As filed with the Securities and Exchange Commission on August 8, 1996
Securities Act Registration No. 33-73832
Investment Company Act Registration No. 811-8268
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM N-1A
Registration statement under the securities act of 1933
Post-effective amendment no. 2 [X]
and
Registration statement under the investment company act of 1940
Amendment no. 7 [X]
Interactive Investments Trust
(Exact name of registrant as specified in charter)
446 Martil Way, Milpitas, California 95035
(Address of principal executive offices) (zip code)
(408) 956-0567
(Registrant's telephone number, including area code)
Corporation Service Company
1013 Centre Road, Wilmington, Delaware 19805
(Name and address of agent for service)
Copies of all communications to:
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Mark H. Mirkin, Esq. Kevin Landis
Mirkin & Woolf, P.A. Interactive Investments
1700 Palm Beach Lakes Blvd., Suite 580 446 Martil Way
West Palm Beach, FL 33401 Milpitas, CA 95035
(407) 687-4460 (408) 956-0567
</TABLE>
It is proposed that this filing will become effective (check appropriate
Box):
[X] Immediately upon filing pursuant to paragraph (b) of rule 485
[ ] On (date) pursuant to paragraph (b)
[ ] 60 days after filing pursuant to paragraph (a)(1)
[ ] On (date) pursuant to paragraph (a)(1)
[ ] 75 days after filing pursuant to paragraph (a)(2)
[ ] On (date) pursuant to paragraph (a)(2) of rule 485
If appropriate, check appropriate box:
[ ] This post-effective amendment designates a new effective date for
a previously filed post-effective amendment
DECLARATION PURSUANT TO RULE 24F-2: PURSUANT TO RULE 24F-2 UNDER THE
INVESTMENT COMPANY ACT OF 1940, AS AMENDED, REGISTRANT HAS REGISTERED AN
INDEFINITE NUMBER OR AMOUNT OF ITS SHARES OF BENEFICIAL INTEREST UNDER THE
SECURITIES ACT OF 1933, AS AMENDED. THE RULE 24F-2 NOTICE FOR REGISTRANT'S
FISCAL YEAR ENDED DECEMBER 31, 1995 WAS FILED JUNE 28, 1996.
<PAGE>
INTERACTIVE INVESTMENTS TRUST
Cross Reference Sheet
Required by Rule 404(a)
PART A
<TABLE>
<CAPTION>
N-1A Item Number location
in prospectus
- ---------------------- --------
- ------------------
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1. Cover Page . . . . . . . . . . . . . . . . . . . . . . . . . . Cover
page
2. Synopsis . . . . . . . . . . . . . . . . . . . . . . . . . . . Summary
of Fund Expenses
3. Condensed Financial Information. . . . . . . . . . . . . . . .
Financial Highlights
4. General Description of Registrant. . . . . . . . . . . . . . .
Prospectus Summary; Investment Objective and Policies; General information
5. Management of the Fund . . . . . . . . . . . . . . . . . . . .
Prospectus Summary; Management; Investment Advisory and Other Services;
general information
5A. Management's Discussion of Fund Performance . . . . . . . . . .Included
in Registrant's Annual Report to Shareholders
6. Capital Stock and Other Securities . . . . . . . . . . . . . . Cover
Page; Prospectus Summary; Redemption of Shares; Dividends, Distributions
and Taxes; general information
7. Purchase of Securities Being Offered . . . . . . . . . . . . .
Prospectus Summary; Purchase of Shares; Determination of Net Asset Value
8. Redemption or Repurchase . . . . . . . . . . . . . . . . . . .
Prospectus Summary; Redemption of Shares
9. Pending Legal Proceedings. . . . . . . . . . . . . . . . . . . Not
Applicable
</TABLE>
<PAGE>
PART B
Not applicable for this filing.
PART C
Not applicable for this filing.
<PAGE>
Interactive Investments
446 Martil Way
Milpitas, CA 95035
(408) 956-0567
PROSPECTUS, AUGUST 8, 1996
Interactive Investments (the "Trust"), a Delaware business trust, is an
open-end management investment company that is offering shares of beneficial
interest ("shares") in series, each series representing a distinct fund with
its own investment objectives and policies. At present, there is only one
series authorized by the Trust, which series has been designated the
Technology Value Fund (the "Fund"). The Fund is non-diversified and has the
primary investment objective of long-term growth of capital. Receipt of
income is a secondary objective, as some investments may yield dividends,
interest or other income. The Fund will invest primarily in securities of
companies in the high technology and medical fields which are believed to be
undervalued and have potential for capital appreciation. The Fund may also
invest portions of its total assets in securities that entail special risks,
such as foreign securities, high yield, high risk bonds, restricted
securities, securities that represent special situations and securities of
issuers with less than three years' continuous operation. Please see
"Investment Objective and Policies" in this Prospectus for additional
information.
As an open-end management investment company, the Fund will offer its
shares on a continuous basis and will redeem its shares upon the demand of a
shareholder. Sales and redemptions will be effected at the net asset value per
share next determined after receipt of a proper order. The Fund does not
charge a transaction fee for sales or redemptions.
The initial minimum investment for the Fund is $10,000 unless investing
through the vehicle of an Individual Retirement Account ("IRA"), in which case
the minimum initial investment is $2000. Subsequent investments in the Fund
must be at least $1000, or $200 for an IRA. Please see "Purchase of Shares"
in this Prospectus for additional information.
Interactive Research Advisers, Inc., a Puerto Rico corporation founded in
August 1993, will serve as the investment adviser to the Fund. Interactive
Research Advisers, Inc. intends to focus its research with the objective of
long-term growth. Please see "Investment Advisory and Other Services" in this
Prospectus for additional information.
This Prospectus sets forth concisely the information about the Fund that
a prospective investor ought to know before investing. Please retain it for
future reference. Additional information about the Fund has been filed with
the Securities and Exchange Commission and is available upon request from the
Fund without charge by calling or writing the Fund at the number or address on
the back page of this Prospectus. Such information includes the Fund's
Statement of Additional Information dated January 31, 1996, which is
incorporated by reference into this Prospectus.
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.
PROSPECTUS SUMMARY
INVESTMENT OBJECTIVE AND POLICIES
The Fund's investment objective is long-term capital appreciation. The
Fund intends to invest primarily in securities of companies in the high
technology and medical fields which are believed to be undervalued. The
receipt of income is a secondary objective.
RISK FACTORS
Generally
Investment in the Fund may be subject to certain risks hereinafter
described, including general risks associated with all securities investments
and certain other risks associated with investments in special situations.
