Registration No. ___-____
ICA No. ___-____
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JUNE____, 1999
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES
ACT OF 1933 |X|
Pre-Effective Amendment No. |-|
Post-Effective Amendment No. |-|
and/or
REGISTRATION STATEMENT UNDER THE INVESTMENT
COMPANY ACT OF 1940 |X|
Pre-Effective Amendment No. |-|
Post-Effective Amendment No. |-|
(Check Appropriate Box or Boxes)
INVESTA MANAGEMENT CO., INC.
-------------------------------------------------
(Exact Name of Registrant as Specified in Charter)
551 FIFTH AVENUE
NEW YORK, NEW YORK 10176
--------------------------------------------------
(Address of Principal Executive Offices)(Zip Code)
(212) 599-4340
---------------------------------------------------
(Registrant's Telephone Number, Including Area Code)
Michael Miola
American Data Services, Inc.
The Hauppauge Corporate Center
150 Motor Parkway
Hauppauge, New York 11788
---------------------------------------
(Name and Address of Agent For Service)
With a copy to:
Thomas R. Westle, Esq.
Spitzer & Feldman P.C.
405 Park Avenue
New York, NY 10022
As soon as practicable after the effective date
-----------------------------------------------
(Approximate Date of Proposed Public Offering)
SHARES OF COMMON STOCK
(Title of Securities Being Registered)
<PAGE>
It is proposed that this filing will become effective (check
appropriate box):
|_| immediately upon filing pursuant to paragraph (b).
|_| on (date) pursuant to paragraph (b).
|_| 60 days after filing pursuant to paragraph (a)(1).
|_| on (date) pursuant to paragraph (a)(1).
|_| 75 days after filing pursuant to paragraph (a)(2).
|_| on (date) pursuant to paragraph (a)(2) of Rule 485.
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE
OR DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT
SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SECTION 8(A), MAY
DETERMINE.
<PAGE>
INVESTA MANAGEMENT CO., INC.
SUPER INDEX FUND
INVESTMENTWIZARD FUND
REGISTRATION STATEMENT ON FORM N-1A
CROSS REFERENCE SHEET FOR ITEMS REQUIRED BY FORM N-1A
ITEM NO. CAPTION IN PROSPECTUS
- -------- ---------------------
1 Front and Back Cover Pages
2 Investment Objectives and Policies
3 Transaction and Operating Expense Table
4 Investment Objectives and Policies
5 Dividends and Distributions; Performance Comparisons
6 Management
7 How to Purchase Shares; How to Redeem Shares;
Shareholder Services; Dividends and Distributions;
Valuation of Shares; Tax Status and General Information
8 Not Applicable
9 Not Applicable
CAPTION IN STATEMENT OF ADDITIONAL INFORMATION
----------------------------------------------
10 Cover Page and Table of Contents
11 Investment Objectives, Policies and Restrictions
12 Directors and Executive Officers
13 Ownership of Common Stock
14 Investment Advisory and Other Services
15 Portfolio Transactions and Allocation of Brokerage
16 Ownership of Common Stock
17 Net Asset Value and Public Offering Price; Redemption of
Shares
18 Taxation
19 Investment Advisory and Other Services
20 Performance Comparisons
21 Financial Statements
<PAGE>
INVESTA MANAGEMENT CO., INC.
SUPER INDEX FUND
INVESTMENTWIZARD FUND
PROSPECTUS
_______________, 1999
The SUPER INDEX FUND is a no-load fund that seeks to provide investors with
annual total returns that exceed the annual return of the Standard & Poor's 500
Composite Market Index (the "S&P 500 Index") by investing a substantial portion
of the Fund's assets in a portfolio of common stock of each of the companies
comprising the S&P 500 Index ("S&P 500 Index Securities") and implementing the
Investa Overwriting Strategy which involves the writing and/or buying of
Standard & Poor's 100 Index Options, Standard & Poor's 500 Index Options or
certain other Index Options that have a direct correlation to the S&P 500 Index
(the "Index Options") according to a proprietary quantitative investment model
developed by Investa, Inc. (the "Adviser"). The Fund will invest primarily in
Standard & Poor's Depository Receipts (SPDRs") until it has sufficient assets
(approximately $3 million) to buy S&P 500 Index Securities and replicate the S&P
500 Index.
The INVESTMENTWIZARD FUND is a no-load fund that seeks to provide investors with
long-term capital appreciation by investing in the equity securities of U.S. and
non-U.S. companies according to the Adviser's analysis of financial information
provided to the Adviser by INVESTMENTWIZARD(SM), an interactive Internet
database developed by the Adviser.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION NOR HAS THE SECURITIES AND EXCHANGE COMMISSION PASSED UPON
THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY
IS A CRIMINAL OFFENSE.
<PAGE>
TABLE OF CONTENTS
-----------------
PAGE
----
RISK/RETURN SUMMARY...........................................................1
FEES AND EXPENSES OF THE FUNDS................................................3
SUPER INDEX FUND..............................................................4
INVESTMENTWIZARD FUND.........................................................5
MAIN RISKS....................................................................6
MANAGEMENT ORGANIZATION AND CAPITAL STRUCTURE.................................9
VALUATION OF SHARES..........................................................11
HOW TO PURCHASE SHARES.......................................................12
HOW TO REDEEM SHARES.........................................................14
SHAREHOLDER SERVICES.........................................................16
DIVIDENDS AND DISTRIBUTIONS..................................................16
DISTRIBUTION AND SERVICE PLAN................................................17
TAX STATUS...................................................................17
PERFORMANCE INFORMATION......................................................18
GENERAL INFORMATION..........................................................18
CUSTODIAN, TRANSFER AGENT AND DIVIDEND AGENT.................................19
COUNSEL AND INDEPENDENT AUDITORS.............................................19
FOR MORE INFORMATION.........................................................20
2
<PAGE>
RISK/RETURN SUMMARY
INVESTMENT SUMMARY
1. SUPER INDEX FUND
----------------
INVESTMENT OBJECTIVE:
- -- The Fund seeks to provide investors with annual returns which exceed the
annual returns of the S&P 500 Index.
PRINCIPAL INVESTMENT STRATEGIES:
--------------------------------
- -- Replicate the holdings of the S&P 500 Index.
- -- Enhance the Fund's performance through the use of a proprietary
quantitative option-based investment model, the "Investa Overwriting
Strategy", involving the trading of Index Options
PRINCIPAL INVESTMENT RISKS:
---------------------------
- -- MARKET RISK. The net asset value of the Fund will fluctuate based on
changes in the value of the underlying S&P 500 Index Securities. The U.S.
stock markets upon which the S&P 500 Index Securities are listed are
generally susceptible to volatile fluctuations in market price. Increased
volatility of the Fund's assets may adversely affect the value of the
Fund's shares and could result in the loss of a portion of your investment.
- -- OPTION STRATEGY. The Investa Overwriting Strategy involves the trading of
Index Options based on the Adviser's expectations concerning the generally
unpredictable stock market. The failure of the Adviser to correctly predict
the market and/or implement the Investa Overwriting Strategy could
adversely affect the value of the Fund's shares and could result in the
loss of a portion of your investment.
2. INVESTMENTWIZARD FUND
---------------------
INVESTMENT OBJECTIVE:
---------------------
- -- The Fund seeks to provide investors with above-average long-term capital
appreciation.
PRINCIPAL INVESTMENT STRATEGIES:
- -- Invest in the equity securities of U.S. and non-U.S. companies without
regard to market capitalization.
3
<PAGE>
- -- Enhance the Fund's performance by utilizing financial information provided
by INVESTMENTWIZARD(SM), an interactive Internet database developed by the
Adviser, which will enable the Adviser to identify specific investment
opportunities that the Adviser believes will best allow the Fund to achieve
its investment objective.
PRINCIPAL INVESTMENT RISKS:
---------------------------
- -- INVESTMENT WITHOUT REGARD TO CAPITALIZATION. The Fund will invest in equity
securities without regard to market capitalization and may be subject to
additional risks associated with investment in companies with small or
mid-sized capital structures that tend to be more volatile and trade at a
lower volume than those of larger companies.
- -- RELIANCE ON INVESTMENTWIZARD(SM). The success of the Adviser's investment
strategy for the InvestmentWizard Fund is dependent upon (i) the
reliability and accuracy of the financial information provided through
INVESTMENTWIZARD(SM) and (ii) the Adviser's ability to analyze this
information and effectively exploit its analysis to achieve the Fund's
objective. There is no guarantee that the financial information provided on
INVESTMENTWIZARD(SM) will be reliable or accurate, that the Adviser's
analysis will lead to the successful implementation of the Fund's
investment strategy or that the Fund will achieve its investment objective.
- -- FOREIGN SECURITIES. Investing in foreign securities involves financial,
country and political risks that could adversely affect the value of the
Fund's shares and your investment that are not typically associated with
investing in U.S. securities.
- -- DERIVATIVE TRANSACTIONS. The Fund will invest in derivatives, including
Index Options utilizing the Investa Overwriting Strategy, for purposes of
hedging and/or direct investment. These instruments contain certain special
risks including imperfect correlations between the value of the derivative
and the value of the underlying asset. The failure of the Adviser to
correctly predict the market and/or implement the Investa Overwriting
Strategy could adversely affect the value of the Fund's shares and could
result in the loss of a portion of your investment.
PERFORMANCE
To date, there is no prior performance of either Fund.
4
<PAGE>
FEES AND EXPENSES OF THE FUNDS
THIS TABLE DESCRIBES THE FEES AND EXPENSES THAT YOU MAY PAY IF YOU BUY AND HOLD
SHARES OF EITHER FUND.
SUPER INDEX INVESTMENTWIZARD
----------- ----------------
SHAREHOLDER TRANSACTION FEES
(PAID DIRECTLY FROM YOUR INVESTMENTS): None None
---------------------------------
ESTIMATED ANNUAL FUND OPERATING EXPENSES:
(EXPENSES THAT ARE DEDUCTED FROM FUND ASSETS,
AS A PERCENTAGE OF NET ASSETS)
- --------------------------------------------------------------------------------
1.00% 1.00%
Management Fees (1)
- --------------------------------------------------------------------------------
Distribution and/or Service (Rule 12b-1)
Fees (2) 0.25% 0.25%
- --------------------------------------------------------------------------------
Other Expenses (3) ____% ___ %
- --------------------------------------------------------------------------------
Total Estimated Fund Operating Expenses (3) % %
- --------------------------------------------------------------------------------
EXAMPLE:
THIS EXAMPLE IS INTENDED TO HELP YOU COMPARE THE COST OF INVESTING IN
A FUND WITH THE COST OF INVESTING IN OTHER MUTUAL FUNDS.
THE EXAMPLE ASSUMES THAT YOU INVEST $10,000 IN A FUND FOR THE TIME
PERIODS INDICATED AND THEN REDEEM ALL OF YOUR SHARES AT THE END OF THESE
PERIODS. THE EXAMPLE ALSO ASSUMES THAT YOUR INVESTMENT HAS A 5% RETURN EACH YEAR
AND THAT THE FUND'S OPERATING EXPENSES REMAIN THE SAME. NEITHER THE 5% RATE OF
RETURN NOR THE EXPENSES SHOWN ABOVE SHOULD BE CONSIDERED INDICATIONS OF PAST OR
FUTURE RETURNS AND EXPENSES. ALTHOUGH YOUR ACTUAL COSTS MAY BE HIGHER OR LOWER,
BASED ON THESE ASSUMPTIONS YOUR COST WOULD BE:
SUPER INDEX FUND INVESTMENTWIZARD FUND
---------------- ---------------------
ONE YEAR $____________ ONE YEAR $___________
THREE YEARS $____________ THREE YEARS $__________
YOU WOULD PAY THE FOLLOWING EXPENSES IF YOU DID NOT REDEEM YOUR SHARES:
- -----------------------------------------
(1) The Adviser may, in its discretion, waive some or all of its advisory fees.
(2) Based on such 12b-1 fees, long-term shareholders may pay more than the
economic equivalent of the maximum front-end sales charges permitted by the
NASD.
(3) Other Expenses include, among other expenses, administrative, custody,
transfer agency and shareholder servicing fees. Other Expenses and Total
Estimated Fund Operating Expenses are based on estimated amounts assuming
net assets of $5 million in a Fund.
5
<PAGE>
SUPER INDEX FUND INVESTMENTWIZARD FUND
---------------- ---------------------
ONE YEAR $____________ ONE YEAR $___________
THREE YEARS $____________ THREE YEARS $___________
SUPER INDEX FUND
Ticker Symbol: ________
INVESTMENT STRATEGY
The Super Index Fund invests substantially all but in no event less
than 65% of its net assets in S&P 500 Index Securities to replicate the holdings
of the S&P 500 Index. As a result, the Fund is diversified in terms of industry,
size, liquidity and other relevant characteristics. The Fund will, however,
invest primarily in SPDRs until it has sufficient assets (approximately $3
million) to invest its assets in S&P 500 Index Securities in furtherance of its
investment objective. With respect to its replication of the S&P 500 Index, the
Adviser employs a passive investment management approach and does not intend to
change the composition of the Fund's equity portfolio based on its own economic,
financial or market analysis. For liquidity purposes or pending the purchase of
additional S&P 500 Index Securities, the Fund may, from time to time, invest a
portion of its net assets in SPDRs, U.S. Government securities or money market
instruments.
Unlike the management of most other "index" mutual funds, the Adviser
actively manages the Super Index Fund to enhance its performance with the goal
of exceeding the annual return of the S&P 500 Index by utilizing its proprietary
quantitative investment model, "Investa Overwriting Strategy", used by the
Adviser for its private accounts since 1984. Through the Adviser's trading of
Index Options pursuant to its Investa Overwriting Strategy, the Adviser seeks to
capitalize on profit opportunities created by the fact that the U.S. stock
markets have, over the long term, generally traded in relatively narrow ranges
and the willingness of option buyers to pay a premium for the leverage that
options provide. By strategically writing and/or buying Index Options in
accordance with the Investa Overwriting Strategy, the Adviser believes that the
Fund will be able to achieve its investment objective of enhancing the overall
annual return of the Fund to the extent that it exceeds the annual return of the
S&P 500 Index. The success of the Investa Overwriting Strategy depends on the
Adviser's ability to correctly predict, identify and exploit these
opportunities.
The Fund will receive premiums when it writes Index Options. The buyers
of these Index Options will have the right to exercise their options and acquire
the cash equivalent of the underlying securities from (if a call option), or
sell the cash equivalent of the underlying securities to (if a put option), the
Fund at the predetermined option exercise price. The success of the Investa
Overwriting Strategy depends on the Fund receiving option overwriting premium
income on opening transactions that exceeds the option premium the Fund pays on
closing transactions and does not depend on the profit or loss of the underlying
securities. Most mutual funds that use option strategies to hedge portfolio
positions do not depend solely on the option profit or loss to justify the use
of options because such funds also take into account the profit or loss of the
underlying securities.
6
<PAGE>
Of course, there is no assurance that the Adviser will be able to
achieve this goal or that the Fund will meet its investment objective.
Additional information concerning the Investa Overwriting Strategy can be found
in the section of this Prospectus entitled "MAIN RISKS" and in the Statement of
Additional Information ("SAI").
PORTFOLIO TURNOVER. The frequency of the Super Index Fund's portfolio
transactions will vary from year to year and depend, to a large extent, on
changes in the S&P 500 Index. Historically, the S&P 500 Index has experienced
relatively low portfolio turnover and it is expected that this will continue.
