As filed with the Securities and Exchange Commission on March 26, 1999
Registration Nos.
================================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
----------------
Form N-1A
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933 |X|
PRE-EFFECTIVE AMENDMENT NO. ___ |_|
POST-EFFECTIVE AMENDMENT NO. ___ |_|
AND/OR
REGISTRATION STATEMENT
UNDER
THE INVESTMENT COMPANY ACT OF 1940 |X|
AMENDMENT NO. ___ |_|
----------------
GAMNA SERIES FUNDS, INC.
(Exact name of registrant as specified in charter)
----------------
180 Maiden Lane
New York, New York 10038
(Address of principal executive offices)
Registrant's Telephone Number, including Area Code: 212-480-1900
Mark P. Bronzo
Groupama Asset Management N.A.
180 Maiden Lane
New York, New York 10038
(Name and Address of agent for service)
----------------
Copies to:
Cynthia Cobden, Esq.
Simpson Thacher & Bartlett
425 Lexington Avenue
New York, New York 10017
----------------
Approximate Date of Proposed Public Offering: As soon as practicable after
this Registration Statement becomes effective.
----------------
The Registrant hereby amends this Registration Statement on such date or
dates as may be necessary to delay its effective date until the Registrant shall
file a further amendment which specifically states that this Registration
Statement shall thereafter become effective in accordance with Section 8(a) of
the Securities Act of 1933 or until the Registration Statement shall become
effective on such date as the Securities and Exchange Commission, acting
pursuant to said Section 8(a), may determine.
Pursuant to Rule 24f-2 under the Investment Company Act of 1940, as
amended, Registrant hereby elects to register an indefinite number of Shares of
Registrant and any series thereof.
================================================================================
<PAGE>
GAMNA SERIES FUNDS, INC.
CROSS REFERENCE SHEET
Item Number Form N-1A,
Part A Prospectus Caption
- ---------------------- ------------------
1(a) Cover Page
1(b) Back Cover Page
2 The Fund At A Glance; The Fund's Main
Investment Strategy; The Main Risks of
Investing in the Fund
3 Fees and Expenses
4 The Fund At A Glance; The Fund's Main
Investment Strategy; The Main Risks of
Investing in the Fund
5 Not Applicable
6 Management of the Fund
7 Shareholder Information: Sales Charge and
Choosing a Share Class, Pricing of Fund
Shares; How to Open Your Fund Account,
Minimum Investments; How to Purchase Shares,
Types of Account Ownership, Tax-Deferred
Accounts, How To Redeem Shares, Payment of
Redemption Proceeds, Written Instructions,
Signature Requirements Based on Account
Type, Signature Guarantee, How to Obtain a
Signature Guarantee, Shareholder Services
and Account Policies
8 Distributions and Taxes
9 Not Applicable
2
<PAGE>
Item Number Form N-1A, Statement of Additional
Part B Information Caption
- --------------------- -------------------
10 Cover Page; Table of Contents
11 The Fund
12 The Fund; Investment Policies and
Restrictions
13 Management of the Company and the Fund
14 Management of the Company and the Fund -
GAMNA; General Information - Control
Persons and Principal Holders
15 Management of the Company and the
Fund; Distribution and
Sub-Administration Agreement; Transfer
Agent and Custodian; Distribution Plans
16 Investment Policies and Restrictions:
Portfolio Transactions and Brokerage
Allocation
17 General Information - Description of
Shares, Voting Rights and Liabilities
18 Determination of Net Asset Value; Purchase,
Redemptions and Exchanges
19 Distributions; Tax Matters
20 Management of the Company and the
Fund; Distribution and
Sub-Administration Agreement
21 Not Applicable
22 Financial Statements
Part C
Information required to be included in Part C is set forth under the appropriate
Item, so numbered, in Part C to this Registration Statement.
3
<PAGE>
Subject to Completion, dated March 26, 1999
PROSPECTUS
June __, 1999
The information in this prospectus is not complete and may be changed. We may
not sell these securities until the registration statement filed with the
Securities and Exchange Commission is effective. This prospectus is not an offer
to sell these securities and it is not soliciting an offer to buy these
securities in any state where the offer or sale is not permitted.
GAMNA Focus Fund
Neither the Securities and Exchange Commission nor any state securities
commission has approved of securities of this Fund or determined if this
prospectus is accurate or complete. It is a crime to state otherwise.
<PAGE>
CONTENTS
THE FUND AT A GLANCE ...................................................... 1
THE FUND'S MAIN INVESTMENT STRATEGY ....................................... 1
THE MAIN RISKS OF INVESTING IN THE FUND ................................... 3
FEES AND EXPENSES ......................................................... 4
PAST PERFORMANCE OF PRIVATE ACCOUNTS ...................................... 6
MANAGEMENT OF THE FUND .................................................... 7
SHAREHOLDER INFORMATION ................................................... 9
DISTRIBUTIONS AND TAXES ................................................... 19
GLOSSARY OF INVESTMENT TERMS .............................................. A-1
<PAGE>
THE FUND AT A GLANCE
The Fund's investment objective is long-term growth of capital. The
Fund is non-diversified and will seek to achieve its objective by normally
concentrating its investments in a core position of 20-30 common stocks. The
investment adviser for the Fund is Groupama Asset Management N.A. (the "Adviser"
or "GAMNA").
THE FUND'S MAIN INVESTMENT STRATEGY
Investment Objective
The Fund's investment objective is long-term growth of capital.
Types of Investments
The GAMNA Focus Fund invests primarily in common stocks selected for
their growth potential. The Portfolio Manager utilizes both a "top down" and
"bottom up" approach in constructing the portfolio. The "top down" approach is a
screening process which narrows the available number of stock investments from
thousands of large cap stocks to several hundred potential stock ideas. The "top
down" approach takes into consideration such macro-economic factors as Federal
Reserve Policy, interest rates, inflation, and the domestic economy. This
approach helps the Portfolio Manager focus his analysis on the most attractive
business sectors within the overall market. The "bottom-up" analysis is then
performed on potential stock ideas in these targeted business sectors by
identifying individual companies with both attractive earnings potential and
sustainable growth characteristics that may not be recognized by the market at
large. Twelve month target prices are established for all individual companies
reviewed, with minimum hurdle rates of capital appreciation potential required
before a stock will be added to the portfolio. Realization of income is not a
significant investment consideration. Any income realized on the GAMNA Focus
Fund's investments will be incidental to its objective.
Under normal market conditions, the Fund will invest at least 80% of
its total assets in common stocks and American, Global or other types of
Depositary Receipts of companies with market capitalization of $1 billion or
more which the Adviser believes have growth potential.
The Fund may invest in "special situations" from time to time. A
special situation arises when, in the opinion of the Fund's Portfolio Manager,
the securities of a particular issuer will appreciate in value due to a specific
development with respect to that issuer. These are described in more detail
below.
The Fund may invest up to 20% of its total assets in high-quality
money market instruments, repurchase agreements, U.S. Government obligations,
short-term debt securities and investment grade bonds, notes and debentures. In
addition, the Fund may invest without limit in U.S. Government obligations and
short-term debt securities or money market instruments if the
<PAGE>
2
Adviser determines that a temporary defensive position is advisable or to meet
anticipated redemption requests.
The Fund may change any of these investment policies (including its
investment objective) without shareholder approval.
The following questions are designed to help you better understand
an investment in the Fund.
Q: What is the main risk of investing in the Fund?
A: Since the Fund usually invests heavily in common stocks, the fundamental risk
is that the value of the stocks the Fund holds might decrease. Stock values may
fluctuate in response to the activities of an individual company or in response
to general market and/or economic conditions. Historically, common stocks have
provided greater long-term returns and have entailed greater short-term risks
than other investment choices. These risks are described in more detail below
under "The Main Risks of Investing in the Fund".
Q: What is meant by "market capitalization"?
A: Market capitalization is the most commonly used measure of the size and value
of a company. It is computed by multiplying the current market price of a share
of the company's stock by the total number of its shares outstanding. Under
normal market conditions, the Fund will invest at least 80% of its total assets
in companies with market capitalization of $1 billion or more.
Q: How frequently will securities be purchased and sold?
A: The Fund generally intends to purchase securities for long-term investment
rather than short-term gains. However, short-term transactions may result from
liquidity needs, securities having reached a price or yield objective, changes
in interest rates or the credit standing of an issuer, or by reason of economic
or other developments not foreseen at the time of the initial investment
decision. Changes are made in the Fund's portfolio whenever the Portfolio
Manager believes such changes are desirable. Portfolio turnover rates are
generally not a factor in making buy and sell decisions. To a limited extent,
the Fund may purchase securities in anticipation of relatively short-term price
gains.
Q: What is a "special situation"?
A: A special situation arises when the Adviser believes that the securities of
an issuer will appreciate in value due to a specific development with respect to
that issuer. Special situations may include significant changes in a company's
allocation of its existing capital, a restructuring of assets, or a redirection
of free cash flows. For example, issuers undergoing significant capital changes
may include companies involved in spin-offs, sales of divisions, mergers or
acquisitions, companies emerging from bankruptcy, or companies initiating large
changes in their debt to equity ratio. Companies that are redirecting cash flows
may be reducing debt, repurchasing shares
<PAGE>
3
or paying dividends. Special situations may also result from (i) significant
changes in industry structure through regulatory developments or shifts in
competition; (ii) a new or improved product, service, operation or technological
advance; (iii) changes in senior management; or (iv) significant changes in cost
structure.
THE MAIN RISKS OF INVESTING IN THE FUND
All mutual funds carry a certain amount of risk. You may lose money
on your investment in the Fund. Here are some of the specific risks of investing
in the Fund.
The value of shares of the Fund will be influenced by conditions in
stock markets as well as the performance of the individual companies selected
for the Fund's portfolio.
The Fund can invest in depositary receipts which are securities
issued by financial institutions (like banks or trust companies) which represent
ownership in underlying securities issued by foreign companies. These securities
carry additional risks associated with investing in foreign securities, such as
changes in currency exchange rates, lack of public information about the foreign
company and political, social and economic instability in the company's country.
Unsponsored depositary receipts may not provide as much information about the
underlying issuer and may not carry the same voting privileges as sponsored
depositary receipts.
If the Fund trades securities actively, transaction costs will be
increased which will lower performance and could increase taxable dividends.
Investment in special situations may carry an additional risk of
loss in the event that the anticipated development does not occur or does not
attract the expected attention.
If the Fund invests a substantial portion of its assets in money
market instruments, repurchase agreements, U.S. Government obligations or
short-term debt securities, it could reduce the Fund's potential returns. In
addition, the value of debt securities tends to fall when prevailing interest
rates rise which could affect the value of the Fund's shares. Short-term debt
securities are generally less sensitive to interest rate changes than
longer-term securities.
The Fund is non-diversified and may invest a greater percentage of
its assets in a particular issuer than a diversified fund would. As a result,
the value of its shares will be more sensitive to economic problems affecting
those issuers. Since the Fund may invest in a relatively small number of
companies, a decrease in the value of any one of its investments can have a
large impact on the value of the entire portfolio.
<PAGE>
4
FEES AND EXPENSES
The following tables show the fees and expenses charged when you own
shares of the Fund.
Shareholder Fees (Fees Paid Directly From Your Investment)
Maximum Deferred Sales
Maximum Sales Charge Charge (Load) shown as
(Load) when you buy lower of original
shares, shown as % of purchase price or
the offering price(1) redemption proceeds
- --------------------------------------------------------------------------------
Class A Shares 5.75% None
- --------------------------------------------------------------------------------
Class B Shares None 5.00%
- --------------------------------------------------------------------------------
Class C Shares None 1.00%
- --------------------------------------------------------------------------------
(1) The offering price is the net asset value of the shares purchased plus any
sales charge.
The description of the different share classes begins on page 9. A
reduced sales charge may be available depending on the size of your investment
and other factors.
Annual Fund Operating Expenses (Expenses That Are Deducted From Fund Assets)
TOTAL
ANNUAL FUND
DISTRIBUTION OTHER OPERATING
CLASS OF SHARES MANAGEMENT FEE (12B-1) FEES EXPENSES EXPENSES
- -------------------------------------------------------------------------------
CLASS A 0.25%
- -------------------------------------------------------------------------------
CLASS B 0.75%
- -------------------------------------------------------------------------------
CLASS C 0.75%
- -------------------------------------------------------------------------------
The actual management fee is currently expected to be _____, other
expenses are expected to be _____ and the total annual Fund operating expenses
are expected not to exceed _____ for Class A shares, ____ for Class B shares and
______ for Class C shares. That is because the Advisor has volunteered not to
collect a portion of its fees and to reimburse others. The Advisor may end this
arrangement at any time. The Fund may have to repay these waivers and
reimbursements to GAMNA in the following two years if the repayment can be made
within the total expense limit.
As of the date of this Prospectus, the Fund had not commenced
investment operations. The amounts set forth for "Other Expenses" are therefore
based on estimates for the
<PAGE>
5
current fiscal year and will include fees for shareholder services,
administrative fees, custodial fees, legal and accounting fees, printing costs
and registration fees.
The table does not reflect charges or credits which you might incur
if you invest through a financial institution.
EXAMPLE This example helps you compare the cost of investing in the Fund with
the cost of investing in other mutual funds. The example assumes:
o you invest $10,000
o you sell all your shares at the end of the period
o your investment has a 5% return each year, and
o the Fund's operating expenses remain the same as shown above.
IF YOU SELL YOUR SHARES:
1 YEAR 3 YEARS
- ---------------------------------------------------
CLASS A SHARES* $ $
- ---------------------------------------------------
CLASS B SHARES** $ $
- ---------------------------------------------------
CLASS C SHARES** $ $
- ---------------------------------------------------
* Assumes sales charge is deducted when shares are purchased.
** Assumes applicable deferred sales charge is deducted when shares are sold.
IF YOU DON'T SELL YOUR SHARES:
1 YEAR 3 YEARS
- ---------------------------------------------------
CLASS B SHARES $ $
- ---------------------------------------------------
CLASS C SHARES $ $
- ---------------------------------------------------
This example is for comparison only. Your actual costs may be higher or lower,
depending on the amount you invest and the Fund's actual rate of return.
<PAGE>
6
PAST PERFORMANCE OF PRIVATE ACCOUNTS
The investment results shown below represent the net historical
performance of Mark Bronzo with respect to non-fee paying proprietary accounts
while employed at SOREMA N.A. Holding Corporation until December 31, 1995 and
thereafter for client accounts at GROUPAMA Asset Management N.A. (formerly named
Sorema Asset Management). These private accounts have substantially similar
investment objectives, policies and strategies to those of the Fund. Mr. Bronzo
was the sole portfolio manager responsible for this performance. Mr. Bronzo
continues to be primarily responsible for the equity portfolios for clients of
GROUPAMA Asset Management N.A., with assistance from Daniel Portanova, and
intends to utilize a substantially similar investment approach for the Fund. The
performance information is provided to illustrate the past performance of Mr.
Bronzo, assisted by Mr. Portanova, in managing substantially similar accounts
and does not represent the performance of the Fund, which has no history of
operations. Investors should realize that this past performance data is not an
indication of future performance of the Fund.
Net Annualized Returns as Of December 31, 1998
[GRAPHIC OMITTED]
[The following table was depicted as a bar graph in the printed material.]
<TABLE>
<CAPTION>
One Year Three Years Five Years Nine Years
-------- ----------- ---------- ----------
12/31/97-12/31/98 12/31/95-12/31/98 12/31/93-12/31/98 12/31/89-12/31/98
----------------- ----------------- ----------------- -----------------
<S> <C> <C> <C> <C>
GAM Equity 34.16% 36.99% 38.94% 29.26%
S&P 500 Index 29.58% 28.27% 24.06% 17.89%
</TABLE>
The performance information above has been calculated in accordance
with recommended Performance Presentation Standards of the Association of
Investment Management and Research ("AIMR"), retroactively applied to certain
time periods. All performance numbers are audited each year to receive a Level
II verification in accordance with AIMR's Performance
<PAGE>
7
Presentation Standards. The data represents sixty-five accounts with assets as
of December 31, 1998 of $552 million representing 39% of total assets under
management. The data includes all accounts with substantially similar investment
objectives, policies and strategies to those of the Fund other than $240 million
of equity assets which are managed in sub-advisory accounts through a wrap-fee
program with different fee structures and which are reflected in a separate
composite in accordance with AIMR Standards. The asset-weighted composite
dispersion for 1998 was 0.48%. Only portfolios that have been managed for the
full year are included in the dispersion calculation.
The performance numbers above reflect the deduction for investment
advisory fees and are net of all transaction costs and expenses. The performance
results reflect dividend reinvestment and are calculated on a settlement date
basis through December 31, 1995 and on a trade date basis thereafter.
The index used for comparison is the S&P 500 Index, an unmanaged
index with no expenses, which covers 500 industrial, utility, transportation and
financial companies of the U.S. markets. It is a capitalization-weighted index
calculated on a total return basis with dividends reinvested.
The private accounts that are included in the data above are not
subject to the same types of expenses as the Fund and are not subject to the
same diversification requirements, tax restrictions and other investment
limitations imposed on the Fund by the Investment Company Act of 1940 or
Subchapter M of the Internal Revenue Code of 1986. The performance results of
the private accounts could have been adversely affected if the accounts had been
regulated as investment companies under the federal tax and securities laws. In
addition, differences in the Securities and Exchange Commission (the "SEC") and
AIMR methodology for calculating performance could result in different
performance data for identical time periods.
MANAGEMENT OF THE FUND
The Fund's Investment Adviser
GAMNA is the investment adviser to the Fund and is responsible for
the day-to-day management of the investment portfolio and other business affairs
of the Fund. GAMNA is located at 180 Maiden Lane, New York, New York 10038.
GAMNA was formed as a joint venture between Groupama Asset
Management and Sorema NA Holding Corp. GAMNA originally was the in-house
investment department of Sorema NA Reinsurance which began managing assets in
1989. GAMNA became a separate company and started to manage assets for outside
clients in 1995 under the name Sorema Asset Management. In August of 1998,
Sorema Asset Management's name was changed to Groupama Asset Management N.A.
Mark Bronzo has continually managed the equity assets of these companies since
1989. GAMNA currently serves as investment adviser to individual, corporate,
charitable and retirement accounts.
<PAGE>
8
GAMNA furnishes continuous advice and recommendations concerning the
Fund's investments. GAMNA also oversees certain administrative, compliance and
accounting services for the Fund. In addition, GAMNA employees serve as officers
of the Fund and GAMNA provides office space for the Fund and pays the salaries,
fees and expenses of Fund officers and Directors who are affiliated with GAMNA.
Portfolio Manager
Mark P. Bronzo is the portfolio manager of the Fund and is
responsible for making investment decisions and for the day-to-day management of
the Fund's portfolio. Mr. Bronzo is assisted by Daniel W. Portanova.
Mark Bronzo is Senior Vice President, Managing Director and Board
Member of GAMNA. Mr. Bronzo is primarily responsible for management of GAMNA's
equity accounts. From 1990 to 1998, Mr. Bronzo served as Chief Investment
Officer of Sorema N.A. Holding Corporation and was also a Director and Vice
President of Fulcrum Insurance Company and Vice President of C&C Consultants,
Inc. From 1983 to 1989, Mr. Bronzo worked at General Reinsurance Corporation
where he was an Assistant Secretary from 1987 to 1989 and Assistant Portfolio
Manager from 1986 to 1989. Mr. Bronzo is a Chartered Financial Analyst and has
made numerous appearances on CNBC and Bloomberg television. Mr. Bronzo has an
MBA in Finance from New York University and a BA in Economics from Boston
College.
Daniel Portanova is currently Senior Vice President, Managing
Director and Board Member of GAMNA. Mr. Portanova is primarily responsible for
the management of GAMNA's taxable bond portfolios and for assisting Mr. Bronzo
in forecasting Federal Reserve Board policy and analyzing the economic
background and relative attractiveness of industry sectors in which GAMNA equity
accounts, including the Fund, may invest. From 1993 to 1995, Mr. Portanova was a
Managing Director at General Reinsurance Asset Management, with responsibility
for the performance of over $4 billion in assets. From 1989 to 1993, Mr.
Portanova was a taxable fixed income portfolio manager for General Reinsurance.
Mr. Portanova also worked for Smith Barney, Harris, Upham Inc. from 1984 to 1989
as an Institutional Corporate Bond Trader, primarily in the Yankee and Canadian
sectors. Mr. Portanova earned an MBA from Duke University's Fuqua School of
Business in 1984 and a BA in Economics from Boston College in 1982.
Management Fees
The Fund pays a management fee which is calculated daily and paid
monthly. The advisory agreement with the Fund spells out the management fee and
other expenses that the Fund must pay. The Fund is subject to the following
management fee schedule (expressed as an annual rate):
<PAGE>
9
Average Daily Net Annual Rate
Assets of Fund Percentage (%)
-------------- --------------
First $1 Billion 0.55
Over $1 Billion 0.50
GAMNA and the Fund have entered into an expense limitation
agreement. The agreement sets a limit of __% on the operating expenses of the
Fund for the next year and requires GAMNA to waive or reimburse fees or expenses
if operating expenses exceed that limit. If in the following two years the
operating expenses of the Fund are less than the expense limit, the Fund is
required to repay GAMNA the amount of expenses previously waived or reimbursed
but only to the extent the the Fund's total operating expenses would not exceed
the __% limit for that year.
Year 2000
Preparing for Year 2000 is a high priority for GAMNA which has
established a policy to address this issue. The Fund, like any business, could
be affected if the computer systems on which it relies fail to properly process
information beginning on January 1, 2000. GAMNA has updated its own systems and
encouraging service providers to do the same, but there's no guarantee these
systems will work properly. Year 2000 problems could also hurt issuers whose
securities the Fund holds or securities markets generally.
SHAREHOLDER INFORMATION
This section will help you become familiar with how to establish an
account with the Fund. It also explains in detail the different share classes
and the types of services and features you can establish on your account, as
well as account policies and fees that may apply to your account. Account
policies (including fees), services and features may be modified or discontinued
without shareholder approval or prior notice.
Sales Charges and Choosing a Share Class
There is a sales charge to buy shares in the Fund. There are also
ongoing charges that all investors pay as long as they own their shares.
Investors may choose Class A, Class B or Class C shares which have different
types of charges and are each described below. There are a number of plans and
special discounts which can decrease or even eliminate certain of these charges.
Class A Shares. When you purchase Class A shares you pay a sales
charge at the time of purchase. The initial sales charge is deducted directly
from the money you invest. As the table shows, the initial sales charge is lower
the more you invest and there is no initial sales charge on purchases of $1
million or more. Certain purchases of Class A shares qualify for
<PAGE>
10
reduced sales charges. Class A shares are not subject to any sales charges when
they are redeemed and have lower combined 12b-1 and service fees than Class B
and Class C shares.
Total Sales Charge
------------------------------------
As % of Public
Offering Price As % of Net
Amount of Investment per share Amount Invested
- -------------------------------------------------------------------------------
Under $100,000 5.75% 6.10%
- -------------------------------------------------------------------------------
$100,000 but under $250,000 3.75% 3.90%
- -------------------------------------------------------------------------------
$250,000 but under $500,000 2.50% 2.56%
- -------------------------------------------------------------------------------
$500,000 but under $1,000,000 2.00% 2.04%
- -------------------------------------------------------------------------------
$1,000,000 or more None None
The public offering price of Class A shares is the net asset value
plus the initial sales charge. Net asset value is the value of everything the
Fund owns, minus everything it owes, divided by the number of shares held by
investors.
