AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION
on November 30, 1999
FILE NOS: 811-9575
333-86655
SECURITIES AND EXCHANGE COMMISSION
----------------------------------
Washington, D.C. 20549
FORM N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 [X]
Pre-Effective Amendment No. 1 [X]
Post-Effective Amendment No. [ ]
and
REGISTRATION STATEMENT UNDER
THE INVESTMENT COMPANY ACT OF 1940 [X]
Amendment No. [ ]
(Check appropriate box or boxes.)
MEEHAN MUTUAL FUNDS, INC.
(Exact name of Registrant as Specified in Charter)
SUITE 600
1900 M STREET, N.W.
WASHINGTON, DC 20036
(Address of Principal Executive Office)
Registrant's Telephone Number, including Area Code:
1-888-545-2128
MR. THOMAS P. MEEHAN
SUITE 600
1900 M STREET, N.W.
WASHINGTON, DC 20036
(Name and Address of Agent for Service)
Please send copy of communications to:
MR. ROBERT J. ZUTZ
Kirkpatrick & Lockhart, LLP
1800 Massachusetts Avenue, N.W., Second Floor
Washington, DC 20036-1800
Approximate Date of Proposed Public Offering: December 1, 1999 or as soon as
practicable thereafter. This Registration Statement shall became effective on
December 1, 1999 or as soon as practicable thereafter pursuant to Section 8(a)
of the Securities Act of 1933, as amended.
<PAGE>
MEEHAN MUTUAL FUNDS, INC.
CONTENTS OF REGISTRATION STATEMENT
This Registration Statement is comprised of the following:
Prospectus for the Meehan Focus Fund
Statement of Additional Information for the Meehan Focus Fund
Part C -- Other Information
Signature Page
Exhibits
<PAGE>
==============================================
DECEMBER 1, 1999
PROSPECTUS
==============================================
MEEHAN FOCUS FUND
(the "Fund")
A SERIES OF MEEHAN MUTUAL FUNDS, INC.
(the "Company")
Suite 600
1900 M Street, NW
Washington, DC 20036
1-888-545-2128
- --------------------------------------------------------------------------------
AS WITH ALL MUTUAL FUNDS, THE SECURITIES AND EXCHANGE COMMISSION HAS NOT
APPROVED OR DISAPPROVED THESE SECURITIES OR DETERMINED IF THIS PROSPECTUS IS
TRUTHFUL OR COMPLETE. ANYONE WHO TELLS YOU OTHERWISE IS COMMITTING A CRIME.
- --------------------------------------------------------------------------------
<PAGE>
TABLE OF CONTENTS
THE FUND
WHAT IS THE FUND'S INVESTMENT OBJECTIVE?.................................3
WHAT ARE THE FUND'S PRIMARY INVESTMENT STRATEGIES?.......................3
WHAT ARE THE PRINCIPAL RISKS OF INVESTING IN THE FUND?...................4
HOW HAS THE FUND PERFORMED IN THE PAST?..................................5
WHAT ARE THE FUND'S FEES AND EXPENSES?...................................6
AN EXAMPLE OF FUND EXPENSES OVER TIME....................................6
THE FUND'S INVESTMENT ADVISER
THE ADVISER..............................................................7
THE PORTFOLIO MANAGER....................................................7
HOW TO BUY AND SELL SHARES
INVESTING IN THE FUND....................................................7
DETERMINING SHARE PRICES.................................................7
DISTRIBUTION (12B-1) FEES................................................8
MINIMUM INVESTMENT AMOUNTS............................................. .8
OPENING AND ADDING TO YOUR ACCOUNT.......................................9
PURCHASING SHARES BY MAIL................................................9
PURCHASING SHARES BY WIRE TRANSFER.......................................9
PURCHASES THROUGH FINANCIAL SERVICE ORGANIZATIONS.......................10
PURCHASING SHARES BY AUTOMATIC INVESTMENT PLAN..........................10
PURCHASING SHARES BY TELEPHONE..........................................10
MISCELLANEOUS PURCHASE INFORMATION......................................11
HOW TO SELL (REDEEM) YOUR SHARES........................................11
BY MAIL.................................................................11
SIGNATURE GUARANTEES....................................................12
BY TELEPHONE............................................................12
BY WIRE.................................................................13
REDEMPTION AT THE OPTION OF THE FUND....................................13
DIVIDENDS AND DISTRIBUTIONS.............................................13
TAX CONSIDERATIONS......................................................13
GENERAL INFORMATION.....................................................14
2
<PAGE>
THE FUND
WHAT IS THE FUND'S INVESTMENT OBJECTIVE?
The Fund's investment objective is long-term growth of capital.
WHAT ARE THE FUND'S PRINCIPAL INVESTMENT STRATEGIES?
The Adviser attempts to achieve the Fund's investment goals by:
o investing in common stocks without restrictions regarding market
capitalization;
o normally investing at least 75% of the Fund's total assets in U.S.
common stocks or securities convertible into common stock; and
o holding a focused portfolio of no more than 25 stocks.
Edgemoor Capital Management, Inc., the Fund's investment adviser ("Adviser"),
believes that the Fund's investment objective is best achieved by investing
in companies that exhibit the potential for significant growth over the long
term. The Adviser defines long-term as a time horizon of at least three
years. To identify companies that have significant growth potential, the
Adviser employs a value-oriented approach to stock selection. To choose the
securities in which the Fund will invest, the Adviser seeks to identify
companies which exhibit some or all of the following criteria:
o low price-to-earnings ratio ("P/E");
o low price-to-book value or tangible asset value;
o excellent prospects for growth;
o strong franchise;
o highly qualified management;
o consistent free cash flow; and
o high returns on invested capital.
The Adviser plans to have the Fund purchase shares of good businesses at
reasonable prices that provide a margin of safety. Investments in securities
convertible into common stock may include corporate bonds, notes and
preferred stock. Mr. Thomas P. Meehan, the Fund's Portfolio Manager, believes
in the principles of value investing and plans to invest the major portion of
his retirement assets in the Fund, and he will be an individual shareholder
of the Fund.
The Fund may invest up to 25% of its total assets in foreign securities that
are traded on a U.S. exchange, either directly or in the form of American
Depository Receipts ("ADRs"). The Fund will only invest in ADRs that are
issuer sponsored. Sponsored ADRs typically are issued by a U.S. bank or trust
company and evidence ownership of underlying securities issued by a foreign
corporation.
3
<PAGE>
The Fund will normally invest its remaining assets in cash and cash
equivalents, such as U.S. government debt instruments, other money market
mutual funds, and repurchase agreements.
WHAT ARE THE PRINCIPAL RISKS OF INVESTING IN THE FUND?
GENERAL RISKS- All investments are subject to inherent risks, and the Fund is
no exception. Accordingly, you may lose money by investing in the Fund. When
you sell your Fund shares, they may be worth more or less than what you paid
for them because the value of the Fund's investments will vary from
day-to-day, reflecting changes in market conditions, interest rates and
numerous other factors.
STOCK MARKET RISK- The stock market tends to trade in cyclical price
patterns, with prices generally rising or falling over sustained periods of
time. The Fund invests primarily in common stocks, so the Fund will be
subject to the risks associated with common stocks, including price
volatility and the creditworthiness of the issuing company.
SMALL TO MEDIUM-CAP STOCK RISKS- The Fund may invest in companies with small
to medium market capitalizations (generally less than $6 billion). Because
these companies are relatively small compared to large-cap companies, may be
engaged in business mostly within their own geographic region, and may be
less well-known to the investment community, they can have more volatile
share prices. Also, small companies often have less liquidity, less
management depth, narrower market penetrations, less diverse product lines,
and fewer resources than larger companies. As a result, their stock prices
often react more strongly to changes in the marketplace.
FOREIGN SECURITIES RISK- Investments in foreign securities involve greater
risks compared to domestic investments for the following reasons:
o Foreign companies are not subject to the regulatory requirements of
U.S. companies, so there may be less publicly available
information about foreign issuers than U.S. companies.
o Foreign companies generally are not subject to uniform accounting,
auditing and financial reporting standards.
o Dividends and interest on foreign securities may be subject to foreign
withholding taxes. Such taxes may reduce the net return to Fund
shareholders.
o Foreign securities are often denominated in a currency other than the
U.S. dollar. Accordingly, the Fund will be subject to the risks
associated with fluctuations in currency values. For example,
fluctuations in the exchange rates between the U.S. dollar and foreign
currencies may have a negative impact on investments denominated in
foreign currencies by eroding or reversing gains or widening losses
from those investments.
o Although the Fund will only invest in foreign issuers that are
domiciled in nations considered to have stable and friendly
governments, there is the possibility of expropriation, confiscation,
taxation, currency blockage or political or social instability which
could negatively affect the Fund.
4
<PAGE>
FOCUSED PORTFOLIO RISK- The Fund is classified as "non-diversified" under the
federal securities laws. This means that the Fund generally will invest a
relatively high percentage of its assets in the securities of a small number
of companies. Investing in this manner makes the Fund more susceptible to a
single economic, political or regulatory event than a more diversified fund
might be. Also, a change in the value of a single company will have a more
pronounced effect on the Fund than such a change would have on a more
diversified fund.
TEMPORARY DEFENSIVE POSITIONS- Ordinarily, the Fund's portfolio will be
invested primarily in common stocks. However, the Fund is not required to be
fully invested in common stocks and, in fact, usually maintains certain cash
reserves. During abnormal or unusual market conditions, cash reserves may be
a significant percentage of the Fund's total net assets. The Fund usually
invests its cash reserves in U.S. Government debt instruments, other
unaffiliated mutual funds (money market funds) and repurchase agreements.
During times when the Fund holds a significant portion of its net assets in
cash, it will not be investing according to its investment objectives, and
the Fund's performance may be negatively affected as a result.
MANAGEMENT RISK- Acting as investment adviser to the Fund is a new position
for the Adviser, and the Fund has no operating history. The Adviser and
Fund's lack of experience and performance history may pose additional risks.
YEAR 2000 RISKS- As with other mutual funds, financial and business
organizations and individuals around the world, the Fund could be adversely
affected if the computer systems used by the Adviser and the Fund's other
service providers don't properly process and calculate date-related
information and data from and after January 1, 2000. This is commonly known
as the "Year 2000" or "Y2K" problem. The Adviser is taking steps to address
the Y2K problem with respect to the computer systems that it uses and to
obtain assurances that comparable steps are being taken by the Fund's other
major service providers. The Adviser will monitor the companies in which the
Fund invests for evidence of Y2K preparedness. However, there can be no
assurance that the Fund's portfolio will not be adversely affected by the Y2K
problem. Further, foreign issuers may not be as well prepared for the Y2K
problem as U.S. issuers, and this may pose additional risk to the Fund.
HOW HAS THE FUND PERFORMED IN THE PAST?
Because this is a new Fund that does not yet have an operating history, a
performance bar chart and table describing the Fund's annual performance and
comparing that performance to appropriate indices is not yet available.