Higher portfolio turnover rates resulting from more actively traded portfolio
securities generally result in higher transaction costs, including brokerage
commissions. The Fund expects that its annual portfolio turnover rate will be
less than 10%.
INVESTMENTWIZARD FUND
Ticker Symbol: _________
INVESTMENT STRATEGY
To achieve its investment objective, the InvestmentWizard Fund will
invest its assets in common stocks, preferred stocks, convertible preferred
stocks and other securities having the characteristics of common stocks, such as
American Depositary Receipts ("ADRs") and SPDRs, without regard to market
capitalization. Although the Fund will invest primarily in equity securities,
under normal market conditions it may invest a portion of its net assets in U.S.
Government securities, high quality money market instruments and repurchase
agreements. The Fund may invest in certain derivative instruments to hedge
various market risks and to enhance the annual return of the Fund by utilizing
the Investa Overwriting Strategy. As described above, through the Adviser's
trading of Index Options pursuant to its Investa Overwriting Strategy, the
Adviser seeks to capitalize on profit opportunities created by the fact that the
U.S. stock markets have, over the long term, generally traded in relatively
narrow ranges and the willingness of option buyers to pay a premium for the
leverage that options provide. By strategically writing and/or buying Index
Options in accordance with its Investa Overwriting Strategy, the Adviser
believes that it will be able to enhance the overall annual return of the
InvestmentWizard Fund.
The Adviser uses the financial information provided by
INVESTMENTWIZARD(SM), an interactive Internet database of Wall Street analysts'
opinions, corporate insider activity and signals generated by technical
indicators on stocks and indices and selects securities for the Fund based on
its investment skill and on its analysis of such financial information.
7
<PAGE>
The InvestmentWizard Fund will not concentrate in any particular
industry. The Adviser intends to diversify the Fund's portfolio among numerous
industry sectors. However, the extent to which the Adviser invests in particular
industries will be governed, to a large degree, by market conditions.
The Adviser monitors the InvestmentWizard Fund's investments on a
continuous basis and constantly reevaluates the Fund's holdings in order to
maximize, to the extent possible, the capital appreciation of the portfolio.
This process allows the Adviser to determine whether any of the Fund's
investments have lost value or whether securities not held by the Fund seem
poised for growth under developing market conditions, and to adjust the Fund's
holdings accordingly. The Adviser does not anticipate this process to result in
high portfolio turnover and does not intend to aggressively trade the
InvestmentWizard Fund's assets. The Fund expects that its annual portfolio
turnover rate will be, under normal conditions, less than 50%.
MAIN RISKS
All mutual funds carry a certain amount of risk. You may lose money on
your investment in either Fund. The following describes the primary risks that
are common to both the Super Index Fund and the InvestmentWizard Fund as well as
risks which are particular to each Fund as a result of each Fund's specific
investment objective and strategies. As all investment securities are subject to
inherent market risks and fluctuations in value due to earnings, economic and
political conditions and other factors, neither Fund can give any assurance that
its investment objective will be achieved. In addition, you should be aware that
neither Fund has any operating history and the Adviser has no prior experience
in acting as an investment adviser to a mutual fund.
DIVERSIFICATION. Each Fund is a "diversified" investment company under
the Investment Company Act of 1940. This means that with respect to 75% of its
total assets, (a) a Fund may not invest more than 5% of its total assets in the
securities of any one issuer (except U.S. Government securities) and (b) each
Fund may not own more than 10% of the outstanding voting securities of any one
issuer. The remaining 25% of each Fund's total assets is not subject to this
restriction. To the extent that either Fund invests a significant portion of its
assets in the securities of a particular issuer, it will be subject to an
increased risk of loss if the market value of such issuer's securities declines.
OTHER SECURITIES A FUND MIGHT PURCHASE. Under normal market conditions,
each Fund will invest a substantial percentage of its total assets in common
stocks, securities having the characteristics of common stocks or Index Options.
If the Adviser believes that market conditions warrant a temporary defensive
posture, or for liquidity purposes, either Fund may invest without limit in high
quality, short-term debt securities and money market instruments. These
short-term debt securities and money market instruments include commercial
paper, certificates of deposit, bankers' acceptances, and U.S. Government
securities and repurchase agreements. More information about these investments
is contained in the SAI.
8
<PAGE>
SECURITIES LENDING. Each Fund may lend its portfolio securities to
broker-dealers amounting to no more than 25% of its assets. These transactions
will be fully collateralized at all times with cash and/or short-term debt
obligations. These transactions involve some risk to a fund if the other party
should default on its obligation and the Fund is delayed or prevented from
recovering the collateral. In the event the original seller defaults on its
obligation to repurchase, the Fund will seek to sell the collateral, which could
involve costs or delays. To the extent proceeds from the sale of collateral are
less than the repurchase price, a Fund would suffer a loss.
SUPER INDEX FUND RISKS
- ----------------------
MARKET RISK. The net asset value of the Super Index Fund will fluctuate
based on changes in the value of the underlying S&P 500 Index Securities and the
Adviser's ability to correctly predict opportunities with respect to its trading
of Index Options. The U.S. stock markets are susceptible to volatile
fluctuations in market price. Market prices may be adversely affected by an
issuer's having experienced losses or by the lack of earnings or by the issuer's
failure to meet the market's expectations with respect to new products or
services, or even by factors wholly unrelated to the value or condition of the
issuer. The value of a portion of the S&P 500 Index Securities is also subject
to the risk that a specific segment of the stock market underperforms the
overall market, thereby decreasing the value of companies comprising such
segment. Under any of these circumstances, the value of the Fund's shares and
its total return will fluctuate and your investment may be worth more or less
than your original cost when you redeem your shares.
INVESTA OVERWRITING STRATEGY. Successful implementation of the Investa
Overwriting Strategy is dependent upon the Adviser's ability to correctly
predict and trade Index Options and capitalize on the difference between the
premiums received and paid by the Fund for such Index Options based on price
fluctuations of those S&P Options. The failure of the Adviser to effectively
implement its Investa Overwriting Strategy could result in the loss of a portion
of your investment.
PASSIVE MANAGEMENT OF S&P 500 SECURITIES. With regard to the purchase
of S&P 500 Index Securities and the Super Index Fund's replication of the
holdings of the S&P 500 Index, the Adviser employs a passive investment
management approach and does not change the composition of the Fund's equity
position based on its own economic, financial or market analysis. The inclusion
of a security in the Fund's portfolio does not reflect an opinion by the Adviser
regarding the particular security's attractiveness as an investment. In the
event that a particular S&P 500 Index Security underperforms or suffers a sharp
decline in market value, the Fund may not liquidate the investment unless such
liquidation is also reflected in the S&P 500 Index. Under these circumstances,
the net asset value of the Fund may decline, negatively impacting the value of
your investment.
FUND EXPENSES VERSUS INDEX PERFORMANCE. The investment performance of
the portion of the Super Index Fund's net assets that are invested in S&P 500
Index Securities will not exactly match the investment performance of the S&P
9
<PAGE>
500 Index because Fund expenses, including, management fees, brokerage
commissions, and bid/ask spreads, do not exist for the S&P 500 Index, which is
an unmanaged index. Additional factors such as the amount of any cash
equivalents held in the Fund for liquidity purposes, the size of the Fund, and
the timing, frequency and size of shareholder purchases and redemptions may also
adversely affect the Fund's ability to exactly match the investment performance
of the S&P 500 Index. Subject to the availability of funds required for the
implementation of the Investa Overwriting Strategy, the Fund will use cash flows
from shareholder purchase activity to maintain, to the extent feasible, the
correlation between its holdings of S&P 500 Index Securities and the S&P 500
Index.
INVESTMENTWIZARD FUND RISKS
- ---------------------------
MARKET RISK. The net asset value of the InvestmentWizard Fund can be
expected to fluctuate based on changes in the value of the securities in which
the Fund invests. The stock market is generally susceptible to volatile
fluctuations in market price. Market prices of the equity securities in which
the Fund invests may be adversely affected by an issuer's having experienced
losses or by the lack of earnings or by the issuer's failure to meet the
market's expectations with respect to new products or services, or even by
factors wholly unrelated to the value or condition of the issuer. The value of
the securities held by the Fund is also subject to the risk that a specific
segment of the stock market does not perform as well as the overall market.
Under any of these circumstances, the value of the Fund's shares and total
return will fluctuate, and your investment may be worth more or less than your
original cost when you redeem your shares.
RELIANCE ON INVESTMENTWIZARD(SM). The success of the Adviser's
investment strategy for the InvestmentWizard Fund is dependent upon the
Adviser's ability to effectively analyze the financial information provided by
INVESTMENTWIZARD(SM). The Fund may not achieve its objective if the Adviser's
analysis of this information is incorrect.
FOREIGN SECURITIES. Investing in foreign securities involves risks not
typically associated directly with investing in U.S. securities. These risks
include fluctuations in exchange rates of foreign currencies; less public
information with respect to issuers of securities; less governmental supervision
of exchanges, issuers, and brokers; lack of uniform accounting and financial
reporting standards. There is also a risk of adverse political, social or
diplomatic developments that affect investment in foreign countries.
MANAGEMENT ORGANIZATION AND CAPITAL STRUCTURE
INVESTMENT ADVISER
Investa, Inc. has been retained under an Investment Advisory Agreement
with Investa Management Co., Inc. (the "Company") on behalf of each Fund to
serve as each Fund's investment adviser, subject to the authority of the Board
of Directors. The Adviser is a privately-held, New York based investment
advisory and money management company, registered as an investment adviser with
the Securities and Exchange Commission. The Adviser manages index option writing
strategies and common stocks for a small group of investors. The Adviser's
principal office is located at 551 Fifth Avenue, New York, New York 10176.
10
<PAGE>
The Adviser developed the Investa Overwriting Strategy, an index option
writing technique with the goal of enhancing the performance and increasing the
income of stock, bond and cash portfolios it manages. Using the Investa
Overwriting Strategy, the Adviser consistently earned honors in the United
States Investing Championships, a contest sponsored by Dr. Norm Zadeh from 1984
to 1995 which required the management of actual (and not hypothetical) client
accounts. The competition was divided into mutual fund, stock, option, option
writing and futures divisions. The Adviser won the option writing division
twice, in 1985 and 1993, placed second twice in 1984 and 1994, and placed third
four times in 1988, 1989, 1991 and 1992, The Adviser did not participate in the
contest in either 1986, 1987 or 1990.
The Adviser provides each Fund with investment advice and supervises
the Fund's management and investment programs and provides investment advisory
facilities and executive and supervisory personnel for managing the investments
and effecting the portfolio transactions of each Fund. The Adviser also
furnishes, at its own expense, all necessary administrative services, office
space, equipment and clerical personnel for servicing the investments of each
Fund. In addition, the Adviser pays the salaries and fees of all officers of the
Company who are affiliated with the Adviser.
PORTFOLIO MANAGERS
DEREK J. HOGGETT has served as the President and Chief Executive of the
Adviser since he founded the Adviser in 1981 (the name of the Adviser was
changed from Hoggett & Company to Investa, Inc. in 1982). Mr. Hoggett is
primarily responsible for the day-to-day implementation of the Investa
Overwriting Strategy and the management of each Fund. In the event that Mr.
Hoggett ceases to be affiliated with the Adviser, the ability of the Adviser to
successfully conduct its business could be adversely affected.
Mr. Hoggett entered the actuarial profession upon graduating from the
University of London with a B.S. in Mathematics (with Honors) in 1968 and soon
developed an interest in investment management. He switched full time to
investment management in 1971. Mr. Hoggett is qualified with the National
Association of Securities Dealers as a Registered Representative, a General
Securities Principal, a Registered Options Principal and a Financial &
Operations Principal. After being employed as a stockbroker with Merrill Lynch
and Rotan Mosle (now a part of Paine Webber), Mr. Hoggett formed the Adviser in
1981. He is a pioneer of on-line investment analysis and databases and in 1983
founded Telescan, Inc., a leading Internet investment database and a
publicly-traded company, where he served as its President until 1986. In 1988,
Mr. Hoggett founded Oz Software, Inc., a publisher of the acclaimed Internet
investment database, INVESTMENTWIZARD(SM).
11
<PAGE>
At various times since the formation of the Adviser, Mr. Hoggett has
been interviewed on a variety of financial issues by several print publications
and television programs, including Nightly Business Report, MacNeil-Lehrer
Newshour, Financial News Network, Texas Business, Texas Monthly, Top Trader
Insight, Financial Services Week, The Robb Report, Houston Business Journal and
USA Today.
SCOTT B. STOKES, who serves with Mr. Hoggett as the Funds' Portfolio
Manager, received a B.S. in Mechanical Engineering and a B.A. in Economics from
Rice University in 1991. He joined the Adviser as a research analyst in 1989.
Mr. Stokes was promoted to Portfolio Manager in 1990, and to Vice President of
the Adviser in 1995.
ADVISORY FEE
Under the Investment Advisory Agreement, each Fund will pay the Adviser
monthly in arrears an annual investment advisory fee equal to 1.0% of the Fund's
average daily net assets. The advisory fee is higher than most comparable mutual
funds since the Adviser will be utilizing the Investa Overwriting Strategy to
enhance returns through Index Option trading. Implementation of the Investa
Overwriting Strategy requires extensive computer simulation to determine the
most profitable strategy available to each Fund in each stage of the market
cycle. Most index mutual funds that use option strategies use them primarily for
hedging purposes.
OTHER EXPENSES
Each Fund pays certain operating expenses directly, including, but not
limited to custodian, audit and legal fees, fees of the independent directors,
costs of printing and mailing prospectuses, statements of additional
information, proxy statements, notices, and reports to shareholders, insurance
expenses, and costs of registering its shares for sale under federal and state
securities laws. See the SAI for a more detailed discussion of independent
director compensation.
ADMINISTRATOR
The Administrator is American Data Services, Inc. ("ADS" or the
"Administrator"), which has its principal office at The Hauppauge Corporate
Center, 150 Motor Parkway, Hauppauge, New York 11788, and is primarily in the
business of providing administrative, fund accounting and stock transfer
services to retail and institutional mutual funds with approximately $6 billion
of total assets through its offices in New York, Denver, Tampa and Los Angeles.
ADS provides all administrative services necessary for each Fund,
subject to the supervision of the Company's Board of Directors.
For the services rendered to each Fund by the Administrator, each Fund
pays the Administrator an annual monthly fee equal to___% of the daily average
net assets of such Fund. Each Fund also pays the Administrator for any
out-of-pocket expenses. In addition, the Administrator serves as each Fund's
transfer agent and performs fund accounting services for which it is paid
separately. For additional information, see "Custodian, Transfer Agent and
Dividend Agent."
12
<PAGE>
DISTRIBUTOR
ADS Distributors, Inc. ("the Distributor"), an affiliate of the
Administrator, has entered into a distribution agreement with the Company to
serve as distributor for each Fund's shares in exchange for an annual
distribution fee equal to $____________. The Distributor will be responsible for
the promotional and advertising expenses related to the distribution of each
Fund's shares and for the printing of all Fund prospectuses used in connection
with the distribution and sale of each Fund's shares. The Distributor will use
its annual fees, together with each Fund's distribution and service plan fees to
pay these expenses and compensate financial intermediaries for providing
distribution assistance with respect to the sale of each Fund's shares. See
"MANAGEMENT OF FUND" in the SAI.
