Filed with the Securities and Exchange Commission on February 23, 2000
1933 Act Registration File No. ___________
1940 Act File No. ____________
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 |X|
Pre-Effective Amendment No. |_|
Post-Effective Amendment No. |_|
and
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 |X|
Amendment No. |_|
ALLIED ASSET ADVISORS FUNDS
(Exact Name of Registrant as Specified in Charter)
745 McClintock Drive, Suite 114
Burr Ridge, IL 60521
(Address of Principal Executive Offices) (Zip Code)
Registrant's Telephone Number, including Area Code: (630) 789-9191
Copies of all communications to:
Elaine E. Richards, Esq.
Firstar Mutual Fund Services, LLC
615 East Michigan Street
2nd Floor
Milwaukee, WI 53202
Approximate Date of Proposed Public Offering: As soon as practical after the
effective date of this Registration Statement.
It is proposed that this filing will become effective (check appropriate box):
___ immediately upon filing pursuant to paragraph (b)
___ on ___________ pursuant to paragraph (b)
___ 60 days after filing pursuant to paragraph (a)(1)
___ on ____________ pursuant to paragraph (a)(1)
___ 75 days after filing pursuant to paragraph (a)(2)
___ on ____________ pursuant to paragraph (a)(2) of Rule 485.
The Registrant hereby amends this Registration Statement on such date or dates
as may be necessary to delay its effective date until the Registrant shall file
a further amendment which specifically states that this Registration Statement
shall thereafter become effective in accordance with Section 8(a) of the
Securities Act of 1933 or until the Registration Statement shall become
effective on such date as the Securities and Exchange Commission, acting
pursuant to said Section 8(a), may determine.
Title of securities being registered: Dow Jones Islamic Index Fund, Classes M
and K.
CLASS M
THE INFORMATION IN THIS PROSPECTUS IS NOT COMPLETE AND MAY BE CHANGED. WE MAY
NOT SELL THESE SECURITIES UNTIL THE REGISTRATION STATEMENT FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION IS EFFECTIVE. THIS PROSPECTUS IS NOT AN OFFER
TO SELL THESE SECURITIES AND IS NOT SOLICITING AN OFFER TO BUY THESE SECURITIES
IN ANY STATE WHERE THE OFFER OR SALE IS NOT PERMITTED.
DOW JONES(SM) ISLAMIC INDEX FUND
PROSPECTUS
__________, 2000
INVESTMENT ADVISOR
AAA
ALLIED ASSET ADVISORS, INC.
DOW JONES(SM) ISLAMIC INDEX FUND
PROSPECTUS
__________, 2000
The Dow Jones(SM) Islamic Index Fund (the "Fund") is the first series offered by
Allied Asset Advisors Funds. This prospectus pertains to the Class M share class
and contains pertinent information about investing in the Fund. Please read this
prospectus carefully before investing.
INVESTMENT ADVISOR
AAA
ALLIED ASSET ADVISORS, INC.
THE SECURITIES AND EXCHANGE COMMISSION HAS NOT APPROVED OR DISAPPROVED THESE
SECURITIES OR DETERMINED IF THIS PROSPECTUS IS TRUTHFUL OR COMPLETE. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
TABLE OF CONTENTS
RISK/RETURN SUMMARY............................................................2
PERFORMANCE SUMMARY............................................................3
FEES AND EXPENSES..............................................................3
MORE INFORMATION ABOUT THE DOW JONES ISLAMIC MARKET USA INDEX(SM)..............4
SHARI'AH SUPERVISORY BOARD.....................................................6
MANAGEMENT OF THE FUND.........................................................7
CALCULATING SHARE PRICE........................................................7
HOW TO PURCHASE SHARES.........................................................8
HOW TO SELL SHARES.............................................................9
DISTRIBUTIONS AND TAXES.......................................................11
SHAREHOLDER REPORTS AND CONFIRMATIONS.........................................11
FINANCIAL HIGHLIGHTS..........................................................11
RISK/RETURN SUMMARY
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WHAT IS THE INVESTMENT OBJECTIVE OF THE DOW JONES(SM) ISLAMIC INDEX FUND?
The Dow Jones Islamic Index Fund ("Fund") seeks to match the total return of the
DOW JONES ISLAMIC MARKET USA INDEX(SM) (the "INDEX").
WHAT ARE THE MAIN INVESTMENT STRATEGIES OF THE FUND?
To achieve its investment objective, the Fund invests in securities included in
the INDEX. The INDEX consists of U.S. common stocks that meet Islamic investment
principles. Islamic principles generally preclude investments in certain
industries (e.g., alcohol, pornography and casinos) and investments in interest
bearing debt obligations or businesses that derive a substantial amount of
impure interest income. Any uninvested cash will be held in non-interest bearing
deposits or invested in a manner following Islamic principles. Under normal
circumstances, the Fund plans to fully invest its assets in securities that are
included in the INDEX. There is no guarantee that the Fund will achieve the same
return as the INDEX.
Due to the large number of stocks in the INDEX, the Fund may, in its initial
stages, purchase a sub-group of equities from those contained in the INDEX that
the investment advisor believes will best track the Index. As the assets of the
Fund grow, the investment advisor anticipates the holdings of the Fund will
increase to include more of the components of the INDEX.
In order to track the INDEX as closely as possible, the Fund will invest
substantially all of its assets in roughly the same proportions as the stocks
are represented in the INDEX. As the Fund receives cash from new investors, or
processes redemption requests from shareholders, the Fund will purchase or sell
securities in an effort to attempt to approximate the return of the INDEX. Also,
the Fund's investments are reviewed and adjusted periodically to reflect any
adjustments in the INDEX, in an effort to tract the INDEX as closely as
possible.
The Fund normally sells portfolio securities in response to redemption requests
or to adjust the number of its shares to track the weighting or composition of
the INDEX. As a result, the Fund's portfolio turnover rate is expected to be
low. A low portfolio turnover rate usually results in low transaction costs and
provides tax efficiencies for shareholders.
WHAT ARE THE MAIN RISKS OF INVESTING IN THE FUND?
The main risks of investing in the Fund are listed below. Like any mutual fund,
you may lose money by investing in the Fund.
MARKET RISKS The return on and value of your investment in the Fund will
fluctuate in response to stock market movements. Stocks and other equity
securities are subject to market risks and fluctuations in value due to
earnings, economic conditions and other factors beyond the control of the Fund.
INDEX INVESTING RISKS Unlike other non-index mutual funds, the Fund will not buy
and sell securities based upon economic, financial and market analysis and
investment judgment. Instead, the Fund will invest using an indexed-based
investment approach, which seeks to approximate the investment performance of
the INDEX. You should not expect to achieve the potential greater results of
some actively managed funds that aggressively seek growth or attempt to limit
losses in a market decline. The Fund's initial strategy of investing in a
representative sample of the INDEX may result in some deviation between the
Fund's performance and the INDEX. The Fund's return is likely to be lower than
that of the INDEX because the Fund incurs brokerage commissions, transaction
fees and other expenses that the INDEX does not. Although the INDEX consists of
stocks from many different economic sectors, it is comprised primarily of
companies with larger market capitalizations. There is a risk that returns from
larger capitalization stocks will trail those of other asset classes or the
overall stock market.
ISLAMIC SHARI'AH INVESTMENT RISKS It is possible that the restrictions placed on
investments may result in the Fund not performing as well as mutual funds with
similar investment objectives but not subject to the Islamic Shari'ah
restrictions.
PERFORMANCE SUMMARY
- --------------------------------------------------------------------------------
There is no performance information available for the Fund at this time because
the Fund has no operating history.
FEES AND EXPENSES
- --------------------------------------------------------------------------------
This table describes the fees and expenses that you may pay if you buy and hold
shares of the Fund.
SHAREHOLDER FEES
(FEES PAID DIRECTLY FROM YOUR INVESTMENT) CLASS M Maximum sales charge (load)
imposed on purchases(1) None Maximum deferred sales charge (load) None Maximum
sales charge (load) imposed on reinvested dividends None Exchange fee None
Redemption fee None Maximum account fee(2) None
ANNUAL FUND OPERATING EXPENSES
(EXPENSES THAT ARE DEDUCTED FROM FUND ASSETS) CLASS M
Management Fees 0.75%
Distribution (12b-1) Fees 0.75%
Other Expenses(3) 0.87%
Shareholder Servicing Fee 0.25%
Other Operating Expenses 0.62%
Total Annual Fund Operating Expenses 2.37%
------------
Less Expense Reimbursement -0.72%
Net Annual Fund Operating Expenses(4) 1.65%
============
(1) Although no sales loads or transaction fees are charged, you will be
assessed fees for outgoing wire transfers and returned checks.
(2) IRA accounts are assessed a $12.50 annual fee.
(3) The percentage for "Other Expenses" totaling 0.87% is comprised of two parts
(1) an annual shareholder servicing fee of 0.25% of average daily net assets,
and (2) administration fees, transfer agency fees and all other ordinary
operating expenses of the fund estimated for the initial fiscal year at 0.62% of
average daily net assets.
(4) The Fund has an Investment Advisory and Management Agreement with the Allied
Asset Advisors, Inc., the investment advisor for the Fund, dated __________,
2000. The Agreement provides that the annual management fee shall be 0.75% of
the first $500 million in assets, 0.65% of the next $5 billion in assets and
0.50% on the amount of assets over $5.5 billion. The investment advisor has also
entered into an Expense Waiver and Reimbursement Contract dated _________, 2000
with the Fund under which the investment advisor has agreed to waive its fees
and absorb expenses to the extent that total annual fund operating expenses
exceed 1.65% for Class M shares. The Contract is in effect for one year and
expires ________, 2000.
EXAMPLE
This example is intended to help you compare the cost of investing in the Fund
with the cost of investing in other mutual funds. It assumes that you invest
$10,000 in a Fund for the time periods indicated and then redeem all of your
shares at the end of those periods. The example also assumes that your
investment has a 5% return each year, your dividends and distributions have been
reinvested, and that the Fund's operating expenses remain the same. Although
your actual cost may be higher or lower, based on these assumptions (including
one year of capped expenses in each period) your costs would be:
1 YEAR 3 YEARS
$168 $651
MORE INFORMATION ABOUT THE DOW JONES ISLAMIC MARKET USA INDEX(SM)
- --------------------------------------------------------------------------------
WHAT IS THE DOW JONES ISLAMIC MARKET USA INDEX(SM)?
The INDEX is a diverse compilation of U.S. equity securities considered by the
Shari'ah Supervisory Board of Dow Jones to be in compliance with Islamic
principles. The INDEX is constructed from the 2,700 stocks in the Dow Jones
Global Indexes (DJGI) family. Dow Jones believes that these stocks are
accessible to investors and are well traded. The DJGI methodology removes issues
that are not suitable for global investing. The INDEX includes the most liquid
U.S. securities meeting the Shari'ah investment criteria in the market, and
reflects the industry breakdown of the U.S. market.
Certain businesses are incompatible with Shari'ah Laws. Thus, stocks of
companies whose primary business is in areas not suitable for Islamic investment
purposes are excluded from the INDEX. Excluded businesses include: alcohol, pork
related products, conventional financial services (banking, insurance, etc.),
entertainment (casinos/gambling, cinema, pornography, music, hotels, etc.),
tobacco and defense.
The filters exclude companies if:
1. Total debt divided by total assets is equal to or greater than 33%. (Note:
total debt = short term debt + current portion of long-term debt + long-term
debt).
2. Accounts receivables divided by total assets is equal to or greater than 47%.
(Note: accounts receivables = current receivables + long-term receivables).
3. Non-operating interest income divided by operating income is equal to or
greater than 9%.
Companies that pass these screens are included in the INDEX'S investable
universe from which INDEX components are selected. The steps taken to select the
components of the INDEX are as follows:
1. Rank companies both by market cap and by the daily average dollar turnover
for the preceding quarter.
2. Sort stocks into their industry groups by country.
3. Select companies making up 95% of the market capitalization of each industry
group in each country and aggregate them into a Selection List.
4. Sort the selection list based on the combination score (from step 1) in
descending order.
5. Select the top 600 companies with highest market cap. (An additional 50
companies are chosen as potential replacements of components lost to
non-compliance.)
6. Select all U.S. companies from the above 600 global companies (currently 226
companies).
As of [DATE] the U.S. companies whose issues comprised the INDEX had an average
market capitalization of $___ billion dollars (U.S.) and a median market
capitalization of $__ billion (U.S.). Securities are selected for the INDEX so
as to represent the most liquid securities meeting the Shari'ah investment
criteria in the market, and to reflect the industry breakdown of the U.S.
market. Additional factors considered when applying the process described above
include relative size and turnover, economic weightings, and the relative health
of the companies.
Dow Jones' Shari'ah Supervisory Board has approved the above criteria and any
changes in the Shari'ah Supervisory Board or the selection criteria are at the
sole discretion of Dow Jones. Changes by Dow Jones in the selection criteria or
the composition of the INDEX will be reflected in the composition of the Fund in
a reasonable period of time.
HOW HAS THE INDEX PERFORMED?
The following table shows the performance of the INDEX for the past four years
ended December 31, 1999 compared to other indexes. PLEASE NOTE THAT THE
PERFORMANCE SHOWN IS NOT THE PERFORMANCE OF THE FUND AND IS NOT INTENDED TO
PREDICT OR SUGGEST THE RETURN THAT MIGHT BE EXPERIENCED IF YOU INVEST IN THE
FUND. The Fund will seek to track the INDEX as closely as possible, but the
performance of the Fund will be less than the performance of the INDEX because
the Fund is subject to operational and transaction costs, while the INDEX is
not.
<TABLE>
<CAPTION>
Average Annual
Benchmark Return for the Calendar Years Total Return *
- -------------------------- ------------ ------------ ------------ ----------------- ---------------------------
1999 1998 1997 1996
- -------------------------- ------------ ------------ ------------ ----------------- ---------------------------
<S> <C> <C> <C> <C> <C>
DJIM US 21.68% 34.14% 30.16% 23.03% 27.25%
S&P 500 19.53% 26.67% 31.01% 20.26% 24.22%
Russell 2000 19.62% -3.45% 20.52% 14.76% 12.40%
- -------------------------- ------------ ------------ ------------ ----------------- ---------------------------
</TABLE>
* RETURN FROM 12/31/95 TO 12/31/99.
The base date for the INDEX is December 31, 1995 and the base value is set at
1000. The INDEX is reviewed quarterly, with component changes implemented on the
third Friday of March, June, September and December. This frequency assures that
the INDEX reflects the latest trends and developments in the stock market and
the companies' adherence to Islamic principles.
The INDEX is capitalization-weighted. It is calculated in real time, posted and
disseminated every 5 seconds to major market-data vendors. Calculation of the
index is based on Laspeyres' formula. It does not include reinvested dividends.
"Dow Jones" and "Dow Jones Islamic Market Index(SM)" are service marks of Dow
Jones & Company, Inc. and have been licensed for use by Allied Asset Advisors,
Inc. in connection with the Fund. The Fund is not sponsored, endorsed, sold or
promoted by Dow Jones, and Dow Jones makes no representation regarding the
advisability of investing in the Fund. Dow Jones does not consider the needs of
the Fund or its shareholders in determining, composing or calculating the index
or have any obligation to do so. See the Statement of Additional Information for
more information about Dow Jones.
SHARI'AH SUPERVISORY BOARD
- --------------------------------------------------------------------------------
The INDEX is reviewed quarterly and annually by the Shari'ah Supervisory Board
and by Dow Jones for consideration of exclusion or inclusion of components. In
addition, the INDEX is reviewed on an on-going basis to contemplate changes as a
result of extraordinary events (e.g., de-listing, bankruptcy, merger,
takeover,). The Shari'ah Board is not affiliated with the Fund or the investment
advisor and does not serve as a consultant to or otherwise have any relationship
with the Fund or the investment advisor. The Shari'ah Board does not consider
the objectives or needs of the Fund or its shareholders in determining,
composing or calculating the INDEX. At the Fund's inception, the Shari'ah
Supervisory Board consisted of the following individuals:
<TABLE>
<CAPTION>
- -------------------------------------------------- -------------------------------------------------------------------
SHARI'AH SUPERVISORY BOARD MEMBER BIOGRAPHY
- COUNTRY
- -------------------------------------------------- -------------------------------------------------------------------
<S> <C>
SHAYKH DR. ABDUL SATTAR ABU GHUDDAH Dr. Abu Ghuddah is a senior Shari`ah Advisor to Albaraka
- SYRIA Investment Co. of Saudi Arabia. He holds a PhD in Islamic Law.
Dr. Abu Ghuddah has published many books on Islamic Financial
transactions. He was an advisor for Islamic Law Encyclopaedia
(Kuwait Awqaf Ministry). Dr. Abu Ghuddah is a member and
chairman of several reputed Islamic Shari`ah Boards.
- -------------------------------------------------- -------------------------------------------------------------------
SHAYKH JUSTICE MUHAMMAD TAQI USMANI Mr. Usmani has been a member of the Supreme Court of Pakistan
- PAKISTAN since 1982. He is also the vice president of Darul Uloom Karachi
and the vice chair and deputy chairman of the Islamic Fiqh
Academy (OIC), Jeddah. Mr. Usmani edits the monthly magazines
Albalagh and Albalagh International. He is a chairman or member
of the Shari`ah supervisory boards of a dozen Islamic banks and
financial institutions worldwide.
- -------------------------------------------------- -------------------------------------------------------------------
SHAYKH NIZAM YAQUBY Mr. Yaquby is a member of the Islamic supervisory boards for
- BAHRAIN several Islamic institutions, including the Arab Islamic Bank and
the Abu Dhabi Islamic Bank. His work has appeared in the
following publications: Risalah Fi al-Tawbah, Qurrat al-'Ainayn
fi Fada il Birr al-Walidayn, Irshad al-'Uqala'ila Hukun al-Qira'h
min al-Mushaf fi al-Salah, Tahqia al-Amal fi Ikhraj Zakat al-Fitr
bi al-Mal.
- -------------------------------------------------- -------------------------------------------------------------------
SHAYKH DR. MOHAMED A. ELGARI Dr. Elgari is an associate professor of Islamic Economics and the
- SAUDI ARABIA director of the Center for Research in Islamic Economics at King
Abdulaziz University in Saudi Arabia. He is an expert at the
Islamic Jurisprudence Academy (OIC), Jeddah. Dr. Elgari is the
editor of the Review of Islamic Economics. He is also an advisor
to several Islamic financial institutions worldwide and the
author of many books on Islamic banking.
- -------------------------------------------------- -------------------------------------------------------------------
SHAYKH YUSUF TALAL DELORENZO Mr. DeLorenzo is considered a leading Islamic scholar in the
- UNITED STATES United States. He has translated over twenty books from Arabic,
Persian, and Urdu for publication in English and has been commissioned to
prepare a new translation of the Qur`an. Mr. DeLorenzo compiled the first
English translation of legal rulings issued by Shari`ah
supervisory boards on the operations of Islamic banks. He is also a Shari`ah
consultant to several Islamic financial institutions and was an advisor on
Islamic education to the government of Pakistan.
- -------------------------------------------------- -------------------------------------------------------------------
</TABLE>
MANAGEMENT OF THE FUND
- --------------------------------------------------------------------------------
INVESTMENT ADVISOR
The Fund's investment advisor is Allied Asset Advisors, Inc. (AAA) located at
745 McClintock Drive, Suite 114, Burr Ridge, Illinois 60521. Subject to the
general supervision of the Fund's Board of Trustees, AAA is responsible for the
day-to-day investment decisions of the Fund in accordance with the Fund's
investment objective and policies. In exchange for these services, AAA receives
an annual management fee, which is calculated daily and paid monthly, according
to the average daily net assets of the Fund.
The Investment Advisory and Management Agreement between the Fund and AAA
provides that the annual management fee for the investment advisor will be 0.75%
on the first $500 million in assets, 0.65% on the next $5 billion in assets and
0.50% on the amount of assets over $5.5 billion. However, AAA has entered into
an Expense Waiver and Reimbursement Contract with the Fund whereby it has agreed
to waive its fees and absorb expenses to the extent that the Fund's total annual
operating expenses for Class M shares exceed 1.65% of net assets. The Expense
Waiver and Reimbursement Contract expires on ________, 2000. AAA has no other
assets under management besides the Fund.
CUSTODIAN, TRANSFER AGENT, DIVIDEND DISBURSING AGENT AND FUND ACCOUNTANT
Firstar Bank, N.A. serves as custodian for the Fund's cash and securities.
Firstar Mutual Fund Services, LLC provides administrative, transfer agent,
dividend disbursing, and fund accounting services to the Fund.
DISTRIBUTOR
___________, Inc., serves as principal underwriter for the Fund and as such, is
the exclusive agent for the distribution of shares of the Fund. Class M shares
have a 12b-1 plan, under which a distribution fee of 0.75% is deducted from Fund
assets each year. Over time these fees will increase the cost of your investment
and may cost more than paying other types of sales charges.
CALCULATING SHARE PRICE
- --------------------------------------------------------------------------------
Shares of the Fund are sold at their net asset value (NAV). The NAV for all
shares of the Fund is determined as of the close of regular trading on the New
York Stock Exchange (NYSE) (normally 4:00 p.m., Eastern time) on every business
day. The NAV for Class M shares of the Fund is calculated by dividing the sum of
the value of the securities held plus cash or other assets minus all liabilities
by the total number of Class M shares outstanding of the Fund.
The Fund's investments are valued according to market value. When a market quote
is not readily available, the security's value is based on "fair value" as
determined by the investment advisor under supervision of the Fund's Board of
Trustees.
If you place a good order (see "How to Purchase Shares") that is delivered to
the Fund before the close of the regular trading session of the NYSE on any
business day, your order will receive the share price determined for the Fund as
of that day. If your order is received after the close of the regular trading
session of the NYSE, it will receive the price determined on the next business
day.
HOW TO PURCHASE SHARES
- --------------------------------------------------------------------------------
To open an account, you must invest at least the minimum amount.
MINIMUM INVESTMENTS TO OPEN TO ADD TO
YOUR ACCOUNT YOUR ACCOUNT
Regular accounts $500 $50
IRA accounts $250 $50
GOOD ORDER PURCHASE REQUESTS
When making a purchase request, make sure your request is in good order.
"Good order" means your purchase request includes:
o the NAME of the Fund
o the DOLLAR amount of shares to be purchased
o account application form or investment stub
o check payable to the "Dow Jones Islamic Index Fund"
<TABLE>
<CAPTION>
METHODS OF BUYING
<S> <C>
THROUGH A You can purchase shares of the Fund through any broker-dealer organization that has a sales
BROKER/DEALER agreement with the Fund's distributor. The broker-dealer organization is responsible for
ORGANIZATION sending your purchase order to the Fund. Please keep in mind that your broker-dealer may
charge additional fees for its services.
BY MAIL To open an account, complete an account application form and send it together with your
check to the address below. To make additional investments once you have opened your
account, send your check together with the detachable form that's included with your Fund
account statement or confirmation. You may also send a letter stating the amount of your
investment with your name, the name of the Fund and your account number together with a
check to the address below. Checks should be made payable to "Dow Jones Islamic Index
Fund." No third party checks will be accepted. If your check is returned for any reason,
a $25 fee will be assessed against your account.
REGULAR MAIL OVERNIGHT DELIVERY
Dow Jones Islamic Index Fund Dow Jones Islamic Index Fund
c/o Firstar Mutual Fund Services, LLC c/o Firstar Mutual Fund Services, LLC
P.O. Box 701 615 E. Michigan Street, Third Floor
Milwaukee, Wisconsin 53201-0701 Milwaukee, Wisconsin 53202
NOTE: The Fund does not consider the U.S. Postal Service or other independent delivery
services to be its agents. Therefore, when you deposit your account application form,
additional purchase request, or redemption request in the mail or use other delivery
services, or if your documents are simply in the transfer agent's post office box, that
does not mean that the transfer agent or the Fund actually RECEIVED those documents.
BY TELEPHONE To make additional investments by telephone, you must check the appropriate box on your account
application form authorizing telephone purchases. If you have given authorization for telephone
transactions and your account has been open for at least 15 days, call the Fund toll free at
1-800-__________ and you will be allowed to move money from your bank account to your Fund account upon
request. Only bank accounts held at U.S. institutions that are Automated Clearing House (ACH) members
may be used for telephone transactions. For security reasons, requests by telephone will be recorded.
BY WIRE To open an account or to make additional investments by wire, call 1-800-______ to notify the
Fund of the incoming wire using the wiring instructions below:
Firstar Bank, N.A.
Milwaukee, WI 53202
ABA #: 075000022
Credit: Firstar Mutual Fund Services, LLC
Account #: 112-952-137
Further Credit: Dow Jones Islamic Index Fund, Class M
(your name or the title on the account)
(your account #)
THROUGH AN Once your account has been opened, you may purchase shares of the Fund through an Automatic
AUTOMATIC Investment Plan ("AIP"). You can have money automatically transferred from your checking
INVESTMENT or savings account on a weekly, bi-weekly, monthly, bi-monthly or quarterly basis. To be
PLAN eligible for this plan, your bank must be a U.S. institution that is an ACH member. The
Fund may modify or terminate the AIP at any time. The first AIP purchase will take place no earlier
than 15 days after the Transfer Agent has received your request.
</TABLE>
HOW TO SELL SHARES
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
METHODS OF SELLING
<S> <C>
THROUGH A If you purchased your shares through a broker-dealer or other financial organization, your
BROKER/DEALER redemption order may be placed through the same organization. The organization is responsible
ORGANIZATION for sending your redemption order to the Fund on a timely basis. Please keep in mind
that your broker-dealer may charge additional fees for its services.
BY MAIL Send your written redemption request to the address below. Your request should contain the
Fund's name, your account number and the dollar amount or the number of shares to be redeemed.
Be sure to have all shareholders sign the letter. Additional documents are required for certain
types of shareholders, such as corporations, partnerships, executors, trustees, administrators,
or guardians (i.e., corporate resolutions, or trust documents indicating proper authorization).
Please see the Statement of Additional Information for more information.
REGULAR MAIL OVERNIGHT DELIVERY
Dow Jones Islamic Index Fund Dow Jones Islamic Index Fund
c/o Firstar Mutual Fund Services, LLC c/o Firstar Mutual Fund Services, LLC
P.O. Box 701 615 E. Michigan Street, Third Floor
Milwaukee, Wisconsin 53201-0701 Milwaukee, Wisconsin 53202
The Fund's transfer agent may require a SIGNATURE GUARANTEE for certain redemption requests such
as redemption requests from IRA accounts, or redemption requests made payable to a person or an
address not on record with the Fund. A signature guarantee assures that your signature is
genuine and protects you from unauthorized account redemptions. You may obtain signature
guarantees from most trust companies, commercial banks or other eligible guarantor
institutions. A NOTARY PUBLIC CANNOT GUARANTEE SIGNATURES.
BY TELEPHONE If you are authorized to perform telephone transactions (either through your account application form
or by subsequent arrangement in writing with the Fund) you may redeem shares in any amount, but not less
than $100, by calling 1-800_________. A signature guarantee is required of all shareholders to change or
add telephone redemption privileges. For security reasons, requests by telephone will be recorded.
BY WIRE To redeem shares by wire, call the Fund at 1-800-________ and specify the amount of money you wish to
be wired. Your bank may charge a fee to receive wired funds. The transfer agent charges a $12 outgoing wire fee.
BY WRITING A CHECK On your account application form, you may select the option to receive a checkbook so that you can
redeem shares by writing checks against your Fund account. Checks may be made payable in the amount of $250
or more. Any checks drawn on a joint account will only require one signature. There is a $25 charge for
stopping payment of a check upon your request, or if the transfer agent cannot honor a check due to
insufficient funds or other valid reason. There will be a charge of $5 for issuing each checkbook.
THROUGH A If you own shares with a value of $10,000 or more, you may participate in the systematic
SYSTEMATIC withdrawal plan. The systematic withdrawal plan allows you to make automatic withdrawals from
WITHDRAWAL PLAN your Fund account at regular intervals. Money will be transferred from your Fund account to the
checking or savings account you choose on your account application form. If you expect to purchase additional
shares of the Fund, it may not be to your advantage to participate in the systematic withdrawal plan because
of the possible adverse tax consequences of making contemporaneous purchases and redemptions.
</TABLE>
WHEN REDEMPTION PROCEEDS ARE SENT TO YOU
Your shares will be redeemed at the NAV next determined after the Fund receives
your redemption request in good order. Your redemption request cannot be
processed on days the NYSE is closed.
When making a redemption request, make sure your request is in good order. "Good
order" means your letter of instruction includes:
o the NAME of the Fund
o the DOLLAR AMOUNT or the NUMBER of shares to be redeemed
o SIGNATURES of all registered shareholders exactly as the shares are registered
o the ACCOUNT number
All requests received in good order by the Fund before the close of the regular
trading session of the NYSE (normally 4:00 p.m. Eastern time) will usually be
wired to the bank you indicate or mailed on the following day to the address of
record. In no event will proceeds be wired or a check mailed more than 7
calendar days after the Fund receives your redemption request. If you purchase
shares using a check and soon after request a redemption, the Fund will honor
the redemption request, but will not mail or wire the proceeds until your
purchase check has cleared (usually within 12 days).
