-------------------------
<TABLE> <S> <C>
<ARTICLE> 6
<S> <C>
<PERIOD-TYPE> OTHER
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> DEC-28-1998
<PERIOD-END> DEC-31-1999
<INVESTMENTS-AT-COST> 0
<INVESTMENTS-AT-VALUE> 0
<RECEIVABLES> 0
<ASSETS-OTHER> 100,000
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 100,000
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 0
<TOTAL-LIABILITIES> 0
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 100,000
<SHARES-COMMON-STOCK> 10,000
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 100,000
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 0
<OTHER-INCOME> 0
<EXPENSES-NET> 0
<NET-INVESTMENT-INCOME> 0
<REALIZED-GAINS-CURRENT> 0
<APPREC-INCREASE-CURRENT> 0
<NET-CHANGE-FROM-OPS> 0
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 10,000
<NUMBER-OF-SHARES-REDEEMED> 0
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 0
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 0
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 0
<AVERAGE-NET-ASSETS> 0
<PER-SHARE-NAV-BEGIN> 10.00
<PER-SHARE-NII> 0
<PER-SHARE-GAIN-APPREC> 0
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 10.00
<EXPENSE-RATIO> 0
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