VALUATION OF SHARES
Each Fund computes its respective net asset value (or price per share)
on each day the NYSE is open for business. The calculation is made as of the
regular close of the NYSE (currently 4:00 p.m., New York time).
Fund securities for which market quotations are readily available are
valued at market value. Fund securities for which market quotations are not
considered readily available, are stated at fair value on the basis of
valuations furnished by a pricing service approved by the Board of Directors
which determines valuations for normal and institutional-size trading units of
such securities using methods based on market transactions for comparable
securities and various relationships between securities which are generally
recognized by institutional traders.
Short-term investments held by either Fund that mature in sixty (60)
days or less are valued at amortized cost, which approximates market value. All
other securities and assets are valued at their fair value following procedures
approved by the Board of Directors.
13
<PAGE>
HOW TO PURCHASE SHARES
GENERAL PURCHASE INFORMATION
Shares of each Fund are sold on a continuous basis. The minimum initial
investment in either Fund is $1,000 (except for retirement accounts for which
the minimum is $500). A Fund may waive or reduce its minimum initial investment
from time to time. If funds are received after the close of business, the
purchase will become effective on the next business day. The purchase price paid
for each Fund's shares is the next determined net asset value of the shares
after the order is placed. See "NET ASSET VALUE" herein.
Additional investments of $100 or more may be made at any time by
purchasing shares of the Fund at net asset value by mailing a check to the
appropriate Fund at the address noted under "PURCHASES BY MAIL" or by wiring
monies to the clearing bank as outlined below from the bank with which the
shareholder has an account and which is a member of the Federal Reserve system
with instructions to transmit federal funds by wire to the appropriate Fund.
PURCHASES BY TELEPHONE
To open an account by telephone, call (877) 732-7696 to obtain an
account number and instructions. Information, including the appropriate federal
tax identification number, concerning the account will be taken over the phone.
Subject to acceptance by the Transfer Agent, shares of each Fund may be
purchased by wiring immediately available federal funds (subject to the minimum
investment) to The Chase Manhattan Bank from your bank, which may charge a fee
for doing so (see instructions below). You should provide your bank with the
following information for purposes of wiring your investment:
The Chase Manhattan Bank
Huntington, New York
ABA# 021000021
Account# _______________
F/B/O Super Index Fund
AND/OR
F/B/O InvestmentWizard Fund
Shareholder Account #
You are required to mail a signed application to the Transfer Agent at
the address listed below in order to complete your initial wire purchase. Wire
orders will be accepted only on a day on which the Fund whose shares are being
purchased or on days the Custodian and the Transfer Agent are open for business.
A wire purchase will not be considered made until the wired money is received by
the Fund. There is presently no fee for the receipt of wired funds, but each
Fund reserves the right to charge shareholders for this service.
14
<PAGE>
PURCHASES BY MAIL
Subject to acceptance by the Transfer Agent, an account may be opened
by completing and signing an account application and mailing it to the
appropriate Fund at the address noted below, together with a check (subject to
the Fund's minimum investment) payable to either:
Super Index Fund AND/OR InvestmentWizard Fund
c/o American Data Services, Inc.
P.O. Box 5536
Hauppauge, NY 11788-0132
Payment for the purchase of shares received by mail will be credited to
your account at the net asset value per share next determined after receipt.
Such payment need not be converted into federal funds (monies credited to a
Fund's custodian bank by a Federal Reserve Bank) before acceptance by the Fund's
Transfer Agent. In the event that there are insufficient funds to cover a check,
such prospective investor will be assessed a $15.00 charge.
All purchases of each Fund's shares will be made in full and fractional
shares calculated to three decimal places. Neither Fund will issue stock
certificates evidencing ownership of its shares, except upon request by the
shareholder.
HOW TO REDEEM SHARES
GENERAL REDEMPTION INFORMATION
Your shares will be redeemed at the net asset value next determined
after receipt of your instructions in "good order" as explained below. Each
Fund's net asset value will fluctuate on a daily basis.
To redeem your shares, you may either contact the Fund's Administrator
with an oral request or send a written request directly to the Transfer Agent.
This request should contain: the dollar amount or number of shares to be
redeemed, your Fund account number and either a social security or tax
identification number (as applicable). You should sign your request in exactly
the same way the account is registered. If there is more than one owner of the
shares, all owners must sign. A signature guarantee is required for redemptions
over $5,000. Please contact the Transfer Agent or refer to the SAI for more
details.
Shares of each Fund may be redeemed by mail, or, if authorized, by
telephone. The value of shares redeemed may be more or less than the purchase
price, depending on the market value of the investment securities held by each
Fund.
15
<PAGE>
BY MAIL
Each Fund will redeem its shares at the net asset value next determined
after the request is received in "good order." Requests should be addressed to:
Investa Management Co., Inc./Super Index Fund and/or InvestmentWizard Fund (as
the case may be), c/o American Data Services, Inc., P.O. Box 5536, Hauppauge, NY
11788-0132.
Requests in "good order" must include the following documentation:
(a) a letter of instruction specifying the number of shares or
dollar amount to be redeemed, signed by all registered owners
of the shares in the exact names in which they are registered;
(b) any required signature guarantees (see "SIGNATURE GUARANTEES"
below); and
(c) other supporting legal documents, if required, in the case of
estates, trusts, guardianships, custodianships, corporations,
pension and profit sharing plans and other organizations.
SIGNATURE GUARANTEES
To protect your account, each Fund and the Transfer Agent from fraud,
signature guarantees are required to enable each Fund to verify the identity of
the person who has authorized a redemption of $5,000 or more from an account.
Signature guarantees are required for (1) redemptions where the proceeds are to
be sent to someone other than the registered shareholder(s) and/or the
registered address, and (2) share transfer requests. Signature guarantees may be
obtained from certain eligible financial institutions, including but not limited
to, the following: banks, trust companies, credit unions, securities brokers and
dealers, savings and loan associations and participants in the Securities
Transfer Association Medallion Program ("STAMP"), the Stock Exchange Medallion
Program ("SEMP") or the New York Stock Exchange Medallion Signature Program
("MSP"). Shareholders may contact either Fund at (877) 732-7696 for further
details.
BY TELEPHONE
If the Telephone Redemption Option has been authorized, you may redeem
your shares by calling the Fund and requesting that the redemption proceeds be
mailed to the primary registration address or wired per the authorized
instructions. Provided that the Transfer Agent employs reasonable procedures to
confirm that the instructions are genuine, you bear the risk of loss in the
event of unauthorized instructions reasonably believed by the Fund or its
Transfer Agent to be genuine. The procedures employed by the Funds in connection
with transactions initiated by telephone may include tape recording of telephone
instructions and requiring some form of personal identification prior to acting
upon instructions received by telephone.
16
<PAGE>
PAYMENT OF REDEMPTION PROCEEDS
After your shares have been redeemed, proceeds will normally be mailed
within three (3) business days. In no event will payment be made more than seven
(7) days after receipt of your order in "good order", except that payment may be
postponed or the right of redemption suspended for more than seven (7) days
under unusual circumstances, such as when trading is not taking place on the
NYSE. Payment of redemption proceeds may also be delayed if the shares to be
redeemed were purchased by a check drawn on a bank which is not a member of the
Federal Reserve System until such time as the check has cleared the banking
system (normally up to fifteen (15) days from the purchase date).
If the Board of Directors determines that it would be detrimental to the
best interests of the remaining shareholders of either Fund to make a payment,
wholly or partly in cash, the Fund may pay the redemption proceeds in whole or
in part by a distribution in-kind of readily marketable securities held by the
Fund in lieu of cash in conformity with applicable rules of the SEC. Investors
generally will incur brokerage charges on the sale of either Fund's securities
so received in payment of redemptions.
INVOLUNTARY REDEMPTION
Each Fund reserves the right to redeem your account at any time the net
asset value of the account falls below $500 as a result of a redemption or
exchange request. You will be notified in writing prior to any such redemption
and will be allowed thirty (30) days to make additional investments before the
redemption is processed.
SHAREHOLDER SERVICES
We offer several shareholder service options to make your account
easier to manage which are listed on the account application. Please make note
of these options and select the ones that are appropriate for you.
AUTOMATIC INVESTMENT PROGRAM
You may arrange to make additional automated purchases of each Fund's
shares. You can automatically transfer $100 or more per month from your bank,
savings and loan or other financial institution to purchase additional shares.
You should contact the Administrator or the Transfer Agent to obtain
authorization forms or for additional information.
TAX-QUALIFIED RETIREMENT PLANS
Both Funds are available for your tax-deferred retirement plan. Call or
write us and request the appropriate forms for:
17
<PAGE>
|_| Individual Retirement Accounts ("IRAs"), Simple IRAs and Roth IRAs;
|_| 403(b) plans for employees of public school systems and non-profit
organizations;
|_| 401(k) Plans; or
|_| Profit-sharing plans and pension plans for corporations and other
employees.
You can also transfer your tax-deferred plan to us from another company
or custodian. Call or write the Administrator for a "REQUEST TO TRANSFER" form.
CONFIRMATION OF TRANSACTIONS AND REPORTING OF OTHER INFORMATION
Each Fund will mail you confirmations of all of your purchases or
redemptions of Fund shares. In addition, you will also receive account
statements on a quarterly basis from the Transfer Agent. You will also receive
various IRS forms after the first of each year detailing important tax
information and each Fund is required to supply annual and semi-annual reports
that list securities held by that Fund and include its then current financial
statements.
DIVIDENDS AND DISTRIBUTIONS
Each Fund will distribute its net investment income, if any, and net
realized capital gains, if any, annually. Distributions from capital gains are
made after applying any available capital loss carryovers.
As a shareholder in either Fund, you can choose from three distribution
options:
-- Reinvest all distributions in additional shares;
-- Receive distributions from net investment income in cash while
reinvesting capital gains distributions, if any, in additional
shares; or
-- Receive all distributions in cash.
You can change your distribution option by notifying the Fund in
writing. If you do not select an option when you open your account, all
distributions will be reinvested in additional shares of the Fund at net asset
value. You will receive a statement confirming reinvestment of distributions in
additional shares promptly following the end of each calendar year.
If a check representing a distribution is not cashed within a
specified period, the Transfer Agent will notify you that you have the option of
requesting another check or reinvesting the distribution in either Fund. If the
Transfer Agent does not receive your election, the distribution will be
reinvested in the Fund in which you were invested at the then-current net asset
value per share. Similarly, if correspondence sent by the Fund or the Transfer
Agent is returned as "undeliverable," all Fund distributions will automatically
be reinvested in the Fund in which you were invested.
18
<PAGE>
DISTRIBUTION AND SERVICE PLAN
The Funds have each adopted a Distribution and Service Plan (the
"Plan") pursuant to Rule 12b-1 of the Investment Company Act of 1940 (the
"Rule"). The Rule provides that an investment company which bears any direct or
indirect expense of distributing its shares must do so only in accordance with a
plan permitted by the Rule. The Plans provides that each Fund will compensate
the Distributor by paying the Distributor a monthly fee equal to one-quarter
(0.25%) percent of each Fund's average daily net assets, on an annual basis, to
enable it to provide marketing and promotional support to the Funds, shareholder
servicing and maintaining shareholder accounts and to make payments to
broker-dealers and other financial institutions with which it has written
agreements and whose clients are shareholders of the Fund for providing
distribution assistance. Fees paid under either Plan may not be waived for
individual shareholders. For further information regarding each Plan, see
"SHAREHOLDER SERVICING AND DISTRIBUTION PLAN" in the SAI.
TAX STATUS
Each Fund is treated as a corporation for federal income tax purposes
under the Internal Revenue Code of 1986, as amended. Each Fund intends to
qualify and to elect to be treated as a regulated investment company. If so
qualified, the Funds will not be liable for federal income taxes to the extent
they distribute taxable income to shareholders.
Distributions by the Funds are generally taxable to shareholders as
ordinary income. Interest income from direct investment by noncorporate
taxpayers in United States Government obligations (but not repurchase
agreements) generally is not subject to state taxation. However, some states may
tax mutual fund dividends attributable to such income.
Any redemption of either Fund's shares is a taxable event that may
result in a capital gain or loss.
For a more detailed discussion of the federal income tax consequences
of investing in shares of the Funds, see "TAXATION" in the SAI. Before investing
in either Fund, you should consult your tax adviser regarding the consequences
of your local and state tax laws.
PERFORMANCE INFORMATION
Each Fund's investment performance may, from time to time, be included
in advertisements about such Fund. "Total Return" for the one (1), five (5) and
ten (10) year periods (or for the life of each Fund, if shorter) through the
most recent quarter represents the average annual compounded rate of return on
an investment of $1,000 in each Fund invested at the public offering price.
Total return may also be presented for other periods.
19
<PAGE>
All performance data is based on each Fund's past investment results
and does not predict future performance. Investment performance, which will
vary, is based on many factors, including market conditions, the composition of
each Fund's portfolio and each Fund's operating expenses. Investment performance
also often reflects the risks associated with each Fund's investment objective
and policies. These factors should be considered when comparing the Funds'
investment results to those of other mutual funds and other investment vehicles.
Quotation of investment performance for any period when a fee waiver or expense
limitation was in effect will be greater than if the waiver or limitation had
not been in effect. A Fund's performance may be compared to other mutual funds,
relevant indices and rankings prepared by independent services. See the SAI.
GENERAL INFORMATION
GENERAL
The Super Index Fund and InvestmentWizard Fund are each a series of
Investa Management Co., Inc., a Maryland corporation.
YEAR 2000 COMPLIANCE
As January 1, 2000 approaches, an issue has emerged regarding whether
existing application software programs and operating systems can accommodate
this date value ("Year 2000 Problem"). Failure to adequately address this issue
could have potentially serious repercussions. The Adviser is in the process of
working with each Fund's service providers to prepare for the year 2000. Based
on information currently available, the Adviser does not expect that either Fund
will incur significant operating expenses or be required to incur material costs
to be year 2000 compliant. Although the Adviser does not anticipate that the
Year 2000 Problem will have a material impact on each Fund's ability to provide
service at current levels, there can be no assurance that steps taken in
preparation for the year 2000 will be sufficient to avoid any adverse impact on
either Fund.
CUSTODIAN, TRANSFER AGENT AND DIVIDEND AGENT
Star Bank, N.A. serves as custodian for each Fund's cash and
securities. The Custodian does not assist in, and is not responsible for,
investment decisions involving assets of either Fund. American Data Services,
Inc., the Administrator, also acts as each Fund's transfer and dividend agent.
Each Fund pays the Administrator the greater of $900 per month or $9.00 per year
per account, plus out-of-pocket expenses for rendering such transfer and
dividend agency services.
20
<PAGE>
COUNSEL AND INDEPENDENT AUDITORS
Legal matters in connection with the Company, including the issuance of
shares of common stock of each Fund, are passed upon by Spitzer & Feldman P.C.,
405 Park Avenue, New York, New York 10022. __________________________, have been
selected as independent accountants for each Fund.
21
<PAGE>
FOR MORE INFORMATION
INVESTA MANAGEMENT CO., INC.
SUPER INDEX FUND INVESTMENTWIZARD FUND
SEC FILE NUMBER ___-_______ SEC FILE NUMBER ___-_______
More Information on either of these Funds is available free upon request,
including the following:
ANNUAL AND SEMIANNUAL REPORTS
Describes each Fund's performance, lists each Fund's holdings and contains a
letter from the Fund's Adviser discussing recent market conditions, economic
trends and strategies that significantly affect a particular Fund's performance.
