SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
FORM N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 / /
Pre-Effective Amendment No. / /
Post-Effective Amendment No. 3 /X/
and/or
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 / /
Amendment No. 5 /X/
(Check appropriate box or boxes.)
TANAKA Funds, Inc. - File Nos. 33-47207 and 811-08683
230 Park Avenue, Suite 960, New York, New York 10169
(Address of Principal Executive Offices) (Zip Code)
Registrant's Telephone Number, including Area Code: (212) 490-3380
Graham Y. Tanaka, 230 Park Avenue, Suite 960, New York, New York 10169
(Name and Address of Agent for Service)
With copy to:
Donald S. Mendelsohn, Brown, Cummins & Brown Co., L.P.A.
3500 Carew Tower, Cincinnati, Ohio 45202
Approximate Date of Proposed Public Offering:
It is proposed that this filing will become effective:
/X/ immediately upon filing pursuant to paragraph (b)
/_/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 the following box:
/_/this post-effective amendment designates a new effective date for a
previously filed post-effective amendment.
TANAKA Growth Fund
Class A Shares and Class B Shares
Prospectus
April 2, 2001
INVESTMENT OBJECTIVE:
Growth of capital
230 Park Avenue, Suite 960
New York, New York 10169
877-4-TANAKA (Toll Free)
The Securities and Exchange Commission has not approved or disapproved
these securities or determined if this prospectus is truthful or complete. Any
representation to the contrary is a criminal offense.
TABLE OF CONTENTS
PAGE
RETURN RISK/SUMMARY.............................................................
FEES AND EXPENSES OF INVESTING IN THE FUND......................................
HOW TO BUY SHARES...............................................................
HOW TO REDEEM SHARES............................................................
DETERMINATION OF NET ASSET VALUE................................................
DIVIDENDS, DISTRIBUTIONS AND TAXES..............................................
MANAGEMENT OF THE FUND..........................................................
FINANCIAL HIGHLIGHTS............................................................
PRIVACY POLICY..................................................................
FOR MORE INFORMATION..................................................BACK COVER
RISK/RETURN SUMMARY
Investment Objective
The investment objective of the TANAKA Growth Fund is growth of capital.
Principal Strategies
The Fund invests primarily in common stocks and other equity securities of small, medium and large capitalization companies. The Fund will invest primarily in domestic securities, but it may also invest up to 45% of its net assets, measured at the time of investment, in foreign securities, including multinational and emerging market securities. The Fund is a non-diversified fund, which means that the Fund may take larger positions in a small number of companies than a diversified fund.
The Fund's investments in equity securities will generally consist of issues which the Fund's advisor believes have capital growth potential due to factors such as:
o rapid growth in demand in existing markets;
o expansion into new markets;
o new product introductions;
o reduced competitive pressures;
o cost reduction programs;
o changes in management; and
o other fundamental changes which may result in improved earnings growth or increased asset values.
The Fund's advisor relies on research, management meetings and industry contacts to identify:
o companies with above-average long-term earnings growth potential that could exceed market expectations;
o industries that are positioned to participate in strong demographic, societal or economic trends; and
o companies within those industries that have a particular competitive advantage or niche.
The Fund may sell a security when:
o the fundamentals of the company decline;
o the security reaches a target price or price-to-earnings ratio; or
o the Fund's advisor determines to reallocate assets to a security with superior capital growth potential.
While it is anticipated that the Fund will diversify its investments across a range of industry sectors, certain sectors are likely to be overweighted compared to others because the Fund's advisor seeks the best investment opportunities regardless of sector. The Fund may, for example, be overweighted at times in the telecommunications, technology and pharmaceutical/health care sectors. The sectors in which the Fund may be overweighted will vary at different points in the economic cycle.
Principal Risks of Investing in the Fund
Management Risk. The Fund's advisor's growth-oriented approach may fail to produce the intended results. Smaller Company Risk. To the extent the Fund invests in smaller capitalization companies, the Fund will be subject to additional risks. These include:
o The earnings and prospects of smaller companies are more volatile than larger companies.
o Smaller companies may experience higher failure rates than do larger companies.
o The trading volume of securities of smaller companies is normally less than that of larger companies and, therefore, may disproportionately affect their market price, tending to make them fall more in response to selling pressure than is the case with larger companies.
o Smaller companies may have limited markets, product lines or financial
resources and may lack management experience. Company Risk. The value of the
Fund may decrease in response to the activities and financial prospects of an
individual company in the Fund's portfolio. The value of an individual company
can be more volatile than the market as a whole. Market Risk. Overall stock
market risks may also affect the value of the Fund. Factors such as domestic
economic growth and market conditions, interest rate levels and political events
affect the securities markets and could cause the Fund's share price to fall.
Foreign Risk. To the extent the Fund invests in foreign securities, the Fund
could be subject to greater risks because the Fund's performance may depend on
issues other than the performance of a particular company. Changes in foreign
economies and political climates are more likely to affect the Fund than a fund
that invests exclusively in U.S. companies. The value of foreign securities is
also affected by the value of the local currency relative to the U.S. dollar.
There may also be less government supervision of foreign markets, resulting in
non-uniform accounting practices and less publicly available information.
Investment in securities of issuers based in underdeveloped emerging
markets entails all of the risks of investing in securities of foreign issuers
outlined in this section to a heightened degree. These heightened risks include:
(i) greater risks of expropriation, confiscatory taxation, nationalization, and
less social, political and economic stability; (ii) the smaller size of the
market for such securities and a low or nonexistent volume of trading, resulting
in lack of liquidity and in price volatility; (iii) certain national policies
which may restrict a Fund's investment opportunities; and (iv) in the case of
Eastern Europe and in China and other Asian countries, the absence of developed
capital markets and legal structures governing private or foreign investment and
private property and the possibility that recent favorable economic and
political developments could be slowed or reversed by unanticipated events.
In addition to brokerage commissions, custodial services and other costs
relating to investment in emerging markets are generally more expensive than in
the United States. Such markets have been unable to keep pace with the volume of
securities transactions, making it difficult to conduct such transactions.
Non-Diversification Risk. As a non-diversified fund, the Fund will be subject to
substantially more investment risk and potential for volatility than a
diversified fund because its portfolio may at times focus on a limited number of
companies. Sector Risk. If the Fund's portfolio is overweighted in a certain
industry sector, any negative development affecting that sector will have a
greater impact on the Fund than a fund that is not overweighted in that sector.
For example, to the extent the Fund is overweighted in the telecommunications
sector, the technology sector or the pharmaceutical/health care sector, it will
be affected by developments affecting the applicable sector. All three sectors
are subject to changing government regulations that may limit profits and
restrict services offered. Companies in these sectors also may be significantly
affected by intense competition, and their products may be subject to rapid
obsolescence.
Volatility Risk. Common stocks tend to be more volatile than other investment choices. The value of an individual company can be more volatile than the market as a whole. This volatility affects the value of the Fund's shares. Additional Risks.
o An investment in the Fund is not insured or guaranteed by the Federal
Deposit Insurance Corporation or any other government agency.
o The Fund is not a complete investment program. As with any mutual fund
investment, the Fund's returns will vary and you could lose money.
Is the Fund Right for You?
The Fund may be suitable for:
o long-term investors seeking a fund with a growth investment strategy;
o investors who can tolerate the greater risks associated with common stock investments;
o investors willing to accept the greater market price fluctuations of smaller companies;
o investors who can tolerate the increased risks of foreign and emerging market securities; or
o investors who can tolerate the increased risks and price fluctuations associated with a non-diversified fund.
General
The investment objective of the Fund may be changed without shareholder approval.
From time to time, the Fund may take temporary defensive positions which are inconsistent with the Fund's principal investment strategies, in attempting to respond to adverse market, economic, political or other conditions. For example, the Fund may hold all or a portion of its assets in money market instruments or repurchase agreements. If the Fund invests in shares of a money market fund, the shareholders of the Fund generally will be subject to duplicative management fees. As a result of engaging in these temporary measures, the Fund may not achieve its investment objective. The Fund may also invest in such instruments at any time to maintain liquidity or pending selection of investments in accordance with its policies.
How the Fund has Performed
The Fund has authorized three classes of shares: Class A, Class B and Class R. As the classes are subject to differing expenses and sales charge structures, performance will vary among the classes. The bar chart below shows Class B total return for the calendar year ended December 31, 2000. Contingent deferred sales charges are not reflected in the bar chart and, if these amounts were reflected, the total return would be less than as shown. The performance table below shows how the Class B average annual total returns compare over time to those of a broad-based securities market index, which gives some indication of the risks of an investment in the Fund. Contingent deferred sales charges are reflected in the average annual total returns for the class. As with all mutual funds, past results are not an indication of future performance.
[OBJECT OMITTED]
During the period shown, the highest return for a quarter was 21.33% (1st quarter, 2000); and the lowest return was -21.54% (4th quarter, 2000).
Average Annual Total Returns (through December 31, 2000):
One Year Since Inception1
The Fund - Class B -11.17% -11.17%
S&P 500 Index -9.10% - 9.10%
Russell 2000 Index -3.02% -3.02%
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1 December 31, 1999
FEES AND EXPENSES OF INVESTING IN THE FUND
The tables describe the fees and expenses that you may pay if you buy and hold shares of the Fund.
Shareholder Fees (fees paid directly from your investment) Class A Class B Maximum Sales Charge (Load) Imposed on Purchases ...........................................4.50%...........NONE Maximum Deferred Sales Charge (Load)........................................................1.00%...........5.00% Redemption Fee...............................................................................NONE...........NONE Exchange Fee.................................................................................NONE...........NONE Annual Fund Operating Expenses (expenses that are deducted from Fund assets) Management Fees............................................................................1.00%............1.00% Distribution (12b-1) Fees................................................................. 0.25%........... 1.00% Other Expenses (A)........................................................................ 1.75%........... 6.94% Total Annual Fund Operating Expenses (A).................................................. 3.00%........... 8.94% Expense Reimbursement (A) (B)............................................................. 1.25%........... 6.44% Net Expenses (After Expense Reimbursement)................................................ 1.75%............2.50% |
(A) Estimated for Class A.
(B) The Fund's advisor has contractually agreed to waive fees and/or reimburse Class A and Class B expenses through March 31, 2002 to maintain Class A total annual operating expenses at 1.75% of its average daily net assets and Class B total annual operating expenses at 2.50% of its average daily net assets. Any waiver or reimbursement by the Fund's advisor is subject to repayment by the Fund within the three fiscal years following the year ending November 30, 2002, if the Fund is able to make the payment without exceeding the above-described expense limitations.
Example:
The example below is intended to help you compare the cost of investing in the Fund with the cost of investing in other mutual funds. The example uses the same assumptions as other mutual fund prospectuses: a $10,000 initial investment for the time periods indicated, reinvestment of dividends and distributions, 5% annual total return, constant operating expenses, and sale of all shares at the end of each time period. Although your actual expenses may be different, based on these assumptions your costs1 will be:
......... 1 Year 3 Years 5 Years 10 Years
------ ------- ------ --------
.........
Class A $550 $763 $1,485 $3,424
Class B $663 $1006 $1,876 $2,577
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HOW TO BUY SHARES
The minimum initial investment in the Fund is $1,000 and minimum subsequent investments are $500. The Fund may waive the minimum under certain circumstances.
Initial Purchase
By Mail - To be in proper form, your initial purchase request must include:
o a completed and signed investment application form (which accompanies this Prospectus); and o a check (subject to the minimum amounts) made payable to the Fund.
Mail the application (be sure to specify whether you are purchasing Class A or Class B shares) and check to:
U.S. Mail: TANAKA Funds, Inc Overnight: TANAKA Funds, Inc.
c/o Unified Fund Services, Inc. c/o Unified Fund Services, Inc.
P.O. Box 6110 431 North Pennsylvania Street
Indianapolis, Indiana 46206-6110 Indianapolis, Indiana 46204
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By Wire - You may also purchase shares of the Fund by wiring federal funds from your bank, which may charge you a fee for doing so. To wire money, you must call Unified Fund Services, Inc. the Fund's transfer agent at 877-4-TANAKA to set up your account and obtain an account number. You should be prepared at that time to provide the information on the application. Then, provide your bank with the following information for purposes of wiring your investment:
Firstar Bank, N.A.
ABA #0420-0001-3
Attn: TANAKA Funds, Inc.: TANAKA Growth Fund
Account Name _________________(write in shareholder name)
For the Account # ______________(write in shareholder account number)
D.D.A.#488922451
You must also mail a signed application to Unified Fund Services, Inc., the Fund's transfer agent, at the above address in order to complete your initial wire purchase. Wire orders will be accepted only on a day on which the Fund, custodian and transfer agent are open for business. A wire purchase will not be considered made until the wired money is received and the purchase is accepted by the Fund. Any delays which may occur in wiring money, including delays which may occur in processing by the banks, are not the responsibility of the Fund or the transfer agent. There is presently no fee for the receipt of wired funds.
Through Financial Institutions
You may purchase and redeem shares of the Fund through brokers and other financial institutions that have entered into sales agreements with the Fund's distributor. These institutions may charge a fee for their services and are responsible for promptly transmitting purchase, redemption and other requests to the Fund. The Fund is not responsible for the failure of any institution to promptly forward these requests.
If you purchase shares through a broker-dealer or financial institution, your purchase will be subject to its procedures, which may include charges, limitations, investment minimums, cutoff times and restrictions in addition to, or different from, those applicable to shareholders who invest in the Fund directly. You should acquaint yourself with the institution's procedures and read this Prospectus in conjunction with any materials and information provided by the institution. If you purchase Fund shares in this manner, you may or may not be the shareholder of record and, subject to your institution's and the Fund's procedures, may have Fund shares transferred into your name. There is typically a one to five day settlement period for purchases and redemptions through broker-dealers.
Additional Investments
You may purchase additional shares of the Fund at any time (subject to minimum investment requirements) by mail, wire or automatic investment. Each additional mail purchase request must contain:
-your name -the name of your account(s) -your account number(s) -a check made payable to TANAKA Funds, Inc.
Checks should be sent to the TANAKA Funds, Inc., c/o Unified Fund Services, Inc. at the address listed above. A bank wire should be sent as outlined above.
Sales Charge (Load)
Class A Shares
Shares of the Fund are purchased at the public offering price. The public
offering price for Class A shares is the next determined NAV plus a sales charge
(load) as shown in the following table.
========================================== ================================================ ================================
Sales Charge as % of:
Public Net Dealer Reallowance as % of
Amount of Investment Offering Amount Public Offering Price
Price Invested
========================================== ================================================ ================================
Less than $100,000 4.50% 4.71% 4.00%
$100,000 but less than $250,000 3.75% 3.90% 3.25%
$250,000 but less than $500,000 2.75% 2.83% 2.50%
$500,000 but less than 2.25% 2.30% 2.00%
$1,000,000 See below See below See below
$1,000,000 or more See below See below See below
========================================== ================================================ ================================
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Investments of $1 million or more are sold with no initial sales charge. A 1% contingent deferred sales charge may be imposed on certain redemptions made within one year of purchase by Class A accounts of $1 million or more. A dealer concession of up to 1% may be paid by the distributor on these investments. Investments by certain individuals and entities including employees and other associated persons of dealers authorized to sell shares of the Fund and the Fund's advisor are not subject to a sales charge (see "Sales at Net Asset Value" below).
Reducing the Sales Charge. As shown in the table above, the size of the total investment in the Class A shares of the Fund will affect the sales charge. Described below are several methods to reduce the applicable sales charge. In order to obtain a reduction in the sales charge, you must notify, at the time of purchase, your dealer, the transfer agent or the Fund's advisor of the applicability of one of the following:
Rights of Aggregation. The investment schedule above applies to the total amount being invested by any "person," which term includes an individual, his spouse and children under the age of 21, a trustee or other fiduciary purchasing for a single trust, estate or single fiduciary account (including a pension, profit-sharing or other employee benefit trust created pursuant to a plan qualified under the Code) although more than one beneficiary is involved, or any United States bank or investment advisor purchasing shares for its investment advisory clients or customers. Any such person purchasing for several accounts at the same time may combine these investments into a single transaction in order to reduce the applicable sales charge.
Rights of Accumulation. You may purchase Class A shares of the Fund at a reduced sales charge by taking into account not only the amount then being invested, but also the current net asset value of the shares of the Fund already held. If the current net asset value of the qualifying shares already held plus the net asset value of the current purchase exceeds a point in the schedule of sales charges at which the charge is reduced to a lower percentage, the entire current purchase is eligible for the reduced charge. To be entitled to a reduced sales charge pursuant to the Rights of Accumulation, you must notify your dealer, the transfer agent or the distributor at the time of purchase that you wish to take advantage of such entitlement, and give the numbers of your account, and those accounts held in the name of your spouse or for a minor child, and your specific relationship to each such other person.
Letter of Intention. You may also qualify for a reduced sales charge by completing a Letter of Intention set forth on a separate form, which is available from the Fund. This enables you to aggregate purchases of shares of the Fund during a 12-month period for purposes of calculating the applicable sales charge. All shares of the Fund currently owned will be credited as purchases toward the completion of the Letter at the greater of their net asset value on the date the Letter is executed or their cost. No retroactive adjustment will be made if purchases exceed the amount indicated in the Letter. For each investment made, you must notify your dealer, the transfer agent or the distributor that a Letter is on file along with all account numbers associated with the Letter.
The Letter is not a binding obligation. However, 5% of the amount specified in the Letter will be held in escrow, and if your purchases are less than the amount specified, you will be requested to remit to the Fund an amount equal to the difference between the sales charge paid and the sales charge applicable to the aggregate purchases actually made. If not remitted within 20 days after written request, an appropriate number of escrowed shares will be redeemed in order to realize the difference. However, the sales charge applicable to the investment will in no event be higher than if you had not submitted a Letter.
Sales at Net Asset Value. Class A shares of the Fund may be sold at net asset value (i.e., without a sales charge) to: ----
o registered representatives or employees (and their immediate families) of
authorized dealers, or to any trust, pension, profit-sharing or other
benefit plan for only such persons;
o banks or trust companies or their affiliates when the bank, trust company,
or affiliate is authorized to make investment decisions on behalf of a
client;
o investment advisors and financial planners who place trades for their own
accounts or the accounts of their clients and who charge a management,
consulting or other fee for their services;
o clients of such investment advisors and financial planners who place trades
for their own accounts if the accounts are linked to the master account of
such investment advisor or financial planner on the books and records of
the broker, agent, investment advisor or financial institution; and
o retirement and deferred compensation plans and trusts used to fund those
plans, including, but not limited to those defined in Section 401(a),
403(b) or 457 of the Code and "rabbi trusts."
o current officers, trustees, directors and employees (and their immediate
families) of the Fund, the Fund's advisor, the Fund's distributor,
employees (and their immediate families) of certain firms providing
services to the Fund (such as the Fund's custodian and administrator), and
any trust, pension, profit-sharing or other benefit plan for any such
persons.
The Fund may also issue Class A shares at net asset value in connection with the acquisition of, or merger or consolidation with, another investment company.
The sales of Class A shares at net asset value described in this section are made upon the written assurance of the purchaser that the purchase is made for investment purposes and that the Class A shares will not be resold except through redemption. Such notice must be given to the transfer agent or the distributor at the time of purchase on a form for this purpose available from the Fund.
Class B Shares--Contingent Deferred Sales Charge
The Class B shares can be purchased at net asset value without an initial sales charge. However, if the Class B shares are redeemed within six years after purchase, they are subject to a contingent deferred sales charge ("CDSC") (expressed as a percentage of the lesser of the current net asset value or original cost) which will vary according to the number of years from the purchase of Class B shares until the redemption of those shares. The amount of the contingent deferred sales charge on Class B shares is set forth below.
Holding Period CDSC Redeemed during the first year 5.0% Redeemed during the second or third year 4.0% Redeemed during the fourth or fifth year 2.0% Redeemed during the sixth year 1.0% Redeemed after the sixth year None |
Class B shares are subject to higher distribution fees than Class A shares for a period of eight years (after which they convert to Class A shares). Shares purchased through reinvestment of dividends on Class B shares also will convert automatically to Class A shares along with the underlying shares on which they were earned. Conversion occurs at the end of the month which precedes the eighth anniversary of the purchase date.
The higher fees mean a higher expense ratio, so Class B shares pay correspondingly lower dividends and may have a lower net asset value than Class A shares.
Application of the Contingent Deferred Sales Charge. Shares obtained from dividend or distribution reinvestment are not subject to the contingent deferred sales charge. The contingent deferred sales charge, if applicable, is deducted from the amount of the redemption. The contingent deferred sales charge will be waived on redemptions of shares following the death of a shareholder or to meet the requirements of certain qualified retirement plans. The contingent deferred sales charge will also be waived for accounts for the benefit of present or former directors of the Fund or their relatives.
General
In addition to the discount or commission paid to dealers, a distributor may from time to time pay additional cash or other incentives to dealers in connection with the sale of shares of the Fund. Such additional amounts may be utilized, in whole or in part, in some cases together with other revenues of such dealers, to provide additional compensation to registered representatives who sell shares of the Fund.
Reinstatement Privilege
If you redeem Class A shares and then decide to reinvest them, you may, within 90 calendar days of the date of redemption, use all or any part of the proceeds of the redemption to reinstate, free of an initial sales charge, all or any part of the investment in Class A shares of the Fund. If you redeem Class B shares and the redemption was subject to a contingent deferred sales charge, you may reinstate all or any part of the investment in Class B shares of the Fund within 90 calendar days of the date of redemption and receive a credit for the applicable contingent deferred sales charge paid. Such investment will be reinstated at the net asset value per share established as of the close of trading on the New York Stock Exchange next calculated after the request is received. The transfer agent must be informed that the purchase represents a reinstated investment. Reinstated shares must be registered exactly and be of the same class as the shares previously redeemed; and the Fund's minimum initial investment amount must be met at the time of reinstatement. The reinstatement privilege is limited to two times per calendar year.
Description of Classes
The Fund currently is authorized to offer three classes of shares: Class A, Class B and Class R shares. Each class is subject to different expenses and a different sales charge structure.
When purchasing shares, please specify whether you are purchasing Class A shares or Class B shares. The differing expenses applicable to the different classes of the Fund's shares may affect the performance of those classes. Broker-dealers and others entitled to receive compensation for selling or servicing Fund shares may receive more with respect to one class than another.
Distribution Plans
Each class has adopted a plan under Rule 12b-1 that allows the class to pay distribution fees for the sale and distribution of its shares and allows the class to pay for services provided to shareholders. Class A shares pay annual 12b-1 expenses of 0.25%. Class B shares pay annual 12b-1 expenses of 1.00%. Because these fees are paid out of the Fund's assets on an on-going basis, over time these fees will increase the cost of your investment and may cost you more than paying other types of sales charges.
Automatic Investment Plan
You may make regular investments in the Fund with an Automatic Investment Plan by completing the appropriate section of the account application, obtainable from the transfer agent. Investments may be made monthly or quarterly. You may terminate the automatic investment or change the amount of your monthly purchase at any time by written notification to the transfer agent.