Performance information will be included in the Fund's first semi-annual and
annual reports, which will be sent to you without charge at your request.
Simply contact the Fund at 1-888-545-2128.
5
<PAGE>
WHAT ARE THE FUND'S FEES AND EXPENSES?
This table describes the fees and expenses you may pay if you buy and hold
shares of the Fund.
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------
SHAREHOLDER FEES: ANNUAL FUND OPERATING EXPENSES:
(FEES PAID DIRECTLY FROM YOUR INVESTMENT) (EXPENSES THAT ARE DEDUCTED FROM FUND ASSETS)
<S> <C> <C> <C>
MAXIMUM SALES CHARGE (LOAD) MANAGEMENT FEES(1) 1.50%
IMPOSED ON PURCHASES NONE
(as a percentage of offering price) DISTRIBUTION (12B-1) FEES(2)
MAXIMUM DEFERRED SALES NONE
CHARGE (LOAD) OTHER EXPENSES(3) 0.00%
(as a percentage of redemption amount) ---------------------------------------
TOTAL ANNUAL
MAXIMUM SALES CHARGE (LOAD) NONE FUND OPERATING EXPENSES 1.50%
IMPOSED ON REINVESTED DIVIDENDS
AND OTHER DISTRIBUTIONS
REDEMPTION FEES NONE
- ----------------------------------------------------------------------------------------------
</TABLE>
1. Management fees include a fee of 1.00% for investment advisory services and
0.50% for administrative and other services. Both fees are paid to the Fund's
Adviser pursuant to separate agreements for each service.
2. Although the Fund's Board of Directors has adopted a Plan of Distribution
under Rule 12b-1 of the 1940 Act, the Plan has not yet been implemented and
the Fund has no intention of implementing the Plan during the period through
December 31, 2000.
3. The Fund's Adviser is responsible for paying all the Fund's expenses except
taxes, interest, litigation expenses and other extraordinary expenses.
Because the Fund believes that it will not incur any of these expenses during
its first fiscal year, no expenses are included in this category.
EXAMPLE OF EXPENSES OVER TIME:
This Example below is intended to help you compare the cost of investing in the
Fund with the cost of investing in other mutual funds.
The Example assumes that you invest $10,000 in the Fund for the time periods
indicated, reinvest all dividends and distributions, and then redeem all your
shares at the end of those 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 costs would be:
ONE YEAR THREE YEARS
----------- ---------------
$ 153 $ 474
6
<PAGE>
THE FUND'S INVESTMENT ADVISER
THE ADVISER
- -----------
Edgemoor Capital Management, Inc., Suite 600, 1900 M Street, NW, Washington, DC
20036, serves as investment adviser to the Fund. The Adviser is a Maryland
corporation and has registered with the Securities and Exchange Commission as an
investment adviser. The Adviser commenced operations in October 1999.
The Adviser's principal business and occupation is to provides financial
management and advisory services to individuals, corporations, and other
institutions throughout the United States. The Adviser has been investment
adviser to the Fund since its inception. The Fund intends to commence operations
on or shortly after the date of this Prospectus. The Adviser manages the
investment portfolio and business affairs of the Fund under an Investment
Advisory Agreement with the Fund, and manages, or arranges to manage, the daily
operations of the Fund under an Operating Services Agreement.
For its investment advisory services to the Fund, the Company pays to the
Adviser, on the last day of each month, an annualized fee equal to 1.00% of the
average net assets of the Fund, such fee to be computed daily based upon the
daily average net assets of the Fund.
THE PORTFOLIO MANAGER
- ---------------------
Mr. Thomas P. Meehan is President of the Adviser and acts as the portfolio
manager for the Fund. Mr. Meehan is also President of Meehan Mutual Funds,
Inc. (the "Company"). In 1968, Mr. Meehan was a founding partner of Sherman,
Meehan, Curtin & Ain, a Washington, DC law firm. Mr. Meehan has served as
President of his law firm for many years, has served on the firm's Executive
Committee since the firm's inception and has been responsible for the
financial management of the firm. Mr. Meehan was a charter trustee of the
firm's pension and profit sharing plans and has served as an investment
manager of these plans since their inceptions in 1973. Although Mr. Meehan
has experience in managing investment portfolios, neither he nor the Adviser
has any prior experience in managing a portfolio for an investment company,
and this may result in additional risks for the Fund.
HOW TO BUY AND SELL SHARES OF THE FUND
INVESTING IN THE FUND
DETERMINING SHARE PRICES
- ------------------------
Shares of the Fund are offered at each share's net asset value ("NAV"). NAV per
share is calculated by adding the value of Fund investments, cash and other
assets, subtracting Fund liabilities, and then dividing the result by the number
of shares outstanding. The Fund generally determines the total value of its
shares by using market prices for the securities comprising its portfolio.
7
<PAGE>
Securities for which quotations are not available and any other assets are
valued at fair market value as determined in good faith by the Adviser, subject
to the review and supervision of the Board of Directors. The Fund's per share
NAV is computed on all days on which the New York Stock Exchange ("NYSE") is
open for business at the close of regular trading hours on the Exchange,
currently 4:00 p.m. Eastern time. In the event that the NYSE closes early, the
share price will be determined as of the time of closing.
DISTRIBUTION (12b-1) FEES
- -------------------------
The Fund has adopted a distribution plan (the "Plan") pursuant to Rule 12b-1
under the 1940 Act. The Plan provides that the Fund is authorized to pay an
annualized fee of up to 0.35% of the Fund's average daily net assets to
compensate certain parties for expenses incurred in the distribution of the
Fund's shares and the servicing and maintenance of existing shareholder
accounts. However, the Directors have not authorized payment of any fees
pursuant to the Plan.
Because any payments under the 12b-1Plan would be paid out of the Fund's assets
on an ongoing basis, over time these fees will increase the cost of your
investment and may cost you more than paying other types of sales charges.
MINIMUM INVESTMENT AMOUNTS
- --------------------------
Payments for Fund shares should be in U.S. dollars, and in order to avoid
fees and delays, should be drawn on a U.S. bank. Fund management may reject
any purchase order for Fund shares and may waive the minimum investment
amounts in its sole discretion.
Your purchase of Fund shares is subject to the following minimum investment
amounts:
MINIMUM MINIMUM
TYPE OF INVESTMENT SUBSEQUENT
ACCOUNT TO OPEN ACCOUNT INVESTMENTS
- -----------------------------------------------------------------------------
REGULAR $50,000 $1000
IRAs $ 2,000 $ 100
- -----------------------------------------------------------------------------
AUTOMATIC INVESTMENT PLAN MEMBERS
MINIMUM MINIMUM
TYPE OF INVESTMENT SUBSEQUENT
ACCOUNT TO OPEN ACCOUNT INVESTMENTS
- ------------------------------------------------------------------------------
REGULAR $50,000 $100 per month minimum
IRAs $ 2,000 $100 per month minimum
- ------------------------------------------------------------------------------
8
<PAGE>
OPENING AND ADDING TO YOUR ACCOUNT
- ----------------------------------
You can invest in the Fund by mail, wire transfer and through participating
financial service professionals. After you have established your account and
made your first purchase, you may also make subsequent purchases by telephone.
You may also invest in the Fund through an automatic payment plan. Any questions
you may have can be answered by calling 1-888-545-2128.
PURCHASING SHARES BY MAIL
- -------------------------
To make your initial investment in the Fund, simply complete the Account
Application Form included with this Prospectus, make a check payable to Meehan
Focus Fund, and mail the Form and check to:
Meehan Mutual Funds, Inc.
c/o Declaration Service Company
555 North Lane, Suite 6160
Conshohocken, PA 19460
To make subsequent purchases, simply make a check payable to Meehan Focus Fund
and mail the check to the above-mentioned address. BE SURE TO NOTE YOUR FUND
ACCOUNT NUMBER ON THE CHECK.
Your purchase order, if accompanied by payment, will be processed upon receipt
by Declaration Service Company, the Fund's Transfer Agent. If the Transfer Agent
receives your order and payment by the close of regular trading on the NYSE
(currently 4:00 p.m. Eastern time), your shares will be purchased at the Fund's
NAV calculated at the close of regular trading on that day. Otherwise, your
shares will be purchased at the NAV determined as of the close of regular
trading on the next business day.
PURCHASING SHARES BY WIRE TRANSFER
- ----------------------------------
To make an initial purchase of shares by wire transfer, you need to take the
following steps:
1. Call 1-888-545-2128 to inform us that a wire is being sent.
2. Obtain an account number from the Transfer Agent.
3. Fill out and mail or fax an Account Application Form to the Transfer
Agent
4. Ask your bank to wire funds to the account of:
First Union National Bank, ABA #: 031201467
Credit: Meehan Mutual Funds, Inc., Acct. #: 2000003246005
Further credit: Meehan Focus Fund,
Acct # [Your Account number]
Include your name(s), address and taxpayer identification number or Social
Security number on the wire transfer instructions. The wire should state that
you are opening a new Fund account.
9
<PAGE>
To make subsequent purchases by wire, ask your bank to wire funds using the
instructions listed above, and be sure to include your account number on the
wire transfer instructions.
If you purchase Fund shares by wire, you must complete and file an Account
Application Form with the Transfer Agent before any of the shares purchased can
be redeemed. Either fill out and mail the Application Form included with this
prospectus, or call the transfer agent and they will send you an application.
You should contact your bank (which will need to be a commercial bank that is a
member of the Federal Reserve System) for information on sending funds by wire,
including any charges that your bank may make for these services.
PURCHASES THROUGH FINANCIAL SERVICE ORGANIZATIONS
- -------------------------------------------------
You may purchase shares of the Fund through participating brokers, dealers, and
other financial professionals. Simply call your investment professional to make
your purchase. If you are a client of a securities broker or other financial
organization, such organizations may charge a separate fee for administrative
services in connection with investments in Fund shares and may impose account
minimums and other requirements. These fees and requirements would be in
addition to those imposed by the Fund. If you are investing through a securities
broker or other financial organization, please refer to its program materials
for any additional special provisions or conditions that may be different from
those described in this Prospectus (for example, some or all of the services and
privileges described may not be available to you). Securities brokers and other
financial organizations have the responsibility of transmitting purchase orders
and funds, and of crediting their customers' accounts following redemptions, in
a timely manner in accordance with their customer agreements and this
Prospectus.
PURCHASING SHARES BY AUTOMATIC INVESTMENT PLAN
- ----------------------------------------------
You may purchase shares of the Fund through an Automatic Investment Plan
("Plan"). The Plan provides a convenient way for you to have money deducted
directly from your checking, savings, or other accounts for investment in shares
of the Fund. You can take advantage of the Plan by filling out the Automatic
Investment Plan section of the Account Application Form. You may only select
this option if you have an account maintained at a domestic financial
institution which is an Automatic Clearing House member for automatic
withdrawals under the Plan. The Fund may alter, modify, amend or terminate the
Plan at any time, and will notify you at least 30 days in advance if it does so.