There can be no assurance the Fund will attain its objectives. See
"Investment Objective and Policies".
Non-Diversification
The Fund will be operated as a "non-diversified" investment company so
that more than 5% of the Fund's assets may be invested in the securities of
any one issuer. As a result of its non-diversified status, the Fund's shares
may be more susceptible to adverse change in the value of securities of a
particular company than would be the shares of a diversified investment
company.
Foreign Securities
The Fund may purchase foreign securities that are listed on a foreign
securities exchange or over-the-counter market, or which are represented by
American Depository Receipts and are listed on a domestic securities exchange
or traded in the United States over-the-counter market. While the Fund has
no present intention to invest any significant portion of its assets in
foreign securities, it reserves the right to invest not more than 15% of the
value of its total assets (at time of purchase, giving effect thereto) in the
securities of foreign issuers and obligors. Investors should recognize that
investments in foreign companies involve certain considerations and risks
that are not typically associated with investing in domestic companies. For
example, such investments may be affected by changes in currency rates and
exchange control regulations.
Inexperience of Investment Adviser
Interactive Research Advisers, Inc., the Fund's investment adviser, does
not have previous experience as an investment adviser.
PURCHASES
Shares of the Fund may be purchased at the next determined net asset
value per share (see "Determination of Net Asset Value"). Shares will be
sold without a sales load, with an initial investment of at least $10,000
(see "Purchases of Shares"). Subsequent investments must be made in a
minimum amount of at least $1000, subject to certain exceptions. Purchases
may be made by check or by bank wire. Although the Fund does not charge a
transaction fee, investors may be charged a transaction fee if they effect
transactions in Fund shares through a broker or agent.
REDEMPTIONS
Investors will be able to redeem shares at their next determined net
asset value per share by so instructing the Fund at its office in Milpitas,
California. See "Redemption of Shares." Although the Fund does not charge a
transaction fee, investors may be charged a transaction fee if they effect
transactions in Fund shares through a broker or agent.
INVESTMENT ADVISER
The Fund will be managed by Interactive Research Advisers, Inc. (the
"Investment Adviser"). The Investment Adviser will be paid a monthly fee at
the annual rate of 1% of the Fund's average daily net assets. Such fee is
higher than that charged by most other investment management companies. From
time to time, the Investment Adviser may waive all or some of its fees and/or
voluntarily assume certain expenses of the Fund which would have the effect
of lowering the Fund's overall expense ratio and increasing the yield to
shareholders during the period such amount is waived or assumed. The
Investment Adviser does not have previous experience in advising a mutual
fund.
ADMINISTRATOR
Interactive Research Advisers, Inc. will also act as the Fund's
administrator, transfer agent and dividend disbursing agent and provide
virtually all customary services required for Fund operations. In addition
to its fee for serving as the Fund's investment adviser, Interactive Research
Advisers, Inc. will receive a fee for serving as the Fund's administrator.
Such fee will be paid monthly at the annual rate of 1% of the Fund's average
daily net assets for the first $10 million of average daily net assets and
.5% of the Fund's average daily net assets over $10 million.
DIVIDENDS
The Fund intends to declare and distribute income dividends and capital
gains distributions as may be required to remain a regulated investment
company under Subchapter M of the Internal Revenue Code. Please see
"Dividends, Distribution and Taxes." Currently, the Fund intends to
distribute income and capital gains in December of each year. All dividends
and distributions will be reinvested automatically unless the shareholder
elects otherwise.
STRUCTURE
Interactive Investments, a Delaware business trust organized in November
1993, is registered under the Investment Company Act of 1940, as amended (the
"1940 Act"), as an open-end management investment company which will issue
its shares in series, each series representing a distinct fund with its own
investment objectives and policies. The Board of Trustees to date has
authorized the issuance of shares in the series constituting the Fund but may
authorize additional series in the future without approval of the
shareholders.
SUMMARY OF FUND EXPENSES
The following table provides information regarding the expenses which may
be incurred by the Fund (expressed as annual percentages of average net
assets). The purpose of this table is to assist investors in understanding
the various costs and expenses an investor in the Fund will bear directly or
indirectly. There are no sales charges, "loads" or maintenance charges of
any kind imposed on the purchase of shares (see "Purchase of Shares") Other
expenses of the Fund and management fees are based on the annual fees payable
to the Investment Adviser.
INVESTOR TRANSACTION EXPENSES
(as a percentage of average net assets, where applicable)
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Maximum sales load
imposed on purchases 0%
Maximum sales load
imposed on reinvested dividends 0%
Deferred sales load 0%
Total Investor Transaction Expenses $0
</TABLE>
ANNUAL FUND OPERATING EXPENSES
(as a percentage of average net assets)
<TABLE>
<S> <C>
Management Fees 1 1.00%
12b-1 Fees 2 0%
Other Expenses 3 1.00%
Total Fund Operating Expenses 2.00%
</TABLE>
1. Fees payable under the Investment Advisory and Management Agreement between
the Fund and the Investment Adviser. See "Investment Advisory and Other
Services".
2. Pursuant to Rule 12b-1 promulgated under the 1940 Act, a fund may act as a
distributor of securities of which it is the issuer, provided that any
payments made by a fund in connection with such distribution are made
pursuant to a written plan which is approved by a majority of the
outstanding voting securities of the fund. The Fund does not intend to
adopt such a plan pursuant to Rule 12b-1.
3. Fees payable under the Administration Agreement between the Fund and the
Investment Adviser are fixed at 1% for the first $10 million under
management. See "Investment Advisory and Other Services".
EXAMPLE:
Assuming: (i) a $1000 investment and (ii) a 5 percent annual return, an
investor would be charged the following expenses over one and three years:
<TABLE>
<CAPTION>
1 YEARS 3 YEARS
<S> <C> <C>
Assuming no redemption: $20 $63
Assuming redemption at the
end of each time period $20 $63
</TABLE>
THE ABOVE EXAMPLE SHOULD NOT BE CONSIDERED A REPRESENTATION OF PAST OR
FUTURE EXPENSES OR PERFORMANCE. ACTUAL EXPENSES MAY BE GREATER OR LESSER
THAN THOSE SHOWN. Please see "Investment Advisory and Other Services" for a
description of the Fund's expenses.