REDEMPTION IN-KIND
If the amount you are redeeming is over the lesser of $250,000 or 1% of the
Fund's net asset value, the Fund has the right to redeem your shares by giving
you the amount that exceeds $250,000 or 1% of the Fund's net asset value in
securities instead of cash.
ACCOUNTS WITH LOW BALANCES
Due to the high cost of maintaining accounts with low balances, the Fund may
mail you a notice if your account falls below $500 ($250 for IRA accounts)
requesting that you bring the account back up to $500 or close it out. If you do
not respond to the request within 30 days, the Fund may close the account on
your behalf and send you the proceeds.
DISTRIBUTIONS AND TAXES
- --------------------------------------------------------------------------------
The Fund will distribute substantially all of the net investment income and net
capital gains that it has realized in the sale of securities. These income and
gains distributions will generally be paid once each year, on or before December
31. Distributions will automatically be reinvested in additional shares of the
Fund, unless you elect to have the distributions paid to you in cash. If you
choose to have distribution checks mailed to you and either the U.S. Postal
service is unable to deliver the check to you or the check remains outstanding
for at least 6 months, the Fund reserves the right to reinvest the check at the
then current net asset value until you notify us with different instructions.
In general, Fund distributions are taxable to you as either ordinary income or
capital gains. This is true whether you reinvest your distributions in
additional Fund shares or receive them in cash. Any long-term capital gains the
Fund distributes are taxable to you as long-term capital gains no matter how
long you have owned your shares. If the Fund distributes realized gains soon
after you purchase shares, a portion of your investment may be treated as a
taxable distribution.
If you do not provide your social security or taxpayer identification number, or
if the IRS instructs the Fund to do so, the Fund must withhold 31% of your
taxable distributions and proceeds by law.
When you sell your shares of the Fund, you may have a capital gain or loss. The
individual tax rate on any gain from the sale of your shares depends on your
marginal tax rate and on how long you have held your shares.
Fund distributions and gains from the sale of your shares generally will be
subject to state and local income tax. Non-U.S. investors may be subject to
U.S. withholding and estate tax. You should consult your tax advisor about the
federal, state, local or foreign tax consequences of your investment in the
Fund.
SHAREHOLDER REPORTS AND CONFIRMATIONS
- --------------------------------------------------------------------------------
As a shareholder, you will be provided annual and semi-annual reports showing
the Fund's portfolio investments and financial information. You will also
receive confirmations of your purchases into, and redemptions out of, the Fund.
Account statements will be mailed to you on an annual basis.
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
The Fund has not commenced operations to date, therefore no financial highlights
are available for the Fund.
INVESTMENT ADVISOR
AAA
ALLIED ASSET ADVISORS, INC.
BURR RIDGE, ILLINOIS
DISTRIBUTOR
________________, INC.
__________ , _________
INDEPENDENT AUDITORS
_____________ LLP
___________ , _____________
LEGAL COUNSEL
VEDDER, PRICE, KAUFMAN, & KAMMHOLZ
CHICAGO, ILLINOIS
ADMINISTRATOR, TRANSFER AGENT,
AND FUND ACCOUNTANT
FIRSTAR MUTUAL FUND SERVICES, LLC
MILWAUKEE, WISCONSIN
CUSTODIAN
FIRSTAR BANK, N.A.
CINCINNATI, OHIO
WHERE TO FIND MORE INFORMATION:
You can find more information about the Fund in the following documents:
STATEMENT OF ADDITIONAL INFORMATION (SAI) DATED __________, 2000
The SAI for Class M of the Fund provides more details about the Fund's policies
and management. The Fund's SAI is incorporated by reference into this
Prospectus.
ANNUAL AND SEMI-ANNUAL REPORTS
After the Fund has been operating for the appropriate time, annual and
semi-annual reports will be made available. The Fund's annual and semi-annual
reports provide the most recent financial reports and portfolio listings. The
annual report contains a discussion of the market conditions and investment
climate that affected the Fund's performance during the last fiscal year.
You can obtain a free copy of these documents or request other information about
the Fund by calling the Fund at 1-__________ or by writing to:
DOW JONES ISLAMIC INDEX FUND
C/O FIRSTAR MUTUAL FUND SERVICES, LLC
P.O. BOX 701
MILWAUKEE, WI 53201-0701
You may write to the Securities and Exchange Commission (SEC) Public Reference
Room at the regular mailing address or the e-mail address below and ask them to
mail you information about the Fund, including the SAI. They will charge you a
fee for this duplicating service. You can also visit the SEC Public Reference
Room and copy documents while you are there. For more information about the
operation of the Public Reference Room, call the SEC at the telephone number
below.
PUBLIC REFERENCE SECTION
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549-0102
[email protected]
1-202-942-8090
Reports and other information about the Fund are available on the EDGAR Database
on the SEC's Internet site at HTTP://WWW.SEC.GOV.
1940 Act File No. 811-________
CLASS K
THE INFORMATION IN THIS PROSPECTUS IS NOT COMPLETE AND MAY BE CHANGED. WE MAY
NOT SELL THESE SECURITIES UNTIL THE REGISTRATION STATEMENT FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION IS EFFECTIVE. THIS PROSPECTUS IS NOT AN OFFER
TO SELL THESE SECURITIES AND IS NOT SOLICITING AN OFFER TO BUY THESE SECURITIES
IN ANY STATE WHERE THE OFFER OR SALE IS NOT PERMITTED.
DOW JONES(SM) ISLAMIC INDEX FUND
PROSPECTUS
__________, 2000
INVESTMENT ADVISOR
AAA
ALLIED ASSET ADVISORS, INC.
DOW JONES(SM) ISLAMIC INDEX FUND
PROSPECTUS
__________, 2000
The Dow Jones(SM) Islamic Index Fund (the "Fund") is the first series offered by
Allied Asset Advisors Funds. This prospectus pertains to the Class K share class
and contains pertinent information about investing in the Fund. Class K shares
are not subject to any sales charges or 12b-1 fees. Please read this prospectus
carefully before investing.
INVESTMENT ADVISOR
AAA
ALLIED ASSET ADVISORS, INC.
THE SECURITIES AND EXCHANGE COMMISSION HAS NOT APPROVED OR DISAPPROVED THESE
SECURITIES OR DETERMINED IF THIS PROSPECTUS IS TRUTHFUL OR COMPLETE. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
TABLE OF CONTENTS
RISK/RETURN SUMMARY............................................................2
PERFORMANCE SUMMARY............................................................3
FEES AND EXPENSES..............................................................3
MORE INFORMATION ABOUT THE DOW JONES ISLAMIC MARKET USA INDEX(SM)..............4
SHARI'AH SUPERVISORY BOARD.....................................................6
MANAGEMENT OF THE FUND.........................................................7
CALCULATING SHARE PRICE........................................................7
HOW TO PURCHASE SHARES.........................................................8
HOW TO SELL SHARES.............................................................9
DISTRIBUTIONS AND TAXES.......................................................11
SHAREHOLDER REPORTS AND CONFIRMATIONS.........................................11
FINANCIAL HIGHLIGHTS..........................................................11
RISK/RETURN SUMMARY
- --------------------------------------------------------------------------------
WHAT IS THE INVESTMENT OBJECTIVE OF THE DOW Jones(SM) ISLAMIC INDEX FUND?
The Dow Jones Islamic Index Fund ("Fund") seeks to match the total return of the
DOW JONES ISLAMIC MARKET USA INDEX(SM) (the "INDEX").
WHAT ARE THE MAIN INVESTMENT STRATEGIES OF THE FUND?
To achieve its investment objective, the Fund invests in securities included in
the INDEX. The INDEX consists of U.S. common stocks that meet Islamic investment
principles. Islamic principles generally preclude investments in certain
industries (e.g., alcohol, pornography and casinos) and investments in interest
bearing debt obligations or businesses that derive a substantial amount of
impure interest income. Any uninvested cash will be held in non-interest bearing
deposits or invested in a manner following Islamic principles. Under normal
circumstances, the Fund plans to fully invest its assets in securities that are
included in the INDEX. There is no guarantee that the Fund will achieve the same
return as the INDEX.
Due to the large number of stocks in the INDEX, the Fund may, in its initial
stages, purchase a sub-group of equities from those contained in the INDEX that
the investment advisor believes will best track the INDEX. As the assets of the
Fund grow, the investment advisor anticipates the holdings of the Fund will
increase to include more of the components of the INDEX.
In order to track the INDEX as closely as possible, the Fund will invest
substantially all of its assets in roughly the same proportions as the stocks
are represented in the INDEX. As the Fund receives cash from new investors, or
processes redemption requests from shareholders, the Fund will purchase or sell
securities in an effort to attempt to approximate the return of the INDEX. Also,
the Fund's investments are reviewed and adjusted periodically to reflect any
adjustments in the INDEX, in an effort to tract the INDEX as closely as
possible.
The Fund normally sells portfolio securities in response to respond to
redemption requests or to adjust the number of its shares to track the weighting
or composition of the INDEX. As a result, the Fund's portfolio turnover rate is
expected to be low. A low portfolio turnover rate usually results in low
transaction costs and provides tax efficiencies for shareholders.
WHAT ARE THE MAIN RISKS OF INVESTING IN THE FUND?
The main risks of investing in the Fund are listed below. Like any mutual fund,
you may lose money by investing in the Fund.
MARKET RISKS The return on and value of your investment in the Fund will
fluctuate in response to stock market movements. Stocks and other equity
securities are subject to market risks and fluctuations in value due to
earnings, economic conditions and other factors beyond the control of the Fund.
INDEX INVESTING RISKS Unlike other non-index mutual funds, the Fund will not buy
and sell securities based upon economic, financial and market analysis and
investment judgment. Instead, the Fund will invest using an indexed-based
investment approach, which seeks to approximate the investment performance of
the INDEX. You should not expect to achieve the potential greater results of
some actively managed funds that aggressively seek growth or attempt to limit
losses in a market decline. The Fund's initial strategy of investing in a
representative sample of the INDEX may result in some deviation between the
Fund's performance and the INDEX. The Fund's return is likely to be lower than
that of the INDEX because the Fund incurs brokerage commissions, transaction
fees and other expenses that the INDEX does not. Although the INDEX consists of
stocks from many different economic sectors, it is comprised primarily of
companies with larger market capitalizations. There is a risk that returns from
larger capitalization stocks will trail those of other asset classes or the
overall stock market.
ISLAMIC SHARI'AH INVESTMENT RISKS It is possible that the restrictions placed on
investments may result in the Fund not performing as well as mutual funds with
similar investment objectives but not subject to the Islamic Shari'ah
restrictions.
PERFORMANCE SUMMARY
- --------------------------------------------------------------------------------
There is no performance information available for the Fund at this time because
the Fund has no operating history.
FEES AND EXPENSES
- --------------------------------------------------------------------------------
This table describes the fees and expenses that you may pay if you buy and hold
shares of the Fund.
SHAREHOLDER FEES
(FEES PAID DIRECTLY FROM YOUR INVESTMENT) CLASS K Maximum sales charge (load)
imposed on purchases(1) None Maximum deferred sales charge (load) None Maximum
sales charge (load) imposed on reinvested dividends None Exchange fee None
Redemption fee None Maximum account fee(2) None
ANNUAL FUND OPERATING EXPENSES
(EXPENSES THAT ARE DEDUCTED FROM FUND ASSETS) CLASS K
Management Fees 0.75%
Distribution (12b-1) Fees None
Other Expenses 0.62%
Total Annual Fund Operating Expenses 1.37%
------------
Less Expense Reimbursement -0.47%
Net Annual Fund Operating Expenses(3) 0.90%
============
(1) Although no sales loads or transaction fees are charged, you will be
assessed fees for outgoing wire transfers and returned checks.
(2) IRA accounts are assessed a $12.50 annual fee.
(3) The Fund has an Investment Advisory and Management Agreement with the Allied
Asset Advisors, Inc., the investment advisor for the Fund, dated __________,
2000. The Agreement provides that the annual management fee shall be 0.75% of
the first $500 million in assets 0.65% of the next $5 billion in assets and
0.50% on the amount of assets over $5.5 billion. The investment advisor has a
also entered into an Expense Waiver and Reimbursement Contract dated _________,
2000 with the Fund under which the investment advisor has agreed to waive its
fees and absorb expenses to the extent that total annual fund operating expenses
exceed 0.90% for Class K shares. The Contract is in effect for one year and
expires ________, 2000.
EXAMPLE
This example is intended to help you compare the cost of investing in the Fund
with the cost of investing in other mutual funds. It assumes that you invest
$10,000 in a Fund for the time periods indicated and then redeem all of your
shares at the end of those periods. The example also assumes that your
investment has a 5% return each year, your dividends and distributions have been
reinvested, and that the Fund's operating expenses remain the same. Although
your actual cost may be higher or lower, based on these assumptions (including
one year of capped expenses in each period) your costs would be:
1 YEAR 3 YEARS
$92 $365
MORE INFORMATION ABOUT THE DOW JONES ISLAMIC MARKET USA INDEX(SM)
- --------------------------------------------------------------------------------
WHAT IS THE DOW JONES ISLAMIC MARKET USA INDEX(SM)?
The INDEX is a diverse compilation of U.S. equity securities considered by the
Shari'ah Supervisory Board of Dow Jones to be in compliance with Islamic
principles. The INDEX is constructed from the 2,700 stocks in the Dow Jones
Global Indexes (DJGI) family. Dow Jones believes that these stocks are
accessible to investors and are well traded. The DJGI methodology removes issues
that are not suitable for global investing. The INDEX includes the most liquid
U.S. securities meeting the Shari'ah investment criteria in the market, and
reflects the industry breakdown of the U.S. market.
Certain businesses are incompatible with Shari'ah Laws. Thus, stocks of
companies whose primary business is in areas not suitable for Islamic investment
purposes are excluded from the INDEX. Excluded businesses include: alcohol, pork
related products, conventional financial services (banking, insurance, etc.),
entertainment (casinos/gambling, cinema, pornography, music, hotels, etc.),
tobacco and defense.
The filters exclude companies if:
1. Total debt divided by total assets is equal to or greater than 33%. (Note:
total debt = short term debt + current portion of long-term debt + long-term
debt).
2. Accounts receivables divided by total assets is equal to or greater than 47%.
(Note: accounts receivables = current receivables + long-term receivables).
3. Non-operating interest income divided by operating income is equal to or
greater than 9%.
Companies that pass these screens are included in the INDEX'S investable
universe from which INDEX components are selected. The steps taken to select the
components of the INDEX are as follows:
1. Rank companies both by market cap and by the daily average dollar turnover
for the preceding quarter.
2. Sort stocks into their industry groups by country.
3. Select companies making up 95% of the market capitalization of each industry
group in each country and aggregate them into a Selection List.
4. Sort the selection list based on the combination score (from step 1) in
descending order.
5. Select the top 600 companies with highest market cap. (An additional 50
companies are chosen as potential replacements of components lost to
non-compliance.)
6. Select all U.S. companies from the above 600 global companies (currently 226
companies).
As of [DATE], the U.S. companies whose issues comprised the INDEX had an average
market capitalization of $___ billion dollars (U.S.) and a median market
capitalization of $__ billion (U.S.). Securities are selected for the INDEX so
as to represent the most liquid securities meeting the Shari'ah investment
criteria in the market, and to reflect the industry breakdown of the U.S.
market. Additional factors considered when applying the process described above
include relative size and turnover, economic weightings, and the relative health
of the companies.
Dow Jones' Shari'ah Supervisory Board has approved the above criteria and any
changes in the Shari'ah Supervisory Board or the selection criteria are at the
sole discretion of Dow Jones. Changes by Dow Jones in the selection criteria or
the composition of the INDEX will be reflected in the composition of the Fund in
a reasonable period of time.
HOW HAS THE INDEX PERFORMED?
The following table shows the performance of the INDEX for the past four years
ended December 31, 1999 compared to other indexes. PLEASE NOTE THAT THE
PERFORMANCE SHOWN IS NOT THE PERFORMANCE OF THE FUND AND IS NOT INTENDED TO
PREDICT OR SUGGEST THE RETURN THAT MIGHT BE EXPERIENCED IF YOU INVEST IN THE
FUND. The Fund will seek to track the INDEX as closely as possible, but the
performance of the Fund will be less than the performance of the INDEX because
the Fund is subject to operational and transaction costs, while the INDEX is
not.
<TABLE>
<CAPTION>
Average Annual
Benchmark Return for the Calendar Years Total Return *
- -------------------------- ------------ ------------ ------------ ----------------- ---------------------------
1999 1998 1997 1996
- -------------------------- ------------ ------------ ------------ ----------------- ---------------------------
<S> <C> <C> <C> <C> <C>
DJIM US 21.68% 34.14% 30.16% 23.03% 27.25%
S&P 500 19.53% 26.67% 31.01% 20.26% 24.22%
Russell 2000 19.62% -3.45% 20.52% 14.76% 12.40%
- -------------------------- ------------ ------------ ------------ ----------------- ---------------------------
</TABLE>
* RETURN FROM 12/31/95 TO 12/31/99
The base date for the INDEX is December 31, 1995 and the base value is set at
1000. The INDEX is reviewed quarterly, with component changes implemented on the
third Friday of March, June, September and December. This frequency assures that
the INDEX reflects the latest trends and developments in the stock market and
the companies' adherence to Islamic principles.
The INDEX is capitalization-weighted. It is calculated in real time, posted and
disseminated every 5 seconds to major market-data vendors. Calculation of the
index is based on Laspeyres' formula. It does not include reinvested dividends.
"Dow Jones" and "Dow Jones Islamic Market Index(SM)" are service marks of Dow
Jones & Company, Inc. and have been licensed for use by Allied Asset Advisors,
Inc. in connection with the Fund. The Fund is not sponsored, endorsed, sold or
promoted by Dow Jones, and Dow Jones makes no representation regarding the
advisability of investing in the Fund. Dow Jones does not consider the needs of
the Fund or its shareholders in determining, composing or calculating the index
or have any obligation to do so. See the Statement of Additional Information for
more information about Dow Jones.
SHARI'AH SUPERVISORY BOARD
- --------------------------------------------------------------------------------
The INDEX is reviewed quarterly and annually by the Shari'ah Supervisory Board
and by Dow Jones for consideration of exclusion or inclusion of components. In
addition, the INDEX is reviewed on an on-going basis to contemplate changes as a
result of extraordinary events (e.g., de-listing, bankruptcy, merger,
takeover,). The Shari'ah Board is not affiliated with the Fund or the investment
advisor and does not serve as a consultant to or otherwise have any relationship
with the Fund or the investment advisor. The Shari'ah Board does not consider
the objectives or needs of the Fund or its shareholders in determining,
composing or calculating the INDEX. At the Fund's inception, the Shari'ah
Supervisory Board consisted of the following individuals:
<TABLE>
<CAPTION>
- -------------------------------------------------- -------------------------------------------------------------------
SHARI'AH SUPERVISORY BOARD MEMBER BIOGRAPHY
- COUNTRY
- -------------------------------------------------- -------------------------------------------------------------------
<S> <C>
SHAYKH DR. ABDUL SATTAR ABU GHUDDAH Dr. Abu Ghuddah is a senior Shari`ah Advisor to Albaraka
- SYRIA Investment Co. of Saudi Arabia. He holds a PhD in Islamic Law.
Dr. Abu Ghuddah has published many books on Islamic Financial
transactions. He was an advisor for Islamic Law Encyclopaedia
(Kuwait Awqaf Ministry). Dr. Abu Ghuddah is a member and
chairman of several reputed Islamic Shari`ah Boards.
- -------------------------------------------------- -------------------------------------------------------------------
SHAYKH JUSTICE MUHAMMAD TAQI USMANI Mr. Usmani has been a member of the Supreme Court of Pakistan
- PAKISTAN since 1982. He is also the vice president of Darul Uloom Karachi
and the vice chair and deputy chairman of the Islamic Fiqh
Academy (OIC), Jeddah. Mr. Usmani edits the monthly magazines
Albalagh and Albalagh International. He is a chairman or member
of the Shari`ah supervisory boards of a dozen Islamic banks and
financial institutions worldwide.
- -------------------------------------------------- -------------------------------------------------------------------
SHAYKH NIZAM YAQUBY Mr. Yaquby is a member of the Islamic supervisory boards for
- BAHRAIN several Islamic institutions, including the Arab Islamic Bank and
the Abu Dhabi Islamic Bank. His work has appeared in the
following publications: Risalah Fi al-Tawbah, Qurrat al-'Ainayn
fi Fada il Birr al-Walidayn, Irshad al-'Uqala'ila Hukun al-Qira'h
min al-Mushaf fi al-Salah, Tahqia al-Amal fi Ikhraj Zakat al-Fitr
bi al-Mal.
- -------------------------------------------------- -------------------------------------------------------------------
SHAYKH DR. MOHAMED A. ELGARI Dr. Elgari is an associate professor of Islamic Economics and the
- SAUDI ARABIA director of the Center for Research in Islamic Economics at King
Abdulaziz University in Saudi Arabia. He is an expert at the
Islamic Jurisprudence Academy (OIC), Jeddah. Dr. Elgari is the
editor of the Review of Islamic Economics. He is also an advisor
to several Islamic financial institutions worldwide and the
author of many books on Islamic banking.
- -------------------------------------------------- -------------------------------------------------------------------
SHAYKH YUSUF TALAL DELORENZO Mr. DeLorenzo is considered a leading Islamic scholar in the
- UNITED STATES United States. He has translated over twenty books from Arabic,
Persian, and Urdu for publication in English and has been commissioned to
prepare a new translation of the Qur`an. Mr. DeLorenzo
compiled the first English translation of legal rulings issued by Shari`ah
supervisory boards on the operations of Islamic banks. He is also a Shari`ah
consultant to several Islamic financial institutions and
was an advisor on Islamic education to the government of Pakistan.
- -------------------------------------------------- -------------------------------------------------------------------
</TABLE>
MANAGEMENT OF THE FUND
- --------------------------------------------------------------------------------
INVESTMENT ADVISOR
The Fund's investment advisor is Allied Asset Advisors, Inc. (AAA) located at
745 McClintock Drive, Suite 114, Burr Ridge, Illinois 60521. Subject to the
general supervision of the Fund's Board of Trustees, AAA is responsible for the
day-to-day investment decisions of the Fund in accordance with the Fund's
investment objective and policies. In exchange for these services, AAA receives
an annual management fee, which is calculated daily and paid monthly, according
to the average daily net assets of the Fund.
The Investment Advisory and Management Agreement between the Fund and AAA
provides that the annual management fee for the investment advisor will be 0.75%
on the first $500 million in assets, 0.65% on the next $5 billion in assets and
0.50% on the amount of assets over $5.5 billion. However, AAA has entered into
an Expense Waiver and Reimbursement Contract with the Fund whereby it has agreed
to waive its fees and absorb expenses to the extent that the Fund's total annual
operating expenses for Class K shares exceed 0.90% of net assets. The Expense
Waiver and Reimbursement Contract expires on ________, 2000. AAA has no other
assets under management besides the Fund.
CUSTODIAN, TRANSFER AGENT, DIVIDEND DISBURSING AGENT AND FUND ACCOUNTANT
Firstar Bank, N.A. serves as custodian for the Fund's cash and securities.
Firstar Mutual Fund Services, LLC provides administrative, transfer agent,
dividend disbursing, and fund accounting services to the Fund.
DISTRIBUTOR
___________, Inc., serves as principal underwriter for the Fund and as such, is
the exclusive agent for the distribution of shares of the Fund.
CALCULATING SHARE PRICE
- --------------------------------------------------------------------------------
Shares of the Fund are sold at their net asset value (NAV). The NAV for all
shares of the Fund is determined as of the close of regular trading on the New
York Stock Exchange (NYSE) (normally 4:00 p.m., Eastern time) on every business
day. The NAV for Class K shares of the Fund is calculated by dividing the sum of
the value of the securities held plus cash or other assets minus all liabilities
by the total number of Class K shares outstanding of the Fund.
The Fund's investments are valued according to market value. When a market quote
is not readily available, the security's value is based on "fair value" as
determined by the investment advisor under supervision of the Fund's Board of
Trustees.
If you place a good order (see "How to Purchase Shares") that is delivered to
the Fund before the close of the regular trading session of the NYSE on any
business day, your order will receive the share price determined for the Fund as
of that day. If your order is received after the close of the regular trading
session of the NYSE, it will receive the price determined on the next business
day.
HOW TO PURCHASE SHARES
- --------------------------------------------------------------------------------
To open an account, you must invest at least the minimum amount.
MINIMUM INVESTMENTS TO OPEN TO ADD TO
YOUR ACCOUNT YOUR ACCOUNT
Regular accounts $500 $50
IRA accounts $250 $50
GOOD ORDER PURCHASE REQUESTS
When making a purchase request, make sure your request is in good order.
"Good order" means your purchase request includes:
o the NAME of the Fund
o the DOLLAR amount of shares to be purchased
o account application form or investment stub
o check payable to the "Dow Jones Islamic Index Fund"
METHODS OF BUYING
<TABLE>
<S> <C>
THROUGH A You can purchase shares of the Fund through any broker-dealer organization that has a sales
BROKER/DEALER agreement with the Fund's distributor. The broker-dealer organization is responsible for
ORGANIZATION sending your purchase order to the Fund. Please keep in mind that your broker-dealer may charge
additional fees for its services.
BY MAIL To open an account, complete an account application form and send it together with your
check to the address below. To make additional investments once you have opened your
account, send your check together with the detachable form that's included with your Fund
account statement or confirmation. You may also send a letter stating the amount of your
investment with your name, the name of the Fund and your account number together with a
check to the address below. Checks should be made payable to "Dow Jones Islamic Index
Fund." No third party checks will be accepted. If your check is returned for any reason,
a $25 fee will be assessed against your account.
REGULAR MAIL OVERNIGHT DELIVERY
Dow Jones Islamic Index Fund Dow Jones Islamic Index Fund
c/o Firstar Mutual Fund Services, LLC c/o Firstar Mutual Fund Services, LLC
P.O. Box 701 615 E. Michigan Street, Third Floor
Milwaukee, Wisconsin 53201-0701 Milwaukee, Wisconsin 53202
NOTE: The Fund does not consider the U.S. Postal Service or other independent delivery
services to be its agents. Therefore, when you deposit your account application form,
additional purchase request, or redemption request in the mail or use other delivery
services, or if your documents are simply in the transfer agent's post office box, that
does not mean that the transfer agent or the Fund actually RECEIVED those documents.
BY TELEPHONE To make additional investments by telephone, you must check the appropriate box on your account
application form authorizing telephone purchases. If you have given authorization for telephone
transactions and your account has been open for at least 15 days, call the Fund toll free at
1-800-__________ and you will be allowed to move money from your bank account to your Fund account upon
request. Only bank accounts held at U.S. institutions that are Automated Clearing House (ACH) members may
be used for telephone transactions. For security reasons, requests by telephone will be recorded.
BY WIRE To open an account or to make additional investments by wire, call 1-800-______ to notify the
Fund of the incoming wire using the wiring instructions below:
Firstar Bank, N.A.
Milwaukee, WI 53202
ABA #: 075000022
Credit: Firstar Mutual Fund Services, LLC
Account #: 112-952-137
Further Credit: Dow Jones Islamic Index Fund, Class K
(your name or the title on the account)
(your account #)
THROUGH AN Once your account has been opened, you may purchase shares of the Fund through an Automatic
AUTOMATIC Investment Plan ("AIP"). You can have money automatically transferred from your checking
INVESTMENT or savings account on a weekly, bi-weekly, monthly, bi-monthly or quarterly basis. To be
PLAN eligible for this plan, your bank must be a U.S. institution that is an ACH member. The
Fund may modify or terminate the AIP at any time. The first AIP purchase will take place no earlier than
15 days after the Transfer Agent has received your request.
</TABLE>
HOW TO SELL SHARES
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
METHODS OF SELLING
<S> <C>
THROUGH A If you purchased your shares through a broker-dealer or other financial organization, your
BROKER/DEALER redemption order may be placed through the same organization. The organization is responsible
ORGANIZATION for sending your redemption order to the Fund on a timely basis. Please keep in mind that your
broker-dealer may charge additional fees for its services.
BY MAIL Send your written redemption request to the address below. Your request should contain the
Fund's name, your account number and the dollar amount or the number of shares to be redeemed.
Be sure to have all shareholders sign the letter. Additional documents are required for certain
types of shareholders, such as corporations, partnerships, executors, trustees, administrators,
or guardians (i.e., corporate resolutions, or trust documents indicating proper authorization).
Please see the Statement of Additional Information for more information.
REGULAR MAIL OVERNIGHT DELIVERY
Dow Jones Islamic Index Fund Dow Jones Islamic Index Fund
c/o Firstar Mutual Fund Services, LLC c/o Firstar Mutual Fund Services, LLC
P.O. Box 701 615 E. Michigan Street, Third Floor
Milwaukee, Wisconsin 53201-0701 Milwaukee, Wisconsin 53202
The Fund's transfer agent may require a SIGNATURE GUARANTEE for certain redemption requests such
as redemption requests from IRA accounts, or redemption requests made payable to a person or an
address not on record with the Fund. A signature guarantee assures that your signature is
genuine and protects you from unauthorized account redemptions. You may obtain signature
guarantees from most trust companies, commercial banks or other eligible guarantor
institutions. A NOTARY PUBLIC CANNOT GUARANTEE SIGNATURES.