For more information, call the Transfer Agent at 1-888-545-2128.
PURCHASING SHARES BY TELEPHONE
- ------------------------------
In order to be able to purchase shares by telephone, your account authorizing
such purchases must have been established prior to your call. Your initial
purchase of shares may not be made by telephone. Shares purchased by telephone
will be purchased at the per share NAV determined at the close of business on
the day that the Transfer Agent receives payment through the Automated Clearing
House, which could be as many as two days after you place your order for shares.
Call the Transfer Agent for details.
10
<PAGE>
You may make purchases by telephone only if you have an account at a bank that
is a member of the Automated Clearing House. Most transfers are completed within
three business days of your call. To preserve flexibility, the Company may
revise or eliminate the ability to purchase Fund shares by phone, or may charge
a fee for such service, although the Company does not currently expect to charge
such a fee.
The Fund's Transfer Agent employs certain procedures designed to confirm that
instructions communicated by telephone are genuine. Such procedures may include,
but are not limited to, requiring some form of personal identification prior to
acting upon telephonic instructions, providing written confirmations of all such
transactions, and/or tape recording all telephonic instructions. Assuming
procedures such as the above have been followed, neither the Transfer Agent nor
the Fund will be liable for any loss, cost, or expense for acting upon telephone
instructions that are believed to be genuine. The Company shall have authority,
as your agent, to redeem shares in your account to cover any such loss. As a
result of this policy, you will bear the risk of any loss unless the Fund has
failed to follow procedures such as the above. However, if the Fund fails to
follow such procedures, it may be liable for such losses.
MISCELLANEOUS PURCHASE INFORMATION
- ----------------------------------
All applications to purchase shares of the Fund are subject to acceptance or
rejection by authorized officers of the Company and are not binding until
accepted. Applications will not be accepted unless they are accompanied by
payment in U.S. funds. Payment must be made by check or money order drawn on a
U.S. bank, savings and loan association or credit union. The Fund's custodian
will charge a $8 fee against your account, in addition to any loss sustained by
the Fund, for any payment check returned to the custodian for insufficient
funds. The Fund reserves the right to refuse to accept applications under
circumstances or in amounts considered disadvantageous to shareholders. If you
place an order for Fund shares through a securities broker, and you place your
order in proper form before 4:00 p.m. Eastern time on any business day in
accordance with their procedures, your purchase will be processed at the NAV
calculated at 4:00 p.m. on that day, provided the securities broker transmits
your order to the Transfer Agent before 5:00 p.m. Eastern time. The securities
broker must send to the Transfer Agent immediately available funds in the amount
of the purchase price within three business days for the order.
HOW TO SELL (REDEEM) YOUR SHARES
You may sell your shares at any time. You may request the sale of your shares
either by mail, by telephone or by wire.
BY MAIL
- -------
Sale requests should be mailed via U.S. mail or overnight courier service to:
Declaration Service Company
555 North Lane, Suite 6160
Conshohocken, PA 19460
11
<PAGE>
The redemption price you receive will be the Fund's per share NAV next
calculated after receipt of all required documents in good order. Payment of
redemption proceeds will be made no later than the third business day after the
valuation date unless otherwise expressly agreed by the parties at the time of
the transaction. If you purchase your shares by check and then redeem your
shares before your check has cleared, the Fund may hold your redemption proceeds
until your check clears, or for 15 days, whichever comes first.
"Good order" means that your redemption request must include:
1. Your account number.
2. The number of shares to be sold (redeemed) or the dollar value of the amount
to be redeemed.
3. The signatures of all account owners exactly as they are registered on the
account.
4. Any required signature guarantees.
5. Any supporting legal documentation that is required in the case of estates,
trusts, corporations or partnerships and certain other types of accounts.
SIGNATURE GUARANTEES --
- --------------------
A signature guarantee of each owner is required to redeem shares in the
following situations, for all size transactions:
o if you change the ownership on your account;
o when you want the redemption proceeds sent to a different address than
is registered on the account;
o if the proceeds are to be made payable to someone other than the
account's owner(s);
o any redemption transmitted by federal wire transfer to your bank; and
o if a change of address request has been received by the Fund or the
Transfer Agent within 15 days previous to the request for redemption.
In addition, signature guarantees are required for all redemptions of $25,000 or
more from any Fund shareholder account. A redemption will not be processed until
the signature guarantee, if required, is received by the Transfer Agent.
Signature guarantees are designed to protect both you and the Fund from fraud.
To obtain a signature guarantee, you should visit a bank, trust company, member
of a national securities exchange, other broker-dealer, or other eligible
guarantor institution. (Notaries public cannot provide signature guarantees.)
Guarantees must be signed by an authorized person at one of these institutions
and be accompanied by the words, "Signature Guarantee."
BY TELEPHONE
- ------------
You may redeem your shares in the Fund by calling the Transfer Agent at
1-888-545-2128 if you elected to use telephone redemption on your account
12
<PAGE>
application when you initially purchased shares. Redemption proceeds must be
transmitted directly to you or to your pre-designated account at a domestic
bank. You may not redeem by telephone if a change of address request has been
received by the Fund or the Transfer Agent within 15 days prior to the request
for redemption. During periods of substantial economic or market changes,
telephone redemptions may be difficult to implement. If you are unable to
contact the Transfer Agent by telephone, shares may be redeemed by delivering
your redemption request in person or by mail. In addition, interruptions in
telephone service may mean that you will be unable to effect a redemption by
telephone exactly when desired.
BY WIRE
- -------
You may request the redemption proceeds be wired to your designated bank if it
is a member bank or a correspondent of a member bank of the Federal Reserve
System. The Fund's Custodian charges a fee $7.50 for outgoing wires.
REDEMPTION AT THE OPTION OF THE FUND
- ------------------------------------
If the value of the shares in your account falls to less than $2000, the Fund
may notify you that, unless your account is increased to $2000 in value, it will
redeem all your shares and close the account by paying you the redemption
proceeds and any dividends and distributions declared and unpaid at the date of
redemption. You will have thirty days after notice to bring the account up to
$2000 before any action is taken. This right of redemption shall not apply if
the value of your account drops below $2000 as the result of market action. The
Fund reserves this right because of the expense to the Fund of maintaining
relatively small accounts.
DIVIDENDS AND OTHER DISTRIBUTIONS
Dividends will be paid by the Fund at least annually from its net investment
income. The Fund's net investment income is made up of dividends received from
the stocks it holds, as well as interest accrued on any obligations that it
might hold in its portfolio. The Fund realizes capital gains when it sells a
security for more than it paid for it. The Fund generally will make
distributions of its net realized capital gains once a year.
Unless you elect to have your distributions paid in cash, your distributions
will be reinvested in additional shares of the Fund. You may change the manner
in which your distributions are paid at any time by writing to the Transfer
Agent.
TAX CONSIDERATIONS
The Fund intends to qualify as a regulated investment company under Subchapter M
of the Internal Revenue Code of 1986, as amended, so as to be relieved of
federal income tax on its capital gains and net investment income that it
currently distributes to its shareholders.
Dividends from net investment income and net short-term capital gains are
generally taxable to you as ordinary income. Distributions of net capital gain
13
<PAGE>
(the excess of net long-term capital gain over net short-term capital loss) are
taxable to you as long-term capital gains, regardless of the length of time you
have held your Fund shares. Distributions are taxable whether received in cash
or reinvested in Fund shares. You will be advised annually of the source of
distributions for federal income tax purposes.
A redemption of shares is a taxable event, and accordingly, a capital gain or
loss generally will be recognized. You should consult a tax adviser regarding
the effect of federal, state, local, and foreign taxes on an investment in the
Fund.
GENERAL INFORMATION
The Fund will not issue stock certificates evidencing shares. Instead, your
account will be credited with the number of shares purchased, relieving you of
responsibility for safekeeping of certificates and the need to deliver them upon
redemption. Written confirmations are issued for all purchases of shares.
In reports or other communications to investors, or in advertising material, the
Fund may describe general economic and market conditions affecting the Fund and
may compare its performance with other mutual funds as listed in the rankings
prepared by Lipper Analytical Services, Inc. or similar nationally recognized
rating services and financial publications that monitor mutual fund performance.
The Fund may also, from time to time, compare its performance to the one or more
appropriate indices.
14
<PAGE>
FOR MORE INFORMATION
Additional information about the Fund is available in the Fund's Statement of
Additional Information (SAI). The SAI contains more detailed information on all
aspects of the Fund. A current SAI, dated December 1, 1999, has been filed with
the SEC and is incorporated by reference into this Prospectus.
To receive information concerning the Fund, or to request a copy of the SAI or
other documents relating to the Fund, please contact the Fund at:
Meehan Mutual Funds, Inc.
c/o Declaration Service Company
555 North Lane, Suite 6160
Conshohocken, PA 19460
1-888-545-2128
A copy of your requested document(s) will be sent to you within three days of
your request.
You may also receive information concerning the Fund, or request a copy of the
SAI or other documents relating to the Fund (duplicating fee required), by
contacting the Securities and Exchange Commission:
IN PERSON -- at the SEC's Public Reference Room in Washington, D.C.
BY PHONE -- 1-202-942-8090
BY MAIL -- Public Reference Section, Securities and Exchange Commission,
Washington, D.C. 20549-0102
BY ELECTRONIC REQUEST AT THE FOLLOWING E-MAIL ADDRESS - [email protected]
ON THE EDGAR DATABASE ON THE SEC'S INTERNET SITE -- www.sec.gov
Investment Company Act No.
811-9575
15
<PAGE>
STATEMENT OF ADDITIONAL INFORMATION
Dated December 1, 1999
MEEHAN MUTUAL FUNDS, INC.
Suite 600
1900 M Street, NW
Washington, DC 20036
1-888-545-2128
This Statement of Additional Information ("SAI") is not a prospectus and should
be read in conjunction with the Prospectus of Meehan Focus Fund ("Fund"), dated
December 1, 1999. You may obtain a copy of the Prospectus, free of charge, by
writing to Meehan Mutual Funds, Inc. ("Company") c/o Declaration Service
Company, 555 North Lane, Suite 6160, Conshohocken, PA 19460 or by calling
1-888-545-2128.
TABLE OF CONTENTS
-----------------
PAGE
Investment Policies and Restrictions..........................................2
Investment Restrictions.......................................................6
Investment Adviser............................................................7
Directors and Officers........................................................9
Performance Information.......................................................10
Purchasing and Redeeming Shares...............................................11
Tax Information...............................................................11
Portfolio Transactions........................................................13
Custodian.....................................................................14
Transfer Agent................................................................14
Administration................................................................15
Distributor...................................................................15
Independent Accountants.......................................................15
Legal Counsel.................................................................16
Distribution Plan.............................................................16
General Information...........................................................16
Financial Statements..........................................................17
<PAGE>
INVESTMENT POLICIES AND RESTRICTIONS
The Fund's investment objectives and the manner in which the Fund pursues its
investment objectives are generally discussed in the prospectus. This section
provides additional information concerning the Fund's investments and its
investment restrictions.