STATEMENT OF ADDITIONAL INFORMATION (SAI)
Provides more details about each Fund and its policies. A current SAI is on file
with the Securities and Exchange Commission (SEC) and is incorporated by
reference herein (and is legally considered part of this prospectus).
TO OBTAIN INFORMATION:
BY TELEPHONE: BY E-MAIL:
- ------------- ----------
(877) 732-7696 Send your request to _________.com
BY MAIL:
- --------
Super Index Fund and/or InvestmentWizard Fund
c/o American Data Services, Inc.
The Hauppauge Corporate Center
150 Motor Parkway
Hauppauge, New York 11588
ON THE INTERNET:
- ----------------
Text only versions of Fund documents can be viewed online or downloaded from
SECURITIES AND EXCHANGE COMMISSION: http://www.sec.gov
- ----------------------------------- -----------
You can also obtain copies by visiting the SEC's Public Reference Room in
Washington D.C. (phone at (1) (800) SEC-0331) or by sending your request and a
duplicating fee to the SEC's Public Reference Section, Washington, DC
20549-6009.
22
<PAGE>
INVESTA MANAGEMENT CO., INC.
SUPER INDEX FUND
INVESTMENTWIZARD FUND
STATEMENT OF ADDITIONAL INFORMATION
_____________, 1999
TABLE OF CONTENTS
PAGE
----
Investment Objective, Policies and Restrictions................................2
Directors and Executive Officers..............................................11
Investment Advisory and Other Services........................................13
Shareholder Servicing & Distribution Plan.....................................15
Portfolio Transactions and Allocation of Brokerage............................15
Taxation......................................................................16
Voting and Ownership of Shares................................................17
Purchase of Shares............................................................17
Dividends and Distributions...................................................18
Net Asset Value ..............................................................18
Performance Comparisons.......................................................19
Redemption of Shares..........................................................19
Counsel and Independent Auditors..............................................19
Other Information.............................................................20
This Statement of Additional Information is not a prospectus, and it should be
read in conjunction with the Prospectus dated _________, 1999, as may be amended
from time to time, of the Super Index Fund and the InvestmentWizard Fund,
individually or collectively, a "Fund" or the "Funds"), each a series of Investa
Management Co., Inc. (the "Company"). Investa, Inc. (the "Adviser") is the
investment adviser to each Fund. A copy of the Prospectus for these Funds may be
obtained from each Fund by writing c/o American Data Services, Inc., The
Hauppauge Corporate Center, 150 Motor Parkway, Hauppauge, New York 11788 or by
calling (516) 951-0500.
<PAGE>
INVESTMENT OBJECTIVE, POLICIES, AND RESTRICTIONS
The investment objective of the Super Index Fund is to provide
investors with annual returns that exceed the annual returns of the Standard &
Poor's 500 Composite Market Index (the "S&P 500 Index") by investing in a
diversified portfolio of the common stock of each of the companies comprising
the S&P 500 Index and implementing the Investa Overwriting Strategy which
involves the writing and/or buying of certain index options, as described in the
Prospectus, that have a direct correlation to the S&P 500 Index ("Index
Options") according to a proprietary quantitative investment model developed by
the Adviser.
The investment objective of the InvestmentWizard Fund is to provide
investors with above-average long-term capital appreciation by investing in the
equity securities of U.S. and non-U.S. companies according to the Adviser's
analysis of financial information provided to the Adviser by
INVESTMENTWIZARD(SM), an interactive Internet database developed by the Adviser.
The discussion below supplements the information contained in the
Prospectus with respect to the investment policies and the primary risks that
are common to both the Super Index Fund and the InvestmentWizard Fund as well as
risks which are particular to each Fund as a result of each Fund's specific
investment objective and strategies. As all investment securities are subject to
inherent market risks and fluctuations in value due to earnings, economic and
political conditions and other factors, neither Fund can give any assurance that
its investment objective will be achieved.
INVESTMENT POLICIES AND ASSOCIATED RISKS
----------------------------------------
The following paragraphs provide a more detailed description of the
investment policies and their associated risks identified in the Prospectus.
Unless otherwise noted, the policies described in this Statement of Additional
Information are not fundamental and may be changed by the Board of Directors.
MUTUAL FUNDS AS PART OF AN INVESTMENT PROGRAM. Neither the Super Index
Fund nor the InvestmentWizard Fund, individually or collectively, constitutes a
balanced or complete investment program and the net asset value of each Fund's
shares will fluctuate based on the value of the securities held by each Fund.
The Funds are both subject to the general risks and considerations associated
with equity investing as well as additional risks and restrictions discussed
herein.
EQUITY INVESTING. An investment in either of the Super Index Fund or
the InvestmentWizard Fund should be made with an understanding of the risks
inherent in an investment in equity securities, including the risk that the
general condition of the stock market may deteriorate. Common stocks are
susceptible to general stock market fluctuations and to volatile increases and
decreases in value according to various unpredictable factors including
expectations regarding government, economic, monetary and fiscal policies,
inflation and interest rates, economic expansion or contraction and global or
regional political, economic and banking crises. A decline in the general market
value of the equity securities held by either of these Funds may result in an
adverse effect on the value of your investment. There can be no assurances that
either Fund will be able to absorb (without significant loss of a portion of
your investment), the potentially negative effects of such market decline.
CONVERTIBLE SECURITIES AND WARRANTS. The InvestmentWizard Fund may
invest in convertible securities and warrants. A convertible security is a fixed
income security (a debt instrument or a preferred stock) which may be converted
at a stated price within a specified period of time into a certain quantity of
the common stock of the same or a different issuer. Convertible securities are
senior to common stocks in an issuer's capital structure, but are usually
subordinated to similar non-convertible securities. While providing a fixed
income stream (generally higher in yield than the income derivable from common
stock but lower than that afforded by a similar nonconvertible security), a
convertible security also gives an investor the opportunity, through its
conversion feature, to participate in the capital appreciation of the issuing
company depending upon a market price advance in the convertible security's
underlying common stock.
2
<PAGE>
A warrant gives the holder a right to purchase at any time during a
specified period a predetermined number of shares of common stock at a fixed
price. Unlike convertible debt securities or preferred stock, warrants do not
pay a fixed dividend. Investments in warrants involve certain risks, including
the possible lack of a liquid market for resale of the warrants, potential price
fluctuations as a result of speculation or other factors, and failure of the
price of the underlying security to reach or have reasonable prospects of
reaching a level at which the warrant can be prudently exercised (in which event
the warrant may expire without being exercised, resulting in a loss of the
Fund's entire investment therein).
STANDARD & POOR'S DEPOSITARY RECEIPTS AND DIAMONDS
Each of the Super Index Fund and the InvestmentWizard Fund may invest
in Standard & Poor's Depositary Receipts ("SPDRs"). SPDRs are units of
beneficial interest in an investment trust sponsored by a wholly-owned
subsidiary of the American Stock Exchange, Inc. (the "Exchange")which represent
proportionate undivided interests in a portfolio of securities consisting of
substantially all of the common stocks, in substantially the same weighting, as
the component common stocks of the Standard & Poor's 500 Stock Index (the "S&P
500 Index"). SPDRs are listed on the Exchange and traded in the secondary market
on a per-SPDR basis.
The Funds may also invest in DIAMONDS. DIAMONDS are units of beneficial
interest in an investment trust representing proportionate undivided interests
in a portfolio of securities consisting of all the component common stocks of
the Dow Jones Industrial Average (the "DJIA"). DIAMONDS are listed on the
Exchange and may be traded in the secondary market on a per-DIAMONDS basis.
SPDRs are designed to provide investment results that generally
correspond to the price and yield performance of the component common stocks of
the S&P 500 Index. DIAMONDS are designed to provide investors with investment
results that generally correspond to the price and yield performance of the
component common stocks of the DJIA. The value of both SPDRs and DIAMONDS are
subject to change as the values of their respective component common stocks
fluctuate according to the volatility of the market. Investments in SPDRs and
DIAMONDS involve certain inherent risks generally associated with investments in
a broadly based portfolio of common stocks, including the risk that the general
level of stock prices may decline, thereby adversely affecting the value of each
unit of SPDRs and/or DIAMONDS invested in by the Funds. Moreover, the Funds'
investment in SPDRs and DIAMONDS may not exactly match the performance of a
direct investment in the respective indices to which they are intended to
correspond. For example, replicating and maintaining price and yield performance
of an index may be problematic for each of the Funds due to transaction costs
and other Fund expenses. Additionally, the respective investment trusts may not
fully replicate the performance of their respective benchmark indices due to the
temporary unavailability of certain index securities in the secondary market or
due to other extraordinary circumstances such as discrepancies between each of
the trusts and the indices with respect to the weighting of securities or the
number of, for example, larger capitalized stocks held by an index and each of
the Funds. Under these type circumstances, the value of the SPDRs or DIAMONDS
held by each of the Funds will have a negative impact on the net asset value of
the trusts.
FOREIGN INVESTMENTS AND CURRENCIES
The InvestmentWizard Fund may invest in securities of foreign issuers,
provided that they are publicly traded in the United States. Such investments
include the following:
AMERICAN DEPOSITARY RECEIPTS. The InvestmentWizard Fund may invest in
American Depositary Receipts ("ADRs") or other forms of depositary receipts.
ADRs are receipts typically issued in connection with a U.S. bank or trust
company which evidence ownership of underlying securities issued by a foreign
corporation. Investments in these types of foreign securities involve certain
inherent risks generally associated with investments in foreign securities,
including the following:
3
<PAGE>
POLITICAL AND ECONOMIC FACTORS. Individual foreign economies of certain
countries may differ favorably or unfavorably from the United States' economy in
such respects as growth of gross national product, rate of inflation, capital
reinvestment, resource self-sufficiency, diversification and balance of payments
position. The internal politics of certain foreign countries may not be as
stable as those of the United States. Governments in certain foreign countries
also continue to participate to a significant degree, through ownership interest
or regulation, in their respective economies. Action by these governments could
include restrictions on foreign investment, nationalization, expropriation of
goods or imposition of taxes, and could have a significant effect on market
prices of securities and payment of interest. The economies of many foreign
countries are heavily dependent upon international trade and are accordingly
affected by the trade policies and economic conditions of their trading
partners. Enactment by these trading partners of protectionist trade legislation
could have a significant adverse effect upon the securities markets of such
countries.
CURRENCY FLUCTUATIONS. The InvestmentWizard Fund may invest in
securities denominated in foreign currencies. Accordingly, a change in the value
of any such currency against the U.S. dollar will result in a corresponding
change in the U.S. dollar value of the Fund's assets denominated in that
currency. Such changes will also affect the Fund's income. The value of the
Fund's assets may also be affected significantly by currency restrictions and
exchange control regulations enacted from time to time.
TAXES. The interest and dividends payable on certain of this Fund's
foreign portfolio securities may be subject to foreign withholding taxes, thus
reducing the net amount of income available for distribution to the Fund's
shareholders.
SHORT-TERM INVESTMENTS. While seeking desirable equity mutual fund
investments or common stocks whose price history and expected performance lend
themselves to the Adviser's method for investment or for liquidity or temporary
defensive purposes, each of the Super Index Fund and the InvestmentWizard Fund
may invest in money market funds and/or money market instruments consisting of
the following:
BANK CERTIFICATES OF DEPOSIT AND BANKERS' ACCEPTANCES. Either Fund may
acquire certificates of deposit, bankers' acceptances and time deposits.
Certificates of deposit are negotiable certificates issued against funds
deposited in a commercial bank for a definite period of time and earning a
specified return. Bankers' acceptances are negotiable drafts or bills of
exchange, normally drawn by an importer or exporter to pay for specific
merchandise, which are "accepted" by a bank, meaning in effect that the bank
unconditionally agrees to pay the face value of the instrument on maturity.
Certificates of deposit and bankers' acceptances acquired by either of the Funds
will be dollar-denominated obligations of domestic banks or financial
institutions which at the time of purchase have capital, surplus and undivided
profits in excess of $100 million (including assets of both domestic and foreign
branches), based on latest published reports, or less than $100 million if the
principal amount of such bank obligations are fully insured by the U.S.
Government.
Domestic banks are subject to different governmental regulations with
respect to the amount and types of loans which may be made and interest rates
which may be charged. In addition, the profitability of the banking industry
depends largely upon the availability and cost of funds for the purpose of
financing lending operations under prevailing money market conditions. General
economic conditions as well as exposure to credit losses arising from possible
financial difficulties of borrowers play an important part in the operations of
the banking industry.
As a result of federal and state laws and regulations, domestic banks
are, among other things, required to maintain specified levels of reserves,
limited in the amount which they can loan to a single borrower, and subject to
other regulations designed to promote financial soundness.
GOVERNMENT OBLIGATIONS. Each of the Super Index Fund and the
InvestmentWizard Fund may invest in U.S. Government obligations. Such
obligations include Treasury bills, certificates of indebtedness, notes and
bonds, and issues of such entities as the Government National Mortgage
Association ("GNMA"), Export-Import Bank of the United States, Tennessee Valley
Authority, Resolution Funding Corporation, Farmers Home Administration, Federal
Home Loan Banks, Federal Intermediate Credit Banks, Federal Farm Credit Banks,
Federal Land Banks, Federal Housing Administration, Federal National Mortgage
Association ("FNMA"), Federal Home Loan Mortgage Corporation, and the Student
Loan Marketing Association.
4
<PAGE>
Certain of these obligations, such as those of the GNMA, are supported
by the full faith and credit of the U.S. Treasury; others, such as those of the
Export-Import Bank of United States, are supported by the right of the issuer to
borrow from the Treasury; others, such as those of the FNMA, are supported by
the discretionary authority of the U.S. Government to purchase the agency's
obligations; still others, such as those of the Student Loan Marketing
Association, are supported only by the credit of the instrumentality. No
assurance can be given that the U.S. Government would provide financial support
to U.S. Government-sponsored instrumentalities if it is not obligated to do so
by law.
USE AND RELIANCE ON INVESTMENTWIZARD(SM). The Adviser will seek to
enhance the performance of the InvestmentWizard Fund by utilizing financial
information provided by INVESTMENTWIZARD(SM), an interactive Internet database
of Wall Street analysts' opinions, corporate insider activity and signals
generated by technical indicators on stocks and indices. The Adviser will select
securities for the Fund based on its investment skill and on its analysis of the
analysts' opinions and insider activity on INVESTMENTWIZARD(SM) and on its
analysis of the track record of technical indicators that generate signals on
stocks and indices.
The success of the Adviser's investment strategy for the
InvestmentWizard Fund is dependent upon (i) the reliability and accuracy of the
financial information provided through INVESTMENTWIZARD(SM) and (ii) the
Adviser's ability to analyze this information and effectively exploit its
analysis to achieve the Fund's objective. There is no guarantee that the
financial information provided on INVESTMENTWIZARD(SM) will be reliable or
accurate, that the Adviser's analysis will lead to the successful implementation
of the Fund's investment strategy or that the Fund will achieve its investment
objective.