BY TELEPHONE If you are authorized to perform telephone transactions (either through your account application form
or by subsequent arrangement in writing with the Fund) you may redeem shares in any amount, but not less
than $100, by calling 1-800_________. A signature guarantee is required of all shareholders to change or add
telephone redemption privileges. For security reasons, requests by telephone will be recorded.
BY WIRE To redeem shares by wire, call the Fund at 1-800-________ and specify the amount of money you wish to
be wired. Your bank may charge a fee to receive wired funds. The transfer agent charges a $12 outgoing wire fee.
BY WRITING A CHECK On your account application form, you may select the option to receive a checkbook so that you can
redeem shares by writing checks against your Fund account. Checks may be made payable in the amount of $250
or more. Any checks drawn on a joint account will only require one signature. There is a $25 charge for
stopping payment of a check upon your request, or if the transfer agent cannot honor a check due to
insufficient funds or other valid reason. There will be a charge of $5 for issuing each checkbook.
THROUGH A If you own shares with a value of $10,000 or more, you may participate in the systematic
SYSTEMATIC withdrawal plan. The systematic withdrawal plan allows you to make automatic withdrawals from
WITHDRAWAL PLAN your Fund account at regular intervals. Money will be transferred from your Fund account to the
checking or savings account you choose on your account application form. If you expect to purchase additional
shares of the Fund, it may not be to your advantage to participate in the systematic withdrawal plan because
of the possible adverse tax consequences of making contemporaneous purchases and redemptions.
</TABLE>
WHEN REDEMPTION PROCEEDS ARE SENT TO YOU
Your shares will be redeemed at the NAV next determined after the Fund receives
your redemption request in good order. Your redemption request cannot be
processed on days the NYSE is closed.
When making a redemption request, make sure your request is in good order. "Good
order" means your letter of instruction includes:
o the NAME of the Fund
o the DOLLAR AMOUNT or the NUMBER of shares to be redeemed
o SIGNATURES of all registered shareholders exactly as the shares are registered
o the ACCOUNT number
All requests received in good order by the Fund before the close of the regular
trading session of the NYSE (normally 4:00 p.m. Eastern time) will normally be
wired to the bank you indicate or mailed on the following day to the address of
record. In no event will proceeds be wired or a check mailed more than 7
calendar days after the Fund receives your redemption request. If you purchase
shares using a check and soon after request a redemption, the Fund will honor
the redemption request, but will not mail or wire the proceeds until your
purchase check has cleared (usually within 12 days).
REDEMPTION IN-KIND
If the amount you are redeeming is over the lesser of $250,000 or 1% of the
Fund's net asset value, the Fund has the right to redeem your shares by giving
you the amount that exceeds $250,000 or 1% of the Fund's net asset value in
securities instead of cash.
ACCOUNTS WITH LOW BALANCES
Due to the high cost of maintaining accounts with low balances, the Fund may
mail you a notice if your account falls below $500 ($250 for IRA accounts)
requesting that you bring the account back up to $500 or close it out. If you do
not respond to the request within 30 days, the Fund may close the account on
your behalf and send you the proceeds.
DISTRIBUTIONS AND TAXES
- --------------------------------------------------------------------------------
The Fund will distribute substantially all of the net investment income and net
capital gains that it has realized in the sale of securities. These income and
gains distributions will generally be paid once each year, on or before December
31. Distributions will automatically be reinvested in additional shares of the
Fund, unless you elect to have the distributions paid to you in cash. If you
choose to have distribution checks mailed to you and either the U.S. Postal
service is unable to deliver the check to you or the check remains outstanding
for at least 6 months, the Fund reserves the right to reinvest the check at the
then current net asset value until you notify us with different instructions.
In general, Fund distributions are taxable to you as either ordinary income or
capital gains. This is true whether you reinvest your distributions in
additional Fund shares or receive them in cash. Any long-term capital gains the
Fund distributes are taxable to you as long-term capital gains no matter how
long you have owned your shares. If the Fund distributes realized gains soon
after you purchase shares, a portion of your investment may be treated as a
taxable distribution.
If you do not provide your correct social security or taxpayer identification
number, or if the IRS instructs the Fund to do so, the Fund must withhold 31% of
your taxable distributions and proceeds by law.
When you sell your shares of the Fund, you may have a capital gain or loss. The
individual tax rate on any gain from the sale of your shares depends on your
marginal tax rate and on how long you have held your shares.
Fund distributions and gains from the sale of your shares generally will be
subject to state and local income tax. Non-U.S. investors may be subject to
U.S. withholding and estate tax. You should consult your tax advisor about the
federal, state, local or foreign tax consequences of your investment in the
Fund.
SHAREHOLDER REPORTS AND CONFIRMATIONS
- --------------------------------------------------------------------------------
As a shareholder, you will be provided annual and semi-annual reports showing
the Fund's portfolio investments and financial information. You will also
receive confirmations of your purchases into, and redemptions out of, the Fund.
Account statements will be mailed to you on an annual basis.
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
The Fund has not commenced operations to date, therefore no financial highlights
are available for the Fund.
INVESTMENT ADVISOR
AAA
ALLIED ASSET ADVISORS, INC.
BURR RIDGE, ILLINOIS
DISTRIBUTOR
________________, INC.
_____________ ,____________
INDEPENDENT AUDITORS
_____________ LLP
___________ , _____________
LEGAL COUNSEL
VEDDER, PRICE, KAUFMAN, & KAMMHOLZ
CHICAGO, ILLINOIS
ADMINISTRATOR, TRANSFER AGENT,
AND FUND ACCOUNTANT
FIRSTAR MUTUAL FUND SERVICES, LLC
MILWAUKEE, WISCONSIN
CUSTODIAN
FIRSTAR BANK, N.A.
CINCINNATI, OHIO
WHERE TO FIND MORE INFORMATION:
You can find more information about the Fund in the following documents:
STATEMENT OF ADDITIONAL INFORMATION (SAI) DATED __________, 2000
The SAI for Class K of the Fund provides more details about the Fund's policies
and management. The Fund's SAI is incorporated by reference into this
Prospectus.
ANNUAL AND SEMI-ANNUAL REPORTS
After the Fund has been operating for the appropriate time, annual and
semi-annual reports will be made available. The Fund's annual and semi-annual
reports provide the most recent financial reports and portfolio listings. The
annual report contains a discussion of the market conditions and investment
climate that affected the Fund's performance during the last fiscal year.
You can obtain a free copy of these documents or request other information about
the Fund by calling the Fund at 1-__________ or by writing to:
DOW JONES ISLAMIC INDEX FUND
C/O FIRSTAR MUTUAL FUND SERVICES, LLC
P.O. BOX 701
MILWAUKEE, WI 53201-0701
You may write to the Securities and Exchange Commission (SEC) Public Reference
Room at the regular mailing address or the e-mail address below and ask them to
mail you information about the Fund, including the SAI. They will charge you a
fee for this duplicating service. You can also visit the SEC Public Reference
Room and copy documents while you are there. For more information about the
operation of the Public Reference Room, call the SEC at the telephone number
below.
PUBLIC REFERENCE SECTION
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549-0102
[email protected]
1-202-942-8090
Reports and other information about the Fund are available on the EDGAR Database
on the SEC's Internet site at HTTP://WWW.SEC.GOV.
1940 Act File No. 811-________
CLASS M
THE INFORMATION IN THIS STATEMENT OF ADDITIONAL INFORMATION IS NOT COMPLETE AND
MAY BE CHANGED. WE MAY NOT SELL THESE SECURITIES UNTIL THE REGISTRATION
STATEMENT FILED WITH THE SECURITIES AND EXCHANGE COMMISSION IS EFFECTIVE. THIS
STATEMENT OF ADDITIONAL INFORMATION IS NOT AN OFFER TO SELL THESE SECURITIES AND
IS NOT SOLICITING AN OFFER TO BUY THESE SECURITIES IN ANY STATE WHERE THE OFFER
OR SALE IS NOT PERMITTED.
DOW JONES(SM) ISLAMIC INDEX FUND
A SERIES OF ALLIED ASSET ADVISORS FUNDS
STATEMENT OF ADDITIONAL INFORMATION
__________, 2000
INVESTMENT ADVISOR
AAA
ALLIED ASSET ADVISORS, INC.
745 MCCLINTOCK DRIVE, SUITE 114
BURR RIDGE, IL 60521
(630) 789-9191
This Statement of Additional Information relates to the Dow Jones(SM) Islamic
Index Fund, which is the first mutual fund within the Allied Asset Advisors
Funds family. The SAI is not a prospectus but should be read in conjunction with
the Fund's current Prospectus dated __________, 2000. To obtain the Prospectus,
please visit the Fund's web-site, call 1-800-________ or write to the Fund as
shown below:
REGULAR MAIL OVERNIGHT OR EXPRESS MAIL
Dow Jones Islamic Index Fund Dow Jones Islamic Index Fund
c/o Firstar Mutual Fund Services, LLC c/o Firstar Mutual Fund Services, LLC
P.O. Box 701 615 East Michigan Street, 3rd Floor
Milwaukee, WI 53201-0701 Milwaukee, WI 53202
TABLE OF CONTENTS
INVESTMENT RESTRICTIONS........................................................3
INVESTMENT OBJECTIVE AND STRATEGIES............................................4
MORE ABOUT DOW JONES(SM).......................................................5
THE TRUST......................................................................5
MANAGEMENT OF THE FUND.........................................................7
INVESTMENT ADVISOR.............................................................7
CODE OF ETHICS.................................................................8
ADMINISTRATIVE SERVICES........................................................8
DISTRIBUTOR....................................................................8
DISTRIBUTION AND SHAREHOLDER SERVICING PLAN....................................8
PRICING OF SHARES..............................................................9
PURCHASING SHARES.............................................................10
REDEMPTION OF SHARES..........................................................10
BROKERAGE ALLOCATION AND OTHER PRACTICES......................................11
ADDITIONAL INFORMATION ON DISTRIBUTIONS AND TAXES.............................12
PERFORMANCE INFORMATION.......................................................13
AUDITORS......................................................................14
COUNSEL.......................................................................14
FINANCIAL HIGHLIGHTS..........................................................14
INVESTMENT RESTRICTIONS
- --------------------------------------------------------------------------------
FUNDAMENTAL RESTRICTIONS
The Fund has adopted the following fundamental investment policies and
restrictions that cannot be changed without the approval of a "majority of the
outstanding voting securities" of the Fund. Under the 1940 Act, a "majority of
the outstanding voting securities" of a fund means the vote of:
(1) more than 50% of the outstanding voting securities of the fund; or
(2) 67% or more of the voting securities of the fund present at a meeting,
if the holders of more than 50% of the outstanding voting securities are
present or represented by proxy, whichever is less.
The Fund may not:
1. Make loans except as permitted under the 1940 Act, as amended, and as
interpreted or modified by regulatory authority having jurisdiction, from
time to time.
2. Borrow money, except as permitted under the 1940 Act, as amended, and as
interpreted or modified by regulatory authority having jurisdiction, from
time to time.
3. Concentrate its investments in a particular industry, as that term is used
in the 1940 Act, as amended, and as interpreted or modified by regulatory
authority having jurisdiction, from time to time.
4. Purchase or sell real estate, which term does not include securities of
companies which deal in real estate and or mortgages or investments secured
by real estate, or interests therein, except that the Fund reserves freedom
of action to hold and to sell real estate acquired as a result of the
Fund's ownership of securities.
5. Engage in the business of underwriting securities, except to the extent
that the Fund may be deemed to be an underwriter in connection with the
disposition of portfolio securities.
6. Issue senior securities, except as permitted under the 1940 Act, as
amended, and as interpreted or modified by regulatory authority having
jurisdiction, from time to time.
7. Purchase physical commodities or contracts relating to physical
commodities.
NON-FUNDAMENTAL RESTRICTIONS
As a matter of non-fundamental policy, the Fund currently does not intend to :
1. Borrow money in an amount greater than 5% of its total assets, except for
temporary or emergency purposes;
2. Purchase securities on margin or make short sales , except (i) short sales
against the box, (ii) for margin deposits in connection with futures
contracts, options or other permitted investments, (iii) that transactions
in futures contracts and options shall not be deemed to constitute selling
securities short, and (iv) that the Fund may obtain such short-term credits
as may be necessary for the clearance of securities transactions;
3. Enter into futures contracts or purchase options thereon unless immediately
after the purchase, the value of the aggregate initial margin with respect
to such futures contracts does entered into on behalf of the Fund and the
premiums paid for such options on futures contracts does not exceed 5% of
the fair market value of the Fund's total assets; provided that in the case
of an option that is in-the-money at the time of purchase, the in-the-money
amount may be excluded in computing the 5% limit; and
4. Invest more than 15% of its net assets in illiquid securities.
INVESTMENT OBJECTIVE AND STRATEGIES
- --------------------------------------------------------------------------------
The Fund seeks to match the total return of the Dow Jones Islamic Market USA
Index(SM) (the "INDEX"), a diversified compilation of equity securities
considered by Dow Jones' Shari'ah Supervisory Board to be in compliance with
Islamic Shari'ah principles. Because the Fund is a diversified Fund, there is a
possibility that the Fund may be unable to track the composition of the INDEX if
the INDEX becomes non-diversified.
The following discussion supplements the information regarding the investment
objective of the Fund and the policies to be employed to achieve this objective
as set forth above and in the Fund's Prospectus.
WHEN-ISSUED AND DELAYED DELIVERY TRANSACTIONS. The Fund may purchase securities
on a when-issued or delayed delivery basis. These transactions are arrangements
in which a fund purchases securities with payment and delivery scheduled for a
future time. The seller's failure to complete these transactions may cause a
fund to miss a price or yield considered advantageous. Settlement dates may be a
month or more after entering into these transactions and the market values of
the securities purchased may vary from the purchase prices. The Fund may dispose
of a commitment prior to settlement if the investment advisor deems it
appropriate to do so. In addition, the Fund may enter into transactions to sell
its purchase commitments to third parties at current market values and
simultaneously acquire other commitments to purchase similar securities at later
dates. The Fund may realize short-term profits or losses upon the sale of such
commitments. These transactions are made to secure what is considered to be an
advantageous price or yield for the Fund. No fees or other expenses, other than
normal transaction costs, are incurred. However, liquid assets of the Fund
sufficient to make payment for the securities to be purchased are segregated on
the Fund's records at the trade date. These assets are marked to market daily
and are maintained until the transaction is settled.
RESTRICTED SECURITIES. Securities that have legal or contractual restrictions on
their resale may be acquired by the Fund. The price paid for these securities,
or received upon resale, may be lower than the price paid or received for
similar securities with a more liquid market. Accordingly, the valuation of
these securities reflects any limitation on their liquidity.
OTHER INVESTMENT COMPANIES. Subject to applicable statutory and regulatory
limitations, the assets of the Fund may be invested in shares of other
investment companies. Assets of the Fund may be invested in shares of other
investment companies to the extent permitted by the 1940 Act.
TEMPORARY INVESTMENTS. In response to severe or unusual adverse market,
economic, political or other conditions, the Fund may make temporary investments
that are not consistent with its investment objective and principal investment
strategies. Such investments may prevent the Fund from achieving its investment
objective.
PERCENTAGE RESTRICTIONS. If a percentage restriction on investment or
utilization of assets set forth in this Statement of Additional Information or
referred to in the Prospectus is adhered to at the time an investment is made or
assets are so utilized, a later change in percentage resulting from changes in
the value of the portfolio securities is not considered a violation of the
policy.
MORE ABOUT DOW JONES(SM)
- --------------------------------------------------------------------------------
"Dow Jones," "Dow Jones Islamic Market USA Index(SM)" and "DJIM" are service
marks of Dow Jones & Company, Inc. Dow Jones has no relationship to the Fund or
its investment adviser, other than the licensing of the Dow Jones Islamic Market
Index(SM) and its service marks for use in connection with the Fund.
Dow Jones does not sponsor, endorse, sell or promote the Fund; recommend that
any person invest in the Fund or any other securities; have any responsibility
or liability for or make any decisions about the timing, amount or pricing of
the Fund; have any responsibility or liability for the administration,
management or marketing of the Fund; consider the needs of the Fund or the
owners of the Fund in determining, composing or calculating the INDEX or have
any obligation to do so.
Dow Jones will not have any liability in connection with the Fund. Specifically,
Dow Jones does not make any warranty, express or implied, and Dow Jones
disclaims any warranty about:
o the results to be obtained by the Fund, the owners of the Fund or any other
person in connection with the use of the Dow Jones Islamic Market Index and
the data included in the INDEX;
o the accuracy or completeness of the INDEX and its data;
o the merchantability and the fitness for a particular purpose or use of the
INDEX and its data.
Although Dow Jones uses reasonable efforts to comply with its guidelines
regarding the selection of components in the INDEX, Dow Jones disclaims any
warranty of compliance with Shari'ah Law or other Islamic principles. Dow Jones
will have no liability for any errors, omissions or interruptions in the INDEX
or its data. Under no circumstances will Dow Jones be liable for any lost
profits or indirect, punitive, special or consequential damages or losses, even
if Dow Jones knows that they might occur. The licensing agreement between the
Fund's investment advisor and Dow Jones is solely for their benefit and not for
the benefit of the owners of the Fund or any other third parties.
THE TRUST
- --------------------------------------------------------------------------------
Allied Asset Advisors Funds (the "Trust"), an open-end management
investment company, was organized as a Delaware business trust on January 14,
2000. The Trust currently offers one series of shares to investors, Dow
Jones(SM) Islamic Index Fund (the "Fund") which consists of two classes: Classes
K and M. The Fund is a diversified series and has its own investment objective
and policies. The Trust may start another series and offer shares of a new fund
under the Trust at any time. The Fund's registered office in Delaware is The
Corporation Trust Company, 1209 Orange Street, Wilmington, Delaware 19801 and
its principal office is at 745 McClintock Drive, Suite 114, Burr Ridge, Illinois
60521.
Shares, when issued, will be fully paid and nonassessable. Shares of
the Fund have equal dividend, voting, liquidation and redemption rights, and are
voted in the aggregate and not by class except in matters where a separate vote
is required by the Investment Company Act of 1940 (the "1940 Act") or when the
matter affects only the interest of a particular class. The beneficial interest
of the Trust is divided into an unlimited number of shares, with no par value.
When matters are submitted to shareholders for a vote, each shareholder is
entitled to one vote for each full share owned and fractional votes for
fractional shares owned. The Trust does not normally hold annual meetings of
shareholders. The Trustees shall promptly call and give notice of a meeting of
shareholders for the purpose of voting upon removal of any Trustee when
requested to do so in writing by shareholders holding 10% or more of the Trust's
outstanding shares. The Trust will comply with the provisions of Section 16(c)
of the 1940 Act in order to facilitate communications among shareholders. Shares
will be maintained in open accounts on the books of the Transfer Agent, and
certificates for shares will generally not be issued, except for special
requests.
Each share of the Fund represents an equal proportionate interest in
the assets and liabilities belonging to that Fund with each other share of that
Fund and is entitled to such dividends and distributions out of the income
belonging to the Fund as are declared by the Trustees. The shares do not have
cumulative voting rights or any preemptive or conversion rights, and the
Trustees have the authority from time to time to divide or combine the shares of
any Fund into a greater or lesser number of shares of that Fund so long as the
proportionate beneficial interests in the assets belonging to that Fund and the
rights of shares of any other Fund are in no way affected. In case of any
liquidation of a Fund, the holders of shares of the Fund being liquidated will
be entitled to receive as a class a distribution out of the assets, net of the
liabilities, belonging to that Fund. Expenses attributable to any Fund are borne
by that Fund. Likewise, expenses attributable to any class are borne
specifically by that class. Class M shares of the Fund are subject to a
Distribution (Rule 12b-1) and Shareholder Servicing Plan which is further
discussed together with the fees in the Class M Prospectus and later in this
SAI. Class K shares of the Fund are not subject to the Distribution and
Shareholder Servicing Plan. Class K shares are discussed in the Class K
Prospectus and Statement of Additional Information.
Any general expenses of the Trust not readily identifiable as belonging
to a particular Fund are allocated by or under the direction of the Trustees in
such manner as the Trustees allocate such expenses on the basis of relative net
assets or number of shareholders. No shareholder is liable to further calls or
to assessment by the Trust without his or her express consent.
The assets of the Fund received for the issue or sale of its shares,
and all income, earnings, profits and proceeds thereof, subject only to the
rights of creditors, shall constitute the underlying assets of the Fund. In the
event of the dissolution or liquidation of the Fund, the holders of shares of
the Fund are entitled to share pro rata in the net assets of the Fund available
for distribution to shareholders.
If they deem it advisable and in the best interests of shareholders,
the Trustees may create additional series of shares, each of which represents
interests in a separate portfolio of investments and is subject to separate
liabilities, and may create multiple classes of shares of such series, which may
differ from each other as to expenses and dividends. If additional series or
classes of shares are created, shares of each series or class are entitled to
vote as a series or class only to the extent required by the 1940 Act as
permitted by the Trustees. Upon the Trust's liquidation, all shareholders of a
series would share pro-rata in the net assets of such series available for
distribution to shareholders of the series, but, as shareholders of such series,
would not be entitled to share in the distribution of assets belonging to any
other series.
MANAGEMENT OF THE FUND
- --------------------------------------------------------------------------------
The Trust's Board of Trustees governs the Trust. The Board of Trustees consists
of five individuals, three of whom are not "interested persons" of the Trust as
that term is defined in Section 2(a)(19) of the 1940 Act. The Trustees meet
throughout the year to oversee the Trust's activities, review contractual
arrangements with companies that provide services to the Fund, and decide upon
matters of general policy with respect to the Fund. The names and business
addresses of the Trustees and officers of the Trust, together with information
as to their principal occupations during the past five years, are listed below:
<TABLE>
<CAPTION>
- --------------------------------------- ---------- -------------------- ----------------------------------------------
NAME AND ADDRESS AGE POSITION/OFFICE PRINCIPAL OCCUPATIONS DURING THE PAST FIVE
WITH THE TRUST YEARS
- --------------------------------------- ---------- -------------------- ----------------------------------------------
<S> <C> <C> <C>
*
- --------------------------------------- ---------- -------------------- ----------------------------------------------
*
- --------------------------------------- ---------- -------------------- ----------------------------------------------
- --------------------------------------- ---------- -------------------- ----------------------------------------------
- --------------------------------------- ---------- -------------------- ----------------------------------------------
- --------------------------------------- ---------- -------------------- ----------------------------------------------
</TABLE>
* This trustee is deemed to be an "interested person" of the Trust as that term
is defined in Section 2(a)(19) of the 1940 Act.
TRUSTEE COMPENSATION. For their service as trustees, the trustees serve without
compensation, but will be reimbursed for expenses incurred in connection with
attendance at Board meetings. The table below details the amount of compensation
estimated to be received by the Trustees from the Trust for the fiscal year
ending ________, 2000. Presently, none of the executive officers receive
compensation from the Trust.
CONTROL PERSONS, PRINCIPAL HOLDERS OF SECURITIES AND MANAGEMENT OWNERSHIP. As of
_______, 2000, which was prior to the public offering of the Fund's shares,
__________ was the holder of 100% of the Fund's shares, and there were otherwise
no control persons or principal holders of securities of the Fund. Control
persons are persons deemed to control the Fund because they own beneficially
over 25% of the outstanding equity securities. Principal holders are persons
that own beneficially 5% or more of the Fund's outstanding equity securities.
INVESTMENT ADVISOR
- --------------------------------------------------------------------------------
Allied Asset Advisors, Inc. (defined as "AAA" or "Investment Adviser") is a
Delaware corporation that serves as an investment manager to the Fund pursuant
to an Investment Management Agreement dated as of [DATE]. AAA is a wholly owned
subsidiary of The North American Islamic Trust ("NAIT"). NAIT is a non-profit
entity that qualifies as a tax-exempt organization under Section 501(c)(3) of
the Internal Revenue Code. The purpose of NAIT is to serve the Islam & Muslim
Students Association and the Islamic Society of America.
This Investment Management Agreement is effective for an initial term of two
years and will continue on a year-to-year basis thereafter, provided that
specific approval is voted at least annually by the Board of Trustees of the
Trust or by the vote of the holders of a majority of the outstanding voting
securities of the Fund. In either event, it must also be approved by a majority
of the Trustees of the Trust who are neither parties to the Agreement nor
interested persons of any such party as defined in the 1940 Act at a meeting
called for the purpose of voting on such approval. AAA's decisions are made
subject to direction of the Board of Trustees. The Agreement may be terminated
at any time, without the payment of any penalty, by vote of a majority of the
outstanding voting securities of the Fund.
For the services provided by AAA under the Agreement, the Trust, on behalf of
the Fund, has agreed to pay to Allied Asset Advisors, Inc. an annual fee of
0.75% on the first $500 million in assets, 0.65% on the next $5 billion in
assets and 0.50% on the amount of assets over $5.5 billion. All fees are
computed on the average daily closing net asset value of the Fund and are
payable monthly. The fee is higher than the fee paid by most other index mutual
funds.
CODE OF ETHICS
- --------------------------------------------------------------------------------
The Trust and the Investment Advisor have adopted a written Code of Ethics that
governs the personal securities transactions of directors, officers and
employees who may have access to current trading information of the Trust. The
Code permits such persons to invest in securities for their personal accounts
including securities that may be purchased or held by the Trust. The code
includes reporting and other obligations to monitor personal transactions and
ensure that such transactions are consistent with the best interests of the
Trust.
ADMINISTRATIVE SERVICES
- --------------------------------------------------------------------------------
ADMINISTRATOR, FUND ACCOUNTANT, TRANSFER AGENT
Firstar Mutual Fund Services, LLC, a subsidiary of Firstar Bank, N.A., provides
administrative personnel and services (including blue-sky services) to the Fund.
Administrative services include, but are not limited to, providing office space,
equipment, telephone facilities, various personnel, including clerical and
supervisory, and computers, as is necessary or beneficial to provide compliance
services to the Fund. Firstar Mutual Fund Services, LLC also will serve as fund
accountant and transfer agent under separate agreements.
CUSTODIAN
Firstar Bank, N.A. is custodian for the securities and cash of the Fund. Under
the Custodian Agreement, Firstar Bank, N.A. holds the Fund's portfolio
securities in safekeeping and keeps all necessary records and documents relating
to its duties.
DISTRIBUTOR
- --------------------------------------------------------------------------------
_______________, Inc. serves as the principal underwriter and national
distributor for the shares of the Fund pursuant to a Distribution Agreement with
the Trust dated as of ____________, 2000 (the "Distribution Agreement").
_________________, Inc. is registered as a broker-dealer under the Securities
Exchange Act of 1934 and each state's securities laws and is a member of the
NASD. The offering of the Fund's shares is continuous. The Distribution
Agreement provides that the Distributor, as agent in connection with the
distribution of Fund shares, will use its best efforts to distribute the Fund's
shares.
DISTRIBUTION AND SHAREHOLDER SERVICING PLAN
- --------------------------------------------------------------------------------
The Board of Trustees has adopted a Distribution and Shareholder Servicing Plan
for Class M shares of the Fund, in accordance with Rule 12b-1 (the "Plan") under
the 1940 Act. The Fund is authorized under the Plan to use the assets of the
Fund to compensate the Distributor or others for certain activities relating to
the distribution of shares of the Fund to investors and the provision of
shareholder services. The maximum amount payable under the Plan is 1.00% of the
Fund's average net assets on an annual basis, which is comprised of distribution
(0.75% of average net assets) and shareholder services expenses (0.25% of
average net assets).
The NASD's maximum sales charge rule relating to mutual fund shares establishes
limits on all types of sales charges, whether front-end, deferred or
asset-based. This rule may operate to limit the aggregate distribution fees to
which shareholders may be subject to under the terms of the Plan.
The Plan authorizes the use of Fund assets to pay the Distributor, banks,
broker/dealers and other institutions that provide distribution assistance
and/or shareholder services such as:
o printing and distributing prospectuses to persons other than Fund
shareholders,
o printing and distributing advertising and sales literature and reports to
shareholders used in connection with selling shares of the Fund, and
o furnishing personnel and communications equipment to service shareholder
accounts and prospective shareholder inquiries.
The Plan requires the Fund to prepare and furnish to the Trustees for their
review, at least quarterly, written reports complying with the requirements of
the Rule and setting out the amounts expended under the Plan and the purposes
for which those expenditures were made. The Plan provides that so long as it is
in effect the selection and nomination of Trustees who are not interested
persons of the Trust will be committed to the discretion of the Trustees then in
office who are not interested persons of the Trust.
Neither the Plan nor any related agreements can take effect until approved by a
majority vote of both all the Trustees and those Trustees who are not interested
persons of the Trust and who have no direct or indirect financial interest in
the operation of the Plan or in any agreements related to the Plan, cast in
person at a meeting called for the purpose of voting on the Plan and the related
agreements. The Trustees approved the Plan on ___________, 2000.
