AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON 12/31/97
FILE NO: 811-8058
33-69798
SECURITIES AND EXCHANGE COMMISSION
----------------------------------
Washington, D.C. 20549
FORM N-1A
---------
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 / X /
Pre-Effective Amendment No. ___ / /
Post-Effective Amendment No. 2 / X /
and/or
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 / X /
Amendment No. 2
(Check appropriate box or boxes.)
THE NOAH INVESTMENT GROUP, INC.
-------------------------------
(Exact name of Registrant as Specified in Charter)
975 Delchester Road
Newtown Square, PA 19073
------------------------
(Address of Principal Executive Office)
Registrant's Telephone Number, including Area Code:
215-651-0460
------------
WILLIAM L. VAN ALEN, JR., ESQUIRE, 975 DELCHESTER ROAD
NEWTOWN SQUARE, PA 19073 - 215-651-0460
---------------------------------------
(Name and Address of Agent for Service)
Please send copy of communications to:
MARTIN V. MILLER, ESQUIRE
115 Foxcroft Drive
Doylestown, Pennsylvania 18901
215-345-7110
------------
Approximate Date of Proposed Public Offering: As soon as practicable following
effective date.
<PAGE>
It is proposed that this filing will become effective (check appropriate box):
/ / immediately upon filing pursuant to paragraph (b)
/ / on (date) pursuant to paragraph (b)
/ X / 60 days after filing pursuant to paragraph (a)(1)
/ / on (date) pursuant to paragraph (a)(1)
/ / 75 days after filing pursuant to paragraph (a)(2)
/ / on (date) pursuant to paragraph (a)(2) of rule 485
If appropriate, check the following box:
/ / this post-effective amendment designates a new effective date
for a previously filed post-effective amendment.
Registrant declares hereby that an indefinite number or amount of its securities
has been registered by this Registration Statement.
A Rule 24f-2 Notice for the year ended October 31, 1997 was filed on December
31, 1997.
TOTAL NUMBER OF PAGES _____
EXHIBIT INDEX BEGINS
ON PAGE _____
<PAGE>
FORM N-1A
---------
CROSS REFERENCE SHEET
---------------------
FORM N-1A PART A
- ----------------
ITEM # PROSPECTUS LOCATION
- ------ -------------------
1. Cover Page ............................ Cover Page
2. Synopsis .............................. Expense Summary
3. Condensed Financial Information ....... N/A
4. General Description of Registrant ..... The Noah Fund Investment
Objective, Investment Policies
5. Management of the Fund ................ The Business of the Fund, Fund
Service Providers, Brokerage
Allocation, Dividends and
Distributions, Tax Implications,
Measuring Performance
6. Capital Stock and Other Securities .... The Noah Investment Group
7. Purchase of Securities Being Offered .. Investing in The Noah Fund,
How to Buy The Noah Fund Shares,
Fund Share Transaction Rules,
Shareholder Services,
Distribution Fees
8. Redemption or Repurchase .............. How to Sell (Redeem) Your
Shares
9. Pending Legal Proceedings ............. N/A
<PAGE>
FORM N-1A PART B
- ----------------
LOCATION IN STATEMENT
ITEM # OF ADDITIONAL INFORMATION
- ------ -------------------------
10. Cover Page ............................ Cover Page
11. Table of Contents ..................... Table of Contents
12. General Information and History ....... See Item "The Noah Investment
Group" in Prospectus
13. Investment Objectives and Policies .... Investment Objective and
Policies
14. Management of the Fund ................ See Items "The Business of the
Fund," "Fund Service
Providers," "Brokerage
Allocation," "Management of
the Fund," in the Prospectus
and "Directors and Officers of
the Fund" in Part B
15. Control Persons and Principal Holders
of Securities ......................... Principal Holders of Securities
16. Investment Advisory and Other Services. Investment Management Services,
Sub-Advisor
17. Brokerage Allocation and
Other Practices ....................... See Item "Brokerage Allocation"
in the Prospectus
18. Capital Stock and Other Securities .... See Item "The Noah Investment
Group" in the Prospectus
19. Purchase, Redemption and Pricing of
Securities Being Offered .............. See Items "Investing in The
Noah Fund," "Fund Share
Transaction Rules,"
Shareholder Services,"
"Distribution Fees," "How to
Sell (Redeem) Your Shares"
"Special Investor Services"
and "Distribution Plan" in the
Prospectus: Distribution Plan,
Redemption in Kind; Special
Investor Services; Purchase
and Redemption of Shares,
Taxes, Dividends and Capital
Gains
<PAGE>
FORM N-1A PART B CONTINUED
- --------------------------
LOCATION IN STATEMENT
ITEM # OF ADDITIONAL INFORMATION
- ------ -------------------------
20. Tax Status ............................ Dividends and Distributions
and Tax Implications
21. Underwriters .......................... N/A
22. Calculations of Performance Data ...... See Item "Measuring Performance"
in Fund Prospectus; Additional
Performance Information for the
Fund
23. Financial Statements .................. Financial Statements, Auditor
<PAGE>
FORM N-1A PART C
- ----------------
ITEM # LOCATION IN PART C
- ------ ------------------
24. Financial Statements and Exhibits .... Financial Statements and
Exhibits
25. Persons Controlled by or under
Common Control with Registrant ....... See Caption "Principal Holders
of Securities" in the Statement
of Additional Information
26. Number of Holders of Securities ...... Number of Holders of Securities
27. Indemnification ...................... Indemnification
28. Business and Other Connections of
Investment Adviser ................... Business and other Connections
of Investment Adviser
29. Principal Underwriter ................ N/A
30. Location of Accounts and Records ..... Location of Accounts and Records
31. Management Services .................. Management Services
32. Undertakings ......................... Undertakings
<PAGE>
PART A
<PAGE>
================================================================================
PROSPECTUS
March 1, 1998
THE NOAH FUND
A Portfolio of The Noah Investment Group, Inc.
================================================================================
The investment objective of The Noah Fund (hereafter sometimes the "Fund") is to
seek capital appreciation consistent with preservation of capital, as adjusted
for inflation, and current income. The Fund is offered by The Noah Investment
Group, Inc., (the "Company"), an open-end, diversified, management investment
company of the series type.
The shares of The Noah Fund are sold without a sales charge.
The Fund will not invest in and may not acquire the securities of businesses
that are engaged, directly or through subsidiaries, in the alcoholic beverage,
tobacco, pornographic and gambling industries or companies in the business of
aborting life before birth.
This Prospectus describes the information about the Fund and the Company that
you should know before investing. Please read it carefully and retain it for
future reference.
More information about the Fund is contained in a Statement of Additional
Information that has been filed with the Securities and Exchange Commission. To
obtain a free copy, call 1-800-626-NOAH. The Statement of Additional
Information, as it may be revised from time to time, is dated March 1, 1998 and
is incorporated by reference into this Prospectus.
Shareholder inquires should be directed to 1-800-626-NOAH.
================================================================================
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.
================================================================================
This Prospectus is part of a Registration Statement that has been filed with the
Securities and Exchange Commission in Washington, D.C. under the Securities Act
of 1933 and the Investment Company Act of 1940.
<PAGE>
No person has been authorized to give any information or to make any
representations in connection with the offer of the Fund's shares, other than as
contained in this Prospectus and the Fund's official sales literature.
Therefore, other information and representations must not be relied upon as
having been authorized by the Fund. This Prospectus does not constitute an offer
in any State in which, or to any person to whom, such offering may not lawfully
be made.
2
<PAGE>
INDEX
Expense Summary ....................................................
The Noah Fund Investment Objective .................................
Investment Policies ................................................
Investing in The Noah Fund .........................................
How to Buy The Noah Fund Shares ....................................
Fund Share Transaction Rules .......................................
How to Sell (Redeem) Your Shares ...................................
Shareholder Services ...............................................
Dividends and Distributions ........................................
The Noah Investment Group ..........................................
The Business of The Fund ...........................................
Brokerage Allocation ...............................................
Fund Service Providers .............................................
Tax Implications ...................................................
Measuring Performance ..............................................
Distribution Fee ...................................................
3
<PAGE>
EXPENSE SUMMARY ==========================================
ANNUAL FUND OPERATING EXPENSES THE NOAH FUND
are paid out of the Fund's Assets
and include fees for portfolio Shareholder Transaction Expenses
management, maintenance of --------------------------------
shareholder accounts, general Sales Load Imposed
Fund administration, shareholder on Purchases None
servicing, accounting and Sales Load Imposed
other services. on Reinvested Dividends None
Deferred Sales Load None
At right is a summary of the Redemption Fees None
Fund's operating expenses Exchange Fees None
expected to be incurred during
the current fiscal year. Annual Fund Operating Expenses
Actual total operating expenses ------------------------------
may vary. A hypothetical (as a percentage of average net assets)
example based on the summary is
also shown below. Management Fees 1.00%
12b-1 Fees .25%
Other Expenses .50%
-----
Total Fund Operating Expenses 1.75%
=====
==========================================
- --------------------------------------------------------------------------------
EXAMPLE:
Assume, for example, that the annual return for the Fund is 5% and that its
operating expenses are as described above. For each $1,000 that you invested in
the Fund and assuming that you closed your account at the end of the one-year
and the three-year periods, you would pay the amount shown as expenses at the
end of such periods.
4
<PAGE>
One Year Three Years
-------- -----------
The Noah Fund 18.00 55.00
- --------------------------------------------------------------------------------
This expense information set out above is provided to help you understand the
expenses you would bear as a Fund shareholder.
The foregoing expenses do not reflect the Company's 12b-1 distribution fee (not
to exceed .25% of average annual net assets). For the reason that the Plan
expired on March 26, 1997: no 12b-1 payments were made for the year ending
December 31, 1997. A new Rule 12b-1 Plan has been adopted which became effective
on January 9, 1998. See "Distribution Fee," p. 26 for further details.
Because of the applicability of the Rule 12b-1 Plan, long-term shareholders may
pay more than the economic equivalent of the maximum permitted front-end sales
charges.
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
MAY 17,1996 (1)
THROUGH YEAR ENDED
Per Share Data: OCTOBER 31, 1996 OCTOBER 31, 1997
---------------- ----------------
<S> <C> <C>
Net asset value, beginning of period ..................... $10.00 $10.59
------ ------
Income from investment operation:
Net investment income .................................. 0.04 (0.01)(2)
Net realized and unrealized gain on investments ........ 0.55 2.69
------ ------
Total from investment operations ....................... 0.59 2.68
------ ------
Net asset value, end of period ........................... $10.59 $13.23
====== ======
Total return (2) ......................................... 5.90% 25.41%
Supplemental data and ratios:
Net assets, end of period .............................. $465,879 $961,716
Ratio of expenses to average net assets (3) ............ 1.42% 1.75%
Ratio of net investment income to average
net assets (3) ....................................... 0.86% (0.18%)
Portfolio turnover rate ................................ 21.61% 27.07%
Average commission rate paid ........................... $0.2173 $0.2385
</TABLE>
(1) Commencement of operations.
(2) Net investment loss per share is calculated using ending balances prior to
consideration of adjustments for permanent book and tax differences.
(3) Not annualized for the period May 17, 1996 through October 31, 1996.
(4) Annualized for the period May 17, 1996 through October 31, 1996.
(5) Without expense waivers of $94,563 and $47,931 for the periods ending
October 31, 1997 and October 31, 1996, the ratio of expenses to average net
assets would have been 16.08% and 49.81% and the ratio of net investment
(loss) to average net assets would have been (14.51%) and (47.52)%.
See notes to the financial statements.
5
<PAGE>
================================================================================
THE NOAH FUND
INVESTMENT OBJECTIVE
================================================================================
The investment objective of The Noah Fund is to seek capital appreciation
consistent with preservation of capital, as adjusted for inflation, and current
income.
The Fund is appropriate for investors who want:
o capital appreciation and are willing to accept moderate stock market
volatility
o asset investment within the context of conservation of capital as
adjusted for inflation
o current income.
================================================================================
INVESTMENT POLICIES
================================================================================
COMPANY'S MANAGEMENT BELIEVES THAT IT IS CONSISTENT WITH JUDEO-CHRISTIAN
PRINCIPLES FOR THE FUND TO TAKE A MORAL STANCE WITH RESPECT TO ITS INVESTMENTS.
THEREFORE, IT IS A MATTER OF FUNDAMENTAL POLICY THAT THE FUND WILL NOT INVEST IN
AND MAY NOT ACQUIRE THE SECURITIES OF BUSINESSES THAT ARE ENGAGED, DIRECTLY OR
THROUGH SUBSIDIARIES, IN THE ALCOHOLIC BEVERAGE, TOBACCO, PORNOGRAPHIC AND
GAMBLING INDUSTRIES OR COMPANIES IN THE BUSINESS OF ABORTING LIFE BEFORE BIRTH.
STOCKS
The Fund seeks to realize capital appreciation by investing in a diversified
portfolio of common stocks of large capitalization companies (one billion
dollars or more). These companies are, in the opinion of the Fund's investment
adviser, advantageously positioned to achieve superior long-term asset value and
earnings growth through realization of the results of company research, product
development, capital spending and market expansion. Stock selection is made
within the context of a broad macroeconomic and political framework and is based
on fundamental security analysis to develop earnings forecasts and to identify
attractive investment opportunities relative to market valuation. Individual
companies are scrutinized concerning their individual growth prospects in the
context of the economy and competitive conditions within their
6
<PAGE>
respective industries. Macroeconomic factors considered, although not
exclusively, include inflation, interest, tax and currency rates. Individual
company analysis focuses upon the outlook for sales, profit margins, returns on
capital, cash flow and earnings per share. Information sources include general
economic and industry data provided by governmental agencies and various trade
associations, financial data such as that contained in corporate annual and
other periodic reports and press releases, corporate financial presentations and
meetings with company managements.
The investment policies described in the above paragraph may be changed without
shareholder approval.
MONEY MARKET INSTRUMENTS
During periods when the Fund's investment adviser deems it advisable for the
Fund to be in a defensive posture, the Fund may invest, without limit, in "money
market instruments," a term that includes, among other things, bank obligations
(which include U.S. Dollar denominated certificates of deposit, bankers
acceptances and time deposits issued or supported by the credit of U.S. or
foreign banks or savings institutions having total assets at the time of
purchase of, in excess of, $1 billion), commercial paper, obligations of the
U.S. Government, its agencies and instrumentalities, and repurchase agreements
backed by U.S. Government securities.
PORTFOLIO TURNOVER
Although investments are generally made for the long term, the investment
advisor retains the right to trade securities actively for short-term trading
profits, irrespective of how long they have been held, if the objectives of the
Fund would be better served. Any gains realized therefrom on securities held for
90 days or less shall not exceed 30% of Fund income including capital gains (See
"Tax Implications," p. 24). An annual portfolio turnover rate of 100% would
occur if the value of all of the securities held in the Fund's portfolio were
replaced within one year. The annual portfolio turnover of the Fund for the
fiscal year ended October 31, 1997 was 27.07%.
INVESTMENT RISKS
The Fund is subject to certain types of risks. It is subject to the risks of the
securities markets in which the portfolio securities of the Fund are traded.
Securities markets are cyclical and the prices of the securities traded in such
markets rise and fall at various times. These cyclical periods may extend over
significant periods of time.
The Fund is also subject to the risk that the sub-adviser will not be successful
in managing the Fund's portfolio. The sub-adviser will manage the portfolio
subject to Polestar Management Company's supervision
7
<PAGE>
and will make decisions on buying, selling or holding portfolio securities based
upon the sub-adviser's skills in interpreting the available economic, financial
and market data. The lack of experience of Polestar Management Company is a
factor to be considered when making an investment in the Fund.
INVESTMENT LIMITATIONS
The following investment restrictions will help the Fund to limit investment
risks. Thus the Fund will not:
(a) with respect to 75% of its assets, invest more than 5% of the market
value of its assets in the securities of any single issuer (other than
obligations issued or guaranteed as to principal and interest by the U.S.
Government or any agency or instrumentality thereof);
(b) with respect to 75% of its assets, purchase more than 10% of any class
of the outstanding securities of any issuer (other than obligations of the U.S.
Government);
(c) invest more than 5% of its assets in the securities of companies that
(with predecessors) have a continuous operating history of less than three
years;
(d) invest 25% or more of its total assets in one or more issuers
conducting their principal business activities in the same industry.
(e) borrow money except from a bank and only for temporary or emergency
`purposes, and then only in an amount not in excess of 10% of the lower of the
market value or cost of its assets, in which case it may pledge, mortgage or
hypothecate any of its assets as security for such borrowing, but not to an
extent greater than 10% of the market value of its assets: the Fund will not
purchase any securities while such borrowings exceed 5% of the Fund's assets;
(f) underwrite the securities of other issuers;
(g) make loans except by purchasing bonds, debentures or similar
obligations which are either publicly distributed or customarily purchased by
institutional investors;
(h) invest in oil, gas or mineral leases or real estate except that the
Fund may purchase the securities of companies engaged in the business of real
estate including real estate investment trusts; or
(i) invest in commodities or commodity contracts.
These investment limitations, described above, are considered at the time that
securities
8
<PAGE>
are purchased. The limitations described are deemed to be fundamental policies
and may not be changed without the approval of a majority of the Fund's
outstanding voting securities.
================================================================================
INVESTING IN THE NOAH FUND
================================================================================
Shares of the Fund may be purchased either through the account you maintain with
a broker-dealer or other financial institution or from The Noah Investment Group
directly.
Should you wish to establish a Fund account directly, please refer to the
purchase options described under "How to Buy The Noah Fund Shares" below.
Payments for Fund shares should be in U.S. dollars and in order to avoid fees
and delays should be drawn on a U.S. bank. Please remember that Fund management
reserves the right to reject any purchase order for The Noah Fund shares.
IF YOU HAVE QUESTIONS
A Fund telephone representative will be happy to provide the information or
service you need. Your needs are most efficiently addressed by calling the
appropriate toll-free number listed below:
1-800-626-NOAH
================================================================================
HOW TO BUY THE NOAH FUND SHARES
================================================================================
This section provides you with pertinent information on how to buy Fund shares.
Further information can be found under "Fund Share Transaction Rules," p. 13.
MINIMUM INVESTMENT
------------------
To Open Account Additional Investments
--------------- ----------------------
Regular Account $1,000 $50
IRAs 500 $50
9
<PAGE>
To Open Account Additional Investments
--------------- ----------------------
Non-Working Spousal
IRA (1) 250 50
IRA Rollovers 1,000 50
401(k) Plans, Qualified
Retirement Plans and
SEP-IRAs 1,000 50
OPENING AND ADDING TO YOUR NOAH FUND ACCOUNT
You are provided with a number of different ways to invest directly in the Fund.
Simply choose the one that is most convenient for you. Any questions you may
have can be answered by calling 1-800-626-NOAH. As described above under
"Investing in The Noah Fund," p. 9, you may also purchase Fund shares through
broker-dealers or other financial organizations.
- ----------------
(1) A regular IRA must be opened first.
10
<PAGE>
================================================================================
TO OPEN AN ACCOUNT TO ADD TO ACCOUNT
By Mail o Complete an Account o Make your check payable to
Registration Form and make The Noah Fund and mail
a check payable to The it to the address at left.
Noah Fund and mail the
Form and check to The Noah o Please include your account
Investment Group, Inc., number on your check.
or by overnight courier,
send to 555 North Lane, o Or use the convenient form
Suite 6160, Conshohocken attached to your regular
PA, 19428. Fund statement.
- --------------------------------------------------------------------------------
By Wire o Ask your bank to wire funds o Ask your bank to wire
to Account of immediately available funds
as described at left, except
CoreStates Bank, N.A. that the wire should note that
ABA#: 031000011 it is to make a subsequent
Credit: The Noah Investment purchase rather than to open
Group, Inc. a new account.
Account #: 1419959661
Further credit: The Noah Fund.
o The wire should state that the o Include your name and Fund
purchase is to be in your account number.
name(s).
o The wire should state that you
are opening a new Fund account.
o Include your name(s), address and
taxpayer identification number,
and the name of the Fund in which
you are purchasing shares.
o Call 1-800-626-NOAH to inform us
that a wire is being sent.
- --------------------------------------------------------------------------------
By o Telephone transactions may o Call 1-800-626-NOAH to make
Tele- not be used for initial pur- your purchase.
phone chases. If you want to make
purchases subsequent transactions via
trans- telephone, please select this
ferring service on your account
money Registration Form.
from
your
checking,
NOW or
bank
money
market
account.
================================================================================
11
<PAGE>
EXPLANATION OF SALES PRICE
The public offering price for shares of The Noah Fund is based upon the Fund's
net asset value per share. Net asset value per share is calculated by adding the
value of Fund investments, cash and other assets, subtracting Fund liabilities,
and then dividing the result by the number of shares outstanding. The assets of
the Fund are valued at market value or, if market quotes cannot be readily
obtained, fair value is used as determined by the Board of Directors. The net
asset value of the Fund's shares is computed on all days on which the New York
Stock Exchange is open for business at the close of regular trading hours on the
Exchange, currently 4:00 p.m. East Coast time.
================================================================================
CALL FOR INFORMATION
- ---- ---------------
1-800-626-NOAH Regarding the Fund's investment
9:00 a.m.-5:30 p.m. objectives and policies.
East Coast Time
- --------------------------------------------------------------------------------
1-800-626-NOAH For information about opening an account or
9:00 a.m.-5:00 p.m. if you are an investor in The Noah Fund
East Coast Time and need assistance with your account,
to obtain your account balance or to request
a telephone transaction or information on
changing your Fund's services. Statements
of Additional Information are also available
at this number.
- --------------------------------------------------------------------------------
1-800-626-NOAH For voice recorded price information.
24 hours a day
================================================================================
ACCURACY OF INVESTOR ACCOUNT INFORMATION
Reasonable procedures will be employed to confirm that instructions
communicated by telephone are genuine. Such procedures may include, among
others, requiring some form of personal identification prior to acting upon
telephonic instructions, providing written confirmations of all such
transactions, and/or tape recording all telephonic instructions. ASSUMING
PROCEDURES SUCH AS THE ABOVE HAVE BEEN FOLLOWED, NEITHER DECLARATION SERVICE
COMPANY NOR THE FUND WILL BE LIABLE FOR ANY LOSS, COST, OR EXPENSE FOR ACTING
UPON AN INVESTOR'S TELEPHONE INSTRUCTIONS. THE COMPANY SHALL HAVE AUTHORITY, AS
YOUR AGENT, TO REDEEM SHARES IN YOUR ACCOUNT TO COVER ANY SUCH LOSS. As a result
of this policy, the investor will bear the risk of any loss unless the Fund has
failed to follow procedures such as the
12
<PAGE>
above.
