<PAGE>
As filed with the Securities and Exchange Commission on November 17, 1995
1933 Act Registration No. 33-40496
1940 Act Registration No. 811-5990
SECURITIES AND EXCHANGE COMMISSION
----------------------------------
Washington, D.C. 20549
FORM N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
-----
Pre-Effective Amendment No.
---- -----
Post-Effective Amendment No. 15 X
---- -----
and/or
REGISTRATION STATEMENT UNDER THE
INVESTMENT COMPANY ACT OF 1940 -----
Amendment No. 15 X
---- -----
IAI INVESTMENT FUNDS VI, INC.
(Exact Name of Registrant as Specified in Charter)
3700 First Bank Place, P.O. Box 357
Minneapolis, Minnesota 55440
(Address of Principal Executive Offices) (Zip Code)
(612) 376-2700
(Registrant's Telephone Number, including Area Code)
Christopher J. Smith, Esq. Copy to:
3700 First Bank Place Michael J. Radmer, Esq.
P.O. Box 357 Dorsey & Whitney
Minneapolis, Minnesota 55440 220 South Sixth Street
(Name and Address of Agent for Service) Minneapolis, Minnesota 55402
It is proposed that this filing will become effective (check appropriate box)
immediately upon filing pursuant to paragraph (b)
---
on (date) pursuant to paragraph (b)
---
60 days after filing pursuant to paragraph (a)(i)
---
on (date) pursuant to paragraph (a)(i)
---
X 75 days after filing pursuant to paragraph (a)(ii)
---
on (date) pursuant to paragraph (a)(ii) of Rule 485
---
If appropriate, check the following box:
this post-effective amendment designates a new effective date for
--- a previously filed post-effective amendment
Registrant has registered an indefinite number of securities under the
Securities Act of 1933 pursuant to Rule 24f-2 under the Investment Company Act
of 1940, as amended. Rule 24f-2 Notices were last filed with the Commission on
May 23, 1995.
<PAGE>
IAI INVESTMENT FUNDS VI, INC.
FORM N-1A
CROSS-REFERENCE SHEET
<TABLE>
<CAPTION>
Item Number Caption Prospectus Caption
- ----------- ------------------------------------------- ----------------------------------------------------------
<S> <C> <C>
1 Cover Page................................. Cover Page of Prospectus
2 Synopsis................................... Fund Expense Information
3 Condensed Financial Information............ Not Applicable
4 General Description of Registrant.......... Investment Objectives and Policies; Description of
Common Stock; Additional Information
5 Management of the Fund..................... Fund Expense Information; Management; Additional
Information; Custodian, Transfer Agent and Dividend
Disbursing Agent
5A Management's Discussion of Fund Performance Not Applicable
6 Capital Stock and Other Securities Dividends, Distributions and
Tax Status; Description of Common Stock;
Additional Information
7 Purchase of Securities Being Offered Computation of Net Asset Value and Pricing; Purchase of
Shares; Automatic Investment Plan; Exchange Privilege;
Automatic Exchange Plan; Retirement Plans; Authorized
Telephone Trading
8 Redemption or Repurchase Systematic Cash Withdrawal Plan;
Redemption of Shares; Authorized
Telephone Trading
9 Pending Legal Proceedings Not Applicable
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Item Number Caption Statement of Additional Information Caption
- ------------- -------------------------------------- -----------------------------------------------------------
<S> <C> <C>
10 Cover Page............................ Cover Page of Statement of Additional Information
11 Table of Contents..................... Table of Contents
12 General Information and History....... Management
13 Investment Objectives and Policies.... Investment Objectives and Policies; Investment Restrictions
14 Management of the Fund................ Management
15 Control Persons and Principal
Holders of Securities................ Management; Capital Stock
16 Investment Advisory and Other Services Management
17 Brokerage Allocation.................. Portfolio Transactions and Allocation of Brokerage
18 Capital Stock and Other Securities.... Capital Stock
19 Purchase, Redemption and Pricing...... Purchases and Redemptions In Kind;
of Securities Being Offered........... Net Asset Value and Public Offering Price
20 Tax Status............................ Tax Status
21 Underwriters.......................... Not Applicable
22 Calculation of Performance Data....... Not Applicable
23 Financial Statements.................. Financial Statements
</TABLE>
<PAGE>
PROSPECTUS DATED FEBRUARY __, 1996
IAI AGGRESSIVE GROWTH FUND
3700 FIRST BANK PLACE
P.O. BOX 357
MINNEAPOLIS, MINNESOTA 55440
TELEPHONE 1-612-376-2700
1-800-945-3863
IAI Aggressive Growth Fund (the "Fund") is a separate portfolio of IAI
Investment Funds VI, Inc., a registered investment company authorized to issue
its shares of common stock in more than one series. The Fund's investment
objective is long-term capital appreciation. The Fund pursues its investment
objective by investing primarily in equity securities of U.S. companies that
have above-average prospects for growth.
This Prospectus sets forth concisely the information which a prospective
investor should know about the Fund before investing and it should be retained
for future reference. A "Statement of Additional Information" dated February
__, 1996 which provides a further discussion of certain areas in this Prospectus
and other matters which may be of interest to some investors, has been filed
with the Securities and Exchange Commission and is incorporated herein by
reference. For a free copy, call or write the Fund at the address or telephone
number shown above.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
<S> <C>
FUND EXPENSE INFORMATION........................................ 3
FUND DIRECTORS.................................................. 3
INVESTMENT PERFORMANCE.......................................... 4
INVESTMENT OBJECTIVE AND POLICIES.............................. 4
Portfolio Securities and Other Investment Techniques....... 5
Fund Risk Factors.......................................... 6
Investment Restrictions.................................... 7
MANAGEMENT...................................................... 7
COMPUTATION OF NET ASSET VALUE AND PRICING...................... 8
PURCHASE OF SHARES.............................................. 9
RETIREMENT PLANS................................................ 10
AUTOMATIC INVESTMENT PLAN....................................... 10
REDEMPTION OF SHARES............................................ 10
EXCHANGE PRIVILEGE.............................................. 11
AUTOMATIC EXCHANGE PLAN......................................... 11
AUTHORIZED TELEPHONE TRADING.................................... 11
SYSTEMATIC CASH WITHDRAWAL PLAN................................. 12
DIVIDENDS, DISTRIBUTIONS AND TAX STATUS......................... 12
DESCRIPTION OF COMMON STOCK..................................... 13
COUNSEL AND AUDITORS............................................ 13
CUSTODIAN, TRANSFER AGENT AND DIVIDEND DISBURSING AGENT......... 14
ADDITIONAL INFORMATION.......................................... 14
</TABLE>
2
<PAGE>
FUND EXPENSE INFORMATION
SHAREHOLDER TRANSACTION EXPENSES
- --------------------------------
Sales Load Imposed on Purchases............................ None
Sales Load Imposed on Reinvested Dividends................. None
Redemption Fees............................................ None
Exchange Fees.............................................. None
ANNUAL FUND OPERATING EXPENSES (NET OF WAIVER)
- ----------------------------------------------
(as a percentage of average daily net assets)
Management Fee............................................. 1.25%
Rule 12b-1 Fee............................................. 0%
Other Expenses............................................. 0%
Total Fund Operating Expenses............................. 1.25%
EXAMPLE:
Based upon the levels of Total Fund Operating
Expenses listed above, you would pay the following 1 Year 3 Years
------ -------
expenses on a $1,000 investment, assuming a five percent
annual return and redemption at the end of each period: $ 13 $ 40
The purpose of the above table is to assist you in understanding the
various costs and expenses that an investor in the Fund will bear directly or
indirectly. THE EXAMPLE SHOULD NOT BE CONSIDERED A REPRESENTATION OF PAST OR
FUTURE EXPENSES. ACTUAL EXPENSES MAY BE GREATER OR LESS THAN THOSE SHOWN. The
fees set forth in the table reflect estimated fees and expenses of the Fund for
its fiscal period ending March 31, 1996. The Fund's investment adviser has
voluntarily agreed to waive the Management Fee in excess of 1.25% of the Fund's
average daily net assets until March 31, 1997. Absent such voluntary waiver,
the Fund would pay 1.40% of its average daily net assets as the Management Fee.
Further information concerning fees paid by the Fund is set forth in the section
"Management" below and in the Statement of Additional Information.
FUND DIRECTORS
Madeline Betsch Richard E. Struthers
W. William Hodgson J. Peter Thompson
George R. Long Charles H. Withers
Noel P. Rahn
3
<PAGE>
INVESTMENT PERFORMANCE
From time to time the Fund may advertise performance data including
monthly, quarterly, yearly or cumulative total return and average annual total
return figures. All such figures are based on historical earnings and
performance and are not intended to be indicative of future performance. The
investment return on and principal value of an investment in the Fund will
fluctuate, so that an investor's shares, when redeemed, may be worth more or
less than their original cost.
Total return is the change in value of an investment in the Fund over
a given period, assuming reinvestment of any dividends and capital gains. A
cumulative total return reflects actual performance over a stated period of
time. An average annual total return is a hypothetical rate of return that, if
achieved annually, would have produced the same cumulative total return if
performance had been constant over the entire period.
For additional information regarding the calculation of such total
return figures, see "Investment Performance" in the Statement of Additional
Information. Further information about the performance of the Fund will be
contained in the Fund's Annual Report to shareholders which may be obtained
without charge from the Fund.
Comparative performance information may be used from time to time in
advertising or marketing the Fund's shares, including data on the performance of
other mutual funds, indexes or averages of other mutual funds, indexes of
related financial assets or data, and other competing investment and deposit
products available from or through other financial institutions. The
composition of these indexes, averages or products differs from that of the
Fund. The comparison of the Fund to an alternative investment should be made
with consideration of differences in features and expected performance. The
Fund may also note its mention in newspapers, magazines, or other media from
time to time. The Fund assumes no responsibility for the accuracy of such data.
For additional information on the types of indexes, averages and periodicals
that might be utilized by the Fund in advertising and sales literature, see the
section "Investment Performance" in the Statement of Additional Information.
INVESTMENT OBJECTIVE AND POLICIES
The investment objective of the Fund is long-term capital
appreciation. The Fund is designed for investors seeking the opportunity for
substantial long-term growth who can accept above average stock market risk and
little or no current income. The Fund will pursue its objective by investing
primarily in equity securities of U.S. companies that Investment Advisers, Inc.
(IAI), the Fund's investment adviser and manager, believes have above-average
prospects for growth. The Fund's investment objective is a fundamental policy
and may not be changed without shareholder approval. There can be no assurance
that the Fund will achieve its investment objective.
In general, the Fund will concentrate on companies that have superior
performance records, solid market positions, strong balance sheets and a
management team capable of sustaining growth. Although IAI expects the Fund
will invest primarily in the common stocks of smaller emerging and mid-sized
companies, it may invest in the securities of companies of any size that offer
strong earnings growth potential. In addition to common stocks the Fund may
also invest in securities convertible into common stocks, nonconvertible
preferred stocks and nonconvertible debt securities when IAI believes that these
securities offer opportunities for capital appreciation. Current income will
not be a substantial factor in the selection of securities.
4
<PAGE>
PORTFOLIO SECURITIES AND OTHER INVESTMENT TECHNIQUES
REPURCHASE AGREEMENTS
The Fund may invest in repurchase agreements relating to the
securities in which it may invest. In a repurchase agreement, the Fund buys a
security at one price and simultaneously agrees to sell it back at a higher
price. Delays or losses could result if the other party to the agreement
defaults or becomes bankrupt.
BORROWING
The Fund may borrow from banks for temporary or emergency purposes or
through reverse repurchase agreements. If the Fund borrows money, its share
price may be subject to greater fluctuation until the borrowing is paid off. If
the Fund makes additional investments while borrowings are outstanding, this may
be considered a form of leverage.
FOREIGN SECURITIES
The Fund may invest in securities of foreign issuers in accordance
with its investment objective and policies. In considering whether to purchase
securities of foreign issuers, IAI will consider the political and economic
conditions in a country, the prospect for changes in the value of its currency
and the liquidity of the investment in that country's securities markets. The
Fund currently intends to limit its investment in foreign securities denominated
in foreign currency and not publicly traded in the United States to no more than
15% of the value of its total assets.
ILLIQUID SECURITIES
The Fund may invest up to 15% of its total assets in securities that
are considered illiquid because of the absence of a readily available market or
due to legal or contractual restrictions. However, certain restricted
securities that are not registered for sale to the general public but that can
be resold to institutional investors may be considered liquid pursuant to
guidelines adopted by the Board of Directors. The institutional trading market
is relatively new, and the liquidity of the Fund's investments could be impaired
if trading does not develop or declines.
VENTURE CAPITAL
The Fund may invest in venture capital limited partnerships and funds
which, in turn, invest principally in securities of early stage, developing
companies. Investments in venture capital limited partnerships and funds
present a number of risks not found in investing in established enterprises
including the facts that such a partnership's portfolio will be composed almost
entirely of early-stage companies which may lack depth of management and
sufficient resources, which may be marketing a new product for which there is no
established market, and which may be subject to intense competition from larger
companies. Any investment in a venture capital fund will lack liquidity, will
be difficult to value, and the Fund will not be entitled to participate in the
management of the partnership or fund. If for any reason the services of the
general partners of a venture capital limited partnership were to become
unavailable, such limited partnership could be adversely affected.
In addition to investing in venture capital limited partnerships and
funds, the Fund may directly invest in early-stage, developing companies. The
risks associated with investing in these securities are substantially similar to
the risks set forth above. The Fund will typically purchase equity securities
in these early stage, developing companies; however from time to time, the Fund
may purchase non-investment grade debt securities in the form of convertible
notes.
5
<PAGE>
LEVERAGED BUYOUTS
The Fund may invest in leveraged buyout limited partnerships and funds
which, in turn, invest in leveraged buyout transactions ("LBOs"). An LBO,
generally, is an acquisition of an existing business by a newly formed
corporation financed largely with debt assumed by such newly formed corporation
to be later repaid with funds generated from the acquired company. Since most
LBOs are by nature highly leveraged (typically with debt to equity ratios of
approximately 9 to 1), equity investments in LBOs may appreciate substantially
in value given only modest growth in the earnings or cash flow of the acquired
business. Investments in LBOs, however, present a number of risks. Investments
in LBO limited partnerships and funds will normally lack liquidity and may be
subject to intense competition from other LBO limited partnerships and funds.
Additionally, if the cash flow of the acquired company is insufficient to
service the debt assumed in the LBO, the LBO limited partnership or fund could
lose all or part of its investment in such acquired company.
ADJUSTING INVESTMENT EXPOSURE
The Fund can use various techniques to increase or decrease its
exposure to changing security prices, interest rates, currency exchange rates,
commodity prices, or other factors that affect security values. These
techniques include buying and selling options and futures contracts, entering
into currency exchange contracts or swap agreements, purchasing indexed
securities, and selling securities short. Because some Fund assets may not be
associated with short-term movements in the financial markets, a portion of the
Fund may be subject to market participation risk. The Fund may invest in
futures contracts in amounts corresponding to its investments in such assets in
order to participate fully in market movements.
TEMPORARY DEFENSIVE POSITION
In unusual market conditions, when IAI believes a temporary defensive
position is warranted, the Fund may invest without limitation in investment-
grade fixed income securities, that is, securities rated within the four highest
grades assigned by Moody's Investors Service, Inc. or Standard & Poor's
Corporation, or money market securities (including repurchase agreements).
Money market securities will only be purchased if they have been given one of
the two top ratings by a major ratings service or, if unrated, are of comparable
quality as determined by IAI. If the Fund maintains a temporary defensive
position, investment income may increase and may constitute a large portion of
the Fund's return.
PORTFOLIO TURNOVER
The Fund will dispose of securities without regard to the time they
have been held when such action appears advisable to management either as a
result of securities having reached a price objective, or by reason of
developments not foreseen at the time of the investment decision. Since
investment changes usually will be made without reference to the length of time
a security has been held, a significant number of short-term transactions may
result. Accordingly, the Fund's annual portfolio turnover rate cannot be
anticipated and may be relatively high. A higher turnover rate generally
results in higher brokerage and other costs for the Fund.
Further information regarding these and other securities and
techniques is contained in the Statement of Additional Information.
FUND RISK FACTORS
FOREIGN INVESTMENT RISK FACTORS
Investments in foreign securities involve risks that are different in
some respects from investments in securities of U.S. issuers, such as the risk
of fluctuations in the value of the currencies in which they are denominated,
the risk of adverse political and economic developments and, with respect to
certain countries, the possibility of expropriation, nationalization or
confiscatory taxation or limitations on the removal of funds or other assets of
the Fund. Securities of some foreign companies are less liquid and more
volatile than securities of
6
<PAGE>
comparable domestic companies. There also may be less publicly available
information about foreign issuers than domestic issuers, and foreign issuers
generally are not subject to the uniform accounting, auditing and financial
reporting standards, practices and requirements applicable to domestic issuers.
Because the Fund can invest in securities denominated or quoted in currencies
other than the U.S. dollar, changes in foreign currency exchange rates may
affect the value of securities in the portfolio. Foreign currency exchange
rates are determined by forces of supply and demand in the foreign exchange
markets and other economic and financial conditions affecting the world economy.
A decline in the value of any particular currency against the U.S. dollar will
cause a decline in the U.S. dollar value of the Fund's holdings of securities
denominated in such currency and, therefore, will cause an overall decline in
the Fund's net asset value and net investment income and capital gains, if any,
to be distributed in U.S. dollars to shareholders by the Fund. Delays may be
encountered in settling securities transactions in certain foreign markets, and
the Fund will incur costs in converting foreign currencies into U.S. dollars.
Custody charges are generally higher for foreign securities.
RISKS OF TRANSACTIONS IN DERIVATIVES
IAI may use futures, options, swap and currency exchange agreements as
well as short sales to adjust the risk and return characteristics of the Fund's
portfolio of investments. If IAI judges market conditions incorrectly or
employs a strategy that does not correlate well with the Fund's investments, use
of these techniques could result in a loss, regardless of whether the intent was
to reduce risk or increase return. Use of these techniques may increase the
volatility of the Fund and may involve a small investment of cash relative to
the magnitude of risk assumed. Moreover, a liquid secondary market for any
futures or options contract may not be available when a futures or options
position is sought to be closed. In addition, these techniques could result in
a loss if the counterparty to the transaction is unable to perform as promised.
Please refer to the Statement of Additional Information which further describes
these risks.
RISKS OF INVESTING IN SMALL COMPANIES
Investing in small companies involves greater risk than is customarily
associated with investments in larger, more established companies due to the
greater business risks of small size, limited markets and financial resources,
narrow product lines and the frequent lack of depth of management. The
securities of small companies are often traded over-the-counter and may not be
traded in volumes typical on a national securities exchange. Consequently, the
securities of small companies may have limited market stability and may be
subject to more abrupt or erratic market movements than securities of larger,
more established growth companies or the market averages in general. Therefore,
shares of the Fund are subject to greater fluctuation in value than shares of a
conservative equity fund or of a growth fund which invests entirely in more
established growth stocks. The Fund will attempt to reduce the volatility of
its share price by diversifying its investments among many companies and
different industries.
INVESTMENT RESTRICTIONS
The Fund is subject to certain other investment policies and
restrictions described in the Statement of Additional Information, some of which
are fundamental and may not be changed without the approval of the shareholders
of the Fund. The Fund is a diversified investment company and has a fundamental
policy that, with respect to 75% of its total assets, it may not invest more
than 5% of its total assets in any one issuer. The Fund, also as fundamental
policies, may not invest more than 25% of its assets in any one industry and may
borrow only for temporary or emergency purposes in an amount not exceeding one-
third of its total assets. Please refer to the Statement of Additional
Information for a further discussion of the Fund's investment restrictions.
MANAGEMENT
Under Minnesota law, the Fund's Board of Directors is generally
responsible for the overall operation and management of the Fund. IAI serves as
the investment adviser and manager of the Fund pursuant to a written agreement
(the "Management Agreement"). IAI also furnishes investment advice to other
concerns including
7
<PAGE>
other investment companies, pension and profit sharing plans, portfolios of
foundations, religious, educational and charitable institutions, trusts,
municipalities and individuals, having total assets in excess of $14 billion.
IAI is an affiliate of Hill Samuel Group ("Hill Samuel"), an international
merchant banking and financial services group based in London, England. Hill
Samuel, in turn, is owned by TSB Group plc, a publicly-held financial services
organization headquartered in London, England. TSB Group plc is one of the
largest personal and corporate financial services groups in the United Kingdom
and is engaged in a wide range of activities including banking, unit linked life
assurance, unit trust management, investment management, credit card and finance
house business. The address of IAI is that of the Fund. In October 1995, TSB
Group plc announced its intention to merge with Lloyds Bank Plc, another U.K.-
based financial services organization. The resulting entity will be known as
Lloyds TSB Group plc. Although subject to regulatory and shareholder approval,
such merger is expected to be consummated by the end of 1995.
Under the Management Agreement, IAI provides the Fund with investment
advice, statistical and research facilities, and certain equipment and services,
including, but not limited to, office space and necessary office facilities,
equipment, and the services of required personnel. IAI also provides all
required administrative, shareholder servicing, stock transfer, redemption,
dividend disbursing and accounting services, including, for example, the
maintenance of the Fund's accounts, books and records, the daily calculation of
the Fund's net asset value, daily and periodic reports, all information
necessary to complete tax returns, questionnaires and other reports requested by
the Fund, the maintenance of stock registry records, the processing of requested
account registration changes and redemption requests, and the administration of
payments of dividends and distributions declared by the Fund. In addition, the
Management Agreement provides that, except for interest and, in certain
circumstances, taxes and extraordinary expenses, IAI shall pay all of the Fund's
operating expenses. IAI may also pay qualifying broker-dealers, financial
institutions and other entities that provide such services. As compensation for
these services, the Management Agreement provides that the Fund will pay IAI an
annual fee of 1.40% of the Fund's first $250 million of average daily net
assets, 1.35% of the Fund's next $250 million of average daily net assets, and
1.30% of the Fund's average daily net assets in excess of $500 million, less any
fees and expenses the Fund pays to its disinterested directors. Until March 31,
1997, IAI has voluntarily agreed to waive the fee due under the Management
Agreement in excess of 1.25% of the Fund's average daily net assets.
The Fund is managed by a team of IAI investment professionals.
Suzanne Zak and Martin Calihan have responsibility for making day-to-day
management decisions for the Fund. Ms. Zak is a Senior Vice President and has
served as an equity portfolio manager of IAI since joining IAI in 1992. Before
joining IAI, Ms. Zak had been a Managing Director of J&W Seligman from 1985 to
1992. Mr. Calihan is a Vice President and has served as an equity analyst for
IAI since 1992. Before joining IAI, Mr. Calihan was an equity analyst with
Morgan Stanley & Co. from 1991 to 1992 and with State Street Research Management
from 1990 to 1991. Ms. Zak and Mr. Calihan have managed the Fund since
inception. R. David Spreng is responsible for Fund investments in equity and
limited partnership interests in privately-held companies and investment
partnerships. Mr. Spreng is a Senior Vice President of IAI and has served IAI
in several capacities since 1989.
COMPUTATION OF NET ASSET VALUE AND PRICING
The Fund is open for business each day the New York Stock Exchange
("NYSE") is open. IAI normally calculates the Fund's net asset value ("NAV") as
of the close of business of the NYSE, normally 3 p.m. Central time.
The Fund's NAV is the value of a single share. The NAV is computed by
adding up the value of the Fund's investments, cash, and other assets,
subtracting its liabilities, and then dividing the result by the number of
shares outstanding.
The Fund's investments with remaining maturities of 60 days or less
may be valued on the basis of amortized cost. This method minimizes the effect
of changes in a security's market value. Other portfolio securities and assets
are valued primarily on the basis of market quotations or, if quotations are not
readily available, by a method that the Board of Directors believes accurately
reflects fair value. Foreign securities are
8
<PAGE>
valued on the basis of quotations from the primary market in which they are
traded, and are translated from the local currency into U.S. dollars using
current exchange rates.
The offering price (price to buy one share) and redemption price
(price to sell one share) are the Fund's NAV.
PURCHASE OF SHARES
The Fund offers its shares continually to the public at the net asset
value of such shares. Shares may be purchased directly from the Fund or through
certain security dealers who have responsibility to promptly transmit orders and
may charge a processing fee, provided that the Fund is duly registered in the
state of the purchaser's residence, if required, and the purchaser otherwise
satisfies the Fund's purchase requirements. No sales load or commission is
charged in connection with the purchase of Fund shares.
Shares may be purchased for cash or in exchange for securities which
are permissible investments of the Fund, subject to IAI's discretion and its
determination that the securities are acceptable. Securities accepted in
exchange will be valued on the basis of market quotations or, if market
quotations are not available, by a method that IAI believes accurately reflects
fair value. In addition, securities accepted in exchange are required to be
liquid securities that are not restricted as to transfer.
The minimum initial investment to establish an account with the IAI
Mutual Funds is $5,000. Such initial investment may be allocated among the Fund
and other IAI Mutual Funds as desired, provided that no less than $1,000 is
allocated to any one fund. The minimum initial investment for IRA accounts is
$2,000, provided that the minimum amount that may be allocated to one fund is
$1,000. Once the account minimum has been met, subsequent purchases can be made
in the Fund for $100 or more. Such minimums may be waived for participants in
the IAI Investment Club.
Investors may satisfy the minimum investment requirement by
participating in the STAR Program. Participation in the STAR Program requires
an initial investment of $1,000 per Fund and a commitment to invest an aggregate
of $5,000 within 24 months. If a STAR Program participant does not invest an
aggregate of $5,000 in the IAI Mutual Funds within 24 months, IAI may, at its
option, redeem such shareholder's interest and remit such amount to the
shareholders. Investors wishing to participate in the STAR Program should
contact the Fund to obtain a STAR Program application.
To purchase shares, forward the completed application and a check
payable to "IAI Funds" to the Fund. Upon receipt, your account will be credited
with the number of full and fractional shares which can be purchased at the net
asset value next determined.
Purchases of shares are subject to acceptance or rejection by the Fund
on the same day the purchase order is received and are not binding until so
accepted. It is the policy of the Fund and IAIS to keep confidential
information contained in the application and regarding the account of an
investor or potential investor in the Fund. Share certificates will only be
issued for the Fund upon written request.
All correspondence relating to purchase of shares should be directed
to the office of the Fund, P.O. Box 357, Minneapolis, Minnesota 55440, or, if
using overnight delivery, to 3700 First Bank Place, 601 Second Avenue South,
Minneapolis, Minnesota 55402. For assistance in completing the application
please contact IAI Mutual Fund Shareholder Services at 1-800-945-3863.
9
<PAGE>
RETIREMENT PLANS
Shares of the Fund may be an appropriate investment medium for various
retirement plans. Persons desiring information about establishing an Individual
Retirement Account (IRA) (for employed persons and their spouses) or other
retirement plans should contact IAI Mutual Fund Shareholder Services at 1-800-
945-3863. All retirement plans involve a long-term commitment of assets and are
subject to various legal requirements and restrictions. The legal and tax
implications may vary according to the circumstances of the individual investor.
Therefore, you are urged to consult with an attorney or tax advisor prior to the
establishment of such a plan.
AUTOMATIC INVESTMENT PLAN
Investors may arrange to make regular investments of $100 or more per
Fund on a monthly or twice a month basis, effective as of the 4th and/or the
18th day of each month (or the next business day), through automatic deductions
from their checking or savings accounts. Such investors may, of course,
terminate their participation in the Automatic Investment Plans at any time upon
written notice to the Fund. Any changes or instructions to terminate existing
Automatic Investment Plan must be received at least two weeks before the date on
which the change or termination is to take place. Investors interested in
participating in the Automatic Investment Plan should complete the Automatic
Investment Plan application and return it to the Fund.
REDEMPTION OF SHARES
Registered holders of Fund shares may at any time require the Fund to
redeem their shares upon their written request. Shareholders may redeem shares
by phone, subject to a limit of $50,000, provided such shareholders have
authorized the Fund to accept telephone instructions.
Fund shareholders who redeem shares by presenting stock certificates
must endorse the back of the certificate with the signature of the person whose
name appears on the certificate.