The Plan will continue in effect only so long as its continuance is specifically
approved at least annually by the Trustees in the manner described above for
Trustee approval of the Plan. The Plan for the Fund may be terminated at any
time by a majority vote of the Trustees who are not interested persons of the
Trust and who have no direct or indirect financial interest in the operations of
the Plan or in any agreement related to the Plan or by vote of a majority of the
outstanding voting securities of the Fund.
The Plan may not be amended so as to materially increase the amount of the
distribution fees for the Fund unless the amendment is approved by a vote of at
least a majority of the outstanding voting securities of the Fund. In addition,
no material amendment may be made unless approved by the Trustees in the manner
described above for Trustee approval of the Plan.
PRICING OF SHARES
- --------------------------------------------------------------------------------
Shares of the Fund are sold on a continual basis at the net asset value per
share next computed following acceptance of an order by the Fund. The Fund's net
asset value per share for the purpose of pricing purchase and redemption orders
is determined at the close of normal trading (normally 4:00 p.m. Eastern Time)
on each day the New York Stock Exchange is open for trading. The NYSE is closed
on the following holidays: New Year's Day, Martin Luther King, Jr.'s Day,
President's Day, Good Friday, Memorial Day, Independence Day, Labor Day,
Thanksgiving Day and Christmas Day.
Securities listed on a U.S. securities exchange or NASDAQ for which market
quotations are readily available are valued at the last quoted sale price on the
day the valuation is made. Price information on listed securities is taken from
the exchange where the security is primarily traded. Options, futures, unlisted
U.S. securities and listed U.S. securities not traded on the valuation date for
which market quotations are readily available are valued at the most recent
quoted bid price.
PURCHASING SHARES
- --------------------------------------------------------------------------------
Shares of the Fund are sold in a continuous offering and may be purchased on any
business day through authorized investment dealers or directly from the Fund.
STOCK CERTIFICATES AND CONFIRMATIONS. The Fund does not generally issue stock
certificates representing shares purchased. Confirmations of the opening of an
account and of all subsequent transactions in the account are forwarded by the
Fund to the shareholder's address of record. If a shareholder needs stock
certificates, the Fund can issue them under special requests.
SPECIAL INCENTIVE PROGRAMS. At various times the Fund may implement programs
under which a dealer's sales force may be eligible to win nominal awards for
certain sales efforts or recognition program conforming to criteria established
by the Fund, or participate in sales programs sponsored by the Fund. In
addition, AAA or Distributor, in their discretion may from time to time,
pursuant to objective criteria, sponsor programs designed to reward selected
dealers for certain services or activities that are primarily intended to result
in the sale of shares of the Fund. These programs will not change the price you
pay for your shares or the amount that the Fund will receive from the sale.
REDEMPTION OF SHARES
- --------------------------------------------------------------------------------
SIGNATURE GUARANTEES. If a shareholder requests that redemption proceeds be sent
to an address other than that on record with the Fund or proceeds be made
payable to someone other than to the shareholder(s) of record, the written
request must have signatures guaranteed by:
o a trust company or commercial bank whose deposits are insured by the BIF,
which is administered by the FDIC;
o a member of the New York, Boston, American, Midwest, or Pacific Stock
Exchange;
o a savings bank or savings association whose deposits are insured by the SAIF,
which is administered by the FDIC; or
o any other "eligible guarantor institution" as defined in the Securities
Exchange Act of 1934.
The Fund does not accept signatures guaranteed by a notary public.
The Fund and its transfer agent have adopted standards for accepting signature
guarantees from the above institutions. The Fund may elect in the future to
limit eligible signature guarantors to institutions that are members of a
signature guarantor program. The Fund and its transfer agent reserve the right
to amend these standards at any time without notice.
ADDITIONAL DOCUMENTATION. Additional documents are required for certain types of
shareholders, such as corporations, partnerships, executors, trustees,
administrators, or guardians. The Fund's Transfer Agent requires documents from
entities to identify individuals possessing authority to redeem shares from the
Fund. The documentation may include corporate resolutions, partnership
agreements, trust instruments or plans that give such authority to the
individual.
BROKERAGE ALLOCATION AND OTHER PRACTICES
- --------------------------------------------------------------------------------
AAA places the Fund's portfolio securities transactions. In doing so, AAA seeks
to obtain the best available execution in its portfolio transactions, taking
into account the costs, promptness of executions and other qualitative
considerations. There is no pre-existing commitment to place orders with any
broker, dealer or member of an exchange. AAA evaluates a wide range of criteria
in seeking the most favorable price and market for the execution of
transactions, including the broker's commission rate, execution capability,
positioning and distribution capabilities, information in regard to the
availability of securities, trading patterns, statistical or factual
information, opinions pertaining to trading strategy, back office efficiency,
ability to handle difficult trades, financial stability, and prior performance
in servicing AAA and its clients. In transactions on securities executed in the
over-the-counter market, purchases and sales are transacted directly with
dealers on a principal basis.
AAA, when effecting purchases and sales of portfolio securities for the account
of the Fund, will seek execution of trades either (1) at the most favorable and
competitive rate of commission charged by any broker, dealer or member of an
exchange, or (2) at a higher rate of commission charges, if reasonable, in
relation to brokerage and research services provided to the Fund or AAA by such
member, broker, or dealer. Such services may include, but are not limited to,
any one or more of the following: information as to the availability of
securities for purchase or sale, statistical or factual information, or opinions
pertaining to investments. AAA may use research and services provided by brokers
and dealers in servicing all its clients, including the Fund, and AAA will not
use all such services in connection with the Fund. In accordance with the
provisions of Section 28(e) of the 1934 Act, the Advisor may from time-to-time
receive services and products which serve both research and non-research
functions. In such event, AAA makes a good faith determination of the
anticipated research and non-research use of the product or service and
allocates brokerage only with respect to the research component. Brokerage may
also be allocated to dealers in consideration of the Fund's share distribution
but only when execution and price are comparable to that offered by other
brokers.
If AAA provides investment advisery services to individuals and other
institutional clients, there may be occasions on which other investment advisery
clients advised by AAA may also invest in the same securities as the Fund. When
these clients buy or sell the same securities at substantially the same time,
the AAA may average the transactions as to price and allocate the amount of
available investments in a manner, which it believes to be equitable to each
client, including the Fund. On the other hand, to the extent permitted by law,
AAA may aggregate the securities to be sold or purchased for the Fund with those
to be sold or purchased for other clients managed by it in order to obtain lower
brokerage commissions, if any.
Because of the Fund's indexing investment strategy, it generally only sells
securities to generate cash to satisfy redemption requests, or to rebalance its
portfolio to track the target index. As a result, the Fund's portfolio turnover
rate is expected to be low. The portfolio turnover rate is calculated by
dividing the lesser of the Fund's annual sales or purchases of portfolio
securities (exclusive of purchases or sales of securities whose maturities at
the time of acquisition were one year or less) by the monthly average value of
the securities in the portfolio during the year.
ADDITIONAL INFORMATION ON DISTRIBUTIONS AND TAXES
- --------------------------------------------------------------------------------
DISTRIBUTIONS
A shareholder will automatically receive all income dividends and capital gain
distributions in additional full and fractional shares of the Fund at their net
asset value as of the date of payment unless the shareholder elects to receive
such dividends or distributions in cash. The reinvestment date normally precedes
the payment date by about seven days although the exact timing is subject to
change. Shareholders will receive a confirmation of each new transaction in
their account. The Trust will confirm all account activity, including the
payment of dividend and capital gain distributions and transactions made as a
result of a Systematic Withdrawal Plan or an Automatic Investment Plan.
Shareholders may rely on these statements in lieu of stock certificates.
TAXES
DISTRIBUTIONS OF NET INVESTMENT INCOME. The Fund receives income generally in
the form of dividends on its investments. This income, less expenses incurred in
the operation of the Fund, constitutes the Fund's net investment income from
which dividends may be paid to you. Any distributions by the Fund from such
income will be taxable to you as ordinary income, whether you take them in cash
or in additional shares.
DISTRIBUTIONS OF CAPITAL GAINS. The Fund may derive capital gains and losses in
connection with sales or other dispositions of its portfolio securities.
Distributions from net short-term capital gains will be taxable to you as
ordinary income. Distributions from net long-term capital gains will be taxable
to you as long-term capital gain, regardless of how long you have held your
shares in the Fund. Any net capital gains realized by the Fund generally will be
distributed once each year, and may be distributed more frequently, if
necessary, in order to reduce or eliminate excise or income taxes on the Fund.
INFORMATION ON THE TAX CHARACTER OF DISTRIBUTIONS. The Fund will inform you of
the amount of your ordinary income dividends and capital gains distributions at
the time they are paid, and will advise you of their tax status for federal
income tax purposes shortly after the close of each calendar year. If you have
not held Fund shares for a full year, the Fund may designate and distribute to
you, as ordinary income or capital gain, a percentage of income that is not
equal to the actual amount of such income earned during the period of your
investment in the Fund.
ELECTION TO BE TAXED AS A REGULATED INVESTMENT COMPANY. The Fund intends to
elect to be treated as a regulated investment company under Subchapter M of the
Internal Revenue Code and intends to so qualify during the current fiscal year.
As a regulated investment company, the Fund generally pays no federal income tax
on the income and gains it distributes to you. The Board reserves the right not
to maintain the qualification of the Fund as a regulated investment company if
it determines such course of action to be beneficial to shareholders. In such
case, the Fund will be subject to federal, and possibly state corporate taxes on
its taxable income and gains, and distributions to you will be taxed as ordinary
dividend income to the extent of the Fund's earnings and profits.
EXCISE TAX DISTRIBUTION REQUIREMENTS. To avoid federal excise taxes, the
Internal Revenue Code requires the Fund to distribute to you by December 31 of
each year, at a minimum, the following amounts: 98% of its taxable ordinary
income earned during the calendar year; 98% of its capital gain net income
earned during the twelve month period ending October 31; and 100% of any
undistributed amounts from the prior year. The Fund intends to declare and pay
these amounts in December (or in January that are treated by you as received in
December) to avoid these excise taxes, but can give no assurances that its
distributions will be sufficient to eliminate all taxes.
REDEMPTION OF FUND SHARES. Redemptions and exchanges of Fund shares are taxable
transactions for federal and state income tax purposes. If you redeem your Fund
shares, the IRS will require that you report a gain or loss on your redemption
or exchange. If you hold your shares as a capital asset, the gain or loss that
you realize will be capital gain or loss and will be long-term or short-term,
generally depending on how long you hold your shares. Any loss incurred on the
redemption or exchange of shares held for six months or less will be treated as
a long-term capital loss to the extent of any long-term capital gains
distributed to you by the Fund on those shares.
All or a portion of any loss that you realize upon the redemption of your Fund
shares will be disallowed to the extent that you buy other shares in the Fund
(through reinvestment of dividends or otherwise) within 30 days before or after
your share redemption. Any loss disallowed under these rules will be added to
your tax basis in the new shares you buy.
DIVIDENDS-RECEIVED DEDUCTION FOR CORPORATIONS. If you are a corporate
shareholder, you should note that it is expected that a portion of the dividends
paid by the Fund will qualify for the dividends-received deduction. In some
circumstances, you will be allowed to deduct these qualified dividends, thereby
reducing the tax that you would otherwise be required to pay on these dividends.
The dividends-received deduction will be available only with respect to
dividends designated by the Fund as eligible for such treatment. All dividends
(including the deducted portion) must be included in your alternative minimum
taxable income calculation.
INVESTMENT IN COMPLEX SECURITIES. The Fund may invest in complex securities.
These investments may be subject to numerous special and complex tax rules.
These rules could affect whether gains and losses recognized by the Fund are
treated as ordinary income or capital gain, accelerate the recognition of income
to the Fund and/or defer the Fund's ability to recognize losses. In turn, these
rules may affect the amount, timing or character of the income distributed to
you by the Fund.
PERFORMANCE INFORMATION
- --------------------------------------------------------------------------------
TOTAL RETURN. Average annual total return quotations used in the Fund's
advertising and promotional materials are calculated according to the following
formula:
P(1 +T)n = ERV
where P equals a hypothetical initial payment of $1,000; R equals average annual
total return; n equals the number of years; and ERV equals the ending redeemable
value at the end of the period of a hypothetical $1,000 payment made at the
beginning of the period.
Under the foregoing formula, the time periods used in advertising will be based
on rolling calendar quarters, updated to the last day of the most recent quarter
prior to submission of the advertising for publication. Average annual total
return, or "T" in the above formula, is computed by finding the average annual
compounded rates of return over the period that would equate the initial amount
invested to the ending redeemable value. Average annual total return assumes the
reinvestment of all dividends and distributions.
CUMULATIVE TOTAL RETURN. Cumulative total return represents the simple change in
value of an investment over a stated period and may be quoted as a percentage or
as a dollar amount. Total returns may be broken down into their components of
income and capital (including capital gains and changes in share price) in order
to illustrate the relationship between these factors and their contributions to
total return.
OTHER INFORMATION. The Fund's performance data quoted in advertising and other
promotional materials represents past performance and is not intended to predict
or indicate future results. The return and principal value of an investment in a
Fund will fluctuate, and an investor's redemption proceeds may be more or less
than the original investment amount.
If permitted by applicable law, the Fund may be compared to data prepared by
Lipper Analytical Services, Inc., CDA Investment Technologies, Inc.,
Morningstar, Inc., the Donoghue Organization, Inc. or other independent services
which monitor the performance of investment companies, and may be quoted in
advertising in terms of its ranking in each applicable universe. In addition,
the Fund may use performance data reported in financial and industry
publications, including Barron's, Business Week, Forbes, Fortune, Investor's
Daily, IBC/Donoghue's Money Fund Report, Money Magazine, The Wall Street Journal
and USA Today.
In addition to the INDEX, the Fund may from time to time use the following
unmanaged indices for performance comparison purposes:
o S&P 500 - The S&P 500 is an index of 500 stocks designed to track the
overall equity market's industry weightings. Most, but not all, large
capitalization stocks are in the index. There are also some small
capitalization names in the index. The list is maintained by Standard &
Poor's Corporation. It is market capitalization weighted. There are
always 500 issuers in the S&P 500. Changes are made by Standard &
Poor's as needed.
o Russell 2000 - The Russell 2000 is composed of the 2,000 smallest stocks in
the Russell 3000, a market value weighted index of the 3,000 largest U. S.
publicly traded companies.
o The NASDAQ Composite Index - The NASDAQ Composite Index is a broad-based
market capitalization-weighted index of all NASDAQ stocks.
AUDITORS
- --------------------------------------------------------------------------------
____________, LLP serves as the Fund's independent auditors, whose services
include examination of the Fund's financial statements and the performance of
other related audit and tax services.
COUNSEL
- --------------------------------------------------------------------------------
Vedder, Price, Kaufman, & Kammholz, 222 North LaSalle Street, Chicago, Illinois
60601-1003, is counsel for the Fund.
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
The Fund has not commenced operations to date therefore no financial highlights
are available for the Fund.
CLASS K
THE INFORMATION IN THIS STATEMENT OF ADDITIONAL INFORMATION IS NOT COMPLETE AND
MAY BE CHANGED. WE MAY NOT SELL THESE SECURITIES UNTIL THE REGISTRATION
STATEMENT FILED WITH THE SECURITIES AND EXCHANGE COMMISSION IS EFFECTIVE. THIS
STATEMENT OF ADDITIONAL INFORMATION IS NOT AN OFFER TO SELL THESE SECURITIES AND
IS NOT SOLICITING AN OFFER TO BUY THESE SECURITIES IN ANY STATE WHERE THE OFFER
OR SALE IS NOT PERMITTED.
DOW JONES(SM) ISLAMIC INDEX FUND
A SERIES OF ALLIED ASSET ADVISORS FUNDS
STATEMENT OF ADDITIONAL INFORMATION
__________, 2000
INVESTMENT ADVISOR
AAA
ALLIED ASSET ADVISORS, INC.
745 MCCLINTOCK DRIVE, SUITE 114
BURR RIDGE, IL 60521
(630) 789-9191
This Statement of Additional Information relates to the Dow Jones(SM) Islamic
Index Fund, which is the first mutual fund within the Allied Asset Advisors
Funds family. The SAI is not a prospectus but should be read in conjunction with
the Fund's current Prospectus dated __________, 2000. To obtain the Prospectus,
please visit the Fund's web-site, call 1-800-________ or write to the Fund as
shown below:
REGULAR MAIL OVERNIGHT OR EXPRESS MAIL
Dow Jones Islamic Index Fund Dow Jones Islamic Index Fund
c/o Firstar Mutual Fund Services, LLC c/o Firstar Mutual Fund Services, LLC
P.O. Box 701 615 East Michigan Street, 3rd Floor
Milwaukee, WI 53201-0701 Milwaukee, WI 53202
TABLE OF CONTENTS
INVESTMENT RESTRICTIONS........................................................3
INVESTMENT OBJECTIVE AND STRATEGIES............................................4
MORE ABOUT DOW JONES(SM).......................................................5
THE TRUST......................................................................5
MANAGEMENT OF THE FUND.........................................................7
INVESTMENT ADVISOR.............................................................7
CODE OF ETHICS.................................................................8
ADMINISTRATIVE SERVICES........................................................8
DISTRIBUTOR....................................................................8
PRICING OF SHARES..............................................................8
PURCHASING SHARES..............................................................9
REDEMPTION OF SHARES...........................................................9
BROKERAGE ALLOCATION AND OTHER PRACTICES......................................10
ADDITIONAL INFORMATION ON DISTRIBUTIONS AND TAXES.............................11
PERFORMANCE INFORMATION.......................................................12
AUDITORS......................................................................13
COUNSEL.......................................................................13
FINANCIAL HIGHLIGHTS..........................................................14
INVESTMENT RESTRICTIONS
- --------------------------------------------------------------------------------
FUNDAMENTAL RESTRICTIONS
The Fund has adopted the following fundamental investment policies and
restrictions that cannot be changed without the approval of a "majority of the
outstanding voting securities" of the Fund. Under the 1940 Act, a "majority of
the outstanding voting securities" of a fund means the vote of:
(1) more than 50% of the outstanding voting securities of the fund; or
(2) 67% or more of the voting securities of the fund present at a meeting,
if the holders of more than 50% of the outstanding voting securities are
present or represented by proxy, whichever is less.
The Fund may not:
1. Make loans except as permitted under the 1940 Act, as amended, and as
interpreted or modified by regulatory authority having jurisdiction, from
time to time.
2. Borrow money, except as permitted under the 1940 Act, as amended, and as
interpreted or modified by regulatory authority having jurisdiction, from
time to time.
3. Concentrate its investments in a particular industry, as that term is used
in the 1940 Act, as amended, and as interpreted or modified by regulatory
authority having jurisdiction, from time to time.
4. Purchase or sell real estate, which term does not include securities of
companies which deal in real estate and or mortgages or investments secured
by real estate, or interests therein, except that the Fund reserves freedom
of action to hold and to sell real estate acquired as a result of the
Fund's ownership of securities.
5. Engage in the business of underwriting securities, except to the extent
that the Fund may be deemed to be an underwriter in connection with the
disposition of portfolio securities.
6. Issue senior securities, except as permitted under the 1940 Act, as
amended, and as interpreted or modified by regulatory authority having
jurisdiction, from time to time.
7. Purchase physical commodities or contracts relating to physical
commodities.
NON-FUNDAMENTAL RESTRICTIONS
As a matter of non-fundamental policy, the Fund currently does not intend to :
1. Borrow money in an amount greater than 5% of its total assets, except for
temporary or emergency purposes;
2. Purchase securities on margin or make short sales , except (i) short sales
against the box, (ii) for margin deposits in connection with futures
contracts, options or other permitted investments, (iii) that transactions
in futures contracts and options shall not be deemed to constitute selling
securities short, and (iv) that the Fund may obtain such short-term credits
as may be necessary for the clearance of securities transactions;
3. Enter into futures contracts or purchase options thereon unless immediately
after the purchase, the value of the aggregate initial margin with respect
to such futures contracts does entered into on behalf of the Fund and the
premiums paid for such options on futures contracts does not exceed 5% of
the fair market value of the Fund's total assets; provided that in the case
of an option that is in-the-money at the time of purchase, the in-the-money
amount may be excluded in computing the 5% limit; and
4. Invest more than 15% of its net assets in illiquid securities.
INVESTMENT OBJECTIVE AND STRATEGIES
- --------------------------------------------------------------------------------
The Fund seeks to match the total return of the Dow Jones Islamic Market USA
Index(SM) (the "INDEX"), a diversified compilation of equity securities
considered by Dow Jones' Shari'ah Supervisory Board to be in compliance with
Islamic Shari'ah principles. Because the Fund is a diversified Fund, there is a
possibility that the Fund may be unable to track the composition of the INDEX if
the INDEX becomes non-diversified.
The following discussion supplements the information regarding the investment
objective of the Fund and the policies to be employed to achieve this objective
as set forth above and in the Fund's Prospectus.
WHEN-ISSUED AND DELAYED DELIVERY TRANSACTIONS. The Fund may purchase securities
on a when-issued or delayed delivery basis. These transactions are arrangements
in which a fund purchases securities with payment and delivery scheduled for a
future time. The seller's failure to complete these transactions may cause a
fund to miss a price or yield considered advantageous. Settlement dates may be a
month or more after entering into these transactions and the market values of
the securities purchased may vary from the purchase prices. The Fund may dispose
of a commitment prior to settlement if the investment advisor deems it
appropriate to do so. In addition, the Fund may enter into transactions to sell
its purchase commitments to third parties at current market values and
simultaneously acquire other commitments to purchase similar securities at later
dates. The Fund may realize short-term profits or losses upon the sale of such
commitments. These transactions are made to secure what is considered to be an
advantageous price or yield for the Fund. No fees or other expenses, other than
normal transaction costs, are incurred. However, liquid assets of the Fund
sufficient to make payment for the securities to be purchased are segregated on
the Fund's records at the trade date. These assets are marked to market daily
and are maintained until the transaction is settled.
RESTRICTED SECURITIES. Securities that have legal or contractual restrictions on
their resale may be acquired by the Fund. The price paid for these securities,
or received upon resale, may be lower than the price paid or received for
similar securities with a more liquid market. Accordingly, the valuation of
these securities reflects any limitation on their liquidity.
OTHER INVESTMENT COMPANIES. Subject to applicable statutory and regulatory
limitations, the assets of the Fund may be invested in shares of other
investment companies. Assets of the Fund may be invested in shares of other
investment companies to the extent permitted by the 1940 Act.
TEMPORARY INVESTMENTS. In response to severe or unusual adverse market,
economic, political or other conditions, the Fund may make temporary investments
that are not consistent with its investment objective and principal investment
strategies. Such investments may prevent the Fund from achieving its investment
objective.
PERCENTAGE RESTRICTIONS. If a percentage restriction on investment or
utilization of assets set forth in this Statement of Additional Information or
referred to in the Prospectus is adhered to at the time an investment is made or
assets are so utilized, a later change in percentage resulting from changes in
the value of the portfolio securities is not considered a violation of the
policy.
MORE ABOUT DOW JONES(SM)
- --------------------------------------------------------------------------------
"Dow Jones," "Dow Jones Islamic Market USA Index(SM)" and "DJIM" are service
marks of Dow Jones & Company, Inc. Dow Jones has no relationship to the Fund or
its investment adviser, other than the licensing of the Dow Jones Islamic Market
Index(SM) and its service marks for use in connection with the Fund.
Dow Jones does not sponsor, endorse, sell or promote the Fund; recommend that
any person invest in the Fund or any other securities; have any responsibility
or liability for or make any decisions about the timing, amount or pricing of
the Fund; have any responsibility or liability for the administration,
management or marketing of the Fund; consider the needs of the Fund or the
owners of the Fund in determining, composing or calculating the INDEX or have
any obligation to do so.
Dow Jones will not have any liability in connection with the Fund. Specifically,
Dow Jones does not make any warranty, express or implied, and Dow Jones
disclaims any warranty about:
o the results to be obtained by the Fund, the owners of the Fund or any other
person in connection with the use of the Dow Jones Islamic Market Index and
the data included in the INDEX;
o the accuracy or completeness of the INDEX and its data;
o the merchantability and the fitness for a particular purpose or use of the
INDEX and its data.
Although Dow Jones uses reasonable efforts to comply with its guidelines
regarding the selection of components in the INDEX, Dow Jones disclaims any
warranty of compliance with Shari'ah Law or other Islamic principles. Dow Jones
will have no liability for any errors, omissions or interruptions in the INDEX
or its data. Under no circumstances will Dow Jones be liable for any lost
profits or indirect, punitive, special or consequential damages or losses, even
if Dow Jones knows that they might occur. The licensing agreement between the
Fund's investment advisor and Dow Jones is solely for their benefit and not for
the benefit of the owners of the Fund or any other third parties.
THE TRUST
- --------------------------------------------------------------------------------
Allied Asset Advisors Funds (the "Trust"), an open-end management
investment company, was organized as a Delaware business trust on January 14,
2000. The Trust currently offers one series of shares to investors, Dow
Jones(SM) Islamic Index Fund (the "Fund") which consists of two classes: Classes
K and M. The Fund is a diversified series and has its own investment objective
and policies. The Trust may start another series and offer shares of a new fund
under the Trust at any time. The Fund's registered office in Delaware is The
Corporation Trust Company, 1209 Orange Street, Wilmington, Delaware 19801 and
its principal office is at 745 McClintock Drive, Suite 114, Burr Ridge, Illinois
60521.
Shares, when issued, will be fully paid and nonassessable. Shares of
the Fund have equal dividend, voting, liquidation and redemption rights, and are
voted in the aggregate and not by class except in matters where a separate vote
is required by the Investment Company Act of 1940 (the "1940 Act") or when the
matter affects only the interest of a particular class. The beneficial interest
of the Trust is divided into an unlimited number of shares, with no par value.
When matters are submitted to shareholders for a vote, each shareholder is
entitled to one vote for each full share owned and fractional votes for
fractional shares owned. The Trust does not normally hold annual meetings of
shareholders. The Trustees shall promptly call and give notice of a meeting of
shareholders for the purpose of voting upon removal of any Trustee when
requested to do so in writing by shareholders holding 10% or more of the Trust's
outstanding shares. The Trust will comply with the provisions of Section 16(c)
of the 1940 Act in order to facilitate communications among shareholders. Shares
will be maintained in open accounts on the books of the Transfer Agent, and
certificates for shares will generally not be issued, except for special
requests.
Each share of the Fund represents an equal proportionate interest in
the assets and liabilities belonging to that Fund with each other share of that
Fund and is entitled to such dividends and distributions out of the income
belonging to the Fund as are declared by the Trustees. The shares do not have
cumulative voting rights or any preemptive or conversion rights, and the
Trustees have the authority from time to time to divide or combine the shares of
any Fund into a greater or lesser number of shares of that Fund so long as the
proportionate beneficial interests in the assets belonging to that Fund and the
rights of shares of any other Fund are in no way affected. In case of any
liquidation of a Fund, the holders of shares of the Fund being liquidated will
be entitled to receive as a class a distribution out of the assets, net of the
liabilities, belonging to that Fund. Expenses attributable to any Fund are borne
by that Fund. Likewise, expenses attributable to any class are borne
specifically by that class. Class K shares of the Fund are not subject to a
Distribution and Shareholder Servicing Plan. Class M shares of the Fund are
subject to a Distribution (Rule 12b-1) and Shareholder Servicing Plan and are
discussed in the Class M Prospectus and Statement of Additional Information.
Any general expenses of the Trust not readily identifiable as belonging
to a particular Fund are allocated by or under the direction of the Trustees in
such manner as the Trustees allocate such expenses on the basis of relative net
assets or number of shareholders. No shareholder is liable to further calls or
to assessment by the Trust without his or her express consent.
The assets of the Fund received for the issue or sale of its shares, and all
income, earnings, profits and proceeds thereof, subject only to the rights of
creditors, shall constitute the underlying assets of the Fund. In the event of
the dissolution or liquidation of the Fund, the holders of shares of the Fund
are entitled to share pro rata in the net assets of the Fund available for
distribution to shareholders.
If they deem it advisable and in the best interests of shareholders, the
Trustees may create additional series of shares, each of which represents
interests in a separate portfolio of investments and is subject to separate
liabilities, and may create multiple classes of shares of such series, which may
differ from each other as to expenses and dividends. If additional series or
classes of shares are created, shares of each series or class are entitled to
vote as a series or class only to the extent required by the 1940 Act as
permitted by the Trustees. Upon the Trust's liquidation, all shareholders of a
series would share pro-rata in the net assets of such series available for
distribution to shareholders of the series, but, as shareholders of such series,
would not be entitled to share in the distribution of assets belonging to any
other series.