================================================================================
The Noah Investment Group wants you to be kept current regarding the status of
your account in the Fund. To assist you, the following statements and reports
will be sent to you:
Confirmation Statements After every transaction that affects your
account balance or your account registration.
Account Statements Quarterly.
Financial Reports Semi-annually -- to reduce Fund expenses, only
one copy of the Fund report will be mailed
to each taxpayer identification number even if
you have more than one account in the Fund.
================================================================================
================================================================================
FUND SHARE TRANSACTION RULES
================================================================================
PURCHASE BY MAIL (see p. 11)
Your purchase order, if in proper form and accompanied by payment, will be
processed upon receipt by Declaration Service Company, the Transfer Agent. If
the Transfer Agent receives your order and payment by the close of regular
trading on the Exchange (currently 4:00 p.m. East Coast time), your shares will
be purchased at the public offering price calculated at the close of regular
trading on that day. Otherwise, your shares will be purchased at the public
offering price determined as of the close of regular trading on the next
business day.
The Company does not consider the U.S. Postal Service or other independent
delivery services to be its agents. Therefore, deposit in the mail or with such
services, or receipt at Declaration Service Company's Post Office Box, of
purchase applications or redemption requests does not constitute receipt by the
Custodian or the Fund. DO NOT MAIL LETTERS BY OVERNIGHT COURIER TO THE POST
OFFICE BOX ADDRESS. CORRESPONDENCE MAILED BY OVERNIGHT COURIER SHOULD BE SENT TO
THE FUND AT:
Declaration Service Company
555 North Lane, Suite 6160
Conshohocken, PA 19428
All applications to purchase capital stock are subject to acceptance or
rejection by
13
<PAGE>
authorized officers of the Company and are not binding until accepted.
Applications will not be accepted unless they are accompanied by payment in U.S.
funds. Payment must be made by check order drawn on a U.S. bank, savings & loan
or credit union. The Custodian will charge a $20.00 fee against a shareholder's
account, in addition to any loss sustained by the Fund, for any payment check
returned to the Custodian for insufficient funds. It is the policy of the
Company not to accept applications under circumstances or in amounts considered
disadvantageous to shareholders; for example, if an individual previously tried
to purchase shares with a bad check, or the proper social security number or tax
identification number is omitted, the Company reserves the right not to accept
future applications for Fund shares from such individual.
If you place an order for Fund shares through a securities broker, and you place
your order in proper form before 4:00 p.m. East Coast time on any business day
in accordance with their procedures, your purchase will be processed at the
public offering price calculated at 4:00 p.m. on that day, if the securities
broker then transmits your order to the Transfer Agent before the end of its
business day (which is usually 5:00 p.m. East Coast time). The securities broker
must send to the Transfer Agent immediately available funds in the amount of the
purchase price within three business days for the order.
By Financial Service Organization -- If you are a client of a securities broker
or other financial organization, you should note that such organization may
charge its clients a separate fee for administrative services in connection with
investments in The Noah Fund shares and may impose account minimums and other
requirements. These fees and requirements would be in addition to those imposed
by The Noah Fund under the Plans or otherwise. If you are investing through a
securities broker or other financial organization, please refer to its program
materials for any additional special provisions or conditions that may be
different from those described in this Prospectus (for example, some or all of
the services and privileges described may not be available to you). Securities
brokers and other financial organizations have the responsibility of
transmitting purchase orders and funds, and of crediting their customers'
accounts following redemptions, in a timely manner in accordance with their
customer agreements and this Prospectus.
TELEPHONE PURCHASES (See p. 11) INVESTORS MUST AFFIRMATIVELY ELECT PRIVILEGE
In order to be able to purchase shares by telephone, an investor's account
authorizing such purchases must have been established prior to the investor's
call. The initial purchase of shares for an account may not be made by
telephone. Shares purchased by telephone will be purchased at the per share net
asset value determined at the close of business on the day that the transfer
agent receives payment through the Automatic Clearing House. Call the Transfer
Agent for details.
Only bank accounts held at domestic financial institutions that are Automated
Clearing House members can be used for telephone transactions. Most transfers
are completed within three business days of your call. To preserve flexibility,
the Company may
14
<PAGE>
revise or eliminate the ability to purchase Fund shares by phone, or may charge
a fee for such service, although the Company does not currently expect to charge
such a fee.
WIRE PURCHASES (See p. 11)
If you purchase Fund shares by wire, you must complete and file an Account
Registration Form with the Transfer Agent before any of the shares purchased can
be redeemed. You should contact your bank (which will need to be a commercial
bank that is a member of the Federal Reserve System) for information on sending
funds by wire, including any charges that your bank may make for these services.
MISCELLANEOUS PURCHASE INFORMATION
Federal regulations require that you provide a certified taxpayer identification
number whenever you open or reopen an account. Congress has mandated that if any
shareholder fails to provide and certify to the accuracy of the shareholder's
social security number or other taxpayer identification number, the Company will
be required to withhold a percentage, currently 31%, of all dividends,
distributions and payments, including redemption proceeds, to such shareholder
as a backup withholding procedure.
For economy and convenience, share certificates will not be issued.
================================================================================
HOW TO SELL (REDEEM) YOUR SHARES
================================================================================
You may sell (redeem) your shares at any time. You may request the sale of your
shares either by mail, by telephone or by wire.
BY MAIL
Sale requests should be mailed to:
Declaration Service Company
555 North Lane, Suite 6160
Conshocken, PA 19428
Should you wish to send your redemption request by overnight courier, the
request for redemption should be sent to:
Declaration Service Company
555 North Lane, Suite 6160
Conshocken, PA 19428
The selling price of the shares being redeemed will be the Fund's per share net
asset value next
15
<PAGE>
calculated after receipt of all required documents in Good Order. Payment of
redemption proceeds will be made no later than the third business day after the
valuation date unless otherwise expressly agreed by the parties at the time of
the transaction.
Good Order means that the request must include:
1. Your account number.
2. The number of shares to be sold (redeemed) or the dollar value of the
amount to be redeemed.
3. The signatures of all account owners exactly as they are registered on the
account.
4. Any required signature guarantees.
5. Any supporting legal documentation that is required in the case of estates,
trusts, corporations or partnerships and certain other types of accounts.
Signature Guarantees --
A signature guarantee of each owner is required to redeem shares in the
following situations, for all size transactions: (i) if you change the ownership
on your account; (ii) when you want the redemption proceeds sent to a different
address than is registered on the account; (iii) if the proceeds are to be made
payable to someone other than the account's owner(s); (iv) any redemption
transmitted by federal wire transfer to your bank; and (v) if a change of
address request has been received by the Company or Declaration Service Company
within 15 days previous to the request for redemption. In addition, signature
guarantees are required for all redemptions of $2,500 or more from any Fund
shareholder account. A redemption will not be processed until the signature
guarantee, if required, is received in proper form.
Signature guarantees are designed to protect both you and the Fund from fraud.
To obtain a signature guarantee you should visit a bank, trust company, member
of a national securities exchange or other broker-dealer, or other eligible
guarantor institution. (Notaries public cannot provide signature guarantees.)
Guarantees must be signed by an authorized person at one of these institutions,
and be accompanied by the words "Signature Guarantee."
BY TELEPHONE
Shares of the Fund may be sold by calling the Transfer Agent at 1-800-626-NOAH
In order to utilize this procedure for telephone redemption, a shareholder must
have previously elected this procedure in writing which will be reflected in the
records of the Transfer Agent, and the redemption proceeds must be transmitted
directly to the investor or to the investor's pre-designated account at a
domestic bank. An investor may not redeem by telephone if a change of address
request has been received by the Company or Declaration Service Company within
15 days previous to the request for redemption.
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<PAGE>
During periods of substantial economic or market changes, telephone redemptions
may be difficult to implement. If an investor is unable to contact the Transfer
Agent by telephone, shares may be redeemed by delivering the redemption request
in person or by mail as described under "By Mail." Shareholders should
understand that with the telephone redemption option, they may be giving up a
measure of security that they might otherwise have had if they were to redeem
their shares in writing. In addition, interruptions in telephone service may
mean that a shareholder will be unable to effect a redemption by telephone if
desired.
Shares purchased by check for which a redemption request has been received will
not be redeemed until the check or payment received for investment has cleared.
BY WIRE
You may request the redemption proceeds be wired to your designated bank if it
is a member bank or a correspondent of a member bank of the Federal Reserve
System. A $10 fee is charged for outgoing wires.
REDEMPTION AT THE OPTION OF THE FUND
If the value of the shares in a shareholder's account is less than $500, the
Company may notify the shareholder that, unless the shareholder's Fund account
is increased to $500 in value, it will redeem all the shareholder's shares and
close the account by paying the shareholder the redemption proceeds and any
dividends and distributions declared and unpaid at the date of redemption. The
shareholder will have thirty days after he or she receives the notice to bring
the account up to $500 before any action is taken. This minimum balance
requirement does not apply to IRAs and other tax-sheltered investment accounts.
This right of redemption shall not apply if the value of a shareholder's account
drops below $500 as the result of market action.
The Company reserves this right because of the expense to the Fund of
maintaining very small accounts.
================================================================================
SHAREHOLDER SERVICES
================================================================================
17
<PAGE>
AUTOMATIC INVESTMENT PLAN
You may select the Automatic Investment Plan. Under this option, sums will be
moved from your local bank checking account to your Fund Account on a periodic
basis; i.e., monthly or quarterly. If you wish to create an Automatic Investment
Plan, complete the Automatic Investment Plan form (page ____) and return the
form and a voided blank check from your local bank checking account to the
Transfer Agent. You must allow three weeks for the Transfer Agent to confirm
that electronic transfers can be made before you make the first transfer. Check
with the bank in which your checking account is maintained to make sure that it
is a participant in the Automated Clearing House system. The minimum amount that
may be invested under the Plan periodically is $25.00.
For information and assistance concerning the Automatic Investment Plan, please
call the Investor Service Department at 1-800-626-NOAH.
Dollar Cost Averaging is a useful method for investing in a portfolio of
securities such as the Fund where the price per share fluctuates. Instead of
trying to time market performance, a fixed dollar amount is invested in Fund
shares at predetermined intervals. In order to be effective, Dollar Cost
Averaging should usually be followed on a sustained, consistent basis. While
regular investment plans do not guarantee a profit and will not protect you
against loss in a declining market, they can be a good way to invest for
retirement, a home, educational expenses, and other long-term financial goals.
You may cancel your Automatic Investment Plan or change the amount of your
periodic payments at any time by mailing written notification of such
cancellation or change to the Transfer Agent at 555 North Lane, Suite 6160,
Conshohocken, PA 19428 or by calling the Transfer Agent at 1-800-626-NOAH.
18
<PAGE>
RETIREMENT PLANS
Retirement plans may provide you with a method of investing for your retirement
by allowing you to exclude from your taxable income, subject to certain
limitations, the initial and subsequent investments in your plan and also
allowing such investments to grow without the burden of current income tax until
monies are withdrawn from the plan.
INDIVIDUAL RETIREMENT ACCOUNTS (IRAS)
The individual investor can select the shares of the Fund to fund either an IRA,
a Rollover IRA or a non-working spousal IRA. To establish an IRA with the Fund,
you must complete the IRA Account Registration Form. If the assets are being
moved from an existing IRA to the Fund, you must also complete the IRA
Rollover/Transfer Form.
Many investors are eligible to deduct from federal income tax all or a portion
of their IRA investment. All dividends and capital gains on IRA investments grow
tax deferred until withdrawal. Investors may make contributions to their IRAs
until the tax year prior to reaching age 70 1/2. Mandatory withdrawals must
begin the year after an investor reaches 70 1/2. Investors should consult their
tax advisers for details on eligibility and tax implications.
Simplified Employee Pension Plans (SEP IRAs) may also be established.
Please read the IRA Disclosure Statement and Custodial Agreement which contains
further information regarding services and fees.
Investors should consult with their own tax advisers before establishing an IRA
account.
QUALIFIED RETIREMENT PLANS
The Noah Fund shares are available for investment by qualified retirement plans
with multiple participants including 401(k), 457, 403(b)(7) and Simplified
Employee Pension Plans (SEP-IRAs). The Fund does not have prototype plans.
Contact the Transfer Agent at 1-800-626-NOAH for details.
================================================================================
DIVIDENDS AND DISTRIBUTIONS
================================================================================
DIVIDENDS AND DISTRIBUTIONS
WHERE DO YOUR DIVIDENDS AND DISTRIBUTIONS COME FROM?
Dividends paid by the Fund are derived from its net investment income. Net
investment income will be distributed at least annually. The Fund's net
investment income is made up of dividends received from the stocks it holds, as
19
<PAGE>
well as interest accrued and paid on any other obligations that might be held in
its portfolio.
The Fund realizes capital gains when it sells a security for more than it paid
for it. The Fund may make distributions of its net realized capital gains (after
any reductions for capital loss carryforwards), generally, once a year.
You must elect one of the following distribution options. You may make such
election on your account application.
1. Automatic Reinvestment Option - All dividends and capital gains
distributions will be re-invested in additional Fund shares.
2. Cash Option - All dividends and capital gains distributions will be paid in
cash.
If you do not elect one of the above Options, Option number 1 will be selected
for you automatically. You may change your Option by writing to Declaration
Service Company, 555 North Lane, Suite 6160, Conshocken, PA 19428.
The election is effective for dividends and distributions with record dates
after the date the Transfer Agent is notified of the election.
================================================================================
THE NOAH INVESTMENT GROUP
================================================================================
The Noah Investment Group was organized on December 16, 1992 as a Maryland
corporation, and is a mutual fund of the type known as an open-end, diversified
management investment company. It did not begin operations until 1996 nor
commence offering its shares until that time. A mutual fund permits an investor
to pool his or her assets with those of others in order to achieve economies of
scale, take advantage of professional money managers and enjoy other advantages
traditionally reserved for large investors. It is authorized to issue
500,000,000 shares of .001 cent par value common capital stock. The Noah
Investment Group's Articles of Incorporation permits its Board of Directors to
classify any unissued shares into one or more classes of shares. The Board has
authorized the issuance of 250,000,000 shares of The Noah Fund which are
currently being offered. The Fund shares are fully paid and non-assessable. They
are entitled to such dividends and distributions as may be paid with respect to
the shares and shall be entitled to such sums on liquidation of the Fund as
shall be determined. Other than these rights, they have no preference as to
conversion, exchange, dividends, retirement or other features and have no
pre-emption rights.
Shareholder meetings will not be held unless required by Federal or State law or
in
20
<PAGE>
connection with an undertaking given by the Fund (See Statement of Additional
Information).
================================================================================
THE BUSINESS OF THE FUND
================================================================================
HOW THE FUND IS MANAGED
The business affairs of the Fund are managed under the general supervision of a
Board of Directors.
Polestar Management Company, 975 Delchester Road, Newtown Square, PA 19073
(hereafter sometimes the "Polestar Management") serves as the Fund's manager and
is responsible for the management of the Fund's business affairs. Under the
terms of the Management Agreement, Polestar Management, for the fee described
below, manages, or arranges for the management of, the investment and
reinvestment of the assets contained in the Fund's portfolio and the review,
supervision and administration of the Fund's investment program. Polestar
Management also provides administrative services to the Fund. It is without
prior experience as an investment adviser and for that reason has secured the
services of Geewax Terker & Company as sub-adviser. See "Sub-Investment
Adviser," p. 22. Polestar Management is responsible to The Noah Investment
Group's Board of Directors.
Polestar Management will receive a fee, payable monthly, for the performance of
its services at an annual rate of 1% of the average net assets of the Fund. The
fee will be accrued daily for the purpose of determining the offering and
redemption price of the Fund's shares; it is higher than those paid by most
investment companies.
POLESTAR MANAGEMENT WILL GIVE A ONE-TENTH PART OF THE NET MANAGEMENT FEE PAID TO
IT TO RELIGIOUS ORGANIZATIONS (WITHOUT REGARD TO DENOMINATION) FOR MISSIONS,
DISCIPLESHIPS AND THE NEEDS OF THE POOR.
The Fund shall bear all of its expenses and all expenses of the Fund's
organization, operation and business not specifically assumed or agreed to be
paid by Polestar Management. Polestar Management will pay or provide for the
payment of the cost of office space, office equipment and office services as are
adequate for the Fund's needs; provide competent personnel to perform all of the
Fund's executive, administrative and clerical functions not performed by Fund
employees or agents; and authorize persons who are officers, directors and
employees of Polestar Management who may be designated as directors, officers,
and committee members to serve in such
21
<PAGE>
capacities at no cost to the Fund. Reference is made to the Statement of
Additional Information for a detailed list of the expenses that will be borne by
the Fund and by Polestar Management.
SUB-INVESTMENT ADVISER
Geewax Terker & Company ("Geewax Terker") 99 Starr Street, Phoenixville, PA
19460, is responsible for the investment and reinvestment of the Fund's assets.
Mr. John J. Geewax, a general partner, is responsible for the day-to-day
recommendations regarding the investment of the Fund's portfolio. Mr. Geewax has
been awarded a Bachelor of Science Degree, a Masters Degree in Business
Administration and Doctorate in Philosophy (ABD) by the University of
Pennsylvania. He has taught at the University of Pennsylvania's Wharton School.
While teaching at the Wharton School, he, together with his partner, Mr. John
Terker, developed the investment strategy presently utilized by Geewax Terker.
While the Fund will be the first investment company to which Geewax Terker has
provided investment advisory services, as of December 31, 1997, Geewax Terker
provided investment advice and counseling with respect to approximately $6
billion in assets.
Geewax Terker will charge a sub-advisory fee calculated as follows: on Noah Fund
average net assets up to $20 million - $1; on average net assets from $20
million to $40 million - .75%; on average net assets from $40 million to $90
million - .50% and on net assets of $90 million and above - .35%. THE NOAH FUND
WILL HAVE NO RESPONSIBILITY FOR THE PAYMENT OF GEEWAX TERKER'S FEES; THE PAYMENT
OF ANY SUCH FEES WILL BE THE SOLE RESPONSIBILITY OF POLESTAR MANAGEMENT COMPANY.
22
<PAGE>
================================================================================
BROKERAGE ALLOCATION
================================================================================
Quaker Securities, Inc. ("Quaker") a registered broker-dealer and member of the
National Association of Securities Dealers, Inc., will arrange for the execution
of portfolio transactions. In placing brokerage orders, Quaker will seek the
best overall terms available. In assessing the best overall terms available for
any transaction, Quaker shall consider all factors that it deems relevant,
including the breadth of the market in the security, the price of the security,
the financial condition and execution capability of the broker or dealer, and
the reasonableness of the commission, if any, both for the specific transaction
and on a continuing basis. Quaker is authorized to pay to a broker or dealer who
provides such brokerage services a commission for executing a portfolio
transaction for the Fund which is in excess of the amount of commission another
broker or dealer would have charged for effecting that transaction if Quaker
determines, in good faith, that such commission was reasonable in relation to
the value of the brokerage services provided by such broker or dealer -- viewed
in terms of that particular transaction or in terms of the overall
responsibilities of Quaker to the Fund. Brokerage transactions may also be
allocated in recognition of sale of Fund shares.
================================================================================
FUND SERVICE PROVIDERS
================================================================================
The Fund could not function without the services provided by certain companies.
Some of these services and the providers are listed below.
INVESTMENT AND MANAGEMENT SERVICES
----------------------------------
POLESTAR MANAGEMENT COMPANY
GEEWAX TERKER & COMPANY
As noted above, Polestar Management Company provides management and other
services to the Fund and Geewax Terker & Company is responsible for managing the
investment and reinvestment of the Fund's assets. For further information
regarding investment and management services, see "How the Fund is Managed"
above and in the Statement of Additional Information.
23
<PAGE>
CUSTODIAN
---------
CoreStates Bank, N.A.
CoreStates Bank, N.A. holds the investments and other assets that the Fund owns.
The Custodian is responsible for receiving and paying for securities purchased,
delivering against payment securities sold, receiving and collecting income from
investments, making all payments covering expenses of the Fund, and performing
other administrative duties, all as directed by persons authorized by the Fund.
The Custodian does not exercise any supervisory function in such matters as the
purchase and sale of portfolio securities, payment of dividends, or payment of
expenses of the Fund. Portfolio securities of the Fund are maintained in the
custody of the Custodian, and may be entered in the Federal Reserve Book Entry
System, or the security depository system of The Depository Trust Company.
TRANSFER, DIVIDEND DISBURSING
AND ACCOUNTING SERVICES AGENT
-----------------------------
DECLARATION SERVICE COMPANY
Declaration Service Company provides transfer agency and dividend disbursing
services for the Fund. This means that its job is to maintain, accurately, the
account records of all shareholders in the Fund as well as to administer the
distribution of income earned as a result of investing in the Fund. Declaration
Service Company also provides accounting services to the Fund including
portfolio accounting services, expense accrual and payment services, valuation
and financial reporting services, tax accounting services and compliance control
services.
================================================================================
TAX IMPLICATIONS
================================================================================
As with any investment, you should consider the tax implications of an
investment in the Fund. The following is only a short summary of the important
tax considerations generally affecting the Fund and its shareholders. You should
consult your tax adviser with specific reference to your own tax situation.
FEDERAL TAXES. The Fund intends to qualify and maintain its qualification as a
"regulated investment company" under the Internal Revenue Code (hereafter the
"Code"), meaning that to the extent a fund's earnings are passed on to
shareholders as required by the Code, the Fund itself is not required to pay
federal income taxes on the earnings.
In order to so qualify, at least 90% of the investment company taxable income of
the
24
<PAGE>
Fund will be paid as dividends. Investment company taxable income includes
taxable interest and dividends. To the extent you receive such a dividend based
on either investment company taxable income or a distribution of the excess of
net short-term capital gain over net long-term capital loss, you would treat
that dividend or distribution as ordinary income in determining your gross
income for tax purposes, whether or not you received payment in the form of cash
or additional shares. Unless you are exempt from federal income taxes, the
dividends and short-term capital gain distributions you receive from the Fund
will be taxable to you as ordinary income. Gains on the sales of securities held
for 3 months or less shall not exceed 30% of Fund income including capital gains
as long as such sale is considered as a disqualification under the Code.
Any distribution you receive of net long-term capital gain over net short-term
capital loss will be taxed as long-term capital gain no matter how long you have
held the Fund shares. If you hold shares for six months or less, and during that
time receive a distribution that is taxable as long-term capital gain, any loss
you might realize on the sale of those shares will be treated as a long-term
capital loss to the extent of the distribution.