Redemption instructions must be signed by the person(s) in whose name
the shares are registered. If the redemption proceeds are to be paid or mailed
to any person other than the shareholder of record or if redemption proceeds are
in excess of $50,000, the Fund will require that the signature on the written
instructions be guaranteed by a participant in a signature guarantee program,
which may include certain national banks or trust companies or certain member
firms of national securities exchanges. (Notarization by a Notary Public is NOT
ACCEPTED.) If the shares are held of record in the name of a corporation,
partnership, trust or fiduciary, the Fund may require additional evidence of
authority prior to accepting a request for redemption. The Fund will not send
redemption proceeds until checks (including certified checks or cashiers checks)
received for the shares purchased have cleared.
The redemption proceeds received by the investor are based on the net
asset value next determined after redemption instructions in good order are
received by the Fund. Since the value of shares redeemed is based upon the
value of the Fund investment at the time of redemption, it may be more or less
than the price originally paid for the shares.
Payment for shares redeemed will ordinarily be made within seven days
after a request for redemption has been made. Normally the Fund will mail
payment for shares redeemed on the business day following receipt of the
redemption request.
Following a redemption or transfer request, if the value of a
shareholder's interest in the Fund falls below $500, the Fund reserves the right
to redeem such shareholder's entire interest and remit such amount. Such a
redemption will only be effected following: (a) a redemption or transfer by a
shareholder which causes the value of such shareholder's interest in the Fund to
fall below $500; (b) the mailing by the Fund to such shareholder of a notice of
intention to redeem; and (c) the passage of at least six months from the date of
such mailing, during
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which time the investor will have the opportunity to make an additional
investment in the Fund to increase the value of such investor's account to at
least $500.
EXCHANGE PRIVILEGE
The Exchange Privilege enables shareholders to purchase, in exchange
for shares of the Fund, shares of other IAI Mutual Funds. These funds have
different investment objectives from the Fund. Shareholders may exchange shares
of the Fund for shares of another fund managed by IAI provided that the fund
whose shares will be acquired is duly registered in the state of the
shareholder's residence and the shareholder otherwise satisfies the fund's
purchase requirements. Although the IAI Mutual Funds do not currently charge a
fee for use of the Exchange Privilege, they reserve the right to do so in the
future.
Because excessive trading can hurt Fund performance and shareholders,
there is a limit of four exchanges out of each IAI Mutual Fund per calendar year
per account. Accounts under common ownership or control, including accounts
with the same taxpayer identification number, will be counted together for
purposes of the four exchange limit. The Fund reserves the right to temporarily
or permanently terminate the Exchange Privilege of any investor who exceeds this
limit. The limit may be modified for certain retirement plan accounts, as
required by the applicable plan document and/or relevant Department of Labor
regulations, and for Automatic Exchange Plan participants. The Fund also
reserves the right to refuse or limit exchange purchases by any investor if, in
IAI's judgment, the Fund would be unable to invest the money effectively in
accordance with its investment objectives and policies, or would otherwise
potentially be adversely affected.
Fund shareholders wishing to exercise the Exchange Privilege should
notify the Fund in writing or, provided such shareholders have authorized the
Fund to accept telephone instructions, by telephone. At the time of the
exchange, if the net asset value of the shares redeemed in connection with the
exchange is greater than the investor's cost, a taxable capital gain will be
realized. A capital loss will be realized if at the time of the exchange the
net asset value of the shares redeemed in the exchange is less than the
investor's cost. The Fund reserves the right to terminate or modify the
Exchange Privilege in the future.
AUTOMATIC EXCHANGE PLAN
Investors may arrange to make regular exchanges of $100 or more
between any of the IAI Mutual Funds on a monthly basis. Exchanges will take
place at the closing price of the fifth day of each month (or the next business
day). Shareholders are responsible for making sure sufficient shares exist in
the Fund account from which the exchange takes place. If there are not
sufficient funds in the Fund account to meet the requested exchange amount, the
Automatic Exchange Plan will be suspended. Shareholders may not close Fund
accounts through the Automatic Exchange Plan. Investors interested in
participating in the Automatic Exchange Plan should complete the Automatic
Exchange Plan portion of their application. For assistance in completing the
application contact IAI Mutual Fund Shareholder Services at 1-800-945-3863.
AUTHORIZED TELEPHONE TRADING
Investors can transact account exchanges and redemptions via the
telephone by completing the Authorized Telephone Trading section of the
application and returning it to the Fund. Investors requesting telephone
trading privileges will be provided with a personal identification number
("PIN") that must accompany any instructions by phone. Shares will be redeemed
or exchanged at the next determined net asset value. All proceeds must be made
payable to the owner(s) of record and delivered to the address of record.
In order to confirm that telephone instructions for redemptions and
exchanges are genuine, the Fund has established reasonable procedures, including
the requirement that a personal identification number accompany telephone
instructions. If the Fund or the transfer agent fails to follow these
procedures, the Fund may be liable for losses due to unauthorized or fraudulent
instructions. None of the Fund, its transfer agent, IAI, or IAIS will be
liable for any loss, injury, damage, or expense for acting upon telephone
instructions believed to be genuine, and
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will otherwise not be responsible for the authenticity of any telephone
instructions, and, accordingly, the investor bears the risk of loss resulting
from telephone instructions. All telephone redemptions and exchange requests
will be tape recorded. Telephone redemptions are not permitted for IRA or
Simplified Employee Pension ("SEP") accounts. For redemptions from these
accounts, please contact IAI Mutual Fund Shareholder Services at 1-800-945-3863
for instructions.
SYSTEMATIC CASH WITHDRAWAL PLAN
The Fund has available a Systematic Cash Withdrawal Plan for any
investor desiring to follow a program of systematically withdrawing a fixed
amount of money from an investment in shares of the Fund. An investment of
$10,000 is required to establish the plan. Payments under the plan will be
monthly or quarterly in amounts of $100 or more. Shares will be sold with the
closing price of the 15th of the applicable month (or the next business day).
To provide funds for payment, the Fund will redeem as many full and fractional
shares as necessary at the redemption price, which is net asset value.
Payments under this plan, unless pursuant to a retirement plan, should
not be considered income. Withdrawal payments may exceed dividends and
distributions and, to this extent, there will be a reduction in the investor's
equity. An investor should also understand that this plan cannot insure profit,
nor does it protect against any loss in a declining market. Careful
consideration should be given to the amount withdrawn each month. Excessive
withdrawals could lead to a serious depletion of equity, especially during
periods of declining market values. Fund management will be available for
consultation in this matter.
Plan application forms are available through the Fund. If you would
like assistance in completing the application contact IAI Mutual Fund
Shareholder Services at 1-800-945-3863.
DIVIDENDS, DISTRIBUTIONS AND TAX STATUS
The policy of the Fund is to pay dividends from net investment income
semiannually and to make distributions of realized capital gains, if any,
annually. However, provisions in the Internal Revenue Code of 1986, as amended
(the "Code"), may result in additional net investment income and capital gains
distributions by the Fund. When you open an account, you should specify on your
application how you want to receive your distributions. The Fund offers three
options: Full Reinvestment--your dividend and capital gain distributions will
be automatically reinvested in additional shares of the Fund; Capital Gains
Reinvestment--your capital gain distributions will be automatically reinvested,
but your income dividend distributions will be paid in cash; and Cash--your
income dividends and capital gain distributions will be paid in cash.
Distributions taken in cash can be sent via check or transferred directly to
your account at any bank, savings and loan or credit union that is a member of
the Automated Clearing House (ACH) network. UNLESS DIRECTED OTHERWISE BY THE
SHAREHOLDER, THE FUND WILL AUTOMATICALLY REINVEST ALL SUCH DISTRIBUTIONS INTO
FULL AND FRACTIONAL SHARES AT NET ASSET VALUE.
The Fund's Directed Dividend service allows you to invest your
dividends and/or capital gain distributions directly into another IAI Mutual
Fund. Contact IAI Mutual Fund Shareholder Services at 1-800-945-3863 for
details.
The Fund intends to qualify for tax purposes as a regulated investment
company under Subchapter M of the Internal Revenue Code during the current
taxable year. If so qualified, the Fund will not be subject to federal income
tax on income that it distributes to its shareholders.
Distributions are subject to federal income tax, and may also be
subject to state or local taxes. If you live outside the United States, your
distributions could also be taxed by the country in which you reside. Your
distributions are taxable when they are paid, whether you take them in cash or
reinvest them in additional shares.
For federal income tax purposes, the Fund's income and short-term
capital gain distributions are taxed as dividends; long-term capital gain
distributions designated as capital gain dividends are taxed as long-term
capital
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gains regardless of the length of time the shareholder has held the shares.
Annually, IAI will send you and the IRS a statement showing the amount of each
taxable distribution you received in the previous year.
Upon redemption of shares of the Fund, the shareholder will generally
recognize a capital gain or loss equal to the difference between the amount
realized on the redemption and the shareholder's adjusted basis in such shares.
Such gain or loss will be long-term if the shares have been held for more than
one year. Under the Code, the deductibility of capital losses is subject to
certain limitations.
Whenever you sell shares of the Fund, IAI will send you a confirmation
statement showing how many shares you sold and at what price. You will also
receive an account statement quarterly and a consolidated transaction statement
annually. However, it is up to you or your tax preparer to determine whether
this sale resulted in a capital gain and, if so, the amount of tax to be paid.
Be sure to keep your account statements; the information they contain will be
essential in calculating the amount of your capital gains.
The foregoing relates to federal income taxation as in effect as of
the date of this Prospectus. For a more detailed discussion of the federal
income tax consequences of investing in shares of the Fund, see "Tax Status" in
the Statement of Additional Information.
DESCRIPTION OF COMMON STOCK
The Fund was created on November 8, 1995 as a separate portfolio
represented by a separate class of common stock of IAI Investment Funds VI,
Inc., a Minnesota corporation. All shares of the Fund have equal rights as to
redemption, dividends and liquidation, and will be fully paid and nonassessable
when issued and will have no preemptive or conversion rights.
The shares of the Fund have noncumulative voting rights, which means
that the holders of more than 50% of the shares voting for the election of
directors can elect 100% of the directors if they choose to do so. On some
issues, such as the election of directors, all shares of IAI Investment Funds
VI, Inc. vote together as one series. On an issue affecting only a particular
series, such as voting on the advisory agreement, only the approval of the
series is required to make the agreement effective with respect to such series.
Annual or periodically scheduled regular meetings of shareholders will
not be held except as required by law. Minnesota corporation law does not
require an annual meeting; instead, it provides for the Board of Directors to
convene shareholder meetings when it deems appropriate. In addition, if a
regular meeting of shareholders has not been held during the immediately
preceding fifteen months, shareholders holding three percent or more of the
voting shares of the Fund may demand a regular meeting of shareholders of the
Fund by written notice of demand given to the chief executive officer or the
chief financial officer of the Fund. Within thirty days after receipt of the
demand by one of those officers, the Board of Directors shall cause a regular
meeting of shareholders to be called and held no later than ninety days after
receipt of the demand, all at the expense of the Fund. An annual meeting will
be held on the removal of a director or directors of the Fund if requested in
writing by holders of not less than 10% of the outstanding shares of the Fund.
The shares of the Fund are transferable by endorsement of the
certificate if held by the shareholders, or if the certificate is held by the
Fund, by delivery to such Fund of transfer instructions. Transfer instructions
or certificates should be delivered to the office of the Fund. The Fund is not
bound to recognize any transfer until it is recorded on the stock transfer books
maintained by the Fund.
COUNSEL AND AUDITORS
The firm of Dorsey & Whitney P.L.L.P., 220 South Sixth Street,
Minneapolis, Minnesota 55402, provides legal counsel for the Fund. KPMG Peat
Marwick LLP, 4200 Norwest Center, Minneapolis, Minnesota 55402, serves as
independent auditors for the Fund.
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CUSTODIAN, TRANSFER AGENT AND DIVIDEND DISBURSING AGENT
The Custodian for the Fund is Norwest Bank Minnesota, N.A., Norwest
Center, Sixth and Marquette, Minneapolis, Minnesota 55479. Norwest employs
foreign subcustodians and depositories, which were approved by the Fund's Board
of Directors in accordance with the rules and regulations of the Securities and
Exchange Commission, for the purpose of providing custodial services for the
Fund's assets held outside of the United States. For a listing of the
subcustodians and depositories currently employed by the Fund, see the Statement
of Additional Information. IAI acts as the Fund's transfer agent, dividend
disbursing agent and IRA Custodian, at P.O. Box 357, Minneapolis, Minnesota.
ADDITIONAL INFORMATION
The Fund sends to its shareholders a six-month unaudited and an annual
audited financial report, each of which includes a list of investment securities
held. To reduce the volume of mail you receive, only one copy of most Fund
reports, such as the Fund's Annual Report, may be mailed to your household (same
surname, same address). Please call IAI Mutual Fund Shareholder Services at
1-800-945-3863 if you wish to receive additional shareholder reports.
Shareholder inquiries should be directed to the Fund at the telephone
number or mailing address listed on the inside back cover of this Prospectus.
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IAI AGGRESSIVE GROWTH FUND
STATEMENT OF ADDITIONAL INFORMATION
DATED FEBRUARY __, 1996
THIS STATEMENT OF ADDITIONAL INFORMATION IS NOT A PROSPECTUS. THIS
STATEMENT OF ADDITIONAL INFORMATION RELATES TO A PROSPECTUS DATED
FEBRUARY __, 1996, AND SHOULD BE READ IN CONJUNCTION THEREWITH. A COPY OF THE
PROSPECTUS MAY BE OBTAINED FROM THE FUND, 3700 FIRST BANK PLACE, P.O. BOX 357,
MINNEAPOLIS, MINNESOTA 55440 (TELEPHONE: 1-612-376-2700 OR 1-800-945-3863).
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
<S> <C>
INVESTMENT OBJECTIVE AND POLICIES...................... 3
Repurchase Agreements............................. 3
Reverse Repurchase Agreements..................... 3
Securities of Foreign Issuers..................... 3
Illiquid Securities............................... 4
Lending Portfolio Securities...................... 4
Swap Agreements................................... 4
Indexed Securities................................ 5
Foreign Currency Transactions..................... 5
Limitations on Futures and Options Transactions... 6
Futures Contracts................................. 7
Futures Margin Payments........................... 7
Purchasing Put and Call Options................... 7
Writing Put and Call Options...................... 8
Combined Positions................................ 8
Correlation of Price Changes...................... 8
Liquidity of Options and Futures Contracts........ 9
OTC Options....................................... 9
Asset Coverage for Futures and Options Positions.. 9
INVESTMENT RESTRICTIONS................................ 9
Portfolio Turnover................................ 11
INVESTMENT PERFORMANCE................................. 11
MANAGEMENT............................................. 13
History........................................... 16
Management Agreement.............................. 16
CUSTODIAL SERVICE...................................... 17
PORTFOLIO TRANSACTIONS AND ALLOCATION OF BROKERAGE..... 21
CAPITAL STOCK.......................................... 22
NET ASSET VALUE AND PUBLIC OFFERING PRICE.............. 22
PURCHASES AND REDEMPTIONS IN KIND...................... 22
TAX STATUS............................................. 22
LIMITATION OF DIRECTOR LIABILITY....................... 23
FINANCIAL STATEMENTS................................... 24
</TABLE>
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INVESTMENT OBJECTIVE AND POLICIES
The investment objective and policies of IAI Aggressive Growth Fund
(the "Fund") are summarized on the front page of the Prospectus and in the text
of the Prospectus under "Investment Objective and Policies." Investors should
understand that all investments have a risk factor. There can be no guarantee
against loss resulting from an investment in the Fund, and there can be no
assurance that the Fund's investment policies will be successful, or that its
investment objective will be attained. Certain of the investment practices of
the Fund are further explained below.
REPURCHASE AGREEMENTS
The Fund may invest in repurchase agreements relating to the
securities in which it may invest. A repurchase agreement involves the purchase
of securities with the condition that, after a stated period of time, the
original seller will buy back the securities at a predetermined price or yield.
The Fund's custodian will have custody of, and will hold in a segregated
account, securities acquired by the Fund under a repurchase agreement or other
securities as collateral. In the case of a security registered on a book entry
system, the book entry will be maintained in the Fund's name or that of its
custodian. Repurchase agreements involve certain risks not associated with
direct investments in securities. For example, if the seller of the agreement
defaults on its obligation to repurchase the underlying securities at a time
when the value of the securities has declined, the Fund may incur a loss upon
disposition of such securities. In the event that bankruptcy proceedings are
commenced with respect to the seller of the agreement, the Fund's ability to
dispose of the collateral to recover its investment may be restricted or
delayed. While collateral will at all times be maintained in an amount equal to
the repurchase price under the agreement (including accrued interest due
thereunder), to the extent proceeds from the sale of collateral were less than
the repurchase price, the Fund could suffer a loss.
REVERSE REPURCHASE AGREEMENTS
In a reverse repurchase agreement, a fund sells a portfolio instrument
to another party, such as a bank or broker-dealer, in return for cash and agrees
to repurchase the instrument at a particular price and time. While a reverse
repurchase agreement is outstanding, the Fund will maintain appropriate liquid
assets in a segregated custodial account to cover its obligation under the
agreement. The Fund will enter into reverse repurchase agreements only with
parties whose creditworthiness has been found satisfactory by Investment
Adviser, Inc. ("IAI"), the Fund's investment adviser and manager. As a result,
such transactions may increase fluctuations in the market value of the Fund's
assets and may be viewed as a form of leverage.
SECURITIES OF FOREIGN ISSUERS
The Fund may invest in securities of foreign issuers in accordance
with its investment objectives and policies. Investing in foreign securities
may result in greater risk than that incurred by investing in domestic
securities. There is generally less publicly available information about
foreign issuers comparable to reports and ratings that are published about
companies in the United States. Also, foreign issuers are not subject to
uniform accounting and auditing and financial reporting standards, practices and
requirements comparable to those applicable to United States companies.
It is contemplated that most foreign securities will be purchased in
over-the-counter markets or on stock exchanges located in the countries in which
the respective principal offices of the issuers of the various securities are
located, if that is the best available market. Foreign stock markets are
generally not as developed or efficient as those in the United States. While
growing in volume, they usually have substantially less volume than the New York
Stock Exchange, and securities of some foreign companies are less liquid and
more volatile than securities of comparable United States companies. Similarly,
volume and liquidity in most foreign bond markets is less than in the United
States and at times volatility of price can be greater than in the United
States. Commissions on foreign stock exchanges are generally higher than
commissions on United States exchanges, although the Fund will endeavor to
achieve the most favorable net results on its portfolio transactions. There is
generally less
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government supervision and regulation of foreign stock exchanges, brokers and
listed companies than in the United States.
With respect to certain foreign countries, there is the possibility of
adverse changes in investment or exchange control regulations, expropriation or
confiscatory taxation, limitations on the removal of funds or other assets of
the Fund, political or social instability, or diplomatic developments which
could affect United States investments in those countries. Moreover, individual
foreign economies may differ favorably or unfavorably from the United States'
economy in such respects as growth of gross national product, rate of inflation,
capital reinvestment, resource self-sufficiency and balance of payments
position.
IAI is not aware at this time of the existence of any investment or
exchange control regulations which might substantially impair the operations of
the Fund as described in the Prospectus and this Statement of Additional
Information. It should be noted, however, that this situation could change at
any time.
The dividends and interest payable on certain of the Fund's foreign
portfolio securities may be subject to foreign withholding taxes, thus reducing
the net amount of income available for distribution to the Fund's shareholders.
The expense ratio of the Fund should not be materially affected by the Fund's
investment in foreign securities.
ILLIQUID SECURITIES
The Fund may also invest up to 15% of its total assets in securities
that are considered illiquid because of the absence of a readily available
market or due to legal or contractual restrictions. However, certain restricted
securities that are not registered for sale to the general public that can be
resold to institutional investors may be considered liquid pursuant to
guidelines adopted by the Board of Directors. It is not possible to predict
with assurance the maintenance of an institutional trading market for such
securities and the liquidity of a Fund's investments could be impaired if
trading declines.
LENDING PORTFOLIO SECURITIES
In order to generate additional income, the Fund may lend portfolio
securities to broker-dealers, banks or other financial borrowers of securities.
As with other extensions of credit, there are risks of delay in recovery or even
loss of rights in the collateral should the borrower of the securities fail
financially. However, the Fund will only enter into loan arrangements with
broker-dealers, banks or other institutions which IAI has determined are
creditworthy under guidelines established by the Fund's Board of Directors. The
Fund may also experience a loss if, upon the failure of a borrower to return
loaned securities, the collateral is not sufficient in value or liquidity to
cover the value of such loaned securities (including accrued interest thereon).
However, the Fund will receive collateral in the form of cash, United States
Government securities, certificates of deposit or other high-grade, short-term
obligations or interest-bearing cash equivalents equal to at least 100% of the
value of the securities loaned. The value of the collateral and of the
securities loaned will be marked to market on a daily basis. During the time
portfolio securities are on loan, the borrower pays the Fund an amount
equivalent to any dividends or interest paid on the securities and the Fund may
invest the cash collateral and earn additional income or may receive an agreed
upon amount of interest income from the borrower. However, the amounts received
by the Fund may be reduced by finders' fees paid to broker-dealers and related
expenses.
SWAP AGREEMENTS
Swap agreements can be individually negotiated and structured to
include exposure to a variety of different types of investments or market
factors. Depending on their structure, swap agreements may increase or decrease
the Fund's exposure to long- or short-term interest rates (in the U.S. or
abroad), foreign currency values, mortgage securities, corporate borrowing
rates, or other factors such as security prices or inflation rates. Swap
agreements can take many different forms and are known by a variety of names.
The Fund is not limited to any
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<PAGE>
particular form of swap agreement if IAI determines it is consistent with the
Fund's investment objectives and policies.
Swap agreements will tend to shift the Fund's investment exposure from
one type of investment to another. For example, if the Fund agrees to exchange
payments in dollars for payments in foreign currency, the swap agreement would
tend to decrease the Fund's exposure to U.S. interest rates and increase its
exposure to foreign currency and interest rates. Depending on how they are
used, swap agreements may increase or decrease the overall volatility of the
Fund's investments and its share price.
The most significant factor in the performance of swap agreements is
the change in the specific interest rate, currency, or other factors that
determine the amounts of payments due to and from the Fund. If a swap agreement
calls for payments by the Fund, the Fund must be prepared to make such payments
when due. In addition, if the counterparty's creditworthiness declined, the
value of a swap agreement would be likely to decline, potentially resulting in
losses. The Fund expects to be able to eliminate its exposure under swap
agreements either by assignment or other disposition, or by entering into an
offsetting swap agreement with the same party or a similarly creditworthy party.
The Fund will maintain appropriate liquid assets in a segregated
custodial account to cover its current obligations under swap agreements. If
the Fund enters into a swap agreement on a net basis, it will segregate assets
with a daily value at least equal to the excess, if any, of the Fund's accrued
obligations under the swap agreement over the accrued amount the Fund is
entitled to receive under the agreement. If the Fund enters into a swap
agreement on other than a net basis, it will segregate assets with a value equal
to the full amount of the Fund's accrued obligations under the agreement.
INDEXED SECURITIES
The Fund may purchase securities whose prices are indexed to the
prices of other securities, securities indexes, currencies, precious metals or
other commodities, or other financial indicators. Indexed securities typically,
but not always, are debt securities or deposits whose value at maturity or
coupon rate is determined by reference to a specific instrument or statistic.
Gold-indexed securities, for example, typically provide for a maturity value
that depends on the price of gold, resulting in a security whose price tends to
rise and fall together with gold prices. Currency-indexed securities typically
are short-term to intermediate-term debt securities whose maturity values or
interest rates are determined by reference to the values of one or more
specified foreign currencies, and may offer higher yields than U.S. dollar-
denominated securities of equivalent issuers. Currency-indexed securities may be
positively or negatively indexed; that is, their maturity value may increase
when the specified currency value increases, resulting in a security that
performs similarly to a foreign-denominated instrument, or their maturity value
may decline when foreign currencies increase, resulting in a security whose
price characteristics are similar to a put on the underlying currency.
Currency-indexed securities may also have prices that depend on the values of a
number of different foreign currencies relative to each other.
The performance of indexed securities depends to a great extent on the
performance of the security, currency, or other instrument to which they are
indexed, and may also be influenced by interest rate changes in the U.S. and
abroad. At the same time, indexed securities are subject to the credit risks
associated with the issuer of the security, and their values may decline
substantially if the issuer's creditworthiness deteriorates. Recent issuers of
indexed securities have included banks, corporations, and certain U.S.
government agencies. IAI will use its judgment in determining whether indexed
securities should be treated as short-term instruments, bonds, stocks, or as a
separate asset class for purposes of the Fund's investment policies, depending
on the individual characteristics of the securities. Indexed securities may be
more volatile than the underlying instruments.
FOREIGN CURRENCY TRANSACTIONS
The Fund may hold foreign currency deposits from time to time and may
convert dollars and foreign currencies in the foreign exchange markets.
Currency conversion involves dealer spreads and other costs,
5
<PAGE>
although commissions usually are not charged. Currencies may be exchanged on a
spot (i.e., cash) basis, or by entering into forward contracts to purchase or
sell foreign currencies at a future date and price. Forward contracts generally
are traded in an interbank market conducted directly between currency traders
(usually large commercial banks) and their customers. The parties to a forward
contract may agree to offset or terminate the contract before its maturity, or
may hold the contract to maturity and complete the contemplated currency
exchange.
The Fund may use currency forward contracts to manage currency risks
and to facilitate transactions in foreign securities. The following discussion
summarizes the principal currency management strategies involving forward
contracts that could be used by the Fund.
In connection with purchases and sales of securities denominated in
foreign currencies, the Fund may enter into currency forward contracts to fix a
definite price for the purchase or sale in advance of the trade's settlement
date. This technique is sometimes referred to as a "settlement hedge" or
"transaction hedge." IAI expects to enter into settlement hedges in the normal
course of managing the Fund's foreign investments. The Fund could also enter
into forward contracts to purchase or sell a foreign currency in anticipation of
future purchases or sales of securities denominated in foreign currency, even if
the specific investments have not yet been selected by IAI.
The Fund may also use forward contracts to hedge against a decline in
the value of existing investments denominated in foreign currency. For example,
if the Fund owned securities denominated in pounds sterling, it could enter into
a forward contract to sell pounds sterling in return for U.S. dollars to hedge
against possible declines in the pound's value. Such a hedge, sometimes
referred to as a "position hedge," would tend to offset both positive and
negative currency fluctuations but would not offset changes in security values
caused by other factors. The Fund could also hedge the position by selling
another currency expected to perform similarly to the pound sterling -- for
example, by entering into a forward contract to sell Deutschemarks or European
Currency Units in return for U.S. dollars. This type of hedge, sometimes
referred to as a "proxy hedge," could offer advantages in terms of cost, yield,
or efficiency, but generally would not hedge currency exposure as effectively as
a simple hedge into U.S. dollars. Proxy hedges may result in losses if the
currency used to hedge does not perform similarly to the currency in which the
hedged securities are denominated.
Under certain conditions, SEC guidelines require mutual funds to set
aside appropriate liquid assets in a segregated custodial account to cover
currency forward contracts. As required by SEC guidelines, the Fund will
segregate assets to cover currency forward contracts, if any, whose purpose is
essentially speculative. The Fund will not segregate assets to cover forward
contracts entered into for hedging purposes, including settlement hedges,
position hedges, and proxy hedges.
Successful use of forward currency contracts will depend on IAI's
skill in analyzing and predicting currency values. Forward contracts may
substantially change the Fund's investment exposure to changes in currency
exchange rates, and could result in losses to the Fund if currencies do not
perform as IAI anticipates. For example, if a currency's value rose at a time
when IAI had hedged the Fund by selling that currency in exchange for dollars,
the Fund would be unable to participate in the currency's appreciation. If IAI
hedges currency exposure through proxy hedges, the Fund could realize currency
losses from the hedge and the security position at the same time if the two
currencies do not move in tandem. Similarly, if IAI increases the Fund's
exposure to a foreign currency, and that currency's value declines, the Fund
will realize a loss. There is no assurance that IAI's use of forward currency
contracts will be advantageous to the Fund or that it will hedge at an
appropriate time. The policies described in this section are non-fundamental
policies of the Fund.