Class B Shares. Class B shares are sold without an initial sales
charge, but are subject to a deferred sales charge which is deducted directly
from your assets when you sell your shares. It is a percentage of the original
purchase price or the current value of the shares, whichever is lower. As the
table shows, the deferred sales charge gets lower the longer you hold the shares
and disappears altogether after six years. Class B shares have the benefit of
putting all of your dollars to work from the time the investment is made. Class
B shares have higher combined 12b-1 and service fees than Class A shares.
Deferred Sales
Year Charge
-------------------------------------------
1 5%
-------------------------------------------
2 4%
-------------------------------------------
3 3%
-------------------------------------------
4 3%
-------------------------------------------
5 2%
-------------------------------------------
6 1%
-------------------------------------------
7 None
-------------------------------------------
Deferred sales charges are calculated from the month you buy your
shares. The Fund always sells the shares with the lowest deferred sales charge
first.
<PAGE>
11
Class B shares automatically convert into Class A shares, based on
relative net asset value, at the beginning of the ninth year after purchase.
Class C Shares. Class C shares are sold without an initial sales
charge, which has the benefit of putting all of your dollars to work from the
time the investment is made. If redeemed within one year after purchase, Class C
shares are subject to a deferred sales charge of 1% which is deducted directly
from your assets when you sell your shares. The sales charge is based on the
lesser of the original cost or the net asset value at the time of the
redemption. Class C shares, like Class B shares, have higher combined 12b-1 and
service fees than Class A shares. Unlike Class B shares, Class C shares do not
convert into any other class of shares of the Fund. That means you keep paying
the higher service and distribution fees as long as you hold your shares. Over
the long term, this can add up to higher total fees than either Class A or Class
B shares.
Rule 12b-1 Fees. ________ is the distributor for the Fund. The Fund
has adopted Rule 12b-1 distribution plans under which it pays annual
distribution fees of up to 0.25% of the average daily net assets attributed to
Class A shares and up to 0.75% of the average daily net assets attributable to
Class B and Class C shares. This payment covers such things as compensation for
services provided by broker-dealers and expenses connected to the sale of
shares. Payments are not tied to actual expenses incurred. Because Rule 12b-1
expenses are paid out of the Fund's assets on an ongoing basis, over time these
fees will increase the cost of your investment and may cost you more than other
types of sales charges.
Which Arrangement Is Best For You? The decision as to which class of
shares provides a more suitable investment for you depends on a number of
factors, including the amount and intended length of the investment. If you are
making an investment that qualifies for reduced sales charges, you might
consider Class A shares. If you prefer not to pay an initial sales charge and
anticipate holding your shares for a number of years, you might consider Class B
shares. If you prefer not to pay an initial sales charge and you are uncertain
as to the intended length of your investment, you might consider Class C shares.
In almost all cases, if you are a long-term investor planning to purchase
$250,000 or more of the Fund's shares you will pay lower aggregate charges and
expenses by purchasing Class A shares.
Pricing of Fund Shares
All purchases and redemptions will be processed at the net asset
value or NAV next calculated after your request is received and approved by the
Fund (or its designated agent). The Fund's NAV is calculated at the close of the
regular trading session of the New York Stock Exchange (the "NYSE") which is
normally 4:00 p.m. New York time each day that the NYSE is open. In order to
receive a day's price, your order must be received by the close of the regular
trading session of the NYSE. Securities are valued at market value or, if a
market quotation is not readily available, at their fair value determined in
good faith under procedures established by and under the supervision of the
Board of Directors. Short-term instruments maturing within 60 days are valued at
amortized cost, which approximates market value.
<PAGE>
12
How to Open Your Fund Account
Complete and sign the appropriate application. Please be sure to
provide your Social Security or taxpayer identification number on the
application and make your check payable to GAMNA Focus Fund. Send all items to
one of the following addresses:
For Overnight Carrier
[Address]
For All Other Inquiries
[Address]
Minimum Investments
To open a new account ............................................... $10,000
To open a new retirement account .................................... $2,000
To open a new account with an Automatic Investment Program .......... $2,000
To add to any type of an account .................................... $1,000
The Funds reserve the right to change the amount of these minimums from time to
time or to waive them in whole or in part for certain types of accounts.
How to Purchase Shares
Paying for Shares. When you purchase shares, your request will be
processed at the next NAV calculated after your order is received and accepted.
Please note the following:
o Cash, credit cards, third party checks and credit card checks
will not be accepted.
o All purchases must be made in U.S. dollars.
o Checks must be drawn on U.S. banks and made payable to GAMNA
Focus Fund.
o If a check does not clear your bank, the Fund reserves the
right to cancel the purchase.
o If the Fund is unable to debit your predesignated bank account
on the day of purchase, it may make additional attempts or
cancel the purchase.
o The Fund reserves the right to reject any specific purchase
request.
<PAGE>
13
If your purchase is canceled, you will be responsible for any losses
or fees imposed by your bank and losses that may be incurred as a result of any
decline in the value of the canceled purchase. The Fund (or its agents) has the
authority to redeem shares in your account(s) to cover any losses due to
fluctuations in share price. Any profit on such cancellation will accrue to the
Fund.
Purchase By Mail. Send your check and written instructions to the
address specified above under "How to Open Your Fund Account". If you are making
a purchase into a retirement account, please indicate whether the purchase is a
rollover or a current or prior year contribution.
Purchase By Telephone. This service allows you to purchase
additional shares quickly and conveniently through an electronic transfer of
money. To purchase shares by telephone, call [telephone #] during normal
business hours. To establish the telephone purchase option on your new account,
complete the "Telephone Purchase of Shares Option" section on the application.
If your account is already established, call [telephone #] to request the
appropriate form. This option will become effective ten business days after the
form is received.
Purchase By Wire. Purchases may also be made by wiring money from
your bank account to your Fund account. Call [telephone #] to receiving wiring
instructions.
Automatic Investment Programs. The Fund, offers several automatic
investment programs to help you achieve your financial goals as simply and
conveniently as possible.
o Automatic Monthly Investment Program
You select the day each month that your money ($1000 minimum) will
be electronically transferred from your bank account to your Fund
account. To establish this option, complete the "Automatic Monthly
Investment Program" section on the application and attach a "voided"
check or deposit slip from your bank account. If your Fund account
is already established, call [telephone #] to request the
appropriate form.
o Payroll Deduction
If your employer can initiate an automatic payroll deduction, you
may have all or a portion of your paycheck ($1000 minimum) invested
directly into your Fund account. To obtain information on
establishing this option, call [telephone #].
Types of Account Ownership
If you are investing in the Fund for the first time, you will need
to establish an account. You can establish the following types of accounts by
completing a New Account Application. To request an application, call [telephone
#].
<PAGE>
14
o Individual or Joint Ownership. Individual accounts are owned
by one person. Joint accounts have two or more owners.
o A Gift or Transfer to Minor (UGMA or UTMA). An UGMA/UTMA
account is a custodial account managed for the benefit of a
minor. To open an UGMA or UTMA account, you must include the
minor's Social Security number on the application.
o Trust. An established trust can open an account. The names of
each trustee, the name of the trust and the date of the trust
agreement must be included on the application.
o Business Accounts. Corporations and partnerships may also open
an account. The application must be signed by an authorized
officer of the corporation or a general partner of the
partnership.
Tax-Deferred Accounts
If you are eligible, you may set up one or more tax-deferred
accounts. A tax-deferred account allows you to shelter your investment income
and capital gains from current income taxes. A contribution to certain of these
plans may also be tax deductible. Tax deferred accounts include retirement plans
and the Education IRA. Distributions from these plans are generally subject to
income tax and may be subject to an additional tax if withdrawn prior to age 59
1/2 or used for a nonqualifying purpose. Investors should consult their tax or
legal counsel before selecting a tax-deferred account.
[Name of Custodian] serves as custodian for the tax-deferred
accounts offered by the Fund. You will be charged an annual account maintenance
fee of $___ for each Fund account, up to a maximum of $___ for two or more Fund
accounts registered under the same taxpayer identification number. The Fund
reserves the right to change the amount of this fee or to waive it in whole or
in part for certain types of accounts.
The following plans require a special application. For an
application and more details about our Retirement Plans, call [telephone #].
o Regular and Roth Individual Retirement Accounts ("IRAs"): Both
types of IRAs allow most individuals with earned income to
contribute up to the lesser of $2,000 ($4,000 for most married
couples) or 100% of compensation annually.
o Education IRA: This plan allows individuals, subject to
certain income limitations, to contribute up to $500 annually
on behalf of any child under the age of 18.
o Simplified Employee Pension Plan ("SEP"): This plan allows
small business owners (including sole proprietors) to make
tax-deductible
<PAGE>
15
contributions for themselves and any eligible employee(s). A
SEP requires an IRA (a SEP-IRA) to be set up for each SEP
participant.
o Profit Sharing or Money Purchase Pension Plan: These plans are
open to corporations, partnerships and sole proprietors to
benefit their employees and themselves.
o Section 403(b)(7) Plan: Employees of educational organizations
or other qualifying, tax-exempt organizations may be eligible
to participate in a Section 403(b)(7) Plan.
How to Redeem Shares
On any business day, you may redeem all or a portion of your shares.
If the shares are held in certificate form, the certificate must be returned
with or before your redemption request. Your transaction will be processed at
the next NAV calculated after your order is received and accepted.
Depending on how long you have held your shares, redemptions of
Class B and Class C shares may be subject to a deferred sales charge as
described above under "Sales Charges and Choosing a Share Class."
In Writing. To request a redemption in writing, please follow the
instructions for written requests on page [12].
By Telephone. Most accounts have the telephone redemption option,
unless this option was specifically declined on the application or in writing.
This option enables you to request redemptions daily from your account by
calling [telephone #] by the close of the regular trading session of the "NYSE"
normally 4:00 p.m. New York time. Redemption requests will be processed at the
NAV next calculated after receipt and acceptance of the request.
Systematic Redemption Option. The Systematic Redemption Option
allows you to redeem a specific dollar amount from your account on a regular
basis. For more information or to request the appropriate form, please call
[telephone #].
Payment of Redemption Proceeds
By Check. Redemption proceeds will be sent to the shareholder(s) of
record at the address of record within seven days after receipt of a valid
redemption request.
By Electronic Transfer. If you have established the electronic
redemption option, your redemption proceeds can be electronically transferred to
your predesignated bank account on the next bank business day after receipt of
your redemption request (wire transfer) or the second bank business day after
receipt of your redemption request (ACH transfer). Wire transfers will be
charged an $___ fee per wire and your bank may charge an additional fee to
receive the wire.
<PAGE>
16
ACH transfers are made free of charge. Wire redemptions are not available for
retirement accounts.
If you would like to establish the electronic redemption option on
an existing account, please call [telephone #] to request the appropriate form.
If the shares being redeemed were purchased by check, telephone or
through the Automatic Monthly Investment Program, the Fund may delay the payment
of your redemption proceeds for up to 15 days from the day of purchase to allow
the purchase to clear.
Written Instructions
To redeem all or part of your shares in writing, your request should
be sent to one of the addresses listed under "How to Open Your Fund Account" and
must include the following information:
o the name of the Fund
o the account number(s)
o the amount of money or number of shares being redeemed
o the name(s) on the account
o the signature(s) of all registered account owners
o your daytime telephone number
Signature Requirements Based on Account Type
o Individual, Joint Tenants, Tenants in Common: Written
instructions must be signed by each shareholder, exactly as
the names appear in the account registration.
o UGMA or UTMA: Written instructions must be signed by the
custodian in his/her capacity as it appears in the account
registration.
o Sole Proprietor, General Partner: Written instructions must be
signed by an authorized individual in his/her capacity as it
appears on the account registration.
o Corporation, Association: Written instructions must be signed
by the person(s) authorized to act on the account. In
addition, a certified copy of the corporate resolution
authorizing the signer to act must accompany the request.
o Trust: Written instructions must be signed by the trustee(s).
If the name of the current trustee(s) does not appear in the
account registration, a certificate of incumbency dated within
60 days must also be submitted.
<PAGE>
17
o IRA: Written instructions must be signed by the account owner.
If you do not want federal income tax withheld from your
redemption, you must state that you elect not to have such
withholding apply. In addition, your instructions must state
whether the distribution is normal (after age 59 1/2) or
premature (before age 59 1/2) and, if premature, whether any
exceptions such as death or disability apply with regard to
the 10% additional tax on early distributions.
Signature Guarantee
In addition to the signature requirements, a signature guarantee is
also required if any of the following is applicable:
o You request a redemption that exceeds $100,000.
o You would like the check made payable to anyone other than the
shareholder(s) of record.
o You would like the check mailed to an address which has been
changed within 10 days of the redemption request.
o You would like the check mailed to an address other than the
address of record.
The Fund reserves the right to require a signature guarantee under
other circumstances or to reject or delay a redemption on certain legal grounds.
For more information pertaining to signature guarantees, please call [telephone
#].
How to Obtain a Signature Guarantee
A signature guarantee assures that a signature is genuine. The
signature guarantee protects shareholders from unauthorized account transfers.
The following financial institutions may guarantee signatures: banks, savings
and loan associations, trust companies, credit unions, broker-dealers, and
member firms of a national securities exchange. Call your financial institution
to see if they have the ability to guarantee a signature. A signature guarantee
may not be provided by a notary public.
Shareholder Services and Account Policies
Web Site. The Fund maintains a Web site located at
http://www.____.com. You can access information such as your account balance and
the Fund's NAVs through the Web site. In addition, you may request and/or
download a prospectus for the Fund.
Small Accounts. Due to the proportionately higher costs of
maintaining small accounts, the Fund reserves the right to close your Fund
account if the balance falls below $___ because you've sold shares. This policy
does not apply to accounts that fall below the minimums
<PAGE>
18
solely as a result of market value fluctuations. You will receive notice before
we close your account so that you may increase your account balance to the
required minimum.
Share Certificates. The Fund will issue share certificates upon
written request only. Share certificates will not be issued until the shares
have been held for at least 15 days.
Telephone Transactions. You may initiate many transactions by
telephone. The Fund and its agents will not be responsible for any losses
resulting from unauthorized transactions when procedures designed to verify the
identity of the caller are followed.
It may be difficult to reach the Fund by telephone during periods of
unusual market activity. If you are unable to reach a representative by
telephone, please consider sending written instructions.
Temporary Suspension of Services. The Fund or its agents may, in
case of emergency, temporarily suspend telephone transactions and other
shareholder services.
Address Changes. To change the address on your account, call
[telephone #] or send a written request signed by all account owners. Include
the name of the Fund, the account number(s), the name(s) on the account and both
the old and new addresses. Certain options may be suspended for 10 days
following an address change unless a signature guarantee is provided.
<PAGE>
19
DISTRIBUTIONS AND TAXES
Distributions
The Fund will generally distribute its income annually. The Fund's
income from dividends and interest and any net realized short-term capital gain
are paid to shareholders as ordinary income dividends. Net realized long-term
gain is paid to shareholders as capital gain dividends.
Distribution Options
When you open an account, you must specify on your application how
you want to receive your distributions. You may change your distribution option
at any time by writing the Fund at one of the addresses on page [12] or calling
[telephone number]. The Fund offers the following options:
1. Reinvestment Option. You may reinvest your income dividends and capital
gain dividends in additional shares of the same class. This option is
assigned automatically if no other choice is made.
2. Cash Option. You may receive your income dividends and capital gain
dividends in cash.
3. Reinvest And Cash Option. You may receive either your income dividends or
capital gain dividends in cash and reinvest the other in additional shares
of the same class.
The Fund reserves the right to reinvest into your account
undeliverable and uncashed dividend and distribution checks that remain
outstanding for six months in shares of the Fund at the NAV next computed after
the check is canceled. Subsequent distributions may also be reinvested.
Taxes
The Fund intends to qualify as a "regulated investment company" for
federal income tax purposes under Subchapter M of the Code and to meet all other
requirements that are necessary for it to be relieved of federal taxes on income
and gain it distributes to shareholders. If the Fund does not qualify as a
regulated investment company for any taxable year or does not meet certain other
requirements, the Fund will be subject to tax on all of its taxable income and
gains.
The taxation of dividends will not be affected by the form in which
you receive them (cash or additional shares). Ordinary dividends are usually
taxable as ordinary income at the federal, state and local levels. Capital gain
dividends will be taxable as long-term capital gain regardless of on how long
you have owned your shares. If you buy shares just before a distribution, you
will pay tax on the entire amount of the taxable distribution you receive, even
though the NAV will be higher on that date because it includes the distribution
amount.
A portion of the ordinary income dividends paid by the Fund may
qualify for the 70% dividends-received deduction for corporate shareholders,
subject to certain limitations.
<PAGE>
20
Ordinarily, you are required to take distributions by the Fund into
account in the year in which the distributions are made. However, dividends
declared in October, November or December of any year and payable to you in such
a month will be deemed to have been received by you (and made by the Fund) on
December 31 of such calendar year if such dividends are actually paid in January
of the following year.
You will recognize gain or loss on the sale or redemption of shares
of the Fund in an amount equal to the difference between the proceeds of the
sale or redemption and your adjusted tax basis in the shares. In general, any
gain or loss arising from the sale or redemption of shares of the Fund will be
considered capital gain or loss and will be long-term capital gain or loss if
the shares were held for longer than one year. However, any capital loss arising
from the sale or redemption of shares held for six months or less will be
treated as a long-term capital loss to the extent of any capital gain dividends
received on such shares.
The Fund will be required in certain cases to withhold and remit to
the U.S. Treasury 31% of ordinary income dividends and capital gain dividends,
and the proceeds of redemption of shares, paid to you if (1) you provide either
an incorrect taxpayer identification number or no number at all, (2) you are
subject to backup withholding by the Internal Revenue Service for failure to
report the receipt of interest or dividend income properly, or (3) you have
failed to certify to the Fund that you are not subject to backup withholding or
that you are a corporation or other "exempt recipient."
Early in each calendar year, the Fund will send you a notice showing
the amount of distributions you received in the proceeding year and the tax
status of those distributions. The above is a general summary of tax
implications of investing in the Fund. Please consult your tax adviser to see
how investing in the Fund will affect your own tax situation.
<PAGE>
APPENDIX A
Glossary of Certain Investment Terms
This glossary provides a more detailed description of some of the
types of securities and other instruments in which the Fund may invest. The Fund
may invest in these instruments to the extent permitted by its investment
objectives and policies. The Fund is not limited by this discussion and may
invest in any other types of instruments not precluded by the policies discussed
elsewhere in this Prospectus. Please refer to the SAI for a more detailed
discussion of certain instruments.
Bonds, notes and debentures are debt securities issued by a company,
municipality, government or government agency. The issuer of a bond is required
to pay the holder the amount of the loan (or par value of the bond) at a
specified maturity and to make scheduled interest payments.
Commercial paper is a short-term debt obligation with a maturity
ranging from 1 to 270 days issued by banks, corporations and other borrowers to
investors seeking to invest idle cash.
Common stock represents a share of ownership in a company and
usually carries voting rights and earns dividends. Unlike preferred stock,
dividends on common stock are not fixed but are declared at the discretion of
the issuer's board of directors.
Depositary receipts are receipts for shares of a foreign-based
corporation that entitle the holder to dividends and capital gains on the
underlying security. Receipts include those issued by domestic banks (American
Depositary Receipts), foreign banks (Global or European Depositary Receipts) and
broker-dealers (depositary shares).
Investment grade debt securities are debt securities rated in the
category BBB- or higher by Standard & Poor's Corporation or Baa3 or higher by
Moody's Investors Services, Inc. or the equivalent by another national rating
organization or, if unrated, determined by GAMNA to be of comparable quality.
Money market instruments may include U.S. Government securities,
commercial paper and obligations of banks.
Repurchase agreements involve the purchase of a security by the Fund
and a simultaneous agreement by the seller (generally a bank or dealer) to
repurchase the security from the Fund at a specified date or upon demand. This
technique offers a method of earning income on idle cash. These securities
involve the risk that the seller will fail to repurchase the security, as
agreed. In that case, the Fund will bear the risk of market value fluctuations
until the security can be sold and may encounter delays and incur costs in
liquidating the security.
Reverse repurchase agreements involve the sale of a security by the
Fund to another party (generally a bank or dealer) in return for cash and an
agreement by the Fund to buy
<PAGE>
A-2
the security back at a specified price and time. This technique will be used
primarily to provide cash to satisfy unusually high redemption requests, or for
other temporary or emergency purposes.
<PAGE>
[BACK COVER]
Statement of Additional Information (SAI)
The SAI contains more detailed information about the Fund and its
policies. It is incorporated by reference into this prospectus. That means that
by law it is considered to be a part of this prospectus.
Annual and Semi-Annual Reports
The Fund will issue annual and semi-annual reports. These reports will
contain more information about the Fund's investments and performance. The
annual report will also include details about the market conditions and
investment strategies that had a significant effect on the Fund's performance
during the last fiscal year. The first report the Fund will issue will be its
semi-annual report for the period ending December 31, 1999.
Contacting the Fund
You can get a free copy of these documents or ask us any questions by
calling [phone #] or writing:
GAMNA Focus Fund
[address]
If you buy your shares through a financial institution, you should contact
that institution directly for more information. You can also find information
on-line at www.____.com on the internet.
Securities and Exchange Commission (SEC)
You can write the SEC's Public Reference Room and ask them to mail you
information about the Fund, including the SAI. They will charge you a copying
fee for this service. You can also visit the Public Reference Section and copy
the documents while you are there.
Public Reference Section of the SEC
Washington, D.C. 20549-6009
1-800-SEC-0330
Reports, a copy of the SAI and other information about the Fund is also
available on the SEC's website at http://www.sec.gov.
<PAGE>
The information contained herein is not complete and may be changed. We may not
sell these securities until the registration statement filed with the Securities
and Exchange Commission is effective. This prospectus is not an offer to sell
these securities and it is not soliciting an offer to buy these securities in
any state where the offer or sale is not permitted.
SUBJECT TO COMPLETION, dated March 26, 1999
GAMNA Series Funds, Inc.
GAMNA Focus Fund
STATEMENT OF
ADDITIONAL INFORMATION
June __, 1999
This Statement of Additional Information sets forth information about
GAMNA Series Funds, Inc. and its portfolio, GAMNA Focus Fund, which may be of
interest to investors but which is not necessarily included in the prospectus
dated June __, 1999 (the "Prospectus") offering shares of GAMNA Focus Fund. This
Statement of Additional Information should be read in conjunction with the
Prospectus. Copies of the Prospectus may be obtained by an investor without
charge by contacting [ ], the Fund's distributor (the "Distributor"), at the
address or phone number listed below.
This Statement of Additional Information is not a prospectus and is
authorized for distribution to prospective investors only if preceded or
accompanied by an effective prospectus.
For more information about your account, simply call or write GAMNA Focus
Fund at:
1-800-[ ]
GAMNA Focus Fund
[Address]
<PAGE>
Table of Contents
Page
----
The Fund .................................................................. 1
Investment Policies and Restrictions ...................................... 1
Performance Information ................................................... 6
Determination of Net Asset Value .......................................... 7
Purchases, Redemptions and Exchanges ...................................... 7
Distributions; Tax Matters ................................................ 10
Management of the Company and the Fund .................................... 15
Distribution Plans ........................................................ 17
Distribution Agreement ..................................................... 18
Transfer Agent and Custodian .............................................. 18
Independent Accountants ................................................... 19
Counsel ................................................................... 19
Expenses .................................................................. 19
General Information ....................................................... 19
<PAGE>
THE FUND
GAMNA Series Funds, Inc. (the "Company") is an open-end investment company
which was organized as a corporation under the laws of the State of Maryland on
March 18, 1999. The Company presently consists of a single series, GAMNA Focus
Fund (the "Fund"). The Fund is non-diversified, as such term is defined in the
Investment Company Act of 1940, as amended (the "1940 Act"). The shares of the
Fund are collectively referred to in this Statement of Additional Information as
the "Shares."