The Fund is a non-diversified Fund, meaning that the Fund can concentrate its
investments in a smaller number of companies than a more diversified fund. The
Fund normally will invest at least 85% of total assets in common stock of U.S.
companies and American Depository Receipts ("ADRs") of foreign companies, and
will normally hold a focused portfolio consisting of not more than 25 stocks.
The Fund may also invest in a variety of other securities. The types of
securities in which the Fund may ordinarily invest are listed below, along with
any restrictions on such investments, and, where necessary, a brief discussion
of any risks unique to the particular security.
COMMON STOCKS. The Fund will ordinarily invest at least 75% of its total assets
in U.S. common stocks or securities convertible into common stock. The Fund's
investment in common stocks is a principal investment strategy of the Fund. The
market value of common stock can fluctuate significantly, reflecting the
business performance of the issuing company, investor perceptions and general
economic or financial market movements. Smaller companies are especially
sensitive to these factors. Despite the risk of price volatility, however,
common stocks historically have offered the greatest potential for gain on
investment, compared to other classes of financial assets. For purposes of the
Fund's 75% minimum investment in common stocks, shares of real estate investment
trusts ("REITS") are considered to be common stock, although the Fund's
investment in REITS is not a principal investment strategy of the Fund.
REAL ESTATE INVESTMENT TRUSTS. The Fund may invest in REITs. Equity REITs invest
directly in real property while mortgage REITs invest in mortgages on real
property. REITs may be subject to certain risks associated with the direct
ownership of real estate, including declines in the value of real estate, risks
related to general and local economic conditions, overbuilding and increased
competition, increases in property taxes and operating expenses, and variations
in rental income. REITs pay distributions to their shareholders based upon
available funds from operations. It is quite common for these distributions to
exceed the REIT's earnings and profits, resulting in the excess portion of such
distributions being designated as a return of capital. The Fund intends to
include the gross distributions from such REITs in its distributions to its
shareholders and, accordingly, a portion of the Fund's distributions may also be
designated as a return of capital. The Fund will not invest more than 20% of its
assets in REITs.
FOREIGN SECURITIES. The Fund may invest up to 25% of its total net assets in the
common stock of foreign issuers traded on U.S. exchanges. The Fund may also
invest in foreign securities in the form of ADRs. The Fund will only invest in
ADRs that are issuer sponsored. Sponsored ADRs typically are issued by a U.S.
bank or trust company and evidence ownership of underlying securities issued by
a foreign corporation. The Fund's investment in foreign securities is a
principal investment strategy of the Fund.
2
<PAGE>
Investments in foreign companies involve certain risks not typically associated
with investing in domestic companies. An investment may be affected by changes
in currency rates and in exchange control regulations. There may be less
publicly available information about a domestic company than about a domestic
company, because foreign companies are not subject to the regulatory
requirements of U.S. companies. Foreign companies generally are not subject to
uniform accounting, auditing and financial reporting standards. Dividends and
interest on foreign securities may be subject to foreign withholding taxes,
which may reduce the net return to Fund shareholders. Foreign securities are
often denominated in a currency other than the U.S. dollar. Accordingly, the
Fund will be subject to the risks associated with fluctuations in currency
values. Although the Fund will only invest in foreign issuers that are domiciled
in nations considered to have stable and friendly governments, there is the
possibility of expropriation, confiscation, taxation, currency blockage or
political or social instability which could negatively affect the Fund.
PREFERRED STOCK. The Fund may invest in preferred stock. Preferred stock
generally pays dividends at a specified rate and generally has preference over
common stock in the payments of dividends and the liquidation of the issuer's
assets. Dividends on preferred stock are generally payable at the discretion of
the issuer's board of directors. Accordingly, shareholders may suffer a loss of
value if dividends are not paid. The market prices of preferred stocks are also
sensitive to changes in interest rates and in the issuer's creditworthiness.
Accordingly, shareholders may experience a loss of value due to adverse interest
rate movements or a decline in the issuer's credit rating.
CONVERTIBLE SECURITIES. Traditional convertible securities include corporate
bonds, notes and preferred stocks that may be converted into or exchanged for
common stock, and other securities that also provide an opportunity for equity
participation. These securities are generally convertible either at a stated
price or a stated rate (that is, for a specific number of shares of common stock
or other security). As with other fixed income securities, the price of a
convertible security to some extent varies inversely with interest rates. While
providing a fixed-income stream (generally higher in yield than the income
derivable from a common stock but lower than that afforded by a non-convertible
debt security), a convertible security also affords the investor an opportunity,
through its conversion feature, to participate in the capital appreciation of
the common stock into which it is convertible. As the market price of the
underlying common stock declines, convertible securities tend to trade
increasingly on a yield basis and so may not experience market value declines to
the same extent as the underlying common stock. When the market price of the
underlying common stock increases, the price of a convertible security tends to
rise as a reflection of the value of the underlying common stock. To obtain such
a higher yield, the Fund may be required to pay for a convertible security an
amount in excess of the value of the underlying common stock.
Common stock acquired by the Fund upon conversion of a convertible security will
generally be held for so long as the Adviser anticipates such stock will provide
the Fund with opportunities which are consistent with the Fund's investment
objectives and policies. The Adviser employs no minimum quality or rating
criteria with respect to the Fund's investments in convertible securities, and
does not intend to invest more than 5% of the Fund's assets in convertible
securities.
3
<PAGE>
DEBT SECURITIES. The Fund may invest in U.S. Government debt securities.
U.S. Government securities include direct obligations of the U.S.
Government and obligations issued by U.S. Government agencies and
instrumentalities. The market value of such securities fluctuates in
response to interest rates and the creditworthiness of the issuer. In the
case of securities backed by the full faith and credit of the U. S.
Government, shareholders are only exposed to interest rate risk.
CREDIT RISK- A debt instrument's credit quality depends on the issuer's
ability to pay interest on the security and repay the debt: the lower the
credit rating, the greater the risk that the security's issuer will
default. The credit risk of a security may also depend on the credit
quality of any bank or financial institution that provides credit
enhancement for the security.
INTEREST RATE RISK- All debt securities face the risk that their principal
value will decline because of a change in interest rates. Generally,
investments subject to interest rate risk will decrease in value when
interest rates rise and will rise in value when interest rates decline.
Also, the longer a security has until it matures, the more pronounced will
be a change in its value when interest rates change.
MONEY MARKET MUTUAL FUNDS. The Fund may invest in securities issued by other
registered investment companies. As a shareholder of another registered
investment company, the Fund would bear its pro rata portion of that company's
advisory fees and other expenses. Such fees and expenses will be borne
indirectly by the Fund's shareholders.
REPURCHASE AGREEMENTS. The Fund may invest a portion of its assets in repurchase
agreements ("Repos") with broker-dealers, banks and other financial
institutions, provided that the Fund's custodian at all times has possession of
the securities serving as collateral for the Repos or has proper evidence of
book entry receipt of said securities. In a Repo, the Fund purchases securities
subject to the seller's simultaneous agreement to repurchase those securities
from the Fund at a specified time (usually one day) and price. The repurchase
price reflects an agreed-upon interest rate during the time of investment. All
Repos entered into by the Fund must be collateralized by U.S. Government
Securities, the market values of which equal or exceed 102% of the principal
amount of the money invested by the Fund. If an institution with whom the Fund
has entered into a Repo enters insolvency proceedings, the resulting delay, if
any, in the Fund's ability to liquidate the securities serving as collateral
could cause the Fund some loss if the securities declined in value prior to
liquidation. To minimize the risk of such loss, the Fund will enter into Repos
only with institutions and dealers considered creditworthy.
REPURCHASE AGREEMENT RISK- A Repo exposes the Fund to the risk that the
party that sells the securities will default on its obligation to
repurchase those securities. If that happens the Fund can lose money
because: (i) it may not be able to sell the securities at the agreed-upon
time and price; and (ii) the securities may lose value before they can be
sold.
CASH RESERVES. The Fund may hold a significant portion of its net assets
in cash, either to maintain liquidity or for temporary defensive
purposes.
4
<PAGE>
RESTRICTED AND ILLIQUID SECURITIES. The Fund will not invest more than 15% of
its net assets in securities that the Adviser determines to be illiquid.
Illiquid securities are securities that may be difficult to sell promptly at an
acceptable price because of a lack of an available market and other factors. The
sale of some illiquid and other types of securities may be subject to legal
restrictions. Because illiquid and restricted securities may present a greater
risk of loss than other types of securities, the Fund will not invest in such
securities in excess of the limits set forth above.
The Fund may also invest in securities acquired in a privately negotiated
transaction from the issuer or a holder of the issuer's securities and which may
not be distributed publicly without registration under the Securities Act of
1933.
Restricted and illiquid securities are valued in such manner as the Fund's Board
of Directors ("Board" or "Directors") in good faith deems appropriate to reflect
the fair market value of such securities.
SPECIAL SITUATIONS. The Fund intends to invest in special situations from time
to time. A special situation arises when, in the opinion of Fund management, the
securities of a company will, within a reasonably estimated time period, be
accorded market recognition at an appreciated value solely by reason of a
development particularly or uniquely applicable to that company and regardless
of general business conditions or movements of the market as a whole. Such
developments and situations include, but are not limited to: liquidations,
reorganizations, recapitalizations or mergers, material litigation,
technological breakthroughs, and new management or management policies. Although
large and well-known companies may be involved, special situations often involve
much greater risk than is found in the normal course of investing. To minimize
these risks, the Fund will not invest in special situations unless the target
company has at least three years of continuous operations (including
predecessors), or unless the aggregate value of such investments is not greater
than 25% of the Fund's total net assets (valued at the time of investment).
WHEN-ISSUED SECURITIES AND DELAYED-DELIVERY TRANSACTIONS. The Fund may purchase
securities on a when-issued basis, and it may purchase or sell securities for
delayed-delivery. These transactions occur when securities are purchased or sold
by the Fund with payment and delivery taking place at some future date. The Fund
may enter into such transactions when, in the Adviser's opinion, doing so may
secure an advantageous yield and/or price to the Fund that might otherwise be
unavailable. The Fund has not established any limit on the percentage of assets
it may commit to such transactions, but to minimize the risks of entering into
these transactions, the Fund will maintain a segregated account with its
custodian consisting of cash, or other high-grade liquid debt securities,
denominated in U.S. dollars or non-U.S. currencies, in an amount equal to the
aggregate fair market value of its commitments to such transactions.
MASTER-FEEDER OPTION. Notwithstanding its other investment policies, the Fund
may seek to achieve its investment objective by investing all of its investable
net assets in another investment company having the same investment objective
and substantially the same investment policies and restrictions as those of the
Fund. Although such an investment may be made in the sole discretion of the
Directors, the Fund's shareholders will be given 30 days prior notice of any
such investment. There is no current intent to make such an investment.
