Registration No. 333-81147
ICA No. 811-09399
As filed with the Securities and Exchange Commission on December 6, 1999
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES
ACT OF 1933
Pre-Effective Amendment No. 1
Post-Effective Amendment No.
and/or
REGISTRATION STATEMENT UNDER THE INVESTMENT
COMPANY ACT OF 1940
Pre-Effective Amendment No. 1
Post-Effective Amendment No.
(Check Appropriate Box or Boxes)
Investa Management Co., Inc.
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(Exact Name of Registrant as Specified in Charter)
551 Fifth Avenue
New York, New York 10176
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(Address of Principal Executive Offices)(Zip Code)
(212) 599-4338
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(Registrant's Telephone Number, Including Area Code)
Michael Miola
American Data Services, Inc.
The Hauppauge Corporate Center
150 Motor Parkway
Hauppauge, New York 11788
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(Name and Address of Agent For Service)
With a copy to:
Thomas R. Westle, Esq.
Spitzer & Feldman P.C.
405 Park Avenue
New York, NY 10022
As soon as practicable after the effective date
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(Approximate Date of Proposed Public Offering)
Shares of Common Stock
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(Title of Securities Being Registered)
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.
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INVESTA MANAGEMENT CO., INC.
Super Index Fund
InvestmentWizard Fund
PROSPECTUS
_______________, 1999
The SUPER INDEX FUND 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 at least 90% of the Fund's assets in a
diversified portfolio of common stock comprised of each of the companies
represented in the S&P 500 Index ("S&P 500 Index Securities") and implementing a
proprietary option strategy developed by Investa, Inc. (the "Adviser").
The INVESTMENTWIZARD FUND seeks to provide investors with long-term capital
appreciation by (i) investing in a diversified portfolio of equity securities of
U.S. and non-U.S. companies which have favorable growth prospects according to
the Adviser's analysis of financial information provided on
InvestmentWizard(sm), an interactive Internet database developed by the Adviser,
and (ii) implementing a proprietary option strategy 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.
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TABLE OF CONTENTS
PAGE
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RISK/RETURN SUMMARY ....................................................... 3
PERFORMANCE ............................................................... 5
FEES AND EXPENSES OF THE FUNDS ............................................ 6
SUPER INDEX FUND .......................................................... 7
INVESTMENTWIZARD FUND ..................................................... 8
MAIN RISKS ................................................................ 10
MANAGEMENT ORGANIZATION AND CAPITAL STRUCTURE ............................. 13
VALUATION OF SHARES ....................................................... 15
HOW TO PURCHASE SHARES .................................................... 17
HOW TO REDEEM SHARES ...................................................... 19
SHAREHOLDER SERVICES ...................................................... 21
DIVIDENDS AND DISTRIBUTIONS ............................................... 22
DISTRIBUTION AND SERVICE PLAN ............................................. 23
TAX STATUS ................................................................ 23
PERFORMANCE INFORMATION ................................................... 24
GENERAL INFORMATION ....................................................... 24
CUSTODIAN, TRANSFER AGENT AND DIVIDEND AGENT .............................. 25
COUNSEL AND INDEPENDENT AUDITORS .......................................... 25
FOR MORE INFORMATION ...................................................... 26
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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:
- -- Invest at least 90% of the Fund's assets in S&P 500 Index Securities to
replicate the proportionate holdings of the S&P 500 Index, an unmanaged
index which represents a significant portion of the market value of all
common stock publicly traded in the United States. Under normal market
conditions, the Adviser seeks to achieve a correlation between the Fund's
portfolio of S&P 500 Index Securities and the S&P 500 Index of at least
0.95, before expenses. A correlation of 1.00 would mean that the Fund and
the S&P 500 Index were perfectly correlated.
- -- Invest primarily in Standard & Poor's Depositary Receipts ("SPDRs") until
the Adviser believes the Fund has sufficient assets ($3 million) to
replicate the S&P 500 Index.
- -- Enhance the Fund's performance by using a proprietary option-based
investment model, 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 (collectively the "Index Options"). The
Adviser expects that, in general, the Investa Overwriting Strategy will be
implemented on 20% of the Fund's assets.
PRINCIPAL INVESTMENT RISKS:
- -- RISK OF LOSS. Loss of money is a risk of investing in this Fund.
- -- 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 portfolio securities may adversely affect the
value of the Fund's shares and your investment.
- -- PASSIVE MANAGEMENT OF S&P 500 INDEX SECURITIES. 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.Therefore, the Fund may not liquidate these securities if they
underperform or suffer a sharp decline.
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- -- IMPERFECT CORRELATION. The correlation between the Fund and the performance
of the S&P 500 Index may be affected by the Fund's expenses, changes in
securities markets, changes in the composition of the S&P 500 Index and the
timing of purchases and redemptions of Fund shares.
- -- OPTION STRATEGY/DERIVATIVE TRANSACTIONS. The Fund will trade Index
Optionsfor hedging purposes and/or direct investment. These instruments
contain certain special risks including imperfect correlations between the
value of the Index Option and the value of the underlying asset. The
failure of the Adviser to successfully implement the Investa Overwriting
Strategy may adversely affect the value of the Fund's shares and your
investment.
2. INVESTMENTWIZARD FUND
INVESTMENT OBJECTIVE:
- -- The Fund seeks to provide investors with long-term capital appreciation.
PRINCIPAL INVESTMENT STRATEGIES:
- -- Invest, without regard to market capitalization, at least 90% of the Fund's
assets in a diversified portfolio of equity securities of U.S. and non-U.S.
companies which the Adviser believes have favorable growth prospects.
- -- Identify portfolio securities based on financial information provided on
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.
- -- Enhance the Fund's performance by using a proprietary option-based
investment model, the "Investa Overwriting Strategy", which involves the
writing and/or buying of Index Options. The Adviser expects that, in
general, the Investa Overwriting Strategy will be implemented on 20% of the
Fund's assets.
PRINCIPAL INVESTMENT RISKS:
- -- RISK OF LOSS. Loss of money is a risk of investing in this Fund.
- -- 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. Increased volatility of the Fund's
portfolio securities may adversely affect the value of the Fund's shares
and your investment.
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- -- 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 ONINVESTMENTWIZARD(sm). There is no guarantee that the financial
information provided on InvestmentWizard(sm)will be reliable or accurate,
that the Adviser's analysis of such information 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,
currency exchange rate fluctuation, 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.
- -- OPTION STRATEGY/DERIVATIVE TRANSACTIONS. The Fund will trade Index
Optionsfor hedging purposes and/or direct investment. These instruments
contain certain special risks including imperfect correlations between the
value of the Index Option and the value of the underlying asset. The
failure of the Adviser to successfully implement the Investa Overwriting
Strategy may adversely affect the value of the Fund's shares and your
investment.
PERFORMANCE
No prior performance information is presented for either the Super
Index Fund or the InvestmentWizard Fund because, to date, neither Fund has
annual returns for a full calendar year.
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This table describes the fees and expenses that you may pay if you buy and hold
shares of either Fund.
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Super Index InvestmentWizard
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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)
Management Fees 1.00% 1.00%
Distribution and/or Service (Rule 12b-1) Fees(1) 0.25% 0.25%
Other Expenses(2) ____% ___ %
Total Estimated Fund Operating Expenses(2) % %
1. 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.
2. Other Expenses include, among other expenses, administrative, custody,
transfer agency and shareholder servicing fees.
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. 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 $__________
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SUPER INDEX FUND
Ticker Symbol: ________
PRINCIPAL INVESTMENT STRATEGIES
1. INVESTMENT IN S&P 500 INDEX SECURITIES
The Super Index Fund invests at least 80% of its assets in S&P 500
Index Securities to replicate the holdings of the S&P 500 Index. The S&P 500
Index is a widely recognized un-managed index of common stock prices and is
comprised of the common stocks of 500 companies representing a significant
portion of the market value of all common stocks publicly traded in the United
States. The 500 component stocks of the S&P 500 Index represent various sectors
of the U.S. economy (including industrial, utilities, financial and
transportation) selected by Standard & Poor's. As a result, the Fund is
diversified in terms of industry, size, liquidity and other relevant
characteristics.
The Fund generally invests in all 500 component common stocks of the
S&P 500 Index in proportion to their weighting in the S&P 500 Index. Under
normal market conditions, the Fund expects the correlation between the
performance of the assets of the Fund invested in S&P Index Securities and the
S&P 500 Index to be at least 0.95 (a correlation of 1.00 would be a perfect
correlation, in which the net asset value of the Fund increases or decreases in
exact proportion to changes in the S&P 500 Index).
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.
Until such time as the Fund raises what the Adviser believes are
sufficient assets ($3 million) to invest in S&P 500 Index Securities in almost
perfect (0.95) correlation to their representation in the S&P 500 Index, the
Fund will invest primarily in SPDRs (or "SPDR shares"). SPDRs are units of
beneficial interest in an investment trust sponsored by a wholly-owned
subsidiary of the American Stock Exchange, Inc. 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 S&P 500 Index. SPDRs trade on the American Stock Exchange
at approximately one-tenth the value of the S&P 500 Index. SPDRs are relatively
liquid and, because they exactly replicate the S&P 500 Index, any price movement
away from the value of the underlying stocks is generally quickly eliminated by
professional traders. Thus, the Adviser believes that the movement of SPDR share
prices should closely track the movement of the S&P 500 Index.
Pending the investment of additional cash in S&P 500 Index Securities
or for liquidity purposes, the Fund may, from time to time, invest a portion of
its net assets in U.S. Government securities, money market instruments, similar
short-term securities, or SPDR shares. Although it is not a principal investment
technique, the Fund may also lend up to 10% of its portfolio securities to
broker-dealers provided that these transactions are fully collateralized at all
times with cash, U.S. Government securities, money market instruments or similar
short-term securities.
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2. INVESTMENT IN OPTIONS PURSUANT TO INVESTA OVERWRITING STRATEGY
Unlike the management of most other "index" mutual funds, the Adviser
seeks to enhance Fund performance and exceed the annual return of the S&P 500
Index by using a proprietary option-based investment model. The "Investa
Overwriting Strategy" involves the Adviser seeking to capitalize on profit
opportunities created by (i) the fact that U.S. stock markets have, over the
long term, generally traded in relatively narrow ranges, and (ii) the
willingness of option buyers to pay a premium for the leverage that options
provide. The Adviser will implement the Investa Overwriting Strategy to generate
positive option premium income for the Fund by strategically writing and/or
buying Index Options in order to take advantage of the stock market's historical
and seasonal trading patterns. The Adviser believes that, in general, the
Investa Overwriting Strategy will be implemented on 20% of the Fund's assets.
The Investa Overwriting Strategy involves the use of the Adviser's
proprietary software to analyze historical market data in order to determine
when and to what extent the Adviser should write Index Options. The Strategy is
based on the Adviser's observation that stock markets tend to operate on a
historically cyclical basis. Accordingly, the Adviser uses proprietary software
to evaluate the performance of various index option strategies during specified
past time periods. By comparing the performance of index option strategies
during past time periods to their performance in recent time periods, the
Adviser determines whether to write Index Options that optimize the Fund's
potential for present gains.
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 the Fund (if a call
option), or sell the cash equivalent of the underlying securities to the Fund
(if a put option), at a 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 the Adviser's ability to correctly predict,
identify and exploit these opportunities.
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 50%.
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INVESTMENTWIZARD FUND
PRINCIPAL INVESTMENT STRATEGIES
To achieve its investment objective, the InvestmentWizard Fund invests,
without regard to market capitalization, at least 80% of its assets in a
diversified portfolio of equity securities of U.S. and non-U.S. companies that
have demonstrated fundamental investment value and the potential for long-term
growth. Portfolio securities include common stocks, preferred stocks,
convertible preferred stocks and other securities having the characteristics of
common stocks, such as American Depositary Receipts ("ADRs") and SPDR shares.
For liquidity purposes or pending the investment in securities in furtherance of
its investment objective, the Fund may invest up to 10% of its net assets in
U.S. Government securities, repurchase agreements and high quality short-term
debt and money market instruments. As a non-principal investment technique, the
Fund may also lend up to 10% of its portfolio securities to broker-dealers
provided that these transactions are fully collateralized at all times with
cash, U.S. Government securities, money market instruments or similar short-term
securities.
The Adviser selects portfolio securities for investment by the Fund
based on its analysis of financial information provided on InvestmentWizard(sm),
an interactive Internet database of Wall Street analysts' opinions, corporate
insider activity and signals generated by technical indicators on various stocks
and indices. The Adviser relies on InvestmentWizard(sm)'s unique ability to
monitor the leading analysts' prior and current market forecasts and stock
recommendations and the stock selection methods of money managers and analysts
when determining which securities should be held, purchased or sold for the
Fund's portfolio.
In addition to the Adviser's analysis of the data provided on
InvestmentWizard(sm), the Adviser reviews various factors prior to purchasing
portfolio securities such as price/earnings ratio, the strength or potential
strength of a company's competitive position, strength of management, marketing
prowess and product development capabilities. Portfolio securities may be sold
as a result of various factors such as lack of performance, change in business
direction, or adverse changes in other factors that were the basis for their
purchase. The Adviser believes that InvestmentWizard(sm) is instrumental in
identifying a pool of potential investment opportunities from which the Adviser
can select portfolio securities that it believes will best allow the Fund to
achieve its investment objective.
As a diversified Fund, the InvestmentWizard Fund will not concentrate
in any particular industry or sector. The Adviser intends to diversify the
Fund's portfolio among numerous market sectors that have consistent operating
histories, strong management teams and favorable growth prospects. The Fund will
focus primarily on sectors represented in the S&P 500 Index including, but not
limited, to Utilities, Energy, Transportation, Technology, Industrial Cyclicals,
Consumer Durables, Consumer Staples, Retail Sales, Oil, Capital Goods, Financial
Services, Service and Communications. However, the extent to which the Adviser
invests in any particular sector will be governed, to a large degree, by market
conditions.
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The Fund may also, from time to time, take temporary defensive
positions that are inconsistent with the Fund's principal investment strategies
in order to respond to adverse market economic, political or other unfavorable
conditions. Under these circumstances, the Fund may invest a substantial portion
of its assets 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. When the Fund is making such defensive investments,
the Fund may not achieve its investment objective.
The Adviser seeks to enhance Fund performance by using a proprietary
option-based investment model. The "Investa Overwriting Strategy" involves the
Adviser seeking to capitalize on profit opportunities created by (i) the fact
that U.S. stock markets have, over the long term, generally traded in relatively
narrow ranges, and (ii) the willingness of option buyers to pay a premium for
the leverage that options provide. The Adviser will implement the Investa
Overwriting Strategy to generate positive option premium income for the Fund by
strategically writing and/or buying Index Options in order to take advantage of
the stock market's historical and seasonal trading patterns. The Adviser expects
that, in general, the Investa Overwriting Strategy will be implemented on 20% of
the Fund's assets.
The Investa Overwriting Strategy involves the use of the Adviser's
proprietary software to analyze historical market data in order to determine
when and to what extent the Adviser should write Index Options. The Strategy is
based on the Adviser's observation that stock markets tend to operate on a
historically cyclical basis. Accordingly, the Adviser uses proprietary software
to evaluate the performance of various index option strategies during specified
past time periods. By comparing the performance of index option strategies
during past time periods to their performance in recent time periods, the
Adviser determines whether to write Index Options that optimize the Fund's
potential for present gains.
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 the Fund (if a call
option), or sell the cash equivalent of the underlying securities to the Fund
(if a put option), at a 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 the Adviser's ability to correctly predict,
identify and exploit these opportunities.
PORTFOLIO TURNOVER. 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%.
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RISKS OF INVESTING IN THE FUNDS
All mutual funds carry risk, and you may lose money on your investment
in either Fund. The following describes in more detail 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. The investment objective of a Fund
cannot be changed without its shareholders' approval. 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.
PRINCIPAL RISKS OF INVESTING IN THE FUNDS
MARKET RISK. Market prices of the equity securities in which a 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 a 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 a 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.
RISK OF INVESTING IN INDUSTRIES REPRESENTED IN THE S&P 500 INDEX.
Investing in the various sectors represented in the S&P 500 Index will expose
each Fund to a broad variety of risk factors. The risks that could adversely
affect the value of your investment include: changes in economic conditions and
interest rates, the exposure of companies within these industries to foreign
economic and political developments and currency fluctuations, the ability of
companies (especially those in the Chemical and Pharmaceutical sectors) to pass
their products through regulatory bodies, changes in the spending patterns of
consumers, the creation of new technology which might make obsolete the
technology sold, serviced, utilized, or otherwise relied upon by companies held
by a Fund, and the fluctuation of energy prices.
INVESTA OVERWRITING STRATEGY. Successful implementation of the Investa
Overwriting Strategy is dependent upon the Adviser's ability to capitalize on
the difference between the premiums received and paid by a Fund for Index
Options traded by the Adviser based on price fluctuations of those Index
Options. The failure of the Adviser to capitalize on such market opportunities
could adversely affect the value of a Fund's shares and your investment.
RISK FACTORS IN OPTIONS TRANSACTIONS GENERALLY. The successful use of
each Fund's option strategy is largely dependent 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.
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When a 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, a Fund will lose part or all of
its investment in the option. This contrasts with an investment by a 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 each Fund's ability to
terminate option positions at times when the Adviser deems it desirable to do
so. There is no assurance that a Fund will be able to effect closing
transactions at any particular time or at an acceptable price.
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) a 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 a 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.
SECURITIES LENDING. Each Fund may lend its portfolio securities to
broker-dealers amounting to no more than 10% of that Fund's net 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 and you could lose money on your investment.
ADDITIONAL PRINCIPAL RISKS OF INVESTING IN THE SUPER INDEX FUND
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.
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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
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 un-managed 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.
ADDITIONAL PRINCIPAL RISKS OF INVESTING IN THE INVESTMENTWIZARD FUND
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.
RISK OF INVESTING IN COMPANIES WITH SMALL AND MID-SIZED CAPITAL
STRUCTURES. The Fund may invest in companies with small or mid-sized capital
structures (generally a market capitalization of $5 billion or less).
Consequently, the Fund may be subject to the additional risks associated with
investment in these companies. These companies may have a relatively limited
operating history and less capital resources than larger market leaders. In
addition, the market prices of the securities of such companies tend to be more
volatile than those of larger companies. Further, these securities tend to trade
at a lower volume than those of larger more established companies. The net asset
value of the Fund will be more susceptible to sudden and significant losses if
the value of these securities decline.
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 the investment adviser to each Fund, 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 private investors but has no
previous experience as an investment adviser to a registered mutual fund. The
Adviser's principal office is located at 551 Fifth Avenue, New York, New York
10176.
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The Adviser conducts investment research and supervision for each Fund
and is responsible for the purchase and sale of securities for each Fund's
portfolio. 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 effectuating 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
Each of the Super Index Fund and the InvestmentWizard Fund is
co-managed by Messrs. Derek J. Hoggett and Scott B. Stokes.
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.
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., publisher of the acclaimed Internet
investment database, InvestmentWizard(sm).
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.
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ADVISORY FEE
Under each Investment Advisory Agreement, in consideration for the
services rendered by the Adviser, 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.
OTHER EXPENSES
Each Fund pays certain operating expenses directly, including, but not
limited to custodian, audit and legal fees, 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.
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 $__________
of total assets through its offices in New York, Denver, and Los Angeles.
ADS provides administrative, executive and regulatory services to each
Fund, supervises the preparation of each Fund's tax returns and coordinates the
preparation of reports to and filing with the Securities and Exchange Commission
and various state securities authorities, 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 reimburses the Administrator for any
out-of-pocket expenses incurred by the Administrator on behalf of the Funds.
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VALUATION OF SHARES
On each day that the Funds are open for business, the price of the
shares of each Fund (net asset value) is determined as of the close of the
regular session of trading on the New York Stock Exchange ("NYSE"), normally
4:00 p.m., eastern standard time. The Funds are open for business on each day
the NYSE is open for business. The NYSE 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, Martin Luther King, Jr. Day, Good
Friday, Memorial Day, Independence Day, Labor Day, Thanksgiving Day and
Christmas Day.
The net asset value per share of a Fund is calculated by dividing the
sum of the value of the securities held by the Fund plus cash and/or other
assets minus all liabilities (including estimated accrued expenses) attributable
to the Fund by the total number of shares outstanding of the Fund, rounded to
the nearest cent. The price at which a purchase or redemption of a Fund's shares
is effected is based on the next calculation of net asset value after the order
is received.
U.S. Government obligations are valued at their most recent bid prices
as obtained from one or more major market makers for such securities. Other
portfolio securities are valued as follows: (1) securities which are traded on
stock exchanges or are quoted on NASDAQ are valued at the last reported sale
price as of the close of the regular trading session on the NYSE on the day the
securities are being valued, or, if not traded on a particular day, at the
closing bid price; (2) securities traded in the over-the-counter market, and
which are not quoted by NASDAQ are valued at the last sale price (or, if the
last sale price is not readily available, at the last bid price as quoted by
brokers that make markets in the securities) as of the close of the regular
session of trading on the NYSE on the day the securities are being valued; and
(3) securities for which market quotations are not readily available are valued
at their fair value as determined in good faith in accordance with consistently
applied procedures established by and under the general supervision of the Board
of Directors. The net asset value per share of a Fund will fluctuate with the
value of the securities it holds.
Fixed income 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 pricing service
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 any of the Funds that mature in sixty
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.
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FOREIGN SECURITIES
Trading in foreign securities may be completed at times when the NYSE
is closed. In computing the InvestmentWizard Fund's net asset value, the Adviser
values foreign securities at the latest closing price on the exchange on which
they are traded immediately prior to the closing of the NYSE. Certain foreign
currency exchange rates may also be determined at the latest rate prior to the
closing of the NYSE. Foreign securities quoted in foreign currencies are
translated into U.S. dollars at current rates. Occasionally, events that affect
these values and exchange rates may occur between the times at which they are
determined and the closing of the NYSE. If such events materially affect the
value of portfolio securities, these securities may be valued at their fair
value as determined in good faith by the Board of Directors.
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 an order is received by a Fund or its authorized agent
after the Fund's net asset value is determined, 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 "Valuation of Shares". The Funds reserve the right to reject any
purchase offer.
You are required to open an account by telephone or mail a signed
application to the Transfer Agent at the address listed below in order to
complete your initial purchase.
Additional investments 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.
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.
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PURCHASES BY MAIL
Subject to acceptance by the Transfer Agent, shares of each Fund may be
purchased by opening an account by mail by completing and signing an account
application and mailing it to the Transfer Agent at the following address:
[NAME OF FUND]
c/o American Data Services, Inc.
P.O. Box 5536
Hauppauge, NY 11788-0132
Shareholders may also open an account by telephone prior to mailing or
wiring his or her initial investment proceeds to the Fund. To open an account by
telephone, call (__) ___-____ to obtain an account number and instructions.
Information, including the appropriate federal tax identification number,
concerning the account will be taken over the phone.
PURCHASES BY WIRE
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 open an account by telephone or mail a signed
application to the Transfer Agent at the address listed above 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 is 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.
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Payment for the purchase of shares 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. No third party checks will be
accepted. In the event that there are insufficient funds to cover a check, such
prospective investor will be assessed a $15.00 charge.
HOW TO REDEEM SHARES
GENERAL REDEMPTION INFORMATION
Your shares will be redeemed at the net asset value next determined
after receipt of your instructions 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 for additional information
regarding redemptions.
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.
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.
The Funds reserve the right to reject any redemption request that is
not in "good order". 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;
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(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 NYSE Medallion Signature Program ("MSP"). Shareholders
may contact either Fund at (___) ___-____ 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 (maximum of $___ per day). 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.
During times of drastic economic or market conditions, you may have
difficulty in contacting the Transfer Agent by telephone to request a redemption
or exchange of a Fund's shares. In those cases, you should consider using the
other redemption procedures described herein. Use of these other redemptions
procedures may result in your redemption request being processed at a later time
than it would have been if telephone redemption has been used. During the delay,
the value of the Fund's net assets may fluctuate.
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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 redemption 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).
You may request that redemption proceeds (minimum of $_________) be
wired to your account at a bank which is a member of the Federal Reserve System,
or a correspondent bank if your bank is not a member.
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.
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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:
-- 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.
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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 the then
current net asset value per share. 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 ___ months,
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 and all future
distributions from a Fund 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. No interest will accrue on uncashed checks.
DISTRIBUTOR
ADS Distributors, Inc. ("the Distributor"), an affiliate of the
Administrator, has entered into a distribution agreement with the Company to
serve as the principal underwriter for each Fund and the distributor for each
Fund's shares. In consideration of these services, the Distributor will receive
annual compensation in the amount of $500 per Fund. 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 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.
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DISTRIBUTION AND SERVICE PLAN
Each Fund has 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. Each plan 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.
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, neither Fund will be liable for federal income taxes to the extent
they distribute taxable income to shareholders.
Distributions to shareholders by a Fund, whether received in cash or
reinvested in additional shares of the Fund, are generally subject to federal
income tax at varying rates depending on whether such distributions are treated
as ordinary income or capital gains distributions. Interest income from direct
investment by non-corporate 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 a Fund's shares is a taxable event that may result in
a capital gain or loss.
Before investing in the Funds, 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.
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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 and the composition
of each Fund's portfolio. 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.
GENERAL INFORMATION
GENERAL
The Super Index Fund and InvestmentWizard Fund are each a series of
Investa Management Co., Inc., a Maryland corporation organized on May 14, 1999.
YEAR 2000 COMPLIANCE
Like other mutual funds, financial and business organizations and
individuals around the world, the Funds may be adversely affected if the
computer systems used by the investment adviser, the administrator and other
service providers do not properly process and calculate date-related information
and data from and after January 1, 2000. This is commonly known as the "Year
2000 Issue" The investment adviser and the administrator are taking steps that
they believe are reasonably designed to address the Year 2000 Issue with respect
to computer systems that they use. The investment adviser and administrator are
also obtaining reasonable assurances that comparable steps are being taken by
the Fund's other major service providers.
Although there can be no assurance at this time that there will be no
adverse impact on the Fund, the Fund's service providers have advised the Fund
that they have been actively working on necessary changes to their computer
systems to prepare for the Year 2000. The Fund's service providers expect that
their systems, and those of other parties they deal with, will be adapted in
time for that event. However, there can be no assurance that the computer
systems of the companies in which the Fund invests (especially those of foreign
companies) will be timely converted or that the value of such investments will
not be adversely affected by the Year 2000 Issue. Foreign issuers, capital
markets and economies may be more susceptible to Year 2000 Issues than domestic
companies. If the computer systems of the companies in which the Fund invests,
including those of foreign companies, are not ready for the Year 2000, the
Fund's net asset value and total return could be adversely affected.
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CUSTODIAN, TRANSFER AGENT AND DIVIDEND DISBURSING AGENT
Union Bank of California (the "Custodian") 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 Disbursing Agent. For these services, each Fund pays ADS the greater of
$___ per month or $____ per year per account, plus out-of-pocket expenses for
rendering such transfer and dividend agency services.
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. [NAME/ADDRESS OF AUDITORS], have been
selected as independent auditors for each Fund.
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FOR MORE INFORMATION
INVESTA MANAGEMENT CO., INC.
SUPER INDEX FUND INVESTMENTWIZARD FUND
More Information on each 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 OR MAKE SHAREHOLDER INQUIRIES:
BY TELEPHONE: BY E-MAIL:
(___) ___-____ Send your request to [email protected]
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
FROM THE 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.
File No. 811-09399
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STATEMENT OF ADDITIONAL INFORMATION
_____________, 1999
TABLE OF CONTENTS PAGE
Principal and Non-Principal Investment Policies, Risks and Restrictions 2
Directors and Executive Officers ...................................... 12
Investment Advisory and Other Services ................................ 14
Shareholder Servicing & Distribution Plan ............................. 17
Portfolio Transactions and Allocation of Brokerage .................... 19
Taxation .............................................................. 21
Voting and Ownership of Shares ........................................ 23
Purchase of Shares .................................................... 24
Dividends and Distributions ........................................... 24
Net Asset Value ....................................................... 24
Performance Comparisons ............................................... 25
Redemption of Shares .................................................. 27
Organization of Company ............................................... 27
Counsel and Independent Auditors ...................................... 27
Other Information ..................................................... 28
Financial Statements .................................................. 28
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 by writing the Funds 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 POLICIES, RISKS AND RESTRICTIONS
Each of the Super Index Fund and the InvestmentWizard Fund is a
diversified, open-end, management investment company whose investment objectives
can be changed only with shareholder approval.
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
the investment policies and risks which are particular to each Fund as a result
of each Fund's specific investment objective and strategies. Unless otherwise
noted, the policies described in this Statement of Additional Information are
not fundamental and may be changed by the Board of Directors. 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
PRINCIPAL INVESTMENT POLICIES AND RISKS OF THE FUNDS
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.
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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
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.
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. The value of SPDRs is subject to change as the values of
their respective component common stocks fluctuate according to the volatility
of the market. Investments in SPDRs involves 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 invested in by the Funds.
Moreover, the Funds' investment in SPDRs 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 held by each
of the Funds will have a negative impact on the net asset value of the trusts.
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USE AND RELIANCE ON INVESTMENTWIZARD(sm). The Adviser will seek to
enhance the performance of the InvestmentWizard Fund by utilizing financial
information provided on 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.
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PURCHASING PUT AND CALL OPTIONS. The InvestmentWizard Fund may purchase
put and call options on securities eligible for purchase by the Fund and on
securities indices, and the SuperIndex Fund may purchase put and call options on
securities indices Put and call options are derivative securities traded on U.S.
exchanges. If the Fund purchases a put option, it acquires the right to sell the
underlying security or index value at a specified price at any time during the
term of the option. If the Fund purchases a call option, it acquires the right
to purchase the underlying security or index value at a specified price at any
time during the term of the option. Prior to exercise or expiration, the Fund
may sell an option when through a "closing sale transaction," which is
accomplished by selling an option of the same series as the option previously
purchased. The Fund generally will purchase only those options for which the
Adviser believes there is an active secondary market to facilitate closing
transactions.
A Fund may purchase call options to hedge against an increase in the
price of securities that the 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.
A Fund will purchase put options to hedge against a decrease in the
price of securities it holds. Such hedge protection is provided during the life
of the put option since the fund, as the holder of the put option, is able to
sell the underlying security at the exercise price regardless of any decrease in
the underlying security's market price. In order for a put option to be
profitable, the market price of the underlying security must decrease
sufficiently below the exercise price to cover the premium and transaction
costs.