Tax Sheltered Retirement Plans
Since the Fund is oriented to longer-term investments, the Fund may be an
appropriate investment medium for tax-sheltered retirement plans, including:
individual retirement plans ("IRAs"); simplified employee pensions ("SEPs");
401(k) plans; qualified corporate pension and profit-sharing plans (for
employees); tax deferred investment plans (for employees of public school
systems and certain types of charitable organizations); and other qualified
retirement plans. You should contact the Fund's transfer agent for the procedure
to open an IRA or SEP plan, as well as more specific information regarding these
retirement plan options. Please consult with an attorney or tax advisor
regarding these plans. You must pay custodial fees for your IRA by redemption of
sufficient shares of the Fund from the IRA unless you pay the fees directly to
the IRA custodian. Call the Fund's transfer agent about the IRA custodial fees.
Other Purchase Information
The Fund may limit the amount of purchases and refuse to sell to any person. If your check or wire does not clear, you will be responsible for any loss incurred by the Fund. If you are already a shareholder, the Fund can redeem shares from any identically registered account in the Fund as reimbursement for any loss incurred. You may be prohibited or restricted from making future purchases in the Fund.
HOW TO REDEEM SHARES
You may receive redemption payments by check or federal wire transfer. The proceeds may be more or less than the purchase price of your shares, depending on the market value of the Fund's securities at the time of your redemption. Presently there is no charge for wire redemptions; however, the Fund may charge for this service in the future. Any charges for wire redemptions will be deducted from your Fund account by redemption of shares. If you redeem your shares through a broker-dealer or other institution, you may be charged a fee by that institution.
By Mail - You may redeem any part of your account in the Fund at no charge by mail. Your request should be addressed to:
U.S. Mail: TANAKA Funds, Inc Overnight: TANAKA Funds, Inc.
c/o Unified Fund Services, Inc. c/o Unified Fund Services, Inc.
P.O. Box 6110 431 North Pennsylvania Street
Indianapolis, Indiana 46206-6110 Indianapolis, Indiana 46204
|
Requests to sell shares are processed at the net asset value next calculated after we receive your order in proper form, less any applicable sales charge. To be in proper form, your request for a redemption must include your letter of instruction, including the Fund name, account number, account name(s), the address, and the dollar amount or number of shares you wish to redeem. This request must be signed by all registered share owner(s) in the exact name(s) and any special capacity in which they are registered. The Fund may require that signatures be guaranteed by a bank or member firm of a national securities exchange. Signature guarantees are for the protection of shareholders. At the discretion of the Fund or the Fund's transfer agent, a shareholder, prior to redemption, may be required to furnish additional legal documents to insure proper authorization.
By Telephone - You may redeem any part of your account in the Fund by calling the Fund's transfer agent at 877-4-TANAKA. You must first complete the Optional Telephone Redemption and Exchange section of the investment application to institute this option. The Fund, the transfer agent and the custodian are not liable for following redemption or exchange instructions communicated by telephone that they reasonably believe to be genuine. However, if they do not employ reasonable procedures to confirm that telephone instructions are genuine, they may be liable for any losses due to unauthorized or fraudulent instructions. Procedures employed may include recording telephone instructions and requiring a form of personal identification from the caller.
The Fund or the transfer agent may terminate the telephone redemption procedures at any time. During periods of extreme market activity, it is possible that shareholders may encounter some difficulty in telephoning the Fund, although neither the Fund nor the transfer agent has ever experienced difficulties in receiving and in a timely fashion responding to telephone requests for redemptions or exchanges. If you are unable to reach the Fund by telephone, you may request a redemption or exchange by mail.
By Wire - If you have elected wire redemption privileges, the Fund will, upon request, transmit the proceeds of any redemption greater than $10,000 by federal funds wire to a bank account designated on your Account Application. Presently there is no charge for wire redemptions; however, the Fund reserves the right to charge for this service. Any charge for wire redemptions will be deducted from your Fund account by redemption of shares. If you wish to request bank wire redemptions by telephone, you must also elect telephone redemption privileges.
Additional Information - If you are not certain of the requirements for a redemption please call the Fund's transfer agent at 877-4-TANAKA. Redemptions specifying a certain date or share price cannot be accepted and will be returned. You will be mailed the proceeds on or before the fifth business day following the redemption. However, payment for redemption made against shares purchased by check will be made only after the check has been collected, which normally may take up to fifteen calendar days. Also, when the New York Stock Exchange is closed (or when trading is restricted) for any reason other than its customary weekend or holiday closing, or under any emergency circumstances (as determined by the Securities and Exchange Commission) the Fund may suspend redemptions or postpone payment dates.
Because the Fund incurs certain fixed costs in maintaining shareholder accounts, the Fund may require you to redeem all of your shares in the Fund on 60 days' written notice if the value of your shares in the Fund is less than $1,000 due to redemption, or such other minimum amount as the Fund may determine from time to time. An involuntary redemption constitutes a sale. You should consult your tax advisor concerning the tax consequences of involuntary redemptions. You may increase the value of your shares in the Fund to the minimum amount within the 60-day period. Your shares are subject to redemption at any time if the Board of Trustees determines in its sole discretion that failure to so redeem may have materially adverse consequences to all or any of the shareholders of the Fund.
DETERMINATION OF NET ASSET VALUE
The price you pay for your shares is based on the Fund's net asset value
per share ("NAV"). The NAV is calculated at the close of trading (normally 4:00
p.m. Eastern time) on each day the New York Stock Exchange is open for business
(the Stock Exchange is closed on weekends, most Federal holidays and Good
Friday). The NAV is calculated by dividing the value of the Fund's total assets
(including interest and dividends accrued but not yet received) minus
liabilities (including accrued expenses) by the total number of shares
outstanding.
The Fund's assets are generally valued at their market value. If market prices are not available, or if an event occurs after the close of the trading market that materially affects the values, assets may be valued by the Fund's advisor at their fair value, according to procedures approved by the Fund's board of directors.
Requests to purchase and sell shares are processed at the NAV next calculated after we receive your order in proper form, less any applicable sales charge.
DIVIDENDS, DISTRIBUTIONS AND TAXES
Dividends and Distributions. The Fund typically distributes substantially all of its net investment income in the form of dividends and taxable capital gains to its shareholders. These distributions are automatically reinvested in the Fund unless you request cash distributions on your application or through a written request. The Fund expects that its distributions will consist primarily of capital gains.
Taxes. In general, selling shares of the Fund and receiving distributions (whether reinvested or taken in cash) are taxable events. Depending on the purchase price and the sale price, you may have a gain or a loss on any shares sold. Any tax liabilities generated by your transactions or by receiving distributions are your responsibility. Because distributions of long-term capital gains are subject to capital gains taxes, regardless of how long you have owned your shares, you may want to avoid making a substantial investment when a Fund is about to make a taxable distribution.
Early each year, the Fund will mail to you a statement setting forth the federal income tax information for all distributions made during the previous year. If you do not provide your taxpayer identification number, your account will be subject to backup withholding.
The tax considerations described in this section do not apply to tax-deferred accounts or other non-taxable entities. Because each investor's tax circumstances are unique, please consult with your tax advisor about your investment.
MANAGEMENT OF THE FUND
Tanaka Capital Management, Inc., 230 Park Avenue, Suite 960, New York, New York 10169, serves as investment advisor to the Fund (the "Investment Advisor"). Tanaka Capital Management, Inc. has been providing portfolio management services since its founding, in 1986, by Graham Y. Tanaka. As of January 31, 2001, in addition to the assets of the Fund, the Investment Advisor and its affiliates managed other assets of approximately $187 million.
Graham Y. Tanaka has been primarily responsible for the day-to-day management of the Fund's portfolio since its inception in December 1998. Mr. Tanaka has approximately 12 years of experience managing a mutual fund portfolio, and has approximately 18 years of experience managing investment portfolios for private clients. From 1973 until 1978, Mr. Tanaka was a research analyst at Morgan Guaranty Trust. He then worked at Fiduciary Trust Company of New York as Vice President from 1978-1980. Prior to launching Tanaka Capital, Mr. Tanaka served as Chairman at Milbank Tanaka & Associates from 1980 to 1986. He is a member of The Electronic Analyst Group and also a member of the Healthcare Analyst Association. Mr. Tanaka currently serves on the boards of TransAct Technologies, Inc. and Tridex Corporation. He is a 1971 graduate of Brown University (BS, BA), a 1973 graduate of Stanford University (MBA) and a Chartered Financial Analyst (CFA).
For the fiscal year ended November 30, 2000 the Fund paid the Investment Advisor a fee at an annualized rate of 1.00% of its average daily net assets. The Investment Advisor may pay certain financial institutions (which may include banks, brokers, securities dealers and other industry professionals) a fee for providing distribution related services and/or for performing certain administrative servicing functions for Fund shareholders to the extent these institutions are allowed to do so by applicable statute, rule or regulation.
FINANCIAL HIGHLIGHTS
The following table is intended to help you better understand the Fund's financial performance since its inception. Certain information reflects financial results for a single Fund share. Total return represents the rate you would have earned (or lost) on an investment in the Fund, assuming reinvestment of all dividends and distributions. This information has been audited by McCurdy & Associates CPA's, Inc., whose report, along with the Fund's financial statements, are included in the Fund's annual report, which is available upon request.
Tanaka Growth Fund - Class A
For the period November 9,
2000 (c) to November 30,
2000
Selected Per Share Data
Net asset value, beginning of period $ 17.46
- -----------
Income from investment operations
Net investment income (loss) (0.01)
Net realized and unrealized gain (loss) (3.07)
--------------------
Total from investment operations (3.08)
Less Distributions:
From net investment income 0.00
From realized capital gains
Total distributions
Net asset value, end of period $ 14.38
====================
Total Return (b) (17.64)%
Ratios and Supplemental Data
Net assets, end of period (000) $ 262
Ratio of expenses to average net assets 1.00% (a)
Ratio of expenses to average net assets before reimbursement 1.00% (a)
Ratio of net investment income (loss) to average net assets (0.73)% (a)
Ratio of net investment income (loss) to
average net assets before reimbursement (0.73)% (a)
Portfolio turnover rate 21.86% (a)
|
(a) Annualized
(b) For periods of less than a full year, total returns are not annualized.
(c) Commencement of operations.
Tanaka Growth Fund - Class B
For the period December
31, 1999 (c) to November
30, 2000
Selected Per Share Data
Net asset value, beginning of period $ 16.03
------------------
Income from investment operations
Net investment income (loss) (0.30)
Net realized and unrealized gain (loss) (1.46)
------------------
Total from investment operations (1.76)
Less Distribution:
From net investment income 0.00
From realized capital gains
------------------
Total distributions
0.00
------------------
Net asset value, end of period $ 14.27
==================
Total Return (b) (10.98)%
Ratios and Supplemental Data
Net assets, end of period (000) $ 462
Ratio of expenses to average net assets 2.50% (a)
Ratio of expenses to average net assets before reimbursement 7.94% (a)
Ratio of net investment income (loss) to average net assets (2.08)% (a)
Ratio of net investment income (loss) to
average net assets before reimbursement (7.51)% (a)
Portfolio turnover rate 21.86% (a)
|
(a) Annualized
(b) For periods of less than a full year, total returns are not annualized.
(c) Commencement of operations.
PRIVACY POLICY
The following is a description of the Fund's policies regarding disclosure of nonpublic personal information that you provide to the Fund or that the Fund collects from other sources. In the event that you hold shares of the Fund through a broker-dealer or other financial intermediary, the privacy policy of your financial intermediary would govern how your nonpublic personal information would be shared with nonaffiliated third parties.
Categories of Information the Fund Collects. The Fund collects the following nonpublic personal information about you:
o Information the Fund receives from you on or in applications or other forms, correspondence, or conversations (such as your name, address, phone number, social security number, assets, income and date of birth); and
o Information about your transactions with the Fund, its affiliates, or others (such as your account number and balance, payment history, parties to transactions, cost basis information, and other financial information).
Categories of Information the Fund Discloses. The Fund does not disclose any nonpublic personal information about its current or former shareholders to unaffiliated third parties, except as required or permitted by law. The Fund is permitted by law to disclose all of the information it collects, as described above, to its service providers (such as the Fund's custodian, administrator and transfer agent) to process your transactions and otherwise provide services to you.
Confidentiality and Security. The Fund restricts access to your nonpublic personal information to those persons who require such information to provide products or services to you. The Fund maintains physical, electronic, and procedural safeguards that comply with federal standards to guard your nonpublic personal information.
FOR MORE INFORMATION
Several additional sources of information are available to you. The Statement of Additional Information ("SAI"), incorporated into this prospectus by reference, contains detailed information on Fund policies and operations. Annual and semi-annual reports contain management's discussion of market conditions, investment strategies and performance results as of the Fund's latest semi-annual or annual fiscal year end.
Call the Funds at 877-4-TANAKA to request free copies of the SAI and the Fund's annual and semi-annual reports, to request other information about the Fund and to make shareholder inquiries.
You may review and copy information about the Fund (including the SAI and other reports) at the Securities and Exchange Commission ("SEC") Public Reference Room in Washington, D.C. Call the SEC at 1-202-942-8090 for room hours and operation. You may also obtain reports and other information about the Fund on the EDGAR Database on the SEC's Internet site at http.//www.sec.gov, and copies of this information may be obtained, after paying a duplicating fee, by electronic request at the following e-mail address: publicinfo@sec.gov, or by writing the SEC's Public Reference Section, Washington, D.C. 20549-0102.
Investment Company Act #811-9096
TANAKA Growth Fund
Class R Shares
Prospectus
April 2, 2001
INVESTMENT OBJECTIVE:
Growth of capital
230 Park Avenue, Suite 960
New York, New York 10169
877-4-TANAKA (TOLL FREE)
The Securities and Exchange Commission has not approved or disapproved these securities or determined if this prospectus is truthful or complete. Any representation to the contrary is a criminal offense.
TABLE OF CONTENTS
PAGE
RISK/RETURN SUMMARY.............................................................
FEES AND EXPENSES OF INVESTING IN THE FUND......................................
HOW TO BUY SHARES...............................................................
HOW TO REDEEM SHARES............................................................
DETERMINATION OF NET ASSET VALUE................................................
DIVIDENDS, DISTRIBUTIONS AND TAXES..............................................
MANAGEMENT OF THE FUND..........................................................
FINANCIAL HIGHLIGHTS............................................................
PRIVACY POLICY..................................................................
FOR MORE INFORMATION..................................................BACK COVER
RISK/RETURN SUMMARY
Investment Objective
The investment objective of the TANAKA Growth Fund is growth of capital.
Principal Strategies
The Fund invests primarily in common stocks and other equity securities of small, medium and large capitalization companies. The Fund will invest primarily in domestic securities, but it may also invest up to 45% of its net assets, measured at the time of investment, in foreign securities, including multinational and emerging market securities. The Fund is a non-diversified fund, which means that the Fund may take larger positions in a small number of companies than a diversified fund.
The Fund's investments in equity securities will generally consist of issues which the Fund's advisor believes have capital growth potential due to factors such as:
o rapid growth in demand in existing markets;
o expansion into new markets;
o new product introductions;
o reduced competitive pressures;
o cost reduction programs;
o changes in management; and
o other fundamental changes which may result in improved earnings growth or increased asset values.
The Fund's advisor relies on research, management meetings and industry contacts to identify:
o companies with above-average long-term earnings growth potential that could exceed market expectations;
o industries that are positioned to participate in strong demographic, societal or economic trends; and
o companies within those industries that have a particular competitive advantage or niche.
The Fund may sell a security when:
o the fundamentals of the company decline;
o the security reaches a target price or price-to-earnings ratio; or
o the Fund's advisor determines to reallocate assets to a security with superior capital growth potential.
While it is anticipated that the Fund will diversify its investments across a range of industry sectors, certain sectors are likely to be overweighted compared to others because the Fund's advisor seeks the best investment opportunities regardless of sector. The Fund may, for example, be overweighted at times in the telecommunications, technology and pharmaceutical/health care sectors. The sectors in which the Fund may be overweighted will vary at different points in the economic cycle.
Principal Risks of Investing in the Fund
Management Risk. The Fund's advisor's growth-oriented approach may fail to produce the intended results. Smaller Company Risk. To the extent the Fund invests in smaller capitalization companies, the Fund will be subject to additional risks. These include:
o The earnings and prospects of smaller companies are more volatile than larger companies.
o Smaller companies may experience higher failure rates than do larger companies.
o The trading volume of securities of smaller companies is normally less than that of larger companies and, therefore, may disproportionately affect their market price, tending to make them fall more in response to selling pressure than is the case with larger companies.
o Smaller companies may have limited markets, product lines or financial resources and may lack management experience.
Company Risk. The value of the Fund may decrease in response to the activities
and financial prospects of an individual company in the Fund's portfolio. The
value of an individual company can be more volatile than the market as a whole.
Market Risk. Overall stock market risks may also affect the value of the Fund.
Factors such as domestic economic growth and market conditions, interest rate
levels and political events affect the securities markets and could cause the
Fund's share price to fall.
Foreign Risk. To the extent the Fund invests in foreign securities, the Fund
could be subject to greater risks because the Fund's performance may depend on
issues other than the performance of a particular company. Changes in foreign
economies and political climates are more likely to affect the Fund than a fund
that invests exclusively in U.S. companies. The value of foreign securities is
also affected by the value of the local currency relative to the U.S. dollar.
There may also be less government supervision of foreign markets, resulting in
non-uniform accounting practices and less publicly available information.
Investment in securities of issuers based in underdeveloped emerging
markets entails all of the risks of investing in securities of foreign issuers
outlined in this section to a heightened degree. These heightened risks include:
(i) greater risks of expropriation, confiscatory taxation, nationalization, and
less social, political and economic stability; (ii) the smaller size of the
market for such securities and a low or nonexistent volume of trading, resulting
in lack of liquidity and in price volatility; (iii) certain national policies
which may restrict a Fund's investment opportunities; and (iv) in the case of
Eastern Europe and in China and other Asian countries, the absence of developed
capital markets and legal structures governing private or foreign investment and
private property and the possibility that recent favorable economic and
political developments could be slowed or reversed by unanticipated events.
In addition to brokerage commissions, custodial services and other costs
relating to investment in emerging markets are generally more expensive than in
the United States. Such markets have been unable to keep pace with the volume of
securities transactions, making it difficult to conduct such transactions.
Non-Diversification Risk. As a non-diversified fund, the Fund's portfolio may at
times focus on a limited number of companies and will be subject to
substantially more investment risk and potential for volatility than a
diversified fund. Sector Risk. If the Fund's portfolio is overweighted in a
certain industry sector, any negative development affecting that sector will
have a greater impact on the Fund than a fund that is not overweighted in that
sector. For example, to the extent the Fund is overweighted in the
telecommunications sector, the technology sector or the pharmaceutical/health
care sector, it will be affected by developments affecting the applicable
sector. All three sectors are subject to changing government regulations that
may limit profits and restrict services offered. Companies in these sectors also
may be significantly affected by intense competition, and their products may be
subject to rapid obsolescence. Volatility Risk. Common stocks tend to be more
volatile than other investment choices. The value of an individual company can
be more volatile than the market as a whole. This volatility affects the value
of the Fund's shares. Additional Risks.
o An investment in the Fund is not insured or guaranteed by the Federal
Deposit Insurance Corporation or any other government agency.
o The Fund is not a complete investment program. As with any mutual fund
investment, the Fund's returns will vary and you could lose money.
Is the Fund Right for You?
The Fund may be suitable for:
o long-term investors seeking a fund with a growth investment strategy;
o investors who can tolerate the greater risks associated with common stock investments;
o investors willing to accept the greater market price fluctuations of smaller companies;
o investors who can tolerate the increased risks of foreign and emerging market securities; or
o investors who can tolerate the increased risks and price fluctuations associated with a non-diversified fund.
General
The investment objective of the Fund may be changed without shareholder approval.
From time to time, the Fund may take temporary defensive positions which are inconsistent with the Fund's principal investment strategies, in attempting to respond to adverse market, economic, political or other conditions. For example, the Fund may hold all or a portion of its assets in money market instruments or repurchase agreements. If the Fund invests in shares of a money market fund, the shareholders of the Fund generally will be subject to duplicative management fees. As a result of engaging in these temporary measures, the Fund may not achieve its investment objective. The Fund may also invest in such instruments at any time to maintain liquidity or pending selection of investments in accordance with its policies.
How the Fund has Performed
The bar chart and table below shows the variability of the Fund's returns, which is one indicator of the risks of investing in the Fund. The bar chart shows changes in the Fund's returns from year-to-year since the Fund's inception. The table shows how the Fund's average annual total returns over time compared to those of a broad-based securities market index. As with all mutual funds, past results are not an indication of future performance.
[OBJECT OMITTED]
During the periods shown, the highest return for a quarter was 51.08% (4th quarter, 1999); and the lowest return was -21.22% ( 4th quarter, 2000).
Average Annual Total Returns (through December 31, 2000):
One Year Since Inception1
The Fund - Class R -10.40% 19.75%
S&P 500 Index -9.10% 4.75%
Russell 2000 Index -3.02% 9.73%
|
1December 30, 1998
FEES AND EXPENSES OF INVESTING IN THE FUND
The tables describe the fees and expenses that you may pay if you buy and hold shares of the Fund.
Shareholder Fees (fees paid directly from your investment) Maximum Sales Charge (Load) Imposed on Purchases ...........................NONE Maximum Deferred Sales Charge (Load)........................................NONE Redemption Fee..............................................................NONE Exchange Fee................................................................NONE Annual Fund Operating Expenses (expenses that are deducted from Fund assets) Management Fees............................................................1.00% Distribution (12b-1) Fees..................................................0.25% Other Expenses.............................................................5.20% Total Annual Fund Operating Expenses.......................................6.45% Expense Reimbursement (A)..................................................4.70% Net Expenses (After Expense Reimbursement) ................................1.75% |
(A) The Fund's advisor has contractually agreed to waive fees and/or reimburse Class R expenses through March 31, 2002 to maintain Class R total annual operating expenses at 1.75% of average daily net assets. Any waiver or reimbursement by the Fund's advisor is subject to repayment by the Fund within the three fiscal years following the year ending November 30, 2002, if the Fund is able to make the payment without exceeding the above-described expense limitation.
Example:
The example below is intended to help you compare the cost of investing in the Fund with the cost of investing in other mutual funds. The example uses the same assumptions as other mutual fund prospectuses: a $10,000 initial investment for the time periods indicated, reinvestment of dividends and distributions, 5% annual total return, constant operating expenses, and sale of all shares at the end of each time period. Although your actual expenses may be different, based on these assumptions your costs will be:
1 year 3 years 5 years 10 years $184 $569 $979 $2,122
HOW TO BUY SHARES
The purchase of Class R shares is only available to the following persons:
o current shareholders in Class R, or the spouse, siblings, children, grandchildren, parents, or grandparents of any such person or any such person's spouse (collectively "Relatives");
o investment advisory clients of the Fund's advisor and their Relatives, as well as other persons approved on a case by case basis by the Fund's advisor;
o officers and directors of the Fund, officers, directors and employees of the Fund's advisor and their relatives, or any trust or individual retirement account or self-employed retirement plan for the benefit of any such person or relative;
o shares purchased on behalf of wrap fee client accounts by broker-dealers that have sales agreements with the distributor of the Fund;
o registered representatives employed by broker-dealers that have sales agreements with the distributor of the Fund, and their spouses and children (or any trust or individual retirement account or self-employed retirement plan for the benefit of any such person); and
o shares purchased on behalf of clients of financial planners, registered investment advisors, bank trust departments and other financial intermediaries with service agreements with the distributor of the Fund.