5
<PAGE>
PORTFOLIO TURNOVER. The Fund has no operating history and therefore has no
annual reportable portfolio turnover. The Fund will generally purchase and sell
securities without regard to the length of time the security has been held. The
Fund expects that its annual portfolio turnover rate will not exceed 100% under
normal conditions. However, there can be no assurance that the Fund will not
exceed this rate, and the portfolio turnover rate may vary from year to year.
High portfolio turnover in any year will result in the payment by the Fund of
above-average transaction costs and could result in the payment by shareholders
of above-average amounts of taxes on realized capital gains the Fund distributes
to them. Distributions to shareholders of those gains, to the extent they
consist of short-term capital gains, will be considered ordinary income for
federal income tax purposes.
Portfolio turnover rate is calculated by dividing (1) the lesser of purchases or
sales of portfolio securities for the for the fiscal year by (2) the monthly
average of the value of portfolio securities owned during the fiscal year. A
100% turnover rate would occur if all the securities in the Fund's portfolio,
with the exception of securities whose maturities at the time of acquisition
were one year or less, were sold and either repurchased or replaced within one
year.
INVESTMENT RESTRICTIONS
The restrictions listed below are fundamental policies and may be changed only
with the approval of a "majority of the outstanding voting securities" of the
Fund as defined in the Investment Company Act of 1940 (the "1940 Act"). As
provided in the 1940 Act, a vote of a "majority of the outstanding voting
securities" of the Fund means the affirmative vote of the lesser of (1) more
than 50% of the outstanding shares of the Fund, or (2) 67% or more of the shares
of the Fund present at a meeting, if more than 50% of the shares are represented
at the meeting in person or by proxy. Except with respect to borrowing, changes
in values of the Fund's assets as a whole will not cause a violation of the
following investment restrictions so long as percentage restrictions are
observed by the Fund at the time it purchases any security.
The Fund will not:
1. With respect to 85% of its assets (valued at time of investment), normally
invest in more than 25 issuers.
2. Acquire securities of any one issuer that at the time of investment represent
more than 10% of the voting securities of the issuer.
3. Invest 25% or more of its total assets (valued at time of investment) in
securities of companies in any one industry.
4. Borrow money, except from banks for temporary or emergency purposes in
amounts not exceeding 20% of the value of the Fund's assets at the time of
borrowi
6
<PAGE>
5. Underwrite the distribution of securities of other issuers.
6. Invest in companies for the purpose of management or the exercise of control.
7. Lend money (but this restriction shall not prevent the Fund from investing in
debt securities or repurchase agreements, or lend its portfolio securities).
8. Issue senior securities.
9. Invest in commodities, futures contracts or options contracts.
The Fund has also adopted the following non-fundamental restrictions that may be
changed by the Board without shareholder approval:
The Fund may not:
1. Make margin purchases.
2. Invest in oil, gas or other mineral exploration or development programs,
although it may invest in marketable securities of companies engaged in oil,
gas or mineral exploration.
3. Purchase or sell real estate or real estate loans or real estate limited
partnerships, although it may invest in marketable securities of companies
that invest in real estate or interests in real estate.
4. Invest more than 15% of its net assets in securities that are not readily
marketable.
5. Acquire securities of other investment companies except as permitted by the
1940 Act. In relevant part, the 1940 Act generally allows an investment
company such as the Fund to acquire up to 3% of the total outstanding
securities of another investment company.
6. Pledge, mortgage or hypothecate its assets, except for temporary or emergency
purposes and then to an extent not greater than 20% of its total assets.
INVESTMENT ADVISER
Information on the Fund's investment adviser, Edgemoor Capital Management,
Inc. (the "Adviser"), is set forth in the Prospectus. This section
contains additional information concerning the Adviser.
The Adviser is organized as a Maryland corporation and is registered as an
investment adviser with the Securities and Exchange Commission. The Adviser's
principal occupation and business is to provide financial management services to
individuals, corporations, and other institutions throughout the United States.
The Adviser manages the investment portfolio and the general business
affairs of the Fund pursuant to an investment advisory agreement
("Advisory Agreement") with the Company dated November, 1999. Mr. Thomas
P. Meehan is President of the Adviser, and Messrs. Thomas P. Meehan,
Joseph Meehan and Paul P. Meehan are directors of the Adviser. Mr.
Thomas P. Meehan is portfolio manager for the Fund.
7
<PAGE>
THE INVESTMENT ADVISORY AGREEMENT.
- ---------------------------------
Under the terms of the Advisory Agreement, the Adviser manages the investment
operations of the Fund in accordance with the Fund's investment policies and
restrictions. The Adviser furnishes an investment program for the Fund,
determines what investments should be purchased, sold and held, and makes
changes on behalf of the Company in the investments of the Fund. At all times
the Adviser's actions on behalf of the Fund are subject to the overall
supervision and review of the Board.
The Advisory Agreement provides that the Adviser shall not be liable for any
loss suffered by the Fund or its shareholders as a consequence of any act or
omission in connection with services under the Advisory Agreement, except by
reason of the Adviser's willful misfeasance, bad faith, gross negligence, or
reckless disregard of its obligations and duties.
The Advisory Agreement has a term of two years, but may be continued thereafter
from year to year so long as its continuance is approved at least annually (a)
by the vote of a majority of the Directors of the Fund who are not "interested
persons" of the Fund or the Adviser cast in person at a meeting called for the
purpose of voting on such approval, and (b) by the Board of Directors as a whole
or by the vote of a majority (as defined in the 1940 Act) of the outstanding
shares of the Fund.
The Advisory Agreement will terminate automatically in the event of its
assignment (as defined in the 1940 Act).
For its investment advisory services to the Fund, the Company pays to the
Adviser, on the last day of each month, an annualized fee equal to 1.00% of
average net assets of the Fund, such fee to be computed daily based upon the
daily average net assets of the Fund.
THE OPERATING SERVICES AGREEMENT
- --------------------------------
The Company has also entered into an Operating Services Agreement with the
Adviser ("Services Agreement"). Under the terms of the Services Agreement, the
Adviser provides, or arranges to provide, day-to-day operational services to the
Fund including, but not limited to:
1. accounting 6. custodial
2. administrative 7. fund share distribution
3. legal (except litigation) 8. shareholder reporting
4. dividend disbursing and transfer agent 9. sub-accounting,and
5. registrar 10. record keeping services
For its services to the Fund under the Services Agreement, the Fund pays to the
Adviser, on the last day of each month, an annualized fee equal to 0.50% of
average net asset value of the Fund, such fee to be computed daily based upon
the net asset value of the Fund.
8
<PAGE>
Under the Services Agreement, the Adviser may, with the Company's permission,
employ third parties to assist it in performing the various services required of
the Fund. The Adviser is responsible for compensating such parties.
The effect of the Advisory Agreement and the Services Agreement together is to
place a "cap" on the Fund's normal operating expenses at 1.50%. The only other
expenses which may be incurred by the Fund are brokerage fees, taxes, legal fees
relating to Fund litigation, and other extraordinary expenses.
DIRECTORS AND OFFICERS
The Board Of Directors ("Board" or "Directors") has overall responsibility for
conduct of the Company's affairs. The day-to-day operations of the Fund are
managed by the Adviser, subject to the Bylaws of the Company and the supervision
and review of the Board. The Directors of the Company, including those Directors
who are also officers, are listed below.
<TABLE>
<CAPTION>
Position Principal Occupation for
Name, Age with Fund The Last Five Years
- --------------------------------------------------------------------------------
<S> <C> <C>
Thomas P. Meehan*; President, President, Edgemoor Capital
(Age 59) Director Management, Inc., a registered
Suite 600 investment adviser, since October,
1900 M Street, N.W. 1999. President, Sherman, Meehan,
Washington, DC 20036 Curtin & Ain, P.C., a Washington,
DC, law firm (1993 thru
September, 1999). Trustee,
Sherman, Meehan Curtin & Ain,
P.C. Pension and Profit Sharing
Plans (1973-1999). Member, Bar
Association of the District of
Columbia; Maryland State Bar
Association, Bar of the United
States Supreme Court. Graduate of
Middlebury College in 1962 (BA)
and Duke University School of Law
in 1965 (JD), with honors;
elected to the Order of the Coif.
Andrew Ferrentino; Director Member, Board of Directors Template
(Age 59) Software, Inc. from 1997 to
7904 Horseshoe Lane present. Private consultant in the
Potomac, MD 20854 computer software industry (January
1, 1999 to present). President,
Template Software, Inc. from 1982
to December 31, 1998. Graduate of
Middlebury College in 1962 (BA)
and Masters Degree from Lehigh
University in 1964 (Mathematics).
9
<PAGE>
Position Principal Occupation for
Name, Age with Fund The Last Five Years
- --------------------------------------------------------------------------------
John A. Cutler Director Partner, Beers & Cutler, PLLC
(Age 55) from October, 1976 to present; Trustee,
3042 P Street, N.W. Beers & Cutler Employees Profit
Washington, DC 20002 Sharing Plan from 1984 to present.
Certified Public Accountant, 1970.
Graduate of University of
Connecticut in 1966 (BS Accounting).
</TABLE>
* Indicates an "interested person" as defined in the 1940 Act.
Pursuant to its obligations to the Company under the Services Agreement, the
Adviser is responsible for paying compensation, if any, to each of the Company's
independent Directors during the fiscal year ending December 31, 2000.
CONTROL PERSONS AND SHAREHOLDERS OWNING IN EXCESS OF 5% OF FUND SHARES
- ----------------------------------------------------------------------
The Adviser intends to purchase all of the outstanding shares of the Fund prior
to the Fund's effective date, and will accordingly be deemed to then control the
Fund.
PERFORMANCE INFORMATION
From time to time the Fund may quote total return figures. "Total Return" for a
period is the percentage change in value during the period of an investment in
Fund shares, including the value of shares acquired through reinvestment of all
dividends and capital gains distributions. "Average Annual Total Return" is the
average annual compounded rate of change in value represented by the Total
Return Percentage for the period.
Average Annual Total Return is computed as follows: 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 shares at the
end of the period
The Fund's performance is a function of conditions in the securities markets,
portfolio management, and operating expenses. Although information such as that
shown above is useful in reviewing the Fund's performance and in providing some
basis for comparison with other investment alternatives, it should not be used
for comparison with other investments using different reinvestment assumptions
or time periods.
10
<PAGE>
In sales literature, the Fund's performance may be compared with that of market
indices and other mutual funds. In addition to the above computations, the Fund
might use comparative performance as computed in a ranking determined by Lipper
Analytical Services, Morningstar, Inc., or that of another service.