Before you purchase shares of The Noah Fund, you should consider the effect of
both dividends and capital gain distributions that are expected to be declared
or that have been declared but not yet paid. When a Fund makes these payments,
its share price will be reduced by the amount of the payment, so that you will
in effect have paid full price for the shares and then received a portion of
your price back as a taxable dividend distribution.
The Fund will notify you annually as to the tax status of dividend and capital
gains distributions paid by the Fund. Such dividends and capital gains may be
subject to state and local taxes.
In the event a shareholder fails to furnish and certify a taxpayer
identification number, or the Internal Revenue Service notifies the Fund that a
shareholder's taxpayer identification number is incorrect, or that withholding
is otherwise required, the Fund will commence withholding on such shareholder's
account. Once withholding is established, all withheld amounts will be paid to
the Internal Revenue Service, from whom such shareholder should seek any refund.
If withholding is commenced with respect to any shareholder account, the
shareholder should consult with the shareholder's attorney or tax adviser or
contact the Internal Revenue Service directly.
Any dividends declared by the Fund in October, November or December of a
particular year and payable to shareholders of record during those months will
be deemed to have been paid by the Fund and received by shareholders on December
31st, of that year, as long as the dividends are actually paid in January of the
following year.
Fund shareholders may realize a taxable gain or loss when redeeming shares of
the
25
<PAGE>
Fund depending on the difference in the prices at which the shareholder
purchased and sold the shares.
STATE AND LOCAL TAXES GENERALLY. Because your state and local taxes may be
different than the federal taxes described above, you should see your tax
adviser regarding these taxes.
================================================================================
MEASURING PERFORMANCE
================================================================================
o Performance information provides you with a method of measuring and
monitoring your investments. The Fund may quote its performance in
advertisements or shareholder communications.
UNDERSTANDING PERFORMANCE MEASURES:
Total return for the Fund may be calculated on an average annual total return
basis or an aggregate total return basis. Average annual total return reflects
the average annual percentage change in value of an investment over the
measuring period. Aggregate total return reflects the total percentage change in
value of an investment over the measuring period. Both measures assume the
reinvestment of dividends and distributions.
PERFORMANCE COMPARISONS:
Total return of The Noah Fund may be compared to those of mutual funds with
similar investment objectives and to bond, stock or other relevant indices or to
rankings prepared by independent services or other financial or industry
publications that monitor mutual fund performance.
================================================================================
DISTRIBUTION FEE
================================================================================
The Fund has adopted a distribution plan (the "Distribution Plan"), pursuant to
which the Fund may incur distribution expenses of up to .25% per annum of the
Fund's average daily net assets currently.
The Distribution Plan provides that the Fund may finance activities which are
primarily intended to result in the sale of the Fund's shares, including but not
limited to, advertising, printing of prospectuses and reports for other than
existing shareholders,
26
<PAGE>
preparation and distribution of advertising materials and sales literature, and
payments to dealers and shareholder servicing agents.
27
<PAGE>
PART B
<PAGE>
THE NOAH FUND
A Portfolio Of The Noah Investment Group, Inc.
----------------------------------------------
STATEMENT OF ADDITIONAL INFORMATION
----------------------------------------------
----------------------------------------------
This Statement is not a prospectus but should be read in conjunction with
the current Prospectus, dated March 1, 1998 of The Noah Fund. To obtain a copy
of the Prospectus, please call 1-800-626-NOAH.
Dated: March 1, 1998
<PAGE>
TABLE OF CONTENTS
PAGE
----
Investment Objective and Policies .........................
Management of the Fund ....................................
Directors and Officers of the Fund ........................
Principal Holders of Securities ...........................
Investment Management Services ............................
Sub-Advisor ...............................................
Distribution Plan .........................................
Special Investor Services .................................
Purchase and Redemption of Shares .........................
Taxes, Dividends and Capital Gains ........................
Auditor ...................................................
Financial Statements ......................................
Additional Performance Information for the Fund ...........
(i)
<PAGE>
INVESTMENT OBJECTIVE AND POLICIES
The investment objective, investment policies and investment restrictions
of The Noah Fund ("Fund") are described on pages 6 through 9 of the Fund's
Prospectus.
MANAGEMENT OF THE FUND
The Fund's Directors are responsible for the Fund's management, and they
have certain fiduciary duties and obligations to the Fund and its shareholders
under the laws of the State of Maryland and applicable federal securities laws.
The information provided below sets forth biographical information regarding
each Director. Directors who are "interested persons" of the Fund, as that term
is defined by Section 2(a)(10) of the Investment Company Act of 1940, are marked
by an asterisk.
DIRECTORS AND OFFICERS OF THE FUND
William L. Van Alen, Jr., Esq.* Mr. Van Alen is an attorney and has been
Director, President and engaged in the private practice of law since
Treasurer 1962. He is President and Chairman of the
975 Delchester Road Board and a Director of Polestar Management
Newtown Square, PA 19073 Company, the Fund's investment manager. He
Age 64 is also President of Cornerstone
Entertainment, Inc., a company engaged in
the film and entertainment industry.
James L. Van Alen, II* Mr. Van Alen, is now and has been since
Director 1981, employed by the stock brokerage firm
Indian River Farm Janney, Montgomery, Scott, Philadelphia, PA.
936 Plumstock Road
Newtown Square, PA 19073
Age 62
George R. Jensen, Jr. Mr. Jensen is the founder, Chairman and
Director Chief Executive Officer of USA Technologies,
3 Sugarknoll Road Inc., a company which markets business
Devon, PA 19333 machines activated by credit cards.
Age 48 Previously, Mr. Jensen was the founder, and
until recently, was the Chairman and Chief
Executive Officer of American Film
Technologies, Inc. (AFT). He had been
Chairman and a Director of AFT since its
inception in 1985. AFT is a publicly owned
company which dominates the industry in the
colorization of black and white films. From
1979 to 1985 Mr. Jensen was President and
Chief Executive Officer of International
Film Productions, Inc.
2
<PAGE>
Christina Jaumotte DeGalavis Mrs. DeGalavis has engaged in private
Director practice as a psychologist for the past ten
Village of Golf years, specializing in marital counseling.
Del Ray, FL 33436 She has also been actively engaged in a
Age 49 number of socially beneficial programs.
During 1992-93, she served as President of
the Girl Scouts of Venezuela. As an Official
of the Venezuelan Ministry of Health, she
instituted a program to improve the
condition of medical institution patients
nationwide. She started the first center for
the treatment of addicted young persons in
Venezuela. As Director of prison conditions
in Venezuela, she initiated a program to
improve the condition of prison inmates and
as Special Advisor/Assistant to the First
Lady of Venezuela, she coordinated a project
for the operation of a "Head-Start" type day
care program for socially disadvantaged
children. She has also been active in the
raising of funds for organizations devoted
to caring for orphans and abandoned children
both in Venezuela and in Austria.
Forrest H. Anthony Forrest H. Anthony, M.D., Ph.D. is currently
Director the Director of Science and Technology at
1426 Fairview Road the University City Science Center. He was
Villanova, PA 19085 previously Chief Executive Officer at Avid
Age 47 Corporation, a biotechnology company he
founded in 1986, until its merger with
Triangle Pharmaceuticals Inc. in August
1997. Dr. Anthony received a B.A. in Biology
from Dartmouth College, an M.D. from the
University of Oregon, and a Ph.D. in
Biomedical Engineering from University of
Virginia. He previously worked in senior
staff positions at Johnson & Johnson and at
Rorer Group Inc., and served (until July
1997) on the Board of Directors and
Executive Committee of the Biotechnology
Industry Organization (BIO), a national
trade association for the biotechnology
industry.
Roger J. Knake Formerly a Systems Analyst with E.I. duPont.
Director He is currently, and has been for the last
615 Mountain View Road seven years, President and Chief Executive
Berwyn, PA 19312 Officer, XITEL, Inc., a communications
Age 56 company engaged in the development and
marketing of electronic mail software.
- ----------------
* INTERESTED PERSONS
3
<PAGE>
Mr. William L. Van Alen, Jr. is an interested person by virtue of being an
officer and director of The Noah Investment Group, Inc. and an officer and
director of Polestar Management Company. Mr. James L. Van Alen is a brother and
member of the "immediate family" (as defined in Section 2(a)(10) of the
Investment Company Act of 1940) of Mr. William L. Van Alen and is an affiliated
person of a brokerage firm.
REMUNERATION OF DIRECTORS AND OFFICERS
No Director or Officer of the Fund will receive any compensation for acting
as such. In the future, the non-interested Fund Directors may receive a fee for
each Board of Directors' meeting or Committee meeting attended, plus expenses.
PRINCIPAL HOLDERS OF SECURITIES
At the close of business on November 19, 1997, two persons were known by
the Fund to be the beneficial owners of more than 5% of the Fund's outstanding
shares other than Polestar Management Company. They are Ms. Judy Van Alen, Ms.
Mildred E. Krentel, Ms. Linda K. Flower, Mr. Scott J. Probosco, Jr. and Mr.
George W. Connell.
INVESTMENT MANAGEMENT SERVICES
Polestar Management Company (hereafter sometimes "Polestar Management"), a
Maryland corporation, has its principal office at 975 Delchester Road, Newtown
Square, PA 19073. Polestar Management does not serve as investment adviser to
any other investment company.
The Management Agreement whereby Polestar Management provides management
services to the Fund was last approved by a majority of The Noah Investment
Group's Board of Directors including a majority of those Directors who are not
"interested persons" at a meeting held on July 9, 1997 called for the purpose of
voting on such Agreement. The Agreement will continue in effect until March 1,
1998 and thereafter for successive annual periods provided that such continuance
is specifically approved at least annually by (a) The Noah Investment Group's
Board of Directors, or (b) the vote of a majority of the Fund's outstanding
voting shares; provided that, in either event, the continuance is also approved
by a majority of those Directors who are not parties to the Agreement or
interested persons of any such party, cast in person at a meeting called for the
purpose of voting on such approval. The Management Agreement may be terminated
at any time, without penalty, on sixty days' prior written notice, by the vote
of a majority of the Fund's outstanding voting shares or by the vote of a
majority of The Noah Investment Group's Board of Directors or by Polestar
Management, and will terminate automatically in the event of its assignment.
4
<PAGE>
Mr. William L. Van Alen, Jr. is President, Treasurer and a director of
Polestar Management. Mr. William L. Van Alen, Jr. and , and Ms. Judy Van Alen
own, respectively, 90% and 10% of the outstanding voting securities of Polestar
Management.
Polestar Management furnishes, at no cost, the services of those of
Polestar Management's officers who may be duly elected executive officers or
directors of The Noah Investment Group.
The Noah Investment Group, Inc. shall pay on behalf of and from the assets
of the Fund the following costs and expenses: the cost of determining the net
asset value of the Fund's shares, the costs incurred in connection with sales
and redemptions of its shares and all of its other administrative and
operational costs including, without limitation, transfer and dividend
disbursing and other agency fees; custodian fees; rent; auditing and legal fees;
fees for the preparation, printing and distribution of prospectuses, proxy
statements, stockholder reports and notices; supplies and postage; federal and
state registration and reporting fees; applicable taxes; the fees and expenses
of non-interested Directors and interest and brokerage commissions and other
fees and expenses of every kind not expressly assumed by Polestar Management.
SUB-ADVISOR
Geewax Terker & Company ("Geewax Terker") is a registered investment
adviser. It serves as sub-advisor to the Fund pursuant to a Sub-Advisory
Agreement dated January 9, 1998 ("Sub-Advisory Agreement") between Polestar
Management and Geewax Terker. The Geewax Terker Sub-Advisory Agreement was
approved by a majority of The Noah Investment Group's
5
<PAGE>
Board of Directors including by a majority of The Noah Investment Group's
non-interested Directors at a directors' meeting specifically called for the
purpose of voting on the Agreement on December 11, 1997 and by the Fund's
shareholders at the annual shareholders' meeting held on January 9, 1998.
Geewax Terker has agreed to: (i) supervise and direct the investment of the
Fund's assets in accordance with applicable law and the Fund's investment
objectives, policies and restrictions, and subject to any further limitations
The Noah Investment Group may impose, from time to time, by written notice to
Polestar Management provided that Polestar Management shall have informed Geewax
Terker, in writing, of such further limitations; (ii) formulate and implement a
continuing investment program for managing the assets and resources of the Fund,
which Geewax Terker shall amend and update, from time to time, to reflect
changes in financial and economic conditions; (iii) make all determinations with
respect to the investment of the Fund's assets and the purchase and sale of
portfolio securities and shall take such steps as may be necessary to implement
the same, including advising Polestar Management and the Board of Directors as
to certain actions taken involving the Fund's portfolio securities that are not
in the nature of investment decisions; (iv) furnish Polestar Management and the
Board of Directors of The Noah Investment Group, periodically and as otherwise
requested, with reports of Geewax Terker's economic outlook and investment
strategy, as well as the Fund's portfolio activity and investment performance;
and (v) select the broker-dealers and place orders for the execution of
portfolio transactions for the Fund with such broker-dealers.
Geewax Terker shall furnish The Noah Investment Group's Board of Directors
with schedules of the securities in the Fund's portfolio on a quarterly basis.
At the Board's request, and otherwise when Geewax Terker deems it appropriate,
it will prepare and provide the Board with schedules of securities and
statistical data regarding the activity and positions in the Fund's portfolio.
The Fund will have no obligation to pay Geewax Terker's fees or the fees of
any other sub-advisor rendering sub-advisory services to any Fund series.
Polestar Management will be solely responsible for the payment of any such
sub-advisory fees.
DISTRIBUTION PLAN
The Noah Investment Group has adopted a distribution plan for the Fund (the
"Distribution Plan"), pursuant to which the Fund may incur distribution expenses
of up to .25% per annum of the Fund's average daily net assets.
The Distribution Plan was approved by the Board of Directors of The Noah
Investment Group, including by all of the Rule 12b-1 Directors ("Rule 12b-1
Directors") are those directors who are not "interested persons" of The Noah
Investment Group
6
<PAGE>
and who have no direct or indirect financial interest in the Distribution Plan
or any related agreement), by the vote of the Fund's shareholders at the annual
shareholders' meeting held on January 9, 1998. The Distribution Plan has been
approved for a term ending December 31, 1998, unless earlier terminated by a
vote of a majority of the Rule 12b-1 Directors, or by vote of a majority of the
Fund's outstanding shares.
The Distribution Plan provides that the Fund may finance activities which
are primarily intended to result in the sale of the Fund's shares, including but
not limited to, advertising, printing and mailing of prospectuses and reports
for other than existing shareholders, printing and distribution of sales
literature, and the compensation of persons primarily engaged in the sale and
marketing of the Fund's shares.
In approving the Distribution Plan, in accordance with the requirements of
Rule 12b-1 under the Investment Company Act of 1940, the Directors considered
various factors and determined that there is a reasonable likelihood that the
Distribution Plan will benefit the Fund and its shareholders.
The Distribution Plan may not be amended to increase materially the amount
to be spent by the Fund under the Distribution Plan without shareholder
approval, and all material amendments to the provisions of the Distribution Plan
must be approved by a vote of the Board of Directors, including a majority of
the Rule 12b-1 Directors, cast at a meeting called for the purpose of such a
vote. During the continuance of the Distribution Plan, the Board of Directors of
The Noah Investment Group will receive quarterly, and in writing, the amounts
and purposes of the distribution payments. Further, during the term of the
Distribution Plan, the selection and nomination of those Directors who are not
interested persons of The Noah Investment Group must be and has been committed
to the discretion of the Rule 12b-1 Directors.
REDEMPTION IN KIND
A Notification under Rule 18f-1 under the Investment Company Act has been
filed on behalf of the Fund, pursuant to which it has undertaken to pay in cash
all requests for redemption by any shareholder of record, limited in amount with
respect to each shareholder during any 90-day period to the lesser amount of (i)
$250,000, or (ii) 1% of the net asset value of the Fund at the beginning of such
election period. It is intended to also pay redemption proceeds in excess of
such lesser amount in cash, but the right is reserved to pay such excess amount
in kind, if it is deemed to be in the best interests of the Fund to do so. In
making a redemption in kind, the right is reserved to select from the portfolio
holding a number of shares which will reflect the portfolio make-up and the
value of which will approximate, as closely as possible, the value of the Fund
shares being redeemed, or to select from one or more portfolio investments,
shares equal in value to the total value of the Fund shares being redeemed: any
shortfall will be made up in cash.
7
<PAGE>
Investors receiving an in-kind distribution are advised that they will
likely incur a brokerage charge on the disposition of such securities through a
broker. The values of portfolio securities distributed in kind will be the
values used for the purpose of calculating the per share net asset value used in
valuing the Fund shares tendered for redemption.
SPECIAL INVESTOR SERVICES
A shareholder may make arrangements for an Automatic Investing Plan (i.e.,
automatic monthly payments from the shareholder's bank account) by calling the
Fund at 1-800-626-NOAH and requesting an application. The Automatic Investing
Plan may be changed or canceled at any time upon receipt by the Fund's Transfer
Agent of written instructions or an amended application from the shareholder
with signatures guaranteed.
Since the Fund's shares are subject to fluctuations in both income and
market value, an investor contemplating making periodic investments in shares of
the Fund should consider his financial ability to continue such investments
through periods of low price levels, and should understand that such a program
cannot protect him against loss of value in a declining market.
INDIVIDUAL RETIREMENT ACCOUNTS (IRAS)
In general, an IRA provides certain tax advantages for participants. Under
an IRA plan, a participant's periodic contributions and all dividends and
capital gains distributions will be invested in shares of the Fund.
An individual may establish and make contributions of up to $2,000 per year
to his or her own IRA or may roll over moneys from other tax qualified plans. An
individual wishing to make an IRA investment, should consult with his or her own
tax adviser before doing so. Investors may wish to call the Transfer Agent at
1-800-794-NOAH for information and instructions.
SYSTEMATIC WITHDRAWAL PLAN
Investors owning Fund shares having a minimum value of $10,000 may adopt a
systematic withdrawal plan. Withdrawal payments to the investor may be made on a
monthly, quarterly, semi-annual or annual basis and must be in a minimum amount
of $500.
Shares are redeemed to make the requested payment on the day of the
shareholder's choosing each month in which a withdrawal is to be made and
payments are mailed within five business days following the redemption. The
redemption of shares, in order to make payments under this plan, will reduce and
may eventually exhaust the account. Each redemption of shares may result in a
gain or loss, which the investor must report on his income tax return.
Consequently, the investor should keep an accurate record of any gain or loss on
each withdrawal.
8
<PAGE>
PURCHASE AND REDEMPTION OF SHARES
Information relating to the procedure for the purchase and redemption of
the Fund's shares at net asset value is contained on pages 5 through 11 of the
Fund's Prospectus.
A description of the procedure for the determination of the net asset value
of the Fund's shares is contained on page 7 of the Fund's Prospectus.
AUDITOR
Sanville & Company will serve as the Fund's independent public accountants
and will audit the Fund's financial statements.
Arthur Andersen LLP served as the Company's independent public accountants
for the fiscal year ended October 31, 1997. At a Board Meeting held on December
11, 1997, the Board determined to replace Arthur Andersen LLP and to approve
Sanville & Company as independent public accountants for the Company for the
fiscal year ending October 31, 1998. The accountants' report of Arthur Andersen
LLP on the financial statements of the Company for either the period from May
17, 1996 through October 31, 1996 or the period from November 1, 1996 through
October 31, 1997 did not contain an adverse opinion or a disclaimer of opinion
nor was it qualified or modified as to uncertainty, audit scope or accounting
principles. Further during such time periods and any subsequent period preceding
such dismissal, there were no disagreements with Arthur Andersen LLP on any
matter or accounting principles or practices, financial statement disclosure or
auditing scope or procedure. In addition, during such time periods and any
subsequent interim period prior to engaging Sanville & Company, neither the
Company nor anyone acting on its behalf, consulted Sanville & Company regarding
(a) either: the application of accounting principles to a specific transaction,
either completed or proposed; or the type of audit opinion that might be
rendered on the Company's financial statements, and neither a written report nor
oral advice was provided to the Company that Sanville & Company concluded was an
important factor considered by the Company in reaching a decision as to the
accounting auditing or financial reporting issue; or (b) any matter that was the
subject of a disagreement or a reportable event.
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
OCTOBER 31, 1997
ASSETS:
Investments, at value (cost $820,384) $962,282
Deferred organization charges (net of amortization) 6,246
Receivable from Manager 39,629
Dividends and interest receivable 1,112
Other assets 4,074
---------
Total Assets 1,013,343
---------
LIABILITIES:
Accrued expenses and other liabilities 51,627
---------
NET ASSETS $961,716
=========
NET ASSETS CONSIST OF:
Capital stock $814,615
Accumulated undistributed net realized gain on investments 5,203
Net unrealized appreciation on investments 141,898
---------
Total Net Assets $961,716
=========
Shares outstanding (500,000,000 shares of $0.001 par
value authorized) 72,696
Net Asset Value, Redemption Price and Offering Price Per Share $13.23
======
See notes to the financial statements.
<PAGE>
STATEMENT OF OPERATIONS
YEAR ENDED OCTOBER 31, 1997
INVESTMENT INCOME:
Dividend income (Net of foreign withholding taxes of $88) $9,061
Interest income 1,259
--------
Total investment income 10,320
--------
EXPENSES:
Management fee 6,566
Administration fee 21,458
Shareholder servicing and accounting costs 34,913
Custody fees 3,172
Federal and state registration 13,835
Professional fees 19,551
Amortization of deferred organization charges 2,042
Reports to shareholders 2,984
Distribution expense 402
Other 945
--------
Total expenses before reimbursement 105,868
Less: Reimbursement from Manager (94,353)
--------
Net Expenses 11,515
--------
NET INVESTMENT LOSS (1,195)
--------
REALIZED AND UNREALIZED GAIN ON INVESTMENTS:
Net realized gain on investments 5,357
Change in unrealized appreciation on investments 126,582
--------
Net realized and unrealized gain on investments 131,939
--------
NET INCREASE IN NET ASSETS
RESULTING FROM OPERATIONS $130,744
========
See notes to the financial statements.