WRITING CALL OPTIONS. The InvestmentWizard Fund may write covered call
options on securities eligible for purchase by the Fund, and the Super Index
Fund may write covered call options on the S&P 500 Index. A call option is
"covered" if a Fund owns the security underlying the call or has an absolute
right to acquire the security without additional cash consideration (or, if
additional cash consideration is required, cash or cash equivalents in such
amount as are held in a segregated account by the Custodian). The writer of a
call option receives a premium and gives the purchaser the right to buy the
security underlying the option at the exercise price. The writer has the
obligation upon exercise of the option to deliver the underlying security
against payment of the exercise price during the option period. If the writer of
an exchange-traded option wishes to terminate his obligation, it may effect a
"closing purchase transaction." This is accomplished by buying an option of the
same series as the option previously written. A writer may not effect a closing
purchase transaction after it has been notified of the exercise of an option.
Effecting a closing transaction in the case of a written call option
will permit a Fund to write another call option on the underlying security with
either a different exercise price, expiration date or both. Also, effecting a
closing transaction allows the cash or proceeds from the concurrent sale of any
securities subject to the option to be used for other investments of the Fund.
If the Fund desires to sell a particular security from its portfolio on which it
has written a call option, it will effect a closing transaction prior to or
concurrent with the sale of the security.
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A Fund realizes a gain from a closing transaction if the cost of the
closing transaction is less than the premium received from writing the option or
if the proceeds from the closing transaction are more than the premium paid to
purchase the option. A Fund realizes a loss from a closing transaction if the
cost of the closing transaction is more than the premium received from writing
the option or if the proceeds from the closing transaction are less than the
premium paid to purchase the option. However, because increases in the market
price of a call option will generally reflect increases in the market price of
the underlying security, appreciation of the underlying security owned by a Fund
generally offsets, in whole or in part, any loss to the Fund resulting from the
repurchase of a call option.
RISK FACTORS IN OPTIONS TRANSACTIONS. The successful use of a Fund's
options strategies depends on the ability of the Adviser to forecast correctly
interest rate and market movements. For example, if the 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 the 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 a 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 a Fund's ability to
terminate option positions at times when the Adviser deems it desirable to do
so. There is no assurance that a Fund will be able to effect closing
transactions at any particular time or at an acceptable price.
If a secondary market in options were to become unavailable, a Fund
could no longer 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.
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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 an 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 unit asset valueailable, 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 a Fund 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, the Fund as purchaser or writer of an
option will 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, an 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,
the Fund as purchaser or writer of an option will be locked into its position
until one of the two restrictions has been lifted. If an 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. The 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.
DEALER OPTIONS. A Fund may engage in transactions involving dealer
options as well as exchange-traded options. Certain risks are specific to dealer
options. While the Fund might look to an exchange's clearing corporation to
exercise exchange-traded options, if a Fund purchases a dealer option it must
rely on the selling dealer to perform if the Fund exercises the option. Failure
by the dealer to do so would result in the loss of the premium paid by the Fund
as well as loss of the expected benefit of the transaction.
Exchange-traded options generally have a continuous liquid market while
dealer options may not. Consequently, a Fund can realize the value of a dealer
option it has purchased only by exercising or reselling the option to the
issuing dealer. Similarly, when a Fund writes a dealer option, the Fund can
close out the option prior to its expiration only by entering into a closing
purchase transaction with the dealer. While the Funds will seek to enter into
dealer options only with dealers who will agree to and can enter into closing
transactions with the Funds, no assurance exists that a Fund will at any time be
able to liquidate a dealer option at a favorable price at any time prior to
expiration. Unless a Fund, as a covered dealer call option writer, can effect a
closing purchase transaction, it will not be able to liquidate securities (or
other assets) used as cover until the option expires or is exercised. In the
event of insolvency of the other party, the Fund may be unable to liquidate a
dealer option. With respect to options written by a Fund, the inability to enter
into a closing transaction may result in material losses to the Fund. For
example, because a Fund must maintain a secured position with respect to any
call option on a security it writes, the Fund may not sell the assets which it
has segregated to secure the position while it is obligated under the option.
This requirement may impair the Fund's ability to sell portfolio securities at a
time when such sale might be advantageous.
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The staff of the SEC takes the position that purchased dealer options
are illiquid securities. A Fund may treat the cover used for written dealer
options as liquid if the dealer agrees that the Fund may repurchase the dealer
option it has written for a maximum price to be calculated by a predetermined
formula. In such cases, the dealer option would be considered illiquid only to
the extent the maximum purchase price under the formula exceeds the intrinsic
value of the option. With that exception, however, the Funds will treat dealer
options as subject to the Funds' limitation on illiquid securities. If the SEC
changes its position on the liquidity of dealer options, the funds will change
their treatment of such instruments accordingly.
NON-PRINCIPAL INVESTMENT POLICIES AND RISKS OF THE FUNDS
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:
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.
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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 investments or
common stocks whose price history and expected performance lend themselves to
the Adviser's method for investment or for liquidity purposes (and, with respect
to InvestmentWizard Fund, for 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.
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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.
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.
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.
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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.
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 10% 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 principal investment objectives, policies and risks
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.
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FUNDAMENTAL INVESTMENT RESTRICTIONS
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"), except as set forth in restriction
number 3 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 all or any portion 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, except as set forth in the Prospectus;
6. Make loans, in the aggregate, exceeding 10% of either Fund's total
assets or lend either Fund's portfolio securities to broker-dealers if the loans
are not fully collateralized;
7. Invest in other registered investment companies, except as permitted
by the 1940 Act;
8. Change the nature of its business so as to cease to be an investment
company;
9. 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 any Fund; or
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10. Concentrate investments, or invest 25% or more of its assets, in
any one industry. This limitation shall not apply to securities issued or
guaranteed by the U.S. Government.
NON-FUNDAMENTAL INVESTMENT RESTRICTIONS
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. In
the event that such illiquid securities comprise more than 15% of a Fund's
assets due to appreciation or other like cause not related to direct investment,
no Fund shall purchase additional portfolio securities until such time as that
Fund holds 15% or less in such illiquid securities; or
3. Purchase additional portfolio securities if borrowings exceed 5%.
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.
DIRECTORS AND EXECUTIVE OFFICERS
The following table contains information concerning the directors and
officers of Investa Management Co., Inc. and their principal occupations during
the past five years. Directors who are interested persons, as defined by the
1940 Act, are indicated by asterisk.
12
<PAGE>
<TABLE>
<CAPTION>
- --------------------------------- ----------------------------- ----------------------------------------
POSITIONS HELD WITH THE PRINCIPAL OCCUPATION LAST FIVE YEARS
NAME AND ADDRESS COMPANY
- --------------------------------- ----------------------------- ----------------------------------------
<S> <C> <C>
Derek J. Hoggett* (Age 53) President, Treasurer and President, Secretary, and Treasurer of
2215 Amberly Court Chairman of the Board of Investa, Inc., a registered investment
Houston, TX 77063 Directors adviser and the Adviser to the Funds
- --------------------------------- ----------------------------- ----------------------------------------
Scott B. Stokes* (Age 31) Vice President and Secretary Vice President and Portfolio Manager
551 Fifth Avenue of Investa, Inc., a registered
New York, NY 10176 investment adviser and the Adviser to
the Funds
- --------------------------------- ----------------------------- ----------------------------------------
Michael Miola* (Age 46) Director President and Chief Executive Officer
c/o American Data Services, Inc. of American Data Services, Inc.
The Hauppauge Corporate Center
150 Motor Parkway
Hauppauge, NY 11788
- --------------------------------- ----------------------------- ----------------------------------------
Donald Weber (Age ___) Director
71 Winchester Court
Vicarage Gate, London W84AF
United Kingdom
- --------------------------------- ----------------------------- ----------------------------------------
Tucker Coughlin (Age ___) Director
4611 Country Club View
Bayton, Texas 77521
- --------------------------------- ----------------------------- ----------------------------------------
Dr. Kenneth Lehrer (Age___) Director
5555 Del Monte Drive
Apartment 802
Houston, Texas 77056
- --------------------------------- ----------------------------- ----------------------------------------
</TABLE>
13
<PAGE>
The members of the Audit Committee of the Board of Directors are
Messrs. Weber and Coughlin and Dr. Lehrer. Mr. Weber 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.
No Director, whether interested or disinterested, will receive any
remuneration from either Fund. However, each Director who is not affiliated with
the Adviser or the Administrator, will be reimbursed for expenses incurred in
connection with attending meetings.
INVESTMENT ADVISORY AND OTHER SERVICES
The investment adviser for each of the Funds is Investa, Inc., a Texas
corporation organized in 1981. The Adviser serves in that capacity pursuant to a
written agreement which, after its initial two-year period, must be annually
re-approved by the Board of Directors. The address of the Adviser is 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.
INVESTMENT ADVISORY AGREEMENTS
The Adviser acts as the investment adviser to each Fund pursuant to
Investment Advisory Agreements, each of which have 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).
Each Investment Advisory Agreement will terminate automatically in the
event of its assignment. In addition, each 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, each agreement shall continue
in effect for more than two years after its execution provided that its
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 (as defined in the 1940 Act), cast in person at a
meeting called for the purpose of voting on such approval.
14
<PAGE>
Under the Investment Advisory Agreements, 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.
CODE OF ETHICS
Personnel of the Adviser may invest in securities for their own account
pursuant to a Code of Ethics which has been adopted by the Company and the
Adviser that sets forth all employees' fiduciary responsibilities regarding the
Funds, establishes procedures for personal investing and restricts certain
transactions. For example, all personal trades in most securities require
pre-clearance, and participation in initial public offerings is prohibited. In
addition, restrictions on the timing of personal investing in relation to trades
by the Funds and on short-term trading have been adopted.
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 on
behalf of the Funds, 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 is 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.
15
<PAGE>
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 , 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 a Fund Accounting Service Agreement in
place with the Company, on behalf of the funds, 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 as
set forth in the Prospectus. The Funds each also pay the Administrator for any
out-of-pocket expenses. These fees are set forth in the Funds' 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.
16
<PAGE>
CUSTODIAN, TRANSFER AGENT AND DIVIDEND DISBURSEMENT AGENT
Union Bank of California (the "Custodian") serves as the custodian for
each Fund's cash and securities. Pursuant to a Custody Agreement with the
Company, on behalf of each Fund, the Custodian 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 Disbursing 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.
The Distribution Agreement contains provisions with respect to renewal
and termination similar to those in the Investment Advisory Agreement described
above. Pursuant to the Distribution Agreement, the Company has agreed to
indemnify the Distributor to the extent permitted by applicable law against
certain liabilities under the Securities Act of 1933.
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.
17
<PAGE>
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
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.
18
<PAGE>
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 the income of each Fund,
respectively, before dividends are paid. These expenses include, but are not
limited to, organizational costs 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 various state securities
laws, the expenses of reports to shareholders, shareholders' meetings and proxy
solicitations.
PORTFOLIO TRANSACTIONS AND ALLOCATION OF BROKERAGE
Each Fund's assets are invested by the Adviser in a manner consistent
with its investment objective, strategies, 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.
Transactions on U.S. stock exchanges, commodities markets and futures
markets and other agency transactions may involve the payment by the Adviser on
behalf of a Fund of negotiated brokerage commissions. Such commissions vary
among different brokers. A particular broker may charge different commissions
according to such factors as the difficulty and size of the transaction.
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 the Adviser usually includes an
undisclosed dealer commission or mark-up. In underwritten offerings, the price
paid by the Adviser on behalf of each Fund includes a disclosed, fixed
commission or discount retained by the underwriter or dealer.
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.
19
<PAGE>
In placing orders for the purchase and sale of portfolio securities for
each Fund, the Adviser seeks to obtain the best price and execution, taking into
account such factors as price, size of order, difficulty and risk of execution
and operational facilities of the firm involved. For securities traded in the
over-the-counter markets, the Adviser deals directly with the dealers who make
markets in the securities unless better prices and execution are available
elsewhere. The Adviser negotiates commission rates with brokers based on the
quality and quantity of services provided in light of generally prevailing
rates, and while the Adviser generally seeks reasonably competitive commission
rates, the Funds do not necessarily pay the lowest commissions available. The
Board of Directors periodically reviews the commission rates and allocation of
orders.
When consistent with the objectives of best price and execution,
business may be placed with broker-dealers who furnish investment research or
services to the Adviser. Such research or services include advice, both orally
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 any 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.
The same security may be suitable for each of the Funds or other
private accounts managed by the Adviser. If and when a Fund and 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 and 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.
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.
20
<PAGE>
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 company taxable income and on net realized
capital gains (net long-term capital gains in excess of the sum of net
short-term capital losses and capital losses carryovers from the prior 8 years)
to the extent distributed as dividends to shareholders.
To qualify as a regulated investment company, a Fund must, among other
things (a) derive in each taxable year at least 90% of its gross income from
dividends, interest, payments with respect to securities loans, and gains from
the sale or other disposition of stock, securities or foreign currencies, or
other income (including gains from options, futures and forward contracts)
derived with respect to its business of investing in such stock, securities or
currencies; (b) diversify its holdings so that, at the end of each quarter of
the taxable year, (i) at least 50% of the market value of a Fund's assets is
represented by cash, U.S. Government securities, the securities of other
regulated investment companies and other securities, with such other securities
of any one issuer limited for the purposes of this calculation to an amount not
greater than 5% of the value of a Fund's total assets and 10% of the outstanding
voting securities of such issuer, and (ii) not more than 25% of the value of its
total assets is invested in the securities of any one issuer (other than U.S.
Government securities or the securities of other regulated investment
companies); and (c) distribute to its shareholders at least 90% of its
investment company taxable income (which includes dividends, interest and net
short-term capital gains in excess of any net long-term capital losses) and 90%
of its net exempt interest income each taxable year.
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.
21
<PAGE>
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.
Many of the options contracts used by the Funds are "section 1256
contracts." Any gains or losses on section 1256 contracts are generally
considered 670% long-term and 40% short-term capital gains or losses ("60/40").
Also, section 1256 contracts held by a Fund at the end of each taxable year
(and, for purposes of the 4% excise tax, on certain other dates as prescribed
under the Code) are "marked to market" with the result that unrealized gains or
losses are treated as though they were realized and the resulting gain or loss
is treated as ordinary or 60/40 gain or loss, depending on the circumstances.
Generally, the hedging transactions and certain other transactions in
options contracts undertaken by a Fund may result in "straddles" for U.S.
federal income tax purposes. The straddle rules may affect the character of
gains (or losses) realized by a Fund. In addition, losses realized by a Fund on
positions that are part of a straddle may be deferred under the straddle rules,
rather than being taken into account in calculating the investment company
taxable income or net capital gain for the taxable year in which such losses are
realized. Because limited regulations implementing the straddle rules have been
promulgated, the tax consequences of transactions in options and future
contracts to a Fund are not entirely clear. The transactions may increase the
amount of short-term capital gain realized by a Fund which is taxed as ordinary
income when distributed to shareholders.
Each Fund may make one or more of the elections available under the
code which are applicable to straddles. If a Fund makes any of the elections,
the amount, character and timing of the recognition of gains or losses from the
affected straddle positions will be determined under the rules that vary
according to the election(s) made. The rules applicable under certain of the
elections operate to accelerate the recognition of gains or losses from the
affected straddle positions. Because application of the straddle rules may
affect the character of gains or losses, defer losses and/or accelerate the
recognition of gains or losses from the affected straddle positions, the amount
which must be distributed to shareholders, and which will be taxed to
shareholders as ordinary income or long-term capital gain, may be increased or
decreased substantially as compared to a fund that did not engage in such
hedging transactions.
22
<PAGE>
Any redemption or exchange of a Fund's shares is a taxable event and
may result in a capital gain or loss. A gain or loss, if the shares are capital
assets in the shareholder's hands, and will be long-term, mid-term or short-term
generally depending upon the shareholder's holding period for the shares. Any
loss realized on a disposition will be disallowed by "wash sale" rules to the
extent the shares disposed of are replaced within a period of 61 days beginning
30 days before and ending 30 days after the disposition. In such a case, the
basis of the shares acquired will be adjusted to reflect the disallowed loss.
Any loss realized by a shareholder on a disposition of shares held by the
shareholder for six months or less will be treated as a long-term capital loss
to the extent of any distributions of capital gain dividends received by the
shareholder with respect to such shares.
Dividend distributions, capital gains distributions, and capital gains
or losses from redemptions and exchanges may also be subject to state and local
taxes.
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.
Shareholders of the Funds and any other future series of the Company
will vote in the aggregate and not by series except as otherwise required by law
or when the Board of Directors determines that the matter to be voted upon
affects only the interest of the shareholders of a particular series. Pursuant
to Rule 18f-2 under the 1940 Act, the approval of an investment advisory
agreement or any change in a fundamental policy would be acted upon separately
by the series affected. Matters such as ratification of the independent public
accountants and election of Directors are not subject to separate voting
requirements and may be acted upon by shareholders of the Company voting without
regard to series.
23
<PAGE>
On __________, 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.
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.
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 NYSE 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 NYSE 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, Martin Luther King, Jr. Day, 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:
24
<PAGE>
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.
In addition to average annual total returns, each Fund may quote unit
asset valueeraged 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.
25
<PAGE>
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.
26
<PAGE>
REDEMPTION OF SHARES
Redemption of shares, or payment for redemptions, may be suspended at
times (a) when the NYSE is closed for other than customary weekend or holiday
closings, (b) when trading on the NYSE 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.
ORGANIZATION OF COMPANY
Each of the Super Index Fund and the InvestmentWizard Fund is a series
of Investa Management Co., Inc., a registered Maryland corporation organized on
May 14, 1999. As of the date of this Statement of Additional Information, all of
the outstanding shares of the Funds are owned by the Adviser. As indicated
above, the Adviser is controlled by Mr. Derek Hoggett. As a result, as of such
date, the Funds may be deemed to be controlled by Mr. Hoggett.
The Board of Directors may establish additional funds (with different
investment objectives and fundamental policies) and additional classes of shares
at any time in the future. Establishment and offering of additional portfolios
will not alter the rights of the Funds' shareholders. Shares do not have
preemptive rights or subscription rights. All shares when issued, will be fully
paid and non-assessable by the Company. In liquidation of a Fund, each
shareholder is entitled to receive his pro rata share of the assets of the Fund.
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. ______________________________ has
been selected as independent auditors for each of the Funds.
27
<PAGE>
OTHER INFORMATION
The Adviser has been continuously registered as an investment adviser
with the Securities Exchange Commission (SEC) under the 1940 Act since June 8,
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.
FINANCIAL STATEMENTS
The Company's balance sheet as of __________, 1999 is set forth below.
It has been audited by the Company's independent auditors, _________________,
whose report thereon is set forth below. The balance sheet is included herein in
reliance upon their authority as experts in accounting and auditing.
28
<PAGE>
PART C
ITEM 23. EXHIBITS.
*(a) Articles of Incorporation;
*(b) By-Laws of the Company;
(c) Not Applicable.
**(d) Form of Investment Advisory Agreement.
**(e) Form of Distribution Agreement.
(f) Not Applicable.
**(g) Form of Custody Agreement.
**(h) Form of Administrative Service Agreement.
**(h-1)Form of Transfer Agency Agreement.
**(h-2) Form of Accounting Agreement.
***(i) 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.
***(i-2) Opinion of Venable, Baetjer and Howard, LLP, as
Maryland counsel, as to matters of Maryland law.
***(i-3) Consent of __________________, independent auditors.
(k) Not Applicable.
** (l) Form of Subscription Letter.
** (m) Distribution (12b-1) Plans.
(n) Not Applicable.
* Filed with the Securities and Exchange Commission as an Exhibit to the
Registration Statement on Form N-1A (Reg. No. 333-81147) filed on June 29,
1999.
** Filed herewith
*** To be filed as a part of Pre-Effective Amendment No. 2.
29
<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."
Registrant will comply with Rule 484 under the Securities Act of 1933
and Release 11300 under the 1940 Act in connection with any
indemnification.
ii
<PAGE>
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 Sole Director
Scott B. Stokes Vice President
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* President, and Director
Chief Executive Officer
*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 at ___________________________.
ITEM 29. MANAGEMENT SERVICES.
Not Applicable
ITEM 30. UNDERTAKINGS.
Not Applicable
iii
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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 6th day of
December, 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 December 6, 1999
- -------------------- Chairman of the Board of Directors
Derek J. Hoggett
/s/ Michael Miola Director December 6, 1999
- -----------------
Michael Miola
/s/ Donald Weber Director December 6, 1999
- ----------------
Donald Weber
/s/ Tucker Coughlin Director December 6, 1999
- -------------------
Tucker Coughlin
/s/ Dr. Kenneth Lehrer Director December 6, 1999
- -----------------------
Kenneth Lehrer
The above persons signing as Directors are all of the members of the
Company's Board of Directors.
iv
INVESTA MANAGEMENT CO., INC.
FORM OF INVESTMENT ADVISORY AGREEMENT
THIS INVESTMENT ADVISORY AGREEMENT ("Agreement") is made as of the __
day of __________, 1999, by and between INVESTA MANGEMENT CO., INC., a Maryland
corporation (the "Company"), on behalf of its series, Super Index Fund (the
"Fund") and INVESTA, INC., a Texas corporation (the "Adviser").
W I T N E S S E T H:
WHEREAS, the Company is an open-end management investment company,
registered as such under the Investment Company Act of 1940 (the "Investment
Company Act"); and
WHEREAS, the Fund is a series of the Company having separate assets and
liabilities; and
WHEREAS, the Adviser is registered as an investment adviser under the
Investment Advisers Act of 1940 and is engaged in the business of providing
investment advice to individual clients and investment companies; and
WHEREAS, the Company desires to retain the Adviser to render advice and
services to the Fund pursuant to the terms and provisions of this Agreement, and
the Adviser desires to furnish said advice and services;
NOW, THEREFORE, in consideration of the covenants and the mutual
promises hereinafter set forth, the parties to this Agreement, intending to be
legally bound hereby, mutually agree as follows:
1. APPOINTMENT OF ADVISER. The Company hereby employs the Adviser
and the Adviser hereby accepts such employment, to render
investment advice and related services with respect to the assets
of the Fund for the period and on the terms set forth in this
Agreement, subject to the supervision and direction of the Board
of Directors.
2. DUTIES OF ADVISER.
<PAGE>
(a) GENERAL DUTIES. The Adviser shall act as investment adviser
to the Fund and shall supervise investments of the Fund on
behalf of the Fund in accordance with the investment
objective, policies and restrictions of the Fund as set
forth in the Fund's and Company's governing documents,
including, without limitation, the Company's Articles of
Incorporation and By-Laws; the Fund's prospectus, statement
of additional information and undertakings, as in effect
from time to time; and such other limitations, policies and
procedures as the Directors may impose from time to time in
writing to the Adviser. In providing such services, the
Adviser shall at all times adhere to the provisions and
restrictions contained in the federal securities laws,
applicable state securities laws, the Internal Revenue Code,
the Uniform Commercial Code and other applicable law.
Without limiting the generality of the foregoing, the Adviser shall:
(i) furnish the Fund with advice and recommendations with respect to the
investment of the Fund's assets and the purchase and sale of portfolio
securities for the Fund, including the taking of such steps as may be necessary
to implement such advice and recommendations (e.g., placing the orders); (ii)
manage and oversee the investments of the Fund, subject to the ultimate
supervision and direction of the Board of Directors; (iii) vote proxies for the
Fund, file ownership reports under Section 13 of the Securities Exchange Act of
1934 for the Fund, and take other similar actions on behalf of the Fund; (iv)
maintain the books and records required to be maintained by the Fund except to
the extent arrangements have been made for such books and records to be
maintained by the administrator or another agent of the Fund; (v) furnish
reports, statements and other data on securities, economic conditions and other
matters related to the investment of the Fund's assets which the Fund's
administrator or distributor or the officers of the Company may reasonably
request; and (vi) render to the Board of Directors such periodic and special
reports with respect to the Fund's investment activities as the Board may
reasonably request, including at least one in-person appearance annually before
the Board of Directors. Notwithstanding the provisions of this Section 2(a), the
Adviser may delegate some or all of these duties under Section 2(c) below.
(b) BROKERAGE. The Adviser shall be responsible for decisions to buy
and sell securities for the Fund, for broker-dealer selection, and for
negotiation of brokerage commission rates, provided that the Adviser shall not
direct orders to an affiliated person of the Adviser without general prior
authorization to use such affiliated broker or dealer from the Board of
Directors. The Adviser's primary consideration in effecting a securities
transaction will be to obtain on behalf of the Fund the best available price and
execution. In selecting a broker-dealer to execute each particular transaction,
the Adviser may take into consideration all factors it deems relevant, including
without limitation: the best net price available; the reliability, integrity and
financial condition of the broker-dealer; the size of and difficulty in
executing the order; and the value of the expected contribution of the
broker-dealer to the investment performance of the Fund on a continuing basis.
The price to the Fund in any transaction may be less favorable than that
available from another broker-dealer if the difference is reasonably justified
by other aspects of the portfolio execution services offered.
Subject to such policies as the Board of Directors may
determine, the Adviser shall not be deemed to have acted unlawfully or to have
breached any duty created by this Agreement or otherwise solely by reason of its
having caused the Fund to pay a broker or dealer that provides (directly or
indirectly) brokerage or research services to the Adviser an amount of
commission for effecting a portfolio transaction in excess of the amount of
-2-
<PAGE>
commission another broker or dealer would have charged for effecting that
transaction, if the Adviser determines in good faith that such amount of
commission was reasonable in relation to the value of the brokerage and research
services provided by such broker or dealer, viewed in terms of either that
particular transaction or the Adviser's overall responsibilities with respect to
the Company. The Adviser is further authorized to allocate the orders placed by
it on behalf of the Fund to such brokers or dealers who also provide research or
statistical material, or other services, to the Company, the Adviser, or any
affiliate of either. Such allocation shall be in such amounts and proportions as
the Adviser shall determine, and the Adviser shall report on such allocations
regularly to the Company, indicating the broker-dealers to whom such allocations
have been made and the basis therefor. The Adviser is also authorized to
consider sales of shares as a factor in the selection of brokers or dealers to
execute portfolio transactions, subject to the requirements of best price and
execution.
On occasions when the Adviser deems the purchase or sale of a security
to be in the best interest of the Fund as well as of other clients, the Adviser,
to the extent permitted by applicable laws and regulations, may aggregate the
securities to be so purchased or sold in order to obtain the most favorable
price or lower brokerage commissions and the most efficient execution. In such
event, allocation of the securities so purchased or sold, as well as the
expenses incurred in the transaction, will be made by the Adviser in the manner
it considers to be the most equitable and consistent with its fiduciary
obligations to the Fund and to such other clients.
(c) DELEGATION OF RESPONSIBILITIES. Notwithstanding the provisions of
Sections 2(a) and 2(b), respectively, the Adviser may delegate the performance
of investment advisory services for the Fund to one or more sub-advisers
approved by the Board of Directors, but such delegation will not relieve the
Adviser of the duty to supervise the performance of advisory services hereunder.
If the advisory functions are delegated to one or more sub-advisers, then the
obligations of each such sub-adviser shall be governed by a sub-advisory
agreement to be entered into between the Adviser and each such sub-adviser.
3. REPRESENTATIONS OF THE ADVISER.
(a) The Adviser shall use its best judgment and efforts in rendering
the advice and services to the Fund as contemplated by this Agreement.
(b) The Adviser shall maintain all licenses and registrations
necessary to perform its duties hereunder in good order.
(c) The Adviser shall conduct its operations at all times in
conformance with the Investment Advisers Act of 1940, the Investment Company Act
of 1940, and any other applicable state and/or self-regulatory organization laws
and regulations.
(d) The Adviser shall maintain errors and omissions insurance in an
amount at least equal to that disclosed to the Board of Directors in connection
with their approval of this Agreement.
-3-
<PAGE>
(e) The Adviser is a corporation duly organized and in good standing
under the laws of the State of Texas and has full corporate power and authority
to enter into this Agreement and to perform services hereunder, the execution
and delivery of this Agreement by the Adviser has been duly authorized by all
necessary corporate action, and this Agreement is a valid binding obligation of
the Adviser, enforceable against the Adviser in accordance with its terms.
4. INDEPENDENT CONTRACTOR. The Adviser shall, for all purposes
herein, be deemed to be an independent contractor, and shall,
unless otherwise expressly provided and authorized to do so, have
no authority to act for or represent the Company or the Fund in
any way, or in any way be deemed an agent for the Company or for
the Fund. It is expressly understood and agreed that the services
to be rendered by the Adviser to the Fund under the provisions of
this Agreement are not to be deemed exclusive, and the Adviser
shall be free to render similar or different services to others
so long as its ability to render the services provided for in
this Agreement shall not be impaired thereby.
5. ADVISER'S PERSONNEL. The Adviser shall, at its own expense,
maintain such staff and employ or retain such personnel and
consult with such other persons as it shall from time to time
determine to be necessary to the performance of its obligations
under this Agreement. Without limiting the generality of the
foregoing, the staff and personnel of the Adviser shall be deemed
to include persons employed or retained by the Adviser to furnish
statistical information, research, and other factual information,
advice regarding economic factors and trends, information with
respect to technical and scientific developments, and such other
information, advice and assistance as the Adviser or the Board of
Directors may desire and reasonably request.