The minimum initial investment in the Fund is $1,000 and minimum subsequent investments are $500. The Fund may waive the minimum under certain circumstances.
Initial Purchase
By Mail - To be in proper form, your initial purchase request must include:
o a completed and signed investment application form (which accompanies this Prospectus); and
o a check (subject to the minimum amounts) made payable to the Fund.
Mail the application and check to:
U.S. Mail: TANAKA Funds, Inc Overnight: TANAKA Funds, Inc.
c/o Unified Fund Services, Inc. c/o Unified Fund Services, Inc.
P.O. Box 6110 431 North Pennsylvania Street
Indianapolis, Indiana 46206-6110 Indianapolis, Indiana 46204
|
By Wire - You may also purchase shares of the Fund by wiring federal funds from your bank, which may charge you a fee for doing so. To wire money, you must call Unified Fund Services, Inc. the Fund's transfer agent at 877-4-TANAKA to set up your account and obtain an account number. You should be prepared at that time to provide the information on the application. Then, provide your bank with the following information for purposes of wiring your investment:
Firstar Bank, N.A.
ABA #0420-0001-3
Attn: TANAKA Funds, Inc.: TANAKA Growth Fund
Account Name _________________(write in shareholder name)
For the Account # ______________(write in shareholder account number)
D.D.A.#488922451
You must also mail a signed application to Unified Fund Services, Inc., the Fund's transfer agent, at the above address in order to complete your initial wire purchase. Wire orders will be accepted only on a day on which the Fund, custodian and transfer agent are open for business. A wire purchase will not be considered made until the wired money is received and the purchase is accepted by the Fund. Any delays which may occur in wiring money, including delays which may occur in processing by the banks, are not the responsibility of the Fund or the transfer agent. There is presently no fee for the receipt of wired funds.
Through Financial Institutions
You may purchase and redeem shares of the Fund through brokers and other financial institutions that have entered into sales agreements with the Fund's distributor. These institutions may charge a fee for their services and are responsible for promptly transmitting purchase, redemption and other requests to the Fund. The Fund is not responsible for the failure of any institution to promptly forward these requests.
If you purchase shares through a broker-dealer or financial institution, your purchase will be subject to its procedures, which may include charges, limitations, investment minimums, cutoff times and restrictions in addition to, or different from, those applicable to shareholders who invest in the Fund directly. You should acquaint yourself with the institution's procedures and read this Prospectus in conjunction with any materials and information provided by the institution. If you purchase Fund shares in this manner, you may or may not be the shareholder of record and, subject to your institution's and the Fund's procedures, may have Fund shares transferred into your name. There is typically a one to five day settlement period for purchases and redemptions through broker-dealers.
Additional Investments
You may purchase additional shares of the Fund at any time (subject to minimum investment requirements) by mail, wire or automatic investment. Each additional mail purchase request must contain:
-your name -the name of your account(s) -your account number(s) -a check made payable to TANAKA Funds, Inc.
Checks should be sent to the TANAKA Funds, Inc., c/o Unified Fund Services at the address listed above. A bank wire should be sent as outlined above.
Description of Classes
The Fund currently is authorized to offer three classes of shares: Class A, Class B and Class R shares. Each class is subject to different expenses and a different sales charge structure.
When purchasing shares, please specify that you are purchasing Class R shares. The differing expenses applicable to the different classes of the Fund's shares may affect the performance of those classes. Broker-dealers and others entitled to receive compensation for selling or servicing Fund shares may receive more with respect to one class than another.
Distribution Plan
The Fund has adopted a plan under Rule 12b-1 that allows Class R of the Fund to pay distribution fees for the sale and distribution of its shares and allows the class to pay for services provided to shareholders. Class R shares are permitted to pay annual 12b-1 expenses of 0.25%. Because these fees are paid out of the Fund's assets on an on-going basis, over time these fees will increase the cost of your investment and may cost you more than paying other types of sales charges.
Automatic Investment Plan
You may make regular investments in the Fund with an Automatic Investment Plan by completing the appropriate section of the account application, obtainable from the transfer agent. Investments may be made monthly or quarterly. You may terminate the automatic investment or change the amount of your monthly purchase at any time by written notification to the transfer agent.
Tax Sheltered Retirement Plans
Since the Fund is oriented to longer-term investments, the Fund may be an
appropriate investment medium for tax-sheltered retirement plans, including:
individual retirement plans ("IRAs"); simplified employee pensions ("SEPs");
401(k) plans; qualified corporate pension and profit-sharing plans (for
employees); tax deferred investment plans (for employees of public school
systems and certain types of charitable organizations); and other qualified
retirement plans. You should contact the Fund's transfer agent for the procedure
to open an IRA or SEP plan, as well as more specific information regarding these
retirement plan options. Please consult with an attorney or tax advisor
regarding these plans. You must pay custodial fees for your IRA by redemption of
sufficient shares of the Fund from the IRA unless you pay the fees directly to
the IRA custodian. Call the Fund's transfer agent about the IRA custodial fees.
Other Purchase Information
The Fund may limit the amount of purchases and refuse to sell to any person. If your check or wire does not clear, you will be responsible for any loss incurred by the Fund. If you are already a shareholder, the Fund can redeem shares from any identically registered account in the Fund as reimbursement for any loss incurred. You may be prohibited or restricted from making future purchases in the Fund.
HOW TO REDEEM SHARES
You may receive redemption payments by check or federal wire transfer. The proceeds may be more or less than the purchase price of your shares, depending on the market value of the Fund's securities at the time of your redemption. Presently there is no charge for wire redemptions; however, the Fund may charge for this service in the future. Any charges for wire redemptions will be deducted from your Fund account by redemption of shares. If you redeem your shares through a broker-dealer or other institution, you may be charged a fee by that institution.
By Mail - You may redeem any part of your account in the Fund at no charge by mail. Your request should be addressed to:
U.S. Mail: TANAKA Funds, Inc Overnight: TANAKA Funds, Inc.
c/o Unified Fund Services, Inc. c/o Unified Fund Services, Inc.
P.O. Box 6110 431 North Pennsylvania Street
Indianapolis, Indiana 46206-6110 Indianapolis, Indiana 46204
|
Requests to sell shares are processed at the net asset value next calculated after we receive your order in proper form. To be in proper form, your request for a redemption must include your letter of instruction, including the Fund name, account number, account name(s), the address, and the dollar amount or number of shares you wish to redeem. This request must be signed by all registered share owner(s) in the exact name(s) and any special capacity in which they are registered. The Fund may require that signatures be guaranteed by a bank or member firm of a national securities exchange. Signature guarantees are for the protection of shareholders. At the discretion of the Fund or the Fund's transfer agent, a shareholder, prior to redemption, may be required to furnish additional legal documents to insure proper authorization.
By Telephone - You may redeem any part of your account in the Fund by calling the Fund's transfer agent at 877-4-TANAKA. You must first complete the Optional Telephone Redemption and Exchange section of the investment application to institute this option. The Fund, the transfer agent and the custodian are not liable for following redemption or exchange instructions communicated by telephone that they reasonably believe to be genuine. However, if they do not employ reasonable procedures to confirm that telephone instructions are genuine, they may be liable for any losses due to unauthorized or fraudulent instructions. Procedures employed may include recording telephone instructions and requiring a form of personal identification from the caller.
The Fund or the transfer agent may terminate the telephone redemption procedures at any time. During periods of extreme market activity, it is possible that shareholders may encounter some difficulty in telephoning the Fund, although neither the Fund nor the transfer agent has ever experienced difficulties in receiving and in a timely fashion responding to telephone requests for redemptions or exchanges. If you are unable to reach the Fund by telephone, you may request a redemption or exchange by mail.
By Wire - If you have elected wire redemption privileges, the Fund will, upon request, transmit the proceeds of any redemption greater than $10,000 by federal funds wire to a bank account designated on your Account Application. Presently there is no charge for wire redemptions; however, the Fund reserves the right to charge for this service. Any charge for wire redemptions will be deducted from your Fund account by redemption of shares. If you wish to request bank wire redemptions by telephone, you must also elect telephone redemption privileges.
Additional Information - If you are not certain of the requirements for a redemption please call the Fund's transfer agent at 877-4-TANAKA. Redemptions specifying a certain date or share price cannot be accepted and will be returned. You will be mailed the proceeds on or before the fifth business day following the redemption. However, payment for redemption made against shares purchased by check will be made only after the check has been collected, which normally may take up to fifteen calendar days. Also, when the New York Stock Exchange is closed (or when trading is restricted) for any reason other than its customary weekend or holiday closing, or under any emergency circumstances (as determined by the Securities and Exchange Commission) the Fund may suspend redemptions or postpone payment dates.
Because the Fund incurs certain fixed costs in maintaining shareholder accounts, the Fund may require you to redeem all of your shares in the Fund on 60 days' written notice if the value of your shares in the Fund is less than $1,000 due to redemption, or such other minimum amount as the Fund may determine from time to time. An involuntary redemption constitutes a sale. You should consult your tax advisor concerning the tax consequences of involuntary redemptions. You may increase the value of your shares in the Fund to the minimum amount within the 60-day period. Your shares are subject to redemption at any time if the Board of Directors determines in its sole discretion that failure to so redeem may have materially adverse consequences to all or any of the shareholders of the Fund.
DETERMINATION OF NET ASSET VALUE
The price you pay for your shares is based on the Fund's net asset value
per share ("NAV"). The NAV is calculated at the close of trading (normally 4:00
p.m. Eastern time) on each day the New York Stock Exchange is open for business
(the Stock Exchange is closed on weekends, most Federal holidays and Good
Friday). The NAV is calculated by dividing the value of the Fund's total assets
(including interest and dividends accrued but not yet received) minus
liabilities (including accrued expenses) by the total number of shares
outstanding.
The Fund's assets are generally valued at their market value. If market prices are not available, or if an event occurs after the close of the trading market that materially affects the values, assets may be valued by the Fund's advisor at their fair value, according to procedures approved by the Fund's board of directors.
Requests to purchase and sell shares are processed at the NAV next calculated after we receive your order in proper form.
DIVIDENDS, DISTRIBUTIONS AND TAXES
Dividends and Distributions. The Fund typically distributes substantially all of its net investment income in the form of dividends and taxable capital gains to its shareholders. These distributions are automatically reinvested in the Fund unless you request cash distributions on your application or through a written request. The Fund expects that its distributions will consist primarily of capital gains.
Taxes. In general, selling shares of the Fund and receiving distributions (whether reinvested or taken in cash) are taxable events. Depending on the purchase price and the sale price, you may have a gain or a loss on any shares sold. Any tax liabilities generated by your transactions or by receiving distributions are your responsibility. Because distributions of long-term capital gains are subject to capital gains taxes, regardless of how long you have owned your shares, you may want to avoid making a substantial investment when a Fund is about to make a taxable distribution.
Early each year, the Fund will mail to you a statement setting forth the federal income tax information for all distributions made during the previous year. If you do not provide your taxpayer identification number, your account will be subject to backup withholding.
The tax considerations described in this section do not apply to tax-deferred accounts or other non-taxable entities. Because each investor's tax circumstances are unique, please consult with your tax advisor about your investment.
MANAGEMENT OF THE FUND
Tanaka Capital Management, Inc., 230 Park Avenue, Suite 960, New York, New York 10169, serves as investment advisor to the Fund (the "Investment Advisor"). Tanaka Capital Management, Inc. has been providing portfolio management services since its founding, in 1986, by Graham Y. Tanaka. As of January 31, 2001, in addition to the assets of the Fund, the Investment Advisor and its affiliates managed other assets of approximately $187 million.
Graham Y. Tanaka has been primarily responsible for the day-to-day management of the Fund's portfolio since its inception in December 1998. Mr. Tanaka has approximately 12 years of experience managing a mutual fund portfolio, and has approximately 18 years of experience managing investment portfolios for private clients. From 1973 until 1978, Mr. Tanaka was a research analyst at Morgan Guaranty Trust. He then worked at Fiduciary Trust Company of New York as Vice President from 1978-1980. Prior to launching Tanaka Capital, Mr. Tanaka served as Chairman at Milbank Tanaka & Associates from 1980 to 1986. He is a member of The Electronic Analyst Group and also a member of the Healthcare Analyst Association. Mr. Tanaka currently serves on the boards of TransAct Technologies, Inc. and Tridex Corporation. He is a 1971 graduate of Brown University (BS, BA), a 1973 graduate of Stanford University (MBA) and a Chartered Financial Analyst (CFA).
For the fiscal year ended November 30, 2000, the Fund paid the Investment Advisor a fee equal to 1.00% of its average daily net assets. The Investment Advisor may pay certain financial institutions (which may include banks, brokers, securities dealers and other industry professionals) a fee for providing distribution related services and/or for performing certain administrative servicing functions for Fund shareholders to the extent these institutions are allowed to do so by applicable statute, rule or regulation.
FINANCIAL HIGHLIGHTS
The following table is intended to help you better understand the Fund's financial performance since its inception. Certain information reflects financial results for a single Fund share. Total return represents the rate you would have earned (or lost) on an investment in the Fund, assuming reinvestment of all dividends and distributions. This information has been audited by McCurdy & Associates CPA's, Inc., whose report, along with the Fund's financial statements, are included in the Fund's annual report, which is available upon request.
Tanaka Growth Fund - Class R
For the year ended For the period
November 30, 2000 December 30, 1998 (c) to
November 30, 1999
Selected Per Share Data
Net asset value, beginning of period $ 13.05 $ 10.00
-----------------------------------------------
Income from investment operations
Net investment income (loss) (0.24) (0.08)
Net realized and unrealized gain (loss)
1.57
3.13
Total from investment operations
1.33 3.05
-----------------------------------------------
Less Distributions:
From net investment income 0.00 0.00
From realized capital gains
-----------------------------------------------
Total distributions
0.00 0.00
-----------------------------------------------
Net asset value, end of period $ 14.38 $ 13.05
===============================================
Total Return (b) 10.19% 30.50%
Ratios and Supplemental Data
Net assets, end of period (000) $ 3,602 $ 1,495
Ratio of expenses to average net assets 1.75% (a) 1.75% (a)
Ratio of expenses to average net assets before reimbursement 6.20% (a) 13.89% (a)
Ratio of net investment income (loss) to average net assets (1.37)% (a) (0.80)% (a)
Ratio of net investment income (loss) to
average net assets before reimbursement (5.81)% (a) (12.94)% (a)
Portfolio turnover rate 21.86% (a) 53.45% (a)
(a) Annualized
(b) For periods of less than a full year, total returns are not annualized.
(c) Commencement of operations.
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PRIVACY POLICY
The following is a description of the Fund's policies regarding disclosure of nonpublic personal information that you provide to the Fund or that the Fund collects from other sources. In the event that you hold shares of the Fund through a broker-dealer or other financial intermediary, the privacy policy of your financial intermediary would govern how your nonpublic personal information would be shared with nonaffiliated third parties.
Categories of Information the Fund Collects. The Fund collects the following nonpublic personal information about you:
o Information the Fund receives from you on or in applications or other forms, correspondence, or conversations (such as your name, address, phone number, social security number, assets, income and date of birth); and
o Information about your transactions with the Fund, its affiliates, or others (such as your account number and balance, payment history, parties to transactions, cost basis information, and other financial information).
Categories of Information the Fund Discloses. The Fund does not disclose any nonpublic personal information about its current or former shareholders to unaffiliated third parties, except as required or permitted by law. The Fund is permitted by law to disclose all of the information it collects, as described above, to its service providers (such as the Fund's custodian, administrator and transfer agent) to process your transactions and otherwise provide services to you.
Confidentiality and Security. The Fund restricts access to your nonpublic personal information to those persons who require such information to provide product or services to you. The Fund maintains physical, electronic, and procedural safeguards that comply with federal standards to guard your nonpublic personal information.
FOR MORE INFORMATION
Several additional sources of information are available to you. The Statement of Additional Information ("SAI"), incorporated into this prospectus by reference, contains detailed information on Fund policies and operations. Annual and semi-annual reports contain management's discussion of market conditions, investment strategies and performance results as of the Fund's latest semi-annual or annual fiscal year end.
Call the Funds at 877-4-TANAKA to request free copies of the SAI and the Fund's annual and semi-annual reports, to request other information about the Fund and to make shareholder inquiries.
You may review and copy information about the Fund (including the SAI and other reports) at the Securities and Exchange Commission ("SEC") Public Reference Room in Washington, D.C. Call the SEC at 1-202-942-8090 for room hours and operation. You may also obtain reports and other information about the Fund on the EDGAR Database on the SEC's Internet site at http.//www.sec.gov, and copies of this information may be obtained, after paying a duplicating fee, by electronic request at the following e-mail address: publicinfo@sec.gov, or by writing the SEC's Public Reference Section, Washington, D.C. 20549-0102.
Investment Company Act #811-9096
[GRAPHIC OMITTED][GRAPHIC OMITTED]
TANAKA FUNDS, INC.
TANAKA GROWTH FUND
230 Park Avenue, Suite 960
New York, New York 10169
877-4-TANAKA (Toll Free)
Statement of Additional Information
April 1, 2001
This Statement of Additional Information ("SAI") is not a prospectus. It should be read in conjunction with the TANAKA Growth Fund's Prospectus for Class R shares dated April 1, 2001 or the TANAKA Growth Fund's Prospectus for Class A and Class B shares dated April 1, 2001. This SAI incorporates by reference the Fund's Annual Report to Shareholders for the fiscal year ended November 30, 2000 ("Annual Report"). A free copy of either Prospectus or Annual Report can be obtained by writing to TANAKA Funds, Inc., P.O. Box 6110, Indianapolis, Indiana 46204 or by calling 877-4-TANAKA.
TABLE OF CONTENTS PAGE
Additional Information on Investment Techniques................................. Investment Restrictions......................................................... Taxes........................................................................... Dividends and Distributions..................................................... Portfolio Transactions and Brokerage............................................ Portfolio Turnover.............................................................. Net Asset Value................................................................. Contingent Deferred Sales Charge................................................ Directors and Officers.......................................................... Investment Advisor.............................................................. Fund Services................................................................... Custodian....................................................................... Accountants..................................................................... Distribution.................................................................... Expenses of the Fund............................................................ Special Shareholder Services.................................................... General Information and History................................................. Performance..................................................................... Financial Statements............................................................
.........TANAKA Funds, Inc. (the "Company"), is an open-end, management investment company, commonly known as a "mutual fund" and was organized on November 5, 1997. The Fund commenced operations on December 30, 1998. The TANAKA Growth Fund (the "Fund"), the sole series of the company, is a non-diversified series organized on November 5, 1997. The Fund commenced operations on December 30, 1998.
......... ADDITIONAL INFORMATION ON INVESTMENT TECHNIQUES
The investment policies of the Fund are described in the Fund's Prospectus. The following discussion supplements the information in the Fund's Prospectus with respect to the types of securities in which the Fund may invest and the investment techniques it may use in pursuit of its investment objective.
Convertible Securities
.........The Fund may invest in convertible securities that are bonds, notes, debentures, preferred stocks and other securities, which are convertible into common stocks that the investment advisor deems suitable. Investments in convertible securities may provide incidental income through interest and dividend payments and/or an opportunity for capital appreciation by virtue of their conversion or exchange features.
.........Convertible debt securities and convertible preferred stocks, until converted, have general characteristics similar to both debt and equity securities. Although, to a lesser extent than with debt securities generally, the market value of convertible securities tends to decline as interest rates increase and, conversely, tends to increase as interest rates decline. In addition, because of the conversion or exchange feature, the market value of convertible securities typically changes as the market value of the underlying common stocks changes, and, therefore, also tends to follow movements in the general market for equity securities. As the market price of the underlying common stock declines, convertible securities tend to trade increasingly on a yield basis, and so may not experience market value declines to the same extent as the underlying common stock. When the market price of the underlying common stock increases, the prices of the convertible securities tend to rise as a reflection of the value of the underlying common stock, although typically not as much as the underlying common stock. While no securities investments are without risk, investments in convertible securities generally entail less risk than investments in common stock of the same issuer.
.........As debt ecurities, convertible securities are investments , which provide for a stream of income (or in the case of zero coupon securities, accretion of income) with generally higher yields than common stocks. Convertible securities generally offer lower yields than non-convertible securities of similar quality because of their conversion or exchange features.
.........Convertible securities are generally subordinated to other similar but non-convertible securities of the same issuer, although convertible bonds, as corporate debt obligations, enjoy seniority in right of payment to all equity securities, and convertible preferred stock is senior to common stock of the same issuer. However, because of the subordination feature, convertible bonds and convertible preferred stock typically have lower ratings than similar non-convertible securities.
Foreign Securities
.........The Fund expects to invest primarily in the securities of companies domiciled in the United States, although the Fund may also invest up to 45% of its net assets, measured at the time of investment, in securities of foreign issuers which meet the same criteria for investment as domestic companies. Such investments may be made directly in such issuers or indirectly through American Depositary Receipts ("ADRs"), American Depositary Shares ("ADSs") or open and closed-end investment companies. It is possible that some material information about unsponsored ADRs and ADSs will not be available.
Most foreign stock markets are not as large or liquid as in the United States, fixed commissions on foreign stock exchanges are generally higher than the negotiated commissions on U.S. exchanges, and there is generally less government supervision and regulation of foreign stock exchanges, brokers and companies than in the United States. Investors should recognize that foreign markets have different clearance and settlement procedures and in certain markets there have been times when settlements have been unable to keep pace with the volume of securities transactions, making it difficult to conduct such transactions. Delays in settlement could result in temporary periods when assets of the Fund are uninvested and no return is earned thereon. The inability of the Fund to make intended security purchases due to settlement problems could cause the Fund to miss attractive investment opportunities. Inability to dispose of portfolio securities due to settlement problems either could result in losses to the Fund due to subsequent declines in value of the portfolio security or, if the Fund has entered into a contract to sell the security, could result in a possible liability to the purchaser. Payment for securities without delivery may be required in certain foreign markets. Further, the Fund may encounter difficulties or be unable to pursue legal remedies and obtain judgments in foreign courts. Foreign governments can also levy confiscatory taxes, expropriate assets, and limit repatriations of assets. Typically, there is less publicly available information about a foreign company than about a U.S. company, and foreign companies may be subject to less stringent reserve, auditing and reporting requirements. It may be more difficult for the Fund's agents to keep currently informed about corporate actions such as stock dividends or other matters which may affect the prices of portfolio securities. Communications between the United States and foreign countries may be less reliable than within the United States, thus increasing the risk of delayed settlements of portfolio transactions or loss of certificates for portfolio securities. Individual foreign economies may differ favorably or unfavorably from the U.S. economy in such respects as growth of gross national product, rate of inflation, capital reinvestment, resource self-sufficiency and balance of payments position.