LIMITATIONS ON FUTURES AND OPTIONS TRANSACTIONS
The Fund has filed a notice of eligibility for exclusion from the
definition of the term "commodity pool operator" with the Commodity Futures
Trading Commission (CFTC) and the National Futures Association, which regulate
trading in the futures markets, before engaging in any purchases or sales of
futures contracts or options on
6
<PAGE>
futures contracts. The Fund intends to comply with Section 4.5 of the
regulations under the Commodity Exchange Act, which limits the extent to which
the Fund can commit assets to initial margin deposits and option premiums.
The above limitations on the Fund's investments in futures contracts
and options, and the Fund's policies regarding futures contracts and options
discussed elsewhere in this Statement of Additional Information may be changed
as regulatory agencies permit.
FUTURES CONTRACTS
When the Fund purchases a futures contract, it agrees to purchase a
specified underlying instrument at a specified future date. When the Fund sells
a futures contract, it agrees to sell the underlying instrument at a specified
future date. The price at which the purchase and sale will take place is fixed
when the Fund enters into the contract. Some currently available futures
contracts are based on specific securities, such as U.S. Treasury bonds or
notes, and some are based on indexes of securities prices, such as the Standard
& Poor's 500 Composite Stock Price Index (S&P 500). Futures can be held until
their delivery dates, or can be closed out before then if a liquid secondary
market is available.
The value of a futures contract tends to increase and decrease in
tandem with the value of its underlying instrument. Therefore, purchasing
futures contracts will tend to increase the Fund's exposure to positive and
negative price fluctuations in the underlying instrument, much as if it had
purchased the underlying instrument directly. When the Fund sells a futures
contract, by contrast, the value of its futures position will tend to move in a
direction contrary to the market. Selling futures contracts, therefore, will
tend to offset both positive and negative market price changes, much as if the
underlying instrument had been sold.
FUTURES MARGIN PAYMENTS
The purchaser or seller of a futures contract is not required to
deliver or pay for the underlying instrument unless the contract is held until
the delivery date. However, both the purchaser and seller are required to
deposit "initial margin" with a futures broker, known as a futures commission
merchant (FCM), when the contract is entered into. Initial margin deposits are
typically equal to a percentage of the contract's value. If the value of either
party's position declines, that party will be required to make additional
"variation margin" payments to settle the change in value on a daily basis. The
party that has a gain may be entitled to receive all or a portion of this
amount. Initial and variation margin payments do not constitute purchasing
securities on margin for purposes of the Fund's investment limitations. In the
event of the bankruptcy of an FCM that holds margin on behalf of the Fund, the
Fund may be entitled to return of margin owed to it only in proportion to the
amount received by the FMC's other customers, potentially resulting in losses to
the Fund.
PURCHASING PUT AND CALL OPTIONS
By purchasing a put option, the Fund obtains the right (but not the
obligation) to sell the option's underlying instrument at a fixed strike price.
In return for this right, the Fund pays the current market price for the option
(known as the option premium). Options have various types of underlying
instruments, including specific securities, indexes of securities prices, and
futures contracts. The Fund may terminate its position in a put option it has
purchased by allowing it to expire or by exercising the option. If the option
is allowed to expire, the Fund will lose the entire premium it paid. If the
Fund exercises the option, it completes the sale of the underlying instrument at
the strike price. The Fund may also terminate a put option position by closing
it out in the secondary market at its current price, if a liquid secondary
market exists.
The buyer of a typical put option can expect to realize a gain if
security prices fall substantially. However, if the underlying instrument's
price does not fall enough to offset the cost of purchasing the option, a put
buyer can expect to suffer a loss (limited to the amount of the premium paid,
plus related transaction costs).
The features of call options are essentially the same as those of put
options, except that the purchaser of a call option obtains the right to
purchase, rather than sell, the underlying instrument at the option's strike
price. A
7
<PAGE>
call buyer typically attempts to participate in potential price increases of the
underlying instrument with risk limited to the cost of the option if security
prices fall. At the same time, the buyer can expect to suffer a loss if security
prices do not rise sufficiently to offset the cost of the option.
WRITING PUT AND CALL OPTIONS
When the Fund writes a put option, it takes the opposite side of the
transaction from the option's purchaser. In return for receipt of the premium,
the Fund assumes the obligation to pay the strike price for the option's
underlying instrument if the other party to the option chooses to exercise it.
When writing an option on a futures contract the Fund would be required to make
margin payments to an FCM as described above for futures contracts. The Fund
may seek to terminate its position in a put option it writes before exercise by
closing out the option in the secondary market at its current price. If the
secondary market is not liquid for a put option the Fund has written, however,
the Fund must continue to be prepared to pay the strike price while the option
is outstanding, regardless of price changes, and must continue to set aside
assets to cover its position. If security prices rise, a put writer would
generally expect to profit, although its gain would be limited to the amount of
the premium it received.
If security prices remain the same over time, it is likely that the
writer will also profit, because it should be able to close out the option at a
lower price. If security prices fall, the put writer would expect to suffer a
loss. This loss should be less than the loss from purchasing the underlying
instrument directly, however, because the premium received for writing the
option should mitigate the effects of the decline.
Writing a call option obligates the Fund to sell or deliver the
option's underlying instrument, in return for the strike price, upon exercise of
the option. The characteristics of writing call options are similar to those of
writing put options, except that writing calls generally is a profitable
strategy if prices remain the same or fall. Through receipt of the option
premium, a call writer mitigates the effects of a price decline. At the same
time, because a call writer must be prepared to deliver the underlying
instrument in return for the strike price, even if its current value is greater,
a call writer gives up some ability to participate in security price increases.
COMBINED POSITIONS
The Fund may purchase and write options in combination with each
other, or in combination with futures or forward contracts, to adjust the risk
and return characteristics of the overall position. For example, the Fund may
purchase a put option and write a call option on the same underlying instrument,
in order to construct a combined position whose risk and return characteristics
are similar to selling a futures contract. Another possible combined position
would involve writing a call option at one strike price and buying a call option
at a lower price, in order to reduce the risk of the written call option in the
event of a substantial price increase. Because combined options positions
involve multiple trades, they result in higher transaction costs and may be more
difficult to open and close out.
CORRELATION OF PRICE CHANGES
Because there are a limited number of types of exchange-traded options
and futures contracts, it is likely that the standardized contracts available
will not match the Fund's current or anticipated investments exactly. The Fund
may invest in options and futures contracts based on securities with different
issuers, maturities, or other characteristics from the securities in which it
typically invests, which involves a risk that the options or futures position
will not track the performance of the Fund's other investments.
Options and futures prices can also diverge from the prices of their
underlying instruments, even if the underlying instruments match the Fund's
investments well. Options and futures prices are affected by such factors as
current and anticipated short-term interest rates, changes in volatility of the
underlying instrument, and the time remaining until expiration of the contract,
which may not affect security prices the same way. Imperfect correlation may
also result from differing levels of demand in the options and futures markets
and the securities markets, from structural differences in how options and
futures and securities are traded, or from imposition of
8
<PAGE>
daily price fluctuation limits or trading halts. The Fund may purchase or sell
options and futures contracts with a greater or lesser value than the securities
it wishes to hedge or intends to purchase in order to attempt to compensate for
differences in volatility between the contract and the securities, although this
may not be successful in all cases. If price changes in the Fund's options or
futures positions are poorly correlated with its other investments, the
positions may fail to produce anticipated gains or result in losses that are not
offset by gains in other investments.
LIQUIDITY OF OPTIONS AND FUTURES CONTRACTS
There is no assurance a liquid secondary market will exist for any
particular options or futures contract at any particular time. Options may have
relatively low trading volume and liquidity if their strike prices are not close
to the underlying instrument's current price. In addition, exchanges may
establish daily price fluctuation limits for options and futures contracts, and
may halt trading if a contract's price moves upward or downward more than the
limit in a given day. On volatile trading days when the price fluctuation limit
is reached or a trading halt is imposed, it may be impossible for the Fund to
enter into new positions or close out existing positions. If the secondary
market for a contract is not liquid because of price fluctuation limits or
otherwise, it could prevent prompt liquidation of unfavorable positions, and
potentially could require the Fund to continue to hold a position until delivery
or expiration regardless of changes in its value. As a result, the Fund's
access to other assets held to cover its options or futures positions could also
be impaired.
OTC OPTIONS
Unlike exchange-traded options, which are standardized with respect to
the underlying instrument, expiration date, contract size, and strike price, the
terms of over-the-counter options (options not traded on exchanges) generally
are established through negotiation with the other party to the option contract.
While this type of arrangement allows the Fund greater flexibility to tailor an
option to its needs, OTC options generally involve greater credit risk than
exchange-traded options, which are guaranteed by the clearing organization of
the exchanges where they are traded.
ASSET COVERAGE FOR FUTURES AND OPTIONS POSITIONS
The Fund will comply with guidelines established by the Securities and
Exchange Commission with respect to coverage of options and futures strategies
by mutual funds, and if the guidelines so require will set aside appropriate
liquid assets in a segregated custodial account in the amount prescribed.
Securities held in a segregated account cannot be sold while the futures or
option strategy is outstanding, unless they are replaced with other suitable
assets. As a result, there is a possibility that segregation of a large
percentage of the Fund's assets could impede portfolio management or the Fund's
ability to meet redemption requests or other current obligations.
INVESTMENT RESTRICTIONS
As indicated in the Prospectus, the Fund is subject to certain
policies and restrictions which are "fundamental" and may not be changed without
shareholder approval. Shareholder approval consists of the approval of the
lesser of (i) more than 50% of the outstanding voting securities of the Fund, or
(ii) 67% or more of the voting securities present at a meeting if the holders of
more than 50% of the outstanding voting securities of the Fund are present or
represented by proxy. Limitations 1 through 8 below are deemed fundamental
limitations. The remaining limitations set forth below serve as operating
policies of the Fund and may be changed by the Board of Directors without
shareholder approval.
The Fund may not:
1. Purchase the securities of any issuer if such purchase would cause the
Fund to fail to meet the requirements of a "diversified company" as defined
under the Investment Company Act of 1940, as amended (the "1940 Act").
9
<PAGE>
As currently defined in the 1940 Act, "diversified company" means a
management company which meets the following requirements: at least 75% of the
value of its total assets is represented by cash and cash items (including
receivables), Government securities, securities of other investment companies
and other securities for the purposes of this calculation limited in respect of
any one issuer to an amount not greater in value than 5% of the value of the
total assets of such management company and not more than 10% of the outstanding
voting securities of such issuer.
2. Purchase the securities of any issuer (other than "Government
securities" as defined under the 1940 Act) if, as a result, more than 25% of the
value of the Fund's total assets would be invested in the securities of
companies whose principal business activities are in the same industry.
3. Issue any senior securities, except as permitted by the 1940 Act or
the Rules and Regulations of the Securities and Exchange Commission.
4. Borrow money, except from banks for temporary or emergency purposes
provided that such borrowings may not exceed 33-1/3% of the value of the Fund's
net assets (including the amount borrowed). Any borrowings that come to exceed
this amount will be reduced within three days (not including Sundays and
holidays) to the extent necessary to comply with the 33-1/3% limitation. This
limitation shall not prohibit the Fund from engaging in reverse repurchase
agreements, making deposits of assets to margin or guarantee positions in
futures, options, swaps or forward contracts, or segregating assets in
connection with such agreements or contracts.
5. Act as an underwriter of securities of other issuers, except to the
extent that in connection with the disposition of portfolio securities the Fund
may be deemed to be an underwriter under applicable laws.
6. Purchase or sell real estate unless acquired as a result of ownership
of securities or other instruments. This restriction shall not prevent the Fund
from investing in securities or other instruments backed by real estate or
securities of companies engaged in the real estate business.
7. Purchase or sell commodities other than foreign currencies unless
acquired as a result of ownership of securities. This limitation shall not
prevent the Fund from purchasing or selling options, futures, swaps and forward
contracts or from investing in securities or other instruments backed by
commodities.
8. Make loans to other persons except to the extent not inconsistent with
the 1940 Act or the Rules and Regulations of the Securities and Exchange
Commission. This limitation does not apply to purchases of commercial paper,
debt securities or repurchase agreements, or to the lending of portfolio
securities.
9. Purchase securities on margin, except that the Fund may obtain such
short-term credits as may be necessary for the clearance of purchases or sales
of securities and provided that margin payments in connection with transactions
in options, futures, swaps and forward contracts shall not be deemed to
constitute purchasing securities on margin.
10. Sell securities short, unless it owns or has the right to obtain
securities equivalent in kind and amount to the securities sold short, and
provided that transactions in options, swaps and forward futures contracts are
not deemed to constitute selling securities short.
11. Except as part of a merger, consolidation, acquisition, or
reorganization, invest more than 5% of the value of its total assets in the
securities of any one investment company or more than 10% of the value of its
total assets, in the aggregate, in the securities of two or more investment
companies, or acquire more than 3% of the total outstanding voting securities of
any one investment company.
12. Mortgage, pledge or hypothecate its assets except to the extent
necessary to secure permitted borrowings. This limitation does not apply to
reverse repurchase agreements or in the case of assets deposited to
10
<PAGE>
margin or guarantee positions in futures, options, swaps or forward contracts or
placed in a segregated account in connection with such contracts.
13. Participate on a joint or a joint and several basis in any securities
trading account.
14. Invest more than 15% of its net assets in illiquid investments.
15. Invest directly in interests (including partnership interests) in oil,
gas or other mineral exploration or development leases or programs, except the
Fund may purchase or sell securities issued by corporations engaging in oil, gas
or other mineral exploration or development business.
Any of the Fund's investment policies set forth under "Investment Objective
and Policies" in the Prospectus, or any restriction set forth above under
"Investment Restrictions" which involves a maximum percentage of securities or
assets shall not be considered to be violated unless an excess over the
percentage occurs immediately after an acquisition of securities or utilization
of assets and results there from.
PORTFOLIO TURNOVER
The portfolio turnover rate is calculated by dividing the lesser of
purchases or sales of portfolio securities for the particular fiscal year by the
monthly average of the value of portfolio securities owned by the Fund during
the same fiscal year. "Portfolio securities" for purposes of this calculation do
not include securities with a maturity date of less than twelve (12) months from
the date of investment. A 100% portfolio turnover rate would occur, for example,
if the lesser of the value of purchases or sales of portfolio securities for a
particular year were equal to the average monthly value of the portfolio
securities owned during such year.
INVESTMENT PERFORMANCE
Advertisements and other sales literature for the Fund may refer to
monthly, quarterly, yearly, cumulative and average annual total return. Each
such calculation assumes all dividends and capital gain distributions are
reinvested at net asset value on the appropriate reinvestment dates as described
in the Prospectus, and includes all recurring fees, such as investment advisory
and management fees, charged as expenses to all shareholder accounts. Each of
monthly, quarterly and yearly total return is computed in the same manner as
cumulative total return, as set forth below.
Cumulative total return is computed by finding the cumulative rate of
return over the period indicated in the advertisement that would equate the
initial amount invested to the ending redeemable value, according to the
following formula:
CTR = (ERV-P) 100
-----
P
Where: CTR = Cumulative total return;
ERV = ending redeemable value at the end of the period
$1,000 payment made at the beginning of such of a
hypothetical period; and
P = initial payment of $1,000
Average annual total return is computed by finding the average annual
compounded rates of return over the periods indicated in the advertisement that
would equate the initial amount invested to the ending redeemable value,
according to the following formula:
11
<PAGE>
P(1+T)/n/ = ERV
Where: P = a hypothetical initial payment of $1,000;
T = average annual total return;
n = number of years; and
ERV = ending redeemable value at the end of the period
$1,000 payment made at the beginning of such of a
hypothetical period.
In advertising and sales literature, the Fund may compare its performance
with that of other mutual funds, indexes or averages of other mutual funds,
indexes of related financial assets or data, and other competing investment and
deposit products available from or through other financial institutions. The
composition of these indexes, averages or products differs from that of the
Fund. The comparison of the Fund to an alternative investment should be made
with consideration of differences in features and expected performance.
The indexes and averages noted below will be obtained from the indicated
sources or reporting services, which the Fund believes to be generally accurate.
The Fund may also note its mention in newspapers, magazines, or other media from
time to time. However, the Fund assumes no responsibility for the accuracy of
such data.
For example, (1) the Fund's performance or P/E ratio may be compared to any
one or a combination of the following: (i) the Standard & Poor's 500 Stock Index
and Dow Jones Industrial Average so that you may compare the Fund's results with
those of a group of unmanaged securities widely regarded by investors as
representative of the U.S. stock market in general; (ii) other groups of mutual
funds, including the IAI Funds, tracked by: (A) Lipper Analytical Services,
Inc., a widely used independent research firm which ranks mutual funds by
overall performance, investment objectives, and assets; (B) Morningstar, Inc.,
another widely used independent research firm which rates mutual funds; or (C)
other financial or business publications, which may include, but are not limited
to, Business Week, Money Magazine, Forbes and Barron's, which provide similar
information; (iii) the Value Line Index and the Standard & Poor's Value Index;
(iv) the Callan Midcap Index, the Russell Midcap Index and the Standard & Poor's
Midcap Index; (v) the Russell 2500 Index, the Russell 2000 Growth Index and the
Russell 1000 Growth Index; (vi) the Standard & Poor's Growth Index; and (vii)
the performance of U.S. government and corporate bonds, notes and bills. (The
purpose of these comparisons would be to illustrate historical trends in
different market sectors so as to allow potential investors to compare different
investment strategies.); (2) the Consumer Price Index (measure for inflation)
may be used to assess the real rate of return from an investment in the Fund;
(3) other U.S. or foreign government statistics such as GNP, and net import and
export figures derived from governmental publications, e.g., The Survey of
Current Business, may be used to illustrate investment attributes of the Fund or
the general economic business, investment, or financial environment in which the
Fund operates; (4) the effect of tax-deferred compounding on the Fund's
investment returns, or on returns in general, may be illustrated by graphs,
charts, etc. where such graphs or charts would compare, at various points in
time, the return from an investment in the Fund (or returns in general) on a
tax-deferred basis (assuming reinvestment of capital gains and dividends and
assuming one or more tax rates) with the return on a taxable basis; and (5) the
sectors or industries in which the Fund invests may be compared to relevant
indices or surveys (e.g., S&P Industry Surveys) in order to evaluate the Fund's
historical performance or current or potential value with respect to the
particular industry or sector.
12
<PAGE>
MANAGEMENT
The names, addresses and positions of the directors and executive officers
of the Fund are given below.
<TABLE>
<CAPTION>
Aggregate Compensation Aggregate Compensation
Name and Address Position from the Fund from IAI Mutual Funds*
- ---------------- -------- ---------------------- ----------------------
<S> <C> <C> <C>
Noel P. Rahn** Chairman of N/A N/A
3700 First Bank Place the Board
P.O. Box 357
Minneapolis, Minnesota 55440
Richard E. Struthers** President, Director N/A N/A
3700 First Bank Place
P.O. Box 357
Minneapolis, Minnesota 55440
Madeline Betsch Director
19 South 1st Street
Minneapolis, Minnesota 55401
W. William Hodgson Director
1698 Dodd Road
Mendota Heights, Minnesota 55118
George R. Long Director
29 Las Brisas Way
Naples, Florida 33963
J. Peter Thompson Director
Route 1
Mountain Lake, Minnesota 56159
Charles H. Withers Director
Rochester Post-Bulletin
P.O. Box 6118
Rochester, Minnesota 55903
Archie C. Black III Treasurer N/A N/A
3700 First Bank Place
P.O. Box 357
Minneapolis, Minnesota 55440
William C. Joas Secretary N/A N/A
3700 First Bank Place
P.O. Box 357
Minneapolis, Minnesota 55440
Suzanne F. Zak Vice President, N/A N/A
3700 First Bank Place Investments
P.O. Box 357
Minneapolis, Minnesota 55440
</TABLE>
13
<PAGE>
<TABLE>
<CAPTION>
Aggregate Compensation Aggregate Compensation
Name and Address Position from the Fund from IAI Mutual Funds*
- ------------------------------ ---------------------- ---------------------- ----------------------
<S> <C> <C> <C>
Martin J. Calihan Vice President, N/A N/A
3700 First Bank Place Investments
P.O. Box 357
Minneapolis, Minnesota 55440
Kirk Gove Vice President, N/A N/A
3700 First Bank Place Marketing
P.O. Box 357
Minneapolis, Minnesota 55440
Susan J. Haedt Vice President, N/A N/A
3700 First Bank Place Director of Operations
P.O. Box 357
Minneapolis, Minnesota 55440
</TABLE>
- -----------------
* For the calendar year ended December 31, 1995. There are currently nineteen
portfolios within the IAI Mutual Funds.
** Directors of the Fund who are interested persons (as that term is defined by
the Investment Company Act of 1940) of IAI and the Fund.
Noel P. Rahn has been Chief Executive Officer and a Director of IAI since
1974. Mr. Rahn is also Chairman of the other IAI Mutual Funds as well as IAI
Securities, Inc., the Fund's principal underwriter.
Richard E. Struthers is Executive Vice President and a Director of IAI and
has served IAI in many capacities since 1979. Mr. Struthers is also President
of the other IAI Mutual Funds as well as President and Director of IAI
Securities, Inc., the Fund's principal underwriter.
Madeline Betsch, until April 1994, was Executive Vice President, Director of
Client Services, of CME-KHBB Advertising since May 1985, and prior thereto was a
Vice President with Campbell-Mithun, Inc. since February 1977. Ms. Betsch
currently is President of ESMA Corp., a start-up business in the beauty and
wellness field.
W. William Hodgson served as information manager for the North Central Home
Office of the Prudential Insurance Company of America from 1961 until 1984; he
is currently retired.
George R. Long has been Chairman of Mayfield Corp. (financial consultants
and venture capitalists) since 1973.
J. Peter Thompson has been a grain farmer in southwestern Minnesota since
1974. Prior to that, Mr. Thompson was employed by Paine Webber, Jackson &
Curtis, Incorporated, most recently as Senior Vice President and General
Partner.
Charles H. Withers was Editor of the Rochester Post-Bulletin, Rochester,
Minnesota from 1960 through March 31, 1980; he is currently retired.
Archie C. Black is a Senior Vice President and Chief Financial Officer of
IAI and has served IAI in several capacities since 1987. Mr. Black is also
Treasurer of the other IAI Mutual Funds as well as Chief Financial
Officer/Treasurer of IAI Securities, Inc., the Fund's principal underwriter.
14
<PAGE>
William C. Joas is a Vice President of IAI and has served as an attorney for
IAI since 1990. Mr. Joas is also Secretary of the other IAI Mutual Funds and
Chief Compliance Officer of IAI Securities, Inc., the Fund's principal
underwriter.
Suzanne F. Zak is a Senior Vice President of IAI. Prior to joining IAI in
1992, Ms. Zak served as a Managing Director of J&W Seligman. Ms. Zak is also
Vice President, Investments of the IAI Midcap Growth Fund.
Martin J. Calihan is a Vice President of IAI. Prior to joining IAI in 1992,
Mr. Calihan served as an equity analyst for Morgan Stanley Co. and State Street
Research Management.
Kirk Gove is a Vice President of IAI. Prior to joining IAI in 1992, Mr.
Gove served as an Associate Vice President of Dain Bosworth, Incorporated. Mr.
Gove is also Vice President, Marketing of the other IAI Mutual Funds.
Susan J. Haedt is a Vice President of IAI and Director of Fund Operations .
Prior to joining IAI in 1992, Ms. Haedt served as a Senior Manager at KPMG Peat
Marwick. Ms. Haedt is also Vice President, Director of Operations of the other
IAI Mutual Funds.
The Fund has agreed to reduced initial subscription requirements for
employees and directors of the Fund or IAI, their spouses, children and
grandchildren. With respect to such persons, the minimum initial investment in
one or more of the IAI Family of Funds is $500; provided that the minimum amount
that can be allocated to any one of the Funds is $250. Subsequent subscriptions
are limited to a minimum of $100 for each of the Funds.
No compensation is paid by the Fund to any of its officers. Directors who
are not affiliated with IAI receive from the IAI Mutual Funds a $15,000 annual
retainer, $2,500 for each Board meeting attended, $3,600 for each Audit
Committee meeting attended (as applicable) and $1,800 for each Securities
Valuation Committee meeting attended. The Fund will pay its pro rata share of
these fees based on its net assets. Such unaffiliated directors also are
reimbursed for expenses incurred in connection with attending meetings.
The Board of Directors for the Fund, at a meeting held November 8, 1995,
approved a Code of Ethics. The Code permits access persons to engage in
personal securities transactions subject to certain policies and procedures.
Such procedures prohibit the acquiring of any securities in an initial public
offering. In addition, all securities acquired through private placement must
be pre-cleared. Procedures have been adopted which implement blackout periods
for certain securities transactions, as well as a ban on short-term trading
profits. Additional policies prohibit the receipt of gifts in certain
instances. Procedures have been implemented to monitor employee trading.
Access persons of the Adviser are required to certify annually that they have
read and understood the Code of Ethics. An annual report is provided to the
Fund's Board of Directors summarizing existing procedures, identifying material
violations and recommending any changes needed.
IAI, the Fund's investment adviser, is a wholly-owned subsidiary of Hill
Samuel Group ("Hill Samuel"). Hill Samuel is an international merchant banking
and financial services firm headquartered in London, England. In addition to
its ownership of IAI, Hill Samuel owns controlling interests in over seventy
insurance, merchant banking and financial services subsidiaries located in
Western Europe, Asia, the United States, Australia, New Zealand and Great
Britain. The principal offices of Hill Samuel are located at 100 Wood Street,
London EC2 P2AJ.
Hill Samuel, in turn, is owned by TSB Group, plc ("TSB"), a publicly-held
financial services organization headquartered in London, England. TSB is one of
the largest personal and corporate financial services groups in the United
Kingdom, engaged in a wide range of activities including banking, unit linked
life assurance, unit trust management, investment management, credit card and
finance house business. The principal offices of TSB are located at 25 Milk
Street, London EC2 V8LU. In October 1995, TSB announced a merger with Lloyds
Bank Plc, another U.K.-based financial services organization. The resulting
entity will be known as
15
<PAGE>
Lloyds TSB Group plc. Although subject to shareholder and regulatory approval,
it is expected that the merger will be consummated by the end of 1995.
HISTORY
The Fund is a separate portfolio of IAI Investment Funds VI, Inc., a
Minnesota corporation whose shares of common stock are currently issued in seven
series (Series A through G). On June 25, 1993, the Fund's shareholders approved
amended and restated Articles of Incorporation, which provided that the
registered investment company whose corporate name had been IAI Series Fund,
Inc., be renamed IAI Investment Funds VI, Inc. The investment portfolio
represented by Series G common shares is referred to as "IAI Aggressive Growth
Fund."
MANAGEMENT AGREEMENT
Pursuant to an Investment Advisory, Administrative Services and Shareholder
Services Agreement between the Fund and IAI (the "Management Agreement"), IAI
has agreed to provide the Fund with investment advice, statistical and research
facilities, and certain equipment and services, including, but not limited to,
office space and necessary office facilities, equipment, and the services of
required personnel and, in connection therewith, IAI has the sole authority and
responsibility to make and execute investment decisions for the Fund within the
framework of the Fund's investment policies, subject to review by the directors
of the Fund. In addition, IAI has agreed to provide to the Fund all required
administrative, stock transfer, redemption, dividend disbursing, accounting, and
shareholder services including, without limitation, the following: (1) the
maintenance of the Fund's accounts, books and records; (2) the calculations of
the daily net asset value in accordance with the Fund's current Prospectus and
Statement of Additional Information; (3) daily and periodic reports; (4) all
information necessary to complete tax returns, questionnaires and other reports
requested by the Fund; (5) the maintenance of stock registry records; (6) the
processing of requested account registration changes, stock certificate
issuances and redemption requests; and (7) the administration of payments and
dividends and distributions declared by the Fund; (8) answering shareholder
questions, (9) providing reports and other information and (10) other services
designed to maintain shareholder accounts. IAI may also pay qualifying broker-
dealers, financial institutions and other entities that provide such services.