6. EXPENSES.
(a) With respect to the operation of the Fund, the Adviser shall
be responsible for (i) providing the personnel, office space and equipment
reasonably necessary for the investment management of the Fund, (ii) the
expenses of printing and distributing extra copies of the Fund's prospectus,
statement of additional information, and sales and advertising materials (but
not the legal, auditing or accounting fees attendant thereto) to prospective
investors (but not to existing shareholders), and (iii) the costs of any special
Board of Directors meetings or shareholder meetings convened for the primary
benefit of the Adviser. The Adviser shall also be responsible for payment of all
of the Fund's expenses, including but not limited to: investment sub-advisory
and administrative fees payable to any sub-adviser or administrator under the
appropriate agreements entered into with the Adviser or the Company, as the case
may be; fees and expenses incurred in connection with the issuance, registration
-4-
<PAGE>
and transfer of Company shares; all expenses of transfer, receipt, safekeeping,
servicing and accounting for the cash, securities and other property of the
Company for the benefit of the Fund including all fees and expenses of its
custodian, shareholder services agent and accounting services agent; interest
charges on any borrowings; costs and expenses of pricing and calculating the
Fund's daily net asset value and of maintaining the Fund's books of account
required under the Investment Company Act; taxes, if any; expenditures in
connection with meetings of the Fund's shareholders and the Company's Board of
Directors that are not paid by other third parties; salaries and expenses of
officers and fees and expenses of members of the Board of Directors or members
of any advisory board or committee who are not members of, affiliated with or
interested persons of the Adviser or the administrator; insurance premiums on
property or personnel of the Fund which inure to its (a)benefit, including
liability and fidelity bond insurance; the cost of preparing and printing
reports, proxy statements, prospectuses and statements of additional information
of the Fund or other communications for distribution to existing shareholders;
legal, auditing and accounting fees; trade association dues; fees and expenses
(including legal fees) of registering and maintaining registration of its shares
for sale under federal and applicable state and foreign securities laws; all
expenses of maintaining and servicing shareholder accounts, including all
charges for transfer, shareholder record-keeping, dividend disbursing,
redemption, and other agents for the benefit of the Fund, if any; and all other
charges and costs of the Fund's operation. Notwithstanding any other provision
of this Agreement to the contrary, however, the Adviser will not be responsible
for any brokerage commissions or extraordinary and non-recurring expenses,
except as specifically agreed to herein or as otherwise prescribed.
7. INVESTMENT ADVISORY AND MANAGEMENT FEE.
(a) The Fund shall pay to the Adviser, and the Adviser agrees to
accept, as full compensation for all investment management and advisory services
furnished or provided to the Fund pursuant to this Agreement, an annual
investment advisory fee at the rate of 1.00% of the Fund's average net assets.
(b) The investment advisory fee shall be accrued daily by the
Fund and paid to the Adviser on the first business day of the succeeding month.
(c) The initial fee under this Agreement shall be payable on the
first business day of the first month following the effective date of this
Agreement and shall be prorated as set forth below. If this Agreement is
terminated prior to the end of any month, the fee to the Adviser shall be
prorated for the portion of any month in which this Agreement is in effect which
is not a complete month according to the proportion which the number of calendar
days in the month during which the Agreement is in effect bears to the number of
calendar days in the month, and shall be payable within ten (10) days after the
date of termination.
(d) The fee payable to the Adviser under this Agreement will be
reduced to the extent of any receivable owed by the Adviser to the Fund and as
required under any expense limitation applicable to the Fund.
-5-
<PAGE>
(e) The Adviser voluntarily may reduce any portion of the
compensation or reimbursement of expenses due to it pursuant to this Agreement
and may agree to make payments to limit the expenses which are the
responsibility of the Fund under this Agreement. Any such reduction or payment
shall be applicable only to such specific reduction or payment and shall not
constitute an agreement to reduce any future compensation or reimbursement due
to the Adviser hereunder or to continue future payments. Any such reduction will
be agreed to prior to accrual of the related expense or fee and will be
estimated daily and reconciled and paid on a monthly basis.
(f) Any fee withheld or voluntarily reduced and any Fund expense
absorbed by the Adviser voluntarily or pursuant to an agreed upon expense cap
shall be reimbursed by the Fund to the Adviser, if so requested by the Adviser,
in the first, second or third (or any combination thereof) fiscal year next
succeeding the fiscal year of the withholding, reduction or absorption if the
aggregate amount actually paid by the Fund toward the operating expenses for
such fiscal year (taking into account the reimbursement) do not exceed the
applicable limitation on Fund expenses. Such reimbursement may be paid prior to
the Fund's payment of current expenses if so requested by the Adviser even if
such practice may require the Adviser to waive, reduce or absorb current Fund
expenses.
(g) The Adviser may agree not to require payment of any portion
of the compensation or reimbursement of expenses otherwise due to it pursuant to
this Agreement. Any such agreement shall be applicable only with respect to the
specific items covered thereby and shall not constitute an agreement not to
require payment of any future compensation or reimbursement due to the Adviser
hereunder.
8. NO SHORTING; NO BORROWING. The Adviser agrees that neither
it nor any of its officers or employees shall take any short
position in the shares of the Fund. This prohibition shall
not prevent the purchase of such shares by any of the
officers or employees of the Adviser or any trust, pension,
profit-sharing or other benefit plan for such persons or
affiliates thereof, at a price not less than the net asset
value thereof at the time of purchase, as allowed pursuant
to rules promulgated under the Investment Company Act. The
Adviser agrees that neither it nor any of its officers or
employees shall borrow from the Fund or pledge or use the
Fund's assets in connection with any borrowing not directly
for the Fund's benefit. For this purpose, failure to pay any
amount due and payable to the Fund for a period of more than
thirty (30) days shall constitute a borrowing.
9. CONFLICTS WITH COMPANY'S GOVERNING DOCUMENTS AND APPLICABLE
LAWS. Nothing herein contained shall be deemed to require
the Company or the Fund to take any action contrary to the
Company's Articles of Incorporation, By-Laws, or any
applicable statute or regulation, or to relieve or deprive
the Board of Directors of the Company of its responsibility
for and control of the conduct of the affairs of the Company
and the Fund. In this connection, the Adviser acknowledges
that the Directors retain ultimate plenary authority over
the Fund and may take any and all actions necessary and
reasonable to protect the interests of shareholders.
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<PAGE>
10. Reports and Access. The Adviser agrees to supply such
information to the Fund's administrator and to permit such
compliance inspections by the administrator as shall be
reasonably necessary to permit the administrator to satisfy
its obligations and respond to the reasonable requests of
the Directors.
11. Adviser's Liabilities and Indemnification.
(a) The Adviser shall have responsibility for the accuracy and
completeness of the statements in the Fund's offering materials (including the
prospectus, the statement of additional information, advertising and sales
materials), except for information supplied by any sub-adviser, the
administrator or the Company or another third party for inclusion therein.
(b) The Adviser shall be liable to the Fund for any loss
(including brokerage charges) incurred by the Fund as a result of any improper
investment made by the Adviser.
(c) In the absence of willful misfeasance, bad faith, gross
negligence, or reckless disregard of the obligations or duties hereunder on the
part of the Adviser, the Adviser shall not be subject to liability to the
Company or the Fund or to any shareholder of the Fund for any act or omission in
the course of, or connected with, rendering services hereunder or for any losses
that may be sustained in the purchase, holding or sale of any security by the
Fund.
(d) Each party to this Agreement shall indemnify and hold
harmless the other party and the shareholders, directors, officers and employees
of the other party (any such person, an "Indemnified Party") against any loss,
liability, claim, damage or expense (including the reasonable cost of
investigating and defending any alleged loss, liability, claim, damage or
expenses and reasonable counsel fees incurred in connection therewith) arising
out of the Indemnified Party's performance or nonperformance of any duties under
this Agreement provided, however, that nothing herein shall be deemed to protect
any Indemnified Party against any liability to which such Indemnified Party
would otherwise be subject by reason of willful misfeasance, bad faith or gross
negligence in the performance of duties hereunder or by reason of reckless
disregard of obligations and duties under this Agreement.
(e) No provision of this Agreement shall be construed to protect
any Director or officer of the Company, or officer of the Adviser, from
liability in violation of Sections 17(h) and (i) of the Investment Company Act.
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12. NON-EXCLUSIVITY; TRADING FOR ADVISER'S OWN ACCOUNT. The
Company's employment of the Adviser is not an exclusive
arrangement. The Company may from time to time employ other
individuals or entities to furnish it with the services
provided for herein. Likewise, the Adviser may act as
investment adviser for any other person, and shall not in
any way be limited or restricted from having, selling or
trading any securities for its or their own accounts or the
accounts of others for whom it or they may be acting,
provided, however, that the Adviser expressly represents
that it will undertake no activities which will adversely
affect the performance of its obligations to the Fund under
this Agreement; and provided further that the Adviser shall
adhere to a code of ethics governing employee trading and
trading for proprietary accounts that conforms to the
requirements of the Investment Company Act and the
Investment Advisers Act of 1940 and has been approved by the
Company's Board of Directors.
13. TERM. This Agreement shall become effective at the time the
Fund commences operations pursuant to an effective amendment
to the Company's Registration Statement under the Securities
Act of 1933 and shall remain in effect for a period of two
(2) years, unless sooner terminated as hereinafter provided.
This Agreement shall continue in effect thereafter for
additional periods not exceeding one (1) year so long as
such continuation is approved for the Fund at least annually
by (i) the Board of Directors of the Company or by the vote
of a majority of the outstanding voting securities of the
Fund and (ii) the vote of a majority of the Directors of the
Company who are not parties to this Agreement nor interested
persons thereof, cast in person at a meeting called for the
purpose of voting on such approval. The terms "majority of
the outstanding voting securities" and "interested persons"
shall have the meanings as set forth in the Investment
Company Act.
14. BOOKS AND RECORDS; CONFIDENTIALITY.
(a) In compliance with the requirements of Rule 31a-3 under the
Investment Company Act, the Adviser agrees that all records which it maintains
for the Company are the property of the Company and further agrees to surrender
promptly to the Company any such records upon the Company's request. The Adviser
further agrees to preserve for the periods prescribed by Rule 31a-2 under the
Investment Company Act the records required to be maintained by Rule 31a-1 under
such Act.
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<PAGE>
(b) The Adviser shall treat as confidential and proprietary
information of the Company all records and other information relative to the
Company and shareholders of the Company, or persons who respond to inquiries
concerning investment in the Company, and shall not use such records and
information for any purpose other than performance of its responsibilities and
duties hereunder or under any other agreement with the Company, except as
otherwise provided in writing by the Company (which approval shall not be
unreasonably withheld if the Adviser may be exposed to civil or criminal
proceedings for failure to comply, when requested to divulge such information by
duly constituted authorities, or when so requested by the Company). However,
nothing herein shall be deemed to prohibit the Adviser or its affiliates from
using in any manner information provided by the Adviser or its affiliates to the
Company, or from advertising to or soliciting the public generally with respect
to other products and services, regardless of whether such advertisements or
solicitation may coincidentally include prior or present shareholders or persons
who have responded to inquiries regarding the Company.
15. TERMINATION; NO ASSIGNMENT.
(a) This Agreement may be terminated by the Company on behalf of
the Fund at any time without payment of any penalty, by the Board of Directors
or by vote of a majority of the outstanding voting securities of the Fund, upon
sixty (60) days' written notice to the Adviser, and by the Adviser upon sixty
(60) days' written notice to a Fund. In the event of a termination, the Adviser
shall cooperate in the orderly transfer of the Fund's affairs and, at the
request of the Board of Directors, transfer any and all books and records of the
Fund maintained by the Adviser on behalf of the Fund.
(b) This Agreement shall terminate automatically in the event of
any transfer or assignment thereof, as defined in the Investment Company Act.
16. ENTIRE AGREEMENT; AMENDMENTS. This Agreement constitutes the
entire agreement and understanding between the parties hereto. No provision of
this Agreement may be changed, waived, discharged or terminated orally, but only
by an instrument in writing signed by the party against which enforcement
thereof is sought. To the extent required by the Investment Company Act, no
amendment of this Agreement shall be effective until approved by a majority of
the outstanding voting securities of the Fund (as defined in such Act).
17. ARTICLES OF INCORPORATION. The Articles of Incorporation of
the Company is on file with the Secretary of the State of Maryland. In
accordance therewith, the Adviser acknowledges and agrees that this Agreement
was signed on behalf of the Company by the undersigned as officers of the
Company and not individually, and that the obligations of the Company under this
Agreement are not binding upon any officers, directors or shareholders of the
Company individually but are binding only upon the assets of the Fund.
18. SEVERABILITY. If any provision of this Agreement shall be
held or made invalid by a court decision, statute or rule, or shall be otherwise
rendered invalid, the remainder of this Agreement shall not be affected thereby.
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<PAGE>
19. CAPTIONS. The captions in this Agreement are included for
convenience of reference only and in no way define or limit any of the
provisions hereof or otherwise affect their construction or effect.
20. GOVERNING LAW. This Agreement shall be governed by, and
construed in accordance with, the laws of the State of New York without giving
effect to the conflict of laws principles thereof; provided that nothing herein
shall be construed to preempt, or to be inconsistent with, any federal law,
regulation or rule, including the Investment Company Act and the Investment
Advisers Act of 1940 and any rules and regulations promulgated thereunder.
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<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed by their duly authorized officers, all on the day and year first
above written.
INVESTA MANGEMENT CO., INC. INVESTA, INC.
on behalf of its series, the
Super Index Fund
By: By:
---------------------------- ---------------------------
Name: Name:
Title: Title:
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<PAGE>
INVESTA MANAGEMENT CO., INC.
FORM OF INVESTMENT ADVISORY AGREEMENT
THIS INVESTMENT ADVISORY AGREEMENT ("Agreement") is made as of
the __ day of __________, 1999, by and between INVESTA MANGEMENT CO., INC., a
Maryland corporation (the "Company"), on behalf of its series, InvestmentWizard
Fund (the "Fund") and INVESTA, INC., a Texas corporation (the "Adviser").
W I T N E S S E T H:
WHEREAS, the Company is an open-end management investment
company, registered as such under the Investment Company Act of 1940 (the
"Investment Company Act"); and
WHEREAS, the Fund is a series of the Company having separate
assets and liabilities; and
WHEREAS, the Adviser is registered as an investment adviser under
the Investment Advisers Act of 1940 and is engaged in the business of providing
investment advice to individual clients and investment companies; and
WHEREAS, the Company desires to retain the Adviser to render
advice and services to the Fund pursuant to the terms and provisions of this
Agreement, and the Adviser desires to furnish said advice and services;
NOW, THEREFORE, in consideration of the covenants and the mutual
promises hereinafter set forth, the parties to this Agreement, intending to be
legally bound hereby, mutually agree as follows:
1. APPOINTMENT OF ADVISER. The Company hereby employs the
Adviser and the Adviser hereby accepts such employment, to
render investment advice and related services with respect
to the assets of the Fund for the period and on the terms
set forth in this Agreement, subject to the supervision and
direction of the Board of Directors.
2. DUTIES OF ADVISER.
<PAGE>
(a) GENERAL DUTIES. The Adviser shall act as investment
adviser to the Fund and shall supervise investments of
the Fund on behalf of the Fund in accordance with the
investment objective, policies and restrictions of the
Fund as set forth in the Fund's and Company's governing
documents, including, without limitation, the Company's
Articles of Incorporation and By-Laws; the Fund's
prospectus, statement of additional information and
undertakings, as in effect from time to time; and such
other limitations, policies and procedures as the
Directors may impose from time to time in writing to
the Adviser. In providing such services, the Adviser
shall at all times adhere to the provisions and
restrictions contained in the federal securities laws,
applicable state securities laws, the Internal Revenue
Code, the Uniform Commercial Code and other applicable
law.
Without limiting the generality of the foregoing, the Adviser
shall: (i) furnish the Fund with advice and recommendations with respect to the
investment of the Fund's assets and the purchase and sale of portfolio
securities for the Fund, including the taking of such steps as may be necessary
to implement such advice and recommendations (e.g., placing the orders); (ii)
manage and oversee the investments of the Fund, subject to the ultimate
supervision and direction of the Board of Directors; (iii) vote proxies for the
Fund, file ownership reports under Section 13 of the Securities Exchange Act of
1934 for the Fund, and take other similar actions on behalf of the Fund; (iv)
maintain the books and records required to be maintained by the Fund except to
the extent arrangements have been made for such books and records to be
maintained by the administrator or another agent of the Fund; (v) furnish
reports, statements and other data on securities, economic conditions and other
matters related to the investment of the Fund's assets which the Fund's
administrator or distributor or the officers of the Company may reasonably
request; and (vi) render to the Board of Directors such periodic and special
reports with respect to the Fund's investment activities as the Board may
reasonably request, including at least one in-person appearance annually before
the Board of Directors. Notwithstanding the provisions of this Section 2(a), the
Adviser may delegate some or all of these duties under Section 2(c) below.
(b) BROKERAGE. The Adviser shall be responsible for decisions to
buy and sell securities for the Fund, for broker-dealer selection, and for
negotiation of brokerage commission rates, provided that the Adviser shall not
direct orders to an affiliated person of the Adviser without general prior
authorization to use such affiliated broker or dealer from the Board of
Directors. The Adviser's primary consideration in effecting a securities
transaction will be to obtain on behalf of the Fund the best available price and
execution. In selecting a broker-dealer to execute each particular transaction,
the Adviser may take into consideration all factors it deems relevant, including
without limitation: the best net price available; the reliability, integrity and
financial condition of the broker-dealer; the size of and difficulty in
executing the order; and the value of the expected contribution of the
broker-dealer to the investment performance of the Fund on a continuing basis.
The price to the Fund in any transaction may be less favorable than that
available from another broker-dealer if the difference is reasonably justified
by other aspects of the portfolio execution services offered.
Subject to such policies as the Board of Directors may determine,
the Adviser shall not be deemed to have acted unlawfully or to have breached any
duty created by this Agreement or otherwise solely by reason of its having
caused the Fund to pay a broker or dealer that provides (directly or indirectly)
brokerage or research services to the Adviser an amount of commission for
effecting a portfolio transaction in excess of the amount of commission another
broker or dealer would have charged for effecting that transaction, if the
Adviser determines in good faith that such amount of commission was reasonable
in relation to the value of the brokerage and research services provided by such
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<PAGE>
broker or dealer, viewed in terms of either that particular transaction or the
Adviser's overall responsibilities with respect to the Company. The Adviser is
further authorized to allocate the orders placed by it on behalf of the Fund to
such brokers or dealers who also provide research or statistical material, or
other services, to the Company, the Adviser, or any affiliate of either. Such
allocation shall be in such amounts and proportions as the Adviser shall
determine, and the Adviser shall report on such allocations regularly to the
Company, indicating the broker-dealers to whom such allocations have been made
and the basis therefor. The Adviser is also authorized to consider sales of
shares as a factor in the selection of brokers or dealers to execute portfolio
transactions, subject to the requirements of best price and execution.
On occasions when the Adviser deems the purchase or sale of a
security to be in the best interest of the Fund as well as of other clients, the
Adviser, to the extent permitted by applicable laws and regulations, may
aggregate the securities to be so purchased or sold in order to obtain the most
favorable price or lower brokerage commissions and the most efficient execution.
In such event, allocation of the securities so purchased or sold, as well as the
expenses incurred in the transaction, will be made by the Adviser in the manner
it considers to be the most equitable and consistent with its fiduciary
obligations to the Fund and to such other clients.
(c) DELEGATION OF RESPONSIBILITIES. Notwithstanding the
provisions of Sections 2(a) and 2(b), respectively, the Adviser may delegate the
performance of investment advisory services for the Fund to one or more
sub-advisers approved by the Board of Directors, but such delegation will not
relieve the Adviser of the duty to supervise the performance of advisory
services hereunder. If the advisory functions are delegated to one or more
sub-advisers, then the obligations of each such sub-adviser shall be governed by
a sub-advisory agreement to be entered into between the Adviser and each such
sub-adviser.
3. REPRESENTATIONS OF THE ADVISER.
(a) The Adviser shall use its best judgment and efforts in
rendering the advice and services to the Fund as contemplated by this Agreement.
(b) The Adviser shall maintain all licenses and registrations
necessary to perform its duties hereunder in good order.
(c) The Adviser shall conduct its operations at all times in
conformance with the Investment Advisers Act of 1940, the Investment Company Act
of 1940, and any other applicable state and/or self-regulatory organization laws
and regulations.
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<PAGE>
(d) The Adviser shall maintain errors and omissions insurance
in an amount at least equal to that disclosed to the Board of Directors in
connection with their approval of this Agreement.
(e) The Adviser is a corporation duly organized and in good
standing under the laws of the State of Texas and has full corporate power and
authority to enter into this Agreement and to perform services hereunder, the
execution and delivery of this Agreement by the Adviser has been duly authorized
by all necessary corporate action, and this Agreement is a valid binding
obligation of the Adviser, enforceable against the Adviser in accordance with
its terms.
4. INDEPENDENT CONTRACTOR. The Adviser shall, for all purposes
herein, be deemed to be an independent contractor, and
shall, unless otherwise expressly provided and authorized to
do so, have no authority to act for or represent the Company
or the Fund in any way, or in any way be deemed an agent for
the Company or for the Fund. It is expressly understood and
agreed that the services to be rendered by the Adviser to
the Fund under the provisions of this Agreement are not to
be deemed exclusive, and the Adviser shall be free to render
similar or different services to others so long as its
ability to render the services provided for in this
Agreement shall not be impaired thereby.
5. ADVISER'S PERSONNEL. The Adviser shall, at its own expense,
maintain such staff and employ or retain such personnel and
consult with such other persons as it shall from time to
time determine to be necessary to the performance of its
obligations under this Agreement. Without limiting the
generality of the foregoing, the staff and personnel of the
Adviser shall be deemed to include persons employed or
retained by the Adviser to furnish statistical information,
research, and other factual information, advice regarding
economic factors and trends, information with respect to
technical and scientific developments, and such other
information, advice and assistance as the Adviser or the
Board of Directors may desire and reasonably request.
6. EXPENSES.
(a) With respect to the operation of the Fund, the Adviser shall
be responsible for (i) providing the personnel, office space and equipment
reasonably necessary for the investment management of the Fund, (ii) the
expenses of printing and distributing extra copies of the Fund's prospectus,
statement of additional information, and sales and advertising materials (but
not the legal, auditing or accounting fees attendant thereto) to prospective
investors (but not to existing shareholders), and (iii) the costs of any special
Board of Directors meetings or shareholder meetings convened for the primary
benefit of the Adviser. The Adviser shall also be responsible for payment of all
of the Fund's expenses, including but not limited to: investment sub-advisory
and administrative fees payable to any sub-adviser or administrator under the
appropriate agreements entered into with the Adviser or the Company, as the case
may be; fees and expenses incurred in connection with the issuance, registration
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<PAGE>
and transfer of Company shares; all expenses of transfer, receipt, safekeeping,
servicing and accounting for the cash, securities and other property of the
Company for the benefit of the Fund including all fees and expenses of its
custodian, shareholder services agent and accounting services agent; interest
charges on any borrowings; costs and expenses of pricing and calculating the
Fund's daily net asset value and of maintaining the Fund's books of account
required under the Investment Company Act; taxes, if any; expenditures in
connection with meetings of the Fund's shareholders and the Company's Board of
Directors that are not paid by other third parties; salaries and expenses of
officers and fees and expenses of members of the Board of Directors or members
of any advisory board or committee who are not members of, affiliated with or
interested persons of the Adviser or the administrator; insurance premiums on
property or personnel of the Fund which inure to its (a)benefit, including
liability and fidelity bond insurance; the cost of preparing and printing
reports, proxy statements, prospectuses and statements of additional information
of the Fund or other communications for distribution to existing shareholders;
legal, auditing and accounting fees; trade association dues; fees and expenses
(including legal fees) of registering and maintaining registration of its shares
for sale under federal and applicable state and foreign securities laws; all
expenses of maintaining and servicing shareholder accounts, including all
charges for transfer, shareholder record-keeping, dividend disbursing,
redemption, and other agents for the benefit of the Fund, if any; and all other
charges and costs of the Fund's operation. Notwithstanding any other provision
of this Agreement to the contrary, however, the Adviser will not be responsible
for any brokerage commissions or extraordinary and non-recurring expenses,
except as specifically agreed to herein or as otherwise prescribed.
7. INVESTMENT ADVISORY AND MANAGEMENT FEE.
(a) The Fund shall pay to the Adviser, and the Adviser agrees
to accept, as full compensation for all investment management and advisory
services furnished or provided to the Fund pursuant to this Agreement, an annual
investment advisory fee at the rate of 1.00% of the Fund's average net assets.
(b) The investment advisory fee shall be accrued daily by the
Fund and paid to the Adviser on the first business day of the succeeding month.
(c) The initial fee under this Agreement shall be payable on
the first business day of the first month following the effective date of this
Agreement and shall be prorated as set forth below. If this Agreement is
terminated prior to the end of any month, the fee to the Adviser shall be
prorated for the portion of any month in which this Agreement is in effect which
is not a complete month according to the proportion which the number of calendar
days in the month during which the Agreement is in effect bears to the number of
calendar days in the month, and shall be payable within ten (10) days after the
date of termination.
(d) The fee payable to the Adviser under this Agreement will
be reduced to the extent of any receivable owed by the Adviser to the Fund and
as required under any expense limitation applicable to the Fund.
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<PAGE>
(e) The Adviser voluntarily may reduce any portion of the
compensation or reimbursement of expenses due to it pursuant to this Agreement
and may agree to make payments to limit the [expenses which are the
responsibility of the Fund under this Agreement. Any such reduction or payment
shall be applicable only to such specific reduction or payment and shall not
constitute an agreement to reduce any future compensation or reimbursement due
to the Adviser hereunder or to continue future payments. Any such reduction will
be agreed to prior to accrual of the related expense or fee and will be
estimated daily and reconciled and paid on a monthly basis.
(f) Any fee withheld or voluntarily reduced and any Fund
expense absorbed by the Adviser voluntarily or pursuant to an agreed upon
expense cap shall be reimbursed by the Fund to the Adviser, if so requested by
the Adviser, in the first, second or third (or any combination thereof) fiscal
year next succeeding the fiscal year of the withholding, reduction or absorption
if the aggregate amount actually paid by the Fund toward the operating expenses
for such fiscal year (taking into account the reimbursement) do not exceed the
applicable limitation on Fund expenses. Such reimbursement may be paid prior to
the Fund's payment of current expenses if so requested by the Adviser even if
such practice may require the Adviser to waive, reduce or absorb current Fund
expenses.
(g) The Adviser may agree not to require payment of any
portion of the compensation or reimbursement of expenses otherwise due to it
pursuant to this Agreement. Any such agreement shall be applicable only with
respect to the specific items covered thereby and shall not constitute an
agreement not to require payment of any future compensation or reimbursement due
to the Adviser hereunder.
8. NO SHORTING; NO BORROWING. The Adviser agrees that neither
it nor any of its officers or employees shall take any short
position in the shares of the Fund. This prohibition shall
not prevent the purchase of such shares by any of the
officers or employees of the Adviser or any trust, pension,
profit-sharing or other benefit plan for such persons or
affiliates thereof, at a price not less than the net asset
value thereof at the time of purchase, as allowed pursuant
to rules promulgated under the Investment Company Act. The
Adviser agrees that neither it nor any of its officers or
employees shall borrow from the Fund or pledge or use the
Fund's assets in connection with any borrowing not directly
for the Fund's benefit. For this purpose, failure to pay any
amount due and payable to the Fund for a period of more than
thirty (30) days shall constitute a borrowing.
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<PAGE>
9. CONFLICTS WITH COMPANY'S GOVERNING DOCUMENTS AND APPLICABLE
LAWS. Nothing herein contained shall be deemed to require
the Company or the Fund to take any action contrary to the
Company's Articles of Incorporation, By-Laws, or any
applicable statute or regulation, or to relieve or deprive
the Board of Directors of the Company of its responsibility
for and control of the conduct of the affairs of the Company
and the Fund. In this connection, the Adviser acknowledges
that the Directors retain ultimate plenary authority over
the Fund and may take any and all actions necessary and
reasonable to protect the interests of shareholders.
10. REPORTS AND ACCESS. The Adviser agrees to supply such
information to the Fund's administrator and to permit such
compliance inspections by the administrator as shall be
reasonably necessary to permit the administrator to satisfy
its obligations and respond to the reasonable requests of
the Directors.
11. ADVISER'S LIABILITIES AND INDEMNIFICATION.
(a) The Adviser shall have responsibility for the accuracy and
completeness of the statements in the Fund's offering materials (including the
prospectus, the statement of additional information, advertising and sales
materials), except for information supplied by any sub-adviser, the
administrator or the Company or another third party for inclusion therein.
(b) The Adviser shall be liable to the Fund for any loss
(including brokerage charges) incurred by the Fund as a result of any improper
investment made by the Adviser.
(c) In the absence of willful misfeasance, bad faith, gross
negligence, or reckless disregard of the obligations or duties hereunder on the
part of the Adviser, the Adviser shall not be subject to liability to the
Company or the Fund or to any shareholder of the Fund for any act or omission in
the course of, or connected with, rendering services hereunder or for any losses
that may be sustained in the purchase, holding or sale of any security by the
Fund.
(d) Each party to this Agreement shall indemnify and hold
harmless the other party and the shareholders, directors, officers and employees
of the other party (any such person, an "Indemnified Party") against any loss,
liability, claim, damage or expense (including the reasonable cost of
investigating and defending any alleged loss, liability, claim, damage or
expenses and reasonable counsel fees incurred in connection therewith) arising
out of the Indemnified Party's performance or nonperformance of any duties under
this Agreement provided, however, that nothing herein shall be deemed to protect
any Indemnified Party against any liability to which such Indemnified Party
would otherwise be subject by reason of willful misfeasance, bad faith or gross
negligence in the performance of duties hereunder or by reason of reckless
disregard of obligations and duties under this Agreement.
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<PAGE>
(e) No provision of this Agreement shall be construed to protect
any Director or officer of the Company, or officer of the Adviser, from
liability in violation of Sections 17(h) and (i) of the Investment Company Act.
12. NON-EXCLUSIVITY; TRADING FOR ADVISER'S OWN ACCOUNT. The
Company's employment of the Adviser is not an exclusive
arrangement. The Company may from time to time employ other
individuals or entities to furnish it with the services
provided for herein. Likewise, the Adviser may act as
investment adviser for any other person, and shall not in
any way be limited or restricted from having, selling or
trading any securities for its or their own accounts or the
accounts of others for whom it or they may be acting,
provided, however, that the Adviser expressly represents
that it will undertake no activities which will adversely
affect the performance of its obligations to the Fund under
this Agreement; and provided further that the Adviser shall
adhere to a code of ethics governing employee trading and
trading for proprietary accounts that conforms to the
requirements of the Investment Company Act and the
Investment Advisers Act of 1940 and has been approved by the
Company's Board of Directors.
13. TERM. This Agreement shall become effective at the time the
Fund commences operations pursuant to an effective amendment
to the Company's Registration Statement under the Securities
Act of 1933 and shall remain in effect for a period of two
(2) years, unless sooner terminated as hereinafter provided.
This Agreement shall continue in effect thereafter for
additional periods not exceeding one (1) year so long as
such continuation is approved for the Fund at least annually
by (i) the Board of Directors of the Company or by the vote
of a majority of the outstanding voting securities of the
Fund and (ii) the vote of a majority of the Directors of the
Company who are not parties to this Agreement nor interested
persons thereof, cast in person at a meeting called for the
purpose of voting on such approval. The terms "majority of
the outstanding voting securities" and "interested persons"
shall have the meanings as set forth in the Investment
Company Act.