.........Because investments in foreign securities will usually involve currencies of foreign countries, and because the Fund may hold foreign currencies, the value of the assets of the Fund as measured in U.S. dollars may be affected favorably or unfavorably by changes in foreign currency exchange rates and exchange control regulations, and the Fund may incur costs in connection with conversions between various currencies. Although the Fund values its assets daily in terms of U.S. dollars, it does not convert its holdings of foreign currencies into U.S. dollars on a daily basis. It will do so from time to time, and investors should be aware of the costs of currency conversion. Although foreign exchange dealers do not charge a fee for conversion, they do realize a profit based on the difference (the "spread") between the prices at which they are buying and selling various currencies. Thus, a dealer may offer to sell a foreign currency to the Fund at one rate, while offering a lesser rate of exchange should the Fund desire to resell that currency to the dealer. The Fund will conduct its foreign currency exchange transactions on a spot (i.e., cash) basis at the spot rate prevailing in the foreign currency exchange market.
.........Investment in securities of issuers based in underdeveloped emerging markets entails all of the risks of investing in securities of foreign issuers outlined in this section to a heightened degree. These heightened risks include: (i) greater risks of expropriation, confiscatory taxation, nationalization, and less social, political and economic stability; (ii) the smaller size of the market for such securities and a low or nonexistent volume of trading, resulting in lack of liquidity and in price volatility; (iii) certain national policies which may restrict a Fund's investment opportunities including restrictions on investing in issuers or industries deemed sensitive to relevant national interests; and (iv) in the case of Eastern Europe and in China and other Asian countries, the absence of developed capital markets and legal structures governing private or foreign investment and private property and the possibility that recent favorable economic and political developments could be slowed or reversed by unanticipated events. So long as the Communist Party continues to exercise a significant or, in some countries, dominant role in Eastern European countries or in China and other Asian countries, investments in such countries will involve risks of nationalization, expropriation and confiscatory taxation. The Communist governments of a number of Eastern European countries expropriated large amounts of private property in the past, in many cases without adequate compensation. There may be no assurance that such expropriation will not occur in the future in either the Eastern European countries or other countries. In the event of such expropriation, a Fund could lose a substantial portion of any investments it has made in the affected countries. Further, no accounting standards exist in Eastern European countries. Finally, even though certain Eastern European currencies may be convertible into U.S. dollars, the conversion rates may be artificial to the actual market values and may be adverse to Fund shareholders.
.........In addition to brokerage commissions, custodial services and other costs relating to investment in emerging markets are generally more expensive than in the United States. Such markets have been unable to keep pace with the volume of securities transactions, making it difficult to conduct such transactions. The inability of a Fund to make intended security purchases due to settlement problems could cause the Fund to miss attractive investment opportunities. Inability to dispose of a security due to settlement problems could result either in losses to the Fund due to subsequent declines in the value of the security or, if the Fund has entered into a contract to sell the security, could result in possible liability to the purchaser.
.........The Fund may invest in shares of open-and closed-end investment companies that acquire equity securities of issuers in emerging markets countries. By investing in shares of such investment companies, the Fund would indirectly pay a portion of the operating expenses, management expenses, and brokerage costs of such companies, as well as those of the Fund. Federal securities laws impose limits on such investments with which the Fund will comply, and may affect the ability of the Fund to acquire or dispose of such shares.
Warrants
.........The Fund may invest up to 5% of its net assets, measured at the time of investment, in warrants or rights. A warrant is a long-term option issued by a corporation that generally gives the investor the right to buy a specified number of shares of the underlying common stock of the issuer at a specified exercise price at any time on or before an expiration date. Rights are similar to warrants, but normally have shorter durations. If the Fund does not exercise or dispose of a warrant prior to its expiration, it will expire worthless. The Fund will make such investments only if the underlying equity securities are deemed appropriate by the Fund's advisor for inclusion in the Fund's portfolio.
Repurchase Agreements
.........The Fund may enter into repurchase agreements (which enables the Fund to employ its assets pending investment) during short periods of time. Ordinarily, these agreements permit the Fund to maintain liquidity and earn higher rates of return than would normally be available from other short-term money-market instruments.
.........Under a repurchase agreement, the Fund buys an instrument and obtains a simultaneous commitment from the seller to repurchase the investment at a specified time and at an agreed upon yield to the Fund. The seller is required to pledge cash and/or collateral which is equal to at least 100% of the value of the commitment to repurchase. The collateral is held by the Fund's custodian. The Fund will enter into only repurchase agreements involving U.S. government securities in which the Fund may otherwise invest. Repurchase agreements are considered securities issued by the seller for purposes of the diversification test under Subchapter M of the Internal Revenue Code of 1986, as amended (the "Code"), and not cash, a cash item or a U.S. government security.
.........The term "U.S. government securities" refers to a variety of securities which are issued or guaranteed by the United States Treasury, by various agencies of the United States government, and by various instrumentalities which have been established or sponsored by the United States government. U.S. Treasury securities are backed by the "full faith and credit" of the United States. Securities issued or guaranteed by federal agencies and U.S. government sponsored instrumentalities may or may not be backed by the full faith and credit of the United States. In the case of securities not backed by the full faith and credit of the United States, the investor must look principally to the agency or instrumentality issuing or guaranteeing the obligation for ultimate repayment, and may not be able to assert a claim against the United States itself in the event the agency or instrumentality does not meet its commitment. An instrumentality of the U.S. government is a government agency organized under federal charter with government supervision.
.........The Fund will always seek to perfect its security interest in the collateral. If the seller of a repurchase agreement defaults, the Fund may incur a loss if the value of the collateral securing the repurchase agreement declines. The Fund's advisor monitors the value of the collateral to ensure that its value equals or exceeds the repurchase price and also monitors the financial condition of the issuer of the repurchase agreement. If the seller defaults, the Fund may incur disposition costs in connection with liquidating the collateral of that seller. If bankruptcy proceedings are commenced with respect to the seller, realization upon the collateral by the Fund may be delayed or limited.
Illiquid or Restricted Securities
The Fund may invest up to 15% of its net assets, measured at the time of investment, in illiquid securities, for which there is a limited trading market and for which a low trading volume of a particular security may result in abrupt and erratic price movements. The Fund may be unable to dispose of its holdings in illiquid securities at acceptable prices and may have to dispose of such securities over extended periods of time. The Fund may invest in (i) securities that are sold in private placement transactions between their issuers and their purchasers and that are neither listed on an exchange nor traded over-the-counter, and (ii) securities that are sold in transactions between qualified institutional buyers pursuant to Rule 144A under the Securities Act of 1933, as amended. Such securities are subject to contractual or legal restrictions on subsequent transfer. As a result of the absence of a public trading market, such restricted securities may in turn be less liquid and more difficult to value than publicly traded securities. Although these securities may be resold in privately negotiated transactions, the prices realized from the sales could, due to illiquidity, be less than those originally paid by the Fund or less than their fair value and in some instances, it may be difficult to locate any purchaser. In addition, issuers whose securities are not publicly traded may not be subject to the disclosure and other investor protection requirements that may be applicable if their securities were publicly traded. If any privately placed or Rule 144A securities held by the Fund are required to be registered under the securities laws of one or more jurisdictions before being resold, the Fund may be required to bear the expenses of registration. Securities which are freely tradable under Rule 144A may be treated as liquid if the Board of Directors of the Company is satisfied that there is sufficient trading activity and reliable price information. Investing in Rule 144A securities could have the effect of increasing the level of illiquidity of the Fund's portfolio to the extent that qualified institutional buyers become, for a time, uninterested in purchasing such 144A securities.
INVESTMENT RESTRICTIONS
.........The policies set forth below are fundamental policies of the Fund and
may not be changed without approval of a majority of the outstanding voting
securities of the Fund. As used in this Statement of Additional Information, a
"majority of the outstanding voting securities of the Fund" means the lesser of
(1) 67% or more of the voting securities present at a shareholders meeting, if
the holders of more than 50% of the outstanding voting securities of the Fund
are present or represented by proxy at such meeting; or (2) more than 50% of the
outstanding voting securities of the Fund.
.........As a matter of fundamental policy, the Fund may not:
.........1. borrow money, except as permitted under the Investment Company Act of 1940, as amended, and as interpreted or modified by a regulatory authority having jurisdiction, from time to time;
.........2. concentrate its investments in a particular industry, as that term is used in the Investment Company Act of 1940, as amended, and as interpreted or modified by a regulatory authority having jurisdiction, from time to time;
.........3. act as an underwriter of securities issued by others, except to the extent that it may be deemed an underwriter in connection with the disposition of portfolio securities of the Fund;
.........4. make loans to other persons, except (a) loans of portfolio securities, and (b) to the extent that the entry into repurchase agreements and the purchase of debt securities in accordance with its investment objective and investment policies may be deemed to be loans;
.........5. issue senior securities, except as permitted under the Investment Company Act of 1940, as amended, and as interpreted or modified by a regulatory authority having jurisdiction, from time to time; provided that the segregation of assets or other collateral arrangements with respect to currency-related contracts, futures contracts, options or other permitted investments, including deposits of initial and variation margin, are not considered to be the issuance of senior securities for purposes of this restriction, and obligations for which the Fund segregates assets in accordance with securities regulatory requirements will not be deemed to be senior securities;
.........6. purchase or sell real estate (except that the Fund may invest in (i) securities of companies which deal in real estate, or mortgages, and (ii) securities secured by real estate or interests therein, and that the Fund reserves freedom of action to hold and to sell real estate acquired as a result of the Fund's ownership of securities); or
7. purchase or sell physical commodities or contracts relating to physical commodities.
.........The Fund has voluntarily adopted certain policies and restrictions, which are observed in the conduct of its affairs. These represent intentions of the Board of Directors based upon current circumstances. They differ from fundamental investment policies in that they may be changed or amended by action of the Board of Directors without prior notice to or approval of shareholders.
The following policies are non-fundamental policies and may be changed without shareholder approval. The Fund currently may not:
.........(a) purchase or sell futures contracts or options thereon;
.........(b) make short sales;
.........(c) pledge, mortgage or hypothecate its assets in excess, together with permitted borrowings, of 1/3 of its total assets;
.........(d) purchase securities on margin, except that the Fund may obtain such short-term credits as are necessary for the clearance of transactions;
.........(e) invest more than 15% of its net assets in securities which are illiquid or not readily marketable; and
.........(f) write put or call options.
.........If a percentage restriction on investment or utilization of assets as set forth under "Investment Restrictions" above is adhered to at the time an investment is made, a later change in percentage resulting from changes in the value or the total cost of the Fund's assets will not be considered a violation of the restriction.
TAXES
.........The Fund will seek to qualify as a regulated investment company under Subchapter M of the Internal Revenue Code of 1986, as amended (the "Code"). A regulated investment company qualifying under Subchapter M of the Code is required to distribute to its shareholders at least 90% of its investment company taxable income (including net short-term capital gain) and generally is not subject to federal income tax (assuming the Fund meets the 90% gross income test and the tax diversification test of Subchapter M, described below) to the extent that it distributes annually its investment company taxable income and net realized capital gains in the manner required under the Code. The Fund intends to distribute at least annually all of its investment company taxable income and net realized capital gains and therefore generally does not expect to pay federal income taxes.
In order to meet the tax diversification test, at the close of each quarter of its fiscal year, (I) at least 50% of the value of the Fund's total assets must be represented by cash and cash items including receivables, U.S. government securities, and securities of other regulated investment companies, and other securities limited in respect of any one issuer to an amount not greater than 5% of the value of its total assets, and to not more than 10% of the outstanding voting securities of such issuer, and (ii) not more than 25% of the value of its total assets may be invested in the securities of any one issuer (other than U.S. government securities and the securities of other regulated investment companies.)
.........The Fund will meet the 90% of gross income test if 90% of its annual gross income is derived from dividends, interest, payments with respect to certain securities loans, and gain from the sale or disposition of stock or securities or foreign currencies, or other income (including, but not limited to, gains from options, futures, or forward contracts) derived with respect to its business of investing in such stock, securities or currencies.
.........The Fund is subject to a 4% nondeductible excise tax on amounts required to be but which are not distributed under a prescribed formula. The formula requires payment to shareholders during a calendar year of distributions representing at least 98% of the Fund's ordinary income for the calendar year, at least 98% of the excess of its capital gains over capital losses (adjusted for certain ordinary losses prescribed by the Code) realized during the one-year period ending October 31 during such year, and all ordinary income and capital gains for prior years that were not previously distributed.
.........Investment company taxable income generally includes dividends, interest, net short-term capital gains in excess of net long-term capital losses, and net foreign currency gains, if any, less expenses. Realized net capital gains for a fiscal year are computed by taking into account any capital loss carry forward of the Fund.
.........If any net realized long-term capital gains in excess of net realized short-term capital losses are retained by the Fund for reinvestment, requiring federal income taxes to be paid thereon by the Fund, the Fund intends to elect to treat such capital gains as having been distributed to shareholders. As a result, each shareholder will report such capital gains as long-term capital gains, will be able to claim his/her share of federal income taxes paid by the Fund on such gains as a credit against his/her own federal income tax liability, and will be entitled to increase the adjusted tax basis of his/her Fund shares by the difference between his/her pro rata share of such gains and his/her tax credit.
.........Distributions of investment company taxable income are taxable to shareholders as ordinary income. If a portion of the Fund's income consists of dividends from U.S. corporations, a portion of the dividends paid by the Fund may qualify for the corporate dividends-received deduction.
.........Distributions of the excess of net long-term capital gain over net short-term capital loss are taxable to shareholders as long-term capital gain, regardless of the length of time the shares of the Fund have been held by such shareholders. Such distributions are not eligible for a dividends-received deduction for corporate investors.
.........Distributions of investment company taxable income and net realized capital gains will be taxable as described above, whether received in shares or in cash. Shareholders electing to receive distributions in the form of additional shares will have a cost basis for federal income tax purposes in each share so received equal to the net asset value of a share on the reinvestment date.
.........If shares are held in a tax-deferred account, such as a retirement plan, income and gain will not be taxable each year. Instead, the taxable portion of amounts held in a tax-deferred account generally will be subject to tax as ordinary income only when distributed from that account.
.........All distributions of investment company taxable income and realized net capital gain, whether received in shares or in cash, must be reported by each shareholder on his or her federal income tax return. Dividends and capital gains distributions declared in October, November or December and payable to shareholders of record in such a month will be deemed to have been received by shareholders on December 31 if paid during January of the following year.
.........Redemptions of shares, including exchanges for shares of another fund (to the extent such exchanges may be available), may result in tax consequences (gain or loss) to the shareholder and are also subject to information reporting requirements. Any loss recognized on a sale or exchange will be disallowed to the extent shares disposed of are replaced within a period of 61 days beginning 30 days before and ending 30 days after the disposition. In such a case, the basis of the acquired shares will be adjusted to reflect the disallowed loss. Any loss realized by a shareholder on a disposition of Fund shares held by the shareholder for six months or less may be treated as a long-term capital loss to the extent of any distributions of net capital gains received by the shareholder with respect to such shares.
.........In some cases, shareholders will not be permitted to take sales charges
into account for purposes of determining the amount of gain or loss realized on
the disposition of their Fund shares. This prohibition generally applies where
(1) the shareholder incurs a sales charge in acquiring the shares, (2) the
shares are disposed of before the 91st day after the date on which they were
acquired, and (3) the shareholder subsequently acquires shares of the same or
another fund and the otherwise applicable sales charge is reduced under a
"reinvestment right" received upon the initial purchase of shares. The term
"reinvestment right" means any right to acquire stock of one or more funds
(including the Fund) without the payment of a sales charge or with the payment
of a reduced sales charge. Sales charges affected by this rule are treated as if
they were incurred with respect to the shares acquired under the reinvestment
right. This provision may be applied to successive acquisitions of Fund shares.
.........Distributions by the Fund result in a reduction in the net asset value of its shares. Should a distribution reduce the net asset value below a shareholder's cost basis, such distribution would nevertheless be taxable to the shareholder as ordinary income or capital gain as described above, even though it may constitute a partial return of capital. In particular, investors should consider the tax implications of buying shares just prior to a distribution. The price of shares purchased at that time includes the amount of the forthcoming distribution. Those purchasing just prior to a distribution will then receive a partial return of their invested capital upon the distribution, which will nevertheless be taxable to them.
.........If the Fund has a large enough percentage of its assets invested in foreign securities, the Fund intends to qualify for and may make the election permitted under Section 853 of the Code so that shareholders may (subject to limitations) be able to claim a credit or deduction on their federal income tax returns for, and may be required to treat as part of the amounts distributed to them, their pro rata portion of qualified taxes paid by the Fund to foreign countries (which taxes relate primarily to investment income). The Fund may make an election nder Section 853 of the Code, provided that more than 50% of the value of the total assets of the Fund at the close of the taxable year consists of securities in foreign corporations. The foreign tax credit available to shareholders is subject to certain limitations imposed by the Code.
.........If the Fund invests in stock of certain foreign investment companies, the Fund may be subject to U.S. federal income taxation on a portion of any "excess distribution" with respect to, or gain from the disposition of, such stock. The tax would be determined by allocating such distribution or gain ratably to each day of the Fund's holding period for the stock. The distribution or gain so allocated to any taxable year of the Fund, other than the taxable year of the excess distribution or disposition, would be taxed to the Fund at the highest ordinary income rate in effect for such year, and the tax would be further increased by an interest charge to reflect the value of the tax deferral deemed to have resulted from the ownership of the foreign company's stock. Any amount of distribution or gain allocated to the taxable year of the distribution or disposition would be included in the Fund's investment company taxable income and, accordingly, would not be taxable to the Fund to the extent distributed by the Fund as a dividend to its shareholders.
.........Alternatively, the Fund may elect to mark to market its foreign investment company stock, resulting in the stock being treated as sold at fair market value on the last business day of each taxable year. Any resulting gain would be reported as ordinary income; any resulting loss and any loss from an actual disposition of the stock would be reported as ordinary loss to the extent of any net mark-to-market gains previously included in income. The Fund also may elect, in lieu of being taxable in the manner described above, to include annually in income its pro rata share of the ordinary earnings and net capital gain of the foreign investment company.
.........Under the Code, gains or losses attributable to fluctuations in exchange rates which occur between the time the Fund accrues receivables or liabilities denominated in a foreign currency and the time the Fund actually collects such receivables, or pays such liabilities, generally are treated as ordinary income or ordinary loss. Gain similarly, on disposition of debt securities denominated in a foreign currency and on disposition of certain forward contracts, gains or losses attributable to fluctuations in the value of foreign currency between the date of acquisition of the security or contract and the date of disposition are also 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 to be distributed to its shareholders as ordinary income.
.........The Fund will be required to report to the U.S. Internal Revenue Service ("IRS") all distributions of investment company taxable income and capital gains as well as gross proceeds from the redemption or exchange of Fund shares, except in the case of certain exempt shareholders. Under the backup withholding provisions of Section 3406 of the Code, distributions of investment company taxable income and capital gains and proceeds from the redemption or exchange of the shares of a regulated investment company may be subject to withholding of federal income tax at the rate of 31% in the case of non-exempt shareholders who fail to furnish the investment company with their Tax Identification Number ("TIN") and with required certifications regarding their status under the federal income tax law. Withholding may also be required if the Fund is notified by the IRS or a broker that the TIN furnished by the shareholder is incorrect or that the shareholder has previously failed to report interest or dividend income. If the withholding provisions are applicable, any such distributions and proceeds, whether taken in cash or reinvested in additional shares, will be reduced by the amounts required to be withheld. Amounts withheld are applied against the shareholder's tax liability and a refund may be obtained from the IRS, if withholding results in overpayment of taxes. A shareholder should contact the Fund or the Transfer Agent (as defined in "Transfer Agent" below) if the shareholder is uncertain whether a proper TIN is on file with the series.
.........Shareholders of the Fund may be subject to state and local taxes on distributions received from the Fund and on redemptions or exchanges of the Fund's shares. Each investor should consult his or her own tax advisor as to the applicability of these taxes.
.........In January of each year the Company's Transfer Agent issues to each shareholder a statement of the federal income tax status of all distributions.
.........The foregoing discussion of U.S. federal income tax law relates solely to the application of that law to U.S. persons, i.e., U.S. citizens and residents and U.S. corporations, partnerships, trusts and estates. Each shareholder who is not a U.S. person should consider the U.S. and foreign tax consequences of ownership of Fund shares. Each shareholder who is not a U.S. person should also consider the U.S. estate tax implications of holding Fund shares at death. The U.S. estate tax may apply to such holdings if an investor dies while holding shares of the Fund. Each investor should consult his or her own tax advisor about the applicability of these taxes. A distribution of net investment income to nonresident aliens and foreign corporations that are not engaged in a trade or business in the U.S. to which the distribution is effectively connected, will be subject to a withholding tax imposed at the rate of 30% upon the gross amount of the distribution in the absence of a tax treaty providing for a reduced rate or exemption from U.S. taxation. A distribution of net long-term capital gains realized by the Fund is not subject to tax unless the distribution is effectively connected with the conduct of the shareholder's trade or business within the United States, or the foreign shareholder is a non-resident alien individual who was physically present in the U.S. during the tax year for more than 182 days.
.........The foregoing is a general abbreviated summary of present federal income taxes on dividends and distributions. Shareholders should consult their tax advisors about the application of the provisions of the tax law described in this Statement of Additional Information in light of their particular tax situations and about any state and local taxes applicable to dividends and distributions.
DIVIDENDS AND DISTRIBUTIONS
.........As stated previously, it is the policy of the Fund to distribute substantially all of its net investment income and net realized capital gains, if any, shortly after the close of the fiscal year (November 30th).
.........All dividend and capital gains distributions, if any, will be reinvested in full and fractional shares based on net asset value (without a sales charge) as determined on the ex-dividend date for such distributions. Shareholders may, however, elect to receive all such payments, or the dividend or distribution portion thereof, in cash, by sending written notice to this effect to the Transfer Agent. This written notice will be effective as to any subsequent payment if received by the Transfer Agent prior to the record date used for determining the shareholders' entitlement to such payment. Such an election will remain in effect unless or until the Transfer Agent is notified by the shareholder in writing to the contrary.
PORTFOLIO TRANSACTIONS AND BROKERAGE
.........Subject to the supervision of the Directors, decisions to buy and sell securities for the Fund and negotiation of their brokerage commission rates are made by the Fund's advisor. Transactions on U.S. stock exchanges involve the payment by the Fund of negotiated brokerage commissions. There is generally no stated commission in the case of securities traded in the over-the-counter market but the price paid by the Fund usually includes an undisclosed dealer commission or mark-up. In certain instances, the Fund may make purchases of underwritten issues at prices which include underwriting fees. Consistent with the Rules of Fair Practice of the National Association of Securities Dealers, Inc., and subject to its obligation of seeking best qualitative execution, the Fund's advisor may give consideration to sales of shares of the Trust as a factor in the selection of brokers and dealers to execute portfolio transactions. For the period December 30, 1998 (commencement of operations) through November 30, 1999, the Fund paid brokerage commissions of $1,075. For the fiscal year ended November 30, 2000, the Fund paid brokerage commissions of $3,731.