The Board of Directors of the Company provides broad supervision over the
affairs of the Company including the Fund. Groupama Asset Management, N.A.
("GAMNA" or the "Adviser") is the investment adviser for the Fund. ________
serves as the Company's administrator (the "Administrator") and supervises the
overall administration of the Company, including the Fund.
INVESTMENT POLICIES AND RESTRICTIONS
Investment Policies
The Prospectus sets forth the various investment policies of the Fund. The
following information supplements and should be read in conjunction with the
related sections of the Prospectus. Except as specifically set forth below under
"Investment Restrictions", the investment policies of the Fund (including the
Fund's investment objective) are non-fundamental and may be changed without the
approval of the shareholders of the Fund. In the event of a change in the Fund's
investment objective, shareholders will be given at least 30 days' written
notice prior to such a change. For descriptions of the securities ratings of
Moody's Investors Service, Inc. ("Moody's") and Standard & Poor's Corporation
("S&P") see Appendix A.
Depositary Receipts. The Fund may invest in securities of multinational
companies in the form of American Depositary Receipts or other similar
securities representing securities of foreign issuers, such as European
Depositary Receipts, Global Depositary Receipts and other similar securities
representing securities of foreign issuers (collectively, "Depositary
Receipts"). These securities carry additional risks associated with investing in
foreign securities. These investment risks may involve, among other
considerations, risks relating to future political and economic developments,
more limited liquidity than comparable domestic securities, the possible
imposition of withholding taxes on income, the possible seizure or
nationalization of foreign assets and the possible establishment of exchange
controls or other restrictions. There may be less publicly available information
concerning foreign issuers, there may be difficulties in obtaining or enforcing
a judgment against a foreign issuer and accounting, auditing and financial
reporting standards and practices may differ from those applicable to U.S.
issuers. The Fund treats Depositary Receipts as interests in the underlying
securities for purposes of its investment policies.
Money Market Instruments. The Fund may invest in cash or high-quality,
short-term money market instruments. These may include U.S. Government
securities, commercial paper of domestic issuers and obligations of domestic
banks.
U.S. Government Securities. The Fund may invest in U.S. Government
Securities. U.S. Government Securities include (1) U.S. Treasury obligations,
which generally differ only in their interest rates, maturities and times of
issuance, including U.S. Treasury bills (maturities of one year or less), U.S.
Treasury notes (maturities of one to ten years) and U.S. Treasury bonds
(generally maturities of greater than ten years); and (2) obligations issued or
guaranteed by U.S. Government agencies and instrumentalities which are supported
by any of the following: (a) the full faith and credit of the U.S. Treasury, (b)
the right of the issuer to borrow any amount listed to a specific line of credit
from the U.S. Treasury, (c) discretionary authority of the U.S. Government to
purchase certain obligations of the U.S. Government agency or instrumentality or
(d) the credit of the agency or instrumentality. Agencies and instrumentalities
of the U.S. Government include but are not limited to: Federal Land Banks,
Federal Financing Banks, Banks for
1
<PAGE>
Cooperatives, Federal Intermediate Credit Banks, Farm Credit Banks, Federal Home
Loan Banks, Federal Home Loan Mortgage Corporation, Federal National Mortgage
Association, Student Loan Marketing Association, United States Postal Service,
Chrysler Corporate Loan Guarantee Board, Small Business Administration,
Tennessee Valley Authority and any other enterprise established or sponsored by
the U.S. Government. Certain U.S. Government Securities, including U.S. Treasury
bills, notes and bonds, are supported by the full faith and credit of the United
States. Other U.S. Government Securities are issued or guaranteed by federal
agencies or government sponsored enterprises and are not supported by the full
faith and credit of the United States. These securities include obligations that
are supported by the right of the issuer to borrow from the U.S. Treasury and
obligations that are supported by the creditworthiness of the particular
instrumentality.
Commercial Paper. Commercial paper consists of short-term (usually from 1
to 270 days) unsecured promissory notes issued by corporations in order to
finance their current operations. A variable amount master demand note (which is
a type of commercial paper) represents a direct borrowing arrangement involving
periodically fluctuating rates of interest under a letter agreement between a
commercial paper issuer and an institutional lender pursuant to which the lender
may determine to invest varying amounts.
Bank Obligations. Investments in bank obligations are limited to those of
U.S. banks which have total assets at the time of purchase in excess of $1
billion and the deposits of which are insured by either the Bank Insurance Fund
or the Savings Association Insurance Fund of the Federal Deposit Insurance
Corporation and such other U.S. commercial banks which are judged by GAMNA to
meet comparable credit standing criteria.
Bank obligations include negotiable certificates of deposit, bankers'
acceptances, fixed time deposits and deposit notes. A certificate of deposit is
a short-term negotiable certificate issued by a commercial bank against funds
deposited in the bank and is either interest-bearing or purchased on a discount
basis. A bankers' acceptance is a short-term draft drawn on a commercial bank by
a borrower, usually in connection with an international commercial transaction.
The borrower is liable for payment as is the bank, which unconditionally
guarantees to pay the draft at its face amount on the maturity date. Fixed time
deposits are obligations of branches of United States banks which are payable at
a stated maturity date and bear a fixed rate of interest. Although fixed time
deposits do not have a market, there are no contractual restrictions on the
right to transfer a beneficial interest in the deposit to a third party. Fixed
time deposits subject to withdrawal penalties and with respect to which a Fund
cannot realize the proceeds thereon within seven days are deemed "illiquid" for
the purposes of its restriction on investments in illiquid securities. Deposit
notes are notes issued by commercial banks which generally bear fixed rates of
interest and typically have original maturities ranging from eighteen months to
five years.
Investments in the banking industry may involve certain credit risks, such
as defaults or downgrades, if at some future date adverse economic conditions
prevail in such industry. Banks are subject to extensive governmental
regulations that may limit both the amounts and types of loans and other
financial commitments that may be made and the interest rates and fees that may
be charged. The profitability of this industry is largely dependent upon the
availability and cost of capital funds for the purpose of financing lending
operations under prevailing money market conditions. Also, general economic
conditions play an important part in the operations of this industry and
exposure to credit losses arising from possible financial difficulties of
borrowers might affect a bank's ability to meet its obligations. Bank
obligations may be general obligations of the parent bank or may be limited to
the issuing branch by the terms of the specific obligations or by government
regulation.
Repurchase Agreements. The Fund may enter into repurchase agreements. The
Fund will enter into repurchase agreements only with member banks of the Federal
Reserve System and securities dealers believed creditworthy, and only if fully
collateralized by securities in which the Fund is permitted to invest. Under the
terms of a typical repurchase agreement, the Fund would acquire an underlying
instrument for a relatively short period (usually not more than one week)
subject to an obligation of the seller to repurchase the instrument and the Fund
to resell the instrument at a fixed price and time, thereby determining the
yield during the Fund's holding period. This procedure results in a fixed rate
of return insulated from market fluctuations during such period. A repurchase
agreement is subject to the risk that the seller may fail to repurchase the
security. Repurchase agreements are considered under the 1940 Act
2
<PAGE>
to be loans collateralized by the underlying securities. All repurchase
agreements entered into by the Fund will be fully collateralized at all times
during the period of the agreement in that the value of the underlying security
will be at least equal to 100% of the amount of the loan, including the accrued
interest thereon, and the Fund or its custodian will have possession of the
collateral, which the Board of Directors believes will give it a valid,
perfected security interest in the collateral. Whether a repurchase agreement is
the purchase and sale of a security or a collateralized loan has not been
conclusively established. This might become an issue in the event of the
bankruptcy of the other party to the transaction. In the event of default by the
seller under a repurchase agreement construed to be a collateralized loan, the
underlying securities would not be owned by the Fund, but would only constitute
collateral for the seller's obligation to pay the repurchase price. Therefore,
the Fund may suffer time delays and incur costs in connection with the
disposition of the collateral. The collateral underlying repurchase agreements
may be more susceptible to claims of the seller's creditors than would be the
case with securities owned by the Fund. Repurchase agreements maturing in more
than seven days are treated as illiquid for purposes of the Fund's restrictions
on purchases of illiquid securities.
Borrowings. The Fund may borrow money from banks for temporary or
short-term purposes. But the Fund may not borrow money to buy additional
securities, which is known as "leveraging."
Reverse Repurchase Agreements. The Fund may enter into reverse repurchase
agreements. Reverse repurchase agreements involve the sale of securities held by
the Fund with an agreement to repurchase the securities at an agreed upon price
and date. The Fund may use this practice to generate cash for shareholder
redemptions without selling securities during unfavorable market conditions.
Whenever the Fund enters into a reverse repurchase agreement, it will establish
a segregated account in which it will maintain liquid assets on a daily basis in
an amount at least equal to the repurchase price (including accrued interest).
The Fund would be required to pay interest on amounts obtained through reverse
repurchase agreements, which are considered borrowings under federal securities
laws. The repurchase price is generally equal to the original sales price plus
interest. Reverse repurchase agreements are usually for seven days or less and
cannot be repaid prior to their expiration dates. Reverse repurchase agreements
involve the risk that the market value of the portfolio securities transferred
may decline below the price at which the Fund is obliged to purchase the
securities.
Other Investment Companies. The Fund may invest up to 10% of its total
assets in shares of other investment companies when consistent with its
investment objective and policies, subject to applicable regulatory limitations.
Additional fees may be charged by other investment companies.
Securities Loans. The Fund is permitted to lend its securities to
broker-dealers and other institutional investors in order to generate additional
income. Such loans of portfolio securities may not exceed 30% of the value of
the Fund's total assets. In connection with such loans, the Fund will receive
collateral consisting of cash, cash equivalents, U.S. Government securities or
irrevocable letters of credit issued by financial institutions. Such collateral
will be maintained at all times in an amount equal to at least 100% of the
current market value plus accrued interest of the securities loaned. The Fund
can increase its income through the investment of such collateral. The Fund
continues to be entitled to the interest payable or any dividend-equivalent
payments received on a loaned security and, in addition, to receive interest on
the amount of the loan. However, the receipt of any dividend-equivalent payments
by the Fund on a loaned security from the borrower will not qualify for the
dividends-received deduction. Such loans will be terminable at any time upon
specified notice. The Fund might experience risk of loss if the institutions
with which it has engaged in portfolio loan transactions breach their agreements
with the Fund. The risks in lending portfolio securities, as with other
extensions of secured credit, consist of possible delays in receiving additional
collateral or in the recovery of the securities or possible loss of rights in
the collateral should the borrower experience financial difficulty. Loans will
be made only to firms deemed by GAMNA to be of good standing and will not be
made unless, in the judgment of GAMNA, the consideration to be earned from such
loans justifies the risk.
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Investment Restrictions
The Fund has adopted the following investment restrictions which may not
be changed without approval by a "majority of the outstanding shares" of the
Fund which, as used in this Statement of Additional Information, means the vote
of the lesser of (i) 67% or more of the shares of the Fund present or
represented by proxy at a meeting, if the holders of more than 50% of the
outstanding shares of the Fund are present or represented by proxy, or (ii) more
than 50% of the outstanding shares of the Fund. The Fund may not:
(1) borrow money, except that the Fund may borrow money for
temporary or emergency purposes, or by engaging in reverse repurchase
transactions, in an amount not exceeding 33-1/3% of the value of its total
assets at the time when the loan is made and may pledge, mortgage or
hypothecate no more than 1/3 of its net assets to secure such borrowings;
(2) make loans, except that the Fund may: (i) purchase and hold debt
instruments (including without limitation, bonds, notes, debentures or
other obligations and certificates of deposit, bankers' acceptances and
fixed time deposits) in accordance with its investment objectives and
policies; (ii) enter into repurchase agreements with respect to portfolio
securities; and (iii) lend portfolio securities with a value not in excess
of one-third of the value of its total assets;
(3) purchase the securities of any issuer (other than securities
issued or guaranteed by the U.S. government or any of its agencies or
instrumentalities, or repurchase agreements secured thereby) if, as a
result, more than 25% of the Fund's total assets would be invested in the
securities of companies whose principal business activities are in the
same industry;
(4) purchase or sell physical commodities unless acquired as a
result of ownership of securities or other instruments but this shall not
prevent the Fund from investing in securities or other instruments backed
by physical commodities;
(5) purchase or sell real estate unless acquired as a result of
ownership of securities or other instruments. Investments by the Fund in
marketable securities of companies engaged in such activities are not
hereby precluded;
(6) issue any senior security (as defined in the 1940 Act), except
that (a) the Fund may engage in transactions that may result in the
issuance of senior securities to the extent permitted under applicable
regulations and interpretations of the 1940 Act; (b) the Fund may acquire
other securities, the acquisition of which may result in the issuance of a
senior security, to the extent permitted under applicable regulations or
interpretations of the 1940 Act; and (c) subject to the restrictions set
forth above, the Fund may borrow money as authorized by the 1940 Act; or
(7) underwrite securities issued by other persons except insofar as
the Fund may technically be deemed to be an underwriter under the
Securities Act of 1933 in selling a portfolio security.
The following investment restrictions of the Fund may be changed without
the approval of the shareholders of the Fund. The Fund may not:
(1) hold more than 25% of its total assets in securities of any
single issuer and, with respect to 50% of its total assets, hold more than
10% of the outstanding voting securities of any issuer or invest more than
5% of its total assets in the securities of any one issuer other than
obligations of the U.S. government, its agencies and instrumentalities.
(2) make short sales of securities, including short sales "against
the box," or purchase securities on margin except for short-term credit
necessary for clearance of portfolio transactions.
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(3) invest more than 15% of its net assets in illiquid securities.
(4) write, purchase or sell any put or call option or any
combination thereof.
If a percentage or rating restriction on investment or use of assets set
forth herein or in a Prospectus is adhered to at the time a transaction is
effected, later changes in percentage resulting from any cause other than
actions by the Fund will not be considered a violation. If the value of the
Fund's holdings of illiquid securities at any time exceeds the percentage
limitation applicable at the time of acquisition due to subsequent fluctuations
in value or other reasons, the Board of Directors will consider what actions, if
any, are appropriate to maintain adequate liquidity.
Portfolio Transactions and Brokerage Allocation
Specific decisions to purchase or sell securities for the Fund are made by
the Portfolio Manager. Changes in the Fund's investments are reviewed by the
Board of Directors of the Company. The Portfolio Manager may serve other clients
of GAMNA in a similar capacity.
The frequency of the Fund's portfolio transactions--the portfolio turnover
rate--will vary from year to year depending upon market conditions. The Fund
estimates that its portfolio turnover rate will not exceed ______. A high
turnover rate may increase transaction costs, including brokerage commissions
and dealer mark-ups, and the possibility of taxable short-term gains. A high
turn-over rate could thus make it more difficult for the Fund to qualify as a
registered investment company under federal tax law. Therefore, GAMNA will weigh
the added costs of short-term investment against anticipated gains, and the Fund
will engage in portfolio trading if the Adviser believes a transaction, net of
costs (including custodian charges), will help it achieve its investment
objective.
Under the Advisory Agreement, GAMNA shall use its best efforts to seek to
execute portfolio transactions at prices which, under the circumstances, result
in total costs or proceeds being the most favorable to the Fund. In assessing
the best overall terms available for any transaction, GAMNA considers all
factors it deems relevant, including the breadth of the market in the security,
the price of the security, the financial condition and execution capability of
the broker or dealer, research services provided to GAMNA, and the
reasonableness of the commissions, if any, both for the specific transaction and
on a continuing basis. GAMNA is not required to obtain the lowest commission or
the best net price for the Fund on any particular transaction, and is not
required to execute any order in a fashion either preferential to the Fund
relative to other accounts they manage or otherwise materially adverse to such
other accounts.
Debt securities are traded principally in the over-the-counter market
through dealers acting on their own account and not as brokers. In the case of
securities traded in the over-the-counter market (where no stated commissions
are paid but the prices include a dealer's markup or markdown), GAMNA normally
seeks to deal directly with the primary market makers unless, in its opinion,
best execution is available elsewhere. In the case of securities purchased from
underwriters, the cost of such securities generally includes a fixed
underwriting commission or concession.
Under the Advisory Agreement and as permitted by Section 28(e) of the
Securities Exchange Act of 1934, GAMNA may cause the Fund to pay a broker-dealer
which provides brokerage and research services to GAMNA, the Fund and/or other
accounts for which they exercise investment discretion an amount of commission
for effecting a securities transaction for the Fund in excess of the amount
other broker-dealers would have charged for the transaction if they determine in
good faith that the greater commission is reasonable in relation to the value of
the brokerage and research services provided by the executing broker-dealer
viewed in terms of either a particular transaction or their overall
responsibilities to accounts over which they exercise investment discretion. Not
all of such services are useful or of value in advising the Fund. GAMNA reports
to the Board of Directors regarding overall commissions paid by the Fund and
their reasonableness in relation to the benefits to the Fund. The term
"brokerage and research services" includes advice as to the value of securities,
the advisability of investing in, purchasing or selling securities, and the
availability of securities or of purchasers or sellers of securities, furnishing
analyses and reports concerning issues, industries, securities, economic factors
and trends, portfolio strategy and the performance of accounts, and effecting
securities transactions and performing functions incidental thereto such as
clearance and settlement.
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The management fees that the Fund pays to GAMNA will not be reduced as a
consequence of GAMNA's receipt of brokerage and research services. To the extent
the Fund's portfolio transactions are used to obtain such services, the
brokerage commissions paid by the Fund will exceed those that might otherwise be
paid by an amount which cannot be presently determined. Such services generally
would be useful and of value to GAMNA in serving one or more of their other
clients and, conversely, such services obtained by the placement of brokerage
business of other clients generally would be useful to GAMNA in carrying out its
obligations to the Fund. While such services are not expected to reduce the
expenses of GAMNA, GAMNA would, through use of the services, avoid the
additional expenses which would be incurred if it should attempt to develop
comparable information through its own staff.
In certain instances, there may be securities that are suitable for one or
more of the accounts advised by GAMNA. Investment decisions for the Fund and for
other clients are made with a view to achieving their respective investment
objectives. It may develop that the same investment decision is made for more
than one client or that a particular security is bought or sold for only one
client even though it might be held by, or bought or sold for, other clients.
Likewise, a particular security may be bought for one or more clients when one
or more clients are selling that same security. Some simultaneous transactions
are inevitable when several clients receive investment advice from the same
investment adviser, particularly when the same security is suitable for the
investment objectives of more than one client. When two or more clients are
simultaneously engaged in the purchase or sale of the same security, the
securities are allocated among clients in a manner believed to be equitable to
each. It is recognized that in some cases this system could have a detrimental
effect on the price or volume of the security as far as the Fund is concerned.
However, it is believed that the ability of the Fund to participate in volume
transactions will generally produce better executions for the Fund.
No portfolio transactions are executed with any affiliate of GAMNA or the
Distributor, acting either as principal or as broker.
PERFORMANCE INFORMATION
From time to time, the Fund may use hypothetical investment examples and
performance information in advertisements, shareholder reports or other
communications to shareholders. Performance is calculated separately for each
class of Shares. Because such performance information is based on past
investment results, it should not be considered as an indication or
representation of the performance of any classes of the Fund in the future. From
time to time, the performance of classes of the Fund may be quoted and compared
to those of other mutual funds with similar investment objectives, unmanaged
investment accounts, including savings accounts, or other similar products and
to stock or other relevant indices or to rankings prepared by independent
services or other financial or industry publications that monitor the
performance of mutual funds. For example, the performance of the Fund or its
classes may be compared to data prepared by Lipper Analytical Services, Inc. or
Morningstar Mutual Fund on Disc, widely recognized independent services which
monitor the performance of mutual funds. Performance data as reported in
national financial publications including, but not limited to, Money Magazine,
Forbes, Barron's, The Wall Street Journal and The New York Times, or in local or
regional publications, may also be used in comparing the performance of the Fund
or its classes. The Fund's performance may be compared with indices such as the
S&P 500 Index, the Dow Jones Industrial Average or any other commonly quoted
index of common stock prices. Additionally, the Fund may, with proper
authorization, reprint articles written about the Fund and provide them to
prospective shareholders.
The Fund may provide period and average annual "total rates of return."
The "total rate of return" refers to the change in the value of an investment in
the Fund over a period (which period shall be stated in any advertisement or
communication with a shareholder) based on any change in net asset value per
share including the value of any Shares purchased through the reinvestment of
any dividends or capital gains distributions declared during such period. For
Class A Shares, the average annual total rate of return figures will assume
payment of the maximum initial sales load at the time of purchase. For Class B
and Class C Shares, the average annual total rate of return figures will assume
deduction of the applicable contingent deferred sales charge imposed on a total
redemption of Shares held for the period. One-, five-, and ten-year periods will
be shown, unless the class has been in existence for a shorter period.
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Unlike some bank deposits or other investments which pay a fixed yield for
a stated period of time, the yields and the net asset values of the classes of
Shares will vary based on market conditions, the current market value of the
securities held by the Fund and changes in the Fund's expenses.
Advertising or communications to shareholders may contain the views of
GAMNA as to current market, economic, trade and interest rate trends, as well as
legislative, regulatory and monetary developments, and may include investment
strategies and related matters believed to be of relevance to the Fund.
The Fund's or class's total rate of return for any period will be
calculated by (a) dividing (i) the sum of the net asset value per share on the
last day of the period and the net asset value per share on the last day of the
period of Shares purchasable with dividends and capital gains declared during
such period with respect to a share held at the beginning of such period and
with respect to Shares purchased with such dividends and capital gains
distributions, by (ii) the public offering price per share on the first day of
such period, and (b) subtracting 1 from the result. The average annual rate of
return quotation will be calculated by (x) adding 1 to the period total rate of
return quotation as calculated above, (y) raising such sum to a power which is
equal to 365 divided by the number of days in such period, and (z) subtracting 1
from the result.
DETERMINATION OF NET ASSET VALUE
As of the date of this Statement of Additional Information, the New York
Stock Exchange is open for trading every weekday except for the following
holidays: New Year's Day, Martin Luther King Jr.'s Day, Presidents' Day, Good
Friday, Memorial Day, Independence Day, Labor Day, Thanksgiving Day and
Christmas Day.
Equity securities in the Fund's portfolio are valued at the last sale
price on the exchange on which they are primarily traded or on the NASDAQ
National Market System, or at the last quoted bid price for securities in which
there were no sales during the day or for other unlisted (over-the-counter)
securities not reported on the NASDAQ National Market System. Bonds and other
fixed income securities (other than short-term obligations, but including listed
issues) in the Fund's portfolio are valued on the basis of valuations furnished
by a pricing service, the use of which has been approved by the Board of
Directors. In making such valuations, the pricing service utilizes both
dealer-supplied valuations and electronic data processing techniques that take
into account appropriate factors such as institutional-size trading in similar
groups of securities, yield, quality, coupon rate, maturity, type of issue,
trading characteristics and other market data, without exclusive reliance upon
quoted prices or exchange or over-the-counter prices, since such valuations are
believed to reflect more accurately the fair value of such securities.
Short-term obligations which mature in 60 days or less are valued at amortized
cost, which approximates market value. Portfolio securities (other than
short-term obligations) for which there are no such quotations or valuations are
valued at fair value as determined in good faith by or at the direction of the
Board of Directors.
Interest income on long-term obligations in the Fund's portfolio is
determined on the basis of coupon interest accrued plus amortization of discount
(the difference between acquisition price and stated redemption price at
maturity) and premiums (the excess of purchase price over stated redemption
price at maturity). Interest income on short-term obligations is determined on
the basis of interest and discount accrued less amortization of premium.