FINANCIAL HIGHLIGHTS
The following financial highlights for a share outstanding through each
period, insofar as they relate to each of the years in the period ended
December 31, 1995, have been audited by Kevane, Peterson, Soto & Pasarell,
independent certified public accountants, whose report thereon was
unqualified. This information should be read in conjunction with the Fund's
financial statements and notes thereto, which are incorporated by reference
in the Statement of Additional Information and this Prospectus, and which
appear, along with the report of Kevane, Peterson, Soto & Pasarell, in the
Fund's 1995 Annual Report to Shareholders. For a more complete discussion of
the Fund's performance, please see the Fund's 1995 Annual report to
Shareholders, which may be obtained without charge by calling or writing to
the Fund.
<TABLE>
<CAPTION>
1995
<S> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $11.70
INVESTMENT OPERATIONS:
Net Investment Income (.14)
Net Realized and Unrealized Gain (Loss) on
Investments 3.99
Total From Investment Operations 3.85
Capital Gains Distributions 0.40
NET ASSET VALUE, END OF PERIOD $18.44
Total Return 61.2%
RATIOS/SUPPLEMENTAL DATA
Net Assets, End of Period (millions) $2.7
Ratio of Expenses to Average Net Assets 2%
Ratio of Net Investment Income to Average Net Assets -1.45%
Portfolio Turnover Rate 38%
</TABLE>
Note: Per-share information is calculated based on the number of shares
outstanding at the end of the period.
From time to time the Fund may advertise its total return. Total return
figures are based on historical earnings and are not intended to indicate
future performance. The "total return" of the Fund refers to the average
annual compounded rates of return over one-, five- and ten-year periods or
for the life of the Fund (as stated in the advertisement) that would equate
an initial amount invested at the beginning of a stated period to the ending
redeemable value of the investment, assuming the reinvestment of all dividend
and capital gains distributions.
INVESTMENT OBJECTIVE AND POLICIES
INVESTMENT OBJECTIVE
The Fund's primary investment objective is long-term growth of capital.
This objective cannot be changed without shareholder approval. Receipt of
income is a secondary objective, as some investments may yield dividends,
interest or other income. Potential investors should be aware that risks
exist in all types of investments and there can be no assurance that the Fund
will be successful in meeting its investment objective. The Fund's
investment policy is outlined below, and where applicable, factors which may
increase the risk of investing in the Fund have been noted. An initial factor
that an investor should be aware of is that the Investment Adviser does not
have previous advising experience.
INVESTMENT POLICIES
Equity Securities
The Fund will invest primarily (i.e. under normal circumstances, at least
65% of the value of the Fund's total assets) in equity securities of
companies in the electronic and medical technology fields which are believed
to be undervalued and have potential for capital appreciation. Among such
investments, the Fund will emphasize the purchase of common stock,
convertible long-term corporate debt obligations, preferred stock,
convertible preferred stock and warrants. The securities selected will
typically be traded on a national securities exchange, the NASDAQ System or
over-the-counter, and may include securities of both large well-known
companies as well as smaller, less well-known companies. (Also see
"Restricted and Not Readily Marketable Securities" and "Companies With Less
Than Three Years' Continuous Operation".)
The Investment Adviser's analysis of a potential investment will focus on
valuing an enterprise and purchasing securities of the enterprise when that
value exceeds the market price. The Adviser intends to focus on the
fundamental worth of the companies under consideration, where fundamental
worth is defined as the value of the basic businesses of the firm, including
products, technologies, customer relationships and other sustainable
competitive advantages. Fundamental worth is a reflection of the value of an
enterprise's assets and its earning power, and will be determined by use of a
dividend and cash flow discounting model, price-earnings ratios and
comparison with sales of comparable assets to independent third party buyers
in arms' length transactions. Balance sheet strength, the ability to
generate earnings and a strong competitive position are the major factors in
appraising an investment. Little weight will be given to current dividend
income. Applicable price-earnings ratios depend on the earnings potential of
an enterprise as determined by the Investment Adviser. For example, an
enterprise that is a relatively high growth company would normally command a
higher price-earnings ratio than lower growth companies because expected
future profits would be higher.
The Fund may also periodically invest in special situations that the
Investment Adviser believes present opportunities for capital growth. Such
investments, however, will not exceed 10% of the Fund's total assets at the
time of purchase. A special situation arises when, in the opinion of the
Investment Adviser, the securities of a particular company will, within an
estimated period of time, be accorded market recognition at an appreciated
value solely by reason of a development particularly or uniquely applicable
to that company and regardless of general business conditions or movements of
the market as a whole. Developments creating special situations might
include, among others, the following: liquidations, reorganizations,
recapitalization or mergers; material litigation; technological
breakthroughs; and new management or management policies. Special situations
often involve much greater risk than is inherent in ordinary investment
opportunities.
Debt Securities
The Fund may also invest in debt obligations of corporate issuers, the
U.S. Government, states, municipalities or state or municipal government
agencies that in the opinion of the Investment Adviser offer long-term
capital appreciation possibilities because of the timing of such investments.
The Fund intends that no more that 50% of the Funds' total assets will be
comprised of such debt securities. Investments in such debt obligations may
result in long-term capital appreciation because the value of debt
obligations varies inversely with prevailing interest rates. Thus, an
investment in debt obligations that are sold at a time when prevailing
interest rates are lower than they were at the time of investment will
normally result in capital appreciation. However, the reverse is also true,
so that if an investment in debt obligations is sold at a time when
prevailing interest rates are higher than they were at the time of
investment, a capital loss will normally be realized. Accordingly,
investments in the debt obligations described above will be made when the
Investment Adviser expects that prevailing interest rates will be falling,
and will be sold when the Investment Adviser expects interest rates to rise.
Although the Fund's investments in this area will consist primarily of
investment grade securities (rated BBB or higher, or Baa or higher by
Standard & Poor's Corporation ("S&P") or Moody's Investors Service, Inc.
("Moody's"), respectively), the Fund may, from time to time, invest in non-
investment grade securities (commonly referred to as "Junk Bonds"). Such
investments will not exceed 5% of the Fund's net assets. In the event that
such investments exceed 5% of the Fund's net assets due to ratings downgrades
or other changes, the Fund will expeditiously dispose of such securities in
order to satisfy the 5% limitation.