.........In selecting a broker to execute each particular transaction, the Fund's advisor takes the following into consideration: the best net price available; the reliability, integrity and financial condition of the broker; the size and difficulty in executing the order; and the value of the expected contribution of the broker to the investment performance of the Fund on a continuing basis. Accordingly, the cost of the brokerage commissions to the Fund in any transaction may be greater than that available from other brokers if the difference is reasonably justified by other aspects of the portfolio execution services offered. For example, the Fund's advisor will consider the research and investment services provided by brokers or dealers who effect or are parties to portfolio transactions of the Fund or the Fund's advisor's other clients. Such research and investment services include statistical and economic data and research reports on particular companies and industries as well as research software. Subject to such policies and procedures as the Directors may determine, the Fund's advisor shall not be deemed to have acted unlawfully or to have breached any duty solely by reason of its having caused the Fund to pay a broker that provides research services to the Fund's advisor an amount of commission for effecting a portfolio investment transaction in excess of the amount another broker would have charged for effecting that transaction, if the Fund's advisor determines in good faith that such amount of commission was reasonable in relation to the value of the research service provided by such broker viewed in terms of either that particular transaction or the Fund's advisor's ongoing responsibilities with respect to the Fund.
.........Research and investment information is provided by these and other brokers at no cost to the Fund's advisor and is available for the benefit of other accounts advised by the Fund's advisor and its affiliates, and not all of the information will be used in connection with the Fund. While this information may be useful in varying degrees and may tend to reduce the Fund's advisor's expenses, it is not possible to estimate its value and in the opinion of the Fund's advisor it does not reduce the Fund's advisor's expenses in a determinable amount. The extent to which the Fund's advisor makes use of statistical, research and other services furnished by brokers is considered by the Fund's advisor in the allocation of brokerage business but there is no formula by which such business is allocated. The Fund's advisor does so in accordance with its judgment of the best interests of the Fund and its shareholders.
.........The Company and the Fund's advisor have adopted a Code of Ethics (the "Code") under Rule 17j-1 of the Investment Company Act of 1940. The personnel subject to the Code are permitted to invest in securities, including securities that may be purchased or held by the Fund. You may obtain a copy of the Code from the Securities and Exchange Commission.
PORTFOLIO TURNOVER
.........Average annual portfolio turnover rate is the ratio of the lesser of sales or purchases to the monthly average value of the portfolio securities owned during the year, excluding from both the numerator and the denominator all securities with maturities at the time of acquisition of one year or less. A higher rate involves greater transaction expenses to the Fund and may result in the realization of net capital gains, which would be taxable to shareholders when distributed. Purchases and sales are made for the Fund's portfolio whenever necessary, in the Investment Advisor's opinion, to meet the Fund's objective. The Fund's advisor anticipates that the Fund's average annual portfolio turnover rate will be less than 100%.
NET ASSET VALUE
.........The Fund's net asset value ("NAV") per share is calculated daily from Monday through Friday on each business day on which the New York Stock Exchange (the "Exchange") is open. The Exchange is currently closed on weekends and on the following holidays: New Year's Day, Martin Luther King, Jr. Day, Presidents' Day, Good Friday, Memorial Day, Independence Day, Labor Day, Thanksgiving Day and Christmas Day, and the preceding Friday or subsequent Monday when any of these holidays falls on a Saturday or Sunday, respectively.
.........The Board of Directors has determined that the Fund's NAV be calculated as of the close of trading of the Exchange (generally 4:00 p.m., Eastern Time) on each business day from Monday to Friday or on each day (other than a day during which no security was tendered for redemption and no order to purchase or sell such security was received by the Fund) in which there is a sufficient degree of trading in the Fund's portfolio securities that the current NAV of the Fund's shares might be materially affected by changes in the value of such portfolio security. The Fund may compute its NAV per share more frequently if necessary to protect shareholders' interests.
.........NAV per share is determined by dividing the total value of the Fund's securities and other assets, less liabilities (including proper accruals of taxes and other expenses), by the total number of shares then outstanding, and rounding the result to the nearer cent.
.........Generally, securities owned by the Fund are valued at market value. In valuing the Fund's assets, portfolio securities, including ADRs and ADSs, which are traded on the Exchange, will be valued at the last sale price prior to the close of regular trading on the Exchange, unless there are indications of substantially different valuations. Lacking any sales, the security will be valued at the last bid price prior to the close of regular trading on the Exchange. ADRs and ADSs for which such a value cannot be readily determined on any day will be valued at the closing price of the underlying security adjusted for the exchange rate. In cases where securities are traded on more than one exchange, the securities are valued on the exchange designated in accordance with procedures approved by the Board of Directors of the Fund as the primary market. Securities will be valued using quotations on the exchange and lacking any sales, securities will be valued at the last reported bid price prior to the Fund's valuation time, unless the Fund is aware of a material change in the value prior to the time it values its securities.
.........Unlisted securities which are quoted on the National Market System of the National Association of Securities Dealers, Inc. (the "NASD"), for which there have been sales of such securities, shall be valued at the last sale price reported on such system. If there are no such sales, the value shall be the high or "inside" bid, which is the bid supplied by the NASD on its NASDAQ Screen for such securities in the over-the-counter market. The value of such securities quoted on the NASDAQ System, but not listed on the NASD's National Market System, shall be valued at the high or "inside" bid. Unlisted securities which are not quoted on the NASDAQ System and for which the over-the-counter market quotations are readily available will be valued at the current bid prices for such securities in the over-the-counter market. Other unlisted securities (and listed securities subject to restriction on sale) may be valued at their fair value as determined in good faith by the Board of Directors.
.........The value of a security traded or dealt in upon an exchange may be valued at what the Company's pricing agent determines is fair market value on the basis of all available information, including the last determined value, if there was no sale on a given day and the pricing agent determines that the last bid does not represent the value of the security, or if such information is not available. For example, the pricing agent may determine that the price of a security listed on a foreign stock exchange that was fixed by reason of a limit on the daily price change does not represent the fair market value of the security. Similarly, the value of a security not traded or dealt in upon an exchange may be valued at what the pricing agent determines is fair market value if the pricing agent determines that the last sale does not represent the value of the security, provided that such amount is not higher than the current bid price.
.........Notwithstanding the foregoing, money market investments with a remaining maturity of less than 60 days shall be valued by the amortized cost method described below; debt securities are valued by appraising them at prices supplied by a pricing agent approved by the Fund, which prices may reflect broker-dealer supplied valuations and electronic data processing techniques and are representative of market values at the close of the Exchange.
.........The value of an illiquid security which is subject to legal or contractual delays in or restrictions on resale by the Fund shall be the fair value thereof as determined in accordance with procedures established by the Fund's Board, on the basis of such relevant factors as the following: the cost of such security to the Fund, the market price of unrestricted securities of the same class at the time of purchase and subsequent changes in such market price, potential expiration or release of the restrictions affecting such security, the existence of any registration rights, the fact that the Fund may have to bear part or all of the expense of registering such security, and any potential sale of such security to another investor. The value of other property owned by the Fund shall be determined in a manner which, in the discretion of the pricing agent of the Fund, most fairly reflects fair market value of the property on such date.
.........Following the calculation of security values in terms of the currency in which the market quotation used is expressed ("local currency"), the pricing agent shall, prior to the next determination of the NAV of the Fund's shares, calculate these values in terms of U.S. dollars on the basis of the conversion of the local currencies (if other than U.S. dollars) into U.S. dollars at the rates of exchange prevailing at the valuation time as determined by the pricing agent.
.........U.S. Treasury bills, and other short-term obligations issued or guaranteed by the U.S. government, its agencies or instrumentalities, with original or remaining maturities in excess of 60 days are valued at the mean of representative quoted bid and asked prices for such securities or, if such prices are not available, are valued at the mean of representative quoted bid and asked prices for securities of comparable maturity, quality and type. Short-term securities, with 60 days or less to maturity, are amortized to maturity based on their cost if acquired within 60 days of maturity or, if already held, on the 60th day prior to maturity, based on the value determined on the 61st day prior to maturity.
.........Any purchase order may be rejected by the distributor or by the Fund.
.........The Company has reserved the right to redeem its shares by payment of its portfolio securities in-kind but does not intend to do so under normal circumstances.
CONTINGENT DEFERRED SALES CHARGES
Class A Shares
.........With respect to purchases of $1 million or more, Class A shares redeemed within one year of purchase will be subject to a contingent deferred sales charge equal to 1% of the lesser of the cost of the shares being redeemed or their net asset value at the time of redemption. Accordingly, no sales charge will be imposed on increases in net asset value above the initial purchase price. In addition, no charge will be assessed on shares derived from reinvestment of dividends or capital gains distributions. In determining, the contingent deferred sales charge applicable to a redemption of Class A shares, it will be assumed that the redemption is, first, of any shares that are not subject to a contingent deferred sales charge (for example, because an initial sales charge was paid with respect to the shares, or they have been held beyond the period during which the charge applies or were acquired upon the reinvestment of dividends and distributions) and, second, of shares held longest during the time they are subject to the sales charge. Proceeds from the contingent deferred sales charge on Class A shares are paid to the distributor of the Fund's Class A shares, and are used by the distributor to defray the expenses related to providing distribution-related services to the Fund in connection with the sales of Class A shares, such as the payment of compensation to selected dealers or financial intermediaries for selling Class A shares.
Class B Shares
.........Class B shares that are redeemed within six years of purchase will be subject to a contingent deferred sales charge at the rates set forth in the Prospectus charged as a percentage of the dollar amount subject thereto. The charge will be assessed on an amount equal to the lesser of the cost of the shares being redeemed or their net asset value at the time of redemption. Accordingly, no sales charge will be imposed on increases in net asset value above the initial purchase price. In addition, no charge will be assessed on shares derived from reinvestment of dividends or capital gains distributions.
.........Proceeds from the contingent deferred sales charge on the Class B shares are paid to the distributor and are used to defray the expenses related to providing distribution-related services to the Fund in connection with the sale of the Class B shares, including payments to dealers and other financial intermediaries for selling Class B shares and interest and other financing costs associated with the Class B shares.
.........In determining the contingent deferred sales charge applicable to a redemption of Class B shares, it will be assumed that the redemption is, first, of any shares that were acquired upon the reinvestment of dividends or distributions and, second, of any shares held longest during the time they are subject to the sales charge.
.........The contingent deferred sales charge is waived on redemptions of shares
(i) following the death of a shareholder, (ii) to the extent that the redemption
represents a minimum required distribution from an individual retirement account
or other retirement plan to a shareholder who has attained the age of 70 1/2, or
(iii) that had been purchased by present or former directors of the Fund, by the
relative of any such person, by any trust, individual retirement account or
retirement plan account for the benefit of any such person or relative, or by
the estate of any such person or relative.
Conversion Feature
.........At the end of the month which precedes the eighth anniversary of the purchase date of a shareholder's Class B shares, the Class B shares will automatically convert to Class A shares and will no longer be subject to higher distribution and service fees. Such conversion will occur on the basis of the relative net asset values of the two classes, without the imposition of any sales charge, fee or other charge. The purpose of the conversion feature is to reduce the distribution and service fees paid by holders of Class B shares that have been outstanding long enough for the distributor to have been compensated for distribution expenses incurred in the sale of such shares.
.........For purposes of conversion to Class A, Class B shares purchased through the reinvestment of dividends and distributions paid in respect of Class B shares in a shareholder's account will be considered to be held in a separate sub-account. Each time any Class B shares in the shareholder's account (other than those in the sub-account) convert to Class A, an equal pro-rata portion of the Class B shares in the sub-account will also convert to Class A.
Class R Shares
.........Class R shares are not subject to a contingent deferred sales charge.
DIRECTORS AND OFFICERS
.........The Board of Directors supervises the business activities of the corporation. The Board of Directors approves all significant agreements between the Fund and persons or companies furnishing services to it, including the Fund's agreements with the Fund's advisor, administrator, fund accountant, Transfer Agent and custodian. The management of the Fund's day-to-day operations is delegated to its officers, the Fund's advisor and the administrator, subject always to the investment objective and policies of the Fund and to general supervision by the Board of Directors. A list of the Company's Directors and Officers and their principal occupations during the past five years are set forth below. The address of each Director and Officer is c/o Tanaka Capital Management, Inc., 230 Park Avenue, Suite 960, New York, New York 10169.
*Graham Y. Tanaka, Chairman, Chief Executive Officer and President of the Company (Year of Birth 1948)
.........Mr. Tanaka is currently the President of Tanaka Capital Management, Inc. ("Tanaka Capital"), having founded the firm in December 1986. From 1973 until 1978, Mr. Tanaka was a research analyst at Morgan Guaranty Trust. He then worked at Fiduciary Trust Company of New York as Vice President from 1978-1980. Prior to launching Tanaka Capital, Mr. Tanaka served as Chairman at Milbank Tanaka & Associates from 1980 to 1986. He is a member of The Electronic Analyst Group and also a member of the Healthcare Analyst Association. Mr. Tanaka currently serves on the boards of TransAct Technologies, Inc. and Tridex Corporation. He is a 1971 graduate of Brown University (BS, BA), a 1973 graduate of Stanford University (MBA) and a Chartered Financial Analyst (CFA).
David M. Fox, Director (Year of Birth 1948)
.........Mr. Fox, has been the President and CEO of myTVshop.com, Inc. since January 1999. From March 1992 until joining myTVshop.com he was Unapix Entertainment's President, Chief Executive Officer and a Director. From June 1991 until joining Unapix Entertainment in March 1992, he was the Chief Executive Officer of David Fox and Associates, a company which he founded and which provided international programming consulting services and acted as U.S. sales agent for producers worldwide. From 1981 until June 1991, Mr. Fox served as Chief Executive Officer and head of Domestic Syndication and Cable Television for Fox/Lorber Associates, Inc. ("Fox/Lorber"), a corporation which he co-founded and which engaged in the worldwide distribution of feature films, home video and television programs. From March 1990 to June 1991, Mr. Fox also served as Director of GAGA Communications, a Japanese company engaged in home video and theatrical distribution. Prior to founding Fox/Lorber, Mr. Fox was Eastern and Midwest Sales Manager for D.L. Taffner Ltd., syndicator of Three's Company and The Benny Hill Show. He is a 1970 graduate of Brown University (BA) and a 1974 graduate of Harvard (MBA).
Thomas R. Schwarz, Director (Year of Birth 1936)
.........Mr. Schwarz was President and Chief Operating Officer of Dunkin Donuts Inc. (1966-1989); Chairman of the Board and Chief Executive Officer of Grossmans Inc. (1989-1994) and retired in 1994. Mr. Schwarz currently sits on the following boards: TransAct Technologies, Inc., Tridex Corporation, A&W Restaurants, Lebhar-Friedman Publishing and Foilmark Inc. He is a 1958 graduate of Williams College (BA) and a 1964 graduate of Harvard University (MBA).
Scott D. Stooker, Director (Year of Birth 1954)
.........Mr. Stooker has been the owner and President of 1st Team Communications Inc. since 1990. He has served as a member on the board of directors of The Advertising Club of Delaware, Big Brothers/Little Sisters of Delaware, and currently serves on the board of Saint Anthony's Community Center. He is a 1976 graduate of University of Kansas (BSJ, BFA).
Michael D. Brady, Secretary (Year of Birth 1971)
.........Mr. Brady is Director of Sales and Marketing with Tanaka Capital Management, having joined the firm in July 2000. From 1992 to July 2000, Mr. Brady was Vice President of Sales & Marketing of Gabelli & Company, Inc., a broker/dealer.
Kenneth D. Trumpfheller, Assistant Secretary (Year of Birth 1958)
Mr. Trumpfheller has been a Managing Director of Unified Fund Services, Inc., a mutual fund servicing company, since October 2000. From 1994 to October 2000, he was President, Treasurer and Secretary of AmeriPrime Financial Services, Inc., a fund administrator (which merged with Unified Fund Services, Inc.) and AmeriPrime Financial Securities, Inc., a fund distributor. He is the President and a Trustee of AmeriPrime Funds, AmeriPrime Advisors Trust and AmeriPrime Insurance Trust. Prior to December 1994, Mr. Trumpfheller was a senior client executive with SEI Financial Services.
Robert A. Chopyak, Treasurer and Chief Financial Officer (Year of Birth 1968)
.........Mr. Chopyak has been Assistant Vice President of Financial Administration of Unified Fund Services, Inc., a mutual fund servicing company, since August 2000. From February 2000 to August 2000 he was Manager of AmeriPrime Financial Services, Inc., which merged with Unified Fund Services, Inc. He was self-employed, performing Y2K testing from January 1999 to January 2000. He was Vice President of Fund Accounting for American Data Services, Inc., a mutual fund services company, from October 1992 to December 1998.
* "Interested person," as defined in the 1940 Act, of the Fund because of the affiliation with Tanaka Capital Management, Inc.
Compensation of Directors and Officers
The Directors and officers of the Fund receive no remuneration or other compensation from the Fund. No fees will be paid to Directors until such time as they determine the Fund has sufficient assets.
INVESTMENT ADVISOR
Tanaka Capital Management, Inc. (the "Investment Advisor"), 230 Park Avenue, Suite 960, New York, New York 10169, manages the investment of the assets of the Fund pursuant to an Investment Advisory Agreement (the "Advisory Agreement"). Graham Y. Tanaka may be deemed to be a controlling person of the Investment Advisor due to his ownership of the shares of the Investment Advisor. The Advisory Agreement dated December 14, 1998 may be renewed annually only so long as such renewal and continuance is specifically approved by the Company's Board of Directors or by vote of a majority of the outstanding voting securities of the Fund, provided the continuance is also approved by a majority of the Directors who are not "interested persons" of the Company or the Investment Advisor by vote cast in person at a meeting called for the purpose of voting on such approval. The Advisory Agreement is terminable without penalty on 60 days' notice by the Company's Board of Directors or by the Investment Advisor. The Advisory Agreement provides that it will terminate automatically in the event of its assignment.
The Company has designated Graham Y. Tanaka, President and a Director of the Investment Advisor, as the Chairman, President and Chief Executive Officer of the Company.
The Investment Advisor is paid a fee to be accrued daily at an annual rate of 1.00% of the average daily net assets of the Fund. All expenses not specifically assumed by the Investment Advisor are assumed by the Fund. For the period December 30, 1998 (commencement of operations) through November 30, 1999, the Fund paid advisory fees of $6,159. For the fiscal year ended November 30, 2000, the Fund paid advisory fees of $28,349.
FUND SERVICES
Unified Fund Services, Inc. ("Unified"), 431 North Pennsylvania Street, Indianapolis, Indiana 46204, acts as the Fund's transfer agent. Unified maintains the records of each shareholder's account, answers shareholders' inquiries concerning their accounts, processes purchases and redemptions of the Fund's shares, acts as dividend and distribution disbursing agent and performs other transfer agent and shareholder service functions. Unified receives a monthly fee from the Advisor of $1.30 per shareholder (subject to a minimum monthly fee of $1,250) for these transfer agency services.
In addition, Unified provides the Fund with fund accounting services, which include certain monthly reports, record-keeping and other management-related services. For its services as fund accountant, Unified receives an annual fee from the Advisor equal to 0.050% of the Fund's assets up to $100 million, 0.040% of the Fund's assets from $100 million to $300 million, and 0.030% of the Fund's assets over $300 million (subject to a minimum fee of $21,000 per year). For the period December 30, 1998 (commencement of operations) through November 30, 1999 and for the fiscal year ended November 30, 2000, Unified received $13,750 and $22,700, respectively, from the Advisor on behalf of the Fund for these accounting services.
Unified also provides the Fund with administrative services, including all regulatory reporting and necessary office equipment, personnel and facilities. Unified receives a monthly fee from the Advisor equal to an annual rate of 0.10% of the Fund's assets under $50 million, 0.075% of the Fund's assets from $50 million to $100 million, and 0.050% of the Fund's assets over $100 million (subject to a minimum fee of $2,500 per month). For the period December 30, 1998 (commencement of operations) through November 30, 1999 and for the fiscal year ended November 30, 2000, Unified received $27,500 and $30,000, respectively, from the Advisor on behalf of the Fund for these administrative services (prior to October 12, 2000, these fees were paid to AmeriPrime Financial Services, Inc. which merged with Unified on that date).
Custodian
Firstar Bank, N.A. (the "Custodian"), 425 Walnut Street, Cincinnati, Ohio 45202, is the custodian for the Fund. The Custodian collects income when due and holds all of the Fund's portfolio securities and cash. The Custodian is authorized to appoint other entities to act as sub-custodians to provide for the custody of foreign securities which may be acquired and held by the Fund outside the United States.
ACCOUNTANTS
The firm of McCurdy & Associates CPA's, Inc., 27955 Clemens Road, Westlake, Ohio 44145, has been selected as independent public accountants for the Fund for the fiscal year ending November 30, 2001. McCurdy & Associates performs an annual audit of the Fund's financial statements and provides financial, tax and accounting consulting services as requested.
DISTRIBUTION
Distributor
Unified Financial Securities, Inc., 431 North Pennsylvania Street, Indianapolis, Indiana 46204 (the "Distributor"), is the exclusive agent for distribution of shares of the Fund. The Distributor is obligated to sell the shares of the Fund on a best efforts basis only against purchase orders for the shares. Shares of the Fund are offered to the public on a continuous basis. The Distributor and Unified are controlled by Unified Financial Services, Inc.
Distribution and Service Plans
The Company has adopted, in accordance with Rule 12b-1 under the 1940 Act, separate Rule 12b-1 distribution and/or service plans pertaining to the Fund's Class A, Class B and Class R shares (each, a "Plan"). In adopting each Plan, a majority of the Independent Directors have concluded in accordance with the requirements of Rule 12b-1 that there is a reasonable likelihood that each Plan will benefit the Fund and its shareholders. The Directors of the Company believe that the Plans should result in greater sales and/or fewer redemptions of the Fund's shares, although it is impossible to know for certain the level of sales and redemptions of the Fund's shares in the absence of a Plan or under an alternative distribution arrangement.
Under the Plan applicable to the Class R shares of the Fund, payments may be made by the Fund for the purpose of financing any activity primarily intended to result in the sales of Class R shares of the Fund as determined by the Board of Directors. Such activities typically include advertising; compensation for sales and sales marketing activities of financial service agents and others, such as dealers or distributors; shareholder account servicing; production and dissemination of prospectuses and sales and marketing materials; and capital or other expenses of associated equipment, rent, salaries, bonuses, interest and other overhead. To the extent any activity on behalf of the Class R shares is one which the Fund may finance without a Plan, the Fund may also make payments to finance such activity outside of the Plan and not subject to its limitations. Payments under the Class R Plan are not tied exclusively to actual distribution and service expenses, and the payments may exceed distribution and service expenses actually incurred on behalf of the Class R shares.
Under the Plans for the Class A and Class B shares, the Fund may pay a service fee, accrued daily and paid monthly, at the annual rate of up to 0.25% of the average daily net assets attributable to its Class A or Class B shares, as the case may be. The services for which service fees may be paid include, among other things, advising clients or customers regarding the purchase, sale or retention of shares of the Fund, answering routine inquiries concerning the Fund, assisting shareholders in changing options or enrolling in specific plans and providing shareholders with information regarding the Fund and related developments. Pursuant to each Plan, service fee payments made out of or charged against the assets attributable to the Fund's Class A or Class B shares must be in reimbursement for services rendered for or on behalf of the affected class. The expenses not reimbursed in any one month may be reimbursed in a subsequent month. Under the Fund's Class B Plan, the Fund also pays a distribution fee at the annual rate of 0.75% of the average daily net assets attributable to its Class B shares to the Investment Advisor as compensation for financing the Class B broker-dealer fees and commissions.