14. BOOKS AND RECORDS; CONFIDENTIALITY.
(a) In compliance with the requirements of Rule 31a-3 under the
Investment Company Act, the Adviser agrees that all records which it maintains
for the Company are the property of the Company and further agrees to surrender
promptly to the Company any such records upon the Company's request. The Adviser
further agrees to preserve for the periods prescribed by Rule 31a-2 under the
Investment Company Act the records required to be maintained by Rule 31a-1 under
such Act.
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<PAGE>
(b) The Adviser shall treat as confidential and proprietary
information of the Company all records and other information relative to the
Company and shareholders of the Company, or persons who respond to inquiries
concerning investment in the Company, and shall not use such records and
information for any purpose other than performance of its responsibilities and
duties hereunder or under any other agreement with the Company, except as
otherwise provided in writing by the Company (which approval shall not be
unreasonably withheld if the Adviser may be exposed to civil or criminal
proceedings for failure to comply, when requested to divulge such information by
duly constituted authorities, or when so requested by the Company). However,
nothing herein shall be deemed to prohibit the Adviser or its affiliates from
using in any manner information provided by the Adviser or its affiliates to the
Company, or from advertising to or soliciting the public generally with respect
to other products and services, regardless of whether such advertisements or
solicitation may coincidentally include prior or present shareholders or persons
who have responded to inquiries regarding the Company.
15. TERMINATION; NO ASSIGNMENT.
(a) This Agreement may be terminated by the Company on behalf of
the Fund at any time without payment of any penalty, by the Board of Directors
or by vote of a majority of the outstanding voting securities of the Fund, upon
sixty (60) days' written notice to the Adviser, and by the Adviser upon sixty
(60) days' written notice to a Fund. In the event of a termination, the Adviser
shall cooperate in the orderly transfer of the Fund's affairs and, at the
request of the Board of Directors, transfer any and all books and records of the
Fund maintained by the Adviser on behalf of the Fund.
(b) This Agreement shall terminate automatically in the event of
any transfer or assignment thereof, as defined in the Investment Company Act.
16. ENTIRE AGREEMENT; AMENDMENTS. This Agreement constitutes the
entire agreement and understanding between the parties hereto. No provision of
this Agreement may be changed, waived, discharged or terminated orally, but only
by an instrument in writing signed by the party against which enforcement
thereof is sought. To the extent required by the Investment Company Act, no
amendment of this Agreement shall be effective until approved by a majority of
the outstanding voting securities of the Fund (as defined in such Act).
17. ARTICLES OF INCORPORATION. The Articles of Incorporation of
the Company is on file with the Secretary of the State of Maryland. In
accordance therewith, the Adviser acknowledges and agrees that this Agreement
was signed on behalf of the Company by the undersigned as officers of the
Company and not individually, and that the obligations of the Company under this
Agreement are not binding upon any officers, directors or shareholders of the
Company individually but are binding only upon the assets of the Fund.
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<PAGE>
18. SEVERABILITY. If any provision of this Agreement shall be
held or made invalid by a court decision, statute or rule, or shall be otherwise
rendered invalid, the remainder of this Agreement shall not be affected thereby.
19. CAPTIONS. The captions in this Agreement are included for
convenience of reference only and in no way define or limit any of the
provisions hereof or otherwise affect their construction or effect.
20. GOVERNING LAW. This Agreement shall be governed by, and
construed in accordance with, the laws of the State of New York without giving
effect to the conflict of laws principles thereof; provided that nothing herein
shall be construed to preempt, or to be inconsistent with, any federal law,
regulation or rule, including the Investment Company Act and the Investment
Advisers Act of 1940 and any rules and regulations promulgated thereunder.
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<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed by their duly authorized officers, all on the day and year first
above written.
INVESTA MANGEMENT CO., INC. INVESTA, INC.
on behalf of its series, the
InvestmentWizard Fund
By: By:
---------------------------- ---------------------------
Name: Name:
Title: Title:
-11-
FORM OF UNDERWRITING AGREEMENT
between
INVESTA, INC.
AND
ADS DISTRIBUTORS, INC.
COMPANY LOGO OMITTED
<PAGE>
UNDERWRITING AGREEMENT
----------------------
AGREEMENT made as of this ________ day of ____________, 1999 between Investa,
Inc., (the "Adviser"), and ADS Distributors, Inc., (the "Underwriter").
BACKGROUND
WHEREAS, Investa, Inc. is the Investment Adviser to the Investa
Management Co., Inc. (the "Fund"); and
WHEREAS, the Fund is a diversified open-end management investment
company registered with the United States Securities and Exchange Commission
under the Investment Company Act of 1940, as amended (the "1940 Act"); and
WHEREAS, the Underwriter is a corporation experienced in providing
distribution services to mutual funds and possesses facilities sufficient to
provide such services; and
WHEREAS, the Adviser desires to avail itself of the experience,
assistance and facilities of the Underwriter and to have the Underwriter perform
for the Fund certain services appropriate to the operations of the Fund and the
Underwriter is willing to furnish such services in accordance with the terms
hereinafter set forth.
TERMS
A: UNDERWRITING ACTIVITIES:
1. The Underwriter will receive orders from purchasers for and the Fund will
sell, issue and deliver from time to time to such purchasers, such part of
the authorized shares of capital stock of the Fund remaining un-issued as
from time to time shall be effectively registered under the Securities Act
of 1933, as amended (the "33 Act"), at prices determined as hereinafter
provided and on the terms hereinafter set forth, all subject to applicable
Federal and State laws and regulations and to the charter of the Fund.
2. The Underwriter shall present all orders received by it for shares of
capital stock of the Fund to the Fund by telegraphic or written purchase
orders and each such order shall be subject to the acceptance or rejection
by the Fund in its sole discretion
2.1 Notwithstanding any other provision hereof, whenever in the judgment of
the Fund such action is warranted by market, economic or political
conditions or by abnormal circumstances of any kind, the Fund may suspend
the offer of shares in effect and may, without liability under the
provision of this Agreement, decline to accept or confirm any orders or
make any sales of shares or capital stock under this Agreement until such
time as the Fund shall deem it advisable to resume the offering of such
shares, provided that as soon as practicable after the taking of any such
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<PAGE>
action a special meeting of the Board of Directors shall be called to be
held as soon as practicable thereafter to determine whether or not such
action shall then continue to be effective, and the period during, or the
circumstance under, which such action shall continue or cease to be
effective. During any period during which the offer of shares shall be
suspended or the Fund shall decline to acceptor confirm any such orders or
make any such sales, the Fund shall be under no obligation to confirm or
accept any such orders or make any such sale at any price.
2.2 The Fund will use its best efforts to keep effectively registered under
the 33 Act for sale as herein contemplated such shares of its capital stock
as the Underwriter shall reasonably request and as the Securities and
Exchange Commission (the "SEC") shall permit to be so registered.
3. Sales by the Underwriter shall be made as agent for the Fund and all such
sales be made to or though qualified dealers or others in such manner, not
inconsistent with the provisions hereof and the then effective registration
statement of the Fund under the 33 Act, (and related prospectus), as the
Underwriter may determine from time to time.
4. All shares of capital stock offered for sale or sold by the Underwriter
shall be so offered or sold at a price per share (the "Offering Price")
equal to the net asset value per share (determined as authorized from time
to time by the Board of Directors of the Fund pursuant to its charter).
4.1 For the purpose of determining the offering price, the net asset value
of any such shares shall be so determined in accordance with the then
current offering prospectus. The Fund, or its authorized agent, will
promptly furnish to the Underwriter a statement of the Offering Price as
often as such net asset value is determined and such statement shall at the
request of the Underwriter show the basis of computation of the Offering
Price.
4.2 Orders presented by the Underwriter for shares, if accepted by the
Fund, shall be accepted and confirmed by it or its duly authorized agent at
the Offering Price in effect at the time of its receipt of such order at
its principal office.
4.3 The Underwriter will not in any event (a) offer for sale or sell shares
of capital stock in excess of the number then effectively registered under
the 33 Act, and available for sale, or (b) offer for sale or sell any
shares in violation of any applicable Federal or State law, rule or
regulation.
5. The Fund will execute any and all documents and furnish any and all
information which may be reasonably necessary in connection with the
qualification of its shares of capital stock in such states as the
Underwriter may reasonably request (it being understood that the Fund shall
not be required without its consent to qualify to do business in any
jurisdiction or to comply with any requirement which in its opinion is
unduly burdensome). The Underwriter, at its own expense, will effect all
qualifications as dealer or broker.
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<PAGE>
6. The Fund will furnish to the Underwriter from time to time such information
with respect to its shares as the Underwriter may reasonably request for
use in connection with the sale of shares. The Underwriter will not use or
distribute or authorize the use, distribution or dissemination by its
dealers or others in connection with such sale of any literature,
advertising or selling aids in any form or through any medium, written or
oral, without prior written specific approval thereof by the Fund.
7. Nothing herein contained shall limit the right of the Fund, in its absolute
discretion, to issue or sell shares of its capital stock for such other
considerations (whether in connection with the acquisition of assets or
shares or securities of another corporation or entity or with the merger or
consolidation of any other corporation into or with the Fund, or otherwise)
as and to the extent permitted by its charter and any applicable laws, or
to issue or sell any such shares directly to the shareholders of the Fund,
upon such terms and conditions and for such consideration, if any, as may
be determined by the Board of Directors, whether pursuant to the
distribution of subscription or purchase rights to such holders or by way
of dividends or otherwise.
8. At the request of the Fund, the Underwriter agrees to act as agent for the
Fund for the repurchase or redemption of shares of the Fund at such prices
as the Fund from time to time shall prescribe.
9. In selling or reacquiring shares, the Underwriter agrees to conform to the
requirements of all state and Federal laws relating to such sale or
reacquisition, as the case may be, and will indemnify and hold the Fund
harmless from any damage or expense on account of any wrongful act by the
Underwriter or any employee, representative or agent of the Underwriter.
The Underwriter will observe and be bound by all the provisions of the
charter of the Fund and any fundamental policies adopted by the Fund
pursuant to the Investment Company Act of 1940, as amended (the "40 Act"),
notice of which has been given to the Underwriter.
10. Neither the Underwriter, any dealer nor any other person is authorized by
the Fund to give any information or to make any representation other than
those contained (a) in the latest effective registration statement (and
related prospectus) filed with the SEC under the 33 Act as such
registration statement (and prospectus) may be amended from time to time,
or (b) in any statement expressly authorized by the Fund for use in
connection with any sale or reacquisition of capital stock for the account
of the Fund.
D. COMPENSATION AND OTHER:
1. In Consideration of the agreements on the part of the Underwriter herein
contained, the Underwriter shall receive payment in the amount of $10,000
for the first portfolio, plus $5,000 for each additional portfolio or, 1
basis point of the combined average net assets of the fund/trust, whichever
is greater, per annum billed monthly, plus reimbursement of all reasonable
out-of-pocket expenses incurred at the request of the Fund in fulfillment
of its responsibilities in this Agreement.
-3-
<PAGE>
2. This Agreement shall continue in effect until such time as there remain no
unsold balance of shares of capital stock effectively registered under the
33 Act; provided, however, that (a) this Agreement shall continue in effect
for a period more than two years from the date hereof only so long as such
continuance is specifically approved at least annually by the Board of
Directors or a majority of the outstanding voting securities of the Fund,
and (b) either party hereto may terminate this Agreement on any date by
giving the other party at least ninety (90) days prior written notice of
such termination specifying the date fixed therefor.
2.1 This Agreement shall automatically terminate in the event of its
assignment by the Underwriter, the term "assignment" having the meaning
defined in Section 2(a)(4) of the 40 Act.
3. Any notice under this Agreement shall be in writing addressed and delivered
by mail, postage prepaid, to the party to whom addressed at the address
given below, or at such other address as such party shall theretofore have
designated (by notice given to the other party as herein provided) in
writing for the receipt of such notice:
To the Adviser: To the Underwriter:
Mr. Michael Miola
Treasurer
ADS Distributors, Inc.
c/o American Data Services, Inc.
150 Motor Parkway
Hauppauge, New York 11788
IN WITNESS WHEREOF, The Fund and the Underwriter have each
caused this Agreement to be executed on its behalf by an officer thereunto duly
authorized on the day and year first above written.
Investa, Inc. ADS Distributors, Inc.
By: _________________________ By: ___________________________
Derek J. Hoggett, President Michael Miola, Treasurer
-4-
INVESTA MANAGEMENT CO., INC.
FORM OF CUSTODY AGREEMENT
This AGREEMENT is entered into as of December , 1999, between Investa
Management Co., Inc., a Maryland corporation (the "Company"), having its
principal office and place of business at 551 Fifth Avenue, New York, New York
10176 and Union Bank of California, N.A. (the "Bank"), a National Banking
Association organized under the laws of the United States with its principal
place of business at 350 California Street, San Francisco, CA 94104.
In consideration of the mutual promises set forth below, the Company and the
Bank agree as follows:
1. DEFINITIONS.
Whenever used in this Agreement or in any Schedules to this Agreement, the words
and phrases set forth below shall have the following meanings, unless the
context otherwise requires:
1.1 "Authorized Person" shall be deemed to include the President, and
any Vice President, the Secretary, the Assistant Secretary, the Treasurer and
any Assistant Treasurer of the Company, or any other person, including persons
employed by the Investment Adviser, whether or not any such person is an officer
of the Company, duly authorized by the Board of Directors of the Company to give
Oral Instructions and Written Instructions on behalf of the Company and listed
in the certification annexed hereto as Schedule A or such other successor
certification as may be received by the Bank from time-to-time.
1.2 "Book-Entry System" shall mean the Federal Reserve/Treasury
book-entry system for United States and federal agency securities, its successor
or successors and its nominee or nominees.
1.3 "Depository" shall mean The Depository Trust Company ("DTC"), a
clearing agency registered with the Securities and Exchange Commission under
Section 17(a) of the Securities Exchange Act of 1934, as amended, its successor
or successors and its nominee or nominees, in which the Bank is hereby
specifically authorized to make deposits. The term "Depository" shall further
mean and include any other person to be named in Written Instructions authorized
to act as a depository under the 1940 Act, its successor or successors and its
nominee or nominees.
1.4 "Money Market Security" shall be deemed to include, without
limitation, debt obligations issued or guaranteed as to interest and principal
by the Government of the United States or agencies or instrumentalities thereof,
and repurchase and reverse repurchase agreements with respect to any of the
foregoing types of securities, commercial paper, bank certificates of deposit,
bankers' acceptances and short-term corporate obligations, where the purchase or
sale of such securities normally requires settlement in federal funds on the
same day as such purchase or sale.
1.5 "Prospectus" shall mean the Series' current prospectus and
statement of additional information relating to the registration of the Series'
Shares under the Securities Act of 1933, as amended.
1.6 "Security" or "Securities" shall be deemed to include bonds,
debentures, notes, stocks, shares, evidences of indebtedness, and other
securities and investments from time-to-time owned by each Series.
1.7 "Shares" refers to the shares of common stock of a Series of the
Company.
1.8 "Series" refers to Funds shown on Schedule B, attached hereto and
made a part hereof by this reference, and any such other Series as may from
time-to-time be created and designated in accordance with the provisions of the
Declaration of Company.
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<PAGE>
1.9 "Transfer Agent" shall mean the person which performs the transfer
agent, dividend disbursing agent and shareholder servicing agent functions for
the Company.
1.10 "Written Instructions" shall mean a written or electronic
communication actually received by the Bank from an Authorized Person or from a
person reasonably believed by the Bank to be an Authorized Person by telex or
any other such system whereby the receiver of such communication is able to
verify through codes or otherwise with a reasonable degree of certainty the
authenticity of the sender of such communication.
1.11 The "1940 Act" refers to the Investment Company Act of 1940, and
the rules and regulations thereunder, all as amended from time-to-time.
2. APPOINTMENT OF CUSTODIAN.
2.1 The Company hereby constitutes and appoints the Bank as Custodian
of all the Securities and moneys owned by or in the possession of the Company
during the period of this Agreement.
2.2 The Bank hereby accepts appointment as Custodian for the Company
and agrees to perform the duties thereof as hereinafter set forth.
3. COMPENSATION.
3.1 The Company will compensate the Bank for its services rendered
under this Agreement in accordance with the fees set forth in the Fee Schedule
attached as Schedule C and made a part of this Agreement by this reference.
3.2 The parties to this Agreement will agree upon the compensation for
acting as Custodian for any Series hereafter established and designated, and at
the time that the Bank commences serving as such for said Series, such agreement
shall be reflected in a Fee Schedule for the Company, which shall be attached to
Schedule C of this Agreement.
3.3 Any compensation agreed to hereunder may be adjusted from
time-to-time by not less than 90 days advance written notice of such fee
increase from Bank to Company.
3.4 The Bank will bill the Company as soon as practicable after the end
of each month, and said billings will be detailed in accordance with the Fee
Schedule. The Company will promptly pay to the Bank the amount of such billing.
In the event such bill is not promptly paid, the Bank may charge against any
money specifically allocated to the Company such compensation and any expenses
incurred by the Bank in the performance of its duties pursuant to such
agreement. The Bank shall also be entitled to charge against any money held by
it and specifically allocated to the Company the amount of any loss, damage,
liability or expense incurred with respect to such Company, including counsel
fees, for which it shall be entitled to reimbursement under the provision of
this Agreement.
The expenses which the Bank may charge against such account include,
but are not limited to, the expenses of Sub-Custodians and foreign branches of
the Bank incurred in settling transactions outside of San Francisco or New York
City involving the purchase and sale of Securities of the Company.
4. CUSTODY OF CASH AND SECURITIES.
4.1 Receipt and Holding of Assets. The Company will deliver or cause to
be delivered to the Bank all Securities and moneys owned by it, including cash
received from the issuance's of its Shares, at any time during the period of
this Agreement and shall specify the Series to which the Securities and moneys
are to be specifically allocated. The Bank shall physically segregate and keep
apart on its books, the assets of each Series, including separate identification
of Securities held in the Book-Entry System. The Bank will not be responsible
for such Securities and moneys until actually received by it. The Company shall
instruct the Bank from time-to-time in its sole discretion, by means of Written
Instructions as to the manner in which and in what amounts Securities and moneys
of a Series are to be deposited on behalf of such Series in the Book-Entry
System or the Depository and specifically allocated on the books of the Bank to
such Series. Securities and moneys of the Company deposited in the Book-Entry
System or the Depository will be represented in accounts which include only
assets held by the Bank for customers, including but not limited to accounts in
which the Bank acts in a fiduciary or representative capacity.
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<PAGE>
4.2 ACCOUNTS AND DISBURSEMENTS. The Bank shall establish and maintain a
separate account for each Series and shall credit to the separate account of
each Series all moneys received by it for the account of such Series and shall
disburse the same only:
4.2.1 In payment for Securities purchased for such Series, as
provided in Section 5 hereof;
4.2.2 In payment of dividends or distributions with respect to
the Shares of such Series;
4.2.3 In payment of original issue or other taxes with respect
to the Shares of such Series;
4.2.4 In payment for Shares which have been redeemed by such
Series;
4.2.5 Pursuant to Written Instructions, setting forth the name
of such Series, the name and address of the person to whom the payment is to be
made, the amount to be paid and the purpose for which payment is to be made; or
4.2.6 In payment of fees and in reimbursement of the expenses
and liabilities of the Bank attributable to such Series.
4.3 CONFIRMATIONS AND STATEMENTS. Promptly after the close of business
each day, the Bank shall make available to the Company information with respect
to all transfers to and from the account of a Series during that day. The Bank
need not send written confirmation or a summary of all such transfers to or from
the account of each Series. Provided, however, that upon the written request of
Company, Bank shall provide within 5 business days of such written request a
copy of any confirmations which include transactions of the Company. At least
monthly, the Bank shall furnish the Company with a detailed statement of the
Securities and moneys held for each Series under this Agreement.
4.4 REGISTRATION OF SECURITIES AND PHYSICAL SEPARATION.
All Securities held for a Series which are issued or issuable only in
bearer form, except such Securities as are held in the Book-Entry System, shall
be held by the Bank in that form; all other Securities held for a Series may be
registered in the name of any duly appointed registered nominee of the Bank as
the Bank may from time-to-time determine, or in the name of the Book-Entry
System or the Depository of their successor or successors, or their nominee or
nominees. When a reference is made in this Agreement to an action to be taken by
Bank, it is understood by the parties that the action may be taken directly or
in the case of book-entry Securities, through the appropriate depository. The
Company agrees to furnish to the Bank appropriate instruments to enable the Bank
to hold or deliver in proper form for transfer, or to register in the name of
its registered nominee or in the name of the Book-Entry System or the
Depository, any Securities which it may hold for the account of a Series. The
Bank (or its Sub-Custodians) shall hold all such Securities specifically
allocated to a Series which are not held in the Book-Entry System or the
Depository in a separate account for such Series in the name of such Series
physically segregated at all times from those of any other person or persons.
Where Securities purchased by a Series are in a fungible bulk of Securities
registered in the name of the Bank (or its nominee) or shown on the Bank's
account on the books of the Depository or the Book-Entry System, the Bank shall
by book entry or otherwise identify the quantity of those Securities belonging
to such Series.
4.5 COLLECTION OF INCOME AND OTHER MATTERS AFFECTING SECURITIES. Unless
otherwise instructed to the contrary by Written Instructions, the Bank shall
with respect to all Securities held for a Series in accordance with this
Agreement:
4.5.1 Collect all income due or payable and credit such income
promptly on the contractual settlement date, whether or not actually received,
to the account of the appropriate Series, except for income from foreign issues.
Income which has not been collected after reasonable effort, within a time
agreed upon between the parties, shall be repaid to the Bank pending final
collection at such date as may be mutually agreed upon by the Company and the
Bank.
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<PAGE>
4.5.2 Present for payment and collect the amount payable upon
all Securities which may mature or be called, redeemed or retired, or otherwise
become payable. Bank shall make a good faith effort to inform Company of any
call, redemption or retirement date with respect to Securities which are owned
by a Series and held by the Bank or its nominee. Notwithstanding the foregoing,
the Bank shall have no responsibility to the Company or a Series for monitoring
or ascertaining of any call, redemption or retirement date with respect to
Securities which are held by a Series and held by Bank or its nominee. Nor shall
the Bank have any responsibility or liability to the Company or to a Series for
any loss by a Series for any missed payment or other default resulting therefrom
unless the Bank received timely notification, which shall not be less than 5
business days, from the Company or the Series specifying the time, place and
manner for the presentment of any put bond owned by a Series and held by the
Bank or its nominee. The Bank shall not be responsible and assumes no liability
to the Company or a Series for the accuracy or completeness of any notification
the Bank shall provide to the Company or a Series with respect to put
Securities;
4.5.3 Execute any necessary declarations or certificates of
ownership under the Federal income tax laws or the laws or regulations of any
other taxing authority now or hereafter in effect; and
4.5.4 Hold for the account of each Series all rights and other
Securities issued with respect to any Securities held by the Bank hereunder for
such Series.
4.6 DELIVERY OF SECURITIES AND EVIDENCE OF AUTHORITY. Upon
receipt of Written Instructions, the Bank shall:
4.6.1 Execute and deliver or cause to be executed and
delivered to such persons as may be designated in such Written Instructions,
proxies, consents, authorization, and any other instruments whereby the
authority of the Company as owner of any Securities may be exercised;
4.6.2 Deliver or cause to be delivered any Securities held for
a Series in exchange for other Securities or cash issued or paid in connection
with the liquidation, reorganization, refinancing, merger, consolidation or
recapitalization of any corporation, or the exercise of any conversion
privilege;
4.6.3 Deliver or cause to be delivered any Securities held for
a Series to any protective committee, reorganization committee or other person
in connection with the reorganization, refinancing, merger, consolidation or
recapitalization or sale of assets of any corporation, and receive and hold
under the terms of this Agreement in the separate (bookkeeping) account for each
Series such certificates of deposit, interim receipts or other instruments or
documents as may be issued to it to evidence such delivery;
4.6.4 Make or cause to be made such transfers or exchanges of
the assets and take such steps as shall be stated in said Written Instructions
to be for the purpose of effectuating any duly authorized plan of liquidation,
reorganization, merger, consolidation or recapitalization of the Company;
4.6.5 Deliver Securities owned by any Series upon sale of such
Securities for the account of such Series pursuant to Section 5;
4.6.6 Deliver Securities owned by any Series upon the receipt
of payment in connection with any repurchase agreement related to such
Securities entered into by such Series;
4.6.7 Deliver Securities owned by any Series to the issuer
thereof or its agent when such Securities are called, redeemed, retired or
otherwise become payable; provided, however, that in any such case the cash or
other consideration is be delivered to the Bank.
4.6.8 Deliver Securities owned by any Series in connection
with any loans of Securities made by such Series but only against receipt of
adequate collateral as agreed upon from time-to-time by the Bank and the Company
which may be in any form permitted under the 1940 Act or any interpretations
thereof issued by the Securities and Exchange Commission or its staff;
4.6.9 Deliver Securities owned by any Series for delivery as
security in connection with any borrowings by such Series requiring a pledge of
Series assets, but only against receipt of amount borrowed;
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<PAGE>
4.6.10 Deliver Securities owned by any Series upon receipt of
instructions from such Series for delivery to the Transfer Agent or to the
holders of Shares of such Series in connection with distributions in kind, as
may be described from time-to-time in the Series' Prospectus, in satisfaction of
requests by holders of Shares for repurchase or redemption; and
4.6.11 Deliver Securities owned by any Series for any other
proper business purpose, but only upon receipt of, in addition to Written
Instructions, a certified copy of a resolution of the Board of Directors signed
by an Authorized Person and certified by the Secretary or Assistant Secretary of
the Company, specifying the Securities to be delivered, setting forth the
purpose for which such delivery is to be made, declaring such purpose to be a
proper business purpose, and naming the person or persons to whom delivery of
such Securities shall be made.
4.7 ENDORSEMENT AND COLLECTION OF CHECKS, ETC. The Bank is hereby
authorized to endorse and collect all checks, drafts or other orders for the
payment of money received by the Bank for the account of a Series.
5. PURCHASE AND SALE OF INVESTMENTS OF THE SERIES.
5.1 Promptly after each purchase of Securities for a Series, the
Company shall deliver to the Bank Written Instructions specifying with respect
to each purchase: (1) the name of the Series to which such Securities are to be
specifically allocated; (2) the name of the issuer and the title of the
Securities; (3) the number of shares or the principal amount purchased and
accrued interest, if any; (4) the date of purchase and settlement; (5) the
purchase price per unit; (6) the total amount payable upon such purchase; (7)
the name of the person from whom or the broker through whom the purchase was
made, if any; (8) whether or not such purchase is to be settled through the
Book-Entry System or the Depository; and (9) whether the Securities purchased
are to be deposited in the Book-Entry System or the Depository. The Bank shall
receive all Securities purchased by or for a Series and upon receipt of such
Securities shall pay out of the moneys held for the account of such Series the
total amount payable upon such purchase, provided that the same conforms to the
total amount payable as set forth in such Written Instructions.
5.2 Promptly after each sale of Securities of a Series, the Company
shall deliver to the Bank Written Instructions specifying with respect to such
sale: (1) the name of the Series to which the Securities sold were specifically
allocated; (2) the name of the issuer and the title of the Securities; (3) the
number of shares or principal amount sold, and accrued interest, if any; (4) the
date of sale; (5) the sale price per unit; (6) the total amount payable to the
Series upon such sale; (7) the name of the broker through whom or the person to
whom the sale was made; and (8) whether or not such sale is to be settled
through the Book-Entry System or the Depository. The Bank shall deliver or cause
to be delivered the Securities to the broker or other person designated by the
Company upon receipt of the total amount payable to such Series upon such sale,
provided that the same conforms to the total amount payable to such Series as
set forth in such Written Instructions. Subject to the foregoing, the Bank may
accept payment in such form as shall be satisfactory to it, and may deliver
Securities and arrange for payment in accordance with the customs prevailing
among dealers in Securities.
6. PAYMENT OF DIVIDENDS OR DISTRIBUTIONS.
6.1 The Company shall furnish to the Bank the resolution of the Board
of Directors of the Company certified by the Secretary or Assistant Secretary
(i) authorizing the declaration of dividends or distribution with respect to a
Series on a specified periodic basis and authorizing the Bank to rely on Written
Instructions specifying the date of the declaration of such dividend or
distribution, the date of payment thereof, the record date as of which
shareholders entitled to payment shall be determined, the amount payable per
share to the shareholders of record as of the record date and the total amount
payable per share to the shareholders of record as of the record date and the
total amount payable to the Transfer Agent on the payment date, or (ii) setting
forth the date of declaration of any dividend or distribution by a Series, the
date of payment thereof, the record date as of which shareholders entitled to
payment shall be determined, the amount payable per share to the shareholders of
record as of the record date and the total amount payable to the Transfer Agent
on the payment date.
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<PAGE>
6.2 Upon the payment date specified in such resolution or Written
Instructions the Bank shall pay out the moneys specifically allocated to and
held for the account of the appropriate Series the total amount payable to the
Transfer Agent of the Company.
7. SALE AND REDEMPTION OF SHARES OF A SERIES.
7.1 Whenever the Company shall sell or redeem any Shares of a Series,
the Company shall deliver or cause to be delivered to the Bank Written
Instructions duly specifying:
(1) The name of the Series whose Shares were sold or redeemed;
(2) The number of Shares sold or redeemed, trade date, and
price; and
(3) The amount of money to be received or paid by the Bank for
the sale or redemption of such Shares.
7.2 Upon receipt of such money from the Transfer Agent, the Bank shall
credit such money to the separate account of the Series.
7.3 Upon issuance of any Shares of a Series in accordance with the
foregoing provisions of this Section 7, the Bank shall pay, out of the moneys
specifically allocated and held for the account of such Series, all original
issue or other taxes required to be paid in connection with such issuance upon
the receipt of Written Instructions specifying the amount to be paid.
7.4 Upon receipt from the Transfer Agent of advice setting forth the
number of Shares of a Series received by the Transfer Agent for redemption and
that such Shares are valid and in good form for redemption, the Bank shall make
payment to the Transfer Agent out of the moneys specifically allocated to and
held for the account of the Series.