FUNDAMENTAL INVESTMENT POLICIES
The Fund has adopted the following fundamental investment policies, which
may not be changed without shareholder approval:
Diversification of Investments
The Fund intends to operate as a "non-diversified" investment company so
that more than 5% of the Fund's assets may be invested in the securities of
any one issuer. The Fund may be subject to greater risks than "diversified"
companies because of the possible fluctuation in the values of securities of
fewer issuers. However, at the close of each fiscal quarter at least 50% of
the value of the Fund's total assets will be represented by one or more of
the following: (i) cash and cash items (e.g. certificates of deposit, money
market funds, etc.) including receivables; (ii) U.S. Government securities;
(iii) securities of other registered investment companies; and (iv)
securities (other than U.S. Government securities and securities of other
regulated investment companies), of any one or more issuers which meet the
following limitations: (a) the Fund will not invest more than 5% of its total
assets in the securities of any such issuer, (b) the entire amount of the
securities of such issuer owned by the Fund will not represent more than 10%
of the outstanding voting securities of such issuer, and (c) the Fund will
not invest more than 10% of it's total assets in the securities of other
registered investment companies.
Additionally, not more that 25% of the value of Fund's total assets may
be invested in the securities of any one issuer.
Concentration of Investments
The Fund will concentrate its investments in the electronic and medical
technology industries. Concentration allows the Fund to invest 25% or more
of the value of its total assets in securities of issuers in a particular
industry. The Fund will therefore invest 25% or more of it's total assets in
each of these two industries. The Fund will be subject to greater risk
because of its relationship with a limited number of industries. The Fund
intends to invest primarily in the following segments within these
industries:
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<CAPTION>
ELECTRONIC TECHNOLOGY MEDICAL TECHNOLOGY
<C> <C>
Semiconductors Cardiovascular Medical Devices
Computers Minimally Invasive Surgical Tools
Computer Peripherals Pharmaceuticals
Software Biotechnology
Telecommunications Managed Care Providers
Mass Storage Devices Generic Drugs
</TABLE>
Restricted and Not Readily Marketable Securities
The Fund may invest in illiquid securities, including repurchase
agreements maturing in over seven days and securities which do not have
readily available market quotations, but only to the extent that the then
aggregate value of all such securities does not exceed 5% of the value of the
Fund's net assets at time of investment.
In the event that the Fund's investments in illiquid securities are
deemed to exceed 10% of the Fund's net assets due to changes in the liquidity
of securities already held, the Fund will expeditiously dispose of such
securities in order to satisfy the 10% limitation.
Companies With Less Than Three Years' Continuous Operation
The Fund may purchase securities of any company with a record of less
than three years' continuous operation (including that of predecessors) but
only to the extent that such purchase would not cause the Fund's investments
in all such companies to exceed 25% of the value of the Fund's net assets at
the time, giving effect to the purchase. The Fund presently intends not to
invest more than 5% of the value of its net assets in such companies during
the coming year, in accordance with investment restrictions of certain state
securities laws.
OTHER INVESTMENT POLICIES
The Fund proposes to follow certain other investment policies set forth
below, which are not matters of fundamental policy and may be changed at the
discretion of the management of the Fund, without a vote of the shareholders:
Portfolio Turnover
The Fund will not seek to realize profits by anticipating short-term
market movements but rather intends to purchase securities for long-term
capital appreciation. Under ordinary circumstances, securities will be held
for more than one year. While the rate of portfolio turnover will not be a
limiting factor when the Investment Adviser deems changes appropriate, it is
anticipated that given the Fund's investment objective, its annual portfolio
turnover will not generally exceed 75%. Portfolio turnover is calculated by
dividing the lesser of the Fund's purchases or sales of portfolio securities
during the period in question by the monthly average of the value of the
Fund's portfolio securities during that period. Excluded from consideration
in the calculation are all securities with maturities of one year or less
when purchased by the Fund.
Securities Lending
The Fund will not engage in securities lending.
Warrants
The Fund may purchase warrants, valued at the lower of cost or market,
but only to the extent that such purchase does not exceed 5% of the Fund's
net assets at the time of purchase. Included within that amount, but not to
exceed 2% of the Fund's net assets, may be warrants which are not listed on
the New York or American Stock Exchanges.
Borrowing
The Fund may borrow from banks for temporary or emergency purposes in an
aggregate amount not to exceed 5% of the Fund's total assets.
Short Sales
The Fund will not engage in short sales.
Other Policies
The Fund will not enter into oil, gas or other mineral leases, or enter
into transactions for the purposes of arbitrage.
In addition to the restrictions described above, the Fund may from time
to time agree to additional investment restrictions for purposes of
compliance with the securities laws of those states where the Fund intends to
offer or sell its shares. Any such additional restrictions that would have a
material bearing on the Fund's operations will be reflected in the Fund's
Prospectus or Statement of Additional Information.
MANAGEMENT
The business of the Fund is managed under the direction of its Board of
Trustees in accordance with section 3.2 of the Declaration of Trust of
Interactive Investments, which Declaration of Trust has been filed with the
Securities and Exchange Commission and is available upon request. Pursuant
to section 2.6 of the Declaration of Trust, the trustees shall elect
officers including a president, secretary and treasurer. The Board of
Trustees retains the power to conduct, operate and carry on the business of
the Fund and has the power to incur and pay any expenses which, in the
opinion of the Board of Trustees, are necessary or incidental to carry out
any of the Fund's purposes. The trustees, officers, employees and agents
of the Fund, when acting in such capacities, shall not be subject to any
personal liability except for his or her own bad faith, willful
misfeasance, gross negligence or reckless disregard of his or her duties.
The trustees and officers of the Fund and their principal occupations
during the recent past are shown below.
<TABLE>
<CAPTION>
NAME AND ADDRESS PRINCIPAL OCCUPATION (S)
<S> <C>
Kevin M. Landis * Mr. Landis has been the Secretary/Treasurer of
Trustee, President Interactive Research Advisors, Inc., since its
2306 Calle Laurel, #2B founding in August 1993. From 1991-1993 he served
San Juan, PR 00913 as New Products Marketing Manager for S-MOS
Systems, a semiconductor firm. From 1988-1991 Mr.
Landis was an Industry Analyst at DataQuest, a
high technology market research firm.
Kendrick W. Kam * Mr. Kam has been President of Interactive Research
Trustee, Secretary/Treasurer Advisors, Inc., since its founding in August 1993.
2306 Calle Laurel, #2B From 1988-1992 Mr. Kam was the Vice-President of
San Juan, PR 00913 Marketing and Finance for Novoste Corporation, a
medical device manufacturer.
Michael T. Lynch Mr. Lynch is currently a Product Manager for
Trustee Iomega Corp. Mr. Lynch served as a Product
1245 Mountain Quail Circle Manager for Adaptec, Inc. during 1995. He served
San Jose, CA 95120 as Product Line Manager for Calera Recognition
Systems, Inc., a manufacturer of Optical Character
Recognition Software, from 1990 to 1995. From
1989 to 1990, he was the Director of Marketing for
Connect, Inc., an on-line information services
company in Cupertino, California. From 1987 to
1989 he was a marketing specialist for Tymenet,
Inc., an on-line information services company in
San Jose, California.