Among other things, each Plan provides that (1) the distributor or the
Investment Advisor, as the case may be, will submit to the Board at least
quarterly, and the Directors will review, written reports regarding all amounts
expended under the Plan and the purposes for which such expenditures were made;
(2) each Plan will continue in effect only so long as such continuance is
approved at least annually, and any material amendment thereto is approved, by
the votes of a majority of the Board, including the Independent Directors, cast
in person at a meeting called for that purpose; (3) payments by the Fund under
each Plan shall not be materially increased without the affirmative vote of the
holders of a majority of the outstanding shares of the relevant class; and (4)
while each Plan is in effect, the selection and nomination of Directors who are
not "interested persons" (as defined in the 1940 Act) of the Fund shall be
committed to the discretion of the Directors who are not "interested persons" of
the Company.
A report of the amount expended pursuant to each Plan, and the purposes for which such expenditures were incurred, must be made to the Board for its review at least quarterly.
As of the date of this SAI, no payments had been made under the Plans with respect to the Fund.
Each Plan may be amended at any time with respect to the class of shares of the Fund to which the Plan relates by vote of the Directors, including a majority of the Independent Directors, cast in person at a meeting called for the purpose of considering such amendment provided that approval of the shareholders of the applicable class is required for any amendment to increase materially the costs which a class may bear for distribution pursuant to the Plan. Each Plan may be terminated at any time with respect to the class of shares of the Fund to which the Plan relates, without payment of any penalty, by vote of a majority of the Independent Directors, or by vote of a majority of the outstanding voting securities of that class.
EXPENSES OF THE FUND
The Fund will pay its expenses not assumed by the Investment Advisor, including, but not limited to, the following: distribution expenses; Fund accounting expenses; custodian fees and expenses; stock transfer and dividend disbursing fees and expenses; taxes; expenses of the issuance and redemption of Fund shares (including registration and qualification fees and expenses); legal and auditing expenses; and the cost of stationery and forms prepared exclusively for the Fund.
The allocation of the general expenses of the Company among the Fund and any other series of the Company that may be created in the future will be made on a basis that the Company's Board of Directors deems fair and equitable, which may be based on the relative net assets of the series of the Company or the nature of the services performed and relative applicability to each series of the Company.
SPECIAL SHAREHOLDER SERVICES
As described briefly in the Prospectus, the Fund offers the following shareholder services:
Regular Account: The regular account allows for voluntary investments to be made at any time and is available to individuals, custodians, corporations, trusts, estates, corporate retirement plans and others. Investors are free to make additions and withdrawals to or from their regular account as often as they wish. Simply use the Account Application provided with the Prospectus to open your regular account.
Telephone Transactions: You may redeem shares by telephone if you request this service at the time you complete the initial Account Application. If you do not elect this service at that time, you may do so at a later date by putting your request in writing to the Transfer Agent and having your signature guaranteed.
The Fund and the Transfer Agent employ reasonable procedures designed to confirm the authenticity of your instructions communicated by telephone and, if the Fund or Transfer Agent does not, they may be liable for any losses due to unauthorized or fraudulent transactions. As a result of this policy, a shareholder authorizing a telephone redemption bears the risk of loss which may result from unauthorized or fraudulent transactions which the Fund or Transfer Agent believes to be genuine. When you request a telephone redemption, or exchange, if available, you will be asked to respond to certain questions designed to confirm your identity as a shareholder of record. Your cooperation with these procedures will protect your account and the Fund from unauthorized transactions.
Automatic Investment Plan: Shareholders may also purchase additional Fund shares at regular, pre-selected intervals by authorizing the automatic transfer of funds from a designated bank account maintained with a U.S. banking institution which is an Automated Clearing House member. Under the program, existing shareholders may authorize amounts to be debited from their bank account and invested in the Fund monthly or quarterly. Shareholders wishing to participate in this program may obtain the applicable forms from the Transfer Agent. Shareholders may terminate their automatic investments or change the amount to be invested at any time by written notification to the Transfer Agent.
Individual Retirement Account ("IRA"):
Traditional IRA: An individual may make a deductible contribution to a traditional IRA IRA of up to $2,000 or, if less, the amount of the individual's earned income for any taxable year prior to the year the individual reaches age 70 1/2 if neither the individual nor his or her spouse is an active participant in an employer's retirement plan. An individual who is (or who has a spouse who is) an active participant in an employer retirement plan also may be eligible to make deductible IRA contributions; the amount, if any, of IRA contributions that are deductible by such an individual is determined by the individual's (and spouse's, if applicable) adjusted gross income for the year. Even if an individual is not permitted to make a deductible contribution to an IRA for a taxable year, however, the individual nonetheless may make nondeductible contributions up to $2,000, or 100% of earned income if less, for that year. One spouse also may contribute up to $2,000 per year to the other spouse's own IRA, even if the other spouse has earned income of less than $2,000, as long as the spouses' joint earned income is at least $4,000. There are special rules for determining how withdrawals are to be taxed if an IRA contains both deductible and nondeductible amounts. In general, a proportionate amount of each withdrawal will be deemed to be made from nondeductible contributions; amounts treated as a return of nondeductible contributions will not be taxable. If you receive a lump sum distribution from another qualified retirement plan, you may roll over all or part of that distribution into a traditional IRA. Such a rollover contribution is not subject to the limits on annual IRA contributions. By complying with applicable rollover rules, you can continue to defer federal income taxes on your rollover contribution and on any income that is earned on that contribution.
Roth IRA: An individual also may make nondeductible contributions to a Roth IRA of up to $2,000 or, if less, the amount of the individual's earned income for any taxable year if the individual's (and spouse's, if applicable) adjusted gross income for the year is less than $95,000 for single individuals or $150,000 for married individuals. The maximum contribution amount phases out and falls to zero between $95,000 and $110,000 for single persons and between $150,000 and $160,000 for married persons. Contributions to a Roth IRA may be made even after the individual attains age 70 1/2. Distributions from a Roth IRA that satisfy certain requirements will not be taxable when taken; other distributions of earnings will be taxable. An individual with adjusted gross income of $100,000 or less generally may elect to roll over amounts from a traditional IRA to a Roth IRA. The full taxable amount held in the traditional IRA that is rolled over to a Roth IRA will be taxable in the year of the rollover, except rollovers made for 1998, which may be included in taxable income over a four year period.
SEP and SIMPLE Plans: There are special IRA programs available for corporate employers under which the employers may establish IRA accounts for their employees in lieu of establishing corporate retirement plans. Known as SEP-IRAs (Simplified Employee Pension-IRA) and SIMPLE IRAs, they free the corporate employer of a number of the recordkeeping requirements of establishing and maintaining a qualified corporate pension or profit sharing plan.
How to Establish IRAs: Please call the Fund to obtain information regarding the establishment of IRAs. The IRA plan custodian charges your IRA nominal fees in connection with establishing and maintaining the IRA. These fees are detailed in the IRA plan documents.
You should consult with a competent advisor for specific advice concerning your tax status and the possible benefits to you of establishing one or more IRAs. The description above is only very general, there are numerous other rules applicable to these plans and considerations of which you should be aware before establishing one.
GENERAL INFORMATION AND HISTORY
The Company is authorized to issue up to 250,000,000 shares of common stock, par value $0.01 per share, of which it has currently allocated 150,000,000 shares to the Fund. The Board of Directors can allocate the remaining authorized but unissued shares to the Fund, or may create additional series or classes and allocate shares to such series or classes. Each series is required to have a suitable investment objective, policies and restrictions, to maintain a separate portfolio of securities suitable to its purposes, and generally to operate in the manner of a separate investment company as required by the 1940 Act. The Company does not issue share certificates.
If additional series were to be formed, the rights of existing series shareholders would not change, and the objective, policies and investments of each series would not necessarily be changed. A share of any series would continue to have a priority in the assets of that series in the event of a liquidation.
The shares of each series when issued will be fully paid and non-assessable, will have no preference over other shares of the same series as to conversion, dividends, or retirement, and will have no preemptive rights. The shares of any series will be redeemable from the assets of that series at any time at a shareholder's request at the current net asset value of that series determined in accordance with the provisions of the 1940 Act and the rules thereunder. The Company's general corporate expenses (including administrative expenses) will be allocated among the series in proportion to net assets or as determined in good faith by the Board.
As of March 12, 2001, the following persons were the beneficial owners (due to record ownership or power to vote or direct the investment) of five percent (5%) or more of the Class R shares: Graham Y. Tanaka, 230 Park Avenue, Suite 960, New York, NY 10169, 7.44%; McFarland Dewey & Co., 230 Park Avenue, Suite 1450, 14th Floor, New York, NY 10169, 7.72%; TANAKA Capital Management, Inc., 230 Park Avenue, Suite 960, New York, NY 10169, 11.65%; and Caru Trust Corporation, 1121 Crandon Boulevard, Key Biscayne, FL 33149, 5.09% [the above percentages include some duplication of ownership].
As of March 12, 2001, the following person was the record owner of five percent (5%) or more of the Class A shares: Parker Hunter Inc., 2800 Euclid Avenue, Room 300, Cleveland, Ohio 44115, 91.58%.
As of March 12, 2001, the following person was the record owner of five percent (5%) or more of the Class B shares: Parker Hunter Inc., 2800 Euclid Avenue, Room 300, Cleveland, Ohio 44115, 97.56%.
As of March 12, 2001, Parker Hunter Inc. may be deemed to control Class A shares, Class B shares and the Fund's shares as a result of its beneficial ownership of the A shares and B shares of the Fund. As the controlling shareholder, it would control the outcome of any proposal submitted to the shareholders for approval including changes to the Fund's fundamental policies or the terms of the management agreement with the Fund's advisor.
As of March 12, 2001, the officers and directors as a group owned beneficially (due to record ownership or power to vote or direct the investment) 19.09% of the Class R shares.
Each outstanding share of the Company is entitled to one vote for each full share of stock and a fractional vote for each fractional share of stock. All shareholders vote on matters that concern the Company as a whole. Election of Directors or ratification of the independent accountants are examples of matters to be voted upon by all shareholders. The Company is not required to hold a meeting of shareholders each year. The Company intends to hold meetings of shareholders when it is required to do so by the General Corporation Law of Maryland or the 1940 Act. Each series will vote separately on matters (1) when required by the General Corporation Law of Maryland, (2) when required by the 1940 Act, and (3) when matters affect only the interest of the particular series. An example of a matter affecting only one series is a proposed change in an investment restriction of that series. The Fund shares will not have cumulative voting rights, which means that the holders of more than 50% of the shares voting for the election of Directors can elect all of the Directors if they choose to do so.
PERFORMANCE
Total return and current yield are the two primary methods of measuring investment performance. Occasionally, however, the Fund may include its distribution rate in sales literature. Yield, in its simplest form, is the ratio of income per share derived from the Fund's portfolio investments to the current maximum offering price expressed in terms of percent. The yield is quoted on the basis of earnings after expenses have been deducted. Total return, on the other hand, is the total of all income and capital gains paid to shareholders, assuming reinvestment of all distributions, plus (or minus) the change in the value of the original investment, expressed as a percentage of the purchase price. The distribution rate is the amount of distributions per share made by the Fund over a twelve-month period divided by the current maximum offering price.
Performance quotations by investment companies are subject to certain rules adopted by the Securities and Exchange Commission (the "Commission"). These rules require the use of standardized performance quotations, or alternatively, that every non-standardized performance quotation furnished by the Fund be accompanied by certain standardized performance information computed as required by the Commission. Current yield and total return quotations used by the Fund are based on the standardized methods of computing performance mandated by the Commission.
Current Yield. As indicated below, current yield is determined by dividing the net investment income per share earned during the period by the maximum offering price per share on the last day of the period and annualizing the result. Expenses accrued for the period include any fees charged to all shareholders during the 30-day (or one-month) base period ended on the date for which the yield is quoted. According to the Commission formula:
where:
a = dividends and interest earned during the period. b = expenses accrued for the period (net of reimbursements). c = the average daily number of shares outstanding during the period that were entitled to receive dividends. d = the maximum offering price per share on the last day of the period.
The Fund's 30 day yield for Class R shares for the 30 days ended November 30, 2000 was -1.76%.
Total Return. The Fund may periodically advertise "average annual total return". As the following formula indicates, the "average annual total return" is determined by multiplying a hypothetical initial purchase order of $1,000 by the average annual compound rate of return (including capital appreciation/depreciation and dividends and distributions paid and reinvested) for the stated period, less any fees charged to all shareholder accounts, and annualizing the result. The calculation assumes the maximum sales load is deducted from the initial $1,000 purchase order and that all dividends and distributions are reinvested at the public offering price on the reinvestment dates during the period. The quotation assumes the account was completely redeemed at the end of each one-, five- and ten-year period or the period since inception if shorter than the one-, five- or ten-year period and the deduction of all applicable charges and fees.
According to the Commission formula:
P(1+T)n = ERV
where:
P = a hypothetical initial payment of $1,000
T = average annual total return
n = number of years
ERV = ending redeemable value of a hypothetical $1,000 payment made at
the beginning of the one-, five-, or ten-year period at the end of
the one-,five-, or ten-year periods (or fractional portion thereof).
For the periods indicated, average annual total returns for each class of the Fund's shares was as follows:
-------------------------- ------------------- --------------------- -----------------------
Class A Class B Class R
-------------------------- ------------------- --------------------- -----------------------
-------------------------- ------------------- --------------------- -----------------------
Fiscal year ended
11/30/00 N/A N/A -10.40%
-------------------------- ------------------- --------------------- -----------------------
-------------------------- ------------------- --------------------- -----------------------
From inception through
11/30/00 (inception 1.14% -11.17% 19.75%
dates as indicated)
11/19/00 12/31/99 12/30/98
-------------------------- ------------------- --------------------- -----------------------
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Sales literature pertaining to the Fund may quote a distribution rate in addition to the yield or total return. The distribution rate is the amount of distributions per share made by the Fund over a twelve-month period divided by the current maximum offering price. The distribution rate differs from the yield because it measures what the Fund paid to shareholders rather than what the Fund earned from investments. It also differs from the yield because it may include dividends paid from premium income from option writing, if applicable, and short-term capital gains in addition to dividends from investment income. Under certain circumstances, such as when there has been a change in the amount of dividend payout, or a fundamental change in investment policies, it might be appropriate to annualize the distributions paid over the period such policies were in effect, rather than using the distributions paid during the past twelve months.
Occasionally, statistics may be used to specify the Fund's volatility or risk. Measures of volatility or risk are generally used to compare the Fund's changes in net asset value, or its performance, relative to a market index. One measure of volatility is beta. Beta is the volatility of the Fund relative to the total market as represented by the Standard & Poor's 500 Stock Index. A beta of more than 1.00 indicates volatility greater than the market, and a beta of less than 1.00 indicates volatility less than the market. Another measure of volatility or risk is standard deviation. Standard deviation is used to measure variability of net asset value or total return around an average, over a specified period of time. The premise is that greater volatility connotes greater risk undertaken in achieving performance.
Regardless of the method used, past performance is not necessarily indicative of future results, but is an indication of the yield or return to shareholders only for the limited historical period used.
Comparison of Portfolio Performance
Comparison of the quoted non-standardized performance of various investments is valid only if performance is calculated in the same manner. Since there are different methods of calculating performance, investors should consider the effect of the methods used to calculate performance when comparing performance of the Fund with performance quoted with respect to other investment companies or types of investments.
In connection with communicating its performance to current or prospective shareholders, the Fund also may compare these figures to the performance of unmanaged indices which may assume reinvestment of dividends or interest but generally do not reflect deductions for administrative and management costs. Examples include, but are not limited to the Dow Jones Industrial Average, the Consumer Price Index, Standard & Poor's 500 Composite Stock Total Return Index ("S&P 500"), the NASDAQ OTC Composite Index, the NASDAQ Industrials Index and the Russell 2000 Index.
From time to time, in advertising, marketing and other Fund literature, the performance of the Fund may be compared to the performance of broad groups of mutual funds with similar investment goals, as tracked by independent organizations such as Investment Company Data, Inc., Lipper Analytical Services, Inc., CDA Investment Technologies, Inc., Morningstar, Inc., Value Line Mutual Fund Survey and other independent organizations. When these organizations' tracking results are used, the Fund will be compared to the appropriate fund category, that is, by fund objective and portfolio holdings or the appropriate volatility grouping, where volatility is a measure of a fund's risk. From time to time, the average price-earnings ratio and other attributes of the Fund's or the model portfolio's securities, may be compared to the average price-earnings ratio and other attributes of the securities that comprise the S&P 500.
Statistical and other information, as provided by the Social Security Administration, may be used in marketing materials pertaining to retirement planning in order to estimate future payouts of social security benefits. Estimates may be used on demographic and economic data.
Marketing and other Fund literature may include a description of the potential risks and rewards associated with an investment in the Fund. The description may include a "risk/return spectrum" which compares the Fund to other Tanaka funds or broad categories of funds, such as money market, bond or equity funds, in terms of potential risks and returns. Money market funds are designed to maintain a constant $1.00 share price and have a fluctuating yield. Share price, yield and total return of a bond fund will fluctuate. The share price and return of an equity fund also will fluctuate. The description may also compare the Fund to bank products, such as certificates of deposit. Unlike mutual funds, certificates of deposit are insured up to $100,000 by the U.S. government and offer a fixed rate of return.
Risk/return spectrums also may depict funds that invest in both domestic and foreign securities or a combination of bond and equity securities.
FINANCIAL STATEMENTS
The financial statements and independent auditors' report required to be included in the Statement of Additional Information are incorporated herein by reference to the Fund's Annual Report to Shareholders for the period ended November 30, 2000. The Trust will provide the Annual Report without charge by calling the Fund at 1-877-4-TANAKA.
PART C. OTHER INFORMATION
Item 23. Exhibits
(a) Articles of Incorporation. Amended and Restated Articles of Incorporation, which were filed as an Exhibit to Registrant's Pre-Effective Amendment No. 2, are hereby incorporated by reference.
(b) By-laws. By-laws, which were filed as an Exhibit to Registrant's Pre-Effective Amendment No. 1, are hereby incorporated by reference.
(c) Instruments Defining Rights of Security Holders - None.
(d) Investment Advisory Contracts.
(i) Form of Investment Advisory Agreement between TANAKA Capital Management, Inc. and the Registrant on behalf of the TANAKA GROWTH FUND, which was filed as an Exhibit to Registrant's Pre-Effective Amendment No. 2, is hereby incorporated by reference.
(ii) Signature page of the Investment Advisory Agreement between TANAKA Capital Management, Inc. and the Registrant on behalf of the TANAKA GROWTH FUND, which was filed as an Exhibit to Registrant's Post-Effective Amendment No. 2, is hereby incorporated by reference.
(e) Underwriting Contracts.
(i) Distribution Agreement between Unified Financial Securities, Inc. and the Registrant on behalf of the TANAKA GROWTH FUND, is filed herewith.
(ii) Form of Dealer Agreement is filed herewith.
(f) Bonus or Profit Sharing Contracts - None.
(g) Custodial Agreements.
(i) Form of Registrant's agreement with the custodian, Firstar Bank, N.A., which was filed as an Exhibit to Registrant's Pre-Effective Amendment No. 2, is hereby incorporated by reference.
(ii) Signature page of the Registrant's agreement with the custodian, Firstar Bank, N.A., which was filed as an Exhibit to Registrant's Post-Effective Amendment No. 2, is hereby incorporated by reference.
(h) Other Material Contracts.
(i) Form of Mutual Fund Services Agreement between Unified Fund Services, Inc. and the Registrant on behalf of the TANAKA GROWTH FUND, which was filed as an Exhibit to Registrant's Pre-Effective Amendment No. 2, is hereby incorporated by reference.
(ii) Signature page of Mutual Fund Services Agreement between Unified Fund Services, Inc. and the Registrant on behalf of the TANAKA GROWTH FUND, which was filed as an Exhibit to Post-Effective Amendment No. 2, is hereby incorporated by reference.
(iii)Form of Administrative Services Agreement between AmeriPrime Financial Services, Inc. and the Registrant on behalf of the TANAKA GROWTH FUND, which was filed as an Exhibit to Registrant's Pre-Effective Amendment No. 2, is hereby incorporated by reference.
(iv) Signature page of Administrative Services Agreement between AmeriPrime Financial Services, Inc. and the Registrant on behalf of the TANAKA GROWTH FUND, which was filed as an Exhibit to Post-Effective Amendment No. 2, is hereby incorporated by reference.
(i) Legal Opinion.
(i) Opinion of Gordon, Feinblatt, Rothman, Hoffberger & Hollander, LLC., which was filed as an Exhibit to Post-Effective Amendment No. 2, is hereby incorporated by reference.
(ii) Consent of Gordon, Feinblatt, Rothman, Hoffberger & Hollander, LLC is filed herewith.
(j) Other Opinions. Consent of McCurdy & Associates, CPA's, Inc. is filed herewith.
(k) Omitted Financial Statements - None.
(l) Initial Capital Agreements - Investment Representations Letter, which was filed as an Exhibit to Registrant's Pre-Effective Amendment No. 2, is hereby incorporated by reference.
(m) Rule 12b-1 Plan.
(i) Distribution and Service Plan (Class A shares only), which was filed as an Exhibit to Registrant's Post-Effective Amendment No. 2, is hereby incorporated by reference.
(ii) Distribution and Service Plan (Class B shares only), which was filed as an Exhibit to Registrant's Post-Effective Amendment No. 2, is hereby incorporated by reference.
(iii)Distribution and Service Plan (Class R shares only), which was filed as an Exhibit to Registrant's Pre-Effective Amendment No. 2, is hereby incorporated by reference.
(iv) Form of Shareholder Service Agreement (Class A and Class B shares), which was filed as an Exhibit to Registrant's Post-Effective Amendment No. 2, is hereby incorporated by reference.
(v) Form of Letter Agreement (Class R shares), which was filed as an Exhibit to Registrant's Post-Effective Amendment No. 2, is hereby incorporated by reference.
(n) Rule 18f-3 Plan. Multiple Class Plan, which was filed as an Exhibit to Registrant's Post-Effective Amendment No. 2, is hereby incorporated by reference.
(o) Reserved.
(p) Codes of Ethics - Code of Ethics of Registrant and its Adviser is filed herewith.
(q) Powers of Attorney.
(i) Powers of Attorney for the Registrant (and certificate with respect thereto) and certain directors and officers of the Registrant which were filed as an Exhibit to Post-Effective Amendment No. 1, are hereby incorporated by reference.
(ii) Power of Attorney for a director of the Registrant, which was filed as an Exhibit to Registrant's Post-Effective Amendment No. 2, is hereby incorporated by reference.
(iii)Power of Attorney for the Treasurer of the Registrant is filed herewith.
Item 24. Control Persons.
None.
Item 25. Indemnification.