8. INDEBTEDNESS.
8.1 The Company will cause to be delivered to the Bank by any bank
(excluding the Bank) from which the Company borrows money for temporary
administrative or emergency purposes using Securities as collateral for such
borrowings, a notice or undertaking in the form currently employed by any such
bank setting forth the amount which such bank will loan to the Company against
delivery of a stated amount of collateral. The Company shall promptly deliver to
the Bank Written Instructions stating with respect to each such borrowing: (1)
the name of the Series for which the borrowing is to be made; (2) the name of
the bank; (3) the amount and terms of the borrowing, which may be set forth by
incorporating by reference an attached promissory note, duly endorsed by the
Company, or other loan agreement; (4) the time and date, if known, on which the
loan is to be entered into (the "borrowing date"); (5) the date on which the
loan becomes due and payable; (6) the total amount payable to the Company for
the separate account of the Series on the borrowing date; (7) the market value
of Securities to be delivered as collateral for such loan, including the name of
the issuer, the title and the number of shares or the principal amount of any
particular Securities; (8) whether the Bank is to deliver such collateral
through the Book-Entry System or the Depository; and (9) a statement that such
loan is in conformance with the 1940 Act and the Series' Prospectus.
8.2 Upon receipt of the Written Instructions referred to above, the
Bank shall deliver on the borrowing date the specified collateral and the
executed promissory note, if any, against delivery by the lending bank of the
total amount of the loan payable, provided that the same conforms to the total
amount payable as set forth in the Written Instructions. The Bank may, at the
option of the lending bank, keep such collateral in its possession, but such
collateral shall be subject to all rights therein given the lending bank by
virtue of any promissory note or loan agreement. The Bank shall deliver as
additional collateral in the manner directed by the Company from time-to-time
such Securities specifically allocated to such Series as may be specified in
Written Instructions to collateralize further any transaction described in this
Section 8. The Company shall cause all Securities released from collateral
status to be returned directly to the Bank, and the Bank shall receive from
time-to-time such return of collateral as may be tendered to it. In the event
that the Company fails to specify in Written Instructions all of the information
required by this Section 8, the Bank shall not be under any obligation to
deliver any Securities. Collateral returned to the Bank shall be held hereunder
as it was prior to being used as collateral.
-6-
<PAGE>
9. PERSONS HAVING ACCESS TO ASSETS OF THE SERIES.
9.1 No Director, officer, employee or agent of the Company, and no
officer, director, employee or agent of the Advisor, shall have physical access
to the assets of the Company held by the Bank or be authorized or permitted to
withdraw any investments of the Company, nor shall the Bank deliver any assets
of the Company to any such person. No officer, director, employee or agent of
the Bank who holds any similar position with the Company or the Advisor shall
have access to the assets of the Company.
9.2 The individual employees of the Bank initially duly authorized by
the Board of Directors of the Bank to have access to the assets of the Company
are listed on Schedule A which is attached and made a part of this Agreement by
this reference. The Bank shall advise the Company of any change in the
individuals authorized to have access to the assets of the Company by written
notice to the Company.
9.3 Nothing in this Section 9 shall prohibit any officer, employee or
agent of the Company, or any officer, director, employee or agent of the
Advisor, from giving Written Instructions to the Bank so long as it does not
result in delivery of or access to assets of the Company prohibited by this
Section 9.
10. CONCERNING THE BANK.
10.1 STANDARD OF CONDUCT. The Bank shall not be responsible for the
title, validity or genuineness of any property or evidence of title thereto
received by it or delivered by it pursuant to this Agreement and reasonably
believed by it to be valid or genuine and shall be held harmless in acting upon
proper instructions, resolutions, any notice, request, consent, certificate or
other instrument reasonably believed by it to be genuine and to be signed by the
proper party or parties and shall be entitled to receive as conclusive proof of
any fact or matter required to be ascertained by it hereunder, a certificate
signed by the President, a Vice President, the Treasurer, the Secretary or an
Assistant Secretary of the Company. The Bank may receive and accept a resolution
as conclusive evidence (a) of the authority of any person to act in accordance
with such vote or (b) of any determination or of any action by the Board of
Directors pursuant to the Declaration of Company as described in such vote, and
such vote may be considered as in full force and effect until receipt by the
Bank of written notice from the Secretary or an Assistant Secretary to the
contrary.
The Bank shall be entitled to rely on and may act upon advice of
counsel (who may be counsel for the Company) on all matters, and shall be
without liability for any action reasonably taken or omitted pursuant to such
advice. Provided, however, that if such reliance involves a potential material
loss to the Company, the Bank shall advise the Company of any such actions to be
taken in accordance with such advice of counsel to the Bank.
The Bank shall be held to the exercise of reasonable care in carrying
out the provisions of this Agreement but shall be liable only for its own
negligent or bad faith acts or wilful misconduct or wilful failures to act by
the Bank and its agents or Employees. Bank shall have no responsibility for
reviewing or questioning the acts or records of any prior Custodian. The Company
shall indemnify the Bank and hold it harmless from and against all losses,
liabilities, demands, claims, actions, expenses, attorneys' fees, and taxes with
respect to each Series which the Bank may suffer or incur on account of being
Bank hereunder except to the extent that such losses, liabilities, demands,
claims, actions, expenses, attorneys fees or taxes arise from the Bank's own
gross negligence or bad faith. Notwithstanding the foregoing the Bank shall be
liable to the Company for any loss or damage resulting from the use of the
Book-Entry System or the Depository arising by reason of any negligence,
misfeasance or misconduct on the part of the Bank or any of its employees or
agents.
If a Series requires the Bank to take any action with respect to
Securities, which action involves the payment of money or which action may, in
the opinion of the Bank, result in the Bank or its nominee assigned to such
Series being liable for the payment of money or incurring liability of some
other form, such Series, as a prerequisite to requiring the Bank to take such
action, shall, prior to the Bank taking such action, provide indemnity in
writing to the Bank in an amount and form satisfactory to it.
-7-
<PAGE>
10.2 LIMIT OF DUTIES. Without limiting the generality of the foregoing,
the Bank shall be under no duty or obligation to inquire into, and shall not be
liable for:
10.2.1 The validity of the issue of any Securities purchased
by any Series, the legality of the purchase thereof, the permissibility of the
purchase thereof under the Company's governing documents, or the propriety of
the amount paid therefor;
10.2.2 The legality of the sale of any Securities by any
Series, the permissibility of such sale under the Company's governing documents,
or the propriety of the amount for which the same are sold;
10.2.3 The legality of the issue or the sale of any Shares, or
the sufficiency of the amount to be received therefor;
10.2.4 The legality of the redemption of any Shares, or the
sufficiency of the amount to be paid therefor;
10.2.5 The legality of the declaration or payment of any
dividend or other distribution of any Series;
10.2.6 The legality of any borrowing for temporary or
emergency administrative purposes.
10.3 NO LIABILITY UNTIL RECEIPT. The Bank shall not be liable for, or
considered to be the Custodian of, any money, whether or not represented by any
check, draft, or other instrument for the payment of money, received by it on
behalf of any Series until the Bank actually receives and collects such money
directly or by the final crediting of the account representing the Company's
interest in the Book-Entry System or the Depository.
10.4 COLLECTION WHERE PAYMENT REFUSED. The Bank shall not be under any
duty or obligation to take action to effect collection of any amount, if the
Securities upon which such amount is payable are in default, or if payment is
refused after due demand or presentation, unless and until (a) it shall be
directed to take such action by Written Instructions and (b) it shall be assured
to its satisfaction of reimbursement of its costs and expenses in connection
with any such action.
10.5 APPOINTMENT OF AGENTS AND SUB-CUSTODIANS. The Bank may appoint one
or more banking institutions, including but not limited to banking institutions
located in foreign countries, to act as Depository or Depositories or as
Sub-Custodian or as Sub-Custodians of Securities and moneys at any time owned by
any Series, upon terms and conditions specified in Written Instructions. The
Bank shall use reasonable care in selecting a Depository and/or Sub-Custodian
located in a country other than the United States ("Foreign Sub-Custodian"), and
shall oversee the maintenance of any Securities or moneys of the Company by any
Foreign Sub-Custodian.
10.6 NO DUTY TO ASCERTAIN AUTHORITY. The Bank shall not be under any
duty or obligation to ascertain whether any Securities at any time delivered to
or held by it for the Company and specifically allocated to a Series are such as
may properly be held by the Series and specifically allocated to such Series
under the provisions of the Declaration of Company and the Series' Prospectus.
10.7 RELIANCE ON CERTIFICATES AND INSTRUCTIONS. The Bank shall be
entitled to rely upon any Written Instructions or Oral Instructions actually
received by the Bank pursuant to the applicable Sections of this Agreement and
reasonably believed by the Bank to be genuine and to be given by an Authorized
Person. The Company agrees to forward to the Bank Written Instructions from an
Authorized Person confirming such Oral Instructions in such manner so that such
Written Instructions are received by the Bank, whether by hand delivery, telex,
or otherwise, by the close of business on the same day that such Oral
Instructions are given to the Bank. The Company agrees that if such confirming
instructions are not received by the Bank that it shall in no way affect the
validity for the transactions or enforceability of the transactions hereby
authorized by the Company. The Company agrees that the Bank shall incur no
liability to the Company in acting upon Oral Instructions given to the Bank
hereunder concerning such transactions provided such instructions reasonably
appear to have been received from a duly Authorized Person.
-8-
<PAGE>
10.8 INSPECTION OF BOOKS AND RECORDS. The books and records of the Bank
regarding the Company shall be open to inspection and audit at reasonable times
by officers and auditors employed by the Company and by employees of the
Securities and Exchange Commission. The Bank shall provide the Company, upon
request, with any report obtained by the Bank on the system of internal
accounting control of the Book-Entry System or the Depository and with such
reports on its own systems of internal accounting control as the Company may
reasonably request from time-to-time. Provided, however, that in the event that
the Company shall require a report of internal accounting control produced by
the auditors of the Series rather than of the Bank, then such report shall be
prepared at the expense of the Series, and the Series agrees to pay for the time
expended by Bank on such audit and report at the hourly rate set forth on the
Fee agreement.
11. TERM AND TERMINATION.
11.1 This Agreement shall become effective on the date first set forth
above (the "Effective Date") and shall continue in effect thereafter as the
parties may mutually agree.
11.2 Either of the parties hereto may terminate this Agreement with
respect to any Series by giving to the other party a notice in writing
specifying the date of such termination, which shall be not less than 90 days
after the date of receipt of such notice. In the event such notice is given by
the Company, it shall designate a Successor Custodian or Custodians, which shall
be a person qualified to so act under the 1940 Act. In the event such notice is
given by the Bank, the Company shall, on or before the termination date, deliver
to the Bank Written Instructions designating a Successor Custodian or
Custodians. In the absence of such designation by the Company, the Bank may
designate a Successor Custodian, which shall be a person qualified to so act
under the 1940 Act. If the Company fails to designate a Successor Custodian for
any Series, the Company shall upon the date specified in the notice of
termination of this Agreement and upon the delivery by the Bank of all
Securities (other than Securities held in the Book-Entry Systems which cannot be
delivered to the Company) and moneys then owned by such Series, be deemed to be
its own Custodian, and the Bank shall thereby be relieved of all duties and
responsibilities pursuant to this Agreement, other than the duty with respect to
Securities held in the Book-Entry system which cannot be delivered to the
Company.
11.3 Upon the date set forth in such notice under paragraph (b) of this
Section, this Agreement shall terminate to the extent specified in such notice,
and the Bank shall upon receipt of a notice of acceptance by the Successor
Custodian on that date deliver directly to the Successor Custodian all
Securities and moneys then held by the Bank and specifically allocated to the
Series or Series specified, after deducting all fees, expenses and other amounts
for the payment or reimbursement of which it shall then be entitled with respect
to such Series or Series.
12. ADDITIONAL SERVICES BY BANK.
12.1 If allowed by the prospectus, Investment Adviser may direct that
the assets of any Series be invested in deposits in Bank or its affiliates
bearing a reasonable rate of interest.
12.2 OTHER BANK SERVICES. Any Authorized Person may direct Bank to
utilize other services or facilities provided by UnionBanCal Corporation
("UBCC"), its subsidiaries or affiliates including Bank. Such services shall
include, but not be limited to (1) the placing of orders for the purchase, sale
exchange, investment or reinvestment of Securities through any brokerage service
conducted by, or (2) the purchase of units of any investment company managed or
advised by Bank, UBCC, or their subsidiaries or affiliates and/or for which
Bank, UBCC, or their subsidiaries or affiliates act as Custodian or provide
investment advice or other services for a fee, including, without limitation,
the HighMark Funds. Company hereby acknowledges that Bank, UBCC or their
subsidiaries or affiliates will receive fees for such services in addition to
the fees payable under this Agreement. Fee Schedules for such additional
directed services shall be delivered to the Authorized Person before provision
of such services.
13. MISCELLANEOUS.
13.1 Annexed hereto as Schedule A is a certification signed by two of
the present Directors of the Company setting forth the names and the signatures
of the present Authorized Persons. The Company agrees to furnish to the Bank a
new certification in similar form in the event that any such present Authorized
Person ceases to be such an Authorized Person or in the event that other or
additional Authorized Persons are elected or appointed. Until such new
certification shall be received, the Bank shall be fully protected in acting
under the provisions of this Agreement upon Oral Instructions or signatures of
the present Authorized Persons as set forth in the last delivered certification.
-9-
<PAGE>
13.2 Annexed hereto as Schedule D is a certification signed by two of
the present Directors of the Company setting forth the names and the signatures
of the present Directors of the Company. The Company agrees to furnish to the
Bank a new certification in similar form in the event any such present Director
ceases to be a Director of the Company or in the event that other or additional
Directors are elected or appointed. Until such new certification shall be
received, the Bank shall be fully protected in acting under the provisions of
this Agreement upon the signature of the officers as set forth in the last
delivered certification.
13.3 Any notice or other instrument in writing, authorized or required
by this Agreement to be given to the Bank, shall be sufficiently given if
addressed to the Bank and mailed or delivered to it at its offices at:
Union Bank of California, N.A.
Mutual Fund Services Dept., Company Group
475 Sansome Street, 15th Floor
San Francisco, California 94111
or such other place as the Bank may from time-to-time designate in writing.
13.4 Any notice or other instrument in writing, authorized or required
by this Agreement to be given to the Company, shall be sufficiently given if
addressed to the Company and mailed or delivered to it at its offices at 551
Fifth Avenue, New York, New York 10176 or at such other place as the Company may
from time-to-time designate in writing.
13.5 This Agreement may not be amended or modified in any manner except
by a written agreement executed by both parties with the same formality as this
Agreement, and as may be permitted or required by the 1940 Act.
13.6 This Agreement shall extend to and shall be binding upon the
parties hereto, and their respective successors and assigns; provided, however,
that this Agreement shall not be assignable by the Company without the written
consent of the Bank, or by the Bank without the written consent of the Company
authorized or approved by a resolution of the Board of Directors of the Company,
and any attempted assignment without such written consent shall be null and
void.
13.7 This Agreement shall be construed in accordance with the laws of
the State of California.
13.8 It is expressly agreed to that the obligations of the Company
hereunder shall not be binding upon any of the Directors, shareholders,
nominees, officers, agents, or employees of the Company, personally, but bind
only the property of the Company, as provided in the Declaration of Company of
the Company. The execution and delivery of this Agreement have been authorized
by the Directors of the Company and signed by an authorized officer of the
Company, acting as such, and neither such authorization by such Directors nor
such execution and delivery by such officer shall be deemed to have been made by
any of them individually or to impose any liability on any of them personally,
but shall bind only the Company property of the Company as provided in its
Declaration of Company.
13.9 The captions of the Agreement are included for convenience of
reference only and in no way define or delimit any of the provisions hereof or
otherwise affect their construction or effect.
13.10 This Agreement may be executed in any number of counterparts,
each of which shall be deemed to be an original, but such counterparts shall,
together, constitute only one instrument.
-10-
<PAGE>
14. DISPUTE RESOLUTION PROVISION
14.1 Jury Waiver. The parties hereby waive their respective rights to a
jury trial in any litigation arising out of or relating to this Agreement or any
related agreements or instruments, including without limitation any claim based
on or arising out of an alleged tort.
14.2 Judicial Reference. If any such litigation is commenced in a
California state court, any party may also elect to have all decisions of fact
and law determined by a referee appointed by the court in accordance with
applicable state reference procedures. The referee shall be a retired judge,
agreed upon by the parties, from either the American Arbitration Association
(AAA) or J.A.M.S./Endispute, Inc. (JAMS). If the parties cannot agree, the party
who initially selected the reference procedure shall request a panel of ten
retired judges from either AAA or JAMS and the court shall select the referee
from that panel. The costs of the reference procedure, including the fee for the
court reporter, shall be borne equally by all parties as the costs are incurred.
The Referee shall hear all pre-trial and post-trial matters, including requests
for equitable relief, conduct a non-jury trial, prepare an award with written
findings of fact and conclusions of law, and award attorney fees and costs to
the prevailing party. Judgment upon the award shall be entered in the court in
which such proceeding was commenced and all parties shall have full rights of
appeal.
15. MERGER OR CONSOLIDATION OF BANK.
Any corporation or association (i) into which the Bank may be merged or
with which it may be consolidated, (ii) resulting from any merger,
consolidation, or reorganization to which the Bank may be a party, or (iii) to
which all or substantially all of the fiduciary business of the Bank may be
transferred shall become a Successor Custodian under this Agreement without the
necessity of executing any instrument or performing any further act subject to
the provision of this Agreement concerning resignation or removal of the
Custodian.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their respective officers thereunder duly authorized as of the day
and year first above written.
INVESTA MANAGEMENT CO., INC. UNION BANK OF CALIFORNIA, N.A.
BY: BY:
-------------------- -----------------------
Derek J. Hoggett ,Vice President
DATE: DATE:
------------------ ---------------------
-11-
<PAGE>
Schedule A
Authorized Persons
Part I - Access Persons of Bank
Part II - Authorized Persons of the Company
Part III - Directors
INVESTA MANAGEMENT CO., INC.
BY:
---------------------
Derek J. Hoggett
DATE:
-------------------
UNION BANK OF CALIFORNIA, N.A.
BY:
---------------------
,Vice President
DATE:
-------------------
-12-
<PAGE>
Schedule B - Funds
1. Super Index Fund
2. InvestmentWizard Fund
INVESTA MANAGEMENT CO., INC.
BY:
---------------------
Derek J. Hoggett
DATE:
-------------------
UNION BANK OF CALIFORNIA, N.A.
BY:
---------------------
,Vice President
DATE:
-------------------
-13-
<PAGE>
Schedule C
Mutual Fund Services
Schedule of Fees
Custody
Transactions*
Depository Eligible $
Depository Ineligible $
Disbursements $
Minimum Fee $
*A transaction is defined as any activity affecting assets, such as purchase,
sale tender offer, stock dividend, free deliveries, maturity, exchange,
redemption, etc. Fees for foreign securities, foreign exchange transactions,
international wires and nonstandard services are quoted separately.
INVESTA MANAGEMENT CO., INC.
BY:
---------------------
Derek J. Hoggett
DATE:
-------------------
UNION BANK OF CALIFORNIA, N.A.
BY:
---------------------
,Vice President
DATE:
-------------------
-14-
<PAGE>
Schedule D
Certification
Names and Signatures of Current Directors
- --------------------- -------------------------
Derek J. Hoggett (Signature of Director)
- --------------------- -------------------------
Michael Miola (Signature of Director)
- --------------------- -------------------------
Donald Weber (Signature of Director)
- --------------------- -------------------------
Tucker Coughlin (Signature of Director)
- --------------------- -------------------------
Kenneth Lehrer (Signature of Director)
-15-
INVESTA MANAGEMENT CO., INC.
FORM OF ADMINISTRATIVE SERVICES AGREEMENT
AGREEMENT made this ______ day of _________, 1999, by and between
Investa Management Co., Inc., a Maryland corporation , having its principal
office and place of business at 551 Fifth Avenue, New York, New York 10176 (the
"Corporation"), and American Data Services, Inc., a New York corporation having
its principal office and place of business at the Hauppauge Corporate Center,
150 Motor Parkway, Suite 109, Hauppauge, New York 11788 ("ADS").
WHEREAS, the Corporation is an open-end management investment company
registered with the United States Securities and Exchange Commission under the
Investment Company Act of 1940, as amended (the "1940 Act"); and
WHEREAS, the Corporation is authorized to issue shares ("Shares") in
separate series, with each such series representing interests in a separate
portfolio of securities and other assets, and is authorized to divide those
series into separate classes; and
WHEREAS, the Corporation offers shares in the series as listed in
Schedule A hereto (each such series, together with all other series subsequently
established by the Corporation and made subject to this Agreement in accordance
with Section 13, being herein referred to as a "Fund," and collectively as the
"Funds"); and
WHEREAS, the Corporation desires that ADS perform certain
administrative services for each Fund and ADS is willing to provide those
services on the terms and conditions set forth in this Agreement;
NOW THEREFORE, for and in consideration of the mutual covenants and
agreements contained herein, the Corporation and ADS hereby agree as follows:
1. APPOINTMENT AND DELIVERY OF DOCUMENTS
(a) The Corporation hereby appoints ADS, and ADS hereby agrees, to act
as administrator of the Corporation for the period and on the terms set forth in
this Agreement.
(b) In connection therewith, the Corporation has delivered to ADS
copies of
(i) the Corporation's Articles of Incorporation and Bylaws
(collectively, as amended from time to time, "Organic Documents"),
<PAGE>
(ii) the Corporation's Registration Statement on Form N-1A and
all amendments thereto filed with the U.S. Securities and Exchange Commission
("SEC") pursuant to the Securities Act of 1933, as amended (the "Securities
Act"), and/or the 1940 Act (the "Registration Statement"),
(iii) the Corporation's notification of registration under the
1940 Act on Form N-8A as filed with the SEC;
(iv) the Corporation's current Prospectus and Statement of
Additional Information for each Fund (collectively, as currently in effect and
as amended or supplemented, the "Prospectus"),
(v) each current plan of distribution or similar document
adopted by the Corporation under Rule 12b-1 under the 1940 Act ("Plan") and each
current shareholder service plan or similar document adopted by the Corporation
("Service Plan"), and
(vi) all procedures adopted by the Corporation with respect to
the Funds (e.g., procedures relating to rule 17a-7 transactions, repurchase
agreements, etc.), and shall promptly furnish ADS with all amendments of or
supplements to the foregoing. The Corporation shall deliver to ADS a certified
copy of the minutes of a meeting or a resolution of the Board of Directors of
the Corporation (the "Board") appointing ADS and authorizing the execution and
delivery of this Agreement.
2. DUTIES OF ADS.
(a) Subject to the direction and control of the Board, ADS shall manage
all aspects of the Corporation's operations with respect to the Funds except
those that are the responsibility of any other service provider hired by the
Corporation, all in such manner and to such extent as may be authorized by the
Board. Specifically ADS shall:
(b) provide persons suitable to the Board to serve as officers of the
Corporation;
(c) provide the Funds with the adequate general office space,
communication facilities and personnel to perform the services for the Funds
described in this Section 2.
(d) oversee the performance of administrative and professional services
rendered to the Corporation by others, including its custodian, transfer agent
and dividend disbursing agent as well as legal, auditing, shareholder servicing
and other services performed for the Funds, including:
(i) the preparation and maintenance by the Corporation's
custodian, transfer agent, dividend disbursing agent and fund accountant in such
form, for such periods and in such locations as may be required by applicable
United States law, of all documents and records relating to the operation of the
Corporation required to be prepared or maintained by the Corporation or its
agents pursuant to applicable law;
2
<PAGE>
(ii) the reconciliation of account information and balances
among the Corporation's custodian, transfer agent, dividend disbursing agent and
fund accountant;
(iii) the transmission of purchase and redemption orders for
Shares; and
(iv) the performance of fund accounting, including the
calculation of the net asset value of the Shares;
(e) assist each Fund's investment adviser in monitoring Fund holdings
for compliance with Prospectus investment restrictions and assist in preparation
of periodic compliance reports, as applicable;
(f) prepare and coordinate the printing of semi-annual and annual
financial statements;
(g) prepare selected management reports for performance and compliance
analyses agreed upon by the Corporation and the Administrator from time to time;
(h) advise the Corporation and the Board on matters concerning the
Corporation and its affairs;
(i) with the cooperation of the counsel to the Corporation, the
investment adviser, officers of the Corporation and other relevant parties,
prepare and disseminate materials for meetings of the Board, including agendas
and selected financial information as agreed upon by the Corporation and ADS
from time to time; attend and participate in Board meetings to the extent
requested by the Board; and prepare or cause to be prepared minutes of the
meetings of the Board;
(j) determine income and capital gains available for distribution and
calculate distributions required to meet regulatory, income, and excise tax
requirements, to be reviewed by the Funds' independent public accountants;
(k) Prepare the Funds' federal, state, and local tax returns to be
reviewed by the Fund's independent public accountants;
(l) Prepare and maintain the Funds' operating expense budgets to
determine proper expense accruals to be charged to each Fund in order to
calculate it's daily net asset value;
(m) in consultation with counsel for the Corporation, assist in and
oversee the preparation, filing, printing and where applicable, dissemination to
shareholders of the following:
3
<PAGE>
(i) amendments to the Corporation's Registration Statement on
Form N-1A;
(ii) periodic reports to the Funds' shareholders and the
Commission, including but not limited to annual reports and semi-annual reports;
(iii) notices pursuant to Rule 24f-2;
(iii) proxy materials; and
(iv) reports to the SEC on Form N-SAR.
(n) coordinate the Funds' annual and/or SEC audit by:
(i) assisting the Funds' independent public accountants, or,
upon approval of a Fund, any regulatory body, in any requested review of that
Fund's accounts and records;
(ii) providing appropriate financial schedules (as requested
by the Funds' independent public accountants or SEC examiners); and,
(iii) providing office facilities as may be required.
(o) after consultation with counsel for the Corporation and the
investment adviser, determine the jurisdictions in which Shares of the Funds
shall be registered or qualified for sale; register, or prepare applicable
filings with respect to the Shares with the various state and other securities
commissions, provided that all fees for the registration of Shares or for
qualifying or continuing the qualification of the Funds shall be paid for by
each Fund, respectively;
(p) monitor sales of Shares and ensure that the Shares are properly and
duly registered with the SEC;
(q) oversee the calculation of performance data for dissemination to
information services covering the investment company industry, for sales
literature of the Corporation and other appropriate purposes;
(r) prepare, or cause to be prepared, expense and financial reports,
including Fund budgets, expense reports, pro-forma financial statements, expense
and profit/loss projections and fee waiver/expense reimbursement projections on
a periodic basis;
(s) authorize the payment of Corporation expenses and pay, from
Corporation assets, all bills of the Corporation;
4
<PAGE>
(t) assist the Corporation in the selection of other service providers,
such as independent accountants, law firms and proxy solicitors; and perform
such other recordkeeping, reporting and other tasks as may be specified from
time to time in the procedures adopted by the Board; provided, that ADS need not
begin performing any such task except upon 65 days' notice and pursuant to
mutually acceptable compensation agreements; and
(u) provide such other services and assistance relating to the affairs
of the Corporation as the Corporation may, from time to time, reasonably request
pursuant to mutually acceptable compensation agreements.
2.1 Except with respect to ADS's duties as set forth in this
Section 2 and except as otherwise specifically provided
herein, the Corporation assumes all responsibility for
ensuring that the Corporation complies with all
applicable requirements of the Securities Act, the 1940
Act and any laws, rules and regulations of governmental
authorities with jurisdiction over the Corporation. All
references to any law in this Agreement shall be deemed
to include reference to the applicable rules and
regulations promulgated under authority of the law and
all official interpretations of such law or rules or
regulations.
2.2 In order for ADS to perform the services required by this
Section 2, the Corporation (i) shall cause all service
providers engaged by the Corporation in connection with
the Funds to furnish any and all information to ADS, and
assist ADS as may be required and (ii) shall ensure that
ADS has access to all records and documents maintained by
the Corporation or any service provider to the
Corporation.
3. INDEPENDENT CONTRACTOR
ADS shall, for all purposes herein, be deemed to be an independent
contractor and shall, unless otherwise expressly provided or authorized, have no
authority to act for or represent a Fund in any way or otherwise be deemed an
agent of a Fund.
4. COMPENSATION OF ADS.
In consideration of the services to be performed by ADS as set forth
herein for each Fund listed in Schedule B, ADS shall be entitled to receive
compensation and reimbursement for all reasonable out-of-pocket expenses. The
Funds shall pay ADS the fees and reimburse the of out-of-pocket expenses set
forth in the fee schedule attached hereto as Schedule A.
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5. EXPENSES
Except as specifically stated in this Agreement, ADS shall pay all
expenses incurred by it in performing its services and duties as Administrator.
Each Fund will bear all other expenses incurred in connection with its operation
and administration (other than those borne by the Adviser) including taxes,
interest, brokerage fees and commissions, if any, fees of Directors who are not
officers, directors, partners, employees or holders of five percent or more of
the outstanding voting securities of the Adviser or ADS or any of their
affiliates, Securities and Exchange Commission fees and state blue sky
registration or qualification fees, advisory fees, charges of custodians,
transfer and dividend disbursing agents' fees, payments under the Plans, certain
insurance premiums, outside accounting and legal expenses, costs of maintaining
corporate existence, costs attributable to shareholder services, including
without limitation telephone and personnel expenses, costs of preparing and
printing Prospectuses for regulatory purposes, costs of shareholders' reports
and Corporation meetings and any extraordinary expenses
6. RESPONSIBILITY AND INDEMNIFICATION.
(a) ADS shall be held to the exercise of reasonable care in
carrying out the provisions of the Agreement, but shall be without liability to
the Funds for any action taken or omitted by it in good faith without gross
negligence, bad faith, willful misconduct or reckless disregard of its duties
hereunder. It shall be entitled to rely upon and may act upon the accounting
records and reports generated by the Funds, advice of the Funds, or of counsel
to the Funds and upon statements of the Funds' independent public accountants,
and shall be without liability for any action reasonably taken or omitted
pursuant to such records and reports or advice, provided that such action is
not, to the knowledge of ADS, in violation of applicable federal or state laws
or regulations, and provided further that such action is taken without gross
negligence, bad faith, willful misconduct or reckless disregard of its duties.
(b) ADS shall not be liable to the Funds for any error of
judgment or mistake of law or for any loss arising out of any act or omission by
ADS in the performance of its duties hereunder except as hereinafter set forth.