PURCHASES, REDEMPTIONS AND EXCHANGES
The Fund has established certain procedures and restrictions, subject to
change from time to time, for purchase, redemption, and exchange orders,
including procedures for accepting telephone instructions and effecting
automatic investments and redemptions. The Fund's Transfer Agent may defer
acting on a shareholder's instructions until it has received them in proper
form. In addition, the privileges described in the Prospectus are not available
until a completed and signed account application has been received by the
Transfer Agent. Telephone transaction privileges are made available to
shareholders automatically upon opening an account unless the privilege is
declined on the Account Application. The Telephone Exchange Privilege is not
available if you were issued certificates for Shares that remain outstanding.
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<PAGE>
Upon receipt of any instructions or inquiries by telephone from a
shareholder or, if held in a joint account, from either party, or from any
person claiming to be the shareholder, the Fund or its agent is authorized,
without notifying the shareholder or joint account parties, to carry out the
instructions or to respond to the inquiries, consistent with the service options
chosen by the shareholder or joint shareholders in his or their latest account
application or other written request for services, including purchasing,
exchanging, or redeeming Shares and depositing and withdrawing monies from the
bank account specified in the shareholder's latest account application or as
otherwise properly specified to the Fund in writing.
Subject to compliance with applicable regulations, the Fund has reserved
the right to pay the redemption price of its Shares, either totally or
partially, by a distribution in kind of readily marketable portfolio securities
(instead of cash). The securities so distributed would be valued at the same
amount as that assigned to them in calculating the net asset value for the
Shares being sold. If a shareholder received a distribution in kind, the
shareholder could incur brokerage or other charges in converting the securities
to cash.
Class B Shares automatically convert to Class A Shares (and thus are then
subject to the lower expenses borne by Class A Shares) after the beginning of
the ninth year after the date of purchase (the "CDSC Period"), together with the
pro rata portion of all Class B Shares representing dividends and other
distributions paid in additional Class B Shares attributable to the Class B
Shares then converting. At the time of the conversion the net asset value per
share of the Class A Shares may be higher or lower than the net asset value per
share of the Class B Shares; as a result, depending on the relative net asset
values per share, a shareholder may receive fewer or more Class A Shares than
the number of Class B Shares converted.
The Fund may require signature guarantees for changes that shareholders
request be made in Fund records with respect to their accounts, including but
not limited to, changes in bank accounts, for any written requests for
additional account services made after a shareholder has submitted an initial
account application to the Fund, and in certain other circumstances described in
the Prospectus. The Fund may also refuse to accept or carry out any transaction
that does not satisfy any restrictions then in effect. A signature guarantee may
be obtained from a bank, trust company, broker-dealer or other member of a
national securities exchange. Please note that a notary public cannot provide a
signature guarantee.
Investors may incur a fee if they effect transactions through a broker or
agent.
Reduced Sales Charges
Class A Shares may be purchased by any person at a reduced initial sales
charge which is determined by (a) aggregating the dollar amount of the new
purchase and the greater of the purchaser's total (i) net asset value or (ii)
cost of any Shares acquired and still held in the Fund and (b) applying the
initial sales charge applicable to such aggregate dollar value (the "Cumulative
Quantity Discount"). The privilege of the Cumulative Quality Discount is subject
to modification or discontinuance at any time with respect to all Class A Shares
purchased thereafter.
An individual who is a member of a qualified group (as hereinafter
defined) may also purchase Class A Shares at the reduced sales charge applicable
to the group taken as a whole. The reduced initial sales charge is based upon
the aggregate dollar value of Class A Shares previously purchased and still
owned by the group plus the securities currently being purchased and is
determined as stated in the preceding paragraph. In order to obtain such
Discount, the purchaser or investment dealer must provide the Transfer Agent
with sufficient information, including the purchaser's total cost, at the time
of purchase to permit verification that the purchaser qualifies for a Cumulative
Quantity Discount, and confirmation of the order is subject to such
verification. Information concerning the current initial sales charge applicable
to a group may be obtained by contacting the Transfer Agent.
A "qualified group" is one which (i) has been in existence for more than
six months, (ii) has a purpose other than acquiring Class A Shares at a discount
and (iii) satisfies uniform criteria which enables the Distributor to realize
economies of scale in its costs of distributing Class A Shares. A qualified
group must have more than 10 members, must
8
<PAGE>
be available to arrange for group meetings between representatives of the Fund
and the members must agree to include sales and other materials related to the
Fund in its publications and mailings to members at reduced or no cost to the
Distributor, and must seek to arrange for payroll deduction or other bulk
transmission of investments in the Fund. This would include, but it not limited
to, retirement plans under Section 401 or 408 of the Internal Revenue Code. This
privilege is subject to modification or discontinuance at any time with respect
to all Class A Shares purchased thereafter.
The Fund may sell Class A Shares without an initial sales charge to (i)
the Directors of the Company (and their immediate families), (ii) employees (and
their immediate families) of GAMNA, (iii) the Fund's Distributor and transfer
agent or any affiliates or subsidiaries thereof, registered representatives and
other employees (and their immediate families) of broker-dealers having selected
dealer agreements with the Fund's Distributor, (iv) employees (and their
immediate families) of financial institutions having selected dealer agreements
with the Fund's Distributor (or otherwise having an arrangement with a
broker-dealer or financial institution with respect to sales of GAMNA Focus Fund
Shares), (v) participants in "wrap-fee" or asset allocation programs or other
fee-based arrangements sponsored by broker-dealers and other financial
institutions that have entered into agreements with GAMNA, (vi) and financial
institution trust departments investing an aggregate of $1 million or more in
GAMNA Focus Fund.
Purchases of the Fund's Class A Shares may be made with no initial sales
charge (i) by an investment adviser, broker or financial planner, provided
arrangements are preapproved and purchases are placed through an omnibus account
with the Fund or (ii) by clients of such investment adviser or financial planner
who place trades for their own accounts, if such accounts are linked to a master
account of such investment adviser or financial planner on the books and records
of the broker or agent.
Initial sales charges on Class A Shares may be waived if the investor is
using redemption proceeds received within the prior ninety days from non-GAMNA
funds to buy his or her Shares, and on which he or she paid a front-end or
contingent deferred sales charge.
Some participant-directed employee benefit plans participate in a
"multi-fund" program which offers both GAMNA and non-GAMNA mutual funds. The
money that is invested in GAMNA Focus Fund may be combined with the other mutual
funds in the same program when determining the plan's eligibility to buy Class A
Shares for purposes of the discount privileges and programs described above.
No initial sales charge will apply to the purchase of the Fund's Class A
Shares if (i) one is investing proceeds from a qualified retirement plan where a
portion of the plan was invested in GAMNA Focus Fund, (ii) one is investing
through any qualified retirement plan with 50 or more participants or (iii) one
is a participant in certain qualified retirement plans and is investing (or
reinvesting) the proceeds from the repayment of a plan loan made to him or her.
Purchases of the Fund's Class A Shares may be made with no initial sales
charge in accounts opened by a bank, trust company or thrift institution which
is acting as a fiduciary exercising investment discretion, provided that
appropriate notification of such fiduciary relationship is reported at the time
of the investment to the Fund or the Fund's Distributor.
The contingent deferred sales charge for Class B and Class C Shares will
be waived for redemptions in connection with the Fund's systematic redemption
plan. In addition, subject to confirmation of a shareholder's status, the
contingent deferred sales charge will be waived for: (i) a total or partial
redemption made within one year of the shareholder's death or initial
qualification for Social Security disability payments; (ii) a redemption in
connection with a Minimum Required Distribution from an IRA, Keogh or custodial
account under section 403(b) of the Internal Revenue Code or a mandatory
distribution from a qualified plan; (iii) redemptions made from an IRA, Keogh or
custodial account under section 403(b) of the Internal Revenue Code through an
established Systematic Redemption Plan; (iv) a redemption resulting from an
over-contribution to an IRA; (v) distributions from a qualified plan upon
retirement; (vi) an involuntary redemption of an account balance under $500;
(vii) the redemption of Shares by participants in certain wrap-fee or asset
allocation programs sponsored by broker-dealers and other financial institutions
that have entered into agreements with GAMNA.
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The Fund reserve the right to change any of these policies at any time and
may reject any request to purchase Shares at a reduced sales charge.
DISTRIBUTIONS; TAX MATTERS
The following is only a summary of certain additional tax considerations
generally affecting the Fund and its shareholders that are not described in the
Fund's Prospectus. No attempt is made to present a detailed explanation of the
tax treatment of the Fund or its shareholders, and the discussions here and in
the Fund's Prospectus are not intended as substitutes for careful tax planning.
Qualification as a Regulated Investment Company
The Fund intends to qualify and elect to be taxed as a regulated
investment company under Subchapter M of the Internal Revenue Code of 1986, as
amended (the "Code") and to meet all other requirements that are necessary for
it to be relieved of federal taxes on income and gains it distributes to
shareholders. As a regulated investment company, the Fund is not subject to
federal income tax on the portion of its net investment income (i.e., its
investment company taxable income, as that term is defined in the Code, without
regard to the deduction for dividends paid ) and net capital gain (i.e., the
excess of net long-term capital gain over net short-term capital loss) that it
distributes to shareholders, provided that it distributes at least 90% of its
net investment income for the taxable year (the "Distribution Requirement"), and
satisfies certain other requirements of the Code that are described below.
Distributions by the Fund made during the taxable year or, under specified
circumstances, within twelve months after the close of the taxable year, will be
considered distributions of income and gains of the taxable year and can
therefore satisfy the Distribution Requirement.
In addition to satisfying the Distribution Requirement for each taxable
year, a regulated investment company must derive at least 90% of its gross
income from dividends, interest, certain payments with respect to securities
loans, gains from the sale or other disposition of stock or securities or
foreign currencies (to the extent such currency gains are directly related to
the regulated investment company's principal business of investing in stock or
securities) and other income derived with respect to its business of investing
in such stock, securities or currencies (the "Income Requirement").
In addition to satisfying the requirements described above, the Fund must
satisfy an asset diversification test in order to qualify as a regulated
investment company. Under this test, at the close of each quarter of the Fund's
taxable year, at least 50% of the value of the Fund's assets must consist of
cash and cash items, U.S. Government securities, securities of other regulated
investment companies, and securities of other issuers (as to which the Fund has
not invested more than 5% of the value of the Fund's total assets in securities
of such issuer and as to which the Fund does not hold more than 10% of the
outstanding voting securities of such issuer), and no more than 25% of the value
of its total assets may be invested in the securities of any one issuer (other
than U.S. Government securities and securities of other regulated investment
companies), or in two or more issuers which the Fund controls and which are
engaged in the same or similar trades or businesses.
The Fund may make investments that produce income that is not matched by a
corresponding cash distribution to the Fund, such as investments having original
issue discount (i.e., an amount equal to the excess of the stated redemption
price of the security at maturity over its issue price) or market discount
(i.e., an amount equal to the excess of the stated redemption price of the
security over the basis of such bond immediately after it was acquired), if the
Fund elects to accrue market discount on a current basis. In addition, income
may continue to accrue for federal income tax purposes with respect to a
non-performing investment. Any such income would be treated as income earned by
the Fund and therefore would be subject to the distribution requirements of the
Code. Because such income may not be matched by a corresponding cash
distribution to the Fund, the Fund may be required to borrow money or dispose of
other securities to be able to make distributions to its investors.
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If for any taxable year the Fund does not qualify as a regulated
investment company, all of its taxable income (including its net capital gain)
will be subject to tax at regular corporate rates without any deduction for
distributions to shareholders, and such distributions will be taxable to the
shareholders as ordinary dividends to the extent of the Fund's current and
accumulated earnings and profits. Such distributions generally will be eligible
for the dividends-received deduction in the case of corporate shareholders.
Excise Tax on Regulated Investment Companies
A 4% non-deductible excise tax is imposed on a regulated investment
company that fails to distribute in each calendar year an amount equal to 98% of
ordinary taxable income for the calendar year and 98% of capital gain net income
for the one-year period ended on October 31 of such calendar year (or, at the
election of a regulated investment company having a taxable year ending November
30 or December 31, for its taxable year (a "taxable year election"). The balance
of such income must be distributed during the next calendar year. For the
foregoing purposes, a regulated investment company is treated as having
distributed any amount on which it is subject to income tax for any taxable year
ending in such calendar year.
For purposes of the excise tax, a regulated investment company shall: (1)
reduce its capital gain net income (but not below its net capital gain) by the
amount of any net ordinary loss for the calendar year; and (2) exclude foreign
currency gains and losses incurred after October 31 of any year (or after the
end of its taxable year if it has made a taxable year election) in determining
the amount of ordinary taxable income for the current calendar year (and,
instead, include such gains and losses in determining ordinary taxable income
for the succeeding calendar year).
The Fund intends to make sufficient distributions or deemed distributions
of its ordinary taxable income and capital gain net income prior to the end of
each calendar year to avoid liability for the excise tax. However, investors
should note that the Fund may in certain circumstances be required to liquidate
portfolio investments to make sufficient distributions to avoid excise tax
liability.
Fund Distributions
The Fund anticipates distributing substantially all of its net investment
income for each taxable year. Such distributions will be taxable to shareholders
as ordinary income and treated as dividends for federal income tax purposes, but
they will qualify for the 70% dividends-received deduction for corporations only
to the extent discussed below. Dividends paid on Class A, Class B and Class C
Shares are calculated at the same time. In general, dividends on Class B and
Class C Shares are expected to be lower than those on Class A Shares due to the
higher distribution expenses borne by the Class B and Class C Shares. Dividends
may also differ between classes as a result of differences in other class
specific expenses.
If a check representing the Fund distribution is not cashed within a
specified period, the Fund will notify the investor that he or she has the
option of requesting another check or reinvesting the distribution in the Fund.
If the Fund does not receive his or her election, the distribution will be
reinvested in the Fund. Similarly, if the Fund sends the investor correspondence
returned as "undeliverable," distributions will automatically be reinvested in
the Fund.
The Fund may either retain or distribute to shareholders its net capital
gain for each taxable year. The Fund currently intends to distribute any such
amounts. If net capital gain is distributed and designated as a "capital gain
dividend," it will be taxable to shareholders as long-term capital gain,
regardless of the length of time the shareholder has held his Shares or whether
such gain was recognized by the Fund prior to the date on which the shareholder
acquired his Shares.
The maximum rate of tax on long-term capital gains of individuals is 20%
(10% for gains otherwise taxed at 15%) with respect to capital assets held for
more than one year.
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If the Fund elects to retain its net capital gain, the Fund will be taxed
thereon (except to the extent of any available capital loss carryovers) at the
35% corporate tax rate. If the Fund elects to retain its net capital gain, it is
expected that the Fund also will elect to have shareholders of record on the
last day of its taxable year treated as if each received a distribution of his
pro rata share of such gain, with the result that each shareholder will be
required to report his pro rata share of such gain on his tax return as
long-term capital gain, will receive a refundable tax credit for his pro rata
share of tax paid by the Fund on the gain, and will increase the tax basis for
his Shares by an amount equal to the deemed distribution less the tax credit.
Ordinary income dividends paid by the Fund with respect to a taxable year
will qualify for the 70% dividends-received deduction generally available to
corporations to the extent of the amount of qualifying dividends received by the
Fund from domestic corporations for the taxable year. A dividend received by the
Fund will not be treated as a qualifying dividend (1) if it has been received
with respect to any share of stock that the Fund has held for less than 46 days
(91 days in the case of certain preferred stock) during the 90 day period
beginning on the date which is 45 days before the date on which such share
becomes ex-dividend with respect to such dividend (during the 180 day period
beginning 90 days before such date in the case of certain preferred stock) under
the rules of Code Section 246(c)(3) and (4); (2) to the extent that the Fund is
under an obligation to make related payments with respect to positions in
substantially similar or related property; or (3) to the extent the stock on
which the dividend is paid is treated as debt-financed under the rules of Code
Section 246A. Moreover, the dividends-received deduction for a corporate
shareholder may be disallowed or reduced if the corporate shareholder fails to
satisfy the foregoing requirements with respect to its Shares.
For purposes of the corporate alternative minimum tax ("AMT"), the
corporate dividends-received deduction is not itself an item of tax preference
that must be added back to taxable income or is otherwise disallowed in
determining a corporation's AMT. However, corporate shareholders will generally
be required to take the full amount of any dividend received from the Fund into
account (without a dividends-received deduction) in determining its adjusted
current earnings.
Distributions by the Fund that do not constitute ordinary income
dividends, or capital gain dividends will be treated as a return of capital to
the extent of (and in reduction of) the shareholder's tax basis in his Shares;
any excess will be treated as gain from the sale of his Shares, as discussed
below.
Distributions by the Fund will be treated in the manner described above
regardless of whether such distributions are paid in cash or reinvested in
additional Shares. Shareholders receiving a distribution in the form of
additional Shares will be treated as receiving a distribution in an amount equal
to the fair market value of the Shares received, determined as of the
reinvestment date. In addition, if the net asset value at the time a shareholder
purchases Shares reflects undistributed net investment income or net capital
gain, or unrealized appreciation in the value of the assets of the Fund,
distributions of such amounts will be taxable to the shareholder in the manner
described above, although such distributions economically constitute a return of
capital to the shareholder.
Ordinarily, shareholders are required to take distributions by the Fund
into account in the year in which the distributions are made. However, dividends
declared in October, November or December of any year and payable to
shareholders of record on a specified date in such a month will be deemed to
have been received by the shareholders (and made by the Fund) on December 31 of
such calendar year if such dividends are actually paid in January of the
following year. Shareholders will be advised annually as to the U.S. federal
income tax consequences of distributions made (or deemed made) during the year.
The Fund will be required in certain cases to withhold and remit to the
U.S. Treasury 31% of ordinary income dividends and capital gain dividends, and
the proceeds of redemption of Shares, paid to any shareholder (1) who has
provided either an incorrect taxpayer identification number or no number at all,
(2) who is subject to backup withholding by the IRS for failure to report the
receipt of interest or dividend income properly, or (3) who has failed to
certify to the Fund that it is not subject to backup withholding or that it is a
corporation or other "exempt recipient."
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Sale or Redemption of Shares
A shareholder will recognize gain or loss on the sale or redemption of
Shares in an amount equal to the difference between the proceeds of the sale or
redemption and the shareholder's adjusted tax basis in the Shares. All or a
portion of any loss so recognized may be disallowed if the shareholder purchases
other Shares within 30 days before or after the sale or redemption. In general,
any gain or loss arising from (or treated as arising from) the sale or
redemption of Shares will be considered capital gain or loss and will be long-
term capital gain or loss if the Shares were held for longer than one year.
However, any capital loss arising from the sale or redemption of Shares held for
six months or less will be treated as a long-term capital loss to the extent of
the amount of capital gain dividends received on such Shares. For this purpose,
special holding period rules may apply in determining the holding period of
Shares. Capital losses in any year are deductible only to the extent of capital
gains plus, in the case of a noncorporate taxpayer, $3,000 of ordinary income.
Foreign Shareholders
Taxation of a shareholder who, as to the United States, is a nonresident
alien individual, foreign trust or estate, foreign corporation, or foreign
partnership ("foreign shareholder"), depends on whether the income from the Fund
is "effectively connected" with a U.S. trade or business carried on by such
shareholder.
If the income from the Fund is not effectively connected with a U.S. trade
or business carried on by a foreign shareholder, dividends paid to a foreign
shareholder from net investment income will be subject to U.S. withholding tax
at the rate of 30% (or lower treaty rate) upon the gross amount of the dividend.
Such a foreign shareholder would generally be exempt from U.S. federal income
tax on gains realized on the sale of Shares and capital gain dividends and
amounts retained by the Fund that are designated as undistributed capital gains.
If the income from the Fund is effectively connected with a U.S. trade or
business carried on by a foreign shareholder, then ordinary income dividends,
capital gain dividends, and any gains realized upon the sale of Shares will be
subject to U.S. federal income tax at the rates applicable to U.S. citizens or
domestic corporations. In the case of foreign noncorporate shareholders, the
Fund may be required to withhold U.S. federal income tax at a rate of 31% on
distributions that are otherwise exempt from withholding tax (or taxable at a
reduced treaty rate) unless such shareholders furnish the Fund with proper
notification of their foreign status.
The tax consequences to a foreign shareholder entitled to claim the
benefits of an applicable tax treaty may be different from those described
herein. Foreign shareholders are urged to consult their own tax advisers with
respect to the particular tax consequences to them of an investment in the Fund,
including the applicability of foreign taxes.
State and Local Tax Matters
Depending on the residence of the shareholder for tax purposes,
distributions may also be subject to state and local taxes or withholding taxes.
Most states provide that a regulated investment company may pass through
(without restriction) to its shareholders state and local income tax exemptions
available to direct owners of certain types of U.S. government securities (such
as U.S. Treasury obligations). Thus, for residents of these states,
distributions derived from the Fund's investment in certain types of U.S.
government securities should be free from state and local income taxes to the
extent that the interest income from such investments would have been exempt
from state and local income taxes if such securities had been held directly by
the respective shareholders themselves. Certain states, however, do not allow a
regulated investment company to pass through to its shareholders the state and
local income tax exemptions available to direct owners of certain types of U.S.
government securities unless the regulated investment company holds at least a
required amount of U.S. government securities. Accordingly, for residents of
these states, distributions derived from the Fund's investment in certain types
of U.S. government securities may not be entitled to the exemptions from state
and local income taxes that would be available if the shareholders had purchased
U.S. government securities directly. Shareholders' dividends attributable to the
Fund's income from repurchase agreements generally are subject to state and
local income taxes, although states and regulations vary in their treatment of
such income. The exemption from state
13
<PAGE>
and local income taxes does not preclude states from asserting other taxes on
the ownership of U.S. government securities. To the extent that the Fund invests
to a substantial degree in U.S. government securities which are subject to
favorable state and local tax treatment, shareholders of the Fund will be
notified as to the extent to which distributions from the Fund are attributable
to interest on such securities. Rules of state and local taxation of ordinary
income dividends and capital gain dividends from regulated investment companies
may differ from the rules for U.S. federal income taxation in other respects.
Shareholders are urged to consult their tax advisers as to the consequences of
these and other state and local tax rules affecting investment in the Fund.
Effect of Future Legislation
The foregoing general discussion of U.S. federal income tax consequences
is based on the Code and the Treasury Regulations issued thereunder as in effect
on the date of this Statement of Additional Information. Future legislative or
administrative changes or court decisions may significantly change the
conclusions expressed herein, and any such changes or decisions may have a
retroactive effect with respect to the transactions contemplated herein.
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<PAGE>
MANAGEMENT OF THE COMPANY AND THE FUND
Directors and Officers
The business and affairs of the Corporation shall be managed under the
direction of its Board of Directors.
The Directors and officers of the Company and their principal occupations
for at least the past five years are set forth below.
Principal Occupation(s)
Name, Age, Address Position Held with Fund Past 5 Years
- ------------------ ----------------------- ------------
Mark Bronzo (age 38)* Director and President Senior Vice President,
180 Maiden Lane Managing Director and
New York, NY 10038 Board Member of GAMNA
(formerly Sorema Asset
Management) - 1995 -
present;
Chief Investment Officer
of Sorema N.A. Holding
Corporation - 1990-1998
Daniel Portanova (age 38)* Senior Vice President,
180 Maiden Lane Director and Managing Director and
New York, NY 10038 Treasurer Board Member of GAMNA -
1998 - present;
Managing Director -
General Reinsurance Asset
Management - 1993 -1995
- --------------------------------------------------------------------------------
* Asterisks indicate those Directors that are "interested persons" (as
defined in the 1940 Act).
The Board of Directors of the Company presently has an Audit Committee.
The members of the Audit Committee are Messrs. [___________________________].
The function of the Audit Committee is to recommend independent auditors and
monitor accounting and financial matters.