MANAGEMENT OF THE FUND
- --------------------------------------------------------------------------------
The Trust's Board of Trustees governs the Trust. The Board of Trustees consists
of five individuals, three of whom are not "interested persons" of the Trust as
that term is defined in Section 2(a)(19) of the 1940 Act. The Trustees meet
throughout the year to oversee the Trust's activities, review contractual
arrangements with companies that provide services to the Fund, and decide upon
matters of general policy with respect to the Fund. The names and business
addresses of the Trustees and officers of the Trust, together with information
as to their principal occupations during the past five years, are listed below:
<TABLE>
<CAPTION>
- --------------------------------------- ---------- -------------------- ----------------------------------------------
NAME AND ADDRESS AGE POSITION/OFFICE PRINCIPAL OCCUPATIONS DURING THE PAST FIVE
WITH THE TRUST YEARS
- --------------------------------------- ---------- -------------------- ----------------------------------------------
<S> <C> <C> <C>
*
- --------------------------------------- ---------- -------------------- ----------------------------------------------
*
- --------------------------------------- ---------- -------------------- ----------------------------------------------
- --------------------------------------- ---------- -------------------- ----------------------------------------------
- --------------------------------------- ---------- -------------------- ----------------------------------------------
- --------------------------------------- ---------- -------------------- ----------------------------------------------
</TABLE>
* This trustee is deemed to be an "interested person" of the Trust as that term
is defined in Section 2(a)(19) of the 1940 Act.
TRUSTEE COMPENSATION. For their service as trustees, the trustees serve without
compensation, but will be reimbursed for expenses incurred in connection with
attendance at Board meetings. The table below details the amount of compensation
estimated to be received by the Trustees from the Trust for the fiscal year
ending ________, 2000. Presently, none of the executive officers receive
compensation from the Trust.
CONTROL PERSONS, PRINCIPAL HOLDERS OF SECURITIES AND MANAGEMENT OWNERSHIP. As of
_______, 2000, which was prior to the public offering of the Fund's shares,
__________ was the holder of 100% of the Fund's shares, and there were otherwise
no control persons or principal holders of securities of the Fund. Control
persons are persons deemed to control the Fund because they own beneficially
over 25% of the outstanding equity securities. Principal holders are persons
that own beneficially 5% or more of the Fund's outstanding equity securities.
INVESTMENT ADVISOR
- --------------------------------------------------------------------------------
Allied Asset Advisors, Inc. (defined as "AAA" or "Investment Adviser") is a
Delaware corporation that serves as an investment manager to the Fund pursuant
to an Investment Management Agreement dated as of [DATE]. AAA is a wholly owned
subsidiary of The North American Islamic Trust ("NAIT"). NAIT is a non-profit
entity that qualifies as a tax-exempt organization under Section 501(c)(3) of
the Internal Revenue Code. The purpose of NAIT is to serve the Islam & Muslim
Students Association and the Islamic Society of America.
This Investment Management Agreement is effective for an initial term of two
years and will continue on a year-to-year basis thereafter, provided that
specific approval is voted at least annually by the Board of Trustees of the
Trust or by the vote of the holders of a majority of the outstanding voting
securities of the Fund. In either event, it must also be approved by a majority
of the Trustees of the Trust who are neither parties to the Agreement nor
interested persons of any such party as defined in the 1940 Act at a meeting
called for the purpose of voting on such approval. AAA's decisions are made
subject to direction of the Board of Trustees. The Agreement may be terminated
at any time, without the payment of any penalty, by vote of a majority of the
outstanding voting securities of the Fund.
For the services provided by AAA under the Agreement, the Trust, on behalf of
the Fund, has agreed to pay to Allied Asset Advisors, Inc. an annual fee of
0.75% on the first $500 million in assets, 0.65% on the next $5 billion in
assets and 0.50% on the amount of assets over $5.5 billion. All fees are
computed on the average daily closing net asset value of the Fund and are
payable monthly. The fee is higher than the fee paid by most other index mutual
funds.
CODE OF ETHICS
- --------------------------------------------------------------------------------
The Trust and the Investment Advisor have adopted a written Code of Ethics that
governs the personal securities transactions of directors, officers and
employees who may have access to current trading information of the Trust. The
Code permits such persons to invest in securities for their personal accounts
including securities that may be purchased or held by the Trust. The code
includes reporting and other obligations to monitor personal transactions and
ensure that such transactions are consistent with the best interests of the
Trust.
ADMINISTRATIVE SERVICES
- --------------------------------------------------------------------------------
ADMINISTRATOR, FUND ACCOUNTANT, TRANSFER AGENT
Firstar Mutual Fund Services, LLC, a subsidiary of Firstar Bank, N.A., provides
administrative personnel and services (including blue-sky services) to the Fund.
Administrative services include, but are not limited to, providing office space,
equipment, telephone facilities, various personnel, including clerical and
supervisory, and computers, as is necessary or beneficial to provide compliance
services to the Fund. Firstar Mutual Fund Services, LLC also will serve as fund
accountant and transfer agent under separate agreements.
CUSTODIAN
Firstar Bank, N.A. is custodian for the securities and cash of the Fund. Under
the Custodian Agreement, Firstar Bank, N.A. holds the Fund's portfolio
securities in safekeeping and keeps all necessary records and documents relating
to its duties.
DISTRIBUTOR
- --------------------------------------------------------------------------------
_______________, Inc. serves as the principal underwriter and national
distributor for the shares of the Fund pursuant to a Distribution Agreement with
the Trust dated as of ____________, 2000 (the "Distribution Agreement").
_________________, Inc. is registered as a broker-dealer under the Securities
Exchange Act of 1934 and each state's securities laws and is a member of the
NASD. The offering of the Fund's shares is continuous. The Distribution
Agreement provides that the Distributor, as agent in connection with the
distribution of Fund shares, will use its best efforts to distribute the Fund's
shares.
PRICING OF SHARES
- --------------------------------------------------------------------------------
Shares of the Fund are sold on a continual basis at the net asset value per
share next computed following acceptance of an order by the Fund. The Fund's net
asset value per share for the purpose of pricing purchase and redemption orders
is determined at the close of normal trading (normally 4:00 p.m. Eastern Time)
on each day the New York Stock Exchange is open for trading. The NYSE is closed
on the following holidays: New Year's Day, Martin Luther King, Jr.'s Day,
President's Day, Good Friday, Memorial Day, Independence Day, Labor Day,
Thanksgiving Day and Christmas Day.
Securities listed on a U.S. securities exchange or NASDAQ for which market
quotations are readily available are valued at the last quoted sale price on the
day the valuation is made. Price information on listed securities is taken from
the exchange where the security is primarily traded. Options, futures, unlisted
U.S. securities and listed U.S. securities not traded on the valuation date for
which market quotations are readily available are valued at the most recent
quoted bid price.
PURCHASING SHARES
- --------------------------------------------------------------------------------
Shares of the Fund are sold in a continuous offering and may be purchased on any
business day through authorized investment dealers or directly from the Fund.
STOCK CERTIFICATES AND CONFIRMATIONS. The Fund does not generally issue stock
certificates representing shares purchased. Confirmations of the opening of an
account and of all subsequent transactions in the account are forwarded by the
Fund to the shareholder's address of record. If a shareholder needs stock
certificates, the Fund can issue them under special requests.
SPECIAL INCENTIVE PROGRAMS. At various times the Fund may implement programs
under which a dealer's sales force may be eligible to win nominal awards for
certain sales efforts or recognition program conforming to criteria established
by the Fund, or participate in sales programs sponsored by the Fund. In
addition, AAA or Distributor, in their discretion may from time to time,
pursuant to objective criteria, sponsor programs designed to reward selected
dealers for certain services or activities that are primarily intended to result
in the sale of shares of the Fund. These programs will not change the price you
pay for your shares or the amount that the Fund will receive from the sale.
REDEMPTION OF SHARES
- --------------------------------------------------------------------------------
SIGNATURE GUARANTEES. If a shareholder requests that redemption proceeds be sent
to an address other than that on record with the Fund or proceeds be made
payable to someone other than to the shareholder(s) of record, the written
request must have signatures guaranteed by:
o a trust company or commercial bank whose deposits are insured by the BIF,
which is administered by the FDIC;
o a member of the New York, Boston, American, Midwest, or Pacific Stock
Exchange;
o a savings bank or savings association whose deposits are insured by the SAIF,
which is administered by the FDIC; or
o any other "eligible guarantor institution" as defined in the Securities
Exchange Act of 1934.
The Fund does not accept signatures guaranteed by a notary public.
The Fund and its transfer agent have adopted standards for accepting signature
guarantees from the above institutions. The Fund may elect in the future to
limit eligible signature guarantors to institutions that are members of a
signature guarantor program. The Fund and its transfer agent reserve the right
to amend these standards at any time without notice.
ADDITIONAL DOCUMENTATION. Additional documents are required for certain types of
shareholders, such as corporations, partnerships, executors, trustees,
administrators, or guardians. The Fund's Transfer Agent requires documents from
entities to identify individuals possessing authority to redeem shares from the
Fund. The documentation may include corporate resolutions, partnership
agreements, trust instruments or plans that give such authority to the
individual.
BROKERAGE ALLOCATION AND OTHER PRACTICES
- --------------------------------------------------------------------------------
AAA places the Fund's portfolio securities transactions. In doing so, AAA seeks
to obtain the best available execution in its portfolio transactions, taking
into account the costs, promptness of executions and other qualitative
considerations. There is no pre-existing commitment to place orders with any
broker, dealer or member of an exchange. AAA evaluates a wide range of criteria
in seeking the most favorable price and market for the execution of
transactions, including the broker's commission rate, execution capability,
positioning and distribution capabilities, information in regard to the
availability of securities, trading patterns, statistical or factual
information, opinions pertaining to trading strategy, back office efficiency,
ability to handle difficult trades, financial stability, and prior performance
in servicing AAA and its clients. In transactions on securities executed in the
over-the-counter market, purchases and sales are transacted directly with
dealers on a principal basis.
AAA, when effecting purchases and sales of portfolio securities for the account
of the Fund, will seek execution of trades either (1) at the most favorable and
competitive rate of commission charged by any broker, dealer or member of an
exchange, or (2) at a higher rate of commission charges, if reasonable, in
relation to brokerage and research services provided to the Fund or AAA by such
member, broker, or dealer. Such services may include, but are not limited to,
any one or more of the following: information as to the availability of
securities for purchase or sale, statistical or factual information, or opinions
pertaining to investments. AAA may use research and services provided by brokers
and dealers in servicing all its clients, including the Fund, and AAA will not
use all such services in connection with the Fund. In accordance with the
provisions of Section 28(e) of the 1934 Act, the Advisor may from time-to-time
receive services and products which serve both research and non-research
functions. In such event, AAA makes a good faith determination of the
anticipated research and non-research use of the product or service and
allocates brokerage only with respect to the research component. Brokerage may
also be allocated to dealers in consideration of the Fund's share distribution
but only when execution and price are comparable to that offered by other
brokers.
If AAA provides investment advisery services to individuals and other
institutional clients, there may be occasions on which other investment advisery
clients advised by AAA may also invest in the same securities as the Fund. When
these clients buy or sell the same securities at substantially the same time,
the AAA may average the transactions as to price and allocate the amount of
available investments in a manner, which it believes to be equitable to each
client, including the Fund. On the other hand, to the extent permitted by law,
AAA may aggregate the securities to be sold or purchased for the Fund with those
to be sold or purchased for other clients managed by it in order to obtain lower
brokerage commissions, if any.
Because of the Fund's indexing investment strategy, it generally only sells
securities to generate cash to satisfy redemption requests, or to rebalance its
portfolio to track the target index. As a result, the Fund's portfolio turnover
rate is expected to be low. The portfolio turnover rate is calculated by
dividing the lesser of the Fund's annual sales or purchases of portfolio
securities (exclusive of purchases or sales of securities whose maturities at
the time of acquisition were one year or less) by the monthly average value of
the securities in the portfolio during the year.
ADDITIONAL INFORMATION ON DISTRIBUTIONS AND TAXES
- --------------------------------------------------------------------------------
DISTRIBUTIONS
A shareholder will automatically receive all income dividends and capital gain
distributions in additional full and fractional shares of the Fund at their net
asset value as of the date of payment unless the shareholder elects to receive
such dividends or distributions in cash. The reinvestment date normally precedes
the payment date by about seven days although the exact timing is subject to
change. Shareholders will receive a confirmation of each new transaction in
their account. The Trust will confirm all account activity, including the
payment of dividend and capital gain distributions and transactions made as a
result of a Systematic Withdrawal Plan or an Automatic Investment Plan.
Shareholders may rely on these statements in lieu of stock certificates.
TAXES
DISTRIBUTIONS OF NET INVESTMENT INCOME. The Fund receives income generally in
the form of dividends on its investments. This income, less expenses incurred in
the operation of the Fund, constitutes the Fund's net investment income from
which dividends may be paid to you. Any distributions by the Fund from such
income will be taxable to you as ordinary income, whether you take them in cash
or in additional shares.
DISTRIBUTIONS OF CAPITAL GAINS. The Fund may derive capital gains and losses in
connection with sales or other dispositions of its portfolio securities.
Distributions from net short-term capital gains will be taxable to you as
ordinary income. Distributions from net long-term capital gains will be taxable
to you as long-term capital gain, regardless of how long you have held your
shares in the Fund. Any net capital gains realized by the Fund generally will be
distributed once each year, and may be distributed more frequently, if
necessary, in order to reduce or eliminate excise or income taxes on the Fund.
INFORMATION ON THE TAX CHARACTER OF DISTRIBUTIONS. The Fund will inform you of
the amount of your ordinary income dividends and capital gains distributions at
the time they are paid, and will advise you of their tax status for federal
income tax purposes shortly after the close of each calendar year. If you have
not held Fund shares for a full year, the Fund may designate and distribute to
you, as ordinary income or capital gain, a percentage of income that is not
equal to the actual amount of such income earned during the period of your
investment in the Fund.
ELECTION TO BE TAXED AS A REGULATED INVESTMENT COMPANY. The Fund intends to
elect to be treated as a regulated investment company under Subchapter M of the
Internal Revenue Code and intends to so qualify during the current fiscal year.
As a regulated investment company, the Fund generally pays no federal income tax
on the income and gains it distributes to you. The Board reserves the right not
to maintain the qualification of the Fund as a regulated investment company if
it determines such course of action to be beneficial to shareholders. In such
case, the Fund will be subject to federal, and possibly state corporate taxes on
its taxable income and gains, and distributions to you will be taxed as ordinary
dividend income to the extent of the Fund's earnings and profits.
EXCISE TAX DISTRIBUTION REQUIREMENTS. To avoid federal excise taxes, the
Internal Revenue Code requires the Fund to distribute to you by December 31 of
each year, at a minimum, the following amounts: 98% of its taxable ordinary
income earned during the calendar year; 98% of its capital gain net income
earned during the twelve month period ending October 31; and 100% of any
undistributed amounts from the prior year. The Fund intends to declare and pay
these amounts in December (or in January that are treated by you as received in
December) to avoid these excise taxes, but can give no assurances that its
distributions will be sufficient to eliminate all taxes.
REDEMPTION OF FUND SHARES. Redemptions and exchanges of Fund shares are taxable
transactions for federal and state income tax purposes. If you redeem your Fund
shares, the IRS will require that you report a gain or loss on your redemption
or exchange. If you hold your shares as a capital asset, the gain or loss that
you realize will be capital gain or loss and will be long-term or short-term,
generally depending on how long you hold your shares. Any loss incurred on the
redemption or exchange of shares held for six months or less will be treated as
a long-term capital loss to the extent of any long-term capital gains
distributed to you by the Fund on those shares.
All or a portion of any loss that you realize upon the redemption of your Fund
shares will be disallowed to the extent that you buy other shares in the Fund
(through reinvestment of dividends or otherwise) within 30 days before or after
your share redemption. Any loss disallowed under these rules will be added to
your tax basis in the new shares you buy.
DIVIDENDS-RECEIVED DEDUCTION FOR CORPORATIONS. If you are a corporate
shareholder, you should note that it is expected that a portion of the dividends
paid by the Fund will qualify for the dividends-received deduction. In some
circumstances, you will be allowed to deduct these qualified dividends, thereby
reducing the tax that you would otherwise be required to pay on these dividends.
The dividends-received deduction will be available only with respect to
dividends designated by the Fund as eligible for such treatment. All dividends
(including the deducted portion) must be included in your alternative minimum
taxable income calculation.
INVESTMENT IN COMPLEX SECURITIES. The Fund may invest in complex securities.
These investments may be subject to numerous special and complex tax rules.
These rules could affect whether gains and losses recognized by the Fund are
treated as ordinary income or capital gain, accelerate the recognition of income
to the Fund and/or defer the Fund's ability to recognize losses. In turn, these
rules may affect the amount, timing or character of the income distributed to
you by the Fund.
PERFORMANCE INFORMATION
- --------------------------------------------------------------------------------
TOTAL RETURN. Average annual total return quotations used in the Fund's
advertising and promotional materials are calculated according to the following
formula:
P(1 +T)n = ERV
where P equals a hypothetical initial payment of $1,000; R equals average annual
total return; n equals the number of years; and ERV equals the ending redeemable
value at the end of the period of a hypothetical $1,000 payment made at the
beginning of the period.
Under the foregoing formula, the time periods used in advertising will be based
on rolling calendar quarters, updated to the last day of the most recent quarter
prior to submission of the advertising for publication. Average annual total
return, or "T" in the above formula, is computed by finding the average annual
compounded rates of return over the period that would equate the initial amount
invested to the ending redeemable value. Average annual total return assumes the
reinvestment of all dividends and distributions.
CUMULATIVE TOTAL RETURN. Cumulative total return represents the simple change in
value of an investment over a stated period and may be quoted as a percentage or
as a dollar amount. Total returns may be broken down into their components of
income and capital (including capital gains and changes in share price) in order
to illustrate the relationship between these factors and their contributions to
total return.
OTHER INFORMATION. The Fund's performance data quoted in advertising and other
promotional materials represents past performance and is not intended to predict
or indicate future results. The return and principal value of an investment in a
Fund will fluctuate, and an investor's redemption proceeds may be more or less
than the original investment amount.
If permitted by applicable law, the Fund may be compared to data prepared by
Lipper Analytical Services, Inc., CDA Investment Technologies, Inc.,
Morningstar, Inc., the Donoghue Organization, Inc. or other independent services
which monitor the performance of investment companies, and may be quoted in
advertising in terms of its ranking in each applicable universe. In addition,
the Fund may use performance data reported in financial and industry
publications, including Barron's, Business Week, Forbes, Fortune, Investor's
Daily, IBC/Donoghue's Money Fund Report, Money Magazine, The Wall Street Journal
and USA Today.
In addition to the INDEX, the Fund may from time to time use the following
unmanaged indices for performance comparison purposes:
o S&P 500 - The S&P 500 is an index of 500 stocks designed to track the
overall equity market's industry weightings. Most, but not all, large
capitalization stocks are in the index. There are also some small
capitalization names in the index. The list is maintained by Standard &
Poor's Corporation. It is market capitalization weighted. There are
always 500 issuers in the S&P 500. Changes are made by Standard &
Poor's as needed.
o Russell 2000 - The Russell 2000 is composed of the 2,000 smallest stocks in
the Russell 3000, a market value weighted index of the 3,000 largest U. S.
publicly traded companies.
o The NASDAQ Composite Index - The NASDAQ Composite Index is a broad-based
market capitalization-weighted index of all NASDAQ stocks.
AUDITORS
- --------------------------------------------------------------------------------
____________, LLP serves as the Fund's independent auditors, whose services
include examination of the Fund's financial statements and the performance of
other related audit and tax services.
COUNSEL
- --------------------------------------------------------------------------------
Vedder, Price, Kaufman, & Kammholz, 222 North LaSalle Street, Chicago, Illinois
60601-1003, is counsel for the Fund.
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
The Fund has not commenced operations to date therefore no financial highlights
are available for the Fund.
ALLIED ASSET ADVISORS FUNDS
PART C
OTHER INFORMATION
ITEM 23. EXHIBITS
(a) DECLARATION OF TRUST
(i) Certificate of Trust -- Filed herewith
(ii) Declaration of Trust -- Filed herewith
(b) BYLAWS - Filed herewith
(c) INSTRUMENTS DEFINING RIGHTS OF SECURITY HOLDERS -- Incorporated by
reference to the Declaration of Trust and Bylaws
(d) ADVISORY AGREEMENT-- To be filed by amendment.
(e) UNDERWRITING AGREEMENT-- To be filed by amendment.
(f) BONUS OR PROFIT SHARING CONTRACTS - Not applicable
(g) CUSTODY AGREEMENT-- To be filed by amendment.
(h) OTHER MATERIAL CONTRACTS
(i) Administration Agreement-- To be filed by amendment.
(ii) Transfer Agent Servicing Agreement-- To be filed by amendment.
(iii) Fund Accounting Services Agreement-- To be filed by amendment.
(i) OPINION AND CONSENT OF COUNSEL-- To be filed by amendment.
(j) CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS -- To be filed by amendment.
(k) OMITTED FINANCIAL STATEMENTS - Not applicable
(l) AGREEMENT RELATING TO INITIAL CAPITAL -- To be filed by amendment.
(m) RULE 12B-1 PLAN - To be filed by amendment.
(n) RULE 18F-3 PLAN - To be filed by amendment.
(o) RESERVED.
(p) CODE OF ETHICS - To be filed by amendment.
ITEM 24. PERSONS CONTROLLED BY OR UNDER COMMON CONTROL WITH REGISTRANT.
No person is directly or indirectly controlled by or under common
control with the Registrant.
ITEM 25. INDEMNIFICATION.
Reference is made to Article V of the Registrant's Agreement and
Declaration of Trust.
Pursuant to Rule 484 under the Securities Act of 1933, as amended, the
Registrant furnishes the following undertaking: "Insofar as indemnification for
liability arising under the Securities Act of 1933 (the "Act") may be permitted
to trustees, officers and controlling persons of the Registrant pursuant to the
foregoing provisions, or otherwise, the Registrant has been advised that, in the
opinion of the Securities and Exchange Commission such indemnification is
against public policy as expressed in the Act and is, therefore, unenforceable.
In the event that a claim for indemnification against such liabilities (other
than the payment by the Registrant of expenses incurred or paid by a trustee,
officer or controlling person of the Registrant in the successful defense of any
action, suit or proceeding) is asserted by such trustee, officer or controlling
person in connection with the securities being registered, the Registrant will,
unless in the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in the Act and
will be governed by the final adjudication of such issue."
ITEM 26. BUSINESS AND OTHER CONNECTIONS OF THE INVESTMENT ADVISOR
To be completed by amendment.
ITEM 27. PRINCIPAL UNDERWRITERS.
To be completed by amendment.
ITEM 28. LOCATION OF ACCOUNTS AND RECORDS.
The books and records required to be maintained by Section 31(a) of
the Investment Company Act of 1940 are maintained in the following locations:
RECORDS RELATING TO: ARE LOCATED AT:
Registrant's Fund Accounting, Administrator Firstar Mutual Fund Services, LLC
and Transfer Agent 615 East Michigan Street
Milwaukee, WI 53202
Registrant's Investment Advisor Allied Asset Advisors, Inc.
745 McClintock Drive, Suite 114
Burr Ridge, IL 60521
Registrant's Custodian Firstar Bank, N.A.
425 Walnut Street
Cincinnati, OH 54202
ITEM 29. MANAGEMENT SERVICES NOT DISCUSSED IN PARTS A AND B.
Inapplicable
ITEM 30. UNDERTAKINGS.
The Registrant hereby undertakes to furnish each person to whom a
Prospectus for one or more of the series of the Registrant is delivered with a
copy of the relevant latest annual report to shareholders, upon request and
without charge.
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, the Registrant certifies that it has duly caused
this Registration Statement to be signed below on its behalf by the undersigned,
thereunto duly authorized, in the City of Burr Ridge and the State of Illinois
on the 23 day of February, 2000.
ALLIED ASSET ADVISORS FUNDS
BY: /S/ DR. BASSAM OSMAN
Dr. Bassam Osman
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 February 23, 2000.
SIGNATURE TITLE
/S/ DR. BASSAM OSMAN Trustee
Dr. Bassam Osman
AMENDED AND RESTATED
CERTIFICATE OF TRUST
OF
AAA FUNDS
The undersigned, constituting the sole member of the Board of
Trustees of AAA FUNDS (the "Trust"), in order to amend and restate the
certificate of trust for AAA Funds, a Delaware business trust, pursuant to
Section 3810 of the Delaware Business Trust Act, does hereby certify the
following:
1. The name of the Delaware business trust is changed from
"AAA Funds" to "Allied Asset Advisors Funds."
2. Prior to the issuance of beneficial interests, the Trust
will become a registered investment company under the Investment Company Act of
1940, as amended.
3. Notice is hereby given that pursuant to Section 3804 of the
Delaware Business Trust Act, the debts, liabilities, obligations and expenses
incurred, contracted for or otherwise existing with respect to a particular
series of the Trust shall be enforceable against the assets of such series only
and not against the assets of the Trust generally.
4. The registered office of the Trust in Delaware is c/o The
Corporation Trust Company, 1209 Orange Street, Wilmington, Delaware 19801.
5. The registered agent for service of process on the Trust is
The Corporation Trust Company, 1209 Orange Street, Wilmington, Delaware 19801.
6. This Certificate of Trust shall be effective on the date it
is filed with the Office of the Delaware Secretary of State.
IN WITNESS WHEREOF, the undersigned Trustee of AAA Funds has
executed this Amended and Restated Certificate as of the 22nd day of February,
2000.
/s/ Dr. Bassam Osman
Dr. Bassam Osman
Trustee
DECLARATION OF TRUST
OF
ALLIED ASSET ADVISORS FUNDS
A Delaware Business Trust
January 10, 2000
DECLARATION OF TRUST
OF
ALLIED ASSET ADVISORS FUNDS
TABLE OF CONTENTS
PAGE
ARTICLE I THE TRUST............................................................1
1.1 NAME.................................................................1
1.2 TRUST PURPOSE........................................................1
1.3 DEFINITIONS..........................................................2
ARTICLE II TRUSTEES............................................................3
2.1 NUMBER AND QUALIFICATION.............................................3
2.2 TERM AND ELECTION....................................................4
2.3 RESIGNATION AND REMOVAL..............................................4
2.4 VACANCIES............................................................4
2.5 MEETINGS.............................................................5
2.6 OFFICERS; CHAIRPERSON OF THE BOARD...................................6
2.7 BY-LAWS..............................................................6
ARTICLE III POWERS OF TRUSTEES.................................................6
3.1 GENERAL..............................................................6
3.2 INVESTMENTS..........................................................6
3.3 LEGAL TITLE..........................................................7
3.4 SALE OF INTERESTS....................................................7
3.5 BORROW MONEY.........................................................7
3.6 DELEGATION; COMMITTEE................................................7
3.7 COLLECTION AND PAYMENT...............................................8
3.8 EXPENSES.............................................................8
3.9 MISCELLANEOUS POWERS.................................................8
3.10 FURTHER POWERS.......................................................8
ARTICLE IV INVESTMENT ADVISORY, ADMINISTRATIVE, AND PLACEMENT AGENT SERVICES...9
4.1 INVESTMENT ADVISORY AND OTHER SERVICES...............................9
4.2 PARTIES TO CONTRACT..................................................9
ARTICLE V LIMITATIONS OF LIABILITY............................................10
5.1 NO PERSONAL LIABILITY OF TRUSTEES, OFFICERS, EMPLOYEES OR AGENTS....10
5.2 INDEMNIFICATION OF TRUSTEES, OFFICERS, EMPLOYEES AND AGENTS.........10
5.3 LIABILITY OF HOLDERS; INDEMNIFICATION...............................11
5.4 NO BOND REQUIRED OF TRUSTEES........................................11
5.5 NO DUTY OF INVESTIGATION; NOTICE IN TRUST INSTRUMENTS, ETC..........11
5.6 RELIANCE ON EXPERTS, ETC............................................11
5.7 ASSENT TO DECLARATION...............................................12
ARTICLE VI INTERESTS IN THE TRUST.............................................12
6.1 GENERAL CHARACTERISTICS.............................................12
6.2 ESTABLISHMENT OF SERIES OF INTERESTS................................12
6.3 ESTABLISHMENT OF CLASSES............................................13
6.4 ASSETS OF SERIES....................................................13
6.5 LIABILITIES OF SERIES...............................................14
6.6 DIVIDENDS AND DISTRIBUTIONS.........................................14
6.7 VOTING RIGHTS.......................................................15
6.8 RECORD DATES........................................................15
6.9 TRANSFER............................................................15
6.10 EQUALITY............................................................15
6.11 FRACTIONS...........................................................16
6.12 CLASS DIFFERENCES...................................................16
6.13 CONVERSION OF INTERESTS.............................................16
6.14 INVESTMENTS IN THE TRUST............................................16
6.15 TRUSTEES AND OFFICERS AS HOLDERS....................................16
6.16 NO PREEMPTIVE RIGHTS; DERIVATIVE SUITS..............................16
6.17 NO APPRAISAL RIGHTS.................................................17
6.18 STATUS OF INTERESTS AND LIMITATION OF PERSONAL LIABILITY............17
ARTICLE VII PURCHASES AND REDEMPTIONS.........................................17
7.1 PURCHASES...........................................................17
7.2 REDEMPTION BY HOLDER................................................17
7.3 REDEMPTION BY TRUST.................................................18
7.4 NET ASSET VALUE.....................................................18
ARTICLE VIII HOLDERS..........................................................19
8.1 RIGHTS OF HOLDERS...................................................19
8.2 REGISTER OF INTERESTS...............................................19
8.3 NOTICES.............................................................19
8.4 MEETINGS OF HOLDERS.................................................19
8.5 NOTICE OF MEETINGS..................................................20
8.6 RECORD DATE.........................................................20
8.7 PROXIES, ETC........................................................20
8.8 REPORTS.............................................................21
8.9 INSPECTION OF RECORDS...............................................21
8.10 VOTING POWERS.......................................................21
8.11 HOLDER ACTION BY WRITTEN CONSENT....................................21
8.12 HOLDER COMMUNICATIONS...............................................21
ARTICLE IX Duration; Termination of Trust;AMENDMENT; MERGERS; ETC.............22
9.1 DURATION............................................................22
9.2 TERMINATION OF TRUST................................................22
9.3 AMENDMENT PROCEDURE.................................................23
9.4 MERGER, CONSOLIDATION AND SALE OF ASSETS............................24
9.5 INCORPORATION.......................................................24
ARTICLE X MISCELLANEOUS.......................................................24
10.1 CERTIFICATE OF DESIGNATION; AGENT FOR SERVICE OF PROCESS............24
10.2 GOVERNING LAW.......................................................25
10.3 COUNTERPARTS........................................................25
10.4 RELIANCE BY THIRD PARTIES...........................................25
10.5 PROVISIONS IN CONFLICT WITH LAW OR REGULATIONS......................25
10.6 TRUST ONLY..........................................................26
10.7 WITHHOLDING.........................................................26
10.8 HEADINGS AND CONSTRUCTION...........................................26
DECLARATION OF TRUST
OF
ALLIED ASSET ADVISORS FUNDS
This DECLARATION OF TRUST OF ALLIED ASSET ADVISORS FUNDS is
made on the 10th day of January, 2000 by the party signatory hereto, as Trustee.
