AS FILED WITH THE SECURITIES
AND EXCHANGE COMMISSION
ON 06/08/99
FILE NOS: 811-9219
333-71501
SECURITIES AND EXCHANGE COMMISSION
----------------------------------
Washington, D.C. 20549
FORM N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 [X]
Pre-Effective Amendment No. [2]
Post-Effective Amendment No. [ ]
and
REGISTRATION STATEMENT UNDER
THE INVESTMENT COMPANY ACT OF 1940 [X]
Amendment No. [2]
(Check appropriate box or boxes.)
OPTIMAL FUNDS, INC.
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(Exact name of Registrant as Specified in Charter)
213-G VT Route 15
Jericho, VT 05465
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(Address of Principal Executive Office)
Registrant's Telephone Number, including Area Code:
802-899-2593
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MR. MITCHELL M. MAYNARD
213-G VT ROUTE 15
JERICHO, VT 05465
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(Name and Address of Agent for Service)
Please send copy of communications to:
DAVID D. JONES, ESQUIRE
518 Kimberton Road, # 134
Phoenixville, Pennsylvania 19460
610-718-5381
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Approximate Date of Proposed Public Offering: As soon as practicable following
effective date.
Registrant declares that it is registering an indefinite number or amount of its
securities by this Registration Statement.
The Registrant hereby amends this Registration Statement on such date or dates
as may be necessary to delay its effective date until the Registrant shall file
a further amendment which specifically states that this Registration Statement
shall thereafter become effective in accordance with Section 8(a) of the
Securities Act of 1933 or until the Registration Statement shall became
effective on such date as the Commission, acting pursuant to said Section 8(a),
may determine.
TOTAL NUMBER OF PAGES _____
EXHIBIT INDEX BEGINS
ON PAGE _____
<PAGE>
THE OPTIMAL FUND
CROSS-REFERENCE SHEET
(As required by Rule 495)
ITEM NO. ON FORM N-1A CAPTION OR SUBHEADING IN PROSPECTUS
- --------------------- -----------------------------------
OR STATEMENT OF ADDITIONAL INFORMATION
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PART A - INFORMATION REQUIRED IN PROSPECTUS
- -------------------------------------------
Part A of this Registration Statement is incorporated herein by reference to
Pre-effective Amendment # 1, filed on April 28, 1999
PART B. STATEMENT OF ADDITIONAL INFORMATION
- -------------------------------------------
Part B of this Registration Statement is incorporated herein by reference to
Pre-effective Amendment # 1, filed on April 28, 1999, with the exception of the
following:
STATEMENT OF ASSETS AND LIABILITIES
OPTIMAL FUNDS, INC -
- --------------------
THE OPTIMAL FUND
- ----------------
Statement of Assets and Liabilities
- -----------------------------------
May 31, 1999
- ------------
ASSETS
Cash $ 100,000 -
------------
Total Assets 100,000 -
------------
NET ASSETS $ 100,000 -
============
Net Assets Consist of:
Capital paid-in $ 100,000 -
------------
Total Net Assets $ 100,000 -
============
NET ASSET VALUE AND REDEMPTION PRICE PER
SHARE (BASED ON 10,000 CLASS C SHARES OUTSTANDING) $ 10.00
============
The accompanying notes are an integral part of this financial statement.
<PAGE>
OPTIMAL FUNDS, INC. -
---------------------
THE OPTIMAL FUND
----------------
Notes to the Statement of Assets and Liabilities
------------------------------------------------
May 31, 1999
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1. ORGANIZATION
The Optimal Funds, Inc. - The Optimal Fund (the "Fund") is a series of
Optimal Funds, Inc. ("the Company") and is registered under the Investment
Company Act of 1940, as amended, as an open-end, diversified management
investment company. The Company was incorporated under the laws of the
State of Maryland on April 27, 1999.
The Fund has had no operations other than those relating to organizational
matters including the sale and issuance of 10,000 Class C shares of the
Fund to Leveraged Index Management Company ("LIMCO"), its investment
advisor.
2. INVESTMENT ADVISORY AND OPERATING SERVICE AGREEMENTS
The Fund has retained as its investment advisor, LIMCO. Under the
Investment Advisory Agreement between the Fund and LIMCO, LIMCO is entitled
to receive from the Fund as compensation for its investment management
services an annual fee of 0.50% of the Fund's average daily net assets.
Under terms of the Operating Services Agreement between the Fund and LIMCO,
LIMCO will provide or arrange to provide, essentially all other services
needed by the Fund. These services include transfer agent, accounting,
distribution and custodial services. LIMCO is entitled to receive as
compensation for the operating services a fee at an annual rate of 0.95% of
the Fund's average daily net assets. The effect of the Investment Advisory
Agreement and the Operating Service Agreement is to cap the Fund's normal
operating expenses. These contracts do not cover expenses incurred by the
Fund for taxes, interest, brokerage fees, legal expenses for litigation,
and other extraordinary expenses. These fees are collectively called
management fees. However, LIMCO has voluntarily agreed to waive its
advisory fees and/or to reimburse the Fund, if necessary, if the management
fee and/or other expenses would cause the total annual expenses to exceed
2.50% for the class C shares.