Nothing herein contained shall be construed to protect the Administrator against
any liability to a Fund or its security holders to which ADS shall otherwise be
subject by reason of willful misfeasance, bad faith, gross negligence in the
performance of its duties on behalf of the Fund, reckless disregard of ADS's
obligations and duties under this Agreement or the willful violation of any
applicable law.
(c) Except as may otherwise be provided by applicable law,
neither ADS nor its stockholders, officers, directors, employees or agents shall
be subject to, and the Funds shall indemnify and hold such persons harmless from
and against, any liability for and any damages, expenses or losses incurred by
reason of the inaccuracy of information furnished to ADS by the Funds or their
respective authorized agents or in connection with any error in judgment or
mistake of law or any act or omission in the course of, connected with or
arising out of any services to be rendered hereunder, except by reason of
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willful misfeasance, bad faith or gross negligence in the performance of its
duties, by reason of reckless disregard of ADS's obligations and duties under
this Agreement or the willful violation of any applicable law.
7. REPORTS.
(a) The Funds shall each provide to ADS on a quarterly basis a
report of a duly authorized officer of each Fund representing that all
information furnished to ADS during the preceding quarter was true, complete and
correct to the best of its knowledge. ADS shall not be responsible for the
accuracy of any information furnished to it by the Funds, and the Funds shall
hold ADS harmless in regard to any liability incurred by reason of the
inaccuracy of such information.
(b) ADS shall provide to the Board of Directors of the
Corporation, on a quarterly basis, a report, in such a form as ADS and the
Corporation shall from time to time agree, representing that, to its knowledge,
the Funds were in compliance with all requirements of applicable federal and
state law, including without limitation, the rules and regulations of the
Securities and Exchange Commission and the Internal Revenue Service, or
specifying any instances in which a Fund was not so in compliance. Whenever, in
the course of performing its duties under this Agreement, ADS determines, on the
basis of information supplied to ADS by a Fund, that a violation of applicable
law has occurred, or that, to its knowledge, a possible violation of applicable
law may have occurred or, with the passage of time, could occur, ADS shall
promptly notify the Fund and its counsel of such violation.
8. ADDITIONAL FUNDS AND CLASSES
In the event that the Corporation establishes additional series of
Shares or one or more classes of Shares after the effectiveness of this
Agreement, such series of Shares or classes of Shares, as the case may be, shall
become Funds and Classes under this Agreement. ADS or the Corporation may elect
not to make any such series or classes subject to this Agreement.
9. ACTIVITIES OF ADS.
(a) ADS shall be free to render similar services to others so long as
its services hereinunder are not impaired thereby.
(b) ADS may subcontract any or all of its responsibilities pursuant
to this Agreement to one or more corporations, trusts, firms, individuals or
associations, which may be affiliated persons of the Administrator, who agree to
comply with the terms of this Agreement; provided, that any such subcontracting
shall not relieve the Administrator of its responsibilities hereunder. The
Administrator may pay those persons for their services, but no such payment will
increase the Administrator's compensation from the Corporation.
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<PAGE>
10. RECORDS.
ADS shall maintain records relating to its services, such as journals,
ledger accounts and other records, as are required to be maintained under the
1940 Act and Rule 31a-1 thereunder. The books and records pertaining to the
Corporation that are in possession of ADS shall be the property of the
Corporation. The Corporation, or the Corporation's authorized representatives,
shall have access to such books and records at all times during ADS's normal
business hours. Upon the reasonable request of the Corporation, copies of any
such books and records shall be provided promptly by ADS to the Corporation or
the Corporation's authorized representatives. In the event the Corporation
designates a successor that assumes any of ADS's obligations hereunder, ADS
shall, at the expense and direction of the Corporation, transfer to such
successor all relevant books, records and other data established or maintained
by ADS under this Agreement.
11. CONFIDENTIALITY.
ADS agrees to treat all records and other information related to the
Corporation as proprietary information of the Corporation and, on behalf of
itself and its employees, to keep confidential all such information, except that
ADS may:
(a) prepare or assist in the preparation of periodic reports to
shareholders and regulatory bodies such as the SEC;
(b) provide information typically supplied in the investment company
industry to companies that track or report price, performance or other
information regarding investment companies; and
(c) release such other information as approved in writing by the
Corporation, which approval shall not be unreasonably withheld and may not be
withheld where ADS may be exposed to civil or criminal contempt proceedings for
failure to release the information, when requested to divulge such information
by duly constituted authorities or when so requested by the Corporation.
12. EFFECTIVENESS, DURATION, AND TERMINATION
(a) This Agreement shall become effective on the date first above
written.
(b) This Agreement shall remain in effect for a period of three (3)
years from the date of its effectiveness and shall continue in effect for
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<PAGE>
successive twelve-month periods; provided that such continuance is specifically
approved at least annually by the Board and by a majority of the Directors who
are not parties to this Agreement or interested persons of any such party.
(c) In the event of a material breach of this Agreement by either
party, the non-breaching part shall notify the breaching party in writing of
such breach and upon receipt of such notice, the breaching party shall have 45
days within which to remedy the breach. If said breach is not remedied to the
reasonable satisfaction of the non-breaching party, the non-breaching party may
thereafter terminate this Agreement immediately.
If, after such termination, ADS, with the written consent of the
Corporation, in fact continues to perform any one or more of the services
contemplated by this Agreement or any schedule or exhibit hereto, the provisions
of this Agreement, including without limitation, the provisions dealing with
indemnification, shall continue in full force and effect.
Compensation due ADS and unpaid by the Corporation upon such
termination shall be immediately due and payable upon, and notwithstanding, such
termination.
(d) If at any time during the initial or any subsequent term of this
Agreement, ADS is replaced as the administrator for any reason other than for a
material breach of this Agreement which ADS does not cure within a reasonable
time, or the Fund is merged into or sells all (or substantially all) of its
assets to another fund or family of funds for which ADS does not serve as
administrator, then the Funds shall, immediately upon demand by ADS, make a one
time cash payment equal to the net present value of the revenues ADS would have
earned during the remainder of the initial or subsequent term of the Agreement,
as the case may be, at the fee rate in effect at the time of such event
(including any applicable minimum).
For purposes of this paragraph, the asset figured used to calculate the
fee due ADS from each Fund hereunder shall be the highest monthly average assets
of the Fund at any time during the 12 months immediately preceding the
termination of ADS (or the merger or sale of assets of the Fund).
If the Corporation terminates this Agreement ADS shall be entitled to
collect from the Corporation, in addition to the compensation described under
Section 2 hereof, the amount of all of ADS's reasonable cash disbursements for
services in connection with ADS's activities in effecting such termination,
including without limitation, the delivery to the Corporation and/or its
designees of the Corporation's property, records, instruments and documents, or
any copies thereof. [Subsequent to such termination, for a reasonable fee, ADS
will provide the Corporation with reasonable access to all Corporation documents
or records, if any, remaining in its possession.] Should the Corporation
exercise its right to terminate, all out-of-pocket expenses associated with the
movement of records and material will be borne by the Funds. Additionally, ADS
reserves the right to charge for any other reasonable costs and expenses
associated with such termination.
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(e) The obligations of Sections 2 and 4 shall survive any termination
of this Agreement
13. ASSIGNMENT.
This Agreement shall extend to and shall be binding upon the parties
hereto and their respective successors and assigns; provided, however, that this
Agreement shall not be assignable by either party without the prior written
consent of the other party.
14. FORCE MAJEURE
ADS shall not be responsible or liable for any failure or delay in
performance of its obligations under this Agreement arising out of or caused,
directly or indirectly, by circumstances beyond its reasonable control
including, without limitation, acts of civil or military authority, national
emergencies, labor difficulties, fire, mechanical breakdowns, flood or
catastrophe, acts of God, insurrection, war, riots or failure of the mails,
transportation, communication or power supply.
15. SERVICE DAYS
Nothing contained in this Agreement is intended to or shall require ADS, in any
capacity under this Agreement, to perform any functions or duties on any day
other than a business day of the Corporation or of a Fund. Functions or duties
normally scheduled to be performed on any day which is not a business day of the
Corporation or of a Fund shall be performed on, and as of, the next business
day, unless otherwise required by law.
17. NOTICES.
All notices and other communications hereunder shall be in writing,
shall be deemed to have been given when delivered in person or by certified
mail, return receipt requested, and shall be given to the following addresses
(or such other addresses as to which notice is given):
To a Fund:
[Name of Fund]
Investa Management Co., Inc.
551 Fifth Avenue
New York, New York 10176
Attn: Scott B. Stokes
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To ADS:
Michael Miola
President
American Data Services, Inc.
150 Motor Parkway, Suite 109
Hauppauge, NY 11788
13. MISCELLANEOUS
(a) Neither party to this Agreement shall be liable to the other party
for consequential damages under any provision of this Agreement.
(b) Except for Schedule B to add new Funds and Classes in accordance
with Section 8, no provisions of this Agreement may be amended or modified in
any manner except by a written agreement properly authorized and executed by
both parties hereto.
(c) The provisions of this Agreement shall be construed and interpreted
in accordance with the laws of the State of New York as at the time in effect
and the applicable provisions of the 1940 Act. To the extent that the applicable
law of the State of New York or any of the provisions herein, conflict with the
applicable provisions of the 1940 Act, the latter shall control.
(d) This Agreement constitutes the entire agreement between the parties
hereto and supersedes any prior agreement with respect to the subject matter
hereof, whether oral or written.
(e) The parties may execute this Agreement on any number of
counterparts, and all of the counterparts taken together shall be deemed to
constitute one and the same instrument.
(f) If any part, term or provision of this Agreement is held to be
illegal, in conflict with any law or otherwise invalid, the remaining portion or
portions shall be considered severable and not be affected, and the rights and
obligations of the parties shall be construed and enforced as if the Agreement
did not contain the particular part, term or provision held to be illegal or
invalid.
(g) Section headings in this Agreement are included for convenience
only and are not to be used to construe or interpret this Agreement.
(h) Notwithstanding any other provision of this Agreement, the parties
agree that the assets and liabilities of each Fund of the Corporation are
separate and distinct from the assets and liabilities of each other Fund and
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that no Fund shall be liable or shall be charged for any debt, obligation or
liability of any other Fund, whether arising under this Agreement or otherwise.
(i) No affiliated person, employee, agent, director, officer or manager
of the Administrator shall be liable at law or in equity for the Administrator's
obligations under this Agreement.
(j) Each of the undersigned warrants and represents that they have full
power and authority to sign this Agreement on behalf of the party indicated and
that their signature will bind the party indicated to the terms hereof and each
party hereto warrants and represents that this Agreement, when executed and
delivered, will constitute a legal, valid and binding obligation of the party,
enforceable against the party in accordance with its terms, subject to
bankruptcy, insolvency, reorganization, moratorium and other laws of general
application affecting the rights and remedies of creditors and secured parties.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the day and year first above written.
INVESTA MANAGEMENT CO., INC.
By: ___________________________________________________
Derek J. Hoggett , President
AMERICAN DATA SERVICES, INC.
By: ___________________________
Michael Miola, President
<PAGE>
SCHEDULE A
(a) ADMINISTRATIVE SERVICE FEE:
For the services rendered by ADS in its capacity as
administrator, as specified in Paragraph 1. DUTIES OF ADS., the Fund shall pay
ADS within ten (10) days after receipt of an invoice from ADS at the beginning
of each month, a fee equal to the greater of:
CALCULATED FEE WILL BE BASED UPON PRIOR MONTH AVERAGE NET ASSETS:
(No prorating partial months)
NOTE: The following administrative service fees are per portfolio
serviced plus out-of-pocket expenses.
MINIMUM FEE:
Under $5 million ............................. $3,000
From $5 million to $10 Million ........ 3,500
From $10 million to $20 million....... 4,000
From $20 million on......................... 4,500
OR,
NET ASSET CHARGE:
First $75 Million of average monthly net assets of Fund 1/12th of 0.15%
(15 basis points), plus
Next $75 Million of average monthly net assets of Fund 1/12th of 0.10%
(10 basis points), plus
Over $150 Million of average monthly net assets of Fund 1/12th of 0.07%
(7 basis points).
FEE INCREASES
On each annual anniversary date of this Agreement, the fees enumerated
above will be increased by the change in the Consumer Price Index for the
Northeast region (CPI) for the twelve-month period ending with the month
preceding such annual anniversary date.
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(b) EXPENSES.
The following expenses will be charged to the Fund as incurred by ADS
in connection with the performance of its duties to include
The Fund shall reimburse ADS for any out-of-pocket expenses , exclusive
of salaries, advanced by ADS in connection with but not limited to the printing
or filing of documents for the Fund, travel, daily quotation fees (currently
$0.10 for equity & $0.58 for debt positions), capital change information,
telephone toll charges, facsimile transmissions, supplies (related to fund
records), record storage, postage and courier charges, pro-rata portion of SAS
70 review, and NASDAQ insertion fee ($22 per month).incurred in connection with
the performance of its duties hereunder. ADS shall provide the Fund with a
monthly invoice of such expenses and the Fund shall reimburse ADS within fifteen
(15) days after receipt thereof.
(c) STATE REGISTRATION (BLUE SKY) SURCHARGE:
The fees enumerated in paragraph (a) above do not include the
initial state registration, renewal and maintenance of registrations (as
detailed in Paragraph 1(l) DUTIES OF ADS). Each state registration requested
will be subject to the following fees:
Initial registration ........... $295.00
Registration renewal ........... $150.00
Sales reports (if required) .... $ 25.00
(d) SPECIAL REPORTS.
All reports and /or analyses requested by the Fund, its auditors,
legal counsel, portfolio manager, or any regulatory agency having jurisdiction
over the Fund, that are not in the normal course of fund administrative
activities as specified in Section 1 of this Agreement shall be subject to an
additional charge, agreed upon in advance, based upon the following rates:
Labor:
Senior staff - $150.00/hr.
Junior staff - $75.00/hr.
Computer time - $45.00/hr.
(e) SERVICE DEPOSIT.
The Fund will remit to ADS upon execution of this Agreement a security
deposit equal to one (1) month's minimum fee under this Agreement, computed in
accordance with the number of portfolios listed in Schedule B of this Agreement.
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The Fund will have the option to have the security deposit applied to the last
month's service fee, or applied to any new contract between the Fund and ADS.
However, if the Fund elects or is forced to terminate this Agreement
for any reason what-so-ever (including, but not limited to, the voluntary or
involuntary termination of the Fund, liquidation of the Fund's assets, the sale
or merger of the Fund or it's assets to any successor entity) prior to the
termination date of this Agreement as specified in Paragraph 8 of this
Agreement, the Fund will forfeit the Security Deposit paid to ADS upon execution
of this Agreement
<PAGE>
SCHEDULE B
PORTFOLIOS TO BE SERVICED UNDER THIS AGREEMENT:
INVESTA MANAGEMENT CO., INC.
FORM OF TRANSFER AGENCY AGREEMENT
AGREEMENT made this ______ day of _________, 1999, by and between
Investa Management Co., Inc., a Maryland corporation, having its principal
office and place of business at 551 Fifth Avenue, New York, New York 10176 (the
"Corporation"), and American Data Services, Inc., a New York corporation having
its principal office and place of business at the Hauppauge Corporate Center,
150 Motor Parkway, Suite 109, Hauppauge, New York 11788 ("ADS").
WHEREAS, the Corporation is an open-end management investment company
registered with the United States Securities and Exchange Commission under the
Investment Company Act of 1940, as amended (the "1940 Act"); and
WHEREAS, the Corporation is authorized to issue shares ("Shares") in
separate series, with each such series representing interests in a separate
portfolio of securities and other assets, and is authorized to divide those
series into separate classes; and
WHEREAS, the Corporation offers shares in the series as listed in
Appendix A hereto (each such series, together with all other series subsequently
established by the Corporation and made subject to this Agreement in accordance
with Section 13, being herein referred to as a "Fund," and collectively as the
"Funds"); and
WHEREAS, the Corporation desires to appoint ADS as its transfer agent
and dividend disbursing agent for each Fund thereof and ADS desires to accept
such appointment on the terms and conditions set forth in this Agreement;
NOW THEREFORE, for and in consideration of the mutual covenants and
agreements contained herein, the Corporation and ADS hereby agree as follows:
1. APPOINTMENT; DELIVERY OF DOCUMENTS
(a) APPOINTMENT. The Corporation, on behalf of the Funds, hereby appoints ADS to
act as, and ADS agrees to act as, (i) transfer agent for the authorized and
issued shares of beneficial interest stock of the Corporation representing
interests in each of the respective Funds and Classes thereof ("Shares"), (ii)
dividend disbursing agent and (iii) agent in connection with any accumulation,
open-account or similar plans provided to the registered owners of shares of any
of the Funds ("Shareholders") and set out in the currently effective
prospectuses and statements of additional information of the applicable Fund,
including, without limitation, any periodic investment plan or periodic
withdrawal program.
(A) DOCUMENT DELIVERY. The Corporation has delivered to ADS copies of:
<PAGE>
(i) the Corporation's Corporation Instrument and Bylaws (collectively,
as amended from time to time, "Organic Documents"),
(ii) the Corporation's Registration Statement and all amendments
thereto filed with the U.S. Securities and Exchange Commission ("SEC") pursuant
to the Securities Act of 1933, as amended (the "Securities Act"), or the
Investment Company Act of 1940, as amended (the "1940 Act")(the "Registration
Statement"),
(iii) the current Prospectus and Statement of Additional Information of
each Fund (collectively, as currently in effect and as amended or supplemented,
the "Prospectus"),
(iv) each current plan of distribution or similar document adopted by
the Corporation under Rule 12b-1 under the 1940 Act ("Plan") and each current
shareholder service plan or similar document adopted by the Corporation
("Service Plan"), and
(v) The Corporation shall promptly furnish ADS with all amendments of
or supplements to the foregoing and shall deliver to ADS a certified copy of the
resolution of the Board of Directors of the Corporation (the "Board") appointing
ADS and authorizing the execution and delivery of this Agreement.
2. DUTIES OF ADS
(a) TRANSFER AGENCY SERVICES. In accordance with procedures established from
time to time by agreement between the Corporation on behalf of each of the
Funds, as applicable, and ADS, ADS will perform the following services:
(i) provide the services of a transfer agent, dividend disbursing agent
and, as relevant, agent in connection with accumulation, open-account or similar
plans (including without limitation any periodic investment plan or periodic
withdrawal program) that are customary for open-end management investment
companies including:
(A) maintaining all Shareholder accounts;
(B) preparing Shareholder meeting lists;
(C) mailing Shareholder reports and prospectuses to current
Shareholders;
(D) withholding taxes on U.S. resident and non-resident alien
accounts;
(E) preparing and filing U.S. Treasury Department Forms 1099
and other appropriate forms required by federal authorities with respect to
distributions for Shareholders;
(F) preparing and mailing confirmation forms and statements of
account to Shareholders for all purchases and redemptions of Shares and other
confirmable transactions in Shareholder accounts; and,
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(G) providing account information in response to inquiries
from Shareholders.
(ii) Receive for acceptance, orders for the purchase of Shares, and
promptly deliver payment and appropriate documentation therefore to the
Custodian of the Funds authorized by the Board of Directors of the Corporation
(the "Custodian"); or, in the case of a Fund's operating in a master-feeder or
fund of funds structure, to the transfer agent or interest-holder recordkeeper
for the master portfolios in which the Fund invests;
(iii) pursuant to purchase orders, issue the appropriate number of
Shares and hold such Shares in the appropriate Shareholder account;
(iv) receive for acceptance redemption requests and deliver the
appropriate documentation therefor to the Custodian or, in the case of a Fund
operating in a master-feeder or fund of funds structure, to the transfer agent
or interest-holder recordkeeper for the master portfolios in which the Fund
invests;
(v) as and when it receives monies paid to it by the Custodian with
respect to any redemption, pay the redemption proceeds as required by the
Prospectus pursuant to which the redeemed Shares were offered and as instructed
by the redeeming Shareholders;
(vi) effect transfers of Shares upon receipt of appropriate
instructions from Shareholders;
(vii) prepare and transmit to Shareholders (or credit the appropriate
Shareholder accounts) payments for all distributions declared by the Corporation
with respect to Shares;
(viii) issue share certificates and replacement share certificates for
those share certificates alleged to have been lost, stolen, or destroyed upon
receipt by ADS of indemnification satisfactory to ADS and protecting ADS and the
Corporation and, at the option of ADS, issue replacement certificates in place
of mutilated share certificates upon presentation thereof without requiring
indemnification;
(ix) receive from Shareholders or debit Shareholder accounts for sales
commissions, including contingent deferred, deferred and other sales charges,
and service fees (I.E., wire redemption charges) and prepare and transmit
payments to underwriters, selected dealers and others for commissions and
service fees received;
(x) track shareholder accounts by financial intermediary source and
otherwise as requested by the Corporation and provide periodic reporting to the
Corporation or its administrator or other agent;
(xi) maintain records of account for and provide reports and statements
to the Corporation and Shareholders as to the foregoing;
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(xii) Record the issuance of shares of the Funds and maintain pursuant
to SEC Rule 17Ad-10(e) a record of the total number of shares of the Fund which
are authorized, based upon data provided to it by the Fund, and issued and
outstanding.
(xiii) provide a system which will enable the Corporation to calculate
the total number of Shares of each Fund and Class thereof sold in each State.
(b) OTHER SERVICES. ADS shall provide the following additional services on
behalf of the Corporation and such other services agreed to in writing by the
Corporation and ADS:
(i) monitor and make appropriate filings with respect to the
escheatment laws of the various states and territories of the United States; and
(c) BLUE SKY MATTERS. The Corporation or its administrator or other agent
(i) shall identify to ADS in writing those transactions and assets to
be treated as exempt from reporting for each state and territory of the United
States and for each foreign jurisdiction (collectively "States"); and
(ii) shall monitor the sales activity with respect to Shareholders
domiciled or resident in each State.
(d) SAFEKEEPING. ADS shall establish and maintain facilities and procedures
reasonably acceptable to the Corporation for the safekeeping, control,
preparation and use of share certificates, check forms, and facsimile signature
imprinting devices. ADS shall establish and maintain facilities and procedures
reasonably acceptable to the Corporation for safekeeping of all records
maintained by ADS pursuant to this Agreement.
(e) COOPERATION WITH ACCOUNTANTS. ADS shall cooperate with each Fund's
independent public accountants and shall take reasonable action to make all
necessary information available to the accountants for the performance of the
accountants' duties.
(f) RESPONSIBILITY FOR COMPLIANCE WITH LAW.
(i) IN GENERAL. Except with respect to ADS's duties as set
forth in this Section 2 and except as otherwise specifically provided
herein, the Corporation assumes all responsibility for ensuring that
the Corporation complies with all applicable requirements of the
Securities Act, the 1940 Act and any laws, rules and regulations of
governmental authorities with jurisdiction over the Corporation. All
references to any law in this Agreement shall be deemed to include
reference to the applicable rules and regulations promulgated under
authority of the law and all official interpretations of such law or
rules or regulations.
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(ii) ISSUANCE OF SHARES. The responsibility of ADS for the
Corporation's state registration status is solely limited to the
reporting of transactions to the Corporation, and ADS shall have no
obligation, when recording the issuance of Shares, to monitor the
issuance of such Shares or to take cognizance of any laws relating to
the issue or sale of such Shares, which functions shall be the sole
responsibility of the Corporation or its administrator or other agent.
4. RECORDKEEPING
(a) PREDECESSOR RECORDS. Prior to the commencement of ADS's responsibilities
under this Agreement, if applicable, the Corporation shall deliver or cause to
be delivered over to ADS:
(i) an accurate list of Shareholders of the Corporation, showing each
Shareholder's address of record, number of Shares owned and whether such Shares
are represented by outstanding share certificates and
(ii) all Shareholder records, files, and other materials necessary or
appropriate for proper performance of the functions assumed by ADS under this
Agreement (collectively referred to as the "Materials"). The Corporation shall
on behalf of each applicable Fund or Class indemnify and hold ADS harmless from
and against any and all losses, damages, costs, charges, counsel fees, payments,
expenses and liability arising out of or attributable to any error, omission,
inaccuracy or other deficiency of the Materials, or out of the failure of the
Corporation to provide any portion of the Materials or to provide any
information in the Corporation's possession or control reasonably needed by ADS
to perform the services described in this Agreement.
(b) RECORDKEEPING. ADS shall keep records relating to the services to be
performed under this Agreement, in the form and manner as it may deem advisable
and as required by applicable law. To the extent required by Section 31 of the
1940 Act, and the rules thereunder, ADS agrees that all such records prepared or
maintained by ADS relating to the services to be performed by ADS under this
Agreement are the property of the Corporation and will be preserved, maintained
and made available in accordance with Section 31 of the 1940 Act and the rules
thereunder, and will be surrendered promptly to the Corporation on and in
accordance with the Corporation's request. The Corporation and the Corporation's
authorized representatives shall have access to ADS's records relating to the
services to be performed under this Agreement at all times during ADS's normal
business hours. Upon the reasonable request of the Corporation, copies of any
such records shall be provided promptly by ADS to the Corporation or its
authorized representatives.
(c) CONFIDENTIALITY OF RECORDS. ADS and the Corporation agree that all books,
records, information, and data pertaining to the business of the other party
which are exchanged or received pursuant to the negotiation or the carrying out
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of this Agreement shall remain confidential, and shall not be voluntarily
disclosed to any other person, except as may be required by law.
(d) INSPECTION OF RECORDS BY OTHERS. In case of any requests or demands for the
inspection of the Shareholder records of the Fund, ADS will endeavor to notify
the Fund and to secure instructions from an authorized officer of the Fund as to
such inspection. ADS reserves the right, however, to exhibit the Shareholder
records to any person whenever it is advised by its counsel that it may be held
liable for the failure to exhibit the Shareholder records to such person, and
shall promptly notify the Fund of any unusual request to inspect or copy the
shareholder records of the Fund or the receipt of any other unusual request to
inspect, copy or produce the records of the Fund.
5. ISSUANCE AND TRANSFER OF SHARES
(a) ISSUANCE OF SHARES. ADS shall make original issues of Shares of each Fund
and Class thereof in accordance with the Corporation's then current prospectus
only upon receipt of
(i) instructions requesting the issuance,
(ii) a certified copy of a resolution of the Board authorizing the
issuance,
(iii) necessary funds for the payment of any original issue tax
applicable to such Shares, and
(iv) an opinion of the Corporation's counsel as to the legality and
validity of the issuance, which opinion may provide that it is contingent upon
the filing by the Corporation of an appropriate notice with the SEC, as required
by Section 24 of the 1940 Act or the rules thereunder. If such opinion is
contingent upon a filing under Section 24 of the 1940 Act, the Corporation shall
indemnify ADS for any liability arising from the failure of the Corporation to
comply with that section or the rules thereunder.
(b) TRANSFER OF SHARES. Transfers of Shares of each Fund and Class thereof shall
be registered on the Shareholder records maintained by ADS. In registering
transfers of Shares, ADS may rely upon the Uniform Commercial Code as in effect
in the State of New York or any other statutes that, in the opinion of ADS's
counsel, protect ADS and the Corporation from liability arising from:
(i) not requiring complete documentation;
(ii) registering a transfer without an adverse claim inquiry;
(iii) delaying registration for purposes of such inquiry; or,
(iv) refusing registration whenever an adverse claim requires such
refusal. As Transfer Agent, ADS will be responsible for delivery to the
transferor and transferee of such documentation as is required by the Uniform
Commercial Code.
6
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6. SHARE CERTIFICATES
(a) SURCHARGE FOR ISSUANCE OF SHARE CERTIFICATIONS. If the Corporation issues
share certificates, the Corporation shall pay the surcharge for issuance of
certificates set forth in Schedule A, item (f).
(b) PROCEDUREs FOR ISSUANCE OF CERTIFICATES. In the event the Corporation elects
to issue share certificates, the following provisions shall apply:
(i) CERTIFICATES. The Corporation shall furnish to ADS a
supply of blank share certificates of each Fund and Class thereof and,
from time to time, will renew such supply upon ADS's request. Blank
share certificates shall be signed manually or by facsimile signatures
of officers of the Corporation authorized to sign by the Organic
Documents of the Corporation and, if required by the Organic Documents,
shall bear the Corporation's seal or a facsimile thereof. Unless
otherwise directed by the Corporation, ADS may issue or register Share
certificates reflecting the manual or facsimile signature of an officer
who has died, resigned or been removed by the Corporation.
(ii) ENDORSEMENT; TRANSPORTATION. New Share certificates shall
be issued by ADS upon surrender of outstanding Share certificates in
the form deemed by ADS to be properly endorsed for transfer and
satisfactory evidence of compliance with all applicable laws relating
to the payment or collection of taxes. ADS shall forward Share
certificates in "non-negotiable" form by first-class or registered
mail, or by whatever means ADS deems equally reliable and expeditious.
ADS shall not mail Share certificates in "negotiable" form unless
requested in writing by the Corporation and fully indemnified by the
Corporation to ADS's satisfaction.
7. SHARE PURCHASES; ELIGIBILITY TO RECEIVE DISTRIBUTIONS
(a) PURCHASE ORDERS. Shares shall be issued in accordance with the terms of a
Fund's or Class' prospectus after ADS or its agent receives either:
(i)(A) an instruction directing investment in a Fund or Class, (B) a
check (other than a third party check) or a wire or other electronic payment in
the amount designated in the instruction and (C), in the case of an initial
purchase, a completed account application; or,
(ii) the information required for purchases pursuant to a selected
dealer agreement, processing organization agreement, or a similar contract with
a financial intermediary.
7
<PAGE>
(b) DISTRIBUTION ELIGIBILITY. Shares issued in a Fund after receipt of a
completed purchase order shall be eligible to receive distributions of the Fund
at the time specified in the prospectus pursuant to which the Shares are
offered.
(c) DETERMINATION OF FEDERAL FUNDS. Shareholder payments shall be considered
Federal Funds no later than on the day indicated below unless other times are
noted in the prospectus of the applicable Class or Fund:
(i) for a wire received, at the time of the receipt of the wire;
(ii) for a check drawn on a member bank of the Federal Reserve System,
on the second Fund Business Day following receipt of the check; and
(iii) for a check drawn on an institution that is not a member of the
Federal Reserve System, at such time as ADS is credited with Federal Funds with
respect to that check.