WHEREAS, the Trustee desires to form a business trust under
the law of Delaware for the investment and reinvestment of its assets; and
WHEREAS, it is proposed that the Trust assets be composed of
cash, securities and other assets contributed to the Trust by the Holders of
Interests in the Trust entitled to ownership rights in the Trust;
NOW, THEREFORE, the Trustee hereby declares that the Trustees
will hold in trust all cash, securities and other assets which they may from
time to time acquire in any manner as Trustees hereunder, and manage and dispose
of the same for the benefit of the Holders of Interests in the Trust, and
subject to the following terms and conditions.
ARTICLE I
THE TRUST
1.1 NAME. The name of the Trust created hereby (the "Trust")
shall be "AAA Funds," and so far as may be practicable the Trustees shall
conduct the Trust's activities, execute all documents and sue or be sued under
that name, which name (and the word "Trust" wherever hereinafter used) shall not
refer to the Trustees in their individual capacities or to the officers, agents,
employees or Holders of Interest in the Trust. However, should the Trustees
determine that the use of the name of the Trust is not advisable, they may
select such other name for the Trust as they deem proper and the Trust may hold
its property and conduct its activities under such other name. Any name change
shall become effective upon the execution by a majority of the then Trustees of
an instrument setting forth the new name and the filing of a certificate of
amendment pursuant to Section 3810(b) of the DBTA. Any such instrument shall not
require the approval of the Holders of Interests in the Trust, but shall have
the status of an amendment to this Declaration.
1.2 TRUST PURPOSE. The purpose of the Trust is to conduct,
operate and carry on the business of an open-end management investment company
registered under the 1940 Act. In furtherance of the foregoing, it shall be the
purpose of the Trust to do everything necessary, suitable, convenient or proper
for the conduct, promotion and attainment of any businesses and purposes which
at any time may be incidental or may appear conducive or expedient for the
accomplishment of the business of an open-end management investment company
registered under the 1940 Act and which may be engaged in or carried on by a
trust organized under the DBTA, and in connection therewith, the Trust shall
have and may exercise all of the powers conferred by the laws of the State of
Delaware upon a Delaware business trust.
1.3 DEFINITIONS. As used in this Declaration, the following
terms shall have the following meanings:
(a) "1940 Act" shall mean the Investment Company Act of
1940, as amended from time to time, and the rules and regulations thereunder, as
adopted or amended from time to time.
(b) "Affiliated Person," "Assignment" and "Interested
Person" shall have the meanings given such terms in the 1940 Act.
(c) "Administrator" shall mean any party furnishing services
to the Trust pursuant to any administrative services contract described in
Section 4.1.
(d) "By-Laws" shall mean the By-Laws of the Trust as
amended from time to time.
(e) "Code" shall mean the Internal Revenue Code of 1986, as
amended from time to time, and the rules and regulations thereunder, as adopted
or amended from time to time.
(f) "Commission" shall mean the Securities and Exchange
Commission.
(g) "Declaration" shall mean this Declaration of Trust, as
amended from time to time. References in this Declaration to "Declaration,"
"hereof," "herein" and "hereunder" shall be deemed to refer to the Declaration
rather than the article or section in which such words appear. This Declaration
shall, together with the By-Laws, constitute the governing instrument of the
Trust under the DBTA.
(h) "DBTA" shall mean the Delaware Business Trust Act,
Delaware Code Annotated Title 12, Sections 3801, ET SEQ., as amended from time
to time.
(i) "Fiscal Year" shall mean an annual period as determined
by the Trustees unless otherwise provided by the Code or applicable regulations.
(j) "Holders" shall mean as of any particular time any or
all holders of record of Interests in the Trust or in Trust Property, as the
case may be, at such time.
(k) "Interest" shall mean a Holder's units of interest into
which the beneficial interest in the Trust and each series and class of the
Trust shall be divided from time to time.
(l) "Investment Adviser" shall mean any party furnishing
services to the Trust pursuant to any investment advisory contract described in
Section 4.1 hereof.
(m) "Majority Interests Vote" shall mean the vote, at a
meeting of the Holders of Interests, of the lesser of (i) 67% or more of the
Interests present or represented at such meeting, provided the Holders of more
than 50% of the Interests are present or represented by proxy or (ii) more than
50% of the Interests.
(n) "Person" shall mean and include an individual,
corporation, partnership, trust, association, joint venture and other entity,
whether or not a legal entity, and a government and agencies and political
subdivisions thereof.
(o) "Registration Statement" as of any particular time shall
mean the Registration Statement of the Trust which is effective at such time
under the 1940 Act.
(p) "Trust Property" shall mean as of any particular time
any and all property, real or personal, tangible or intangible, which at such
time is owned or held by or for the account of the Trust or the Trustees or any
series of the Trust established in accordance with Section 6.2.
(q) "Trustees" shall mean such persons who are indemnified
as trustees of the Trust on the signature page of this Declaration, so long as
they shall continue in office in accordance with the terms of this Declaration
of Trust, and all other persons who at the time in question have been duly
elected or appointed as trustees in accordance with the provisions of this
Declaration of Trust and are then in office, in their capacity as trustees
hereunder.
ARTICLE II
TRUSTEES
2.1 NUMBER AND QUALIFICATION. The number of Trustees shall
initially be one and shall thereafter be fixed from time to time by written
instrument signed by a majority of the Trustees so fixed, then in office,
provided, however, that the number of Trustees shall in no event be less than
one. A Trustee shall be an individual at least 21 years of age who is not under
a legal disability.
(a) Any vacancy created by an increase in Trustees shall be
filled by the appointment or election of an individual having the qualifications
described in this Article as provided in Section 2.4. Any such appointment shall
not become effective, however, until the individual appointed or elected shall
have accepted in writing such appointment or election and agreed in writing to
be bound by the terms of the Declaration. No reduction in the number of Trustees
shall have the effect of removing any Trustee from office.
(b) Whenever a vacancy in the number of Trustees shall
occur, until such vacancy is filled as provided in Section 2.4 hereof, the
Trustees in office, regardless of their number, shall have all the powers
granted to the Trustees and shall discharge all the duties imposed upon the
Trustees by this Declaration.
2.2 TERM AND ELECTION. Each Trustee named herein, or elected
or appointed prior to the first meeting of the Holders, shall (except in the
event of resignations or removals or vacancies pursuant to Section 2.3 or 2.4
hereof) hold office until his or her successor has been elected at such meeting
and has qualified to serve as Trustee. Beginning with the Trustees elected at
the first meeting of Holders, each Trustee shall hold office during the lifetime
of this Trust and until its termination as hereinafter provided unless such
Trustee resigns or is removed as provided in Section 2.3 below or his term
expires pursuant to Section 2.4 hereof.
2.3 RESIGNATION AND REMOVAL. Any Trustee may resign (without
need for prior or subsequent accounting) by an instrument in writing signed by
him or her and delivered or mailed to the Chairperson, if any, the President or
the Secretary and such resignation shall be effective upon such delivery, or at
a later date according to the terms of the instrument.
(a) Any of the Trustees may be removed with or without cause
by the affirmative vote of the Holders of two-thirds (2/3) of the Interests or
(provided the aggregate number of Trustees, after such removal and after giving
effect to any appointment made to fill the vacancy created by such removal,
shall not be less than the number required by Section 2.1 hereof) with cause, by
the action of two-thirds (2/3) of the remaining Trustees, or without cause, by
the action of eighty percent (80%) of the remaining Trustees. Removal with cause
shall include, but not be limited to, the removal of a Trustee due to physical
or mental incapacity.
(b) Upon the resignation or removal of a Trustee, or his or
her otherwise ceasing to be a Trustee, he or she shall execute and deliver such
documents as the remaining Trustees shall require for the purpose of conveying
to the Trust or the remaining Trustees any Trust Property held in the name of
the resigning or removed Trustee. Upon the death of any Trustee or upon removal
or resignation due to any Trustee's incapacity to serve as trustee, his or her
legal representative shall execute and deliver on his or her behalf such
documents as the remaining Trustees shall require as provided in the preceding
sentence.
2.4 VACANCIES. The term of office of a Trustee shall terminate
and a vacancy shall occur in the event of the earliest to occur of the
following: the Trustee's death, resignation, adjudicated incompetence or other
incapacity to perform the duties of the office, or the removal of the Trustee. A
vacancy shall also occur in the event of an increase in the number of Trustees
as provided in Section 2.1. No such vacancy shall operate to annul this
Declaration or to revoke any existing trust created pursuant to the terms of
this Declaration. In the case of a vacancy, the Holders of a plurality of the
Interests entitled to vote, acting at any meeting of the Holders held in
accordance with Article VIII hereof, or, to the extent permitted by the 1940
Act, a majority vote of the Trustees continuing in office acting by written
instrument or instruments, may fill such vacancy, and any Trustee so elected by
the Trustees or the Holders shall hold office as provided in this Declaration.
There shall be no cumulative voting by the Holders in the election of Trustees.
2.5 MEETINGS. Meetings of the Trustees shall be held from time
to time within or without the State of Delaware upon the call of the
Chairperson, if any, the President, the Chief Operating Officer, the Secretary,
an Assistant Secretary or any two Trustees.
(a) Regular meetings of the Trustees may be held without
call or notice at a time and place fixed by the By-Laws or by resolution of the
Trustees. Notice of any other meeting shall be given not later than 72 hours
preceding the meeting by United States mail or by electronic transmission to
each Trustee at his or her business address as set forth in the records of the
Trust or otherwise given personally not less than 24 hours before the meeting
but may be waived in writing by any Trustee either before or after such meeting.
The attendance of a Trustee at a meeting shall constitute a waiver of notice of
such meeting except where a Trustee attends a meeting for the express purpose of
objecting to the transaction of any business on the ground that the meeting has
not been lawfully called or convened.
(b) A quorum for all meetings of the Trustees shall be
one-third of the total number of Trustees, but (except at such time as there is
only one Trustee) no less than two Trustees. Unless provided otherwise in this
Declaration, any action of the Trustees may be taken at a meeting by vote of a
majority of the Trustees present (a quorum being present) or without a meeting
by written consent of a majority of the Trustees, which written consent shall be
filed with the minutes of proceedings of the Trustees or any such committee. If
there be less than a quorum present at any meeting of the Trustees, a majority
of those present may adjourn the meeting until a quorum shall have been
obtained.
(c) Any committee of the Trustees, including an executive
committee, if any, may act with or without a meeting. A quorum for all meetings
of any such committee shall be two or more of the members thereof, unless the
Board shall provide otherwise. Unless provided otherwise in this Declaration,
any action of any such committee may be taken at a meeting by vote of a majority
of the members present (a quorum being present) or without a meeting by written
consent of a majority of the members, which written consent shall be filed with
the minutes of proceedings of the Trustees or any such committee.
(d) With respect to actions of the Trustees and any
committee of the Trustees, Trustees who are Interested Persons of the Trust or
are otherwise interested in any action to be taken may be counted for quorum
purposes under this Section 2.5 and shall be entitled to vote to the extent
permitted by the 1940 Act.
(e) All or any one or more Trustees may participate in a
meeting of the Trustees or any committee thereof by means of a conference
telephone or similar communications equipment by means of which all persons
participating in the meeting can hear each other, and participation in a meeting
pursuant to such communications system shall constitute presence in person at
such meeting, unless the 1940 Act specifically requires the Trustees to act "in
person," in which case such term shall be construed consistent with Commission
or staff releases or interpretations.
2.6 OFFICERS; CHAIRPERSON OF THE BOARD. The Trustees shall,
from time to time, elect officers of the Trust, including a President, a
Secretary and a Treasurer. The Trustees shall elect or appoint, from time to
time, a Trustee to act as Chairperson of the Board who shall preside at all
meetings of the Trustees and carry out such other duties as the Trustees shall
designate. The Trustees may elect or appoint or authorize the President to
appoint such other officers or agents with such powers as the Trustees may deem
to be advisable. The President, Secretary and Treasurer may, but need not, be a
Trustee. The Chairperson of the Board and such officers of the Trust shall serve
in such capacity for such time and with such authority as the Trustees may, in
their discretion, so designate or as provided for in the By-Laws.
2.7 BY-LAWS. The Trustees may adopt and, from time to time,
amend or repeal the By-Laws for the conduct of the business of the Trust not
inconsistent with this Declaration, and such By-Laws are hereby incorporated in
this Declaration by reference thereto.
ARTICLE III
POWERS OF TRUSTEES
3.1 GENERAL. The Trustees shall have exclusive and absolute
control over management of the business and affairs of the Trust, but with such
powers of delegation as may be permitted by this Declaration and the DBTA. The
Trustees may perform such acts as in their sole discretion are proper for
conducting the business and affairs of the Trust. The enumeration of any
specific power herein shall not be construed as limiting the aforesaid power.
Such powers of the Trustee may be exercised without order of, or recourse to,
any court.
3.2 INVESTMENTS. The Trustees shall have power to:
(a) conduct, operate and carry on the business of an
investment company; and
(b) subscribe for, invest in, reinvest in, purchase or
otherwise acquire, hold, pledge, sell, assign, transfer, exchange, distribute or
otherwise deal in or dispose of United States and foreign currencies and related
instruments including forward contracts, and securities, including common and
preferred stock, warrants, bonds, debentures, time notes and all other evidences
of indebtedness, negotiable or non-negotiable instruments, obligations,
certificates of deposit or indebtedness, commercial paper, repurchase
agreements, reverse repurchase agreements, convertible securities, forward
contracts, options, futures contracts, and other securities, including, without
limitation, those issued, guaranteed or sponsored by any state, territory or
possession of the United States and the District of Columbia and their political
subdivisions, agencies and instrumentalities, or by the United States
Government, any foreign government, or any agency, instrumentality or political
subdivision of the United States Government or any foreign government, or
international instrumentalities, or by any bank, savings institution,
corporation or other business entity organized under the laws of the United
States or under foreign laws; and to exercise any and all rights, powers and
privileges of ownership or interest in respect of any and all such investments
of every kind and description, including, without limitation, the right to
consent and otherwise act with respect thereto, with power to designate one or
more persons, firms, associations, or corporations to exercise any of said
rights, powers and privileges in respect of any of said instruments; and the
Trustees shall be deemed to have the foregoing powers with respect to any
additional securities in which the Trustees may determine to invest.
The Trustees shall not be limited to investing in obligations
maturing before the possible termination of the Trust, nor shall the Trustees be
limited by any law limiting the investments which may be made by fiduciaries.
3.3 LEGAL TITLE. Legal title to all the Trust Property shall
be vested in the Trust as a separate legal entity under the DBTA, except that
the Trustees shall have the power to cause legal title to any Trust Property to
be held by or in the name of one or more of the Trustees or in the name of any
other Person on behalf of the Trust on such terms as the Trustees may determine.
In the event that title to any part of the Trust Property is
vested in one or more Trustees, the right, title and interest of the Trustees in
the Trust Property shall vest automatically in each person who may hereafter
become a Trustee upon his or her due election and qualification. Upon the
resignation, removal or death of a Trustee he or she shall automatically cease
to have any right, title or interest in any of the Trust Property, and the
right, title and interest of such Trustee in the Trust Property shall vest
automatically in the remaining Trustees. To the extent permitted by law, such
vesting and cessation of title shall be effective whether or not conveyancing
documents have been executed and delivered.
3.4 SALE OF INTERESTS. Subject to the more detailed provisions
set forth in Article VII, the Trustees shall have the power to permit persons to
purchase Interests and to add or reduce, in whole or in part, their Interest in
the Trust.
3.5 BORROW MONEY. The Trustees shall have power to borrow
money or otherwise obtain credit and to secure the same by mortgaging, pledging
or otherwise subjecting as security the assets of the Trust, including the
lending of portfolio securities, and to endorse, guarantee or undertake the
performance of any obligation, contract or engagement of any other person, firm,
association or corporation.
3.6 DELEGATION; COMMITTEE. The Trustees shall have the power,
consistent with their continuing exclusive authority over the management of the
Trust and the Trust Property, to delegate from time to time to such of their
number or to officers, employees or agents of the Trust the doing of such things
and the execution of such instruments, either in the name of the Trust or the
names of the Trustees or otherwise, as the Trustees may deem expedient.
3.7 COLLECTION AND PAYMENT. The Trustees shall have the power
to collect all property due to the Trust; to pay all claims, including taxes,
against the Trust Property; to prosecute, defend, compromise or abandon any
claims relating to the Trust Property; to foreclose any security interest
securing any obligations, by virtue of which any property is owed to the Trust;
and to enter into releases, agreements and other instruments.
3.8 EXPENSES. The Trustees shall have the power to incur and
pay any expenses which in the opinion of the Trustees are necessary or
incidental to carry out any of the purposes of this Declaration, and to pay
reasonable compensation from the funds of the Trust to themselves as Trustees.
The Trustees shall fix the compensation of all officers, employees and Trustees.
The Trustees may pay themselves such compensation for special services,
including legal and brokerage services, as they in good faith may deem
reasonable (subject to any limitations in the 1940 Act), and reimbursement for
expenses reasonably incurred by themselves on behalf of the Trust. There shall
be no retirement compensation plan for the Trustees; provided, however, that the
Trustees may adopt a deferred compensation plan consistent with industry and
regulatory standards.
3.9 MISCELLANEOUS POWERS. The Trustees shall have the power
to: (a) employ or contract with such Persons as the Trustees may deem desirable
for the transaction of the business of the Trust and terminate such employees or
contractual relationships as they consider appropriate; (b) enter into joint
ventures, partnerships and any other combinations or associations; (c) purchase,
and pay for out of Trust Property, insurance policies (including, but not
limited to, fidelity bonding and errors and omission policies) insuring the
Investment Adviser, Administrator, distributor, Holders, Trustees, officers,
employees, agents, or independent contractors of the Trust against all claims
arising by reason of holding any such position or by reason of any action taken
or omitted by any such Person in such capacity, whether or not the Trust would
have the power to indemnify such Person against liability; (d) establish
pension, profit-sharing and other retirement, incentive and benefit plans for
any officers, employees and agents of the Trust; (e) to the extent permitted by
law, indemnify any Person with whom the Trust has dealings, including the
Investment Adviser, Administrator, distributor, Holders, Trustees, officers,
employees, agents or independent contractors of the Trust, to such extent as the
Trustees shall determine; (f) guarantee indebtedness or contractual obligations
of others; (g) determine and change the Fiscal Year of the Trust and the method
by which its accounts shall be kept; and (h) adopt a seal for the Trust, but the
absence of such seal shall not impair the validity of any instrument executed on
behalf of the Trust.
3.10 FURTHER POWERS. The Trustees shall have power to conduct
the business of the Trust and carry on its operations in any and all of its
branches and maintain offices, whether within or without the State of Delaware,
in any and all states of the United States of America, in the District of
Columbia, in any foreign countries, and in any and all commonwealths,
territories, dependencies, colonies, possessions, agencies or instrumentalities
of the United States of America and of foreign countries, and to do all such
other things and execute all such instruments as they deem necessary, proper or
desirable in order to promote the interests of the Trust although such things
are not herein specifically mentioned. Any determination as to what is in the
interests of the Trust made by the Trustees in good faith shall be conclusive
and shall be binding upon the Trust and the Holders, past, present and future.
In construing the provisions of this Declaration, the presumption shall be in
favor of a grant of power to the Trustees. The Trustees shall not be required to
obtain any court order to deal with Trust Property.
ARTICLE IV
Investment Advisory, Administrative,
and Placement Agent Services
4.1 INVESTMENT ADVISORY AND OTHER SERVICES. The Trustees may
in their discretion, from time to time, enter into contracts or agreements for
investment advisory services, administrative services (including transfer and
dividend disbursing agency services), distribution services, fiduciary
(including custodian) services, placement agent services, Holder servicing and
distribution services, or other services, whereby the other party to such
contract or agreement shall undertake to furnish the Trustees such services as
the Trustees shall, from time to time, consider desirable and all upon such
terms and conditions as the Trustees may in their discretion determine.
Notwithstanding any other provisions of this Declaration to the contrary, the
Trustees may authorize any Investment Advisor (subject to such general or
specific instructions as the Trustees may, from time to time, adopt) to effect
purchases, sales, loans or exchanges of Trust Property on behalf of the Trustees
or may authorize any officer, employee or Trustee to effect such purchases,
sales, loans or exchanges pursuant to recommendations of any such Investment
Advisor (all without further action by the Trustees). Any such purchases, sales,
loans or exchanges shall be binding upon the Trust.
4.2 PARTIES TO CONTRACT. Any contract or agreement of the
character described in Section 4.1 of this Article IV or in the By-Laws of the
Trust may be entered into with any Person, although one or more of the Trustees
or officers of the Trust or any Holder may be an officer, director, trustee,
shareholder, or member of such other party to the contract or agreement, and no
such contract or agreement shall be invalidated or rendered voidable by reason
of the existence of any such relationship, nor shall any person holding such
relationship be liable merely by reason of such relationship for any loss or
expense to the Trust under or by reason of such contract or agreement or held
accountable for any profit realized directly or indirectly therefrom, provided
that the contract or agreement when entered into was reasonable and fair and not
inconsistent with the provisions of this Article IV or the By-Laws. Any Trustee
or officer of the Trust or any Holder may be the other party to contracts or
agreements entered into pursuant to Section 4.1 hereof or the By-Laws of the
Trust, and any Trustee or officer of the Trust or any Holder may be financially
interested or otherwise affiliated with Persons who are parties to any or all of
the contracts or agreements mentioned in this Section 4.2.
ARTICLE V
LIMITATIONS OF LIABILITY
5.1 NO PERSONAL LIABILITY OF TRUSTEES, OFFICERS, EMPLOYEES OR
AGENTS. No Trustee, officer, employee or agent of the Trust when acting in such
capacity shall be subject to any personal liability whatsoever, in his or her
individual capacity, to any Person, other than the Trust or its Holders, in
connection with Trust Property or the affairs of the Trust; and all such Persons
shall look solely to the Trust Property for satisfaction of claims of any nature
against a Trustee, officer, employee or agent of the Trust arising in connection
with the affairs of the Trust. No Trustee, officer, employee or agent of the
Trust shall be liable to the Trust, Holders of Interests therein, or to any
Trustee, officer, employee, or agent thereof for any action or failure to act
(including, without limitation, the failure to compel in any way any former or
acting Trustee to redress any breach of trust), except for his or her own bad
faith, willful misfeasance, gross negligence or reckless disregard of his or her
duties.
5.2 INDEMNIFICATION OF TRUSTEES, OFFICERS, EMPLOYEES AND
AGENTS. The Trust shall indemnify each of its Trustees, officers, employees, and
agents (including Persons who serve at its request as directors, officers or
trustees of another organization in which it has any interest, as a shareholder,
creditor or otherwise) against all liabilities and expenses (including amounts
paid in satisfaction of judgments, in compromise, as fines and penalties, and as
counsel fees) reasonably incurred by him or her in connection with the defense
or disposition of any action, suit or other proceeding, whether civil or
criminal, in which he or she may be involved or with which he or she may be
threatened, while in office or thereafter, by reason of his or her being or
having been such a Trustee, officer, employee or agent, except with respect to
any matter as to which he or she shall have been adjudicated to have acted in
bad faith, willful misfeasance, gross negligence or reckless disregard of his or
her duties; provided, however, that as to any matter disposed of by a compromise
payment by such Person, pursuant to a consent decree or otherwise, no
indemnification either for said payment or for any other expenses shall be
provided unless there has been a determination that such Person did not engage
in willful misfeasance, bad faith, gross negligence or reckless disregard of the
duties involved in the conduct of his or her office by the court or other body
approving the settlement or other disposition or by a reasonable determination,
based upon review of readily available facts (as opposed to a full trial-type
inquiry), that he or she did not engage in such conduct or by a reasonable
determination, based upon a review of the facts, that such Person was not liable
by reason of such conduct, by (a) the vote of a majority of a quorum of Trustees
who are neither "interested persons" of the Trust as defined in Section 2(a)(19)
of the 1940 Act nor parties to the proceeding, or (b) a written opinion from
independent legal counsel approved by the Trustees. The rights accruing to any
Person under these provisions shall not exclude any other right to which he or
she may be lawfully entitled; provided that no Person may satisfy any right of
indemnity or reimbursement granted herein or in Section 5.1 or to which he or
she may be otherwise entitled except out of the Trust Property. The Trustees may
make advance payments in connection with indemnification under this Section 5.2,
provided that the indemnified Person shall have given a written undertaking to
reimburse the Trust in the event it is subsequently determined that he or she is
not entitled to such indemnification.
5.3 LIABILITY OF HOLDERS; INDEMNIFICATION. The Trust shall
indemnify and hold each Holder harmless from and against any claim or liability
to which such Holder may become subject solely by reason of his or her being or
having been a Holder and not because of such Holder's acts or omissions or for
some other reason, and shall reimburse such Holder for all legal and other
expenses reasonably incurred by him or her in connection with any such claim or
liability (upon proper and timely request by the Holder); provided, however,
that no Holder shall be entitled to indemnification by any series established in
accordance with Section 8.8 unless such Holder is a Holder of Interests of such
series. The rights accruing to a Holder under this Section 5.3 shall not exclude
any other right to which such Holder may be lawfully entitled, nor shall
anything herein contained restrict the right of the Trust to indemnify or
reimburse a Holder in any appropriate situation even though not specifically
provided herein.
5.4 NO BOND REQUIRED OF TRUSTEES. No Trustee shall, as such,
be obligated to give any bond or surety or other security for the performance of
any of his or her duties hereunder.
5.5 NO DUTY OF INVESTIGATION; NOTICE IN TRUST INSTRUMENTS,
ETC. No purchaser, lender, or other Person dealing with the Trustees or any
officer, employee or agent of the Trust shall be bound to make any inquiry
concerning the validity of any transaction purporting to be made by the Trustees
or by said officer, employee or agent or be liable for the application of money
or property paid, loaned, or delivered to or on the order of the Trustees or of
said officer, employee or agent. Every obligation, contract, instrument,
certificate or other interest or undertaking of the Trust, and every other act
or thing whatsoever executed in connection with the Trust, shall be conclusively
relied upon as having been executed or done by the executors thereof only in
their capacities as Trustees, officers, employees or agents of the Trust. Every
written obligation, contract, instrument, certificate or other interest or
undertaking of the Trust made by the Trustees or by any officer, employee or
agent of the Trust, in his or her capacity as such, shall contain an appropriate
recital to the effect that the Trustee, officer, employee or agent of the Trust
shall not personally be bound by or liable thereunder, nor shall resort be had
to their private property or the private property of the Holders for the
satisfaction of any obligation or claim thereunder, and appropriate references
shall be made therein to the Declaration, and may contain any further recital
which they may deem appropriate, but the omission of such recital shall not
operate to impose personal liability on any of the Trustees, officers, employees
or agents of the Trust. The Trustees may maintain insurance for the protection
of the Trust Property, Holders, Trustees, officers, employees and agents in such
amount as the Trustees shall deem advisable.
5.6 RELIANCE ON EXPERTS, ETC. Each Trustee and officer or
employee of the Trust shall, in the performance of his or her duties, be fully
and completely justified and protected with regard to any act or any failure to
act resulting from reliance in good faith upon the books of account or other
records of the Trust, upon an opinion of counsel, or upon reports made to the
Trust by any of its officers or employees or by any Investment Adviser,
Administrator, accountant, appraiser or other experts or consultants selected
with reasonable care by the Trustees, officers or employees of the Trust,
regardless of whether such counsel or expert may also be a Trustee.