PURCHASING AND REDEEMING SHARES
Purchases and redemptions of the Fund's shares will be made at net asset value
("NAV"). The Fund's NAV is determined on days on which the New York Stock
Exchange ("NYSE") is open for trading. For purposes of computing the NAV of a
share of the Fund, securities traded on security exchanges, or in the
over-the-counter market in which transaction prices are reported, are valued at
the last sales price at the time of valuation or, lacking any reported sales on
that day, at the most recent bid quotations. Securities for which quotations are
not available and any other assets are valued at a fair market value as
determined in good faith by the Adviser, subject to the review and supervision
of the Board. The price per share for a purchase order or redemption request is
the NAV next determined after receipt of the order.
The Fund is open for business on each day that the NYSE is open. The Fund's
share price or NAV is normally determined as of 4:00 p.m., Eastern time. The
Fund's share price is calculated by subtracting its liabilities from the closing
fair market value of its total assets and dividing the result by the total
number of shares outstanding on that day. Fund liabilities include accrued
expenses and dividends payable, and its total assets include the market value of
the portfolio securities as well as income accrued but not yet received. Since
the Fund generally does not charge sales or redemption fees, the NAV is the
offering price for shares of the Fund.
TAX INFORMATION
The Fund intends to qualify for treatment as a regulated investment company
("RIC") under Subchapter M of the Internal Revenue Code of 1986, as amended, so
as to be relieved of federal income tax on its capital gains and net investment
income that it currently distributes to its shareholders. To qualify as a RIC,
the Fund must, among other things, derive 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 securities or foreign currencies, or other
income derived with respect to its business of investing in securities or such
currencies, and satisfy certain diversification requirements. A portion of the
Fund's dividends derived from U.S. Government obligations may be exempt from
state and local taxation.
If the Fund qualifies as a RIC and distributes at least 90% of its net
investment income, net short-term capital gains and net gains from certain
foreign currency transactions, the Fund will not be subject to federal income
tax on the income and gains so distributed. If the Fund failed to qualify for
treatment as a RIC for any taxable year, (a) it would be taxed as an ordinary
corporation on the full amount of its taxable income for that year without being
able to deduct the distributions it makes to its shareholders and (b) the
shareholders would treat all those distributions, including distributions of net
11
<PAGE>
capital gain (the excess of net long-term capital gain over net short-term
capital loss), as dividends (that is, ordinary income) to the extent of the
Fund's earnings and profits. In addition, the Fund could be required to
recognize unrealized gains, pay substantial taxes and interest and make
substantial distributions before requalifying for RIC treatment.
If shares are purchased shortly before the record date for a distribution, the
shareholder will, in effect, receive a return of a portion of his investment,
but the distribution will be taxable to him even if the net asset value of the
shares is reduced below the shareholder's cost. However, for federal income tax
purposes the original cost would continue as the tax basis.
If a shareholder fails to furnish his social security or other taxpayer
identification number or to certify properly that it is correct, the Fund is
required to withhold federal income tax at the rate of 31% (backup withholding)
from dividends, capital gain distributions and redemption payments to him.
Dividend and capital gain distributions also will be subject to backup
withholding if the shareholder fails to certify properly that he is not subject
to backup withholding due to underreporting of certain income.
Taxable distributions generally are included in a shareholder's gross income for
the taxable year in which they are received. However, distributions declared in
December and made payable to shareholders of record in that month will be deemed
to have been received on December 31st if paid by the Fund during the following
January.
The Fund's income will qualify for the dividends-received deduction available to
corporate shareholders to the extent that income is derived from qualifying
dividends (generally, dividends from domestic corporations). Because the Fund
may earn other types of income, such as interest, income from securities loans,
non-qualifying dividends, and net short-term capital gains, the percentage of
dividends from the Fund that qualifies for the deduction generally will be less
than 100%. The Fund will notify corporate shareholders annually of the
percentage of Fund dividends that qualify for the dividends-received deduction.
Corporate shareholders should consult their tax advisers regarding other
requirements applicable to the dividends-received deduction. It should be noted
that dividends received by a corporate shareholder and deducted by it pursuant
to the dividends-received deduction are subject indirectly to the federal
alternative minimum tax.
The Fund will be subject to a nondeductible 4% excise tax ("Excise Tax") to the
extent it fails to distribute by the end of any calendar year substantially all
of its ordinary income for that year and capital gain net income for the
one-year period ending on October 31 of that year, plus certain other amounts.
Dividends and interest received and gains realized by the Fund on foreign
securities may be subject to income, withholding, or other taxes imposed by
foreign countries and U.S. possessions that would reduce the total return on its
investments. Tax conventions between certain countries and the United States may
reduce or eliminate foreign taxes, however, and many foreign countries do not
impose taxes on capital gains in respect of investments by foreign investors.
12
<PAGE>
The Fund may invest in the stock of "passive foreign investment companies"
("PFICs"). A PFIC is any foreign corporation (with certain exceptions) that, in
general, meets either of the following tests: (1) at least 75% of its gross
income is passive or (2) an average of at least 50% of its assets produce, or
are held for the production of, passive income. Under certain circumstances, the
Fund will be subject to federal income tax on a portion of any "excess
distribution" received on the stock of a PFIC or of any gain on disposition of
the stock (collectively "PFIC income"), plus interest thereon, even if the Fund
distributes the PFIC income as a dividend to its shareholders. The balance of
the PFIC income will be included in the Fund's investment company taxable income
and, accordingly, will not be taxable to it to the extent it distributes that
income to its shareholders.
If the Fund invests in a PFIC and elects to treat the PFIC as a "qualified
electing fund" ("QEF"), then in lieu of the foregoing tax and interest
obligation, the Fund would be required to include in income each year its PRO
RATA share of the QEF's annual ordinary earnings and net capital gain -- which
the Fund likely would have to distribute to satisfy the Distribution Requirement
and avoid imposition of the Excise Tax -- even if the Fund did not receive those
earnings and gain from the QEF. In most instances it will be very difficult, if
not impossible, to make this election because of certain requirements thereof.
The Fund may elect to "mark to market" its stock in any PFIC.
"Marking-to-market," in this context, means including in ordinary income each
taxable year the excess, if any, of the fair market value of the stock over the
Fund's adjusted basis therein as of the end of that year. Pursuant to the
election, the Fund also would be allowed to deduct (as an ordinary, not capital,
loss) the excess, if any, of its adjusted basis in PFIC stock over the fair
market value thereof as of the taxable year-end, but only to the extent of any
net mark-to-market gains with respect to that stock included in income by the
Fund for prior taxable years thereunder. The Fund's adjusted basis in each
PFIC's stock subject to the election would be adjusted to reflect the amounts of
income included and deductions taken thereunder.
PORTFOLIO TRANSACTIONS
Decisions to buy and sell securities for the Fund are made by the Adviser. In
placing purchase and sale orders for portfolio securities for the Fund, it is
the policy of the Adviser to seek the best execution of orders at the most
favorable price. In selecting brokers to effect portfolio transactions, the
determination of what is expected to result in the best execution at the most
favorable price involves a number of largely judgmental considerations. Among
these are the Adviser's evaluation of the broker's efficiency in executing and
clearing transactions, the rate of commission or the size of the broker-dealer's
"spread", the size and difficulty of the order, the nature of the market for the
security, operational capabilities of the broker-dealer, and the research and
other services provided. The Fund may pay more than the lowest available
commission in return for brokerage and research services. Research and other
services may include information as to the availability of securities for
purchase or sale, statistical or factual information or opinions pertaining to
securities and reports and analysis concerning issuers and their
creditworthiness. The Adviser may use research and other services to service all
of its clients, rather than the particular clients whose commissions may pay for
research or other services. In other words, the Fund's brokerage may be used to
pay for a research service that is used in managing another client of the
Adviser.
The Adviser may purchase or sell portfolio securities on behalf of the Fund in
agency or principal transactions. In agency transactions, the Fund generally
13
<PAGE>
pays brokerage commissions. In principal transactions, the Fund generally does
not pay commissions. However, the price paid for the security may include an
undisclosed commission or "mark-up" or selling concessions. The Adviser normally
purchases fixed-income securities on a net basis from primary market makers
acting as principals for the securities. The Adviser may purchase certain money
market instruments directly from an issuer without paying commissions or
discounts. Over-the-counter securities are generally purchased and sold directly
with principal market makers who retain the difference in their cost in the
security and its selling price. In some instances, the Adviser feels that better
prices are available from non-principal market makers who are paid commissions
directly.
The Adviser may combine transaction orders placed on behalf of the Fund with
orders placed on behalf of any other fund or private account managed by the
Adviser for the purpose of negotiating brokerage commissions or obtaining a more
favorable transaction price. In these cases, transaction costs are shared
proportionately by the fund or account, as applicable, which are part of the
block. If an aggregated trade is not completely filled, then the Adviser
typically allocates the trade among the funds or accounts, as applicable, on a
pro rata basis based upon account size. Exemptions are permitted on a
case-by-case basis when judged by the Adviser to be fair and reasonable to the
funds or accounts involved.
TRADING BY THE PORTFOLIO MANAGER
- --------------------------------
Pursuant to Section 17(j) of the 1940 Act and Rule 17j-1 thereunder, the Fund,
the Adviser and the Distributor have adopted Codes of Ethics restricting
personal securities trading by the Fund's Portfolio Manager. These Codes are on
public file, and are available from the Securities and Exchange Commission.
While the Codes permit personal transactions by the Portfolio Manager in
securities held or to be acquired by the Fund, the Codes prohibit and are
designed to prevent fraudulent activity in connection with such personal
transactions.
CUSTODIAN
First Union National Bank, 123 South Broad Street, Philadelphia, Pennsylvania
19109 ("First Union"), acts as custodian for the Fund. As such, First Union
holds all securities and cash of the Fund, delivers and receives payment for
securities sold, receives and pays for securities purchased, collects income
from investments and performs other duties, all as directed by officers of the
Company. First Union does not exercise any supervisory function over management
of the Fund, the purchase and sale of securities or the payment of distributions
to shareholders.
TRANSFER AGENT
Declaration Service Company, 555 North Lane, Suite 6160, Conshohocken, PA 19428
("DSC") acts as transfer, dividend disbursing, and shareholder servicing agent
for the Fund pursuant to a written agreement with the Company and the Adviser.
Under the agreement, DSC is responsible for administering and performing
transfer agent functions, dividend distribution, shareholder administration, and
maintaining necessary records in accordance with applicable rules and
regulations.
14
<PAGE>
For the services to be rendered as transfer agent, the Adviser shall pay DSC an
annual fee, paid monthly, based on the average net assets of the Fund, as
determined by valuations made as of the close of each business day of the month.
ADMINISTRATION
DSC also acts as administrator to the Fund pursuant to a written agreement with
the Company and Adviser. DSC supervises all aspects of the operations of the
Fund except those performed by the Adviser under the Advisory Agreement and
Services Agreement. DSC is responsible for:
(a) calculating the Fund's net asset value;
(b) preparing and maintaining the books and accounts specified in Rule 31a-1
and 31a-2 of the 1940 Act;
(c) preparing financial statements contained in reports to stockholders of the;
Fund
(d) preparing the Fund's federal and state tax returns;
(e) preparing reports and filings with the Securities and Exchange Commission;
(f) preparing filings with state Blue Sky authorities; and
(g) maintaining the Fund's financial accounts and records.