INVESTA OVERWRITING STRATEGY. A fundamental aspect of the investment
strategies of both the Super Index Fund and the InvestmentWizard Fund is the
enhancement of fund performance by utilizing a proprietary quantitative
investment model, the "Investa Overwriting Strategy", which was developed by the
Adviser in 1984 for use in the management of its private accounts. Through the
Adviser's trading of Index Options, the Investa Overwriting Strategy seeks to
capitalize on profit opportunities created by the fact that the U.S. stock
markets have, over the long term, generally traded in relatively narrow ranges
and the willingness of option buyers to pay a premium for the leverage that
options provide. By strategically writing and/or buying Index Options in
accordance with the Investa Overwriting Strategy, the Adviser believes that it
will be able to achieve its investment goal of enhancing the overall annual
return of each Fund. The success of the Investa Overwriting Strategy depends on
the Adviser's ability to correctly predict, identify and exploit these
opportunities.
Each of the Funds will receive premiums when it writes Index Options.
The buyers of these Index Options will have the right to exercise those Index
Options and acquire the cash equivalent of the underlying securities from (if a
call Option) or sell the cash equivalent of the underlying securities to (if a
put Option) a Fund at the predetermined option exercise price. The success of
the Investa Overwriting Strategy depends on the Fund receiving option
overwriting premium income on opening transactions that exceeds the option
premium the Fund pays on closing transactions and does not depend on the profit
or loss of the underlying securities. Most mutual funds that use option
strategies to hedge portfolio positions do not depend solely on the option
profit or loss to justify the use of options, because such funds also take into
account the profit or loss of the underlying securities. A more detailed
discussion of writing covered and uncovered options on securities generally and
the investment risks associated with such investments is set forth below.
WRITING COVERED OPTIONS ON SECURITIES. Each of the Super Index Fund and
the InvestmentWizard Fund may write covered call options and covered put options
on optionable securities held in its portfolio, when in the opinion of the
Adviser such transactions are consistent with either Fund's investment objective
and policies. Call options written by a Fund gives the purchaser the right to
buy the underlying securities from the Fund at a stated exercise price; put
options give the purchaser the right to sell the underlying securities to the
Fund at a stated price.
Either Fund may write only covered options, which means that, so long
as the Fund is obligated as the writer of a call option, it will own the
underlying securities subject to the option (or comparable securities satisfying
the cover requirements of securities exchanges). In the case of put options, the
Fund will hold cash and/or high-grade short-term debt obligations equal to the
price to be paid if the option is exercised. In addition, the Fund will be
considered to have covered a put or call option if and to the extent that it
holds an option that offsets some or all of the risk of the option it has
written. The Fund may write combinations of covered puts and calls on the same
underlying security.
5
<PAGE>
Both Funds will receive a premium from writing a put or call option,
which increases each of the Fund's return on the underlying security in the
event the option expires unexercised or is closed out at a profit. The amount of
the premium reflects, among other things, the relationship between the exercise
price and the current market value of the underlying security, the volatility of
the underlying security, the amount of time remaining until expiration, current
interest rates, and the effect of supply and demand in the options market and in
the market for the underlying security. By writing a call option, the Funds
limit their opportunity to profit from any increase in the market value of the
underlying security above the exercise price of the option but continues to bear
the risk of a decline in the value of the underlying security. By writing a put
option, the Funds assume the risk that they may be required to purchase the
underlying security for an exercise price higher than its then-current market
value, resulting in a potential capital loss unless the security subsequently
appreciates in value.
Either Fund may terminate an option that it has written prior to its
expiration by entering into a closing purchase transaction, in which it
purchases an offsetting option. A Fund realizes a profit or loss from a closing
transaction if the cost of the transaction (option premium plus transaction
costs) is less or more than the premium received from writing the option. If a
Fund writes a call option but does not own the underlying security, and when it
writes a put option, the Fund may be required to deposit cash or securities with
its broker as "margin," or collateral, for its obligation to buy or sell the
underlying security. As the value of the underlying security varies, the Funds
may have to deposit additional margin with the broker. Margin requirements are
complex and are fixed by individual brokers, subject to minimum requirements
currently imposed by the Federal Reserve Board and by stock exchanges and other
self-regulatory organizations.
PURCHASING CALL OPTIONS. Each of the Super Index Fund and the
InvestmentWizard Fund may purchase call options to hedge against an increase in
the price of securities that a Fund wants ultimately to buy. Such hedge
protection is provided during the life of the call option since the Fund, as
holder of the call option, is able to buy the underlying security at the
exercise price regardless of any increase in the underlying security's market
price. In order for a call option to be profitable, the market price of the
underlying security must rise sufficiently above the exercise price to cover the
premium and transaction costs.
RISK FACTORS IN OPTIONS TRANSACTIONS. The successful use of the Funds'
option strategies depends on the ability of the Adviser to forecast correctly
interest rate and market movements. For example, if a Fund were to write a call
option based on the Adviser's expectation that the price of the underlying
security would fall, but the price were to rise instead, the Fund could be
required to sell the security upon exercise at a price below the current market
price. Similarly, if a Fund were to write a put option based on the Adviser's
expectation that the price of the underlying security would rise, but the price
were to fall instead, the Fund could be required to purchase the security upon
exercise at a price higher than the current market price.
When either the Super Index Fund or the InvestmentWizard Fund purchases
an option, it runs the risk that it will lose its entire investment in the
option in a relatively short period of time, unless the Fund exercises the
option or enters into a closing sale transaction before the option's expiration.
If the price of the underlying security does not rise (in the case of a call) or
fall (in the case of a put) to an extent sufficient to cover the option premium
and transaction costs, the Fund will lose part or all of its investment in the
option. This contrasts with an investment by the Fund in the underlying
security, since the Fund will not realize a loss if the security's price does
not change.
The effective use of options also depends on the Funds' ability to
terminate option positions at times when the Adviser deems it desirable to do
so. There is no assurance that either Fund will be able to effect closing
transactions at any particular time or at an acceptable price.
6
<PAGE>
If a secondary market in options were to become unavailable, neither
the Super Index Fund nor the InvestmentWizard Fund could engage in closing
transactions. Lack of investor interest might adversely affect the liquidity of
the market for particular options or series of options. A market may discontinue
trading of a particular option or options generally. In addition, a market could
become temporarily unavailable if unusual events -- such as volume in excess of
trading or clearing capability -- were to interrupt its normal operations.
A market may at times find it necessary to impose restrictions on
particular types of options transactions, such as opening transactions. For
example, if an underlying security ceases to meet qualifications imposed by the
market or the Options Clearing Corporation, new series of options on that
security will no longer be opened to replace expiring series, and opening
transactions in existing series may be prohibited. If an options market were to
become unavailable, the Fund as a holder of an option would be able to realize
profits or limit losses only by exercising the option, and the Fund, as option
writer, would remain obligated under the option until expiration or exercise.
Disruptions in the markets for the securities underlying options
purchased or sold by either of the Funds could result in losses on the options.
If trading is interrupted in an underlying security, the trading of options on
that security is normally halted as well. As a result, a Fund as purchaser or
writer of an option would be unable to close out its positions until options
trading resumes, and it may be faced with considerable losses if trading in the
security reopens at a substantially different price. In addition, the Options
Clearing Corporation or other options markets may impose exercise restrictions.
If a prohibition on exercise is imposed at the time when trading in the option
has also been halted, a Fund as purchaser or writer of an option will be locked
into its position until one of the two restrictions has been lifted. If the
Options Clearing Corporation were to determine that the available supply of an
underlying security appears insufficient to permit delivery by the writers of
all outstanding calls in the event of exercise, it may prohibit indefinitely the
exercise of put options. A Fund, as holder of such a put option, could lose its
entire investment if the prohibition remained in effect until the put option's
expiration.
Over-the-counter ("OTC") options purchased by either Fund and assets
held to cover OTC options written by a Fund may, under certain circumstances, be
considered illiquid securities for purposes of any limitation on the Fund's
ability to invest in illiquid securities.
INDEX FUTURES CONTRACTS. An index futures contract is a contract to buy
or sell units of an index at a specified future date at a price agreed upon when
the contract is made. Entering into a contract to buy units of an index is
commonly referred to as buying or purchasing a contract or holding a long
position in the index. Entering into a contract to sell units of an index is
commonly referred to as selling a contract or holding a short position. A unit
is the current value of the index. Each Fund may enter into stock index futures
contracts related to the S&P 500 Index in furtherance of its investment
objective. The Fund may also purchase and sell options on index futures
contracts as those contracts relate to the S&P 500 Index.
For example, the S&P 500 Index is composed of 500 selected common
stocks, most of which are listed on the New York Stock Exchange. The S&P 500
Index assigns relative weightings to the common stocks included in the Index,
and the value fluctuates with changes in the market values of those common
stocks. In the case of the S&P 500 Index, contracts are to buy or sell 500
units. Thus, if the value of the S&P 500 Index were $150, one contract could be
worth $75,000 (500 units x $150). The stock index futures contract specifies
that no delivery of the actual stocks making up the index will take place.
Instead, settlement in cash must occur upon the termination of the contract,
with the settlement being the difference between the contract price and the
actual level of the stock index at the expiration of the contract. For example,
if the Fund enters into a futures contract to buy 500 units of the S&P 500 Index
at a specified future date at a contract price of $150 and the S&P 500 Index is
at $154 on that future date, the Fund will gain $2,000 (500 units x gain of $4).
If the Fund enters into a futures contract to sell 500 units of the stock index
at a specified future date at a contract price of $150 and the S&P 500 Index is
at $152 on that future date, the Fund will lose $1,000 (500 units x loss of $2).
There are several risks in connection with the use by a Fund of index
futures. One risk arises because of the imperfect correlation between movements
in the prices of the index futures and movements in the prices of securities
which are the subject of the hedge. The Adviser will, however, attempt to reduce
this risk by buying or selling, to the extent possible, futures on the S&P 500
Index which will, in its judgment, have a significant correlation with movements
in the prices of the securities sought to be hedged.
7
<PAGE>
Successful use of index futures by a Fund is also subject to the
Adviser's ability to predict movements in the direction of the market. For
example, it is possible that, where a Fund has sold futures to hedge its
portfolio against a decline in the market, the index on which the futures are
written (in this case the S&P 500 Index) may advance and the value of securities
held in the Fund's portfolio may decline. If this occurred, the Fund would lose
money on the futures and also experience a decline in value in its portfolio
securities. It is also possible that, if a Fund has hedged against the
possibility of a decline in the market adversely affecting securities held in
its portfolio and securities prices increase instead, the Fund will lose part or
all of the benefit of the increased value of those securities it has hedged
because it will have offsetting losses in its futures positions. In addition, in
such situations, if the Fund has insufficient cash, it may have to sell
securities to meet daily variation margin requirements at a time when it is
disadvantageous to do so.
In addition to the possibility that there may be an imperfect
correlation, or no correlation at all, between movements in the index futures
and the portion of a Fund's portfolio being hedged, the prices of index futures
may not correlate perfectly with movements in the underlying index due to
certain market distortions. First, all participants in the futures market are
subject to margin deposit and maintenance requirements. Rather than meeting
additional margin deposit requirements, investors may close futures contracts
through offsetting transactions which could distort the normal relationship
between the index and futures markets. Second, margin requirements in the
futures market are less burdensome than margin requirements in the securities
market, and as a result the futures market may attract more speculators than the
securities market does. Increased participation by speculators in the futures
market may also cause temporary price distortions. Due to the possibility of
price distortions in the futures market and also because of the imperfect
correlation between movements in the index and movements in the prices of index
futures, even a correct forecast of general market trends by the Adviser may
still not result in a profitable position over a short time period.
OPTIONS ON STOCK INDEX FUTURES. Options on index futures are similar to
options on securities except that options on index futures give the purchaser
the right, in return for the premium paid, to assume a position in an index
futures contract (a long position if the option is a call and a short position
if the option is a put) at a specified exercise price at any time during the
period of the option. Upon exercise of the option, the delivery of the futures
position by the writer of the option to the holder of the option will be
accompanied by delivery of the accumulated balance in the writer's futures
margin account which represents the amount by which the market price of the
index futures contract, at exercise, exceeds (in the case of a call) or is less
than (in the case of a put) the exercise price of the option on the index
future. If an option is exercised on the last trading day prior to its
expiration date, the settlement will be made entirely in cash equal to the
difference between the exercise price of the option and the closing level of the
index on which the future is based on the expiration date. Purchasers of options
who fail to exercise their options prior to the exercise date suffer a loss of
the premium paid.
OPTIONS ON INDICES. Each of the Super Index Fund and the
InvestmentWizard Fund may purchase and sell call and put options on the S&P 500
Index, S&P 100 Index, and other major market indices. Such options would be used
in a manner identical to the use of options on index futures.
INDEX WARRANTS. Each of the Super Index Fund and the InvestmentWizard
Fund may purchase put warrants and call warrants whose values vary depending on
the change in the value of the S&P 500 Index ("index warrants"). Index warrants
are generally issued by banks or other financial institutions and give the
holder the right, at any time during the term of the warrant, to receive upon
exercise of the warrant a cash payment from the issuer based on the value of the
underlying index at the time of exercise. In general, if the value of the
underlying index rises above the exercise price of the index warrant, the holder
of a call warrant will be entitled to receive a cash payment from the issuer
upon exercise based on the difference between the value of the index and the
exercise price of the warrant; if the value of the underlying index falls, the
holder of a put warrant will be entitled to receive a cash payment from the
issuer upon exercise based on the difference between the exercise price of the
warrant and the value of the index. The holder of a warrant would not be
entitled to any payments from the issuer at any time when, in the case of a call
warrant, the exercise price is greater than the value of the underlying index,
or, in the case of a put warrant, the exercise price is less than the value of
the underlying index. If a Fund were not to exercise an index warrant prior to
its expiration, then the Fund would lose the amount of the purchase price paid
by it for the warrant.
8
<PAGE>
Each Fund will normally use index warrants in a manner similar to its
use of options on securities indices. The risks of a Fund's use of index
warrants are generally similar to those relating to its use of index options.
Unlike most index options, however, index warrants are issued in limited amounts
and are not obligations of a regulated clearing agency, but are backed only by
the credit of the bank or other institution which issues the warrant. Also,
index warrants generally have longer terms than index options. Although each
Fund will normally invest only in exchange-listed warrants, index warrants are
not likely to be as liquid as certain index options backed by a recognized
clearing agency. In addition, the terms of index warrants may limit a Fund's
ability to exercise the warrants at such time, or in such quantities, as the
Fund would otherwise wish to do.
ILLIQUID SECURITIES. Neither the Super Index Fund nor the
InvestmentWizard Fund may invest more than 15% of the value of its net assets in
securities that at the time of purchase have legal or contractual restrictions
on resale or are otherwise illiquid. The Adviser will monitor the amount of
illiquid securities in each Fund's portfolio, under the supervision of the
Company's Board of Directors, to ensure compliance with each Fund's investment
restrictions.
Historically, illiquid securities have included securities subject to
contractual or legal restrictions on resale because they have not been
registered under the Securities Act of 1933 (the "Securities Act"), securities
which are otherwise not readily marketable and repurchase agreements having a
maturity of longer than seven days. Securities which have not been registered
under the Securities Act are referred to as private placement or restricted
securities and are purchased directly from the issuer or in the secondary
market. Mutual funds do not typically hold a significant amount of these
restricted or other illiquid securities because of the potential for delays on
resale and uncertainty in valuation. Limitations on resale may have an adverse
effect on the marketability of each Fund's portfolio securities and the Funds
might be unable to dispose of restricted or other illiquid securities promptly
or at reasonable prices and might thereby experience difficulty satisfying
redemption requests within seven days. The Funds might also have to register
such restricted securities in order to dispose of them, resulting in additional
expense and delay. Adverse market conditions could impede such a public offering
of securities.