Remuneration of Directors and Certain Executive Officers
Each Director who is not an affiliate of GAMNA receives a fee which
consists of an annual retainer of $______ and a meeting fee of $_________ for
each meeting attended. Each Director is also reimbursed for expenses incurred in
attending each meeting of the Board of Directors or any committee thereof.
The Articles of Incorporation provide that the Company will indemnify its
Directors and officers against liabilities and expenses incurred in connection
with litigation in which they may be involved because of their offices with the
Company, unless, as to liability to the Company or its shareholders, it is
finally adjudicated that they engaged in willful misfeasance, bad faith, gross
negligence or reckless disregard of the duties involved in their offices or with
respect to any matter unless it is finally adjudicated that they did not act in
good faith in the reasonable belief that their actions were in the best interest
of the Company. In the case of settlement, such indemnification will not be
provided unless it has been determined by a court or other body approving the
settlement or other disposition, or by a reasonable determination based upon a
review of readily available facts, by vote of a majority of disinterested
Directors or in a written opinion of independent counsel, that such officers or
Directors have not engaged in willful misfeasance, bad faith, gross negligence
or reckless disregard of their duties.
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<PAGE>
GAMNA
GAMNA acts as investment adviser to the Fund pursuant to an Investment
Advisory Agreement, dated as of _________, 1999 (the "Advisory Agreement").
Subject to such policies as the Board of Directors may determine, GAMNA is
responsible for investment decisions for the Fund. Pursuant to the terms of the
Advisory Agreement, GAMNA provides the Fund with such investment advice and
supervision as it deems necessary for the proper supervision of the Fund's
investments. GAMNA provides a continuous investment program and determines from
time to time what securities shall be purchased, sold or exchanged and what
portion of the Fund's assets shall be held uninvested. GAMNA also oversees
certain administrative, compliance and accounting services for the Fund. GAMNA
furnishes, at its own expense, all services, facilities and personnel necessary
in connection with managing the investments and effecting portfolio transactions
for the Fund. The Advisory Agreement for the Fund will continue in effect for an
initial two year period and thereafter for successive annual periods provided
that such continuance is specifically approved at least annually by (i) the
Board of Directors or by vote of a majority of the Fund's outstanding voting
securities and (ii) by a majority of the Directors who are not parties to the
Advisory Agreement or interested persons of any such party, at a meeting called
for the purpose of voting on such Advisory Agreement.
Pursuant to the terms of the Advisory Agreement, GAMNA is permitted to
render services to others. The Advisory Agreement is terminable without penalty
by the Company on behalf of the Fund on not more than 60 days', nor less than 30
days', written notice when authorized either by a majority vote of the Fund's
shareholders or by a vote of a majority of the Board of Directors of the
Company, or by GAMNA on not more than 60 days', nor less than 30 days', written
notice, and will automatically terminate in the event of its "assignment" (as
defined in the 1940 Act). The Advisory Agreement provides that GAMNA shall not
be liable for any error of judgment or mistake of law or for any loss arising
out of any investment or for any act or omission in the execution of portfolio
transactions for the Fund, except for wilful misfeasance, bad faith or gross
negligence in the performance of its duties, or by reason of reckless disregard
of its obligations and duties thereunder.
GAMNA (formerly Sorema Asset Management) was formed as a joint venture
between Groupama Asset Management and Sorema NA Holding Corp. GAMNA is 80% owned
by Groupama Asset Management and 20% owned by Sorema N.A. Holding Corp. Groupama
Asset Management is 96.1% owned by Banque Financiero Groupama, which is in turn
owned 67.7% by Groupama Finance and 28.7% by AMACAM. Groupama Finance is 100%
owned by Groupama S.A. AMACAM is 50% owned by Groupama S.A., 25% owned by SACAM
S.A. and 25% owned by CNCA S.A. CNCA S.A. and SACAM S.A. are both controlled by
Credit Agricoles. Sorema N.A. Holding Corp. is 100% owned by Sorema (Paris)
which is in turn owned 100% by Financiero Sorema. Financiero Sorema is 93.5%
owned by Groupama Reassurance. Groupama Reassurance is 36.2% owned by Groupama
S.A., 23.45% owned by Groupama Assurances and Services and 40.35% owned by
Groupama. Groupama Assurances and Services is 96.03% owned by Groupama S.A.
Groupama S.A. is 100% owned by Groupama.
In consideration of the services provided by GAMNA pursuant to the
Advisory Agreement, GAMNA is entitled to receive from the Fund an investment
advisory fee computed daily and paid monthly based on a rate equal to a
percentage of the Fund's average daily net assets specified in the Prospectus.
However, GAMNA may voluntarily agree to waive a portion of the fees payable to
it on a month-to-month basis. The Fund may be required to reimburse GAMNA for
any advisory fees waived.
GAMNA may from time to time, at its own expense out of compensation
retained by it from the Fund or other sources available to it, make additional
payments to certain selected dealers or other shareholder servicing agents for
performing administrative services for their customers. These services include
maintaining account records, processing orders to purchase, redeem and exchange
Shares and responding to certain customer inquiries. The amount of such
compensation may be up to an additional __% annually of the average net assets
of the Fund attributable to Shares held by customers of such shareholder
servicing agents. Such compensation does not represent an additional expense to
the Fund or its shareholders, since it will be paid by GAMNA.
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<PAGE>
Administrator
Pursuant to an Administration Agreement (the "Administration Agreement"),
_______ is the administrator of the Fund. The Administrator provides certain
administrative services to the Fund, including, among other responsibilities,
certain accounting, clerical and bookkeeping services, assistance in the
preparation of reports to shareholders, coordinating the negotiation of
contracts and fees with, and the monitoring of performance and billing of, the
Fund's independent contractors and agents; preparation for signature by an
officer of the Company of all documents required to be filed for compliance by
the Company with applicable laws and regulations including those of the
Securities and Exchange Commission and the securities laws of various states;
arranging for the computation of performance data, including net asset value;
responding to shareholder inquiries; and arranging for the maintenance of books
and records of the Fund and providing, at its own expense, office facilities,
equipment and personnel necessary to carry out its duties. The Administrator
does not have any responsibility or authority for the management of the Fund,
the determination of investment policy, or for any matter pertaining to the
distribution of Shares.
In consideration of the services provided pursuant to the Administration
Agreement, the Administrator receives from the Fund a fee computed daily and
paid monthly at an annual rate equal to ____% of the Fund's average daily net
assets.
DISTRIBUTION PLANS
The Company has adopted separate plans of distribution pursuant to Rule
12b-1 under the 1940 Act (a "Distribution Plan") on behalf of each class of
Shares as described in the Prospectus. The Distribution Plans provide that each
class of Shares shall pay for distribution services a distribution fee (the
"Distribution Fee"), including payments to the Distributor, at annual rates not
to exceed the amounts set forth in the Prospectus. The Distributor may use all
or any portion of such Distribution Fee to pay for Fund expenses of printing
prospectuses and reports used for sales purposes, expenses of the preparation
and printing of sales literature and other distribution-related expenses,
including payments to selected securities dealers. Promotional activities for
the sale of each class of Shares may be conducted generally, and activities
intended to promote one class of Shares may also benefit the Fund's other
Shares.
Class B and Class C Shares pay a Distribution Fee of up to 0.75% of
average daily net assets. The Distributor currently expects to pay sales
commissions to a dealer at the time of sale of Class B and Class C Shares of up
to 4.00% and 1.00%, respectively, of the purchase price of the Shares sold by
such dealer. The Distributor will use its own funds (which may be borrowed or
otherwise financed) to pay such amounts. Because the Distributor will receive a
maximum Distribution Fee of 0.75% of average daily net assets with respect to
Class B Shares, it will take the Distributor several years to recoup the sales
commissions paid to dealers and other sales expenses.
Some payments under the Distribution Plans may be used to compensate
broker-dealers with trail or maintenance commissions in an amount not to exceed
0.25% annualized of the average net asset value of Class A Shares, or 0.25%
annualized of the average net asset value of the Class B Shares, or 0.75%
annualized of the average net asset value of the Class C Shares, maintained in
the Fund by such broker-dealers' customers. Trail or maintenance commissions on
Class B and Class C Shares will be paid to broker-dealers beginning the 13th
month following the purchase of such Class B or Class C Shares. Since the
distribution fees are not directly tied to expenses, the amount of distribution
fees paid by the Fund during any year may be more or less than actual expenses
incurred pursuant to the Distribution Plans. For this reason, this type of
distribution fee arrangement is characterized by the staff of the Securities and
Exchange Commission as being of the "compensation variety" (in contrast to
"reimbursement" arrangements by which a distributor's payments are directly
linked to its expenses). With respect to Class B and Class C Shares, because of
the 0.75% annual limitation on the compensation paid to the Distributor during a
fiscal year, compensation relating to a large portion of the commissions
attributable to sales of Class B or Class C Shares in any one year will be
accrued and paid by the Fund to the Distributor in fiscal years subsequent
thereto. In determining whether to purchase Class B or Class C Shares, investors
should consider that compensation payments could continue until the Distributor
has been fully reimbursed for the commissions paid on sales of Class B and Class
C Shares. However, the Shares are not liable for any distribution expenses
incurred in excess of the Distribution Fee paid.
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<PAGE>
Each class of Shares is entitled to exclusive voting rights with respect
to matters concerning its Distribution Plan.
Each Distribution Plan provides that it will continue in effect
indefinitely if such continuance is specifically approved at least annually by a
vote of both a majority of the Directors and a majority of the Directors who are
not "interested persons" (as defined in the 1940 Act) of the Company and who
have no direct or indirect financial interest in the operation of the
Distribution Plans or in any agreement related to such Plan ("Qualified
Directors"). The continuance of each Distribution Plan was most recently
approved on ___________________. Each Distribution Plan requires that the
Company shall provide to the Board of Directors, and the Board of Directors
shall review, at least quarterly, a written report of the amounts expended (and
the purposes therefor) under the Distribution Plan. Each Distribution Plan
further provides that the selection and nomination of Qualified Directors shall
be committed to the discretion of the disinterested Directors (as defined in the
1940 Act) then in office. Each Distribution Plan may be terminated at any time
by a vote of a majority of the Qualified Directors or by vote of a majority of
the outstanding voting shares of the class of the Fund. Each Distribution Plan
may not be amended to increase materially the amount of permitted expenses
thereunder without the approval of shareholders and may not be materially
amended in any case without a vote of the majority of both the Directors and the
Qualified Directors.
DISTRIBUTION AGREEMENT
The Company has entered into a Distribution Agreement dated __________,
1999 (the "Distribution Agreement") with the "Distributor", pursuant to which
the Distributor acts as the Fund's exclusive underwriter and promotes and
arranges for the sale of each class of Shares. The Distribution Agreement
provides that the Distributor will bear the expenses of printing, distributing
and filing prospectuses and statements of additional information and reports
used for sales purposes, and of preparing and printing sales literature and
advertisements not paid for by the Distribution Plan. The Company pays for all
of the expenses for qualification of the Shares for sale in connection with the
public offering of such Shares, and all legal expenses in connection therewith.
The Distribution Agreement will continue in effect for an initial two year
period and thereafter for successive annual periods only if such continuance is
specifically approved at least annually by (i) the Board of Directors or by vote
of a majority of the Fund's outstanding voting securities and (ii) by a majority
of the Directors who are not parties to the Distribution Agreement or
"interested persons" (as defined in the 1940 Act) of any such party. The
Distribution Agreement is terminable without penalty by the Company on behalf of
the Fund on 60 days' written notice when authorized either by a majority vote of
the Fund's shareholders or by vote of a majority of the Board of Directors of
the Company, including a majority of the Directors who are not "interested
persons" (as defined in the 1940 Act) of the Company, or by the Distributor on
60 days' written notice, and will automatically terminate in the event of its
"assignment" (as defined in the 1940 Act). The Distribution Agreement also
provides that neither the Distributor nor its personnel shall be liable for any
act or omission in the course of, or connected with, rendering services under
the Distribution Agreement, except for willful misfeasance, bad faith, gross
negligence or reckless disregard of its obligations or duties.
TRANSFER AGENT AND CUSTODIAN
The Company has also entered into a Transfer Agency Agreement pursuant to
which _____ acts as transfer agent for the Company. The Transfer Agent's address
is [address].
Pursuant to a Custodian Agreement, _______________ acts as the Custodian
of the assets of the Fund and receives such compensation as is agreed upon from
time to time. As Custodian provides oversight and record keeping for the assets
held in the portfolios of the Fund. The Custodian also provides fund accounting
services for the income, expenses and Shares outstanding for the Fund. The
Custodian is located at [address].
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<PAGE>
INDEPENDENT ACCOUNTANTS
[___________________] provides the Fund with audit services, tax return
preparation and assistance and consultation with respect to the preparation of
filings with the Securities and Exchange Commission. The financial statement
included in this Statement of Additional Information has been included in
reliance upon the report of ______________, [address], independent accountants
of the Fund, given on the authority of that firm as experts in accounting and
auditing.
COUNSEL
_______________ serves as counsel to the Company and the Fund.
_________________, Baltimore, Maryland has issued an opinion regarding the valid
issuance of Shares being offered pursuant to the Fund's Prospectus.
EXPENSES
The Fund pays the expenses incurred in its operations, including its pro
rata share of expenses of the Company. These expenses include investment
advisory and administrative fees; the compensation of the Directors;
registration fees; interest charges; taxes; expenses connected with the
execution, recording and settlement of security transactions; fees and expenses
of the Fund's custodian for all services to the Fund, including safekeeping of
funds and securities and maintaining required books and accounts; expenses of
preparing and mailing reports to investors and to government offices and
commissions; expenses of meetings of investors; fees and expenses of independent
accountants, of legal counsel and of any transfer agent, registrar or dividend
disbursing agent of the Company; insurance premiums; and expenses of calculating
the net asset value of, and the net income on, Shares. Distribution fees are
allocated to specific classes of the Fund. In addition, the Fund may allocate
transfer agency and certain other expenses by class. Service providers to the
Fund may, from time to time, voluntarily waive all or a portion of any fees to
which they are entitled.
GENERAL INFORMATION
Description of Shares, Voting Rights and Liabilities
GAMNA Series Funds, Inc. is an open-end management investment company
organized as corporation under the laws of the State of Maryland on March 18,
1999. The Company currently consists of one series of Shares of common stock,
par value $.01 per share relating to the GAMNA Focus Fund. The Company has
reserved the right to create and issue additional series or classes. Each share
of a series or class represents an equal proportionate interest in that series
or class with each other share of that series or class. The Shares of each
series or class participate equally in the earnings, dividends and assets of the
particular series or class. Expenses of the Company which are not attributable
to a specific series or class are allocated among all the series in a manner
believed by management of the Company to be fair and equitable. Shares have no
pre-emptive or conversion rights. Shares when issued are fully paid and
non-assessable. Shareholders are entitled to one vote for each whole share held,
and each fractional share shall be entitled to a proportionate fractional vote,
except that Shares held in the treasury of the Company shall not be voted.
Shares of each series or class generally vote together, except when required
under federal securities laws to vote separately on matters that only affect a
particular class, such as the approval of distribution plans for a particular
class.
The Fund offers Class A, Class B and Class C Shares. The classes of Shares
have several different attributes relating to sales charges and expenses, as
described herein and in the Prospectus. In addition to such differences,
expenses borne by each class of the Fund may differ slightly because of the
allocation of other class-specific expenses. For example, a higher transfer
agency fee may be imposed on certain classes. The relative impact of initial
sales charges, contingent deferred sales charges, and ongoing annual expenses
will depend on the length of time a share is held.
Selected dealers and financial consultants may receive different levels of
compensation for selling one particular class of Shares rather than another.
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<PAGE>
The business and affairs of the Company are managed under the general
direction and supervision of the Company's Board of Directors. The Company is
not required to and does not currently intend to hold annual meetings of
shareholders but will hold special meetings of shareholders of a series or class
when required by the 1940 Act and when, in the judgment of the Directors, it is
necessary or desirable to submit matters for a shareholder vote. Shareholders
have, under certain circumstances, the right to communicate with other
shareholders in connection with requesting a meeting of shareholders. No
material amendment may be made to the Company's Articles of Incorporation
without the affirmative vote of the holders of a majority of the outstanding
shares of each portfolio affected by the amendment. Shares have no preemptive or
conversion rights. Shares, when issued, are fully paid and non-assessable.
Stock certificates are issued only upon the written request of a
shareholder. No certificates are issued for Class B Shares due to their
conversion feature.
The Board of Directors has adopted a code of ethics addressing personal
securities transactions by investment personnel and access persons and other
related matters. The code has been designated to address potential conflicts of
interest that can arise in connection with personal trading activities of such
persons. Persons subject to the code are generally permitted to engage in
personal securities transactions, subject to certain prohibitions, pre-clearance
requirements and blackout periods.
Control Persons, Principal Holders and Management Ownership
As of the date of this Statement of Additional Information, 100% of the
issued and outstanding common stock of the Company is owned by GAMNA.
As of the date hereof, the Directors and officers as a group own less than
1% of the Fund's outstanding Shares, all of which were acquired for investment
purposes.
20
<PAGE>
[Audit Report]
INDEPENDENT AUDITORS REPORT
The Board of Directors
GAMNA Series Funds, Inc.
We have audited the accompanying balance sheet of GAMNA Focus Fund as of
_________, 1999. This financial statement is the responsibility of the Company's
management. Our responsibility is to express an opinion on this financial
statement 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 statement. 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 of GAMNA Focus Fund at _____,
1999, in conformity with generally accepted accounting principles.
21
<PAGE>
FINANCIAL STATEMENTS
GAMNA Series Funds, Inc.
Statement of Assets and Liabilities
____, 1999
Assets:
Cash
Deferred organization expenses (Note __)
Total Assets:
Liabilities:
Organization expenses payable
Net Assets
Net Assets consist of:
Paid-in capital
Net Assets
Shares outstanding
Net asset value, offering and redemption price per share
See accompanying notes to financial statement.
22
<PAGE>
GAMNA SERIES FUNDS, INC.
NOTES TO FINANCIAL STATEMENTS
Note 1. Organization
GAMNA Series Funds, Inc (the "Company"), an open-end management investment
company, has one portfolio, GAMNA Focus Fund (the "Fund"). The Series was
incorporated in Maryland on March __, 1999. The Fund is classified as a
non-diversified fund under the Investment Company Act of 1940, as amended (the
"1940 Act").
As of March __, 1999, the Series had no other activity except for matters
relating to its organization and the purchase by Groupama Asset Management N.A.
("GAMNA"), the Fund's investment adviser, of __ shares of the Fund.
The preparation of financial statements in accordance with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts and disclosures. Actual results
could differ from those estimates.
Note 2. Management and Advisory Fees and Other Transactions
The Fund has entered into an investment advisory agreement with GAMNA.
Pursuant to the agreement, GAMNA manages the investment and reinvestment of the
Fund's assets. GAMNA also furnishes office space, personnel and certain
facilities required for the performance by GAMNA of the services provided by it
to the Fund under the management contract.
As compensation for its services, the Fund will pay GAMNA a monthly fee at
an annual rate, based on its average daily net assets, of between 0.50% and
0.55%.
GAMNA has voluntarily agreed to impose an expense cap on the total
operating expenses (exclusive of taxes, interest and extraordinary expenses such
as litigation and indemnification expenses) for the Fund at [ ]% for the fiscal
year ending June 30, 2000.
Note 3. Organization Expenses
Organization expenses estimated at $______ have been charged to expense.
23
<PAGE>
SPECIMEN COMPUTATIONS OF OFFERING PRICES PER SHARE
A Shares:
Net Asset Value and Redemption Price per Share at an assumed net
asset value of $10.00 per share ......................................... $10.00
Maximum Offering Price per Share (an assumed net value of $10.00 per
share divided by .9425) (reduced on purchases of $100,000 or more) ...... $10.61
B Shares:
Net Asset Value and Redemption Price per Share at an assumed net
asset value of $10.00 per share ......................................... $10.00
C Shares:
Net Asset Value and Redemption Price per Share at an assumed net
asset value of $10.00 per share ......................................... $10.00
24
<PAGE>
APPENDIX A
DESCRIPTION OF RATINGS
A description of the rating policies of Moody's and S&P with respect to
bonds and commercial paper appears below.
Moody's Investors Service's Corporate Bond Ratings
Aaa--Bonds which are rated "Aaa" are judged to be of the best quality and
carry the smallest degree of investment risk. Interest payments are protected by
a large or by an exceptionally stable margin, and principal is secure. While the
various protective elements are likely to change, such changes as can be
visualized are most unlikely to impair the fundamentally strong position of such
issues.
Aa--Bonds which are rated "Aa" are judged to be of high quality by all
standards. Together with the Aaa group they comprise what are generally known as
high grade bonds. They are rated lower than the best bonds because margins of
protection may not be as large as in Aaa securities or fluctuation of protective
elements may be of greater amplitude or there may be other elements present
which make the long-term risks appear somewhat larger than in Aaa securities.
A--Bonds which are rated "A" possess many favorable investment qualities
and are to be considered as upper medium grade obligations. Factors giving
security to principal and interest are considered adequate but elements may be
present which suggest a susceptibility to impairment sometime in the future.
Baa--Bonds which are rated "Baa" are considered as medium grade
obligations, i.e., they are neither highly protected nor poorly secured.
Interest payments and principal security appear adequate for the present but
certain protective elements may be lacking or may be characteristically
unreliable over any great length of time. Such bonds lack outstanding investment
characteristics and in fact have speculative characteristics as well.
Ba--Bonds which are rated "Ba" are judged to have speculative elements;
their future cannot be considered as well assured. Often the protection of
interest and principal payments may be very moderate and thereby not well
safeguarded during both good and bad times over the future. Uncertainty of
position characterizes bonds in this class.
B--Bonds which are rated "B" generally lack characteristics of a desirable
investment. Assurance of interest and principal payments or of maintenance and
other terms of the contract over any long period of time may be small.
Caa--Bonds which are rated "Caa" are of poor standing. Such issues may be
in default or there may be present elements of danger with respect to principal
or interest.
Ca--Bonds which are rated "Ca" represent obligations which are speculative
in high degree. Such issues are often in default or have other marked
shortcomings.
C--Bonds which are rated "C" are the lowest rated class of bonds and
issues so rated can be regarded as having extremely poor prospects of ever
attaining any real investment standing.
Moody's applies numerical modifiers "1", "2", and "3" to certain of its
rating classifications. The modifier "1" indicates that the security ranks in
the higher end of its generic rating category; the modifier "2" indicates a
mid-range ranking; and the modifier "3" indicates that the issue ranks in the
lower end of its generic rating category.
A-1
<PAGE>
Standard & Poor's Ratings Group Corporate Bond Ratings
AAA--This is the highest rating assigned by Standard & Poor's to a debt
obligation and indicates an extremely strong capacity to repay principal and pay
interest.
AA--Bonds rated "AA" also qualify as high quality debt obligations.
Capacity to pay principal and interest is very strong, and differs from "AAA"
issues only in small degree.
A--Bonds rated "A" have a strong capacity to repay principal and pay
interest, although they are somewhat more susceptible to the adverse effects of
changes in circumstances and economic conditions than debt in higher rated
categories.
BBB--Bonds rated "BBB" are regarded as having an adequate capacity to
repay principal and pay interest. Whereas they normally exhibit adequate
protection parameters, adverse economic conditions or changing circumstances are
more likely to lead to a weakened capacity to repay principal and pay interest
for bonds in this category than for higher rated categories.
BB-B-CCC-CC-C--Bonds rated "BB", "B", "CCC", "CC" and "C" are regarded, on
balance, as predominantly speculative with respect to the issuer's capacity to
pay interest and repay principal in accordance with the terms of the
obligations. BB indicates the lowest degree of speculation and C the highest
degree of speculation. While such bonds will likely have some quality and
protective characteristics, these are outweighed by large uncertainties or major
risk exposures to adverse conditions.