Mark K. Taguchi Mr. Taguchi is currently strategic relations
Trustee manager for the WebFORCE group at Silicon
526 Occidental Avenue Graphics, Inc. Mr. Taguchi is also a principal
San Mateo, CA 94402 with Renaissance Management, a business
development firm. From 1990-1993 was a Vice-
President of Postal Buddy Corporation, a delivery
services company. Mr. Taguchi was an associate
with Marakon Associates, a management consulting
firm, from 1987-1989.
</TABLE>
* This trustee is an "interested person" (as defined in section 2(a)(19)
of the 1940 Act) by virtue of his affiliation with the Investment Adviser.
INVESTMENT ADVISORY AND OTHER SERVICES
INVESTMENT ADVISER
The Fund retains Interactive Research Advisers, Inc., 206 Calle Tetuan
#701, San Juan, Puerto Rico, as its Investment Adviser. The Investment
Adviser is controlled by Kendrick W. Kam and Kevin M. Landis, who also serve
as trustees of the Fund. The Investment Adviser does not have previous
advising experience.
Under an investment advisory contract (the "Contract") between the Fund
and the Investment Adviser, the Investment Adviser furnishes advice and
recommendations with respect to the Fund's portfolio of securities and
investments and provides persons satisfactory to the Fund's Board of Trustees
to act as officers and employees of the Fund responsible for the overall
management and administration of the Fund, subject to supervision of the
Fund's Board of Trustees. Such officers and employees as well as certain
trustees of the Fund may be directors, officers or employees of the
Investment Adviser or its affiliates.
Under the Contract, the Investment Adviser is responsible for (i) the
compensation of any of the Fund's trustees, officers and employees who are
directors, officers, employees or shareholders of the Investment Adviser,
(ii) compensation of the Investment Adviser's personnel and payment of other
expenses in connection with provision of portfolio management services under
the Contract, and (iii) expenses of printing and distributing the Fund's
Prospectus and sales and advertising materials to prospective clients. The
Fund is responsible and has assumed the obligation for payment of all of its
other expenses, including (a) brokerage and commission expenses, (b) federal,
state and local taxes, including issue and transfer taxes, incurred by or
levied on the Fund, (c) interest charges on borrowings, (d) compensation of
any of the Fund's trustees, officers or employees who are not interested
persons of the Investment Adviser or its affiliates, (e) applicable charges
and expenses of the Bank which will act as the custodian of the Fund's
assets, (f) all costs associated with shareholders meetings and the
preparation and dissemination of proxy solicitation materials, except for
meetings called solely for the Investment Adviser's benefit, (g) legal and
auditing expenses, (h) costs of printing and distribution of the Fund's
Prospectus and other shareholder information to existing shareholders, (i)
all investment advisory fees, (j) fees and expenses of registering the Fund's
shares under the federal securities laws and of qualifying its shares under
applicable state Blue Sky laws, including expenses attendant upon renewing
such registrations and qualifications, (k) insurance premiums on the Fund's
property and personnel, including a fidelity bond and liability insurance for
officers and trustees, (l) accounting and bookkeeping costs and expenses
necessary to maintain the Fund's books and records as required by the 1940
Act, including the pricing of the Fund's portfolio securities and the
calculation of its daily net asset value, and (m) any extraordinary and non-
recurring expenses, except as otherwise prescribed herein. Please refer to
"Investment Advisory and Other Services" in the Statement of Additional
Information.
Kendrick W. Kam and Kevin M. Landis own all of the outstanding shares of
the Investment Adviser, a Puerto Rico corporation formed in August 1993. Mr.
Kam was most recently co-founder and Vice President of Marketing and Finance
for Novoste Corporation, a medical device company headquartered in Aguadilla,
Puerto Rico, which was purchased by NAMIC Corporation in May 1992. Mr. Kam
served in this capacity from March 1988 to May 1992. Prior to Novoste, Mr.
Kam was associated with Marakon Associates, a management consulting firm,
from August 1986 to April 1988.
From June 1991 through July 1993, Mr. Landis served as New Products
Marketing Manager for S-MOS Systems, Inc., a San Jose, California-based
semiconductor firm. From December 1988 to May 1991, Mr. Landis was employed
as an analyst at Dataquest, a high technology market research firm.
INVESTMENT ADVISER'S FEE
For the services provided by the Investment Adviser under the Contract,
the Investment Adviser receives from the Fund a management fee equal to 1%
per annum of the Fund's average daily net asset values. Such fee is higher
than that charged by most other investment management companies. The
management fee is accrued daily in computing the net asset value of a share
for the purpose of determining the offering and redemption price per share,
and is paid to the Investment Adviser at the end of each month.
FUND ADMINISTRATION
The Fund has entered into a separate contract with the Investment Adviser
wherein the Investment Adviser will render administrative and supervisory
services to the Fund (the "Administration Agreement"). Under the
Administration Agreement, the Investment Adviser will oversee the maintenance
of all books and records with respect to the Fund's securities transactions
and the Fund's book of accounts in accordance with all applicable federal and
state laws and regulations. The Investment Adviser will also arrange for the
preservation of journals, ledgers, corporate documents, brokerage account
records and other records which are required to be maintained pursuant to
Rule 31a-1 promulgated under the 1940 Act.
Under the Administration Agreement, the Investment Adviser is responsible
for the equipment, staff, office space and facilities necessary to perform
its obligations. The Fund will assume all other expenses except to the
extent paid by the Investment Adviser under the Contract.
For the services rendered by the Investment Adviser under the
Administration Agreement, the Investment Adviser will receive a fee at the
annual rate of 1% of the Fund's average daily net assets for the first $10
million of average daily net assets and 0.5% of the Fund's average daily net
assets for average daily net assets over $10 million.
PURCHASE OF SHARES
GENERAL
Shares of the Fund will be offered on a continuous basis at the net asset
value without any sales load or other charge. A "sales load" is the
difference between the price of a security to the public and that portion of
the proceeds of its sale which is received and invested or held for
investment by the issuer, less any portion of such difference deducted for
custodial fees, insurance premiums, issue taxes or administrative expenses or
fees which are not properly chargeable to sales or promotional activities.
Although the Fund does not charge a transaction fee, investors may be charged
a transaction fee if they effect transactions in Fund shares through a broker
or agent.