In recent years, however, a large institutional market has developed
for certain securities that are not registered under the Securities Act,
including repurchase agreements, commercial paper, foreign securities, municipal
securities and corporate bonds and notes. Institutional investors depend on an
efficient institutional market in which the unregistered security can be readily
resold or on an issuer's ability to honor a demand for repayment. The fact that
there are contractual or legal restrictions on resale to the general public or
to certain institutions may not be indicative of the liquidity of such
investments. If such securities are subject to purchase by institutional buyers
in accordance with Rule 144A promulgated by the Commission under the Securities
Act, the Company's Board of Directors may determine that such securities are not
illiquid securities notwithstanding their legal or contractual restrictions on
resale. In all other cases, however, securities subject to restrictions on
resale will be deemed illiquid.
RESTRICTED SECURITIES. The SEC Staff currently takes the view that any
delegation by the Board of Directors of the authority to determine that a
restricted security is readily marketable (as described in the investment
restrictions of the Fund) must be pursuant to written procedures established by
the Board of Directors. It is the present intention of the Board of Directors
that, if the Board of Directors decide to delegate such determinations to the
Adviser or another person, they would do so pursuant to written procedures,
consistent with the Staff's position. Should the Staff modify its position in
the future, the Board of Directors would consider what action would be
appropriate in light of the Staff's position at that time.
REPURCHASE AGREEMENTS. Each of the Super Index Fund and the
InvestmentWizard Fund may invest in repurchase agreements. A repurchase
agreement involves the purchase by a Fund of the securities with the condition
that after a stated period of time the original seller will buy back the same
securities at a predetermined price or yield. The Funds' custodian will hold the
securities underlying any repurchase agreement or such securities will be part
of the Federal Reserve Book Entry System. The market value of the collateral
underlying the repurchase agreement will be determined on each business day. If
at any time the market value of a Fund's collateral falls below the repurchase
price of the repurchase agreement (including any accrued interest), that Fund
will promptly receive additional collateral (so the total collateral is an
amount at least equal to the repurchase price plus accrued interest).
9
<PAGE>
SECURITIES LOANS. Each of the Super Index Fund and the InvestmentWizard
Fund may make secured loans of its portfolio securities, on either a short-term
or long-term basis, amounting to not more than 25% of its total assets, thereby
realizing additional income. The risks in lending portfolio securities, as with
other extensions of credit, consist of possible delay in recovery of the
securities or possible loss rights in the collateral should the borrower fail
financially. As a matter of policy, securities loans are made to broker-dealers
pursuant to agreements requiring that the loans be continuously secured by
collateral consisting of cash or short-term debt obligations at least equal at
all times to the value of the securities on loan, "marked-to-market" daily. The
borrower pays to a lender-Fund an amount equal to any dividends or interest
received on securities lent. The Fund retains all or a portion of the interest
received on investment of the cash collateral or receives a fee from the
borrower. Although voting rights, or rights to consent, with respect to the
loaned securities may pass to the borrower, the Fund retains the right to call
the loans at any time on reasonable notice, and it will do so to enable the Fund
to exercise voting rights on any matters materially affecting the investment.
The Fund may also call such loans in order to sell the securities.
INVESTMENT RESTRICTIONS
In addition to the investment objectives and policies set forth in the
Prospectus and in this Statement of Additional Information, each of the Super
Index Fund and the InvestmentWizard Fund is subject to certain fundamental and
non-fundamental investment restrictions, as set forth below. Fundamental
investment restrictions may not be changed with respect to a Fund individually,
without the vote of a majority of that Fund's outstanding securities, as defined
in the Investment Company Act of 1940. Non-fundamental investment restrictions
of a Fund may be changed by the Board of Directors.
As fundamental investment restrictions, the Funds will not:
1. Purchase the securities of any issuer (other than securities issued or
guaranteed by the U.S. Government, its agencies or instrumentalities), if, as a
result, as to 75% of a Fund's total assets, more than 5% of its net assets would
be invested in the securities of one issuer or the Fund would hold more than 10%
of the outstanding voting securities of any one issuer.
2. Issue any senior securities, as defined in the Investment Company Act
of 1940, as amended (the "1940 Act"), other than in connection with short sales
as described above or as set forth in restriction number 4 below.
3. Borrow amounts in excess of 10% of the cost or 10% of the market value
of its total assets, whichever is less, and then only from a bank and as a
temporary measure for extraordinary or emergency purposes. To secure any such
borrowing, a Fund may pledge or hypothecate not in excess of 15% of the value of
its total assets.
4. Act as an underwriter of securities of other issuers, except insofar
as the Company may be technically deemed an underwriter under the federal
securities laws in connection with the disposition of each Fund's portfolio
securities.
5. Purchase or sell real estate or commodities, including oil, gas or
other mineral exploration or developmental programs or commodity futures
contracts. This restriction shall nor preclude the Funds from investing in banks
or other financial institutions that have real estate or that buy and sell real
estate.
6. Make loans, in the aggregate, exceeding 25% of either Fund's total
assets or lend either Fund's portfolio securities to broker-dealers if the loans
are not fully collateralized or write call options on securities which are not
fully covered.
7. Invest more than 5% of the value of its total assets in any closed-end
investment company and will not hold more than 3% of the outstanding voting
stock of any other mutual fund.
10
<PAGE>
8. Change the nature of its business so as to cease to be an investment
company.
9. Purchase or retain securities of any issuer if any officer or director
of the Company or the Adviser owns individually more than one-half (1/2%)
percent of the securities of that issuer, or collectively the officers and
directors of the Company and Adviser together own more than 5% of the securities
of that issuer.
10.Purchase from or sell to any officer or director of the Company or its
Adviser any securities other than the shares of common stock of each Fund.
11.Concentrate its investments in any one industry although it may invest
up to 25% of the value of its total assets in a particular industry. This
limitation shall not apply to securities issued or guaranteed by the U.S.
Government
12.Invest more than 5% of the value of its total assets in any closed-end
investment company and will not hold more than 3% of the outstanding voting
stock of any closed-end investment company.
13.On a joint or joint and several basis, participate in any trading
account in securities.
14.Allow its Adviser or officers or directors of itself or its Adviser to
take long or short positions in shares of a Fund, except that such persons may
purchase shares for their own account for investment purposes only at the price
available to the public at the moment of purchase.
15.Cause more than 5% of a Fund's total assets to be invested in the
securities of companies that (including predecessors) have been in continuous
operation for less than three years. This limitation shall not apply to
securities issued or guaranteed by the U.S. Government.
The Funds are each subject to the following restrictions that are not
fundamental and may therefore be changed by the Board of Directors without
shareholder approval.
The Funds will not:
1. Acquire securities for the purpose of exercising control over
management.
2. Invest more than 15% of its net assets in illiquid securities.
Unless otherwise indicated, percentage limitations included in the
restrictions apply at the time the Fund enters into a transaction. Accordingly,
any later increase or decrease beyond the specified limitation resulting from a
change in the Fund's net assets will not be considered in determining whether
its has complied with its investment restrictions.
11
<PAGE>
DIRECTORS AND EXECUTIVE OFFICERS
The following table contains information concerning the directors and
officers of Investa Management Co., Inc. (the "Company"), and their principal
occupations during the past five years. Directors who are interested persons, as
defined by the 1940 Act, are indicated by asterisk.
NOTE: IDENTITY AND DESCRIPTIONS OF THREE DISINTERESTED DIRECTORS TO COME
<TABLE>
<CAPTION>
- ---------------------------------- ----------------------------- ----------------------------------------
POSITIONS HELD WITH THE PRINCIPAL OCCUPATION LAST FIVE YEARS
COMPANY
NAME AND ADDRESS
- ---------------------------------- ----------------------------- ----------------------------------------
<S> <C> <C>
Derek J. Hoggett (Age 53) President, Treasurer and President, Secretary, and Treasurer of
Chairman of the Board of Investa, Inc., a registered investment
2215 Amberly Court Directors adviser and the Adviser to the Funds
Houston, TX 77063
- ---------------------------------- ----------------------------- ----------------------------------------
Scott B. Stokes (Age 31) Vice President and Vice President and Portfolio Manager
Secretary of Investa, Inc., a registered
551 Fifth Avenue investment adviser and the Adviser to
the Funds
New York, NY 10176
- ---------------------------------- ----------------------------- ----------------------------------------
Michael Miola (Age 46) Director Chief Executive Officer of American
Data Services, Inc.
c/o American Data Services, Inc.
The Hauppauge Corporate Center
150 Motor Parkway
Hauppauge, NY 11788
- ---------------------------------- ----------------------------- ----------------------------------------
</TABLE>
Mr. Derek J. Hoggett is the current President, Secretary and Treasurer of
the Adviser.
The members of the Audit Committee of the Board of Directors are Messrs.
______________ and __________________. Mr. ______________ acts as the
chairperson of such committee. The Audit Committee oversees each Fund's
financial reporting process, reviews audit results and recommends annually to
the Company a firm of independent certified public accountants.
Those Directors who are officers or employees of the Administrator or its
affiliates receive no remuneration from either Fund. Each disinterested Director
receives a fee from each of the Funds for each regular quarterly and in-person
special meeting of the Board of Directors attended. Members of the Board who are
not affiliated with the Adviser or the Administrator receive an annual fee of
$___________ plus $_____ for each Board meeting attended. Each Fund will pay a
pro rata portion of the Directors' fees and expenses based on the net assets of
the Fund and the other series of the Company. In addition, each Director who is
not affiliated with the Adviser or the Administrator is reimbursed for expenses
incurred in connection with attending meetings.
The following table sets forth the estimated compensation expected to be
received by each Director from the Company during the fiscal year ending as of
December 31, 1999.
12
<PAGE>
- -------------------------- =====================================================
DIRECTOR AGGREGATE ANNUAL ESTIMATED COMPENSATION FROM THE
COMPANY
- -------------------------- =====================================================
Derek J. Hoggett NONE
- -------------------------- =====================================================
Michael Miola NONE
- -------------------------- =====================================================
TO COME $__________
- -------------------------- =====================================================
1. There are no family relationships among the directors, officers and/or
management of the Company or the Adviser.
INVESTMENT ADVISORY AND OTHER SERVICES
The investment adviser for each of the Funds is Investa, Inc., a Texas
corporation organized in 1981. The Adviser will act as such pursuant to a
written agreement which, after its initial two-year period, must be annually
reapproved by the Board of Directors. The address of the Adviser is 551 Fifth
Avenue, New York, New York 10176. The Adviser can also be contacted by telephone
at (212) 599-4338.
CONTROL OF THE ADVISER
The common stock of the Adviser is wholly-owned and controlled by Mr.
Derek J. Hoggett, who is also the President, Secretary, and Treasurer of the
Adviser. As of the date of this SAI, total assets under management by the
Adviser were in excess of $1,000,000.
INVESTMENT ADVISORY AGREEMENT
The Adviser acts as the investment adviser to each Fund under an
Investment Advisory Agreement which has been approved by the Board of Directors
(including a majority of the Directors who are not parties to the agreement, or
interested persons of any such party).
The Investment Advisory Agreement will terminate automatically in the
event of its assignment. In addition, the agreement is terminable at any time,
without penalty, by the Board of Directors of the Company or by vote of a
majority of the Company's outstanding voting securities on not more than 60
days' written notice to the Adviser, and by the Adviser on 60 days' written
notice to the Company. Unless sooner terminated, the agreement shall continue in
effect for more than two years after its execution only so long as such
continuance is specifically approved at least annually by either the Board of
Directors or by a vote of a majority of the outstanding shares of the Company,
provided that in either event such continuance is also approved by a vote of a
majority of the Directors who are not parties to such agreement, or interested
persons of such parties, cast in person at a meeting called for the purpose of
voting on such approval.
Under the Investment Advisory Agreement, the Adviser provides each Fund
with advice and assistance in the selection and disposition of the Fund's
investments. All investment decisions are subject to review by the Board of
Directors of the Company. The Adviser is obligated to pay the salaries and fees
of any affiliates of the Adviser serving as officers of the Company or either of
the Funds.
The same security may be suitable for each of the Funds or other private
accounts managed by the Adviser. If and when either of the Funds or two or more
accounts simultaneously purchase or sell the same security, the transactions
will be allocated as to price and amount in accordance with arrangements
equitable to the Fund or account. The simultaneous purchase or sale of the same
securities by a Fund and other accounts may have a detrimental effect on the
Fund, as this may affect the price paid or received by the Fund or the size of
the position obtainable or able to be sold by the Fund.
13
<PAGE>
ADMINISTRATOR
The Administrator for each Fund is American Data Services, Inc. (the
"Administrator"), which has its principal office at The Hauppauge Corporate
Center, 150 Motor Parkway, Hauppauge, New York 11788, and is primarily in the
business of providing administrative, fund accounting and stock transfer
services to retail and institutional mutual funds through its offices in New
York, Denver and Los Angeles.
Pursuant to an Administrative Service Agreement with the Company, the
Administrator provides all administrative services necessary for the Funds,
subject to the supervision of the Company's Board of Directors. The
Administrator will provide persons to serve as officers of the Company. Such
officers may be directors, officers or employees of the Administrator or its
affiliates.
The Administrative Service Agreement is terminable by the Board of
Directors of the Company or the Administrator on sixty days' written notice and
may be assigned provided the non-assigning party provides prior written consent.
The Agreement shall remain in effect for two years from the date of its initial
approval, and subject to annual approval of the Board of Directors for one-year
periods thereafter. The Agreement provides that in the absence of willful
misfeasance, bad faith or gross negligence on the part of the Administrator or
reckless disregard of its obligations thereunder, the Administrator shall not be
liable for any action or failure to act in accordance with its duties
thereunder.
Under the Administrative Service Agreement, the Administrator provides
all administrative services, including, without limitation: (i) provides
services of persons competent to perform such administrative and clerical
functions as are necessary to provide effective administration of each Fund;
(ii) overseeing the performance of administrative and professional services to
the Fund by others, including each Fund's Custodian; (iii) preparing, but not
paying for, the periodic updating of the Registration Statement and each Fund's
Prospectus and Statement of Additional Information in conjunction with Fund
counsel, including the printing of such documents for the purpose of filings
with the Securities and Exchange Commission and state securities administrators,
preparing each Fund's tax returns, and preparing reports to each Fund's
shareholders and the Securities and Exchange Commission; (iv) preparing in
conjunction with each Fund's counsel, but not paying for, all filings under the
securities or "Blue Sky" laws of such states or countries as are designated by
the Distributor, which may be required to register or qualify, or continue the
registration or qualification, of each Fund and/or its shares under such laws;
(v) preparing notices and agendas for meetings of the Board of Directors and
minutes of such meetings in all matters required by the 1940 Act to be acted
upon by the Board; and (vi) monitoring daily and periodic compliance with
respect to all requirements and restrictions of the Investment Company Act, the
Internal Revenue Code and the Prospectus.