In return for such services, the Fund has agreed to pay IAI an annual fee as a
percentage of the Fund's average daily net assets as set forth below:
Daily Net Assets Fee IAI Receives Annually
---------------- -------------------------
For the first $250 million 1.40%
For the next $250 million 1.35%
Above $500 million 1.30%
Except for brokerage commissions and other expenditures in connection with
the purchase and sale of portfolio securities, interest expense, and, subject to
the specific approval of a majority of the disinterested directors of the Fund,
taxes and extraordinary expenses, IAI has agreed to pay all of the Fund's other
costs and expenses, including, for example, costs incurred in the purchase and
sale of assets, taxes, charges of the custodian of the Fund's assets, costs of
reports and proxy material sent to Fund shareholders, fees paid for independent
accounting and legal services, costs of printing Prospectuses for Fund
shareholders and registering the Fund's shares, postage, insurance premiums, and
costs of attending investment conferences. The Management Agreement further
provides that IAI will either reimburse the Fund for the fees and expenses it
pays to directors who are not "interested persons" of the Fund or reduce its fee
by an equivalent amount. IAI is not liable for any loss suffered by the Fund in
the absence of willful misfeasance, bad faith or negligence in the performance
of its duties and obligations.
The Management Agreement will terminate automatically in the event of its
assignment. In addition, the Agreement is terminable at any time without
penalty by the Board of Directors of the Fund or by vote of a majority of the
Fund's outstanding voting securities on not more than 60 day's written notice to
IAI, and by IAI on
16
<PAGE>
60 days' notice to the Fund. The Agreement shall continue in effect from year
to year only so long as such continuance is specifically approved at least
annually by either the Board of Directors of the Fund or by vote of a majority
of the outstanding voting securities, provided that in either event such
continuance is also approved by the vote of a majority of directors who are not
parties to the Agreement or interested persons of such parties cast in person at
a meeting called for the purpose of voting on such approval.
Although investment decisions for the Fund are made independently from those
of the other funds and accounts as to which IAI gives investment advice, it may
occasionally develop that the same security is suitable for more than one fund
and/or other account. If and when more than one fund or other account
simultaneously purchase or sell the same security, the transactions will be
averaged as to price and allocated as to amount in accordance with arrangements
equitable to such funds and accounts. The simultaneous purchase or sale of the
same securities by more than one fund or by any fund and other accounts may have
detrimental effects on the Fund, as they may affect the price paid or received
by a fund or the size of the position obtainable by a fund.
CUSTODIAL SERVICE
The custodian for the fund is Norwest Bank Minnesota, N.A. Norwest Center,
Sixth and Marquette, Minneapolis, MN 55479. Norwest has entered into an
agreement with Morgan Stanley Trust Company, 1 Pierrepont Plaza, Brooklyn, New
York ("Morgan Stanley") which enables the Fund to utilize the subcustodian and
depository network of Morgan Stanley. Such agreements, subcustodians and
depositories were approved by the Fund's Board of Directors in accordance with
the rules and regulations of the Securities and Exchange Commission, for the
purpose of providing custodial services for the Fund's assets held outside the
United States.
The following is a listing of the subcustodians and depositories currently
approved by the Fund's directors and the countries in which such subcustodians
and depositories are located:
BRANCHES OF THE CUSTODIAN
AND SUBCUSTODIAN BANKS
----------------------
Argentina Citibank, N.A., Buenos Aires Branch
Australia Australia & New Zealand Banking Group, Ltd.
Austria Credit Austalt Bankverein
Bangladesh Standard Chartered Bank
Belgium Banque Bruxelles Lambert (BBL)
Botswana Barclays Bank of Botswana
Brazil Banco de Boston
Canada Toronto Dominion Bank
Chile Citibank, N.A., Santiago Branch
China Hong Kong & Shanghai Banking, Corp. Ltd.
Columbia Cititrust
17
<PAGE>
Cyprus Barclays Bank PLC
Czech Republic ING Bank
Denmark Den Danske Banke
Finland Merita Bank
France Banque Indosuez
Germany Berliner Handels-und-Frankfurter Bank
Ghana Barclays Bank of Ghana
Greece Citibank, N.A., Athens Branch
Hong Kong Hong Kong & Shanghai Banking Corp. Ltd.
Hungary Citibank, N.A., Budapest Branch
India Standard Chartered Bank
Indonesia Hong Kong & Shanghai Banking Corp. Ltd.
Ireland Allied Irish Bank
Israel Bank Leumi
Italy Barclays Bank PLC
Japan The Mitsubishi Bank Limited
Jordan Arab Bank plc
Kenya Barclays Bank Kenya
Korea Standard Chartered Bank
Luxembourg Banque Bruxelles Lambert
Malaysia Oversea Chinese Banking Corporation
Mauritius Hong Kong and Shanghai Bank Corporation
Mexico Citibank, N.A., Mexico City Branch
Morocco Banque Commerciale du Maroc
Netherlands ABN Amro Bank
New Zealand Bank of New Zealand
Norway Den Norske Bank
18
<PAGE>
Pakistan Standard Chartered Bank
Papua New Guinea Australia and New Zealand Bank
Peru Citibank N.A., Lima Branch
Philippines Hong Kong & Shanghai Banking Corp. Ltd.
Poland Citibank, S.A.
Portugal Banco Commercial Portugues
Singapore Oversea Chinese Banking Corporation
South Africa First National Bank of Southern Africa
Spain Banco Santader
Sri Lanka Hong Kong & Shanghai Banking, Corp. Ltd.
Swaziland Barclays Bank of Swaziland
Sweden Svenska Handelsbanken
Switzerland Morgan Guaranty Trust Company of New
York, Zurich Branch
Taiwan Hong Kong & Shanghai Banking Corp. Ltd.
Thailand Standard Chartered Bank
Turkey Citibank, N.A., Istanbul Branch
United Kingdom Barclays Bank PLC
Uruguay Citibank, N.A., Montevideo Branch
Venezuela Citibank, N.A., Caracas Branch
Zambia Barclays Bank of Zambia
Zimbabwe Barclays Bank of Zimbabwe
DEPOSITORIES
------------
Argentina Caja de Valores
Australia Clearing House Electronic Subregister
System
19
<PAGE>
Austria Euroclear Clearance System
OsterreicheKontrollbank
Belgium C.I.K. (Caisse Interprofessionelle de
Depot et de Virements de Titres S.A.)
Brazil Sao Paulo Stock Exchange
Canada CDS (The Canadian Depository
for Securities Ltd.)
Czech Republic Center for Securities (SCP)
Denmark Euroclear Clearance System
Vaerdipapircentralen
Finland Euroclear Clearance System
France SICOVAM (Societe Interprofessionelle la
Compensacion des Valuers Mobilieres)
Germany Kassenverein (Deutscher Kassenverein AG)
Hong Kong Central Clearing and Settlement System
Hungary Euroclear Clearance System
OsterreicheKontrollbank
Italy Monte Titoli, S.p.A
Japan Japan Securities Depository Center
Korea The Korean Central Depository
Malaysia The Malaysian Central Depository
Mexico Instituto para el Deposito de Valores
Netherlands NECIGEF (Netherlands Centraal Instit
voor Giraal Effectenverkeer B.V.
Norway Euroclear Clearance System
Verdipapirsentralen
Singapore Central Depository Pte Ltd.
Spain Servicio de Compensacion y Liquidacion de
Valores
Sweden Euroclear Clearance System
Vardepapperscentralen VPC AB
Switzerland SEGA (Schweizerische Effekten Giro A.G.)
20
<PAGE>
Taiwan Taiwan Securities Depository Co.
Thailand Share Depository Center
United Kingdom Stock Exchange Talisman System
PORTFOLIO TRANSACTIONS AND ALLOCATION OF BROKERAGE
Many of the Fund's portfolio transactions are effected with dealers
without the payment of brokerage commissions but at a net price which usually
includes a spread or markup. In effecting such portfolio transactions on behalf
of the Fund, IAI seeks the most favorable net price consistent with the best
execution.
Generally, however, the Fund must deal with brokers. IAI selects and
(where applicable) negotiates commissions with the brokers who execute the
transactions for the Fund. The primary criteria for the selection of a broker
is the ability of the broker, in the opinion of IAI, to secure prompt execution
of the transactions on favorable terms, including the reasonableness of the
commission and considering the state of the market at the time. In selecting a
broker, IAI may consider whether such broker provides brokerage and research
services (as defined in the Securities Exchange Act of 1934). IAI may direct
Fund transactions to brokers who furnish research services to IAI. Such
research services include advice, both directly and in writing, as to the value
of securities, the advisability of investing in, purchasing or selling
securities, and the availability of securities or purchasers or sellers of
securities, as well as analyses and reports concerning issues, industries,
securities, economic factors and trends, portfolio strategy, and the performance
of accounts. By allocating brokerage business in order to obtain research
services for IAI, the Fund enables IAI to supplement its own investment research
activities and allows IAI to obtain the views and information of individuals and
research staffs of many different securities research firms prior to making
investment decisions for the Fund. To the extent such commissions are directed
to brokers who furnish research services to IAI, IAI receives a benefit, not
capable of evaluation in dollar amounts, without providing any direct monetary
benefit to the Fund from these commissions. Generally the Fund pays higher than
the lowest commission rates available.
IAI believes that most research services obtained by it generally
benefit one or more of the investment companies or other accounts which it
manages. Normally research services obtained through commissions paid by the
managed fund investing in common stocks and managed accounts investing in common
stocks would primarily benefit the fund and accounts.
There is no formula for the allocation by IAI of the Fund's brokerage
business to any broker-dealers for brokerage and research services. However,
IAI will authorize the Fund to pay an amount of commission for effecting a
securities transaction in excess of the amount of commission another broker
would have charged only if IAI determines in good faith that such amount of
commission is reasonable in relation to the value of the brokerage and research
services provided by such broker viewed in terms of either that particular
transaction or IAI's overall responsibilities with respect to the accounts as to
which it exercises investment discretion.
Although investment decisions for the Fund are made independently from
other accounts as to which IAI gives investment advice, it may occasionally
develop that the same security is suitable for more than one account. If and
when more than one account simultaneously purchase or sell the same security,
the transactions will be averaged as to price and allocated as to amount in
accordance with arrangements equitable to the Fund and such accounts. The
simultaneous purchase or sale of the same securities by the Fund and other
accounts may have detrimental effects on the Fund, as they may affect the price
paid or received by the Fund or the size of the position obtainable by the Fund.
Consistent with the Rules of Fair Practice of the National Association
of Securities Dealers, Inc. and subject to the policies set forth in the
preceding paragraphs and such other policies as the Board of Directors of the
21
<PAGE>
Fund may determine, IAI may consider sales of shares of the Fund as a factor in
the selection of broker-dealers to execute the Fund's securities transactions.
CAPITAL STOCK
The Fund is a separate portfolio of IAI Investment Funds VI, Inc., a
Minnesota corporation whose shares of common stock are currently issued in seven
series (Series A through G). Each share of a series is entitled to participate
pro rata in any dividends and other distributions of such series and all shares
of a series have equal rights in the event of liquidation of that series. The
Board of Directors of IAI Investment Funds VI, Inc. is empowered under the
Articles of Incorporation of such company to issue other series of the company's
common stock without shareholder approval. IAI Investment Funds VI, Inc., has
authorized 10,000,000,000 shares of $.01 par value common stock to be issued as
Series G common shares. The investment portfolio represented by such shares is
referred to as IAI Aggressive Growth Fund.
NET ASSET VALUE AND PUBLIC OFFERING PRICE
The portfolio securities in which the Fund invests fluctuate in value, and
hence, for the Fund, the net asset value per share also fluctuates.
The net asset value per share of the Fund is determined once daily as of the
close of trading on the New York Stock Exchange on each business day on which
the New York Stock Exchange is open for trading, and may be determined on
additional days as required by the Rules of the Securities and Exchange
Commission. The New York Stock Exchange is closed, and the net asset value per
share of the Fund is not determined, on the following national holidays: New
Year's Day, Presidents' Day, Good Friday, Memorial Day, Independence Day, Labor
Day, Thanksgiving Day, and Christmas Day.
PURCHASES AND REDEMPTIONS IN KIND
In extraordinary circumstances, Fund shares may be purchased for cash or in
exchange for securities which are permissible investments of a Fund, subject to
IAI's discretion and its determination that the securities are acceptable.
Securities accepted in exchange will be valued on the basis of market
quotations, or if the market quotations are not available, by a method that IAI
believes accurately reflects fair value. In addition, securities accepted in
exchange are required to be liquid securities that are not restricted as to
transfer. Also in extraordinary circumstances, if a shareholder so desires, and
IAI so agrees, Fund shares may be redeemed in exchange for securities held by a
Fund. Securities redeemed in exchange will be valued on the basis of market
quotations, or if market quotations are not available, by a method that IAI
believes accurately reflects fair value.
TAX STATUS
The tax status of the Fund and the distributions of the Fund are summarized
in the Prospectus under "Dividends, Distributions and Tax Status."
Under the Internal Revenue Code of 1986, as amended, (the "Code"),
individual shareholders may not exclude any amount of distributions from Fund
gross income that is derived from dividends; corporate shareholders, however,
are permitted to deduct 70% of qualifying dividend distributions from domestic
corporations. Such a deduction by a corporate shareholder will depend upon the
portion of the Fund's gross income that is derived from dividends received from
domestic corporations. Since it is anticipated that a portion of the net
investment income of the Fund may derive from sources other than dividends from
domestic corporations, a portion of the Fund's dividends may not qualify for
this exclusion. Distributions designated as long-term capital gain
distributions will be taxable to the shareholder as long-term capital gains
regardless of how
22
<PAGE>
long the shareholder has held the shares. Such distributions will not be
eligible for the dividends received exclusion referred to above.
Ordinarily, distributions and redemption proceeds earned by Fund
shareholders are not subject to withholding of federal income tax. However, the
Fund is required to withhold 31% of a shareholder's distributions and redemption
proceeds upon the occurrence of certain events specified in Section 3406 of the
Code and regulations promulgated thereunder. These events include the failure
of the Fund shareholder to supply the Fund with such shareholder's taxpayer
identification number, and the failure of the Fund shareholder who is otherwise
exempt from withholding to properly document such shareholder's status as an
exempt recipient. Additionally, distributions may be subject to state and local
income taxes, and the treatment thereunder may differ from the federal income
tax consequences discussed above.
If Fund shares are sold or otherwise disposed of more than one year from the
date of acquisition, the difference between the price paid for the shares and
the sales price will result in long-term capital gain or loss to the Fund
shareholder if, as is usually the case, the Fund shares are a capital asset in
the hands of the Fund shareholder at that time. However, under a special
provision in the Code, if Fund shares with respect to which a long-term capital
gain distribution has been, or will be, made are held for six months or less,
any loss on the sale or other disposition of such shares will be long-term
capital loss to the extent of such distribution.
Under the Code, the Fund will be subject to a non-deductible excise tax
equal to 4% of the excess, if any, of the amount of investment income and
capital gains required to be distributed pursuant to the Code for each calendar
year over the amount actually distributed. In order to avoid this excise tax,
the Fund generally must declare dividends by the end of each calendar year
representing 98% of the Fund's ordinary income for such calendar year and 98% of
its capital gain net income, if any, for the twelve-month period ending October
31 of the same calendar year. The excise tax is not imposed, however, an
undistributed income that is already subject to corporate income tax. It is
the Fund's policy not to distribute capital gains until capital loss carryovers,
if any, either are utilized or expire.
Income received from sources within foreign countries may be subject to
withholding and other taxes imposed by such countries. Tax conventions between
certain countries and the United States may reduce or eliminate such taxes. It
is impossible to determine the effective rate of foreign tax applicable to such
income in advance since the precise amount of the Fund's assets to be invested
in various countries is not known. Any amount of taxes paid by the Fund to
foreign countries will reduce the amount of income available to the Fund for
distributions to shareholders.
The foregoing is a general and abbreviated summary of the Code and Treasury
regulations in effect as of the date of the Fund's Prospectus and this Statement
of Additional Information. The foregoing relates solely to the federal income
tax law applicable to "U.S. persons," i.e., U.S. citizens and residents and U.S.
domestic corporations, partnerships, trusts and estates. Shareholders who are
not U.S. persons are encouraged to consult a tax adviser regarding the income
tax consequences of acquiring shares of the Fund.
LIMITATION OF DIRECTOR LIABILITY
Under Minnesota law, the Fund's Board of Directors owes certain fiduciary
duties to the Fund and to its shareholders. Minnesota law provides that a
director "shall discharge the duties of the position of director in good faith,
in a manner the director reasonably believes to be in the best interest of the
corporation, and with the care an ordinarily prudent person in a like position
would exercise under similar circumstances." Fiduciary duties of a director of
a Minnesota corporation include, therefore, both a duty of "loyalty" (to act in
good faith and act in a manner reasonably believed to be in the best interests
of the corporation) and a duty of "care" (to act with the care an ordinarily
prudent person in a like position would exercise under similar circumstances).
Minnesota law authorizes corporations to eliminate or limit the personal
liability of a director to the corporation or its shareholders for monetary
damages for breach of the fiduciary duty of "care." Minnesota law does not,
however, permit a corporation to eliminate or limit the liability of a director
(i) for any breach of the director's duty of
23
<PAGE>
"loyalty" to the corporation or its shareholders, (ii) for acts or omissions not
in good faith or that involve intentional misconduct or a knowing violation of
law, (iii) for authorizing a dividend, stock repurchase or redemption or other
distribution in violation of Minnesota law or for violation of certain
provisions of Minnesota securities laws, or (iv) for any transaction from which
the director derived an improper personal benefit. The Articles of Incorporation
of IAI Investment Funds VI, Inc., limit the liability of directors to the
fullest extent permitted by Minnesota statutes, except to the extent that such
liability cannot be limited as provided in the Investment Company Act of 1940
(which Act prohibits any provisions which purport to limit the liability of
directors arising from such directors' willful misfeasance, bad faith, gross
negligence, or reckless disregard of the duties involved in the conduct of their
role as directors).
Minnesota law does not eliminate the duty of "care" imposed upon a director.
It only authorizes a corporation to eliminate monetary liability for violations
of that duty. Minnesota law, further, does not permit elimination or limitation
of liability of "officers" of the corporation for breach of their duties as
officers (including the liability of directors who serve as officers for breach
of their duties as officers.) Minnesota law does not permit elimination or
limitation of the availability of equitable relief, such as injunctive or
rescissionary relief. Further, Minnesota law does not permit elimination or
limitation of a director's liability under the Securities Act of 1933 or the
Securities Exchange Act of 1934, and it is uncertain whether and to what extent
the elimination of monetary liability would extend to violations of duties
imposed on directors by the Investment Company Act of 1940 and the rules and
regulations adopted under such Act.
FINANCIAL STATEMENTS
The Fund undertakes to file a Post-Effective Amendment to its Registration
Statement on or before the date of the Fund's effectiveness for the purpose of
providing an audited balance sheet. Such audited balance sheet will be included
in this Statement of Additional Information at that time.
24
<PAGE>
PART C
Item 24. Financial Statements and Exhibits
- ------- ---------------------------------
(a) Financial Statements (Series A, C, E) (1)
(Series B, D) (2)
(Series F) (3)
(Series G) (4)
(b) Exhibits
(1A) Articles of Incorporation (5)
(1B) Certificate of Designation (Series C, D, E) (6)
(1C) Certificate of Designation (Series F) (7)
(1D) Certificate of Designation (Series G)
(2) Bylaws
(5A) Investment Advisory Agreement (Series A, B, C, D, E, F) (5)
(5B) Investment Advisory, Administrative Services and Shareholder
Services Agreement
(6A) Distribution and Shareholder Services Agreement (Series A, C, E)
(1)
(6B) Distribution and Shareholder Services Agreement (Series F) (3)
(6C) Distribution and Shareholder Services Agreement (Series B, D, G)
(6D) Dealer Sales Agreement (Series A, C, E) (1)
(6E) Dealer Sales Agreement (Series F) (3)
(6F) Dealer Sales Agreement (Series B, D, G)
(6G) Shareholder Services Agreement (Series A, C, E) (1)
(6H) Shareholder Services Agreement (Series F) (3)
(6I) Shareholder Services Agreement (Series B, D, G)
(8A) Custodian Agreement (Series A, B, C, D, E, F) (5)
(8B) Custodian Agreement (Series G)
(9) Administrative Agreement (Series A, B, C, D, E, F) (7)
(15A) Plan of Distribution (Series A, C, E) (1)
(15A) Plan of Distribution (Series B, D) (3)
IIII-1
<PAGE>
(16) Calculation of Performance Data (6)
___________________
(1) Incorporated by reference to Post-Effective Amendment to Registrant's
Registration Statement on Form N-1A filed on July 31, 1995.
(2) Incorporated by reference to Post-Effective Amendment to Registrant's
Registration Statement on Form N-1A filed on March 30, 1995.
(3) Incorporated by reference to Post-Effective Amendment to Registrant's
Registration Statement on Form N-1A filed on June 1, 1995.
(4) To be filed by Post-Effective Amendment on or before February 1, 1996.
(5) Incorporated by reference to Post-Effective Amendment to Registrant's
Registration Statement on Form N-1A filed on June 3, 1993.
(6) Incorporated by reference to Post-Effective Amendment to Registrant's
Registration Statement on Form N-1A filed on February 7, 1992.
(7) Incorporated by reference to Post-Effective Amendment to Registrant's
Registration Statement on Form N-1A filed on October 30, 1992.
Item 25. Persons Controlled by or Under Common Control with Registrant.
- ------- -------------------------------------------------------------
See the sections of the Prospectus entitled "Management" and
"Description of Common Stock" and the section of the Statement of Additional
Information entitled "Management," filed as part of this Registration Statement.
Item 26. Number of Holders Securities.
- ------- ----------------------------
<TABLE>
<CAPTION>
Number of Record Holders
Portfolio Title of Class as of October 31, 1995
- --------- -------------- ----------------------
<S> <C> <C>
IAI Investment Funds VI, Inc. Common Stock (Series A) 6,832
Common Stock (Series B) 704
Common Stock (Series C) 3,416
Common Stock (Series D) 683
Common Stock (Series E) 261
Common Stock (Series F) 1,911
Common Stock (Series G) N/A
</TABLE>
Item 27. Indemnification.
- ------- ---------------
No change from information supplied in Pre-Effective Amendment No. 1, filed
on July 22, 1991.
Item 28. Business and Other Connections of Investment Adviser.
- ------- ----------------------------------------------------
Information on the business of Investment Advisers, Inc. ("IAI") is
described in the Prospectus section "Management" and in Part B of this
Registration Statement in the section "Management."
The senior officers and directors of IAI and their titles are as follows:
IIII-2
<PAGE>
Name Title
- ---- -----
Jeffrey R. Applebaum Senior Vice President
Charles P. Barrington Director
Scott Allen Bettin Senior Vice President
Richard Oliver Bernays Director
Archie Campbell Black, III Senior Vice President/Treasurer
Julian Peavey Carlin Senior Vice President
Stephen C. Coleman Senior Vice President
Hugh Freedberg Chairman
Larry Ray Hill Executive Vice President/Director
Anne Florence Holloran Senior Vice President
Richard A. Holway Senior Vice President
Irving Philip Knelman Executive Vice President/Director
Rick D. Leggott Senior Vice President
Timothy A. Palmer Senior Vice President
Douglas Rugh Platt Senior Vice President
Andrew Scott Plummer Director
Noel Paul Rahn Chief Executive Officer/Director
R. David Spreng Senior Vice President
Christopher John Smith Senior Vice President/Secretary
Eric St. C. Stobart Director
Richard Edward Struthers Executive Vice President/Director
Suzanne F. Zak Senior Vice President
All of such persons have been affiliated with IAI for more than two years
except Messrs. Barrington, Bernays, Freedberg, Plummer and Stobart. Prior to
being appointed to the Board of IAI in 1993, Mr. Bernays was and remains Chief
Executive Officer of Hill Samuel Investment Management Group Ltd., 10 Fleet
Place, Limeburner Lane, London, England EC4M 7RH, since 1992. Prior to being
appointed to the Board in 1994, Mr. Barrington was and remains Managing Director
of Hill Samuel Bank, 100 Wood Street, London, England EC2P 2AJ, since 1991.
Prior to being appointed to the Board in 1994, Mr. Freedberg was and remains
Chief Executive of TSB Group plc, Hill Samuel Division, 100 Wood Street, London,
England EC2P 2AJ, since 1991. Prior to being appointed to the Board in 1994, Mr.
Plummer was and remains Legal Adviser to TSB Group plc, 60 Lombard Street,
London, England EC3V 9DN, since 1988. Prior to being appointed to the Board in
1994, Mr. Stobart was and remains Director of Hill Samuel Bank, 100 Wood Street,
London, England EC2P 2AJ, since 1977.
Certain directors and officers of IAI are directors and/or officers of the
Registrant, as described in the section of the Statement of Additional
Information entitled "Management," filed as a part of this Registration
Statement.
The address of the officers and directors of IAI is that of IAI, which is
3700 First Bank Place, P. O. Box 357, Minneapolis, Minnesota 55440.
Certain of the officers and directors of IAI also serve as officers and
directors of IAI International Ltd. Both IAI and IAI International are wholly-
owned subsidiaries of Hill Samuel Group BV, a London-based merchant banking and
financial services firm which, in turn, is owned by TSB Group plc, a publicly-
held financial services organization based in London, England. The senior
officers and directors of IAI International and their titles are as follows:
Name Title
- ---- -----
Noel Paul Rahn Chairman of the Board of Directors
Richard Bernays Director
IIII-3
<PAGE>
Roy C. Gillson Chief Investment Officer/Director
Anne F. Holloran Senior Vice President/Director
Irving Philip Knelman Director
Hilary Fane Deputy Chief Investment Officer/Director
Feidhlim O'Broin Associate Director
Elizabeth Gold Associate Director
Certain of the officers and directors of IAI also serve as officers and
directors of IAI Trust Company, a wholly-owned subsidiary of IAI. The officers
and directors of IAI Trust Company and their titles are as follows:
Name Title
- ---- -----
Richard E. Struthers Chairman of the Board
John G. Flesch Director/President
Christopher J. Smith Director/Secretary
Archie C. Black Director/Treasurer
Christie Haagensen Director of Trust Services
Item 29. Principal Underwriters
- ------- ----------------------
(a) IAI Securities is also the principal underwriter for IAI
Investment Funds I, Inc., IAI Investment Funds II, Inc., IAI Investment Funds
III, Inc., IAI Investment Funds IV, Inc., IAI Investment Funds V, Inc., IAI
Investment Funds VII, Inc., and IAI Investment Funds VIII, Inc.
(b) The officers and directors of IAI Securities and the positions, if
any, such officers and directors hold with the Registrant are set forth below.
The business address of such persons is 3700 First Bank Place, Minneapolis,
Minnesota 55402.
<TABLE>
<CAPTION>
Name and Principal Positions and Offices Positions and Offices
Business Address with Underwriter with Registrant
- ---------------------- ------------------------ ---------------------
<S> <C> <C>
Noel P. Rahn Chairman of the Board Chairman of the Board
Richard E. Struthers President/Director President/Director
Douglas R. Platt Vice President/Director None
R. David Spreng Vice President/Director None
Christopher J. Smith Secretary None
Archie C. Black, III CFO/Treasurer Treasurer
William C. Joas Chief Compliance Officer Secretary
</TABLE>
Item 30. Location of Accounts and Records.
- ------- --------------------------------
The Custodian for Registrant is Norwest Bank Minnesota, N.A., Norwest
Center, Sixth & Marquette, Minneapolis, Minnesota 55479. The Custodian maintains
records of all cash transactions of Registrant. All other books and records of
Registrant, including books and records of Registrant's investment portfolios,
are maintained
IIII-4
<PAGE>
by IAI. IAI also acts as Registrant's transfer agent and dividend disbursing
agent, at 3700 First Bank Place, Minneapolis, Minnesota 55402.
Item 31. Management Services.
- ------- -------------------
Not applicable.
Item 32. Undertakings.
- ------- ------------
(a) Not applicable.
(b) Registrant undertakes to file a post-effective amendment, using
financial statements which need not be certified, within four to six months from
the effective date of the registration of Registrant's Series G Common Stock.
(c) Registrant undertakes to furnish each person to whom a prospectus is
delivered a copy of its latest annual report to shareholders, upon request and
without change.
IIII-5
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, Registrant certifies that it meets all of the
requirements for effectiveness of its Post-Effective Amendment to its
Registration Statement pursuant to Rule 485(a) under the Securities Act of 1933
and has duly caused this Post-Effective Amendment to its Registration Statement
to be signed on its behalf by the undersigned, thereunto duly authorized, in the
City of Minneapolis, and State of Minnesota, on the 17th day of November, 1995.