CI--Bonds rated "CI" are income bonds on which no interest is being paid.
D--Bonds rated "D" are in default. The "D" category is used when interest
payments or principal payments are not made on the date due even if the
applicable grace period has not expired unless S&P believes that such payments
will be made during such grace period. The "D" rating is also used upon the
filing of a bankruptcy petition if debt service payments are jeopardized.
The ratings set forth above may be modified by the addition of a plus or
minus to show relative standing within the major rating categories.
Moody's Investors Service's Commercial Paper Ratings
Prime-1--Issuers (or related supporting institutions) rated "Prime-1" have
a superior ability for repayment of senior short-term debt obligations.
"Prime-1" repayment ability will often be evidenced by many of the following
characteristics: leading market positions in well-established industries, high
rates of return on funds employed, conservative capitalization structures with
moderate reliance on debt and ample asset protection, broad margins in earnings
coverage of fixed financial charges and high internal cash generation, and
well-established access to a range of financial markets and assured sources of
alternate liquidity.
Prime-2--Issuers (or related supporting institutions) rated "Prime-2" have
a strong ability for repayment of senior short-term debt obligations. This will
normally be evidenced by many of the characteristics cited above but to a lesser
degree. Earnings trends and coverage ratios, while sound, will be more subject
to variation. Capitalization characteristics, while still appropriate, may be
more affected by external conditions. Ample alternative liquidity is maintained.
Prime-3--Issuers (or related supporting institutions) rated "Prime-3" have
an acceptable ability for repayment of senior short-term obligations. The effect
of industry characteristics and market compositions may be more pronounced.
Variability in earnings and profitability may result in changes in the level of
debt protection measurements and the requirement for relatively high financial
leverage. Adequate alternate liquidity is maintained.
A-2
<PAGE>
Not Prime--Issuers rated "Not Prime" do not fall within any of the Prime
rating categories.
Standard & Poor's Ratings Group Commercial Paper Ratings
S&P commercial paper rating is current assessment of the likelihood of
timely payment of debt having an original maturity of no more than 365 days.
Ratings are graded in several categories, ranging from "A-1" for the highest
quality obligations to "D" for the lowest. The four categories are as follows:
A-1--This highest category indicates that the degree of safety regarding
timely payment is strong. Those issues determined to possess extremely strong
safety characteristics are denoted with a plus (+) sign designation.
A-2--Capacity for timely payment on issues with this designation is
satisfactory. However, the relative degree of safety is not as high as for
issues designated "A-13"
A-3--Issues carrying this designation have adequate capacity for timely
payment. They are, however, somewhat more vulnerable to the adverse effects of
changes in circumstances than obligations carrying the higher designations.
B--Issues rated "B" are regarded as having only speculative capacity for
timely payment.
C--This rating is assigned to short-term debt obligations with a doubtful
capacity for payment.
D--Debt rated "D" is in payment default. The "D" rating category is used
when interest payments or principal payments are not made on the date due, even
if the applicable grace period has not expired, unless S&P believes that such
payments will be made during such grace period.
After purchase by the Fund, a security may cease to be rated or its rating
may be reduced below the minimum required for purchase by the Fund. Neither
event will require a sale of such security by the Fund. However, the Fund's
Adviser will consider such event in its determination of whether the Fund should
continue to hold the security. To the extent the ratings given by Moody's or S&P
may change as a result of changes in such organizations or their rating systems,
the Fund will attempt to use comparable ratings as standards for investments in
accordance with the investment policies contained in the Prospectus and in the
Statement of Additional Information.
A-3
<PAGE>
GAMNA SERIES FUNDS, INC.
PART C.
OTHER INFORMATION
Item 23. Exhibits
Exhibit
Number Description
- ------ -----------
(a) -- Articles of Incorporation of Registrant.
(b) -- By-Laws of Registrant.
(c) -- None.
(d) -- Form of Management Contract between Registrant and Groupama Asset
Management N.A. relating to the GAMNA Focus Fund.*
(e) -- Form of Distribution Agreement between Registrant and ___________.*
(f) -- None.
(g) -- Form of Custodian Agreement between Registrant and ___________.*
(h)(i) -- Form of Transfer Agency Agreement between Registrant and
____________.*
(h)(ii) -- Form of Administration Agreement between Registrant
and____________.*
(h)(iii)-- Share Purchase Agreement.*
(i) -- Opinion and Consent of Counsel of __________ as to the Legality of
Securities Being Registered.*
(j) -- Consent of Independent Accountants.*
- ----------
* To be filed by amendment.
1
<PAGE>
Item 24. Persons Controlled by or Under Common Control with Registrant.
None.
Item 25. Indemnification.
Reference is made to Article XII of Registrant's Articles of
Incorporation, Article V of Registrant's By-Laws and Section __ of the
Distribution Agreements between the Registrant and _________.
Insofar as indemnification for liabilities arising under the Securities
Act of 1933, as amended (the "Securities Act"), may be permitted to directors,
officers and controlling persons of the Registrant pursuant to the foregoing
provisions, or otherwise, the Registrant understands that in the opinion of the
Securities and Exchange Commission such indemnification is against public policy
as expressed in the Securities Act and is, therefore, unenforceable. In the
event that a claim for indemnification against such liabilities (other than the
payment by the Registrant of expenses incurred or paid by a director, officer or
controlling person of the Registrant in the successful defense of any action,
suit or proceeding) is asserted by such director, officer or controlling person
in connection with the securities being registered, the Registrant will, unless
in the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in the
Securities Act and will be governed by the final adjudication of such issue.
Item 26. Business and Other Connections of Investment Adviser.
The list required by this Item 26 of officers and directors of Groupama
Asset Management, together with information as to any other business,
profession, vocation or employment of a substantial nature engaged in by such
officers and directors during the past two years, is incorporated by reference
to Schedules A and D of the FORM ADV filed by Groupama Asset Management,
pursuant to the Advisers Act (SEC File No. 801-50836).
Item 27. Principal Underwriter.
(a) __________ currently acts as distributor for, in addition to the
Registrant, __________.
(b) The information required by this Item 27 with respect to each
director, officer or partner of _________ is incorporated by reference to
Schedule A of Form BD filed by __________ pursuant to the Securities Exchange
Act of 1934 (SEC File No. _______).
(c) Not applicable.
Item 28. Location of Accounts and Records.
(1) [Name of Administrator]
[Address]
(2) [Name of Custodian]
[Address]
Item 29. Management Services.
Not applicable.
2
<PAGE>
Item 30. Undertakings.
The Registrant undertakes to file a post-effective amendment containing
certified financial statements showing the initial capital received before
accepting subscriptions from more than 25 persons if the Fund intends to raise
its capital under section 14(a)(3) [15 U.S.C. 80a-14(a)(3)].
3
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act, as amended, and the
Investment Company Act, as amended, the Registrant has duly caused this
registration statement to be signed on its behalf by the undersigned, duly
authorized, in the City of New York, and State of New York, on the 25th day of
March, 1999.
GAMNA SERIES FUNDS, INC.
(Registrant)
By: /s/ Mark P. Bronzo
---------------------------
Mark P. Bronzo
President
Pursuant to the requirements of the Securities Act, this registration
statement has been signed below by the following persons in the capacities and
on the dates indicated.
Signature Title Date
--------- ----- ----
/s/ Mark P. Bronzo Director and President March 25, 1999
- -------------------------- (principal executive officer)
/s/ Daniel W. Portanova Director and Treasurer March 25, 1999
- -------------------------- (principal financial and
accounting officer)
4
<PAGE>
EXHIBIT INDEX
Exhibit
Number Description
Exhibit
Number Description
- ------ -----------
(a) -- Articles of Incorporation of Registrant.
(b) -- By-Laws of Registrant.
(c) -- None.
(d) -- Form of Management Contract between Registrant and Groupama Asset
Management N.A. relating to the GAMNA Focus Fund.*
(e) -- Form of Distribution Agreement between Registrant and ___________.*
(f) -- None.
(g) -- Form of Custodian Agreement between Registrant and ___________.*
(h)(i) -- Form of Transfer Agency Agreement between Registrant and
____________.*
(h)(ii) -- Form of Administration Agreement between Registrant
and____________.*
(h)(iii)-- Share Purchase Agreement.*
(i) -- Opinion and Consent of Counsel of __________ as to the Legality of
Securities Being Registered.*
(j) -- Consent of Independent Accountants.*
- ----------
* To be filed by amendment.
5
Exhibit (a)
GAMNA SERIES FUNDS, INC.
ARTICLES OF INCORPORATION
FIRST: The undersigned, Robert L. Monkmeyer, whose address is 425
Lexington Avenue, New York, New York 10017-3954, being at least eighteen years
of age, acting as incorporator, does hereby form a corporation under the General
Laws of the State of Maryland.
SECOND: The name of the corporation (which is hereinafter called the
"Corporation") is:
GAMNA Series Funds, Inc.
THIRD: (a) The purposes for which the Corporation is formed and the
business and objects to be carried on and promoted by it are:
(1) To engage primarily in the business of investing, reinvesting or
trading in securities as an investment company classified under the
Investment Company Act of 1940 as an open-end, management company.
(2) To engage in any one or more businesses or transactions, or to
acquire all or any portion of any entity engaged in any one or more
businesses or transactions, which the Board of Directors may from time to
time authorize or approve, whether or not related to the business
described elsewhere in this article or to any other business at the time
or theretofore engaged in by the Corporation.
(b) The foregoing enumerated purposes and objects shall be in no way
limited or restricted by reference to, or inference from, the terms of any other
clause of this or any other Article of these Articles of Incorporation, and each
shall be regarded as independent; and they are intended to be and shall be
construed as powers as well as purposes and objects of the Corporation and shall
be in addition to and not in limitation of the general powers of corporations
under the General Laws of the State of Maryland.
FOURTH: The present address of the principal office of the
Corporation in this State is c/o The Corporation Trust Incorporated, 300 East
Lombard Street, Baltimore, Maryland 21202.
<PAGE>
2
FIFTH: The name and address of the resident agent of the Corporation
in this State are The Corporation Trust Incorporated, 300 East Lombard Street,
Baltimore, Maryland 21202. Said resident agent is a Maryland corporation.
SIXTH: (a) The total number of shares of stock of all classes and
series which the Corporation initially has authority to issue is five hundred
million (500,000,000) shares of capital stock (par value $.001 per share),
amounting in aggregate par value to Five Hundred Thousand Dollars ($500,000).
All of the authorized shares of capital stock of the Corporation are initially
classified as "Common Stock," of which three hundred million (300,000,000)
shares are further initially classified as a series of Common Stock designated
"GAMNA Focus Fund". The remaining two hundred million (200,000,000) shares of
authorized but unissued Common Stock remain undesignated as to series or class.
The Board of Directors may classify and reclassify any unissued shares of
capital stock by setting or changing in any one or more respects the
preferences, conversion or other rights, voting powers, restrictions,
limitations as to dividends, qualifications, or terms or conditions of
redemption of such shares of stock.
(b) Unless otherwise prohibited by law, so long as the Corporation
is registered as an open-end company under the Investment Company Act of 1940,
the Board of Directors shall have the power and authority, without the approval
of the holders of any outstanding shares, to increase or decrease the number of
shares of capital stock, or the number of shares of capital stock of any class
or series, that the Corporation has authority to issue.
(c) The following is a description of the preferences, conversion
and other rights, voting powers, restrictions, limitations as to dividends,
qualifications, and terms and conditions of redemption of the GAMNA Focus Fund
and any additional series of Common Stock of the Corporation (unless otherwise
provided in the articles supplementary or other charter document classifying or
reclassifying such series):
(1) All consideration received by the Corporation from the issue or
sale of shares of a particular series of Common Stock, together with all
assets in which such consideration is invested or reinvested, all income,
earnings, profits and proceeds thereof, including any proceeds derived
from the
<PAGE>
3
sale, exchange or liquidation of such assets, and any funds or payments
derived from any investment or reinvestment of such proceeds in whatever
form the same may be, shall irrevocably belong to that series for all
purposes and shall be so recorded upon the books of account of the
Corporation. Such consideration, assets, income, earnings, profits and
proceeds, together with any items allocated as provided in the following
sentence, are hereinafter referred to collectively as the "assets
belonging to" that series. In the event that there are any assets, income,
earnings, profits or proceeds which are not identifiable as belonging to a
particular series of Common Stock, such items shall be allocated by or
under the supervision of the Board of Directors to and among one or more
of the series of Common Stock from time to time classified or
reclassified, in such manner and on such basis as the Board of Directors,
in its sole discretion, deems fair and equitable. Each such allocation
shall be conclusive and binding for all purposes. No holder of a
particular series of Common Stock shall have any right or claim against
the assets belonging to any other series, except as a holder of the shares
of such other series.
(2) The assets belonging to each series of Common Stock shall be
charged with the liabilities of the Corporation in respect of that series
and all expenses, costs, charges and reserves attributable to that series.
Any liabilities, expenses, costs, charges or reserves of the Corporation
which are attributable to more than one series of Common Stock, or are not
identifiable as pertaining to any series, shall be allocated and charged
by or under the supervision of the Board of Directors to and among one or
more of the series of Common Stock from time to time classified or
reclassified, in such manner and on such basis as the Board of Directors,
in its sole discretion, deems fair and equitable. Each such allocation
shall be conclusive and binding for all purposes. The liabilities,
expenses, costs, charges and reserves charged to a series of Common Stock
are hereinafter referred to collectively as the "liabilities of" that
series. All persons who have extended credit with respect to, or who have
a claim or contract in respect of, a particular series of Common Stock
shall look only to the assets belonging to that series for payment or
satisfaction of such credit, claim or contract.
(3) The net asset value per share of a particular series of Common
Stock shall be the quotient obtained by
<PAGE>
4
dividing the value of the net assets of that series (being the value of
the assets belonging to that series less the liabilities of that series)
by the total number of shares of that series outstanding, all as
determined by or under the direction of the Board of Directors in
accordance with generally accepted accounting principles and the
Investment Company Act of 1940. Subject to the applicable provisions of
the Investment Company Act of 1940, the Board of Directors, in its sole
discretion, may prescribe and shall set forth in the by-laws of the
Corporation, or in a duly adopted resolution of the Board of Directors,
such bases and times for determining the current net asset value per share
of each series of Common Stock, and the net income attributable to such
series, as the Board of Directors deems necessary or desirable. The Board
of Directors shall have full discretion, to the extent not inconsistent
with the Maryland General Corporation Law and the Investment Company Act
of 1940, to determine whether any moneys or other assets received by the
Corporation shall be treated as income or capital and whether any item of
expense shall be charged to income or capital, and each such determination
shall be conclusive and binding for all purposes.
(4) Subject to the provisions of law and any preferences of any
class or series of stock from time to time classified or reclassified,
dividends, including dividends payable in shares of another class or
series of the Corporation's stock, may be paid on a particular class or
series of Common Stock of the Corporation at such time and in such amounts
as the Board of Directors may deem advisable. Dividends and other
distributions on the shares of a particular series of Common Stock shall
be paid only out of the assets belonging to that series after providing
for the liabilities of that series.
(5) Each share of Common Stock shall have one vote, irrespective of
the class or series thereof, and the exclusive voting power for all
purposes shall be vested in the holders of the Common Stock. All classes
and series of Common Stock shall vote together as a single class;
provided, however, that as to any matter with respect to which a separate
vote of a particular class or series is required by the Investment Company
Act of 1940 or the Maryland General Corporation Law, such requirement
shall apply and, in that event, the other classes and series entitled to
vote on the matter shall vote together as a single class; and provided,
further, that the holders of a
<PAGE>
5
particular class or series of Common Stock shall not be entitled to vote
on any matter which does not affect any interest of that class or series,
including liquidation of another class or series, except as otherwise
required by the Investment Company Act of 1940 or the Maryland General
Corporation Law.
(6) Each holder of Common Stock shall have the right to require the
Corporation to redeem all or any part of his shares of any class or series
at a redemption price equal to the current net asset value per share of
that class or series which is next computed after receipt of a tender of
such shares for redemption, less such redemption fee or deferred sales
charge, if any, as the Board of Directors may from time to time establish
in accordance with the Investment Company Act of 1940 and the Rules of
Fair Practice adopted by the National Association of Securities Dealers,
Inc. Payment of the redemption price shall be made by the Corporation only
from the assets belonging to the series whose shares are being redeemed.
The redemption price shall be paid in cash; provided, however, that if the
Board of Directors determines, which determination shall be conclusive,
that conditions exist which make payment wholly in cash unwise or
undesirable, the Corporation may, to the extent and in the manner
permitted by law, make payment wholly or partly in securities or other
assets, at the value of such securities or other assets used in such
determination of current net asset value. Notwithstanding the foregoing,
the Corporation may suspend the right of holders of any series of Common
Stock to require the Corporation to redeem their shares, or postpone the
date of payment or satisfaction upon such redemption for more than seven
days after tender of such shares for redemption, during any period or at
any time when and to the extent permitted under the Investment Company Act
of 1940.
(7) To the extent and in the manner permitted by the Investment
Company Act of 1940 and the Maryland General Corporation Law, the Board of
Directors may cause the Corporation to redeem, at their current net asset
value, the shares of any series of Common Stock held in the account of any
stockholder having, because of redemptions or exchanges, an aggregate net
asset value which is less than the minimum initial investment in that
series specified by the Board of Directors from time to time in its sole
discretion.
(8) In the event of any liquidation, dissolution or
<PAGE>
6
winding up of the Corporation, whether voluntary or involuntary, or of the
liquidation of a particular series of Common Stock, the holders of each
series that is being liquidated shall be entitled, after payment or
provision for payment of the liabilities of that series, as a class, to
share ratably in the remaining assets belonging to the series. The holders
of shares of any particular series shall not be entitled thereby to any
distribution upon the liquidation of any other series. The liquidation of
any series of Common Stock of which there are shares then outstanding
shall be approved by the vote of a majority (as defined in the Investment
Company Act of 1940) of the outstanding shares of that series, and without
the vote of the holders of shares of any other series of Common Stock.
(9) Subject to compliance with the Investment Company Act of 1940,
the Board of Directors shall have authority to provide that holders of any
series of Common Stock shall have the right to exchange their shares for
shares of one or more other series in accordance with such requirements
and procedures as may be established by the Board of Directors.
d) Subject to the foregoing and to the Investment Company Act of
1940, the power of the Board of Directors to classify and reclassify any of the
shares of capital stock shall include, without limitation, subject to the
provisions of the charter of the Corporation, authority to classify or
reclassify any unissued shares of such stock into one or more classes or series
of preferred stock, preference stock, special stock or other stock, and to
divide and classify shares of any class or series into one or more classes or
series of such class or series by determining, fixing or altering one or more of
the following:
(1) The distinctive designation of such class or series and the
number of shares to constitute such class or series; provided that, unless
otherwise prohibited by the terms of such or any other class or series,
the number of shares of any class or series may be decreased by the Board
of Directors in connection with any classification or reclassification of
unissued shares and the number of shares of such class or series may be
increased by the Board of Directors in connection with any such
classification or reclassification, and any shares of any class or series
which have been redeemed, purchased, otherwise acquired or converted into
shares of any other class or series shall become part of the authorized
capital stock and be subject to classification and reclassification as
herein provided.
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7
(2) Whether or not and, if so, the rates, amounts and times at
which, and the conditions under which, dividends shall be payable on
shares of such class or series, whether any such dividends shall rank
senior or junior to or on a parity with the dividends payable on any other
class or series of stock, and the status of any such dividends as
cumulative, cumulative to a limited extent or noncumulative and as
participating or non-participating.
(3) Whether or not shares of such class or series shall have voting
rights, in addition to any voting rights provided by law and, if so, the
terms of such voting rights.
(4) Whether or not shares of such class or series shall have
conversion or exchange privileges and, if so, the terms and conditions
thereof, including provision for adjustment of the conversion or exchange
rate in such events or at such times as the Board of Directors shall
determine.
(5) Whether or not shares of such class or series shall be subject
to redemption and, if so, the terms and conditions of such redemption,
including the date or dates upon or after which they shall be redeemable
and the amount per share payable in case of redemption, which amount may
vary under different conditions and at different redemption dates; and
whether or not there shall be any sinking fund or purchase account in
respect thereof and, if so, the terms thereof.
(6) The rights of the holders of shares of such class or series upon
the liquidation, dissolution or winding up of the affairs of, or upon any
distribution of the assets of, the Corporation, which rights may vary
depending upon whether such liquidation, dissolution or winding up is
voluntary or involuntary and, if voluntary, may vary at different dates,
and whether such rights shall rank senior or junior to or on a parity with
such rights of any other class or series of stock.
(7) Whether or not there shall be any limitations applicable, while
shares of such class or series are outstanding, upon the payment of
dividends or making of distributions on, or the acquisition of, or the use
of monies for purchase or redemption of, any stock of the Corporation, or
upon any other action of the Corporation, including action under this
paragraph and, if so, the terms and conditions thereof.
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8
(8) Any other preferences, rights, restrictions, including
restrictions on transferability, and qualifications of shares of such
class or series, not inconsistent with law and the charter of the
Corporation.
(e) For the purposes hereof and of any articles supplementary to the
charter providing for the classification or reclassification of any shares of
capital stock or of any other charter document of the Corporation (unless
otherwise provided in any such articles or document), any class or series of
stock of the Corporation shall be deemed to rank:
(1) prior to another class or series either as to dividends or upon
liquidation, if the holders of such class or series shall be entitled to
the receipt of dividends or of amounts distributable on liquidation,
dissolution or winding up, as the case may be, in preference or priority
to holders of such other class or series;
(2) on a parity with another class or series either as to dividends
or upon liquidation, whether or not the dividend rates, dividend payment
dates or redemption or liquidation price per share thereof be different
from those of such others, if the holders of such class or series of stock
shall be entitled to receipt of dividends or amounts distributable upon
liquidation, dissolution or winding up, as the case may be, in proportion
to their respective dividend rates or redemption or liquidation prices,
without preference or priority over the holders of such other class or
series; and
(3) junior to another class or series either as to dividends or upon
liquidation, if the rights of the holders of such class or series shall be
subject or subordinate to the rights of the holders of such other class or
series in respect of the receipt of dividends or the amounts distributable
upon liquidation, dissolution or winding up, as the case may be.
(f) The Corporation may issue and sell fractions of shares of
capital stock having pro rata all the rights of full shares, including, without
limitation, the right to vote and to receive dividends, and wherever the words
"share" or "shares" are used in the charter or By-laws of the Corporation, they
shall be deemed to include fractions of shares where the context does not
clearly indicate that only full shares are intended.
<PAGE>
9
(g) The Corporation shall not be obligated to issue certificates
representing shares of capital stock of any class or series. At the time of
issue or transfer of shares without certificates, the Corporation shall provide
the stockholder with such information as may be required under the Maryland
General Corporation Law.
SEVENTH: Pursuant to the authority of the Board of Directors
contained in these Articles of Incorporation to classify and reclassify unissued
shares of capital stock of the Corporation, the Board of Directors has duly
classified:
(a) 100,000,000 shares of the authorized and unissued shares of
GAMNA Focus Fund Common Stock as Class A Common Stock of GAMNA Focus Fund, par
value $.001 per share,
(b) 100,000,000 shares of the authorized and unissued shares of
GAMNA Focus Fund Common Stock as Class B Common Stock of GAMNA Focus Fund, par
value $.001 per share, and
(c) 100,000,000 shares of the authorized and unissued shares of
GAMNA Focus Fund Common Stock as Class C Common Stock of GAMNA Focus Fund, par
value $.001 per share.
Any class of capital stock shall be referred to herein individually
as a "Class" and collectively, together with any further classes from time to
time established, as "Classes."