Fund shares may be purchased at the net asset value next computed (see
"Determination of Net Asset Value") after receipt of an order subject to a
minimum initial investment requirement of $10,000 ($2000 for IRA's).
Subsequent investments may be made in minimum amounts of $1000 ($200 for
IRA's). All purchase orders are subject to acceptance by the Fund and are
not binding until so accepted.
Investors may purchase shares by completing the Purchase Application
included with this Prospectus and submitting it with a check payable to:
Interactive Investments
446 Martil Way
Milpitas, CA 95035
For subsequent purchases, the account name and account number should be
included with any purchase order to identify the account.
Payment for shares may also be made by bank wire. To do so the investor
must direct his or her bank to wire immediately available funds directly to
the Custodian as indicated below:
1. Telephone the Fund at (408) 956-0567 and furnish the name, the
account number and the telephone number of the investor as well as the amount
being wired and the name of the wiring bank. If a new account is being
opened, additional account information will be requested and an account
number will be provided.
2. Instruct the bank to wire the specific amount of immediately
available funds to the Custodian. The Fund will not be responsible for the
consequences of delays in the bank or Federal Reserve wire system. The
investor's bank must furnish the full name of the investor's account and the
account number. Contact the Fund at (408) 956-0567 for specific wiring
instructions.
3. Complete a Purchase Application and mail it to the Fund if shares
being purchased by bank wire transfer represent an initial purchase. (The
completed Purchase Application must be received by the Fund before funds will
be accepted, and an initial purchase of shares can be affected.) Banks may
impose a charge for the wire transfer of funds.
The Fund reserves the right, in its sole discretion, to reject any order,
to waive initial and subsequent investment minimums and to modify investment
minimums generally from time to time.
Shares may be purchased only in those states in which the Fund is
qualified for sale.
To obtain a Purchase Application, for assistance in completing the
Application or for additional information, call or write the Fund at the
address or telephone number shown on the cover page of this Prospectus.
RETIREMENT ACCOUNTS
Certain individuals may be eligible to establish an Individual Retirement
Account (IRA) if they meet the applicable requirements of the Internal
Revenue Code. A form of individual retirement account is available from the
Fund for investment in Fund shares by qualified investors. This form may be
used for annual contributions as well as for qualified rollover contributions
of distributions received from certain employer-sponsored pension and profit-
sharing plans and from other IRAs. A required disclosure statement
describing relevant tax and other information will be provided with the
appropriate forms and instructions. Investors should consult their tax
advisers to determine whether they are qualified to take advantage of an IRA
and whether an investment in the Fund would be appropriate.
A self-employed individual may purchase shares through a properly drafted
self-employment retirement plan (customarily referred to as a Keogh or HR-10
plan) covering the self-employed individual and eligible employees. The Fund
does not have forms of such plans available for adoption. An investor should
contact a tax adviser concerning establishment of such a plan.
Because retirement programs involve commitments covering future years, it
is important that the investment objective of the Fund be consistent with the
participant's retirement objectives. Premature withdrawals from a retirement
plan may result in adverse tax consequences. Consultation with a tax adviser
regarding retirement plan taxation is recommended.
The minimum investment requirement for the purchase of shares for IRAs
and Keogh plans is $2000 and subsequent purchases must be at least $200. An
investor should contact the Fund for further information concerning
retirement plan investments.
REDEMPTION OF SHARES
The Fund will redeem all or any portion of a shareholder's shares of the
Fund when requested in accordance with the procedures set forth below.
Although the Fund does not charge a transaction fee, investors may be charged
a transaction fee if they effect transactions in Fund shares through a broker
or agent.
All redemption requests should be made to the Fund at its office in
Milpitas, California. The redemption price will be the Fund's net asset
value per share next computed following receipt of a written redemption
request and, if requested, any required documents in good order (see
"Determination of Net Asset Value"). A document in "good order" means:
(1) A letter of instruction or stock assignment specifying the number or
dollar value of shares to be redeemed, signed by all owners of the shares in
the exact names in which they appear on the account, or by an authorized
officer of a corporate shareholder indicating the capacity in which the
officer is signing; and
(2) Other supporting legal documents, if required by applicable law, in
the case of estates, trusts, guardianships, custodianships and corporations.
Payment for shares redeemed will be made as soon as possible after the
date of receipt of the request for redemption, but in no case later than
seven days thereafter, provided the shareholder has complied with all the
requirements described above. Payments will be made in cash. However, if
the Board of Trustees believes that economic conditions exist which would
make such a practice detrimental to the best interests of a Fund, redemption
may be accomplished through distribution of portfolio securities of the Fund
valued at the same price employed in calculating net asset value. The Fund
may only redeem its shares through distribution of portfolio securities if
and to the extent that redemptions by the same shareholder during any 90-day
period exceed the lesser of (i) $250,000, or (ii) 1 percent of the net assets
of the Fund at the beginning of the period. Shareholders whose Fund shares
are redeemed in kind may be subject to brokerage commissions or other
transaction charges upon the transfer, sale or other disposition of
distributed securities.
Although payment of the redemption proceeds ordinarily will be made
within seven days after a redemption request in good order is received,
payment to investors redeeming shares which were recently purchased by check
will not be made until the Fund can verify that the payment of the purchase
has been collected, which may take up to 15 days from the purchase date. The
Fund may suspend redemption privileges or postpone the date of payment:
(1) During any period that trading on the New York Stock Exchange is
restricted as determined by the Securities and Exchange Commission ("SEC")
other than holiday and weekend closings;
(2) During any period when an emergency exists, as defined by the rules
of the SEC, as a result of which it is not reasonably practicable for the
Fund to dispose of securities owned by it or fairly to determine the value of
its net assets; and
(3) For such other periods as the SEC may permit.
DETERMINATION OF NET ASSET VALUE
The Fund's net asset value per share will be determined at the close of
each day, following the close of trading on the New York Stock Exchange
(currently 4:00 p.m. Eastern Time). However, the Company will be closed for
business on all federal holidays, currently New Year's Day, Martin Luther
King, Jr. Day, Presidents' Day, Memorial Day, Independence Day, Labor Day,
Columbus Day, Veterans Day, Thanksgiving and Christmas. Net asset value will
be computed by dividing the market value of the Fund's assets (including
dividends and interest received or accrued), less all liabilities (including
expenses payable or accrued), by the number of outstanding shares of the
Fund.
For purposes of calculating the net asset value of shares of the Fund,
securities traded on a national or regional securities exchange are valued at
the last sale price if the security is traded on the valuation date.