IAI INVESTMENT FUNDS VI, INC.
(Registrant)
By /s/ Richard E. Struthers, President
-----------------------------------
Richard E. Struthers , President
Pursuant to the requirements of the Securities Act of 1933, this Post-
Effective Amendment to the Registration Statement has been signed below by the
following persons in the capacities and on the dates indicated:
/s/ Richard E. Struthers President (principal November 17, 1995
- ------------------------ executive officer)
Richard E. Struthers & Director
/s/ Archie C. Black III Treasurer (principal November 17, 1995
- ----------------------- financial and
Archie C. Black III accounting officer)
Noel P. Rahn (1)
Director
Madeline Betsch (1)
Director
W. William Hodgson (1)
Director
George R. Long (1)
Director
J. Peter Thompson (1)
Director
Charles H. Withers (1)
Director
/s/ William C. Joas November 17, 1995
- -------------------
William C. Joas,
Attorney-in-fact
(1) Registrant's directors executing Powers of Attorney dated August 18, 1993,
and filed with the Commission on February 7, 1994.
<PAGE>
EXHIBIT INDEX
-------------
Exhibit No. Exhibit Description Sequential Page No.
- ----------- ------------------- -------------------
1D Certificate of Designation (Series G)
2 Bylaws of IAI Investment Funds VI, Inc.
5B Investment Advisory, Administrative Services
and Shareholder Services Agreement
6C Distribution and Shareholder Services Agreement
6F Dealer Sales Agreement
6I Shareholder Services Agreement
8B Custodian Agreement
<PAGE>
EXHIBIT 1D
CERTIFICATE OF DESIGNATION
OF SERIES OF COMMON SHARES
The undersigned, Secretary of IAI Investment Funds VI, Inc., a Minnesota
corporation (the "Corporation"), hereby certifies that the following is a true,
complete and correct copy of resolutions duly adopted by a majority of the
directors of the Board of Directors through a written action taken without a
meeting in accordance with Minnesota Statues, Section 302A.239.
DESIGNATION OF SERIES G COMMON SHARES
-------------------------------------
WHEREAS, the shareholders of IAI Investment Funds VI, Inc. (the
"Corporation") have authorized 10,000,000,000,000 shares of common stock, $.01
par value per share, of which 10,000,000,000 are designated Series G Common
Shares, as set forth in the Articles of Incorporation of the Corporation; and
WHEREAS, said Articles of Incorporation set forth that the balance of the
authorized but unissued shares of common stock may be issued in such series with
such designations, preferences and relative, participating, optional or other
special rights, or qualifications, limitations or restrictions thereof, as shall
be stated or expressed in a resolution or resolutions providing for the issue of
any series of common shares as may be adopted from time to time by the Board of
Directors of the Corporation.
NOW, THEREFORE, BE IT RESOLVED, that 10,000,000,000 of the remaining
authorized but unissued common shares of the Corporation be, and they hereby
are, designated as Series G Common Shares, and said Series G Common Shares shall
represent interests in a separate and distinct portion of the Corporation's
assets which shall take the form of a separate portfolio of investment
securities, cash and other assets.
FURTHER RESOLVED, that Articles 6, 7 and 8 of the Articles of Incorporation
of the Corporation setting forth the preferences and relative, participating,
optional or other special rights, and qualifications, limitations and
restrictions thereof, of and among each series of common shares be, and they
hereby are, adopted as the preferences and relative, participating, optional and
other rights, and the qualifications, limitations and restrictions thereof, of
and among the Series G Common Shares designated hereby and in relation to the
Series A, B, C, D, E, and F Common Shares of the Corporation designated prior
hereto.
BE IT FURTHER RESOLVED, that the officers of the Corporation are hereby
authorized and directed to the file with the office of the Secretary of
Minnesota, a Certificate of Designation setting forth the relative rights and
preferences of the Series G Common Shares, as required by Subd. 3(b) of Section
401 of the Minnesota Business Corporation Act.
IN WITNESS WHEREOF, the undersigned has signed this Certificate of
Designation on behalf of IAI Investment Funds VI, Inc. this _____ day of
October, 1995.
---------------------------------
William C. Joas, Secretary
<PAGE>
EXHIBIT 2
BYLAWS
OF
IAI INVESTMENT FUNDS VI, INC.
ARTICLE I
OFFICES, CORPORATE SEAL
Section 1.01. Name. The name of the corporation is IAI Investment Funds
VI, Inc. The name of the series represented by Series A Common Shares shall be
"IAI Emerging Growth Fund." The name of the series represented by Series B
Common Shares shall be "IAI Government Fund." The name of the series
represented by Series C Common Shares shall be "IAI Midcap Growth Fund." The
name of the series represented by Series D Common Shares shall be "IAI Tax Free
Fund." The name of the series represented by Series E Common Shares shall be
"IAI Balanced Fund." The name of the series represented by Series F Common
Shares shall be "IAI Money Market Fund." The name of the series represented by
Series G Common Shares shall be "IAI Aggressive Growth Fund."
Section 1.02. Registered Office. The registered office of the corporation
in Minnesota shall be that set forth in the Articles of Incorporation or in the
most recent amendment of the Articles of Incorporation or resolution of the
directors filed with the Secretary of State of Minnesota changing the registered
office.
Section 1.03. Other Offices. The corporation may have such other offices
and places of businesses, within or without the State of Minnesota, as the
directors shall, from time to time, determine.
Section 1.04. Corporate Seal. The corporate seal shall be circular in
form and shall have inscribed thereon the name of the corporation and the word
"Minnesota" and the words "Corporate Seal." The form of the seal shall be
subject to alteration by the Board of Directors and the seal may be used by
causing it or a facsimile to be impressed or affixed or printed or otherwise
reproduced. Any officer or director of the corporation shall have authority to
affix the corporate seal of the corporation to any document requiring the same.
ARTICLE II
MEETINGS OF SHAREHOLDERS
Section 2.01. Place and Time of Meetings. Except as provided otherwise by
Minnesota Statutes Chapter 302A, meetings of the shareholders may be held at any
place, within or without the State of Minnesota, designated by the directors
and, in the absence of such designation, shall be held at the registered office
of the corporation in the State of Minnesota. The directors shall designate the
time of day for each meeting and, in the absence of such designation, every
meeting of shareholders shall be held at ten o'clock a.m.
Section 2.02. Regular Meetings. Annual meetings of shareholders are not
required by these Bylaws. Regular meetings shall be held only with such
frequency and at such times and places as provided in and required by law.
Section 2.03. Special Meetings. Special meetings of the shareholders may
be held at any time and for any purpose and may be called by the Chairman of the
Board, the President, and two or more directors, or by one or more shareholders
holding ten percent (10%) or more of the shares entitled to vote on the matters
to be presented to the meeting, except that a special meeting for the purpose of
considering any action directly or indirectly to facilitate or effect a business
combination, including any action to change or otherwise affect the composition
of the Board of Directors for that purpose, must be called by 25% of the voting
power of all shares entitled to vote.
<PAGE>
Section 2.04. Quorum; Adjourned Meetings. The holders of ten percent
(10%) of the shares outstanding and entitled to vote at the meeting shall
constitute a quorum for the transaction of business at any regular or special
shareholders' meeting. In case a quorum shall not be present at a meeting,
those present in person or by proxy shall adjourn the meeting to such day as
they shall, by majority vote, agree upon without further notice other than by
announcement at the meeting at which such adjournment is taken. If a quorum is
present, a meeting may be adjourned from time to time without notice other than
announcement at the meeting. At adjourned meetings at which a quorum is
present, any business may be transacted which might have been transacted at the
meeting as originally noticed. If a quorum is present, the shareholders may
continue to transact business until adjournment notwithstanding the withdrawal
of enough shareholders to leave less than a quorum.
Section 2.05. Voting. At each meeting of the shareholders, every
shareholder shall have the right to vote in person or by proxy. Each
shareholder, unless the Articles of Incorporation or applicable laws provide
otherwise, shall have one vote for each share having voting power registered in
his name on the books of the corporation. Upon the demand of any shareholder,
the vote upon any question before the meeting shall be by written ballot.
Except as otherwise specifically provided by these Bylaws or as required by
provisions of the Investment Company Act of l940 or other applicable laws, all
questions shall be decided by a majority vote of the number of shares entitled
to vote and represented at the meeting at the time of the vote. If the
matter(s) to be presented at a regular or special meeting relates only to an
individual series or class thereof of the corporation, then only the
shareholders of the series or class thereof are entitled to vote on such
matter(s).
Section 2.06. Voting Proxies. The right to vote by proxy shall exist only
if the instrument authorizing such proxy to act shall have been executed in
writing by the shareholder himself or by his attorney thereunto duly authorized
in writing. No proxy shall be voted after eleven (11) months from its date
unless it provides for a longer period.
Section 2.07. Closing of Books. The Board of Directors may fix a time, not
exceeding sixty (60) days preceding the date of any meeting of shareholders, as
a record date for the determination of the shareholders entitled to notice of,
and to vote at, such meeting, notwithstanding any transfer of shares on the
books of the corporation after any record date so fixed. If the Board of
Directors fails to fix a record date for determination of the shareholders
entitled to notice of, and to vote at, any meeting of shareholders, the record
date shall be the thirtieth (30th) day preceding the date of such meeting.
Section 2.08. Notice of Meetings. The Secretary or an Assistant Secretary
shall mail to each shareholder shown by the books of the corporation to be a
holder of record of voting shares, at his address as shown by the books of the
corporation, a notice setting out the time and date and place of each regular
meeting and each special meeting, which notice shall be mailed at least ten (10)
days prior thereto; except that notice of a meeting at which an agreement of
merger or consolidation is to be considered shall be mailed to all shareholders
of record, whether entitled to vote or not, at least two (2) weeks prior
thereto; and except that notice of a meeting at which a proposal to dispose of
all, or substantially all, of the property and assets of the corporation is to
be considered shall be mailed to all shareholders of record, whether entitled to
vote or not, at least ten (10) days prior thereto; and except that notice of a
meeting at which a proposal to dissolve the corporation or to amend the Articles
of Incorporation is to be considered shall be mailed to all shareholders of
record, whether entitled to vote or not, at least ten (10) days prior thereto.
Every notice of any special meeting shall state the purpose or purposes for
which the meeting has been called, pursuant to Section 2.03, and the business
transacted at all special meetings shall be confined to the purpose stated in
the call.
Section 2.09. Waiver of Notice. Notice of any regular or special meeting
may be waived either before, at or after such meeting orally or in writing
signed by each shareholder or representative thereof entitled to vote the shares
so represented. A shareholder, by his attendance at any meeting of shareholders,
shall be deemed to have waived notice of such meeting, except where the
shareholder objects at the beginning of the meeting to the transaction of
business because the meeting is not lawfully called or convened, or objects
before a vote on an item of business because the item may not lawfully be
considered at that meeting and does not participate in the consideration of the
item at that meeting.
2
<PAGE>
Section 2.10. Written Action. Any action which might be taken at a meeting
of the shareholders may be taken without a meeting if done in writing and signed
by a majority of the shareholders entitled to vote on that action. If the action
to be taken relates to an individual series or class thereof of the corporation,
then only shareholders of the series or class thereof are entitled to vote on
such action.
ARTICLE III
DIRECTORS
Section 3.01. Number Qualifications and Term of Office. Until the first
meeting of shareholders, or until the directors increase their number by
resolution, the number of directors shall be the number named in the Articles of
Incorporation. Thereafter, the number of directors shall be established by
resolution of the shareholders (subject to the authority of the Board of
Directors to increase the number of directors as permitted by law). In the
absence of such resolution, the number of directors shall be the number last
fixed by the shareholders, the Board of Directors or the Articles of
Incorporation. Directors may but need not be shareholders. Each of the directors
shall hold office until the regular meeting of shareholders next held after his
election and until his successor shall have been elected and shall qualify, or
until he shall resign, or shall have been removed as hereinafter provided.
Section 3.02. Election of Directors. Except as otherwise provided in
Section 3.12 and 3.13 hereof the directors shall be elected at all regular
shareholders' meeting. Directors may be elected at a special shareholders'
meeting, provided that the notice of such meeting shall contain mention of such
purpose. At each shareholders' meeting for the election of directors, the
directors shall be elected by a plurality of the votes validly cast at such
election. The shareholders of each series or class thereof of stock of the
corporation shall be entitled to vote for directors and shall have equal voting
power.
Section 3.03. General Powers.
---------------
(a) The property, affairs and business of the corporation shall be managed
by the Board of Directors, which may exercise all the powers of the corporation
except those powers vested solely in the shareholders of the corporation by
statute, the Articles of Incorporation or these Bylaws, as amended.
(b) All acts done by any meeting of the directors or by any person acting
as a director, so long as his successor shall not have been duly elected or
appointed, shall, notwithstanding that it be afterwards discovered that there
was some defect in the election of the directors or such person acting as
aforesaid or that they or any of them were disqualified, be as valid as if the
directors or such other person, as the case may be, had been duly elected and
were or was qualified to be directors or a director of the corporation.
Section 3.04. Power to Declare Dividends.
---------------------------
(a) The Board of Directors, from time to time as they may deem advisable,
may declare and pay dividends in cash or other property of the corporation, out
of any source available for dividends, to the shareholders of each series (or
class thereof) of stock of the corporation according to their respective rights
and interests in the investment portfolio of the corporation issuing such series
(or class thereof) of stock.
(b) The Board of Directors shall cause to be accompanied by a written
statement any dividend payment wholly or partly from any source other than
(i) each investment portfolio's accumulated and accrued undistributed
net income (determined in accordance with generally accepted
accounting practice and the rules and regulations of the
Securities and Exchange Commission then in effect) and not
including profits or losses realized upon the sale of securities
or other properties; or
3
<PAGE>
(ii) each investment portfolio's net income so determined for the
current or preceding fiscal year.
Such statement shall adequately disclose the source or sources of such payment
and the basis of calculation, and shall be in such form as the Commission may
prescribe.
(c) Notwithstanding the above provisions of this Section 3.04, the Board of
Directors may at any time declare and distribute pro rata among the shareholders
of each series (or class thereof) of stock a "stock dividend" out of each
portfolio's authorized but unissued shares of stock, including any shares
previously purchased by a portfolio of the corporation.
Section 3.05. Annual Meeting. The Board of Directors shall meet annually at
the registered office of the corporation, or at such other place within or
without the State of Minnesota as may be designated by the Board of Directors,
for the purpose of electing the officers of the corporation and for the
transaction of such other business as shall come before the meeting.
Section 3.06. Board Meetings. Meetings of the Board of Directors shall be
held from time to time at such time and place within or without the State of
Minnesota as may be fixed by resolution adopted by a majority of the whole Board
of Directors.
Section 3.07. Meeting; Notice. A director may call a meeting by giving five
(5) days' notice to all directors of the date, time, and place of the meeting;
provided that if the date, time and place of a board meeting have been announced
at a previous meeting of the board, no notice is required.
Section 3.08. Waiver of Notice. Notice of any meeting of the Board of
Directors may be waived either before, at, or after such meeting orally or in
writing signed by such director. A director, by his attendance and participation
in the action taken at any meeting of the Board of Directors, shall be deemed to
have waived notice of such meeting.
Section 3.09. Quorum. A majority of the directors then holding office shall
constitute a quorum for the transaction of business at such meeting; provided,
however, notwithstanding the above, if the Board of Directors is taking action
pursuant to the Investment Company Act of 1940, as now enacted or hereafter
amended, a majority of the directors who are not "interested persons" (as
defined by the Investment Company Act of 1940, as now enacted or hereafter
amended) of the corporation shall constitute a quorum for taking such action.
Section 3.10. Advance Consent or Opposition. A director may give advance
written consent or opposition to a proposal to be acted on at a meeting of the
Board of Directors. If such director is not present at the meeting, consent or
opposition to a proposal does not constitute presence for purposes of
determining the existence of a quorum, but consent or opposition shall be
counted as a vote in favor of or against the proposal and shall be entered in
the minutes or other record of action at the meeting, if the proposal acted on
at the meeting is substantially the same or has substantially the same effect as
the proposal to which the director has consented or objected.
Section 3.11. Conference Communications. Directors may participate in any
meeting of the Board of Directors, or of any duly constituted committee thereof,
by means of a conference telephone conversation or other comparable
communication technique whereby all persons participating in the meeting can
hear and communicate to each other. For the purposes of establishing a quorum
and taking any action at the meeting, such directors participating pursuant to
this Section 3.11 shall be deemed present in person at the meeting, and the
place of the meeting shall be the place or origination of the conference
telephone conversation or other comparable communication technique.
Section 3.12. Vacancies; Newly Created Directorships. Vacancies in the
Board of Directors of the corporation occurring by reason of death, resignation,
removal or disqualification shall be filled for the unexpired term by a majority
of the remaining directors of the Board although less than a quorum; newly
created
4
<PAGE>
directorships resulting from an increase in the authorized number of directors
by action of the Board of Directors as permitted by Section 3.01 may be filled
by a two-thirds (2/3) vote of the directors serving at the time of such
increase; and each person so elected shall be a director until his successor is
elected by the shareholders, who may make such election at their next regular
meeting or at any meeting duly called for that purpose; provided, however, that
no vacancy can be filled as provided above if prohibited by the provisions of
the Investment Company Act of 1940.
Section 3.13. Removal. The entire Board of Directors or any individual
director may be removed from office, with or without cause, by a vote of the
shareholders holding a majority of the shares entitled to vote at an election of
directors. In the event that the entire Board or any one or more directors be so
removed, new directors shall be elected at the same meeting, or the remaining
directors may, to the extent vacancies are not filled at such meeting, fill any
vacancy or vacancies created by such removal. A director named by the Board of
Directors to fill a vacancy may be removed from office at any time, with or
without cause, by the affirmative vote of the remaining directors if the
shareholders have not elected directors in the interim between the time of the
appointment to fill such vacancy and the time of removal.
Section 3.14. Committees. A resolution approved by the affirmative vote of
a majority of the Board of Directors may establish committees having the
authority of the board in the management of the business of the corporation to
the extent provided in the resolution. A committee shall consist of one or more
persons, who need not be directors, appointed by affirmative vote of a majority
of the directors present. Committees are subject to the direction and control
of, and vacancies in the membership thereof shall be filled by, the Board of
Directors, except as provided by Minnesota Statutes Section 302A.243.
A majority of the members of the committee present at a meeting is a quorum
for the transaction of business, unless a larger or smaller proportion or number
is provided in a resolution approved by the affirmative vote of a majority of
the directors present.
Section 3.15. Written Action. Any action which might be taken at a meeting
of the Board of Directors, or any duly constituted committee thereof, may be
taken without a meeting if done in writing and signed by a majority of the
directors or committee members.
Section 3.16. Compensation. Directors who are not salaried officers of this
corporation or affiliated with its investment adviser shall receive such fixed
sum per meeting attended or such fixed annual sum as shall be determined, from
time to time, by resolution of the Board of Directors. All directors may receive
their expenses, if any, of attendance at meetings of the Board of Directors or
any committee thereof. Nothing herein contained shall be construed to preclude
any director from serving this corporation in any other capacity and receiving
proper compensation therefor.
Section 3.17. Resignation. A director may resign by giving written notice
to the corporation, and the resignation is effective without acceptance when
given, unless a later effective time is specified in the notice.
ARTICLE IV
OFFICERS
Section 4.01. Number. The officers of the corporation shall consist of a
Chairman of the Board (if one is elected by the Board), the President, a
Treasurer and a Secretary, and, if desired by the Board, one or more Vice
Presidents, Assistant Secretaries, and Assistant Treasurers, and such other
officers and agents as may, from time to time, be elected by the Board of
Directors. Any number of offices may be held by the same person.
5
<PAGE>
Section 4.02. Election, Term of Office and Qualifications. The Board of
Directors shall elect, from within or without their number, the President, the
Secretary, the Treasurer and such other officers as may be deemed advisable. The
President and all other officers who may be directors shall continue to hold
office until the election and qualification of their successors, notwithstanding
an earlier termination of their directorship.
Section 4.03. Resignation. Any officer may resign his office at any time by
delivering a written resignation to the Board of Directors, the President, the
Secretary, or any Assistant Secretary. Unless otherwise specified therein, such
resignation shall take effect upon delivery.
Section 4.04. Removal and Vacancies. Any officer may be removed from his
office by a majority of the whole Board of Directors, with or without cause.
Such removal, however, shall be without prejudice to the contract rights of the
person so removed. If there be a vacancy among the officers of the corporation
by reason of death, resignation or otherwise, such vacancy shall be filled for
the unexpired term by the Board of Directors.
Section 4.05. Chairman of the Board. The Chairman of the Board, if one is
elected, shall preside at all meetings of the shareholders and directors and
shall have such other duties as may be prescribed, from time to time, by the
Board of Directors.
Section 4.06. President. The President shall have general active management
of the business of the corporation. In the absence of the Chairman of the Board,
he shall preside at all meetings of the shareholders and directors. He shall be
the chief executive officer of the corporation and shall see that all orders and
resolutions of the Board of Directors are carried into effect. He shall be ex
officio a member of all standing committees. He may execute and deliver, in the
name of the corporation, any deeds, mortgages, bonds, contracts or other
instruments pertaining to the business of the corporation and, in general, shall
perform all duties usually incident to the office of President. He shall have
such other duties as may, from time to time, be prescribed by the Board of
Directors.
Section 4.07. Vice President. Each Vice President shall have such powers
and shall perform such duties as may be specified in the Bylaws or prescribed by
the Board of Directors or by the President. In the event of absence or
disability of the President, Vice Presidents shall succeed to his power and
duties in the order designated by the Board of Directors.
Section 4.08. Secretary. The Secretary shall be secretary of, and shall
attend all, meetings of the shareholders and Board of Directors and shall record
all proceedings of such meetings in the minute book of the corporation. He shall
give proper notice of meetings of shareholders and directors. He shall keep the
seal of the corporation and shall affix the same to any instrument requiring it
and may, when necessary, attest the seal by his signature. He shall perform such
other duties as may, from time to time, be prescribed by the Board of Directors
or by the President.
Section 4.09. Treasurer. The Treasurer shall keep accurate accounts of all
moneys of the corporation received or disbursed. He shall deposit all moneys,
drafts and checks in the name of, and to the credit of, the corporation in such
banks and depositories as a majority of the whole Board of Directors shall, from
time to time, designate. He shall have power to endorse, for deposit, all notes,
checks and drafts received by the corporation. He shall disburse the funds of
the corporation, as ordered by the Board of Directors, making proper vouchers
therefor. He shall render to the President and the directors, whenever required,
an account of all his transactions as Treasurer and of the financial condition
of the corporation, and shall perform such other duties as may, from time to
time, be prescribed by the Board of Directors or by the President.
Section 4.10. Assistant Secretaries. At the request of the Secretary, or in
his absence or disability, any Assistant Secretary shall have power to perform
all the duties of the Secretary and, when so acting, shall have all the powers
of, and be subject to all restrictions upon, the Secretary. The Assistant
Secretaries shall
6
<PAGE>
perform such other duties as from time to time may be assigned to them by the
Board of Directors or the President.
Section 4.11. Assistant Treasurer. At the request of the Treasurer, or in
his absence or disability, any Assistant Treasurer shall have power to perform
all the duties of the Treasurer, and when so acting, shall have all the powers
of, and be subject to all the restrictions upon, the Treasurer. The Assistant
Treasurers shall perform such other duties as from time to time may be assigned
to them by the Board of Directors or the President.
Section 4.12. Compensation. The officers of this corporation shall receive
such compensation for their services as may be determined, from time to time, by
resolution of the Board of Directors.
Section 4.13. Surety Bonds. The Board of Directors may require any officer
or agent of the corporation to execute a bond (including, without limitation,
any bond required by the Investment Company Act of 1940 and the rules and
regulations of the Securities and Exchange Commission) to the corporation in
such sum and with such surety or sureties as the Board of Directors may
determine, conditioned upon the faithful performance of his duties to the
corporation, including responsibility for negligence and for the accounting of
any of the corporation's property, funds or securities that may come into his
hands. In any such case, a new bond of like character shall be given at least
every six years, so that the date of the new bond shall not be more than six
years subsequent to the date of the bond immediately preceding.
ARTICLE V
SHARES AND THEIR TRANSFER AND REDEMPTION
Section 5.01. Certificates for Shares.
------------------------
(a) The corporation may have certificated or uncertificated shares, or
both, as designated by resolution of the Board of Directors. Every owner of
certificated shares of the corporation shall be entitled to a certificate, to be
in such form as shall be prescribed by the Board of Directors, certifying the
number of shares of the corporation owned by him. Within a reasonable time after
the issuance or transfer of uncertificated shares, the corporation shall send to
the new shareholder the information required to be stated on certificates.
Certificated shares shall be numbered in the order in which they shall be issued
and shall be signed, in the name of the corporation, by the President or a Vice
President and by the Treasurer, or by such officers as the Board of Directors
may designate. Such signatures may be facsimile if authorized by the Board of
Directors. Every certificate surrendered to the corporation for exchange or
transfer shall be canceled, and no new certificate or certificates shall be
issued in exchange for any existing certificate until such existing certificate
shall have been so canceled, except in cases provided for in Section 5.08
(b) In case any officer, transfer agent or registrar who shall have signed
any such certificate, or whose facsimile signature has been placed thereon,
shall cease to be such an officer (because of death, resignation or otherwise)
before such certificate is issued, such certificate may be issued and delivered
by the corporation with the same effect as if he were such officer, transfer
agent or registrar at the date of issue.
Section 5.02. Issuance of Shares. The Board of Directors is authorized to
cause to be issued shares of the corporation up to the full amount authorized by
the Articles of Incorporation in such series and classes thereof and in such
amounts as may be determined by the Board of Directors and as may be permitted
by law. No shares shall be allotted except in consideration of cash or of an
amount transferred from surplus to stated capital upon a share dividend. At the
time of such allotment of shares, the Board of Directors making such allotments
shall state, by resolution, their determination of the fair value to the
corporation in monetary terms of any consideration other than cash for which
shares are adopted. The amount of consideration to be received in cash, or
otherwise, shall not be less than the par value of the shares so allotted. No
shares of stock issued by the corporation shall be issued, sold, or exchanged by
or on behalf of the corporation for any amount less than the net asset value per
share of the shares outstanding as determined pursuant to Article XI hereunder.
7
<PAGE>
Section 5.03. Redemption of Shares. Upon the demand of any shareholder this
corporation shall redeem any share of stock issued by it held and owned by such
shareholder at the net asset value thereof as determined pursuant to Article XI
hereunder. The Board of Directors may suspend the right of redemption or
postpone the date of payment during any period when: (a) trading on the New York
Stock Exchange is restricted or such Exchange is closed for other than weekends
or holidays; (b) the Securities and Exchange Commission has by order permitted
such suspension; or (c) an emergency as defined by rules of the Securities and
Exchange Commission exists, making disposal of portfolio securities or valuation
of net assets of the corporation not reasonably practicable.
If the value of a shareholder's investments in the corporation becomes less
than $500 (or such other amount as may be determined from time to time by the
Board of Directors) as a result of a redemption or transfer of shares, the
corporation's officers are authorized, in their discretion, on behalf of the
corporation, to redeem such shareholder's entire interest and remit such amount,
provided that such a redemption will only be effected by the corporation
following (a) the mailing by the corporation to such shareholder of a "notice of
intention to redeem," and (b) the passage of such time period as may be
determined by the Board of Directors, during which time the shareholder will
have the opportunity to make an additional investment in the corporation to
increase the value of such shareholder's account to at least such minimum
amount.
Section 5.04. Transfer of Shares. Transfer of shares on the books of the
corporation may be authorized only by the shareholder named in the certificate,
or the shareholder's legal representative, or the shareholder's duly authorized
attorney-in-fact, and upon surrender of the certificate or the certificates for
such shares or a duly executed assignment covering shares held in unissued form.
The corporation may treat, as the absolute owner of shares of the corporation,
the person or persons in whose name shares are registered on the books of the
corporation.
Section 5.05. Registered Shareholders. The corporation shall be entitled to
treat the holder of record of any share or shares of stock as the holder in fact
thereof and accordingly shall not be bound to recognize any equitable or other
claim to or interest in such share on the part of any other person, whether or
not it shall have express or other notice thereof, except as otherwise expressly
provided by the laws of Minnesota.