8. FEES AND EXPENSES
(a) For the services provided by ADS pursuant to this Agreement, the
Corporation, on behalf of each Fund, agrees to pay ADS the fees set forth in
Schedule A. Fees will begin to accrue for each Fund on the latter of the date of
this Agreement or the date of commencement of operations of the Fund.
(b) In addition to the fees paid under subsection (a), the Corporation agrees to
reimburse ADS for out-of-pocket expenses or advances incurred by ADS for the
items set out in the Schedule A attached hereto. In addition, the Corporation
will reimburse any other expenses incurred by ADS at the request or with the
consent of the Corporation.
(c) The fees, out-of pocket expenses and advances identified in the foregoing
subsections (a) and (b) above may be changed from time to time subject to mutual
written agreement between the Corporation and ADS.
(d) The Corporation agrees to pay all fees and reimbursable expenses within ten
days following the receipt of the respective billing notice.
9. REPRESENTATIONS AND WARRANTIES
(a) REPRESENTATIONS OF ADS. ADS represents and warrants to the Corporation that:
(i) it is a corporation duly organized and existing and in good
standing under the laws of the State of New York;
(ii) it is duly qualified to carry on its business in the State of New
York;
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<PAGE>
(iii) it is empowered under applicable laws and by its Article of
Incorporation and Bylaws to enter into this Agreement and perform its duties
under this Agreement;
(iv) it has access to the necessary facilities, equipment, and
personnel to perform its duties and obligations under this Agreement; and,
(iv) it is registered as a transfer agent under Section 17A of the
Securities Exchange Act of 1934 and shall continue to be registered throughout
the remainder of this Agreement.
(b) REPRESENTATIONS OF THE CORPORATION. The Fund represents and warrants to ADS
that
(i) it is a business Corporation duly organized and existing and in
good standing under the laws of Massachusetts;
(ii) it is empowered under applicable laws and by its Organic Documents
to enter into and perform this Agreement;
(iii) all proceedings required by said Organic Documents have been
taken to authorize it to enter into and perform this Agreement;
(iv) it is an open-end management investment company registered under
the Investment Company Act of 1940; and,
(v) a registration statement under the Securities Act of 1933 is
currently or will become effective and will remain effective, and appropriate
state securities law filings as required, have been or will be made and will
continue to be made, with respect to all Shares of the Fund being offered for
sale.
10. INDEMNIFICATION
(a) INDEMNIFICATION OF ADS. ADS shall not be responsible for, and the
Corporation shall on behalf of each applicable Fund or Class thereof indemnify
and hold ADS harmless from and against, any and all losses, damages, costs,
charges, reasonable counsel fees, payments, expenses and liability arising out
of or attributable to:
(i) all actions of ADS or its agents or subcontractors required to be
taken pursuant to this Agreement, provided that such actions are taken in good
faith and without gross negligence or willful misconduct; the Corporation's lack
of good faith or the Corporation's gross negligence or willful misconduct;
(ii) the reliance on or use by ADS or its agents or subcontractors of
information, records or documents which (i) are received by ADS or its agents or
subcontractors and furnished to it by or on behalf of the Fund, and (ii) have
been prepared or maintained by the Corporation or any other person or firm on
behalf of the Corporation, including but not limited to any previous transfer
agent or registrar;
9
<PAGE>
(iii) the reasonable reliance on, or the carrying out by ADS or its
agents or subcontractors of, any instructions or requests of the Corporation on
behalf of the applicable Fund;
(iv) the Fund's refusal or failure to comply with the terms of this
Agreement, or which arise out of the Fund's lack good faith, gross negligence or
willful misconduct or which arise out of the breach of any representation or
warranty of the Fund hereunder and,
(v) the offer or sale of Shares in violation of any requirement under
the Federal securities laws or regulations or the securities laws or regulations
of any State that such Shares be registered in such State or in violation of any
stop order or other determination or ruling by any federal agency or any State
with respect to the offer or sale of such Shares in such State.
(b) INDEMNIFICATION OF THE CORPORATION. ADS shall indemnify and hold the
Corporation and each Fund or Class thereof harmless from and against any and all
losses, damages, costs, charges, reasonable counsel fees, payments, expenses and
liability arising out of or attributed to any action or failure or omission to
act by ADS as a result of ADS's lack of good faith, gross negligence or willful
misconduct with respect to the services performed under or in connection with
this Agreement.
(c) RELIANCE. At any time ADS may apply to any officer of the Corporation for
instructions, and may consult with legal counsel to the Corporation or to ADS
with respect to any matter arising in connection with the services to be
performed by ADS under this Agreement, and ADS and its agents or subcontractors
shall not be liable and shall be indemnified by the Corporation on behalf of the
applicable Fund for any action taken or omitted by it in reasonable reliance
upon such instructions or upon the advice of such counsel. ADS, its agents and
subcontractors shall be protected and indemnified in acting upon
(i) any paper or document furnished by or on behalf of the Corporation,
reasonably believed by ADS to be genuine and to have been signed by the proper
person or persons;
(ii) any instruction, information, data, records or documents provided
ADS or its agents or subcontractors by machine readable input, telex, CRT data
entry or other similar means authorized by the Corporation; and,
(iii) any authorization, instruction, approval, item or set of data, or
information of any kind transmitted to ADS in person or by telephone, vocal
telegram or other electronic means, reasonably believed by ADS to be genuine and
to have been given by the proper person or persons. ADS shall not be held to
have notice of any change of authority of any person, until receipt of written
notice thereof from the Corporation. ADS, its agents and subcontractors shall
10
<PAGE>
also be protected and indemnified in recognizing share certificates which are
reasonably believed to bear the proper manual or facsimile signatures of the
officers of the Corporation, and the proper countersignature of any former
transfer agent or former registrar or of a co-transfer agent or co-registrar of
the Corporation.
(d) RELIANCE ON ELECTRONIC INSTRUCTIONS. If the Corporation has the ability to
originate electronic instructions to ADS in order to (i) effect the transfer or
movement of cash or Shares or (ii) transmit Shareholder information or other
information, then in such event ADS shall be entitled to rely on the validity
and authenticity of such instruction without undertaking any further inquiry as
long as such instruction is undertaken in conformity with security procedures
established by ADS from time to time.
(e) USE OF FUND/SERV AND NETWORKING. The Corporation has authorized or in the
future may authorize ADS to act as a "Mutual Fund Services Member" for the
Corporation or various Funds and Classes. Fund/SERV and Networking are services
sponsored by the National Securities Clearing Corporation ("NSCC") and as used
herein have the meanings as set forth in the then current edition of NSCC RULES
AND PROCEDURES published by NSCC or such other similar publication as may exist
from time to time. The Corporation shall indemnify and hold ADS harmless from
and against any and all losses, damages, costs, charges, reasonable counsel
fees, payments, expenses and liability arising directly or indirectly out of or
attributed to any action or failure or omission to act by NSCC.
(f) NOTIFICATION OF CLAIMS. In order that the indemnification provisions
contained in this Section shall apply, upon the assertion of a claim for which
either party may be required to indemnify the other, the party seeking
indemnification shall promptly notify the other party of such assertion, and
shall keep the other party advised with respect to all developments concerning
such claim. The party who may be required to indemnify shall have the option to
participate with the party seeking indemnification in the defense of such claim
or to defend against said claim in its own name or in the name of the other
party. The party seeking indemnification shall in no case confess any claim or
make any compromise in any case in which the other party may be required to
indemnify it except with the other party's prior written consent.
11. PROPRIETARY INFORMATION
(a) PROPRIETARY INFORMATION OF ADS. The Corporation acknowledges that the
databases, computer programs, screen formats, report formats, interactive design
techniques, and documentation manuals maintained by ADS on databases under the
control and ownership of ADS or a third party constitute copyrighted, trade
secret, or other proprietary information (collectively, "Proprietary
Information") of substantial value to ADS or the third party. The Corporation
agrees to treat all Proprietary Information as proprietary to ADS and further
agrees that it shall not divulge any Proprietary Information to any person or
organization except as may be provided under this Agreement.
11
<PAGE>
(B) PROPRIETARY INFORMATION OF THE CORPORATION. ADS acknowledges that the
Shareholder list and all information related to Shareholders furnished to ADS by
the Corporation or by a Shareholder in connection with this Agreement
(collectively, "Customer Data") constitute proprietary information of
substantial value to the Corporation. In no event shall Proprietary Information
be deemed Customer Data. ADS agrees to treat all Customer Data as proprietary to
the Corporation and further agrees that it shall not divulge any Customer Data
to any person or organization except as may be provided under this Agreement or
as maybe directed by the Corporation.
12. EFFECTIVENESS, DURATION, AND TERMINATION
(a) EFFECTIVE DATE. This Agreement shall become effective on the date
first above written.
(b) TERM. This Agreement shall remain in effect for a period of three
(3) years from the date of its effectiveness and shall continue in effect for
successive twelve-month periods; provided that such continuance is specifically
approved at least annually by the Board and by a majority of the Directors who
are not parties to this Agreement or interested persons of any such party.
(c) TERMINATION FOR CAUSE. In the event of a material breach of this
Agreement by either party, the non-breaching part shall notify the breaching
party in writing of such breach and upon receipt of such notice, the breaching
party shall by 45 days to remedy the breach. If said breach is not remedied to
the reasonable satisfaction of the non-breaching party, the non-breaching party
may thereafter terminate this Agreement immediately. Compensation due ADS and
unpaid by the Corporation upon such termination shall be immediately due and
payable upon, and notwithstanding, such termination. If after such termination
for so long as ADS, with the written consent of the Corporation, in fact
continues to perform any one or more of the services contemplated by this
Agreement, the provisions of this Agreement, including without limitation, the
provisions dealing with indemnification, shall continue in full force and
effect.
(d) PAYMENT UPON TERMINATION. If at any time during the initial or any
subsequent term of this Agreement, ADS is replaced as transfer agent or dividend
disbursing agent for any reason other than for a material breach of this
Agreement which ADS does not cure within a reasonable time, or a Fund is merged
into or sells all (or substantially all) of its assets to another fund or family
of funds for which ADS does not serve as transfer agent or dividend disbursing
agent, then the Fund shall, immediately upon demand by ADS, make a one time cash
payment equal to the net present value of the revenues ADS would have earned
during the remainder of the initial or subsequent term of the Agreement, as the
case may be, at the fee rate in effect at the time of such event (including any
applicable minimum). For purposes of this paragraph, the figure used to
calculate the fee due ADS hereunder shall be the highest monthly fees paid by
the Fund at any time during the 12 months immediately preceding the termination
of ADS (or the merger or sale of assets) of the Fund.
12
<PAGE>
(e) REIMBURSEMENT OF ADS'S EXPENSES. If this Agreement is terminated
with respect to a Fund or Funds, ADS shall be entitled to collect from the Fund
or Funds, in addition to the compensation described under Sections 4 and 11(d)
hereof, the amount of all of ADS's reasonable cash disbursements for services in
connection with ADS's activities in effecting such termination, including
without limitation, the delivery to the Corporation and/or its designees of the
Corporation's property, records, instruments and documents, or any copies
thereof. Subsequent to such termination, for a reasonable fee, ADS will provide
the Corporation with reasonable access to all Corporation documents or records,
if any, remaining in its possession. Should the Fund exercise its right to
terminate, all out-of-pocket expenses associated with the movement of records
and material will be borne by the Fund. Additionally, ADS reserves the right to
charge for any other reasonable costs and expenses associated with such
termination.
(e) SURVIVAL OF CERTAIN OBLIGATIONS. The obligations of Sections 8, 10
and 11 shall survive any termination of this Agreement
(f) FORCE MAJEURE. In the event either party is unable to perform its
obligations under the terms of this Agreement because of acts of God, strikes,
equipment or transmission failure or damage reasonably beyond its control, or
other causes reasonably beyond its control, such party shall not be liable for
damages to the other for any damages resulting from such failure to perform or
otherwise from such causes.
13. ADDITIONAL FUNDS AND CLASSES.
If the Corporation establishes one or more series of Shares or one or more
classes of Shares after the effectiveness of this Agreement, such series of
Shares or classes of Shares, as the case may be, shall become Funds and Classes
under this Agreement; PROVIDED, however, that either ADS or the Corporation may
elect not to make and such series or classes subject to this Agreement.
14. ASSIGNMENT
Except as otherwise provided in this Agreement, neither this Agreement nor any
rights or obligations under this Agreement may be assigned by either party
without the written consent of the other party. This Agreement shall inure to
the benefit of and be binding upon the parties and their respective permitted
successors and assigns. ADS may, without further consent on the part of the
Corporation, subcontract for the performance hereof with any entity, including
affiliated persons of ADS; provided however, that ADS shall be as fully
responsible to the Corporation for the acts and omissions of any subcontractor
as ADS is for its own acts and omissions.
15. TAXES
ADS shall not be liable for any taxes, assessments or governmental charges that
may be levied or assessed on any basis whatsoever in connection with the
13
<PAGE>
Corporation or any Shareholder or any purchase of Shares, excluding taxes
assessed against ADS for compensation received by it under this Agreement.
16. MISCELLANEOUS
(a) AMENDMENTS. No provisions of this Agreement may be amended or modified in
any manner except by a written agreement properly authorized and executed by
both parties hereto.
(b) CHOICE OF LAW. This Agreement shall be construed and the provisions thereof
interpreted under and in accordance with the laws of the State of New York.
(c) ENTIRE AGREEMENT. This Agreement constitutes the entire agreement between
the parties hereto and supersedes any prior agreement with respect to the
subject matter hereof whether oral or written.
(d) COUNTERPARTS. The parties may execute this Agreement on any number of
counterparts, and all of the counterparts taken together shall be deemed to
constitute one and the same instrument.
(e) SEVERABILITY. If any part, term or provision of this Agreement is held to be
illegal, in conflict with any law or otherwise invalid, the remaining portion or
portions shall be considered severable and not be affected, and the rights and
obligations of the parties shall be construed and enforced as if the Agreement
did not contain the particular part, term or provision held to be illegal or
invalid.
(f) HEADINGS. Section and paragraph headings in this Agreement are included for
convenience only and are not to be used to construe or interpret this Agreement.
(g) NOTICES. All notices and other communications hereunder shall be in writing,
shall be deemed to have been given when received or when sent by telex or
facsimile, and shall be given to the following addresses (or such other
addresses as to which notice is given):
To the Fund: To ADS:
[Name] Michael Miola
[Title] President
[Name of Corporation] American Data Services, Inc.
[Street] 150 Motor Parkway, Suite 900
[City, State, Zip] Hauppauge, NY 11788
(H) BUSINESS DAYS. Nothing contained in this Agreement is intended to or shall
require ADS, in any capacity hereunder, to perform any functions or duties on
any day other than a Fund Business Day. Functions or duties normally scheduled
to be performed on any day which is not a Fund Business Day shall be performed
on, and as of, the next Fund Business Day, unless otherwise required by law.
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<PAGE>
(I) DISTINCTION OF FUNDS. Notwithstanding any other provision of this Agreement,
the parties agree that the assets and liabilities of each Fund of the
Corporation are separate and distinct from the assets and liabilities of each
other Fund and that no Fund shall be liable or shall be charged for any debt,
obligation or liability of any other Fund, whether arising under this Agreement
or otherwise.
(j) CONSEQUENTIAL DAMAGES. Neither party to this Agreement shall be liable to
the other party for consequential damages under any provision of this Agreement
or for any act or failure to act hereunder.
(k) NONLIABILITY OF AFFILIATES. No affiliated person (as that term is defined in
the 1940 Act), employee, agent, director, officer or manager of ADS shall be
liable at law or in equity for ADS's obligations under this Agreement.
(l) REPRESENTATION OF SIGNATORIES. Each of the undersigned expressly warrants
and represents that they have full power and authority to sign this Agreement on
behalf of the party indicated and that their signature will bind the party
indicated to the terms hereof
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed
in their names and on their behalf by and through their duly authorized persons,
as of the day and year first above written.
INVESTA MANAGEMENT CO., INC. AMERICAN DATA SERVICES, INC.
By: ______________________________________ By: __________________________
Derek J. Hoggett, President Michael Miola, President
15
<PAGE>
INVESTA MANAGEMENT CO., INC.
TRANSFER AGENCY AGREEMENT
SCHEDULE A
FEES AND ACCOUNT CHARGES
For the services rendered by ADS in its capacity as transfer agent, the
Fund shall pay ADS a fee, calculated as a combination of account maintenance
charges plus transaction charges as follows:
(a) ACCOUNT MAINTENANCE CHARGE:
The Greater of (No prorating for partial months) (1) a minimum maintenance
charge per Fund/Class $1,000.00/ month; or, (2) charges based upon the total of
all open/closed accounts (1) per Fund/class upon the following annual rates:
TYPE OF FUND CHARGE PER ACCOUNT
------------ ------------------
Dividend calculated and
paid annually, semi-annually, quarterly $ 9.00
Dividend calculated and paid monthly $ 12.00
Dividend accrued daily and paid monthly $ 16.00
Closed Accounts $ 2.00(2)
(1) All accounts closed during a month will be considered as open accounts for
billing purposes in the month the account is closed.
(2) Closed accounts remain on the shareholder files until all 1099's and 5498's
have been distributed to the shareholders and send via mag-media to the IRS.
PLUS,
(b) TRANSACTION FEES:
Trade Entry (purchase/liquidation) and maintenance transactions .....$ 1.50 each
New account set-up ..................................................$ 3.00 each
Customer service calls ..............................................$ 1.50 each
Correspondence/ information requests ................................$ 1.75 each
Check preparation ...................................................$ .50 each
Liquidations paid by wire transfer ..................................$ 3.00 each
ACH charge ..........................................................$ .45 each
SWP .................................................................$ 1.00 each
A-1
<PAGE>
(c) 24 HOUR AUTOMATED VOICE RESPONSE:
Initial set-up (one-time) charge per Fund - $750.00
Monthly maintenance charge per Fund - $50.00
All calls processed through automated voice response will be billed as a
customer service call listed above.
(d) FUND/SERV
All Funds processed through Fund/SERV will be subject to an additional monthly
charge of $250.00
All transactions processed through Fund/SERV will be billed at the transaction
fee rates listed in (b) above.
(e) INTERNET ACCESS:
Each shareholder/adviser/broker hit billed at $0.25 per hit.
(f) Issuance of Share Certificates:
For each share certificate issued by ADS, a $xx.xx charge will be assessed to
the Fund for which the certificate was issued.
FEE INCREASES
-------------
On each annual anniversary date of this Agreement, the fees enumerated above
will be increased by the change in the Consumer Price Index for the Northeast
region (CPI) for the twelve-month period ending with the month preceding such
annual anniversary date.
(f) IRA PLAN FEES:
The following fees will be charged directly to the shareholder account:
Annual maintenance fee ................................$15.00 /account *
Incoming transfer from prior custodian ................$12.00
Distribution to a participant .........................$15.00
Refund of excess contribution .........................$15.00
Transfer to successor custodian .......................$15.00
Automatic periodic distributions .....................$15.00/year per account
* Includes $8.00 Bank Custody Fee.
A-2
<PAGE>
(g) EXPENSES:
The Fund shall reimburse ADS for any out-of-pocket expenses, exclusive
of salaries, advanced by ADS in connection with but not limited to the costs for
printing fund documents, (i.e. printing of confirmation forms, shareholder
statements, redemption/dividend checks, envelopes, financial statements, proxy
statement, fund prospectus, etc.) proxy solicitation and mailing expenses,
travel requested by the Fund, telephone toll charges, 800-line costs and fees,
facsimile and data transmission costs, stationery and supplies (related to Fund
records), record storage, postage (plus a $0.085 service charge for all
mailings), pro-rata portion of annual SAS-70 audit letter, telex and courier
charges incurred in connection with the performance of its duties hereunder. ADS
shall provide the Fund with a monthly invoice of such expenses and the Fund
shall reimburse ADS within fifteen (15) days after receipt thereof.
(h) SPECIAL REPORTS:
All reports and/or analyses requested by the Fund that are not included
in the fee schedule, shall be subject to an additional charge, agreed upon in
advance, based upon the following rates:
Senior staff..........$150.00/hr.
Junior staff .........$ 75.00/hr.
Computer time.........$ 45.00/hr.
(I) SERVICE DEPOSIT:
The Fund will remit to ADS upon execution of this Agreement a security
deposit of equal to one (1) month's shareholder service fee. The service deposit
computation will be based either on the total number of shareholder accounts
(open and closed) of each Fund to be serviced or the minimum fee, whichever is
greater, as of the execution date of this Agreement. The Fund will have the
option to have the security deposit applied to the last month's service fee, or
applied to any new contract between the Fund and ADS.
However, if the Fund elects or is forced to terminate this Agreement
for any reason what-so-ever other than a material breach by ADS (including, but
not limited to, the voluntary or involuntary termination of the Fund,
liquidation of the Fund's assets, the sale or merger of the Fund or it's assets
to any successor entity) prior to the termination date of this Agreement as
specified in Section 7 of this Agreement, the Fund will forfeit the Security
Deposit paid to ADS upon execution of this Agreement
(J) CONVERSION CHARGE: (EXISTING FUNDS ONLY)
There will be a charge to convert the Fund's shareholder accounting
records on to the ADS stock transfer system. In addition, ADS will be reimbursed
for all out-of-pocket expenses, enumerated in paragraph (b) above and data media
conversion costs, incurred during the conversion process.
The conversion charge will be estimated and agreed upon in advance by
the Fund and ADS. The charge will be based upon the quantity of records to be
converted and the condition of the previous service agent's records.
A-3
<PAGE>
INVESTA MANAGEMENT CO., INC.
TRANSFER AGENCY AGREEMENT
SCHEDULE B
FUNDS TO BE SERVICED UNDER THIS AGREEMENT
1. INVESTMENTWIZARD FUND
2. SUPER INDEX FUND
B-1
INVESTA MANAGEMENT CO., INC.
FORM OF FUND ACCOUNTING AGREEMENT
AGREEMENT made this ______ day of _________, 1999, by and between
Investa Management Co., Inc., a Maryland corporation , having its principal
office and place of business at 551 Fifth Avenue, New York, New York 10176 (the
"Corporation"), and American Data Services, Inc., a New York corporation having
its principal office and place of business at the Hauppauge Corporate Center,
150 Motor Parkway, Suite 109, Hauppauge, New York 11788 ("ADS").
WHEREAS, the Corporation is an open-end management investment company
registered with the United States Securities and Exchange Commission under the
Investment Company Act of 1940, as amended (the "1940 Act"); and
WHEREAS, the Corporation is authorized to issue shares ("Shares") in
separate series, with each such series representing interests in a separate
portfolio of securities and other assets, and is authorized to divide those
series into separate classes; and
WHEREAS, the Corporation offers Shares in the series listed in Appendix
A hereto (each such series, together with all other series subsequently
established by the Corporation and made subject to this Agreement in accordance
with Section 13, being herein referred to as a "Fund," and collectively as the
"Funds") and the Corporation offers shares of the classes of each Fund as listed
in Appendix A hereto (each such class together with all other classes
subsequently established by the Corporation in a Fund being herein referred to
as a "Class," and collectively as the "Classes"); and
WHEREAS, the Corporation desires that ADS provide fund accounting
services for each Fund and Class thereof and ADS is willing to provide those
services on the terms and conditions set forth in this Agreement;
NOW THEREFORE, for and in consideration of the mutual covenants and
agreements contained herein, the Corporation and ADS hereby agree as follows:
1. APPOINTMENT AND DELIVERY OF DOCUMENTS
(a) APPOINTMENT. The Corporation hereby appoints ADS, and ADS hereby
agrees, to act as fund accountant of the Corporation for the period and on the
terms set forth in this Agreement.
(b) DOCUMENT DELIVERY. In connection therewith, the Corporation has
delivered to ADS copies of:
(i) the Corporation's Corporation Instrument and Bylaws
(collectively, as amended from time to time, "Organic Documents");
<PAGE>
(ii) the Corporation's Registration Statement and all
amendments thereto filed with the U.S. Securities and Exchange
Commission ("SEC") pursuant to the Securities Act of 1933, as amended
(the "1933 Act"), or the Investment Company Act of 1940, as amended
(the "1940 Act")(the "Registration Statement");
(iii) the Corporation's notification of registration under the
1940 Act on Form N-8A as filed with the SEC;
(iv) the Corporation's current Prospectus and Statement of
Additional Information for each Fund (collectively, as currently in
effect and as amended or supplemented, the "Prospectus"),
(vi) all procedures adopted by the Corporation with respect to
the Funds' securities transactions, valuation of portfolio securities,
and calculation of net asset value ("NAV") the Funds.
(c) CORPORATION'S DUTY TO UPDATE. The Corporation shall promptly
furnish ADS with all amendments or supplements to the foregoing and shall
deliver to ADS a certified copy of the resolution of the Board of Corporationees
of the Corporation (the "Board") appointing ADS and authorizing the execution
and delivery of this Agreement.
2. DUTIES OF ADS AND THE CORPORATION
(a) SERVICES. ADS may from time to time adopt procedures, or or modify
its procedures, to implement the terms of this Section. With respect to each
Fund, ADS shall perform the following services:
(i) calculate the net asset value per share with the frequency
prescribed in each Fund's then-current Prospectus;
(ii) calculate each item of income, expense, deduction,
credit, gain and loss, if any, as required by the Corporation and in
conformance with generally accepted accounting practice ("GAAP"), the
SEC's Regulation S-X (or any successor regulation) and the Internal
Revenue Code of 1986, as amended (or any successor laws)(the "Code");
(iii) maintain each Fund's general ledger and record all
income, expenses, capital share activity and security transactions of
each Fund;
(iv) calculate the yield, effective yield, tax equivalent
yield and total return for each Fund, and each Class thereof, as
applicable, and such other measure of performance as may be agreed upon
between the parties hereto;
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<PAGE>
(v) provide the Corporation and the Adviser with the following
reports (A) a current security position report, (B) a summary report of
transactions and pending maturities (including the principal, cost, and
accrued interest on each portfolio security in maturity date order),
and (C) a current cash position and projection report;
(vi) prepare and record, as of each time when the net asset
value of a Fund is calculated or as otherwise directed by the
Corporation, either (A) a valuation of the assets of the Fund (unless
otherwise specified in or in accordance with this Agreement, based upon
the use of outside services normally used and contracted for this
purpose by ADS in the case of securities for which information and
market price or yield quotations are readily available and based upon
evaluations conducted in accordance with the Corporation's instructions
in the case of all other assets) or (B) a calculation confirming that
the market value of the Fund's assets does not deviate from the
amortized cost value of those assets by more than a specified
percentage;
(vii) make such adjustments over such periods as ADS deems
necessary to reflect over-accruals or under-accruals of estimated
expenses or income;
(viii) request any necessary information from the
Corporation's adviser, administrator, transfer agent and distributor in
order to prepare, and prepare, the Corporation's Form N-SAR;
(ix) provide appropriate records to assist the Corporation's
independent accountants and, upon approval of the Corporation, any
regulatory body in any requested review of the Corporation's books and
records maintained by ADS;
(x) draft for review by the Corporation's auditors semi-annual
and annual financial statements and oversee the production of these
financial statements and any related report to the Corporation's
shareholders prepared by the Corporation or its investment advisers;
(xi) file the Funds' semi-annual financial statements with the
SEC or ensure that the Funds' semi-annual financial statements are
filed with the SEC;
(xii) provide information typically supplied in the investment
company industry to companies that track or report price, performance
or other information with respect to investment companies;
(xiii) provide the Corporation, its administrator, or counsel
with the data requested by the Corporation that is required to update
the Corporation's registration statement;
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<PAGE>
(xiv) provide the Corporation or independent accountants with
all information requested with respect to the preparation of the
Corporation's income, excise and other tax returns;
(xv) prepare for review by the Corporation's auditors all
Federal income and excise tax returns and state income and other tax
returns, including any extensions or amendments, each as agreed between
the Corporation and ADS;
(xvi) produce quarterly compliance reports for investment
advisers to the Corporation and the Board and provide information to
the Corporation's administrator, investment advisers and other
appropriate persons with respect to questions of Fund compliance;
(xvii) determine the amount of distributions to shareholders
as necessary to, among other things, maintain the qualification of each
Fund as a regulated investment company under the Code, and prepare and
distribute to appropriate parties notices announcing the declaration of
dividends and other distributions to shareholders;
(xviii) transmit to and receive from each Fund's transfer
agent appropriate data to on a daily basis and daily reconcile Shares
outstanding and other data with the transfer agent;
(xiv) periodically reconcile all appropriate data with each
Fund's custodian;
(xv) verify investment trade tickets when received from an
investment adviser and maintain individual ledgers and historical tax
lots for each security; and
(xvi) perform such other recordkeeping, reporting and other
tasks as may be specified from time to time in the procedures adopted
by the Board; provided, that ADS need not begin performing any such
task except upon 65 days' notice and pursuant to mutually acceptable
compensation agreements.
(b) Books and Records. ADS shall prepare and maintain on behalf of the
Corporation the following books and records of each Fund, and each Class
thereof, pursuant to Rule 31a-1 under the 1940 Act (the "Rule"):
(i) Journals containing an itemized daily record in detail of
all purchases and sales of securities, all receipts and disbursements
of cash and all other debits and credits, as required by subsection
(b)(1) of the Rule;
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<PAGE>
(ii) Journals and auxiliary ledgers reflecting all asset,
liability, reserve, capital, income and expense accounts, as required
by subsection (b)(2) of the Rule (but not including the ledgers
required by subsection (b)(2)(iv);
(iii) A record of each brokerage order given by or on behalf
of the Corporation for, or in connection with, the purchase or sale of
securities, and all other portfolio purchases or sales, as required by
subsections (b)(5) and (b)(6) of the Rule;
(iv) A record of all options, if any, in which the Corporation
has any direct or indirect interest or which the Corporation has
granted or guaranteed and a record of any contractual commitments to
purchase, sell, receive or deliver any property as required by
subsection (b)(7) of the Rule;
(v) A monthly trial balance of all ledger accounts (except
shareholder accounts) as required by subsection (b)(8) of the Rule; and
(vi) Other records required by the Rule or any successor rule
or pursuant to interpretations thereof to be kept by open-end
management investment companies, but limited to those provisions of the
Rule applicable to portfolio transactions and as agreed upon between
the parties hereto.
(c) MAINTENANCE OF AND ACCESS TO RECORDS. The books and records
maintained pursuant to Section 2(b) shall be prepared and maintained in such
form, for such periods and in such locations as may be required by the 1940 Act.