EIGHTH: The shares of Class A Common Stock, Class B Common Stock and
Class C Common Stock of GAMNA Focus Fund, as so divided and classified by the
Corporation's Board of Directors, shall have and be subject to all of the
preferences, conversion and other rights, voting powers, restrictions,
limitations as to dividends, qualifications and terms and conditions of rights
to require redemption set forth in the charter.
NINTH: Notwithstanding any provision to the contrary contained
herein, with respect to determining dividends payable to shareholders of Class A
Common Stock, Class B Common Stock or Class C Common Stock of GAMNA Focus Fund,
the Board of Directors may determine not to permit certain dividends to accrue
on shares until the proceeds from the sale thereof are included in assets
belonging to such Classes of capital stock and/or to permit certain dividends to
continue to accrue on shares redeemed through the day before
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10
redemption proceeds are removed from the assets belonging to such Classes of
Common Stock.
TENTH: The shares of any Class of Common Stock of GAMNA Focus Fund
shall represent the same interest in the Corporation and have identical voting,
dividend, liquidation, and other rights, terms and conditions with any other
shares of GAMNA Focus Fund Common Stock, provided however:
(a) The shares of Class A, Class B and Class C Common Stock shall be
subject to such front-end sales charges and/or contingent deferred sales charges
as may be established by the Board of Directors from time to time in accordance
with the Investment Company Act of 1940, as amended and applicable rules and
regulations of the National Association of Securities Dealers, Inc. (the
"NASD").
(b) Expenses related solely to a particular Class of Common Stock
including, without limitation, distribution expenses under a Rule 12b-1 plan and
administrative expenses under an administration or service agreement, plan or
other arrangement, however designated) shall be borne by that Class and shall be
appropriately reflected (in the manner determined by the Board of Directors) in
the net asset value, dividends, distribution and liquidation rights of the
shares of that Class.
(c) Except as may be otherwise required by law pursuant to any applicable
order, rule or regulation issued by the Securities and Exchange Commission (the
"SEC") or under Maryland law or otherwise, the holders of stock of any Class of
Common Stock created by these Articles of Incorporation shall have respectively
(i) exclusive voting rights with respect to any matter submitted to a vote of
stockholders which affects such Class (provided that it if it affects one or
more of such Classes, but less than all of such Classes, the affected Classes
shall together have the exclusive vote), including without limitation, the
provisions of any distribution plan adopted by the Corporation pursuant to Rule
12b-1 under the Investment Company Act applicable to such Class and (ii) no
voting rights with respect to the provisions of any Rule 12b-1 plan not
applicable to such Class or with regard to any other matter submitted to a vote
of stockholders that does not affect the holders of such Class.
(d) On the ninth anniversary of the first business day of the month
following the month in which shares of Class B Common
<PAGE>
11
Stock were purchased by a stockholder, such Class B shares (as well as a pro
rata portion of any Class B shares purchased through the reinvestment of
dividends and other distributions paid in respect of all Class B shares held by
such stockholder) shall automatically convert to Class A shares. The Board of
Directors, in its sole discretion, may suspend the conversion of Class B shares
if such ruling and opinion are no longer available.
(e) The number of Class A shares into which the Class B shares are
converted pursuant to paragraph (d) above shall equal the number (including for
these purposes fractional shares) obtained by dividing the net asset value per
share of the Class B Common Stock, for purposes of sales and redemptions on the
conversion date, by the net asset value per share of the Class A Common Stock
for purposes of sales and redemptions thereof on the conversion date.
(f) The holders of each Class of Common Stock classified or designated by
these Articles of Incorporation shall have such rights to exchange their shares
for shares of any other Class or Series of GAMNA Series Funds, Inc. or shares of
another investment company upon such terms as may be approved by the Board of
Directors from time to time and set forth in appropriate disclosure documents
under the applicable law, rules and regulations of the SEC and the rules of the
NASD, including but not limited to such rights to credit holding periods of the
stock exchanged with respect to the stock received in the exchange.
ELEVENTH: The number of directors of the Corporation shall be two,
which number may be increased or decreased pursuant to the by-laws of the
Corporation, but shall never be less than the minimum number permitted by the
General Laws of the State of Maryland now or hereafter in force. The names of
the directors who will serve until the first annual meeting and until their
successors are elected and qualified are as follows:
Mark P. Bronzo
Daniel W. Portanova
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12
TWELFTH: (a) The following provisions are hereby adopted for the
purpose of defining, limiting and regulating the powers of the Corporation and
of the directors and stockholders:
(1) The Board of Directors is hereby empowered to authorize the
issuance from time to time of shares of its stock of any class or series,
whether now or hereafter authorized, or securities convertible into shares
of its stock of any class or series, whether now or hereafter authorized,
for such consideration as may be deemed advisable by the Board of
Directors and without any action by the stockholders.
(2) No holder of any stock or any other securities of the
Corporation, whether now or hereafter authorized, shall have any
preemptive right to subscribe for or purchase any stock or any other
securities of the Corporation other than such, if any, as the Board of
Directors, in its sole discretion, may determine and at such price or
prices and upon such other terms as the Board of Directors, in its sole
discretion, may fix; and any stock or other securities which the Board of
Directors may determine to offer for subscription may, as the Board of
Directors in its sole discretion shall determine, be offered to the
holders of any class, series or type of stock or other securities at the
time outstanding to the exclusion of the holders of any or all other
classes, series or types of stock or other securities at the time
outstanding.
(3) The Board of Directors of the Corporation shall, consistent with
applicable law, have power in its sole discretion to determine from time
to time in accordance with sound accounting practice or other reasonable
valuation methods what constitutes annual or other net profits, earnings,
surplus or net assets in excess of capital; to determine that retained
earnings or surplus shall remain in the hands of the Corporation; to set
apart out of any funds of the Corporation such reserve or reserves in such
amount or amounts and for such proper purpose or purposes as it shall
determine and to abolish any such reserve or any part thereof; to
distribute and pay distributions or dividends in stock, cash or other
securities or property, out of surplus or any other funds or amounts
legally available therefor, at such times and to the stockholders of
record on such dates as it may, from time to time, determine; and to
determine whether and to what extent and at what times and places and
under what conditions and regulations the books, accounts
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13
and documents of the Corporation, or any of them, shall be open to the
inspection of stockholders, except as otherwise provided by statute or the
by-laws of the Corporation, and, except as so provided, no stockholder
shall have any right to inspect any book, account or document of the
Corporation unless authorized to do so by resolution of the Board of
Directors.
(4) Notwithstanding any provision of law requiring the authorization
of any action by a greater proportion than a majority of the total number
of shares of capital stock or of any class or series of capital stock,
such action shall be valid and effective if authorized by the affirmative
vote of the holders of a majority of the total number of shares of capital
stock or of such class or series, as the case may be, outstanding and
entitled to vote thereon; provided, however, that the election of the
Directors of the Corporation shall be by plurality vote. At a meeting of
stockholders the presence in person or by proxy of stockholders entitled
to cast a majority of all the votes entitled to be cast on any matter with
respect to which one or more classes or series of capital stock are
entitled to vote as a separate class shall constitute a quorum of such
separate class for action on that matter. Whether or not a quorum of such
a separate class for action on any such matter is present, a meeting of
stockholders convened on the date for which it was called may be adjourned
as to that matter from time to time without further notice by a majority
vote of the stockholders of the separate class present in person or by
proxy to a date not more than 120 days after the original record date.
(5) The Corporation shall indemnify (i) its directors and officers,
whether serving the Corporation or at its request any other entity, to the
full 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 full 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 of the Corporation and as permitted by
law. 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
<PAGE>
14
such provisions or such further indemnification arrangements as may be
permitted by law. The right of indemnification provided hereunder shall
not 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, modification or repeal of this
provision shall adversely affect any right or protection provided
hereunder that exists at the time of such amendment, modification or
repeal.
(6) To the fullest extent permitted by Maryland statutory or
decisional law, as amended or interpreted, no director or officer of the
Corporation shall be personally liable to the Corporation or its
stockholders for money damages; provided, however, that this provision
shall not be construed to protect any director or officer 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, modification or repeal of this provision shall
adversely affect any right or protection provided hereunder that exists at
the time of such amendment, modification or repeal.
(7) The Corporation reserves the right from time to time to make any
amendments of its charter which may now or hereafter be authorized by law,
including any amendments changing the terms or contract rights, as
expressly set forth in its charter, of any of its outstanding stock by
classification, reclassification or otherwise.
(b) The enumeration and definition of particular powers of the Board
of Directors included in the foregoing shall in no way be limited or restricted
by reference to or inference from the terms of any other clause of this or any
other article of the Articles of Incorporation of the Corporation, or construed
as or deemed by inference or otherwise in any manner to exclude or limit any
powers conferred upon the Board of Directors under the General Laws of the State
of Maryland now or hereafter in force.
THIRTEENTH: The duration of the Corporation shall be perpetual.
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15
IN WITNESS WHEREOF, I have signed these Articles of Incorporation,
acknowledging the same to be my act, on this 12th day of March, 1999.
Witness: /s/ Naomi Wiesen
-----------------------
Naomi Wiesen
/s/ Robert L. Monkmeyer
-----------------------------------
Name: Robert L. Monkmeyer
Title: Sole Incorporator
Exhibit (b)
GAMNA SERIES FUNDS, INC.
BY-LAWS
ARTICLE I.
STOCKHOLDERS
1.01 Annual Meetings. The Corporation is not required to hold an
annual meeting of its stockholders in any year in which the election of
directors is not required to be acted upon under the Investment Company Act of
1940. If the Corporation is required by the Investment Company Act of 1940 to
hold a meeting of stockholders to elect directors, such meeting shall be held at
a date and time set by the Board of Directors in accordance with the Investment
Company Act of 1940 and no later than 120 days after the occurrence of the event
requiring the meeting. Any stockholders' meeting held in accordance with the
preceding sentence shall for all purposes constitute the annual meeting of
stockholders for the fiscal year of the Corporation in which the meeting is
held. Except as the charter or statute provides otherwise, any business may be
considered at an annual meeting without the purpose of the meeting having been
specified in the notice. Failure to hold an annual meeting does not invalidate
the Corporation's existence or affect any otherwise valid corporate acts.
1.02 Special Meetings. At any time in the interval between annual
meetings, a special meeting of stockholders may be called by the Chairman of the
Board or the President or by a majority of the Board of Directors by vote at a
meeting or in writing (addressed to the Secretary of the Corporation) with or
without a meeting. Special meetings of the stockholders shall be called as may
be required by law. The Secretary of the Corporation shall call a special
meeting of stockholders on the written request of stockholders entitled to cast
at least a majority of all the votes entitled to be cast at the meeting. A
request for a special meeting shall state the purpose of the meeting and the
matters proposed to be acted on at it. The Secretary shall inform the
stockholders who make the request of the reasonably estimated costs of preparing
and mailing a notice of the meeting and, on payment of these costs to the
Corporation, notify each stockholder entitled to notice of the meeting. Unless
requested by stockholders entitled to cast a majority of all the votes entitled
to be cast at the meeting, a special meeting need not be called to consider any
matter which is substantially the same as a matter voted on at any special
meeting of stockholders held in the preceding twelve months.
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2
1.03 Place of Meetings. Meetings of stockholders shall be held at
such place in the United States as is set from time to time by the Board of
Directors.
1.04 Notice of Meetings; Waiver of Notice. Not less than ten nor
more than 90 days before each stockholders' meeting, the Secretary shall give
written notice of the meeting to each stockholder entitled to vote at the
meeting and each other stockholder entitled to notice of the meeting. The notice
shall state the time and place of the meeting and, if the meeting is a special
meeting or notice of the purpose is required by statute, the purpose of the
meeting. Notice is given to a stockholder when it is personally delivered to
him, left at his residence or usual place of business, or mailed to him at his
address as it appears on the records of the Corporation. Notwithstanding the
foregoing provisions, each person who is entitled to notice waives notice if he
before or after the meeting signs a waiver of the notice which is filed with the
records of stockholders' meetings, or is present at the meeting in person or by
proxy.
1.05 Quorum; Voting. Unless statute or the charter provides
otherwise, at a meeting of stockholders the presence in person or by proxy of
stockholders entitled to cast a majority of all the votes entitled to be cast at
the meeting constitutes a quorum, except that where the holders of any series of
shares are entitled to vote as a separate class (such series being referred to
as a "Separate Class") or where the holders of two or more (but not all) series
of shares are required to vote as a single class (such series being referred to
as a "Combined Class"), the presence in person or by proxy of the holders of a
majority of the shares of that Separate Class or Combined Class, as the case may
be, issued and outstanding and entitled to vote thereat shall constitute a
quorum for such vote. A majority of all the votes cast at a meeting at which a
quorum is present is sufficient to approve any matter which properly comes
before the meeting, except that a plurality of all the votes cast at a meeting
at which a quorum is present is sufficient to elect a director.
1.06 Adjournments. Whether or not a quorum is present, a meeting of
stockholders convened on the date for which it was called may be adjourned from
time to time without further notice by a majority vote of the stockholders
present in person or by proxy to a date not more than 120 days after the
original record date. If a quorum with respect to a Separate Class or a Combined
Class, as the case may be, shall not be present or represented at any meeting of
stockholders, the holders of a majority of the shares of such Separate Class or
such Combined Class, as the case may be, present in person or by proxy and
entitled to vote shall have power to adjourn the meeting from time to time as to
such Separate Class or such Combined Class, as
<PAGE>
3
the case may be, without notice other then announcement at the meeting, until
the requisite number of shares entitled to vote at such meeting shall be
present. Any business which might have been transacted at the meeting as
originally notified may be deferred and transacted at any such adjourned meeting
at which a quorum shall be present.
1.07 General Right to Vote; Proxies. Unless the charter provides for
a greater or lesser number of votes per share or limits or denies voting rights,
each outstanding share of stock, regardless of class or series, is entitled to
one vote on each matter submitted to a vote at a meeting of stockholders[;
however, a share is not entitled to be voted if any installment payable on it is
overdue and unpaid]. In all elections for directors, each share of stock may be
voted for as many individuals as there are directors to be elected and for whose
election the share is entitled to be voted. A stockholder may vote the stock he
owns of record either in person or by proxy as provided by statute. A
stockholder may sign a writing authorizing another person to act as proxy.
Signing may be accomplished by the stockholder or the stockholder's authorized
agent signing the writing or causing the stockholder's signature to be affixed
to the writing by any reasonable means, including facsimile signature. A
stockholder may authorize another person to act as proxy by transmitting, or
authorizing the transmission of, a telegram, cablegram, datagram, or other means
of electronic transmission to the person authorized to act as proxy or to a
proxy solicitation firm, proxy support service organization, or other person
authorized by the person who will act as proxy to receive the transmission.
Unless a proxy provides otherwise, it shall not be valid for more than eleven
months after its date. A proxy is revocable by a stockholder at any time without
condition or qualification unless the proxy states that it is irrevocable and
the proxy is coupled with an interest. A proxy may be made irrevocable for so
long as it is coupled with an interest. The interest with which a proxy may be
coupled includes an interest in the stock to be voted under the proxy or another
general interest in the Corporation or its assets and liabilities.
1.08 List of Stockholders. At each meeting of stockholders, a full,
true and complete list of all stockholders entitled to vote at such meeting,
showing the number and class or series of shares held by each and certified by
the transfer agent for such class or series or by the Secretary, shall be
furnished by the Secretary.
1.09 Conduct of Business and Voting. At all meetings of
stockholders, unless the voting is conducted by inspectors, the proxies and
ballots shall be received, and all questions touching the qualification of
voters and the validity of proxies,
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4
the acceptance or rejection of votes and procedures for the conduct of business
not otherwise specified by these By-Laws, the charter or law, shall be decided
or determined by the chairman of the meeting. If demanded by stockholders,
present in person or by proxy, entitled to cast ten percent in number of votes
entitled to be cast, or if ordered by the chairman, the vote upon any election
or question shall be taken by ballot and, upon like demand or order, the voting
shall be conducted by one or more inspectors, in which event the proxies and
ballots shall be received, and all questions touching the qualification of
voters and the validity of proxies and the acceptance or rejection of votes
shall be decided, by such inspectors. Unless so demanded or ordered, no vote
need be by ballot and voting need not be conducted by inspectors. The
stockholders at any meeting may choose an inspector or inspectors to act at such
meeting, and in default of such election the chairman of the meeting may appoint
an inspector or inspectors. No candidate for election as a director at a meeting
shall serve as an inspector thereat.
1.10 Action by Written Consent. Any action required or permitted to
be taken at a meeting of stockholders may be taken without a meeting if there is
filed with the records of stockholders' meetings an unanimous written consent
which sets forth the action and is signed by each stockholder entitled to vote
on the matter and a written waiver of any right to dissent signed by each
stockholder entitled to notice of the meeting but not entitled to vote at it.
ARTICLE II.
BOARD OF DIRECTORS
2.01 Function of Directors. The business and affairs of the
Corporation shall be managed under the direction of its Board of Directors. All
powers of the Corporation may be exercised by or under authority of the Board of
Directors, except as conferred on or reserved to the stockholders by statute or
by the charter or By-Laws. The Board may delegate the duty of management of the
assets and the administration of the day-to-day operations of the Corporation to
one or more entities or individuals pursuant to a written contract or contracts
which have obtained the approvals, including the approval of renewals thereof,
required by the Investment Company Act of 1940.
2.02 Number of Directors. The Corporation shall have at least three
directors; provided that, if there is no stock outstanding, the number of
directors may be less than three but not less than one, and, if there is stock
outstanding and so long as there are fewer than three stockholders the number of
directors may be less than three but not less than the number of
<PAGE>
5
stockholders. The Corporation shall have the number of directors provided in its
charter until changed as herein provided. Unless statute or the charter provides
otherwise, a majority of the entire Board of Directors may alter the number of
directors set by the charter to a number not exceeding 25 nor less than the
minimum number then permitted herein, but the action may not affect the tenure
of office of any director.
2.03 Election and Tenure of Directors. At each annual meeting, the
stockholders shall elect directors to hold office until the next annual meeting
and until their successors are elected and qualify.
2.04 Removal of Directors. Unless the charter of the Corporation
provides otherwise, the stockholders of the Corporation may remove any director,
with or without cause, by the affirmative vote of a majority of all the votes
entitled to be cast for the election of directors. The Board of Directors shall
promptly call a meeting of stockholders for the purpose of voting upon the
question of removal of any director or directors when requested in writing to do
so by the record holders of not less than ten percent of the outstanding shares.
Whenever ten or more stockholders of record who have been such for at least six
months preceding the date of application, and who hold in the aggregate either
shares having a net asset value of at least $25,000 or at least one percent of
the outstanding shares, whichever is less, shall apply to the Board of Directors
in writing, stating that they wish to communicate with other stockholders with a
view to obtaining signatures to a request for a meeting to vote on the removal
of any director and accompanied by a form of communication and request which
they wish to transmit, the Board shall within five business days after receipt
of such application either (i) afford to such applicants access to a list of the
names and addresses of all stockholders as recorded on the books of the
Corporation; or (ii) inform such applicants as to the approximate number of
stockholders of record, and the approximate cost of mailing to them the proposed
communication and form of request. If the Board elects to follow the course
specified in clause (ii) above, the Board, upon the written request of such
applicants accompanied by a tender of the material to be mailed and of the
reasonable expenses of mailing, shall, with reasonable promptness, mail such
material to all stockholders of record at their addresses as recorded on the
books, unless within five business days after such tender the Board shall mail
to such applicants and file with the Securities and Exchange Commission,
together with a copy of the material to be mailed, a written statement signed by
a least a majority of the directors to the effect that in their opinion either
such material contains untrue statements of fact or omits to state facts
necessary to make the statements contained therein not
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6
misleading, or would be in violation of applicable law, and specifying the basis
of such opinion. If the Securities and Exchange Commission shall enter an order
refusing to sustain any of such objections, or if, after the entry of an order
sustaining one or more of such objections, the Commission shall find, after
notice and opportunity for hearing, that all objections so sustained have been
met end shall enter an order so declaring, the Board shall mail copies of such
material to all stockholders with reasonable promptness after the entry of such
order and the renewal of such tender.
2.05 Vacancy on Board. The stockholders may elect a successor to
fill a vacancy on the Board of Directors which results from the removal of a
director by the stockholders. A director elected by the stockholders to fill a
vacancy which results from the removal of a director serves for the balance of
the term of the removed director. Unless otherwise provided by statute or the
charter, a majority of the remaining directors, whether or not sufficient to
constitute a quorum, may fill a vacancy on the Board of Directors which results
from any cause except an increase in the number of directors and a majority of
the entire Board of Directors may fill a vacancy which results from an increase
in the number of directors. A director elected by the Board of Directors to fill
a vacancy serves until the next annual meeting of stockholders and until his
successor is elected and qualifies.
2.06 Regular Meetings. After each meeting of stockholders at which
directors shall have been elected, the Board of Directors shall meet as soon as
practicable for the purpose of organization and the transaction of other
business. In the event that no other time and place are specified by resolution
of the Board, the President or Chairman with notice in accordance with Section
2.08, the Board of Directors shall meet immediately following the close of, and
at the place of, such stockholders meeting. Any other regular meeting of the
Board of Directors shell be held on such date and at any place as may be
designated from tine to time by the Board of Directors. No notice of meeting
following a stockholders meeting or any other regular meeting shall be necessary
if held as hereinabove provided.
2.07 Special Meetings. Special meetings of the Board of Directors
may be called at any time by the Chairman of the Board or the President or by a
majority of the Board of Directors by vote at a meeting, or in writing with or
without a meeting. A special meeting of the Board of Directors shall be held on
such date and at any place as may be designated from time to time by the Board
of Directors. In the absence of designation such
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7
meeting shall be held at such place as may be designated in the call.
2.08 Notice of Meetings; Waiver of Notice. Except as provided in
Section 2.06, the Secretary shall give notice to each director of each regular
and special meeting of the Board of Directors. The notice shall state the time
and place of the meeting. Notice is given to a director when it is delivered
personally to him, left at his residence or usual place of business, or sent by
telegraph, facsimile transmission or telephone, at least 24 hours before the
time of the meeting or, in the alternative, by mail to his address as it shall
appear on the records of the Corporation at least 72 hours before the time of
the meeting. Unless statute, the By-Laws or a resolution of the Board of
Directors provides otherwise, the notice need not state the business to be
transacted at or the purposes of any regular or special meeting of the Board of
Directors. No notice of any meeting of the Board of Directors need be given to
any director who attends except where a director attends a meeting for the
express purpose of objecting to the transaction of any business because the
meeting is not lawfully called or convened, or to any director who, in a writing
executed and filed with the records of the meeting either before or after the
holding thereof, waives such notice. Any meeting of the Board of Directors,
regular or special, may adjourn from time to time to reconvene at the same or
some other place, and no notice need be given of any such adjourned meeting
other than by announcement.
2.09 Action by Directors. Unless statute or the charter or the
By-Laws requires a greater proportion, the action of a majority of the directors
present at a meeting at which a quorum is present is action of the Board of
Directors. A majority of the entire Board of Directors shall constitute a quorum
for the transaction of business. In the absence of a quorum, the directors
present by majority vote and without notice other than by announcement may
adjourn the meeting from time to time until a quorum shall attend. At any such
adjourned meeting at which a quorum shall be present, any business may be
transacted which might have been transacted at the meeting as originally
notified. Unless otherwise provided by statute or regulation, any action
required or permitted to be taken at a meeting of the Board of Directors may be
taken without a meeting, if an unanimous written consent which sets forth the
action is signed by each member of the Board and filed with the minutes of
proceedings of the Board.