Securities not listed on an exchange or securities in which there were no
reported transactions will be valued at the current closing bid price. The
bid price is used in order that the Fund's assets are valued by the most
conservative measure possible. Any securities or other assets for which
reliable recent market quotations are not readily available will be valued at
fair value as determined in good faith by or under the direction of the
Fund's Board of Trustees.
PERFORMANCE INFORMATION
The Fund may, from time to time, include figures indicating its total
return, or yield and total return, in advertisements or reports to
shareholders or prospective investors. Any quotations of yield will be based
on all investment income per share earned during a given 30-day period
(including dividends and interest), less expenses accrued during the period
("net investment income"), and will be computed by dividing net investment
income by the maximum public offering price per share on the last day of the
period and annualizing the result. Quotations of the Fund's average annual
compounded rate of return on a hypothetical investment in the Fund over a
period of 1, 5 and 10 years (or shorter periods dating from the commencement
of Fund operations) will reflect the deduction of a proportional share of
Fund expenses (on an annual basis) and will assume that all dividends and
distributions are reinvested when paid.
Performance information for the Fund may be compared, in reports and
promotional literature, to the Standard & Poor's 500 Stock Index (the "S&P
500"), an unmanaged index of 500 industrial, transportation, utility and
financial companies. The S&P 500 is not necessarily typical of the type of
investments made by the Fund.
Performance information for the Fund reflects only the performance of a
hypothetical investment in the Fund during the particular time period on
which the calculations are based. Performance information should be
considered in light of the Fund's investment objective and policies, the
types and quality of the Fund's portfolio investments, market conditions
during the particular time period and operating expenses. Such information
should not be considered as a representation of the Fund's future
performance. For a description of the methods to be used to determine the
Fund's average annual total return and yield, please refer to "Performance
Information" in the Statement of Additional Information.
The table listed below shows the investment results for the Fund for
several periods throughout the Fund's lifetime. The results shown represent
"total return" investment performance, which assumes the reinvestment of all
capital gains and income dividends for the indicated periods. Also included
is comparative information with respect to the unmanaged Standard & Poor's
500 Composite Index, the NASDAQ composite index and the Dow Jones Industrial
Average. The table does not make any allowance for federal, state or local
income taxes which shareholders must pay on a current basis.
The results should not be considered a representation of the total return
from an investment made in the Fund today. The periods shown were generally
favorable ones for stock market investing. This information is provided to
help you better understand the Fund and may not provide a basis for
comparison with other investments or mutual funds which use a different
method to calculate performance.
<TABLE>
<CAPTION>
PERIODS ENDED TECHNOLOGY NASDAQ
12/31/95 VALUE FUND S & P 500 DJIA Composite
<S> <C> <C> <C> <C>
1 Year 61.2% 34.1% 33.5% 39.9%
Lifetime * 101.9% 35.4% 35.9% 44.8%
</TABLE>
* May 20, 1994 to December 31, 1995.
DIVIDENDS, DISTRIBUTIONS AND TAXES
The Fund intends to distribute substantially all of its net investment
company taxable income and net capital gains, if any, to shareholders once
each year. In determining amounts of capital gains to be distributed any
capital loss carryovers from prior years will be offset against capital
gains. Each shareholder may elect either to be paid in cash or to have the
distribution reinvested in additional whole or fractional shares of the Fund.
Election to receive dividends and distributions in cash or shares is made at
the time of the original subscription order. A shareholder may change such
election at any time prior to the record date for a particular dividend or
distribution by written request to the Fund. Dividends declared by the Fund
in October, November or December of any calendar year to shareholders of
record as of a record date in such a month will be treated for federal tax
purposes as having been received by shareholders on December 31 of that year
if they are paid during January of the following year.
The Fund intends to qualify and to be treated as a "regulated investment
company" under Subchapter M of the Internal Revenue Code of 1986, as amended
(the "Code"), by annually distributing substantially all of its net
investment company taxable income and net capital gains in dividends to its
shareholders in accordance with certain other requirements related to the
sources of its income and the diversification of its assets. By so
qualifying, the Fund will not be subject to federal income or excise tax on
that part of its investment company taxable income and net realized short-
term and long-term capital gain which it distributes to its shareholders in
accordance with the Code's timing requirements.
The following discussion relates solely to the federal income tax
treatment of dividends and distributions by the Fund, is general in nature
and assumes the Fund qualifies as a regulated investment company. Investors
should consult their own tax advisers for further details and for the
application of state, local and foreign tax laws to their particular
situations.
Dividends and distributions paid to shareholders are generally subject to
federal income tax and may be subject to state and local income tax.
Dividends from net investment income and distributions from any excess of net
realized short-term capital gains over net realized capital losses are
currently taxable to shareholders as ordinary income.
In view of the Fund's investment policies, it is expected that dividends
received from domestic and certain foreign corporations will be part of the
Fund's gross income. Distributions by the Fund of such dividends to
corporate shareholders may be eligible for the "70% dividends received"
deduction, subject to the holding period and debt-financing limitations of
the Code. However, the portion of the Fund's gross income attributable to
dividends received from qualifying corporations is largely dependent on the
Fund's investment activities for a particular year and therefore cannot be
predicted with certainty. In addition, for purposes of the deduction for
dividends received by corporations, a capital gain dividend received from a
regulated investment company is not treated as a dividend.
Distributions of net capital gains (i.e., the excess of net long-term
capital gains over net short-term capital losses) by the Fund to its
shareholders are taxable to the recipient shareholders as long-term capital
gains, without regard to the length of time a shareholder has held Fund
shares.
To avoid a 31% federal backup withholding tax requirement on dividends,
distributions and redemption proceeds, individuals and other non-exempt
shareholders must certify their taxpayer identification number to the Fund on
the investment application and provide certain other certifications. A
shareholder may also be subject to backup withholding if the IRS or a broker
notifies the Fund that the number furnished by the shareholder is subject to
backup withholding for previous under-reporting of interest or dividend
income.
Reports containing appropriate federal income tax information (relating
to the tax status of dividends and capital gain distributions by the Fund)
will be furnished to each shareholder not later than 30 days following the
close of the calendar year during which the payments are made.
The Fund may invest as much as 15% of its net assets in securities of
foreign companies and may therefore be liable for foreign withholding and
other taxes. Tax conventions between the United States and various other
countries may reduce or eliminate such taxes. A foreign tax credit or
deduction is generally allowed for foreign taxes paid or deemed to be paid. A
regulated investment company may elect to have the foreign tax credit or
deduction claimed by the shareholders rather than the company if certain
requirements are met, including the requirement that more than 50% of the
value of the company's total assets at the end of the taxable year consist of
securities in foreign corporations. Because the Fund does not anticipate
investment in securities of foreign corporations to this extent, the Fund
will likely not be able to make this election and foreign tax credits will be
allowed only to reduce the Fund's tax liability, if any.