Section 5.06 Transfer Agents and Registrars. The Board of Directors may
from time to time appoint or remove transfer agents and/or registrars of
transfers of shares of stock of the corporation, and it may appoint the same
person as both transfer agent and registrar. Upon any such appointment being
made all certificates representing shares of capital stock thereafter issued
shall be countersigned by one of such transfer agents or by one of such
registrars of transfers or by both and shall not be valid unless so
countersigned. If the same person shall be both transfer agent and registrar,
only one countersignature by such person shall be required.
Section 5.07. Transfer Regulations. The shares of stock of the corporation
may be freely transferred, and the Board of Directors may from time to time
adopt rules and regulations with reference to the method of transfer of the
shares of stock of the corporation.
Section 5.08. Lost, Stolen, Destroyed, and Mutilated Certificates. The
holder of any stock of the corporation shall immediately notify the corporation
of any loss, theft destruction or mutilation of any certificate therefor, and
the Board of Directors may, in its discretion, cause to be issued to him a new
certificate or certificate of stock upon the surrender of the mutilated
certificate or in case of loss, theft or destruction of the certificate, upon
satisfactory proof of such loss, theft or destruction, after the owner of the
lost, stolen or destroyed certificate, or his legal representatives, gives to
the corporation and to such registrar or transfer agent as may be authorized or
required to countersign such new certificate or certificates a bond, in such sum
as they may direct, and with such surety or sureties, as they may direct, as
indemnity against any claim that may be made against them or any of them on
account of or in connection with the alleged loss, theft, or destruction of any
such certificate.
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ARTICLE VI
DIVIDENDS, SURPLUS, ETC.
Section 6.01. The corporation's net investment income will be determined,
and its dividends shall be declared and made payable at such time(s) as the
Board of Directors shall determine; dividends shall be payable to shareholders
of record as of the date of declaration.
It shall be the policy of the corporation to qualify for and elect the tax
treatment applicable to regulated investment companies under the Internal
Revenue Code, so that the corporation will not be subjected to Federal income
tax on such part of its income or capital gains as it distributes to
shareholders.
ARTICLE VII
BOOKS AND RECORDS, AUDIT, FISCAL YEAR
Section 7.01. Books and Records. The Board of Directors of the corporation
shall cause to be kept such books and records, at such places, as may be
required by law.
Section 7.02. Audit, Accountant.
------------------
(a) The Board of Directors shall cause the records and books of account of
the corporation to be audited at least once in each fiscal year and at such
other times as it may deem necessary or appropriate.
(b) The corporation shall employ an independent certified public accountant
or firm of independent certified public accountants as its Accountant to examine
the accounts of the corporation and to sign and certify financial statements
filed by the corporation. The Accountant's certificates and reports shall be
addressed both to the Board of Directors and to the shareholders.
(c) A majority of the members of the Board of Directors shall select the
Accountant at any meeting held before the first regular meeting of shareholders,
and thereafter shall select the Accountant annually at a meeting held within
thirty (30) days before or after the beginning of the fiscal year of the
corporation. Such selection shall be submitted for ratification or rejection at
the next succeeding regular shareholders' meeting. If such meeting shall reject
such selection, the Accountant shall be selected by majority vote, either at the
meeting at which the rejection occurred or at a subsequent meeting of
shareholders called for such purpose.
(d) Any vacancy occurring between regular meetings, due to the death,
resignation or otherwise of the Accountant, may be filled by the Board of
Directors.
Section 7.03. Fiscal Year. The fiscal year of the corporation shall
------------
be determined by the Board of Directors.
ARTICLE VIII
INSPECTION OF BOOKS
Section 8.01. Every shareholder of the corporation and every holder of a
voting trust certificate shall have a right to examine, in person or by agent or
attorney, at any reasonable time or times, for any proper purpose, and at the
place or places where usually kept, the share register, books of account and
records of the proceedings of the shareholders and directors and to make
extracts therefrom.
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ARTICLE IX
LOANS TO OFFICERS, DIRECTORS, SHAREHOLDERS
Section 9.01. The corporation shall not lend any of its assets to any
officer or director of the corporation, nor shall it lend any of its assets to
shareholders upon the security of its shares. If any such loan be made, the
officers and directors who make such loan, or assent thereto, shall be jointly
and severally liable for repayment or return thereof.
ARTICLE X
VOTING OF STOCK HELD
Section 10.01. Unless otherwise provided by resolution of the Board of
Directors, the President, any Vice President, the Secretary or the Treasurer,
may from time to time appoint an attorney or attorneys or agent or agents of the
corporation, in the name and on behalf of the corporation, to cast the votes
which the corporation may be entitled to cast as a stockholder or otherwise in
any other corporation or association, any of whose stock or securities may be
held by the corporation, at meetings of the holders of the stock or other
securities of any such other corporation or association, or to consent in
writing to any action by any such other corporation or association, and may
instruct the person or persons so appointed as to the manner of casting such
votes or giving such consent, and may execute or cause to be executed on behalf
of the corporation and under its corporate seal, or otherwise, such written
proxies, consents, waivers, or other instruments as it may deem necessary or
proper in the circumstances; or any of such officers may themselves attend any
meeting of the holders of stock or other securities of any such corporation or
association and thereat vote or exercise any or all other powers of the
corporation as the holder of such stock or other securities of such other
corporation or association, or consent in writing to any action by any such
other corporation or association.
ARTICLE XI
VALUATION OF NET ASSET VALUE
Section 11.01. The net asset value per share of each series of stock issued
by the portfolios of the corporation shall be determined in good faith by or
under supervision of the officers of the corporation as authorized by the Board
of Directors as often and on such days and at such time(s) as the Board of
Directors shall determine.
ARTICLE XII
CUSTODY OF ASSETS
Section 12.01. All securities and cash owned by this corporation
shall, as hereinafter provided, be held by or deposited with a bank or trust
company having (according to its last published report) not less than two
million dollars ($2,000,000) aggregate capital, surplus and undivided profits
(the "Custodian").
This corporation shall enter into a written contract with the Custodian
regarding the powers, duties and compensation of the Custodian with respect to
the cash and securities of this corporation held by the Custodian. Said contract
and all amendments thereto shall be approved by the Board of Directors of this
corporation. In the event of the Custodian's resignation or termination, the
corporation shall use its best efforts promptly to obtain a successor Custodian
and shall require that the cash and securities owned by this corporation held by
the Custodian be delivered directly to such successor Custodian.
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ARTICLE XIII
AMENDMENTS
Section 13.01. These Bylaws may be amended or altered by a vote of
the majority of the whole Board of Directors at any meeting provided that notice
of such proposed amendment shall have been given in the notice given the
directors of such meeting. Such authority in the Board of Directors is subject
to the power of the shareholders to change or repeal such Bylaws by a majority
vote of the shareholders present or represented at any regular or special
meeting of shareholders called for such purpose. The Board of Directors shall
not make or alter any Bylaws fixing their qualifications, classifications, term
of office, or number, except that the Board of Directors may make or alter any
Bylaws to increase their number.
ARTICLE XIV
MISCELLANEOUS
Section 14.01. Interpretation. When the context in which words are
used in these Bylaws indicates that such is the intent, singular words will
include the plural and vice verse, and masculine words will include the feminine
and neuter genders and vice versa.
Section 14.02. Article and Section Titles. The titles of Sections
and Articles in these Bylaws are for descriptive purpose only and will not
control or alter the meaning of any of these Bylaws as set forth in the text.
11
<PAGE>
EXHIBIT 5B
INVESTMENT ADVISORY
ADMINISTRATIVE SERVICES
AND
SHAREHOLDER SERVICES AGREEMENT
This Agreement is made and entered into as of _____________, 1995 by
and between Investment Advisers, Inc., a Delaware corporation ("IAI"), and IAI
Investment Funds VI, Inc., a Minnesota corporation (the "Company"), on behalf of
IAI Aggressive Growth Fund, the portfolio represented by the Company's Series G
Common Shares (the "Fund"). The purpose of this Agreement is to memorialize that
IAI will provide the Company, on behalf of the Fund, with all necessary
services, or arrange for the provision of such services, other than services
relating to the distribution of Fund shares.
1. ENGAGEMENT OF IAI; SERVICES.
(a) Investment Advisory Services. The Company hereby engages IAI on behalf
of the Fund, and IAI hereby agrees, pursuant to the terms and conditions
hereinafter set forth, to furnish the Fund continuously with investment
planning, to provide investment advice with regard to the Fund's portfolio, to
prepare and make available to the Fund necessary research and statistical data
in connection therewith, to supervise the acquisition and disposition of
specific securities by the Fund and to perform such other services as are
reasonably incidental to the foregoing duties as investment adviser for, and to
manage the investment of the assets of, the Fund. IAI covenants and agrees that,
in effecting acquisitions and dispositions of specific investments on behalf of
the Fund, IAI shall at all times be governed by the Fund's investment
objectives, restrictions and policies as delineated and limited by the
disclosures contained in the various documents filed with the Securities and
Exchange Commission on behalf of the Fund, as such documents may from time to
time be amended or supplemented. IAI shall report to the Company's Board of
Directors regularly at such times and in such detail as the Board may from time
to time determine appropriate, in order to permit the Board to determine the
adherence of IAI to the Fund's investment objectives, policies and limitations.
(b) Dividend Disbursing, Accounting, Administrative and Transfer Agency
Services. The Company on behalf of the Fund hereby engages IAI, and IAI hereby
agrees, to provide to the Fund with all dividend disbursing, accounting,
administrative and transfer agency services required by the Fund, including,
without limitation, the following services:
(1) The calculation of net asset value per share at such times and in
such manner as specified in the Fund's current Prospectus and Statement of
Additional Information and at such other times upon which the parties
hereto may from time to time agree. The pricing services or other sources
from which daily price quotations on portfolio securities are to be
obtained for purposes of calculating the Fund's daily net asset value shall
be paid for by IAI and approved by the Company;
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(2) Upon the receipt of funds for the purchase of Fund shares or the
receipt of redemption requests with respect to Fund shares outstanding, the
calculation of the number of shares to be purchased or redeemed,
respectively;
(3) Upon the Fund's distribution of dividends, (i) the calculation of
the amount of such dividends to be received per Fund share, (ii) the
calculation of the number of additional Fund shares to be received by each
Fund shareholder, other than any shareholder who has elected to receive
such dividends in cash, and (iii) the mailing of payments with respect to
such dividends to shareholders who have elected to receive such dividends
in cash;
(4) The provision of transfer agency services as described below:
(i) IAI shall make original issues of shares of the Fund in
accordance with the Fund's current Prospectus and Statement of
Additional Information and with instructions from the Company;
(ii) Prior to the daily determination of net asset value of the
Fund, IAI shall process all purchase orders received since the last
determination of the Fund's net asset value;
(iii) Transfers of shares shall be registered;
(iv) IAI will maintain stock registry records in the usual form in
which it will note the issuance, transfer and redemption of Fund
shares, and is also authorized to maintain an account in which it will
record the Fund shares and fractions issued and outstanding from time
to time for which issuance of Fund share certificates is deferred; and
(v) IAI will, in addition to the aforementioned duties and
functions, perform the usual duties and functions of a stock transfer
agent for a registered investment company;
(5) The creation and maintenance of such records relating to the
business of the Fund as the Company may from time to time reasonably
request;
(6) The preparation of tax forms, reports, notices, proxy statements,
proxies and other Fund shareholder communications, and the mailing thereof
to Fund shareholders; and
2
<PAGE>
(7) The provision of such other dividend disbursing, accounting,
administrative, accounting and transfer agency services upon which the
parties hereto may from time to time agree.
(8) The Fund hereby authorizes IAI to contract with qualified entities
for the provision of any of the services to be performed pursuant to this
Section 1(b).
(c) Shareholder Services. The Company on behalf of the Fund hereby engages,
and IAI hereby agrees, to provide the Fund with all services to shareholders not
otherwise the subject of Section 1(b) above. These services include, without
limitation, personal services, services relating to the maintenance of
shareholder accounts, and shareholder liaison services such as responding to
customer inquiries and providing information on customer investments. The Fund
hereby also authorizes IAI to contract with qualifying broker-dealers, financial
institutions and other such entities for the provision of such services to Fund
shareholders.
(d) Filings, Office Facilities, Equipment and Personnel. IAI shall, at its
own expense, file all documents with all relevant regulatory agencies and
governmental authorities on the Company's behalf, furnish the Company and the
Fund with all office facilities, equipment and personnel necessary to discharge
its responsibilities and duties hereunder. IAI shall arrange, if requested by
the Company, for officers or employees of IAI to serve without compensation from
the Company as directors, officers, or employees of the Company if duly elected
to such positions by the shareholders or directors of the Company.
(e) Other Services. IAI shall, at its own expense, provide or arrange for
the provision of all services required by the Company on behalf of the Fund not
otherwise addressed in this Agreement, except for services related to the
distribution of Fund shares.
(f) Books and Records. IAI hereby acknowledges that all records pertaining
to the services rendered hereunder are the sole and exclusive property of the
Company, and in the event that a transfer of any of the services currently
rendered hereunder to someone other than IAI should ever occur, IAI will
promptly, and at its own cost, take all steps necessary to segregate such
records and deliver them to the Company.
(g) No Separate Charges to Shareholders. IAI hereby covenants and agrees
that it will make no separate charge to any Fund shareholder or his individual
account for any services rendered to said shareholder, the Fund or the Company
unless such charge for special services is specifically approved by the Board
including a majority of the directors who are not "interested persons" (as such
term is defined in the Investment Company Act of 1940, as amended, which act, as
amended and together with all rules and regulations promulgated thereunder, is
hereinafter referred to as the "1940 Act") of IAI. No special charge will be
levied retroactively or without appropriate notice to affected shareholders.
3
<PAGE>
(h) Limitation of Liability. IAI, in carrying out and performing the terms
and conditions of this Agreement, shall incur no liability for its status
hereunder or for any actions taken or omitted in good faith and without
negligence, and the Company does hereby agree to indemnify and hold IAI harmless
from any and all loss, liability and expense, including any legal expenses,
arising out of IAI's performance or status or any act or omission of IAI under
this agreement other than that incurred by IAI's willful misfeasance, bad faith
or negligence. Without limitation of the foregoing:
(1) IAI may rely upon, and shall not be liable to any person or party
for any actions taken or omitted to be taken in good faith in reliance
upon, the advice of the Company, or of counsel, who may be counsel for the
Company or counsel for IAI, and upon statements of accountants, brokers and
other persons believed by IAI in good faith to be expert in the matters
upon which they are consulted; and
(2) IAI may rely upon, and shall not be liable to any person or party
for any actions taken or omitted to be taken in good faith in reliance
upon, any signature, instruction, request, letter of transmittal,
certificate, opinion of counsel, statement, instrument, report, notice,
consent, order or other paper or document that IAI in good faith believes
to be genuine and to have been signed, presented or authorized by the
purchaser, Company or other proper party or parties.
2. COMPENSATION FOR SERVICES; ALLOCATION OF EXPENSES
(a) In payment for the services to be provided or arranged by IAI
hereunder, the Company (on behalf of the Fund) shall pay to IAI a fee based on
the Fund's average daily net assets (as determined in accordance with the
Company's Bylaws and with the Fund's Prospectus and Statement of Additional
Information, as the same may from time to time be amended or supplemented) as
set forth in Exhibit A attached hereto. This fee shall be paid to IAI on a
monthly basis not later than the tenth business day of the month following the
month in which the services were rendered and shall be prorated for any fraction
of a month at the commencement or termination of this Agreement.
(b) Except for brokerage commissions and other expenditures in connection
with the purchase and sale of portfolio securities, interest expense and,
subject to the specific approval of a majority of the directors of the Company
who are not "interested persons" (as defined in the 1940 Act) of IAI or the
Company, taxes and extraordinary expenses, IAI shall bear all of the Fund's
expenses; provided however, that IAI will either pay the ordinary and reasonable
fees and expenses of the Fund's disinterested directors or reduce the fee due
under this Agreement by an equivalent amount paid by the Fund to such directors.
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<PAGE>
3. FREEDOM TO DEAL WITH THIRD PARTIES.
IAI shall be free to render services to others similar to those rendered
under this Agreement or of a different nature except as such services may
conflict with the services to be rendered or the duties to be assumed hereunder.
4. EFFECTIVE DATE, DURATION, AMENDMENT AND TERMINATION OF AGREEMENT.
(a) Unless sooner terminated as hereinafter provided, this Agreement shall
continue in effect for a period more than two years from the date of its
execution but only as long as such continuance is specifically approved at least
annually by (i) the Board of Directors of the Company or by the vote of a
majority of the outstanding voting securities of the Fund, and (ii) by the vote
of a majority of the directors of the Company who are not parties to this
Agreement or "interested persons" (as defined in the 1940 Act) of IAI or of the
Company cast in person at a meeting called for the purpose of voting on such
approval.
(b) This Agreement may be terminated at any time, without the payment of
any penalty, by the Board of Directors of the Company or by the vote of a
majority of the outstanding voting securities of the Fund, or by IAI, upon 60
days' written notice to the other party.
(c) This Agreement shall automatically terminate in the event of its
"assignment" (as defined in the Investment Company Act of 1940, as amended).
(d) No amendment to this Agreement shall be effective until approved by the
vote of: (i) a majority of the directors of the Company who are not parties to
this Agreement or "interested persons" (as defined in the 1940 Act) of IAI or of
the Company cast in person at a meeting called for the purpose of voting on such
approval; and (ii) a majority of the outstanding voting securities of the Fund.
(e) Wherever referred to in this Agreement, the vote or approval of the
holders of a majority of the outstanding voting securities or shares of the Fund
shall mean the lesser of (i) the vote of 67% or more of the voting securities of
the Fund present at a regular or special meeting of shareholders duly called, if
more than 50% of the Fund's outstanding voting securities are present or
represented by proxy, or (ii) the vote of more than 50% of the outstanding
voting securities of the Fund.
(f) To the extent the provisions of this Section 4 are based on legislative
or regulatory requirements in effect at the time of this Agreement's initial
approval by the Fund's Board of Directors and any such legislative or regulatory
requirements change, the relevant provision of this Section 4 will be deemed to
have been so amended without further action by the Fund's Board of Directors or
its shareholders.
5
<PAGE>
5. NOTICES.
Any notice under this Agreement shall be in writing, addressed, delivered
or mailed, postage prepaid, to the other party at such address as such other
party may designate in writing for receipt of such notice.
6. REPRESENTATION.
IAI hereby represents that it will maintain registrations with and/or
approvals by all relevant governmental authorities necessary for the provision
of services pursuant to this Agreement.
7. INTERPRETATION; GOVERNING LAW.
This Agreement shall be subject to and interpreted in accordance with all
applicable provisions of law including, but not limited to, the 1940 Act. To the
extent that the provisions herein contained conflict with any such applicable
provisions of law, the latter shall control. The laws of the State of Minnesota
shall otherwise govern the construction, validity and effect of this Agreement.
IN WITNESS WHEREOF, the Company and IAI have caused this Agreement to be
executed by their duly authorized officers as of the day and year first above
written.
IAI INVESTMENT FUNDS VI, INC.
By
-------------------------------------
Richard E. Struthers, President
INVESTMENT ADVISERS, INC.
By
-------------------------------------
Noel P. Rahn, Chief Executive Officer
6
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EXHIBIT A
Annual Advisory Fee
Portfolio Effective Date (as % of average daily net assets)
--------- -------------- ----------------------------------
Series G -- IAI
Aggressive Growth Fund For the first $300,000,000 ... 1.40%
For the next $500,000,000 ... 1.35%
Above $800,000,000 ... 1.30%
7
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EXHIBIT 6C
AS AMENDED 5/10/95
DISTRIBUTION AND SHAREHOLDERS' SERVICES AGREEMENT
THIS AGREEMENT is made this 10 day of May, 1995, by and between IAI
Investment Funds VI, Inc., a Minnesota corporation (the "Corporation"), on
behalf of each portfolio represented by a series of shares of common stock of
the Corporation (the "Portfolios") set forth in Exhibit A hereto, as
supplemented from time to time, and IAI Securities, Inc., a Minnesota
corporation ("Securities").
1. DISTRIBUTION AND SHAREHOLDER SERVICES.
The Corporation hereby engages Securities, and Securities hereby agrees
to act, as principal underwriter for the Corporation in connection with the sale
and distribution of Portfolio shares to the public. Securities agrees to offer
such shares for sale at all times when such shares are available for sale and
may lawfully be offered for sale and sold. Securities, or others retained by it,
may also provide shareholder services, as described in the Corporation's Plan of
Distribution.
2. SALE OF PORTFOLIO SHARES.
Portfolio shares are to be sold only on the following terms:
(a) All subscriptions, offers or sales shall be subject to acceptance
or rejection by the Corporation. Any offer or sale shall be conclusively
presumed to have been accepted by the Corporation if the Corporation shall fail
to notify Securities of the rejection of such offer or sale prior to the
computation of the net asset value of the respective Portfolio's shares next
following receipt by the Corporation of notice of such offer or sale.
(b) Portfolio shares shall not be sold by Securities for an amount less
than the net asset value of such shares. No such shares shall be sold by
Securities for any consideration other than cash or, pursuant to an exchange
privilege provided for by the currently effective Prospectus of the respective
Portfolio, shares of any other investment company for which Securities act as
principal underwriter.
3. REGISTRATION OF SHARES.
The Corporation agrees to make prompt and reasonable efforts to effect
and keep in effect, at its own expense, the registration or qualification of the
shares of each Portfolio for sale in such jurisdiction as the Corporation may
designate.
4. INFORMATION TO BE FURNISHED TO SECURITIES.
The Corporation agrees that it will furnish Securities with such
information with respect to the affairs and accounts of the Corporation and the
Portfolios as Securities may from time to time reasonably require and further
agrees that Securities, at all reasonable times, shall be permitted to inspect
the books and records of the Corporation.
5. ALLOCATION OF EXPENSES.
During the period of this contract, the Corporation, on behalf of each
Portfolio shall pay or cause to be paid all expenses, costs and fees which are
not assumed by Securities or Investment Advisers, Inc. ("Advisers"). Securities
shall pay all promotional expenses in connection with the distribution of
Portfolio shares including paying for prospectuses and shareholder reports for
new shareholders and the costs of sales literature. Securities shall pay all
expenses which it incurs in connection with providing shareholder services.
Advisers, rather than Securities, may bear the expenses referred to in the above
two sentences, but Securities shall be primarily liable for such expenses until
paid.
<PAGE>
6. COMPENSATION TO SECURITIES.
As compensation for all of its services and its costs assumed under
this contract, the Corporation, on behalf of each Portfolio, shall pay
Securities a monthly fee based upon the average net assets of the Portfolios as
set forth in Exhibit A hereto, as supplemented from time to time.
Securities hereby agrees to waive a portion or all of the monthly fee
with respect to each Portfolio to the extent that the expenses for such
Portfolio exceeds its expense limitation referenced in Part Three of the
Investment Advisory Agreement between the Corporation and Advisers.
The monthly distribution fee paid by each Portfolio shall be used by
Securities for the purposes of financing any activity which is primarily
intended to result in the sale of such Portfolio's shares as set forth in a
written plan and in any related agreements which shall comply with Rule 12b-1
under the Investment Company Act of 1940, as such rule may be periodically
amended.
7. LIMITATION OF SECURITIES' AUTHORITY.
Securities shall be deemed to be an independent contractor and, except
as specifically provided or authorized herein, shall have no authority to act
for or represent the Corporation or any Portfolio. In connection with its role
as underwriter of Portfolio shares, Securities shall at all times be deemed an
agent of the Corporation and shall sell such shares to purchasers thereof as
agent and not as principal.
8. SUBSCRIPTION FOR SHARES--REFUND FOR CANCELED ORDERS.
Securities shall effect the subscription of Portfolio shares as agent
for the Corporation. In the event that an order for the purchase of Portfolio
shares is placed with Securities by a customer and subsequently canceled,
Securities, on behalf of such customer or dealer, shall forthwith cancel the
subscription for such shares entered on the books of the Corporation, and if
Securities has paid the Corporation for such shares, shall be entitled to
receive from the Corporation in refund of such payment the lesser of:
(a) the consideration received by the Corporation for said shares; and
(b) the net asset value of such shares at the time of cancellation by
Securities.
9. INDEMNIFICATION OF THE CORPORATION.
Securities agrees to indemnify the Corporation against any and all
litigation and other legal proceedings of any kind or nature and against any
liability, judgment, cost or penalty imposed as a result of such litigation or
proceedings in any way arising out of or in connection with the sale or
distribution of Portfolio shares by Securities. In the event of the threat or
institution of any such litigation or legal proceedings against the Corporation,
Securities shall defend such action on behalf of the Corporation at its own
expense, and shall pay any such liability, judgment, cost or penalty resulting
therefrom whether imposed by legal authority or agreed upon by way of compromise
and settlement; provided, however, Securities shall not be required to pay or
reimburse the Corporation for any liability, judgment, cost or penalty incurred
as a result of information supplied by, or as the result of the omission to
supply information by, the Corporation to Securities, or to Securities by a
director, officer, or employee of the Corporation who is not an interested
person of Securities, unless the information so supplied or omitted was
available to Securities or Advisers without recourse to the Corporation or any
such interested person of the Corporation.
10. FREEDOM TO DEAL WITH THIRD PARTIES.
Securities shall be free to render to others services of a nature
either similar to or different from those rendered under this contract, except
such as may impair its performance of the service and duties to be rendered by
it hereunder.
<PAGE>
11. EFFECTIVE DATE, DURATION AND TERMINATION OF AGREEMENT.
This Agreement shall become effective with respect to each Portfolio on
the date set forth on Exhibit A hereto, as supplemented from time to time.
Unless sooner terminated as hereinafter provided, this Agreement shall
continue in effect only so long as such continuance is specifically approved at
least annually (a) by the Board of Directors of the Corporation, or by the vote
of the holders of a majority of the outstanding voting securities of the
applicable Portfolio, and (b) by a majority of the directors who are not
interested persons of Securities or of the Corporation cast in person at a
meeting called for the purpose of voting on such approval. Whenever referred to
in this Agreement, the vote or approval of the holders of a majority of the
outstanding voting securities of a Portfolio shall mean the vote of 67% or more
of such securities if the holders of more than 50% of such securities are
present in person or by proxy or the vote of more than 50% of such securities,
whichever is less.
This Agreement may be terminated with respect to any Portfolio at any
time without the payment of any penalty by the vote of the Board of Directors of
the Corporation or by the vote of the holders of majority of the outstanding
voting securities of such Portfolio, or by Securities, upon sixty (60) days'
written notice to the other party. This Agreement shall automatically terminate
in the event of its assignment.
12. AMENDMENTS TO AGREEMENT.
No material amendment to this Agreement shall be effective until
approved by a vote of the Board of Directors of the Corporation, including a
majority of the directors who are not interested persons of the Corporation and
who have no direct or indirect financial interest in this Agreement, case in
person at a meeting called for the purpose of voting on such amendment.
Additionally, no amendment to this Agreement that materially increases the fee
payable by a Portfolio hereunder shall be effective until approved by a vote of
the holders of a majority of the outstanding voting securities of such
Portfolio.
13. NOTICES.
Any notice under this Agreement shall be in writing addressed,
delivered or mailed, postage prepaid to the other party at such address as such
other party may designate in writing for receipt of such notice.
IN WITNESS WHEREOF, the Corporation and Securities have caused this
Agreement to be executed by their duly authorized officers as of the day and
year first above written.
IAI INVESTMENT FUNDS VI, INC.
By:
--------------------------------
Noel P. Rahn, Chairman
IAI SECURITIES, INC.
By:
--------------------------------
Richard E. Struthers, President
<PAGE>
EXHIBIT 6F
DEALER SALES AGREEMENT
----------------------
Ladies and Gentlemen:
We invite you to join a selling group for the distribution of shares of those
mutual funds available to the public for which we serve as principal underwriter
(the "Funds"). Upon execution of this Agreement, you agree to participate in the
distribution of the Funds to the public subject to the terms set forth herein.
1. In all sales of the Funds to the public, you shall act as dealer of your
own account and shall not be authorized to act as agent for the Funds, for us or
for any other dealer.