5.7 ASSENT TO DECLARATION. Every Holder, by virtue of having
become a Holder in accordance with the terms of this Declaration, shall be held
to have expressly assented and agreed to the terms hereof and to have become a
party hereto.
ARTICLE VI
INTERESTS IN THE TRUST
6.1 GENERAL CHARACTERISTICS. (a) The Trustees shall have the
power and authority, without Holder approval, to issue Interests in one or more
series from time to time as they deem necessary or desirable. Each series shall
be separate from all other series in respect to the assets and liabilities
allocated to that series and shall represent a separate investment portfolio of
the Trust. The Trustees shall have exclusive power, without Holder approval, to
establish and designate such separate and distinct series, as set forth in
Section 6.2, and to fix and determine the relative rights and preferences as
between the Interests of the separate series as to right of redemption, special
and relative rights as to dividends and other distributions and on liquidation,
conversion rights, and conditions under which the series shall have separate
voting rights or no voting rights.
(b) The Trustees may, without Holder approval, divide
Interests of any series into two or more classes, Interests of each such class
having such preferences and special or relative rights and privileges (including
conversion rights, if any) as the Trustees may determine as provided in Section
6.3. The fact that a series shall have been initially established and designated
without any specific establishment or designation of classes, shall not limit
the authority of the Trustees to divide a series and establish and designate
separate classes thereof.
(c) The number of Interests authorized shall be unlimited,
and the Interests so authorized may be represented in part by fractional
Interests. From time to time, the Trustees may divide or combine the Interests
of any series or class into a greater or lesser number without thereby changing
the proportionate beneficial interests in the series or class. The Trustees may
issue Interests of any series or class thereof for such consideration and on
such terms as they may determine (or for no consideration if pursuant to an
Interest dividend or split-up), all without action or approval of the Holders.
All Interests when so issued on the terms determined by the Trustees shall be
fully paid and non-assessable. The Trustees may classify or reclassify any
unissued Interests or any Interests previously issued and reacquired of any
series or class thereof into one or more series or classes thereof that may be
established and designated from time to time. The Trustees may hold as treasury
Interests, reissue for such consideration and on such terms as they may
determine, or cancel, at their discretion from time to time, any Interests of
any series or class thereof reacquired by the Trust.
6.2 ESTABLISHMENT OF SERIES OF INTERESTS. (a) Without limiting
the authority of the Trustees set forth in Section 6.2(b) to establish and
designate any further series, the Trustees hereby establish and designate one
series, as follows: Dow Jones(SM) Islamic Index Fund
The provisions of this Article VI shall be applicable to the
above designated series and any further series that may from time to time be
established and designated by the Trustees as provided in Section 6.2(b).
(b) The establishment and designation of any series of
Interests other than the one set forth above shall be effective upon the
execution, by a majority of the Trustees, of an instrument setting forth such
establishment and designation and the relative rights and preferences of such
series, or as otherwise provided in such instrument. At any time that there are
no Interests outstanding of any particular series previously established and
designated, the Trustees may by an instrument executed by a majority of their
number abolish that series and the establishment and designation thereof. Each
instrument referred to in this paragraph shall have the status of an amendment
of this Declaration.
(c) Section 9.2 of this Declaration of Trust shall apply
also with respect to each such series as if such series were a separate trust.
6.3 ESTABLISHMENT OF CLASSES. (a) The division of any series
into two or more classes and the establishment and designation of such classes
shall be effective upon the execution by a majority of the Trustees of an
instrument setting forth such division, and the establishment, designation, and
relative rights and preferences of such classes, or as otherwise provided in
such instrument. The relative rights and preferences of the classes of any
series may differ in such respects as the Trustees may determine to be
appropriate, provided that such differences are set forth in the aforementioned
instrument. At any time that there are no Interests outstanding of any
particular class previously established and designated, the Trustees may by an
instrument executed by a majority of their number abolish that class and the
establishment and designation thereof. Each instrument referred to in this
paragraph shall have the status of an amendment to this Declaration.
(b) Section 9.2 of this Declaration of Trust shall apply
also with respect to each such class as if such class were a separate trust.
6.4 ASSETS OF SERIES. All consideration received by the Trust
for the issue or sale of Interests of a particular series together with all
Trust Property in which such consideration is invested or reinvested, all
income, earnings, profits, and proceeds thereof, including any proceeds derived
from the sale, exchange or liquidation of such assets, and any funds or payments
derived from any reinvestment of such proceeds in whatever form the same may be,
shall irrevocably belong to that series for all purposes, subject only to the
rights of creditors of such series and except as may otherwise be required by
applicable tax laws, and shall be so recorded upon the books of account of the
Trust. Separate and distinct records shall be maintained for each series and the
assets associated with a series shall be held and accounted for separately from
the other assets of the Trust, or any other series. In the event that there is
any Trust Property, or any income, earnings, profits, and proceeds thereof,
funds, or payments which are not readily identifiable as belonging to any
particular series, the Trustees shall allocate them among any one or more of the
series established and designated from time to time in such manner and on such
basis as they, in their sole discretion, deem fair and equitable. Each such
allocation by the Trustees shall be conclusive and binding upon the Holders of
all Interests for all purposes.
6.5 LIABILITIES OF SERIES. (a) The Trust Property belonging to
each particular series shall be charged with the liabilities of the Trust in
respect to that series and all expenses, costs, charges and reserves
attributable to that series, and any general liabilities, expenses, costs,
charges or reserves of the Trust which are not readily identifiable as belonging
to any particular series shall be allocated and charged by the Trustees to and
among any one or more of the series established and designated from time to time
in such manner and on such basis as the Trustees in their sole discretion deem
fair and equitable. Each allocation of liabilities, expenses, costs, charges and
reserves by the Trustees shall be conclusive and binding upon the Holders of all
Interests for all purposes. The Trustees shall have full discretion, to the
extent not inconsistent with the 1940 Act, to determine which items shall be
treated as income and which items as capital, and each such determination and
allocation shall be conclusive and binding upon the Holders.
(b) Without limitation of the foregoing provisions of this
Section, but subject to the right of the Trustees in their discretion to
allocate general liabilities, expenses, costs, charges or reserves as herein
provided, the debts, liabilities, obligations and expenses incurred, contracted
for or otherwise existing with respect to a particular series shall be
enforceable against the assets of such series only, and not against the assets
of any other series. Notice of this limitation on interseries liabilities shall
be set forth in the certificate of trust of the Trust (whether originally or by
amendment) as filed or to be filed in the Office of the Secretary of State of
the State of Delaware pursuant to the DBTA, and upon the giving of such notice
in the certificate of trust, the statutory provisions of Section 3804 of the
DBTA relating to limitations on interseries liabilities (and the statutory
effect under Section 3804 of setting forth such notice in the certificate of
trust) shall become applicable to the Trust and each series. Every note, bond,
contract or other undertaking issued by or on behalf of a particular series
shall include a recitation limiting the obligation represented thereby to that
series and its assets.
6.6 DIVIDENDS AND DISTRIBUTIONS. (a) Dividends and
distributions on Interests of a particular series or any class thereof may be
paid with such frequency as the Trustees may determine, which may be daily or
otherwise, pursuant to a standing resolution or a resolution adopted only once
or with such frequency as the Trustees may determine, to the Holders of
Interests in that series or class, from such of the income and capital gains,
accrued or realized, from the Trust Property belonging to that series, or in the
case of a class, belonging to that series and allocable to that class, as the
Trustees may determine, after providing for actual and accrued liabilities
belonging to that series. All dividends and distributions on Interests in a
particular series or class thereof shall be distributed pro rata to the Holders
of Interests in that series or class in proportion to the total outstanding
Interests in that series or class held by such Holders at the date and time of
record established for the payment of such dividends or distribution, except to
the extent otherwise required or permitted by the preferences and special or
relative rights and privileges of any series or class. Such dividends and
distributions may be made in cash or Interests of that series or class or a
combination thereof as determined by the Trustees or pursuant to any program
that the Trustees may have in effect at the time for the election by each Holder
of the mode of the paying of such dividend or distribution to that Holder. Any
such dividend or distribution paid in Interests will be paid at the net asset
value thereof as determined in accordance with Section 7.4.
(b) The Interests in a series or a class of the Trust shall
represent beneficial interests in the Trust Property belonging to such series or
in the case of a class, belonging to such series and allocable to such class.
Each Holder of Interests in a series or a class shall be entitled to receive its
pro rata share of distributions of income and capital gains made with respect to
such series or such class. Upon reduction or withdrawal of its Interests or
indemnification for liabilities incurred by reason of being or having been a
Holder of Interests in a series or a class, such Holder shall be paid solely out
of the funds and property of such series or in the case of a class, the funds
and property of such series and allocable to such class of the Trust. Upon
liquidation or termination of a series or class of the Trust, Holders of
Interests in such series or class shall be entitled to receive a pro rata share
of the Trust Property belonging to such series or in the case of a class,
belonging to such series and allocable to such class.
6.7 VOTING RIGHTS. Notwithstanding any other provision hereof,
on each matter submitted to a vote of the Holders, each Holder shall be entitled
to one vote for each whole Interest standing in his name on the books of the
Trust, and each fractional Interest shall be entitled to a proportionate
fractional vote, irrespective of the series thereof or class thereof, and all
Interests of all series and classes thereof shall vote together as a single
class; provided, however, that (a) as to any matter with respect to which a
separate vote of one or more series or classes thereof is permitted or required
by the 1940 Act or the provisions of the instrument establishing and designating
the series or class, such requirements as to a separate vote by such series or
class thereof shall apply in lieu of all Interests of all series and classes
thereof voting together; and (b) as to any matter which affects only the
interests of one or more particular series or classes thereof, only the Holders
of the one or more affected series or classes shall be entitled to vote, and
each such series or class shall vote as a separate series or class.
6.8 RECORD DATES. The Trustees may from time to time close the
transfer books or establish record dates and times for the purposes of
determining the Holders entitled to be treated as such, to the extent provided
or referred to in Section 8.6.
6.9 TRANSFER. All Interests of each particular series or class
thereof shall be transferable, but transfers of Interests of a particular series
or class thereof will be recorded on the Interest transfer records of the Trust
applicable to that series or class only at such times as Holders shall have the
right to require the Trust to redeem Interests of that series or class and at
such other times as may be permitted by the Trustees.
6.10 EQUALITY. Except as provided herein or in the instrument
designating and establishing any class or series, all Interests of each
particular series or class thereof shall represent an equal proportionate
interest in the assets belonging to that series, or in the case of a class,
belonging to that series and allocable to that class, subject to the liabilities
belonging to that series, and each Interest of any particular series or class
shall be equal to each other Interest of that series or class; but the
provisions of this sentence shall not restrict any distinctions permissible
under Section 6.6 that may exist with respect to dividends and distributions on
Interests of the same series or class. The Trustees may from time to time divide
or combine the Interests of any particular series or class into a greater or
lesser number of Interests of that series or class without thereby changing the
proportionate beneficial interest in the assets belonging to that series or
class or in any way affecting the rights or Interests of any other series or
class.
6.11 FRACTIONS. Any fractional Interest of any series or
class, if any such fractional Interest is outstanding, shall carry
proportionately all the rights and obligations of a whole Interest of that
series or class, including rights and obligations with respect to voting,
receipt of dividends and distributions, redemption of Interests, and liquidation
of the Trust.
6.12 CLASS DIFFERENCES. Subject to Section 6.3, the relative
rights and preferences of the classes of any series may differ in such other
respects as the Trustees may determine to be appropriate in their sole
discretion, provided that such differences are set forth in the instrument
establishing and designating such classes and executed by a majority of the
Trustees.
6.13 CONVERSION OF INTERESTS. Subject to compliance with the
requirements of the 1940 Act, the Trustees shall have the authority to provide
that Holders of Interests of any series shall have the right to convert said
Interests into one or more other series in accordance with such requirements and
procedures as may be established by the Trustees. The Trustees shall also have
the authority to provide that Holders of Interests of any class of a particular
series shall have the right to convert said Interests into one or more other
classes of that particular series or any other series in accordance with such
requirements and procedures as may be established by the Trustees.
6.14 INVESTMENTS IN THE TRUST. The Trustees may accept
investments in the Trust from such persons and on such terms and for such
consideration, not inconsistent with the provisions of the 1940 Act, as they
from time to time authorize. The Trustees may authorize any distributor,
principal underwriter, custodian, transfer agent or other person to accept
orders for the purchase of Interests that conform to such authorized terms and
to reject any purchase orders for Interests whether or not conforming to such
authorized terms.
6.15 TRUSTEES AND OFFICERS AS HOLDERS. Any Trustee, officer or
other agent of the Trust, and any organization in which any such person is
interested, may acquire, own, hold and dispose of Interests of the Trust to the
same extent as if such person were not a Trustee, officer or other agent of the
Trust; and the Trust may issue and sell or cause to be issued and sold and may
purchase Interests from any such person or any such organization subject only to
the general limitations, restrictions or other provisions applicable to the sale
or purchase of Interests generally.
6.16 NO PREEMPTIVE RIGHTS; DERIVATIVE SUITS. Holders shall
have no preemptive or other right to subscribe to any additional Interests or
other securities issued by the Trust. No action may be brought by a Holder on
behalf of the Trust unless Holders owning no less than 10% of the then
outstanding Interests, or series or class thereof, join in the bringing of such
action. A Holder of Interests in a particular series or a particular class of
the Trust shall not be entitled to participate in a derivative or class action
lawsuit on behalf of any other series or any other class or on behalf of the
Holders of Interests in any other series or any other class of the Trust.
6.17 NO APPRAISAL RIGHTS. Holders shall have no right to
demand payment for their Interests or to any other rights of dissenting Holders
in the event the Trust participates in any transaction which would give rise to
appraisal or dissenters' rights by a stockholder of a corporation organized
under the General Corporation Law of Delaware, or otherwise.
6.18 STATUS OF INTERESTS AND LIMITATION OF PERSONAL LIABILITY.
Interests shall be deemed to be personal property giving only the rights
provided in this Amended and Restated Declaration of Trust. Every Holder by
virtue of acquiring Interests shall be held to have expressly assented and
agreed to the terms hereof and to be bound hereby. The death, incapacity,
dissolution, termination or bankruptcy of a Holder during the continuance of the
Trust shall not operate to dissolve or terminate the Trust or any series thereof
nor entitle the representative of such Holder to an accounting or to take any
action in court or elsewhere against the Trust or the Trustees, but shall
entitle the representative of such Holder only to the rights of such Holder
under this Trust. Ownership of Interests shall not entitle the Holder to any
title in or to the whole or any part of the Trust Property or right to call for
a partition or division of the same or for an accounting, nor shall the
ownership of Interests constitute the Holders as partners. Neither the Trust nor
the Trustees, nor any officer, employee or agent of the Trust, shall have any
power to bind personally any Holder, nor except as specifically provided herein
to call upon any Holder for the payment of any sum of money or assessment
whatsoever other than such as the Holder may at any time personally agree to
pay.
ARTICLE VII
PURCHASES AND REDEMPTIONS
7.1 PURCHASES. The Trustees, in their discretion, may, from
time to time, without a vote of the Holders, permit the purchase of Interests by
such party or parties (or increase in the Interests of a Holder), for such type
of consideration, including, without limitation, cash or property, at such time
or times (including, without limitation, each business day), and on such terms
as the Trustees may deem best, and may in such manner acquire other assets
(including, without limitation, the acquisition of assets subject to, and in
connection with the assumption of, liabilities) and businesses.
7.2 REDEMPTION BY HOLDER. Each Holder of Interests of the
Trust or any series or class thereof shall have the right at such times as may
be permitted by the Trust to require the Trust to redeem all or any part of his
or her Interests of the Trust, or series or class thereof, at a redemption price
equal to the net asset value per Interest of the Trust or series or class
thereof, next determined in accordance with Section 7.4 hereof after the
Interests are properly tendered for redemption, subject to any contingent
deferred sales charge or redemption charge in effect at the time of redemption.
Payment of the redemption price shall be in cash; provided, however, that if the
Trustees determine, which determination shall be conclusive, that conditions
exist which make payment wholly in cash unwise or undesirable, the Trust may,
subject to the requirements of the 1940 Act, make payment wholly or partly in
securities or other assets belonging to the Trust or series or class thereof of
which the Interests being redeemed are part of the value of such securities or
assets used in such determination of the net asset value.
Notwithstanding the foregoing, the Trust may postpone payment
of the redemption price and may suspend the right of the Holders of Interests of
the Trust, or series or class thereof, to require the Trust to redeem Interests
of the Trust, or of any series or class thereof, during any period or at any
time when and to the extent permissible under the 1940 Act.
7.3 REDEMPTION BY TRUST. Each Interest of the Trust, or series
or class thereof that has been established and designated is subject to
redemption by the Trust at the redemption price which would be applicable if
such Interest was then being redeemed by the Holder pursuant to Section 7.2
hereof: (a) at any time, if the Trustees determine in their sole discretion and
by majority vote that it is in the best interest of the Trust, or any series or
class thereof, to so redeem, or (b) upon such other conditions as may from time
to time be determined by the Trustees and set forth in the then current
Prospectus of the Trust with respect to maintenance of Holder accounts of a
minimum amount. Upon such redemption the Holders of the Interests so redeemed
shall have no further right with respect thereto other than to receive payment
of such redemption price.
7.4 NET ASSET VALUE. The net asset value per Interest of any
series shall be (a) in the case of a series whose Interests are not divided into
classes, the quotient obtained by dividing the value of the net assets of that
series (being the value of the assets belonging to that series less the
liabilities belonging to that series) by the total number of Interests of that
series outstanding, and (b) in the case of a class of Interests of a series
whose Interests are divided into classes, the quotient obtained by dividing the
value of the net assets of that series allocable to such class (being the value
of the assets belonging to that series allocable to such class less the
liabilities belonging to such class) by the total number of Interests of such
class outstanding; all determined in accordance with the methods and procedures,
including without limitation those with respect to rounding, established by the
Trustees from time to time.
The Trustees may determine to maintain the net asset value per
Interest of any series or any class at a designated constant dollar amount and
in connection therewith may adopt procedures consistent with the 1940 Act for
continuing declarations of income attributable to that series or that class as
dividends payable in additional Interests of that series at the designated
constant dollar amount and for the handling of any losses attributable to that
series or that class. Such procedures may provide that in the event of any loss
each Holder shall be deemed to have contributed to the capital of the Trust
attributable to that series his or her pro rata portion of the total number of
Interests required to be canceled in order to permit the net asset value per
Interest of that series or class to be maintained, after reflecting such loss,
at the designated constant dollar amount. Each Holder of the Trust shall be
deemed to have agreed, by his or her investment in any series or class with
respect to which the Trustees shall have adopted any such procedure, to make the
contribution referred to in the preceding sentence in the event of any such
loss.
ARTICLE VIII
HOLDERS
8.1 RIGHTS OF HOLDERS. The right to conduct any business
hereinbefore described is vested exclusively in the Trustees, and the Holders
shall have no rights under this Declaration or with respect to the Trust
Property other than the beneficial interest conferred by their Interests and the
voting rights accorded to them under this Declaration.
8.2 REGISTER OF INTERESTS. A register shall be kept by the
Trust under the direction of the Trustees which shall contain the names and
addresses of the Holders and the number of Interests held by each Holder. Each
such register shall be conclusive as to the identity of the Holders of the Trust
and the Persons who shall be entitled to payments of distributions or otherwise
to exercise or enjoy the rights of Holders. No Holder shall be entitled to
receive payment of any distribution, nor to have notice given to it as herein
provided, until it has given its address to such officer or agent of the
Trustees as shall keep the said register for entry thereon. No certificates
certifying the ownership of interests need be issued except as the Trustees may
otherwise determine from time to time.
8.3 NOTICES. Any and all notices to which any Holder hereunder
may be entitled and any and all communications shall be deemed duly served or
given if presented personally to a Holder, left at his or her residence or usual
place of business, or sent via United States mail or by electronic transmission
to a Holder at his or her address as it is registered with the Trust, as
provided in Section 8.2. If mailed, such notice shall be deemed to be given when
deposited in the United States mail addressed to the Holder at his or her
address as it is registered with the Trust, as provided in Section 8.2, with
postage thereon prepaid.
8.4 MEETINGS OF HOLDERS. Meetings of the Holders may be called
at any time by a majority of the Trustees and shall be called by any Trustee
upon written request of Holders holding, in the aggregate, not less than 10% of
the Interests (or series or class thereof), such request specifying the purpose
or purposes for which such meeting is to be called. Any such meeting shall be
held within or without the State of Delaware on such day and at such time as the
Trustees shall designate. Holders of one-third of the Interests in the Trust,
present in person or by proxy, shall constitute a quorum for the transaction of
any business, except as may otherwise be required by the 1940 Act or other
applicable law or by this Declaration or the By-Laws of the Trust. If a quorum
is present at a meeting, an affirmative vote by the Holders present, in person
or by proxy, holding more than 50% of the total Interests (or series or class
thereof) of the Holders present, either in person or by proxy, at such meeting
constitutes the action of the Holders, unless the 1940 Act, other applicable
law, this Declaration or the By-Laws of the Trust require a greater number of
affirmative votes. Notwithstanding the foregoing, the affirmative vote by the
Holders present, in person or by proxy, holding less than 50% of the Interests
(or class or series thereof) of the Holders present, in person or by proxy, at
such meeting shall be sufficient for adjournments. Any meeting of Holders,
whether or not a quorum is present, may be adjourned for any lawful purpose
provided that no meeting shall be adjourned for more than six months beyond the
originally scheduled meeting date. Any adjourned session or sessions may be
held, within a reasonable time after the date set for the original meeting
without the necessity of further notice.
8.5 NOTICE OF MEETINGS. Written or printed notice of all
meetings of the Holders, stating the time, place and purposes of the meeting,
shall be given as provided in Section 8.3. At any such meeting, any business
properly before the meeting may be considered, whether or not stated in the
notice of the meeting. Any adjourned meeting held as provided in Section 8.4
shall not require the giving of additional notice.
8.6 RECORD DATE. For the purpose of determining the Holders
who are entitled to notice of any meeting, to vote at any meeting, to
participate in any distribution, or for the purpose of any other action, the
Trustees may from time to time fix a date, not more than 90 calendar days prior
to the date of any meeting of the Holders or payment of distributions or other
action, as the case may be, as a record date for the determination of the
persons to be treated as Holders of record for such purposes, and any Holder who
was a Holder at the date and time so fixed shall be entitled to vote at such
meeting or to be treated as a Holder of record for purposes of such other
action, even though he or she has since that date and time disposed of his or
her Interests, and no Holder becoming such after that date and time shall be so
entitled to vote at such meeting or to be treated as a Holder of record for
purposes of such other action. If the Trustees shall divide the Interests into
two or more series in accordance with Section 6.2 herein, nothing in this
Section shall be construed as precluding the Trustees from setting different
record dates for different series and if the Trustees shall divide any series
into two or more classes in accordance with Section 6.3 herein, nothing in this
Section 8.6 shall be construed as precluding the Trustees from setting different
record dates for different classes.
8.7 PROXIES, ETC. At any meeting of Holders, any Holder
entitled to vote thereat may vote by proxy, provided that no proxy shall be
voted at any meeting unless it shall have been placed on file with the
Secretary, or with such other officer or agent of the Trust as the Secretary may
direct, for verification prior to the time at which such vote shall be taken.
(a) Pursuant to a resolution of a majority of the Trustees,
proxies may be solicited in the name of one or more Trustees or one or more of
the officers of the Trust. Only Holders of record shall be entitled to vote.
Each Holder shall be entitled to a vote proportionate to its Interest in the
Trust.
(b) When Interests are held jointly by several persons, any
one of them may vote at any meeting in person or by proxy in respect to such
Interest, but if more than one of them shall be present at such meeting in
person or by proxy, and such joint owners or their proxies so present disagree
as to any vote to be cast, such vote shall not be received in respect to such
Interest.
(c) A proxy purporting to be executed by or on behalf of a
Holder shall be deemed valid unless challenged at or prior to its exercise, and
the burden of proving invalidity shall rest on the challenger. If the Holder is
a minor or a person of unsound mind, and subject to guardianship or to the legal
control of any other person regarding the charge or management of his or her
Interest, he or she may vote by his or her guardian or such other person
appointed or having such control, and such vote may be given in person or by
proxy.
8.8 REPORTS. The Trustees shall cause to be prepared, at least
annually, a report of operations containing a balance sheet and statement of
income and undistributed income of the Trust prepared in conformity with
generally accepted accounting principles and an opinion of an independent public
accountant on such financial statements. The Trustees shall, in addition,
furnish to the Holders at least semi-annually an interim report containing an
unaudited balance sheet as of the end of such period and an unaudited statement
of income and surplus for the period from the beginning of the current Fiscal
Year to the end of such period.
8.9 INSPECTION OF RECORDS. Any Holder, upon reasonable notice
to the Trust, may inspect and copy, during normal business hours, the following
Trust documents:
(a) A copy of the declaration of trust and certificate of
trust and all amendments thereto, together with copies of any written powers of
attorney pursuant to which the declaration of trust and any certificate and any
amendments thereto have been executed;
(b) Bylaws;
(c) minutes of meetings of the Holders; and
(d) semi-annual and annual reports.
Other records of the Trust, including a current list of the name and
last known business, residence or mailing address of each Holder and Trustee,
upon reasonable notice to the Trust, may be open to inspection by Holders during
normal business hours, if determined by the Trustees to be for a proper and
lawful purpose.
Any such request to inspect or copy records of the Trust by a Holder
shall be in writing and shall state the purpose of such request. The cost of any
copying shall be borne by the Holder and the Trust may request payment in
advance prior to honoring the Holder's request.
Notwithstanding anything to contrary, the Trustees of the Trust shall
have the right to keep confidential from the Holders, for such period of time as
the Trustees deem reasonable, any information that the Trustees reasonably
believe to be in the nature of trade secrets or other information the disclosure
of which the Trustees in good faith believe is not in the best interest of the
Trust or could damage the Trust or its business or which the Trust is required
by law or by agreement with a third party to keep confidential.
8.10 VOTING POWERS. (a) The Holders shall have power to vote
only (i) for the election of Trustees as contemplated by Section 2.2 hereof,
(ii) with respect to any investment advisory contract as contemplated by Section
4.1 hereof, (iii) with respect to termination of the Trust as provided in
Section 9.2 hereof, (iv) with respect to amendments to the Declaration of Trust
as provided in Section 9.3 hereof, (v) with respect to any merger, consolidation
or sale of assets as provided in Section 9.4 hereof, (vi) with respect to
incorporation of the Trust to the extent and as provided in Section 9.5 hereof,
and (vii) with respect to such additional matters relating to the Trust as may
be required by the 1940 Act, DBTA, or any other applicable law, the Declaration,
the By-Laws or any registration of the Trust with the Commission (or any
successor agency) or any state, or as and when the Trustees may consider
necessary or desirable.
(b) Each Holder shall be entitled to vote based on the ratio
his or her Interest bears to the Interests of all Holders entitled to vote.
Until Interests are issued, the Trustees may exercise all rights of Holders and
may take any action required by law, the Declaration or the By-Laws to be taken
by Holders. The By-Laws may include further provisions for Holders' votes and
meetings and related matters not inconsistent with this Declaration.
8.11 HOLDER ACTION BY WRITTEN CONSENT. Any action which may be
taken by the Holders may be taken without notice and without a meeting if
Holders holding more than 50% of the total Interests entitled to vote (or such
larger proportion thereof as shall be required by any express provision of this
Declaration) shall consent to the action in writing and the written consents
shall be filed with the records of the meetings of Holders. Such consents shall
be treated for all purposes as votes taken at a meeting of the Holders.
8.12 HOLDER COMMUNICATIONS. (a) Whenever ten or more Holders
who have been such for at least six months preceding the date of application,
and who hold in the aggregate at least 1% of the total Interests, shall apply to
the Trustees in writing, stating that they wish to communicate with other
Holders with a view to obtaining signatures for a request for a meeting of
Holders and accompanied by a form of communication and request which they wish
to transmit, the Trustees shall within five business days after receipt of such
application either (i) afford to such applicants access to a list of the names
and addresses of all Holders as recorded on the books of the Trust; or (ii)
inform such applicants as to the approximate number of Holders, and the
approximate cost of transmitting to them the proposed communication and form of
request.
(b) If the Trustees elect to follow the course specified in
clause (ii) above, the Trustees, upon the written request of such applicants,
accompanied by a tender of the material to be transmitted and of the reasonable
expenses of transmission, shall, with reasonable promptness, transmit, by United
States mail or by electronic transmission, such material to all Holders at their
addresses as recorded on the books, unless within five business days after such
tender the Trustees shall transmit, by United States mail or by electronic
transmission, to such applicants and file with the Commission, together with a
copy of the material to be transmitted, a written statement signed by at least a
majority of the Trustees to the effect that in their opinion either such
material contains untrue statements of fact or omits to state facts necessary to
make the statements contained therein not misleading, or would be in violation
of applicable law, and specifying the basis of such opinion. The Trustees shall
thereafter comply with any order entered by the Commission and the requirements
of the 1940 Act and the Securities Exchange Act of 1934.