2.10 Participation by Telephone. Members of the Board of Directors
may participate in a meeting by means of a conference telephone or similar
communications equipment allowing all persons participating in the meeting to
hear each other at
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8
the same time. Unless provided otherwise by statute or regulation, participation
in a meeting by these means constitutes presence in person at the meeting, but
shall not constitute attendance for the purpose of compensation pursuant to
Section 2.11.
2.11 Compensation. By resolution of the Board of Directors a fixed
sum and expenses, if any, for attendance at each regular or special meeting of
the Board of Directors or of committees thereof, and other compensation for
their services as such or on committees of the Board of Directors, may be paid
to directors. A director who serves the Corporation in any other capacity also
may receive compensation for such other services, pursuant to a resolution of
the Board of Directors.
ARTICLE III.
COMMITTEES
3.01 Committees. The Board of Directors may appoint from among its
members an Executive Committee and other committees comprised of one or more
directors and delegate to these committees any of the powers of the Board of
Directors, except the power to declare dividends or other distributions on
stock, elect directors, issue stock other than as provided in the next sentence,
recommend to the stockholders any action which requires stockholder approval,
amend the By-Laws, or approve any merger or share exchange which does not
require stockholder approval. If the Board of Directors has given general
authorization for the issuance of stock, a committee of the Board, in accordance
with a general formula or method for determining the maximum number of shares to
be issued specified by the Board by resolution or by adoption of e stock option
or other plan, may fix the terms of stock subject to classification or
reclassification and the terms on which any stock may be issued, including all
terms and conditions required or permitted to be established or authorized by
the Board of Directors.
3.02 Committee Procedure. Each committee may fix rules of procedure
for its business. A majority of the members of a committee shall constitute a
quorum for the transaction of business and the action of a majority of those
present at a meeting at which a quorum is present shall be action of the
committee. The members of a committee present at any meeting, whether or not
they constitute a quorum, may appoint a director to act in the place of an
absent member. Any action required or permitted to be taken at a meeting of a
committee may be taken without a meeting, if an unanimous written consent which
sets forth the action is signed by each member of the committee and filed with
the minutes of the committee. The members of a
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9
committee may conduct any meeting thereof by telephone in accordance with the
provisions of Section 2.10.
3.03 Emergency. In the event of a state of disaster of sufficient
severity to prevent the conduct and management of the affairs and business of
the Corporation by its directors and officers as contemplated by the charter and
these By-Laws. Any two or more available members of the then incumbent Executive
Committee shall constitute a quorum of that Committee for the full conduct and
management of the affairs and business of the Corporation in accordance with the
provisions of Section 3.01. In the event of the unavailability, at such time, of
a minimum of two members of the then incumbent Executive Committee, the
available directors shall elect an Executive Committee comprised of any two
members of the Board of Directors, whether or not they be officers of the
Corporation, which two members shall constitute the Executive Committee for the
full conduct and management of the affairs of the Corporation in accordance with
the foregoing provisions of this Section 3.03. This Section 3.03 shall be
subject to implementation by resolution of the Board of Directors passed from
time to time for that purpose and any provisions of the By-Laws (other then this
Section) and any resolutions which are contrary to the provisions of this
Section or to the provisions of any such implementing resolutions shall be
suspended until it shall be determined by any interim Executive Committee acting
under this Section that it shall be to the advantage of the Corporation to
resume the conduct and management of its affairs and business under all the
other provisions of these By-Laws.
ARTICLE IV.
OFFICERS
4.01 Executive and Other Officers. The Corporation shall have a
President, a Secretary and a Treasurer. It may also have a Chairman of the
Board. The Board of Directors shall designate who shall serve as chief executive
officer, who shall have general supervision of the business and affairs of the
Corporation, and may designate a chief operating officer, who shall have
supervision of the operations of the Corporation. In the absence of any
designation the Chairman of the Board, if there be one, shall serve as chief
executive officer and the President shall serve as chief operating officer. In
the absence of the Chairman of the Board, or if there be none, the President
shall be the chief executive officer. The same person may hold both offices. The
Corporation may also have one or more Vice-Presidents, assistant officers and
subordinate officers as may be established by the Board of Directors. A person
may hold more than one office in the Corporation except that no person may
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10
serve concurrently as both President and Vice-President of the Corporation. The
Chairman of the Board shall be a director. The other officers may be directors.
4.02 Chairman of the Board. The Chairman of the Board, if one be
elected, shall preside at all meetings of the Board of Directors and of the
stockholders at which he shall be present. Unless otherwise specified by the
Board of Directors, he shall be the chief executive officer of the Corporation
and perform the duties customarily performed by chief executive officers, and
may perform any duties of the President. In general, he shall perform all such
duties as are from time to time assigned to him by the Board of Directors.
4.03 President. Unless otherwise provided by resolution of the Board
of Directors, the President, in the absence of the Chairman of the Board, shall
preside at all meetings of the Board of Directors and of the stockholders at
which he shall be present. Unless otherwise specified by the Board of Directors,
the President shall be the chief operating officer of the Corporation and
perform the duties customarily performed by chief operating officers. He may
sign and execute, in the name of the Corporation, all authorized deeds,
mortgages, bonds, contracts or other instruments, except in cases in which the
signing and execution thereof shall have been expressly delegated to some other
officer or agent of the Corporation. In general, he shall perform all duties
usually performed by a president of a corporation and such other duties as are
from time to time assigned to him by the Board of Directors or the chief
executive officer of the Corporation.
4.04 Vice-Presidents. The Vice-President or Vice-Presidents, at the
request of the chief executive officer or the President, or in the President's
absence or during his inability to act, shall perform the duties and exercise
the functions of the President, and when so acting shall have the powers of the
President. If there be more than one Vice-President, the Board of Directors may
determine which one or more of the Vice-Presidents shall perform any of such
duties or exercise any of such functions, or if such determination is not made
by the Board of Directors, the chief executive officer or the President may make
such determination; otherwise any of the Vice-Presidents may perform any of such
duties or exercise any of such functions. The Vice-President or Vice-Presidents
shall have such other powers and perform such other duties, and have such
additional descriptive designations in their titles (if any), as are from time
to time assigned to them by the Board of Directors, the chief executive officer,
or the President.
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11
4.05 Secretary. The Secretary shall keep the minutes of the meetings
of the stockholders, of the Board of Directors and of any committees, in books
provided for that purpose; he shall see that all notices are duly given in
accordance with the provisions of the By-Laws or as required by law; he shall be
custodian of the records of the Corporation; he may witness any document on
behalf of the Corporation, the execution of which is duly authorized, see that
the corporate seal is affixed where such document is required or desired to be
under its seal, and, when so affixed, may attest the same; and, in general, he
shall perform all duties incident to the office of a secretary of a corporation,
and such other duties as are from time to time assigned to him by the Board of
Directors, the chief executive officer, or the President.
4.06 Treasurer. The Treasurer shall have charge of and be
responsible for all funds, securities, receipts and disbursements of the
Corporation, and shall deposit, or cause to be deposited, in the name of the
Corporation, all moneys or other valuable effects in such banks, trust companies
or other depositories as shall, from time to time, be selected by the Board of
Directors; he shall render to the President and to the Board of Directors,
whenever requested, an account of the financial condition of the Corporation;
and, in general, he shall perform all the duties incident to the office of a
treasurer of a corporation, and such other duties as are from time to time
assigned to him by the Board of Directors, the chief executive officer, or the
President.
4.07 Assistant and Subordinate Officers. The assistant and
subordinate officers of the Corporation are all officers below the office of
Vice-President, Secretary or Treasurer. The assistant or subordinate officers
shall have such duties as are from time to time assigned to them by the Board of
Directors, the chief executive officer, or the President.
4.08 Election, Tenure and Removal of Officers. The Board of
Directors shall elect the officers of the Corporation. The Board of Directors
may from time to time authorize any committee or officer to appoint assistant
and subordinate officers. Election or appointment of an officer, employee or
agent shall not of itself create contract rights. All officers shall be elected
or appointed to hold their respective offices, respectively, during the pleasure
of the Board. The Board of Directors (or, as to any assistant or subordinate
officer, any committee or officer authorized by the Board) may remove an officer
at any time. The removal of an officer does not prejudice any of his contract
rights. The Board of Directors (or, as to any assistant or subordinate officer,
any committee or
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12
officer authorized by the Board) may fill a vacancy which occurs in any office.
4.09 Compensation. The Board of Directors shall have power to fix
the salaries and other compensation and remuneration, of whatever kind, of all
officers of the Corporation. It may authorize any committee or officer, upon
whom the power of appointing assistant and subordinate officers may have been
conferred, to fix the salaries, compensation and remuneration of such assistant
and subordinate officers. No officer shall be prevented from receiving such
salary by reason of the fact that he is also a director of the Corporation.
ARTICLE V.
INDEMNIFICATION
5.01 Indemnification of Directors and Officers. The Corporation
shall indemnify any person who was or is a party or is threatened to be made a
party to any threatened, pending or completed action, suit or proceeding,
whether civil, criminal, administrative or investigative (other than a
proceeding by or in the right of the Corporation in which such person shall have
been adjudged to be liable to the Corporation), by reason of being or having
been a director or officer of the Corporation, or serving or having served at
the request of the Corporation as a director, officer, partner, trustee,
employee or agent of another entity in which the Corporation has an interest as
a shareholder, creditor or otherwise (a 'Covered Person'), against all
liabilities, including but not limited to amounts paid in satisfaction of
judgments, in compromise or as fines and penalties, and reasonable expenses
(including attorney's fees) actually incurred by the Covered Person in
connection with such action, suit or proceeding, except (i) liability in
connection with any proceeding in which it is determined that (A) the act or
omission of the Covered Person was material to the matter giving rise to the
proceeding, and was committed in bad faith or was the result of active and
deliberate dishonesty, or (B) the Covered Person actually received an improper
personal benefit in money, property or services, or (C) in the case of any
criminal proceeding, the Covered Person had reasonable cause to believe that the
act or omission was unlawful, and (ii) liability to the Corporation or its
security holders to which the Covered Person would otherwise be subject by
reason of willful misfeasance, bad faith, gross negligence or reckless disregard
of the duties involved in the conduct of his office (any or all of the conduct
referred to in clauses (i) and (ii) being hereinafter referred to as "Disabling"
Conduct).
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13
5.02 Procedure For Indemnification. Any indemnification under
Section 5.01 shall (unless ordered by a court) be made by the Corporation only
as authorized for a specific proceeding by (i) a final decision on the merits by
a court or other body before whom the proceeding was brought that the Covered
Person to be indemnified was not liable by reason of Disabling Conduct, (ii)
dismissal of the proceeding against the Covered Person for insufficiency of
evidence of any Disabling Conduct, or (iii) a reasonable determination, based
upon a review of the facts, by a majority of a quorum of the directors who are
neither "interested persons" of the Corporation as defined in the Investment
Company Act of 1940 nor parties to the proceeding ('Disinterested, Non-Party
Directors'), or an independent legal counsel in a written opinion, that the
Covered Person was not liable by reason of Disabling Conduct. The termination of
any proceeding by judgment, order or settlement shall not create a presumption
that the Covered Person did not meet the required standard of conduct; the
termination of any proceeding by conviction, or a plea of nolo contendere or its
equivalent, or an entry of an order of probation prior to judgment, shall create
a rebuttable presumption that the Covered Person did not meet the required
standard of conduct. Any determination pursuant to this Section 5.02 shall not
prevent recovery from any Covered Person of any amount paid to be in accordance
with this By-Law as indemnification if such Covered Person is subsequently
adjudicated by a court of competent jurisdiction to be liable by reason of
Disabling Conduct.
5.03 Advance Payment of Expenses. Reasonable expenses (including
attorney's fees) incurred by a Covered Person may be paid or reimbursed by the
Corporation in advance of the final disposition of an action, suit or proceeding
upon receipt by the Corporation of (i) a written affirmation by the Covered
Person of his good faith belief that the standard of conduct necessary for
indemnification under this By-Law has been met and (ii) a written undertaking by
or on behalf of the Covered Person to repay the amount if it is ultimately
determined that such standard of conduct has not been met, so long as either (A)
the Covered Person has provided a security for his undertaking, (B) the
Corporation is insured against losses arising by reason of any lawful advances,
or (C) a majority of a quorum of the Disinterested, Non-Party Directors, or an
independent legal counsel in a written opinion, has determined, based on a
review of readily available facts (as opposed to a full trial-type inquiry),
that there is reason to believe that the Covered Person ultimately will be found
entitled to indemnification.
5.04 Exclusivity, Etc. The indemnification and advance of expenses
provided by this By-Law shall not be deemed exclusive of any other rights to
which a Covered Person seeking
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14
indemnification or advance of expenses may be entitled under any law (common or
statutory), or any agreement, vote of stockholders or disinterested directors,
or other provision that is consistent with law, both as to action in an official
capacity and as to action in another capacity while holding office or while
employed by or acting as agent for the Corporation, shall continue in respect of
all events occurring while the Covered Person was a director or officer after
such Covered Person has ceased to be a director or officer, and shall inure to
the benefit of the estate, heirs, executors and administrators of such Covered
Person. The Corporation shall not be liable for any payment under this By-Law in
connection with a claim made by a director or officer to the extent such
director or officer has otherwise actually received payment under an insurance
policy, agreement, vote or otherwise. All rights to indemnification and advance
of expenses under the charter and hereunder shall be deemed to be a contract
between the Corporation and each director or officer of the Corporation who
serves or served in such capacity at any time while this By-Law is in effect.
Nothing herein shall prevent the amendment of this By-Law, provided that no such
amendment shall diminish the rights of any Covered Person hereunder with respect
to events occurring or claims made before its adoption or as to claims made
after its adoption in respect of events occurring before its adoption. Any
repeal or modification of this By-Law shall not in any way diminish any rights
to indemnification or advance of expenses of a Covered Person or the obligations
of the Corporation arising hereunder with respect to events occurring, or claims
made, while this By-Law or any provision hereof is in force.
5.05 Insurance. The Corporation may purchase and maintain insurance
on behalf of any Covered Person against any liability asserted against him and
incurred by him in any such capacity, or arising out of his status as such;
provided, however, that the Corporation shall not purchase insurance to
indemnify any Covered Person against liability for Disabling Conduct.
5.06 Severability; Definitions. The invalidity or unenforceability
of any provision of this Article V shall not affect the validity or
enforceability of any other provision hereof. The phrase "this By-Law" in this
Article V means this Article V in its entirety.
ARTICLE VI.
STOCK
6.01 Certificates for Stock. The Board of Directors may determine to
issue certificated or uncertificated shares of
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15
capital stock and other securities of the Corporation. For certificated stock,
each stockholder is entitled to certificates which represent and certify the
shares of stock he holds in the Corporation. Each stock certificate shall
include on its face the name of the Corporation, the name of the stockholder or
other person to whom it is issued, and the class or series of stock and number
of shares it represents. It shall also include (a) a statement of any
restrictions on transferability and (b) a statement which provides in substance
that the Corporation will furnish to any stockholder on request and without
charge a full statement of the designations and any preferences, conversion and
other rights, voting powers, restrictions, limitations as to dividends,
qualifications, and terms and conditions of redemption of the stock of each
class which the Corporation is authorized to issue, of the differences in the
relative rights and preferences between the shares of each series of a preferred
or special class in series which the Corporation is authorized to issue, to the
extent they have been set, and of the authority of the Board of Directors to set
the relative rights and preferences of subsequent series of a preferred or
special class of stock and any restrictions on transferability. Such request may
be made to the Secretary or to its transfer agent. Upon the issuance of
uncertificated shares of capital stock, the Corporation shall send the
stockholder a written statement of the same information required on the
certificate and by the Maryland Uniform Commercial Code - Investment Securities.
It shall be in such form, not inconsistent with law or with the charter, as
shall be approved by the Board of Directors or any officer or officers
designated for such purpose by resolution of the Board of Directors. Each stock
certificate shall be signed by the Chairman of the Board, the President, or a
Vice-President, and countersigned by the Secretary, an Assistant Secretary, the
Treasurer, or an Assistant Treasurer. Each certificate may be sealed with the
actual corporate seal or a facsimile of it or in any other form and the
signatures may be either manual or facsimile signatures. A certificate is valid
and may be issued whether or not an officer who signed it is still an officer
when it is issued. A certificate may not be issued until the stock represented
by it is fully paid.
6.02 Transfers. The Board of Directors shall have power and
authority to make such rules and regulations as it may deem expedient concerning
the issue, transfer and registration of shares of stock; and may appoint
transfer agents and registrars thereof. The duties of transfer agent and
registrar may be combined.
6.03 Record Date and Closing of Transfer Books. The Board of
Directors may set a record date or direct that the stock transfer books be
closed for a stated period for the purpose of
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16
making any proper determination with respect to stockholders, including which
stockholders are entitled to notice of a meeting, vote at a meeting, receive a
dividend, or be allotted other rights. The record date may not be prior to the
close of business on the day the record date is fixed nor, subject to Section
1.06, more than 90 days before the date on which the action requiring the
determination will be taken the transfer books may not be closed for a period
longer than twenty days; and, in the case of a meeting of stockholders, the
record date or the closing of the transfer books shall be at least ten days
before the date of the meeting.
6.04 Stock Ledger. The Corporation shall maintain a stock ledger
which contains the name and address of each stockholder and the number of shares
of stock of each class or series which the stockholder holds. The stock ledger
may be in written form or in any other form which can be converted within a
reasonable time into written form for visual inspection. The original or a
duplicate of the stock ledger shall be kept at the offices of the transfer agent
for a particular class or series of stock, or, if none, at the principal office
in the State of Maryland or the principal executive office of the Corporation.
6.05 Certification of Beneficial Owners. The Board of Directors may
adopt by resolution a procedure by which a stockholder of the Corporation may
certify in writing to the Corporation that any shares of stock registered in the
name of the stockholder are held for the account of a specified person other
than the stockholder. The resolution shall set forth the class of stockholders
who may certify; the purpose for which the certification may be made; the form
of certification and the information to be contained in it; if the certification
is with respect to a record date or closing of the stock transfer books, the
ties after the record date or closing of the stock transfer books within which
the certification must be received by the Corporation; and any other provisions
with respect to the procedure which the Board considers necessary or desirable.
On receipt of a certification which complies with the procedure adopted by the
Board in accordance with this Section, the person specified in the certification
is, for the purpose set forth in the certification, the holder of record of the
specified stock in place of the stockholder who makes the certification.
6.06 Lost Stock Certificates. The Board of Directors of the
Corporation may determine the conditions for issuing a new stock certificate in
place of one which is alleged to have been lost, stolen or destroyed, including
the requirement that the owner furnish a bond as indemnity against any claim
that may be made against the Corporation in respect of the lost, stolen or
destroyed certificate, or the Board of Directors may delegate
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such power to any officer or officers of the Corporation. In their discretion,
the Board of Directors or such officer or officers may refuse to issue such new
certificate save upon the order of some court having jurisdiction in the
premises.
ARTICLE VII.
FINANCE
7.01 Checks, Drafts, Etc. All checks, drafts and orders for the
payment of money, notes and other evidences of indebtedness, issued in the name
of the Corporation, shall, unless otherwise provided by resolution of the Board
of Directors, be signed by the Chairman of the Board, President, a
Vice-President or an Assistant Vice-President and countersigned by the
Treasurer, an Assistant Treasurer, the Secretary or an Assistant Secretary.
7.02 Annual Statement of Affairs. The President or chief accounting
officer shall prepare annually a full and correct statement of the affairs of
the Corporation, to include a statement of net assets and a financial statement
of operations for the preceding fiscal year. The statement of affairs shall be
placed on file at the Corporation's principal office within 120 days after the
end of the fiscal year.
7.03 Fiscal Year. The fiscal year of the Corporation shall be the
twelve-calendar-month period ending December 31 in each year, unless otherwise
provided by the Board of Directors.
7.04 Dividends. If declared by the Board of Directors at any meeting
thereof, the Corporation may pay dividends on its shares in cash, property, or
in shares of the capital stock of the Corporation, unless such dividend is
contrary to law or to a restriction contained in the charter of the Corporation.
7.05 Net Asset Value. Except in the event of emergency conditions or
as otherwise permitted by the Investment Company Act of 1940, the net asset
value per share of each class or series of stock shall be determined no less
frequently than once daily, Monday through Friday, at such time or times as the
Board of Directors sets. In valuing portfolio investments for the determination
of the current net asset value per share of any class or series, securities for
which market quotations are readily available shall be valued at prices which,
in the opinion of the Board of Directors or the person designated by the Board
of Directors to make the determination, most nearly represent the current market
value of such securities, and other securities and assets shall be valued on the
basis of their fair value as determined by or under the direction of the Board
of Directors.
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7.06 Employment of Custodian. The Corporation shall place and
maintain its securities and similar investments in the custody of one or more
custodians meeting the requirements of the Investment Company Act of 1940, or
may serve as its own custodian in accordance with such rules and regulations or
orders as the Securities and Exchange Commission may from time to time prescribe
for the protection of investors. Securities held by a custodian may be
registered in the name of the Corporation, including the designation of the
particular class or series to which such assets belong, or any such custodian,
or the nominee of either of them. Subject to such rules, regulations, and orders
as the Commission may adopt as necessary or appropriate for the protection of
investors, the Corporation or any custodian, with the consent of the
Corporation, may deposit all or any part of the securities owned by the
Corporation in a system for the central handling of securities, pursuant to
which system all securities of a particular class or series of any issuer
deposited within the system are treated as fungible and may be transferred or
pledged by bookkeeping entry without physical delivery of such securities.
ARTICLE VIII.
SUNDRY PROVISIONS
8.01 Books and Records. The Corporation shall keep correct and
complete books and records of its accounts and transactions and minutes of the
proceedings of its stockholders and Board of Directors and of any executive or
other committee when exercising any of the powers of the Board of Directors. The
books and records of the Corporation may be in written form or in any other form
which can be converted within a reasonable time into written form for visual
inspection. Minutes shall be recorded in written form but may be maintained in
the form of a reproduction. The original or a certified copy of these By-Laws
shall be kept at the principal office of the Corporation.
8.02 Corporate Seal. The Board of Directors shall provide a suitable
seal, bearing the name of the Corporation, which shall be in the charge of the
Secretary. The Board of Directors may authorize one or more duplicate seals and
provide for the custody thereof. If the Corporation is required to place its
corporate seal to a document, it is sufficient to meet the requirement of any
law, rule or regulation relating to a corporate seal to place the word "Seal"
adjacent to the signature of the person authorized to sign the document on
behalf of the Corporation.
8.03 Bonds. The Board of Directors may require any officer, agent or
employee of the Corporation to give a bond to
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the Corporation, conditioned upon the faithful discharge of his duties, with one
or more sureties and in such amount as may be satisfactory to the Board of
Directors.
8.04 Voting Shares in Other Corporations. Shares of other
corporations or associations, registered in the name of the Corporation, may be
voted by the President, a Vice-President, or a proxy appointed by either of
them. The Board of Directors, however, may by resolution appoint some other
person to vote such shares, in which case such person shall be entitled to vote
such shares upon the production of a certified copy of such resolution.
8.05 Mail. Any notice or other document which is required by these
By-Laws to be mailed shall be deposited in the United States mails, postage
prepaid.
8.06 Execution of Documents. A person who holds more than one office
in the Corporation may not act in more than one capacity to execute, acknowledge
or verify an instrument required by law to be executed, acknowledged or verified
by more than one officer.
8.07 Amendments. Subject to the special provisions of Section 2.02,
(i) any and all provisions of these By-Laws may be altered or repealed and new
by-laws may be adopted at any annual meeting of the stockholders, or at any
special meeting called for that purpose, and (ii) the Board of Directors shall
have the power, at any regular or special meeting thereof, to make and adopt new
by-laws, or to amend, alter or repeal any of the By-Laws of the Corporation.