2. All orders will be accepted by us only at the price, in the amount and
subject to the terms set forth in the then current Prospectuses and Statements
of Additional Information of the Funds. The procedure relating to the handling
of orders shall be subject to instructions which we shall forward to you from
time to time. Certificates representing shares of the Funds will not be issued.
3. You agree to provide distribution and marketing services in the marketing
of shares of the Funds and assistance to your customers who own shares of the
Funds including, but not limited to, answering inquiries regarding the status of
customers' accounts, assisting in changing dividend options, account
designations and addresses, and providing information to customers relating to
maintaining their investments in the Funds. For such services, we will pay you a
fee, as established by us from time to time and as permitted by each Fund's
respective Plan of Distribution established under Rule 12b-1 of the Investment
Company Act of 1940. Such fee will be based upon the following percentages of
the average month-end net assets of each Fund represented by shares of the Fund
owned, during the quarter for which payment is being made, by customers for
which you maintain a servicing relationship as evidenced by their execution of
such agreements as we may from time to time require. We specifically reserve the
right to discontinue paying fees with respect to those assets for which such
customer authorizations which we may require are not provided.
<PAGE>
Annual Fee (as a % of
Fund average month-end net assets)
------------------------- -----------------------------
Reserve Fund 0
Money Market Fund 0
Tax Free Fund .10%
Bond Fund .15%
Government Fund .15%
Growth and Income Fund .25%
Regional Fund .25%
Value Fund .25%
Developing Countries Fund .25%
International Fund .25%
Midcap Growth Fund .25%
Balanced Fund .25%
Growth Fund .25%
Such fee will be paid on a quarterly basis and, subject to the last sentence of
this section 3, will be paid so long as the accounts of your clients remain in
the Funds and this Agreement and such other agreements as we may require have
not been terminated. Each Fund reserves the right to terminate or suspend its
Plan of Distribution at any time as specified therein. You agree to furnish us
or the Funds with such information as may be reasonably requested with respect
to such fees paid to you pursuant to this Agreement.
4. If any Fund shares sold under the terms of this Agreement are repurchased
by the Funds or are tendered for redemption within seven business days after
confirmation of the original purchase, it is agreed that you shall forfeit the
right to receive the fees hereunder with respect to such shares.
5. No person is authorized to make any representations concerning the Funds
except those contained in the then current Prospectuses and in such printed
information as may be furnished by us for use as information supplemental to the
Prospectuses. Additional copies of the Prospectuses and any printed information
supplementing the Prospectuses will be supplied by us in reasonable quantities
upon request.
2
<PAGE>
6. We reserve the right in our sole discretion, without notice, to suspend
sales or withdraw the offering of shares of the Funds. This Agreement may be
terminated by either party at any time upon seven days' notice to the other
party. We reserve the right to amend this Agreement at any time upon written
notice.
7. You represent that you are a member in good standing of the National
Association of Securities Dealers, Inc. and agree that termination or suspension
of such membership shall automatically terminate this Agreement. You further
agree that you will immediately advise us of any such termination or suspension.
You also represent that you are authorized under relevant federal and state laws
and regulations to receive the fees payable hereunder and that you will
immediately advise us of any termination or suspension of such authorization.
8. You agree to indemnify and hold harmless the Funds and IAI Securities, Inc.
from and against any and all claims, liability, expense or loss in any way
connected with your violation of this Agreement or arising out of or in any way
connected with your willful, reckless or negligent conduct in the performance of
your duties and obligations hereunder including, without limitation, any
representations, verbal or otherwise, of any untrue or alleged untrue statements
of a material fact relating to the offer and sale of the Funds made by you, your
agents or employees.
9. All communications to us should be sent to the above address. Any notice
to you shall be duly given if mailed or telegraphed to you at the address
specified by you below. This Agreement shall be governed by and construed in
accordance with the laws of the State of Minnesota.
The undersigned hereby accepts
the offer set forth herein:
DEALER IAI SECURITIES, INC.
By___________________________ By___________________________
Its___________________________ Its___________________________
Date of Acceptance_______, 19___
3
<PAGE>
EXHIBIT 6I
SHAREHOLDER SERVICE AGREEMENT
Ladies and Gentlemen:
We invite you to enter into an agreement with us for the servicing of
shareholders of, and the maintenance of shareholder accounts for which we serve
as principal underwriter (the "Funds") and the shares of which are offered to
the public at net asset value, as described in the Funds' Prospectuses. Subject
to your acceptance of this Agreement, the terms and conditions of this Agreement
shall be as follows:
1. You shall provide shareholder and account maintenance services for certain
shareholders of the Funds who purchase shares of the Funds as a result of
their relationship to you. Such services may include, shareholder liaison
services, such as responding to customer inquiries and providing
information on their investments, and such other information and services
as we reasonably may request, to the extent you are permitted by applicable
statue, rule or regulation to provide such information or services.
2. If shares of the Funds are to be purchased or held by you on behalf of your
clients:
(i) Such shares will be registered in your name or in the name of your
nominee. The client will be the beneficial owner of the shares of
the Funds purchased and held by you in accordance with the client's
instructions and the client may exercise all rights of a shareholder
of the Funds. You agree to transmit to the Funds' transfer agent
(Investment Advisers, Inc.), in a timely manner, all purchase orders
and redemption requests of your clients and to forward to each
client all proxy statements, periodic shareholder reports and other
communications received from the Funds by you on behalf of your
clients. The Funds have agreed to pay all reasonable out-of-pocket
expenses actually incurred by you in connection with the transfer by
you of such proxy statements and reports to your clients.
(ii) You agree to transfer to the Funds' transfer agent, on the date such
purchase orders are effective, federal funds in an amount equal to
the amount of all purchase orders placed by you on behalf of your
clients and accepted by the Funds. In the event that the Funds fail
to receive such federal funds on such date (other than through fault
of the Funds or their transfer agent), you shall indemnify the Funds
against any expense (including overdraft charges) incurred by the
Funds as a result of their failure to receive such federal funds.
(iii) You agree to make available to the Funds, upon the Funds' request,
such information relating to your clients who are beneficial owners
of shares of
<PAGE>
the Funds and their transactions in shares of the Funds, as may be
required by applicable laws and regulations or as may be reasonably
requested by the Funds.
(iv) You agree to transfer record ownership of a client's shares of the
Funds to the client promptly upon the request of a client. In
addition, record ownership will be promptly transferred to the
client in the event that the person or entity ceases to be your
client.
3. You shall provide to us copies of the lists of members of your organization
and make available to us any publications and other facilities of your
organization for the placement of advertisements or promotional materials
and sending information regarding the Funds, to enable us to solicit for
sale and to sell shares to your members.
4. Neither you nor any of your employees or agents are authorized to make any
representation concerning the shares of the Funds except those contained in
the then current Prospectuses of the Funds, copies of which will be
supplied by us to you; and you shall have no authority to act as agent for
the Funds or for us. You agree to hold the Funds harmless and indemnify us
in the event that you, or any of your employees or agents, should violate
any law, rule, or regulation, or any provisions of this Agreement, which
violation may result in liability to us, and in the event we determine to
refund any amounts paid by any investor by reason of any such violation on
your part, you shall return to us any fees previously paid by us to you in
connection with the transaction for which the refund is made.
5. In consideration for the services described herein, you shall be entitled
to receive from us such fees as established by us from time to time and as
permitted by each Funds' respective Plan of Distribution established under
Rule 12b-1 of the Investment Company Act of 1940 as set forth on Exhibit A.
Such fee will be based upon assets of each Fund represented by shares of
the Fund owned, during the quarter for which payment is being made, by
shareholders for which you maintain a servicing relationship as evidenced
by their execution of such agreements as we may from time to time require.
We specifically reserve the right to discontinue paying fees with respect
to those assets for which such customer authorization which we may require
is not provided.
Such fee will be paid on a quarterly basis and, subject to the last
sentence of this section, will be paid so long as the accounts for your
clients and this Agreement and such other agreements as we may require have
not been terminated. Each Fund reserves the right to terminate or suspend
its Plan of Distribution or terminate this Agreement at any time, and upon
such termination any such obligation to pay such fee shall cease. You
agree to furnish us and the Funds with any such information as may be
reasonably requested with respect to such fees paid to you pursuant to this
Agreement.
<PAGE>
6. We reserve the right, at our discretion and without notice, to suspend the
sale of shares or withdraw the sale of shares of the Funds.
7. This Agreement may be terminated by either party at any time upon seven
days notice to the other party with or without cause. We reserve the right
to amend this Agreement at any time upon written notice.
8. All communications to us should be sent to us at 3700 First Bank Place,
P.O. Box 357, Minneapolis, MN 55440. Any notice to you shall be duly given
if mailed or telegraphed to you at the address specified by you below.
This Agreement shall be governed by and construed under the laws of the
State of Minnesota.
The undersigned hereby accepts IAI Securities, Inc.
the offer set forth herein
_____________________________ By __________________________
Firm
By___________________________ Its ___________________________
Its ___________________________ Date of Acceptance______________
Address_______________________
_____________________________
<PAGE>
EXHIBIT 8B
CUSTODIAN CONTRACT
between
IAI Aggressive Growth Fund
IAI INVESTMENT FUNDS VI, INC.
and
NORWEST BANK MINNESOTA, N.A.
<PAGE>
CUSTODIAN CONTRACT
------------------
This AGREEMENT made as of November 14, 1995 by and between The IAI
Aggressive Growth Fund Series of IAI Investment Funds VI, Inc., a Minnesota
corporation having its principal office and place of business at 3700 First Bank
Place, Minneapolis, Minnesota, (the "Company"), and Norwest Bank Minnesota,
N.A., a National Banking Association having its principal office and place of
business at Sixth and Marquette, Minnesota, MN 55479 (the "Custodian").
WHEREAS, the Company is a mutual fund whose shares are currently offered in
the following series (which, together with each future series of the Company
that adopts this contract are hereafter referred to individually as a "Fund" and
collectively as the "Funds") as set forth in Exhibit D.
WHEREAS, the Company desires to appoint the Bank as the custodian for each
Fund, and the Bank desires to accept such appointment;
WITNESSETH, that in consideration of the mutual covenants and agreements
hereinafter contained, the parties hereto agree as follows:
1. Employment of Custodian and Property to be Held by It.
------------------------------------------------------
The Company hereby employs the Custodian as the custodian of the assets of
each Fund, including securities the Company desires to be held in places within
the United States ("domestic securities") and securities the Company desires to
be held outside of the United States ("foreign securities"). The Company agrees
to deliver to the Custodian all securities and cash owned by each Fund, and all
payments of income, payments of principal or capital distributions received by
the Fund with respect to all securities owned by the Fund from time to time, and
the cash consideration received by the Fund for such new or treasury shares of
capital stock ("Shares") of the Fund as may be issued or sold from time to time.
The Custodian shall not be responsible for any property of a Fund held or
received by the Fund and not delivered to the Custodian.
Upon receipt of "Proper Instructions" (within the meaning of Article 6),
the Custodian shall from time to time employ one or more sub-custodians, but
only in accordance with any necessary approvals by the Board of Directors of the
Company, and provided that the appointment by the Custodian of any sub-
custodians shall not relieve the Custodian of any of its responsibilities or
liabilities hereunder.
2. Duties of the Custodian with Respect to Fund Property held by the Custodian
---------------------------------------------------------------------------
in the United States.
---------------------
2.1 Holding Securities.
------------------
The Custodian shall hold and physically segregate for the account of each
of the Funds all non-cash property, including all securities owned by the Funds,
other than (a) securities which are maintained pursuant to Section 2.12 in a
clearing agency which acts as a securities depository or in a Federal Reserve
Bank, as Custodian may select, and to permit such deposited Assets to be
registered in the name of Custodian or Custodian's agent or nominee on the
records of such Federal reserve Bank or such registered clearing agency or the
nominee of either, and to employ and use securities depositories, clearing
agencies, clearance systems, sub-custodians or agents located outside the United
States in connection with transactions involving foreign securities,
collectively referred to herein as a "Securities System".
2.2 Delivery of Securities.
----------------------
The Custodian shall release and deliver securities owned by the Company for
the account of a Fund held by the Custodian or in a Securities System account of
the Custodian only upon receipt of Proper Instructions, which may be continuing
instructions when deemed appropriate by the parties, and only in the following
cases:
1) Upon sale of such securities for the account of a Fund and receipt of
payment therefor;
2) Upon the receipt of payment in connection with any repurchase agreement
related to such securities entered into by the Company on behalf of a
Fund;
1
<PAGE>
3) In the case of a sale effected through a Securities System, in
accordance with the provisions of Section 2.12 hereof;
4) To the depository agent in connection with tender or other similar
offers for portfolio securities of a Fund;
5) To the issuer thereof or its agent when such securities are called,
redeemed, retired or otherwise become payable; provided that, in any
such case, the cash or other consideration is to be delivered to the
Custodian;
6) To the issuer thereof, or its agent, for transfer into the name of the
Company for the account of a Fund or into the name of any nominee or
nominees of the Custodian or into the name or nominee name of any
agent appointed pursuant to Section 2.11 or into the name or nominee
name of any sub-custodian appointed pursuant to Article 1; or for
exchange for a different number of bonds, certificates or other
evidence representing the same aggregate face amount or number of
units; provided that, in any such case, the new securities are to be
delivered to the Custodian;
7) Upon the sale of such securities for the account of a Fund, to the
broker or its clearing agent, against a receipt, for examination in
accordance with "street delivery" custom; provided that in any such
case, the Custodian shall have no responsibility or liability for any
loss arising from the delivery of such securities prior to receiving
payment for such securities except as may arise from the Custodian's
own negligence or willful misconduct;
8) For exchange or conversion pursuant to any plan or merger,
consolidation, recapitalization, reorganization or readjustment of the
securities of the issuer of such securities, or pursuant to provisions
for conversion contained in such securities, or pursuant to any
deposit agreement; provided that, in any such case, the new securities
and cash, if any, are to be delivered to the Custodian;
9) In the case of warrants, rights or similar securities, the surrender
thereof in the exercise of such warrants, rights or similar securities
or the surrender of interim receipts of temporary securities for
definitive securities; provided that, in any such case, the new
securities and cash, if any, are to be delivered to the Custodian;
10) For delivery in connection with any loans of securities made by the
Company on behalf of a Fund, but only against receipt of adequate
collateral as agreed upon from time to time by the Custodian and the
Company, which may be in the form of cash or obligations issued by the
United States government, its agencies or instrumentalities, except
that in connection with any loans for which collateral is to be
credited to the Custodian's account in the book-entry system
authorized by the U.S. Department of the Treasury, the Custodian will
not be held liable or responsible for the delivery of securities owned
by a Fund prior to the receipt of such collateral;
11) For delivery as security in connection with any borrowings by the
Company on behalf of a Fund requiring a pledge of assets by the
Company on behalf of such Fund, but only against receipt of amounts
borrowed;
12) For delivery in accordance with the provisions of any agreement among
the Company on behalf of a Fund, the Custodian and a broker-dealer
registered under the Securities Exchange Act of 1934 (the "Exchange
Act") and a member of the National Association of Securities Dealers,
Inc. ("NASD"), relating to the compliance with the rules of The
Options Clearing Corporation and of any registered national securities
exchange, or of any similar organization or organizations, regarding
escrow or other arrangements in connection with transactions by the
Company;
13) For delivery in accordance with the provisions of any agreement among
the Company on behalf of a Fund, the Custodian, and a Futures
Commission Merchant registered under the Commodity Exchange Act,
relating to compliance with the rules of the Commodity Futures Trading
Commission and/or any Contract Market, or any similar organization or
organizations, regarding account deposits in connection with
transactions by the Company on behalf of a Fund;
14) Upon receipt of instructions from the transfer agent ("Transfer
Agent") for the applicable Fund, for delivery to such Transfer Agent
or to the holders of shares in connection with distributions in kind,
as may be described from time to time in the Fund's currently
effective prospectus and statement of additional information
("prospectus"), in satisfaction of requests by holders of Shares for
repurchase or redemptions; and
2
<PAGE>
15) For any other proper corporate purpose, but only upon receipt of, in
addition to Proper Instructions, a certified copy of a resolution of
the Board of Directors of the Company signed by an officer of the
Company and certified by the Secretary or an Assistant Secretary,
specifying the securities to be delivered, setting forth the purpose
for which such delivery is to be made, declaring such purpose to be a
proper corporate purpose, and naming the person or persons to whom
delivery of such securities shall be made.
2.3 Registration of Securities.
--------------------------
Domestic securities held by the Custodian (other than bearer securities)
shall be registered in the name of the Company for the account of the applicable
Fund(s) or in the name of any nominee of the Company or of any nominee of the
Custodian which nominee shall be assigned exclusively to the Company's, unless
the Company has authorized in writing the appointment of a nominee to be used in
common with other registered investment companies having the same investment
adviser as the applicable Fund(s), or in the name of nominee name of any agent
appointed pursuant to Section 2.11 or in the name or nominee name of any sub-
custodian appointed pursuant to Article 1. All securities accepted by the
Custodian on behalf of the Company under the terms of this Contract shall be in
"street name" or other good delivery form.
2.4 Bank Accounts.
-------------
The Custodian shall open and maintain a separate bank account or accounts
in the name of each Fund, subject only to draft or order by the Custodian acting
pursuant to the terms of this Contract, and shall hold in such account or
accounts, subject to the provisions hereof, all cash received by it from or for
the account of each applicable Fund, other than cash maintained by the
applicable Fund in a bank account established and used in accordance with Rule
17f-3 under the Investment Company Act of 1940. Cash held by the Custodian for
each Fund may be deposited by it to its credit as Custodian in the Banking
Department of the Custodian or in such other banks or trust companies as it may
in its discretion deem necessary or desirable; provided, however, that every
such bank or trust company shall be qualified to act as a custodian under the
Investment Company Act of 1940 and that each such bank or trust company and the
cash to be deposited with each such bank or trust company shall be approved by
vote of a majority of the Board of Directors of the Company. Such cash shall be
deposited by the Custodian in its capacity as Custodian and shall be
withdrawable by the Custodian only in that capacity.
2.5 Payments for Shares.
-------------------
The Custodian shall receive from the distributor for each Fund Shares or
from the Transfer Agent of each Fund and deposit into the Fund account such
payments as are received for Shares of the Fund issued or sold from time to time
by the Fund. The Custodian will provide timely notification to the Fund and the
Transfer Agent of any receipt by it of payments for Shares of the Funds.
2.6 Availability of Federal Funds.
-----------------------------
Upon mutual agreement between the Company and the Custodian, the Custodian
shall, upon the receipt of Proper Instructions, make federal funds available to
the Funds as of specified times agreed upon from time to time by the Company and
the Custodian in the amount of checks received in payment for Shares of the
Funds which are deposited into the Funds' accounts.
2.7 Collection of Income.
--------------------
The Custodian shall, or shall cause its agent or sub-custodian to, collect
on a timely basis all income and other payments with respect to registered
securities held hereunder to which each Fund shall be entitled either by law or
pursuant to custom in the securities business, and shall collect on a timely
basis all income and other payments with respect to bearer securities if, on the
date of payment by the issuer, such securities are held by the Custodian or its
agent or sub-custodian and shall credit such income, as collected, to the
applicable Fund's custodian account. Without limiting the generality of the
foregoing, the Custodian shall detach and present for payment all coupons and
other income items requiring presentation as and when they become due and shall
collect interest when due on securities held hereunder. Unless the Custodian is
the lending agent in connection with securities loaned by the Fund, income due
each Fund on securities loaned pursuant to the provisions of Section 2.2 (10)
shall be the responsibility of the Company. The Custodian will have no duty or
3
<PAGE>
responsibility in connection therewith, other than to provide the Company with
such information or data as may be necessary to assist the Company in arranging
for the timely delivery to the Custodian of the income to which each Fund is
properly entitled.
2.8 Payment of Company Monies.
-------------------------
Upon receipt of Proper Instructions, which may be continuing instructions
when deemed appropriate by the parties, the Custodian shall pay out monies of
each Fund in the following cases only:
1) Upon the purchase of domestic securities, options, futures contracts or
options on futures contracts for the account of each Fund but only (a)
against the delivery of such securities or evidence of title to such
options, futures contracts or options on futures contracts, to the
Custodian (or any bank, banking firm or trust company doing business in
the United States or abroad which is qualified under the Investment
Company Act of 1940 to act as a custodian and has been designated by
the Custodian as its agent for this purpose) registered in the name of
the Company for the account of a Fund or in the name of a nominee of
the Custodian referred to in Section 2.3 hereof or in proper form for
transfer; (b) in the case of a purchase effected through a Securities
System, in accordance with the conditions set forth in Section 2.12
hereof or (c) in the case of the repurchase agreements entered into
between the Company and the Custodian, or another bank, or a broker-
dealer which is a member of NASD, (i) against delivery of the
securities either in certificate form or through an entry crediting the
Custodian's account at the Federal Reserve Bank with such securities or
(ii) against delivery of the receipt evidencing purchase by the Company
for the account of a Fund of securities owned by the Custodian along
with written evidence of the agreement by the Custodian to repurchase
such securities from a Fund;
2) In connection with conversion, exchange or surrender of securities
owned by a Fund as set forth in Section 2.2 hereof;
3) For the redemption or repurchase of Shares issued by a Fund as set
forth in Section 2.10 hereof;
4) For the payment of any expense or liability incurred by a Fund,
including but not limited to the following payments for the account of
such Fund: interest, taxes, management, accounting, transfer agent and
legal fees, and operating expenses of the Fund whether or not such
expenses are to be in whole or part capitalized or treated as deferred
expenses;
5) For the payment of any dividends declared pursuant to the governing
documents of the Company and the applicable Fund;
6) For payment of the amount of dividends received in respect of
securities sold short; or
7) For any other proper purpose, but only upon receipt of, in addition to
Proper Instructions, a certified copy of a resolution of the Board of
Directors of the Company signed by an officer of the Company and
certified by its Secretary or an Assistant Secretary, specifying the
amount of such payment, setting forth the purpose for which such
payment is to be made, declaring such purpose to be a proper purpose,
and naming the person or persons to whom such payment is to be made.
2.9 Liability for Payment in Advance of Receipt of Securities Purchased.
-------------------------------------------------------------------
The Custodian shall not make payment for the purchase of domestic
securities for the account of a Fund in advance of receipt of the securities
purchased in the absence of specific written instructions from the Company to so
pay in advance. In any and every case where payment for purchase of domestic
securities for the account of a Fund is made by the Custodian in advance of
receipt of the securities purchased in the absence of specific written
instructions from the Company to so pay in advance, the Custodian shall be
absolutely liable to the Company (for the account of the Fund) for such
securities to the same extent as if the securities had been received by the
Custodian.
2.10 Payments for Repurchases or Redemptions of Shares of a Fund.
-----------------------------------------------------------
From such funds as may be available for the purpose but subject to the
limitations of the Articles of Incorporation or Bylaws and any applicable votes
of the Board of Directors of the Company, the Custodian shall, upon receipt of
instructions from the Transfer Agent, make funds available for payment to
holders of Shares who have delivered to the Transfer Agent a request for
redemption or repurchase of their Shares. In connection with the redemption or
repurchase of Shares of a Fund, the Custodian is authorized upon receipt of
instructions from the Transfer Agent to wire funds to or through a commercial
bank designated by the
4
<PAGE>
redeeming shareholders. In connection with the redemption or repurchase of
Shares of a Fund, the Custodian shall honor checks drawn on the Custodian by a
holder of Shares, which checks have been furnished by the Company to the holder
of Shares, when presented to the Custodian in accordance with such procedures
and controls as are mutually agreed upon from time to time between the Company
and the Custodian.
2.11 Appointment of Agents.
---------------------
The Custodian may at any time or times in its discretion appoint (and may
at any time remove) any other bank or trust company which is itself qualified
under the Investment Company Act of 1940 to act as a custodian, as its agent to
carry out such of the provisions of this Article 2 as the Custodian may from
time to time direct; provided, however, that the appointment of any agent shall
not relieve the Custodian of any of its responsibilities or liabilities
hereunder.
2.12 Deposit of Fund Assets in Securities Systems.
--------------------------------------------
The Custodian may deposit and/or maintain domestic securities owned by any
Fund in a clearing agency registered with the Securities and Exchange commission
under Section 17A of the Exchange Act, which acts as a securities depository, or
in a Federal Reserve Bank, as Custodian may select, and to permit such deposited
Assets to be registered in the name of Custodian or Custodian's agent or nominee
on the records of such Federal reserve Bank or such registered clearing agency
or the nominee of either (collectively referred to herein as "Securities
System") in accordance with applicable Federal Reserve Board and Securities and
Exchange Commission rules and regulations, if any, and subject to the following
provisions:
1) The Custodian may keep domestic securities of a Fund in a Securities
System provided that such securities are represented in an account
("Account") of the Custodian in the Securities System which shall not
include any assets of the Custodian other than assets held as a
fiduciary, custodian or otherwise for customers;
2) The records of the Custodian with respect to domestic securities of a
Fund which are maintained in a Securities System shall identify by
book-entry those securities belonging to such Fund;
3) The Custodian shall pay for domestic securities purchased for the
account of a Fund upon (i) the simultaneous receipt of advice from the
Securities System that such securities have been transferred to the
Account, and (ii) the making of an entry on the records of the
Custodian to reflect such payment and transfer for the account of the
Fund. The Custodian shall transfer domestic securities sold for the
account of a Fund upon (i) the simultaneous receipt of advice from the
Securities System that payment for such securities has been transferred
to the Account, and (ii) the making of an entry on the records of the
Custodian to reflect such transfer and payment for the account of the
Fund. Copies of all advises from the Securities System of transfers of
securities for the account of a Fund shall identify the Fund, be
maintained for the Fund by the Custodian and be provided to the Company
at its request. Upon request, the Custodian shall furnish the Company
confirmation of each transfer to or from the account of a Fund in the
form of a written advice or notice and shall furnish to the Company
copies of daily transaction sheets reflecting each day's transactions
in the Securities System for the account of each Fund.
4) The Custodian shall provide the Company with any report obtained by the
Custodian on the Securities System's accounting system, internal
accounting control and procedures for safeguarding securities deposited
in the Securities System;
5) The Custodian shall have received the initial or annual certificate, as
the case may be, required by Article 16 hereof;
6) Anything to the contrary in this Contract notwithstanding, the
Custodian shall be liable to the Company (for the account of each Fund)
for any loss or damage to the applicable Fund(s) resulting from use of
the Securities System by reason of any negligence, misfeasance or
misconduct of the Custodian or any of its agents or of any of its or
their employees or from failure of the Custodian or any such agent or
employee to enforce effectively such rights as it may have against the
Securities System; at the election of the Company, it shall be entitled
to be subrogated to the rights of the Custodian with respect to any
claim against the Securities System or any other person which the
Custodian may have as a consequence of any such loss or damage if and
to the extent that the applicable Funds have not been made whole for
any such loss or damage.
5
<PAGE>
2.13 Segregated Account.
------------------
The Custodian shall upon receipt of Proper Instructions establish and
maintain a segregated account or accounts for and on behalf of each Fund, into
which account or accounts may be transferred cash and/or securities, including
securities maintained in an account by the Custodian pursuant to Section 2.12
hereof, (i) in accordance with the provisions of any agreement among the
Company, the Custodian and a broker-dealer registered under the Exchange Act and
a member of NASD (or any futures commission merchant registered under the
Commodity Exchange Act), relating to compliance with the rules of The Options
Clearing Corporation and of any registered national securities exchange (or the
Commodity Futures Trading Commission or any registered contract market), or of
any similar organization or organizations, regarding escrow or other
arrangements in connection with transactions by the Company for the account of
any Fund, (ii) for the purpose of segregating cash or government securities in
connection with options purchased, sold or written by the Company for the
account of any Fund or commodity futures contracts or options thereon purchased
or sold by the Company for the account of any Fund, (iii) for the purpose of
compliance by the Company with the procedures required by Investment Company Act
Release No. 10666, or any subsequent release or releases of the Securities and
Exchange Commission relating to the maintenance of segregated accounts by
registered investment companies and (iv) for other proper corporate purposes,
but only, in the case of the clause (iv), upon receipt of, in addition to Proper
Instructions, a certified copy of a resolution of the Board of Directors of the
Company signed by an officer of the Company and certified by the Secretary or an
Assistant Secretary, setting forth the purpose or purposes of such segregated
account and declaring such purposes to be proper corporate purposes.