3. DISTRIBUTION AGREEMENT
The Fund has adopted a distribution plan (the "Distribution Plan") for its
Class C shares, pursuant to which the Fund may incur shareholder servicing
expenses of up to 0.25% per annum of the Fund's average daily net assets,
and up to 0.75% per annum of the Fund's average daily net assets on its
Class C shares for distribution services. These fees are available to
brokers, dealers and other persons who provide distribution and other
services to the Fund to help sell Class C shares.
The Distribution Plan provides that the Fund may finance activities which
are primarily intended to result in the sale of the Fund's shares,
including but not limited to, advertising, printing of prospectuses and
reports for other than existing shareholders, preparation and distribution
of advertising materials and sales literature, and payments to dealers and
shareholder servicing agents.
<PAGE>
INDEPENDENT AUDITOR'S REPORT
To the Shareholders and
Board of Directors of
Optimal Funds, Inc. -
The Optimal Fund
We have audited the statement of assets and liabilities of Optimal Funds,
Inc. - The Optimal Fund as of May 31, 1999. This financial statement is the
responsibility of the Fund's management. Our responsibility is to express an
opinion on this statement of assets and liabilities 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 statement is free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the statement of assets. 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 audits provide a reasonable basis for our opinion.
In our opinion, the statement of assets and liabilities referred to above
presents fairly, in all material respects, the financial position of Optimal
Funds, Inc. - The Optimal Fund as of May 31, 1999, in conformity with generally
accepted accounting principles.
Abington, Pennsylvania Sanville & Company
June 7, 1999 Certified Public Accountants
PART C
Information required to be included in PART C is set forth under the appropriate
Item, so numbered, in PART C of the Registration Statement.
- -----------------------------------------------------------------------
<PAGE>
PART C
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OTHER INFORMATION
Item 23. Financial Statements and Exhibits
- -------- ---------------------------------
(a) Articles of Incorporation --- Incorporated by reference to Pre-effective
Amendment # 1, filed on April 28, 1999.
(b) By-Laws --- Incorporated by reference to Pre-effective Amendment # 1, filed
on April 28, 1999.
(c) Instruments defining rights of Shareholders --- None, See Articles of
Incorporation
(d) Investment Advisory Contracts --- Incorporated by reference to
Pre-effective Amendment # 1, filed on April 28, 1999.
(e) Underwriting Contracts --- Incorporated by reference to Pre-effective
Amendment # 1, filed on April 28, 1999.
(f) Bonus or Profit Sharing Contracts --- None
(g) Custodian Agreements --- Incorporated by reference to Pre-effective
Amendment # 1, filed on April 28, 1999.
(h) Other Material Contracts --- Incorporated by reference to Pre-effective
Amendment # 1, filed on April 28, 1999.
(i) Legal Opinion --- Incorporated by reference to Pre-effective Amendment # 1,
filed on April 28, 1999.
(j) Other opinions --- Attached as Exhibit 23(J)
(k) Omitted Financial statements --- None
(l) Initial Capital Agreements --- Incorporated by reference to Pre-effective
Amendment # 1, filed on April 28, 1999.
(m) Rule 12b-1 Plan --- Incorporated by reference to Pre-effective Amendment #
1, filed on April 28, 1999.
(n) Financial Data Schedule --- Not Applicable
<PAGE>
Item 24. Persons Controlled by or Under Common Control With Registrant
- -------- -------------------------------------------------------------
See Caption "Principal Holders of Securities" in the Statement of
Additional Information
Item 25. Indemnification
- -------- ---------------
(a) General. The Articles of Amendment and Restatement of Charter
(the "Articles") of the Corporation provide that to the fullest
extent permitted by Maryland and federal statutory and decisional
law, as amended or interpreted, no director or officer of this
Corporation shall be personally liable to the Corporation or the
holders of Shares for money damages for breach of fiduciary duty
as a director and each director and officer shall be indemnified
by the Corporation; provided, however, that nothing herein shall
be deemed to protect any director or officer of the Corporation
against any liability to the Corporation or the holders of Shares
to which such director or officer would otherwise be subject by
reason of breach of the director's or officer's duty of loyalty
to the Corporation or its stockholders, for acts or omissions not
in good faith or which involved intentional misconduct or a
knowing violation of law or for any transaction from which the
director derived any improper personal benefit. The By-Laws of
the Corporation provide that the Corporation shall indemnify any
individual who is a present or former director or officer of the
Corporation and who, by reason of his or her position was, is or
is threatened to be made a party to any threatened, pending or
completed action, suit or proceeding, whether civil, criminal,
administrative or investigative (hereinafter collectively
referred to as a "Proceeding") against judgments, penalties,
fines, settlements and reasonable expenses actually incurred by
such director or officer in connection with such Proceeding, to
the fullest extent that such indemnification may be lawful under
Maryland law.
(b) Disabling Conduct. The By-Laws provide that nothing therein shall
be deemed to protect any director or officer against any
liability to the Corporation or its shareholders to which such
director or officer 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 or her
office (such conduct hereinafter referred to as "Disabling
Conduct").