The Administrator, pursuant to the Fund Accounting Service Agreement in
place with the Company, provides each Fund with all accounting services,
including, without limitation: (i) daily computation of net asset value; (ii)
maintenance of security ledgers and books and records as required by the
Investment Company Act; (iii) production of each Fund's listing of portfolio
securities and general ledger reports; (iv) reconciliation of accounting
records; (v) calculation of yield and total return for each Fund; (vi)
maintaining certain books and records described in Rule 31a-1 under the 1940
Act, and reconciling account information and balances among each Fund's
Custodian and Adviser; and (vii) monitoring and evaluating daily income and
expense accruals, and sales and redemptions of shares of each Fund.
ADMINISTRATOR'S FEES
For the services rendered to the Funds by the Administrator, each Fund
pays the Administrator a monthly fee based on the Fund's average net assets. The
Funds each also pay the Administrator for any out-of-pocket expenses. These fees
are set forth in each Fund's Prospectus.
In return for providing the Funds with all accounting related services,
each Fund pays the Administrator a monthly fee based on the Fund's average net
assets, plus any out-of-pocket expenses for such services.
14
<PAGE>
CUSTODIAN, TRANSFER AGENT AND DIVIDEND AGENT
Star Bank, N.A. serves as custodian for each Fund's cash and securities
(the "Custodian"). Pursuant to a Custodian Agreement with the Company on behalf
of each Fund, it is responsible for maintaining the books and records of each
Fund's portfolio securities and cash. The Custodian does not assist in, and is
not responsible for, investment decisions involving assets of the Funds.
American Data Services, Inc., the Administrator, also acts as each Fund's
transfer and dividend agent.
DISTRIBUTION AGREEMENT
Pursuant to a Distribution Agreement with the Company on behalf of each
Fund, ADS Distributors, Inc. (the "Distributor") has agreed to act as the
principal underwriter for each Fund in the sale and distribution to the public
of shares of that Fund, either through dealers or otherwise. The Distributor has
agreed to offer such shares for sale at all times when such shares are available
for sale and may lawfully be offered for sale and sold.
SHAREHOLDER SERVICING AND DISTRIBUTION PLAN
The Funds have each adopted a Distribution and Service Plan (the "Plan"),
which was reviewed and approved by a majority of the disinterested directors of
the Fund, pursuant to Rule 12b-1 under the Act (the "Rule"). The Rule provides
that an investment company which bears any direct or indirect expense of
distributing its shares must do so only in accordance with a plan permitted by
the Rule. The Plan provides that each Fund will compensate the Distributor for
certain expenses and costs incurred in connection with providing marketing and
promotional support to the Fund, shareholder servicing and maintaining
shareholder accounts, to compensate parties with which it has written agreements
and whose clients own shares of the Fund for providing servicing to their
clients ("shareholder servicing") and financial institutions with which it has
written agreements and whose clients are Fund shareholders (each a
"broker-dealer") for providing distribution assistance and promotional support
to the Fund, which is subject to a maximum of 0.25% per annum of each Fund's
average daily net assets. Fees paid under the Plan may not be waived for
individual shareholders.
Each shareholder servicing agent and broker-dealer will, as agent for its
customers, among other things: answer customer inquiries regarding account
status and history, the manner in which purchases and redemptions of shares of
each may be effected and certain other matters pertaining to each of the Funds;
assist shareholders in designating and changing dividend options, account
designations and addresses; provide necessary personnel and facilities to
establish and maintain shareholder accounts and records; assist in processing
purchase and redemption transactions; arrange for the wiring of funds; transmit
and receive funds in connection with customer orders to purchase or redeem
shares; verify and guarantee shareholder signatures in connection with
redemption orders and transfers and changes in shareholder designated accounts;
furnish quarterly and year-end statements and confirmations within five business
days after activity in the account; transmit to shareholders of each Fund's
proxy statements, annual reports, updated prospectuses and other communications;
receive, tabulate and transmit proxies executed by shareholders with respect to
meetings of shareholders of each of the Funds; and provide such other related
services as either Fund or a shareholder thereof may request.
The Plan, the shareholder servicing agreements and the form of
distribution agreement each provide that the Adviser or the Distributor may make
payments from time to time from their own resources which may include the
advisory fee and the asset based sales charges and past profits for the
following purposes: (i) to defray the costs of and to compensate others,
including financial intermediaries with whom the Distributor has entered into
written agreements, for performing shareholder servicing and related
administrative functions of the Funds; to compensate certain financial
15
<PAGE>
intermediaries for providing assistance in distributing each Fund's shares; (ii)
to pay the costs of printing and distributing each Fund's Prospectus to
prospective investors; and (iii) to defray the cost of the preparation and
printing of brochures and other promotional materials, mailings to prospective
shareholders, advertising, and other promotional activities, including the
salaries and/or commissions of sales personnel in connection with the
distribution of each Fund's shares. The Distributor will determine the amount of
such payments made pursuant to the Plan with the shareholder servicing agents
and broker-dealers with whom it has contracted, provided that such payments made
pursuant to the Plan will not increase the amount which either Fund is required
to pay the Distributor for any fiscal year under the shareholder servicing
agreements or otherwise.
Shareholder servicing agents and broker-dealers may charge investors a
fee in connection with their use of specialized purchase and redemption
procedures offered to investors by the shareholder servicing agents and
broker-dealers. In addition, shareholder servicing agents and broker-dealers
offering purchase and redemption procedures similar to those offered to
shareholders who invest in the fund directly may impose charges, limitations,
minimums and restrictions in addition to or different from those applicable to
shareholders who invest in either Fund directly. Accordingly, the net yield to
investors who invest through shareholder servicing agents and broker-dealers may
be less than realized by investing in either Fund directly. An investor should
read the Prospectus in conjunction with the materials provided by the
shareholder servicing agent and broker-dealer describing the procedures under
which Fund shares may be purchased and redeemed through the shareholder
servicing agent and broker-dealer.
The Glass-Steagall Act limits the ability of a depository institution to
become an underwriter or distributor of securities. It is the Funds' position,
however, that banks are not prohibited from acting in other capacities for
investment companies, such as providing administrative and shareholder account
maintenance services and receiving compensation from the distributor for
providing such services. This is an unsettled area of the law, however, and if a
determination contrary to the Funds' position concerning shareholder servicing
and administration payments to banks from the distributor is made by a bank
regulatory agency or court, any such payments will be terminated and any shares
registered in the banks' names, for their underlying customers, will be
re-registered in the names of the customers at no cost to either Fund or its
shareholders. In addition, state securities laws on this issue may differ from
the interpretation of federal law expressed herein and banks and financial
institutions may be required to register as dealers pursuant to state law.
In accordance with the Rule, the Plan provides that all written
agreements relating to the Plan entered into by each Fund, the Distributor or
the Adviser, and the shareholder servicing agents, broker-dealers, or other
organizations, must be in a form satisfactory to the Board of Directors. In
addition, the Plan requires each Fund and the Distributor of each Fund to
prepare, at least quarterly, written reports setting forth all amounts expended
for distribution purposes by the Fund and the Distributor pursuant to the Plan
and identifying the distribution activities for which those expenditures were
made for review by the Board of Directors.
OTHER EXPENSES
The Funds each pay certain operating expenses that are not assumed by the
Adviser, the Administrator or any of their respective affiliates. These
expenses, together with fees paid to the Adviser, the Administrator, the
Distributor and the Transfer Agent, are deducted from income of each the Funds,
respectively, before dividends are paid. These expenses include, but are not
limited to, organizational costs, fees and expenses of officers and Directors
who are not affiliated with the Adviser, the Administrator or any of their
respective affiliates, taxes, interest, legal fees, custodian fees, audit fees,
brokerage fees and commissions, fees and expenses of registering and qualifying
the Funds and their shares for distribution under federal and state securities
laws, the expenses of reports to shareholders, shareholders' meetings and proxy
solicitations.
16
<PAGE>
PORTFOLIO TRANSACTIONS AND ALLOCATION OF BROKERAGE
Each Fund's assets are invested by the Adviser in a manner consistent
with its investment objective, policies, and restrictions and with any
instructions the Board of Directors may issue from time to time. Within this
framework, the Adviser is responsible for making all determinations as to the
purchase and sale of portfolio securities and for taking all steps necessary to
implement securities transactions on behalf of each of the Funds.
U.S. Government securities generally are traded in the over-the-counter
market through broker-dealers. A broker-dealer is a securities firm or bank that
makes a market for securities by offering to buy at one price and sell at a
slightly higher price. The difference between the prices is known as a spread.
In placing orders for the purchase and sale of portfolio securities for
each Fund, the Adviser will use its best efforts to obtain the best possible
price and execution and will otherwise place orders with broker-dealers subject
to and in accordance with any instructions the Board of Directors may issue from
time to time. The Adviser will select broker-dealers including, the Distributor,
to execute portfolio transactions on behalf of each Fund primarily on the basis
of best price and execution.
When consistent with the objectives of prompt execution and favorable net
price, business may be placed with broker-dealers who furnish investment
research or services to the Adviser. Such research or services include advice,
both directly and in writing, as to the value of securities; the advisability of
investing in, purchasing or selling securities; and the availability of
securities, or purchasers or sellers of securities; as well as analyses and
reports concerning issues, industries, securities, economic factors and trends,
portfolio strategy and the performance of accounts. To the extent portfolio
transactions are effected with broker-dealers who furnish research services to
the Adviser, the Adviser receives a benefit, not capable of evaluation in dollar
amounts, without providing any direct monetary benefit to either Fund from these
transactions. The Adviser believes that most research services obtained by it
generally benefit several or all of the investment companies and private
accounts which it manages, as opposed to solely benefitting one specific managed
fund or account.
Transactions on U.S. stock exchanges, commodities markets and futures
markets and other agency transactions may involve the payment by the Funds of
negotiated brokerage commissions. Such commissions vary among different brokers.
A particular broker may charge different commissions according to such factors
as the difficulty and size of the transaction. Transactions in foreign
investments often involve the payment of fixed brokerage commissions, which may
be higher than those in the United States. There is generally no stated
commission in the case of securities traded in the over-the-counter markets, but
the price paid by each Fund usually includes an undisclosed dealer commission or
mark-up. In underwritten offerings, the price paid by each Fund includes a
disclosed, fixed commission or discount retained by the underwriter or dealer.
It has for many years been a common practice in the investment advisory
business for advisers of investment companies and other institutional investors
to receive brokerage and research services (as defined in the Securities
Exchange Act of 1934, as amended (the "1934 Act")) from broker-dealers that
execute portfolio transactions for the clients of such advisers and from third
parties with which such broker-dealers have arrangements. Consistent with this
practice, the Adviser may receive brokerage and research services and other
similar services from many broker-dealers with which the Adviser may place a
Fund's portfolio transactions and from third parties with which these
broker-dealers have arrangements. These services include such matters as general
economic and market reviews, industry and company reviews, evaluations of
investments, recommendations as to the purchase and sale of investments,
newspapers, magazines, pricing services, quotation services, news services and
personal computers utilized by the Adviser. Where the services referred to above
are not used exclusively by the Adviser for research purposes, the Adviser,
based upon its own allocations of expected use, bears that portion of the cost
of these services which directly relates to their non-research use. Some of
these services are of value to the Adviser and its affiliates in advising
various of their clients (including the Funds), although not all of these
services are necessarily useful and of value in managing funds. The management
fee paid by each Fund is not reduced because the Adviser and its affiliates
receive these services even though the Adviser might otherwise be required to
purchase some of these services for cash.
17
<PAGE>
As permitted by Section 28(e) of the 1934 Act, the Adviser may cause each
Fund to pay a broker-dealer which provides "brokerage and research services" (as
defined in the 1934 Act) to the Adviser an amount of disclosed commission for
effecting securities transactions on stock exchanges and other transactions for
the Fund on an agency basis in excess of the commission which another
broker-dealer would have charged for effecting that transaction. The Adviser's
authority to cause each Fund to pay any such greater commissions is also subject
to such policies as the Directors may adopt from time to time. The Adviser does
not currently intend to cause any Fund to make such payments. It is the position
of the staff of the Securities and Exchange Commission that Section 28(e) does
not apply to the payment of such greater commissions in "principal"
transactions. Accordingly, the Adviser will use its best effort to obtain the
most favorable price and execution available with respect to such transactions,
as described above.
Consistent with the Conduct Rules of the National Association of
Securities Dealers, Inc. and subject to seeking the most favorable price and
execution available and such other policies as the Directors may determine, the
Adviser may consider sales of shares of each Fund as a factor in the selection
of broker-dealers to execute portfolio transactions for the Fund.
TAXATION
Each of the Funds intends to qualify each year as a "regulated investment
company" under Subchapter M of the Internal Revenue Code of 1986, as amended
(the "Code"). By so qualifying, a Fund will not incur federal income or state
taxes on its net investment income and on net realized capital gains to the
extent distributed as dividends to shareholders.
Amounts not distributed on a timely basis in accordance with a calendar
year distribution requirement are subject to a nondeductible 4% excise tax at
the fund level. To avoid the tax, each Fund must distribute during each calendar
year an amount equal to the sum of (a) at least 98% of its ordinary income (not
taking into account any capital gains or losses) for the calendar year, (b) at
least 98% of its capital gains in excess of capital losses (adjusted for certain
ordinary losses) for a one-year period generally ending on October 31st of the
calendar year, and (c) all ordinary income and capital gains for previous years
that were not distributed during such years.
Under the Code, dividends derived from interest, and any short-term
capital gains, are taxable to shareholders as ordinary income for federal and
state tax purposes, regardless of whether such dividends are taken in cash or
reinvested in additional shares. Distributions made from each Fund's net
realized long-term capital gains (if any) and designated as capital gain
dividends are taxable to shareholders as long-term capital gains, regardless of
the length of time Fund shares are held. Corporate investors are not eligible
for the dividends-received deduction with respect to distributions derived from
interest on short-or long-term capital gains from either Fund but may be
entitled to such a deduction in respect to distributions attributable to
dividends received by a Fund. A distribution will be treated as paid on December
31st of a calendar year if it is declared by the Fund in October, November or
December of the year with a record date in such a month and paid by each Fund
during January of the following year. Such distributions will be taxable to
shareholders in the calendar year the distributions are declared, rather than
the calendar year in which the distributions are received.
Distributions paid by each Fund from net long-term capital gains (excess
of long-term capital gains over long-term capital losses), if any, whether
received in cash or reinvested in additional shares, are taxable as long-term
capital gains, regardless of the length of time you have owned shares in the
Fund. Distributions paid by each Fund from net short-term capital gains (excess
of short-term capital gains over short-term capital losses), if any, whether
received in cash or reinvested in additional shares are taxable as ordinary
income. Capital gains distributions are made when either Fund realizes net
capital gains on sales of portfolio securities during the year. Realized capital
gains are not expected to be a significant or predictable part of either Fund's
investment return.
Any redemption of a Fund's shares is a taxable event and may result in a
capital gain or loss. A capital gain or loss may be realized from an ordinary
redemption of shares.
Dividend distributions, capital gains distributions, and capital gains or
losses from redemptions and exchanges may also be subject to state and local
taxes.
18
<PAGE>
Ordinarily, distributions and redemption proceeds paid to fund
shareholders are not subject to withholding of federal income tax. However, 31%
of each of the Fund's distributions and redemption proceeds must be withheld if
a Fund shareholder fails to supply the Fund or its agent with such shareholder's
taxpayer identification number or if the Fund shareholder who is otherwise
exempt from withholding fails to properly document such shareholder's status as
an exempt recipient.