<PAGE>
STATEMENTS OF CHANGES IN NET ASSETS
MAY 17, 1996(1)
YEAR ENDED THROUGH<F4>
OCTOBER 31, 1997 OCTOBER 31, 1996
----------------- ---------------
OPERATIONS:
Net investment income (loss) $(1,195) $854
Net realized gain on investments 5,357 151
Change in unrealized appreciation on investments 126,582 15,316
--------- ---------
Net increase in net assets from operations 130,744 16,321
--------- ---------
CAPITAL SHARE TRANSACTIONS:
Proceeds from shares sold 438,766 449,558
Proceeds from shares issued to holders in reinvestment
of dividends 1,662 --
Cost of shares redeemed (73,472) --
--------- ---------
Net increase in net assets from capital
share transactions 366,956 449,558
--------- ---------
DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income (1,712) --
Net realized gains (151) --
--------- ---------
Total distributions (1,863) --
--------- ---------
TOTAL INCREASE IN NET ASSETS 495,837 465,879
--------- ---------
NET ASSETS:
Beginning of period 465,879 0
--------- ---------
End of period (including undistributed net investment
income of $1,712 for the period ended
October 31, 1996) $961,716 $465,879
========= =========
(1)<F4>Commencement of operations.
See notes to the financial statements.
<PAGE>
FINANCIAL HIGHLIGHTS
MAY 17, 1996(1)
YEAR ENDED THROUGH<F5>
OCTOBER 31, 1997 OCTOBER 31, 1996
---------------- ----------------
Per Share Data:
Net asset value, beginning of period $10.59 $10.00
Income from investment operations:
Net investment income (loss) (0.01)(2)<F6> 0.04
Net realized and unrealized gain on investments 2.69 0.55
--------- ---------
Total from investment operations 2.68 0.59
--------- ---------
Less distributions from:
Net investment income (0.04) --
Net realized gains 0.00 --
--------- ---------
Total distributions (0.04) --
--------- ---------
Net asset value, end of period $13.23 $10.59
======== ========
Total Return (3)<F7> 25.41% 5.90%
Supplemental data and ratios:
Net assets, end of period $961,716 $465,879
Ratio of expenses to average net assets (4)<F8>(5)<F9> 1.75% 1.42%
Ratio of net investment income (loss) to average
net assets (4)<F8>(5)<F9> (0.18%) 0.86%
Portfolio turnover rate 27.07% 21.61%
Average commission rate paid $0.2385 $0.2173
(1)<F5>Commencement of operations.
(2)<F6>Net investment loss per share is calculated using ending balances prior
to consideration of adjustments for permanent book and tax differences.
(3)<F7>Not annualized for the period May 17, 1996 through October 31, 1996.
(4)<F8>Annualized for the period May 17, 1996 through October 31, 1996.
(5)<F9>Without expense waivers of $94,353 and $47,931 for the periods ending
October 31, 1997 and October 31, 1996, respectively, the ratio of expenses to
average net assets would have been 16.08% and 49.81% and the ratio of net
investment (loss) to average net assets would have been (14.51)% and (47.52)%.
See notes to the financial statements.
<PAGE>
SCHEDULE OF INVESTMENTS
OCTOBER 31, 1997
NUMBER
OF SHARES MARKET VALUE
--------- ------------
COMMON STOCKS -- 94.8%
BANKING -- 4.4%
700 NationsBank Corporation $41,912
--------
BUSINESS SERVICES -- 6.9%
900 Automatic Data Processing, Inc. 46,013
700 First Data Corporation 20,344
--------
66,357
--------
COSMETICS & SOAP -- 13.3%
600 Colgate-Palmolive Company 38,850
500 Gillette Company 44,531
650 The Procter & Gamble Company 44,200
--------
127,581
--------
CHEMICALS -- 1.8%
300 du Pont (E.I.) de Nemours & Company 17,063
--------
DRUGS -- 21.6%
700 Abbott Laboratories 42,919
700 Medtronic, Inc. 30,450
500 Merck & Co., Inc. 44,625
800 Pfizer, Inc. 56,600
600 Schering-Plough Corporation 33,637
--------
208,231
--------
ELECTRICAL EQUIPMENT -- 4.6%
850 Emerson Electric Company 44,572
--------
ELECTRONICS -- 4.5%
700 Hewlett-Packard Company 43,181
--------
ENTERTAINMENT & LEISURE -- 3.3%
700 McDonald's Corporation 31,369
--------
FINANCIAL SERVICES -- 4.5%
900 Fannie Mae 43,594
--------
FOOD & BEVERAGES -- 11.8%
700 The Coca-Cola Company 39,550
300 CPC International, Inc. 29,700
1,200 PepsiCo, Inc. 44,175
--------
113,425
--------
INSURANCE -- 6.8%
450 American International Group, Inc. 45,928
100 General Re Corporation 19,719
--------
65,647
--------
MISCELLANEOUS -- 2.8%
300 Minnesota Mining & Manufacturing Company 27,450
--------
OIL-INTERNATIONAL -- 2.2%
400 Royal Dutch Petroleum Company - NYS 21,050
--------
RETAIL -- 3.5%
600 Home Depot, Inc. 33,375
--------
SAVINGS & LOAN -- 2.8%
700 Federal Home Loan Mortgage Corporation 26,512
--------
Total Common Stocks (Cost $769,421) 911,319
--------
PRINCIPAL
AMOUNT
---------
SHORT-TERM INVESTMENTS -- 5.3%
VARIABLE RATE DEMAND NOTES*<F10> -- 5.3%
$26,749 Johnson Controls, Inc., 5.185% 26,749
24,214 Wisconsin Electric Power Co., 5.2054% 24,214
--------
Total Short-Term Investments (Cost $50,963) 50,963
--------
Total Investments -- 100.1% (Cost $820,384) 962,282
--------
Other Assets and Liabilities -- (0.1%) (566)
--------
TOTAL NET ASSETS -- 100.0% $961,716
========
NYS - New York Shares
* -<F10>Variable rate demand notes are considered short-term obligations and
are payable on demand. Interest rates change periodically on specified dates.
The rates listed are as of October 31, 1997.
See notes to the financial statements.
<PAGE>
NOTES TO THE FINANCIAL STATEMENTS
OCTOBER 31, 1997
1. ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES
The Noah Investment Group, Inc. (the "Company") was incorporated under the
laws of the state of Maryland on December 16, 1992, and consists solely of The
Noah Fund (the "Fund"). The Company is registered as a no-load, open-end
diversified management investment company of the series type under the
Investment Company Act of 1940 (the "1940 Act"). The primary investment
objective of the Fund is to seek capital appreciation consistent with the
preservation of capital, as adjusted for inflation, and current income. The Fund
will not invest in and may not acquire the securities of businesses that are
engaged, directly or through subsidiaries, in the alcoholic beverage, tobacco,
pornographic and gambling industries or companies in the business of aborting
life before birth. The Fund became effective with the SEC on May 10, 1996 and
commenced operations on May 17, 1996.
The costs incurred in connection with the organization, initial registration
and public offering of shares, aggregating $17,797, have been paid by the
Manager and will be reimbursed by the Fund. These costs are being amortized over
the period of benefit, but not to exceed sixty months from the Fund's
commencement of operations. The proceeds of any redemption of the initial shares
(seed money) by the original stockholder or any transferee will be reduced by a
pro-rata portion of any then unamortized organizational expenses in the same
proportion as the number of initial shares being redeemed bears to the number of
initial shares outstanding at the time of such redemption. On December 12, 1996,
one of the original stockholders redeemed his shares which consisted of 50
percent of the seed money. This stockholder's proceeds were reduced by 50
percent of the unamortized deferred organization asset ($15,756 at that time).
The unamortized deferred organization asset was reduced to $7,878 after the
adjustment. The adjusted balance will be amortized over the remaining
amortization period, not to exceed sixty months from the Fund's commencement of
operations.
The following is a summary of significant accounting policies consistently
followed by the Fund.
a) Investment Valuation -- Common stocks and other equity-type securities listed
on a securities exchange are valued at the last quoted sales price on the day of
the valuation. Price information on listed stocks is taken from the exchange
where the security is primarily traded. Securities that are listed on an
exchange but which are not traded on the valuation date are valued at the most
recent bid prices. Unlisted securities for which market quotations are readily
available are valued at the latest quoted bid price. Other assets and securities
for which no quotations are readily available are valued at fair value as
determined in good faith by the Investment Manager under the supervision of the
Board of Directors. Short-term instruments (those with remaining maturities of
60 days or less) are valued at amortized cost, which approximates market.
b) Federal Income Taxes -- No provision for federal income taxes has been made
since the Fund has complied to date with the provisions of the Internal Revenue
Code applicable to regulated investment companies and intends to so comply in
the future and to distribute substantially all of its net investment income and
realized capital gains in order to relieve the Fund from all federal income
taxes.
c) Distributions to Shareholders -- Dividends from net investment income and
distributions of net realized capital gains, if any, will be declared and paid
at least annually. Income and capital gain distributions are determined in
accordance with income tax regulations that may differ from generally accepted
accounting principles. The Fund's primary financial reporting and tax difference
relates to the differing treatment for the amortization of deferred organization
expenses. Permanent financial reporting and tax differences are reclassified to
capital stock.
d) Use of Estimates -- The preparation of financial statements in conformity
with generally accepted accounting principles requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the date of
the financial statements and the reported amounts of revenues and expenses
during the reporting period. Actual results could differ from those estimates.
e) Other -- Investment and shareholder transactions are recorded on trade date.
The Fund determines the gain or loss realized from the investment transactions
by comparing the original cost of the security lot sold with the net sales
proceeds. Dividend income is recognized on the ex-dividend date or as soon as
information is available to the Fund, and interest income is recognized on an
accrual basis.
2. CAPITAL SHARE TRANSACTIONS
Transactions in shares of the Fund were as follows:
MAY 17, 1996
YEAR ENDED THROUGH
OCTOBER 31, 1997 OCTOBER 31, 1996
--------------- ----------------
Shares sold 35,309 44,000
Shares issued to holders in reinvestment
of dividends 152 --
Shares redeemed (6,765) --
------- -------
Net increase 28,696 44,000
======= =======
3. INVESTMENT TRANSACTIONS
The aggregate purchases and sales of investments, excluding short-term
investments, by the Fund for the year ended October 31, 1997, were as follows:
Purchases:
U.S. Government $26,744
Other 475,057
Sales:
U.S. Government 3,682
Other 169,876
At October 31, 1997, gross unrealized appreciation and depreciation of
investments for tax purposes were as follows:
Appreciation $163,434
(Depreciation) (23,064)
--------
Net appreciation on investments $140,370
========
At October 31, 1997, the cost of investments for federal income tax purposes
was $821,912.
For the year ended October 31, 1997, 81.1% of the ordinary distributions
paid qualifies for the dividend received deduction available to corporate
stockholders.
4. AGREEMENTS
The Fund has entered into a Management Agreement with Polestar Management
Company ("Polestar Management"). Pursuant to its Management Agreement with the
Fund, the Manager is entitled to receive a fee, calculated daily and payable
monthly, at the annual rate of 1.00% as applied to the Fund's daily net assets.
The Manager voluntarily agrees to reimburse its management fee and other
expenses to the extent that total operating expenses (exclusive of interest,
taxes, brokerage commissions and other costs incurred in connection with the
purchase or sale of portfolio securities, and extraordinary items) exceed the
annual rate of 1.75% of the net assets of the Fund, computed on a daily basis.
This voluntary reimbursement may be terminated upon approval of the Board of
Directors.
Rittenhouse Financial Services, Inc. ("Rittenhouse") has been retained by
Polestar Management to serve as the Fund's sub-investment adviser. See note 6
below.
The Fund has adopted a distribution plan (the "Distribution Plan"), pursuant
to which the Fund may incur distribution expenses of up to 0.25% per annum of
the Fund's average daily net assets. The Distribution Plan provides that the
Fund may finance activities which are primarily intended to result in the sale
of the Fund's shares, including but not limited to, advertising, printing of
prospectuses and reports for other than existing shareholders, preparation and
distribution of advertising materials and sales literature, and payments to
dealers and shareholder servicing agents. The Distribution Plan expired on March
1, 1997 as it was not renewed by the Board of Directors of the Fund. At October
31, 1997, the amount accrued but unpaid pursuant to the Distribution Plan
amounted to $402.
Firstar Trust Company, a subsidiary of Firstar Corporation, a publicly held
bank holding company, serves as custodian, transfer agent, administrator and
accounting services agent for the Fund.
5. RELATED PARTY TRANSACTIONS
Martin V. Miller, Esq., an Officer of the Fund, furnishes legal services to
the Fund. For the year ended October 31, 1997, the Fund incurred $11,550 for
such services.
6. SUBSEQUENT EVENTS
The sub-advisory agreement between Polestar Management and Rittenhouse will
be terminated. Polestar Management plans to replace Rittenhouse with Geewax,
Terker and Company in January 1998.
Effective January 1, 1998, Declaration Service Company will replace Firstar
Trust Company as transfer agent, administrator and accounting services agent for
the Fund. Declaration Distributors, Inc. will act as underwriter/distributor of
the Fund. CoreStates Bank will replace Firstar Trust Company as custodian for
the Fund.
<PAGE>
ARTHUR ANDERSEN LLP
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Shareholders and Board of Directors of
The Noah Investment Group, Inc.:
We have audited the accompanying statement of assets and liabilities of The Noah
Fund (the "Fund") a portfolio of The Noah Investment Group, Inc., (a Maryland
Corporation), including the schedule of investments, as of October 31, 1997, the
related statement of operations for the year then ended, and the statements of
changes in net assets for the year ended October 31, 1997, and the period from
May 17, 1996 (commencement of operations) through October 31, 1996 and the
financial highlights for each of the periods presented. These financial
statements are the responsibility of the Fund's management. Our responsibility
is to express an opinion on these financial statements and financial highlights
based on our audit.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of The
Noah Fund as of October 31, 1997, the results of its operations for the year
then ended, the changes in its net assets for the year ended October 31, 1997
and the period from May 17, 1996 (commencement of operations) through October
31, 1996 and its financial highlights for the periods presented, in conformity
with generally accepted accounting principles.
/s/ ARTHUR ANDERSEN LLP
ARTHUR ANDERSEN LLP
Milwaukee, Wisconsin,
November 19, 1997.
9
<PAGE>
ADDITIONAL PERFORMANCE INFORMATION FOR THE FUND
Total investment return is one recognized method of measuring mutual fund
investment performance. The Fund's average annual total return is the rate of
growth of the Fund that would be necessary to achieve the ending value of an
investment kept in the Fund for the period specified. This method of calculating
total return is based on the following assumptions: (1) all dividends and
distributions by the Fund are reinvested in shares of the Fund at net asset
value; and (2) all recurring fees are included for applicable periods.
The performance of the Fund may be compared with the S&P 500 Index, an
unmanaged index of 500 industrial, transportation, utility, and financial
companies, widely regarded as representative of the equity market in general,
but which does not ordinarily include all companies in which the Fund may invest
and the NASDAQ Composite Index, an unmanaged index of the price of all domestic
companies' common stocks quoted on the NASDAQ system, which may include
companies in which the Fund invests. Unlike the returns of the Fund, the returns
of the indices do not include the effect of paying the brokerage and other
transaction costs that investors normally incur when investing directly in the
stocks in those indices. The Fund's performance reflects actual investment
experience, net of all operating expenses, which are paid from the Fund's gross
investment income.
From time to time, in reports and promotional literature the Fund's total
return performance may be compared to: (1) the Dow Jones Industrial Average so
that you may compare that 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; (2) other groups of mutual funds tracked by: (A) Lipper
Analytical Services, Inc.; Value Line Mutual Fund Survey, and Morningstar Mutual
Funds, each of which is a widely-used independent research firm which ranks
mutual funds by, among other things, overall performance, investment objectives,
and asset size; (B) Forbes Magazine's Annual Mutual Funds Survey and Mutual Fund
Honor Roll; or (C) other financial or business publications, such as The Wall
Street Journal, Investors Business Daily, New York Times, Money Magazine, and
Barron's, which provide similar information; (3) indices of stocks comparable to
those in which the Fund invests; (4) the Consumer Price Index (measure for
inflation) may be used to assess the real rate of return from an investment in
the Fund; and (5) other government statistics such as GNP, may be used to
illustrate investment attributes of the Fund or the general economic, business,
investment, or financial environment in which the Fund operates.
In addition, the performance of the Fund may be compared to the Russell
2000 Index, the Wilshire 5000 Equity Index, and returns quoted by Ibbotson
Associates. The Russell 2000 Index is a capitalization weighted index which
measures total return (and includes in such calculation dividend income and
price appreciation). The Russell 2000 is generally regarded as a measure of
small capitalization performance. The
10
<PAGE>
Wilshire 5000 Equity Index is a broad measure of market performance and
represents the total dollar value of all common stocks in the United States for
which daily pricing information is available. This index is capitalization
weighted and measures total return. The small company stock returns quoted by
Ibbotson Associates are based upon the smallest quintile of the NYSE, as well as
similar capitalization stocks on the American Stock Exchange and NASDAQ. This
data base is also unmanaged and capitalization weighted.
The total returns for all indices used show the changes in prices for the
stocks in each index. The performance data for the S&P 500 Index, the Russell
2000 Index, the Wilshire 5000 Equity Index and Ibbotson Associates also assumes
reinvestment of all dividends paid by the stocks in each data base, while the
NASDAQ Corporate Index does not assume the reinvestment of all dividends and
capital gains. Tax consequences are not included in such illustration, nor are
brokerage or other fees or expenses of investing reflected.
SHAREHOLDER MEETINGS
Shareholder meetings will not be held unless required by Federal or State
law. However, the directors of The Noah Investment Group, Inc. will promptly
call a meeting of shareholders for the purpose of acting upon questions of
removal of a director or directors, when requested in writing to do so by the
record holders of not less than 10% of the outstanding shares.
11
<PAGE>
PART C
------
OTHER INFORMATION
Item 24. Financial Statements and Exhibits
---------------------------------
(a) Financial Statements
--------------------
In Prospectus
-------------
Financial Highlights
In Statement of Additional Information
--------------------------------------
Statement of Assets and Liabilities, year ended October 31, 1997
Statement of Operations, year ended October 31, 1997
Statement of Changes in Net Assets, May 17, 1996 through
October 31, 1996 and year ended October 31, 1997
Financial Highlights, May 17, 1996 through October 31, 1996
and year ended October 31, 1997
Schedule of Investments, October 31, 1997 and
Notes to the Financial Statements
(b) Exhibits Exhibit No.
-------- -----------
(1) Copies of the Certificate of
Incorporation as now in effect;
Articles of Amendment and ***
Restatement of Charter, as amended
(2) Copies of the existing By-Laws
or instruments corresponding
thereto;
Copy of By-Laws, ***
as amended
(3) Copies of any voting Trust None
Agreement with respect to
more than 5% of any class
of equity securities of the
Registrant.
<PAGE>
(4) Specimens of copies of each None
security issued by the
Registrant, including copies
of all constituent instruments,
defining the rights of the
holders of such securities and
copies of each security being
registered;
(5) Copies of all investment
advisory contracts relating to
the management of the Assets
of the Registrant;
Investment Management Agreement ***
between The Noah Investment Group,
Inc. with respect to The Noah Fund
and Polestar Management Company.
Form of Subadvisory Agreement Ex. - 10.5(b)
between Polestar Management
Company and Geewax Terker &
Company
(6) Copies of each underwriting or
distribution contract between
the Registrant and a principal
underwriter, and specimens of
copies of all agreements between
principal underwriters and dealers.
Form of Distribution Agreement Ex. - 10.6
(7) Copies of all bonus, profit None
sharing, pension or other similar
arrangements wholly or partly for
the benefit of Directors or
Officers of the Registrant in
their capacity as such; any such
plan that is not set forth in a
formal document, furnish a
reasonably detailed description thereof.
(8) Copies of all custodian
agreements and depository
contracts under section 17(f)
of the 1940 Act with respect
<PAGE>
to securities and similar
investments;
Form of Custodian Agreement Ex. - 10.8
between The Noah Investment
Group Inc. and CoreStates
Bank, N.A.
(9) Copies of all material contracts
not made in the ordinary course
of business which are to be
performed in whole or in part at
or after the date of the filing of
the Registration Statement;
(a) Form of multipurpose agreement Ex. - 10.9
for the provision of transfer
agency, dividend disbursing,
accounting and other services
(10) An opinion and consent of counsel
as to the legality of the securities
being registered, indicating whether
they will, when sold, be legally
issued, fully paid and non-assessable;
Opinion of Martin V. Miller, Fund ***
counsel.
Consent of Martin V. Miller Ex. - 23(a)
(11) Copies of any other opinions,
appraisals or rulings and consents
to use thereof relied on in the
preparation of this Registration
Statement and required by Section 7
of the 1933 Act.
Letter of Arthur Andersen LLP Ex. - 23(d)
Consent of Independent Public Ex. - 23(b)
Accountants - Arthur Andersen LLP
Consent of Independent Public Ex. - 23(c)
Accountants - Sanville & Company
(12) All financial statements None
omitted from Item 23;
<PAGE>
(13) Copies of any agreements or None
understandings made in
consideration for providing the
initial capital between and among
the Registrant, the Underwriter,
adviser, promoter, or initial
stockholders that their purchases
were made for investment purposes
without any present intention of
redeeming or reselling.
(14) Copies of model plan used in the
establishment of any retirement plan
in conjunction with which Registrant
offers its securities, any instructions
thereto, and any other documents making
up the model plan. Such form(s) should
disclose the costs and fees charged in
connection therewith.
IRA Custodian Account, Disclosure *
Statement and Support documents.
(15) Copies of any plan entered into
by Registrant pursuant to Rule 12b-1
under the 1940 Act, which describes
all material aspects of the
financing of distribution of
Registrant's shares, and any
agreements with any person
relating to implementation of such
Plan.
Plan of Distribution adopted **
by The Noah Investment Group, Inc.
Agreement Pursuant to Plan of **
Distribution between The Noah
Investment Group, Inc. with respect
to The Noah Fund, Inc. and Polestar
Management Company.
(16) Schedule for computation
of each performance quotation
provided in the Registration
<PAGE>
Statement in response to Item 22
(which need not be audited)
Computation of a $1,000 ***
Hypothetical Investment in
the Fund, as set forth in
Prospectus Fee Table.
*: Included with initial filing made on October 1, 1993.
**: Included with Pre-Effective Amendment No. 1 filed on September 20, 1995.
***: Included with Pre-Effective Amendment No. 2 filed on April 16, 1996.
Item 25. Persons Controlled by or Under Common Control With Registrant
-------------------------------------------------------------
See Caption "Principal Holders of Securities" in the Statement of
Additional Information
Item 26. Number of Holders of Securities
-------------------------------
(a) Title of Class
--------------
Common Capital Stock, $.001 par value
(b) Number of Record Holders
------------------------
76 as of 10/31/97
Item 27. Indemnification
---------------
(a) General. The Articles of Amendment and Restatement of Charter
(the "Articles") of the Corporation provide that to the fullest
extent permitted by Maryland and federal statutory and decisional
law, as amended or interpreted, no director or officer of this
Corporation shall be personally liable to the Corporation or the
holders of Shares for money damages for breach of fiduciary duty
as a director and each director and officer shall be indemnified
by the Corporation; provided, however, that nothing herein shall
be deemed to protect any director or officer of the Corporation
against any liability to the Corporation or the holders of Shares
to which such director or officer would otherwise be subject by
reason of breach of the director's or officer's duty of loyalty
to the Corporation or its stockholders, for acts or omissions not
in good faith or which involved intentional misconduct or a
knowing violation of law or for any transaction from which the
director derived any improper personal benefit.