The Registrant is incorporated under the General Corporation Law (the "GCL") of the State of Maryland. The Registrant's Articles of Incorporation provide for indemnification of directors, officers and other agents of the corporation to the fullest extent permitted under the GCL. The articles limit such indemnification so as to comply with the prohibition against indemnifying such persons under Section 17 of the 1940 Act for certain conduct set forth in that section ("Disabling Conduct"). Contracts between the Fund and various service providers include provisions for indemnification, but also forbid the Registrant to indemnify affiliates for Disabling Conduct.
The Registrant may maintain a standard mutual fund and investment advisory professional and directors and officers liability policy. The policy, if maintained, would provide coverage to the Registrant, it directors and officers, and could cover its Adviser, among others. Coverage under the policy would include losses by reason of any act, error, omission, misstatement, misleading statement, neglect or breach of duty.
Item 26. Business and Other Connections of Investment Adviser.
TANAKA Capital Management, Inc. ("TANAKA"), 230 Park Avenue, Suite 960 New York, New York 10169, is adviser to the TANAKA Growth Fund.
TANAKA has engaged in no other business during the past two fiscal years.
For information as to any other business, profession, vocation or employment of a substantial nature in which each director , officer or partner of TANAKA is or has been, at any time during the past two fiscal years, engaged for his own account or in the capacity of director, officer, employee, partner or trustee, reference is made to the Adviser's Form ADV (File #801-28990), currently on file with the Commission as required by the Investment Advisors Act of 1940, as amended.
Item 27. Principal Underwriter.
(a) Unified Financial Securities, Inc., 431 North Pennsylvania Street, Indianapolis, IN 46204, is the Registrant's principal underwriter. Kenneth D. Trumpfheller, a registered principal of the underwriter and the President and Secretary and a Trustee of the Registrant. Unified Financial Securities, Inc. is also the underwriter for the AmeriPrime Funds, AmeriPrime Advisors Trust, Avalon Funds, Inc., Industry Leaders Fund, the Julius Baer Investment Funds, the Kenwood Funds, Labrador Mutual Fund, Lindbergh Funds, The Milestone Funds, Regional Opportunity Fund, The Rockland Fund Trust, Securities Management & Timing Fund, The Sparrow Funds, Threshold Advisor Funds, The Unified Funds, and Valenzuela Capital Trust.
(b) Information with respect to each director and officer of Unified Financial Securities, Inc. is incorporated by reference to Schedule A of Form BD filed by it under the Securities and Exchange Act of 1934 (File No. 8-23508).
(c) Not applicable.
Item 28. Location of Accounts and Records.
Accounts, books and other documents required to be maintained by Section 31(a) of the Investment Company Act of 1940 and the rules promulgated thereunder are maintained by the Registrant at 230 Park Avenue, Suite 960, New York, New York 10169 and/or by the Registrant's Custodian, Firstar Bank, N.A., 425 Walnut Street, Cincinnati, Ohio 45202, and/or by the Registrant's transfer and shareholder service agent, Unified Fund Services, Inc., 431 North Pennsylvania Street, Indianapolis, Indiana 46204.
Item 29. Management Services Not Discussed in Parts A or B.
None.
Item 30. Undertakings.
None.
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the Investment Company Act of 1940, the Registrant certifies that it meets all the requirements for effectiveness of this Post-Effective Amendment No. 3 to its Registration Statement pursuant to Rule 485(b) under the Securities Act of 1933 and has duly caused this Post-Effective Amendment No. 3 to its Registration Statement to be signed on its behalf by the undersigned, duly authorized, in the City of Cincinnati, State of Ohio on the 2nd day of April, 2001.
By:________/s/________________
Donald S. Mendelsohn,
Attorney-in-Fact
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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 dates indicated.
By:_________/s/____________________
*Donald S. Mendelsohn,
Attorney-in-Fact
April 2, 2001
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Graham Y. Tanaka, President and Director*
David M. Fox, Director*
Thomas R. Schwarz, Director*
Scott D. Stoker, Director*
Robert A. Chopyak, Treasurer and CFO*
EXHIBIT INDEX
1. Distribution Agreement...................................EX-99.23.e.i
2. Form of Dealer Agreement.................................EX-99.23.e.ii
3. Consent of Counsel.......................................EX99.23.i
4. Consent of Independent Accountants.......................EX-99.23.j
5. Code of Ethics...........................................EX-99.23.p
6. Power of Attorney........................................EX-99.23.q.iii
EX-99.23.e.i
TANAKA FUNDS, INC.
..................
DISTRIBUTION AGREEMENT
THIS DISTRIBUTION AGREEMENT (the "Agreement") is made as of the 31st day of December 2000 by and among TANAKA Funds, Inc. (the "Corporation"), a Maryland corporation, TANAKA Capital Management, Inc. (the "Adviser"), a Delaware corporation, and Unified Financial Securities, Inc. (the "Distributor"), an Indiana corporation.
WITNESSETH THAT:
WHEREAS, the Corporation 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 "Fund" or "Funds");
WHEREAS, the Adviser has been appointed investment adviser to the Corporation;
WHEREAS, the Distributor is a broker-dealer registered with the Securities and Exchange Commission (the "SEC") and a member in good standing of the National Association of Securities Dealers, Inc. (the "NASD"); and
WHEREAS, the Corporation, the Adviser and the Distributor desire to enter into this Agreement pursuant to which the Distributor will provide distribution services to the Funds of the Corporation identified on Schedule A, as may be amended from time to time, on the terms and conditions hereinafter set forth.
NOW, THEREFORE, in consideration of the premises and mutual covenants contained in this Agreement, the Corporation, the Adviser and the Distributor, intending to be legally bound hereby, agree as follows:
1. APPOINTMENT OF DISTRIBUTOR. The Corporation hereby appoints the Distributor as an agent for the distribution of the Shares, and the Distributor hereby accepts such appointment under the terms of this Agreement. Notwithstanding any other provision hereof, the Corporation 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 Corporation has provided the Distributor with properly certified or authenticated copies of the following Corporation related documents in effect on the date hereof: the Corporation's organizational documents, including its Articles of Incorporation and By-Laws; the Corporation's Registration Statement on Form N-1A, including all exhibits thereto; the Corporation's most current relevant Prospectus and Statement of Additional Information; and resolutions of the Corporation's Board of Directors authorizing the appointment of the Distributor and approving this Agreement. The Corporation shall promptly provide to the Distributor copies, properly certified or authenticated, of all amendments or supplements to the foregoing. The Corporation 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 Corporation by its independent public accountants. The Corporation shall also supply the Distributor with such number of copies of the current relevant 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 Corporation, shall sell Shares to the public against orders therefore at the public offering price, which shall be the net asset value of the Shares then in effect, plus applicable sales charges.
b. The net asset value of the Shares shall be determined in the manner provided in the then-current relevant Prospectus and Statement of Additional Information. The net asset value of the Shares shall be calculated by the Corporation or by another entity on behalf of the Corporation. 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 Corporation or its transfer agent for registration of the Shares purchased.
d. The Distributor, in light of Corporation policies, procedures and disclosure documents, shall also have the right to take, as agent for the Corporation, 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 Corporation 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 Corporation, and that it shall not undertake activities which, in its judgment, would adversely affect the performance of its obligations to the Corporation under this Agreement.
f. The Distributor, as agent for the Corporation, 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 record keeping; and quarterly reports to the Corporation's Board of Directors. Such distribution support services may also include: fulfillment services, including telemarketing, printing, mailing and follow-up tracking of sales loads; and licensing, in Distributor's sole discretion, Adviser or Corporation 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 therefore. The Corporation 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 Corporation agree as follows:
a. The Distributor shall comply with the Conduct Rules 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 Corporation's most current relevant Prospectus and Statement of Additional Information, with respect to the public offering price of the Shares.
c. The Corporation 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, approve and file such materials with the appropriate regulatory authorities and obtain clearance for use. The Corporation 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, in its sole discretion, 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, make or authorize any representative, service organization, broker or dealer to make, any representations concerning the Shares except those contained in the Corporation's most current relevant 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 Corporation 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 Corporation and the Distributor; transfer agent/shareholder servicing agent services; supplying information, prices and other data to be furnished by the Corporation under this Agreement; any original issue taxes or transfer taxes applicable to the sale or delivery of the Shares or certificates therefore; and items covered by the 12b-1 distribution plan adopted with regard to each class of Shares of a Fund (each a "12b-1 Plan").
b. The Adviser shall pay all other expenses incident to the sale and distribution of the Shares sold hereunder to the extent not covered by the applicable 12b-1 Plan, 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 Corporation shall 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. If this Agreement becomes effective subsequent to the first day of the month or terminates before the last day of the month, the Corporation 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 Corporation 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 Corporation 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 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 Corporation or material relating to the Corporation on any forms (including any checks, bank drafts or bank statements) for other than internal use in a manner not approved prior thereto in writing by the Corporation; provided, however, that the Corporation 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 may, in connection with this Agreement employ agents or attorneys in fact, and shall not be liable for any loss arising out of or in connection with its actions under this Agreement, so long as it acts in good faith and with due diligence, and is not negligent or guilty of any willful misfeasance, bad faith or gross negligence, or reckless disregard of its obligations and duties under this Agreement. As used in this Section 11 and in Section 12 (except the second paragraph of Section 12), the term "Distributor" shall include directors, officers, employees and other agents of the Distributor.
12. INDEMNIFICATION OF DISTRIBUTOR. Any director, officer, employee, shareholder or agent of the Distributor who may be or become an officer, Director, employee or agent of the Corporation, shall be deemed, when rendering services to the Corporation or acting on any business of the Corporation (other than services or business in connection with the Distributor's duties hereunder), to be rendering such services to or acting solely for the Corporation 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 Corporation 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 Corporation and provided by the Corporation 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 Corporation 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 Corporation, and each person who controls the Corporation 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 (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, sales literature or other written material, or arise out of or relate to actions or oral representations of Distributor's associated persons and 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, in all events, based upon information furnished in writing to the Corporation 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 Agreement 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 counsel retained by Indemnitee, including reasonable investigation costs.
13. ADVISER PERSONNEL. The Adviser agrees that only its employees who are registered representatives of the Distributor ("dual employees") or registered representatives of another NASD member firm shall offer or sell Shares of the Funds. The Adviser 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 employee's 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, including, without limitation, any and all such liabilities, losses, damages, claims and expenses arising from or related to the breach by such 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 Corporation, 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 Corporation 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 Corporation shall submit to the Distributor at a reasonable time in advance of filing with the SEC copies of any amended or supplemented Registration Statement of the Corporation (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 Corporation. 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 therefor.
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 (i) either the vote of a majority of the Directors of the Corporation, or by the vote of a majority of the outstanding voting securities of each Fund, and (ii) the vote of a majority of those Directors of the Corporation who are not interested persons of the Corporation, 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 16 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 Corporation or by a vote of the majority of the outstanding voting securities of each Fund, upon not less than 60 days' prior written notice to the Distributor.
d. The Distributor may terminate this Agreement upon not less than 60 days' prior written notice to the Corporation.
Upon the termination of this Agreement, the Corporation 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 Corporation designates a successor to any of the Distributor's obligations hereunder, the Distributor shall, at the expense and direction of the Corporation, transfer to such successor all relevant books, records and other data established or maintained by the Distributor pursuant to the foregoing provisions.
Sections 6, 7, 8, 9, 10, 11, 12, 13, 14, 15, 17, 20, 21, 22, 23, 24, 25, 26 and 27 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 Corporation and shall not become effective unless its terms have been approved by the majority of the Directors of the Corporation or by a "vote of majority of the outstanding voting securities" of each Fund and by a majority of those Directors who are not "interested persons" of the Corporation or any party to this Agreement.
19. NON-EXCLUSIVE SERVICES. The services of the Distributor rendered to the Corporation 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 Corporation all records and other information relating to the Corporation and prior, present or potential shareholders and shall not use such records and information for any purpose other than performance of its responsibilities and duties hereunder, except as may be required by administrative or judicial tribunals or as requested by the Corporation.
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 22 as promptly as practicable thereafter). Notices shall be addressed as follows:
(a) if to the Corporation:
TANAKA Funds, Inc. 230 Park Avenue, Suite 960 New York, NY 10169 Attn: Graham Tanaka, President
(b) if to the Adviser:
TANANA Capital Management, Inc.
230 Park Avenue, Suite 960
New York, NY 10169
Attn: Graham Tanaka, President
(c) if to the Distributor:
Unified Financial Securities, Inc.
431 North Pennsylvania Street
Indianapolis, IN 46204
Attn: Stephen D. Highsmith, Jr., President
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 State of Indiana 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 three 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.
TANAKA FUNDS, INC.
By: /s/ Name: Graham Y. Tanaka Title: President |
UNIFIED FINANCIAL SECURITIES, INC.
By: /s/ Name: Stephen D. Highsmith, Jr. Title: President |
TANAKA CAPITAL MANAGEMENT, INC.
By: /s/
Name: Graham Y. Tanaka
Title: President
|
SCHEDULE A
TANAKA FUNDS
Funds covered by Distribution Agreement:
TANAKA Growth Corporation
SCHEDULE B
TANAKA FUNDS, INC.
Distribution Support Services
1. Review and submit for approval all advertising and promotional materials.
2. Maintain all books and records required by the NASD.
3. Monitor Distribution Plan(s) and report to Board of Directors.
4. Prepare quarterly reports to Board of Directors relating to distribution activities.
5. Subject to approval of Distributor, license personnel as registered representatives of the Distributor.
6. Telemarketing services (additional fees to be negotiated).
7. Corporation fulfillment services, including sampling prospective shareholders inquiries and related mailings (additional fees to be
negotiated).
EX-99.23.e.ii
TANAKA FUNDS, INC.
DEALER AGREEMENT
Unified Financial Securities, Inc. (the "Distributor") invites you, , as a selected dealer, to participate as principal in the distribution of shares (the "Shares") of the mutual funds set forth on Schedule A to this Agreement (the "Funds"), of which it is the exclusive Distributor. Distributor agrees to sell to you, subject to any limitations imposed by the Funds, Shares issued by the Funds and to promptly confirm each sale to you. All sales will be made according to the following terms:
1. All offerings of any of the Shares by you must be made at the public offering prices, and shall be subject to the conditions of offering, set forth in the then current Prospectus of the applicable Fund and to the terms and conditions herein set forth, and you agree to comply with all requirements applicable to you of all applicable laws, including federal and state securities laws, the rules and regulations of the Securities and Exchange Commission, and the Rules of Fair Practice of the National Association of Securities Dealers, Inc. (the "NASD"), including Section 24 of the Rules of Fair Practice of the NASD. You will not offer the Shares for sale in any state or other jurisdiction where they are not qualified for sale under the Blue Sky Laws and regulations of such state or jurisdiction, or where you are not qualified to act as a dealer. Upon request to Distributor, Distributor will inform you as to the states or other jurisdictions in which Distributor believes the Shares may legally be sold.
2. (a) On sales of Shares which are made subject to a sales charge, you will receive a discount from the public offering price ("concession") on all Shares purchased by you from Distributor as indicated on Schedule A, as it may be amended by Distributor from time to time.
(b) In all transactions in open accounts in which you are designated as Dealer of Record, you will receive the concessions as set forth on Schedule A.
(c) On sales of Shares which are subject to an asset-based fee or sales charge payable to the selling dealer, you will be paid any continuing fees ("Fees") in accordance with any applicable plan of distribution adopted by the applicable Fund as in effect from time to time (in accordance with SEC Rule 12b-1 and NASD Conduct Rule 2830) as set forth in the applicable Fund's Prospectus or Statement of Additional Information. (See Schedule A.)
(d) You hereby authorize Distributor to act as your agent in connection with all transactions in open accounts in which you are designated as Dealer of Record. All designations as Dealer of Record, and all authorizations of Distributor to act as your agent pursuant thereto, shall cease upon the termination of this Agreement or upon the investor's instructions to transfer his open account to another Dealer of Record. No dealer concessions or Fees will be allowed on purchases generating less than $1.00 in dealer concessions or Fees.
(e) As the exclusive Distributor of the Shares, Distributor reserves the privilege of revising the discounts and Fees specified on Schedule A at any time by written notice.
3. Concessions and Fees will be paid to you at the address of your principal office, as indicated below in your acceptance of this Agreement.
4. Distributor reserves the right to cancel this Agreement at any time without notice if any Shares shall be offered for sale by you at less than the then current public offering prices determined by, or for, the Funds.
5. All orders are subject to acceptance or rejection (in whole or in part) by Distributor in its sole discretion. Distributor reserves the right, in its discretion, without notice, to suspend sales or withdraw the offering of Shares entirely.
6. Payment shall be made to the Funds and shall be received by its Transfer Agent within three (3) business days after the acceptance of your order or such shorter time as may be required by law. With respect to all Shares ordered by you for which payment has not been received, you hereby assign and pledge to Distributor all of your right, title and interest in such Shares to secure payment therefor. You appoint Distributor as your agent to execute and deliver all documents necessary to effectuate any of the transactions described in this paragraph. If such payment is not received within the required time period, Distributor reserves the right, without notice, and at its option, forthwith (a) to cancel the sale, (b) to sell the Shares ordered by you back to the Funds, or (c) to assign your payment obligation, accompanied by all pledged Shares, to any person. You agree that Distributor may hold you responsible for any loss, including loss of profit, suffered by the Funds, its Transfer Agent or Distributor, resulting from your failure to make payment within the required time period.
7. No person is authorized to make any representations concerning Shares of the Funds except those contained in the current applicable Prospectus and Statement of Additional Information and in sales literature issued and furnished by Distributor supplemental to such Prospectus. Distributor will furnish additional copies of the current Prospectus and Statement of Additional Information and such sales literature and other releases and information issued by Distributor in reasonable quantities upon request.
8. Under this Agreement, you act as principal and are not employed by Distributor as broker, agent or employee. You are not authorized to act for Distributor nor make any representation on its behalf; and in purchasing or selling Shares hereunder, you rely only upon the current Prospectus and Statement of Additional Information furnished to you by Distributor from time to time and upon such written representations as may hereafter be made by Distributor to you over its signature.
9. You appoint the Transfer Agent for the Funds as your agent to execute the purchase transactions of Shares in accordance with the terms and provisions of any account, program, plan or service established or used by your customers and to confirm each purchase to your customers on your behalf, and you guarantee the legal capacity of your customers so purchasing such Shares and any co-owners of such Shares.
10. You will (a) maintain all records required by law relating to transactions in the Shares, and upon the request of Distributor, or the request of the Funds, promptly make such of these records available to Distributor or to the Funds as are requested, and (b) promptly notify Distributor if you experience any difficulty in maintaining the records required in the foregoing clause in an accurate and complete manner. In addition, you will establish appropriate procedures and reporting forms and schedules, approved by Distributor and by the Funds, to enable the parties hereto and the Funds to identify all accounts opened and maintained by your customers.
11. Each party hereto represents that it is at present, and at all times during the term of this Agreement will be, a member in good standing of the NASD and agrees to abide by all its Rules of Fair Practice including, but not limited to, the following provisions:
(a) You shall not withhold placing customers' orders for any Shares so as to profit yourself as a result of such withholding. You shall not purchase any Shares from Distributor other than for investment, except for the purpose of covering purchase orders already received.
(b) If any Shares purchased by you are repurchased by the Funds (or by Distributor for the account of the Funds) or are tendered for redemption within seven business days after confirmation of the original sale of such Shares (1) you agree to forthwith refund to Distributor the full concession allowed to you on the original sale, such refund to be paid by Distributor to the Funds, and (2) Distributor shall forthwith pay to the Funds that part of the discount retained by Distributor on the original sale. Notice will be given to you of any such repurchase or redemption within ten days of the date on which the repurchase or redemption request is made.
(c) Neither Distributor, as exclusive Distributor for the Funds, nor you as principal, shall purchase any Shares from a record holder at a price lower than the net asset value then quoted by, or for, the Funds. Nothing in this sub-paragraph shall prevent you from selling Shares for the account of a record holder to Distributor or the Funds at the net asset value currently quoted by, or for, the Funds and charging the investor a fair commission for handling the transaction.
(d) You warrant on behalf of yourself and your registered representatives and employees that any purchase of Shares at net asset value by the same pursuant to the terms of the Prospectus of the applicable Fund is for investment purposes only and not for purposes of resale. Shares so purchased may be resold only to the Fund which issued them.
12. You agree that you will indemnify Distributor, each Fund, each Fund's Transfer Agent, each Fund's Investment Adviser, and each Fund's Custodian and hold such persons harmless from any losses, claims, liabilities and expenses (including legal expenses) relating to the lawfulness of your company's participation in this Agreement and the transactions contemplated hereby or relating to any activities of any persons or entities affiliated with your company which are performed in connection with the discharge of your responsibilities under this Agreement. If any claims are asserted, the indemnified parties shall have the right to engage in their own defense, including the selection and engagement of legal counsel of their choosing, and all costs of such defense shall be borne by you.
13. You agree to provide distribution and marketing services to your customers in the promotion of the Fund's shares including furnishing services and assistance to your customers who own Fund shares. You agree that sales of shares which are not subject to a sales load will be made at the net asset value next computed, and you will advise your customer of any nominal processing charge assessed by you to cover the cost of processing that transaction. You will furnish the fund and us with such information as may be reasonably requested by the Fund, its directors or by us with respect to fees paid to you pursuant to this Agreement.
14. Either party hereto may terminate this Agreement without penalty in the event of its assignment or upon ten days written notice. This Agreement may also be terminated as to any Fund at any time without penalty by the vote of a majority of the members of the Board of Directors of the terminating Fund who are not "interested persons" (as such term is defined in the Investment Company Act of 1940) or by a vote of a majority of the outstanding voting securities of the terminating Fund on ten days written notice. This Agreement may be amended by us upon written notice to you, and you shall be deemed to have consented to such amendment upon effecting any purchases of shares for your own account or on behalf of any of your customer's accounts following your receipt of such notice.
15. All communications to Distributor should be sent to Unified Financial Securities, Inc., 431 North Pennsylvania Ave., Indianapolis, IN 46204, or at such other address as Distributor may designate in writing. Any notice to you shall be duly given if mailed or telegraphed to you at the address of your principal office, as indicated below in your acceptance of this Agreement.
16. This Agreement supersedes any other agreement with you relating to the offer and sale of the Shares, and relating to any other matter discussed herein.
17. This Agreement shall be binding (i) upon placing your first order with Distributor for the purchase of Shares, or (ii) upon receipt by Distributor in Indianapolis, IN of a counterpart of this Agreement duly accepted and signed by you, whichever shall occur first. This Agreement shall be construed in accordance with the laws of the State of Indiana.
18. The undersigned, executing this Agreement on behalf of Dealer, hereby warrants and represents that he is duly authorized to so execute this Agreement on behalf of Dealer.
If the foregoing is in accordance with your understanding of our agreement, please sign and return to us one copy of this Agreement.
Unified Financial Securities, Inc.
By: _____________________________________
Printed Name: Stephen H. Highsmith
Title: President
ACCEPTED BY DEALER:
Firm Name:
By: _____________________________________ Authorized Signature
Type or Print Name:
Position:
ADDRESS and PHONE NUMBER (Principal Office):
Date: _____________________________________
OPERATIONS DEPARTMENT INFORMATION:
Operations Contact (print): ____________________ Operations Phone Number: ____________________
SCHEDULE A
DEALER COMPENSATION SCHEDULE
TANAKA FUNDS, INC.