2.14 Ownership Certificates for Tax Purposes.
---------------------------------------
The Custodian shall execute ownership and other certificates and affidavits
for all federal and state tax purposes in connection with receipt of income or
other payments with respect to domestic securities of each Fund held by it and
in connection with transfers of securities.
3. Duties of the Custodian with Respect to Fund Property Held Outside of the
-------------------------------------------------------------------------
United States.
--------------
3.1 Appointment of Foreign Sub-Custodians.
--------------------------------------
The Custodian is authorized and instructed, either directly or indirectly
(through one or more sub-custodian U.S. banks), to employed as sub-custodians
for any Fund's securities and other assets maintained outside of the United
States the foreign banking institutions, foreign securities depositories and
foreign clearing agencies designated on Exhibit A hereto ("foreign sub-
custodians"); provided, however, that, notwithstanding the contents of Exhibit
A hereto, the Custodian (including any of its agents and subcustodians) is
authorized to directly or indirectly employ or retain any sub-custodian,
depository or clearing agency only if said employed or retained institution
qualifies as either (a) an "eligible foreign custodian", as defined in Rule 17f-
5 under the Investment Company Act of 1940, or (b) a "bank", as defined in
Section 2(a)(5) of the Investment Company Act of 1940, that in turn qualifies as
an eligible domestic custodian under Section 17(f) of the Investment Company Act
of 1940; and provided further that the Custodian shall be liable to the Company
for any loss of any Fund assets custodied with any institution directly or
indirectly employed or retained by the Custodian (or any of its agents or sub-
custodians) that does not meet the qualifications of either clause (a) of (b) of
the preceding proviso.
Upon receipt of Proper Instructions, together with a certified resolution
of the Company's Board of Directors, the Custodian and the Company may agree to
amend Schedule A hereto from time to time to designate additional or alternative
foreign banking institutions, foreign securities depositories and foreign
clearing agencies to act as sub-custodians. Each foreign banking institution
shall be authorized to deposit securities in foreign securities depositories and
foreign clearing agencies authorized pursuant to Rule 17f-5 under the Investment
Company Act of 1940. Upon receipt of Proper Instructions from the Company the
Custodian shall promptly cease the employment of any one or more of such sub-
custodians for maintaining custody of the assets of the applicable Fund(s).
3.2 Assets to be Held.
------------------
The Custodian shall limit the securities and other assets maintained in the
custody of the foreign sub-custodian to: (a) "foreign securities", as defined
in paragraph (c) (1) of Rule 17f-5 under the Investment
6
<PAGE>
Company Act of 1940, and (b) cash and cash equivalents in such amounts as the
Custodian or the Company may determine to be reasonably necessary to effect the
foreign securities transactions of the applicable Fund(s).
3.3 Segregation of Securities.
--------------------------
The Custodian shall identify on its books as belonging to the Company for
the account of one or more of the Fund(s), the foreign securities of each such
Fund held by each foreign sub-custodian. Each agreement pursuant to which the
Custodian or its duly appointed U.S. sub-custodian employs a foreign banking
institution shall require that such institution establish a custody account for
the Custodian (or its U.S. sub-custodian, as the case may be) on behalf of its
customers and physically segregate in that account securities and other assets
of the Custodian's customers, and, in the event that such institution deposits a
Fund's securities in a foreign securities depository, the sub-custodian shall
identify on its books as belonging to the Custodian (or its U.S. sub-custodian,
as the case may be), as agent for the Custodian's customers, the securities so
deposited (all collectively referred to as the "Account").
3.4 Agreement with Foreign Banking Institution.
-------------------------------------------
Each agreement with a foreign banking institution shall provide that: (a)
each Fund's assets will not be subject to any right, charge, security interest,
lien or claim or any kind in favor of the foreign banking institution or its
creditors, except a claim of payment for their safe custody or administration;
(b) beneficial ownership for each Fund's assets will be freely transferable
without the payment of money or value other than for custody or administration,
which may include payment of stamp duties or government taxes; (c) adequate
records will be maintained identifying the assets as belonging to the customers
of Custodian; (d) officers of or auditors employed by, or other representatives
of the Custodian, including independent public accountants for each Fund, will
be given access to the books and records of the foreign banking institution
relating to its actions given under its agreement with the Custodian or shall be
given confirmation of the contents of such books and records; and (e) assets of
each Fund held by the foreign sub-custodian will be subject only to the
instructions of the Company, the Custodian or their agents.
3.5 Access of Independent Accountants of the Company.
-------------------------------------------------
Upon request of the Company, the Custodian will use its best efforts to
arrange for the independent accountants of the Company to be afforded access to
the books and records of any foreign banking institution employed as a foreign
sub-custodian insofar as such books and records relate to the performance of
such foreign banking institutions under its agreement with the Custodian (or its
U.S. sub-custodian, as the case may be).
3.6 Reports by Custodian.
---------------------
The Custodian will supply to the Company from time to time, as mutually
agreed upon, statements in respect of the securities and other assets of each
Fund held by foreign sub-custodians, including but not limited to an
identification of entities having possession of each applicable Fund's
securities and other assets and advices or notifications of any transfers of
securities to or from each custodial account maintained by a foreign sub-
custodian for the Custodian on behalf of each applicable Fund indicating, as to
securities acquired for the Fund, the identity of the entity having physical
possession of such securities.
3.7 Foreign Securities Transactions.
--------------------------------
1) Upon receipt of Proper Instruction, which may be continuing
instructions when deemed appropriate by the parties, the Custodian
shall make or cause its foreign sub-custodian to transfer, exchange or
deliver foreign securities owned by the Company for the account of a
Fund, but except to the extent explicitly provided herein only in any
of the cases specified in Section 2.2.
2) Upon receipt of Proper Instructions, which may be continuing
instructions when deemed appropriate by the parties, the Custodian
shall pay out or cause its foreign sub-custodian to pay out monies of a
Fund, but except to the extent explicitly provided herein only in any
of the cases specified in Section 2.8.
3) Settlement and payment for securities received for the account of a
Fund and delivery of securities maintained for the account of a Fund
may, upon receipt of Proper Instructions, be effected in accordance
with the customary or established securities trading or securities
processing practices
7
<PAGE>
and procedures in the jurisdiction or market in which the transaction
occurs, including, without limitation, delivering securities to the
purchaser thereof or to a dealer therefor (or an agent for such
purchaser or dealer) against a receipt with the expectation of
receiving later payment for such securities from such purchaser or
dealer.
4) With respect to any transaction involving foreign securities, the
Custodian or any sub-custodian in its discretion may case a Fund's
account to be credited on either the contractual settlement date or the
actual settlement date with the proceeds of any sale or exchange of
foreign securities from the account of the applicable Fund and to be
debited on either the contractual settlement date or the actual
settlement date for the cost of foreign securities purchased or
acquired for such Fund according to Custodian's then current internal
policies and procedures pertaining to securities settlement, which
policies and procedures may change from time to time. Custodian shall
advise the Company of any changes to such policies and procedures. The
Custodian may reverse any such credit or debit made on the contractual
settlement date if the transaction with respect to which such credit or
debit was made fails to settle within a reasonable period, determined
by Custodian in its reasonable discretion, after the contractual
settlement date except that if any foreign securities delivered
pursuant to this section are returned by the recipient thereof, the
Custodian may cause any such credits and debits to be reversed at any
time.
5) Securities maintained in the custody of a foreign sub-custodian may be
maintained in the name of such entity's nominee to the same extent as
set forth in Section 2.3 of this Contract and the Fund agrees to hold
any such nominee harmless from any liability as a holder of record of
such securities.
6) Until the Custodian receives written instructions to the contrary the
Custodian shall, or shall cause the sub-custodian to collect all
interest and dividends paid on securities held in each applicable
Fund's account, unless such payment is in default. Unless otherwise
instructed, the Custodian shall convert interest, dividends and
principal received with respect to securities in a Fund's account into
United States dollars, and the Custodian shall perform foreign exchange
contracts for the conversion of United States dollars to foreign
currencies for the settlement of trades whenever it is practicable to
do so through customary banking channels. Customary banking channels
may vary based upon industry practice in each jurisdiction, and shall
include the banking facilities of the Custodian's affiliates, in
accordance with such affiliate's then prevailing internal policy on
funds repatriation. All risk and expense incident to such foreign
collection and conversions is the responsibility of each applicable
Fund's account, and Custodian shall have no responsibility for
fluctuation in exchange rates affecting collections or conversions.
3.8 Foreign Securities Lending.
---------------------------
Notwithstanding any other provisions contained in this Contract, the
Custodian and any sub-custodian shall deliver and receive securities loaned or
returned in connection with securities lending transactions only upon and in
accordance with Proper Instructions; provided, if the Custodian is not the
lending agent in connection with such securities lending, then neither the
Custodian or any sub-custodian shall undertake, or otherwise be responsible for,
(i) marking to market values for such loaned securities.
(ii) collection of dividends, interest or other disbursements or
distributions made with respect to such loaned securities
(iii) receipt of corporate action notices, communications, proxies or
instruments with respect to such loaned securities, and
(iv) custody, safekeeping, valuation or any other actions or services
with respect to any collateral securing any such securities lending
transactions.
In the event that the Custodian is the applicable Fund's lending agent in
connection with a specific securities loan, the Custodian shall undertake to
perform all of the above duties with regard to such loan, except that the
Company shall not receive, nor be enabled to vote, proxies in connection with
such loaned security.
3.9 Liability of Foreign Sub-Custodians.
------------------------------------
Each agreement pursuant to which the Custodian (or its U.S. sub-custodian
bank, as applicable) employs a foreign banking institution as a foreign sub-
custodian shall require the institution to exercise
8
<PAGE>
reasonable care in the performance of its duties and to indemnify, and hold
harmless, the Custodian and Custodian's customers from and against any loss,
damage, cost, expense, liability or claim arising out of such sub-custodian's
negligence, fraud, bad faith, willful misconduct or reckless disregard of its
duties. At the election of the Company, it shall be entitled to be subrogated to
the right of the Custodian with respect to any claims against the Custodian's
U.S. sub-custodian bank (if any) or a foreign banking institution as a
consequence of any such loss, damage, cost, expense, liability or claim if and
to the extent that the Company has not been made whole for any such loss,
damage, cost, expense, liability or claim.
3.10 Monitoring Responsibilities.
----------------------------
The Custodian shall furnish annually to the Company information concerning
the foreign sub-custodians employed by the Custodian (or its U.S. sub-custodian
bank, as applicable). Such information shall be similar in kind and scope to
that furnished to the Company in connection with the initial approval of this
Contract (and any contracts with U.S. and foreign sub-custodians entered into
pursuant hereto). In addition, the Custodian will promptly inform the Company
in the event that the Custodian learns of a material adverse change in the
financial condition of a foreign sub-custodian or is notified by the Custodian's
U.S. sub-custodian bank (if any) or a foreign banking institution employed as
foreign sub-custodian that there appears to be a substantial likelihood that its
shareholders' equity will decline below $200 million (United States dollars or
the equivalent thereof) or that its shareholders' equity has declined below $200
million (in each case computed in accordance with generally accepted United
States accounting principles).
3.11 Branches of United States Banks.
--------------------------------
Except as otherwise set forth in this Contract, the provisions hereof shall
not apply where the custody of any Fund's assets maintained in a foreign branch
of a banking institution which is a "bank" as defined by Section 2(a) (5) of the
Investment Company Act of 1940 which meets the qualification set forth in
Section 26(a) of said Act. The appointment of any such branch as a sub-
custodian shall be governed by Article 1 of this Contract.
3.12 Expropriation Insurance.
------------------------
The Custodian represents that it does not intend to obtain any insurance
for the benefit of the Company or any Fund which protects against the imposition
of exchange control restrictions or the transfer from any foreign jurisdiction
of the proceeds of sale of any securities or against confiscation, expropriation
or nationalization of any securities or the assets of the issuer of such
securities is organized or in which securities are held for safekeeping either
by Custodian or any sub custodians in such country. The Custodian represents
that its understanding of the position of the Staff of the Securities and
Exchange Commission is that any investment company investing in securities of
foreign issuers has the responsibility for reviewing the possibility of the
imposition of exchange control restrictions which would affect the liquidity of
such investment company's assets and the possibility of exposure to political
risk, including the appropriateness of insuring against such risk.
4. Proxies.
-------
The Custodian shall, with respect to the securities held hereunder, cause
to be promptly executed by the registered holder of such securities, if the
securities are registered otherwise than in the name of the Company or a nominee
of the Company, all proxies, without indication of the manner in which such
proxies are to be voted, and shall promptly deliver to the Company such proxies,
all proxy soliciting materials and all notices relating to such securities.
5. Communications Relating to Fund Portfolio Securities.
----------------------------------------------------
The Custodian shall transmit promptly to the Company all written
information (including, without limitation, dependency of calls and maturities
of securities and expirations of rights in connection therewith and notices of
exercise of call and put options written by the Fund and the maturity of futures
contracts purchased or sold by the Company) received by the Custodian from
issuers of the securities being held for each Fund. With respect to tender or
exchange offers, the Custodian shall transmit promptly to the Company all
written information received by the Custodian from issuers of the securities
whose tender or exchange is sought and from the party (or his agents) making the
tender or exchange offer. If the Company desires to take action with
9
<PAGE>
respect to any tender offer, exchange offer or any other similar transaction,
the Company shall notify the Custodian at least three business days prior to the
date on which the Custodian is to take such action.
6. Proper Instructions.
-------------------
Proper Instructions as used in this Contract means a writing signed or
initialed by one or more person or persons as the Board of Directors of the
Company shall have from time to time authorized. Each such writing shall set
forth the specific transaction or type of transaction involved, including a
specific statement of the purpose for which such action is requested. Oral
instructions will be considered Proper Instructions if the Custodian reasonably
believes them to have been given by a person authorized to give such
instructions with respect to the transaction involved. The Company shall cause
all oral instructions to be confirmed in writing. Upon receipt of a certificate
of the Secretary or an Assistant Secretary as to the authorization by the Board
of Directors of the Company accompanied by a detailed description of procedures
approved by the Board of Directors, Proper Instructions may include
communications effected directly between election-mechanical or electronic
devices provided that the Board of Directors and the Custodian are satisfied
that such procedures afford adequate safeguards for each Fund's assets.
7. Actions Permitted Without Express Authority.
-------------------------------------------
The Custodian may in its discretion, without express authority from the
Company:
1) Make payments to itself or others for minor expenses of handling
securities provided that all such payments shall be accounted for to
the Company;
2) Surrender securities in temporary form for securities in definitive
form;
3) Endorse for collection, in the names of the applicable Fund, checks,
drafts and other negotiable instruments; and
4) In general, attend to all non-discretionary details in connection with
the sale, exchange, substitution, purchase, transfer and other dealings
with the securities and property of the Company except as otherwise
directed by the Board of Directors of the Company.
8. Evidence of Authority.
---------------------
The Custodian shall be protected in acting upon any instructions, notice,
request, consent, certificate or other instrument of paper believed by it to be
genuine and to have been properly executed by or on behalf of the Company. The
Custodian may receive and accept a certified copy of a vote of the Board of
Directors of the Company as conclusive evidence (a) of the authority of any
person to act in accordance with such vote or (b) or any determination or of any
action duly made or taken by the Board of Directors as described in such vote,
and such vote may be considered as in full force and effect until receipt by the
Custodian of written notice to the contrary.
9. Class Actions. The Custodian shall transmit promptly to the Company all
notices or other communications received by it in connection with any class
action lawsuit relating to securities currently or previously held for one or
more of the Funds. Upon being directed by the Company to do so, the Custodian
shall furnish to the Company any and all written materials which establish the
holding/ownership, amount held/owned, and period of holding/ownership of the
securities in question.
10. Records.
-------
The Custodian shall create and maintain all records relating to its
activities and obligations under this Contract in such manner as will meet the
obligations of the Company and each Fund under the Investment Company Act of
1940, with particular attention to Section 31 thereof and Rule 31a-1 and 31a-2
thereunder. The Custodian shall also maintain records as directed by the
Company in connection with applicable federal and state tax laws and any other
law or administrative rules or procedures which may be applicable to the Company
and the Funds. With respect to securities and cash deposited with a Securities
System, a sub-custodian or an agent of the Custodian, the Custodian shall
identify on its books all such securities and cash as belonging to the Company
for the account of the applicable Fund(s). All such records shall be the
property of the Company and shall at all times during the regular business hours
of the Custodian be open for inspection by duly authority officers, employees or
agents of the Company. Such records shall be made available to the Company for
review by employees and agents of the Securities and Exchange Commission. The
Custodian shall
10
<PAGE>
furnish to the Company, and its agents as directed by the Company, as of the
close of business on the last day of each month a statement showing all
transactions and entries for the account of the Company during that month, and
all holdings as of month-end.
All records so maintained in connection with the performance of its duties
under this Agreement shall remain the property of the Company and, in the event
of termination of this Agreement, shall be delivered to the Company. Subsequent
to such delivery, and surviving the termination of this Agreement, the Company
shall provide the Custodian access to examine and photocopy such records as the
Custodian, in its discretion, deems necessary, for so long as such records are
retained by the Company.
11. Opinion of Company's Independent Accountant.
--------------------------------------------
The Custodian shall take all reasonable action, as the Company may from
time to time request, to obtain from year to year favorable opinions from the
Company's independent accountants with respect to its activities hereunder in
connection with the preparation of the Company's Form N-1A and Form N-SAR or
other reports to the Securities and Exchange Commission and with respect to any
other requirements of such Commission.
12. Reports to Company by Independent Public Accountants.
-----------------------------------------------------
The Custodian shall provide the Company, at such times as the Company may
reasonably require, with reports by independent public accountants on the
accounting system, internal accounting control and procedures for safeguarding
securities, futures contracts and options on futures contracts, including
securities deposited and/or maintained in a Securities System, relating to the
services provided by the Custodian under this Contract; such reports shall be of
sufficient scope, and in sufficient detail, as may reasonably be required by the
Company to provide reasonable assurance that any material inadequacies would be
disclosed by such examination, and, if there are no such inadequacies, the
reports shall so state.
13. Compensation of Custodian.
--------------------------
For performance by the Custodian pursuant to this Agreement, the Company,
out of the assets of each applicable Fund, agrees to pay the Custodian annual
asset fees and supplemental charges as set out in Exhibit B. Fees and
supplemental charges may be changed from time to time subject to mutual written
agreement between the Company and the Custodian.
14. Responsibility of Custodian.
----------------------------
So long as and to the extent that it is in the exercise of reasonable care,
the Custodian shall not be responsible for the title, validity or genuineness of
any property or evidence of title thereto received by it or delivered by it
pursuant to this Contract and shall be held harmless in acting upon any notice,
request, consent, certificate or other instrument reasonably believed by it to
be genuine and to be signed by the proper party or parties. The Custodian shall
be held to the exercise of reasonable care in carrying out the provisions of
this Contract, but shall be kept indemnified by and shall be without liability
to the Company or any Fund for any action taken or omitted by it in good faith
and without negligence. It shall be entitled to rely on and may act upon advice
of counsel of, or reasonably acceptable to, the Company on all matters, and
shall be without liability for any action reasonably taken or omitted pursuant
to such advice. Notwithstanding the foregoing, the responsibility of the
Custodian with respect to redemptions effected by check shall be in accordance
with a separate Agreement entered into between the Custodian and the Company.
If the Company requires the Custodian to take any action with respect to
securities, which action involves the payment of money or which action may, in
the reasonable opinion of the Custodian, result in the Custodian or its nominee
assigned to the Company being liable for the payment of money or incurring
liability of some other form, the Company, as a prerequisite to requiring the
Custodian to take such action, shall provide indemnity to the Custodian in an
amount and form reasonably satisfactory to it.
If the Company requires the Custodian to advance cash or securities for any
purpose or in the event that the Custodian or its nominee shall incur or be
assessed any taxes, charges, expenses, assessments, claims or liabilities in
connection with the performance of this Contract, except such as may arise from
its or its nominee's own negligent action, negligent failure to act or willful
misconduct, any property at any time held for the account of a Fund shall be
security therefor and should the Company fail to repay the Custodian promptly
with
11
<PAGE>
respect to any Fund, the Custodian shall be entitled to utilize available cash
and to dispose of assets to the extent necessary to obtain reimbursement.
The Custodian shall not be liable for any loss or damage to the Company or
any Fund resulting from participation in a securities depository unless such
loss or damage arises by reason of any negligence, misfeasance, or willful
misconduct of officers or employees of the Custodian, or from its failure to
enforce effectively such rights as it may have against any securities depository
or from use of a sub-custodian or agent. Anything in this Contract to the
contrary notwithstanding, the Custodian shall exercise, in the performance of
its obligations undertaken or reasonably assumed with respect to this Agreement,
reasonable care, for which the Custodian shall be responsible to the same extent
as if it were performing such duties directly. The Custodian shall be
responsible for the securities and cash held by or deposited with any sub-
custodian or agent to the same extent as if such securities and cash were
directly held by or deposited with the Custodian. The Custodian hereby agrees
that it shall indemnify and hold the Company and each applicable Fund harmless
from and against any loss which shall occur as a result of the failure of a
foreign sub-custodian holding the securities and cash to provide a level of
safeguards for maintaining any Fund's securities and cash not materially
different from that provided by a United States custodian holding such
securities and cash in the United States.
The Custodian agrees to indemnify and hold the Company and each of the
Funds harmless for any and all loss, liability and expense, including reasonable
legal fees and expenses, arising out of the Custodian's own negligence or
willful misconduct or that of its officers, agents, sub-custodians or employees
in the performance of the Custodian's duties and obligations under this
Contract.
15. Effective Period, Termination and Amendment.
--------------------------------------------
The Contract shall become effective as of its execution, shall continue in
full force and effect until terminated as hereinafter provided, may be amended
at any time by mutual agreement of the parties hereto and may be terminated by
either party by an instrument in writing delivered or mailed, postage prepaid to
the other party, such termination to take effect not sooner than sixty (60) days
after the date of such delivery or mailing; provided, however, that the
Custodian shall not act under Section 2.12 hereof in the absence of receipt of
an initial certificate of the Secretary or an Assistant Secretary that the Board
of Directors of the Company has approved the initial use of a particular
Securities System and the receipt of an annual certificate of the Secretary or
an Assistant Secretary that the Board of Directors has reviewed the use by each
Fund of such Securities System, as required in each case by Rule 17f-4 under the
Investment Company Act of 1940, provided further, however, that the Company
shall not amend or terminate this Contract in contravention of any applicable
federal or state regulations, or any provision of its Articles of Incorporation,
and further provided, that the Company may at any time by action of its Board of
Directors, with respect to any Fund (i) substitute another bank or trust company
for the Custodian by giving notice as described above to the Custodian, or (ii)
immediately terminate this Contract in the event of the appointment of a
conservator or receiver for the Custodian by the Comptroller of the Currency or
upon the happening of a like event at the direction of an appropriate regulatory
agency or court of competent jurisdiction.
Upon termination of the Contract, the Company on behalf of each Fund shall
pay to the Custodian such compensation as may be due as of the date of such
termination and shall likewise reimburse the Custodian for its costs, expenses
and disbursements.
16. Successor Custodian.
--------------------
If a successor custodian shall be appointed by the Board of Directors of
the Company, the Custodian shall, upon termination, deliver to such successor
custodian at the office of the Custodian, duly endorsed and in the form for
transfer to an account of the successor custodian each of the Fund's securities
held in a Securities System.
If no such successor custodian shall be appointed, the Custodian shall, in
like manner, upon receipt of a certified copy of a vote of the Board of
Directors of the Company, deliver at the office of the Custodian and transfer
such securities, funds and other properties in accordance with such vote.
In the event that no written order designating a successor custodian or
certified copy of a vote of the Board of Directors shall have been delivered to
the Custodian on or before the date when such termination shall become
effective, then the Custodian shall have the right to deliver to a bank or trust
company, which is a "bank" as defined in the Investment Company Act of 1940, of
its own selection, having an aggregate capital, surplus, and undivided profits,
as shown by its last published report, of not less than $100,000,000, all
securities,
12
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funds and other properties held by the Custodian and all instruments held by the
Custodian relative thereto and all other property held by it under this Contract
and to transfer to an account of such successor custodian all of each Fund's
securities held in any Securities System. Thereafter, such bank or trust company
shall be the successor of the Custodian under and pursuant to this Contract.
In the event that securities, funds and other properties remain in the
possession of the Custodian after the date of termination hereof owing to
failure of the Company to procure the certified copy of the vote referred to or
of the Board of Directors to appoint a successor custodian, the Custodian shall
be entitled to fair compensation for its services during such period as the
Custodian retains possession of such securities, funds and other properties and
the provisions of this Contract relating to the duties and obligations of the
Custodian shall remain in full force and effect.
17. Interpretive and Additional Provisions.
--------------------------------------
In connection with the operation of this Contract, the Custodian and the
Company may from time to time agree on such provisions interpretive of or in
addition to the provisions of this Contract as may in their joint opinion be
consistent with the general tenor of this Contract. Any such interpretive or
additional provisions shall be in a writing signed by both parties and shall be
annexed hereto, provided that no such interpretive or additional provisions
shall contravene any applicable federal or state regulations or any provision of
the Articles of Incorporation or Bylaws of the Company. No interpretive or
additional provisions made as provided in the preceding sentence shall be deemed
to be an amendment of this Contract.
18. Minnesota Law to Apply.
----------------------
This Contract shall be construed and the provisions thereof interpreted
under and in accordance with laws of the State of Minnesota.
19. Prior Contracts.
---------------
This Contract supersedes and terminates, as of the date hereof, all prior
contracts between the Company and the Custodian relating to the custody of each
Fund's assets. This Contract shall not be assignable by any party hereto;
provided however, that any entity into which the Company or the Custodian, as
the case may be, may be merged or converted or with which it may be
consolidated, or any entity succeeding to all or substantially all of the
business of the Company or the custody business of the Custodian, shall succeed
to the respective rights and shall assume the respective duties of the Company
or the Custodian, as the case may be, hereunder.
20. General.
-------
Nothing expressed or mentioned in or to be implied from any provision of
this Contract is intended to, or shall be construed to give any person or
corporation other than the parties hereto, any legal or equitable right, remedy
or claim under or in respect to this Contract, or any covenant, condition and
provision herein contained, this Contract and all of the covenants, conditions
and provisions hereof being intended to be and being the sole and exclusive
benefit of the parties hereto and their respective successors and assigns.
IN WITNESS WHEREOF, each of the parties has caused this instrument to be
executed in its name and behalf by its duly authorized officers as of the day
and year first above written.
IAI Aggressive Growth Fund, which is
a separate series of IAI Investment
Funds VI, Inc. Norwest Bank Minnesota, N.A.
By By /s/ Tim Burks
---------------------------------- -------------------------------------
ATTEST ATTEST
By By /s/ Susan Skonnord
---------------------------------- -------------------------------------
13
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<TABLE>
<CAPTION>
Exhibit B
(as amended through November 14, 1995
to
CUSTODIAN AGREEMENT
between
IAI Investment Funds VI, Inc.
and
NORWEST BANK MINNESOTA, N.A.
Compensation Schedule
---------------------
Annual Fees Rate
<S> <C>
Fee Per Global Market Value $0.0007
(Domestic Securities Excluded)
Fee Per Issue Held $25.00
(Global Securities Excluded)
Fee Per Account $4,000.00
Norwest ACCESS (on-line cost $.50 billed to client) $3,600.00
First year waived excluding communications costs.
Transaction Fees - Domestic Securities
DTC Purchase/Sale/Maturity $8.00
Fed Purchase/Sale/Maturity 10.00
New York Physical Purchase/Sale/Maturity 20.00
Commercial Paper Purchase/Maturity 20.00
Other Physical Purchase/Sale/Maturity 20.00
Options/Futures Purchase/Sale 20.00
Book Entry Deposit/Withdrawal $12.50
Book Entry Re-Registration 15.00
Physical Re-Registration 100.00
GNMA and Fed Agency Principal Payments $5.00
CMO & Private Placement Payments 15.00
Non-Trade Wire 10.00
Transfer to DDA/Check Issuance 0.00
Overnight Sweep Activity 0.00
Transaction Fees - Global Securities
Global Equity Transactions $50.00
Forward Currency Purchase/Sale 0.00
</TABLE>