<PAGE>
The By-Laws of the Corporation provide that the Corporation shall
indemnify any individual who is a present or former director or
officer of the Corporation and who, by reason of his or her
position was, is or is threatened to be made a party to any
threatened, pending or completed action, suit or proceeding,
whether civil, criminal, administrative or investigative
(hereinafter collectively referred to as a "Proceeding") against
judgments, penalties, fines, settlements and reasonable expenses
actually incurred by such director or officer in connection with
such Proceeding, to the fullest extent that such indemnification
may be lawful under Maryland law.
(b) Disabling Conduct. The By-Laws provide that nothing therein shall
be deemed to protect any director or officer against any
liability to the Corporation or its shareholders to which such
director or officer would otherwise be subject by reason of
willful misfeasance, bad faith, gross negligence or reckless
disregard of the duties involved in the conduct of his or her
office (such conduct hereinafter referred to as "Disabling
Conduct").
The By-Laws provide that no indemnification of a director or
officer may be made unless: (1) there is a final decision on the
merits by a court or other body before whom the Proceeding was
brought that the director or officer to be indemnified was not
liable by reason of Disabling Conduct; or (2) in the absence of
such a decision, there is a reasonable determination, based upon
a review of the facts, that the director or officer to be
indemnified was not liable by reason of Disabling Conduct, which
determination shall be made by: (i) the vote of a majority of a
quorum of directors who are neither "interested persons" of the
Corporation as defined in Section 2(a)(19) of the Investment
Company Act of 1940, nor parties to the Proceeding; or (ii) an
independent legal counsel in a written opinion.
(c) Standard of Conduct. Under Maryland law, the Corporation may not
indemnify any director if it is proved that: (1) the act or
omission of the director was material to the cause of action
adjudicated in the Proceeding and (i) was committed in bad faith
or (ii) was the result of active and deliberate dishonesty; or
(2) the director actually received an improper personal benefit;
or (3) in the case of a criminal proceeding, the director had
reasonable cause to believe that the act or omission was
unlawful. No indemnification may be made under Maryland law
unless authorized for a specific proceeding after a determination
has been made, in accordance with Maryland law, that
indemnification is permissible in the circumstances because the
requisite standard of conduct has been
<PAGE>
met.
(d) Required Indemnification. Maryland law requires that a director
or officer who is successful, on the merits or otherwise, in the
defense of any Proceeding shall be indemnified against reasonable
expenses incurred by the director or officer in connection with
the Proceeding. In addition, under Maryland law, a court of
appropriate jurisdiction may order indemnification under certain
circumstances.
(e) Advance Payment. The By-Laws provide that the Corporation may pay
any reasonable expenses so incurred by any director or officer in
defending a Proceeding in advance of the final disposition
thereof to the fullest extent permissible under Maryland law. In
accordance with the By-Laws, such advance payment of expenses
shall be made only upon the undertaking by such director or
officer to repay the advance unless it is ultimately determined
that such director or officer is entitled to indemnification, and
only if one of the following conditions is met: (1) the director
or officer to be indemnified provides a security for his
undertaking; (2) the Corporation shall be insured against losses
arising by reason of any lawful advances; or (3) there is a
determination, based on a review of readily available facts, that
there is reason to believe that the director or officer to be
indemnified ultimately will be entitled to indemnification, which
determination shall be made by: (i) a majority of a quorum of
directors who are neither "interested persons" of the
Corporation, as defined in Section 2(a)(19) of the Investment
Company Act of 1940, nor parties to the Proceeding; or (ii) an
independent legal counsel in a written opinion.
(f) Insurance. The By-Laws provide that, to the fullest extent
permitted by Maryland law and Section 17(h) of the Investment
Company Act of 1940, the Corporation may purchase and maintain
insurance on behalf of any officer or director of the
Corporation, against any liability asserted against him or her
and incurred by him or her in and arising out of his or her
position, whether or not the Corporation would have the power to
indemnify him or her against such liability.
Item 28. Business and Other Connections of Investment Adviser
----------------------------------------------------
None
Item 29. Principal Underwriter
---------------------
The Fund does not have a principal underwriter
<PAGE>
Item 30. Location of Accounts and Records
--------------------------------
The books and records of the Fund, other than the accounting and
transfer agency (including dividend disbursing) records, are
maintained by the Fund at 975 Delchester Road, Newtown Square, PA
19073; the Fund's accounting and transfer agency records are
maintained at Declaration Services Company, 555 North Lane, Suite
6160, Conshocken, PA 19428.
Item 31. Management Services
-------------------
There are no management service contracts not described in Part A or
Part B of Form N-1A.
Item 32. Undertakings
------------
Registrant agrees that the Directors of The Noah Investment Group,
Inc. will promptly call a meeting of shareholders for the purpose of
acting upon questions of removal of a director or directors, when
requested in writing to do so by the record holders of not less than
10% of the outstanding shares, and
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, the Registrant has duly caused this
Post-Effective Amendment No. 1 to its Registration Statement to be signed on its
behalf by the undersigned, hereunto duly authorized in Newtown Square,
Commonwealth of Pennsylvania, on the 31st day of December, 1997.
THE NOAH INVESTMENT GROUP, INC.
/s/ William L. Van Alen, Jr.
By: ____________________________
President
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed below by the following persons in
the capacities and on the date indicated:
NAME TITLE DATE
/s/ William L. Van Alen, Jr. December 31, 1997
_________________________________ Director, _________________
WILLIAM L. VAN ALEN, JR. President and
Treasurer
/s/ Forrest H. Anthony December 31, 1997
_________________________________ Director _________________
FORREST H. ANTHONY
/s/ James L. Van Alen, II December 31, 1997
_________________________________ Director _________________
JAMES L. VAN ALEN, II
_________________________________ Director _________________
CHRISTINA JAUMOTTE DE GALAVIS
/s/ Roger J. Knake December 31, 1997
____________________________ Director _________________
ROGER J. KNAKE
/s/ George R. Jensen, Jr. December 31, 1997
____________________________ Director _________________
GEORGE R. JENSEN, JR.
EX-10.5(b)
SUB-ADVISORY AGREEMENT
SUB-ADVISORY AGREEMENT, made as of the_____ day of January 1998 by and
between POLESTAR MANAGEMENT COMPANY, a New York corporation ("Polestar
Management"), and GEEWAX TERKER & COMPANY, a Pennsylvania General Partnership
("Geewax Terker").
WITNESSETH:
WHEREAS, Polestar Management and The Noah Investment Group, Inc., a
Maryland corporation (the "Corporation"), on behalf of its separately designated
series, The Noah Fund (the "Fund"), have entered into an Investment Management
Agreement dated as of March 26,1996 (the 'Investment Management Agreement")
pursuant to which Polestar Management will provide investment supervisory and
administrative services to the Fund; and
WHEREAS, Polestar Management wishes to engage the services of Geewax
Terker as Sub-Adviser to the Fund; and
WHEREAS, Geewax Terker is willing to perform sub-advisory services on
behalf of the Fund upon the terms and conditions and for the compensation
hereinafter set forth;
NOW, THEREFORE, in consideration of the premises and mutual covenants and
agreements hereinafter set forth, the parties hereto, intending to be legally
bound, hereby agree as follows:
1. Polestar Management hereby employs Geewax Terker to serve as
sub-adviser with respect to the assets of the Fund under the management of
Polestar Management and to perform the services hereinafter set forth. Geewax
Terker hereby accepts such employment and agrees for the compensation herein
provided to assume all obligations herein set forth and to bear all expenses of
its performance of such obligations (but no other expenses).
2. Geewax Terker shall supervise and direct the investment of the Fund's
assets in accordance with applicable law and the investment objectives, policies
and restrictions set forth in the then-current Prospectus and the then-current
Statement of Additional Information relating to the Fund contained in the
Corporation's Registration Statement under the Investment Company Act of 1940,
as amended (the "1940 Act') and the Securities Act of 1933, as amended, and
subject to such further limitations as the Corporation may, from time to time,
impose by written notice to Polestar Management, provided that Polestar
Management shall have informed
<PAGE>
Geewax Terker, in writing, of such further limitations imposed by the
Corporation. Geewax Terker shall formulate and implement a continuing program
for the management of the Fund's assets and resources. Geewax Terker shall amend
and update such program, from time to time, as financial and other economic
conditions warrant.
3. Geewax Terker shall make all determinations with respect to the
investment of the assets of the Fund and the purchase and sale of portfolio
securities, and shall take such steps as may be necessary to implement the same.
Such services shall include determining the manner in which the voting rights ,
rights to consent to corporate action, and any other non-investment decisions
pertaining to the Fund's portfolio securities should be exercised in accordance
with the Fund's investment policies and restrictions.
4. Geewax Terker shall regularly furnish reports to Polestar Management
for its use in discharging its obligations under the Investment Management
Agreement, which reports may be distributed by Polestar Management to the
Corporation at periodic meetings of the Corporation's Board of Directors. Such
reports shall include Geewax Terker's economic outlook and investment strategy
and a discussion of the portfolio activity and the performance of the Fund since
the last report and for such other relevant periods as shall be mutually agreed
upon . Copies of all such reports shall be furnished to Polestar Management for
examination and review within a reasonable time prior to the presentation of
such reports to the Corporation's Board of Directors.
Geewax shall furnish the Corporation's Board of Directors with schedules
of the securities in the Fund's portfolio on a quarterly basis. At the Board's
request, and otherwise when Geewax Terker deems it appropriate, it will prepare
and provide the Board with schedules of securities and other statistical data
regarding the activity and positions of the Fund's portfolio.
5. Geewax Terker will not select the brokers and dealers that will
execute the purchase and sale of portfolio securities for the Fund.
Geewax Terker shall promptly communicate to Polestar Management and, if
requested by Polestar Management, to the Corporation's Board of Directors, such
information relating to portfolio transactions as Polestar Management may
reasonably request. The parties understand that the Corporation shall bear all
brokerage commissions and ordinary and reasonable transaction costs in
connection with purchases and sales of portfolio securities for the Fund and all
ordinary and reasonable transaction costs in connection with purchases of such
securities in private placements and subsequent sales thereof.
6. Geewax Terker may employ, retain or otherwise avail itself of the
services and facilities of persons and entities within its own organization or
any other organization for the purpose of providing , Polestar Management, the
Corporation or the Fund with such information, advice or assistance, including,
but not limited to, advice regarding economic factors
2
<PAGE>
and trends and advice as to transactions in specific securities, as Geewax
Terker may deem necessary, appropriate or convenient for the discharge of its
obligations hereunder or otherwise helpful to Polestar Management, the
Corporation or the Fund, or in the discharge of Geewax Terker's overall
responsibilities with respect to the other accounts which it serves as
investment manager.
7. Polestar Management shall pay to Geewax Terker for all services
rendered by it hereunder a fee calculated as follows:
On average net assets of up to $20,000,000-$1.00 per annum
On average net assets from $20,000,000 to $40,000,000-.75% per annum
On average net assets from $40,000,000 to $90,000,000-.50% per annum
average net assets of $90,000,000 and above- .35% per annum
The net asset value of the Fund shall be calculated as of the close of
business on each day and, in the case of any day that is not a business day, it
shall be determined as of at the close of business on the last preceding
business day.
The sub-advisory fee in excess of $20,000,000 calculated as aforesaid,
shall accrue on each calendar day, and the sum of the daily fee accruals shall
be paid monthly to Geewax Terker on the first business day of the next
succeeding calendar month. The daily fee accruals shall be computed by
multiplying the fraction of one over the number of calendar days in the year by
the annual sub-advisory fee rate in excess of $20,000,000 described above, and
multiplying this product by the net assets of the Fund calculated as described
in the Fund's then current Prospectus as of the close of business on the
previous business day on which the Fund's net asset value was determined.
Geewax Terker shall not be entitled to receive any payment for the
performance of its services hereunder from the Fund and shall look solely and
exclusively to Polestar Management for payment of all fees for such services.
8. (a) Geewax Terker has assumed no responsibility under this
Agreement other than to render the services called for hereunder. Geewax Terker
shall not be liable for any error of judgment or mistake of law or for any loss
suffered by the Corporation or Polestar Management in connection with the
performance of this Agreement, except a loss resulting from a breach of
fiduciary duty with respect to the receipt of compensation for services or a
loss resulting from willful misfeasance, bad faith or gross negligence on the
part of Geewax Terker in the performance of its duties or from reckless
disregard by it of its obligations and duties under this Agreement.
(b) Geewax Terker agrees to indemnify Polestar Management with
respect to any loss, liability, judgment, cost or penalty which Polestar
Management may directly
3
<PAGE>
or indirectly suffer or incur in any way arising out of or in connection with
any material breach of this Agreement by Geewax Terker. Polestar Management
agrees to indemnify Geewax Terker with respect to any loss, liability, judgment,
cost or penalty which Geewax Terker may directly or indirectly suffer or incur
in any way arising out of the performance of its duties under this Agreement as
provided in paragraph 8(c).
(c) Geewax Terker shall be entitled to full indemnification from
Polestar Management for any loss, liability, judgment, cost or penalty arising
from (1) any act by any person or entity (including Polestar Management) for
which Geewax Terker was not involved directly in either the act itself or the
decision making process leading up to such act; (2) any act by Geewax Terker
taken upon the written instructions of Polestar Management or (3) the
performance of Geewax Terker's duties under this Agreement; provided, however,
Geewax Terker shall not be entitled to indemnity under clause (3) of this
sentence for any loss, liability, judgment, cost or penalty resulting from
willful misfeasance, bad faith or negligence in the performance of its duties,
or by reason of its reckless disregard of its obligations and duties, under this
Agreement.
9. (a) This Agreement shall become effective on the day and year
first above written and unless sooner terminated as hereinafter provided, shall
continue in effect through March 26, 1999. Thereafter, this Agreement shall
continue in effect from year to year, so long as its continuance is approved in
the manner required by the 1940 Act.
(b) This Agreement may be terminated at any time without the
payment of any penalty, (i) by the Board of Directors of the Corporation, (ii)
by the vote of a majority of the outstanding voting securities of the Fund,
(iii) by Polestar Management on sixty (60) days' prior written notice to Geewax
Terker, or (iv) by Geewax Terker on sixty (60) days' prior written notice to the
Fund. This Agreement shall terminate automatically in the event of its
assignment, or upon termination of the Investment Management Agreement between
the Corporation and Polestar Management. No provision of this Agreement may be
changed, discharged or terminated orally, but only by an instrument in writing
signed by the party against which enforcement of the change, discharge or
termination is sought.
4
<PAGE>
(c) As used in this Agreement the terms "assignment", "interested
person" and "vote of a majority of the outstanding voting securities" of the
Fund shall have the meanings set forth for such terms in the 1940 Act.
(d) Any notice under this Agreement shall be given in writing,
addressed and delivered, or mailed postpaid (i) if to Geewax Terker, to Geewax
Terker & Company 99 Starr Street Phoenixville, PA 19460; (ii) if to Polestar
Management to Polestar Management Company, 975 Delchester Road Newtown Square,
PA 19073 and (iii) if to the Corporation, at the forgoing office of Polestar
Management.
10. Nothing in this Agreement shall limit or restrict the right of any
director, officer, or employee of Geewax Terker to engage in any other business
or to devote his or her time and attention, in part, to the management or other
aspects of any other business, whether of a similar nature or a dissimilar
nature, nor to limit or restrict the right of Geewax Terker to engage in any
other business or to render services of any kind to any other corporation, firm,
individual or association.
11. If any provision of this Agreement shall be held or made invalid by a
court decision, statute, rule or otherwise, the remainder of this Agreement
shall not be affected thereby. This Agreement shall be binding upon and shall
inure to the benefit of the parties hereto. Except insofar as the 1940 Act or
other federal laws and regulations may be controlling, this Agreement shall be
governed by, and construed and enforced in accordance with the internal laws of
the Commonwealth of Pennsylvania without regard to conflict of law provisions
12. Geewax Terker shall promptly notify the Corporation and Polestar
Management:
(a) of any material change in the senior management or ownership
of Geewax Terker;
(b) of any change in the manager of the Fund's portfolio;
(c) of any other material change in the nature of the principal
business activities of Geewax Terker.
5
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed as of the day and year first above written.
ATTEST: POLESTAR MANAGEMENT COMPANY
_________________________ BY______________________________
Secretary President
GEEWAX TERKER & COMPANY
_________________________ BY:______________________________
Witness A General Partner
6
EX-10.6
DISTRIBUTION AGREEMENT
The Noah Investment Group, Inc.
THIS DISTRIBUTION AGREEMENT (the "Agreement") is made as of the 1st day
of January, 1998 by and among The Noah Investment Group, Inc. (the "Fund"), a
Maryland corporation, Polestar Management Company (the "Adviser"), a
Pennsylvania corporation, and Declaration Distributors, Inc. (the
"Distributor"), a Pennsylvania corporation.
WITNESSETH THAT:
WHEREAS, the Fund is registered as an open-end management investment
company under the Investment Company Act of 1940, as amended (the "1940 Act")
and has registered its shares of common stock (the "Shares") under the
Securities Act of 1933, as amended (the "1933 Act") in one or more distinct
series of Shares (the "Portfolio" or "Portfolios");
WHEREAS, the Adviser has been appointed investment adviser to the Fund;
WHEREAS, the Distributor is a broker-dealer registered with the U.S.
Securities and Exchange Commission (the "SEC") and a member in good standing of
the National Association of Securities Dealers, Inc. (the "NASD");
WHEREAS, the Fund has adopted a plan of distribution (the "Distribution
Plan") pursuant to Rule 12b-1 under the 1940 Act relating to the payment by the
Fund of distribution expenses; and
WHEREAS, the Fund, the Adviser and the Distributor desire to enter into
this Agreement pursuant to which the Distributor will provide distribution
services to the Portfolios of the Fund identified on Schedule A, as may be
amended from time to time, on the terms and conditions hereinafter set forth.
<PAGE>
NOW, THEREFORE, in consideration of the premises and mutual covenants
contained in this Agreement, the Fund, the Adviser and the Distributor,
intending to be legally bound hereby, agree as follows:
1. Appointment of Distributor. The Fund hereby appoints the Distributor
as its exclusive agent for the distribution of the Shares, and the Distributor
hereby accepts such appointment under the terms of this Agreement. The Fund
shall not sell any Shares to any person except to fill orders for the Shares
received through the Distributor; provided, however, that the foregoing
exclusive right shall not apply: (i) to Shares issued or sold in connection with
the merger or consolidation of any other investment company with the Fund or the
acquisition by purchase or otherwise of all or substantially all of the assets
of any investment company or substantially all of the outstanding shares of any
such company by the Fund; (ii) to Shares which may be offered by the Fund to its
shareholders for reinvestment of cash distributed from capital gains or net
investment income of the Fund; or (iii) to Shares which may be issued to
shareholders of other funds who exercise any exchange privilege set forth in the
Fund's Prospectus. Notwithstanding any other provision hereof, the Fund may
terminate, suspend, or withdraw the offering of the Shares whenever, in its sole
discretion, it deems such action to be desirable, and the Distributor shall
process no further orders for Shares after it receives notice of such
termination, suspension or withdrawal.
2. Fund Documents. The Fund has provided the Administrator with
properly certified or authenticated copies of the following Fund related
documents in effect on the date hereof: the Fund's organizational documents,
including Articles of Incorporation and By-Laws; the Fund's Registration
Statement on Form N-1A, including all exhibits thereto; the Fund's most current
Prospectus and Statement of Additional Information; and resolutions of the
Fund's Board of Directors authorizing the appointment of the Distributor and
approving this Agreement. The Fund shall promptly provide to the Distributor
copies, properly certified or authenticated, of all amendments or supplements to
the foregoing. The Fund shall provide to the Distributor copies of all other
information which the Distributor may reasonably request for use in connection
with the distribution of Shares, including, but not limited to, a certified copy
of all financial statements prepared for the Fund by its independent public
accountants. The Fund shall also supply the
2
<PAGE>
Distributor with such number of copies of the current Prospectus, Statement of
Additional Information and shareholder reports as the Distributor shall
reasonably request.
3. Distribution Services. The Distributor shall sell and repurchase
Shares as set forth below, subject to the registration requirements of the 1933
Act and the rules and regulations thereunder, and the laws governing the sale of
securities in the various states ("Blue Sky Laws"):
a. The Distributor, as agent for the Fund, shall sell Shares
to the public against orders therefor at the public offering price, which shall
be the net asset value of the Shares then in effect.
b. The net asset value of the Shares shall be determined in
the manner provided in the then current Prospectus and Statement of Additional
Information. The net asset value of the Shares shall be calculated by the Fund
or by another entity on behalf of the Fund. The Distributor shall have no duty
to inquire into or liability for the accuracy of the net asset value per Share
as calculated.
c. Upon receipt of purchase instructions, the Distributor
shall transmit such instructions to the Fund or its transfer agent for
registration of the Shares purchased.
d. The Distributor shall also have the right to take, as agent
for the Fund, all actions which, in the Distributor's judgment, are necessary to
effect the distribution of Shares.
e. Nothing in this Agreement shall prevent the Distributor or
any "affiliated person" from buying, selling or trading any securities for its
or their own account or for the accounts of others for whom it or they may be
acting; provided, however, that the Distributor expressly agrees that it shall
not for its own account purchase any Shares of the Fund except for investment
purposes and that it shall not for its own account sell any such Shares except
for redemption of such Shares by the Fund, and that it shall not undertake
activities which, in its judgment, would adversely affect the performance of its
obligations to the Fund under this Agreement.
3
<PAGE>
f. The Distributor, as agent for the Fund, shall repurchase
Shares at such prices and upon such terms and conditions as shall be specified
in the Prospectus.
4. Distribution Support Services. In addition to the sale and
repurchase of Shares, the Distributor shall perform the distribution support
services set forth on Schedule B attached hereto, as may be amended from time to
time. Such distribution support services shall include: Review of sales and
marketing literature and submission to the NASD; NASD recordkeeping; and
quarterly reports to the Fund's Board of Directors. Such distribution support
services may also include: fulfillment services, including telemarketing,
printing, mailing and follow-up tracking of sales leads; and licensing Adviser
or Fund personnel as registered representatives of the Distributor and related
supervisory activities.