The books and records pertaining to the Corporation that are in possession of
ADS shall be the property of the Corporation. The Corporation, or its authorized
representatives, shall have access to such books and records at all times during
ADS's normal business hours. Upon the reasonable request of the Corporation,
copies of any such books and records shall be provided promptly by ADS to the
Corporation or the Corporation's authorized representatives at the Corporation's
expense. In the event the Corporation designates a successor that shall assume
any of ADS's obligations hereunder, ADS shall, at the expense and direction of
the Corporation, transfer to such successor all relevant books, records and
other data established or maintained by ADS under this Agreement.
(d) INSPECTION OF RECORDS. In case of any requests or demands for the
inspection of the records of the Corporation maintained by ADS, ADS will
endeavor to notify the Corporation and to secure instructions from an authorized
officer of the Corporation as to such inspection. ADS shall abide by the
Corporation's instructions for granting or denying the inspection; provided,
however, that ADS may grant the inspection without instructions if ADS is
advised by counsel to ADS that failure to do so will result in liability to ADS.
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<PAGE>
4. COMPENSATION OF ADS
(a) FEES. For the services provided by ADS pursuant to this Agreement,
the Corporation, on behalf of each Fund, agrees to pay ADS the fees set forth in
Schedule A. Fees will begin to accrue for each Fund on the latter of the date of
this Agreement or the date of commencement of operations of the Fund.
(b) EXPENSES. In addition to the fees paid under subsection (a), the
Corporation agrees to reimburse ADS for out-of-pocket expenses or advances
incurred by ADS for the items set out in the Schedule A attached hereto. In
addition, the Corporation will reimburse any other expenses incurred by ADS at
the request or with the consent of the Corporation.
(c) FEE CHANGES. The fees, out-of pocket expenses and advances
identified in the foregoing subsections (a) and (b) above may be changed from
time to time subject to mutual written agreement between the Corporation and
ADS.
5. REPRESENTATIONS AND WARRANTIES
(a) REPRESENTATIONS OF ADS. ADS represents and warrants to the
Corporation that:
(i) it is a corporation duly organized and existing and in
good standing under the laws of the State of New York;
(ii) it is duly qualified to carry on its business in the
State of New York;
(iii) it is empowered under applicable laws and by its Article
of Incorporation and Bylaws to enter into this Agreement and perform
its duties under this Agreement; and,
(iv) it has access to the necessary facilities, equipment, and
personnel to perform its duties and obligations under this Agreement.
(b) REPRESENTATIONS OF THE CORPORATION. The Corporation represents and
warrants to ADS that:
(i) it is a business Corporation duly organized and existing
and in good standing under the laws of [Massachusetts/Delaware];
(ii) it is empowered under applicable laws and by its Organic
Documents to enter into and perform this Agreement;
(iii) all proceedings required by said Organic Documents have
been taken to authorize it to enter into and perform this Agreement;
6
<PAGE>
(iv) it is an open-end management investment company
registered under the Investment Company Act of 1940; and,
(v) a registration statement under the Securities Act of 1933
is currently or will become effective and will remain effective, and
appropriate state securities law filings as required, have been or will
be made and will continue to be made, with respect to all Shares of the
Fund being offered for sale.
6. STANDARD OF CARE, INDEMNIFICATION AND RELIANCE
(a) STANDARD OF CARE. ADS shall be under no duty to take any action
except as specifically set forth herein or as may be specifically agreed to by
ADS in writing. ADS shall use its best judgment and efforts in rendering the
services described in this Agreement. ADS shall not be liable to the Corporation
or any of the Corporation's shareholders for any action or inaction of ADS
relating to any event whatsoever in the absence of bad faith, willful
misfeasance or gross negligence in the performance of ADS's duties or
obligations under this Agreement or by reason of ADS's reckless disregard of its
duties and obligations under this Agreement.
(b) INDEMNIFICATION OF ADS. The Corporation agrees to indemnify and
hold harmless ADS, its employees, agents, directors, officers and managers and
any person who controls ADS within the meaning of section 15 of the Securities
Act or section 20 of the Securities Exchange Act of 1934, as amended, ("ADS
Indemnitees") against and from any and all claims, demands, actions, suits,
judgments, liabilities, losses, damages, costs, charges, reasonable counsel fees
and other expenses of every nature and character arising out of or in any way
related to ADS's actions taken or failures to act with respect to a Fund that
are consistent with the standard of care set forth in Section 3(a) or based, if
applicable, on good faith reliance upon an item described in Section 3(c)(a
"Claim"). The Corporation shall not be required to indemnify any ADS Indemnitee
if, prior to confessing any Claim against the ADS Indemnitee, ADS or the ADS
Indemnitee does not give the Corporation written notice of and reasonable
opportunity to defend against the claim in its own name or in the name of the
ADS Indemnitee.
(c) RELIANCE. An ADS Indemnitee shall not be liable for any action
taken or failure to act in good faith reliance upon:
(i) the advice of the Corporation or of counsel, who may be
counsel to the Corporation or counsel to ADS;
(ii) any oral instruction which it receives and which it
reasonably believes in good faith was transmitted by the person or
persons authorized by the Board to give such oral instruction (ADS
shall have no duty or obligation to make any inquiry or effort of
certification of such oral instruction.);
7
<PAGE>
(iii) any written instruction or certified copy of any
resolution of the Board, and ADS may rely upon the genuineness of any
such document or copy thereof reasonably believed in good faith by ADS
to have been validly executed; or
(iv) any signature, instruction, request, letter of
transmittal, certificate, opinion of counsel, statement, instrument,
report, notice, consent, order, or other document reasonably believed
in good faith by ADS to be genuine and to have been signed or presented
by the Corporation or other proper party or parties;
and no ADS Indemnitee shall be under any duty or obligation to inquire into the
validity or invalidity or authority or lack thereof of any statement, oral or
written instruction, resolution, signature, request, letter of transmittal,
certificate, opinion of counsel, instrument, report, notice, consent, order, or
any other document or instrument which ADS reasonably believes in good faith to
be genuine.
(d) ERRORS OF OTHERS. ADS shall not be liable for the errors of other
service providers to the Corporation, including the errors of pricing services
(other than to pursue all reasonable claims against the pricing service based on
the pricing services' standard contracts entered into by ADS) and errors in
information provided by an investment adviser (including prices and pricing
formulas and the untimely transmission of trade information), custodian or
transfer agent to the Corporation.
(e) NAV ERRORS. With respect to Funds which do not value their assets
in accordance with Rule 2a-7 under the 1940 Act, notwithstanding anything to the
contrary in this Agreement, ADS shall not be liable to the Corporation or any
shareholder of the Corporation for (i) any loss to the Corporation if an NAV
Difference for which ADS would otherwise be liable under this Agreement is less
than or equal to 0.001 (1/10 of 1%) or (ii) any loss to a shareholder of the
Corporation if the NAV Difference for which ADS would otherwise be liable under
this Agreement is less than or equal to 0.005 (1/2 of 1%) or if the loss in the
shareholder's account with the Corporation is less than or equal to $10. Any
loss for which ADS is determined to be liable hereunder shall be reduced by the
amount of gain which inures to shareholders, whether to be collected by the
Corporation or not.
(f) DEFINITION OF "NAV DIFFERENCE." For purposes of this Agreement, (i)
the NAV Difference shall mean the difference between the NAV at which a
shareholder purchase or redemption should have been effected ("Recalculated
NAV") and the NAV at which the purchase or redemption is effected, divided by
the Recalculated NAV, (ii) NAV Differences and any ADS liability therefrom are
to be calculated each time a Fund's (or class's) NAV is calculated, (iii) in
calculating any NAV Difference for which ADS would otherwise be liable under
this Agreement for a particular NAV error, Fund losses and gains shall be netted
and (iv) in calculating any NAV Difference for which ADS would otherwise be
liable under this Agreement for a particular NAV error that continues for a
period covering more than one NAV determination, Fund losses and gains for the
period shall be netted.
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<PAGE>
(c) INDEMNIFICATION OF THE CORPORATION. ADS shall indemnify and hold
the Corporation and each Fund or Class thereof harmless from and against any and
all losses, damages, costs, charges, reasonable counsel fees, payments, expenses
and liability arising out of or attributed to any action or failure or omission
to act by ADS as a result of ADS's lack of good faith, gross negligence or
willful misconduct with respect to the services performed under or in connection
with this Agreement.
(f) NOTIFICATION OF CLAIMS. In order that the indemnification
provisions contained in this Section shall apply, upon the assertion of a claim
for which either party may be required to indemnify the other, the party seeking
indemnification shall promptly notify the other party of such assertion, and
shall keep the other party advised with respect to all developments concerning
such claim. The party who may be required to indemnify shall have the option to
participate with the party seeking indemnification in the defense of such claim
or to defend against said claim in its own name or in the name of the other
party. The party seeking indemnification shall in no case confess any claim or
make any compromise in any case in which the other party may be required to
indemnify it except with the other party's prior written consent.
7. CONFIDENTIALITY
ADS and the Corporation agree that all books, records, information, and
data pertaining to the business of the other party which are exchanged or
received pursuant to the negotiation or the carrying out of this Agreement shall
remain confidential, and shall not be voluntarily disclosed to any other person,
except that ADS may:
(a) prepare or assist in the preparation of periodic reports to
shareholders and regulatory bodies such as the SEC; and
(b) release such other information as approved in writing by the
Corporation which approval shall not be unreasonably withheld and may not be
withheld where ADS may be exposed to civil or criminal contempt proceedings for
failure to release the information, when requested to divulge such information
by duly constituted authorities or when so requested by the Corporation or the
Adviser.
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8. EFFECTIVENESS, DURATION, AND TERMINATION
(a) EFFECTIVE DATE. This Agreement shall become effective on the date
first above written.
(b) TERM. This Agreement shall remain in effect for a period of three
(3) years from the date of its effectiveness and shall continue in effect for
successive twelve-month periods; provided that such continuance is specifically
approved at least annually by the Board and by a majority of the Directors who
are not parties to this Agreement or interested persons of any such party.
(c) TERMINATION FOR CAUSE. In the event of a material breach of this
Agreement by either party, the non-breaching part shall notify the breaching
party in writing of such breach and upon receipt of such notice, the breaching
party shall by 45 days to remedy the breach. If said breach is not remedied to
the reasonable satisfaction of the non-breaching party, the non-breaching party
may thereafter terminate this Agreement immediately. Compensation due ADS and
unpaid by the Corporation upon such termination shall be immediately due and
payable upon, and notwithstanding, such termination. If after such termination
for so long as ADS, with the written consent of the Corporation, in fact
continues to perform any one or more of the services contemplated by this
Agreement, the provisions of this Agreement, including without limitation, the
provisions dealing with indemnification, shall continue in full force and
effect.
(d) PAYMENT UPON TERMINATION. If at any time during the initial or any
subsequent term of this Agreement, ADS is replaced as fund accountant for any
reason other than for a material breach of this Agreement which ADS does not
cure within a reasonable time, or a Fund is merged into or sells all (or
substantially all) of its assets to another fund or family of funds for which
ADS does not serve as fund accountant, then the Fund shall, immediately upon
demand by ADS, make a one time cash payment equal to the net present value of
the revenues ADS would have earned during the remainder of the initial or
subsequent term of the Agreement, as the case may be, at the fee rate in effect
at the time of such event (including any applicable minimum). For purposes of
this paragraph, the present value of the revenues shall be determined by
applying a 5.00% discount rate, and the asset figure used to calculate the fee
due ADS hereunder shall be the highest monthly average assets of the Fund at any
time during the 12 months immediately preceding the termination of ADS (or the
merger or sale of assets) of the Fund.
(e) REIMBURSEMENT OF ADS'S EXPENSES. If this Agreement is terminated
with respect to a Fund or Funds, ADS shall be entitled to collect from the Fund
or Funds, in addition to the compensation described under Sections 4 and 11(d)
hereof, the amount of all of ADS's reasonable cash disbursements for services in
connection with ADS's activities in effecting such termination, including
without limitation, the delivery to the Corporation and/or its designees of the
Corporation's property, records, instruments and documents, or any copies
thereof. Subsequent to such termination, for a reasonable fee, ADS will provide
the Corporation with reasonable access to all Corporation documents or records,
if any, remaining in its possession. Should the Fund exercise its right to
terminate, all out-of-pocket expenses associated with the movement of records
and material will be borne by the Fund. Additionally, ADS reserves the right to
charge for any other reasonable costs and expenses associated with such
termination.
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(e) SURVIVAL OF CERTAIN OBLIGATIONS. The obligations of Sections 8, 10
and 11 shall survive any termination of this Agreement
9. ADDITIONAL FUNDS AND CLASSES.
If the Corporation establishes one or more series of Shares or one or
more classes of Shares after the effectiveness of this Agreement, such series of
Shares or classes of Shares, as the case may be, shall become Funds and Classes
under this Agreement; provided, however, that either ADS or the Corporation may
elect not to make and such series or classes subject to this Agreement.
10. ASSIGNMENT
Except as otherwise provided in this Agreement, neither this Agreement
nor any rights or obligations under this Agreement may be assigned by either
party without the written consent of the other party. This Agreement shall inure
to the benefit of and be binding upon the parties and their respective permitted
successors and assigns. ADS may, without further consent on the part of the
Corporation, subcontract for the performance hereof with any entity, including
affiliated persons of ADS; provided however, that ADS shall be as fully
responsible to the Corporation for the acts and omissions of any subcontractor
as ADS is for its own acts and omissions.
11. MISCELLANEOUS
(a) AMENDMENTS. No provisions of this Agreement may be amended or
modified in any manner except by a written agreement properly authorized and
executed by both parties hereto.
(b) CHOICE OF LAW. This Agreement shall be construed and the provisions
thereof interpreted under and in accordance with the laws of the State of New
York.
(c) ENTIRE AGREEMENT. This Agreement constitutes the entire agreement
between the parties hereto and supersedes any prior agreement with respect to
the subject matter hereof whether oral or written.
(d) COUNTERPARTS. The parties may execute this Agreement on any number
of counterparts, and all of the counterparts taken together shall be deemed to
constitute one and the same instrument.
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(e) SEVERABILITY. If any part, term or provision of this Agreement is
held to be illegal, in conflict with any law or otherwise invalid, the remaining
portion or portions shall be considered severable and not be affected, and the
rights and obligations of the parties shall be construed and enforced as if the
Agreement did not contain the particular part, term or provision held to be
illegal or invalid.
(f) HEADINGS. Section and paragraph headings in this Agreement are
included for convenience only and are not to be used to construe or interpret
this Agreement.
(g) NOTICES. All notices and other communications hereunder shall be in
writing, shall be deemed to have been given when received or when sent by telex
or facsimile, and shall be given to the following addresses (or such other
addresses as to which notice is given):
To the Fund: To ADS:
[Name] Michael Miola
[Title] President
[Name of Corporation] American Data Services, Inc.
[Street] 150 Motor Parkway, Suite 900
[City, State, Zip] Hauppauge, NY 11788
(h) BUSINESS DAYS. Nothing contained in this Agreement is intended to
or shall require ADS, in any capacity hereunder, to perform any functions or
duties on any day other than a Fund Business Day. Functions or duties normally
scheduled to be performed on any day which is not a Fund Business Day shall be
performed on, and as of, the next Fund Business Day, unless otherwise required
by law.
(i) DISTINCTION OF FUNDS. Notwithstanding any other provision of this
Agreement, the parties agree that the assets and liabilities of each Fund of the
Corporation are separate and distinct from the assets and liabilities of each
other Fund and that no Fund shall be liable or shall be charged for any debt,
obligation or liability of any other Fund, whether arising under this Agreement
or otherwise.
(j) CONSEQUENTIAL DAMAGES. Neither party to this Agreement shall be
liable to the other party for consequential damages under any provision of this
Agreement or for any act or failure to act hereunder.
(k) NONLIABILITY OF AFFILIATES. No affiliated person (as that term is
defined in the 1940 Act), employee, agent, director, officer or manager of ADS
shall be liable at law or in equity for ADS's obligations under this Agreement.
(l) REPRESENTATION OF SIGNATORIES. Each of the undersigned expressly
warrants and represents that they have full power and authority to sign this
Agreement on behalf of the party indicated and that their signature will bind
the party indicated to the terms hereof
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed
in their names and on their behalf by and through their duly authorized persons,
as of the day and year first above written.
INVESTA MANAGEMENT CO., INC. AMERICAN DATA SERVICES, INC.
By: ________________________________ By: ___________________________
Derek J. Hoggett, President Michael Miola, President
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INVESTA MANAGEMENT CO., INC.
FUND ACCOUNTING AGREEMENT
SCHEDULE A
Fees and Account Charges
For the services rendered by ADS in its capacity as fund accountant, the Fund
shall pay ADS a fee, calculated as a combination of account maintenance charges
plus transaction charges as follows:
(a) Fund Accounting Service Fees (per Fund):
(d) Multi-Class Processing Charge. An additional charge of $xxxx per month will
be assessed for each additional class of Shares of each Fund.
(e) Conversion Charge (existing funds only).
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(f) SPECIAL REPORTS
All reports and/or analyses requested by the Corporation, its auditors,
legal counsel, portfolio manager, or any regulatory agency having jurisdiction
over the Corporation or a Fund, that are not in the normal course of fund
administrative activities as specified in Section 1 of this Agreement shall be
subject to additional charges for ADS staff time, agreed upon in advance, based
upon the following rates:
Senior staff:..................................$150.00 per hour
Junior staff:.................................$ 75.00 per hour
Computer time.................................$ 45.00 per hour
(g) EXPENSES.
(h) PREPAYMENT OF FEES
Upon execution of this Agreement, the Fund will prepay one (1) month's
minimum fee under this Agreement, computed in accordance with the number of
Funds listed in Schedule B of this Agreement.
(i) CPI INCREASES
On each annual anniversary date of this Agreement, the fees enumerated
above will be increased by the change in the Consumer Price Index for the
Northeast region (CPI) for the twelve-month period ending with the month
preceding such annual anniversary date.
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INVESTA MANAGEMENT CO., INC.
FUND ACCOUNTING AGREEMENT
SCHEDULE B
Funds and Classes to be Serviced under this Agreement
1. InvestmentWizard Fund
2. Super Index Fund
16
FORM OF SUBSCRIPTION LETTER
______________,1999
Board of Directors of
Invest Management Co., Inc.
551 Fifth Avenue
New York City, New York 10176
Gentlemen:
Investa, Inc. ("Investa") hereby subscribes for five thousand (5,000)
shares of common stock of each of the Super Index Fund and the InvestmentWizard
Fund (each a "Fund" and collectively the "Funds"), each Fund being a series of
Investa Management Co., Inc., a Maryland corporation, at $10.00 per share, for
an aggregate purchase price of $100,000.00. Investa's payment in full is
confirmed.
Investa hereby represents and agrees that Investa is purchasing these
shares of common stock for investment purposes, for its own account and risk and
not with a view to any sale, division or other distribution thereof within the
meaning of the Securities Act of 1933 as amended, nor with any present intention
of distributing or selling such shares.
Very truly yours,
INVESTA, INC.
By: /s/ SCOTT B. STOKES
--------------------
Scott B. Stokes
Vice President
CONFIRMED AND ACCEPTED:
INVESTA MANAGEMENT CO., INC.
On behalf of each of its series:
Super Index Fund, and
InvestmentWizard Fund
By: /S/ DEREK J. HOGGETT
---------------------
Name: DEREK J. HOGGETT
---------------------
Title: TREASURER
---------------------
DISTRIBUTION PLAN OF
SUPER INDEX FUND
PURSUANT TO RULE 12B-1
Distribution Plan, (the "Plan"), of Super Index Fund (the
"Fund"), a series of Investa Management Co., Inc. (the "Corporation"), a
Maryland corporation.
WHEREAS, the Fund and ADS Distributors, Inc. (the
"Distributor"), a broker-dealer registered under the Securities Exchange Act of
1934, have entered into a Distribution Agreement pursuant to which the
Distributor will act as principal underwriter of shares of the Fund for sale to
the public;
WHEREAS, the Directors of the Corporation have determined to
adopt this Distribution Plan (the "Plan") on behalf of the Fund, in accordance
with the requirements of the Investment Company Act of 1940, as amended (the
"Act") and have determined that there is a reasonable likelihood that the Plan
will benefit the Fund and its shareholders.
NOW, THEREFORE, the Fund hereby adopts the Plan on the
following terms and conditions:
1. The Fund shall reimburse the Distributor, at the end of
each month, up to a maximum on an annual basis of 0.25% of the average daily
value of the net assets of the Fund, subject to any applicable restrictions
imposed by rules of the National Association of Securities Dealers, Inc., for
distribution expenditures incurred by the Distributor in connection with the
sale and promotion of the Fund and the furnishing of services to shareholders of
the Fund. Such expenditures shall consist of: (i) commissions to sales personnel
for selling shares of the Fund; (ii) compensation, sales incentives and payments
to sales, marketing and service personnel; (iii) payments to broker-dealers and
other financial institutions which have entered into agreements with the
Distributor in the form of the Dealer Agreement for National Affiliated
Investment Companies for services rendered in connection with the sale and
distribution of shares of the Fund; (iv) payment of expenses incurred in sales
and promotional activities, including advertising expenditures related to the
Fund; (v) the costs of preparing and distributing promotional materials; (vi)
the cost of printing the Fund's Prospectus and Statement of Additional
Information for distribution to potential investors; and (vii) such other
similar services that the Directors of the Corporation determine are reasonably
calculated to result in sales of shares of the Fund; provided, however, that a
portion of such amount paid to the Distributor, which portion shall be equal to
or less than 0.25% annually of the average daily net assets of the Fund shares,
may be paid for reimbursing the costs of providing services to shareholders,
including assistance in connection with inquiries related to shareholder
accounts (the "Service Fee").
<PAGE>
Amounts paid or payable by the Fund under this Plan or any
agreement with any person or entity relating to the implementation of this Plan
("related agreement") shall only be used
to pay for, or reimburse payment for, the distribution expenditures described in
the preceding paragraph and shall, given all surrounding circumstances,
represent charges within the range of what would have been negotiated at
arm's-length as payment for the specific sales or promotional services and
activities to be financed hereunder and any related agreement, as determined by
the Directors, in the exercise of reasonable business judgment, in light of
fiduciary duties under state law and Sections 36(a) and (b) of the Act and based
upon appropriate business estimates and projections.
2. At least quarterly in each year the Plan remains in effect,
the Fund's Principal Financial Officer or Treasurer, or such other person
authorized to direct the disposition of monies paid or payable by the Fund,
shall prepare and furnish to the Directors for their review, and the Directors
shall review a written report complying with the requirements of Rule 12b-1
under the Act regarding the amounts expended under the Plan and the purposes for
which such expenditures were made.
3. This Plan shall not take effect until it, together with any
related agreements, have been approved by a vote of at least a majority of the
Directors, as well as a vote of at least a majority of the Directors who are not
interested persons (as defined in the Act) of the Fund and who have no direct or
indirect financial interest in the operation of the Plan or in any related
agreements (the "Disinterested Directors"), cast in person at a meeting called
for the purpose of voting on the Plan or any elated agreement, and the Plan
shall not take effect with respect to the Fund until it has been approved by a
vote of at least a majority of the outstanding voting securities (as defined in
the Act) of the Fund.
4. This Plan shall remain in effect for one year from the date
of its execution and may be continued thereafter if specifically approved at
least annually by a vote of at least a majority of the Directors, as well as a
majority of the Disinterested Directors. This Plan may be amended at any time,
provided that (a) the Plan may not be amended to increase materially the amount
of the distribution expenses provided in Paragraph 1 hereof (including the
Service Fee) without the approval of at least a majority of the outstanding
voting securities (as defined in the Act) of the Fund and (b) all material
amendments to this Plan must be approved by a vote of the Directors and the
Disinterested Directors cast in person at a meeting called for the purpose of
such vote.
5. While this Plan is in effect, the selection and nomination
of Directors who are not interested persons (as defined in the Act) of the Fund
shall be committed to the discretion of the Disinterested Directors then in
office.
6. Any related agreement shall be in writing and shall provide
that (a) such agreement shall be subject to termination, without penalty, by
vote of a majority of the outstanding voting securities (as defined in the Act)
of the Fund on not more than 60 days' written notice to the other party to the
agreement, and (b) such agreement shall terminate automatically in the event of
its assignment.
2
<PAGE>
7. This Plan may be terminated at any time by a vote of a
majority of the Disinterested Directors or by a vote of a majority of the
outstanding voting securities (as defined in the Act) of the Fund. In the event
this Plan is terminated or otherwise discontinued, no further payments hereunder
will be made by the Plan.
8. The Fund shall preserve copies of this Plan and any related
agreements and all reports made pursuant to paragraph 2 hereof, and any other
information, estimates, projections and other materials that serve as a basis
therefor, considered by the Directors, for a period of not less than six years
from the date of this Plan, the agreement or report, as the case may be, the
first two years in an easily accessible place.
Adopted as of the __th
day of November, 1999.
3
<PAGE>
DISTRIBUTION PLAN OF
INVESTMENTWIZARD FUND
PURSUANT TO RULE 12B-1
Distribution Plan, (the "Plan"), of InvestmentWizard Fund (the
"Fund"), a series of Investa Management Co., Inc. (the "Corporation"), a
Maryland corporation.
WHEREAS, the Fund and ADS Distributors, Inc. (the
"Distributor"), a broker-dealer registered under the Securities Exchange Act of
1934, have entered into a Distribution Agreement pursuant to which the
Distributor will act as principal underwriter of shares of the Fund for sale to
the public;
WHEREAS, the Directors of the Corporation have determined to
adopt this Distribution Plan (the "Plan") on behalf of the Fund, in accordance
with the requirements of the Investment Company Act of 1940, as amended (the
"Act") and have determined that there is a reasonable likelihood that the Plan
will benefit the Fund and its shareholders.
NOW, THEREFORE, the Fund hereby adopts the Plan on the
following terms and conditions:
1. The Fund shall reimburse the Distributor, at the end of
each month, up to a maximum on an annual basis of 0.25% of the average daily
value of the net assets of the Fund, subject to any applicable restrictions
imposed by rules of the National Association of Securities Dealers, Inc., for
distribution expenditures incurred by the Distributor in connection with the
sale and promotion of the Fund and the furnishing of services to shareholders of
the Fund. Such expenditures shall consist of: (i) commissions to sales personnel
for selling shares of the Fund; (ii) compensation, sales incentives and payments
to sales, marketing and service personnel; (iii) payments to broker-dealers and
other financial institutions which have entered into agreements with the
Distributor in the form of the Dealer Agreement for National Affiliated
Investment Companies for services rendered in connection with the sale and
distribution of shares of the Fund; (iv) payment of expenses incurred in sales
and promotional activities, including advertising expenditures related to the
Fund; (v) the costs of preparing and distributing promotional materials; (vi)
the cost of printing the Fund's Prospectus and Statement of Additional
Information for distribution to potential investors; and (vii) such other
similar services that the Directors of the Corporation determine are reasonably
calculated to result in sales of shares of the Fund; provided, however, that a
portion of such amount paid to the Distributor, which portion shall be equal to
or less than 0.25% annually of the average daily net assets of the Fund shares,
may be paid for reimbursing the costs of providing services to shareholders,
including assistance in connection with inquiries related to shareholder
accounts (the "Service Fee").
<PAGE>
Amounts paid or payable by the Fund under this Plan or any
agreement with any person or entity relating to the implementation of this Plan
("related agreement") shall only be used to pay for, or reimburse payment for,
the distribution expenditures described in the preceding paragraph and shall,
given all surrounding circumstances, represent charges within the range of what
would have been negotiated at arm's-length as payment for the specific sales or
promotional services and activities to be financed hereunder and any related
agreement, as determined by the Directors, in the exercise of reasonable
business judgment, in light of fiduciary duties under state law and Sections
36(a) and (b) of the Act and based upon appropriate business estimates and
projections.
2. At least quarterly in each year the Plan remains in effect,
the Fund's Principal Financial Officer or Treasurer, or such other person
authorized to direct the disposition of monies paid or payable by the Fund,
shall prepare and furnish to the Directors for their review, and the Directors
shall review a written report complying with the requirements of Rule 12b-1
under the Act regarding the amounts expended under the Plan and the purposes for
which such expenditures were made.
3. This Plan shall not take effect until it, together with any
related agreements, have been approved by a vote of at least a majority of the
Directors, as well as a vote of at least a majority of the Directors who are not
interested persons (as defined in the Act) of the Fund and who have no direct or
indirect financial interest in the operation of the Plan or in any related
agreements (the "Disinterested Directors"), cast in person at a meeting called
for the purpose of voting on the Plan or any elated agreement, and the Plan
shall not take effect with respect to the Fund until it has been approved by a
vote of at least a majority of the outstanding voting securities (as defined in
the Act) of the Fund.
4. This Plan shall remain in effect for one year from the date
of its execution and may be continued thereafter if specifically approved at
least annually by a vote of at least a majority of the Directors, as well as a
majority of the Disinterested Directors. This Plan may be amended at any time,
provided that (a) the Plan may not be amended to increase materially the amount
of the distribution expenses provided in Paragraph 1 hereof (including the
Service Fee) without the approval of at least a majority of the outstanding
voting securities (as defined in the Act) of the Fund and (b) all material
amendments to this Plan must be approved by a vote of the Directors and the
Disinterested Directors cast in person at a meeting called for the purpose of
such vote.
5. While this Plan is in effect, the selection and nomination
of Directors who are not interested persons (as defined in the Act) of the Fund
shall be committed to the discretion of the Disinterested Directors then in
office.
6. Any related agreement shall be in writing and shall provide
that (a) such agreement shall be subject to termination, without penalty, by
vote of a majority of the outstanding voting securities (as defined in the Act)
of the Fund on not more than 60 days' written notice to the other party to the
agreement, and (b) such agreement shall terminate automatically in the event of
its assignment.
2
<PAGE>
7. This Plan may be terminated at any time by a vote of a
majority of the Disinterested Directors or by a vote of a majority of the
outstanding voting securities (as defined in the Act) of the Fund. In the event
this Plan is terminated or otherwise discontinued, no further payments hereunder
will be made by the Plan.
8. The Fund shall preserve copies of this Plan and any related
agreements and all reports made pursuant to paragraph 2 hereof, and any other
information, estimates, projections and other materials that serve as a basis
therefor, considered by the Directors, for a period of not less than six years
from the date of this Plan, the agreement or report, as the case may be, the
first two years in an easily accessible place.
Adopted as of the __th
day of ___________, 1999.
3