Under the Code, on disposition of debt securities denominated in a
foreign currency, gains or losses attributable to fluctuations in the value
of the foreign currency between the date of acquisition of the security and
the date of disposition are treated as ordinary gain or loss. These gains or
losses, referred to under the Code as "Section 988" gains or losses, may
increase or decrease the amount of the Fund's investment company taxable
income.
Any dividend or distribution received shortly after a share purchase will
have the effect of reducing the net asset value of such shares by the amount
of such dividend or distribution. Such dividend or distribution is fully
taxable. Accordingly, prior to purchasing shares of the Fund, an investor
should carefully consider the amount of dividends or capital gains
distributions which are expected to be or have been announced.
Generally, the Code's rules regarding the determination and character of
gain or loss on the sale of a capital asset apply to a sale, redemption or
repurchase of shares of the Fund that are held by the shareholder as capital
assets. However, if a shareholder sells shares of the Fund which he has held
for less than six months and on which he has received distributions of
capital gains, any loss on the sale or exchange of such shares must be
treated as long-term capital loss to the extent of such distributions. Any
loss realized on the sale of shares of the Fund will be disallowed by the
"wash sale" rules to the extent the shares sold are replaced within a period
of 61 days before and ending 30 days after the shares are sold. In such a
case, the basis of the shares acquired will be adjusted to reflect the
disallowed loss.
The above discussion concerning the taxation of dividends and
distributions received by shareholders is applicable whether a shareholder
receives such payment in cash or reinvests such amount in additional shares
of the Fund. Thus, dividends and distributions which are taxable as ordinary
income or long-term capital gain are so taxable whether received in cash or
reinvested in additional shares of the Fund.
Additional information regarding the taxation of the Fund and its
shareholders is contained in the Statement of Additional Information under
"Tax Status."
DISTRIBUTION
The Fund will distribute its shares and will bear the expenses of
communication and correspondence with existing shareholders. The Investment
Adviser will bear the expenses of printing and distributing the Prospectus
and sales and advertising materials to prospective investors, along with any
other sales or promotional costs incurred in connection with the sale of the
Fund's shares. Shares are to be sold at the net asset value per share,
without a sales load.
GENERAL INFORMATION
ORGANIZATION AND CAPITAL STRUCTURE
The Trust was organized in November 1993 as a Delaware business trust and
is authorized to issue an unlimited number of shares of beneficial interest.
The Trust currently has authorized the issuance of only one series of shares:
the Fund. The Board of Trustees may authorize the creation of additional
series without shareholder approval.
All shares, when issued, will be fully paid and non-assessable and will
be redeemable and freely transferable. All shares have equal voting rights.
They can be issued as full or fractional shares. A fractional share has PRO
RATA the same kind of rights and privileges as a full share. The shares
possess no preemptive or conversion rights.
Each share of the Fund has one vote irrespective of the relative net
asset value of the shares. The voting rights of shareholders are non-
cumulative, so that holders of more than 50% of the shares can elect all
trustees being elected. On some issues, such as the election of trustees,
all shares of the Fund vote together as one series. In the event that the
Trust authorizes additional series of shares as separate funds, on issues
affecting only a particular fund the shares of the affected fund will vote as
a separate series. An example of such an issue would be a fundamental
investment restriction pertaining to only one fund.
The Board of Trustees of the Trust is responsible for managing the
business and affairs of the Fund. The Board consists of four members and
exercises all of the rights and responsibilities required by, or made
available under, the Delaware Business Trust Act ("DBTA"). The Board of
Trustees consists of Kendrick W. Kam, Kevin M. Landis, Michael T. Lynch and
Mark K. Taguchi. See "Management". Pursuant to the Investment Advisory
Agreement, the Investment Adviser provides the Fund with continuous
investment advice and is responsible for the overall management of the Fund's
business affairs, subject to supervision of the Trust's Board of Trustees.
See "Investment Advisory and Other Services".
SHAREHOLDER MEETINGS AND INQUIRIES
Annual meetings of shareholders will not be held unless called by the
shareholders pursuant to the DBTA or unless required by the 1940 Act and the
rules and regulations promulgated thereunder. Special meetings of the
shareholders may be held, however, at any time and for any purpose, if called
by (i) the Chairman of the Board of Trustees, if one exists, the President
and two or more trustees, (ii) by one or more shareholders holding ten
percent or more of the shares entitled to vote on matters presented to the
meeting, or (iii) if the annual meeting is not held within any thirteen month
period, upon application of any shareholder, a court of competent
jurisdiction may summarily order that such meeting be held. In addition, the
1940 Act requires a shareholder vote for all amendments to investment
advisory contracts and amendments thereto. See "Capital Stock" in the
Statement of Additional Information.
Shareholder inquiries should be directed to the Fund's principal office
at 446 Martil Way, Milpitas CA 95035.
REPORTS TO SHAREHOLDERS
The Fund will issue semiannual reports which will include a list of
securities owned by the Fund and financial statements which, in the case of
the annual report, will be examined and reported upon by the Fund's
independent auditors.
CUSTODIAN, TRANSFER AGENT AND DIVIDEND PAYING AGENT
The Bank of California, N.A., 375 Sansome Street, San Francisco, CA
94104, will act as custodian for the Fund. The Custodian will attend to all
routine and mechanical matters in connection with the sale, exchange,
substitution, purchase or other transactions with securities or other
properties of the Fund. The Investment Adviser will act as transfer agent
and dividend paying agent and will provide the Fund with certain accounting
and shareholder services.
LEGAL OPINION
The legality of the shares offered hereby will be passed upon by Mirkin &
Woolf, P.A., 1700 Palm Beach Lakes Blvd., West Palm Beach, FL 33401.
AUDITORS
The Fund's auditors are Kevane, Peterson, Soto & Pasarell, independent
certified public accountants, 33 Bolivia Street, Hato Rey, PR 00917.
No person has been authorized to give any information or to make any
representation with respect to the Fund other than those contained in this
Prospectus, and information or representations not herein contained, if given
or made, must not be relied upon as having been authorized by the Fund. This
prospectus does not constitute an offer to sell or a solicitation of an offer
to buy in any jurisdiction to any person to whom it is unlawful to make such
an offer or solicitation in such jurisdiction.