5. Reasonable Efforts. The Distributor shall use all reasonable efforts
in connection with the distribution of Shares. The Distributor shall have no
obligation to sell any specific number of Shares and shall only sell Shares
against orders received therefor. The Fund shall retain the right to refuse at
any time to sell any of its Shares for any reason deemed adequate by it.
6. Compliance. In furtherance of the distribution services being
provided hereunder, the Distributor and the Fund agree as follows:
a. The Distributor shall comply with the Rules of Fair
Practice of the NASD and the securities laws of any jurisdiction in which it
sells, directly or indirectly, Shares.
b. The Distributor shall require each dealer with whom the
Distributor has a selling agreement to conform to the applicable provisions of
the Fund's most current Prospectus and Statement of Additional Information, with
respect to the public offering price of the Shares.
c. The Fund agrees to furnish to the Distributor sufficient
copies of any agreements, plans, communications with the public or other
materials it intends to use in connection with any sales of Shares in a timely
manner in order to allow the Distributor to review,
4
<PAGE>
approve and file such materials with the appropriate regulatory authorities and
obtain clearance for use. The Fund agrees not to use any such materials until so
filed and cleared for use by appropriate authorities and the Distributor.
d. The Distributor, at its own expense, shall qualify as a
broker or dealer, or otherwise, under all applicable Federal or state laws
required to permit the sale of Shares in such states as shall be mutually agreed
upon by the parties; provided, however that the Distributor shall have no
obligation to register as a broker or dealer under the Blue Sky Laws of any
jurisdiction if it determines that registering or maintaining registration in
such jurisdiction would be uneconomical.
e. The Distributor shall not, in connection with any sale or
solicitation of a sale of the Shares, or make or authorize any representative,
service organization, broker or dealer to make, any representations concerning
the Shares except those contained in the Fund's most current Prospectus covering
the Shares and in communications with the public or sales materials approved by
the Distributor as information supplemental to such Prospectus.
7. Expenses. Expenses shall be allocated as follows:
a. The Fund shall bear the following expenses: preparation,
setting in type, and printing of sufficient copies of the Prospectus and
Statement of Additional Information for distribution to existing shareholders;
preparation and printing of reports and other communications to existing
shareholders; distribution of copies of the Prospectus, Statement of Additional
Information and all other communications to existing shareholders; registration
of the Shares under the Federal securities laws; qualification of the Shares for
sale in the jurisdictions mutually agreed upon by the Fund and the Distributor;
transfer agent/shareholder servicing agent services; supplying information,
prices and other data to be furnished by the Fund under this Agreement; and any
original issue taxes or transfer taxes applicable to the sale or delivery of the
Shares or certificates therefor.
5
<PAGE>
b. The Adviser shall pay all other expenses incident to the
sale and distribution of the Shares sold hereunder, including, without
limitation: printing and distributing copies of the Prospectus, Statement of
Additional Information and reports prepared for use in connection with the
offering of Shares for sale to the public; advertising in connection with such
offering, including public relations services, sales presentations, media
charges, preparation, printing and mailing of advertising and sales literature;
data processing necessary to support a distribution effort; distribution and
shareholder servicing activities of broker-dealers and other financial
institutions; filing fees required by regulatory authorities for sales
literature and advertising materials; any additional out-of-pocket expenses
incurred in connection with the foregoing and any other costs of distribution.
8. Compensation. For the distribution and distribution support services
provided by the Distributor pursuant to the terms of the Agreement, the Adviser
shall pay to the Distributor the compensation set forth in Schedule A attached
hereto, which schedule may be amended from time to time. The Adviser shall also
reimburse the Distributor for its out-of-pocket expenses related to the
performance of its duties hereunder, including, without limitation,
telecommunications charges, postage and delivery charges, record retention
costs, reproduction charges and traveling and lodging expenses incurred by
officers and employees of the Distributor. The Fund shall pay the Distributor's
monthly invoices for distribution fees and out-of-pocket expenses within five
days of the respective month-end. If this Agreement becomes effective subsequent
to the first day of the month or terminates before the last day of the month,
the Fund shall pay to the Distributor a distribution fee that is prorated for
that part of the month in which this Agreement is in effect. All rights of
compensation and reimbursement under this Agreement for services performed by
the Distributor as of the termination date shall survive the termination of this
Agreement.
9. Use of Distributor's Name. The Fund shall not use the name of the
Distributor or any of its affiliates in the Prospectus, Statement of Additional
Information, sales literature or other material relating to the Fund in a manner
not approved prior thereto in writing by the Distributor; provided, however,
that the Distributor shall approve all uses of its and its affiliates' names
that merely refer in accurate terms to their appointments or that are required
by the
6
<PAGE>
Securities and Exchange Commission (the "SEC") or any state securities
commission; and further provided, that in no event shall such approval be
unreasonably withheld.
10. Use of Fund's Name. Neither the Distributor nor any of its
affiliates shall use the name of the Fund or material relating to the Fund on
any forms (including any checks, bank drafts or bank statements) for other than
internal use in a manner not approved prior thereto by the Fund; provided,
however, that the Fund shall approve all uses of its name that merely refer in
accurate terms to the appointment of the Distributor hereunder or that are
required by the SEC or any state securities commission; and further provided,
that in no event shall such approval be unreasonably withheld.
11. Liability of Distributor. The duties of the Distributor shall be
limited to those expressly set forth herein, and no implied duties are assumed
by or may be asserted against the Distributor hereunder. The Distributor shall
not be liable for any error of judgment or mistake of law or for any loss
suffered by the Fund in connection with the matters to which this Agreement
relates, except to the extent of a loss resulting from willful misfeasance, bad
faith or gross negligence, or reckless disregard of its obligations and duties
under this Agreement. As used in this Section 9 and in Section 10 (except the
second paragraph of Section 10), the term "Distributor" shall include directors,
officers, employees and other agents of the Distributor.
12. Indemnification of Distributor. The Fund shall indemnify and hold
harmless the Distributor against any and all liabilities, losses, damages,
claims and expenses (including, without limitation, reasonable attorneys' fees
and disbursements and investigation expenses incident thereto) which the
Distributor may incur or be required to pay hereafter, in connection with any
action, suit or other proceeding, whether civil or criminal, before any court or
administrative or legislative body, in which the Distributor may be involved as
a party or otherwise or with which the Distributor may be threatened, by reason
of the offer or sale of the Fund shares prior to the effective date of this
Agreement.
Any director, officer, employee, shareholder or agent of the
Distributor who may be or become an officer, Director, employee or agent of the
Fund, shall be deemed, when
7
<PAGE>
rendering services to the Fund or acting on any business of the Fund (other than
services or business in connection with the Distributor's duties hereunder), to
be rendering such services to or acting solely for the Fund and not as a
director, officer, employee, shareholder or agent, or one under the control or
direction of the Distributor, even though receiving a salary from the
Distributor.
The Fund agrees to indemnify and hold harmless the
Distributor, and each person, who controls the Distributor within the meaning of
Section 15 of the 1933 Act, or Section 20 of the Securities Exchange Act of
1934, as amended ("1934 Act"), against any and all liabilities, losses, damages,
claims and expenses, joint or several (including, without limitation, reasonable
attorneys' fees and disbursements and investigation expenses incident thereto)
to which they, or any of them, may become subject under the 1933 Act, the 1934
Act, the 1940 Act or other Federal or state laws or regulations, at common law
or otherwise, insofar as such liabilities, losses, damages, claims and expenses
(or actions, suits or proceedings in respect thereof) arise out of or relate to
any untrue statement or alleged untrue statement of a material fact contained in
a Prospectus, Statement of Additional Information, supplement thereto, sales
literature or other written information prepared by the Fund and provided by the
Fund to the Distributor for the Distributor's use hereunder, or arise out of or
relate to any omission or alleged omission to state therein a material fact
required to be stated therein or necessary to make the statements therein not
misleading. The Distributor (or any person controlling the Distributor) shall
not be entitled to indemnity hereunder for any liabilities, losses, damages,
claims or expenses (or actions, suits or proceedings in respect thereof)
resulting from (i) an untrue statement or omission or alleged untrue statement
or omission made in the Prospectus, Statement of Additional Information, or
supplement, sales or other literature, in reliance upon and in conformity with
information furnished in writing to the Fund by the Distributor specifically for
use therein or (ii) the Distributor's own willful misfeasance, bad faith, gross
negligence or reckless disregard of its duties and obligations in the
performance of this Agreement.
The Distributor agrees to indemnify and hold harmless the
Fund, and each person who controls the Fund within the meaning of Section 15 of
the 1933 Act, or Section 20 of the 1934 Act, against any and all liabilities,
losses, damages, claims and expenses, joint or several
8
<PAGE>
(including, without limitation reasonable attorneys' fees and disbursements and
investigation expenses incident thereto) to which they, or any of them, may
become subject under the 1933 Act, the 1934 Act, the 1940 Act or other Federal
or state laws, at common law or otherwise, insofar as such liabilities, losses,
damages, claims or expenses arise out of or relate to any untrue statement or
alleged untrue statement of a material fact contained in the Prospectus or
Statement of Additional Information or any supplement thereto, or arise out of
or relate to any omission or alleged omission to state therein a material fact
required to be stated therein or necessary to make the statements therein not
misleading, if based upon information furnished in writing to the Fund by the
Distributor specifically for use therein.
A party seeking indemnification hereunder (the "Indemnitee") shall give
prompt written notice to the party from whom indemnification is sought
("Indemnitor") of a written assertion or claim of any threatened or pending
legal proceeding which may be subject to indemnity under this Section; provided,
however, that failure to notify the Indemnitor of such written assertion or
claim shall not relieve the Indemnitor of any liability arising from this
Section. The Indemnitor shall be entitled, if it so elects, to assume the
defense of any suit brought to enforce a claim subject to this Indemnity and
such defense shall be conducted by counsel chosen by the Indemnitor and
satisfactory to the Indemnitee; provided, however, that if the defendants
include both the Indemnitee and the Indemnitor, and the Indemnitee shall have
reasonably concluded that there may be one or more legal defenses available to
it which are different from or additional to those available to the Indemnitor
("conflict of interest"), the Indemnitor shall not have the right to elect to
defend such claim on behalf of the Indemnitee, and the Indemnitee shall have the
right to select separate counsel to defend such claim on behalf of the
Indemnitee. In the event that the Indemnitor elects to assume the defense of any
suit pursuant to the preceding sentence and retains counsel satisfactory to the
Indemnitee, the Indemnitee shall bear the fees and expenses of additional
counsel retained by it, except for reasonable investigation costs which shall be
borne by the Indemnitor. If the Indemnitor (i) does not elect to assume the
defense of a claim, (ii) elects to assume the defense of a claim but chooses
counsel that is not satisfactory to the Indemnitee or (iii) has no right to
assume the defense of a claim because of a conflict of interest, the Indemnitor
shall advance or reimburse the Indemnitee, at the election of the Indemnitee,
reasonable fees and disbursements of any
9
<PAGE>
counsel retained by Indemnitee, including reasonable investigation costs.
13. Dual Employees. The Adviser agrees that only its employees who are
registered representatives of the Distributor ("dual employees") shall offer or
sell Shares of the Portfolios and further agrees that the activities of any such
employees as registered representatives of the Distributor shall be limited to
offering and selling Shares. If there are dual employees, one employee of the
Adviser shall register as a principal of the Distributor and assist the
Distributor in monitoring the marketing and sales activities of the dual
employees. The Adviser shall maintain errors and omissions and fidelity bond
insurance policies providing reasonable coverage for its employees activities
and shall provide copies of such policies to the Distributor. The Adviser shall
indemnify and hold harmless the Distributor against any and all liabilities,
losses, damages, claims and expenses (including reasonable attorneys' fees and
disbursements and investigation costs incident thereto) arising from or related
to the Adviser's employees' activities as registered representatives of the
Distributor, including, without limitation, any and all such liabilities,
losses, damages, claims and expenses arising from or related to the breach by
such dual employees of any rules or regulations of the NASD or SEC.
14. Force Majeure. The Distributor shall not be liable for any delays
or errors occurring by reason of circumstances not reasonably foreseeable and
beyond its control, including, but not limited, to acts of civil or military
authority, national emergencies, work stoppages, fire, flood, catastrophe, acts
of God, insurrection, war, riot or failure of communication or power supply. In
the event of equipment breakdowns which are beyond the reasonable control of the
Distributor and not primarily attributable to the failure of the Distributor to
reasonably maintain or provide for the maintenance of such equipment, the
Distributor shall, at no additional expense to the Fund, take reasonable steps
in good faith to minimize service interruptions, but shall have no liability
with respect thereto.
15. Scope of Duties. The Distributor and the Fund shall regularly
consult with each other regarding the Distributor's performance of its
obligations and its compensation under the foregoing provisions. In connection
therewith, the Fund shall submit to the Distributor at a
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<PAGE>
reasonable time in advance of filing with the SEC copies of any amended or
supplemented Registration Statement of the Fund (including exhibits) under the
1940 Act and the 1933 Act, and at a reasonable time in advance of their proposed
use, copies of any amended or supplemented forms relating to any plan, program
or service offered by the Fund. Any change in such materials that would require
any change in the Distributor's obligations under the foregoing provisions shall
be subject to the Distributor's approval. In the event that a change in such
documents or in the procedures contained therein increases the cost or burden to
the Distributor of performing its obligations hereunder, the Distributor shall
be entitled to receive reasonable compensation therefore.
16. Duration. This Agreement shall become effective as of the date
first above written, and shall continue in force for two years from that date
and thereafter from year to year, provided continuance is approved at least
annually by either (i) the vote of a majority of the Directors of the Fund, or
by the vote of a majority of the outstanding voting securities of the Fund, and
(ii) the vote of a majority of those Directors of the Fund who are not
interested persons of the Fund, and who are not parties to this Agreement or
interested persons of any such party, cast in person at a meeting called for the
purpose of voting on the approval.
17. Termination. This Agreement shall terminate as follows:
a. This Agreement shall terminate automatically in the event
of its assignment.
b. This Agreement shall terminate upon the failure to approve
the continuance of the Agreement after the initial two year term as set forth in
Section 14 above.
c. This Agreement shall terminate at any time upon a vote of
the majority of the Directors who are not interested persons of the Fund or by a
vote of the majority of the outstanding voting securities of the Fund, upon not
less than 60 days prior written notice to the Distributor.
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<PAGE>
d. The Distributor may terminate this Agreement upon not less
than 60 days prior written notice to the Fund.
Upon the termination of this Agreement, the Fund shall pay to the
Distributor such compensation and out-of-pocket expenses as may be payable for
the period prior to the effective date of such termination. In the event that
the Fund designates a successor to any of the Distributor's obligations
hereunder, the Distributor shall, at the expense and direction of the Fund,
transfer to such successor all relevant books, records and other data
established or maintained by the Distributor pursuant to the foregoing
provisions.
Sections 7, 8, 9, 10, 11, 12, 13, 14, 15, 17, 21, 22, 24, 25 and 26
shall survive any termination of this Agreement.
18. Amendment. The terms of this Agreement shall not be waived,
altered, modified, amended or supplemented in any manner whatsoever except by a
written instrument signed by the Distributor and the Fund and shall not become
effective unless its terms have been approved by the majority of the Directors
of the Fund or by a "vote of majority of the outstanding voting securities" of
the Fund and by a majority of those Directors who are not "interested persons"
of the Fund or any party to this Agreement.
19. Non-Exclusive Services. The services of the Distributor rendered to
the Fund are not exclusive. The Distributor may render such services to any
other investment company.
20. Definitions. As used in this Agreement, the terms "vote of a
majority of the outstanding voting securities," "assignment," "interested
person" and "affiliated person" shall have the respective meanings specified in
the 1940 Act and the rules enacted thereunder as now in effect or hereafter
amended.
21. Confidentiality. The Distributor shall treat confidentially and as
proprietary information of the Fund all records and other information relating
to the Fund and prior, present or potential shareholders and shall not use such
records and information for any purpose other than
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<PAGE>
performance of its responsibilities and duties hereunder, except as may be
required by administrative or judicial tribunals or as requested by the Fund.
22. Notice. Any notices and other communications required or permitted
hereunder shall be in writing and shall be effective upon delivery by hand or
upon receipt if sent by certified or registered mail (postage prepaid and return
receipt requested) or by a nationally recognized overnight courier service
(appropriately marked for overnight delivery) or upon transmission if sent by
telex or facsimile (with request for immediate confirmation of receipt in a
manner customary for communications of such respective type and with physical
delivery of the communication being made by one or the other means specified in
this Section 20 as promptly as practicable thereafter). Notices shall be
addressed as follows:
(a) if to the Fund:
The Noah Investment Group, Inc.
Polestar Management Company
975 Delchester Road
Newtown Square, PA 19073
Attention: Mr. William L. Van Alen, Jr.
President
(b) if to the Adviser:
Polestar Management Company
975 Delchester Road
Newtown Square, PA 19073
Attention: Mr. William L. Van Alen, Jr.
President
(c) if to the Distributor:
Declaration Distributors, Inc.
555 North Lane, Suite 6160
Conshohocken, PA 19428
Attention: Mr. Terence P. Smith
President
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<PAGE>
or to such other respective addresses as the parties shall designate by like
notice, provided that notice of a change of address shall be effective only upon
receipt thereof.
23. Severability. If any provision of this Agreement shall be held or
made invalid by a court decision, statute, rule or otherwise, the remainder of
this Agreement shall not be affected thereby.
24. Governing Law. This Agreement shall be administered, construed and
enforced in accordance with the laws of the Commonwealth of Pennsylvania to the
extent that such laws are not preempted by the provisions of any law of the
United States heretofore or hereafter enacted, as the same may be amended from
time to time.
25. Entire Agreement. This Agreement (including the Exhibits attached
hereto) contains the entire agreement and understanding of the parties with
respect to the subject matter hereof and supersedes all prior written or oral
agreements and understandings with respect thereto.
26. Miscellaneous. Each party agrees to perform such further acts and
execute such further documents as are necessary to effectuate the purposes
hereof. The captions in this Agreement are included for convenience of reference
only and in no way define or delimit any of the provisions hereof or otherwise
affect their construction. This Agreement may be executed in two counterparts,
each of which taken together shall constitute one and the same instrument.
IN WITNESS WHEREOF, the parties have duly executed this
Agreement as of the day and year first above written.
The Noah Investment Group, Inc.
By:
--------------------------
William L. Van Alen, Jr.
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<PAGE>
Polestar Management Company
By:
--------------------------
William L. Van Alen, Jr.
Declaration Distributors, Inc.
By:
--------------------------
Terence P. Smith, President
15
<PAGE>
SCHEDULE A
Noah Investment Group, Inc.
Portfolio and Fee Schedule
Portfolios covered by Distribution Agreement:
The Noah Fund
Fees for distribution and distribution support services on behalf of the
Portfolios:
Year One (1) Waived
Year Two (2) $ 5,000
Year Three (3) 10,000
Thereafter 20,000
Plus out-of-pocket expenses to include, but not limited to: Fund specific and
Adviser specific federal and state registration fees, printing, copying,
postage, courier, telephone, travel, and other standard miscellaneous items.
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<PAGE>
SCHEDULE B
Distribution Support Services
1. Provide national broker dealer for Fund registration.
2. Review and submit for approval all advertising and promotional materials.
3. Maintain all books and records required by the NASD.
4. Monitor Distribution Plan and report to Board of Directors.
5. Prepare quarterly reports to Board of Directors relating to distribution
activities.
6. Subject to approval of Distributor, license Adviser personnel as registered
representatives of the Distributor.
7. Telemarketing services (additional cost- to be negotiated).
8. Fund fulfillment services, including sampling prospective shareholders
inquiries and related mailings (additional cost - to be negotiated).
17
EX-10.9
INVESTMENT COMPANY SERVICES AGREEMENT
The Noah Investment Group, Inc.
This AGREEMENT, dated as of the 1st day of January, 1998, made by and
between The Noah Investment Group, Inc., (the "Fund"), a corporation operating
as an open-end, management investment company registered under the Investment
Company Act of 1940, as amended (the "Act"), duly organized and existing under
the laws of the State of Maryland, and Declaration Service Company
("Declaration"), a corporation duly organized under the laws of the Commonwealth
of Pennsylvania (collectively, the "Parties").
WITNESSETH THAT:
WHEREAS, the Fund is authorized by its Articles of Incorporation and
By-Laws to issue separate series of shares representing interests in separate
investment portfolios which are identified on Schedule "C" attached hereto and
which Schedule "C" may be amended from time to time by mutual agreement of the
Fund and Declaration; and
WHEREAS, the Parties desire to enter into an agreement whereby
Declaration will provide the services to the Fund as specified herein and set
forth in particular in Schedule "A" which is attached hereto and made a part
hereof.
NOW THEREFORE, in consideration of the premises and mutual covenants
contained herein, and in exchange of good and valuable consideration, the
sufficiency and receipt of which are hereby acknowledged, the Parties hereto,
intending to be legally bound, do hereby agree as follows:
<PAGE>
GENERAL PROVISIONS
Section 1. Appointment. The Fund hereby appoints Declaration as
servicing agent and Declaration hereby accepts such appointment. In order that
Declaration may perform its duties under the terms of this Agreement, the Board
of Directors of the Fund shall direct the officers, investment adviser, legal
counsel, independent accountants and custodian of the Fund to cooperate fully
with Declaration and, upon request of Declaration, to provide such information,
documents and advice relating to the Fund which Declaration requires to execute
its responsibilities hereunder. In connection with its duties, Declaration shall
be entitled to rely, and will be held harmless by the Fund when acting in
reasonable reliance, upon any instruction, advice or document relating to the
Fund as provided to Declaration by any of the aforementioned persons on behalf
of the Fund. All fees charged by any such persons acting on behalf of the Fund
will be deemed an expense of the Fund.
Any services performed by Declaration under this Agreement will conform
to the requirements of:
(a) the provisions of the Act and the Securities Act of 1933, as
amended, and any rules or regulations in force thereunder;
(b) any other applicable provision of state and federal law;
(c) the provisions of the Articles of Incorporation and the By-Laws as
amended from time to time and delivered to Declaration;
(d) any policies and determinations of the Board of Directors of the
Fund which are communicated to Declaration; and
2
<PAGE>
(e) the policies of the Fund as reflected in the Fund's registration
statement as filed with the U.S. Securities and Exchange Commission.
Nothing in this Agreement will prevent Declaration or any officer
thereof from providing the same or comparable services for or with any other
person, firm or corporation. While the services supplied to the Fund may be
different than those supplied to other persons, firms or corporations,
Declaration will provide the Fund equitable treatment in supplying services. The
Fund recognizes that it will not receive preferential treatment from Declaration
as compared with the treatment provided to other Declaration clients.