The information above is only a summary of some of the tax considerations
generally affecting the Funds and their shareholders. No attempt has been made
to discuss individual tax consequences. To determine whether either of the Funds
is a suitable investment based on his or her tax situation, a prospective
investor may wish to consult a tax advisor.
VOTING AND OWNERSHIP OF SHARES
Each share of each Fund has one vote in the election of Directors.
Cumulative voting is not authorized for either Fund. This means that the holders
of more than 50% of the shares voting for the election of Directors can elect
100% of the Directors if they choose to do so, and, in that event, the holders
of the remaining shares will be unable to elect any Directors.
On June ___, 1999, the Adviser invested $50,000 in shares of each Fund at
$10.00 per share, as seed capital. The Adviser will control the Fund until
public shareholders begin investing in each of the Funds thereby diluting the
ownership of Fund shares by the Adviser.
PURCHASE OF SHARES
Shares of the Funds may be purchased at the net asset value per share
next determined after receipt of an order by a Fund's Distributor in proper form
with accompanying check or other bank wire payment arrangements satisfactory to
the Fund. Each Fund's minimum initial investment is $1,000 (except for
retirement accounts for which the minimum initial investment is $500) and the
minimum subsequent investment is $100.
DIVIDENDS AND DISTRIBUTIONS
Net investment income, if any, is declared as dividends and paid
annually. Substantially all the realized net capital gains for each Fund, if
any, are also declared and paid on an annual basis. Dividends and distributions
are payable to shareholders of record at the time of declaration.
Distributions from each Fund are automatically reinvested in additional
Fund shares unless the shareholder has elected to have them paid in cash.
The net investment income of each Fund for each business day is
determined immediately prior to the determination of net asset value. Net
investment income for other days is determined at the time net asset value is
determined on the prior business day. See "Purchase of Shares" and "Redemption
of Shares" in the Prospectus.
19
<PAGE>
NET ASSET VALUE
The method for determining each Fund's net asset value is summarized in
the Prospectus in the text following the heading "Valuation of Shares." The net
asset value of a Fund's shares is determined on each day on which the New York
Stock Exchange is open, provided that the net asset value need not be determined
on days when no Fund shares are tendered for redemption and no order for Fund
shares is received. The New York Stock Exchange is not open for business on the
following holidays (or on the nearest Monday or Friday if the holiday falls on a
weekend): New Year's Day, President's Day, Good Friday, Memorial Day,
Independence Day, Labor Day, Thanksgiving and Christmas.
PERFORMANCE COMPARISONS
Total return quoted in advertising and sales literature reflects all
aspects of each Fund's return, including the effect of reinvesting dividends and
capital gain distributions and any change in a Fund's net asset value during the
period.
Each Fund's total return must be displayed in any advertisement
containing the Fund's yield. Total return is the average annual total return for
the 1-, 5- and 10-year period ended on the date of the most recent balance sheet
included in the Statement of Additional Information, computed by finding the
average annual compounded rates of return over 1-, 5- and 10-year periods that
would equate the initial amount invested to the ending redeemable value
according to the following formula:
P(1 + T)n = ERV
Where:
P = a hypothetical initial investment of $1000
T = average annual total return
n = number of years
ERV = ending redeemable value of a hypothetical
$1000 payment made at the beginning of the
1-, 5- or 10-year periods at the end of the
1-, 5-or 10-year periods (or fractions
thereof).
Because the Funds have not had a registration in effect for 1, 5 or 10
years, the period during which the registration has been effective shall be
substituted.
Average annual total return is calculated by determining the growth or
decline in value of a hypothetical historical investment in each Fund over a
stated period and then calculating the annual compounded percentage rate that
would have produced the same result if the rate of growth or decline in value
had been constant throughout the period. For example, a cumulative total return
of 100% over 10 years would produce an average annual total return of 7.18%,
which is the steady annual rate that would result in 100% growth on a compounded
basis in 10 years. While average annual total returns are a convenient means of
comparing investment alternatives, investors should realize that the Fund's
performance is not constant over time, but changes from year to year, and that
average annual total returns represent averaged figures as opposed to actual
year-to-year performance.
20
<PAGE>
In addition to average annual total returns, each Fund may quote
unaveraged or cumulative total returns reflecting the simple change in value of
an investment over a stated period. Average annual and cumulative total returns
may be quoted as a percentage or as a dollar amount and may be calculated for a
single investment, a series of investments, or a series of redemptions over any
time period. Performance information may be quoted numerically or in a table,
graph, or similar illustration.
Each Fund's performance may be compared with the performance of other
funds with comparable investment objectives, tracked by fund rating services or
with other indexes of market performance. Sources of economic data that may be
considered in making such comparisons may include, but are not limited to,
rankings of any mutual fund or mutual fund category tracked by Lipper Analytical
Services, Inc. or Morningstar, Inc.; data provided by the Investment Company
Institute; major indexes of stock market performance; and indexes and historical
data supplied by major securities brokerage or investment advisory firms. The
Funds may also each utilize reprints from newspapers and magazines furnished by
third parties to illustrate historical performance.
The agencies listed below measure performance based on their own criteria
rather than on the standardized performance measures described in the preceding
section.
Lipper Analytical Services, Inc. distributes mutual fund rankings
monthly. The rankings are based on total return performance calculated
by Lipper, generally reflecting changes in net asset value adjusted for
reinvestment of capital gains and income dividends. They do not reflect
deduction of any sales charges. Lipper rankings cover a variety of
performance periods, including year-to-date, 1-year, 5-year, and
10-year performance. Lipper classifies mutual funds by investment
objective and asset category.
Morningstar, Inc. distributes mutual fund ratings twice a month. The
ratings are divided into five groups: highest, above average, neutral,
below average and lowest. They represent the fund's historical
risk/reward ratio relative to other funds in its broad investment class
as determined by Morningstar, Inc. Morningstar ratings cover a variety
of performance periods, including 1-year, 3-year, 5-year, 10-year and
overall performance. The performance factor for the overall rating is a
weighted-average assessment of the fund's 1-year, 3-year, 5-year, and
10-year total return performance (if available) reflecting deduction of
expenses and sales charges. Performance is adjusted using quantitative
techniques to reflect the risk profile of the fund. The ratings are
derived from a purely quantitative system that does not utilize the
subjective criteria customarily employed by rating agencies such as
Standard & Poor's and Moody's Investor Service, Inc.
CDA/Weisenberger's Management Results publishes mutual fund rankings
and is distributed monthly. The rankings are based entirely on total
return calculated by Weisenberger for periods such as year-to-date,
1-year, 3-year, 5-year and 10-year. Mutual funds are ranked in general
categories (e.g., international bond, international equity, municipal
bond, and maximum capital gain). Weisenberger rankings do not reflect
deduction of sales charges or fees.
Independent publications may also evaluate each Fund's performance. The
Funds may from time to time each refer to results published in various
periodicals, including Barrons, Financial World, Forbes, Fortune, Investor's
Business Daily, Kiplinger's Personal Finance Magazine, Money, U.S. News and
World Report and The Wall Street Journal.
21
<PAGE>
REDEMPTION OF SHARES
Redemption of shares, or payment for redemptions, may be suspended at
times (a) when the New York Stock Exchange is closed for other than customary
weekend or holiday closings, (b) when trading on said Exchange is restricted,
(c) when an emergency exists, as a result of which disposal by a Fund of
securities owned by it is not reasonably practicable, or it is not reasonably
practicable for the Fund fairly to determine the value of its net assets, or (d)
during any other period when the Securities and Exchange Commission, by order,
so permits, provided that applicable rules and regulations of the Securities and
Exchange Commission shall govern as to whether the conditions prescribed in (b)
or (c) exist.
Shareholders who purchased shares through a broker-dealer other than
the Distributor may also redeem such shares by written request to the Transfer
Agent which shares are held by the Transfer Agent at the address set forth in
the Prospectus. To be considered in "good order", written requests for
redemption should indicate the dollar amount or number of shares to be redeemed,
refer to the shareholder's Fund account number, including either the social
security or tax identification number. The request should be signed in exactly
the same way the account is registered. If there is more than one owner of the
shares, all owners must sign. If shares to be redeemed have a value of $5,000 or
more or redemption proceeds are to be paid by someone other than the shareholder
at the shareholder's address of record, the signature(s) must be guaranteed by
an "eligible guarantor institution," which includes a commercial bank that is a
member of the Federal Deposit Insurance Corporation, a trust company, a member
firm of a domestic stock exchange, a savings association or a credit union that
is authorized by its charter to provide a signature guarantee. The Transfer
Agent may reject redemption instructions if the guarantor is neither a member of
nor a participant in a signature guarantee program. Signature guarantees by
notaries public are not acceptable. The purpose of a signature guarantee is to
protect shareholders against the possibility of fraud. Further documentation
will be requested from corporations, administrators, executors, personal
representatives, directors and custodians. Redemption requests given by
facsimile will not be accepted. Unless other instructions are given in proper
form, a check for the proceeds of the redemption will be sent to the
shareholder's address of record.
Share purchases and redemptions are governed by Maryland law.
COUNSEL AND INDEPENDENT ACCOUNTANTS
Legal matters in connection with the Company, including the issuance of
shares of common stock of each Fund, are passed upon by Spitzer & Feldman P.C.,
405 Park Avenue, New York, New York 10022. ______________________________ has
been selected as independent accountants for each of the Funds.
OTHER INFORMATION
The Adviser has been continuously registered with the Securities
Exchange Commission (SEC) under the 1940 Act since June , 1999. The Company has
filed a registration statement under the Securities Act of 1933 and the 1940 Act
with respect to the shares offered. Such registrations do not imply approval or
supervision of either Fund or the Adviser by the SEC.
For further information, please refer to the registration statement and
exhibits on file with the SEC in Washington, D.C. These documents are available
upon payment of a reproduction fee. Statements in the Prospectus and in this
Statement of Additional Information concerning the contents of contracts or
other documents, copies of which are filed as exhibits to the registration
statement, are qualified by reference to such contracts or documents.
22
<PAGE>
FINANCIAL STATEMENTS
NOTE: AUDITED BALANCE SHEET OF THE COMPANY TO COME
23
<PAGE>
PART C
------
ITEM 23. EXHIBITS.
*(1) Articles of Incorporation;
*(2) By-Laws of the Company;
(3) Not Applicable.
**(4) Investment Advisory Agreements.
**(5) Distribution Agreement.
(6) Not Applicable.
**(7) Custody Agreement.
**(8.1) Administrative Service Agreement.
**(8.2) Transfer Agency Agreement.
**(9) Opinion of Spitzer & Feldman P.C. as to the
legality of the securities being registered,
including their consent to the filing thereof and
as to the use of their names in the Prospectus.
**(10) Consent of __________________, independent
accountants.
(11)Not Applicable.
**(12) Subscription Letter.
(13) Not Applicable.
**(14) Financial Data Schedule.
**(15) Distribution Plan.
* Filed herewith
** To be filed by Amendment
C-i
<PAGE>
ITEM 24. PERSONS CONTROLLED BY OR UNDER COMMON CONTROL WITH REGISTRANT.
Not applicable
ITEM 25. INDEMNIFICATION.
(a) In accordance with Section 2-418 of the General Corporation
Law of the State of Maryland, Article NINTH of the Registrant's
Articles of Incorporation provides as follows:
"NINTH:(1) The Corporation shall indemnify (i) its currently
acting and former directors and officers, whether serving the
Corporation or at its request any other entity, to the fullest
extent required or permitted by the General Laws of the State of
Maryland now or hereafter in force, including the advance of
expenses under the procedures and to the fullest extent permitted
by law, and (ii) other employees and agents to such extent as
shall be authorized by the Board of Directors or the By-Laws and
as permitted by law. Nothing contained herein shall be construed
to protect any director or officer of the Corporation against any
liability to the Corporation or its security holders to which he
would otherwise be subject by reason of willful misfeasance, bad
faith, gross negligence, or reckless disregard of the duties
involved in the conduct of his office. The foregoing rights of
indemnification shall not be exclusive of any other rights to
which those seeking indemnification may be entitled. The Board of
Directors may take such action as is necessary to carry out these
indemnification provisions and is expressly empowered to adopt,
approve and amend from time to time such by-laws, resolutions or
contracts implementing such provisions or such indemnification
arrangements as may be permitted by law. No amendment of the
charter of the Corporation or repeal of any of its provisions
shall limit or eliminate the right of indemnification provided
hereunder with respect to acts or omissions occurring prior to
such amendment or repeal.
(2) To the fullest extent permitted by Maryland statutory or
decisional law, as amended or interpreted, and the Investment
Company Act of 1940, no director or officer of the Corporation
shall be personally liable to the Corporation or its stockholders
for money damages; provided, however, that nothing herein shall
be construed to protect any director or officer of the
Corporation against any liability to the Corporation or its
security holders to which he would otherwise be subject by reason
of willful misfeasance, bad faith, gross negligence, or reckless
disregard of the duties involved in the conduct of his office. No
amendment of the charter of the Corporation or repeal of any of
its provisions shall limit or eliminate the limitation of
liability provided to directors and officers hereunder with
respect to any act or omission occurring prior to such amendment
or repeal."
ITEM 26. BUSINESS AND OTHER CONNECTIONS OF INVESTMENT ADVISER.
Investa, Inc. serves as investment adviser to each Fund. Set forth below
are the names of the directors and officers of the Adviser:
Derek J. Hoggett President, Secretary, Treasurer,
and Director
Scott B. Stokes Vice President
C-ii
<PAGE>
ITEM 27. PRINCIPAL UNDERWRITER.
(a) The principal underwriter of the Company's shares currently acts
as a principal underwriter for other investment companies.
(b) The following table contains information with respect to each
director, trustee, officer or partner of each principal
underwriter named in the answer to Item 20:
(1) (2) (3)
Name and Principal Positions and Offices Positions and Offices
Business Address* With Underwriter With Registrant
----------------- ---------------- ---------------
Michael Miola* Treasurer, Director None
Chairman
*c/o The Hauppauge Corporate Center
150 Motor Parkway
Hauppauge, NY 11788
ITEM 28. LOCATION OF ACCOUNTS AND RECORDS.
The accounts and records of the Company required to be maintained by
Section 31(a) of the 1940 Act and the rules promulgated thereunder are located,
in whole or in part, at the office of the Adviser at 551 Fifth Avenue, New York,
New York 10176. The Adviser can also be contacted by telephone at (212)
599-4340; except transfer agency records which are maintained at the offices of
the Administrator, American Data Services, Inc., The Hauppauge Corporate Center,
150 Motor Parkway, Hauppauge, New York 11788 and custodial records which are
maintained at the offices of the Custodian, Star Bank, N.A., 425 Walnut Street,
Cincinnati, Ohio 45202.
ITEM 29 MANAGEMENT SERVICES.
Not Applicable
ITEM 30. UNDERTAKINGS.
Not Applicable
C-iii
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940 the registrant has duly caused this registration
statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Houston and State of Texas, on the 7th day of June,
1999.
INVESTA MANAGEMENT CO., INC.
By: /S/ DEREK J. HOGGETT
---------------------------
Derek J. Hoggett, President
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed below by the following persons in the
capacities and on the date indicated.
/S/ DEREK J. HOGGETT President, Treasurer, and
- -------------------- Chairman of the Board of Directors June 7, 1999
Derek J. Hoggett
/S/ MICHAEL MIOLA Director
- ----------------- June 7, 1999
Michael Miola
The above persons signing as Directors are all of the members of the
Company's Board of Directors.