CLASS A CUSIP # 875353203
At Time of Sale (1):
Gross Sales Dealer/Agent
Amount Purchased Charge Concession
Less than $100,000 4.50% 4.00%
$100,000 but less than $250,000 3.75% 3.25%
$250,000 but less than $500,000 2.75% 2.50%
$500,000 but less than $1,000,000 2.25% 2.00%
$1,000,000 or more (2)
|
(1) Investments by certain individuals and entities including employees and other associated persons of dealers authorized to sell shares of the Fund and the Fund's advisor are not subject to a sales charge.
(2) Investments of $1 million or more are sold with no initial sales charge. A 1% contingent deferred sales charge may be imposed on certain redemptions made within one year of purchase by Class A accounts of $1 million or more. A dealer concession of up to 1% may be paid by the distributor on these investments.
Service Fee: 0.25% For providing shareholder services such as responding to shareholder inquiries; processing redemptions; changing dividend options, account designations and addresses; transmitting proxy statements, annual reports, prospectuses and other correspondence, Tanaka Capital Management intends to pay a quarterly fee to qualifying dealers at the equivalent of 0.25% annually. This fee will be paid quarterly and is based on the average value of eligible assets during the preceding quarter. Class A Service Fee payments will commence 13 months after each sale.
CLASS B CUSIP # 875353104
Sales
Commission
All Sales 4.00%
The above dealer compensation does not apply for shares that will be exempt from CDSC upon redemption.
CDSC: 1% - 5%: Dealers maintaining omnibus accounts, upon redemption of a customer account within the time frames specified below, shall charge such customer account the appropriate CDSC as indicated and shall forward the proceeds to Tanaka Capital Management.
The CDSC is determined based on the chart below:
Holding Period CDSC Redeemed during first year 5.0% Redeemed during second or third year 4.0% Redeemed during fourth or fifth year 2.0% Redeemed during the sixth year 1.0% Redeemed after the sixth year None |
Service Fee: 0.25% For providing shareholder services such as responding to shareholder inquiries; processing redemptions; changing dividend options, account designations and addresses; transmitting proxy statements, annual reports, prospectuses and other correspondence, Tanaka Capital Management intends to pay a quarterly fee to qualifying dealers at the equivalent of 0.25% annually. This fee will be paid quarterly and is based on the average value of eligible assets during the preceding quarter. Class B Service Fee payments will commence 13 months after each sale.
CLASS R CUSIP # 875353302
At Time of Sale:
No Sales Charge
Service Fee: 0.25% For providing shareholder services such as responding to shareholder inquiries; processing redemptions; changing dividend options, account designations and addresses; transmitting proxy statements, annual reports, prospectuses and other correspondence, Tanaka Capital Management intends to pay a quarterly fee to qualifying dealers at the equivalent of 0.25% annually. This fee will be paid quarterly and is based on the average value of eligible assets during the preceding quarter.
Fees described in the above paragraphs shall be paid promptly after the end of each calendar quarter that this Agreement is in effect.
EX-99.23.i March 30, 2001
TANAKA Funds, Inc.
230 Park Avenue, Suite 960
New York, New York 10169
Ladies and Gentlemen:
A legal opinion that we prepared was filed with Post-Effective Amendment No. 2 (the "Legal Opinion") to the Registration Statement. We hereby give you our consent to incorporate by reference the Legal Opinion into Post-Effective Amendment No. 3 to your Registration Statement (the "Amendment"), and consent to all references to us in the Amendment.
Sincerely,
Gordon, Feinblatt, Rothman, Hoffberger & Hollander, LLC
By: /s/ Print Name: Edward E. Obstler, Member |
cc: Brown, Cummins & Brown Co., L.P.A.
EX-99.23.j
CONSENT OF INDEPENDENT AUDITORS
As independent public accountants, we hereby consent to the use of our report dated December 21, 2000 for Tanaka Funds, Inc. and to all references to our firm included in or made a part of this Post-Effective Amendment No. 3 to Tanaka Funds, Inc.'s Registration Statement on Form N-1A (file No. 33-47207), including the references to our firm under the heading "Financial Highlights" in each Prospectus and under the heading "Accountants" in the Statement of Additional Information.
/s/
McCurdy & Associates CPA's, Inc.
Cleveland, Ohio
March 30, 2001
|
EX-99.23.p Tanaka Funds, Inc. Tanaka Capital Management, Inc. AmeriPrime Financial Securities, Inc. Code of Ethics
(Approved by the Board of Directors November 1, 2000)
STATEMENT OF PRINCIPLES
.........Tanaka Funds, Inc. (the "Company") has approved this Code of Ethics to govern personal securities investment activities of persons affiliated with Tanaka Capital Management, Inc. ("TCM"), the officers and directors of AmeriPrime Financial Securities, Inc. (the "Underwriter"), and the officers and directors of the Company (all persons affiliated with TCM and all officers and directors of the Underwriter and the Company, collectively, "Tanaka Personnel"). Although this Code contains a number of specific standards and policies, there are three key principles embodied throughout the Code.
.........The Interests Of Company Shareholders Must Always Be Paramount
.........Tanaka Personnel have a legal, fiduciary duty to place the interests of clients first. In any decision relating to their personal investments, Tanaka Personnel must scrupulously avoid serving their own interests ahead of those of any client.
Tanaka Personnel May Not Take Inappropriate Advantage Of Their Relationship To Our Shareholders
Tanaka Personnel should avoid any situation (unusual investment opportunities, perquisites, accepting gifts of more than token value from persons seeking to do business with TCM or the Company) that might compromise, or call into question, the exercise of their fully independent judgement in the interests of Company shareholders.
All Personal Securities Transactions Should Avoid Any Actual, Potential or Apparent Conflicts Of Interest
Although all personal securities transactions by Tanaka Personnel must be conducted in a manner consistent with this Code, the Code itself is based upon the premise that Tanaka Personnel owe a fiduciary duty to clients, and should avoid any activity that creates an actual, potential or apparent conflict of interest. This includes executing transactions through or for the benefit of a third party when the transaction is not in keeping with the general principles of this Code.
Tanaka Personnel must adhere to these general principles as well as comply with the specific provisions of this Code. Technical compliance with the Code and its procedures will not automatically prevent scrutiny of trades that show a pattern of abuse of an individual's fiduciary duties of clients.
DEFINITIONS
"Act" means the Investment Company Act of 1940.
"Adviser Personnel" means (1) any employee of the Company, TCM, or the
Underwriter, who, in connection with his or her regular functions or duties,
makes, participates in or obtains information regarding the purchase or sale of
Securities by any Fund, or whose functions relate to the making of any
recommendations with respect to the purchase or sale of Securities by any Fund,
(2) any officer or director of TCM, and (3) any natural person in a control
relationship to any Fund or TCM who obtains information concerning
recommendations made to a Fund with regard to the purchase or sale of a Security
by a Fund. Any provisions of this Code that apply directly to Adviser Personnel
apply equally to accounts in the names of other persons in which Adviser
Personnel have Beneficial Ownership.
"Beneficial Ownership" means the opportunity, directly or indirectly, to profit or share in any profit derived from the purchase or sale of the subject Securities. "Beneficial Ownership" includes, but is not limited to, ownership of Securities held by members of the family. For these purposes, a person's family includes the spouse, minor children, any person living in the home and any relative to whose support the person directly or indirectly contributes.
"Underwriter Personnel" means any officer or director of the Underwriter who, in the ordinary course of business, makes, participates in or obtains information regarding, the purchase or sale of securities by any Fund, or whose functions or duties in the ordinary course of business relate to the making of any recommendation to any Fund regarding the purchase or sale of securities, and any officer or director of the Company.
"Compliance Officer" means, for Adviser Personnel affiliated with TCM, the person designated as the Compliance Officer by TCM; for Adviser Personnel affiliated with the Underwriter, the person designated as the Compliance Officer by the Underwriter; and for Underwriter Personnel not affiliated with the Underwriter or TCM, the Board of Directors of the Company.
"Control" means the power to exercise a controlling influence over the
management or policies of the Company, unless such power is solely the result of
an official position with the Company. Any person who beneficially owns, either
directly or through one or more controlled companies, more than 25 percent of
the voting securities of any Fund of the Company shall be presumed to control
such Fund. Any such presumption may be rebutted by evidence, in accordance with
Section 2(a)(9) of the Act.
"Fund" means any existing or future fund that is a series of the Company.
"Portfolio Managers" means those Adviser Personnel entrusted with the direct responsibility and authority to make investment decisions affecting any Fund. Any provisions of this Code that apply directly to Personal Securities Transactions by a Fund Portfolio Manager apply equally to transactions in accounts in the names of other persons in which the Fund Portfolio Manager has Beneficial Ownership.
"Personal Securities Transaction(s)" means transactions in Securities for the account(s) in the names of Tanaka Personnel, or for accounts in which Tanaka Personnel have Beneficial Ownership.
"Security" means any note, stock, treasury stock, bond, debenture, evidence of indebtedness, certificate of interest or participation in any profit-sharing agreement, collateral-trust certificate, pre-organization certificate or subscription, transferable share, investment contract, voting-trust certificate, certificate of deposit for a security, fractional undivided interest in oil, gas or other mineral rights, or, in general, any interest or instrument commonly known as "security," or any certificate or interest or participation in temporary or interim certificate for, receipt for, guarantee of, or warrant or right to subscribe to or purchase (including options) any of the foregoing.
The term "Security" shall not include the following securities (the
"Excluded Securities"): (i) shares of registered open-end investment companies;
(ii) securities issued by the United States government; (iii) short term debt
securities which are government securities within the meaning of Section
2(a)(16) of the Act; (iv) bankers' acceptances; (v) bank certificates of
deposit; (vi) commercial paper and (vii) such other money market instruments as
may be designated by the Company's Board of Directors.
"Purchase or Sale of a Security" includes the writing of an option to purchase or sell a Security. A Security shall be deemed "being considered for Purchase or Sale" by a Fund when a recommendation to purchase or sell has been made and communicated and, with respect to the person making the recommendation, when such person seriously considers making such a recommendation. A Security shall not be deemed to be one which is "being considered for Purchase or Sale" by a Fund if such Security is reviewed as part of a general industrial survey or other broad monitoring of the securities market.
PROHIBITED PURCHASES AND SALES OF SECURITIES
In a Personal Securities Transaction, Adviser Personnel may not:
o Purchase or Sell a Security within three calendar days before, or on the same day as, the execution of a trade in the same Security or an equivalent Security by a Fund. If a Fund is engaged in a trading program extending over several trading days, the prohibition on trading by Mutual Fund Portfolio Managers begins three trading days prior to the first Fund transaction in that program, and ends on the same day as the last transaction in that program.
Adviser Personnel may not:
o In any calendar year, receive a gift or anything else (for example, air fare, hotel accommodations, etc.) with a value of more than $100 from any single person or entity that does business with or on behalf of the Company;
o Serve on the board of directors of a publicly traded company without prior authorization from the Board of Directors of TCM and of the Company based upon a determination that such service would be consistent with the interests of the Company and its shareholders (unless so serving prior to the adoption of this Code). Adviser Personnel that serve on such boards of directors are not permitted to participate in any investment decisions made by the Company involving Securities of a company on whose board they serve;
o Execute a Personal Securities Transaction without the prior written authorization of the Compliance Officer and President of TCM.
Adviser Personnel and Underwriter Personnel may not:
o Execute a Personal Securities Transaction on a day during which a Fund has a pending "buy" or "sell" order in that Security or an equivalent Security, until the Fund's order is executed or withdrawn; or
o Execute a Personal Securities Transaction in a Security or an equivalent Security that is being considered for Purchase or Sale by a Fund;
In a Personal Securities Transaction, Adviser Personnel may not:
o Acquire any Security in an initial public offering or in a private placement without prior written authorization of the acquisition by the Compliance Officer and (for Adviser Personnel who are affiliated with TCM) the President of TCM. Any decision by a Fund to invest in or sell such Securities must be approved solely by Adviser Personnel with no investment in the issuer.
Provided, however, that for Underwriter Personnel and for persons who are Adviser Personnel solely because they are directors of TCM, the above prohibitions shall only apply with respect to Personal Securities Transactions if the applicable person knew or, in the ordinary course of fulfilling his or her duties as an officer or director of the Company or as a director of TCM, should have known, that during the fifteen day period immediately preceding or after the date of the Personal Security Transaction in the Security by the person such Security is or was purchased or sold by a Fund, or such purchase or sale by a Fund is or was considered by a Fund (or by TCM for a Fund).
EXEMPTED TRANSACTIONS
The provisions described above under the heading Prohibited Purchases and Sales of Securities and the pre-clearance procedures under the heading Pre-clearance of Personal Securities Transactions do not apply to:
o Purchases or Sales of Excluded Securities;
o Purchases or Sales of options contracts on a broad-based market index;
o Purchases or Sales of Securities effected in any account in which the applicable Personnel has no Beneficial Ownership or control;
o Purchases or Sales of Securities which are non-volitional on the part of either Tanaka Personnel or a Fund (for example, the receipt of stock dividends);
o Purchases of Securities made as part of automatic dividend reinvestment plans;
o Purchases of Securities made as part of an employee benefit plan involving the periodic purchase of company stock or mutual funds; and
o Purchases of Securities effected upon the exercise of rights issued by an issuer pro rata to all holders of a class of its securities, to the extent such rights were acquired from such issuer, and sale of such rights so acquired;
provided, however, that this section shall not exempt acquisitions of any Security in an initial public offering or in a private placement from the requirement that prior written authorization be obtained from the Compliance Officer.
PRE-CLEARANCE OF PERSONAL SECURITIES TRANSACTIONS.
All Adviser Personnel (except for persons who are Adviser Personnel solely because they are directors of TCM, as to whom the following pre-clearance procedures shall not apply) wishing to engage in Personal Securities Transactions, must obtain prior written authorization of any such Personal Securities Transaction from the Compliance Officer and (for Adviser Personnel who are affiliated with TCM) the President of TCM, or their respective designates. Personal Securities Transactions by a Compliance Officer shall require prior written authorization of the President of TCM (for Adviser Personnel who are affiliated with TCM), or the President of the Underwriter (for all other Adviser Personnel), or their respective designates, who shall perform the review and approval functions relating to reports and trading by the applicable Compliance Officer. TCM shall adopt the appropriate forms and procedures for implementing this Code of Ethics.
Any authorization so provided is effective until the close of business on the fifth trading day after the authorization is granted. In the event that an order for the Personal Securities Transaction is not placed within that time period, a new authorization must be obtained. If a person is authorized to acquire a security in a private placement or initial public offering, the Compliance Officer must maintain a record of the decision and the reasons supporting the decision.
If a person wishing to effect a Personal Securities Transaction learns, while the order is pending that the same Security is being considered for Purchase or Sale by the Fund, such person shall cancel the trade.
Notification of Fund Trading Activity
In addition to placing Purchase or Sale Orders for the Funds, the Mutual Fund Portfolio Managers, or their designates, shall notify, the Compliance Officer of daily purchases and sales and of Securities being considered for Purchase or Sale by any Fund. In the alternative, a Compliance Officer must consult with the respective Portfolio Manager prior to authorizing a Personal Securities Transaction.
TRANSACTION AND ACCOUNT POSITION REPORTING REQUIREMENTS
With respect to (i) directors of the Company who are not "interested
persons" of the Company within the meaning of section 2(a)(19) of the Act, and
who would be required to make a report solely by reason of being directors or
(ii) persons who are Adviser Personnel solely because they are directors of TCM
(collectively, "Disinterested Directors"), the following reporting requirements
do not apply. If, however, a Disinterested Director knew or, in the ordinary
course of fulfilling his or her duties as a director of the Company or TCM,
should have known, that during the fifteen day period immediately preceding or
after the date of a Personal Security Transaction in a Security by the
Disinterested Director such Security is or was purchased or sold by a Fund or
such purchase or sale by a Fund is or was considered by a Fund (or by TCM for a
Fund), the Disinterested Director shall make the quarterly disclosures described
below to the Compliance Officer, but only with respect to the applicable
Personnel Security Transactions.
Disclosure Of Personal Brokerage Accounts and Securities Holdings
Within ten (10) days of the commencement of employment with TCM, the Underwriter or the Company, all Tanaka Personnel and Underwriter Personnel are required to submit to the Compliance Officer: a) the names and account numbers of all of their personal brokerage accounts, brokerage accounts of members of their immediate families, and any brokerage accounts which they control or in which they or an immediate family member has Beneficial Ownership when the person became an employee, b) a list of all personal Securities holdings when the person became an employee, c) certification that they have read and understand this Code, and d) the date the report was submitted.
Each of these brokerage accounts is required to furnish duplicate confirmations and statements to TCM and the designated independent auditor (for Adviser Personnel who are affiliated with TCM) or the Underwriter (for all others).
Annual Reporting Requirements
At the beginning of the first quarter of each fiscal year, all Adviser Personnel and Underwriter Personnel are required to submit to the Compliance Officer: a) the names and account numbers of all of their personal brokerage accounts, brokerage accounts of members of their immediate families, and any brokerage accounts which they control or in which they or an immediate family member has Beneficial Ownership as of a date no more than 30 days before the report was submitted, b) a list of all personal Securities holdings as of a date no more than 30 days before the report was submitted, c) certification that they have read and understand this Code and whether they have complied with its requirements throughout the prior fiscal year, and d) the date the report was submitted.
Quarterly Reporting Requirements
All Adviser Personnel and Underwriter Personnel shall report to the Compliance Officer the following information with respect to transactions in any Security in which such person has, or by reason of such transaction acquires, any direct or indirect Beneficial Ownership in the Security:
o The date of the transaction, the title and the number of shares, and the principal amount of each Security involved;
o The nature of the transaction (i.e., purchase, sale or any other type of acquisition or disposition);
o The price at which the transaction was effected; and
o The name of the broker, dealer or bank with or through whom the transaction was effected.
Underwriter Personnel and Adviser Personnel shall also identify any trading account established by the person during the previous quarter with a broker, dealer or bank.
Reports pursuant to this section of this Code shall be made no later than 10 days after the end of the calendar quarter in which the transaction to which the report relates was effected, and shall include a certification that the reporting person has reported all Personal Securities Transactions required to be disclosed or reported pursuant to the requirements of this Code. Any such report may contain a statement that the report shall not be construed as an admission by the person making such report that he or she has any direct or indirect Beneficial Ownership in the Security to which the report relates. Adviser Personnel and Underwriter Personnel need not make such a report with respect to transactions effected for any account in which they may have Beneficial Ownership, but over which they do not have any direct or indirect influence or control (for example, a blind trust).
ENFORCEMENT AND PENALTIES
With respect to Adviser Personnel affiliated with TCM, the Compliance Officer shall identify all Adviser Personnel, inform those persons of their reporting obligations, and maintain a record of all current and former Adviser Personnel. With respect to all others, the Compliance Officer of the Underwriter shall identify all Underwriter Personnel, inform those persons of their reporting obligations, and maintain a record of all current and former Adviser Personnel and Underwriter Personnel who are not affiliated with TCM.
The Compliance Officer of TCM (or the independent auditor for TCM) shall review the transaction information supplied by its employees, whether full-time or part-time. The applicable Compliance Officer will review the transaction information supplied by all Adviser Personnel and Underwriter Personnel who are not affiliated with TCM. If a transaction appears to be in violation of this Code of Ethics, the transaction will be reported to TCM as well as the Board of Directors of the Company.
Upon being informed of a violation of this Code of Ethics, TCM may impose such sanctions as it deems appropriate, including but not limited to, a letter of censure or suspension, termination of the employment of the violator or a request for disgorgement of any profits received from a securities transaction effected in violation of this Code of Ethics. TCM shall impose sanctions in accordance with the principle that no Tanaka Personnel may profit at the expense of the shareholders of the Company. Any sanctions imposed with respect thereto shall be reported periodically to the Board of Directors of the Company.
DUTIES AND POWERS OF THE BOARD OF DIRECTORS
TCM, the Underwriter and an officer of the Company shall submit to the Board of Directors of the Company at each regular meeting of the Board, a report on Personal Securities Transactions by Tanaka Personnel. Such reports shall be reviewed by the Board of Directors in order to determine whether any violation of this Code or any section of the Act or the regulations promulgated thereunder has occurred.
Annually, TCM, the Underwriter and an officer of the Company shall submit to the Board of Directors a report that:
o Summarizes existing procedures concerning Personal Securities investing and any changes in the procedures made during the prior year;
o Identifies any violations of this Code and any significant remedial action taken during the prior year;
o Identifies any recommended changes in existing restrictions or procedures based upon the experience under the Code, evolving industry practices or developments in applicable laws and regulations; and
o Certifies that TCM, the Company and the Underwriter have each adopted procedures reasonably designed to prevent violations of this Code.
The Board of Directors of the Company may, in its discretion, take any actions and impose any penalty it deems appropriate upon any person that has violated the Code of Ethics of the Company or engaged in a course of conduct which, although in technical compliance with this Code, shows a pattern of abuse by that person of his or her fiduciary duties to the Company.
The above actions of the Board of Directors may be in addition to any action taken by TCM against the person or persons involved.
ANNUAL CODE OF ETHICS CERTIFICATION
I acknowledge that I have received a copy and read the Code of Ethics, amended as of August 30, 2000, for Tanaka Funds, Inc. I understand my responsibilities under this Code of Ethics and agree to comply with all of its terms and conditions. I will retain a copy of this Code of Ethics for future reference.
I hereby certify that I have complied with the requirements of the Code of Ethics of Tanaka Funds, Inc. and I have disclosed or reported all personal securities transactions required to be disclosed or reported pursuant to such Code of Ethics.
Dated
Printed Name
Signature
EX-99.23.q.iii
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS:
WHEREAS, TANAKA FUNDS, INC., a corporation organized under the laws of the State of Maryland (hereinafter referred to as the "Company"), periodically files amendments to its Registration Statement with the Securities and Exchange Commission under the provisions of the Securities Act of 1933 and the Investment Company Act of 1940, as amended; and
WHEREAS, the undersigned is the Treasurer and Assistant Secretary of the Company;
NOW, THEREFORE, the undersigned hereby constitutes and appoints JAMES R. CUMMINS and DONALD S. MENDELSOHN, and each of them, his attorneys for him and in his name, place and stead, and in his office and capacity in the Company, to execute and file any Amendment or Amendments to the Company's Registration Statement, hereby giving and granting to said attorneys full power and authority to do and perform all and every act and thing whatsoever requisite and necessary to be done in and about the premises as fully to all intents and purposes as he might or could do if personally present at the doing thereof, hereby ratifying and confirming all that said attorneys may or shall lawfully do or cause to be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned has hereunto set his hand this 23rd day of March, 2001.
/s/
Rob Chopyak,
Treasurer and Assistant Secretary
|
STATE OF INDIANA )
) ss:
COUNTY OF MARION )
|
Before me, a Notary Public, in and for said county and state, personally appeared Robert Chopyak , known to me to be the person described in and who executed the foregoing instrument, and who acknowledged to me that he executed and delivered the same for the purposes therein expressed.
WITNESS my hand and official seal this 23rd day of March, 2001.
___Carol J. Highsmith__________ Notary Public My commission expires: ___7/28/07______