For the services to be rendered as administrator, the Adviser shall pay DSC an
annual fee, paid monthly, based on the average net assets of the Fund, as
determined by valuations made as of the close of each business day of the month.
DISTRIBUTOR
Declaration Distributors, Inc. ("DDI"), 555 North Lane, Suite 6160,
Conshohocken, PA 19460, acts as the principal underwriter of the Fund's shares
pursuant to a written agreement with the Fund and the Adviser ("Distribution
Agreement"). DDI and DSC are both wholly-owned subsidiaries of Declaration
Holdings, Inc., a Delaware corporation.
Pursuant to the Distribution Agreement, DDI facilitates the registration of the
Funds' shares under state securities laws and assists in the sale of shares. For
providing underwriting services to the Fund, DDI is paid an annual fixed fee by
the Adviser.
The Adviser shall bear the expense of all filing or registration fees incurred
in connection with the registration of the Fund's shares under state securities
laws.
INDEPENDENT ACCOUNTANTS
Tait, Weller & Baker, 8 Penn Center Plaza, Suite 800, Philadelphia, PA
19103-2108, will serve as the Company's independent auditors for its first
fiscal year.
15
<PAGE>
LEGAL COUNSEL
Kirkpatrick & Lockhart LLP, 1800 Massachusetts Avenue, NW, Washington, DC
20036-1800, has passed on certain matters relating to this registration
statement and acts as counsel to the Company.
DISTRIBUTION PLAN
As noted in the Fund's Prospectus, the Fund has adopted a plan pursuant to Rule
12b-1 under the 1940 Act (the "Plan") whereby the Fund is authorized to pay a
fee of up to 0.35% per annum of the Fund's average daily net assets to the
Adviser and others to compensate them for certain expenses incurred in the
distribution of the Fund's shares and the servicing or maintaining of existing
Fund shareholder accounts. The fees may be paid on a monthly basis, in arrears.
Although the Plan has been adopted by the Board, the Board has decided not to
implement the Plan for at least the Fund's first full fiscal year, in order to
minimize the ongoing expenses of the Fund during the Fund's start-up phase. The
Board will implement the Plan when and if circumstances so warrant.
GENERAL INFORMATION
Meehan Mutual Funds, Inc., an open-end management investment company, was
incorporated in Maryland on September 3, 1999. The Fund is a non-diversified
series of the Company. The affairs of the Company are managed by its Board of
Directors. The Board has delegated the day-to-day operations of the Fund to the
Adviser, which operates the Fund under the Board's general supervision.
The Company's Articles of Incorporation permit the Board to issue 100,000,000
shares of common stock. The Board has the power to designate one or more
separate and distinct series and/or classes of shares of common stock and to
classify or reclassify any unissued shares with respect to such series.
Currently, the Fund is the only series of shares being offered by the Company.
Shareholders are entitled to one vote per full share, to such distributions as
may be declared by the Company's Board of Directors out of funds legally
available, and upon liquidation, to participate ratably in the assets available
for distribution.
There are no conversion or sinking fund provisions applicable to the shares, and
shareholders have no preemptive rights and may not cumulate their votes in the
election of directors. The shares are redeemable and are fully transferable. All
shares issued and sold by the Fund will be fully paid and nonassessable.
Pursuant to Maryland law, under which the Company is incorporated, and the
Company's Bylaws, the Company is not required to hold an annual meeting of
shareholders unless required to do so under the Investment Company Act of 1940.
Accordingly, the Company will not hold annual shareholder meetings unless
required to do so under the 1940 Act. Shareholders do have the right to call a
16
<PAGE>
meeting of shareholders for the purpose of voting to remove directors. The
Company will call a meeting of shareholders for the purpose of voting upon the
question of removal of a director or directors when requested in writing to do
so by record holders of at least 10% of the Fund's outstanding common shares.
FINANCIAL STATEMENTS
The financial statements and report of independent accountants with respect to
the Company as at November 19, 1999 are attached hereto as part of this SAI.
17
<PAGE>
TAIT WELLER & BAKER
CERTIFIED PUBLIC ACCOUNTANTS
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
To the Shareholders and Board of Directors of
Meehan Mutual Funds, Inc.
Washington, DC
We have audited the accompanying statement of assets and liabilities of the
Meehan Focus Fund, (a series of the Meehan Mutual Funds, Inc.). This financial
statement is the responsibility ofthe Fund's management. Our responsibility is
to express an opinion on this financial statement based on our audit
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the statement of assets and liabilities is free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the statement of assets and
liabilities. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audit of the statement of
assets and liabilities provides a reasonable basis for our opinion.
In our opinion, the statement of assets and liabilities referred to above
presents fairly, in all material respects, the financial position of (he Meehan
Focus Fund as of November 19, 1999, in conformity with generally accepted
accounting principles.
/s/ Tait, Weller & Baker
------------------------
Tait, Weller & Baker
Philadelphia, Pennsylvania
November 19,1999
<PAGE>
MEEHAN FOCUS FUND
STATEMENT OF ASSETS AND LIABILITIES
November 19,1999
================================================================================
ASSETS
Cash $100,000
--------
LIABILITIES -
--------
NET ASSETS $100,000
========
Shares of $.0001 par value, capital stock outstanding,
100,000,000 authorized 8,333,333
=========
Net asset value, offering and redemption price per share 12.00
---------
At November 19, 1999 the components of net assets were as follows:
Paid-in capital $100,000
========
- ------------------------------------------------------------------------------
SEE NOTE TO STATEMENT OF ASSETS AND LIABILITIES
<PAGE>
MEEHAN FOCUS FUND
NOTE TO STATEMENT OF ASSETS AND LIABILJTIES
NOVEMBER 19, 1999
- -----------------
(1) ORGANIZATION
The Meehan Mutual Funds, Inc. (the "Fund"), is registered under the
Investment Company Act of 1940, as amended (the "1940 Act") as an open-end
management investment company and is authorized to issue shares of capital
stock. The Company currently offers shares of capital stock in one
portfolio, the Meehan Focus Fund.
The Company was organized on September 3, 1999, and between that date and
November 19, 1999, the Company had no operations other than those relating
to organizational matters and the registration of its shares under
applicable securities laws.
<PAGE>
PART C
OTHER INFORMATION
Item 23. Exhibits
(a) Articles of Incorporation(1)
(b) By-Laws(1)
(c) Instruments defining rights of Shareholders - see Articles Eighth and
Fourteenth of the Company's Articles of Incorporation and Articles II, VII
and XIV of the Company's By-Laws.
(d) Investment Advisory Contracts - (2)
(e) Underwriting Contracts - (2)
(f) Bonus or Profit Sharing Contracts -- none
(g) Custodian Agreements - (2)
(h) Other Material Contracts
(i) Operating Services Agreement - (2)
(ii) Investment Company Services Agreement - (2)
(i) Legal Opinion - filed herewith
(j) (i) Consent of independent accountants - filed herewith
(ii) Consent of Initial Director - filed herewith
(iii) Powers of Attorney - filed herewith
(k) Omitted Financial statements -- none
(l) Initial Capital Agreements - not applicable
(m) Rule 12b-1 Plan - (2)
(n) Financial Data Schedule -- not applicable
(o) Rule 18f-3 Plan -- none
(p) Code of Ethics - (2)
1 Incorporated by reference from Registrant's initial Registration Statement on
Form N-1A filed on September 7, 1999.
2 Filed by subsequent amendment.
Item 24. Persons Controlled by or Under Common Control With Registrant
-------------------------------------------------------------
There are no persons controlled by or under common control with the Fund.
Item 25. Indemnification
---------------
(a) GENERAL. The Articles of Incorporation (the "Articles") of the Corporation
provide that to the fullest extent permitted by Maryland and federal
statutory and decisional law, as amended or interpreted, no director or
officer of this Corporation shall be personally liable to the Corporation or
the holders of shares for money damages for breach of fiduciary duty as a
director and each director and officer shall be indemnified by the
Corporation; provided, however, that nothing herein shall be deemed to
protect any director or officer of the Corporation against any liability to
the Corporation or the holders of shares to which such director or officer
<PAGE>
would otherwise be subject by reason of breach of the director's or
officer's duty of loyalty to the Corporation or its stockholders, for acts
or omissions not in good faith or which involved intentional misconduct or a
knowing violation of law or for any transaction from which the director
derived any improper personal benefit.
The By-Laws of the Corporation, Article VI, provide that the Corporation
shall indemnify to the fullest extent required or permitted under Maryland
law or The Investment Company Act of 1940, as either may be amended from
time to time, any individual who is a director or officer of the Corporation
and who, by reason of his or her position was, is or is threatened to be
made a party to any threatened, pending or completed action, suit or
proceeding, whether civil, criminal, administrative or investigative
(hereinafter collectively referred to as a "Proceeding") against judgments,
penalties, fines, settlements and reasonable expenses actually incurred by
such director or officer in connection with such Proceeding, to the fullest
extent that such indemnification may be lawful under Maryland law or the
Investment Company Act of 1940.
(b) DISABLING CONDUCT. No director or officer shall be protected against any
liability to the Corporation or its shareholders if such director or officer
would be subject to such liability by reason of willful misfeasance, bad
faith, gross negligence or reckless disregard of the duties involved in the
conduct of his or her office (such conduct hereinafter referred to as
"Disabling Conduct").
Article 2-418 of the General Corporation Laws of Maryland provides that no
indemnification of a director or officer may be made unless: (1) there is a
final decision on the merits by a court or other body before whom the
Proceeding was brought that the director or officer to be indemnified was
not liable by reason of Disabling Conduct; or (2) in the absence of such a
decision, there is a reasonable determination, based upon a review of the
facts, that the director or officer to be indemnified was not liable by
reason of Disabling Conduct, which determination shall be made by: (i) the
vote of a majority of a quorum of directors who are neither "interested
persons" of the Corporation as defined in Section 2(a)(19) of the Investment
Company Act of 1940, nor parties to the Proceeding; or (ii) an independent
legal counsel in a written opinion.
(c) STANDARD OF CONDUCT. The Corporation may not indemnify any director if it is
proved that: (1) the act or omission of the director was material to the
cause of action adjudicated in the Proceeding and (i) was committed in bad
faith or (ii) was the result of active and deliberate dishonesty; or (2) the
director actually received an improper personal benefit; or (3) in the case
of a criminal proceeding, the director had reasonable cause to believe that
the act or omission was unlawful. No indemnification may be made under
Maryland law unless authorized for a specific proceeding after a
determination has been made, in accordance with Maryland law, that
indemnification is permissible in the circumstances because the requisite
standard of conduct has been met.