ARTICLE IX
Duration; Termination of Trust;
AMENDMENT; MERGERS; ETC.
9.1 DURATION. Subject to possible termination in accordance
with the provisions of Section 9.2, the Trust created hereby shall continue
perpetually pursuant to Section 3808 of DBTA.
9.2 TERMINATION OF TRUST. (a) The Trust may be terminated (i)
by the affirmative vote of the Holders of not less than two-thirds of the
Interests in the Trust at any meeting of the Holders, or (ii) by an instrument
in writing, without a meeting, signed by a majority of the Trustees and
consented to by the Holders of not less than two-thirds of such Interests, or
(iii) by the Trustees by written notice to the Holders. Upon any such
termination,
(i) The Trust shall carry on no business except for the
purpose of winding up its affairs.
(ii) The Trustees shall proceed to wind up the affairs of
the Trust and all of the powers of the Trustees under this Declaration shall
continue until the affairs of the Trust shall have been wound up, including the
power to fulfill or discharge the contracts of the Trust, collect its
assets, sell, convey, assign, exchange, or otherwise dispose of all or
any part of the remaining Trust Property to one or more Persons at
public or private sale for consideration which may consist in whole or
in part of cash, securities or other property of any kind, discharge or
pay its liabilities, and do all other acts appropriate to liquidate its
business; provided that any sale, conveyance, assignment, exchange, or
other disposition of all or substantially all of the Trust Property
shall require approval of the principal terms of the transaction and
the nature and amount of the consideration by the Holders with a
Majority Interests Vote.
(iii) After paying or adequately providing for the payment
of all liabilities, and upon receipt of such releases, indemnities and refunding
agreements, as they deem necessary for their protection, the Trustees may
distribute the remaining Trust Property, in cash or in kind or partly each,
among the Holders according to their respective rights.
(b) Upon termination of the Trust and distribution to the
Holders as herein provided, a majority of the Trustees shall execute and lodge
among the records of the Trust an instrument in writing setting forth the fact
of such termination and file a certificate of cancellation in accordance with
Section 3810 of the DBTA. Upon termination of the Trust, the Trustees shall
thereon be discharged from all further liabilities and duties hereunder, and the
rights and interests of all Holders shall thereupon cease.
9.3 AMENDMENT PROCEDURE.
(a) All rights granted to the Holders under this Declaration
of Trust are granted subject to the reservation of the right of the Trustees to
amend this Declaration of Trust as herein provided, except as set forth herein
to the contrary. Subject to the foregoing, the provisions of this Declaration of
Trust (whether or not related to the rights of Holders) may be amended at any
time, so long as such amendment is not in contravention of applicable law,
including the 1940 Act, by an instrument in writing signed by a majority of the
Trustees (or by an officer of the Trust pursuant to the vote of a majority of
such Trustees). Any such amendment shall be effective as provided in the
instrument containing the terms of such amendment or, if there is no provision
therein with respect to effectiveness, upon the execution of such instrument and
of a certificate (which may be a part of such instrument) executed by a Trustee
or officer of the Trust to the effect that such amendment has been duly adopted.
(b) No amendment may be made, under Section 9.3(a) above,
which would change any rights with respect to any Interest in the Trust by
reducing the amount payable thereon upon liquidation of the Trust, by repealing
the limitations on personal liability of any Holder or Trustee, or by
diminishing or eliminating any voting rights pertaining thereto, except with a
Majority Interests Vote.
(c) A certification signed by a majority of the Trustees
setting forth an amendment and reciting that it was duly adopted by the Holders
or by the Trustees as aforesaid or a copy of the Declaration, as amended, and
executed by a majority of the Trustees, shall be conclusive evidence of such
amendment when lodged among the records of the Trust.
(d) Notwithstanding any other provision hereof, until such
time as Interests are first sold, this Declaration may be terminated or amended
in any respect by the affirmative vote of a majority of the Trustees or by an
instrument signed by a majority of the Trustees.
9.4 MERGER, CONSOLIDATION AND SALE OF ASSETS. The Trust may
merge or consolidate with any other corporation, association, trust or other
organization or may sell, lease or exchange all or substantially all of its
property, including its good will, upon such terms and conditions and for such
consideration when and as authorized by no less than a majority of the Trustees
and by a Majority Interests Vote of the Trust or by an instrument or instruments
in writing without a meeting, consented to by the Holders of not less than 50%
of the total Interests of the Trust or such series, as the case may be, and any
such merger, consolidation, sale, lease or exchange shall be deemed for all
purposes to have been accomplished under and pursuant to the statutes of the
State of Delaware. In accordance with Section 3815(f) of DBTA, an agreement of
merger or consolidation may effect any amendment to the Declaration or By-Laws
or effect the adoption of a new declaration of trust or by-laws of the Trust if
the Trust is the surviving or resulting business trust. A certificate of merger
or consolidation of the Trust shall be signed by a majority of the Trustees.
9.5 INCORPORATION. Upon a Majority Interests Vote, the
Trustees may cause to be organized or assist in organizing a corporation or
corporations under the laws of any jurisdiction or any other trust, partnership,
association or other organization to take over all of the Trust Property or to
carry on any business in which the Trust shall directly or indirectly have any
interest, and to sell, convey and transfer the Trust Property to any such
corporation, trust, association or organization in exchange for the equity
interests thereof or otherwise, and to lend money to, subscribe for the equity
interests of, and enter into any contracts with any such corporation, trust,
partnership, association or organization, or any corporation, partnership,
trust, association or organization in which the Trust holds or is about to
acquire equity interests. The Trustees may also cause a merger or consolidation
between the Trust or any successor thereto and any such corporation, trust,
partnership, association or other organization if and to the extent permitted by
law, as provided under the law then in effect. Nothing contained herein shall be
construed as requiring approval of the Holders for the Trustees to organize or
assist in organizing one or more corporations, trusts, partnerships,
associations or other organizations and selling, conveying or transferring a
portion of the Trust Property to such organizations or entities.
ARTICLE X
MISCELLANEOUS
10.1 CERTIFICATE OF DESIGNATION; AGENT FOR SERVICE OF PROCESS.
The Trust shall file, in accordance with Section 3812 of DBTA, in the office of
the Secretary of State of Delaware, a certificate of trust, in the form and with
such information required by Section 3810 of DBTA and executed in the manner
specified in Section 3811 of DBTA. In the event the Trust does not have at least
one Trustee qualified under Section 3807(a) of DBTA, then the Trust shall comply
with Section 3807(b) of DBTA by having and maintaining a registered office in
Delaware and by designating a registered agent for service of process on the
Trust, which agent shall have the same business office as the Trust's registered
office. The failure to file any such certificate, to maintain a registered
office, to designate a registered agent for service of process, or to include
such other information shall not affect the validity of the establishment of the
Trust, the Declaration, the By-Laws or any action taken by the Trustees, the
Trust officers or any other Person with respect to the Trust except insofar as a
provision of the DBTA would have governed, in which case the Delaware common law
governs.
10.2 GOVERNING LAW. This Declaration is executed by all of the
Trustees and delivered with reference to DBTA and the laws of the State of
Delaware, and the rights of all parties and the validity and construction of
every provision hereof shall be subject to and construed according to DBTA and
the laws of the State of Delaware (unless and to the extent otherwise provided
for and/or preempted by the 1940 Act or other applicable federal securities
laws); provided, however, that there shall not be applicable to the Trust, the
Trustees or this Declaration (a) the provisions of Section 3540 of Title 12 of
the Delaware Code, or (b) any provisions of the laws (statutory or common) of
the State of Delaware (other than the DBTA) pertaining to trusts which are
inconsistent with the rights, duties, powers, limitations or liabilities of the
Trustees set forth or referenced in this Declaration.
10.3 COUNTERPARTS. This Declaration may be simultaneously
executed in several counterparts, each of which shall be deemed to be an
original, and such counterparts, together, shall constitute one and the same
instrument, which shall be sufficiently evidenced by any such original
counterpart.
10.4 RELIANCE BY THIRD PARTIES. Any certificate executed by an
individual who, according to the records of the Trust or of any recording office
in which this Declaration may be recorded, appears to be a Trustee hereunder,
certifying to (a) the number or identity of Trustees or Holders, (b) the due
authorization of the execution of any instrument or writing, (c) the form of any
vote passed at a meeting of Trustees or Holders, (d) the fact that the number of
Trustees or Holders present at any meeting or executing any written instrument
satisfies the requirements of this Declaration, (e) the form of any By-Laws
adopted by or the identity of any officers elected by the Trustees, or (f) the
existence of any fact or facts which in any manner relate to the affairs of the
Trust, shall be conclusive evidence as to the matters so certified in favor of
any person dealing with the Trustees and their successors.
10.5 PROVISIONS IN CONFLICT WITH LAW OR REGULATIONS. (a) The
provisions of this Declaration are severable, and if the Trustees shall
determine, with the advice of counsel, that any of such provisions is in
conflict with the 1940 Act, the DBTA, or with other applicable laws and
regulations, the conflicting provisions shall be deemed never to have
constituted a part of this Declaration; provided, however, that such
determination shall not affect any of the remaining provisions of this
Declaration or render invalid or improper any action taken or omitted prior to
such determination.
(b) If any provision of this Declaration shall be held
invalid or unenforceable in any jurisdiction, such invalidity or
unenforceability shall attach only to such provision in such jurisdiction and
shall not in any manner affect such provision in any other jurisdiction or any
other provision of this Declaration in any jurisdiction.
10.6 TRUST ONLY. It is the intention of the Trustees to create
only a business trust under DBTA with the relationship of trustee and
beneficiary between the Trustees and each Holder from time to time. It is not
the intention of the Trustees to create a general partnership, limited
partnership, joint stock association, corporation, bailment, or any form of
legal relationship other than a Delaware business trust except to the extent
such trust is deemed to constitute a corporation under the Code and applicable
state tax laws. Nothing in this Declaration of Trust shall be construed to make
the Holders, either by themselves or with the Trustees, partners or members of a
joint stock association.
10.7 WITHHOLDING. Should any Holder be subject to withholding
pursuant to the Code or any other provision of law, the Trust shall withhold all
amounts otherwise distributable to such Holder as shall be required by law and
any amounts so withheld shall be deemed to have been distributed to such Holder
under this Declaration of Trust. If any sums are withheld pursuant to this
provision, the Trust shall remit the sums so withheld to and file the required
forms with the Internal Revenue Service, or other applicable government agency.
10.8 HEADINGS AND CONSTRUCTION. Headings are placed herein for
convenience of reference only and shall not be taken as a part hereof or control
or affect the meaning, construction or effect of this instrument. Whenever the
singular number is used herein, the same shall include the plural; and the
neuter, masculine and feminine genders shall include each other, as applicable.
IN WITNESS WHEREOF, the undersigned have caused these presents
to be executed as of the day and year first above written.
/s/ Dr. Bassam Osman January 10, 2000
Dr. Bassam Osman
Trustee
ALLIED ASSET ADVISORS FUNDS
BY-LAWS
These By-Laws are made as of the 10th day of January, 2000 and
adopted pursuant to Section 2.7 of the Declaration of Trust establishing ALLIED
ASSET ADVISORS FUNDS dated January 10, 2000, as from time to time amended
(hereinafter called the "Declaration"). All words and terms capitalized in these
By-Laws shall have the meaning or meanings set forth for such words or terms in
the Declaration.
ARTICLE I
MEETINGS OF HOLDERS
Section 1.1 ANNUAL MEETING. An annual meeting of the Holders
of Interests in the Trust, which may be held on such date and at such hour as
may from time to time be designated by the Board of Trustees and stated in the
notice of such meeting, is not required to be held unless certain actions must
be taken by the Holders as set forth in Section 8.10 of the Declaration, or
except when the Trustees consider it necessary or desirable.
Section 1.2 CHAIRPERSON. The Chairperson of the Board,
President or, in his or her absence, the Chief Operating Officer shall act as
chairperson at all meetings of the Holders and, in the absence of both of them,
the Trustee or Trustees present at the meeting may elect a temporary chairperson
for the meeting, who may be one of themselves or an officer of the Trust.
Section 1.3 PROXIES: VOTING. Holders may vote either in person
or by duly executed proxy and each Holder shall be entitled to a vote
proportionate to his or her Interest in the Trust, all as provided in Article
VIII of the Declaration. No proxy shall be valid after eleven (11) months from
the date of its execution, unless a longer period is expressly stated in such
proxy.
Section 1.4 FIXING RECORD DATES. For the purpose of
determining the Holders who are entitled to notice of or to vote or to act at a
meeting, including any adjournment thereof, or who are entitled to participate
in any distributions, or for any other proper purpose, the Trustees may from
time to time fix a record date in the manner provided in Section 8.6 of the
Declaration. If the Trustees do not, prior to any meeting of the Holders, so fix
a record date, then the date of mailing notice of the meeting shall be the
record date.
Section 1.5 INSPECTORS OF ELECTION. In advance of any meeting
of the Holders, the Trustees may appoint Inspectors of Election to act at the
meeting or any adjournment thereof. If Inspectors of Election are not so
appointed, the chairperson, if any, of any meeting of the Holders may, and on
the request of any Holder or his or her proxy shall, appoint Inspectors of
Election of the meeting. The number of Inspectors shall be either one or three.
If appointed at the meeting on the request of one or more Holders or proxies, a
Majority Interests vote shall determine whether one or three Inspectors are to
be appointed, but failure to allow such determination by the Holders shall not
affect the validity of the appointment of Inspectors of Election. In case any
person appointed as Inspector fails to appear or fails or refuses to act, the
vacancy may be filled by appointment made by the Trustees in advance of the
convening of the meeting or at the meeting by the person acting as chairperson.
The Inspectors of Election shall determine the Interests owned by Holders, the
Interests represented at the meeting, the existence of a quorum, the
authenticity, validity and effect of proxies, shall receive votes, ballots or
consents, shall hear and determine all challenges and questions in any way
arising in connection with the right to vote, shall count and tabulate all votes
or consents, determine the results, and do such other acts as may be proper to
conduct the election or vote with fairness to all Holders. If there are three
Inspectors of Election, the decision, act or certificate of a majority is
effective in all respects as the decision, act or certificate of all. On request
of the chairperson, if any, of the meeting, or of any Holder or his or her
proxy, the Inspectors of Election shall make a report in writing of any
challenge or question or matter determined by them and shall execute a
certificate of any facts found by them.
1.6 PLACE OF MEETINGS. All meetings of Holders shall be held
at the principal office of the Trust or at such other place within the United
States as shall be designated by the Trustees or the President of the Trust.
ARTICLE II
TRUSTEES
Section 2.1 ANNUAL AND REGULAR MEETINGS. The Trustees shall
hold an Annual Meeting of the Trustees for the election of officers and the
transaction of other business which may come before such meeting. Regular
meetings of the Trustees may be held without call or notice at such place or
places and times as the Trustees may by resolution provide from time to time.
Section 2.2 SPECIAL MEETINGS. Special Meetings of the Trustees
shall be held upon the call of the Chairperson, if any, the President, the
Secretary, or any two Trustees, at such time, on such day and at such place, as
shall be designated in the notice of the meeting.
Section 2.3 NOTICE. Notice of a meeting shall be given by mail
(which term shall include overnight mail) or by telegram (which term shall
include a cablegram or telefacsimile) or delivered personally (which term shall
include notice by telephone). If notice is given by mail, it shall be mailed not
later than 72 hours preceding the meeting and if given by telegram or
personally, such notice shall be delivered not later than 24 hours preceding the
meeting. Notice of a meeting of Trustees may be waived before or after any
meeting by signed written waiver. Neither the business to be transacted at, nor
the purpose of, any meeting of the Board of Trustees need the notice or waiver
of notice of such meeting, and no notice need be given of action proposed to be
taken by written consent. The attendance of a Trustee at a meeting shall
constitute a waiver of notice of such meeting except where a Trustee attends a
meeting for the express purpose of objecting, at the commencement of such
meeting, to the transaction of any business on the ground that the meeting has
not been lawfully called or convened.
Section 2.4 CHAIRPERSON: RECORDS. The Trustees shall appoint a
Chairperson of the Board from among their number. Such Chairperson of the Board
shall act as chairperson at all meetings of the Trustees; in his or her absence
the President shall act as chairperson; and, in the absence of all of them, the
Trustees present shall elect one of their number to act as temporary
chairperson. The results of all actions taken at a meeting of the Trustees, or
by written consent of the Trustees, shall be recorded by the Secretary.
Section 2.5 AUDIT COMMITTEE. The Board of Trustees may, by the
affirmative vote of a majority of the entire Board, appoint from its members an
Audit Committee composed of two or more Trustees who are not "interested
persons" (as defined in the 1940 Act) of the Trust, as the Board may from time
to time determine. The Audit Committee shall (a) recommend independent public
accountants for selection by the Board, (b) review the scope of audit,
accounting and financial internal controls and the quality and adequacy of the
Trust's accounting staff with the independent public accountants and such other
persons as may be deemed appropriate, (c) review with the accounting staff and
the independent public accountants the compliance of transactions of the Trust
with its investment adviser, administrator or any other service provider with
the financial terms of applicable contracts or agreements, (d) review reports of
the independent public accountants and comment to the Board when warranted, and
(e) report to the Board at least once each year and at such other times as the
committee deems desirable.
Section 2.6 NOMINATING COMMITTEE OF TRUSTEES. The Board of
Trustees may, by the affirmative vote of a majority of the entire Board, appoint
from its members a Trustee Nominating Committee composed of two or more
Trustees. The Trustee Nominating Committee shall recommend to the Board a slate
of persons to be nominated for election as Trustees by the Holders at a meeting
of the Holders and a person to be elected to fill any vacancy occurring for any
reason in the Board. Notwithstanding anything in this Section to the contrary,
if the Trust has in effect a plan pursuant to Rule 12b-1 under the 1940 Act, the
selection and nomination of those Trustees who are not "interested persons" (as
defined in the 1940 Act) shall be committed to the discretion of such
non-interested Trustees.
Section 2.7 EXECUTIVE COMMITTEE. The Board of Trustees may
appoint from its members an Executive Committee composed of those Trustees as
the Board may from time to time determine, of which committee the Chairperson of
the Board shall be a member. In the intervals between meetings of the Board, the
Executive Committee shall have the power of the Board to (a) determine the value
of securities and assets owned by the Trust, (b) elect or appoint officers of
the Trust to serve until the next meeting of the Board, and (c) take such action
as may be necessary to manage the business of the Trust. All action by the
Executive Committee shall be recorded and reported to the Board at its meeting
next succeeding such action.
Section 2.8 OTHER COMMITTEES. The Board of Trustees may
appoint from among its members other committees composed of two or more of its
Trustees which shall have such powers as may be delegated or authorized by the
resolution appointing them.
Section 2.9 COMMITTEE PROCEDURES. The Board of Trustees may at
any time change the members of any committee, fill vacancies or discharge any
committee. In the absence of any member of any committee, the member or members
thereof present at any meeting, whether or not they constitute a quorum, may
unanimously appoint to act in the place of such absent member a member of the
Board. Each committee may fix its own rules of procedure and may meet as and
when provided by those rules. Copies of the minutes of all meetings of
committees other than the Nominating Committee and the Executive Committee shall
be distributed to the Board unless the Board shall otherwise provide.
ARTICLE III
OFFICERS
Section 3.1 OFFICERS OF THE TRUST; COMPENSATION. The officers
of the Trust shall consist of a President, a Secretary, a Treasurer and such
other officers or assistant officers, including Vice Presidents, as may be
elected by the Trustees. Any two or more of the offices may be held by the same
person. The Trustees may designate a Vice President as an Executive Vice
President and may designate the order in which the other Vice Presidents may
act. No officer of the Trust need be a Trustee. The Board of Trustees may
determine what, if any, compensation shall be paid to officers of the Trust.
Section 3.2 ELECTION AND TENURE. At the initial organization
meeting and thereafter at each annual meeting of the Trustees, the Trustees
shall elect the President, Secretary, Treasurer and such other officers as the
Trustees shall deem necessary or appropriate in order to carry out the business
of the Trust. Such officers shall hold office until the next annual meeting of
the Trustees and until their successors have been duly elected and qualified.
The Trustees may fill any vacancy in office or add any additional officers at
any time.
Section 3.3 REMOVAL OF OFFICERS. Any officer may be removed at
any time, with or without cause, by action of a majority of the Trustees. This
provision shall not prevent the making of a contract of employment for a
definite term with any officer and shall have no effect upon any cause of action
which any officer may have as a result of removal in breach of a contract of
employment. Any officer may resign at any time by notice in writing signed by
such officer and delivered or mailed to the President or Secretary, and such
resignation shall take effect immediately, or at a later date according to the
terms of such notice in writing.
Section 3.4 BONDS AND SURETY. Any officer may be required by
the Trustees to be bonded for the faithful performance of his or her duties in
such amount and with such sureties as the Trustees may determine.
Section 3.5 PRESIDENT AND VICE-PRESIDENTS. The President shall
be the chief executive officer of the Trust and, subject to the control of the
Trustees, shall have general supervision, direction and control of the business
of the Trust and of its employees and shall exercise such general powers of
management as are usually vested in the office of president of a corporation.
The President shall preside at all meetings of the Holders and, in the absence
of the Chairperson of the Board, the President shall preside at all meetings of
the Trustees. Subject to direction of the Trustees, the President shall have the
power, in the name and on behalf of the Trust, to execute any and all loan
documents, contracts, agreements, deeds, mortgages, and other instruments in
writing, and to employ and discharge employees and agents of the Trust. Unless
otherwise directed by the Trustees, the President shall have full authority and
power, on behalf of all of the Trustees, to attend and to act and to vote, on
behalf of the Trust at any meetings of business organizations in which the Trust
holds an interest, or to confer such powers upon any other persons, by executing
any proxies duly authorizing such persons. The President shall have such further
authorities and duties as the Trustees shall from time to time determine. In the
absence or disability of the President, the Vice Presidents in order of their
rank or the Vice President designated by the Trustees, shall perform all of the
duties of President, and when so acting shall have all the powers of and be
subject to all of the restrictions upon the President. Subject to the direction
of the President, the Treasurer and each Vice President shall have the power in
the name and on behalf of the Trust to execute any and all loan documents,
contracts, agreements, deeds, mortgages and other instruments in writing, and,
in addition, shall have such other duties and powers as shall be designated from
time to time by the Trustees, the Chairperson, or the President.
Section 3.6 SECRETARY. The Secretary shall keep the minutes of
all meetings of, and record all votes of, Holders, Trustees and any committee of
Trustees, provided that, in the absence or disability of the Secretary, the
Holders or Trustees or any committee of Trustees may appoint any other person to
keep the minutes of a meeting and record votes. The Secretary shall attest the
signature or signatures of the officer or officers executing any instrument on
behalf of the Trust. The Secretary shall also perform any other duties commonly
incident to such office in a Delaware business trust and shall have such other
authorities and duties as the Trustees shall from time to time determine.
Section 3.7 TREASURER. Except as otherwise directed by the
Trustees, the Treasurer shall have the general supervision of the monies, funds,
securities, notes receivable and other valuable papers and documents of the
Trust, and shall have and exercise under the supervision of the Trustees and of
the Chairperson and the President all powers and duties normally incident to his
office. He or she may endorse for deposit or collection all notes, checks and
other instruments payable to the Trust or to its order. He or she shall deposit
all funds of the Trust as may be ordered by the Trustees, the Chairperson or the
President. He or she shall keep accurate account of the books of the Trust's
transactions which shall be the property of the Trust and which, together with
all other property of the Trust in his or her possession, shall be subject at
all times to the inspection and control of the Trustees. Unless the Trustees
shall otherwise determine, the Treasurer shall be the principal accounting
officer of the Trust and shall also be the principal financial officer of the
Trust. He or she shall have such other duties and authorities as the Trustees
shall from time to time determine. Notwithstanding anything to the contrary
herein contained, the Trustees may authorize any advisor or administrator to
maintain bank accounts and deposit and disburse funds on behalf of the Trust.
Section 3.8 OTHER OFFICERS AND DUTIES. The Trustees may elect
such other officers and assistant officers as they shall from time to time
determine to be necessary or desirable in order to conduct the business of the
Trust. Assistant officers shall act generally in the absence of the officer whom
they assist and shall assist that officer in the duties of his or her office.
Each officer, employee and agent of the Trust shall have such other duties and
authority as may be conferred upon him or her by the Trustees or delegated to
him or her by the President.
ARTICLE IV
CUSTODIAN
Section 4.1 APPOINTMENT AND DUTIES. The Trustees shall at all
times employ a custodian or custodians with authority as its agent, but subject
to such restrictions, limitations and other requirements, if any, as may be
contained in these By-Laws:
(1) to hold the securities owned by the Trust and
deliver the same upon written order;
(2) to receive and receipt for any moneys due to the
Trust and deposit the same in its own banking department or elsewhere
as the Trustees may direct;
(3) to disburse such funds upon orders or vouchers;
(4) if authorized by the Trustees, to keep the books
and accounts of the Trust and furnish clerical and accounting services;
and
(5) if authorized to do so by the Trustees, to
compute the net income and net assets of the Trust;
all upon such basis of compensation as may be agreed upon between the Trustees
and the custodian. The Trustees may also authorize the custodian to employ one
or more subcustodians, from time to time, to perform such of the acts and
services of the custodian and upon such terms and conditions as may be agreed
upon between the custodian and such sub-custodian and approved by the Trustee.
Section 4.2 CENTRAL CERTIFICATE SYSTEM. Subject to such rules,
regulations and orders as the Commission may adopt, the Trustees may direct the
custodian to deposit all or any part of the securities owned by the Trust in a
system for the central handling of securities established by a national
securities exchange or a national securities association registered with the
Commission under the Securities Exchange Act of 1934, any such other person or
entity with which the Trustees may authorize deposit in accordance with the 1940
Act.
ARTICLE V
MISCELLANEOUS
Section 5.1 DEPOSITORIES. In accordance with Article IV of
these By-Laws, the funds of the Trust shall be deposited in such depositories as
the Trustees shall designate and shall be drawn out on checks, drafts or other
orders signed by such officer, officers, agent or agents (including any advisor
or administrator), as the Trustees may from time to time authorize.
Section 5.2 SIGNATURES. All contracts and other instruments
shall be executed on behalf of the Trust by such officer, officers, agent or
agents, as provided in these By-Laws or as the Trustees may from time to time by
resolution or authorization provide.
Section 5.3 SEAL. The seal of the Trust shall, subject to
alteration by the Trustees, consist of a flat-faced circular die with the word
"Delaware", together with the name of the Trust and the year of its
organization, cut or engraved thereon; but, unless otherwise required by the
Trustees, the seal shall not be necessary to be placed on, and its absence shall
not impair the validity of, any document, instrument or other paper executed and
delivered by or on behalf of the Trust.
Section 5.4 FISCAL YEAR. The fiscal year of the Trust shall be
established by the Board of Trustees and may be changed from time to time.
ARTICLE VI
INTERESTS
Section 6.1 INTERESTS. Except as otherwise provided by law,
the Trust shall be entitled to recognize the exclusive right of a person in
whose name Interests stand on the record of Holders as the owners of such
Interests for all purposes, including, without limitation, the rights to receive
distributions, and to vote as such owner, and the Trust shall not be bound to
recognize any owner, and the Trust shall not be bound to recognize any equitable
or legal claim to or interest in any such Interests on the part of any other
person.
Section 6.2 REGULATIONS. The Trustees may make such additional
rules and regulations, not inconsistent with these By-Laws, as they may deem
expedient concerning the sale and purchase of Interests of the Trust.
Section 6.3 DISTRIBUTION DISBURSING AGENTS AND THE LIKE. The
Trustees shall have the power to employ and compensate such distribution
disbursing agents, warrant agents and agents for the reinvestment of
distributions as they shall deem necessary or desirable. Any of such agents
shall have such power and authority as is delegated to any of them by the
Trustees.
ARTICLE VII
AMENDMENT OF BY-LAWS
Section 7.1 AMENDMENT AND REPEAL OF BY-LAWS. In accordance
with Section 2.7 of the Declaration, the Trustees shall have the power to alter,
amend or repeal the By-Laws or adopt new By-Laws at any time. The Trustees shall
in no event adopt By-Laws which are in conflict with the Declaration, DBTA, the
1940 Act or applicable federal securities laws.
Section 7.2 NO PERSONAL LIABILITY. The Declaration
establishing ALLIED ASSET ADVISORS FUNDS provides that the name "ALLIED ASSET
ADVISORS FUNDS" does not refer to the Trustees as individuals or personally; and
no Trustee, officer, employee or agent of, or Holder of Interest in, ALLIED
ASSET ADVISORS FUNDS shall be held to any personal liability, nor shall resort
be had to their private property for the satisfaction of any obligation or claim
or otherwise in connection with the affairs of ALLIED ASSET ADVISORS FUNDS
(except to the extent of a Holder's Interest in the Trust).