Section 2. Duties and Obligations of Declaration.
Subject to the provisions of this Agreement, Declaration will provide
to the Fund the specific services as set forth in Schedule "A" attached hereto.
Section 3. Definitions. For purposes of this Agreement:
"Certificate" will mean any notice, instruction, or other instrument in
writing, authorized or required by this Agreement. To be effective, such
Certificate shall be given to and received by the custodian and shall be signed
on behalf of the Fund by any two of its designated officers, and the term
Certificate shall also include instructions communicated to the custodian by
Declaration.
"Custodian" will refer to that agent which provides safekeeping of the
assets of the Fund.
"Instructions" will mean communications containing instructions
transmitted by electronic or telecommunications media including, but not limited
to, Industry Standardization
3
<PAGE>
for Institutional Trade Communications, computer-to-computer interface,
dedicated transmission line, facsimile transmission (which may be signed by an
officer or unsigned) and tested telex.
"Oral Instruction" will mean an authorization, instruction, approval,
item or set of data, or information of any kind transmitted to Declaration in
person or by telephone, telegram, telecopy or other mechanical or documentary
means lacking original signature, by a person or persons reasonably identified
to Declaration to be a person or persons so authorized by a resolution of the
Board of Directors of the Fund to give Oral Instructions to Declaration on
behalf of the Fund.
"Shareholders" will mean the registered owners of the shares of the
Fund in accordance with the share registry records maintained by Declaration for
the Fund.
"Shares" will mean the issued and outstanding shares of the Fund.
"Signature Guarantee" will mean the guarantee of signatures by an
"eligible guarantor institution" as defined in Rule 17Ad-15 under the Securities
Exchange Act of 1934, as amended (the "Exchange Act"). Eligible guarantor
institutions include banks, brokers, dealers, credit unions, national securities
exchanges, registered securities associations, clearing agencies and savings
associations. Broker-dealers guaranteeing signatures must be members of a
clearing corporation or maintain net capital of at least $100,000. Signature
guarantees will be accepted from any eligible guarantor institution which
participates in a signature guarantee program.
"Written Instruction" will mean an authorization, instruction,
approval, item or set of data or information of any kind transmitted to
Declaration in an original writing containing an original signature or a copy of
such document transmitted by telecopy including transmission
4
<PAGE>
of such signature reasonably identified to Declaration to be the signature of a
person or persons so authorized by a resolution of the Board of Directors of the
Fund, or so identified by the Fund to give Written Instructions to Declaration
on behalf of the Fund.
Concerning Oral and Written Instructions For all purposes under this
Agreement, Declaration is authorized to act upon receipt of the first
of any Written or Oral Instruction it receives from the Fund or its
agents. In cases where the first instruction is an Oral Instruction
that is not in the form of a document or written record, a confirmatory
Written Instruction or Oral Instruction in the form of a document or
written record shall be delivered. In cases where Declaration receives
an Instruction, whether Written or Oral, to enter a portfolio
transaction onto the Fund's records, the Fund shall cause the
broker/dealer executing such transaction to send a written confirmation
to the Custodian.
Declaration shall be entitled to rely on the first Instruction
received. For any act or omission undertaken by Declaration in
compliance therewith, it shall be free of liability and fully
indemnified and held harmless by the Fund, provided however, that in
the event a Written or Oral Instruction received by Declaration is
countermanded by a subsequent Written or Oral Instruction received
prior to acting upon such countermanded Instruction, Declaration shall
act upon such subsequent Written or Oral Instruction. The sole
obligation of Declaration with respect to any follow-up or confirmatory
Written Instruction or Oral Instruction in documentary or written form
shall be to make reasonable efforts to detect
5
<PAGE>
any such discrepancy between the original Instruction and such
confirmation and to report such discrepancy to the Fund. The Fund shall
be responsible and bear the expense of its taking any action, including
any reprocessing, necessary to correct any discrepancy or error. To the
extent such action requires Declaration to act, the Fund shall give
Declaration specific Written Instruction as to the action required.
The Fund will file with Declaration a certified copy of each resolution
of the Fund's Board of Directors authorizing execution of Written
Instructions or the transmittal of Oral Instructions as provided above.
Section 4. Indemnification.
(a) Declaration, its directors, officers, employees, shareholders, and
agents will be liable for any loss suffered by the Fund resulting from the
willful misfeasance, bad faith, gross negligence or reckless disregard on the
part of Declaration in the performance of its obligations and duties under this
Agreement.
(b) Any director, officer, employee, shareholder or agent of
Declaration, who may be or become an officer, director, employee or agent of the
Fund, will be deemed, when rendering services to the Fund, or acting on any
business of the Fund (other than services or business in connection with
Declaration' duties hereunder), to be rendering such services to or acting
solely for the Fund and not as a director, officer, employee, shareholder or
agent of, or under the control or direction of Declaration even though such
person may be receiving compensation from Declaration.
6
<PAGE>
(c) The Fund agrees to indemnify and hold Declaration harmless,
together with its directors, officers, employees, shareholders and agents from
and against any and all claims, demands, expenses and liabilities (whether with
or without basis in fact or law) of any and every nature which Declaration may
sustain or incur or which may be asserted against Declaration by any person by
reason of, or as a result of:
(i) any action taken or omitted to be taken by Declaration
except claims, demands, expenses and liabilities arising from willful
misfeasance, bad faith, gross negligence or reckless disregard on the part of
Declaration in the performance of its obligations and duties under this
Agreement; or
(ii) any action taken or omitted to be taken by Declaration in
reliance upon any Certificate, instrument, order or stock certificate or other
document reasonably believed by Declaration to be genuine and signed,
countersigned or executed by any duly authorized person, upon the Oral
Instructions or Written Instructions of an authorized person of the Fund, or
upon the written opinion of legal counsel for the Fund or Declaration; or
(iii) the offer or sale of shares of the Fund to any person,
natural or otherwise, which is in violation of any state or federal law.
If a claim is made against Declaration as to which Declaration may seek
indemnity under this Section, Declaration will notify the Fund promptly after
receipt of any written assertion of such claim threatening to institute an
action or proceeding with respect thereto and will notify the Fund promptly of
any action commenced against Declaration within ten (10) days after Declaration
has been served with a summons or other legal process. Failure to
7
<PAGE>
notify the Fund will not, however, relieve the Fund from any liability which it
may have on account of the indemnity under this Section so long as the Fund has
not been prejudiced in any material respect by such failure.
The Fund and Declaration will cooperate in the control of the defense
of any action, suit or proceeding in which Declaration is involved and for which
indemnity is being provided by the Fund to Declaration. The Fund may negotiate
the settlement of any action, suit or proceeding subject to Declaration's
approval, which will not be unreasonably withheld. Declaration reserves the
right, but not the obligation, to participate in the defense or settlement of a
claim, action or proceeding with its own counsel. Costs or expenses incurred by
Declaration in connection with, or as a result of such participation, will be
borne solely by the Fund if:
(i) Declaration has received an opinion of counsel from
counsel to the Fund stating that the use of counsel to the Fund by Declaration
would present an impermissible conflict of interest;
(ii) the defendants in, or targets of, any such action or
proceeding include both Declaration and the Fund, and legal counsel to
Declaration has reasonably concluded that there are legal defenses available to
it which are different from or additional to those available to the Fund or
which may be adverse to or inconsistent with defenses available to the Fund (in
which case the Fund will not have the right to direct the defense of such action
on behalf of Declaration); or
(iii) the Fund authorizes Declaration to employ separate
counsel at the expense of the Fund.
8
<PAGE>
(d) The terms of this Section will survive the termination of this
Agreement.
Section 5. Representations and Warranties.
(a) Declaration represents and warrants that:
(i) it is a corporation duly organized and existing and in
good standing under the laws of Pennsylvania;
(ii) it is empowered under applicable laws and by its
Certificate of Incorporation and By-Laws to enter into and perform this
Agreement;
(iii) all requisite corporate proceedings have been taken to
authorize Declaration to enter into and perform this Agreement;
(iv) it has and will continue to have access to the
facilities, personnel and equipment required to fully perform its duties and
obligations hereunder;
(v) no legal or administrative proceeding have been instituted
or threatened which would impair Declaration' ability to perform its duties and
obligations under this Agreement;
(vi) its entrance into this Agreement shall not cause a
material breach or be in material conflict with any other agreement or
obligation of Declaration or any law or regulation applicable to it;
(vii) it is registered as a transfer agent under Section
17A(c)(2) of the Exchange Act;
(viii) this Agreement has been duly authorized by Declaration
and, when executed and delivered, will constitute valid, legal and binding
obligation of Declaration,
9
<PAGE>
enforceable in accordance with its terms.
(b) The Fund represents and warrants that:
(i) it is a business Fund duly organized and existing and
in good standing under the laws of the State of Maryland;
(ii) it is empowered under applicable laws and by its Articles
of Incorporation and By-Laws to enter into and perform this Agreement;
(iii) all requisite proceedings have been taken to authorize
the Fund to enter into and perform this Agreement;
(iv) no legal or administrative proceedings have been
instituted or threatened which would impair the Fund's ability to perform its
duties and obligations under this Agreement;
(v) the Fund's entrance into this Agreement shall not cause a
material breach or be in material conflict with any other agreement or
obligations of the Fund, or any law or regulation applicable to either;
(vi) the Shares are properly registered or otherwise
authorized for issuance and sale;
(vii) this Agreement has been duly authorized by the Fund and,
when executed and delivered, will constitute valid, legal and binding obligation
of the Fund, enforceable in accordance with its terms.
(c) Delivery of Documents
The Fund will furnish or cause to be furnished to Declaration
the following documents;
10
<PAGE>
(i) current Prospectus and Statement of Additional
Information;
(ii) most recent Annual Report;
(iii) most recent Semi-Annual Report for registered
investment companies on Form N-SAR;
(iv) certified copies of resolutions of the Fund's Board
of Directors authorizing the execution of Written
Instructions or the transmittal of Oral Instructions
and those persons authorized to give those
Instructions.
(d) Record Keeping and Other Information
Declaration will create and maintain all records required of it
pursuant to its duties hereunder and as set forth in Schedule "A" in accordance
with all applicable laws, rules and regulations, including records required by
Section 31(a) of the Act. All such records will be the property of the Fund and
will be available during regular business hours for inspection, copying and use
by the Fund. Where applicable, such records will be maintained by Declaration
for the periods and in the places required by Rule 31a-2 under the Act. Upon
termination of this Agreement, Declaration will deliver all such records to the
Fund or such person as the Fund may designate.
In case of any request or demand for the inspection of the Share
records of the Fund, Declaration shall notify the Fund and secure instructions
as to permitting or refusing such inspection. Declaration may, however, exhibit
such records to any person in any case where it is advised by its counsel that
it may be held liable for failure to do so.
11
<PAGE>
Section 6. Compensation. The Fund agrees to pay Declaration
compensation for its services, and to reimburse it for expenses at the rates,
times, manner and amounts as set forth in Schedule "B" attached hereto and
incorporated herein by reference and as will be set forth in any amendments to
such Schedule "B" agreed upon in writing by the Parties. Upon receipt of an
invoice therefor, Declaration is authorized to collect such fees by debiting the
Fund's custody account. In addition, the Fund agrees to reimburse Declaration
for any out-of-pocket expenses paid by Declaration on behalf of the Fund within
ten (10) calendar days of the Fund's receipt of an invoice therefor.
For the purpose of determining fees payable to Declaration, the value
of the Fund's net assets will be computed at the times and in the manner
specified in the Fund's Prospectus and Statement of Additional Information then
in effect.
During the term of this Agreement, should the Fund seek services or
functions in addition to those outlined below or in Schedule "A" attached
hereto, a written amendment to this Agreement specifying the additional services
and corresponding compensation will be executed by the Parties.
In the event that the Fund is more than sixty (60) days delinquent in
its payments of monthly billings in connection with this Agreement (with the
exception of specific amounts which may be contested in good faith by the Fund),
this Agreement may be terminated upon thirty (30) days' written notice to the
Fund by Declaration. The Fund must notify Declaration in writing of any
contested amounts within thirty (30) days of receipt of a billing for such
amounts. Disputed amounts are not due and payable while they are being disputed.
12
<PAGE>
Section 7. Days of Operation. Nothing contained in this Agreement is
intended to or will require Declaration, in any capacity hereunder, to perform
any functions or duties on any holiday, day of special observance or any other
day on which the New York Stock Exchange ("NYSE") is closed. Functions or duties
normally scheduled to be performed on such days will be performed on and as of
the next succeeding business day on which the NYSE is open. Notwithstanding the
foregoing, Declaration will compute the net asset value of the Fund on each day
required pursuant to Rule 22c-1 promulgated under the Act.
Section 8. Acts of God, etc. Declaration will not be liable or
responsible for delays or errors caused by acts of God or by reason of
circumstances beyond its control including, acts of civil or military authority,
national emergencies, labor difficulties, mechanical breakdown, insurrection,
war, riots, or failure or unavailability of transportation, communication or
power supply, fire, flood or other catastrophe.
In the event of equipment failures beyond Declaration' control,
Declaration will, at no additional expense to the Fund, take reasonable steps to
minimize service interruptions but will have no liability with respect thereto.
The foregoing obligation will not extend to computer terminals located outside
of premises maintained by Declaration. Declaration has entered into and
maintains in effect agreements making reasonable provision for emergency use of
electronic data processing equipment to the extent appropriate equipment is
available.
Section 9. Inspection and Ownership of Records. In the event of a
request or demand for the inspection of the records of the Fund, Declaration
will use its best efforts to notify the
13
<PAGE>
Fund and to secure instructions as to permitting or refusing such inspection.
Declaration may, however, make such records available for inspection to any
person in any case where it is advised in writing by its counsel that it may be
held liable for failure to do so after notice to the Fund.
Declaration recognizes that the records it maintains for the Fund are
the property of the Fund and will be surrendered to the Fund upon written notice
to Declaration as outlined under Section 10(c) below. The Fund is responsible
for the payment in advance of any fees owed to Declaration. Declaration agrees
to maintain the records and all other information of the Fund in a confidential
manner and will not use such information for any purpose other than the
performance of Declaration' duties under this Agreement.
Section 10. Duration and Termination.
(a) The initial term of this Agreement will be for the period of two
(2) years, commencing on the date hereinabove first written (the "Effective
Date") and will continue thereafter subject to termination by either Party as
set forth in subsection (c) below.
(b) The fee schedules set forth in Schedule "B" attached hereto will be
fixed for the initial term commencing on the Effective Date of this Agreement
and will continue thereafter subject to their review and any adjustment.
(c) After the initial term of this Agreement, a Party may give written
notice to the other (the day on which the notice is received by the Party
against which the notice is made shall be the "Notice Date") of a date on which
this Agreement shall be terminated ("Termination Date"). The Termination Date
shall be set on a day not less than one hundred
14
<PAGE>
eighty (180) days after the Notice Date. The period of time between the Notice
Date and the Termination Date is hereby identified as the "Notice Period". Any
time up to, but not later than fifteen (15) days prior to the Termination Date,
the Fund will pay to Declaration such compensation as may be due as of the
Termination Date and will likewise reimburse Declaration for any out-of-pocket
expenses and disbursements reasonably incurred or expected to by incurred by
Declaration up to and including the Termination Date.
(d) In connection with the termination of this Agreement, if a
successor to any of Declaration' duties or responsibilities under this Agreement
is designated by the Fund by written notice to Declaration, Declaration will
promptly, on the Termination Date and upon receipt by Declaration of any
payments owed to it as set forth in Section 10(c) above, transfer to the
successor, at the Fund's expense, all records which belong to the Fund and will
provide appropriate, reasonable and professional cooperation in transferring
such records to the named successor.
(e) Should the Fund desire to move any of the services outlined in this
Agreement to a successor service provider prior to the Termination Date,
Declaration shall make a good faith effort to facilitate the conversion on such
prior date, however, there can be no guarantee that Declaration will be able to
facilitate a conversion of services prior to the end of the Notice Period.
Should services be converted to a successor service provider prior to the end of
the Notice Period, or if the Fund is liquidated or its assets merged or
purchased or the like with another entity, payment of fees to Declaration shall
be accelerated to a date prior to the conversion or termination of services and
calculated as if the services had remained at Declaration until the expiration
of the Notice Period and shall be calculated at the asset levels
15
<PAGE>
on the Notice Date.
(f) Notwithstanding any other provisions of Paragraph 10, and after the
passage of one (1) year from the effective date of this Agreement; in the event
the Fund deregisters as an Investment Company with the United States Securities
and Exchange Commission ("SEC"), this Agreement may be terminated by the Fund
upon ninety (90) days written notice to Declaration. The Termination Date shall
be ninety (90) days after the receipt of such notice by Declaration. Any time up
to, but not later than fifteen (15) days prior to the Termination Date, the Fund
will pay to Declaration such compensation as may be due as of the Termination
Date and will likewise reimburse Declaration for any out- of- pocket expenses
and disbursements reasonably incurred or expected to be incurred by Declaration
up to and including the Termination Date.
(g) Notwithstanding the foregoing, this Agreement may be terminated at
any time by either Party in the event of a material breach by the other Party
involving gross negligence, willful misfeasance, bad faith or a reckless
disregard of its obligations and duties under this Agreement provided that such
breach shall have remained unremedied for sixty (60) days or more after receipt
of written specification thereof.
Section 11. Rights of Ownership. All computer programs and procedures
developed to perform services required to be provided by Declaration under this
Agreement are the property of Declaration. All records and other data except
such computer programs
16
<PAGE>
and procedures are the exclusive property of the Fund and all such other records
and data will be furnished to the Fund in appropriate form as soon as
practicable after termination of this Agreement for any reason.
Section 12. Amendments to Documents. The Fund will furnish Declaration
written copies of any amendments to, or changes in, the Articles of
Incorporation, By-Laws, Prospectus or Statement of Additional Information in a
reasonable time prior to such amendments or changes becoming effective. In
addition, the Fund agrees that no amendments will be made to the Prospectus or
Statement of Additional Information of the Fund which might have the effect of
changing the procedures employed by Declaration in providing the services agreed
to hereunder or which amendment might affect the duties of Declaration hereunder
unless the Fund first obtains Declaration' approval of such amendments or
changes.
Section 13. Confidentiality. Both Parties hereto agree that any
non-public information obtained hereunder concerning the other Party is
confidential and may not be disclosed to any other person without the consent of
the other Party, except as may be required by applicable law or at the request
of the U.S. Securities and Exchange Commission or other governmental agency.
Declaration agrees that it will not use any non-public information for any
purpose other than performance of its duties or obligations hereunder. The
obligations of the Parties under this Section will survive the termination of
this Agreement. The Parties further agree that a breach of this Section would
irreparably
17
<PAGE>
damage the other Party and accordingly agree that each of them is entitled,
without bond or other security, to an injunction or injunctions to prevent
breaches of this provision.
Section 14. Notices. Except as otherwise provided in this Agreement,
any notice or other communication required by or permitted to be given in
connection with this Agreement will be in writing and will be delivered in
person or sent by first class mail, postage prepaid or by prepaid overnight
delivery service to the respective parties as follows:
If to the Fund: If to Declaration:
The Noah Investment Group, Inc. Declaration Service Company.
Polestar Management Company 555 North Lane, Suite 6160
975 Delchester Road Conshohocken, PA 19428
Newtown Square, PA 19073
Attention: Mr. William L. Van Alen, Jr. Attention: Terence P. Smith
President President
Section 15. Amendment. No provision of this Agreement may be amended or
modified in any manner except by a written agreement properly authorized and
executed by the Parties. This Agreement may be amended from time to time by
supplemental agreement executed by the Parties and the compensation stated in
Schedule "B" attached hereto may be adjusted accordingly as mutually agreed
upon.
Section 16. Authorization. The Parties represent and warrant to each
other that the execution and delivery of this Agreement by the undersigned
officer of each Party has been duly and validly authorized; and when duly
executed, this Agreement will constitute a valid and legally binding enforceable
obligation of each Party.
18
<PAGE>
Section 17. Counterparts. This Agreement may be executed in two or more
counterparts, each of which when so executed will be deemed to be an original,
but such counterparts will together constitute but one and the same instrument.
Section 18. Assignment. This Agreement will extend to and be binding
upon the Parties hereto and their respective successors and assigns; provided,
however, that this Agreement will not be assignable by the Fund without the
written consent of Declaration or by Declaration without the written consent of
the Fund which consent shall be authorized or approved by a resolution by its
respective Boards of Directors.
Section 19. Governing Law. This Agreement will be governed by the laws
of the State of Pennsylvania and the exclusive venue of any action arising under
this Agreement will be Montgomery County, Commonwealth of Pennsylvania.
Section 20. Severability. If any part, term or provision of this
Agreement is held by any court to be illegal, in conflict with any law or
otherwise invalid, the remaining portion or portions will be considered
severable and not be affected and the rights and obligations of the parties will
be construed and enforced as if the Agreement did not contain the particular
part, term or provision held to be illegal or invalid, provided that the basic
agreement is not thereby materially impaired.
19
<PAGE>
IN WITNESS WHEREOF, the Parties hereto have caused this Agreement
consisting of twenty (20) typewritten pages, together with Schedules "A," "B"
and "C" (Pages 21- 28, attached), to be signed by their duly authorized officers
as of the day and year first above written.
The Noah Investment Group, Inc. Declaration Service Company
- ------------------------------- -------------------------------
By: William L. Van Alen, Jr. By: Terence P. Smith
President President
20
<PAGE>
SCHEDULE A
Accounting Services Provided by Declaration Service Company
- --------------------------------------------------------------------------------
o Journalize each Portfolio's investment, capital share and income and expense
activities.
o Verify investment buy/sell trade tickets when received from the advisor and
transmit trades to the Fund's custodian for proper settlement.
o Maintain individual ledgers for investment securities.
o Maintain historical tax lots for each security.
o Reconcile cash and investment balances of each Portfolio with the custodian,
and provide the advisor with the beginning cash balance available for
investment purposes.
o Update the cash availability throughout the day as required by the advisor.
o Post to and prepare each Portfolio's Statement of Assets and Liabilities and
Statement of Operations.
o Calculate expenses payable pursuant to the Fund's various contractual
obligations.
o Control all disbursements form the Fund on behalf of each Portfolio and
authorize such disbursements upon instructions of the Fund.
o Calculate capital gains and losses.
o Determine each Portfolio's net income.
o At the Portfolio's expense, obtain security market prices or if such market
prices are not readily available, then obtain such prices from services
approved by the advisor, and in either case calculate the market or fair
value of each Portfolio's investments.
o Where applicable, calculate the amortized cost value of debt instruments.
o Transmit or mail a copy of the portfolio valuations to the advisor.