The By-Laws provide that no indemnification of a director or
officer may be made unless: (1) there is a final decision on the
merits by a court or other body before whom the Proceeding was
brought that the director or officer to be indemnified was not
liable by reason of Disabling Conduct; or (2) in the absence of
such a decision, there is a reasonable determination, based upon
a review of the facts, that the director or officer to be
indemnified was not liable by reason of Disabling Conduct, which
determination shall be made by: (i) the vote of a majority of a
quorum of directors who are neither "interested persons" of the
Corporation as defined in Section 2(a)(19) of the Investment
Company Act of 1940, nor parties to the Proceeding; or (ii) an
independent legal counsel in a written opinion.
<PAGE>
(c) Standard of Conduct. Under Maryland law, the Corporation may not
indemnify any director if it is proved that: (1) the act or
omission of the director was material to the cause of action
adjudicated in the Proceeding and (i) was committed in bad faith
or (ii) was the result of active and deliberate dishonesty; or
(2) the director actually received an improper personal benefit;
or (3) in the case of a criminal proceeding, the director had
reasonable cause to believe that the act or omission was
unlawful. No indemnification may be made under Maryland law
unless authorized for a specific proceeding after a determination
has been made, in accordance with Maryland law, that
indemnification is permissible in the circumstances because the
requisite standard of conduct has been met.
(d) Required Indemnification. Maryland law requires that a director
or officer who is successful, on the merits or otherwise, in the
defense of any Proceeding shall be indemnified against reasonable
expenses incurred by the director or officer in connection with
the Proceeding. In addition, under Maryland law, a court of
appropriate jurisdiction may order indemnification under certain
circumstances.
(e) Advance Payment. The By-Laws provide that the Corporation may pay
any reasonable expenses so incurred by any director or officer in
defending a Proceeding in advance of the final disposition
thereof to the fullest extent permissible under Maryland law. In
accordance with the By-Laws, such advance payment of expenses
shall be made only upon the undertaking by such director or
officer to repay the advance unless it is ultimately determined
that such director or officer is entitled to indemnification, and
only if one of the following conditions is met: (1) the director
or officer to be indemnified provides a security for his
undertaking; (2) the Corporation shall be insured against losses
arising by reason of any lawful advances; or (3) there is a
determination, based on a review of readily available facts, that
there is reason to believe that the director or officer to be
indemnified ultimately will be entitled to indemnification, which
determination shall be made by: (i) a majority of a quorum of
directors who are neither "interested persons" of the
Corporation, as defined in Section 2(a)(19) of the Investment
Company Act of 1940, nor parties to the Proceeding; or (ii) an
independent legal counsel in a written opinion.
(f) Insurance. The By-Laws provide that, to the fullest extent
permitted by Maryland law and Section 17(h) of the Investment
Company Act of 1940, the Corporation may purchase and maintain
insurance on behalf of any officer or director of the
Corporation, against any liability asserted against him or her
and incurred by him or her in and arising out of his or her
position, whether or not the Corporation would have the power to
indemnify him or her against such liability.
Item 26. Business and Other Connections of Investment Adviser
- -------- ----------------------------------------------------
None
Item 27. Principal Underwriter
- -------- ---------------------
Declaration Distributors, Inc., 555 North Lane, Suite 6160,
Conshohocken, PA 19428
Item 28. Location of Accounts and Records
- -------- --------------------------------
The books and records of the Fund, other than the accounting and
transfer agency (including dividend disbursing) records, are
maintained by the Fund at 213-G VT, Route 15, Jericho, VT 05465; the
Fund's accounting and transfer agency records are maintained at
Declaration Service Company, 555 North Lane, Suite 6160, Conshohocken,
PA 19428.
Item 29. Management Services
- -------- -------------------
There are no management service contracts not described in Part A or
Part B of Form N-1A.
Item 30. Undertakings
- -------- ------------
Not Applicable
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, the Registrant has duly caused this Registration
Statement to be signed on its behalf by the undersigned, hereunto duly
authorized in Jericho, Vermont on the 8th day of June, 1999.
OPTIMAL FUNDS, INC.
By: /s/ Mitchell M. Maynard
-----------------------------
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:
NAME TITLE DATE
- ---- ----- ----
/s/ Mitchell M. Maynard President & Director June 8, 1999
/s/ Judith E. Liskin-Gasparro Director June 8, 1999
/s/ Ellyn M. Mack Director June 8, 1999
/s/ Christine Bechade Director June 8, 1999
/s/ Elaine A. Bernasconi Director June 8, 1999
<PAGE>
EXHIBIT INDEX
Exhibit 23(J) --- Consent of Independent Auditors
EXHIBIT 23(J)
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
We consent to the use of our report, dated June 7, 1999, on the initial
financial statement of The Optimal Fund, a series of Optimal Funds, Inc., which
is included in pre-effective amendment # 2 to the registration Statement under
the Securities Act of 1933 and included in the prospectus and Statement of
Additional information, as specified, and to the reference made to us under the
caption "Independent Auditors" in the Statement of Additional Information.
Abington, Pennsylvania /s/ Sanville & Company
June 7, 1999 Certified Public Accountants