(d) REQUIRED INDEMNIFICATION. A director or officer who is successful, on the
merits or otherwise, in the defense of any Proceeding shall be indemnified
against reasonable expenses incurred by the director or officer in
connection with the Proceeding. In addition, under Maryland law, a court of
appropriate jurisdiction may order indemnification under certain
circumstances.
2
<PAGE>
(e) ADVANCE PAYMENT. The Corporation may pay any reasonable expenses so incurred
by any director or officer in defending a Proceeding in advance of the final
disposition thereof to the fullest extent permissible under Maryland law.
Such advance payment of expenses shall be made only upon the undertaking by
such director or officer to repay the advance unless it is ultimately
determined that such director or officer is entitled to indemnification, and
only if one of the following conditions is met: (1) the director or officer
to be indemnified provides a security for his undertaking; (2) the
Corporation shall be insured against losses arising by reason of any lawful
advances; or (3) there is a determination, based on a review of readily
available facts, that there is reason to believe that the director or
officer to be indemnified ultimately will be entitled to indemnification,
which determination shall be made by: (i) a majority of a quorum of
directors who are neither "interested persons" of the Corporation, as
defined in Section 2(a)(19) of the Investment Company Act of 1940, nor
parties to the Proceeding; or (ii) an independent legal counsel in a written
opinion.
(f) INSURANCE. To the fullest extent permitted by Maryland law and Section 17(h)
of the Investment Company Act of 1940, the Corporation may purchase and
maintain insurance on behalf of any officer or director of the Corporation,
against any liability asserted against him or her and incurred by him or her
in and arising out of his or her position, whether or not the Corporation
would have the power to indemnify him or her against such liability.
Item 26. Business and Other Connections of Investment Adviser
----------------------------------------------------
Mr. Meehan was a founding partner of Sherman, Meehan, Curtin & Ain, a
Washington, DC law firm. Mr. Meehan has served as President of his law firm
for many years, has served on the firm's Executive Committee since the firm's
inception and has been responsible for the financial management of the firm.
Mr. Meehan was a charter trustee of the firm's pension and profit sharing
plans and has served as the investment manager of these plans since their
inceptions in 1973.
Item 27. Principal Underwriter
---------------------
Declaration Distributors, Inc., 555 North Lane, Suite 6160, Conshohocken, PA
19428 ("DDI"), acts as principal underwriter for the Fund. DDI is a registered
broker-dealer, and offers underwriting services to a number of mutual funds
nationwide.
Pursuant to its agreement with the Fund, DDI offers shares of the Fund to the
public on a continuous basis. DDI is not obligated to sell any fixed number of
shares, but only to sell shares to fill orders as received by DDI.
Neither DDI nor any person affiliated with DDI is an affiliated person of the
Fund.
3
<PAGE>
Item 28. Location of Accounts and Records
--------------------------------
The books and records of the Fund, other than the accounting and transfer agency
(including dividend disbursing) records, are maintained by the Fund at Suite
600, 1900 M Street NW, Washington, DC 20036. The Fund's accounting and transfer
agency records are maintained at Declaration Service Company, 555 North Lane,
Suite 6160, Conshohocken, PA 19428.
Item 29. Management Services
-------------------
None.
Item 30. Undertakings
------------
The Registrant undertakes to file an amendment to the registration statement
with certified financial statements showing the initial capital received before
accepting subscriptions from more than 25 persons in the event the Fund chooses
to raise its initial capital under Section 14(a)(3) of the Investment Company
Act of 1940.
4
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, the Registrant has duly caused this Registration
Statement to be signed on its behalf by the undersigned, hereunto duly
authorized in Washington, DC on the 30th day of November, 1999.
MEEHAN MUTUAL FUNDS, INC.
*
- -----------------------
By: THOMAS P. MEEHAN
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:
MEEHAN MUTUAL FUNDS, INC.
NAME TITLE DATE
- --------------------------------------------------------------------------------
*_________________ President & November 30, 1999
THOMAS P. MEEHAN Director
*__________________ Treasurer November 30, 1999
TERENCE P. SMITH
* By: /s/ Robert J. Zutz
--------------------
Robert J. Zutz
Attorney-in-fact
<PAGE>
EXHIBIT INDEX
-------------
Item 23:
- -------
(a) Articles of Incorporation(1)
(b) By-Laws(1)
(c) Instruments defining rights of Shareholders - see Articles Eighth and
Fourteenth of the Company's Articles of Incorporation and Articles II, VII
and XIV of the Company's By-Laws.
(d) Investment Advisory Contracts - (2)
(e) Underwriting Contracts - (2)
(f) Bonus or Profit Sharing Contracts -- none
(g) Custodian Agreements - (2)
(h) Other Material Contracts
(i) Operating Services Agreement - (2)
(ii) Investment Company Services Agreement - (2)
(i) Legal Opinion - filed herewith
(j) (i) Consent of independent accountants - filed herewith
(ii) Consent of Initial Director - filed herewith
(iii) Powers of Attorney - filed herewith
(k) Omitted Financial statements -- none
(l) Initial Capital Agreements - not applicable
(m) Rule 12b-1 Plan - (2)
(n) Financial Data Schedule -- not applicable
(o) Rule 18f-3 Plan -- none
(p) Code of Ethics - (2)
1 Incorporated by reference from Registrant's initial Registration Statement on
Form N-1A filed on September 7, 1999.
2 Filed by subsequent amendment.
Kirkpatrick & Lockhart LLP
1800 Massachusetts Avenue, N.W.
Second Floor
Washington, D.C. 20036-1800
202-778-9000
www.kl.com
November 30, 1999
Meehan Mutual Funds, Inc.
1900 M Street, N.W.
Washington, DC 20036
Ladies and Gentlemen:
You have requested our opinion, as counsel to Meehan Mutual Funds, Inc.
(the "Company"), as to certain matters regarding the issuance of Shares of the
Company. As used in this letter, the term "Shares" means the shares of
beneficial interest of the Meehan Focus Fund, a series of the Company, during
the time this Pre-Effective Amendment No. 1 to the Company's Registration
Statement on Form N-1A ("PEA") is effective and has not been superseded by
another amendment.
As such counsel, we have examined certified or other copies, believed by
us to be genuine, of the Company's Articles of Incorporation and by-laws and
such resolutions and minutes of meetings of the Company's Board of Directors as
we have deemed relevant to our opinion, as set forth herein. Our opinion is
limited to the laws and facts in existence on the date hereof, and it is further
limited to the laws (other than the conflict of law rules) in the State of
Maryland that in our experience are normally applicable to the issuance of
shares by corporations and to the Securities Act of 1933 ("1933 Act"), the
Investment Company Act of 1940 ("1940 Act") and the regulations of the
Securities and Exchange Commission ("SEC") thereunder.
Based on present laws and facts, we are of the opinion that the issuance
of the Shares has been duly authorized by the Company and that, when sold in
accordance with the terms contemplated by the PEA, including receipt by the
Company of full payment for the Shares and compliance with the 1933 Act and the
1940 Act, the Shares will have been validly issued, fully paid and
non-assessable.
We hereby consent to this opinion accompanying the PEA when it is filed
with the SEC and to the reference to our firm in the PEA.
Very truly yours,
KIRKPATRICK & LOCKHART LLP
By /s/ Robert J. Zutz
------------------
Robert J. Zutz
CONSENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
We consent to the references to our firm in the Pre-Effective Amendment to the
Registration Statement on Form N-1A of the Meehan Mutual Funds, Inc. and to the
use of our report dated November 19, 1999 on the statement of assets and
liabilities of the Meehan Focus Fund ("Fund"). Such statement of assets and
liabilities appears in the Fund's Statement of Additional Information.
/s/ TAIT, WELLER & BAKER
------------------------
TAIT, WELLER & BAKER
Philadelphia, Pennsylvania
November 19, 1999
CONSENT OF INITIAL DIRECTOR
OF MEEHAN MUTUAL FUNDS, INC.
As the sole initial director of Meehan Mutual Funds, Inc. ("Company"),
Thomas P. Meehan hereby consents to the following action:
RESOLVED, That the following individuals be, and hereby are, elected as
directors of the Company, said election to be effective
immediately: John A. Cutler and Andrew B. Ferrentino.
Date: November 20, 1999 By: /s/ Thomas P. Meehan
-----------------------
Thomas P. Meehan
Director
POWER OF ATTORNEY
I, the undersigned Director and officer of the following investment
company (as set forth in the company's Registration Statement on Form N-1A):
MEEHAN MUTUAL FUNDS, INC.
hereby severally constitute and appoint Robert J. Zutz my true and lawful
attorney-in-fact, with full power of substitution, and with full power to sign
for me and in my name in the appropriate capacity, any Registration Statement on
Form N-1A, any and all Pre-Effective Amendments to said Registration Statement
of the Fund, any and all subsequent Post-Effective Amendments to said
Registration Statement, any and all supplements or other instruments in
connection therewith, to file the same with the Securities and Exchange
Commission and the securities regulators of appropriate states and territories,
and generally to do all such things in my name and behalf in connection
therewith as said attorney-in-fact deems necessary or appropriate, to comply
with the provisions of the Securities Act of 1933 and the Investment Company Act
of 1940, all related requirements of the Securities and Exchange Commission and
all requirements of appropriate states and territories. I hereby ratify and
confirm all that said attorney-in-fact or his or her substitutes may do or cause
to be done by virtue hereof.
WITNESS my hand as of the date set forth below.
SIGNATURE DATE
- --------- ----
/s/ Thomas P. Meehan November 20, 1999
- -----------------------
Thomas P. Meehan
<PAGE>
POWER OF ATTORNEY
I, the undersigned Director or officer of the following investment company
(as set forth in the company's Registration Statement on Form N-1A):
MEEHAN MUTUAL FUNDS, INC.
hereby severally constitute and appoint each of Thomas P. Meehan and Robert J.
Zutz my true and lawful attorney-in-fact, with full power of substitution, and
with full power to sign for me and in my name in the appropriate capacity, any
Registration Statement on Form N-1A, any and all Pre-Effective Amendments to
said Registration Statement of the Fund, any and all subsequent Post-Effective
Amendments to said Registration Statement, any and all supplements or other
instruments in connection therewith, to file the same with the Securities and
Exchange Commission and the securities regulators of appropriate states and
territories, and generally to do all such things in my name and behalf in
connection therewith as said attorney-in-fact deems necessary or appropriate, to
comply with the provisions of the Securities Act of 1933 and the Investment
Company Act of 1940, all related requirements of the Securities and Exchange
Commission and all requirements of appropriate states and territories. I hereby
ratify and confirm all that said attorney-in-fact or his or her substitutes may
do or cause to be done by virtue hereof.
WITNESS my hand as of the date set forth below.
SIGNATURE DATE
- --------- ----
/s/ John A. Cutler November 22, 1999
- --------------------------
John A. Cutler
/s/ Andrew B. Ferrentino November 22, 1999
- --------------------------
Andrew B. Ferrentino
/s/ Terence P. Smith November 22, 1999
- --------------------------
Terence P. Smith