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<PAGE>
o Compute the net asset value of each Portfolio.
o Report applicable net asset value and performance data to performance
tracking organizations.
o Compute each Portfolio's yields, total returns, expense ratios and portfolio
turnover rate.
o Prepare and monitor the expense accruals and notify Fund management of any
proposed adjustments.
o Prepare monthly financial statements, which will include, without
limitation, the Schedule of Investments, the Statement of Assets and
Liabilities, the Statement of Operations, the Statement of Changes in Net
Assets, the Cash Statement, and the Schedule of Capital Gains and Losses.
o Prepare monthly security transactions listings.
o Prepare monthly broker security transactions summaries.
o Supply various Fund and Portfolio statistical data as requested on an
ongoing basis.
o Assist in the preparation of support schedules necessary for completion of
Federal and state tax returns.
o Assist in the preparation and filing of the Fund's annual and semiannual
reports with the SEC on Form N-SAR.
o Assist in the preparation and filing of the Fund's annual and semiannual
reports to shareholders and proxy statements.
o Assist with the preparation of amendments to the Fund's Registration
Statements on From N-1A and other filings relating to the registration of
shares.
o Monitor each Portfolio's status as a regulated investment company under
Subchapter M of the Internal Revenue Code of 1986, as amended from time to
time ("Code").
o Determine the amount of dividends and other distributions payable to
shareholders as necessary to, among other things, maintain the qualification
as a regulated investment company of each Portfolio of the Fund under the
Code.
o Provide other accounting services as may be agreed upon from time to time in
writing by the Fund and the Accounting Services Agent.
22
<PAGE>
Administrative Services Provided by Declaration Service Company
- --------------------------------------------------------------------------------
o Provide overall day-to-day Fund administrative management, including
coordination of investment advisor, custodian, transfer agency, distribution
and pricing and accounting services.
o Preparation of filing of all Federal and State reports including:
o Fund's post-effective amendments under the Securities Act of 1933 and
the Investment Company Act of 1940.
o Form N-SAR - Semi-Annual report for Registered Investment Companies.
o The Fund's Annual and Semi-Annual Report.
o Rule 24f-2 Notice - filing regarding sale(s) of securities.
o Rule 17g-1 filing with the SEC regarding Fidelity Bond coverage.
o Ongoing monitoring and filing of State Blue Sky registrations.
o Prepare and file such reports, applications and documents as may be
necessary or desirable to register the Fund's shares with the Federal and
state securities authorities, and monitor the sale of Fund shares for
compliance with Federal and state securities laws.
o Prepare and file reports to shareholders, including the annual report to
shareholders, and coordinate mailing Prospectuses, notices, proxy
statements, proxies and other reports to shareholders.
o Assist with layout and printing of shareholder communications, including
Prospectuses and reports to shareholders.
o Administer contracts on behalf of the Fund with, among others, the Fund's
investment advisor, custodian, transfer agent/shareholder servicing agent,
distributor, and accounting services agent.
o Prepare and maintain materials for directors/management meetings including,
agendas, minutes, attendance records and minute books.
o Coordinate shareholder meetings, including assisting Fund counsel in
preparation of
23
<PAGE>
proxy materials, preparation of minutes and tabulation of results.
o Monitor and pay Fund bills, maintain Fund budget and report budget expenses
and variances to Fund management.
o Monitor the Fund's compliance with the investment restrictions and
limitations imposed by the 1940 Act and state Blue Sky laws and applicable
regulations thereunder, the fundamental and non-fundamental investment
policies and limitations set forth in the Fund's Prospectuses and Statement
of Additional Information, and the investment restrictions and limitations
necessary for each Portfolio of the Fund to qualify as a regulated
investment company under Subchapter M of the Internal Revenue Code of 1986,
as amended, or any successor statute.
o Prepare and distribute to appropriate parties notices announcing the
declaration of dividends and other distributions to shareholders.
o Provide administrative services as may be agreed from time to time in
writing by the Fund or Administrator.
24
<PAGE>
Transfer Agent, Shareholder Servicing Agent and Dividend Disbursing Agent
Services provided by Declaration Service Company
- --------------------------------------------------------------------------------
o Examine and process new accounts, subsequent payments, liquidations,
exchanges, transfers, telephone transactions, check redemptions automatic
withdrawals, and wire order trades.
o Reinvest or pay dividends and make other distributions.
o Answer investor and dealer telephone and/or written inquiries, except as
otherwise agreed by the Transfer Agent and the Fund.
o Process and confirm address changes.
o Process standard account record changes as required, i.e. Dividend Codes,
etc.
o Microfilm and/or store source documents for transactions, such as account
applications and correspondence.
o Perform backup withholding for those accounts in accordance with Federal
regulations.
o Solicit missing taxpayer identification numbers.
o Provide remote access inquiry to Fund records via Fund supplied hardware
(fund responsible for connection line and monthly fee).
o Maintain the following shareholder information in such a manner as the
Transfer Agent shall determine:
o Name and address, including zip code.
o Balance of Shares.
o Number of Shares, issuance date of each share outstanding and
cancellation date of each share no longer outstanding, if issued.
o Balance of dollars available for redemption.
o Dividend code (daily accrual, monthly reinvest, monthly cash or
quarterly cash).
o Type of account code.
o Establishment date indicating the date an account was opened, carrying
forward pre-conversion data as available.
o Original establishment date for accounts opened by exchange.
o W-9 withholding status and periodic reporting.
25
<PAGE>
o State of residence code.
o Social security or taxpayer identification number, and indication of
certification.
o Historical transactions on the account for the most recent 18 months, or
other period as mutually agreed to from time to time.
o Indication as to whether phone transaction can be accepted for this
account. Beneficial owner code, i.e. male, female, joint tenant, etc.
o Provide the following reports and statements:
o Prepare daily journals for Fund reflecting all shares and dollar
activity for the previous day.
o Supply information monthly for Fund's preparation of Blue Sky reporting.
o Supply monthly purchase, redemption and liquidation information for use
in Fund's N-SAR report.
o Provide monthly average daily balance reports for the Fund.
o Prepare and mail copies of summary statements to dealers and investment
advisors.
o Mail transaction confirmation statements daily to investors.
o Address and mail four periodic financial reports (material must be
adaptable to Transfer Agent's mechanical equipment as reasonably
specified by the Transfer Agent).
o Mail periodic statement to investors.
o Compute, prepare and furnish all necessary reports to governmental
authorities: Forms 1099R, 1099DIV, 1099B, 1042 and 1042S.
o Enclose various marketing material as designated by the Fund in
statement mailings, i.e. monthly and quarterly statements (material must
be adaptable to mechanical equipment as reasonably specified by the
Transfer Agent).
o Prepare and mail confirmation statements to dealers daily.
o Prepare certified list of stockholders for proxy mailing.
26
<PAGE>
SCHEDULE B
Compensation Schedule for Services Provided by Declaration Service Company
Per Portfolio
0.20% on first $25 million of average annual assets
0.15% on next $25 million of average annual assets
0.10% on next $50 million of average annual assets
0.075% in excess of $100 million of average annual assets
Transfer Agent/ Shareholder Services:
$7.50 per Shareholder Account
Minimum annual fees:
Year one (1) $27,000 ($3,000 per month, 1st three months waived)
Year two (2) 53,667
Year three (3) 71,333
Thereafter 89,000
Plus out-of-pocket expenses to include, but not limited to: wire fees, bank
service charges, printing, copying, postage, courier, account statement/
confirmation (including programming costs for specialized statements/
confirmations), portfolio price quotation service, asset allocation charges,
travel, telephone, registration fees, and other standard miscellaneous items.
Additional classes of shares per Portfolio
Each category of fee ( including annual minimums) increases by 50% for the
second class of shares per portfolio, and by 25% for each additional class of
shares per portfolio.
27
<PAGE>
SCHEDULE C
The Noah Investment Group, Inc.
Portfolios covered by this Agreement:
The Noah Fund
28
EX-10.8
CUSTODY AGREEMENT
This agreement made this ____ day of ________________, 19___ between NOAH and
Fund (hereinafter called "Customer") and CoreStates Bank, N.A. (hereinafter
called "Agent").
WITNESSETH:
1. Appointment of Agent
--------------------
Customer hereby appoints Agent as its agent and custodian, and Agent hereby
accepts such appointment and agrees to act as agent and custodian on the terms
hereinafter specified.
2. Custody of Assets
-----------------
Agent shall act as custodian of all cash, securities, evidences of indebtedness
and other property, including all income thereon and proceeds from the sale or
maturity thereof (collectively, the "Assets") from time to time delivered to or
received by it for Customer. The Assets shall be held in the appropriate
custodial account established from time to time upon Customer's written request
and shall be segregated at all times (except for cash and Assets held in book
entry form which shall be appropriately designated as property of Customer) from
the securities and property of any other person or entity. If any of the assets
are securities eligible for deposit in a central deposit in a central depository
system, Agent is hereby authorized to deposit those securities in that system.
3. Reports
-------
Agent shall forward or cause to be forwarded to Customer any financial reports,
proxy statements, tender offers or other materials received by it with respect
to Assets registered in the name of the Nominees. Agent shall promptly forward
or cause to be forwarded to Customer all proxies with respect to such Assets
executed in blank by the appropriate Nominees together with all pertinent
information and documents received by Agent in connection with such proxies.
4. Income of Assets
----------------
Agent will collect the income and after deducting any charges and expenses,
remit the net income to the Customer or reinvest the income or transfer the net
income to principal periodically in accordance with the Customer's instructions.
(a) Unless otherwise instructed in writing, Agent shall retain in the
appropriate account of Customer any stock dividends, subscription rights
and other non-cash distributions on the Assets, or the proceeds from the
sale of any distributions.
(b) Agent or its Nominee is hereby authorized to sign any declarations,
endorsements, affidavits, certificates of ownership or other documents
which may be required with respect to all coupons, registered interest,
dividends or other income on the Assets.
<PAGE>
5. Purchases and Sales of Assets
-----------------------------
Agent shall promptly effect purchases and sales of the Assets in accordance with
Customer's instructions from time to time, and shall take all steps necessary or
advisable to collect the proceeds of any Assets which are sold, redeemed or
which have matured and shall promptly deposit said proceeds in the appropriate
account designated by Customer from time to time, provided that Agent shall not
be responsible for the collection of Assets called for redemption or otherwise
payable (other than by reason of sale or other disposition by Agent) unless
notice thereof is published in national financial reporting services to which
Agent subscribes, or notice is otherwise received by Agent. Agent shall not be
under any duty to advise or recommend any sales or purchases of Assets for
Customer's account.
6. Limitation of Liability, Responsibilities
-----------------------------------------
(a) Agent shall not be liable for any loss or damage suffered by Customer as
the result of any act or omission of any broker or other agent engaged by
Customer in effecting purchases, sales or exchanges of Assets except to the
extent of any liability caused by (i) the negligent, reckless or willful
conduct of Agent or its subagent or subcustodian, or (ii) the failure of
Agent or its subagent or subcustodian to perform any act required in this
Agreement. Agent shall not be liable for loss or damage caused directly or
indirectly by invasion, insurrection, riot, war, nuclear disaster, order of
civil authority or any other causes beyond its control.
(b) Agent shall not be responsible to file any tax returns or pay any taxes due
in connection with the Assets held hereunder and the income therefrom.
(c) Agent shall be under no obligation to advise the Customer of due or tender
dates for those Assets which have tender options attached to, stamped on,
or incorporated in the Asset itself.
7. Statements
----------
Agent shall deliver to Customer a monthly statement of all accounts maintained
hereunder showing all receipts, disbursements and other transactions affecting
the Assets during the preceding month and a statement of the cost and market
value of each of the Assets at the end of the preceding month. The scope,
content and frequency of the statements required hereunder may be changed from
time to time upon the mutual written agreement of the parties hereto.
8. Withdrawal of Assets
--------------------
(a) Any securities and evidences of indebtedness included in the Assets may be
withdrawn from Agent in accordance with Customer's instructions, provided,
however, that except as provided below, such instructions shall direct that
the delivery of any such securities and evidences of indebtedness by Agent
shall be made only to (i) a bank shown in Exhibit 1, or its Nominee, (ii) a
broker, shown in Exhibit 1, or its Nominee, (iii) in the case of commercial
paper, to the obligor upon payment. In the event the instructions direct
the delivery of Assets to any person or entity other than as set forth
above, such instructions shall be in writing and countersigned by a
President, Vice President, Secretary or Treasurer of Customer or otherwise
be authorized pursuant to a resolution duly adopted and provided to Agent
in accordance with paragraph 10(c) below.
(b) Upon receipt of such instructions and subject to the terms and conditions
thereof, Agent shall deliver the items specified therein to the person or
entity designated and shall obtain a proper receipt therefore.
<PAGE>
(c) In connection with the sale of any Assets, Agent shall make delivery of
such Assets only against payment therefore, in federal funds or by
certified check or bank cashiers check, provided that, consistent with
customary practice at the place of delivery. Agent may (i) make delivery
for inspection prior to sale at buyer's location, upon delivery to Agent of
a proper receipt therefore, to a member of registered national securities
exchange or bank or trust company. In no event shall Agent be liable
hereunder for not delivering Assets in accordance with Customer's
instructions where such delivery is withheld by reason of the purchaser's
inability or unwillingness to make a payment therefore in federal funds or
by certified or bank cashier's check or as otherwise provided in this
paragraph 8(c).
(d) Any cash included in the Assets may be withdrawn from Agent in accordance
with written instructions provided, however, that subject to a transfer or
other disposition of securities by bookkeeping entry in connection with
Agent's participation (through its agent) the Federal Reserve/Treasury
book-entry system, Agent shall make payments of cash to, or from the
account of, Customer only (i) upon the purchase of securities or other
Assets and delivery of such securities or other Assets to Agent in proper
form for transfer; (ii) to Customer's account with CoreStates Bank, N.A. or
with such other bank as Customer may designate by written instructions from
time to time; (iii) for the payment of Agent's expenses and fees authorized
in this Agreement; (iv) for payments in connection with the conversion,
exchange or surrender of securities included in the Assets; or (v) for
other proper purposes. In making any cash payments, Agent shall first
receive instructions requesting such payment and stating the purpose
therefore, and in the case of a payment under clause (v) above, such
instructions shall, except as otherwise authorized pursuant to a resolution
duly adopted by the Customer or provided to Agent in accordance with
paragraph 10(c) below, be in writing and shall be countersigned by the
President, Vice President, Secretary or Treasurer of Customer.
(e) Agent shall promptly notify the Treasurer of the Customer of all
withdrawals from or deliveries to Agent for Customer's account hereunder.
9. Indemnity
---------
With respect to any Assets received by Agent and registered in the name of Agent
or Agent's subagent or subcustodian or nominee or held on behalf of Customer in
Book Entry at a central depository system. Agent shall be fully responsible and
liable for and shall indemnify and hold Customer harmless against any loss,
damage or expense (including attorney's fees and amounts paid with Agent's
consent in settlement of any claim or action) which Customer may sustain
resulting from (i) any act of Agent, its subagent or subcustodian or nominee, or
any employee or other agent of any of them which has not been authorized
hereunder, or (ii) any failure by Agent or its subagent or subcustodian or
nominee, to perform any of its obligations under this Agreement. Except with
respect to the extent same may result, directly or indirectly from any negligent
act or omission or willful or reckless misconduct of Agent, its subagent or
subcustodian or nominee, or any employee or other agent or any of them or any
failure of Agent or its subagent or subcustodian or nominee, to perform any of
Agent's obligations under this Agreement. Customer shall indemnify and hold
Agent or any subagent, subcustodian or nominee harmless against any loss, damage
or expense (including attorney's fees and amounts paid, with Customer's consent,
in settlement of any claim or action) which Agent or any subagent, subcustodian,
or nominee may sustain resulting from its performance in accordance with this
Agreement.
10. Instructions, Notices and Authorized Persons
--------------------------------------------
(a) As used in this Agreement, the term "Instructions" or "Instructed" means a
request or order given or delivered to Agent by the President, Vice
President, Secretary, Treasurer, or a duly appointed investment advisor of
Customer. Unless specifically required herein to be in writing,
instructions may be oral or written; provided that any oral instructions
shall be promptly confirmed in writing. Failure to provide a written
confirmation of oral instructions shall not validate any such instructions.
<PAGE>
(b) Any notices, confirmations and receipts required hereunder to be delivered
by Agent to Customer, unless otherwise specifically provided, shall be
delivered by Agent to the Treasurer of Customer.
(c) Customer will from time to time file with Agent a certified copy of a
Corporate Resolution authorizing person or persons to give proper
instructions and specifying the class of instructions that may be given by
each person to Agent under this Agreement.
(d) Agent may rely and shall be protected in acting upon any oral or written
(including telegraph and other mechanical) instructions, request, letter of
transmittal, certificate, opinion of counsel, statement, instrument,
report, notice, consent, order or other paper or document reasonably
believed by it to be genuine and to have been signed, forwarded, or
presented by customer.
11. Fees and Expenses
-----------------
As compensation for its services under this Agreement, Agent may retain those
fees which are specified in its published or otherwise generally applicable fee
schedule in effect at the time its services are being rendered. Customer
recognizes that this schedule might be changed from time to time with prior
notice to Customer.
Administrative Fee: 1.00 basis points on the first $2.5 billion
.75 basis points on the next $2.5 billion
.50 basis points on the next $5 billion
.40 basis points on the remainder
Minimum Fee: $5,000
Transaction Fees: $4.00 per trade and maturity through Depository
Trust Company
$10.00 per trade and maturity clearing book entry
through Federal Reserve
$30.00/transaction for GIC contracts/Physical
Securities
$10.00 per trade and maturity clearing through
Participants Trust Company
$4.00 paydowns on mortgage backed securities
$5.50 Fed wire charge on Repo collateral in/out
$5.50/$4.50 other wire transfers in/out
$5.50 dividend reinvestment
$2.50 Fed charge for sale/return of collateral
$8.00 Futures contracts
$15.00 Options
12. Amendments or Termination
-------------------------
This Agreement contains the entire understanding between Customer and Agent
concerning the subject matter of this Agreement, supersedes all other Custody
Agreements of dates previous and may be amended only in writing signed by both
parties. No term or provision of this Agreement may be modified or waived unless
in writing and signed by the party against whom such waiver or modification is
sought to enforce. Either party's failure to insist at any time upon strict
compliance with this Agreement or with any of the terms hereunder, or any
continued course of such conduct on the part of either party shall in no event
constitute or be considered a waiver by either party of any of its rights
hereunder. This Agreement may be terminated at any time provided such effective
time shall be not less than 30 days from the date of written notice of
termination.
<PAGE>
13. Applicable Law
--------------
The Agent represents that it has all the necessary power and authority to
perform its obligations under this Agreement, that the execution and delivery by
it of this Agreement and the performance by it of its obligations hereunder have
been duly authorized by all necessary action and will not violate any law,
regulation or other restriction or provision applicable to it or by which it is
bound, and that this Agreement constitutes a legal, valid and binding obligation
enforceable against Agent in accordance with its terms. This agreement shall be
interpreted and enforced in accordance with the laws of the Commonwealth of
Pennsylvania.
Attest:
--------------------------- -------------------------------
CoreStates Bank, N.A.
Attest:
--------------------------- -------------------------------
EXHIBIT 23(a) - Consent
CONSENT OF MARTIN V. MILLER
As counsel, I do hereby consent to the use of my opinion and to all references
to me included in or made part of this N-1A registration statement for The Noah
Investment Group, Inc. and the series The Noah Fund.
___________________
Martin V. Miller
EX-23(b)
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the use of our report,
and to all references to our firm, included in or made a part of this Form N-1A
(Registration Statement File No. 811-8058 and No. 33-69798) for the Noah
Investment Group, Inc.
/s/ ARTHUR ANDERSEN LLP
ARTHUR ANDERSEN LLP
Milwaukee, Wisconsin,
December 31, 1997.
EX-23(c)
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to all references to our
firm, included in or made part of this Form N-1A registration statement for The
Noah Investment Group, Inc. and the series The Noah Fund.
/s/ Sanville & Company
December 31, 1997 Sanville & Company
EX-23(d)
December 30, 1997
Securities and Exchange Commission
450 5th Street N.W.
Washington, D.C. 20549
Dear Sirs:
We have read the "Auditor" section included on page 9 of part B of the October
31, 1997 annual report to shareholders for the Noah Investment Group, Inc.,
provided pursuant to Item 304(a)(3) of Regulation S-X and Item 23 of the
Instructions of Form N-1A and are in agreement with the statements contained
therein.
Very truly yours,
By: /s/ Dale J. Kent
Dale J. Kent
<TABLE> <S> <C>
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<NAME> THE NOAH INVESTMENT GROUP, INC. - THE NOAH FUND
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> OCT-31-1997
<PERIOD-START> NOV-01-1996
<PERIOD-END> OCT-31-1997
<INVESTMENTS-AT-COST> 820,384
<INVESTMENTS-AT-VALUE> 962,282
<RECEIVABLES> 40,741
<ASSETS-OTHER> 10,320
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 1,013,343
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 51,627
<TOTAL-LIABILITIES> 51,627
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 814,615
<SHARES-COMMON-STOCK> 72,696
<SHARES-COMMON-PRIOR> 44,000
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
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<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 141,898
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<DIVIDEND-INCOME> 9,061
<INTEREST-INCOME> 1,259
<OTHER-INCOME> 0
<EXPENSES-NET> 11,515
<NET-INVESTMENT-INCOME> (1,195)
<REALIZED-GAINS-CURRENT> 5,357
<APPREC-INCREASE-CURRENT> 126,582
<NET-CHANGE-FROM-OPS> 130,744
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 1,712
<DISTRIBUTIONS-OF-GAINS> 151
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 35,309
<NUMBER-OF-SHARES-REDEEMED> 6,765
<SHARES-REINVESTED> 152
<NET-CHANGE-IN-ASSETS> 495,837
<ACCUMULATED-NII-PRIOR> 1,712
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<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
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<GROSS-EXPENSE> 105,868
<AVERAGE-NET-ASSETS> 658,440
<PER-SHARE-NAV-BEGIN> 10.59
<PER-SHARE-NII> (0.01)
<PER-SHARE-GAIN-APPREC> 2.69
<PER-SHARE-DIVIDEND> 0.04
<PER-SHARE-DISTRIBUTIONS> 0.00
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<PER-SHARE-NAV-END> 13.23
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<AVG-DEBT-PER-SHARE> 0
</TABLE>
